TaxTMI 
TaxTMI 
2024 (2) TMI 1541
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....er. The grounds of appeal raised by the assessee and revenue in these bunch of appeals are as under:- ASSESSMENT YEAR 2015-16 ITA NO. 500/JPR/2023(ASSESSEE) 1. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in not considering the assessment order u/s 143(3) r.w.s. 144C as invalid and void ab initio which is liable to be quashed since not passed in accordance with the provisions of Section 144B(1)(xvi)(b) of the Act. 2. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in rejecting the appellant's claim of allowing reliability charge of Rs. 1.5/unit in computing Transfer Price of Power for the purpose of Deduction u/s 80-IA in respect to its eligible power undertakings. 3. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in confirming the disallowance made by the A.O. on account of claim of Education Cess of Rs. 3, 06, 59, 279/-. 4. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in rejecting the claim....
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....igible power undertakings. 3. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in confirming the disallowance made by the A.O. on account of claim of Education Cess of Rs. 3, 68, 58, 639/- 4. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in rejecting the claim of Deduction u/s 80-IA while computing book profit u/s 115JB of the Act. 5. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in law in not considering incentives amounting to Rs. 6, 20, 91, 72, 703/- granted to the appellant as capital receipt which are not exigible to tax while computing total income under normal provisions of the Act. 6. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal. ITA NO. 490/JPR/23 (REVENUE) 1. Whether on the facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in allowing the appeal of the assessee by de....
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....e A.O. on account of claim of Education Cess of Rs. 11, 89, 88, 742/-. 5. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in law in confirming the disallowances made by the A.O. on account of payment made to the transporter to the tune of Rs. 1, 00, 00, 000/-. 6. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in law in not considering incentives amounting to Rs. 278, 74, 31, 998/- granted to the appellant as capital receipt which are not exigible to tax while computing total income under normal provisions of the Act and under the provisions of Sec. 115JB of the Act. 7. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in rejecting the claim of Deduction u/s 80-IA and 80-IC while computing book profit u/s 115JB of the Act. 8. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in law in not excluding notional income while computing Book Profit u/s 115JB of the Act. 9. That on the facts and in the ....
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....at on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in rejecting the appellant's claim of allowing reliability charge of Rs. 1.5/unit in computing Transfer Price of Power for the purpose of Deduction u/s 80-IA in respect to its eligible power undertakings. 4. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in restricting the claim of deduction u/s 80-IA on account of Solid Waste Management System upto the amount as claimed in the return of income inspite of the fact that Ld. CIT(Appeals) confirmed that assessee is eligible for higher deduction u/s 80-IA of the Act. 5. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in confirming the disallowance made by the A.O. on account of claim of Education Cess of Rs. 13, 91, 57, 647/- 6. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals), was not justified and erred in confirming the addition made by the A.O. on account of unexplained investments u/s 69B to the tune of Rs. 15, 88, 040/- by considering it as bogus purchases. 7....
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....ing & sale of clinker & cement, generation, sale & trading of power among others. The assessee efiled return of income for the year under consideration on 28.11.2015 declaring the current year loss of Rs. 40, 25, 53, 024/- under the head "Capital Gain" (Deemed total income u/s. 115JB is Rs. 4, 84, 39, 49, 080/-). The case was selected for Limited Scrutiny under the E-assessment Scheme, 2019 on the following flagged issues:- Sr. No. Issues i. Stock valuation ii. Income/Capital Gain on sale of land or building iii. Outward Foreign Remittance iv. Depreciation Claim v. Sales Turnover Mismatch vi. Other Deduction claimed vii. Refund Claim viii. Payment to related persons mismatch ix. Deduction under Chapter VI-A x. Deduction for scientific research xi. Other income not credited to P & L a/c xii. Mismatch in Income/Capital Gain on sale of land or building xiii. Loans/advance to related persons Consequently, a notice u/s. 143(2) of the Act was issued on 08.04.2016 electronically and served upon assessee through email. Further notice u/s. 142(1) of the Act dated 05.02.2021 dated 01.03.2021 was also issued ....
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....efore, the same is not allowable as a deduction under section 37(1) of the Act. As regards Circular No. 91/58/66-ITJ (19), dt. 18.5.1967, the same will also not support the view that education cess is an allowable deduction under section 37(1) of the Act. Based on this contention the ld. AO noted that the underlying idea relating to the provisions of section 40(a)(ii) of the Act, is that tax, surcharge or education cess paid on the profits would be a payment out of profits, by way of application thereof, rather than a payment made in order to earn profits, so as to be a deductible expenditure. In the light of the aforesaid reasons, he holds that education cess is not an allowable deduction under section 37(1), r.w.s. 40(a)(ii) of the Act and therefore, the amount of Rs. 3, 06, 59, 279/- claimed by the assessee as allowable deduction disallowed and added back to the income of the assessee. 3.3 During the scrutiny proceedings, the case was referred to the TPO for determination of Arm's Length price with reference to all international transactions / domestic transaction undertaken by the assessee during A.Y 2015-16. In response, the order u/s 92CA (3) of Income Tax Act, 1....
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....isallowance of Rs. 2, 70, 66, 00, 914/- made on account of deduction u/s 80IA on generation of power is deleted. 4.2 On the issue of the deduction u/s 80 IA of Rs. 2, 26, 24, 12, 049/- towards profit of solid waste management system assessee company has claimed the transfer price of treated solid waste being treated pond ash under CUP method by considering the realizable market value of clinker and thereafter applying PSM of 79.73%. Though the TPO accepted the approach adopted by the assessee for conducting the benchmarking analysis, however made modifications and revised the PSM to 64 % as against the PSM of 79.73 % adopted by the assessee on the basis of the FAR analysis adopted by the department in A. Y. 2013-14. TPO for the year under consideration carried out independent FAR analysis to arrive at 64 % rate. Further, TPO rejected the element of freight on clinker handling from the market value. Thus, on this issue adjustment of Rs. 90, 55, 18, 397/- on account of transfer price of solid waste was made in the assessment order. The ld. CIT (A) after considering the arguments of the assessee has deleted the said addition. The crux of the finding recorded by the l....
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....he AO is directed to adopt ALP as Rs. 3/- per Lt. as claimed by the appellant to compute deduction u/s 80IA on Water treatment system. These grounds are therefore allowed." 4.4 As regards the claim of the assessee for deduction u/s. 80-IA of Rs. 30, 99, 45, 832/- towards profits of Railway System from services of Transportation of fuel, raw-materials and finished goods to eligible / non eligible units. The revenue from the said facility was determined by considering gross road freight and handling charges payable for transportation of goods by roads to the rail add Bangur Gram (i.e. nearest railway station) and rail freight from rail head to the final destination, determined as per the tariff notified by the Indian Railways. The assessee benchmarked this transaction by applying the profit split method to incorporate the inter unit provision of services. The TPO has rejected the profit split method adopted by the assessee and proceeded to apply the Transaction Net Margin Method by applying the margin earned by the comparable companies. On this issue after considering the finding of the TPO and that of the assessee the ld. CIT (A) has decided this issue by observing as u....
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....005 vide Finance Act, 2022, the intention of legislature has been made clear that surcharge and cess cannot be considered to be deductible expenditure. The disallowance of claimed of Rs. 3, 06, 59, 279/- made by AO is confirmed. The ground of appeal is dismissed." 4.6 Ground no. 19 before the ld. CIT (A) was that deduction on various infrastructure facilities and power undertakings amounting to Rs. 7, 13, 42, 76, 504/- under regular provision is also available while computing book profit u/s. 115JB which was not considered by the ld. AO. On this issue the ld. CIT (A) accorded the view of the ld. AO and has rejected the contention of the assessee. The relevant finding of the ld. CIT (A) on this issue reads as under: 15.20. In view of overall discussion made above, it is concluded that section 115JB is a self-contained code and while computing Book Profit, the amounts to be deducted and to be added to the net profits has already been stated in Explanation to section 115JB(2). No further deductions or additions can be made to the book profit apart from those already provided therein. Thus, respectfully following the aforesaid decisions, it is held that deductions....
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....ours over and above the tariff rate. 9. Since, the TPO has not considered this issue the assessee has challenged the issue before the ld. CIT (A) who after considering the submission of the assessee held as under : 8.12 The appellant in its written submission has also prayed to allow reliability charge of Rs. 1.5 per unit for uninterrupted power supply in computing the transfer price of power. 8.12.1 The above contention of the appellant was rejected by the TPO vide his order dated 31.03.2020 by stating as follows: "As regards claim of Rs. 1.5 per unit being reliability charges, this submission of the assessee is not acceptable as firstly it pertains to Haryana Electricity Regulator authority and not to Rajasthan Electricity Regulatory authority and hence not applicable to the case of assessee. Secondly the terms and conditions are different in this case from the case of assessee. Assessee is not supplying power to third party on 24 hour basis. Thus the submissions of the assessee in this regard are not acceptable" 10. Thus, we note that the issue which was raised before the ld. CIT (A), was rejected on the contention that the reliability ....
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....c. 92F(ii), keeping in mind, that in case of the Appellant, (1) it has incurred huge capex, for setting up the power undertaking exclusively for the CMUs and (2) it provides uninterrupted power to CMUs. Alternatively, 15% markup may be allowed for each of the aforesaid advantages to the actual user. ● In any case and without prejudice to the above, the issue is partly covered in favour of the appellant by the decision of Hon'ble Jaipur Tribunal in Appellant's own case for AY 2014-15 vide order dated 07-08-2023 (ITA 152/JP/2023 at Para No. 8 to 8.4 of Page 19-22) wherein reliability charge @15% of grid rate (Average Annual Landed Cost of Power supplied by the Grid) has been allowed for uninterrupted power supply. Based on above, for the year under appeal, Grid rate being Rs. 6.98/unit, reliability charge @ 15% of grid rate shall be Rs. 1.05/unit for AY 2015-16. However in the aforesaid decision in Appellant's own case for AY 2014-15, the fact of exclusive capex by the Power Undertaking and application of arms' length principles enshrined in Sec. 92F(ii) (and made applicable to Undertakings claiming tax holiday under section 80IA vide clause (iii) to the....
