TMI Blog2016 (3) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... ing so, then there is no need to show such high sale price of ₹ 120 to ₹ 150 per quintal for about 51,500 Quintals out of total sale of 615,631 Quintals. This has been deleted by the Ld. CIT(A) on this basis that there is no evidence in the possession of the Assessing Officer which goes to prove that the assessee had actually sold the declared bagasse at ₹ 80 per qtl. or at a higher rate then what has been declared by the assessee and in the absence of such information or evidence, no addition can be made in the hands of the assessee MAT computation - inclusion or exclusion of receipt of carbon credits - Held that:- The receipt on account of transfer of carbon credit which is held to be a capital receipt needs to be excluded from profit as per P&L account for the present year while computing the book profit u/s 115JB of the Act. - ITA No.417, 418/LKW/2013, CO No.26, 27/Lkw/2013, ITA No.339/LKW/2013, ITA No.518, 53/LKW/2015, ITA No.569/LKW/2015 - - - Dated:- 9-2-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri Ajeet Kumar, CIT DR For The Respondent : Shri A.K. Gupta, CA ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of income and in this manner, Hon ble Andhra Pradesh High Court has upheld the Tribunal s order in that case. The dispute in the present case is also regarding nature of receipt on account of transfer of carbon credit. Ld. DR of the Revenue could not point out any difference in facts in the present case and in the case of CIT Vs. My Home Power Ltd. (Supra) and therefore, respectfully following this judgment of Hon ble Andhra Pradesh High Court, we decline to interfere in the order of Ld. CIT(A) on this issue. Accordingly, Ground No.1 of the Revenue is rejected. 5. The Ground Nos. 2 and 3 of the Revenue are as under:- 2. That the order of Ld CIT(A) is erroneous in law and facts in restricting the addition to ₹ 1,00,000/- instead of ₹ 3,24,708/-/- made by A.O, on account of miscellaneous expenses, 3. That the order of Ld CIT(A) is erroneous in law and facts in restricting the addition to ₹ 1,00,000/- and granting relief of ₹ 8,35,016/- made by A.O. on account of building and machinery repairs. 6. Ld. DR of the Revenue supported the assessment order whereas it is submitted by Ld. AR of the assessee that both these issues are covered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by Ld. AR of the assessee this issue was also before the Tribunal in Assessment Year 2007-08 as per Ground No.5 in that year and it was held by the Tribunal in that year that the Assessing Officer was justified in estimating the yield of bagasse at 34% because the assessee itself has shown yield of bagasse at 34.29% for Assessment Year 2008-09. Thereafter, it was submitted that in the present year, the Assessing Officer estimated the yield of bagasse at 36% as against yield disclosed by the assessee at 34.27%. He submitted that under these facts, no addition is justified in the present year. 10. We have considered the rival submissions. We find that in Assessment Year 2007-08, the Tribunal has considered the whole history of yield of bagasse from Assessment Year 2004-05 to Assessment Year 2008-09 and thereafter, the Tribunal held that the Assessing Officer is justified in estimating the yield of bagasse at 34%. Since in the present year, the yield of bagasse reported by the assessee is 34.27% which is more than 34% estimated by the Tribunal in Assessment Year 2007-08, we find force in the submissions of the Ld. AR of the assessee that no addition is called for in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Ld. CIT(A), we find that Ld. CIT(A) has followed the various judgments of the Hon ble Madras High Court and Hon ble Supreme Court and Ld. Ld. DR of the Revenue could not show us as to how these judgments are not applicable in the facts of the present case. In this view of the matter, we decline to interfere in the order of Ld. CIT(A) on this issue also. Accordingly, Ground No.5 is also rejected. 15. The Ground No.6 of the Revenue is as under:- 6. That the order of Ld CIT(A) is erroneous in law and facts in deleting the addition of ₹ 80,03,203/-made by A.O. on account of low value of bagasse claimed and sold the same in open market at ₹ 80,03,203/-. 16. Ld. DR of the Revenue supported the assessment order whereas Ld. Ld. AR of the assessee of the assessee supported the order of Ld. CIT(A). He also submitted that the statement of bagasse sales during the present year is available on page 55 of the paper book. 17. We have considered the rival submissions. We find that as per details regarding sale of bagasse in the present year available on page 55 of the paper book, there are different rates in the range of ₹ 40 per.qtl. to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of ld. CIT(A) on this issue and restore this matter back to his file for fresh decision by way of speaking and reasoned order after providing adequate opportunity of being heard to both sides. Accordingly, Ground no. 7 is allowed for statistical purposes. 