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

3. It will be necessary to advert to a few facts before dealing with these appeals. The facts in Income Tax Appeal No.413/13 may be taken up. The assessee belongs to the Weizmann Group of companies. A survey was conducted at the premises of NEG Micon (I) P. Ltd. at Chennai. The department found that the said company had sold 20 windmills to the Weizmann Group which included the assessee. According to the department, the average price of the windmill was between Rs.2.25 to Rs.2.50 crores whereas the sale price to this group was between Rs.3.6 to Rs.3.6 crores.4. In the assessment proceedings, the assessee had claimed 100% depreciation on 12 windmills. According to the Assessing Officer, the excess payment made towards purchase price of windmills was received back by the Weizmann group routed through third parties while maintaining a claim of 100% depreciation by the assessee. The Assessing Officer, therefore, disallowed depreciation in respect of 12 windmills installed by the assessee holding that the cost of windmills were inflated by Rs.1 crore per windmill. The Assessing Officer also noticed that the assessee had taken a 9MW windfarm on lease from M/s. Weizmann Ltd. and has paid lease rent of Rs.The assessee claimed reliefs under Section 40(2)(b) of the Income Tax Act, 1961 (the Act).5. The Commissioner of Income Tax (Appeals) deleted the additions made by the Assessing Officer stating that during the search and seizure of the business premises, no evidence of the assessees complicity in the transactions with NEG Micon was gathered. It was also noticed that the assessment order did not indicate that the assessee had paid a higher price for the purchase of windmills. Apropos, the lease rentals, the Commissioner of Income Tax (Appeals) deleted the disallowance. All payments were made by crossed account payee cheques and it was fully accounted for in the books of account. The Commissioner of Income Tax (Appeals) further held that since there was nothing on record to prove that there was excessive payment on account of lease rent, there was no question of adopting a different figure for the purchase price in respect of leased windmills.6. Being aggrieved by the order, the Revenue filed an appeal before the ITAT on or about 6th June, 2007. By order dated 7th September, 2012 the ITAT dismissed the appeal.

Court's reasoning:
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.