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Rrb income tax letters Rrb income tax letters Document Transcript

  • August 19, 2005 The Asstt. Commissioner IV Sales Tax Office New Delhi Respected Sir, Sub : Hearing of Appeal in the case of Prime Hides Corp, in respect of F. Y. 2003-2004 fixed For 19.08.2005. With reference to above, it is prayed, that the dealer is in The process of collecting C form from its customer, and is going to Calcutta for this purpose. You are therefore requested to kindly adjourn this case to the first week of September 2005, as to suit to your kind convenience. CHARTERED ACCOUNTANT The undersigned in this case is not in a position to appear before your good self, since he is suffering from Viral fever. CHARTERED ACCOUNTANT Thanking you, Yours faithfully, ( F. A. SHAMSI ) CHARTERED ACCOUNTANT
  • The Income Tax Officer Ward No. 15(4) New Delhi Sub: Penalty proceedings U/Sec 271 (1) (c) in the case of M/s RRB Consultants & Engineers Pvt. Ltd. for Ass. Yr. 2003-04 Dear Sir, With reference to above, the assessee hereby submits as under: 1. That the assessee had filed its return declaring an income of Rs. 1,10,17,156/- 2. That the assessment was completed at Rs. 1,11,17,156/- 3. That the resultant addition of Rs. 1,00,000/- only to the declared income, was on account of deductions of the said sum from the claim of the assessee amounting to Rs. 11871062/- u /Sec. 80-IA to Rs. 11771062/- 4. That during the year consideration, the assessee had earned a gross sum of Rs. 12278960/- on account of Power Generation Income, which is subject to the claim of deduction u/sec. 80-IA of the Income Tax Act. 5. The Assessee has been insisting and has a strong case in claiming that no expenditure should be deducted from it’s gross income of Power Generation, since the said expenses have nexus with it’s main source of income from business/ profession. The assessee has been mainly earning commission on sale of wind electric generators (WEGs) here in India from a Danish manufacturer of this product. The reasons that as to why expenses attributed by the department to be deducted from power generation income, should be deducted from commission/ composite income have been discussed at length in assessee’s letter dated 10th Jan. 2006 submitted during Assessment proceedings for the year consideration. However, a copy of the same is enclosed herewith for your kind ready reference. 6. That it was in the Ass. Year 2000-01, that your predecessor after considering all the facts and the entirety of the circumstances, decided to deduct expenses incurred on WEGs maintenance and Wegs insurance from gross power generation income as an appropriate claim for deduction u/sec 80-IA. 7. That without prejudice to assessee’s claim as discussed in para 5 above, the assessee in order to avoid the multiplicity of cases and prolonged process of litigation followed the learned A.O.’s version as adopted by him in the Ass. Year 2000- 01.
  • 8. That without any change in the circumstances, the learned A.O. in the year under consideration has deviated from the stand taken by his predecessor, and duly adopted by the assessee as well for the reason mentioned above. This is however not in accordance with the maintenance of the concept of consistency as directed by the several courts of law in their judicial pronouncements. 9. That without prejudice to the bonafides and correctness of the claim made by the assessee on this issue, the assessee submits that the resultant additions are simply because of the difference of opinion of the assessee and the assessing authority, on a particular issue. The disallowance has not figured because of any wlful and deliberate attempt to avoid tax, on the part of the assessee which is an important condition for imposing penalty u/sec 271 (1) (c), proceeding of which are quasi criminal in nature. 10. In commissioner of Wealth tax Vs. Viswa Nathan- S.L.P. (civil) Nos. 15761-62 of 1994- (1994) 209 ITR (St). The Hon’ble Supreme Court, through their lord ships J.S.Verma and Paripoorman JJ dismissed a SLP by the department too appeal against the order of Punjab and Haryana High Court holding that the difference in the valuation as assessed and as returned arose only because of a difference of opinion and not as a result of any concealment on the part of the assessee. 11. The assessee therefore prays that keeping in view the above submissions the penalty proceedings u/sec 271 (1) (c) may please be dropped. Thanking you. Yours Faithfully, For RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory Enclosure: 1) Copy of Assesse’s letter dated 10.01.2006
  • The Income Tax Officer Ward No. 15(4) New Delhi Sub: Penalty proceedings U/Sec 271 (1) (c) in the case of M/s RRB Consultants & Engineers Pvt. Ltd. for Ass. Yr. 2004-05 Dear Sir, With reference to above, the assessee hereby submits as under: 1. That the assessee had filed its return declaring an income of Rs. 744,91200/- 2. That the assessment was completed at Rs. 749,96861 3. That the resultant addition of Rs. 505661/- was on two accounts as mentioned below: (a) Rs. 1,00,000/- on account of deduction of some estimated charges from the claim of the assessee amounting to Rs. 11644989/- u/sec 80-IA to Rs. 11544989/- (b) Rs. 405661/- on account of depreciation charged in excess on buildings through an inadvertent mistake. 4. That the facts about the reduction of the assessee’s claim u/sec 80-IA, as per serial no.3 (a) above, being the same as discussed in assessee’s letter filed in respect of it’s request dropping penal proceedings u/sec 271(1) (c) for A.Y. 2003-04, the assessee hereby relies on the said submissions for the year under consideration also. 5. That regarding excess depreciation charged discussed as per serial no. 3 (b) above the assessee submits, that it was neither deliberate, nor was the result of concealment of any fact/ income. All facts about sale consideration of the property along with calculation of depreciation of the Building Block, were well discussed and were available with the return of income. As such, nothing was concealed, yet through an inadvertent mistake, while reducing the amount of Rs. 80,00,000/- being the sale consideration of Niti Bagh Property, it’s written down value of Rs. 21,18,138/- was deducted from the said block of assets. The correct value of the block for the purpose of calculating depreciation should have been as under: Building:- 43,50,431/- W.D.V. at the beginning of the year Add:- 2,71,76,593/- Acquired during the year- NFC Property =========== Total:- 3,15,27,024/- Less:- 80,00,000/- Sale consideration of Niti Bagh Property =========== Value of Block:- 2,35,27,024/- ===========
  • Depreciation was therefore to be charged as half rates i.e. (5%) since period involved is less than 6 months = 2,35,27,024/- @ 5% 11,76,351/- instead of Rs. 15,82,059/- The assessed however realizing the mistake voluntarily surrenderd the increase in it’s income by Rs. 405708/- vide its letter dated 20.02.2006 (copy enclosed) on account of depreciation excess charged inadvertently and without any malafide intention. The facts about the said transaction were also very much explicit in the statement of accounts and relevant documents filed along with the income tax return. The assessee has also paid the due tax on the said addition, copy of challan is enclosed herewith for your ready reference. 6. Without prejudice to the submission made above, the assessee has not concealed any thing, and has given the entire particulars of his income in the computation filed along with the return. Please refer CIT Vs. Jogi Bhai Mangal Bhai – 1992-1931 ITR404 (Bombay). Even, considering it a mistake, the same is inadvertent and it’s bonafide can not be suspected. Hon’ble Supreme Court has held in CIT Vs Sylco (SLP (civil) Nos- 8308-8309, of (1993) 203(St) that concealment proceedings are not maintainable in the presence of bonafide and inadvertent mistakes, out side the perview of penalty u/sec 271 (1) (c) in the following cases:- 1. CIT Vs Shant Sports Industries (1996) 217 ITR – 243 (Punjab & Haryana) 2. CIT Vs Ask Enterprises (1998) – 230 ITR – 48 (Bombay) 7. Finally, it is prayed that in view of what has been mentioned aove the penal proceedings in this case may please be dropped as the proceedings are quasi criminal in nature, and therefore can not be based on assumptions, surmises and conjectures. Thanking you. Yours Faithfully, For RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory Enclosure: 1) Copy of Assesse’s letter dated 20.02.2006 2) Copy of Challan amounting to Rs. 181406/-
  • Regd.-AD July 20, 2006 The Commissioner of Income Tax Appeals XVIII Income Tax Office Drum Shape Building I. P. Estate New Delhi. Sub: Appeal in the case of M/s RRB Consultants & Engineers Pvt. Ltd., New Delhi in respect of Ass. Yr. 2003-04. Appeal No. 7106-07 Dear Sir, With reference to above, it is submitted, that the above said appeal has been fixed for hearing on 25.07.2006. It is submitted that the counsel of the assessee has proceeded out of station and shall not be available on the above said date of hearing. It is therefore prayed that the said appeal may kindly be adjourned to some other date as to suit to your kind convenience. Thanking you. Yours faithfully for RRB Consultants & Engineers Pvt. Ltd. Managing Director
  • Ref: RRB/IT/2008-09 15 July 2008 The Asstt. Commissioner of Income Tax Circle 15(1) C.R. Building New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to above and as desired by your goodself, we are enclosing herewith the relevant statement of Andhra Bank, showing the detail of Rs. 1095750/- being purchase consideration of 12175 nos. equity shares of Andhra Bank acquired @ Rs. 90/- per shares. Thanking you. for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory Enclosures: 1. Copy of Ledger Account regarding payment and refund received for purchase of 12175 nos of shares of Andhra Bank. 2. Relevant copy of Bank Statement in evidence of payament and refund entries of the above said transaction.
  • RRB/IT/2008-09 11 August 2008 The Addl.Commissioner of Income Tax Range 15 C. R. Building New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to your notice dated 04.08.2008 served upon us on 08.08.2008 on the above cited subject, It is submitted that the counsel of the assessee has proceeded out of station and shall not be available on the above said date of hearing. It is therefore prayed that the said date may kindly be adjourned for a fortnight as to suit to your kind convenience. Thanking you. Yours faithfully, for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2008-09 25 August 2008 The Addl.Commissioner of Income Tax Range 15 C. R. Building New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to above and as required by your good self, we are enclosing herewith the following details for your king perusal’ 1. Details of Income from Power Generation The above details along with copies of bills raised upon Tamilnadu Electricity Board are furnished herewith. The Electricity Board purchases the electricity generated by the wind Electric Generators @ Rs. 2.70 per unit. 2. Details of Addition of Wind Electric Generators Copies of the Invoices in respect of supply of Vestas Type V-39 500 KW Wind Electric Generators, as well as Erection and Commissioning thereoff along with commissioning certificate of Tamilnadu Electricity Board are hereby submitted. 3. Details of Utilisation of Foreign Currency The Said detail are hereby submitted. 4. Detail of Consultancy Fee and Service Charges The Assessee is receiving the consultancy fee in connection to installation of wind electric generators in India from Vestas Wind Technology, Denmark. The details in this respect alongwith 5 nos. of bank advices are furnished herewith. Thanking you. Yours faithfully, for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2008-09 4 September 2008 The Addl. Commissioner of Income Tax, Range 15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to above it is hereby submitted that the details as required by your good self during the last Assessment proceedings, are under preparation. As it may take some more time, it is hereby prayed that the said case may kindly be adjourned for a week as to suit to your kind convenience. Thanking you Yours faithfully, for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2008-09 11 September 2008 The Addl. Commissioner of Income Tax, Range 15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to above and as required by your good self, we are enclosing herewith the following details for your kind perusal. 1. Detail of addition in fixed assets along with the copies of the bills. 2. Copy of Wealth Tax Return filed for Assessment Year 2006- 07 3. Copy of proposal for sale of wind electric generators from Vestas RRB India Ltd. along with the purchase order of the assessee duly accepted by Vestas RRB India Limited. 4. Detail of Building Repair 5. Shareholding pattern of RRB Energy Limited (formerly known as Vestas RRB India Limited) and Solchrome Systems India Limited. The original copies of commissioning certificates of wind electric generators, issued by Tamilnadu Electricity Board, are hereby produced for your verification. The photocopies of the same have already been submitted to your good self earlier. Thanking you Yours faithfully, for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2008-09 30 September 2008 The Addl. Commissioner of Income Tax, Range 15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to above, and as required by your goodself, we are filing herewith the following details: 1. Fringe Benefit Details- The highlighted figures comprising Vehicle Insurance, Vehicle Repair & Maintenance and Vehicle Depreciation gives the breakup of 5713160/- pertaining to Vehicle Running & Maintenance as shown in FBT return 2. Business Promotion Expenses amounting to Rs. 2928139/- as shown in Profit & Loss Account includes a sum of Rs. 65551/- incurred for Advertisement, leaving a sum of Rs. 2862588/- towards Business Promotion only which comprises the following expenditure. Business Promotion (Gift) Rs. 978834/- Taxable @ 50% Hospitality Rs. 1883754/- Taxable @ 20% 3. Power Generation Income as per Schedule No. 8 of Profit & loss Account is Rs. 7895679/-. It also includes the income for the month of March 2006, which is 142979/- only. Copy of the Bill for the month of March, 2006 alongwith the annual statement is enclosed herewith for your perusal. 4. Details of Service & Professional Charges amounting to rs. 1208070/- is enclosed herewith alongwith TDS details. It is hereby requested that for filing the remaining details a convenient date may please be granted. Thanking you Yours faithfully, for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2008-09 13 October 2008 The Addl. Commissioner of Income Tax, Range 15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants & Engineers Pvt. Ltd. A.Y. 2006-07 With reference to above and as required by your good self, we are enclosing herewith the following details for your kind perusal. 1. Detail of Repair & Maintenance of Furniture Exp. 2. Detail of Repair & Maintenance of Electrical Exp. 3. Detail of Vehicle Running & Maintenance Exp. 4. Detail in respect of Repair and Maintenance Building has been already submitted to you vide letter dated 11 September 2008 5. Sample copy of the Agreement for Private Wind Mill Generation of Tamilnadu Electricity Board with the Assessee. 6. Justification regarding Depreciation on land along with the cost of Wind Electric Generator. The plot of land is an integral part of Wind Electric Generator which is acquired and developed for the purpose of erection and installation of Wind Electric Generator. A very heavy nacelle with 3 Nos. 47 feet long blades are mounted on a 50 feet high iron tower which needs land to be dug deeply for its erection. Further, as per condition of the Tamilnadu Electricity Board, a wind mill is to be erected and located at least 235 meters away or seven times the diameter of rotor whichever is more from the existing Wind Mill so that the performance of either machine does not get affected. Besides this another very important feature of the land is its location. Without land of high velocity wind area the machine can not function properly to generate power. Land is therefore an integrated entity of a Wind Electric Generator and is a vital part of the project. Its contribution in generating power is equally important. It is in fact an item by which the business is carried on. Without it’s participation, as described above no power generation is possible.
