TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 748
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....rder 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 respect of international transactions and specified domes....
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....o 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 grounds of appeal- 1. "Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in law & on facts in deleting the addition made by the AO to the tune ....
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....he 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 rival contentions and perused the material available on record. In the instant case, the assessee has produced electricity on various locations which were transferred from eligible units to non eligibl....
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.... 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 in the form of LEX price and accordingly proposed TP adjustment to the tune of $ 7,96,94,566. The primacy of internal comparables wherever available, over the external ones is already a settled issue. Hon'ble Delhi Bench ITAT in the case of Destination of the World (Subcontinent) (P) Ltd. v. ACIT [12 taxmann.com 310 (Del)], ....
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....harged 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 computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. 33. It is admitted by the Department that in Chattisgarh the power was supplied to the industrial consumers at the rate of ≥ 3.20/- per unit for the AY 2004-05 and 23.75/- per unit for the AYs 2005-06 and 2006-07.It was this ....
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....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 eligible unit at Kota while at the same time accepting the ALP determined on the basis of the same internal comparable in respect of other eligible units at Hariawan, Ajbapur, Loni and Bharuch. Similarly, the TPO's approach of using the average of an external CUP (IEX Data) and the internal CUP (JVVNL rate) to benchmark the ALP is also not proper. The law and rules don't approve of averaging of the prices of an internal and one external CUP data. The co....
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....so 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 exist in the above transactions. However comparability Under the cup method depends on the similarity with respect to the following factors also which could materially affect the price in uncontrolled transaction i. quality of the product ii. contractual terms (i.e. scope and terms of warranties provided, sales are purchased volume, credit terms, transport terms) iii. level of market (i.e. whole sale or retail etc) iv. geographic market in which the transaction takes ....
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....er 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 consumer using electricity. Therefore, much sanctity is attached to the rates adopted by SEBs. However, the learned transfer pricing officer has failed to show the reason of such a wide disparity between the rates of Indian energy exchange which is a spot exchange compared with the rates at which the energy is actually consumed in that geographical region. This does not mean that the quoted price cannot be used for the comparability analysis in cup method. But if the prices are so divergent and the difference between the two exter....
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..... 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 Assessee states - and the same is not controverted - that the availability of power on IEX is unpredictable and the supply of power is unreliable. 47. It is stated that in order for a party to purchase power from IEX, the said party has to participate in the bidding process. The same entails furnishing a bid in advance for supply of fifteen minutes slots. Illustratively, it is stated that if a party requires power supply for a period of four hours, it would be required to submit sixteen bids for fifteen minutes slots. Further, the bidder cannot resile from the bids furnished by ....
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....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 and Rajasthan regions as the said rates was considered as an external CUP. 56. Undoubtedly, there is a degree of similarity between the transaction of supply of electricity by SEBs to the Assessee and the supply of electricity by the Assessee's eligible units. However, there is a difference between the transactions being benchmarked, which is supply of electricity by captive units, and the transaction of supply of electricity by distribution companies/corporations. The power distribution companies enjoy a near monopoly status. The tariff charged by such companies are regulated tariffs. However, we accept that there is a sufficie....
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.... 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 trading. Such pricing is unfettered by any control or regulation; rather, it is determined by the economics of demand and supply. 26. Under the electricity regime in force, an industrial consumer could purchase electricity from the State Electricity Board or avail electricity produced by its own captive power generating unit. No other entity could supply electricity to any consumer. A private person could set up a power generating unit having restrictions on the use of power generated and at the same time, the tariff at which the said power plant could supply surplus power to the State Electricity Board was also liable to be determined in accordance with the statutory requ....
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....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 rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under Section 80IA of the Act." [emphasis added] 59. As is apparent from the above, the Supreme Court had accepted the rates at which electricity was supplied by the SEBs to industrial consumers as being the market value of the said supplies for the purposes of Sub-section (8) of Section 80IA of the Act. 60. In view of the above, the questions of law are answered in favour of the Assessee and against the Revenue." 16. Thus, by respectfully following the judgement of Hon'ble High Court and Co-ordinate Bench of the Tribunal in the case of assesse....
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....nch 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'ble High Court in ITA No.566/2023 dated 02.05.2024 where no substantial questional of law is admitted on this issue. He thus prayed that the order of ld. CIT(A) deserves to be uphold in this count. 22. We have heard the rival contentions and perused the material available on record. From the facts, it is seen that steam is commercial and viable product and its value cannot be taken at NIL. Since the steam is one of the form of power and can be considered as joint product and not as by-product. The assessee has also filed the certificate of Chartered Accountant based on which the cost of the steam was worked out as transferred to the non-eligible unit which was disregarded by the AO/TPO without giving any reason. We find ....
