TaxTMI 
TaxTMI 
2018 (5) TMI 420
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....ed by the A.O. dated 31.12.2010, and the other assessee's appeal in ITA No. 1188/Kol/2016 arising out of the appellate order of the Ld. CIT(A) - 17, Kolkata dated 04.03.2016 passed against the order under section 250/143(3) passed by the A.O. with a view to give effect to the Ld. CIT(A)'s order dated 27.04.2012. First we will take up for A.Y. 2008-09 (ITA No. 1037/Kol/2012 i.e. assessee's appeal. 3. Ground No. 1 to 4 are directed against the action of the Ld. CIT(A) who confirmed the disallowance aggregating to Rs. 61,47,311/- made by the A.O. under section 14A of the Income Tax Act, 1961 (here-in-after the Act) read with rule 8D of the Income Tax Rules, 1962 (here-in-after the Rules). 4. Briefly stated the facts of the cases are that during the relevant previous year, the assessee derived dividend income to the tune of Rs. 3,55,81,107/- which was exempt under section 10(34) of the Act. For earning the exempt income, the assessee had offered disallowance of Rs. 10,00,000/- under section 14A in the return of income. In the assessment proceedings, the A.O. did not accept the disallowance offered by appellant. Referring to the decision of the Special Bench of the Tribunal (Mu....
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....pute the fact that the investments were made out of own funds. We note that in A.Y. 2007-08, the Revenue had in fact invoked provisions of section 14A and disallowed the proportionate interest. However, in the appellate order for A.Y. 2007-08, the Ld. CIT(A) had given a categorical finding that the assessee had demonstrated that investments were out of own funds and not from borrowed funds and we note that the Ld. CIT(A) action of deletion of interest was upheld by this Tribunal. We rely on the judgment of the Hon'ble Calcutta High Court in the case of CIT vs Rasoi Ltd. (supra) wherein the Hon'ble High Court taking note of the judgment passed by the co-ordinate Bench of the Calcutta High Court in Dhanuka & Sons 339 ITR 319 held as under: "It appears for both the assessment years the Appellate Authority held that there was no finding of direct nexus between the borrowed fund and investment in shares. The assessee's own funds were far in excess of the average total investments. There could not be any presumption of utilization of borrowed funds. Hence disallowance under section 14A read with Rule 8D (2 ) (ii) was deleted while disallowance ofindirect expenses of Rs. 1,82....
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....s entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.'s case (supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the overdraft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT (Appeals) and ITAT. ....
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....s court in HDFC Bank Ltd. (supra) for the first time on 23rd July, 2014 has settled the issue by holding that the test of presumption as held by this court in Reliance Utilities and Power Ltd. (supra) while considering section 36(1)(iii) of the Act would apply while considering the application of section 14A of the Act. The aforesaid decision of this court in HDFC Bank Ltd. (supra) on the above issue has also been accepted by the Revenue in as much as even though they have filed an appeal to the Supreme Court against the order on the other issue therein viz. broken period interest, no appeal has been preferred by the revenue on the issue of invoking the principles laid down in Reliance Utilities & Power Ltd. (supra) in its application to section 14A of the Act. Therefore, the issue which arose for consideration before the Tribunal had not been decided by this court in Godrej & Boyce Mfg. Co. Ltd. (supra). It arose and was so decided for the first time by this court in HDFC Bank Ltd. (supra). Thus, there is no conflict as sought to be made out by the impugned order. Thus, the impugned order has proceeded on a fundamentally erroneous basis as the presumption canvassed by the petition....
