Appeals partly allowed: strategic investments excluded, verification required.

The Tribunal partly allowed the appeals in the case. The first ground was dismissed as it awaited the High Court decision. The second ground was partly allowed, directing exclusion of strategic investments from disallowance calculation. The third ground was allowed, instructing verification and application of the High Court decision. The fourth ground was dismissed due to lack of argument.

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Issues Involved:
1. Taxing of sales tax benefit received under power policy in respect of windmills.
2. Disallowance of expenses under Section 14A read with Rule 8D.
3. Disallowance of claim for deduction under Section 80-IA(iv).
4. Levy of interest under Section 234-C.

Detailed Analysis:

1. Taxing of Sales Tax Benefit Received Under Power Policy in Respect of Windmills:
The primary issue was whether the sales tax subsidy received by the assessee under the power policy of the State Government for setting up windmills should be treated as a capital receipt or a revenue receipt. The assessee argued that the subsidy was a capital receipt, not liable to tax, as it was an incentive for setting up infrastructure. However, the CIT(A) and the Tribunal treated the subsidy as a revenue receipt liable to tax. The matter was already pending before the Hon'ble High Court, and the assessee had filed a declaration under Section 158A(1) agreeing to abide by the High Court's final decision. Consequently, this ground was dismissed.

2. Disallowance of Expenses Under Section 14A Read with Rule 8D:
The assessee had shown dividend income from mutual funds and shares, which is exempt from tax. The AO disallowed Rs. 26,009/- under Section 14A read with Rule 8D, which the CIT(A) confirmed. The assessee contended that the investment in the partnership firm should be excluded from the calculation as it was a strategic investment with no share income received in the year. The Tribunal agreed and directed the AO to exclude the investment in the partnership firm from the average investment calculation under Rule 8D(2)(iii) and recalculate the disallowance.

3. Disallowance of Claim for Deduction Under Section 80-IA(iv):
The issue was whether the interest income on delayed payment of sale proceeds qualified for deduction under Section 80-IA(iv). The assessee argued that such interest should be considered as income from eligible business, citing the Bombay High Court's decision in CIT vs. Vidhyut Corporation. The Tribunal agreed, noting that the interest was on account of delayed payment for the sale of power generated by the windmill, thus partaking the same nature as the sale consideration. The AO was directed to verify the nature of the delayed payment interest and decide accordingly.

4. Levy of Interest Under Section 234-C:
The assessee contested the levy of interest under Section 234-C amounting to Rs. 8,759/-. However, no arguments were presented before the Tribunal on this issue, leading to its dismissal as not pressed.

Conclusion:
The Tribunal's consolidated order addressed each ground of appeal comprehensively. Ground No. 1 was dismissed due to the pending High Court decision. Ground No. 2 was partly allowed, directing the AO to exclude strategic investments from the disallowance calculation. Ground No. 3 was allowed, directing the AO to verify and apply the jurisdictional High Court's decision. Ground No. 4 was dismissed due to lack of argument. The appeals were thus partly allowed.

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