9911796707
TMI Blog2023 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Thus, we hereby direct the AO to delete the addition made by him. Decided in favour of assessee. Disallowance on account of loss of loans advances - assessee in accordance with the arbitration award has written of the sum being difference between amount due as per books of assessee and claim awarded by the arbitrator in the profit and loss account of as not recoverable - HELD THAT:- Loss to the assessee was known at the time of signing the audited financial statements. The accounting principles also provide if it is likely that a contingency will result in a loss to the enterprise, then it is prudent to provide for that loss in the financial statements. Thus, the assessee cannot be denied the deduction as discussed above merely for the reason that the order of the arbitrator was passed after the balance sheet date. Thus, it is transpired that the assessee was known to the fact of the loss in accordance with the award of the arbitration before filing the return of income. Therefore, the event for writing off the loss certainly occurred after the balance sheet date but before signing the financial statements and filing the income tax return. Whether the loan advanced by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence the ground of appeal of the assessee hereby allowed. Disallowance on account of provision for doubtful loans and advances - HELD THAT:- In the case of the present assessee both the lower authority being the AO and CIT(A) have given concurrent finding that the amount claimed as deduction represents provision only and no amount of bad debt or part thereof is written off as irrecoverable in the books of account. Thus, considering the fact that the amount of bad debt or part thereof was not written off as irrecoverable in the year consideration therefore we hold that the assessee is not eligible to claim the deduction of bad debt in the year under consideration. However, the assessee will be eligible to claim deduction of the same in the year in which bad debts actually written off as irrecoverable i.e. A.Y. 2010-11 as claimed by the learned AR subject to verification. Hence, the grounds of the appeal of the assessee is hereby dismissed in the light of the above discussion. Deduction u/s 80IA - deduction not claimed at the time of filing the return of income since total income was declared at Rs. NIL - HELD THAT:- Only AO who has no power under the statute to entertain a claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de on the same if the interest claimed is not more than actual interest cost. Hence, the ground of appeal of the Revenue is hereby dismissed. Disallowance of sales tax benefit - HELD THAT:- As decided in assessee own case [ 2016 (6) TMI 1023 - GUJARAT HIGH COURT] wherein issues involved in these appeals are squarely covered by the decisions of this Court in Birla VXL Ltd. [ 2013 (7) TMI 655 - GUJARAT HIGH COURT] and in Munjal Auto Industries Ltd [ 2013 (10) TMI 650 - GUJARAT HIGH COURT] . Therefore, the questions of law posed for our consideration in these appeals are answered in favour of the assessee. Addition on account of set-off of losses and unabsorbed depreciation of a unit of Core Healthcare Ltd. merged with the assessee - HELD THAT:- Issue decided in favour of assessee as in own case AY 2005-06 . TDS u/s 194C - Disallowance of transportation charges u/s 40(a)(ia) - transportation charges paid by the assessee to the GAIL - HELD THAT:- Transportation charges paid by the assessee to the GAIL is not in the nature of work contract for the purpose of section 194C of the Act, therefore no default committed by the assessee. Hence the ground of appeal of the revenue is hereby dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided against revenue. Addition on account of liabilities transferred to capital account - assessee during the year under consideration, on merger transferred the liabilities being custom duty, demurrage and detention and sales tax liabilities to capital reserve - whether the writing off the statutory liabilities being custom duty, demurrage, detention, and sales tax amounting is chargeable in the hands of the assessee either under the provisions of section 28(iv) of the Act or section 41(1) of the Act? - HELD THAT:- To bring any item under the net of income in pursuance to the provisions of section 41(1) of the Act, there must be recovery either in cash or in-kind in respect of loss, expenditure or trading liability which was allowed as deduction in any of the assessment year. CIT(A) has given clear finding that the deduction on account of impugned statutory liability was never allowed to the assessee. Thus, the very first precondition to invoke the provision of section 41(1) of the Act is not satisfied. Therefore, we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the Revenue is hereby dismissed. Addition on account of difference betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subject to the maximum adjustment made by the AO. Thus, the ground of appeal of the Revenue is partly allowed. TP Adjustment - Addition of guaranteed fee - international transaction or not? - HELD THAT:- We find that in the case of PCIT vs. Redington [ 2020 (12) TMI 516 - MADRAS HIGH COURT] has held that corporate guarantee is covered under the limb of international transaction and having bearing on profit and loss account. Bank/corporate guarantee is an international transaction. Therefore, the same has to be bench marked for determining the ALP. Determine the benchmarking for working out the ALP of the impugned international transaction - As extension of corporate/guarantee to AEs is an international transaction which needs to be benchmarked and in view of several order of the tribunal as referred above 0.5% commission on the value of corporate/ bank guarantee will serve the justice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of the assessee is hereby allowed. Interest under section 244A - HELD THAT:- As relying on case of Karsanbhai Kacharabhai Patel HUF [ 2022 (12) TMI 1083 - ITAT AHMEDABAD] assessee is entitled to additional compensation of interest under section 244A of the Act on account of delay in the issue of refund X X X X Extracts X X X X X X X X Extracts X X X X ..... ity where its business premises are situated in order to maintain harmony with local environment. Accordingly, it was contented that the same are incurred wholly and exclusively for the purpose of the business. 5.1 However, the AO disagreed with the reasoning of the assessee and held that the assessee failed to explain the nexus of such expenditure with the business. Thus, the AO disallowed the same under the provisions of section 37(1) of the Act and added to the total income of the assessee. 6. On appeal by the assessee, the learned CIT(A) following the order of his predecessor in the own case of the assessee for AY 2008-09 deleted the addition made by the AO in part by observing as under: 9.6 It is seen that appellant's factories are located at village: Mandali, Savali, Near Baroda and Moraiya. Many of the staff and worker are residing in the vicinity of these areas. In view of these facts, I am of the opinion that donation/payments are nothing but an exercise of maintaining good relation and improving the vicinity area by which employees can get benefits, who stay in the nearby areas as well as advertisement of the appellant company for the benefit of appellant's busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factories of the assessee were located. Furthermore, it is the prerogative of the assessee to decide the expenses to be incurred for the purpose of the business and the revenue is not expected to sit on the armchair of the assessee to decide the expenses to be incurred for the commercial purposes. 9. On the other hand, the ld. DR before us contended that there was no nexus of the expenses incurred by the assessee with its business and therefore the same cannot be allowed as deduction. 10. Both the ld. AR and DR before us vehemently supported the order of the authorities below as favourable to them. 11. We have heard the rival contentions and perused the materials available on record. We have perused the list of nature of expenses incurred under the head general public utility expenses and find that the payments were made to gram panchayat, schools, social or religious welfare groups, hospitals which are working in the localities where assessee's factories or other premises are situated. Generally, these types of expenses incurred to maintain good relationship with the people in locality which also helps in image building of the business organizations. There are several insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding loan & advance to the impugned party including interest was at Rs. 32,16,51,167/- only. Due to a dispute regarding the claim of outstanding amount, the mater reached to for arbitration before the sole arbitrator Hon'ble justice S.B. Mazumdar (retired from Hon'ble Supreme court). The Hon'ble arbitrator vide order dated 3rd August 2006 held that the assessee company was not able to prove the claim of interest on such loan and advance and finally directed the party namely Shri Babubhai Ramanlal Patel to pay an amount of Rs. 20,50,00,000/- for full and final settlement of the loan and advance. 13.1 The assessee in accordance with the arbitration award has written of the sum of ₹11,66,51,168/- (being difference between amount due as per books of assessee and claim awarded by the arbitrator) in the profit and loss account of as not recoverable. However, the AO disallowed the claim of the assessee by observing as under: 6.7. In view of the above discussion, it is held that, (a) that the claim of assessee regarding write off of advance has been made by passing entry in the accounts on 31.03.2006, when the Arbitration Order on which the assessee relies is dated 03.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was duly offered to tax as business income. Therefore, any loss arising in carrying out the activity of money lending should be considered as revenue loss. The impugned amount of claim of Rs. 11,61,51,168/- was based on arbitration award given by the retired justice of Hon'ble supreme court wherein full and final settlement reached for Rs. 20.5 crores against the total outstanding of Rs. 32,16,51,168/- only. The assessee further submitted that there cannot be nexus between the money lent to Shri Babubhai Ramanlal Patel and land transaction between impugned party and its associate concern/individual. 