TMI Blog2022 (12) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax subsidy schemes, which are admittedly to encourage industrial growth in the specific areas and the overall scheme in all the sales tax subsidy and exemption schemes unambiguously indicate so, are capital receipts in nature. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee that the amount added to the income of the assessee must stand deleted, and reject the grievance of the Assessing Officer against the grant of relief by the CIT(A). Disallowance of prior period expenditure debited to Profit and Loss Account of the instant year - HELD THAT:- We are of the considered view that the assessee deserves to succeed as for the three immediately preceding assessment years, i.e. the assessment years 2002-03,2003-04 and 2004-05, the coordinate benches, in assessee s own case, have decided the same issue in favour of the assessee. In any case, there is no dispute that the expenses are otherwise admissible in nature and have not been claimed or allowed as deduction in any other assessment year. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the permissible 5% range of the transaction value at US $ 28.98, as 95% of the comparable transaction price in that case, which can be taken as a valid CUP, is US $ 28.92 per MT - as against the transaction price of US$ 28.98 per MT. Therefore, even going by the data gathered by the TPO, to the extent such data can meet our approval in the light of the observations above, the transaction entered into by the assessee for exports of cement to its AE in Sri Lanka was at an arm s length price. We, therefore, uphold the plea of the assessee for this short reason alone and direct the Assessing Officer to delete the impugned ALP adjustment of Rs 4,73,21,572. The assessee gets the relief accordingly. As we have upheld the assessee's plea for the short reason as elaborated upon, we see no need to deal with other contentions raised before us. Interest paid by the appellant under Bare Boat Charter cum Demise Arrangement entered with its Associated Enterprise as not at arm's length - HELD THAT:- As noted that the payments under the BBCD arrangements were made with specific regulatory approval prescribed by the RBI, and there are coordinate bench decisions, such as in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar (Vice President), And Sandeep S Karhail (Judicial Member) For the Appellant : Yogesh Thar along with Chitanya D. Joshi For the Respondent : Jasdeep Singh and Jagdish Jangid ORDER PER PRAMOD KUMAR VP 1. These cross appeals are directed against the order dated 31st July 2012 passed by the learned CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2005-06. 2. We will first take up the appeal filed by the assessee. 3. In ground no. 1, the assessee has raised the following grievance: That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) [here-in-after referred to as Ld. CIT (Appeals)] was not justified and grossly erred in confirming the action of the A.O. in denying the claim of exclusion of Sales Tax Incentive availed in respect of units situated in the state of Himachal Pradesh and Rajasthan aggregating to Rs. 39,36,21,956/-, being capital in nature, in computing total income under the normal provisions of the Act. 4. In a connected ground of appeal number 1 in revenue s appeal, which we will take up along with the above ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rabriyawas Unit), and Exemptions/ Concessions to Industries Excise Taxation Department Notification No EXN C(9)2/9- dated 31-1-2-1994 (Himachal Unit). He discussed these schemes in quite a bit of detail-to the extent wordings of the preamble of the schemes are concerned, and concluded that while the amounts aggregating to Rs 130,57,12,796, in respect of Punjab and Maharashtra Schemes, are indeed capital receipts in nature, and exempt from tax as such, the amounts aggregating to Rs 39,36,21,956 are revenue in nature, and to that extent the Assessing Officer was justified in including the same in taxable income. None of the parties is satisfied. While the assessee is aggrieved of the amount of Rs 39,36,21,956 being included in his taxable income, the Assessing Officer is aggrieved of the learned CIT(A) s granting relief of Rs 130,57,12,796. Both parties are in appeal before us. 6. We have heard the rival contentions, perused the material on record, and duly considered the facts of the case in the light of the applicable legal position. 