TaxTMI 
TaxTMI 
2021 (7) TMI 1477
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....eals by the Revenue being I. T. A. Nos. 46, 47, 48, 49, 1526 and 1527/Ahd/2016 for the assessment years 2007-08 to 2012-13 and I. T. A. No. 3032/Ahd/2016 for the assessment year 2013-14, further the assessee also filed its cross-objections (CO) in appeals filed by the Revenue in the assessment years 2007-08, 2008-09 and 2013-14 being C. O. Nos. 41 and 42/Ahd/2016 and 4/Ahd/2016. The learned Commissioner of Income-tax (Appeals) passed consolidated order dated November 27, 2015 for the assessment years 2007-08 to 2010-11. However, for remaining years the learned Commissioner of Income-tax (Appeals) passed separate orders. 2. In appeals for the assessment years 2007-08, 2009-10 to 2013-14 and in cross-objection for the assessment year 2008-09 the assessee vide additional grounds of appeal filed on December 14, 2020, has raised additional grounds of appeal that the Assessing Officer and the learned Commissioner of Income-tax (Appeals) erred in not allowing the deduction of education cess and higher education cess as allowable expenditure under section 40(a)(ii). The additional grounds of appeal is raised on the basis of decision of Rajasthan High Court in Chambal Fertilisers and Che....
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....ief to the assessee on various issues. However, during the hearing the learned Commissioner of Income-tax (Appeals) issued notice for enhancement on account of coal consumption in all units and enhance income by re-computing the working of coal consumption in different units and also revise the cost allocation of high power (HP) steam and low power (LP) steam. 5. Further aggrieved, the assessee as well as the Revenue filed appeal before the Tribunal. The Tribunal vide order dated July 26, 2013 set aside the grounds of appeal to the file of the learned Commissioner of Income-tax (Appeals). Thereafter, the learned Commissioner of Income-tax (Appeals) again vide his order dated November 27, 2015 has passed fresh order granting partial relief to the assessee. Further aggrieved both, the assessees as well as the Revenue have filed their respective appeals before this Tribunal. 6. The Assessing Officer passed regular assessment order under section 143(3) for the assessment years 2011-12 to 2013-14 and made various additions. On appeal the learned Commissioner of Income-tax (Appeals) by relying upon appellate order of his predecessor dated November 27, 2015 adjudicated various groun....
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....f appeal either before the Assessing Officer or before first appellate authority as no such claim was raised before lower authorities, the additional grounds of appeal should not be admitted. The learned Commissioner of Income-tax-Departmental representative further submits that in case the additional ground of appeals are admitted by the Tribunal, then this issue in all the years may be restored to the file of the Assessing Officer to examine the facts and adjudicate the same in accordance with law. 10. We have considered the rival submission of both the parties and have gone through the additional grounds of appeal raised by the assessee. We have noted that the assessee has raised the additional ground of appeal vide grounds of appeal dated December 14, 2020 ; on perusal of record and the order of the lower authorities, we further find that the facts relating to adjudication of additional ground of appeal raised by the assessee are available on the record of the Assessing Officer. Moreover, the assessee has raised grounds of appeal on the basis of decision of the hon'ble Rajasthan and Bombay High Court in Chambal Fertilizer and Chemicals Ltd. (supra) and Sesa Goa Ltd. (sup....
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....tially. The learned senior counsel submits that addition made on the basis of notice of enhancement of income by the learned Commissioner of Income-tax (Appeals) is not based on any incriminating material found during the course of search. A search action was carried out in case of the assessee on July 16, 2009, on the date of search time-limit for issuance of notice under section 143(2) for the assessment year 2007-08 had expired. Thus, no assessment for the assessment year 2007-08 can be said to have been pending on the day of search. In other words the assessment for the assessment year 2007-08 remained unabated. Therefore, no addition can be made, which is not based upon any incriminating material found during the course of search. To support his submission the learned senior counsel relied upon the decision of the Delhi High Court in the case of CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) ; [2015] 61 taxmann.com 412 (Delhi) and of the Gujarat High Court in the case of Pr. CIT v. Saumya Construction Pvt. Ltd. [2016] 387 ITR 529 (Guj) ; [2017] 81 taxmann.com 292 (Guj). 13. On the other hand the learned Commissioner of Income-tax-Departmental representative for the Revenue ....
