TaxTMI 
TaxTMI 
2023 (5) TMI 1507
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....respect of the Rail Systems and Power Plants transferred from Samruddhi Cement Limited to the appellant Company pursuant to the Scheme of amalgamation, the deduction is not allowable as per the provisions of section 80IA(12A) of the Income Tax Act, 1961 (IT Act). 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the addition on account of notional commission chargeable in respect of the Corporate Guarantee provided by the appellant Company to the bankers for providing loan to the Associated Enterprises of the appellant Company. He erred in confirming the notional charge at the rate of 0.5% of total corporate guarantee provided disregarding the fact that the assessee has not charged and could not have charged any commission on the corporate guarantee so provided. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in denying the claim of investment allowance amounting to Rs 64,77,21,366/- u/s 32AC in respect of capital work in progress of plant and machinery which were installed during the financial year 2014-15 5 On the facts and in the circumstances of the....
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.... Further, he brought to our notice following key findings of the Tribunal: - ● Deduction under section 80-IA of the Act is available to an undertaking, or an enterprise and not to the owner ● Sub-section (12) is a disabling provision and the insertion of sub-section (12A) merely negates the effect of such disabling provision ● Deduction under section 80-IA is allowable to the appellant as per the Scheme of Amalgamation approved by the High Court ● Sub-section (12) only made explicit that was implicit - Withdrawal of sub- section (12) by sub-section (12A) does not take away what is implicit ● CBDT Circular 3 of 2008 not binding, since it enlarges scope beyond what is provided in sub-section (12A). Further, the requirement stated in the said Circular are fulfilled in the case of the appellant" 8. On the other hand, Ld. DR relied on the orders of the lower authorities. 9. Considered the rival submissions and material placed on record, we observe that similar issue was considered and adjudicated by the Coordinate Bench in assessee's own case vide order dated 14.12.2021 in ITA. Nos. 1412, 1413, 2461 & 2....
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.... Profit of Rail System at Shambhupura in the State of Rajasthan 29,66,96,837/- IV Profit of Rail System at Dodaballapur in the State of Karnataka 9,23,80,840/- Total 82,61,81,708/- vi. Similarly, the assessee Company also claimed deduction of Rs.18,91,43,054/- u/s 80IA of the IT Act (as tabulated below) with respect to its power generating eligible undertakings which were acquired from SCL: Sr. No. Undertakings Amount (Rs.) I Thermal Power Plant at Reddipallayam in the State of Tamil Nadu 5,21,57,858/- II Thermal Power Plant at Malkhed in the State of Karnataka 11,97,45,646/- III Thermal Power Plant at Rawan in the State of Chattisgarh 1,72,39,550/- Total 18,91,43,054/- 25. The AO disallowed the claim of the assessee in respect of these Rail systems and power undertakings inherited by the assessee from SCL under the scheme of amalgamation, invoking the provisions of sub-section (12A) of Section 80-IA. In this regard, the AO relied on the Memorandum explaining the provisions of Finance Bill, 2007 which reads as under. "The existing provisions of section 80-IA provide for ....
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....tion (1) and submitted that the benefit of tax holiday, as envisaged u/s.80IA, is attached to an 'undertaking' and not to the 'owner'. Accordingly, it was emphasized that the change in ownership has no impact on the availability of deduction in the hands of the successor company. References were made to various decisions discussing availability of similar claims u/s. 80] / Section 84 of the 1922 Act etc. to draw home his point that the benefit of tax holiday remains with the undertaking although the ownership of the same may change hands. We will deal with these references subsequently in this order. 29. According to the Ld AO as well as Ld CIT(A), sub-section (12) of section 80IA of the IT Act, which was inserted by the Finance Act, 1999, with effect from 1st April 2000 was an enabling provision and facilitated the successor to claim the benefit of the tax holiday in the year of reorganisation and thereafter. The Ld AR of the assessee on the other hand, argued that sub-section (12) merely made it explicit what was implicit u/s. 80IA of the IT Act. It, however, made subtle change by providing that in the year of reorganisation, the deduction, which is attac....
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....4. According to the Ld AR of the assessee, the intent of introduction of sub-section (12A) was never to deny the deduction to the eligible undertakings but it merely restored the position of law as it was before insertion of sub-section (12) in section 80IA. This is clear from the wordings used in sub-section (12A) viz: the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31-3-2007 35. The Ld AR further submitted that sub-section (12) was in fact a disabling provision as it disabled the predecessor entity from claiming deduction in the year of amalgamation on a pro-rata basis. Therefore, sub- section (12A) merely negates the effect of such disabling provision and it does not restrict the eligibility of an undertaking to claim deduction under section 80IA of the IT Act which is granted under sub-section (1) of section 80IA of the IT Act. 36. The Ld AR also submitted that the Scheme of amalgamation under which the undertakings have been transferred to the assessee clearly provided that the associated benefits/ available deductions including tax holiday claims u/s.80IA w....
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....sk had reduced. 39. In the rejoinder, the Ld AR of the assessee submitted that the interpretation of CBDT is contrary to the plain reading of sub-section (12) or (12A), as also the explanatory memorandum to the Finance Bill, 1999 by which sub-section (12) was introduced in the statute and Finance Bill, 2007 by which sub-section (12A) was introduced in the statute. It was further argued that Circulars issued by CBDT are not binding either on the assessee or on the Courts/ Tribunals for the purpose of interpretation of law especially when the language used in the statute is plain and unambiguous. Reliance was placed in this regard on the Supreme Court Ruling in the case of Ratan Melting & Wire Industries (Civil Appeal No.4022 of 1999). 40. Even otherwise, the Ld AR of the assessee was of the view that, in the present case such deduction cannot be denied to the assessee since the assessee has considered the fair value of the undertakings for the purpose of amalgamation and has paid appropriate consideration by way of issue of shares, to the shareholders of SCL. Thus, the assessee has assumed full entrepreneurial risk of investment and operations of the undertakings s....
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....an 'enterprise' or an 'undertaking' and not to the owner thereof. There is no dispute on this aspect that the deduction u/s.80IA is attached to an enterprise or an undertaking. 46. The Hon'ble Madras High Court in the case of Madras Machine Tools Manufacturers Ltd. vs. CIT [1975] 98 ITR 119 while dealing with the question as to whether applicability of deduction under section 84 has to be with respect to a particular undertaking or to the company in general, held as under: "15. ... It is not the manufacture or production of articles by the company but the manufacture or production by the undertaking, which is different from the company, that is contemplated under the sub-section. A company may own or run many undertakings some of which may be entitled to the benefit of Section 84 and others may not be so entitled. It is not, therefore, possible to equate the undertaking with the company. When a company owns more than one undertaking the application, of Section 84 has to be with respect to the particular undertaking and not to the company in general ... " 47. The Hon'ble Delhi High Court in the case of CIT vs. Tata Communications In....
