TaxTMI 
TaxTMI 
2025 (7) TMI 748
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....This appeal is filed by the Revenue against the order dated 16.09.2020 passed by Ld. Commissioner of Income Tax (A)-44, New Delhi ["Ld.CIT(A)"] in Appeal No .- 78/2019-20/CIT(A)-44 u/s 250 of the Income Tax Act, 1961 ["the Act"] arising from the assessment order dated 28.12.2018 passed u/s 143(3)/144C of the Act pertaining to assessment year 2015-16. 4. Brief facts of the case are that the assessee is a public limited company engaged in the business of manufacturing and trading of chemical, PVC Resins, PVC compounds, UPVC Windows & Door Systems, Cement, Sugar, Fertilizers, seeds, textile yarn, power generation etc. The return of income was filed on 28.11.2015, declaring total income at INR 29,48,96,750/- after claiming deduction under section 80IA of the Act in respect of power generation unit and also claimed deduction under section 80G of the Act. The company has declared book profit u/s 115JB at INR 2,46,12,21,172/- and paid MAT on book profits. The return of income was revised on 13.07.2016 at an income of INR 22,56,33,190/-. The case of the assessee was taken up for scrutiny and a reference under section 92CA of the Act was made to the TPO for determination of ALP in respec....
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....der section 115JB for MAT purposes was computed at INR 2,31,11,56,502/-. 6. Against that order, the assessee preferred appeal before the Ld. CIT(A) who vide impugned order dated 16.09.2020 has deleted the adjustments made towards deduction claimed u/s 80IA towards transfer pricing adjustment and further, deleted the addition made under section 14A of the Act. 7. Aggrieved by the said order, the Revenue is in appeal before the Tribunal where the Revenue has taken following grounds of appeal- 1. "Whether on facts and in circumstances of the case and in law, the CIT(A) erred in law & on facts in not appreciating the facts of the case and deleting the adjustment on transfer of power in Rajasthan Region when the internal CUP data was not available. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in law & on facts in deleting the adjustment proposed by the TPO on account of transfer of steam. 3. The appellant craves, leave, modify, add or forego in any ground(s) of appeal at any time before or during the hearing of this appeal." 8. The Revenue vide letter dated 23.04.2025 has raised following additional grou....
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....AO/TPO. 11. On the other hand, Ld.AR for the assessee drew our attention to the decision of Co-ordinate Bench of Tribunal in assessee's own case for AY 2014-15 in ITA No.7362/Del/2018 where the Co-ordinate Bench vide order dated 28.10.2021 upheld the assessee's contention of working out the ALP with regard to the transfer of electricity between eligible unit to non-eligible units. The Tribunal has accepted the comparables of the assessee in the form of power purchased from the respective State Electricity Boards which in the instant year is from Jaipur Vidyut Vitran Nigam Limited ("JVVNL") and rejected the TPO's action of using IEX data as External CUP. 12. Ld. AR further submits that order of Co-ordinate Bench was confirmed by the Hon'ble Jurisdictional High Court vide its order dated 21.01.2025 in ITA No. 566 of 2023. The Reliance is further placed on the judgement of Hon'ble Supreme Court in the case of Jindal Steel and Power Limited reported in 460 ITR 162 (SC) wherein the Hon'ble Supreme Court has defined the principle for determination of market value of goods and services for the purpose of deduction u/s 80IA of the Act. 13. We have heard the....
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....age TG III, Ajabpur DSCL. Sugar Ajabpur 11,016,978 49,177,339 4.46 159 TG II, Ajabpur DSCL Sugar Ajabpur 3,945,152 17,610,280 4.46 159 TG I, Loni DSCL Sugar Loni 13,745,554 61,825,582 4.5 170 TG II, Loni DSCL Sugar Loni 2,399,728 10,797,813 4.5 170 TG I, Hariawan DSCL. Sugar Hariawan 18,143,841 82,458,155 4.54 147 TG II, Hariawan DSCL Sugar Hariawan 864,663 3,795,871 4.39 147 Captive, Bahrauch Sriram Alkali & Chemicals Bahrauch 403,236,851 2,778,867,400 6.89 181 Captive, Kota Sriram Fertilisers & Chemicals Kota 287,187,626 1,852,360,188 6.45 192 In its TP analysis / TP Study, the appellant has justified the price charged by it for the supply of power by applying an internal CUP in the form of price at which power was sold / purchased from the respective State Electricity Boards. The TPO, accepted all the transactions to be in arms length other than the transaction involving the eligible and non-eligible units of Kota which she benchmarked using the average price of the internal CUP as adopted by the appellant and the external CUP i....
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....ee during the year has undertaken transactions with both AEs and non-AEs, and as claimed, has not only maintained segmental details of such transactions, but, has also undertaken comparative analysis in its TP study, it has to be looked into an objective manner before rejecting the same." Similarly, it has been affirmed in a number of decisions that the rate of power charged by the State Electricity Boards constitute the 'market value' of the goods which it would fetch in the open market and this meets the standards of section 80IA(8) of the Income Tax Act. Hon'ble Chhatisgarh High Court in the case of Godawari Power & Ispat Ltd. [42 taxmann.com 55] held that - "31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate 10 a consumer in the open market. 32. In our opinion, the AO committed an illegality in com....
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....3. It is admitted by the Department that in Chattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power. 34. The CIT(Appeals) and the Tribunal had righty computed the market rate of the power after considering it with the rate of power available in the open marker namely the price charged by the Board". Hon'ble Gujarat high Court in the case of Gujarat Alkalies & Chemicals Ltd. 188 taxmann. com 722) has held that rate of 7 4.51 per electricity unit charged by aversee's eligible unit from non-eligible unit represented cost of electricity generation to the assevee especially when it is not in dispute that SEB charged ≥ 5.00 per unit for supplying electricity to other industries including non-eligible unit of the assessee itself. The case of the appellant when analyzed in the light of the above backdrop and judicial precedents, makes it amply clear that the TPO has erred in selectively disregarding an evisting internal comparable in respect of one elig....
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....igible units to non-eligible units by making following observations- 30. Firstly if we look at the rate Indian energy exchange which is stated to be pertaining to Rajasthan region is Rs 2.55 per kilowatt whereas the rates at which the power was purchased by the assessee in Rajasthan from SEBs Rs. 8.35 per kilowatt. This shows that the rates at which the power is sold by SEBs is 3.30 times higher than the rates which are quoted by Indian energy exchange. It is also undisputed fact that most of the power is supplied in Rajasthan region by Jaipur Vidhyout Vitran Nigam Limited and used by the consumers. Whereas there is no data available that how much power is being sold at the platform of Indian energy exchange in Rajasthan region. 31 It is also an undisputed fact that product comparability is a critical element while applying cup method and needs to be closely examined. In case if there are any differences identified between the controlled and uncontrolled transaction that would affect price, adjustment should be made to the price of the uncontrolled transaction is in order to make the same comparable to the controlled transaction is. No doubt the product similarity....
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....33 (6) of the act to obtain such rates i.e. data. Furthermore the Indian energy exchange rates are also required to be adjusted for the various levies and other variable charges of transmission et cetera as well as the transmission loss. Even otherwise the assessee has submitted the land rate at Indian energy exchange which shows the average price at Rs. 6.36 per kilowatt by taking base rate at Rs 2.55. Even if the average of the SEBI rates at Rs. 8.35 per kilowatt and the landed rate at Indian energy exchange at Rs. 6.36 per kilowatt is averaged out it comes to Rs. 7.355 per kilowatt which is more than the rates at which the power is transferred from eligible unit to non-eligible unit at Kota Rajasthan by the assessee i.e. at Rs. 6.30 kilowatt. 32. There is no doubt that the rates at which the SEBs supplies power to the assessee is an perfect external cup. Such rates are Rs. 8.35 per kilowatt. Rates of Indian energy exchange shown at Rs 2 .55 per kilowatt. If the rates of SEB compared with the rates of Indian energy exchange clearly shows that there is a wide disparity between the two rates. It is not in dispute that SEB in Rajasthan is supplying power to majority of the ....