  • H’onble Supreme Court and Various High Court in order to ascertain and reach to the conclusion wheather a building or a part of the building, roads, well etc should be considered as building or plant, had applied a test, whether the item under consideration is one by which business is carried on or it is used in carrying the business. In CIT V Coromandel Fertilizer Ltd. (1985) 156 ITR 283 (AP) roads constructed in the factory premises for transportation of essential material were considered as plant and not building, for the purpose of depreciation. Like wise following are the several cases, where building put under the test, were considered as plant in the following cases:- 1. Scientific Engg. House Pvt. Ltd. V CIT (1986) 157 ITR 86 (SC) 2. CIT V Taj Mahal Hotel (1971) 82 ITR 44 (SC) 3. CIT V Ispat Ltd. RG (1994) 210 ITR 1018 (Raj) 4. Santosh Enterprises V CIT (1993) 200 ITR 353 (Bombay) 5. CIT V Warner Hindustan Ltd. (1979) 117 ITR 15 (AP) Moreover, in the instant case the independent value of the plot of the land is negligible, since no construction or other activity is permissible with in the spacified area as per Tamilnadu Electricity Board rules. As such, the value of land erupts only when some Wind Electric Generator is installed. It is therefore clearly linked with the Wind Electric Generator , and as such composite value of Wind Electric Generator duly erected on land may please be considered for the purpose of depreciation. Apart from this and as per the debit note of the wind mill supplier, a substantial part of expenditure relates to the development of land, which is done to meet the required parameters for proper erection and commissioning of the Wind Electric Generators, so as to produce maximum power generator. The development of the land is therefore inter- related with the process of power generation. Thanking you Yours faithfully, for RRB Consultants & Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2008 17 December 2008 To The Joint Director of Income Tax, Transfer Pricing Officer- II(3), Room No. 312, 3rd Floor, Drum Shape Building, I.P. Estate, New Delhi Sir, Sub: Notice u/s 92CA(2) and 92D(3) of the Income Tax Act, 1961- Computation of Arm’s Length Price – A/Y 2006-07, regarding Kindly refer to your Notice bearing F. No. JDIT/TPO-II(3)/2008-09/98 dated 07.11.2008 on the captioned subject. The Company receives technical consultancy fee from VESTAS-DANISH WIND TECHNOLOGY, but for the relationship of Principal Agent for commission business, there is no otherwise relationship on capital account. However, as required by your goodself, we are enclosing herewith the following documents for your perusal. 1. Complete set of audited final accounts & auditor’s report for A/Y 2006-07 2. Copy of tax audit report 3. Copy of computation of total income 4. Copy of agreement with Vestas- Danish Wind Technology 5. Copy of Shareholding Pattern You are therefore requested to kindly drop the said proceedings. Thanking You Yours Faithfully, For RRB Consultants and Engineers Pvt. Ltd.
  • Authorised Signatory RRB/IT/2008 17 December 2008 To The Joint Director of Income Tax, Transfer Pricing Officer- II(3), Room No. 312, 3rd Floor, Drum Shape Building, I.P. Estate, New Delhi Sir, Sub: Notice u/s 92CA(2) and 92D(3) of the Income Tax Act, 1961- Computation of Arm’s Length Price – A/Y 2006-07, regarding Kindly refer to your Notice bearing F. No. JDIT/TPO-II(3)/2008-09/98 dated 07.11.2008 on the captioned subject. The Company receives technical consultancy fee from VESTAS-DANISH WIND TECHNOLOGY, but for the relationship of Principal Agent for commission business, there is no otherwise relationship on capital account, as per shareholding pattern of the assessee, annexed hereto. You are therefore requested to kindly drop the said proceedings. Thanking You Yours Faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • 13 January 2009 The Joint Director of Income Tax, Transfer Pricing Officer – 11(3), I.P. Estate, New Delhi Dear Sir, Subject: Notice under Section 92 CA (2) and 92 D (3) of the Income Tax Act, 1961 – AY 2006-07. As required by your goodself and further to our submission vide our letter dated 17 December 2008 mentioning, that for the relationship of Principal Agent for commission business, there is no otherwise relationship on Capital Account, we would like to draw your kind attention that none of the sub-clauses of clause 2 of Section 92 A is applicable in the instant case. As per the shareholding pattern of the assessee, already submitted, it is evident that the Principal Vestas Danish Wind Technology does not hold any shares of the assesssee Company. As such, sub clauses ( c) and (d) relating to holding of shares/voting rights also do not apply in the instant case. Sub-clauses (e) and (f) of the said section are also not applicable since no such constitution as mentioned therein exists in either Company. The assessee Company is deriving income on two accounts, i.e. Power Generation and commission, which it is earning on sale of Vestas Danish Wind Technology’s products in India. The assessee, as such is not involved in either manufacturing or processing of goods or articles or business dependent on the USE of know how, patents etc of the other enterprise, as mentioned in sub clause (g). The assessee is not using the know how of its principal by exercising any process to earn profit. It is simply earning commission on sale made by Vestas Danish Wind Technology through the assessee, which in any case does not include any manufacture/process activity based on the use of know how, patent, model, invention etc of the other enterprise.
  • Sub clause (h) to (m) are also not applicable in the said case. Without prejudice to the optimum rate of commission as availed by the assessee and what has been stated above the agreement duly approved by Reserve Bank of India was made between the assessee and Vestas Danish Wind Technology as many as 18 years back i.e. in 1990. The commission then determined @ 10% still continues to be the same, inspite of the fact, that the product which was in its infancy in 1990, had got considerable recognition in the market in 2006. Your goodself may appreciate that inspite of the fact that the agreement which was subject to be renewed annually the rate of commission agreed to between the parties as many as 18 years back did not reduce. Hence, the question of avoidance of tax in relation to Section 92 by any means does not arise. Thanking you Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorized Signatory
  • RRB/IT/2009 23 January 2009 The Joint Director of Income Tax, Transfer Pricing Officer – 11(3), I.P. Estate, New Delhi Dear Sir, Subject: Notice u/Sec 92 CA (2) and 92 D (3) of the Income Tax Act, 1961 – AY 2006-07 With prejudice to what has been stated in the letter dated 13 January 2009, we are enclosing herewith the share holding pattern of RRB Energy Ltd (Formerly known Vestas RRB India Ltd.) We also submit that neither the assessee nor Vestas RRB India Ltd. has any share holding in Vestas Denish Wind Technology Demark. As such, none of the entities is an associate enterprise with one another. Thanking You Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorized Signatory
  • RRB/IT/2009 23 January 2009 The Joint Director of Income Tax, Transfer Pricing Officer – 11(3), I.P. Estate, New Delhi Dear Sir, Subject: Notice u/Sec 92 CA (2) and 92 D (3) of the Income Tax Act, 1961 – AY 2006-07 With prejudice to what has been stated in the letter dated 13 January 2009, we are enclosing herewith the following documents as required by your goodself. 1. Letter from Vestas Danish Wind Technology Denmark confirming; a. That they have no share holding in RRB Consultants and Engineers Pvt. Ltd. New Delhi, and vice versa b. That they have no share holding in RRB Energy Ltd., New Delhi (formerly known Vestas RRB India Ltd.) and vice versa As such, none of the entities is an associate enterprise with one another. Thanking You Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 16 June 2009 The Assistant Commissioner of Income Tax, Circle-15(1), New Delhi Dear Sir, Subject: Notice No. ACIT/Circle-15(1)/200-10 dated 09.06.2009, regarding non compliance to notice u/s 142(1) of the I.T. Act- 1961 With reference to above, it is submitted that, we have not received any notice u/s 142(1) as envisaged in your above said notice, regarding filing of certain documents by 08.05.2009. In this connection, we may submit that the above said notice u/s 142(1) might not have been received by us because of the fact that in mentioning the address on the envelope, a mistake in mentioning the locality is done as is apparent form the envelope of this present notice also. On this notice, our address has been wrongly mentioned as R. K. Puram, which in fact is not so. We assume that the previous letter was not served upon us because of the said mistake (copy of the envelope enclosed). However, as required by your good self, we are furnishing herewith the following documents for your kind perusal. 1. Balance Sheet and Profit & Loss Account alongwith audit schedules and annexure prepared according to the Company’s Act for A/Y 2007-08 and A/y 2006-07 2. Audit Report in form 3CD along with necessary annexure for the A/y 2007-08 3. Form 29B and 10CCB Thanking You Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 3 July 2009 The Assistant Commissioner of Income Tax, Circle-15(1), New Delhi Dear Sir, Subject: Assessment proceedings in the case of M/s RRB Consultants and Engineers Pvt. Ltd. For the A/Y 2007-08 As required, we are submitting herewith the computation of taxable income for the Assessment Year 2007-08, for your kind perusal. Thanking You Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 5 August 2009 The Joint Director of Income Tax, Transfer Pricing Officer- II(3), Room No. 312, 3rd Floor, Drum Shape Building, I.P. Estate, New Delhi Dear Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment Year 2006-07 With reference to above, and as required by your goodself, we wish to submit here as under: 1) That the assessee is a service providing company, which fetches consultancy to its principal known as Danish Wind Technology A/s Denmark against 10% commission on sales made by them in India. The copy of agreement made between the assessee and it’s above mentioned principal has already been furnished for your perusal. 2) That the assessee has earned a sum of Rs. 154103760/- as commission in sales during the year, out of the total turnover of Rs. 170016576/-, The total turnover includes Power Generation income of Rs. 7895679/- and Interest on FDR amounting to Rs. 7888331/-, which is however not considered for the purpose of calculating operating and net profit. 3) Like wise Direct Expenses incurred on insurance and maintenance of producing power generation income, amounting to Rs. 601780/- are also deducted from total Direct and other over heads amounting to Rs. 32897523/- to work out operating and net profit earned by the assessee. The total net expenses after deducting expenses relating to power generation income come to Rs. 32295743/- which are detailed here under: Salaries & Wages (including provision for Gratuity Rs. 43490/-, last Year Rs. 33108/-) 944686.00 Directors’ Remuneration 3897944.00 Insurance (Includes insurance on WEGs Rs. 169530/-, Last Year Rs. 167251/-) 469089.00 Business Promotion Expenses 2928139.00 Festival Expenses 1081072.00 Repair and Maintenance - Building 3729887.00 - Furniture 397241.00 - Electricals 852907.00 - Generators 455355.00 - Vehicles 1371413.00 - Others 693064.00 Telephone, Fax & Courier Charges 629513.00 Rent, Rates & Taxes 245093.00 Services & Professional Charges 1208070.00 Conveyance 734092.00 Contd….2/-
  • (2) Office Maintenance 2698969.00 Safety, Security & Sanitation 1595813.00 Staff Welfare 751610.00 Uniform & Dresses 711971.00 Water & Electricity Charges 849060.00 Travelling Exp.( including Director’s traveling exp Rs. 4859056, last Year Rs. 4851842/-) 5505526.00 Miscellaneous Exp (Comprising Diff. heads of Accounts 1147011.00 --------------- Total Rs. 32897523.00 -------------- Less: Direct Exp. Incurred against power Generation income 601780.00 Expenses Incurred against commission income 32295743.00 ======== 4) The operating profit as such comes to Rs. 121808017/- which is worked out as under: Commission Earned 154103760.00 Less: Expenses incurred there on 32295743.00 ----------------- Operating Profit 121808017.00 ----------------- Thus, operating profit/ commission income ratio comes to 79.04% 5) The net profit finally comes to Rs. 109805562/- after deducting a sum of Rs. 12002455/- on account of depreciation. As such, net profit/commission income ratio is worked out to be 71.25% 6) With out prejudice to our earlier submission, we would like to draw your kind attention towards the fact that operating ratio of almost 80% is quite satisfactory, convincing and reasonable in the case of a service providing company of this nature, which is engaged not only in selling a capital product, but also introducing a concept which is absolutely new to Indian conditions. Thanking you Yours faithfully. For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 8 September 2009 The Addl. Commissioner of Income Tax, Range 15, C.R. Building, New Delhi – 110 002 Respected Sir, Sub: Notices u/sec 142(1) and u/sec 143(2) dated 03.09.2009 of the Income Tax Act, in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Ass. Yr. 2007- 08 With reference to above, the said notices requiring the presence of the assessee on 08.09.2009 were served upon us on 07.09.2009 only. The Assessee hereby submits that the counsel of the assessee is out of station in connection to audit pre occupation. Hence, it is requested that the said case may kindly be adjourned to the first week of October 2009 as to suit to your kind convenience. In the meanwhile the assessee shall undertake to compile the details as required by you. Thanking you Yours faithfully, for RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 1 October 2009 The Assistant Commissioner of Income Tax, Range-15, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2007-08 With reference to above, we wish to submit here as under:- 1. As regards to Income from consultancy fee, we wish to submit that we are obliged to provide different type of technical informations and services to Vestas Denish Wing Technology relating to the field of wind energy as more elaborately discussed in paras 2.2 and 2.3 along with other informations as sought by your goodself in the Memo of Understanding, copy of which is enclosed herewith for your kind perusal. 2. Details of Wind Electric Generators (power generating units) is enclosed herewith. 3. Depreciation Chart as per Income Tax Act is enclosed herewith. 4. Details of Bank accounts in the suggested format are enclosed herewith. 5. Details of expenses as required by your goodself:- 1. Salaries and Wages 2. Directors Remuneration 3. Traveling Expenses 4. Repair and Maintenance of Generator Since, remaining details are under preparation, they shall be furnished shortly. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 9 October 2009 The Asstt. Commissioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Sir, Sub: Penalty proceedings u/s 271(1)(b) in respect of A.Y. 2006-07 With reference to the above said notice, regarding non compliance of assessment proceedings, it is submitted, that the assessee had received notices u/sec 143(2) and 142(1) dated 8.9.2009 alongwith a questionnaire from the office of Addl. Commissioner of Income Tax, Range 15, New Delhi to appear before him on 1.10.2009. However, the said notices were followed by a clarificatory letter dated 11.09.2009, mentioning that the said notices u/sec 142(1) and 143(2) alongwith the questionnaire were meant for A.Y. 2007-08 and should be considered only for that Ass. Year. Further it was stated in the said letter that the Ass. Year 2006-07 was inadvertently mentioned and needs to be rectified, replaced and read as A. Y. 2007-08. As such, no notice has been received from your good office for assessment proceedings of Ass. Yr. 2006-07, it is submitted that the said proceedings may please be dropped, since no penal provisions u/sec 271(1)(b) are attracted. Thanking you For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory Enclosures : 1. Copy of Notices dated 8.9.2009 u/sec 142(1) and 143(2) alongwith the Questionnaire from Addl. Commissioner of Income Tax, Range 15. 2. Copy of the clarifying letter dated 11.09.2009 from Addl. Commissioner of Income Tax, Range 15.
