TaxTMI 
TaxTMI 
2022 (1) TMI 923
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....ion against the appeal filed by the Revenue. Since these appeals and cross objections filed by the assessee and the revenue for all the four years germinate from the same set of facts, these are taken up together for adjudication and are decided by this common order. Assessee's Appeal - ITA No. 1413/Mum/2018 - Assessment Year 2011-12 1. Grounds raised by the assessee are as under: 1) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in upholding the disallowance u/s 80IA amounting to Rs. 82,61,81,708 for Rail Systems and Rs. 18,91,43,054 for Power Plants. He erred in holding that in respect of Rail Systems and Power Plants transferred from Samruddhi Cement Limited to the appellant Company pursuant to the scheme of amalgamation, the deduction is not allowable as per the provisions of section 80IA(12A) of the income Tax Act 1961. 2) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income tax (Appels) has erred in upholding the disallowance of additional depreciation spilled over from earlier year amounting to Rs. 24,12,51,789 u/s 32 (1) of the IT Act....
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....tax. 2) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, in holding that the sales tax exemption benefits of Rs. 19,99,06,000 / -are capital receipts not liable to income tax in view of the Hon'ble ITAT decision in the assessee's own case in earlier years i.e. 2004-05 to 2010-11 without appreciating the facts that the revenue has not accepted the decision of the Hon'ble, ITAT on this issue and has filed further appeal in the Hon'ble Bombay High Court. 3) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, allowing the disallowance of Rs. 136,74,78,762/ - u/ s 80IA on rail system. 4) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, in allowing the disallowance of Rs. 136,74,78,762/ - u/ s 80IA on rail "system relying on the decision of the ITAT in earlier years, without appreciating that the department has not accepted the decision of ITAT and further appeal has been filed against the appellate orders. 5) On the facts and in the circumstances of the case and in law, the Ld. CIT(A} erred, in allowing the disallowance of oth....
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.... "On the facts and in the circumstances of the case an in law, the learned AO has : 1) erred in challenging the order of the LD CIT(A), wherein LD CIT(A) allowed the sales tax exemption benefits of Rs. 19,99,06,000 as capital receipt not chargeable to income tax, without appreciating that the LD CIT(A) has allowed relief by following the decision of the Hon'ble ITAT in case of the Respondent in earlier years from AY 2004-05 to AY 2010-11. 2) erred in challenging the order of the LD CIT(A), wherein LD CIT(A) allowed deduction of Rs. 136,74,78,762 under section 80-1A on rail system, without appreciating that the LD CIT(A) has allowed relief by following the decision of the Hon'ble ITAT in case of the Respondent in earlier years from AY 2004-05 to AY 2010-11. 3) erred in challenging the order of the LD CIT(A), wherein LD CIT(A) allowed the Carbon Credit Certified Emission Reduction receipt of Rs. 1,92,42,384 as capital receipt not chargeable to income tax, without appreciating that the LD CIT(A) has allowed relief by following the decision of the Hon'ble ITAT in case of the Respondent in earlier year i.e. AY 2008-09: 4) erred in chall....
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....inate Bench held as under: "99. We have considered rival contentions and carefully gone through the orders of the authorities below as well as the order passed by the Tribunal in assessee's own case in the A.Y.2004-05 to 2006-07. We found that exactly similar issue was considered in detail by the Tribunal and after discussing various judicial pronouncements held that subsidy so received by the assessee was capital in nature, therefore not liable to tax as revenue receipt." "100. The facts and circumstances during the years under consideration i.e., 2009-10 & 2010-11 are exactly same, therefore, respectfully following the series of the order of the Tribunal in assessee's own case, we do not find any infirmity in the order of LD CIT(A) for holding that subsidy was capital in nature therefore, not liable to tax as revenue receipt." 7. The facts and circumstances during the year under consideration remain the same and hence following the series of the orders of Coordinate Bench of this Tribunal for earlier years in assessee's own case, we confirm the order of the LD CIT(A) and dismiss this ground raised by the Revenue. 8. Ground nos.3 and 4 of the revenue are co....
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....as well as the order passed by the Tribunal in assessee's own case for the AY 2007-08 and 2008-09 wherein the Tribunal has restricted the disallowance under Rule 8D(iii) to the extent of amount offered by the assessee as attributable to earning of exempt income. During the year under consideration, we found that assessee has offered expenses on Cost to Company basis of employees, executives and staff those were looking after the profit on investment in the mutual funds amounting to Rs. 43,31.541/ Assessee has also offered expenditure indirectly attributable to these employees amounting to Rs. 12,09,391/- thus, total disallowance offered by the assessee amounts to Rs. 55.40,932/- which appears to be reasonable looking to the nature of the exempt income vis-a-vis nature of expenses so incurred for earning the same. Respectfully following the decision of the Tribunal in assessee's own case, we restrict the disallowance under Rule 8D(2)(iii) to the extent of Rs. 55,40,932/-. Following the same reasoning, we direct AO to restrict disallowance under Rule 8D(2)(iii) to the extent of Rs. 64,30,155/- as offered by assessee in the AY 2010-11. We direct accordingly." 13. It is also....
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....ction is connected with this claim 17. We note that this issue has also been decided in favour of the assessee in its own case by the Coordinate Bench of this Tribunal in ITA No. 1348/Mum/2012 for AY 2008-09 vide order dated 28 Feb 2014. The observation of the Tribunal on this issue is as under: "43. We find that the assessee has shown the sale consideration out of sale proceeds of Carbon Credit under the head 'other income' as revenue receipts which now it wants to claim as capital receipts in the light of the decision of the Tribunal. Since no new facts have to be verified so far as this claim is concerned realization of Carbon Credit are already shown under the head' other income'. Respectfully following the decision of the Tribunal cited hereunder: 1. ITAT Hyderabad Bench in the case of My Home Power Ltd. Vs DCIT in ITA No. l l 14/Hyd/2009 2. ITAT Chennai Bench in the case of Sri Velayudaswamy Spinning Mills (P) Ltd. Vs DCIT in ITA No. 582/Mds/2013 3. ITAT Chennai Bench in the case of Ambika Cotton Mills Ltd. Vs DCIT in ITA No. 1836/Mds/2012; We direct the AO to treat the Proceeds realized from sale of Certified Emiss....
