TaxTMI 
TaxTMI 
2020 (2) TMI 830
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....ome filed by the appellant on the facts and circumstances of the case. 3. The assessment order passed by the learned Assessing Officer on the invalid notice issued under section 143(2) on the original return filed by the appellant is bad in law, consequently the order passed on the invalid notice is liable to be set aside on the facts and circumstance of the case." 4. As far as the aforesaid grounds are concerned, the facts are that the assessee is a company engaged in the business of bulk drug manufacturing and intermediary products besides operating windmills. For AY 2010-11, the assessee filed return of income on 28.9.2010 disclosing a total income of Rs. 54,96,04,630. The first revised return was filed on 10.1.2012 and the second revised return filed on 28.2.2012. The AO issued notice u/s. 143(2) of the Income-tax Act, 1961 [the Act] dated 26.8.2011 which was duly served on assessee on 3.9.2011. This notice u/s. 143(2) of the Act was served within time contemplated u/s. 143(2) of the Act and there is no dispute on this aspect. The grievance projected by the Assessee in grounds 2 & 3 before the Tribunal is that since the assessee had filed a second revised return on 28.2.2012....
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....ntemplated by law. The original return u/s. 139(1) of the Act has not been treated as non est and the revised return is only for the purpose of certain errors and mistakes in the original return. In such circumstances, there is no requirement of law to issue a notice u/s. 143(2) of the Act with reference to revised return. We derive support for the aforesaid conclusions from the decision of the Hon'ble Delhi High Court in the case of Vinod Kumar Khatri v. DCIT [2016] 129 DTR 377 (Del). We are therefore of the view that there is no merit in grounds No.1 & 2 raised by the assessee and accordingly the said grounds are dismissed. 6. Ground Nos.4 & 5 is with regard to the action of the revenue authorities in not treating the subsidy grant from the State Govt. as a as capital receipt and consequently not in the nature of income. The admitted factual position as it emanates from the order of AO and the CIT(Appeals) is that the assessee did not file a copy of the scheme under which subsidy was received by assessee. In the absence of details of the scheme, it is not possible to decide the question, whether the subsidy is capital or revenue in nature. Since the burden was on the assessee to....
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....on in respect of the current AY. without receiving approval during the year. As discussed elsewhere, Approval has been received by the Assessee-company during the period relevant to subsequent AY 2012-13. Of course, a deduction is allowed in Assessment in AY 2012-13. The decision in the case of Claris Life Sciences, is distinguishable for the reason that Approval in that case was received during the year itself. Whereas in the case on hand, as said above, the Approval is received not during the current year. In the circumstances, I take the view that the Appellant is not eligible to take a deduction in the current AY. Accordingly. I uphold the stand of the AO in disallowing the deduction." 8. Aggrieved by the order of CIT(Appeals), the assessee is in appeal before the Tribunal. 9. The ld. counsel for the assessee apart from relying on the decision of the Hon'ble Gujarat High Court in the case of Claris Life Science (supra) further placed reliance on the decision of Hon'ble Delhi High Court in the case of CIT v. Sandan Vikas (India) Pvt. Ltd., 335 ITR 117 (Del) laying down identical proposition and also on the decision of the Hon'ble Gujarat High Court in the case of Banco Produ....
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....f the Act in respect of income derived from power generation out of 4 windmill units to the tune of Rs. 2,46,06,965. After claiming expenses on account of depreciation and operating & maintenance expenses, the net profit was Rs. 2,12,79,462 which was claimed as deduction u/s. 80IA of the Act. The AO was of the view that in arriving at the net profit, the assessee has not reduced finance charges incurred on loans for the purpose of installation of windmills and also employee cost and other administrative expenses before arriving at the net profit of windmill power generation. According to the AO, the assessee had not maintained separate books of account in respect of windmill units and therefore he allocated the finance charges, employee cost and other administrative charges on the basis of turnover of the various businesses of the assessee and accordingly reduced the net profit of the windmill units on which deduction u/s. 80IA of the Act was to be allowed. 14. On appeal by the assessee, the CIT(Appeals) deleted the addition made by the AO, by following the decision of his predecessor CIT(Appeals) on a similar allocation of expense in AY 2008-09 & 2009-10, wherein the CIT(Appeals)....