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....ursuant to amalgamation or demerger, was inserted in section 80IA by the Finance Act, 1999, with effect from 1st April 2000 and read as follows: "(12) Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger - (a) no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, as far as may be, apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place". 51. As per sub-section (12) of section 80IA of the IT Act: i. If an undertaking entitled to the deduction, owned by any Indian company, ii. is transferred before expiry of the specified period, iii. the transfer is to another Indian company, pursuant to amalgamation or demerger, then: iv. in the year of amalgamation or ....
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....ionalise the existing provisions of amalgamation, a number of amendments have been proposed on the basis of the following broad principles: (a) demergers should be tax neutral and should not attract any additional liability to tax. (b) in demergers, tax benefits and concessions are available to any undertaking should be available to the said undertaking on its transfer to the resulting company. ... . With a view to neutralise the tax effects, the Finance Act, 1999, inter alia, carried out amendments in sections 35A, 35AB, 35ABB, 35D, 35E of the IT Act. 54. The amendment was subsequently explained in more detail by the CBDT in Circular No. 779 dated 14-09-1999 under the head Business re- organization - Extensive amendments in relation to amalgamation demerger and slump sale. Relevant portion of the Circular is extracted below: "56.1 The business and economic environment of the country has thrown up the need for simplification and rationalisation of laws relating to business re-organization, for rationalisation of the production system and better utilization of resources which have become necessary with a view to enabling the Indi....
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....be limited to the transfer of business as a going concern and not to the transfer of specific assets which would amount to sale of assets and not a business reorganization. The Act has substituted section 80I-A by sections 80-IA and 80-IB of the Income-tax Act. The substituted section 80-IA, inter alia, in sub-section (12) provides that where any undertaking of an Indian company entitled to the deduction under this section is transferred to another Indian company in a scheme of amalgamation or demerger before the expiry of the specified period, the deduction shall be availed by the amalgamated company or the resulting company. Identical provision has been enacted in sub-section (12) of section 80-IB in regard to deduction available under that section in the case of an amalgamation or demerger" (emphasis supplied) 55. The memorandum explains that the purpose of introducing sub-section (12) was to make the business reorganisations such as amalgamation and demerger tax neutral. A question, therefore, arises is to understand what was the position prior to insertion of sub-section (12)? In other words, prior of insertion of sub-section (12), whether the taxpay....
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.... Income-tax Act, which has been statutorily conferred on the company, if such companies fulfil the conditions stipulated therein. Hence, we are of the view that the order of the Tribunal granting the benefit of sections 80HH and 80-I to the assessee-company cannot be stated to be illegal or against the statutory provisions. A similar view has been taken by the Bombay High Court in the case of CIT v. Dandeli Ferro Alloys P. Ltd. [1995] ITR 1, in which the Bombay High Court held that the facts on record clearly established that the amalgamated company was already incorporated and formed and had come into existence on March, 1973 and had become an industrial undertaking carrying on industrial and commercial activities on and from June 20,1973, i.e., prior to the amalgamation of the amalgamating company with the amalgamated company, which had become effective from October 31,1973. The amalgamated company was not formed by the splitting up, or the reconstruction, of a business already in existence. Therefore, the Tribunal was right in holding that the assessee company was entitled to relief under sections 80J and 80HH of the Act". 58. The CBDT had also accepted the abo....
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....t in the case of Mega Packages [2011] 203 Taxman 236 while considering the eligibility of deduction under section 80-IC on conversion of proprietorship concern into a partnership firm. The Hon'ble High Court observed as under: "9. Adverting to the alternate reason adopted by the Assessing Officer to deny the benefit of Section 80-IC the Act for the remaining period, suffice is to notice that the formation of the partnership from proprietorship business could not be held to be as a result of splitting or reconstruction of a business already in existence which could justify denying benefit by virtue of Section 80-IC(4)(i) of the Act. The Tribunal rejected the said contention as under :- 12. The said circular was issued with reference to Section 84 which was replaced by section 80J w.e.f. 1.4.1968. The said section 80] has been omitted by Finance Act No.2 of 1996 w.e.f. 1.4.1989. However, the provisions of section 84/80J and 80IC are similar in the context of benefit of deduction to be allowed to an undertaking. Reading the provisions of section 84, 80J and 80IC of the Income Tax Act, we find that the provisions of the aforesaid sections are similar and applying ....
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....mated company) is entitled to relief under section 80] for the balance of the period of 5 years in terms of section 80J." 63. The crux of all the above decisions fortify that prior to insertion of sub- section (12) in section 80IA / 80IAB of the IT Act, the deduction was allowed to the successor entity to which the undertaking was transferred. We are, therefore, not persuaded to accept the contention of the Revenue that sub- section (12) of section 80IA was an enabling provisions which entitled the successor entity to claim the benefit relating to undertaking transferred in the scheme of amalgamation /demerger. The deduction was available to the successor even prior to insertion of sub-section (12) and pursuant to the provisions of sub-section (1) r.w.s. sub-section (4) of section 80IA of the IT Act. 64. We are rather inclined to accept the proposition put forth by the Ld AR of the assessee that sub-section (12) was in the nature of disabling provision in so far as it disentitled the amalgamating / demerged entity to claim any deduction in the year of amalgamation/ demerger. 65. Sub-section (12) of section 80IA provided that: i. In case of the am....
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.... (12) cannot withdraw what was implicit in the statue. 70. It is a settled principle that when law makes something explicit, which is implicit in the provisions, the amendment or deletion of the explicit provision does not take away what is implicitly provided. The Hon'ble Delhi High Courtin case of CIT vs. Jindal Exports Ltd. (314 ITR 137) which is approved by the Hon'ble Supreme Court in CIT vs. Tulsyan NEC Ltd. (330 ITR 226) held that the amendment to explanation under section 234B and 234C of the Act was clarificatory since even for the years prior to the amendment the assessee was entitled to get credit of MAT paid under section 115JAA of the Act by virtue of section 140A of the Act. The Hon'ble High Court observed as under: "42. So, the amendment merely clarifies and makes explicit what was already implicit. Even if the amendment had not been introduced, the expression "such tax" as appearing in section 140A would have reference to the tax payable on the basis of the return minus, inter alia, the MAT credit claimed to be set off in accordance with the provisions of section 115JAA of the said Act." 71. Similar issue had arisen before the ....
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.... be spread over six years beginning from the year of payment. Sub-section (3) was inserted by Finance Act 1999 which read as follows: "Where there is a transfer of an undertaking under a scheme of amalgamation or demerger and the amalgamating or the demerged company is entitled to a deduction under this section, then, the amalgamated company or the resulting company, as the case may be, shall be entitled to claim deduction under this section in respect of such undertaking to the same extent and in respect of the residual period as it would have been allowable to the amalgamating company or the demerged company, as the case may be, had such amalgamation or demerger not taken place". (Emphasis supplied) 74. The Notes on clauses (to the Finance Bill, 1999) explains the amendment as follows: "Clause 17 seeks to amend section 35 AB of the Income tax Act relating to allowance of expenditure on know-how. Under the existing provisions, any lump sum consideration paid for acquiring know-how is allowed in six years commencing from the previous year in which the expenditure incurred, at the rate of one sixth of the amount. It is proposed to insert ....