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....arned AR that only dividend bearing investment of scrips are to be considered for making disallowance under section 14A of the Act. In this regard, reliance was placed by the learned AR on the decision of the Tribunal in the case REI Agro Ltd. reported in 143 ITD 141 Kolkata which we note is very well founded wherein it was held: "(8.1) Thus, not all investments become the subject-matter of consideration when computing disallowance under section 14A read with rule 8D. The disallowance under section 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. Under the circumstances, the computation of the disallowances under section 14A read with rule 8D(2)(iiI0, which is issue in the assessee's appeal, is restored in the file of the A.O. for recomputation in line with the direction given above. No disallowance under section 14A read with rule 8D(2)(i) and (ii) can be made in this case." 11. In view of the aforesaid findings and respectively following the decision of the Coordinat....
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....n assessee's own case in ITA No. 931/Kol/2012 dated 29.02.2016 for A.Y. 2005-06 wherein on identical facts and circumstances held as under: "8.3 We have heard the rival submissions and perused the materials available on record. We find from the facts of the case that the deposits and advances were given in the ordinary course of business and were lying in the books of the assessee company for quite a long time. The some were considered irrecoverable by the assessee and had written off the same in Asst Year 2005-06 and hence the same is to be considered as a trading loss u/s 28 of the Act. We hold that the Learned CITA) had rightly deleted the addition made in this regard. Accordingly, the ground no.1 raised by the revenue is dismissed. " 15. The facts in the year under dispute are analogous to that in the earlier years and since no change in law or facts could be pointed out by the revenue so respectfully following the order of the Tribunal (supra), we find no infirmity in the impugned order of Ld. CIT(A), in this regard. Accordingly Ground No. 1 raised by the Revenue is dismissed. 16. Ground No. 2 is against the action of the Ld. CIT(A) directing the A.O. to allow f....
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....earlier years passed by his predecessors and this Tribunal allowed the claim of assessee. Aggrieved the revenue is before us. 17. We have heard both the parties and carefully perused the material available on record. Taking note of the fact that the issue is squarely covered by the Co-ordinate Bench of this Tribunal for A.Y. 2001-02 to 2007-08 in favour of the assessee, we find no infirmity in the order of the Ld. CIT(A) in following the decision of this Tribunal deleting the disallowance of depreciation. Ground No. 2 of the Revenue's appeal is dismissed. 18. Ground No. 3 of the revenue's appeal is against the action of the Ld. CIT(A) in accepting the assessee's claim for considering the market value of electricity for the purpose of section 80IA to be the average landed cost of electricity at which the assessee procured electricity from the respective State Electricity Boards (herein after SEBs). Briefly stated the facts are that the assessee is engaged in the business of manufacturing and sale of cement, rayon, fire bricks, cast iron pipes, tyres and tubes and various forms of chemicals. The assessee-company has set up two power plants for its cement unit at Vasavadatta Cem....
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.... of electricity adopted by the assessee with which much lower figures. By such substitution, the A.O. determined lower profits eligible for deduction in respect of the four power plants under section 80IA of the Act. Aggrieved, the assessee preferred appeal before the Ld. CIT(A) - VI, Kolkata who principally accepted the assessee's contention that the rate at which the State Electricity Boards sold the electricity to the assessee represented open market value of the power and which could be adopted as the basis for determining profits eligible for deduction under section 80IA of the Act. Further the Ld. CIT(A) held that the tariff rate to be adopted for ascertaining transfer price of power for captive consumption should be the weighted average of the annual consumption of electricity sourced from SEBs but so however that such rate should be reduced by the amount of electricity duty and cess charged by the SEBs. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us. On the other hand, the assessee supported the order of the Ld. CIT(A) in terms of Rule 27 of the Rules and prayed that even the electricity duty and cess charged by the SEBs should be taken into ac....
