TaxTMI 
TaxTMI 
2021 (11) TMI 260
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....tion/disallowance of Rs. 4,12,79,790/- on account of non-transfer pricing additions / disallowances. 1.2 That the final assessment order u/s 143(3) r.w.s. 144C of the Act dated 31 October 2018 is bad in law. 1.3 That the additions/disallowances made by Ld. AO are wholly illegal, untenable and on erroneous grounds. GROUNDS OF APPEALS IN RESPECT OF TRANSFER PRICING ADJUSTMENTS Transfer of power-Rs. 26,52,98,490/- 2. That the Ld. DRP/TPO/AO have erred in law and facts and in circumstances of the case in making an adjustment of Rs. 26,52,98,590/- to the arm's length price of transfer of power from eligible unit to non-eligible unit on wholly illegal and erroneous grounds. 2.1 That Ld. DRP and consequently Ld. AO have grossly erred in law and on facts and in circumstances of the appellant's case in erroneously interpreting the transaction of purchase of power by appellant from State Electricity Board (SEB) at Kota, Rajasthan as an external CUP data and thus proposing a different treatment by averaging the same with IEX rates, while determining the Arm's length price. 2.2 The Ld DRP has erred in not appreciating that purchase of power....
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....s. 3.1 That Ld. DRP and consequently Ld. AO have grossly erred in law and on facts and in circumstances of the appellant's case in merely confirming the Ld, TPO's action of determining the ALP of transfer of steam at NIL, without providing any reasoning or passing a speaking order on the issue. 3.2 The Ld. TPO/AO have grossly erred in law by proposing transfer pricing adjustment in respect of transaction of transfer of steam without giving any opportunity/issuing a proper show cause notice u/s 92CA(2), thus not following the principle of natural justice. The adjustment made therefore, is prayed to be quashed. 3.3 The Ld. DRP/TPO and consequently Ld. AO have failed to appreciate that a commercially valuable product should only be transferred at an arm's length price to a related party. The Ld. DRP/TPO have failed to appreciate that the product, in the instant case 'steam', whether bye-product or joint product or whether it has cost or 'Nil' cost is irrelevant for purpose of determining the ALP for the purpose of transfer thereof to a related party in a transfer pricing analysis. 3.4 The Ld. TPO has erred in proposing and Ld. DRP in upholding the a....
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.... amount of investments and thus clause (ii) of rule 8D(2) is not attracted. 4.3 The Ld. DRP and consequently Ld. AO have erred in making disallowance u/s 14A of the Act disregarding the order of Hon'ble Jurisdictional High Court in assessee's own case for AY 2008-09, Hon'ble ITAT's order for AY 2009-10 and for AY 2010-11, 4.4 It is prayed before Hon'ble ITAT that disallowance u/s 14A r.w.r. 8D(2)(ii) made by the Ld. AO may kindly be deleted. Addition u/s 50C of the Act - Rs. 2,57,31,000/- 5. That the Ld. DRP/AO have erred in law and facts and in circumstances of the appellant's case by making an addition of ?2,57,31,000/- u/s 50C of the Act which is against the mandate of law and thus bad in law. 5.1 The Ld. DRP and consequently Ld. AO have erred in law and in facts and in the circumstances of the appellant's case by making an addition of ?2,57,31,000/- u/s 50C of the Act, by substituting the sales consideration of lands (at 4 locations) with their stamp valuation. 5.2 The Ld. DRP/AO have grossly erred in disregarding the fair market valuation of such lands carried out by the independent valuers. The Ld DRP/AO have thus erred in law in n....
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....ons (SDT) with Associated Enterprises [AE]. The transactions were either covered u/s 40 A (2) (b) or are covered u/s 80 IA of the act. Mainly specific domestic transactions were with respect to transfer of low-pressure steam from eligible business to other non-eligible businesses and transfer of power from its captive power plants (eligible business for deduction u/s 80 IA of the act) to other non-eligible businesses. Therefore, learned AO referred to the Additional Commissioner of Income Tax, Transfer Pricing Officer 1 (2), New Delhi, [learned Transfer Pricing Officer/TPO] to determine the arm's-length price of the international transactions entered into by the assessee as per the provisions of Section 92CA of the act. 06. As stated, that assessee mostly had Specified Domestic Transactions [SDT]. Assessee has shown transfer of power and steam from eligible unit to non-eligible unit during the year. 07. Assessee has shown the transfer of the power as per its transfer pricing study report from eligible unit to non-eligible unit as Under :- Transferor unit Transferee unit Quantity [ KWH] Rate Amount in Rupees UP Region ....
