9911796707
TMI Blog2019 (11) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the fact that claim was neither made in in original return of income nor revised return was filed. First sub issue raised in ground no.1 is decided in favour of assessee. Whether the Ld. A.O was justified in denying the benefit u/s 80IA(4) of the Act for not filing the audit report in Form 10CCB along with the return of income? - Hon'ble Jurisdictional High Court in the case of CIT Vs. Panama Chemicals Works [ 2006 (8) TMI 159 - MADHYA PRADESH HIGH COURT ] dealt the similar issue holding that the claim of the assessee u/s 80IA(4) is justified if it has not filed the audit report in Form 10CCB along with return of income but submitted later on during the assessment proceedings. Whether before allowing deduction u/s 80IA(4) of the Act, profit and loss of each unit needs to be considered on individual basis or consolidated profit loss of all the eligible units basis? - Co-ordinate Bench, Chennai in the case of Shriram Properties Pvt. Ltd V/s ACIT [ 2013 (9) TMI 446 - ITAT CHENNAI ] decided similar issue in favour of the assessee thereby holding that profits and loss of individual units and not consolidated units are to be considered for granting deduction u/s 80IB. Initial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AND HON BLE MANISH BORAD, ACCOUNTANT MEMBER For the Revenue : Shri K.G. Goel, Sr.DR For the Assessee : Shri Ajay Tulasiyan, CA ORDER PER MANISH BORAD, AM: The above captioned three appeals filed by the revenue for Assessment Year 2012-13 to 2014-15, Cross Appeal by the assessee for 2012-13 and Cross Objections by the assessee for Assessment Year 2013-14 to 2014-15 are directed against the order of ld. Commissioner of Income-tax (Appeals)-I, Indore, dated 30.07.2018, which are arising out of the order u/s 143(3) r.w.s. 144C of the Income Tax Act dated 22.03.2016 framed by the DCIT-1(1), Indore. 2. As the issues raised in the appeals and cross objections are common in nature these were heard together and are being disposed off by this consolidated order for the sake of time and brevity. 3. First we will take up Revenue s appeal raising following Grounds of appeal: ITA No.801/Ind/2018 Assessment Year 2012-13 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to ₹ 57,94,105/- in respect of computing arm s length price for the corporate guarantee given by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was also submitted that under the identical facts, the coordinate bench of this Tribunal vide order dated 14.8.2019 in ITA No.1398/Ahd/2004 and others in the case of ITO Vs. Dinesh Madhavlal Patel has dismissed the revenue s appeals as non maintainable. 5. Ld. D.R. appealing on behalf of the revenue could not controvert this fact. 6. We have considered the rival submissions and gone through the records. It is not in dispute that in these three appeals, the tax effect for each year is below monetary limits of ₹ 50 lakhs as prescribed under the CBDT circular No.3/2018 dated 8th August, 2019 (supra). The coordinate bench of this Tribunal in ITA No.1398/Ahd/2004 and others in the case of ITO Vs. Dinesh Madhavlal Patel (supra) decided the issue by holding as under: 5. Having considered the rival submissions and having perused the material on record, we do not have slightest of hesitation in holding that the concession extended by the CBDT not only applies to the appeals to be filed in future but it is also equally applicable to the appeals pending for disposal as on now. Our line of reasoning is this. The circular dated 8th August 2019 is not a standalone circular. It is to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / cross objections/ references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/ appeals/ cross objections/references. Pending appeals below the specified tax limits in pare 3 above may be withdrawn/ not pressed. 7. In view of the above discussions, we hereby hold that the relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 (supra) shall be applicable to the pending appeals in addition to the appeals to be filed henceforth. 8. Learned Commissioner (DR) then submits liberty may kindly be given to point out, upon necessary further verifications, and to seek recall the dismissal of appeals and restoration of the appeals in the cases (i) in which it can be demonstrated that the appeals are covered by the exceptions, and (ii) which are inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds ₹ 50,00,000. None opposes this prayer; we accept the same. We make it clear that the appellants shall be at liberty to point out the cases which are wrongly included in the appeals so summarily dismissed, either owing to wrong computation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the decision of the coordinate bench, we hereby dismiss these three appeals of the revenue for Assessment Year 2012-13 to A.Y. 2014-15 in limine without going in to the merits of the case. 8. In the result, all the three appeals filed by the revenue for A.Y. 2012-13 to 2014-15 are dismissed. 