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TMI Blog2019 (11) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... see s appeal. Disallowance u/s 14A - HELD THAT:- We noted that the CIT(A) has categorically admitted that here is no satisfaction recorded in the assessment order while referring to the provisions of section 14A of the Act read with Rule 8D(2) of the Rules. We noted that this issue is squarely covered in favour of assessee and against Revenue by the decision of Supreme Court in the case of Maxopp Investment Ltd. vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT] . However, this issue also covered by the decision of Hon ble Bombay High Court in the case of Godrej Boyce Manufacturing Company Ltd vs. DCIT [ 2017 (5) TMI 403 - SUPREME COURT] . As this issue is squarely covered in favour of assessee and against the Revenue, hence, we delete the disallowance only on the issue of non-recording of satisfaction for invoking the provisions of section 14A of the Act read with Rule 8D of the Rules. Hence, this issue of assessee s appeal is allowed. Depreciation of UPS @ 15% treating the same as part of plant and machinery, as against the claim of depreciation of the assessee @ 60% as part of the computer - HELD THAT:- Depreciation allowed at the rate of 60% on UPS Deduction u/s 80IA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in holding that the reimbursement of expenses made by the assessee to an institute for running of a school at Mankahari, Satna was not hit by the provision of section 401A(9) of the Act. 3. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the CIT(A) has deleted the addition following Tribunal s order in assessee s own case for AY 2000-01 in ITA No. 889/Mum/2005 order dated 27.02.2008 by observing in Para 6.3 as under: - 6.3 I have considered the submissions of the appellant and perused the materials available on record including copies of the judicial decisions relied upon by the appellant. A perusal of the record shows that this is a recurring issue. So for the issue was covered against the appellant by order of Hon ble Mumbai ITAT dated 27.2.2018 in its own case in ITA No 889/Mum/2004 for AY 2000-01. Following the said decision, the disallowance made by the AO in AYs 2008-09 and 2009-10 was upheld in first appeal. However, as stated above, pursuant to the filing of a Miscellaneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier years in present case by observing as under: - 7.3 I have considered the submissions of the appellant and perused the materials available on record including copies of the judicial decisions relied upon by the appellant. It is observed form the record that the issue under appeal is also a recurring issue covered in favour of the appellant by order of my predecessor in AY 2006-07 which has been followed while deciding the first appeals filed by the appellant for AY 2008-09 and 2009-10. The facts and submissions made by the appellant are substantially similar to those in AY 2008-09. There being no change in the facts as well as the legal position on this issue. I have no reason to differ from the decision taken by my predecessors in AYs. 2008-09 and 2009-10. In view of the above position, the disallowance of depreciation of ₹ 3,53,75,977/- made by the AO cannot be sustained and the same is deleted. Grounds bearing Nos. 5(a) to 5(d) raised by the appellant are accordingly allowed. 7. Even we noted that the Tribunal in AYs 2008-09 and 2009-10 in ITA No. 8048/Mum/2011 and 1776/Mum/2013 has dismissed the Revenue s appeal by observing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, assessee has raised the following ground 1(a) (b): - 1. (a) The learned Commissioner of Income Tax (Appeals) erred in upholding the action of the learned Assistant Commissioner of income tax, Central Circle-34, (hereinafter referred to as the Assessing Officer) in disallowing a sum of ₹ 1,83,50,404/- under section 14A while computing the total income of the appellant under normal provisions as well as book profit under section 115JB. (b) Without prejudice to what is stated above, the appellant submits that Commissioner of Income tax (Appeals) erred in upholding the action of Assessing Officer in considering interest expenses for the purpose of calculation under Rule 8D(ii) as the entire interest paid was for the purpose of its business and for working capital requirements of the appellant and no borrowed funds were utilized for the purpose of investments. 10. The first issue is regarding the order of CIT(A) confirming the disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D2 of the Rules while computing book profit under section 115JB of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edural and hence, he rejected the claim of the assessee as regards to recording of satisfaction. For this CIT(A), in Para 5.3.1 and 2 has considered this aspect and noted as under: - 5.3.1 Thus, all the essential elements for invoking the provisions of Section 14A are present in this case. It is observed that the appellant had suo moto disallowed ₹ 20,44,907/- u/s.14A as per the tax audit report u/s.44AB. In this connection, I find merit in the plea of the appellant that the A.O. has not given any cogent reasons for rejecting the working of disallowance u/s.14A amounting to ₹ 20,44,907/- made by the appellant and resorting to the provisions of Section 14A(2) r.w.Rule 8D. 