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TMI Blog2022 (8) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... market value of the power supplied by the assessee to its steel division was rightly computed by considering the rate at which power was available in the open market, namely, the price that was charged by the electricity board. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. Decided in favour of assessee. Disallowance u/s.14A r.w.r. 8D - As per CIT(A) assessee had own funds to make investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (ii) of section 92F, where the transfer of goods and services is a specified domestic transaction referred to section 92BA?" (3) "Whether on points If law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance of Rs. 19,40,967/- made by the AO u/s. 14A of the Act r.w.r. 8D of the I.T. Rules?" (4) "Whether on points If law and on facts & circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s. 14A ,when clause (3) of the Section 14A of the Act clearly prescribes that provision of section 14A(2) shall M/s Mahendra Sponge and Power Ltd. Raipur for A.Y. 2014-15 also apply in relation to case where any assessee claims that no expenditure has beenincurred by him in relation to the income which does not part form part of the total income under this Act, as held in the case of Cheminvest Ltd. Vs ITO(ITAT, SB-Del) 121 ITD 318 and Pradeep Kar Vs ACUIT(Kar) 319 ITR 416?" (5) "Whether on points of law and facts & circumstances of the case, the Ld. CIT(A) was justified by giving a finding that the exemption of income from taxability by claiming no expenditure when assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the case, the learned CIT(A) has erred in confirming the addition made by the A.O of Rs.2,91,792/- on account of delay payment of PF/ESIC. The addition made by the A.O and sustained by the CIT(A) is unjustified, unwarranted and uncalled for." 2. Succinctly stated, the assessee company which is engaged in the business of manufacturing and trading of sponge iron, steel ingots and generation of power had e-filed its return of income for the assessment year 2014-15 on 29.09.2014, declaring an income of Rs.2,71,31,360/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s.143(2) of the Act. 3. Assessment was, thereafter, framed by the A.O u/s.143(3) of the Act dated 26.12.2017 determining the income of the assessee company at Rs. 6,72,14,570/-i.e. after, inter alia, making the following additions/disallowances: Sr.No. Particulars Amount 1. Disallowance out of assessee's claim for deduction u/s.80IA of the Act Rs.3,86,20,902/- 2. Disallowance u/s.14A r.w.r. 8D Rs.10,88,188/- 4. Aggrieved, the assessee company carried the matter in appeal before the CIT(Appeals). After exhaustive deliberations the CIT(Appeals) vacated the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nimesh Ispat (P) Ltd. The TPO vide his order passed u/s.92CA(3) of the Act, dated 31.10.2017 did not find favour with the benchmarking carried out by the assessee of its specified domestic transactions with its AE. Accordingly, the TPO on the basis of the reasoning recorded in his aforesaid order adopted the rate of Rs.1.88/- per unit, i.e, the rate at which electricity was sold by the assessee to CSEB and determined the ALP of the assessee's specified domestic transaction at Rs.1.88/- per unit. On the basis of his aforesaid observations, the TPO proposed a downward adjustment of Rs.11,47,00,658/- and advised a revision of the assessee's claim for deduction u/s. 80IB of the Act. Accordingly, the A.O after receiving the order passed by the TPO u/s. 92CA(3) of the Act, dated 31.10.2017, therein vide his order passed u/s 143(3), dated 26.12.2017 reduced the assessee's claim for deduction u/s. 80IA(4)(iv) to Rs. Nil. 10. Before us, it is the claim of the Ld. Authorized Representative (for short 'AR') for the assessee that the issue involved in the present appeal is squarely covered by the order passed by the Tribunal in its own case for the immediately preceding assessment year 2013-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., wherein on this very fact that the said assessee was a manufacturer of Iron steel and captive power plant has supplied electricity to its manufacturer unit which was at higher rate than the power supplied to Chhattisgarh State Electricity Board; the Hon'ble High Court has held as under : "28. The Chhattisgarh-Company is a company which is generating power. It is neither consumer of the electricity, nor it is supplying power to a consumer. It also cannot sell power to any consumer directly: it has to compulsorily sell it to the Board. 29. The power sold by the Chhattisgarh-Company to the Board is a sale to a company which itself supplies power to the consumers. It is not sale of power to the consumer. 30. The Steel-Division of the Assessee is a consumer. The CPP of the Assessee supplies electricity to the Steel-Division. Had the Steel-Division not taken power from the CPP then it had to purchase power from the Board. The CPP has charged the same rate from the Steel-Division that the Steel-Division had to pay to the Board if the power was purchased from the Board. 31. The market value of the power supplied to the Steel-Division should be computed considering the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither been setaside or stayed by the Hon'ble High Court which would have otherwise justified the declining on its part to follow the same. Apart from that, we find absolutely no justification on the part of the A.O in not following the binding judgment of the Hon'ble High Court in the case of CIT Vs. Godawari Power &Ispat Ltd. (supra) which seizes the issue under consideration. Admittedly, the Department had assailed the aforesaid judgment of the Hon'ble High Court by filing a SLP before the Hon'ble Apex Court but again,as long as the said judicial pronouncement is not set-aside or stayed by the Hon'ble Apex Court the same holds the ground and have to be ritually followed by the lower authorities. We, thus, in terms of our aforesaid observations finding no merit in the declining of