TMI Blog2019 (11) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided in favour of assessee. Whether the Ld. A.O was justified in denying the benefit u/s 80IA(4) of the Act for not filing the audit report in Form 10CCB along with the return of income? - Hon'ble Jurisdictional High Court in the case of CIT Vs. Panama Chemicals Works [ 2006 (8) TMI 159 - MADHYA PRADESH HIGH COURT ] dealt the similar issue holding that the claim of the assessee u/s 80IA(4) is justified if it has not filed the audit report in Form 10CCB along with return of income but submitted later on during the assessment proceedings. Whether before allowing deduction u/s 80IA(4) of the Act, profit and loss of each unit needs to be considered on individual basis or consolidated profit loss of all the eligible units basis? - Co-ordinate Bench, Chennai in the case of Shriram Properties Pvt. Ltd V/s ACIT [ 2013 (9) TMI 446 - ITAT CHENNAI ] decided similar issue in favour of the assessee thereby holding that profits and loss of individual units and not consolidated units are to be considered for granting deduction u/s 80IB. Initial year for claiming deduction of profits of eligible undertaking for 10 consecutive assessment years out of the slab of 15 or 12 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BLE MANISH BORAD, ACCOUNTANT MEMBER For the Revenue : Shri K.G. Goel, Sr.DR For the Assessee : Shri Ajay Tulasiyan, CA ORDER PER MANISH BORAD, AM: The above captioned three appeals filed by the revenue for Assessment Year 2012-13 to 2014-15, Cross Appeal by the assessee for 2012-13 and Cross Objections by the assessee for Assessment Year 2013-14 to 2014-15 are directed against the order of ld. Commissioner of Income-tax (Appeals)-I, Indore, dated 30.07.2018, which are arising out of the order u/s 143(3) r.w.s. 144C of the Income Tax Act dated 22.03.2016 framed by the DCIT-1(1), Indore. 2. As the issues raised in the appeals and cross objections are common in nature these were heard together and are being disposed off by this consolidated order for the sake of time and brevity. 3. First we will take up Revenue s appeal raising following Grounds of appeal: ITA No.801/Ind/2018 Assessment Year 2012-13 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to ₹ 57,94,105/- in respect of computing arm s length pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 and subsequent amendment thereto dated 8th August, 2019 as the tax effect in each year is less than ₹ 50 lakhs. It was also submitted that under the identical facts, the coordinate bench of this Tribunal vide order dated 14.8.2019 in ITA No.1398/Ahd/2004 and others in the case of ITO Vs. Dinesh Madhavlal Patel has dismissed the revenue s appeals as non maintainable. 5. Ld. D.R. appealing on behalf of the revenue could not controvert this fact. 6. We have considered the rival submissions and gone through the records. It is not in dispute that in these three appeals, the tax effect for each year is below monetary limits of ₹ 50 lakhs as prescribed under the CBDT circular No.3/2018 dated 8th August, 2019 (supra). The coordinate bench of this Tribunal in ITA No.1398/Ahd/2004 and others in the case of ITO Vs. Dinesh Madhavlal Patel (supra) decided the issue by holding as under: 5. Having considered the rival submissions and having perused the material on record, we do not have slightest of hesitation in holding that the concession extended by the CBDT not only applies to the appeals to be filed in future but it is also equally applicable to the appeals pending f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, each assessee shall be dealt with separately 4. The said modifications shall come into effect from the date of issue of this Circular. 6. Clearly, all other portions of the circular no. 3 of 2018 (supra) have remained intact. The portion which has remained intact includes paragraph 13 of the aforesaid circular which is as follows: 13. This Circular will apply to SLPs/ appeals/ cross objections/ references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/ appeals/ cross objections/references. Pending appeals below the specified tax limits in pare 3 above may be withdrawn/ not pressed. 7. In view of the above discussions, we hereby hold that the relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 (supra) shall be applicable to the pending appeals in addition to the appeals to be filed henceforth. 8. Learned Commissioner (DR) then submits liberty may kindly be given to point out, upon necessary further verifications, and to seek recall the dismissal of appeals and restoration of the appeals in the cases (i) in which it can be demonstrated that the appeals are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. It is indeed an appreciable goodwill gesture by the Government, for so many taxpayers, on the eve of this Independence Day and offering them freedom from the prolonged mental agony and uncertainty of litigation. 