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.... is allowed and the appeal of the Revenue for the assessment year 2007-08 has become infructuous and dismissed as such. Considering the fact that the appeal of the assessee is allowed on legal ground and the appeal of the Revenue is also dismissed being infructuous, therefore the cross-objections raised by the assessee are also held as infructuous and dismissed as such. The additional ground of appeal raised by the assessee for the assessment year 2007-08 is also dismissed. 16. Ground No. 4 in the Revenue's appeals for the assessment years 2008-09, 2009-10 and 2010-11 and ground No. 3 in the assessee's appeal for the assessment years 2009-10 and 2010-11 relates to enhancement relating to Unit-III for coal consumption. The learned senior counsel for the assessee submits that while passing appellate order in first round, the learned Commissioner of Income-tax (Appeals) has discussed and made following tabular chart showing coal consumption, electricity generated and steam generated by unit-III in the following manner ; Assessment year Coal consumed MT Electricity generated (units) Steam generated (MT) Electricity ton of per coal (Units) Steam per ton coal....
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.... 2007-08 50690 24496 19516 4980 2330 1,16,03,400 2008-09 50082 21729 19281 2448 2673 65,43,504 2009-10 55952 32361 21541 10820 3250 3,51,65,000 2010-11 57616 30204 22183 8021 3033 2,43,27,693 Total 7,76,39,597 19. The learned senior counsel further submits that the assessee filed appeal before Tribunal and the issue was remitted back the issue to the file of the learned Commissioner of Income-tax (Appeals) for fresh consideration after obtaining remand report from the Assessing Officer. On above issue, the assessee filed his reply along with evidence including complete record of coal consumption before the Assessing Officer. The copy of which is filed at page Nos. 149 to 173 of paper book. The Assessing Officer has furnished his remand report dated July 18, 2014 and another remand report dated August 22, 2014, copy of which are also filed on record. The assessee has submitted its rejoinder on relevant issues vide letter dated September 20, 2014, which is also filed on record. In the second round the learned Commissioner of Income-tax (Appeals)....
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.... hereinabove, he has not enhanced any income in the assessment year 2008-09. The learned Commissioner of Income-tax (Appeals) enhanced income for the assessment years 2009-10 and 2010-11 as computed in tabular chart herein above. Thus, the assessee has raised ground of appeal before Tribunal in the assessment years 2009-10 and 2010-11 whereas Department has raised ground for relief in enhancement of income provided by the learned Commissioner of Income-tax (Appeals) in second round. It is submitted that Tribunal has set aside entire issue to the file of the learned Commissioner of Income-tax (Appeals) to decide it afresh hence, it cannot be said that issue was remitted back for limited purpose as held by the learned Commissioner of Income-tax (Appeals). The learned senior counsel submits that once the assessee has submitted entire details relating to coal consumption and there is no discrepancy in such details, additions cannot be sustained. It is submitted that in both the remand report the Assessing Officer has repeated the same argument as was raised by the learned Commissioner of Income-tax (Appeals) in first round. Once the assessee has submitted all the evidence related to co....
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...., issue slips and bank statements since payment has been made through cheques only. (ii) All the abovementioned details were made available to the Assessing Officer and Commissioner of Income-tax (Appeals) for verification. On verification of such details no defect has been noticed in the purchase of coal both in quantity and in value. Even opening stock and closing stock of coal as per books of account has not been disputed. (iii) The department is not in possession of any bogus bills pertaining to purchase of coal for which payment is made outside books account to prove the fact that any bogus purchase or issue of such coal has been made. (iv) During original assessment proceedings or during appellate proceedings and even during search carried on in case of the appellant, not even an iota of evidence has been discovered by the department to substantiate that any purchase of coal out of books has been done by the appellant. (v) No enquiries have been made from suppliers to clarify the doubt, if any, to prove that purchases of coal have been inflated by the appellant. (vi) It has not been proved that coal consumption which has stated to ....
