TaxTMI 
TaxTMI 
2026 (3) TMI 1185
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.... the Act. 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 specified domestic transactions. Certain transfer pricing adjustment as well non-transfer pricing additions were made in the final assessment order, which are agitated by the appellant before us in the following concise grounds of appeal. "1. The Ld. AO has erred in law and on facts, and in the circumstances of the appellant's case in making an addition/adjustment of 107,01,24,795/- on account of transfer pricing issue as per the order of the transfer pricing officer (TPO) u/s 92CA(3) of the Act. 2. That the Ld. AO/TPO has erred in not entertaining/allowing the following additional claims of the assessee raised during the course of assessment proceedings: a. With respect to the transfer pricing issues in relation to the redetermination of value of steam transferred and consequent enhancement of deduction u/s 80-IA of the Act. b. With respect to the corporate tax issues in relation to (i) treating the sale of renewable energy certificates (RECs) as revenue receipts and (ii) by not....
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.... ALP rate of electricity. 9. That the Id. TPO and consequently the Id. AO have erred in not allowing the consequential enhancement of deduction u/s 80-IA of the Act claimed by the assessee from Rs.47,78,80,266/- to Rs.3,98,50,55,539/-, by considering the equivalent value of steam as determined above in ground no. 8 (viz. 24,57,73,00,068/-) and also limiting the same to GTI. GROUNDS OF APPEAL WITH RESPECT TO THE CORPORATE TAX ISSUES Claim made during the assessment proceedings and before the Id. DRP Sale Proceeds of Renewable Energy Certificates (RECs) inadvertently suo-moto offered to tax by the assessee instead of treating the same as Capital receipts not liable to tax-20,76,97,397/- 10. That the Id. DRP/AO has erred in law and on the facts and in the circumstances of the case, by disregarding the additional allowance/claim raised by the assessee during the course of assessment proceedings treating the sale proceeds of renewable energy certificates (RECs) amounting to 220,76,97.397/-not liable to tax being capital receipts in nature. 11. Without prejudice to above, the Ld. DRP and consequently the Ld. AO have erred in law by not enterta....
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....8,545/-. 1.3 That the Id. AO has erred in raising an incorrect demand on account of DDT payable [1,41,67,650/-] and interest u/s 115P [268,00,472/-] completely ignoring that DDT amounting to Rs.1,41,67,650/- has been duly paid by the assessee on time. Other grounds 15. That the penalty proceedings initiated u/s 270A of the Act are on wholly illegal and untenable grounds since there was no concealment of any income nor submission of inaccurate particulars of income, nor any other default according to law by the assessee. 16. That the Ld. A.O has erred in law in charging interest u/s 234B of the Act on wholly illegal and untenable grounds. 17. That each ground of objection is independent and without prejudice to other grounds of appeal raised herein. 18. The appellate craves the leave to add, amend or alter all or any of the grounds of appeal." The above grounds of appeals are adjudicated hereinbelow. Ground Nos. 1 to 4: General Grounds 3. These are general and summarized version of specific grounds which are dealt along with the other specific grounds as below and hence are not adjudicated and are hereby dismissed. Gr....
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.... has not sold steam to any non- AE or other eligible unit, hence, no data regarding price of steam to be charged has been provided by assessee. (v) Assessee or its AE have not purchased steam from any non AE, hence, data for purchase cost is not available. Based on aforesaid reasoning, the TPO determined the ALP of transfer of steam as nil. This resulted in TP adjustments. While deciding the issue, learned DRP took note of the fact that in assessee's own case in assessment year 2015-16, learned Commissioner (Appeals) has decided the issue in favour of the assessee. Accordingly, learned DRP directed the Assessing Officer to verify the fact whether any appeal against the decision of Commissioner (Appeals) has been preferred before the higher forum and in case it is found not to be so, delete the adjustment. While completing the final assessment, the Assessing Officer incorporated the adjustment again. 7. We have considered rival submissions and perused the materials on record. As could be seen from the materials on record, the TP adjustments have been made in the final assessment orders by stating that against the decision of Commissioner (Appeals) in assessment year 2015-16....