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.... laying and operating cross-country natural gas distribution network, including gas pipelines and storage facilities being an integral part of the network, etc. Sub-section (12) of the said section 80-IA, inter-alia, provides that where any undertaking of an Indian company which is entitled to the deduction under the said section is transferred before the expiry of the period specified therein, to another Indian company in a scheme of amalgamation or demerger, the provisions of the said section 80-IA shall apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. It is proposed to insert a new sub-section (12A) in section 80-IA so as to provide that the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31.03.2007." (emphasis supplied) 79. The language used in sub-section (12A) simply states that provisions of sub-section (12) shall not apply to undertakings or enterprise transferred in the scheme of amalgamation or demerger after 31.03.2....
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....interpretation. 83. Looking from another angle, since the provisions of sub-section (12) were disabling in nature, as it disentitled an amalgamating company or a demerged company from claiming deduction in the year of amalgamation or demerger, the insertion of sub-section (12A) merely negated the effect of sub-section (12) and cured the disability created under sub-section (12) of section 80IA of the IT Act. Further, it is also worth noting that the language used in sub-section (12) had another defect. It can be explained with the help of an example: Suppose an entity had 3 eligible undertaking on which tax holiday was claimed and one out of the three was demerged to another entity. By virtue of clause (a) of sub-section (12) which specifies that no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes places, even the other two undertakings which remains with the demerged company could be denied the benefit of tax holiday when only one undertaking is determined. We are, therefore, of the view that the legislature, in all its wisdom, has neutralised the disability e....
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.... He accordingly submitted that the amendment was brought in by introducing sub-section (12A) to disallow such benefit in the hands of someone who has not taken these risks and had only acquired the eligible undertaking much later when the risk had reduced. 86. The CBDT in this circular has tried to clarify something which is nowhere stated either in the language of newly inserted sub-section (12A) or in the Notes to Clause or explanatory memorandum to Finance Bill 2007. Sub-section (12A) simply prescribes that from a particular date the provisions of sub-section (12) shall not apply to the undertaking which are transferred under a scheme of amalgamation or demerger. Further, as we have already held, sub-section (12) of section 80IA did not confer any new rights to the tax payer and hence its non-applicability cannot be construed to mean withdrawal of a right which is conferred under separate provisions of Section 80IA i.e. sub-section (1) r.w.s. (4) of section 80IA of the IT Act. 87. If the intention of tax holiday under section 80IA was to provide incentive to only original investor, the legislature would have never inserted sub-section (12) in the statute. At le....
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....clarification or amendment by the Legislature or by Ordinance is not incorporated in the statute, no notification or circular of the Department can override the statutory provisions of the Act. It would not be permissible to read words into the statute, which prima facie is very plain and straight. 91. Even if one has to assume that the real intent of insertion of sub- section 12(A) was to accord incentive to those who had made initial investment and taken entrepreneurial risk, then also deduction under section 80IA cannot be denied to the successor taxpayer entities since successor entities would pay due and fair consideration for the value of the undertakings taken over, which includes the price for assumption of full risk of investment and operations. In other words, the entrepreneurial risk of the undertaking would also travel with the undertaking and the new owner of the undertaking would also bear the same risk as the original investor. The original investor will recover the price from the new investor in respect of the higher risk which he would have assumed at the initial stage. 92. Further, even if this intention is considered as relevant, such claim cann....
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....ts order has explicitly conferred upon the assessee, being the amalgamated company, a right to claim deduction under section 80-IA in respect of the eligible undertakings for the residual period. The relevant extract of the scheme is reproduced below for reference: " ... all the rights and benefits that have accrued or which may accrue to the Transferor Company, whether on, before or after the Appointed Date, including income-tax benefits and exemptions including the right to deduction under Section 80-IA of the Income-tax Act, 1961 (or any statutory modification or re-enactment thereof for the time being in force), shall, under the provisions of section 391 to 394 of Act and all other applicable provisions, if any, without any further act, instrument or deed, cost or charge be and stand transferred to and vest in and/ or deemed to be transferred to and vested in and be available to the Transferee Company so as to become licenses, permits, entitlements, quotas, approvals, permissions, registrations, incentives, sales tax deferrals, exemptions and benefits, subsidies, concessions, grants, rights, claims, leases, mining leases, prospecting licenses, tenancy rights, liberties....
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....terial placed on record, we observe that similar issue was considered and adjudicated by the Coordinate Bench in assessee's own case in ITA. Nos. 1412, 1413, 2461 & 2462/Mum/2018 for the A.Y.2012-13, 2011-12, 2013-14 and 2014-15 respectively and decided the issue in favour of the assessee. While holding so, the Coordinate Bench held as under: "203 Ground nos.6 to 11 of the appeal relate to addition made by the AO regarding Corporate Guarantee commission in pursuant to the order passed by the TPO. 204 Unlike AY 2011-12 and AY 2012-13, the order passed by the TPO is based on the reference made by the AO subsequent to the proceedings initiated u/s. 153C r.w.s. 153A of the IT Act. Accordingly, the TPO order passed is pursuant to the valid proceedings. We are, therefore, adjudicating the grounds raised by the Revenue on this issue on merits of the matter. 205 During financial year 2010-11 (AY 2011-12), the assessee had acquired stakes in Star Cement LLC., Middle East, through its wholly owned subsidiary in Dubai, viz., UltraTech Cement Middle East Investment Limited (UCMEIL). For the purpose of overseas acquisition, the assessee Company had given corporate....
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.... warranted. 212 We have taken into consideration the contentions advanced by the Ld counsels for both the parties, perused the orders of the lower authorities and the material available on record, and also taken note of the judicial pronouncements pressed into service by them in order to drive home their respective contentions in context of the aforesaid issue in question. As far as the contention of the AR that provision of corporate guarantee is not an international transaction, we are not convinced with it. A reading of Explanation- 1(c) of section 92B of the Act, makes it clear that the provision of any kind of guarantee will come within the ambit of international transaction under section 92B of the Act. 213 Further, this issue also stands covered by the decision of the Hon'ble jurisdictional Bombay High Court's judgment in the case of CIT vs Everest Kento Cylinders Ltd [(2015) 58 taxmann.com 152 (Bom)], wherein the High Court had upheld determination of arm's length price at 0.5% by observing as follows: "In the matter of guarantee commission, the adjustment made by the TPO were based on instances restricted to the commercial banks provi....
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....ue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee's own case for the A.Y. 2011-12 to 2014-15, we allow the ground raised by the assessee. 15. With regard to Ground Nos. 4 which are in respect of disallowance of investment allowance u/s. 32AC, Ld. AR brought to our notice that similar grounds which assessee has raised before the Coordinate Bench in ITA.Nos. 1412, 1413, 2461 & 2462/Mum/2018 for the A.Y.2012-13, 2011-12, 2013-14 and 2014-15 respectively, and Coordinate Bench vide order dated 14.12.2021 has considered and adjudicated the issue in favour of the assessee and he brought to our notice Para No. 223 to 249 of the order. Copy of the order is placed on record. 16. On the other hand, Ld. DR relied on the orders of the lower authorities. 17. Considered the rival submissions and material placed on record, we observe that similar issue was considered and adjudicated by the Coordinate Bench in assessee's own case in ITA.Nos. 1412, 1413, 2461 & 2462/Mum/2018 for the A.Y.2012-13, 2011-12, 2013-14 and 2014-15 respectively and decided the issue in favour of the assessee. While holding so, th....
