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TMI Blog2022 (3) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the Ld. CIT(A) erred in deleting the addition of sales tax incentive/subsidy of Rs. 524,44,02,597/- holding it as capital in nature? 4. So far as this ground of appeal is concerned, it is sufficient to take note of the fact that the assessee had, during the relevant previous year, received sales tax subsidy of Rs 524,44,02,597 and claimed it to be a capital receipt not chargeable to tax. The Assessing Officer, however, rejected this stand and held that the said amount is taxable, as a revenue receipt, under section 28 of the Act. Aggrieved, assessee carried the matter in appeal before the CIT(A), and the learned CIT(A), following decisions of the coordinate benches from the assessment years 1994-95 to 2012-13, deleted the said addition. While doing so, learned CIT(A) observed as follows: I have considered the facts and submissions made by the assessee and have also perused the decision of the Special Bench of Mumbai ITAT in assessee's own case wherein it was held: "The question for consideration is whether the Tribunal in the case of RelianceIndustries Ltd. (supra) had correctly appreciated and interpreted the ratio of thedecision of the Supreme Court in Sahney Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be capital, irrespective of the modality or the source of funds through or from which it is given and that if monies are given for assisting the in carrying out the business operations only after, and conditional upon, the commencement of production, it would be revenue. It was only for the purpose of bringing out this distinction that the Tribunal had analysed the features of the Maharashtra Scheme of 1979 and had come to the conclusion that the subsidy given under the Scheme had a direct nexus with the fixed capital investment and that it could not be said that the subsidy was given with the object of assisting or lending a helping hand to the in its business operations. (Para 29) The Tribunal was thus aware of the distinction between the subsidy given with the object of setting up the industry and the subsidy given after the industry commences production and conditional upon the commencement of production. Factually, the Tribunal found that the appellant's case which fell under the Maharashtra Scheme, was a case where the subsidy was given for the purpose of facilitating the to set up an industry in Patalganga, Raigad District, which is a notified area. The actual disburs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying on the orders of my predecessors in preceding assessment years including the order for immediate preceding assessment year i.e. A.Y.2013-14 and order of the Hon'ble ITAT for AY 1994-95 to AY 2012-13, I am inclined to allow the assessee's claim for treatment of Notional Sales tax of Rs.524,44,02,597/- as Capital receipt not liable to tax. This ground of appeal is therefore allowed. 5. The Assessing Officer is aggrieved and is in appeal before us. 6. Learned representatives fairly agree that, as rightly noted by the learned CIT(A), this issue is covered, in favour of the assessee, by the coordinate bench decisions in the assessee's own cases for the assessment years 1994-95 to 2012-13. No reasons have been pointed out to us as to why we should not follow these decisions of the coordinate benches in the assessee's own cases. In view of this position, respectfully following these binding judicial precedents- including the special bench decision, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 7. Ground no. 1 is thus dismissed. 8. In the ground no. 2, the Assessing Officer has raised the following grievance by way of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny is entitled for depreciation of only Rs. 6418,60,98,039/- as against the claim made of Rs. 6524,55,55,688/-. The difference in the department's calculation of depreciation amount and the claim of the assessee amounting to Rs. 105,94,57,649/- is due to the fact that the department has been giving depreciation to the assessee leading to reduction in WDV prior to year when the assessee started making the claim of depreciation. Hence, there has been difference in WDV as per working of the department and the working of the assessee and that has led to the difference in calculation of depreciation. Accordingly an addition of Rs. 105,94,57,649/- is being made to the total income of the assesse. Penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars are initiated separately. 5.1.3 Further, during the assessment proceedings, it is also noted that has claimed depreciation under "Oil and Gas division" in respect of KG-D6 basin/Block of Rs 726,75,62,145/-. As has been discussed in detail under subsequent paragraphs (para 14.7) of this order, the assesse company is entitled for a depreciation of Rs. 575,79,90,895/-, accordingly an addition of Rs. 150,05,71, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D(2)(iii) to 0.5% by taking the average value of that investment which have yielded a dividend during the year under consideration? 15. This issue is required to be taken up along with the ground of appeal no. 10 (additional ground of appeal) raised by the assessee. The said ground of appeal, raised by the assessee, is as follows: The learned CIT(A) Mumbai erred in directing the AO to compute the disallowance under section 14A of the Act, by invoking the provisions of Rule 8D of the income tax Rules, while computing income under normal provisions of the Act without recording any satisfaction for rejection of the disallowance computed by the appellant under section 14A of the Act. 16. So far as the additional ground of appeal is concerned, we find that this grievance is ill-conceived inasmuch as, at page 58 of the assessment order, the Assessing Officer has specifically observed that "since the assessee has not correctly apportioned any expenses as having been incurred for earning this exempt income, I am not satisfied with regard to correctness of the claim of expenditure made by the assessee, and, accordingly, provisions of rule 8D of the Income Tax Rules are being invoked" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puting the disallowance under section 14A, and relying upon the Explanation 1(f) to Section 115JB(1) of the Act, the disallowance under section 14A is also to be added to the book profits. In appeal, learned CIT(A) upheld the adjustment in principle but restricted the quantum to the disallowance as computed by the assessee under section 14A, rather than the actual disallowance made under section 14A read with rule 8D. While doing so, the learned CIT(A) observed as follows: I have considered the facts and the submission of the Appellant. I find strength in the arguments of the Appellant on the ground relating to disallowance made under section 14A r.w.r. 8D, where the Appellant has relied on the decision of Bombay High Court in case of CIT vs. Reliance Utilities and Power Limited (313 ITR 340 ) wherein it has been held that where the own funds of the is more than the investments made on which exempt income has been earned no disallowance can be made out of interest expenditure. Following the above decision I am of the considered view that the Appellants own funds far more exceed investments made on which exempt income has been earned, therefore I direct the AO to delete the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added under section 115JB. Respectfully following the precedent from honourable jurisdictional High Court, we decide this issue in favour of the assessee. 25. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we direct the Assessing Officer to delete the impugned adjustment for disallowance under section 14 A in the book profit computed under section 115JB. The assessee gets the relief accordingly 26. Once we uphold the connected grievance of the assessee, the grievance so raised by the Assessing Officer must be held to be academic, and, as such, infructuous. 27. Ground no. 4 of the Assessing Officer's appeal is thus dismissed as infructuous, as ground no. 2 of the assessee is allowed. 28. In ground no. 5, the Assessing Officer has posed the following question for our adjudication: Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the disallowance of deduction u/s. 80IB(9) of the Act holding that the assessee shall be eligible to claim deduction u/s. 80IB(9) of the Act in respect of profits "not allowed as deduction u/s. 10 AA of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit of Rs.7530,26,45,346/- of the eligible undertaking. Further a deduction of Rs.698,07,88,519/- [i.e. Rs.7530,26,45,346 profit of the undertaking - (less) Rs. 6832,18,56,826/-] is claimed as deduction u/s. 801B(9) of the Act as per Form 10CCB submitted by the appellant. The appellant's claim of deduction of eligible profit u/s 10AA and 80IB{9) of the Act has not exceeded the profit of the undertaking in respect of SEZ refinery unit. Section 80IB(9) of the Act provides deduction in respect of profit and gains derived from an undertaking for specified period if the undertaking is engaged in refining of mineral oil and begins such refining process on or after the 1st day of October, 1998. Accordingly, the assessee submitted that it had complied with the conditions specified u/s 80IB(9J of the Act and it claimed deduction of the balance profits and gains u/s 80-18(9) of the Act. The Form 10CCB (Revised) filed by the assessee/ has been verified by the AO and there is no dispute as regards the quantum of deduction worked out therein. The assessee's claim of deduction of eligible profit u/s 10AA and 80IB(9) of the Act was based on various judgments and as per the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, For the sake of convenience, we extract below both the provisions:- "80A(4) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading "C-Deductions in respect of certain incomes", where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be." "80IA(9) Where any amount of profits and gains of an undertaking or of an Enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading "C.-Deductions in respect of certain incomes", and shall in no case exceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of an undertaking may be claimed under different provisions and hence the restriction is only for that portion of profit claimed and allowed as deduction under setc. 10A or 10AA or 10B or 10BA or any provisions of Chapter VI under heading "C - deductions in respect, of certain incomes" shall not be eligible for deduction under any other provisions of the Act. For the remaining portion of profit, the assessee is eligible to claim deduction under any other section. 77. The Id CIT(A) has referred to the decision rendered by Hon'ble Delhi High Court in the case of TEI Technologies P Ltd (supra). Following observations made by Hon'ble High Court, which has been extracted by Ld CIT(A) at page 84 of his order, in fact, support our view:- "This section seems to indicate, as contended by the Revenue, that Section 10A or Section 10B are only deduction provisions. No doubt, the assumption underlying the sub-section is that Section 10A and Section 10B are deduction provisions and once a deduction is allowed to the assessee under those sections, the same profits shall not be allowed as a deduction under any other provision of this Act for the same assessment year and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of profits and gains of an undertaking is claimed and allowed under sec. 80IA(1) for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Chapter VIA and shall in no case exceed the profits and gains of such eligible business or undertaking. The Hon'ble Bombay High Court held that the provisions of sec. 80IA(9) affects only allowability of deduction and not computation of deduction. This decision rendered by Hon'ble Bombay High Court supports the case of the assessee that sec. 80A(4) and sec. 801A(9) restricts only allowability of deduction and not "computation of deduction". 