TaxTMI 
TaxTMI 
2022 (8) TMI 1445
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....with its Associated Enterprises?" (2) "Whether in law and in the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance u/s. 801A of the I.T. Act, ignoring the explanation to sub section (8) of that section, where market value is defined as the arm's length price as defined in clause (ii) of section 92F, where the transfer of goods and services is a specified domestic transaction referred to section 92BA?" (3) "Whether on points If law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance of Rs. 19,40,967/- made by the AO u/s. 14A of the Act r.w.r. 8D of the I.T. Rules?" (4) "Whether on points If law and on facts & circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s. 14A ,when clause (3) of the Section 14A of the Act clearly prescribes that provision of section 14A(2) shall M/s Mahendra Sponge and Power Ltd. Raipur for A.Y. 2014-15 also apply in relation to case where any assessee claims that no expenditure has beenincurred by him in relation to the income which does not part form part of the total income under this Act, as held in the case of Cheminve....
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....h in law and on facts. (11) Any other ground that may be adduced at the time of hearing. On the other hand the assessee as a cross-objector has assailed the impugned order on the following grounds: "1. On the facts and in the circumstances o the case, the learned CIT(A) has erred in confirming the addition made by the A.O of Rs.2,91,792/- on account of delay payment of PF/ESIC. The addition made by the A.O and sustained by the CIT(A) is unjustified, unwarranted and uncalled for." 2. Succinctly stated, the assessee company which is engaged in the business of manufacturing and trading of sponge iron, steel ingots and generation of power had e-filed its return of income for the assessment year 2014-15 on 29.09.2014, declaring an income of Rs.2,71,31,360/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s.143(2) of the Act. 3. Assessment was, thereafter, framed by the A.O u/s.143(3) of the Act dated 26.12.2017 determining the income of the assessee company at Rs. 6,72,14,570/-i.e. after, inter alia, making the following additions/disallowances: Sr.No. Particulars Amount 1. Disallowance out of assessee's claim for deduction u/s.8....
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....or approval of the Pr. CIT, Raipur made a reference u/s.92CA(1) of the Act to the Transfer Pricing Officer (TPO) for computing the arm's length price (ALP) of the specified domestic transactions of the assessee with its associate enterprise viz. Animesh Ispat (P) Ltd. The TPO vide his order passed u/s.92CA(3) of the Act, dated 31.10.2017 did not find favour with the benchmarking carried out by the assessee of its specified domestic transactions with its AE. Accordingly, the TPO on the basis of the reasoning recorded in his aforesaid order adopted the rate of Rs.1.88/- per unit, i.e, the rate at which electricity was sold by the assessee to CSEB and determined the ALP of the assessee's specified domestic transaction at Rs.1.88/- per unit. On the basis of his aforesaid observations, the TPO proposed a downward adjustment of Rs.11,47,00,658/- and advised a revision of the assessee's claim for deduction u/s. 80IB of the Act. Accordingly, the A.O after receiving the order passed by the TPO u/s. 92CA(3) of the Act, dated 31.10.2017, therein vide his order passed u/s 143(3), dated 26.12.2017 reduced the assessee's claim for deduction u/s. 80IA(4)(iv) to Rs. Nil. 10. Before us, it is the ....
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....sessee at page 12, the respondent-assessee has also placed reliance on the order of Hon'ble High Court of Chhattisgarh at Bilaspur in the Tax case No.31, 34,32 of 2012 dated 2nd August, 2013 pronounced in the case of CIT V/s Godavari Power &Ispat Ltd., wherein on this very fact that the said assessee was a manufacturer of Iron steel and captive power plant has supplied electricity to its manufacturer unit which was at higher rate than the power supplied to Chhattisgarh State Electricity Board; the Hon'ble High Court has held as under : "28. The Chhattisgarh-Company is a company which is generating power. It is neither consumer of the electricity, nor it is supplying power to a consumer. It also cannot sell power to any consumer directly: it has to compulsorily sell it to the Board. 29. The power sold by the Chhattisgarh-Company to the Board is a sale to a company which itself supplies power to the consumers. It is not sale of power to the consumer. 30. The Steel-Division of the Assessee is a consumer. The CPP of the Assessee supplies electricity to the Steel-Division. Had the Steel-Division not taken power from the CPP then it had to purchase power from the Board. The CPP ....