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....on 80IA of the IT Act. 24. Before we get into the merits of the claim of the assessee, it is important to understand the facts in the case before us. i. The assessee is a subsidiary of Grasim Industries Limited (Grasim) with the promoter holding of more than 60%. ii. During the financial year 2010-11, as per the Scheme of Amalgamation duly approved by the Hon'ble High Courts of Bombay and Gujarat, Samruddhi Cement Ltd. (SCL) was amalgamated with the assessee w.e.f. 01.07.2010 (appointed date). The amalgamating company, viz. SCL was a 100% subsidiary of Grasim. iii. Pursuant to the sanction of the Scheme by the High Courts and upon coming into effect of the Scheme of Amalgamation from the appointed date, all the estate, assets, properties, rights, claims, title, interest and authorities including accretions and appurtenances comprised in the undertaking of SCL stood transferred to and vested in UTCL, as a going concern. iv. The abovementioned rights, properties, estates etc. of SCL included Rail undertakings and power plants for which SCL had been claiming tax holiday u/s 80IA. v. Upon amalgamation of SCL and vesting of its Railway und....
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....he deduction under the said section is transferred before the expiry of the period specified therein, to another Indian company in a scheme of amalgamation or demerger, the provisions of the said section 80-IA shall apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. It is proposed to insert a new sub-section (12A) in section 80-IA so as to provide that the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31-3-2007. This amendment will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years." 26. The LD CIT(A) upheld the view taken by the AO and noted that amendment provision brought in by the Finance Act, 2007 is free from any ambiguity and pursuant to such amendment, deduction under section 80IA becomes impermissible for the amalgamated company in respect of the undertakings inherited under the scheme of amalgamation. 27. The Ld AR of the assessee, at the outset submitt....
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....Ld CIT(A) are of the view that with the introduction of sub-section (12A), since the provisions of sub-section (12) shall not apply to the undertakings or enterprises which are transferred in the scheme of amalgamation or demerger after 31-3-2007, the statute has disabled the enabling provision enshrined in subsection (12) of Section 80IA of the IT Act. 32. The Ld AR of the assessee on the other hand, as aforementioned, argued that sub-section (12) of section 80IA did not create any new right of tax holiday to the successor entity at the first place. Thus, insertion of sub-section (12A) in section 80IA of the IT Act, which merely disabled the applicability of sub-section (12), cannot be construed as withdrawal of right to claim the deduction by the successor. 33. The Ld AR of the assessee further argued that sub-section (12A) was introduced merely to neutralise the abnormalities brought into the statue by sub-section (12) of section 80IA. According to Ld AR of the assessee following anomalies had arisen on account of introduction of sub-section (12) in section 80IA of the IT Act: "i. In cases of amalgamation / demerger which are effective on a day other than beginnin....
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.... as the successor company in case of amalgamation/ demerger would not be eligible for the deduction, whereas a purchaser of unit or a successor pursuant to dissolution/slump sale, conversion of proprietorship /firm into company etc. shall be able to claim the tax holiday. Therefore, the AR submitted that an interpretation which leads to absurd consequences and results in discrimination should be avoided. ii. Sub-section (12) applies only to an "undertaking" and not to an "enterprise", therefore sub-section (12A) which negates the applicability of sub-section (12) will not apply to rail systems which are regarded as "enterprise" for the purpose of section 80-IA(4)(i). iii. Sub-section (12) of section 80IA presupposes that the amalgamating Company/ demerging entity is claiming deduction at the time of reorganisation. As such, the provisions of sub-section (12A) cannot be construed to deny benefit in respect of those undertakings which started claiming deduction only after the date of amalgamation. 38. The Ld DR on the other hand referred to the CBDT Circular no.3 of 2008 dated 12 March 2008 wherein the CBDT has explained the purpose behind introduction of sub-sec....
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....and subject to the provision of the section. The relevant section is reproduced below: "[1] Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years". 44. Sub-section (4) of section 80IA provides as under: any enterprise carrying on the business of (i) developing or(ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions namely :- (a)... (b)... (c)... ............ Explanation - For the purposes of this clause, "infrastructure facility" means - (a) a road including toll road, a bridge or a rail system (b) .... ........... (i) .... (ii)....
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....where the deduction is prescribed for an undertaking. The Hon'ble jurisdictional High Court in the case of CIT vs. Sonata Software Ltd. [2012] 343 ITR 397 dealing with the issue relating to eligibility of the successor entity which had acquired the eligible undertaking on slump sale basis to claim deduction under section 10A, held as under: "11. The Tribunal in the present case has come to the conclusion that where a running business is transferred lock, stock and barrel by one assessee to another assessee the principle of reconstruction, splitting up and transfer of plant and machinery cannot be applied. According to the Tribunal the benefit of Section 10A attaches to the undertaking and not to the assessee which owns the undertaking. The benefit of Section 10A was held to have attached itself to the STP unit of the software division which was owned by IOCL till 19 October 1994 and it was owned by the assessee subsequent to that date. What is material, according to the Tribunal, is not who owns the undertaking but whether the undertaking is entitled to the benefit available under Section 10A..." 49. Thus, there is no dispute that the deduction under section 80IA(1) r.w....
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....ness reorganisation. Relevant portion of the Memorandum explaining the provisions of the finance Bill was as follows: "86. With growing liberalisation of the economy has come the need for industrial restructuring so that companies can focus better on their core activities. The corporate sector has been voicing the need for a flexible fiscal policy for regulating business reorganisations. In response to this need, I propose a comprehensive set of amendments to the Income tax Act to make such business reorganisations fully tax neutral. ... 87. ... Further, it is proposed that all fiscal concessions will survive for the unexpired period in the case of amalgamation and demergers". (Extracts from the speech of Finance Minister)" The Memorandum further explained as under: "The business and economic development of the country has thrown up the need for rationalisation of laws relating to business reorganisations for restructuring of production system and a better utilisation of resources which have become necessary with a view to enable the Indian industry to rearrange itself to become globally competitive. It was in this background that tax concessi....
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....gamation. Demerger is relatively a new phenomenon in the Indian corporate sector. A demerger is a reorganization of a company where all the existing assets and liabilities are divided into one or more additional entities leading to resulting companies. While there are no specific provisions under the Companies Act governing demergers, some transactions of this nature do take place through schemes of compromise or arrangement under sections 391 to 394 of the Companies Act and these are sanctioned by the High Courts. A slump sale is a form of reorganization where an undertaking or a division is transferred from one person to another for a lump sum consideration without values being assigned to the individual assets and liabilities transferred. 56.3 Extensive amendments in the Income-tax Act have been carried out on the basis of the following broad principles: a) The restructuring shall not attract additional liabilities to tax and also not result in the withdrawal of relief and concessions available to the existing unit. b) The tax benefits and concessions available to an undertaking of a company shall continue to be available to the undertaking on transfer....
