2024 (3) TMI 1195 - ITAT KOLKATA

TP adjustment - price of the power transferred by the section 80IA eligible captive power plant of the assessee to the non-eligible manufacturing units of the assessee and thereby, reducing the claim of deduction claimed by the assessee u/s 80IA - HELD THAT:- As decided in assessee own case [2023 (2) TMI 341 - ITAT KOLKATA] transfer pricing adjustment made for deduction u/s 80IA of the Act raised by the Revenue are dismissed.

Claim of balance additional depreciation - assessee purchased and installed new plant and machinery in the preceding year but put to use the same for a period less than 180 days in that year - HELD THAT:- As decided in assessee own case [2023 (2) TMI 341 - ITAT KOLKATA] we are of the view that the law laid down by the Hon'ble High Court of Karnataka in the case of CIT and another vs. Rittal India Private Lid [2016 (1) TMI 81 - KARNATAKA HIGH COURT] is applicable to the present case, thus we hold that the assessee is entitled to claim remaining 50% depreciation of such 20% which is equal to the actual cost of new plant and machinery, accordingly ground no-I raised by the assessee is allowed.

Nature of expenses - Deduction on proportionate basis of the compensation paid in connection with the mining activity for obtaining limestone, used as raw material for manufacturing of cement - AO disallowed the claim of the said expenditure by observing that the same was capital expenditure in nature - HELD THAT:- As decided in assessee own case [2023 (2) TMI 341 - ITAT KOLKATA] held that payment of compensation to persons whose rights are infringed by the mining activity is revenue in nature.

Nature of receipt - amount received by the assessee as industrial promotion assistance from the State Govt. - revenue v/s capital receipt - HELD THAT:- As decided in Tribunal [2023 (2) TMI 341 - ITAT KOLKATA] to hold that the interest subsidy is to be treated only as a capital receipt and accordingly the grounds raised by the assessee in this regard are allowed.

Disallowance u/s 14A r.w.r.8D - HELD THAT:- The impugned order of the CIT(A) is modified and it is directed that the Assessing Officer would recompute the disallowance u/s 14A r.w.r 8D(2)(iii) by considering all investments including investments in subsidiary companies which yielded dividend income. This Ground of the revenue’s appeal is partly allowed.

MAT Computation - exclude the subsidy from the books profits assessable u/s 115JB - HELD THAT:- As decided in own case of assessee [2023 (2) TMI 341 - ITAT KOLKATA] no infirmity in the finding of ld. CIT(A) holding that the subsidy/incentive received by the assessee which have been held to be capital receipts are to be excluded from the book profit u/s 115JB.

Upward adjustment made to book profit on account of disallowance of expenditure computed u/s 14A of the Act r.w.r. 8D - HELD THAT:- It is to be pointed out that as per Explanation 1(f), the book profit means the profit shown in the statement of profit and loss account as increased by the amount of expenditure relatable to the exempt income. The said amount of expenditure has already been ordered to be determined as per our observations made above while adjudicating the issue relating to the disallowance u/s 14A vide Ground No.10 of the revenue’s appeal. It has to be further noted that section 115JB in itself does not prescribe any procedure to calculate the expenditure relatable to exempt income earned by the assessee. The said provision has been separately and specifically placed in the Act u/s 14A of the Act. Therefore, the book profits of the assessee are liable to be increased by the expenditure as calculated u/s 14A of the Act as provided under Explanation 1 to Clause (f) of section 115JB of the Act. In view of this, it is directed that the book profits will be increased u/s 115JB of the Act by the disallowance calculated as per our directions given while adjudicating Ground No.10 of the revenue’s appeal. This ground of the revenue’s appeal is hereby allowed.

Deduction of leave encashment actually paid - HELD THAT:- Claim of leave encashment actually paid by the assessee during the previous year relevant to A.Y 2015-16 allowed.