9911796707
TMI Blog2023 (2) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... , thereafter, revised its return of income on 31.03.20211 declaring total income at Rs.166,02,98,495/-. The case of the assessee was selected for scrutiny and thereafter notices u/s 143(2) and 142(1) were issued and served on the Assessee. 4. On the basis of the information available on record, AO noticed that assessee had undertaken International Transactions (IT) with its Associated Enterprises ('AEs') during the year under consideration. As the value of international transactions entered into by the assessee was more than Rs.15 crore, AO made reference to TPO for determining the Arm's Length Price (ALP) of the international transactions entered into by the assessee with Associated Enterprises ('AEs'). TPO vide order dated 28.01.2013 passed u/s 92CA(3) proposed enhancement of income of the assessee by Rs.36,03,975/-on account of the international transactions. AO thereafter passed a draft assessment order u/s 144C of the Act vide order dated 18.03.2013 and computed the total taxable income at Rs.168,87,52,470/-. AO has noted that a show-cause letter was issued and served to the assessee along with the draft order passed u/s 144C of the Act asking the assessee as to whether it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omparable data submitted by the Appellant. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding that CERs of Rs.3,48,37,38,617/- was a Revenue receipt and is taxable under section 2(24)(v) read with section 28(iv) of the Act. 4. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding that goodwill of Rs.3,68,94,006/- was created subsequent to the purchase of business from SRF Polymers Ltd. and therefore, the Appellant was not entitled to depreciation of Rs.46,11,751/- on the goodwill. 5. That on the facts and circumstances of the case and in law, the CIT(A) has erred in confirming the disallowance of Rs.1,04,00,000/- being donation paid to schools of SRF Vidyalay and SRF Foundation. 6. Without prejudice, on the facts and circumstances of the case and in law, the CIT(A) has erred in holding that the following claims made without filing the revised return were rightly not considered by the Assessing Officer and such claims can also not be entertained by the CIT(A): (i) the amount of Rs.3,48,37,38,617/- received on account of CERs transferred was a capital receipt not liable to tax under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and on perusing the materials available on record we find that the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. 229 ITR 383 after considering the decision in the case of Jute Corporation of India Ltd. 187 ITR 688 (SC) has held that there is no reason to restrict the power of Tribunal u/s 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals) and that both the assessee and Department have a right to file an appeal/cross objections before the tribunal and the Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. It has further held that the view that tribunal is confined only to issues arising out of the appeal before CIT(A) is too narrow a view to take of the powers of the tribunal. We therefore, following the aforesaid decision rendered by Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. (supra) admit the additional ground and proceed to dispose of the appeal. 11. Ground No.1 and its sub grounds are with respect to the disallowance u/s 14A of the Act. 12. During the course of assessment proceedings and on perusing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts held by assessee were to the extent of Rs.13,360.01 lakhs as against which the interest free funds in the form of Share Capital and Reserves and Surplus was to the extent of Rs. 97,647.62 lakhs. He, thereafter, pointed to page 50 of the paper book which is the schedule for Reserves and Surplus and from that schedule, he pointed to the fact that even if the different Reserves depicted therein are excluded by considering them to be not free reserves, but still the General Reserve is of Rs.13,950.24 lakhs and surplus in Profit and Loss Account is to the extent of Rs.48,206.80 lakhs. He, therefore, submitted that since the availability of interest free funds are more than the investments, the presumption is that the investments are made out of free funds available with the assessee and are not out of borrowed funds. In support of his aforesaid contention, he placed reliance on the decision in the case of CIT vs. Reliance Utilities & Power Ltd. [2009] 313 ITR 340 (Bom). He further submitted that identical issue arose in assessee's own case in earlier years and in A.Y. 2012-13, the Co-ordinate Bench of Tribunal has decided the issue in assessee's favour. He pointed to the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. We, therefore, direct the deletion of the additional disallowance made by AO. Thus the ground of assessee is allowed. 17. Ground No.2 and the sub grounds are with respect to the upholding the adjustment of Rs.36,03,975/- under section 92CA(3) of the Act on account of interest on loan to assessee's 100% subsidiary. 