15. The learned CIT(A) after considering the facts confirmed the disallowances made by the AO by observing as under: 11.6 I have carefully considered the rival contention. Appellant's claim is that it had business transactions with Shri Babubhai R. Patel. It has also been claimed that the appellant is in the business of financing and therefore is entitled to write off of the principal amount also. In connection it is seen that the main object clause of the appellant company does not include the business of financing or money lending.) The appellant company also does not have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed. This view is not supportable for more than one reason that it is not based on any material on record; that there was nothing on record to indicate that the assessee had been recognized as money lender in terms of any legal provisions or business practice and the mere fact that the assessing officer and the appellate authority have opined correctly or otherwise that deposit of Rs 75 qualifies for deduction under Section 36(1)(vii) of the Act being a deposit made in the money lending business activity of the assessee automatically entails the assessee to a like deduction in respect of the advance to extent of Rs 5.34 crore also as a deduction under the very provision of law without more. The assessee's mam business activity was only in providing services in telecommunication technology and not in money lending activity. 36. While it may be true that in terms of No 23 of the objects clause of Memorandum and Articles of Association of the Company, the assessee could have carried on this activity incidental to its main business, it was not made known as to whether the assessee was carrying this business also in a systematic manner. Mere fact that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arbitrator dated 3 August 2006 relates to the year in dispute i.e F.Y. 2005-06 corresponding to A.Y. 2006-07. As per the AO, the order for the arbitration was made on 3 August 2006 and therefore if at all the assessee wishes to make a claim based on such award, the same can be made only in the previous year 2006-07 corresponding to the assessment year 2007-08 and not in the year under consideration. There is no confusion that the order of the arbitration was made on 3rd August 2006 based on the application made by the parties i.e. the assessee and the party being Shri Babubhai Ramanlal Patel which was made sometime in the month of June 2006 whereas the books of accounts of the assessee were closed as on 31 March 2006. In the present case, the balance sheet for the period ending as on 31 March 2006 was prepared and signed dated 31st August 2006 and return was filed as on 5th January 2007 whereas the order of the arbitrator was made dated 3rd August 2006. In other words, it can be said that loss to the assessee was known at the time of signing the audited financial statements. The accounting principles also provide if it is likely that a contingency will result in a loss to the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It is pertinent to mention here that holding of money lending licence is not a prerequisite for allowing a claim of bad debts as is held by Supreme Court in TRF Ltd. Supra and it is enough if the irrecoverable debt is written off in the books of accounts. It is also pertinent to note that non charging of interest is not fatal to the claim for deduction. However, the aforesaid aspect of the matter has not been appreciated by the tribunal. Alternatively, the claim of the assessee under section 37(1) of the Act has also not been examined. 19.2 Likewise, we note that the Hon'ble Madras High Court in the case of CIT Vs Southern Polymers Pvt. Ltd. reported in 20 taxmann.com 847 has observed as under: 7. It is seen from the order of the Tribunal that it had, in an elaborate manner, considered the claim of the assessee as well as the Revenue, on the aspect of the assessee doing business in money-lending. A perusal of the order of the Tribunal and the assessment order shows that right from the assessment years 1991-92 to 2000-01, the assessee had been consistently receiving interest from the money-lending business as a business income and the same was offered as business income, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oneylending, which had been accepted so by the Revenue, and in the absence of any other material to show that the memorandum and articles of association of the company did not permit carrying on of money-lending business, the only question that survives for us to consider is whether the amount advanced by the assessee to the extent of Rs. 40 lakhs was really in the nature of a loan. 19.3 Based on the above, it can be concluded that the assessee is engaged in the business of moneylending and therefore once the amount lent in normal course of business become irrecoverable/bad. The benefit of deduction as business loss to the assessee cannot be denied on the reasoning that there was no license available to it for carrying out the moneylending business. 19.4 As regards the conditions specified under section 36(2) read with section 36(1)(vii) of the Act, i.e. amount of bad debt written off as irrecoverable in the books of account is subject to the condition that income should have been offered in the year of writing off or in earlier years out of such bad debt. In this regard, we note that the assessee written off amount as irrecoverable as well as has offered interest income from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability. The onus lies upon the revenue to prove based on the documentary evidence that the assessee has adopted the colourable device. From the reading of the order of the AO, no detail is forthcoming about the land purchased by the group of the assessee at the alleged nominal price. The AO was expected to prove the impugned transaction of the purchase of land by the group company of the assessee based on the documentary evidence suggesting that the land has been purchased by the group company at the nominal price which has ultimately resulted the low-income tax liability on the assessee. Thus, in the absence of necessary details, we're not inclined to confirm the order of the authorities below. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee hereby allowed. 20. The next issue raised by the assessee vide ground No. 4 of its appeal is that the learned CIT(A) erred in confirming the disallowance of Rs. 48,96,52,916/- on account of provision for doubtful loans and advances. 21. The AO during the assessment proceeding found that an amount of Rs. 48,96,52,916/- being provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 I have already held while deciding the 10th ground of appeal that the appellant is not engaged in the business of money lending and advances given by it by charging interest is only incidental to the business. This cannot be treated as an activity of money lending in absence of any systematic business of taking deposits on interest and lending the same or having a money lending license. The appellant merely utilized funds available with it to earn some income. Following the stand taken while deciding the 10th ground of appeal the action of A.O. in disallowing the claim of provision for doubtful advances amounting to Rs. 48,96,52,916/- is upheld. In addition the claim has been made only in respect of the provision and the debt has not been written off in the books of accounts which is the primary condition for claim u/s. 36(1)(vii). The allowability of bad debt on the provisions has been rejected by number of judicial forums. Reliance is placed on the decision of Haryana State Industrial Development Corporation (2012) 344 ITR 460 (P&H) in which it has been held that Section 36(1)(vii) provides for deduction in the computation of taxable profits of any debt or part thereof, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such provision has actually been written off in the books of accounts. 25. On the other hand, the learned DR before us the reiterated the findings of the authorities below. 26. We have heard the rival contention of both the parties and perused the materials available on record. The facts of the issue on hand have been elaborated in previous paragraphs, therefore we are not inclined to repeat the same for the sake of brevity and convenience. The first question before us is whether the assessee is in the business of money lending or not and consequently the loan and advances given became irrecoverable is eligible for deduction as business loss or not. This question has been answered by us while adjudicating the immediate previous ground of appeal of the assessee i.e. ground no.-3 where we vide paragraph no. 19 of this order have held that the assessee is also engaged in the business money lending. Thus, we are not in agreement with the finding of learned CIT(A) to this extent. 26.1 Moving ahead, as per the provision of section 36(1)(vii) the amount of bad or part thereof will be allowed as deduction in the previous year in which written off as irrecoverable in the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble undertaking and claimed that similar deduction was allowed by the ld. CIT(A) in its own case for the AY 2004-05. 30. However, the learned CIT(A) dismissed the additional ground of appeal of the assessee by observing as under: I have carefully considered the contention made by the appellant. Hon'ble Supreme Court in the case of Goetz India Ltd. 284 ITR 323 has held that any claim for deduction not made in the return cannot be made except by way of filing revised return. In the case of appellant , no revised return was filed for making the claim. Hence, the claim is not acceptable. The additional ground of appeal raised by appellant is dismissed. 31. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 32. The learned AR before us contended that the deduction was not claimed by the assessee as there was no positive income but on account of the disallowance made by the AO, there was positive income to the assessee and therefore the assessee becomes entitled for the deduction provided under section 80-IA of the Act. It was further contended by the learned AR that the assessee has been allowed the deduction under section 80 IA of the Act in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income tax Appellate Tribunal under section 254 of the Income-tax Act, 1961. There shall be no order as to costs. 34.2 On perusal of the above judgement, there remains no ambiguity to the fact that it is the only AO who has no power under the statute to entertain a claim of deduction otherwise than by filing a revised return. However, there is no restriction on the power of the CIT(A) and ITAT being quasi-judicial authority. Thus, we are of the view that the learned CIT(A) should have accepted the claim of the assessee by extending the benefit of deduction envisaged under the provisions of section 80IA of the Act. Accordingly, we set aside the finding of the learned CIT(A) and direct the AO allow the deduction to the assessee under section 80IA of the Act as per the provisions of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not raised before the authorities below. 