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TMI Blog2022 (1) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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 - Assessment Year 2011-12 1. Grounds raised by the assessee are as under: 1) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in upholding the disallowance u/s 80IA amounting to Rs. 82,61,81,708 for Rail Systems and Rs. 18,91,43,054 for Power Plants. He erred in holding that in respect of Rail Systems and Power Plants transferred from Samruddhi Cement Limited to the appellant Company pursuant to the scheme of amalgamation, the deduction is not allowable as per the provisions of section 80IA(12A) of the income Tax Act 1961. 2) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income tax (Appels) has erred in upholding the disallowance of additional depreciation spilled over from earlier year amounting to Rs. 24,12,51,789 u/s 32 (1) of the IT Act in respect of assets was put to use for less than 180 days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax exemption benefits of Rs. 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 earlier years i.e. 2004-05 to 2010-11 without appreciating the facts that the revenue has not accepted the decision of the Hon'ble, ITAT on this issue and has filed further appeal in the Hon'ble Bombay High Court. 3) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, allowing the disallowance of Rs. 136,74,78,762/ - u/ s 80IA on rail system. 4) On the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) erred, in allowing the disallowance of Rs. 136,74,78,762/ - u/ s 80IA on rail "system relying on the decision of the ITAT in earlier years, without appreciating that the department has not accepted the decision of ITAT and further appeal has been filed against the appellate orders. 5) On the facts and in the circumstances of the case and in law, the Ld. CIT(A} erred, in allowing the disallowance of other expense of Rs. 4,14,78,764/ - u/ s 14A. 6) On the facts and circumstances of the case and in law the Ld. LD CIT(A) erred in deleting the treatmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 as capital receipt not chargeable to income tax, without appreciating that the LD CIT(A) has allowed relief by following the decision of the Hon'ble ITAT in case of the Respondent in earlier years from AY 2004-05 to AY 2010-11. 2) erred in challenging the order of the LD CIT(A), wherein LD CIT(A) allowed deduction of Rs. 136,74,78,762 under section 80-1A on rail system, without appreciating that the LD CIT(A) has allowed relief by following the decision of the Hon'ble ITAT in case of the Respondent in earlier years from AY 2004-05 to AY 2010-11. 3) erred in challenging the order of the LD CIT(A), wherein LD CIT(A) allowed the Carbon Credit Certified Emission Reduction receipt of Rs. 1,92,42,384 as capital receipt not chargeable to income tax, without appreciating that the LD CIT(A) has allowed relief by following the decision of the Hon'ble ITAT in case of the Respondent in earlier year i.e. AY 2008-09: 4) erred in challenging the order of LD CIT(A) on the above ground no 1 to 3 merely on the ground that Department has not accepted the decision of the Hon'ble ITAT and filed a further appeal before the High Court 5) erred in challenging the order of the LD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue was considered in detail by the Tribunal and after discussing various judicial pronouncements held that subsidy so received by the assessee was capital in nature, therefore not liable to tax as revenue receipt." "100. The facts and circumstances during the years under consideration i.e., 2009-10 & 2010-11 are exactly same, therefore, respectfully following the series of the order of the Tribunal in assessee's own case, we do not find any infirmity in the order of LD CIT(A) for holding that subsidy was capital in nature therefore, not liable to tax as revenue receipt." 7. The facts and circumstances during the year under consideration remain the same and hence following the series of the orders of Coordinate Bench of this Tribunal for earlier years in assessee's own case, we confirm the order of the LD CIT(A) and dismiss this ground raised by the Revenue. 8. Ground nos.3 and 4 of the revenue are concerned with the allowability of deduction under section 80IA in respect of the rail undertakings set up by the assessee. Ground no.2 of the assessee's cross objection is connected with this claim. 9. This issue was also subject matter of appeal in all the earlier years. The coor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, we found that assessee has offered expenses on Cost to Company basis of employees, executives and staff those were looking after the profit on investment in the mutual funds amounting to Rs. 43,31.541/ Assessee has also offered expenditure indirectly attributable to these employees amounting to Rs. 12,09,391/- thus, total disallowance offered by the assessee amounts to Rs. 55.40,932/- which appears to be reasonable looking to the nature of the exempt income vis-a-vis nature of expenses so incurred for earning the same. Respectfully following the decision of the Tribunal in assessee's own case, we restrict the disallowance under Rule 8D(2)(iii) to the extent of Rs. 55,40,932/-. Following the same reasoning, we direct AO to restrict disallowance under Rule 8D(2)(iii) to the extent of Rs. 64,30,155/- as offered by assessee in the AY 2010-11. We direct accordingly." 13. It is also noted that for AY 2008-09, on the same issue, the Revenue had approached the Bombay High Court against the order of the Tribunal. The Hon'ble Bombay High Court dismissed the appeal filed by the Revenue vide order dated 14.02.2017 in ITA No.1401 of 2014 and observed as under: "No fault can be found w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has shown the sale consideration out of sale proceeds of Carbon Credit under the head 'other income' as revenue receipts which now it wants to claim as capital receipts in the light of the decision of the Tribunal. Since no new facts have to be verified so far as this claim is concerned realization of Carbon Credit are already shown under the head' other income'. Respectfully following the decision of the Tribunal cited hereunder: 1. ITAT Hyderabad Bench in the case of My Home Power Ltd. Vs DCIT in ITA No. l l 14/Hyd/2009 2. ITAT Chennai Bench in the case of Sri Velayudaswamy Spinning Mills (P) Ltd. Vs DCIT in ITA No. 582/Mds/2013 3. ITAT Chennai Bench in the case of Ambika Cotton Mills Ltd. Vs DCIT in ITA No. 1836/Mds/2012; We direct the AO to treat the Proceeds realized from sale of Certified Emission Reduction (CERs) generated out of Capital Projects registered with UNFCCC as capital receipts. Additional ground No.1 is accordingly allowed." 