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TMI Blog2014 (4) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for by the AO at the time of assessment - the issue cannot be decided at this level – the matter is remitted back to the AO for fresh adjudication – Decided in favour of Revenue. Allowability of adjustment under Explanation to section 115JB of the Act – Wealth tax liability – Held that:- As decided in assessee’s own case for the previsous assessment years’, the decision in JCIT vs. Usha Martin Industrial Ltd.[2006 (12) TMI 171 - ITAT CALCUTTA] followed – Decided against Revenue. Deduction u/s 80HHC of the Act – Book profits u/s 115JB of the Act – Held that:- The AO rightly held that that assessee had claimed deduction u/s. 80HHC while calculating its book profit u/s. 115JB by filing revised e-return - deduction u/s.80HHC was not available under the normal provisions of the IT Act w.e.f. 01.04.2005 - The assessee gave reasonable opportunity of being heard on the issue, which was afforded by the assessee - After considering the assessee’s reply, no deduction was allowed - The amendment made u/s 115JB is effective from 01.04.2005 and as per item no. iv of Explanation 1, the deduction u/s. 80HHC is not allowed and is to be reduced from 115JB profit – thus, the order fo the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case and in law, the Id.CIT(Appeals) erred in deleting the addition of Rs.10,08,27,649/- on account of disallowance of claim of deduction u/s.80IA(4) on the electricity produced for captive consumption in COGEN Plants . The Id.CIT(A) erred in deleting the addition relying on the decision of the Hon.ITAT in the case of Alembic Ltd, For A.Y.2003-04 bearing No.3594/Ahd/2007 dated 06.06.2008 wherein the Hon.ITAT allowed the appeal of the assessee in respect of claim of the assessee u/s.80IA(4) by taking the price of electricity supplied by GEB. 1(b) On the facts and circumstances of the case, the Id.CIT(Appeals) as well as the Hon.ITAT did not rely on the decision in the case of Chettinad Cement Corporation Ltd. in ITA No.1026 (MDS)/2005 for A.Y.2001-Q2 on the ground that the assessee had captive power generation plant and therefore the claim was not allowable. 2(a). On the facts and in the circumstances of the case and in law, the Id.CIT(Appeals) erred in deleting the disallowance of Rs.14.91 lacs u/s. 14A towards interest and other expenses incurred in relation to exempted income of dividend and tax-free interest without taking note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COGEN Unit II of Rs.9,09,81,526/-, COGEN Unit III of Rs.36,24,232/-. During the course of assessment proceeding, the assessee was asked to substantiate his claim for deduction u/s. 80IA(4) in respect of COGEN - I, COGEN - II COGEN - III. The assessee was asked to justify not in respect of the claim deduction u/s. 80IA of Rs.19,54,33,407/- in respect of power generating plants used for captive consumption in view of the decision of the Hon ble ITAT, Chennai in case of M/s. Chettinad Cement Corporation Ltd. vs. ACIT in ITA No. 1029 (Mads.) 2005 for A.Y. 2001-02, wherein it has been held that the deduction u/s. 80IA is not available in respect of captive power plant to meet in house requirement and rate of supply. Further, the assessee was requested to show cause as to why for calculating the eligible profits of COGEN I, COGEN -II COGEN Unit III for the purpose of computation of deduction u/s. 80IA, the average sale rate of Rs.2.36 per unit should not be taken by invoking the provisions of section 80IA(8) r.w.s. 80IA(10) of the Act. The assessee submitted his reply on 16.03.2009 and after considering the assessee s reply, the ld. A.O. held that the deduction under this provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is nothing in the section to indicate that the deduction would not be available even though it may be required to be scaled down in terms of section 80HHC(1B). 4. Now the Revenue is before us. The ld. CIT D.R. fairly accepted that this issue is covered against the Revenue by the order of the ITAT for A.Y. 03- 04 06-07. The ld. A.R. also supported the order of the CIT(A) and argued that this issue has been decided by the Hon ble ITAT in A.Y. 03-04 as well as A.Y. 06-07. The A.R. submitted that Hon ble D Bench in ITA No. 3530/Ahd/2008 for A.Y. 06-07 at page no.2 against the ground no.1 had confirmed the order of the CIT(A) who has allowed the deduction u/s.80IA(4) on captive power plant, where the profit was calculated on the basis of market rate of power unit on captive power plant production of unit. 5. We have heard the rival contentions and perused the material on record. The Co-ordinate B Bench vide its order dated 15.02.2011 has set aside this issue in favour of the assessee. The Co-ordinate Bench has confirmed the order of the CIT(A) who had allowed the 80IA deduction on the basis of market rate of power unit computing the profit from the eligible unit u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Bombay High Court in case of Godrej and Boyce Mfg Co. Ltd. (328 ITR 81), has held that Rule 8D is not applicable retrospectively and applicable for A.Y. 08-09. But it was held that reasonable disallowance is to be made by the A.O. After analyzing the borrowed fund used for the business purposes, non business purposes and interest paid and also other disallowance for under the administrative head. The ld. A.O. had to satisfy before making disallowance u/s. 14A of the IT Act by relying upon various case laws. He further relied in case of UTI Bank Limited (2013) 215 Taxman 8 (Gujarat HC) and it was argued that Hon ble Gujarat High Court held that if any fund of the assessee are sufficient to cover the investment then no any disallowance needs to be made u/s. 14A. He also relied upon the decision of Hon ble Bombay High Court in case of Reliance Utilities Power Ltd. 18 DTR 1 and argued that this issue may be decided by the Hon ble Bench itself. 