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2018 (10) TMI 581 - AT - Income TaxDeduction u/s 80-IA - set-off of loss of the eligible industrial unit against the profit of other eligible industrial unit - CIT(A) rejected the finding of AO by holding no justification in netting off of the profit and losses of the two eligible units and allowing deduction thereon - Held that - It has been held in various decisions that while computing the deduction u/s 80-IA loss of one eligible unit is not to be set off or adjusted against the profit of another eligible unit. Since the order of the ld. CIT(A) is in consonance with the law laid down by various High Courts and various Benches of the Tribunal therefore we find no infirmity in the order of the ld. CIT(A). Accordingly the same is upheld and the ground raised by the Revenue on this issue is dismissed. Deduction claimed u/s 80-IA disallowed by holding that value of power supplied to its own unit for captive consumption at 4.28 per unit has been overstated - Held that - Raipur Bench of the Tribunal in the case of DCIT vs. Hira Ferro Alloys Ltd. 2009 (8) TMI 732 - CHHATTISGARH HIGH COURT for assessment years 2009-10 2010-11 and 2012-12 has also decided identical issue by upholding the decision of the CIT(A) wherein CIT(A) has deleted the disallowance made by the Assessing Officer u/s 80-IA by holding that the assessee has not overstated the price of power supplied to its divisions. Further we find the Assessing Officer in subsequent assessment years i.e. for assessment years 2009-10 2010-11 and 2012-13 has not made any such disallowance u/s 80-IA on account of power tariff charged to other units of the assessee. Under these circumstances we do not find any infirmity in the order of the ld. CIT(A) on this issue. Taxability of the carbon credits - Assessee filed an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules 1963 and submitted that the issue relating to the taxability of receipts on account of carbon credit was a highly contentious issue and the law relating to the same has been settled in favour of assessee by the decision of the Hon ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd. 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT - Held that - Ground is admitted for adjudication. Since this ground was neither raised before the Assessing Officer nor before the ld. CIT(A) for which there is no adjudication therefore considering the totality of the facts of the case and in the interest of justice we deem it proper to restore this issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh. While doing so he shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. Disallowance on account of CSR expenses - Held that - We find identical issue had come up before the Tribunal in assessee s own case for assessment year 2009-10 and 2010-11 submitted that CSR expenses are incurred for the welfare of local community and thereby improve corporate image of the companies incurring such expenditure. We are of the considered opinion that the CIT(A) has rightly considered the decision and deleted the addition made by the Assessing Officer. Addition on account of charity/pooja and festival expenses - allowable busniss expenditure u/s 37 - Held that - dentical issue had come up before the Tribunal in assessee s own case wherein the Tribunal considering the CBDT Circular No.17(F.No.27(2)-IT/43) dated 06.05.1983 and another CBDT Circular No.13A/20/68-IT(A-II) dated 03.10.1968 wherein it has been held that the expenses incurred on the occasion of Deepawali and Mahurat are in the nature of business expenditure had allowed and granted relief to 6, 54, 900/-. Since in the instant case such relief granted by ld. CIT(A) is only 3, 50, 000/- towards purchase and distribution of sweets therefore following the order of the Tribunal in assessee s own case for the preceding assessment years 2009-10 and 2010-11 respectively we do not find any infirmity in the order of the ld. CIT(A). Disallowance u/s 14A - Held that - Since admittedly the assessee in the instant case has sufficient own capital and free reserves of 559.12 crores which is much more than the investments of 212.09 crores therefore respectfully following the decisions cited above we hold that no disallowance of interest is called for. However since the assessee is holding huge investments the income of which is exempt from tax therefore some disallowance towards administrative expenses is required to be made. Considering the totality of the facts of the case we are of the considered opinion that 2% of the dividend income received during the year may reasonably be estimated towards administrative expenses for earning such exempt income. The Assessing Officer is directed to compute the same and the order of the ld. CIT(A) is accordingly modified to this extent. Disallowance u/s 43B - delayed payment of employees contribution to PF and ESI - employees contribution to PF and ESI although deposited after the due date prescribed under the relevant date however were deposited before the due date of filing of the return u/s 139(1) - Held that - The various Benches of the Tribunal are also taking the consistent view that employees contribution to PF and ESI cannot be disallowed u/s 2(24)(x) r.w.s. 36(1)(va) if such deposits are made before the due date of filing of the return. Since in the instant case the assessee has deposited the employees contribution to PF and ESI before the due date of filing of the return u/s 139(1) of the I.T. Act 1961 therefore following the consistent view of the various Benches of the Tribunal on this issue we hold that the ld. CIT(A) is justified in deleting such disallowance - decided against revenue