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....of Hindustan Zinc (Supra) the assessee has not urged the contention that exclusive capex has been made by the Captive Power undertaking for it's manufacturing unit. It is seen that various regulatory commissions have fixed the reliability charge at the time the power is supplied by the DISCOMs to various consumers where there is no exclusive capex for a particular consumer. However, in the present case, the Captive Power Undertaking has incurred huge capex only for the CMU to exclusively provide power only to such unit. 15. Further to the above, Haryana Electricity Regulatory Commission (HERC) vide its order dated 14-03-2013 has held that the Chairman cum Managing Director of DISCOM has agreed to reduce the reliability charge of Rs. 2.50 per unit originally proposed to Rs. 1.50 per unit. The ld. AR of the assessee strongly placed reliance on above fact that the charge proposed by Discoms with HERC was Rs. 2.50 on arm's length principles and thereafter in the interest of general public, post discussions it has been agreed to reduce to Rs. 1.50 per unit. Thus Rs. 1.50 per unit charge is also the minimum chargeable rate for uninterrupted power supply and th....
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....guments of the ld. DR that in view of the amendment made in the law with retrospective effect of 01.04.2005 by inserting explanation 3 to section 40(a)(ii). Therefore, we see no merits in the ground No. 3 raised by assessee and therefore, the same is dismissed. 21. Ground No. 4 relates to exclusion of deduction under section 80IA in computing Book Profit under section 115JB of the Act. 22. Brief facts of this case that the assessee has claimed deduction u/s. 80IA on various infrastructure facilities and power undertakings amounting to Rs. 7, 13, 42, 76, 504/- under regular provision of the Act. The assessee contended that said claim of deduction u/s. 80IA is also available while computing Book Profit u/s. 115JB of the Act. The said contention of the assessee was not considered by the ld. AO. 23. The assessee has challenged the action of the ld. AO before the ld. CIT (A) who has decided the issue against the assessee stating that section 115JB is self-contained code and while computing book profit, the amounts to be deducted and to be added to the net profit has already been stated in Explanation to section 115JB (2). No further deductions or additions can be....
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....ecided against. It further held that none of the decisions relied upon by the Appellant have considered Sec. 115JB(6). However, in the cases relied upon by the Appellant as well as in Appellant's own case, it does not have any business in SEZ. Hence facts of the case of the Appellant being different, the provisions of Sec. 115JB(6) or the decision in the case of Safeflex(supra) do not apply. On the other hand, the decisions relied upon by the Appellant are squarely applicable. 25. Before us the ld. AR of the assessee prayed that though the issue raised has been decided against in A.Y. 2014-15 in assessee's own case by relying upon the decision in Safeflex International Ltd. (in ITA No. 769/JP/2018). But the same has not been decided considering the favorable decision Hon'ble High Courts wherein the same has been considered in the spirit of the law as interpreted by the High Court. 26. The ld. AR of the assessee submitted that the case of Safeflex International (supra) was that there was a unit eligible for exemption u/s 10AA which is an SEZ unit. For SEZ unit u/s 10AA, there is already an amendment made vide Finance Act, 2011 w.e.f. 01-04-2012 which inserted a sunset cla....
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....um Plater (P) Ltd (2016) 97 CCH 80 (Mad) & Best Trading and Agencies Ltd. -vs.- DCIT (2020) 428 ITR 52 (Kar - HC). 30. Thus in the appreciation of the provision of the law as enacted as contained in the act vide section 115JB(5) specifically provides that - "Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee being a company mentioned in this section." 31. He further pointed out that precedent decision of Mumbai Tribunal in the case of Neha Home Builders (supra) which is directly on the same matter, has not been followed by Hon'ble Pune ITAT and has also not been distinguished or considered in that decision. 32. The ld. AR of the assessee submitted that every exemption / deduction allowed by statute and claimed by the assessee are provided in the Act to motivate or incentivise on account of furtherance of larger national objectives of industrialization of backward area, augmentation of power generation, elimination of health hazards etc. Such exemptions/ financial motivations factor provided by way of deduction from the income of the said eligible undertakings provided by the statute vide specific provisions c....
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....ected from the corporate like assessee whose payment of tax always without the application of this provision falls short of this amount of tax. Thus, this section is charging section and a self-contain code itself and if the contention of the assessee is accepted then in that case the very purpose of levying the minimum alternate tax would be defeated. Thus, the ld. DR submitted that there is no basis for the assessee to claim exemption under Chapter VI-A as per the provisions of section 115JB of the Act. 35. We have carefully considered rival contentions pursued the orders of lower authorities, paper books and judicial precedents relied upon. The issue in this ground is whether the deduction available to the assessee u/s 80 IA under the normal computation of total income, should also be reduced from the computation of book profit u/s 115 JB of the Act. This issue has been decided by the coordinate bench in assessee's own case for A Y 2014-15 in assessee's own case wherein Bench relying on the order of Safeflex International (Supra) held as under :- - "18. The sub-section (5) to section 115JB has been subject matter of interpretation by the courts and it would be re....
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....'ble Mumbai Tribunal in Neha Home Builders Pvt Ltd vs CIT (2018) 195 TTJ 506 (Mum) on deduction u/s 80IB in the context of section 115JB. In the said case, the co-ordinate bench has categorically held that if any income is not taxable because of a specific provision of the Act, the same will not form part of Book Profit u/s 115JB unless provided otherwise. Hence, in the absence of any provision to the contrary in section 115JB, deduction u/s 80IB shall be available while computing Book Profit u/s 115JB of the Act and the relevant finding of the co-ordinate bench is as under:- (a) Sub-sec 5 clearly provides that all the provisions of the I.T act will be applicable to the computation governed by sec. 115JB. As such if any income is not taxable because of a specific provision of the Act, the same will not form part of Book profit u/s 115JB. Like Sec. 80IB(10) exclude the income from housing project for taxation purpose under normal provisions of the Act. Thus, it will not be taxable u/s 115JB. (b) Dealing with the matter, sub-section (5) which says that save as otherwise provided in this section. Similar provision was incorporated in sub sec (4) of sec 115JA which is....
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....on :; not give benefit of sec. 80IB(10) for the purpose of MAT calculation then legislature will also provide same type of provision in section 115JB which is currently absent, i.e. legislature wants to give benefit of deduction u/s 80IB(10) for the purpose of sec. 115JB calculation. (f) Hon'ble Gujarat High Court in case of CIT v. Indian Petrochemicals Corpn. Ltd. [2016] 74 taxmann.com 163 held that deduction u/s. 80HHC can be allowed while computing book profit u/s. 115JA even though assessee had no taxable income under normal provisions of Act. Similarly, Kerala High Court in case CIT v. D.C. Mills (P.) Ltd. [2016] 387 ITR 64/[2017] 79 taxmann.com 340 held that where two views are possible and AO has taken one plausible view, such order of the AO cannot be branded as prejudicial to the interest of Revenue. In this case, assessee was entitled for deduction of profit on export business. AO allowed setting off loss incurred in one unit against profit of other two units which were as per the judicial pronouncements. It was held that Commissioner taking a different view and branding the order of the AO erroneous and prejudicial to the interest of the revenue was not just....
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....eld that the receipts which are not taxable cannot brought to tax under any other section. Deduction claimed by assessee in the instant case u/s. 80IB (10) is not taxable under the normal provisions of the Act cannot be treated as part of book profit u/s. 115JB, hence, the ld. AO has adopted one of the possible view. (l) Based on the above, Hon'ble Tribunal in the case if Neha Builders (supra) finally held that income arising from development of housing projects are not taxable (Sec 80IB(10) and were excluded from its purview. Therefore, Sec. 80IB(10) income will not be part of MAT income and MAT tax. Thus, the assessment order was rightly passed and cannot be termed as erroneous & prejudicial to interest of revenue. 38. Further, the co-ordinate bench of Chennai Tribunal in ACIT vs State Industrial Promotion Corporation of Tamil Nadu Limited [ITA No. 1290/Mds/2011 dated 07-03-2013] have also held that deduction u/s 80IA is required to be allowed even while computing Book Profit u/s 115JB of the Act. 39. Hon'ble Madras High Court in the case of CIT vs Metal Chromium Plater (P) Limited (2016) 97 CCH 80 (Mad) while dealing with the issue of allowability of exemptio....
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....urt in CIT V Godavari Devi Saraf [1978] 113 ITR 589 (Bombay) [27-09-1977] has held that Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. 44. Provisions contained in Chapter VI-A, Part C are specific sections enacted for the purpose of encouraging setting up of specific new undertakings and/or infrastructure facility by providing tax holiday for specified period on profits earned by the said undertaking/infrastructure facility. These sections are specific provisions providing explicit tax incentive for investment by assessee in priority sectors for the country for a sector like power generation, infrastructure building, solid waste management and so on. These being specific tax holiday provisions and since nothing otherwise in relation to the same is provided in Sec 115JB, principles laid down in the decisions of Hon'ble Karnataka High Court in Best Trading (supra) and Hon'ble Madras High Court in Metal Chromium (supra) (where departmental SLP has been rejected by Hon'ble Supreme Court), ....