39. We have heard both the parties and perused the materials available on record. The Hon'ble Supreme Court in the case of National Thermal Power Co. Limited vs. CIT reported in 229 ITR 383 has held as under:- " Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(24) of the Act i.e. not liable to be tax then such receipt cannot be included in the book profit under section 115JB of the Act. The relevant observation of the Hon'ble Court is extracted as under: 27. In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital receipt' and does not fall within the definition of 'Income' under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under Section 115JB of the Act, 1961. In the case of Appollo Tyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for 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. 40. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es paid to GAS Authority of India of u/s 40 (a) (ia) of Income -tax Act. (vii) The CIT(A) has further erred in law and on facts in deleting the addition-of Rs. 11,68,377/- on account of Depreciation on Heavy Vehicles. (ix) On the facts end circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. (x) It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 44. The first issue raised by the Revenue vide ground No. 1 of its appeal is that the learned CIT(A) erred in deleting the disallowances of interest expenses of Rs. 15,71,96,428/- on deep discount bonds (DDBs). 45. The necessary facts are that the assessee has issued different series of deep discount bonds (DDBs) in earlier years which were having the maturity date in the subsequent years. The assessee was claiming the interest/discount (being difference between the price of the bonds when allotted and the price at which same will be redeemed on maturity) on pro rata basis. Accordingly, the assessee in the year under consideration also claimed interest expenses of Rs. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ready reference. "26. Having held that the assessee is entitled to proportionately claim the expenditure towards discount/interest on the DDBs on accrual basis in the year under appeal., we direct the AO to correctly work out the amount of deduction to the extent it relates to the year under appeal. In view of the foregoing, ground no.3 taken by the assessee is allowed subject to the aforesaid observations." 3.4 Following the above ITAT order in the case of appellant for A.Y. 2002-03 I hold that the appellant is entitled to pro rata interest expenditure pertaining to current A.Y. 2006-07. The A.O is directed to allow the pro-rata interest expenditure after necessary verification. The second ground of appeal is allowed accordingly. 47. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 48. The learned DR before us vehemently supported the order of the AO. 49. On the other hand, the learned AR before us contended that the issue on hand is covered in favour of the assessee by the order this tribunal in its own case for the AYs 2002-03 to 2004-05. The ld. AR vehemently supported the order of the ld. CIT-A. 50. We have heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits in a given accounting period. This view is well fortified by the judgment in Taparia Tools Ltd., 260 ITR 102, 116 (Bom.) in which the Hon'ble High... Cot has explained the matching concept thus: "'….Therefore, under the mercantile system of accounting, in order to determine the net income of an accounting year, the revenue and other incomes are matched with the cost of resources consumed (expenses). Under the mercantile system of accounting, this matching is required to be done on accrual basis. Under this matching concept, revenue and income earned during an accounting period irrespective of actual cash in-flow is to be compared with expenses incurred during the same period irrespective of actual out-flow of cash." 18. to the provisions of section 145(2), the Central Government has notified Accounting Stapdards to be followed for income-tax purposes. According to Paragraph 6(b) of the aforesaid Notification, "Accrual" refers to the "assumption that revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the period to which they rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest was incurred in that very year in which the DDBS were issued. The assessee was contractually bound to discharge it at the time of maturity of DDBS. The assessee had no element of discretion in this behalf. By issuing the debentures at a discount, the assessee-company incurred the liability in the year of issue of debentures to pay the discount at the time of maturity but such payment was to secure the benefit over a number of years. And therefore such liability was not to be allowed in its entirety in the year of issue of DDBS as the entire liability did not relate to that year. Here comes the relevance of matching principle. Since there was a continuing benefit to the business of the assessee over the entire period, the liability was required to be spread over the entire period of the DDBs. Besides, there is no dispute that the funds borrowed through DDBs were used for the purposes of the business in the year under appeal and hence the expenses, e.g., discount/interest, etc, relating thereto would deserve to be accounted for in and allocated to the year under appeal on pro-rata basis. Tested on the aforesaid principles, the assessee is entitled to succeed in its claim as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval, the observations made in India Cements Ltd., 60 ITR 52 (SC), that (a) the loan obtained is not an asset or advantage of an enduring nature; (b) the expenditure was made for securing the use of money for a certain period; and (c) it irrelevant to consider the object with which the loan was obtained. (iii) By Issuing the debentures at a discount, the assessee incurs the liability to pay the discount in the year of issue of debentures but such payment is to secure a benefit over a number of years. Since there is a continuing benefit to the business of the assessee over the entire period, the liability should be spread over the period of the debentures. 22. The factual matrix of the case before us is almost identical with the one in Madras Industrial Investment Corporation Ltd. (supra). In this view of the matter, the law as laid down in the aforesaid judgment would squarely cover the issue involved in the case before us as well. In the case before us, the assessee has issued DDBS at a price lower than their par value/deemed face value, i.e., the value at which they were required to be redeemed upon expiry of redemption period. The liability towards proportionate discount i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (illa) in section 36 made it abundantly clear that "pro- rata discount could be allowed in respect of Zero Coupon Bonds alone issued by an infrastructure capital company or infrastructure capital fund or public sector company after 1.6.2005 and therefore such a concession could not be extended in respect of earlier assessment years and that too to the assessee company which was neither an infrastructure company nor a public sector company; (vii) The device adopted by the assessee was a tax avoidance device and therefore such device was to be ignored. 25. It is submitted on behalf of the assessee that all the aforesaid observations have no direct bearing on the issue and therefore are not relevant in deciding upon the claim of the assessee under section 36(1)(ii)/37 of the Income-tax. We are in agreement with the aforesaid submissions. In our view, the assessee is entitled to succeed in its claim for deduction under section 36(1)(ii)/37 so long as he fulfils all the conditions prescribed therein. We have already held earlier that the assessee not only satisfies all the conditions stipulated by the aforesaid provisions but also that the case of the assessee is covered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as under: 5.3 This issue is also covered by the order of Hon'ble ITAT, Bench: A, Ahmedabadjor A.Yrs,.2002-03 and. 2004-05 dtd. 13th July, 2009. The relevant portion of the order passed by Hon.'lTAT is reproduced for immediate reference. "26. Having held that the assesses is entitled to proportionately claim the expenditure towards discount/interest on the DDBs on accrual basis in the year under appeal, we direct the AO to correctly work out the amount of deduction to the extent it relates to the year under appeal. In view of the foregoing, ground no.3 taken by the assessee is allowed subject to the aforesaid observations." 5.4 As per the direction of Hon'ble ITAT the interest on DDBs has been allowed in the earlier year on accrual basis. The write back of excess provision was on the basis of the accounting practice of the appellant. Since out of 400 DDBs, 175 DDBs were ,; repurchased by the appellant, A.O. is directed to verify, if the interest I allowed till purchase on 175 DDBs has exceeded the consideration paid while repurchase, towards interest, then the same would be added to the income for the year. Otherwise appellant succeeds. The ground of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- for two units namely Alindrra Unit Broada and Kalatalav Unit Bhavnagar under the backward area development scheme. The impugned subsidy was treated as capital receipt by the assessee. However, the AO found that the impugned subsidy was received in the form of exemption on sales tax on sale and purchases of different products. Hence, the same is directly linked to the turnover of the assessee. Therefore, as per the AO, the same should be treated as revenue receipt. The AO further held that had impugned subsidy been for the investment in plant & machinery, then the same should have been reduced from the original cost of the plant & machinery as prescribed under explanation 10 to section 43 of the Act. The AO accordingly treated the subsidy received by the assessee as revenue receipt and added to the total income of the assessee. 60. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: 6.4 It is seen that addition made on account of sales-tax subsidy treating as revenue receipt was deleted by my predecessor in the case of appellant for Asst.Year: 2008-09 vide appellate order No.CIT(A)-XI/94/Cir.5/10-11 dtd. 27th February, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Ltd. (supra). Therefore, the questions of law posed for our consideration in these appeals are answered in favour of the assessee and against the department. Accordingly, all these appeals are dismissed. 