TMI Blog2022 (1) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... D THAT:- The coordinate Bench of this tribunal in AY 2010-11[ 2017 (12) TMI 1134 - ITAT MUMBAI] analysed the issue in great detail and allowed the claim of the assessee. It has been held that the Rail undertakings are infrastructure facilities and eligible for deduction u/s.80IA - Since the facts and circumstances with regard to this claim of the assessee remain same in this year, following the orders of Coordinate Bench in assessee s own case for earlier assessment years, especially for AY 2010-11, we uphold the action of the LD CIT(A) and dismiss this ground raised by the Revenue. Disallowance u/s 14A r.w.r. 8D - indirect expenses incurred for earning exempt income - HELD THAT:- The facts in the present case are similar to the facts in the earlier years. For the year under consideration, the disallowance offered by the assessee is in respect of salary cost of the employees looking after the investment activities and the indirect cost relating to such employees. Therefore, following the decision of Coordinate Bench of this Tribunal in assessee s own case for earlier year and the Bombay High Court s ruling for AY 2008-09[ 2017 (2) TMI 1005 - BOMBAY HIGH COURT] against which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever inserted sub-section (12) in the statute. At least, the memorandum explaining the provisions of Finance Bill 2007, regarding insertion of sub-section (12) in Section 80IA should have clarified why the legislature thought fit to deviate from the its basic intent of providing incentive to the original investor and provide benefit to the successor. We have seen earlier, the memorandum explaining the provisions of Finance Bill 2007 has no such reference. It is, therefore, difficult to accept the contention of the Revenue and accept the contents of Circular no. 3 of 2008 to be depicting correct intention. In our view, therefore, the clarification provided in the circular for insertion of sub-section (12A) cannot be extended beyond what is unambiguously stated in the provisions of the IT Act. Sub-section (12A) simply states that from a particular date i.e. 31 March 2007 the provisions of sub-section (12) shall not apply in the specified situations. There cannot be any other meaning to such simple provision of the IT Act We hold that sub-section (12A) of section 80IA of the IT Act, merely neutralises applicability of subsection (12) and does not disentitle the successor entitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a can be raised by the affected party at any point of time in the matter pending for adjudication. Further, it is settled proposition of law that mere procedural lapse, or omission on the part of the assessee, cannot lead to denial of substantive benefit/eligible claim in the hands of the assessee. Keeping in view, of above discussion and decision of the Hon ble Apex Court, the additional grounds filed by the assessee are accepted and taken up for adjudication Claim of deduction towards the education cess and secondary and higher education cess - HELD THAT:- Education cess, secondary and higher education cess should be allowed as deduction. Their Lordships had held that Section 40a(ii) of the Act applies only to taxes other than cess. This issue is also decided in favour of assessee by Jurisdictional High Court in case of Sesa Goa Limited [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] which has been followed in various Tribunal orders subsequently. We direct the AO to allow deduction towards education cess and secondary and higher education cess to the extent of actual payment made by the assessee. Refund of dividend distribution tax paid in excess of the rate prescribed under D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. - ITA NOs.1412, 1413 2461 And 2462/MUM/2018 And ITA NOs. 2871, 2872 &2873/MUM/2018 And ITA NO. 3764/MUM/2018 And C.O.NOs. 129, 130, 118 & 155/MUM/2019 [ARISING OUT OF ITA.NOs. 2871, 2872, 2873, 3764/MUM/2018 - - - Dated:- 14-12-2021 - Shri C.N. Prasad, Hon'ble Judicial Member And Shri S. Rifaur Rahman, Hon'ble Accountant Member For the Assessee : Shri Nishant Thakkar For the Department : Shri Sushil Kumar Mishra ORDER PER BENCH. These appeals filed by the assessee, (in short UTCL ) as well as the Revenue against the findings of the Commissioner of Income-tax (Appeals), 47, Mumbai [in short the LD CIT(A) ] relate to Assessment Years 2011-12, 2012-13, 2013-14 and 2014-15 in the matter of order passed under section 153C r.w.s. 144C(3) r.w.s. 143(3) of the Income-tax Act, 1961(IT Act). UTCL has also filed cross objection against the appeal filed by the Revenue. Since these appeals and cross objections filed by the assessee and the revenue for all the four years germinate from the same set of facts, these are taken up together for adjudication and are decided by this common order. Assessee s Appeal - ITA No. 1413/Mum/2018 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Taxation Avoidance Agreement on dividend paid to non-resident shareholders. 9) Without prejudice to the other grounds, on the facts and in the circumstances of the case and in law, the Learned AO erred in not making a reference to the Learned TPO under Section 92CA(2) of the Act, pursuant to the notice dated 26 November 2014 issued under Section 153C of the Act and accordingly, the order issued under Section 92CA(3) of the Act dated 28 November 2014 by the Learned TPO, in absence of such reference, is bad in law and liable to be quashed. Revenue s Appeal- ITA No. 2871/Mum/2018 - Assessment Year 2011-12 2. The grounds taken by the revenue are as under: 1) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, in holding that the sales tax exemption benefits of ₹ 19,99,06,000/ - are capital receipts not liable to income tax. 2) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, in holding that the sales tax exemption benefits of ₹ 19,99,06,000 / -are capital receipts not liable to income tax in view of the Hon'ble ITAT decision in the assessee's own case in ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Corporate Guarantee is not an international transaction when the assessee itself has clearly declared it as an international transaction in Form 3CEB and charged corporate guarantee fee and included it as part of its returned total income. 11) Whether the Ld. LD CIT(A) is right by deciding the case under the factually incorrect assumption that the assessee has not charged any guarantee commission when the assessee has actually charged the same. 12) Whether the Ld. LD CIT(A) is right in deciding the case by relying on the decision of the Hon'ble ITAT of Videocon Ind. Ltd. vs Addl. CIT in ITA No.- 6662/ Mum/ 2012 ignoring the fact that in that case no guarantee fees were charged and therefore, facts are not identical CO. No. 129/Mum/2018 - Assessment Year 2011-12 3. The cross objections filed by UTCL against the appeal of the Revenue are as under: On the facts and in the circumstances of the case an in law, the learned AO has : 1) erred in challenging the order of the LD CIT(A), wherein LD CIT(A) allowed the sales tax exemption benefits of ₹ 19,99,06,000 as capital receipt not chargeable to income tax, without appreciating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the Revenue are already covered in the assessee s own case in earlier years by the orders of Coordinate Bench of this Tribunal, we shall take the revenue s appeal and the cross objection filed by UTCL, first. 5. Ground nos.1 and 2 of the Revenue s appeal relate to the claim of the assessee in treating the sales tax exemption benefit received, amounting to ₹ 19,99,06,000/- as capital receipts not liable to tax. Ground no.1 of the assessee s cross objection is connected with this claim. 