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....08-09, therefore, we are unable to comprehend as to on what basis the A.O had declined to follow the same. At this stage, we may herein observe that it is neither a fact nor the case of the department that the aforesaid order of the Tribunal had either been setaside or stayed by the Hon'ble High Court which would have otherwise justified the declining on its part to follow the same. Apart from that, we find absolutely no justification on the part of the A.O in not following the binding judgment of the Hon'ble High Court in the case of CIT Vs. Godawari Power &Ispat Ltd. (supra) which seizes the issue under consideration. Admittedly, the Department had assailed the aforesaid judgment of the Hon'ble High Court by filing a SLP before the Hon'ble Apex Court but again,as long as the said judicial pronouncement is not set-aside or stayed by the Hon'ble Apex Court the same holds the ground and have to be ritually followed by the lower authorities. We, thus, in terms of our aforesaid observations finding no merit in the declining of the assessee's claim for deduction u/s.80IA(4)(iv)(a) of Rs.4,38,73,880/- by the A.O which had rightly been vacated by the CIT(Appeals), uphold the latters orde....
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....alled for in its hands. 16. At the time of hearing of the appeal, it was submitted by the Ld. AR that the issue in hand was squarely covered by the order passed by the Tribunal in its own case for the immediately preceding year i.e assessment year 2013-14 in ITA No.197/RPR/2017, dated 29.07.2022, wherein, the Tribunal had upheld the order of the CIT(Appeals) by observing as under: "14. On appeal, the CIT(Appeals) observed that the A.O had failed to co-relate the interest paid by the assesee company on borrowed funds with the investments made in the exempt income yielding shares. On the contrary, it was noticed by the CIT(Appeals) that the various interest-bearing loans were raised by the assessee company to meet out its working capital requirements and maintaining its current assets level for running the business smoothly. It was also observed by the CIT(Appeals) that the AO while dislodging the assessee's claim that no expenditure was incurred for earning of exempt income had failed to comply with the mandate of law as per which he was obligated to record his dissatisfaction before triggering the mechanism contemplated u/r.8D. It was further observed by the CIT(Appeals) that th....
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....had triggered the provisions of section 36(1)(va) of the Act and disallowed an amount of Rs.2,91,792/- qua the delayed deposit of the employee's share of contributions towards Provident fund (PF) and Employees State Insurance (ESI) by the assessee. 20. Aggrieved, the assessee, inter alia, assailed the aforesaid disallowance made by the AO u/s 36(1)(va) before the CIT(Appeals), but without any success. 21. We have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions qua the aforesaid issue in hand. 22. Admittedly, it is though a matter of fact borne from record that the assessee firm had delayed deposit of an amount of Rs.2,91,792/- qua employee's share of contributions towards PF & ESI i.e. beyond the stipulated time period contemplated under the respective Employees Welfare Acts, but had deposited the same prior to the "due date" of filing of its return of income for the year under consideration. Backed by the aforesaid facts, it is the claim of the Ld. AR that....
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....ein draw support from the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Hindustan Organic Chemicals Ltd in ITA No. 399/12, dated 11.07.2014. In the said case, the Hon'ble High Court of Bombay was, inter alia, called upon to answer the following substantial question of law that was raised in the appeal filed by the revenue:- "(A). Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal, in law, was right in allowing the claim of the Assessee on account of delayed payments of P.F. Of employees' contribution amounting to Rs.1,82,77,138/- by relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Alom Extrusion Ltd. (319 ITR 306) ?" After referring to the amendments that were made available to Section 43B of the Act, the Hon'ble High Court answered the aforesaid question in the affirmative and upholding the order of the tribunal qua the aforesaid aspect dismissed the appeal filed by the revenue. Also, we find that a similar view had been arrived at by various Hon'ble High Courts, as under :- i. CIT Vs. Amil Ltd reported (2010) 321 ITR 508 (Delhi High Court) ii. CIT Vs. Hemla Embroidery Mills (P) L....
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....roversy. 5.2 Admittedly there is plethora of judgments in favour of the Assessee's contention and of the Revenue. The controversy with regard to divergent views of different High Courts, has been settled by the Hon'ble Apex Court in the case of CIT Vs. M/s. Vegetables Products Ltd. (88 ITR 192) by laying the dictum that if two reasonable constructions of a taxing provision are possible that construction which favours the Assessee must be adopted. The Hon'ble jurisdictional High Court in the case of CIT Vs. M/s Hemla Embroidery Mills (P) Ltd. (366 ITR 167) (P&H HC) and in the case of CIT Vs. M/s Mark Auto Industries Ltd. (358 ITR 43) (P&H HC) clearly held that the assessee is entitled to claim deduction of employee's share of ESI & PF u/s.43B of the Act, if the same has been deposited prior to the filing of return of income u/s.139(1) of the Act. From the above judgments of the Hon'ble jurisdictional High Court, it is clear that the Hon'ble Court has not drawn any distinction between the employee's and employer's share qua PF & ESI contributions. Admittedly there are no contrary judgements of the jurisdictional High Court against the assessee on the aspect under consideration....