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TMI Blog2022 (1) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... RT] cannot applied in each and every case without examining the necessary and relevant facts. Also in the case of CIT vs. H.M.T. Ltd.[ 1992 (11) TMI 37 - KARNATAKA HIGH COURT] has allowed such lease premium as revenue expenses. In that case the land was acquired on lease for 95 years and the assessee paid upfront lease premium of ₹ 12,09,200/-. Thereafter, the assessee was liable pay lease rent at ₹1 per annum. The Hon ble Karnataka High Court was pleased to delete the addition made by the AO.As the assessee will not be penalized even in the case no tax deducted at source on the amount paid or credited to resident payees if following conditions fulfilled: (A) Payee has included the impugned amount on which tax was not deducted/short deducted by the payer in his return of income filed under section 139 and pays the taxes due on returned income and (B) Payer produces a certificate in prescribed form i.e. form 26A from a CA to the effect that the payee has included the income in return and paid taxes thereof. We note that the disallowance cannot be made without referring the provisions as discussed above - we hold that the impugned amount of lease premium exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to find out the truth by carrying out the necessary verification. But we find that the CIT (A) without necessary verification had doubted on the impugned insurance receipt. In our considered view, this approach of the CIT(A) seems to be improper. Be that as may be, in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for limited purpose to verify whether the impugned receipt represents the capital receipt or revenue receipt. If it is of capital in nature, then the assessee should not be allowed as deduction under section 80 IA of the Act and vice-versa as per the provisions of law. Hence the issue raised by the assessee is allowed for the statistical purposes. Streetlight maintenance - As safely concluded that the expression Profit and gain derived from an Industrial undertaking used in sections 80-IA of the Act, will include all the profits and gains earned by the Industrial undertaking by the actual conduct of its business. It would mean that all the income which has a direct nexus with the business of the Industrial Undertaking, will be includible in such profits and gains. Thus, we are of the view that profit and gain ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was deprived. Thus the interest was charged which partakes the character of the sale proceeds. Thus to our understanding such amount of interest is very much eligible for deduction under section 80-IA. As relying on NIRMA INDUSTRIES LIMITED [ 2006 (2) TMI 92 - GUJARAT HIGH COURT] the judgment was rendered in connection with the provisions of section 80I of the Act but the principles laid down therein can also be adopted to the provisions of section 80-IA of the Act. In view of the above, we do not find any infirmity in the order of learned CIT (A). Hence the issue raised by the Revenue is dismissed. Unfulfilled guarantee revenue - The fees charged by the assessee from the customers on account of not using the committed units has direct nexuses with the activity of the assessee i.e. distribution of electricity. Had the customer utilized the guaranteed units, there would have been the flow of income from the distribution of power activity which was very much eligible for deduction under section 80-IA of the Act. On the same analogy, the amount paid by the customer on account of the failure on its part for not utilizing the committed units, would partake the chara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e draw support and guidance from the judgment of Hon ble Gujarat High Court in the case of Nirma Industries Ltd. Vs. DCIT [ 2006 (2) TMI 92 - GUJARAT HIGH COURT] - with the interest income which is eligible for deduction under section 80- I of the Act but the principles laid down therein can also be adopted to the provisions of section 80-IA of the Act in the given facts and circumstances. In view of the above we do not find any infirmity in the order of learned CIT (A). Hence the issue raised by the revenue is dismissed. Miscellaneous receipts - whether the amount of scrap sale shown by the assessee is eligible for deduction under section 80-IA? - Admittedly the amount of scrap sale is not arising from the power distribution activity of the assessee. The amount of deduction under section 80-IA of the Act is limited to the extent of the profit derived from the distribution of power in the given facts and circumstances. Accordingly, we are not in agreement with the contention of the assessee. We find lot of force in the arguments of the assessee. The amount of sale of scrap of ₹ 10,04,30,079/- represents the sale of the items which have been classified as fixed assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration of the feasibility are allowable expenses under the provisions of section 37(1) of the Act. Thus we do not find any infirmity in the order of the learned CIT-(A). Hence the ground of appeal of the revenue is dismissed. Deduction u/s 80IA - initial assessment year for claiming the deduction with respect to all its units was the year under consideration - HELD THAT:- Deduction is available to the assessee at its option for 10 consecutive assessment years out of a block of 15 years effective from the year in which the undertaking begins the activity of renovation and modernization of the existing transmission/distribution lines. It was the 1st time i.e. the year under consideration when the assessee exercised its option for claiming the deduction under section 80IA of the Act. Thus, the period of 10 years shall begin from the year under consideration for which the assessee is entitled for deduction. As per circular CBDT circular No. 1 of 2016 dated 15th February 2016 Assessee has option to choose initial year or first year out of the block of 15 or 20 years as case may be to claim deduction for 10 consecutive years but not the year in which the assessee becomes first t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] Determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - There is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts circumstances, we feel that adhoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortioned to Ahmadabad generation unit and Ahmedabad distribution unit in equal proportion - CIT-A deleted the addition - HELD THAT:- If the eligible undertaking derives any incomefrom the activity other than those business referred therein, then, the same cannot be allowed as deduction under section 80-IA of the Act. On the same reasoning, if there is any expense/payment made by the non-eligible undertaking which is not in connection with the business referred under the provisions of section 80-IA of the Act, the same expenses/payment has to be excluded for determining the eligible profit. Thus, the amount eligible for deduction under section 80-IA of the Act is determined from the business referred therein only. Coming to the case on hand the contribution under section 35 (1)(ii) of the Act was paid by the assessee against the against the non-eligible undertaking which is not qualified for deduction under section 80-IA of the Act, the same cannot be considered as an expense/payment against the specific business/undertaking eligible for deduction under section 80 IA of the Act. It is for the reason that the contribution under section 35(1)(ii) of the Act does not relate to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanying the appellant's appeal before him, in truth and substance, the learned Assessing Officer had failed to carry out the directions of the Hon'ble ITAT in the matter of passing the assessment order impugned before him and for that reason as well, that order deserved to be cancelled. 2.1 In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in rejecting the appellant's claim for deduction for the full amount of initial payments for the leaseholds in question on the ground that the facts of the appellant's case were different from the facts in DCIT v. Sun Pharmaceutical Industries Ltd, (227 CTR 206) without considering the following VITAL facts pointed out in the very Statement of Facts accompanying the appellant's appeal before him: (a) That in arriving at its decision in DCIT v. Sun Pharmaceutical Industries Ltd. (227 CTR 206), the jurisdictional Gujarat High had applied the decisions of the Supreme Court in Empire Jute Co. Ltd. v. CIT (124 ITR 1) and CIT v. Madras Auto Service P. Ltd. (233 ITR 468) wherein it had been held that unless the expenditure was in the capital field, it could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no provision . in law for allowing such deduction. He ought to have appreciated, inter alia, that the appellant's claim was eminently covered by the ratio of the Supreme Court decision in Madras Industrial Investment Corporation Ltd. v. CIT(225ITR802). 5. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in omitting to consider Ground No. 5 of the appellant's appeal before him challenging initiation of penalty proceedings u/s. 271(1)(c). He ought to have appreciated, inter alia, that in the peculiar facts and circumstances of the appellant's case, there being absolutely no warrant/justification for initiating the penalty proceedings, they deserved to be dropped, thereby saving both the appellant and the Department from long drawn unnecessary litigation. 