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TMI Blog2023 (11) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... tional depreciation is allowable only on new machinery i.e. the first year in which it is put to use? - HELD THAT:- It is observed that coordinate bench in its later decision in the case of Ambuja Cement Limited [ 2022 (11) TMI 1419 - ITAT MUMBAI] holding company of assessee has allowed similar claim of depreciation. When coordinate bench of ITAT in its latest decision has decided issue in favour of assessee by holding that assessee is entitled for additional depreciation u/s 32(1)(iia), such later decision would prevail over the decision of Everst Industries Limited [ 2018 (4) TMI 426 - ITAT MUMBAI] relied upon by Ld DR. As a result, since this aspect of the matter is no longer res integra, we see no reasons to take any other view of the matter than the view so taken by the coordinate bench in the group concern s case of the assessee. We uphold the plea of the assessee and direct the Assessing Officer to allow depreciation u/s.32(1)(iia) of the Act. Disallowance of proportionate Head Office expenditure and Research Development expenditure while computing deduction u/s 80IA/80IB/80IC - AO is directed to allocate Head office expenses (other than auditor fees and CMA expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the provision of the Act. On this ground also the claim of assessee fails and adjustment made by AO is also upheld. Addition in respect of tax on non-monetary perquisites while computing book profits u/s. 115JB - HELD THAT:- As in Rashtriya Chemicals Fertilizers Ltd [ 2018 (3) TMI 1564 - ITAT MUMBAI] , IDBI Bank v. DCIT [ 2021 (2) TMI 608 - ITAT MUMBAI] and M/s NHPC Ltd [ 2020 (3) TMI 1308 - ITAT DELHI] has deleted the adjustment made on account of tax paid on non-monetary perquisites provided to the employees to book profit u/s 115JB of the Act. Respectfully following the decisions as discussed herein above, this ground raised by assessee is allowed. Addition of unutilized CENVAT Credit - HELD THAT:- Irrespective of the method of accounting followed by the assessee, i.e. 'Inclusive method', wherein the taxes are included in the opening stock, purchases, etc. or the 'Exclusive method', the MODVAT credit does not have any impact on the profit of the assessee. Thus, following the ratio laid down by the Hon'ble Supreme Court in the case of Indo Nippon Chemicals Co. Ltd. [ 2003 (1) TMI 8 - SUPREME COURT] and followed by the Hon'ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of hearing. The assessee has been consistently following TNMM method for determining the ALP of this transaction and same has not been disputed by TPO in earlier years. On perusal of TP order, it is observed that TPO did not apply any method or did not present any comparable agreements based on which man hours or costs was estimated. The TPO proceeded to arbitrarily decide, without any explanation or details whatsoever, and without reference to the actual transaction or services rendered, that 8,000 man hours would be considered reasonable for providing these services referred in the invoices furnished, and a cost of ₹.10,000/- per man hour was determined at arm s length man hour cost. The TPO has in fact not disputed that services were rendered by AEs. Thus as relying on CLSA India Private Limited [ 2019 (1) TMI 1351 - ITAT MUMBAI] we hold that since the TPO has not made the transfer pricing adjustment by following the mandatory provisions of the law and determined the same on estimation basis, action of the Ld. DRP in upholding the TP adjustment so made by the Ld. TPO is bad in law. TP adjustment being services availed from various AEs - TPO c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th tax provision is not required to be added back while computing Book Profits under Section 115JB. Addition of provision for leave encashment made while computing book profit u/s 115JB is deleted. Excise duty exemption received by assessee are capital receipts both for the purpose of computing income as per normal provision of the Act as well as book profit u/s 115JB of the Act and the addition made by Assessing Officer is deleted. Disallowance u/s 14A cannot be made while computing book profit u/s.115JB - SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND MS KAVITHA RAJAGOPAL, HON'BLE JUDICIAL MEMBER For the Assessee : Shri Yogesh Thar, Shri Chaitanya D. Joshi Ms. Sukanya Jayaram For the Department : Shri Jasdeep Singh ORDER PER S. RIFAUR RAHMAN (AM) 1. These appeals are cross appeals filed by the assessee and revenue against the order of the Ld. Commissioner of income Tax (Appeals) 55, Mumbai [hereinafter referred to as Ld.CIT(A)] dated 28th February, 2022 pertaining to Assessment Year 2013-14. 2. At the time of hearing, both the counsels fairly agreed that the issues raised in both these appeals are covered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose investments are to be considered for computing average value of investment which yielded exempt income during year - Held, yes [Para 11.16][Matter remanded] 14. The above referred decision has been followed by co-ordinate Bench in the case of DCIT v. Shree Global Tradef in Ltd. in ITA No. 1374/Mum/2022 dated 22nd December, 2022 has held as under: 11. Having heard the rival submissions and perused the materials available on record. It is observed that the assessee has made a suo moto disallowance of Rs.1,263/- for which the assessee contends that the A.O. ought not to have applied Rule 8D on the ground that suo moto disallowance has been made by the assessee. The assessee further contends that without prejudice, the disallowance should be restricted only to the investments which have yielded an exempt income for the assessee during the impugned year. It is also pertinent to point out that since the assessee had not borrowed funds during the relevant year, no disallowance as per Rule 8D(2)(i) of the Income Tax Rules was warranted. It is also observed that the A.O. has recorded his satisfaction that the correctness of the assessee's claim of expenses of disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partly allowed. 9. In Ground No.2, assessee has raised the following grievance: Ground No. 2: Denial of claim of exclusion of Sales tax Incentive as Capital Receipt (Rs. 85,48,23,477/-) a) On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of AO in not excluding sales tax incentive availed by the Appellant under various schemes of different states, aggregating to Rs.85,48,23,477/-, being capital in nature, in computing total income under normal provisions of Act. b) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) was not justified and grossly erred by disallowing Sales Tax Incentives by not following the order of the Jurisdictional Tribunal (on similar facts) and order of his predecessor in the Appellant's own case without any reason recorded in the order. c) The Appellant prays that subsidy received by the Appellant from various States be held as capital receipt, not chargeable to tax. 10. With regard to Ground No. 2 which is in respect of denial of claim of exclusion of sales tax incentive as capital receipt, Ld. AR of the assessee brought to our notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Department Appeal for AY 2005-06 in Ground no 5 and held as under: 32. Considered the rival submissions and material placed on record. On this issue, coordinate bench in the case of Ambuja Cement Limited in ITA No 5883/Mum/2012 5927/Mum/2012 (A.Y.2005-06) dated 31/10/2022 has held as under: .. The relevant material facts, so far as necessary for adjudication of these grievances, are as follows. The assessee before us is a company engaged in the business of manufacturing of cement and generation of electricity. The assessee has set up its plants in different parts of the country, and as the location of some of these plants was in backward areas, the assessee had received certain sales tax concessions from the respective State Governments. These concessions were in the nature of exemptions and remissions etc, and were granted under specific schemes announced, under the industrial policies, from time to time. During the relevant previous year, the assessee received amounts aggregating to Rs 169,93,34,752, but all these receipts were treated as tax exempt on account of being in the nature of capital receipts. When income tax return filed by the assessee was subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this decision, he has noted that for deciding the nature of subsidy, whether capital or revenue, what should be seen and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry , as is also held by Hon ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to attract them to the underdeveloped and developing areas of the State, and to promote the growth of the industry in the State, in the preamble to the scheme. It is on this basis that he has held that so far as the subsidies given by the Maharashtra and Punjab States are concerned, these are required to be treated as capital in nature, whereas, the subsidies received from the State Governments of Himachal Pradesh and Rajasthan, in the absence of specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that so far as Tax Appeal No.226 of 2010 is concerned, after discussing the evidence on record, the Tribunal has followed earlier decision and discussed the issue in detail in para 54 and 55 of its decision, which reads as under:- 54. Per contra, the learned D.R. Supported the orders passed by the Assessing Officer and the learned CIT (A). Referring to the judgment in Sahney Steel and Press Works Limited v. CIT 228 ITR 253 (SC), he submitted that the impugned sales tax exemption increased the profits of the assessee by eliminating the expenses which the assessee would have had to incur later and therefore the impugned receipts were in the revenue field. He also referred to Explanation (10) to Section 43 (1) of the Income Tax Act inserted in with effect from 01/04/99 to emphasise that the action of the assessee in not reducing the cost of assets by the amount of subsidy for working out the Written Down Value was indicative of the fact that the impugned receipts were not in the nature of capital receipts. 55. We have heard both the parties and considered their rival submissions. Perusal of the scheme extending the aforesaid incentives to prestigious units announced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext, we had in wake of the revenues contention that the receipt was revenue in nature, held and observed as under : From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expansion and diversification of an existing unit. As noted, such subsidy was available only to a new industrial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, new construction, plant and machinery etc. The entitlement was related to percentage of fixed capital investment. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Incometax reported in 228 ITR 253, the Apex Court held and observed that the character of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade. 11. He also submitted that in view of above decisions, these appeals may not be entertained. 12. We have heard both the learned counsel and perused the record. We have also gone through the decisions cited before us. After considering the material on record, we are of the view that the issues involved in these appeals are squarely covered by the decisions of this Court in Birla VXL Ltd. (supra) and in Munjal Auto Industries 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. 8. In the case of JCIT Vs Grasim Industries Limited (ITA Nos 2155/Mum/2016 and Ors; order date 29th April 2022), a coordinate bench has dealt with these legal issues in considerable detail and observed as follows: 5.3.5. . the dominant purpose for which the incentive scheme per se introduced by the respective State Governments was only for the purpose of settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Sahney Steel and Press Works Ltd., case. In this regard, it would be relevant to reproduce the operative portion of the decision of Hon ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., as under:- 14. The second case is Lincolnshire Sugar Co. Ltd. v. Smart 20 TC 643. In that case it was found that Lincolnshire Sugar Co. Ltd carried on the business of manufacturing sugar from home grown beet. The company was paid various sums under British Sugar Industry (Assistance) Act, 1931, out of monies provided by the Parliament. The question was whether these monies were to be taken into account as trade receipts or not. The object of the grant was that in the year 1981, in view of heavy fall in prices of sugar, sugar industries were in difficulty. The Government decided to give financial assistance to certain industries in respect of sugar manufactured by them from home-grown beet during the relevant period. Lord Macmillan held that- What to my mind is decisive is that these payments were made to the company in order that the money might be used in their business. He further observed that: I think that they were supplementary trade receipts bestowed upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature and not revenue receipts. The relevant operative portion of the judgment is reproduced hereunder:- 18. After discussing the judgment in Sahney Steel Press Works Ltd.'s case (supra) this Court then held: The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to the applied in judging the character of a subsidy. The test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the Scheme with which we are concerned in this case is that the incentive must be utilised for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of the Subsidy Scheme was to enable the assessee to run the business more profitably then the receipt is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of three years and partial remission for a period of two years should go towards helping the industry to set up such highly capital intensive entertainment centers. This being the case, it is difficult to accept Mr. Narasimha's argument that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post construction, that is when cinema tickets are actually sold. We hasten to add that the object of the scheme is only one -there is no larger or immediate object. That the object is carried out in a particular manner is irrelevant, as has been held in both Ponni Sugar and Sahney Steel. 23. Mr. Ganesh, learned Senior Counsel, also sought to rely upon a judgment of the Jammu and Kashmir High Court in Shree Balaji Alloys v. CIT [2011] 9 taxmann.com 255/198 Taxman 122/ 333 ITR 335. While considering the scheme of refund of excise duty and interest subsidy in that case, it was held that the scheme was capital in nature, despite the fact that the incentives were not available unless and until commercial production has started, and that the incentives in the form of excise duty or interest subsidy were not give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, new construction, plant and machinery etc. The entitlement was related to percentage of fixed capital investment. 8. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that the character of the subsidy in the hands of the recipient whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of find is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. Such But if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idies in that case were granted year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney Steel could not be regarded as anything but a revenue receipt. Accordingly the matter was decided against the assessee. The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the eligible capital investments. In other words, the upper limit of total incentive which the unit could receive from the State Government in the form of tax waiver would not exist 100% of the eligible capital investment regardless of the residue of the period of its exemption eligibility as per the scheme. From the combined reading of salient features of the scheme, we have no doubt in our mind that the incentive was being offered for recouping or covering a capital investment or outlay already made by the assessee. 11. In the result we find no error in view of the Tribunal. Tax Appeals are dismissed. 5.3.7.1. It is pertinent to note that against this judgement, civil appeals were dismissed by the Hon ble Supreme Court vide its order dated 08/05/2018 on the ground that the issue is already covered in the decision of Chapalkar Brothers referred to supra. 5.3.8. Before us, the ld. Special Counsel for the Revenue referred to various decisions of Hon ble High Courts. But, all those decisions were rendered prior to the decision of Hon ble Supreme Court referred to above. Hence, the decisions relied upon by the ld. Special Counsel for the Revenue would not advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out more stress on the form of the scheme and not their substance as held in Bajaj Auto as the Tribunal in the order for AY 1985-86 has explained the difference between exemption schemes of Maharashtra and Andhra Pradesh in detail. iii) Reliance placed by Tribunal in Asst Year 1985-86 on the decision of Hon ble Supreme Court in the case of Sahney Steel Press Works Ltd. v. CIT (228 ITR 253) cannot be said to be erroneous. The Tribunal did recognise that the object with which subsidy is given is decisive as laid down by Hon ble Supreme Court. If the scheme is for setting up or expansion of industry in a backward area, it will be capital, irrespective of the modality or source of fund. If the scheme is for assisting of carrying out of business operations, it is revenue. Hon ble Supreme Court demonstrated the principle that the object of the subsidy must be given primary importance over the source of fund. 5.4.1. Ultimately the Special Bench after placing reliance on the decision of Hon ble Supreme Court in Sahney Steel and Hon ble Madras High Court in the case of CIT v. Ponni Sugars Chemicals Ltd. Reported in 260 ITR 605 held that the decision of the Tribunal in Asst Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue? (d) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in entertaining the additional ground without appreciating that the assessee had treated the amount of sales tax exemption benefit of Rs.58 crores as revenue receipt and had included this amount in the returned income and it had been taxed accordingly and the assessee did not raise this issue before the CIT(A) and the issue had attained finality? 5.4.3. While disposing of the questions Nos. c d, the Hon ble Jurisdictional High Court categorically held that the decision of the Special Bench of Tribunal had not been reversed or stayed by any higher judicial forum and it holds good as on date. The relevant operative portion of the judgement of Hon ble Jurisdictional High Court in this regard is reproduced as under:- 3. We will first address the questions no. (c) and (d), which are different elements of the same issue. The respondent assessee had received a subsidy. It is undisputed that up to the level of Income Tax Appellate Tribunal, the assessee did not raise a contention that such subsidy was towards capital account and, therefore, not taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not the case of the Revenue that the assessee in the context of its contention on the nature of the subsidy, desired to produce additional evidence. It is true that the judgment of this Court confirming the order of the Tribunal in case of Reliance Industries Ltd. has been partially reversed by the Supreme Court. A question of law has been framed and placed for consideration of the 4 of High Court. However, this does not mean that the judgment of the Tribunal as on today stands reversed or stayed. In any case, quite apart from the judgment in the case of Reliance Industries Ltd. of the Special Bench of the Tribunal, it is always been for the assessee to contend before the Assessing Officer by pointing out the relevant clauses of the subsidy that in law the subsidy cannot be treated to be towards revenue account. It would be equally open for the Revenue to oppose such a contention if so advised. The Assessing Officer and the Revenue authorities would have to take a decision in accordance with law. These questions, therefore, are not considered. (emphasis applied by us while placing reliance on the decision of Hon ble Jurisdictional High Court) 5.4.4. Against this j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elementary, does not affect the biding nature of a judicial precedent. The Special Bench decision, in the case of Reliance Industries Ltd. (supra), was not reversed by Hon'ble Supreme Court, but was directed to be examined, on merits, by Hon'ble Bombay High Court. That is quite different from disapproving the special bench decision, but it appears that the coordinate bench was led to believe, and there could not have been any other reason for ignoring the special bench decision, that this Special Bench decision is reversed. That is patently incorrect, and when we pointed it out to the learned Commissioner (DR), he did not have much to say except to rely upon the coordinate bench decision which seems to have followed that approach. The coordinate bench, in the case of Jindal Steel Power Ltd. (supra), did indeed travel much beyond its limited mandate in ignoring a binding judicial precedent simply because appeal against that special bench decision is now pending before Hon'ble Bombay High Court. When posed with a special bench decision and a division bench directly on the issue, though touching different chords, we have no difficulty in recognizing our limitations. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Reliance Industries Ltd (supra), what came up for consideration was specifically the sales tax subsidy, and that decision, as we seen in the elaborate analysis of the coordinate bench- as extracted above still holds good in law. In the case of CIT Vs Chaphalkar Brothers [(2018) 400 ITR 279 (SC)], Hon ble Supreme Court has held that where the object of respective subsidy schemes of State Governments was to encourage the development of Multiple Theatre Complexes, incentives would be held to be capital in nature and not revenue receipts, and, following the same logic, the sales tax subsidy schemes, which are admittedly to encourage industrial growth in the specific areas and the overall scheme in all the sales tax subsidy and exemption schemes unambiguously indicate so, are capital receipts in nature. 10. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee that the amount of Rs 39,36,21,956 added to the income of the assessee must stand deleted, and reject the grievance of the Assessing Officer against the grant of relief of Rs 130,57,12,796 by the CIT(A). 9. In grounds nos. 12 and 13, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a part of book profit, but where the receipt is not in the nature of income at all, it cannot be included in book profit for the purpose of computation u/s 115JB of the I.T. Act, 1961. 48. We further noted that the ITAT special bench of Kolkata Tribunal, in the case of Sutlej Cotton mills Ltd. v. Asstt. CIT [1993] 45 ITD 22 (Cal.) (SB), held that a particular receipt, which is admittedly not an income cannot be brought to tax under the deeming provisions of section 115J of the Act, as it defies the basic intention behind introduction of provisions of section 115JB of the Act. The ITAT Jaipur bench, in case of Shree Cement Ltd. (supra) had considered an identical issue and held that incentives granted to the assessee is capital receipt and hence, cannot be part of book profit computed u/s 115JB of the Act. Similarly, the ITAT Kolkata Bench, in the case of Sipca India (P.) Ltd. v. Dy. CIT [2017] 80 taxmann.com 87 (Trib.) had considered an identical issue and held that when, subsidy in question is not in the nature of income, it cannot be regarded as income even for the purpose of book profit u/s 115JB of the Act, though credited in the profit and loss account and have to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettled in favour of the Assessee. Hence, the ground raised by the revenue is dismissed. 13. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.2012-13 is respectfully followed, accordingly, ground raised by the assessee is allowed. 14. In Ground No. 3, the assessee has raised the following grievance: Ground No. 3: Denial of claim of exclusion of refund of royalty as Capital Receipt (Rs. 25,17,62,233/-) a) On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of AO in not excluding refund of royalty granted under the Industrial Policy of the State of Maharashtra, amounting to Rs.25,17,62,233 being capital in nature, in computing total income under normal provisions of Act. b) The Appellant prays that royalty refund received by the Appellant be held as capital receipt, not chargeable to tax. 15. The Assessing Officer has dealt this issue at Para No 6.1 to 6.8 of Assessment Order. The Assessing Officer has observed that assessee has claimed sales tax incentives for various units such as Bargarh (Orissa), New Wadi (Karnataka), Gagal ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. It is observed that the Assessing Officer has made the addition on account of refund of royalty paid by the assessee to the State of Maharashtra in respect of its Chanda Plant by treating such receipts as a revenue receipt as same is of similar nature as that of sales tax incentive. With regard to the taxability of such sales tax incentives, as held in preceding paras, this issue is squarely covered by the decision of coordinate bench in the case of assessee itself as well as Ambuja Cement Limited, holding company of the assessee in following ITA Nos.: Name AY ITA No. Ambuja Cement Limited AY 2005-06 ITA No. 5927/Mum/2012 Ambuja Cement Limited AY 2006-07 ITA No. 2366/Mum/2013 Ambuja Cement Limited 2007-08 ITA No. 6405/Mum/2013 Ambuja Cement Limited 2008-09 2009-10 ITA Nos. 3307/Mum/2015 and 2428/Mum/2019 Ambuja Cement Limited 2010-11, 2011-12 and 2012-13 ITA No. 2958 and 3843/Mum/2019 and 1889/Mum/2018 19. The coordinate bench in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of Tamilnadu Sugar Corporation Ltd Vs CIT [(2001) 251 ITR 843 (Mad)], CIT Vs Rajaram Maize Products [(2001) 251 ITR 427 (SC)], CIT Vs S Kumars Tyre Manufacturing Co [(2004) 266 ITR 325 (MP)], and CIT Vs Abhishek Industries Ltd [(2006) 286 ITR 1 (P H)]. The entire amount of Rs 1169.93 crores was added to income of the assessee. Aggrieved, assssee carried the matter in appeal before the CIT(A). Learned CIT(A) took note of the fact that these amounts pertained to five different units under four schemes- namely Maharshtra's Dispersal of Industries Package Scheme of Incentives 1993 (Maratha Unit), Punjab's Industrial Incentives Code under the Industrial Policy, 1996 (Ropar and Bhatinda Units), Rajasthan's Sales Tax New Incentives Scheme for Industries, 1989 (Rabriyawas Unit), and Exemptions/ Concessions to Industries Excise Taxation Department Notification No EXN C(9)2/9- dated 31-1-2-1994 (Himachal Unit). He discussed these schemes in quite a bit of detail- to the extent wordings of the preamble of the schemes are concerned, and concluded that while the amounts aggregating to Rs 130,57,12,796, in respect of Punjab and Maharashtra Schemes, are indeed capital receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct- which is admittedly to promote the growth of industry, is incorrect and superficial. The subsidies so received can be said to be revenue in nature unless these subsidies are for augmenting the profits of the assessee, and that is not even the case of the revenue. The CIT(A) is simply swayed by the wording of the preamble of the scheme- something clearly impermissible. These subsidy schemes are materially similar in nature, and there are, by now, a number of decisions of the coordinate benches, as also Hon'ble Courts above, dealing with these schemes. It is also important to bear in mind the fact that the subsidies received by the assessee are in the nature of sales tax subsidies, and dealing with sales tax subsidies, Hon'ble Gujarat High Court, in the case of CIT Vs Nirma Ltd [(2017) 397 ITR 49 (Guj)], has observed as follows: 7. So far as second issued as to Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT (A) and in directing the Assessing Officer to consider the Sales-tax exemption benefit of Rs. 5,45,81,171/- as capital receipts is concerned, Mr.Mehta contended that in view of the decision of the Calcutta and Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government of Gujarat as Capital Investment Incentive Scheme on 11th September 1995 was intended to attract investments to generate greater employment in less industrially developed areas of Gujarat and also to secure balanced development of industries in Gujarat through dispersal of industries in the most backward area and backward areas. It is thus clear that the object of both the scheme was to ensure development of backward areas or for development of core sector industries in the State or for generating the employment. Perusal of both the schemes shows that the incentives extended to the eligible units were, inter alia, through exemption from payment of Sales Tax. Thus, the object of both the schemes was to attract capital investment to ensure development of backward areas and the modality or mechanism chosen to attract such investment was, inter alia, through exemption from payment of sales tax. 9. He further contended that in view of decisions of this Court in CIT v. Birla VXL Ltd. [2013] 32 taxmann.com 330/215 Taxman 117 (Guj.) and in Dy. CIT v. Munjal Auto Industries Ltd. [2013] 37 taxmann.com 115/218 taxman 135 (Guj.) the issue is squarely covered and the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. But, if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade. 14. In the result, we do not find that the Tribunal has committed any error. No question of law, therefore, arises. Tax Appeals are therefore dismissed.' 10. In the case of Munjal Auto Industries Ltd. (supra), this Court has observed as under:-- 7. From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expansion and diversification of an existing unit. As noted, such subsidy was available only to a new industrial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profits of the assessee. Effectively, the schemes of various State Governments envisaged the rapid industrialisation, growth and new employment generation in the respective areas which would in turn promote the growth of the State. Hence, it could be safely concluded that subsidy / incentive granted is only for setting up of the units based on the fixed percentage of the capital cost and not for running the business of the assessee. Moreover, even this subsidy which is determined based on sales tax assessment orders for 9 years, 6 years etc., are subject to maximum outer limit already fixed under the respective schemes. Though the quantification of the subsidy has been made post commencement of business, the measurement of subsidy is immaterial. In our considered opinion, none of the schemes contemplated to finance the assessee in the form of subsidy / incentive for meeting the working capital requirements of the assessee company post commencement of business. Hence, by applying the purpose test, apparently, the subsidy / incentive received in the instant case would only have to be construed as capital receipts not chargeable to income tax. In this regard, we find that ld. AR pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and gains for the year in which they were received. 15. In the case before us, the payments were made to assist the new industries at the commencement of business to carry on their business. The payments were nothing but supplementary trade receipts. It is true that the assessee could not use this money for distribution as dividend to its shareholders. But the assessee was free to use the money in its business entirely as it liked and was not obliged to spend the money for a particular purpose like extension of docks as in the Seaham Harbour Dock Co. 5 case (supra). 16. There is a Canadian case St. John Dry Dock Ship Building Co. Ltd. v. Minister of National Revenue 4 DLR 1, which has close similarity to the case of Seaham Harbour Dock Co. 's case (supra). In that case it was held that where subsidies were given under statutory authority, the statutory purpose for which they are authorised is relevant and may even be decisive in determining whether it is taxable income in the hands of the recipient. In that case, it was pointed out after discussing the Seaham Harbour Dock Co. 's case (supra)as well as that of Lincolnshire Sugar Co. Ltd. 5 case (supra)that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce under the Subsidy Scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant. 19. Sahney Steel was distinguished, in para 16 by then stating that this Court found that the assessee was free to use the money in its business entirely as it liked. 20. Finally, it was found that, applying the test of purpose, the Court was satisfied that the payment received by the assessee under the scheme was not in the nature of a helping hand to the trade but was capital in nature. 21. What is important from the ratio of this judgment is the fact that Sahney Steel was followed and the test laid down was the purpose test . It was specifically held that the point of time at which the subsidy is paid is not relevant; the source of the subsidy is immaterial; the form of subsidy is equally immaterial. 22. Applying the aforesaid test contained in both Sahney Steel as well as Ponni Sugar, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets or for the purpose of purchasing machinery. 24. After setting out both the Supreme Court judgments referred to hereinabove, the High Court found that the concessions were issued in order to achieve the twin objects of ITA Nos. 5883 and 5927/Mum/2012 Assessment year: 2005-06 acceleration of industrial development in the State of Jammu and Kashmir and generation of employment in the said State. Thus considered, it was obvious that the incentives would have to be held capital and not revenue. Mr. Ganesh, learned Senior Counsel, pointed out that by an order dated 19.04.2016, this Court stated that the issue raised in those appeals was covered, inter alia, by the judgment in Ponni Sugars Chemicals Ltd. case (supra) and the appeals were, therefore, dismissed. 25. We have no hesitation in holding that the finding of the Jammu and Kashmir High Court on the facts of the incentive subsidy contained in that case is absolutely correct. In that once the object of the subsidy was to industrialize the State and to generate employment in the State, the fact that the subsidy took a particular form and the fact that it was granted only after commencement of production would mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade. 9. Such decision was considered in case of Ponni Sugars and Chemicals Ltd.(supra) and the Apex Court held and observed as under : 13. The main controversy arises in these cases because of the reason that the incentives were given through the mechanism of price differential and the duty differential. According to the Department, price and costs are essential items that are basic to the profit making process and that any price related mechanism would normally be presumed to be revenue in nature. In other words, according to the Department, since incentives were given through price and duty differentials, the character of the impugned incentive in this case was revenue and not capital in nature. On the other hand, according to the assessee, what was relevant to decide the character of the incentive is the purpose test and not the mechanism of payment. 14. In our view, the controversy in hand can be resolved if we apply the test laid down in the judgment of this Court in the case of Sahney Steel and Press Works Ltd. (supra). In that case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case is that the incentive must be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant. 10. In a recent judgement dated 8.1.2013 in case of DCITCircle1(2)-Baroda v. Inox Leisure Ltd.,we had an occasion to consider somewhat similar question in the backdrop of entertainment tax waiver scheme of State of Gujarat as well as State of Maharashtra. Even in such a case, the entertainment tax waiver which was granted in terms of sale of tickets was treated as capital in nature when it was found that same was relatable to the capital in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not advance the case of the Revenue. 5.3.9. It is pertinent to note that in each of the aforesaid decisions of Hon'ble Supreme Court, the Courts have been mindful of the fact that the subsidy has to be received after commencement of business and to be availed within 9,10 12 years, as the case may be, and yet by applying purpose test, it was held that subsidy was on capital account. 5.4. Applicability of Special Bench decision of Mumbai Tribunal in the case of Reliance Industries reported in 88 ITD 273. The ld. Special Counsel for the Revenue vehemently submitted that the decision of the Hon'ble Special Bench has been reversed by the Hon'ble Supreme Court by remitting the matter back to the Hon'ble Bombay High Court. First of all, it would be relevant to bring on record the crux of the decision of the Special Bench in the case of Reliance Industries Ltd. In case of Special Bench decision of Reliance Industries Ltd, the scheme dealt with sales tax exemption under the scheme of Government of Maharashtra, 1979. Further the said scheme was implemented by SICOM. The following question was referred by the Hon'ble President, Tribunal to the Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 260 ITR 605 held that the decision of the Tribunal in Asst Year 1985-86 is correct and observed the following: 37....The observations of the Madras High Court lend support to the view that the purpose and object of the Scheme under which the subsidy is given is of more fundamental importance than the fact that the subsidy was received after the commencement of production or conditional upon it. Therefore, in our view and with respect, the Tribunal in the case of Reliance Industries Ltd. ( supra) had correctly interpreted and understood the ratio of the judgment of the Supreme Court in Sahney Steel Press Works Ltd.'s case (supra). 38. In this view of the matter, we answer the question referred to us in the affirmative. 5.4.2. The ld. AR vehemently submitted that the department did not challenge the decision of the Special Bench before the Hon'ble Bombay High Court. However, he fairly stated that there was a subsequent decision of the Division Bench of this Tribunal which followed the Special Bench and that Division Bench order was challenged by the Revenue before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court while disposing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, the assessee did not raise a contention that such subsidy was towards capital account and, therefore, not taxable. However, before the Tribunal such a contention was raised. The Tribunal by the impugned judgment relied upon its earlier judgment for the Assessment Year 1999-2000 in case of this very assessee and restored the issue back to the Assessing Officer. In the earlier order, the Tribunal had remanded the issue to the file of the Assessing Officer to decide the issue afresh after considering the decision of Special Bench of the Tribunal in the case of Reliance Industries Ltd. (supra) . Thus, the Tribunal remanded the issue back to the Assessing Officer to be decided in the light of the Special Bench judgment in the case of Reliance Industries Ltd. The Revenue's grievance in this respect is two fold. It was contended that the issue was raised for the first time before the Tribunal and the same should not have been permitted. Secondly, the view of the Tribunal in case of Reliance Industries Ltd. was challenged before the High Court. The High Court in a judgment dated 15.04.2009 in Income Tax Appeal No. 1299 of 2008 had held that no question of law in this respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis applied by us while placing reliance on the decision of Hon'ble Jurisdictional High Court) 5.4.4. Against this judgement on other issues, the Revenue preferred an SLP before the Hon'ble Supreme Court and the same was dismissed vide order dated 23/08/2019 in SLP (Civil) Diary No.22929/2019. In other words, the Revenue while preferring SLP before the Hon'ble Supreme Court did not even challenge this ground of subsidy and the decision of Special Bench of Tribunal in the case of Reliance Industries Ltd., Hence, the order of the Hon'ble Jurisdictional High Court in assessee's own case for A.Y.2001-02 had become final on the very same issue. Though the said decision has been rendered for subsequent assessment year as compared to the years under consideration before us, in view of identical facts and the same legal issue, and more especially, in order to address the fact of binding precedent of Special Bench decision in the case of Reliance Industries Ltd., this Bench deems it fit to place reliance on the said decision also of the Hon'ble Jurisdictional High Court. Accordingly, we categorically hold that the decision of the Special Bench still holds the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Bombay High Court. When posed with a special bench decision and a division bench directly on the issue, though touching different chords, we have no difficulty in recognizing our limitations. The wisdom of a division bench, even if superior- as strenuously argued by the learned Commissioner, has to make way for the higher wisdom of a larger bench. It is this faith of judicial hierarchical system that is the strength of our functioning, and we must follow the same. We, therefore, regret our inability to follow the division bench in the case of Jindal Power, no matter how deeply we respect and admire the work of all our colleagues, and we would rather be guided by the special bench decision - which is exactly what another division bench, on the same set of facts as before us, did in the case of Ajanta Manufacturing Ltd. (supra). As for learned Commissioner (DR)'s suggestion that we should follow the jurisdictional High Court decision in the case off Colourman Dyechem Ltd. (supra), we find that Their Lordships, in this case, were dealing with an entirely different type of subsidy which was clearly dealing with an expansion situation. However, we would rather refrain from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee that the amount of Rs 39,36,21,956 added to the income of the assessee must stand deleted, and reject the grievance of the Assessing Officer against the grant of relief of Rs 130,57,12,796 by the CIT(A). 