18. TPO noted that assessee had given a loan of 4 million USD to its subsidiary, M/s. SRF Overseas Ltd., Dubai and had charged interest at 6 months LIBOR + 2.5% per annum on the loan amount. TPO noted that the subsidiary company to whom the loan was given was incurring losses and was not rated by credit rating agency. As per the information obtained by AO from CRISIL Ltd, the annualized average yield of AA- Rated Company was 10.83%. According to the TPO, since the subsidiary company was a loss making company, the annualized average yield should be the average for the companies with credit rating of BBB+, BBB- & BBB which works out to 14.29%. According to the TPO, the markup that should have been charged by the assessee from its AEs should be the difference of 14.29% and 10.83% which comes to 3.4%. Apart from that, according to TPO, a mark up towards the administr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as under: "21. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to interest for Foreign Currency Loan granted by the assessee to its AEs. We find that identical issue arose in assessee's own case in A.Y. 2010-11 and the Co-ordinate Bench of Tribunal in assessee's own case decided the issue observing as under: "22. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. There is no dispute that assessee has granted loan to its AE in foreign currency, i.e. USD. The Ld TPO applied the imputed interest rate @ 6.89% obtained from various Indian Banks u/s 133(6). It is now well settled in view of Jurisdictional High Court judgment in case of Cotton Naturals (I) Pvt. Ltd. (supra) that Indian lending rates cannot be applied in case of foreign currency lending. The appropriate rate for benchmarking is rate prevailing in the country where the loan has been utilized. Correctly stated by Ld. AR is that LIBOR is an international benchmark used globally as interest benchmark. Various courts have held that LIBOR is an appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before AO that the receipt on account of CER Certificates to be capital receipts and contended that the same should not be taxed. Before AO, assessee also relied on the decision of Hyderabad Tribunal in the case of M/s. My Home Power Ltd. vs. DCIT (2012) 27 taxman.com 27 and contended that in the aforesaid decision it has been held that carbon credit is in the nature of entitlement received to improve world atmosphere and environment reducing carbon, heat and gas emissions and therefore capital receipt. AO did not entertain the claim of the assessee for the reason that no revised return was filed by the assessee claiming the aforesaid amount as capital receipts. AO was of the view that the claim of the assessee cannot be allowed in the absence of revised return of income filed by the assessee and for the aforesaid conclusion, he relied on the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. (200) 157 taxman-1 (SC). 27. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). Before CIT(A), assessee sought the exclusion of receipts on account of CER certificates by treating it to be capital receipt. To support its contentions, before CIT(A), it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of Cochin Bench of Tribunal in the case of Apollo Tyres Ltd. held that the proceeds out of CER to be Revenue receipt and taxable u/s 2(24)(vd) r.w.s 28(iv) of the Act. 30. Aggrieved by the order of CIT(A), assessee is now before Tribunal. 31. Before us, Learned AR reiterated the submissions made before lower authorities and further submitted that the assessee had claimed the sale proceeds from the transfer of CER proceeds to be capital receipts and therefore not chargeable to tax. In support of his contentions that the receipts are capital receipts, he also placed reliance on the decision of Hyderabad Tribunal of the case of My home Power Ltd. (ITA No. 1114/Hyd/2009 order dated 02.11.2012. He pointed to the copy of the Tribunal order in that case which is placed at pages 146 to 152 of Case law Paper book. He thereafter submitted that the aforesaid order of tribunal has been upheld by Hon'ble Andhra Pradesh High Court and reported in (2014) 46 Taxmann.com 314 (AP) wherein it has been held that carbon credit is in the nature of entitlement received to improve world atmosphere and environment reducing carbon, heat and gas emissions and therefore capital receipt in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties, we find that Hon'ble Gujarat High Court in the case of CIT vs. Mitesh Impex [2014] 46 taxmann.com 30 (Gujarat), after considering various decisions cited in the decision, has held the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. It has further held that any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. The relevant observations of the Hon'ble High Court are as under: "38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd.(supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd.(supra). When it comes to the power of Appellate Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve perused the orders of the lower authorities and judgments relied upon by the revenue and the Ld. AR on the issue under consideration. As observed in various judgments, the 'Carbon credits' or CERs represent the 'privilege /entitlement' given to the businesses for its efforts resulting in reduction of emission of greenhouse gases. Such CERs are tradable commodity and one party to Kyoto protocol is benefited by selling such entitlement to other parties to Kyoto protocol which are in deficit. During the year under consideration, the assessee has also received certain sum on account of sale of certain CERs entitlement to other parties. All such parties are foreign parties and the amount has been received in foreign currency. The question that we are really required to adjudicate upon is whether such money received by the assessee on sale of CERs/ carbon credits is taxable under Income-tax Act or not. The Hyderabad bench of the Tribunal in case of My Home Power Ltd (Supra) while dealing with the similar issue held as under: "24. We have heard both the parties and perused the material on record. Carbon credit is in the nature of "an entitlement" received to improve world atmosphere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of loom hours by the assessee is on account of exploitation of capital asset and it is capital receipt and not an income. Similarly, in the present case the assessee transferred the carbon credits like loom hours to some other concerns for certain consideration. Therefore, the receipt of such consideration cannot be considered as business income and it is a capital receipt. Accordingly, we are of the opinion that the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration. Carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns. Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission. It does not increase profit in any manner and does not need any expenses. It is a nature of entitlement to reduce carbon emission, however, there is no cost of acquisition or cost of production to get this entitlement. Carbon credit is not in the nature of profit or in the nature of income." "25. Further, as per g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s capital in nature. We also find that ITAT Bangalore Bench in the case of Subhash Kabini Power Corpn. Ltd. vs. CIT reported in (2015) 37 ITR (T)106 (Bang .Trib.) had held that once the Assessing Officer had allowed the assessee's claim of deduction u/s 80-IA in respect of income derived from sale of carbon credits, such order was not amendable u/s 263 of the Act. This order of ITAT, Bangalore Bench was also upheld by the Hon'ble Karnataka High Court." "6.1 Further, ITAT Hyderabad Bench in the case of CIT Vs. My Home Power Ltd. Hyderabad in ITA No. 1114/Hyd/2009 held that carbon credit receipts are capital in nature. This order of ITAT Hyderabad Bench was subsequently upheld by the Hon'ble Andhra Pradesh High Court in 365 ITR 82." "6.2 Accordingly, respectfully following the ratio of the settled judicial precedent as aforementioned, we allow the additional grounds raised by the assessee and hold that the income from sale of carbon credits is capital in nature." 5.3 Coming to the judgments relied upon by the AO and the Ld. CIT(A) and which have been further relied by the Ld. DR, we are of opinion that such cases do not support the case of revenue. As pointed out by the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mann.com 213 (Madras)] vi. Arun Textiles Pvt. Ltd. [2016-TIOL-2212-HCMAD- IT] vii. Rajasthan State Mines and Minerals Ltd. [2017- TIOL-2297-HC-RAJ-IT] viii. Shree Cement Ltd. [ ITA No. 86/204 dated 22.08.2017] ix. Subhash Kabini Power Corporation Ltd. {[2016] 69 taxmann.com 394 (Karnataka)} x. Dodson Lind blom Hydro Power Pvt. Ltd. [2019- TIOL-531-HC-MUM-IT] xi. My Home Power Ltd. {[2014] 46 taxmann.com 314 (Andhra Pradesh)} 5.6 Further, we are not aware of any contrary judgment of any High Court on the issue nor the Ld. DR could point out any contrary judgment on the issue. Therefore, respectfully following the ratio of the Hon'ble High Courts as discussed above as well the orders of the ITAT including the jurisdictional bench of the Tribunal, we are of the view that carbon credits/CERs are in nature entitlement accrued to the assessee on account of its efforts to reduce the emission of harmful greenhouse gases. They have arisen due to environmental concerns and therefore cannot be said to be 'connected with' or 'incidental to' the business activities of assessee. The assessee is engaged in the business of refrigerants, engineering plastics and industrial yarns etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of computation under Section 115JB of the Income Tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961." 