7. We find that the learned CT(A) has, in his elaborate analysis, primarily followed the Special Bench decision in the case of DCIT Vs Relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 49 (Guj)], has observed as follows: 7. So far as second issued as to Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT (A) and in directing the Assessing Officer to consider the Sales-tax exemption benefit of Rs. 5,45,81,171/- as capital receipts is concerned, Mr.Mehta contended that in view of the decision of the Calcutta and Punjab High Court, the Tribunal has committed an error in reversing the view taken by CIT (Appeals) so far as Tax Appeal No.226 of 2010 is concerned, wherein the CIT (A), after discussing the evidence has held in favour of the department. In this regard, he has relied upon the decision of High Court of Bombay in the case of CIT v. Reliance Industries Ltd. [2010] 8 taxmann.com 218/[2011] 339 ITR 632, wherein it is held that object of subsidy being to set up new units in backward area is a capital receipt and another decision of High Court of Calcutta in the case of CIT v. Chhindwara Fuels [2001] 114 Taxman 707/[2000] 245 ITR 9, wherein it is held that subsidy in the form of refund of sales-tax received after commencement of production cannot be treated as capital receipt. 8. On the other hand, Mr. Soparka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption from payment of sales tax. 9. He further contended that in view of decisions of this Court in CIT v. Birla VXL Ltd. [2013] 32 taxmann.com 330/215 Taxman 117 (Guj.) and in Dy. CIT v. Munjal Auto Industries Ltd. [2013] 37 taxmann.com 115/218 taxman 135 (Guj.) the issue is squarely covered and the decisions which are sought to be relied upon by learned advocate for the appellant are not applicable in the facts of the present case. In the case of Birla VXL Ltd. (supra), this Court has observed as under:- '12. It can thus be straightaway seen that the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-to-day functioning of the business, or for making the industry more profitable. The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry. 13. In a recent decision dated 28th January 2013 in Tax Appeal No. 450 of 2012 and connected appeals, we had an occasion to examine the nature of incentives received by the assessee from the State Government in the form of entertaining tax waiver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of an existing unit. As noted, such subsidy was available only to a new industrial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, new construction, plant and machinery etc. The entitlement was related to percentage of fixed capital investment. 8. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that the character of the subsidy in the hands of the recipient whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of find is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. Such But if monies are given to the assessee for assisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / incentive received in the instant case would only have to be construed as capital receipts not chargeable to income tax. In this regard, we find that ld. AR placed reliance on the decision of Hon ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., reported in 306 ITR 392, wherein the incentive conferred under that scheme were two fold. First, in the nature of higher free sale sugar quota and second, in allowing the manufacturer to collect Excise duty on sale price on the free sale sugar in excess of the normal quota, but to pay to the Government only the Excise duty payable on the price of levy sugar. The Hon ble Supreme Court in para 14 of its decision had held that character of receipt of subsidy has to be determined with respect to the purpose for which the subsidy is given. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. In fact, the Hon ble Supreme Court while rendering this decision had duly considered its earlier decision in the case of Sahney Steel and Press Works Ltd., reported in 228 ITR 253 and had absolutely no quarrel with that judgement. Rather, it concurred with the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t after discussing the Seaham Harbour Dock Co. 's case (supra)as well as that of Lincolnshire Sugar Co. Ltd. 5 case (supra)that subsidy given by the Canadian Government to encourage construction of dry docks was 'an aid to the construction of dry dock and not an operational subsidy'. 17. This precisely is the question raised in this case. By no stretch of imagination can the subsidies whether by way of refund of sales tax or relief of electricity charges or water charges can be treated as an aid to setting up of the industry of the assessee. As we have seen earlier, the payments were to be made only if and when the assessee commenced its production. The said payments were trade for a period of five years calculated from the date of commencement of production in the assessee's factory. The subsidies are operational subsidies and not capital subsidies. 