6. This issue has been subject matter of appeal in the assessee s own case from AY 2004-05 onwards and has been decided in favour of the assessee from AY 2004-05 onwards. The latest order on this issue is for AY 2010-11 in ITA No. 7614/Mum/2014 and 7631/Mum/2014 dated 5 April 2017 wherein the Coordinate bench has followed the decisions in earlier years and allowed the plea of the assessee. The Coordinate Bench held as under: 99. We have considered rival contentions and carefully gone through the orders of the authorities below as well as the order passed by the Tribunal in assessee s own case in the A.Y.2004-05 to 2006-07. We found that exactly similar issue was consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.14A of the IT Act. The assessee in its return of income had, u/s.14A of the IT Act, offered for disallowance an amount of ₹ 71,50,186/- as indirect expenses incurred for earning exempt income. The AO, however, applied Rule 8D(2)(iii) and computed the disallowance at ₹ 4,14,78,764/-. Ground no.5 of the assessee s cross objection is connected with this claim 12. This issue is also covered in favour of the assessee in its own case by the orders of coordinate bench of this Tribunal for AY 2007-08 to AY 2010-11, wherein the coordinate bench has accepted the assessee s plea that the amount suo moto offered for disallowance is appropriate and without pointing out any defect in the workings of the assessee, no further disallowance can be made by the AO. The observation of the coordinate bench in AY 2010-11 is reproduced below: 104. We had carefully gone through the order of the authorities below as well as the order passed by the Tribunal in assessee's own case for the AY 2007-08 and 2008-09 wherein the Tribunal has restricted the disallowance under Rule 8D(iii) to the extent of amount offered by the assessee as attributable to earning of exempt income. During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier years. For the year under consideration, the disallowance offered by the assessee is in respect of salary cost of the employees looking after the investment activities amounting to ₹ 58,84,137 and the indirect cost amounting to ₹ 12,66,049 relating to such employees. Therefore, following the decision of Coordinate Bench of this Tribunal in assessee s own case for earlier year and the Bombay High Court s ruling for AY 2008-09 against which the SLP filed by the Revenue has been rejected by the Hon ble Apex Court, we hold that total disallowance for the purpose of section 14A should be restricted to the amount suo moto offered by the assessee i.e. ₹ 71,50,186 and accordingly dismiss the ground raised by the Revenue in this regard. 16. Ground nos.6 and 7 raised by the Revenue relate to treating the receipts on sale of CER certificates as capital receipts instead of revenue receipts. Ground no.3 of the assessee s cross objection is connected with this claim 17. We note that this issue has also been decided in favour of the assessee in its own case by the Coordinate Bench of this Tribunal in ITA No. 1348/Mum/2012 for AY 2008-09 vide order dated 28 Feb 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Dy. CIT, Central Circle -1(4) (AO) and served on the assessee asking it to file return of income for the AY 2008-09 to AY 2014-15. Pursuant to the above notice, the assessee filed its return of income u/s 153C r.w.s. 153A of the IT Act for the year under consideration. The AO initiated proceedings u/s 153C r.w.s. 153A of the IT Act against the appellant and an order dated 29.03.2016 was passed u/s. 153C r.w.s 144(3) r.w.s 143(3) of the IT Act assessing the total income at ₹ 15,25,40,74,592/-. 23. Ground no.1 of the appeal filed by the assessee relate to disallowance of claim made by the assessee amounting to ₹ 82,61,81,708 for rail system and ₹ 18,81,43,054 for power generation. The AO has held that the undertakings which were transferred to the assessee from Samruddhi Cement Limited pursuant to the scheme of amalgamation are not eligible for tax holiday benefit under section 80IA in view of the provisions of sub-section (12A) of section 80IA of the IT Act. 24. Before we get into the merits of the claim of the assessee, it is important to understand the facts in the case before us. i. The assessee is a subsidiary of Grasim Industries Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thermal Power Plant at Reddipallayam in the State of Tamil Nadu 5,21,57,858/- II Thermal Power Plant at Malkhed in the State of Karnataka 11,97,45,646/- III. Thermal Power Plant at Rawan in the State of Chattisgarh 1,72,39,550/- Total 18,91,43,054/- 25. The AO disallowed the claim of the assessee in respect of these Rail systems and power undertakings inherited by the assessee from SCL under the scheme of amalgamation, invoking the provisions of subsection (12A) of Section 80-IA. In this regard, the AO relied on the Memorandum explaining the provisions of Finance Bill, 2007 which reads as under: The existing provisions of section 80-IA provide for 100 per cent deduction for ten years in respect of profits and gains of certain undertakings or enterprises engaged in the business of development, operation and maintenance of infrastructure facility, industrial parks and special economic zones or generation, distribution or transmission of power, laying and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng availability of similar claims u/s. 80J / Section 84 of the 1922 Act etc. to draw home his point that the benefit of tax holiday remains with the undertaking although the ownership of the same may change hands. We will deal with these references subsequently in this order. 29. According to the Ld AO as well as Ld CIT(A), sub-section (12) of section 80IA of the IT Act, which was inserted by the Finance Act, 1999, with effect from 1st April 2000 was an enabling provision and facilitated the successor to claim the benefit of the tax holiday in the year of reorganisation and thereafter. The Ld AR of the assessee on the other hand, argued that sub-section (12) merely made it explicit what was implicit u/s. 80IA of the IT Act. It, however, made subtle change by providing that in the year of reorganisation, the deduction, which is attached to the undertaking, would not be available to the predecessor company, but such deduction will be available to the successor company. 30. According to the Ld AR of the assessee, sub-section (12) was introduced merely with the intention to put to rest the divergent views taken by the authorities on this issue. It was also pointed out that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31-3-2007 35. The Ld AR further submitted that sub-section (12) was in fact a disabling provision as it disabled the predecessor entity from claiming deduction in the year of amalgamation on a pro-rata basis. Therefore, sub-section (12A) merely negates the effect of such disabling provision and it does not restrict the eligibility of an undertaking to claim deduction under section 80IA of the IT Act which is granted under sub-section (1) of section 80IA of the IT Act. 36. The Ld AR also submitted that the Scheme of amalgamation under which the undertakings have been transferred to the assessee clearly provided that the associated benefits/ available deductions including tax holiday claims u/s.80IA will vest in the amalgamated entity i.e. assessee. The Scheme has sanction of the High Court of Bombay as well as High Court of Gujarat. Hence, once the scheme of amalgamation of SCL with the assessee has received the approval of the Hon ble High Courts, conferring the right upon the assessee company to continue to claim deduction u/s. 80-IA in respect of the eligible undertakings for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by CBDT are not binding either on the assessee or on the Courts/ Tribunals for the purpose of interpretation of law especially when the language used in the statute is plain and unambiguous. Reliance was placed in this regard on the Supreme Court Ruling in the case of Ratan Melting Wire Industries (Civil Appeal No.4022 of 1999). 40. Even otherwise, the Ld AR of the assessee was of the view that, in the present case such deduction cannot be denied to the assessee since the assessee has considered the fair value of the undertakings for the purpose of amalgamation and has paid appropriate consideration by way of issue of shares, to the shareholders of SCL. Thus, the assessee has assumed full entrepreneurial risk of investment and operations of the undertakings so transferred. Thus even on that count the deduction cannot be denied. 41. We have carefully gone through the orders of the lower authorities / materials placed before us and considered the arguments of both parties. Grievance of both parties revolve around eligibility of tax holiday claim for units acquired by the assessee Company from SCL pursuant to the Scheme of amalgamation. 