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TMI Blog2023 (5) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... determined at Rs.9,26,29,490/-. 3. Aggrieved by the order of AO assessee carried the matter before CIT(A) who vide order dated 29.08.2018 in Appeal No.815/CIT(A)-4/2014-15 granted partial relief to the assessee. 4. Aggrieved by the order of the CIT(A), assessee is now in appeal before the Tribunal and has raised the following grounds: - "1.(i) That on facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding the action of the assessing officer in disallowing the claim of statutory deduction u/s 80IA to the extent of Rs. 75,56,637/- by making adjustment of notional brought forward losses without appreciating the facts of the case and legal position. (ii) That business losses of earlier years having been set off against income of those years and there being no case of any brought forward losses pertaining to eligible unit, the disallowance of claim of statutory deduction u/ s 80IA is on illegal and arbitrary basis. (iii) That this being the initial year of claiming statutory deduction u/s 80IA, the notional adjustment of brought forward losses considered by the AO and confirmed by CIT(A) is not sustainable in the light of principle laid down in pleth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons noted in the order denied the claim of deduction u/s 80IA of the Act. 7. Aggrieved by the order of AO assessee carried the matter before CIT(A). Before CIT(A) assessee apart from various submissions to support its stand also placed reliance on the decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. [231 CTR 368] (Mad.). The submissions of the assessee was not found acceptable to CIT(A). CIT(A) noted that a Special Bench of Ahmedabad Tribunal had decided the issue in favour of the Revenue which is reported in 113 ITD 209 (Ahmedabad) and Hon'ble Karnataka High Court in the case of Micropals Limited vs. ACIT [56 taxmann.com 160] (Karnataka) had also decided the issue in favour of the Revenue. He, therefore, for the reasons noted in the order upheld the action of AO. 8. Aggrieved by the order of CIT(A), assessee is now before the Tribunal. 9. Before us, Ld. AR reiterated the submissions made before lower authorities and further submitted that identical issues arose before the Hon'ble Bombay High Court and the Hon'ble Bombay High Court in the case of CIT vs. Hercules Hoists Ltd. in Income tax Appeal No. 707/2014 order dated 14.06.2017 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Hon'ble Bombay High Court in the case of CIT vs. Hercules Hoists Ltd. (supra). The question for adjudication before the Hon'ble High Court and its findings are as under: - "2. The Revenue has framed the following questions for our consideration :- (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in holding that the respondent company was eligible for deduction u/s 80IA of the I.T.Act, 1961. (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in its interpretation of Section 80IA(5) of the I.T. Act, 1961 that unabsorbed depreciation of the eligible units need not be necessarily set off from the profits of the same units, but could be set off from other non-eligible units as well. (iii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in its interpretation considering the fact that Section 80IA(5) of the I.T. Act, 1961 points out that the eligible unit be considered as a stand-alone unit, thereby mandating that unabsorbed depreciation or losses be set off before allowing profits as deduction." 12. The Hon'ble High Court has dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's own case for the previous year, the losses were set off in the relevant years. The Revenue had challenged the said action before this Court in Income Tax Appeal No.2485 of 2013 and it was held that the said action is legal and proper. The said judgment is also upheld by the Apex Court. 10. Considering the above, we do not find any error committed by the Tribunal in allowing the deduction of the profit u/s 80IB(5) of the Act without deducting the losses of the earlier years." 13. Before us Revenue has not placed on record any contrary binding decision in its support. In such a situation, we following the decision of Hon'ble Bombay High Court in the case of Hercules Hoists Ltd. (supra) are of the view that AO was not justified in denying the claim of deduction u/s 80IA of the Act. We, therefore, direct the AO to allow the claim of deduction u/s 80IA of the Act. Thus, the ground of the assessee is allowed. 14. Ground no. 2 and sub grounds are with respect to the computation of book profit u/s 115JB of the Act. 15. Before CIT(A) assessee had claimed the exclusion of interest subsidy of Rs.3,03,80,678/- from the profits while computing the book profits u/s 115JB of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The issue in the present ground is about the computation of book profits for the purpose of Section 115JB of the Act. It is the case of the assessee that the interest subsidy received by it being capital in nature, the same should be excluded for working of the profits u/s 115JB of the Act whereas it is the case of the Revenue that since there is no specific exclusion provided u/s 115JB, the same cannot be excluded for working out the book profits u/s 115JB of the Act. We find that the identical issue arose before the coordinate bench in the case of Indogulf Cropsciences Ltd. (supra) and the coordinate bench of Tribunal has decided the issue in favour of the assessee by observing as under: - "7. On behalf of the assessee it was submitted that capital receipts are not to be included in computation of book profits and reliance in this regard was placed on the judgment of Coordinate Bench in M/s. Insecticides (India) Ltd. vs. DCIT and the judgment of Calcutta High Court in Ankit Metal and Power Ltd. 2019 (7) TMI 878. It was submitted that this judgment of Hon'ble Calcutta High Court have been followed in the pronouncements as well: i. Principal Commissioner of Income Tax-4, Kol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- pertaining to remission of liability under one time settlement of outstanding loan with ING Vysya Bank was the disputed income which was included by the assessee in its P & L account as income and which the assessee wanted to exclude for the purpose of computing book profits u/s 115JB of the Act. 9.1 However, in the case in hand the issue revolves around the capital receipts of the nature excise duty refund and interests subsidy which without any doubt are receipts of capital nature. Hon'ble Calcutta High Court in the case of Ankit Metal and Power Ltd. (supra) was directly dealing with the question whether the incentives received from the Government for setting up power plant in the backward regions of West Bengal are to be included for the purpose of computation of book profits u/s 115JB and after taking into consideration the judgment of Hon'ble Supreme Court in Appollo Tyres Ltd. (supra) observed that the income in question, in that case was taxable but was exempt under specific provision of the Act, as such it was to be included as a part of book profit. But since a receipt is not in the nature of income at all, it cannot be included in book profit for the purpose of com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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