  • RRB/IT/2009 14 October 2009 The Asstt. Commisioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2006-07 With reference to above, we wish to submit here as under:- 1. As regards to Income from consultancy fee, we wish to submit that we are obliged to provide different type of technical informations and services to Vestas Denish Wing Technology relating to the field of wind energy as more elaborately discussed in paras 2.2 and 2.3 along with other informations as sought by your goodself in the Memo of Understanding, copy of which is enclosed herewith for your kind perusal. 2. Details of Power Generation Income is enclosed herewith. 3. Depreciation Chart as per Income Tax Act is enclosed herewith. 4. Details of Bank accounts in the suggested formats are enclosed herewith. 5. Details of expenses as required by your goodself:- 1. Salaries and Wages. 2. Directors Remuneration. 3. Repair and Maintenance of Office Equipments. 4. Repair and Maintenance of Generator. 5. Repair and Maintenance of Vehicles. 6. Service & Professional Charges. Since, remaining details are under preparation, they shall be furnished shortly. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 20 October 2009 The Asstt. Commisioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2006-07 With reference to above, we are furnishing herewith the following details for your perusal:- 1. Repair and Maintenance Furniture. 2. Repair and Maintenance Electrical. 3. Repair and Maintenance Buildings. 4. Break up of Miscellaneous Expenses. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 21 October 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2007-08 With reference to above, the assessee is submitting herewith following details for your kind perusal:- 1. Break up of Debit Entries of Bank Accounts along with necessary reconciliations. 2. Details of Power Generation Income alongwith the copies of the bills raised by the assessee. 3. Detail of Repair & maintenance- Office Equipments. 4. Details of Repair & Maintenance- Furniture. 5. Detail of Business Promotion Exp. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 29 October 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2007-08 The assesses is submitting herewith the following details for your kind perusal:- 1. Break up of “other Debit Entries”, as per summary of the Debit Entries with Bank Accounts in our books, along with details of the credit impact there of and relevant ledger accounts. 2. Copy of ledger Account of FDR interest received in evidence of receipt of interest amounting to Rs. 595800/- as per above summary . 3. Copy of FDR Canara Bank NFC A/c in evidence of encashment of FDRs amounting to Rs. 13396819/- and copy of FDR Andhra Bank in evidence of encashment of FDR amounting to Rs. 50514567/- as per above summary. 4. Copies of Bank Statements along with their reconciliation statements as at 31.03.2006 & 31.03.2007. 5. Details of the following expenses:- (i) Vehicle running and maintenance expenses. (ii) Building Repair and maintenance expenses. (iii) Electrical Repair and maintenance expenses. (iv) Service and professional charges. (v) Break up of miscellaneous expenses. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 9 November 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2006-07 The assesses is hereby submitting the following details for your kind perusal:- 1. Break up of “other Debit Entries”, as per summary of the Debit Entries with Bank Accounts in our books, along with details of the credit impact there of. 2. Monthwise detail of Power Generation Income alongwith copies of bills raised upon Tamilnadu Electricity Board. 3. Copies of following Bank Statements along with their reconciliation statements as at 31.03.2005 & 31.03.2006. a) Canara Bank, Maharani Bagh, New Delhi. b) Canara Bank, New Friends Colony, New Delhi. c) Andhra Bank, Green Park, New Delhi. 4. Details of the following expenses:- (i) Travelling expenses. (ii) Repair & Maintenance of Electricals. (vi) Repair & Maintenace of Furniture. (vii) Repair & Maintenance of Building. Further, it is submitted that our counsel Sh. F. A. Shamsi has been suffering from back pain and fever. It is therefore requested that the said case may kindly be adjourned for a week’s time i.e. 17 the November 2009, as to suit to your convenience. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 9 November 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2007-08 The Assessee hereby submits that our counsel Sh. F. A. Shamsi has been suffering from severe back pain and fever. It is therefore requested that the said case may kindly be adjourned to 17.11.2009, as to suit to your convenience. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 17 November 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2006-07 With reference to above, we are submitting herewith the following details:- 1. Detail of Business Promotion Expenses. 2. Break Up of Misc. Expenses. 3. Detail of Security, Safety & Sanitation.. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 17 November 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment Year 2007-08 With reference to above, we are submitting herewith the following details:- 1. Detail of Security, Safety & Sanitation.. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • TO WHOM IT MAY CONCERN This is to certify that we have remitted a sum of DKK 21721127 during the financial year 2005-06 to RRB Consultants and Engineers Pvt. Ltd., New Delhi, being technical consultancy fee of 10% in proportion to the payment made to us in the above said financial year, by our customers in India, on account of sale of our products made to them. for Vestas – Danish Wind Technology A/S
  • TO WHOM IT MAY CONCERN This is to certify that we have remitted a sum of DKK 29504593 during the financial year 2006-07 to RRB Consultants and Engineers Pvt. Ltd., New Delhi, being technical consultancy fee of 10% in proportion to the payment made to us in the above said financial year, by our customers in India, on account of sale of our products made to them. for Vestas – Danish Wind Technology A/S
  • RRB/IT/2009 10 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Sub: Assessment proceedings in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment year 2007-08 With reference to your notice F No.AddlCIT/Range-15/2009-10/519 dated 27.11.2009, the assessee submits here as under: 1. In response to question No.1 the assessee submits that it is deriving income by carrying on two activities of the business. One of them is providing consultancy in renewable and non-conventional source of wind energy and thus earning Commission on sale of Wind Electric Generator (WEGs) made in India by its foreign principal, which is the main source of the assessee’s business. The other source is income from power generation which is earned from the WEGs installed by the assessee as to demonstrate the features of the new concept of Wind Energy in India. The second source is therefore incidental to the first one i.e. providing consultancy which in any case is the main source of income. However, like business, incidental business is also very well covered in the definition of Business, as narrated in Section 2 (13) of the Income Tax Act, which reads that “business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. In Lakshmi Narayan Ram Gopal V Govt of Hyderabad (1954) 25 ITR 449 (SC) the Supreme Court pointed out that the activities which constitute carrying on of business need not necessarily consist of activities by way or trade, commerce or manufacture or activities in the exercise of a profession or vocation. They definition of business being an inclusive definition and not being exhaustive, is indicative of extension and expansion and not restriction. The scope of business in view of Supreme Courts verdict is extremely wide and not restricted one, and should be taken in that spirit only. As per Delhi Value Added Tax Act 2004 also, Business as per section 2(1)(d) of the Delhi Value Added Tax Act, 2004 includes trace, commerce, manufacture, adventure or concern in nature of trade, commerce or manufacture, activities incidental or ancillary to trade, commerce, manufacture, adventure or concern, occasional transaction and services prescribed regardless of their volume, frequency, continuity/regularity and profit motive. Contd….2/-
  • (2) Sub-clause(iv) of section 2(1)(d) treats transactions in connection with or incidental to or ancillary to trade, commerce, manufacture, adventure or concern as referred to in clauses (i) to (ii) of section 2(1)(d) as business. Hon’ble Supreme Court while giving verdict in State of Tamil Nadu V Shakti Eslates (1989)73 STC 209 (SC) has clarified that Incidental transactions are not primary or main activities but are incident of main activities. These facilitate attainment of main objectives. For example, cutting unwanted tress or natural growth on forestland acquired for plantation and selling them as timber, firewood, etc., is incidental to main business. Further, the assessee relies upon the order of Hon’ble ITAT in it’s case for Assessment year 2000-01, where in on page 7 of the said order, the Power Generation activity has been considered as an incidental business activity, which is however as good as business in view of the explanations made above. Since the Power Generation income is the outcome of an incidental business which is well covered in the definition of Business, the claim Under Section 80-1A is completely in order. The Section by itself no where debars the income arising from incidental business outside the purview of eligible business. Setting up a new Wind electric generator in any part of India for the purpose of power generation as per Section 80-1A(4) (iv) fully meets with the intention of the law makers to promote investment in Power Projects as to meet with the growing demand of electricity in the national interest. Setting up WEGs is also one of the main objects of the company as is evident from clause No 5 of the Main objects of Memorandum and Articles of Association already furnished to you. Without prejudice to what has been stated above, as there is no change in the nature of business in the year under consideration from it’s inception the rule of consistency does not call for a different treatment as given in the earlier years. Regarding question No.2 as raised by your goodself, it is submitted that the assessee in the first instance relies upon the order of the Hon’ble ITAT regarding deduction of the quantum of claim Under Section 80-1A. The Hon’ble ITAT has agreed with the assessee’s version that the direct expenses relating to WEGs are deductible from the Consultancy income. However, without prejudice to the above stand as taken by the assessee and upheld by the Hon’ble ITAT, the interpretation of clause (5) of Section 80-1A, stating eligible business, being the only source of income for computation of quantum of deduction is all about the national loss which is to be set off with the income of the eligible business in the succeeding years even if the loss in the earlier year is already set off with the income of non eligible business. The interpretation however does not apply to the deduction of expenses of the current year from the income of eligible business as was misunderstood by the A.O. in assessment year 2000-01. The assessee hereby furnishes the Assessment order and CIT order for assessment year 2000-01 on the said issue for your perusal, where in the learned CIT (Appeals) has agreed that clause 5 of Section 80-1A is not applicable as interpreted by the A.O. Contd….3/-
  • (3) Regarding query no.3 raised about the special rate of depreciation on WEGs, it is submitted that the depreciation allowance Under Section 32 is a statutory allowance, not confined expressly to diminution in Value of the asset by reason of Wear & Tear. There are certain conditions for allowance of depreciation which are narrated as under: (a) The allowance is granted only in respect of certain specified assets; (b) The assets should be owned by the assessee who claims the depreciation; (c) The assets should be used for the purpose of a business or profession carried on by the assessee; (d) The depreciation is computed on the basis of the actual cost or the written down value of the asset as defined in section 43; (e) The assets should be used during the relevant previous year. The assessee’s submission in any case is, that because of the nature of it’s main business, the assessee is entitled to claim expenses relating to WEG from it’s main/composite income. However, without prejudice to above, the depreciation on WEGs is a statutory allowance which is granted to the said asset as per Appendix I, Rule5, read with to Section 32 of the Income Tax Act. Once the WEGs are put to use they become entitle for a statutory rate of 80% depreciation thereon. However there is no provision like special and general rate of depreciation on WEGs, which is mentioned as one of the several items which are entitled for 80% depreciation in the said Appendix. Hope the assessee clarifies the queries to the satisfaction of your good self. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 14 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Sub: Penalty proceedings Under Section 271 BA of the IT Act 1961- Assessment Year 2007-08 With reference to above, the assessee here by submits that the notice F No. AddlCIT /Rage-15/2009-10/540 dated 9 December 2009 has been received by the assessee on Saturday evening i.e. 12 December 2009 only as to appear before your goodself on 14 December 2009. It is submitted that the assessee may please be provided sufficient time to submit it’s reply. The assessee shall be grateful if the said case is adjourned to 22nd December 2009, as to suit to your kind convenience. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 17 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Subject: Penalty proceedings Under Section 271 BA for Assessment Year 2007-08 With reference to your notice F No. Addl.CIT/Range-15/2009-10/540 dated 9-12-2009, the assesses submits here as under:- 1. That as required by Section 92 E of the Income Tax Act, the report in Form No. 3CEB is to be furnished, when the assessee has entered into an International Transaction during a previous year. 2. “International Transaction” as per Section 92 B (1) means a transaction between two or more associated enterprises. In case it is not between two associated enterprises, then as per section 92 B (2), it shall be deemed an “International Transaction” if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between such other person and the associated enterprise. 3. The assessee company receives commission from Vestas Danish Wind Technology, but for the relationship of Principal Agent, and as such there is no otherwise relationship on Capital Account. The permission to act as an agent and receive commission was granted by the Joint Controller of Reserve Bank of India, New Delhi, on 15.10.90. The agreement to this effect between RRB Consultants and Engineers Pvt. Ltd. and Vestas Danish Wind was however, not in the capacity of associated enterprises at any given point of time, as explained below in clause no. 4. Neither there existed any prior agreement under the conditions as mentioned in Section 92 B (2) of the Income Tax Act. 4. The assessee Company and Vestas Danish Wind Denmark had never held any share holding/ voting rights in one another at any point of time whatsoever. A certificate of Vestas Danish Wind to this effect is enclosed herewith for your perusal. 5. That there are no conditionalities as stipulated in section 92 B which find that the assessee relationship is covered as associated enterprises with Vestas Danish Wind Denmark, thereby suggesting the transaction between assesseee and Vestas Danish Wind outside the ambit of “International Transaction”, as defined in Section 92 B.