5.3.6. Yet another decision was rendered by Hon ble Supreme Court in the case of CIT vs. Chapalkar Brothers reported in 400 ITR 279 which held that where the object of respective subsidy schemes of State Government was to encourage development of multiple theatre complexes, incentives would be held to be capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontained in both Sahney Steel as well as Ponni Sugar, we are of the view that the object, as stated in the statement of objects and reasons, of the amendment ordinance was that since the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past, the concept of a Complete Family Entertainment Centre, more popularly known as Multiplex Theatre Complex, has emerged. These complexes offer various entertainment facilities for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct Multiplex Theatre Complexes, the idea being that exemption from entertainment duty for a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make no difference. 5.3.7. We further find that the Hon ble Gujarat High Court in CIT vs. Munjal Auto Industries Ltd., in Tax Appeal No.450 with 451-453 of 2012 dated 28/01/2013 also had an occasion to consider the very same issue in dispute before us. In this case also, the Revenue had taken a specific argument that since subsidy would be received only once unit goes for production, subsidy would be revenue nature. The Hon ble Gujarat High Court referred to the relevant subsidy scheme noted that concession was capped @125% of fixed capital investment and could be availed within 9 years. The Hon ble Gujarat High Court after considering the decision of Hon ble Supreme Court both in the case of Sahney Steel and Press Works Ltd., and Ponni Sugars and Chemicals referred to supra had held as under:- 7. From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expansion and diversification of an existing unit. As noted, such subsidy was available only to a new industrial u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, it was contended that the subsidy given was up to 10% of the capital investment calculated on the basis of the quantum of investment in capital and, therefore, receipt of such subsidy was on capital account and not on revenue account. It was also urged in that case that subsidy granted on the basis of refund of sales tax on raw materials, machinery and finished goods were also of capital nature as the object of granting refund of sales tax was that the assessee could set up new business or expand his existing business. The contention of the assessee in that case was dismissed by the Tribunal and, therefore, the assessee had come to this Court by way of a special leave petition. It was held by this Court on the facts of that case and on the basis of the analyses of the Scheme therein that the subsidy given was on revenue account because it was given by way of assistancein carry ing on of trade or business. On the facts of that case, it was held that the subsidy given was to meet recurring expenses. It was not for acquiring the capital asset. It was not to meet part of the cost. It was not granted for production of or bringing into existence any new asset. The subsidies in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. It was held as under : 10. From the above noted provisions of thescheme it can be clearly seen that the entire purpose of granting tax exemption was for giving the boost to the terrorism sector. This was to be achieved by attracting higher investment in areas with tourism potential. In order to achieve such purpose, exemption from various taxes as may be applicable was granted. It is true that the exemption was to be computed in terms of tax otherwise payable by the industry. However, the purpose of such exemption was to meet with the capital outlay already undertaken by the assessee. This clearly comes out from various provisions of the scheme. For example, the scheme was applicable only to the new project or to a existing project provided investment in fixed capital or capacity was increased atleast by 50%.Thus, the very eligibility for seeking exemption was linked with new investment being made in fixed capital. Further though the scheme envisaged a certain period spanning for 5 to 10 years during which such exemption could be availed depending on the category of the unit, such exemption would cease the moment the total incentives touched 100% of the eligible ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law the assessee company is justified in its claim that the sales-tax incentive allowed to it during the previous year in terms of the relevant Government order constitutes capital receipt and is not to be taken into account in the computation of total income? The Hon ble Tribunal for Asst Years 1984-85 and 1985-86 had held the sales tax exemption to be capital in nature as the same was given for industrial development of the backward districts as well as generation of employment. However, the matter was referred to the Special Bench as it was alleged that the decision for AY 1985-86 was virtually overruled by subsequent decision of the Mumbai Tribunal in the case of Bajaj Auto Ltd (ITA No. 49 and 1101 of 1991). The