80. The ld CIT(A) has expressed the view that the assessee has adopted two different parameters for computing deductions u/s 10AA and u/s 80IB(9) of the Income Tax Act, 1961. We have noticed earlier that, during the year under consideration, the assessee earned profit of Rs.5036.35 crores from this unit. As per the formula prescribed in scc. 10AA of the Act, the deduction allowable u/s 10AA on the above said profit worked out to Rs.4379.13 crores. Against the profit of Rs.5036.35 crores arid the deduction actually allowed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years. While computing the 80IB(9) deduction, the assessee had reduced it by Rs 228,39,15,312, being unsuccessful exploration cost in respect of areas, other than KGD-9 on which the profits were made. When asked to justify the same, the assessee submitted that the provisions of section 80IB(9) are required to be read with the provisions of Section 80IA(5) which, inter alia, requires that the profits of the eligible business are required to be computed as if that business is the only source of income. Accordingly, the losses required in other exploration on other blocks, in addition to the profits from the blocks from which the income is earned, are also required to be taken into account. Elaborate legal submissions were also made in support of this broad proposition. None of these submissions, however, impressed the Assessing Officer. He was, inter alia, of the view that such an accounting practice and claim of the assessee company is in patent violation of the mandatory provisions of clause 17.2.2 of the PSC agreement signed in respect of its undertaking which laid down the manner in which deduction for such expenses are to be allowed. He was of the view that the deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Article 17 of the PSC, it can be concluded that the deduction under Article 17.2.2 in respect of abortive/unsuccessful blocks is to be allowed to a Company while computing its profits and gains from the business of Petroleum Operations. Thus, the same are not be reduced for the purpose of computing the profits of an Undertaking' eligible for deduction u/s 801B. Similar issue has been allowed to appellant in the immediately preceding assessment year ie. for AY 2013-14. Futher, similar issue has been decided by the ITAT in favour of the appellant for A.Y. 2011-12. The relevant extract of ITAT order for A.Y. 2011-12 is reproduced below. 108. We notice that the article/clause 17.2.2 of PSC allows deduction of expenses relating to aborted blocks against the profit arising from other blocks. In our view, the assesse was right in contending that the article/clause 17.2.2 was concerned with the computation of income at entity level in terms of sec. 42 of the Act. The article/clause 17.2.5 of PSC states that all other provisions of Income Tax Act shall apply. The PSC does not deal with the deduction given u/s 80IB(9) of the Act and hence the provisions of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have considered the facts of the case and the submissions made by assessee. The issue for consideration is whether cost of abortive/ unsuccessful blocks (other independent undertakings) are be reduced while computing the profits of a successful block (KGD in the assessee's case which is independent undertaking) for the purpose of claiming deduction u/s 80-IB(9).The assessee was engaged in the business of exploration and production of mineral oil. The assessee was awarded 31 contract areas under separate production sharing contracts (PSC) signed with the Government of India. The above contract areas were awarded on bidding in separate auction for each contract area. There is no dispute that for the purpose of claiming deduction u/s. 80IB(9) of the Act each contract area constituted an independent undertaking. Since the assessee had complied with the conditions specified u/s. 80IB(9) of the Act, it claimed deduction of the profits and gains of KGD undertaking u/s. 80-IB(9) of the Act. While computing the profits and gains of KGD undertaking for the purpose of claiming deduction under the section 80IB(9) of the Act, the provisions of section 80IA(5) are applicable, which pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB of the Act. Sec. 80IB(13) of the Act provides that the provisions of sec. 80IA(5) shall apply and under the provisions of sec. 80IA(5) of the Act, the profits and gains of eligible business, for the purposes of sec. 80IB, shall be computed as if such eligible business were the only source of income of the assessee. In view of these provisions, the deduction u/s 80IB(9) has to be computed after ascertaining profits and gains of eligible business in terms of sec. 80IA(5) of the Act. Hence there is no scope to adjust expenses relating to other "undertaking" while computing deduction u/s 80IB(9) of the Act. Hence, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference and accordingly we uphold the same. Since facts are identical and it is not the case that above decision of ITAT has been reversed by Hon'ble Jurisdictional High Court, we uphold the order of learned CIT(A). 36. Respectfully following the views so expressed by the coordinate bench in assessee's own case, for the immediately preceding assessment year, we uphold the conclusions arrived at by the learned CIT(A) on this point as well, and decline to interfere in the matter. 37. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or extraction and exploration of mineral oil i.e. 'Petroleum'. Although the term 'mineral oil' is defined in section 42, 44BB and 293A of the Act, the same is not defined in Section 80-IB of the Act. When one refers to following statutes dealing with mineral oil, petroleum and natural gas etc, natural gas is treated as a part of 'mineral oil' viz: a) The Oil fields (Regulation Development) Act, 1948 b) The Mines and Minerals (Development and Regulation) Act, 1959 c) The Oil industry (development) Act, 1974 d) The Regulation for foreign direct investment in India e) Notification issued (No GSR 304(E) dated March 31, 1983 for extending the applicability of the Act to the continental shelf of India f) New Exploration Licensing Policy g) Petroleum Tax Guide published by the Ministry of Petroleum and Natural Gas, Government of India The issue is whether natural gas is mineral oil and is eligible for deduction u/s. 801B(9) of the Act has already been considered by the Hon'ble Income Tax Appellate Tribunal Ahmedabad Bench in the case of NIKO Resources Limited Vs. DCIT [22 DTR 225] and held that natural gas is mineral oil eligible for deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, which we will take up together, the Assessing Officer has raised the following grievances: 8. "Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) erred in allowing appeal of the assessee and directing the Assessing Officer to recompute the profits and deductions taking into consideration the revised interest expenditure as submitted by the assessee? 9. "Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing appeal of the assesses and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee?" 10. "Whether, on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in allowing appeal of the assessee and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee?" 44. So far as these grievances are concerned, the relevant material facts are as follows. These grievances pertain to the revision of deductions claimed under sections 80IB and 80AA for KGD6 Unit, Refinery SEZ U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only point was that he did not have the powers to admit the claim in the assessment order, but he was alive to the fact that the appellate authorities did not have this limitation, and that apparently was the reason that the Assessing Officer stated that the necessary verification will be done in case of admission of claim by the appellate authorities. His grievance before us thus does not make sense and seems somewhat mechanical or ritualistic. In any event, in the case of CIT Vs Pruthvi Brokers and Shareholders Pvt Ltd [(2012) 349 ITR 336 (Bom)], Hon'ble jurisdictional High Court has observed that "It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254". While th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d parity between income under normal provisions andbook profit so far as exempted receipts are concerned, if this logic is extended further,items of receipt which are not income at all and hence fall outside the purview of thecomputation of income under normal provisions cannot be included in "book profit" u/s115JB of the Act. Relying on provisions of sub-section section 5 to Section 115JB of the Act which reads as"save as otherwise provided in this section, all other provisions of the Act shall apply toevery assesse, being a company, mentioned in this section", it is submitted that sinceSection 115JB for the relevant assessment year does not provide for any specific inclusionof a subsidy or a capital receipt for computing book profit, other provisions of the Act haveto be applied for determining whether such receipt has to be taken into account for computing book profit. Thus provisions of Section 4 and Section 2(24) will necessarilyapply for computation of book profit u/s 115JB and as such applying the aforesaidprovisions, the sales tax subsidy being capital in nature and outside the ambit of chargingsection 4, has to be reduced while computing book profit u/s 115JB of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this proposition, the Ld D.R placed his reliance on the decision rendered by the Special bench of Tribunal in the case of Rain Commodities Ltd (2010) (40 SOT 265). We notice that an identical issue was considered by the co-ordinate bench in the case of M/s. Alok Industries Ltd (ITA No.1017/Mun/2017 dated 21.05.2018) and has been held that the Capital receipts cannot be included in the Book Profit u/s.115JB of the Act. We notice that an identical view has been expressed in several other cases also by the co-ordinate benches. For the sake of convenience, we extract below the relevant observations made by the Co-ordinate bench in the case of Alok Industries Ltd (supra): 25. Contention of learned AR was as under:- i. Section 115JB should be considered subject to charging provisionunder sectionSection 4 read with the definition of an "income under Section 2(24). ii. The definition of income under Section 2(24) has been amended by the Finance Act 2015 to include subsidy within its scope, but only with prospective effect from AY 2016-17. iii. Therefore, such subsidy which is capital in nature cannot be brought within the purview of Section 115JB as the charging provision fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m which is not otherwise taxable cannot be subjected to tax under the MAT provision without any express authority in this behalf. Also, if we look at Explanation 1 to Section 115JB(2), we