AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 1438
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Assessing Officer was as per the formula given in Rule-8D for deriving proportionate interest disallowance. In the rule there is nowhere mentioned to reduce the interest portion which is related to business purposes. In Rule - 8D the formula is given for deriving proportionate interest disallowance and the AO had already had made computation of disallowance u/s. 14A r.w. rule 8D accordingly. 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to allow the Guarantee fee after verification disregarding the applicable statutory provisions contained under S 37 of the I.T. Act which do not allow any expenditure of capital nature." 3. "On the facts and in the circumstances of the case and in law, without following the ratio taken earlier in the case of M/s. Dakshin Gujrat Vij Co. Ltd. and other subsidiary companies of the assessee, the Id. CIT(A) erred in deleting the addition of Rs. 3750 lacs being 15% of capital grant received by the assessee which was neither reduced from the cost of capital assets nor offered portion of it as revenue receipts as treatments of grants/ subsidies given by the subsidiary com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f capital grant, disallowance of 14A claim of interest while computing book profit under Section 115JB of the Act. However, the Ld. CIT(A) granted relief partly. Hence, the appeal preferred by the Revenue. 4. Ground No.1 relates to disallowance under Section 14A of the Act. 5. At the very threshold of the matter, Ld. Counsel appearing for the assessee and the Representative of the Revenue contended that the issue is directly covered in assessee's own case for A.Y. 2015-16 whereby and whereunder the issue has been remitted to the file of the Ld. AO for fresh adjudication upon examination of the facts and figures and to calculate the disallowance to be made under Section 14A of the Act. Copy of order dated 14.12.2022 passed by the Co-ordinate Bench has been duly submitted before us by the Ld. AR. On perusal of which, it appears that the contention made by the assessee is acceptable. The Co-ordinate Bench in ITA No.406/Ahd/2019 for A.Y. 2015-16 on identical issue passed order in the following manner: "3.2. The assessing officer has made an addition in the book profit by adding the amount of disallowance made u/s. 14A while calculating the taxable profit u/s. 115JB of the Act. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing of interest under section 234B, 234C and 234D of the Income Tax Act, 1961. 4.1. Regarding grounds no. 1.0 to 1.2 namely disallowance u/s. 14A. Both the parties submitted that this issue is squarely covered in assessee's own case by Coordinate Bench of this Tribunal in ITA Nos. 11 & 37/Ahd/2013 dated 22.10.2020 wherein the Hon'ble ITAT remanded the matter back to the Assessing Officer for fresh adjudication by directing as follows: 10. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, there is no ambiguity that the Learned CIT (A) has decided the issue on hand after relying on the order of his predecessor for the Assessment Year 2008-09 which was subsequently set aside by the ITAT for fresh adjudication. The relevant finding of the ITAT reads as under: "8. On the other hand, ld. DR supported the orders of lower authorities. 9. We have heard the rival contentions and perused the material on record. In these grounds raised by the assessee and the Revenue challenge the action of ld. CIT(A). We observe that an addition of Rs.152.46 crores was sustained, made by ld. Assessing Officer which....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... required to adduce evidence that all the borrowings were used for the purpose of the business and the assessee's own surplus funds were invested in the shares. Learned DR has also informed that in A.Y. 2007-08, the addition of similar nature was upheld by learned CIT(A). He has thus pleaded that the issue being legal in nature which has emerged from the facts already on record, therefore, the additional ground deserves to be admitted for adjudication. 4. After hearing both the sides, the additional ground of the Revenue Department is hereby admitted for adjudication. At the outset, it is worth to mention that the impugned addition of Rs.18796.82 lacs was made by the AO without having any discussion in respect of the applicability of Section 14A of the IT Act. Likewise, learned CIT(A) has also not discussed the applicability of the provisions of Section 14A of IT Act, however, after considering the merits of the case, deleted the addition. With this clarification, we have examined the facts and the issue as emerged from the corresponding assessment order passed u/s. 143(3), dated 26.12.2008. It was noted by the AO that the assessee had claimed a huge amount of interest expen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Rs.18796.82 