9. Now we take up Assessee s cross appeal and Cross Objections raised for Assessment Year 2012-13 to 2014-15. 10. Assessee has raised following Grounds of appeal for Assessment Year 2012-13 in ITA No.778/Ind/2018. 1.That the Ld. CIT(A) erred in not allowing the claim of deduction made under section 80IA(4) in respect of the profits of ₹ 64,62,398/- derived from the eligible power generation business through Wind Mill units of the appellant. That on the facts and in circumstances of the case the claim of deduction having been made during the course of assessment proceedings is legally allowable to the appellant, which has also been allowed in subsequent years, is prayed to be now allowed. 2. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Honourable Supreme Court in the case of Goetze (India) Limited Vs CIT (2006) 284 ITR 323 (Hon'ble Supreme Court) (ii) The requisite Form No. 3CCB was to be obtained and also filed before due date of the return hence the claim of the appellant is not eligible to be entertained. (iii) Profits and gains from all the three units were to be considered on consolidated basis no individually. 13. Aggrieved with the finding of Ld. A.O assessee preferred appeal before Ld. CIT(A) but failed to succeed. 14. Now the assessee is in appeal before the Tribunal for Assessment Year 2012-13. 15. At the outset Ld. Counsel for the assessee submitted that assessee s claim of being eligible for deduction u/s 80IA(4) of the Act is not disputed as in the subsequent assessment years such claim has been allowed. However as regards the issues raised in the appeal that whether legitimate claim can be denied by the Ld. A.O merely for not filing revised return of income and not filing the audit reports in support of the deduction and also with regard to the issue that whether the deduction u/s 80IA(4) is to be granted for each unit rather than consolidated profits of all the eligible uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative vehemently argued and supported the orders of both the lower authorities and also relied on the judgment of Hon'ble High Court of Himachal Pradesh in the case of CIT V/s Deepak Gupta and Rajiv Sharma, JJ (2012) 26 Taxmann.com 129 (HP). 17. We have heard rival contentions and perused the records placed before us and also carefully gone through the judgments referred and relied by both the parties. 18. As regards the issue of eligibility of deduction u/s 80I(4) of the Act at ₹ 64,62,398/- comprises of three sub-issues:- (i) Whether the Ld. A.O is duty bound to compute the correct income of the assessee even if the claim has not been made in the return of income but subsequently made during the course of assessment proceedings along with necessary documentary evidence in the form of audit report without filing revised return. (ii) That whether the assessee should be denied the benefit of deduction u/s 80IA(4) of the Act just for not making the claim in the regular return of income and not filing revised return of income even if the audit report in Form 10CCB is filed during the course of assessment proceedings along with making the claim. (iii) Whether the deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same in the grab of drawing incorrect interpretation from the pronouncement rendered by Honourable Supreme Court, ignoring the provisions enacted undr the Act and also under the Constitution of India which has overrinding and superseding effect over the all prevalent laws including Income Tax Act. That in the case of appellant, due to the rejection of a legitimate claim, the correct income has not been ascertained and the purpose of assessment has been defeated. 21A. Ld. Counsel for the assessee also submitted that the appellant s ignorance to claim correct deduction in the return of income cannot be taken to the advantage by the assessing officer and it is the benevolent duty of assessing officer to assess the correct income of a person as per law even if the assessee fails to claim any benefit legitimately due to him. 22. Hon'ble Apex court in the case of CIT vs. Mahalaxi Sugar Mills Co Ltd. 58 CTR 138 (enclosed at page 01 to page No.09 of the Case law Paper book). Relevant portion held that: There is a duty cast on the ITO to apply the relevant provisions of the Indian IT Act for the purpose of determining the true figure of the assesee s taxable income and the consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO rejected the claim merely stating that since the claim was not made by filing a revised return u/s 139(5) in view of the decision of the Hon'ble Apex