TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 532
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee against the order giving effect to CIT(A)'s order dated 12/09/2011 was partly allowed. 2. The various grounds are raised in present cross appeals requiring adjudication which are taken up together. To avoid repetition of facts and for the sake of convenience, the grounds of appeal having common facts and/or legal issues are taken up together. During the course of appellate hearing, Assessee has filed paper books in support of its contention which is duly considered while adjudicating present appeal. During the course of appellate hearing, the Ld. AR of the Assessee has vehemently relied upon decision of Coordinate Bench in the case of Ambuja Cement Limited, holding company of Assessee for AY 2005-06 to 2012-13 and same are summarised herein below: SR No ITA No Date of order 1 5883/Mum/2012& 5927/Mum/2012 for AY. 2005-06 30/10/2022 2 2848/Mum/2013 and 2366/Mum/2013 for AY 2006-07 03/11/2022 3 6375/Mum/2013 & 6405/Mum/2013 for AY 2007-08 07/11/2022 4 2968/Mum/2015 & 3307/Mum/2015 for AY 2008-09, 1665/Mum/2019 & 2428/Mum/2019 for AY 2009-10 07/11/2022 5 2384/Mum/2019 for AY 2010-11, 3475/Mum/2018 for AY 2011-12 &1241/Mum/2018 for AY 2012-13 07/11/2022 6 238....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c. 145A did not result in any modification in net profit. The AR of the appellant also relied on the judicial pronouncements -vs.- Berger Paints (India) Ltd. (No. 2) (2002) 254 ITR 503 (Cal), S. Kumars Ltd. -vs.- IGT I.T.A. no.2547/M/02, CIT vs. Indo Nippon Chemicals Ltd. (2003) 261 ITR 275 (SC) and Hawkins Cookers Ltd. -vs.- ITO (2008-TIOL-480- ITAT-Mum). The AR of the appellant further submitted that similar addition made by the AO has been deleted by my predecessor in AY 2001-02 to AY 2005-06. 6.3 I have considered the A.O.'s order as well as the appellant's AR submission. Having considered both, I find that similar issue was decided by my predecessor in favour of the appellant from A.Y.-2001-02 to 2005-06 in the appellant's own case. Thus, respectfully following the said order of my predecessor and also following the rule of consistency, the addition so made by the A.O. on this account is deleted. Thus, this ground of appeal is allowed in view of the aforesaid order of my predecessor referred as above." 7. Against the observation of Ld. CIT(A), Revenue has filed further appeal. During the course of appellate hearing, Ld. AR of the assessee has relied upon finding of Ld.CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or the 'Exclusive method', the MODVAT credit does not have any impact on the profit of the assessee. Thus, following the ratio laid down by the Hon'ble Supreme Court in the case of Indo Nippon Chemicals Co. Ltd. (supra) and followed by the Hon'ble Bombay High Court in the case of Diamond Dye Chem Ltd. (supra), we set-aside the order of the CIT (A) and direct the Assessing Officer to delete the addition made on account of unutilised MODVAT credit. This Ground of appeal is accordingly allowed." 19. It is observed that on identical issue, Coordinate bench in Para No. 32 to 34 in the case of Ambuja Cement Limited in ITA No 5883/Mum/2012 & 5927/Mum/2012 (for A.Y. 2005-06) vide order dated 31/10/2022 has dismissed revenue's appeal. Respectfully following decisions of Coordinate as discussed herein above, the ground raised in Departmental Appeal is dismissed. 9. Respectfully following the above decision, we dismiss the ground raised by the revenue. 10. In the Ground No 2, Department has raised the following grievance: "On the facts and the circumstances of the case and in law the CIT(A) erred in deleting the disallowance of club entrance/subscription fee Rs.17,77,3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....27/05/2022 wherein it is held as under: "3. We have heard the rival contentions and perused the material on record. We note that the Tribunal has decided identical issue in the favour of the Assessee in Assessee's own case in ITA No. 647/Mum/1997 (AY 1991-92), ITA No. 2361/Mum/1995 (AY 1990- 91), ITA No. 288/Mum/1993 (AY 1989-90), ITA No. 968/Mum/1992 ITA. No. 5259 & 4895/Mum/2007 Assessment Year: 2004-05 (AY 1988-89), and ITA No. 43/Mum/1991 (AY 1987-88) by following the decision of the Hon'ble Bombay High Court in the case of Otis Elevator Co (I) Ltd. v. CIT (supra), and American International Banking Corporation v. CIT (supra). The relevant extract of the order of the Tribunal in ITA No. 43/Mum/1991 pertaining to AY 1987-88, followed in subsequent years, reads as under: "8. Ground no. 2 relates to disallowance of payments to clubs. The Assessing Officer made disallowance of Rs. 8,125/- representing payments made by the assessee to clubs. On appeal, it was contended that reimbursement of club fees to employees is an expenditure incurred by the assessee wholly and exclusively for the purpose of business and the expenditure is allowable as deduction u/s 37 of the Act. Relianc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e issue at Para No. 7 to 7.12 of Assessment Order. The Assessing Officer has observed that assessee has claimed sales tax incentives for various units such as Tikaria (UP), Chanda (Maharashtra), New Wadi (Karnataka), Gagal (HP) and DSCL(WB) for Rs 1,51,85,22,523/-. The Assessing Officer has examined different schemes under which incentive is granted to assessee and same was considered as revenue receipt mainly relying upon decision of Hon'ble Supreme Court in the case of Sahney Steel and Press Works Ltd 228 ITR 253. He has further observed that sales tax incentive given to assessee is for expansion of units and cannot be treated as capital receipt. Thus, Assessing Officer has treated such receipts as revenue receipts both while computing income as per normal provisions of the Act as well as while computing book profit u/s 115JB of the Act. 18. In appeal Ld.CIT (A) has discussed the above issue at Para No. 8.10 of his order and held as under: "I have considered the AO's order as well as the appellant's submission. Having considered both, I find merits in the argument of the appellant. It is seen that the issue raised thorough this ground of appeal is covered in favour of the appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee had received certain sales tax concessions from the respective State Governments. These concessions were in the nature of exemptions and remissions etc, and were granted under specific schemes announced, under the industrial policies, from time to time. During the relevant previous year, the assessee received amounts aggregating to Rs 169,93,34,752, but all these receipts were treated as tax exempt on account of being in the nature of capital receipts. When income tax return filed by the assessee was subjected to the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee had a lodged a claim for exclusion of Rs 169.93 crores, being sales tax exemption/incentives received by it, as capital receipt, and hence not liable to tax. The Assessing Officer declined this claim, primarily on the basis of certain observations in the judgments in the cases of Tamilnadu Sugar Corporation Ltd Vs CIT [(2001) 251 ITR 843 (Mad)], CIT Vs Rajaram Maize Products [(2001) 251 ITR 427 (SC)], CIT Vs S Kumars Tyre Manufacturing Co [(2004) 266 ITR 325 (MP)], and CIT Vs Abhishek Industries Ltd [(2006) 286 ITR 1 (P&H)]. The entire amount of Rs 1169.93 crores was added to incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for achieving dispersal of industries outside Mumbai, to attract them to the underdeveloped and developing areas of the State, and to promote the growth of the industry in the State, in the preamble to the scheme. It is on this basis that he has held that so far as the subsidies given by the Maharashtra and Punjab States are concerned, these are required to be treated as capital in nature, whereas, the subsidies received from the State Governments of Himachal Pradesh and Rajasthan, in the absence of specific mention to the effect in the preambles of the subsidy schemes that these subsidies are required to be held to be revenue in nature. However, in our considered view, the approach of discerning the purpose of the subsidy, solely from the specific words used in the preamble of the scheme and without examining the overall scheme of the Act- which is admittedly to promote the growth of industry, is incorrect and superficial. The subsidies so received can be said to be revenue in nature unless these subsidies are for augmenting the profits of the assessee, and that is not even the case of the revenue. The CIT(A) is simply swayed by the wording of the preamble of the scheme- somethi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Explanation (10) to Section 43 (1) of the Income Tax Act inserted in with effect from 01/04/99 to emphasise that the action of the assessee in not reducing the cost of assets by the amount of subsidy for working out the Written Down Value was indicative of the fact that the impugned receipts were not in the nature of capital receipts. 55. We have heard both the parties and considered their rival submissions. Perusal of the scheme extending the aforesaid incentives to "prestigious" units announced by Government of Gujarat on 26/07/91 makes it amply clear that the scheme was announced to attract investment in core sector industry having potential, to spur industrial growth in ancillary, tertiary and secondary sector of the economy. The other scheme announced by the Government of Gujarat as Capital Investment Incentive Scheme on 11th September 1995 was intended to attract investments to generate greater employment in less industrially developed areas of Gujarat and also to secure balanced development of industries in Gujarat through dispersal of industries in the most backward area and backward areas. It is thus clear that the object of both the scheme was to ensure development of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement was related to percentage of fixed capital investment. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that the character of the subsidy in the hands of the recipient whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of fund is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. But, if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade." 14. In the result, we do not find that the Tribunal has committed any error. No question of law, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the assessee and against the department. Accordingly, all these appeals are dismissed. 8. In the case of JCIT Vs Grasim Industries Limited ( ITA Nos 2155/Mum/2016 and Ors; order date 29th April 2022), a coordinate bench has dealt with these legal issues in considerable detail and observed as follows: 5.3.5. ............. the dominant purpose for which the incentive scheme per se introduced by the respective State Governments was only for the purpose of setting up of industries in the respective areas for industrial development in State and also to accelerate development and absolutely not for augmenting the profits of the assessee. Effectively, the schemes of various State Governments envisaged the rapid industrialisation, growth and new employment generation in the respective areas which would in turn promote the growth of the State. Hence, it could be safely concluded that subsidy / incentive granted is only for setting up of the units based on the fixed percentage of the capital cost and not for running the business of the assessee. Moreover, even this subsidy which is determined based on sales tax assessment orders for 9 years, 6 years etc., are subject to maximum out....