lacs." 5. Being aggrieved the matter was carried before the First Appellate Authority who has decided the issue in assessee's favour in the following manner: "Thus, the only test to be applied is that of "commercial expediency". In the instant case, it is seen that no investment was made by the assessee company by using borrowed funds.The entire investment, except minor investment of Rs.11.25 lacs was inherited in the demerger exercise. The investment in shares was due to the restructuring carried out at the behest of GOG. The investments were in the form of shares of subsidiary companies as pan of the financial restructuring plan approved by the Government of Gujarat which was integral to the demerger. This was clearly commercially expedient for the appellant company. The business itself was viable only under the plan of restructuring, which required the company to have crossholdings in the unbundled companies of GEB. In fact, the appellant became the holding company of the generating and transmission companies. Looking to the facts and circumstances of the case, I am of the opinion that there was no diversion of borrowed funds for nonbusiness purposes. Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the balance sheet of the demerged company and the position of the accounts of the undertaking which is demerged with the resulting company. The AO has to examine the liabilities related to the said undertaking whether being transferred under the scheme of arrangement which were in existence immediately before the demerger. The AO has to examine the value of the property in the books of accounts immediately before the demerger which was transferred. The AO has also to examine the financial position of the "resulting company", as defined u/s. 2(41A) of IT Act. In general, an undertaking of the demerged company is transferred in a demerger scheme and as a result a resulting company comes into existence. The resulting company in consideration of such transfer of an undertaking of the demergerd company issues shares to the share holders of the demerged company. Therefore, the responsibility of the "resulting company" was also required to be ascertained by the AO. This is the first aspect, which was not examined by the AO and the order of the Revenue Authorities are silent on this subject. 6.3 Next question is about the huge amount of interest expenditure claimed by the assessee. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en the investment in shares and total assets including investment in shares. Apart from this, there is nothing in the assessment order which can establish the nexus of utilization of borrowed interest-bearing funds diverted towards investment in debentures. But there are other discussions in this very assessment order wherein the provisions of section 36(l)(iii) of the Act have also been touched upon. The Assessing Officer was expected to correlate the said discussion with the exempted dividend income u/s. 10(33) of the Act. As far as the law pronounced in this regard is concerned, first of all, we have to follow a latest decision of Hon'ble Bombay High Court pronounced in the case of Godrej & Boyce Mfg. Co. Ltd. Mumbai vs. Dy. CIT in Income tax Appeal No.626 of 2010 and Writ Petition No.758 of 2010 order dated 12/08/2010, { now reported as 328 ITR 81(Bom) } wherein the Hon'ble High Court has upheld the constitutional validity of section 14A of the I.T. Act, 1961 and held that the Assessing Officer should determine as to whether the assessee has incurred any expenditure (direct or indirect) in relation to dividend income and/or income from mutual fund which do not form part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....no such exercise has been carried out and, therefore, the Tribunal was justified in remanding the matter. b) Section 14A was introduced by the Finance Act 2001 with retrospective effect from 1 April 1962. However, in view of the proviso to that Section, the disallowance thereunder could be effectively made from assessment year 2001-2002 onwards. The fact that the Tribunal failed to consider the applicability of Section 14A in its proper perspective, for assessment year 2001 -2002 would not bar the Tribunal from considering disallowance under Section 14A in assessment year 2002- 2003. c) The decisions reported in Sridev Enterprises (supra), Munjal Sales Corporation (supra) and Radhasoami Satsang (supra) holding that there must be consistency and definiteness in the approach of the revenue would not apply to the facts of the present case, because of the material change introduced by Section 14A by way of statutory disallowance in certain cases. There, the decisions of the Tribunal in the earlier years would have no relevance in considering disallowance in assessment year 2002-2003 in the light of Section 14A of the Act. 73. For the reasons which we have indicated, we have co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall apply with effect from Assessment Year 2008-09; (vi) Even prior to Assessment Year 2008-09, when Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub section (1) of Section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record; vii) The proceedings for Assessment year 2002-03 shall stand remanded back to the Assessing Officer. The Assessing Officer shall determine as to whether the assessee has incurred any expenditure (direct or indirect) in relation to dividend income / income from mutual funds which does not form part of the total income as contemplated under Section 14A. The Assessing Officer can adopt a reasonable basis for effecting the apportionment. While making that determination, the Assessing Officer shall provide a reasonable opportunity to the assessee of producing its accou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001.' 2. New Rule 8D : 2.1 In exercise of the powers given in S. 14A(2) C.B.D.T. has issued a Notification No. S.O. 547(E) on 24-3-2008 (299 ITR (ST) 88). This notification amends the Income-tax Rules by insertion of a new Rule 8D providing for a "Method for determining amount of expenditure in relation to income not includible in total income". Reading this Rule it is evident that the Rule provides for disallowance of not only direct expenditure incurred for earning the exempt income but also for disallowance of proportionate indirect expenditure. This is clearly contrary to the main objective with which S. 14A was enacted. 2.2 Broadly stated, the new Rule 8D provides as under : (i) The method prescribed in the Rule is to be applied only if the AO is not satisfied with : (a) The correctness of the claim of expenditure incurred for earning the exempt income made by the assessee or (b) The claim made by the assessee that no expenditure has been incurred for earning exempt income. (ii) The method prescribed in the Rule states....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same were partly received from State Government as equity and remaining from net profit earned. (iv) Interest expenditure of Rs.131.32 crores represents mostly the interest paid on bill discounting of IPPs and working capital loan from banks which are specifically meant for the business purpose; and (v) Total exempt income earned by assessee during the year stood at Rs.249 crores. 13. We observe that ld. Assessing Officer has made disallowance u/s 14A of the Act without examining the facts referred above which were very crucial to reach at the final disallowance u/s 14A of the Act. There are series of judgments of the co-ordinate benches that the disallowance u/s 14A of the Act should not exceed the exempt income earned during the year and also decisions wherein the disallowance u/s 14A of the Act on account of interest expenditure are held to be incorrect if the assessee has sufficient equity and general reserve to cover the investments. 14. We are, therefore, of the view that applying the decision of the coordinate bench in assessee's own case in ITA No.1874 & 1821/Ahd/2010 for Asst. Year 2007-08 is dated 20.6.2014 the matter is set aside to the file of Assessing Off....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not required to be added back to the book profit and relief accordingly was granted. However, the Ld. CIT(A) issued direction to the Ld. AO to include the dividend income while computing book profit. We, therefore, do not find any reason to deviate from the stand taken by the Coordinate Bench which has upheld such direction passed by the Ld. CIT(A). We, therefore, respectfully relying upon the same, do not find any reason to interfere with such order passed by the Ld. CIT(A). This ground of appeal appears to have been no merit and thus dismissed. 7. Ground No.2 relates to disallowance of Rs.80,34,000/- being guarantee fees paid to Government of Gujarat. 8. The guarantee fee paid to the Government of Gujarat relates to capital work-in-progress needs to be capitalized. Accordingly, it was submitted by the Ld. Counsel that certificate of utilization was furnished before the Ld. CIT(A) contending that the loans on which guarantee fee was paid were utilized for construction of power plant and there was no work-in-progress in respect of such loans borrowed during the F.Y. 2014-15. It was further submitted that identical issue was considered by the Tribunal in assessee's own case for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) decided these issues in paras- 5.2 & 5.3 and 6.2 respectively by observing as under:- "5.2. I have considered the submissions of the ld.AR and the facts of the case. The issue relating to whether an item of expenditure lies in the capital or the revenue field has exercised the courts in numerous cases. From an analysis of such cases a few guiding principles/tests can be identified. One of the important tests for categorizing any expenditure as capital in nature is whether the laying out of the impugned expenditure results in the acquisition of creation of any new asset. Where no such asset is created, it would be indicative of an expenditure which was not capital in nature. Another test relates to the principle of "enduring benefit". "Enduring benefit" may be in the form of long lasting use of an asset or the acquisition of a right to exploit certain commercial processes, etc. In the instant case, the assessee did not acquire any right to exploit a commercial technology or process, and neither was the benefit "enduring", since the payment of guarantee commi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n making the disallowance of Rs.45,24,582/-, which is directed to be deleted." 