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....one and the amalgamated company continued to carry on the business of the undertakings. It claimed the deduction of tax holiday for all the eligible undertakings. The AO disallowed the deduction on the ground that it did not set up the aforesaid units and there was no provision in the Act for granting the benefit of deduction to the amalgamated company. The Ld CIT(A) and the Tribunal upheld the claim of the taxpayer. The Hon'ble Madras High Court confirmed the decision of the Tribunal and observed as follows: "A reading of the provision of sections 80HH and 80-I of the Act, it is clear that the same has been incorporated to encourage the new industrial undertaking on fulfilment of certain conditions mentioned therein. If the conditions mentioned in the sections are complied with by the assessee, the benefit extended by the provisions has to be granted to the assessee. The amalgamation of one company with the other company cannot be regarded as a splitting up or reconstruction or by a transfer of a new business of the plant and machinery of the old business. With reference to the Companies Act, the amalgamation was also for the benefit of the two companies, i.e.....
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....pplicability have been upheld. The Hon'ble Allahabad High Court in the case of Prisma Electronics [2015] 377 ITR 207 was concerned with deduction under section 80-IB on conversion of proprietorship concern into partnership firm. In this regard, it was held as under: "11. From a perusal of the aforesaid provision, it is clear that Section 84 is more or less the same as provided in Section 80-IB of the Act. The Central Board of Direct Taxes issued a circular F. No.15/5/63-IT(A-1) dated 13th December, 1963 indicating that the benefit of Section 84 is attached to the undertaking and not to the owner thereof and, consequently, the successor would be entitled to the benefit for the unexpired period of 5 years provided the undertaking is taken over as a running concern. 12. The same principle is applicable in the instant case. Admittedly, the undertaking was in existence since 2002. The proprietorship concern changed into a partnership firm. The benefit under Section 80-IB of the Act is available to the partnership firm and the conditions imposed under Section 80-IB(2)(i) does not come in the way." Thus, the sanctity of the CBDT Circular has been upheld in the context....
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....mined by the Hon'ble Bombay High Court in case of Tyresoles Concessionaire (P.) Ltd [1995] 81 Taxman 279. Relevant findings of the High Court while deciding the issue in favour of the assessee were as follows: "10. So far as the next question is concerned, we find that the amalgamated company claimed relief under section 80J for the period from 1-1-1975 to 31-3-1975. This relief was refused by the ITO on the ground of non-fulfilment of the conditions of section 80J(5). So far as the fulfilment of the conditions of section 80J(5) is concerned, we find that there is a clear and categorical finding of the Tribunal that all the conditions were fulfilled. The only question to be decided is whether having regard to the provision of section 80J, the assessee-company is entitled to claim development rebate for the balance period of 5 years. We have carefully perused the provisions of section 80J. Relief under that section is available only to those industrial undertakings which fulfil all the conditions specified in sub-section (4) thereof, the relevant conditions for the present purpose being conditions (i) and (ii). ... On a careful perusal of the provisions of section 80J as a ....
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....im deduction upto the period the undertaking was operated by it and, the amalgamated company will be eligible to claim deduction for the period the undertaking was operated by it after the amalgamation. In this case, the Tribunal was interpreting the provisions of section 80J, which did not have a provision similar to sub-section (12) of section 80IA. 68. In summary, prior to insertion of sub-section (12) in section 80IA, the deduction was allowed to the amalgamating and the amalgamated companies on a pro-rata basis for the year in which the amalgamation took place. Sub-section (12), although allowed the benefit to the successor entity to which the undertaking was transferred, it changed the position a little, by disentitling the amalgamating company to claim any deduction in the year of amalgamation. Therefore, sub-section (12) did not create a new right, since this right was already provided in the statute to the successor. It, in effect, curtailed the rights of the amalgamating company or demerged company by disenabling them to claim any benefit in the year of amalgamation/demerger. 69. We also tend to agree with another proposition put forth by the AR of the assessee that....
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....eral liability of partners for tax payable by firm.-Every person who was, during the previous year, a partner of a firm, and the legal representative of any such person who is deceased, shall be jointly and severally liable along with the firm for the amount of tax, penalty or other sum payable by the firm for the assessment year to which such previous year is relevant, and all the provisions of this Act, so far as may be, shall apply to the assessment of such tax or imposition or levy of such penalty or other sum." 72. In our view since the benefit is implicit in sub-section (1) read with sub-section (4) of section 80IA of the IT Act, the discontinuance of subsection (12) by insertion of sub-section (12A) does not take away the benefit provided in sub-section (1) of section 80IA of the IT Act. 73. We may also refer to one more amendment made by the Finance Act, 1999 (by which sub-section (12) was introduced in section 80IA of the IT Act), for the purposes of "tax neutral" business reorganisation i.e. 35AB(3). This amendment relate to an expenditure which was incurred in a particular year and the allowance was spread over a certain number of years. Section 35AB provided that ....
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.... "(12A) Nothing containing sub-section (12) shall apply to an enterprise or undertaking which is transferred in the scheme of amalgamation or demerger on or after the 1st day of April, 2007". 77. Notes on clauses to the Finance Act, 2007 explains it as follows: "It is proposed to insert sub-section (12A) so as to provide that nothing contained in sub-section (12) shall apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger on or after the 1st day of April, 2007". 78. The Notes on clauses simply reiterated what has been stated in subsection (12A). The memorandum explaining the provisions of the Finance Bill 2007, which has been relied upon by the AO as well as LD CIT(A) states as under: "Tax benefit u/s 80-IA not available to undertakings / enterprises of Indian companies undergoing amalgamation or demerger after 31.03.2007 The existing provisions of section 80-IA provide for 100% deduction for ten years in respect of profits and gains of certain undertakings or enterprises engaged in the business of development, operation and maintenance of infrastructure facility, industrial parks and special econom....