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....l Steel & Power Ltd. (supra) and held the order of the Tribunal as reasonable order and confirmed the same. The observations of the Hon'ble Court as contained in para 43 to 60 are reproduced as under- 43. In the present case, the question is to determine the market value or the ALP of power supplied by power plants established by the Assessee to its other units. Supplying of electricity is governed by the Electricity (Supply) Act, 1948 and Electricity Act, 2003. The transmission of electricity is also governed by the Electricity Rules, 2005. 44. Thus, the market for supply of electricity is regulated. Thus, to apply the CUP method, it would be necessary to ascertain the comparable transactions that are similar in material aspects and there is no difference between the transactions which has a bearing on the price of the power supplied. 45. The question whether the average IEX rate at which power is traded on IEX, is a comparable uncontrolled transaction, is required to be evaluated by determining whether there are any differences between the specified domestic transaction 6 and the uncontrolled transaction of trade on the IEX. 46. The Assesse....
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....r that the said material differences between the electricity supplied by SEBs or power distribution companies and those secured by bidding on IEX would have a significant bearing on the price of power. 53. As noted above, the CUP method is an appropriate method only in cases where there is sufficient degree of identity between the tested transactions and comparable uncontrolled transactions. The CUP method cannot be applied where there is significant dissimilarity between the comparable transactions and it is not feasible to determine an adjustment to eliminate the impact of the said differences on the prices of comparable transactions. 54. In the present case, the Assessee had supplied excess power to UPPCL in UP region at the rate of Rs.4.39 per kWh. Thus, the said transaction was accepted by the learned DRP as well as the learned ITAT as an internal uncontrolled transaction. The rate at which such electricity was supplied by the Assessee being Rs.4.39 per kWh, was rightly accepted as an ALP. 55. As noted above, the learned ITAT also accepted the rates at which electricity was supplied by the SEBs/power distribution companies to the Assessee in Gujarat ....
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....reme Court assailing the orders passed by the learned ITAT and the High Court. In the aforesaid context, the Supreme Court had held as under: "23. This brings to the fore as to what do we mean by the expression "open market" which is not a defined expression. 24. Black's Law Dictionary, 10th Edition, defines the expression "open market" to mean a market in which any buyer or seller may trade and in which prices and product availability are determined by free competition. P. Ramanatha Aiyer's Advanced Law Lexicon has also defined the expression "open market" to mean a market in which goods are available to be bought and sold by anyone who cares to. Prices in an open market are determined by the laws of supply and demand. 25. Therefore, the expression "market value" in relation to any goods as defined by the Explanation below the proviso to sub-section (8) of section 80IA would mean the price of such goods determined in an environment of free trade or competition. "Market value" is an expression which denotes the price of a good arrived at between a buyer and a seller in the open market i.e., where the transaction takes place in the normal course of....
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....ned in the normal course of trade and competition. 27. Another way of looking at the issue is, if the industrial units of the assessee did not have the option of obtaining power from the captive power plants of the assessee, then in that case it would have had to purchase electricity from the State Electricity Board. In such a scenario, the industrial units of the assessee would have had to purchase power from the State Electricity Board at the same rate at which the State Electricity Board supplied to the industrial consumers i.e. Rs. 3.72 per unit. 28. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the ra....
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....ocess of other production activity and such steam is transferred to power generating units thus the AO should consider this aspect also while determining the cost of stem. He prayed accordingly. 21. On the other hand, Ld. AR for the assessee submitted that steam has been sold by the eligible units to non-eligible units at cost and no markup is done on the said transaction. Ld. AR submitted that before the TPO, the assessee has filed cost sheet of cost of production of steam duly certified by the Chartered Accountant however, the TPO has observed that the assessee has not filed any basis for determination of such cost. Ld.AR further submits that this issue has been settled in favour of the assessee by the Co-ordinate Bench of the Tribunal in assessee's own case for AY 2014-15 wherein identical adjustment was made by the AO/TPO which was deleted by the Tribunal. Ld. AR further submits that the Department upto AY 2013-14 had accepted benchmarking methodology followed by the assessee however, for the first time, did not accept the methodology of the assessee in AY 2014-15 which as observed above has been deleted by the Hon'ble ITAT which order stood confirmed by the Hon'....
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....n examining the process of power generation stated that the power plants are not installed for steam production but for power generation and as steam being byproduct do not have any cost. Therefore he rejected the most appropriate method applied by the assessee he further held that activity regarding production of steam shows that steam is produced as a result of burning of fuel in boiler. This steam is used for generation of electricity. Thus the entire cost of electricity absorbs entire cost of production of steam. Thus the resultant cost of excess team is nil. Therefore he made an adjustment of Rs. 1,035,745,275 on this account. The learned dispute resolution panel also agreed with the view of the learned transfer pricing officer. 38. We are not in agreement with the findings of the lower authorities for the simple reason that the Institute of cost and works accountants and issued a guidance note "Guidance Note on Cost Accounting Standard on Cost of Utilities (CAS-8))" which provides guidance as to how the cost of utilities such as production of steam can be determined. According to that guidance note in paragraph number 5.1 it is stated that each type of utility shall ....
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....e credit should be given to the Power plant and corresponding charge to SGP(Steam Generation Plant). Charging of power to the consuming cost object is generally done at the weighted average of the cost of power purchased, generated and distribution cost at the consuming point. Steam: A separate statement of cost of steam is prepared indicating the quantity of steam generated, cost of fuel, soft water, power, employee cost for operating staff, sundry supplies, chemical additives, deprecation and other works overhead. Unit cost of steam is arrived at on the basis of units consumed in different departments after adjusting distribution loss. Steam may be of high pressure, low pressure and medium pressure with multiple paths by which the steam pressure is reduced according to the purpose of use. Steam costs are highly dependent on the path that steam follows in the generation and distribution system. Raw water: Raw water is either purchased or obtained from ground wells/canal. The cost of water mainly consists of share of cost of power allocated through inter-utility transfer. The total cost of water should include employee cost, fuel, power, repair and maintenance of tube wells, deprec....
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....dition to the above cost as illustrated below 1 Steam generation cost as 5.3.1 above Rs 471.09 Per MT 2 Distribution cost : Operation & Maintenance cost of distribution line Depreciation Other Total Distribution cost Per MT Rs 1.00 Rs 0.75 Rs 0.75 Rs 2.50 3. Inter Unit transfer cost Rs. 473.59 Cost of a utility determined as per para 5.3.2 plus share of administrative overhead to be charged." 40. Therefore, from the above analysis it is apparent that the learned revenue authorities have incorrectly held that there is no cost of production of steam. 41. Even otherwise steam is a commercially viable product and it is a form of power and therefore it cannot be said to be produced at nil cost. The assessee has submitted a detailed cost sheet duly certified by the cost accountant following the standards issued by the Institute of cost and works accountant for determining the exact cost of steam, it has also been certified by the chartered accountant and further a chartered engineer certificates is also provided. All these cost statement duly certified by the professionals were rejected by the learned revenue authorities without any basis. 42. Further in the ca....
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....steam to the power plant. It has been held by her that steam does not fall within the meaning of "power". In this reference she has made reliance on the judgment of honourable ITAT Ahmadabad in the case of N R Agrawal Industries Ltd v. DCIT dated 26/07/2013. The appellant on the other hand has submitted that the value of steam should be considered for arriving the profit as the scheme is being gererated for generation of electricity and after utilising the same for electricity generation the balance steam is used for the chemical process. Therefore, it is a byproduct and therefore, the deduction was admissible. On a careful consideration of the facts related to the issue, it is noted that that appellant is generating steam at high-pressure and temperature and the steam is being fed into turbine and the steam which is coming out from turbine is utilised for the chemical process. The details on record to show that the turbine utilised by the appellant for generation of the power is a back pressure turbine. In back pressure turbine the intake is of high pressure steam which is used for generation of power and the exhaust steam is also at certain pressure so that it can utilis....
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....ch is utilised by the chemical plant can be determined by distributing the same in proportion to the heat value (Enthalpy) of the inlet steam and the outlet steam of the turbine. As per the details available on record the heat value of the inlet steam at 65.5 KG/cm2 is 793 kcal per KG whereas the heat value of the output steam at 3.5 KG/cm2 is 653.7 kcal per KG. The quantity of input and output steam remains the same and only the calorific value of the heat value goes down as part of the energy is utilised for generation of power. Accordingly, the expenses can be apportioned in the ratio of enthalpy of the inlet and output steam. The same is worked out as under :- Total enthalpy of the steam coming out of the boiler 793 kcal per KG The enthalpy of the steam coming out of the turbine 653 kcal per KG The enthalpy utilised by the turbine for generation of electricity 139 kcal per KG Percentage of energy utilised in the generation of electricity 17.66% Total expenses for Boiler 1800000 Generation of steam to be allocated on a percentage basis expenses Boiler maint 1728903 ....