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....quired to sell the power to the distribution companies and that too at the tariff rate fixed by the Regulatory Commission. In these circumstances, therefore the only market rate available for sale of electricity by CPPs was the tariff rate at which electricity generating company sold power to SEBs and none else. The learned AR submitted that the regulatory framework, underwent sea change after the Electricity Act 2003 was enacted and came into force in 2003 pursuant to which the business of generation, transmission and distribution of power was deregulated and CPPs were permitted to undertake sale of power to third party consumer on the terms mutually agreeable. Power generators were also permitted to purchase and sale power through power exchanges established in the country. In the course of hearing of the appeal, the learned AR was directed to furnish the submission setting forth the relevant regulatory provisions applicable to the CPPs, particularly with reference to the facts of the assessee's case which would prove that the assessee's CPPs were not legally obliged to sell electricity only at the rate determined by the State Regulatory Commission. In response the learned AR of ....
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....t value' for the purposes of Section 80IA should be the rate at which the SEB procured power from electricity generating companies because in his opinion the CPPs were not permitted to sell power to ultimate consumers but was obliged to sell surplus power only to SEB and that too at the rate at which power was being purchased by SEBs from other generating companies. According to AO the sale price realized by SEBs were higher than the price at which SEB was purchasing power from generating companies. According to AO the per unit selling price of SEB not only included the cost of electricity purchased or generated but also the cost incurred on distribution, storage, transmission loss and its own profit margins. Based on certain tariff rates available from the website of Orissa Electricity Commission, the AO made some extrapolations and computed the transfer rates for all the four CPPs as follows: CPP AY 2008-09- AY 2009-10 Karnataka 1.92 (Both I & II) 3.62 (Both I & II) Orissa 2.02 1.46 West Bengal 1.93 1.85 5. Aggrieved by such action of the AO, the assessee company preferred an appeal before the CIT(A)-VI, Kolkata. In the appellate o....
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....e generating companies to compulsorily sell the power to the distribution companies and to none else. Therefore, in absence of any alternate rates, the High Court held that the price at which electricity generating company sold power to SEBs was only available market rate which could be adopted for the purposes of Section 80IA(4) of the Act. In this regard it was explained the relevant year in question in the decision of the Calcutta High Court in the case of CIT Vs ITC Ltd (supra) was Financial Year 2001-02 i.e. prior to the introduction of Electricity Act, 2003. It was submitted that until 2002-03, the electricity generating companies could only sell or supply power to the State Electricity Boards. However subsequent to the enactment of Electricity Act, 2003, the electricity had been de-regulated and it was legally permissible for the electricity generating companies to supply power to other consumers and determined the pricing through competitive bidding process or any other mutually agreed terms. 8. Before the Hon'ble Tribunal it was further explained that the ratio laid by the Calcutta High Court in the decision of CIT Vs ITC Ltd (supra) that electricity could be ....
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....d the assessee to furnish the relevant extracts of Electricity Act, 2003 and the regulations framed by the respective State Electricity Commissions in order to substantiate that open access was legally permissible. The assessee was also required to establish that apart from SEBs; power could be supplied to other consumers directly and that the rates at which power could be supplied was variable and could be determined at values different from the fixed tariff rates in terms of Section 61 & 62 of the Electricity Act, 2003. In view of the foregoing therefore the assessee-company is placing on record a further paper book comprising of 1-73 pages. 10. It would first be relevant to set out the pertinent provisions of the Electricity Act of 2003 containing the 'open access' policy. The term 'open access' has been defined in clause (47) of Section 2 of the Electricity Act 2003 which reads as follows: " open access" means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified....
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....n and the duties of the distribution licensee with respect to such supply shall be of a common carrier providing non-discriminatory open access. (4) Where the State Commission permits a consumer or class of consumers to receive supply of electricity from a person other than the distribution licensee of his area of supply, such consumer shall be liable to pay an additional surcharge on the charges of wheeling, as may be specified by the State Commission, to meet the fixed cost of such distribution licensee arising out of his obligation to supply. (5) Every distribution licensee shall, within six months from the appointed date or date of grant of licence, whichever is earlier, establish a forum for redressal of grievances of the consumers in accordance with the guidelines as may be specified by the State Commission. (6) Any consumer, who is aggrieved by non-redressal of his grievances under sub-section (5), may make a representation for the redressal of his grievance to an authority to be known as Ombudsman to be appointed or designated by the State Commission. (7) The Ombudsman shall settle the grievance of the consumer within such time and in suc....
