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TMI Blog2017 (1) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The assessee claimed deduction u/s. 80IB to the tune of Rs. 22.59 crores in respect of power transmission division, Rakholi. It also claimed deduction u/s. 80IC of the Act to the tune of Rs. 8.52 crores in respect of power transmission division, Haridwar. The AO, while completing the assessment determined the Business income of the assessee after setting off of brought forward loss at Rs. 4,04,32,385/-. The Gross total income of the assessee came to be computed at Rs. 6,53,71,905/-. The Assessing Officer, by placing reliance on the decision of Hon'ble Supreme Court in the case of SYNCO Industries Ltd. (2008) 299 ITR 444 and also provisions of section 80AB of the Act, took the view that the aggregate amount of deduction allowable u/s. 80IB and 80IC of the Act should be restricted to the amount of "business income" computed. Accordingly, he restricted the aggregate amount of deduction under both sections of Rs. 4,04,32,385/-. The learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before us with the contention that the aggregate amount of deduction u/s 80IB and 80IC should be restricted to the amount of Gross Total Income. 5. Learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction under Chapter VI-A of the Act". The Hon'ble Supreme Court in the above cited case held that the losses suffered should be adjusted while working out gross total income and if the gross total income is NIL, then the assessee shall not be entitled to deduction under Chapter VI-A. We notice that the Hon'ble Supreme Court has not decided the issue as to whether the aggregate amount of deduction should be restricted to the amount of "Business income" or "Gross Total income". 9. The Ld CIT(A) has taken support of the provisions of sec. 80AB to come to the conclusion that the income referred to in sec. 80IB and 80IC is the profits and gains of the undertakings included in the Gross total income. Accordingly the Ld CIT(A) has held that the aggregate amount of deduction allowable u/s 80IB and 80IC cannot exceed the business income, since it is the amount of profits and gains included in the Gross total income. In our view, the Ld CIT(A) has misdirected himself in interpreting the provisions of sec.80AB of the Act. A study of history of provisions of sec. 80AB and its predecessor 80AA would show that the same is intended to refer to the "Net income", i.e., (Gross income less expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee (Rs.539.51 crore) as on 31.3.2008 is in far excess of the amount of investments (Rs.6.01 crores). Similar is the position in the earlier year also. Hence, in view of the decision of Hon'ble Bombay High Court rendered in the case of HDFC Bank Ltd (366 ITR 505), there is no requirement to make interest disallowance under rule 8D(2)(ii) of the IT Rules. Accordingly we confirm the order passed by Ld CIT(A) on this issue. 13. With regard to the expenses, we notice that the assessee has made investment only in its subsidiary companies during the year under consideration. In the preceding year, it had also made investment in units of two mutual funds and they have been sold during the year under consideration. The Ld A.R submitted that there is no requirement to apply the provisions of rule 8D, when these specific details are available on record. He submitted that the assessee itself has worked out allocable expenses at Rs. 1,65,000/- and accordingly prayed that the disallowance may be restricted to the above said amount. On a careful perusal of the submissions made by the assessee and the Ld D.R, we find merit in the submissions made by Ld A.R. We have noticed the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute that the decision rendered by the larger bench of Tribunal is required to be preferred over the division bench. Accordingly we are of the view that this issue requires fresh examination in accordance with the decision rendered by the Special bench in the case of Biocon Ltd (supra). Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to compute the deduction in accordance with the method prescribed by the Special bench in the decision referred supra. The assessee is directed to furnish the details that may be called for by the AO in this regard. 19. We shall now take up the appeal filed by the assessee for AY 2009-10. The first issue urged by the assessee relates to the claim for deduction u/s 80IC of the Act on the receipts from sale of scrap. This issue has been decided in favour of the assessee in the following cases:- (a) CIT Vs. Sadhu Forging Ltd (336 ITR 444)(Delhi) (b) CIT Vs. Harjivandas Juthabhai Zaveri (258 ITR 785)(Guj) Following the above said decision, we set aside the order passed by Ld CIT(A) and direct the AO to allow deduction u/s 80IC of the Act on the receipts from sale of scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 1 to 115JB of the Act, as held by us in the preceding year while adjudicating identical issue. 23. We shall now take up the appeal filed by the revenue for AY 2009-10. The issues urged therein are identical to the one urged in AY 2008-09. However, the revenue has inadvertently mentioned the figures relating to assessment year 2008-09 in the grounds urged for AY 2009-10. 24. The first issue relates to the relief granted by Ld CIT(A) on the addition made u/s 14A of the Act. In the earlier paragraphs we have confirmed the order passed by Ld CIT(A) on this issue. Accordingly we reject this ground of the revenue. 25. The next issue urged by the revenue relates to the disallowance of ESOP expenses. The AO disallowed a sum of Rs. 68,21,137/- during AY 2009-10. The Ld CIT(A) deleted the same by following the order passed by the Tribunal in the assessee's own case for earlier years. We have considered an identical issue in AY 2008-09 in the preceding paragraphs and restored this matter to the file of the AO with the direction to decide this issue by following the decision rendered by the Special bench of Tribunal in the case of Biocon Limited (supra). Consistent with the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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