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TMI Blog2019 (10) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... the additions and disallowance made by the Learned Assessing Officer, is based on irrelevant considerations, against the principles of natural justice, contrary to facts, arbitrary, erroneous and bad in law. 2. Disallowance of Interest on disputed Govt, duty (Electricity Duty and water charges -Rs. 202,61,47,249/-, a. That on the facts and in the circumstances the case, sustaining the addition/disallowance of Rs. 202,61,47,249/- under 'Interest on Disputed Govt, duty (Electricity Duty and water charges)' by the learned CIT (Appeals), ignoring the written submissions and the orders of the jurisdictional ITAT Bench, is against the principles of natural justice, arbitrary, erroneous, bad in law and legally untenable. b. That the learned CIT (Appeals) ignoring arid not following the order of the Jurisdictional ITAT (Hon'ble ITAT Cuttack Bench, Cuttack) for the Asst. Year 2005-06 in appellant's own case), wherein in under similar circumstances, the issue of allowbility of 'Interest on Disputed Govt, duty (Electricity Duty and water charges)' having been decided in favour of the assessee, his order in confirming the addition/disallowance of Rs. 202,61,47,24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. d. The appellant's computation of the aforesaid Rs. 82,378/- u/s. 14A of the Act is based on its books of accounts and is worked out in a reasonable and fair manner, the learned lower authorities have mis appreciated/misconstrued the same and the disallowance U/S.14A of the Act is incorrect, arbitrary, erroneous and bad in law. e. That the learned CIT(Appeals) holding that the aforesaid Rs. 82,378/- has no basis and purely adhoc' is incorrect, contrary to facts, arbitrary and erroneous and bad, both in the eye of law and on facts, 5. Treatment of Short Term Capital Gains of Rs. 67,67,666/- and not accepting Loss under Long term Capital Gains of Rs. 13,75,90,268/- and treating the same as 'Business income' and the addition under "Business Income" of Rs. 114,80,58,652/- a. That on the facts and in the circumstances the case, the dismissal of the ground for Treatment of Short Term Capital Gains of Rs. 67,67,666/- and not accepting Loss under Long term Capital Gains of Rs. 13,75,90,268/- and treating the same as 'Business income' and the addition of Rs. 114,80,58,652/- under "Business Income" by the learned CIT (Appeals) is arbitrary, erroneous, bad, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,464/- That on the facts and the circumstances of the case, the learned CIT (Appeals) ought to / have allowed the claim of Additional depreciation Rs. 85,65,464/- u/s.32(l)(iia) of the I.T Act, instead of directing the matter to the Ld. Assessing officer as all the details and supporting were available with him. 6. That the appellant craves leave to add, supplement, modify the grounds here-in-above before or at the hearing of the appeal. 3. The brief facts are that the assessee is a public sector company is engaged in the business of bauxite mining, manufacture of Alumina and Aluminum & Power Generation and filed its return of income for the assessment year 2014-2015 electronically on 28.11.2014 with total income of Rs. 748,62,49,500/- and under the provision of section 115JB of the Act at Rs. 642,35,18,317/- and the return of income was processed u/s.143(1) of the Act and subsequently, the case was selected for scrutiny under CASS and notices u/s.143(2) & 142(1) of the Act were issued. In compliance, the AR of the assessee appeared from time to time and filed written submissions and the Assessing Officer completed the assessment u/s.143(3) of the Act, dated 29.02.2016, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served as under :- "11. On further appeal to the Tribunal, the ld. AR of the assessee before us submitted that the issue under consideration is squarely covered by the order of this Tribunal in assessee's own case for A.Y. 2006-07 and 2007-08 in ITA Nos. 233, 234/CTK/2011 dated 20.07.2012 and in ITA Nos. 66-68, 459, 511-512/CTK/2003 dated 20.11.2005 in respect of A.Y. 1994-95 to 1998-99 and 2000-01. Ld. AR further stated that the interest liability is as per Statute and has been charged to the Profit & Loss account on accrual basis and comply the mercantile system of accounting, and is allowable u/s 37 of the Act and prayed that addition by the lower authorities be deleted. The ld. AR filed a copy of order of the Tribunal in assessee's own case for the assessment year 2010-2011 in ITA No.352/CTK/2016 and other connected appeals, dated 27.04.2018, wherein the Tribunal has decided the issue in favour of the assessee relying on the earlier decision of the Tribunal in assessee's own case for the assessment years 2006-2007 & 2007-2008 in ITA Nos.233&234/CTK/2011, dated 20.07.2012 and also for the assessment year 2005-06 in ITA No.286/CTK/2013, order dated 11.05.2016. The observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoning given by the AO for disallowing interest on non/delayed payment of water charges are that it was a contingent liability. We found that Tribunal in assessee's own case in earlier years had allowed this claim under similar circumstances and held that interest on unpaid electricity duty and water charges is fully allowable u/s.37 of the Act and provisions of Section 44A of the Act for disallowance is not attracted. 7.It is pertinent to mention here that the ITAT Cuttack Bench in the case of NALCO in the combined order dated 30-11-2005 has held that interest on disputed Electricity Duty are allowable u/s.37 of the Act and further the interest on Electricity Duty, even if a statutory liability, the same do not fall under the ambit of Section 43B of the Act and therefore, even if such interest is not paid the same is not to be disallowed under section 43B. 8.Following the reasoning given hereinabove with regard to the interest on delayed payment of electricity bill, we direct the AO to allow interest on the water bill. We direct accordingly." We respectfully follow the above orders of the Tribunal and direct the AO to allow the claim of the assessee on account of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has made the provision for leave encashment and the provision was not added back in the computation of income. As the ld. AR submitted that the above issue is covered by the order of the coordinate bench of the Tribunal in the case of Baitarani Gramya Bank in ITA Nos.318 & 319/CTK/2013 for assessment years 2008-09 & 2009-10, wherein the Tribunal held as under :- "19.1The DR also agreed with the submission of ld. AR of the assessee. In the circumstances of the case, we set aside the order of the CIT(A) and remit the matter to the file of the Assessing officer to re-adjudicate the issue in the light of the Hon'ble Supreme Court decision. Hence, this ground is allowed for statistical purposes. 