6. The appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal. 3. The issue raised by the assessee is that the learned CIT (A) erred in not following the direction issued by the ITAT to decide the question of lease payment after considering the principles laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with perpetual right of getting the renewal of the lease period. Thus, such payment of the premium amount towards the acquisition of land was capital in nature and the land is not subject to depreciation under the Act. Thus, the depreciation claimed by the assessee cannot be allowed as deduction. ii. The lease deed was neither entered nor any payment for the lease premium made in the year under consideration. 4.2 In view of the above, the AO disallowed the depreciation claimed by the assessee in the order dated 30-12-2008. 5. Aggrieved assessee preferred an appeal to the learned CIT (A). 5.1 The assessee reiterated the submissions as made before the AO during the assessment proceedings and further contended that the amount of lease premium can be allowed as revenue expenses in the light of the judgment of Hon ble Gujarat High Court in the case of Sun Pharmaceuticals Industries Ltd reported in 329 ITR 479. 6. However, the learned CIT (A) in his order dated 19 February 2009 upheld the order of the AO by observing that this Tribunal in the case of erstwhile companies namely Torrent Power AEC and Torrent Power SEC in ITA Nos. 1998/Ahd/2006 C.O. NO. 54/Ahd/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, the co-ordinate Bench of Tribunal in assessee s own case in ITA No.293/Ahd/2008 771/Ahd/2008 has remitted the matter back to the file of A.O. by holding as under:- 3. On this short submission of restoration, Ld. D.R. Mr. Kartar Singh had no objection but stated that once the matter has been decided by the Hon ble High Court, though the A.O. had left with a limited scope but still has to verify the connected facts to apply the ratio laid in the said precedent. The said verdict is as follows, reproduced from the Head Notes (329 ITR 479):- The assessee-company claimed deduction of a sum of ₹ 48,02,616/- being payment to GIDC. It contended that the lease rent in respect of the land allotted to the assesseecompany being very nominal i.e. at ₹ 40 per year,the payment was nothing else but advance rent and hence, allowable as revenue expenditure. After going through the lease agreement the A.O. disallowed the claim holding that the assessee had acquired a benefit of enduring nature in the form of use of land for a period of 99 years; that the land had been transferred through a registered deed involving transfer of immovable property and thus, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter. We respectfully following the decision of the co-ordinate Bench remit the issue to the file of A.O. to examine the facts and decide the issue in the light of decision in the case of DCIT vs. Sun Pharmaceuticals Ind. Ltd., and after giving reasonable opportunity of hearing to assessee. Thus this ground of appeal of the assessee is allowed for statistical purposes. 8. In view of the direction of the ITAT as discussed above, the present proceedings were initiated by the AO by issuing notice under section 143(2) of the Act dated 02 April 2013. 8.1 The assessee in response to such show cause notice submitted that the principles laid down by the Hon ble Gujarat High Court in the case of Sun Pharmaceuticals Industries Ltd. (supra) are applicable to the present facts of the case. The assessee further contended that merely registration of the lease deed does not bring any change in the character of lease deed transaction. In other words, the ownership of the land was vested with the owner only which has not transferred to the assessee. It was not possible for the assessee to carry on its business without acquiring the land. Thus the assessee contended that the amount of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of the assessee by treating the same as intangible assets. 9.1 Moreover, the assessee failed to deduct the TDS under the provisions of section 194(I) of the Act on the amount of lease premium and therefore the same cannot be allowed as deduction under the provisions of section 40(a)(ia) of the Act. 10. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us: 11. The learned AR before us contended that the principles laid down by the Hon ble Gujarat High Court in the case of Sun Pharmaceuticals Industries Ltd are squarely applicable to the case of the assessee. Therefore the same can be allowed treating as revenue expenses in nature. 11.1 The learned AR further contended that amount of depreciation was claimed in the earlier years including the year under consideration but the same was never allowed. Therefore, there cannot be any distortion in the income of the assessee for the year under consideration as well as for the earlier year if the same is allowed treating as revenue expenditure. Admittedly, the expense, was incurred in the earlier year but there is no prohibition for claiming the same as deduction in the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and guidance from the judgment of Hon ble Allahabad High Court in case of S.P Kochhar vs. ITO reported in 145 ITR 255, where it was held as under: The provisions of sections 251 and 254(1) as well as the various judicial pronouncements make it clear that the powers of the AAC are wider than those of the Tribunal. The AAC, while hearing an appeal under section 251 can examine all matters covered by the assessment order and correct the assessment in respect of all such matters even to the prejudice of the assessee. When the AAC remands the case to the ITO for making a fresh assessment, the powers of the ITO while making the fresh assessment are the same as if he were making an original assessment under section 143(3) unless the AAC limits the powers of the ITO by giving suitable directions. Where the remand is made by the Tribunal, the position is different. Unlike those of the AAC, the powers of the Tribunal are confined to the subject-matter of appeal as constituted by the original grounds of appeal and such additional grounds as may be raised by the leave of the Tribunal. Thus, when the Tribunal allows the appeal and sets aside the assessment and remands the case for making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions of Supreme Court, held that the land in question was not acquired by the assessee. That merely because the deed was registered the transaction in question would not assume a different character. The lease rent was very nominal. By obtaining the land on lease the capital structure of the assessee did not undergo any change. The assessee only acquired a facility to carry on business profitably by paying nominal lease rent. 13.4 Now, we proceed to examine the facts of the present case viz a viz the facts of the Sun pharmaceutical industries Ltd in the manner as tabulated below: S.No. Facts in case of assessee Facts in case of Sun Pharma Comment 1. Property belong to AMC and SMC Property belong to GIDC 2. Lease period 99 year Lease period 99 year Same in both 3. Lease taken with development right Not known 4. No proof that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er assessment year. Accordingly, there is no loss to the revenue even claim of the assessee is allowed in the later assessment year. In holding so we draw support and guidance from the judgment of Hon ble Bombay High Court in case of Nagri Mills Co. Ltd. reported in 33 ITR 681, the relevant portion of the finding is extracted herein: We have often wondered why the Income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. 13.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Pingle Industries Ltd reported in 40 ITR 67 held that: A large number of decisions were cited before us, but ho infallible criterion of universal application emerges therefrom and each case must turn on its own facts, though the decisions are useful as illustrations and as affording indication of the kind of considerations which may relevantly be borne in mind in approaching the problem. I shall refer in this judgment to such decisions only as have a bearing on the real controversy between the parties. 13.11 From the above judgment it is observed that the principles laid down in a given case cannot be applied in all the cases. As such, the issue depends upon the facts and circumstances of each case. Thus the issue whether the lease premium is capital in nature depends upon the facts and circumstances of each case. Accordingly, in our humble understanding, the principles laid down by the Hon ble SC cannot applied in each and every case without examining the necessary and relevant facts. 13.12 We also find that the Hon ble Karnataka High Court in the case of CIT vs. H.M.T. Ltd. reported in 203 ITR 820 has allowed such lease premium as revenue expenses. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.] 13.14 It is pertinent here to refer the first proviso to section 201 of the Act which reads as under: [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed 21a :] 13.15 On perusal of the above provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income ₹ 1,44,61,003 (iii) Bad debts recovery ₹ 5,32,51,168 (iv) Interest on Fixed Deposits ₹ 26,76,505 (v) Rent recovered from Staff members for residential quarters ₹ 3,10,990 (vi) Miscellaneous receipts (Including Scrap Sales of ₹ 10,72,87,989) ₹ 11,57,69,618 5. On the facts and in the circumstances of the case, the CIT(A) has erred in not accepting the assessee's plea that it was not a fit case for levy of interest u/s.234A, u/s.234B, u/s.234C and u/s.2340 and he in particular erred in upholding levy of interest u/s.2340 on addition of ₹ 48,26,69,999. 6. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing 14.1 The assessee has also raised Additional ground of appeal which reads as under: Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests for admission of its additional claim and for allowing deduction of ₹ 1,23,32,471/- in respect of Education Cess and the Secondary and Higher Education Cess on in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. 17. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under: I have carefully perused the assessment order and the submissions given by the appellant. The AO has applied the provisions of section 14A read with rule 8D. He has given a finding that there was an intermingling of own funds and borrowed funds. From A.Y. 08-09 the provisions of rule 8D have been made operative. The formula given in rule 8D takes care of the interest expenses in proportion to the investment in assets that give tax free income. It also works out administrative expenses in proportion to the average investment. Therefore, it takes care of the situation of availability of all types of funds and investment made by the appellant. The Assessing Officer has also considered various submissions given by the appellant during the course of assessment proceedings and after analyzing the submission, he has given a finding that no separate accounts are being kept regarding the earning of exempt income. As there is an intermingling of funds, the action taken by the A, O. by applying Rule 8D to work out the disallowance u/s. 14A was fully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment. Therefore, we are of the view that no disallowance of interest expenses on account of diversion of the fund is warranted. In this regard, we find support and guidance from the judgement of Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd. reported in 313 ITR 340 wherein it was held as under:- The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT(A) and Tribunal . 21.2 Similarly, we also rely on the judgment of the Hon ble Gujarat High Court in the case of CIT vs. India Gelatine Chemicals Pvt. Ltd. reported in 376 ITR 553. The relevant extract of the order is reproduced below: The assessee had made investment in shares and mutual funds. It suo motu offered/ disallowed the amount of ₹ 2 lakhs on account of section 14A. The Assessing Officer, however, made further disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowing the depreciation on the intangible assets being leasehold right. Likewise the alternate contention to allow the deduction of the premium paid on the leasehold land as revenue expenses was also rejected. 23. At the outset we note that, this issue raised by the assessee has already been adjudicated along with the appeal of the assessee bearing ITA No. 1577/AHD/2015 for the AY 2006-07 where the ground raised by the assessee was allowed vide paragraph number 13 of this appeal. For the detailed discussion, please refer the relevant paragraph. In other words, the amount of lease premium was allowed as revenue expenditure. Once the deduction has been allowed to the assessee, the question of allowing either the depreciation or revenue expense does not arise. As such, the issue raised by the assessee becomes infructuous. Accordingly, the ground of appeal raised by the assessee is dismissed as infructuous. 24. The interconnected issue raised by the assessee in ground No. 3 and 4 is that the learned CIT (A) erred in in holding that there are certain incomes which are not eligible for deduction under section 80IA of the Act. 25. There were several incomes shown by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of the assessee. 27. Aggrieved assessee preferred an appeal to the learned CIT (A). 27.1 The assessee before the learned CIT(A) submitted that the insurance claims were settled in the year under consideration with respect to the loss incurred in the earlier years. The accounting principles require that the income from the insurance claim should be recognized when its collection is reasonably certain. Furthermore, the same policy has been adopted by the assessee consistently in recognizing the insurance claim in the year in which it was received. The assessee also submitted that the insurance claim was received with respect to the eligible unit therefore it has integral nexuses with the eligible unit. Thus the same should be allowed as deduction. 28. The learned CIT(A) after considering the submission of the assessee observed that the insurance claim pertains to the period in which the unit was not eligible for deduction under section 80IA of the Act. Likewise, the assessee failed to demonstrate whether such insurance claim represents the revenue or capital receipt. Accordingly, in the absence of the necessary information, the learned CIT (A) rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept out of consideration while computing the assessee's income eligible for reduction under section 80-IA of the Act. 32.1 From the above, there remains no ambiguity to the fact that the assessee is eligible for deduction under section 80IA of the Act with respect to the impugned insurance receipt shown as income in the year under consideration. 32.2 However, we note that the learned CIT (A) has also given a finding in his order that there is no clarity whether the impugned insurance claim is on account of revenue loss or the capital loss. First of all, we note that the AO in his order has given very clear finding that the loss was claimed as deduction in the earlier year against which the impugned insurance receipt has been shown as income. If that be so, then in our considered view the same treatment should be given to the impugned insurance receipt. In simple words once the loss has been allowed as deduction in the earlier year, then the receipt against such loss by way of insurance claim should also be treated as income of the assessee. There cannot be different treatment for the loss claimed by the assessee and the income shown by the assessee qua such loss. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power distribution activity. The maintenance activity is altogether separate and independent to the power distribution activity. It is not necessary for providing the maintenance services to AMC that the assessee should be engaged in the activity of power distribution. Accordingly, the AO excluded the amount of ₹ 1,44,61,003/- from the eligible amount of deduction under section 80IA of the Act. 34. Aggrieved assessee preferred an appeal to the learned CIT (A). 34.1 The assessee before the learned CIT(A) contended that the income from the maintenance of the streetlight has direct nexuses with the business of distribution of power. Therefore, the same should be allowed as deduction under section 80IA of the Act. 34.1 However the learned CIT (A) disregarded the contention of the assessee by holding that the activity of maintaining the streetlight is different and independent to the activity of distribution of power. The assessee was raising the separate invoice to the AMC for maintaining the streetlight besides the bill raised for the consumption of the power. Accordingly, the learned CIT(A) was of the view that the receipt from the maintenance of streetlight i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on derived from the business has generated a lot of controversy. To our understanding, it refers to the effective source from which the income arises. But to find out the effective source, the term derived from indeed demands an enquiry into the genealogy of the product which should be stopped as soon as the effective source is discovered. 38.2 At this juncture it is important to refer judgment of SC in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) which have interpreted the term derived from . The relevant decisions of the Supreme Court The Legislature has deliberately used the expression attributable to , having a wider import than the expression derived from , thereby intending to cover receipts from sources other than the actual conduct of the business of the specified industry. (p.85) 38.3 From the ratio of the aforesaid decision of the Apex Court, it is clear that the phrase derived from covers receipts from the actual conduct of business of the specified industry as provided under section 80-IA of the Act. 38.4 Likewise, as per the Bombay High Court in the case of Hindustan Lever Ltd. v. CIT [1980] 121 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the AO effectively excluded the sum of ₹ 5,32,51,168/- from the amount of deduction claimed under section 80IA of the Act and added the same to the total income of the assessee. 40. Aggrieved assessee preferred an appeal to the learned CIT (A). 40.1 The assessee before the learned CIT (A) reiterated the submission as made in connection with the insurance claim which have been discussed in the preceding paragraph. 41. However the learned CIT (A) disregarded the contention of the assessee by observing that the bad debts were claim in the earlier years which were also allowed as deduction when the undertaking was not eligible for deduction under section 80 IA of the Act. Therefore any recovery of such bad debts cannot be allowed as deduction under section 80 IA of the Act. 42. Being aggrieved by the order of learned CIT (A) the assessee is in appeal before us. 43. The learned AR before us contended that the bad debts were recovered with respect to the eligible undertaking. Therefore, the same should be eligible for deduction under section 80 IA of the Act. 44. On the other hand, the ld. DR vehemently supported the order of the authorities below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of business the transactions have a direct nexus with the business and one cannot view these transactions away from the business. Such transactions include receipts and payment of money in cash or in kind immediately or on credit and are part of business activities. If the assessee has to make the payment to the above four parties, which were standing in the balance sheet as creditors and which have been claimed as business deduction in an earlier year then only course left to the assessee is either to make the payment or if no payment is legally required, to show as profit under section 41(1) which has been so done by the assessee. There is a clear and direct business connection of such cessation or remission and such profits taxable under section 41(1) can be held as derived from industrial undertaking. The arguments of the ld. DR that they are not current year's profit from manufacturing activity is devoid of any merit because deduction under section 80-IA is available only on profits derived from industrial undertaking which is carrying on manufacturing activities and it is not confined to only current year's profit as per P L account. The deduction under section 80-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore the same should be read, interpreted more liberally. The assessee also quoted several judgments before the learned CIT (A) in support of his contention. 