TaxTMI 
TaxTMI 
2023 (8) TMI 1740
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.... we take up ITA No. 2080/AHD/2012, an appeal by the assessee for A.Y. 2009-10 2. The assessee has raised following grounds of appeal: 1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of 19,65.01.400/- on account of Capital Grants & Subsidies and Consumers' Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions amounting to 12,18,05,000/- on account of Wheeling Charges refunded during the year which have already been taxed as income in earlier years. 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions with respect to the interest income from staff loans & advances amounting to 283,52,000/- as Income from Other Sources as against the Business Income. 4.0 The learned Commissioner of Income Tax (Appeals) erred in law and facts has set aside the additions with respect to the Income from Gain on Sale ....
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....come should have been recognized @ 15% instead of 10% of the amount discussed above. The provision of accounting standard-12 states that subsidies or grants received for depreciable assets should be treated as deferred income and should be recognized in profit and loss of account on a systemic and rationale basis. Likewise, the provisions of section 43(1) of the Act also provides that the cost of capital assets should be reduced by the amount of subsidies or grants. Thus, following the provision of section 43(1) of the Act, the cost of capital assets should have been reduced by the year end amount of grants, then the profit of the assessee ultimately would have increased. Consequently, the recognition of income on closing value of grants & consumer contribution would have been rational and reasonable. Hence, the AO worked the amount of income on closing value of grants & consumer contribution @ 15% and accordingly made addition of Rs. 19,65,01,400/- being an additional amount of 5% of the amount as discussed above. 5. On appeal by the assessee, the learned CIT(A) confirmed the finding of the AO by observing as under: 5.4 I have given my careful consideration to the subm....
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....ccordingly. The relevant finding of the coordinate bench reads asunder: 17. We have heard the rival contentions and perused the material on record. Through this ground assessee has challenged the order of ld. CIT(A) sustaining the disallowance of depreciation at Rs. 10,84,81,976/- by observing that capital subsidy and grant received are to be reduced from fixed asset and depreciation to be allowed on the remaining balance. We observe that the Government gives grant/subsidy to the holding company and then it is allocated to the assessee which is one of the subsidiary company and further such subsidy are not granted to actually to meet the cost but are granted as an inclusive of rural economically backward unviable areas. Assessee received subsidies on different schemes viz. Rural Electrification and Tribal area Electrification and the assets cannot be bifurcated into Rural/Tribal area etc. 17.1 There is no dispute to the fact that the grants received from the Government are capital in nature but they have not been given specifically for acquiring a particular asset. In such situation provision of section 43(1) Explanation 10 of the Act squarely applies for the trea....
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....ce with the provisions of the Act. As envisaged in explanation 10 to section 43(1), where a portion of the cost an asset acquired by the assessee has been met directly or indirectly by the Central Government or State Govt. or any Authority established under any law, or by any other person, in the form of subsidy or grant or reimbursement then in a case where the subsidy is directly relatable to the asset, such subsidy shall not be included in the actual cost of the assets. In a case, where such subsidy or Grant or reimbursement, is of such nature that, it cannot be directly relatable to any particular assets, 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 which or with reference to which such grant or subsidy or reimbursement is received shall not be included in the actual cost of that assets to the assessee. 4.3 In view of the clear provisions of the Act as stated supra and the assessee himself have admitted that the subsidy and grant received are towards Capital assets, the assessee should have reduced the same from the Capital asset to arrive at the actual cost. How....
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....unt of depreciation, Ld. Assessing Officer to provide proper opportunity of being heard should be given to the assessee. Accordingly, this ground of assessee is allowed for statistical purposes. 7.1 The above finding of the of the coordinate bench has been followed in the subsequent year i.e. A.Y. 2008-09 in ITA No. 1709/Ahd/2018 vide order dated 28- 2-2022. Therefore, following the concurrent view taken by the ITAT, we hereby restore the issue to file of the AO for fresh adjudication in accordance with the direction of the ITAT in assessment year 2006-07 and as per the provision of law. Hence the ground of the assessee is hereby allowed for statistical purposes. 8. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of refund of wheeling charges for Rs. 12,18,05,000/- only. 9. The assessee in the year under consideration debited profit and loss account on account of refund of wheeling charges amounting to Rs. 12,18,05,000/- to the company namely M/s Gujarat Alkalies and Chemicals Limited (hereafter M/s GACL). As per the assessee, the wheeling charges were recovered in the earlier year which was accounted as income but ref....
