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TMI Blog2021 (12) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... from reserves and surplus account and credited to Profit Loss account. The net result of the accounting entries passed in the books of accounts was that the assessee has claimed enhanced depreciation on confessional duty and at the same time, reversed the same from reserves and surplus account and thus, the net effect of the entry is nil adjustment to income computed for the year. Therefore AO was erred in disallowing depreciation claim on asset and added back to total income without understanding the fact that entries passed in the books of accounts is not determinative to compute correct income of the assessee - Decided against revenue. Addition of interest income under the head income from other sources while computing tonnage tax u/s.115VI - HELD THAT:- In this case, the assessee has earned interest income and claimed that such interest income is derived from shipping business, on the ground that it had maintained separate books of accounts for shipping business and hence, whatever income derived from the segment of shipping business is eligible for tonnage tax scheme. We do not find merits in the arguments of the assessee for the simple reason that interest earned on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Supreme Court said in the case of M/s. Hero Cycles Ltd.[ 2015 (11) TMI 1314 - SUPREME COURT] and sat in the arm-chair of businessman and decided himself that investment made in above two companies are not strategic investments but only a quid pro quo without bringing on record any evidence to prove that said investments is a quid pro quo. The CIT(A) after considering relevant facts has rightly deleted additions made by the AO and hence, we are inclined to uphold the findings of the ld.CIT(A) and reject ground taken by the Revenue. Addition u/s 14A to book profit computed u/s.115JB of the Act - HELD THAT:- As relying on own case [ 2019 (12) TMI 1562 - ITAT CHENNAI] and Vireet Investment Pvt. Ltd., [ 2017 (6) TMI 1124 - ITAT DELHI] , held that computation under Clause (f) of the Explanation -1 to Section 115JB(2) is to be made without resorting to the computation as contemplated u/s.14A r.w.rule.8D of the Rules . Therefore, we direct the AO to delete addition made towards disallowance u/s.14A r.w.rule 8D to book profit computed u/s.115JB. Disallowance of advertisement expenditure - HELD THAT:- We find that an identical issue has been considered by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by MCA however, in the statement of total income deduction has been claimed towards total loss incurred in the year in respect of revenue account. The assessee has following said accounting method consistently for several years and further, when the loss incurred on fluctuation in foreign currency is on revenue account then said loss is deductable u/s.37(1) of the Act irrespective of accounting treatment given in books of accounts of the assessee. Therefore, we are of the considered view that there is no error in findings recorded by the ld.CIT(A) to delete addition made by the AO towards loss on foreign currency translation difference account and hence, we are inclined to uphold the order of the CIT(A) and reject ground taken by the Revenue. Transfer pricing adjustment to deduction claimed u/s.80IA of the Act towards income generated on captive power plant - HELD THAT:- We find that an identical issue has been considered by the Tribunal in assessee s own case for assessment year 2011-12. [ 2019 (12) TMI 1562 - ITAT CHENNAI] where the Tribunal under identical set of facts by following certain judicial precedents including the decision of Hon ble Bombay High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pear below the line needs to be added back to compute book profit u/s.115JB of the Act. Since interest on TDS is an item above the line in the Profit Loss account, the same cannot be added back while computing book profit u/s.115JB of the Act. The CIT(A) after considering relevant facts has rightly deleted additions made by the AO and hence we are inclined to uphold the order of CIT(A) and reject the ground taken by the Revenue. Depreciation on UPS - @ 60% as applicable to computers whereas, the AO has restricted depreciation @15% on UPS on the ground that UPS is a separate item of plant machinery. - HELD THAT:- Tribunal in assessee s own case for assessment years 2011-12 to 2016-17 [ 2019 (12) TMI 1562 - ITAT CHENNAI] where the Tribunal has deleted addition made by the AO towards excess depreciation on UPS by holding that UPS is an integral part of computer system which is eligible for depreciation @ 60% as applicable to computers. The CIT(A) after considering relevant facts has rightly deleted addition made by the AO and hence, we are inclined to uphold the finding of ld.CIT(A) and reject ground taken by the Revenue. Nature of receipts - Treatment of subsidy from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having