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....a is unwarranted. Assessee further stated the modus operandi adopted by the IEX and how the rates are derived, stating that there is a lack of surety in relation to the availability of power and rates offered by IEX are not comparable. It was further stated that it is an exchange where the buyer has to pay for the electricity quantity traded rather than the quantity actually used, therefore the traded quantity cannot be compared with the actual quantity produced and consumed. Assessee relied on the OECD guidelines and then submitted that there is no sufficient level of comparability between IEX and eligible units of the assessee and CUP method cannot be applied in a manner by adopting those rates. Assessee also relied upon several judicial precedents. Assessee further submitted that in respect of the transfer of the power since assessment year 1997 - 1998, the internal CUP has been used at the state Electricity Board rates, which have been accepted by the revenue, and therefore the rule of consistency should be followed and there is no reason to deviate from the same. 11. The learned transfer-pricing officer considered the explanation of the assessee and referred to the change i....
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....t such average rate of price charged by Discoms and rates of IEX is Rs. 20.54 per unit whereas the assessee has charged only Rs. 6.67 per unit and thus there is no adjustment required. Therefore, based on the above facts, he made an adjustment of Rs. 308,365,268/ - on account of transfer of power from eligible business to other businesses with respect to Uttar Pradesh and Rajasthan region. 12. Another specified domestic transaction was that Assessee also transfers low-pressure steam from the eligible business to another business. For benchmarking of these transactions, assessee adopted the 'other method' as the most appropriate method. The other method adopted by the assessee is "At cost". Thus, the assessee transferred steam from eligible unit to non-eligible units at the cost i.e. Without charging any markup. The learned assessing officer issued a show cause notice on 26/10/2017 directing assessee to furnish costing of steam produced. The assessee submitted such details in accordance with the cost accounting standard - 4 issued by the Institute of cost and works accountants of India. The learned transfer-pricing officer initially stated that assessee should have applied cost p....
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....earned assessing officer further noted that the assessee has earned exempt income of Rs. 91,388,245/- which has been claimed as exempt income u/s 10 (35) of the act. The assessee has made a disallowance of Rs. 6,399,219/- u/s 14 A of the act. The AO asked the assessee to justify the above disallowance made in the return of income. The assessee submitted that it has disallowed Rs. 6,399,219/- based on 0.5% of the average investment of Rs. 127.98 crores considering those investments on which dividend/exempt income is received. It was further stated that no interest expenditure could be disallowed u/s 14A as the amount of investment made by the assessee is less than the amount of interest free funds in the form of share capital and free reserves available to the assessee. It was further stated that for the administrative expenditure the only the disallowance could be made with respect to the average investment taking only those investments where from the exempt income is received during the year. The learned assessing officer rejected the contention of the assessee and applied the provisions of rule 8D (2) of the Income Tax Rules and worked out disallowance of Rs. 1.55 crores of indir....
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.... claim of deduction u/s 80 IA of the act in respect of power generated by the assessee, the learned DRP gave its direction as per paragraph number 2.2.5 onwards holding that the assessee has sold surplus power generated from the power plant as per agreements with the distribution companies for sale of surplus power, whereas the power unit at Rajasthan the assessee has purchased power from discom and the assessee has taken rates of the power sold to 3 discoms and power purchased from SEB in Kota as internal CUP The DRP held that this is a fallacious and incorrect method, since while the former are internal CUP , the latter could only be an external CUP . With respect to the rates taken for benchmarking, the learned DRP directed the assessing officer/TPO to adopt internal CUP for benchmarking the transfer/sale of power by the three units in Uttar Pradesh and recompute the adjustment. With respect to the Rajasthan unit, it was noted that assessee has not applied correct internal CUP as the assessee has applied the rates at which it is purchasing power from power Distribution Company and therefore it is an external CUP. The learned DRP noted that since the assessee has not sold power t....