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....er. 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 be treated as a distinct cost object as Under :- "5.1 Each type of utility shall be treated as a distinct cost object. As each utility is a distinct cost object, cost of each utility is to be collected and measured separately. For example power, steam, water, compressed air, oxygen, nitrogen, coke oven gas and the like are distinct utilities, and the cost is collected and measured for each utility separately. The costs are booked to each utility Page 34 of 55 through initial documents such as supplier 's bill, if directly identifiable with utility, payroll analysis sheet, stores requisition, etc. A separate cost statement is to be prepared for each utility." In paragraph number 5.3.2 it has provided as Under :- "5.3.2 In case o....
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.... 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, depreciation, overhead. The total monthly cost of operating this department is divided by the quantity of K Ltr of water pumped during the month to determine the unit cost of water pumped. Cost of Soft Water: Water, if hard, requires treatment. The cost of soft water will include the cost of raw water, chemicals, cost of maintenance of settling tanks, employees cost, depreciation and the like. The cost of demineralised water is also arrived at on the above basis. There is inter-utility transfer cost for a utility. For example water utility may be used in generation of steam and power. Power may be required for pumping water from tubewell. Inter-utility cost is to be determined by the following method: a) repeated distribution method; b) matrix algebra through computer application (a) When ....
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....ued 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 case of the assessee sister concern in case of SRF Ltd the learned dispute resolution panel on the identical facts and circumstances has held that steam has a cost and therefore the arm's length price of steam cannot be determined at nil. It further held that the value of steam can be expressed in terms of equivalent units of electricity that would have been generated and such value is usually higher than the cost of steam. 43. Further in case of the assessee for assessment year 2015-16 the learned CIT - capital has rejected the action of the learned transfer pricing officer of determining the arm's-length price of steam at nil and upheld the assessee's approach of benchmarking the transfer price of steam at cost. This order has been accepted by the revenue and no further appeal has been filed. Therefore this issue....
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....cal 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 utilised for some other purpose. The design of the turbine is done in such a manner so that all energy of the steam is not utilised by the turbine for generation of power but certain part of it is released in the exhaust steam also. Therefore, the design of the turbine used by the appellant is in such a manner that the exhaust steam is at a certain pressure so that it can be utilised for some other work. Accordingly, this steam cannot be consider as a by product but it is intentionally being produced or generated for a specific purpose. Further the intention of the legislature was to provide deduction for generation of electricity and not for generation of steam. The intention is clearly evident from the perusal of the speech of the honourable Finance Minister while introducing the provisions for deduction in the budget. The use of word 'power' is intended for 'electri....
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....ity 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 Coal expenses 38733894 Depreciation other than turbine 10522945 Total expenses 52785832 Expenses for steam utilised for 17.66% of 52785832 Generation of electricity 9321977 In addition to above expenses for generation of steam, the expenses of head office of the appellant company which looks after the management or the affairs of-the Company and also the power plant are also to be disallowed on proportionate basis. It is also noted that the appellant has taken loan from financial institutions for installing the power plant. The appellant is also paying huge amount of interest on the loan. Proportionate allocation of the interest expenditure should also be done and added to the cost of generation of steam. Since the details related to the expenses of head office as well as interest expenditures are not available before me, the AO is directed to work out the proportionate allocation ....
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....arried 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 after the judgment was delivered by the Tribunal, the High Court, in the case of Gujarat Alkalines and Chemicals Ltd. v. CIT [2013] 350 ITR 94/[2012] 208 Taxman 31/20 taxmann.com 764 (Guj.) has delivered a judgment which would have a bearing on the issue decided by the Tribunal. The said application was opposed by the Revenue. However, the Tribunal allowed the application for rectification and recalled its earlier judgment. The Revenue came before this Court in appeal. This Court took the view while allowing the appeal of the Revenue that the claim of the assessee for deduction under section 80IA of the Act was not tenable in law. 19. This Court took notice of the fact that the assessee had installed turbine for power generation which relied on the excess steam production capacity of the plant. This Court ultimately took the view that the installation of turbine for power generation could be said to setting up of a new industrial unit and therefore, the assessee would not be entitled for deducti....