heard both sides and considered the petitions filed by the Revenue for condonation of delay, we are of the considered view that reasons given by the Revenue for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of above appeals is condoned and appeals filed by the Revenue are admitted for adjudication. ITA No.2210/CHNY/2017, Assessment year 2008-09 3. The Revenue has raised the following grounds of appeal:- 1.1 The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case. 2.1 The CIT(A) erred in directing the AO to delete the disallowance of release from reserves under the normal provisions of the Act. 2.2 The CIT(A) failed to consider the fact that there cannot be any deduction for any release from reserve unless the same has gone to increase the profits of the year in which the said reserve was created. 2.3 The CIT(A) failed to consider the fact that no justification for claiming such depreciation has been explained by the assessee. 3.1 The CIT(A) erred in deleting the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the learned Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored. 4. The first issue that came up for our consideration from Ground No.2 of Revenue appeal is disallowance of amount released from reserves account under normal computation of income. 4.1 The facts with regard to impugned dispute are that during the year under consideration the assessee had, in the computation of total income under normal provisions as well as book profits has reduced an amount of ₹ 298.78 lakhs as amount transferred from reserves to Profit Loss account. This amount represents depreciation claimed on assets purchased at concessional import duty with a condition that if assessee fulfills export obligation, it gets concessional rate of duty on import of assets. In the books of accounts, the assessee has capitalized the asset with its monetary value including normal import duty applicable on said asset, but credited concessional duty availed under the scheme to reserves and surplus account under the head deferred income . Since, the assessee has claimed depreciation on enhanced value of assets including concessional duty benefit availe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enhanced depreciation on concessional duty and at the same time, reversed the same from reserves and surplus account and thus, the net effect of the entry is nil adjustment to income computed for the year. Therefore, we are of the considered view that the AO was erred in disallowing depreciation claim on asset and added back to total income without understanding the fact that entries passed in the books of accounts is not determinative to compute correct income of the assessee. The CIT(A) after considering relevant facts and also by following the decision of ITAT, Chennai in assessee s own case in ITA No.1339 to 1342/Mds/2010 for assessment years 2001-02, 2004-05 2006-07 deleted addition made by the AO. The Revenue has failed to bring on record any evidences to counter the findings of fact recorded by the ld.CIT(A), in light of decision of ITAT in assessee s own case for earlier years. Hence, we are inclined to uphold the findings of CIT(A) and reject ground taken by the Revenue. 5. The next issue that came up for our consideration from Ground No.3 of Revenue appeal is addition of interest income under the head income from other sources while computing tonnage tax u/s.115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has completely erred in deleting addition made by the AO towards interest income. 5.3 The ld.AR for the assessee on the other hand supporting order of the ld.CIT(A) submitted that the issue is now squarely covered in favour of the assessee by the decision of Hon ble Bombay High Court in the case of CIT vs. Varun Shipping C. Ltd., 334 ITR 263, where the Hon ble High Court held that interest income derived by a shipping company out of surplus funds kept in short term deposits was very much part and parcel of core activity of shipping business. He further referring to decision of ITAT, Mumbai in case of Shipping Corporation of India Ltd., vs. ADIT, 31 ITR (Trib) 545, submitted that income on account of interest and dividend cannot be termed as earned from carrying on separate business activity other than tonnage tax business and is chargeable to tax under the head income from other sources . Therefore, he submitted that there is no error in the order passed by the ld.CIT(A) in deleting addition made by the AO. 5.4 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The provisions of section 115VI of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is not entitled for tonnage tax scheme. The ld.CIT(A) without appreciating the facts simply deleted addition made by the AO. Hence, we reverse the findings of ld.CIT(A) and allow the ground taken by the Revenue. 