42. Before getting into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 15. It is not the manufacture or production of articles by the company but the manufacture or production by the undertaking, which is different from the company, that is contemplated under the sub-section. A company may own or run many undertakings some of which may be entitled to the benefit of Section 84 and others may not be so entitled. It is not, therefore, possible to equate the undertaking with the company. When a company owns more than one undertaking the application, of Section 84 has to be with respect to the particular undertaking and not to the company in general 47. The Hon ble Delhi High Court in the case of CIT vs. Tata Communications Internet Services Ltd. [2012] 251 CTR 290 dealing with the issue relating to availability of deduction under section 80-IA post change in shareholding pattern of the company, held as under: 13. Insofar as the objection of the revenue that there had been change in the name of pattern of shareholding it does not make any difference as it is a well settled rule of law that benefit under Section 80IA of the Act is available to an undertaking and not to the assessee since the undertaking continues to carrying on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation or the demerger takes place; and (b) the provisions of this section shall, as far as may be, apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place . 51. As per sub-section (12) of section 80IA of the IT Act: i. If an undertaking entitled to the deduction, owned by any Indian company, ii. is transferred before expiry of the specified period, iii. the transfer is to another Indian company, pursuant to amalgamation or demerger, then: iv. in the year of amalgamation or demerger, the amalgamating or the demerged company ( predecessor co ) would not be entitled to the deduction; and v. the provisions of the section would apply to the amalgamated or the resulting company ( successor co ), as if the amalgamation or demerger had not taken place. 52. Sub-section (12) of section 80IA of the IT Act, uses the word undertaking signifying that it applies to an undertaking and not to a taxpayer or owner of the undertaking. It provided that in case of amalgamation/demerger, the benefit will flow to the assessee which acquires the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y explained in more detail by the CBDT in Circular No. 779 dated 14-09-1999 under the head Business re-organization Extensive amendments in relation to amalgamation demerger and slump sale. Relevant portion of the Circular is extracted below: 56.1 The business and economic environment of the country has thrown up the need for simplification and rationalisation of laws relating to business re-organization, for rationalisation of the production system and better utilization of resources which have become necessary with a view to enabling the Indian industry to restructure itself to become globally competitive. It was in this background that the tax concessions to conversion of firms into companies or proprietary concern into companies were provided in Finance (No.2) Act, 1998 and were widely welcomed. Following this up, the Act has carried out a number of amendments for the entire gamut of business reorganisation. These include rationalisation of the existing provisions relating to amalgamation of companies, new provisions relating to demerger of companies and sale or transfer of business as a going concern through slump sale. 56.2 Amalgamation in relation to the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision has been enacted in sub-section (12) of section 80-IB in regard to deduction available under that section in the case of an amalgamation or demerger (emphasis supplied) 55. The memorandum explains that the purpose of introducing sub-section (12) was to make the business reorganisations such as amalgamation and demerger tax neutral. A question, therefore, arises is to understand what was the position prior to insertion of sub-section (12)? In other words, prior of insertion of sub-section (12), whether the taxpayers were allowed or were they denied the benefit of tax holiday, if the undertaking were transferred by one taxpayer to another. 56. The issue about eligibility to claim tax holiday/deduction of the eligible undertaking by a successor, (not necessarily in the context of 80IA but other similar tax holiday provisions) had arisen number of times for adjudication before the Courts prior to insertion of sub-section (12) in section 80IA of the IT Act. We observe that the Courts have taken a consistent view that the deduction was allowable for the residual period to the successor company. 57. In CIT vs. Silical Metallurgic Ltd (324 ITR 29), the facts bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g carrying on industrial and commercial activities on and from June 20, 1973, i.e., prior to the amalgamation of the amalgamating company with the amalgamated company, which had become effective from October 31, 1973. The amalgamated company was not formed by the splitting up, or the reconstruction, of a business already in existence. Therefore, the Tribunal was right in holding that the assessee company was entitled to relief under sections 80J and 80HH of the Act . 58. The CBDT had also accepted the above legal position with regard to deduction under section 84 of Income Tax Act, 1922 (Section 80J of Income-tax Act, 1961), way back in 1963 and clarified the matter vide Letter: F No 15/5/63-IT (A-I), dated 13 December 1963, which reads as under: The Board agree the benefit of section 84 attaches to the undertaking and not to the owner, thereof. The successor will be entitled to the benefit for the unexpired period of five years provided the undertaking is taken over as a running concern . 59. The Board set out two principles (prima facie, independent of one another or the later dependent on the primary and the first principle): i. The deduction attaches to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular was issued with reference to Section 84 which was replaced by section 80J w.e.f. 1.4.1968. The said section 80J has been omitted by Finance Act No.2 of 1996 w.e.f. 1.4.1989. However, the provisions of section 84/80J and 80IC are similar in the context of benefit of deduction to be allowed to an undertaking. Reading the provisions of section 84, 80J and 80IC of the Income Tax Act, we find that the provisions of the aforesaid sections are similar and applying the circular issued in respect of section 84 to the provisions of section 80IC, we hold that the benefit of deduction u/s 80IC, which has not withdrawn till date, as a going concern, is to be allowed to an undertaking. The said undertaking being succeeded by a partnership firm, would not disentitle the succeeding person, the benefit of deduction under the aforesaid section. We find support from the ratio laid down in the under mentioned judgment replied upon by the assessee. 10. The interpretation placed by the Tribunal on the provisions of Section 80- IC(4)(i) of the Act being in consonance with law, no fault arises in the view taken by the Tribunal. No ground to interfere with the order of the Tribunal has been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (1) r.w.s. sub-section (4) of section 80IA of the IT Act. 64. We are rather inclined to accept the proposition put forth by the Ld AR of the assessee that sub-section (12) was in the nature of disabling provision in so far as it disentitled the amalgamating / demerged entity to claim any deduction in the year of amalgamation/ demerger. 65. Sub-section (12) of section 80IA provided that: i. In case of the amalgamating company or the demerged company the deduction would not be admissible, in the year of amalgamation or demerger; and ii. The provisions of the section, as far as may be, should be applied to the amalgamated company or the resulting company, as would have applied to the amalgamating company or demerged company. 66. Thus, sub-section (12) restricted the rights of the amalgamating/demerged company to claim deduction under section 80-IA for the year in which the amalgamation/demerger takes places, even if such amalgamation/demerger was effected in the middle of the year, and the profits of such undertaking for the period up to the appointed date/demerger are taxed in the hands of the amalgamating company/demerged company. 