TaxTMI 
TaxTMI 
2023 (1) TMI 473
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....aimed by the assessee and Ground No. 4 is the issue of the notional gain on the fair valuation of investments in Corporate Debt Bonds. Ground Nos. 1 and 7 are general in nature. Ground Nos. 5 & 6 are against the consequential interest. 4. In regard to Ground No. 4 of appeal, regarding deduction of notional gain on fair valuation of investments, it was fairly agreed by ld. AR that inadvertently, the assessee has credited notional income. It was the submission that though this was not claimed in the return of income, the issue had been submitted before the Assessing Officer and the Dispute Resolution Panel (DRP). It was the submission that the DRP and AO on the ground that the revised return had not been filed, applied the principles laid down by the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs CIT, 284 ITR 323 (SC) and rejected the claim of the assessee. It was fairly agreed by both the sides that in view of the principles laid down by the Hon'ble Supreme Court in the case Goetze (India) Ltd. (supra), the Appellate Tribunal being the appellate authority did have the power to restore the issue to the file of the Assessing officer with the direction to consid....
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....rected the Assessing Officer to verify whether the appeal has been filed against the decision of the Hon'ble Jurisdictional High Court of Orissa in the case of the assessee in respect of allowability of the deduction u/s. 80IA. It was the submission that the DRP had specifically given direction that if no appeal has been filed, the same has attained finality in assessee's case, deduction u/s. 80IA was to be allowed subject to the DRP direction in the subsequent paragraph in respect of factual matrix of the case. It was the submission that the Assessing Officer has violated the provisions of section 144C(10) and (13) of the Act insofar as the Assessing Officer has not followed the direction of the DRP. It was the submission that no appeal has been filed by the Revenue against the order of the Hon'ble Jurisdictional High Court of Orissa in the case of the assessee and as the Co-ordinate Bench of this Tribunal has already held the issue of deduction u/s. 80-IA in favour of the assessee for the assessment year 2006-07, the assessee is entitled to the deduction u/s. 80-IA for the impugned assessment i.e. 2018-19. It was the further submission by ld. AR that the CBDT vide its....
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....ed to the file of the A.O. Hence the plea to quash the assessment order need not be accepted: i.) The Hon'ble Delhi IT AT in the case of Boettcher India (P.) Ltd. vs. ACIT (86 taxmann.com 229) held as under in para-5 as under: "5. We have heard the rival submissions and have perused the material on record. It is undisputed and apparent from the directions of the Hon'ble DRP that the Hon'ble DRP in page 3 of its directions dated 23.08.2016 had directed the TPO to calculate the ALP by restricting the adjustment to the international transaction and also allowing credit of amount of Rs. 3698683/- already added back by the assessee in the computation of taxable income. It is very much evident that while passing the order subsequent to the directions of the Hon'ble DRP, the AO has not followed the directions of the Hon'ble DRP in this regard and has proceeded to calculate the ALP by applying the entity level turnover. Therefore, we deem it fit to restore this issue to the file of the TPO/AO for giving effect to the directions of the Hon'ble DRP in a proper manner after verification and after affording due opportunity to the assessee to present it....
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.... Ltd (Segmental 0.84 0.84 0.84 Mukta Arts (Segmental) Ltd 13.15 Rejected as per DRP Rejected as per DRP Avani Clmcon Technologies Ltd. 4.09 4.09 4.09 Bodhtree Consulting Ltd 34.27 34.27 34.27 Nextbrick solutions Ltd. 19.01 19.01 19.01 Spry Resources ltd 33.25 33.25 33.25 Ajet Infotech Ltd. 25.60 Rejected as per DRP Rejected as per DRP Arithmatic mean 27.98 23.82 21.06 Accordingly, we direct the AO to examine the working given by the assessee and if such a work is found to be correct, then he shall adopt the correct operating profits for both the comparables and then include the same in the list of comparables with the corrected margin to work out the average profit margin to benchmark the ALP." iii.) The Hon'ble Kolkata ITAT in the case of Dongfang Electric (India) (P.) Ltd. (116 taxmann.com 441 (one of the co-authors is the Vice-president Shri P M Jagtap) held in para-6 as under: "6. The ld. Counsel for the assessee has contended that the aforesaid direction specifically given by t....
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....ass orders in accordance with the directions of the DRP. Thus, it was a case of concession by the assessee and not on the basis of arguments advanced by the parties. It was thus held that the law is well settled that a decision on concession of the counsel could not be regarded as a precedent. It was accordingly held that the decision cited by the learned DR did not support the case of the revenue. In the present case, the assessee company by filing rectification application before the A.O. had conceded that not allowing the deduction u/s. 80IA was just a mistake apparent from the records. d) The Hon'ble DRP has itself held in para-3.S on page-4 of its order that deduction u/s. 80IA wilt be allowed subject to DRP's directions in the subsequent paragraphs on the related transfer pricing adjustment and fulfillment of conditions laid down in the said section in terms of factual matrix. Thus the TPOI A.O. were directed to allow deduction u/s. 80IA on fulfillment of conditions as laid down in said section. The Hon'ble DRP held in para-4.3 on page-6 of its order that supply of power by SEB to a manufacturing unit was a transaction between a power destitution entity a....
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....#39; Therefore, the rate at which electricity is sold to any such company can only be the market rate contemplated by the section. The judgment in the case of Thiru Arooran Sugars Ltd. (supra) has no manner of application for the simple reason that the Court in that case was concerned with the question as to the market value of sugarcane grown by the assessee at home. The Supreme Court was of the opinion that the sugarcane grown at home would be deemed to have been sold to the sugar mill at the same rate at which sugar cane was purchased by the sugar mill. That obviously is correct because if the sugarcane grown at home had not been sold to the sugar mill of the assessee itself, the sugarcane would have been sold in the open market. The rate of sale in the open market would be the same at which sugarcane was purchased by the sugar mill of the assessee. But in the case before us the electricity generated by the assessee could not be sold to anyone other than a distribution company or a company which is engaged both in generation and distribution. The rate at which electricity could have been sold to any such company is not the same at which such companies sale electricity to the con....
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....receipts for captively consumed power at the rate at which it had purchased power from the board. That appeal preferred by the revenue was not admitted by this Court and was dismissed at the admission stage without examining of the matter. Therefore, that judgment does not constitute a precedent. Another judgment was drawn to our attention by Mr. Khaitan which is in the case of CIT vs. Kanoria Chemicals & Industries Ltd. [2013] 219 Taxman 35(Mag.)/35 taxmann.com 566 (Calcutta) to which one of us was a party (Girish Chandra Gupta, J.). That judgment was rendered on concession. Therefore, that judgment also does not constitute a precedent. 22. The Last submission, advanced by Mr. Khaitan that this point was not taken by the appellant, has not impressed us. The point is certainly involved in the appeal because the CIT(A) reversed the finding of the assessing officer that the rate at which electricity was supplied by the Andhra Pradesh State Electricity Board "cannot be taken as the market rate within the meaning of Section 80-IA". The learned Tribunal has upheld that finding. The revenue is in appeal. The decision to reverse the finding is based on a wrong determination of a ....
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....s subject to the decision of the Hon'ble Supreme Court in the SLP filed in respect of decision in the case of Alembic Ltd. (supra). Therefore, categorically on law, the Hon'ble Jurisdictional High Court of Orissa has held the issue in favour of the assessee and on the factual matrix, the Co-ordinate Bench held in favour of the assessee, thus, holding that the assessee is entitled to the benefit of deduction u/s. 80IA of the Act. Liberty has been granted to the Assessing Officer to withdraw the deduction granted u/s. 80IA, if and when the Hon'ble Supreme Court adjudicated on the issue of said deduction u/s. 80IA in the case SLP filed in the case of Alembic Ltd., should the issue be held against the assessee. Nowhere, either the Hon'ble Jurisdictional High Court or the Co-ordinate Bench of this Tribunal held that the deduction allowable u/s. 80IA is to await the decision of the Hon'ble Supreme Court in the SLP filed in the case of Alembic Ltd. Thus, the interpretation taken by the Assessing Officer that the deduction allowed u/s. 80IA is to be kept alive to await the decision of the Hon'ble Supreme Court in the case of Alembic Ltd. is erroneous. In these circu....
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....s before the Hon'ble Jurisdictional High Court and the appeal has been allowed in favour of the assessee by the Hon'ble Jurisdictional High Court. It was fairly agreed by ld. AR that no specific adjudication per se has been done by the Hon'ble Jurisdictional High Court in respect of the specific substantial question of law raised. It was the submission that as the appeal of the assessee has been allowed, it should be deemed that the said question of law also stands answered in favour of the assessee. It was the submission that consequently, the rate adopted by the assessee being the rate at which the consumer purchases the power from the State Electricity Board was to be considered. It was further submitted that in para 4.5 of the order of the DRP, the DRP has also directed that the Assessing Officer was to verify whether the issue was available in the SLP filed before the Hon'ble Supreme Court in the case of Alembic Limited. It was the submission that the issue of transfer pricing was not an issue in the case of Alembic Limited and consequently this direction of the DRP itself is erroneous. It was the further submission that consequent to the direction of the DRP, ....
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....(3)(iv) provides for the provisions of section 80IA to be applicable to such undertakings which fulfils the conditions specified. One of such undertaking is providing under sub-clause (iv), which is "clause (a) which is set up in any part of India for the generation or generation and distribution of power, if it begins to generate the power at any time during the period beginning 1.4.1993 and ending on 31.3.2017, the said undertaking will be eligible for the benefit of deduction u/s. 80IA and in the case of captive power unit also, the provisions of law is the same. The word used are 'generation' or 'generation and distribution of power'. On perusal of the decision of Hon'ble High Court of Calcutta in the case of ITC Ltd. (supra) referred by ld. CIT DR, shows that the said decision has been rendered in the case of an assessee which is generating power. The Hon'ble High Court of Calcutta itself recognizes in para 18 that there are different limbs. It is from the words "there is thus an in-built mechanism to ensure permissible profit both to the generating companies and the distribution licenses". 11. A perusal of provisions of section 80-IA(4) clearly show....