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....ssets which were eligible for depreciation at the rate of 100 per cent but installed and put to use for less than 180 days and hence claimed at 50%. The dispute therefore relates to only value of component of plant and machinery lying in capital work in progress as on 1st April 2013. 229. The learned AR submitted that assessee is entitled to deduction under section 32AC of the Act as: i. The term 'plant' has to be read in the manner in which it is generally understood and accordingly, a plant can be said to have been acquired on or after 1st April 2013 since it came into existence only after all the machinery and components were assembled and commissioned together. The plant was brought into existence from the components lying in CWIP only after 1st April 2013 when it was assembled and installed. Thus, according to the AR of the assessee, plants were acquired and installed after 1st April 2013. ii. The word "acquired and installed" has to be interpreted as "acquired or installed" since it is impossible to acquire and also install any plant or machinery valuing Rs.100 crores or more in a span of one year. Such a situation is not intended by the leg....
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....projects, I propose to introduce an investment allowance for new high value investments. A company investing Rs. 100 crore or more in plant and machinery during the period 1.4.2013 to 31.3.2015 will be entitled to deduct an investment allowance of 15 percent of the investment. This will be in addition to the current rates of depreciation. There will be enormous spill-over benefits to small and medium enterprises." Thus, the intention behind introduction of section 32AC and provide investment allowance was to attract new investment as well as to quicken the implementation of projects. 232 The explanation regarding introduction of this new section in the Memorandum explaining the provisions of the Finance Bill, 2013 was stated under the head "Measures to Promote Socio- Economic Growth" and the opening portion of the relevant clause of the Memorandum read as under: "Incentive for acquisition and installation of new plant or machinery by manufacturing company" In order to encourage substantial investment in plant and machinery, it is proposed to insert a new section 32AC in the income tax Act .... " [clause 5]. 233 It is also worth noting th....
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....2AC of the Act shall be allowed if the company on or after 1st April, 2014 invests more than Rs.25 crore in plant and machinery in a previous year. It is also proposed that the assessee who is eligible to claim deduction under the existing combined threshold limit of Rs.100 crores for investment made in previous years 2013-14 and 2014-15 shall continue to be eligible to claim deduction under the existing provisions contained in sub-section (1) of section 32AC even if its investment in the year 2014-15 is below the proposed new threshold limit of investment of Rs. 25 crores during the previous year. [Clause 11]" 235 The Finance Minister's Speech and the Explanatory Memorandum, at the time of introduction of the incentive in 2013 as well as while extending the benefit w.e.f. 1 April, 2015, stressed on the term "investment" in new "plant" or "machinery". The intention was to give impetus to the manufacturing sector making substantial investment including in the stalled projects. 236 The term 'acquire' used in section 32AC has to be read in conjunction with the term 'assets', i.e. `plant' or 'machinery', and not in isolation. A new `pla....
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....condition of "acquisition" and "installation" in the same year. Therefore, such proviso being curative in nature must apply retrospectively. 239 An analogy can also be drawn from the second proviso to section 32(1) which restricts the claim of depreciation to 50% in case of assets "acquired during the previous year" and "put to use" for a period of less than 180 days in that previous year. The provisions of second proviso are reproduced as under: "Provided further that where an asset referred to in clause (i) or clause (ii) or clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be". 240 For the purpose of second proviso to section 32, the plant is considered as "acquired" only after all the machines and components are ass....
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....llowing AS. Therefore, in our opinion, assessee was entitled to claim additional depreciation @10%." 242 Again, the Coordinate Bench of this Tribunal in the case of JCIT vs. Lotus Energy (India) Ltd [2016] 68 taxmann.com 364 upheld the view of the taxpayer to allow additional depreciation in the year of installation. It was observed as under: "10. We have heard the rival contentions and also perused the material available on record. We have observed that Section 32(1)(iia) of the Act was amended by Finance Act, 2005. It is stated in the Memorandum to the Finance Bill 2005 that the provisions are amended in order to encourage new investment, the initial depreciation on new machinery and plant was proposed to be increased to 20 per cent from the existing level of 15 percent and consequently the initial depreciation will be available to all new plant and machineries except those referred to in the proviso to the clause (iia) of section 32 of the Act. The requirement of creating a minimum increase of 10 percent in installed capacity for availing the initial depreciation is also proposed to be eliminated. We have also observed that section 32(1)(iia) of the Act stipula....
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....common objective for setting up new industrial unit of coke production plant and finally concluded with the completion of installation of the said new plant and machineries in April 2005 and commencement of the commercial production of LAM coke in April 2005 i.e. financial year 2005-06 when new coke production plant became operational. Once a new industrial project is initiated by an enterprise to be set up, then the entire composite plant and machineries which are acquired and installed are an integrated activities as the said plant and machineries can only function when they are integrated together as per technical requirements and specifications which can there-after lead to successful commissioning of the project to produce or manufacture the desired products/articles. The plant and machineries so acquired cannot be visualized and seen in the individual and itemized context as they are in-capable of production or manufacture of desired products/articles unless these itemized plant and machineries are integrated together as per technical requirements and specifications to achieve the manufacturing or production of desired products. Since, the assessee company was engaged in sett....
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....ar 2005- 06 along with those new plant and machineries which were acquired in financial year 2005-06 and the assessee company has not claimed any depreciation in the financial year 2004-05 on these new plant and machineries so acquired in financial year 2004- 05. Thus, acquisition of the entire set of new machineries and plant whether acquired prior to or post 31-03-2005 was an integrated event in the chain of activity undertaken with common and sole goal of setting up new coke production plant by the assessee company which process got completed in April 2005 i.e. financial year 2005-06 with the completion of installation of the entire new machineries and plant as composite, so acquired by the assessee company whether pre or post 31-03-2005 with the commencement of the production of coke production plant becoming operational in April 2005. We find that the conditions as stipulated u/s 32(1)(iia) of the Act are duly complied with by the assessee company and the assessee company cannot be denied the benefit of the claim of additional depreciation merely because new plant and machinery was acquired partly prior to 31-3-2005 and partly post 31-03-2005 as the entire activity of acquisit....
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....Gujarat High Court and the Hon'ble Bench of Coordinate Bench of this Tribunal have consistently taken a view that the twin condition of "acquired and installed" have to be read in the manner to give it a meaningful, reasonable and purposive interpretation. The twin condition can be said to have been satisfied on the day these huge plant and machineries are installed and become useful for production. Since, the language of section 32AC is similar to the language used in section 32(1)(iia), the ratio laid down in the above cases squarely applies to the facts of the instant case in the context of section 32AC. 245 The AR of the assessee also contended that if a strict interpretation is adopted for the word "and" used in the term "acquired and installed", to understand it in its normal grammatical sense, i.e. a conjunctive, then there may be a large number of instances where the assessee, even after making required investment in plant and machinery, would not be able to claim deduction under section 32AC of the Act. The assessee may invest in designs, plans, drawings, bottles, books, etc. which are considered as "plant" for the purpose of section 32 of the Act. If the inte....