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....by doing so, the legislature has restored the position that prevailed prior to insertion of sub-section (12) in section 80IA. As discussed above, various Courts have confirmed the availability of benefit of tax holiday claims (although under different sections) and allowed to the successor even prior of specific provisions of sub-section (12) in section 80IA of the IT Act. 81. Wherever the legislature intended denial of any deduction, it expressly so provided. To illustrate, section 10A(9) (since omitted) which sought to deny the deduction under section 10A, where there was a change in shareholding, it was expressly so provided and a reference was drawn to the sub-section conferring the deduction. Sub-section (9) of section 10A of the IT Act read as under: "(9) Where during any previous year, the ownership or the beneficial interest in the undertaking is transferred by any means, the deduction under sub-section (1) shall not be allowed to the assessee for the assessment year relevant to such previous year and the subsequent years". 82. Thus, a conscious use of different terminology or language is found to be adopted for every amendment and that difference cannot be i....
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....s no justification for passing on the benefit to someone who had not taken these risks and had only acquired the eligible undertaking much later when the risks had reduced. Hence, a new sub-section (12A) has been inserted in section 80-IA so as to provide that the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31.03.2007. Thus, if an undertaking or an enterprise is transferred in a scheme of amalgamation or demerger after 31.03.2007, the benefits of deduction u/s 80-IA will not be available to the amalgamated or demerged undertaking or enterprise. The content of this circular will supersede whatever contrary has been stated, on this issue, in any other circular, issued by the Central Board of Direct Taxes earlier. (Emphasis supplied) 35.2 Applicability - this amendment will take effect from 01.04.2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent years." 85. TheLd DR contended that the intention of providing benefit under section 80-IA was to accord incentive to those who had made initial investment and taken entrepreneurial risk. He....
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....al No. 4022 of 1999) has held as under: "6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/ circulars issued by the Central Government and of the State Government 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." 90. We also place reliance on the decision of the Allahabad High Court in a case Shivangee Crafts Limited vs. State of UP. A writ petition was filed by assessee in reference to UP Trade Tax Act, 1948, wherein the Court has held that till such time as a clarification or amendment by the Legi....
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....heme of amalgamation or demerger, it is also worth noting that in the present case, the initial investment in eligible undertakings /enterprises was made by Grasim (the holding company of the assessee). These undertakings were demerged by Grasim to its wholly owned subsidiary, viz. SCL. Subsequently, SCL was amalgamated with the assessee w.e.f. 1 July 2010. Accordingly, even after the amalgamation of SCL with the assessee, there is no change in the entity which made the initial investment since Grasim still retains the entrepreneurial risk with itself as the ultimate shareholder of the assessee company. Therefore, even assuming that the CBDT Circular is to be relied upon, the conditions prescribed by the CBDT for denial of deduction is not fulfilled in the present case. Accordingly, even on this count, the deduction should continue to be available to the assessee company. 94. We are also inclined to draw reference to one more argument of the AR of the assessee. The scheme of amalgamation of SCL with the assessee was duly approved by the Hon'ble High Courts of Bombay and Gujarat. The Hon'ble Courts in its order has explicitly conferred upon the assessee, being the amalgamated com....
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....ingly, AO is directed to allow the deduction as claimed by the assessee with respect to eligible units acquired from SCL. Accordingly, Ground no.1 of the assessee is allowed. 98. Ground no.2 of the assessee relate to disallowance of additional depreciation under section 32(1)(iia) of the IT Act in respect to assets installed during the FY 2009-10 (i.e. AY 2010-11) and are used for a period less than 180 days in that year (spill over depreciation). 99. The Ld CIT(A) upheld the action of the AO and has held as under: "It can be seen that there is no explicit provision like section 32(2) to deal with depreciation that cannot be claimed due to statutory restriction. The restriction to 10 % (one half of 20 %) arose as a result of not using the asset on which additional depreciation is claimed more than 180 days. What has not been claimed gets absorbed to closing WDV and for next year depreciation is claimed on the opening WDV. There is no provision in law to cull out a specific portion out of opening WDV and claim the same in the next year in a manner not prescribed by law. Whatever legal arguments are given, in absence of specific provision in law, the claim is inadmissi....
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....ions wherein it has been held that beneficial legislation should be given liberal interpretation so as to benefit the assessee. The Hon'ble Courts have held that the accelerated depreciation as per clause (iia) to Section 32(1) is a benefit granted to the assessee, the law cannot be read in a manner to make such benefit void merely because it is not explicitly provided. 104. The Division Bench of the Madras High Court in case of CIT vs T. P. Textiles Pvt. Ltd. [394 ITR 483], took note of the amendment vide third proviso to clause (ii) of sub-section 1 of Section 32 of the Act and observed as under: "10.1:- The plain language of section 32(1)(iia) read along with relevant proviso would have us come to the conclusion that, there is no limitation in the assessee claiming the balance 10 per cent of additional depreciation in the succeeding assessment year. 10.2:- As a matter of fact, with effect from April 1, 2016, the ambiguity, if any, in this regard, in the mind of the Assessing Officer, stands removed by virtue of the Legislature, incorporating in the Statute, the necessary clarificatory amendment. 10.3 .... .... .... .... .... .... .... 11:- ....
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....ictional Bombay High Court in the case of Pr. CIT v/s Godrej Industries Ltd. [ITA 511 of 2016]. The 50% of the balance additional depreciation claim has been allowed by the Hon'ble High Court in the succeeding AY where the asset was purchased and put to use for less than 180 days. The Hon'ble Bombay High Court also relied on the decision rendered by the Karnataka High Court in Rittal India Pvt. Ltd. (380 ITR 423) and Madras High Court ruling in T.P. Textiles Pvt. Ltd. (supra), to hold that amendment made vide insertion of third proviso to Sec.32(1)(ii) w.e.f. April 1, 2016 (which allows claim in succeeding year), is clarificatory in nature and would apply to all pending cases. 106. We also find that the Coordinate Bench of this Tribunal in the case of Grasim Bhiwani Textiles Limited vs ACIT (ITA 790 & 791/Mum/2014), has also allowed the claim of spill over depreciation observing as under: "6. The issue under consideration is also squarely covered by the order of coordinated bench in the case SIL Investment Ltd., 73 DTR 0233, wherein it was held that additional depreciation, which was restricted in the year of purchase to the extent of 50% on the plea of machinery having....
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....al contentions and perused the material on record. To understand the controversy, it's important to examine the requirements of Section 35(2AB)(1) which reads as under : "(2AB)(1) Where a company engaged in the business of bio-technology or in any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to one and two times of the expenditure so incurred." 113. It is clear from the provisions of section 35(2AB) that once R&D facility is approved by the DSIR, the expenses incurred by the assessee have to be allowed. If the law wanted the expenditure to be approved by the prescribed authority, same would have been expressly provided in the section. 114. The Bangalore Tribunal in case of Natural Remedies Pvt. Ltd. vs. ACIT (2021) 61 CCH 0005 has held that for the period prior to the Income Tax (Tenth Amendment) Rules, 2016, with effec....
