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TMI Blog2023 (7) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... law as well as on facts by deleting the disallowance of Rs. 3,20,00,000/- received on account of delayed completion of project as capital receipt as claimed by the assessee. 4. The Ld. CIT(A) has erred in law as well as on facts by deleting the disallowance of Rs. 30,23,032/- being differential royalty on ballast considering it as allowable deduction. 5. The Ld. CIT(A) has erred in law as well as on facts by deleting the disallowance of additional depreciation of Rs. 33,85,988/- claimed on new plant and machinery. 6. The Ld. CIT(A) has erred in law as well as on facts by deleting the disallowance of club expenses of Rs. 1,18,728/- made by the AO on account of alleged non-business and personal use. 7. The Ld. CIT(A) has erred in law as well as on facts by deleting the disallowance of Rs. 11,34,064/- out of license/registration fees made by the AO. 8. The Ld. CIT(A) has erred in law as well as on facts by deleting the disallowance u/s. 40A(9)of Rs. 10,31,054/- 9. The Ld. CIT(A) has erred in law as well as on facts by restricting the disallowance u/s. 14A to Rs. 6.66 lakhs as against Rs. 88.35 lakhs computed by the AO. 10. The Ld. CIT(A) has erred in law as well as on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of surrender of rights in redemption of OCCPS amounting to Rs. 174.56 Lakhs, disallowance out of liquidated damages on account of delayed completion of project amounting to Rs. 320 Lakhs, disallowance of penalty amounting to Rs. 30,23,032/- paid on Differential Royalty on Basalt, disallowance of Excessive Depreciation claim on Plant & Machinery amounting to Rs. 33,85,988/-, disallowance of expenditure incurred as Entertainment of Expenses amounting to Rs. 72,054/-, disallowance of Contribution of PWD Road of Rs. 52,34,500/-, disallowance out of Licence/Registration Fees amounting to Rs. 11,34,064/-, disallowance under Section 40(A)(9) of the Act in respect of salary and other expenses amounting to Rs. 10,36,560/-, disallowance of Mumbai Guest House Maintenance Charges amounting to Rs. 5,05,000/-, disallowance under Section 14A of the Act amounting to Rs. 88,35,429/- and disallowance under Section 40(a)(ia) of the Act amounting to Rs. 1,40,760/- in respect of Short Deduction of late payment of interest and defaulting amount. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Rs. 174.56 Lakhs, for benefit of the company. Therefore, the same has resulted into cessation of liability to redeem this amount of Rs. 174.65 Lakhs for the assessee company. The assessee company was required to credit this amount to the profit and loss account being a gain/income to the company. The Ld. DR submitted that however, the assessee company has referred to transfer the beneficial ownership of the OCCPS in favour of a trust of which the company is the beneficiary. No accounting effect of such waiver of redemption has been given in the books of Assessee Company even though the income/gain has already accrued to the company at the time of waiver of such right of redemption. The Ld. DR submitted that the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession is taxable income as per provisions of Section 28(iv) of the Act. Therefore, the Assessing Officer was right in disallowing the surrender of rights in redemption of OCCPS. 10. The Ld. AR submitted that this addition was made on the basis of general disclosure note in Audit Report for the information of the readers. Money raised for capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e without showing it in operative part of Profit & Loss account is highly irregular. The Ld. DR relied upon the Assessment Order. 13. The Ld. AR submitted that the assessee received compensation from M/s. Thermax Limited towards liquidated damages for delayed completion of project. The terms of delayed payment was provided in the agreement which was before the Assessing Officer. The Ld. AR further submitted that it is related to assets of the company and, therefore, the same are capital in nature. The Ld. AR relied upon the decision of Hon'ble Supreme Court in assessee's own case in Civil Appeal No.3702 of 2003. 14. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the issue contested by the Revenue is already decided in favour of the assessee in assessee's own case by the Hon'ble Apex Court. From the perusal of records also the assessee has received compensation for the liquidated damages for delayed completion of project which is related to assets of the Company. Therefore, the same is part of capital in nature. Thus, ground no.3 of Revenue's appeal is dismissed. 