20. In the result, appeal for the assessment year 2008-09 is partly allowed for statistical purposes." 29. We considering the ratio of the decision and the facts to the present case, remit this issue to the file of the AO to examine and allow the claim and this ground of appeal is allowed for statistical purposes." Respectfully following the order of the Tribunal and we restore this issue to the file of AO to examine and allow the claim of the assessee and we allow this ground of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A (2) of the Act read with Rule 8D (1) (a) of the Rules and we respectfully follow the above judicial decision of the Tribunal and remit the disputed issue to the file of AO for re-examination and verification and to decide the issue on merits after complying the mandatory requirement of the provisions of Section 14A of the Act and this ground of appeal is allowed for statistical purposes. 14. From the orders both the authorities below, we observe that the assessee is earning income under different heads, as mentioned above. During the year, the assessee has received dividend of Rs. 110,068,076/- and claimed such income as exempt income. The assessee has only made disallowance at Rs. 1,20,828/- u/s.14A to earn the exempt income. The Assessing Officer has applied section 14A read with Rule 8D and disallowed the expenditure as per formula provided under rule 8D. The assessee is stated to have made no fresh investments out of borrowed funds. The Assessing Officer appears to have calculated the disallowance as per Rule 8D(2)(iii) observing that administrative expenses cannot be denied to earn exempt income. We, however, find that the Assessing Officer has considered average total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals, has allowed the appeal of the assessee. The observations of the Tribunal in this regard are as under :- "39. We have heard rival submissions and perused the material available on record. We find that the main object of the assessee is manufacturing and assessee being a public sector company has enough funds and made investment in the mutual funds and on redemption the income is offered under the capital gain and the main object being the business and the maximum income is established through the direct business operations and not from the financial transaction. The investment has been made with the mutual funds/liquid funds/ closed ended funds and encashment on redemption/maturity. Further, the total profit earned by the assessee company by way of capital gains is only about 4% of the total income of the assessee company, which clearly shows that the assessee company is engaged in the business of mining, manufacturing, generation and production of aluminium and not dealing in mutual funds / liquid funds. We find the Hon'ble Gujarat High Court in the case of Pr. CIT Vs. Ramniwas Ramjivan Kasat [2017] 248 Taxman 484, has held as under :- "5. The second issue pertains to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce litigation and uncertainty in the matter, in partial modification to the aforesaid circulars, further instructs that the Assessing Officers in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following- a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income, (b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years; (c) In all other cases, the nature of transaction (i.e. whether the same is in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the lower authorities. Therefore, claim of additional depreciation may kindly be allowed. On the other hand, ld. DR relied on the order of AO. 18. After hearing both the parties and perusing the material on record along with orders of authorities below, we find that the assessee has claimed additional deprecation u/s.32(1)(iia) of the Act, however, the AO disallowed the same on account of the fact that the assessee could not produce the particulars/details of actual cost during the course of assessment proceedings. The CIT(A) has dealt with the issue in details and restore the issue to the file of AO for verification of claim of depreciation as per the necessary details to be filed by the assessee to ascertain the date of acquisition and directed the AO to allow the additional depreciation as per the law after such verification. The relevant observations of the CIT(A) read as under :- "5.2 I have considered the matter. Similar issue has been decided by the CIT(A)-II, Bhubaneswar vide her order dt.16.7.2014 in ITA No.0700/2013-14 for the AY 2011-12 with the following observations: "The appellant company submitted that the majority of the plant and machinery installed in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 7,77,14,686/-, on which additional depreciation claim has been disallowed in assessment, after calling for the necessary details from the assessee to ascertain the date of acquisition, and allow additional depreciation as per law after such verification." From the above observations of the CIT(A), we are of the considered opinion, that the CIT(A) has already remitted the issue to the file of AO to allow the claim of the assessee after verification of necessary details. Therefore, any order/direction by us, at this stage, on this issue, would be futile exercise. However, a reasonable order is expected from the AO on the above observations of CIT(A). Hence, ground No.6 is disposed of accordingly. 19. Thus, the appeal of the assessee in ITA No.106/CTK/2018 is allowed partly for statistical purposes. 20. Now, we shall decide the appeal of Revenue in ITA No.110/CTK/2018, wherein the Revenue has raised the following grounds :- 1. The order of the Ld. CIT(A) is erroneous on facts and in law. 2. On the facts and the circumstances of the case and in law, ld. CIT(A) is not justified in deleting the addition of Rs. 11,35,37,207/- made by the AO towards 'disallowance of loss on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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