62.2. Respectfully following the finding of the Hon'ble Gujarat High Court in the own case of the assessee, we do not find any reason to interfere in the finding of the learned CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed. 63. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 209,41,67,551/- made by the AO on account of setoff of losses and unabsorbed depreciation of a unit of Core Healthcare Ltd. merged with the assessee. 64. The necessary facts are that one of the units of Core Healthcare Ltd was merged with the assessee company w.e.f. from 1st April 2004 and scheme of merger was approved by the Hon'ble Gujarat High Court vide order dated 07-032007. The assessee during the year in the scheme of merger claimed brought forward losses and unabsorbed depreciation of demerged unit for Rs. 209,41,67,551/- only. The assessee also made a similar claim in the immediate previous year i.e. FY. 2004-05 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses and depreciation of Rs. 1,64,78,76,612/- in respect of Sachana Division is concerned. The Appellant company being resulting company acquired unit at Sachana from Core Healthcare Ltd. (CHL) being the demerged company. All the assets and liabilities of Sachana Unit stands transferred to the appellant company. The Scheme was approved by Hon'ble High Court vide order dated 01/03/2007. The Scheme was divided into following parts. Part-I Deals with introduction and definitions. Part-II: Deals with compromise with lenders. Part-III: Deals with reconstruction of demerged company. Part-IV: Deals with reorganization of share capital of resulting Part-V: company, Deals with demerger. Part-VI: Deals with other terms and conditions applicable to the Scheme. • The scheme of demerger was approved by board of directors and share holders of the appellant company and CHL and also was approved by lenders of CHL. The scheme contains various clauses. This was a composite scheme whereby the liabilities of CHL got settled prior to demerger and later on Sachana Division got demerger from CHL and transferred to the appellant company. Para-3 of the Schemes provides as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956 ( 1 of 1956), by a demerged company of its one or more undertakings to any resulting company in such a manner that- (i) all the property of the undertaking, being transferred by the demerged company, immediately before the demerger, becomes the property of resulting company by virtue of the demerger; (ii) all the liabilities relatable to the undertaking, being transferred by the demerged company, immediately before the demerger, become the liabilities of the resulting company by virtue of the demerger; (iii) the property and liabilities of the undertaking or undertakings being transferred by the demerged company are transferred at values appearing in its books of account before the demerger; (iv) the resulting company issues, in consideration of the demerger, its shares to the shareholders of the demerged company on a proportionate basis [except where the resulting company itself is a shareholder of the demerged company]; (v) the shareholders holding not less than three-fourths in value. of the shares in the demerged company (other than shares already hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Appointed Date of Demerger." The liabilities were scaled down in the hands of CHL only. This is clearly mentioned in the scheme duly approved by Hon'ble High Court. The accounts are duly prepared by the Management of the Company and Auditors opined about the correctness of the financial statement based on the audit. The Auditors verified the liabilities of the Demerged Undertaking which were taken over by the appellant company. Once Hon'ble High Court sanctioned the scheme it binds all concerned. The settlement of debts was carried out by CHL with its lenders of Sachana Division which were taken over by the appellant company. The appellant company is not concerned in the matter of settlement due of CHL. The Rajpur Division continues The losses were allocated in the proportion of the assets of the Demerged Undertaking. Accounting treatment in the books of resulting company was a per Para-16 of the Scheme duly sanctioned by Hon'ble High Court. Section 72(A)(4) deals with carry forward set off of demerge undertaking in the hands of resulting company which provides as under: "(4) anything contained other provisions this Act, in the case of a demer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to demerged undertaking on the basis of 72A(4)(b). Accordingly having complied all the conditions Section 2(19AA) of Income-tax Act and Scheme sanctioned by the Hon'ble High Court, the appellant Company is eligible to reduction on Undertaking. loss depreciation pertaining Sachana Depreciation and losses of CHL should be determined as on 31- 032004 and cannot be determined as on 01-12-2004. The depreciation and losses are always to be worked out at the end of the year as per section 72A of Income Tax Act. This is also mentioned in the scheme sanctioned by Hon'ble High court at Para-8 of the Scheme. . 4.4 So far as directing to allow depreciation Rs. 73,09,18,272/- on tangible assets on the opening w.d.v. in AO Para 7 (Page 32) and in CIT(A) Para 6.3 (Page 29). In this case, Hon'ble Tribunal allowed the depreciation in the case of Nirma Industries Ltd. for the Asst. Year 2001- 02 on Rs. 62.50 crores taking the cost of Rs. 500 crores. Para 6.1.1 (P.B. Volume II - Page No.310 backside and 311). Thereafter, ITAT has also allowed in the Asst. Year 2004-05 in favour of the assessee. Respectfully following the decision of the Coordinating Bench, this Ground of the appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO by observing as under: .The issue pertains to non deduction of TDS from the of Gas Authority of India Ltd. The Id. CIT(A)-X, Ahmedabad while dealing with the appeal for Asst.Years: 2004-05 to 2006-07 in the case of appellant has held that there was no requirement of deducting TDS in the appeal order No.CIT(a)-X/15,16 &17/06-07 dtd.03-01-2008. The order of Id.CIT(A) was confirmed by Hon. ITAT Bench: A. Ahmedabad in the order passed vide ITA Nos.1072 to 1074/Ahd/2008 for Asst. Years 2004-05 to 2006-07 dtd. 22nd May, 2008. In view of the above appeal orders, I allow the claim of the appellant and direct the AO to delete the disallowance made towards transportation charges paid to Gas Authority of India Ltd. for Rs. 66,37,143/- u/s. 40(a)(ia) of the I.T Act. This ground of appeal is allowed. 74. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 75. The learned DR before us vehemently supported the order of the AO by reiterating the findings contained in the assessment order. 76. On the other hand, the learned AR submitted that the transportation charges were part and parcel of the purchases and therefore the same is outside the purv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined to "works contract." However, in the present case we are not faced with such a situation. We only find that there was no contract between GAIL and the assessee for carriage of goods. Transportation of gas by GAIL was only in furtherance of contract of sale of gas. 18. In view of the above discussion, we are of the opinion that the Tribunal committed no error in coming to the conclusion that the case was not covered under Section 194C of the Act. It may be that the transportation component of gas was paid separately by the assessee to GAIL. Here also the transportation charges did not depend on the consumption of quantity of gas but was of fixed monthly charges to be borne by the assessee as part of the agreement between the parties. The ownership of the gas vested in GAIL till it was transported and delivered to the assessee's premises at the outlet of the gas metering station. The pipeline was laid down by GAIL and was permitted to be utilized for further onward transportation of gas to other consumers. 77.2 At the same, it also pertinent to highlight that the CBDT after taking cognizance of judgment of Hon'ble Gujarat High Court in case of CIT(TDS) vs. Kris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t doubt the claim of the use of these trucks since they were also registered in the name of the appellant. Disallowance of depreciation of Rs. 11,68,377/- on these truck by A.O is deleted and 12 the ground of appeal is allowed. 81. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 82. The learned DR before us reiterated the findings contained in the assessment order by supporting the order of the AO. 83. On the other hand, the learned AR before us submitted that vehicles in dispute were ready to use as on 31 March 2006 and therefore the assessee cannot be denied the benefit of the depreciation for the year under consideration. The learned AR before us vehemently supported the order of the ld. CIT-A. 84. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee purchased secondhand trucks and claimed to have put to use on 31st March 2006. However, the AO held that no evidence of put to use as on 31st March 2006 was furnished and accordingly disallowed the deprecation claimed on same. On appeal by the assessee, the learned CIT(A) was pleased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 where the quantum additions have been deleted by us vide paragraphs nos. 11 and 19 of this order. 88.1 Thus, from the above there remains no ambiguity that the first two additions/disallowances being General Public Utility Expenses and Bad Debt Written Off based on which the penalty was levied upon the assessee by the AO has ceased to exist. In other words, the quantum additions made by the AO and confirmed by the learned CIT(A) were deleted by the us. Thus, the question of concealment of income or furnishing inaccurate particular of income does not arise and therefore the penalty cannot be sustained. Under the provisions of section 271(1)(c) of the Act, the amount of penalty has been specified which shall not be less than hundred percent of the amount of tax sought to be evaded subject to the maximum limit of 300% of such amount. Under explanation 4 to section 271(1)(c) of the Act, the manner for quantifying the amount of tax sought to be evaded has been specified which has direct nexus with the additions/ disallowances made during the quantum proceedings. Therefore, when the quantum additions/disallowances have been deleted, then the manner of quantifying the amount of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late authority. 88.4 From the above, it is transpired that there was bona fide mistake committed by the assessee which was duly admitted before the AO. It is settled position of law that quantum proceedings and the penalty proceeding are different. Any addition or disallowances made under quantum proceeding do not ipso facto empower the revenue authority to levy penalty under section 271(1)(c) of the Act. In the penalty proceeding it has to be proved by the revenue based on cogent material that the assessee has either concealed income or furnished inaccurate particulars of income. In holding so we draw support and guidance from the judgment of Hon'ble Supreme Court in case Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 wherein it was held as under: If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. 