Special Bench held that the decision of Bajaj Auto has not overruled the decision of Hon ble Mumbai Tribunal for AY 1985-86 on the following basis: i) There cannot be any question of overruling the decision of one Bench by another bench of equal strength as it would be contrary to the established norms of judicial system in the country. ii) Even on merits it cannot be said that the Tribunal has laid out more stress on the form of the scheme an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue before the Hon ble Supreme Court, the Hon ble Supreme Court remitted the matter back to the Hon ble Bombay High Court. Accordingly, he argued that the decision of Special Bench was never reversed by the Hon ble Supreme Court as stated by the ld. Special Counsel for the Revenue and accordingly still is a good law and therefore a binding precedent on this Division Bench. In fact, in assessee s own case for A.Y.2001-02 in ITA No.778 of 2015 dated 18/12/2018 before the Hon ble Jurisdictional High Court, wherein the question Nos. c d was exactly on this point. For the sake of convenience, the question Nos. c d raised by the Revenue before the Hon ble Jurisdictional High Court is reproduced hereunder:- (c) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in restoring the issue of taxability of the sale tax exemption benefit of Rs.58 crores availed by the assessee to the file of the Assessing Officer for deciding afresh after considering the decision of the Special Bench of the ITAT in the case of DCIT V. Reliance Industries Ltd., 88 ITD 273, which has not been accepted by the Revenue? (d) Whether on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court had held that a question of law did arise. The Supreme Court framed a question and placed the matter back before the High Court. We are informed that this appeal is still pending. 4. On the other hand, learned Counsel for the assessee firstly contended that the Tribunal had merely remanded the issue back to the Assessing Officer. In earlier orders, the Revenue had approached the Court against the similar orders of the Tribunal. The High Court on two occasions, in the order dated 27.09.2016 and 22.11.2016 passed in Income Tax Appeal Nos. 475 of 2014 and 102 of 2014 respectively had not entertained the challenge of the Revenue. In any case, it was contended that the facts on record are available and the Tribunal has merely asked the Assessing Officer to take a decision on the assessee's contention. 5. As long as the material exists on record, a contention raised by the assessee for the first time before the Tribunal, cannot be barred. So much is clear from series of judgments of various Courts including of this Court in case of CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. (2012) 349 ITR 336. It is not the case of the Revenue that the assessee in the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of ACIT vs. Genus Electrotech Ltd., reported in 72 taxmann.com 101 had an occasion to consider the fact of Special Bench decision in a more elaborate manner. The relevant operative portion is reproduced hereunder:- 11. We find that so far as the Special Bench decision of this Tribunal in the case of Reliance Industries Ltd. (supra) is concerned, it still holds the field. All that has happened, as a result of Hon'ble Supreme Court's decision dated 9th September 2011, is that Hon'ble Bombay High Court has now admitted the question whether, on the facts and circumstances of the case, the Hon'ble Tribunal was right in holding that sales tax exemption was a capital receipt and will, in due course though, adjudicate on this legal issue. To that extent, Hon'ble Bombay High Court's order dated 15th April 2009, to the extent of declining to admit this question, stands reversed. However, the decision of the Special Bench still holds good as the same has not, and at least not yet, even been examined by Hon'ble Bombay High Court. Mere admission of appeal against a decision, as is elementary, does not affect the biding nature of a judicial precedent. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues will now come up for consideration of Their Lordships. The fact that appeal is admitted does not, as we have stated earlier as well, does not affect the binding nature of the judicial precedents. There is no dispute before us that the scheme under which the sales tax and excise duty subsidy are given to this assessee are the same as in the case of Ajanta Manufacturing Ltd. (supra). All the material facts being the same, there is no reason to take any other view of the matter than the view so taken by the coordinate bench. We must, therefore, uphold the conclusions arrived at by the Commissioner (Appeals), which are in consonance with the Special Bench decision in the case of Reliance Industries Ltd. (supra) and coordinate bench decision in the case of Ajanta Manufacturing Ltd. (supra), and decline