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....oiler and also a turbine since the boiler would manufacture steam which would be a raw material for the production of power with the aid of turbine and such a plant would be a new industrial undertaking capable of generating electricity. The case of the assessee was that in the existing power plant the assessee had excess steam production capacity which was to be utilised by the turbine installed in the new plant. The Assessing Officer ultimately rejected the case of the assessee on the ground that the turbine should be treated as an independent power generating unit and thereby disallowed the claim of deduction under section 80IA of the Act. 17. The assessee carried the matter in appeal. The CIT(A) held that no industrial undertaking would come into existence within the meaning of the provisions contained in section 80IA of the Act by transferring the boiler or by installing new machinery for the purpose of generation of the power. The appeal came to be dismissed and the assessee carried the matter before the Tribunal. The Tribunal dismissed the appeal. 18. It appears that the assessee preferred an application for rectification before the Tribunal contending that....
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....osting Standards for determining the cost of production of steam. iv. Assessee has transferred the steam from eligible units to noneligible units at cost only. v. Such cost is certified by the Cost Accountant, Chartered Accountant, and Chartered Engineers. vi. It cannot have Nil cost 47. In view of above facts, we are of the view that ld Revenue authorities erred in holding that the steam does not have any cost and therefore steam transferred by assessee's eligible units to non eligible units at cost, which is determined by Cost accountants and Other professional, has the Arms length price of Rs Nil instead of cost of Rs. 10,37,45,275/- . Therefore we allow ground number 3 of the appeal and direct the learned transfer-pricing officer to delete the addition of Rs. 1,035,745,275 which was made determining the arm's-length price of transfer of steam from eligible unit to non-eligible unit by considering the cost of production of the steam at Rs. Nil." 23. This order of the Tribunal was challenged by the Revenue before the Hon'ble High court in ITA No.566/2023 wherein no substantial question of law was admitted on this issue by the hon'ble....
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....T DR supported the order of AO and submits that though the assessee has made disallowance under Rule 8D(2)(iii) of the Rules however, since the company had paid interest on the funds borrowed therefore, the proportionate disallowance under Rule 8D(2)(ii) should have been made and therefore, he requested for the restoration of the addition made by the AO. 29. On the other hand, Ld. AR for the assessee submits that the assessee has suo-moto made the addition on account of administrative expenses as per Rule 8D(2)(iii) and no expenses were incurred excepts such administrative expenses therefore, no further disallowance was required to be made. Ld. AR further submits that the AO by observing that the Revenue has not accepted the order of earlier years, has made the disallowances however, in assessee's own case for AY 2008-09, the Hon'ble High Court has deleted the disallowance and further in AY 2014-15, the disallowance made by the AO was deleted by the Co-ordinate Bench of Tribunal against which the Revenue had preferred the appeal before Hon'ble High Court where Hon'ble High Court has not admitted substantial question of law on this issue. 29.1. On merits, the a....
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....'s own case wherein AY 2014-15 under identical circumstances, the addition/disallowance made was deleted by the Co-ordinate Bench of ITAT and on further appeal by revenue, the Hon'ble Jurisdictional High Court has not admitted substantial question of law on this issue. With regard to the inclusion of book profit under section 115 JB, we followed the judgement of Special Bench in the case of Virit Investment (supra) where it is held that no addition could be made on account of disallowance under section 14A to the book profit. This being so, we do not find any force in the arguments of Ld. CIT DR accordingly, the additional grounds of appeal taken by the Revenue are dismissed. 31. In the result, the appeal filed by the Revenue is dismissed. ITA No.704/Del/2021 (AY 2016-17) [Assessee's appeal] 32. This appeal has been filed by the assessee against the assessment order dt. 22.04.2021 passed u/s 143(3) r.w.s.144C(13) r.w.s. 144B of the Act after giving effect to the order of Hon'ble DRP dated 03.03.2021 pertaining to assessment year 2016-17. 33. Since the grounds of appeal taken by the assessee in captioned appeal are very extensive and argumentative thus, t....
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....DRP/TPO and consequently the Id. AO have erred by not limiting the transfer pricing adjustment to the extent of deduction u/s 80-IA of the Act claimed by respective eligible power units of the assessee and thereby making an excess disallowance to the tune of Rs. 40,65,76,101/-. GROUNDS OF OBJECTIONS AGAINST CORPORATE TAX DISALLOWANCES Additional Disallowance u/s 14A of Rs. 4,14,870/- 6. The Ld. DRP/AO has erred in law and in facts and in the circumstances of the assessee by enhancing the disallowance u/s 14A of the Act, to the tune of Rs. 54,14,870/- by attributing the interest expenses incurred by the assessee to earning of exempt income invoking rule 8D(2)(ii) which is wholly untenable in law and based on conjectures and surmises. 7. Without prejudice, Ld. AO has grossly erred in law and on facts of the case in computing the additional disallowance u/s 14A r.w.r. 8D(2)(ii) by including the investments (investments in foreign subsidiaries, NSC) income from which is taxable under the Act. 8. The Ld. DRP/AO has erred in making above additional disallowance u/s 14A of the Act disregarding the Hon'ble Jurisdictional High Court order in ....
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....and untenable grounds since there was no concealment of any income nor submission of inaccurate particulars of income, nor any other default according to law by the assessee. 15. That the Ld. A.O has erred in law in charging interest u/s 234C of the Act on wholly illegal and untenable grounds." 34. Ground No. 1 is general in nature needs no separate adjudication. 35. Ground Nos. 2 to 5 are in relation to the adjustment made by AO/TPO of INR 1,04,88,00,979/- in respect of specified domestic transaction of transfer of steam by eligible units to non-eligible units wherein the assessee has taken the transfer price at cost however, the TPO/AO has treated the ALP/cost of production at NIL which has resulted into the reduction in the deduction claimed under section 80IA of the Act. 36. We have heard the rival contentions and perused the material available on record. Similar issues has come up for consideration before us in Revenue's appeal for AY 2015-16 in ITA No.927/Del/2022 wherein by following the judgement of Hon'ble Co-ordinate Bench of the Tribunal in assessee's own case for AY 2014-15 wherein the Co-ordinate Bench has held that the steam is not a by-product but a....
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....ible units to non-eligible units at its cost of production without any markup on the same. Based on the judgement in case of group companies and also the other companies as delivered by the Co- ordinate Bench of ITAT, the assessee has made further claim of deduction where the value of steam is computed by multiplying the quantity of steam that can be expressed in terms of equivalent units of electricity in KWH with the rate of electricity which was upheld / approved. In support the same assessee also filed a certificate of Chartered Engineer. The assessee has also filed the additional evidences under rule 29 of the Rules which contained the following- (i) detailed working of enhancement deduction under section 80IA of the act; (ii) Engineer Certificate computing the equivalent value of steam; (iii) supplementary form 10CCB alongwith power action of eligible plants; (iv) addendum to form 3CEB for AY 2016-17; (v) supplementary transfer pricing study report; and (vi) directions dated 26.03.2021 of Hon'ble DRP-2, Delhi in assessee group case namely M/s. SRF Limited for AY 2016-17. 40. The assessee further stated the reason fo....
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.... as additional evidence. Therefore, it is prayed before your honour to kindly accept the same as per Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 while adjudicating the matter." 41. The assessee further placed reliance on the judgement of Hon'ble jurisdictional High Court in the case of CIT-IV us Text Hundred India Private Limited in ITA Nos. 2077, 2061 & 2065/2010 dated 14.01.2011 wherein Hon'ble High court has held as under- 13. "The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be a....
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....hat the appellate court has power to allow additional evidence not only if it requires such evidence "to enable it to pronounce judgment" but also for "any other substantial cause." There may be cases where even though the court finds that it is able to pronounce judgment on the state of the record as it is and so it cannot strictly say that it requires additional evidence "to enable it to pronounce judgment," it still considers that in the interest of justice something which remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence "for any other substantial cause". In case of Arjan Singh v. Kartar Singh, AIR 1951 SC 193, wherein the Hon'ble SC remarked as "The legitimate occasion for the application of Order 41, rule 27 is when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent, not where a discovery is made, outside the court of fresh evidence and the application is made to impart it. The true test, therefore, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into considerati....
