9911796707
TMI Blog2016 (1) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... the company should be reduced from the profit of the Power Units. 3. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) ought to have given directions to allow deduction u/s 801A in respect of integrated Power Unit No. 6 if in the unlikely event the claim for deduction u/s 801A in respect of Power Unit No. 6A & 6B is ultimately not allowed in favour of the company. B. Disallowance of Employee's Contribution to Provident Fund & ESI Fund. 4. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals was not justified and grossly erred in confirming the disallowance of employee's contribution to Provident Fund and EST Fund amounting to Rs. 43,23,169/-made after the due date. C. Allocation of notional expenses to income exempt u/s 10(34) & 10(35). 5(a) That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified and grossly erred in confirming the disallowance u/s 14A on account of expenditure incurred to earn exempt dividend income, by applying the provision of Rule 8D. 5(b) That on the facts and in the circumstances of the case and without prejudice to the ground 5(a), the Ld. CIT (Appeals) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of Hon'ble Bombay High Court. 3. The Ld. DR has also admitted that most of the grounds raised by the assessee are covered by the order of the Tribunal for the earlier years. 4. The assessee company is engaged in the business of manufacturing of paper and paper boards, optic cables, Jelly field cables and power generations for captive consumptions. Most of the issues raised in both the appeals have a chequered history, in as much as they stand decided by the Tribunal in earlier years. 5. So far as the issue raised vide ground no.1, whether electricity duty should be excluded while calculating the transfer price of electricity duty for computing the deduction u/s 80IA. 6. This issue has been decided in favour of the assessee by the Tribunal vide order dated 30.05.2014 in assessee's own case for AYs 2002-03 to 2005-06. The relevant conclusion and finding of the Tribunal as given in para 32 and 33 reads as under:- "32. We have heard the rival submissions and also perused the relevant findings of the authorities below and the material available on record. The assessee has worked out the notional sale of power supplied by its power unit to its paper division @ Rs. 5.80 per u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and price available for the public at large. In the present case, the market value of supply of electricity by power unit of the assessee to the paper division of the assessee has to be seen from the angle, if the paper unit has to purchase the electricity directly from the Karnataka Electricity Board (as both the power units as well as the paper units are situated in Karnataka), then what is the price which would be paid by the paper unit to the Karnataka Electricity Board. The transfer of the price as contemplated in section 80IA(8) has to be seen having regard to the arm's length condition i.e., what would be the price under uncontrolled transactions in the open market. If the paper division has been purchasing the electricity from the Karnataka Electricity Board at an average cost of Rs. 5.80, which fact is not in dispute, then the same price should be considered as market value for bench marking the price at which power units are supplying the electricity to the paper division. If the taxes and duties are part of the price at which the power / electricity is supplied by the Karnataka Electricity Board to the paper division, then the same price is the indicator of the mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, we decide this issue in favour of the assessee. 8. In ground no. 2, the assessee has challenged the calculation of deduction u/s 80IA for reducing the pro-rated indirect expenses of the company from the profit of the power units. 9. This issue has been decided against the assessee by the Tribunal in assessee's own case for the earlier years in the following manner:- 34. Ground no.9 reads as under:- "9. That on the facts and in the circumstances of the case the Ld. CIT(Appeals) was not justified in holding that for computing deduction u/s 80IA, the prorated indirect expenses of the company should be reduced from the profit of the Power Unit." 35. After hearing both the parties, we find that the present issue has been decided by the Tribunal against the assessee right from the assessment year 1999-2000 to 2001-02. The Assessing Officer has apportioned indirect expenses which are to be reduced from the profits of the power unit as worked out in detail at Page-20 of the assessment order. This allocation of indirect expenses to arrive at the profit of power unit has been decided by the Tribunal in the earlier years and, therefore, consistent with the view taken therein, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two payments of Rs. 30,827 for the month of April, 2006 and Rs. 30,777/- for the month of May, 2006, the assessee has deposited the entire sum within the grace period, as provided in the relevant statute. So therefore, to the extent of Rs. 42,61,565/- which has been deposited well within the due date, same should not be disallowed. Further, in any case now in view of the decision of Hon'ble Bombay High Court in the case of CIT vs Ghatge Patil Transports Ltd, judgment dated 14.10.2014 passed in ITA No. 1002 of 2012 and 1034 of 2012, the Hon'ble High Court held that both employees and employer's contributions are covered under the amendment to section 43B and therefore, if the payments have been made before the due date of filling of return of income, the they are to be allowed u/s 43B. While arriving to this proposition the Hon'ble court has followed the decision of Hon'ble Supreme Court in the case of CIT vs Alom Extrusions Ltd, reported in [2009] 319 ITR 306 and also relied upon its own decision in the case of CIT vs Hindustan Organics Chemicals Ltd., judgment and order dated 11.07.2014 passed in ITA 399 of 2012. 