Issues Involved:
1. Set-off of losses of one eligible unit from the profit of another eligible unit for deduction under section 80-IA. 2. Market value determination for captive consumption of electricity. 3. Taxability of carbon credits. 4. Disallowance of CSR expenses. 5. Restriction of disallowance on charity/pooja and festival expenses. 6. Disallowance under section 14A. 7. Disallowance on account of delayed payment of employees' contribution to PF and ESI. Issue-wise Detailed Analysis: 1. Set-off of Losses of One Eligible Unit from the Profit of Another Eligible Unit for Deduction under Section 80-IA: The Assessing Officer (AO) held that the loss of an eligible industrial unit must be set off against the profit of another eligible unit. The assessee argued that each undertaking should be treated as a separate source of income, and losses of one eligible undertaking should not be set off against the profits of another eligible undertaking. The CIT(A) agreed with the assessee, stating that the deduction under section 80-IA should be computed as if the eligible business of the undertaking is the only source of income. The Tribunal upheld the CIT(A)'s decision, referencing various High Court and Tribunal decisions that support the non-netting off of profits and losses of different eligible units. 2. Market Value Determination for Captive Consumption of Electricity: The AO contended that the market value of electricity for captive consumption was overstated by the assessee. The CIT(A) disagreed, noting that the market value should be the price at which the Steel Division would have purchased electricity from the State Electricity Company. The Tribunal upheld the CIT(A)'s decision, citing the assessee's own case decided by the Hon'ble Chhattisgarh High Court, which supported the market value determination based on the rate charged by the State Electricity Board to industrial consumers. 3. Taxability of Carbon Credits: The AO treated the income from the sale of carbon credits as revenue receipt. The assessee argued that it should be considered a capital receipt, not taxable. The CIT(A) allowed the assessee's claim, referencing various judicial decisions that treated carbon credits as capital receipts. However, the Tribunal restored the issue to the AO for fresh adjudication, considering the recent amendment and judicial precedents. 4. Disallowance of CSR Expenses: The AO disallowed CSR expenses, stating they were not wholly and exclusively for business purposes. The CIT(A) allowed the expenses, referencing judicial decisions that supported CSR expenses as business expenses. The Tribunal upheld the CIT(A)'s decision, noting that similar issues had been decided in favor of the assessee in previous years. 5. Restriction of Disallowance on Charity/Pooja and Festival Expenses: The AO disallowed the entire amount claimed for charity, pooja, and festival expenses. The CIT(A) restricted the disallowance, allowing a portion of the expenses as business-related. The Tribunal upheld the CIT(A)'s decision, referencing previous Tribunal decisions that allowed similar expenses. 6. Disallowance under Section 14A: The AO disallowed expenses under section 14A, claiming they were related to exempt income. The CIT(A) deleted the disallowance, stating that the assessee had sufficient own funds for making investments. The Tribunal upheld the CIT(A)'s decision, referencing judicial decisions that supported the use of own funds for investments, negating the need for disallowance under section 14A. 7. Disallowance on Account of Delayed Payment of Employees' Contribution to PF and ESI: The AO disallowed the delayed payment of employees' contributions to PF and ESI. The CIT(A) deleted the disallowance, stating that the payments were made before the due date of filing the return of income. The Tribunal upheld the CIT(A)'s decision, referencing consistent Tribunal decisions that allowed such payments if made before the due date of filing the return. Conclusion: The Tribunal's judgment addressed each issue comprehensively, often referencing judicial precedents and previous decisions in the assessee's own case. The Tribunal upheld the CIT(A)'s decisions on most issues, providing detailed reasoning and legal references to support its conclusions.
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