9911796707
TMI Blog2024 (6) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to exempt income. AO moved on the premise that INR 3.22 Crores represented direct expenses and proceeded to disallow the same as per Rule 8D(2)(i) of the Rules without identifying any direct expenses related to earning of exempt income. Thus, we do not find any infirmity in order passed by the CIT(A) deleting the disallowance of INR 3.22 Crore made by the AO as per the provisions of Rule 8D(2)(i) of the Rules. As per the judgment of HDFC Bank Limited [ 2016 (3) TMI 755 - BOMBAY HIGH COURT ] CIT(A) was correct in drawing presumption that the investments were made by the Assessee out of the interest-free own funds. In absence of any material placed before us by the Revenue to rebut the aforesaid presumption, we are not inclined to interfere with the order passed by the CIT(A) in this regard. Accordingly, we do not find any infirmity in the order passed by the CIT(A) deleting the addition made by the AO invoking the provisions of Rule 8D(2)(i) and Rule 8D(2)(ii) of the Rules, respectively. In view of the aforesaid, Ground No. 3 and 2 raised by the Revenue are dismissed. CIT(A) has directed the AO to recomputed the quantum of disallowance by taking into consideration only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer for adjudication after verification of facts as averred on behalf of the Assessee and after taking into consideration the decision of Cooper Corporation Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, Satara [ 2016 (5) TMI 809 - ITAT PUNE ] Additional Ground No. 1 raised by the Assessee is allowed for statistical purposes. Nature of expenditure - expenses incurred on Projects Department which oversaw the execution of various Projects undertaken by the Assessee - capital or revenue expenditure - HELD THAT:- As relying on assessee own case [ 2016 (11) TMI 1751 - ITAT MUMBAI] ] decided by way of common order, no infirmity in the order passed by the the CIT(A) accepting Assessee s claim for deduction of establishment expenses holding the same to be revenue in nature. Inclusion of foreign exchange losses or the Exchange Rate Variation (ERV) in the value of inventory - HELD THAT:- We concur with the conclusion reached by the CIT(A) that the adjustment in the valuation of inventories as made by the AO cannot be sustained on account of the following reasons. Firstly, the methodology adopted by the AO is flawed. It does not take into account the fact that in addition to imports, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disputed that on making such contribution to LIC, the Assessee would not have any control over the funds so contributed; and that the amount of leave encashment would be paid by LIC to the employee when the same becomes payable to the employees - HELD THAT:- As before the CIT(A) the Assessee relied upon statement wherein payment as reflected. The submission of the Assessee before the Assessing Officer that the fund maintained with LIC already had a balance in excess of Rs. 577.36 Crore, i.e. Rs. 637.19 Crore, and therefore, the provision of INR 48.26 Crores was not separately funded was not taken into consideration by the CIT(A). Accordingly, in the facts and circumstances of the case we remit this issue back to the file of the AO with the directions to allow deduction for INR 48.26 Crores, being provisions for leave encashment, to the Assessee during the relevant previous year in terms of Section 37(1) read with Section 43B(f) of the Act provided the Assessee is able to establish before the Assessing Officer that the payment of INR 48.38 Crores made by the Assessee to LIC during the relevant previous year (i.e., on 26/09/2013) corresponds to the provision created during the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue against the order, dated 15/04/2019, passed by the CIT(A) under Section 154 read with Section 250 of the Act rectifying order, dated 19/03/2019, passed by the CIT(A). 2.2. The Assessee has raised the following grounds of appeal in ITA No. 3195/Mum/2019: 1. Disallowance under Section 14A(2) read with Rule 8D. The Appellant submits that on the facts and in the circumstances of the case and true interpretation of the provisions of Section 14A, a. CIT(A) erred by not giving ground of rejection of Appellant's own disallowance Instead directly applied Rule 8D in his order. b. CIT(A) erred in applying provisions of Sec 14A(2) read with Rule 8D of the Income Tax Rules when it is recorded and accepted in the Order that Appellant had sufficient funds and AO also acknowledged elaborate quantification of suo moto disallowance by Appellant based on CA certificate. c. CIT(A) erred in applying Rule 8D(iii) i.e. 0.5% of average investment which is nothing but notional indirect disallowance when Appellant suo moto had taken Indirect expense disallowance and duly recorded by CIT(A) in his order. Appellant craves leave to rely on the information and explanation given to CIT(A) and to the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt dividend income; without appreciating the fact that there is no such exclusions provided under the Act. 5. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that the forex losses should not be accounted for the purpose of valuation of inventory and thereby deleting the addition of Rs. 46,04,86,281/- without considering Accounting Standards based on matching principle. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 71.63 crore made by the AO being the expenditure incurred in relation to income to which section 10 of the Act applies, while computing the income under section 115JB of the Act. 2.5. The Revenue has raised the following grounds of appeal in ITA No. 4579/Mum/2019: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 48.26 cr. made on account of disallowance of provision for leave encashment u/s 43B(f) of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in applying the provisions of section 43B(b) as against the applicability of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders passed by the CIT(A). Appeal by Assessee (ITA No. 3195/Mum/2019, AY 2014-15) 4. We would first take grounds raised by the Assessee in the appeal (ITA No. 3195/Mum/2019) against the order, dated 19/03/2019, passed by the CIT(A) along with the connected grounds raised by the Revenue in the cross appeal (ITA No. 3913/Mum/2019). . Ground No.1 of Appeal by Assessee along with Ground No. 2, 3 4 of Appeal by Revenue 4.1. Ground No. 1 raised in appeal by the Assessee pertains to the disallowance made by the Assessing Officer under Section 14A of the Act read with Rule 8D(2)(iii) of the Rules to the extent sustained by the CIT(A), while Ground No. 4 raised by the Revenue pertain to the disallowance under Section 14A of the Act read with Rule 8D(2)(iii) of the Rules to the extent reduced by the CIT(A). Ground No. 3 and 2 raised by the Revenue pertain to the disallowance under Section 14A of the Act read with Rule 8D(2)(i) 8D(2)(ii) of the Rules deleted by the CIT(A). 4.2. The facts relevant for adjudication of the grounds under consideration are that during the assessment proceedings, the Assessing Officer noted that the Assessee has earned dividend income amounting to INR 74,02,14,72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : [2009] 313 ITR 340. Further, only investment yielding exempt dividend income are to be considered for the purpose of computing the amount of disallowance as per Rule 8D(2)(ii) of the Act. c. It was also submitted that there was no nexus between the exempt income earned and interest cost incurred. No indirect expenses were incurred. Without prejudice to the aforesaid, at most INR 3.22 Crores could be disallowed on the basis of the Chartered Accountant certificate, dated 27/11/2014 filed by the Assessee. 4.3. However, the Assessing Officer, not being convinced, rejected the above contentions of the Assessee and recomputed the amount of disallowance under Section 14A of the Act by invoking the provisions of Rule 8D of the Rules giving the following reasoning: a. The presence of share capital and free reserves surplus does not prove that the investments were made out of own funds b. Free cash flow provided by the Assessee is not supported by documents c. Investments have been made out of common pool of funds. It cannot be presumed that out of common pool of funds only own funds were utilized for making investment while the borrowed funds were used for business purposes. The Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration to the rival submissions advance by the parties, perused the material on record and analyzed the position in law. 4.8. We would first take up Ground No. 3 and 2 raised by the Revenue. We are of the considered view that the Revenue has failed to dislodge the factual findings returned by the CIT(A) while deleting the disallowance in terms of Rule 8D(2)(i) and 8D(2)(ii) of the Rules. The CIT(A) has returned a findings that the Assessing Officer had incorrectly treated the indirect expenses of INR 3.22 Crores stated in the report, dated 27/11/2014, issued by the Tax Auditor as direct expenses. On perusal of the aforesaid report issued by the Tax Auditor, we find that the Tax Auditor had quantified INR 3.22 Crores as the expenses that could, at best, be disallowed as indirect expenses incurred in relation to exempt income. The Assessing Officer moved on the premise that INR 3.22 Crores represented direct expenses and proceeded to disallow the same as per Rule 8D(2)(i) of the Rules without identifying any direct expenses related to earning of exempt income. Thus, we do not find any infirmity in order passed by the CIT(A) deleting the disallowance of INR 3.22 Crore made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g provisions of Section 14A of the IT Act . While doing so the Assessing Officer has also made reference to the report issued by the Tax Auditor wherein the disallowance has been quantified. However, no specific observations have been recorded regarding the indirect expenses or administrative expenses disallowed by the Assessee (except for the interest expenses). A perusal of the Assessment Order shows that the Assessing Officer had rejected the computation of suo motu disallowance of INR 3.22 Crores by recording dissatisfaction regarding interest expenses incurred by the Assessee during the relevant previous year. According to the Assessing Officer the aforesaid interest expenses should have been disallowed by the Assessee. As noted hereinabove, while recording the aforesaid dissatisfaction the