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.... in CIT v. Kashiram Textile Mills Pvt. Ltd. [2006] 284 ITR 61 (Guj) ; [2007] 160 Taxman 4 (Guj) 25. In alternative submissions the learned senior counsel submits that the learned Commissioner of Income-tax (Appeals) is not competent to enhance the income by taking any issue which was not considered expressly or by necessary implication by the Assessing Officer during original assessment proceedings. Reliance is placed on following decisions : ٭ Decision of the Delhi Tribunal in Hari Mohan Sharma v. Asst. CIT [2019] 71 ITR (Trib) 18 (Delhi) ; [2019] 110 taxmann.com 119 (Delhi-Trib), ٭ Decision of the Delhi High Court in CIT v. Union Tyres [1999] 240 ITR 556 (Delhi) ; [1999] 107 Taxman 447 (Delhi), ٭ Decision of Jaipur Income-tax Appellate Tribunal in Zuberi Engineering Co. v. Dy. CIT [2019] 69 ITR (Trib) 261 (Jaipur) ; [2019] 103 taxmann.com 196 (Jaipur). 26. In second alternative and without prejudice submissions the learned senior counsel for the assessee submits that the learned Commissioner of Income-tax (Appeals) was not justified in arriving at quantum of coal requirement for one ton of production after considering similar dat....
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.... electricity generation per ton of coal has reduced from 133.69 units to 122.52 units, steam per ton of coal has increased from 3.72MT to 3.92MT. Thus the learned Commissioner of Income-tax (Appeals) noted that increase in steam production is not commensurate with increase in coal consumption which prove that the appellant has debited/claimed excess consumption of coal. 29. We have considered the rival submissions of the parties and have gone through the orders of the learned Commissioner of Income-tax (Appeals) in both the rounds. We have also deliberated on the various facts and figures compiled by the learned Commissioner of Income-tax (Appeals) in first round of appeal. We have also deliberated on various case laws relied by the learned senior counsel. During the first round of appeal the learned Commissioner of Income-tax (Appeals) noted that increased in the steam production is not commensurate with increase of coal consumption which shows that the assessee claimed excess consumption of coal. The learned Commissioner of Income-tax (Appeals) arrived at coal requirement for one ton production of duplex board based upon average data of earlier years of Suman Papers (assessmen....
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....nting out the specific defects the books of account, books of account cannot be rejected by the Revenue authorities. 30. We have also examined the remand reports dated November 30, 2013, (page Nos. 149 to 173 of paper book), July 18, 2013 (page Nos. 215 to 232 of paper book) and dated August 22, 2014 (page Nos. 233 to 247 of paper book), furnished by the Assessing Officer in second round of appeal before the learned Commissioner of Income-tax (Appeals). We find that in the remand report no discrepancy in the coal consumption was pointed out by the Assessing Officer, rather only supported the view taken by the learned Commissioner of Income-tax (Appeals) in first round of appeal. The Assessing Officer also stated in his remand report dated August 22, 2014 that issue under consideration is only pertaining to cost of various internal constituents of the business and concomitant addition under section 69C. The trading result of the assessee was not tinkered by the learned Commissioner of Income-tax (Appeals). And there is no requirement to invoke the provision of section 145(3) for making addition under section 69C. 31. The hon'ble Gujarat High Court in CIT v. Nangalia Fabric....
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....t appellate authority is invested with very wide powers under section 251(1)(a) and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee make a grievance and ranges over the whole assessment to correct the Assessing Officer not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the Assessing Officer and determined in the course of assessment. However, there is a solitary but significant limitation to the power of revision, viz., that it is not open to the Commissioner of Income-tax (Appeals) to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subject matter of original assessment. Thus, the assessee is also liable to be succeeded in toto on the second alternative contention of the learned senior counsel of the assessee. 34. We also find merit in the second alternative submissions of the learned senior counsel that on computing the average rate for two immediately preceding years, as shown to us in a chart (as ....