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.... No.566/2023 wherein no substantial question of law was admitted on this issue by the hon'ble high court. The relevant observations as contained in ITA No.566/2023 and CN Application No. 51969/2023 while admitting the substantial question of law in para 5 of the Hon'ble High court is as follows: 5. "Question C pertains to the transfer of steam from the eligible unit to the non-eligible unit of the assessee. The appellant seeks to contend that since steam was a by-product of the business and would have been included in the cost of power generation, it should not have been taken into account. We, however, find that the aforesaid issue and aspect was concerned with the transfer of steam to the non-eligible unit and for the purposes of which the assessee would have been justified in relying on the cost of production. We therefore, are of the opinion that Question C raises no substantial issue." 24. In view of the above facts and by respectfully following the decision of Co-ordinate Bench and further looking to the fact that such order attained finality since the Hon'ble High Court has not admitted any substantial question of law on this issue. Thus the price charged for ....
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.... admitted substantial question of law on this issue. 29.1. On merits, the assessee submits that the AO has taken the average value of investment on INR 127.01 crores as against which the assessee is having own reserves and surplus of INR 1673.56 crores as on 31.03.2014 and of INR 1857.06 crores as on 31.03.2015 which is much more than the average value of investment and therefore, no disallowance is required to be made. With respect to the adjustment of the disallowances in the book profit, Ld.AR relied upon the judgement of Special Bench of ITAT, Delhi Benches in the case of Vireet Investment Private limited [2017] 82 taxmann.com 415 (Delhi-Trib.) and submits that section 115JB is a separate code and has to be interpreted in its literal sense and therefore, no adjustment should be made on account of disallowance under section 14A of the Act in the book profits. He thus prayed for the confirmation of the order of Ld. CIT(A) in deleting the disallowance under section 14A and further requesting that the same should not be included in the book profits computed u/s 115JB for the purpose of MAT. 30. We have heard the rival contentions and perused the material available on record. In t....
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....e in captioned appeal are very extensive and argumentative thus, the assessee was directed to file the concise grounds of appeal which are filed by the assessee vide letter dated 24.05.2024. The concise grounds of appeal reads as under- 1. "That the Learned Assessing Officer (ld. AO) has erred in law and on facts, and in the circumstances of the appellant's case in making an addition/ adjustment of Rs. 1,04,88,00,979/- on account of transfer pricing issues and making an addition/disallowance of Rs. 54,14,870/- on account of non-transfer pricing issues pursuant to the directions of learned Dispute Resolution Panel-I, New Delhi (ld. DRP) dated 03.03.2021. GROUNDS OF APPEAL IN RESPECT OF TRANSFER PRICING ADJUSTMENTS Transfer of Steam - Adjustment of Rs. 104,88,00,979/- 2. That the Ld. DRP/TPO and consequently the Id. AO have erred in law and facts and in circumstances of the case in making an adjustment of Rs. 1,04,88,00,979/- in respect of specified domestic transaction of transfer of steam by eligible power units to non-eligible units [at its cost of production/ by treating its arm's length price / cost of production at NIL on wholly erroneous, superficial and arbitr....
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.... Hon'ble ITAT's orders for AY 2009-10 and AY 2010-11 and Id. CIT(A)'s order for AY 2015-16. 9. That the Id. AO has grossly erred in law and on facts and circumstances of the case in not following the directions of the Id. DRP by not deleting the aforesaid disallowance as the revenue has not yet filed any appeal / petition against the judgment of Hon'ble High Court of Delhi in assessee case for A.Y. 2008-09 till date [as per the information available and to the best of knowledge of the assessee]. Incorrect computation book profits u/s 115JB of the Act 10. The Ld. DRP/AO has grossly erred in law and in facts and in the circumstances of case by making an addition of 54,14,870/- to the book profits u/s 115JB on account of enhanced disallowance u/s 14A of the Act. Claim made during the proceedings before the Id. DRP 11. That the Ld. DRP and consequently Id. AO have grossly erred in law and on the facts & circumstances of the assessee's case in not allowing assessee's claim raised before Id. DRP for allowing deduction of 'Education Cess' amounting to 133,85,194/- u/s 37 of the Act paid or payable under normal provision of the Act. Assessment u/....
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....er section 80IA on the transfer price charged by the eligible units to non-eligible units was held as allowable. This order of Co-ordinate Bench in AY 2014-15 was got confirmed by the Hon'ble Jurisdictional High court wherein Hon'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. 37. In view of these facts and by following the findings made in Revenue's appeal for AY 2015-16 in ITA No.927/Del/2022, Ground Nos.2 to 5 of the assessee are allowed. 38. During the course of hearing vide application dated 18.05.2023, the assessee has taken additional grounds of appeal No.32 and 33 wherein the assessee had requested for redeterm....