11. Ground no. 1 of the assessee is thus allowed and ground no. 1 of the revenue is thus dismissed . 20. It is observed that coordinate bench has decided similar issue in favour of assessee for AY 2005-06 to 2012-13, as stated supra. The decision of Ambuja Cement Limited referred supra has been followed in assessee s own case while adjudicating appeal for A.Y. 2012-13 in ITA No 3203/M/2018 and 3246/M/2018 vide order dated 28/02/2023. It is observed that once the additions made on account of sales tax incentives are deleted by coordinate bench as well as deleted in preceding paras, discussed in the preceding paras, the addition made for refund of royalty paid by the assessee to State of Maharashtra cannot be sustained in view of the decisions referred supra more particularly when the Assessing Officer himself has observed that both of them (sales tax subsidy and royalty refund) are similar in nature. It is observed that various observations made by Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional depreciation u/s 32(1)(iia) amounting to Rs. 85,60,39,093/- on the eligible assets acquired during the previous year 2005-06 in computing the total income under the normal provisions of the Act. 45. The AO has dealt with the issue at para 10 to 10.5 of the Assessment Order. The AO observed that assessee has claimed additional depreciation u/s 32(iia) of the Act on all the eligible assets acquired after 31 st March 2005. The contention as raised by assessee before AO was reproduced at para 10.3 of assessment order. However, this contention of assessee was not accepted by AO on the ground that assessee is entitled to additional depreciation on assets acquired during the year only and balance claim made by assessee was rejected. 46 In appeal CIT (A) has discussed the above issue at para 9.3.1 9.3.2 of his order and held as under: 9.3.1 From the above, it is clear that the additional depreciation is to be allowed on the actual cost of the eligible machinery or plant. There cannot be any doubt that there is a difference between the actual cost of an asset and the WDV of an asset. The assessee has already claimed additional depreciation or has been allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer and CIT(A). The Ld AR has also referred Legislative history of the provisions of sec. 32(1)(iia) introduced by Finance (No.2) Act, 1980, Circular No. 281 dated 22-09-1980, Sec. 32(1)(iia) introduced by Finance Act, 2002, - Circular No.8 of 2002 dated 27-08-2002, Sec. 32 as amended by Finance Act, 2005 and Circular No. 3 of 2006 dated 27-02- 2006 and contended that claim made by assessee is as per provisions of the Act. In support of such argument, Ld AR has relied upon decision of Ambuja Cement Limited, holding company of assessee company wherein coordinate bench has allowed similar claim of assessee. He has also referred decision of DCIT v. Gloster Jute Mills Ltd (ITA 95/Kol/2011) (Kolkata Tribunal and argued that claim of assessee needs to be allowed. The Ld AR has also referred to appellate order passed in case of assessee for subsequent years wherein similar claim is allowed by CIT(A) himself and such finding is also relied upon during the course of appellate hearing. On the other hand, Ld DR has vehemently contended that additional depreciation should be restricted to assets acquired during the year and finding of lower authority needs to be confirmed. In support of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows such claim of additional depreciation every year on machinery acquired in earlier year. There cannot be any presumption that unless a claim is specifically denied, it has to be allowed... 10. When an allowance which is ordinarily not available under normal commercial principles of accounting, is made specifically allowable, accordingly, it was held that the assessee is entitled to claim balance amount of additional depreciation in the succeeding year. (Para 26) d. The amendment brought into section 32 by the Finance Act 2015 by inserting third proviso with effect from 01.04.2016 also supports above view (Para 27) e. By insertion of the above said proviso in section 32 though Finance Act 2015 with effect from 01.04.2016, the parliament has approved the view taken by the Tribunal/ Courts in respect of additional depreciation allowable under section 32(1)(iia). This provisions also makes it very clear that the additional depreciation allowed only once. (Para 28) It is observed that the assessee has placed reliance on the recent decision of the Mumbai ITAT in the case of its holding company, Ambuja Cements Ltd. ( A.Y.2007-08 in ITANo. 6375 and 6405 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present context, is whether the additional depreciation is also to be granted in respect of the subsequent year. That aspect of the matter is covered by a coordinate bench decision in the case of DCIT Vs Gloster Jute Mills Limited [(2017) 88 taxmann.com 738 (Kol)], which has been subsequently followed by other benches- including Mumbai benches. The coordinate bench has inter alia observed as follows: 24. Ground No. 3 raised by the revenue reads as follows :- 3. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law by allowing assessee's claim of additional depreciation of plant and machinery on original cost in the year subsequent to the year of acquisition and installation and thereby has erred in deleting the addition of Rs.54,21,617/- without appreciating the fact that such additional depreciation is allowable on plant and machinery only in the year of acquisition and installation. 25. This ground of appeal relates to the claim of the Assessee for additional depreciation u/s.32(1)(iia) of the Act. The undisputed facts are that the original cost of the new machinery purchased and installed by the Assessee after 31-3-2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the Assessee. The AO accordingly disallowed the claim of the Assessee for additional depreciation. 28. Before we set out the conclusions of the CIT(A) on this issue, it would be worthwhile to examine the history of scheme of allowance by way of additional depreciation in the Act. 'Sec.32 Depreciation. (1) In respect of depreciation of (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii): ' 29. It can be seen from the provisions of Sec.32(1)(iia) as it existed from 1-4-1981 to 31-3-1988 and reinserted subsequently from 1-4-2003 that the benefit for claiming additional depreciation was restricted only to the initial assessment year. However the provisions of Sec.32(1)(iia) as substituted by the finance Act, 2005 w.e.f. 1-4- 2006, the benefit for claiming additional depreciation was not so restricted to only to the intital assessment year. From AY 1981-82 to 87-88, the claim for additional depreciation was restricted to previous year in which such machinery or plant is installed or, if the machinery or plant is first put to use in the immediately succeeding previous year. From AY 2003-04 till 2005-06, the claim for additional depreciation was restricted to previous year in which such undertaking begins to manufacture or produce any article or thing on or after the 1st day of April, 2002; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(iia) have been amended. In so far as the language used in the provision in concerned one has to construe the language beneficially and in favour of the assessee as held by the Jurisdictional High Court in the case of Indian Jute There is little merit in the contention of the AO that the asset is not new in the second year. In my view for claiming additional depreciation the assessee has to acquire and install the plant machinery after 31-03-2005 and the same should be new in the year of installation. There is no requirement that the assets should be new in the year of claim of additional depreciation. For the reasons aforesaid I am of the view that in terms of provisions of Section 32(1)(iia), additional depreciation is available in AY 2006-07 and subsequent years in respect of all new plant machinery acquired and installed after 31-03-2005 subject to overall criteria that total depreciation does not exceed the actual cost. Hence Ground No. 4 is decided in favour of the Appellant. 31. Aggrieved by the order of CIT(A) the revenue has raised ground no.3 before the Tribunal. The ld. DR placed reliance on the order of the AO. The ld. Counsel for the assessee submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell. It was submitted that the condition imposed by the relevant provisions was that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/ s 32(1)(iia) and not new in subsequent years. 32. We have given very careful consideration to the rival submissions and are of the view that the provision of section 32(1)(iia) as amended w.e.f. 01-04-2006 by the Finance Act 2005, there is no restriction that the additional depreciation will be allowed only in one year or that it would be allowed only on the written down value. The law as it prevailed prior to the said amendment imposed such a condition that additional depreciation will be allowed only in the year of installation of machinery or plant or the year in which it is first put to use or the year in which the concerned undertaking begins to manufacture or produce any article or thing or achieves substantial expansion by way of increase in installed capacity by 25%. The only objection of the AO is that the provisions refer to new machinery or plant and therefore the machinery will cease to be a new machinery after the end of the first year in which it is installed or put to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not consider the third proviso inserted by Finance Act, 2015. Since the legislative intent in inserting sec.32(1)(iia) has been made clear by the third proviso inserted in sec. 32(1) by Finance Act 2015, hence ITAT Mumbai did not follow the view expressed by the Kolkatta bench of Tribunal in the case of Gloster Jute Mills (supra). It is pertinent to refer to the Decision of Hon ble ITAT Kolkata in the case of DCIT vs Graphite India Ltd. in ITA No. 472/Kol/2018 dated 22.11.2019 wherein both of the above decisions of ITAT Kolkata as well as ITAT Mumbai has been duly considered and has decided in the favour of the assessee. In this decision, decision of ITAT Mumbai in the case of Everest Industries Limited (supra), was referred in finding of CIT(A). The ITAT has followed Gloster Jute Mills Ltd. (supra) and has decided the issue in assessee s favour. It is observed that coordinate bench in its later decision in the case of Ambuja Cement Limited(supra), holding company of assessee has allowed similar claim of depreciation. When coordinate bench of ITAT in its latest decision has decided issue in favour of assessee by holding that assessee is entitled for additional depreciation u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 5(a), 5(b) and 5(c) taken here-in-above, in the unlikely event if it is held that indirect Head Office expenses (and R D expenses as the case may be) is required to be allocated, such allocation should be made on the basis of total cost of the respective eligible undertaking to the total cost of the appellant company instead of allocation on the basis of turnover made in the order u/s 143(3). 27. With regard to Ground No. 5 which is in respect of disallowance of proportionate Head office expenditure while computing deduction u 80IA/80IC, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this Tribunal in assessee s own case for the A.Y. 2008-09 in ITA No. 6638/MUM/2018 and ITA No. 268/MUM/2019 dated 28.02.2023 and decided the issue in favour of the department and against the assessee. 28. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 29. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the department in the A.Y.2008-09. While deciding the issue, the Coordinate Bench of the Tribunal in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirming the action of AO in apportioning Research Development expenses incurred at Thane Technical Service Centre amounting to Rs. 2,34,32,596/- in computing Tax Holiday u/s 80IB and 80IC. 37. Similar issue was considered by us in the Department appeal in Ground No 10 in AY 2005-06 and held as under: 75.Considered the rival submissions and material placed on record. We observe that the Assessing Officer has identified indirect expenditure incurred at Head Office i.e Statutory Audit fees, Audit for taxation matter, Director Fees, Cost Auditor expenses, Subscription to CME etc and observed that such expenditure are not allocated to eligible businesses and to that extent deduction u/s 80IA is claimed excess. Before Ld.CIT(A), assessee has claimed that cost audit fees and subscription to CMA are in respect of cement manufacturing unit hence no allocation of such expenditure is required to be made. To that extent, Ld.CIT(A) has accepted the plea of assessee and such fact is not controverted by Ld. DR hence finding given by Ld.CIT(A) to that extent is upheld. Further, on this issue, coordinate bench in the case of Ambuja Cement Limited, holding company of assessee in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture. Thus, related ground of appeal in departmental appeal is dismissed and ground of appeal in assessee s appeal is partly allowed as directed herein above. 38. Respectfully following the above decision, we are dismissing the ground raised by the revenue and partly allow the grounds raised by the assessee 30. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.2008-09 is respectfully followed, accordingly, ground raised by the assessee is allowed. 31. In the Ground No.6, assessee has raised the following grievance: Ground No. 6: Disallowance of proportionate CENVAT credit availed for units eligible for deduction u/s 80IA (Rs. 11,22,04,525/- for CPPs): a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in reducing the claim of the Appellant u/s.80IA to the extent of Rs.11,22,04,525/- on the contention that CENVAT/service-tax/VAT component of expenditure so incurred on consumption of raw materials other servicesby the eligible undertakings should be included for arriving at profits o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made . All that this provision does is that it provides for the profits of the eligible unit being treated on a standalone basis, but then in case the Assessing Officer makes an adjustment for the payment which has earned the CENVAT credit, he must also make an adjustment for the corresponding CENVAT credit availed by any other unit of the assessee other than the eligible unit. If the captive power unit makes a payment of X amount, and in turn, it generates a CENVAT credit of X amount, which is availed by another unit, say Ropar Cement Manufacturing Unit, the hypothetical independence embedded in the profit computation on a standalone basis requires that the Ropar Cement Manufacturing Unit must reimburse the captive power unit for such a CENVAT credit. It cannot be open to the assessee to provide for the expenses which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of disallowance U/s. 80-IA on Rail System, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this Tribunal in assessee s own case for the A.Y. 2011-12 in ITA No. 3139 3178/MUM/2019 dated 28.02.2023 and decided the issue in favour of the assesse and against the department. 38. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 39. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee in the A.Y.2011-12. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 3139 3178/MUM/2019, held as under: - 68. In the Ground No.6, Assessee has raised the following grievance: Ground No. 6: Disallowance u/s 80-IA on Rail System (Rs.1,26,17,49,139/-: a) On facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO in denying the deduction claimed by the Appellant u/s. 801A of the Act in respect of Rail System, b) The Appellant prays that the AO be directed to allow the deduction u/s. 80IA towards rail system to the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was accepted for three consecutive preceding assessment years. After elaborately discussing the things in detail, and extensively referring to investigations carried out in the case of Ultratech Cements Limited, the Assessing Officer concluded that (a) the so called rail system of the assessee company is simply a private rail siding, and is not any infrastructure of public utility; (b) the agreements entered into between the assessee company and the Indian Railways consisting of terms and conditions for private sidings, and could not be viewed as an agreement for building, operating and maintenance of a rail system; (c) the conditions stipulated under section 80IA have not been satisfied; (d) the actual operation of the rail system (i.e. running of the goods train) was being done by the Indian Railways and not the assessee company; (e) all the four cement plant sites were notified as independent booking stations and the freight was charged for the entire distance- including the distance from these private sidings to the railheads; (f) the notional profit computation is incorrect; and (g) the decisions of the Tribunal were not applicable as these critical facts were not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frastructure facility]; and that in pursuance thereof it had developed the integrated rail system in between the plant and the nearest railway track [of Indian Railways] and running it [in between] for movement of the inward and outward material so as to enable it to transport the materials from its plants straightaway to the various destinations and vice versa at all those four locations; and that by way of such operation of rail systems, it has been able to save the expenses for loading [at those plants] into the trucks, road freight and expenses for unloading and loading the same at the site of nearest Indian railways and that resulted into the. profit of such rail systems. 10. However, the AO noted that those agreements were for laying out private sidings and not for any rail system [as referred to in Explanation (a) to the clause (t) of sub-section (4) section 80IA in reference to the infrastructure facility] as claimed by the assessee that railway had laid down those [sidings] partly on the land belonging to the railways and partly belonging to the assessee company so as to facilitate the transportation of raw materials/cement bags through railway wagons [from / to thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80lA as per the concession given by the aforesaid circular]. Finally, the AO held that assessee was not eligible to claim the deduction u/s 80lA in r/o such rail systems and disallowed the claim accordingly. 