TaxTMI 
TaxTMI 
2023 (9) TMI 1789
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....ent Years under consideration before us, all the above-mentioned appeals are being disposed of by way of a common order. ITA No. 1710/Ahd/2012 (A.Y. 2008-09) (Assessee's Appeal) :- 2. The assessee has raised the following grounds of appeal:- "1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the reduction of the amount of Capital Grants & Subsidies and Consumers' Contribution aggregating to Rs. 4,52,84,97,000/- from the total cost of the Plant & Machinery for the purpose of allowing depreciation and has thereby confirmed the restriction of the appellant's claim of depreciation to Rs. 96,64,65,332/- as against Rs. 1,56,20,72,882/- claimed by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions Rs. 1,000/- on account of expenditure booked under the head penalty expenses without considering the fact that the penalties were not for contravention of any law. 3.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has dismissed the ground relating to the initiation of penalty proceedings under section 271(1)(c) of the I T....
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....as income is not sustainable under the provisions of I.T. Act, 1961. This ground is therefore dismissed." 5. Before us, the Counsel for the assessee submitted that the Assessing Officer has followed the order of Madhya Gujarat Vij Company Ltd. for A.Y. 2006-07. However, it was submitted that in the case of Madhya Gujarat Vij Company Ltd., the ITAT has set-aside this issue/ground to the Assessing Officer in ITA No. 1709/Ahd/2012 vide order dated 28.02.2022. Accordingly, it was submitted that the issue may be set-aside to the file of the Assessing Officer in line with the order passed by the Ahmedabad Tribunal in the case of Madhya Gujarat Vij Company Ltd. refer to above. 6. It would be useful to reproduce the relevant extract of the decision of the ITAT Ahmedabad for ready reference: - "3. Brief facts relating to the issue are that the Assessing Officer (A.O.) observed that in schedule 4 to the Balance Sheet as on 31.03.2008, the assessee company had reserves comprising the following deferred government grants, subsidies and contributions: Particulars RESERVES As on 31.03.2008 Rs. in lakh Government Grants Subsidies Subsidies towards of capital a....
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....a pro-rata basis. The A.O. also worked out the allowable depreciation at Rs. 48,00,29,924/- as against the depreciation of Rs. 81,48,93,308/- claimed by the assessee. 3.1 The Ld. CIT(A) upheld by the order of the A.O. following the order of the Ld. CIT(A) in the case of the assessee itself for assessment year 2006-07. 4. Before us, Ld. Counsel for the assessee pointed out that the appeal of the assessee for assessment year 2006-07 stood adjudicated by the ITAT in ITA No. 2583/Ahd/2010 vide order dated 09.11.2016 wherein the issue has been restored back to the A.O. to adjudicate afresh after verifying apportioned amount of granted relating to different assets. Our attention was drawn to the relevant findings of the ITAT at Para 17 of the order is as under: 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 t....
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....t 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 assets at the same proportion as such assets bears all the assets. We further observe that ld. Assessing Officer has given following finding for application of explanation -10 to section 43(1) by observing as follows:- 4.2 The contention of the assessee that Consumer's Contribution and Capital Grant are capital in nature is found tenable, but its treatment, of 10% thereof transferred to P & L account every year is not in accordance 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,....
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....set, 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 proviso to Explanation -10 to section 43(1) of the Act we find it justified to restore the issue back to the file of Assessing Officer to adjudicate afresh after verifying the apportioned amount of grant relating to different assets and calculate the depreciation at the rates applicable to such assets. Needless to mention that all necessary details will be provided by the assessee to the Assessing Officer in order to calculate the correct amount 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. 5. Ld. D.R. fairly agreed with the same. 5.2 In view of the above, since the Ld. CIT(A) has followed the order of the Ld. CIT(A) in the case of the assessee for assessment year 2006- 07 while treating the entire capital subsidy grant and consumers contribution as capital in na....
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....A No. 2082/Ahd/2012 (A.Y. 20009-10) (Assessee's Appeal):- 16. The assessee has taken the following grounds of appeal:- "1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs. 28,90,00,000/- 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) erred in law and facts has confirmed the additions Rs. 65,58,000/- on account of difference in the balance lying in the account of Gujarat Energy Transmission Corporation Ltd., on account of energy sales. 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 Rs. 1,13,70,000/- 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 o....