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gar, sugar industries were in difficulty. The Government decided to give financial assistance to certain industries in respect of sugar manufactured by them from home-grown beet during the relevant period. Lord Macmillan held that- "What to my mind is decisive is that these payments were made to the company in order that the money might be used in their business." He further observed that: "I think that they were supplementary trade receipts bestowed upon the company by the Government and proper to be taken into computation in arriving at the balance of the company's profits and gains for the year in which they were received." 15. In the case before us, the payments were made to assist the new industries at the commencement of business to carry on their business. The payments were nothing but supplementary trade receipts. It is true that the assessee could not use this money for distribution as dividend to its shareholders. But the assessee was free to use the money in its business entirely as it liked and was not obliged to spend the money for a particular purpose like extension of docks as in the Seaham Harbour Dock Co. 5 case (supra). 16. There is a Canadian case....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is immaterial. The form of subsidy is immaterial. The main eligibility condition in the Scheme with which we are concerned in this case is that the incentive must be utilised for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of the Subsidy Scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the assistance under the Subsidy Scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant." 19. Sahney Steel was distinguished, in para 16 by then stating that this Court found that the assessee was free to use the money in its business entirely as it liked. 20. Finally, it was found that, applying the test of purpose, the Court was satisfied that the payment received by the assessee under the scheme was no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mir High Court in Shree Balaji Alloys v. CIT [2011] 9 taxmann.com 255/198 Taxman 122/ 333 ITR 335. While considering the scheme of refund of excise duty and interest subsidy in that case, it was held that the scheme was capital in nature, despite the fact that the incentives were not available unless and until commercial production has started, and that the incentives in the form of excise duty or interest subsidy were not given to the assessee expressly for the purpose of purchasing capital assets or for the purpose of purchasing machinery. 24. After setting out both the Supreme Court judgments referred to hereinabove, the High Court found that the concessions were issued in order to achieve the twin objects of acceleration of industrial development in the State of Jammu and Kashmir and generation of employment in the said State. Thus considered, it was obvious that the incentives would have to be held capital and not revenue. Mr. Ganesh, learned Senior Counsel, pointed out that by an order dated 19.04.2016, this Court stated that the issue raised in those appeals was covered, inter alia, by the judgment in Ponni Sugars & Chemicals Ltd. case (supra) and the appeals were, theref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave to be determined, having regard to the purpose for which the subsidy is given. The source of find is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. Such But if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade. 9. Such decision was considered in case of Ponni Sugars and Chemicals Ltd.(supra) and the Apex Court held and observed as under : "13. The main controversy arises in these cases because of the reason that the incentives were given through the mechanism of price differential and the duty differential. According to the Department, price and costs are essential items that are basic to the profit making process and that any price related mechanism would normally be presumed to be revenue in nature. In other words, according to the Department, since incentives were given through price and duty differentials, the character of the impugned incentive in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aracter of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant." 10. In a recent judgement dated 8.1.2013 in case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue is already covered in the decision of Chapalkar Brothers referred to supra. 5.3.8. Before us, the ld. Special Counsel for the Revenue referred to various decisions of Hon'ble High Courts. But, all those decisions were rendered prior to the decision of Hon'ble Supreme Court referred to above. Hence, the decisions relied upon by the ld. Special Counsel for the Revenue would not advance the case of the Revenue. 5.3.9. It is pertinent to note that in each of the aforesaid decisions of Hon'ble Supreme Court, the Courts have been mindful of the fact that the subsidy has to be received after commencement of business and to be availed within 9,10 & 12 years, as the case may be, and yet by applying purpose test, it was held that subsidy was on capital account. 5.4. Applicability of Special Bench decision of Mumbai Tribunal in the case of Reliance Industries reported in 88 ITD 273. The ld. Special Counsel for the Revenue vehemently submitted that the decision of the Hon'ble Special Bench has been reversed by the Hon'ble Supreme Court by remitting the matter back to the Hon'ble Bombay High Court. First of all, it would be relevant to bring on record the crux of the decision of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the object of the subsidy must be given primary importance over the source of fund. 5.4.1. Ultimately the Special Bench after placing reliance on the decision of Hon'ble Supreme Court in Sahney Steel and Hon'ble Madras High Court in the case of CIT v. Ponni Sugars & Chemicals Ltd. Reported in 260 ITR 605 held that the decision of the Tribunal in Asst Year 1985-86 is correct and observed the following: 37....The observations of the Madras High Court lend support to the view that the purpose and object of the Scheme under which the subsidy is given is of more fundamental importance than the fact that the subsidy was received after the commencement of production or conditional upon it. Therefore, in our view and with respect, the Tribunal in the case of Reliance Industries Ltd. (supra) had correctly interpreted and understood the ratio of the judgment of the Supreme Court in Sahney Steel & Press Works Ltd.'s case (supra). 38. In this view of the matter, we answer the question referred to us in the affirmative. 5.4.2. The ld. AR vehemently submitted that the department did not challenge the decision of the Special Bench before the Hon'ble Bombay High Court. However, he ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "3. We will first address the questions no. (c) and (d), which are different elements of the same issue. The respondent assessee had received a subsidy. It is undisputed that up to the level of Income Tax Appellate Tribunal, the assessee did not raise a contention that such subsidy was towards capital account and, therefore, not taxable. However, before the Tribunal such a contention was raised. The Tribunal by the impugned judgment relied upon its earlier judgment for the Assessment Year 1999- 2000 in case of this very assessee and restored the issue back to the Assessing Officer. In the earlier order, the Tribunal had remanded the issue to the file of the Assessing Officer "to decide the issue afresh after considering the decision of Special Bench of the Tribunal in the case of Reliance Industries Ltd. (supra)". Thus, the Tribunal remanded the issue back to the Assessing Officer to be decided in the light of the Special Bench judgment in the case of Reliance Industries Ltd. The Revenue's grievance in this respect is two fold. It was contended that the issue was raised for the first time before the Tribunal and the same should not have been permitted. Secondly, the view of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enue to oppose such a contention if so advised. The Assessing Officer and the Revenue authorities would have to take a decision in accordance with law. These questions, therefore, are not considered." (emphasis applied by us while placing reliance on the decision of Hon'ble Jurisdictional High Court) 5.4.4. Against this judgement on other issues, the Revenue preferred an SLP before the Hon'ble Supreme Court and the same was dismissed vide order dated 23/08/2019 in SLP (Civil) Diary No.22929/2019. In other words, the Revenue while preferring SLP before the Hon'ble Supreme Court did not even challenge this ground of subsidy and the decision of Special Bench of Tribunal in the case of Reliance Industries Ltd., Hence, the order of the Hon'ble Jurisdictional High Court in assessee's own case for A.Y.2001-02 had become final on the very same issue. Though the said decision has been rendered for subsequent assessment year as compared to the years under consideration before us, in view of identical facts and the same legal issue, and more especially, in order to address the fact of binding precedent of Special Bench decision in the case of Reliance Industries Ltd., this Bench deems i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....noring a binding judicial precedent simply because appeal against that special bench decision is now pending before Hon'ble Bombay High Court. When posed with a special bench decision and a division bench directly on the issue, though touching different chords, we have no difficulty in recognizing our limitations. The wisdom of a division bench, even if superior- as strenuously argued by the learned Commissioner, has to make way for the higher wisdom of a larger bench. It is this faith of judicial hierarchical system that is the strength of our functioning, and we must follow the same. We, therefore, regret our inability to follow the division bench in the case of Jindal Power, no matter how deeply we respect and admire the work of all our colleagues, and we would rather be guided by the special bench decision - which is exactly what another division bench, on the same set of facts as before us, did in the case of Ajanta Manufacturing Ltd. (supra). As for learned Commissioner (DR)'s suggestion that we should follow the jurisdictional High Court decision in the case off ColourmanDyechem Ltd. (supra), we find that Their Lordships, in this case, were dealing with an entirely d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e entirety of the case, we uphold the plea of the assessee that the amount of Rs 39,36,21,956 added to the income of the assessee must stand deleted, and reject the grievance of the Assessing Officer against the grant of relief of Rs 130,57,12,796 by the CIT(A)." 9. In grounds nos. 12 and 13, the assessee has raised the following grievances: 12. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in not allowing exclusion of Sales Tax Incentive availed of Rs. 1,69,93,34,752/-, being capital in nature, in computing Book Profit u/s 115JB of the Act. 13. That on the facts and in the circumstances of the case, necessary directions may please be given to the A.O. to exclude of Sales Tax Incentive availed by the appellant amounting to Rs. 1,69,93,34,752/-, being capital in nature, in computing Book Profit u/s 115JB of the Act. 50. Learned representatives fairly agree that the above issues are now covered, in favour of the assessee, by Hon'ble Calcutta High Court's judgment in the case of PCIT Vs Ankit metal & Power Ltd [(2019) 416 ITR 591 (Cal)], by Hon'ble jurisdictional High Court's judgment in the case of CIT Vs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....