to interfere in the matter. (emphasis supplied by us) 5.4.6. In view of the above, no fault could be attributed on the ld. CIT(A) placing reliance on the decision of the Special Bench of the Tribunal and granting relief to the assessee in the instant case. 9. In the Special Bench decision in the case of Reliance Industries Ltd (supra), what came up for consideration was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival contentions and having peruse the material on record, we are of the considered view that the assessee deserves to succeed as for the three immediately preceding assessment years, i.e. the assessment years 2002-03,2003-04 and 2004-05, the coordinate benches, in assessee s own case, have decided the same issue in favour of the assessee. In any case, there is no dispute that the expenses are otherwise admissible in nature and have not been claimed or allowed as deduction in any other assessment year. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and direct the Assessing Officer to delete the impugned disallowance of Rs 5,12,019. 15. Ground no. 2 is thus allowed. 16. In ground no. 3, the assessee has raised the following grievance: That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in not giving directions to exclude gain on account of foreign exchange rate fluctuation from the computation of total income irrespective of the stand taken by the A.O. in earlier years that the loss on foreign exchange rate fluctuation is notional and hence not allowable. 17. Learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, a disallowance of 1% is reasonable- particularly when the assessee has made investments entirety out of his own funds and when there are no borrowings costs involved. It is an undisputed position, on the facts of this case, that the assessee has made the investments entirely out of his own funds. The disallowance is thus restricted to 1% of the tax-exempt income. The assessee gets the relief accordingly. 23. Ground nos. 4 and 5 are thus allowed in the terms indicated above. 24. In ground no 6, the assessee has raised the following grievance: 6(a). That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified in confirming the decision of the A.O. in assessing Interest Income of Rs. 12,07,82,717/- and Truck Hire Charges of Rs. 2,19,000/- (Net) as income under the head Income from Other Sources 6(b). That on the facts and in the circumstances of the case and without prejudice to ground no. 6(a) taken here-in-above, necessary direction may please be given to the A.O. to allow deduction of expenditure incurred for earning the aforesaid income for the purpose of computing income from other sources . 6(c). That on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction for the came is avail ble to fro appellant under provisions of Section 43B since the appellant had paid excise duty payable on closing stock of cement as on last day of accounting year before filing of return of income for Assessment Year 2005-06 by adjusting unutilized MODVAT credit and necessary proofs for payment of excise duty are on the records of A.O. 33. Learned representatives fairly agree that the above issue is covered in favour of the assessee by decisions of the coordinate benches in assessee s own cases from assessment years 1999-2000 to 2004-05. Copies of these decisions have been placed before us by the assessee. Learned Departmental Representative, however, relies upon the stand of the authorities below nevertheless. 34. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches in assessee s own case. Respectfully following the same, we uphold the plea of the assessee and direct the Assessing Officer to delete the impugned addition of Rs 6,17,08,694 on account of unutilized MODVAT credit (net of unadjusted MODVAT credit on the first day of the year). The assessee gets the relief accordingly. Ground no. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of exports of cement by Indian companies to the Sri Lankan companies, and these transactions of cement exports were exports by Grasim Industries Ltd (4,250 MTs- at 34.95 US$ per MT), Indian Cement Ltd (1,100 MTs- at US $ 32 per MT ) and Ultratech Cements Ltd (2,79,100 MTs- at US $30.45 per MT) to Sri Lankan companies. Taking an arithmetic average of these three inputs for the application of Comparable Uncontrolled Price, which worked out to FOB price at US $ 32.47, as against the FOB price of US $ 30.28 charged by the assessee, the TPO computed the arm s length price adjustment at Rs 4,73,21,572. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee made elaborate arguments on various facets of the benchmarking so adopted by the TPO but none of these arguments impressed the CIT(A), and, after giving a small relief on the ground of a computational error, the CIT(A) upheld the action of the lower authorities. The assessee is not satisfied and is in further appeal before us. 37. We have heard the rival contentions, perused the material on record as also the facts of the case as also the applicable legal position. 38. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the relationship between the price and volume, when variations in the volume are significant- around 30 times in one case and around 8 times in another, a significant variation in price is inevitable, and, for this reason, alone, the independent transactions cease to be comparable. That leaves us with only one case, and that is the export of 2,79,100 MTs of cement by Ultratech Cements Ltd, and the FOB rate, going by the TPO, in this case, is US $ 30.45. That is well within the permissible 5% range of the transaction value at US $ 28.98, as 95% of the comparable transaction price in that case, which can be taken as a valid CUP, is US $ 28.92 per MT - as against the transaction price of US$ 28.98 per MT. Therefore, even going by the data gathered by the TPO, to the extent such data can meet our approval in the light of the observations above, the transaction entered into by the assessee for exports of cement to its AE in Sri Lanka was at an arm s length price. We, therefore, uphold the plea of the assessee for this short reason alone and direct the Assessing Officer to delete the impugned ALP adjustment of Rs 4,73,21,572. The assessee gets the relief accordingly. As we have uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire arrangement was routed through, and duly approved by, the RBI. It was noted that under the terms of arrangement, the assessee company was to pay to CAIL ten half-yearly instalments of US$ 7,69,500 for both of these vessels, and the implicit interest rate, under the arrangement, was 7.5% p.a. The TPO also noted that the CAIL had obtained loan of US $ 7 million from the Bank of America, Taipei office, to part finance the vessels, and that interest rate on this financing by the CAIL was LIBOR plus 1.5% for first three years, and +1.55% for the rest of the two years. The TPO was of the view that the interest differential between the interest charged to the assessee and interest paid by the CAIL to Bank of America was mutually beneficial to the assessee as also the CAIL and should have been equally shared between the two. The total interest paid by the assessee, during the relevant previous year, was US $ 1,93,800, whereas CAIL paid interest of US $ 1,06,980 to the Bank of America. The difference of US $ 86,820 was equally shared between the assessee and the CAIL, and, accordingly, an arm s length price adjustment of US $ 43,40, which was computed as equal to Rs 18,93,544 was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 SOT 409 (Mum)], a coordinate bench of this Tribunal has taken note of the working showing interest rate @ 8%, which has remained unchallenged by the revenue. We have also noted that the payments under the BBCD arrangements were made with specific regulatory approval prescribed by the RBI, and there are coordinate bench decisions, such as in the case of ACIT Vs Dow Agrosciences India (P.) Ltd. [(2016) 76 taxmann.124 (Mum)], holding that when such regulatory approvals are duly obtained, that approval can also be viewed in support of the transaction price as an arm s length price. In any event, the total ALP adjustment is less than Rs 20 lakhs, and the relevant financial period is almost 20 years ago, it may not even be appropriate to even remit the matter for fresh consideration at the TPO stage. Keeping in all these factors, as also the entirety of the case, in mind, we deem it fit and proper to delete the impugned ALP adjustment of Rs 18,93,544. The assessee gets the relief accordingly. 45. Ground no. 10 of the assessee is thus allowed, and ground no. 11 of the revenue is thus dismissed. 46. In ground no. 11, the assessee has raised the following grievance: That on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that when a receipt is not in the character of income as defined under section 2(24) of the I.T. Act, 1961, then it cannot form part of the book profit u/s 115JB of the I.T. Act, 1961. The Hon'ble High court, further observed that sales tax subsidy received by the assessee is capital receipt and does not come within definition of income under section 2(24) of the I.T. Act, 1961 and when, a receipt is not a in the nature of income, it cannot form part of book profit u/s 115JB of the I.T. Act, 1961. The Court, further observed that the facts of case before the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) were altogether difference, where the income in question was taxable, but was exempt under a specific provision of the Act, and as such it was to be included as a part of book profit, but where the receipt is not in the nature of income at all, it cannot be included in book profit for the purpose of computation u/s 115JB of the I.T. Act, 1961. 