6.5 Further ITAT, Lucknow Bench, in case of L.H. Sugar Factory Ltd. (ITA No. 717 & 418/LKW/2013 and others), held as under: - "4. We have considered the rival submissions. We find that the issue in dispute as per Ground No. 1 of appeal is regarding nature of receipt on account of sale of carbon credit and in the case of CIT Vs. My Home Power Ltd. (Supra) also, the dispute before Hon'ble Andhra Pradesh High Court was this as to whether the amount received by the assessee on transfer of carbon credit is capital receipt or Revenue receipt. It was held by Hon'ble Andhra Pradesh High Court in that case that carbon credit is not an offshoot of business but an offshoot of environmental concerns and no assets is generated in the course of business but it is generated due to environmental concerns and therefore, it was held that the Tribunal has correctly held that this is a capital receipt and it cannot be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it had purchased business from SRF Polymers Ltd. on lump sum basis. The amount of goodwill appeared in the Balance Sheet as on 31st March 2009 which represents the total consideration paid for acquiring business which exceeds the value of assessment taken over by the assessee. Before CIT(A), assessee, relying on various decisions claimed that the deprecation on goodwill be allowed. 40. Learned CIT(A) did not agree with the contentions of the assessee. On the jurisdictional issue of admission of claim, he noted that CIT(A) was not empowered to admit the claim of deduction because assessee has not claimed the same in the return of income nor had the assessee claimed it by filing the revised return of income. On the merits of the claim of deduction, he noted that there was no mention of goodwill in the purchase agreement between the assessee and SRF Polymers Ltd. There was no valuation of assets prior to entering into an agreement for the transfer of assets, so as to suggest that the assessee has paid more consideration then the market value of the assets. He further noted that goodwill has been created by the assessee subsequent to the purchase of assets and liabilities on lump s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum basis and price was not paid for assets/items wise. He further submitted that it was also stated before lower authorities that it does not make any difference, whether the valuation was done prior to or after the purchase and in case of business purchase as a going concern, the basic principle to amount for goodwill is balance figure of price paid over and above the value of assets and liabilities purchased. Apart from the submissions made before lower authorities, he further submitted that issue is fully covered issue in favour of the assessee by decision of Hon'ble Tribunal own case for A.Ys. 2012- 13 & 2013-14 wherein the Hon'ble Tribunal has upheld that goodwill to be an intangible assets and eligible for depreciation and had granted depreciation. He, therefore, submitted that assessee is eligible for deprecation on goodwill and the same should be allowed to the assessee. 42. Learned DR on the other hand supported the order of lower authorities and further submitted that submissions of the Learned AR that the issue is covered by the decision of Tribunal in assessee's own case is not fully correct for reason that in the year under consideration, it was the first year of cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s SRF Polymers Limited on lump sum basis and the amount of goodwill appearing in the Balance Sheet as at 31.03.2009 represents the total consideration paid for acquiring business which exceeds the value of assets taken over by the assessee. Assessee also relied on various decisions in respect of its claim for depreciation. The submissions of the assessee were not found acceptable to AO. AO noted that the assessee had purchased three business for a consideration of Rs.150,31,26,228/- as slump sale without making its valuation. He noted that assessee, after the purchase had made valuation of the assets and liabilities which was determined at Rs.146,62,32,222/- and the balancing amount of Rs.3,68,94,006/- was treated as Goodwill. AO was of the view that the aforesaid amount of Goodwill was a balancing figure and was not Goodwill for which assessee had paid in excess of its valuation to its group companies. He was of the view that since the assets and liabilities has not been valued; no Goodwill can be purchased by the assessee. He accordingly disallowed the claim of depreciation on Goodwill amounting to Rs.25,53,577/-. 37. When the matter was carried before the DRP, DRP noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. In the year under consideration, we are of the view that since the claim was already made in the return of income and was denied by AO and DRP, we are of the view that ratio of the decision rendered by Hon'ble Apex Court in the case of Smifs Securities is squarely applicable to the facts of the case. We are therefore direct the AO to grant the depreciation of such goodwill. Thus the ground of assessee is allowed." 