11. In the results, all the appeals are dismissed as withdrawn and the cross objections are dismissed as infructuous. Pronounced in the open court today on the 14th August, 2019. 7. Respectfully following the decision of the coordinate bench, we hereby dismiss these three appeals of the revenue for Assessment Year 2012-13 to A.Y. 2014-15 in limine without going in to the merits of the case. 8. In the result, all the three appeals filed by the revenue for A.Y. 2012-13 to 2014-15 are dismissed. 9. Now we take up Assessee s cross appeal and Cross Objections raised for Assessment Year 2012-13 to 2014-15. 10. Assessee has raised following Grounds of appeal for Assessment Year 2012-13 in ITA No.778/Ind/2018. 1.That the Ld. CIT(A) erred in not allowing the claim of deduction made under section 80IA(4) in respect of the profits of ₹ 64,62,398/- derived from the eligible power generation business through Wind Mill units of the appellant. That on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at ₹ 64,62,398/- for the profits of Jodha wind mill unit. The assessee opted the deduction u/s 80IA(4) from Assessment Year 2012-13 onwards being the initial year but did not opt for the other two eligible units. Assesse made claim during the course of assessment proceedings by filing the audit report on Form 10CCB. However Ld. A.O rejected the claims for following 3 reasons; (i) The claim made otherwise than by way of revised return cannot be entertained by the AO and placed reliance on the decision of the Honourable Supreme Court in the case of Goetze (India) Limited Vs CIT (2006) 284 ITR 323 (Hon'ble Supreme Court) (ii) The requisite Form No. 3CCB was to be obtained and also filed before due date of the return hence the claim of the appellant is not eligible to be entertained. (iii) Profits and gains from all the three units were to be considered on consolidated basis no individually. 13. Aggrieved with the finding of Ld. A.O assessee preferred appeal before Ld. CIT(A) but failed to succeed. 14. Now the assessee is in appeal before the Tribunal for Assessment Year 2012-13. 15. At the outset Ld. Counsel for the assessee submitted that assessee s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of term initial assessment year in section 80IA(5) of the Act. (ix) Hon'ble Madras High Court in the case of Commissioner of Income Tax Vs G.R.T. Jewelers (India) Pvt. Ltd (2016) 95 CCH 0072. (x) Hon'ble Supreme Court in the case of Commissioner of Income Tax Anr vs. Yokogawa India Ltd (2017) 291 CTR 0001. (xi) Hon'ble I.T.A.T. Chennai Bench in the case of M/s. Shriram Properties Pvt. Ltd vs. ACIT (2013) 36 CCH 0297. (xii) Hon'ble I.T.A.T. Ahmedabad Bench in the case of Sadbhav Engineering Ltd V/s DCIT (2013) 38 CCH 0105. 16. Ld. Departmental Representative vehemently argued and supported the orders of both the lower authorities and also relied on the judgment of Hon'ble High Court of Himachal Pradesh in the case of CIT V/s Deepak Gupta and Rajiv Sharma, JJ (2012) 26 Taxmann.com 129 (HP). 17. We have heard rival contentions and perused the records placed before us and also carefully gone through the judgments referred and relied by both the parties. 18. As regards the issue of eligibility of deduction u/s 80I(4) of the Act at ₹ 64,62,398/- comprises of three sub-issues:- (i) Whether the Ld. A.O is duty bound to compute the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odyear case AIR 1990 Hon'ble Supreme Court781 wherein it has been stated that constitution is not a mere law but machinery by which all laws are enacted . 21. Ld. Counsel for assessee also submitted that the above circular has been judicially noted and approved in many judgments and is being relied upon in support of the appellant s claim. It is pertinent to recall here the very purpose of assessment which is nothing but to assess the correct income of an assessee and compute the legitimate tax payable on such income. A claim which is legally allowable to the assessee cannot be disallowed by brushing aside the same in the grab of drawing incorrect interpretation from the pronouncement rendered by Honourable Supreme Court, ignoring the provisions enacted undr the Act and also under the Constitution of India which has overrinding and superseding effect over the all prevalent laws including Income Tax Act. That in the case of appellant, due to the rejection of a legitimate claim, the correct income has not been ascertained and the purpose of assessment has been defeated. 