Rrb income tax letters

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.


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.



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,


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,


RRB/IT/2008-09 25 August 2008

The Addl.Commissioner of Income Tax
Range 15
C. R. Building
New Delhi

Respected Sir,


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,


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,



Range 15,
C. R. Building,
New Delhi

Respected Sir,

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,



Range 15,
C. R. Building,
New Delhi

Respected Sir,

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,


RRB/IT/2008-09 13 October
2008

Range 15,
C. R. Building,
New Delhi

Respected Sir,

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,


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.



To

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,



13 January 2009

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,

Authorized Signatory

RRB/IT/2009
23 January 2009

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,

Authorized Signatory

RRB/IT/2009
23 January 2009

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,


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,


RRB/IT/2009
3 July 2009

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,


RRB/IT/2009 5 August 2009

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.



RRB/IT/2009
8 September 2009

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.


RRB/IT/2009 1 October 2009

Range-15,
New Delhi

Respected Sir,

Sub: Assessment in the case of RRB Consultants and Engineers Pvt. Ltd. for

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,



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



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.


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,




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,




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,




Range-15, C. R. Building,
New Delhi

Respected Sir,


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,



RRB/IT/2009 9 November 2009

Range-15,
C. R. Building,
New Delhi

Respected Sir,


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,




Range-15,
C. R. Building,
New Delhi

Respected Sir,


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,




Range-15,
C. R. Building,
New Delhi

Respected Sir,


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,




Range-15,
C. R. Building,
New Delhi

Respected Sir,


With reference to above, we are submitting herewith the following details:-

1. Detail of Security, Safety & Sanitation..

Thanking you

Yours sincerely,



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


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,




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,




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,



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.


New Delhi

Respected sir,

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

(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,




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,



Enclosure:-

1. Details of Wind Electric Generators
2. Statement of Income earned from power generation

RRB/IT/2009 21 December
2009

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,




Range-15,
C. R. Building,
New Delhi

Respected sir,

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,



RRB/IT/2010 11 January
2010

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,



RRB/IT/2010 11 January 2010

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,



RRB/IT/2010 22 January 2010

The Addl. Director of Income Tax,
Transfer Pricing Officer-II(3),
Room No. 311,
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,


RRB/IT/2010 9 February 2010

The Addl. Director of Income Tax,
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
--------------

(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,




Range-15,
C. R. Building,
New Delhi

Respected sir,

Subject: Penalty Proceedings U/Sec. 271 (1) (C) in respect of

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.,


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

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,



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:-


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,



RRB/IT/2010 31 March 2010

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,



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,



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