TMI Blog2023 (11) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT (A) and direct the AO to delete the addition made on account of unutilised MODVAT credit. Club entrance/subscription fee is an expenditure was incurred on account of subscription to clubs for the purpose of promoting and fostering its business relationship and objective of the assessee was to enable its directors to meet various kinds of people in the clubs so that by such meeting they would develop business relationship. See Otis Elevator Co [ 1991 (4) TMI 53 - BOMBAY HIGH COURT] Addition on account sales tax subsidy under the normal provisions and u/s 115JB - We uphold the plea of the assessee and direct the AO to exclude the sales tax incentive subsidy for computing book profit u/s 115 JB of the Act Additional gratuity while computing income under normal provision of the Act. - A.O. was not justified in making this disallowance. Thus, this ground of appeal is allowed. TDS u/s 194A - interest payment made to SBI Bank- Bahrain Branch - disallowance u/s.40(a) - HELD THAT:- As decided in own case AY 2005-06 [ 2023 (2) TMI 1210 - ITAT MUMBAI] CIT(A) in his order has given finding that Bahrain Branch of State Bank of India (SBI) is part of SBI which is g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are denied the benefit, there will be discrimination to them. It is for the reason that there will not be allowed the benefit granted under the statute but withdrawn by way of retrospective amendment. Thus, the impugned amendment will create disharmony among different taxpayers. In view of the above and after considering the facts in totality, we are of the view that the assessee cannot be deprived for the benefit granted to it under the statute by way of retrospective amendment in the given facts and circumstances. Hence, the ground of appeal of the assessee is allowed. Amount withdrawn from share premium account while computing book profit u/s 115JB - We confirm the order of Ld. CIT(A) holding that amount transferred from Share Premium Account to the profit loss account was correctly reduced from Book Profits by the Assessee while computing book profit as per the provisions of Clause (i) of Explanation to Section 115JB(2) of the Act. This ground of appeal in Departmental Appeal is dismissed. Addition of VRS expenditure pertaining to earlier years, capital expenditure debited and write down of value of assets while computing the book profit u/s.115JB - HELD THAT:- C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and allow the same on the payment basis as per law. Therefore, this additional ground raised by the assessee is allowed for statistical purpose. - SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, HON'BLE JUDICIAL MEMBER For the Assessee : Shri Yogesh Thar Ms. Sukanya Jayaram For the Department : Smt. Shailja Rai ORDER PER S. RIFAUR RAHMAN (AM) 1. These are cross appeals pertaining to Assessment Year 2006-07 arising from the Appellate Order dated 6th April 2011 passed by the Ld. Commissioner of income Tax (Appeals) 1 [hereinafter referred to as CIT(A)) whereby appeal filed by Assessee against the Assessment Order dated 30th December, 2008 passed u/s. 143(3) of the Income Tax Act, 1961) hereinafter referred to as the Act) was partly allowed. Further, on similar issue, there are cross appeals for very same assessment year arising from the order u/s 251 passed by CIT(A)-1, Mumbai whereby appeal filed by Assessee against the order giving effect to CIT(A) s order dated 12/09/2011 was partly allowed. 2. The various grounds are raised in present cross appeals requiring adjudication which are taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377;.16,93,37,435 being MODVAT on opening stock) which is required to be added back to total income of assessee considering provisions of Section 145A of the Act. 6. In appeal Ld.CIT(A) has discussed the above issue at Para No. 6.2 and 6.3 of his order and held as under: 6.2 In this regard, the AR of the appellant filed a detailed written submission in support of its contention. The A/R of the appellant submitted that adjustment in the value of the opening and the closing stock in isolation were contrary to the provisions of Sec. 145A, which required adjustment in the value of opening stock, purchases, sales and closing stock. Further my attention was drawn to the relevant annexure forming part of the Tax Audit Report where the tax auditors have, in their report issued u/s 44AB, certified the adjustments on all counts u/s 145A. The net effect of the said adjustments is Nil. Further, the A/R of the appellant submitted that the AO has not given any adverse finding on the tax audit report and particularly, on the adjustments made u/s 145A. It was submitted that, in the tax audit report, the tax auditors have duly adjusted the opening as well as closing inventory. However, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The relevant para of the said decision is reproduced hereunder: 5. We have considered the submissions. It is not disputed that the assessee was liable to excise duty. The assessee got credit in the excise duty already paid on the raw materials purchased by it and utilized in the manufacturing of excisable goods. The assessee was adopting the exclusive method i.e. valuing the raw materials on the purchase price minus (-) the Modvat credit. The same would be permissible. The Apex Court in the case of Indo Nippon Chemicals Co. Ltd. (supra) while affirming the order of High Court, has observed that the income was not generated to the extent of Modvat credit or unconsumed raw material. Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials, that would not amount to income which was liable to be taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same. 6. Considering the above, the amount of the unutilized Cenvat credit could not have been directly added to the closing stock. The Tribunal has not committed any error. (underlined for emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant s A/R submission. Having considered both, I find that the similar issue has been decided my predecessor as well as the Hon ble ITAT in the appellant own case for earlier years. Further my view also gets strength from the decision of Hon ble Bombay High Court in the case of Otis Elevator Co. Ltd. Thus, respectfully following the decision of jurisdictional High Court as well as the decision of Mumbai ITAT in the appellant s own case and also taking note of decision of my predecessor, I sider it proper and appropriate to hold that the A.O. was not justified in making this addition, According the addition so made by the AO is deleted. This ground is thus allowed. 13. Against the observation of Ld.CIT(A), Revenue has filed further appeal. During the course of appellate hearing, Ld. AR of the assessee has relied upon finding of CIT(A) and contended that identical issue is also decided in its favour in A.Y. 1987-88 to 1991-92 and also in A.Y. 2004-05 whereas DR has relied upon finding of Assessing Officer and contended that observation of Assessing Officer may be restored. 14. Similar issue was considered by us in Department Appeal in Ground No 3 in AY 2005-06 and held as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of INR 17,45,829/-, consisting of expenditure incurred on club entrance fee of INR 15,00,000/- and subscription fee of INR 2,45,829/-, is confirmed. Ground No. 1 of the Departmental Appeal is dismissed. 25. It is further observed that on identical issue, Coordinate bench in Para No. 94 to 96 in the case of Ambuja Cement Limited in ITA No 5883/Mum/2012 5927/Mum/2012 (for A.Y. 2005-06) vide order dated 31/10/2022 has dismissed revenue s appeal. Respectfully following the above said decisions as discussed herein above, this ground in Departmental Appeal is dismissed. 15. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 16. In the Ground No 3 16, Department has raised the following grievance: 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 1,51,85,22,523/ - by the Assessing Officer on account sales tax subsidy under the normal provisions and u/S.115JB of the Act, relying on the order of his predecessor without appreciating the new facts brought out by the A. O in the impugned assessment order. 16. On the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R of the assessee has also referred to decision of Hon ble ITAT in its own case for A.Y. 2003-04 wherein identical issue was decided in favour of it. The Ld.AR has also relied upon decision of coordinate bench in the case of Ambuja Cement Limited (referred supra) for A.Y. 2005-06 to 2011-12 wherein sales tax incentives received by assessee for various units set up in different states and availed different incentive schemes as capital receipts. The Ld.AR has also relied upon decisions of various ITAT as well as High court for various different schemes wherein sales tax incentives are treated as capital receipts. On the other hand, Ld. DR has mainly relied upon finding of Assessing Officer and contended that order of Assessing Officer may be restored. 20. Similar issues were considered by us in the AY 2005-06 in Ground No 5 of Department appeal and held as under: 32.Considered the rival submissions and material placed on record. On this issue, coordinate bench in the case of Ambuja Cement Limited in ITA No 5883/Mum/2012 5927/Mum/2012 (A.Y.2005-06) dated 31/10/2022 has held as under: .. The relevant material facts, so far as necessary for adjudication of these grieva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts aggregating to Rs 39,36,21,956 are revenue in nature, and to that extent the Assessing Officer was justified in including the same in taxable income. None of the parties is satisfied. While the assessee is aggrieved of the amount of Rs 39,36,21,956 being included in his taxable income, the Assessing Officer is aggrieved of the learned CIT(A) s granting relief of Rs 130,57,12,796. Both parties are in appeal before us. 6. We have heard the rival contentions, perused the material on record, and duly considered the facts of the case in the light of the applicable legal position. 7. We find that the learned CIT(A) has, in his elaborate analysis, primarily followed the Special Bench decision in the case of DCIT Vs Reliance Industries Ltd [(2004) 88 ITD SB 273 (Mum)]. Upon analysis of this decision, he has noted that for deciding the nature of subsidy, whether capital or revenue, what should be seen and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry , as is also held by Hon ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by CIT (Appeals) so far as Tax Appeal No.226 of 2010 is concerned, wherein the CIT (A), after discussing the evidence has held in favour of the department. In this regard, he has relied upon the decision of High Court of Bombay in the case of CIT v. Reliance Industries Ltd. [2010] 8 taxmann.com 218/[2011] 339 ITR 632, wherein it is held that object of subsidy being to set up new units in backward area is a capital receipt and another decision of High Court of Calcutta in the case of CIT v. Chhindwara Fuels [2001] 114 Taxman 707/[2000] 245 ITR 9, wherein it is held that subsidy in the form of refund of sales-tax received after commencement of production cannot be treated as capital receipt. 