18. Since the facts on this issue remains same for the year under consideration, we do not find any reason to interfere with the order of the LD CIT(A). Accordingly, following the decision of the Coordinate Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Courts of Bombay and Gujarat, Samruddhi Cement Ltd. (SCL) was amalgamated with the assessee w.e.f. 01.07.2010 (appointed date). The amalgamating company, viz. SCL was a 100% subsidiary of Grasim. iii. Pursuant to the sanction of the Scheme by the High Courts and upon coming into effect of the Scheme of Amalgamation from the appointed date, all the estate, assets, properties, rights, claims, title, interest and authorities including accretions and appurtenances comprised in the undertaking of SCL stood transferred to and vested in UTCL, as a going concern. iv. The abovementioned rights, properties, estates etc. of SCL included Rail undertakings and power plants for which SCL had been claiming tax holiday u/s 80IA. v. Upon amalgamation of SCL and vesting of its Railway undertakings at Rawan - District Raipur, at Hotgi - District Sholapur, at Shambhupura - District Chittorgarh, and at Dodaballarpur - District Bangalore, into the assessee, the assessee Company claimed a deduction of Rs. 82,61,81,708/- u/s 80-IA of the IT Act (as tabulated below) for the period 1st July 2010 to 31st March 2011: Sr. No. Particulars Amount (Rs.) I Profit of Rail System at Rawan in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31-3-2007. This amendment will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years." 26. The LD CIT(A) upheld the view taken by the AO and noted that amendment provision brought in by the Finance Act, 2007 is free from any ambiguity and pursuant to such amendment, deduction under section 80IA becomes impermissible for the amalgamated company in respect of the undertakings inherited under the scheme of amalgamation. 27. The Ld AR of the assessee, at the outset submitted that it is subsection (1) of section 80IA of the IT Act, which confers the benefit of tax holiday to the eligible undertakings and sub-section (4) prescribes various businesses for which the undertakings / enterprises are eligible for tax holiday. All the other sub-sections of section 80IA prescribe conditions for the allowance, computation mechanism, extent and period of deduction, options to choose the period of deduction, procedural compliance etc. 28. The Ld AR took us through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax holiday to the successor entity at the first place. Thus, insertion of sub-section (12A) in section 80IA of the IT Act, which merely disabled the applicability of sub-section (12), cannot be construed as withdrawal of right to claim the deduction by the successor. 33. The Ld AR of the assessee further argued that sub-section (12A) was introduced merely to neutralise the abnormalities brought into the statue by sub-section (12) of section 80IA. According to Ld AR of the assessee following anomalies had arisen on account of introduction of sub-section (12) in section 80IA of the IT Act: "i. In cases of amalgamation / demerger which are effective on a day other than beginning of a financial year, the predecessor company has no right to claim any deduction despite the income for such period is reported by such predecessor company. ii. A strict application of sub-section (12A) read with sub-section (12) in case of demerger would disentitle the demerged entity from claiming deduction with respect to other eligible undertakings even when only one or few eligible undertakings are transferred under the demerger process." 34. According to the Ld AR of the assessee, the intent of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicability of sub-section (12) will not apply to rail systems which are regarded as "enterprise" for the purpose of section 80-IA(4)(i). iii. Sub-section (12) of section 80IA presupposes that the amalgamating Company/ demerging entity is claiming deduction at the time of reorganisation. As such, the provisions of sub-section (12A) cannot be construed to deny benefit in respect of those undertakings which started claiming deduction only after the date of amalgamation. 38. The Ld DR on the other hand referred to the CBDT Circular no.3 of 2008 dated 12 March 2008 wherein the CBDT has explained the purpose behind introduction of sub-section (12A) in section 80IA. According to the CBDT, the intention of providing benefit under section 80IA was to accord incentive to those who had made initial investment and taken entrepreneurial risk. The amendment, by introducing subsection (12A), was brought in the statute to disallow such benefit in the hands of someone who has not taken these risks and had only acquired such eligible undertakings much later when the risk had reduced. 39. In the rejoinder, the Ld AR of the assessee submitted that the interpretation of CBDT is contrary to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business for ten consecutive assessment years". 44. Sub-section (4) of section 80IA provides as under: any enterprise carrying on the business of (i) developing or(ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions namely :- (a)... (b)... (c)... ............ Explanation - For the purposes of this clause, "infrastructure facility" means - (a) a road including toll road, a bridge or a rail system (b) .... ........... (i) .... (ii) .... (iii) An undertaking which,- (a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2017; (b) ... (c) ..." 45. Sub-section (4) provides that the benefit of deduction is attached to an 'enterprise' or an 'undertaking' and not to the owner thereof. There is no dispute on this aspect that the deduction u/s.80IA is attached to an enterprise or an undertaking. 