5.3.2 A perusal of the impugned order reveals that the A.O. has not properly examined the working of disallowance of ₹ 20,44,907/- u/s.14A suo moto made by the appellant. Nor has the A.O. expressed any opinion on the correctness or otherwise of the appellant's claim in respect of aforesaid expenditure, having regard to the accounts of the appellant. However, such lapse or omission on part of the A.O. is at best a procedural lapse and it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f depreciation of the assessee @ 60% as part of the computer. For this assessee has raised the following ground No.2 (a) (b): - 2(a) The learned Commissioner of Income-tax (appeals) erred in upholding the action of the Assessing Officer in allowing depreciation on UPS @ 15% by treating the same as plant machinery as against depreciation claimed by the appellant @ 60% as part of computer. (b) Without prejudice to what is stated above, the appellant submits that UPS are in the nature of energy saving device and as such entitled to depreciation @ 80%. 14. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that this issue was identical in earlier year i.e. AYs 2008-09 2009-10, in ITA No.8048/Mum/2011 1776/Mum/2013, wherein this issue has been dealt with vide Para 8 and 8.1: - 8. In the fourth Ground, the grievance of the assessee is against the action of the income tax authorities in allowing depreciation on UPS @15% treating it as a part of Plant Machinery, as against assessee s claim for allowance of depreciation @60% as part of computer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax exemption of ₹ 15,02,80,412/- availed during the year under consideration be treated as a capital receipt and hence be excluded in computing book profit under section 115JB of the Act. 5. That on the facts and in circumstances of the case, income from sale of carbon credit of ₹ 1,14,34,760/- earned during the year under consideration be treated as a capital receipt and hence be excluded in computing book profit under section 115JB of the Act. 18. Another issue raised by way of additional ground is as regards to the claim of deduction under section 80IA of the Act as certified in form No. 10 CCB in respect of infrastructure facility in the nature of Rail System developed, operated and maintained by assessee. For this assessee has raised following ground No. 3: - 3. That on the facts and in circumstances of the case, deduction under section 80IA of the Act certified in Form 10CCB be allowed to the appellant in respect of the infrastructure facility in the nature of Rail System developed, operated and maintained by it. 19. Before us, the learned Counsel for the assessee argued issue wise on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e normal provisions of the Act and in computing book profit under section 115JB of the Act. For AYs 2005-06 to 2009-10, the assessee had filed similar additional ground of appeal before the Hon'ble ITAT in respect of treatment of sales tax subsidy as capital in nature. The Hon'ble ITAT was pleased to admit the said additional ground of appeal and sent the issue to file of the Assessing Officer to examine the claim of the assessee and decide in accordance with law. The copies of the orders of the Hon'ble ITAT for AY 2005-06 to AY 2007-08 ITA No.5957/Mum/2009, 3275/Mum/2010, 8049/Mum/2010, order dt. 1605-2016] and AY 2008-09 to AY 2009-10 [ITA No. 8554/Mum/2011 965/Mum/2013, Order dt. 16-06-2017 are enclosed herewith as Annexure-A and Annexure-B respectively. 21. The next issue is sale of carbon credit earned during the year under consideration is to be treated as capital receipt. He stated the facts that the assessee has undertaken a Clean Development Mechanism ('COM') project by utilization of waste gases emitted from gas based power generating system for spray drying and vertical drying application at HRJ unit in Dewas, Madhya Pradesh. The projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucture facility: Rail System The assessee has developed an integrated Rail System between its cement manufacturing plant and the nearest railway station of the Indian Railways for inward and outward movement of goods for efficient and cost effective transportation to/from various destinations. The assessee fulfills the prescribed conditions in order to claim deduction u/s 80-IA in respect of the aforesaid infrastructure facility. However, the assessee was neither aware of the fulfillment of the said eligibility conditions nor any judicial precedents in this regard. As such, no claim of deduction u/s 80-IA in respect of the aforesaid infrastructure facility was made white filing the income tax return, during the course of assessment as well as during the appellate proceedings before the CIT(A). 23. Subsequently, the assessee noticed that the Hon'ble Mumbai ITAT in the case of M/s. Ultratech Cement Ltd. -vs.