6. The next issue that came up for our consideration from Ground No.4 of Revenue appeal is disallowance u/s.14A at the rate of 0.5% of average value of investments, income from which does not form part of total income. It was the claim of the assessee before the AO that only those investments which yielded exempt income for the year needs to be considered while computing disallowance under Rule 8D(2)(iii) of the IT Rules, 1962. 6.1 Having heard both the sides and considered material on record, we find that an identical issue has been considered by the Co-ordinate Bench of ITAT, Chennai in assessee s own case for assessment years 2007-08 in ITA Nos.1343/Mds/2010, where the Tribunal held that, only those investments which yielded exempt income shall be considered to disallow 0.5% of average value of investment, the income from which does not form part of total income. We further noted that ITAT, Delhi Special Bench in the case of ACIT vs. Vireet Investment Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made investment in companies related to Y.S. Jagan Mohan Reddy for getting benefit in the form of additional water supply from Krishna river to the companies run by the assessee and which is in the nature of a quid pro quo. He, further referring to the judgment, submitted that CBI has already filed a charge sheet and highlighted the investigation relating to M/s. India Cements Ltd., and the various amounts exchanged between the parties. The AO has brought out all these facts before concluding that investment made in above two companies is not a strategic investment but a quid pro quo and hence, interest relatable to said investment needs to be disallowed u/s.36(1)(iii) of the Act. The ld.CIT(A) without appreciating the facts simply deleted addition made by the AO. 7.3 The ld.AR for the assessee on the other hand submitted that the AO has approached the investment with suspicious, doubt and attempted to create an illusion that strategic investment are not for business purpose and thereby disallowed interest expenditure on notional and adhoc basis without appreciating the fact that said investment is a strategic investment and the assessee has derived commercial advantage. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the case of third person is not relevant to decide the issue of disallowance of interest u/s.36(1)(iii) of the Act. Moreover, the Hon ble Supreme Court in the case of S.A. Builders v. CIT, supra, has held that interest on borrowed funds cannot be disallowed if the assessee has advanced interest free loans to a sister concern as a measure of commercial expediency and what is to be seen is business purpose and what the sister concern did with the money advanced. The court further held that the expenditure may not have been incurred under any legal obligation but yet it is allowable as business expenditure, if it was incurred on the ground of commercial expediency. The Hon ble Supreme Court in the case of M/s. Hero Cycles Ltd., vs. CIT, (2015) 379 ITR 347 discussed the scope of commercial expediency and held that once it is established that there is nexus between the expenditure and the purpose of business, the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the Board of Directors and decide how much is reasonable expenditure having regard to the circumstances of the case . In this case, the AO has exactly done what the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of ACIT vs. Vireet Investment Pvt. Ltd., supra, held that computation under Clause (f) of the Explanation -1 to Section 115JB(2) is to be made without resorting to the computation as contemplated u/s.14A r.w.rule.8D of the Rules . Therefore, we direct the AO to delete addition made towards disallowance u/s.14A r.w.rule 8D to book profit computed u/s.115JB of the Act. 11. In the result, appeal filed by the assessee is partly allowed. ITA No.2145/CHNY/2017, Assessment year 2012-13 12. The first issue that came up for our consideration from Ground No.2 of Revenue appeal is disallowance of notional interest on advances to subsidiaries. 12.1 The facts with regard to the impugned dispute are that during the relevant period under consideration, the assessee has borrowed huge loans and debited interest expenses of ₹ 2019.36 lakhs to the Profit Loss account. The assessee has given advance to various subsidiaries and has recognized interest on said advances. In the case of M/s. Trinetra Cement Ltd., interest has been charged @ 8%, however, no interest has been charged on advances to M/s.ICL Financial Services Ltd., M/s. ICL Securities Ltd., M/s. ICL Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be disallowed if the assessee has advanced interest free loans to sister concerns as a measure of commercial expediency and what is to be seen is business purpose and what the sister concern did with the money advanced. In this case, the Tribunal has recorded categorical findings that the assessee has advanced loans to sister concerns for business purpose and hence, interest cannot be disallowed for diversion of funds to sister concerns. The relevant findings of the Tribunal are as under:- 10. We have considered