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....ded wheeling charges on a per MW per day basis. Subsequently, M/s GACL filed a petition before GERC against the applicability of charges as per GERC open access regulation dated 29-09-2005 and tariff order dated 06-05-2006. Thereafter, the dispute was resolved between the assessee company and the company namely M/s GACL by entering an MOU dated 1st March 2008 wherein it was agreed not to charge Wheeling charges and accordingly agreed for revision of the bill issued with effect from 1st April 2006. It was also agreed that whatever amount received on account of Wheeling charges will be refunded to M/s GACL. 12.1 From the above, assessee company has charged wheeling charges for transmission of power to the plant of the M/s GACL which was decided to be refunded as per the memorandum of understanding dated 1st March 2008. On perusal of minutes of meeting dated 1st March 2008 and the letter dated 8th April 2008 written by the senior management of the assessee company to the office of field engineer for issuing the revised bill, we find that the quantum of wheeling charge collected for the period April 2006 to March 2008 which needs to be refunded has not been mentioned. However, we fi....
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.... recharacterization of interest income on loans & advances given to the employee held that the assessee is not in the business of money lending. Therefore, the AO rightly treated the same as income from other sources. 15.1 Regarding the gain on sale of fixed assets, the learned CIT(A) held that the same should be routed through the block of assets and will be governed by the provisions of section 50 of the Act. Accordingly, the ld. CIT-A directed the assessee to verify whether WDV of the fixed assets was reduced by the sale consideration or not if the same has been done, then no addition needs to be made. 16. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 16.1 The learned AR with respect to the interest income from the staff loans submitted that such loans were given to the staff for better performance and therefore the interest income has direct nexus with the activity of the assessee. Similarly, the salary given to the staff was treated as business expenses on the reasoning that staff was working for the company and thus the interest income from the same staff should also be treated as income from the business and profession. The....
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....upplied, is sought to be made up by GRIDCO by issuing bonds on which the Assessee earns interest. This also therefore, has a direct nexus with the essential business activity of the Assessee. 9.1. In that view of the matter, we find it fit and proper to direct the Ld. AO to consider the issue afresh upon examining the same in regard to the head of income upon considering the relevant evidence in the light of the observation made by the Hon'ble High Court as mentioned hereinabove. We, thus, pass order accordingly. This ground is allowed for statistical purposes. 17.2 Respectfully following the finding of the coordinate bench in above mentioned case, we hereby set aside the issue of interest income on loans & advances given to staff to file of the AO for fresh adjudication as per the direction given in the above case and as per the provisions of law. 17.3 Regarding the income on the sale of fixed assets, we note that there is a direct provision under section 50 of the Act which reads as under: Special provision for computation of capital gains in case of depreciable assets. 50. Notwithstanding anything contained in clause (42A) of section 2, where the capital ....
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...., or general in nature, thus they do not require any separate adjudication. Hence, the same are dismissed as infructuous. 19. In the result, the appeal of the assessee is hereby partly allowed for statistical purposes. Coming to ITA No. 1999/Ahd/2012 an appeal by the Revenue for A.Y. 2009-10 20. The only issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 2,48,97,244/- made on account of waiver of interest. 21. The AO during the assessment proceedings found that the assessee has shown interest expenses of Rs. 2,44,10,653/- and Rs. 4,86,591/- against the government loan being "ADB-1804 Loan" and "APDRP Loan" whereas the Government of Gujarat vide notification dated 07-11-2008 has waived off interest on the "ADB-1804 Loan" and "APDRP Loan" for the period from 2005-06 to 2010-11. Accordingly, a question was raised to the assessee to explain why the interest was not reversed. 21.1 The assessee in reply submitted that it has made provisions on account interest on government loan in the A.Y. 2005-06 and 2006-07. However, once the government waiver notification came on 07-11-2008, no further provision was made from A.Y. 2007-08 onwar....