  • Contd….2/ - (2) 6. Thus under such circumstances, the assessee is not obliged to furnish report under section 92 E of the Income Tax Act. 7. That without prejudice to what has been stated above, and other relevant provisions under Income Tax Act, which do not call for furnishing report in form 3CEB, the assessee submits that in view of the explanations made above, the assessee has bonafidely believed that it is not required to file the report in form No. 3CEB. The assessee had no willful intention and had acted without negligence or inaction or want of bonafides in accordance with requirement of law and professional advice on the subject. 8. That as per Section 273 B of the Income Tax Act, no penalty Under Section 271 BA is imposable on the assessee for any failure, if it has occurred for some ‘Reasonable Cause’. 9. That in the instant case, the assessee has acted with due diligence, and honest belief founded upon reasonable grounds of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man to come to the conclusion that the same was right thing to do. Conclusively, this action of the assessee is no departure from the term “Reasonable Cause” as defined in Section 273 B of the Income Tax Act and as interpreted by the Apex and Hon’ble High Courts in the following cases:- (i) Woodward Governor India Pvt. Ltd. V.CIT(2001) 118 Taxman 433/ (2002) 253 ITR 745 ( Delhi). (ii) Azadi Bachao Andolan V. Union of India (2001) 116 Taxman 249/252 ITR 471 (Delhi). (iii) Concord of India Insurance Co. Ltd. V. Smt. Nirmala Devi (1979) 118 -ITR 507(SC). (iv) Subhkaran & Sons V.N.A Kazi ITO (1984) 19 Taxman 250/(1985) 152-ITR 231 (Bombay). (v) Lachman Chaturbhey Java V.R.G. Nitsure (1981) of Taxman 198/132 ITR 631 (Bomabay).
  • Contd….3/- (3) In view of the explanations made above, it is prayed that the penal proceeding u/sec 271 BA may please be dropped. Thanking you Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory Enclosures:- 1. Copy of Agreement between assessee and Vestas Danish Wind Technology- Denmark. 2. RBI Permission of the Agreement. 3. Certificate of Vestas Danish Wind Technology-Denmark.
  • RRB/IT/2009 21 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Sub: Assessment proceedings in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment year 2006-07 With reference to your notice F No.AddlCIT/Range-15/2009-10/563 dated 15.12.2009, the assessee submits here as under: 1. In response to question No.1 the assessee submits that it is deriving income by carrying on two activities of the business. One of them is providing consultancy in renewable and non-conventional source of wind energy and thus earning Commission on sale of Wind Electric Generator (WEGs) made in India by its foreign principal, which is the main source of the assessee’s business. The other source is income from power generation which is earned from the WEGs installed by the assessee as to demonstrate the features of the new concept of Wind Energy in India. The second source is therefore incidental to the first one i.e. providing consultancy which in any case is the main source of income. However, like business, incidental business is also very well covered in the definition of Business, as narrated in Section 2 (13) of the Income Tax Act, which reads that “business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. In Lakshmi Narayan Ram Gopal V Govt of Hyderabad (1954) 25 ITR 449 (SC) the Supreme Court pointed out that the activities which constitute carrying on of business need not necessarily consist of activities by way or trade, commerce or manufacture or activities in the exercise of a profession or vocation. They definition of business being an inclusive definition and not being exhaustive, is indicative of extension and expansion and not restriction. The scope of business in view of Supreme Courts verdict is extremely wide and not restricted one, and should be taken in that spirit only. As per Delhi Value Added Tax Act 2004 also, Business as per section 2(1)(d) of the Delhi Value Added Tax Act, 2004 includes trace, commerce, manufacture, adventure or concern in nature of trade, commerce or manufacture, activities incidental or ancillary to trade, commerce, manufacture, adventure or concern, occasional transaction and services prescribed regardless of their volume, frequency, continuity/regularity and profit motive. contd….2/-
  • (2) Sub-clause(iv) of section 2(1)(d) treats transactions in connection with or incidental to or ancillary to trade, commerce, manufacture, adventure or concern as referred to in clauses (i) to (ii) of section 2(1)(d) as business. Hon’ble Supreme Court while giving verdict in State of Tamil Nadu V Shakti Eslates (1989)73 STC 209 (SC) has clarified that Incidental transactions are not primary or main activities but are incident of main activities. These facilitate attainment of main objectives. For example, cutting unwanted tress or natural growth on forestland acquired for plantation and selling them as timber, firewood, etc., is incidental to main business. Further, the assessee relies upon the order of Hon’ble ITAT in it’s case for Assessment year 2000-01, where in on page 7 of the said order, the Power Generation activity has been considered as an incidental business activity, which is however as good as business in view of the explanations made above. Since the Power Generation income is the outcome of an incidental business which is well covered in the definition of Business, the claim Under Section 80-1A is completely in order. The Section by itself no where debars the income arising from incidental business outside the purview of eligible business. Setting up a new Wind electric generator in any part of India for the purpose of power generation as per Section 80-1A(4) (iv) fully meets with the intention of the law makers to promote investment in Power Projects as to meet with the growing demand of electricity in the national interest. Setting up WEGs is also one of the main objects of the company as is evident from clause No 5 of the Main objects of Memorandum and Articles of Association already furnished to you. Without prejudice to what has been stated above, as there is no change in the nature of business in the year under consideration from it’s inception the rule of consistency does not call for a different treatment as given in the earlier years. Regarding question No.2 as raised by your goodself, it is submitted that the assessee in the first instance relies upon the order of the Hon’ble ITAT regarding deduction of the quantum of claim Under Section 80-1A. The Hon’ble ITAT has agreed with the assessee’s version that the direct expenses relating to WEGs are deductible from the Consultancy income. However, without prejudice to the above stand as taken by the assessee and upheld by the Hon’ble ITAT, the interpretation of clause (5) of Section 80-1A, stating eligible business, being the only source of income for computation of quantum of deduction is all about the national loss which is to be set off with the income of the eligible business in the succeeding years even if the loss in the earlier year is already set off with the income of non eligible business. The interpretation however does not apply to the deduction of expenses of the current year from the income of eligible business as was misunderstood by the A.O. in assessment year 2000-01. The assessee hereby furnishes
  • contd….3/-
  • (3) furnishes the Assessment order and CIT order for assessment year 2000-01 on the said issue for your perusal, where in the learned CIT (Appeals) has agreed that clause 5 of Section 80-1A is not applicable as interpreted by the A.O. Regarding query no.3 raised about the special rate of depreciation on WEGs, it is submitted that the depreciation allowance Under Section 32 is a statutory allowance, not confined expressly to diminution in Value of the asset by reason of Wear & Tear. There are certain conditions for allowance of depreciation which are narrated as under: (a) The allowance is granted only in respect of certain specified assets; (b) The assets should be owned by the assessee who claims the depreciation; (c) The assets should be used for the purpose of a business or profession carried on by the assessee; (d) The depreciation is computed on the basis of the actual cost or the written down value of the asset as defined in section 43; (e) The assets should be used during the relevant previous year. The assessee’s submission in any case is, that because of the nature of it’s main business, the assessee is entitled to claim expenses relating to WEG from it’s main/composite income. However, without prejudice to above, the depreciation on WEGs is a statutory allowance which is granted to the said asset as per Appendix I, Rule5, read with to Section 32 of the Income Tax Act. Once the WEGs are put to use they become entitle for a statutory rate of 80% depreciation thereon. However there is no provision like special and general rate of depreciation on WEGs, which is mentioned as one of the several items which are entitled for 80% depreciation in the said Appendix. Hope the assessee clarifies the queries to the satisfaction of your good self. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 21 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Sub: proceedings in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment year 2006-07 With reference to your notice No.569 dated 17.12.2009, it is submitted here as under: 1. Depreciation on Apple i Pod and speakers and sound sticks Apple i Pod is an Audio cum Video device used by the assessee as a hard disc to down load Corporate Video from the Computers, as to carry and make presentation of the Company’s product before the clients. Thus it is used as a storage device used for Marketing purpose as mentioned above. It is however not a mobile phone as pointed out in above referred notice. Like wise, Sound Speakers etc as pointed out by your goodself are associated as integral part of the Computers hard disk. They are used to listen to the sound effect of the data which is loaded in the Computer System. Since the Speakers are associated with the Computers, which are now a days available, in built in their latest version, the depreciation is correctly charged on the same as applicable on Computers. However, they can not be generalized for a depreciation rate of 15% as available on plant & Machinery. 2. Regarding dividend earned amounting to Rs. 27670/- it is submitted that the same has been received by us on our old investment of Rs. 10,69,512/- made in equity shares of Mohan Meakin Ltd., as shown in schedule -6 of the Balance Sheet. The assessee has not incurred any expenditure on account of dividend for the purpose of Section 14A. Without prejudice to the fact that the investment in shares on which dividend is received is quite old, the provisions of clause (2) is applicable w.e.f. 1.4.2007 only. Contd….2/-
  • (2) 3. Regarding claim of power generation income u/section 80-IA, it is submitted that no deduction has been made against 5 machines which were commissioned on 31st March 1995 and 30th September 1995 vide HTSC No. 125/226 and 166/271, covering 3 and 2 Nos. of machines respectively. The first year of generation of these machines was Financial Year 1995-96 i.e. Ass. Yr 1996-97, resulting into completion of 10 consecutive assessment years in Ass. Yr. 2005-06. The correct details of Wind Electric Generators alongwith generation details is enclosed herewith. 4. The detail of building repairs account have already been furnished vide our letter dated 9 November 2009. 5. Justification regarding Depreciation on land along with the cost of Wind Electric Generator. The plot of land is an integral part of Wind Electric Generator which is acquired and developed for the purpose of erection and installation of Wind Electric Generator. A very heavy nacelle with 3 Nos. of 47 feet long blades each are mounted on a 50 feet high iron tower which needs land to be dug deeply for its erection. Further, as per condition of the Tamilnadu Electricity Board, a wind mill is to be erected and located at least 235 meters away or seven times the diameter of rotor whichever is more from the existing Wind Mill so that the performance of either machine does not get affected. Besides this another very important feature of the land is its location. Without land of high velocity wind area the machine can not function properly to generate power. Land is therefore an integrated entity of a Wind Electric Generator without which it is value less. As such, it has no alternative use and value. It is therefore, a vital part of the project. Its contribution in generating power is equally important. It is in fact an item by which the business is carried on. Without it’s participation, as described above no power generation is possible. H’onble Supreme Court and Various High Court in order to ascertain and reach to the conclusion whether a building or a part of the building, roads, well etc should be considered as building or plant, had applied a test, whether the item under consideration is one by which business is carried on or it is used in carrying the business. In CIT V Coromandel Fertilizer Ltd. (1985) 156 ITR 283 (AP) roads constructed in the factory premises for transportation of essential material were considered as plant and not building, for the purpose of depreciation. Like wise following are the several cases, where building put under the test, were considered as plant in the following cases:- 1. Scientific Engg. House Pvt. Ltd. V CIT (1986) 157 ITR 86 (SC) 2. CIT V Taj Mahal Hotel (1971) 82 ITR 44 (SC) 3. CIT V Ispat Ltd. RG (1994) 210 ITR 1018 (Raj) 4. Santosh Enterprises V CIT (1993) 200 ITR 353 (Bombay) 5. CIT V Warner Hindustan Ltd. (1979) 117 ITR 15 (AP)
  • Contd….3/- (3) Your goodself may appreciate, that the piece of land in depth of which, iron tower is planted and the machine is mounted, acts like an item by which business of power generation is carried on. The ratio of the above referred cases is fully applicable in the assessee’s case. Moreover, in the instant case the independent value of the plot of the land is negligible, since no construction or other activity is permissible with in the spacified area as per Tamilnadu Electricity Board rules. As such, the value of land erupts only when some Wind Electric Generator is installed. It is therefore clearly linked with the Wind Electric Generator, and as such composite value of Wind Electric Generator duly erected on land may please be considered for the purpose of depreciation. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory Enclosure:- 1. Details of Wind Electric Generators 2. Statement of Income earned from power generation