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....b) of the Rules, that the quantification of the weighted deduction u/s.35(2AB) of the Act has significance. In the present case there is no difficulty about the quantum of deduction u/s.35(2AB) of the Act, because the AO allowed 100% of the expenditure as deduction u/s.35(2AB)(1)(i) of the Act, as expenditure on scientific research. Deduction u/s.35(1)(i) and Sec.35(2AB) of the Act are similar except that the deduction u/s.35(2AB) is allowed as weighted deduction at 200% of the expenditure while deduction u/s.35(1)(i) is allowed only at 100%. The conditions for allowing deduction u/s.35(1)(i) of the Act and under Sec.35(2AB) of the Act are identical with the only difference being that the Assessee claiming deduction u/s.35(2AB) of the Act should be engaged in manufacture of certain articles or things. It is not in dispute that the Assessee is engaged in business to which Sec.35(2AB) of the Act applied. The other condition required to be fulfilled for claiming deduction u/s.35(2AB) of the Act is that the research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. Of I....
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....he name of amalgamating company (i.e. SCL/ Grasim Industries). Due to the amalgamation during the year under consideration, some of these TDS/ TCS certificates were issued by the parties in the name of the erstwhile entity. 121. It was confirmed that neither Grasim Industries nor SCL has claimed any credit of such TDS or TCS in its return of income for any year. The AR also referred to clause 11(d) at page no. 27 of the Scheme of Amalgamation, wherein it has been mentioned that all taxes paid/ payable by the Transferor Company (including TDS) shall be deemed to be paid by the Transferee Company. Accordingly, credit in respect of TDS/ TCS deposited in the name of the amalgamating company ought to be allowed to the assessee as it is rightfully claimed and allowable. 122. Our attention was invited to the decision of coordinate Bench of Ahmedabad Tribunal in case of Adani Gas Ltd. vs. ACIT (ITA No. 2241/Ahd/2011) wherein it has been observed as under: "13. ... We conclude accordingly that once the demerged gas distribution undertaking no more exists w.e.f. 01-01-2007 coming to be the appointed day, the assessee-resulting company is entitled for all the pro rata adjustmen....
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....)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of the entire tax deducted at source for and on behalf of a deductee cannot be placed on an assessee-deductee. The assessee, by furnishing the TDS certificate/s bearing the full details of the tax deducted at source, credit for which is being claimed, has in our view discharged the primary onus on it toward claiming credit in its respect. He, accordingly, cannot be burdened any further in the matter. The Revenue is fully entitled to conduct proper verification in the matter and satisfy itself with regard to the veracity of the assessee's claim/s, but cannot deny the assessee credit in respect of TDS without specifying any infirmity in its claim/s. Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee's claim/s. Where so, no doubt a matter of concern, is one which is to be investigated and pursued by the Revenue, which is suitably....
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....peals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/crossobjections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 6. In the case of Jute Corporation of India Ltd. v. C.I.T. this Court, while dealing with the powers of the Appellate Assistant Commissioner observed that a....
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....bjection towards admissibility of the additional grounds. We are of the view that a legal plea can be raised by the affected party at any point of time in the matter pending for adjudication. Further, it is settled proposition of law that mere procedural lapse, or omission on the part of the assessee, cannot lead to denial of substantive benefit/eligible claim in the hands of the assessee. Keeping in view, of above discussion and decision of the Hon'ble Apex Court, the additional grounds filed by the assessee are accepted and taken up for adjudication. 133. Ground nos. 6 and 7 are the additional grounds filed by the assessee with regard to claim of deduction towards the education cess and secondary and higher education cess. 134. We find that this issue is squarely covered by the decision of the Hon'ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. vs. JCIT in Income Tax Appeal No.52 & 68 of 2018 dated 31/07/2018. The Hon'ble Rajasthan High Court had taken into account the CBDT Circular dated 18/05/1967 and held that the education cess, secondary and higher education cess should be allowed as deduction. Their Lordships had held that Section 40a(ii....
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....of the appeal wherein the assessee has contended that the order passed by the Transfer Pricing Officer is not valid. Accordingly, the addition made in the assessment pursuant to such order is also invalid. Ground nos. 8 to 12 of the Revenue's appeal and Ground no. 6 and 7 of assessee's cross objection for the subject year are also related to additions made by the AO on Corporate Guarantee commission pursuant to the Transfer Pricing order passed by the TPO. All these grounds are taken up together for adjudication. 140. The relevant facts are, an addition was made in the assessment towards corporate guarantee commission in respect of corporate guarantee extended by the assessee to the bankers of its subsidiaries in middle east. During AY 2011-12, the assessee had acquired stakes in Star Cement LLC., Middle East, through its wholly owned subsidiary in Dubai, viz., UltraTech Cement Middle East Investment Limited (UCMEIL). For the purpose of overseas acquisitions, the assessee had given corporate guarantee to the bankers of its Associated Enterprises (AEs) for providing loan to the AE for the purpose of capital commitments and working capital facility availed by them. 141. Guarant....
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....he IT Act. The 1st proviso to section 153C provides that for the purpose of abatement of assessment and reassessment the date on which the AO receives the books of accounts or documents shall be considered. Consequently, the date on which notice u/s.153A of the IT Act was issued, the assessment proceeding initiated u/s.143(2) of the IT Act prior to such notice based on the original return filed and the transfer pricing proceeding initiated by reference dated 5 July 2013 got abated and ceased to exist. The Bombay High Court in the case of JSW Steel Limited ([2020] 115 taxmann.com 165 has held that once proceeding is initiated under section 153A of the Act, the original return of income and the assessment pending on that date loses its validity and, a fresh return of income is required to be filed which the AO is obliged to assess afresh. The relevant extract of the judgement is reproduced below: "12... Further sub section(a) of section 153A(1) provides for issuance of notice to the persons searched under section 132 of the Act to furnish a return of income. However, the second proviso to section 153A of the said act makes it clear that assessment relating to any assessment ....