48. However the learned CIT (A) disagreed with the contention of the assessee on the reasoning that there is no nexus between the activity of the assessee being distribution of power and the income received on the short-term deposits made with the bank. Thus, the finding of the AO was upheld by the learned CIT (A). 49. Being aggrieved by the order of the learned CIT (A), the assessee in appeal before us. 50. The learned AR before us contended that the interest was recovered with respect to the eligible undertaking. Therefore, the same should be eligible for deduction under section 80 IA of the Act. 51. On the other hand, the ld. DR vehemently supported the order of the authorities below. 52. We have heard the rival contentions of both the parties and perused the materials available on record. Undeniably, the fixed deposits were made by the eligible undertakings and interest was earned thereon. On perusal of the order of the AO, we also note that there was surplus fund available with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved assessee preferred an appeal to the learned CIT (A). 54.1 The assessee before the learned CIT (A) submitted that that the Hon ble jurisdictional High Court in the case of Nirma Industries reported in 283 ITR 402 in the context of the provisions of section 80-I of the Act has held that the interest received on delayed payment is part and parcel of the sale proceeds. Accordingly the assessee contended that such amount of interest on the delay payment should be eligible for deduction under section 80-IA of the Act. 55. The learned CIT (A) agreed with the contention of the assessee by observing that the interest paid on account of delayed payment against the use of the power represents the business receipts. Therefore the same is eligible for deduction under section 80-IA (4 )of the Act. Thus the ground of appeal of the assessee was allowed. 56. Being aggrieved by the order of the learned CIT (A) the Revenue is in appeal before us. 57. The learned DR before us vehemently supported the order of the AO. 58. On the contrary, the ld. AR vehemently supported the order of the learned CIT (A). 59. We have heard the rival contentions of both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or interest is the out-standing sale proceeds. It is not the assessee s business to lend funds and earn interest. The distinction drawn by Revenue is artificial in nature and is neither in consonance with law nor commercial practice. 30. The Tribunal was, therefore, not justified in holding that while computing deduction under section 80-I of the Act, interest received from trade debtors towards late payment of sales consideration is required to be excluded from the profits of the industrial undertaking as the same cannot be stated to have been derived from the business of the industrial undertaking. 31. In the result, both the questions stand answered as hereinbefore. The appeal is accordingly allowed and stands disposed of. 59.1 From the preceding discussion we note that the judgment was rendered in connection with the provisions of section 80I of the Act but the principles laid down therein can also be adopted to the provisions of section 80-IA of the Act. In view of the above, we do not find any infirmity in the order of learned CIT (A). Hence the issue raised by the Revenue is dismissed. Unfulfilled guarantee revenue 60. The assessee charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exuses with the activity of the assessee i.e. distribution of electricity. Had the customer utilized the guaranteed units, there would have been the flow of income from the distribution of power activity which was very much eligible for deduction under section 80-IA of the Act. On the same analogy, the amount paid by the customer on account of the failure on its part for not utilizing the committed units, would partake the character of sale proceeds of power distribution activity. Thus to our understanding such amount of un-fulfilment commitment charges is very much eligible for deduction under section 80-IA of the Act. In holding so we draw support and guidance from the judgment of Hon able Gujarat High Court in the case of Nirma Indutries Ltd. Vs. DCIT reported in 283 ITR 402 where in it was held as under: When the assessee enters into a contract for sale of its products it could either stipulate (a) that interest at the specified rate would be charged on the unpaid sale price and added to the outstanding till the point of time of realisation, or (b) that in case of delay the payment for sale of products worth ₹ 100 to carry the sale price of ₹ 102 for first mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such the receipt of rent cannot be segregated from the activity of power distribution. Thus the assessee claimed that the impugned rental income of ₹ 3,10,990/- is eligible for deduction under section 80-IA of the Act. The assessee alternatively contended that if it is denied the benefit of deduction under section 80-IA, then only the net income from the rent after adjusting the corresponding expenses should only be considered for excluding from the deduction. 66.1 The AO was of the view that the impugned rental income has no connection with the power distribution activity. Therefore the same cannot be allowed as deduction under section 80-IA of the Act. Likewise, the alternate contention of the assessee was also rejected by the AO in the absence of the necessary information about the expenditure incurred by it against such rental income. Thus the AO excluded the gross amount of rental income of ₹ 3,10,990/- from the amount eligible for deduction under section 80-IA(4) of the Act. 67. Aggrieved assessee preferred an appeal to the learned CIT (A). 68. The assessee before the learned CIT-(A) submitted that the impugned amount of rent was received from the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the eligible business activity. 73.1 Before parting a question arises what about the depreciation claimed by the assessee with respect to such building being the staff quarters. If the income is not eligible for deduction under section 80-IA of the Act then in our considered view the corresponding depreciation should also be excluded from the profit of the eligible undertaking. Likewise, the expenses incurred in connection with the maintenance of such staff quarters should also be excluded. Accordingly, we direct the AO to exclude the rental income from the amount of eligible profit net of the expenses qua to such rental income. Hence the ground of appeal of the assessee is partly allowed. Delayed payment charges 74. The assessee was recovering the delay payment charges from the customers who have not paid the outstanding amount on the due date. As per the assessee, the late payment charges partake the character of the sales consideration. Therefore the same should be eligible for deduction under section 80-IA of the Act. The AO disregarded the contention of the assessee by observing that the delay payment charges are in the nature of interest and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th s delay and so on. If the contention of Revenue is accepted, merely because the assessee has described the additional sale proceeds as interest in case of contract as per illustration (a) above, such payment would not be profits derived from industrial undertaking, but in case of illustration (b) above, if the payment is described as sale price it would be profits derived from the industrial undertaking. This can never be, because in sum and substance these are only two modes of realising sale consideration, the object being to realise sale proceeds at the earliest and without delay. Purchaser pays higher sale price if it delays payment of sale proceeds. In other words, this is a converse situation to offering of cash discount. Thus, in principle, in reality, the transaction remains the same and there is no distinction as to the source. It is incorrect to state that the source for interest is the out-standing sale proceeds. It is not the assessee s business to lend funds and earn interest. The distinction drawn by Revenue is artificial in nature and is neither in consonance with law nor commercial practice. 30. The Tribunal was, therefore, not justified in holding that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4115055 5502100 16765256 Total 61721182 33206797 5502100 100430079 81.2 Accordingly, the assessee submitted before the AO during the assessment proceedings that the amount of sale as shown income in the profit and loss account can be reduced by adjusting the same against the capital assets as discussed in the table above. Thereafter, the depreciation should be allowed on the remaining amount. 