46. The Hon'ble Madras High Court in the case of Madras Machine Tools Manufacturers Ltd. vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not to the assessee which owns the undertaking. The benefit of Section 10A was held to have attached itself to the STP unit of the software division which was owned by IOCL till 19 October 1994 and it was owned by the assessee subsequent to that date. What is material, according to the Tribunal, is not who owns the undertaking but whether the undertaking is entitled to the benefit available under Section 10A..." 49. Thus, there is no dispute that the deduction under section 80IA(1) r.w.s. 80IA(4) is available to an undertaking or an enterprise and not to the owner. Having said that, it is necessary to examine whether introduction of sub-section (12) in section 80IA had any implications in terms of the said understanding. 50. Sub-section (12) providing for allowance of deduction in case of a transfer of undertaking, pursuant to amalgamation or demerger, was inserted in section 80IA by the Finance Act, 1999, with effect from 1st April 2000 and read as follows: "(12) Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned as under: "The business and economic development of the country has thrown up the need for rationalisation of laws relating to business reorganisations for restructuring of production system and a better utilisation of resources which have become necessary with a view to enable the Indian industry to rearrange itself to become globally competitive. It was in this background that tax concessions to conversion of firms into companies were provided ..., which were widely welcomed. With the same end in view, a number of provisions have been conceived for the entire gamut of business reorganisations. ... 3. With a view to reorganise demergers, slump sales and to rationalise the existing provisions of amalgamation, a number of amendments have been proposed on the basis of the following broad principles: (a) demergers should be tax neutral and should not attract any additional liability to tax. (b) in demergers, tax benefits and concessions are available to any undertaking should be available to the said undertaking on its transfer to the resulting company. ...". With a view to neutralise the tax effects, the Finance Act, 1999, inter alia, carried out amendments in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broad principles: a) The restructuring shall not attract additional liabilities to tax and also not result in the withdrawal of relief and concessions available to the existing unit. b) The tax benefits and concessions available to an undertaking of a company shall continue to be available to the undertaking on transfer of the same while concessions and benefits that are available to the transferor company as an entity and not to the undertaking of the company proposed to be transferred, should remain with the transferor company. c) Tax benefits to such business reorganizations should be limited to the transfer of business as a going concern and not to the transfer of specific assets which would amount to sale of assets and not a business reorganization. The Act has substituted section 80I-A by sections 80-IA and 80-IB of the Income-tax Act. The substituted section 80-IA, inter alia, in sub-section (12) provides that where any undertaking of an Indian company entitled to the deduction under this section is transferred to another Indian company in a scheme of amalgamation or demerger before the expiry of the specified period, the deduction shall be availed by the amalgamate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gamation of one company with the other company cannot be regarded as a splitting up or reconstruction or by a transfer of a new business of the plant and machinery of the old business. With reference to the Companies Act, the amalgamation was also for the benefit of the two companies, i.e., amalgamating and amalgamated company and in the public interest and also in the interest of the shareholders. Viewed from any angle amalgamation cannot be regarded as a splitting up of the company for the purpose of negativing the claim under the Income-tax Act, which has been statutorily conferred on the company, if such companies fulfil the conditions stipulated therein. Hence, we are of the view that the order of the Tribunal granting the benefit of sections 80HH and 80-I to the assessee-company cannot be stated to be illegal or against the statutory provisions. A similar view has been taken by the Bombay High Court in the case of CIT v. Dandeli Ferro Alloys P. Ltd. [1995] ITR 1, in which the Bombay High Court held that the facts on record clearly established that the amalgamated company was already incorporated and formed and had come into existence on March, 1973 and had become an industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip firm. The benefit under Section 80-IB of the Act is available to the partnership firm and the conditions imposed under Section 80-IB(2)(i) does not come in the way." Thus, the sanctity of the CBDT Circular has been upheld in the context of section 80IB, confirming that the tax holiday moves along with the undertaking and the ownership has no relevance. 61. The said Circular has also been relied upon by the Hon'ble Punjab & Haryana High Court in the case of Mega Packages [2011] 203 Taxman 236 while considering the eligibility of deduction under section 80-IC on conversion of proprietorship concern into a partnership firm. The Hon'ble High Court observed as under: "9. Adverting to the alternate reason adopted by the Assessing Officer to deny the benefit of Section 80-IC the Act for the remaining period, suffice is to notice that the formation of the partnership from proprietorship business could not be held to be as a result of splitting or reconstruction of a business already in existence which could justify denying benefit by virtue of Section 80-IC(4)(i) of the Act. The Tribunal rejected the said contention as under:- 12. The said circular was issued with reference to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h fulfil all the conditions specified in sub-section (4) thereof, the relevant conditions for the present purpose being conditions (i) and (ii). ... On a careful perusal of the provisions of section 80J as a whole and the clear and categorical finding of the Tribunal that the assessee-company has fulfilled all the conditions of section 80J, we are of the clear opinion that the assesseecompany (amalgamated company) is entitled to relief under section 80J for the balance of the period of 5 years in terms of section 80J." 63. The crux of all the above decisions fortify that prior to insertion of subsection (12) in section 80IA / 80IAB of the IT Act, the deduction was allowed to the successor entity to which the undertaking was transferred. We are, therefore, not persuaded to accept the contention of the Revenue that sub-section (12) of section 80IA was an enabling provisions which entitled the successor entity to claim the benefit relating to undertaking transferred in the scheme of amalgamation /demerger. The deduction was available to the successor even prior to insertion of sub-section (12) and pursuant to the provisions of sub-section (1) r.w.s. sub-section (4) of section 80IA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company by disenabling them to claim any benefit in the year of amalgamation/demerger. 