15. As regards ground no.4, the ld DR submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on power plant which is not a Plant & Machinery eligible for additional deprecation because power is not an article or thing and, therefore, there is an excess claim being additional depreciation. The Ld. DR further submitted that the Assessing Officer was also right in respect of depreciation claim of Rs. 8,304/- on electricity service line owned by PGVCL as the asset is not owned by the assessee Company. 19. The Ld. AR submitted that the Assessing Officer had disallowed the entire amount of additional depreciation as the assessee has not claimed the additional depreciation on Power Plant. The assessee is entitled for additional deprecation on Power Plant as per the decision of Hon'ble Delhi High Court in the case of PCIT vs. NCPT sail Power Co. (P) Limited, 103 Taxmann.com 398. 20. We have heard both the parties and perused all the relevant material available on record. The assessee during the course of assessment proceedings as well as before CIT(A) submitted that additional depreciation provided on Power Plant was subsequently reversed which was also apparent in the details furnished by the assessee before the Assessing Officer. From the records, it is pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is non-business activity or that of capital in nature if related to business. Therefore, the Assessing Officer has rightly disallowed the said amount. 25. The Ld. AR submitted that processing and registration fees paid to Gujarat Energy Transmission Corporation Limited for approval of sales of power Rs. 10,34,064/- and Rs. 1,00,000/- paid on 10.07.2009 reversed on 31.12.2009. The Ld. AR submitted that the electricity line is exclusively being used for the purpose of assessee's business and in substance the assessee company is the beneficial owner of such electricity line since the assessee company has domination and control over it in its own right. The Ld. AR relied upon the order of the CIT(A). 26. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that from the perusal of records it appears that the said electricity line is solely used by the assessee and, therefore, the expenses incurred related to sale of power registration and membership is for the business purpose only. Thus, the CIT(A) was right in deleting the said disallowance. Hence, ground no.7 is dismissed. 27. As regards to ground no.8, the Ld. DR su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiary companies. Thus, the net value of this investment after provision for diminution in value is Rs. 1863.60 Lakhs. Other investment was Rs. 34,000/- and, therefore, the total investment for consideration of disallowance under Section 14A is Rs. 1910.36 Lakhs. The Ld. DR submitted that Section 14A does not apply in respect of deductions where expenditure incurred by the assessee is in relation to the income which does not form part of the total income. Thus, the Ld. DR relied upon the Assessment Order. 31. The Ld. AR submitted that the assessee was having total exempt income of Rs. 5,000/- and the assessee has already disclosed Rs. 1.20 Lakhs in computation of income. Therefore, the Ld. AR submitted that disallowance cannot be more than exempt income. The Ld. AR relied upon the decision of the Tribunal in assessee's own case for A.Y. 2013-14. 32. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has made disallowance of Rs. 1.20 Lakhs in computation of income and there is no dispute by the Revenue Authorities that total exempt income as shown by the assessee is Rs. 5,000/-. Thus, the CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed. 41. Ground no.2 is not pressed by the assessee and hence ground no.2 of assessee's appeal is dismissed. 42. As regards to ground no.3 of Assessee's appeal related to confirming disallowance of Rs. 52,34,500/- for contribution made towards PWD Road, the Ld. AR submitted that the contribution towards construction of 4 lane road in order to facilitate infrastructure requirement in the surrounding area was for the smooth conducting of the business. Therefore, the CIT(A) was not right in confirming the said disallowance. 43. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 44. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the road made by the PWD was in fact for the smooth running of assessee's business and, therefore, assessee's contribution towards construction of 4 lane road in order to facilitate infrastructure requirement in the surrounding area should have been allowed. Thus, grounds no.3 of assessee's appeal is allowed. 45. Ground no.4 is not pressed by the assessee and hence the same is dismissed. 46. As regards to ground no.5 of the assessee's appeal related to confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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