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....ishes to explain the reasons due to which the assessee was unable to submit the same during the proceedings before the Ld. TPO. In this regard, it is hereby submitted that during the course of litigation before various appellate authorities/income tax authorities of earlier assessment years, the assessee has come across the ruling of Hon'ble DRP-2, New Delhi dated 26.03.2021 in case of its group's concern case namely SRF Limited for the AY 2016-17 wherein the Hon'ble DRP-2 have dealt with and adjudicated the identical issue in the nature of transfer of steam from eligible unit to its non-eligible unit. In the said directions, the Hon'ble DRP-2, New Delhi has adjudicated the matter in the favor of the said appellant and vide its directions dated 26.03.2021 have expounded various principles to determine the Arm's Length Price with respect to transfer of Steam. In the said directions, the Hon'ble DRP-2, New Delhi strongly relied on the certificates issued by the Chartered Engineer wherein the chartered engineer has chartered engineer has computed the equivalent value of steam actually produced transferred by the eligible unit of the assessee to the non-elig....
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....ime was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect." 42. Ld.AR further filed a written submissions wherein Ld. AR has placed reliance on various judicial pronouncements on the admission of additional evidences which is as under- Legal submission on admission of additional evidences "We would also like to respectfully submit with regard to the admission of additional evidence as under: Rule-29, Income-tax (Appellate Tribunal) Rules, 1963: Production of additional evidence before the Tribunal "29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by th....
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.... 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 allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect." 4....
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....r admission of above mentioned additional grounds of appeal and the additional evidences for the detailed reasons mentioned below: (i) The additional grounds filed by the assessee are not in respect of a question of law. Rather, the same pertains to an issue that is entirely factual in nature. The adjudication of the said grounds will require examination and discovery of new facts, which are not on the records of the Assessing Officer. (ii) On perusal of the additional grounds raised and the additional evidence sought to be admitted, it is noted that the assessee has changed the basis on which the value of steam transferred from the eligible unit to the non-eligible unit is to be determined. This is entirely a new issue, that was not raised before the Assessing Officer or the Hon'ble DRP earlier. This issue is now sought to be raised before the Hon'ble Tribunal for the first time. This issue is entirely factual in nature and facts required for determination of such issue are not on the file of the lower authorities. In support of its changed stand, the assessee is now seeking admission of additional documents such as Chartered engineer's certificate, supplementary T....
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....ns mentioned in ITAT Rule 29. It is respectfully submitted that such discretion vested with Hon'ble Tribunal is required to be exercised to bring on record those relevant documents, which are necessary for judicious adjudication of the issues arising from proceedings before the lower authorities. In other words, such discretion should not be allowed to be used to enable a party to the dispute-i.e., the assessee in this case to create an entirely new factual issue before the Hon'ble Tribunal for the first time. (vii) The assessee has contended that similar issue of redetermination of ALP of steam and consequent enhancement of deduction under section 80IA has been restored to the Assessing officer by the Hon'ble Tribunal for verifying the claim of the assessee and deciding the issue in the case of its group concern, i.e., DCM Shriram Industries Ltd.(combined order dated 15.03.2023 in ITA No.1000/Del/2022 for AY 17-18 and ITA No. 539/Del/2021 for AY 16-17). In this regard, it is noted that in said order of Hon'ble Tribunal, there is no discussion with regard to any objection raised to admission of additional ground and additional evidences and disposal of such object....
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....ted that it is a fact that the assessee had not claimed the so-called enhanced deduction in the return of income. The moot question is as to whether the assessee entitled to claim any new deduction u/s Chapter-VIA without claiming the same in the original return of income filed u/s 139(1) of the IT Act. The relevant provisions of Income Tax Act with regard to claim of deductions u/s Chapter VIA are discussed below. 4.1 Whether the person can claim 80IA deductions by filing letter during assessment proceedings? The provisions of 'Income Tax Act' for claiming deductions in chapter VIA: Sub section 5 of section 80A provides that no deductions under chapter VIA shall be allowed, if not claimed in the return of income. For ready reference, the provision of section 80A (5) are reproduced below :- "5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 108 or section 10BA or under any provision of this Chapter under the heading "C .- Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder." Further the section 80AC of I.T. Act provides that no deductions shall b....