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....JA and (5) of section 115JB." 46. Deduction under Section 80IA, 80IC etc. reflect specific and clear intention of legislature to grant tax holiday in respect of specified business in those sections for a tenure of 10 years. The said decision of the Government to give tax holiday in deserving cases cannot be abrogated or compromised by a technical interpretation of provisions of section 115JB on combined reading of the provisions of section 115JB on one hand and section 80IA and section 80IC on the other hand. 47. It is further a point of view that receipts, which is not taxable under normal provisions, cannot be taxed under the provisions of MAT unless specified otherwise. In Patel Engineering Limited vs DCIT (ITA No 9090/M/2010), the co-ordinate bench has held that income of Joint venture, which was not taxable under normal provisions as the same, was already taxed in the hands of JV, the same cannot be taxable under MAT. Identical principle has also been upheld in Sun Pharmaceuticals Industries Ltd vs ACIT in ITA No. 1462 & 1463/Ahd/2018 dated 24-08-2022 wherein it has been held that amount of remuneration not allowed as deduction in the hands of the Partnership firm c....
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....High courts stated above holding that since 115JB(5) does not specify any particular claim to be excluded or included under the said provisions, said decision has lost its persuasive value. Further, the said sub-section applies to all the provisions of the Act and not to any particular claim or section. Further, the said decision is contrary to the decisions of Hon'ble Karnataka and Madras High court referred to hereinabove on section 115JB(5) of the Act. Similar is the case of judicial precedents, in Rockline Developers P Ltd vs ITO (ITA No. 5125/M/2016 dated 06-07-2018 and Chheda Electricals and Electronics P Ltd vs DCIT (2022) 195 ITD 354 (Pune). 51. One important aspect also needs to be analyzed. Subsection (1) of Section 115JB has non-obstante clause. The said sub-section provides that in case of a company, if the income tax payable on total income as computed under the Income Tax Act is less than 18.5% of its book profit, then book profit shall be deemed to be its total income and 18.5% of the said book profit will be the tax payable by the corporate assessee on such total income. Because of the non-obstante clause, this provision of sub-section (1) for levy of tax on....
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....Return of Income, the aforesaid ground raised being purely legal in nature may kindly be admitted since no new facts are brought on record. Details of acquisition of leasehold rights are already available in the audited accounts filed with the return of income. Reliance was placed on the decisions of Apex Court in the case of National Thermal Power Corporation Ltd. vs. CIT (1998) 229 ITR 383 (SC) and Jute Corporation of India Ltd. vs. CIT (1991) 187 ITR 688 (SC). The ld. AR further submitted that the issue is covered in favour of the assessee by decision of Hon'ble Jaipur Tribunal in appellant's own case for AY 2014-15 vide order dated 07-08-2023 (ITA 152/JP/2023). 58. On the other hand, the ld. DR did not raise any objection to the admissibility of additional ground based on the decision of the apex court. So far as the merits of the claim of the assessee ld. DR though relied upon the findings of the lower authority but did not controvert to the contention of the assessee by bring any contrary material. 59. We have heard the rival contention of both the parties. We note that this issue was not raised before the Assessing Officer during the course of assessment proceedings or....
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....ible assets being "business or commercial right" is entitled to depreciation u/s 32(1)(ii) of the Act. Hence, AO is directed to grant depreciation @25% on such leasehold rights in accordance with the provision of section 32(1)(ii) of the Act. Ergo we decide accordingly, and the additional ground no. 1 raised by the assessee is allowed. 62. Ground No. 6 (Additional Ground no. 2) of the assessee's appeal raised by the ld. A/R of the assessee is in relation to allowability of interest paid on late deposit of TDS amounting to Rs. 1, 10, 980/- as business expenditure under section 37(1) of the I.T Act. 63. The brief facts of the case are that the assessee during the assessment year under appeal had paid interest of Rs. 1, 10, 980/- on late deposit of TDS, which has been added back in the computation of income while computing total income under Normal provisions. Now, the assessee has pleaded before us that such interest paid being compensatory in nature should be allowed as a deduction. The said ground, being a pure question of law is also admitted on merits as per our discussion made while admitting additional ground no. 1 of the assessee's appeal. 64. The ld. A....
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....that the same was claimed or not. Therefore, AO is directed to verify the claim of the assessee. The ground of the assessee is allowed." 67. Hence, respectfully following the decision of this bench we allow the ground of the assessee. Therefore, AO is directed to reduce interest on TDS while computing Total Income. The additional ground no 2 raised by the assessee is allowed. 68. Based on the findings so recorded herein above appeal of the assessee for AY 2015-16 in ITA No. 500/JPR/2023 is partly allowed. ITA NO. 489/JPR/23 (REVENUE) 69. We now take up the appeal of the Revenue for adjudication as under : 70. Ground No. 1 relates to allowing the appeal of the assessee by deleting the disallowance of Rs. 90, 55, 18, 397/- on account of deduction u/s 80IA in respect of captive power plant. 71. The facts in brief are that the assessee is engaged in the business of manufacture and sale of cement and generation of power. The power undertakings of the respondent are eligible for deduction under section 80-IA of the IT Act. The assessee in the return of income had claimed deduction under section 80-IA amounting to Rs. 4, 36, 34, 31, 241/- on the power....
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....cord and gone through the orders of the revenue authorities and the case laws cited before us. The Ld. D/R during the course of the hearing fairly admitted that the issue is covered in favour of the assessee by the decision of this Bench in earlier years in appellant's own case. The above orders of Tribunal have since been approved by the Hon'ble Rajasthan High Court decisions also in those years. We further find that this issue has been dealt in detail by this Bench in the order for AY 2014-15 in ITA No. 142/JP/2023 which is reproduced herein below - "30.9. In light of above, we can conclude that ld. CIT (A) has rightly held that meaning of arm's length price as required under section 92BA read with section 92F is identical to the meaning of "open market value" as defined in Section 80-IA(8) of the Act and accordingly all the judicial pronouncements and principles held therein, rendered before the amendment brought under section 80-IA(8) of the Act including that of Hon'ble Jurisdictional High Court and Jaipur Tribunal in assessee's own case for earlier year would equally apply for the year under consideration post amendment brought under section 80IA(8) ....
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....anies to middlemen (i.e. B2B business models) which are governed by altogether different level of market and are therefore not comparable to the rates which are charged to ultimate consumer (B2C Business Models), Further, each of the entities involved in the power market (engaged in generation of power, transmission, distribution as well as trading of power) are regulated by separate regulatory provisions thus it is not appropriate to compare the rates at which the generating companies sell power to other licensees as these licensees are not the ultimate consumers as in the case of assessee where the CPPs transfer power directly to the ultimate industrial consumer i.e. the manufacturing units of assessee. 30.13. Further, the aspect as to why rate at which power is sold to 3rd parties including Power distribution companies should not be considered as internal CUP and hence considered for computing arm's length price under the Transfer Pricing regulations, needs to be dealt with. The ld. A/R submitted that sale to 3rd party by the power unit is not comparable with the transaction of captive consumption of power by the Cement manufacturing unit due to various factors. Pow....
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....ials in the cement production, respondent also uses treated pond ash/fly ash ('solid waste') as a substitute of clinker in the production of cement. The said solid waste is provided by the solid waste management system being the infrastructure facility set up by the respondent. This solid waste is used by the cement manufacturing units as substitute of clinker in the production of cement. The assessee claimed deduction u/s 80IA on its Solid Waste Management System (SWMS) of Rs. 2, 26, 24, 12, 049/-. The assessee has entered into agreement with local gram panchayats for setting and operating the above facility. It has been claiming this deduction from AY 2013-14 onwards and the AO has verified the eligibility in the 1st year of its claim in AY 2013-14 while passing order u/s 143(3) dated 16-12-2014. This is the 3rd year of the claim which is granted for a continuous period of 10 years out of 20 years from the commencement of operation. 79. In terms of Sec. 80-IA(8) r.w.s. 92F of the Act, the transfer price of treated solid waste has been determined by taking average landed cost of clinker saved by the Cement Manufacturing Unit (CMU) of the assessee. The aforesaid computation....
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.... Some of the assessee's contentions were rejected, the summary of which can be found as below: Assessee's submissions vide reply dated 21.1.2020 TPO's comments TPO has not rejected the method applied by the assessee and proposed her own method The method adopted by the assessee has not been rejected as such. Only adjustment, which is required to be made in working out ALP has been proposed. The assessee has also used Profit Split Method and TPO has also proposed profit split method. As the profit split ratio submitted by the assessee is not correct, a scientific and more logical profit split ration has been proposed. Freight has to be included in sale value to work out transfer price This issue has been discussed in detail in above paragraphs. In nutshell, while freight is a cost for buyer, it is not part of sale value or market value for seller. Therefore, it has to be excluded for working out sale value/market value. Treated pond ash is replacing clinker in the ratio of 1:1 in manufacturing of cement. As discussed in above paragraph, treated pond ash is not replacing clinker in the ration of 1:1 but in the ration of 0.64:1 from functional and replacement p....
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....no contingency. The raw material for the solid waste management unit is free of cost and it can very well do all processing only when there is requirement. In that sense, the good amount of risk is with the non-eligible unit, as their entire production process will suffer it solid waste management unit fails in supplying treated pond ash. Assessee itself has taken risk ration as 65:35. (b) As regards assets employed is concerned, a list of assets employed has been provided by the assessee in solid waste management unit, but some corresponding changes would be required to be made in cement manufacturing unit for getting the units ready to include this treated pond ash as raw material. These modifications would be part and parcel of assets employed in the process as a whole, part of which belong to solid waste management unit and remaining part with cement manufacturing units. Besides these processes being very technical in nature has to be supervised by the technical as well as administrative in-charge of cement manufacturing units. Thus assets employed would also require redistribution. Assessee's further submissions vide reply dated 29.1.2020 TPO's comments FAR analysi....