88.5 As such revenue authority has to prove based on cogent material that the assessee has concealed income willfully with mala fide intention. There is no such finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings u/s. 271(l)(c) of I.T. Act. 9) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in dismissing additional ground regarding allowances of deduction u/s. 80IA of I.T Act on the profit of the power project. 10) Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time. 90. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of general public utility expenses for Rs. 6,52,637/- under section 37(1) of the Act. 90.1 At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2007-08 is identical to the issue raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 200708. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been decided by us vide paragraph No. 34 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment years 2007-08. Hence, the ground of appeal filed by the assessee is hereby allowed. 99. The assessee, vide application dated 02-03-2020 and 15-02-2021, has pleaded before us for admitting the additional grounds of appeal which read as under: Additional ground vide letter dated 02-03-2020 In law and in facts and circumstances of the Appellant's case, sales benefit of Rs. 58,70,07,586/- should be excluded from the book profit u/s. 115JB of the I.T. Act. Additional ground vide letter dated 15-02-2021 On the facts and in the circumstances of the case and in law, education cess and secondary & higher education cess(education cess) paid on income tax and surcharge during the year, ought to be allowed as a deductible expense under the provisions of the Income-tax Act, ('the Act') while computing the taxable income. The appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,250/-on account of Benefit on settlement of loan. vii) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 6,01,00,000/-. On account of Disallowance of liabilities transferred to capital reserve of u/s .28 (1) of the IT Act. viii) The CIT(A) has further erred in law and on facts in deleting the addition Rs. 350,71,61,552/- on account of difference between assets and liabilities in respect of demerged undertaking of Sachana which assessee had received from Core Health Ltd. xii) On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. xi) It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-a.side and that of the Assessing Officer be restored. 103. The first issue raised by the Revenue vide ground No. 1 of its appeal is that the learned CIT(A) erred in deleting the disallowance of interest expense of Rs. 60,83,39,826/- on deep discount bonds (DDBs). 104. At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2007-08 is identical to the issue raised by the Revenue in ITA No. 685/AHD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of setoff of losses and unabsorbed depreciation of a unit of Core Healthcare Ltd. merged with the assessee. 110. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2007-08 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment years 200708. The appeal of the Revenue for the AY 2006-07 has been decided by us vide paragraph No. 68 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2007-08. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 111. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of depreciation on intangible assets for Rs. 46,39,21,449/- only. 112. At the outset, we note that the assessee has acquired brand/trademark in the A.Y. 2003-04 from Nirma Industries Ltd and this is 5th year of its claim. We also note that there is no dispute other than the value of brand/tradem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-08 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 200708. The appeal of the Revenue for the AY 2006-07 has been decided by us vide paragraph No. 70 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2007-08. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 115. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 12,30,29,250/- by the AO for the waiver of the loan. 116. The assessee during the assessment proceedings vide letter dated 23-122009 submitted that an amount of Rs. 12,30,29,250/- was credited to profit and loss account representing settlement of loan in the scheme of merger of Sachana Division of Core Healthcare Ltd. There was not claimed any deduction against such loan against the taxable income of the assessee. Therefore, the waiver of the loan cannot be made taxable under section 41 of the Act. Further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us vehemently supported the order of the ld. CIT-A. 123. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the case on hand relates whether the waiver of loan amounting to Rs. 12,30,29,250/- is chargeable in the hands of the assessee either under the provisions of section 28(iv) of the Act or section 41(1) of the Act. To attract the provisions of section 28(iv) of the Act there must be some benefit to the assessee in any form other than the cash arising from business or the exercise of profession. In the present case, the benefit arising to the assessee is in the form of cash, i.e., waiver of loan represents the benefit in the form of cash. The Hon'ble Supreme Court in the case of CIT vs. Mahindra and Mahindra Ltd reported in 93 taxmann.com 32 has observed as under: On a plain reading of section 28(iv), prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provision of section 28(iv), the benefit which is received has to be in some other form rather than in the shape of money. In the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been paying interest at 6 % per annum to the KJC as per the contract but the assessee never claimed deduction for payment of interest under Section 36 (1) (iii) of the IT Act. In the case at hand, learned CIT (A) relied upon Section 41 (1) of the IT Act and held that the Respondent had received amortization benefit. Amortization is an accounting term that refers to the process of allocating the cost of an asset over a period of time, hence, it is nothing else than depreciation. Depreciation is a reduction in the value of an asset over time, in particular, to wear and tear. Therefore, the deduction claimed by the Respondent in previous assessment years was due to the deprecation of the machine and not on the interest paid by it. 16. Moreover, the purchase effected from the Kaiser Jeep Corporation is in respect of plant, machinery and tooling equipments which are capital assets of the Respondent. It is important to note that the said purchase amount had not been debited to the trading account or to the profit or loss account in any of the assessment years. Here, we deem it proper to mention that there is difference between 'trading liability' and 'other liability' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated before the authorities below that the assessee was not allowed the deduction of unpaid interest expenses by virtue of the provisions of section 43(B) of the Act. The relevant extract of the contention of the assessee is reproduced as under: Interest expenditure, if any, unpaid is already disallowed u/s. 43B of Income-tax Act. Hence, Rs. 12,30,29,250 credited to Profit & Loss account should not be taxed. 123.6 It is the precondition for attracting the provisions of section 41(1) of the Act that the assessee must have been allowed the deduction in respect of any expenditure, loss, or trading liability. But in the given case such condition was not complied with as far as unpaid interest is concerned and therefore, we are of the view that the assessee cannot be made subject to tax on account of waiver of interest on the loan as it was never allowed deduction to the assessee in any of the assessment year. 123.7 Thus, in view of the above discussion we do not find any reason to interfere in the finding of the learned CIT(A). Hence, the ground of appeal of the revenue is hereby dismissed. 124. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 28(iv) of the Act cannot be applied. 130.2 The next aspect arises whether such writing-off of the liability can be brought to tax under the provisions of section 41(1) of the Act. To bring any item under the net of income in pursuance to the provisions of section 41(1) of the Act, there must be recovery either in cash or in-kind in respect of loss, expenditure or trading liability which was allowed as deduction in any of the assessment year. In the given case, the learned CIT(A) has given clear finding that the deduction on account of impugned statutory liability was never allowed to the assessee. Thus, the very first precondition to invoke the provision of section 41(1) of the Act is not satisfied. Therefore, we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the Revenue is hereby dismissed. 131. The last issue raised by the Revenue is that the learned CIT(A) erred in deleting addition of Rs. 350,71,61,552/- on account of difference between assets and liabilities taken on merger of Sachana Division of Core Healthcare Ltd. 132. The AO during the assessment proceedings found that the assessee has created capital reserve account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. The assessee in the process of demerger received assets having book value of Rs. 964,44,80,456/- and liabilities having book value of Rs. 611,86,73,204/-. Thus, the assessee received net assets of Rs. 352,58,07,252 against which issued share capital of Rs. 1,86,45,700/- as purchase consideration. Accordingly, the net assets over the purchase consideration amounting to Rs. 350,71,61,552/- transferred by the assessee to the capital reserve by the following accounting principle. On the other hand, the revenue wishes to tax the excess amount of book of value of net assets acquired by the assessee under section 28(iv) of the Act. 136.1 On close perusal of the provision of section 28(iv) of the Act, we note that to tax an amount under the impugned provision of the Act following ingredient should be available on record: i. The assessee should have derived any benefit or perquisite which is in the form of kind whether convertible into money or not. ii. Such benefit or perquisite should be derived from business or exercise of business or profession. 136.2 In the case on hand the assessee received surplus assets over the liabilities and purchase consideration paid in the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year based on Us. 152. 