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....ity Act, 2003 not only is open" access permitted but even the rates for supply of electricity under open access is left to the discretion of the contracting parties. 10.6 The above proposition is further fortified from Section 86 of Electricity Act, 2003 which lays down the provisions concerning the State Electricity Commissions. The extracts of the provision is as follows: 86. (1) The State Commission shall discharge the following functions, namely: - (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: Providing that where open access has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers;" 10.7 The proviso to sub-section (1) of Section 86 makes it abundantly clear that the State Electricity Commission does not have the power to regulate the rates for supply of electricity permitted under open access. The State Electricity Commission can only determine & levy the charges for wheeling of the electricity throu....
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....ataka permitting it to supply power to other consumers directly under open access scheme [Refer Pages 58 to 61 of Paper Book]. 13. The assessee-company has further enclosed the data complied from the official web site of India Energy Exchange ('IEX') in the years 2007 & 2008 to show that the power was being openly traded on recognized platform at prices which were determined through the prevailing market forces and not the tariff rates fixed by Regulatory Commission. From the data enclosed at Pages 62 to 64 of the Paper Book as traded in the market at a price as high as Rs. 7.670 during 2008. 14. In view of the above set out facts, provisions of Electricity Act of 2003, orders of State Regulatory Commission and data obtained from IEX, it is clear that the proposition put forth by the AO in the impugned order that the electricity generating companies could only sell or supply power only to the State Electricity Boards and that too at the prescribed tariffs rates by the Regulatory Commission is wholly erroneous and factually incorrect. Accordingly even the decision of the Calcutta High Court in the case of CIT Vs ITC Ltd (supra) is not applicable because the....
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....EB supplied power to its consumers ignoring the rate of Rs. 2.36 per unit, the rate on which power generating company supplied its power to GEB?" 18. From the above it will be observed that the Gujarat High Court specifically decided the issue in favour of the assessee by holding that the deduction under Section 80IA in respect of CPP shall be computed by taking the per unit selling price of electricity equal to the rate at which the assessee purchased the electricity from SEB. 19. In the said judgment the Gujarat High Court also held that for the purposes of adopting market rate of electricity, the component of duty & tax charged by SEB will also be taken into account. The judgment of the Gujarat High Court thus upholds the direction of the Hon'ble I TAT , Kolkata in the case of Dy.CIT Vs Birla Corporation Ltd (supra). Respectfully relying on the said judgment of Gujarat High Court, it is prayed that the relief claimed by the company in application under Rule 27 may kindly be allowed on the same lines [Refer Pages 68 to 73 of Paper Book]. 21. We have considered the rival submissions and perused the documents in the paper book which inter alia contained Ele....
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.... not allowed to sell power to any person other than the SEBs or power distribution companies. According to the A.O., there was monopoly buyer who alone was permitted to purchase the power at the price determined in the sole discretion of the SEBs and therefore, the price at which the SEBs were purchasing power alone represented the market value for the power generated by CPPs. We also note that the premise on which the A.O. proceeded was analogous to the premise on which the Hon'ble Calcutta High Court decided the Revenue's appeal in the case of ITC Ltd. (supra). In that case also the Hon'ble High Court proceeded on premise that the independent power producers or CPPs could sell the power only to power distribution companies and that too at the rates determined by the State Regulatory Commission. In other words in the opinion of the A.O. and the Hon'ble High Court the power producers were necessarily required to sell the power in the regulated market where prices were fixed at the discretion of the State Electricity Boards and / or Regulatory Commissions and the power generating companies had no option or discretion to determine the selling rate. However, in the case in hand there ....