the assessee's claim for deduction u/s.80IA(4)(iv)(a) of Rs.4,38,73,880/- by the A.O which had rightly been vacated by the CIT(Appeals), uphold the latters order. Thus, the Grounds of appeal Nos. (a) to (c) raised by the Revenue are dismissed in terms of our aforesaid observations." We, thus, respectfully following the view taken by the Tribunal in the assessee's own case as culled out hereinabove, fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2013-14 in ITA No.197/RPR/2017, dated 29.07.2022, wherein, the Tribunal had upheld the order of the CIT(Appeals) by observing as under: "14. On appeal, the CIT(Appeals) observed that the A.O had failed to co-relate the interest paid by the assesee company on borrowed funds with the investments made in the exempt income yielding shares. On the contrary, it was noticed by the CIT(Appeals) that the various interest-bearing loans were raised by the assessee company to meet out its working capital requirements and maintaining its current assets level for running the business smoothly. It was also observed by the CIT(Appeals) that the AO while dislodging the assessee's claim that no expenditure was incurred for earning of exempt income had failed to comply with the mandate of law as per which he was obligated to record his dissatisfaction before triggering the mechanism contemplated u/r.8D. It was further observed by the CIT(Appeals) that the assessee had not earned any exempt income from the investments during the year under consideration. On the basis of his aforesaid observations the CIT(Appeals) vacated the disallowance of Rs.5,73,515/- made by the A.O u/s.14A r.w Rule 8D. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 20. Aggrieved, the assessee, inter alia, assailed the aforesaid disallowance made by the AO u/s 36(1)(va) before the CIT(Appeals), but without any success. 21. We have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions qua the aforesaid issue in hand. 22. Admittedly, it is though a matter of fact borne from record that the assessee firm had delayed deposit of an amount of Rs.2,91,792/- qua employee's share of contributions towards PF & ESI i.e. beyond the stipulated time period contemplated under the respective Employees Welfare Acts, but had deposited the same prior to the "due date" of filing of its return of income for the year under consideration. Backed by the aforesaid facts, it is the claim of the Ld. AR that now when the amount in question had been deposited by the assessee prior to the "due date" of filing of its return of income, therefore, no disallowance of the same was called for u/s.43B of the Act. In support of his aforesaid contention the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswer the following substantial question of law that was raised in the appeal filed by the revenue:- "(A). Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal, in law, was right in allowing the claim of the Assessee on account of delayed payments of P.F. Of employees' contribution amounting to Rs.1,82,77,138/- by relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Alom Extrusion Ltd. (319 ITR 306) ?" After referring to the amendments that were made available to Section 43B of the Act, the Hon'ble High Court answered the aforesaid question in the affirmative and upholding the order of the tribunal qua the aforesaid aspect dismissed the appeal filed by the revenue. Also, we find that a similar view had been arrived at by various Hon'ble High Courts, as under :- i. CIT Vs. Amil Ltd reported (2010) 321 ITR 508 (Delhi High Court) ii. CIT Vs. Hemla Embroidery Mills (P) Ltd. (2014) 366 ITR 167 (P&H) iii. Bihar State Warehousing Corporation Ltd.Vs. CIT 386 ITR 410 (Patna) iv. Sagun Foundary Pvt. Ltd Vs. CIT 145 DTR 265 (All) v. CIT Vs. Mark Auto Industries (2008) 358 ITR 43 (P&H) vi. CIT Vs. Jaipur Vidy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT Vs. M/s. Vegetables Products Ltd. (88 ITR 192) by laying the dictum that if two reasonable constructions of a taxing provision are possible that construction which favours the Assessee must be adopted. The Hon'ble jurisdictional High Court in the case of CIT Vs. M/s Hemla Embroidery Mills (P) Ltd. (366 ITR 167) (P&H HC) and in the case of CIT Vs. M/s Mark Auto Industries Ltd. (358 ITR 43) (P&H HC) clearly held that the assessee is entitled to claim deduction of employee's share of ESI & PF u/s.43B of the Act, if the same has been deposited prior to the filing of return of income u/s.139(1) of the Act. From the above judgments of the Hon'ble jurisdictional High Court, it is clear that the Hon'ble Court has not drawn any distinction between the employee's and employer's share qua PF & ESI contributions. Admittedly there are no contrary judgements of the jurisdictional High Court against the assessee on the aspect under consideration hence, first determination of the Ld. CIT(A) qua non- applicability of the provisions of Section 43B of the Act to the employee's share qua PF & ESI, is unsustainable. 5.3 Now, coming to the second aspect/determination made by the CIT(A) to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he backdrop of our aforesaid deliberations set-aside the order of the CIT(A) and vacate the disallowance of Rs.2,88,976/- made by the A.O. Thus, the Ground of appeal No. 1 is allowed in terms of our aforesaid observations."
As the facts and issue involved in the aforesaid order of the Tribunal in the case of Ind Synergy Ltd. (supra) remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance of Rs.2,91,792/- made by him u/s. 36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF/ESIC. Thus, ground raised in cross objection by the assessee is allowed in terms of our aforesaid observations.
25. In the result, cross-objection filed by the assessee is allowed in terms of our aforesaid observations.
26. In the combined result, appeal of the Revenue is dismissed while for, cross-objection filed by the assessee is allowed in terms of our aforesaid observations.
Order pronounced in open court on 05th day of August, 2022. X X X X Extracts X X X X X X X X Extracts X X X X
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