find that the legislature has defined 'book profit'. For calculation of such book profit, one has to reduce certain items, which inter alia include, item 'ii'which states that 'the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, if any such amount is credited to the profit and loss account". Thus, what can be discerned from above item is that, for calculation of book profit one has to reduce those items of income which do not form part of total income under normal provisions. If that be the case, then it logically follows that those items which do not constitute income at all cannot for part of book profit and no MAT can be levied thereon at all, Even sub section (5) of section 115JB states that 'Save as otherwise provided in this section, all provisions of this Act shall apply to every assessee, being a company, mentioned in this section. Thus, provisions of section 4 and section 2(24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2020, this tribunal has adjudicated the same issue and directed that "the learned CIT(A) is directed to consider this issue de novo after taking into account the aforesaid Hon'ble Jurisdictional High Court decisions [i.e. in the case of CIT vs Veekaylal Investment Co. (P.) Ltd., 249 ITR 597 (Bom.]" That approach, however, is contrary to the stand taken by Hon'ble Madras High Court, in the case of CIT Vs Metal and Chromium Plater Pvt Ltd [(2019) 415 ITR 123 (Mad)] wherein Their Lordships have, inter alia, observed that "The Bombay High Court in the case of Veekaylal Investments (supra) considers the inclusion of capital gain for the purposes of assessment under section 115J. Both judgements are rendered in the context of Section 115J which does not contain a provision analogous to sub-sections (4) of section 115JA or (5) of section 115JB of the Act. Thus while an assessment u/s 115J would be concluded exclusively on the basis of the book profits as adjusted by the items set out in the Explanation thereunder, in an assessment in terms of sections 115JA or JB, the adjusted book profits would be further subjected to the effect of other provisions of the Act that are specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e desire to add and as was said in Cassell & Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of courts" which exists in our country, "it is necessary for each lower tier", including the High Court, "to accept loyally the decision of the higher tiers". "It is inevitable in hierarchical system of courts that there are decisions of the Supreme appellate Tribunal which do not attract the unanimous approval of all members of the judiciary... But the judicial system only works if someone is allowed to have the last word, and that last word, once spoken, is loyally accepted" and observed that. . . "the better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system." The principle is thus unambiguous. As a rule, therefore, judicial discipline warrants that the wisdom of a lower tier in the judiciary has to make way for higher wisdom of the tiers above. Unlike the decisions of Hon'ble jurisdictional High Court, which bind us in letter and in spirit on account of the binding force of law, the decisions of Hon'ble non-jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench decision, in the case of Bank of India (supra), wherein, speaking through one of us (i.e. the Vice President), the coordinate bench has observed as follows: While dealing with judicial precedents from non-jurisdictional High Courts, we may usefully take of observations of Hon'ble jurisdictional High Court in the case of CIT v. Thana Electricity Co. Ltd [(1994) 206 ITR 727 (Bom)], to the effect "The decision of one High Court is neither binding precedent for another High Court nor for the courts or the Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect". Unlike the decisions of Hon'ble jurisdictional High Court, which bind us in letter and in spirit on account of the binding force of law, the decisions of Hon'ble non-jurisdictional High Court are followed by the lower authorities on account of the persuasive effect of these decisions and on account of the concept of judicial proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that "To a forum like us, following a jurisdictional High Court decision is a compulsion of law and absolutely sacrosanct that way, but following a non-jurisdictional High Court is a call of judicial propriety.....-which can...be, in deserving cases, deviated from". Implicit in this observation is the fact that not following non-jurisdictional High Court decision is more of an exception than the rule. There have to be very strong and good reasons not to follow even non jurisdictional High Court decisions. It is not, therefore, open to us in the present situation, as has been contended by the learned counsel, to simply disregard this judicial precedent from Hon'ble Madras High Court, and follow the decision of the coordinate bench, in assessee's own case, in favour of the assessee. The fact that the decisions in assessee's own cases were authored by one of us, the claim that these decisions elaborately deal with certain aspects which may or may not have been examined by Hon'ble High Court and the apprehension that it may not have been argued on certain important facets, are wholly irrelevant. Once Their Lordships of a higher judicial forum express their esteemed view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soning has now been specifically disapproved by Hon'ble Madras High Court holding that the said decision does not apply in the case of section 115JB- as in this case. In view of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this count as well. 54. Ground no. 11 is also thus dismissed. 55. In ground no. 12, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) right in allowing appeal of the assessee and directing the assessing officer to allow the weighted deduction at 200% in respect of R&D expenditure u/s. 35(2AB) of the Act as claimed by the assessee.?" 56. So far as this grievance is concerned, the relevant material facts are as follows. In the course of the assessment proceedings, the Assessing Officer disallowed Rs 8.66 crores for weighted deduction under section 35(2AB) in respect of research and development expenditure by observing as follows: 21.1 On perusal of the computation of income statement, it is seen that during the year under consideration the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years prior to 2016-17 are concerned, the DSIR's limitingthe quantification of expenditure incurred on research and development expenses on a DSIR approved facility would not come in the way of weighted deduction under section 35AB. We are of the considered view that as long as the expenditure is actually incurred in the DSIR approved facility, which is not even in dispute in the present case, the entire expenses will have to be allowed as a deduction. This is also so held by several decisions of the coordinate benches, including in the cases of JCIT Vs Reliance Life Sciences Pvt Ltd (2130/Mum/2018), Glenmark Pharmaceutical Ltd Vs ACIT (5651/Mum/2017), ACIT Vs Crompton Greaves Ltd (111 taxmann.com 338) and Cummins India Ltd Vs DCIT (309/Pune/2014). In view of these discussions, and bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this point as well. 59. Ground no. 12 is thus dismissed. 60. In ground no. 13, the Assessing Officer has raised the following four questions for our adjudication:- "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y preceding assessment years, consistently this approach of the assessee, at the even lower spread of 150 bps, has been all along accepted by the coordinate benches. In any case, no case has been made out that the spread of 200 bps is lower than the arm's length price. As regards the cost-plus method on the cost of funds, we find it is fundamentally flawed inasmuch as it treats all the types of borrowing at par and proceeds on the erroneous assumption that the arm's length price of the debt has, at its basis, cost of funds available to the tested party- particularly when these funds are of significantly different tenures and different currencies. In view of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A)- which is, in any event, in harmony with the decisions of the coordinate benches in assessee's own, and decline to interfere in the matter. 64. Ground No. 13 is also thus dismissed. 65. In ground no. 14, which once again has several parts in the grounds of appeal and all, but first, parts are no more than arguments in support of the grievance, the Assessing Officer has raised the following grievances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignoring another vital fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RGBV had positive incomes of 33,31,606 Euro for FY 2009-10, 1,09,313 Euro for FY 2010-11, 18,923 Euro for FY 2011-12 and 22,332 Euro for FY 2012-13, the assessee has not accounted any such return on accrual basis leading to base erosion to India, casting severe doubts on the nature of entire investment, which is otherwise an interest free loan? Whether on the facts and circumstances of the case and in law, theLd. CIT(A) is correct in ignoring the fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RGBV had positive incomes of 11,494,125 UAE Dirhams, 5,188,402 Dirhams and $742,069 during the calendar years 2007,2008 and 2009 respectively, the assessee has not accounted any such return on accrual basis leading to base erosion to India, casting severe doubts on the nature of entire investment, which is otherwise an interest free loan? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that though the assessee is eligible for compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and has been in liquidation process from FY 2014-15 and its net worth is also negative only, though the assessee claimed to have made investment in said preference shares, which is not an arm's length behavior?" Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in not appreciating the sham nature of the nomenclature and form of the transaction "compulsorily convertible preference share", when the investment was redeemed losing the significance of "compulsory convertible"; never ever been converted into equity shares at any point of time further losing its nature, and never even received the coupon rate of return losing the nature of preference share, thus rendering the transaction essentially an interest free loan?" Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in over-looking the fact that though the stated preference shares should carry a fixed rate of dividend, the assessee has not accounted any such return which casts cloud on the real nature of investment being interest free loan?" Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as an international transaction under "capital financing" and such transaction would yield accrued interest which is 'income' for the purposes of section 92(1), so as to be dealt under Chapter X of the Income tax Act? Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the essential character of the transaction is "loan" in "substance" which the assessee camouflages as 'preference share' in order to avoid tax liability on the interest that accrues coupled with the base erosion in India by shifting of huge amount of Rs. 652.4 crores out of India without any return? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct In ignoring the BEPS (Base Erosion and Profit Shifting) Action Plan 9 of which India is a party which mandates that transactions can be disregarded for TP purposes where they lack commercial rationality, as far as proper return on investments is concerned? Whether on the facts and circumstances of the case and in law, the Id. CIT(A) is correct in Ignoring the BEPS Action Plan which emphasizes substance over form, economic reality over legal form and conduct of parties over co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e? 66. So far as this set of issues raised by the Assessing Officer is concerned, the relevant material facts are as follows. The assessee has made investments in non-cumulative compulsorily convertible preference shares of its subsidiary companies, bearing a coupon rate of 5% p.a. This transaction was converted as a loan simpliciter, and, accordingly, benchmarking was done on the basis of Bloomberg database. The Assessing Officer noted that even though the assessee was entitled to a yield of 5% of the value there was no dividend declaration in many cases, and no person would enter into such transactions in a real commercial world. He was of the view that this transaction needs to be recharacterized as its economic substance differs from its purported form. It is in this background that an arm's length price adjustment of Rs 25,16,59,278 was made by treating these investments as loans for all practical purposes. Aggrieved, assessee carried the matter in an appeal before the learned CIT(A) who deleted this arm's length price adjustment on the basis of decisions of the coordinate benches for the assessment years 2010-11, 2011-12 and 2012-13 as also her predecessor's order for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted before us that the above decision is squarely applicable in as much as no fresh investment has been done during the A.Y. 2013-14. Furthermore, as pointed out by learned Counsel of the assessee from Hon'ble Bombay High Court decision in the case of Pr. CIT Vs. M/s. Aegis Limited (supra) supports the above proposition. We may refer the Hon'ble High Court decision as under :- ―The respondent-assessee is a Company registered under the Companies Act. For the Assessment Year 2009-10, the assessee was subjected to transfer pricing regime. Question no.1 arises out of the action of the Revenue to tax notional interest in the hands of the assessee through transfer pricing. The facts are that, during the period relevant to the assessment year in question, the assessee had subscribed to redeemable preferential shares of its Associated Enterprises (―AE"for short) and redeemed some of its shares at par. The Transfer Pricing Officer ("TPO" for short) held that the preference shares were equivalent to interest free loans advanced by the assessee and accordingly charged the interest on notional basis. The Tribunal by the impugned judgment, deleted the addition by obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period till the conversion into shares takes place, cannot be considered in isolation from the overall transaction as a whole. The decision of the CIT(A) for the assessment year 2013-14, which is relied upon in the impugned order, has already been confirmed by a coordinate bench as above. As regards plea of the Assessing Officer that the CIT(A) has simply relied upon the earlier decisions of the coordinate benches, without taking a fresh look at the facts, it is an admitted position that there are no changes in the facts in circumstances of the case and there is not even a fresh investment in the present year, and, such being the facts, there cannot indeed be any justification for disregarding the binding legal precedents. This plea of the Assessing Officer is ill-conceived. Similarly, his grievance about reasons for recharacterization having been ignored is not really incorrect as there is a specific consideration by the coordinate benches, as indeed by us, as to why these reasons of recharacterization do not hold good in law. As regards the claim of these transactions being dubious in nature, just because of the timing of conversion at the same value, as long as the conversi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss support services? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s BNR Udyog Ltd. without appreciating that it is functionally similar, as only business support service segment of comparable has been considered for benchmarking the transaction?" 72. So far as this set of grievances is concerned, it is sufficient to take note of the facts that the assessee has rendered management consultancy services and business support services to its associated enterprise at cost plus 7% mark up. This transaction was benchmarked on the basis of the transactional net margin method (TNMM) with certain comparables including Ace BPO Services Pvt Ltd and Allsec Technologies Limited. These comparable were rejected and the Transfer Pricing Officer introduced comparables of BNR Udyog Ltd and Axis Integrated Systems Ltd on the basis of, what he described as, functional similarity. On this basis, an ALP adjustment of Rs 67,84,423 was made by the Assessing Officer. When the matter travelled in appeal before the CIT(A), the comparison of Axis Integrated Systems was rejected and the inclusion of Allsec was upheld. The Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the AE and the foreign government was to avoid base erosion for the Kurdish government and it would not avoid Indian jurisdiction to arrive at the ALP of the transaction unless it is prohibited by any Bilateral Investment Treaty?" "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating the fact that at best the agreement with Kurdish government would only serve as evidence for the cost incurred and it could not be read into much for ALP determination in the absence of any binding Bilateral Treaty between Indian and Iraq?" "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in holding that the transaction is covered u/r 10B(2)(d) in the absence of any laws and Government orders in force and equating an agreement between the AE and the regional government for incurring of cost with 'law or government order in force' for ALP of the transaction?" "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the cost-to-cost basis of support services to the AE, without understanding the basic tenet of the transfer pricing u/s. 92F(ii) that no u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been pointed out to us. Undoubtedly, one of the critical factors in determining the ALP, as recognized by rule 10B(2)(d), is conditions prevailing in the market in which AEs operate, and once it's a legal condition precedent in entering the transaction in the respective PSC market is that the AE's affiliates are not allowed to have any mark up on a supply of services to the AE, the determination of ALP is required to be having regard to this condition. Viewed thus, the cost to cost rendition of services can be indeed be viewed as an arm's length transaction. In view of these discussions, and being consistent with the co-ordinate bench decisions, we uphold the action of the CIT(A) and decline to interfere in the matter. 79. Ground no. 16 is also thus dismissed. 80. In ground no 17, the assessee has raised the following questions for our adjudication: "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing to restrict the TP adjustment of corporate guarantee fee which is split into 50:50 as against the split of 60:40 charged by the TPO for the impugned year merely relying on the Tribunal and the CIT(A)'s order for earlier year i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and 40% benefit to the AE. There is no justification for this change. In appeal, following accepted earlier decisions of the coordinate benches on this issue, in the assessee's own case, the CIT(A) has accepted 50:50 allocation of spread. The Assessing Officer is aggrieved and is in appeal before us. 82. Having heard the rival contentions and having perused the material on record, we find that this is a purely factual matter, which permeates from year to year, and once the coordinate benches have consistently held, right from 2011-12 onwards, that 50:50 allocation is reasonable, and there is no change in the material facts, we see no reasons to take any other view of the matter than the view so taken by the coordinate benches in assessee's own cases for the preceding assessment years. We, therefore, approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 83. Ground no. 17 is also thus dismissed. 84. In ground no. 18, the Assessing Officer has raised the following questions for our adjudication: "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s BVG India L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of the benchmarking analysis under the TNMM- as has been done in this case, learned representatives agree that the adjudication on comparability of Spectrun Business Solutions Ltd and ICRA Management Consulting Services Ltd will become academic. 86. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in assessee's own case for the immediately preceding assessment year. Respectfully following the same, and subject to the observations as above, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 87. Ground no. 18 is also thus dismissed. 88. In the result, the appeal filed by the Assessing Officer for the assessment year 2014-15 is dismissed in the terms, and subject to the observations, above, is dismissed. 89. We now take up ITA No. 1645/Mum/2019, i.e. the appeal filed by the assessee against the order dated 31st January 2019 passed by the learned CIT(A) in the matter of assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2014-15. 90. In the first ground of appeal, the assessee has raised the following grievance: The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's own case. Respectfully following these decisions, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 99. Ground no. 3 is thus dismissed. 100. In ground no. 4, the assessee has raised the following grievance: The CIT(A) erred in disallowing the deduction of Rs 520,25,03,446/- u/s 37(1) of the Act, being expenses incurred on corporate social responsibility (CSR) on the ground that it does not fall under business expenditure. 