44. Before us, Learned DR has inter alia contended that since the issue of goodwill is arising in the year under consideration for the first time, the issue may be remitted back to AO for verification and adjudication. We do not find merit in the aforesaid contention of the Learned DR in view of the fact that the issue of depreciation also arose before the tribunal in assessee's own case in A.Y. 2012-13 (ITA No.5784/Del/2016 order dated 24.02.2020) wherein the coordinate Bench of Tribunal by relying on the decision of Hon'ble Apex Court in the case of SMIFS Securities (2012) 24 taxmann.com 222 (SC) had held that assessee is eligible for depreciation on goodwill but however since the issue was an additional claim, the matter was restored to AO. We further find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at para 7 of the order by placing reliance on the decision of Goetze India Ltd. (supra) held that since assessee has not made the claim in the return of income nor in the revised return of income, the claim cannot be entertained. He, accordingly, rejected the claim on jurisdictional ground. Aggrieved by the order of CIT(A), assessee is now before us. 47. Before us, Learned AR reiterated the submissions made before lower authorities and further submitted that CIT(A) has factually erred in relying on the decision in the case of Goetze India Ltd. (supra) and not entertaining the claim of the assessee. He submitted that Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders (P) Ltd. (2012) 349 ITR 336 (Bom) has held that CIT(A) as well as the Tribunal have the jurisdiction to consider the additional claim and the additional claim need not be those which became available on account of change of circumstances of law but which were even available when the return of income was filed. He further submitted that identical issue arose before the Hon'ble Tribunal in the case of the assessee in A.Y. 2010-11 and the Hon'ble Tribunal vide order dated 24.02.2020 (ITA No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees of the company. 27. The assessee placed reliance on the judgment of the Hon'ble Mumbai High Court in the case of Mahindra & Mahindra Ltd. v. CIT [TS-25-HC-2003 (Bom)] wherein it was held that such expense, being in the nature of staff welfare expenses should be treated as business expenditure. The relevant extract of judgment is reproduced hereunder: "The Tribunal has given a finding of fact which shows that M/s. Mahindra & Mahindra had paid Rs. 92,500 to an Education Society which runs the School in which children of the employees of the Company study. We do not wish to interfere with this finding of fact. The Tribunal has held that the amount should be allowed as business expenditure because it was incurred predominantly for staff welfare. In the circumstances, we answer the question in the affirmative i.e. in favour of the assessee and against the Department." 28. We have heard the rival contentions, perused the relevant findings and as well as material referred to before us at the time of hearing. The payment has been made by the assessee to a school which runs within its compound. The school gives preference to the children of assessee's employees which provide an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. Needless to state that the AO shall grant adequate opportunity of hearing to the assessee. Thus the ground of assessee is allowed for statistical purposes. 52. Ground No.8 including the sub grounds are with respect to non adjudication of the claim by CIT(A) of additional depreciation, seeking of indexation benefit for long term capital gains and treating the TUF subsidy as revenue receipts. 53. Before CIT(A), assessee had made claim for additional depreciation, seeking indexation benefit for Long Term Capital Gains and considering TUF subsidy as capital receipt. CIT(A) noted that all the aforesaid claims were neither made in the return of income nor during the course of the assessment proceedings. He was therefore of the view that the claims were not entertainable before him in view of the decision rendered by Hon'ble Apex Court in the case of Goetze India Ltd. (supra). He, accordingly denied the claims made by the assessee. Aggrieved by the order of CIT(A), assessee is now before Tribunal. 54. Before us, Learned AR submitted that CIT(A) has factually erred in relying on the decision in the case of Goetze India Ltd. (supra) and not entertaining the claim of the assessee. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout taking the indexation benefit. It was submitted that if the indexation benefit u/s 48 is considered then the Long Term Capital Gain would work out to Rs.87,97,731/- instead of Rs.200,50,000/-. The CIT(A) was therefore requested to grant the benefit of indexation. CIT(A) by following the decision rendered by Hon'ble Apex Court in the case of Goetze India (supra) did not entertain the additional claim by stating that the claim was neither made in the return of income nor during assessment proceedings. It is the submission of the Learned AR that the CIT(A) neither considered the additional claim nor remanded the matter back to AO for fresh adjudication though the complete details were filed before CIT(A). With respect to the denial of benefit of indexation while calculation the Long Term Capital Gain on sale of Mutual Fund units, he fairly submitted that the issue may be remitted to AO for his decision. 