17. On the other hand, Ld. DR strongly relied upon the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative expenses are concerned, we find that the Assessing Officer has taken all the administrative expenses for apportioning the disallowance on pro-rata basis without even looking to the nature of expenses. For e.g., vehicle maintenance, charity and donation, misc. expenses, etc., cannot be said to have been incurred for the purpose of investment in shares, etc. At the most, directors' fees and expenses and auditor's remuneration can be said to be attributable for the purpose of disallowing the administrative expenses for the purpose of earning exempt income on the investments made. From the details mentioned above, it is seen that the directors' fees and expenses is Rs. 13 lakhs whereas, auditor's remuneration is Rs. 5.53 lakhs. If the ratio on which the Assessing Officer has worked out the disallowance on entire expenditure, then on that ratio, the disallowance under the administrative expenses will come down to Rs. 33,253. Thus, on a reasonable basis, we hold that the sum of Rs. 50,000 is quite reasonable for allocating administrative expenses for the purpose of making the investment on which the assessee has earned exempt income. Consequently, the disallowance is restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of investments of fixed assets in computing book profit u/s. 115JB." 234. After hearing both the parties, we find that this issue was decided in favour of the assessee by the Tribunal in assessee's own case, however, now this issue stands covered against the assessee by the Special Bench decision of the Tribunal in Rain Commodities Ltd. v/s DCIT, [2010] 131 TTJ 514 (Hyd.). Thus, respectfully following the decision of the Special Bench of the Tribunal, we confirm the addition on account of profit on sale of investment in fixed assets while computing the book profit under section 115JB. Thus, ground no.7, raised by the Revenue is treated as allowed". 24. Thus, following the aforesaid ratio, this issue is decided against the assessee. Accordingly, ground no. 7 is treated as dismissed. 25. Ground no. 8 is with regards to disallowance of expenses incurred for earning of exempt dividend income i.e. disallowance u/s 14A whether to be included while computing the book profit. 26. This issue would be decided against the assessee in view of the decision of Hon'ble Delhi High Court in the case of Goetze India Ltd. in ITA No. 1179 of 2010, wherein Hon'ble High Court has held that dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer consumption from generation set would be eligible for deduction u/s 80IA. 32. This issue has been decided by the Tribunal in the earlier years, wherein the Tribunal following the precedence of earlier years and had been consistently deciding this issue in favour of the assessee right from AY 1997-98 onwards. Hence, consistent with the view taken in the earlier years, we decide this issue in favour of the assessee and against the revenue. 32. Similarly, the issue raised in ground no. 1.2, whether the conditions of provision of section 80IA(3)(ii) are satisfied in respect of DG sets or not. 33. This issue too has been decided in favour of the assessee right from assessment year 1997-98 onwards up till 2005-06. Thus, consistent with the view taken in the earlier years, this issue too is decided in favour of the assessee and against the revenue. 34. In Ground no. 1.3, the revenue has challenged whether the generation of steam amounts to formation of power or not so as to be eligible for claim of deduction u/s 80IA for Unit No. 6A and 6B. 35. The Tribunal in the earlier years has been deciding the impugned issue by observing and holding as under:- "20. We have heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electricity alone, is too narrow a view. The term "power" encompasses a whole range of energy generated in various forms to run machines, devices, etc. This precise issue had also come up for consideration before the Tribunal in several cases cited supra. The Tribunal in Sial SBEC Bio Energy Ltd. (supra), while deciding the issue whether generation of steam amounts to generation of power or not for the purpose of deduction under section 80IA, has referred catena of decisions and also the dictionary meaning on the meaning and term of "power" and thereafter, observed and concluded as under:- "The word 'power' used in s. 80-IA(lV) has not been defined in the statute, then the common parlance meaning as per the dictionary is normally taken into account. The word 'power' has to be given a meaning which is in common parlance and