101. During the course of the scrutiny assessment proceedings, the Assessing Officer noted that the assessee has incurred an expenditure of Rs 520,25,03,446 on account of certain corporate social responsibility work undertaken by the assessee company. The Assessing Officer was of the view that this expenditure cannot be treated as relatable to the business activity of the company. He further noted that Explanation 2 to Section 37(1), introduced with effect from 1st April 2015, clearly provided that "for the removal of doubts, it is hereby declared that for the purpose of sub section (1) any expenditure incurred by the assessee on the activities relating to corporate social responsibility referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0] 38 ITR 601, which reads as follows: "It was made clear in the above cited cases of Usher's Wilshire Brewery v. Bruce (supra) and Smith v. Incorporated Council of Law Reporting [1914] 6 Tax Cases 477 that a sum of money expended not with a necessity and with a view to direct immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency and in order to indirectly facilitate, carrying on of business may yet be expended wholly and exclusively for the purpose of the trade; and it appears to me that the findings of the CIT in the present case, bring the payment in question within that description. They found (in words which I have already quoted) that payment was made for the sound commercial purpose of enabling the company to retain the existing and future members of staff and for increasing the efficiency of the staff; and after referring to the contention of the Crown that the sum of Sterling Pound 31,784 was not money wholly and exclusively laid out for the purpose of the trade under the rule above referred to, they found deduction was admissible thus in effect, though not in terms, negativing the Crowns contentions. I think that there was ample m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re quite different', 'but nonetheless the two sections are not mutually exclusive'. Thus, there are overlapping areas between the donations given by the assessee and the business expenditure incurred by the assessee. In other words, there can be certain amounts, though in the nature of donations, and nonetheless, these amounts may be deductible under section 37(1) as well. Therefore, merely because an expenditure is in the nature of donation, or, to use the words of the CIT(A), 'promoted by altruistic motives', it does not cease to be an expenditure deductible under section 37(1). In Mysore Kirloskar Ltd.'s case (supra), Their Lordships have observed that even if the contributions by the assessee is in the forms of donations, but if it could be termed as expenditure of the category falling in section 37(1), then the right of the assessee to claim the whole of it as a deduction under section 37(1) cannot be declined. What is material in this context is whether or not the expenditure in question was necessitated by business considerations or not. Once it is found that the expenditure was dictated by commercial expediencies, the deduction under section 37(1) ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly sets out, the expenditure on 20-Point Programmes was incurred in view of specific directions of the Government of India. This factual aspect is not even disputed or challenged by the Revenue at any stage. It cannot but be in the business interest of the assessee-company to abide by the directions of the Government of India which also owns the assessee-company. In any event, as observed by the Hon'ble Madras High Court in Madras Refineries Ltd.'s case (supra), monies spent by the assessee as a good corporate citizen and to earn the goodwill of the society help creating an atmosphere in which the business can succeed in a greater measure with the help of such goodwill. The monies so spent therefore are required to be treated as business expenditure eligible for deduction under section 37(1) of the Act. What is the expenditure for the implementation of 20-point plant after all? It is solely for the welfare of the oppressed classes of society, for which even the Constitution of India sanctions positive discrimination, and for contribution to all around development of villages, which has always been the central theme of Government's development initiatives. An expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal position in this regard has been very succinctly summed up by observing that "Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year, deleted the similar disallowance. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches, and, in any case, no specific reasons for doing so have been pointed out to us. We have also noted that there is not even doubt on the bonafides and reasonableness of the expenses, and that the dispute before us, as elaborated earlier, is confined to the nature of the amendment being clarificatory. That issue, for the detailed reasons set out above- with which we are in considered agreement, must be held to only prospective in effect. In this view of the matter, and respectfully following the esteemed views of the coordinate benches, we delete the impugned disallowance of Rs 520,25,03,446. The assessee gets the relief accordingly. 105. Ground no. 4 is thus allowed. 106. In ground no. 5, the assseee has raised the following grievance: The CIT(A) erred in restricting the Appellant's claim for investment allowance u/s 32AC of the Act to Rs. 130,26,48,964/- (being 15% of Rs. 868,43,26,433, subject to AO verifying the revised figures as per CA certificate dt. 12.10.2018), as against the Appellant's claim of Rs. 406,63,37,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period and thus any claim of deduction without investment in that specific period is ultra virus. Since, deduction under section 32AC is allowed only on the assets acquired and installed during FY 13-14, the assessee's claim of deduction on assets acquired prior to 01.04.2013 but installed during FY 13-14 is disallowed. Accordingly, deduction u/s 32AC is allowed @15% on Rs. 522,40,48,126 which works out to Rs. 78,36,07,218. Further as per para 14.6.2 above, the assessee is eligible for deduction u/s 32AC which was not claimed In the Return of Income in respect of additions categorized as Plant & Machinery in the KGD6 Block. Hence an additional deduction of Rs. 54,58,29,120 is allowed in the computation of income. 19.5.6 Thus total deduction u/s 32AC is computed at Rs.132,94,36,33 (Rs.78,36,07,218 plus Rs.54,58,29,120). Since the assessee has claimed deduction u/s 32AC of Rs.406,63,37,137/- the balance sum Rs.273,69,00,799/- is hereby disallowed and added to the income of assessee. 108. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. While rejecting this plea of the assessee, learned CIT(A) has observed as follows: In the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Thus it was accepted by the legislature that both acquisition and installation cannot/would not happen in a particular financial year and hence the purpose of Section 32AC would be defeated if an assessee is called upon to both acquire and install the new asset in the same financial year. Since there are 4 stages of an asset cycle viz: acquisition, installation, usage and discard, investment allowance under section 32AC is available to any assessee only when the second stage is completed i.e. when the asset is actually installed by the assessee. Thus even if assets are acquired by the assessee, if they are not installed during the period specified, no allowance is available under Section 32AC. Further, the appellant during the course of appellant proceedings has submitted that the value of assets acquired prior to 1st April, 2013 and installed post in FY 2013- 14 has been inadvertently submitted by the appellant as Rs.2188,48,66,122. The appellant in this regard has submitted that it was asked to furnish the breakup only at the fag end of the assessment ie. on 18.12.2017. The matter being time barring, the appellant in its efforts to comply immediately submitted the det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year commencing on the 1st day of April, 2015, of as 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 1 day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a). From the plain reading of the sec 32 AC (1) it is seen that this section specifically mentions that this acquires and installed new asset after 31st day of march 2013. And so the word "and" connotes that acquisition and installation should both be after March 2013. The basic intention of the legislature in introducing sec 324C was to invite more new investments above 100 crores and the incentive was given in acquiring and installing new asset after 31st March 2013 to 1st April 2015. These dates are very important and the interpretation of the section has to made on the basis of language of the section. Hence, I find the Assessing Officer has rightly disallowed the claim of the appellant. Now coming to the without prejudice submissions to the ground of appeal that the disallowance should be restricted to the revised figure of Rs.276,36,85,749 (being 15% of Rs.1842,45,71,664) which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one year, even if it is acquired in an earlier year, it will be treated as "acquired and installed‟ in the year of installation of plant and machinery. No contrary decision has been cited before us. We may reiterate that the expression used in Section 32(1)(iia) is materially the same as it refers to "new machinery or plant...... which has been acquired and installed after the 31st day of March, 2005". When this judicial precedent and the legal positionwere put to the learned Departmental Representative, all that was submitted before us was that it was a case in which delay in the installation was held to be with sufficient justification, whereas there is no such justification in the present case. We do not think that is a material distinction because what is relevant in the present case is whether an installation of a plant and machinery in a previous year, even though the same is acquired in an earlier previous year, could be treated as "acquisition and installation‟ and the answer that Their Lordships have given is in positive. As we have noted earlier in this decision, the mere fact that Hon'ble High Court judgment is a non-jurisdictional High Court, in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the term 'income' does take into consideration the deductions on account of depreciation and investment allowance. Therefore, the term profits and gains are not synonymous with the term 'income' ..... 19) Reading of Section 80HH along with Section 80A would clearly signify that such a deduction has to be of gross profits and gains, i.e., before computing the income as specified in Sections 30 to 43D of the Act." Without prejudice to the above, the appellant prays that while computing the commercial profit of the SEZ unit eligible for deduction 10AA of the Act (to the extent of export), depreciation charged in the books as per the Companies Act 1956 ought to have been reduced, instead of the depreciation allowed u/s. 32 of the Income Tax Act 1961. 115. Learned representatives fairly agree that this issue is also a covered issue by a decision of the coordinate bench in the assessee's own case for the immediately preceding assessment year. In the said decision, the coordinate bench has, inter alia, observed as follows: 125. In this regard we note that section 80HH with which the honourable Supreme Court was concerned with, provided that where the gross tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his section and the deduction under this section shall not exceed such total income of the assessee". 131. In this regard it is noted that the provisions of section 80 AB are parimatereia with the provisions of this explanation. Section 80 AB reads as under: "Deductions to be made with reference to the income included in the gross total income. 80AB. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading "C.-Deductions in respect of certain incomes" in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee an which is included in his total income. 132. This section was introduced by Finance Act 1980 with effect from 1.4.1981. 