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....re, inclined to accept the contention of the AR of the assessee that the words "acquired and installed" have to be read as "acquired or installed" to give effect to the intention of the legislature. 248 We refer to the decision in the case of Jupiter Radios vs. DCIT [2017] 88 taxmann.com 93 (Delhi) relied upon by the DR during the course of hearing. We have gone through the case but find no relevance to the issue before us. The Hon'ble Delhi High Court in that case was concerned with the issue relating to availability of development rebate/ allowance under section 32A/ 34(3) the language in which are not pari materia with the provisions of section 32AC of the Act. Secondly, the Court was not at all concerned with the interpretation of the words "acquired and installed" and the question before the High Court was whether the partnership firm can continue to claim deduction under section 34A/ 34(3) of the Act if the plant and machinery is given to a partner on his retirement from the firm during the statutory holding period of 8 years. Therefore, the aforesaid decision is not relevant to decide the issued involved in the present appeal. 249 In view of the above w....
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.... by way of capital assets has been given as a part of this policy. Since, these payments were admittedly capital in nature the assessee claims deduction in respect thereof by way of depreciation in its return of income. To complete the narration of facts it is brought to your attention that revenue expenditure incurred under the CSR policy has been suo moto disallowed based on Explanation 2 below section 37(1) of the Income-tax Act (the Act). 4. The AO and the CIT(A) have relied upon Explanation 2 below section 37(1) of the Act as reflecting the legislative intent for denying the claim for deduction by way of depreciation on the CSR assets. Apart therefrom, it is also alleged that use of the assets by the assessee for the purposes of its business has not been shown. In this regard your attention is invited to paragraph 5.1 at pages 2- 3 of the assessment order and paragraphs 2021 at pages 17-18 of the CIT(A)'s order. 5. The Assessee's submissions in respect of the above, each of which is in the alternative and without prejudice to any others is as stated hereafter :- a. Section 37(1) read with Explanation 2 thereof reads as under- "37 (l)....
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....sess the sale proceeds. The requirement in section 41(1) of the Act is that initially an allowance or deduction ought to have been allowed in respect of loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year the assessee has obtained either in cash or in any manner whatsoever any amount in respect of such loss or expenditure or some benefit in respect of such trading liability. There was no dispute that deduction earlier allowed could not be regarded as loss or trading liability. The Revenue's submission before the Court as per paragraph 10 at page 319 of the report was s ........... notwithstanding the deletion of section 41(2), since the assessee had obtained the benefit of depreciation in the earlier years as allowance or deduction in respect of expenditure incurred by it when it bought bottles and crates, on recoupment in the assessment years in question, such recoupment was liable to be taxed as deemed income under section 41 (l). " Rejecting this contention of the Revenue, the Court observed in paragraph 11 at pages 319-320 of the report "The entire controversy, therefore, stands resolved if one understands the meaning of....
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....; but is a statutory deduction on an asset which is otherwise eligible for deduction of depreciation. Section 40(a)(i) and (ia) of the Act provides for disallowance only in respect of expenditure, which is revenue in nature, therefore, the provision does not apply to a case of the assessee whose claim is for depreciation, which is not in the nature of expenditure but an allowance. The depreciation is not an outgoing expenditure and therefore, provisions of section 40(a)(i) and (ia) of the Act are not applicable. In the absence of any requirement of law for making deduction of tax out of expenditure, which has been capitalized and no amount was claimed as revenue expenditure, no disallowance under section 40(a)(i) and (ia) of the Act would be made. It is also pertinent to note that depreciation is a statutory deduction available to the assessee on a asset, which is wholly or partly owned by the assessee and used for business or profession. The depreciation is an allowance and not an expenditure, loss or trading liability. " (emphasis supplied). d. In the course of hearing of the present appeal, the Hon'ble Bench had raised an issue that depreciation would fall within th....
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....ed in the case of the same assessee as reported in 284 ITR 679. Apart from the benefit to the employees, it is also essential that the assessee maintains its goodwill in the local region, where its manufacturing facility exists for its smooth functioning. This gesture of supporting the schools and hospitals therefore is for the purposes of its business. In this regard reliance is further placed on judgment of the Hon' ble jurisdictional High Court in CIT v. Indian Rayon and Industries Ltd. 336 ITR 479 and PCIT v. Indian Oil Corporation Ltd. being Order dated 11.02.2019 in Income Tax Appeal No. 1765 of 2016 and the Madras High Court in CIT v. Madras Refineries Ltd.266 ITR 170. Based thereon, it is urged that the capital assets used to support the schools and the hospitals in the facts of the present case has been used for the purposes of its business." 20. On the other hand, Ld.DR relied on the order of the lower authorities. 21. Considered the rival submissions and material placed on record, we observe that the assessee has spent Rs.39.12 crores and Rs.3.31 crores under CSR obligation. The assessee claimed depreciation on the CSR capital expenditures during the year under....
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...., the plea that explanation 2 has no application to section 32, accordingly, rejected and the assessee has to explain how the capital expenditure incurred are utilized in the assessee's business. In absence of the same, the assessee has no right to claim depreciation. 22. In this regard, Ld AR made elaborate submissions and relied on the various case law. Let us discuss the same, the reliance on Nectar Beverage case (supra), we observe that the case was towards claim of 100% depreciation on the specified amount which is less than Rs.5000/- and subsequently written off, in subsequent recovery of certain amount, whether the provision section 41 can be invoked or not. For this purpose, the Hon'ble court held that it is an allowance and not a deduction. Further, there was no doubt about the usage of the assets within the business. In the present case, the issue is relating to CSR obligation and the assets are not meant to be used within the business. 22.1 Even in the decision Tally Solutions (supra), it was held that depreciation is a statutory deduction available to the assessee on an asset, which is wholly or partly owned by the assessee and used for business or profess....
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....11-12, 2013-14 and 2014-15 respectively and decided the issue in favour of the assessee. While holding so, the Coordinate Bench held as under: "118 Ground no.4 filed by the assessee is with respect to short grant of TDS / TCS credit claimed by the assessee on the basis of certificates available with the assessee. 119 The learned AR of the assessee submitted that it claimed credit towards TDS / TCS on the basis of entries appearing in Form 26AS and also on the basis of original TDS certificates available with them. The claim of credit was, however, restricted by the AO only to the extent of entries appearing in Form 26AS. The AR of the assessee also submitted that it produced copies of the TDS / TCS certificates before the AO on sample basis and was willing to furnish all the TDS / TCS certificates with respect to its claim made in the ROI. 120 It was further submitted that some of the TDS/ TCS certificate are issued in the name of amalgamating company (i.e. SCL/ Grasim Industries). Due to the amalgamation during the year under consideration, some of these TDS/ TCS certificates were issued by the parties in the name of the erstwhile entity. 121 It....