22. In the result, appeal of the Revenue is partly allowed for statistical purposes. 23. Now, we take up the CO of the assessee for Assessment Year 2008-09 i.e. CO No. 26/Lkw/2013. 24. The grounds of the assessee are as under:- A- Grounds to support order of CIT(A): For that learned CIT(A) has passed order and allowed relief on consideration of facts and circumstances of the case, applicable law, written explanations filed by assessee, case laws and precedence relied on by assessee .Therefore, relief allowed by learned CIT(A) on various issues, may be confirmed and the ground nos. 1-8 of departmental appeal may be dismissed. B. Grounds to seek further relief: 1. For that learned CIT(A) was wrong in confirming disallowance on estimated and adhock basis to the extent of Rs.one lakh out of Miscellaneous Expenses and Rs. one lakh out of repairs and Maintenance Expenses with his contention for b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on similar line. Accordingly, Ground No.1 is rejected. 32. The Grounds No.2 and 3 of the Revenue are as under:- 2. That the order of ld CIT(A) is erroneous in law and facts in restricting the addition to ₹ 1,00,000/- instead of ₹ 3,50,050/-made by A.O. on account of miscellaneous expenses. 3. That the order of Ld CIT(A) is erroneous in law and facts in restricting the addition to ₹ 1,00,000V- and granting relief of ₹ 8,25,190/- made by A.O. on account of building and machinery repairs. 33. Both sides agree that these two grounds are also identical to Ground no. 2 and 3 raised by the Revenue in Assessment Year 2008-09 and the same can be decided in the present year also on similar line. In Assessment Year 2008-09, Ground Nos. 2 and 3 were also decided by us in favour of the assessee as per Para No. 7 and therefore, on similar line, in the present year also, both these issues are decided in favour of the assessee. Accordingly, Ground Nos 2 and 3 of the Revenue are rejected. 34. The Ground No.4 of the Revenue is as under:- 4. That the order of Ld CIT(A) is erroneous in law and facts in deleting the addition of ₹ 1,29,29,258/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gross Total income, deductions under chapter VIA could not be allowed to compute total income and tax payable then S. 115JB will not be applicable as the charging section and computation provisions are integral code and computation fails when there is no gross total income so the charge also fails. 3. For that learned CIT(A) was also wrong in ignoring the fact that decisions of the Calcutta High Court and Tribunal has attained finality since the revenue has not challenged judgments of Calcutta High Court before the Supreme Court, and many judgments of Tribunal have not been challenged before the Calcutta High Court. Therefore, the judgments relied on by assessee, in cases of Vishnu Sugar Mills Ltd, Sasamusa Sugar Works Ltd and Neeraj Vanijya P. Ltd are binding in view of law laid down in case of Berger Paints India Ltd. Vs CIT [2004] 266 ITR 99 (SC). 4. For that learned CIT(A) was wrong in applying decision of ITAT, Kolkata, in case of Bhatkwa Tea Industries Ltd, and impliedly applying decision in case of DCW Ltd of Bombay Tribunal, though in these cases no grounds were taken at all by respective assessee about integrality of charging provision and computation provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly ignored to consider particularly when learned CIT(A) has allowed relief on similar ground of appeal of Assessment Years 2007-08 and 2008-09 heard and decided by him at the same time . Alternatively the learned AO may be directed to allow initial depreciation u/s 32(1) (iia) as an incentive and one time allowance @ 20% of cost of new eligible plant and machinery, as allowed by the learned CIT(A) in Assessment years 2007-08 and 2008-09. 44. As per Grounds No. 1 to 5 of the appeal, the issue involved is regarding applicability of the provisions of Section 115JB in the present case when the assessee is having no gross total income. In this regard, reliance was placed by the Ld. AR of the assessee on the Tribunal s order rendered in the case of DCIT Vs. M/s Vishnu Sugar Mills Ltd. in ITA No. 2131 and 2133/Kol/2004, 193 774/Kol/2005 and 918/Kol/2002 dated 17.08.2005. He submitted that the copy of this Tribunal s order is available on pages 65 to 83 of the paper book. He also placed reliance on another Tribunal s order rendered in the case of Neeraj Vanijya Pvt. Ltd. Vs. ITO in ITA No.1504/Kol/2008 dated 31.10.2008 copy which is available on pages 84 to 87 of the paper book and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 115JA of the Act, the comparison was to be made between