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....0% weight to SWMS is justified. As already discussed in show cause dated 28.01.2020, only customer of the treated pond ash is assessee company's cement manufacturing units. These units have well planned schedule of production and requirement of treated pond ash. As such there is no contingency. The raw material for the solid waste management unit is free of cost and it can very well do all processing only when there is requirement. In that sense, the good amount of risk is with the non-eligible unit, as their entire production process will suffer it solid waste management unit fails in supplying treated pond ash. In case of any mismatch in supply of 'treated pond ash' both the units will suffer, as there would be fall in profit of SWMS and there would be fall in production in CMUs. Therefore, 50% sharing of risk on this account is appropriate In risk analysis, assets are to be utilized and maintained efficiently for smooth functioning. Location of assets is not important. Hence allocation of 60% weight to SWMS is justified As already discussed, there is one to one relationship between these entities, as the only customer of SWMS is CMU and only supplier to CMU is SWM....
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....espondent is not using pond ash but using 'treated pond ash' which is completely different product. (b) Pond ash and bottom ash supplied by NTPC is a waste material and cannot be used unless further processed. The Solid Waste Infrastructure Facility of respondent undertakes series of processes to convert it into a product which is a treated pond ash. Hence, the untreated pond ash supplied by NTPC cannot be compared with treated pond of the respondent; (c) No data is available in public domain w.r.t sale/purchase of treated pond ash between independent parties since there is no readily available market for treated pond ash; Even otherwise, the rate for pond ash if available in the public domain, would be with respect to untreated pond ash which is a waste material and cannot be used unless further processed; (d) There is no third party involved in the business of processing/treating such waste pond ash which could help to determine the market value of the processed pond ash. 3.3 Solid waste in its raw form cannot be used in the manufacture of cement and that it requires a series of processes to make it usable, it is not reasonable to consider trea....
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....[2015] 55 taxmann.com 240 (Delhi-HC), it has been held that: "60. The transfer pricing methods have seen a measure of standardization, universal recognition and acceptability. Indian transfer pricing regulations have adopted and benefited, from the international framework. The OECD Transfer Pricing guidelines for multinational enterprises and tax administration and United Nations' Practical Manual on Transfer Pricing do reflect the international understanding on several aspects relating to transfer pricing. We have taken note and liberally referred to the two guidelines as it is found to be conducive and helpful in deciding the issues. Their relevance has been examined in some detail below. 142. ..... The Act, i.e. the Income Tax Act, 1961 and the Rules are supreme, but the OECD Transfer Pricing Guidelines or the U.N. Transfer Pricing Manual can be supplement and constitute a valuable and convenient commentary on the subject. They are not binding but surely their rational and articulacy requires cogitation, if not acceptance, when warranted. 4.5 Further, in Aztec Software & Technology Services Ltd. - vs.- ACIT [(2007) 107 ITD 141 (BANG.) (SB- Tri)] it....
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....of the assessment order, it can be seen that the TPO has nowhere doubted the functional comparability w.r.t. clinker and in-fact himself applied the margin earned on sale of clinker for determination of transfer price of SWMS. TPO's rejection of CUP method on the contention that strict comparability is required for applying the said method also is not correct. OECD Guidelines at Para 1.109 clearly states that uncontrolled transactions involving different product but having similar functionality may be considered as a comparable. Guidelines also states that it may be acceptable to broaden the scope of the comparability analysis to include uncontrolled transactions involving products that are different, but where similar functions are undertaken. TPO's rejection of above guidelines in the order therefore does not seem to be fair. Guidelines also states that it may be acceptable to broaden the scope of the comparability analysis to include uncontrolled transactions involving products that are different, but where similar functions are undertaken. TPO's rejection of above guidelines in the order therefore does not seem to be fair. 9.8 The appellant also relied upon va....
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.... law, is not justified. As, pond ash in its raw form cannot be used in the manufacture of cement and that it requires a series of processes to make it usable, it is not reasonable to treat transfer of treated waste in the form of pond ash and fly ash from SWMS to Cement Manufacturing Unit of the appellant at NIL value. 9.11 Coming to the next question of what should be the benchmarking of the treated solid waste transferred by SWMS. Since, treated solid waste is not readily available in the market, the appellant applying the functionality test has compared the product with the product being replaced i.e. clinker and adopted the rate based on the savings approach. TPO himself has agreed that the product of the appellant is comparable to that of clinker based on functionality test and accordingly has applied the margin of clinker. Since, in manufacture of cement, the solid waste is replacing clinker in equal quantity and because of its use, the appellant is saving equivalent quantity of clinker, benchmarking would be justified by adopting realisable value of clinker to determine the revenue of SWMS facility. 9.12 However, I do not agree completely with the benchmark....
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....nd of the Revenue is dismissed." 86. The Ld. DR during the course of the hearing accepted that the issue is squarely covered in favour of the assessee by the above order of Tribunal in appellant's own case. 87. We have considered the stand taken by Revenue in the assessment and rival submissions before us. We have examined the order of relevant authorities from time to time and facts relevant in the context of assessee's claim of tax holiday in this case. The appellant is eligible for tax holiday u/s 80IA in respect of its Solid Waste Management Systems. The question is on quantum determination. Considering relevant facts & rival submissions, we hold as under:- (a) Identical issue has been decided in favour of the assessee by this Tribunal in assessee's own case for AY 2014-15 vide ITA No. 142/JP/2023 dated 7-8-2023. In the above decision it has been held that Solid waste, being Pond Ash and Fly Ash which is the waste generated by thermal power plant and used by the respondent for manufacture of cement, is substitute by clinker and thus realisable market value of clinker can be used to determine the transfer price of solid waste. (b) FAR analysis done b....
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....system ('WTS') amounting to Rs. 19, 84, 87, 383/-. Assessee has also submitted report in Form 10CCB along with the return of income. The TPO vide his order u/s 92CA (3) dated 31.01.2020 rejected the benchmarking of the respondent and made an adjustment of Rs. 19, 34, 58, 626/- by adopting Cost Plus Method and applying a gross profit margin of 70.60% earned by comparable companies. On appeal before the ld. CIT (A), the ld. CIT (A) after making detailed analysis on the aforesaid issue deleted the disallowance of Rs. 19, 34, 58, 626/- as proposed by the TPO and allowed the claim of the assessee as per the transfer price adopted at Rs 3/ltr in respect to the treated water. 92. Now the revenue is in appeal before us on this issue challenging the finding of the ld. CIT(A). 93. The ld. AR of the assessee reiterated that the said issue is covered in favour of assessee in its own case by the decision of Hon'ble Jaipur Tribunal in AY 2014-15 vide order dated 07-08-2023 (ITA No. 142/JP/2023). 94. The Ld. DR during the course of appeal has relied upon the order of TPO and A.O and stated that the adjustments made are in accordance with prevalent industrial practices....
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.... precedents of Hon'ble Supreme Court and Hon'ble High Courts and the Tribunals while allowing the claim of the assessee, in para 10.4 to 10.12 of his order, as under :- 10.4 The appellant contends that the TPO has erred in replacing the benchmarking analysis adopted by the appellant with Cost Plus Method. Appellant has done the benchmarking analysis on the basis of quotations received from Bisleri India Private Limited after making certain necessary adjustments on the basis of departmental stand taken in earlier years and the same method has been followed by the appellant in the previous years also which has been duly allowed in assessment by the department. 10.5 As discussed earlier, as per Section 92C(3) of the Act the AO may proceed to determine the ALP in relation to an international transaction or specified domestic transaction on the basis of material or information or document available with him, if any one of the four conditions are satisfied: a) The price charged or paid in an international transaction/SDT has not been determined in accordance with Sections 92C(1) and 92C(2) of the Act: b) Proper documentation has not been maintained in ....
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....have on the reliability of the comparison and on whether or not more reliable data are available." Thus, OECD is of the view that different products may be selected as comparable if the functions performed by both the products are identical. Since Filtered water and packaged water are both used as water for drinking purpose, the TPO's opinion is not found to be justified. 10.9 The TPO has also observed that the appellant has earned abnormal profit margin by applying the rates on the basis of quotations received from Bisleri. This observation is not relevant since what we are concerned is determination of arm's length price. Profit margin is the consequence of such arm's length price and cannot be a determining factor if the arm's length is correct. 10.10 Another reasoning given by TPO in rejecting the bench marking analysis of the appellant is that the packaged drinking water companies face various risks which the appellant does not face. After making this observation, the TPO himself adopted Cost Plus Method based on profit margins of various package drinking water companies such as Bisleri International Pvt. Ltd, Global Acqua Pvt Ltd., P....
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....he deduction u/s 80IA on Water Treatment System considering the ALP as Rs. 3/Lt. These grounds are therefore, partly allowed." We find that the Coordinate Bench of the Tribunal Delhi in case of Toll Global Forwarding India Pvt. Ltd. vs. DCIT, 37 ITR_Trib 391 (Delhi) while dealing with the matter, has held as under :- "25. In effect, thus, it would appear that as long as one can come to the conclusion, under any method of determining the arm's length price, that price paid for the controlled transactions is the same as it would have been, under similar circumstances and considering all the relevant factors, for an uncontrolled transaction, the price so paid can be said to be arm's length price. As we have noted earlier in this order, the price need not be in terms of an amount but can also be in terms of a formulae, including interest rate, for computing the amount. In any case, when the expression "price which ......would have been charged or paid" is used in rule 10BA, dealing with this method, in this method the place of "price charged or paid", as is used in rule 10B(1)(a), dealing with CUP method, such an expression not only covers the actual price but al....