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.... the event, the payment had been made, credit of the same would be given to the assessee. 124 We also refer to the decision of Allahabad High Court in Civil Misc Writ Petition (Tax) No.657 of 2013 Rakesh Kumar Gupta Vs. Union of India and another, wherein the High Court has held that assessee cannot be denied credit for TDS on the ground of Form 26AS mismatch, since the mismatching is not attributable to the assessee and the fault solely lay with the deductor. 125 We also refer to the decision of Coordinate Bench of this Tribunal in the case of LSG Sky Chef (India) (P.) Ltd. [2014] 45 taxmann.com 256, wherein the taxpayer assessee had claimed credit in respect of TDS on the basis of TDS certificates available with it which were submitted to the AO. However, the AO denied credit of TDS to the extent of entries not appearing in Form 26AS. In this regard, the Hon'ble Tribunal held as under: "4.3 ... In our view, though Form 26AS (r/w r.31AB and ss. 203AA and 206C (5)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of....
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....heir ROI. This ground is remitted back to Ld AO and accordingly it is allowed for statistical purpose." 27. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee's own case for the A.Y. 2011-12 to 2014-15, accordingly, we direct the AO to verify the claim of the assessee and allow the claim of the assessee as per law after due verification. we allow the ground raised by the assessee for statistical purpose. 28. With regard to Ground Nos. 7 and 8 of grounds of appeal, Ld. AR of the assessee submitted that these grounds are not pressed, accordingly, these grounds are dismissed as not pressed. 29. In the result, appeal filed by the assessee is partly allowed. ITA. No. 931/Mum/2020 (A.Y. 2015-16) - Revenue Appeal 30. Revenue has raised following grounds in its appeal: - 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred, in holding that the sales tax exemption benefits of Rs. 223,20,87,969/ are capital receipts not liable to income tax". 2. "On the facts and in the circumstances of the case and in law, the Ld. CITIA) erred, in ....
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.... the case and in law, the Ld. CIT(A) erred, in allowing disallowance of Rs. 2,97,74,011/- on account of additional employee compensation cost under ESOP" 10. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred, in allowing disallowance of Rs. 2,97,74,011/- on account of additional employee compensation cost under ESOP without appreciating that in the case of the assessee, the issue is pending in the Hon'ble Bombay High Court for A. Y. 2008-09". 11. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the disallowance of Rs. 130,06,87,640/ on account of additional Spill Over Depreciation without appreciating the fact that r the Id. CIT(A) has disallowed the similar claim in assessee's own case for A.Y. 2011-12 and therefore, on this issue the Revenue has not accepted the decision of Id. CIT(A) in the assessee's own case and has filed an appeals before Hon'ble ITAT for A. Ys. 2013-14and 2014-15." 12. "On the facts and circumstances of the case and in law the Ld CIT(A) erred in allowing additional spill over depreciation of Rs. 130.06.87,640/ without appreciating that there is ....
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....Hon'ble ITAT Mumbai (34 Taxmann.com 19 (Mum Tribunal) dated 23.11.2012 and decision of Hon'ble Bombay High Court (ITA No. 1165 of 2013 dated 08.05.2015 for AY 2007-08) without appreciating certain important facts having bearing on the benchmarking such as: i. The quotation obtained by the Everest Kanto Cylinders Ltd, India (EKC India) was in respect of transaction of a guarantee obtained by the Indian entity having strong financials and asset base and not in respect of Everest Kento Dubai the foreign entity with weaker financial strength and thereby impacting the comparability in view of difference in credit rating of entities which admittedly form basis for guarantee rates/ quotations ii. and not appreciating the fact that the EKC rulings(34 Taxmann.com 19 (Mum Tribunal) dated 23.11.2012 and ITA No. 1165 of 2013 dated 08.05.2015 for AY 2007-08) ignored the fact that entity obtaining loan in foreign jurisdiction for which EKC India stood as guarantor had lower credit rating. iii. That the starting point for benchmarking in the case of EKC was obtaining of bank guarantee quote by the EKC India, which was used for benchmarking corporate guarantee an....
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....ntee to its AES, thereby exposing itself to a 'lending business' risk as well as the 'single customer' risk by not at all charging fee for such guarantee which the assessee would have done, had it stood guarantee to any third party in uncontrolled conditions as in section 92F(ii)? 22. "Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in failing to see that AE had no credit- worthiness and financial capacity to service its own loan and in such a situation assessee standing guarantee for the loan, it had to be remunerated at arm's length as per section 92F(u)? 23. "Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in failing to recognize the fact that the assessee has not charged any guarantee fees and also not discharged its onus and has not provided any comparable to benchmark the transaction and as a result, the TPO is forced to benchmark the transaction based on average bank guarantee rate with an appropriate downward adjustment as held by the ITAT in Glenmark Pharmaceuticals Ltd. in ITA No. 5031/Mumbai/2012? 24. "Whether on the facts and circumstances of the case....
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....see by not accepting the contention of the assessee that these are capital receipts. The CIT(A) confirmed the action of the AO by following the decision of the Tribunal in the case of Bajaj Auto Ltd., in 90 ITD 153. It was submitted that now this issue has been decided by the Special Bench in the case of Reliance Industries in 88 ITD 273. It was further submitted that the decision of the Special Bench has been affirmed by the Hon'ble Bombay High Court in appeal no.1299 of 2008 dated 15.4.2009. Copy of the order of the High Court was also filed. On the other hand, the ld DR placed reliance on the orders of the authorities blow 5. After considering the submissions and perusing the material on record, we find that the issue has been decided in favour of the assessee now. The AO has disallowed the claim of the assessee by treating the sales tax exemption benefit as revenue receipt against the claim of the assessee that it is non-taxable capital receipt. The CIT(A) also rejected the contention of the assessee and held that the AO is justified in rejecting the claim of the assessee as the decision of the Bajaj Auto is applicable on the facts of the present case and the decis....
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....1 of the assessee's cross objection is connected with this claim. 6. This issue has been subject matter of appeal in the assessee's own case from AY 2004-05 onwards and has been decided in favour of the assessee from AY 2004-05 onwards. The latest order on this issue is for AY 2010-11 in ITA No. 7614/Mum/2014 and 7631/Mum/2014 dated 5 April 2017 wherein the Coordinate bench has followed the decisions in earlier years and allowed the plea of the assessee. The Coordinate Bench held as under: "99. We have considered rival contentions and carefully gone through the orders of the authorities below as well as the order passed by the Tribunal in assessee's own case in the A.Y.2004-05 to 2006-07. We found that exactly similar issue was considered in detail by the Tribunal and after discussing various judicial pronouncements held that subsidy so received by the assessee was capital in nature, therefore not liable to tax as revenue receipt." "100. The facts and circumstances during the years under consideration i.e., 2009-10 & 2010-11 are exactly same, therefore, respectfully following the series of the order of the Tribunal in assessee's own case, ....