[2017] 80 taxmann.com 87 (Trib.) had considered an identical issue and held that when, subsidy in question is not in the nature of income, it cannot be regarded as income even for the purpose of book profit u/s 115JB of the Act, though credited in the profit and loss account and have to be excluded for arriving at the book profit u/s 115JB of the Act. 49. Insofar as, case laws relied upon by the department , we find that all those case laws have been either considered by the Tribunal or High Court and came to conclusion that in those cases the capital receipt is in the nature of income, but by a specific provision, the same has been exempted and hence, the came to the conclusion that, once particular receipt is routed through profit and loss account, then it should be part of book profit and cannot be excluded, while arriving at book profit u/s 115JB of the Act 1961. 50. In this view of the matter and considering the ratio of case laws discussed hereinabove, we are of the considered view that when a particular receipt is exempt from tax under the Income tax law, then the same cannot be considered for the purpose of computation of book profit u/s 115JB of the I.T. Act 1961. Hen....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellant. I find that similar issue has been decided in favour of the appellant by the-Hon'ble ITAT as well as the by my predecessor in the appellant's own case. Thus, in view of the same, I am of the considered view to not to deviate from the orders of erstwhile CIT(A) as well as from the orders of Hon'ble ITAT, Mumbai. Hence considering all the factual position of the case, I consider it proper and appropriate to hold that the A.O. was not justified in making this disallowance. Thus, this ground of appeal is allowed. 25. Against the observation of CIT(A), Revenue has filed further appeal. During the course of appellate hearing, Ld. AR of the assessee has relied upon finding of CIT(A) and contended that identical issue is also decided in its favour in A.Y. 2002-03 to 2004-05 as well as 1990-91 whereas Ld. DR has relied upon finding of Assessing Officer and contended that observation of Assessing Officer may be restored. 26. Considered the rival submissions and material placed on record. It is observed that identical issue has been decided in favour of assessee by the Coordinate Bench in assessee's own case for A.Y. 2004-05 in ITA No 5259/Mum/2027 dated 27/05/2022 wherein i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avour of the appellant by my predecessor in A.Y.-05-06 in the appellant's own case. Hence considering the rule of consistency, I consider it proper and appropriate not to deviate from the order of erstwhile CIT(A). Accordingly this ground of appeal is allowed." 31. Against the observation of CIT(A), Revenue has filed further appeal. During the course of appellate hearing, assessee has claimed that it is not required to deduct TDS as SBI Bahrain branch is branch of SBI which is a Banking Company hence provisions of Section 194A is not applicable. Ld. AR of the assessee has relied upon finding of CIT(A) and further relied upon decision of Coordinate Bench in the case of Bajaj Eco Products Limited in ITA No 4609 & ORs of 2016 dated 08/06/2018 and Hyderabad ITAT in the case of Semantic Space Technologies Limited in ITA No 824 of 2010 whereas Ld. DR has relied upon finding of Assessing Officer and contended that observation of Assessing Officer may be restored. 32. Similar issue was considered by us in the department appeal for AY 2005-06 in Ground No 7 and held as under: "45.Considered the rival submissions and material placed on record. On this issue, the coordinate bench in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eting the addition made by Assessing Officer. This ground of appeal in Departmental appeal is dismissed. 33. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 34. In the Ground No 6, Department has raised the following grievance: "On the facts and the circumstances of the case and in law the CIT(A) erred in directing the Assessing Officer to allow deduction u/s.80IA in respect of TG-3 Power Plant. 35. On identical issue in Assessee's appeal, in the Ground No 5, following issue is raised: "That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in confirming the denial of deduction u/s 80IA in respect of Power Plant TG2 at Wadi in Karnataka. 36. The Assessing Officer has dealt with the issue at Para No.14.5 of Assessment Order. The Assessing Officer has relied upon assessment order of A.Y. 2005-06 and observed that assesse has purchased two old Captive Power Plant being TG- and TG3 at Wadi Karnataka from Tata Power. The assessee has claimed deduction u/s 80IA at Rs 59,49,20,689/- and Rs..61,99,12,756/- respectively in two units. The Assessing Officer observed that benefit of deduction u/s 80IA is available ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on or revival by the assessee of the business of any such 52[undertaking] as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose:" 61. It is relevant to refer to Oxford dictionary, the term "split up" means to separate of end relationship. It is undisputed fact in present case that assessee has acquired both the units as a whole. It is not the case that assessee has set up two different power plant by purchasing only partial assets which were used by another assessee but entire undertaking itself is purchased as it is in year under consideration which clearly prove that assessee has not split any of its existing business for forming both the units. Hon'ble Bombay High court in CIT v. Gaekwar Foam & Rubber Co. Ltd. [1959] 35 ITR 662 explains that the concept of a reconstruction of a business implies that the original business is not to cease functioning and its identity is not lost. Reconstruction is of a business already in existence implies that there must be a continuation of the activities of business of the same ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... continued to carry on the business of the undertakings. It claimed the deduction of tax holiday for all the eligible undertakings. The Assessing Officer 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., amalgamating and amalgamated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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." 65. Thus, the sanctity of the CBDT Circular has been upheld in the context of section 80IB, confirming that the tax holiday moves along with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aimed for deduction u/s 80IA for various reasons and there is nothing on record to prove that said company was not entitled for deduction in respect of 80IA on such power plant. On the other hand, claim of deduction u/s 80IA made by assessee is emanating from notes forming part of return of income for A.Y. 1999-2000 and not disputed by Assessing Officer in assessment proceedings hence there is no reason for not allowing deduction u/s 80IA for TG-2 Wadi. The Hon'ble Bombay High court in the case of Simple Food Products (P.) Ltd. [2017] 84 taxmann.com 239 has held that if deduction u/s. 80-IB was granted for an initial assessment year, same could not be rejected for subsequent assessment years unless relief for initial year was withdrawn. 68 In view of holistic discussion made herein above, assessee is entitled to deduction u/s 80IA on TG-2 and TG-3, Wadi unit. Thus, related ground of appeal in departmental appeal is dismissed and ground of appeal in assessee's appeal is allowed." 40. Respectfully following the above decision, we dismiss the ground raised by the revenue. 41. In the Ground No 7, Department has raised the following grievance: "On the facts and the circumstances....
X X X X Extracts X X X X
X X X X Extracts X X X X
....spect of cement manufacturing unit. Accordingly, the A.O. is directed to exclude this item out of expenditure as mentioned on page 41 of the assessment order at Serial No.4 and 11 of the deduction u/s. 80IA accordingly. Thus, the appellant this ground of appeal is partly allowed." 45. Against the observation of CIT(A), both assessee and department has filed appeal. Both Ld AR and DR have relied upon arguments as were made in appellate hearing for A.Y. 2005-06 in assessee's own case. 46. Similar issues were considered by us in the Department Appeal Ground no 10 and Ground no 4 of Assessee's Appeal in AY 2005-06 and held as under: "75.Considered the rival submissions and material placed on record. We observe that the Assessing Officer has identified indirect expenditure incurred at Head Office i.e Statutory Audit fees, Audit for taxation matter, Director Fees, Cost Auditor expenses, Subscription to CME etc and observed that such expenditure are not allocated to eligible businesses and to that extent deduction u/s 80IA is claimed excess. Before Ld.CIT(A), assessee has claimed that cost audit fees and subscription to CMA are in respect of cement manufacturing unit hence no allocat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....basis of expenditure incurred by the units vis-àvis overall expenditure" 78. Respectfully following decisions of coordinate bench referred supra, Assessing Officer is directed to allocate Head office expenses (other than auditor fees and CMA expenses) on the basis of expenditure incurred by the units vis-à-vis overall expenditure. Thus, related ground of appeal in departmental appeal is dismissed and ground of appeal in assessee's appeal is partly allowed as directed herein above. 47. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 48. In the Ground No 8, Department has raised the following grievance: 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of provision for wealth tax of Rs.30,00,000/- while computing the book profit u/s.115JB of the Act." 49. The Assessing Office has dealt with this issue at Para No.20.1 of his order and made addition for provisions for wealth tax while computing the book profit u/s.115JB of the Act relying upon reasons given in A.Y.2003-04 and 2004-05. This issue is dealt with by CIT(A) at Para No.19.2 of his order as under: "19.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r clause (a) of the Explanation to section 115J(1A), what is contemplated is the amount of income-tax paid. Under the said clause, payment of wealth-tax is not contemplated. Therefore, the net profit shall not be increased by the amount of wealth-tax paid by the assessee." (Emphasis Supplied) 14.2.5. In the immediately preceding assessment year (AY 2003-04), identical issue has been decided in favour of the Assessee. The relevant extract of the common order, dated 13.03.2019, passed in ITA No. 4242&4988/MUM/2007 for the Assessment Year 2003- 04 reads as under: "44. Issue no. 15 is in connection with the deletion of addition in respect of provision of Wealth Tax in computing book profit u/s 115JB of the Act in sum of Rs..80,00,000/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "37.3 I have considered the submissions made on behalf of the appellant. Respectfully following the decision of the Hon'ble Bombay High Court in the case of Echjyay Forgings Ltd. (supra) and the Hon'ble Special Bench of Kolkata Tribunal in the case of Usha Martin Industries Ltd. (supra) as well as my own order in appeal no. CIT(A)-I/IT/232/04- 05 f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssion. Having considered both, I find that the issue raised through this ground of appeal has been already decided in favour of the appellant by my predecessor in A.Y.2003-04 to 2005-06 in the appellant's own case. Hence considering the same, I consider it proper and appropriate not to deviate from the orders of erstwhile CIT(A) referred as above. Thus, this ground of appeal is accordingly adjudicated." 