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....ppeal (GOA 32 and 33) vide its submission dated 19.05.2023, which are reproduced below as under :- "32. That the Hon'ble ITAT may be pleased to re-determine the arm's length price of steam transferred from eligible unit to non-eligible units at Rs. 4,15,89,33,008/- [instead at its cost of production at 1,09,61,42,586/-) which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KWH) as certified by the Chartered Engineer with the ALP rate of electricity"; 33. That the Hon'ble ITAT may be pleased to allow the consequential enhanced deduction u/s 80-IA of the Act that would be available to the assessee by considering the equivalent value of steam as determined above in ground no. 32." 2. Further, in order to re-determine the arm's length value of steam and consequently to enhance the deduction under section 80IA of the Act, the assessee has also made application for submission of following additional evidences under Rule 29 of ITAT: a) Detailed working of enhanced deduction u/s 80IA of the Act. b) Chartered engineer's certificate computing the equivalent value of steam. ....
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....e on the basis of such new evidences for the first time before the Tribunal, it would be akin to carrying out a fresh assessment in the case for determination of a new issue. In my respectful submission, it would be contrary to the provisions of the law. (iv) It is pertinent to highlight here that enhanced claim of deduction under section 80IA is not being made by the assessee on account of some error in computation of deduction in the return of income filed or documents filed before the Assessing Officer. Rather, the assessee is trying to change entire basis of determination of value of steam by relying on fresh sets of documents and evidences. Therefore, it cannot be considered as mere enhancement of the claim of deduction made before the Assessing Officer. Rather, it will qualify as making a new claim relying on new evidences produced before Tribunal. (v) Even though enhanced claim is in respect of transaction of transfer of steam from eligible unit to non-eligible unit which was before the Assessing officer, since whole basis of determination of value of such steam is sought to be changed, it would qualify as a new issue being raised for the first time before ....
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....ning the power of the ITAT under section 254 of the I.T.Act has held as under: "16. In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. 17. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that "it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. 18. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal ....
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....on of this Chapter under the heading "C .- Deductions in respect of certain incomes", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139." Thus both these sections i.e. section 80A(5) and section 80AC lays down the primary conditions for claiming deductions and the conjoint reading of both the sections bring out the following pre conditions for claiming deductions under chapter VIA. (1) No deductions u/s 80IA/80IB/ 80IC etc. shall be allowed if the deductions are not claimed in the return of income. (2) The return of income must be filed on or before the due date mentioned in the section 139(1) of the IT Act. Thus, the I.T. Act clearly provides that both the above conditions are to be satisfied as these are primary conditions for claiming deductions under chapter VIA. If the assessee satisfies these primary conditions, only then the AO verifies the eligibility of the assessee for claiming these deductions. From the facts of the case, it is crystal clear that the assessee company has not claimed such enhanced....
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....139(1) of the IT Act, meaning thereby, that even by filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed u/s 139(1) of the IT Act. Thus a person cannot make any new claim under the revised return of income on the ground that he has forgotten to file a claim in the original return of income filed u/s 139(1) of the IT Act. Thus, by the conjoint reading of section 80A(5), 80AC and section 139(1) and 139(5) of the IT Act, it is clear that the assessee cannot file a fresh claim of chapter VIA deductions, by filing the revised return of income. This proposition of claiming exemptions/benefits u/s 10(8) even in the revised return of income has been discussed by the Hon'ble Supreme Court of India in the case of Pr. CIT vs. Wipro Ltd. in 140 taxmann.com 223 (SC) 2022. It has been held that for claiming benefit u/s 108, the claim has to be made in the original return of income filed u/s 139(1) of the IT Act. Being pertinent, the relevant para of the Hon'ble Supreme Court decision is reproduced below; "9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying....
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....hall be accompanied by P&L account and balance sheet of the enterprises as if the undertaking or the enterprise were a distinct entity. Also the Form No.10CCB has been provided in the Income Tax Rules which is for audit report ought to be filed by all assessee who wants to claim deductions u/s 80IA/80I/80IC. This form/report is to be filed for each undertaking and audit report has to be furnished one month prior to the due date of filing of return of income. From the facts of the case, it is clear that at the time of filing of original return of income, the assessee company did not comply with the rule 18BBB and form 10CCB on account of transfer of steam, and the same has not been filed before furnishing of return of income for claiming the enhanced deduction u/s 80IA. The conditions prescribed in Rule 18BBB are almost similar to the provisions of section 10B(8) of the IT Act. In the above referred decision of Pr. CIT vs. Wipro Ltd, the Hon'ble Supreme Court has clearly laid down that for claiming benefit u/s 108(8), the twin conditions i.e. of furnishing of the declaration to the AO in writing and the same to be furnished before the due date of filing of return of inc....
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....eclaration in writing and submission of the same before the filing of return of u/s 139(1) are to be mandatory satisfied for claiming exemptions. The ratio of the Hon'ble Supreme Court decision is applicable to this case also and in the instant case the assessee was required to mandatory comply with the conditions of filing of the audit report for each project and the same was required to be filed before the due date of filing of return of income u/s 139(1) of IT Act. From the perusal of the facts of the instant case, above noted mandatory conditions were not complied by the assessee for the so called enhanced claim of deductions u/s chapter VIA and accordingly the assessee has to be denied the enhanced deduction on account of transfer of steam, as claimed by filing of letter during assessment stage based on some chartered engineers report. The same has been reiterated by the Hon'ble Supreme Court in the case of Wipro Ltd. (cited above) in its operative part, which being very pertinent is reproduced below :- "14. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and h....
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....esh claim under section 80IA of the Act but it is an enhanced/revised claim of deduction already made int eh return of income filed. The relevant rejoinder filed by the AR is as under- "At the outset it is submitted that that submission of ld. DR which runs in 9 pages has nothing new in terms of arguments, contentions, reliance on case laws etc. The written submission by the Id. DR is merely a written version of the oral arguments made during the course of hearing before your honours on 24^th April, 2025 wrt. the issue mentioned in the subject viz. the enhanced claim on account of transfer of steam However, against said submission, the assessee would like to briefly reiterate its earlier submission for the sake of ready reference for your honours. Brief facts The assessee has filed an application on 19.05.2023 with a copy to the Id. DR vide which some additional ground of appeal has been raised as identified in the said application as also additional evidence under Rule 29 has been filed with a prayer to admit the same. As submitted in the detailed explanation as to what triggered the assessee to file the additional ground of appeal, it ....
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....knowledge and therefore, the assessee could not submit the said evidences at the time of proceedings before the Id. AO. Hence, it is prayed that contention of Id. DR are not acceptable and assessee's grounds and evidence be admitted on this point. In this regard, further reliance is placed on the observation made by the Hon'ble Supreme Court, which defines the term "for any other substantial cause", in case of K. Venkatramaiah v. A. Seetharama Reddy, AIR 1963 SC 1526, that under rule 27(1) of Order 41 of the Code of Civil Procedure, "That the appellate court has power to allow additional evidence not only if it requires such evidence "to enable it to pronounce judgment" but also for "any other substantial cause." There may be cases where even though the court finds that it is able to pronounce judgment on the state of the record as it is and so it cannot strictly say that it requires additional evidence "to enable it to pronounce judgment," it still considers that in the interest of justice something which remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence....
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....n on the assessee's reliance on the ITAT ruling in the case of assessee's group concern namely DCM Shriram Industries Limited [ITA no. 1000/D/2022 for AY 2017-18 and ITA no. 539/D/2021 for AY 2016-17] stating that "since there is no discussion with regard to any objection raised to admission of additional ground and additional evidences in the order and order is silent on this aspect, therefore the finding of Hon'ble Tribunal in the said case cannot be of any help to the assessee in light of specific objection raised to admission of additional grounds of appeal and additional evidences" is unjustified, misplaced and suffers from illegality as it beyond the scope and authority of Id. DR to pass such comments on Hon'ble ITAT order and more so where said ITAT order has not been challenged by the department. The Id. DR has incorrectly interpreted the Id. AR's contention. The reliance on the said decision by Id. AR was not in relation to the admission of additional grounds or evidence. Rather, the Id. AR cited the judgment solely on the basis of factual similarity, as in the case of DCM Shriram Industries Limited (supra), the Hon'ble ITAT had remitted th....