Assessing Officer proceeded on the incorrect premise that the expenses of INR 3.22 Crores stated in the report issued by the Tax Auditor were direct expense. As regards, administrative expenses, apart from the general observation made by the Assessing Officer that the Assessee must have incurred some expenses related to earning of exempt income, no dissatisfaction was recorded by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional Ground would not require enquiring into new set of factual not on record. It was submitted that the Assessee is a public sector undertaking and had capitalized ERV of INR 539,09,00,445/- in the Books of Accounts and had not claimed deduction for the same as revenue expenditure or by way of depreciation. In the return of income, the Assessee did not claim deduction for the year end ERV in so far as it related to liability to repay the principal amount of loan taken by the Assessee in the form of External Commercial Borrowings (ECBs). By way of Additional Ground No. 1, the Assessee has claimed deduction for the year end ERV of INR 539,09,00,445/- under Section 37(1) of the Act contending that the same pertain to borrowings utilized for acquisition of assets domestically in compliance with guidelines/approvals issued by the Reserve Bank of India and were therefore, not hit by the provisions contained in Section 43A of the Act. It was pointed out that while deciding appeal preferred by the Assessee for the Assessment Year 2016-17, the CIT(A) has decided identical issue in favour of the Assessee and the Revenue is in appeal before the Tribunal. 5.2. Per contra, the Ld. Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred on Projects Department which oversaw the execution of various Projects undertaken by the Assessee. According to the Assessee, the aforesaid establishment expenses were in the nature of salary etc. incurred on various personnel engaged in supervision and monitoring of various projects at refineries and marketing locations. The aforesaid projects were purely in respect of existing line of business undertaken with the purposes of improving efficiency and expanding refinery infrastructure/market network, and not for setting up a new line of business. Therefore, the Assessee claimed the establishment expenses to be revenue in nature, even though the same were debited to Capital Work-In-Progress Account in the books of account. However, the Assessing Officer was not convinced. Following the assessment order passed in the preceding assessment years, the Assessing Officer concluded that since the Assessee had accounted for establishment expenses in the books of accounts as capital expenditure, and the Assessee was bound to treat the same as capital expenditure unless it was proved by the Assessee that entries made in books of accounts were erroneous or contrary to legal position. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Engineering Project and the ld. CIT(A) while considering this ground of appeal concurred with the finding of AO. 19. The Hon ble Supreme Court in Tuticorin alkali Chemicals and Fertilizers Ltd. vs. CIT (227 ITR 172(SC) held that when the question is whether a receipt of money is taxable or not, or whether certain deduction from receipt are permissible in law or not. The question has to be decided according to the principle of law and not in accordance with the accounting practice. The Hon ble Apex Court held that Accounting Practices cannot be override section 56 or any other provisions of the Act. The assessee incurred expenses on various personnel/ employee in the project for supervision and monitoring the various project and marketing allocation and refineries which is certainly allowable as business expenditure u/s 37(1) of the Act. Expenses were made on account of salary, Dearness Allowance (DA), Conveyance Expenses, postal charges, bank charges, rent for housing accommodation, Motorcar etc. which is certain of revenue expenditure. Thus, the Ground No.8 raised by the assessee is allowed. (Emphasis Supplied) 8.5. In view of the above decision of the Tribunal, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 8.65% 8.68% Exchange rate Variation (forex loss) 1473 938 Disallowance on account of ERV 127.44 81.40 However, while adding forex loss in closing stock it is imperative to reduce forex loss in opening stock amounting to Rs. 127,44,42,112. Accordingly, a Net deduction of Rs. 460,486,281 is carried out. (Emphasis Supplied) 9.2. Being aggrieved, the Assessee carried the issue in appeal before CIT(A). Following the order, dated 30/12/2016, and 26/07/2017 passed by his predecessor in appeals preferred by the Assessee for the Assessment Year 2012-13 and 2013-14, respectively, the CIT(A) accepted the valuation of inventories as done by the Assessee and deleted the adjustment of INR 46,04,86,281/- made by the Assessing Officer. 9.3. Being aggrieved, the Revenue is now in appeal before us. 9.4. We have heard the rival submissions and perused the material on record. We note that the Assessing Officer had made adjustment relying on the assessment order for the Assessment Year 2013-14. During the appellate proceedings before the CIT(A), it was contended on behalf of the Assessee that: a) As per Accounting Standard 2 Valuation of Inventories the Inventory Valuation is to be done at cost or ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Affairs on 02/01/2015, which is relied by assessing officer, was applicable with effect from 01/04/2016. Following the aforesaid orders passed by his predecessor in appeals for the Assessment Year 2012-13, the CIT(A) set aside the adjustment made by the Assessing Officer in the valuation of the inventories. 