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....ital gain. In Response ld DRP held that as there was no time left it was not possible and therefore they rejected the objection of the assessee and confirmed the addition of Rs. 2 57,31,000. 16. Consequently the learned AO passed assessment order u/s 143 (3) read with Section 144C of The Income Tax Act dated 31/10/2018 determining the total income of the assessee at Rs. 2,623,437,423/-. 17. Assessee is aggrieved with that assessment order and has preferred an appeal before us. 18. The assessee has also raised the following additional grounds of appeal:- "1. The income tax appeal in the case of M/s. DCM Shriram Limited (ITA NO. 7362/DEL/2018) for the A.Y. 2014-15 has been scheduled for hearing before the I-i Bench of the Hon'ble ITAT on 02.09.2021. 2. That the appellant had inadvertently omitted to raise a ground of appeal on education cess due to oversight. 3. That the appellant wishes to raise additional ground of appeal on education cess which may be treated as Ground No. 10 as under:- "26. The Hon'ble ITAT may be pleased to grant the claim of 'Education Cess' (@ 3%) amounting to Rs. 1.33.41.210/- u/s 37 of the Act paid / payable by th....
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..... Assessee cannot be aggrieved with the above ground that it is merely an initiation of the penalty proceedings and the assessee would be given a proper opportunity for raising all its contention before the penalty is levied. In view of this ground number 1 and 7 of the appeal of the assessee are dismissed. 21. With respect to ground number 2, the learned authorised representative submitted that i. this issue is fully covered by the order of the learned CIT - A India assessee's own case for assessment year 2015 - 16 wherein the learned CIT - A has upheld the assessee's internal cup in respect of Kota unit over IEX rates and also completely rejected the transfer pricing officer's action on taking average of assessee's internal cup as the rate at which power was purchased from JVVNL and rates obtained from IEX by invoking the provisions of Section 133 (6) of the act. He referred to the order of the learned CIT - A listed page number 335 of the case law compiler and submitted. He further submitted that the power purchased by the assessee from JVVNL is an internal cup and as per OECD guidelines internal, comparable means a comparable transaction between one party to the con....
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....s are used for benchmarking the electricity transfer and are approved as an arm's-length price. i. Godawari Power & Ispat Ltd. [[2014] 42 taxmann.com 551 (Chhattisgarh)] ii. Gujarat Alkalies & Chemicals Ltd. [[2017] 88 taxmann.com 722 (Gujarat)] iii. DCIT, Circle- 10(2), Kolkata Vs. M/s Balarampur Chini Mills Ltd. (ITANo. 1672/Kol/2019) iv. Reliance Industries Ltd. [[2019] 102 taxmann.com 372 (Bombay)] v. Gujarat Fluor chemicals Ltd. (R/Tax Appeal No. 11/2019 with R/Tax Appeal No. 28/2019)(HC of Gujarat at Ahmedabad) vi. PCIT Vadodara1 vs Alembic Limited (Tax Appeal no. 553 of 2017 with Tax Appeal no. 554 of 2017)(HC of Gujarat at Ahmedabad) vii. Commissioner of Income-tax, Kolkata-IV, Kolkata v. Kanoria Chemicals & Industries Ltd. [2013] 35 taxmann.com 566 (Calcutta) viii. Graphite India Ltd [ITA Nos.304-305/Kol/2008 ix. Gujarat Fluor chemicals Ltd. [[2018] 97 taxmann.com 10 (Ahmadabad - Trib.)] x. Hero MotoCorp Limited [TS-844-ITAT-2012(Mum)] xi. Saf Yeast Company Pvt. Ltd. [TS-614-ITAT-2017(Mum)] vi. He further submitted that the rule 10 THC provides that the use of tariff....
