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TMI Blog2024 (3) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for deduction under section 80IAB. Decided against revenue. Lease rent claimed for deduction u/s 80IAB - AO disallowed claim on the ground that the said income does not have any nexus with the business of the assessee - CIT(A) overturned the findings returned by the AO holding that lease rent income received by the assessee is an income from business and eligible for deduction under section 80IAB - HELD THAT:- Bare perusal of the findings returned by the Ld. CIT(A) goes to prove that this issue is no longer res-integra having already been decided by the Tribunal in assessee s own case in A.Y. 2010-11 2011-12 [ 2019 (6) TMI 1370 - ITAT MUMBAI] whereby income derived by the assessee from the lease rental has been held to be eligible as business income for the purpose of deduction under section 80IAB of the Act. So finding no illegality or perversity in the impugned findings ground No.3 raised by the Revenue is hereby dismissed. Nature of receipt - Grant received from Government of Maharashtra towards the repair and maintenance of airports - revenue or capital receipt - A.Y. 2012-13 - HELD THAT:- This issue is no longer res-integra having already been decided by the Tribunal in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be a state only for the purpose of receiving grant-in-aid from the state government as a special planning authority and collecting the development charges from various lessees/unit holders in Multi- Model International Passenger and Cargo Hub Airport at Nagpur' (MIHAN) area are to be used for development of the land acquired by the assessee company with the grants-in-aid provided by the state government and as such is also a statutory function. Because without developing the land purchases with grant-in-aid received from the state government, which ultimately vests in the state government the purpose of providing public amenities as prescribed under the scheme of the Act cannot be fulfilled. CIT(A) has erred in treating these development charges which are inextricably linked to the development of the project under the scheme, akin to the lease rental/usage charges. So the findings returned by the Ld. CIT(A) are hereby set aside and the AO is directed to delete the addition made by the AO and confirmed by the Ld. CIT(A). Disallowance u/s 14A r.w.r. 8D - as argued there is no exempt income and own funds of the assessee are far more than the investment made by the assessee du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccess of airport project being executed by the assessee company on behalf of the state government and as such it cannot be treated as income. So the same is ordered to be treated as revenue in nature as claimed by the assessee. Disallowance of Loss in respect of power distribution and water supply activities - CIT(A) has considered the losses due to water evaporation - HELD THAT:- As not in dispute that no company will deliberately decrease its profit. Main cause as brought on record by the assessee has been duly perused by the Ld. CIT(A) for loss on account of distribution of water is underutilization of water supply which led to low sale and it has increased the losses. It is also not in dispute that sometimes a purchaser has no option except to purchase the electricity at the higher cost and there has to be energy loss due to transmission distribution and scheduling losses. Similarly so far as water losses are concerned it is a proved fact on record that the assessee has not fully utilized the installation capacity of water supply which has become the main cause of losses for which cost has to be incurred to procure the same. Moreover, when the AO has not disputed the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athy S, Accountant Member For the Assessee : Shri Rushabh Mehta, A.R. For the Revenue : Smt Sanyogita Nagpal, D.R. ORDER PER BENCH: Aforesaid cross appeals filed by M/s. Maharashtra Airport Development Company Ltd. and Dy/Asst. Commissioner of Income Tax-(3)(2)(1), Mumbai bearing common question of law and facts pertaining to A.Y. 2008-09, 2012-13, 2013-14 2014-15 are being disposed of by way of composite order in order to avoid repetition of discussion. 2. Appellant M/s. Maharashtra Airport Development Company Ltd. (hereinafter referred to as the assessee) and appellant Dy/Asst. Commissioner of Income Tax-(3)(2)(1), Mumbai (hereinafter referred to as the Revenue) by filing aforesaid cross appeals sought to set aside the impugned orders dated 18.10.2018, 27.02.2017, 01.09.2017, 01.09.2017 13.12.2018 passed by Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] qua the assessment year 2008-09, 2012-13, 2013-14, 2014-15 2015-16 respectively on the grounds inter-alia that :- Grounds of Assessee ITA No.521/M/2019 (A.Y. 2008-09) 1. That in view of the facts and circumstances of the case the Assessing Officer has erred in law and on facts in assessing the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, CIT(A) has erred in not appreciating that the Grant in Aid given by state government is for specific purpose and same has been spent for that specific purpose. 