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....nsel for the assessee submitted that the dispute is only regarding the year of taxability and there is no tax effect as the assessee company is assessed at the same rate of taxation. 22. In response Ld. D.R. relied on the observations made by the Ld. CIT(A). We observe that in the case of PCIT vs. Adani Infrastructure and Developers Pvt. Ltd. in Revenue Tax Appeal No. 01 of 2021 the Gujarat High Court held that there can be no addition for income offered in subsequent year if the tax effect remains the same. In this case the Gujarat High Court observed that whether professional fee received by the assessee was offered to tax in the subsequent year, no addition could be made on account of said fee during the relevant assessment year, as the same would amount to double taxation, which would be contrary to the provisions of law. In view of the above decision, since in the instant case it is an undisputed fact that the necessary reconciliation was carried out in the immediately succeeding year and the corresponding un-reconciled amount was offered to tax in the subsequent year, respectfully following the decision of Hon'ble Gujarat High Court on this issue, in our considered view, t....
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....passing appropriate orders as per law. It would be useful to reproduce the relevant extracts of the order of ITAT Ahmedabad in the case of Gujarat Energy Transmission Corporation Ltd. (supra) for ready reference: - "10. Ground No.2:- Confirming income as "other income" instead of business income interest on loans to staff and other advances to the tune of Rs. 1,79,18,000/- has been challenged before us by the assessee. 11. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee with all his fairness submitted before us that the identical issue has been decided by the Coordinate Bench in the case of Gujarat Energy Transmission Corpn. Ltd. in ITA No. 3441/Ahd/2015 for A.Y. 2012-13. On this aspect he has drawn our attention to Page 8 of the Paper Book filed before us. However, by and under the order passed by the Hon'ble Orissa High Court in the case of Odisha Power Generation Corporation Ltd. vs. ACIT, Circle-2(2), Bhubaneswar & ors. in ITA Nos. 1, 2, 3 of 2015 and ITA Nos. 24 & 25 of 2009 the issue has been decided otherwise. A copy of the same has also been submitted before us by the Ld. Counsel appearing for the assessee. ....
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....e from other sources instead of business income (Rs. 1,47,88,000/-) 29. The issue under consideration with respect to this ground of appeal is whether the Assessing Officer erred in facts and in law in treating the gain on sale of fixed assets as "income from other sources" for the purposes of the Income Tax Act. Before us, the Counsel for the assessee submitted that gain on sale of fixed asset is governed by Section 50 of the Act and hence taxable as "business income". Before us, the Counsel for the assessee relied on the decision in the case of Madhya Gujarat Vij Company Ltd. in ITA No. 2080/Ahd/2012 vide order dated 18.08.2023, wherein the ITAT decided this issue in favour of the assessee on identical set of facts. 30. It would be useful to reproduce the relevant extracts of the ITAT ruling for ready reference: - "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 asset is an asset formi....
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....se of arguments we observed that there is some discrepancy between the figure of capital gains on sale of fixed assets as per the revised return of income filed by the assessee and the figure taken by the Assessing Officer in the assessment order. Therefore, while deciding this issue, the Assessing Officer is directed to verify the correct figure of gain on sale of fixed asset in the assessee's set of facts. 32. In the result, Ground No. 4 of the assessee's appeal is allowed for statistical purposes. 33. Ground No. 5 of the assessee's appeal is general and does not require any specific adjudication. 34. In the result, the appeal of the assessee for A.Y. 2009-10 is allowed for statistical purposes. ITA No. 323/Ahd/2015(A.Y. 2010-11)(Assessee's Appeal):- 35. The assessee has raised the following grounds of appeal:- "1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs. 43,26,55,500/- 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% off....
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....his amount of Rs. 3,58,30,000/- is the income of the appellant for AY 2010-11 and it should have been accounted for in this year itself. The appellant is following mercantile system of accounting and hence, all the receipts are required to be accounted for in the year in which these have accrued. Hence, the AO's action is upheld and this ground of appeal is dismissed." 40. Before us, the Counsel for the assessee submitted that the unreconciled balance in respect inter-unit transfer and remittance in transit has been reconciled in the next and the subsequent assessment years. Therefore, the dispute is only regarding the year of taxability and there is no tax effect as the assessee company is assessed to tax at the same rate of taxation. 41. We observe that we have already decided this issue in Ground No. 2 of the assessee's appeal in ITA No. 2082/Ahd/2012 for A.Y. 2009-10. Accordingly, this issue is being restored to the file of Assessing Officer to carry out the necessary verification whether the aforesaid un-reconciled balance amount to Rs. 3.58 crores has been offered to tax by the assessee in the subsequent years. 42. In the result, the Ground No. 2 of the assessee's ap....
