By TIOL News Service

MUMBAI, APR 13, 2015: THE issue before the Bench is - Whether when discrepancies are found in the claim of the assessee that in a short span of time it moved the wind mills from one location to another and installed them, depreciation can be disallowed. YES is the answer.

The assessee is a firm carrying on the business of construction of building and land development. It had filed a return of income on 27th October, 2006 in respect of AY 2006-07, declaring total loss of Rs.30,51,480/-. The assessee claimed 50% depreciation on this windmill project and by urging that it was commissioned within and before the relevant date. To verify the genuineness and veracity of this project, the assessee was called upon to file complete details. These details were placed and they demonstrated that the windmill project was completed by M/s. Suzlon Energy Limited and M/s. Suzlon Infrastructure Limited collectively on turnkey basis. The assessee had placed separate purchase orders on both parties for windmill project in Maharashtra. The project was completed on 30th March, 2006 and handed over to the assessee on the same date. The summons were issued to these two companies to provide copies of purchase order, books of account and related documents relevant to the project. They responded and on perusal of their replies, AO found that the site was in Maharashtra. The transport bills revealed that the windmill components were transported to District Sangli. The AO had compiled the transport delivery site and invoice notices and then concluded that there were serious discrepancies and which revealed that the claim was not genuine. The assessee's reply that previously the windmill site was at Dhalgaon, District Nandurbar but it was then installed at Tisangi village, District Sangli. It was stated that Dhalgaon was only a proposed site. However, AO found that there were no components which were transported to Tisangi site. AO concluded that as the new windmill was not installed at the village site in District Sangli and, therefore, he disallowed this 50% claim of depreciation.

Held that,

++ the Commissioner may have undertaken an exercise as alleged by Mr.Toprani but what the Tribunal found from the Commissioner's conclusion that the certificates which were relied upon by the Commissioner and purportedly of site inspection do not remove the essential discrepancy nor does it take care of the fact that the windmill was commissioned on 31st March, 2006. The certificate issued by Maharashtra State Electricity Distribution Company Limited was relied upon. However, the Tribunal found that the hair-splitting by the Commissioner was uncalled for. If the project was indeed commissioned then it was not necessary for the assessee to have approached another authority and stated to be a statutory authority. The certificate issued by the statutory authority was also doubted because the same was issued at the instance and on the application of the assessee dated 28th March, 2006;

++ the evidence with regard to heavy windmill components being transported from Nandurbar District and particularly village Dhalgaon to village Tisangi in Sangli District was not produced. That is a finding of fact which has been recorded by the Tribunal and relying on the documents which were on record. It also records that it is surprising that a project of this magnitude was commissioned and within a short span as noted in paragraph 10 of the Tribunal's order. The certificate issued by the other entity M/s. Suzlon indicate that the material supplied to the assessee against the invoice number set out in the Tribunal's order at paragraph 10 dated 27th March, 2006 was dispatched from their works at Puducherry. In such circumstances, it was physically impossible for the consignment to cover a distance of 800 kilometers and reach a site which was earlier proposed in Nandurbar District and later on in Sangli District. Therefore, the perversity in the Commissioner's order enabled the Tribunal to interfere with the findings and uphold that of the AO. We do not see any substantial question of law emerging from an exercise of this nature undertaken by the Tribunal. This is not a case where any expert opinion was produced or relied upon and that expert was not made available for cross examination. We do not see how, therefore, a reliance on the judgment of the SC in Saraswati Industrial Syndicate Ltd. vs. CIT 2002-TIOL-731-SC-IT-LB would assist the assessee. That judgment is clearly distinguishable on facts. As a result of the above discussion, we do not find any merit in this appeal. It is dismissed.

(See 2015-TIOL-894-HC-MUM-IT)