4. That in view of the facts and in the circumstances of the case, CTT(A) has erred in not appreciating that the Appellant is a Special Planning Authority appointed under section 40(1)(b) of The Maharashtra Regional and Town Planning Act, 1966 the development charges collected by virtue of section 1240 of MRTP Act, 1966 is for specific purpose the same shall be utilized as per the provisions of Section 1241 of MRTP Act, 1966. 5. That the addition/disallowance made are illegal, unjust and bad in law and are based on mere surmises and conjunctures and the same cannot be justified by any material on record hence the entire addition should be deleted. That the additions/disallowances made are also highly excessive. 6. That the evidence filed and materials available on record have not been properly construed and judiciously interpreted, hence the addition/ disallowance made is uncalled for. 7. The Appellant craves leave to add, to alter to amend the above Ground of Appeal at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me u/s. 80IAB? 2. Whether on the facts and in the circumstances of the case and in law, the decision of the Ld. CIT(A) is not perverse in directing the AO in para 3.1.4 of his order to allow deduction u/s. 80IAB of the IT Act 1961 to the assessee on interest of Rs. 2,92,88,967/- received from Contractors without appreciating that such deduction u/s. 80IAB had already been allowed to the assessee by the Assessing Officer in his order giving effect to the ITAT's order dated 24.08.2017, thereby resulting in double relief to the assessee? 3. The appellant prays that for this and other reasons it is submitted that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. ITA No.3704/M/2017 (A.Y 2012-13) 1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in holding the income of 0.3, 9 ,28,138/ being Interest on Advance given to Developers as 'Income from Business' eligible for deduction u/s. 80IAB of the I.T.Act, 1961 instead of 'Income from Other Sources' as held by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred for earning such exempt income which was later clarified in the CBDT Circular No.5 of 2014 dated 11/2 / 2014 laying down the condition that it is not necessary that exempt income should necessarily be included in a particular year's income for the disallowance u/s. 14A of the I.T. Act, 1961 to be triggered. 7. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance u/s. 14A to the book profit u/s. 115JB of the I.T. Act, 1961 ignoring the decisions of the Hon'ble ITAT, Mumbai in the case of M/s. Viraj Profiles Ltd. in ITA No.4439/Mum/2013 dated 21/10/2015 46 ITR(T) 626 (Mumbai - Trib.)/[2016] and in Ferani Hotels Pvt. Ltd. in ITA No.857/Mum/2013 dated 17/11/2014. 8. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 9. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. ITA No.7258/M/2017 (A.Y. 2013-14) 1a. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in restoring the issue to the file of the AO with direction to ascertain whether FDs are made out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,83,130/- u/s. 14A r.w.r. 8D without appreciating the fact that the amount of disallowance u/s. 14A of the I.T. Act, 1961 has to be computed as per Rule 8D of I.T. Rules, 1962 as held in the order of the Hon'ble High Court in the case of M/s Godrej Boyce Manufacturing Co. Ltd.? 6. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs. 17,83,130/- u/s. 14A r.w.r. 8D since no dividend income is received without appreciating the fact that section 14A provides for disallowance of expenditure incurred in relation to and not incurred for earning such exempt income which was later clarified in the CBDT Circular No.5 of 2014 dated 11/2 / 2014 laying down the condition that it is not necessary that exempt income should necessarily be included in a particular year's income for the disallowance u/s. 14A of the I.T. Act, 1961 to be triggered? 7. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance u/s. 14A to the book profit u/s. 115JB of the I.T. Act, 1961 ignoring the decisions of the Hon'ble ITAT, Mumbai in the case of M/s. Viraj Profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) was right in restoring the issue to the file of the AO with direction to ascertain whether FDs are made out of the surplus funds or out of the borrowed funds of the assessee and if so, the interest from FDs should be held as business incme and should be included while allowing deduction u/s. 80IAB of the I.T.Act, 1961. 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in directing the AO to allow deduction u/s. 80IAB of the I.T.Act, 1961 on interest on Fixed Deposits relying on its own decision in the case of the assessee for A.Yrs. 2011-12 2012-13 without appreciating the fact that for the year under consideration, the assessee had neither claimed any deduction u/s. 80IAB of the I.T.Act, 1961 and nor filed the Form No.10CCB claiming such deduction while filing the return of income. 3a Whether on the facts and in the circumstances of the case the Hon. Income Tax Appellate Tribunal was right in holding that the interest of Rs. 2,13,16,880/- received by the assessee from Developers, on advances, was business income and deduction u/s. 80IAB was allowable on the same as per provisions of the I.T.Act, 1961? 3b Whether on the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f I.T.Rules, 1962 as held in the order of the Hon'ble High Court in the case of M / s Godrej Boyce Manufacturing Co. Ltd. 7. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 12,60,575/- u/s. 14A r.w.r. 8D since no dividend income is received without appreciating the fact that section 14A provides for disallowance of expenditure incurred in relation to and not incurred for earning such exempt income which was later clarified in the CBDT Circular No.5 of 2014 dated 11/2 / 2014 laying down the condition that it is not necessary that exempt income should necessarily be included in a particular year's income for the disallowance u/s. 14A of the I.T.Act, 1961 to be triggered. 8. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance u/s. 14A to the book profit u/s. 115JB of the I.T.Act, 1961 ignoring the decisions of the Hon'ble ITAT, Mumbai in the case of M/s Viraj Profiles Ltd. in ITA 4439 / Mum / 2013 dated 21/10 / 2015 46 ITR(T) 626 [Mumbai- Trib.)/ [2016] and in Ferani Hotels Pvt. Ltd. in ITA No.857 / Mum / 2013 dated 17/11 / 2014. 9. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the borrowed funds of the assessee and if so, the interest from FDs should be held as Business Income and should be included while allowing deduction u/s. 80IAB of the Income Tax Act 1961? 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in directing the AO to allow deduction u/s. 80IAB of the I.T.Act, 1961 on interest on Fixed Deposits relying on its own decision in the case of the assessee for A.Yrs. 2011-12 without appreciating that for the year under consideration, the assessee had neither claimed any deduction u/s. * 0.8IAB of the I.T.Act, 1961 and nor filed the Form No.10CCB claiming such deduction while filing the return of income? 4. Whether on the facts and in the circumstances of the case the Ld.CIT(A) was right in holding that the interest of Rs. 2,13,94,828/- received by the assessee from Developers, on advances, was business income and deduction u/s. 80IAB was allowable on the same as per provisions of the I.T.Act, 1961? 5. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in directing the AO to allow deduction u/s. 80IAB of the 1.T.Act, 1961 on interest on advances to Developers relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.Act, 1961 has to be computed as per Rule 8D of I.T.Rules, 1962 as held in the order of the Hon'ble High Court in the case of M / s . Godrej Boyce Manufacturing Co. Ltd? 11. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 12,01,617/- u/s. 14A r.w.r. 8D since no dividend income is received without appreciating the fact that section 14A provides for disallowance of expenditure incurred in relation to and not incurred for earning such exempt income which was later clarified in the CBDT Circular No.5 of 2014 dated 11/02/2014 laying down the condition that it is not necessary that exempt income should necessarily be included in a particular year's income for the disallowance u/s. 14A of the I.T.Act, 1961 to be triggered? 12.Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance u/s. 14A to the book profit u/s. 115JB of the I.T.Act, 1961 ignoring the decisions of the Hon'ble ITAT, Mumbai in the case of M / s Viraj Profiles Ltd. in ITA No.4439/Mum/2013 dated 21/10 / 2015 - 4 ITR(T) 626 (Mumbai - Trib.)/[2016] and in Ferani Hotels Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITAT Rules sought to raise the additional grounds in its own appeal for A.Y. 2012-13 2015-16 in ITA No.3682/M/2017 in ITA No.522/M/2019 respectively and in Revenue s appeal to counter the ground Nos.4, 9 13 raised by the Revenue in its appeals for A.Y. 2012-13, 2014-15 2015-16, which are identical in all the aforesaid assessment years and read as under: Without prejudice, in view of the facts and circumstances of the case, the AO/CIT (A) has erred on facts and in law, in not appreciating that the grant received during the year from the state government is capital receipt, not liable to tax, as the assessee is a state by itself or a surrogate of the state or an agent, performing the functions of the state and/or on behalf of the state of Maharashtra On the grounds inter-alia that although the assessee has not filed appeal against the order passed by the Ld. CIT(A) allowing the ground of the assessee that addition of grant-in-aid received by the assessee company from state government towards repair and maintenance of airports, which is without prejudice to the findings given by the Ld. CIT(A) while allowing the grounds of the assessee by treating the grant-in-aid received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -14, Ground Nos.4a 4b of ITA No.7259/M/2017 for A.Y. 2014-15 Ground Nos.4, 5, 6 7 of ITA No.798/M/2019 for A.Y. 2015- 16 of Revenue s appeals 8. The assessee company has filed return of income for A.Y. 2012-13 declaring total loss of Rs. 16,70,819/-. The assessee earned interest on the advances received from the developers and contractors to facilitate the execution of work entrusted to them. Declining the contentions raised by the assessee the AO considered the interest received on advances to the developer/contractors under the head income from other sources and proceeded to hold that the said income does not have nexus with the business of the assessee, hence not eligible for deduction under section 80IAB. 9. However, the