81.3 However, the AO was of the view that there is no scrap in the power distribution activity. Therefore the impugned amount of miscellaneous income cannot be subject to deduction under section 80-IA of the Act. Accordingly the AO excluded the sum of ₹ 11,57,69,618/- from the amount eligible for deduction under section 80-IA of the Act. 81.4 However, the AO accepted the alternate plea of the assessee to the limited extent by observing that the amount of scrap sale as discussed in the table given above can be adjusted against the assets shown in the balance sheet which will reduce the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the respective block of assets. The ground of appeal raised by the revenue in ITA number 738/Ahd/2012 reads as under: The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad erred in law and on facts in directing the Assessing Officer to reduce the value of sale of scrap from total income and also from WDV. 85. Both the learned AR and the DR before us vehemently supported the order of the authorities below as favourable to them. 86. We have heard the rival contentions of both the parties and perused the materials available on record. The assessee in the year has shown scrap sales of ₹ 11,57,69,618/- only which was credited in the profit and loss account. As per the assessee, this scrap sale relates to the eligible undertaking and therefore the same should be considered for the purpose of deduction under section 80-IA of the Act. 86.1 The assessee also submitted that the amount of scrap sale of ₹ 10,04,30,079/- out of the total scrap sales of ₹11,57,69,618/- represents the sales of those items which were classified as fixed assets in the balance sheets which were pertaining to different block of assets. Thus, the assessee alternatively co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to claim the depreciation. Accordingly, on sale of these items, the sale proceeds should be adjusted against the relevant of assets and therefore the same should not be treated as income of the assessee. To avoid any ambiguity, the amount of ₹ 1,53,39,539/-being the difference of ₹ 11,57,69,618/- minus ₹ 10,04,30,079/- shall be treated as scrap sale which is not eligible for deduction under section 80-IA of the Act. In view of the above and after considering the facts in totality, the ground of appeal of the assessee and the ground of appeal of the revenue are dismissed. 89. The issue raised by the assessee in ground no. 5 and 6 are either consequential or general in nature which do not requires separate adjudication. Hence the same are dismissed being infructuous. Now coming to additional ground of appeal filed by the assessee 90. The assessee vide letter dated NIL has filed the additional ground of appeal for allowing the deduction of ₹ 1,23,32,471/- representing the education cess paid on income tax under section 37(1) of the Act. 90.1 It was pleaded by the assessee in the application filed for the admission of the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 92.2 Since the claim of the assessee is purely legal claim and entire facts are available on record. Thus it is not justified in not admitting the purely legal ground raised by the assessee for the first time. As the assessee has not claimed this expenditure before the lower authorities, they have not got opportunity to examine the same as per the provisions of Act, thus In the interest of justice, the ground is restored back to the file of the Assessing Officer with a direction to examine assessee's eligibility to claim of deduction of the items raised in the ground of appeal de novo afresh after providing an opportunity of being heard to the assessee and as per the provisions of law. Thus the additional ground of appeal raised by the assessee is allowed for statistical purposes. 92.3 In the result the appeal of the assessee is partly allowed for statistical purposes. Coming to the Revenue s appeal in ITA No. 738/AHD/2012 for the assessment year 2008-09 93. The revenue has raised the following grounds of appeal: 1. The Ld. Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Commissioner of Income-Tax (Appeals)-XlV, Ahmedabad erred in law and on facts in holding that the disallowance of ₹ 38,18,571/-made u/s.14A of the Act is not to be added while computing Book profit u/s.115JB of the Act. 7). On the facts and in the circumstances of the case, the Ld. Commissioner of Income- Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 8). It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals)- XIV, Ahmedabad may be set-a-side and that of the order of the Assessing Officer be restored. 94. The 1st issue raised by the Revenue is that the learned CIT (A) erred in deleting the disallowance made by the AO for ₹ 8,98,880/- on account of fees for the study relating to new project. 95. The AO during the assessment proceedings found that the assessee has paid fee of ₹ 8,98,880/- to M/s Feedback venture private Ltd in order to conduct a study about the new project. As per the AO, such expenses are capital in nature and therefore the same cannot be allowed as deduction. Hence the AO added the same to the total income of the assessee. 96. Aggrieved assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Kesoram Industries Cotton Mills Ltd. Vs. CIT reported in 196 ITR 845 wherein it was held as under: The principles are well-settled. It cannot be disputed that if the expenses are incurred in connection with the setting up of a new business, such expenses will be no capital account. But where the setting up does not amount to starting of a new business but expansion or extension of the business already being carried on by the assessee, expenses in connection with such expansion or extension of the business must be held to be deductible as revenue expenses. One has to consider the purposes of the expenditure and its object and effect. The finding of the Tribunal in the instant case was that there was an expansion or extension of the existing business of the assessee. The assessee was a manufacture of cement. In addition to its factory in Andhra Pradesh, it proposed to start another cement factory in Rajasthan. There was one business. Although the factory at Rajasthan was not set up in the previous year relevant to the assessment year, this fact was not a relevant factor in determining whether the deduction was allowable or not. The expenses were miscellaneous expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year for claiming the deduction with respect to all its units was the year under consideration. 102. The assessee in the year under consideration has claimed deduction under section 80 IA of the Act for its undertakings as detailed under: Sr.no Unit Amount of Deduction u/s 80IA 1 Ahmedabad Distribution unit 84,73,39,210/- 2 Surat Distribution Unit 41,04,50,957/- 3 Bhiwandi Distribution Unit 41,68,99,276/- 102.1 As per the assessee, it has started the renovation and modernization of the existing network of transmission/distribution lines from the financial year 2004-05 for its Ahmedabad and Surat distribution undertaking which substantially got completed in the year under consideration. Thus the assessee submitted that it has started claiming the deduction under section 80IA of the Act from the year under consideration upon the fulfilment of the condition specified under section 80 IA(4) of the Act i.e. 50% increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the learned CIT (A) submitted that it is the option of the assessee to select 10 consecutive assessment years out of the block of 15 years beginning from the year in which the assessee undertakes substantial renovation and modernization of the existing transmission/distribution lines. As such the assessee has exercised its option for claiming the deduction under section 80IA of the Act effective from the year under consideration. Therefore, the period of 10 consecutive assessment years will begin from the year under consideration for claiming the deduction under section 80IA of the Act. 105. The learned CIT (A) after considering the submission of the assessee held that it is the option available to the assessee in pursuance to the provisions of section 80IA(2) of the Act to choose the initial assessment year for claiming the deduction. The period of 15 years shall begin from the year in which it starts the activity of renovation and modernization of the distribution lines. Thus the learned CIT (A) allowed the ground of appeal of the assessee. 106. Being aggrieved by the order of the learned CIT (A) the revenue is in appeal before us. 107. Both the learned AR and D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its operations and in this case the initial assessment year is the assessment year in which assessee has chosen to claim deduction under section 80-IA............ . 12.61 As observed by the ITAT in the aforecited decisions, we are of the opinion that section 80-IA(2) of the Act nowhere provides that first year of 10 consecutive assessment years should be always the first year when the assessee starts providing telecommunication services. If that were so, then the words used in sec. 80IA(4)(ii) 'has started become otiose. We may point out that the provisions of sec. 80IA of the Act are beneficial provisions and these have to be construed in such a manner so as to advance the objects of the provisions and not to frustrate it. If the intention of the Legislature was that the first year of start of telecommunication services is the initial assessment year to claim deduction under section 80-IA of the Act, then the provision of option to the undertakings which had already started providing telecommunication services, would be meaningless. 108.2 We also find pertinent to refer the CBDT circular No. 1 of 2016 dated 15th February 2016 which reads as under: SECTIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The matter has been examined by the Board. It is abundantly clear from sub-section (2) that an assessee who is eligible to claim deduction u/s 80-IA has the option to choose the initial/ first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen ( or twenty) years, as prescribed under that sub-section. It is hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80-IA for ten consecutive 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 80-IA. 