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....by the Indian Energy Exchange (IEX) for the yearly power price prevailing on the IEX in different regions during the year2008-09. The said chart we note gave break up of power price at which the power was purchased and sold by power producers, distribution companies etc in different regions of the country. From the said chart it appears that the average power unit price of the Eastern Region in the year 2008 was Rs. 7.53/-. Similarly for the Southern Region of Rs. 7.54 per unit. Similar prices prevailed in 2009 as well. The foregoing documents therefore prove that the A.O.'s presumption that the assessee was legally obliged to sell electricity only to the power distribution companies and SEBs and that too at the controlled prices was devoid of any legal or factual foundation. We note that this specific issue was adjudicated by the Co-ordinate Bench of this Tribunal in the case of DCIT vs Birla Corporation Ltd. to which one of us was signatory. In the said decision, the Co-ordinate Bench of this Tribunal, after considering the ratio laid down by the Hon'ble Supreme Court in the case Thiru Arooran Sugar Ltd. held as follows: "5.6. We have heard the rival submissions and peru....
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.... a very good indication of the market value of electricity and the assessee did not commit any error in adopting such price for working out the amount eligible for deduction u/s 80IA of the Act. 5.6.2. We find that the reliance placed by the ld AR on the decision of the Hon'ble Supreme Court in the case of Thiru Arooran Sugars Ltd. v CIT, (1997) 227 ITR 432 (SC), wherein at page 441, it was held as under:- "In view of the aforesaid, it is very difficult to uphold the contention of Mr. Nariman that in order to find out the market price, there has to be an actual market where there will be "a concourse of buyers and sellers". This argument was specifically rejected by Lord Pearson L. J., in the case of Building and Civil Engineering Holidays Scheme Management Ltd. v. Post Office [1966] 1 QB 247 (CA), in the following words (page 268): "What is meant by 'market value' ? It is not reasonable to suppose that for the purposes of this proviso there is no market value unless there is a concourse of buyers and sellers. There is no need to infer that there must be an open market, or that there must be a price fluctuating according to the pressures of supply and dem....
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....during the year at different times being made applicable uniformly for the whole year. In our considered opinion, the assessee's method is more appropriate as it factors in variations as and when they take place." 24. We also note that the identical issue of determination of power tariff rate for allowing deduction under section 80IA in respect of profits of CPPs came up for consideration before the Co-ordinate Benches of this Tribunal in the case of Graphite India Ltd. vs ACIT in ITA No. 304-305/Kol/2008 and DIT vs Kanoria Chemicals and Industries Ltd in ITA NO. 944/Kol/2016, a perusal of the said orders reveals that the Co-ordinate Benches held that for the purpose of granting the deduction, the profits of the CPP should be determined with reference to the power tariff/ rate at which the manufacturing undertakings being the captive consumers were provided electricity by the SEBs. 25. We also note that similar issue was also considered by the Hon'ble Madras High Court in the case of Tamil Nadu Petro Products Ltd. vs ACIT 338 ITR 648 wherein the Hon'ble High Court held that there is no difficulty in holding that captive consumption of the power generated by the assessee from ....
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....icals Ltd. (544 of 2016 dated 03.10.2016), the Hon'ble High Court reiterated the same view. 28. We have heard the submissions and perused the working provided by the learned AR and also the decision relied upon, we find that the issue raised by the assessee is squarely covered by the decision of the Hon'ble Gujarat High Court in the case of Pr. CIT vs Gujarat Alkalis and Chemicals Ltd. (supra) wherein the Hon'ble High Court following the judgment in the case of CIT vs Shah Alloys Ltd. (supra) wherein the Hon'ble High Court has held as follows: "2. In both the tax appeals though slightly differently worded, the questions concerning the same assessee are identical and concern the issue of deduction under section 80IA of the Income Tax Act granted to the assessee by the Tribunal on captive power generation plant. The second question is with respect to recognising such claim on the basis of purchase price of power from GEB and substituting the rates of 2.47 per unit adopted by the Assessing Officer. 3. Since both the issues are covered by various judgments of this Court, we do not find it necessary to record facts at any length. Division Bench of this Court by judg....