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....on made by the AO is directed to be deleted. 23. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 23.1 The learned DR before us reiterated the findings contained in the assessment order. 23.2 On the other hand, the learned AR before us filed a paper book running from pages 1 to 67 and contended that the interest was charged to the profit of loss account on the amount of loan received after 31 March 2005 which was not waived off and therefore, the same is eligible for deduction. 24. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee claimed interest expenses for Rs. 2,48,97,244/- on ADB & ADRP loan (government loan) which has been disallowed by the AO by holding that government of Gujarat vide notification dated 07-11-2008 waived of the interest on ADB & ADRP loan for a period of six years starting from 1st April 2005. On appeal by the assessee, learned CIT(A) was pleased to delete the addition made by the AO. 24.1 In this regard, we perused the notification issued by the Government of Gujarat dated 07-11-2008 which is placed on pages 18 to 19 of the pap....
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....tract the provision of fringe benefit tax. Thus, the AO vide order dated 09-12-2011 assessed the value of fringe benefit under the provision of section 115WE(3) at Rs. 2,29,38,644/- only. The AO also initiated the penalty proceeding under section 271(1)(d) of the Act for furnishing inaccurate particular of fringe benefit but the same was kept in abeyance as the assessee preferred appeal before the ld. CIT(A) against the assessment of fringe benefit tax. Subsequently, the learned CIT(A) vide order dated 25-04-2012 confirmed the order of the AO. Accordingly, the penalty proceedings under section 271(1)(d) of the Act were initiated vide notice dated 18-03-2014. 27.1 The assessee during the penalty proceeding contended that all the necessary details regarding the issue of fringe benefit had been made available at the time of assessment. Therefore, there was no concealment or filing of inaccurate particular of fringe benefit of whatsoever on its part. There was no mala-fide intention for concealment of fringe benefit. Hence, the penalty proceeding should be dropped. 27.2 However, the AO disagreed and found that the assessee had incurred expenditures which attract the provision fri....
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....enefit in its return of income with a clear-cut intentions to evade Fringe Benefit Tax. Accordingly, all the case laws relied upon by the appellant become inapplicable in the case of appellant. 4.2 In view of the above facts and circumstances of the case as also the legal position, thus I hold that the appellant has furnished inaccurate particulars of Fringe Benefit by not disclosing any value of Fringe Benefits in the return of income and hence rendered itself liable for penalty u/s 271(1)(d) of the Act. Accordingly, the penalty imposed by the AO at Rs. 77,97,000/- is confirmed. Thus, appellant fails in respect of all the grounds of appeals. 29. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 29.1 The ld. AR before us contended that the assessee has already disclosed the necessary details in the income tax return about the fringe benefit tax and therefore there cannot be any penalty on the assessee on account of furnishing the inaccurate particulars of fringe benefit. 29.2 On the other hand, the ld. DR vehemently supported the order of the authorities below. 30. We have heard the rival contentions of both the parties and....
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....for the AY 2010-11 is identical to the issue raised by assessee in ITA No. 2080/Ahd/2012 for AY 2009-10. Therefore, the findings given in ITA No. 2080/Ahd/2012 shall also be applicable for assessment year under consideration i.e. AY 2010-11. The ground of appeal of the assessee for A.Y. 2009-10 has been decided by us vide paragraph No. 7 of this order in favour of the assessee for statistical purposes. The learned AR and the DR also agreed that whatever will be the findings for the A.Y. 2009-10 shall also be applied for the year under consideration i.e. AY 2010-11. Hence, the ground of appeal filed by the assessee is hereby allowed for statistical purposes. 35. The next issue raised by the assessee vide ground Nos. 2 & 3 are that the learned CIT(A) erred in holding the interest income from staff loans & advances as income from other sources as well erred in setting aside the issue of gain on sale of fixed assets to AO. 36. At the outset, we note that the issues raised by the assessee in the captioned ground of appeal for the AY 2010-11 are identical to the issue raised by assessee in ITA No. 2080/Ahd/2012 for AY 2009-10. Therefore, the findings given in ITA No. 2080/Ahd/2012 ....
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....n ITA No. 561/AHD/2014 which we have set aside to the file of the AO for fresh adjudication vide paragraph number 36 of this order. Therefore, we hereby set aside the issue of treatment of miscellaneous income whether it is business income or income from other sources to the file of the AO fresh adjudication in accordance with the direction provided while adjudicating the issue of interest income in assessee's appeal and as per the provision of law. Hence, the ground of appeal of the revenue is hereby allowed for statistical purposes. 43. In the result appeal filed by the revenue is hereby allowed for statistical purposes. Coming to ITA No. 3028/Ahd/2014, an appeal by the assessee for AY 2011-12 44. The assessee has raised following grounds of appeal: 1.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the addition of 29,63,13,000/- on account of Capital Grant & Subsidies and Consumers' Contribution on the ground that the appellant should transfer 15% of the total Grant/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Ta....