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.... Das Khandelwal ([2019] 108 taxmann.com 183 [SC]) held that even in the proceedings initiated u/s.153A of the IT Act, the AO is duty bound to issue notice u/s.143(2) of the IT Act and in the absence of such notice the assessment proceedings are invalid. Applying the same analogy, after the issue of notice under section 153C of the IT Act, the AO was required to make a fresh reference under section 92CA(1) of the IT Act. Since no fresh reference has been made the order passed by TPO dated 28 November 2014 is bad in law as it is based on the abated proceedings. The order of the TPO is, therefore treated as non-est. 147. Further, in the present case the notice under section 143(2) of the IT Act pursuant to fresh proceedings under section 153C was issued on 8 January 2015. The order of the TPO has been passed on 28.11.2014 i.e. before the assessment proceedings initiated by issue of notice u/s.143(2). The Pune Bench of the Tribunal in the case of Maximize Learning Private Limited (ITA No. 2234/PN/2012 dated 2 February 2015) has observed that the law is quite clear i.e. TPO gets the jurisdiction to pass an order under section 92CA(3) of the Act only after the return is selected for s....
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....uest was made to restrict the disallowance under section 14A of the IT Act only to Rs. 81,58,878 as against Rs. 2,36,25,581 made in the return of income. 153. The AO duly verified the cash flow statement submitted during the course of assessment proceeding and noted that assessee had sufficient fund of its own for making investment. Accordingly, the AO agreed with the assessee's contention that no interest is required to be disallowed u/s 14A of the IT Act. As for the other expenses, the AO has disregarded the submission of the assessee. Applying Rule 8D(2)(iii) the AO reworked the computation of disallowance at Rs. 1,81,80,007. The AO has not given any specific findings or reasons for rejecting the assessee's computation of other expenses offered for disallowances. Having computed the quantum of disallowance u/s.14A to Rs. 1,81,80,007/-, the AO did not make any separate addition to the returned income since the assessee had suo moto disallowed an amount of Rs. 2,36,25,581/- in its computation. This was despite the fact that AO agreed with the assessee's contention that no disallowance is required with regard to interest. 154. The LD CIT(A) agreed with the contention of the a....
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....he assessee. Since the facts relating to this ground remains same as in AY 2011-12, we direct the AO to allow the deduction claimed by the assessee in this regard. 159. Ground no.4 of the appeal relate to denial of claim by the AO u/s. 35(2AB) in respect of R&D expenses amounting to Rs. 38,87,646/- on the basis of report received from DSIR. 160. This ground is similar to Ground no.3 of the assessee's appeal in ITA No. 1413/Mum/2018 for AY 2011-12. In that year, discussed above, we have already taken a view that the amended Rule 6(7) of the IT Rules was applicable from AY 2016-17. There was no requirement for the AO to obtain specific report from the DSIR approving the expenses for the year under consideration. Accordingly, since the AO has not found any defect in the expenses incurred by the assessee, the same should be allowed as deduction. 161. Ground no.5 of the appeal relate to short grant of TDS/TCS credit claimed by the assessee on the basis of certificates and for which entries are not found in Form 26AS. 162. This ground is similar to Ground no.4 of the assessee's appeal in ITA No. 1413/Mum/2018 wherein we have directed the AO to grant credit for TDS/TCS on the ....
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....e's appeal in AY 2011-12 and have given direction to the AO to verify the assessee's claim. In case the rate of tax as per tax treaty on dividend is lower and the rate of DDT paid by the assessee, the excess should be refunded to the assessee. Following our decision in AY 2011-12, we direct accordingly. 170. Additional Ground nos. 10 of the appeal relate to the validity of transfer pricing order passed by the learned TPO. The assessee has questioned the validity of transfer pricing proceedings and the consequent order passed by the TPO raising a plea that the same should be treated as non-est. 171. This ground is similar to additional Ground no.9 filed by the assessee in ITA no.1413/Mum/2018 for AY 2011-12. Incidentally the Revenue has also raised Ground nos.5 to 10 in ITA no 2872/Mum/2018 for AY 2012-13 against the relief allowed by LD CIT(A) in respect of additions made with regard to commission on corporate guarantee. Against the said grounds of Revenue, the assessee has also filed cross objection and Ground nos.4 and 5 in CO No. 130/Mum/2019 relate to the same matter. The Grounds raised by the Revenue and the CO filed by the assessee on this issue are similar to Ground no....
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....scussed this issue in details in AY 2011-12 above and have held that since the order passed by TPO is based on the old proceedings which already got abated, the order has to be treated as invalid. The facts remaining same, we follow our findings in AY 2011-12 and hold that the order passed by TPO for AY 2012-13 is invalid. Consequently, the additions made by the AO pursuant to the recommendation in the order of the TPO also does not survive. This ground of the assessee is accordingly allowed. 176. Having allowed the ground of the assessee, the grounds filed by the Revenue on this issue (Ground nos.8 to 12) in ITA no. 2872/Mum/2018 as well as Ground nos. 4 and 5 of the cross objection filed by the assessee in CO 130/Mum/2019 becomes infructuous and does not require any separate adjudication. Revenue's Appeal - ITA No. 2872/Mum/2018 - Assessment Year 2012-13 177. Ground nos. 1 and 2 of the Revenue's appeal relate to claim of the assessee in treating sales tax exemption benefits received amounting to Rs. 1,79,49,21,867/- as capital receipts not liable to tax. Ground no.1 of the assessee's cross objection is connected with this claim. 178. These grounds are similar to Groun....
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....39;ble Bombay High Court in Pr.CIT vs. Godrej Industries Ltd. (supra), we have already taken a stand that the additional spill over depreciation should be allowed to the assessee. Since the facts relating to this ground remain same as in AY 2011-12, we direct the AO to allow the deduction claimed by the assessee in this regard 186. Ground no. 3 of the appeal relate to denial of claim by the AO u/s. 35(2AB) in respect of R&D expenses on the basis of report received from DSIR. 187. This ground is similar to Ground no.3 of the assessee's appeal in ITA No. 1413/Mum/2018 for AY 2011-12. In that year, discussed above, we have already taken a view that the amended Rule 6(7) of the IT Rules was applicable from AY 2016-17. There was no requirement for the AO to obtain specific report from the DSIR approving the expenses for the year under consideration. Accordingly, since the AO has not found any defect in the expenses incurred by the assessee, the same should be allowed as deduction. 188. Ground no. 4 of the appeal relate to short grant of TDS/TCS credit claimed by the assessee on the basis of certificates and for which entries are not found in Form 26AS. 189. This ground is simil....