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. The Assessing Officers are, therefore, directed to allow deduction u/s 80-IA in accordance with this clarification and after being satisfied that all the prescribed conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein. On the contrary the deduction under section 80-IA of the Act is provided for the specified business carried on by the assessee. Thus, the deductions under section 80G//80GGB of the Act and 80-IA of the Act are mutually exclusive and independent to each other. The assessee while claiming the deduction under section 80-IA of the Act against the profit of the specified business can also claimed the deduction under section 80G/80GGB of the Act separately. 110.2 However, the AO disregarded the contention of the assessee by observing that there remained no taxable profit after claiming the deduction under section 80- IA of the Act in the specified undertaking. Accordingly, the AO disallowed the deduction of ₹ 96,37,500/- and 1,00,00,000/- claimed under the provisions of section 80G and 80GGB of the Act respectively. 111. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by observing as under: I have carefully perused the assessment order and the submissions given by the appellant. The A. O. had disallowed the claim of deduction u/s 80G and 80GG which was made by the appellant, from Ahmedabad and Surat distrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under section 80-IA of the Act. On the same reasoning, if there is any expense/payment made by the eligible undertaking which is not in connection with the business referred under the provisions of section 80-IA of the Act, the same expenses/payment has to be excluded for determining the eligible profit. Thus, the amount eligible for deduction under section 80-IA of the Act is computed from the business referred therein only. 114.1 Now coming to the case on hand the donations paid by the assessee against the eligible undertaking which is qualified for deduction under section 80G/80GGGB of the Act, the same cannot be considered as an expense/payment against the specific business/undertaking eligible for deduction under section 80-IA of the Act. It is for the reason that the donation under section 80G/80GGB of the Act does not relate to the activity of eligible undertaking. In other words, the payment under section 80G/80GGB of the Act is eligible for deduction on account of the payment made to the specific institution irrespective of the business whether it is eligible or non-eligible carried on by the assessee. 114.2 There is no dispute to the fact that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee bearing ITA No. 776/AHD/2012 where the grounds raised by the Revenue were dismissed vide paragraph No. 59, 65, 80 and 86 of this order. For the detailed discussion, please refer the relevant paragraph. Accordingly, the grounds of appeal raised by the Revenue are dismissed. 117. The 5th issue raised by the Revenue is that the learned CIT (A) erred in allowing the exclusion of ₹ 10,04,30,079/- being sale of scrap and ₹ 68,57,910/- being sale of scrap of Ahmedabad Generation unit from the total income of the assessee. 118. At the outset we note that, this issue raised by the Revenue has already been adjudicated along with the appeal of the assessee bearing ITA No. 776/AHD/2012 where the ground raised by the Revenue was dismissed vide paragraph number 86 of this order. For the detailed discussion, please refer the relevant paragraph. Accordingly, the ground of appeal raised by the Revenue is dismissed. 119. The 6th issue raised by the Revenue is that the learned CIT-A erred in deleting the addition made by the AO for ₹ 38,18,571 under the provisions of section 14A read with rule 8D of Income Tax Rule while computing the book profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the order of the learned CIT (A), the Revenue is in appeal before us. 123. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them 124. We have heard the rival contentions of both the parties and perused the materials available on record. The AO in the instant case has made the disallowance u/s 14A r.w.r. 8D of the Income Tax Rules for ₹ 38,18,571/- while determining the income under normal computation of income. Further, the AO while determining the income under Minimum Alternate Tax (MAT) as per the provisions of section 115JB of the Act, has added the disallowance made under the normal computation of Income under section 14A r.w.r. 8D of Income Tax Rule for ₹ 38,18,571/- to the book profit in pursuance to the clause (f) of explanation 1 to section 115JB of the Act. 124.1 However, we note that in the recent judgment of Special Bench of Hon ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of addition while determining the net profit u/s 115JB of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts circumstances, we feel that adhoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the Revenue is partly allowed. 124.6 The issue raised by the Revenue in grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s total income; (b) that in the peculiar facts and circumstances of the appellant's case, elaborately narrated at para 10 of the Statement of Facts accompanying the appellant's appeal, it was just not possible, considering the well settled legal position in this behalf, for the learned Assessing Officer not to be satisfied with the appellant's claim in regard to expenditure in relation to income not forming part of its total income; and that, therefore, there could be absolutely no question for making any disallowance whatsoever out of interest expenditure or out of administrative expenditure beyond ₹ 10,00,000 which the appellant had itself disallowed out of abundant caution. 3.1 In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the disallowance of the appellant's claim for deduction of ₹ 4,27,65,690 of depreciation on Leasehold Rights made @ 25% prescribed for Intangible Assets pursuant to Section 32(1) read with the relevant provisions of the Income-tax Rules, 1962, by following his decision in the appellant's case for the immediately preceding assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking, Section 80-IA provided for deduction in respect of profits and gains from the business of an undertaking and that, therefore, the scope of income eligible to deduction u/s. 80-IA was broader than that under Sections 80H, 80HH and 80-I; (b) that by its very nature, the Street Light Maintenance Income clearly formed part of the income from the appellant's Power Distribution Business; (c) that recovery of Bad Debts was very much in respect of debts arising on the sale of power in the course of the appellant's Power Distribution Business; (d) that, as he had himself appreciated, Miscellaneous Receipts were in respect of sale of different types of scrap such as cable scrap, metal scrap, sale of waste oil, rubber, wooden scrap etc. and rightly credited to the appellant's Profit and Loss Account as income and being an integral part of the appellant's business of distribution of power, deduction u/s. 80-IA in respect thereof could not be denied on the ground that the appellant had not established that the scrap in question was in respect of items debited as revenue and not capital when purchased; (e) that income by way of rent bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted and the levy deserved to be cancelled. 8. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in dismissing Ground No. 11 of the appellant's appeal before him challenging the initiation of penalty proceedings u/s. 271(1)(c), as premature. He ought to have appreciated, inter alia, that in the peculiar facts and circumstances of the appellant's case, there being absolutely no warrant/justification for initiating the penalty proceedings, he ought to have ordered for their being dropped, thereby saving both the appellant and the Department from long drawn unnecessary litigation. 9. The appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal. 125.1 The assessee vide letter dated NIL has filed the additional ground of appeal for allowing the deduction of ₹ 1,54,56,655/- and 28,06,343/- representing the education cess paid on income tax and dividend distribution tax under section 37(1) of the Act. 126. The issue raised by the assessee in ground No. 1 of its appeal is general in nature. Hence the same is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the issues raised by the assessee in its ground of appeal for the AY 2009-10 are identical to the issues raised by the assessee vide ground Nos. 4 in ITA No. 776/AHD/2012 for the assessment year 2008-09. Therefore, the findings given in ITA No. 776/AHD/2012 shall also be applicable for the year under consideration i.e. AY 2009-10. The appeal of the assessee for the assessment 2008-09 has been decided by us vide paragraph Nos. 38, 45, 52, 86 and 73 of this order in favour of the assessee in part. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2009-10. 137. Before parting, we note that, the reversal of the provision shown by the assessee crediting the profit and loss account, is allowable for eligible for deduction under section 80-IA of the Act on the same reasoning as provided by us with respect to insurance receipt and bad debts written back in ITA No. 776/AHD/2012 for the AY 2008-09 in Paragraph No. 32 and 45 of this order. Hence, the grounds of appeal filed by the Assessee is partly allowed. 