  • RRB/IT/2009 21 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Sub: Assessment for Assessment Year 2008-09 vide notice Under Section 142(1) of the Income Tax Act With reference to your notice No.564 dated 16.12.2008 on the above cited subjected. As required by your goodself we are enclosing herewith the hard copy of the return filed for Assessment year 2006-07. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2009 26 December 2009 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Sub: Assessment proceedings in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment year 2007-08 in respect of Fringe Benefits With reference to your notice no.547 dated 11.12.2009 on the above cited subject, the assessee is hereby furnishing the Reconciliation Statement of expenses as shown in P&L A/C with Annexure-II, as filed by the assessee. Further, the assessessee submits that no FBT is paid on the following expenses as shown in P&L A/C for the reasons mentioned below:- 1. Staff Welfare Rs. 855538/- These expenses pertain to payment for food or beverages provided by the assessee to its employees at its work place and offices, and as such are not covered under FBT. 2. Office maintenance Expenses None of the abovesaid expenditure is incurred for the purpose of employees welfare. Since, these expenses do not provide any direct facility or reimbursement to any employee and are of routine business nature only, these expenses are not covered under FBT. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 11 January 2010 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Subject: Penalty Proceedings U/Sec. 271 (1) (C) in respect of Assessment Year 2006-07 With reference to your notice 14/62 dated 31 December 2009 on the above cited subject, the assessee submits that above said proceedings may please be adjourned Sine die, since the assessee is moving an appeal before C.I.T. Appeals- XVIII, New Delhi against the Order made U/Sec. 143(3) for Assessment Year 2006-07. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 11 January 2010 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Subject: Issuance of Challan of Rs. 1000/- being fee for the appeal to be filed before C.I.T. Apeal XVIII, New Delhi. With reference to above, it is submitted that the assessee is moving as appeal before the C.I.T. Appleals- XVIII, New Delhi against the order of Assessment made U/Sec. 143(3) for Assessment Year 2006-07. It is Requested that a challan of Rs. 1000/- being the requisite fee for filing the appeal may please be issued to the Assessee. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 22 January 2010 The Addl. Director of Income Tax, Transfer Pricing Officer-II(3), Room No. 311, Drum Shape Building, I. P. Estate, New Delhi Sub: Notice u/s 92CA (2) and 92D (3) of Income Tax Act, 1961, in the case of RRB Consultants and Engineers Pvt. Ltd. for Assessment year 2007-08 Dear Sir, With reference to above, it is submitted that the counsel of the assessee has proceeded out of station and shall not be available on the above said date of hearing. It is therefore prayed that the case may kindly be adjourned to 9 February 2010 as to suit to your kind convenience. Thanking you, Yours faithfully, for RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 9 February 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), Room No. 311, 3rd Floor, Drum Shaped Building, I.P. Estate, New Delhi Dear Sir, Sub: Information in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment Year 2007-08 vide your letter No. Addl.DIT/TPO-II(3)/2009- 10/124 dated 22.12.2009 With reference to above, and as required by your goodself, we wish to submit here as under: 1. That the assessee is a service providing company, which fetches consultancy to its principal known as Vestas Danish Wind Technology A/s Denmark against 10% commission on sales made by them in India. 2. The Company thus receives technical consultancy fee from VESTAS-DANISH WIND TECHNOLOGY, but for the relationship of Principal Agent for commission business, there is no otherwise relationship on capital account. Besides, shareholding pattern of the assessee, a certificate from Vestas Danish Wind Technology Denmark, That neither they nor the assessee has ever held any share holding/ voting rights in between them, is hereby produced for your perusal. Since, there does not exist any relationship of associated enterprises between the assessee and it’s Danish principal, no provision under this particular chepter are applicable upon the assessee. However, as required by your goodself, we are enclosing herewith the following documents for your perusal:- 1. Complete set of audited final accounts & auditor’s report for A/Y 2007-08. 2. Copy of tax audit report. 3. Copy of computation of total income. 4. Copy of agreement with Vestas- Danish Wind Technology. 5. Copy of Shareholding Pattern. 6. Copy of Transfer Pricing Officer’s order for the Assessment Year 2006-07. 7. Copy of Assessment Order for the Assessment Year 2006-07. 8. Copy of Ledger Account of Consultancy fee income. Contd….2/-
  • (2) 3. As required by your goodself vide para ‘r’ of the abovesaid letter, it is submitted that the assessee has earned a sum of Rs. 228996884/- as commission on sales during the year, out of the total turnover of Rs. 266913817/-, The total turnover includes Power Generation income of Rs. 23424849/- and Interest on FDR amounting to Rs. 14229663/-, which is however excluded for the purpose of calculating operating and net profit. 4. Like wise Direct Expenses incurred on insurance and maintenance of producing power generation income, amounting to Rs. 168067/- are also deducted from total Direct and other over heads amounting to Rs. 35180521/- to work out operating and net profit earned by the assessee. The total net expenses after deducting expenses relating to power generation income come to Rs. 35012454/- which are detailed here under: Salaries & Wages (including provision for Gratuity Rs. 2315/-, last Year Rs. 43490/-) 1860252.00 Directors’ Remuneration 3891446.00 Insurance (Includes insurance on WEGs Rs. 168067/-, Last Year Rs. 169530/-) 713783.00 Business Promotion Expenses 2637780.00 Festival Expenses 2359114.00 Repair and Maintenance - Building 2058381.00 - Furniture 1141207.00 - Electricals 1533871.00 - Generators 409197.00 - Vehicles 2349636.00 - Others 238352.00 Telephone, Fax & Courier Charges 553259.00 Rent, Rates & Taxes 207951.00 Services & Professional Charges 343266.00 Conveyance 593013.00 Office Maintenance 3713222.00 Safety, Security & Sanitation 2331911.00 Staff Welfare 855538.00 Uniform & Dresses 739175.00 Water & Electricity Charges 786030.00 Travelling Exp.( including Director’s traveling exp Rs. 4859056, last Year Rs. 4851842/-) 4346491.00 Miscellaneous Exp (Comprising Diff. heads of Accounts 1517646.00 --------------- Total Rs. 35180521.00 --------------
  • Contd….3/-
  • (3) Less: Direct Exp. Incurred against power Generation income 168067.00_ Total Expenses Incurred against commission income 35012454.00 ========= 5. The operating profit as such comes to Rs. 193984430/- which is worked out as under: Commission Earned 228996884.00 Less: Expenses incurred there on 35012454.00 ----------------- Operating Profit 193984430.00 ----------------- Thus, operating profit ratio on commission income comes to 84.71% 6. The net profit finally comes to Rs. 166563392/- after deducting a sum of Rs. 27421038/- on account of depreciation from operating profit amounting to Rs. 193984430/-. As such, net profit/commission income ratio is worked out at 72.74% 7. With out prejudice to our submission made in para 2 of this letter, we would like to draw your kind attention towards the fact that operating ratio of almost 85% is quite satisfactory, convincing and reasonable in the case of a service providing company of this nature, which is engaged not only in selling a capital product, but also introducing a concept which is absolutely new to Indian conditions. Thanking you, Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 1 February 2010 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected sir, Subject: Penalty Proceedings U/Sec. 271 (1) (C) in respect of Assessment Year 2006-07 Further to our letter dated 11 January 2010 on the above cited subject, we are enclosing herewith the copy of A/R No.003786 dated 25 January 2010 in evidence of the fact that the assessee has filed an appeal before CIT Appeal XVIII against the order made for Assessment Year 2006-07. It is requested that the above cited proceeding may please be kept in abeyance till the disposal of the appeal. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd., Authorised Signatory Enclosure:- 1. Copy of the A/R No. 003786 dated 25 January 2010 in respect of Appeal filed before CIT XVIII. 2. Copy of letter dated 11 January 2010.
  • 22 February 2010 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Re: RRB Consultants & Engineers Pvt. Ltd. AY: 2006-07 PAN: AAACR0233R Sub: Stay of Demand ------------------------------------------------- Sir, Assessment in the above case was completed at an income of Rs.12,98,55,406/- against the returned income of Rs.8,07,90,200/- u/s 143 (3) of the Income Tax Act, 1961 vide order dated 31.12.2009. A demand of Rs.2,20,58,074/- was raised against the assessee which included interest u/s 234B of the Act in a sum of Rs.54,41,445/-. Following disallowances were made to the returned income: 1) The assessee Company is deriving income from the business of consultancy and power generation as in the past. The deduction u/s 80IA of the Act was claimed in a sum of Rs.41,38,035/- which was duly supported by the Audit Report in Form 10CCB. The assessee has always been deriving this income and the same has been allowed. In AY 2004-05, this claim was partly allowed vide order dated 31.03.2006. The assessee preferred an appeal against the said order before the Ld. CIT (Appeals)-XVIII, New Delhi who vide order dated 22.11.2006 in appeal No.38/06-07 allowed the claim of the assessee. The disallowance for the year under consideration was made on the ground that the business of generation and distribution of power is for the purposes of demonstration and education and, therefore, not eligible for deduction. This issue is squarely covered by the decision of Hon’ble Income Tax Appellate Tribunal in appeal No.3936/Del/2002 in AY 2000-01 and that of Ld. CIT (Appeals) in appeal No.38/06-07 in AY: 2004-05. 2) An addition of Rs.4,38,00,000/- has been made on account of disallowance of depreciation claimed on wind electricity generators on the ground that since the generators are used in the industry which is entitled to exemption u/s 80IA of the Act, the depreciation is not allowable against other incomes. This disallowance is wholly arbitrary in as much as the assessee has not been allowed any exemption u/s 80IA of the Act. contd… .2/-
  • (2) 3) The assessee has claimed depreciation on electronic media machinery purchased and used as computers integrals @60%. While computing the income, the depreciation has been allowed at 15%. This disallowance is also unwarranted as the user of the machinery is as computer and not as ordinary machine. 4) A further disallowance in a sum of Rs.10.00 lakh has been made on cost of land which formed part of the Plant & Machinery and was thus entitled for depreciation as machinery on the basis of user factor. This disallowance also is wholly arbitrary and unsustainable. 5) A further disallowance of Rs.80,312/- has been made u/s 14A of the Act against dividend income of Rs.27,670/- by applying Rule 8D. This Rule is applicable from 01.04.2008 and so not covered for this year. This disallowance also is arbitrary, untenable and beyond law. The assessee has preferred an appeal against the various additions made to the returned income as discussed above before the Ld. CIT (Appeals) – XVIII on 25.01.2010 vide acknowledgement No.3786. A copy of the acknowledgement for filing the appeal and also Grounds of Appeals are being submitted for your perusal. It is also submitted that a refund of Rs.55,43,455/- is due to assessee for Assessment year 2009-10, which may be adjusted against the disputed demand. (Copy of Acknowledgment of return enclosed) It is further submitted that the assessee company is entitled to refund for AYs 2000-01, 2003-04 and 2004-05 on account of appeal effect. The same may, therefore, be allowed and credit adjusted against disputed demand.(Details enclosed) Under these circumstances, it is requested that the disputed demand raised against the assessee may be stayed till a decision in the first appeal. The demand is just not payable and any coercive recovery will jeopardize the normal business functioning of the assessee company as presently the company is facing acute financial hardship due to non-availability of clients. Placed for most favourable consideration. Thanking you, Yours faithfully, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • Deed of Gift BE IT KNOWN to all that I ________________________ residing ___________________ _____________________________ have this _________ day of ____ 20__ conveyed and transferred by way of gift_____________________________________________ To my ___________________ wife/daughter/son of _______________________ residing at ___________________________ (here in after called ‘The Donee”) out of natural love and affection for her/him TO HOLD the same unto the Donee absolutely for ever AND have delivered possession of the said property to the said Donee which she/he has accepted. The value of the said property is estimated at Rs._________________ I, the said _______ have here unto set my hands to this writing the day and the year first here in above written. (DONOR) Witness:- 1. 2. ACCEPTANCE I _________________________wife/daughter/son of ___________________ residing at __________________________ do hereby thankfully accept ______________________ as irrevocable gift made by shri /shrimate ______________________________ wife/son of _____________________residing at _____________________________________ On this________ day of ______ 20____. (DONEE) Witness:-
  • 1. 2.
  • RRB/IT/2010 24 February 2010 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Dear Sir, Subject: Notice U/sec. 209/210 of the Income Tax Act in respect of Assessment year 2010-11 With reference to your notice dated 22.2.2010 on the above cited subject, it is submitted that the Company has not received any amount on account of consultancy fee from it’s Danish principals during the current financial year, which is the main source of income of the assessee. During the preceding year the Company has received a sum of Rs.11,00,20481/- as against Nil amount during the year under consideration. Since the assessee is facing acute business loss during the current financial year, no tax liability does arise, so as to pay any installment of advance tax by the assessee, what so ever. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 31 March 2010 The Addl. Commissioner of Income Tax, Range-15, C. R. Building, New Delhi Respected Sir, Subject: Stay of demand in respect of Ass. Year 2006-07 Further to our petition dated 22 February 2010 for stay of demand of Rs. 22058074/- we would like to submit that besides merit in appeal, the assessee is also facing acute shortage of funds, since nothing has been received during the current year on account of consultancy fee which is the main source of income of the assessee. Your goodself may appreciate that paucity of funds in itself is a real and valid ground for non payment of dues. However, as discussed, the assessee is forwarding herewith a Cheque No. 083329 drawn on Canara Bank, New Delhi for Rs. 50,00,000/- (Rs. Fifty Lakhs Only) in your favour and also agrees to pay a sum of Rs. 10,00,000/- (Rs. Ten Lakhs Only) by way of monthly instatement beginning wef 15 May 2010 for the balace amount. The assessee may also bring it to your kind information that a refund of Rs. 55,43,455/- (Rs. Fifty Five Lakhs Forty Three Thousand Four Hundred Fifty Five Only) for AY 2009-10 is also due and shall become payable by the department wef First April 2010. The assessee hereby prays that with this arrangement of paying the additional demand the attachment of the banks of the assessee may kindly be withdrawn with immediate effect. Thanking you, Yours sincerely, For RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 8 April 2010 The Deputy Commissioner of Income Tax, Circle15, New Delhi Respected Sir, Subject: Notice U/Sec 148 in the case of RRB Consultants and Engineers Pvt. Ltd. in respect of Ass. Year 2003-04 With reference to your notice dated 26 March 2010 on the above cited subject it is requested that the details/information regarding the income which has escaped assessment, may please be furnished to the assessee for doing needful in this connection. Thanking you Yours sincerely, for RRB Consultants and Engineers Pvt. Ltd. Authorised Signatory
  • RRB/IT/2010 19 April 2010 The Income Tax Officer, Ward 37(1), New Delhi Dear Sir, Sub: Rectification Application u/Sec 154 of in the case of Feroze Ahmed Shamsi in respect of Ass. Year 2008-09 With reference to above, the assessee submits here as under: 1) That the assessee has received a notice u/Sec 221(1) dated 6 April 2010 on 9 April 2010 alongwith a copy of intimation u/Sec 143(1) dated 30 March 2010, wherein a sum of Rs. 1336650/- has been shown as payable by me. The assessee has however not received any order u/Sec 143(1) earlier to this. 2) That prima facie the Computation of income has not been made in accordance with the return filed by the assessee, and also advance tax paid and TDS certificates have also not been considered for the credit given to the assessee. 3) That the assessee here by submits, that the said intimation may please he modified in view of the facts mentioned if intimation u/Sec 143(1) here as under. 4) The assessee was the partner of “A.F. Mehtabsons and Co” till 1 October 2007, when the firm was dissolved and taken over as a proprietary business by the assessee. 5) The assessee had filed it’s return of Income as the proprietor of A.F. Mehtabsons and Co declaring an income of Rs. 3111278/-, which also included income of short term Capital gain u/Sec 111A. The Computation of Income and Tax there on is annexed here with this application. 6) That the assessee had paid advance tax amounting to Rs. 250,000/- and TDS amounting to Rs. 255028/-. The challans for Advance Tax and TDS certificates as mentioned below are here by produced in original for your verification, and copy of the same for year record. It is requested that the said intimation may please be modified and proceedings u/Sec 221(1) may please be dropped. Thanking you Yours sincerely, A.F. Mehtabsons & Co. Charted Accountants (F.A. SHAMSI) Prop. Enclosure:- 1. Copy of Acknowledgement of Return for A.Y. 2008-09. 2. Challans 2 No of Advance Tax Paid. 3. T.D.S Certificates 3 Nos.
