Appeal partly allowed: Assessee wins on depreciation, interest, and charges. Service charges included.

The appeal was partly allowed in the case, with specific grounds being decided in favor of the assessee and others being dismissed. The disallowance of depreciation on the building used as a guest house, non-inclusion of interest received from employees, and disallowance of legal and professional charges were dismissed. However, the inclusion of service charges from the Heavy Water Board was allowed in favor of the assessee. Other issues such as disallowance of equipment hire charges, crane hire charges, and interest from IDBI were also dismissed.

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Issues Involved:
1. Disallowance of depreciation on the building used as a guest house.
2. Non-inclusion of interest received from employees in the computation of eligible profits for deduction under Section 80I.
3. Non-inclusion of service charges received from the Heavy Water Board in the computation of eligible profits for deduction under Section 80I.
4. Disallowance of equipment hire charges, crane hire charges, and ammonia tank wagon hire charges in the computation of eligible profits for deduction under Section 80I.
5. Disallowance of guest house receipt in the computation of eligible profits for deduction under Section 80I.
6. Non-inclusion of interest income from banks in the computation of eligible profits for deduction under Section 80I.
7. Disallowance of interest from IDBI under investment deposit under Section 32AB.
8. Disallowance of legal and professional charges incurred on various consultants for feasibility studies.
9. Levy of interest under Section 234C.

Detailed Analysis:

1. Disallowance of Depreciation on the Building Used as a Guest House:
The assessee claimed depreciation on a building used as a guest house under Section 32 of the Income Tax Act, 1961. The Assessing Officer disallowed this by invoking Section 37(4)(i), and the CIT(A) confirmed the disallowance. The assessee acknowledged that this issue was covered against them by the Supreme Court judgment in Britannia Industries Limited Vs. CIT (2005) 278 ITR 546. Consequently, this ground of appeal was dismissed.

2. Non-Inclusion of Interest Received from Employees:
The assessee included interest income from employees on advances given to them in the computation of eligible profits for deduction under Section 80I. The Assessing Officer disallowed this inclusion, and the CIT(A) confirmed the disallowance. The assessee conceded that this issue was covered against them by the Delhi High Court judgment reported in (2008) 300 ITR 92, which held that interest on loans to employees would not be entitled to special deduction under Section 80I. This ground of appeal was dismissed.

3. Non-Inclusion of Service Charges from Heavy Water Board:
The assessee included service charges received from the Heavy Water Board in the computation of eligible profits for deduction under Section 80I. The Assessing Officer disallowed this inclusion, and the CIT(A) confirmed the disallowance. However, the Delhi High Court in the assessee's own case (2013) 358 ITR 168 held that the service charges received from the Heavy Water Board should be regarded as profits or gains derived from an industrial undertaking, qualifying for deduction under Section 80I. Following this precedent, the Tribunal allowed this ground in favor of the assessee.

4. Disallowance of Equipment Hire Charges, Crane Hire Charges, and Ammonia Tank Wagon Hire Charges:
The assessee included equipment hire charges, crane hire charges, and ammonia tank wagon hire charges in the computation of eligible profits for deduction under Section 80I. The Assessing Officer disallowed these inclusions, and the CIT(A) confirmed the disallowance. The assessee conceded that this issue was covered against them by the Delhi High Court judgments in their own case, which held that these charges were not entitled to special deduction under Section 80I. This ground of appeal was dismissed.

5. Disallowance of Guest House Receipt:
The assessee included guest house receipts in the computation of eligible profits for deduction under Section 80I. Due to the smallness of the amount involved (Rs. 1,87,229), this ground was not pressed by the assessee and was dismissed.

6. Non-Inclusion of Interest Income from Banks:
The assessee included interest income from banks in the computation of eligible profits for deduction under Section 80I. The assessee conceded that this issue was covered against them by the Delhi High Court judgment in their own case. Consequently, this ground of appeal was dismissed.

7. Disallowance of Interest from IDBI under Investment Deposit under Section 32AB:
The assessee included interest from IDBI under investment deposit under Section 32AB in the computation of eligible profits for deduction under Section 80I. The Assessing Officer disallowed this inclusion, and the CIT(A) confirmed the disallowance. The Tribunal, following the Supreme Court judgment in CIT Vs. Pandian Chemicals Ltd (262 ITR 278), held that the interest derived from IDBI under investment deposit could not be said to be income derived from the industrial undertaking and did not qualify for deduction under Section 80I. This ground of appeal was dismissed.

8. Disallowance of Legal and Professional Charges:
The assessee claimed legal and professional charges incurred on various consultants for feasibility studies as revenue expenditure. The Assessing Officer disallowed this claim, and the CIT(A) confirmed the disallowance. The Tribunal, following the Delhi High Court judgments in CIT Vs. Priya Village Roadshows Ltd. (2011) 332 ITR 594 and Indo Rama Synthetics India Ltd. Vs. CIT (2011) 333 ITR 18, held that since the expenditure was incurred for the expansion of the existing business and no new asset was created, it should be treated as revenue expenditure. This ground of appeal was allowed.

9. Levy of Interest under Section 234C:
The assessee submitted that the CIT had allowed their waiver petition regarding the levy of interest under Section 234C. Consequently, this ground was not pressed and was dismissed.

General Grounds:
Grounds 5, 6, and 7 were general and were dismissed.

Conclusion:
The appeal was partly allowed, with specific grounds being decided in favor of the assessee and others being dismissed. The detailed analysis provided a comprehensive understanding of each issue, preserving the legal terminology and significant phrases from the original judgment.

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