Case: Commissioner of Income-Tax-4, Mumbai Vs. Karma Energy Limited (In Favour of Assessee)

to enable the group company to benefit. According to Mr. Mistri, the contention of the revenue is that subsequent transactions have been put into place all of which enure to benefit of the Weizmann group is incorrect. It is the revenues contention that the commission involved in the deal has been indirectly handed back to the Weizmann group. According to Mr. Mistri, these contentions are misconceived. He supported the order of the Commissioner of Income Tax (Appeals) as well as the ITAT and contended that no question of law would arise in these appeals.9. On the additional question in ITXA Nos.1511/13 and 1713/013, Mr. Mistri submitted that no substantial question arises in the facts of the case and that disallowance made by the Assessing Officer was under section 40A(2)(b) of the I.T. Act is to be rightly deleted.10. Having heard both counsel and having perused the record, we find that the order of the Appellate Tribunal cannot be faulted. The order of the Appellate Tribunal in the set of appeals filed by the Revenue against M/s. Karma Energy Ltd., the Respondent herein as well M/s. Weizmann Ltd. has also taken into account all contentions including that during the course of investigation, NEG Micon was unable to provide any corroborative evidence before the Assessing Officer. Apparently, NEG Micon denied that they have paid these commissions.11. The Tribunal considered the previous findings of certain group companies of Weizmann being involved and on inquiry, it was found that the commission/fees paid by NEG Micon was not received by the assessee. M/s. Samrat Spinner and M/s. Kakatiya Industries had paid Rs.115 lacs and Rs.303 lacs to M/s. Suhami Traders (presently known as Suhami Power & Finance Corporation), whose address is the same as that of the present assessee. According to the Assessing Officer, the commission paid by NEG Micon to Suhami was thus received by a Weizmann group company. Therefore, the excess money paid for the windmills was routed back to Weizmann Group, while the assessee, also a Weizmann group company claimed 100% depreciation. The collusion between NEG Micon and Weizmann group it is alleged was in order to deprive the Revenue.12. A comparative chart has been prepared of the transactions entered into by the Respondent as well as Precot Mills Ltd. claiming difference in prices of windmills pegged at about Rs.98 lacs. However, comparison with companies like Rajasthan State Power Corporation Ltd. reveals that the price is easily justifiable given the difference in specifications. It is necessary to mention that in the course of the comparison provided between the price paid by Weizmann and Savita Chemicals Ltd. and the assessee, it revealed that Savita Chemicals purchased similar windmills at price of Rs. 405.00 lacs as against Rs. 360.64 lacs in the case of the assessee. The performance, specifications and type of requirements were very similar in these cases.13. Accordingly, the Tribunal considered the statement of comparable cases made by the assessee and concluded that the payment made by the assessee was certainly not inflated. The Tribunal considered the fact that setting up of windmills was a specialized task and came to the conclusion that the Assessing Officer had no evidence on record to establish that the price of windmills paid by the assessee was not the actual price or that the price was inflated. The Tribunal found that the Assessing Officer had proceeded on the basis of a presumption that the cost of each windmill is inflated by Rs.1 crore and it had not been proved by documentary evidence that such money came back to the assessee from the concern to whom commission was paid, namely M/s. Suhani Traders.14. Mr. Mistri highlighted the fact that although the receipt of commission by Weizmann group company is alleged, there is no merit whatsoever in the contention that could justify disallowance of the depreciation claim. The Tribunal found that there is no excessive payment. The Assessing Officer has not disputed the fact that the assessee paid lease rent of Rs.5,51,788/- to Weizmann group Ltd. on account of the windmills taken on lease and the contention of the Assessing Officer that lease rents were unreasonable was not based on any cogent material but only based on assumption and presumption. In fact, the lease rents were fixed in accordance with the formula provided by Indian Renewable Energy Development, a Government of India Company which provided support to Electricity Project.15. The Tribunal found that the Commissioner of Income Tax (Appeals) was justified in holding that there is nothing on record to prove the excessive amount of lease rent was paid. The said issue is identical in all appeals and the appeals came to be rejected while upholding the orders of the Commissioner of Income Tax (Appeals). The appeals filed for the year 2002-03 and 2005-06 were also dismissed. The cross objections filed by the assessee for the year 2002-03 were also rejected.16. In the circumstances, having considered the finding of the two fact finding authorities, namely the Commissioner of Income Tax (Appeals) and the Tribunal, both of whom have come to an identical findings, we find no reason to interfere in the above appeal Nos.413, 458 and 449 of 2013. None of the three questions of law proposed arise from the present set of facts in these appeals.17. In Income Tax Appeal Nos.1511/13 and 1713/13, the fourth question also does not arise. In fact, this issue was never raised before the Commissioner of Income Tax (Appeals) or before the Tribunal. The Commissioner of Income Tax (Appeals) observed that the payment made to Weizmann group of is not in the nature of income but was expenditure reimbursed which cannot be regarded as a revenue receipt and therefore, the Tribunal considering the provisions of Section 194 of the Act has upheld the order of the Commissioner of Income Tax (Appeals) rejecting the contention of the department. In view of the same, the fourth question in Income Tax Appeal Nos.1511/13 and 1713/13 also does not raise as a substantial question of law.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]10. Having heard both counsel and having perused the record, we find that the order of the Appellate Tribunal cannot be. Having heard both counsel and having perused the record, we find that the order of the Appellate Tribunal cannot befaulted. The order of the Appellate Tribunal in the set of appeals filed by the Revenue against M/s. Karma Energy Ltd., the Respondent herein as well M/s. Weizmann Ltd. has also taken into account all contentions including that during the course of investigation, NEG Micon was unable to provide any corroborative evidence before the Assessing Officer. Apparently, NEG Micon denied that they have paid these commissions.The Tribunal found that the Commissioner of Income Tax (Appeals) was justified in holding that there is nothing on record to prove the excessive amount of lease rent was paid. The said issue is identical in all appeals and the appeals came to be rejected while upholding the orders of the Commissioner of Income Tax (Appeals). The appeals filed for the year06 were also dismissed. The cross objections filed by the assessee for the yearwere also rejected.16. In the circumstances, having considered the finding of the two fact finding authorities, namely the Commissioner of Income Tax (Appeals) and the Tribunal, both of whom have come to an identical findings, we find no reason to interfere in the above appeal Nos.413, 458 and 449 of 2013. None of the three questions of law proposed arise from the present set of facts in these appeals.17. In Income Tax Appeal Nos.1511/13 and 1713/13, the fourth question also does not arise. In fact, this issue was never raised before the Commissioner of Income Tax (Appeals) or before the Tribunal. The Commissioner of Income Tax (Appeals) observed that the payment made to Weizmann group of is not in the nature of income but was expenditure reimbursed which cannot be regarded as a revenue receipt and therefore, the Tribunal considering the provisions of Section 194 of the Act has upheld the order of the Commissioner of Income Tax (Appeals) rejecting the contention of the department. In view of the same, the fourth question in Income Tax Appeal Nos.1511/13 and 1713/13 also does not raise as a substantial question of law.