in common parlance the word 'power' shall mean the energy only. The energy can be of any form, be it mechanical, be it electrical, be it wind or be it thermal. The steam produced by the assessee on the principle of interpretation of statute shall only be termed as power and shall quality for the benefits available under s. 80-IA(iv). The assessee is into the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA(4)(iv)(b) to infer that intention is to provide benefit to the generation of electricity only, since in the sub-cl. (b) transmission and distribution lines are mentioned which can be of electricity only. Submission of the learned Authorised Representative in this regard to which we also agree remained that sub-cls. (a), (b) and (c) of s. 80IA(4)(iv) provide for deduction in the cases of three types of undertaking viz. the one which is engaged in generation or generation and distribution of power; second, which start transmission or distribution lines; and the third, which undertakes substantial renovation and modernization of the existing network of transmission or distribution lines. All these three clauses deal with the three different categories of the undertaking. These three types of undertakings referred to in the said sub-cls. (a), (b) and (c) are different and independent of each other. Thus while dealing (with) one sub-clause, inference need not and cannot be drawn from the other subclause. On perusal of these provisions, we agree with the plea of the learned Authorised Representative that case of the assessee falls in sub-cl. (a) itself and the legislative intent infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of s. 80-IA which would qualify for this benefit. The first appellate order is thus upheld. The ground is thus rejected." 23. From the aforesaid decisions, it can be inferred that the generation / production of steam is also a form of power and the Unit- 6 which is an undertaking set-up for generation of steam for its manufacturing process can be said to be for generation of power. The basis on which the learned Commissioner (Appeals) has tried to distinguish the decision of Sial SBEC Bio Energy Ltd. (supra) is very superficial. What needs to be seen is, whether generation of steam can be said to be generation of power or not, then, the finding and the conclusion drawn by the Tribunal in the aforesaid decision after referring to the catena of decisions and various other provisions clearly clinches the point. Now coming to the other observation of the learned Commissioner (Appeals) that the assessee has not undertaken the generation of power in this year also, we find that the same is incorrect on facts because the assessee has already filed a certificate from the Karnataka State Boiler Inspection Department that the assessee has generated steam during the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired property at Bangalore on lease. For repair and maintenance of the new Bangalore office, it had incurred a sum of ' 2,14,075 during the assessment year 2002-03. The Assessing Officer, after holding it to be capital expenditure, disallowed the said expenditure. 42. The learned Commissioner (Appeals), while deciding the issue, had followed the first appellate order for the assessment year 2001-02 in assessee's own case and partly affirmed the said findings. 43. Before us, it has been submitted that this issue has been decided in favour of the assessee by the Tribunal in assessee's own case for the assessment year 2000-01 and 2001-02 in ITA no.8243/Mum./ 2004, etc., order dated 31st January 2007. The relevant observations and findings of the Tribunal in this regard are as under:- "7. The next dispute relates to the disallowance of expenditure in respect of new Bangalore office taken on lease. The amount so spent for A.Y. 2000-01 is ' 36,68,591 and for A.Y. 2001-02 is ' 4,29,052. We have heard both the sides and have gone through the record. The assessee had taken office on lease and to make it fit for use the aforesaid expenses were incurred on plastering, polishing, false ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act as recorded by the learned Commissioner (Appeals) that after making the adjustments made by the assessee in the opening stock and purchase and sale, the net effect is nil appears to be based on fact. Thus, we do not find any reason to deviate from such findings of fact which has not been rebutted and, hence, the ground no.6(i) and 6(ii) raised by the Revenue stand dismissed". 45. Thus, on similar lines, we uphold the order of the CIT(A) and dismiss the ground raised by the revenue. 46. In ground no. 4, the revenue has challenged the allowability of deduction u/s 80HHC while computing the book profit u/s 115JB. 47. Before us, the Ld. Counsel submitted that this issue has been decided against the assessee by the Tribunal in the earlier years, vide which para 236 reads as under :- "236. After hearing both the parties, we find that this ground is similar too the additional ground raised by the assessee in its appeal in ITA no.3802/Mum./2006, for the assessment year 2002-03. However, this ground now stands covered against the assessee in view of the retrospective amendment brought in statute in section 115JB by the Finance Act, 2011 w.e.f. 1 st April 2005. Since this amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