9.6. We concur with the conclusion reached by the CIT(A) that the adjustment in the valuation of inventories as made by the Assessing Officer cannot be sustained on account of the following reasons. Firstly, the methodology adopted by the Assessing Officer is flawed. It does not take into account the fact that in addition to imports, the crude oil is also purchased by the Assessee from the domestic market. The inventories may include crude oil imported as well as crude oil procured from domestic market. Further, the methodology adopted by the Assessing Officer proceeds on the understanding that the inventories are to be valued at cost without taking into consideration the Fair Market Value, or the Net Realizable Value, as the case may be. Secondly, the Revenue has failed to controvert the finding returned by the CIT(A) that IND AS 23, on which reliance has been placed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt. CIT v. Vireet Investment (P.) Ltd. [2017] 165 ITD 27/82 taxmann.com 415 it has been held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated under section 14A read with rule 8D. Following the said decision it is held that the addition towards clause (f) of Explanation to Section 115JB is to be restricted to Rs. 322,48,484/-, as done by the appellant. Ground No. 11 is allowed. 10.5. We do not find any infirmity in the order passed by the CIT(A) since the CIT(A) has followed the binding decision of the Special Bench of Tribunal wherein it has been held that computation in terms of Clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to computation as contemplated under Section 14A of the Act read with Rule 8D of the Rules. We note that the CIT(A) has restricted the amount of disallowance to the amount of suo-motu disallowance under Section 14A of the Act offered to tax by the Assessee. The Revenue has failed to point out any infirmity in the computation furnished by the Assessee which is supported by the report issued by the Tax Audit. Accordingly, we decline to interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution to LIC cannot be treated at par with the actual payment . Therefore, as per the provisions of Section 43B(f) of the Act, deduction could not have been allowed to the Assessee. 12.3. On the other hand, the contention advanced on behalf of the Assessee was that from the statement of fund maintained with LIC as on 31/03/2014 payment of INR 48.38 Crores was made by the Assessee to LIC on 26/09/2013 and therefore, the CIT(A) was correct in taking note of the aforesaid facts and allowing deduction under Section 43B(f) of the Act. The payment to LIC constituted actual payment by the Assessee for Leave Encashment. 12.4. We have heard both the sides on this issue and perused the material on record. 12.5. On perusal of the assessment order, we find that during the assessment proceeding, the Assessee made the following submissions: Considering that the fund maintained with LIC already has a balance in excess of Rs. 577.36 Crore, Le. Rs. 637.19 Crore, the additional provision of Rs. 48.26 Crore has not been separately funded. A certificate from LIC on balance in Fund maintained with them is attached and marked as Annexure 1 Once it got disallowed in one of the years, this has been cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable under the Act in respect of specified heads, in that previous year in which the sum is actually paid irrespective of method of accounting. 12.8. On perusal of the above it can be seen that 43B(f) of the Act attaches conditionality of actual payment to a deduction otherwise allowable as per the provision of the Act. As per the judgment of the Hon ble Supreme Court in the case of Bharat Earth Movers Vs. Commissioner of Income Tax: [2000] 245 ITR 428 (SC) provision created for meeting liability towards Leave Encashment was allowable as deduction under Section 37(1) of the Act as the same cannot be regarded as a provision for contingent liability. Therefore, deduction for provision created for Leave Encashment on the basis of actuarial valuation is allowable as deduction under Section 37(1) of the Act. However, Section 43B(f) of the Act provides that even if deduction for provision for Leave Encashment created during the relevant previous year is otherwise allowable [under Section 37(1) of the Act] as per the method of accounting followed by the assessee, deduction for the same can only be allowed on actual payment. Therefore, in a case where an assessee accounts for expense (co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Assessee is able to establish before the Assessing Officer that the payment of INR 48.38 Crores made by the Assessee to LIC during the relevant previous year (i.e., on 26/09/2013) corresponds to the provision created during the relevant previous year. In terms of the aforesaid, Ground No. 1 raised by the Revenue is allowed for