11. In its appellate order CIT(A) noted that the issue has come up first in A.Y. 2004-05. In that year, the assessee had claimed deduction of Rs 15.63 crores in r/o rail system at Hirmi, Raipur District, Chattisgarh. In A.Ys. 2005- 06 2006-07, the assessee claimed deduction of Rs.16.30crs. Rs 20.95 crs. respectively in r/o that rail system at Hirmi. In A.Y. 2007- 08, the claim was made in r/o two more rail systems [one at Tadipatri in Andhra Pradesh the other at Arakkonam in Tamil Nadu]. The total claim for that year amounted to Rs 52.38 crs. [Rs 21.09 crs. - Hirmi; Rs 25.56 crs. -Tadipatri Rs 5.73 crs. -Arakkonam]. In A.Y. 2008- 09, the claim extended to one more rail system at Durgapur [West Bengal] and the total claim amounted to Rs 61.56 crs. This claim for AY 2009-10 i.e. for the year under consideration had risen to 73.13 crs. 12. The rail systems at all these four locations viz. Hirmi, Tadipatri, Arakkonam Durgapur are said to have commenced the oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has opted for claiming the deduction from A.Y. 2004-05 on wards. It was submitted that the income offered for tax by the assessee includes income from rail system and that certificate of M/s Sharp Tannan, CA in Form No. 10CCB certifying the correctness of the aforesaid claim was duly submitted to the AO. 13.1. It was further submitted that the rail system is a profit centre. The rail system is engaged in business of providing transportation facility to the cement plant, profit of which is embedded in the profit of the assessee company as a whole. It was submitted that by developing this infrastructure facility, there has been saving in transportation cost and overall profits of the company have increased due to such savings. It was such that the mere fact that it does not raise an invoice from its railway unit to its cement unit cannot govern the tax implication of the profits delivered by the rail system. In support of its contention that treatment of a transaction in books of accounts cannot govern the tax statement reliance was placed on the decision of the Supreme Court in the case of Kadernath Jute Manufacturing Company Ltd. 82 ITR 362; in the case of TutcorinAlali C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically stated in para 5.2.3 of his order that rail system was developed by L T and was inherited by the assessee out of demerger. It was further submitted that in a demerger all the property of the undertaking is necessarily transferred by the demerged company to the resulting company, therefore it is immaterial whether the rail system was developed by L T Ltd. or by the resulting company i.e. the assessee. Further it was submitted that the facility of rail system consists of all that is required to carry on the railway activity in an organized and systematic manner. The activity of rail system is real and substantial and it is carried on with said purpose viz transportation of goods from one place to another and thereby augmenting profits of the company as a whole by saving transportation cost which it would have otherwise incurred. It was further submitted that the profits derived from the rail systems are clearly arising out of the business of developing operating and maintaining the rail system. 13.5. It was further submitted that substantial investment has been made in developing the railway system. There is an agreement with the railways for operating and maintaining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) is liable to be confirmed in this regard. 16. We have heard the rival submission and considered them carefully: We have also perused the various material placed on record on which our attention was drawn. After taking into consideration we find that the CIT(A) has dealt with the aspect in detail. Contention raised before the ClT(A) on behalf of the assessee were not found incorrect or false. Conditions of Sec. 80IA have been fulfilled by the assessee. Thereafter, the CIT(A) came to the conclusion that the assessee is eligible for deduction u/s 80IA. The findings of the Id. CIT(A) are given in para 3.10 are as under :- 3.10 After perusal of the facts of the case, findings given by the AO and submissions made by the appellant, I find that the only issues in this case is whether the appellant is eligible for deduction u/s. 80IA in r/o profits derived from the rail system. There is no dispute that the appellant (i) is a company (if) has developed the rail system and (iii) it has entered into an agreement for operation and maintenance of the rail system with the railways i.e the Government. Thus all the 3 conditions required to be fulfilled as per Sec. 80IA(4)(i) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same was as under:- 16. The CIT(A) observed that the agreements under reference were not at all any agreements for developing, maintaining and operating any infrastructure facility to which benefit of exemption is intended to be given in Section 80IA. For this reason also the assessee company was held to be not entitled for deduction u/s.80IA in r/o the profit from the operation of rail system. 17. The CIT(A) also observed that L T Ltd., who have developed the said rail system was also not eligible u/s.80IA on operations of those rail systems under the provisions that existed at the relevant time i.e., prior to 01/04/2002 when such infrastructure facility was said to have become operational. 18. The CIT(A) observed that the L T Ltd., did not claim exemption on operation of those rail systems. Rather the assessee company has started claiming exemption from AY. 2004-05 after the ownership over the cement plants together with such rail systems were transferred to it following the demerger scheme in FY. 2003-04. 19. The CIT(A) further observed that the provision of railway track, signals, level crossings etc are the essential components of a rail system bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the Ays.2009-10 and 2010-11 under consideration. Learned A.R threadbare taken us to the objections raised by the CIT(A) and the reply filed by the assessee controverting each and every objection of the CIT(A). Our attention was invited to the amended provisions of Section 80IA(4) which does not require infrastructure facility to be a public facility for allowing deduction u/s. 80IA. Our attention was also invited to the terms and conditions of the agreement entered between the assessee company and the railway department which contained conditions for construction of railway sidings, development of sidings, laying of tracks, signaling system and all the essential components of rail system. The terms of the agreement also provided for its operation and maintenance. He vehemently argued that the rail systems were developed in accordance with the agreements entered with the Indian Railways, wherein assessee was allowed to operate and maintain these sidings under supervision and as per the guidelines of Indian Railway. Our attention was invited to the various clauses particularly Class 2, 6, 7(a), 17 and 8(b) which stipulate for construction of railway sidings at the cost of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2008-09, wherein Tribunal have after considering in detail allowed the assessee's claim u/s.80IA with regard to rail system. Sales Tax exemption as capital receipt was also decided by Tribunal in assessee's own case for the Ays. 2004-05 to 2008-09, relevant decision of the Tribunal was also filed before us. 29. Learned AR relied on following judicial pronouncements in support of the proposition that benefit allowed in earlier year cannot be denied in subsequent years. 1. RadhaSoamiSatsang v. CIT[1992]60 Taxman248/193ITR321 (SC) 2. CITv.WesternOutdoorInteractive(P)Ltd. [2012]25taxmann.com340/210Taxman229(Mag.)/349ITR309(Bom.) 3. CITv. Paul Brothers.[1995]79 Taxman378/216ITR548(Bom.) 4. CITv. MacbroutEngineering(P.)Ltd. [2014]52taxmann.com219/[2015]232Taxman406(Bombay) 5. CITv. ModiIndustriesLtd. [2010]8 taxmann.com129/327 ITR570(Delhi) 6. CIT v. DelhiPressPatraPrakashanLtd. [2013]34taxmann.com3/217Taxman288/355 ITR14(Delhi) 7. SaurashtraCement ChemicalIndustriesLtd.v. CIT [1979]2Taxman22/[1980]123ITR669(GUJARAT) 8. AceMultiAxesSystemLtd.v. Dy.CIT[2015]228Taxman98/[2014]49taxmann.com168/367ITR266 (Karnataka) 9. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 122/9 taxmann.com 255/333 ITR 335, Bombay High Court in case of CIT v. Chaphalkar Brothers [2013] 33 taxmann.com 431/215 Taxman 145 (Mag.)/351 ITR 309. 32. With regard to disallowance made u/s.14, she relied on the findings recorded by lower authorities. 33. We have considered rival contentions, carefully gone through the orders of the authorities below and materials placed before us. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. 34. Grievance of both the assessee and revenue revolves around assessee's eligibility for claim of deduction u/s.80IA (4) of the Income-tax Act. From the record we found that assessee UltraTech Cement Ltd. ('UTCL') has acquired the cement business of Larsen Toubro Limited (L T') along with the Rail systems at Hirmi, Tadipatri, Arrokonam and Durgapur in the FY. 2003-04. These Railway systems were developed on or after 01/04/1995 by the L T. year wise details of the aforesaid rail systems are as follows: UnitIRailsystemUnd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly the assessee had awarded the contract to the private parties for construction and to the Indian Railway approved agency for supervision and consultancy of the Rail system and had borne the entire cost of development including for incidental expenses paid to all the agencies. The clause in the agreement saying that railway administration is willing to lay the said sidings / construct the siding is meant for Railway administration's permission for allowing the assessee for developing the Rail system as per the norms and supervision of Indian Railways. The revenue authorities alleged that the Railway system have been developed to facilitate the transportation of goods for the assessee from and upto the factory premises, and therefore the Agreements entered into by the assessee with the Indian Railways cannot be regarded as required agreements between the Govt. and the assessee. In this respect the assessee submitted as under before the lower authorities. (a) as per section 80- IA(4)(i)(b) the agreement has to be entered with the Central Govt or a State Govt or a Local Authority or any other statutory body f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng charges are not leviable. 38. The rail systems were developed by assessee under the agreements entered into with Indian Railways and assessee operates and maintains the same in accordance with terms and conditions of the Agreements, under the supervision and as per guidelines of Indian Railways. Relevant clauses of the agreements substantiating the same are asunder:- (a) ClauseNo.2, Agreement to Construct Siding Wherein it is mentioned that the Railway administration will at the cost and the expenses of the applicant, in all respect, construct the railwaysidings Further kindlybe informed that, for construction ofthe siding under thesupervision ofthe Railways, the contract for construction and supervision has been awarded by the applicant andtheentire cost hasbeen borne by theapplicant. (b) Clause No. 6 - Payment by Applicant against the total estimated cost - wherein it is mentioned that, The applicant will pay in advance to the railway administration the total estimated cost of the work consisting of the estimated costs of work done by the party and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with assessee's contention and held that Rail systems developed by assessee is not eligible for claim of deduction u/s.80IA (4). Now, we deal precisely with the observation made by CIT(A) for declining Assessee's claim of deduction u/s.80IA. 42. With regard to CIT(A)'s observation as to whether rail systems developed by M/s. L T were in accordance with the Build-Own-Lease- Transfer (BOLT) scheme of the Indian Railways, we observe that L T had entered into agreements with the railway authorities to develop, operate maintain the rail systems, which in fact the company has done from the initial day. The assessee was permitted to setup and even operate maintain the rail systems so developed. Further, regarding' Circular No. 733 dated 03-01-1996, we found that the Circular clarifies that tax holiday benefit u/s. 80-IA of the Act was also available to private enterprises which only built and leased out the rail system to the Indian Railways. In spite the absence of activities-'operate and maintain' the rail systems, such 'infrastructure facilities' were also declared as eligible to claim deduction under the said section. Further, the circular al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for claiming deduction under Section SO-lA (4)(i). Section 80-lA (4)(i) provides the following conditions to be complied with for claiming deductions; (i) ...... (a) itis ownedby a companyregisteredinIndia (b) it has entered into an agreement with the Central Government or a State Government or a localauthority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing,operatingandmaintaininganew infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1 st day of April,1995: 45. With regard to objection of revenue authorities on applicability of CBDT circular No.733 on BOLT schemes, systems developed under BOLT scheme are also eligible for 80-IA benefit, and in no way restricts the deduction u/s.80-IA to other rail systems. We found that the Hon'ble ITAT in assessee's own case for AY 2006-07, has categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been awarded by the applicant and the entire cost has been borne by the applicant. (b) Clause No. 6 - Payment by Applicant against the total estimated cost -wherein it is mentioned that, The applicant will pay in advance to the railway administration the total estimated cost of the work consisting of the estimated costs of work done by the party and those by the railway administration (c) Clause No. 7(a) - Permanent way materials - The applicant will provide and deliver at site the permanent way and other materials (which includes Girders, Rails, Sleepers, fastenings, points, crossings, fencings, signals and overhead structures and any other things connected therewith for electric tractions and other machinery and equipments necessary for working of the sidings) in accordance with the Railway administration's standards and specifications. All charges incurred in laying and fitting the permanent way materials and all other equipments which may be provided shall entirely be borne by the applicant. (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems has been settled in earlier years by the Hon'ble ITAT in assessee's own case. The facts and the agreements were also placed before authorities in those years. Therefore, the claim based on same facts needs to be allowed following the principle of Consistency in assessment proceedings. Even though the 'principles of res judicata' do not apply to income tax proceedings and each assessment year being a separate unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be appropriate to allow the position to be changed in a subsequent year. The above principles have been accepted in the undernoted case: H.A.Shah Cov. CIT[1956](30ITR618)(Bom.) AmalgamatedCoalfieldsLtd.v.JanapadaSabhaAIR1964SC1013 CruchofSouthIndiaTrust Associationv.TeluguChurchCouncil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -- 5.71 6.72 54. We have also verified the calculation of revenue from rail system, filed before the lower authorities and found that the basis adopted for calculating the revenue from rail system is, lower of the Freight chargeable through Road and Rail. The Rail Freight being lower is considered after discounting it further by 50% based on the Circular of Indian railways for the freight chargeable upto the nearest railway station. Freight Rates are considered as per the Freight Rate chart Freight Circulars issued from time to time by Indian Railways, based on the classification of the goods transported. The Railway freight rates are uniformly charged to everyone by Indian Railways. The copies of Form 10CCB including the Profit and loss account, Balance sheet along with Schedules, giving- therein the basis for calculation of revenue has been submitted before the lower authorities and had been duly examined by us and found to be correct. 55. We also found that the loading and unloading of goods is being done by the integrated Rail system set up by the assessee and expenses which were incurred earlier for loading and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsure to the public in general - to the consumers of cement. Any benefit to the business even though it is first enjoyed by the particular trade or establishment eventually is for the general public good. It has to be noted that several industries may come up on both the sides of sidings from the interchange point till factory gate, if anyone of them wants to make use of railway sidings, it is permissible for the Railway Administration to entertain such request and by making use of the exiting siding, can extend or branch off and lay railway tracks to the industry which makes the request and lay siding accordingly. Thus, the railway siding from the point of interchange till factory gate of the assessee has immense potential, with enabling powers to the Railway Administration (which itself is a public department), to be developed into a facility that will ensure to the public at large. The railway sidings are always constructed for captive consumption. Thus, the provisions of section 80IA(4) cannot be read in the manner to make it redundant, when the legislature in all its wisdom intended to give benefit of tax holiday for construction of infrastructure facility in the form of railw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprise only, which also supports our view. 61. As far as operations is concerned, we found that the assessee carries out all the following operations for smooth movement of its goods, viz. shunting of the wagons, placing of the wagons at appropriate locations, loading/unloading of wagons within the stipulated time and stipulated methods of Indian Railways through Wagon Loading Machines and Wagon Tipplers, weighing of wagons on Motion Weigh Bridges, wagon couplings and de-couplings, rake formation for dispatch, hauling of wagons through its own locomotives within the factory premises, etc. Thus, the rail system is being operated by the assessee and the cost of above operations is borne by assessee. 62. With regard to CIT(A)'s conclusion at page 42 of A.Y. 2010-11 to the effect that various conditions given in Section were not met with, we observe as under:- a. Section 80-IA (4)(i) provides the following conditions to be complied with for claiming deductions; (i) any enterprise carrying on the business of (i) developing, (ii) maintaining and operating or (iii) developing, maintaining and operating any infrastructure facility which fulfils all the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-10-2002 67. This also is an undisputed fact and there is no adverse remark by the AO or CIT(A) in this regard. In view of above all the conditions specified in section 80IA(4) has been complied with by the assessee entitling it to claim the tax holiday. 68. With regard to CIT(A)'s observation that the actual operation of Rail System [i.e. running of goods train] onto the private sidings between the serving railway station and plant premises [upto interchange point! exchange yard], was being done by the Indian Railways and not by the assessee Company. 69. We found that the CIT(A) has equated running of goods train with the operation of Rail System . This is the sole basis on which he has arrived at his conclusion that since the assessee is not running the goods train it is not operation of Rail System and hence not eligible for claiming deduction under section 80IA(4). 70. As per our considered view, the operation of Rail System is not simply running of goods train. Operation of Railway Systems comprises of various activities viz. shunting of the wagons, placing of the wagons at appropriate locations, loading/unloading of wagons withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the cost of road transportation, which the cement division of the assessee was hitherto incurring for transportation of materials to and from the factory premises, is adopted as the basis of calculating the revenue of the railway undertaking. The revenue is, however, computed for the actual services rendered by the railway undertaking to the cement division. 77. After verifying the computation of income eligible for deduction u/s.80IA, as filed by assessee, we found that the CIT(A) has misunderstood the working of the revenue calculation and alleged that such working is ill-conceived as the actual transportation of materials on the siding is carried out by the railway authorities. Based on such misunderstanding, he further alleged that assessee has claimed deduction for notional profits whereas section 80lA allows deduction for profits derived from actual operations. 