21A. Ld. Counsel for the assessee also submitted that the appellant s ignorance to claim correct deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually written off in the books of accounts in this year. Details of bad debts actually written off, provision made and copies of ledger accounts of all the debtors reflecting the actual write off in the books of accounts, were also filed before the AO. Copies of income tax returns of earlier years were also filed to substantiate that NPA provisions were disallowed by the assessee in the respective years. The AO rejected the same on the premise that claims made through a revised return could only be entertained. He relied on the decision of the Hon 'ble Supreme Court in the case of Goetze India Ltd. The CIT(A) observed that the AO rejected the claim merely stating that since the claim was not made by filing a revised return u/s 139(5) in view of the decision of the Hon'ble Apex Court in the case of Goetze India the claim cannot be accepted. The CIT(A) has also stated that when the bad debts are actually written off in the books of accounts as irrecoverable the said claim is allowable to the appellant u/ s 36(1)(vii) read with section 36(2). Since the amount of ₹ 11,90,575/- was actually written off from the debtors account in this year, the claim made by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income but submitted later on during the assessment proceedings. The relevant extract of the Hon'ble High Court judgment is reproduced below:- 7. We are of the view that even if an assessee fails to file information in Form No. 10CCB along with the return, he cannot be divested of the benefit of s. 80-1. It is not a case where the form was filed after the assessment, but before it and, therefore, when the authorities assessed the income, the form was before the AO. Under these circumstances, we find that the approach of the CIT(A) and the Tribunal was proper. 8. Even in the judgment of CITI' vs. Shivanand Electronics (supra), their Lordships of the Bombay High Court have observed that the position may be different when an assessee does a particular act not within the specified time but after the expiry thereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the objects sought to be achieved by prescribing the time-limit, it would be the duty of the officer to consider the documents, even submitted belatedly. Thus, this decision also supports the view that even if the prescribed form is submitted belatedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials available on record. The undisputed facts of the case are that the assessee is eligible for deduction u/s 80IB in respect of profits derived by it from its 'Samruddhi' and 'Spandhana' projects. Further the gross taxable income of the assessee was comprised of the following elements: (i) Profit from 'Samruddhi' and 'Spandhana' : ₹ 2,23,22,237/- (ii) Loss from two Projects viz.'Shreyas' and 'Coimbatore': ₹ 2,87,7l,682/- (iii) Interest income : ₹ 3,20,87,4211- Gross total income: ₹ 2,56,37,975/- On the above facts, the issue before us is whether the assessee is entitled for deduction u/s 80IA of ₹ 2,23,22,237/- or not in view of the fact that though there is gross total income of higher amount of ₹ 2,56,37,975/-, but in view of the fact that amount computed under the head 'business income' by aggregating profits and losses of all business is loss of ₹ 64,49,445/-. 9. Sub-section (1) of section 80-IB provides that where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (lIB), there shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the aggregate of profits from all the eligible industrial undertakings. We are, therefore, of the considered opinion that if there is profit derived from a particular industrial undertaking, that will qualify for deduction without reduction of loss suffered by any other eligible industrial undertaking(s). 10. Section 80IB(13) reads as under: (13) The provisions contained in sub-section (5) and sub- sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible business under this section22. 11. Sub section(5) of section 80lA reads as under: (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount has to be restricted to the amount of gross total income as computed under section 80B(5), which means the income available after adjusting all the brought forward losses and unabsorbed depreciation etc. 14. Thus, a careful reading of all the above provisions shows that what is relevant for ascertaining the amount which is allowable deduction u/s 80IB are - (i) Amount of profit derived from eligible business; and (ii) The amount of gross total income of the assessee The amount of profit derived from eligible business qualifies for deduction u/s 80IB subject to the amount of gross total income of the assessee. There is absolutely no relevance for this purpose of the amount which is arrived at by aggregating income from all the different business of the assessee which is the amount assessable as business income of the assessee. 