48. We further noted that the ITAT special bench of Kolkata Tribunal, in the case of Sutlej Cotton mills Ltd. v. Asstt. CIT [1993] 45 ITD 22 (Cal.) (SB), held that a particular receipt, which is admittedly not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, on disposal of this appeal, material adjustments would be required in computing total income, deduction under chapter VIA, Book Profit, interest, carry forward and set off of losses and tax and necessary direction may be given to the A.O. on this front. 55. Learned representatives fairly agree that the relief so sought by the assessee is only a consequential relief and no specific adjudication is required on the same; suffice to direct the Assessing Officer to give consequential reliefs, as admissible. 56. Ground no. 14 is thus allowed in the terms indicated above. 57. No other issue was raised before so far as appeal of the assessee is concerned. 58. In the result, the appeal of the assessee is partly allowed in the terms indicated above. 59. We will now take up the appeal filed by the Assessing Officer. 60. So far as the first ground of appeal in the Assessing Officer s appeal, it has already been, earlier in this common order, adjudicated upon along with a connected ground of appeal of the assessee, and dismissed as such. 61. Ground no 1 is thus dismissed. 62. In ground no. 2, the Assessing Officer has raised the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decline to interfere in the matter. 68. Ground no. 3 is thus dismissed. 69. In ground no. 4, the Assessing Officer has raised the following grievance: On the facts and in the circumstances of the case and in law, the Id.CIT(A) erred in allowing Pooja/Function expenses amounting to Rs. 39,81,919/- as a business expenditure 70. Learned representative fairly agree that this issue is also a legacy issue and is covered by decisions of the co-ordinate benches an assessee own cases for the assessment years 1988-89 to 1989-90 1997-98 to 2000-05. Copies of the orders passed by the co-ordinate benches were also placed before us. Learned Departmental Representative, however, relied upon the stand of the Assessing Officer. 71. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches in assessee own cases for the preceding assessment years. Respectfully following the same, we uphold the relief granted by the learned CIT(A) and decline to interfere in the matter. 74. Ground no. 4 is thus dismissed. 75. In ground no. 5, the Assessing Officer has raised the following grievance: On the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in its own cases, but added that the views of the Tribunal has not attained finality, and that the CIT(A) gave relief on the ground that as the Assessing Officer has not challenged the relief granted by the Tribunal, the matter has attained finality. No material has been brought before us to dislodge the findings of the learned CIT(A). In any event, even going by the observations of the Assessing Officer, the matter is squarely covered, in favour of the assessee, by decisions of the coordinate benches in assessee s own case. We, therefore, uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 85. Ground no. 7 is thus dismissed. 86. In ground no. 8, the Assessing Officer has raised the following grievance: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing expenditure incurred on roads amounting to Rs. 82,95,819/-. 87. Learned representatives fairly agree that this issue is also a legacy issue and is covered by decisions of the co-ordinate benches an assessee's own cases for the assessment years 2001-02 2004-05; copies of the orders passed by the co-ordinate benches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interfere in the matter. 97. Ground no. 10 is thus dismissed. 98. So far as ground no. 11 of revenue s appeal is concerned, it has already been dealt with, and disposed of, while dealing with ground no. 10 in the asseee s appeal. We need not, therefore, take it up again. 99. Ground no. 11 is thus dismissed. 100. In ground no. 12, the Assessing Officer has raised the following grievance: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing expenses of Rs. 6,28,579/- incurred towards earning dividend income U/s. 14A and reduced from the amount of income exempt U/s.14A and reduced from the amount of income exempt u/s. 10(34)/10 (35) of Income tax Act in computing book profit U/s. 115JB of the Act. 101. Learned representatives fairly agree that this issue is also a legacy issue and is covered by decisions of the co-ordinate benches an assessee own cases for the assessment years 2001-02 to 2002-03; copies of the orders passed by the co-ordinate benches were also placed before us. Learned Departmental Representative however relied upon the stand of the Assessing Officer. 102. We see no reasons to take any other view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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