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....ssee failed to claim the so-called enhanced deduction u/s 80IA in the original return of income, it is clearly hit by provision of section 80(5) r.w.s 80AC of the IT Act and accordingly these deductions under chapter VI-A cannot be allowed to the assessee. He further relied upon the following judicial precedents to contend that the assessee cannot file a fresh claim of chapter VI-A deductions by filing the revised return of income at the assessment stage and not in original return of income. a) M/s Patel Brass Works Put. Ltd. Vs. ACIT, Circle 5 Rajkot [ITA no. 60/RJT/2020] b) Rachna infrastructure Put. Ltd. [2022] 138 taxmann.com 416 (Gujarat) c) ITO vs. Jagtap Patil Promoters and Builders 147 taxmann.com 199(2023) The Id. DR also placed reliance on the judgment of Hon'ble Supreme Court in the case CIT vs. Wipro Ltd. In 140 taxmann.com 223(SC) 2022 stating that mandatory conditions were not complied by the assessee for the so-called enhanced claim of deduction u/s 80-IA as it was claimed by filing a letter during assessment stage based on the chartered engineer certificate. In this regard, it is submitted that assessee has raised an ....
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....uctive. It is for the aforenoted reasons that we are inclined to hold that Wipro Limited (supra) is distinguishable and that it would be the principles enunciated in G.M. Knitting (supra) which would govern the present matters." b) PCIT us. Oracle (OFSS) BPO Services Ltd. [2019] 102 taxmann.com 396(Delhi) "22. Our attention was, however, drawn to the observations of the Division Bench that the objective behind the amendment was to defeat multiple claims of deduction and ensure hetter compliance. Certainly, the amended provisions ensure better compliance of the statutory provisions. Reference to the expression 'multiple claims of deduction' would be with reference to the stipulation that deduction should be claimed under a particular provision and it cannot be shifted and treated as deduction claimed under the other provision. Language of Sub-section 5 to Section 80 A does not state that the deduction once claimed under a particular section cannot be corrected and modified before the Assessing Officer. Indeed, the Assessing Officer can examine the claim for deduction and can make adjustment/ disallowance. We would not read in the amended provision, a stipul....
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....tances, this additional claim is made for the first time before the Tribunal by filing additional grounds of appeal and further by filing additional evidences. With regard to the admission of additional grounds of appeal, we find that the additional ground taken are legal in nature where the assessee has claimed the revised / additional deduction u/s 80IA of the Act. The Hon'ble Supreme Court in the case of NTPC vs CIT 229 ITR 383 has held that any legal claim could be made at any stage of the proceedings. It is further seen that the Revenue has challenged the admission of additional grounds for the reason that it is a fresh claim made by the assessee. Since it is not made through the income tax return filed u/s 139(1) of the Act, such claim could not be admitted. For this reliance was placed in the case of PCIT vs Wipro Ltd. (supra) wherein the Hon'ble Supreme Court has held that, one of the mandatory conditions is that for claiming the benefit u/s 10B(8) of the Act, the twin conditions of furnishing the declaration to the AO in writing and the same must be furnished before the due date of filing of return of income u/s 139(1) of the Act are required to be fulfilled and ar....
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....risdictional Delhi High Court in the case of Text Hundred India Pvt.Ltd. [TS-13-HC-2011 (Del.)], we find that the assessee has shown sufficient cause for non-filing of these evidences before the lower authorities and therefore, the same are hereby admitted for adjudication. 52. Now coming to the merits of the issue taken in the additional grounds of appeal, Ld.AR for the assessee contended that identical issue has been decided by the Co-ordinate Bench of the Tribunal in assessee's group company namely DCM ShriRam in ITA No.1000/Del/2002 for AY 2017-18 and in ITA No.539/Del/2021 for AY 2016-17. In the said case, the Co-ordinate Bench has remitted back all the issues of additional claim of deduction u/s 80IA of the Act on transfer of steam to the file of AO for fresh consideration on the basis of additional evidences and direct to decide the issue as per law. The relevant observations made by the CO-ordinate Bench are as under :- 8. "The next issue is with reference to re-determination of ALP of steam transferred from eligible unit to non-eligible units and consequent enhancement of deduction under section 80IA of the Act. This issue arises in assessment years 2016-17....
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....terial available on record. This issue has already been decided by us in favour of assessee in Revenue's appeal for AY 2015-16 in ITA No. 927/Del/2022. Thus, by following the observations made therein, the disallowance u/s 14A made in the year under appeal is hereby deleted. Accordingly, Ground of appeal Nos.6 to 9 are allowed. 56. Ground No.10 raised by the assessee is in relation to the adjustment of disallowance u/s 14A to the book profits computed u/s 115JB of the Act. 57. Heard both the parties and perused the material available on record. The identical issue has already been decided in favour of the assessee while disposing the additional grounds of appeal taken by the Revenue in its appeal in ITA No.927/Del/2022 for AY 2015-16. Thus, by respectfully following the observations made therein, we hold that no adjustment could be made in the book profits on account of disallowance made u/s 14A of the Act. Ground No. 10 of the assessee is accordingly, allowed. 58. Ground No.11 raised by the assessee is in respect to the deduction of INR 1,33,85,194/- u/s 37 of the Act. 59. This issue has been settled in terms of the Hon'ble Supreme Court in the case of Sesa Goa....
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.... of electricity from eligible unit to non-eligible unit 70,40,57,860 3. Sale of Seeds 1,49,75,000 4. Interest on Loan given 1,61,77,929 5. Interest on receivables 36,77,478 Adjustment u/s 92CA 172,09,29,543 68. The AO thereafter, passed the draft assessment order dated 21.09.2021 wherein in addition to the adjustments proposed by the TPO, various other additions/disallowances were also proposed and total income was assessed at INR 6,49,05,22,270/- and Long Term Capital loss was assessed at INR 3,05,94,029/-. The AO has also computed the book profit in terms of section 115JB of INR 8,96,94,97,676/- declared by the assessee. 69. Against this draft assessment order, the assessee filed objections before the Hon'ble DRP. The Hon'ble DRP vide impugned order dated 16.06.2022 has partly accepted the objections raised by the assessee. The TPO in compliance to the directions given by the Hon'ble DRP passed the effect order on 30.08.2022 wherein the adjustments as proposed in draft assessment order at INR 1,72,09,29,543/- were reduced to INR 1,69,03,44,466/-. Thereafter, the AO has passed the final assessment order dated 30.08.20....
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....ent order and final assessment order are null & void 6. That the draft assessment order dated 21st September, 2021 passed by the Id. AO is null & void and is liable to be quashed being passed in gross violation to the statutory provisions of the Act on the following accounts: a) that principles of natural justices have been flouted as both the transfer pricing adjustment and corporate tax additions have been made by the Id. AO without issuing any show cause notice on any issue and thus depriving the assessee of its fair and reasonable opportunity of being heard; and b) that statutory procedure laid down in clause (xvi)(b) of sub-section (1) of section 144B of the Act r.w. sub-section (9) of that section prescribing the issuance of show cause notice along with draft assessment order in prescribed manner has not been followed by the Id. AO before passing the draft assessment order u/s 144C of the Act dated 21^st September, 2021. 7. That the Id. DRP has erred in law and in facts and circumstances of the case in not quashing the draft assessment order which is vitiated being null and void and instead validating the action of ld. AO by giving him dire....
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....law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid adjustment/ addition as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further no records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO. Grounds on merits not adjudicated by ld. DRP 15 That Ld. TPO and consequently the Ld. AO have erred in law and on facts and in circumstances of the assessee's case in: a) taking 6.36 per unit as arm's length price (ALP) for transfer of electricity being the average of following: (i) Indian Energy Exchange (IEX) rates @3.25 per unit [external price obtained by the Id. TPO from IEX website]; and (ii) assessee's comparable uncontrolled price data in form actual purchase of electricity from respective state electricity board (SEB)- JVVNL[@ 9.47 per unit); and then b) comparing the above average rate with assessee's actual transfer price [@ 8.52 per unit)....
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.... ld. AO have erred in law and on facts and circumstances of the case in not following the rule of consistency by disregarding the methodology followed by the assessee for transfer of electricity since assessment year 1997-98 which has been accepted by the department in past and has also been upheld by the Hon'ble ITAT and the Id. CIT(A) in assessee's own case for the AY 2014-15 and AY 2015-16 respectively. 22. It is humbly prayed before the Hon'ble ITAT that the transfer pricing adjustment of Rs. 70,40,57,860/- in respect of transaction of transfer of electricity by the eligible power plant at Kota be directed to be deleted. Transfer of Steam from Eligible to Non-Eligible Units-adjustment of 98,20,41,276/- 23. That the Id. DRP has erred in not dealing with adjudicating the assessee's various grounds of objections on merits, in the backdrop of favourable order of the Hon'ble ITAT in assessee's own case for the AY 2014-15 on the issue. 24. That even otherwise, the Id. TPO/AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid adjustm....