15. We are reminded of the celebrated judgment rendered by the Hon'ble Supreme Court in the case of CIT v. Canara Workshop (P.) Ltd. (1986) 161 ITR 320 in which the assessee was engaged in the manufacture of automobile spares. The products manufactured by it were covered by the list in the Fifth Schedule to the Income-tax Act. During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant provisions when they held that the losses suffered by the assessee from two projects, viz. 'Shreyas' and 'Coimbatore' be reduced from the profits of the other two units viz. 'Spandhana' and 'Samruddhi' for granting deduction u/s 80IB. Accordingly, the impugned orders of the lower authorities are set aside. The Assessing Officer is directed to allow deduction u/s 8018 on the profits derived by the assessee from two projects viz. 'Spandhana' and 'Samruddhi' of ₹ 2,23,22,237/-. Thus, the grounds of appeal of the assessee are allowed. 29. The above view of the Chennai Bench was also followed by the Co-ordinate Bench Ahmedabad in the case of Sadbhav Engineering Ltd V/s DCIT (2013) 38 CCH 0105 (supra) observing as follows:- 13. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The undisputed facts of the case in the years under appeal is that the assessee claimed deduction u/s.80-IB of the Act. The AO computed the claim for deduction allowable u/s.80-IA to the assessee by allocating the losses of other units against the profits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Honourable High Court of Madras further referred the Circular No. 1/2016 dated 15.02.2016 issued by the Central Board of Direct Taxes which clarified the position of law in respect of the claim to be made under section 80lA observing as follows:- The matter has been examined by the Board. It is abundantly clear from Sub-Section (2) that an assessee who is eligible to claim deduction u/ s 80JA has the option to choose the initial! first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years) as prescribed under that Sub-Section. It is hereby clarified that once such initial assessment year has been opted for by the assessee) he shall be entitled to claim deduction u/ s 80JA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfilment of conditions prescribed in the section. Hence) the term 'initial assessment year) would mean the first year opted for by the assessee for claiming deduction u/ s 80JA. However) the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years) as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the issue that whether the alleged education cess is to be considered as part of rate of tax and surcharge levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of any such profits or gains not taxable as expenses as provided in Section 40(a)(ii) of the Act and or whether it is an allowable expenditure. 36. At the outset Ld. Counsel for the assessee submitted that the issue stands squarely covered in favour of the assessee by various judgments mentioned herein below:- For the proposition that the cess is an allowable expenditure and is not hut by the disallowance contemplated u/s 40(a)(ii) of the Act. (i) Hon'ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Limited D.B.I.T.A No.52/2018 dated 31.7.2018. (ii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs. Eicher Motors Ltd (2007) 293 ITR 0464. (iii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs Bhopal Sugar Industries Ltd(1998) 233 ITR 0429. (iv) Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd Vs. CIT (1993) 199 ITR 035 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at a proportion of, or otherwise on the basis of, any such profits or gains . When the matter came up before the Select Committee, it was decided to omit the word cess from the clause. The effect of the omission of the word cess is that only taxes paid are to be disallowed in the assessments for the year 1962-63 and onwards. 3.The Board desire that the changed position may please be brought to the notice of all the ITOs so that further litigation on this account may be avoided. Reliance were placed by the Ld. Counsel for the assessee on the following judgments; In Instalment Supply (P) Ltd Ors Vs/ Union of India Ors (1962) 2 SCR 644, it has been held as under:- 19. There is another answer to the point of res judicata raised on behalf of the petitioners, relying upon the decision of the Punjab High Court in Installment Supply Ltd, New Delhi v State of Delhi MANU/PH/0068/1956. It is well settled that in matters of taxation there is no question of res judicata because such year s assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period. (See the decision in the House of Lords in Socie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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