9911796707
TMI Blog2024 (8) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... declared as income in the hands of the assessee and further the assessee has to keep up the plant in running condition it has to incur certain expenditures. As and when withdrawal of the suspension of power purchase agreement the assessee may continue to generate power, therefore, the temporarily suspension of the business is with a proper reason declared on record, therefore, in our view assessee is eligible to claim the Revenue expenditure as well as the relevant depreciation of the fixed assets during the current year, therefore, we are inclined to agree with the findings of the CIT(A) and, accordingly, appeal filed by the Revenue is dismissed. - Shri S. Rifaur Rahman, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Assessee : Sh. Anil Bhalla, CA For the Department : Sh. Anshul, Sr. DR ORDER PER S. RIFAUR RAHMAN, AM: 1. This appeal has been filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeals)-6, Delhi, [ Ld. CIT(A) , for short], dated 22/02/2017 for Asst. Year 2012-13. 2. The brief facts of the case are, assessee filed its return of income on 27/09/2012 declaring income at Rs. NIL by claiming carry forward loss of Rs. 2,35,09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed his business forever, the business must be said to be continuing. It is not necessary that for a business to be in existence, it should have worked all may be quiet and dormant for some time. [Lakshmi Narayan Board Mills Pvt. Ltd. v. CIT, (1994) 2005 ITR 88(Cal)]. The querist has only suspended manufacturing activity at its factory and its business is continued by way of trading in the same line of product. In L.VE. Vairavan Chettiar v. CIT, (1969)72 ITR, 114, the Madras High Court held that maintaining the establishment and waiting for improved market conditions in a business which the assessee had temporarily stopped, the business must be deemed to have continued as there was nothing to show that he had completely abandoned or closed that business. The facts of the quietist's case suggest that business has not been closed down but manufacturing at its factory has been suspended and trading is being carried out. The querist therefore has a good case to contend that its business has not been discontinued but manufacturing has been temporarily suspended and trading activity is carried out in the interim. In our case business has not been discontinued it is just that a liti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier years. Applying the ratio of the judgements as discussed to the facts of the case of the querist, the querist has a good case to contend that it satisfies the primary conditions of S.32(1) and is therefore entitled to depreciation. After considering the submissions of the assessee, the Assessing Officer rejected the same by observing as under:- The Auditors in Note No.18 of Notes to Financial Statement has mentioned that the company is supply electricity to Haryana Power Generation Corporation Ltd. (HPCL) under a 15 year Power purchase agreement (PPA). PPA was suspended by HPGCL w.e.f. 10.5.2005. As such company had not considered deemed generations from 10.5.2005 to 31.3.2006 in the books of accounts of previous year as HPGVL is not releasing outstanding balance and the company decided to make provision of doubtful debts relating to unpaid amount of deemed generation from the counting year 2002-03 till 9th May, 2005. A petition was filed with HERC in July, 2008. An order was passed by HERC on 23rd March, 2010 as per which the figures of deemed generation ad other deductions were to e reconciled with a period of one month through joint meetings with the officers with the erstw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the entire expenditure in one year could give a very distorted picture of the profits of a particular year. 4. With the above observation, the Assessing Officer held that assessee to provide amount of being generation as the Revenue which is book and could claimed expenses against above said deemed Revenue but assessee has not made any provisions for the same. Since, no Revenue has been claimed during the year, no expenses can be allowed. Accordingly, he disallowed the expenses claimed by the assessee and the relevant depreciation under the Income Tax Act. Accordingly, he made an addition of Rs. 2,35,30,309/- to the income of the assessee. 5. Aggrieved assessee preferred an appeal before the Ld. CIT(A)-6 and filed detailed submissions before him. After considering the detailed submissions of the assessee, Ld. CIT(A) allowed the claim of the assessee by observing as under:- 3.2.3 I have carefully considered the submissions and the facts of the case and find that the company is engaged in the business of generating, transmitting, distribution and supply of electricity since 1995 and has an agreement for supplying electricity with Haryana Power Generation Corporation Limited (HPGCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in order to claim the relevant expenditure. In this regard, he relied on the findings of the Assessing Officer 8. On the other hand, Ld. AR submitted that the business of the assessee was temporarily closed to the fact HPGCL under 15 years power purchase agreement HPGCL has suspended the power purchase with effect from 10th May, 2005 in compliance with the order of HERC. He submitted that the business of the assessee is temporarily suspended but it has to maintain its plant, therefore, it is incurred certain expenditure for upkeeping of the plant and the relevant depreciation on the asset utilized in the business. He agreed with the Ld. DR that assessee has not declared any revenue during the year. Considering the fact that power purchase agreement was suspended and no fixed tariff has accrued to the company and he heavily relied on the findings of the Ld. CIT(A). 9. Considered the rival submissions and material placed on record, we observed that the assessee is having a huge plant for the purposes of generating, transmitting, distribution and supply of electricity since 1995 with an agreement for supply of electricity with HPCL, at present HPPC for 15 year power purc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
