TaxTMI 
TaxTMI 
2022 (11) TMI 1498
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....ed under section 154 r.ws. 143(3) of the Income-tax Act ("the Act") at an income of Rs. 8445,98,12,500 as against the returned income of Rs. 63,25,11,95,270. 1.1 That on the facts and circumstances of the case and in law the order dated 29.07.2022 passed by the AO/NFAC under section 143(3) read with section 144B /144C(13) of the Act, having been passed beyond limitation provided in terms of Section 144C(13) read with section 153(3) of the Act, is illegal being barred by limitation, void ab initio and is liable to be quashed. 1.2 That on the facts and circumstances of the case and in law directions issued by the DRP after the period of 9 months prescribed in terms of section 144C(5) of the Act are barred by Limitation and thus the impugned Assessment order under section 143(3) read with section 144B/144C(13) of the Act passed pursuant thereto by the AO/NFAC is liable to be quashed. 2. That the AO/NFAC erred on facts and in law in completing the assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.w.s 143(3) of the Act at an income of Rs. 84,45,98,12,500, after making additions/ disallowances to the income of Rs. 63,90,56,88,720 d....
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....domestic transaction of transfer of power by the Captive Power Plants (CPP) of the Appellant was appropriately benchmarked by applying the other method on the basis of rates at which the power is supplied by the State Electricity Boards (SEBs) to third party consumers. 3.4 That DRP/NFAC/AO/TPO erred on facts and in law in considering the rate at which power is supplied by the power generation companies to the State Electricity Boards ('SEBs') as an appropriate comparable for benchmarking the Specified Domestic Transaction of supply of power undertaken by the Appellant. 3.5 That the DRP/NFAC/AO/TPO erred on facts and in law in relying upon the tariff order issued by the SEBs for the purpose of undertaking benchmarking analysis without appreciating that the said rates are for supply for power by power-generation companies to SEBs for further supply to the ultimate customers and not for the consumption by SEBs themselves. 3.6 That the DRP/NFAC/AO/IPO erred on facts and in law in not appreciating that the CPP supplies continuous uninterrupted power which is critical for the operations of the appellant and is therefore, at a premium even in comparison to rates charged by S....
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.... by Rs. 1068,72,78,348, in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, allegedly on account of Transfer Pricing (TP") adjustment disregarding the arm's length price and the methodical economic analysis and benchmarking carried out by the Assessee in the TP documentation maintained by it in terms of Section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962. 6.1 That the AO/NFAC/DRP/TPO erred on facts and in law in disallowing deduction under section 80-IC of the Act in respect of the eligible units under section 80-IC of Pantnagar Zinc and Lead Plant (PLZP) of the Appellant; and Pantnagar Silver Metal Plant (PSMP) to the extent of Rs. 800,45,96,398 (in aggregate), allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ("TPO"). 6.2 That the AO/NFAC/DRP/TPO erred on facts and in law in holding that deduction u/s 80IC of the Act in respect of Pantnagar Lead & Zinc Plant (PLZP) is available by determining the income of PLZP, the eligible unit u/s 801C, in the ratio of expenditure incurred by the PLZP and other units of the Appe....
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....der passed under section 154 rws 143(3) of the Act, allegedly on account of markup on Business Support Services under normal provisions of the Act. 7.1 That the AO/NFAC/TPO/ DRP erred on facts and in law in ignoring the fact that the Appellant incurred expenses amounting to Rs. 4,19,56,073, towards third-party cost on behalf of its overseas AEs, which were in the nature of pass-through costs not involving any value addition and were rightly charged back without any mark up to the relevant AEs at cost. 7.2 The Ld. TPO/DRP/AO/NFAC erred in facts and in law in making addition of Rs. 66,54,233 on account of TP adjustment mark-up on Business Support Services, not apprecting that the similar adjustment was deleted by CIT(A)-1 Udaipur, in AY 2015-16, and thus the addition made is in violation of the mandatory directions of the DRP in terms of section 144C(13) of the Act. 8. That the AO/ DRP/NFAC erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Rs. 15,31,69,157 u/s 14A of the Act, both under normal provisions and for computing Book profit under MAT ....
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....ld to be deductible business expenditure by the Hon'ble ITAT, Jodhpur in AY 2011-12 (in ITA No. 246&262/JODH/2017) and in AY 2012-13/ (in ITA No. 404&412/Jodh/2017). 11. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of staff welfare expenses of Rs. 23,66,67,865, being the expenses towards canteen facility, school activities, sport club, scholarship, other club, etc. holding them to be not allowable u/s 40A(9) of the Act, as well as holding them to be in the nature of corporate social responsibility expenses disallowable in terms of Explanation 2 of section 37 of the Act. 11.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the above expenses were incurred in the course of the business by the appellant pursuant to statutory or contractual obligation and were held to be deductible business expenditure in the earlier years. 12. That the AO/NFAC erred of facts and in law in allowing TDS credit of Rs. 5,74,27,821 instead of Rs. 5,86,75,126 claimed in the return of income. 13. That the AO/NFAC err....
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....he assessment order in cases where a reference is made to the Transfer Pricing officer. Accordingly, the assessing officer was required to pass final assessment order within 33 months from the end of the relevant assessment year and after considering the extended time allowed under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 the order was required to be passed on or before September 30, 2021. 3.2 The final assessment order was however passed by the assessing officer on 29.07.2022 i.e. much beyond the time limit for passing the final assessment order. 3.3 In terms of section 153(1)/(4) of the Act, and after considering the extended time allowed under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 the assessing officer was required to pass final assessment order on or before September 30, 2021 . In view of the aforesaid, it is submitted that the order dated 29.07.2022 passed by the assessing officer under sections 143(3) r.w.s. 144C(13)/144B of the Act is barred by limitation and is therefore unlawful. 3.4 Reliance is placed in this regard on the decision of the Hon'ble Madras High Court in the case of CIT ....
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....overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal's order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an interdepartment arrangement and it cannot defeat the rights of the assessee" It is submitted that the Hon'ble Delhi Bench of the Tr....
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....f section 144C overrides all other provisions of the Act. Subsection (4) and (13) of section 144C overrides section 153 and 153B of the Act. The harmonious construction of all these provisions is that the TPO has to pass the order 60 days before the time-barring date u/s 153(1)/153(4) of the Act and without prejudice to any provision u/s 153 of the Act, the AO will pass order u/s 144C(13) of the Act within one month from the end of the month in which directions by the DRP u/s 144C(5) are received by him. 7. The Hon'ble Madras High Court in the case of Roca Bathroom Products Pvt Ltd has held that all proceedings should be completed within the time limit prescribed u/s 153 of the Act and this is the outer time-limit. The overriding provisions in section 144C(13) does not extend the time-limit specified in section 153 of the Act and it only means that if directions are received earlier then AO will not wait for the outer time-limit and order will be passed within one month. 8. The finding of the Hon'ble High Court was given in a writ petition wherein the Court was required to pass order of writ in a case wherein original proceedings were complete and all the orders were passed ass....
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....has no relevance, except setting the time limit for the TPO to pass order u/s 92CA(3) of the Act. The landmark order on the issue is in the case of Honda Trading Corporation, Japan v DCIT reported in 61 taxmann.com 233 by Hon'ble Delhi Tribunal, wherein it has been held that: "5.16 We have heard the marathon arguments advanced by both the sides on the point. The controversy which looms large before us is to decide the nature of order referred to in section 153, thatis, whether it is draft order as contended by the ld. AR or the final assessment order as put forth by the ld. DR. We have set out supra the language of section 153, whose title is:"Time limit for completion of assessments and reassessments'. Then subsection(1) of section 153 starts with the words: 'No order of assessment shall be made under section 143 or section 144 at any time after the expiry of' two/three years from the end of the assessment year in which the income was first assessable. Albeit a marginal note cannot control the language of a provision, yet it throws some light on the scope of the section. Marginal note of a section can be taken help of to interpret a provision, if the language as per ....
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....s that up to the A.Y. 2008-09, when the mechanism of DRP and the passing of draft order was not in place, the final assessment order pursuant to the order of the TPO was required to be passed within the time limit given in section 153. However, when the institution of the DRP and the concept of passing a draft order came into being w.e.f. the A.Y. 2009-10, the time limit for the completion of assessment came to be governed by sub-section (4) or (13) of section 144C. This shows that upon the introduction of section 144C, there emerged two simultaneous time limits for completion of assessments, viz., the one which was already existing as per section 153 and the latest one, which came to be introduced through section 144C. At this stage, it is significant to note one salient feature in the time limits enshrined under subsections(4) and (13) of section 144C. Such common thread is that the time limits given in both the sub-sections are 'notwithstanding anything to the contrary contained in section 153 or ...'. This transpires that the time limits for completion of assessment as prescribed in sub-sections (4) and (13) of section 144C have been superimposed on the time limit as gi....
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....e ld. AR's poser that when the time limit for completion of assessment is contained in section 144C, then the provisions of section 153 cannot be read as meaningless except for linking it with draft order. In our considered opinion, it is overt that the time limit u/s 153 is not meaningless as the same has been retained for keeping alive the time limit given to the TPO for passing his order. 5.24 We have noticed above that the term 'draft order' has been statutorily coined u/s 144C(1). It means that the term 'draft order' has been recognized as and is actually different in ambit from the term 'assessment order'. With the insertion of section 144C, which led to the birth of the draft order, the legislature did not substitute the term 'order of assessment' with the term 'draft order' in section 153. If the intention of the legislature had been to substitute the hitherto time limit for passing of the assessment order as the time limit for the passing of draft order henceforth, on shifting the time limit for passing of the final assessment order to section 144C(4) or (13), then it would have made necessary changes in section 153 by substitu....
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....rable High Courts and the benches of the tribunal across the country have recognized the position that no time limit has been prescribed for passing an order treating a person responsible as assessee in default. Whereas the Hon'ble Calcutta High Court in British Airways v. CIT [1992] 193 ITR 439/[1991] 54 Taxman 470 has held that since no period of limitation for liability has been statutorily given, even the order passed after 6 years is valid, the Hon'ble Delhi High Court in CIT v. NHK Japan Broadcasting Corpn [2008] 305 ITR 137/172 Taxman 230 has held such order in the absence of the express time limit should be passed within a period of four years. Legislature stepped in by way of insertion of sub-section (3) to section 201 w.e.f. A.Y. 2010-11 providing the time limit for passing of the order deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time within (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed; (ii) six years from the end of the financial year in which payment is made or....
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..... We do not have any hesitation in holding that the issues argued by the ld AR are squarely covered against the assessee by the decision of coordinate bench in ITA No. 1132/Del/2015 . The above order of the coordinate bench has clearly covers from para No. 5.22 onwards that in such cases the passing of the final assessment order pursuant to the order of the ld TPO as contained in section 144C(4) and (13), the time limit given u/s 153 has no relation whatsoever with the passing of the draft order, which should be passed within a reasonable time and the time limit given u/s 153 of the Act is relevant for the determination of time available with the TPO for passing order u/s 92CA(3). The facts before the coordinate bench was that the assessment order u/s 143(3) was passed on 29.01.2015 which is well within the period of one month in which the direction was received from the ld DRP on 24.12.2014, thus, the final order passed by the ld AO is within the time prescribed u/s 144C(13). As the draft order was also passed within a reasonable time same is also not barred by limitation. Against this decision no further appeal is filed by the Assessee. However, the ld AR has given a detail rebut....
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....pt of the draft order either to accept the draft order and intimate the assessing officer accordingly or to file objections to the proposed variations with the dispute resolution panel and the assessing officer. If the assessee exercised an option to accept the draft order nothing else is required to be done except to complete the assessment on the basis of the draft order. Such order i.e. the draft order becomes the final order when acceptances received or the period for filing of the objection expires. Ifthe objections are filed by the assessee the dispute resolution panel issue directions as it thinks fit and enabling the assessing officer to complete and issue the order of final assessment. Provisions of subsection 6, 7, 8 and 9 of section 144C sets out the procedure to be followed by the dispute resolution panel in issue of the direction. The section further provides that every direction issued by the dispute resolution panel shall be binding on the assessing officer. Thus it seen that AO cannot tinker or apply anything further than what was mentioned in the draft assessment order except what is directed by the learned dispute resolution panel. The provisions of principles o....