statistical purposes, and Ground No. 2 raised by the Revenue is dismissed as being infructuous. (Assessment Year 2015-16) 13. We will now take up cross-appeals for the Assessment Year 2015- 16. These cross-appeals arise from the common order, dated 22/03/2019, passed by the CIT(A) whereby the CIT(A) had partly allowed the appeal preferred by the Assessee against the Assessment Order, dated 29/12/2017, for the Assessment Year 2015-16 passed under 143(3) of the Act. 13.1. The Assessee has raised the following grounds of appeal in ITA No. 3196/Mum/2019: 1. Disallowance under Section 14A(2) read with Rule 8D. The Appellant submits that on the facts and in the circumstances of the case and true interpretation of the provisions of Section 14A, a. CIT(A) erred by not giving ground of rejection of Appellant's own disallowance Instead directly applied Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He failed to appreciate that actuarial report is the best scientific method to account for liability and hence at given date, books need to reflect actual payable and accordingly provision was required as per prudent accounting policies. As LIC fund already had more than the required amount to be paid, the condition of payment gets satisfied and hence allowable u/s 37(1). e. CIT(A) failed to appreciate the fact that LIC fund comprises of interest on the amount funded on regular basis and such interest component offered to tax on regular basis and also for the period in question and thus would amount to funded to LIC. f. CIT(A) failed to appreciate that interest earned offered to tax and if provision is also disallowed, would again entail tax. Thus, there would be double taxation on the same amount, first on interest offered to tax and second on the amount representing provision to meet the shortfall as required to be accounted in the books as per Actuarial report. The Appellant submit that as CIT(A) decided applicability of Sec 438(b), and based on CIT(A) own observation, Fund had more than the accrued liability, condition of Sec 438(b) gets satisfied and hence disallowance by CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st direct expenditure as was held by the AO. 4. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in directing the AO to re-compute the disallowance u/R 8D(2)(iii) by considering investments which had yielded exempt dividend income; without appreciating the fact that there is no such exclusions provided under the Act. 5. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that the forex losses should not be accounted for the purpose of valuation of inventory and thereby deleting the addition of Rs. 87,68,03,979/- without considering Accounting Standards based on matching principle. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 68,16,10,308/- made by the AO being the expenditure incurred in relation to income to which section 10 of the Act applies; while computing the income under section 115JB of the Act. 13.4. During the course of hearing both the sides had adopted the arguments made in relation to corresponding grounds raised in appeal for the Assessment Year 2014-15 and agreed that our findings/adjudication in appeal for the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed (supra), it can be presumed that the investments were made out of interest free funds. As regards, computation of disallowance as per Rule 8D(2)(iii) of the Rules, the CIT(A) directed the Assessing Officer to re-compute the quantum of disallowance by taking into consideration only the investments which yielded exempt income. 15.3. Now, both, the Assessee and the Revenue are in appeal before us. Ground No. 1 raised in appeal by the Assessee pertains to the disallowance made by the Assessing Officer under Section 14A of the Act read with Rule 8D(2)(iii) of the Rules to the extent sustained by the CIT(A), while Ground No. 4 raised by the Revenue pertain to the disallowance under Section 14A of the Act read with Rule 8D(2)(iii) of the Rules to the extent reduced by the CIT(A). Ground No. 3 and 2 raised by the Revenue pertain to the disallowance under Section 14A of the Act read with Rule 8D(2)(i) 8D(2)(ii) of the Rules, respectively, deleted by the CIT(A). 15.4. Both the sides agreed that our finding/adjudication in relation of corresponding grounds raised in appeal for the Assessment Year 2014-15 shall apply mutatis mutandis since there is no change in the relevant facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g due to Exchange Rate Variation (for Short ERV ) on Foreign Loans used for creating indigenous assets. 17.1. Both the sides adopted the arguments made in relation to Additional Ground No.1 raised by the Assessee in appeal for the Assessment Year 2014-15. Since both the sides had agreed during the course of hearing that our findings/adjudication in relation to the aforesaid Additional Ground No. 1 raised by the Assessee in appeal for the Assessment Year 2014-15 shall apply mutatis mutandis to Ground No. 1 raised in appeal preferred by the Assessee for the Assessment Year 2015-16, Additional Ground No. 1 raised by the Assessee is admitted in view of the judgment of the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT: 229 ITR 383. However, in view of our findings/adjudication in paragraph 5 to 5.3 above, the issue raised in Additional Ground No.1 is remitted back to the file of Assessing Officer for adjudication after verification of factual averments made on behalf of the Assessee and after taking into consideration the decision of the Tribunal in the case of Cooper Corporation Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, Satara: 159 ITD 165. In term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses or the Exchange Rate Variation (ERV) in the value of inventory. 