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....consequent enhancement of deduction u/s 80-IA of the Act. 30. That the Id. TPO and consequently the Ld. AO have erred in not entertaining the submissions of assessee to re-determine the arm's length price of steam transferred from eligible units to non eligible units at 8,33,02,05,098/- [instead at its cost of production at 1,58,23,81,367/-], which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KWH) as certified by the Chartered Engineer with the ALP rate of electricity and corroborated by the supplementary form no. 10CCBs. 31. That the id. TPO and consequently the Id. AO have erred in not allowing the consequential enhancement deduction ofRs. 6,74,78,23,731 u/s 80IA of the Act claimed by the assessee from 3,28,60,68,984/- to Rs. 10,03,38,92,715/-, by considering the equivalent value of steam as determined above in ground no. 30 (viz. 8,33,02,05,098/). 32. It is prayed that the Hon'ble ITAT may be pleased to pass the following order: a. that assessee be allowed the enhanced claim of 6,74,78,23,731/-u/s 80-IA of the Act considering the equivalent value of steam based on the certificate of ....
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..... AO has erred in law and the facts and circumstances of the case by not considering the submissions of the assessee and by passing a non-speaking order inspite of the specific binding directions of the Id. DRP vide para no. 4.7.3 to verify the factual contentions of the assessee w.r.t. the comparability analysis of the comparables selected/ rejected by the Id. TPO. 37 That the Ld. TPO and consequently the Id. AO have erred in ignoring the fact that the AEs of the assessee have been incurring losses. Therefore, there is no profit shifting by the assessee to its AEs by virtue of the transaction under consideration and hence no ALP adjustment is warranted on the same. 38. That the Id. TPO has failed to appreciate that assessee's SBG division PLI [OP/OC] @18.86% is same for AE sales of hybrid seeds which is only Rs.11.38 Crores and non-AE sales of hybrid seeds which is around 400.27 Crores and thus AE sales are ALP under internal TNMM as well. 39. That the Ld. TPO and consequently the Id. AO have erred in law and on the facts & circumstances of the assessee's case by not following the rule of consistency as regards to the selection of filters and ben....
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....oan granted to its AE, while on the other hand the AE has been incurring losses. Therefore, there is no profit shifting to its AE by virtue of this transaction and hence no variation of benchmark interest rate is warranted on the same. 46. That the Ld. TPO and consequently the Ld. AO have erred in law and facts and in circumstances of the case in not following the rule of consistency ignoring that same methodology has been consistently followed by the assessee for past many years, which has been accepted by the revenue in past. 47 That the Ld. TPO and consequently the Ld. AO have erred in making the factual computational error apparent from records by considering the LIBOR rate from globalrates.com @ 2.49% which relates to FY 2018-19 (instead of correct LIBOR rate of 1.475% which pertains to current FY 2017-18). 48. It is prayed that the Hon'ble ITAT may be pleased to pass the following order: a. That 'LIBOR only' is the appropriate interest rate to benchmark the transaction of foreign currency loan granted to the AE. b. Without prejudice, to the above, the assessee's approach of computing the interest income by consideri....
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....pread is an appropriate benchmark for the purpose of benchmarking interest on receivables from its AEs. 55. The Id. TPO and consequently the Id. AO have erred on the facts and in law in imputing ad-hoc interest rate @ LIBOR+400 basis points i.e. 6.49%, without providing any basis to arrive at such rate in the show cause notice issued by him. 56. The Ld. TPO has erred in law and facts and in circumstances of the case in erroneously justifying the rate of LIBOR+400 bps directly in its order by making reference to arbitrary parameters like credit ratings, country risk premium, miscellaneous factors etc. 57. That the Ld. TPO and consequently the Id. AO have erred in ignoring the fact that the assessee has earned interest income on delayed receipt from outstanding receivables from its AE, while the said AEs have been incurring losses. Therefore, there is no profit shifting to its AE by virtue of this transaction and hence no ALP adjustment is warranted on the same. 58. That the Ld. TPO and consequently the Ld. AO have erred in law and facts and in circumstances of the case without appreciating the fact that the same methodology has been followed by th....
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.... has erred in making the above disallowance u/s 14A of the Act by not following the Judgment of Hon'ble Jurisdictional High Court in assessee's own case for the AY 2008-09, Hon'ble ITAT's order for the AY 2010-11 and Hon'ble CIT(A)'s order for AY 2011-12, AY 2013-14 and AY 2015-16 all in favour in assessee's own case. 66. That the Id. AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid disallowance as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further по records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO. 67. It is prayed before Hon'ble ITAT that additional disallowance u/s 14A r.w.r.8D(2)(ii) by the Ld. AO may kindly be deleted. Addition to Books profits u/s 115JB-adjustment ofRs. 8,70,000/- 68. That the Ld. AO has erred in law and in facts and circumstances of the case by making an addition of Rs. 8,7....
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....t the Id. AO has erred in law and on facts and circumstances of the case by sustaining the above addition merely to keep the issue alive by blindly following the order of preceding year without carrying out any independent enquiry or without referring the matter to the valuation officer to determine the fair market value of the property. 77 That the Id. AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid addition as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further no records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO. 78. It is prayed before Hon'ble ITAT that addition u/s 50C of the Act made by the Ld. AO may kindly be deleted. Addition on account of notional Interest-8,73,37,548/- 79. The Ld. AO has erred in law and in facts and in the circumstances of the case in making the addition of 8,73,37,548/- being notional interest without issuing....
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....d. DRP and consequently the Id. AO has erred in law and in facts and circumstances of the case in rejecting the assessee's claim of foreign tax credit (FTC) amounting to 18,27,359/- solely on the technicality of the issue that since claim does not fall in the category of 'variation made by the AO' no intervention of the Id. DRP at this stage is called for. 88. That the Hon'ble ITAT may be pleased to grant an claim of foreign tax credit (FTC) amounting to 18,27,359/- against the tax liability of the assessee u/s 90 of the Act, which had not been claimed and granted to the assessee due to late deduction and deposit of the same by the deductor. The said FTC pertains to the interest income receivable by the assessee from its subsidiary company- Bioseed Holdings Pte, Singapore for the AY 2018-19. Penalty 89. The Ld. AO has erred in law & circumstances of the case by initiating penalty proceedings u/s 270A of the Act. Others 90. The aforesaid grounds of appeal are without prejudice to one another. 91. The assessee craves leave to add, amend, alter, change vary or substitute any of the aforesaid grounds or raise an addi....
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....both the parties and perused the material available on record. From the perusal of the computation of income and return of income filed, it is seen that the assessee has specifically claimed the exemption of dividend u/s 10(35) of INR 1,03,10,987/-. In the computation of income, a note to this effect was also given. Further, in Note No.22 of the financial statement, income under the head "dividend income on short term investment" at INR 1.03 crores was disclosed which is evident from Paper Book at page 23. Admittedly, the dividend was received on mutual funds therefore, the same is exempted u/s 10(35) of the Act. Accordingly, we direct the AO to delete the addition so made to the total income of the assessee. 78. With regard to the disallowance of INR 45,04,47,576/- made u/s 43B, it is seen that the assessee has claimed deduction of the said amount on payment basis however, no details of actual date of payment and the proof of payments were filed before the lower authorities therefore, in the interest of justice and to provide one more opportunity to the assessee, this issue is remitted back to the file of the AO with the direction that the same be allowed in accordance with law....
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....'ble High Court vide order dated 02.05.2024 in ITA No. 566/2023 has held that it is a pure question of fact and no substantial question of law is involved in this issue. Accordingly, the Hon'ble High Court has not admitted the Revenue's appeal against such observations of the Co-ordinate Bench of the Tribunal. In view of these facts, the issue of allowability of deduction u/s 80IA of the Act on transfer of steam from eligible unit to non-eligible unit stood settled in assessee's own case and by following same observations in Revenue's appeal for AY 2015-16 in ITA No.927/Del/2022, was dismissed by us herein above. 83. In view of these facts and by respectfully following the findings made in Revenue's appeal for AY 2015-16 in ITA No.927/Del/2022, Ground Nos.23 to 28 of the assessee are allowed. 84. Ground Nos.29 to 32 taken by the assessee are in relation to the additional / revised claim of deduction u/s 80IA of the Act on the transfer of steam from eligible units to non-eligible units. The issue in hand is common with the issue taken in AY 2016-17 with a difference that in the year under appeal, the assessee has made additional / revised claim of deduc....