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.... 153A or section 153C in pursuance of the directions of the dispute resolution panel. Further, it may also be possible that in certain circumstances the provisions of section 263 of the income tax act also do not apply to orders passed under directions of the dispute resolution panel. Thus law has seen the assessment passed in pursuance of direction u/s 144C of the Act different from the regular assessment as envisaged u/s 153 of the Act. 14. The further argument of the learned authorized representative is that there is no time limit for passing of the draft assessment order under the scheme of section 144C and then same can be passed within a reasonable time is flawed. The argument advanced is that legislative intent is to progressively reduce the limitations for passing the assessment order to expedite the dispute resolution process and impart certainty & finality to assessment proceedings. As we have already held that it is a complete code in itself therefore it in fact it supports the intention of the legislature in providing expeditious resolution of the dispute between the taxpayer and tax gatherer. Thus this argument deserves to be rejected. 15. No doubt, the final order....
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....t dealt with and was also not addressed to deal with the controversy by noticing the non obstante provisions of section 80- I(6)/80-IA(5) aforesaid. Thirdly, in any case the issue before Rajasthan High Court was whether Assessing Officer could be said to be justified to invoke section 154 to rectify the mistake which on a contentious matter is not permitted. Fourthly, a decision without noticing an existing provision of law governing the very issue in dispute cannot shut the doors of the Tribunal in considering and applying the provisions of law de hors the contrary decision of a High Court. This is because a statutory provision supersedes the contrary decision of any court including that of a High Court or even Supreme Court and has an ultimate force of law having greater force. Fifthly, in the first case it was not an actual non-consideration of a provision but as the Supreme Court itself says in the underlined portion by the intervener itself 'because they thought that "relevant provisions were not brought to the notice of the Court". (emphasis supplied) During the course of the hearing, the ld. AR argued that the above decision of the Special Bench has been reversed. It....
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.....03.2023. Thereafter time limit to complete the assessment will be extended to 31.03.2024. Now, in this case as per the interpretation of the Hon'ble High Court, passing of draft assessment order u/s 144C(1), issuing directions u/s 144C(5) and passing the final assessment order u/s 144C(13) is required to be done in just 15 months which is practically not possible and blatantly against the provisions of the Act. 10. The ld. AR during the course of the arguments had submitted that if provisions of section 153 are overlooked and not to be taken as outer limit for completing the assessment, then there will be no time-limit to pass order u/s 144C(1) of the Act, as there is no specific provision to pass order u/s 144C(1) of the Act. It is respectfully submitted that this issue has already been dealt with very elaborately and convincingly by the Hon'ble Delhi Tribunal in the case of Honda Trading Corporation in para 5.22 to para 5.26 reproduced supra. It has been discussed by the Hon'ble Tribunal that not laying down the time-limit is not a thing which is unheard of, and the same was also the case earlier with the orders u/s 201(1) of the Act and passing of the order by TPO in the init....
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....to be issued. Once it was so, the order of the Hon'ble Mumbai Tribunal goes against the appellant, rather than supporting its cause. 11(ii). It is true that the Hon'ble Tribunal in Super Brands has allowed the appeal of the additional ground following the judgement of the Hon'ble Madras High Court in Roca Bathroom case, but factual foundations of the above case were absolutely different from the present case. Further, more importantly, the additional ground was allowed as the Department neither differentiated facts of the Roca Bathroom case from those present in that case and also did not cite the orders of the co-ordinate benches in that case. It is clear from para-31 (Page-699) that additional ground was allowed as no distinguishing decision was brought into the knowledge of the Hon'ble Tribunal. 12. The ld. AR of the appellant during the course of the hearing placed reliance on the judgement of the Hon'ble Delhi High Court in the case of All India Lakshmi Commercial Bank Officers' Union v Union of India reported in 150 ITR 1 probably to buttress the point that the Tribunals should follow the judgements of the High Courts. It is submitted in this regard that issue in that c....
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....urt judgement was of Single Bench, wherein three judgements of the Hon'ble Punjab and Haryana High Courts were of Double Bench. (b) The observations were passed in respect of 'income-tax authorities' and not for Tribunals. Tribunal is not an income-tax authority and it cannot shut its eyes if any non-jurisdictional High Court delivers a judgement which is against the provisions of the Act and contrary to the law settled by various coordinate benches. Thus, it is clear from the above discussion that section 144C is a code in itself and time limit to complete assessment order is mentioned in section 144C(13) itself and section 153 does not come into picture while deciding the time-limit. Therefore, ground raised by the appellant on this issue needs to be dismissed as all orders were passed in both the years within the time limits as specified in section 144C(13) and section 92CA(3A) of the Act." 5. In rejoinder, the ld. Counsel for the assessee submitted as under :- In terms of sections 153(1)/(4) of the Act, and after considering the extended time allowed under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 the assessing officer was re....
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....e Act]. Where the eligible assessee chooses to file objection before the DRP, the DRP is duty bound to dispose of the objections within 9 months from the end of the month in which the draft order is forwarded to the eligible assessee.[Refer section 144C(12) of the Act]. Upon receipt of directions issued by DRP, the assessing officer has to complete the assessment within one month from the end of the month in which the direction is received. [Refer section 144C(13) of the Act]. Re.: Limitation for framing assessment: The relevant provisions of section 153 of the Act as applicable at the relevant time read as under: "153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable:" Sub section (4) of Section 153 of the Act provides additional time of 12 months for passing the assessment order in cases where a reference is made to the Transfer Pricing officer. Re.: Legal Position: The Hon'ble Madras High Court in the case of CIT vs Roca Bathroom Products Pvt Ltd (WA NO. 1609&1610 of 2021) (ref. pages 619 to 673 of CL Paper book) held ....
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....is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the Appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years. 21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are interdependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective....
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...., upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed, (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act," Following the aforesaid decision of the Hon'ble Madras High Court, which is the solitary decision of any High Court on the issue, the Delhi bench of the Tribunal in the case of Super Brands Ltd. UK vs ADIT (ITA No. 3115/Del/2019) (at pages 674 to 706 of CL Paper book), quashed the order passed by the assessing officer in the case of the assesse foreign company, [as e....
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..... It is pertinent to mention here that in the aforesaid decision, the Hon'ble Karnataka High Court went on to hold that even if the period of five years has expired as on the date of amended provisions but the period of ten years is still running, the assessee cannot be denied the benefit. Thus, the issue raised before this Special Bench is squarely covered by the aforesaid decision of the Hon'ble High Court of Karnataka. Since this is the only decision of the Hon'ble High Court on the issue, the same is binding on the Special Bench in view of the settled principle of judicial proprietary, as laid down in following cases:-............ Supreme Court in the case of Dunlop India Ltd.'s case (supra) : "We desire to add and as was said in Cassell & Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never be necessary for us to say so again that 'in the hierarchical system of courts' which exists in our country, 'it is necessary for each lower tier', including the High Court, 'to accept loyally the decisions of the higher tiers'. It is inevitable in a hierarchical system of courts that there are decisions of the supreme appellate tribunal ....
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....hasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in of tax in administration of tax laws." Having regard to the dictum of law laid down by the Apex Court in the said judgement regarding respecting judicial hierarchy, in order to maintain judicial discipline, the Hon'ble T....
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....ure consciously did not mention section 144C(13) whereas section 143(3) and 144 are mentioned in section 153(1). This is to ensure that section 144C remains a code in itself." Reliance has also been placed on the decision of Supreme Court in the South India Corporation Pvt Ltd v The Secretary, Board of Revenue 1964 AIR 207 wherein it held that "It is settled law that a special provision should be given effect to the extent of its scope, leaving the general provision to control cases where the special provision does not apply." 4) The decision of the Hon'ble Madras High Court in the case of CIT vs Roca Bathroom (supra) is against the legislative intent and not binding on the Hon'ble Tribunal, being decision of a non-jurisidictional High Court. For the aforesaid proposition, the Ld. CIT DR relied upon the decision of the Special Bench of the Tribunal in the case of ACIT v. Goldmine Shares and Finance (P.) Ltd.: 113 ITD 209 (SB)(Ahd.), more particularly, para 54 of the said judgement. 5) It was further contended by the ld. CIT D/R that the decision of the Delhi High Court in the case of All India Lakshmi Commercial Bank (supra) was in any case applicable qua income tax authorities....
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....tion 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order;" - Section 253(2A) of the Act (omitted by the Finance Act, 2016, w.e.f. 1-6-2016) providing Revenue the power to file appeal against the order of assessment completed pursuant to directions of the DRP, which reads as under: "(2A) The Principal Commissioner or Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under sub-section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order." It is submitted that the proceedings before the DRP are continuation of the assessment proceedings. Reliance is placed in this regard on the decision of the Hon'ble Bombay High Court in the case of Vodafone India Service vs UOI 361 ITR 531 wherein the Hon'ble Bombay High Court held that proceedings before the DRP are continuation of ass....
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....n of the Supreme Court in CIT v. Mother India Refrigeration Industries (P.) Ltd.: 155 ITR 711 wherein it is reiterated that "legal fictions are created only for some definite purpose and these must be limited to that purpose and should not be extended beyond their legitimate field". Section 153 of the Act providing for limitation for framing an assessment contains an absolute prohibition to the effect that an order passed after the limitation prescribed there under would be non est / invalid in law. The non obstante clause in sections 144C(4) / 144C(13) does not override the provisions of section 153 of the Act. The time limit of 30 days for passing of the assessment order in terms of section 144C(4) / 144C(13) has to be read as sub time limit within the overall limitation set out in section 153 of the Act. The non-obstante clause in sections 144C(4) / 144C(13) thus seek to shorten the time available for completion of assessment to 30 days or the over all time limit provided in section 153(1) of the Act, whichever is less. The aforesaid aspect has been duly accepted by the Hon'ble Madras High Court in the case of Roca Bathroom (supra) vide para 22 of the said judgement. As noted ....
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....le assessee is 33 months from the end of the relevant assessment year which would include reference to the TPO, receipt of order from the TPO, passing of draft assessment order, filing of objections before the DRP, disposal of objections and issue of directions by DRP and passing of assessment order by the assessing officer. The time limitation in section 144C(4) or section 144C(13), as the case may be, are only sub-limits, subsumed within the overall limitation of 3 years from the end of the relevant assessment year provided in section 153 of the Act. Accordingly, the time limit of 3 years from the end of the relevant assessment year provided in section 153(1) of the Act read with third proviso thereto is absolute and applies to all assessments including those completed pursuant to the directions of the DRP. Furthermore, in case it were to be held that section 144C is an independent / selfcontained code and that the limitation in section 153 of the Act would not apply in case of an eligible assessee, then, the consequence would be that there would be no limitation qua passing of the draft assessment order. In other words, the assessing officer would be at liberty to pass the draf....
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....ute resolution mechanism which will facilitate expeditious resolution of disputes in a fast track basis". It is submitted that if the non-obstante clause in sections 144C(4)/ 144C(13) of the Act is interpreted as allowing the assessing officer additional time over and above the limit provided under section 153 of the Act, the same would defeat the entire purpose of expediting the dispute resolution process, by enlarging the time available for completion of assessment to almost five years from the end of the relevant previous year (four years from the end of the relevant assessment year). In view of the aforesaid, it is submitted that non-obstante provision in section 144C(13) is to be interpreted having regard to the stated intent of the Legislature to expedite the dispute resolution process. Accordingly, it is submitted that the time limitation in sections 144C(4)/144C(13) of the Act is to be read as a sub-limit, subsumed within the overall limitation of 33 months from the end of the relevant assessment year provided in section 153 of the Act. The Ld. CIT (DR) relied upon the following decisions of the co-ordinate benches of the Tribunal to contend that in a case where referenc....