89 crores being market value in Asst. Year 4) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming disallowance of expenses of Rs. 12.50.304/- u/s. 37 (1) of 5) In law and in facts and circumstances of the Appellant's case, the learned CIT (A) has grossly erred in confirming not allowing depreciation Rs. 2,45,359/- on disallowance of depreciation Rs. 1 1,68,377/- made in the assessment order for earlier Asst. Year 2006-07. 6) In law and in facts and circumstances of the Appellant's case, the learned CIT (A) has grossly erred in holding that charging of interest u/ss.234B; 234C, 234D and withdrawing interest u/s. 244A of the Act are mandatory. 7) In law and in facts and circumstances of the Appellant's case, the learned CIT (A) has grossly erred in dismissing appellant's ground regarding initiation of penalty proceedings u/s. 271 (l)(c) of Income-tax Act. 8) Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time. 139. The first issue raised by the assessee is that the learned CIT(A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the Revenue for the AY 2007-08 has been decided by us vide paragraph No. 112 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2007-08 shall also be applied for the assessment year 2008-09. Hence, the ground of appeal filed by the assessee is hereby allowed. 142. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of general public utility expense for Rs. 12,50,304/- under section 37(1) of the Act. 143. At the outset, we note that the issue raised by the assessee in its grounds of appeal for the AY 2008-09 is identical to the issue raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 200809. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2008-09. Hence, the ground of appeal filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 148. At the outset, we note that identical additional grounds were raised by the assessee in ITA NO. 515/Ahd/2014 in the AY 2006-07 which were dealt by us vide paragraph No. 36 to 41 of this order. Hence, following the same the additional grounds raised in captioned appeal are also admitted. 148.1 At the outset, we note that the issues raised by the assessee in its additional grounds of appeal for the AY 2008-09 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment years 2008-09. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 36 and 40 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2008-09. Hence, the additional grounds of appeal filed by the assessee are hereby partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) erred in deleting the addition of Rs. 210,78,03,786/- made on account of setoff of losses and unabsorbed depreciation of demerged unit of Core Healthcare Ltd. 153. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2008-09 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 200809. The appeal of the Revenue for the AY 2006-07 has been decided by us vide paragraph No. 68 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2008-09. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 154. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowances of excess depreciation on intangible assets for Rs. 34,79,41,087/- only. 155. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2008-09 is identical to the issue raised by the Revenue in ITA No. 686/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing appellant's ground regarding initiation of penalty proceedings u/s. 271 (l)(c) of Income-tax Act. 6) Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time. 159. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of general public utility expense for Rs. 1,14,651/- under section 37(1) of the Act. 160. At the outset, we note that the issue raised by the assessee in its ground of appeal for the AY 2009-10 is identical to the issue raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 200910. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2009-10. Hence, the ground of appeal filed by the assessee is hereby allowed. 161. The next issue raised by the assessee is that the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional ground vide letter dated 15-02-2021 On the facts and in the circumstances of the case and in law, education cess and secondary & higher education cess ("education cess") paid on income tax and surcharge during the year, ought to be allowed as a deductible expense under the provisions of the Income-tax Act, ( 'the Act') while computing the taxable income. The appellant craves leave to Add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 171. At the outset, we note that identical additional grounds were raised by the assessee in ITA No. 515/Ahd/2014 which were accepted by us vide paragraph No. 36 to 40 of this order. Hence, following the same, the additional grounds raised in captioned appeal are also accepted. 171.1 At the outset, we note that the issues raised by the assessee in its additional grounds of appeal for the AY 2009-10 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of disallowance u/s. 14A of the Act r. w. Rule 8D of the I T Rule. 6. The Id. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 15,98,115/- made On account of product registration expense. 6.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the benefit of the registration of the product is of enduring nature and therefore the expenses are not allowable u/s 37(1) of the Act. 7. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 15,18,778/- made'on account of disallowance u/s. 14A of the Act r. w. Rule 8D of the I T Rule under the MAT provisions. 8. The CIT(A) has erred i'n iaw and on facts in allowing the Assessee's claim for deduction u/s. 80IA of the Act in respect of its Power Generation Unit at Bhavnagar. 8.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the power generated: was consumed on captive basis and therefore the assessee is not entitled for deduction u/s 80IA. 9. The Id. CIT(A) has erred in law and on facts in deleting the addition made on account of guarantee fee of Rs. 12,48,19,000/- 9.1 The Id. CIT(A) has erred in law and on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided by us vide paragraph No. 68 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2009-10. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 178. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of excess depreciation on intangible assets amounting to Rs. 23,12,67,110/- only. 179. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2009-10 is identical to the issue raised by the Revenue in ITA No. 686/AHD/2014 for the assessment year 2007-08. Therefore, the findings given in ITA No. 686/AHD/2014 shall also be applicable for the assessment year 200910. The appeal of the Revenue for the AY 2007-08 has been decided by us vide paragraph No. 112 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2007-08 shall also be applied for the assessment year 2009-10. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 180. The next issue raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted. The learned Assessing Officer has not pinpointed the nexus to acquire tax free investment out of borrowed funds. The investments were made in earlier year. No case is made out to find out the expenses incurred - interest expenses and other expenses for making tax free investments. Since the capital and reserves of appellant company is Rs. 2601.04 crores which is substantially more than the tax free investment of Rs. 6.24 crores, following the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Suzlon Energy Ltd. (354 ITR 630) (Guj) I delete the disallowance made u/s. 14A of Income-tax Act for Rs. 15,18,778/-. This ground of appeal is allowed. 183. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 184. The learned DR before us vehemently supported the findings of the assessment order. 185. On the other hand, the learned AR before us submitted that the own fund of the assessee exceeds the amount of investments and therefore there cannot be any disallowance of interest expense under the provisions of section 14A read with rule 8D of Income Tax Rules. The learned AR before us vehemently supported the order of the learned CIT- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 15,98,115/- only. 188. The AO during the assessment proceedings found that the assessee incurred expenses on product registration and approval in foreign countries and claimed the same as revenue expenditure. The AO held that the expenditure has incurred registration to enable the assessee to sale its product on foreign countries in year under consideration as well as in the subsequent years. Therefore, the assessee from such expenditure is deriving benefit of enduing nature and therefore the same needs to be capitalized. Hence the AO disallowed same and made addition of Rs 15,98,115/- after providing depreciation allowances. 189. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: It is seen that the A.O. had disallowed product registration expenses of Rs. 15,98,155/- as in the opinion of the A.O, the benefit derived by the product registration expenses (nay benefit the appellant for many years and accordingly benefit of enduring nature had accrued to the appellant as a result of these expenses. Taking entirety of facts in view, I am not inclined to agree with the contentions of Ld. A.O. The product registration expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order of the Hon'ble jurisdictional High court in the above-mentioned case, we do not find any infirmity in the order of the learned CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed. 194. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 15,18,778/- while calculating the income under MAT on account of the disallowance under section 14A of the Act. 195. The AO while computing book profit under the provisions of section 115JB of the Act made addition of the amount disallowed under section 14A of the Act in normal computation of income. On appeal by the assessee the learned CIT(A) was pleased to delete the addition made by the AO in the normal provision as well as under the book profit. 196. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 197. The learned DR before us vehemently supported the findings of the assessment order. 198. On the other hand, the learned AR contended that the addition under the normal provisions of the Act cannot be added while determining the income under the provisions of MAT. Thus, such expenses cannot be disallowed while calculating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not and cannot be made to section 14A of the Act." 199.3 Given above, we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot 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. (Supra). 