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TMI Blog2022 (6) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... stands dismissed. Disallowance u/s 14A - HELD THAT:- We find from the order of the CIT(A) that only contention raised before the ld. CIT(A) was that the provisions of section 14A have no application in the case of strategic investments. We further find from the order of the Assessing Officer, it was asserted vide para 15(c) that during the year under consideration the appellant had not received any exempt income and therefore, no disallowance can be made. AO without dealing with this contention applied the provisions of section 14A of the Act. In the circumstances, we are of the considered opinion that to meet the ends of justice matter requires remission to the AO with direction that if it is found on verification that no exempt income was earned from the investments made no resort to provisions of section 14A can be made keeping in view of the decision cited supra. Accordingly, this ground of appeal remitted to the file of AO for de novo consideration on merits in accordance with law after affording reasonable opportunity of being heard to the assessee. Thus, this ground of appeal no.2 stands partly allowed for statistical purposes. Reduction from the book profits the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of Rs.90,00,400/- u/s 14A and disallowance of Rs.1,92,695/- u/s 37(1) of the Act. 5. Being aggrieved by the above disallowances, an appeal was preferred before the ld. CIT(A), who vide impugned order while allowing the claim of the appellant held that it is entitled for claim of deduction u/s 80IA, however, held that the miscellaneous receipts are not connected to the eligible business of the assessee for deduction u/s 80IA of the Act. Accordingly, the ld. CIT(A) confirmed the addition under the head income from other sources . As regards to the addition u/s 14A, the ld. CIT(A) confirmed the order of the Assessing Officer and the addition of ad-hoc disallowance u/s 37(1) also confirmed, as this ground of appeal was not pressed. 6. Being aggrieved by the above decision of the ld. CIT(A), the assessee is in appeal before us in the present appeal. 7. Ground of appeal no.1 challenges the findings of the ld. CIT(A) that the income assessed to tax on account of reimbursement of VAT reimbursement, interest received on bank deposits, discount received from sundry creditors etc are not eligible for deduction u/s 80IA of the Act. The ld. AR submitted that the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place: Provided further that nothing contained in this section shall apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017. Explanation.-For the purposes of this clause, infrastructure facility means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea; (ii) any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, netw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April, 2004 and ending on the 31st day of March, 2017. Explanation.-For the purposes of this sub-clause, substantial renovation and modernisation means an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004; (v) an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant, if- (a) such Indian company is formed before the 30th day of November, 2005 with majority equity participation by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant and such Indian company is notified before the 31st day of December, 2005 by the Central Government for the purposes of this clause; (b) such undertaking begins to generate or transmit or distribute power before the 31st day of March, 2011; (vi) [***] 10. A perusal of the above provisions of the Act, it would show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the first degree. [Para 14] Further, sub-section (13) of section 80-IB provides for applicability of the provisions of sub-section (5) and sub-sections (7) to (12) of section 80-IA, so far as may be applicable to the eligible business under section 80-IB. Therefore, one needs to read sections 80-I, 80-IA and 80-IB as having a common scheme. On perusal of sub-section (5) of section 80-IA, it may be noticed that it provides for manner of computation of profits of an eligible business. Accordingly, such profits are to be computed as if such eligible business is the only source of income of the assessee. Therefore, the devices adopted to reduce or inflate the profits of eligible business have got to be rejected in view of the overriding provisions of sub-section (5) of section 80-IA, which are also required to be read into section 80-IB. Sections 80-I, 80-IA and 80-IB have a common scheme and if so read, it is clear that the said sections provide for incentives in the form of deduction(s) which are linked to profits and not to investments. On analysis of sections 80-IA and 80-IB it becomes clear that any industrial undertaking, which becomes eligible on satisfying sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of hearing before the ld. CIT(A). Hence, this ground of appeal no.3 dismissed as such. 15. The additional ground of appeal filed by the assessee seeks reduction from the book profits the amount of eligible profits u/s 80IB of the Act. This issue raised by way of additional ground of appeal is covered against the appellant by decision of the Coordinate Bench of the Tribunal in the case of M/s. Chheda Electricals and Electronics Pvt. Ltd. vs. DCIT (ITA No.400 668/PUN/2018 dated 04.05.2022) wherein the Tribunal held as under :- 17. In the case of Jaintia Alloys (P) Ltd. (supra), the assessee filed writ petition challenging the validity of the provisions of section 115JB of the Act on the ground that it did not provide for deduction u/s.80IB and the assessee had set up its unit in the eligible area for availing benefit u/s.80IB. Dismissing the writ petition, the Hon ble High Court held that the curtailment of the benefit earlier granted by legislative Act cannot be invalidated on the principles of promissory estoppel. In other words, the benefit of section us.80IB which was available u/s.115JA but taken away by section 115JB, was declared as valid. In Sankhl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edent under Article 141 of the Constitution. Ratio of the judgment in such cases continues to have full force under Article 227 of the Constitution until it is actually reversed and not on admission of the SLP. 20. In view of the fact that four consecutive High Courts have disentitled the assesses to reduce the amount of deduction u/s.80IB/80IC in the computation of book-profit u/s.115JB of the Act, and not even a single divergent judgment of any Hon ble High Court has been brought to our notice, there is no scope for taking a contrary view. Ex consequenti, the Tribunal, which is an inferior authority, is incapacitated to lay down differently. Reverting to the language of section 115JB(5) making all other provisions of the Act applicable but by saving section 115JB and subsection (1) of section 115JB containing a non obstante clause qua any other provision of the Act in the manner of computation of income tax liability of a company at 18.5% of its book profit and because of deeming provision in this sub-section regarding the computation of book profit and further Explanation 1 defining book profit in an exhaustive manner, we hold that there is no merit in the contention o ..... 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