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....aring on the issue in dispute in the case of Roca Bathroom (supra). The view taken by the Hon'ble Madras High Court in the case of Roca Bathroom (supra), furthers the legislative intent of expediting the assessment in the case of eligible assessee, by curtailing the time limit for framing assessment in the case of such category of assessees. The decision of the Special bench in the case of Goldmine Shares (supra) does not lay down the correct law considering that the Gujarat High Court in the cases of CIT v. Sarabhai Sons Ltd.: 143 ITR 473 @ 486 (Guj.) and CIT v. Maganlal Mohanlal Panchal (HUF) [1994] 210 ITR 580 (Guj.) had held the decision of a non-jurisdictional High Court to be binding on the Tribunal. Further, the decision of the Hon'ble Rajasthan High Court cited before the Special Bench was held to be not dealing with the controversy to be decided by the Special bench and the Special Bench in that view of the matter did not follow the said decision of the Rajasthan High Court. Furthermore, as submitted earlier, the Special Bench in the later decision of the case of Maral Overseas (supra) held the decision of non-jurisdictional High Court as binding on the Tribunal and foll....
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....mitted by the assessee is to pass an order under Section 92CA(3) of the Act. As per Section 92CA (3A), the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under Section 153 expires. As per Section 153, no order of assessment can be passed at any time after the expiry of 21 months. As per 92CA (4), the assessing officer has to pass an order in conformity with the order of the TPO. After the receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Sub-Section (5) of Section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel consisting of top and expert functionaries of the department, is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. As per sub-section (12), the DRP has no author....
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....and by the ITAT, the power of DRP to take up the dispute on additions by TPO, is not circumscribed by Section 153 and that in the absence of any express time limits contemplated under the Act, the time limits under Section 153 for reassessment cannot be read into Section 144C more particularly when the provisions of Section 153 are excluded by the non-obstante clause in section 144C(13) and hence the proceedings are not barred by limitation. Per contra, it has been contended by the learned senior counsels appearing for the respondent(s)/assessees that the outer time limit under Section 153 is applicable to every proceedings on remand and the department having slept over the issue for several years, cannot now redo the proceedings afresh, after certain rights have vested with the assessees. Even if specific provisions are not there to deal with this situation, the proceedings must be concluded within a reasonable time and hence the impugned proceedings are liable to be struck down and rightly done so by the learned Judge. 19. Admittedly, the facts including the dates are not under dispute. As regards the appeal in W.A.No.1854 of 2021, even though the remand was on 24.01.2013 and t....
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.... from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years. 21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are interdependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal's order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as ....
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....t reconciliation between them. (3) It has to be borne in mind by all the courts all the time that when there are two conflicting provisions in an Act, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is the essence of the rule of "harmonious construction". (4) The courts have also to keep in mind that an interpretation which reduces one of the provisions as a "dead letter" or "useless lumber" is not harmonious construction. (5) To harmonise is not to destroy any statutory provision or to render it otiose." (ii) CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57 : 2002 SCC OnLine SC 1226: "16. The courts will have to reject that construction which will defeat the plain intention of the legislature even though there may be some inexactitude in the language used. (See Salmon v. Duncombe [(1886) 11 AC 627 : 55 LJPC 69 : 55 LT 446 (PC)] AC at p. 634, Curtis v. Stovin [(1889) 22 QBD 513 : 58 LJQB 174 : 60 LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35 ITR 408]). 18. The statute must be read as a whole and one provision of the Act should be construed with reference to o....
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....time limit under Section 153, once the order of TPO is accepted or not objected to, causing a deeming fiction of acceptance, the final order is to be passed immediately. The object is to conclude the proceedings as expeditiously as possible and the authority above, the DRP will have no authority to issue directions after nine months and a further period of one month as per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India Private Ltd (supra) and Vedanta Ltd (Supra) is well founded. The timeline given under the Act is to be strictly followed." 30. The Hon'ble High Court concluded as under: "(a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the ....
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....ory provisions of section 144B inasmuch as the adjustments aggregating to Rs. 65,44,93,450 made in intimation issued under section 143(1)(a) of the Act have been mechanically imported by the assessing officer, without confronting the same to the assessee during the course of assessment proceedings by issuing any show-cause notice, prior to the issuance of the draft assessment order. 8. On the other hand, the ld. D/R submitted that the appellant did not file an appeal against intimation issued under section 143(1)(a) of the Act and, therefore, the same has become final. 9. In rejoinder, the ld. Counsel for the assessee submitted that the Ld. CIT (DR) failed to appreciate that the intimation under section 143(1)(a) of the Act was never made available / received by the appellant, and therefore, there was no ccasion or opportunity for filing the appeal against the same. The Appellant, in fact, came to know to the said intimation issued under section 143(1)(a) only from the impugned assessment order. 9.1 As a matter of fact, there was no such proposal in the show-cause notice cum draft assessment order or at any other stage for confirming the erroneous adjustments made by CPC in the ....
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....e in the Intimation issued under section 143(1)(a) of the Act and the AO has computed the total income taking the income processed under section 143(1)(a) as the base. Against this adjustment, the appellant has not filed any appeal. As against this, the ld. A/R has contended that Intimation under section 143(1)(a) of the Act was never made available/received by the appellant and, therefore, there was no occasion or opportunity for filing the appeal. Even the details of the adjustment are not made known to the appellant. In these circumstances, in the interest of natural justice, we deem it appropriate to direct the AO to provide the details of adjustment made in processing the return under section 143(1)(a) and liberty to the assessee-appellant to file appeal within 30 days of receipt of the details before the ld. CIT (A). Thus this ground of the assessee is allowed for statistical purposes. Ground Nos. 3-3.6 relate to disallowance of deduction claimed under section 80IA of the Act in respect of Captive Power Plants (CPPs) amounting to Rs. 11,08,24,50,372 (in aggregate) in respect of the undertakings at Chanderia Lead and Zinc Smelter, Zawar Mines and Rajpura Dariba, on the basis ....
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....luded that since internal CUP is available, rate of Rs. 2.53 per unit is to be considered for benchmarking the transaction of sale of power by the eligible unit to non-eligible unit and made adjustment of Rs. 1286,10,45,365/-. The AO in his final assessment order dated 29.07.2022 considered the upward adjustment but restricted it to total deduction claimed by the Appellant u/s 80IA to Rs. 1108,24,50,372 within the umbrella disallowance made under section 80IA of the Act including allocation of common expenses to eligible units and deduction towards disallowance of steam. 12. On the other hand the ld. D/R referred to the amendment made by way of insertion of Explanation section 80IA(8), with effect from assessment year 201314 which read as under: "Section 80-IA ...... (8) Where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business ....
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....ection 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA." Section 80IA of the Act, thus provides that the transfer price of the goods or services transacted between an eligible unit or a non-eligible unit should correspond to the market price of the goods and services so transacted. However no-where in the Act it has been prescribed that what should be the component of that price structure. The Act does not provide that what component of price structure should be included or excluded from the transfer price to arrive at the market price. In case of the Appellant, the price of power at which the consuming units can procure the power is available in the market. It is submitted that though changes have been made in respect to exercise of power within Tax Department, however, the basic intent of determination of 'market value' or arm's length price by comparing a controlled transaction with an uncontrolled transaction remains the same. If the nature of transaction remains the same as in earlier years, the ratio or reasoning of the Assessing Officer in earlier years would mutatis mutandis apply to the year under consider....
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....re, has no other option but to sell the excess (over and above self-consumption) electricity generated to JVVNL, AVVNL or JdVVNL at the predetermined rates and it cannot charge higher rate from JVVNL, AVVNL or JdVVNL. The market rate of electricity thus is not determined by the forces of demand and supply, rather the same is regulated by the Government. In spite of it, the Appellant has determined transfer price at Rs. 7.76 to Rs. 8.64 per unit as charged by SEB. Further, the fixed demand charges were stated to be for ensuring uninterrupted supply. In the assessee's case, the Appellant has fulfilled this condition as the CPP's have provided uninterrupted power supply to the manufacturing units. In the state of Uttarakhand, Bihar, West Bengal and Maharashtra, Governments has announced different rates for normal supply of power and uninterrupted continuous supply of power to the same industrial unit. These State Electricity Boards of these states charge a premium of 10% to 15% over and above the normal rate of power for uninterrupted power supply. Thus, under the given circumstances, the Appellant submits that the revenue recorded by the Appellant's eligible undertaking for transfe....
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....rs. To the similar effect is the decision of Calcutta High court in the case of CIT v. Kanoria Chemicals &Industries Ltd.: 219 Taxman 35 (Calcutta)(Mag.) and Chennai Bench of the Tribunal in the case of Sri Matha Spinning Mills (P.) Ltd. v. DCIT: 141 ITD 238. The above issue is squarely covered in favour of the Appellant by the decision of the Delhi Bench of the Tribunal in the case of CIT v. Jindal Steel & Power Limited: 16 SOT 509, wherein it was observed as under: "15. Therefore, from the aforesaid, it can be deduced that market value is an expression which denoted a price arrived at between the buyer and the seller in the open market wherein the transactions take place in the normal course of trading and competition in contrast to a situation where the price is fixed between a buyer and seller can be understood as denoting 'market price' since the elements of trading and competition exist. Whereas in the case of the latter situation, the price fixed between the buyer and seller cannot be understood as denoting the market price since the elements of trade and competition are conspicuous by their absence. 16. To understand the contrasting situations, let us analyze the situ....
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....rom the aforesaid, an analogy that can be safely deduced is that the market value cannot be the result of a transaction which has been entered into between a buyer and a seller in a situation where one of the parties is carrying the compulsive mandate of the Legislature. The situation before us is such wherein the aforesaid analogy can be usefully applied. As we have seen earlier, the price at which the power is supplied by the Appellant to the Board is determined entirely by the Board in terms of the statutory regulations. Such a price cannot be equated with the market value as understood for the purposes of Section 80-IA(8) of the Act. The stand of the revenue to the aforesaid effect cannot be approved. 18. Having held so, the natural corollary is to ascertain whether the price recorded by the Appellant at Rs. 3.72 pet unit can be considered to be the market value for the purposes of Section 80-IA(8) of the Act. The answer, to our mind, is in the affirmative. This is for the reason that the Appellant as an industrial consumer is also buying power from the Board and the Board supplies such power at the rate of Rs. 3.72 per unit to its consumers. This is the price at which the ....
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....ee. As long as the Appellant has adopted a 'Market Value' as the transfer price, it is sufficient compliance of law. It was observed that the assessing officer can adopt a different value only where the value adopted by Appellant does not correspond to the 'market value'. In case there are options, the option favourable to the Appellant is to be adopted as held in Vegetable Products Ltd 88 ITR 192 (SC). The aforesaid findings of the Jaipur bench of the Tribunal were also affirmed by the Hon'ble Rajasthan High Court, vide order dated 22.8.2017, in Income tax Appeal No 85/2014 (ref. Page 2941-2955 of CL PB) as under: "24. The issue No. 2 is with regard to the claim of the assessee for the value of the goods or services for the purpose of Section 80IA(8). 25. In view of the submissions made by Mr. S. Ganesh, price which has been given to the sister concern is to be determined on the basis of principle laid down by the Supreme Court in case all the four conditions are fulfilled as stated in his submissions and more so the Tribunal has given the finding which reads as under:- "10. We have heard the rival submissions and perused the evidence on record. We have also gone through th....
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....s, means the price that such goods or services would ordinarily fetch in the open market." 12. On perusal of the above, it could be clearly seen that the Statute provides that the assessee must adopt 'Market Value' as the transfer price. In the open market, where a basket of 'Market Values'[say like, independent third party transactions, grid price (average annual landed cost at which grid has sold power to the assessee), Power Exchange Price for the relevant period etc.] are available, the law does not put any restriction on the assessee as to which 'Market Value' it has to adopt, it is purely assessee's discretion. So long as the assessee has adopted a 'Market Value' as the transfer price, that is sufficient compliance of law. AO can adopt a different value only where the value adopted by assessee does not correspond to the 'market value'. Even if assessee's Cement Unit has purchased power, also from the Grid or that assessee's Power Unit has also partly sold its power to grid or third parties that by itself, does not 14 compel the assessee or permit the Revenue, to adopt ONLY the 'grid price' or the price at which the Eligible Unit has partly sold its power to grid or third pa....