55. Against the observation of Ld.CIT(A), department has filed appeal. Before us, Ld.AR has relied upon appellate order passed in its own case for A.Y. 2002-03 to 2004-05 and contended that no such adjustment is required to be made. The Ld. DR has relied upon finding given by Assessing Officer and argued that order of Assessing Officer may be restored. 56. Similar issue was considered by us in the Ground No 12 of Department Appeal in AY 2005-06 and held as under: "85.Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee's own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided this issue in its favour. The relevant finding is reproduced herein below: "14.3.3. Revenue is in appeal, challenging the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... others) and Assessment Year 2003-04 (ITA No. ITA. No. 5259 & 4895/Mum/2007 Assessment Year: 2004-05 4242/Mum/2007), we confirm the order of CIT(A), and hold that provision for Normal/Additional Gratuity of INR 5,86,82,751/- is in the nature of provision for an ascertained liability and is, therefore, not required to be added back while computing Book Profits in terms of Clause (c) of Explanation 1 to Section 115JB(2) of the Act. Accordingly, Ground No. 9 raised by the Revenue is dismissed." 86. Respectfully following decision of coordinate bench referred supra, addition of provision for gratuity made while computing book profit u/s 115JB is deleted. Accordingly, this ground of appeal in Departmental Appeal is dismissed. 57. Respectfully following the above decision, we dismiss the ground raised by the revenue. 58. In the Ground No 10, Department has raised the following grievance: "On the facts and the circumstances of the case and in law the CIT(A) erred in deleting the addition of provision for leave encashment amounting to Rs 8,87,31,096 while computing the book profit u/s.115JB of the Act." 59. The Assessing Office has dealt with this issue at Para No. 23.1 of his or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e bench referred supra, addition of provision for leave encashment made while computing book profit u/s 115JB is deleted. Accordingly, this ground of appeal in Departmental Appeal is dismissed. 62. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 63. In the Ground No 11, Department has raised the following grievance: "On the facts and the circumstances of the case and in law, the CIT(A) erred in directing the AO to allow deduction u/s 80HHC computed on the basis of book profit u/s 115JB of the Act. 64. The Assessing Office has dealt with this issue at Para No.25.2 of his order. The Assessing Officer has observed that assessee has claimed deduction u/s 80HHC on book profit in revised return of income. The assessee has relied upon decision of Hon'ble Pune ITAT in the case of Smruthi Organisers Limited wherein it is held that for computing book profit u/s 115JA, clause (viii) of the explanation being export profit to be claimed on the basis of book profits and not as per Section 80HHC. However, this contention of assessee was not accepted by Assessing Officer on the ground that zero deduction is eligible for deduction u/s 80HHC w.e.f 2005-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ready reference: "95. Ground No. 5: The grievances raised by the assessee in this ground is that the learned CIT (A) erred not allowing the deduction of Rs..79,58,97,799/- under the provision of MAT while calculating the book profit. 96. The assessee while calculating the book profit under the provisions of MAT under section 115JB of the Act has reduced the profit eligible for deduction under section 80HHC of the Act amounting to Rs. 79,58,97,799/- in pursuance to the clause (iv) of explanation 1 to section 115JB of the Act. 96.1. The assessee during the assessment proceedings further contended that the clause (iv) of explanation to section 115JB of the Act, authorizing the assessee to subtract the amount of profit eligible for deduction under section 80HHC of the Act while calculating the book profit, was omitted by the Finance Act 2011 with retrospective effect from 1-4-2005. As per the assessee this amendment was brought under the statute to nullify the effect of the judgment of Hon'ble Supreme Court in the case of Ajanta Pharma reported in 327 ITR 305. According to the assessee the Parliament is authorized to bring any amendment with retrospective effect but it can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the judgment of the Hon'ble Supreme Court in the case of Ajanta Pharma reported in 327 ITR 305. 99.1 It was also contended by the learned AR that the assessee at the time of filing the return of income was very much entitled for the profit of the business eligible for deduction under section 80HHC of the Act to be reduced from the book profit. There was no possibility for the assessee to foresee at the time of filing the return of income that there will be some amendment with retrospective effect on a future date. Accordingly, the assessee contended that it cannot be deprived from the benefit which was available to it under the statute at the relevant point of time. 100. On the contrary, the learned DR vehemently supported the order of the authorities below. 101. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the present case arises whether the assessee is entitled the benefit of reducing the profit of the business eligible for deduction under section 80HHC of the Act while computing the book profit under the provisions of section 115JB of the Act. Such benefit was available to the assessee in p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ided it is not detrimental to the assessee. In other words any amendment denying the benefit to the assessee cannot be brought under the statute with retrospective effect. 101.3. We also note that there will be certain classes of assessee who must have claimed the benefit of clause (iv) of explanation 1 to section 115 JB of the Act prior to the amendment by the Finance Act as discussed above. But, assuming their case have not been selected under scrutiny, then such benefit cannot be denied to them. On the contrary the assessees who were subject to scrutiny assessment, if they are denied the benefit, there will be discrimination to them. It is for the reason that there will not be allowed the benefit granted under the statute but withdrawn by way of retrospective amendment. Thus, the impugned amendment will create disharmony among different taxpayers. In view of the above and after considering the facts in totality, we are of the view that the assessee cannot be deprived for the benefit granted to it under the statute by way of retrospective amendment in the given facts and circumstances. Hence, the ground of appeal of the assessee is allowed." 120During the course of the hear....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... On this issue, coordinate bench in assessee's own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided this issue in favour of assessee. The relevant finding is reproduced herein below: "21.3. Now, the Revenue is in appeal before us against the above finding of the CIT(A) on this issue. We note that CIT(A) has granted relief to the Assessee following decision of the Tribunal in the case of the Assessee in Assessment Year 1990-91 and 1998-99. Further, in the immediately preceding assessment year (AY 2003-04), identical issue has been decided in favour of the Assessee. The relevant extract of the order, dated 13.03.2019, passed by the Tribunal in the case of the Assessee for the Assessment Year 2003-04 (ITA No. 4242 & 4988/MUM/2007 reads as under: "50. Under this issue the revenue has challenged the deletion of addition made in respect of amount withdrawn from share premium account in computation of book profit u/s 115JB of the Act. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "40.3 I have considered the submissions made on behalf of the appellant. In my view write back of share premium account is an a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se and in law, the Ld. CIT(A) erred in deleting the addition of VRS expenditure amounting to Rs.6,31,06,178/- pertaining to earlier years, capital expenditure debited and write down of value of assets while computing the book profit u/s.115JB of the I.T. Act." 75. The Assessing Office has dealt with this issue at Para No. 27.1 of his order and observed that while passing the assessment order of earlier years, VRS expenses pertaining to earlier years, capital expenditure debited & write down of value of assets was added back while computing book profit u/s 115JB of the Act hence in current year, for identical reasons such expenses are added back to total income. This issue is dealt by CIT(A) at Para No.25.2 of his order as under. "25.2 I have considered the A.O.'s order as well as the appellant's A/R submission. Having considered both, I find that similar issue has been decided by the order of ITAT and also by erstwhile CIT(A) from A.Y.-2002-03 to 2005-06 in the favour of the appellant. Thus, considering the same, I have no hesitation to hold that the A.O. was not justified in making this addition. Accordingly, this ground of appeal is accordingly adjudicated." 76. Against the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the claim of the assessee rightly, hence, the finding of the CIT(A) is not liable to be disturbed at this stage. Accordingly, this issue is being decided in favour of the assessee against the revenue." 6.5. In view of the above, Ground No. 15 raised by the Revenue is dismissed" 105 Respectfully following decision of coordinate bench referred supra, the addition made by Assessing Officer while computing book profit is deleted. This ground of appeal in departmental appeal is dismissed. 78. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 79. In the Ground No 14, Department has raised the following grievance: "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.24,97,91,716/- being capital expenditure debited to P & L A/c. comprising of Rs.24,06,31,716/- on account of written down value of assets and Rs.91,60,000/- on account of cost assets not owned by the company in computing the book profit u/s. 115JB of the I. T. Act. " 80. The Assessing Office has dealt with this issue at Para No. 27.1 of his order and observed that while passing the assessment order of earlier years, ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of Capital expenditure debited to P&L Account in computing book profit u/s 115JB of the Act in sum of Rs.15,02,74,405/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - "28.2 I have considered the submission made on behalf of the appellant. In my view additions made in computing total income under normal provisions of the Act has nothing to do with computation of book profit u/s 115JB and respectfully following the decisions of Hon'ble Apex Court in the case of Apollo Tyres Ltd.(supra), Max Well Dyes & Chemicals P. Ltd. (supra) as well as my own order for AY 1998-99 and 2002-03 in appeal no CIT(A)- I/IT/232/4-5 and CIT(A)-I/IT/7/5-6 respectively discussed herein above and for the reasons stated therein the addition made by the Assessing Officer is deleted. Hence the ground of appeal is allowed." 36. On appraisal of the above said finding, we noticed that the CIT(A) has allowed the claim of the assessee on the basis of the decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. Vs. CIT (2002) 255 ITR 273 (SC). Moreover, we also noticed that the issue has been decided in favour of the assessee by the Hon'ble ITAT i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....while CIT(A) in favour of the appellant in the appellant's own case. Hence, considering the same, I consist it proper and appropriate not to deviate the orders of erstwhile CIT(A) and accordingly allow the claim of the appellant. Thus, the AO has directed to delete the addition made of Rs.8,80,000/- in computing Book Profit. This ground is therefore allowed." 