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....nearest available Railway Siding was at a distance of around 15 km from the plant. To facilitate inward and outward movement of goods, the assessee developed infrastructure facility of Rail System which was made operative in 1999. The assessee company duly entered into an agreement with the Railways, which is a part of Government of India. It was submitted that there was option available u/s 801A with the assessee to claim deduction for any of 10 consecutive years at its own choice. The assessee has opted for claiming the deduction from AY 04-05 onwards. It was submitted that the income offered for tax by the assessee includes income from Rail System and that certificate of M/s Sharp & Tannan, CA in Form No. 10CCB certifying the correctness of the aforesaid claim was duly submitted to the AO. 13.1 It was further submitted that the Rail System is a profit centre. The Rail System is engaged in business of providing transportation facility to the cement plant, profit of which is embedded in the profit of the assessee company as a whole. It was submitted that by developing this infrastructure facility, there has been saving in transportation cost and overall profits of the com....
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....he manufacturing activity. It was therefore, submitted that in view of the above, it is not correct to say that the assessee does not earn any profits from its Rail System merely because the Rail System is used for the captive purposes of the cement plant. 13.4 It was further submitted that the Board circular no.733 dated 3.1.1996 states that deduction u/s 80IA is applicable to an infrastructure facility meant for development of Rail System. It was contended that the AO has categorically stated in para 5.2.3 of his order that rail system was developed by L&T and was inherited by the assessee out of demerger. It was further submitted that in a demerger all the property of the undertaking is necessarily transferred by the demerged company to the resulting company, therefore, it is immaterial whether the Rail System was developed by L&T Ltd or by the resulting company i.e. the assessee. Further, it was submitted that the facility of Rail System consists of all that is required to carry on the ay activity in an organized and systematic manner. The activity of Rail System is real and substantial and it is carried on with said purpose, namely transportation of goods from one pla....
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....it deduction u/s 80IA in 10 years of his choice out of 15 years period. The provisions are very clear. Attention of the Bench was also drawn on the copy of the agreement placed at page 93 of the paper book. It was further submitted that all the conditions of sec 80IA have been fulfilled. Reliance was placed on the decision reported in 40 ITR 123. It was submitted that the CIT(A) has discussed the issue extensively and the findings of the Id CIT(A) remained uncontroverted. Therefore, the order of the CIT(A) is liable to be confirmed in this regard. 16. We have heard the rival submissions and considered them carefully. We have also perused the various material placed on record on which our attentions were drawn. After taking into consideration, we find that the CIT(A) has dealt with the aspect in detail. Contention raised before the CIT(A) on behalf of the assessee were not found incorrect or false. Conditions of sec. 80IA have been fulfilled by the assessee. Thereafter, the CIT(A) came to the conclusion that the assessee is eligible for deduction u/s 80IA. The findings of the Id CIT(A) are given in para 3.10 are as under: 3.10 After perusal of the facts of the case....
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.... is connected with this claim. 9. This issue was also subject matter of appeal in all the earlier years. The coordinate Bench of this tribunal in AY 2010-11 (ITA No. 7614/Mum/2014 and 7631/Mum/2014) has vide order dated 5.04.2017 analysed the issue in great detail and allowed the claim of the assessee. It has been held that the Rail undertakings are infrastructure facilities and eligible for deduction u/s.80IA of the Act. The Coordinate Bench held as under: "96. In view of the above discussions and respectfully following the order of the Tribunal in assessee's own case for A.Y. 2004-05 to 2008-09, we do not find any merit in the action of the Revenue authorities declining the claim of deduction under section 80IA(4). Accordingly, AO is directed to allow the deduction as claimed by the assessee with respect to its rail system. We direct accordingly." 10. Since the facts and circumstances with regard to this claim of the assessee remain same in this year, following the orders of Coordinate Bench in assessee's own case for earlier assessment years, especially for AY 2010-11, we uphold the action of the LD CIT(A) and dismiss this ground raised by the ....
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....y partly looking after the activity of investment in Mutual Fund - Rs. 2,24,880/- c) Payment made to consultant for outsourcing of a person for the working relating to investment activity - Rs. 1,45,810/- The Total disallowances computed by the assessee comes to - Rs. 5,21,731/- In addition to this, we find that as an abundant caution the assessee has also disallowed interest on whole of cash credit amounting to Rs. 44,93,553/-. Thus the total disallowance made by the assessee comes to Rs. 50,15,284/-. 32. In our considerate view, the disallowances made by the assessee in respect of other expenditure (other than interest) is reasonable and therefore no further disallowance is called for. The AO is directed to only verify the disallowability of proportionate interest after close verification of the cash flow chart. Ground No. 1 is partly allowed for statistical purpose." 47. Further in assessee own case in ITA. No. ITA. Nos. 1412, 1413, 2461 & 2462/Mum/2018 for the A.Y. 2012-13, 2011-12, 2013-14 and 2014-15 respectively vide order dated 14.12.2021 the Coordinate Bench observed as under: - "11. Ground no. 5 raised by the Revenue r....
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....eal filed by the Revenue vide order dated 14.02.2017 in ITA No.1401 of 2014 and observed as under: "No fault can be found with the impugned order of the Tribunal holding that the Assessing Officer should show fallacies in the computation of disallowance done by the respondent assessee. Thus, there is no reason to discard the disallowance done by the respondent assessee." "So far as the claim with regard to the disallowance made in respect of the other expenditure (other than interest which has been restored to the Assessing Officer to find out the source of funds in the investment made), the impugned order has held it to be reasonable and calling for no further disallowance. This finding of the Tribunal is a finding of fact and the same has not been shown to us to be perverse in any manner." 14. Further, the Hon'ble Supreme Court has also dismissed the Revenue's Special Leave Petition (SLP No. 19601/2018) vide order dated 9th July 2018 for AY 2008-09 and upheld the order of the Hon'ble Bombay High Court. 15. We have carefully gone through the order of the AO. He has not pointed out any errors in the amount of disallowance offered by t....
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....sation expenses of Rs. 2,44,55,470/- in respect of issue of stock option to the "Deferred Employees Compensation Expenses Account" by giving credit to the "Employees Stock Option Outstanding". The AO further noticed that out of the aforesaid expenses, amount of Rs. 77,27,928/- has been amortized for the year under consideration. The assessee was asked to explain as to why the above expenses may not be disallowed as the liability to incur the same has not been ascertained as well as the expenses incurred relates to issue of share capital. 34.1. The assessee filed a detailed reply vide letter dt. 27.12.2010 and explained that as per the Securities Exchange Board of India (SEBI) Guidelines on Employee Stock Option Scheme (ESOP), accounting in respect of options granted during any accounting period, the accounting value of the options shall be treated as another form of employee compensation in the financial statement of the company. It was further explained that SEBI Regulations mandate that the difference between the market prices and the price at which the option is exercised by the employees to be amortized on a straight line basis over the vesting period. The explanation ....