138. The next issue raised by the Assessee in ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IA should accordingly get increased. However the claim of the assessee was rejected by the learned CIT (A) by holding that there is no dispute that the disallowances under section 14A will increase the business profit. But the profit includes both eligible and non-eligible undertaking and expenditure are incurred for earning both eligible and non-eligible profit. Further disallowances under section 14A is specific disallowances. Hence, the same cannot be allowed for deduction under section 80 IA of the Act. The 1st question that arises for our consideration whether the expenses disallowed under section 14A of the Act were attributable to the eligible undertaking or not. But the assessee before us has not brought anything on record suggesting that such expenses which was disallowed under the provisions of section 14 A of the Act were pertaining to the eligible undertaking. Accordingly, we are of the view that no benefit can be extended to the assessee on account of the enhanced profit which is deductible under the provisions of section 80 IA of the Act on account of the disallowance of the expenses under the provisions of section 14A of the Act. Hence, the ground of appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the time limit to revise the return of income has already been lapsed. Further, the AO failed to understand that provisions made in earlier years starting from A.Y. 1997- 98 automatically got disallowed and added back to the book profit by virtue of amendment brought by Finance (No.2) Act 2009 by clause (i) to explanation 1 to section 115JB of the Act with retrospective effect. Thus, in the year under consideration, such provision once written back becomes eligible for reduction from the book profit of the year under consideration as provided in the proviso to explanation 1 to section 115JB of the Act. 147. The learned CIT (A) after considering the submission of the assessee and finding of the AO directed the AO to examine the matter as per the provisions of law by observing as under: I have carefully perused the findings of the assessing officer and submissions made by the Id.AR. It is observed from the assessment records that the appellant has not made any such claim in the return of income. However, the amendment which has been referred by the appellant has come into effect after the return was filed by the appellant and, therefore, the appellant might have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was obvious that in the surplus or deficit in any intervaluation period relating to the LIC, which came to be formed only on 1-9-1956, any surplus or deficit made in any earlier inter-valuation period, as provided for in rule 2(1)( b), could not be reflected since it related to a period prior to the formation of LIC. The law does not contemplate or require the performance of an impossible act. The legal fiction enacted in section 7(2) must be taken to its logical conclusion. For this reason, the amount of refund made to the LIC because of the excess tax paid by the predecessor prior to 1-9-1956, on which date the LIC was formed, must form a part of the assets of the predecessor which came to be transferred and vested in the LIC on 1-9-1956 on the formation of LIC. For the same reason, this amount of refund, even though made later, must also be deemed to be included in the inherited opening balance shown by the LIC in the earlier inter-valuation period which undisputedly had to be deducted under rule 2(1)(b). It followed that because of the legal fiction being required to be taken to its logical conclusion, the amount so refunded to the LIC must be deemed to be included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 154.1 The view that the Tribunal is confined only to issues arising o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance made u/s.80G and 80GGB of the Act. 3). The Ld Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition made of amount disallowed u/s.14Aof the Act while computing Book Profit / income u/s.115JB of the Act. 4). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in set-aside the matter directing the Assessing Officer to examine the matter of addition of ₹ 75, 00, 000/- u/s.1 15JB of the Act which is not permitted under provision of Section 251(1)(a) of the Act as amended w.e.f. 01/10/1998. 5) On the facts and in the circumstances of the case, the Ld. Commissioner of Income- Tax (Appeals)-XIV, Ahmedabad ought to have uphold the order of the Assessing Officer. 6). It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad may be set-a-side and that of the order of the Assessing Officer be restored. 156. The first issue raised by the Revenue in ground Nos. 1(a) to 1(d) of its appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2009-10. Hence, the ground of appeal filed by the Revenue is dismissed. 160. The next issue raised by the Revenue in ground No. 3 of its appeal is that the learned CIT (A) erred in deleting the addition made in book profit under section 115JB of the Act by the amount of disallowances made under the provisions of section 14A of the Act r.w.r. 8D of Income Tax Rules. 161. At the outset we note that the issues raised by the Revenue in its ground of appeal for the AY 2009-10 are identical to the issues raised by the Revenue in ITA No. 738/AHD/2012 for the assessment year 2008-09. Therefore, the findings given in ITA No. 738/AHD/2012 shall also be applicable for the year under consideration i.e. AY 2009-10. The appeal of the Revenue for the assessment 2008-09 has been decided by us vide paragraph Nos. 127 of this order which was partly allowed. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2009-10. Hence, the grounds of appeal filed by the Revenue is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s. 80IA than granted by the learned Assessing Officer, in upholding the learned Assessing Officer's action of reducing the following items of income while arriving at the quantum of that deduction: Amounts ( in Rs) Ahmedabad Dist. Unit Surat Dist. Unit Bhiwandi Dist. Unit (a) Streetlight maintenance income from Ahmedabad Municipal Corporation which was directly related to the appellant's supplying power to the said Ahmedabad Municipal Corporation in the course of appellant's power distribution business 2,33,84,425 (b) Recovery of bad debts written off earlier 19,37,493 31,97,045 - (c) Interest income from FD - 5,95,532 - (d) Other interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest u/s. 234C and 234D on the ground that the levy was consequential in nature, instead of ordering for the deletion thereof. 7. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in dismissing Ground No. 12 of the appellant's appeal before him challenging the initiation of penalty proceedings u/s. 271(1)(c), as premature. 8. The appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal. 166. The assessee vide letter dated NIL has filed the additional ground of appeal for allowing the deduction of ₹ 6,59,43,609.00 and 46,77,238.00 representing the education cess paid on income tax and dividend distribution tax under section 37(1) of the Act. 167. The ground No. 1 of the appeal of the assessee is general in nature. Hence, the same is dismissed being infructuous. 168. The first issue raised by the Assessee in ground No. 2 of its appeal is that the learned CIT (A) erred in confirming the disallowance made under section 14A for ₹ 39,38,873/- on account interest expenses and ₹ 80,30,260/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in ITA No. 1581/AHD/2012 shall also be applicable for the year under consideration i.e. AY 2010-11. The appeal of the assessee for the assessment 2009-10 has been decided by us vide paragraph No. 143 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2009-10 shall also be applied for the year under consideration i.e. AY 2010-11. Hence, the grounds of appeal filed by the Assessee is dismissed. 174. The next issue raised by the Assessee in ground no. 5 of its appeal is that the learned CIT (A) erred in setting aside the issue of addition for ₹ 75,00,401/- in the book profit with direction to re-examine the same as per law. 175. At the outset, we note that the identical issue raised by the assessee in its ground of appeal vide ground No. 4 in ITA No. 1581/AHD/2012 for the assessment year 2009-10 has been decided in favour of the assessee. For the detailed discussion please refer the paragraph No. 150 of this order. Therefore, we are not required to give any separate finding again. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2009-10 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 180.1 The view that the Tribunal is confined only to issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 180.2 Since the claim of the assessee is purely legal claim and entire facts are available on record. Thus it is not justified in not admitting the purely legal ground raised by the assessee for the first time. As the assessee has not claimed this expenditure before the lower authorities, they have not got opportunity to examine the same as per the provisions of Act, thus In the interest of justice, the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in law and on facts in deleting the disallowance of claim of deduction u/s.80IA of the Act made on account of other income of ₹ 5,56,489/- which is income not having first degree nexus to not derived from Assessee's business of power generation. 3). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition made on account of apportioning one half on the contribution of ₹ 3,00,00,0007- since Assessee has failed to prove that the benefit of the contribution to research was derived only by the Ahmedabad Distribution Unit (not eligible for claim of .deduction u/s.BOlA of the Act). 4). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the, disallowances made u/s.80G of the Act amounting to ₹ 2,22,80,500/-and U/S.80GGB of ^he Act amounting to ₹ 10,25,00,000/-. 5). The. Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in set-aside the addition of ₹ 75,00,401/- made on account of book profit u/s.14A , r.w.r. 8D which isn t permitted u/s.251(1) of the Act. 6). The Ld. Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, delayed payment charges, receipt on sale of scrap waste Oil and other income. 