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....the binding directions of the DRP as per provisions of section 144C(13) of the Act. 9. The case of ld. AR is that it is an undisputed fact that no appeal has been preferred by the tax department against the CIT-(A)'s order for AY 2015-16. This fact is also supported by the findings of the coordinate bench of the ITAT in its orders for preceding assessment years in appellant's own case. Ld. AR further referred the assessing officer's affidavit placed on record. In the affidavit filed [Pg no 425-427 of PB], the Assessing Officer has admitted that no appeal has been filed by the department against the order of CIT-(A) in AY 2015-16. 10. On the other hand, ld. DR submitted that no appeal could have been filed by the department against the CIT-(A) order for AY 2015-16 as said appeal was dismissed by the CIT(A) on this particular issue. Referring to the finding of CIT(A) on page no 58 and 59 of CIT-(A)'s order, the ld. DR stated that as borne out of the facts in that year, the assessee did not claim any deduction u/s 80-IA as its gross total income was negative in that particular year, therefore, the appeal of the assessee has been dismissed as infructuous in nature. It was further....
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....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." 14. It was also informed that no adjustment on account of transfer of steam has been made by TPO in AY 2020-21 and the issue has been accepted at that level. It was thus submitted that adjustment on account transfer of steam should be deleted following the rule of consistency. Several judgements as listed below were relied upon by the ld.AR in support of this contention: - a. CIT v. GE India Technology Centre Pvt. Ltd. [2020-TII-50-HC-KARTP] b. Godrej & Boyce Manufacturing Company Limited [TS-176-SC-2017] c. CIT v. Excel Industries Ltd [358 ITR 295 SC (2013)] d. Radha Swami Satsang vs. CIT [193 ITR 321] 15. Considered the rival submissions and perused the material placed on record. Undisputedly, the issue is covered by the....
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....f transfer of steam is hereby deleted and hence grounds of appeal no.5 to 7 raised by the assessee in this respect are allowed. Ground no 8 and 9: Enhanced Claim of deduction u/s 80-IA on transfer of steam 17. The next issue which relates to above issue is, with reference to redetermination of ALP of steam transferred from eligible unit to non-eligible units and consequent enhancement of deduction under section 80IA of the Act. The contention raised is that assessee's power plant has transferred the steam to non-eligible units at cost. However, based on the methodology accepted by the higher appellate authorities in various other cases, the ALP of the steam should be determined based on the value arrived at the converting the steam into equivalent quantity of electricity in Kwh and thereafter multiply the equivalent quantity of electricity with the market rate of electricity. The conversion of steam into equivalent quantity of electricity is done on the basis of certificate obtained from chartered engineer. 18. It was submitted by the AR that this issue was raised by the assessee in course of proceedings before TPO and AO. Even, before DRP, a specific plea was raised to co....
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.... other hand, ld. DR countered the above claim of the assessee by first relying upon provisions of section 80-IA(5) and 80AC of the Act which provides that no deduction shall be allowed unless the such claim is raised by a return of income filed on or before the due date mentioned in section 139(1) of the Act. He further placed reliance on the various judgments as listed below to contend that no additional claim should be allowed to the assessee as such additional claim has not been claimed in the return of income filed u/s 139(1) of the Act but claimed before the lower tax authorities during the course of assessment proceeding for the first time: - a) Pr. CIT vs. Wipro Ltd. [2022] 140 taxmann.com 223/288 Taxman 491/446 ITR 1 (SC) b) Patel Brass Works Pvt. Ltd. Vs. ACIT [ITA no. 60/RJT/2020] c) Rachna Infrastructure Pvt. Ltd. (2022) 138 taxmann.com 416, Gujarat d) ITO vs. Jagtap Patil Promoters and Builders 147 taxmann.com 199(2023) 22. The ld. DR further placed reliance on Rule 18BBB along with the above cited judgements in support of its contentions. The relevant rule is reproduced herewith as follows: - "18BBB. (1) The report of the....