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....gram reported in TS-14-ITAT-2020 (Delhi)-TP and further in the case of L.G. Electronics INC (Page - 50) reported in TS-68-ITAT-2022 (Delhi)-TP. With regard to the rejection of comparables taken by the assessee by the TPO, the assessee has made detailed submissions at page 51 to 57 of the WS filed before us wherein the main contention of the assessee is that the approach of TPO in rejecting the comparables is not based on the actual facts of the case. Ld. AR for the assessee further submits that TPO has considered the wrong PLI and therefore, requested for exclusion of the comparables included by the TPO. 87. On the other hand, Ld. CIT DR supports the order of the TPO and submits that in para 9.3 of TPO's order, he has given detailed reasons for rejection of the comparables taken by the assessee and further provided the reasons for inclusion of the fresh comparables. The ld. CIT DR thus requested for the confirmation of the adjustment made which has already been reduced substantially in terms of the directions given by the ld. DRP. He requested accordingly. 88. Heard the contentions of both the parties and perused the material available on record. In the instant case, the ....
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.... worth and also the same is accepted suitable comparison for benchmarking the transaction in subsequent AY. Under these circumstances we find no reason to exclude the same from the final set of comparables accordingly, we direct the AO/TPO to include this company as a suitable comprable. (ii) Maharastra Hybrid Seeds Co.Ltd. This comparable was rejected by TPO for the reason that it had failed in PBT ("profit before tax") filter since the said company is in losses consistently. In this regard, the Ld.AR drew our attention to the financial statements of the company available in Paper Book pages 988 to 990 according to which, in the year under appeal, the company is having profit before taxes of INR 8.07 crores in FY 2016-17 which is 1.82 % of the sales. Further, it is seen that in the year under appeal and in FY 2015-16 relevant to YA 2016-17, the company was in losses and therefore, we are not in agreement with the contention of the assessee that this company is to be included in the final set of comparable accordingly, we find no infirmity in the order of AO/TPO to exclude the same from the final set of comparables. (iii) Metahelix Life Science Ltd. (Now ....
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.... of 180 days has taken the period of 30 days for computing the delay. Ld. DRP while deciding the objections raised by the assessee has directed the TPO to use LIBOR + 400 basis points as benchmark rate for computing interest on receivables and further directed to take credit period of 60 days as against 30 days taken by the TPO. Accordingly, the TPO has computed the adjustment of INR 28,28,330/ -. The ld. AR submits that the TPO has taken incorrect LIBOR of 2.49% which is applicable for year 2018 whereas the correct rate was 1.37% prevailing in the year under consideration. For this, he referred the TP study report wherein the average rate is taken at 1.37% as LIBOR rate of FY 2017-18. Regarding the credit period, the assessee contended that the credit period was allowed at 60 days by Ld. DRP whereas in assessee's own case for AY 2020-21, the credit period of 175 days has been accepted by the TPO itself. 95. Ld.AR further submits that the credit period should be considered as stated in the invoices raised. Ld. AR also contended that the assessee has not charged interest from independent third party and outstanding receivables whereas charged interest @ 4.75% from its AE thus....
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....ceivables" does not mean that de hors the context every item of "receivables" appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterized as an international transaction, and (ii) With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/ profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterized the transaction. 98. This view is further confirmed by the Hon'ble Delhi high court in the case of Avenue Asia Advisors Pvt. Ltd. vs. DCIT reported in 398 ITR 120 (Delhi). 99. Thus by following respectfully the judgement of Hon'ble Delhi High Court in the case of Kusum Health Care Pvt.Ltd. (supra) and further considering the fact that in preceding years, the Revenue has accepted benchmarking done by the assessee also considering the fact that no interest is charged from independent parties, we direct to delete the adjustment made on account of interest on receivable in addition to the interest income already disclosed by the asses....
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....t that the actual price of land was less than the consideration received. It is further submitted by Ld. AR that the assessee has objected the valuation made by the Stamp Authority therefore, it is the duty of the AO to refer the matter for valuation to determine the FMV however, this has not been done. He thus requested that addition made deserves to be deleted. In the alternate, Ld. AR requested that the matter may be referred to DVO for determination of FMV as on the date of transfer. 105. On the other hand, Ld. CIT DR made no objection if the matter is sent back to the file of the AO with the direction to refer the DVO for determination of the FMV of the lands sold during the year. 106. Heard the contentions raised by both the parties and perused the material available on record. In the assessee's own case for AY 2014-15, the Co-ordinate Bench of Tribunal in ITA No. 7326/Del/2018 has sent back the issue to the file of the AO with a direction to refer the issue of determination of FMV as on the date of transfer of assets to DVO. AS admitted by both the parties, there is no change in the circumstances, thus, by respectfully following the decision of ITAT in ITA No.7362/Del/....
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....the same on accrual basis. The assessee has duly offered the amount of TDS received by it as tax credit in this year and further stated the balance amount of interest was received in FY 2022-23 and the same was offered for tax in AY 2023-24 therefore, if the same is taxed in the year under appeal, it would be double taxation of income. Looking to these facts, we find force in the arguments of the assessee that an income should not be taxed twice. Once the interest income is offered for tax in the year of receipt i.e. in AY 2023-24 and has been accepted by the department, same should not be included in the income for the year under appeal on accrual basis. Accordingly, the AO is directed to verify the claim of the assessee whether interest income was offered in AY 2023-24 and if the claim is found correct, no addition is required to be made in the year under appeal on account of interest on accrual basis. With these directions, Grounds of appeal Nos.79 to 81 raised by the assessee are partly allowed for statistical purposes. 112. Grounds of appeal Nos. 82 to 86 raised by the assessee are related to the addition of INR 1,57,80,000/- made towards mismatch in sales reported in ITR a....
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.... are in respect of the additional claim of foreign tax credit of INR 18,27,359/-. 117. Before us, Ld.AR for the assessee submits that during the year under appeal, the assessee has received interest on loan given to its subsidiary company namely Bio Seeds Holding Pte, Singapore of INR 1.02 crores. The interest was duly recorded in the books of accounts and shown as receivable by the respective companies. As per the DTAA between India and Singapore, withholding tax @ 15% was required to be deducted by Singapore based company however, due to inadvertent mistake on the part of the Counsel of the subsidiary company, the tax was deposited delayed on 24.01.2020 and the certificate was issued on 03.02.2020. Since the assessee had filed its return of income for the impugned order u/s 139(1) much prior to 03.02.2020 and time limit f to file revised return u/s 139(4) was also expired, a request was made for allowing the credit through an application filed before the AO. The claim of the assessee was rejected by the AO and DRP by holding that the matter is pending before Ld. Pr. CIT. It is, therefore, requested by the Ld.AR that the claim of the assessee being genuine and delay is not caus....
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....nts made by CPC in the final assessment order before us. Further the assessee has challenged the intimation order passed u/s 143(1) of the Act separately before us in ITA No.1495/Del/2024. In view of these facts and considering that the issues raised in this ground are not borne out from the impugned order appealed by the assessee, the ground of appeal No. 4 taken by the assessee is dismissed. 124. Ground of appeal No.5 is with regard to the computation of tax as per the computation sheet forming part of the final order u/s 143(3). In this regard, we direct the AO to compute the tax and the interest thereon in terms of the income finally computed giving effect to the order of the Tribunal in the present appeal of the assessee. With this direction, Ground No.5 raised by the assessee is partly allowed. 125. Ground of appeal No.6 taken by the assessee is with regard to the adjustments reducing the amount of deduction u/s 80IA of the Act on account of transfer of power to eligible unit to non-eligible unit. 126. Heard both the parties and perused the material available on record. This issue has came up before us in Revenue's appeal for AY 2015-16 in assessee's own case....
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....we deleted the adjustments made by relying upon the judgement of Hon'ble High Court in the case of Kusum Health Care Pvt.Ltd. (Supra). As there is no change in circumstances, thus, by following the observations made in ITA No.2587/Del/2022 for AY 2018-19, the adjustment of INR 5,72,744/- is hereby deleted. The, Ground of appeal No.9 raised by the assessee is allowed. 133. Ground of appeal No.10, the assessee has challenged the disallowance of interest for non-deduction of tax at source of INR 47,73,07,262/- being 30% of the interest paid of INR 1,59,10,24,209/ -. 134. Brief facts are that the assessee has claimed INR 1,59,93,84,217/- as finance cost in P&L Account. The AO by observing that the assessee has deducted tax at source only on the payment of INR 83,60,008/- and therefore, made the disallowance @ 30% on the remaining amount of INR 1,59,10,24,209/- in terms of the provision of section 40a(ia) of the Act. Ld. DRP sought for the Remand Report in the matter as the assessee claimed that the interest was paid to the financial institution on which TDS is not required to be made or the interest was paid against Government dues where TDS is not required to be made. Howeve....
