Section 80-IA Deduction of ₹9,67,138 Disallowed Where BESCOM Approvals, PPA and Completion Certificate Stood in Name of a Different Entity — Bangalore ITAT

Case Overview

Case Name: Boggaram Krishnamurthy Ramakrishna Vs DCIT (ITAT, Bangalore Bench)
Assessment Year: 2018-19
Deduction in Dispute: ₹9,67,138 claimed under Section 80-IA of the Income Tax Act, 1961

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal of an individual assessee who sought deduction under Section 80-IA of the Income Tax Act, 1961 through his proprietary concern M/s. Azure Energy in respect of electricity generation from a solar rooftop power plant. The Tribunal upheld the disallowance on the ground that every material statutory document — the regulatory approval, the power-purchase agreement, and the project completion certificate — was issued in the name of M/s. Viswas Textile Processors, a separate and distinct partnership entity, and not in the name of M/s. Azure Energy, which was the undertaking actually claiming the deduction.

Procedural Aspect: Condonation of 177-Day Delay

Before addressing the substantive question, the Tribunal dealt with a significant procedural hurdle. The assessee's appeal before the ITAT was filed with a delay of 177 days beyond the prescribed limitation period.

The assessee submitted that the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi under Section 250 of the Income Tax Act, 1961 was never received through postal delivery, nor was it communicated via email. The assessee came to know of the existence of the order only after receiving a telephonic communication from the Demand Management Centre, CPC, Mysuru, regarding an outstanding tax demand for AY 2018-19.

The Tribunal, placing reliance on the Supreme Court's decision in Collector Land Acquisition, Anantnag vs. MST Katiji and others, reported in 1987 SCR (2) 387, reiterated the well-settled principle that:

"The Rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred."

The Tribunal noted that the assessee had filed a supporting affidavit and had not derived any advantage by filing the appeal belatedly. Satisfied that sufficient cause existed for the delay, the Tribunal condoned the 177-day delay and proceeded to decide the appeal on merits.

Background Facts

The assessee is an individual who operates a proprietary concern under the name M/s. Azure Energy. For AY 2018-19, the assessee filed his return of income on 12.10.2018 declaring total income of ₹42,77,990 after availing Chapter VI-A deductions aggregating ₹11,52,138. Included within these deductions was a claim of ₹9,67,138 under Section 80-IA of the Income Tax Act, 1961, on the basis that M/s. Azure Energy was engaged in the generation of electricity through solar energy.

The return was selected for scrutiny and statutory notices under Section 143(2) and Section 142(1) of the Income Tax Act, 1961 were duly issued and served.

What the Assessment Proceedings Revealed

During scrutiny, the Assessing Officer (AO) examined the documentary trail related to the solar rooftop power plant and made a critical observation: none of the regulatory approvals, agreements or permissions connected with the project were in the name of M/s. Azure Energy.

Specifically: