AI Drafter 
TaxTMI 
TaxTMI 
2023 (2) TMI 1113
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....ing total income of Rs.165,32,86,704/-. Assessee, thereafter, revised its return of income on 31.03.20211 declaring total income at Rs.166,02,98,495/-. The case of the assessee was selected for scrutiny and thereafter notices u/s 143(2) and 142(1) were issued and served on the Assessee. 4. On the basis of the information available on record, AO noticed that assessee had undertaken International Transactions (IT) with its Associated Enterprises ('AEs') during the year under consideration. As the value of international transactions entered into by the assessee was more than Rs.15 crore, AO made reference to TPO for determining the Arm's Length Price (ALP) of the international transactions entered into by the assessee with Associated Enterprises ('AEs'). TPO vide order dated 28.01.2013 passed u/s 92CA(3) proposed enhancement of income of the assessee by Rs.36,03,975/-on account of the international transactions. AO thereafter passed a draft assessment order u/s 144C of the Act vide order dated 18.03.2013 and computed the total taxable income at Rs.168,87,52,470/-. AO has noted that a show-cause letter was issued and served to the assessee along with the draft order passed u/s 144C ....
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....iate that the TPO in proposing the addition of Rs.36,03,975/- did not consider the alternate comparable data submitted by the Appellant. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding that CERs of Rs.3,48,37,38,617/- was a Revenue receipt and is taxable under section 2(24)(v) read with section 28(iv) of the Act. 4. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding that goodwill of Rs.3,68,94,006/- was created subsequent to the purchase of business from SRF Polymers Ltd. and therefore, the Appellant was not entitled to depreciation of Rs.46,11,751/- on the goodwill. 5. That on the facts and circumstances of the case and in law, the CIT(A) has erred in confirming the disallowance of Rs.1,04,00,000/- being donation paid to schools of SRF Vidyalay and SRF Foundation. 6. Without prejudice, on the facts and circumstances of the case and in law, the CIT(A) has erred in holding that the following claims made without filing the revised return were rightly not considered by the Assessing Officer and such claims can also not be entertained by the CIT(A): (i) the amoun....
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....st of justice. 9. On the issue of the admissibility of additional ground of appeal, Learned DR strongly objected to the plea for admission of additional ground. 10. Having heard the rival submissions and on perusing the materials available on record we find that the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. 229 ITR 383 after considering the decision in the case of Jute Corporation of India Ltd. 187 ITR 688 (SC) has held that there is no reason to restrict the power of Tribunal u/s 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals) and that both the assessee and Department have a right to file an appeal/cross objections before the tribunal and the Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. It has further held that the view that tribunal is confined only to issues arising out of the appeal before CIT(A) is too narrow a view to take of the powers of the tribunal. We therefore, following the aforesaid decision rendered by Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. (supra) admit the additional groun....
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....further pointed to the audited Balance Sheet as at 31st March 2009 which is placed at page 47 of the paper book. From the aforesaid Balance Sheet, he pointed to the fact that as at 31st March 2009, the investments held by assessee were to the extent of Rs.13,360.01 lakhs as against which the interest free funds in the form of Share Capital and Reserves and Surplus was to the extent of Rs. 97,647.62 lakhs. He, thereafter, pointed to page 50 of the paper book which is the schedule for Reserves and Surplus and from that schedule, he pointed to the fact that even if the different Reserves depicted therein are excluded by considering them to be not free reserves, but still the General Reserve is of Rs.13,950.24 lakhs and surplus in Profit and Loss Account is to the extent of Rs.48,206.80 lakhs. He, therefore, submitted that since the availability of interest free funds are more than the investments, the presumption is that the investments are made out of free funds available with the assessee and are not out of borrowed funds. In support of his aforesaid contention, he placed reliance on the decision in the case of CIT vs. Reliance Utilities & Power Ltd. [2009] 313 ITR 340 (Bom). He fur....
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....lier years. Considering the totality of the aforesaid facts, we are of the view that no additional disallowance as made by AO in excess of the suo moto disallowance made by the assessee was warranted in the present case. We, therefore, direct the deletion of the additional disallowance made by AO. Thus the ground of assessee is allowed. 17. Ground No.2 and the sub grounds are with respect to the upholding the adjustment of Rs.36,03,975/- under section 92CA(3) of the Act on account of interest on loan to assessee's 100% subsidiary. 18. TPO noted that assessee had given a loan of 4 million USD to its subsidiary, M/s. SRF Overseas Ltd., Dubai and had charged interest at 6 months LIBOR + 2.5% per annum on the loan amount. TPO noted that the subsidiary company to whom the loan was given was incurring losses and was not rated by credit rating agency. As per the information obtained by AO from CRISIL Ltd, the annualized average yield of AA- Rated Company was 10.83%. According to the TPO, since the subsidiary company was a loss making company, the annualized average yield should be the average for the companies with credit rating of BBB+, BBB- & BBB which works out to 14.29%. Accordi....
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....efore the Tribunal in assessee's own case in A.Y. 2014-15 and Co-ordinate Bench of Tribunal by following the order of Tribunal in assessee's own case for A.Y. 2010-11 has decided the issue in favour of the assessee by observing as under: "21. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to interest for Foreign Currency Loan granted by the assessee to its AEs. We find that identical issue arose in assessee's own case in A.Y. 2010-11 and the Co-ordinate Bench of Tribunal in assessee's own case decided the issue observing as under: "22. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. There is no dispute that assessee has granted loan to its AE in foreign currency, i.e. USD. The Ld TPO applied the imputed interest rate @ 6.89% obtained from various Indian Banks u/s 133(6). It is now well settled in view of Jurisdictional High Court judgment in case of Cotton Naturals (I) Pvt. Ltd. (supra) that Indian lending rates cannot be applied in case of foreign currency lending. The appropriate rate for ben....
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.... amount was in the nature of capital receipt and should have been excluded while computing the taxable income but however it had recognized it as Revenue receipt in the return of income. 26. During the course of assessment proceedings, assessee claimed before AO that the receipt on account of CER Certificates to be capital receipts and contended that the same should not be taxed. Before AO, assessee also relied on the decision of Hyderabad Tribunal in the case of M/s. My Home Power Ltd. vs. DCIT (2012) 27 taxman.com 27 and contended that in the aforesaid decision it has been held that carbon credit is in the nature of entitlement received to improve world atmosphere and environment reducing carbon, heat and gas emissions and therefore capital receipt. AO did not entertain the claim of the assessee for the reason that no revised return was filed by the assessee claiming the aforesaid amount as capital receipts. AO was of the view that the claim of the assessee cannot be allowed in the absence of revised return of income filed by the assessee and for the aforesaid conclusion, he relied on the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. (200) 157 taxman-1 (SC....
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....was a byproduct of the business, the reduction of which had resulted into the issuance of carbon credit certificate whereas in the case of My Home (supra), it was a case where the assessee was in the business of power generation. He, thereafter by relying on the decision of Cochin Bench of Tribunal in the case of Apollo Tyres Ltd. held that the proceeds out of CER to be Revenue receipt and taxable u/s 2(24)(vd) r.w.s 28(iv) of the Act. 30. Aggrieved by the order of CIT(A), assessee is now before Tribunal. 31. Before us, Learned AR reiterated the submissions made before lower authorities and further submitted that the assessee had claimed the sale proceeds from the transfer of CER proceeds to be capital receipts and therefore not chargeable to tax. In support of his contentions that the receipts are capital receipts, he also placed reliance on the decision of Hyderabad Tribunal of the case of My home Power Ltd. (ITA No. 1114/Hyd/2009 order dated 02.11.2012. He pointed to the copy of the Tribunal order in that case which is placed at pages 146 to 152 of Case law Paper book. He thereafter submitted that the aforesaid order of tribunal has been upheld by Hon'ble Andhra Pradesh Hi....
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....the receipts to be capital receipts and for which AO had placed reliance on the decision of Hon'ble Apex Court in the case of Goetze India Ltd. (supra). The order of AO was upheld by CIT(A). On the issue of claim being made for the first time before the Appellate Authorities, we find that Hon'ble Gujarat High Court in the case of CIT vs. Mitesh Impex [2014] 46 taxmann.com 30 (Gujarat), after considering various decisions cited in the decision, has held the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. It has further held that any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. The relevant observations of the Hon'ble High Court are as under: "38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court obs....
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....ore the Co-ordinate Bench of Tribunal in assessee's own case in A.Y. 2006-07. The Co-ordinate Bench of Tribunal in ITA No 6693/Del/2018 order dated 07.02.2022 has decided the issue in favour of the assessee by observing as under: "5.0 We have carefully considered the rival contentions and have perused the orders of the lower authorities and judgments relied upon by the revenue and the Ld. AR on the issue under consideration. As observed in various judgments, the 'Carbon credits' or CERs represent the 'privilege /entitlement' given to the businesses for its efforts resulting in reduction of emission of greenhouse gases. Such CERs are tradable commodity and one party to Kyoto protocol is benefited by selling such entitlement to other parties to Kyoto protocol which are in deficit. During the year under consideration, the assessee has also received certain sum on account of sale of certain CERs entitlement to other parties. All such parties are foreign parties and the amount has been received in foreign currency. The question that we are really required to adjudicate upon is whether such money received by the assessee on sale of CERs/ carbon credits is taxable under Income-ta....
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....he assessee under an agreement for control of production was capital receipt and not income. Being so, the consideration received by the assessee is similar to consideration received by transferring of loom hours. The Supreme Court considered this fact and observed that taxability of payment received for sale of loom hours by the assessee is on account of exploitation of capital asset and it is capital receipt and not an income. Similarly, in the present case the assessee transferred the carbon credits like loom hours to some other concerns for certain consideration. Therefore, the receipt of such consideration cannot be considered as business income and it is a capital receipt. Accordingly, we are of the opinion that the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration. Carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns. Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission. It does n....
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....we find that this issue is covered in favour of the assessee by the judgment of the Hon'ble Allahabad High Court in the case of Pr. Commissioner of Income Tax vs. L.H. Sugar Factory Pvt. Ltd. reported in 392 ITR 568 (All.) wherein the Hon'ble Allahabad High Court had held that income from sale of carbon credits/profits from sale of carbon credits is capital in nature. We also find that ITAT Bangalore Bench in the case of Subhash Kabini Power Corpn. Ltd. vs. CIT reported in (2015) 37 ITR (T)106 (Bang .Trib.) had held that once the Assessing Officer had allowed the assessee's claim of deduction u/s 80-IA in respect of income derived from sale of carbon credits, such order was not amendable u/s 263 of the Act. This order of ITAT, Bangalore Bench was also upheld by the Hon'ble Karnataka High Court." "6.1 Further, ITAT Hyderabad Bench in the case of CIT Vs. My Home Power Ltd. Hyderabad in ITA No. 1114/Hyd/2009 held that carbon credit receipts are capital in nature. This order of ITAT Hyderabad Bench was subsequently upheld by the Hon'ble Andhra Pradesh High Court in 365 ITR 82." "6.2 Accordingly, respectfully following the ratio of the settled judicial precedent as....
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.... holding carbon credits as capital receipts not liable to tax: i. Alembic Limited [ITA Nos. 553/2017 & 554/2017] (Gujarat High Court 28.08.2017) ii. L.H. Sugar Factory Pvt. Ltd. [2016-TIOL-1942- HC-ALL-IT] iii. Ambika Cotton Mills Ltd. [TS-144-HC- 2021(MAD)] iv. Lanco Tanjore Power Co. Ltd. [[2021] 434 ITR 671 (Madras)] v. Tamil Nadu Newsprint & Papers Ltd. [[2021] 130 taxmann.com 213 (Madras)] vi. Arun Textiles Pvt. Ltd. [2016-TIOL-2212-HCMAD- IT] vii. Rajasthan State Mines and Minerals Ltd. [2017- TIOL-2297-HC-RAJ-IT] viii. Shree Cement Ltd. [ ITA No. 86/204 dated 22.08.2017] ix. Subhash Kabini Power Corporation Ltd. {[2016] 69 taxmann.com 394 (Karnataka)} x. Dodson Lind blom Hydro Power Pvt. Ltd. [2019- TIOL-531-HC-MUM-IT] xi. My Home Power Ltd. {[2014] 46 taxmann.com 314 (Andhra Pradesh)} 5.6 Further, we are not aware of any contrary judgment of any High Court on the issue nor the Ld. DR could point out any contrary judgment on the issue. Therefore, respectfully following the ratio of the Hon'ble High Courts as discussed above as well the orders of the ITAT including the ....
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....e definition of 'Income' under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under Section 115JB of the Act, 1961. In the case of Appollo Tyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation under Section 115JB of the Income Tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961." 6.5 Further ITAT, Lucknow Bench, in case of L.H. Sugar Factory Ltd. (ITA No. 717 & 418/LKW/2013 and others), held as under: - "4. We have considered the rival submissions. We find that the issue in dispute as per Ground No. 1 of appeal is regarding nature of receipt on account of sale of carbon credit and in the case of CIT Vs. My Home Power Ltd. (Supra) also, the dispute before Hon'ble Andhra Prade....
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....deprecation of goodwill was not made by assessee either in the return of income or during the assessment proceedings. CIT(A) remanded the matter to AO wherein AO has opined that the claim of depreciation cannot be entertained as the claim was not made in the return of income or by filing revised return of income and for the aforesaid proposition, AO placed reliance on the decision of Hon'ble Apex Court in the case of Goetze India Ltd. vs. CIT (2006) 157 taxman.com 1. 39. Before CIT(A), assessee inter alia submitted that it had purchased business from SRF Polymers Ltd. on lump sum basis. The amount of goodwill appeared in the Balance Sheet as on 31st March 2009 which represents the total consideration paid for acquiring business which exceeds the value of assessment taken over by the assessee. Before CIT(A), assessee, relying on various decisions claimed that the deprecation on goodwill be allowed. 40. Learned CIT(A) did not agree with the contentions of the assessee. On the jurisdictional issue of admission of claim, he noted that CIT(A) was not empowered to admit the claim of deduction because assessee has not claimed the same in the return of income nor had the assessee cla....
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....assessee made the claim for depreciation. He submitted that the AO did not entertain the claim of the assessee during the assessment proceedings and therefore assessee has raised the claim before the CIT(A). He submitted that observation made by AO about the assets not being valued prior to entering into an agreement for the transfer of assets, the valuation being made after the purchase of business and goodwill being accounted for balancing figure is factually incorrect. He submitted that the business was purchased on lump sum basis and price was not paid for assets/items wise. He further submitted that it was also stated before lower authorities that it does not make any difference, whether the valuation was done prior to or after the purchase and in case of business purchase as a going concern, the basic principle to amount for goodwill is balance figure of price paid over and above the value of assets and liabilities purchased. Apart from the submissions made before lower authorities, he further submitted that issue is fully covered issue in favour of the assessee by decision of Hon'ble Tribunal own case for A.Ys. 2012- 13 & 2013-14 wherein the Hon'ble Tribunal has upheld that ....
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....ee by observing as under: "36. During the course of assessment proceedings, it was noticed that assessee had claimed depreciation on goodwill amounting to Rs 25,53,577/-. It was submitted that assessee had purchased three business namely Industrial Yarn Business at Manali (Tamilnadu), Engineering Plastic business at Manali (Tamilnadu) and Engineering Plastic business at Pantnagar (Uttrakhand) for a consideration of Rs.150,31,26,228/- as slump sale on 31st December 2008. It was submitted that the businesses was purchased from M/s SRF Polymers Limited on lump sum basis and the amount of goodwill appearing in the Balance Sheet as at 31.03.2009 represents the total consideration paid for acquiring business which exceeds the value of assets taken over by the assessee. Assessee also relied on various decisions in respect of its claim for depreciation. The submissions of the assessee were not found acceptable to AO. AO noted that the assessee had purchased three business for a consideration of Rs.150,31,26,228/- as slump sale without making its valuation. He noted that assessee, after the purchase had made valuation of the assets and liabilities which was determined at Rs.146,62,....
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.... ground is with respect to the claim of depreciation on goodwill. We find that issue of depreciation on goodwill also arose in assessee's own case in A.Y. 2012-13 and the Co-ordinate Bench of Tribunal in ITA No.5784/Del/2016 order dated 24.04.2020 by relying on the decision of Hon'ble Apex Court in the case of Smifs Securities Ltd. (supra), held that assessee is eligible to claim depreciation on goodwill. However in that order since the claim of depreciation was made as an additional claim before the Tribunal, the matter was remitted to the AO for examination. In the year under consideration, we are of the view that since the claim was already made in the return of income and was denied by AO and DRP, we are of the view that ratio of the decision rendered by Hon'ble Apex Court in the case of Smifs Securities is squarely applicable to the facts of the case. We are therefore direct the AO to grant the depreciation of such goodwill. Thus the ground of assessee is allowed." 44. Before us, Learned DR has inter alia contended that since the issue of goodwill is arising in the year under consideration for the first time, the issue may be remitted back to AO for verification and adjudic....
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....is amount is reflected as part of donation and charity amounting to Rs.14,722,683/-). He submitted that during the course of assessment proceedings, assessee relying on the decision rendered by Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd. vs. CIT (2003) 261 ITR 501 (Bom) submitted that the expenses of Rs.1,04,00,000/- be allowed as expense incurred for business purposes. Learned AR submitted that AO did not entertain the claim in the assessment proceedings, therefore, assessee raised the claim before CIT(A). He submitted that Learned CIT(A) at para 7 of the order by placing reliance on the decision of Goetze India Ltd. (supra) held that since assessee has not made the claim in the return of income nor in the revised return of income, the claim cannot be entertained. He, accordingly, rejected the claim on jurisdictional ground. Aggrieved by the order of CIT(A), assessee is now before us. 47. Before us, Learned AR reiterated the submissions made before lower authorities and further submitted that CIT(A) has factually erred in relying on the decision in the case of Goetze India Ltd. (supra) and not entertaining the claim of the assessee. He submitted that Hon'b....
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....s decided the issue by observing as under : "26. Next issue is the disallowance made by AO of an amount of Rs. 4,28,000/- paid by the assessee to SRF Vidyalaya School Chennai which has been claimed as business expenditure u/s 37(1) of the Income Tax Act, 1961 on the ground that school, which runs within the compound of textile business of the assessee, gives preference to children of employees of the company. The ld. AR submitted that assessee has taken the initiative to tap good talent across the industry and has taken a step towards the general welfare of the employees of the company. 27. The assessee placed reliance on the judgment of the Hon'ble Mumbai High Court in the case of Mahindra & Mahindra Ltd. v. CIT [TS-25-HC-2003 (Bom)] wherein it was held that such expense, being in the nature of staff welfare expenses should be treated as business expenditure. The relevant extract of judgment is reproduced hereunder: "The Tribunal has given a finding of fact which shows that M/s. Mahindra & Mahindra had paid Rs. 92,500 to an Education Society which runs the School in which children of the employees of the Company study. We do not wish to interfere with th....
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....0-11 has been stayed/set aside/overruled by higher judicial forum. In view of the fact that there is no finding by the lower authorities on the allowability of the expenses, we, following the order of the coordinate bench of Tribunal in assessee's own case and for similar reasons restore the issue back to the file of the AO and direct him to decide the claim of the assessee in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Assessee shall also be free to file such documents, explanations, submissions as it deems fit in respect of this claim. Needless to state that the AO shall grant adequate opportunity of hearing to the assessee. Thus the ground of assessee is allowed for statistical purposes. 52. Ground No.8 including the sub grounds are with respect to non adjudication of the claim by CIT(A) of additional depreciation, seeking of indexation benefit for long term capital gains and treating the TUF subsidy as revenue receipts. 53. Before CIT(A), assessee had made claim for additional depreciation, seeking indexation benefit for Long Term Capital Gains and considering TUF subsidy ....
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....matter be decided. 57. With respect to denial of indexation benefit, it is submitted that Assessee had offered for taxation Rs.2,00,50,000/- under the head Long Term Capital Gain on sale of Mutual Funds. The aforesaid Mutual Fund were purchased on 27.06.2007 costing Rs.20,00,00,000/- and sold on 02.07.2008 for Rs.22,00,50,000/- consequently Long Term Capital Gain was worked out at Rs.200,50,000/-. During the course of appellate proceedings before CIT(A), it was submitted that the though the Long Term Capital Gain was eligible for indexation benefit u/s 48 of the Act but in the return of income, assessee had offered long term capital gains without taking the indexation benefit. It was submitted that if the indexation benefit u/s 48 is considered then the Long Term Capital Gain would work out to Rs.87,97,731/- instead of Rs.200,50,000/-. The CIT(A) was therefore requested to grant the benefit of indexation. CIT(A) by following the decision rendered by Hon'ble Apex Court in the case of Goetze India (supra) did not entertain the additional claim by stating that the claim was neither made in the return of income nor during assessment proceedings. It is the submission of the Learned A....