86. Against the observation of CIT(A), department has filed appeal. The Ld. AR has contended that adhoc disallowance u/s 14A cannot be made while computing book profit u/s 115JB of the Act. The Ld.AR has mainly relied upon following decisions: (i) CIT v. Bengal Finance & Investments Pvt. Ltd. [ITA No.337 of 2013 (Bombay HC)] (ii) ACIT v. Vireet Investment (P.) Ltd [(2017) 165 ITD 27 (Delhi Tribunal) (SB)] 87. The Ld. DR has relied upon finding given by AO and argued that order of Assessing Officer may be restored. 88. Similar issue was considered by us in Department Appeal in Ground No 20 in AY 2005-06 and held as under: "129. Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee's own case for A.Y. 2002-03 in ITA No 4987/M/2007 dated 29/07/2015 has decided issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im of exclusion of Excise Duty Exemption availed of Rs. 63,59,19,000/being capital in nature in computing total income under the normal provisions of the Act. 1.1 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in holding that the appellant is not entitled to Excise Duty Exemption in utter disregard of the fact that the entitlement of Excise Duty Exemption for substantial expansion has already been accepted by the Excise authorities. 13. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified and grossly erred in not directing the A.O. to exclude excise duty exemption being capital in nature, in computing Book Profit u/s 115JB." 94. The Assessing Office has dealt with this issue at Para No. 8 to 8.4 of his order. The Assessing Officer observed that assessee has claimed exclusion of Excise duty exemption availed during the year which cannot be treated as capital receipt considering similar discussion made for Sales Tax exemption as discussed in assessment order. In appeal CIT (A) has discussed the above issue at Para No. 9.5 to 9.15. of his order and held as under: "9.5. To examine the justification....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area, as the case may be, specified in Annexure-II appended hereto, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts. 2. The exemption contained in this Notification shall apply to the following kinds of units, namely (a) new industrial units which have commenced their commercial production on or after the 7th day of January, 2003; (b) industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January, 2003. The exemption contained in this Notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is later." 9.7 Thus, it is important to ascertain that whether the appellant's company expansion relates to any of the items enumerated in Annexure I which are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sistant Commissioner Central Excise, which is appearing in paper book F , nowhere suggests that the expansion plan were carried out in the spirit of the notification no.50/2003 central excise dated 10/06/03. The ACIT central excise merely took note of the Director of Industries, Shimla letter, which was submitted to him by the appellant company. He is also taking note of a certificate from M.D. of the appellant company for commencement of production as on 03/05/05. Even I find that the appellant has challenged ACIT (Central Excise), Shimla show cause notice dated 23/06/06 through this letter dated 07/07/2006. The relevant portion of ACIT(Central Excise) order dated 11/09/07 is extracted as under:- "REPLY TO THE LETTER CUM SHOW CAUSE NOTICE The Notice vide their letter dated 07/07/2006 submitted the reply to the letter cum show cause Notice dated 26/06/06, and stated that:- The notification No.50/2003-(Supra) does not cast any legal obligation on them to submit any of the list documents or called for. The contention that in absence of these documents we would not be eligible to the exemption granted under the said notification is not legally sustainable. ii) That the only re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... investment is towards the targeted expansion in compliance to office memorandum No.l(10)/2001/NER dated 07/01/2003 and notification no.50/2003 central excise dated 10/06/03. * It is surprised to note that the power requirement prior to expansion was of 26.63 MW, which after just making expansion as claimed the double requirement has been shown to 30.50 MW. Considering the claim of increase in capacity of production of Gagal Unit I, the proportionate increase in power capacity is absolutely does not commensurate with the increase in capacity of production as claimed by the appellant. * The claimed increase/expansion in capacity of production of appellant is also in respect of clinker, which is appearing in the negative list as elaborated in Annexure I of the notification. * The appellant company claims that the expansion was completed on 03/05/05 though no proof or evidence from any of the agency was furnished who might have carried out the expansion plan as stated by the appellant to suggest or establish that the commissioning of expansion of Gagal Unit I has taken place. * The appellant company merely filed huge list of plant & machinery giving details as per Annexure 1(c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etter merely mention of proposal of exemption, which was considered in its meeting held on 21/06/04. The same is extracted as under: - We have the pleasure to inform you that your proposal for substantial expansion for your existing cement plant from 9.84 LTPA to 20.00 LTPA of installed cement manufacturing capacity was considered by the State Level Single window clearance and monitoring authority in its 4 th meeting held on 21/06/2004. The expansion proposal was approved by the authority subject to the following conditions. 1. You are required to obtain environmental related and other statutory clearances as may be required for expansion of the existing cement plant 2. You are to employ at least 80% or as prescribed from time to time of the total manpower employment from amongst the bonafide Himachalles. 3. The existing unit after expansion will not be entitled for any additional/ new benefits/incentives under the existing incentive rules 1999 of the state Govt. 4. The additional power can be made available by HPSEB at 132 KV." 5. In this regard following facts are needed to be taken on record. a) The application for expansion was made through letter dated 29/10/04 f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claimed expansion of clinker also, which is appearing in Annexure I of the notification no.50/2003 dated 10/06/03. 9.13 Further to that, even in my considered opinion, the appellant company is trying to get benefit of exemption on the basis of upgradation of the plant, which has already taken place in advance by the appellant company prior to Notification as the same has been mentioned in Annual Report of year-ending 31/03/2004 of the appellant on page 15 at Serial No.6 of the report. The appellant company intend to camouflage the already existing improvement of the plant to have the benefit of exemption, though the same was not at all intended to be targeted for achievement of the purpose as intended to in office memorandum dated 07/01/2003. 9.14 Further to that, even I find that purpose of incentive of exemption of Central Excise is production operation based only as the same is available to the appellant company only after the commencement of commercial production only. Thus, the crucial point is that such incentive of exemption of Central Excise of production incentive in the sense that the appellant would be entitled to such fiscal incentive only after it goes to commercia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Accordingly, the AO's action is confirmed. Thus this ground of appeal is dismissed." 95. The Assessee has preferred appeal against the finding of Ld.CIT(A) as discussed herein above. The Ld. AR of the assessee has argued that excise duty exemption is a capital receipt not chargeable to tax. Reliance was placed on following judicial precedents: - (i) Shree Balaji Alloys J&K HC (333 ITR 335) (ii) CIT v. Chaphalkar Bros [(2018) 400 ITR 279 (SC)] (iii) DCIT v. Everest Industries Limited [ITA.No.554 of 2020 (Mumbai Tribunal)] - (iv) Greenply Industries Limited v. ACIT [ITA No. 232 of 2019 (Guwahati Tribunal)] 96. The Ld.AR of the assessee has also referred to appellate order passed by CIT(A) in assessee's own case for A.Y. 2008-09 to 2012-13 wherein identical claim was allowed. On the other hand, Ld. DR has relied upon finding of Assessing Officer and CIT(A) in year under consideration. Further she relied on the ruling of AAR New Delhi (2007) 165 taxmann.com 627 and argued that finding of the authorities needs to be confirmed. 97. Considered the rival submissions and material placed on record. On this issue, coordinate bench in the case of Ambuja Cement Limited in ITA No 2428....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... stand deleted as the related receipts are required to be treated as capital receipts in nature. The observations in the context of the first ground of appeal will apply mutatis mutandis here as well. That apart, once the Assessing Officer himself also accepts that the object and purpose of the excise exemption scheme are to promote the industry is set up, or being subjected to substantial expansion, in the backward areas, it cannot be open to the revenue even to suggest that the object and purpose of the scheme are to promote industries in backward areas. The Assessing Officer had declined the relief on a technical ground about at what stage the receipts materialize, whether postproduction or pre-production. That test, as is the settled legal position now, is no longer a relevant test. What is material is as to what is the purpose of the scheme in question, and a call about the object and purpose of the scheme is to be taken in a holistic manner and on the basis of the scheme on an overall basis. The approach adopted by the learned CIT(A) was not only legally incorrect but wholly superficial. The following observations by Hon'ble jurisdictional High Court, in the case of PCIT Vs W....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m of an exemption from payment of entertainment duty to multiplex theatre complex. The scheme was introduced to start new cinema houses in the State. The Supreme Court observed that, in such circumstance, the purpose tests for grant of subsidy should be applied. It was concluded as under:- "Applying the aforesaid test contained in both Sahney Steel as well as Ponni Sugars, we are of the view that the object, as stated in the statement of objects and reasons, of the amendment ordinance was that since the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past, the concept of a complete family entertainment centre, more popularly known as multiplex theatre complex, has emerged. Those complexes offer various entertainment facilitate for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that Government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment du....