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....ction (for the relevant period and which has taken place in the relevant area where the eligible unit is located) constitute 'market value' in terms of explanation to Section 80IA(8); (b) the value at which State Grid has sold power to the Cement Unit of the Assessee (average annual landed cost) also constitute 'market value' in terms of explanation to Section 80IA(8) but the value at which State Grid or third party has purchased power from the Power Unit of the Assessee, which represents its power which is sold when not required by the Cement Unit, does not constitute 'market value' in terms of 16 explanation to Section 80IA(8). It is the 'principle' and not the 'quantum' which is deciding factor; (c) where a basket of 'market values' are available for the relevant period and relevant geographical area where the eligible unit is situated, the assessee has discretion to adopt any one of them as market value; and (d) If the value adopted by the assessee is 'market value' as explained above, it is not permissible for Revenue to recompute the profits & gains of the eligible unit by substituting the said value (as adopted by the Assesse) by any other 'market value'. 14. Accordi....
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.... & gains derived from business of generation of power for CPP, Debari (being first year of the consecutive period of 10 out of 15 years). Regarding CPP, Zawar, there was no profit available for deduction under section 80IA during the year under consideration. In the original assessment order the A.O. had allowed deduction under section 80IA regarding CPP, Debari for A.Ys. 2004-05 to 2006. 7. The ld. Authorized Representative argued that all the requisite conditions, which are necessary and sine-qua-known for claiming deduction in payment of section 80IA(3), stands satisfied. 7. We incorporate or extract paragraph no. 2.2.4 at page nos. 4 to 6 of CIT(A)' s order to demonstrate as to how the assessee has fulfilled the requisite conditions: "2.2.4 The AR has further submitted that the appellant has fulfilled the three conditions as prescribed in sub-section (3) of 80/A of the Act. A. The brief submissions in respect of each of the conditions are as under: i) Profits from Eligible Business:- The undertaking is engaged in generation or generation and distribution of power which is an eligible business in terms of section 80/A 4(iv)( a). ii) Undertaking is not formed by....
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....ined in section 288 and certificates in Form 10CCB have been enclosed with the return of income. Kind reference is made to Page No 10-16 of PB-for CPP Debari and for CPP Zawar Mines at Page No 33-42 of PB, enclosed with this submission. These reports in the statutory form furnish the details and the quantum of deduction claimed by the Company . These reports were accompanied by the profit and loss account and balance sheet of the respective eligible undertakings. In the case of CPP Debari, the profit and loss account is at Page No 15-16 and balance sheet at Page No 14. In the case of CPP Zawari, the relevant information of profitability is at Page No 38-39 and balance sheet at Page No 37 of PB. In the case of CPP Debari and CPP Zawar Mines, since the claim of 80IA was allowed by the AO regularly in the original assessment, from the AY 2004-05 and onwards, the relevant information was attached in each of the assessment years. Kind reference is also made to the details enclosed with the submissions for the assessment years viz. AY 2005-06 and AY 2006-07 respectively in respect of CPP Debari and CPP Zawar (Please refer Page No.52-71 and 77-98 respectively of PB). Disclosure in....
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....contention that only whatever power generated from the sale to an outsider or the Electricity Board, and the profit or gain derived by such sale alone can be taken as profits or gains derived by the assessee as mentioned in s. 80-IA(1) of the IT Act, has been rejected, by the Tribunal in the order impugned. In our considered view, the Tribunal was well justified in having rejected such a stand of the appellant. Having referred to s. 80- IA(1) of the IT Act, we are also convinced that what is all to be satisfied in order to be eligible for the deduction as provided under sub-s.(l) of s. 80-IA, the assessee should have set up an undertaking or an enterprise and from and out of such an undertaking or an enterprise set up, any profit or gain is derived, falling under sub- section covered by sub-s.(4) of s.80-IA of the IT Act, such profit or gain derived by the assessee can be deducted in its entirety for a period of 10 years starting from the date of functioning of the set up. The contention that profit or gain can be claimed by the assessee only if such profit or gain is derived by the sale of its product or power generated to an outsider cannot be the manner in which the provisions c....
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....s very specific that in a case of captive power unit the provision of law is also the same as in the case of the undertaking which generates and distributes the power to any other concern. Further, it is a well-established principle of law that a circular can only be made in consonance with the provisions of the enactment and the same cannot be derogatory to the purport sought to be achieved. Hence we are of the opinion that the circular relied upon by the learned counsel for the Revenue is infact in favour of the assessee and therefore the said contention also cannot be accepted. " 6. Mr. K. Subramanian, learned standing counsel for the respondent would however contend that the expression 'derived from' should be given restricted meaning in which event the claim of the appellant cannot be countenanced. According to the learned standing counsel since the business of the appellant is manufacture of petro products and generation of electricity is not its business, it cannot be held that whatever profit earned, even notional profit, by virtue of captive consumption, cannot be construed as profit earned from and out of the income derived from the business undertaking. 7. In....
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....ing the y ear under consideration. The company would claim the same whenever there are profits from this unit." Since power generation has been started during the assessment year 2004-05, therefore, the AO has not considered as to whether the depreciation for earlier year was allowable against set off of income of the earlier year because the commencement of Captive Power Plant is from assessment year 2004-05. There has been clear cut lack of enquiry for ascertaining the quantum of deduction u/s 80IA. 9. Therefore, it becomes clear from the above that the assessee has been held eligible for deduction under section 80IA of the Act in respect of Captive Power Plant, Debari. Respectfully following the above Tribunal Order, we do not find any merit in the ground raised by the Revenue in this appeal. Therefore, we confirm the impugned deletion and dismiss the appeal of the Revenue." 262. Respectfully following the decision of the Coordinate Bench and in the absence of any distinguishing factor brought to our attention by the Ld. CIT DR, we dismiss this ground of Appeal of the Revenue." Similar ground has also been decided by the Coordinate Bench of the Tribunal in assessee's own ....
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....m was not at "power" for the purposes of section 80IA, and therefore income from sale of steam was not eligible for deduction u/s 80IA. Without prejudice, the AO held that even if notional income from sale of steam was considered eligible for deduction u/s 80IA, the assessee had failed to furnish any details of cost of steam claimed at Rs. 31,17,36,541/- to show that any specific cost attached to steam which was a waste product generated in the process of generation of electricity from coal. In these facts, sale price for notional transfer of steam (submitted by the assessee to be equal to cost of steam) was taken at NIL by the AO, reducing the income of the CPPs eligible for deduction u/s 80IA by Rs. 31,17,36,541/-. 2.3 As regards the first finding of the AO, while deciding the preceding Ground, 8(b), of appeal, income from sale of steam has been held eligible for deduction u/s 80IA following the Hon. ITAT's orders in assessee's own case in earlier years. However, the question to be decided in this ground of appeal, i.e., whether the assessee, in the year under appeal, has been able to furnish any details of cost of steam claimed at Rs. 31,17,36,541/- to show that any specific c....
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....fact that the Steam is power. The Webster's Dictionary defines steam as "energy". In Webster's Abridged Dictionary, at p. 1391, the steam has been defined to mean 'power or energy'. The Oxford English Dictionary defines "Power" as mechanical or electrical energy or any form of energy or force available for application to work (as that of gravitation, running water, wind, steam, electricity. The TPO failed to appreciate that section 80 IA of the act refers to the term "Power" and this term has to be determined from the perspective of the recipient and also that "Power" cannot only mean "electricity". Accordingly, the steam and power are one or the other form of energy and giving steam a different treatment would be contrary to the spirit of the statute. Since the steam is equated with the power it is a form of energy and power being also energy, the revenue so generated would qualify for deduction u/s. 80-IA. It is submitted that the income derived from the supply of steam is income derived from an undertaking engaged in the generation of power is a form of energy and is thus power that would qualify for the deduction under s. 80-IA of the IT Act. The Appellant therefore ....
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....nt was entitled to claim deduction under section 80-IA of the Act on the value of steam used for captive consumption by the appellant. At this juncture, it is respectfully submitted that the issue of allowability of this claim of deduction u/s 80-IA is no longer res integra and is covered by decision of Hon'ble Kolkata Bench of Tribunal in Deputy Commissioner of Income-tax, Circle-8, Kolkata vs ITC Ltd. [2015] 154 ITD 136 (Kolkata - Trib). The similar claim of steam has been allowed in Appellant's favour in the past, in respect to Asst. Yr. 2014-15 and 2015-16 by the Hon'ble CIT(Appeals), Udaipur. The Hon'ble Jurisdictional ITAT Jodhpur in the case assessee's own case has allowed the claim of the Appellant vide its consolidated order dated 04/09/2017 for the assessment years 2008-09 (ref. pages 208-212 of CL Paper book), 2011-12(ref. pages 349 of CL Paper book) and for the AY 2012-13. (ref. pages 349 of CL Paper book). 18. We have heard rival contentions, perused the material available on record and gone through the orders of the revenue authorities. We find that the matter is squarely covered by the decision of Coordinate Bench of the Tribunal in assessee's own case in ITA Nos....
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....arlance, production of steam and generation of steam or for that matter, production of electricity and generation of electricity, shall have the same meaning whichever of the two be the item under consideration. Regarding the sub-clauses (b) and (c) of section 80-1Å(4)( iv) deal with -transmission and distribution lines, he submitted that under clause (iv) of section 80-1Å(4) provides for deduction in case of three types of undertakings, viz., the one which is engaged in generation or generation and distribution of power, the second which starts transmission or distribution by laying a network of new transmission or distribution lines; and the third which undertakes substantial renovation and modernization of the existing network of transmission or distribution lines. All these three clauses deal with the three different categories of the undertakings. These three types of undertakings referred to in the said sub-clauses (a), (b) and (c ) are different and independent of each other. Hence while dealing with one sub-clause, inference need not and cannot be drawn from the other sub-clause. He submitted that the word 'power' used in section 80 ) has not been specif....
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....of power generation unit, gas base route. 5. Considering the above submissions, we find substance in the arguments of the learned Authorised Representative that like electricity, steam is also a form of power as per the dictionary meaning reproduced by the learned CIT(Å) at pp. 5 and 5 (sic) of the first appellate order. We also concur with the view of the learned Authorised Representative that there is little room for any doubt that scientifically or in general parlance, 'production of steam' and 'generation of steam'; or for that matter, 'production of electricity' and 'generation of electricity', shall have the same meaning whichever of the two be the item under consideration. In this regard the learned Authorised Representative has also referred the definition of word 'generate' under section 2(29) of the Electricity Act, 2003 as per which 'generate' means to produce electricity from a generating station for the purpose of giving supply to its any premises or enabling a supplier to be so given. The Assessing Officer has tried to point out the intention of the Legislatures by referring to section 80-1A(4)(iv)( b) to infer t....
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....ridge International Dictionary of English, the steam is the hot gas that is produced when water boils; steam can be used to provide power, steam turbines of a steam engine/ locomotive of the age of steam. Thus, there is no doubt, like electricity, steam is also a form of power. The arguments advanced on behalf of the assessee also find support from the decision of Delhi Bench of the Tribunal in the case of Sial SBEC Bioenergy Ltd. (supra) on an identical issue wherein dealing with the matter in detail, it has been held that the word 'power' has to be given a meaning which is in common parlance and in common parlance the word 'power' shall mean the energy only. The energy can be of any form, be it mechanical, be it electrical, be it wind or be it thermal. The steam produced by the assessee on the principle of interpretation of statute shall only be termed as power and shall qualify for the benefits available under section 80-1A(iv), held the Tribunal. Under these circumstances, we fully concur with the decision on the issue arrived at by learned CIT(Å) that assessee is in the business of generation of power and that the steam so generated by the industrial unde....
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....us Head Office expenses like salary, rent, insurance, etc. and depreciation on the head office assets i.e. residential building, computers, furniture and fittings, motor vehicles etc. was also considered for the apportionment. That way, the expenses of Rs. 4.90 Cr, 4.65 Cr, Rs. 10.97 Cr, Rs. 57.44 Cr respectively were determined to be apportioned for CPPs Chanderiya 80MW, Zawar 80MW CPP, CPP Dariba 160 MW and Pantnagar lead and Zinc plant respectively and in the case of WPPs Rs. 2.07 Cr on the basis of turn-over while computing the eligible profits. For arriving at the amount of disallowance, the TPO has worked out the percentage of HO expenses to the Total expenses of HZL which worked out at Rs. 337.97 Cr being 32% of total head office expenses and arrived at an amount of Rs. 7.97 Cr and added the same with total HO expenses for depreciation on HO assets and apportioned total amount of Rs. 345.94 Cr on the basis of turnover of the units and made total addition of Rs. 50.99 Cr. 20. On the other hand the ld. D/R contended that head office is only the cost center and not a profit center. Reference made to the observations of the TPO at page 63 of the TPO's order which reads as unde....