total income computed as per normal provisions of the Act and 30% of book profit and because of this, it was held by the Tribunal in that case that since the assessee was having losses under the normal provisions of the Act and for the purpose of computing book profit also, loss brought forward or unabsorbed depreciation whichever is less is also required to be reduced from the amount of book profit as per profit and loss account, it was held that the provisions of Section 115JA are not applicable but in the present case, after insertion of Section 115JB of the Act, there is no comparison to be made between 30% book profit and total income as per normal provisions of Act and therefore, the very basis of this Tribunal decision is not in existence. Now after insertion of Section 115JB of the Act, what is required is to compare the tax payable under normal provisions of the Act and if such tax payable is less than the specified percentage of book profit then the assessee has to make payment of the prescribed percentage of book profit as MAT u/s 115JB of the Act. This is undisputedly admitted position that tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 115JB of the Act was applicable and although the Tribunal has noted in Para 42 of that Tribunal s order available on page 81 of the paper book that in this year, the provisions of Section 115JB are applicable but while deciding the issue as per Para 44 of the Tribunal s order, the Tribunal has not taken note of the differences in the provisions of Section 115JA and 115JB of the Act and therefore, in our considered opinion, this Tribunal s order is per inqurium because it has not considered the change in law in proper prospective and therefore, this Tribunal s order also does not lay down a binding precedent. 47. Same is the case with regard to other Tribunal s orders, on which reliance has been placed by Ld. AR of the assessee because in these cases also, the Tribunal simply followed the judgment of the Hon ble Kolkata High Court rendered in the case of DCIT Vs. Vishnu Sugar Mills Ltd. (Supra), and we have already seen that the judgment of Hon ble Kolkata High Court rendered in the case of DCIT Vs. Vishnu Sugar Mills Ltd. (Supra) and the Tribunal s order in that case are not laying down binding precedent and therefore, any Tribunal s order by blindly following these judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot. Now, in the light of this factual position, we examine the applicability of this Tribunal s order rendered in the case of ACIT Vs. M/s Shree Cement Ltd. (Supra), for Assessment Year 2004-05 to 2006-07. The relevant paras of this Tribunal s order are para 13 to 13.11 of this Tribunal s order and the same are reproduced herein below for the sake of ready reference:- 13. We have heard the rival submissions and considered them carefully. We have also perused the orders of authorities below as well as other material on which our attention has been drawn. We have taken into consideration the ratio decidendi of all the decisions relied upon by the rival parties. 13.1 At the outset, the issue in hand is covered in favour of the assessee in its own case for A.Y. 2003-04 vide order dated 23-12-2009 in ITA No. 942/Jp/08. The above decision of Tribunal has been appealed before the Hon ble Jurisdictional Rajasthan High Court and Hon ble Jurisdictional High Court vide order dated 01-10-2010 has admitted only one ground which is reproduced below: Whether on the facts circumstances of the case, the Tribunal was justified in holding that the Sales Tax Subsidy received by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the issue of taxability of capital gains in computing Book profit u/s 115JB of the Act. These capital gains were otherwise income u/s 2(24) of the Act and exclusion was claimed in computing Book Profit u/s 115JB on the ground that the said capital gains was exempt either u/s 47(iv) or u/s 54EC of the Act, which the Tribunal did not agree. In the present case, however, we are dealing not with capital gains but with pure capital receipt, which does not even have any income , profits or, gains embedded therein. The impugned incentive granted to the Assessee is pure and simple capital receipt, in terms of our decision on ground no. 1 at Para 10 here-in-above, which in turn is supported by the principles laid down by the Apex Court, various high courts Special Bench of the Tribunal. That being the case, it does not have any income or profit element embedded in it, since the incentive was granted to encourage industrial growth of industrially non developed area. No one can make profit out of the subsidy or incentive granted to it. Hence, it is not chargeable to tax under the Income Tax Act as held by the Apex Court in the case of Padmaraje (supra) and in the light of our fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt is in line with the principles as laid down by Hon ble Apex Court in the case of Apollo Tyres (supra). In the case of Apollo Tyres (supra), the question before the Apex Court was whether an AO can, while assessing a company for income tax u/s 115J of the IT Act, question the correctness of the P L tic prepared in accordance with requirements of Parts II and III of Sch. VI to the Companies Act. From the question as framed before the Apex Court it is clear that the issue before the Hon ble Court was with regard to power of the AO to recast audited accounts prepared in accordance with Part II and Part III of the Sch. VI to the Companies Act. Therefore, for applicability of the decision of the Apex Court the prerequisite is that the accounts are prepared in accordance with Part II arid Part III to Sch. VI of the Companies Act. If however the P L accounts are not in accordance with Part II and III of Sch. VI to the Companies Act, the said decision cannot be applied and in that situation it does not prohibit the needful adjustment. 13.9 Our view as above is supported by the decision of-the Special Bench in the case of Rain Commodities (supra), which incidentally has been relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicate Bank Vs. ACIT, 7 SOT 51 Bangalore where it was held by the Tribunal after considering the decision of Hon ble Apex Court rendered in the case of Apollo Tyres Ltd. (Supra), and after explaining the same that adjustment to profit and loss account is possible to make it compliant with Schedule VI Part II and Part III of the Companies Act, 1956 which is prerequisite of Section 115JB of the Act. On this basis, the Tribunal in the case of Shree Cement Ltd. (Supra) decided this issue in favour of the assessee and it was held that capital receipt in the form of sales tax subsidy needs to be excluded from profit as per P L account for the purpose of computing book profit u/s 115JB of the Act. By respectfully following these Tribunal s orders, we hold that in the present case also, the receipt on account of transfer of carbon credit which is held to be a capital receipt needs to be excluded from profit as per P L account for the present year while computing the book profit u/s 115JB of the Act. This issue is decided in favour of the assessee and accordingly Ground Nos.1 to 5 are allowed. The assessee gets relief of ₹ 27,70,880/- and consequent interest being 10% of amount recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-. 3. The learned CIT (Appeals) has erred in law and on facts in confirming the applicability of section 11 5 JB of the Income Tax Act. 1961 on the facts and circumstances of the case and confirming the assessment al book profit of ₹ 38,06,07,184/- and imposing the Minimum Alternate Tax of ₹ 5,70,91,078/-. 4. Such other relief as may crave in during the course of proceeding of the appeal and found equitable or justified by the Hon ble Tribunal. 57. Both sides agreed that the Grounds No. 1 and 2 in the present year are same as Grounds No. 6 and 7 in assessee s appeal for Assessment Year 2009-10 in ITA No. 339/Lkw/2013 and the same may be decided in similar line. Regarding Ground No.3, it was submitted by Ld. AR of the assessee that since there is no taxable income after adjustment of brought forward business loss and unabsorbed depreciation, the provisions of Section 115JB are not applicable. 58. Ld. DR of the Revenue supported the order of authorities below. 59. We have considered the rival submissions. Regarding Ground Nos. 1 and 2 we find that this issue is squarely covered against the assessee because in Assessment Year 2008-09, disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year also, all these three grounds are rejected on similar line. 65. In the result, appeal of the assessee is dismissed. 66. Now, we take up the appeal the Revenue for Assessment Year 2010-11 in ITA No. 569/Lkw/2015. 67. The grounds raised by the Revenue are as under:- (1) That the order of the Commissioner of Income Tax (Appeals ) is erroneous in law and on facts in deleting the addition rightly made by the Assessing Officer on account of Miscellaneous Expenses at ₹ 2,98,238/-. (2) That the order of the Commissioner of Income Tax (Appeals ) is erroneous in law and on facts in deleting the addition rightly made by the Assessing Officer on account of Repairs and Maintenance Expenses at ₹ 6,29,228/-. (3) That the order of the Commissioner of Income Tax (Appeals ) is erroneous in law and on facts in deleting the addition rightly made by the Assessing Officer on account of low production of bagasse at ₹ 3, 84,23,000/-. (4) That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts may be cancelled and the order of the Assessing Officer may be restored. (5) Any me ground of appeal may be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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