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... capital assets. We may notice that, a similar question was considered by Division Bench of Gujarat High Court in case of CIT v. Grace Paper Industries (P.) Ltd. [1990] 183 ITR 591/52 Taxman 18. The Court noted that, the subsidy was granted by the Government for development of industries in back-ward areas. It was not part of the actual cost of plant or machinery. The Court, therefore, held that it could not have been deducted towards costs of acquisition. The Court held as under:- "We have carefully considered the provisions relating to the grant of cash subsidy under the schemes framed by the Central Government and the State Government. The Central Government as well as the State Government noticed that areas specified as backward areas and tribal areas were undeveloped or under-developed. Entrepreneurs were not willing to set up industries in such undeveloped or underdeveloped areas. The industries were concentrating only in urban areas. In other words, rapid urbanization was taking place. So far as the State of Gujarat is concerned, there was rapid industrial growth in cities like Baroda, Ahmedabad and Surat resulting in strain on municipal services. Urbanization created seve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lding already owned by an industrial unit, cost of tools, jigs, dies and moulds, transport charges, insurance premium, erection cost, value of second-hand machinery purchased by an industrial unit etc. were to be taken into account while computing the value of fixed assets for the purposes of subsidy. In other words, it was the value of the fixed assets which formed the basis for computation of subsidy to be granted under the scheme. Subsidy, in our opinion, did not meet the cost of the fixed assets directly or indirectly. Under the scheme of the Central Government or the scheme of the State Government, cash subsidy was quantified by determining the same at a specified percentage of the value/ cost of the fixed assets. Therefore, as observed above, the basis adopted for determining the cash subsidy with reference to the cost or value of fixed assets was only a measure for quantifying the subsidy and it could not be said that the subsidy was given for the specific purpose of meeting any portion of the cost of the fixed assets. The subsidy was granted to compensate the entrepreneur for the hardship and inconvenience which he might encounter while setting up industries in backward are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to interfere in the matter. 44. Ground no. 3 is thus dismissed." 98. It is observed that coordinate bench has also decided similar issue in favour of Ambuja Cement Limited, holding company of assessee from A.Y. 2006-07 to 2011-12 as stated supra. It is observed that various observations made by Assessing Officer and arguments made by Ld DR are already dealt with by various decisions referred supra hence there is no reason to deviate from the finding given by Coordinate Bench referred supra. Thus, Excise duty exemption received by assessee are capital receipts both for the purpose of computing income as per normal provision of the Act as well as book profit u/s 115JB of the Act and the addition made by Assessing Officer is deleted. In the result, related grounds in Assessee's Appeal are allowed. 99. In the Ground No 2 Assessee has raised the following grievance: "2. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in directing the AO to determine the direct and indirect expenditure for disallowance u/s 14A inspite of the fact that no such expenditure was incurred for earning the exempt income." 100. The Assessing Office has dealt with this is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this proposition, reliance was placed on following decisions: (i). Godrej & Boyce Mfg. Co. Ltd. v. CIT [(2010) 328 ITR 81 (Bombay HC)] (ii). PCIT v. Reliance Natural Resoruce Ltd. [(2019) 267 Taxman 644 (Bombay HC)] 102. The Ld.AR of the Assessee has also argued that disallowance of interest is not warranted as it has sufficient interest free funds which exceeded investments made by it. The Ld.AR has drawn attention to Para No. 5.2 of CIT(A)'s wherein Assessing Officer it is stated that Assessee has own funds in form of Share Capital & reserve to the tune of Rs..2425.27 crores as against investments made in shares for Rs..476.67 crore. Reliance was mainly placed on following decisions. (i) South Indian Bank Ltd. v. CIT [(2021) 438 ITR 1 (SC)] (ii) HDFC Bank v. DCIT [(2016) 383 ITR 529 (Bombay HC)] (iii) CIT v. HDFC Bank Ltd. (366 ITR 505) (Bom.) (iv) Reliance Utilities & Power Limited (313 ITR 340) (Bom.) 103. The Ld.AR of the assessee has alternatively contended that in the case of Ambuja Cement Limited, Mumbai ITAT has considered disallowance u/s 14A @ 1% of exempt income as reasonable disallowance in ITA No 5883 & 5927 of 2012 for A.Y.2005-06. 104. The Ld. DR has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the advance given. Tribunal further noted that the Revenue does not dispute the said finding and relying on the decision of this Court in CIT v. Reliance Utilities & Power Ltd. [2009] 178 Taxman 135/313 ITR 340, affirmed the deletion made by the first appellate authority. 7. We have perused the decision of this Court in Reliance Utilities & Power Ltd. (supra) wherein it has been held that if there are funds available with the assessee, both, interest-free and overdraft and/ or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the assessee if the interest-free funds were sufficient to meet the investments. In the facts of that case, it was noted that the said presumption was established considering the finding of fact returned by the first appellate authority as affirmed by the Tribunal which is identical in the present case. 7.1 We also note that the said decision of this Court has been affirmed by the Supreme Court in CIT v. Reliance Industries Ltd. [2019] 102 taxmann.com 52/261 Taxman 165/410 ITR 466." 107. Respectfully following the binding decision of Hon'ble Supreme Court and Hon'ble J....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reproduced in CIT(A)'s order wherein Assessing Officer has computed income from capital gain u/s 50B of the Act for sale of refractory business as against claim of assessee for item wise sale in return of income. 114. In appeal Ld.CIT (A) has discussed the above issue at Para No. 13.4 to 13.19 of his order and held as under: "13.4 I have considered the AO's order as well as the appellant AR's submission. Having taken note of both, I find that the AO has given a detailed reasoning for denial of the appellant's claim. Even I find that the AO has taken note of the relevant provision of the Act i.e. Section 50B of the Income-tax Act and also the meaning defined as slump sale u/s. 2(42C) of the Income-tax Act. I find that the appellant company has more or less made similar submission before me as it was submitted before the AO. The appellant's claim is basically based upon the Valuation Report carried out by the Registered Valuer which was done on the request of the appellant company. But, I find after perusal of the sale agreement carried out between the appellant company and the purchaser i.e. M/S.ACE Refractories Ltd vide agreement dated 29.09.2005, mentioning that no cognizance w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....make further clarity of the provision for taxability, I also consider it appropriate to extract Section 50B of the Act which is as under: "50B, (1) Any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place: Provided that any profits or gains arising from the transfer under the slump sale of any capital asset being one or more undertakings owned and held by the assessee for not more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets. In relation to capital assets being an undertaking or division transferred by way of such sale, the "net worth" of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48. Every assessee, in the case of slump sale, shall fu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hdrawn any asset or liability from the business sold or the purchaser has not rejected any asset or liability comprised in the business. (iii). The material on record do not indicate item-wise value of the assets transferred. (iv). There is no material to infer severalty in the sale as in the case. I find that the appellant company's sale transaction of refractory business vide Transfer Agreement dated 29.09.2005 completely covered as "Slump Sale" as per aforesaid standard parameters. 13.7 Nevertheless the concept of slump was and continues to be well known and judicially recognized concept. The concept of "slump sale", which was hitherto judicially recognized has not been codified and inserted in the form of clause (42C) in section 2 of the I.T. Act, What was earlier judge-made law is now a codified law. In Premier Automobiles Ltd. v. ITO 264ITR193 OM.), the Hon'ble Jurisdictional High Court has held at page 223 of the said Report thus: The concept of slump sale initially was evolved under judge-made law which has subsequently been recognized by the Legislature by inserting 2(42C)....." Thus, the definition of slump sale in section 2(42C) is nothing but codification of wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isting law and thus puts the same beyond the pale of any doubt, sub-section (2) and (3) thereof merely lay down the machinery for computation of capital gains from slump sale. 13.8 Valuer has made the valuation of intangible assets based on method best known to him alone and he has made specific clarification that "it is understood that values vary based on time and purpose. It is clearly understood that he will not be asked to appear before any agency or court with respect to this opinion, which makes the authenticity of the report questionable." 13.9 Further to that, I find that the appellant has referred to Annexure-52 i.e. Off the Agenda of dated 12 th July, 2005 appearing on Page 1059 of the Paper Book of Part Relevant portion of the said Agenda also which I consider appropriate to extract is as under: "ICICI Venture through their Advisors, M/s. ICICI Securities with whom the company has been having a direct dialogue for some time now is the only party which has submitted its fined binding offer for the Refractories Business. The salient elements of their offer are as under: (i). The consideration for the business will be Rs.2570 million, i.e. the enterprise value ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id business undertaking is mentioned and it also assigned a lump sum consideration i.e. Rs.257 crores. The relevant portion of para 3,1 is also extracted herein below as under: - "3.7 In consideration of the sale and transfer of the Refractory Business, the purchaser has on the Effective Date paid to the Vendor, the purchase price being the amount of Rs.257,00,00,000 (Rupees Two Hundred and Fifty Seven Crores Only) less the amount of actual cash accruals accruing to the Refractory Business (as determined by the Closing Audit) which is exclusive of any value added stamp, transfer or registration taxes pertaining to the transfer of the Refractory Business, all of which are payable by the Purchaser (the "Purchase Price") " 13.13 Even taking note of the Business Transfer Agreement between ACC Ltd. and ACE Refractories Ltd., clearly suggests that the entire business of refractory was transferred to the Transferee. In the entire agreement, nowhere any value to any asset has been separately assigned for the entire consideration of Rs.257 crores. It has been mentioned that the transfer of business concern is stipulated and that is only the lump sum price determined between the Transf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct of beneficial provision cannot be carried to the extent of doing violence to the plain and simple language used in the enactment. Further, in the case of Seshayee Paper & Boards Ltd. vs. CTT reported in 233 ITR 167, the Hon'ble Madras High court has considered the observations of the Supreme Court in file case of K. P. Vergeese and held that when there is no absurdity and mischief in the provisions contained in the Act it is not possible for the court to interpret in a different way by substituting or rewriting the provision. Therefore, it is evident from the plain reading of the provisions of the section that the assessee does not fulfill the conditions laid down in the section itself and is not entitled to claim deduction only on that count. (2) The Supreme Court in the case of Padmasundara Rao (Deed.) & Ors. Vs. State of Tamil Nadu & Ors. reported in 257 ITR 147 has observed that it is well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Court in the case of Federation of Andhra Pradesh Chambers of Commerce & Industry & Ors. etc. Vs. State of Andhra Pradesh & Ors. etc. reported in 247 ITR 36. 