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....ks Put. Ltd. Vs. ACIT, Circle 5 Rajkot in ITA No. 60/RJT/2020. The facts of the case are similar, as in that case also, the assessee had made a claim under section 80IA during the assessment stage. The AO and the CIT appeal had rejected the claim by relying on Goetze India judgement and also relying on the provisions of section 80A(5) and 80IA(7) and because form no. 10 CCB was not furnished along with return of income. The assessee in that case had also relied on the decision of Hon'ble Apex Court in the case of Jute Corp. Of India for admission of the claim, however, the Hon'ble Tribunal while relying on section 80A(5) of the Act and the decision of Hon'ble Gujarat High Court in the case of Rachna infrastructure Put. Ltd. (2022) 138 taxmann.com 416 (Gujarat) has rejected the claim of the assessee. Reliance is also placed on the recent decision of the Hon'ble Coordinate Pune Bench in the case of Income Tax Officer vs. Jagtap Patil Promoters and Builders in 147 taxmann.com 199 (2023) In this case, the Hon'ble Tribunal after analyzing several case laws and the provisions of the Income Tax Act, has clearly held that assessee is not eligible for deduction u/s 80I....
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....ised return of income, under section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set-off of any loss. Filing a revised return under section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 108 (8) and furnishing the declaration as required under section 108(8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 108 (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in na....
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....9, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years." On a plain reading of section 108(8) of the IT Act as it is, i.e., "where the assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of section 108 may not be made applicable to him, the provisions of section 108 shall not apply to him for any of the relevant assessment years", we note that the wording of the section 108 (8) is very clear and unambiguous. For claiming the benefit under section 108 (8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of section 139 of the IT Act are required to be fulfilled and/ or satisfied. In our view, both the conditions to be satisfied are mandatory. It cannot be said that one of the conditions would be mandatory and the other would be directory....
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....n favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under section 10B(8) of the IT Act on non-compliance of the twin conditions as provided under section 108(8) of the IT Act, as observed hereinabove. The present Appeal is accordingly Allowed. However, in the facts and circumstances of the case, there shall be no order as to costs. Thus in the instant case also, the assessee was required to furnish the form 10CCB before the due date of filing of original return of income u/s 139(1) and because of the failure of the assessee to do the same, the enhanced deduction under chapter VIA cannot be allowed to the assessee on account of transfer of steam of Rs. 350,71,75,273/-. Also, in the Wipro case, it is specifically mentioned by the Hon'ble Supreme Court that in taxing statute, the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption as sought by an assessee. In the instant case also, as the assessee is claiming deductions, the provisions of the IT Act ....
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....of SRF Limited based on which judgements, the assessee realized that it should have claimed a higher amount of deduction u/s 80IA of the Income Tax Act on account of transfer of steam. During the course of hearing, the Id. DR requested the bench to allow him to file a written submission against the said issue. The written submission filed by the Id. DR does not have any new point on the said issue, all points in the submission are same which were raised/ argued orally during the hearing on 24th April, 2025 and the assessee hereby is filing rejoinder against the said submission as follows: - We would like to respectfully submit with regard to the admission of additional evidence as under: Rule-29, Income-tax (Appellate Tribunal) Rules, 1963: Production of additional evidence before the Tribunal "29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving suff....
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....ling 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 allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect." Further, reliance is hereby placed on the following cases wherein the additional evidences as filed by the assessee has been accepted, which have a material bearing and go to the root of the matter needs to be decided by the Tribunal deserves to be accepted to impart complete justice to the assessee: a) South Konkan Distilleries [AIR 2009 SC 1177 b) HL. Malhotra and Company Private Limited vs. DC....
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....learned DRP no specific objection was raised in this regard. It is the say of the assessee, in course of proceedings before the DRP, the assessee has raised the issue of enhanced claim of deduction under section 80IA of the Act through submissions. However, learned DRP has completely ignored the issue while issuing the directions. 10. Having heard the parties and considering the fact that neither the Assessing Officer, nor learned DRP have examined this particular claim of the assessee, we are inclined to restore this issue to the file of the Assessing Officer for verifying assessee's claim and deciding the issue in accordance with law, However, the Assessing Officer is directed to provide reasonable opportunity of being heard to assessee. The grounds are allowed for statistical purposes." Further, it may also be noted that the evidences and ground pertaining to this issue for enhanced claim has been raised/filed in AY 2016-17 before your honours, while for rest of the years, i.e. AY 2018-19 and AY 2020-21, the claim was raised before Id. AO/TPO, for which the Id. DR did not place any objections / arguments. Therefore, in the interest of justice, it was the request of the a....