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.... transfer, then for the purposes of deduction under Section 80IA in case of the eligible business as if the transfer had been made at the market value of such goods or services. It is in this context that the question of substituting the actual consideration by the market value comes into picture. 7. We may notice that the Tribunal did not accept the contention of the assessee that the electricity is neither goods nor services and that, transfer of electricity, therefore, would not be covered under sub-Section (8) of Section BOIA of the Act. However, in so far as the Tribunal's reasoning to adopt the market value of the goods at Rs. 5.40 ps. per unit is concerned, we find no error. Undisputedly, GEB supplied the electricity to its consumers at the same rate. This, therefore, was a market value of the electricity supplied by the CPP Unit to the general unit. The fact that this amount of Rs. 5.40 ps. comprises of a component of 8 paise, which was electricity duty, to our mind, would make no difference in so far as the market value is concerned. To a consumer, the pricebeing paid remains 5.40 ps. per unit. The fact that the seller retains only Rs. 5.32 ps. out of the said....
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....n market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.9O to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 5. Issue once again reached the Division Bench of this Court in case of Commissioner of Income-tax-I v. AlembicLimited in Tax Appeal No.47l /2OOg and connectedappeals. The Division Bench referring to earlier judgmentsof the Court held as under : "11. We have considered the submissions made by thelearned counsel for the parties. We have also consideredthe case laws cited by the learned counsel for the assessee.Taking into consideration the judgments of this court andother High Courts, cited above, we are of the opinion thatthe Tribunal has rightly allowed the claim of the assessee.In that view of the matter, we do not find any infirmity inthe order of the Tribun....
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....nst the action of the Ld. CIT(A)-17 { second round} dated 04.03.2016 - Kolkata in confirming the A.O.'s order passed under section 250/143 wherein the A.O. restricted the benefit of deduction under section 80IA only to the extent of amount claimed in the return of income as opposed to the specific directions issued by the Ld. CIT(A) - VI, Kolkata requiring AO to re-compute the eligible profits of CPPs. 32. Briefly stated facts of the case are that in the return filed under section 139(1) of the Act, the assessee had claimed deduction under section 80IA in respect of the profits derived by it for CPPs at Rs. 37,38,67,760/-. In arriving at the deduction permissible in terms of section 80IA, the assessee had adopted the following selling rates of powers which was captively consumed by its manufacturing undertakings: CPP Per Unit Karnataka 4.28 Orissa 4.06 West Bengal 4.30 33. In the order framed under section 143(3), the A.O. however had objected to the manner of determination of selling of power by the assessee and recomputed it at the following rates: CPP Per Unit Karnataka 1.92 Orissa 2.02 West Bengal 1.93 Aggrieved by the sa....
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.... of the assessee holding that the annual weighted average landed cost of electricity to the assessee (excluding duty and cess) was the most appropriate rate for the purpose of computing the transfer value and deduction under section 80IA(4) of the Act. The relevant findings and direction issued by the Ld. CIT(A) in this regard were as follows: "32. The Hon'ble ITAT 'B' Bench, Kolkata in the case of DCIT, Cir-8, Kolkata vs M/s. ITC Ltd. Kolkata in ITA No. 18 (Kol) of 2006 decided on 30.06.2006 has approved in the same manner. Therefore, the rates calculated in this manner are held to be fair, reasonable and applicable to the appellant and are given as follows: SL No. Asst. Year CPP in Karnataka CPP in West Bengal CPP in Orissa 1 2008-09 6.04 4.25 3.50 33. The rates have been furnished by the appellant on the basis of calculation in the bills charged by the State Electricity Board(s). The basis followed is held fair and reasonable and approved in the facts of the appellant and also in view of the judgement of the jurisdictional ITAT, Kolkata and other appellate authorities on this issue (supra). However, the Assessing officer will....