- DOT [ITA No. 5107 It 7614/Mum/2014, Order dt. 05-0420171 dealing with the similar facts as that of the assessee's case, has granted deduction u/s 80-IA in respect of Rail System. Based on the said decision, the assessee sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or super tax or any law relating to tax on profits of business, to take into consideration such depreciation actually allowed under these rules also for the purpose of computing the written down value. The assessee contended that the Tribunal should not have allowed the department to raise the contention for the first time before it and remanded the case. The Supreme Court held that the Tribunal had sufficient power under section 33(4) to entertain the contention of the department and to remand the case to the ITO. 19. After referring to section 33(4) which gave to the Tribunal power to pass 'such order thereon as it thinks fit', the Supreme Court said: The word 'thereon', of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by section 31 of the Act. ... (p. 237) And a little later, the Court explained: In the present case, the subject-matter of the appeal before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal in AY 2005-06 to 2009-10 in its own case has admitted the said additional ground and sent the issue to the file of the AO to examine the claim and decide in accordance of law. 29. On the issue of sale of carbon credit, the reasons given by the assessee for making the fresh claim is the decision of the Hon'ble Karnataka High Court in case of CIT vs. Subhash Kabini Power Corporation Ltd. [2016] 69 taxmann.com 394 [order dated 29.03.2016] 30. On the issue of deduction u/s 801A, the reasons given by the assessee for making the fresh claim before the Tribunal is as under: Subsequently, the appellant noticed that Hon'ble Mumbai ITAT in the case of MIs. Ultratech Cement Ltd. vs DCIT ITA No. 5107 76141Mum12014. order dated 05-04-2017] dealing with similar facts as that of the appellant's case has granted deduction u/s 80IA in respect of Rail System. Submission of The Department Filed by Learned CIT DR 5. Decision of Hon'ble Bombay High Court in the case of Ultratech Cement Limited reported in [2017] 81 taxmann.com 74 (Bom) [date of order: 18.04.2017] is the latest decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 801A in not a pure question of law. 11. It is also clear from the aforesaid decision that record means record before assessing officer. 12. In the present case also, the assessee has claimed deduction u/s 80IA on Rail siding which is not a pure question of law as held by jurisdictional High Court in case of Ultratech Cement Ltd. and material facts to support such claim was not on record before the Assessing Officer. 13. In the present case, the assessee is for the first time filing form no. 1OCCB and agreements with Railway authorities in support of its claim under section 801A. Obviously, these are fresh evidences not existing on record before the lower authorities. 14. The interpretation that record means record before the Assessing officer will be clear beyond doubt if we see the land mark decision of the Supreme Court in case of NTPC Ltd. though it was in favour of the assessee. 15. The decision of the Supreme Court in case of National Thermal Power Co. Ltd. Vs. CIT [1998] 229 ITR 383 (SC)] also deals with the power of the Appellate Tribunal u/s 254. In that decision, the supreme Court held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. But later on. it was assessed to purchase tax and claimed deduction of it during the pendency of appeal before AAC. The assessee was entitled to the deduction as per order of the Supreme Court in case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT [1971] 82 ITR 363 (SC). In these circumstances, the AAC allowed to raise this question and after hearing the ITO, he granted deduction from assessee's income. Here what the AAC allowed was purely a legal claim and the facts are not in dispute. 20. In the case of Ahmedabad Electricity Co. Ltd. VS. CIT [1993] 199 ITR 351 (Born), the assessee did not claim deduction of amounts transferred to Reserve' as per Electricity Supply Act either before ITO or AAC. Subsequently, the High Court in case of Amalgamated Electricity Co. Ltd. [1974] 97 ITR 334 (Born) held that such amounts represent allowable deduction on revenue account. In view of above, the additional grounds were allowed. There was no dispute in this case regarding the amount transferred to reserve. Only the legal claim of deduction was made fresh. 21. Therefore, the decision of the Supreme Court in case of Jute Corpn. of India Ltd. vs.CIT [1990] 53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid ITAT order in case of Ultratech Cement Ltd., the Tribunal has decided the issue of deduction u/s 801A on Railway sidings in favour of assessee in case of Ultratech Cement Ltd. long back vide following orders: ITA No. 7735 7736/Mum/2007 dated 20.08.2009 for AY 2004-05 2005-06 ITA No. 2604/M/09 dated 31.5.2010 for AY 2006-07 ITA No. 8143/Mum/2010 and ITA No. 1813/Mum/2012 dated 28,042014 for AY 2007-08 and 2008-09. Therefore, the order of the Tribunal dated 05/04/2017 is not a new order on the subject matter and cannot constitute bona fide reasons. 26. Moreover, the Jurisdictional High Court in case of Ultratech Cement Ltd. vide its order date 18.4.2017 has held that additional ground related to deduction u/s 801A is not a pure question of law. Further, the facts also do not exist on record in the assessment proceedings to allow benefit u/s 801A. 27. To conclude, in the present case, all the three additional grounds are being raised for the first time before the Tribunal without relevant evidence being on record in the assessment proceedings. Here, not only the claims raised are new but also the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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