the rival submissions on either side and also perused the material available on record. As rightly submitted by the ld. Counsel for the assessee even if the borrowed funds were diverted for making advances to subsidiary companies, this Tribunal is of the considered opinion that there cannot be any addition of notional interest since it is not the case of the Revenue that the subsidiary companies had misused the funds for any other purpose. In other words, since the subsidiary companies used the funds for their business this Tribunal is of the considered opinion that in view of the judgment of the Apex Court in S.A Builders(supra) there cannot be any addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not incurred wholly and exclusively for the purpose of business and the assessee has not offered any explanation as to why only Kalaignar TV Pvt. Ltd., is chosen for advertisement when number of TV channels are available for that purpose. He, further noted that the purported payment made for telecast of advertisement is only a facade to transfer money from the assessee to Kalaignar TV for the reasons best known to the assessee. 14.2 The ld.DR submitted that although the assessee has paid lumpsum payment for advertisement expenditure but not given proper reasons for giving advertisement to only one channel when number of channels are available for this purpose. However, he fairly agreed that the issue is covered in favour of the assessee by the decision of ITAT in earlier years. 14.3 The ld.AR on the other hand submitted that the issue is squarely covered in favour of the assessee by the decision of ITAT, Chennai Benches in assessee s own case in ITA No.239/Mds/2015 dated 01.01.2016 for assessment year 2011- 12, where the Tribunal in identical circumstances and on identical payment held that advertisement charges paid to Kalaignar TV Pvt. Ltd., is a genuine business expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. to decide the time schedule for the advertisement. The Assessing Officer cannot suggest the assessee or M/s Kalaignar TV Pvt. Ltd. when to telecast the assessee s advertisement in their channel. When the assessee and M/s Kalaignar TV Pvt. Ltd. decided to telecast the advertisement in a particular time, the Assessing Officer cannot doubt the genuineness of the transaction. The fact remains that there was a telecast of advertisement in respect of the product manufactured by the assessee. It is also not in dispute that the assessee has paid ₹ 60 crores being the cost of advertisement for five years and the assessee is claiming proportionate cost for the year under consideration. Therefore, the CIT(A) has rightly allowed the claim of the assessee. This Tribunal do not find any infirmity in the order of the CIT(A) and accordingly, the same is confirmed. 14.5 In this view of matter and consistent with view taken by the Co-ordinate Bench, we are of the considered view that there is no error in findings recorded by the CIT(A) and delete addition made towards disallowance of advertisement expenses. Hence, we are inclined to uphold the findings of CIT(A) and reject the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the method of accounting by the assessee is not relevant to decide the nature of loss, whether it is capital or revenue in nature but, what is to be seen is the purpose for which said FCCBs was used and thus, the AO has proportionately allocated loss into capital account and revenue account based on repayment of FCCBs and premium paid on said FCCBs. But the ld.CIT(A) without considering said aspect, but simply deleted addition made by the AO. 15.4 The ld.AR for the assessee on the other hand submitted that this issue is squarely covered in favour of the assessee by the decisions of Hon ble Supreme Court in the case of ONGC Ltd., vs. CIT, 322 ITR 180 and further, in the case of Woodward Governor India (P.) Ltd., vs. CIT, 312 ITR 254. He further submitted that the assessee has incurred loss on account of redemption of FCCBs due to fluctuation in foreign currency and hence, it is in the nature of revenue expenditure, because the proceeds of FCCBs was utilized in the business operation of the assessee as working capital requirement. Therefore, the ld.CIT(A) after considering relevant facts, has rightly deleted addition made by the AO and his order should be upheld. 