  • Computation of Taxable Income Ass Year 2008-09 Of F.A. SHAMSI Prop of A.F. Mehtabsons Chartered Accountants A. Income From Profession (a) From proprietary profession:- (A.F. Methabsons & Co wef. 1 October 2007) Net Profit as per P&L A/c 932382 Add depreciation charged as per P&L A/c _15098 947480 Less depreciation as per I.T. Rules 15098 932382 (b)Salary earned from A.F. Mehtabsons & Co. 79648 (Partnership firm being dissolved on 1 October 2007) 1012030 B. Short Term Capital gain u/Sec 111 A against Sale of Equity Shares 2095184 C. Long Term Capital gain against Sale of Share 99080 Less exempt u/Sec 10(38) 99080 ---- D. Income from other Sources 4064 Interest from S. Bank Dividend earned 2640 Less exempt u/Sec 10(34) 2640 --- 4064 ----------- Taxable Income 3111278 ------------ Computation of Tas on Taxable Income Rs. 3111278/- :- Tax due on income of Rs. 2095184/- u/Sec 111A@10% 237384 Including S. charge and E. Cess Tax due on Rs. 1016094/- 259660 Including S. Charge and E. Cess ----------- Total Tax, S. Charge & Ed. Cess thereon 497044 Interest u/Sec 234C 7502_ 504546 Tax Paid:- Adv. Tax 250000 TDS Certificate 255028 505028 Refund 482
  • (F.A. Shamsi)
  • RRB/IT/2010 28 April 2010 The Deputy Commissioner of Income Tax, Circle15(1), New Delhi Respected Sir, Subject: Filing of Income Tax Return for the Ass. Year 2003-04 in response to notice u/Sec148 With reference to your notice dated 26 March 2010 u/Sec 148 of the Income Tax Act, 1961, the assessee submits here as under:- 1. That the assessee had filed its return of Income for the above referred assessment year u/Sec 139(1) of the Income Tax Act 1961 on 25 November 2003, Vide Acknowledgement Receipt No. 1511000403, declaring an income of Rs. 1,10,17200/- only (Rs. One Crore Ten Lakhs Seventeen Thousand Two Hundred Only). 2. That the assessment was completed on 30 January 2006 u/Sec 143(3) by the Assessing Officer 15(4) on an income of Rs. 1,11,17200/- only. However, the said addition of Rs. 100000/- (Rs. One Lakh Only) was deleted by the C.I.T. (appeals) XVIII, vide his order dated 22 November 2006. 3. That the assessee hereby submits, that the income originally declared at Rs. 1,10,17200/- (One Crore Ten Lakhs Seventeen Thousand Two Hundred Only) on 25 November 2003 u/Sec 139(1), and also finally assessed same by the CIT (Appeals) XVIII may please be considered, as returned income in response to your above notice u/Sec 148 of the I.T. Act, duly served upon the assessee on 29 March 2010. The original return filed u/Sec 139(1) is already on your record which may also be considered as return filed by the assessee in response to the above said notice u/Sec 148. Thanking you, Yours sincerely, for RRB Consultants and Engineers Pvt. Ltd. Managing Director
  • ERRBI/IT/2010 30 June 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), Room No. 311, 3rd Floor, Drum Shaped Building, I.P. Estate, New Delhi. Respected Madam, Sub: Information in the case of Eco RRB Infra Private Limited formerly known RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment Year 2007-08 As required by your goodself, we are submitting herewith the following details: Note on technical service and fee Besides deriving income from Power generation, the assessee is engaged in rendering technical service in the field of Power generation through alternate source of energy to Vestas Danish Wind Technology. A Memorandum of Undertaking (MOU) to this effect was taken place on 3rd day of July 1990 between two independent entities, namely Vestas Danish Wind Technology A/s Denmark (VDWT) and RRB Consultants and Engineers Pvt. Ltd. (RRB) whereas the former was engaged inter alia, in Project Enginerring and sale of Various types or part of wind turbine and the latter was engaged in rendering technical advice/consultancy and service relating to generation and distribution of electricity/power through alternate source of energy. Since Vestas Danish Wind Technology wanted to supply it’s products in India, it engaged RRB to provide them expert advice and technical information relating to site identification and wind data on specific sites in India, characteristics of the Indian terrains like roughness factor etc., electrical grids used in India, weather conditions prevalent in various Indian locations, etc. In this connection it required technical consultancy services from RRB consultants and Engineers Pvt. Ltd. read here as under:- a) The transfer of all technical information in the field of Wind Energy such as site identification and wind data on specific sites, compilation of wind data for known windy areas, characteristics of the terrain like roughness factor etc. required for wind energy output and other construction data required for manufacture, project engineering and commissioning of VESTAS/DWT Products and to furnish such other technical advice and know-how of electrical grids used in India, soil characteristics of sites, weather condition prevalent in various locations etc., pertaining to project engineering and manufacture of VESTAS/DWT Products. count….2/-
  • (2) b) The rendering of regular technical advice to assist in all respects for the design, manufacture, erection, commissioning, project engineering and sales of VESTAS/ DWT projects. c) In addition to these technical services as mentioned above, RRB shall perform such other advisory services as may be agreed to from time to time between VESTAS DWT and RRB upon mutually agreed terms and conditions. d) RRB undertakes to give all technical help and support to VESTAS/DWT for the manufacture and maintenance of VESTAS/DWT products for the region of India. Thus RRB was to perform a supportive role to the business functions carried on by Vestas Danish Wind Technology at Denmark. RRB had however no authority either to enter into or conclude the contracts on behalf or Vestas Danish Wind Technology. As such, all decisions relating to supply and sale of Wind turbines/parts were taken at Denmark by Vestas Danish Wind Technology only. RRB’s income from the source of consultancy was based entirely on its skill and expertise of its own technical staff under uncontrolled conditions. For the said services provided by RRB, VDWT was obliged to pay RRB in respects of all VESTAS/DWT Products supplied in India and as far as fully paid by the client, a technical consultancy fee of 10% of the total ex-works sales value of VESTAS/DWT Products, unless a different rate of fee was agreed in writing between the parties in any particular case. It may however be noted that operating profit ratio and net profit ratio in the year under consideration comes to 84.71% and 72.74% respectively. as compared to last year’s ratio which was worked out at 79.04% and 71.25% respectively. Based on these economic analysis your predecessor had passed order for the preceding Assessment year U/section 92 CA(3) of the Income Tax Act, without calling for any adverse inference. Further, as required by your goodself, we are furnishing herewith a certificate wherein VDWT has certified that it has no Permanent Establishment in India. The said certificate is enclosed herewith for your perusal. Thanking you, Yours faithfully, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • ERRBI/IT/2010 15 June 2010 Dy. Commissioner of Income Tax, Range-15(1), C. R. Building, New Delhi Respected sir, Subject: Penalty Proceedings U/Sec. 271 (1) (C) in respect of Assessment Year 2006-07 With reference to your letter no. F.No.DCIT/Circle-15(1)/2010-11/228 dated 4 June 2010 on the above cited subject, we are enclosing herewith the copy of A/R No.003786 dated 25 January 2010 in evidence of the fact that the assessee has filed an appeal before CIT Appeal XVIII against the order made for Assessment Year 2006-07. It is requested that the above cited proceedings may please be kept in abeyance till the disposal of the said appeal. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory Enclosure:- 1. Copy of the A/R No. 003786 dated 25 January 2010 in respect of Appeal filed before CIT XVIII.
  • ERRBI/IT/2010 15 June 2010 Dy. Commissioner of Income Tax, Range-15(1), C. R. Building, New Delhi. Respected sir, Subject: Intimation of change of name of the Company We wish to inform you that the name of our Company has been changed from “RRB Consultants and Engineers Private Limited” to “Eco RRB Infra Private Limited”. The fresh Certificate of Incorporation dated 11 May 2010, covering new name has been issued by the Government of India, Ministry of Corporate Affairs, Registrar of Companies (ROC), National Capital Territory of Delhi and Haryana. The above is for your kind information and a request to incorporate the new name of the Company in your records. In this regard, we are sending herewith the following: (a) A certified copy of the fresh Certificate of Incorporation consequent upon change of name issued by the Government of India, Ministry of Corporate Affairs, Registrar of Companies (ROC), National Capital Territory of Delhi and Haryana. (b) Copy of the amended PAN card in the name of Eco RRB Infra Private Limited. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited Promilla Bakshi Managing Director
  • ERRBI/IT/2010 17 June 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), Room No. 311, 3rd Floor, Drum Shaped Building, I.P. Estate, New Delhi. Respected Madam, Sub: Information in the case of Eco RRB Infra Private Limited formerly known RRB Consultants and Engineers Pvt. Ltd. in respect of Assessment Year 2007-08 With reference to above said case which has been fixed for hearing on 17 June 2010, it is submitted that the counsel of the assessee Sh. F. A. Shamsi is presently out of station. Since he is expected to be back in Delhi by next week, it is prayed that the said case may please be adjourned to 29 June 2010 as to suit to your kind convenience. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • ERRBI/IT/2010 30 July 2010 The Deputy Commissioner of Income Tax, CIT Circle15(1), C.R. Building, New Delhi- 110 002. Respected Madam, Subject: Demand in the case of Eco RRB Infra Private Limited (formerly Known RRB Consultants and Engineers Pvt. Ltd.) in respect of Assessment Year 2006-07. With reference to above and you notice CIT/ Circle-15(1)/ 2009-10/ 373 dated 20 July 2010 on the above cited subject. It is submitted that the relevant details and particulars about the said demand is available with our counsel who is extremely busy in filing Income Tax returns with the department. It is therefore prayed that the said hearing may kindly be adjourned for a week as to suit to your kind convenience Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • SEEMA BAKSHI SOLAN BREWERY DISTT. SOLAN (HP) 30 July 2010 The Assistant Commissioner of Income Tax, Circle Parwnoo, Dear Sir, Subject: Income Tax Assessment for AY 2007-08 in the case of Smt. Seema Bakshi With reference to your notice No. ACTI/PWN/2010-11/1217 dated 19 July 2010. The assessee submits here as under: 1) In support of claim of Rs. 100000/- only made under Section 80C of the Income Tax Act, the assessee is enclosing herewith the LIC certificates of Rs. 92744/- only and Proof of Rs. 30000/- being paid on account of Public Provident Fund. Since the payment made on these two accounts is an allowable deduction under Section 80C the same my please be allowed. 2) The perquisite of Rs. 19200/-, as reflected in form No 16 of the assessee is on account of valuation of motor car provided by the employer to be used by the employee for his official as well as personal purposes. However, this perquisite is not taxable in the hands of the employee, as with the induction of Fringe Benefit Tax Act, rule 3(2) of Income Tax Act relating to valuation of motor car has been deleted by notification No.68/2005, dated 28 February 2005. The said expense is now treated as fringe benefit and taxed in the hands of the employer. Without prejudice to the submission made, it may also please be noted, that the employer of the assessee is a Private Limited Company which is liable to pay fringe benefit tax under chapter XII-H of the Income Tax Act. It is for this reason that the salary of the assessee is computed at Rs. 18,00,000/- only being net of car perquisite. Thanking you, Yours faithfully, (SEEMA BAKSHI) Enclosures:
  • ERRBI/IT/2010 5 August 2010 The Deputy Commissioner of Income Tax, Circle15, C.R. Building, New Delhi Respected Madam, Subject: Demand of Rs. 17058054/- in the case of Eco RRB Infra Private Limited (formerly Known RRB Consultants and Engineers Pvt. Ltd.) in respect of Assessment Year 2006-07 With reference to your notice No. Dy. CIT/Circle-15(1)/2009-10/373 dated 20 July 2010. The assessee submits here as under: 1. Assessment in the above case was completed at an income of Rs.12,98,55,406/- against the returned income of Rs.8,07,90,200/- u/s 143 (3) of the Income Tax Act, 1961 vide order dated 31.12.2009 resulting into additional demand of Rs.2,20,58,074/- raised against the assessee. 2. Aggrieved with the additions made the assessee had preferred an appeal and as such sincerely hopes that the impugned additions shall be deleted, reducing the demand considerably. 3. The assessee had also applied for stay of the said demand vide it’s letter dated 22 February 2010. 4. That on the insistence of the department, the assessee had paid a sum of Rs. 50,00,000/- (Rs. Fifty Lakhs only) towards the said demand vide it’s Cheque No083329 dated 15 April 2010. 5. The assessee in view of acute shortage of funds had also requested that the refund of Rs. 55,43455/- (Rs. Fifty five Lakhs forty three thousand four hundred fifty five only) for the Ass. Year 2009-10 may also be made in April 2010 in order to enable him to adjust or make further payment against the said demand. Unfortunately, the said refund is yet to be made. 6. Besides, the assessee hereby brings it to your kind information that the appeal in the said case is already heard yesterday only ie on 4 August 2010, and as such the order is awaited. 7. It is prayed that the payment of additional demand may kindly be stayed till the outcome of the order made by CIT (Appeals)-XVIII. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.)