69. We also tend to agree with another proposition put forth by the AR of the assessee that sub-section (12) to section 80IA only made explicit that was implicit in the provisions and therefore withdrawal of subsection (12) by sub-section (12) cannot withdraw what was implicit in the statue. 70. It is a settled principle that when law makes something explicit, which is implicit in the provisions, the amendment or deletion of the explicit provision does not take away what is implicitly provided. The Hon'ble Delhi High Courtin case of CIT vs. Jindal Exports Ltd. (314 ITR 137) which is approved by the Hon'ble Supreme Court in CIT vs. Tulsyan NEC Ltd. (330 ITR 226) held that the amendment to explanation under section 234B and 234C of the Act was clarificatory since even for the years prior to the amendment the assessee was entitled to get credit of MAT paid under section 115JAA of the Act by virtue of section 140A of the Act. The Hon'ble High Court observed as under: "42. So, the amendment merely clarifies and makes explicit what was already implicit. Even if the amendment had not been introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment relate to an expenditure which was incurred in a particular year and the allowance was spread over a certain number of years. Section 35AB provided that where an assessee paid any lump sum consideration for acquiring any know-how, the allowance thereof would be spread over six years beginning from the year of payment. Sub-section (3) was inserted by Finance Act 1999 which read as follows: "Where there is a transfer of an undertaking under a scheme of amalgamation or demerger and the amalgamating or the demerged company is entitled to a deduction under this section, then, the amalgamated company or the resulting company, as the case may be, shall be entitled to claim deduction under this section in respect of such undertaking to the same extent and in respect of the residual period as it would have been allowable to the amalgamating company or the demerged company, as the case may be, had such amalgamation or demerger not taken place". (Emphasis supplied) 74. The Notes on clauses (to the Finance Bill, 1999) explains the amendment as follows: "Clause 17 seeks to amend section 35 AB of the Income tax Act relating to allowance of expenditure on know-how. Under the existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, operation and maintenance of infrastructure facility, industrial parks and special economic zones or generation distribution or transmission of power, laying and operating cross-country natural gas distribution network, including gas pipelines and storage facilities being an integral part of the network, etc. Sub-section (12) of the said section 80-IA, inter-alia, 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 amalgamating or the demerged company if the amalgamation or demerger had not taken place. It is proposed to insert a new sub-section (12A) in section 80-IA so as to provide that the provisions of sub-section (12) shall not apply to any undertaking or enterprise which 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-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adopted for every amendment and that difference cannot be ignored, for the purposes of interpretation. 83. Looking from another angle, since the provisions of sub-section (12) were disabling in nature, as it disentitled an amalgamating company or a demerged company from claiming deduction in the year of amalgamation or demerger, the insertion of sub-section (12A) merely negated the effect of sub-section (12) and cured the disability created under sub-section (12) of section 80IA of the IT Act. Further, it is also worth noting that the language used in sub-section (12) had another defect. It can be explained with the help of an example: Suppose an entity had 3 eligible undertaking on which tax holiday was claimed and one out of the three was demerged to another entity. By virtue of clause (a) of sub-section (12) which specifies that no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and taken entrepreneurial risk. He accordingly submitted that the amendment was brought in by introducing sub-section (12A) to disallow such benefit in the hands of someone who has not taken these risks and had only acquired the eligible undertaking much later when the risk had reduced. 86. The CBDT in this circular has tried to clarify something which is nowhere stated either in the language of newly inserted sub-section (12A) or in the Notes to Clause or explanatory memorandum to Finance Bill 2007. Sub-section (12A) simply prescribes that from a particular date the provisions of sub-section (12) shall not apply to the undertaking which are transferred under a scheme of amalgamation or demerger. Further, as we have already held, sub-section (12) of section 80IA did not confer any new rights to the tax payer and hence its non-applicability cannot be construed to mean withdrawal of a right which is conferred under separate provisions of Section 80IA i.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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment by the Legislature or by Ordinance is not incorporated in the statute, no notification or circular of the Department can override the statutory provisions of the Act. It would not be permissible to read words into the statute, which prima facie is very plain and straight. 