15.5 We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and also for Sankar Nagar power plant and has incurred translation loss in foreign currency loan at ₹ 3700.62 lakhs. It was further explained that as per notification of MCA, Forex loss relating to loans for the purpose of acquiring fixed assets has been added to the cost of fixed asset while Forex loss on loans for a general business purpose has been treated as foreign currency monetary item translation difference account and amortized during the balance period of the loan. The assessee further submitted that out of total loss for the year, a sum of ₹ 2622.18 lakhs was capitalized to asset and ₹ 1078.44 lakhs was debited to translation difference account. Out of ₹ 1078.44 lakhs debited to translation difference account, a sum of ₹ 190.5 lakhs was amortized and debited to Profit Loss account. The AO however was not convinced with the explanation furnished by the assessee and according to him, the treatment given by the assessee in the books of accounts for accounting foreign currency monetary item translation difference is not correct and further MCA s circular is not binding on the AO and therefore, he has rejected explanation of the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ₹ 2622.18 lakhs was added to the cost of asset whereas, loss related to loan borrowed for general purpose was added to monetary item translation difference account of ₹ 1078.44 lakhs. It is an admitted fact that loss incurred on fluctuation in foreign currency while repaying any loan borrowed for the purpose of business of the assessee is held to be revenue in nature and allowable as deduction u/s.37 of the Act. This proposition is supported by the decision of Hon ble Supreme Court in the case of ONGC Ltd., vs. CIT, supra, where the Hon ble Supreme Court held that assessee having maintained accounts on mercantile system of accounting, loss claimed by the assessee on account of fluctuation in the rate of foreign exchange as on the date of balance sheet in respect of loans taken for revenue purposes is allowable as expenditure u/s.37(1) of the Act, notwithstanding the fact that the liability has not been actually discharged in the year in which the fluctuation in the rate of foreign exchange has occurred . This proposition is further supported by the decision of Hon ble Supreme Court in the case of CIT vs. M/s. Woodward Governor India P Ltd., supra. In this case, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice was issued by the TPO seeking to adjust deduction claimed u/s.80IA by adopting the rate at which the State Electricity Boards purchase power from independent power producers as per the TN Electricity Regulatory Commission. In response, the assessee claimed that both the plants are captive power plants meant for 100% captive use and therefore the ERC pricing has no bearing on the issue. The assessee further claimed that the windmill at Kayathar generates electricity which is fed into grid of TANGEDCO. Further, whenever the assessee draws power from TANGEDCO grid while billing the factories, it has adjusted such power fed into the grid and bills for the rest at normal tariff rate which is ₹ 5.69 per unit. The Waste Heat Recovery Plant is located in Telengana and therefore the TNERC rates are not applicable. The power generated in the grid is consumed internally and not fed into the grid and therefore adopting a tariff applicable to power generating entities is not correct. 18.2 The TPO however was not convinced with the explanation furnished by the assessee and according to him price fixed by ERC becomes a significant factor because the said rate was fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO to recompute deduction u/s.80IA of the Act. 18.4 The ld.AR for the assessee on the other hand strongly supporting order of the ld.CIT(A) submitted that the issue is squarely covered in favour of the assessee by the decision of ITAT in assessee s own case, where the Tribunal by following decision of Bombay High Court in the case of CIT vs. Reliance Industries Ltd., and the decision of Hon ble Chhattisgarh High Court in the case of M/s. Godavari Power and Ispat Limited, [2014] 42 taxman.com 551 held that deduction u/s.80IA was allowable to generation of power for captive consumption and the rate of power generation at which the electricity board supplied power to its consumers rather than the rate at which the power generated companies supply its power to the electricity board was to be taken as the price. Therefore, there is no reason to revisit the issue once again to take a different view. 18.5 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by the Tribunal in assessee s own case for assessment year 2011-12 in ITA No.2412/Chny/2019 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the decision of the Hon ble Chhattisgarh High Court in the case of Godavari power and Ispat Limited reported in [2014] 42 Taxman.com 551 (Chhattisgarh). As it is noticed that the learned CIT(A) has followed judicial discipline by following the decision of this Tribunal in the case of Sri Velayudhaswamy Spinning Mills Vs Deputy Commissioner of Income Tax and Eveready Spinning Mills vs. Assistant Commissioner of Income Tax referred to supra, as it is noticed this view has also been approved by the Hon ble High Courts referred to supra, we find no error in the order of the learned CIT(A) which calls for any interference. It may be mentioned here that the deduction u/s.80IA is the deduction from the total income of the assessee the profits and gains of an eligible undertakings. The Hon ble Gujarat High Court has categorically admitted that the deduction u/s.80IA is permissible for captive consumption and even the rate at which the deduction is to be computed. Consequently, the issue is held in favour of the assessee and against the Revenue. 