9. We have heard the rival contentions and perused the material on record. The assessee did not supply the information called for by the A.O. at the time of assessment. Therefore, we cannot decide the issue at this level. Accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005. The assessee gave reasonable opportunity of being heard on this issue, which was afforded by the assessee. After considering the assessee s reply, the A.O. held that w.e.f. 01.04.2005 under sub-section 1B of Section 80HHC, no deduction shall be allowed and in subsequent year also. Therefore, he made adjustment of Rs.12,56,36,906/- u/s. 115JB of the IT Act. gist 14. Being aggrieved by the order of the A.O., assessee carried the matter before the CIT(A) who had set aside the issue to the A.O., after considering the various case laws on this issue on page nos. 19 to 22 and held as under: 8.7 Having regard to the totality of the circumstances as mentioned above, the jurisdictional interpretation on the issue by Madras and Mumbai High Courts, as well as that of ITAT, Ahmadabad Bench, and the course of action suggested by the Hon. Supreme Court in such a situation, it is held that the AO was not justified in denying the claim of deduction u/s 80HHC while computing profits u/s.115JB. The AO is directed to recomputed the book profit u/s 115JB and allow the deduction of profit u/s 80HHC and the same is to be worked out on the basis of adjusted book profit and not on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. He further relied upon in case of Goetze(India) Limited, 32 SOT 101 (Delhi ITAT) Quippo Telecom Infrastructure Limited in ITA No. 4931/Del/2010. 17. We have heard the rival contentions and perused the material on record. As this issue has been set aside to the A.O. for re-computation of disallowance u/s. 14A, however, for making adjustment u/s. 115JB, the ITAT, Mumbai Bench in case of M/s. Essar Teleholdings Limited (supra) held that Provisions of sub-Section 2 3 of Section 14B cannot be imported into Clause (f) of the Explanation to Section 115JB of the Act. As per Clause (f) of Explanation 1 to Section 115JB refers to amount debited to the p l account, which can be added back to the book profit while computing the book profit u/s. 115JB. Similar views have been taken by the ITAT, Delhi Bench in case of Goetze(India) Ltd. (supra). Therefore, we held that adjustment made by the A.O. is not as per law. Accordingly, we dismiss the Revenue s appeal on this ground. 18. Revenue s appeal is partly allowed. Now we take C. O. No. 204/Ahd/2010 (Assessee's C.O.) 19. Assessee's C.O. is against the addition of provision for doubtful debt of Rs.3,00,51,177/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -off of a debt would certainly result in diminution in the value of the asset. Accordingly, it is held that the AO has correctly enhanced the book profits by the provision for doubtful debts. The action of the AO is confirmed. 21. Now the assessee is before us. Ld. Counsel for the assessee argued that the amendment made in Section 115JB is retrospective w.e.f. 01.04.2001 and Explanation 1 was added in Section 115JB. As per clause (c) of Explanation 1, the amount or amounts set aside to the provision for liability other than ascertain liability is to be considered in increasing book profit as per Explanation 1. The Hon ble Karnataka High Court has decided this issue in case of CIT vs. Yokogawa India Ltd., [2012] 17 taxmann.com 15 (Kar.), that provision made for bad debt cannot be added back in accordance with Explanation (c) to Section 115JB(1) as same is not an ascertained liability. Ld. A.R. further relied in case of Hon ble A Bench, ITAT, Ahmadabad, in case of ACIT vs. Vodafone Essar Gujarat Ltd. in ITA No. 1999/Ahd/2008, wherein identical issue has been decided in favour of the assessee by considering the Hon ble Karnataka High Court decision in case of CIT vs. Yokogawa In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed for statistical purposes. At the outset, ld. CIT D.R. supported the order of CIT(A). 22. We have heard the rival contentions and perused the material on record. The Hon ble Karnataka High Court had decided this issue by analyzing the provision for bad debt and held that as per Section 36(1)(vii), the assessee has to show net of the provision for bad debt in the balance sheet. Even Explanation (c) has been inserted retrospectively, then no increase can be made u/s. 115JB or 115JA. The amendment came by the Finance Act, 2008 w.e.f. 01.04.2001. The assessee had made provisions for bad debt in earlier year and added back in the computation of income of that year and actual bad debt had been claimed by debited the provision for bad debt and claimed u/s. 36(1)(vii) of IT Act. Therefore, we set aside this issue to the A.O. and is directed to decide this as per the decisions of Hon ble Karnataka High Court in case of CIT vs. Yokogawa India Ltd. (supra). Accordingly, this ground of appeal is set aside and allowed for statistical purpose. 23. In the result, Revenue s appeal is partly allowed and assessee s C.O. is allowed for statistical purpose. These Orders pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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