6.1 The ld.CIT(A) has followed the decision of the Tribunal passed in ITA No.738/Ahd/2009 for AY 2006-07 in the case of Himalaya Machinery Pvt. Ltd., dated 5.6.2009 and in the case of Shri Rama Multi Tech vs. ACIT reported at 92 TTJ 568. 6.2. The ld.CIT-DR could not distinguish the facts of the case, therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, these two grounds raised in the Revenue's appeal are rejected." 36. DR could not point out any good reason as to why the above quoted order of the Tribunal should not be followed for the year under consideration. In the absence of distinguishing features being pointed out by the DR, and the facts being identical, respectfully following the above quoted decision of the Tribunal, we confirm the order of the CIT(A), and dismiss this ground of appeal of the Revenue. 40. We are of the view that the issue raised in this ground is squarely covered by the decision of co-ordinate bench referred above in the case of Gujarat Energy Transmission Corpn. (supra) and respectfully following the same,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r that assessment year. Therefore, there was no dispute for the ITAT for the Assessment Year 2008-09 for the direction issued by the Learned CIT(A). Accordingly, it cannot be inferred that the order of the Learned CIT(A) for the Assessment Year 2008-09 has merged with the order of the Learned ITAT insofar the direction issued by the Learned CIT(A) to verify the claim of the assessee for the guarantee fees whether such fees relates to the capital work in progress. Accordingly, it cannot be said that the issue raised by the assessee is a covered issue by the order of the ITAT in the own case of the assessee for the Assessment Year 2008-09 as contended by the ld. AR for the assessee. In view of the above and after considering the facts in totality, the grounds of appeal of the assessee and the Revenue are dismissed. 4.4. Though the Ld. CIT(A) directed to verify the certificate filed during the appellate proceedings that the loans on which guarantee fees was paid were utilized for construction of power plants at that time and there was no capital work-in-progress in respect of such loans during the Financial Year 2014-15. Both the assessee counsel as well as the Ld. D.R. could not p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... DR with all his fairness. 14. We have perused the order passed by the Co-ordinate Bench in ITA Nos.281 & 282/Ahd/2018 & 323 & 324/Ahd/2018 in assessee's own case, wherein issue has been discussed and decided in favour of the assessee upon deleting the addition made by the Ld. AO being addition of 15% of capital grant. The relevant portion whereof is as follows: "14. Ground No. 3 deleting the addition of Rs. 37.50 crores being 15% of capital grant received by the assessee. It is submitted by the Ld. Counsel that the assessee has not received any fresh grant from Government of Gujarat during the Financial Year, hence the assessee has not offered any income on account of receipt of grant in the Profit and Loss Account. However the Ld. A.O. without appreciating the vital fact of non-receipt of grant made an addition on the wrong premises that the assessee should have offered 15% out of total grant of 250 crores which works out to Rs. 37.50 crores and added to the total income of the assessee. 14.1. Ld. Counsel further submitted that this issue is now in settled in favour of the assessee by the Hon'ble High Court of Gujarat in assessee's own case for A.Y. 2010-11 filed by the Revenu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... aforesaid financial years were allocated among the four distribution companies for implementation of the aforesaid scheme of the State Government. In view of the above facts and circumstances, we do not find any infirmity with the decision of the Ld. Therefore, the aforesaid grants received cannot be treated as income of the assessee company. Accordingly, this ground of the appeal is dismissed." 12 We are in agreement with the concurrent finding of fact arrived at by the CIT(A) as well as the Tribunal as the assessee did not acquire any fixed assets on which depreciation has been claimed, and therefore, grants cannot be reduced from cost of fixed asset of the assessee. Therefore, appeal stands dismissed qua question No.2[c] proposed by the Revenue. 