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....ot relevant when the transaction is at arm's length as held by Hon'ble Pune Tribunal in MSS India (32 SOT 132). (c) In the present facts of the case, CPM method cannot be applied since determination of gross profit margin is a difficult and subjective exercise in absence of proper data. 99. Considering the above findings, we find no infirmity in the order of the ld. CIT(Appeals), accordingly the order of the ld. CIT(Appeals) is upheld. The ground no. 4 of the Revenue is dismissed. 100. Ground No. 4 relates to deleting the disallowance of Rs. 18, 05, 65, 450/- on account of deduction u/s 80IA of Rail system due to adjustment of Transfer Pricing. 101. The brief facts of the case are that the assessee was operating and maintaining a separate Rail Infrastructure Facility System (RIFS) at Beawar, Rajasthan for procurement of principal raw materials i.e., clinker, coal and pet coke and for the purpose of cement dispatches to its customers. The said infrastructure facility is eligible for deduction u/s 80-IA of the Act. In the Return of Income, the assessee had claimed deduction u/s 80-IA of Rs. 30, 99, 45, 832/- in respect of the said infrastructure facil....
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....n record and gone through the orders of the revenue authorities and the case laws cited before us. We find that the above issue has been dealt by this Bench in AY 2014-15 vide order dated 7-82023 in ITA No. 142/JP/2023. The findings of this Bench is reproduced herein below:- "43. We have heard the rival submissions, perused the material on record and gone through the orders of the revenue authorities and the case laws cited before us. On perusal of the record, we noticed that similar claim of the assessee has been allowed by the AO for the preceding assessment years 2012-13 and 13-14 vide order dated 30.01.2014 and 16.12.2014 respectively. On the similar ground, the AO has accepted the claim of the assessee for the preceding assessment year 2012-13 by holding in para (iii) at page 12 of the assessment order, as under :- "As the rail system is used at assessee's own undertaking, hence provision of section 80-IA(8) are applicable. On going through Form 10CCB for this facility for the year under consideration as submitted by the assessee company it was found that assessee company has adopted transfer price for using the services of this infrastructure facility a....
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....mely crucial to the appellant, * The manufacturing unit of the appellant is in remote location where means of transport are limited and road transport cost and related logistics cost are high * If Rail Infrastructure Facility System would not have been installed by the appellant, the appellant would have transported its goods through road. Thus, installation of the said Rail Infrastructure Facility System has resulted in substantial cost savings which has been considered as revenue. 11.5 It has been contended that u/s 92C(3) of the Act, the AO may proceed to determine the ALP in relation to an international transaction or specified domestic transaction on the basis of material or information or document available with him, if any one of the four conditions are satisfied: a) The price charged or paid in an international transaction/SDT has not been determined in accordance with Sections 92C(1) and 92C(2) of the Act; b) Proper documentation has not been maintained in terms of Section 92D(1) r.w Rule 10D of the Income Tax Rules, 1962; c) The information or data used in computation of ALP is not reliable or correct; d) Fail....
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....f manufacturing units. Thus, revenue derived by the Rail Infrastructure Facility System computed based on savings in cost which inter-alia includes road freight from appellant's factory to nearest railway station is correct and the fact that such road is not owned by the appellant would not be relevant. 11.9 Another reason for the TPO to reject the savings approach adopted by appellant is the observation that the railways ought to have charged concessional freight from the appellant on account of infrastructure provided by the appellant, and in doing so no profit actually accrues to the Rail Infrastructure Facility of the appellant. This opinion of TPO is also not correct. OECD Guidelines addresses this issue, relevant extract of which are as follows : "B 2.3.2 Considerations on including a profit element 7.35 Depending on the method being used to establish an arm's length charge for intra-group services, the issue may arise whether it is necessary that the charge be such that it results in a profit for the service provider. In an arm's length transaction, an independent enterprise normally would seek to charge for services in such a way as to....
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....tion the appellant has claimed 84.83% profits of RIFS in the Return of Income. However, in earlier year the TPO has quantified a split of 65.52% to the RIFS and balance to the Cement Manufacturing Unit based on FAR analysis. The order of A.O./TPO on this issue in AY 2013-14 has been accepted by the appellant and it has not filed any appeal on this issue. Since in the preceding year, above split has been computed by TPO at 65,52%, there is no reason why the appellant should be granted 84.83% profits as attributable to RIFS in the current year. 11.12 In view of above, applying the split of 65.52% in the current year, profits attributable to rail system comes to Rs. 25,90,55,755/- as against Rs. 33,54,04,453/- and eligible deduction u/s 80IA comes to Rs. 26,69,07,312/- as against Rs. 34,32,56,010/- as claimed by the appellant in its return of income. The AO is therefore directed to allow deduction u/s 80IA on account of Rail Infrastructure Facility System of Rs. 26,69,07,312/- and disallowance of Rs. 7,63,48,698/- made by the AO is confirmed and balance disallowance is deleted. The AO is directed to re-check this working carefully while giving ap....
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....The AO after incorporating the proposed adjustment made by the TPO and after making further disallowances for various deduction claimed by the assessee passed draft assessment order under section 144C r.w.s. 144B of the Act on 05.04.2021 determining total income under the normal provisions of the Act at Rs. 5,99,71,73,010/-. Since the assessee did not intend to exercise the option available u/s 144C to file objections before the Dispute Resolution Panel, the AO passed final order under section 144C read with section 143(3) of the Act on 16.05.2021 by making various disallowances/additions to the returned income of the assessee as under:- - Reduction in claim u/s 80-IA on power undertakings (Rs. 3,89,10,26,211/-) - Reduction in claim u/s 80-IA on Solid Waste Management System (Rs. 1,12,47,97,791/-) - Reduction in claim u/s 80-IA on Water Treatment System (Rs. 18,28,00,629/-) - Reduction in claim u/s 80-IA on Rail System (Rs. 10,78,49,923/-) - Disallowance of Education cess (Rs. 3,68,58,639/-) 111. Feeling dissatisfied with the order of the assessment, the assessee preferred an appeal before the Commissioner of Income Tax, (Appeals....
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.... 118. Ground No. 3 relates to confirming the disallowance made by the AO on account of claim of Education Cess of Rs. 3,68,58,639/-. 119. Ground No. 3 in this appeal is same as Ground 3 for AY 2015-16 on claim of Education Cess under normal provision of the Act. This ground has been extensively dealt with while dealing with Assessee's Appeal for AY 2015-16 in ITA No. 500/JPR/2023 and in the light of our findings recorded therein Hence the said ground no 3 of the assessee is dismissed. 120. Ground No. 4 relates to exclusion of deduction under section 80IA in computing Book Profit under section 115JB of the Act. 121. Ground No. 4 in this appeal is same as Ground 4 for AY 2015-16 on claim of deduction under section 80IA in computing Book Profit under section 115JB of the Act. This ground has been extensively dealt with in Ground 4 of Assessee's Appeal for AY 2015-16 and in the light of our findings recorded therein, AO is directed to compute Book Profit u/s 115JB of the Act after allowing deduction under Chapter VI-A, Part C, particularly u/s 80IA of the Act. Hence, ground no. 4 of appeal is therefore allowed. 122. Ground No. 5 relates t....
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....f the ground so raised the ld. AR of the assessee argued based on the following written submission as under :- (a) Directly Covered by the decisions of Hon'ble Jaipur Tribunal, Rajasthan HC and Supreme Court: 'Incentives' in the form of Reward, constitute capital receipt and are not taxable Hon'ble Jaipur Tribunal have held in Mayur Uniquoters Ltd. - vs.- CIT (ITA No. 02/JP/2022 dated 09.11.2022) that export incentives received under Foreign Trade Policy in AY 2018-19, post amendment of Section 2(24), for promotion of manufacturing and export of notified goods are incentives in the form of Reward, which are capital receipts, not chargeable to tax, relying upon the decisions of Jurisdictional HC in PCIT -Vs- M/s Nitin Spinners Ltd. (116 Taxman.com 26) and J&K HC in Shree Balaji Alloys -Vs- CIT (333 ITR 335) (SLP rejected by SC in both the cases). Hon'ble Tribunal further held that incentive in the form of Reward cannot be considered as 'assistance'. In case of the Assessee, the incentives are received for promotion of setting up of new industrial undertakings and are incentives in the form of Reward. Thus, following the decision of the Hon'bl....
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....duction in 2007), which has not been granted or approved and where the matter is subjudice. In fact, the said amount has neither been approved nor received even as on date. Even the dispute has not yet been resolved. Hence in absence of approval &/or receipt &/or resolution of dispute, which is pending since more than a decade, there is no question of treating such book entry as taxable income. Reliance is placed on the decision of SC in Kedarnath Jute Manufacturing Co. Ltd. -Vs- CIT (1971) 82 ITR 363(SC), where it has been categorically held that accounting entries are not sine qua non in determining taxability of income. Further reliance is placed on the decision of Hon'ble Gujarat High Court in CIT -vs.- Bavla Gopalak Vividh Karyakarisahakari Mandli Ltd. (2002) 253 ITR 97 (Guj) wherein it has been held that where final decision on dispute regarding subsidy had not reached, it could not be said that income had accrued to the assessee. 126. The ld. AR of the assessee also drew our attention to various provisions of the Act starting from Section 2(24) which defines the term 'income'. Charge of Income Tax has been prescribed under Section 4 of the Act, as per which incom....
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.... amendment made by the Finance Act, 2015 w.e.f. 01.04.016 by inserting new clause (xviii) to provide that Income shall include any "assistance" in the form of subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement by the Central Government or a state Government or any authority in cash or in kind to the assessee. Therefore, after the amendment made there is no scope to consider the various aspect of the matter as argued by the ld. AR of the assessee. Based on these arguments the ld. DR supported the order of the ld. CIT(A). 128. We have heard the rival contentions raised before us, perused the material placed on record and gone through the various judicial precedent cited by both the parties to drive home to their respective contentions. The bench noted that the apple discord raised before us that the assessee has availed incentives of Rs. 5,01,26,70,827/- in respect of Capital Investment and Employment Generation Rs. 10,91,07,280/- in the form of Electricity Duty Exemption and Rs. 1,08,75,15,849/- in respect of Excise Duty Exemption under various Central and State incentive schemes being Rajasthan Investment Promotion Scheme,....