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....s capital receipt i.e. A.Ys. 2013-14, 2014-15 & 2015-16 and the same has been accepted by Revenue. He placed on record the copy of the computation of income in assessment order for those years. He, therefore, submitted that the issue may be remitted back to the lower authorities for deciding the issue afresh. 60. Learned DR on the other hand did not controvert the factual submissions made by Learned AR but however supported the order of lower authorities. 61. We have heard the rival submissions and perused the material available on record. The issue raised in the present grounds is about CIT(A) not entertaining and adjudicating the claims made before him for the first time. On the issue of the claim being disallowed as it was made for the first time before CIT(A), we have herein above at para 34 & 35 have held that CIT(A) was not justified in not deciding the claim made by the assessee for the first time before him and CIT(A) should have decided the claim of the assessee. We for the same reasons hold that CIT(A) has erred in not deciding the claim made before him for the first time and should have decided the claim of the assessee. 62. On the claim of additional depreciati....
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....010-11. The Co-ordinate Bench of Tribunal restored the issue back to the file of AO for considering the claim of assessee by observing as under. "44. The facts as submitted are that assessee claimed additional depreciation @10% (half of 20%) amounting to Rs.18,67,13,454/- on assets being the plant and machinery put to use for less than 180 days during the relevant assessment year 2010-11. The assessee claimed that in respect of additional 180 days or more is not applicable. Therefore in view of assessee, it is eligible to claim to full additional depreciation @20% on value of assets put to use during the year irrespective of timing of such put to use during the balance 10% left unclaimed - Rs.18,67,13,454/-, the assessee filed an additional claim during assessment proceedings for A.Y. 2010-11 however the same was neither entertained by AO nor by DRP. 45. The Ld. Counsel has placed reliance on following judicial pronouncements: • Apollo Tyres Ltd. vs. ACIT (2014) 64 SOT 203 • CIT vs. Cosmo Films Ltd. (2012) (ITA 1404/2008) • CIT vs. SIL Investment Ltd. (2012) (ITA No. 24319 (Del) 2010) • TCPL Packaging Ltd. vs. De....
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....r similar reasons set aside the issue back to the file of AO to consider the same on merits after considering the submissions made by assessee and in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Needless to state that AO shall grant adequate opportunity of hearing to the assessee and the assessee shall also be at liberty of file such documents, explanations and submissions as deemed fit in respect of its claim. Thus the ground of assessee is allowed for statistical purposes. 63. Since the facts of the case in the year under consideration are identical to that of A.Y. 2014-15, we for the reasons given while deciding the issue A.Y. 2014-15 and for similar reasons, restore the issue back to the file of AO and direct him to decide the issue afresh in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Assessee shall also be free to file such documents, explanations, submissions as it deems fit in respect of this claim. Needless to state that the AO shall grant adequate opportunity of hearing t....
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....artment has in subsequent years accepted the assessee's claim of interest subsidy on TUF scheme as capital in nature as no addition has been made in subsequent years. 26. Ld DR relied upon the orders of authorities below. 27. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. It is a settled position that purpose of subsidy or incentive and not the nomenclature of such incentive have to be seen for the purpose of deciding its nature as capital or revenue. In the judgment of Ponni Sugars & Chemicals Ltd. (Supra), the Hon'ble Apex Court have held that character of the receipt of a subsidy in the hands of recipient assessee has to be decided with respect to the purpose for which subsidy is granted. If the subsidy is received to enable the assessee to run its business more profitably then such subsidy is revenue in nature. While, if the subsidy has been received by the assessee to set up a new unit or for expansion of existing unit then such subsidy would be capital in nature. We find form the objective of TUF scheme that interest subsidy under such scheme was granted for expansion o....