Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

Dy. CIT-Central Circle-8 (3) , Aayakar Bhavan, M.K. Road, Mumbai Versus M/s. JSW Energy Limited, And Vice-Versa

2017 (6) TMI 249 - ITAT MUMBAI

Addition made on account of capitalization of amount in respect of contract awarded - Held that:- We find that the amalgamation of the JSW(E)Ratnagiri took place on 01.04.2010, that before that date Ratnagiri Unit was an independent entity, that the alleged bogus bills were obtained by JSW(E)Ratnagiri.If any addition in that regard had to be made it could be made in the hands of Ratnagiri Unit or successor to that unit. The FAA has deleted the addition as the bills were not taken by the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se to notice u/s. 153A of the Act. Considering the above, we are of the opinion that there is no need to disturb the order of the FAA. - Deduction u/s. 80IA in respect of the total disallowance u/s.14A - Held that:- Issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09 wherein held whatever income was enhanced on account of disallowance computed u/s 14A of the Act, it has been offset by the exemption available on such enhanced profit in ter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

O for fresh adjudication - I.T.A. /1334/Mum/2015, And I.T.A. /1091/Mum/2015, - Dated:- 2-6-2017 - Shri Rajendra,Accountant Member, And Ram Lal Negi,Judicial Member For The Revenue : Shri Alok Johari-DR For The Assessee : Shri Rakesh Joshi Order u/s.254(1)of the Income- tax Act,1961(Act) PER RAJENDRA, AM Challenging the order dated 22.12.2014 of CIT(A)-47,Mumbai the AO and the assessee have filed cross appeals for the above mentioned assessment years.Assessee-company, engaged in the business of g .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was carried out in JSW group, including the assessee, on 16/03/2011resulting in seizure of books of accounts and documents.Thereafter, a notice u/s. 153A was issued requiring the assesse to file return of income. In response to the notice it filed return on 29/01/2011 declaring income of ₹ 255.08 crores. Income u/s.115JB was disclosed at ₹ 9,76,27,90,248/-. 3.First Ground of appeal is about deleting the addition made on account of capitalization, amounting to ₹ 33.84 crores in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the course of search and seizure proceedings.He further observed that JSW Energy Ltd.(Ratnagiri), previously a wholly owned subsidiary of the assessee had merged with it w.e.f. 01.04.2010, that it got generation of electricity from its plant at village Nandiwade, that the total capacity of the project was 1200MW, that it had invested ₹ 3527.00 crores in the project till 31/3/2010, that about ₹ 615.00 crores were invested in capital assets and ₹ 3959.00 crores was part of capit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat all these documents were prepared on a particular day to serve the purpose of having some supporting evidence for the bills produced by the contractor i.e. GIEPL, that the bills were approved and passed for payment without any cross verification,that the log sheet of the contractor were manipu - lated,that the serially numbered log sheets were not issued in order, that the Log-sheet for July-August,2007 were issued after the Log sheet for the next two months were issued, that the assessee wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

EPL had informed that during the course of hearing GIEPL had admitted that it had provided accommodation entry to JSW(E), Ratnagiri of ₹ 35.54 crores.The AO directed the assessee to file explanation as to why all the expenditure ₹ 35.54 crores should not be disallowed. 3.2.After considering the submission of the assessee, the AO observed that GIEPL (New name-Sancia Global Infra Projects Ltd.)-Sancia) had admitted that it had provided entries to the assessee to the extent of ₹ 3 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the First Appellate Authority (FAA)and made elaborate submissions. After considering the assessment order and the submissions of the assessee,he held that JSW(E), Ratnagiri made payment to GEIPL, that the subsidiary got merged with the assessee w.e.f. 1.4.2010 as per the scheme arrangement approved by the Hon ble Bombay High Court vide order dt.24/9/2010, that it stood dissolved without being wound up on 2/11/2010 being the date of filing of order of the Hon'ble High Court with Registrar of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een dealt with under separate proceedings initiated in its name/ in the names of its successors, that disallowance of capital expenditure of ₹ 33.84 lakhs in respect of transaction between JSW(E) Ratnagiri and GEIPL.Finally, he deleted the addition made by the AO. 3.4.project carried out by Ratnagiri unit, that GEIPL had admitted to have issued bogus bill to JSW(E),Ratnagiri,that the AO had rightly made the disallowance.The Authorised Representa -tive(AR)contended that the assessee was not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