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....56) 39648 Actual coal consumption shown by the appellant 45871 Excess coal consumption (45871 -39648) 6223 Average rate of coal per MT in A.Y. 2009-10 3250 Value of excess coal consumption claimed by the appellant 2,02,24,750 38. Aggrieved by the enhancement, the assessee filed appeal before the Tribunal, The Tribunal has remitted the issue to the file of the learned Commissioner of Income-tax (Appeals) for fresh consideration after obtaining remand report from the Assessing Officer. During the remand proceedings, on above issue, the assessee furnished his reply along with evidence including complete record of coal consumption. The Assessing Officer furnished his remand report vide letter dated November 30, 2013, dated July 18, 2014 and another remand report dated August 22, 2014 and repeated the same contention as noted by the learned Commissioner of Income-tax (Appeals) in first round of appeal. The assessee also filed its rejoinder on relevant issues vide letter dated September 20, 2014. The Commissioner of Income-tax (Appeals) in second round has also upheld enhancement of income as made by his predecessor the learned Commissioner of Income-tax (Ap....
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.... upon detailed finding given by both the Commissioner of Income-tax (Appeals). 43. The learned senior counsel further submits that for the purpose of accounting, the appellant implemented SAP, an ERP accounting package and defined various profit centers in relation to its different units. At the time of preparing the accounts, it extracts information from SAP, downloads it to excel sheets and prepares the profit and loss account and balance-sheet. Such accounts are provided to the statutory auditors for the purpose of audit and thereafter it obtains the audit report in form 10CCB before the statutory time-limit provided under the Act. The audit report obtained in form 10CCB also comprises of balance-sheet, profit and loss account and calculation of section 80-IA of the Act, apart from the verification by the auditor for eligibility of business under section 80-IA of the Act. The assessee obtained audit report (form 10CCB report) as required, for claiming deduction under section 80-IA of the Act, before the due date of filing of original return of income. Had the assessee has not prepared profit and loss and balance-sheet in excel format as claimed by it, it would have not been i....
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....ned Commissioner of Income-tax (Appeals) in first round of appeal has held that the assessee implemented SAP accounting software and on the basis of extraction of data, excel sheet containing profit and balance-sheet was prepared for computing income eligible for 80-IA(4). It was also held that the assessee claimed deduction under section 80-IA(4) in original as well as in return filed in response to notice under section 153A and these facts are not disputed by the Assessing Officer. The assessee maintained separate books of account filed before the Assessing Officer. Further the assessee has obtained Audit report in form 10CCB, before due date of fling the return of income, which is sufficient compliance as per decision of the Delhi High Court in Centimeters Electricals in I. T. A. No. 1336/Delhi/2008. 46. We find that in second round of appeal the learned Commissioner of Income-tax (Appeals) allowed relief to the assessee by following the order of his predecessor. Before us, the learned senior counsel vehemently argued that the assessee using SAP, and ERP accounting package in its different Units and obtained extracts information from SAP, downloaded it to excel and prepares t....
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.... assessment years 2008-09 to 2013-14 are dismissed. 49. Next grounds of appeal relates to deleting the disallowance of sale of power eligible for deduction under section 80-IA (ground No. 2 in the Revenue's appeal for the assessment years 2008-09 to 2013-14). The learned senior counsel for the assessee submits that the Assessing Officer in its alternate contention has denied deduction under section 80-IA(4) on sale of steam on the ground that steam is not power. This issue was decided by the Commissioner of Income-tax (Appeals) in first round in favour of the assessee. The Revenue filed appeal in all the assessment years and issue was remitted back to the file of the Commissioner of Income-tax (Appeals) for de novo consideration by the Tribunal. The Commissioner of Income-tax (Appeals) in second round has again decided the issue in favour of the assessee. The learned senior counsel thus relies upon detailed finding given by both the Commissioner of Income-tax (Appeals). The learned senior counsel the entire controversy whether steam is power or not is decided by the Ahmedabad Tribunal in the case of Deputy CIT (OSD) v. Jay Chemical Industries Ltd. [2019] 71 ITR (Trib) (S. N.....