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....ensure better compliance of the statutory provisions. Reference to the expression 'multiple claims of deduction' would be with reference to the stipulation that deduction should be claimed under a particular provision and it cannot be shifted and treated as deduction claimed under the other provision. Language of Sub-section 5 to Section 80 A does not state that the deduction once claimed under a particular section cannot be corrected and modified before the Assessing Officer. Indeed, the Assessing Officer can examine the claim for deduction and can make adjustment/disallowance. We would not read in the amended provision, a stipulation barring and restricting the assessee from revising the computation/claim for deduction made in accordance with Section 80A (5) of the Act." b) Shree Bhavani Power Projects (P) Lt. Vs. ITO [2024] 165 taxmann.com 733 (Delhi) "31. One of the reasons which appears to have weighed 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 liabl....
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....6.03.2021, it was not possible for the assessee to make such additional claim before the AO who has already passed the final assessment order after the directions of Ld. DRP on 28.12.2019. Thus under these circumstances, this additional claim is made for the first time before the Tribunal by filing additional grounds of appeal and further by filing additional evidences. With regard to the admission of additional grounds of appeal, we find that the additional ground taken are legal in nature where the assessee has claimed the revised / additional deduction u/s 80 IA of the Act. The Hon'ble Supreme Court in the case of NTPC vs CIT 229 ITR 383 has held that any legal claim could be made at any stage of the proceedings. It is further seen that the Revenue has challenged the admission of additional grounds for the reason that it is a fresh claim made by the assessee. Since it is not made through the income tax return filed u/s 139(1) of the Act, such claim could not be admitted. For this reliance was placed in the case of PCIT vs Wipro Ltd.(supra) wherein the Hon'ble Supreme Court has held that, one of the mandatory conditions is that for claiming the benefit u/s 10B(8) of the Act, the ....
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.... Act. Sub-section (10) of section 144C of the Act provides that every direction of DRP is binding upon the assessing officer. 27. Further, as stated by the ld. AR, the coordinate bench in case of DCM Shriram Ltd. (ITA no 704/Del/2021) has in clear terms distinguished the judgment of supreme court in case of Wipro Limited (Supra) on the similar facts and issue. 28. Thus, in view of above facts, and respectfully following the decision of coordinate benches, 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 8 and 9 are allowed for statistical purposes. Ground no 10 to 12: Sale Proceeds of Renewable Energy Certificates (RECs) - Capital receipts or not? 29. The next issue arising for consideration vide ground no. 10 to 12 is concerning the nature and character of receipts from sale of Renewable Energy Certificates (RECs), whether capital or revenue. During the year under consideration, the assessee received Rs. 20,76,97,397/- on account of sale of such REC's ....
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.... keep the issue alive, the panel refrains from granting reliefto the assessee." 10. We have perused the order passed by co-ordinate Bench of the Tribunal in assessee's own case in ITA No.312/M/2019 for A.Y. 2015-16 order dated 24.05.2021 which is on identical issue and decided the same in favour of the assessee by following the decision rendered by Hon'ble Andhra Pradesh High Court in case of CIT vs. My Home Power Ltd. (2014) 365 ITR 082 (AP) by returning following findings: "7. Considered the submissions of the learned Counsel for both the parties and perused the material on record. While going through the judicial pronouncements relied upon by the learned Counsel for the assessee, we find that the issue for our adjudication is squarely covered by the aforesaid decisions relied upon by the learned Counsel wherein in one of the cases relied upon in CIT v/s My Home Power Ltd., [2014] 365 ITR 082 (AP) (supra) filed by the Revenue, the Hon'ble Andhra Pradesh High Court held that the Tribunal had factually found that Carbon Credit was not off-shoot of business but off-shoot of environmental concerns and no asset was generated in course of business but it was generated....