199.4 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we note that 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 12,48,19,000 is required to be deleted. The appellant company furnished bank guarantee to the foreign bank for providing finance to associated enterprise at U.S.A. which is wholly owned subsidiary of the appellant company. Hon'ble Delhi Tribunal in the case of Bharti Airtel Ltd Vs. CIT (43 taxmann.com 150) held that extending corporate guaranteed not within the purview of international transaction. The Tribunal in this case held as under; • Capital financing! transactions {covered by the Explanation to section 92B) are international transactions only if they have any real bearing as distinct from contingent effect on the profits, income, losses or assets of the enterprise; • When an assessee extends an assistance to the Associated Enterprise (AEs), which does not cost anything to the assessee, such an assistance or accommodation will not have any bearing on its profits, income, losses or assets, and, therefore, it is outside the ambit of international transaction under section 92B(1). • Corporate guarantees issued for the benefit of AEs do not cost anything to the issuing enterprise and yet it might provide certain comfort levels to the parties deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in case of Bharti Airtel Ltd vs. CIT reported in 43 taxmann.com 150 held the extension of bank guarantee is not covered under the purview of international transaction. 208.1 In this regard we find that the Hon'ble Madras High Court in the case of PCIT vs. Redington (India) Ltd. reported in 122 taxmann.com 136 has held that corporate guarantee is covered under the limb of international transaction and having bearing on profit and loss account. The relevant finding of the Hon'ble court reads as under: The concept of bank Guarantees and Corporate Guarantees was explained in the decision of the Hydrabad Tribunal in the case of Prolifics Corpn. Ltd v. Dy. CIT [2015] 55 taxmann.com 226/68 SOT 104 (URO). In the said case, the revenue contended that the transaction of providing Corporate Guarantee is covered by the definition of international transaction after retrospective amendment made by Finance Act, 2012. The assessee argued that the Corporate Guarantee is and additional guarantee, provided by the Parent company. It does not involve any cost of risk to the shareholders. Further, the retrospective amendment of section 92B does not enlarge the scope of the term 'internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsiderations which apply for issuance of a corporate guarantee are distinct and separate from that of bank guarantee and, accordingly, commission charged cannot be called in question, in the manner TPO has done. The comparison is not as between like transactions but the comparisons are between guarantees issued by the commercial banks as against a corporate Guarantee issued by holding company for the benefit of its AE, a subsidiary company. In view of the above discussion, appeal does not raise any substantial question of law and it is dismissed 208.4 Now, the question arises what should be the ALP rate of the commission on corporate guarantee? In this regard we find that The Tribunal in several cases has considered 0.50% (of corporate guarantee given) as ALP rate of Corporate/bank Guarantee commission. Some of these cases are as under: (i) Videocon Industries Ltd. v. Dy. CIT [2017] 79 taxmann.com 216 (Mumbai - Trib.), Parent company charged commission at 0.25 %. The ALP was determined by the Tribunal at 0.50%. (ii) Hindalco Industries Ltd. v. Addl. CIT [2015] 62 taxmann.com 181 (Mum.), Parent company charged commission at 0.50% which was considered as at ALP. (iii) Manugra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the Assessing Officer. 1.1 The Id. CIT(A) has erred in law and on facts by not following the judgments of Hon'ble Supreme Court in the case of Sahney Steel and press works Ltd. and others v CIT (228 ITR 253) and in the case of Rajaram Maize Products (251 ITR 427)., 2. The Id. CIT{A) has erred in law and on facts in allowing the assessee's claim of set-off of brought forward losses and unabsorbed depreciation of Rs. 1,31,00,00,000/- on account of merger of its demerged undertaking of Core Health Care Ltd. 2.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the assessee had taken over only about 97,15% of the assets and 9.33% of liabilities of the Core Healthcare Ltd. and as such the conditions laid down u/s 2(19AA) of the Act were not satisfied. 3. The Id. CIT(A) has erred in law and on facts in deleting the disallowance of excess claim of depreciation of Rs. 17,34,50,332/- on intangible assets and in directing the Assessing Officer to work out the WDV of intangible assets with reference to the market value of the assets at Rs. 500 Crores.; 4. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,68, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of its Power Generation Unit at Bhavnagar. 10.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the power generated was consumed on captive basis and therefore the assessee is not entitled for deduction u/s 801A. 11. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 12. It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 210. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO by treating the sales tax benefit of Rs. 52,42,58,190/- as revenue receipt only. 210.1 At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 201011. The appeal of the Revenue for the A.Y. 2006-07 has been decided by us vide paragraph No. 62 of this order against the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2010-11. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 186 of this order partly in favour of the Revenue. 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 assessment years 2010-11. Hence, the ground of appeal filed by the Revenue is hereby partly allowed. 216. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 9,68,231/- by the AO while calculating the income under MAT on account disallowance made under section 14A of the Act. 217. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2010-11. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 199 of this order partly in favour of Revenue. The learned DR and the AR also agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture. Accordingly, the AO disallowed the same and added to the total income of the assessee. 222. The aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that no benefit of enduring nature arises from the expenditure incurred for study of updated status of Cement Industry in India nor any asset came into existence. Further, in its manufacturing process of soda, soda ash is generated which can be used as raw material in production of Cement as backward integration. Therefore, the expenditure relates to its present business and same to be allowed as revenue expenditure. 222.1 The learned CIT(A) after considering the facts and submission of the assessee deleted the disallowances made by the AO by observing as under: 10.3 I have carefully considered the submission of the appellant. Appellant is one of the leading manufacturer of Soda Ash in the country. Accordingly, ash is generated in large quantity which will be used in production of cement as backward integration, hence which is part of the same business. After considering the entirety of facts, am not inclined to agree with the contentions of the Id.A.O. as appellant paid consultation fee to IFCI rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In such facts and circumstances the Hon'ble Gujarat High Court in the case of DCIT Vs. Gujarat Narmada Valley Fertilizers Co. Ltd. reported in 57 taxmann.com 250 has held as under: The Tribunal found that management of the existing company engagement in production of fertiliser and the proposed company of Seamless Steel Tube project was the same. The expenditure incurred by the assessee from the same fund of the company. There was a unity of control and common business organization, common administration by the existing Board of Directors and the present employees of the company were involved in the said project. The company's common place of business was supposed to be used to establish the Seamless Steel Tube Project. In such circumstances, it cannot be said that it is altogether a new business of the assessee-company. Considering the facts involved in the present case, in our opinion, the Seamless Steel Tube Project was an expansion of the present business of the assessee which is supported by the objects mentioned in the memorandum of association. However, ultimately the project was given up by the assessee for some reason even otherwise it is a business loss of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of different bench of tribunal where it has been held ALP on interest on loan extended to AE in USA would be LIBOR + 200 to 250 basis points. The average LIBOR rate for the year under consideration was 1.28% and taking the basis points of 250 the ALP would be 3.78% whereas it has charged interest @ 5% on the loan extended to AE. Therefore, no further adjustment is required to be made. 228.1 The learned CIT(A) concurred with the submission of the assessee and deleted the upward adjustment made by the TPO for Rs. 13,92,104/- by observing as under: 12.2 I have carefully considered appellant's submission and case laws relied upon by the appellant. Appellant submitted that Ld. Transfer Pricing Officer passed an order u/s. 92CA(5) r.w.s. 154 of the I. T. Act dtd. 18.07.2014 revised the addition on account of benchmarking of loan to Rs. 13,92,104/-. The copy of the order u/s 92CA(5) r.w.s. 154 of the I. T. Act was furnished. Appellant submitted that loan granted to its AE (subsidiary company) should be computed at LIBOR plus 200 to 250 points. Appellant submitted that considering the fact that the LIBOR rate during FY 09-10 was 1.28% and by applying the higher rate of 250 basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan. 230.1 Thus, in view of the above detailed discussion, the upward adjustment with respect to corporate guarantee fee is confirmed in part whereas upward adjustment on benchmarking of interest is deleted. Hence, the ground of appeal raised by the Revenue is hereby partly allowed. 231. The next issue raised by the Revenue is that the learned CIT(A) erred in allowing the deduction under section 80IA of the Act for Power generation unit located at Bhavnagar. 232. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2009-10 is identical to the issue raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 200910. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 34 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2010-11. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 233. In the result, the appeal of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and in law, education cess and secondary & higher education cess (education cess) paid on income tax and surcharge during the year, ought to be allowed as a deductible expense under the provisions of the Income tax Act, ('the Act') while computing the taxable income. The appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 237. At the outset, we note that identical additional grounds were raised by the assessee in ITA NO. 515/Ahd/2014 which were accepted by us vide paragraph No. 36 to 40 of this order. Hence, following the same, the additional grounds raised in captioned CO are also accepted. 238. At the outset, we note that the issues raised by the assessee in its additional grounds of objection for the AY 2010-11 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 200607. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 2010-11. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2011-12. Hence, the ground of appeal filed by the assessee is hereby allowed. 243. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the addition made by the AO representing the late payment of employee's contribution of ESIC and EPF for Rs. 2,733/- and Rs. 40,932/- respectively. 244. The AO during the assessment found that the assessee deposited the employee contribution to ESI and EPF for Rs. 2,733/- and 40,932/- after the due date prescribed under relevant Act. Thus, the AO by invoking the provisions of section 2(24)(x) r.w.s. 36(1)(vi) and after placing reliance on the judgment of Hon'ble Gujarat High Court in case of CIT vs. G.S.R.T.C. in tax appeal No. 673/2010 treated the same as income of the assessee and added to the total income. 245. Aggrieved, assessee preferred an appeal before the learned CIT(A). 246. The assessee before the learned CIT(A) submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the assessee towards ESI is within the due date as specified under the relevant Act. In this regard, we note that the assessee has made the payment of employee's contribution beyond the due date as specified under the relevant Act. Therefore, the same cannot be allowed as deduction. We also note that the identical issue has been decided dated 15th Oct, 2018 by the Hon'ble Gujarat High Court in the case of M/s Checkmate Facility and Electronics Solutions Pvt. Ltd. v/s DCIT reported in Tax Appeal No.1256 of 2018 against the assessee. The head note reads as under: "Disallowance u/s 2(24)(x) r.w.s. 36(1)(va) Held that:- Provision requires an employer before paying the employee his wages to deduct the employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. If not so paid then no deduction 36(1)(va)" 250.1 From the above it is very clear that the payment under section 36(1)(va) would be allowed in respect to the payment of employee contribution towards ESI/EPF if such payment is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round of appeal is hereby dismissed. 254. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 255. The learned AR before us contended that expenses claimed by the assessee were genuine and this fact was also not doubted by the authorities below. Accordingly, the learned AR prayed for the deduction of the expenses in dispute. 256. On the other hand, the learned DR vehemently supported the order of the authorities below. 257. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the assessee has claimed certain expenses in the books of accounts amounting to Rs. 23,98,687.00 in the financial year ending as on 31 March 2013 i.e. previous year 2012-13 corresponding to assessment year 2013-14 but disallowed the same suo moto in the computation of income on the reasoning that these expenses do not pertain to the previous year 2012-13 corresponding to the assessment year 2013-14. However, it was contended by the assessee that these expenses pertain to the year under consideration and therefore the assessee has claimed deduction for the same by way of letter filed during the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l which read as under: 259.1 Additional ground vide letter dated 05-03-2020 In law and in facts and circumstances of the Appellant's case, sales tax benefit of Rs. 55,0073,308/- should be excluded from the book profit u/s. 115JB of the I.T Act. 259.2 Additional ground vide letter dated 15-02-2021 On the facts and in the circumstances of the case and in law, education cess and secondary & higher education cess (education cess) paid on income tax and surcharge during the year, ought to be allowed as a deductible expense under the provisions of the Income tax Act, ('the Act') while computing the taxable income. The appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 260. At the outset, we note that identical additional grounds were raised by the assessee in ITA NO. 515/Ahd/2014 which were accepted by us vide paragraph No. 37 of this order. Hence, following the same, the additional grounds raised in captioned appeal are also accepted. 261. At the outset, we note that the issues raised by the assessee in its addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of doubtful advances written off. 10. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 4,89,80,354/- made on account of doubtful advances written off. 11. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs,5,14,00,000/- made on account of excess provision written back. 12. On the facts and circumstances of the case, the Ld. Commissioner of Income ia\ (A) ought to have upheld the order of the Assessing Officer. 13. It is, therefore, prayed that the order of the Ld. Commissioner of Income tax A -may be set-aside and that of the Assessing Officer be restored. 264. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO by treating the sales tax benefit of Rs. 56,21,38,408/- as revenue receipt. 265. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 201112. The appeal of the Revenue for the A.Y. 2006-07 has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2011-12. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 186 of this order partly in favour of the revenue. 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 assessment year 2011-12. Hence, the ground of appeal filed by the Revenue is hereby partly allowed. 272. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 7,65,211/- while calculating the book profit under the MAT on account of the disallowance under section 14A of the Act. 273. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issue raised by the Revenue in ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2011-12. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 199 of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-11. Therefore, the findings given in ITA No. 2412/AHD/2015 shall also be applicable for the assessment year 2011-12. The appeal of the Revenue for the A.Y. 2010-11 has been decided by us vide paragraph No. 226 to 230 of this order partly in favour of the revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2010-11 shall also be applied for the assessment year 2011-12. Hence, the ground of appeal filed by the Revenue is hereby partly allowed. 280. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of doubtful advance written off for Rs. 5,45, 062/- only. 281. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 201112. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 19 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted at source and advance tax paid for Rs. 1,39,77,665/- only. However, the assessment was framed by the AO under section 143(3) of the Act dated 30-03-1999 determining total income at Rs. 16,43,11,720/- only. Finally, the dispute reached the Tribunal and an order dated 12-11-2008 was passed. Consequentially, the AO in giving effect order dated 15-01-2009 has determined the amount of refund at Rs. 75,00,281/- without granting interest under section 244A of the Act. The assessee filed a rectification application date 11-02-2009 to grant interest under section 244A of the Act which travelled up to Tribunal and the Tribunal vide order dated 27-03-2015 directed the AO to dispose of the rectification application as per law. The AO in the effect giving order dated 07-082015 granted interest of Rs. 22,12,583/- on the amount of refund for the period March 2004 to January 2009. The amount of refund for Rs. 22,12,583/- being interest under section 244A was adjusted against demand of A.Y. 2011-12 as on 04-05-2016. 288.1 Thus, the assessee made a claim for additional compensation of interest under section 244A of the Act for the period February 2009 to May 2016. But the AO rejected the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted as under: "3.10 It is noted from the observations of the Hon'ble Supreme Court that it has been observed that whatever money has been received by the department, it ought to be refunded ex aequo et bono. It is a Latin phrase which means 'what is just and fair' or 'according to equity and good conscience'. Something to be decided ex aequo et bono is something that is to be decided by principles of what is fair and just. A decision-maker who is authorized to decide ex aequo et bono is not bound by legal rules but may take account of what is just and fair. Thus, if we decide the issue before us ex aequo et bono, then it would be decided by the principles of what is fair and just and not necessarily as per strict rule of law. Thus, since the statute itself has already prescribed a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided. Under these circumstances and aforesaid discussion, we find that the judicial proprietary demands that order of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT as discussed above and the order of this tribunal in the case of Karsanbhai Kacharabhai Patel HUF vs. ITO(supra), we hereby set aside the finding of the learned CIT(A) and held that the assessee is entitled to additional compensation of interest under section 244A of the Act on account of delay in the issue of refund . Thus, the ground of appeal raised by the assessee is hereby allowed. 292. In the result, the ground of appeal of the assessee is hereby allowed. 293. In the combined results, the outcome of the appeals of the assessee and Revenue are as follows: Sr. No. ITA No. Asstt. Year Appeal filed by Result 1-2 515-516/AHD/2014 2006-07 & 2007- 08 Assessee Partly Allowed 3-4 685-686/AHD/2014 2006-07 & 2007- 08 Department Dismissed 5 1744/AHD/2016 2006-07 Department Dismissed 6 911/AHD/2012 2008-09 Assessee Partly Allowed 7 969/AHD/2012 2008-09 Department Dismissed 8 2236/AHD/2015 2009-10 Assessee Partly Allowed 9-10 2411 & 2412/AHD/2015 2009-10 & 2010- 11 Department Partly Allowed 11 CO. NO. 63/Ahd/2019 (in ITA No.2412/Ahd/2015) 2010-11 Assessee Partly Allowed 12 1872/AHD/2016 2011-12 Assessee Partly Allowed 13 2237/AHD/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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