133. A bare reading of the above makes it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to section 10A/10AA/10B/10BA/ 10C of the Act, even though the said sections provide for deduction to be granted to an assessee. Secondly, deduction under section 10AA of the Act (prior to the amendment made by Finance Act 2017 by way of insertion of Explanation) was to be given at the stage of computing the gross total income of the eligible undertaking under Chapter IV of the Act i.e. prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. This has been held by the Supreme Court in the case of CTT v. Yokogawa India Ltd 391 ITR 274 (SC) in the context of section 10A of the Act. Plastiblends India deals with a situation of computation of deduction under Chapter VIA of the Act i.e. after computing the gross total income of the eligible undertaking under Chapter IV of the Act. 135. The other submission of the learned departmental representative is that section 10 AA is a part of chapter 3 and is essentially an exemption section. This the learned departmental representative himself contradicts by submitting that though post-amendment such an exemption is available in form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 92CA of the Act, 7.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of learned Assessing Officer ('AO') in making a reference of the Appellant's case to the TPO, without applying his mind and without recording his satisfaction, thereby making the entire process of referring the matter to the TPO as invalid; 7.2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not stating reasons to show that any of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied before making an adjustment to the total income of the Appellant; 7.3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not demonstrating the motive of the Appellant, to carry out transactions between an eligible business and other business, to reduce the taxable profits by manipulating the prices of its Specified Domestic transactions, either at the stage of invoking or initiating the assessment or at the stage of framing the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment to the comparable's fixed cost based on Plant Load Factor. 122. So far as this ground of appeal is concerned, the assessee has certain captive power plants, namely CPP GTG VII Hazira, CPP GTG IX Hazira, STGII Hazira and CPP II Gandhar, which are eligible for deduction under section 80IA. These four eligible units have supplied electricity to Hazira Manufacturing Division (HMD) and Dahej Manufacturing Division (DMD) of the assessee company. The rate at which the electricity is so supplied is Rs 6.49 per KWH, and it is exactly the same at which an external supplier of power (i.e. Dakshin Gujarat Vij Company Limited- DGVCL in short) is supplying the power to the manufacturing units of the assessee company. It is on this basis that the assessee claimed the electricity sale transaction between its CPPs and manufacturing units to be at arm's length. Based on the price at which an external vendor, namely DGVCL, is supplying power to the manufacturing divisions of the assessee company, the assessee applied Internal CUP (comparable uncontrolled price) method for the benchmarking. This benchmarking, however, was rejected by the Transfer Pricing Officer. The TPO was of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2005-06 to assessment year 2012-13 the ITAT Mumbai has upheld that the power rate charged by DGVCL for determining the market rate of unit rate of electricity. 169. Furthermore it is the contention that Hon'ble High Court has rejected the appeal of the revenue for assessment year 2006-07 and has discussed non applicability of judgement of Hon'ble Calcutta High Court in the case of CIT vs. ITC Ltd. 170. Learned counsel of the assessee further pleads that he is relying upon the decision of honourable Supreme Court in the case of Radha Soami Satsang vs. CIT (1992) 193 ITR 321 (SC), for the proposition that on the ground of consistency also DG VCL rate should be accepted. It is further contended that market value of electricity supplied by the CPP unit to the other unit would be the same as charged by the Gujarat Electricity Board to the end consumers. In this regard learned Counsel of the assessee also referred to ITAT decision and Hon'ble Gujarat High Court decision. It is further contention that honourable Supreme Court has also rejected the special leave decision filed by the Commissioner of income tax, Ahmedabad and the principle down by the honourable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices would ordinarily fetch in the open market; or (ii) the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA. 175. The rate charged by the assessee has been duly accepted by the Tribunal and upheld by the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Reliance Industries Ltd. (in ITA No. 1056 of 2016 dated 30.01.2019), which reads as under: 4. Question (c) pertains to the dispute between the department and the assessee regarding the rate at which the electricity generated by one unit of the assessee-company and provided to the another be valued. The assessee contended that such valuation should be at the rate at which the electricity distribution companies are allowed to supply electricity to the consumers. The revenue on the other hand argues that the appropriate rate should be the rate at which the electricity is purchased by the distribution companies from the electricity generating companies. 5. This controversy arose in the background of the fact that the assessee had set up a captive power generating unit and claimed deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by the MERC is the true market value. The Assessee gave explanation that the rates determined by the MERC do not reflect the correct market rate. The finding is that the mode of computation and deduction under Section 80IA requires no deviation from the past. The findings of fact and to be found in paragraphs 42 to 50 also reflect that the very issue came up for consideration for the Assessment Year 2003-2004. For the reasons assigned by the ITAT and finding that the attempt is to seek re-appreciation and reappraisal of the factual data that we come to a conclusion that even question (d) as framed is not a substantial question of law." 8. Thus, the issue at hand had been examined by this Court on earlier occasion and the view of the Tribunal under similar circumstances was approved. 9. Additionally, we also notice that similar issue came up for consideration before Chhattisgarh High Court in case of Commissioner of Income-tax, Raipur Vs. Godawari Power &Ispat Limited1, in which the Court held and observed as under: "31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 11. Judgment of Calcutta High Court in case of Commissioner of Income- tax, Kolkata - III Vs. ITC Ltd. was also brought to our notice in which the said High Court has taken a different stand. However, since the issue has already been examined by this Court earlier and in view of the decisions of the Chhattisgarh and Gujarat High Court, we see no reason to entertain this question." 176. Here we note that the assessing officer while expounding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in the case of NTPC Vs CIT [ (1998) 229 ITR 383 (SC)], these grounds are admitted. 129. As regards the first additional ground of appeal, we have already adjudicated upon the same while dealing with the related ground of Assessing Officer's appeal, and rejected the same. We, therefore, reject this additional ground of appeal. 130. The additional ground of appeal no. 1 is thus rejected. 131. In the second and third additional grounds of appeal, the following grievances have been raised: The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs.1,45,90,856 accrued under the Technology Upgradation Fund (TUF) Scheme, being a capital receipt not liable to tax, while computing income under the normal provisions of the Act. The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs. 1,45,90,856 accrued under the TUF scheme, from the Book profit computed u/s 115 JB of the Act being capital receipt and not income liable to tax. 132. Learned representatives fairly agree that as the related facts have not come up for examination before any of the authorities below, even upon admission of these grounds of appeal, these issues are only re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs of the learned CIT(A) on this issue. We, therefore, have no reasons to take any other view of the matter than the view so taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 141. Ground no. 1 is thus dismissed. 142. In ground nos. 3(a) and (b), which we will take up together, the Assessing Officer has raised the following question for our adjudication: (a) Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Act r. w. Rule 8D(2)(iii) to 0.5% by taking average value of that investment which have yielded dividend during the year under consideration? (b) Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance under section 14A of the Act to the amount disallowed by the assessee for the purpose of income under section 115JB of the Act. 143. This issue is required to be taken up along withthe ground of appeal no. 8 (additional ground of appeal raised by the assessee) as under: The learned CIT(A) M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 115JB of the Income Tax Act, 1961 ("the Act" for short), provision made by the assessee for wealth tax should be excluded. The Tribunal was of the opinion that the section itself refers to the income tax paid or payable or the provisions made therefore. This would not include the provision made for wealth tax. The Tribunal relied on a decision of this Court in the case of CIT v. Echjay Forgings (P.) Ltd. [2001] 116 Taxman 322/251 ITR 15 in which such an issue had come up for consideration. 3. Learned counsel for the Revenue, however, submitted that the decision of this Court in the case of Echajay Forgings (P.) Ltd. (supra) proceeded on the concession made by the Revenue's counsel and the Tribunal, therefore, committed an error in treating it as ratio of the High Court decision. On the other hand, the learned counsel for the assessee submitted that even otherwise, the statutory provision being clear, there is no scope for interpretation. 4. Section 115JB of the Act pertains to special provision for payment of tax by certain companies. As is well known, detailed provisions have been made to compute the book profit of the assessee for the purpose of the said p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will also apply mutatis mutandis on this issue as well. Vide paragraph nos. 32-37 in our decision for the assessment year 2013-14, earlier in this consolidated order, we have rejected this plea and confirm the findings of the learned CIT(A) on this issue. We, therefore, have no reasons to take any other view of the matter than the view so taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 152. Ground no. 4 (a) is thus dismissed. 153. In ground no. 4 (b), the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing deduction u/s 80IB(9)(ii) of the Act at Rs 604,61,83,730/- instead of Rs.NIL as held by the Assessing Officer?" 154. So far as this grievance of the Assessing Officer is concerned, it is sufficient to take note of the fact that the deduction under section 80IB(9), amounting to Rs 604,61,83,730 was declined for the short reason that this deduction is allowable for mineral oil, which, according to the Assessing Officer, includes cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Explanatory Notes thereof clearly spell out that an assessee intending to claim the benefit of the Section must acquire and install the P&M within the aforementioned period and as such there is no scope left for any interpretation otherwise. It is pertinent to mention here that the deduction under section 32AC is investment linked which is to be made in a specific period and thus any claim of deduction without investment in that specific period is ultra virus. 