18.6 In the present case, the facts are identical with that of the facts considered by the Tribunal in earlier year. The CIT(A) after c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ground taken by the Revenue. 21. The next issue that came up for our consideration from Ground No.5 of Revenue appeal is depreciation on franchisee right of Indian Premier League of ₹ 5,09,00,000/- 21.1 The assessee was owner of franchisee rights of Chennai Super Kings. The assessee company successfully bid for Chennai franchisee of BCCI-IPL for a period of 10 years for ₹ 364 crores in the second half of the financial year 2007-08. The assessee company has to pay this amount in 10 years at the rate of ₹ 36.4 crores per annum. However, the assessee company has capitalized the franchisee rights in its books of accounts for assessment year 2009-10 on the entirely bid amount of ₹ 364 crores and claimed depreciation at the rate of 25% as applicable to intangible assets. Accordingly for the year under consideration, the assessee has claimed depreciation of ₹ 25.19 crores. The AO has not accepted the explanation furnished by the assessee and according to him, the assessee can claim depreciation on actual amount paid for acquiring franchisee rights and not on total bid amount and hence, recomputed depreciation by taking into account actual payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of subsidy or discount in the cost which was given to the assessee. In such a case, the cost of franchise rights would be reduced to the extent of subsidy or discount, if any, given to the assessee. It is an admitted case of both parties that the cost of ₹ 364 crores was to be paid in 10 equal installments. Therefore, the cost of asset is ₹ 364 crores and not ₹ 36.4 crores. When the cost of block of assets was increased to the extent of ₹ 364 crores, this Tribunal is of the considered opinion that depreciation has to be allowed on the cost of block of assets increased. Therefore, the Assessing Officer is not justified in restricting the depreciation at ₹ 36.4 crores which was said to be paid during the year under consideration. This Tribunal is of the considered opinion that the entire cost of the franchise rights has to be taken into consideration for computation of depreciation. The assessee also filed appeal against the order of the CIT(A), restricting the depreciation on the amount actually paid by the assessee during the year under consideration. While adjudicating the assessee s appeal at para 34 hereunder this Tribunal found that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on the other hand submitted that Explanation (2) to Section 115JB of the Act was intended to exclude only interest on income tax and not interest on belated payment of TDS. Therefore, the ld.CIT(A) was right in deleting addition made by the AO towards disallowance of interest paid on TDS for recomputing book profit u/s.115JB of the Act. In this regard, he relied upon Circular No.1 of 2009 dated 27.03.2009 issued by the CBDT. 23.4 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. As per Explanation (2), income tax shall include any interest charged under this Act, and hence interest on income tax shall alone be added back under Explanation 1(a) to Section 115JB of the Act. Admittedly, TDS is not an income tax of the assessee. It is a tax deducted at source in respect of income of a third party. Therefore, TDS cannot be considered as income tax payable by the assessee on its income. Therefore, any interest paid on belated remittance of TDS also in the nature of expenditure deductible under the Act and hence, the same cannot be added back to book profit computed u/s.115JB of the Act. This is so, as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s.Sahney Steel Press Works Ltd., 228 ITR 253. The AO however was not accepted the explanation furnished by the assessee and according to him, subsidy received from Government is in the nature of assistance given to companies in carrying on trade or business and hence it is in the nature of revenue receipt and liable for tax. The AO has considered the decision of Hon ble High Court of Madras in the case of M/s. Brakes India Ltd., vs. JCIT, 363 ITR 13 to support his arguments. On appeal, the ld.CIT(A) deleted additions made by the AO by holding that the assessee has received subsidy from Government of Maharashtra to incentivize a manufacturing plant set up at Parli, Beed District, Government of Maharashtra under the Industrial Promotion Policy of Government of Maharashtra and hence it is in the nature of capital subsidy not liable for tax. 25.2 The ld.DR submitted that the ld.CIT()A has erred in deleting addition made by the AO towards capital subsidy by relying upon the decision of Hon ble Supreme Court in the case of M/s. Sahney Steel Press Works