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....rious Discoms. Assessee has sold power to Uttar Pradesh the power Corporation Ltd [ UPPCL] at the rate of Rs. 4.39 per kilowatt in UP region. Further, in Gujarat region assessee has purchased power from DGVCL at the rate of Rs. 38.56 per kilowatt. However, assessee has purchased power in Rajasthan region from JVVNL at the rate of Rs. 8.35 per kilowatt. Therefore the claim of the assessee is that it's price adopted for transfer of power in all these three regions is at arm's-length. 25. The learned transfer pricing officer for determination of A-L P of the power transferred the average rate of power from Indian energy exchange by obtaining the data u/s 133 (6) of the act and found that average sale price for the year 2013 - 14 relevant to assessment year 2014 - 15 at that exchange with respect to these region is as Under:- Serial number region average sale price for kilowatt 1 U p 2.55 2 Rajasthan 2.55 3 Gujarat 2.52 26. Based on the above information, the learned TPO held that external cup should be applied in this case and the sale rate of power should be taken at the average price of Indian energy exchange and price at which power was pur....
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....arking the transaction is. Therefore, the rate at which IEX all the electricity boards since power to the consumer are Pari materia from which power is produced, and since power to the consumer as per the demand. If the IEX since power to consumers at lower price, any consumer would prefer to purchase power from IEX or any other supplier of power, and certainly not from supplier who sends power at high cost. 2.2.6 on consideration of the facts of the case it is apparent that the assessee has sold surplus power generated from the power units at Ajbapur , Hariawan and Loni in UP to SEBs as per agreements with them for sale of surplus power, and in respect of the power unit at Kota in Rajasthan, the assessee has purchased power from the SEB. The assessee has taken both the power sold to the three SEBS in UP as well as power purchased from SEB in Kota as internal cup. This is a fallacious and incorrect method since while the former are internal cup, the latter could only be an external cup. 2.2.7 the assessee has submitted copies of agreement with SEBs in respect of the three power units in UP for sale of surplus power to them. The assessee has entered into separate a....
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.... same party that engages in a controlled sale/purchase transaction also engages in an uncontrolled sale/purchase transaction of the same products/services. The external cup would be available when an external party engages in an uncontrolled sale/purchase of a product/services that is like the products/services sold/purchased in a controlled transaction. There is no dispute about the applicability of internal cup prices with respect to transaction of sale of power from eligible unit to non eligible unit with respect to UP. This is so for the reason that in UP region assessee sales power to SEBs and therefore it is an internal cup accepted by the learned DRP also. However in Kota, Rajasthan, assessee purchases power but it does not sell the power and in that circumstances it cannot be said to be an internal cup applied by the assessee. Therefore we are in agreement with the learned dispute resolution panel that for the purpose of benchmarking of power transferred from eligible unit to non eligible unit assessee can only claim internal cup when it also sales power to SEB. Here it purchases power from SEB therefore it cannot be used as an internal cup but is rightly held by the learne....
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....milarity with respect to the following factors also which could materially affect the price in uncontrolled transaction i. quality of the product ii. contractual terms (i.e. scope and terms of warranties provided, sales are purchased volume, credit terms, transport terms) iii. level of market (i.e. whole sale or retail etc) iv. geographic market in which the transaction takes place v. date of the transaction vi. intangible property associated with the sale, foreign currency risks and alternatives realistically available to the buyer and seller the learned transfer pricing officer has used the average sale price for the financial year 2013 - 14 available at the Indian energy exchange. Therefore there cannot be much of the grievance when the assessee also charges the same rate for the whole year. However the claim made by the assessee before us which remains uncontroverted is that Indian energy exchange is not the main exchange where the power is traded. As per the Indian power market journey so far and way forward June 2014 report published by Indian energy exchange which is available in public domain has categorically stated ....
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....er, the learned transfer pricing officer has failed to show the reason of such a wide disparity between the rates of Indian energy exchange which is a spot exchange compared with the rates at which the energy is actually consumed in that geographical region. This does not mean that the quoted price cannot be used for the comparability analysis in cup method. But if the prices are so divergent and the difference between the two external cup becomes irreconcilable, the external cup price which is more reliable should be used. Therefore, in our view, IEX rates for these reasons cannot be said to be an external cup available for invoking the provisions of first proviso to Section 92C (2) of the act. 33. Further in case of the assessee for assessment year 2015 - 16 , external corporate of purchase price of power from SEB is used as a comparable discarding the Indian energy exchange rate by the learned CIT - A, and the same order has not been challenged before the higher forum, it becomes final. This shows that in the subsequent year the learned transfer pricing officer/assessing officer has accepted the methodology of benchmarking the transaction of transfer of power in Rajasthan fro....