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....upon the Supreme Court while rendering its decision in Wipro Limited (supra) was of Section 10B being an exemption provision. This is evident from the Supreme Court significantly observing that Section 10B(8) being an exemption provision not being liable to be compared with Section 32(1)(ii-a) and which was concerned with a claim for additional depreciation. Regard must also be had to the fact that Section 10B(1) is essentially concerned with the grant of exemptions to newly established hundred per cent export-oriented undertakings and the deduction of profits and gains derived by such an enterprise. Sub-section (8) thereof enables an assessee to opt out of the exemption provisions contained therein subject to a requisite declaration being submitted. Since such a declaration would have an immediate and indelible bearing on the assessment of the Return of Income itself, it would clearly be liable to be viewed as a mandatory requirement warranting such a declaration being made at the outset itself and the statutory prescriptions made in that regard being liable to be strictly adhered to. 32. The aforesaid position may be contrasted with Section 80IA(7), and which is principally con....
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....ts to non-eligible units at INR 1,04,88,00,979/ -. Such claim was disallowed in terms of the adjustment proposed by the TPO and upheld by the Ld. DRP however, while deciding the assessee's ground of appeal No.2 to 5, we have already allowed such claim of deduction by following the judgement of Co-ordinate Bench of Tribunal in assessee's own case for AY 2014-15 and also by the judgement of hon'ble jurisdictional high court who in revenue's appeal had not admitted substantial question of law on this issue. 47. Now by taking additional grounds of appeal, the assessee has made revised / additional claim of INR 2,99,49,20,010/- of deduction u/s 80IA towards transfer of steam from eligible units to non-eligible units. The assessee has claimed that it is based on the order of Hon'ble DRP-II, New Delhi dated 26.03.2021 in case of group concerns M/s. SRF Ltd. for AY 2016-17 where the additional claim was considered and allowed by the Hon'ble DRP. The assessee's claim is that the Hon'ble DRP while allowing the additional claim in the case of group concern M/s. SRF Ltd. placed reliance on the certificate issued by Chartered Engineer. As the Ld. DRP had issued ....
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....rall discussion, we admit the additional grounds of appeal taken by the assessee with respect to the additional / revised claim of deduction u/s 80IA of the Act. 49. With respect to the admission of additional evidences, we find that these evidences are crucial to decide the quantum of deduction of additional / revised claim of deduction u/s 80IA made by the assessee in the additional grounds of appeal taken before us. The assessee while filing the additional grounds of appeal in categorical terms has admitted that the said claim is made only after the directions given by Hon'ble DRP in the case of group concern M/s.SRF Ltd in terms of order passed on 26.03.2021 and prior to that making, such claim is not possible. The additional evidences also contained the Chartered Engineer certification with regard to the working of enhanced claim and supported by the revised certificate in this regard. 50. In the instant case, since the draft assessment order, the direction by the Hon'ble DRP and the final assessment order was passed prior to the direction given by ld.DRP in the case of M/s. SRF Ltd. therefore, these evidences could not be filed before the lower authorities. This is ....
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....g assessee's claim and deciding the issue in accordance with law, However, the Assessing Officer is directed to provide reasonable opportunity of being heard to assessee. The grounds are allowed for statistical purposes." 53. As observed above, the issue of additional / revised claim of deduction u/s 80IA of the Act on transfer of steam is raised for the first time by the assessee before us, by filing the additional grounds of appeal and supported by the additional evidences. The assessee has not made such claim either before the AO or before the Hon'ble DRP and thus the veracity of the additional claim remained to be examined on the merits by the lower authorities. In view of these facts, we restore back this issue to the file of AO to verify the assessee's claim of additional / revised deduction 80IA of the Act and decide the same in accordance with law. The assessee has also directed to file all the necessary evidences and further filed any other details as called for from time to time by the AO in respect to verification of such additional /s revised claim. With these directions, the additional grounds of appeal taken by the assessee are allowed for statistical pur....
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....t be charged on the income declared by the assessee in the return of income filed accordingly, Ground No.15 raised by the assessee is partly allowed for statistical purposes. 65. In the result, appeal of the assessee is partly allowed. ITA No.2587/Del/2022 (AY- 2018-19) [Assessee's appeal] 66. This appeal is filed by the assessee against the assessment order dated 30.08.2022 passed u/s 143(3) r.w.s.144C(13) of the Act as a consequence of directions by Hon'ble DRP vide its order dated 16.06.2022 pertaining to assessment year 2018-19. 67. Brief facts of the case are that the assessee has filed the return of income on 27.11.2018, declaring total income at INR 4,20,48,46,610/- which was processed u/s 143(1) of the Act. Thereafter, by way of issue of notice u/s 143(2) of the Act on 22.09.2019, the case of the assessee was taken for scrutiny. The AO found that the assessee has entered into international transactions and specified domestic transaction and therefore, a reference was made to the TPO for the determination of ALP of such transactions. The TPO after considering the submissions and going through the facts of the case has proposed following adjustments to the domesti....