Ld. CIT(A) by following the order passed by the Tribunal in assessee s own case for A.Y. 2008-09 proceeded to hold that the interest received on advances given to the contractors should be considered as income from business and as such eligible for deduction under section 80IAB. 10. We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2008-09 in ITA No.1223/M/2013 which is on the identical facts having been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors, being eligible for deduction under section 80IAB. So finding no illegality or perversity in the impugned findings, the grounds raised by the Revenue in Ground Nos.1 2 of ITA No.3704/M/2017 for A.Y. 2012-13, Ground Nos.3 4 of ITA No.7258/M/2017 for A.Y. 2013-14, Ground Nos.4a 4b of ITA No.7259/M/2017 for A.Y. 2014-15 Ground Nos.4, 5, 6 7 of ITA No.798/M/2019 for A.Y. 2015-16 are hereby dismissed. Ground No.3 of ITA No.3704/M/2017 for A.Y. 2012-13 (Revenue s appeal) 12. The assessee company has received an amount of Rs. 1,25,95,074/- as lease rent and claimed the same for deduction under section 80IAB of the Act, which is disallowed by the AO on the ground that the said income does not have any nexus with the business of the assessee. However, the Ld. CIT(A) overturned the findings returned by the AO holding that lease rent income received by the assessee is an income from business and eligible for deduction under section 80IAB of the Act by returning following findings: 5.7.1 This ground relates to treating Lease Rental, Lease Premium and Rental Income received from Central Facility Building of the appellant aggregating to Rs. 1,25,95,074/- as income not derived from developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment and the income of the assessee if any was treated as income of the Government which stand deposited in the consolidated fund of the State. The assessee placed reliance upon the decision of Kolkata High Court in case of Prl. CIT Vs. The State Fisheries Development Corporation ITA No. 19 of 2017 with GA 413 of 2017 in which the grant has been treated has capital receipt. The similar view has been taken by the Delhi High Court in case titled as CIT Vs. Handicrafts and Handlooms Exports Corporation of India Limited cited as (2014)360 ITR 130 (Delhi). The instant case also Maharashtra Government release the grant in favour of assessee for the repairs and maintenance of airports . It is if any capital in nature and is not liable to be considered as revenue in nature. Taking into account all the facts and circumstances and by relying upon the above mentioned law, we are of the view that the grant in sum of Rs. 1 crores released by Government of Maharashtra on account of repairs and maintenance of airports is not liable to be treated as income of the assessee being in the nature of capital receipt. 15. So following the order passed by the co-ordinate Bench of the Tribunal ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by Hon ble Apex Court in case of Sahney Steel Press Works Ltd. (1997) 228 ITR 253. 21. However, on the other hand, the Ld. A.R. for the assessee challenging the impugned findings in holding grant-in-aid received by the assessee company as capital in nature contended inter-alia that since the grant-in-aid held by the assessee company for payment of compensation towards purchase of land to the land owner, rehabilitation of the PAP and for infrastructure development of airports in the notified area the same is not income of the assessee company; that the assessee company being a state is executing the work of development of airports, repair and maintenance of airports as an arm of the state and relied upon the decision rendered by the Hon ble Bombay High Court in case of Percival Joseph Pareira vs. The Special Land Acquisition (Writ Petition No.1211 of 2009) and the decision rendered by the Tribunal in assessee s own case for A.Y. 2010-11 in ITA No.3072/M/2014. 22. In order to decide the issue in controversy we would decide if the assessee company is a state while executing the work of development of airports, repair and maintenance of airports as an arm of the state. 23. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s directed by the Statement Government and cannot function independently. iv) that all the development proposals of the assessee company are sent to the state government for approval as required under section 115 of the MRTP Act. v) that the assessee company is required to submit the timely reports/returns etc. to the state government from time to time as required under section 155 of the MRTP Act. vi) that under section 160 of the MRTP Act a state government can dissolve the special planning authorities and upon dissolution its properties, the liabilities, undischarge functions shall get transferred to the state government. vii) that as per sub-section 3A of section 113 of MRTP Act any corporation/company or subsidiary company which is into the work of developing and disposing of land in the area of a new town is an agent of the state government. Sub section 3A of section 113 of the Act reads as under: (3A) Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase at hand the assessee company is also appointed as a town planning authority under sub section 3A of section 113 of MRTP Act for acquisition of land for development