TaxTMI 
TaxTMI 
2024 (2) TMI 1687
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....case. The brief facts of the case is that the assessee is a company engaged in the business of distribution of electricity. The assessee company filed its e-Return of Income on 22.10.2014 declaring Nil income after setting off brought forward business losses and unabsorbed depreciation, but a book profit of Rs. 25,65,52,381/- and paid taxes along with interest amounting to Rs. 5,37,74,661/-. The case was selected for scrutiny and assessment order u/s. 143(3) was passed on 26.12.2016 by making additions and disallowances as follows: 1 Addition on account of Govt. Grant Rs. 24,22,26,000/- 2 Interest from Staff loan treated as income from other sources instead of business income Rs. 2,95,94,000/- 3 Disallowance of additional depreciation Rs. 53,53,48,484/- 2.1. Thus, the Assessing Officer determined the total income under normal computation at Rs. 17,55,73,300/- and book profits u/s. 115JB at Rs. 49,87,78,381/-. 3. Aggrieved against the assessment order, the assessee filed an appeal before Ld. CIT(A), who partly allowed the assessee appeal and partly confirmed the addition. Aggrieved against the appellate order, both the Assessee and Revenue are in appeal befor....
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....apital Grants and Subsidies and on the ground that the assessee should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the assessee. The Assessing Officer followed the earlier assessment year and thereby made the disallowance, which has been confirmed by the Ld. CIT(A). Hence the assessee is in appeal before us. 4.1. Ld. Counsel for the assessee submitted that this issue was considered by the Co-ordinate Bench of this Tribunal in assessee's own case in ITA Nos. 2080/Ahd/2012 and Ors. dated 18.08.2023 which has followed earlier years order in ITA No. 2583/Ahd/ 2010 dated 09.11.2016 relating to the Assessment Year 2006-07 wherein this issue was set aside to the Ld. A.O. as follows: "...7. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the issue in the dispute regarding the recognition of income on account of government grants and customer contribution in the case of present assessee was also there in the AY 2006-07 which has been adjudicated by the ITAT in ITA No. 2583/Ahd/2010 vide order dated 09.11.2016 wherein it was he....
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....ual cost thereof shall be taken to be twenty-five thousand rupees.] [Explanation 10.--Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee : Provided that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee.] 17.2 Proviso to Explanation -10 to section 43(1) contemplates that subsidy or grant or reimbursement which cannot be relatable to the assets acquired then grant amount to be apportioned in the a....
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....0,708/- minus Rs. 17,20,37,655/-, which amounts to Rs. 9,28,93,053/-, and 15% of Rs. 6427.94 lakhs amounting to Rs. 964.191 lakh. The submissions of the assessee before us are that the uniform rate of 15% adopted by the CIT(A) is not justified. As per provisions of section 43(1} of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. The DR could not point out any mistake in the above submission of the assessee. which we find is in accordance with law. We, therefore, set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO for adjudication afresh after verifying the proportionate amount of grant relating to different asset, and applying the actual rate of depreciation which relate to these assets. Thus, this ground of appeal of the assessee is allowed for statistical purpose. 17.4 In the light of the decision of the Co-ordinate Bench discussed above and in the light of p....
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....est income shown by the assessee on the loans & advances given to the employees, we note that there was identical issue before this Tribunal in the case of sister concern of the assessee namely Gujarat Energy Transmission Corporation Ltd (GETCO) in ITA No. 753/AHD/2018, wherein the coordinate bench vide order 24-08-2022 set aside the issue to the file of the AO for fresh adjudication by observing as under: "....9. We have heard the rival submissions made by the respective parties, and we have also perused the relevant materials available on record and also gone through the order passed by the Hon'ble Orissa High Court in the case of Odisha Power Generation Corporation Ltd. (supra). It appears that the Hon'ble Orissa High Court while dealing with the issue the Court was pleased to observe as follows: 12. The Assessee offered an explanation regarding interest income earned by it, from advances given to its employees as well as provision of electricity and water charges collected from water through its employees and contractors for facilities in the township, receipt from transit hostel, sale of scrap, insurance claim etc. The facilities were given to its employees f....
