TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 898
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.... filed by the assessee shall be adjudicated by us separately. 2. It appears from the report of the registry that the appeal have been filed by the revenue after a delay of 32 days. At the time of hearing the counsel of the revenue explained the reason for delay in filing the appeal. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the submission made by the D.R. and the judicial pronouncement that a case should be decided on merit not on technical issue, the delay is hereby condoned. ITA No. 2457/Kol/2024 for AY 2018-19 3. Brief facts of the case of the assessee are that the assessee engaged in the manufacturing and sale of carbon black, sale of surplus of power generated from off-gases from carbon black manufacturing process having its factories at Durgapur, Kochi and Mundra. The assessee filed return of income for AY 2018-19 on 30.11.2018 declaring total income of Rs. 2,67,89,81,290/-. Further, the assessee filed revised return on 30.03.2019 declaring total income of Rs. 2,65,88,45,310/-. It was processed on 13.11.2019 u/s 143(1) of the Act at total income of Rs. 2,68,05,34,260/-. Further the case of the assessee was selected for scrutiny under ....
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....ces that such goods or services to the ordinarily fetched in the open market or Arm's Length Price as defined in clause (4) of Section 92f of the Act, where the transfer of such goods or services is a specified domestic transaction referred to Section 92BA. The Ld. D.R has further submitted that the Ld. CIT(A) has further committed wrong in not appreciating the fact that the assessee is generating unit [CPP] account as such claim of any benefit u/s 80IA of the Act and further did wrong by not appreciating that the manufacturer cannot be compensated based on rate meant for distributor and thereby ignoring the clear provision of Rule 10B(2)(b) of the Rule, 1962 that specifies the function, assets and risks to be essential comparability factors for reference. The Ld. D. R has further submitted that the Ld. CIT(A) erred in fact and law by allowing CSR expenditure to the extent of Rs. 1,16,00,000/- to be allowable for claiming deduction u/s 80G of the Act. The Ld. D.R has further submitted that the Ld. CIT(A) has erred in law by allowing deduction u/s 80IA of the Act against the gross total income as against deduction restricted to profit and gains from specified business as per provisi....
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....18-19 relates to the action of the Ld. CIT(A) deleting the disallowing the deduction of Rs. 28,34,57,200/- claimed u/s 80IA of the Act on account of downwards transfer pricing adjustment made by TPO in response to the transfer price of eligible CPPs at Durgapur in West Bengal, Kochi in Kerala and Mundra in Gujarat eligible for deduction u/s 80IA of the Act. There is no dispute that the assessee is engaged in the business of manufacture of carbon black having its factory at Durgapur, Kochi and Mundra. The following issues are for adjudication. (i) Transfer Pricing Adjustment in relation to transfer value of power by CPPs to manufacturing unit and consequent disallowance of deduction claimed u/s 80-IA of the Act. 8. The facts of the case are that, the assessee is engaged in the business of manufacture of carbon blank having its factories at Durgapur, Kochi and Mundra. The assessee operates four (4) power plants whose profits are eligible for deduction u/s 80- IA of the Act. During the relevant year, these power plants had generated and distributed power which was entirely consumed by the manufacturing unit of the assessee. Having regard to the provision of Sec. 80IA(8), the electri....
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....ower was supplied by the assessee to the State Electricity Board was determined entirely by State Electricity Board in terms of statutory regulations and contractual terms and that such a price could not be equated with market value as was understood for purpose of Section 80-IA(8) of the Income Tax Act, 1961. Instead, the Hon'ble Apex Court held that the rate at which the State Electricity Board supplied electricity to industrial consumers would have to be taken as market value for computing deduction u/s 80-IA. Thus, in totality, the Hon'ble Apex Court has concluded that the market value of the power supplied by CPP to an industrial unit should be computed by considering the rate at which the State Electricity Board supplied power to the industrial consumers in the open market and not by comparing it with the rate of power when sold by the Assessee to the State Electricity Board. The Hon'ble Supreme Court emphasized that the rate contended by the Revenue was not the rate at which an industrial consumer could have purchased power in the open market. 9. In this regard we have gone through a later judgment of the Hon'ble Calcutta High Court in the case of CIT Vs Sta....