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....CPPs and other units were being monitored and controlled. Auditors remuneration expenses, cost audit expenses, director's related expenses, grass- root expenses and salary to non executive employees are nil in the case of CPPs, refineries and WPPs whereas the said expenses are substantial in the case of Head Office. The substantial difference in staff welfare expenses, rates and taxes, insurance, technical consultancy and watch and ward expenses paid at Head Office without earning any income and those incurred in the case of CPPs, refineries and WPPs where huge turnover was made is a glaring example to establish that CPPs and other units were being controlled and managed by the Head Office. Therefore, Head Office expenses need to be allocated to the CPPs and other units to work out their actual exempted profits." The Ld. CIT (DR) contended that services received from head office is to be construed as transfer in terms of section 80IA of the Act and, therefore, the same is to be taken into account for determining the profit eligibility for deduction under section 80IA for the eligible unit. 21. In Rejoinder, the ld. Counsel for the assessee submitted as under :- "The Appellant s....
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....e tax holiday units have already been debited while calculation of profit of the tax holiday units. Directors' fees Directors' travelling expenses Auditor's remuneration and expenses Donation The board of directors take part in strategic and key decision making for facilitating the operational activities at eligible as well as non-eligible units. In this regard, the salary cost of the board of directors may be apportioned and allocated to the eligible units. Similarly, the other expenses listed herein, are incurred for the Company as a whole and may also be apportioned between the eligible and non-eligible units, based on a rational allocation key, which would appropriately reflect the efforts undertaken by the respective units. The Appellant submitted that the Head Office expenses and common assets have no proximate connection with the industrial undertaking eligible for deduction under the Act. These expenses would have been incurred otherwise also had there been no tax benefit units in existence and these expenses represent common corporate expenditure which cannot be allocated or assigned to any particular unit or activity. The TPO/AO while making the appo....
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.... Commissioner of Income-tax vs EHPT India (P.) Ltd. [2013] 350 ITR 41 (ref. pages 1035-1042 of CL Paper book) has held that apportionment of expenses should be made on a rationale and scientific basis, if no method has been prescribed under statute, and also affirmed application of headcount basis for allocating common expenses. (d) No provision for apportionment of expenditure in the Act. The TPO/AO held that the head office expenses have to be apportioned on the basis of turnover. Various Head Office expenses like salary, rent, insurance, etc. and depreciation on the head office assets i.e. residential building, computers, furniture and fittings, motor vehicles etc. was also considered for the apportionment. That way, the expenses of Rs. 4.90 Cr, 4.65 Cr, Rs. 10.97 Cr, Rs. 57.44 Cr respectively were determined to be apportioned for CPPs Chanderiya 80MW, Zawar 80MW CPP, CPP Dariba 160 MW and Pantnagar lead and Zinc plant respectively and in the case of WPPs Rs. 2.07 Cr on the basis of turn-over while computing the eligible profits. The TPO also held that the head office expenses and the depreciation on the common assets have to be apportioned on the basis of turnover an....
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....le Supreme Court has observed at pp. 450 and 451 that in the absence of direct nexus between the expenditure and the income of the eligible unit, there can-not be apportionment HO expenditure. "The following principles may be laid down : (i) if the income of an Appellant is derived from various head of income, he is entitled to claim deduction permissible under the respective head, whether or not computation under each head results in taxable income; (iii) if the income of an assessee arises under any of the heads of income but from different items, e.g., different house properties or different securities, etc., and income from one or more items alone is taxable whereas income from the other item is exempt under the Act, the entire permissible expenditure in earning the income from that head is deductible; and (iii) in computing the 'profit and gains of business or profession' when an assessee is carrying on business in various ventures and some among them yield taxable income and the others do not, the question of allowability of the expenditure under s. 37 of the IT Act, 1961, - will depend on : (a) fulfillment of requirements of that provisions, namely that (i) the expenditure....
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....Office for all the units on proportionate basis. The assessee also claimed deduction under Section 80HHC in respect of each of its units on the ground that the accounts for these units were separately maintained, and therefore common expenditure of the Head Office cannot be apportioned for considering the deduction under chapter VIA. Aggrieved by the order of the assessment apportioning the common expenditure incurred by the Head Office, the assessee went on appeal before the Commissioner of Income Tax (Appeal), who following his earlier order, held against the assessee. Aggrieved by the same, the assessee went on appeal before the Tribunal, so too the Revenue went on appeal as against certain relief granted to the assessee. 3. A perusal of the order of the Tribunal shows that it followed the orders relating to assessment years 1981-82 to 1991-92 dated 28.5.2002 deciding the issue in favour of the assessee. Thus, the assessee's appeals were allowed. Learned counsel for the assessee placed before this Court the Tribunal's order passed in the assessee's own case on the identical claim dealt with under paragraph 28 of the order relating to assessment year 1984-85, paragr....
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....ax Officer shall proceed to assess the income to the best of his judgment." 5. Referring to Rule 5 of the Karnataka Agricultural Income Tax Rules, the Supreme Court pointed out that the crucial words in the said rule are that the deductions admissible under the Act shall be the actual amount relating to the income derived from agricultural operations and proved by accounts or other conclusive evidence. Where no such accounts or evidence available, the Assessing officer can proceed to asses the income to the best of his judgment. In confirming the view of the Karnataka High Court, the Supreme Court also affirmed the similar view rendered by this Court in the decision of CIT v. Manjushree Plantations Ltd. [1981] 130 ITR 908 6. As far as the above stated decision is concerned, the deduction is based on Rule 5. In the absence of any specific provision in the Income Tax Act, and more so in the absence of any such provision, there being no material to show that the expenditure though common were with reference to individual units relatable to the income earned, we do not find any justifiable ground to accept the plea of the Revenue. The assessee had taken the contention that the expe....
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....taken by Hon'ble Tribunal for assessment year 2005-06 vide order dated 10.04.2017 in ITA No. 612/JU/2009] (ref. Page 1475 - 1479 of the CL Paper Book)., holding as follows : "9. Ground no. 8 is against deletion of reduction of Rs. 87,97,262/- made by the Assessing Officer for the claim u/s 80IA of the Act. The Ld. Departmental Representatives adopted the same argue as were made in ITA No. 612/JU/ 2009. He submitted that the assessee has not apportioned the expenses related to Head Office and CPP. He submitted that Director's fee is same for the Head Officer as well. 9.1 On the contrary, Id. Counsel for the assessee submitted that the expenses are duly apportioned and the word derived from has a wide import and be construed accordingly. 9.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The identical issue was in the ITA No. 612/JU/2009 we have decided this issue in para 10.2 by observing as under:- "10.2 We have heard the rival contentions, perused the material available on records and gone through the orders of the authorities below. We find that the identical issue was in the yea....
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....d. AO instead of establishing any direct of proximate relation between these unconnected proportionate expenses reduced them from eligible profits under a notion that even the remote and unconnected proportionate expenses are allocable. (iv) The Id. AO held that HO is not a profit earning centre and Captive Power Plant, Debari is not a standalone unit, having independent functioning and a separate profit center and on such erroneous assumption reduced the deduction u/ 80IA by aforesaid expenses of other independent and functionally different units. Ld. Counsel has demonstrated that other units of the Company cannot use the fixed assets, like permanent residential buildings of Udaipur unit which are wholly and exclusively for the operation of Udaipur unit only; there is no basis to assume that they were even impliedly used by other operating units including CPP. Consequently there being no direct nexus between two independent industrial units the question of proportionate apportionment of their user or depreciation to CPP does not arise. Moreover, it has been demonstrated that the Udaipur based office equipment, furniture, fixtures, computers, motor vehicles etc. are also exclus....
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....buted to independent CPP unit situated at Debri. Such presumptive and notional reduction of claim u/s 80IA is arbitrary and unsustainable. g) The words "derived from" have been used by the Legislature in the restricted sense and therefore, there must be direct nexus between the expenditure and industrial activity. Since there is no direct nexus of the alleged expense with CPP unit, neither allocation nor reduction of 80IA claim has justification. It is settled law that allocation, if any, cannot be made by demonstration of direct nexus between alleged proportions of expenses with power generation operations of PP unit situate at Debari, Ld. CIT(A) has rightly deleted the reduction in 80IA claim. i) The Legislature has used the words "derived from" in contradiction to the words "attributable to" in other sections. a. In the case of Cambay Electric supply Co vs. CIT 1978 CTR (SC) 50: (197) 113 ITR 84 Hon'ble Supreme Court has squarely held that the Words ''derived from" have been used by the legislature in restricted sense as the Words ''attributable to" are much wider in meaning than the words "derived from" b. Hon'ble Supreme Court in the case of IT ....
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....aking i.e. CPP, therefore the unrelated proportionate HO expenses cannot be reduced while computing deduction u/s 80IA. This ground no. 12 of the Revenue is dismissed. However, we find that the certain expenses which are common to both to the Head Office and Captive Power Plant has not been allocated Therefore, the issue. is restored to the file of the Assessing Officer for re-computation of reduction. The Assessing Officer would re-work allocation of the expenses related to the director's fees, auditor's fees and donation for charity. To this extent, the order of the Ld. CIT(A) is modified This ground of the Revenue's appeal is partly allowed for statistical purposes." 9.3 There is no change into facts and circumstances. Therefore, taking a consistent view, we restore this issue to the file of the Assessing Officer for re- computing the reduction of deduction u/s 80IA. The Assessing Officer would restrict the apportionment to the extent of Director's fee, charity and donations. The Ground no. 8 is partly allowed as discussed hereinabove for statistical purpose." The above view has been affirmed by the decision of the Hon'ble Jodhpur Bench of the Tribunal in t....
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....gible industrial undertaking i.e. CPP, therefore the unrelated proportionate HO expenses cannot be reduced while computing deduction u/s 80IA. This ground no.12 of the revenue is dismissed." 268. Having considered the submissions to the counsel for the Assessee refined his contentions to be correct and noted that one of disputes raised by the Assessee in the earlier order was also the basis of allocation. Hence while accepting that there was no basis for allocating expenditure of the Head Office to the eligible units he make the exception in respect of directors fee, auditors fee and donation for charity. However, we direct the Assessing Officer to apportion such expenditure on a reasonable basis and not on the basis of turnover as was done by him in the Assessment Years. For these utterly support from the decision of a Coordinate Bench in the case of ACIT Vs. P.I. Industries (144 TTJ 353) (Jodhpur) where the Tribunal has disapproved the turnover basis for allocating common expenditure. Given the nature of these expenses it would be seen that the auditors have contention and expenses for charity cannot rely be attributed to any particular unit as these are genuine expenses and in....
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....es below. The identical issue was in the ITA No. 612/JU/2009 we have decided this issue in para 10.2 by observing as under:- "10.2 We have heard the rival contentions, perused the material available on records and gone through the orders of the authorities below. We find that the identical issue was in the year 2004-05 in ITA No. 235/JU/2008. The coordinate Bench has decided the issue in Para 17.9 holding as under:- "17.9 We have heard the rival contention and perused the material available on record. It is settled law that when the assessee claims any allowable deduction the explanation and evidence submitted in this behalf is to be objectively considered by ld. AO. In case of any infirmity in the claim, the same should be effectively dealt and the claim should be denied by proper discharge of onus. Without effective rebuttal and objective consideration assessee's beneficial claim cannot be disallowed on assumptions and intendments. It is also settled jurisprudence that while interpreting the beneficial legislations a liberal approach should be adopted. This is so as a very strict interpretation will defeat the legislative intent of encouraging captive power plants in electric....
