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2018 (1) TMI 1376 - ITAT RAIPURCalculation of deduction u/s.80IA - steel division has procured the electricity at higher rate than charged by power division to steel division - Held that:- In the present case, the appellant has charged ₹ 2.97 for each unit of electricity supplied to its Ferro Division calculated at the rate on the basis of CSEB tariff applicable to such industries. The Ferro Division had purchased power from CSEB and according to the CSEB tariff, the average purchase price of power was ₹ 20.77 per unit. On the contrary, CSEB purchased power (a: ₹ 2.80 per unit. In the given facts and circumstances - what should be the market price, is a matter for adjudication. It of the considered opinion that the value of power agreed in PPA is on the basis of certain statutory provisions enacted in the Electricity Act and not based on demand and supply factors prevailing in the market.Thus price charged by Electricity Board to its consumer is the market price. In the present case the steel division has procured the electricity at higher rate than charged by power division to steel division, it is therefore, the AO is directed to allow relief to the appellant u/s. 80-IA as claimed. Proportionate disallowance of advertisement, traveling, director's remuneration, printing and stationery etc. for the purpose of disallowance from Ferro Division - Held that:- The assessee has substantiated that the expenses proportionately disallowed by the A.O were attributable to Ferro Alloys Division only and not to the Power Division. The assessee further produced the copy of Ledger Account of such expenses which were already examined by the A.O. Therefore, the CIT(A) was in agreement with the assessee has been maintaining the books of accounts separately for both the divisions and thus, there was no question of making any proportionate disallowance. Addition u/s 14A in respect of investment in shares - Held that:- Investment was not for making any profit for future benefit of the assessee company. The Assessing Officer noticed that the assessee has incurred certain expenditure towards interest and also these investments were made out of borrowed funds. Whereas, the CIT(A) found that the investment in shares is not out of its ainterest bearing funds, which is not disputed by ld D.R. and also the investments have been made with profit motive. CIT(A) found that the disallowance is not in order. We find that the CIT(A) while deleting the disallowance has relied various judicial pronouncements, which support the assessee's case. Proportionate disallowance of interest expenses on account of interest free advance given to sister concern - Held that:- We find that the finding recorded by the CIT(A) that " the assessee had substantial interest free funds and cash profits and also the assessee has substantiated that the loan so advanced was out of commercial expediency/exigency" " has not specifically challenged by the Revenue. Disallowance u/s.40A(3) - Held that:- CIT(A) found from the verification of list furnished by the assessee that several amounts paid were below the prescribed limit and aggregate of such payments works out to ₹ 4,61,041/-. No plausible explanation was furnished by the assessee for rest of the amount. Therefore, the CIT(A) restricted the disallowance to ₹ 4,61,041/-. On careful consideration of the findings of the CIT(A), we find no good reason to interfere. Hence, we uphold the same. This ground of appeal of the revenue is dismissed. Disallowance u/s.37(1) - Held that:- D.R. could not controvert the above findings of ld CIT(A). Hence, we see no good reason to interfere with the order of the CIT(A), which is hereby confirmed and ground of appeal of the revenue is dismissed. Calculating the deduction u/s. 80IA - the loss of an eligible industrial unit is required to be set off against profit of other eligible industrial unit - Held that:- The facts for the year under consideration being no different from those before the Hon'ble High Court in the case of Godawari Power & Ispat Ltd (2013 (10) TMI 5 - CHHATTISGARH HIGH COURT) we find no reason to differ therefrom. We find that Hon'ble High Court in its judgment, inter alia, held that the CIT(A) and Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. No contrary view has been taken by any superior authority on this issue. Accordingly, the findings of the learned Commissioner of Income- tax (Appeals) stand confirmed. Ground raised by the revenue is dismissed. Disallowance on account of CSR expenses - Held that:- In the instant case, it is submitted that CSR expenses are incurred for the welfare of local community and thereby improve corporate image of the companies incurring such expenditure. We are of the considered opinion that the CIT(A) has rightly considered the decision and deleted the addition made by the Assessing Officer. Disallowance made by the AO on account of Pooja and festival expenses and charity & donation expenses - Held that:- As relied on the CBDTG Circular No.17(F.No.27(2)-IT/43) dated 6.5.1983 & circular No.13A/20/68-IT-II dated 3.10.1968, wherein, it was emphasized that expenses incurred on the occasion of Diwali and Muhurat are in the nature of business expenditure. Based on these circulars, the CIT(A) allowed ₹ 71,779/- and disallowed balance of ₹ 1,01,277/-. Addition on ESI made by the AO on account of delayed payment of employees contribution to PF/ESI - deposits beyond the period prescribed in the relevant statute but before the due date of filing the return u/s.139(1) - Held that:- We find that the CIT(A) relying on the decision of the Delhi High Court in CIT Vs. AIMIL Limited [2009 (12) TMI 38 - DELHI HIGH COURT] wherein, it has been that the employees' contribution towards EPF and ESI etc. deposited after the due date but before the time allowed for filing the return u/s.139(1) will not call for any disallowance u/s.36(1)(va), has deleted the disallowance. We find that the assessee has deposited the amount before the due date u/s 139(1). Therefore, we confirm the order of the CIT(A) and dismiss the ground of appeal of the revenue. Disallowance u/s 14A - Held that:- CIT(A) correctly relying on case of JCIT vs. Beckay Engineering Corporation [2010 (4) TMI 387 - CHHATTISGARH HIGH COURT] held that the AO failed to prove nexus of transfer of borrowed funds without charging interest, except saying that same is given from the cash credit account maintained by the assessee. The assessee has substantial interest free funds and cash profits and also the assessee has substantiated that the loan so advanced was out of commercial expediency/exigency and deleted the addition made by the Assessing Officer.
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