67. The Coord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and makes explicit what was already implicit. Even if the amendment had not been introduced, the expression such tax as appearing in section 140A would have reference to the tax payable on the basis of the return minus, inter alia, the MAT credit claimed to be set off in accordance with the provisions of section 115JAA of the said Act. 71. Similar issue had arisen before the Supreme Court in case of ITO vs. Arunagiri Chettiar 220 ITR 232 wherein the question was whether a partner is liable to pay a demand raised on a firm, pursuant to his retirement but, in respect of an assessment year during which he was acting as a partner. The Kerala High Court decided the question in favour of the assessee holding that nothing in the Act provide that the retired partner would be liable to pay the demand. The Supreme Court reversed the Judgment of High Court and held that the provisions of section 188A made the position explicit which was implicit in law. Therefore, even before the amendment the partner was liable to pay the demand raised on the firm, after his retirement, but relating to the year in which he was acting as a partner. The Hon ble Apex Court observed as under: 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeks to amend section 35 AB of the Income tax Act relating to allowance of expenditure on know-how. Under the existing provisions, any lump sum consideration paid for acquiring know-how is allowed in six years commencing from the previous year in which the expenditure incurred, at the rate of one sixth of the amount. It is proposed to insert a new sub-section (3) to provide in the case of transfer of business under the scheme of amalgamation or demerger, the amalgamated company or the resulting company, as the case may be, shall be entitled to claim deduction under this sub-section for the residual period as if the business or the undertaking had continued . (Emphasis supplied) 75. It may be noted that sub-section (3) entitles the amalgamated or the resulting company to claim the deduction. As against that, sub-section (12) did not use the same language. Rather, sub-section (12) provided the manner in which the deduction shall be claimed in the year of amalgamation or demerger and in fact as observed earlier it disabled the existing entity from claiming the deduction in the year of amalgamation/demerger. Thus, sub-section 12 could at best be said to make exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is transferred in a scheme of amalgamation or demerger after 31.03.2007. (emphasis supplied) 79. The language used in sub-section (12A) simply states that provisions of sub-section (12) shall not apply to undertakings or enterprise transferred in the scheme of amalgamation or demerger after 31.03.2007. Even the notes on clause reiterated the same text. The Explanatory memorandum too has not clarified anything more than what is mentioned in the sub-section (12A) except that the heading under which the said explanation is appearing, stated that the deduction shall not be available after 31-3-2007. 80. As has been held above, sub-section (12) did not confer any new rights to the successor entity when the undertakings were transferred from one taxpayer to another. Sub-section (12A) simply states that in a case of amalgamation or demerger after 31.3.2007, the provisions of sub-section (12) would not be applicable. If the intention of legislature was to curtail the rights of the new owner of the undertaking to claim the tax holiday for residual period, it could have simply stated that benefit u/s 80IA will not be available or it could have stated that the deduction prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demerger takes places, even the other two undertakings which remains with the demerged company could be denied the benefit of tax holiday when only one undertaking is determined. We are, therefore, of the view that the legislature, in all its wisdom, has neutralised the disability enshrined in sub-section (12) by inserting sub-section (12A) in section 80IA of the IT Act. 84. We now refer to the contention of the DR where he has relied on the contents of the Circular No. 3 of 2008 dated 12 March 2008 issued by CBDTto explain the provisions of newly inserted section 80IA(12A). The circular provided as under: 35. Tax benefit u/s 80IA not available to undertaking / enterprise of Indian companies undergoing amalgamation or demerger after 31.03.2007 35.1 Sub-section (12) of section 80-IA provides that where any undertaking of an Indian company which is entitled to the deduction under the said section is transferred before the expiry of the period specified therein, to another Indian company in a scheme of amalgamation or demerger, the provisions of the said section 80-IA shall apply to the amalgamated or the resulting company as they would have applied to the amal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. subsection (1) r.w.s. (4) of section 80IA of the IT Act. 87. If the intention of tax holiday under section 80IA was to provide incentive to only original investor, the legislature would have never inserted sub-section (12) in the statute. At least, the memorandum explaining the provisions of Finance Bill 2007, regarding insertion of sub-section (12) in Section 80IA should have clarified why the legislature thought fit to deviate from the its basic intent of providing incentive to the original investor and provide benefit to the successor. We have seen earlier, the memorandum explaining the provisions of Finance Bill 2007 has no such reference. It is, therefore, difficult to accept the contention of the Revenue and accept the contents of Circular no. 3 of 2008 to be depicting correct intention. 88. In our view, therefore, the clarification provided in the circular for insertion of sub-section (12A) cannot be extended beyond what is unambiguously stated in the provisions of the IT Act. Sub-section (12A) simply states that from a particular date i.e. 31 March 2007 the provisions of sub-section (12) shall not apply in the specified situations. There cannot be any other mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal investor will recover the price from the new investor in respect of the higher risk which he would have assumed at the initial stage. 92. Further, even if this intention is considered as relevant, such claim cannot be denied in case of amalgamation and demerger since: i. In case of demerger, there may not be any change in ownership of the entity. The same shareholders or atleast three fourth in the value of shares of the demerged company become the shareholders of the resulting company. ii. Similarly, in the case of amalgamation, the shareholders of the amalgamating company or atleast three fourth in the value of shares, become shareholders of the successor/amalgamated company along with the existing shareholders of the predecessor company. Thus, in both the situations, there is no change in the risk bearing entities or at least the majority of initial investor continue to bear the risk as they become shareholder of the successor entity. Thus, even on this count it is difficult to accept the contents of Circular no.3 of 2008 which clarified that sub-section (12A) was inserted to disentitle the successor entity the benefit of tax holiday since the entrepre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistrations, incentives, sales tax deferrals, exemptions and benefits, subsidies, concessions, grants, rights, claims, leases, mining leases, prospecting licenses, tenancy rights, liberties, special status and other benefits or privileges of the Transferee Company and shall remain valid, effective and enforceable on the same terms and conditions. 95. We would be sitting on the judgment and wisdom of the Hon ble Courts if we were to deny the benefit especially sanctioned by the Hon ble High Courts. 96. The Kolkata Bench of the Tribunal in case of Electrocast Sales India Ltd. vs. DCIT [2018] 170 ITD 507, has held that merger scheme approved by the Hon'ble High Court having in mind the larger public interest, cannot be disturbed by the revenue. We concur with the view taken by the coordinate Bench to hold that since the scheme of amalgamation was approved by the Hon'ble High Court only after ensuring that the same is not prejudicial to the interests of its members or to the public interest, the same cannot be challenged by the Revenue subsequent to the approval. If at all, they could have raised the objection when the Court had sought their comments on the scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation u/s. 32(1)(iia) of the IT Act. The above depreciation was in respect of assets installed in FY 2009-10 (relevant to AY 2010-11) but used for less than 180 days during that year. 101. The learned AR of the assessee submitted that the additional depreciation allowable u/s 32(1)(iia) is an incentive in the nature of accelerated deduction, which has been earned in the year of acquisition though restricted for that year to 50% on account of its usage for less than 180 days. The balance incentive so earned must, therefore, be made available to the assessee in the subsequent year. The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of plant and machinery. Therefore, there is no excess allowance of depreciation / additional depreciation. The DR on the other hand sought support from the order of the lower authorities. 