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....ajasthan High Court and supreme court cases. The ld. AR of the assessee also argued that incentives in the form of Reward, constitute capital receipt and are not taxable and to drive home to this contentions he has relied upon the decision of Jaipur Tribunal in the case of Mayur Uniquoters Ltd. -vs.- CIT (ITA No. 02/JP/2022 dated 09.11.2022) where in it was held that export incentives received under Foreign Trade Policy in AY 2018-19, post amendment of Section 2(24), for promotion of manufacturing and export of notified goods are incentives in the form of Reward, which are capital receipts, not chargeable to tax, relying upon the decisions of Jurisdictional HC in PCIT -Vs- M/s Nitin Spinners Ltd. (116 Taxman.com 26) and J&K HC in Shree Balaji Alloys Vs- CIT (333 ITR 335) (SLP rejected by SC in both the cases). Hon'ble Tribunal further held that incentive in the form of Reward cannot be considered as 'assistance'. In case of the Assessee, the incentives are received for promotion of setting up of new industrial undertakings and are incentives in the form of Reward. Thus, following the decision of the Hon'ble Jaipur Tribunal in Mayur Uniquoters (supra), the incentives in case of....
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....the dispute has not yet been resolved. Hence in absence of approval &/or receipt &/or resolution of dispute, which is pending since more than a decade, there is no question of treating such book entry as taxable income. Reliance is placed on the decision of SC in Kedarnath Jute Manufacturing Co. Ltd. -Vs- CIT (1971) 82 ITR 363(SC), where it has been categorically held that accounting entries are not sine qua non in determining taxability of income. Further reliance is placed on the decision of Hon'ble Gujarat High Court in CIT -vs.- Bavla Gopalak Vividh Karyakarisahakari Mandli Ltd. (2002) 253 ITR 97 (Guj) wherein it has been held that where final decision on dispute regarding subsidy had not reached, it could not be said that income had accrued to the assessee. 130. Since, the ld. AR of the assessee contended that there is difference between the reward and assistance and the amendment in the act deals with the assistance and not the reward. Thus, the meaning of this terms are required to be grasped and the same is: Reward Assistance A reward is given in return for an act or achievement Assistance refer to aid or help provided to someone It can be monetary or non ....
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....tary grants. h) There is press release dated 05.05.2015 that it does not apply to individuals and having business income to save government relief measures. i) When subsidy is included in the definition of income provision of section 14 shall apply to determine under which head said income falls. So section 14 will classify the income under the respective heads. j) There is no amendment under section 28 or section 56 to include specifically subsidy taxable under those respective heads for the reason that such classification will depend upon the nature, purpose of such subsidy. k) Amendment is constitutionally valid as held by Bombay High Court in case of Serum Institute of India Private Limited [157 taxmann.com 107]. l) Provision of section 145B(3) has also dealt with the year of taxability of the susidy. m) In paragraph 12(g) of the Serum Institute decision (supra) the argument of absence of head of income was raised stating that in the absence align amendment in the Section 28, subsidy still remain outside the taxation. Court answered it by relying upon decision of apex court in the case Poona Electric Supply Co Ltd. Vs. CIT [....
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....138. Ground No. 1 relates to allowing the appeal of the assessee by deleting the disallowance of Rs. 3,89,10,26,211/- on account of deduction u/s 80IA in respect of captive power plant. 139. Ground No. 1 in this appeal are same as Ground 1 of Departmental appeal for AY 2015-16 on deduction u/s 80IA. The ld. A/R submitted that for AY 2016-17, the facts are similar to the facts for AY 2015-16. In this year also the assessee has adopted Transfer Price for the purpose of power transferred by the Power Generating Units ('PGUs') to the Cement Manufacturing Unit ('CMU') based on annual average rate of power sold by the State Electricity Board ('Grid/SEB') during the year to the nearby manufacturing units of independent assessees in the State of Rajasthan by applying Comparable Uncontrolled Price ('CUP') Method. These grounds have been extensively dealt with in while dealing with Departmental Appeal for AY 2015-16 in ITA No. 489/JPR/2023 and in the light of our findings recorded therein, we find no infirmity in the order of the ld. CIT (A). Accordingly, the order of the ld. CIT (A) is upheld. The ground no 1 of the Revenue is dismissed. 140. Ground No. 2 rela....
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....stination, determined as per the tariff notified by the Indian Railways. Further, the assessee has also applied PSM on the revenue so derived and allocated 34.48% of the profits to its Cement Manufacturing Unit ('CMU') based on an effective Functional, Assets and Risk ('FAR') analysis. These grounds have been extensively dealt with in Gr. 4 of Departmental Appeal for AY 2015-16 in ITA No. 489/JPR/2023 and in the light of our findings recorded therein, we find no infirmity in the order of the ld. CIT (A), accordingly the order of the ld. CIT (A) is upheld. The ground no. 4 of the Revenue is dismissed. 146. Hence, departmental appeal filed for AY 2014-15 vide ITA No. 490/JPR/2023 is dismissed. For Assessment year 2017-18 147. The assessee filed its return of income for the year under consideration on 30.11.2017 disclosing total income of Rs. 4,53,70,36,160/- under the normal provisions of the Act and book profit amounting to Rs. 15,23,48,74,771/- under provisions of Sec. 115JB of the Act. Thereafter, the revised return of income for the captioned Assessment Year was filed on 31-03-2019, disclosing total income of Rs. 2,87,91,24,160/- under the normal....
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....at ground for adjudication. So, for the A. Y. 2017-18 we are taking up the appeal of the assessee first which is registered as ITA No. 497/JPR/2023 and then that of the revenue as ITA no. 491/JPR/2023. 150. First, we take up the appeal of the assessee in ITA No. 497/JPR/2023. 151. Ground No. 1 relates to rejecting the impugned assessment order u/s 143(3) r.w.s. 144C passed by Ld. AO as invalid and void ab initio since it was not passed in accordance with the provisions of Section 144B(1)(xvi)(b) of the Act. 152. Before us, the ld. AR of the assessee has submitted that the said ground being technical in nature is not being pressed in the interest of substantive justice. Hence, the said ground is not being adjudicated. Ground No. 1 of appeal is therefore dismissed. 153. Ground No. 2 relates to relates to rejecting allowability of Reliability charge of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80IA of the Act. The said ground relates to non-consideration of component of reliability charge of Rs. 1.50 per unit which the power undertaking is eligible to charge for providing uninterrupted and qua....
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....CIT (A) and the relevant finding of the ld.CIT(A) is reiterated here in below : Error in computing deduction u/s 80-IA on SWMS (Fly Ash). 11. Ground No. 13 is in respect of error in computing deduction u/s 80IA on Solid Waste Management System (Fly Ash). This is raised without prejudice to Ground No. 8 to 12. 11.1 The AR submitted that the A.O. in the assessment order was required to compute deduction u/s 80IA in accordance with the provisions of Sec. 92CA(4). Instead of computing revised deduction u/s 80IA after taking into account order of TPO, AO added back the entire amount of adjustment to total income without taking into cognizance the amount of claim made in the computation. Hence, instead of allowing deduction u/s 80- IA of Rs. 203,39,79,752/- the AO has computed negative deduction of Rs. (63,88,96,572)/- [Rs. 101,85,41,499/- minus Rs. 1,65,74,38,071/-]. 11.2 Since the said issue has already been adjudicated in detail in Para 9 above and necessary directions have already been given to the A.O. in this regard, the said ground does not require further adjudication and hence is dismissed. 159. Since the ld. CIT (A....
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....2876324/- which was lodged vide notes but not in in the main return of income, cannot be considered as claimed in the return of income. 9.7 In view of above, the action of AO in allowing deduction u/s 80IA on eligible Solid Waste Management System as per Form 10CCB filed along with return of income is upheld. This ground is dismissed. 160. Thus, the ld. CIT (A) dismissed this ground merely on the ground that assessee has made the claim in the notes to the computation of income and the same is not in accordance with the provisions of Section 80A(5) and restricted the claim of the assessee up to the amount claimed vide computation of income. 161. Aggrieved by the order of CIT(A), the assessee preferred appeal before us in ground no. 3. 162. In support of the ground so raised the ld. AR of the assessee submitted his written submission as under :- i. Deduction claimed u/s 80-IA w.r.t eligible Solid Waste Management System(SWMS) was as follows: - Form 10CCB : INR 753.10 Crs - Return of Income: INR 753.10 Crs [INR 485.81 Crs in computation part of ITR-6 (based on stand taken by TPO in earlier years) & balance INR 267.29 Crs vide Notes forming par....
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....) 229 ITR 383 (SC). viii. Full Claim quantified and reflected in Audited Accounts of the SWMS & Form 10 CCB duly uploaded before filing of the Return of Income. This fact makes prayer of the Assessee all the stronger. When the claim allowed on merit by CIT (A) is in terms of (1) the Audited Accounts and Form 10CCB duly uploaded and also (2) in terms of the amount reflected in the Return read with the Notes forming part of the return, there is no reason to restrict the claim to the amount reflected in the computation part of the Return. Reliance is placed on all the decisions referred to here in above. 163. Per contra, the ld. DR representing the revenue has heavily relied upon the finding of the ld. CIT (A) on the issue. The ld. DR submitted that as the claim of the assessee is not in accordance with the provision of section 80A(5) the excess claim since not claimed in the return of income the claim of the assessee is required to be denied. 164. Since the ground of appeal was decided against the assessee relying upon the provision of section 80A(5) the same is considered and reiterated here in below : Deductions to be made in computing total income. ....