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....irect nexus between two independent industrial units the question of proportionate apportionment of their user or depreciation to CPP does not arise. Moreover, it has been demonstrated that the Udaipur based office equipment, furniture, fixtures, computers, motor vehicles etc. are also exclusively used for the day to day working of Udaipur Unit and they can in no way be supposed to be used for CPP. Since respective units retain control over their assets, they have no occasion of user by CPP. Rom the facts and circumstances emerging form the record and contentions. We observe that: a) No allocation of Ho and other expenses is justified since such expenditure on Ho and other units was incurred even prior to setting up of eligible CPP unit. b) The assessee is primarily engaged in the activities of mining and manufacturing of Zinc and lead metals. This business of the assessee is one and indivisible from CPP unit. In the absence of any direct nexus the apportionment is not mandated by the correct interpretation of sec 80IA. c) It has not been rebutted that after the commencement of CPP activity there was no increase in the HO expense relatable to employee's remuneration & benefit....
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.... Hon'ble Supreme Court has squarely held that the Words "derived from" have been used by the legislature in restricted sense as the Words "attributable to" are much wider in meaning than the words "derived from". b. Hon'ble Supreme Court in the case of IT vs. Sterling Foods (1999) 153 ITR CTR (SC) 439: (1999) 237 ITR 579 (SC) has held that or application of the words "derived from". There must be a direct nexus between the profits and the activity of the industrial undertaking, consequently, it is by now a settled proposition that remote or indirect nexus would not be sufficient for application of the words "derived from". c. In the case of IT vs. Strawboard Manufacturing Co Ltd. {(1989) 177 ITR 43} in the context of deduction under section 80E, Hon'ble Supreme Court held that: "The provision for rebate has been made for the purpose of encouraging the setting up of new industries. It is necessary to remember the when a provision is made in the context of a law providing for concessional rate of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute. In our view, the controversy in question stands squa....
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....t of Director's fee, charity and donations. The Ground no. 8 is partly allowed as discussed hereinabove for statistical purpose." The above view has also been affirmed by the Jodhpur Bench of the Tribunal in the assessee's own case in ITA No. 184/Jodh/2012 dated 04.09.2017 for the assessment year 2008-09 by observing in para 277 as under :- "277. Having considered the submissions of the parties we find the contentions raised by the ld. A/R to be correct and note that one of disputes raised by the Assessee in the earlier order was also on the basis of allocation. However, we direct the Assessing Officer to apportion such expenditure on a reasonable basis and not on the basis of turnover as was done by him in the Assessment years. For this we find support from the decision of a Coordinate Bench in the case of ACIT vs. P.I. Industries (144 TTJ 353)(Jodhpur) where the Tribunal has disapproved the turnover basis for allocating common expenditure. In our opinion only such expenses should be attributed which have a direct bearing of the business activity. With these observations this ground of revenue is partly allowed." On the very same issue the Coordinate Bench of the Tribunal in I....
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....curred at Pantnagar unit and other units of the Appellant. TPO has rejected the Functional, Asset and Risk Analysis (FAR analysis) undertaken by the Appellant and disregarded the TP documentation maintained by the Appellant, stating that the refining units of the Appellant do not perform any significant function in the manufacturing of the final product of HZL and accordingly, the FAR analysis undertaken by the Appellant is incorrect. Further, the Ld. TPO has proposed to reject the economic analysis undertaken by the Appellant [using Transactional Net Margin Method (TNMM) as the MAM] and has applied the Profit Split Method (PSM) for determining arm's length price for transfer of cathode. TPO held in the impugned TP order that the cost plus approach adopted by the Appellant for valuing the transfer of semi-finished/ intermediary goods from the noneligible units to the eligible units of the Appellant is inappropriate and has applied PSM Method (considering the processing cost incurred as the allocation key). 24. On the other hand, the ld. D/R contended as under :- (i) The Ld. CIT (DR) contended that in the Pantnagar Silver Metal Process ("PSMP") unit significant value addition....
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.... the prescribed methods and therefore Profit Split Method was rightly applied by the TPO. 25. In Rejoinder, the ld. Counsel for the assessee submitted regarding Manufacturing Process of PSMP Unit as under :- "At the outset, the Appellant would like to submit that HZL has zinc, lead and silver refining facilities at Pantnagar in the state of Uttarakhand, which are eligible for claiming deduction u/s 80IC of the Act. These units input cathode sheets, which are semi-finished goods manufactured by the smelting units of HZL, and produce zinc, lead and silver ingots for ultimate sale to the customer. The manufacturing process at the refining units is explained below: (i) The cathode sheets are transported to the refining units of HZL through containerized trucks, either by rail / road, in bundles, each weighing approx. 2.5 - 2.8 MT with MS strapped. The bundles are unloaded by the forklift and kept in the storage yard. (ii) These cathode bundles are unstrapped manually by cutter and with the help of forklift they are taken to the charging floor. The cathode sheets of approx. 1MT to 1.5 MT are charged in the furnace through the chain rollers charging system. (iii) These sheets ar....
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....rocess to the metal enables it to fetch the premium prices in the market. The statement of Mr. Rajesh Dua and others referred to by the Ld. CIT (DR) does not contradict the aforesaid factual position regarding the manufacturing process. Mr. Rajesh Dua in his statement has merely submitted that as he comes from financial background and is not familiar with the manufacturing process. He thus submitted in the statement that was not competent to provide details / make statement with respect to technical aspects and would consult the concerned technical department and submit reply / revert on the same thereafter. [Ref. Pg 61 of the compilation filed by the Ld. CIT (DR)]. In the statement of Mr. Ramesh J. Parmar placed at pages 64 to 71 of the compilation filed by the Ld. CIT (DR) only confirms and corroborate the aforesaid manufacturing process undertaken at PSMP plant. It is also confirmed in the said statement that the raw material, i.e., zinc, cathode, sheets received from plants in Rajasthan are further refined at PSMP which results in reduction of 2-2.5% of waste material, viz., zinc dross and consequently the finish product, viz., zinc ingots with 99.995% zinc content/purity i....
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....rom non-eligible units to eligible units on a total cost plus basis is in line with the guidance provided by the OECD. In the instant case, since the gross cost is not easily available, variation of total cost was considered for pricing the semi-finished goods transferred to eligible units. In this regard, the attention of your goodself is also drawn to the discussion in respect of most appropriate method as captured in the TP Documentation of the Appellant. It is further submitted that the appellant has undertaken a detailed economic analysis wherein suitability of every method was examined and TNMM was selected as the most appropriate method considering the nature and characteristics of the transactions undertaken between the eligible and non eligible undertaking. (Detailed functional and economic analysis at Pg 419-434 of paper book Vol 2). Further, on the basis of the aforesaid analysis, the appellant selected functionally comparable companies engaged in mining and production of aluminium and copper. It is submitted that such companies are functionally comparable to the taxable units of the appellant and a detailed business description of the aforesaid companies was provide....
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....lant and instead of applying Profit Split Method. It is further respectfully submitted that in terms of section 80IA(8) what is required to determine is market price of the goods and services transferred. Section 80IA(8) does not provide determination profit of the eligible undertaking and for that reason also it is not open for the TPO to embark upon profit determination by resorting to Profit Split Method. For the aforesaid cumulative reasons action of the AO/TPO in rejecting Transactional Net Margin Method consistently applied by the Appellant. In line with Indian Excise Laws The Appellant's approach of adding 10% mark-up on cost of producing cathode for transfers to eligible units is also in line with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 ('Central Excise Rules') which reads as following - Quote Where the excisable goods are not sold by the Appellant but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods. Unquote Further, the Appellant would also like to submit....
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....a patent mistake. Under the TP provisions too, rule 10B(2) of the Income-tax Rules providing that the comparability of an "international transaction" or a specified domestic transaction, with an uncontrolled transaction shall be judged with reference to, inter alia, "...the laws and Government orders in force". [refer clause (d) Rule 10(B)(2)]. In the present case, it is reiterated in terms of the Central Excise laws the transfer price of the semi-finished goods, viz., cathod are to be at cost plus 10% mark up and the same has mandatorily required to be followed by the appellant. The aforesaid requirement under the Excise law would have to be taken into consideration for evaluating comparability of the specified domestic transaction in terms of the Rule 10B(2)(d) of the Income-tax Rules. In other words, the said price of cost plus 10% adopted by the appellant as the transfer price for determining the profit of the eligible unit is to be considered sacrosant and as per arm's length and for the purpose of transfer pricing under the Income-tax Act. Similar observation was also made by Delhi ITAT in case of Abhishek Auto Industries Ltd. Vs. DCIT (ITA No. 1433/Del/2009), wherein t....
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.... the then AO had observed as following in his order for the AY 2009-10 (ref. Page 1681 - 1687 of the CL Paper Book): Quote "(''PARA 12. DEDUCTION U/S 80IC IN RESPECT OF HZL PLANT (HZP) The Appellant has claimed deduction u/s 80IC at Rs. 118,26,40,303/- in respect of income from HZP. To examine this claim, following queries were raised. "You have claimed deduction u/s 80IC at Rs. 1182640303/- in respect of HZP plant Haridwar. In this regard, you are required to furnish the following information:- a) Whether the undertaking fulfills the conditions laid down in sub section 3 of section 80IC. Please give detailed reply in respect of each condition. b) Explain in details whether provisions of sub section 2 of section 80IC apply to your unit. c) Also furnish information as has been asked in the case of CPP for claiming deduction u/s 80IA i.e. information required to be furnished by the eligible unit as per sub section 5 and sub section 7 to 12 of section 80IA. d) Explain whether cathode sheets were being sold by any particular supplier unit to HZP plant. Besides, the same unit was also making sales of cathode sheets to other consumers. If so, compare the average sale price ....
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....1- 2011 Appellant was further required to furnish details of HO expenses and to explain why these may not allocated to HZP to work out eligible income. 12.3. In response to above queries, vide reply No. 6 dated 03-11-2011 (part ii), reply No. 7 dated 23-11-2011 and reply No. 9 dated 13-12- 2011 the Appellant interalia furnished following information:- 1. Process flow chart showing charging of cathode, use of various chemicals in electric induction furnace for melting cathode, production of buy production like dross and metallics, use of graphite pumps, casting, stamping, clamping etc. It was also explain that zinc ingots so produced contains 99.995% purity and used in galvanizing, manufacturing of zinc oxide, die casting etc. 2. The Haridwar Zinc Plant (HZP) caters only the requirement of buyers needing zinc of 99.995% purity. 3. The raw material zinc cathode does not have Harmonized System code and it is not a saleable commodity having no market anywhere. 4. Appellant claimed that deduction u/s 80IC is permissible to the unit under clause (ii) (a) of sub section 2 of section 80IC which reads as under:- "2a (ii) " on the 7th day of January, 2003 and ending before the 1s....
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.... of letter received from Regional Manager, Sidcul IIE - Haridwar certifying that the plant of Hindustan Zinc situated at 2D-1, Sector10, IIE-Haridwara Uttar Khand is situated in notified area Salempur Mehdood in Khasra No. 545 which has been notified by the Government of India vide notification bearing No. SO741(E) dated 28-06-2004 as amended by Notification No. 283/2006(F.No. 142/30/2005-TPL dated 03-10-2006) for the purpose of allowing deduction u/s 80IC. Further Appellant also furnished certificate of Tehsildar Haridwar certifying that the unit of the Appellant is situated in Khasra No. 545 which has been notified for granting deduction u/s 80IC. 12.4 On the basis of above submission, Appellant pressed claim of deduction u/s 80IC which was examined carefully. From the evidences furnished by the Appellant, it is noticed that the undertaking is situated in the notified area and that it is involved in manufacturing of article or things not covered by schedule thirteen. Therefore, the undertaking of the Appellant duly falls within the category specified in sub section 2 (a) (ii) of section 80IC and is found eligible for deduction u/s 80IC.'')'' Unquote [Emphasis supp....
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....e us. Before we adjudicate the issue, it would be relevant to refer to the provisions of Section 801Å (8) of the Act (as applicable for assessment year under consideration) - (8) Where any goods [or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods [or services] as on that date . Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on su....
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....ance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by section 45 must fall under the governance of its computation provisions. transaction to which those provisions cannot be applied must be regarded as never intended by section 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the Income-tax Act, whereunder each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section, there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that t....
