AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2018 (5) TMI 796
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting an addition of Rs. 239.33 crores on account of income tax recoverable from SEBs. 5. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting an addition of Rs. 790.10 crores on account of provision of deffered tax. 6. The appellant craves to be allowed to amend, delete or add any other grounds of appeal during the course of hearing of this appeal." 3. As regards to the Ground No. 1 relating to the deduction u/s 80IA of the Income Tax Act, 1961 (hereinafter referred to as the Act), the ld. Counsel for the assessee at the very outset stated that this issue is covered in favour of the assessee vide order dated 26.05.2004 in ITA Nos. 1377 & 2188/Del/2002 for the assessment years 1998-99 and 1999-2000 respectively in assessee's own case (copy of the said order was furnished which is placed on record). 4. The CIT DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 5. After considering the submissions of both the parties and the material available on record, it is noticed that an iden....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contained in any other provisions of this Act, the profits and gains of an industrial undertaking or a ship or the business of a hotel or the business of repairs to oceangoing vessels or other powered craft to which the provisions of subsection (a) apply shall, for the purposes of determining the quantum of deduction under sub-section (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ship or the business of the hotel or the business of repairs to ocean-going vessels or other powered craft were the only source of income of the assessee during the previous years relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made." We are afraid how the above provisions help the case of the revenue. On the contrary, it helps the case of the assessee. This provision has been relied upon by the Assessing Officer for the submission that profits of each unit has to be determined independently as if such unit were only source of income of the assessee. There is no dispute to su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Assessing Officer, the computation of the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship or the business of repairs to ocean- going vessels or other powered craft in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.-In this sub-section, "market value", in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market." Section 80-IA(9): Where any goods held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x amounting to Rs. 790.10 crores respectively. The ld. Counsel for the assessee submitted that clearance was not given by the COD to file the appeals on these issues and that as per the office memorandum dated 04.02.2013 issued by Government of India, Cabinet Secretariat, Rashtrpati Bhavan, the department or public sector undertakings may not reopen the cases wherein decision has been issued by the COD prior to 17.02.2011 (copy of the said office memorandum was furnished which is placed on record). The reliance was also placed on the judgment of the Hon' ble Delhi High Court in the case of CIT-V Vs Rural Electrification Corp. Ltd. 2014 (1) TMI 1238 (copy of the said order was furnished which is placed on record). 7. In her rival submissions, the ld. CIT DR supported the order of the AO. 8. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the CBDT sought permission from the COD for filing the appeals for the assessment year 2004-05 on the issues relating to incentive paid to various SEBs, income tax recoverable from State Electricity Board (SEBs) and provisions of deferred tax, vide....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Director Tel: 23018467 9. In the present case, it is not indispute that the COD vide minutes dated 21.12.2009 has not permitted the CBDT to pursue the issues raised in Ground Nos. 2, 4 & 5, of the appeal before the ITAT. It is also clear from the office memorandum dated 04.02.2013 that no public sector undertakings may reopen those cases in which clear decisions have been issued by the COD prior to 17.02.2011. Therefore, the department ought not to have filed the appeal on these issues. 10. On a similar issue their Lordships of the Hon'ble Jurisdictional High Court in the case of CIT-V Vs Rural Electrification Corp. Ltd. (supra) observed as under: "This is an application for revival of the appeal, which was dismissed/ disposed of by order dated 6 th May, 2009 for want of approval from the Committee on Disputes (COD). The applicant, Commissioner of Income Tax (LTU) has filed the application for revival in view of the order dated 17th February, 2011 passed by the Supreme Court in Civil Appeal No.1883/ 2011, Electronic Corporation India Ltd. Vs. Union of India and Others. By this order, it was held that mechanism of COD device has outlived its utility and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the COD prior to 17 .2.2011, AND (II) Ministries/ Departments may circulate the instructions to all concerned offices/ PSUs under their administrative control indicating that any violation may be viewed seriously and may invite administrative/disciplinary action. 4. This issues with the concurrence of Ministry of Law, Department of Legal Affairs vide Dy No.246 Adv (B) dated 18.2.2013. Receipt of this O.M. may kindly be acknowledged." 4. Learned counsel for the respondent states that the present application may be disposed of with the finding and direction that if the Revenue succeeds in the appeal before the Supreme Court, they will be entitled to ask for revival of the appeals. We take the statement made by the learned counsel for the respondent on record and dispose of the present application with the observation and direction that i f the decision in the case of Gas Authority of India Ltd. is reversed, the Revenue will be entitled to ask for revival of the present appeal." 11. We, therefore, by respectfully following the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to case, dismiss these grounds of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....odrej & Boyce Mfg. Co. Ltd. Mumbai while holding that Rule 8D, inserted w.e.f 24.3.2008 cannot be regarded as retrospective because it enacts an artificial method of estimating expenditure relatable to tax-free income and is applicable only w.e.f AY 2008-09, concluded that for the assessment years where Rule 8D does not apply, the AO will have to determine the quantum of disallowable expenditure by a reasonable method having regard to all the facts and circumstances. Thus, the disallowance made by the AO ,invoking Rule 8D of the IT Rules, 1962 in the AY 2007-08, is not justified. 11.1. Moreover, Hon'ble Supreme Court in their decision dated 6.7.2010 in CIT v. Walfort Share & Stock Brokers (P.) Ltd., 326 ITR 1, inter alia, observed that for attracting section 14A of the Act there has to be a proximate cause for disallowance, which is its relationship with the tax exempt income. Hon'ble Apex Court observed in the context of provisions sec.14A of the Act in the following terms: "17. The insertion of section 14A with retrospective effect is the serious attempt on the part of the Parliament not to allow deduction in respect of any expenditure incurred by the assessee i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ose heads. Sections 15 to 59 quantify the total income chargeable to tax. The permissible deductions enumerated in sections 15 to 59 are now to be allowed only with, reference to income which is brought under one of the above heads and is chargeable to tax. If an income like dividend income is not a part of the total income, the expenditure/deduction though of the nature specified in sections 15 to 59 but related to the income not forming part of total income could not be allowed against other income includible in the total income for the purpose of chargeability to tax. The theory of apportionment of expenditures between taxable and non-taxable has, in principle, been now widened under section 14A. Reading section 14 in juxtaposition with sections 15 to 59, it is clear that the words "expenditure incurred" in section 14A refers to expenditure on rent, taxes, salaries, interest, etc. in respect of which allowances are provided for (see sections 30 to 37).................." 11.2 Hon'ble Punjab & Haryana High Court in their decision in CIT vs. Hero Cycles Ltd.,323 ITR 518 have observed that disallowance under section 14A requires finding of incurring of expenditure and where....