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....been decided in assessee's own case in AY 2018-19 in ITA No.2587/Del/2022 while deciding the assessee's Ground of appeal Nos.79 to 81. 140. As there is no change in circumstances thus, by following the observations made therein, Ground of appeal No.11 raised by the assessee is allowed for statistical purposes with the same directions. 141. Ground of appeal No. 12 is with regard to the addition of INR 6,42,00,000/- on account of sale of motor car. The AO made the addition on the basis of information available in insight portal according to which the assessee had sold motor vehicle at INR 6.42 crores. The assessee claimed that during the year, vehicles amounting to INR 5.81 crores were sold and the sale price was reduced from the value of gross block of assets. Ld. DRP while disposing the objections raised by the assessee directed the AO to make necessary verification of the claim and decide the issue however, the AO has failed to make such verification and made the addition. 142. Ld.AR further submits that the show cause notice was issued at the fag end of the proceedings therefore, the necessary details could not be filed. Ld. AR further submits that as per insight....
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.... perusal of the intimation order passed u/s 143(1) of the Act, it is seen that the CPC has already made disallowance of INR 6,85,505/- however, the AO in final order without following the directions of Ld. DRP of making factual claim of double addition, made further disallowance of INR 6,85,505/-. Thus, it is double disallowance made both by the CPC and AO. 151. In view of these facts, we direct the AO to delete this disallowance being made twice. Ground of appeal No.14 raised by the assessee is accordingly, allowed. 152. Ground of appeal No.15 raised by the assessee is with respect to the addition of INR 7,36,890/- u/s 14A of the Act made in the book profits computed u/s 115JB for the purpose of charging MAT. 153. This issue has been decided by us in assessee's appeal for AY 2016-17 in ITA No.704/Del/2021 wherein we direct the AO to delete this disallowance u/s 14A from the book profits computed for the purpose of MAT u/s 115JB of the Act. 154. Since there is no change in the circumstances, thus, by following the observations made in the order for AY 2016-17 in ITA No. 704/Del/2021, we direct the AO to delete the addition of INR 7,36,890/- from the book profits of the ....
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....ter, proceeded to make further additions on various issues discussed in the order and accordingly the final income was computed at INR 9,53,46,75,062/-. The assessee filed a rectification application dated 06.08.2024 indicating the errors and re-iterated the facts that the rectification applications filed earlier remained pending and thus requested to rectify the order passed u/s 143(3) dated 24.07.2024. However, it is the statement at bar by the ld. AR for the assessee that such applications are not dispose of by the department till the date of hearing before us. With this background, the appeal of the assessee is heard on merits. 160. Before dwelling upon the issues taken by the assessee, we first discussed the mode and manner of disposal of appeal by the Additional/JCIT (A) in not accepting the appeal of the assessee. Ld. Additional/JCIT (A) in para 5 of impugned order dated 06.02.2024 observed that the assessment in the case of assessee was picked up for complete scrutiny and draft assessment order was passed u/s 144C of the Act and therefore, the intimation order passed u/s 143(1) merged in the said order. It is further observed that subsequently when this draft assessment ....
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.... draft assessment order or in the final assessment order of these adjustment made by CPC. Further, the AO has not followed the directions given by Ld. DRP who in para 4.2.1 of the order while disposing objection No.4 directs the AO to verify the facts on record and rectify the mistake apparent from record, if any. However, till date no order was passed by the AO on the rectification application filed by the assessee firstly, against the intimation order passed u/s 143(1)(a) filed on 05.09.2023 thereafter, filed against the draft assessment order dated 25.10.2023 thereafter the addendum rectification filed and application filed on 12.07.2024 before the JAO, requesting for passing the order in terms of the directions of Ld. DRP. Finally, on 06.08.2024, the rectification application was filed requesting for correction of mistake in final assessment order. This series of events clearly indicates that Revenue has not taken the issue raised by the assessee in rectification applications filed on so many times to rectify the mistakes apparent on records as pointed in the intimation order passed u/s 143(1)(a) of the Act. To add further, the appeal filed by the assessee against such intimati....
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.... of INR 4,34,15,54,788/- claimed in the return of income filed. 168. Before us, ld. AR for the assessee submits that while computing the total income in Annexure-"Deduction under Chapter VIA" deduction u/s 80IA of the Act claimed by assessee is disallowed by observing that the assessee has claimed deduction u/s 80IA more than the sum of amounts mentioned in Form 10CCB. Hence, deduction u/s 80IA will be restricted to the extent of amounts mentioned in Form 10CCB. In this regard, Ld. AR for the assessee drew our attention amounts certified by auditors in Form 10CCB eligible for deduction u/s 80IA on each eligible project which are available at pages 280 to 477 of the Paper Book relating to eligible units situated at Hariawan, Lakhimpur, Ajbapur, Loni and Bharuch. It is further stated by ld. AR that in final assessment order transfer pricing adjustment of INR 1,01,70,00,629/- were made towards the withdrawal/deduction u/s 80IA from transfer of power/steam from the eligible unit to non-eligible unit thus the remaining deduction claimed u/s 80IA was allowed. However, from the perusal of tax computation sheet, it is seen that the deduction u/s 80IA was not allowed to the assessee and ....
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.... INR 21,98,611/- to INR 43,289/-. As a result, Ground of appeal No.6 raised by the assessee is partly allowed. 173. Ground of appeal No.7 taken by the assessee is with regard to the adjustment of INR 17,29,52,164/- made on account of loss on sale of fixed assets and loss suffered on account of foreign exchange fluctuation of INR 6,85,505/-. 174. Heard both the parties and perused the material available on record. Regarding loss on sale of fixed assets of INR 17,22,66,659/-, we find that this amount of loss on sale of fixed assets as claimed in P&L Account was added back to the total income by the assessee which is evident from the computation of income available at paper book pages 478 to 480. Further, since the assessee is claiming the depreciation on vehicle on block of assets concept, the said amount was already reduced from the gross value of the block and therefore, again making disallowance of this amount tantamount to double addition. With regard to the addition/disallowance of INR 6,85,505/-, the assessee has not pressed this issue and while deciding the assessee's appeal for AY 2020-21 in ITA No. 4328/Del/2024, further addition of this amount was deleted by us by obs....
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....79 of the Paper Book, therefore, being double addition, the same is hereby deleted. Ground of appeal No.10 raised by the assessee is accordingly, allowed. 181. Ground of appeal No.11 taken by the assessee with respect to the double taxation relief of the tax paid in Singapore u/s 90 of the Act. In this regard, it is seen that in the intimation under Annexure FSI as provided and as computed, the CPC has accepted the foreign tax credit available to the assessee at INR 12,76,950 however, while computing the tax liability, credit of the same is not given without stating any reason. The same is reproduced as under: 182. From the perusal of the above, it is established, there is no dispute with regard to the availability of the foreign tax in the hands of assessee even by CPC, therefore, the AO is directed to allow foreign tax credit of INR 12,76,950/- to the assessee. Ground of appeal No.11 of the assessee's appeal is accordingly, allowed. 183. Ground No.12 is with regard to the MAT credit available to the assessee and not allowed. After considering the argument of both the parties, the AO is directed to verify the MAT credit available to the assessee and further directed to al....
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....352906261140521 Annexure - FSI (As Provided by Taxpayer) Details of Income from outside India and tax relief (available only in case of resident) Taxpayer Country SING. Identification SLNe. Head of Code Number income : (1) Income from outside (included in PART B-TI) Tax paid outside India Tax payable on such income under normal provisions in India Tax relief available Relevant article in India of DTAA if relief (e)+ (c) or [e] claimed a/'s 90 whichever is lower or 904 (4) House e Property 0 0 65 SINGAPORE 200823250E Business or Profession 81,35,332 12,76,950 28,42.810 12,76,950 11 (1) Capital Gains 0 0 (iv) Other sources 0 0 Total 81,35,332 12,76,950 28,42,810 1276,950 Tax payable on such income under normal provisions in India Tax relief available Relevant article in India of DTAA if relief (e)+ (c) or [e] claimed a/'s 90 whichever is lower or 904 Annexure - FSI (As computed) Details of Income from outside India and tax relief (available only in case of resident) Taxpaye SLNa. Country Identification Head of SLNa. Code income Number (a) Income from outside India (included in PART B-TO) Tax paid outside India Tax payable on su....