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....rice as stated in the explanation to Section 801Å(8). The power that is vested in the A.O. to recompute profits under the proviso cannot be read in isolation to the main provision. This power has been vested only where an exceptional difficulty is faced by the A.O. in computing the eligible profits of the unit. The AO has not pointed out any exceptional difficulty as mandated under the act. We note that the incentive providing provisions need not be construed in a manner so as to discourage investments as was the intent behind the insertion of these provisions. It is settled position of law that the incentive provisions have to be interpreted in a manner so as to further the objective of the legislature and not to defeat it. 538. We are also constrained to observe that the CIT(Å) himself has accepted the contention of the Assessee . that profits cannot accrue equally over every unit of expense. Having come to that conclusion we also failed to understand how by applying the test of reasonableness the CIT(A) affirmed the allocation of profits on the basis of the expenditure incurred by the units. This is impermissible in law. 539. We have also analyzed the provisions ....
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....n behalf of its overseas AEs which have been charged back to the relevant AEs at cost amounting to Rs. 4,19,56,073 without any mark-up. Since, the aforesaid reimbursements were third party expenses where no value addition is made by the Appellant and are subsequently reimbursed by the AEs on a cost-to-cost basis, the Appellant applied "Other Method" as it merely acted as a facilitator of payments on behalf of the AEs and did not provide any service to the AEs that would have warranted a mark-up. The TPO, however, held that the Appellant provided administrative (agency) services to its AEs acting as an intermediary and these recoveries represent business support services provided by the Appellant to its AEs and accordingly the Appellant should have charged a mark-up for providing these services. The TPO also noted that the payments have been received by the Appellant over a period ranging from 23 days to 110 days and hence, on that basis concluded that the Appellant has provided support services to its AE and thus mark-up should have been charged by the Appellant. Accordingly, the TPO has identified companies providing market support functions and after noting their average pr....
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....ITR 43 (at Page 1060 - 1070 @ 1069 of the CL Paper Book).where in the Delhi High Court directed to exclude the pass through cost, being raw material purchased by an automobile component manufacturer, while computing the operating margin. The Delhi High Court held as follows: "It is further importantly pointed out that the very purpose of transfer pricing is to benchmark transactions between related parties in order to discover the true price if such entities were unrelated. If MUL had bought the PGM directly from JMUK there would have been no application of transfer pricing since MUL and JMUK are unrelated entities. MUL would have purchased the PGM just like JMIPL did on negotiated prices. There is merit in the contention that the prices at which JMIPL purchased PGM from JMUK were already at arm's length and that it was for administrative convenience that MUL had outsourced this function to JMIPL. The submission of the Revenue that the accounting entries of JMUK do not treat the cost of PGM as a pass-through cost fails to acknowledge that JMUK is in the business of selling PGM. It does not require to charge JMIPL for processing the raw material i.e. PGM as that is passed on to MU....
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.... is no rendering of any service and it does not involve service element. What is incurred is reimbursed. So, therefore, there is no profit element in the reimbursement. In such situation there is no justification in making a mark up of 5 per cent. This addition is accordingly deleted. This issue is decided in favour of the assessee." Reliance in this regard is also placed on the ruling in the case of LG Soft India Pvt. Ltd. (ITA No. 1121/Bang/2011) whereby it was held as under: "4.5 We have heard the rival submissions and perused the materials on record. We have noticed that the details of reimbursement expenses are given at page 334 of the paper book filed by the Appellant . The break-up of the Said expenses are not given in detail and it is not clear whether it is the reimbursement of expenses incurred on behalf of the AE Since the issue is not dear and there is no detailed discussion of the break-up of expenses we deem it fit and proper to remit the issue to the file of the Assessing Officer / TPO for detailed verification. We make it clear that if the receipts are mere recovery of expenses without any service then the same should not be added back to the cost base for the p....
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....ropriate for the performance of an agency function rather than for the performance of the services themselves. In such a case, it may not be appropriate to determine arm's length pricing as a mark-up on the cost of the services but rather on the costs of the agency function itself. For example, an associated enterprise may incur the costs of renting advertising space on behalf of group members, costs that the group members would have incurred directly had they been independent. In such a case, it may well be appropriate to pass on these costs to the group recipients without a mark-up, and to apply a mark-up only to the costs incurred by the intermediary in performing its agency function." As per the said Guidelines, when an Associated Enterprise incur the costs on behalf of the group members, cost that the group members would have incurred directly had they been independent, it may be appropriate to pass on the costs to group recipients without a mark-up and to apply a mark-up only to the costs incurred by the intermediary in performing its agency function. In the present case, we are of the view that the assessee-appellant is not performing any agency function but has only incurr....
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.... which is directly relatable to the earning of exempt income. The AO, however, contended that the Appellant did not make disallowance of expenses as per provisions of sections 14A of the Act read with rule 8D of the Income tax Rules, 1962. Further, the AO contended that Appellant is having huge investments and it is quite certain that administrative expenses such as salary, other services fees, printing and stationery, postage and stamp, telephone, bank charges, legal and professional fees, office expenses, clerical and other administrative expenses are made in acquiring, maintaining the tax free investments and earning the tax free income. Hence the AO held that the provisions of Rules 8D(2)(iii) of IT Rules are required to be applied for disallowance of administrative expenses in the Appellant's case and accordingly made addition of Rs. 15,31,69,157 under Normal provisions of the Act being expenditure incurred in relation to earning of exempt income by applying Rule 8D of the Rules. Adjustment for 14A under MAT: The AO also made adjustment for the same amount while computing book profit in terms of section 115JB of the Act. 32. On the other hand, the ld. D/R relied on the d....
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....14A of the Act. Reference in this regard may be made to the following decisions: * CIT vs. Walfort Share & Stock Brokers: 326 ITR 1 (SC) * Godrej & Boyce Manufacturing Company Ltd. vs. DCIT: 394 ITR 449 (SC) * Maxopp Investment Ltd: 203 Taxman 364 (Del.) - affirmed by SC in 402 ITR 640 * H.T. Media Ltd. v. PCIT: 399 ITR 576 (Del) Reliance is also placed on the decision of the Delhi High Court in the case of Coforge India Limited: 436 ITR 546 (Del), wherein the Court, on the issue of satisfaction observed as under: "........ 13. Therefore, what emerges is, if the Appellant claims a certain amount of expenditure was incurred by him to earn the income which does not form part of the total income, the AO is required to examine the accounts, and thus, satisfy himself as to the correctness of the claim made by the Appellant about the expenditure incurred in that regard. It is when an AO is not satisfied as to the correctness of the claim made by the assessee, about the expenditure said to have been incurred by him on such income which does not form part of the total income under the Act, he then proceeds to determine the amount of expenditure, by following such method as is....
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....r in the assessment order, before applying Rule 8D. In that view of the matter, the action of the assessing officer in invoking the provisions of section 14A read with Rule 8D of the Rules, without recording prerequisite satisfaction, needs to be reversed at the threshold and disallowance is liable to be deleted. The Hon'ble ITAT Jodhpur deleted similar disallowance in Appeal No. 179 & 184 for AY 2008-09 (ref. pages 261-279 of CL Paper book) , 262 & 246/Jodh/2017 for AY 2011-12 (ref. pages 346-347 of CL Paper book) and in Appeal no. 404 & 412/Jodh/2017 for AY 2012-13 (ref. pages 427-431 of CL Paper book) . Re.: MAT Also, any disallowance made under the normal provisions of the Act cannot be given effect to for arriving at the "Book Profit" for the purpose of Section 115JB of the Act unless it is specifically covered u/s 115JB of the Act as above. the aforesaid provision of the Act does not refer to any disallowance made u/s. 14A of the Act for arriving at the Book Profit for the purpose of Section-115JB(2) of the Act. The Appellant Company therefore contends that additions u/s 14A of the Act cannot be made under MAT provisions. Reliance in this regard is placed on the decisio....
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.... Industrial Infrastructure Ltd. v. ACIT: ITA Nos. 69 & 70/Mum/2009 (Mum Trib.) * JCIT v. Reliance Capital Ltd.: ITA No. 3037/Mum/2008(Mum Trib.) * Bengal Finance and Investment (P) Ltd. v. CIT: ITA No. 5620/Mum/2010 (Mum Trib.) * Nahar Capital And Financial v. ACIT: ITA No. 1120/Chd/2011 (Mum Trib.) * ACIT vs. Spray Engineering Devices Ltd: (2012) 53 SOT 70 (Chd.) (URO.) * Cadila Healthcare Ltd. v. ACIT: 21 Taxmann.com 483 (Ahd. Trib.) In view of aforesaid, it is submitted that addition of Rs. 15,31,69,157 made by the AO MAT under MAT provisions u/s 14A r.w.r 8D of the Rules is liable to be deleted. 34. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. We find that the issue stands covered in favour of the assessee by the decision of Jodhpur Bench of the Tribunal in assessee's own case in ITA Nos. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the coordinate Bench has decided the issue by following its earlier order in assessee's own case in ITA Nos. 538 & 556/Jodh/2014 dated 04.09.2017 by observing in para 42 to 43 at pages 54-55 as under :- "42. We have ....
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....ich was also certified by the tax auditor and accordingly reduced from its computation of income for the impugned AY 2017-18. The Appellant has also furnished copy of Form 3CL as required. The AO however, held that the said Form 3CL pertains to AY 2014-15 and AY 2015-16 only and made disallowance of Rs. 94,55,355. For the purposes of claiming deduction under section 35(2AB), the only requirement is that the R&D facility should be approved by DSIR. There is no provision under the Act empowering DSIR to prescribe the period and quantum of expenditure for which the weighted deduction is admissible under the Act. Sub-rule (b) to Rule 6(7A) of the Income tax Rules, 1962 ('the Rules') provides that the prescribed authority shall submit its report in relation to the approval of in-house R&D facility in Form No. 3CL to the Director General (Income Tax Exemptions) within 60 days of its granting approval. The said Form is merely an intimation to be sent by the prescribed authority to the department. An Appellant engaged in such R&D activity having already obtained Form 3CM approval of its facility has no role to play in such correspondence. In the present case, the in-house R & D facility....
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....l available on record and gone through the orders of the Revenue authorities. Similar issue has come up before the Jodhpur Bench of the Tribunal in assessee's own case in ITA Nos. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13. While dealing with the issue, the Tribunal by observing in para 118 at page 158 of its order dismissed the ground of the assessee as under :- "118. We have considered the facts of the matter and also perused the relevant material on record. We note that the CIT(A), while principally agreeing to claim of Assessee regarding allowability of expenditure on scientific research, had directed to obtain a copy of Form 3CL. We find no infirmity with the order of the CIT(A) and hence, this ground of appeal of the Assessee is dismissed and order of the CIT(A) is confirmed." We, therefore, respectfully following the decision of coordinate Bench of the Tribunal in the assessee's own case, find no infirmity in the orders of the Revenue authorities. The ground is dismissed. Ground Nos. 10, 10.1 & 10.2 relate to disallowance of Grass Root expenses of Rs. 54,69,30,401/-. 38. Before us, the ld. Counsel for the assessee submitted that the expenditur....
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....ars. Section 35E of the Act relates to deduction for expenditure on prospecting, extraction and production for certain minerals. The Appellant do not have any new mine identified during the AY 2017-18, hence the Appellant was not eligible to claim deduction u/s 35E of the Act. It is submitted that the Hon'ble ITAT, Jodhpur has adjudicated the issue of disallowance of grass root expenditure in Appellant 's favour in its case vide order no 404 & 412/Jodh/2017 for the AY 2012-13 relying on its own order in the case of the Appellant for the AY 2011-12 in ITA No. 246/JODH/2017 holding that the expenditure incurred by a mining company does not fall within the meaning of Mine Development expenditure as envisaged by section 35E if the expenditure is incurred in an area which falls within the existing mining license area where a mine is already under commercial production and the expenditure incurred is in an area where no mining license has been granted so far. Thus, the only situation when the expenditure incurred is covered under provision of section 35E is where the mining license is granted and no commercial production has yet started. (ref. pages 526-531 of CL Paper book). In the ca....