13.15 Even I find that Agenda Item No.1 and Board Note wherein Transaction Structuring and Tax and Duty Implications has been assigned are made by the appellant company which is for the self-serving purposes. It has no legal binding to the assessing authority for taxing such business transaction of sale of entire business undertaking with the agreement stated therein. The appellant has made these illustrations in the Board Note and Agenda Item No.1 with the sole intention to have benefit of lesser tax liability which has no sanctity of the provisions of law. Hence, in my considered view, the AO's action was completely justified and in accordance with the provisions of law. Further to that, . I also want to make this observation that the case laws relied upon by the appellant of Artex Manufacturing Co. of the Apex Court reported in 227 ITR 260(SC) and other decisions referred in the submission in support of its contention are delivered by the Apex Court prior to the enactment of the provisions of section 50B of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed view that the AO was completely justified in his action of taxing the income arising to the appellant on account of sale of refractory business undertaking of the appellant as slump sale. Accordingly, the AO's order is confirmed. Consequently, the appellant's appeal on this ground is dismissed. 115. Ld.DR brought to our notice that this issue is discussed by the Assessing Officer in Para No. 12 of the assessment order available on page 24 to 34 of the order and in para 13 of the CIT(A)s order available on page No. 29 to 55 of the order. Both the Assessing Officer & the Ld.CIT(A) have dealt with the assessee's submissions (both factual and legal) in great detail and after analysis of the provision of section 50B brought on statute w.e.f. 01.04.2000; drawing the reference from clauses of the Business Transfer Agreement entered between the assessee and the purchaser i.e. M/S. ACE Refractories Ltd; and distinguishing the various case laws relied upon by the assessee, have come to the conclusion that the sale of the refractory business is not an itemized sale of various business assets but a slump sale u/ s. 50B of the Act.Ld.DR relied on the orders passed by the Assessing Offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llowed higher depreciation of Rs.12,50,71,313/- while computing total income. The addition made by Assessing Officer was upheld by Ld.CIT(A) for reasons stated supra. 119. The Assessee has filed appeal against above addition. During the course of appellate hearing, Ld AR has mainly referred to provisions of Section 50B of the Act and relied upon the decision of Hon'ble Supreme court in the case of CIT v. Artex Manufacturing Co 227 ITR 260 and argued that sale consideration had been arrived at by taking into consideration the value of various assets as assessed by the valuer and it is clear that the said transaction involved assigning values to the individual assets and liabilities hence such transaction of the assessee does not fall under the ambit of "Slump Sale". The Ld. AR has also referred to relevant submissions and documents filed before Assessing Officer and Ld.CIT(A) in support of his claim. On the other hand, Ld. DR has mainly relied upon finding given by lower authorities, brought to our notice various observations made by the lower authorities and contended that working of capital gain u/s 50B made by Assessing Officer needs to be upheld. 120. On the other hand, Ld. DR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account: Provided that any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth. Explanation 2.--For computing the net worth, the aggregate value of total assets shall be,-- (a) in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (i) of sub- clause (c) of clause (6) of section 43; (b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and (c) in the case of other assets, the book value of such assets." Further, Section 2 (42C) of the Act defines "slump sale" means the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to the individual assets and liabilities in such transfer. Section 50B was introduced by virtue of the Finance Act, 1999 w.e.f. 1 st April, 2000 to provide for special provisions fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....preme Court further held that if the amount of surplus exceeded the difference between the written down value and the actual cost, then the surplus amount to the extent of such excess will have to be treated as capital gains for the purpose of taxation. In the second case, in the agreement for sale of the entire business as a going concern, there was nothing to indicate the price attributable to assets like machinery, plant or building out of the sale consideration amount. Therefore, the Supreme Court held that provisions of section 41(2) were not applicable. It is for this reason that in the definition of 'slump sale' in the proposed new clause (42C), it has been provided that the sale should be for a lump sum consideration without values being assigned to individual assets and liabilities. 124. It is relevant to refer to decision of the Supreme Court in the cases of CIT v. Artex Mfg. Co. [1997] 227 ITR 260 wherein the gains were held to be taxable: "Section 41(2), read with section 45, of the Income-tax Act, 1961 - Balancing charge - Assessment year 1967-68 - Assessee-firm sold its business as a going concern - Plant, machinery and dead-stocks were revalued by valuers and sale c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of individual assets and value of assets were determined at Rs.249.42 crore (nearly Rs. 250 crore). It is undisputed fact that in the board note, it is clearly mentioned that transaction would be item wise sale. The assessee has brought on record that sale of refractory business was preceded by bidding and assessee had declared a floor price of Rs..250 crore for the bidding purpose and such fact is mentioned in Board note and such price was based on values assigned to various assets as mentioned in valuation report. The lower Authorities have never doubted the genuineness of such valuation report determining value of each assets/liabilities. It is found that bind letter, the purchaser has mentioned that the transaction may be structured as a slump sale or slump sale with an item wise category wise break up. When entire transaction was approved in Shareholder meeting, it was never stated that assessee is selling the undertaking on "Slump Sale" basis which also supports the contention of assessee that provisions of Section 50B is not applicable to it. It is observed that both assessing officer and CIT(A) has applied provisions of Section 50B by simply relying upon relevant para of BT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed does not only include immovable properties but movable properties as well as other intangible assets and agreed consideration of all assets were at Rs..257 crore. It was submitted that this para was inserted for very specific purpose to avoid any dispute between seller and purchaser regarding agreed consideration of transfer of assets of undertaking. As held herein above, both buyer and seller were very well aware that transfer of undertaking was item wise sale and not on lumpsum basis. In the present case, assessee has valued each assets separately in valuation report and same was already on record of AO along with the fact that bid letter as well as Board note clearly states that transaction would be item wise sale and such facts cannot be ignored. Hon'ble Madras High court in the case of CIT v. Shiva Distilleries Ltd [2020] 116 taxmann.com 929 has held that "Where transfer price of undertaking was based on individual assets and liabilities, said sale would not qualify as 'Slump Sale' as per section 2(42C)". In the case of Sanmar Speciality Chemicals Limited [2020] 118 taxmann.com 78, similar view is rendered by Hon'ble Madras High court. 129. So far as observation of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....luding the statutory liabilities till the date of transfer. Therefore, it could not be said that the transfer was a slump sale only for the reason that the tea estate was transferred to the buyer as a 'going concern". It is observed that the revenue carried the matter by way of an appeal before Hon'ble Calcutta High Court in ITA No. 203 of 2016, which was dismissed by judgment and order dated 29th June, 2018. Similar view is given by Hon'ble Cochin ITAT in the case of Harrisons Malayalam Ltd [2009] 32 SOT 497. 131. So far as reliance placed by Ld. DR on the decision of Hon'ble Kerala High court in the case of CIT v. Accelerated Freeze Drying Co. Ltd [198 Taxman 18], wherein assessee-company, engaged in seafood processing and export of products of its own factories, transferred one of its industrial units as a going concern during the relevant assessment year for certain consideration. The consideration agreed was the aggregate value for the land, building, machinery and all equipment's with liabilities specifically mentioned in the agreement entered into between the parties. The sale was in two parts; one sale deed executed and registered covered land and building, and for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollowing grievance: "8. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals)was not justified and grossly erred in treating the ground claiming deduction u/s 80Ia in respect of Unit-Chanda, Tikkaria, Madukarai and Chaibasaas infructuous." 134. During the course of appellate proceedings, Ld AR has not pressed this ground of appeal hence same is dismissed as not pressed. 135. In the Ground No 9 Assessee has raised the following grievance: "9. That on the facts and in the circumstances of the case, necessary direction may please be given to the A.O. to allow deduction in respect of Education Cess on Income Tax, Fringe Benefit Tax and Dividend Distribution tax in computing total income." 136. During the course of appellate proceedings, Ld.AR has not pressed this ground of appeal hence same is dismissed as not pressed. 137. In the Ground No 10 and 11 Assessee has raised the following grievance: - "10. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified and grossly erred in confirming the denial of claim of exclusion of profit on sale of fixed assets of Rs. 1,83,49,29,359/- in computing Book Profit u/s 115JB....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the relevant previous year the Assessee had credited to the Profit & Loss Account net profits on sale of fixed assets amounting to INR 10,98,70,597/-. In the original return of income, while computing book profit under Section 115JB of the Act, the Assessee omitted to exclude aforesaid profit on sale of fixed assets. However, in the revised return, while computing book profits under Section 115JB of the Act the same were excluded. In response to query raised during the course of assessment proceedings, the Assessee, vide letter dated 16.11.2006, filed detailed submission substantiating the claim. However, the Assessing Officer rejected the claim of the Assessee by placing reliance on the judgment of Hon'ble Bombay High Court in the case of CIT vs. Veekay Lal Investments Co. Pvt. Ltd. : 249 ITR 597 (Bom) 19.2. Being aggrieved, the Assessee filed before CIT(A) on this issue. 