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TMI Blog2012 (7) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... verification, therefore, he prayed for acceptance of the application. 4.1. The learned DR appearing for the revenue has opposed the admission of additional grounds. He stated that at this belated stage, the instant application is nothing but misuse of the process of law. Therefore, he prayed for rejection of the application. 5. We have heard both the learned representatives. In our opinion, since the above admission of additional grounds does not require any additional evidence etc., therefore, exercising our jurisdiction, we hereby admit these grounds for adjudication. 6. Ground No.I:- Facts giving rise to the instant ground before us are that in the assessment proceedings, assessee claimed that he had invested in equity shares. Hence, prayed for allowance. However, the Assessing Officer vide assessment order dated 31.12.2007 held that the investments in question made by the assessee were not for business. Therefore, interest claim proportionate to the said investment was not allowable as business expenditure. In the opinion of the Assessing Officer, if the funds in question would have been utilized for business, it would have reduced the debt burden. Also observed that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. 12.1. Accordingly, from the paper book on record, it is clear that the assessee had sufficient interest free funds. Therefore, by relying on the ratio of the Hon'ble High Courts' judgment, we are also of the opinion that the Ld. CIT (A) in confirming the disallowance has not appreciated the law settled. Therefore, we accept this ground and direct AO is directed to allow the interest as claimed. 13. Ground No.II.:- In this ground, the assessee has challenged the order of Ld. CIT (A) wherein disallowance made by the Assessing Officer u/s 10B of the Act to the tune of Rs. 7,68,39,953/- has been upheld. 14. Qua this ground, factual matrix of the case is that in its computation of income, the assessee claimed the above said amount as deduction u/s 10B of the Act. Also enclosed necessary certificate. The certificate would prove that the deduction claimed was actually in the 9th year of claim. 15. The AO after perusing the necessary details as well as certificate ex-facie came to conclusion that the assessee had started its manufacturing / production from 1.4.1994 (AY 1994-95). The period of 'ten consecutive assessment' years could be only up to AY 2003- 04. Not thereafter. So, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing / production started from AY 1994-95 i.e. 1.1.94 to be precise, the deduction period would only run up to AY 2003-04. 22. In rejecting the assessee's contention, the AO also referred to explanatory notes to the Finance Act, 2000. Observed that the provisions had since been substituted by the amended provision in furtherance to the object of rationalizing the concession of tax holiday and to phase out the same by the end of Assessment Year 2009-10. He also observed that there was no explanation in the proviso to sec. 10B(1) clarifying deduction of ten years as claimed by the assessee. 23. Not only this, the AO examined the old provision of sec. 10B. Held that period of five years for the old provision could not be extended beyond the period of eight years from the date of beginning of production. Hence, declined the assessee's prayer of deduction. 24. In appeal, Ld. CIT (A) has upheld the findings of the AO. Hence, the assessee is aggrieved. 25. Learned AR in support of the grounds raised, has assailed the impugned findings. He reiterated the factual position i.e. date of manufacturing, the Assessment Year availing deduction for the first time as well as Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10B. Special provisions in respect of newly established hundred per cent exportoriented undertakings-(1) Subject to the provisions of this section, a deduction of such profits and gains are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee." The aforesaid provision provides that subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent exportoriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee. Sub-s. (2) provides that this section applies to any undertaking which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year is the AY 1998-99, therefore, the assessee was rightly held to be fully eligible for exemption under sec. 10B of the Act for the AY under consideration i.e., 2001-02, as it was the fourth year, out of ten years beginning with the initial assessment year, in which it began to develop and export the computer software." In the light thereof, the learned DR prayed for rejection of the ground. 30. In rebuttal, learned AR has relied on some case law (relevant extracts reproduced hereinabove starting from "in our view". 31. We have heard both the learned representatives. Also perused the relevant record, case law and impugned findings as well. Facts are not in dispute regarding date of beginning of manufacturing, first AY after manufacturing, first Assessment Year of availing tax rebate i.e. 1.1.1994, AY 1994-95, AY 1997-98 respectively. The issue before us is as to whether in the light of the amended provisions of sec. 10B, the assessee who started manufacturing in the year 1994, availed first tax rebate benefit in the year 1997-98 is entitled for getting the deduction in the AY in hand i.e. 2005-06. 32. Undisputedly, when the assessee had started manufacturing, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs would commence from the Assessment Year when the assessee starts availing the tax benefit. We cannot presume that the period of 'ten years' rebate would depend on the fact as to when the assessee starts availing its concession. 36. As far as case law referred by both the parties i.e. 219 CTR 405 is concerned, we hold that the same does not cover the issue in hand. The reason is that their Lordships in the said case have only decided as to whether an assessee who has started production in the AY 1998-99 could start claiming deduction in the Assessment Year 2001-02 or not? At the same time, their Lordships also clarified that the "newly established undertaking" only identified the initial year of the period of ten years in which the assessee is eligible for the claim of exemption. Therefore, the same also does not help the assessee. 37. Accordingly, we reject this ground. 38. Ground No.III:- In this ground, the assessee has challenged disallowance u/s 40(a)(ia) of Rs.4,88,95,690/- made by the Assessing Officer. Confirmed by the Ld. CIT (A). 39. The assessee in the assessment proceedings submitted that it had made payments in the shape of commission directly contractors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual verification, therefore, he has no objection if ground is remitted back to AO. 28. After hearing both the learned representatives and in view of the fact that it is an additional ground and the order dated 31.3.2005 requires to be verified by the Assessing Officer. Therefore, we set aside this ground to the Assessing Officer to verify the said factual position and pass appropriate order after hearing the assessee. 44. This ground is allowed for statistical purposes. 45. Ground No.V:- In this ground, the assessee has raised contention that if its plea u/s 10B is disallowed, then deduction of Rs. 4,01,99,719/-, ought to have been allowed u/s 80IA of the Act as income from the business of power generation. 46. The learned AR in support of the ground has submitted that since the instant ground is u/s 80IA that to only as an alternate ground, therefore, the same may be sent to the Assessing Officer for re-examination. 46.1. On the other hand, the learned DR has opposed the same. He prayed for its rejection. 47. After hearing both the learned representatives, we are of the opinion that since we have admitted additional ground that to plea in alternate raised by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 80IA(4) of the Act on the profits of the assessee's undertaking which is engaged in the business generating and distributing electricity. 64. Brief facts of the ground are that per assessee, it has earned profits from the business of generating and distributing electricity. Learned AR has submitted before us that although the assessee's contentions have been rejected by the lower authorities, but at the same time the assessee's profits from generating / distributing surplus power have not been granted despite clear cut provision u/s 80IA(4) of the Act. 65. On the other hand, the learned DR has opposed the ground. Argued that the ground in hand was neither raised before the AO nor before the Ld. CIT (A). Therefore, at this stage the ground cannot be entertained. 66. We have heard both the learned representatives. In our opinion, the relevant statutory provision i.e. 80IA(4) provides deduction in case of generation / distribution on profits of an undertaking. However, neither the AO nor Ld. CIT (A) has considered the material on record leading to some concrete finding. 67. As it is evident from the assessment order as well as CIT (A)'s order this ground has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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