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....the electricity in a captive power plant is by product of electricity power and is eligible for deduction under section 80-IA(4). The learned Commissioner of Income-tax (Appeals) while granting relief to the assessee followed the decision of the Jaipur Tribunal in Dy. CIT v. Maharaja Shree Umaid Mills Ltd. [2009] 120 TTJ 711 (Jaipur), Mumbai Tribunal in DCW Ltd. v. Addl. CIT [2010] 132 TTJ 442 (Mum), the Delhi Tribunal in Sial SBEC Bioenergy Ltd. v. Dy. CIT [2004] 83 TTJ 866 (Delhi) and the hon'ble apex court in CIT v. Tanfac Industries Ltd. (SLP (C) No. 18537 of 2009) [2009] 319 ITR (St.) 8 (SC). In the second round the learned Commissioner of Income-tax (Appeals) grated again granted relief to the assessee by taking view that for claiming deduction under this section material is generation of power and not form of power. And further whether "steam" is power is decided by the Mumbai Tribunal in West Coast Paper Mills Ltd v. Addl. CIT [2014] 33 ITR (Trib) 560 (Mum) (I. T. A. No. 3802/Mum/2006). The learned Commissioner of Income-tax (Appeals) also followed the decision in Maharaja Shree Umaid Mills Ltd. (supra). 52. We find that the hon'ble Gujarat High Court in Pr. CIT ....
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....orm 10CCB report), it is apparent that entire cost of co-generation power plant is shown as expenditure and the assessee is disclosing sale of electricity and steam as income. The profit of eligible undertaking is derived after reducing total cost from sale value of electricity and steam and on such profit ; the assessee has claimed deduction under section 80-IA of the Act. It is submitted that controversy as to which rate electricity units generated by unit I and transferred to paper unit should be shown as income is decided in favour of the assessee by the Tribunal in first round of appeal in appellate order dated July 26, 2013. Now dispute remains regarding value of low power steam shown as income in audited annual accounts for the purpose of section 80-IA. Both the Assessing Officer and the Commissioner of Income-tax (Appeals) has disputed the method of allocation of cost between high power steam and low power steam and thereby contended that the appellant has allocated higher cost to low power steam and thereby claim excess deduction under section 80-IA. 55. The learned Commissioner of Income-tax (Appeals) in his first round of appeal for the assessment years 2007-08 to 201....
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....worked deduction under section 80-IA based upon above working in assessment years being the assessment years 2011-12 to 2013-14. The assessee has preferred appeal for additions partially confirmed by the learned Commissioner of Income-tax (Appeals) and the Revenue has preferred appeal for additions deleted by the learned Commissioner of Income-tax (Appeals). It is submitted that Unit I of the assessee being eligible for deduction under section 80-IA is recovering cost of low power steam from paper unit which is considered as sale value of steam in audited annual accounts of such unit and based upon such accounts, form 10CCB report was prepared. The Assessing Officer and the learned Commissioner of Income-tax (Appeals) has disputed value of steam charged from paper unit. The learned senior counsel by referred the provisions of section 80-IA(8) of the Act, which reads as under : "(8) Where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in eith....
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.... plant is towards generation of electricity and steam and as both the Revenue is eligible for deduction under section 80-IA as submitted earlier above, there is no basis for allocating cost between high power steam and low power steam as made by the Assessing Officer and the Commissioner of Income-tax (Appeals). The whole basis of additions made by the Revenue is that the assessee is producing two kinds of steam namely high pressure steam and low pressure steam and separate cost of each kind of steam is required to be found out. The whole assumption is fundamentally erroneous. The assessee does not produce two different kinds of steam. When from the boiler steam is generated, it is of high pressure which is used to rotate the turbine. Once the turbine is rotated the steam released becomes low pressure. There for there is only one steam ; before it is put into turbine it is having high pressure and post the turbine stage it is low pressure. The whole attempt to allocate costs to these two kinds of steam is fundamentally misconceived. This becomes clear from the diagram produced by the assessee at page No. 185 of paper book as also the diagram produced by the Department at page No. 2....