102. It is worth noting that there has been considerable dispute on this issue leading to persistent litigation between the assessees and the tax department. The Finance Ministry took cognizance of this fact and made an amendment in the IT Act in order to remove the incongruity and the related difficulty faced by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2:- A perusal of the extract of the memorandum relied upon would show that the legislature recognized the fact that the manner in which the Revenue chose to interpret the provision, as it stood prior to its amendment would lead to discrimination, in respect of plant and machinery, which was used for less than 180 days, as against that, which was used for 180 days or more. 11.3:- In our opinion, as indicated above, the amendment is clarificatory in nature and not prospective, as is sought to be contended by the Revenue. The memorandum cannot be read in the manner, in which, the Revenue has sought to read it, which is, that the amendment brought in would apply only prospectively. 11.4:- We are, clearly, of the view that the memorandum, which is sought to be relied upon by the Revenue, only clarifies as to how the unamended provision had to be read all along. 11.5:- In any event, in so far as the Court is concerned, it has to go by the plain language of the unamended provision, and then, come to a conclusion in the matter. As alluded to above, our view, is that, upon a plain reading of the unamended provision, it could not be said that the assessee could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Kharia Khangar (Rajashthan) and Taloja (Maharashtra) which are approved by the DSIR and entitled to deduction u/s 35(2AB) of the IT Act. During the year the assessee claimed revenue expenditure amounting to ₹ 2,02,93,591/- under section 35(2AB) of the IT Act. The AO disallowed the claim to the extent of ₹ 7,50,139 on the ground that DSIR has not approved the said expenditure in a report submitted by it to the tax officer in Form 3CL. The LD CIT(A) confirmed the above disallowance. 110. The AR of the assessee submitted that as per section 35(2AB) of the IT Act, the DSIR is only empowered to approve the R D facility. For the year under consideration there was no provision mandating the DSIR to approve the expenditure. It was further submitted that once the R D facility is approved by the prescribed authority, i.e. DSIR by issuing Form No.3CM, the expenses incurred by the assessee have to be allowed u/s 35(2AB) of the IT Act. It was also submitted that Rule 6(7A) of the Income Tax Rules, 1962 was amended much later to provide that DSIR shall furnish a report in Form 3CL quantifying the expenditure allowable on in-house R D facility. 111. The DR, on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention of the DR that the amendment to Rule 6(7A) is procedural cannot be accepted, since the amended rule stipulates a condition that apart from approval of in-house R D facility of assessee, the expenditure also has to be quantified by the prescribed authority for weighted deduction u/s 35(2AB) of the I.T.Act. Therefore, the amended Rule 6(7A) effect the substantive right of the assessee and cannot be termed merely as procedural. Moreover, the coordinate Bench of Bangalore Tribunal in case of M/s.Mahindra Electric Mobility Ltd. v. ACIT (supra) and M/s.Indfrag Limited v. ACIT (supra) have clearly held that prior to 01.07.2016 Form 3CL has no legal sanctity and it is only w.e.f. 01.07.2016 with the amendment to Rule 6(7A) of the I.T.Rules, that the quantification of weighted deduction u/s 35(2AB) of the I.T.Act has significance. Therefore, we hold that the deduction u/s 35(2AB) of the I.T.Act be granted as claimed by the assessee instead of restricting it to the quantum of claim as mentioned in .Form No.3CL by the prescribed authority. It is ordered accordingly. 115. As can be noted above, the Tribunal relied on another decision of the same Bench in the case of M/s Mahin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt iii. Cummins India Limited v. DCIT [ITA No.309/Pun/2014 - order dated 15.05.2018] 117. The AO in the present case has not disputed the correctness of the claim made by the assessee. In view of the above discussions and judicial precedents on this issue, we hold that the claim of the assessee must be granted as made in its return of income. It cannot be restricted to the extent of claim as approved in Form No.3CL by DSIR since there was no such requirement either under the Act or in the Rules for the assessment year 2011-12. We accordingly allow the appeal of the assessee Company on this ground and direct the AO to delete the disallowance in this regard. 118. Ground no.4 filed by the assessee is with respect to short grant of TDS / TCS credit claimed by the assessee on the basis of certificates available with the assessee. 119. The learned AR of the assessee submitted that it claimed credit towards TDS / TCS on the basis of entries appearing in Form 26AS and also on the basis of original TDS certificates available with them. The claim of credit was, however, restricted by the AO only to the extent of entries appearing in Form 26AS. The AR of the assessee also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irections to give credit of unmatched and mismatched TDS certificates. Pursuant to the said decision of the Delhi High Court, the CBDT has issued instruction No.5 of 2013, dated 8.7.2013 directing that where the assessee approaches the assessing officer with requisite details and particulars in the form of TDS certificate as an evidence against any mismatch amount, the assessing officer would verify whether or not the deductor had made payment of the TDS in the government account and, in the event, the payment had been made, credit of the same would be given to the assessee. 124. We also refer to the decision of Allahabad High Court in Civil Misc Writ Petition (Tax) No.657 of 2013 Rakesh Kumar Gupta Vs. Union of India and another, wherein the High Court has held that assessee cannot be denied credit for TDS on the ground of Form 26AS mismatch, since the mismatching is not attributable to the assessee and the fault solely lay with the deductor. 125. We also refer to the decision of Coordinate Bench of this Tribunal in the case of LSG Sky Chef (India) (P.) Ltd. [2014] 45 taxmann.com 256, wherein the taxpayer assessee had claimed credit in respect of TDS on the basis of TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes available although no entry for the same appears in Form 26AS. The mismatch cannot be attributed to the assessee as it has no control over Form 26AS. 127. Accordingly, we direct the AO to grant credit of TDS / TCS credit for certificates produced by the assessee including the certificates which may be in name of Grasim / SCL. The AO can satisfy himself to the effect that the claim in respect of the said certificates are not made by the Grasim / SCL in their ROI. This ground is remitted back to Ld AO and accordingly it is allowed for statistical purpose. 128. Ground no. 5 is general in nature and does not require separate adjudication and hence accordingly dismissed. 129. The assessee has filed four additional grounds vide applications dated 14 January 2020 (Ground No. 6 and 7) and 5 November 2020 (Ground No. 8 and 9). 130. With respect to admissibility of additional ground the AR relied on the judgment of the Hon ble Apex Court in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383 to contend that since the grounds are purely legal in nature it should be admitted for adjudication. 131. The Hon ble Supreme Court in the case of National ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. 7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal [vide, e.g., C.I.T, v. Anand Prasad (Delhi), C.I.T. v. Karamchand Premchand P. Ltd. and C.I.T. v. Cellulose Products of India Ltd. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction to examine a question of law which arises from the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders, the dividend distribution tax (DDT) has been paid at the rates prescribed under section 115-O as against the rates provided in the respective tax treaties. In this regard reliance has been placed on the decision of the Hon ble Coordinate Bench of this Tribunal in the case of Asian Paints (ITA No. 2754/Mum/2014), wherein it was held as under: 22. In the third additional ground numbered as ground no. 5, the assessee has raised the issue of applicability of beneficial rate as per the applicable DTAA to the dividend distribution tax (DDT) paid under section 115-O of the Act and has claimed refund of the excess amount. 