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....s before the Id. DRP and also inspite of specific directions of the ld. DRP to consider such claim of the assessee. 3. That the assessment order passed by the ld. AO u/s 143(3) r.w.s. 144C(13) of the Act dated 30th August, 2022 is bad in law. The adjustment/ addition/disallowances are on wholly illegal, untenable and on erroneous grounds. COMMON GROUND OF OBJECTIONS AGAINST THE FINAL ASSESSMENT ORDER Incorrect name as well as incorrect PAN mentioned in the directions passed by the ld.DRP u/s 144C(5) of the Act 4. That the Id. DRP has erred in facts and on the circumstances of the case by mentioning the incorrect PAN in the directions passed u/s 144C(5) of the Act dated 16th June, 2022 as well the incorrect name and incorrect PAN in the intimation letter of order u/s 144C(5) of the Act dated 28th June, 2022. 5. It is humbly prayed before the Hon'ble ITAT that directions passed by the lid. DRP dated 16th June, 2022 being vitiated by a non-curable defect u/s 292B of the Act and consequently the final assessment order passed by the Id. AO u/s 143(3) r.w.s. 144C(13) of the Act dated 30th August, 2022 pursuant to such directions of ld. DRP u/s 144C(5) of the Act be held a....
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....f income. b) not giving the allowance of deduction u/s 43B of the Act amounting to 45,04,47,576/- claimed by the assessee in its return of income, being the amounts actually paid during the year which were earlier added back in the computation of previous assessment year(s). 11. That the Id. AO has erred in facts and circumstances of the case in not rectifying the above mistakes apparent from records by incorrectly holding that assessee did not provide any documentary evidence and failed to explain the same. 12. That the Hon'ble ITAT may be pleased to direct the Id. AO to rectify the above mistakes apparent from records while computing the total income of the assessee. GROUNDS OF OBJECTIONS AGAINST TRANSFER PRICING ADJUSTMENTS Transfer of Electricity from Eligible to Non-Eligible Units-adjustment of Rs. 70,40,57,860/- 13. 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. 14. That even otherwise, the Id. TPO/AO has erred in law and on facts and circumstances of the case in not ....
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....d. TPO and consequently the Ld. AO have erred in law and on facts and circumstances of the case in averaging the data of two different systems viz. assessee's internal CUP and IEX spot rates and erroneously treating such average rate as ALP for the purpose of making the aforesaid adjustment in respect of transfer of electricity by eligible power plant at Kota. 19. That the Ld. TPO has erred in ignoring the assessee's reliance on Safe harbor rules (SHR) provided in Rule 10THC of Income-tax Rules, 1962 and on various judicial precedents on the issue which corroborates the assessee's methodology of taking SEB rates as comparable uncontrolled price. 20. That without prejudice, the Id. TPO and consequently the Id. AO have erred in not appreciating that IEX rates as obtained are only basic rates and various other charges viz. fixed charges, POC charges, RPO Charges, distribution charges, NLDC Charges, load charges, electricity duty, cesses etc. have been completely disregarded. 21. The Ld. TPO and consequently the 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 a....
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....he Ld. TPO and consequently the Ld. AO have erred in law and on facts and circumstances of the case in not following rule of consistency by disregarding the same methodology followed by assessee since inception i.e. FY 2005-06 which has also been upheld by the Hon'ble ITAT & the Id. CIT(A) in assessee's own case for the AY 2014-15 and the AY 2015-16 respectively. Enhanced Claim of deduction u/s 80-IA of the Act raised during the assessment proceedings as well as before the Id. DRP 29. That the Id. TPO and consequently the Id. AO has erred in law and the facts and circumstances of the case by not entertaining the enhanced claim of deduction u/s 80IA of the Act inspite of the specific binding directions of the Id. DRP vide para no. 4.6.1 w.r.t. the enhanced claimed raised by the assessee during the course of transfer pricing proceedings / assessment proceedings as well as before the Id. DRP w.r.t. the re-determination of value of steam and 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....
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....ompanies as comparables, which should not be accepted due to following reasons: a) that the FAR analysis, output of each stage of quantitative filter and PLI computation of the comparables as selected by the Ld. TPO has not been provided to the assessee neither as part of the SCN nor separately, which is against the principles of natural justice. b) that on the basis of FAR analysis conducted by the assessee, the new comparables of Id. TPO are both product-wise and functionally incomparable with the assessee's bioseed segment. c) without prejudice to the above, the PLIs of new comparables as computed by the Ld. TPO are at variance with the PLIs as computed by the assessee and if correct PLIs are considered, then assessee's PLI falls within such ALP range and hence no adjustment is warranted. 36. That the Id. TPO and consequently the Id. 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 sel....