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....2018 for AY 2011-12. We have allowed the assessee's appeal in AY 2011-12 and have given direction to the AO to verify the assessee's claim. In case the rate of tax as per tax treaty on dividend is lower and the rate of DDT paid by the assessee, the excess should be refunded to the assessee. Following our decision in AY 2011-12, we direct accordingly. Revenue's Appeal - ITA No. 2873/Mum/2018 - Assessment Year 2013-14 197. Ground nos.1 and 2 of the Revenue's appeal relate to claim of the assessee in treating sales tax exemption benefits received as capital receipts not liable to tax. Ground no.1 of the assessee's cross objection is connected with this claim. 198. These grounds are similar to Ground nos.1 and 2 of the Revenue's appeal in ITA No. 2871/Mum/2018 and assessee's cross objection in CO no. 129/Mum/2019 for AY 2011-12. We have already decided this issue in favour of the assessee by following the order of Tribunal in assessee's own case for earlier years. Since the facts relating to this ground remain same, following our decision in AY 2011-12, we reject this ground raised by the Revenue 199. Ground nos. 3 and 4 of the Revenue's appeal relate to availability of deduct....
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....rs of its Associated Enterprises (AEs) for providing loan to the AE for the purpose of capital commitments and working capital facility availed by them. 206. The assessee had out of abundant caution offered an amount of Rs. 5,79,80,032/-.in its return of income as corporate guarantee commission although nothing was recovered as corporate guarantee commission from its AE's. A claim was made in the return by way of notes as well as during assessment proceeding that nothing should be taxed towards corporate guarantee commission and amount offered for addition should be deleted 207. The Ld AO added as notional income an amount of Rs. 25,41,59,209/- being commission chargeable on the Corporate Guarantee provided by the assessee Company to the bankers for providing loan to the AEs of the assessee Company. The LD CIT(A), however, deleted the addition on the ground that the provision of guarantee cannot be considered to be an international transaction as it had no impact on the profits, income or assets of the assessee company. Reliance was placed on the decision of earlier years wherein LD CIT(A) had relied upon the decision of Coordinate Bench of this Tribunal in case of Videocon I....
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....contracts of guarantee, however, when they are Commercial banks that issue bank guarantees which are treated as the blood of commerce being easily encashable in the event of default, and if the bank guarantee had to be obtained from Commercial Banks, the higher commission could have been justified. In the present case, it is assessee company that is issuing Corporate Guarantee to the effect that if the subsidiary AE does not repay loan availed of it from ICICI, then in such event, the assessee would make good the amount and repay the loan. The considerations which applied for issuance of a Corporate guarantee are distinct and separate from that of bank guarantee and accordingly we are of the view that commission charged cannot be called in question, in the manner TPO has done. In our view the comparison is not as between like transactions but the comparisons are between guarantees issued by the commercial banks as against a Corporate Guarantee issued by holding company for the benefit of its AE, a subsidiary company." 214. The adequacy of the ALP of corporate guarantee fee at 0.5% can also safely be gathered by drawing support from the following judicial pronouncements: ....
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....gard 221. Ground no.3 of the appeal relate to denial of claim by the AO u/s. 35(2AB) in respect of R&D expenses amounting to Rs. 39,52,000/- on the basis of report received from DSIR. 222. This ground is similar to Ground no.3 of the assessee's appeal in ITA No. 1413/Mum/2018 for AY 2011-12. In that year, discussed above, we have already taken a view that the amended Rule 6(7) of the IT Rules were applicable from AY 2016-17. There was no requirement for the AO to obtain specific report from the DSIR approving the expenses for the year under consideration. Accordingly, since the Ld AO has not found any defect in the expenses incurred by the assessee, the same should be allowed as deduction. 223. Ground No.4 of the appeal filed by the assessee relates to disallowance of claim of investment allowance under section 32AC of the Act. 224. During the year under consideration, the assessee Company claimed in its original return filed u/s 139(1) an investment allowance u/s. 32AC of the IT Act on account of investment in plant and machinery. 225. The Finance Act, 2013 introduced a new section 32AC in the IT Act with effect from 1 April, 2014, which provides that a company, eng....
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....ce it came into existence only after all the machinery and components were assembled and commissioned together. The plant was brought into existence from the components lying in CWIP only after 1st April 2013 when it was assembled and installed. Thus, according to the AR of the assessee, plants were acquired and installed after 1st April 2013. ii. The word "acquired and installed" has to be interpreted as "acquired or installed" since it is impossible to acquire and also install any plant or machinery valuing Rs. 100 crores or more in a span of one year. Such a situation is not intended by the legislature and therefore the word "and" has to be read as "or" to arrive at the intended consequences. 230. The provisions of section 32AC is reproduced below for better understanding of the issue: "32AC. (1) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,- (a) f....
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....implementation of projects. 232. The explanation regarding introduction of this new section in the Memorandum explaining the provisions of the Finance Bill, 2013 was stated under the head "Measures to Promote Socio-Economic Growth" and the opening portion of the relevant clause of the Memorandum read as under: "Incentive for acquisition and installation of new plant or machinery by manufacturing company" In order to encourage substantial investment in plant and machinery, it is proposed to insert a new section 32AC in the income tax Act...." [clause 5]. 233. It is also worth noting that section 32AC was further amended by Finance Act, 2014 whereby subsection (1A) was introduced with effect from 1 April 2015. The relevant extract of the budget Speech 2014 in respect of such amendment is reproduced below: "198. The manufacturing sector is of paramount importance for the growth of our economy. This sector has multiplier effect on creation of jobs. Last year, an incentive in the form of investment allowance to a manufacturing company that invests more than Rs. 100 Crore in plant and machinery during the period from 01.04.2013 to 31.03.2015 was announced....
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.... the previous year. [Clause 11]" 235. The Finance Minister's Speech and the Explanatory Memorandum, at the time of introduction of the incentive in 2013 as well as while extending the benefit w.e.f. 1 April, 2015, stressed on the term "investment" in new "plant" or "machinery". The intention was to give impetus to the manufacturing sector making substantial investment including in the stalled projects. 236. The term 'acquire' used in section 32AC has to be read in conjunction with the term 'assets', i.e. 'plant' or 'machinery', and not in isolation. A new 'plant' or 'machinery' can be said to have been acquired when the individual components of the plants are aggregated and installed together so that the resulting equipment takes the character of 'plant' or 'machinery' as is generally understood. "Acquisition" of plant or machinery cannot be read to mean mere purchase/ ownership/ possession of individual items or components of a plant or machinery. Restricting the meaning of acquisition of plant or machinery to mere purchase of individual components of 'plant' in piecemeal, which are accounted under the head 'Capital Work-in-Progress' will give absurd results not intended by ....