78. In this regard, we observe that the railway systems of the assessee has been rendering following services to the cement division: shunting of the wagons, placing of the wagons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight rate is also not correct in so far as for comparison, he has considered the rate per quintal as against per Metric Ton adopted by the assessee which can be observed from the calculation submitted by assessee before the lower authorities. Without any evidence in hands, the CIT(A) has merely stated that crucial facts were not disclosed by the assessee without referring to any specific facts which were not disclosed. Perhaps he is indicating about the operations of railway siding being carried out by the railways and not by the assessee. However, as aforesaid, he is comparing the operation of railway siding with merely hauling of wagons. The operations of railway siding involves various activities other than the hauling of wagons. Mere haulage of wagons cannot be equated with operations of railway siding. We found that assessee has filed reports in Form 10CCB from M/s G.P.Kapadia Co., Chartered Accountant. The CIT(A) himself has allowed the deduction in AY. 2009-10 based on the similar facts available on records but changed his decision merely based on the replies to questionnaire from various Railway Department. 83. The CIT(A) has also raised a query as to whether the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perating and maintaining any infrastructure facility. This was in contrast to the previous requirement of all three conditions being cumulatively satisfied; (ii) that the explanation of the term 'infrastructure facility' was changed to besides others, a road including toll road instead of hitherto existing expression 'road', and (iii) that the requirement of transferring the infrastructural facilities developed by the enterprise to the Central or the State Government or the local authority within the time stipulated in the agreement was done away with. 33. These changes, however, would not alter the situation vis-a-vis the impugned amendment. These legislative changes did enlarge the scope of the deduction and in a sense, made it available to certain assessees who would not have been, but for the changes eligible for such deduction 86. In terms of the above averments, after acquiring the cement business from L T, the assessee started claiming deduction for Rail system u/s. 80- IA from Assessment year 2004-05 onwards since it satisfied all the conditions as prescribed u/s 80IA(4) as it stood during AY. 2004-05, viz: (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds for obtaining edible oils and refining thereof, set up a new industrial undertaking for the extraction and refining of edible oil. It claimed to have temporarily commenced the activity on and from 1-1-1997 on a trial run; however, the systematic activity of refining commenced only in the previous year relating to the assessment year 1998-99. After the final completion of the project, the assessee-company applied directly for a permanent registration certificate of its status as a small scale industry (SSI) under section 11-B of the Industrial Development Regulation Act, 1951 (IRDA) to the prescribed authority, who granted the certificate dated 30-3-1998, which was a conclusive and final proof of such a status under the provisions of IRDA. The return of income filed earlier by the assessee for the assessment year 1999-2000 as subsequently revised, wherein a claim of deduction under section 80-IA was made. The Assessing Officer disallowed the claim of the assessee, on the ground that the assessee started production from the assessment year 1997-98 itself, the year in which the assessee was not a small scale industry, and, therefore, the assessee did not fulfil the condition of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction cannot be disallowed on the same ground. Hon'ble High Court decision in the case of Saurashtra Cement Chemical Industries Ltd. (supra), has pointed out that once deduction is allowed in the first year, revenue has no power to deny the deduction in subsequent assessment years as provided under the Act. 93. Even the Supreme Court in case of Bajaj Tempo Ltd. v. CIT [1992] 62 Taxman 480 /196 ITR 188 held that a provision in the taxing statute for promoting growth and development is to be construed liberally and hence, even the restriction contained in such a provision has to be construed so as to advance the objective of the provision and not to frustrate it. 94. The CIT(A) has also raised an objection to the effect that since L T was not eligible for deduction u/s.80IA on operation of those rail system, then whether the assessee company, which inherited the cement business [i.e. cement plants together with said rail system] of the L T Ltd in the FY. 2003-04 on account of demerger, could be treated as eligible to the deduction under the aforesaid section in respect of profit, if any, of those rail system for the later years. In this regard we observe that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y preceding assessment years, the same stand of the assessee, which has been rejected now, was accepted during the scrutiny assessment proceedings. While it is indeed true that there is no res judicata in the income tax assessment proceedings, at the same time, following the principles of consistency duly recognized by Hon'ble Supreme Court in the case of Radhasoami Satsang Vs CIT [(1992) 193 ITR 321 (SC)], unless there is a change in the material facts, the issues which have been settled one way or other must to be disturbed. In this view of the matter, and respectfully following the coordinate bench in the case of Ultratech Cement Ltd (supra), we uphold the plea of the assessee. The Assessing Officer is, therefore, directed to delete the impugned disallowance in respect of claim of 80IA in respect of rail system. The assessee gets the relief accordingly. 31. It is relevant to refer to decision of Kolkata ITAT in the case of RASHMI METALIKS LTD in ITA No 813 to 816/Kol/2017 dated 02/05/2018 wherein it is held as under: 38. Learned Counsel for the assessee also took us through the agreement entered into by' the assessee in respect of the Railway System operated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee as the Hon 'ble High Court refused to admit the question raised by the Revenue on the very applicability of the provisions of section 80JA of the Act for the Rail System. Therefore/ respectively following the said decision we hold that the assessee entitled for the deduction u/s. 80JA of the Act in respect of the railway system . 43. Thus, in view of what is discussed above, we hold that the assessee is entitled for deduction u/s. 80IA in respect of the Railway System and water Supply project and therefore we set-aside the orders of the LdPCIT passed u/s 263 of the Act for the Assessment Years 2008-09 to 2011-12. 44. In the result, appeals of the assessee are allowed. 40. The judgment of the Hon'ble Bombay High Court in the case of M/s. Ultra Tech Cement Ltd in ITA No.6070 of 2010 has confirmed the order of the ITAT. The Hon'ble Madras High Court in the case of M/s Tamilnadu Petro Products Ltd. Vs ACIT 338 ITR 643 allowed deduction u/s 80IA of the Act where the facility was one of captive consumption. Thus even if the facility was for captive use, deduction u/s 80IA(4) cannot be denied. Thus applying the proposition of law laid down in all these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UOI v. Exide Industries Limited (Supra) and decided the issue against the assessee. Accordingly, the ground raised by the assessee is dismissed. 45. In the Ground No.9, assessee has raised the following grievance: Ground No. 9: Addition of Rs. 30,14,80,247/- in respect of provision for Interest on Income tax while computing book profits u/s. 115JB of the Act: a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in adding Rs. 30,14,80,247/- being provision for interest on income tax (arising for providing of interest of excess income-tax refund) in computing Book Profit u/s 115JB. b) The Appellant prays that the AO be directed to exclude provision for interest on income tax while computing book profits u/s. 115JB. 46. With regard to Ground No. 9 which is in respect of addition of provision for Interest on Income tax while computing book profits u/s. 115JB of the Act, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this Tribunal in assessee s own case for the A.Y. 2010-11 in ITA No. 3177 3137/MU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal against such order. During the course of hearing the Ld. AR has conceded the ground relating to interest u/s.234D visa-vis adjustment while computing Book Profit u/s.115JB of the Act in view of decision of Coordinate Bench in the case of Ambuja Cement Ltd. [140 Taxman.com 347]. So far as adjustment for interest u/s.244A of the Act while computing Book Profit, Ld. AR has stated that provision was made based upon past records / trend of receipt of Income Tax refund from Tax Department and subsequent withdrawal thereof based upon orders u/s.143(3) of the Act. The Ld. AR has stated that such provision does not fall within the definition of Income Tax as per Explanation 2 to Section 115JB of the Act. The Ld. AR has also provided working of interest income received v. provision made against such interest on a scientific basis. On the other hand, the Ld. DR has relied upon orders of lower authorities and argued that any provision of Income Tax including interest need to be added while computing Book Profit u/s.115JB of the Act 110. Considered the rival submissions and material placed on record. It is observed that assessee has made provision for interest u/s.244A and interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in A.Y.2010-11 is respectfully followed, accordingly, ground raised by the assessee is dismissed. 50. In Ground No.10, the assessee has raised the following grievance: Ground No. 10: Addition of Rs. 1,35,86,250/- in respect of tax on non-monetary perquisites while computing book profits u/s. 115JB of the Act: a) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) was not justified and grossly erred in confirming the action of AO in adding Rs.1,35,86,250/- being tax on non-monetary perquisites in computing Book Profit u/s 115JB. b) The Appellant prays that the AO be directed to exclude provision for interest on income tax while computing book profits u/s. 115JB 51. The Assessing Officer has dealt with the issue at Para No. 19 of the Assessment order. The relevant facts are that the Assessing Officer has made the adjustment of tax on non-monetary perquisites to the book profit u/s 115JB of the Act. The Assessing Officer observed that the assessee had not added back ₹.1,35,86,250/- in the computation of book profit which was disallowed u/s 40(a)(v) being tax paid on non-monetary perquisites provided to employees. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larity as under: Minimum alternate tax (Perquisite) - Assessment year 2012-13 - Whether fringe Benefit tax not being part of income-tax is not required to be added back while arriving at Book Profits under section 115JB - Held, yes [Para 8] [In favour of assessee] 54. Further, the coordinate bench in the case of IDBI Bank v. DCIT in ITA No. 3394/MUM/2019 and 3849/MUM/2019 has held as under: Assessee vehemently relied upon the decision of coordinate bench of tribunal in Rashtriya Chemical and Fertilizers Ltd. (supra) wherein on similar ground of appeal the coordinate bench held the taxes borne by the assessee on non-monetary perquisites provided to employees forms part of Employee Benefit cost and akin to Fringe Benefit Tax since they are certainly not 'below the line' items since the same are expressively disallowed under section 40(a)(v), the same do not constitute Income Tax for the assessee in terms of Explanation-2. Therefore, without there being any corresponding amendment in the definition of Income Tax as provided in Explanation-2 to Section 115JB, Fringe Benefit Tax was notrequired to be added back while arriving at Book Profits u/s. 115JB. In our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (M) of 2013, dated 16-9-2015] where the Tribunal took a view that Wealth Tax' did not form part of Income Tax and therefore, could not be added back to arrive at Book Profits since the adjustment thereof was not envisaged by the statutory provisions. Therefore, we are of the opinion that the adjustment of impugned item as suggested by Ld. CIT was not legally tenable in law which leads us to inevitable conclusion that the omission to carry out the said adjustment did not result into any loss of revenue 61. We find that the issue is squarely covered in favour of the assessee by the above quoted decision of the Tribunal. No contrary decision was cited before us by the ld. Departmental Representative during the course of hearing. We, therefore, respectfully following the above quoted decision of the Mumbai Bench of the Tribunal delete the addition of ₹ 95,02,478/- and allow this ground of appeal of the assessee. 56. It is observed that on identical issue, the coordinate bench as well as Delhi ITAT has deleted the adjustment made on account of tax paid on non-monetary perquisites provided to the employees to book profit u/s 115JB of the Act. Respectfully following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by invoking the provision of Sec. 145A of the Act. 15. The Assessing Officer has dealt with the issue at Para No. 5 to 5.3 of Assessment Order. The Assessing Officer has observed that Assessee has following exclusive method of accounting and unutilised CENVAT credit on closing stock of raw material and stores is ₹.16,93,37,435/- which is required to be added back to total income of assessee considering provisions of Section 145A of the Act. 16. In appeal Ld.CIT(A) has discussed the above issue at Para No. 6.4 and 6.5. of his order and held as under: 6.4 I have carefully considered the submissions of the Ld. AR and gone through the relevant judicial decisions cited by the Ld. AR. Under Section-145A of the Act, the element of any tax, duty, cess or fee is to be adjusted against purchase, sale, inventory etc. The Assessee is following exclusive method which means the purchase is not debited along with the excise duty paid on the same. If the credit for such unutilized modvat is added to the inventory of the closing stock, it will be necessary to make additions of the excise duty to its purchases also. Ld. AR has pointed out that in the Tax Audit Report vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase price minus (-) the Modvat credit. The same would be permissible. The Apex Court in the case of Indo Nippon Chemicals Co. Ltd. (supra) while affirming the order of High Court, has observed that the income was not generated to the extent of Modvat credit or unconsumed raw material. Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials, that would not amount to income which was liable to be taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same. 6. Considering the above, the amount of the unutilized Cenvat credit could not have been directly added to the closing stock. The Tribunal has not committed any error. (underlined for emphasis by us) It is evident from the above that irrespective of the method of accounting followed by the assessee, i.e. 'Inclusive method', wherein the taxes are included in the opening stock, purchases, etc. or the 'Exclusive method', the MODVAT credit does not have any impact on the profit of the assessee. Thus, following the ratio laid down by the Hon'ble Supreme Court in the case of Indo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-ordinate Bench of this Tribunal in assessee s own case for the A.Y.2009-10 in ITA No. 3176/MUM/2019 dated 28.02.2023 and decided the issue in favour of the assesse and against the department. 71. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee in the A.Y.2009-10. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 3176/MUM/2019, held as under: - 67. In the Ground No.8, Department has raised the following grievance: Whether, on the facts and in the circumstances of the case in law, Id. CIT(A) erred in deleting the disallowance of Rs. 52,85,01,072/- being preoperative expenses, when in its books of accounts, the assessee itself had claimed the expenses as capital expenses and added them to its capital- work-in progress/fixed assets and there is no provision in Income-tax Act permitting the allowance of such expenses? 68. The Assessing Officer has dealt with the issue at Para No 16 of his order. The Assessing Officer observed that assessee has incurred expenditure of ₹.52,85,01,072/- in respect of employee remuneration, travelling e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of this case. In that case, the Hon ble ITAT held: 7. We have heard both the parties and perused the orders of the Revenue Authorities as well as the precedents cited by the Ld Representatives of both the parties. After hearing both the parties and perusal of the orders of the Revenue Authorities as well as the relevant material placed before us, our adjudication is given in the following paras. 8. Nature of Expenditure: we find that the expenditure in question undisputedly is of revenue nature. The same is evident from the nature of nominal accounts they are accounted in the records of the assessee. By no stretch of imagination, the expenditure incurred on accounts of salaries, wages, marketing expenditure, professional fee, travelling etc falls in the capital fields but for the alleged preoperative nature of the claim. Therefore, we have no doubt to treat the impugned expenditure as allowable revenue but for the allegation of the AO. No expenditure incurred on acquisition of the capital assets such as plant machinery, land and building, technical know-how etc., is included in the expenditure claimed by the assessee. 9. New product vs New busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propositions. 12. Aborted Expenditure: Further, it is a decided issue legally that the capital expenditure incurred on the capital assets of an aborted project is not an allowable expenditure. However, the revenue expenditure such as the salaries, wages, travelling, fee, rent etc of an aborted project is an allowable expenditure. 13. Therefore, the ice-cream and the Mawa fall in the genus of the dairy/milk products and they are covered by the nature of declared business of the assessee. As such, the impugned expenditure claimed by the assessee does not include any expenditure of capital nature. The control and management, accounts, CEOs for both the dairy /milk products is one and the same. AO has not made out the absence of interlacing of the above. Under the factual matrix of the case, we find the claim of the assessee is allowable. Accordingly, the AO is directed to delete the addition. The order of the CIT (A) is thus, affirmed. 14. In the result, appeal of the Revenue is dismissed. I also find that for AY 2012-13, CIT(A)-3, Mumbai has decided the similar issue in appellant s own case. I am in agreement with the view of my predecessor and followed the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses in nature and that this shows that lodging this claim is only an afterthought of the assessee, with no substantial basis . The Assessing Officer also observed that some of the above expenses are for setting up the business, and not the expansion of the existing ones though he did not specifically point out any such expenses. The Assessing Office thus proceeded to disallow the entire amount of preoperative expenses. Aggrieved, assessee carried the matter in appeal before the CIT(A) who, after taking note of the detailed submissions, held that the expenses, being in the nature of expenses incurred for the expansion of existing business, cannot be disallowed. Accordingly, the disallowance was deleted. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us. 101. We have heard the rival submissions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 102. The short grievance raised before us by the Assessing Officer is whether, even when the expenditure is shown in the books of accounts, it can be treated as revenue in nature. That question, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue, the Coordinate Bench of the Tribunal in ITA.No. 3786/MUM/2009, held as under: - 53. In Ground No 9, Department has raised the following grievance: On the facts and the circumstances of the case and in law the CIT(A) erred in directing the Assessing Officer to allow deduction u/s.80IA in respect of TG-3 Power Plant. 