91. Even if one has to assume that the real intent of insertion of subsection 12(A) was to accord incentive to those who had made initial investment and taken entrepreneurial risk, then also deduction under section 80IA cannot be denied to the successor taxpayer entities since successor entities would pay due and fair consideration for the value of the undertakings taken over, which includes the price for assumption of full risk of investment and operations. In other words, the entrepreneurial risk of the undertaking would also travel with the undertaking and the new owner of the undertaking would also bear the same risk as the original investor. The original 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a right to claim deduction under section 80-IA in respect of the eligible undertakings for the residual period. The relevant extract of the scheme is reproduced below for reference: "... all the rights and benefits that have accrued or which may accrue to the Transferor Company, whether on, before or after the Appointed Date, including income-tax benefits and exemptions including the right to deduction under Section 80-IA of the Income-tax Act, 1961 (or any statutory modification or re-enactment thereof for the time being in force), shall, under the provisions of section 391 to 394 of Act and all other applicable provisions, if any, without any further act, instrument or deed, cost or charge be and stand transferred to and vest in and/ or deemed to be transferred to and vested in and be available to the Transferee Company so as to become licenses, permits, entitlements, quotas, approvals, permissions, registrations, 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 remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before me citing judicial decisions, it is not clear whether the Courts/ITAT has ordered allowing 10% of preceding years depreciation not claimed + depreciation on basis of opening WDV or depreciation after including the spill over depreciation in Opening WDV. The restriction to 50% was made in Finance Act 2002 and clearly objects of amendment brought about by Finance Act mentions " Such further sum shall be deductible from the written down value of the assets. The legislative intent gets defeated besides resulting in allowance of an ineligible deduction if the claim is admitted. In view of foregoing decisions, I uphold the decision of the Assessing Officer. He shall however work out depreciation for the year corresponding to correct opening WDV." 100. The assessee, in its original return filed u/s 139(1), claimed an amount of Rs. 24,12,51,789/- towards additional depreciation 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 na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention was drawn to the "Memorandum explaining the provisions in Finance Bill, 2015" whereby, the aforementioned amendment was brought about. 11.1:- The relevant part of the memorandum is extracted hereafter:" .... To remove the discrimination in the matter of allowing additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more, it is proposed to provide that the balance 50 per cent of the additional depreciation on new plant or machinery acquired and used for less than 180 days which has not been allowed in the year of acquisition and installation of such plant or machinery, shall be allowed in the immediately succeeding previous year. This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years." 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, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the succeeding year. In view of the above, we do not find any merit for disallowing assessee's claim for depreciation." 107. Considering above views of different High Courts and Tribunal and respectfully following decision of the Hon'ble jurisdictional High court in the case of Pr.CIT vs. Godrej Industries Ltd. (supra) on this issue, we allow the appeal of the assessee and accordingly direct the assessing officer to delete this addition. 108. Ground no.3 of the appeal relate to denial of claim by the AO under section 35(2AB) in respect of R&D expenses incurred by the assessee amounting to Rs. 7,50,139/-, on the basis of report received from Department of Scientific and Industrial Research (DSIR). 109. The assessee has in-house Research and Development facilities at three locations, Khor (MP), 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 Rs. 2,02,93,591/- under section 35(2AB) of the IT Act. The AO disallowed the claim to the extent of Rs. 7,50,139 on the ground that DSIR has not approved the said expenditure in a repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure as recorded by the assessee in the books of account. Relevant finding of the Tribunal is reproduced below: "8.5 In view of the aforesaid reasoning and in the light of judicial pronouncements, cited supra, we hold that in the present case since the deduction is with reference to assessment year 2016-2017 (where the law applicable is the 1st day of April, 2016), which is prior to the Income Tax (Tenth Amendment) Rules, 2016, with effect from 01.07.2016 of Rule 6(7A) of the I.T.Rules, deduction u/s 35(2AB) of the I.T.Act has to be allowed on the basis of the expenditure as recorded by the assessee in the books of account. Admittedly, the Assessing Officer has not disputed the correctness of the claim of expenditure incurred on Scientific Research. The contention 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 proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances and in the light of the judicial precedents on the issue, we are of the view that the deduction u/s.35(2AB) of the Act ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by the Assessee and ought not to have been restricted to 100% of the expenditure incurred on scientific research. We hold and direct accordingly and allow the appeal of the Assessee." 116. Similar view has been taken by various other Tribunals in the following cases: i. M/s.Indfrag Limited v. ACIT [ITA No.98/Bang/2018 - order dated 30.07.2020] ii. M/s.Sun Pharmaceutical Industries Ltd. v. Pr.CIT, reported in (2017) 162 ITD 484 (Ahmedabad Trib.) - This has been subsequently confirmed by Hon'ble Gujarat High Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above stated demerger scheme, sections 391 to 394 of the Companies Act, Section 2(19AA) of the Income Tax Act and the case law discussed hereinabove. We direct the Assessing Officer to compute pro rata quantification of the demerged undertaking MAT, TDS and advance tax credits as per law after affording adequate opportunity of hearing.". 