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....80- IA and 80G of the Act against the 'Gross Total Income' instead of 'Business Income'. The facts relating to this issue are that, the assessee had reported Gross Total Income of Rs. 17,64,29,012/- against which deduction(s) under Chapter VI ie. Section 80-IA & 80G was claimed, which aggregated to Rs. 125,45,60,120/-, Accordingly, the deduction claimed under Chapter VI was restricted to the extent of Gross Total Income Le Rs. 17,64,29,012/-. The AO however in the impugned order while assessing the total income restricted the allowance of deduction under Chapter VI to the extent of 'Business Income' which was assessed at Rs. 14,63,72,782/- and therefore assessed the Total Income at Rs. 2,92,64,030/- which comprised of Short-Term Capital Gain taxable at normal rates of Rs. 2,92,64,030/-. In this context a question which was put up for consideration before the Hon'ble Apex Court, whether the quantum of deduction u/s 80IA has to be restricted by treating 'eligible business' as the only source of income' or whether it can be allowed against any source even other than business income, and Hon'ble Supreme Court in the case of CIT vs Reliance En....
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.... The AO accordingly disallowed the same. It is submitted that the reason given by the AO for disallowing the deduction claimed u/s 80G in respect of CSR donations to registered charitable trusts is unjustified as nowhere do the provisions of Section 80G provide that the sums paid to charitable trusts have to be 'voluntary' in nature so as to become eligible for deduction under the said provision. It is further submitted that, it was the assessee's sole prerogative to decide as to the manner in which it proposes to contribute towards CSR activities. It was not a case that the assessee has contributed to the registered charitable trust in question under any specific mandate or compulsion. Instead, the appellant has voluntarily decided to contribute to the registered charitable trust(s). Hence, the AO's action that the donation was not made at the assessee's own volition was untenable. It is imperative to mention that the Legislature was well aware that the companies may spend on CSR activities by contributing to charitable trusts recognized under Section 80G of the Act and therefore wherever the Legislature intended that CSR contributions to any specific charitab....
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....0/10303941 dated 20.08.2024 for AY 2020-21 [Ground No. 11 - Paras 5.6.1 to 5.6.3] had deleted the same by following the impugned appellate order for AY 2018-19. It is submitted that the Revenue has not preferred any appeal on this issue in AY 2020-21 and the same has attained finality. In that view of the matter, when the Revenue itself has accepted the decision of the Ld. CIT(A) on this same issue in the subsequent AY 2020-21, the impugned ground raised in AY 2018-18 has no legs to stand on. 15. Going over the above discussion, we do not find any infirmity in the order of Ld. CIT(A) on this issue. (iv) Disallowance u/s 14A of the Act Ground No. 11 of Revenue's appeal in ITA No. 11 for AY 2020-21 Ground No. 2 of Assessee's appeal in ITA No.2034/Kol/2024 for AY 2020-21 16. This ground relates to the disallowance made by the AO u/s 14A read with Rule 8D amounting to Rs. 2,27,70,615/-. During the year, the appellant earned exempted dividend income of Rs. 5,27,97,867/-. In the return of income for AY 2018-19, the assessee had suo moto computed and disallowed a sum of Rs. 11,54,387/- u/s 14A of the Act by way of expenditure incurred for earning of exempt income. Statement g....
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....y has customers located across India. The company had obtained corporate membership of clubs having affiliations across India for its Directors and senior employees to interact with customers and other stakeholders Such clubs provide a perfect platform for interactions, exchange of information and to conduct business. The club facilities are used as a platform for holding business meetings of the directors and senior employees to interact with business partners and customers. The activities undertaken by the Directors and the senior employees in such clubs are in the nature of business meetings, networking, brand building, dealings and business gatherings between suppliers/customers and/or senior executives of the appellant company, which fosters the business interests of the appellant company. In the circumstances, the club membership and club service expenses borne by the company were incurred in the course and for the purposes of business. The year-wise details of club expenses incurred by the company is as follows: Particulars 2017-18 2018-19 2019-20 2020-21 2022-23 Club Expenses 24,16,517 43,09,612 48,62,302 40,95,593 38,03,221 18. In view of the above table, it ....