of airports, repair and maintenance of airports and for rehabilitation of the project affected persons (POP), for infrastructure development of airports in the notified area as an agent of the state. The assessee company carries out all the activities for and on behalf of the state government and after development and completion of the project the entire property vests in the state government. The entire control over the assessee company is of state government being exercised through the officer of the state government. In these circumstances the assessee company is an agent of the state not assessable to tax. As such grant-in-aid received by the assessee company from the Government of Maharashtra for land acquisition, development of airports, repair and maintenance of airports etc. is not a capital receipt as has been held by the Ld. CIT(A) rather the assessee company has performed these functions as an agent of the state and as such not assessable to income tax. xii) that the assessee company has been formulated wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or A.Y. 2012-13 2015-16 respectively 26. The assessee company received an amount of Rs. 4,38,97,624/- and Rs. 3,48,60,686/- on account of development charges levied by the assessee company under section 124J of Maharashtra Regional Town Planning (MRTP) Act, 1966. The Ld. CIT(A) by passing impugned order held the receipt on account of development charges as business receipt and liable to be taxed by returning following (of A.Y. 2012-13) findings: 5.9.9 Now coming to amount of Rs. 4,38,97,624/- shown at Sr. No. c) in the table above, as stated, these are development charges levied by the appellant u/s. 124J of Maharashtra Regional and Town Planning Act. It is noted that once again this amount has not been given in the form of a grant for capital outlay by Government of Maharashtra. One of the stated business objectives of the appellant is to develop and maintain townships schemes, industrial parks etc., and any earning from engaging in such activity is relatable to business and, therefore, is business receipt. The fact that MRTPA empowers the appellant company to levy charges at prescribed rates from users of infrastructure facilities in its jurisdiction does not change the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, Ground Nos.2 4 and Additional ground No.1 in ITA No.3682/M/2017 Ground Nos.1, 2 4 and additional ground No.1 in ITA No.522/M/2019 (both assessee s appeals) for A.Y. 2012-13 2015-16 respectively are hereby allowed. Ground Nos.5, 6 7 of ITA No.3704/M/2017 for A.Y. 2012-13 of Revenue s appeal; Ground Nos.5 6 of ITA No.7258/M/2017 for A.Y. 2013-14 of Revenue s appeal; Ground Nos.6 7 of ITA No.7259/M/2017 for A.Y. 2014-15 of Revenue s appeal; Ground Nos.10, 11 12 of ITA No.798/M/2019 for A.Y. 2015- 16 of Revenue s appeal; 29. Undisputedly facts of all the ground raised qua the years under consideration are identical in which the AO by invoking the provisions contained under section 14A read with rule 8D made additions, which have been deleted by the Ld. CIT(A) on the ground that the AO has mechanically applied the provisions contained under rule 8D without noticing the fact that there is no exempt income and own funds of the assessee are far more than the investment made by the assessee during the years under consideration. 30. It is admitted fact on record that during the years under consideration no exempt income has been earned by the assessee and assessee s own interest free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded for claiming deduction under section 80IAB of the Act . The Ld. A.R. for the assessee contended that this issue has been decided by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2008-09 in ITA No.1223/M/2013. 34. We have perused the order (supra) passed by the co-ordinate Bench of the Tribunal which is on identical issue. The operative part of the order is extracted for ready perusal as under: 6. We have carefully perused the orders of the authorities below and also perused the relevant material brought on record before us. The only issue to be decided is whether the FDs was made out of surplus funds of the assessee or out of the borrowings/advances received by the assessee and whether the deposits were made for a short period. We find that this issue has not been considered by the lower authorities on the facts of the case. In our considered opinion, this issue needs to be re-adjudicated by the A.O. We accordingly restore this issue to the file of the A.O. The A.O. is directed to verify whether the FDs have been made out of surplus funds or out of loans and borrowing of the assessee and whether the FDs were for short period of time. The assessee is dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the state government and as such it cannot be treated as income. So the same is ordered to be treated as revenue in nature as claimed by the assessee. So ground No.3 in ITA No.522/M/2019 for A.Y. 2015-16 of assessee s appeal is allowed. Ground Nos.5 to 7 in ITA No.522/M/2019 for A.Y. 2015-16 (Assessee s appeal) 38. Ground Nos.5 to 7 are general in nature, hence need no discussion and adjudication in specific. Ground Nos.5 10 in ITA No.7259/M/2017 for A.Y. 2014-15 of Revenue s appeal Ground Nos.8 9 of ITA No.798/M/2019 for A.Y. 2015-16 of Revenue s appeal 39. These grounds have become infructuous as the Ld. A.R. for the assessee contended and has also recorded in the synopsis provided to the Bench that the AO has granted deductions claimed by the assessee under section 80IAB post giving effect order passed by the Ld. CIT(A), without filing of form No.10CCB. Consequently aforesaid grounds are dismissed having been become infructuous. Ground Nos.14a, 14b 14c in ITA No.798/M/2019 for A.Y. 2015-16 of Revenue s appeal 40. The AO made disallowance of Rs. 76,32,135/- and Rs. 3,55,42,101/- pertaining to loss in respect of power distribution and water supply activities respectively. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore nearly 2.72 MU loss of energy on account of transmission, distribution Scheduling loss is there. 3.10.7 I find that the appellant has submitted the copy of lease agreement along with other documentary evidence placed on record in support of the claim that the expenditure incurred is a part of revenue model of MIHAN project and has also submitted very detailed explanation in respect of power distribution loss factually as well as logically which has also been discussed by me in the above paras. Determining tariff for the units of electricity is not at the sole discretion of the appellant. Therefore, practically speaking, the selling cost cannot be controlled by the appellant. Further, due to emergency situation, there was no option other than to purchase of electricity at the cost sold by the respective suppliers.Also, the energy loss such as transmission, distribution scheduling losses cannot be ruled out which will further reduce the revenue from selling electricity. Therefore, I am of the view that addition on account deficit of Rs. 76,32,135/- in respect of power distribution activity has no merits and has to be deleted. 3.10.8 With respect to deficit in water supply act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to step into the shoes of the appellant company, that too, a Government of Maharashtra one, the credibility of whose accounts are one notch above the private ones. 3.10.9 In view of the above discussion, additions on account of deficit of Rs. 76,32,135/- and Rs. 3,55,42,101/- in respect of Power distribution and Water supply activity respectivelyare deleted. These grounds of appeal are allowed. 41. We have perused the order passed by the Ld. CIT(A) who has duly thrashed the facts in the light of the copy of lease agreement along with other documentary evidence placed on record by the assessee and reached the conclusion that the expenditure incurred by the assessee on providing power distribution and water supply activities is a part of the Revenue model of MIHAN project and has also perused the record and explanation in respect of power distribution loss and water supply activities. The Ld. CIT(A) has also considered the losses due to water evaporation. 42. It is also not in dispute that no company will deliberately decrease its profit. Main cause as brought on record by the assessee has been duly perused by the Ld. CIT(A) for loss on account of distribution of water is underut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the decisions rendered by Hon ble Supreme Court of India in case of National Thermal Power Co. Ltd. (1998) 229 ITR 383 (SC) and in the case of Jute Corporation of India Ltd. vs. CIT 187 ITR 688. 45. Bare perusal of the grounds goes to prove that these are purely legal grounds and as per the law laid down by the Hon ble Supreme Court in case of National Thermal Power Co. Ltd. (supra) and Jute Corporation of India Ltd. (supra) the legal grounds can be raised at any stage of the appellate proceedings and hence the same are allowed. 46. Since the additional grounds raised by the assessee company goes to the root of the case the Bench has decided to dispose of the additional ground No.1 first before going into the grounds raised on merits. 47. It is contended by the Ld. A.R. for the assessee that qua assessment year 2008-09 in the first round of litigation the Tribunal has passed an order dated 27.08.2014 in ITA No.1223/M/2013 for A.Y. 2008-09 whereby issue as to earning interest of Rs. 39327585/- being interest on fixed deposits was ordered to be decided afresh as per findings given as under: 6. We have carefully perused the orders of the authorities below and also perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or section 263 or section 264 is to be given by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] wholly or partly, otherwise than by making a fresh assessment or reassessment [or fresh order under section 92CA, as the case may be,], such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be] 50. In all eventualities the AO is required to pass the order within a period of nine months/three months as the case may be which the AO has failed to pass. Even it is not the case of the Revenue that their case falls under proviso 1 2 to section 153(5) of the Act nor any explanation has been brought on record. When the AO was required to pass the order giving effect to the order passed by the Tribunal within a period of three months from the end of the month i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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