123. We have heard the rival submissions. The controversy relates to denial of credit of TDS / TCS since the entries are not appearing in Form 26AS. We refer to the decision of Delhi High Court in a PIL moved by the Hon'ble Court on its Own motion vs Commissioner of Income Tax [2013(352) ITR 273]. The Hon'ble Court issued a mandamus directing the CBDT to issue directions 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the proper deductee. The onus for the purpose lies squarely at the door of the Revenue. 4.4. ..... the Revenue is obliged to grant the assessee credit for the TDS of which he is able to satisfactorily prove to the A.O. the factum of deduction of tax at source and its deposit to the credit of the central government, subject of-course to the conditions of sections 198 and 199. The A.O. is accordingly directed to allow the assessee credit for the impugned shortfall, subject to the said verification/s and condition/s. We decide accordingly." 126. We are, therefore, of the view that credit for TDS / TCS should be allowed to the assessee on the basis of TDS/ TCS certificates 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised 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. Karamc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers subsequently. 135. Respectfully following the above decisions, the ground raised by the assessee is allowed. 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. These grounds are accordingly allowed. 136. Ground no. 8 is the additional ground filed by the assessee with regard to refund of dividend distribution tax paid in excess of the rate prescribed under DTAA on dividend paid to non-resident shareholders. 137. The AR of the assessee submitted that in case of dividend distributed by it to the non-resident shareholders, 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 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital facility availed by them. 142. The TPO computed an amount of Rs. 23,65,27,390/- being commission chargeable on the Corporate Guarantees provided by the assessee to the bankers for providing loan to the AEs of the assessee and recommended adjustment in this regard. The AO while passing the assessment order has added the said amount as notional income. 143. The AR of the assessee submitted that transfer pricing order passed for the subject year is bad in law on the following grounds: i. Reference to TPO u/s. 92CA(1) of the IT Act, was made during original assessment proceedings 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority cannot proceed with such pending assessment after initiation of search under section 132 of the said 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer pricing order passed by the TPO for the subject year is without jurisdiction 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 Rs. 1,40,80,74,900/- for rail system and Rs. 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 disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinate 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 Rs. 81,58,878/- i.e. amount suo moto offered by the assessee. 156. Coming to the claim of Rs. 1,54,66,703/- (i.e. Rs. 2,36,25,581/- minus Rs. 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 disallowance, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ground no.6 and 7 of the assessee's appeal in ITA No. 1413/Mum/2018 for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 143(2) of the Act 7 09.12.2015 Transfer pricing order passed under Section 92CA(3) of the Act, pursuant to the reference made during regular assessment proceedings 174. We have allowed the additional ground no.9 of the assessee in AY 2011-12 in ITA no.1413/Mum/2018 and held that the order passed by the TPO based on the reference made in the original assessment proceedings was non-est. The AO was required to make fresh reference subsequent to the proceedings initiated under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of deduction under section 80IA of the IT Act with respect to the rail system developed, operated and maintained by the assessee, amounting to Rs. 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 relating to this ground remain same, following our decision in AY 2011-12, we reject this ground raised by the Revenue. 181. Ground nos. 5 to 10 of the Revenue's appeal and Ground nos. 4 and 5 of assessee's CO have been already disposed off along with Ground no.9 of the assessee's appeal. Assessee's Appeal - ITA No. 2461/Mum/2018 - Assessment Year 2013-14 182. Ground no. 1 of the appeal relate to disallowance of claim for rail system and for power generation in view of provisions of section 80IA(12A) of the IT Act. 183. This ground is similar to Ground no.1 of the assessee's appeal in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 2013-14 filed by the assessee and have taken up the same for adjudication. 193. Additional Ground no.6 and 7 relate to the claim of deduction towards education cess and secondary and higher education cess in computing the total taxable income. 194. These grounds are similar to Ground no.6 and 7 of the assessee's appeal in ITA No. 1413/Mum/2018 for AY 2011-12. We have allowed the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 expenses in Ground no. 5 of the Revenue's appeal for AY 2011-12 in ITA No. 2871/Mum/2018. Relying on the order of the Coordinate 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 Rs. 51,42,831/- i.e. amount suo moto offered by the assessee. 203. Ground nos.6 to 11 of the appeal relate to addition made by the AO regarding Corporate Guarantee commission in pursuant to the order passed by the TPO. 204. Unlike AY 2011-12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 provide guarantee without compensation and accordingly, an adjustment for the corporate guarantee provided by the assessee was warranted. 