21.1. We have already dismissed identical ground raised by the Revenue in appeal for the Assessment Year 2014-15 in paragraph 9 to 9.6 above. Since there is no change in the facts and circumstances of the case and both the sides had made identical submission, we decline to interfere with the order passed by the CIT(A) on this issue. Accordingly, Ground No. 5 raised by the Revenue is dismissed. Ground No. 6 22. Ground No. 6 raised by the Revenue pertains to computation of Book Profits under Section 115JB of the Act. 22.1. Identical ground raised by the Revenue in appeal for the Assessment Year 2014-15 stands dismissed in paragraph 10 to 10.5. above. Since there is no change in facts and circumstances during the relevant previous year, taking a view consistent with the view taken while deciding identical issue in appeal for the Assessment Year 2014-15, we do not find any infirmity in the order passed by the CIT(A) by following the binding decision of the Special Bench of the Tribunal in the case of Assistant Commissioner of Income Tax Vs. Vireet Investment Pvt. Ltd. : [2017] 165 ITD 27 (Delhi Trib) (SB). According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of rule 8D; and also by applying the ratio of decision given in the case of HDFC Bank Ltd. (2016) 67 Taxmann.com 42 (Bom.) and (2014) 366 ITR 505 (Bom.) Which has the impact of making the statutory rule redundant and entering into the legislative realm of redrafting the mandatory rule made by the Parliament. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 79,87,30,469/- made by the AO being the expenditure incurred in relation to income to which section 10 of the Act applies; while computing the income under section 115JB of the Act. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in law in holding that in the computation of book profits under section 115JB of the Income Tax Act, disallowance under section 14A was impermissible, contrary to Explanation 1(f) to section 115JB of the Act. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the forex losses should not be accounted for the purpose of in valuation of inventory and thereby deleting the addition of Rs. 35,03,47,309/- developed considering Accounting Standards b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee had claimed deduction for INR 80,99,68,307/- being establishment expenses incurred on Projects Department which oversaw the execution of various Projects undertaken by the Assessee. The Assessing Officer disallowed the aforesaid expenses holding the same to be capital in nature. In appeal preferred by the Assessee on this issue, the CIT(A) agreed with the Assessee allowed claim for deduction as revenue expenditure. The Revenue is now in appeal before us. 28.2. We note that while adjudicating Ground No. 1 raised in appeal (ITA No. 3913/Mum/2019) for the Assessment Year 2014-15 preferred by the Revenue in paragraph 8 to 8.5 above, we have accepted the contention of the Assessee that the aforesaid expenses are revenue in nature. Since there is no change in facts and circumstances during the relevant previous year, taking a view consistent with the view taken while deciding identical issue in appeal for the Assessment Year 2014-15, we confirm the order of CIT(A) deleting the disallowance of INR 80,99,68,307/- holding the same to be expenses of revenue nature by following the decision of the Mumbai Bench of the Tribunal in Assessee s own case in appeals for the Assessment Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove. Since there is no change in facts and circumstances during the relevant previous year, taking a view consistent with the view taken while deciding identical issue in appeal for the Assessment Year 2014-15, we hold that there is no infirmity in the order passed by the CIT(A) on this issue as the CIT(A) was correct in accepting the valuation of inventory as done by the Assessing Officer. Accordingly, we decline to interfere with the order passed by the CIT(A) on this issue. Ground No. 5 raised by the Revenue is dismissed. Ground No. 6 7 33. Ground No. 6 7 raised by the Revenue is directed against the order of CIT(A) are directed against the order of CIT(A) accepting the fresh claim for deduction of INR 580,36,54,174/- under Section 37(1) of the Act is respect of the loss arising due to Exchange Rate Variation (for Short ERV ) on Foreign Loans used for creating indigenous assets made by the Assessee in the revised return. 33.1. Both the sides adopted the arguments made in relation to Additional Ground No.1 raised by the Assessee in appeal for the Assessment Year 2014-15. Since both the sides had agreed during the course of hearing that our findings/adjudication in relation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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