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.... is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be". 240. For the purpose of second proviso to section 32, the plant is considered as "acquired" only after all the machines and components are assembled and commissioned together and the plant is ready for use. The Revenue has never allowed depreciation on any individual component of plant/machineries acquired before the previous year since the process of assembling and commissioning was completed during the year. The claim of depreciation commences only from the day the plant is fully installed including on the value of component lying in capital work in progress but capitalised as plant and machinery on completion of installation. Thus, the meaning of the term "acquired" used in section 32 is considered as fulfilled only when the plant / machinery is "installed". The language used in section 32AC being similar to th....
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....ew machinery and plant was proposed to be increased to 20 per cent from the existing level of 15 percent and consequently the initial depreciation will be available to all new plant and machineries except those referred to in the proviso to the clause (iia) of section 32 of the Act. The requirement of creating a minimum increase of 10 percent in installed capacity for availing the initial depreciation is also proposed to be eliminated. We have also observed that section 32(1)(iia) of the Act stipulates that new machinery and plant should be acquired and installed after 31-3-2005 by an tax-payer and a further sum equal to twenty percent of the actual cost of such machinery or plant shall be allowed as deduction. Provisions of Section 32(1)(ii) of the Act are a piece of beneficial legislation being incentive provision is a piece of beneficial legislation is to be liberally construed to grant the benefit to the tax-payer to fulfill the mandate of legislation which is to promote investment in business of manufacturing or production of any article or thing or in the business of generation or generation or distribution of power, rather than in the manner which may frustrate the object. R....
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....ioning of the project to produce or manufacture the desired products/articles. The plant and machineries so acquired cannot be visualized and seen in the individual and itemized context as they are in-capable of production or manufacture of desired products/articles unless these itemized plant and machineries are integrated together as per technical requirements and specifications to achieve the manufacturing or production of desired products. Since, the assessee company was engaged in setting up new coke production plant which activity of setting up new industrial unit started in financial year 2004 - 05 and concluded in financial year 2005-06, the entire set of new machineries and plant were acquired by the assessee company as an integrated activity with the sole and common objective towards the setting up of new coke production plant which was carried out in financial year 2004-05 and in financial year 2005-06, with the installation of said new plant and machineries getting completed in April 2005 with the commencement of commercial production of LAM coke in April 2005 when the said new plant became operational and acquisition of said machineries and plant cannot be seen and vis....
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....essee company whether pre or post 31-03-2005 with the commencement of the production of coke production plant becoming operational in April 2005. We find that the conditions as stipulated u/s 32(1)(iia) of the Act are duly complied with by the assessee company and the assessee company cannot be denied the benefit of the claim of additional depreciation merely because new plant and machinery was acquired partly prior to 31-3-2005 and partly post 31-03-2005 as the entire activity of acquisition of new plant and machinery was an integrated and composite activity in the chain of events with the common and sole objective of setting up new coke production plant by the assessee company, as the installation of new machinery and plant which started in financial year 2004-05 got completed after 31-3-2005 with the commencement of commercial production starting in financial year 2005- 06 i.e. post 31-03-2005 with the plant becoming operational. Thus, in our considered view, the assessee company is entitled for claim of additional depreciation u/s 32(1)(iia) of the Act amounting to Rs. 83,55,387/- during the assessment year 2006-07." 243. The Hon'ble Gujarat High Court in the case of PCIT vs....
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....used in the term "acquired and installed", to understand it in its normal grammatical sense, i.e. a conjunctive, then there may be a large number of instances where the assessee, even after making required investment in plant and machinery, would not be able to claim deduction under section 32AC of the Act. The assessee may invest in designs, plans, drawings, bottles, books, etc. which are considered as "plant" for the purpose of section 32 of the Act. If the interpretation of the Revenue is accepted that only plant acquired and installed is eligible for deduction under section 32AC of the Act then, it would lead to absurd results as the aforesaid assets which have been considered by the Supreme Court and the High Courts falling within the meaning of "plant" would not be eligible for deduction under section 32AC of the Act since the aforesaid assets are incapable of installation. Designs, plans, drawings, bottles, books, etc. by their very nature are not required to be installed and on their acquisition, they are ready to be put to use. Therefore, a manufacturer who is acquiring designs, drawings, plans which are considered as plant and machinery for the type of business they are i....
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....tion of the words "acquired and installed" and the question before the High Court was whether the partnership firm can continue to claim deduction under section 34A/ 34(3) of the Act if the plant and machinery is given to a partner on his retirement from the firm during the statutory holding period of 8 years. Therefore, the aforesaid decision is not relevant to decide the issued involved in the present appeal. 249. In view of the above we have no hesitation to hold that the assessee is entitled to deduction u/s 32AC of the Act on the value of cost of components of plant or machinery lying as CWIP as on 1 April 2013 but installed during the financial year 2013-14. We therefore direct the AO to allow deduction as investment allowance u/s 32AC of the IT Act. 250. Ground no.5 of the appeal relate to short grant of TDS/TCS credit claimed by the assessee on the basis of certificates and for which entries are not found in Form 26AS. 251. This ground is similar to Ground no.4 of the assessee's appeal in ITA No. 1413/Mum/2018 wherein we have directed the AO to grant credit for TDS/TCS on the basis of certificates available with the assessee (including certificates which are in nam....
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.... paid by the assessee, the excess should be refunded to the assessee. Following our decision in AY 2011-12, we direct accordingly Department's Appeal - ITA No. 3764/Mum/2018 - Assessment Year 2014-15 259. Ground nos. 1 and 2 of the Revenue's appeal relate to claim of the assessee in treating sales tax exemption benefits received amounting to Rs. 1,86,51,36,228/- as capital receipts not liable to tax. Ground nos.1 and 3 of the assessee's cross objection is connected with this issue. 260. These grounds are similar to Ground nos.1 and 2 of the Revenue's appeal in ITA No. 2871/Mum/2018 and assessee's cross objection in CO No. 129/Mum/2019 for AY 2011-12. We have already decided this issue in favour of the assessee by following the order of Tribunal in assesse's own case for earlier years. Since the facts relating to this ground remain same, following our decision in AY 2011-12, we reject this ground raised by the Revenue 261. Ground nos.3 and 9 of the Revenue's appeal relate to availability of deduction under section 80IA of the IT Act with respect to the rail system developed, operated and maintained by the assessee, amounting to Rs. 1,05,45,74,078/-. Ground nos.2 and 3 of....