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....in the return of income. The co-orindate bench of Mumbai Tribunal in ACC Limited vs ACIT (ITA No. 6082/Mum/2014 dated 16-3-2023) has held that - "77. It is observed that in above referred case, the fact was that the assessee has made claim in notes to the return of income and claim was not reflected in actual quantum of income in absence of its quantification. Considering such facts, ITAT Bench has held that claim made in the notes to return form integral part of return of income and further observed that a claim made in notes to return of income, though without any quantification of such claim will be considered as a valid claim in the return of income. The finding of ITAT Bench was also upheld by Hon'ble Bombay High Court in 79 Taxmann.com 306." 167. In CIT vs B.G. Shirke construction Technology (P) Ltd (2017) 395 ITR 371 (Bom), the Hon'ble Bombay High Court has held that "The issue whether or not the claim of quantification made by the assessee before the AO for the subject assessment years would be a fresh claim or not is academic. This is view of the fact that the impugned order has held that even if one accepts that the quantification of the amount o....
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.... 171. Ground No. 4 in this appeal is same as Ground 3 of assessee's appeal for AY 2015-16 in ITA No. 500/JPR/2023 on claim of Education Cess under normal provision of the Act. This ground has been extensively dealt with while dealing with Assessee's Appeal for AY 2015-16 in ITA No. 500/JPR/2023 and in the light of our findings recorded therein Hence the said ground no. 4 of the assessee is dismissed. 172. Ground No. 5 relates to addition made by the Assessing officer on account of payment made to transporter of Rs. 1,00,00,000/- 173. The facts of the case are that during the course of the assessment proceedings the AO raised a query before the assessee vide notice u/s 142(1) dated 22.04.2021 w.r.t. alleged cash receipt of Rs. 1 Cr. from Shiv Group, Gandhidham by way of over invoicing. The relevant extract of the query asked by the AO is given hereunder : "6. Further, during the survey u/s 133A of the Income Tax Act, 1961 conducted on 15-03-2018 at various premises of Shiv Group, Gandhidham, certain items were found in which a information was found out that Rs. 1 crore was sent back to Shri Cement Pvt. Ltd. on 29-07-2016, after rece....
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....he AO was correct in adding the amount to the total income of the appellant since he had necessary information available with him for such addition. I find no force in the contention of the AR that although such incriminating materials has been found during the course of survey at 3rd party's premises, it is the duty of the A.O. to confirm and be satisfied that the appellant has actually entered into such cash transactions. 16.7 The appellant has not been able to produce anything to the contrary that what has been alleged by the AD. Since the A.O. has incriminating materials in his possession, the contentions of the appellant in this regard deserve to be rejected. The disallowance of Rs. 1 crore as made by the A.O. is confirmed and this ground of appeal is dismissed. 177. As the assessee has not received any favour from the grounds so raised for this issue the assessee has thus aggrieved from the finding of the lower authority has raised the ground before us. 178. In support of the grounds so taken by the ld. AR of the assessee, the arguments in oral and written were placed on record. The written argument raised are as under:- i. Notices was issu....
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.... & Export P. Ltd. (2020) 424 ITR 195 (Bom.): [Statement recorded u/s 133A does not have any evidentiary value and that materials or information found in the course of survey proceedings could not be a basis for making any addition] * CIT -vs.- Dhingra Metal Works (2010) 328 ITR 384 (Del): [A.O. cannot make addition solely on the basis of the statement made during the course of survey] vii. Loose papers, computer print outs, hard disk and pen drive etc. are not admissible as evidence unless corroborated * Common Cause (A Registered Society) -vs.- UOI (2017) 394 ITR 220 (SC)) : [Loose papers and electronic data not maintained regularly during the course of the business cannot be considered as admissible evidence as per the Indian Evidence Act] viii. Addition based on assumptions, presumptions, surmises and conjectures are not sustainable * Late Shri Harshad S. Mehta -vs.- DCIT (ITA No. 5702/Mum/2017 dated 14-01-2019) [Additions cannot be sustained on the basis of assumptions and presumptions that evidences so obtained are against the assessee and without giving the opportunity to the assessee to controvert the same.] 179. ....
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....se of the business cannot be considered as admissible evidence as per Indian Evidence Act, 1872. Not only that the Hon'ble apex court in the case of M/s. Andaman Timbers Industries Vs. Commissioner of Central Excise, Kolkata-II, held that not allowing the assessee to cross-examine witnesses whose statements were relied upon by the Adjudicating Authority resulted in a breach of principles of natural justice. The order based solely on witness statements was considered a serious flaw and rendered null and void. The bench also noted that in the present case, the assessee has filed copies of all invoices, bank statement as well as confirmation from the said party that submitting the evidence in support of the claim that the transactions are genuine. Hence, the onus now shifts to department to counter them and provide evidence that the transaction is not genuine. We find that the AO in the present case has not discharged its onus despite repeated requests from the assessee to provide documents to justify the addition. In view of the above facts, we find that Ld. CIT (A) was not justified in confirming the addition made by AO in summary without dealing with the contentions and his finding....
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....f the Act wherein this ground has been extensively discussed. Accordingly, AO is directed to compute Book Profit u/s 115JB of the Act after allowing deduction under Chapter VI-A, Part C, particularly u/s 80IA & u/s 80IC of the Act Thus ground no. 7 of appeal is therefore allowed. 189. Ground No. 8 related to exclusion of notional income while computing Book Profit u/s 115JB of the Act. 190. Apropos to this ground the brief facts of the case are that during the year, the assessee company in view of adoption of IndAS had credited an amount of Rs. 676.49 Crs. as transition amount to the retained earnings as on 01-04-2016 being notional income. In view of Sec 115JB(2C), 1/5th of such transition amount i.e. Rs. 1,35,29,81,703/- was offered to tax while computing book profit for the year under consideration. In addition to the said amount, as per the provisions of Ind-AS 109, the assessee also recorded an amount of Rs. 83,35,74,971/- being notional interest on bonds (including Zero Coupon Bonds) and debentures and fair valuation gain on preference shares and mutual funds amounting to Rs. 24,67,00,000/-. The said amounts were credited to the Statement of P&L....
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....nds 22.18 4 Fair value gain/ (loss) on Preference shares 2.62 5 Reversal of Mines Reclamation Expenses (on NPV basis) 12.18 6 Amortization of upfront fees (on NPV basis) 0.05 Total Opening Balance of Ind-AS Adjustments 676.49 1/5th of Opening Balance of Ind-AS Adjustment 135.30 One fifth of the above amount (INR 135.30 Crs.) was included while computing book profit as per provisions of Sec 115JB(2C) of the Act. However, vide notes forming part of the Return, the aforesaid amount of INR 135.30 Crs. was claimed to be excluded under MAT, being notional income and not real income of the company, which is not even credited to Statement of P&L. Further, the appellant on adoption of Ind-AS has offered an amount of INR 108.03 Crs. while computing book profits u/s 115JB. This comprised of (1) an amount of INR 83.36 Crs being income towards notional interest on bonds & debentures and (2) a further amount of INR 24.67 Crs., being notional fair valuation gain on preference shares and mutual funds credited to the Statement of P&L on Ind-AS adoption. However, vide notes forming part of the Return, the aforesaid amount ....
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....ubjected to MAT." 194. Per contra, the ld. DR supported the finding recorded in the order of the ld. CIT (A) who has considered the provision of the Act and rightly not considered the contentions of the assessee. 195. We have carefully considered the rival contentions and perused written submissions filed by the assessee. The facts are that due to adoption of Ind AS, the accounts of the company have been prepared which requires various assets to be recorded at Fair Market Value and not at Historic Cost basis. The appellant's contention is that due to above, various notional entries have been passed in the books of accounts which includes notional income credited to Profit & Loss statement. ld. CIT (A) has also stated that the fact that notional entries have been recorded in the Financial Statement due to adoption of Ind AS is not disputed. However, we find that there are 2 types of notional entries passed. (a) Transition amount on first time adaptation of Ind AS which is credited to retained earnings and not to P&L Statement (Rs. 135.30 Crs.) and (b) Mark to Market/Amortised cost as per Ind AS 109 on account of fair valuation of shares and mutual funds (Rs. 108.03 Crs.). The ....
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.... the notional income theory in computing Book Profit u/s 115JB of the Act. The bench noted that the similar issue has been dealt in detailed by the Mumbai Bench of the ITAT in the case of Reliance Industrial Investment and Holdings Ltd. v. Deputy Commissioner of Income-tax 149 taxmann.com 113 (Mumbai - Trib.) where in the ITAT holds that 83. We have already noted in the earlier part of our order that Zero Coupon OFCDs issued on 30th June 1995 which was issued at par for Rs. 441.57 crores was converted into 72388770 equity shares in financial year 2020-21 and the total convergence was at par only. The Zero Coupon OF CDs issued in the year 2015 and 2016 issued for sums aggregating to Rs. 1510.30 crores, the entire ZOFCDs was redeemed in the financial year 2016-17 at par. Thus, even though it has been redeemed within the year in a very short span of a year, then also there is neither any interest component nor any financial liability in the form of compounding financial instruments or any kind of discounting factor which can be said to be applicable. Nor assessee has claimed in the financial account or treated it as financial liability. The fact that it was redeemed....
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....that "When the notional gain on fluctuation in foreign exchange is not disputed by the revenue, the same is not an income taxable u/s 115JB of the Act. Moreover, when the notional income does not really form part of income in the hands of the assessee company, the same cannot be part of the profit reflecting the real results in the profit & loss account." 200. Relying on the above decisions, we hold that notional income amounting to Rs. 83,35,74,971/- on account of bonds and debentures and Rs. 24,67,00,000/- on account of shares and mutual fund aggregating to Rs. 108,02,74,971/- represents notional income and hence needs to be excluded while computing Book Profit u/s 115JB of the Act. Based on this observation the ground no 8 of the assessee is therefore partly allowed. Ground No. 9 relates to deletion of excess levy of interest u/s 234C 201. The brief facts of the case are that the assessee during the captioned assessment year has computed Interest u/s 234C amounting to Rs. 1,43,60,496/- on its tax liability. The said interest was arising on account of shortfall in payment of advance tax for Quarter - III for AY 2017-18. The Ld. AR of the....