23. Having considered rival submissions, we restore the issue to the Assessing Officer for examining assessee s claim of applicability of beneficial rate of tax as per the applicable DTAA to the DDT paid under section 115-O of the Act. This ground is allowed for statistical purposes. 138. We are in agreement with the findings of the coordinate Bench of this Tribunal. We restore the issue to the AO for examining assessee s claim of applicability of beneficial rate of tax as per the applicable DTAA to the DDT paid under section 115O of the IT Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and no fresh reference was made after initiation of the proceedings u/s.153C of the IT Act. ii. Transfer pricing order u/s. 92CA(3) of the IT Act, was passed prior to issuance of notice u/s. 143(2) of the IT Act. iii. Transfer pricing order u/s. 92CA(3) of the IT Act, was passed prior to filing of ROI in response to notice u/s.153C of the Act. 144. Before we get into merits of plea raised by the assessee, it will be worthwhile to first list the chronology of event and various dates related to transfer pricing proceedings for the year: Sr. No. Date Event 1 25.11.2011 Original Return of Income filed under Section 139(1) of the Act 2 12.03.2013 Revised Return of Income filed under Section 139(5) of the Act 3 05.07.2013 Reference made to learned Transfer Pricing Officer ( TPO ) under Section 92CA(1) of the Act, during original assessment proceedings 4 26.11.2014 Notice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 13 It is fortified that once the assessment gets abated, the original return which had been filed looses its originality and the subsequent return filed under section 153A of the said Act (which is in consequence to the search action under section 132) takes the place of the original return. In such a case, the return of income filed under section 153A(1) of the said Act, would be construed to be one filed under section 139(1) of the Act and the provisions of the said Act shall apply to the same accordingly. If that be the position, all legitimate claims would be open to the assessee to raise in the return of income filed under section 153A(1). 14. We would further like to emphasis on the judgment passed by this Court in the case of Continental Warehousing Corpn (Nhava Sheva) Ltd. (supra) which also explains the second proviso to Section 153A(1). The explanation is that pending assessment or reassessment on the date of initiation of search if abated, then the assessment pending on the date of initiation of search shall cease to exist and no further action with respect to that assessment shall be taken by the AO. In such a situation the assessment is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence invalid. The addition made consequent to TPO order therefore does not hold any ground. Accordingly, this ground of the assessee is allowed. Consequently, Ground nos.8 to 12 in the appeal filed by the revenue and Ground nos.6 and 7 in the CO bearing CO 129 /Mum/2019 are dismissed since the TPO order is held to be invalid. Assessee s Appeal ITA No. 1412/Mum/2018 Assessment Year 2012-13 149. Ground no. 1 of the appeal relate to disallowance of claim amounting to ₹ 1,40,80,74,900/- for rail system and ₹ 29,52,99,959/- for power generation in view of provisions of section 80IA(12A) of the IT Act. 150. This ground is similar to Ground no.1 of the assessee s appeal in ITA No. 1413/Mum/2018 for AY 2011-12. We have discussed this issue at length, hereinabove, while disposing the assessee s appeal for AY 2011-12 and allowed the ground of the assessee. Since facts relating to this ground of appeal remain same for AY 2012-13 also, we allow ground no.1 of the assessee s appeal and direct the AO to delete the disallowance. 151. Ground no. 2 of the appeal for AY 2012-13 relate to disallowance u/s.14A of the IT Act r.w. Rule 8D of the IT Rules amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bench of this Tribunal in earlier years in the assessee s own case as also the decision of Hon ble jurisdictional High Court for AY 2008-09 (Revenue s SLP against such order of the High Court is rejected by the Hon ble Supreme Court), we hold that total disallowance for the purpose of section 14A should be restricted to ₹ 81,58,878/- i.e. amount suo moto offered by the assessee. 156. Coming to the claim of ₹ 1,54,66,703/- (i.e. ₹ 2,36,25,581/- minus ₹ 81,58,878/-) which has erroneously crept in the computation of total income, we are of the view that the same cannot be sustained merely because the assessee has made this disallowance suo moto in its return of income. This is especially so when the AO himself has accepted the assessee s contention that no disallowance was required u/s.14A in respect of interest. The Courts have even held that the assessing officers are in fact required to help the tax payers in making legitimate claim if they have missed out on some such claims since they are required to obtain only legitimate tax from the tax payers. Accordingly, if an assessee has actually made mistake in its return of income and offered excess disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO can satisfy himself to the effect that the claim in respect of the same certificates are not made by the erstwhile entities. This ground is restored to the file of AO and allowed for statistical purpose. 163. Ground no.6 is general in nature and does not require separate adjudication and hence accordingly dismissed. 164. The assessee has filed additional grounds vide application dated 10 January 2020 (Ground nos.7 and 8) and 5 November 2020 (Ground nos.9 and 10). Similar grounds were filed as additional grounds for AY 2011-12 also in ITA No. 1413/Mum/2018. 165. Following the Supreme Court Ruling in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383, we admitted and adjudicated the additional grounds filed for AY 2011-12 since those were merely legal plea which did not require any factual investigation. Accordingly, we admit the additional grounds for AY 2012-13 filed by the assessee and have taken up the same for adjudication. 166. Additional Ground nos.7 and 8 relate to the claim of deduction towards education cess and secondary and higher education cess in computing the total taxable income. 167. These grounds are similar to Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue raised in all the ground pertain to common matter, we are disposing them together. 173. The chronology of event and various dates related to transfer pricing proceedings for this year is listed below: Sr. No. Date Event 1 28.11.2012 Original Return of Income filed under Section 139(1) of the Act 2 18.12.2013 Reference made to learned Transfer Pricing Officer ( TPO ) under Section 92CA(1) of the Act, during original assessment proceedings 3 30.03.2014 Revised Return of Income filed under Section 139(5) of the Act 4 26.11.2014 Notice issued by the learned AO under Section 153C read with Section 153A of the Act 5 02.01.2015 Return of Income ( ROI ) filed in response to notice issued under Section 153C of the Act 6 08.01.2015 Notice issued by AO under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s cross objection is connected with this claim. 178. These grounds are similar to Ground nos.1 and 2 of the Revenue s appeal in ITA No. 2871/Mum/2018 and assessee s cross objection in CO no. CO 129/Mum/2019 for AY 2011-12. We have already decided this issue in favour of the assessee by following the order of Tribunal in assessee s own case for earlier years. Since the facts relating to this ground remain same, following our decision in AY 2011-12, we reject this ground raised by the Revenue. 179. Ground nos. 3 and 4 of the Revenue s appeal relate to availability of deduction under section 80IA of the IT Act with respect to the rail system developed, operated and maintained by the assessee, amounting to ₹ 1,48,44,82,911/-. Ground no.2 of the assessee s cross objection is connected with this claim. 