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....ssible, the Ld. AR drew our attention to the decision of the Hon'ble Calcutta High Court in the case of CIT Vs M/s. Britannia Industries Ltd in ITA NO. 03 of 2013 dated 13.07.2017 in which the Hon'ble High Court took a view that the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. (supra) was applicable only to the power of the assessing authority to consider a claim made otherwise by way of a revised return of income, but that does not limit the power of the appellate authorities to entertain a new claim. The Ld. AR also drew our attention to similar decisions rendered by the Hon'ble Madras High Court in the case of CIT Abhinita Foundation (P) Ltd 396 ITR 251 & Hon'ble Bombay High Court in the case of CIT vs Pruthvi Brokers & Shareholders (349 ITR 336). 38. As far as the power of CIT(A) to entertain revised claim or an additional claim raised by the assessee is concerned, we find that the law is now well settled that the appellate authorities have the power to entertain a new claim by the assessee even in the absence of a revised return of income. The decision of Calcutta High Court in the case of CIT Vs Britannia Industries Ltd (supra)....
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....ific facts of the assessee's case, we find that in the original appellate proceedings the Ld. CIT(A) had taken due cognizance of the assessee's plea that if the annual weighted average cost of electricity purchased at Karnataka Unit is adopted, then it would result in enhancement of the quantum of claim u/s 80IA of the Act. This is apparent from Para 18 (at Page 26) of the first appellate order of the Ld. CIT(A)VI. We further note that the Ld. CIT(A) had specifically annexed the revised computation of selling rates of power of the respective CPPs to the appellate order and issued necessary directions to the AO to verify the same and then modify the claim allowable u/s 80IA. On these facts therefore, we find that in the impugned order the Ld. CIT(A)-17 erred in holding that his predecessor did not direct the A.O. to allow the deduction u/s 80 IA at a sum higher than the one claimed in the return furnished u/s 139(1). Once the Ld. CIT(A)-VI 's order specifically laid down the manner and mode of calculation of selling rate of power and also annexed the computation sheets to the appellate order, subject to verification of figures by the A.O. with reference to original bills; in our con....
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....sub-section (1) the Assessing Officer shall by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment; b. in a case where an assessment has been made under sub-section (1), if either such assessment has been objected to by the assessee by an application under clause (a) of subsection (2) or the Assessing Officer is of opinion that such assessment is incorrect, inadequate or incomplete in any material respect, the Assessing Officer shall, by an order in writing make a fresh assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment." 43. On perusal of the above, we note that the A.O. was authorized by the Legislature to make assessment of the total income or loss and determine the sum which was 'payable' or 'refundable' on the basis of the assessment. Meaning thereby, the A.O. was legally empowered in law to make assessment of the total income of the assessee at a lower sum that the returned income, which would result in 'sum refundable' to the assessee. 44. The pr....
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....43(3) explicitly stated that under the erstwhile provisions, there was no provision to issue refund and the Assessing Officer was only empowered to determine the sum payable by the assessee, but under the amended provisions the A.O. is empowered to provide for determination of sum payable by the assessee as well as the refund of any amount due to him. 48. On conjoint & harmonious reading of these provisions & after giving due consideration of the legislative history of Section 143(3) and the judgment of the Calcutta High Court in the case of CIT Vs Britannia Industries Ltd (supra) and Gujarat High Court in the case of Milton Laminates Ltd (supra), we are of the considered view that the Ld. CIT(A) erred in upholding the order u/s 250/143(3) of the A.O by restricting the claim of deduction u/s 80IA to the extent as claimed in the return filed u/s 139(1). We are of the considered view that there is no estoppel in law that the assessed income cannot go below the income returned by the assessee. We therefore direct the A.O to modify the deduction allowable u/s 80IA by re-computing the income /profits of the eligible power generating undertakings by adopting power tariff /rates as spe....