8. On the other hand, Mr. Soparkar, learned counsel appearing for the respondent contended that so far as Tax Appeal No.226 of 2010 is concerned, after discussing the evidence on record, the Tribunal has followed earlier decision and discussed the issue in detail in para 54 and 55 of its decision, which reads as under:- 54. Per contra, the learned D.R. Supported the orders passed by the Assessing Officer and the learned CIT (A). Referring to the judgment in Sahney Steel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. In the case of Birla VXL Ltd. (supra), this Court has observed as under:- '12. It can thus be straightaway seen that the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-today functioning of the business, or for making the industry more profitable. The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry. 13. In a recent decision dated 28th January 2013 in Tax Appeal No. 450 of 2012 and connected appeals, we had an occasion to examine the nature of incentives received by the assessee from the State Government in the form of entertaining tax waiver for setting up multiplexes. In such context, we had in wake of the revenues contention that the receipt was revenue in nature, held and observed as under : From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that the character of the subsidy in the hands of the recipient whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of find is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. Such But if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade. 11. He also submitted that in view of above decisions, these appeals may not be entertained. 12. We have heard both the learned counsel and perused the record. We have also gone through the decisions cited befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second, in allowing the manufacturer to collect Excise duty on sale price on the free sale sugar in excess of the normal quota, but to pay to the Government only the Excise duty payable on the price of levy sugar. The Hon ble Supreme Court in para 14 of its decision had held that character of receipt of subsidy has to be determined with respect to the purpose for which the subsidy is given. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. In fact, the Hon ble Supreme Court while rendering this decision had duly considered its earlier decision in the case of Sahney Steel and Press Works Ltd., reported in 228 ITR 253 and had absolutely no quarrel with that judgement. Rather, it concurred with the decision rendered in Sahney Steel and Press Works Ltd., case. In this regard, it would be relevant to reproduce the operative portion of the decision of Hon ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., as under:- 14. The second case is Lincolnshire Sugar Co. Ltd. v. Smart 20 TC 643. In that case it was found that Lincolnshire Sugar Co. Ltd carried on the business of manufacturing sugar fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether by way of refund of sales tax or relief of electricity charges or water charges can be treated as an aid to setting up of the industry of the assessee. As we have seen earlier, the payments were to be made only if and when the assessee commenced its production. The said payments were trade for a period of five years calculated from the date of commencement of production in the assessee's factory. The subsidies are operational subsidies and not capital subsidies. 5.3.6. Yet another decision was rendered by Hon ble Supreme Court in the case of CIT vs. Chapalkar Brothers reported in 400 ITR 279 which held that where the object of respective subsidy schemes of State Government was to encourage development of multiple theatre complexes, incentives would be held to be capital in nature and not revenue receipts. The relevant operative portion of the judgment is reproduced hereunder:- 18. After discussing the judgment in Sahney Steel Press Works Ltd.'s case (supra) this Court then held: The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plex Theatre Complex, has emerged. These complexes offer various entertainment facilities for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct Multiplex Theatre Complexes, the idea being that exemption from entertainment duty for a period of three years and partial remission for a period of two years should go towards helping the industry to set up such highly capital intensive entertainment centers. This being the case, it is difficult to accept Mr. Narasimha's argument that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post construction, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsidy would be revenue nature. The Hon ble Gujarat High Court referred to the relevant subsidy scheme noted that concession was capped @125% of fixed capital investment and could be availed within 9 years. The Hon ble Gujarat High Court after considering the decision of Hon ble Supreme Court both in the case of Sahney Steel and Press Works Ltd., and Ponni Sugars and Chemicals referred to supra had held as under:- 7. From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expansion and diversification of an existing unit. As noted, such subsidy was available only to a new industrial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, new construction, plant and machinery etc. The entitlement was related to percentage of fixed capital investment. 8. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital nature as the object of granting refund of sales tax was that the assessee could set up new business or expand his existing business. The contention of the assessee in that case was dismissed by the Tribunal and, therefore, the assessee had come to this Court by way of a special leave petition. It was held by this Court on the facts of that case and on the basis of the analyses of the Scheme therein that the subsidy given was on revenue account because it was given by way of assistance in carrying on of trade or business. On the facts of that case, it was held that the subsidy given was to meet recurring expenses. It was not for acquiring the capital asset. It was not to meet part of the cost. It was not granted for production of or bringing into existence any new asset. The subsidies in that case were granted year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le was granted. It is true that the exemption was to be computed in terms of tax otherwise payable by the industry. However, the purpose of such exemption was to meet with the capital outlay already undertaken by the assessee. This clearly comes out from various provisions of the scheme. For example, the scheme was applicable only to the new project or to a existing project provided investment in fixed capital or capacity was increased atleast by 50%. Thus, the very eligibility for seeking exemption was linked with new investment being made in fixed capital. Further though the scheme envisaged a certain period spanning for 5 to 10 years during which such exemption could be availed depending on the category of the unit, such exemption would cease the moment the total incentives touched 100% of the eligible capital investments. In other words, the upper limit of total incentive which the unit could receive from the State Government in the form of tax waiver would not exist 100% of the eligible capital investment regardless of the residue of the period of its exemption eligibility as per the scheme. From the combined reading of salient features of the scheme, we have no doubt in our m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be capital in nature as the same was given for industrial development of the backward districts as well as generation of employment. However, the matter was referred to the Special Bench as it was alleged that the decision for AY 1985-86 was virtually overruled by subsequent decision of the Mumbai Tribunal in the case of Bajaj Auto Ltd (ITA No. 49 and 1101 of 1991). The Special Bench held that the decision of Bajaj Auto has not overruled the decision of Hon ble Mumbai Tribunal for AY 1985- 86 on the following basis: i) There cannot be any question of overruling the decision of one Bench by another bench of equal strength as it would be contrary to the established norms of judicial system in the country. ii) Even on merits it cannot be said that the Tribunal has laid out more stress on the form of the scheme and not their substance as held in Bajaj Auto as the Tribunal in the order for AY 1985-86 has explained the difference between exemption schemes of Maharashtra and Andhra Pradesh in detail. iii) Reliance placed by Tribunal in Asst Year 1985-86 on the decision of Hon ble Supreme Court in the case of Sahney Steel Press Works Ltd. v. CIT (228 ITR 253) ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent on this Division Bench. In fact, in assessee s own case for A.Y.2001-02 in ITA No.778 of 2015 dated 18/12/2018 before the Hon ble Jurisdictional High Court, wherein the question Nos. c d was exactly on this point. For the sake of convenience, the question Nos. c d raised by the Revenue before the Hon ble Jurisdictional High Court is reproduced hereunder:- (c) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in restoring the issue of taxability of the sale tax exemption benefit of Rs.58 crores availed by the assessee to the file of the Assessing Officer for deciding afresh after considering the decision of the Special Bench of the ITAT in the case of DCIT V. Reliance Industries Ltd., 88 ITD 273, which has not been accepted by the Revenue? (d) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in entertaining the additional ground without appreciating that the assessee had treated the amount of sales tax exemption benefit of Rs.58 crores as revenue receipt and had included this amount in the returned income and it had been taxed accordingly and the assessee did not rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. In earlier orders, the Revenue had approached the Court against the similar orders of the Tribunal. The High Court on two occasions, in the order dated 27.09.2016 and 22.11.2016 passed in Income Tax Appeal Nos. 475 of 2014 and 102 of 2014 respectively had not entertained the challenge of the Revenue. In any case, it was contended that the facts on record are available and the Tribunal has merely asked the Assessing Officer to take a decision on the assessee's contention. 