leged bogus bills were obtained by JSW(E)Ratnagiri.If any addition in that regard had to be made it could be made in the hands of Ratnagiri Unit or successor to that unit. The FAA has deleted the addition as the bills were not taken by the assessee in the year under consideration. In our opinion the order of the FAA does not suffer from any legal or factual infirmity.Therefore, confirming the same the Ground is decided against the AO. 3.6.We find that identical issue was dealt by the Tribunal in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

IPL for exhibiting part of its projects, that it had been held during that year that no work had been done by GEIPL in respect of the contract awarded,that no work could be executed,that the payment made by the assessee could not be considered for purpose of business,that capital expenditure of ₹ 68.15 lakhs claimed by the assessee for the year under consideration could not be allowed. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was a subsidiary of the assessee and the amount in question was included in the capital work in progress,that JS got merged with the assessee with effect from 01/04/2010 vide an scheme of arrangement approved by honorable Bombay High Court order dated 24/09/2010 that during the search and seizure proceedings carried out in the case of assessee group certain papers were found about the contract given to GEIPL, that the AO of that company had disallowed a sum of ₹ 33.84 lakhs for the AY. 20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

find that the assessee had not claimed the expenditure in question in its books of accounts for the year under appeal.For disallowing any expense,the AO should first prove the incurring and claiming of of the said expenditure in the regular books of accounts.But, without establishing the basic fact that the assessee had claimed the expenditure,the AO had made the disallowance.The expenditure was incurred by an erstwhile entity namely JSWERL and certain discrepancies were noticed about the transa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e hands of the assessee.Thus, there was no justification for making any addition in the case of the assessee.In our opinion,there is no legal or factual infirmity in the order of the FAA.So,confirming his order,we decide first ground of appeal against the AO. 4.Second Ground is about restricting the disallowance u/s. 14A r.w. Rule 8D of the income tax Rules,1962 at ₹ 9.14 crores against ₹ 44.03 crores.In the original assessment order the AO had made disallowance of ₹ 29.66 cror .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessee made elaborate submissions regarding non applicability of section 14A and Rule 8D contending that no disallowance had been made as it had not earned any exempt income during the year.After considering the submissions of the assessee, the FAA held that disallowance of ₹ 9.14 crores was made by the assessee itself in the return filed by the assessee u/s. 153A,that there was no explanation as to how the expenditure-that was identified by the assessee as being incurred with reference to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o notice u/s. 153A of the Act. Considering the above, we are of the opinion that there is no need to disturb the order of the FAA.Ground No.2 stands dismissed. 5.Third ground deals with allowing deduction u/s. 80IA in respect of the total disallowance u/s.14A of the Act. The DR supported the order of the AO and the AR stated that issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09(ITA/463/Mum/2014 dt.31.7.15). We are reproducing para No.16-19 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

