TaxTMI 
TaxTMI 
2020 (2) TMI 1485
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....e grossly erred in not granting an additional claim/allowances, amounting to Rs. 4,57,59,45,187/- made by the assessee during the course of assessment proceedings, on account of transfer of CERs, excise duty component on sale effected by the eligible unit, short claim of deduction u/s 10A(1A), interest subsidy under TUF scheme, additional depreciation and depreciation on goodwill. 3. The Ld DRP/AO has grossly erred in law in not excluding/including the capital receipts/ items total (net) amounting to Rs. 4,60,91,78,552 /- in the nature of CER receipts, interest subsidy under TUF scheme, excise duty component on sale effected by the eligible unit, provisions for doubtful debts/ advances/ investment written back etc from the book profits u/s 115JB of the Act. GROUNDS OF OBJECTIONS IN RESPECT OF TRANSFER PRICING ADJUSTMENTS Corporate Guarantee 4. The Ld. DRP/TPO and consequently the Ld. AO have grossly erred in holding that extending of corporate guarantee by the assessee to the lending institution of the AEs constitutes an international transaction u/s 92B of the Act. 5. The Ld. DRP/TPO and consequently the Ld. AO have grossly erred in law....
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....sly erred in law and on the facts & circumstances of the assessee in attributing interest u/r 8D(2)(ii) although all loans were explained to be for specific business purpose. 11. That the Ld. AO be directed to delete the enhancement of disallowance of Rs. 1,54,16,743/- made u/s 14A of the IT Act. Claims of deduction u/s 10A(1A) (A) Scrap sale of Rs. 49,32,423/- 12. The Ld. DRP/AO has erred in law and in facts and in circumstances of the case by reducing the claim of deduction u/s 10A(1A) by an amount of Rs. 49,32,423/- being the scrap sale made by the eligible unit by holding that scrap sale is in the nature of domestic sales and hence not eligible for deduction u/s 10A(1A). 13. (a) The Ld. DRP/AO has erred in law in not following the legally binding precedent of Hon'ble Karnataka High Court in case of GE BE (P) Ltd Vs ACIT-11(2), wherein in the similar facts as that of appellant, it was held that scrap generated during manufacturing or production activities of the unit is eligible for profit based deduction. (b) The Ld. DRP/AO has grossly erred in law in disregarding the legally binding precedent of Hon'ble Delhi High Court in ....
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....eciation of Rs. 45,39,692/- on goodwill which was inadvertently left to be claimed while filing the tax return. e) exclusion of Rs. 11,81,58,510/- being the excise duty component on sale effected by the eligible unit (u/s 80-IC at Kashipur) worked out on reverse calculation mechanism, from the taxable income of the assessee, since this was a capital receipt not liable to tax. 20. That the Ld. DRP/ AO failed to appreciate that the taxes are leviable & recoverable in accordance with law and legal claims are required to be entertained at any stage of the proceedings. Computation of book profits under MAT 21. Without prejudice to the grounds 18, 19 & 20 that the ITAT may be is pleased to admit the following additional grounds as a decision on these issues is in the interest of justice and all facts for their adjudication are on record of the AO and raise legal issues only as per the judgment of Hon'ble SC in the case of NTPC Vs. CIT 229 ITR 383(SC) (a) That Rs. 4,39,72,72,157/-, received by the assessee on account of transfer of Carbon emission reductions (CERs) to be excluded from the taxable income, since the same was a capital receipt, no....
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....39,72,72,157/- received by the assessee on account of transfer of Carbon emission reductions (CERs) from the book profit of the assessee. b) exclusion of Rs. 35,02,570/- on account of provisions for doubtful debts written back. c) exclusion of Rs. 4,00,00,000/- on account of provisions for doubtful advances written back. d) exclusion of Rs. 1,54,10,239/- on account of provisions for investments written back. e) inclusion of Rs. 22,66,432/- on account of provision for doubtful debt created f) inclusion of Rs. 7,64,706/- on account of provision for doubtful advances created g) inclusion of Rs. 9,07,600/- on account of provision for doubtful advances created h) exclusion of Rs. 3,08,96,338/- received by the assessee on account of interest subsidy under TUF scheme, being capital receipt in nature. i) exclusion of excise duty component amounting to Rs. 11,81,58,510/- on sale affected by eligible unit u/s 80-IC (Kashipur unit) of worked out on reverse calculation mechanism being capital receipt in nature. 23. The Ld. DRP/AO has erred in law & circumstances of the case by initiating penalty proceedings u/s 27....
