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2024 (2) TMI 920 - AT - Income TaxCapital Grants and Subsidies and Consumers Contribution - addition of 15% Capital Grants as against 10% offered by the assessee - HELD THAT - This issue was considered by the Co-ordinate Bench of this Tribunal in assessee s own case 2023 (2) TMI 1267 - ITAT AHMEDABAD as held 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. MAT - addition on account of capital grants and Consumer Contribution while calculating book profit u/s. 115JB - HELD THAT - We find it fit and proper to remit the issue to the file of the Ld. AO to adjudicating the issue taking into consideration the Capital Grant and subsidies and consumers contribution made by the assessee and pass orders in accordance with law upon granting a reasonable opportunity of being heard to the assessee. Additional depreciation - Disallowance of claim on the ground that the assessee failed to submit the details and establish the genuineness of the expenditure - CIT(A) held that the assessee has not produced the details of additional depreciation before the AO - HELD THAT - As seen from the submissions made by the assessee detailed submissions on additional depreciation with Annexures were submitted by the assessee. But the lower authorities failed to consider the amended provisions of law and denied the claim of additional depreciation to the assessee. Therefore, in the interest of Principle of Natural Justice, we hereby set aside this issue to the file of Jurisdictional Assessing Officer to verify the claim of additional depreciation. Correct head of income - treatment to interest income received on the loans and advances to staff loans as income from other sources instead of business income - HELD THAT - As perused the relevant material and the judgment of the Odisha High Court in the case of Odisha Power Generation Corporation Ltd. 2022 (3) TMI 539 - ORISSA HIGH COURT In view of the same, we find it proper to direct the A.O. to consider the issue afresh upon examining the same in regard to the heads of income after considering the facts of the case. Miscellaneous receipts - income from other sources or business income - HELD THAT - Hon ble Madras High Court in the case of CIT vs. New India Maritime Agencies (P.) Ltd 2001 (6) TMI 27 - MADRAS HIGH COURT wherein it was held that the company had given the houses owned by it, to its Directors for their residences, it is doing so only in the course of his business. The principle is that if the owner of a property carries on business with a property owned by him, the income from that property must be assessed as only income from business . Since the Tribunal found that the house property had been used by the assessee as a part of the business and treated as business, the finding of the Tribunal that the income from the property could not be assessed separately as income from house property and included in the assessee s business income, was correct. Hon ble Delhi High Court in the case of Triveni Engg. Industries Ltd., 2010 (9) TMI 26 - DELHI HIGH COURT wherein the loss on account of non-recovery of loan given to employees was treated as loss incidental to business activity, then the interest on such loan falls within the purview of business activity only and not income from other sources - 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. Receipt on sale of Scrapes - income from other sources or business income - HELD THAT - Considering the asset value of the assessee company and the nature of transmission business the claim of Scrap sales is very negligible only. However the lower authorities has not given specific reasons to assess the sale of scrapes as income from other sources . 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. Disallowance of interest expenditure as attributable to capital work in progress and was liable to be capitalized - CIT(A) deleted the addition - HELD THAT - We do not find any infirmity in the order passed by the Ld. CIT A , it is further seen that the addition made by the Ld. AO was only on notional basis of 12% without bringing any evidence on record to show whether the entire Capital Work In Progress was financed by borrowings alone. Whereas the assessee has given the detailed workings of CWIP and also breakup of the amount capitalized during the year. Further in the earlier assessment years the workings given by the assessee were accepted and no additions made by the Ld. AO. CIT DR could not place on record any justifiable reason to sustain the addition, thus the ground raised by the Revenue is devoid of merits and liable to be dismissed.
Issues Involved:
1. Addition of Capital Grants and Consumer Contributions. 2. Calculation of book profit under Section 115JB. 3. Disallowance of additional depreciation. 4. Classification of interest income from staff loans and advances. 5. Classification of miscellaneous receipts. 6. Classification of income from sale of scrap. 7. Initiation of penalty proceedings under Section 270A. 8. Charging of interest under Sections 234A, 234B, 234C, and 234D. 9. Disallowance of interest expenditure attributable to Capital Work in Progress (CWIP). Summary of Judgment: 1. Addition of Capital Grants and Consumer Contributions: The Assessing Officer (AO) made additions of Rs. 60,71,40,000/- and Rs. 88,88,08,000/- on account of Capital Grants and Consumer Contributions, asserting that 15% of the total grants/subsidies/consumer contributions should be transferred, as opposed to the 10% offered by the assessee. The Tribunal remanded the issue back to the AO for re-adjudication, directing verification of the proportionate amount of grant relating to different assets and applying the actual rate of depreciation. 2. Calculation of Book Profit under Section 115JB: The AO included the addition on account of capital grants and consumer contributions while calculating book profit under Section 115JB. The Tribunal remanded this issue back to the AO for fresh adjudication, providing the assessee with a reasonable opportunity to be heard. 3. Disallowance of Additional Depreciation: The AO disallowed additional depreciation of Rs. 49,52,66,000/- due to the assessee's failure to submit detailed evidence. The Tribunal found that the lower authorities did not consider the amended provisions of law and remanded the issue back to the AO for verification and allowance of the claim in accordance with the amended law. 4. Classification of Interest Income from Staff Loans and Advances: The AO treated interest income from staff loans and advances as "income from other sources" instead of "business income." The Tribunal, considering the Odisha High Court's decision in a similar case, remanded the issue back to the AO for fresh verification. 5. Classification of Miscellaneous Receipts: The AO treated miscellaneous receipts as "income from other sources" instead of "business income." The Tribunal, referencing the Odisha High Court's judgment, remanded the issue back to the AO for verification and proper classification. 6. Classification of Income from Sale of Scrap: The AO treated income from the sale of scrap as "income from other sources" instead of "business income." The Tribunal remanded the issue back to the AO for verification, noting the significant asset value and nature of the assessee's business. 7. Initiation of Penalty Proceedings under Section 270A: The assessee did not press this ground, and it was dismissed as not pressed. 8. Charging of Interest under Sections 234A, 234B, 234C, and 234D: This ground was also not pressed by the assessee and was dismissed. 9. Disallowance of Interest Expenditure Attributable to CWIP: The AO capitalized interest expenditure on a notional basis without evidence. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the assessee provided detailed workings of CWIP and the AO failed to show that the entire CWIP was financed by borrowings alone. Conclusion: The appeals filed by the assessee were partly allowed for statistical purposes, and the appeals filed by the Revenue were dismissed.
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