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....ntant that has been disregarded by both the learned dispute resolution panel and the transfer-pricing officer without giving any reason. He further submitted that steam is one of the powers and can be considered as a joint product but it cannot be considered as a byproduct having nil value. He once again pressed the rule of consistency and stated that in several judicial precedents, the steam is held to be a commercially viable product and its value cannot be taken as a nil. It is further held that the steam is a form of power and hence eligible for deduction u/s 80 IA of the act. vi. It was further stated that the total cost of production is located between electricity and steam based on the scientific basis since inception and which is also substantiated by the Cost sheets is certified by the cost accountant following the cost accounting rules. vii. It was further stated that the entire cost has not been utilized for generation of the power but it is a residual steam as a usable low-pressure steam, which is desired with requisite characteristics used by sugar units for crystallization process. He further submitted that assessee uses both high pressure and low pr....
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.... the rival contention and perused the orders of the lower authority as well as perused the judicial precedents relied upon by both the sides. The facts shows that assessee has transferred low-pressure steam from eligible business to other business amounting to Rs. 1,028,618,630/-. The rate at which the low-pressure steam is supplied from eligible unit to non eligible unit is at cost. The assessee adopted "other method" as the most appropriate method. The learned transfer pricing officer objected to the same and initially stated that assessee should have adopted the cost plus method for the benchmarking of transfer of steam. However letter on when the assessee contended that if the assessee would have used the cost plus method, the relevant deduction u/s 80 IA would have been much higher. Thereafter, the learned transfer pricing officer changed its stand and directed the assessee to submit a statement of cost of production of steam manufactured during the period 1/4/2013 231/3/2014. Assessee stated that it is submitted original set of corsets of the cost of production of steam transferred certified by the cost accountant. However letter on the learned transfer pricing officer on exa....
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....ribution may be through a pipe line/transmission line. The cost of maintenance of pipe line/ Transmission line for transfer of utility will be added to the cost of utility. In paragraph number 5.3.1 it is provided however cost of utilities are to be determined. 5.3.1 Cost of self generated utilities for own consumption shall comprise direct material cost, direct employee cost, direct expenses and factory overheads. The cost of generating a utility may comprise water, fuel, power, direct expenses ( such as boiler inspection fee) consumable stores, direct employee cost, repair and maintenance, depreciation, inter- utility transfer and factory overhead. For example: Cost of power generation will include cost of fuel such as furnace oil, coal, salaries and wages, consumable stores, repair and maintenance, deprecation and factory overhead. Unit cost is arrived at on the basis of the net aggregate consumption in different departments after adjusting transmission losses. In case of cogeneration (power and steam) where waste heat from TG (Turbine Generation) is recovered in waste heat recovery unit and used for production of steam, due credit should be given to t....
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....cost centres and other utilities in the proportion as determined in step (a) above. III. Similarly cost of other utilities is to be apportioned. IV. This process as stated above is to be continued till the figures remaining undistributed in the utility are too small to be significant. The small amount left with utilities may be distributed to the production cost centres. b) Matrix algebra through computer application: Spread sheet software such as Excel provides facility for inter-division cost ascertainment and reapportionment of inter utility. This application may be used for determining inter-utility transfer cost. Quantitative records of production and distribution should be recorded for each utility to measure the unit cost of a utility. An illustration of steam cost is at Annexure 2. 39. In the annexure - 2 it is given and examples of the total steam cost to be determined in the manner when it is transferred to other units as Under:- "Examples of Steam cost - Transfer to Other units Steam cost per tonne works out to Rs. 471.09 as illustrated under Annexure 2. If steam is transferred to other unit, distribution cost will be in addition to the above cost as illustra....