14.2. Respectfully following the Jurisdictional High Court judgment, we hereby delete the addition made by the Assessing Officer and the Grounds raised by the Revenue is hereby rejected." 15. Considering the above order passed by the Co-ordinate Bench, we do not find any reason to interfere with the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO. This ground of appeal found to be devoid of any merit an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of appellate proceedings, the Revenue has failed to controvert the aforesaid contention and the findings of the ld. CIT(A),therefore after considering the material fact that interest earned on loan and advances from deposit placed with Mega Power Project toward sits sharing of power and interest of UL pool account received from M/s. Power Grid Corporation India Ltd were directly related to the business of the assessee ,therefore, this ground of appeal of the Revenue stands dismissed." 15 In view of above findings of acts arrived at by the Tribunal that interest earned by the assessee was directly related to the business of the assessee, no question of law much less substantial question of law arises. Therefore, appeal stands dismissed qua question No.2[d]. 15.1. Respectfully following the Jurisdictional High Court judgment which has confirmed Tribunal's decision in assessee's own case, we hereby held that the interest income and miscellaneous income earned by the assessee were directly related to the business of the assessee and assessable as "business income" only and not as "income from other sources". Thus the Ground no. 4 raised by the Revenue is hereby rejected." 20. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bic Ltd (Tax Appeal No.1249 of 2014) and the provisions of sub - sections (2) and (3) of Section 14A cannot be made applicable to clause (f) of Explanation to Section 115JB of the Act, 1961. 6. The Revenue, therefore, went in appeal before the Tribunal and the Tribunal relying upon the decision of the Special Bench of the ITAT in the case of ACIT vs. Vineet Investment vide 165 ITD 27 (Delhi) and the decision in Alembic Ltd upheld the order passed by the CIT(A). 7. The issue as to whether the addition made under Section 14A of the Act, 1961 while computing book profit under Section 115JB of the Act, 1961 is no more res integra. Accordingly, this Court in the case of Principal Commissioner of Income Tax vs. Gujarat Fluorochemicals Ltd [Tax Appeal No.28 of 2019 decided on 17th June 2019] has dismissed the appeal filed by the Revenue by holding as under: "22. The third question proposed by the revenue is in context with the adjustment made on account of the disallowance under section 14A in computing the book profit. In this context, the findings recorded by the ITAT are as follows: 17. Next common issue involved in both years is, whether the amount disallowed under section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by invoking the provisions of Section 14A of the Act read with the Rule 8D of Income Tax Rules, 1962 for computing book profit u/s. 115JB(2) of the Act read with clause (f) to Explanation 1 to clause 115JB(2) of the Act. We, therefore, set aside the orders of the CIT(A) and restore the orders of the AO. We order accordingly. In the case of CIT (Central-II) Vs. Goetze (India) Limited, the Hon'ble Delhi High Court has in ITA No.1179/2010 vide order dated 09.12.2013, held that the disallowance u/s. 14A is to be taken into consideration for the purposes of calculating book profits u/s. 115JB. The relevant paras of the judgment are reproduced below. "36. By order dated 16th May, 2012, the following substantial questions of law were framed in the present appeals:" (i) Whether the Income Tax Appellate Tribunal was right in holding that while computing book profit under Section 115JA (sic. Section 115JB) of the Income Tax Act, 1961, no disallowance under Section 14A was required to be made? Learned counsel for the respondents-assessee, during the course of hearing, has fairly conceded that the first question has to be answered in favour of the Revenue and against the assessee in view....