  • Authorised Signatory
  • RRB Consultants and Engineers Pvt. Ltd. A.Y.-2006-07 Rectified Version of Breakup of Profit from Power Generation Unit Assessed by A.O. on which deduction is claimable under sector 80-1A of the I.T. Act _________________________________ Taxable Income Tax free Income Total Income (exceeding 10 yrs.) (U/Sec 80-1A) (within 10 yrs.) Gross receipts 3456754 4438925 7895679 Less direct Exp. -300890 Less indirect Exp. -858625 Less depreciation on -43800000 Wegs yielding Tax free income. _________ unabsorbed Dep. 40520590 _________
  • ERRBI/IT/2010 5 August 2010 The Deputy Commissioner of Income Tax, Circle15, C.R. Building, New Delhi Respected Madam, Subject: Assessment in the case of Eco RRB Infra Private Limited (formerly Known RRB Consultants and Engineers Pvt. Ltd.) in respect AY 2008-09 With reference to your notice U/sec. 143(3) & 142(1) of the Income Tax Act, it is hereby submitted that as the details sought in the said notice are under preparation an adjournment of 15 days may please be granted to the assessee. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited Authorised Signatory
  • ERRBI/IT/2010 12 August 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), New Delhi Respected Madam, Sub: Show cause Notice u/Sec 271AA and U/Sec 271 BA of the Income Tax Act in case of Eco RRB Infra Private Limited (formerly known as RRB Consultants and Engineers Pvt. Ltd.) for AY 2007-08 With reference to your notice No. Addl. DIT/TPO 11(3)/2010-11/34 dated 21.07.2010, the assessee submits here as under: Referring To Sub Section(2) of Section 92B of The Income Tax Act in Para 2 of your letter, your goodself in the following para has reached to the conclusion that if same transaction is entered into by an enterprise with a person other than an associated enterprise, the same merely by virtue of an existing agreement between two such persons shall be deemed to be an international transaction. The assessee submits that this interpretation of Sub Section(2) is not correct. Section 92B(2) which defines deemed international transactions, comes into play, when there exists another party which is an associate of the transacting party besides transacting party itself and unrelated person. In such case, if there is a separate prior agreement between unrelated person and the associated party of the transacting party relating to the relevant Transaction, or the terms of the relevant transaction are determined in substance Between such other (unrelated person) and the associated enterprise of the transitioning enterprise. The assessee in order to have better view of the said Sub Section draws your kind attention towards circular No.14/2001, dated, 9.11.2001, which is explained in the book, “Fundamental of Indian Transfer Pricing”, with an illustration mentioned here as under:- Sub Section(2) of section 92B extends the scope of the definition of international transaction by providing that a transaction entered into with an unrelated person shall be deemed to be a transaction with an associated enterprise, if there exists a prior agreement in relation to the transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined by the associated enterprise. An illustration of such a transaction could be where the assessee, being an enterprise resident in India, exports goods to an unrelated person abroad, and there is a separate arrangement or agreement between the unrelated person and an associated enterprise which influences the price at which the goods are exported. In such a case the transaction with the unrelated enterprise will also be subject to transfer pricing regulations.
  • Contd….2/-
  • (2) The author in the said book has also more elaborately defined deemed international transaction u/Sec 92B(2) as under:- Section 92B(2) defines “deemed international transaction”. These are transactions essentially between associated parties cleverly disguised by using a third party which is an outsider, for example, A enters into a contract with B to purchase raw material from it at a determined fixed price. B, in turn purchase the same from a subsidiary of A, the transaction is essentially on between A and its subsidiary and B is used merely as a devise. Thus, section 92B(2) would cover such transactions within the ambit of deemed international transactions. Section 92B(2) provides that if- (i) there exists a prior agreement in relation to the relevant transaction between such person and the associated enterprise of the transacting enterprise; or (ii) the terms of the relevant transactions are determined in substance between such person and the associated enterprise of the transacting enterprise. It would be deemed to be an international transaction. The assessee believes that with the above clarifications made in respect of deeming provisions of Section 92B(2), your goodself would appreciate that there does not exist any of the under noted conditions which could deem the said transaction as an international transaction: (i) Existence of an associated enterprise of the transacting party. (ii) Prior agreement of unrelated party with the above said associated enterprise of the transacting enterprise in relation to the relevant transaction or (iii) The terms of the relevant transactions are determined in substance between such person (unrelated party) and the associated enterprise of the transacting enterprise. Since Section 92D and 92E are related to the persons who have entered into international transaction as defined in Section 92B and as the assessee is out of the ambit of the defined international transaction, under that Section the provisions of Section 92D and 92E are not applicable in the assessee’s case. Consequently, penal provisions of Section 271AA and 271BA are also not attracted, and the same may please not be initiated. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited
  • Authorised Signatory
  • ERRBI/IT/2010 26 August 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), New Delhi Respected Madam, Sub: Notice u/Sec 92CA(2) and 92D(3) in the case of Eco RRB Infra Private Limited (formerly known as RRB Consultants and Engineers Pvt. Ltd.) in respect of Assessment Year 2007-08 With reference to your notice No. Addl. DIT/TPO 11(3)/2010-11/35 dated 21.07.2010, on the above cited subject, and the queries raised therein, the assessee submits here as under: 1) The documentary evidence in regard to change in the name of the Company is enclosed herewith. 2) There is no change in the Shareholding pattern of the Company, with one as already submitted. 3) There is no amendment in the MOU, consequent to change in the name of the Company. 4) No agreement as such takes place between the assessee and the perspective Indian customers to whom products of Vestas Danish Wind Technology products are sold by them herein India. 5) To the best of our knowledge and belief Vestas Danish Wind Technology is not assessed to Income Tax in India. As such question of furnishing the documents as required by you does not arise. However, replying to the query as raised vide clause no.6 of your notice, the assessee would like to draw your kind attention on certain contents of the MOU reached between Vestas Danish Wind Technology and the assessee on 3 July 1990, as mentioned below, to ensure that the assessee has been functioning independently as a legal free entity since its incorporation which took place on 29 March 1984:- (a) The MOU was made between the assessee and Vestas Danish Wind Technology A/ S as two different independent legal entities. (b) As mentioned in the preamble of the MOU, the assessee was already in existence as to provide technical advice/consultancy and other professional services relating to the generation and distribution of electricity/ power through alternate source of energy, in its independent capacity. (c) Besides, the assessee was also entitled to do other activities as well, which is evident from the object clause of Memorandum of Association of the Company. (d) As mentioned in the preamble of the MOU itself Vestas Danish Wind Technology in order to manufacture/sell its products as to suit Indian condition, had appointed the assessee to provide services, scope of which was limited to a particular area,
  • such as providing technical information relating to site identification and wind data on specific sites in India, characteristics of the Indian terrains, like roughness factors etc, electrical grids used in Indian, weather condition prevalent in Various Indian locations etc.. There was as such no restriction upon the assessee to perform any other activity what so ever for itself or for anyone whosoever. In fact, the assessee in past had been engaged in providing services to other clients along with Vestas Danish Wind Technology A/S, which were however terminated on merits by the assessee himself at a later stage. It clearly shows that the assessee was neither appointed to provide exclusive services to Vestas Danish Wind only, nor there was any such restriction upon the assessee to prevent him from doing other activity for other clients. (e) The assessee was to perform all such services through it’s own, staff at all time during the currency of the agreement to discharge it’s obligation which is mentioned in Article No2.1 of this agreement, and not from deputed, or borrowed staff from Vestas Danish Wind Technology A/s or some other entity. (f) Finally and as regard to the query raised about exclusivity clauses vide Articles 2.4 and 3.1 of the MOU with reference to Article 5(4) clause (a) and clause (c) of the Indo-Denmark Double Taxation Avoidance Agreement in India, is concerned, it is worth noting that furnishing of technical data was only one of the Various activities for which the Company was formed and as such there was no restriction upon the assessee to prevent it from doing any other activity. There is no clause in the entire MOU to suggest that the assessee is barred from doing any activity what so ever. However, it is natural and logical that no business entity would like to share information with it’s Competitors for which it has paid money to its service provider, which according to humble submissions of the assessee does not amount to lose ones independent status, in the given circumstances. Further, the contents of Article 2(a) and (b) of the (MOU) dated 3.7.1990 already submitted to you for your kind perusal, itself suggest that the services provided by the assessee are only supportive in nature as they relate to technical data and information on various aspects in the field of wind energy. Such services therefore amount to back office operations only as the assessee has no authority to enter in to or conclude the contracts like that of main office operations of the principal Company. Possessing an authority to enter into or conclude contracts on behalf of a foreign Company is a Vital factor to establish the Indian entity as P/E. Without such authority, The question of considering an entity as P/E does not arise. In first instance, the assessee submits that in view of submissions made above and particularly those mentioned vide clauses (a) to (f) of this letter, the assessee enjoys an independent status. However, as your goodself has specifically asked the assessee to clear its position under Article 5(4)(a) and clause (c) of Indo-Denmark Double Taxation Avoidance Agreement, it is submitted here as under: S. Raja Ratnam and B. Venkata Ramaiah in their book Treatise on Double Taxation Avoidance Agreements have reproduced the observation of the Authority for Advance Ruling in TVM Ltd. V. CIT(1999)237 ITR 230 (AAR) as under:- “The argument of counsel has to be accepted. One may be tempted to say that an enterprise carrying on business in a country through an agent who has no
  • independent status should be held to have a permanent establishment in that country and no doubt that would have been the result if para. 5 had stood alone. But para. 4 is, unambiguously and definitely, attracted to cases where there is a person in one State acting on behalf of the other State that is, an agent who is “other than an agent of independent status to whom the provisions of para. 5 apply”. The consequence is that when an “agent” fails to come up to the standard of independence referred to in para. 5 the issue regarding permanent establishment is not closed but has to be resolved in terms of para. 4. The wording of para. 4 is somewhat ambiguous. The presence of the words “unless his activities are limited to the purchase of goods or merchandise for the enterprise” in clause (i) and the terms of clause (ii) may suggest a narrower interpretation for this paragraph restricting its application to agents involved in the purchase and sale of goods and no others and as saying that mere purchase or sporadic sale of goods through an agent will not be sufficient to merit such an agent being considered a permanent establishment. But the authority is of the view that it will not be a proper canon of construction to ignore the generality of the preceding words of the paragraph merely because exceptions are carved out in the latter part of clause (i) or clause (ii) only in respect of a certain specific category of agents, viz., those buying or selling goods. The paragraph is applicable in all cases where the enterprise in a Contracting State has an agent in the other who does not have an independent status. Such a person will be deemed to be a permanent establishment only if he has, and exercise, the authority to conclude contracts in the name of the enterprise. But even the existence of such authority will not make him a permanent establishment (i) if he is a mere agent for purchase of goods or merchandise; or (ii) being an agent for sale of goods or merchandise is allowed to habitually maintain a stock of the goods of the enterprise and effect sales therefrom. The conclusion seems inevitable that even a non-independent agent can be deemed to be permanent establishment only if he can act independently in the matter of concluding contracts on behalf of the principal, on his own, freely and without control from the latter. Referring back to the position of the assessee in view of the said articles 5(4)(a) and (c) it is evident the assessee does neither habitually or other wise has an authority to conclude contracts on behalf of the enterprise as per clause (a) nor habitually secures orders for the enterprise. Contrary to this, clauses 1 & 2 under the head of “General’ of the MOU very specifically restrict the either parties of the MOU to make contract on behalf of the other, and absolve the assessee from any liability for the deficiency of Vestas Danish Wind Technology A/s. Without prejudice to what has been explained above, even an exclusivity clause without a proper authority to enter and conclude contracts is not sufficient to declare such unit of a Foreign enterprise, a P/E. In the case of Director of Income Tax (International Taxation) V Morgan Stanley a Co., Hon’ble Supreme Court held the Ruling of the Authority for Advance Ruling that MSAS an Indian Company and a group Company as well of M Group, by providing IT enabled services, such as data processing and support centre to Morgan Stanley an investment bank also belonging to same M group can not be considered as agency PE since it has no authority to enter into or conclude the contracts on one hand and nature of activites which are supportive in nature on the other. The assessee therefore submits that even for a group Company the nature of activity and authority to conclude the contracts are important factors for declaring an establishment as P/E. As, the assessee has no authority to enter into or conclude the contracts on behalf of the foreign