54. On identical issue in Assessee s appeal, in the Ground No3, following issue is raised: That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in confirming the denial of deduction u/s 80IA in respect of Power Plant TG2 at Wadi in Karnataka. 55. The relevant facts relating to above grounds are, Assessing Officer observed that assessee has purchased two old Captive Power Plant being TG- and TG-3 at Wadi Karnataka from Tata Power. The assessee has claimed deduction u/s 80IA at ₹.26,70,88,579/- and ₹.23,46,09,784/- respectively in two units. The Assessing Officer observed that benefit of deduction u/s 80IA is available for setting up new plant and Assessee has not set up plant but purchased such plant hence deduction u/s 80IA is not available. On this ground, Assessing Officer has denied dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e this proposition is accepted that the deduction is allowed on income from a specific unit, whether such unit was in the possession of the original founder or with somebody else, will not be material. But it is imperative that deduction u/s. 80IA must be claimed in respect of the income from this unit consecutively for a period of 10 yrs from any point out of the span of 15 yrs from commencement of the business. It is admitted that when the unit was sold to M/s. Tata power and during the period when it was under their possession, no deduction u/s. 80IA has been claimed or allowed on the profits of this unit. The Assessee admits that such a claim was not made during the period after having claimed deduction u/s. 80IA in 1999-2000 such claim has been made again in AY: 2005-06, which to my mind, will not qualify as '10 consecutive assessment years' as mentioned u/s. 80IA(2). Under the circumstances, the claim of deduction u/s. 80IA does not appear to be allowable in respect of TG-2. 15.12 So far as TG-3 is concerned, the facts are different. In fact in his order the AO has not given any specific reason for disallowing the deduction against the unit TG-3. It appears that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable to it. The Ld. AR of the assessee has referred to provisions of Section 80-IA which states that if new undertaking is not setup by splitting up, or the reconstruction of a business already in existence and it is not formed by transfer to a new business or machinery or plant previously used for any purpose, deduction would be allowable. The Ld.AR has argued that assessee has acquired entire unit as a whole which means that company has not split any existing business for forming the said unit and purchase of power unit from the TPC doesn t amount to reconstruction as undertaking has been purchased from TPC which is altogether a distinct and separate entity. He has also referred to CBDT Circular F No 15/5/63-IT(A-1) dated 13th December 1963 which was in the context of Section 80J wherein it is stated that Section 84 attaches to the undertaking and not to the owner thereof and successor will be entitled to benefit for the unexpired period. In support of such contention Ld. AR has lied upon following decisions: (i). CIT vs Sonata Software Ltd 343 ITR 397 Bombay High Court (ii). CIT vs Heartland KG Information Limited 359 ITR 1, Madras High court (iii).ITO vs H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the transfer to a new business of machinery or plant previously used for any purpose: 61. It is relevant to refer to Oxford dictionary, the term split up means to separate of end relationship. It is undisputed fact in present case that assessee has acquired both the units as a whole. It is not the case that assessee has set up two different power plant by purchasing only partial assets which were used by another assessee but entire undertaking itself is purchased as it is in year under consideration which clearly prove that assessee has not split any of its existing business for forming both the units. Hon ble Bombay High court in CIT v. Gaekwar Foam Rubber Co. Ltd. [1959] 35 ITR 662 explains that the concept of a reconstruction of a business implies that the original business is not to cease functioning and its identity is not lost. Reconstruction is of a business already in existence implies that there must be a continuation of the activities of business of the same industrial undertaking where the ownership of a business or undertaking changes hands that would not be regarded as reconstruction. This judgment has specifically been approved by the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it did not set up the aforesaid units and there was no provision in the Act for granting the benefit of deduction to the amalgamated company. The Ld.CIT(A) and the Tribunal upheld the claim of the taxpayer. The Hon ble Madras High Court confirmed the decision of the Tribunal and observed as follows: A reading of the provision of sections 80HH and 80-I of the Act, it is clear that the same has been incorporated to encourage the new industrial undertaking on fulfilment of certain conditions mentioned therein. If the conditions mentioned in the sections are complied with by the assessee, the benefit extended by the provisions has to be granted to the assessee. The amalgamation of one company with the other company cannot be regarded as a splitting up or reconstruction or by a transfer of a new business of the plant and machinery of the old business. With reference to the Companies Act, the amalgamation was also for the benefit of the two companies, i.e., amalgamating and amalgamated company and in the public interest and also in the interest of the shareholders. Viewed from any angle amalgamation cannot be regarded as a splitting up of the company for the purpose of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm. In this regard, it was held as under: 11. From a perusal of the aforesaid provision, it is clear that Section 84 is more or less the same as provided in Section 80- IB of the Act. The Central Board of Direct Taxes issued a circular F. No.15/5/63-IT(A-1) dated 13th December, 1963 indicating that the benefit of Section 84 is attached to the undertaking and not to the owner thereof and, consequently, the successor would be entitled to the benefit for the unexpired period of 5 years provided the undertaking is taken over as a running concern. 12. The same principle is applicable in the instant case. Admittedly, the undertaking was in existence since 2002. The proprietorship concern changed into a partnership firm. The benefit under Section 80-IB of the Act is available to the partnership firm and the conditions imposed under Section 80-IB(2)(i) does not come in the way. 65. Thus, the sanctity of the CBDT Circular has been upheld in the context of section 80IB, confirming that the tax holiday moves along with the undertaking and the ownership has no relevance. Similar decision is also rendered by Hon ble Punjab Haryana High Court in the case of Mega Packages [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IA on such power plant. On the other hand, claim of deduction u/s 80IA made by assessee is emanating from notes forming part of return of income for A.Y. 1999-2000 and not disputed by Assessing Officer in assessment proceedings hence there is no reason for not allowing deduction u/s 80IA for TG-2 Wadi. The Hon ble Bombay High court in the case of Simple Food Products (P.) Ltd. [2017] 84 taxmann.com 239 has held that if deduction u/s. 80-IB was granted for an initial assessment year, same could not be rejected for subsequent assessment years unless relief for initial year was withdrawn. 68. In view of holistic discussion made herein above, assessee is entitled to deduction u/s 80IA on TG-2 and TG-3, Wadi unit. Thus, related ground of appeal in departmental appeal is dismissed and ground of appeal in assessee s appeal is allowed. 77. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.2005-06 is respectfully followed, accordingly, ground raised by the Revenue is dismissed. 78. In Ground No. 6, Revenue has raised following grievance: 6. Whether on the fact and circumstances of the case and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for determining the 'market value' of power captively consumed. b. The CIT(A) was not justified and grossly erred in not following the binding judicial precedents without providing any cogent reasons; c. The Appellant prays that the AO be directed to allow deduction u/s. 80IA as claimed by the Appellant. 54. The Assessing Officer has discussed this issue at Para No. 10.23 of assessment order. The Assessee company has claimed deduction u/s 80IA with reference to various power generating units mainly used for captive power consumption. The Assessing Officer has prepared tabular chart showing market value of such goods on transfer at Page No 37 of assessment order. On perusal of such table, it is apparent that assessee has considered 6.30 per unit at which the units generated by it were sold to Tata Power Trading Company Limited. The Assessing Officer at Para No. 10.28 of his order has observed that assessee before it claimed that notional market value of the electricity generated by CPP shall be the same as what the manufacturing unit would have paid electricity to the State Government or other party if CPP would not be in existence. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise or eligible business and, the consideration, if any, for such transfer as recorded in the accounts of the undertaking or unit or enterprise or eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of any deduction under this Chapter, the profits and gains of such undertaking or unit or enterprise or eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date. Explanation. For the purposes of this sub-section, the expression market value , in relation to any goods or services sold or supplied, means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions, if any; in relation to any goods or services acquired, means the price that such goods or services would cost if these were acquired by the undertaking or unit or enterprise or eligible business from the open market, subject to statutory or regulatory restrictions, if any. The dispute is whether the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Reliance Industries Ltd [2020] 421 ITR 686 (Bombay) (iii) CIT v. Godawari Power Ispat Ltd. [(2014) 223 Taxman 234 (Chattisgarh HC)] (iv) PCIT v. Gujarat Alkalies Chemicals Ltd. [(2017) 395 ITR 247 (Gujarat HC)] (v) West Coast Paper Mills Ltd. v. JCIT (2006) 100 TTJ 833 (Mumbai Trib.) (vi) Eveready Spinning Mills (P.) Ltd. v. ACIT (50 SOT 8) (Chennai) (URO) (vi) ACIT vs. Godavari Power Ispat LTD (2011) 133 ITD 502 (Bilaspur) (vii) BalrampurChini Mills Ltd (ITA 1672/Kol/2019) (Kolkata ITAT) 57. During the course of appellate hearing, Ld AR has filed revised working of the turnover of the eligible CPP units by adopting rate which the assessee s Cement Manufacturing Unit (CMM) would have paid to purchase the power from the State Electricity Board (SEB) which means Average Annual Landed Cost (AALC) of power purchased from SEB at each location. This method has been followed by assessee while claiming deduction u/s 80IA in return of income for A.Y. 2011-12 hence there was no need for submitting revised working in such year. 58. The Ld DR has mainly relied upon observations made by lower authorities. She has mainly relied upon pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee as to how the rate at which SEB sells the electricity to its CMUs is arrived at by the assessee. The copy of the alternative working for market values of electricity generated filed by the Ld.DR on 9.01.2023 is also enclosed herewith for ready reference as Enclosure-I Perusal of the assessment order shows that for computing the turnover of the CPPs, the AO adopted the rate at which the CPP sold the power generated by them to the SEBs/ PTCs. The same was considered to be the market value in view of the explanation to subsection 6 of section 80A of the Income Tax Act, 1961. The sub section (6) of 80A was brought on statute by the Finance Act of 2009 'With retrospective effect from 01.04.2009 and hence is applicable to the AN. under consideration. It is pertinent to mention that section 80A(6) is a non-obstante clause. For the sake of ready reference, sub section 6 of section 80A along with its explanation is reproduced hereunder: (6) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading C. Deductions in respect of certain incomes , w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Interestingly, the Assessee itself has adopted the first meaning for computing its turnover i.e. the rate of Rs 6.30 per unit at which the units generated by it were sold to Tata Power Trading Company Limited. The AO had however, after giving his reasons in detail as to why the rate adopted by the Assessee cannot be applied for the entire output of the CPPs, which are spread across various states and further after considering the small sample size of the sales made by the assessee to Tata Power Trading Company Limited. by one of its units at Kymore in Madhya Pradesh, that too only over a short period of three months, worked out the turnover of the CPPs after adopting the average rate at which the power was purchased by the two players in the power sector, the Tata Power Trading Company Limited and the Tata Power Trading Corporation Limited, the working is available on page 40 the assessment order. while computing the net output of the CPPs, the AO has excluded the transmission loss which was considered by the assessee. It is pertinent to mention that during the course of hearing before the Bench, the Ld. AR of the assessee conceded the ground on the exclusion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ambuja Cements Ltd. [ITA.No. No. 3475/Mum/:2019 and ors.] (A.Y. 2011-12) The issue is discussed in Para 80-85, internal page 47-50. Perusal of the order shows that the issue is decided in favour of the assessee by placing reliance on Bombay High Court's decisions mentioned at Sr.No. a . The Relevant pages of the order are enclosed herewith for ready reference.(Enclosure) All the case laws are perused and it is observed that all the cases relied upon by the AR are pertaining to A.Ys prior to A.Y. 2009-10, ie. when the provisions of sub-section 6 of section 80 A was not on statute. Even in cases, wherein the AY involved happens to be post 2009-10,for example Mumbai ITAT's decision dated 29/11/2022 passed in the case of ACIT v. Century Textiles and Industries Ltd. [ITA No. 1886/Mum/2022 for AY 2010-11 (copy of the decision was filed by the Ld. AR on 09.01.2023during the course of hearing), the issue is decided in favour of the assessee by placing reliance on such decisions, wherein the Court had no opportunity to consider the provisions of section 80A(6) of the Act and its explanation. Reference is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon certain caselaws including those of the jurisdictional Tribunal and High Court, including, the decision of the coordinate bench in case of Reliance Industries (ITA 4361/M/12, order dated 12/04/2017), which was later approved by the Hon ble Jurisdictional High Court [2020] 421 ITR 686 (Bombay). 61. It is important to note here that the case of Reliance Industries (supra) pertains to AY 2009-10 along with other preceding assessment years. Accordingly, it has to be considered that the judicial authorities have taken into consideration all the relevant amendments, including 80IA(6). Further, it is relevant to reproduce the relevant portion of the decision from coordinate bench Order, wherein the ITAT has held as under: 17. The assessee had claimed the deduction u/s.80IA on power generation undertaking by adopting price which the industrial consumers paid during the year under consideration for electricity purchased from State Power Distribution Agency. However, the Assessing Officer has restricted the claim of deduction u/s.80IA to Rs.34,23,45,990/- by taking 16% return on capital base as per the parameters prescribed by the Regulatory Authorities i.e. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness in the manner hereinbefore specified presents. exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. (Explanation - For the purposes of this sub-section; market value , in relation: to any goods 'or services, 'means the price that such goods or services would ordinarily fetch in the open market.) A perusal of the said section reveals that where transfer of any goods or services by the eligible business to any other business carried on by the assessee is not recorded in the books of accounts of the eligible business at the market value of such goods or services as on date of the transfer, then for the purposes of the deduction, the profits and gains of such business is required to be computed as if the transfer has been made at the market value of such goods or services as on that date. As per the Explanation,' 'market value' in relation to the goods would mean the price that such-goods would ordinarily fetch in the open market. The proviso to subsection(8) of section 80IA would come into operation only' when in the opinion of the Assessing Officer; the computation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase value of electricity but the price of the electricity which the assessee can fetch in the open market. There being no open market for electricity during the period under review, the regulatory bodies fixed the price of electricity. He has further held that the tariff fixed for sale by the State. Power Distribution Agency for industrial consumers could not be called as market price as the regulatory fixes the tariff considering the wheeling charges, transmission loss due to leakage, past losses of the distribution agency, etc. In my opinion, the findings of the AO cannot be taken to be correct. Even though there may be 110 open market for the goods, an open market has to be presumed in respect of the goods in question in view of the categorical condition laid down in the provisions itself and the law laid down in this regard by the different Hon'ble Courts of the land and which have/been relied upon by the assessee in its submissions. The Assessing Officer has not brought any material to show that the price charged was not in consonance with the market value. The AO has also not suggested, leave alone computed as to what the market value of the goods should be. While the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the eligible business under the Act. To sum up under Sec. 80IA(8), the following conditions are required to be satisfied:- a) Any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee. b) The' consideration if any for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the. date of transfer, c) It is only when condition (b).is satisfied then the Revenue gets a right to determine profits and gains of such eligible business at the market value of such-goods or services. as on the date of its transfer. The Assessing Officer had considered the rate' charged by the State Distribution Agency as the market value of the goods 'transferred by the eligible business in the original assessment of the assessee, There is nothing on record to show as to how the value of the goods adopted/taken by the assessee do not correspond to the market value of such goods especially in light of the reasons given by the assessee. The Assessing Officer has also not expressed any opinion as to how the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the unit paid to TPC for purchase of power would be the best basis for working out the profits of the business of generation of power even after the order MERC. In this case, the assessee, other than using power generated from its own captive generating units, was also purchasing power from TPC. In the case of Jindal Steel Power Ltd. reported in 16 SOT 509 (Del), Hon 'ble Tribunal has held as follows Sec: 43A of the Electricity (Supply)Act,1948, lays down rules and conditions for determining the tariff for sale of electricity by a generating company to the State Electricity Boards. A perusal of the same reveals that the tariff is determined on the basis of various parameters contained therein: From the aforesaid, it is evident that on one hand it is only upon granting of specific' consent that a private person call set up a power generating unit having 'restrictions on the use of power generated and at the same time the tariff at which a power generating unit can supply power to the Electricity Board is also liable to 'be determined in accordance with the statutory requirements. In this context it can be safely deduced that determination of tariff betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness carried on by the assessee, or where any goods held for the purposes of any 'other business'. carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods as on the date of transfer, then for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer in either case, had been made at the market value of such goods as'on that date . The above concept of transfer pricing is also apparent in r. 7 of I T Rules, 1962 provided for determining the income from agricultural produces consumed by the agriculturist-assessee in his business as raw material. The rule provides that in the case' of income which is partially agricultural income and partially income chargeable as business income in determining that part which is chargeable to income-tax, the market value of any agricultural produce which has been raised by the assessee and utilized as a raw material in such business hall be deducted at the prevalent market val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted for sale by the captive power generating units of the assessee, such rate would be taken by the Assessing Officer for computing the profits of the eligible business, eligible for deduction u/s. 80IA. However, if the rate charged by the suppliers is the same as the rate adopted for sale by the captive power generating units of the assessee, such rate adopted should be accepted for the purpose of working out the deduction u/s.80-lA.Subject to the above, this ground or-appeal filed by the assessee is allowed. 