TaxTMI 
TaxTMI 
2026 (6) TMI 484
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....92(1), ITBA/NFAC/S/250/2025-26/1076481994(1), ITBA/NFAC/S/250/2025-26/1076483917(1) involving proceedings under sections 154 (A.Y. 2014-15) and under sections 143(3), 143(3), 143(3) & 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') in A.Ys. 2016-17, 2017-18, 2018-19 & 2020-21, respectively. Heard both the parties. Case files perused. 2. The assessee's appeal herein ITA 3103/Del/2025 raises the following substantive grounds of appeal: 1. That the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre ['CIT(A), NFAC'] erred on facts and in law in upholding the action of the assessing officer in passing a rectification order under section 154 of the Income tax Act, 1961 ('the Act'), regarding the disallowance of claim of depreciation to the extent of Rs. 53,75,832. Re: CIT(A) order passed without granting an opportunity of being heard 2. That on the facts and circumstances of the case and in law, the order dated 11.03.2025 passed under section 250 of the Act ('CIT(A) order') is in violation of the principles of natural justice and therefore illegal and bad in law. 2.1....
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.... in respect of Cold Tank Repairs carried out in the financial year 2010-11 which led to revision of written down values of block of fixed assets on which depreciation was computed. 4.2. That on the facts and circumstances of the case and in law, the CIT(A), NFAC erred not appreciating that vide order dated 31.12.2017 issued under section 143(3)/254 for assessment year 2009-10, the entire engineering fees was treated to be in nature of capital expenditure on which the appellant was entitled to depreciation once the plant, in respect whereof cold tank repair work was completed in assessment year 2011-12, was put to use. 4.3. That on the facts and circumstances of the case and in law, the CIT(A), NFAC erred in not appreciating the certificate issued by tax auditors of the appellant company explaining the reasons for difference between depreciation claimed as per income tax return and tax audit report. Re: Incorrect levy of interest under section 234B of the Act 5. That on the facts and circumstances of the case and in law, the assessing officer erred in levying consequential interest under section 234B of the Act. The appellant craves leave....
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....e of Rs. 12,32,18,073/- (after deduction of fund management charges) from investments made in mutual funds. The appellant, in its return of income, had suo-motu disallowed Rs. 7,96,140/- under section 14A of the Act towards 25% of the salary of one accounting person along with 5% remuneration of the Finance Director. However, the assessing officer made an additional disallowance of Rs. 1,19,23,833/- in the impugned order by invoking provisions of section 14A of the Act read with Rule 8D of the Rules. The appellant has submitted that it had no borrowings during the year under consideration and investments were made out of available surplus funds. It has been submitted that during the financial year the surplus funds available with the company were more than the amount invested in mutual funds. The appellant during the beginning of relevant previous year had interest free surplus funds amounting to Rs. 686,73,71,826/- out of which it had invested in mutual fund. The appellant had made suo-moto disallowance u/s. 14A of the Act to the tune of Rs. 7,96,140/-. It has been submitted that this disallowance has been consistently made by them since 2007-08 and this approach of compu....
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.... the interest free fund. To put it another way, in respect of payment made out of mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it may not be permissible for the Revenue to make an estimation of a proportionate figure. For accepting such a proposition, it would be helpful to refer to the decision of the Bombay High Court in Pr. CIT v. Bombay Dyeing and Mfg. Co. Ltd where the answer was in favour of the assessee on the question, whether the Tribunal was justified in deleting the disallowance under Section 80M of the Act on the presumption that when the funds available to the assessee were both interest free and loans, the investments made would be out of the interest free funds available with the assessee, provided the interest free funds were sufficient to meet the investments. The resultant SLP of the Revenue challenging the Bombay High Court judgment was dismissed both on merit and on delay by this Court. The merit of the above proposition of law of the - Bombay High Court would now be appreciated in the following discussion. 18. In the above context, it would....
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....he profit u/s 80IA at notional value of Rs. 7.32 per unit. The A.O. has found that the assessee company has inflated profits by showing notional value of Rs. 7.32 per unit being the market value of electricity per unit, when the assessee was supplying power to the Electricity board at Rs. 3.37 per unit thereby an excessive claim of deduction of Rs. 3.95 per unit was made. Hence, the A.O. has disallowed the excess claim of deduction of Rs. 14,02,08,848/-. The appellant has taken the market value at which the electricity was supplied to the assessee by the Electricity Board whereas the A.O. has determined the price at which electricity was supplied by the assessee to the Electricity Board. The assessee in his submission filed has raised the issue section 80IA(8) of the Act. As per Section 80IA(8), if the internal transfer of goods or services is not at market value, then profits or gains of transacting units shall be computed, as if, transfer, in either case, had been made at market value of such goods or services. In the present case the issue involved is regarding determination of the market value of electricity per unit so as to compute the income accrued to an assessee o....
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....the rates at which electricity was supplied by GEB to industrial consumers i.e market rate of power. The appellant has also submitted that price charged by GEB from various industrial consumers, being levied without any restriction/condition could reasonably be said to be true reflective of the market price of electricity. As per the appellant, the sub-section 8 of section 80IA of the Act seek to provide that the profit of the eligible business should be computed on the basis of inter unit transfer of goods and services at the price such goods and services at the price such goods would ordinarily fetch on sale in the open market. Hence, the appellant has submitted that Ld. A.O taking the value of electricity at 3.37 which is not as per provision of the Act and hence needs to be deleted. The appellant has relied upon various case law to canvass the point that legally the market rate adopted by the appellant to calculate the value of deduction under section 80IA of the Act is justified and as per mandate of the law. I have gone through the assessment order passed by the Assessing Officer and detailed submission made by the appellant. The only issue for decision is r....
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....s industrial units. However, the captive power plants of the assessee could sell or supply the surplus electricity (after supplying electricity to its industrial units) to the State Electricity Board only and not to any other authority or person. Therefore, the surplus electricity had to be compulsorily supplied by the assessee to the State Electricity Board and in terms of Sections 43 and 43A of the 1948 Act, a contract was entered into between the assessee and the State Electricity Board for supply of the surplus electricity by the former to the latter. The price for supply of such electricity by the assessee to the State Electricity Board was fixed at Rs. 2.32 per unit as per the contract. This price is, therefore, a contracted price. Further, there was no room or any elbow space for negotiation on the part of the assessee. Under the statutory regime in place, the assessee had no other alternative but to sell or supply the surplus electricity to the State Electricity Board. Being in a dominant position, the State Electricity Board could fix the price to which the assessee really had little or no scope to either oppose or negotiate. Therefore, it is evident that determination of ....
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.... of the assessee is allowed. Ground No. 18 : The ground relates to Excess Levy of Interest under section 234D of the Income-tax Act, 1961. The assessee has contended that the interest u/s. 234D of the Act has been erroneously charged. The charging of interest under section 234D is mandatory in consequence to the assessment framed. However, the A.O is directed to calculate interest based on the decision arrived in this case. Hence, this ground of appeal is allowed for statistical purpose. Ground No. 19 : This ground relates to computation of interest u/s. 115 of the Income-tax Act, 1961. The appellant submitted that interest amounting to Rs. 6,58,410/- has been erroneously charged upon the appellant under section 115P of the Act on account of late deposit of Dividend Distribution Tax ('DDT'). It has been submitted by the appellant that in the income tax return filed on 26.11.2016, the date of declaration of dividend had been inadvertently mentioned as 30.06.2015 instead of 22.07.2015 due to a clerical error. Consequently, interest of Rs. 8,50,182 had been charged under section 115P of the Act on account of delay in deposit of DDT liability....