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.... its investment in mutual funds which is claimed exempted from tax under section 10(34) of the Act. The assessee itself made suo-moto disallowance of Rs. 53,51,280/- u/s 14A of the Act r.w.r 8D(2)(iii) being 0.50% of average value of investment income from which is exempt from tax. The AO being dissatisfied with the suo-motu disallowance made by the assessee made further disallowance of Rs. 1,54,16,743/- in respect of proportionate interest paid by the assessee to various banks invoking the provisions of Rule 8D(2)(ii). The DRP upheld the assessment order. 7. The ld. counsel for assessee argued that no disallowance in respect of Rule 8D(2)(ii) can be made in respect of interest expenses as interest was paid for loan taken for specific business purposes. Chart depicting actual utilization and purpose of loans for which interest was paid as given to AO and DRP is as under: Interest on Loan/ Purpose AY 2012-13 Utilisation/Justification by assessee Loan under TUF scheme of Govt. of India 377.66 Fixed Assets under TUF scheme administered by Government Rupee term loan other than TUF 3439.36 Fixed Assets : specific loans for purchase of fixed assets Foreig....
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....rial referred to before us at the time of hearing. The interest paid by the assessee is in respect of loans taken for specific business purposes and thus to earn non-exempt business income. The DRP has given its finding in assessee's own case for AY 2014-15 that loans were taken for specific business purposes. Moreover, the assessee's own funds in form reserves and surplus profits of Rs. 1788.26 Crores are much higher than the investments of Rs. 107.26 Crores. Moreover, we have already examined this issue in this assessee's own case for AY 2010-11 (ITA no. 356/Del/15) and on identical facts we held that disallowance u/s 14A read with rule 8D(2)(ii) is not sustainable. In view of above, the disallowance of Rs. 1,54,16,743/- u/s 14A made by the assessing officer is therefore deleted. Disallowance of deduction u/s 10(1A) in respect of Scrap Sale (Ground no.12-14): 12. During the year, the SEZ Indore unit of the assessee received proceeds from scrap sales amounting to Rs. 49,32,423/-. The same was shown as Other Income in P&L of the SEZ Unit- Indore and has been considered for purpose of calculation of eligible deduction u/s 10A(1A). The AO claimed that scrap sale made was in nat....
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....lyester Chips) to Kashipur unit of the assessee amounting to Rs. 7,52,64,246/-. The assessee had claimed the deduction after taking into account such inter unit transfer. The AO proceeded to reduce the amount of deduction claim u/s 10A(1A) by the amount of such inter-unit sales, which was further upheld by the DRP. Aggrieved the assessee is before us in the appeal on aforesaid grounds. 17. In this respect the Ld. Counsel submitted that Indore SEZ unit based on the requirement of Kashipur unit transferred semi-finished goods at its market value. The market value has been determined with reference to the rates at which similar goods are purchased by the Kashipur unit from unrelated parties. The AR has submitted that average rate of inter-unit transfer of goods is Rs. 85.22 per unit while the third party rate of same goods was Rs. 85.5 and 86.5 per unit. The copies of invoice of third parties -JBF Industries were submitted (Page no. 404-405 of Paper Book). It was further submitted that the assessee has fulfilled the conditions of section 10A(7) read with section 80-IA of the Act- transfer of goods between eligible business and any other business of assessee have been undertaken at ....