19. We found that exactly similar issue has been considered by the Tribunal in assessee's own case for the assessment year 2006-07 therein issue has been decided in favour of the assessee. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal in assessee's own case, we do not find any infirmity in the order of CIT(A) for allowing assessee's claim of deduction u/s. 80IA with reference to power generating undertaking and the power so generated being used mainly for captive consumption. 20. Learned DR has relied on the decision of Calcutta High Court in the case of ITC Ltd., (2015) 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishment of Appellate Tribunal and for matters connected therewith or incidental thereto . 25. A look at the Statement of Objects and Reasons annexed to the bill, para 4 would indicate that the Act seeks to encourage private sector participation in generating, transmission and distribution of electricity and promoting competition and providing for newer concepts like power trading and open access. A copy of the statement of Objects and reasons is annexed herewith. Para 4(i) of the Objects and Reasons is particularly important and it reads as under: Generation is being delicensed and captive generation is being freely permitted. Hydro projects would, however, need approval of the State Government and clearance from the Central Electricity Authority which would go into the issues of dam safety and optimal utilisation of water resources. (Emphasis supplied). 26. Reference is invited to this para to show that captive generation is being freely promoted. With this background, it is necessary to see what is the scope and impact of the Electricity Act 2003. 27. Section 12 provides that no person shall transmit electricity or distribute electricity or undertake tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined by the Central Transmission Utility or the State Transmission Utility, as the case may be: Provided further that any dispute regarding the availability of transmission facility shall be adjudicated upon by the Appropriate Commission. (Emphasis Supplied) 30. Section 9 is a non-obstante clause and permits any person to construct, maintain or operate a Captive Generation plant and dedicated transmissions lines. A bare perusal of section 9(1) would indicate that there is no restriction whatsoever on a person in respect of Captive Generation plant. It is neither required to obtain a licence under section 7 or under section 12 as a generating company if it consumes power within itself. In other words, a Captive Generation Plant does not need to apply for licence under this Act if it complies with the technical standards relating to connectivity with the grid referred to in clause (b) of section 73. 31. The reason for excluding a Captive Generation plant from any of the technical standards for construction of electricity plants relating to connectivity with the grid, is because a person can, without a licence, construct, maintain and operate a Captive Genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other words, according to the Calcutta High Court, the regulated selling price by a third party to the assessee annot form the selling price by a Captive Generation plant. Whilst this is the absolutely correct and true, it is wholly irrelevant in context of Electricity Act, 2003. In a much as under the Electricity Act 2003, when the Captive Generation plant notionally sells electricity to itself, there is no regulation in respect of market price. In this connection, the decision of Supreme Court in the case of Thiru Arooran Sugars Ltd. v. CIT (1997) 227 ITR 432 is material. In that case, the assessee company was a manufacturer of sugar which purchased sugarcane from the market for crushing. It also had its own cane fields where it cultivated sugarcane, which was entirely consumed by its factory. Since the profit made by the assessee from the sale of sugar arose out of agricultural activities as well as manufacturing activities, the income earned by the assessee was required to be divided into two parts. No tax was leviable on agricultural income, but the profit generated from non-agricultural activities was leviable to be taxed under the Act. Therefore the agricultural income had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the purchase was at a price controlled by the Sugarcane Control Order or not is quite immaterial. There was a price at which sugarcane could ordinarily be purchased by the assessee for the purpose of its own business. The price paid by the assessee was the market price. It is by now well-settled that market does not have to be one open place of business where buyer and seller congregate (Emphasis Supplied). 37. According to the Supreme Court, it is not necessary that there must be an actual market where buyers and consumers congregate to purchase and sell Goods Where there is no such open market, an estimate of the market price will have to be done on an estimated hypothetical basis. It stated at page 440, para (f) of 227 ITR 432. The principle that value of a property will be the price which it will fetch if sold in the open market is a well-known method of valuation which has been adopted in a large number of statutes in England and also in India. It is well-settled that existence of an open market is not a pre-condition for application of this principle. There may or may not be an actual market where buyers and sellers congregate to purchase and sell goods. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd (GEB). It is not relevant whether that price was controlled or not. If the price at which the GEB supplied as controlled then that would be the market price vis-avis the assessee. Accordingly, the price charged by GEB should be adopted as market price. Therefore, the decision of Supreme Court in ThriuArooran Sugars completely covers the situation of the assessee. 40. The Supreme Court at page 441 has stated as under: These are the principles universally applied to find out the price at which the goods are ordinarily sold in the open market. For determination of market value, there is no pre-requisite that an open market where buyers and sellers congregate to buy and sell goods must exist. In the instant case, the assessee-company actually bought sugarcane from a large number of growers year after year in the ordinary course of business. The price at which it buys sugarcane must/be taken to be the market price. If the price is controlled by Sugarcane Control Order, the controlled price will be taken as the market price because it is at this price that a willing buyer and a willing seller are expected to transact business. As Lord Denning pointed out, it does not make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere are similarly provisions in Section 61 so that the distribution licensee can derive reasonable return. There is thus an in-built mechanism to ensure permissible profit both to the generating companies and the distribution licensees ..... 45. This conclusion is indisputable as applicable to licenced generating companies selling in the market but has no application to a 'captive generating plant' as much as there is no tariff fixed by Tariff Regulation Commission for self consumption. Therefore, the open market for sale of electricity by a licenced generating company and the open market which must be assumed for consumption of electricity by the generating producer itself are two different markets and the market price for self consumption and the market price for sale by the licenced generating companies to outsiders are two different prices. The Electricity Act, 2003 contemplates determination of market price only in respect of licenced generating companies willing to distribute or transmit power to a distribution licensees or to a consumer and it is only those generating companies which are regulated under section 42(2). The self consumption of electricity by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(1) above. Hence for supply of power by a captive power plant to the captive users or to open access consumers, it is not required to get the tariff approved by the commission as stated in section 86(1)(a) of the Electricity Act, 2003. 49. Therefore, the decision of the Calcutta High Court cannot be applied to the acts of the assessee in as much as it was delivered in respect of A Y 2002-03 for which the Electricity Act 2003 did not apply and also for the reason that the Honourable Court has not considered the provisions of sections 8, 9, 42 and 2(g) of the Electricity Act, 2003. Further the provisions of section 62 of the Electricity Act, 2003 referred to by the Honourable Court are not applicable to the fact of the assessee's case. 50. The Calcutta High Court has dissented from the decision of three different High Court as follows: 1. The decision of Chattisgarh High Court Bilaspur Bench in the case ofACIT v. Godavari Power Ispat Ltd. - 223 Taxman 234. 2. CIT v. Kanoria Chemicals and Industries Ltd 35 taxmann.com (Cal). 3. CIT v. Graphite India Ltd ITA No ITA No 733 of 2008 (Cal). 4. Madras High Court decision referred to in page 12 (Cita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Co. Ltd - 89 ITR 236 (SC) In view of the above discussion, the Calcutta High Court can have no application to the assessee's case. 56. In view of the above, we respectfully follow the order of the Tribunal in assessee's own case and confirm the order of CIT(A). 62. It is observed that above decision was upheld by Hon ble Bombay High court in 421 ITR 686 and observed as under: Question (c) pertains to the dispute between the department and the assessee regarding the rate at which the electricity generated by one unit of the assessee-company and provided to the another be valued. The assessee contended that such valuation should be at the rate at which the electricity distribution companies are allowed to supply electricity to the consumers. The revenue on the other hand argues that the appropriate rate should be the rate at which the electricity is purchased by the distribution companies from the electricity generating companies. 5. This controversy arose in the background of the fact that the assessee had set up a captive power generating unit and claimed deduction under Section 80IA of the Income Tax Act, 1961 ( the Act for short) in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue market value. The Assessee gave explanation that the rates determined by the MERC do not reflect the correct market rate. The finding is that the mode of computation and deduction under Section 80IA requires no deviation from the past. The findings of fact and to be found in paragraphs 42 to 50 also reflect that the very issue came up for consideration for the Assessment Year 2003-2004. For the reasons assigned by the ITAT and finding that the attempt is to seek reappreciation and reappraisal of the factual data that we come to a conclusion that even question (d) as framed is not a substantial question of law. 8. Thus, the issue at hand had been examined by this Court on earlier occasion and the view of the Tribunal under similar circumstances was approved. 9. Additionally, we also notice that similar issue came up for consideration before Chhattisgarh High Court in case of CIT v. Godawari Power Ispat Ltd. [2014] 42 taxmann.com 551/223 Taxman 234, in which the Court held and observed as under: 31. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed. 11. Judgment of Calcutta High Court in case of CIT v. ITC Ltd. [2016] 236 Taxman 612/[2015] 64 taxmann.com 214 was also brought to our notice in which the said High Court has taken a different stand. However, since the issue has already been examined by this Court earlier and in view of the decisions of the Chhattisgarh and Gujarat Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasing same from State Electricity Board (SEB) - Assessee had determined ALP of said specified domestic transactions at rate ranging from Rs. 7.66 per unit to Rs. 7.87 per unit which was Average Annual Landed Cost (AALC) at which non-eligible unit procured power from SEB - Thus, assessee followed internal CUP for benchmarking specified domestic transactions of transfer of power from SEB by taking non-eligible units as tested party in TP Study Report and, accordingly, ALP of power captively consumed had been benchmarked at ALC of power purchased by tested party from SEB - Assessee had also duly reported these transactions in audited report in Form 3CEB - However, TPO opined that average rate of Rs. 3.47 per unit calculated on basis of sale data of power by independent CPPs/IPPs as determined by various tariff orders would be ALP of domestic specified transactions and, accordingly, made an upward adjustment - It was noted that CPPs benchmarked transactions with non-eligible units at a rate at which power was supplied by SEB to non-eligible units and, therefore, was prevailing rate at which power had been supplied by SEB to other parties/factories located in same geog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to verify the working as submitted by Ld AR before us and directed to consider the market value of power sold by CPP units at the Electricity rate at which CMM units at different location is purchasing electricity from SEBs as held/discussed by various courts including decision of coordinate bench in the case of Reliance Industries Limited and Ambuja Cement Limited referred supra. Accordingly, this ground of appeal is allowed for statistical purpose. 82. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.2011-12 is respectfully followed, accordingly, ground raised by the Revenue is dismissed. 83. In Ground No. 7, Revenue has raised the following grievance: - 7. On the facts and in the circumstances of the case in law the ld. CIT(A) erred in directing the assessing officer that auditor's fee and director's remuneration (indirect expenses) should not be apportioned for computing deduction u/s 80IA of the Act. 84. This ground of appeal is similar to Ground No. 5 of grounds of appeal raised by the assessee for the A.Y. 2013-14 and the decision taken therein shall apply mutatismut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option and based on specific needs of the business entity within the group. Accordingly, it was almost impossible to find independent comparables for these services as they are made available only to group entities, and are, without exception, confidential in nature. Hence, TNMM was considered the MAM for determining the ALP of this transaction. In support of this, the assessee furnished the financial statements of the AE for the year 2012 which reflected a meagre margin of 3.25% earned by the AE on its total cost as against an average of 12.84% margin earned by comparable companies on their total cost. The TPO has rejected such working of Assessee and observed that 8,000 man hours would be considered reasonable for providing these services referred in the invoices furnished, and a cost of ₹. 10,000/- per man hour was determined at arm s length man hour cost. Thus, TPO has worked out cost of service rendered by AE to assessee at ₹.8,00,00,000/- and made adjustment of ₹.23,21,01,267/- (₹.31,21,01,267 less ₹.8,00,00,000). 88. This upward adjustment made by TPO is deleted by CIT(A) as under: 20.4 Decision: I find from the order that the TPO has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, based on the decision of the Hon ble Bombay High Court, respectfully following judicial discipline, the ground is allowed and the adjustment is deleted . 89. The department has filed appeal against above finding of Ld.CIT(A). During the course of hearing, Ld.DR has mainly relied upon TPO s order and on the other hand, Ld.AR has relied upon decision of Ld.CIT(A) as referred supra and argued that arbitrary addition should be deleted more particularly when no such adjustment is made in earlier years on similar facts. 90. Considered the rival submissions and material placed on record. It is an undisputed fact that assessee has availed identical services from its AE in earlier assessment years. During the course of hearing, Ld AR has drawn attention to the fact that there has been no adjustment for the previous AYs 2007-08 to AY 2012-13 while passing the assessment order and this fact is not rebutted by Ld.DR during the course of hearing. The assessee has been consistently following TNMM method for determining the ALP of this transaction and same has not been disputed by TPO in earlier years. It is relevant to refer to decision of Hon ble Bombay High court in the case of PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 of the impugned order of the Tribunal and on its reading we are of the view that the same is a finding of fact based on appreciation of evidence. Thus, no interference is warranted. 91. The facts of the case discussed herein above are similar to Assessee s case hence ratio of such decision is squarely applicable. 92. On perusal of TP order, it is observed that TPO did not apply any method or did not present any comparable agreements based on which man hours or costs was estimated. The TPO proceeded to arbitrarily decide, without any explanation or details whatsoever, and without reference to the actual transaction or services rendered, that 8,000 man hours would be considered reasonable for providing these services referred in the invoices furnished, and a cost of ₹.10,000/- per man hour was determined at arm s length man hour cost. The TPO has in fact not disputed that services were rendered by AEs. It is relevant to refer to decision of coordinate bench in the case of Brinks India Private Limited v. DCIT in ITA No 5462/MUM/2018(A.Y.2014-15) dated 12/01/2023 wherein it is held as under: 5. We have heard the rival submissions and perused the relevant materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case, the TPO has summarily rejected the TNMM followed by the assessee in respect of management fees paid/payable by it to its AE and proposing an adjustment under CUP without benchmarking with comparable uncontrolled transactions. Also the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts of the case. In view of the above factual scenario and position of law, we delete the addition of Rs.3,83,75,622/- made by the AO as adjustment on account of transfer pricing. 