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....xed the prior period income during the impugned assessment year, however, prior period expenses have been disallowed. Further, the assessee placed reliance in the case of Gujarat Energy Transmission Corporation Ltd. in ITA No. 2855/Ahd/2015 vide order dated 27.07.2022, in which the Ahmedabad Tribunal set-aside the issue to the file of Assessing Officer for carrying out necessary verification. Accordingly, it was requested that the matter may be set-aside to the file of Assessing Officer in light of the aforesaid decision, to carry out the necessary verification. 46. Before deciding the issue, it would be useful to reproduce the relevant extracts of the Ahmedabad Tribunal order ruling in the case of Gujarat Energy Transmission Corporation Ltd. (supra), for ready reference: - "14. Ground No. 3:- Disallowance of prior period expenses of Rs. 8,79,06,000/- is under challenged before us. 15. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the Coordinate Bench in ITA No. 3441/Ahd/2015 for A.Y. 2012-13 has set-aside the identical issue to the file of the Ld. AO. On this aspect he has drawn our attention t....
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....icating afresh according to the direction laid down by the Hon'ble Gujarat High Court in the case of Adani Enterprises Ltd. in Tax Appeal No. 573 of 2016. The relevant part of the decision of the Coordinate Bench in the Gujarat Urja Vikas Nigam Ltd. supra as cited above is reproduced as under:- "6. We have carefully heard the rival submissions and perused the orders of the authorities as well the case-laws referred. The assessee is aggrieved by the disallowance of prior period expenses of Rs. 53.53 crores as per Ground No. 4 of its appeal. The disallowance has been made on the ground that the expenses under various heads as noted in the assessment order pertained to earlier years and the assessee which is following system of accounting should have made provision for expenses in those respective years and claimed them as deduction. We have gone through the break-up of the expenses as noted in para-8 of the assessment order and observe that certain expenses declared under the head 'other adjustments Rs. 30.75 crores'; 'other charges Rs. 79.34 lakhs'; 'depreciation under provided Rs. 7.86 crores' etc. are ostensibly vague and does not indicate the natu....
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....idences which the assessee may choose to file at the time of hearing of the matter. 48. In the result, Ground No. 3 of the assessee's appeal is allowed for statistical purposes. Ground No.4:- Interest from staff loan treated as income from other sources instead of business income (Rs. 97,85,000/-) 49. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2009-10 in ITA No. 1710/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee's appeal for A.Y. 2008-09. 50. In the result, Ground No. 4 of the assessee's appeal is allowed for statistical purposes. Ground No. 5:- Taxing gain on sale of assets as income from other sources instead of business income (Rs. 65,76,000/-) 51. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2009-10 in ITA No. 2082/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 4 of the assessee's appeal for A.Y. 2009-10. 52. In the result, the Ground No.....
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.... derived from the business of the appellant and hence this is directed to be taxed as income from business. Similarly, miscellaneous receipts have been earned by the appellant during the ordinary course of its business and hence, the same are to be taxed as business income. Accordingly, these are directed to be taxed as business income." 57. On going through the facts of the instant case we find no infirmity in the order of Ld. CIT(A) who has held that since such interest is received on credited balances of suppliers and other parties which is in the ordinary course of business, the same is liable to be taxed as business income in the hands of the assessee. 58. In the result, Ground No. 1 of the Department's appeal is dismissed. Ground No. 2:- Treating income from miscellaneous receipts as business income instead of income from other sources (Rs. 16,43,69,000/-) 59. The brief facts in relation to this ground of appeal are that during the impugned assessment year, the assessee earned certain miscellaneous income amounting to Rs. 16,43,69,000/- which was taxed by the Assessing Officer as "income from other sources" instead of "business income". The break-up of such miscel....
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....'s appeal is allowed for statistical purposes. Ground No. 2:- Addition on account of difference in inter-unit balance and remittance in transit (Rs. 1,95,42,000/-) 68. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 2 of the assessee's appeal for A.Y. 2010-11. 69. In the result, the Ground No. 2 of the assessee's appeal is allowed for statistical purposes. Ground No. 3:- Addition of prior period expenses (Rs. 46,67,000/-) 70. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee's appeal for A.Y. 2010-11. 71. In the result, the Ground No. 3 of the assessee's appeal is allowed for statistical purposes. Ground No.4:- Interest from staff loan treated as income from other sources instead of business income (Rs. 1,03,66,000/....
