Tribunal dismisses AO's appeals, upholds deletions, remands issue for verification.

The Tribunal dismissed the AO's appeals on grounds 1, 2, 4, and 5, upholding the CIT(A)'s deletions of disallowances. Regarding ground 3, the Tribunal remanded the issue to the AO for further verification. The appeal was partly allowed, with detailed directions for further examination of specific issues.

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Issues Involved:

1. Disallowance of Rs. 8,27,715/- u/s 40(a)(ia) for non-deduction of TDS on Bank Guarantee Expenses.
2. Disallowance of Rs. 6,85,662/- on account of additional depreciation claimed u/s 32(1)(iia).
3. Disallowance of Rs. 62,96,880/- on account of excess depreciation claimed on electrical installations.
4. Disallowance of Rs. 6,87,99,634/- on account of excess deduction claimed u/s 80IA(8).
5. Disallowance of Rs. 69,89,846/- on account of depreciation while calculating Book Profit u/s 115JB.

Issue-wise Detailed Analysis:

1. Disallowance of Rs. 8,27,715/- u/s 40(a)(ia) for non-deduction of TDS on Bank Guarantee Expenses:

The assessee did not deduct TDS on bank guarantee charges paid to the State Bank of India, leading to a disallowance by the AO based on Section 194H. The CIT(A) deleted the disallowance, applying CBDT Notification No. 56/2012 retrospectively, which was contested by the AO. The Tribunal upheld the CIT(A)'s order, referencing the Bombay High Court's decision in CIT vs. Larsen and Toubro Ltd., which clarified that bank guarantee charges are not in the nature of commission and thus not subject to TDS under Section 194H. Consequently, the Tribunal confirmed that the assessee was not required to deduct TDS on bank guarantee charges, dismissing the AO's appeal on this ground.

2. Disallowance of Rs. 6,85,662/- on account of additional depreciation claimed u/s 32(1)(iia):

The AO disallowed additional depreciation on the grounds that power generation does not qualify as manufacturing or production of an article or thing, and the relevant amendment was effective from 01.04.2013. The CIT(A) allowed the claim, relying on the ITAT's decision in NTPC vs. DCIT, which recognized electricity as goods. The Tribunal upheld the CIT(A)'s decision, noting that the issue was covered in favor of the assessee by earlier decisions in the assessee's own case. The Tribunal confirmed that the assessee was entitled to additional depreciation on power generation assets, dismissing the AO's appeal on this ground.

3. Disallowance of Rs. 62,96,880/- on account of excess depreciation claimed on electrical installations:

The AO categorized electrical installations as "furniture and fittings," allowing only 10% depreciation instead of 15% applicable to plant and machinery. The CIT(A) allowed the higher depreciation rate, treating electrical installations as integral to plant and machinery. The Tribunal remanded the issue to the AO for verification, instructing to determine if the electrical installations were indeed part of the plant and machinery or fell under "furniture and fittings." The Tribunal allowed the AO's appeal on this ground with directions for further examination.

4. Disallowance of Rs. 6,87,99,634/- on account of excess deduction claimed u/s 80IA(8):

The AO reduced the deduction claimed by excluding government levies from the sale price of power transferred to other units. The CIT(A) restored the original deduction, referencing the ITAT and High Court decisions in similar cases, which accepted the rate charged by SEBs as the market price. The Tribunal upheld the CIT(A)'s order, following the Delhi High Court's decision in the assessee's own case, confirming that the market price for power could include government levies. The Tribunal dismissed the AO's appeal on this ground.

5. Disallowance of Rs. 69,89,846/- on account of depreciation while calculating Book Profit u/s 115JB:

The AO added back depreciation computed under the Income Tax Act, which was not debited in the profit and loss account as per the Companies Act. The CIT(A) deleted the addition, following the Supreme Court's decision in Apollo Tyres Ltd., which held that adjustments to book profit should align with the Companies Act. The Tribunal upheld the CIT(A)'s decision, noting that similar additions were deleted in earlier years in the assessee's own case. The Tribunal dismissed the AO's appeal on this ground.

Conclusion:

The Tribunal dismissed the AO's appeals on grounds 1, 2, 4, and 5, upholding the CIT(A)'s deletions of disallowances. For ground 3, the Tribunal remanded the issue to the AO for further verification. The appeal was partly allowed, with detailed directions for further examination of specific issues.

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