6. In the result, the appeal filed by the assessee is allowed. (Emphasis Supplied) 6. On perusal of the above order of the Tribunal, it is apparent that for the Assessment Year 2012-13, the TPO had made transfer pricing adjustment by determining ALP of Management Fee at INR 22,50,000/- (750 hours x INR 3,000/- per hour) by using CUP Method, and while doing so the TPO made an adhoc unilateral estimation by assuming that around 750 hours would have been spent for providing the aforesaid services for which remuneration of INR 3,000/- per hour was appropriate.The Tribunal deleted the addition holding that the TPO had resorted to an adhoc unilateral pricing of the Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to allowed the objection filed by the assessee. Hence, we decide both the questions mentioned in para No 17 (supra) in negative and further hold that the assessment order passed by the AO pursuant to the directions passed by the Ld DRP u/s 144(5) of the Act, is not sustainable in law. (Emphasis Supplied) 8. In the case before us pertaining to Assessment Year 2013-14, the TPO has determined the ALP of the transaction without following any of the prescribed methods. The transfer pricing adjustment has been made by estimating the man hours (at 750 hours) and the cost of service per hour (at INR 3000/- per hour). Identical approach adopted by the TPO stands rejected by the Tribunal in the above said decisions including in the case of the Appellant for the Assessment Year 2012-13. Thus, respectfully following the above decisions of the Tribunal, we delete the transfer pricing addition of INR 7,83,82,267/-. Ground No. I (1. to 3.) is allowed, whereas all the other grounds are disposed off as being infructuous. 9. In the result, the present appeal preferred by the Assessee is allowed. No contrary decision /facts have been brought to our notice, thus, on parity of facts followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, not applied the CUP method to determine the arm s length price of the transaction, there is no reason to reject the TNMM method applied by the assessee. The Hon ble jurisdictional High Court in the case of Johnson Johnson Ltd. (supra) while dealing with the issue of determination of arm s length price of royalty on estimation basis by the TPO held as under:- (d) We find that the impugned order of the Tribunal upholding the order of the CIT (A) in the present facts cannot be found fault with. The TPO is mandated by law to determine the ALP by following one of the methods prescribed in section 92C of the Act read with Rule 10B of the Income Tax Rules. However, the aforesaid exercise of determining the ALP in respect of the royalty payable for technical knowhow has not been carried out as required under the Act. Further, as held by the CIT (A) and upheld by the impugned order of the Tribunal, the TPO has given no reasons justifying the technical knowhow royalty paid by the Assessing Officer to its Associated Enterprise being restricted to 1% instead of 2%as as claimed by the respondent assessee. This determination of ALP of technical knowhow royalty by the TPO was ad-h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprise. 22. Section 92C(1) of the Act, contemplates that the arms length price in relation to an international transaction shall be determined by comparable uncontrolled price method; resale price method; cost plus method; profit split method; transactional net margin method or such other method as may be prescribed by the Board. Hence, the TPO is bound to determine the ALP by following one of the prescribed methods, however, we notice that in the present case the Ld. TPO has not followed any prescribed methods and made the transfer pricing adjustment by estimating the man hours and the cost of service per hour. We therefore, find merit in the contention of the Ld. counsel that any ad-hoc determination of arms length price by the Ld TPO u/s section 92 de-hors section 92C(1) of the Act cannot be sustained. The contention of the Ld. counsel is further supported by the judgment of the Hon ble jurisdictional High Court in the case of Commissioner of Income Tax vs. Merck Ltd. 389 ITR 70 (Mum). In the said case the Hon ble High Court decline to interfere with the findings of the Mumbai Bench of the Tribunal that the transfer pricing adjustment made by the TPO without following on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the method adopted by the Revenue to determine the ALP was alien to the methods prescribed under Section 92C of the Act. In the above circumstances, the Tribunal declined to restore the issue to the Assessing Officer for re determining the ALP by adopting one of the methods as listed out in Section 92C of the Act. This finding of the Tribunal has also not been challenged by the Revenue. 11. In view of the fact that the Revenue has accepted the order of the Tribunal on its findings on facts on the two issues as pointed out hereinabove as well as the refusal of the Tribunal to restore the issue of determination of ALP to the TPO by following one of the methods prescribed under the issue of determination of ALP to the TPO by following one of the methods prescribed under Section 92C of the Act. Thus, the question as formulated for our consideration even if answered in favour of the Revenue would become academic in the present facts. Thus, we see no reason to entertain this appeal. However, we make it clear that the issues of law which has been raised in the present appeal are left open for consideration in an appropriate case. 25. In view of the judgment of the Hon ble j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ength principle. 96. The above referred adjustment made by TPO was deleted by Ld CIT(A) as under: I have gone through the detailed written submission by the appellant and the relevant paragraphs of the TPSR. I find that the payment to AE mainly relate to the following: Technical services in respect of aggregate and construction business under an agreement dated 01.01.2011 Participation costs in seminars Licence fee for Ariba Software a procurement software Reimbursement of travel expenses, training charges, hotel expenses The TPSR gives details of services received and also the benefits expected therefrom. The scope of services is also laid out in the agreement. The Ld TPO has considered the ALP to be NIL on the ground that no evidence of rendering of service has been produced. I find that the TPSR produces enough detail of the nature of the service and the benefits. In case of reimbursement of participation costs and license fees, these are merely in the nature of reimbursement of costs. I therefore do not find merit in the conclusion arrived at by the Ld TPO that the ALP is NIL. The Ld TPO has not provided any alternative benchmarking. No record is ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has provided major break up of such expenditure which mainly consist of Payment of ₹.2,39,51,772 to Holcim Services (Asia) Ltd was towards actual support in a key business area (RMX or Concrete) of the Assessee and Payment of ₹.1,04,00,076 to various AEs represented business expenses incurred by the various AEs on behalf of the Assessee, in the nature of reimbursement of actual expenses without any margin. During the course of hearing, Ld AR has stated that invoices and documents furnished before TPO clearly demonstrate that these services were rendered / received and that there was no finding that no services were actually received nor there is any finding that such expenditure is not for the purpose of business. This fact is not contravened by Ld DR during the course of hearing. The finding given by Ld CIT(A) clearly supports the argument of Assessee. The Assessee has already submitted sufficient evidences to prove that actual services of AEs were taken by Assessee which mainly includes reimbursement of participation costs and license fees and actual support in a key business area (RMX or Concrete) of the Assessee and same is supported by terms of an agreement signe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marking or comparables but only states that the appellant has not produced enough evidence to justify rendering of the service in a third party situation. I find merit in the contention of the appellant any adhoc adjustment without any analysis of methods or benchmarking is not acceptable as per law. I also find that the TPSR provides in detail the nature of service provided by the AE, that are in the nature of IT support and management support. The submissions of the appellant also give in detail the nature of IT support provided by the AE. On a perusal of the Financial statements of the AE, the operating margin earned by the AE is 10.02% as against 10.28% of comparable companies as per the benchmarking process. I find no reason why the benchmarking should be rejected. I therefore allow this ground of appeal in favour of the appellant 102. The department has filed appeal against above finding of Ld.CIT(A). During the course of hearing, Ld.DR has mainly relied upon TPO s order and Ld.AR has relied upon decision of CIT(A) as referred supra and argued that arbitrary addition should be deleted . 103. Considered the rival submissions and material placed on record. It is obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of provision for normal and additional gratuity while computing the book profit u/s.115JB of the Act. 83. The Assessing Office has dealt with this issue at Para No. 23 of his order and observed that as assessee has not established that Gratuity provisions are made towards ascertained liabilities, same are added back while computing total income. This issue is dealt by Ld.CIT(A) at Para No. 22.6 of his order as under: 22.6 As the Ld.AR has brought to my notice that this issue has been decided by the ITAT, Mumbai in the case of the Assessee in AY: 1990-91 following the decision of the Bombay High Court in the case of Echjay Forgings P Ltd (surpa). Further my predecessors have decided the issue in favour of the Assessee in AYs: 1998-99, 2003-04 and 2004-05. Since the issue is the same, I follow these decisions and allow the appeal. 84. Against the observation of Ld.CIT(A), department has filed this ground in this appeal. Before us, Ld. AR has relied upon appellate order passed in its own case for A.Y. 2002-03 to 2004-05 and contended that no such adjustment is required to be made. On the other hand, Ld. DR has relied upon finding given by Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. 14.3.5. Respectfully following the decision of the co-ordinate Bench of the Tribunal in the case of the Assessee for the Assessment Year 1990- 91 (ITA No. 2361/Mum/1995), Assessment Year 2002-03 (ITA No. 4987/Mum/2007 others) and Assessment Year 2003-04 (ITA No. ITA. No. 5259 4895/Mum/2007 Assessment Year: 2004-05 4242/Mum/2007), we confirm the order of CIT(A), and hold that provision for Normal/Additional Gratuity of INR 5,86,82,751/- is in the nature of provision for an ascertained liability and is, therefore, not required to be added back while computing Book Profits in terms of Clause (c) of Explanation 1 to Section 115JB(2) of the Act. Accordingly, Ground No. 9 raised by the Revenue is dismissed. 86. Respectfully following decision of coordinate bench referred supra, addition of provision for gratuity made while computing book profit u/s 115JB is deleted. Accordingly, this ground of appeal in Departmental Appeal is dismissed . 108. Respectfully following the above decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of CIT Vs HCL Comnet Systems Services Ltd, 305 ITR 409 will also support the issue. My decision in the earlier ground also will be relevant in this regard. 79. Against the observation of Ld.CIT(A), department has filed this ground in this appeal. Before us, Ld. AR has relied upon appellate order passed in its own case for A.Y. 2002-03 to 2004-05 and contended that no such adjustment is required to be made. On the other hand, Ld. DR has relied upon finding given by Assessing Officer and argued that order of Assessing Officer may be restored. 80. Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee s own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided issue in its favour. The relevant finding is reproduced herein below: 14.2.3. Revenue is in appeal, challenging the relief granted by CIT(A). We have heard the rival contentions and perused the record. While the Departmental Representative relied upon the assessment order, the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities and relied upon the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT Vs. Echjay Forgings (P) Ltd. (2001) 251 ITR 15 (Bom) and JCIT Vs. Usha Martin Industries Ltd. (2007) 104 ITD 249 (Kolkata Tribunal) SB. We also noticed that the matter of controversy has been adjudicated by CIT(A) for the A.Y. 1998-99 also and against the said decision, the revenue is not in appeal. It is reiterated that the adjustment can only be made in view of Section 115JB of the Act which has been specified in Explanation to Section 115JB of the Act. In view of the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. (Emphasis Supplied) 14.2.6. In view of the above, we confirm the order of CIT(A) and hold that provision for Wealth-Tax of INR 70,00,000/- is not required to be added back while computing Book Profits under Section 115JB of the Act. Accordingly, Ground No 8 raised by the Revenue is dismissed. 81. Respectfully following the decision of coordinate bench referred supra, addition of provision for wealth tax made w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of provision for additional gratuity in computing book profit has been deleted by the IT AT, in the Assessee s own case for 1990-91, relying on the decision of the Bombay High Court in the case of Echjay Forgings Pvt Ltd, (supra). Further this issue has been decided by my predecessor in AYs:2003-04 and 2004-05 in favour of the Assessee. Following these decision the appeal is allowed. 89. Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee s own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided this issue in its favour. The relevant finding is reproduced herein below: 14.4.4. We have considered the rival contentions and perused the material on record. We note that the CIT(A) has granted relief to the Assessee by following the judgment of the Hon ble Supreme Court in the case of Bharat Earth Movers (245 ITR 528), and the Hon ble Bombay High Court in the case of CIT v. EchjayForgins (P) Ltd. (2001) 251 ITR 15. We do not find any infirmity in the order passed by the CIT(A) to the extent it holds that provision for Leave Encashment of INR 3,26,00,238/- is in the nature of provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is concerned, the relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has availed excise duty exemption, amounting to Rs 46,83,11,376, in respect of their Darlaghat Unit, HP, and it was claimed as a capital receipt in nature. It was also noted that in terms of general Exemption No, 51 (Notification No. 50/2003 dated 10th June 2003) the assessee is entitled to 100% excise duty exemption for a period of ten years in respect of its cement manufacturing plant at Darlaaghat. The assessee s submission was that this exemption was in response to the announcement made by the Hon ble Prime Minister to the effect that tax and central excise concession are made to attract investments in the industrial sector for special category states, including Uttarakhand. The Assessing Officer noted that though it is apparent from the excise notification that exemption is granted for only those units which are located in the backward areas and which have undertaken substantial expansion, however incentives are available only post production and therefore he finds no difference in sales tax and excise exemption c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the learned Counsel for the parties on this question, we notice that, the Government of Gujarat Sales Tax Incentive Scheme was envisaged to promote large scale investments in the Kutch District since on account of devastating earth-quake, development of the district had suffered. The Scheme envisaged that, the same was confined only with the Kutch District. Similar, being the purpose and philosophy of the Government of India, while granting excise duty exemption, we may not separately take note of the background thereof. In view of these facts, the question arises is - whether the Tribunal was justified in holding that Sales Tax and Excise duty exemption enjoyed by the assessee under the said subsidy scheme, was not taxable as revenue receipt. Such and similar issue has came up before different High Courts and Supreme Court on the numerous occasions. Reference to all those judgments would be un-necessary. However, the principle that has evolved is that, not the nomenclature of the subsidy or the fact that, the computation of the subsidy benefit is in terms of tax payable, would not be conclusive. What is to be examined in each case is the purpose for granting such subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct multiplex theatre complexes, the idea being that exemption from entertainment duty for a period of three years and partial remission for a period of two years should go towards helping the industry to set up such highly capital intensive entertainment centres. This being the case, it is difficult to accept Mr. Narasimha's argument that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post construction, that is when cinema tickets are actually sold. We hasten to add that the object of the scheme is only one - there is no larger or immediate object. That the object is carried out in a particular manner is irrelevant, as has been held in both Ponni Sugars and Sahney Steel. 8. In the present appeal also, as noted, the subsidy was granted under schemes framed by the State and the Central Government, to be given to the assesses who set up new industry in Kutch District. The scheme was envisaged to encourage investment which would in turn, provide fresh em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to have balanced growth of industry in different regions. However, as pointed out above, entrepreneurs were reluctant to set up industries in backward areas. These areas were identified as backward because there was un-development or underdevelopment of industries in these areas. It was, therefore, that the Government decided to give financial incentives to encourage and induce entrepreneurs to move to backward areas and establish industries there so that the region may develop and promote the welfare of the people living in that region. One of the incentives which the Government decided to grant was cash subsidy so that entrepreneurs could utilize such cash subsidy for any purpose connected with the establishment of industries in the backward areas. Once the decision to give cash subsidy was taken, the Government had to work out some method to determine the quantum of such subsidy. In other words, the question as to how the amount of cash subsidy should be determined had to be considered by the Government. The Government, in order to determine the amount of cash subsidy, decided to follow one of the recognized methods of working it out on the basis of the amount invested by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat High Court in CIT v. Swastik Sanitary Works Ltd. [2006] 286 ITR 544. It was a case in which, the Government subsidy was intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries. In such a case, specified percentage of the fixed capital cost, which was the basis for determining the subsidy, would be granted. The Court held that, such basis for determining the subsidy was only a measure adopted under the scheme to quantify the financial aid and it was not a payment, directly or indirectly to meet any portion of the actual cost of acquisition of capital asset. It was held and observed as under: ' In so far as question No.2 is concerned, this court finds that the same is squarely covered by the decision of the Supreme Court in CIT v. P. J. Chemicals Ltd., [1994] 210 ITR 830. In the said case, after review of the law on the point, the Supreme Court has held as under (head note): Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend income in computing Book Profit u/s. 115JB of the Act (Rs.1,16,00,000/-).. 125. With regard to Ground No. 13 which is in respect of disallowance u/s. 14A while computing book profit u/s. 115JB, Ld.DR relied on the order of the Assessing Officer. 126. On the other hand, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this Tribunal in assessee s own case for the A.Y.2008-09 in ITA No. 6638/MUM/2018 dated 28.02.2023 and decided the issue in favour of the assesse and against the department. 127. Considered the rival submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee in the A.Y.2008-09. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 6638/MUM/2018, held as under: - 51. In the Ground No.13, Department has raised the following grievance: Whether, on the facts and in the circumstances of the case in law the Id. CIT(A) was right in deleting the disallowance of interest made under rule 8D(ii) u/s 14A of the Income Tax Act, 1961. 52. On identical issue in Assessee s appeal, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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