212. We have taken into consideration the contentions advanced by the Ld counsels for both the parties, perused the orders of the lower authorities and the material available on record, and also taken note of the judicial pronouncements pressed into service by them in order to drive home their respective contentions in context of the aforesaid issue in question. As far as the contention of the AR that provision of corporate guarantee is not an international transaction, we are not convinced with it. A reading of Explanation-1(c) of section 92B of the Act, makes it clear that the provision of any ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee are disposed off accordingly. Assessee's Appeal - ITA No. 2462/Mum/2018 - Assessment Year 2014-15 217. Ground no. 1 of the appeal relate to disallowance of claim for rail system and for power generation in view of provisions of section 80IA(12A) of the IT Act. 218. 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 remains same for AY 2014-15 also, we allow ground no.1 of the assessee's appeal and direct the AO to delete the disallowance 219. Ground no. 2 of the appeal relate to disallowance of additional depreciation u/s. 32(1)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 180 days and hence depreciation was claimed to the extent of only 50% of its actual cost during the FY 2013-14. 227. The AO rejected the claim of the assessee on the following grounds: "i. The word "and" signifies that both acquisition and installation of assets should be after 31/03/2013 and not merely the installation ii. The assets which are eligible for 100% depreciation even though put to use for less than 180 days are not eligible for investment allowance in view of provisions of section 32AC(4)(v)." 228. On further appeal, the LD CIT(A) has upheld the order of the AO with regard to deduction claimed in respect of cost of components of plant or machinery lying as Capital Work In Progress (CWIP) as on 1 April 2013 amounting to 248,65,65,041/- but allowed the claim amounting to Rs. 8,32,42,289/- with respect to assets which were eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a sum equal to fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year: Provided that no deduction under this sub-section shall be allowed for the assessment year commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under sub-section (1) for the said assessment year. (1B) No deduction under sub-section (1A) shall be allowed for any assessment year commencing on or after the 1st day of April, 2018..............................." 231. The intention behind introduction of section 32AC can be discerned from the speech of the Hon'ble Finance Minister while presenting the Finance Bill 2013, wherein the Hon'ble Minister stated as under: "New Investments 59. To attract new investment and to quicken the implementation of projects, I propose to introduce an investment allowance for new high value investments. A com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 engaged in the business of manufacture of an article or thing and invests a sum of more than Rs. 100 crore in new assets (plant and machinery) during the period beginning from 1st April, 2013 and ending on 31st March, 2015, then the assessee shall be allowed a deduction of 15% of cost of new assets for assessment years 2014-15 and 2015-16. As growth of the manufacturing sector is crucial for employment generation and development of an economy, it is proposed to extend the deduction available under section 32AC of the Act for investment made in plant and machinery up to 31.03.2017. Further, in order to simplify the existing provisions of section 32AC of the Act and also to make medium size investments in plant and machinery eligible for deduction, it is also proposed that the deduction under section 32AC of the Act shall be allowed if the company on or after 1st April, 2014 invests more than Rs. 25 crore in plant and machinery in a previous year. It is also proposed that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 "acquisition" will have to be considered in light of the nature of various plants the assessee was constructing. The plant is acquired only when all the components of machinery are assembled and commissioned together. 238. In this regard it is worth noting the first proviso to sub-section (1A) of section 32AC. It is provided that where installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which new assets are installed. This amendment was brought by the Finance Act, 2016. We are of the view that the intention of the legislature was to cure the discrepancy in the provision and to obviate the unintended hardship faced by the taxpayers in completing both the condition of "acquisition" and "installation" in the same year. Therefore, such proviso being curative in nature must apply retrospectively. 239. An analogy can also be drawn from the second proviso to section 32(1) which restricts the claim of depreciation to 50% in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal 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 machinery takes very long time because of the sheer volume of the work to be carried out. If an assesse is not successful in installing P&M in one year and carries forward the installation work in subsequent year / years it cannot be denied any benefit on the ground that it had acquired the P&M in earlier year. The intent of the legislature was to attract investment, so in our opinion the section can be termed as benevolent provision. In the case under consideration production started from 01.01.2006. Before that fabrication and completion of P& M was going on. Treatment given by the assesse in the books of accounts to the P&M was in accordance with the Accounting Standards (AS) and the AO has not denied the fact that the assessee was following AS. Therefore, in our opinion, assesse was entitled to claim additional depreciation @10%." 