Court in the case of Goetze India the claim cannot be accepted. The CIT(A) has also stated that when the bad debts are actually written off in the books of accounts as irrecoverable the said claim is allowable to the appellant u/ s 36(1)(vii) read with section 36(2). Since the amount of ₹ 11,90,575/- was actually written off from the debtors account in this year, the claim made by the appellant is a legitimate claim and is allowable. The AO is bound to assess the correct income and for this purpose the AO may grant relief suo-moto or on being pointed out by the assessee in the course of assessment proceedings. Hon ble Apex Court held that; 129. We find that it has been time and again held by various courts that legitimate claims of the assessee should be allowed even if raised during the assessment proceedings. In the case of CIT vs. Ramco International in (2011) 332 ITR 306. The Hon'ble Punjab and Haryana High Court has held that:- Deduction under section 80-IB-Allowability-Claim not made in return - Assessee having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay High Court have observed that the position may be different when an assessee does a particular act not within the specified time but after the expiry thereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the objects sought to be achieved by prescribing the time-limit, it would be the duty of the officer to consider the documents, even submitted belatedly. Thus, this decision also supports the view that even if the prescribed form is submitted belatedly, the AO has to proceed on the basis of the claim made. 9. We, therefore, hold that in the facts and circumstances of the case, the Tribunal was justified in law in holding that the claim of the assessee under s. 80-1 is justified even if he had not filed the audit report in Form No. 10CCB along with the return. We, therefore, answer the question against the Revenue and in favour of the assessee. 26. As regards to third sub issue relating to deduction u/s 80IA(4) of the Act raised before us that whether before allowing deduction u/s 80IA(4) of the Act, profit and loss of each unit needs to be considered on individual basis or consolidated profit loss of all the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 237/- or not in view of the fact that though there is gross total income of higher amount of ₹ 2,56,37,975/-, but in view of the fact that amount computed under the head 'business income' by aggregating profits and losses of all business is loss of ₹ 64,49,445/-. 9. Sub-section (1) of section 80-IB provides that where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (lIB), there shall be allowed, in computing the total income of the assessee a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. Sub-section (2) states that this section applies to any industrial undertaking which fulfils all the conditions stipulated in this sub-section. Sub-section (4) of section 80-IB states that the amount of deduction in the case of an industrial undertaking in an industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter. . In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. 12. Thus, a reading of the above provisions shows that for determining the amount which qualifies for deduction u/s 80lB(1), one has to compute the income from eligible business as if the eligible business was the only source of income of the assessee. In other words, the income or loss from other business or other activities are to be ignored for the purpose of determining the amount which is eligible for deduction u/s 80IB(l) of the Act. 13. Section 80A(1) provides that in computing total income of the assessee, there shall be allowed from the gross total income the deductions specified in sections 80-C to 80-U. Sub-section (2) further provides that the aggregate amount of deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the different business of the assessee which is the amount assessable as business income of the assessee. 15. We are reminded of the celebrated judgment rendered by the Hon'ble Supreme Court in the case of CIT v. Canara Workshop (P.) Ltd. (1986) 161 ITR 320 in which the assessee was engaged in the manufacture of automobile spares. The products manufactured by it were covered by the list in the Fifth Schedule to the Income-tax Act. During the relevant period, the assessee commenced another activity, that is the manufacture of alloy steels, which was also an industry covered in the Fifth Schedule. The assessee sustained loss in the alloy steel industry but profit in the other industry. It claimed deduction in respect of the profit without reducing the loss from the alloy steel industry. The ITO held that the assessee will be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture. The High court decided the point in assessee's favour. The revenue assailed the judgment of the Hon'ble High Court before the Hon'ble Supreme Court. While affirming the view taken by the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0105 (supra) observing as follows:- 13. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The undisputed facts of the case in the years under appeal is that the assessee claimed deduction u/s.80-IB of the Act. The AO computed the claim for deduction allowable u/s.80-IA to the assessee by allocating the losses of other units against the profits of the eligible units in proportion to the turnover of the assessee. On appeal, the CIT(A) confirmed the action of the AO on the ground that in the appeal for A Ys 2003-04 2004-05,the CIT(A) has confirmed the action of the AO. The Id.AR has submitted that due to smallness of the amount involved, the assessee though filed the appeal before the Tribunal in AYs 2003-04 2004-05 but had withdrawn the same and, therefore, the appeals of the assessee were dismissed as withdrawn. Thus, as the Tribunal has dismissed the appeals of the assessee for want of prosecution, it cannot be a decision on merits which can be applied in the subsequent years in the case of the assessee. We find force in the argument of the Id.AR of the assessee since the appeal of the assessee for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years beginning from the year in respect of which he has exercised such option subject to the fulfilment of conditions prescribed in the section. Hence) the term 'initial assessment year) would mean the first year opted for by the assessee for claiming deduction u/ s 80JA. However) the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years) as the case may be and the period of claim should be availed in continuity. 31. Further the judgment of Hon ble High Court of Himachal Pradesh in the case of CIT vs. Deepak Gupta and Rajiv Sharma(supra) relied by the Ld. DR is not applicable since the facts of the instant appeals are distinguishable. 32. We therefore respectfully following the above judicial pronouncements and in the given facts and circumstances of the case are of the considered view that Ld. A.O should have accepted the legitimate claim made by the assessee claiming deduction u/s 80IA(4) of the Act, for the eligible undertaking namely wind mill at Jodha, Rajasthan and also accepted the audit report filed for making such claim during the course of assessment proceeeings. Further since the assessee opted claim u/s 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2018. (ii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs. Eicher Motors Ltd (2007) 293 ITR 0464. (iii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs Bhopal Sugar Industries Ltd(1998) 233 ITR 0429. (iv) Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd Vs. CIT (1993) 199 ITR 0351. 37. Per contra Ld. Departmental Representative strongly opposed the submissions of the Ld. Counsel for the assessee and contended that the nature of the education cess is the same as for taxes and surcharge levied on the income of the assessee and thus are of the personal nature and not deductable as an expenditure. 38. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments relied by the Ld. Counsel for the assessee. The other issue commonly raised by the assessee for Assessment Year 2013-14 is that whether the education cess paid by the assessee along with the income tax and surcharge is deductible as expenditure u/s 37 or it is not deductible as per provisions of Section 40(a)(ii) of the Act which refers to the amount not deductible . 39. We observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi MANU/PH/0068/1956. It is well settled that in matters of taxation there is no question of res judicata because such year s assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period. (See the decision in the House of Lords in Society of Medical Officers of Health v. Hope (Valuation Officer) (1960) A.C. 551 approving and following the decision of the privy Council in Broken Hill Proprietary Company Limited v Municipal Council of Broken Hill (1925) A.C. 94. In Godrej Boyce Manufacturing Company Ltd vs. Dy. Commissioner of Income Tax ors (2017) 247 Taxman 361 (SC), it has been held as under:- 33.While answering the said question this Court considered the object of insertion of Section 14A in the Income Tax Act by Finance Act, 2001, details of which have already been noticed. Noticing the objects and reasons behind introduction of Section 14A of the Act this Court held that: Expenses allowed can only be in respect of earning of taxable income. In paragraph 17, this Court went on to observe that: Therefore, one needs to read the words expenditure incurred in Section 14A in the context of the scheme of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