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....ssessee company disallowed the provision in respect of leave encashment made during the year and offered it to tax in the computation of income. The assessee has now made a claim for deduction of a sum of Rs. 2,55,74,457/- u/s 43B of the Act towards leave encashment and retirement benefits that was actually paid during the relevant previous year in computing income of the business. After hearing the submissions of the rival parties, we find that the admitted factual position was that the assessee did not claim the aforesaid sum as deduction in the return of income and the details thereof were not available before the A.O. In all fairness therefore we deem it fit to remand the appellant's claim to the A.O. for fresh consideration. If the claim of the assessee regarding actual payment is found to be correct, then the assessee should be allowed the deduction on actually payment basis as demanded by Sec. 43B(f). The A.O. is accordingly directed to verify the claim of the assessee after giving due opportunity of hearing to the assessee and in accordance with law. Additional Ground raised by the assessee is therefore decided accordingly. 53. In the result, the appeal of the assessee i....
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....assessee neither capitalized the clinker plant to fixed assets & claimed the benefit of depreciation thereon nor did it charge off the interest paid on borrowed funds used for meeting cost of clinker plant, to the Profit & Loss Account. However for tax purposes, the assessee claimed that the plant & machinery of the clinker plant had been "put to use" on 12th March 2009 i.e. the date on which trial run was conducted and therefore claimed depreciation in respect thereof on the ground that conditions prescribed in Section 32 were satisfied. The assessee also claimed deduction for interest of Rs. 72,50,371/- relatable to borrowed funds utilized for acquiring clinker plant, for the period 12th March 2009 to 31st March 2009, on the ground that conditions for claiming deduction for interest paid on borrowed capital, prescribed in Section 36(1)(iii) of the Act were satisfied. In the course of assessment, the A.O. required the assessee to explain the rationale behind both the claims made in the return along with relevant details. The details requisitioned by the A.O. were furnished by the assessee through its letters dtd. 22.12.2011 & 27.12.2011.After examining the submissions of the asses....
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.....2009 relatable to clinker plant in arriving at the profits of the business. We find that the A.O. had called for and examined the details and documents in respect of both these claims i.e. deduction for interest and depreciation in relation to the clinker plant, which was put to trial run on 12th March 2009. A bare perusal of the impugned order u/s 143(3) shows that the deduction for interest of Rs. 72,50,371/- u/s 36(1)(iii) was allowed by the A.O. on being satisfied that the assets of Clinker Plant were used for the purposes of assessee's business when trial run was conducted on 12th March 2009. However on the self same facts the A.O. however refused to accept the claim depreciation on the ground that assets were not capitalized and assessee failed to prove that assets were actually used for business purpose because commercial production did not commence before 31.03.2009. The Ld. AR argued that the provisions of Section 32 & 36(1)(iii) were analogous & allowed deduction only if the asset is used for the business purpose of the assessee during the relevant previous year. Under both these provisions once the qualifying asset is put to use, then the assessee becomes legally entitl....
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.... of the assessee. The Hon'ble High Court held that even trial production conducted only for 1 day would fall within the ambit of the phase "used for the purposes of business" contained in Section 32 of the Act. It was held that the quantity produced and its sale-ability or marketability was of no consequence because the only requirement of Section 32 was that the asset should be put to use. The Court further held that even subsequent breakdown of machinery or technical snag which may be developed during the trial run which interrupted subsequent production for a period of time cannot be the reason to deprive the assessee of the benefit of depreciation claimed. We find that in present case the assets of the Clinker plant were used to conduct trial run on 12th March 2009. The disclosure of such fact was made in the audited accounts. The assessee also furnished relevant details and documents supporting purchase of the plant and machinery before the A.O. and also substantiated that the said plant was used for conducting trial run on 12th March 2009. The A.O. has not shown any infirmity in the factual matrix. In the A.O.'s opinion however the use of clinker plant for conducting trial ru....