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.... which is based upon the decision rendered by Hon'ble Andhra Pradesh High Court in case of My Home Power Ltd. (supra), we are of the considered view that sale of REC (carbon credits) income received by the assessee is a capital receipt and could not be a business receipt or income nor it is directly linked with the business of the assessee nor any asset is generated in the course of business but it is generated due to environmental concern. Therefore, addition made by Ld. TPO/AO to the tune of Rs. 8,90,53,500/- on account of sale of RECs/carbon credits during the year under assessment is not sustainable in the eyes of law, hence, ordered to be deleted. Consequently, the appeal filed by the assessee is allowed." "28. ......The only reason on which the departmental authorities have rejected assessee's claim is, filing of SLP against the decision of the Hon'ble Andhra Pradesh High Court in case of My Home Power Ltd. (supra). Thus, in our view, the decisions cited by learned counsel for the assessee and more particularly, the decisions of the Coordinate Benches discussed hereinabove, clearly support the case of the assessee that the receipts from RECs are not in the n....
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....vant extract of which is reproduced herewith as follows: - "29. Another off-shoot of this issue is whether the receipts from RECs, being in the nature of capital receipts, will form part of book profit computed under section 115JB of the Act. We find, this issue has also been addressed by the Coordinate Bench in case of SRF Ltd. Vs. ACIT (supra) wherein it has been held as under: 6.4 It is a settled law that a capital receipt is not liable to tax under the Act unless it is specifically included in the definition of income u/s 2(24) of the Act and chargeable under any of the charging provisions of the Act. Once a particular receipt is treated as capital receipt, the same cannot be brought to tax in garb of 'minimum alternative tax' applicable on book profits computed u/s 115JB of the Act. The ratio of judgment delivered by the Hon'ble High Court of Calcutta in case of Ankit Metal & Power Ltd. [2019] 109 taxmann 93 (Cal) is worth mentioning. In Para no. 27, the Hon'ble Court held that: "27. In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital ....
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....tent, therefore, is clear and confined to carbon credits as so defined. Relying upon the detailed submissions advanced by the learned AR of the assessee and the judicial precedents cited in support thereof, we are inclined to hold that the provisions of the taxing statute are required to be construed strictly. In view of the established principle of strict interpretation of taxing statutes, REC and carbon credits cannot be treated as synonymous and must be considered separately for the purpose of taxation. 36. Thus, in our view, the decisions cited by learned counsel for the assessee and more particularly, the decisions of the Coordinate Benches discussed hereinabove, clearly support the case of the assessee that the receipts from RECs are not in the nature of revenue receipt. Therefore, we hold that the amounts received by the assessee from sale of RECs, being in the nature of capital receipts, are not taxable at the hands of the assessee. 37. With regard to the issue of whether the receipts from RECs, being in the nature of capital receipts, will form part of book profit computed under section 115JB of the Act. We hold that respectfully following the ratio laid down by Coor....
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....val submissions and perused materials placed on record. Admittedly, in the assessment year under dispute, the assessee has not earned any exempt income. Therefore, as per the settled legal principles, no disallowance under section 14A read with Rule 8D is called for. It is observed, while deciding assessee's appeal on identical issue in assessment years 2011-12, 2013-14 and 2015-16, learned Commissioner (Appeals), considering the fact that the assessee had not earned any exempt income, deleted the disallowance under section 14A. In an affidavit furnished before us the Assessing Officer has admitted that department has not preferred any appeal against the decision of Commissioner (Appeals) in assessment year 2015-16. Therefore, in view of specific directions of DRP, the disallowance cannot be sustained. Accordingly, we delete it. Grounds are accordingly allowed. 44. With regard to the inclusion of book profit under section 115JB, we hereby follow the judgement of Special Bench in the case of Vireet Investment [2017] 82 taxmann.com 415 (Delhi-Trib.) where it is held that no addition could be made on account of disallowance under section 14A to the book profit. This being so, we de....