19.4. We note that in the immediately preceding Assessment Year 2003-04, the Tribunal has decided this issue in favour of the Revenue, vide common order 13.03.2019 passed in ITA No. 4242/MUM/2007 and ITA No. 4988/MUM/2007, holding as under: "52. Under this issue the revenue has challenged the deletion o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vision viz., section 112 of the Act, therefore, the provisions of section 115JB of the Act, which is a general provision cannot be made applicable to the case of the assessee. For yet another reason, the assessee has to be given the benefit of indexed cost of acquisition as considering the profits on sale of land without giving the benefit of indexed cost of acquisition results in taxing the income other than actual/real income. In other words, a mere book keeping entry cannot be treated as income. ..................." 143. On perusal of the aforesaid decision, it is evident that the assessee will be entitled to indexed cost of acquisition while computing capital gains u/s 115JB of the IT Act. It is also to be noted that in the immediately preceding year i.e. AY 2004-05, Coordinate bench has held that long term capital gains credited in the books of accounts is taxable to which even the Ld. AR fairly conceded. However, it was only during the current year as well as AY 2005-06 that the Ld. AR of the assessee referred to the decision of Hon'ble Karnataka High Court as relied and reproduced supra. Extensively relying on it he claimed that the indexed cost of acquisition does not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....court referred herein below: (i) Wipro Limited v. DCIT [IT(TP)A No. 2556 of 2019 (Bangalore Tribunal)] (ii) Reliance Infrastructure Ltd. V. CIT [ (2016) 390 ITR 271 (Bom HC)] (iii) Wipro Ltd. v. DCIT (382 ITR 179 (Karnataka) (iv) Bank of India v. ACIT [ITA No.869 of 2018 dated March 04, 2021 (Mumbai Tribunal)] 147. On the other hand, Ld DR has argued that Assessing Officer was correct in making addition u/s 115JB of the Act and in support of her claim, she relied upon decision of AAR v. New Delhi Bank of India [165 Taxmann.com 627]. 148. Considered the rival submissions and material placed on record. It is observed that identical facts have been discussed by Hon'ble Bombay High court in the case of Reliance Infrastructure Limited v. CIT [76 Taxmann.com 257 (2016)]and held as under: II. Section 40(a)(ii) of the Income-tax Act, 1961 - Business disallowance - Taxes (Foreign tax) - Assessment year 1983-84 - Indian assessee executed projects in Saudi Arabia and paid taxes there - Whether since foreign tax was paid on a part of global income which had accrued or arisen in India, to extent of said tax, benefit of double taxation relief under section 91 would not be availab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed includes any sum eligible for relief of tax under Section 90A.]" (i) We have considered the rival submissions. So far as the question relating to the Tribunal not following its order in the case of the applicant itself for A.Y. 1979-80, we find that there is a justification for the same. This is so as the decision of this Court in S. Inder Singh Gill (supra) was noted by the Tribunal on an identical issue while passing the order for the subject assessment year. Thus, the Tribunal had not erred in not following its order for A.Y. 1979-80. In fact, the decisions of this Court in South East Asia Shipping Co. (supra) and Tata Sons Ltd. (supra), which are being relied upon in preference to Inder Singh Gill (supra) cannot be accepted as both the orders being relied upon by the applicant was rendered not at the final hearing but on applications under Section 256(2) of the Act and at the stage of admission under Section 260A of the Act. This unlike the judgment rendered in a Reference by this Court in S. Inder Singh Gill (supra). Moreover, the decision in South East Asia Shipping Co. (supra) is not available in its entirety. Therefore, it would not be safe to rely upon it as all fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nswered the question posed to it in S. Inder Singh Gill (supra) in favour of the Revenue. (l) We would have answered the question posed for our consideration by following the decision of this Court in S. Inder Singh Gill (supra). However, we notice that the decision of this Court in S. Inder Singh Gill (supra) was rendered under the Indian Income Tax Act, 1922 and not under the Act. We further note that just as Section 40(a)(ii) of the Act does not allow deduction on tax paid on profit and/or gain of business. The Indian Income Tax Act, 1922 Act also contains a similar provision in Section 10(4) thereof. However, the Indian Income Tax Act, 1922 contains no definition of "tax" as provided in Section 2(43) of the Act. Consequently, the tax paid on income/profits and gains of business/profession anywhere in the world would not be allowed as deduction for determining the profits/gains of the business under Section 10(4) of the Indian Income Tax Act, 1922. Therefore, on the state of the statutory provisions as found in the Indian Income Tax Act, 1922 the decision of this Court in S. Inder Singh Gill (supra) would be unexceptionable. However, the ratio of the aforesaid decision in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, would require in the context thereof that the definition of the word "tax" under the Act to mean also the tax which is eligible to the benefit of Sections 90 and 91 of the Act. However, this departure from the meaning of the word "tax" as defined in the Act is only restricted to the above and gives no license to widen the meaning of the word "tax" as defined in the Act to include all taxes on income/profits paid abroad. (o) Therefore, on the Explanation being inserted in Section 40(a)(ii) of the Act, the tax paid in Saudi Arabia on income which has accrued and/or arisen in India is not eligible to deduction under Section 91 of the Act. Therefore, not hit by Section 40(a)(ii) of the Act. Section 91 of the Act, itself excludes income which is deemed to accrue or arise in India. Thus, the benefit of the Explanation would now be available and on application of real income theory, the quantum of tax paid in Saudi Arabia, attributable to income arising or accruing in India would be reduced for the purposes of computing the income on which tax is payable in India. (p) It is not disputed before us that some part of the income on which the tax has been paid abroad is on the income....
X X X X Extracts X X X X
X X X X Extracts X X X X
....SEE APPEAL) 151. We now take up the appeal filed by the assessee in ITA No 417/Mum/2014. 152. In the Ground No.1, Assessee has raised the following grievance: "1(a) That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) [here-in-after referred to as Ld. CIT (Appels)] erred in computing direct and indirect expenditure for disallowance u/s.14A inspite of the fact that no such expenditure was incurred for earning the exempt income. 1(b) That on the facts and in the circumstances of the case, and without prejudice to ground no.1(a), the Ld. CIT (A) erred in applying ratio of investment and total funds to the total interest expense considering the fact that interest expenses were incurred on borrowing used specific purposes. 1(c). That on the facts and in the circumstances of the case, and without prejudice to ground no.1(a), the Ld. CIT (A) erred in considering ad-hoc amount of Rs.30,00,000/- as expenses of treasure Department for the purpose of computing disallowance u/s.14A. 153. It is observed that identical issue is already decided partly in favour of assessee while dealing with Ground No 2 of Assessee appeal in ITA No 5655....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed ground that outstanding BIS Marking fees of Rs..477,161/-, which was disallowed u/s 43B in A.Y.2005-06, it was prayed that this payment was made subsequently in the current assessment year and the assessee failed to claim the same in the return of Income. It was submitted that the assessee is entitled to raise the genuine and legal issue before the appellate authorities in additional ground by relying on the decision of Hon'ble Bombay High Court in the case of CIT v. Pruthvi Brokers and Shareholders P Ltd [349 ITR 336]. On the other hand, Ld DR objected for the above proposition and the assessee could claim the same in the return of income and also not claimed by filing the revised return of income. 3. Considered the rival submissions and material placed on record. It was submitted that the assessee made the payment to BIS Marking in the current assessment year and the same is eligible to claim as business expenditure. After considering the submissions, we are inclined to remit this issue back to the file of Assessing Officer to verify the claim of the assessee and allow the same on the payment basis as per law. Therefore, this additional ground raised by the assessee is allowe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ribunal order. As there is mistake with respect to reference and extraction, we modify Para No. 113 & 114 of the Tribunal order in A.Y.2010-11 as under: - "113. Similar issue was considered by us in the Assessee's Appeal in Ground No 1 in AY 2008-09 and held as under: - "10. Considered the rival submissions and material placed on record. So far as proportionate interest disallowance u/s 14A is concerned, it is observed that Assessee has sufficient own funds in the form of share capital and reserves and surplus in comparison with investment in shares made by it. On this issue, Hon'ble Supreme Court in the case of South Indian Bank Ltd [2021] 130 taxmann.com 178 has held as under: "Section 14A of the Income-tax Act, 1961 - Expenditure incurred in relation to exempt income not includible in total income (General) - Assesseescheduled banks earned income from investments made in tax-free securities - Assessing Officer made proportionate disallowance of interest attributable to funds invested to earn tax free income under section 14A on grounds that separate accounts were not maintained for investment in tax-free securities - Whether since interest free own funds available wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....So far as disallowance of other administrative expenditure is considered, it is observed that Hon'ble Delhi ITAT in the case of Vireet Investment Pvt. Ltd. [165 ITD 27] has held as under: "Section 14A of the Income-tax Act, 1961 read with rule 8D of the Incometax Rules, 1962 - Expenditure incurred in relation to exempt income not includible in total income - Assessment year 2008-09 - Whether only those investments are to be considered for computing average value of investment which yielded exempt income during year - Held, yes [Para 11.16][Matter remanded]" 14. The above referred decision has been followed by co-ordinate Bench in the case of DCIT v. Shree Global Tradef in Ltd. in ITA No. 1374/Mum/2022 dated 22 nd December, 2022 has held as under: "11. Having heard the rival submissions and perused the materials available on record. It is observed that the assessee has made a suo moto disallowance of Rs.1,263/- for which the assessee contends that the A.O. ought not to have applied Rule 8D on the ground that suo moto disallowance has been made by the assessee. The assessee further contends that without prejudice, the disallowance should be restricted only to the investm....