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Vegetable Products Ltd., 88 ITR 192 (SC) and other decisions has held that it is incumbent upon it follow the decision of Hon'ble Delhi High Court in the case of Bhushan Steel. In this case, Hon'ble Delhi High Court has held as under: "However, Ld. Senior Counsel has relied on the decision in the case of Bhushan Steel Ltd. (supra) wherein it has been held as under: "ITA 593/2015 PR. CIT .....Appellant Through: Mr. N.P. Sahni, Senior Standing Counsel with Mr. Nitin Gulati, Advocate Versus BHUSHAN STEEL LTD. ...Respondent Through: Ms. Kavita Jha, Advocate with Ms. Roopali Gupta, Advocate. ORDER 29.09.2015 ** ** ** ** ** ** 7. Question No.6 concerns deletion of addition of Rs.89,00,000 made by the AO for computation of the income for the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the profit shown in the 'Profit and Loss Account'. When the matter travelled to the CIT (Appeals), since it deleted the addition of Rs.1,14,43,040/while deciding the question No.1, it consequently deleted such addition under Section 115JB of the Act on the ground that this would not serve any purpose. The Tribunal decided the said issue as follows: "94. We have considered the rival submissions and we find that similar issue was raised by Revenue as per ground No.3 above in respect of regular assessment of income and while deciding that ground, we have already upheld that disallowance of Rs.5 lakh in respect of administrative expenses will meet the ends of justice and no disallowance is called for in respect of interest expenditure. Hence, for the purpose of computing book profit u/s. 115JB of the Act also, we hold accordingly and confirm the addition of Rs.5 lakh. This ground of Revenue's appeal is partly allowed." As rightly held by both, the CIT (Appeals) and the Tribunal, this issue has a direct correlation with the first question. It was argued by the Revenue that while computing the book profit under Section 115JB of the Act, the disallowance of interest expendi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....24. Respectfully following the above decision, we hold that no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. We allow this ground of appeal in both the years and delete the additions." 23. We take notice of the fact that in context with the third proposed question, the ITAT placed reliance on the following decisions: (1) CIT Vs. Alembic Ltd. (Tax Appeal No.1249/2014) (2) CITI Vs. Gujarat State Fertilizers & Chemicals Ltd. (2013) 358 ITR 323 24. The issue is squarely covered and in our opinion, no error could be said to have been committed by the ITAT in taking the view that no addition in the book profit can be made on the basis of the calculations worked out under section 14A of the Act." 8. In view of above, this Tax Appeal stands dismissed so far as question No.2[b] is concerned." 16.1. Respectfully following the Jurisdictional High Court judgment, the ground raised by the Revenue to include the disallowance u/s. 14A for the purpose of computation of book profit u/s. 115JB of the Act is hereby deleted and the Ground no. 5 raised by the Revenue is hereby dismissed." 25. In view of the above, we ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The same is visible from the copy of computation of income placed as Annexure-III. Therefore, the disallowance is not sustainable and the same stands deles. Accordingly, Ground No 4 allowed." 29. It appears that the appellant had accounted for net prior period expenses of the impugned amount which is visible from the copy of computation of income placed at Annexure-III before the Ld. CIT(A). Considering which, the disallowance found to be not sustainable, which according to us, is just and proper so as to warrant interference. Thus, this ground of appeal is dismissed. 30. Deleting the action on account of capital grants amounting to Rs.37,50,00,000/- made by the Ld. AO is the subject matter before us. Since this similar ground has already been taken by the Department and also dealt with by us in the foregoing paragraphs it appears that addition made in respect of capital grant upon adjustment in book profit under section 115JB of the Act is the main challenge before us by the Revenue. 31. At the time of hearing of the instant appeal, the Ld. Counsel appearing for the assessee is submitted before us that the issue is already been decided in favour of the assessee by and under t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the CIT(A). The CIT(A) deleted the addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, and therefore, such grants cannot be reduced from cost of fixed asset of the assessee on the basis of estimate. 11 The Revenue, therefore, went in appeal before the Tribunal and the Tribunal confirmed the order passed by the CIT(A) by holding as under: "28. We have heard the rival contention and produced the material on record on this issue. During assessment, the assessing officer has stated that the assessee has not received the grant or subsidy during the year but was of the view that the subsidy or grant which was received in earlier years was to be taken to the revenue or to be reduced from the cost of assets. Therefore, the assessing officer has estimated 15% of grant of Rs. 2500 lacs which worked out at Rs.3750 lacs as income of the assessee. The Ld. CIT(A) has deleted the aforesaid addition holding that the assessee has not acquired an fixed assets on which depreciation has been claimed, therefore, such grants cannot be reduced from cost of fixed asset of the assessee company. With the assistance of ld. Authorized representa....