180. These grounds are similar to Ground nos.3 and 4 of the Revenue s appeal in ITA No. 2871/Mum/2018 and assessee s cross objection in CO No. 129/Mum/2019 for AY 2011-12. We have already decided this issue in favour of the assessee by following the order of Tribunal in assessee s own case for earlier years, particularly AY 2010-11. Since the facts relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t claimed by the assessee on the basis of certificates and for which entries are not found in Form 26AS. 189. This ground is similar to Ground no.4 of the assessee s appeal in ITA No. 1413/Mum/2018 wherein we have directed the AO to grant credit for TDS/TCS on the basis of certificates available with the assessee (including certificates which are in name of Grasim/SCL) since mismatch with Form 26AS cannot be attributed to the taxpayer. Following our decision in AY 2011-12, we direct the AO to grant credit for TDS/TCS for which the assessee produces certificates including the certificates in the name of erstwhile entities. The AO can satisfy itself to the effect that the claim in respect of the same certificates are not made by the erstwhile entities. 190. Ground no.5 is generic in nature and does not require separate adjudication and hence accordingly dismissed. 191. The assessee has filed additional grounds vide applications dated 14 January 2020 (Ground nos.6 and 7) and 5 November 2020 (Ground no. 8). Similar grounds were filed as additional grounds for AY 2011-12 also in ITA no. 1413/Mum/2018. 192. Following the Supreme Court Ruling in the case of National Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing our decision in AY 2011-12, we reject this ground raised by the Revenue 199. Ground nos. 3 and 4 of the Revenue s appeal relate to availability of deduction under section 80IA of the IT Act with respect to the rail system developed, operated and maintained by the assessee. Ground no.2 of the assessee s cross objection is connected with this claim. 200. These grounds are similar to Ground nos.3 and 4 of the Revenue s appeal in ITA No. 2871/Mum/2018 and assessee s cross objection in CO no. 129/Mum/2019 for AY 2011-12 for AY 2011-12. We have already decided this issue in favour of the assessee by following the order of Tribunal in assessee s own case for earlier years, particularly AY 2010-11. Since the facts relating to this ground remains same, following our decision in AY 2011-12, we reject this ground raised by the Revenue. 201. Ground no. 5 of the appeal relate to relief allowed by the LD CIT(A) by deleting additions made by the AO under section 14A of the IT Act r.w. Rule 8D of the IT Rules amounting to ₹ 51,42,831/-. Ground no.4 of the assessee s cross objection is connected with this claim 202. We have dealt with the issue of disallowance of other ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of the assessee company. Reliance was placed on the decision of earlier years wherein LD CIT(A) had relied upon the decision of Coordinate Bench of this Tribunal in case of Videocon Industries Limited vs. ACIT ITA No. 6662/Mum/2012. 208. The AR of the assessee submitted that as part of the assessee Company s expansion plan and foraying into business outside India, the assessee Company had acquired stakes in Star Cement LLC., Middle East, through its wholly owned subsidiary in Dubai, viz., UltraTech Cement Middle East Investment Limited (UCMEIL) 209. The assessee was of the view that no guarantee fees/ commission was chargeable from its Associated Enterprises ( AEs ) in respect of aforesaid corporate guarantees, since it is in the nature of shareholder s activity of the Assessee. 210. The Ld AR of the assessee also contended that the corporate guarantee transaction has no bearing on the profits, income, losses or assets of the assessee hence it will be outside the ambit of transfer pricing provisions as it is not an international transaction within the meaning of section 92B of the Act. 211. On the other hand, the Ld DR submitted that no third-party would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its AE, a subsidiary company. 214. The adequacy of the ALP of corporate guarantee fee at 0.5% can also safely be gathered by drawing support from the following judicial pronouncements: - Aditya Birla Minacs Worldwide Ltd. vs. JCIT (2016) 47 CCH 760 (Mum Tribunal) - Godrej Household Products Ltd. vs. Addl. CIT 41 taxmann.com 386 (Mum Tribunal) - Nimbus Communications Limited vs. Addl. CIT (2014) 149 ITD 0508 (Mum Tribunal) - Hindalco Industries Ltd. vs. Addl. CIT (62 taxmann.com 181) (Mum Tribunal) - Manugraph India Ltd. vs. DCIT (2015) 43 CCH 348 (Mum Tribunal) - Prolific Corporation Ltd. Vs. DCIT (55 taxmann.com) (Hyd. Tribunal) - Thomas Cook (India) Limited (2016) 47 CCH 0162 (Mum Tribunal) 215. We see no reasons to take any other view of the matter than the view so taken by Hon ble jurisdictional High Court and coordinate Benches and therefore we reject the determination of arm s length price reduced to Nil by the Ld CIT(A) and direct the AO to adopt 0.5% as an arm s length consideration for the corporate guarantee issued by the assessee in favour of its AEs. 216. The grounds raised by the Revenue and the CO filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the IT Act on account of investment in plant and machinery. 225. The Finance Act, 2013 introduced a new section 32AC in the IT Act with effect from 1 April, 2014, which provides that a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset amounting to ₹ 100 crores or more, after the 31st day of March, 2013 but before the 1st day of April, 2015, then such company is entitled to an investment allowance of 15 percent of the investment in such new assets. The intention of the legislature was to provide incentive to the taxpayers making substantial investments in plant or machinery and thereby boost the manufacturing sector in the economy. 226. The assessee claimed the amount of ₹ 3,43,97,11,256/- as deduction u/s. 32AC which includes ₹ 248,65,65,041/- towards cost of components of plant or machinery lying as CWIP as on 1.4.2013 but aggregated and installed as plant or machinery during the FY 2013-14. Further an amount of ₹ 8,32,42,289/- was claimed in respect of the assets which are eligible for depreciation at the rate of 100 per cent but installed and put to use for less than 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,- (a) for the assessment year commencing on the 1st day of April, 2014, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and (b) for the assessment year commencing on the 1st day of April, 2015, of a sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a). (1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, an incentive in the form of investment allowance to a manufacturing company that invests more than ₹ 100 Crore in plant and machinery during the period from 01.04.2013 to 31.03.2015 was announced. Considering the need to incentivize smaller entrepreneurs, I propose to provide investment allowance at the rate of 15 percent to a manufacturing company that invests more than ₹ 25 Crore in any year in new plant and machinery. This benefit will be available for three years i.e. for investments up to 31.03.2017. The Scheme announced last year will continue to operate in parallel till 31.03.2015. 234. The memorandum explaining the provision of Finance (No.2) Bill, 2014 in respect of the aforesaid amendment stated as under:- FINANCE (No. 2) BILL, 2014 PROVISIONS RELATING TO DIRECT TAXES Investment Allowance to a Manufacturing Company In order to encourage the companies engaged in the business of manufacture or production of an article or thing to invest substantial amount in acquisition and installation of new plant and machinery, Finance Act, 2013 inserted section 32AC in the Act to provide that where an assessee, being a company, is engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the meaning of acquisition of plant or machinery to mere purchase of individual components of plant in piecemeal, which are accounted under the head Capital Work-in-Progress will give absurd results not intended by the legislature. 237. The assessee is the largest cement manufacturer in the country having plants across various location in India. Huge plant and machineries are required for the manufacturing of cement. These plants are in the nature of complex machineries. Various components purchased by the assessee are to be assembled and commissioned together which takes substantial amount of time given the complexity, size and nature of the machinery/ project/ plant required for the business. The sheer size of various plants/ machineries constructed and put to use during the year is evident from the fact that as on 1 April 2013, the capital work-in-progress of the assessee was ₹ 1,657 crores and to convert them into plant, additional purchase of individual components worth ₹ 635 crores was made during the year. Unless and until the machinery are assembled and commissioned together, the plant does not come into existence. Therefore, the meaning of word acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and machinery on completion of installation. Thus, the meaning of the term acquired used in section 32 is considered as fulfilled only when the plant / machinery is installed . The language used in section 32AC being similar to the language used in second proviso to section 32(1), we must give the same interpretation. 