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....e. AY 2011-12. The appeal of the assessee for AY 2009-10 has been decided by us vide paragraph No. 17 of this order partly in favour of the assessee for statistical purposes. The learned AR and the DR also agreed that whatever will be the findings for the AY 2009-10 shall also be applied for the year under consideration i.e. AY 2011-12. Hence, the ground of appeal filed by the assessee is hereby partly allowed for statistical purposes. 49. In the result appeal of the assessee is hereby partly allowed for statistical purposes. Coming to ITA No. 3316/Ahd/2014 an appeal by the revenue for A.Y. 2011-12 50. The only issue raised by the Revenue is that the learned CIT(A) erred in holding the income from miscellaneous receipt as income from business. 51. At the outset, we note that the issue raised by the Revenue in the captioned ground of appeal for the AY 2011-12 is identical to the issue raised by Revenue in ITA No. 680/Ahd/2014 for AY 2010-11. Therefore, the findings given in ITA No. 680/Ahd/2014 shall also be applicable for the assessment year under consideration i.e. AY 2011-12. The appeal of the Revenue for A.Y. 2010-11 has been decided by us vide paragraph No. 42 of th....
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....e issue raised by the assessee in the captioned ground of appeal for the AY 2012-13 is identical to the issue raised by assessee in ITA No. 2080/Ahd/2012 for AY 2009-10. Therefore, the findings given in ITA No. 2080/Ahd/2012 shall also be applicable for assessment year under consideration i.e. AY 2012-13. The appeal of the assessee for AY 2009-10 has been decided by us vide paragraph No. 7 of this order in favour of the assessee for statistical purposes. The learned AR and the DR also agreed that whatever will be the findings for the AY 2009-10 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the assessee is hereby allowed for statistical purposes. 56. The next issues raised by the assessee vide ground no. 2 & 4 of its appeal are that the learned CIT(A) erred in holding the interest income form staff loans & advances as income from other sources as well erred in setting aside the issue of gain on sale of fixed assets to AO. 57. At the outset, we note that the issues raised by the assessee in the captioned ground of appeal for the AY 2012-13 are identical to the issues raised by assessee in ITA No. 2080/Ahd/2012 for A....
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....f interest income on loan to staff and as per the provisions of law. Hence, the ground of appeal of the assessee is hereby allowed for statistical purposes. 63. In the result, appeal of the assessee is hereby partly allowed for statistical purposes. Coming to ITA No. 1190/Ahd/2014, an appeal by the revenue for AY 2012-13 64. The only issue raised by the Revenue is that the learned CIT(A) erred in holding the income form miscellaneous receipt as income from business. 65. At the outset, we note that the issue raised by the Revenue in the captioned ground of appeal for the AY 2012-13 is identical to the issue raised by Revenue in ITA No. 680/Ahd/2014 for AY 2010-11. Therefore, the findings given in ITA No. 680/Ahd/2014 shall also be applicable for assessment year under consideration i.e. AY 2012-13. The appeal of the Revenue for A.Y. 2010-11 has been decided by us vide paragraph No. 42 of this order in favour of the Revenue for statistical purposes. The learned AR and the DR also agreed that whatever will be the findings for the A.Y. 2010-11 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the revenue is hereby al....
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....d/2012 for AY 2009-10. Therefore, the findings given in ITA No. 2080/Ahd/2012 shall also be applicable for assessment year under consideration i.e. AY 2013-14. The appeal of the assessee for A.Y. 2009-10 has been decided by us vide paragraph No. 7 of this order in favour of the assessee for statistical purposes. The learned AR and the DR also agreed that whatever will be the findings for the A.Y. 2009-10 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the assessee is hereby allowed for statistical purposes. 69.1 Besides the above, the assessee also filed an appeal against the addition made by the AO in the book profit computed under section 115JB of the Act by the amount of addition made on account of grants or subsidies. Since, the issue arises from the treatment of grants or subsidies which we have set aside to the file of the AO for de novo adjudication, we hereby set aside the issue of addition of book profit to the file of the AO for fresh adjudication accordingly. Hence the ground of appeal raised by the assessee is allowed for statistical purposes. 70. The next issue raised by the assessee vide ground Nos. 2 ....