  • Company and also performs supportive activities only it does not qualify to be a P/E, under any circumstances. The assessee at this juncture also draws your kind attention towards No objection certificate dated 15.10.90 issued to the assessee by the Joint Controller, Reserve Bank of India, New Delhi in respect of two agreements with two overseas Companies, namely, Vestas Danish Wind Technology A/s, Denmark and Gelruder PFORTNER G & Co., KG, Germany. It also shows, that the Company was also not exclusive consultant of the Company. Moreover, the Reserve Bank of India has acknowledged the independent entity of the assessee by approving the agreement made by the assessee with the overseas Companies subject to the condition that the income earned by the assessee should be repatriated to India through normal banking channel and at no stage the amount of Commission so received will be allowed to be repatriated out of India. In IAC V Mitsui & Co Ltd (1991) 39 ITD 59 (Del) (SB) the Hon’ble Tribunal has held that the findings of the Reserve Bank of India where it has emerged as a sanctioning Authority is more authentic and correct than the interpretation placed by the Revenue. It is therefore prayed that the findings and approval of Reserve Bank may be given due recognition and acceptance. The assessee also submits some other facts about the instant case for your kind perusal. (a) Vestas Danish Wind has never sent it’s employees to India either to work as stewards or deputationist in the employment of the assessee. The assessee has relied only it’s own staff in discharge of it’s duties, and hence it can not be considered as P/E in this behalf also. (b) Without prejudice the claim that the assessee is not a P/E, it may be noted that your predecessor while finalizing the case for the Ass. Year 2006-07 has applied Transaction Net Margin Method (TNMM) without any adverse inference drawn, therein. In Director of Income Tax (International Transaction) V Morgan Stanley a Co case, Hon’ble Supreme Court has upheld the finding of Authority of Advance of Advance Ruling and commented that Transaction Net Morgin Method (TNMM) for determination of arms length price is appropriate method in case of Service PE as TNMM apportions total operating profit arising from transaction on basis of sales, cost of assets etc. Further once a transfer pricing analysis is under taken there is no further need to attribute profits to a P/E in so far as an associated enterprise, that also constitutes a P/E has been remunerated on Arm Length basis taking into account all risk taking functions of enterprise. Where agreement exists TNMM is appropriate method determination of arm’s length price. It may be noted that the relevant provisions of Double Taxation Avoidance Agreement of Denmark and United States of America as discussed above correspond with each other. In view of the submissions made above, it is prayed that provisions of chapter x of Income Tax Act, 1961 may not please be applied, since the assessee does not qualify to be a P/E. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited Authorised Signatory
  • ERRBI/IT/2010 19 August 2010 The Deputy Commissioner of Income Tax, Circle 15, C.R. Building, New Delhi Respected Madam, Subject: Demand of Rs. 17058054/- in the case of Eco RRB Infra Private Limited (formerly Known RRB Consultants and Engineers Pvt. Ltd.) in respect of Assessment Year 2006-07 With reference to your notice No. Dy. CIT/Circle-15(1)/2009-10/373 dated 20 July 2010. The assessee submits here as under: 8. Assessment in the above case was completed at an income of Rs.12,98,55,406/- against the returned income of Rs.8,07,90,200/- u/s 143 (3) of the Income Tax Act, 1961 vide order dated 31.12.2009 resulting into additional demand of Rs.2,20,58,074/- raised against the assessee. 9. Aggrieved with the additions made the assessee had preferred an appeal and as such sincerely hopes that the impugned additions shall be deleted, reducing the demand considerably. The Appeal has already been heard on 4 August 2010 and the order is awaited. The Assessee however, hopes that the said order shall be released in the following month. 10.However, the assessee has already paid a sum of Rs. 50,00,000/- (Rs. Fifty Lakhs only) towards the said demand vide it’s Cheque No. 083329 dated 15 April 2010. 11. It is prayed that the payment of additional demand may kindly be stayed till the outcome of the order made by CIT (Appeals)-XVIII. It is further requested that the stay for the above said demand may kindly be granted till 30 September 2010. The resultant demand consequent to CIT Appeal order shall be paid in equal monthly installments till March 2011. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • ERRBI/IT/2010 31 August 2010 The Deputy Commissioner of Income Tax, Circle15, C.R. Building, New Delhi Respected Madam, Subject: Assessment in the case of Fringe Benefit Tax in respect AY 2008-09 With reference to above, the assessee is here by furnishing head wise reconciliation of taxable benefits shown under different heads in Profit and Loss Account with Schedule FB of the Return of Income filed. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited Authorised Signatory Annexures:- 1. Reconciliation Statement 2. Copy of Schedule FB of the Return of Income
  • ERRBI/IT/2010 7 September 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), New Delhi Respected Madam, Sub: Assessment in the case of Eco RRB Infra Private Limited (formerly known as RRB Consultants and Engineers Pvt. Ltd.) in respect of Assessment Year 2007-08 With reference to above, it is submitted that the confirmation from Vestas Danish Wind Technology A/s, Denmark, which was required by your goodself has not been received by us as yet. Since it may take some more time to reach to us and submitted before you, it is requested that the said case may kindly be adjourned to 16.09.2010, as to suit to your kind convenience. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited Authorised Signatory
  • 13 September 2010 Mr. Dinesh Gupta, Sir, Reg: RRB Consultants and Engineers Pvt. Ltd. As required, I am sending herewith copies of the Assessment Orders alongwith computation of Income for AY 2003-04 and 2004-05. For the additions made by the A.O. for Rs. 100,000/- in each year on account of secretarial expenses attributed towards expenses to be deducted from the claim made U/sec 80-IA, appeals were filed before CIT (Appeal) who however had deleted the same. The orders of the CIT (Appeals) are also sent herewith for your perusal. Assessment, for the AY 2005-06, was made u/sec 143(1). Since no order under that section was served, the Computation of Income along with acknowledgement is sent herwith. Thanking you. Yours Faithfully, F.A. Shamsi
  • ERRBI/IT/2010 16 September 2010 The Addl. Director of Income Tax, Transfer Pricing Officer- II(3), New Delhi Respected Madam, Sub: Assessment in the case of Eco RRB Infra Private Limited (formerly Known as RRB Consultants and Engineers Pvt. Ltd.) in respect of Assessment Year 2007-08. As required by your goodself , we are furnishing herewith the confirmation for remittance sent to us by Vestas Danish Wind Technology A/s, Denmark, during financial year 2006-07. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited Authorised Signatory
  • Adjourned to 2010 ERRBI/IT/2010 5 October 2010 The Deputy Commissioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Madam, Subject: Assessment in the case of Eco RRB Infra Private Limited (formerly known as RRB Consultants and Engineers Pvt. Ltd.) for A.Y. 2007-08 With reference to above it is submitted that the details as sought by your goodself in the above said case as per detailed questionnaire sent to us are under preparation. Further, our counsel is also busy in auditing and filing Income Tax returns required to be filed by 15 October 2010. It is therefore prayed that the said case may kindly be adjourned to 20 October 2010 as to suit to your convenience. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • Adjourned to 2010 ERRBI/IT/2010 5 October 2010 The Deputy Commissioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Madam, Subject: Assessment in the case of Fringe Benefit Tax in respect A.Y. 2008-09 With reference to above it is submitted that the assessee has already filed head wise reconciliation of taxable benefits shown under different heads in Profit and Loss Account with Schedule FB of the Return filed. Since the assessessee is required to file some other details on 7 October 2010, and as they are under preparation it is submitted that an adjournment to 20 October 2010 may please be granted as to suit to your goodself as the assesses counsel is also busy in conducting audit and filing Income Tax returns at present which are required to be filed by 15 October 2010. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • 04.10.2010 RRB Energy Limited, GA-1/B-1 Extension, Mohan Co-operative Industrial Estate, Mauthura road, New Delhi – 110 044 Bill Professional fee in respect of Second 400,000/- Quarter for F.Y. 2010-11 (1 July 2010 to 20 September 2010) ____________ Rs. 400,000/- ____________ (Rupees Four Lakhs Only) (F.A. SHAMSI)
  • RRB CONSULTANTS & ENGINEERS PVT. LTD. LIST OF DOCUMENTS ASSESSMENT YEAR 2003-04 1. Notice of U/sec 148 dated 26.3.2010. 2. Reply dated 8 April 2010. 3. Filing of I.T.Return – Letter dated 28 April 2010. 4. Notice u/sec 143 (2) dated 10.8.2010. 5. Objections to Notice u/sec 143(2) dated 18.8.2010. 6. Reply to objections by A.O. dated 28.9.2010. 7. Copy of Audit Report u/sec 10ccB. 8. Copy of letter dated 10 Jan 2006 filed during original Ass. proceedings. 9. Copy of A.O. order Assessment Year 2003-04 u/sec 143(3). 10. Copy of ITAT order for Assessment Year 2000-01.
  • October 8, 2010 The Observations of the Assessee Kind Attention of Shri Sampathji The facts which were crystal clear before the A.O., while framing the Assessment order:- 1. Detailed letter of the assessee dated 10.01.2006, filed during the original assessment proceedings which is also referred as “Reasons for initiating proceedings u/sec 148” enclosed with A.O. notice dated 10.8.2010. 2. The said letter contains detailed reasons as to the purpose of erection of wind electric generators and as to why nexus of expenses relating to wind electric generators which are very nominal also should be charged to consultancy income and therefore income from Power Generation should be claimed on gross basis under section 801A. 3. The order of the A.O in itself is speaking loudly as to consider Power Generation as a separate business when like his predecessors he not only confirms the deduction of maintence and insurance expenses from gross Power Generation income but also adds Rs. One Lakh on account of secretarial expenses to be deducted from Power Generation income. The A.O. has also taken into considerations the provisions of section 80-1A in this order. 4. On page no.3 and page no. 10 of the letter dated 10.1.2006, the assessee has specifically discussed the nature of business of Power Generation, describing the same as emerged business. 5. ITAT order dated 6.7.2007 for A.Y. 2000-01 in itself has upheld that the Power Generation income should be treated separately for the purpose of deduction u/section 80-1A, although all expenses relating to Power Generation income have nexus to the consultancy income. The ITAT order is much prior to this notice issued u/sec 148. Contd..P/2
  • :2: 6. In Sial SBEC Bioenergy Ltd. VDCIT(2004) 83 TTJ (Delhi) 86, and other courts decision it has been agreed in principal, that co-generation plant can be eligible for 80-1A, which produce energy for captive consumption. Though as a part of manufacturing business (as in our business considered to be the part of business) it is eligible for relief under section 80-1A. Keeping in view all the facts, it can not be said that A.O. has not applied his mind in treating the Power Generation income as a part of consultancy business. On the contrary, accepting it a different business with restricted deduction of expenses on merit from its income, he has treated it as a separate business. Now reopening the case on this ground that A.O. has not applied his mind and that the business should be considered as on business only, amounts to change of opinion and is not justified. Thanking you Yours sincerely, F.A.SHAMSI
  • ERRBI/IT/2010 11 October 2010 The Deputy Commissioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Madam, Subject: Assessment u/section 147/148 in the case of Eco RRB Infra Private Limited (formerly known as RRB Consultants and Engineers Pvt. Ltd.) for A.Y. 2003-04 With reference to your notice No DCIT/Circle15(1)/2010-11/1070 dated 28 September 2010, requiring the assessee to appear before your good self on 11 October 2010, it is submitted that the counsel of the assessee is extremely busy in conducting Tax audit and filing Income Tax returns, which are required to be filed by 15 October 2010. It is therefore requested that the said case may kindly be adjourned to 20 October 2010, so as to suit to your goodself. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • ERRBI/IT/2010 21 October 2010 The Deputy Commissioner of Income Tax, Circle 15(1), C.R. Building, New Delhi Respected Madam, Subject: Assessment in the case of Fringe Benefit Tax for A.Y. 2008-09 in the case of Eco RRB Infra Private Limited (formerly known as RRB Consultants and Engineers Pvt. Ltd.) With reference to above, requiring the assessee to explain, as to why the following expenses are not subject to Fringe Benefit tax, the assessee submits here as under:- 1. Staff Welfare Expenses Rs. 706831 Since these expenses pertain to payment for food and beverages provided by the assessee to its employees at it work place and offices, they are as such not subject to the provisions of Fringe Benefit Tax. 2. Miscellaneous Expenses Rs. 1801714 These expenses as mentioned in Schedule-9 of Statement of Accounts of the Company, comprise different small heads of Accounts. The said expenses are mentioned here as under:- 1. Bank Charges 19196 2. Garden Maintenance 179190 3. News Papers Books and Periodicals 239226 4. Computer Expenses 181077 5. Professional Charges 300000 6. Member Ship and Subscription 92555 7. Printing and Stationery 715658 8. Other Miscellaneous Expenses 74812 _________ Total Rs. 18,01,714 _________ contd….2/-
  • (2) Your goodself may please see that the above said expenses are as such not subject to Fringe benefit Tax. Thanking you, Yours sincerely, For Eco RRB Infra Private Limited (formerly known RRB Consultants and Engineers Pvt. Ltd.) Authorised Signatory
  • TO WHOM IT MAY CONCERN This is to confirm that I KAUSAR FEROZE, w/o Feroze Ahmed Shamsi and owner of premises No. D-9 Jauhri Farm, Jamia Nagar, Okhla Village, New Delhi - 110 025, have no objection in Monis Mehtab Proprietor of M.M. Trading Corporation in Carrying on his business activities at the above said premises No. D-9 Jauhri Farm, Jamia Nagar, Okhla Village, New Delhi - 110 025. (KAUSAR FEROZE) New Delhi Dated 18 October 2010