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.... any spread is an appropriate benchmark for the purpose of benchmarking foreign currency loans to AEs. 43. The Id. TPO and consequently Id.AO have erred on the facts and in law in imputing adhoc 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. 44 That the Ld. TPO and consequently the Ld. AO has erred in law and on 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. 45. That the Ld. TPO and consequently the Id. AO have erred in ignoring the fact that the assessee has earned interest income on loan 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....
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....or more to both AEs and the third parties; and b) that the assessee has not been charging interest on account of delay in receipt of outstanding receivables from third parties wherein the delay in receipt of payment is much higher as compared to the delay in case of AEs. 54. The Ld. TPO and consequently the Ld. AO have erred in making such an adjustment by: a) disregarding the comparability analysis carried out by the assessee in its TP study which is based on the RBI Master Circular and OECD guidelines, without affording any cogent reason. b) ignoring the settled judicial position on the issue which have held that 'LIBOR only without any spread 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 parameter....
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....le in law and based on conjectures and surmises. 63. The Id. AO has failed to appreciate that assessee has already disallowed an amount of Rs. 7,30,000/- u/s 14A of the Act and no further disallowance is warranted under the said provision. 64. The Ld. AO has while upholding/enhancing disallowance u/s 14A of the Act r.w.r 8D(2)(ii) of the Income Tax rules, erred in disregarding the fact that no expenditure is disallowable, as assessee's own interest free funds/surplus funds are much more than the amount of investments. 65. The Ld. AO 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 ....
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....ty value of lands as their full value of consideration u/s 50C of the Act against their actual sale consideration which should also be treated as arm's length price as the lands have been sold to independent third parties only. 75 Without prejudice, the ld. AO has erred in law in making the above addition u/s 50C without referring the valuation of lands to valuation officer in accordance with the provisions of section 50C(2) of the Act. 76. That 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....
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....the specific binding directions of the Id. DRP vide para no. 4.14.1 w.r.t. in this regard. 86. It is prayed before Hon'ble ITAT that the ad-hoc addition made by the Ld. AO for mismatch between ITR and Form no.26QB may kindly be deleted. ADDITIONAL CLAIMS RAISED BEFORE HON'BLE DRP Allowance of Foreign tax Credit-18,27,359/- 87 That the Id. 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.....
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....thorities and submits that the assessee has not provided any details of actual date of payments of statutory dues nor the details of the dividend income was filed to claim that the said dividend was received from mutual funds and thus exempt u/s 10(35) of the Act. 77. Heard 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....
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....d thus, the deduction claimed under section 80IA on the transfer price charged by the eligible units to non-eligible units was held as allowable. This order of Co-ordinate Bench in AY 2014-15 was got confirmed by the Hon'ble Jurisdictional High court wherein Hon'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 deduc....
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....ontention regarding net worth and also functional comparison and then decide this issue afresh. For this, he placed reliance on the judgment of Co-ordinate Bench of ITAT, Delhi in the case of Olympus Medical Systems India Pvt. Ltd. US DCIT, Circle-3(1), Gurugram 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 ....
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.... (PB P.No.978) 2016-17 104.56(PB P.No.980) 2017-18 110.64 (PB P.No.982) 2018-19 117.31 (PB P. No.984) 2019-20 126.15 (PB P.No.986) Since the company M/s Basant Agro Tech (India) Ltd. has positive net 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 inclu....
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....delay is over and above 175 days, as mutually agreed. During the year, the assessee has received INR 57,97,251/- on such outstanding receivables however, the TPO instead 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. ....
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....acts has held as under :- (i) The inclusion in the Explanation to Section 92B of the Act of the expression "receivables" 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 o....
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.... the addition has been made without issue show cause notice and further by ignoring the fact 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 ....
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....terest income was offered for tax on receipt basis whereas the Revenue taxed 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 add....
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....istical purposes. 116. Ground Nos. 87 to 88 raised by the assessee 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 t....
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....basis. As there is no discussion about the adjustments 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 app....
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....djudicating Ground Nos.49 to 60, 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 no....
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....dentical issue has 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 a....
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....rusal 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 assessee. A....
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....er 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 order has been considered and ....
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....nal 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 intimation order was dismissed ny Adl./ JCIT....
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....rn 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 further addition was made on account of transf....
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....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 observing that this adjustment has already been done by CPC u....