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....re. Performance of this impossible duty must be excused in accordance with the maxim, 'lex non cogitate ad impossible' as held by Hon'ble Supreme Court in Cochin State Power and light vs State of Kerela (1965 AIR 1688). Based on the above finding of the apex court read with the facts of the case, the ld. AO is directed to delete interest levied u/s 234C of Rs. 1,38,85,263/-. This ground no. 9 is decided in favour of the assessee and is allowed. 206. Ground No. 10 (Additional Ground) relates to allowability of the claim of depreciation @25% on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature. 207. We note that the facts of this issue are identical to Additional Ground No. 1 raised for AY 2015-16 in ITA No. 500/JPR/2023. Based on our detailed findings given in AY 2015-16, this ground is allowed. Hence, the ld. AO is directed to grant depreciation @25% on such leasehold rights acquired in accordance with section 32(1)(ii) of the Act. 208. In the result, appeal of the assessee's in ITA no. 497/JPR/2023 is partly allowed. 209. Now we take up Department Appeal in I....
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....ount of deduction u/s 80IA on account of Solid Waste Management System. 214. Ground No. 2 in this appeal is same as Ground 2 of Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The ld. AR of the assessee submitted that for AY 2017-18, the facts are similar to the facts for AY 2015-16. During the year, the assessee has claimed Deduction u/s 80IA towards profits on Solid Waste Management System set up for management of solid waste being pond ash & fly ash. The assessee has claimed the transfer price of treated solid waste by considering realisable market value of clinker and thereby applying Profit Split method. The TPO accepted the approach adopted by the assessee but made modification by revising the PSM to 64% and rejecting the element on freight on clinker handling from the market value. The ld. CIT(A), accepting the realisable market value of clinker, restricted the PSM to 79.73%. We have already dealt with this ground on the same set of facts in Departmental Appeal for AY 2015-16 in ITA No. 489/JPR/2023 and in the light of our findings recorded therein, we find no infirmity in the order of the ld. CIT (A), accordingly the order of the ld. CIT (A) is upheld....
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....e ld. CIT (A), accordingly the order of the ld. CIT (A) is upheld. The ground no 4 of the Revenue is dismissed. 219. In the result, appeal of the Revenue is dismissed. For Assessment year 2018-19 220. The assessee filed its return of income for the year under consideration on 30.11.2018 disclosing total income of Rs. 3,97,76,01,600/- under the normal provisions of the Act and book profit amounting to Rs. 16,74,01,26,358/- under provisions of Sec. 115JB of the Act. Thereafter, the revised return of income for the captioned Assessment Year was filed on 31-03-2019, disclosing total income of Rs. 2,07,85,79,430/- under the normal provisions of the Act and book profit amounting to Rs. 16,74,01,26,358/- under provisions of Sec. 115JB of the Act. Along with the computation of total income filed with return of income, the assessee filed notes to computation forming part of the return. 221. The case of the assessee was selected for complete scrutiny assessment under the E-assessment Scheme, 2019 on the following issues: Sr. No Issues i. Claim of Any other amount allowable as Deduction in Schedule BP ii. Stock Valuation iii Busine....
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....16 the same is not repeated and the issue which is not there in the year earlier the same will be dealt when we take up that specific ground for adjudication. So, for the A. Y. 2018-19 we are taking up the appeal of the assessee first which is registered as ITA No. 498/JPR/2023 and then that of the revenue as ITA no. 492/JPR/2023. 226. First, we take up the appeal of the assessee in ITA No. 498/JPR/2023. 227. Ground No. 1& 2 relates to rejecting the impugned assessment order u/s 143(3) r.w.s. 144C passed by Ld. AO as invalid and void ab initio since it was time barred as passed beyond the prescribed date and it was not passed in accordance with the provisions of Section 144B(1)(xvi)(b) of the Act. 228. Before us, the ld. AR of the assessee submitted that the said ground being technical in nature is not being pressed in the interest of substantive justice. Hence, the said ground is not being adjudicated. Ground No. 1 & 2 of appeal is therefore dismissed. 229. Ground No. 3 relates to rejecting allowability of Reliability charge of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80-IA of the Act. The sai....
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....9B on account of unexplained investments amounting to Rs. 15,88,041/- 236. Briefly, the facts of the case are that AO during the course of assessment proceedings vide Notice u/s 142(1) dated 24.12.2020 asked the following details - "12. As per data available with the department, Assessee Company has made substantial purchases from multiple such suppliers who are either Non-Filer(s) or have filed non-business ITR or reflected a substantially lower turnover in ITR as compared to turnover shown in GSTR 1 return. Please furnish the below specified details:" 237. Thereafter, vide Show Cause Notice dated 22-09-2021, ld. AO proposed to make disallowance of an amount equal to 8% of Rs. 5,15,19,20,587/-, amounting to Rs. 41,21,53,647/- on account of alleged purchases made from suppliers who are either non-filers of ITR or filed non-business ITR or reflected a substantial lower turnover in ITR as compared to turnover shown in their GSTR-1 return. Against above SCN, assessee vide letter dated 24-09-2021 submitted that it cannot identify the suppliers who are Non Filer(s) or have filed non-business ITR or reflected a substantially lower turnover in ITR as compared....
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....on and the same is reiterated here in below:- A. Notice was issued by AO on 22-09-2021 proposing to disallow INR. 41.21 Crs. [@ 8% on INR 515.19 Crs] based on information available with the department w.r.t. purchases of INR. 515.19 Crs. made from suppliers who were non-filers of ITR. [Refer Pg 195 to 201 of PB]. Despite request of the appellant before AO vide its letter dated 2409-2021 [Refer Pg 202 to 206 of PB] to provide details of such suppliers, AO without providing such details passed draft assessment order u/s 144C dated 27-09-2021 proposing to disallow the said amount of Rs 41.21 Crs [Refer Pg 207 to 209 of PB]. The appellant vide its letter dated 01-10-201 [Refer Pg 210 to 224 of PB] again requested to provide details of such suppliers. AO issued notice u/s 142(1) dated 11-10-2021 [Refer Pg 225 to 231 of PB], providing PANs of 91 suppliers along with the transaction values of INR 5.65 Crs, as against INR 515.19 Crs alleged in the Draft Order dated 27-09-2021 & Notice dated 22-09-2021. Against the notice dated 11-10-2021, reply was filed by the appellant vide letter dated 20-10-2021 [Refer Pg 232 to 255 of PB] providing details of transa....
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....he assessee has duly furnished the details of the transactions entered with the said suppliers during the year under consideration and has stated that no other transactions for purchase of goods has been undertaken with the said suppliers. The ld. AO has not provided any document in support of the information given in the insight portal. Thus, the bench noted that such type of addition to income cannot be made by the ld. AO merely by relying on the information in the insight portal and also without providing documents based upon which information was culled out from the insight portal. As it is held by the various courts that the ld. Assessing officer holding co judicial power. His role is multifaceted and is not the only adjudicator but he serves as investigator when the assessee has furnished all the details he is duty bound to asked the assessee the specific defaults and the information in his possession read with the records provided by the assessee. The bench noted that how the assessing officer has proposed the addition and how ultimately he made the addition is without appreciating the information placed on record by the assessee. We see that there is no finding about detail....
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....sessee's Appeal in AY 2015-16 on claim of deduction under section 80IA and 80-IC in computing Book Profit under section 115JB of the Act. This ground has been extensively dealt with in Assessee's Appeal for AY 2015-16 in ITA No. 500/JPR/2023 and in the light of our findings recorded therein, AO is directed to compute Book Profit u/s 115JB of the Act after allowing deduction under Chapter VI-A, Part C, particularly u/s 80IA & u/s 80IC of the Act. Ground no. 8 of appeal is therefore allowed. 251. Ground No. 9 relates to exclusion of notional income while computing Book Profit u/s 115JB of the Act. 252. Ground No. 9 pertains to non-adjustment of 1/5th of transition amount on first time adoption of IND-AS while computing Book Profits u/s 115JB. The said issue has been discussed in detail in Ground 8 for Assessee's Appeal in AY 2017-18 in ITA No. 497/JPR/2023 wherein the assessee's plea on the same ground has been rejected. Ground no. 9 of appeal is therefore dismissed. 253. Ground No. 10 (Additional Ground) relates to claim of depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or comm....
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....er of the ld. CIT (A) is upheld. The ground no. 1 of the Revenue is dismissed. 260. Ground No. 2 relates to allowing the appeal of the assessee by deleting the disallowance of Rs. 5,38,59,30,559/- on account of deduction u/s 80IA on account of Solid Waste Management System. 261. Ground No. 2 in this appeal is same as Ground 2 of Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The ld. A/R submitted that for AY 2018-19, the facts are similar to the facts for AY 2015-16. In this year also, the assessee has claimed Deduction u/s 80IA towards profits on Solid Waste Management System set up for management of solid waste being pond ash & fly ash. The assessee has claimed the transfer price of treated solid waste by considering realisable market value of clinker and thereby applying Profit Split method. The TPO accepted the approach adopted by the assessee but made modification by revising the PSM to 48% and rejecting the element on freight on clinker handling from the market value. The ld. CIT(A), accepting the realisable market value of clinker, restricted the PSM to 79.73%. We have already dealt with this ground on the same set of facts in Departmental App....