16.5.6 In view of above, deduction under section 32AC is allowed only on the Plant & machinery acquired and installed during FY 13-14 & F.Y 14-1, and the assessee's claim of deduction on Plant & machinery acquired prior to 01.04.2013 but installed during FY 13-14 is disallowed. Accordingly, the claim of the assessee of Rs.312,93,30,000/- on the plant & machinery of Rs.2086,22,00,000/- acquired before 1st April 2013 is hereby disallowed. 158. When the matter travelled in appeal before the CIT(A), learned CIT(A) reversed the disallowance so made by the Assessing Officer on the ground that a specific provision to enable the said claim was inserted by virtue of Section 32AC(1A). While doing so, learned CIT(A) observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, 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 during any previous year exceeds twenty-five crore rupees and such assets are installed on or before the 31 day of March, 2017], then, there shall be allowed a deduction of a sum equal fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year" As can be seen, the amendment (highlighted in bold) in sub-section 1A to Section 32AC clearly provides for investment allowance on assets acquired during any previous year but installed on or before 31.03.2017. Thus the emphasis was to give investment allowance only if the same are installed on or before 31/03/2017. This is further corroborated if one refers to the 1st proviso to sub-section 1A of Section 32AC of the Act. The said proviso was also amended to clarify that investment allowance will be available on installation of assets, where installation and acquisition is in two different years. The amended proviso is also reproduced below for your ready reference: "Provided that where the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed. 162. In the ground nos. 6, the Assessing Officer has raised the following grievance: 6. "Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing appeal of the assesses and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee?" 7 "Whether, on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in allowing appeal of the assessee and directing the assessing officer to recompute the profit and deductions u/s 10AA in respect of Polypropylene (PP) SEZ taking into consideration the revised interest expenditure as submitted by the assessee ?" 8 "Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing appeal of the assessee and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee ?" 163. So far as these grievances are concerned, the relevant material facts are as follows. These grievances pertain to the revision of deductions claimed under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254". While there is a specific reference to the powers of the Tribunal, as was the issue before Their Lordships, these observations hold equally good in respect of the powers of the Commissioner (Appeals). It is also important to bear in mind the fact that it was not even a fresh claim, it was simply a request for correction in the claim which was already made. Keeping in view of these discussions, as also bearing in mind the entirety of the case, we approve conclusions arrived at by the learned CIT(A), and decline to interfere in the matter on this count as well. 165. Grounds nos. 6,7 and 8 are thus dismissed. 166. In ground no. 9, the Assessing Officer has raised the following grievance: Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) right in allowing appeal of the assessee and directing the assessing officer to exclude the amount of Notional sales tax incentive while computing B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) is correct in not considering the cost of borrowing for the assessee adopted by the TPO to benchmark the interest chargeable on receivables and instead adopting adhoc Libor plus spread of 200 bps as adopted by the assessee?" (c) "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in not considering the cost of borrowing for the assessee adopted by TPO to benchmark interest chargeable on receivables when the sale price is determined to recover the cost of business, which is inclusive of cost of borrowing?" (d) "Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is correct in ignoring the basic tenet of the transfer pricing as enshrined in section 92F(ii), as in a third party unrelated uncontrolled circumstances the assessee would have recovered the interest on receivables considering the cost of borrowing in its hands?" 167. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in the ground no. 13 in the Assessing Officer's appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.222,66,88,853) in RGBV at the same face value of 0.01 euro per share without any return, which again shows the nature as current account loan transaction and not compulsorily convertible preference shares as claimed by the assesses? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the vital fact that though the said investment is stated to be compulsorily convertible preference shares, the assessee said to have redeemed 2,90,720 said preference shares in another AE-RIME in the FY 2012-13 at par with same value of AED 290,72,00,000 (INR 430.70 crores) at which it was invested, without any arm's length return from the AE, proving the claim of "compulsorily convertible "as dubious, which shows the investment in the AE is essentially interest free loan in nature? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring another vital fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RGBV had positive incomes of 33,31,606 Euro for FY 2009-10, 1,09,313 Euro for FY 2010-11, 18,923 Euro for FY 2011-12 and 22,332 Euro for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2F(H)? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assessee has not furnished any detailed valuation report for the value of the preference shares said to be invested as above in RGBV preference shares and also for the value of AED 1000 per preference share in the AE RIME which again casts cloud on the nature of the Investment? "Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the facts that the AE RIME has been making losses continuously from calendar year 2010 to 2015 and as such the share value under NA Vis negative and even if it is to be valued under DCF method based on RBI's Circular for outbound shares, the actual cash flows during these years are negative and so its value would be negative only? "Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the facts that the AE RGBV has been making very meager profit during the FYs 2010-11 to 2012-13 and loss during the FY 2013-14 and has been under liquidation process from AY 2014-15 and if its outbound shares are valued under DCF, it would also be negat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India, which cannot be an arm's length situation in uncontrolled circumstances as in Section 92F(ii)? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the very essence of transfer pricing as to whether unrelated enterprises under uncontrolled conditions would enter into such transactions within the meaning of section 92F(ii)? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not perceiving the intention of the assessee in providing loans in the garb of preference shares thereby avoiding tax liability on the interest? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the economic substance of the transaction which is essentially loan though its external form is stated to be investment in preference shares, as the basic tenet of transfer pricing is that the transaction is to be seen in uncontrolled circumstances in thiro party situation as per Section 92F(ii)? "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assessee has entered into an "arrangement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and in law, the CIT(A) is correct in not realizing the fact that if such practices are allowed under transfer pricing unchecked without setting it right for arm's length return, it would lead to base erosion to this country as huge funds as in this case could besiphoned out of this country in the garb of alleged preference shares in AE, even though the actual character is essentially loan which should be earning interest, which again would be yielding tax revenue to this country? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the decision of Hon'ble Delhi High court in the case of CIT v/s EKL Appliances Ltd, (345ITR 241) wherein it has been held that recharacterisation of transaction is permissible in exceptional circumstances as that of assessee as under? Two exceptions have been allowed to the aforesaid principle and they are - (i) where the economic substance of a transaction differs from its form; and (ii) where the form and substance of the transaction are the same but arrangements made in relation to the transaction, viewed in their totality, differ from those Which would have commercially rationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case and in law, the Ld. CIT(A) is correct in including M/s Allsec Technologies Ltd, as the comparable without appreciating that it is functionally dissimilar as it is engaged into ITES service whereas benchmarking is done for MCS and BSS? Whether On the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s Axis Integrated Systems Ltd. without appreciating that it is functionally similar as both the assessee and the comparable are engaged in providing high end management and business support services? 172. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in ground no. 15 in the Assessing Officer's appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 71-74 we have rejected this grievance of the assessee. Accordingly, the inclusion of Allsec Technologies Ltd is to be included in the comparables and Axis Integrated Systems Ltd is confirmed. The observations made there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices on cost-to-cost basis, leading to base erosion in India?" 175. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in the ground no. 16in the Assessing Officer's appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 75-79 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 176. Ground no. 14is thus dismissed. 177. In ground no. 15, which again has several parts in the nature of arguments, the Assessing Officer has raised the following grievances: "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in directing to restrict the TP adjustment of corporate guarantee fee which is split into 50:50 as against the split of 60:40 charged by the TPO for the impugned year merely relying on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in passing a non-speaking order in as much as she observed as 'The FAR analysis done by the TPO is not appropriate" without adducing reasons as to why it is not appropriate?" "Whether on the facts and circumstances of the case and in law, after having observed that the FAR analysis done by the TPO is not appropriate and powers being coterminous, the CIT(A) is correct in not carrying out appropriate FAR analysis on her own, or getting it done by the TPO by remanding the case u/s 250(4) r.w.r. 46A and deciding the issue taking into account such remand report?" "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in passing a non-speaking order in as much as she held the split of 50:50 of interest differentia is correct without adducing any reasons as 'to how the equal split between the assessee and the AEs would be correct, whereas it is anybody's knowledge that the huge assessee and the less creditworthy AEs cannot be equated on any parameter?" "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.A order in M.A.No.736/Mum/2018 dated 2.1.2019?" 178. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in ground no. 17in the Assessing Officer's appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 80-83 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 179. Ground no. 15is thus dismissed. 180. In ground no. 16, with several arguments having been made part of the ground of appeal itself, the Assessing Officer has raised the following grievances: "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s B VG India L td, without appreciating that it is functionally similar as it is engaged in the business support service only?" "Whether on the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 182. Ground no. 16 is thus dismissed. 183. In the result, the appeal of the Assessing Officer for the assessment year 2015-16 is dismissed. 184. We now take up the ITA No. 2876/Mum/2019, i.e. the appeal filed by the assessee against the order dated 27th March 2019passed by the learned CIT(A) in the matter of assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2015-16. 185. In the first ground of appeal, the assessee has raised the following grievance: The Learned CIT(A) erred in directing the AO to compute the disallowance under clause (f) of Exp 1 to section 115JB(2) i.e., expenditure relating to exempt income, when no such disallowance ought to have been made while computing book profit u/s.115JB of the Act, relying on Tribunal decision in appellant's own case for AY 2009-10 vide corrigendum order dated 02.04.2008. 186. We find that, while dealing with the identical ground of appeal for the immediately preceding assessment year in this very order at paragraphs 20-25, we have decided this issue in favour of the assessee. We see no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that such a deduction has to be of gross profits and gains, i.e., before computing the income as specified in Sections 30 to 43D of the Act." Without prejudice to the above, the appellant prays that while computing the commercial profit of the SEZ unit eligible for deduction 10AA of the Act (to the extent of export), depreciation charged in the books as per the Companies Act 1956 ought to have been reduced, instead of the depreciation allowed u/s. 32 of the Income Tax Act 1961. 192. Learned Representatives fairly agree that whatever we decide on ground no. 6 in the assessee's appeal for the assessment year 2014-15, which has been heard along with this appeal, will hold good for this assessment year as well. In our decision on the said ground, earlier in paragraphs 114-117, we have, following the coordinate bench decision for the assessment year 2013-14 in the assessee's own case, upheld the said plea of the assessee. We are in considered agreement with the views so taken by the coordinate bench, and respectfully following the said decision, we uphold the plea of the assessee in this assessment year as well. 193. Ground no. 3 is thus allowed. 194. In ground no. 4, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 is thus dismissed as not pressed. 197. In ground no. 5, the assessee has raised the following grievance: 5. Management Consultancy Services and Business Support Services rendered to AEs: 5.1 The learned CIT(A) erred in rejecting the Appellant's comparable Tech process Solutions Limited, on the ground of functional dissimilarity. 5 2. The learned CIT{A) erred in accepting the TPO's cherry picked comparable BNR Udyog Ltd, without providing any cogent reasons. 198. While dealing with a connected grievance earlier in this order in ground no. 14 of the appeal of the Assessing Officer, we have already held that, following the decision in the immediately preceding assessment year, Allsec Technologies Ltd is to be included in the comparables and Axis Integrated Systems Ltd is to be excluded. In this view of the matter, the assessee's challenge about Techprocess Solutions Ltd and BNR Udyog Limited is wholly academic inasmuch as with these comparables, or without these comparables, the transaction price does not call for any ALP adjustment. The grievance raised by the assessee is thus dismissed as infructuous. 199. Ground no. 5 is thus dismissed as infructuous. 200. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and manufacturing units to be at arm's length. Based on the price at which external vendor, namely DGVCL, is supplying power to the manufacturing divisions of the assessee company, the assessee applied Internal CUP (comparable uncontrolled price) method for the benchmarking. This benchmarking, however, was rejected by the Transfer Pricing Officer. The TPO was of the view that DGVCL was not a manufacturer of the electricity and it was only supplying the electricity purchased from others, and, therefore, its price is bound to be higher. He then proceeded to obtain information from Gujarat State Electricity Corporation Ltd and analyze the data with respect to the plant load factor (PLF) and the financial costs of its various manufacturing units. He then applied these details, with suitable PLF adjustment, and computed the prices on which these CPPs should have supplied the power to the HMD and DMD. These prices were used as external CUP inputs, and based thereon an ALP adjustment of Rs 34,96,00,236was made. Aggrieved, the assessee carried the matter in appeal before the learned CIT(A) but without any success. In a very brief operative portion of her order, learned CIT(A) observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged by the Gujarat Electricity Board to the end consumers. In this regard learned Counsel of the assessee also referred to ITAT decision and Hon'ble Gujarat High Court decision. It is further contention that honourable Supreme Court has also rejected the special leave decision filed by the Commissioner of income tax, Ahmedabad and the principle down by the honourable High Court has attained finality in favour of the assessee. 171. With regard to ground No. 10.4 it is the contention of the learned counsel of the assessee that he will not press this ground if ground No. 10.3 is decided in favour of the assessee. 172. In this ground the assessee contends that assessee's CPP is supplying power to the manufacturing unit that is the customer and learned Transfer Pricing officer has applied rate at which power generating unit is selling to power distribution which will then sell to the end consumer. Hence the level of market is different. 173. It is further contended that rate which electricity is supplied by GEB to the end consumer is to be considered as the market rate at which the captive power plant can sell power to other unit. 174. Upon careful consideration we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y electricity to the consumers. The revenue on the other hand argues that the appropriate rate should be the rate at which the electricity is purchased by the distribution companies from the electricity generating companies. 5. This controversy arose in the background of the fact that the assessee had set up a captive power generating unit and claimed deduction under Section 80IA of the Income Tax Act, 1961 ("the Act" for short) in respect of the profits arising out of such activity. Obviously, therefore the attempt on the part of the assessee was to claim larger profit under the unit which was eligible for such deduction as against this, attempt of the revenue would be see that the ineligible unit shows greater profit. 6. The Tribunal in the impugned judgment extracted extensively from the order of CIT (Appeals) and independent reasons for confirming the same. In such order CIT (Appeals) had placed reliance on an earlier judgment of the Tribunal in case of Reliance Infrastructure Limited Vs. Addl. CIT, Range 1(1), Learned counsel for the assessee had placed on record a copy of the judgment of the Tribunal in case of Reliance Infrastructure limited. In such judgment an identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice that similar issue came up for consideration before Chhattisgarh High Court in case of Commissioner of Income-tax, Raipur Vs. Godawari Power &Ispat Limited1, in which the Court held and observed as under: "31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier. it should have been compared with the market 10. Gujarat High Court in case of Principal Commissioner of Income-Tax Vs. Gujarat Alkalies and Chemicals Ltd. also had occasion to examine such an issue. It referred to earlier order in case of Asst. CIT Vs. Pragati Glass Works Pvt. Ltd.2 in which following observations were made:- "7. To our mind, Tribunal has committed no error. Assessing Officer and CIT(Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and. However, since the issue has already been examined by this Court earlier and in view of the decisions of the Chhattisgarh and Gujarat High Court, we see no reason to entertain this question." 176. Here we note that the assessing officer while expounding that rate duly approved under 80 IA(8) is to be changed for Transfer Pricing purposes has placed reliance upon honourable Calcutta High Court decision in the case of ITC Ltd. We find that the view of TPO and learned CIT(appeals) also by relying upon Calcutta High Court decision in ITC Ltd that market value basis duly approved by the honourable Bombay High Court shall change for the purpose of domestic transfer pricing regimen here is not at all sustainable. The reliance by learned CIT(appeals) on honourable Calcutta High Court decision in the case of ITC Limited supra has been distinguished by the honourable jurisdictional High Court. The honourable jurisdictional High Court has chosen not to follow the Calcutta High Court decision. Hence in our considered opinion, the authorities below have misled themselves by relying upon Calcutta High Court decision in this regard. This decision has not found favour with honourable jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We, therefore, deem it fit and proper to remit the matter to the Assessing Officer with the direction as above. Ordered, accordingly. 209. Ground no. 7 is thus allowed for statistical purposes. 210. We now take up the additional grounds of appeal filed by the assessee. Having heard the parties on the admissions of these grounds of appeal, and having regard to the well-settled legal position in the light of the Hon'ble Supreme Court's judgment in the case of NTPC Vs CIT [(1997) 229 ITR 383 (SC)], these grounds are admitted. 211. As regards the first additional ground of appeal, we have already adjudicated upon the same while dealing with the related ground of Assessing Officer's appeal, and rejected the same. We, therefore, reject this additional ground of appeal. 213. The additional ground of appeal no. 1 is thus rejected. 214. In the second and third additional grounds of appeal, the following grievances have been raised: The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs.1,23,93,743 accrued under the Technology Upgradation Fund (TUF) Scheme, being a capital receipt not liable to tax, while computing income under the normal provisions of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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