58. With respect to the treatment of Technology up-gradation fund (TUF) subsidy it is submitted Assessee had obtained loan of Rs.4000.00 lakhs from State Bank of India and Rs.3500.00 lakhs from State Bank of Mysore under the TUF scheme. As per the subsidy scheme, assessee was eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore him for the first time. On the issue of the claim being disallowed as it was made for the first time before CIT(A), we have herein above at para 34 & 35 have held that CIT(A) was not justified in not deciding the claim made by the assessee for the first time before him and CIT(A) should have decided the claim of the assessee. We for the same reasons hold that CIT(A) has erred in not deciding the claim made before him for the first time and should have decided the claim of the assessee. 62. On the claim of additional depreciation, we find that identical issue of additional depreciation arose before the coordinate Bench of Tribunal in assessee's own case in A.Y. 2014- 15 (ITA No.6620/Del/2018 order dated 13.12.2021). The claim of the assessee was restored back to the file of AO by observing as under: "52. Ground No.22.2 is with respect to claim of additional depreciation u/s 32(1)(iia) of the Act. 53. Before us, Learned AR submitted that assessee had not claimed 50% additional depreciation amounting to Rs.58,14,99,012/- u/s 32(1)(iia) of the Act inadvertently on the assets put to use for less than 180 days in the immediately preceding assessment year while filing the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rs.18,67,13,454/-, the assessee filed an additional claim during assessment proceedings for A.Y. 2010-11 however the same was neither entertained by AO nor by DRP. 45. The Ld. Counsel has placed reliance on following judicial pronouncements: * Apollo Tyres Ltd. vs. ACIT (2014) 64 SOT 203 * CIT vs. Cosmo Films Ltd. (2012) (ITA 1404/2008) * CIT vs. SIL Investment Ltd. (2012) (ITA No. 24319 (Del) 2010) * TCPL Packaging Ltd. vs. Deputy Commissioner of Income Tax (2019-TIOL-907-ITAT-MUM) * CIT vs. Kalpataru Power Transmission Ltd. [2019-TIOL- 1424-ITAT-AHD] The coordinate Bench in case of CIT vs. Cosmo Films Ltd. (supra) while holding that remaining additional depreciation shall be allowed in the subsequent year observed as under : "This additional benefit in the form of additional allowance under section 32(1)(iia) is onetime benefit to encourage the industrialization and in view of the decision of Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT [1992] 196 ITR 188/62 Taxman 480, the provision related to it have to be constructed reasonably, liberally and purposively to make the provision meaningful while granting the additional allowance." Similarly in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and direct him to decide the issue afresh in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Assessee shall also be free to file such documents, explanations, submissions as it deems fit in respect of this claim. Needless to state that the AO shall grant adequate opportunity of hearing to the assessee. 64. With respect to the issue of interest subsidy on TUF scheme, we find that identical issue arose in assessee's own case in A.Y. 2012-13 (ITA No.5784/Del/2016 order dated 24.02.2020) where the issue was restored back to the AO by observing as under: "Claim 2. Interest subsidy under Technology Upgradation Fund (TUF) Scheme: 23. During the year, Assessee had obtained loan of Rs. 6,250 Lacs from SBI and Rs. 3,500 Lacs from State Bank of Mysore under TUF Scheme issued by the ministry of textile, Government of India. Whether the Loan was utilized as per the scheme is not under question. Under the TUF scheme, the assessee was eligible for 5% Interest subsidy calculated on the loan outstanding which amounted to Rs. 3,08,96,338/-. The assessee made such additional claim vide letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee to set up a new unit or for expansion of existing unit then such subsidy would be capital in nature. We find form the objective of TUF scheme that interest subsidy under such scheme was granted for expansion of capacities, modernisation and up gradation of facilities. In case of CIT v. Sham Lal Bansal (Supra), the Hon'ble Punjab & Haryana High Court on similar facts held subsidy received under TUF Scheme as capital receipt. Since the issue under hand is related to additional claim which was not entertained by the lower authorities, we therefore allow the assessee's ground for entertainment of above additional claim and remit the issue back to the file of AO to decide the same in accordance with law after granting a reasonable opportunity of being heard to the assessee. The assessee shall be free to file such documents, explanations, submissions as it deems fit in respect of this claim." 65. Since the facts of the case in the year under consideration are identical to that of A.Y. 2012-13, we for the reasons given while deciding the issue A.Y. 2012-13 and for similar reasons, restore the issue back to the file of AO and direct him to decide the issue afresh in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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