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....aim of assessee for higher depreciation on internal road laid for approach to windmills. These grounds are related to the profits of the windmill unit for which deduction u/s. 80IA was claimed by assessee. It is not in dispute before us that identical issue was raised by revenue in assessee's own case for AYs 2008-09 & 2009-10 in ITA Nos. 174 & 175/Bang/2014 and this Tribunal vide order dated 12.04.2016 has adjudicated the said grounds as follows:- "10. Grounds 5 to 8 are regarding higher depreciation on internal roads approaching the wind-mills. 11. Assessee claimed higher depreciation on the cost of installation of wind-mills which include the cost of the roads constructed / prepared for the purpose of installation of the windmill. AO denied the claim of higher depreciation (80%) in respect of roads. 12 On appeal, CIT (A) has allowed the claim of depreciation on the entire wind-mill cost by holding that the foundation, civil and electrical works are necessary for installation of wind-mill and is part and parcel of the wind-mill project which is eligible for depreciation at the rate of 80%. While allowing the claim of higher depreciation CIT (A) has followed the decision of ....
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....n the case of CIT Vs. Anil H. Lad [2014] 45 taxmann.com 98 (Karnataka) relied upon by the assessee has not become final and the Department has filed SLP before the Supreme Court." 20. On the aforesaid grounds, it is not in dispute before us that in AY 2008-09 in ITA Nos.174 & 175/Bang/2014 in assessee's own case (supra), similar issue had come up for consideration and this Tribunal held that the brought forward losses of the earlier years need not be set off against the income of the current year on which deduction u/s. 80IA of the Act was to be allowed to the assessee. Following were the relevant observations:- "4. Grounds 2 to 4 are regarding disallowance of claim of deduction u/s.80IA of the Act and unabsorbed depreciation of the earlier years. Assessee claimed deduction u/s.80IA of the Act, being income from wind-mill. AO in the assessment order observed that the assessee claimed deduction u/s.80IA of the Act, in respect of profits derived from three units to the extent of Rs. 1,63,33,926/- and the assessee has not exercised its option to claim deduction in respect of fourth unit. In the statement of computation of deduction of Rs. 1,63,33,926 assessee has deducted the depre....
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....d and carefully considered the material on record; including the judicial pronouncements cited. The sole issue in these four appeals preferred by Revenue for Assessment Years 2006-07 to 2009-10 is with regard to the assessees claim for deduction under Section 80 IA of the Act which was entirely disallowed by the Assessing Officer. The Assessing Officer disallowed the assessee 5 claim holding that even though depreciation and business loss relating to earlier assessment years had already been set off against the profits of the other businesses it is necessary for the purpose of deduction under Section 80 IA of the Act to carry forward that depreciation and business loss in a notional manner for set off against the profit of the impugned assessment years and if on being so set off there remained any profit available in the hands of the assessee to claim deduction under Section 80 IA of the Act, deduction to that extent only can be allowed. In other words, the Assessing Officer held that for the purpose of arriving at the profits from the assessee's wind mill, the brought forward depreciation and business losses are to be taken into account and after set off of the same against th....
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.... already been set off against other business income of those assessment years. there is no need for notionally carrying forward and setting off the some depreciation and business loss for computing the quantum of deduction under Section 80-IA of the Act as such action would be contrary to the scheme of the Act. In this view of the matter and respectfully following the decision of the Hon'ble High Court of Karnataka in the case of Anil H Lad (supra), we dismiss the grounds raised by Revenue at 5.Nos. 2 to 4 of these appeals and consequently uphold the impugned orders of the learned CIT (Appeals) for Assessment Years 2006-07 to 2009-10 in allowing the assessee the deduction claimed under Section 80-IA of the Act. 9. As it is clear from the decision of the coordinate bench that an identical issue was considered by the Hon'ble jurisdictional High Court in the case of Anil H. Lad (supra) and by following the said judgment of Hon'ble jurisdictional High Court. the Tribunal has decided this issue in favour of the assessee by holding that the depreciation and losses of the earlier year even in respect of the eligible business (the wind-mill) has already been set off against other....
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....diency. The Company LOBA had already been acquired in the previous years. LOBA was a sick Company and the infusion during the current year as well as in the previous years was to run the said Company. Further, it was used as equity infusion in LOBA by ZHL. The investments were in accordance with the provisions of Foreign Investment policy and the Assessee Company was entitled to have Overseas Direct Investment under the Automatic Route. The condition was that the investment is made to acquire a company in the same field, the Assessee stated to the AO. The Assessee relied on the decision rendered.* the Hon'ble Supreme Court in the case of S.A. Builders reported in 228 ITR 1 (SC). 24. The AO rejected the claim of the Assessee and held that the transaction between the Assessee Company and that of subsidiary Company (ZHL) is in the nature of International Transaction and he further held that Commercial Principles are to be applied to evaluate the International Transaction. The AO further held that International lending rate of LIBOR has to be considered while determining the Arm's Length Interest rate. The AO again held that the decision rendered in the case of SA Builders (su....