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.... the assessee had claimed deduction of Rs. 32,51,080/- under section 80IA(4) of the Act. This claim was on account of the operation of the Captive Power Plant. The assessee showed income from sale of Power to the tune of Rs. 1,23,10,500/- and the sale of vapour of Rs. 6,59,77,170/-. The Assessing Officer took the view that "Vapour" would not fall within the meaning of "Power". The case of the assessee is that "steam" is also a form of "power". 14. The case of the Revenue is that "steam" is only an intermediate raw material for the manufacturing process. In other words, the production of "steam" is only a byproduct, which is used by the assessee for its manufacturing activity. 15. In this regard, the CIT (A) recorded the following findings: "2. The appellant has also claimed deduction under section 80 IA on account of sale of steam to the chemical plant. "The steam was generated by the power plant in the boiler and part of it was also utilised for the chemical process of the non-eligible unit. The AO has held that the appellant was not entitled to the deduction on account of sale of steam to the power plant. It has been held by her that steam does not fall....
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....emical plant. Accordingly, the decision of the AO in this regard is upheld. 3. For the purpose of calculation the quantum of deduction and allocation of expenditure incurred for production of steam the appellant had given certain information-related to the heat value of steam (Enthalpy). The details given by the appellant were also forwarded to the AO and she has also given her comments on the same. In order to arrive at a logical conclusion it would be useful to understand the process involved. The appellant has installed a boiler which generates high-pressure steam at a very high temperature. The steam is first fed in the turbine where part of the heat energy of the steam is utilized in generating the electricity and the balance energy available in the steam coming out from the turbine is utilised in the chemical process. The appellant is incurring expenses such as coal consumption, boiler running, depreciation of boiler and other machinery and the building in which the whole generation plant is housed. The expenditure for the steam, which is utilised in generation of power, and the balance steam which is utilised by the chemical plant can be determined by distributing t....
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....g suitable details from the AO. The details of following expenses are readily available from record:- Expenses for generation of steam 9321977 Depreciation on turbine 1289189 Electricity duty 787872 The AO is also directed to verity the above figures. Accordingly the AO is directed to rework the deduction under section 80I-A claimed by the appellant as indicated in the preceding discussion." 16. The Tribunal, concurred with the aforesaid findings recorded by the CIT (A), by taking support of the decision of a Co-ordinate Bench of the ITAT, Mumbai, in the case of West Cost Paper Mills (P.) Ltd. v. CIT, [2014] 52 taxmann.com 268. As regards section 80IA of the Act, strong reliance has been placed on behalf of the Revenue on the decision of this Court in the case of CIT v. Atul Ltd. [2016] 74 taxmann.com 255. In Atul Ltd. (supra), the assessee had established a new power plant by expending a sum of Rs. 14.62 Crore and claimed deduction under section 80IA. The Assessing Officer upon examination of such claim, arrived at the conclusion that the production of power would require boiler and also a turbine since the boiler would manufacture steam which w....
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....No. 3 with which we are dealing with. 21. It is difficult for us to take the view as suggested by the learned standing counsel appearing for the Revenue that "steam" would not amount to power. The word "Power" used in Section 80IA(4) has not been defined under the Income-tax Act. 22. The word "Power" should be understood in common parlance as "Energy". "Energy" can be in any form being mechanical, electricity, wind or thermal. In such circumstances, the "steam" produced by the assessee can be termed as power and would qualify for the benefits available under section 80IA(4) of the Act." 45. Further Hon'ble Supreme Court in CIT v. Tanfac Industries Ltd., SLP (C) No. 18537 of 2009 [319 ITR 8 (st)] wherein while applying section 80-IA of the IT Act, the Hon'ble Supreme Court took a view that the value of steam used for captive consumption by the assessee was entitled to be deducted under section 80-IA of the Act. 46. Therefore it is apparent that i. steam is a valuable sources of power ii. it has cost of production, iii. There are methods and Costing Standards for determining the cost of production of steam. iv. Assessee has ....
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....expenses directly attributable to a particular purpose cannot be considered for the purpose of disallowance u/s 14 A of the income tax act unless there are other compelling reasons. In view of this, he submitted that the assessee has already offered the disallowance of Rs. 6,399,219/- being 0.50 percentage of the average value of investment towards the administrative expenditure against the total dividend income received of Rs. 91,388,245/-. He submitted that the working is based on which the assessee has worked out the disallowance is in line with the several judicial precedents of the honourable High Court. 49. The learned CIT DR vehemently supported the orders of the lower authorities with respect to the disallowance u/s 14 A of the act. 50. We have carefully considered the rival contention and perused the orders of the lower authorities. We have also considered the various judicial precedents cited before us. In fact undeniably the assessee has interest free funds available which are 12.82 times higher than the amount of investments. Thus Where assessee had its surplus fund against which investment was made, no question of making any disallowance of expenditure in respect....