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....ra) after making necessary verification and after giving a reasonable opportunity of being heard to the assessee. Ground No. 2 is allowed for statistical purpose." 52. Further in assessee own case in ITA. No. ITA. Nos. 1412, 1413, 2461 & 2462/Mum/2018 for the A.Y.2012-13, 2011-12, 2013-14 and 2014-15 respectively vide order dated 14.12.2021 the Coordinate Bench observed as under: - "265 Ground no. 7 and 8 of the appeal relate to claim of expenses on account of Employee Stock Option Scheme. Ground nos.5 and 6 of the assessee's cross objection is connected with this claim 266 This issue has been subject matter of appeal in assessee's own case for AY 2008-09. The Tribunal in AY 2008-09 had remanded back the issue to the AO with a limited direction to allow the appeal if the facts of the assessee matched with the facts in the case of Biocon Ltd. [251 ITR (Trib.) 602]. The relevant para of the Hon'ble Tribunal order is reproduced hereunder: "36. .... In our considerate view, the allowability of the claim of the assessee has to be considered afresh in the light of the findings of the Special Bench (supra). We therefore restore this issue back to ....
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.... 32(1)(iia) of the IT Act in respect to assets installed during the FY 2009-10 (i.e. AY 2010-11) and are used for a period less than 180 days in that year (spill over depreciation). 99. The Ld CIT(A) upheld the action of the AO and has held as under: "It can be seen that there is no explicit provision like section 32(2) to deal with depreciation that cannot be claimed due to statutory restriction. The restriction to 10 % (one half of 20 %) arose as a result of not using the asset on which additional depreciation is claimed more than 180 days. What has not been claimed gets absorbed to closing WDV and for next year depreciation is claimed on the opening WDV. There is no provision in law to cull out a specific portion out of opening WDV and claim the same in the next year in a manner not prescribed by law. Whatever legal arguments are given, in absence of specific provision in law, the claim is inadmissible. From the submission made before me citing judicial decisions, it is not clear whether the Courts/ITAT has ordered allowing 10% of preceding years depreciation not claimed + depreciation on basis of opening WDV or depreciation after including the spill over depre....
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.... granted to the assessee, the law cannot be read in a manner to make such benefit void merely because it is not explicitly provided. 104. The Division Bench of the Madras High Court in case of CIT vs T. P. Textiles Pvt. Ltd. [394 ITR 483], took note of the amendment vide third proviso to clause (ii) of sub-section 1 of Section 32 of the Act and observed as under: "10.1 :- The plain language of section 32(1)(iia) read along with relevant proviso would have us come to the conclusion that, there is no limitation in the assessee claiming the balance 10 per cent of additional depreciation in the succeeding assessment year. 10.2 :- As a matter of fact, with effect from April 1, 2016, the ambiguity, if any, in this regard, in the mind of the Assessing Officer, stands removed by virtue of the Legislature, incorporating in the Statute, the necessary clarificatory amendment. 10.3 ............................... 11 :- We may only indicate that during the course of the arguments, our attention was drawn to the "Memorandum explaining the provisions in Finance Bill, 2015" whereby, the aforementioned amendment was brought about. 11.1 :- The re....
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....the asset was purchased and put to use for less than 180 days. The Hon'ble Bombay High Court also relied on the decision rendered by the Karnataka High Court in Rittal India Pvt. Ltd. (380 ITR 423) and Madras High Court ruling in T.P. Textiles Pvt. Ltd. (supra), to hold that amendment made vide insertion of third proviso to Sec.32(1)(ii) w.e.f. April 1, 2016 (which allows claim in succeeding year), is clarificatory in nature and would apply to all pending cases. 106. We also find that the Coordinate Bench of this Tribunal in the case of Grasim Bhiwani Textiles Limited vs ACIT (ITA 790 & 791/Mum/2014), has also allowed the claim of spill over depreciation observing as under: "6. The issue under consideration is also squarely covered by the order of coordinated bench in the case SIL Investment Ltd., 73 DTR 0233, wherein it was held that additional depreciation, which was restricted in the year of purchase to the extent of 50% on the plea of machinery having been put to use for a period of less than 180 days, the balance of additional depreciation is required to be allowed in the succeeding year. In view of the above, we do not find any merit for disallowing asse....
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.... of the IT Act. The AO disallowed the claim to the extent of Rs.7,50,139 on the ground that DSIR has not approved the said expenditure in a report submitted by it to the tax officer in Form 3CL. The LD CIT(A) confirmed the above disallowance. 110. The AR of the assessee submitted that as per section 35(2AB) of the IT Act, the DSIR is only empowered to approve the R&D facility. For the year under consideration there was no provision mandating the DSIR to approve the expenditure. It was further submitted that once the R & D facility is approved by the prescribed authority, i.e. DSIR by issuing Form No.3CM, the expenses incurred by the assessee have to be allowed u/s 35(2AB) of the IT Act. It was also submitted that Rule 6(7A) of the Income Tax Rules, 1962 was amended much later to provide that DSIR shall furnish a report in Form 3CL quantifying the expenditure allowable on in-house R&D facility. 111. The DR, on the other hand, apart from relying on the order of the lower authorities, submitted that the amendment to Rule 6(7A) of the IT Rules by Finance Act, 2016 with effect from 01.07.2016 is only procedural and the same is applicable to the relevant assessment year....
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.... quantified by the prescribed authority for weighted deduction u/s 35(2AB) of the I.T. Act. Therefore, the amended Rule 6(7A) effect the substantive right of the assessee and cannot be termed merely as procedural. Moreover, the co-ordinate Bench of Bangalore Tribunal in case of M/s. Mahindra Electric Mobility Ltd. v. ACIT (supra) and M/s. Indfrag Limited v. ACIT (supra) have clearly held that prior to 01.07.2016 Form 3CL has no legal sanctity and it is only w.e.f. 01.07.2016 with the amendment to Rule 6(7A) of the I.T. Rules, that the quantification of weighted deduction u/s 35(2AB) of the I.T. Act has significance. Therefore, we hold that the deduction u/s 35(2AB) of the I.T. Act be granted as claimed by the assessee instead of restricting it to the quantum of claim as mentioned in Form No.3CL by the prescribed authority. It is ordered accordingly." 115. As can be noted above, the Tribunal relied on another decision of the same Bench in the case of M/s Mahindra Electric Mobility Ltd. vs ACIT [ITA No.641/Bang/2017 - order dated 14.09.2018] wherein it was observed as under: "20. From the above discussion it is clear that prior to 1.7.2016 Form 3CL had no legal sanc....
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....see. In view of the above discussions and judicial precedents on this issue, we hold that the claim of the assessee must be granted as made in its return of income. It cannot be restricted to the extent of claim as approved in Form No.3CL by DSIR since there was no such requirement either under the Act or in the Rules for the assessment year 2011- 12. We accordingly allow the appeal of the assessee Company on this ground and direct the AO to delete the disallowance in this regard." 61. Since the issue is exactly similar in this appeal and grounds as well as the facts are also identical, respectfully following the above decision in assessee's own case for the A.Y. 2011-12 to 2014-15, we dismiss the ground raised by the revenue. 62. With regard to Ground No. 14 which is in respect of addition confirmed for inclusion of interest on Income-tax refund in book profit u/s. 115JB of the Act, Ld.DR relied on the order of the Assessing Officer and prayed to set-aside the order of the Ld.CIT(A). 63. On the other hand, Ld. AR of the submitted that the amount is reflected as a liability in the balance sheet and not credited to profit and loss account, since does not fall within any....