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....arbon emission reduction ('CER' or 'carbon credits') certificates on account of its efforts to reduce the emission of greenhouse gases in terms of Kyoto Protocol. During the relevant year the assessee transferred such certificates for a consideration. For the relevant assessment year 2012-13 the assessee received an amount of Rs. 439.73 crores in respect of sale of such CERs. The income from CERs has been disclosed in profits & loss accounts and various notes and annexure of annual report of the assessee. The assessee originally included the above receipts in its total income while filing the return of income. Subsequently the decision reported in My Home Power Ltd. vs DCIT [2012] 27 taxmann.com 27 151 TTJ 616 subsequently confirmed by the Hon'ble Andhra Pradesh High Court in CIT vs My Home Power Ltd. [2014] 365 ITR 82, described carbon credits as an offshoot of environmental concerns and not offshoot of business and hence held as capital receipt in nature. In light of above judgment the assessee claimed before AO that such receipts from sale of CER certificates are not chargeable to tax being such receipts capital in nature and hence should be excluded from the total income of ass....
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....008) 306 ITR 392 (SC) * CIT vs.- Rasoi Ltd. [(2011) 335 ITR 438 (Cal.)] * CIT v. Chaphalkar Brothers [2017] 88 taxmann.com 178 (SC)/ (2018) 400 ITR 279 (SC) * DCIT vs.- Reliance Industries (2004) 88 ITD 273 (Mum.)(SB); * CIT vs. Birla VXL Lt d. (2013) 90 DTR 376 (Guj.)(HC); * Hydro Carbons & Chemicals vs.- ACIT (ITA No. 1982-86/Kol/09); * Indo Rama Synthetics (I) Ltd. vs. ACIT (2012) 33 CCH 526 (Del.)(ITAT). * CIT v Gloster Jute mills Ltd ITA no. 766/Kol/2010 * Shree Balaji Alloys v. CIT [2011] 333 ITR 335/198 Taxman 122/9 taxmann.com 255 (J&K) 25. The ld. AR has further submitted the department has in subsequent years accepted the assessee's claim of interest subsidy on TUF scheme as capital in nature as no addition has been made in subsequent years. 26. Ld DR relied upon the orders of authorities below. 27. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. It is a settled position that purpose of subsidy or incentive and not the nomenclature of such incentive have to be seen for the purpose of deciding its nature a....
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....o to section 32(1)(iia) - applicable w.e.f. 1st April 2016 to allow the claim of additional depreciation for assets put to use for less than 180 days in subsequent Assessment Year. 31. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. We have dealt the identical issue in the assessee's own case for AY 2010- 11 (ITA no. 356/Del/15) and set aside the issue to the file of AO to consider the claim of the assessee. Following the same, we hereby direct the AO to consider the claim of the assessee and give his findings thereon. For this purpose this issue is set aside to the file of AO. The AO shall be free to call for such information and explanation as he deems fit in order to adjudicate this claim of the assessee after granting reasonable opportunity to the assessee of being heard. The assessee is also free to file such documents, explanations, submissions as it deems fit in respect of this claim. Claim 4. Depreciation on Goodwill: 32. The assessee had purchased a running business in the financial year 2008-09 and paid sale consideration in excess of value of net assets acquired. The excess ....
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.... file such documents, explanations, submissions as it deems fit in respect of this claim. Claim 5. Claim of Excise Duty Component Included In Sales: 36. Facts as submitted to us are that during the financial year, one of the unit at Technical textiles business at Kashipur has made sale amounting to Rs. 1,26,53,28,518/- inclusive of excise duty. Excise duty component on such sales come to Rs. 11,81,58,510/- by reverse working mechanism. Such excise duty component, as claimed by the assessee being in the nature of capital receipt, be excluded from the taxable income of the assessee. The AO did not entertain the additional claim of the assessee. The DRP did not admit the additional claim of the assessee relying on the judgment in Goetze (India) Limited vs CIT (supra). 37. Having heard the assessee, we hereby remand back the issue to the file of the AO for fresh adjudication. The assessee shall be free to file such documents, explanations, submissions as it deems fit in respect of this claim. Exclusion/inclusion of capital receipts/items in the book profit u/s 115JB (Ground no.21 and 22): 38. In grounds no. 21 and 22 the assessee has pleaded to exclude certain receipts v....