189. At the outset we note that the issues raised by the Revenue in its ground of appeal for the AY 2010-11 are identical to the issues raised by the Revenue vide ground 4(a) to 4(e) in ITA No. 738/AHD/2012 for the assessment year 2008-09. Therefore, the findings given in ITA No. 738/AHD/2012 shall also be applicable for the year under consideration i.e. AY 2010-11. The appeal of the Revenue for the assessment 2008-09 has been decided by us vide paragraph Nos. 59, 65, 86, 80, of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2010-11. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 190. The next issue raised by the Revenue in ground No. 3 of its appeal is that the learned CIT (A) erred in deleting the amount of contribution made under section 35(1)(ii) of the Act towards the research activity apportioned to Ahmadabad generation unit and Ahmedabad distribution unit in equal proportion. 191. The AO during the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Ahmedabad Generation Unit which is not eligible for deduction under Section 80IA and Ahmedabad Distribution Unit which is eligible for deduction under Section 80IA. On the basis of such apportionment Assessing Officer has reduced profit eligible for deduction under Section 80IA for Ahmedabad Distribution Unit by ₹ 1,87,50,000. On careful consideration of facts of present case, appellant has mainly five business units which include Ahmedabad Generation Unit and Surat Generation Unit not eligible for deduction under Section 801A and other three units being Ahmedabad Distribution Unit, Bhiwandi Distribution Unit and Surat Distribution Unit which are eligible for deduction under Section 80IA. The appellant has made donation under Section 35(l)(ii) amounting to ₹ 3 crores from Ahmedabad Generation Unit. The Assessing Officer has not disputed the fact that payment was not made from such Unit but from the Ahmedabad Distribution Unit. As stated herein above, appellant has five different business units which represent five different sources of income and appellant has been maintaining separate Books of Account for each of the units. Even Auditor of the appellant has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to units was not justified - Held, yes [Paras 17 18][ln favour of assessee] Respectfully following the aforesaid decision and facts of the present case, the Assessing Officer was not justified in apportioning contribution made under Section 35(1)(ii) for Research Development to Ahmedabad Distribution Unit and thereby disallowing deduction under Section 80IA to that extent. In view of the above, the ground of appeal is allowed. 195. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us. 196. The learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 197. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the present case relates whether the assessee is required to apportion contribution made under section 35(1)(ii) of the Act between the eligible unit and non-eligible units. The deduction under section 80-IA of the Act is allowed to the assessee with respect to the business referred therein is carried on by the assessee. That particular business is known as the undertaking which is considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the ground of appeal of the Revenue is dismissed. 198. The next issue raised by the Revenue in ground No. 4 of its appeal is that the learned CIT (A) erred in allowing the claim of the assessee under section 80G and 80GG of the Act. 199. At the outset, we note that the issues raised by the Revenue in its ground of appeal for the AY 2010-11 are identical to the issues raised by the Revenue vide ground No. 3 in ITA No. 738/AHD/2012 for the assessment year 2008-09. Therefore, the findings given in ITA No. 738/AHD/2012 shall also be applicable for the year under consideration i.e. AY 2010-11. The appeal of the Revenue for the assessment 2008-09 has been decided by us vide paragraph Nos. 118 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2010-11. Hence, the grounds of appeal filed by the Revenue is dismissed. 200. The next issue raised by the Revenue in ground No. 5 of its appeal is that the learned CIT(A) erred in setting aside the issue of addition of ₹ 75,00,401/- in the book profit with the direction to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 2) Whether the Ld. CIT(A) is right in law and on facts in deleting the disallowance of ₹ 2,28,11,782/- made by the A.O. u/s. 36(l)(iii) of the Act. 3) Whether the Ld. CIT(A) is right in law and on facts in restricting the disallowance made by the A.O. u/s. 80IA of the Act. 4) Whether the Ld. CIT(A) is right in law and on facts deleting the disallowance made u/s. 801A of the Act attributable to amount pertains to: i) Unfulfilled guarantee revenue , ii) Delayed payment charges iii) Sale of waste oil. iv) Income from shifting of services. 206. The first issue raised by the Revenue is that the learned CIT (A) erred in deleting the disallowances of ₹ 1,86,30,366/- under section 14A read with rule 8D of the Income Tax Rules. 207. We also note that the assessee has also raised additional ground in its cross objection by letter dated NIL in relation to the disallowance made under section 14A r.w.r. 8D of Income Tax Rules. 208. The issue raised by the assessee in the additional ground of appeal is that there was no exempt income earned by the assessee, therefore there cannot be disallowed of any expense u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income under the provisions of section 14A read with section rule 8D of Income Tax Rule. 210.2 Now the question arises, whether the assessee can claim the benefit of the disallowance made by the assessee in the income tax return before the judicial forum. It is the trite law that the income tax has to be levied on the income which is determined under the provisions of the Act. The assessee for any reason has offered any income which was not chargeable to tax, the revenue is not expected to deny the benefit to the assessee for which it was entitled. 210.3 It is also pertinent to note that the assessee has filed the return of income for the year under consideration dated 29-9-2011 wherein the disallowance of ₹ 1,57,95,815/- was made under the provisions of section 14A read with rule 8D. At that point of time, there was no clarity on the issue whether there will not be any disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule if there was no exempted income. However this clarity was brought on a later date by the Hon ble Gujarat High Court in the case of Corrtech Energy Ltd (Supra) vide order dated 24-3-2014. The contents of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration i.e. AY 2011-12. The appeal of the Revenue for the assessment 2008-09 has been decided by us vide paragraph Nos. 65, 80 and 86 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2011-12. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 215. Before parting, Income from shifting services of the meters given to the customers, have direct proximity with the business of the assessee. Therefore, we do not find any infirmity in the order of learned CIT (A). At the time of hearing, the learned AR has not brought anything on record contrary to the finding of the learned CIT (A). Hence we decline to interfere in the order of the learned CIT (A). Thus the ground of appeal of the revenue is hereby dismissed. In the result, the appeal filed by the Revenue is dismissed. Coming to CO No. 25/Ahd/2017 by the assessee corresponding to A.Y. 2011-12 216. The assessee has raised following CO: 1. On the facts and in the circumstances of the case, the CIT(A) erred in not dealing with and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the appellant by the first appellate authority in respect of various claims of eligible income u/s 80IA for the assessment year 2010-11; and should have set off the loss against eligible profits to that extent in A.Y. 2010-11 itself: thereby reducing the carry forward of loss for A.Y.2010-11 and consequently, the set off of loss in respect of Surat Distribution Unit for the year under consideration ought to have been reduced by that very extent. 5. On the facts and in the circumstances of the case, the CIT(A) erred in confirming the Assessing Officer's action restricting the grant of deductions u/s.80G and u/s.80GGB of the IT. Act, in spite of the fact that for earlier years similar issue was decided by the CIT(A) in Respondent's favour. 6. On the facts and in the circumstances of the case, the Assessing Officer had erred in not allowing credit for TDS amounting to ₹ 13,54,520V-, which includes an amount of ₹ 8,53,244/-, being claim made in the return of income and ₹ 5,01,276/-, being claim made before him during the course of assessment proceedings. 7. The respondent craves leave to add, alter, amend and/or withdraw any ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned AR has not brought anything on record contrary to the finding of the learned CIT (A). Hence, we do not find any reason to interfere in the order of learned CIT (A). Hence, the grounds of cross objection filed by the Assessee is partly allowed. 223. The next issue raised by the assessee in its cross objection is that the learned CIT (A) erred in restricting the deduction under section 80G and 80GGB of the Act. 224. At the outset we note that the issues raised by the Assessee in its ground of cross objection for the AY 2011-12 are identical to the issues raised by the Revenue vide ground No. 3 in ITA No. 738/AHD/2012 for the assessment year 2008-09. Therefore, the findings given in ITA No. 738/AHD/2012 shall also be applicable for the year under consideration i.e. AY 2011-12. The appeal of the Revenue for the assessment 2008-09 has been decided by us vide paragraph Nos. 118 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2008-09 shall also be applied for the year under consideration i.e. AY 2011-112. Hence, the grounds of CO filed by the assessee is allowed. 225. The next iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 232. The view that the Tribunal is confined only to issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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