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....on of stamp duty rate for the purpose of computation of the capital gain by invoking the provisions of Section 50 C of the act, the assessing officer is duty-bound to refer the same to the District valuation Officer for determining the fair value of the property. This has not been done and therefore the addition deserves to be deleted on this count itself. 52. The learned CIT DR submitted that assessee has objected to before the learned assessing officer with respect to the adoption of the fair market value in terms of the market value of the property for computation of capital gain at the fag and of the assessment proceedings and therefore same could not have been referred by the learned assessing officer to the valuation Officer. He otherwise submitted that the assessee does not dispute that transaction value of the sale of the property is less than the market value of the property. He submitted that there is no infirmity in the order of the learned assessing officer as it is mandated that if the sale consideration is lower than the fair market value of the property as determined for stem duty valuation, the learned assessing officer is duty-bound to adopt that rate for the pu....
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....is no provision for making the disallowance u/s 14 A of the act as per the expression to provisions of Section 115JB of the act. Even otherwise, he submitted that the issue is squarely covered in favour of the assessee by the decision of the special bench in case of Vireet Investments. He further submitted that the learned assessing officer has not made any addition/disallowances u/s 115JB of the act at the time of passing of the draft assessment order however, in the final assessment order he has made the adjustment, which is not permissible. 55. The learned CIT DR vehemently supported the order of the learned assessing officer. 56. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that this issue is squarely covered in favour of the assessee by the decision of special bench in case of ACIT V Vireet Investments [P] Ltd [2017] 82 taxmann.com 415 (Delhi - Trib.) (SB)/[2017] 58 ITR(T) 313 (Delhi - Trib.) (SB)/[2017] 165 ITD 27 (Delhi - Trib.) (SB)/[2017] 188 TTJ 1 (Delhi - Trib.) (SB) where in it has been held that the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to th....
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....e Hon'ble ITAT judgment in case of Philips India Limited [TS-326- ITAT-2020(Kol)],Sicpa India Private Ltd. [TS-154-ITAT-2020(DEL)] and Reckitt Benckiser (India) Private Limited [TS-614-ITAT-2020(Kol)] for allowance of claim of education cess u/s 37 of the Act. 62. The Ld DR vehemently opposed the above claim and submitted that i. education cess is an additional surcharge on the tax levied ii. the word "cess" has not been defined under the Act, however, way back the Hon'ble Supreme Court in the year 1967 in the case of Shinde Brothers, (AIR 1967 SC 1512) held that it is a tax only. iii. Hon'ble Supreme Court has been referred in India Cement India Ltd. Vs. State of Tamil Nadu (1990) 1 SCC 12; wherein the Hon'ble Supreme Court after referring to the judgment in the case of Shinde Brothers (supra) held that ordinarily a cess is also a tax, but is a special kind of a tax. Further, in Union of India v. Mohit Mineral (P) Ltd. [TS512-SC-2018-NT], the Supreme Court held that the expression "cess" means a tax levied for some special purpose, which may be levied as an increment to an existing tax. iv. Hon'ble Supreme Court in the case of CIT vs. K Srini....
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....ent are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law." xiv. It was submitted that above decision is of 5 judges bench and must be considered. xv. law declared by this Court is supreme law of the land under Article 141 of the Constitution of India, 1950 (in short the `Constitution'). The Circulars cannot be given primacy over the decisions. Even the decision of honourable high court should not be followed, if honourable supreme court has decided otherwise. xvi. He extensively referred the provision of section 2 (28A), section 4 of the income tax act. xvii. He otherwise submitted that cess does not accrue during the year as it is determined only at the time of computation which happens in next year. xviii. That all the decision cited by the ld AR has merely followed the decision of Honourable High court without considering above arguments. ....