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....owance under another provision of law would tantamount to a new source of income and as such it would not be open before the CIT(Å) to make such enhancement. The relevant discussions of the Hon'ble Delhi High Court and the conclusions are reproduced are as under:- "11. A question regarding powers of the first appellate authority came up for consideration before the Supreme Court recently in CIT v. Nirbheram Daluram [1977] 224 ITR 610/ 91 Taxman 181. Following their earlier decisions in Kanpur Coal Syndicate's case (supra) and Jute Corpn. of India Ltd. 's case (supra) though their Lordships reiterated that the appellate powers conferred on the Commissioner under section 251 could not be confined to the matter which had been considered by the ITO, as the Commissioner is vested with all the plenary powers which the ITO may have while making the assessment, but did not comment on the issue whether these wide powers also include the power to discover a new source of income. Therefore, the principle of law laid down in Shapoorji Pallonji Mistry's case (supra) and Rai Bahadur Hardutroy Motilal Chamaria's case (supra ) still holds the field. 12. Thus, the prin....
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....2/J0dh/2015, held that the provisions of Section 35E are not applicable where the commercial production has already commenced. For the reasons stated in our order in context of ground no. 1 in Appeal No. 312/Jodh/2015, we hold that the expenditure of Rs. 10.16 crores has to be allowed as revenue expenditure u/s 37 of the Act since it was incurred in respect of existing mines and the provisions of Section 35E had no application thereon. 567. As regards, the balance expenditure of Rs. 24.47 crores, a perusal of the details contained in the annexure to the Order of the CIT(Å) reveals that such expenditure was only in respect of areas for which the Assessee was in the process of making applications for securing mining leases that being the nature of expenditure it was not covered under Section 35E of the Act. We are supported in our conclusions from a reading of sub-section 2 of Section 35E where in the last part of that section a reference has been made to expenditure on development of mine. In our understanding the nature of expenditure referred to in Section 35E refers to expenditure on prospecting after the license has been granted in respect of a certain area. Preparatory ....
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....ng the relevant previous year incurred Staff Welfare expenses debited to P&L account of Rs. 23,66,67,865 and claimed as revenue expenditure as follows: Particulars Amount Rs. Expenses Towards Canteen Facility to Employees 8,94,78,437 Expenses Towards Cooperative Stores 18,000 Expenses Towards Schooling Activities 5,19,87,170 Expenses Towards Sports Clubs 28,73,995 Expenses Towards Community Centers 2,16,050 Expenses Towards Clubs - Others 21,53,488 Scholarship Executive 25,08,518 Scholarship Non-Executive 61,32,235 Other Staff Welfare Expenses 8,12,99,972 Total 23,66,67,865 42. On the other hand, the ld. CIT (D/R) contended that the above staff welfare expenses towards canteen facility, school activities, sport club, scholarship, other club etc. were covered by provisions of section 40A(9) read with Explanation 2 of section 37 as these expenses clearly fall within the meaning of corporate social responsibility and thus made disallowance of Rs. 23,66,67,865. 43. In Rejoinder, the ld. Counsel for the assessee submitted that Section 40A (9) of the Act provides for disallowance of any expenditure made by an employer towards setting up or formation of or toward ....
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....eal of the Appellant and deleted the disallowance which was earlier confirmed by the CIT(A) as above. It is further submitted that the AO has allowed such expenditure in respect of set aside matter by Hon'ble ITAT and jurisdictional Rajasthan High Court of the Appellant company for A.Y. 1992-93, A.Y.1996-97 and A.Y.1997-98. It is respectfully submitted that this issue is squarely covered in favour of Appellant vide order dated 24.04.2017 passed by Jaipur Bench of Tribunal in ITA No. 638/JU/2008 and 606/JU/2008 for assessment year 2006-07 [similar view has been taken by Hon'ble Tribunal for assessment year 2005-06 being order dated 10.04.2017 in ITA No. 612/JU/2009]. Further, the Hon'ble ITAT, Jodhpur for all these AYs from AY 2008-09 to AY 2012-13 has decided the issue in favour of the Appellant (ref. pages 611 - 617 CL Paper book). 44. We have heard rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. On perusal of records, we find that the issue of Staff Welfare Expenses is covered by the decision of Jodhpur Bench of the Tribunal in assessee's own case in ITA Nos. 404/Jodh/2017 and 412/Jodh/2017 dated 22.02.201....
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....les of consistency as enunciated by Hon'ble Supreme Court in Radha Soami Satsang (supra). It is not disputed by revenue that the expenditure on staff welfare has been allowed by AO himself in various earlier years while re-verifying also in set aside fresh proceedings. From the record it emerges that no specific item of expenditure is pointed out to be not covered by sec. 40A(9), no such indication is given by auditors and ld. CIT(A)'s findings on facts and law have not been dislodged by revenue. Adverting to the plea of set aside as raised by revenue, it can be acceded as no lawful justification exists to support it. In past so many years even after reverification, AO himself has allowed such expenditure, such orders may have been passed after the impugned assessment order was passed. Respectfully following the Hon'ble Supreme Court in the case of Radha Soami Satsang we cannot gloss over the obvious legal position that revenue by its AO has allowed the staff welfare expenditure in successive assessment years after direction of Hon'ble High Court and ITAT during re-verification proceedings of set aside assessment years. The legal propositions as canvassed by ld. Counsel deserve....
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....,54,53,048/- and interest under section 234C of Rs. 588,64,174/- instead of Rs. 425,34,666/-. 48. After hearing the arguments of both the sides, we hereby direct the AO to compute interest under section 234B and 234C in accordance with law. The ground is allowed for statistical purposes. Ground No. 14 relates to initiating penalty proceedings under section 270 r.w.s. 274 of the Act for the alleged under reporting of income. 49. The ld. Counsel for the assessee has not pressed this ground. Therefore, the same is dismissed as not pressed. 50. In the result, appeal of the assessee is partly allowed. ITA NO. 128/JODH/2022 - AY 2018-19 : 51. The assessee has raised the following grounds :- "1. That the Assessing Officer (AO) / National Faceless Assessment Centre (NEAC) erred on facts and in law in completing assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.w.s. 143(3) of the Income-tax Act ("the Act") at an income of Rs. 13669,09,83,530 as against the returned income of Rs. 10715,67,60,470. 1.1 That on the facts and circumstances of the case and in law the order dated 28.07.2022 passed by the AO/NFAC under section 143(3) r....
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.... 3.1 That the DRP/NFAC/AO/TPO erred on facts and in law in reducing the claim under section 80IA in respect of CPP units by considering the transfer pricing of the power supplied by CPP to other manufacturing unit of the Appellant @Rs. 3.78 per unit as against Rs. 8.64 to Rs. 8.85 per unit considered by the Appellant being the rates at which electricity is purchased from SEBS. 3.2 Without prejudice that the DRP/NFAC/AO/TPO erred on facts and in law in reducing the claim of deduction under section 80IA in respect of CPP units to nil instead of restricting the disallowance of deduction under section 80IA to the extent of the difference between the per unit rate of Rs. 8.64 to Rs. 8.85 per unit as considered by the Appellant and Rs. 3.78 per unit considered by the TPO/the AO as the market price. 3.3 That the DRP/AO/NFAC/TPO erred on facts and in law in not appreciating that the specified domestic transaction of transfer of power by the Captive Power Plants ('CPP') of the Appellant was appropriately benchmarked by applying the other method' on the basis of rates at which the power is supplied by the State Electricity Boards ('SEBS') to third party consumers. 3.4 T....
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....nses and depreciation on assets, on turnover basis while computing profits relatable to various tax holiday units and thus reducing the claim by a sum of: A. Rs. 3.60 Cr for CPP 80 MW Chanderiya B. Rs. 3.63 Cr for CPP 80 MW Zawar C. Rs. 4.21 Cr for CPP 160 MW Rajpura Dariba D. Rs. 3.31 Cr for 80IC unit of Hardwar Zinc Plant (HZP) E. Rs. 66.97 Cr for 80IC Unit of Pantnagar Lead and Zinc Plant (PLZP) F. Rs. 9.17 Cr for 80IC Unit of Pantnagar Silver Plant (PSMP) 5.2 The DRP/AO/NFAC/TPO erred in facts and in law in holding that the deduction u/s 80IA for the wind power plants (WPPs) was available only after apportioning HO expenses and depreciation on common assets, on turnover basis while computing profits relatable from the following WPPS, and thus reducing the deduction claimed by a sum of Rs. 55,00,000. 6. That the DRP/AO/NFAC/TPO erred on facts and in law in enhancing the income of the eligible units under section 80IC of Pantnagar Zine and Lead Plant (PLZP) and Pantnagar Silver Metal Plant (PSMP) of the Appellant by Rs. 5605.76 Crores in the order passed under section 143(3) read with section 144B/144C(13) of the Act, allegedly on account of Transfer Pricing ("TP"....
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....e extent of Rs. 1569,46,18,917 (in aggregate), allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ("TPO"). 6.8 That the DRP/AO/NFAC/TPO erred on facts and in law in disregarding the rule of consistency and not appreciating that the approach adopted by the Appellant has been accepted by the TPO in Appellant's own case in an earlier Assessment Year (i.e. 2013-14) and the Assessing officer in the first year of the claim by the exempt units. 6.9 That the DRP/AO/NFAC/TPO erred on facts and in law in making the adjustment by following an inappropriate approach and in the process, modifying the audited profit and loss account of the eligible units of the Appellant, which is not permitted. 6.10 That the DRP/AO/NFAC/TPO erred on facts and in law in making the adjustment inappropriately considering the costs incurred by the units as the correct representative and measure of the actual contribution/value created by such units. 6.11 That the DRP/AO/NFAC/TPO erred on facts and in law in making the adjustment holding that computation of transfer price of inter-unit transactions of PSMP unit presents exceptional difficulty and t....
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....nder section 143(3) read with section 144B/144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Rs. 2,53,65,000 u/s 35(2AB) of the Act. 8.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the required Form 3CL provided by the assessee was valid for the impugned AY 2018-19. 9. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Grass Root expenses of Rs. 79,63,39,579 being expenditure on exploration which is necessary for sustaining the existing business of mining of metals holding that such expenses pertain to prospecting operations, which did not result in commercial exploitation of mines. 9.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the above grass root expenditure were not incurred in respect of mining areas where the mining license is granted and no commercial production has yet started and thus were not disallowable in terms of provisions of section 35E of the Act. 9.2 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the ....
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....is ground of the assessee for statistical purposes. Ground Nos. 3-3.6 relate to disallowance of deduction claimed under section 80IA of the Act in respect of Captive Power Plants (CPPs) in respect of the undertakings at Chanderia Lead and Zinc Smelter, Zawar Mines and Rajpura Dariba, on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ('TPO'). 55. We have adjudicated identical ground in Para 14 hereinabove for the assessment year 2017-18 in favour of the assessee. Hence, on the basis of decision arrived therein, we allow this ground of the assessee. Ground Nos. 4-4.1 relate to disallowance of deduction u/s 80IA of the Act for generation and transfer of "Steam" which is included in the profit computed for CPPs at Chanderiya and Dariba. 56. This ground of the assessee is covered by the decision of the Coordinate Bench of the Tribunal in assessee's own case in ITA No. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 and in ITA Nos. 179 & 184/Jodh/2014 dated 04.09.2017 for the assessment year 2008-09. Therefore, respectfully following the decisions the Coordinate Bench and taking a consistent view of the matter, we....
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....assessee for the assessment year 2017-18 as discussed in Para 37 hereinabove. This ground of the assessee is dismissed. Ground Nos. 9-9.2 relate to disallowance of Grass Root expenses. 61. We find that similar issue of Grass Root Expenses is covered by the decision of Jodhpur Bench of the Tribunal in assessee's own case in ITA Nos. 404/Jodh/2017 and 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the Tribunal following its earlier order in assessee's own case in ITA No. 246/Jodh/2017 dated 04.09.2017 for the assessment year 2011-12 allowed the ground of the assessee. Thus, taking a consistent view above, we have allowed the identical grounds for the assessment year 2017-18. Hence, on the basis of the decision arrived in assessment year 2017-18 in Para 40, we allow the claim of the assessee. The ground of the assessee is allowed. Ground No. 10-10.1 relates to disallowance of staff welfare expenses being the expenses towards canteen facility, school activities, sport club, scholarship, other club , etc. 62. This ground of the assessee is covered in favour of the assessee by the decision of Jodhpur Bench of the Tribunal in assessee's own case in ITA Nos. 4....