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2022 (7) TMI 386 - AT - Income TaxAddition on account of unrealized loss arising from foreign exchange fluctuations - rejection of claim of Forex Loss holding that the loss represented the marked to market loss which is notional and contingent in nature and not eligible for setting off against the taxable income - HELD THAT:- As in assessee’s own case in AY 2009-10, 2010-11 [2018 (7) TMI 2266 - ITAT KOLKATA] & 2011-12 [2019 (8) TMI 1826 - ITAT KOLKATA] we find that the issue is squarely covered in favour of the assessee wherein the Co-ordinate Bench has held that loss incurred on account of marked to market basis in respect of forward contracts which were outstanding at the year end on the basis of foreign exchange rate at the end of the year is not a notional loss and also not contingent in nature but a loss which the assessee is entitled to set off against the its income. In view of these facts and circumstances and the decisions of the coordinate bench supra, we are inclined to uphold the order of Ld. CIT(A) by dismissing the ground no. 1 in the revenue’s appeal. Disallowance of depreciation on energy saving devices comprising transformer of different KVA, switchyard and chimney etc. - CIT-A directing the AO to allow the depreciation @ 80% as against the depreciation of 15% allowed by the AO - HELD THAT:- As undisputed facts in all preceding and succeeding years these items of equipments have been treated as part of the energy saving devices and the assessee has been allowed depreciation @ 80%. As decided in M/S MAHARAJA SHREE UMAID MILLS LTD [2020 (5) TMI 118 - ITAT JAIPUR], RAKESH GUPTA [2013 (6) TMI 691 - ITAT CHANDIGARH], MEHRU ELECTRICALS & MECHANICAL ENGINEERS PVT. LTD., ALWAR [2016 (7) TMI 708 - RAJASTHAN HIGH COURT] held that transformer, switchyard and chimney are integral part of co-generation system and they are in the nature of energy saving devices. The Ld. CIT(A) has also given a very comprehensive items on the cogeneration system and how the transformer, switchyard, chimney are integral part are energy power generation system not analyzing each item. Under these circumstances, we do not find any reason to interfere in the order passed by the Ld. CIT(A). Besides the issue has been accepted by the Department in all the preceding and succeeding assessment years. Therefore the revenue cannot be allowed to demand a different stand in the current assessment year in this year as there is no change of facts and circumstances during the year vis a vis preceding and succeeding years. The case of assessee also finds support from the decision of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT], CIT vs. Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT] and Maharao Bhim Singh of Kota vs. CIT (2016 (12) TMI 418 - SUPREME COURT] on this issue that where there is change in the facts and circumstances vis a vis the earlier years and the revenue has accepted the position with regard to particular issue , then in the subsequent the revenue can not be allowed to take a different stand. In view of these facts and circumstances and considering the various decisions of the various judicial forums as referred to above, we are inclined to uphold the order of Ld. CIT(A) by dismissing the ground no. 2 of revenue’s appeal. Additional depreciation claimed by the assessee @ 10% - HELD THAT:- As relying on case Rittal India (P) Ltd. [2016 (1) TMI 81 - KARNATAKA HIGH COURT], National Engineering Industrial Ltd. [2021 (12) TMI 1130 - ITAT KOLKATA], Century Enka Ltd. [2015 (5) TMI 647 - ITAT KOLKATA],and Universal Cables Ltd. [2015 (5) TMI 650 - ITAT KOLKATA] the assessee is entitled to remaining 50% of the depreciation in the subsequent year which was not claimed in the year of addition because of the reasons that the asset was put to use for less than 180 days. The assessee has claimed 50% of the depreciation in consonance with second proviso to section 32(1)(ii) of Act. Accordingly we are inclined to uphold the order of Ld. CIT(A) by dismissing the ground no. 3 of revenue. Addition on account of TP adjustment - upholding the internal CUP method to bench mark the transactions of sale of power by directing the AO/TPO to allow the deduction u/s 80IA(8) of the Act - HELD THAT:- The power supplied by the CPP to non eligible unit was business to consumer (commonly known As B2C) meaning thereby the rate at which the ultimate consumers can purchase the power for their consumption is relevant. In the instant case before us, the B2C market comprises the sale of power by SEB and IEX etc to different categories of consumers. Thus the power sold by the CPP to unrelated parties namely Noida Power Co Ltd, Global Energy , RPG Power Trading Co, and IEX etc was in altogether different market conditions which is business to business commonly known as B2B model and the said rate represented the rate at which the distribution companies purchased power from generation companies. Further no consumer can buy the power in the open market at a rate generation companies sell power to distribution companies. No force in the contentions of the ld DR that rate at which the power was sold to unrelated parties by the CPP is the ALP. We also note that decision of the Calcuta High court in the case of CIT Vs ITC [2015 (7) TMI 450 - CALCUTTA HIGH COURT] which was relied by the TPO/AO and the functional dissimilarity between CPP and SEB have been considered by the coordinate bench of the tribunal in the case of Star Paper Mills Ltd [2021 (11) TMI 1 - ITAT KOLKATA] Therefore , we are inclined to uphold the order of Ld. CIT(A) by holding that the ALC at which the power is procured by noneligible unit from SEB is the most appropriate ALP to bench mark the specified domestic transaction and accordingly the order passed by Ld. CIT(A) is upheld by dismissing the ground no. 4 of the revenue’s appeal. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- CIT(A) allowed the appeal of the assessee so far as the disallowance under Rule 8D(2)(ii) is concerned by holding that the assessee has sufficient own interest free funds available and therefore came to the conclusion that the investment in share and securities were made out of own interest free by relying the decision of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT], CIT vs. HDFC Bank Ltd. [2016 (3) TMI 755 - BOMBAY HIGH COURT], CIT vs. UTI Bank Ltd. [2013 (6) TMI 223 - GUJARAT HIGH COURT] and CIT vs. Max India Ltd. [2016 (11) TMI 1012 - PUNJAB AND HARYANA HIGH COURT] and assessee’s own case for AYs. 2009-10 & 2010-11. Disallowance under rule 8D(2)(iii) was concerned, the Ld. CIT(A) allowed the appeal of the assessee by holding that only those investments are required to be considered which yielded exempt income during the year by following the ratio laid down by co-ordinate Bench in assessee’s own case [2018 (7) TMI 2266 - ITAT KOLKATA] and came to the conclusion that the disallowance under rule 8D(2)(iii) worked out to Rs. 9635/- only. Since the assessee has suo-moto made disallowance which is higher than the disallowance coming under Rule 8D(2)(iii), therefore no need for any disallowance and directed the AO to restrict the disallowance to the suo-moto disallowance. Appeal of revenue dismissed.
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