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.... 1 36 547 1 54 616 C HP Steam utilized for generating electricity 31 954 72 003 91 280 79 357 D Ratio of allocation of cost between HP and LP steam 46090 : 31954 114490 : 72003 136547 : 91280 154616 : 79357 E Total cost incurred by the appellant in CO GEN Plant 7 10 24 927 17 14 06 234 25 16 37 734 22 13 50 855 F Cost of LP steam (F) = E*B/A 4 19 44 786 10 52 28 077 15 08 17 847 14 62 74 928 G Value of Steam considered by the appellant 2 99 58 500 7 44 18 500 15 08 84 435 14 62 66 736 H (Deficit)/excess (G-F) -1 19 86 286 -3 08 09 577 66 588 -8 192 60. On the other hand the learned Commissioner of Income-tax-Departmental representative for the Revenue supported the order of the Assessing Officer and submits that during the assessment the Assessing Officer disputed the method of allocation for high power steam and low power steam and thereby find that the assessee has allocated higher cost to low power steam thereby claimed excess deduction of section 80-IA. The learned Commissioner of Income-tax-Departmental representative prayed for restoring the order of the Assessin....
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.... matrix of the case and the diagram shown to us, we are in agreement with the learned senior counsel for the assessee that the assessee is not producing two different kinds of steam. It is fact that from the boiler steam is generated ; it is of high pressure which is used to rotate the turbine, further once the turbine is rotated the steam released becomes low pressure. Therefore, there is only one steam ; before it is put into turbine it is having high pressure and post the turbine stage it is low pressure. Accordingly, the whole attempt to allocate costs to these two kinds of steam is fundamentally not correct. We are also convinced with the submissions that once, the assessee has claimed relevant cost of power plant and recognized revenue for generation of power and steam at specific value and the Assessing Officer has not brought any evidence that steam value charged from other unit is not at market value, the Assessing Officer is not empowered to re-compute profit and loss account of eligible unit. Therefore, considering these facts, there is no need to prepare re-casted profit and loss account or compute excess low pressure steam cost recovered from paper units as made by the....
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....stment made out which exempt income is earned. The learned senior counsel submitted that disallowance under section 14A has been erroneously confirmed by the learned Commissioner of Income-tax (Appeals) without appreciating the facts that the assessee owned sufficient interest-free funds available with it. The appellant has sufficient interest-free funds to cover investments which yield exempt income. Out of total interest-free fund available in the assessment year 2011-12, investment for Rs. 18,72,860 has been made. Similarly in the assessment year 2012-13, the appellant has made investment of Rs. 18,69,360. The assessee total interest-free funds as on March 31, 2011 of Rs. 92,35,93,236 and as on March 31, 2012 of Rs. 90,22,60,154. Thus, no interest disallowance is warranted. Further, the assessee is engaged in the business of manufacturing of paper, paper boards and news prints hence entire expenditure is for earning business income and not for carrying out any investment activity. To buttress his submissions the learned senior counsel relied on the following decisions : ٭ The hon'ble Gujarat High Court in the case of Pr. CIT v. Shreno Ltd. [2018] 409 ITR 401 (....
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.... shares taken mainly from co-operative banks, which are mandatory condition for availing of credit facilities from co-operative banks. Those investment is made from the tax free profit of Rs. 67 crores. There is no investment from the borrowed funds. The Assessing Officer made disallowance of Rs. 1,03,175 for the assessment year 2011-12. Similarly in the assessment year the Assessing Officer made disallowance of Rs. 55,870. The Assessing Officer made disallowance of interest expenses by taking view that the assessee diverted it funds for earning exempt income. 69. Before the learned Commissioner of Income-tax (Appeals) the assessee again filed detail written submissions and furnished the statement of interest-free funds available with the assessee as on March 31, 2011 and on March 31, 2012 and submits that no interest disallowance can be made. For administrative expenses the assessee explained that no such disallowance can be made as entire expenses are debited to the profit and loss account has been incurred for the purpose of business and not for investing purpose. The assessee in its without prejudice submissions explained that they have received total exempt dividend income ....