242. Again, the Coordinate Bench of this Tribunal in the case of JCIT vs. Lotus Energy (India) Ltd [2016] 68 taxmann.com 364 upheld the view of the taxpayer to allow additional depreciation in the year of inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty for setting up industrial project for coke production plant which started in financial year 2004-05 were completed after 31- 03-2005 and commercial production of the new coke production plant being set up by the assessee company started in April 2005 i.e. in financial year 2005-06 when the new coke production plant set up by the assessee company became operational, which is an admitted position by the Revenue. The assessee company was incorporated on 2nd September 2004 i.e. in the financial year 2004-05, and was engaged in setting up new industrial unit being coke production plant for the setting up of which new plant and machineries were acquired by the assessee company starting from financial year 2004-05, which process of acquiring plant and machineries also continued in the financial year 2005-06 as an integrated activity with the sole and common objective for setting up new industrial unit of coke production plant and finally concluded with the completion of installation of the said new plant and machineries in April 2005 and commencement of the commercial production of LAM coke in April 2005 i.e. financial year 2005-06 when new coke production plant became operational. Onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se machineries and plant were put to use after installation with start of commencement of commercial production of LAM coke in April 2005 when the new coke production plant become operational and their acquisition which concluded in financial year 2005-06 is to be seen in composite manner rather than in itemized manner as in an itemized capacity said new plant and machineries are not capable of producing the desired articles/products being LAM coke. It is pertinent to mention that on perusal of the Balance Sheet for financial year 2004-05 and 2005-06 (placed in paper book) will reveal that the assessee company has purchased new plant and machinery in financial year 2004-05 which is undisputed and the same was shown in the Balance Sheet as at 31-03- 2005 under the head 'Capital Work in Progress' and the same was capitalized in financial year 2005- 06 along with those new plant and machineries which were acquired in financial year 2005-06 and the assessee company has not claimed any depreciation in the financial year 2004-05 on these new plant and machineries so acquired in financial year 2004- 05. Thus, acquisition of the entire set of new machineries and plant whether acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge the industries by permitting the assessee setting up the new undertaking/ installation of new plant and machinery and to give a boost to the manufacturing sector by allowing additional depreciation deduction. Thus, as rightly held by the Tribunal the provisions of section 32(1)(iia) are required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) would lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery. Under the circumstances, no error has been committed by the Tribunal in allowing the additional depreciation at the rate of 20 per cent on the plant and machinery installed by the assessee after 31-3-2005 i.e. the year under consideration." 244. As can be noted, the Hon'ble Gujarat High Court and the Hon'ble Bench of Coordinate Bench of this Tribunal have consistently taken a view that the twin condition of "acquired and installed" have to be read in the manner to give it a meaningful, reasonable and purposive interpretation. The twin condition can be said to have been satisfied on the day these huge plant and machineries are installed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of sub-section (2A), it has been held by this Court in Sahara India (Firm), Lucknow (supra) that the word "and" is used in the conjunctive sense. Undoubtedly the expression "and" in subsection (2A) has been held to the conjunctive, while delineating the circumstances on the basis of which an opinion can be arrived at by the assessing officer. This would not necessarily furnish an index to how the expression "and" in the proviso to subsection (2C) should be construed. The interpretation of the expression must be based on the context in which it is used. In the proviso to sub-section (2C), the expression "and" is used in connection with the grant of an extension of time and not in the context of the formation of an opinion for ordering a special audit." 247. We are, therefore, inclined to accept the contention of the AR of the assessee that the words "acquired and installed" have to be read as "acquired or installed" to give effect to the intention of the legislature. 248. We refer to the decision in the case of Jupiter Radios vs. DCIT [2017] 88 taxmann.com 93 (Delhi) relied upon by the DR during the course of hearing. We have gone through the case but find no relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 255. Additional Ground no. 7 and 8 relate to the claim of deduction towards education cess and secondary and higher education cess in computing the total taxable income. 256. These grounds are similar to Ground no.6 and 7 of the assessee's appeal in ITA No. 1413/Mum/2018 for AY 2011-12. We have allowed the assessee's appeal on this ground and directed the AO to allow the deduction towards education cess and secondary and higher education cess, to the extent of actual payment made by the assessee, in computing its taxable income. Following our decision in AY 2011-12, we direct the AO to allow the deduction of actual payment of education cess and secondary and higher education cess in computing the taxable income for this year as well. 257. Additional Ground no. 9 of the appeal relate to refund of DDT paid in excess of the rate prescribed under DTAA on dividend paid to the nonresident sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her expenses in Ground no. 5 of the Revenue's appeal for AY 2011-12 in ITA No. 2871/Mum/2018. Relying on the order of the Coordinate 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 Rs. 73,27,969/- i.e. amount suo moto offered by the assessee. 265. Ground no. 7 and 8 of the appeal relate to claim of expenses on account of Employee Stock Option Scheme. Ground nos.5 and 6 of the assessee's cross objection is connected with this claim 266. This issue has been subject matter of appeal in assessee's own case for AY 2008-09. The Tribunal in AY 2008-09 had remanded back the issue to the AO with a limited direction to allow the appeal if the facts of the assessee matched with the facts in the case of Biocon Ltd. [251 ITR (Trib.) 602]. The relevant para of the Hon'ble Tribunal order is reproduced hereunder: "36. .... In our considerate view, the allowability of the claim of the assessee has to be considered afresh in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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