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....d 30.03.2022. Thus, the assessee is not eligible for additional depreciation for the present Assessment Year 2014-15. However, the Ld. Counsel requested to give a direction to allow normal depreciation in the succeeding Assessment Year 2015-16 on the WDV of the current year. 8. We have considered the submissions of the assessee which has legal force, even otherwise the assessee will be eligible for normal depreciation in the subsequent assessment year with the opening WDV. As we have already set aside on the other issues to the file of Assessing Officer, this claim of additional depreciation is also set aside to the file of the Jurisdictional Assessing Officer and allow the claim in accordance with the provisions of amended law. 9. In the result, Ground No. 3 raised by the Assessee is allowed for statistical purpose. 10. Ground No. 4 is Initiation of penalty u/s. 271(1)(c) and Ground no. 6 is general ground, which are not pressed by the assessee. Hence both the grounds no. 4 & 6 raised by the assessee are dismissed as not pressed. 11. Ground no. 5 is charging of interest u/s. 234B, 234C and 234D of the Act which were consequential in nature the same is also not pressed ....
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....urpose. 18. Ground Nos. 4, 5 & 6 are covered by Paragraph Nos. 11 & 13 of this common order. Following the same, no separate adjudication are required. 19. In the result, the appeal filed by the Assessee is allowed for statistical purpose. ITA No. 367/Ahd/2022 for A.Y. 2014-15 (Revenue's Appeal) 20. The Grounds of Appeal raised by the Revenue in ITA No. 367/Ahd/2022 for A.Y. 2014-15 are as follows: 1.1 That on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 24,22,26,000/- to book profits u/s. 115JB of the LT. Act towards govt. grants, subsidies and consumers contribution towards capital assets. 1.2 That on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition to book profits u/s. 115JB of the IT. Act without appreciating that the assessee had not prepared its statement of profit and loss in accordance with section 115JB of the LT. Act, and had failed to comply with the provisions of the Companies Act and Accounting Standards. The Ld.CIT(A) failed to consider that the assessee has claimed depreciation on related assets @15%, but the corresponding deferred ....
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....facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the additions to book profits u/s. 115JB of the I.T. Act without appreciating that the assessee had not prepared its statement of profit and loss account in accordance with provisions of section 115JB(2) of the Act, and the AO was justified in making the additions after computing, book profits in accordance with section 115JB(2) of the Act. 2.1 That on the facts and circumstances of the case and in law the Ld.CIT(A), erred in treating the income from others (sale of scrap) of Rs. 1,70,000/- & miscellaneous receipts of Rs. 14,40,92,300/- as "business income" instead of "income from other sources" without appreciating that these miscellaneous receipts were not generated from day to day business activity, and the assessee had failed to controvert the findings of the AO and failed to substantiate its claim with necessary documentary evidence. 2.2 That on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in treating income from others (sale of scrap) of Rs. 1,70,000/- & miscellaneous receipts of Rs. 14,40,92,300/- as business income following the order of CIT(A) for ea....
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.... the business. Therefore, the above incidental income received from such activities should be considered as "business income" only. It is for this reason in the computation of total income under the head "Income from other sources", the assessee claimed Nil income. The assessee further drawn our attention to the balance sheet more particularly Interest on staff loan and advances, Miscellaneous receipts, etc were shown. The above receipts of staff quarter charges, guest house charges, water charges from employees, sale of Tender forms, supervision charges received, forfeiture of earnest money/security deposit, unclaimed deposits of customers, etc. are all related to the business income of the assessee. Therefore, the same has to be treated as incidental to the business activity of the assessee and therefore treated as "business income" only. However, the Assessing Officer denied the above claim and held that the miscellaneous receipts have no nexus with the business carried out by the assessee. 22.2. Ld. Counsel further submitted that this issue is also set aside by the Co-ordinate Bench of this Tribunal in ITA No. 2080/Ahd/2012 vide order dated 18.08.2023 by observing as follows....
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....within the purview of business activity only and not "income from other sources". 24.2. In the light of the above, we find it fit to remand this issue to the file of the Assessing Officer for verification of the facts with proper materials and allow the claim in accordance with law. 25. In the result, the appeal filed by the Revenue is allowed for statistical purpose. 26. Revenue in its ground claimed sale of scrap of Rs. 1,70,000/- as "business income" instead of "income from other sources". It is seen from the assessment records Rs. 1,70,000/- is not of sale of scrap but "interest from others". Thus, Revenue wrongly mentioned as "scrap", be that as it may be for the elaborate discussion made Paragraph No. 24 above. This issue is also set aside to the file of Ld. Assessing Officer for verification of the facts with proper materials and allow the claim in accordance with law. Thus, the ground raised by the Revenue is allowed for statistical purpose. ITA No. 368/Ahd/2022 (Revenue Appeal for A.Y. 2015-16) 27. Ground No. 1 deleting the addition of Govt. grants, subsidies of Rs. 54,00,77,000/- while computing book profit u/s. 115JB of the Act, which is similar to the fin....