241. We further note that the issue relating to availability of additional depreciation under section 32(1)(iia) wherein the phrase used is acquired and installed after the 31st day of March has been subject matter of litigation. The Coordinate Bench of this Tribunal in the case of Euro Pratik Ispat Pvt. Ltd. vs. ACIT (ITA No. 1682/Mum/2011) has observed as under : In our opinion machinery was installed in the AY under appeal, though acquisition of the P M had started in earlier year AY. Till a machine is not assembled in a manner that it could be used to manufacture, it cannot be held that it had been installed. Mere purchasing or shifting it to factory premises is not enough. Assessee had claimed additional depreciation @ 10%, as the P M had worked for a period less than one year. It is a common phenomenon that in big projects, installation of mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which is to promote investment in business of manufacturing or production of any article or thing or in the business of generation or generation or distribution of power, rather than in the manner which may frustrate the object. Reference can be drawn to the following observations of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 (SC): The provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; since the provision for promoting economic growth has to be interpreted liberally, restrictions on it too has to be construed so as to advance the objective of the provisions and not to frustrate it. The words used u/s 32(1)(iia) of the Act are acquired and installed after 31st day of March 2005. The assessee company did purchased new machineries and plant prior to 31-03-2005 as well after 31-03-2005 for the coke production plant being set up by the assessee company but the installation of the entire new plant and machineries as an integrated activity for setting up industrial project for coke production plant which started in financial year 2004-05 were completed after 31- 03-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and machineries getting completed in April 2005 with the commencement of commercial production of LAM coke in April 2005 when the said new plant became operational and acquisition of said machineries and plant cannot be seen and visualized in itemized manner as unless these new plant and machineries are integrated together they will not achieve the desired results. The assessee company has finally installed the entire new plant and machineries in April 2005 i.e. after 31-3-2005 and assessee company is entitled to the benefit u/s 32(1)(iia) of the Act for claiming additional depreciation in the impugned assessment year because what is relevant is that new machineries and plant which were acquired before 31-03-2005 and also post 31-03-2005 were all purchased as an integrated activity connected with the common and sole objective directed towards activity of the assessee company to set up new coke production plant which become operational in financial year 2005-06 with completion of installation of these new plant and machineries in April 2005 when all these machineries and plant were put to use after installation with start of commencement of commercial production of LAM coke in Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered view, the assessee company is entitled for claim of additional depreciation u/s 32(1)(iia) of the Act amounting to ₹ 83,55,387/- during the assessment year 2006-07. 243. The Hon ble Gujarat High Court in the case of PCIT vs. IDMC Ltd. [2017] 393 ITR 441 also took a similar view on the issue and has observed as under: Applying law laid down by the Supreme Court in various decisions to the facts of the case on hand, if the submission on behalf of the revenue is accepted, it will lead to an absurd and unjust result and the purpose and object of granting the additional depreciation will be frustrated. If the contention on behalf of the revenue is accepted, in that case, the assessee shall never get the additional depreciation as provided under section 32(1)(iia). In the facts and circumstances of the case, the twin conditions of the acquired and installed shall never be satisfied in a year and therefore, the assessee shall never get any depreciation. The purpose and object of granting additional depreciation under section 32(1)(iia) is to encourage the industries by permitting the assessee setting up the new undertaking/ installation of new plant and machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure are not required to be installed and on their acquisition, they are ready to be put to use. Therefore, a manufacturer who is acquiring designs, drawings, plans which are considered as plant and machinery for the type of business they are in, will not be eligible to claim deduction under section 32AC since according to the Revenue the designs, drawing, plans are not installed by the assessee. 246. It is fairly well settled law that where the word and as is understood leads to unintended results, then it should be interpreted to mean or . The Supreme Court in the case of CIT vs. Ram Kishan Dass 413 ITR 337 (2019) SC has held: Secondly, the alternate construction of the proviso is that the expression and for any good and sufficient reason should be read to mean or for any good and sufficient reason . As a matter of statutory interpretation, it is well settled that the expression and can in a given context be read as or (see in this context Ishwar Singh Bindra v. State of UP AIR 1968 SC 1450). This submission was opposed on behalf of the assessees by urging that in the context of sub-section (2A), it has been held by this Court in Sahara India (Firm), Lucknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 251. This ground is similar to Ground no.4 of the assessee s appeal in ITA No. 1413/Mum/2018 wherein we have directed the AO to grant credit for TDS/TCS on the basis of certificates available with the assessee (including certificates which are in name of Grasim/SCL) since mismatch with Form 26AS cannot be attributed to the taxpayer. Following our decision in AY 2011-12, we direct the AO to grant credit for TDS/TCS for which the assessee produces certificates including the certificates in the name of erstwhile entities. The AO can satisfy itself to the effect that the claim in respect of the same certificates are not made by the erstwhile entities. 252. Ground no. 6 is general in nature and does not require separate adjudication and hence accordingly dismissed. 253. The assessee has filed additional grounds vide applications dated 14 January 2020 (Ground nos. 7 and 8) and 5 November 2020 (Ground no. 9). Similar grounds were filed as additional grounds for AY 2011-12 also in ITA No. 1413/Mum/2018. 254. Following the Supreme Court Ruling in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383, we admitted and adjudicated the additional grounds file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Revenue 261. Ground nos.3 and 9 of the Revenue s appeal relate to availability of deduction under section 80IA of the IT Act with respect to the rail system developed, operated and maintained by the assessee, amounting to ₹ 1,05,45,74,078/-. Ground nos.2 and 3 of the assessee s cross objection is connected with this claim. 262. These grounds are similar to Ground nos.3 and 4 of the Revenue s appeal in ITA No. 2871/Mum/2018 and assessee s cross objection in CO No. 129/Mum/2019 for AY 2011-12 for AY 2011-12. We have already decided this issue in favour of the assessee by following the order of Tribunal in assesse s own case for earlier years, particularly AY 2010-11. Since the facts relating to this ground remain same, following our decision in AY 2011-12, we reject this ground raised by the Revenue. 263. Ground no. 4 to 6 of the appeal relate to relief allowed by the LD CIT(A) by deleting additions made by the AO under section 14A of the IT Act r.w. Rule 8D of the IT Rules amounting to ₹ 1,26,79,264/-. Ground no.4 of the assessee s cross objection is connected with this issue. 264. We have dealt with the issue of disallowance of other e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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