Ltd., supra, ignoring the fact that facts of the case before the Hon ble Supreme Court is entirely different from facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue account. On the other hand, if the object of the assistance under the subsidy is to enable the assessee to set up a new unit or to expand its existing unit, then the receipt of the subsidy was on capital account. The learned CIT(A) has also considered the principles laid down by the Hon ble Supreme Court in the case of Commissioner of Income-Tax vs. Ponni Sugars and Chemicals Limited [2008] 306 ITR 392 (SC). In the present case, the learned CIT(A) has also recognized the fact that the subsidy was granted to the assessee as incentive to invest in backward areas and consequently the said subsidy granted by the Government in fact was capital receipt. It is also noticed that the learned CIT(A) has recognized with the fact that the Cement Manufacturing Plant at Parli, Beed District in the state of Maharashtra comes under the Industrial Promotion Policy of the Government of Maharashtra and the Package Scheme of Incentives 2007 invited by the Directorate of Industries, Government of Maharashtra and consequently the assessee has made a fixed capital investment of nearly 152 crores as on 31.03.2011. It is after recognizing this that the learned CIT(A) has granted the assessee the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mutandis apply to this appeal as well. Therefore for similar reasons, we direct the AO to delete additions made towards disallowance u/s.14A r.w.r.8D while computing book profit u/s.115JB of the Act. 28. The next issue that came up for our consideration from Ground No.3 of cross objection is addition towards provision for leave encashment both under normal provisions of the Act and book profit u/s.115JB of the Act. 28.1 The AO has disallowed a sum of ₹ 33,34,91,000/- being provision for leave encashment. The disallowance has been made in view of the provisions of section 43B(f) of the Act. The ld.AR for the assessee submitted that this issue has been decided against the assessee by the Tribunal in assessee s own case for earlier assessment years and has set aside the issue to the file of the AO to decide the issue afresh after the Supreme Court has decided the issue of deductibility of provision for leave encashment in light of amended provisions of section 43B(f) of the Act. 28.2 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that the Tribunal has considered an identical issue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt. Ltd to the extent of ₹ 2,50,00,000/-, this Tribunal has allowed the claim of the assessee for assessment year 2009-10 as revenue expenditure to the extent of ₹ 50,00,000/-. It is not known why such a huge payment was made to the very same company M/s Rishi Vidhya Consultants Pvt. Ltd for the year under consideration. The assessee cannot make such a payment year after year in the name of vastu consultancy, therefore, it lacks bonafideness of the services rendered by M/s Rishi Vidhya Consultants Pvt. Ltd for the year under consideration. Hence, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition made by the Assessing Officer for the year under consideration. 29.2 In view of the matter and consistent with view taken by the Co-ordinate Bench, we are of the considered view that there is no error in the findings recorded by the CIT(A) to confirm additions made by the AO towards disallowance of payment to vasthu consultancy M/s. Rishividya Consultants Pvt. Ltd. Hence, we reject the ground taken by the assessee. 30. The next issue that came up for our consideration from Ground No.5 of cross objection filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of this matter and consistent with view taken by the Co-ordinate Bench, we are inclined to uphold the findings of the CIT(A) and reject ground taken by the assessee. 31. The next issue that came up for our consideration from Ground No.6 of cross objection filed by the assessee is amount withdrawn from a notional reserve for computing book profit u/s.115JB of the Act. 31.1 We find that a similar issue has been considered by us for assessment year 2008-09 in ITA No.2210/Chny/2017, where we by following the decision of Tribunal in assessee s own case for assessment years 2001-02 to 2004-05, 2006-07 in ITA No.1339 to 1342/Chny/2010 held that notional entries passed in books of account for accounting concession availed in customs duty payment on import of machinery and reversal of depreciation on said machinery by withdrawing equal amount from reserves and surplus account and credited to Profit Loss account does not give raise any income to the assessee and hence, the same cannot be considered for normal computation as well as for the purpose of book profit u/s.115JB of the Act. The reasons given by us in preceding Para No.4.4 shall mutatis mutandis apply to his app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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