undant because the CIT(A) agreed to an omnibus alternate plea of the assessee to the effect that the amount disallowed u/s 14A of the Act resulted in increased profits, which qualified for the benefits of section 80IA of the Act. The aforesaid decision of the CIT(A) is challenged by the Revenue by way of Ground of appeal No.2. 17. Pertinently, with respect to the disallowance u/s 14A of the Act made by application of clauses (i) and (ii) of Rule 8D of the Rules amounting to ₹ 24,37,66,836/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In appeal, the CIT(A) has noted that the expenses debited to non-80-IA units were direct expenses pertaining to those units and insofar as the indirect expenditure was concerned, the same was debited to 80IA units, which are engaged in the business of generation of power. Thus, as per the CIT(A), the disallowance of administrative expenses u/s.14A r.w.r. 8D(2)(iii) of the Rules amounting to ₹ 5,29,15,000/- would only result in increased profits of the business of generation of power, whic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere with the same inasmuch as the same are unexceptional. The CIT (A) has factually concluded that the disallowance of administrative expenses amounting to ₹ 5,29,15,000/- u/s 14A r.w.r 8D(2)(iii) of the Rules leads to enhanced profits of the eligible business of the generation of power and, therefore, such enhanced profits have been rightly held to be eligible for benefits of section 80IA of the Act. No material has been lead by the Revenue 12 M/s JSW Energy Limited Page 12 of 20 before u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e becomes eligible to higher exemption u/s 80IA of the Act. Therefore, the dispute pertaining to the efficacy of the disallowance u/s 14A of the Act, r.w. rule 8D(2) of the Rules, which is manifested in Ground of appeal no. 4 of the assessee and in Ground of appeal no. 1 of the Revenue, is academic in nature. Thus, we refrain from adjudicating the same at the present. Respectfully following the above, Ground three decided against the AO. 6.Sale of Certified Emission Reduction (CER) is the subjec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o.1468 of 2013 dt. 30/4/2015) was dismissed. In these circumstances, we are of the opinion that the order of the FAA has to be confirmed. Respectfully following the order of the Tribunal for AY 2006-07,we decide the fifth Ground against the AO. 8.Last Ground deals with penalty proceedings.As the issue raised before us is premature so,same is not being adjudicated. ITA/1091/Mum/2015:- 9.First Ground of appeal,raised by the assessee,is about treatment given to sale proceeds of CER while computing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arbon Credits are in the nature of a capital receipt and, therefore, the same is liable to be reduced while computing the Book Profit for the purposes of section 115JB of the Act. The point made out by the appellant is that if the receipts on account of sale of Carbon Credits are held to be capital receipts not chargeable to tax, it would automatically have the effect of altering the Book Profit computable for the purpose of section 115JB of the Act. Since in the earlier part of this order, we h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ability of the assessee and, therefore, following the Judgment of Hon ble Supreme Court in the Case of National Thermal Power Corporation (supra), the same is liable to be admitted. Nevertheless, the said Ground of appeal was not hitherto raised by the assessee before the lower authorities, therefore, the same is ought to be examined appropriately by the income tax authorities. Thus, the Additional Ground of appeal no. 1 is admitted and the same is restored back to the file of the Assessing Offi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e find that similar Ground was taken by the assessee before the Tribunal in the appeal filed by the assessee in the AY 2008-09.We are reproducing the para -24, 25, 26 and 28 of the order. 24. The Additional Ground of appeal no. 2 also involves determination of Book Profits for the purpose of section 115JB of the Act. It is canvassed that assessee is entitled to a deduction of ₹ 3,25,83,13098/- on account of loss arising on demerger of its investment division while computing the Books Profi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e transferred JSWEIPL at their book values. As a consequence, a sum of ₹ 3,25,83,13,098/-, being the excess of book value of assets over the liabilities transferred, was a loss suffered on demerger of the investment division. Notably, in lieu of such transfer of investment division, shares of JSWEIPL were issued to shareholders of assessee company in the ratio specified in the Scheme of arrangement. The loss of ₹ 3,25,83,13,098/- was adjusted against the balance/ surplus of the Profi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assets/liabilities in the case of merger or demerger is a transaction of transfer and liable to Capital gains tax under section 45 of the Act. So however, since section 47(vib) of the Act, exempts transfer in the scheme of demerger from the definition of transfer , the same is not liable to Capital gains tax. The plea set up by the assessee is that the Act recognizes transfer of shares, in the scheme of merger, as a transfer but provides exemption u/s 47(vib) of the Act. 26. Before us, the Ld. R .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t was noted by the Hon ble High Court that under Clause (2) of part II of Schedule -VI of the Companies, Act 1956, where a company receives the amount on account of sale of lease hold rights, the company is bound to disclose in the Profit & Loss Account, the said amount as a non-recurring transaction or a transaction of an exceptional nature irrespective of its nature being Capital or revenue and that it would be inappropriate to directly transfer such amount to the Capital Reserve in the Ba .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version