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....wn from the books of the Assessee to the Step-Down Subsidiary through the subsidiary company for the purpose of being used as investment in equity and also of the fact that the advances have not been made out of borrowals. In view of the above, he held that the disallowance being unwarranted and unjustified and accordingly, the addition was directed to be deleted. 27. Aggrieved by the aforesaid order of the CIT(Appeals), the revenue has raised ground No.7 before the Tribunal. 28. The ld. counsel for the assessee relied on the order of CIT(Appeals) and the ld. DR relied on the stand of the revenue as reflected in the ground of appeal before the Tribunal. 29. We have given a careful consideration to the rival submissions. At the time of hearing, it was brought to our notice that the Special Bench of ITAT Kolkata in the case of Instrumentariam Corporation Ltd. v. ADIT (IT) in ITA No.1548 & 1549/2009 dated 15.7.2016 held that interest-free loans are subject to the provisions of section 92 of the Act and the ALP of such transaction have to be determined. In view of the aforesaid decision, we are of the view that the conclusion of the CIT(Appeals) that the provisions of section 92 of ....
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....relating to windmills on the basis of turnover, particularly when the assessee had not maintained separate books of accounts in respect of windmills. 2. The Ld. CIT (A) ought to have appreciated that assessee's reliance on Accounting Standard-10 of the Institute of Chartered Accountants of India is out of context and that there is no dispute with regard to the issue that the cost of roads is to be capitalized but that the dispute is regarding the block under which it has to be capitalized. 3. Ld. CIT(A) ought to have appreciated that when different percentages are provided for different blocks of assets by law, they cannot be clubbed for the simple reason that a consolidated invoice was received for erection and commissioning cost. 4. The Ld. CIT(A) ought to have appreciated that the decision of ITAT, Ahmedabad in the case of ACIT (OSD) Vs. Parry Engineering & Electronics Pvt. Ltd. is only with regard to civil work and foundation for installing the windmill and not relating to approach roads. 5. The Ld. CIT(A) ought to have appreciated that the AO has rightly brought forward (notionally) the losses of the earlier years in respect of the eligible business to set it off a....
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....fits and consequently there would be no income on which deduction u/s.10B of the Act can be given. Accordingly, the AO rejected the claim of the Assessee by observing as follows:- " As per the information furnished by the assessee, the 100% EOU has claimed losses/unabsorbed depreciation for the A.Yrs. 2008-09 & 2009-10 and these losses have been adjusted against the profit of the non-eligible unit even though the assessee is not entitled to make such adjustments. By making the adjustments, the assessee company has reduced the profit to the extent of Rs. 3,80,21,039/- for the A.Y. 2008-09 and Rs. 27,44,49,575/- for the A.Y. 2009-10. With regard to the deduction claimed under s. 10B of the Income Tax Act for the A.Y. 2011-12, it is noticed that the assessee had filed only one Profit & Loss Account wherein the net profit was shown at Rs. 65,83,64,069/-. In the computation statement, the assessee claimed deduction u/s. 10B amounting to Rs. 18,95,68,278/- As per the provisions of section 10B (8) of the I. T. Act, where the assessee before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writ....
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....e of exemption. The provisions of section 10B(6) of the Income Tax Act were amended vide the Finance Act, 2003 (FA, 2003) w.r.e.f. 1st April, 2001 to permit the losses earned it an Eligible Unit during the period after 1st April, 2001 and before the last year in which the tax incentive to be carry forward and set off against the profits earned from the business after the tax holiday period. This amendment clearly brings out the intention behind the amendment to section 10B vide Finance Act, 2000 that the incentive prior to 01.04.2001 was in the nature of an exemption and post the same it has been classified as a deduction. Section 10B is an optional section and is applicable when all the provisions of section 10B are complied with in toto. The company has not opted for application of section 10B(6) of the Act for the AYs 2008-09, 2009-10 and 2010-11 as it has not filed Audit Report as prescribed under section 10B(5) of the Income Tax Act. Section 10B(8) clearly states that the provisions of this section would not apply for any of the relevant assessment year wherever the company opts for it. Once the option is exercised by the Company, the income will have to be computed as provid....