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....h documentary evidence. 3. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary." Ground No.1:- Treating interest from suppliers as "business income" instead of "income from other sources" (Rs.79,90,000/-) 79. We observe that this issue has already been dismissed in Department's appeal for A.Y. 2010-11 in ITA No. 98/Ahd/2015. Accordingly, this ground is dismissed as per directions given in Ground No. 1 of the Department's appeal for A.Y. 2010-11. 80. In the result, Ground No. 1 of the Department's appeal is dismissed. Ground No. 2:- Treating income from miscellaneous receipts as "business income" instead of "income from other sources" (Rs. 8,83,12,000/-) 81. We observe that this issue has already been dismissed in Department's appeal for A.Y. 2010-11 in ITA No. 98/Ahd/2015. Accordingly, this ground is dismissed as per directions given in Ground No. 1 of the Department's appeal for A.Y. 2010-11. 82. In the result, Ground No. 2 of the Department's appeal is dismissed. 83. Ground No. 3 of the Department's appeal is general in nature and does not require any specific adjudication. 84. In the result, the appea....
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....ter-unit balance and remittance in transit (Rs. 1,42,06,000/-) 88. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 2 of the assessee's appeal for A.Y. 2010-11. 89. In the result, Ground No. 2 of the assessee's appeal is allowed for statistical purposes. Ground No. 3:- Addition of prior period expenses (Rs. 1,96,76,000/-) 90. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee's appeal for A.Y. 2010-11. 91. In the result, Ground No. 3 of the assessee's appeal is allowed for statistical purposes. Ground No. 4:- Interest from staff loan treated as income from other sources instead of business income (Rs. 1,80,27,000/-) 92. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal....
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....56,10,000/- with the direction to re-verify the claim in terms of the provisions of section 50 of the IT Act. 5.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the action of Assessing Officer in treating the Miscellaneous Receipts amounting to Rs. 25,02,07,000/- as Income from Other Sources as against the Business Income and thereby disallowing the claim of set off of business losses of earlier years against the said income. 6.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs. 2,77,09,000/- on account of the balance lying in the Inter unit Balance account and balance in remittance in transit. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that there was no unreconciled balance during the year. 7.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal" Ground No. 1:- Addition @15% of capital grants & subsidies as against 10% offered by appellant (Rs. 31,47,80,000/-) 99. We observe that this issue has already been set-aside to ....
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.... miscellaneous income is tabulated below for ready reference: - ACCOUNT HEAD Amt. Rs. (In lakh) Income from Staff quarters 3.51 Income from Contractors, Post Office, Bank etc. 0.22 Excess stock found on Physical Verification 1.95 Recovery of water charges from employees /contractors 2.13 Reservation deposit forfeited 0.54 Rec. for tpt. & vehicle exp other than staff 0.78 Sale of tender forms 233.54 Supervision charges on execution of job/deposit work 538.82 Registration fees - Suppliers, contractors 10.10 Penalties recovered from employees 0.15 Insurance premium recovered for HBA loan 6.23 Rebate for Prompt Payment - purchase of power 5.43 Other Miscellaneous Receipts 1698.28 Receipt under Right to Information Act, 2005 0.40 TOTAL 2502.07 108. In appeal, Ld. CIT(A) confirmed the addition with the following observations:- "4.5 Ground No. 6 pertains to the action of Assessing Officer in assessing the miscellaneous receipts of Rs. 25,02,07,000/- as income from other sources. On perusal of the details furnished and also available in the assessment order, I find that some of the i....
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....tter in accordance with the direction by ITAT for A.Y. 2010-11. 112. Accordingly, Ground No. 5 of the assessee's appeal is allowed for statistical purposes. Ground No. 6:- Addition on account of difference in inter-unit balance and remittance in transit (Rs. 2,77,09,000/-) 113. We observe that this issue has already been set-aside to the Assessing Officer in assessee's appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 2 of the assessee's appeal for A.Y. 2010-11. 114. In the result, Ground No. 6 of the assessee's appeal is allowed for statistical purposes. 115. Ground No. 7 of the assessee's appeal is general in nature and do not require any specific adjudication. 116. In the result, the appeal of the assessee in ITA No. 300/Ahd/2018 for A.Y. 2014-15 is allowed for statistical purposes. ITA No. 293/Ahd/2018(A.Y.2014-15) (Department's Appeal):- 117. The Department has raised the following grounds of appeal:- "1.1 That on the facts and circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition to book prof....