5. As long as the material exists on record, a contention raised by the assessee for the first time before the Tribunal, cannot be barred. So much is clear from series of judgments of various Courts including of this Court in case of CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. (2012) 349 ITR 336. It is not the case of the Revenue that the assessee in the context of its contention on the nature of the subsidy, desired to produce additional evidence. It is true that the judgment of this Court confirming the order of the Tribunal in case of Reliance Industries Ltd. has been partially reversed by the Supreme Court. A question of law has been framed and placed for consideration of the 4 of High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. (supra) is concerned, it still holds the field. All that has happened, as a result of Hon'ble Supreme Court's decision dated 9th September 2011, is that Hon'ble Bombay High Court has now admitted the question whether, on the facts and circumstances of the case, the Hon'ble Tribunal was right in holding that sales tax exemption was a capital receipt and will, in due course though, adjudicate on this legal issue. To that extent, Hon'ble Bombay High Court's order dated 15th April 2009, to the extent of declining to admit this question, stands reversed. However, the decision of the Special Bench still holds good as the same has not, and at least not yet, even been examined by Hon'ble Bombay High Court. Mere admission of appeal against a decision, as is elementary, does not affect the biding nature of a judicial precedent. The Special Bench decision, in the case of Reliance Industries Ltd. (supra), was not reversed by Hon'ble Supreme Court, but was directed to be examined, on merits, by Hon'ble Bombay High Court. That is quite different from disapproving the special bench decision, but it appears that the coordinate bench was led to believe, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same as in the case of Ajanta Manufacturing Ltd. (supra). All the material facts being the same, there is no reason to take any other view of the matter than the view so taken by the coordinate bench. We must, therefore, uphold the conclusions arrived at by the Commissioner (Appeals), which are in consonance with the Special Bench decision in the case of Reliance Industries Ltd. (supra) and coordinate bench decision in the case of Ajanta Manufacturing Ltd. (supra), and decline to interfere in the matter. (emphasis supplied by us) 5.4.6. In view of the above, no fault could be attributed on the ld. CIT(A) placing reliance on the decision of the Special Bench of the Tribunal and granting relief to the assessee in the instant case. 9. In the Special Bench decision in the case of Reliance Industries Ltd (supra), what came up for consideration was specifically the sales tax subsidy, and that decision, as we seen in the elaborate analysis of the coordinate bench- as extracted above still holds good in law. In the case of CIT Vs Chaphalkar Brothers [(2018) 400 ITR 279 (SC)], Hon ble Supreme Court has held that where the object of respective subsidy schemes of State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that when a receipt is not in the character of income as defined under section 2(24) of the I.T. Act, 1961, then it cannot form part of the book profit u/s 115JB of the I.T. Act, 1961. The Hon'ble High court, further observed that sales tax subsidy received by the assessee is capital receipt and does not come within definition of income under section 2(24) of the I.T. Act, 1961 and when, a receipt is not a in the nature of income, it cannot form part of book profit u/s 115JB of the I.T. Act, 1961. The Court, further observed that the facts of case before the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) were altogether difference, where the income in question was taxable, but was exempt under a specific provision of the Act, and as such it was to be included as a part of book profit, but where the receipt is not in the nature of income at all, it cannot be included in book profit for the purpose of computation u/s 115JB of the I.T. Act, 1961. 48. We further noted that the ITAT special bench of Kolkata Tribunal, in the case of Sutlej Cotton mills Ltd. v. Asstt. CIT [1993] 45 ITD 22 (Cal.) (SB), held that a particular receipt, which is admittedly not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 2011-12 as stated supra. It is observed that various observations made by AO and arguments made by Ld. DR are already dealt with by various decisions referred supra hence there is no reason to deviate from the finding given by Coordinate Bench referred supra. Thus, sales tax incentives received by assessee are rightly considered as Capital Receipts by Ld.CIT(A). 34. In the result, ground of appeal raised by the Departmental is dismissed. 21. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 22. In the Ground No 4, Department has raised the following grievance: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the provision for additional gratuity amounting to Rs.3,20,98,901/- while computing income under normal provision of the Act. 23. The Assessing Officer has dealt with the issue at Para No. 11.1 of Assessment Order. The Assessing Officer has observed that in original return of income, appellant has disallowed additional gratuity. However, in revised return of income, appellant has claimed such amount as deduction on the ground that Hon ble ITAT in A.Y. 1990-91 has allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Year 1990-91 (ITA No. 2361/Mum/95). In view of the aforesaid, we are not inclined to interfere the order of CIT(A) on this issue. Accordingly, Ground No. 22 raised by the Revenue is dismissed . 27. Respectfully following decision of Coordinate Bench in assessee s own case as discussed herein above, this ground in Departmental Appeal is dismissed. 28. In the Ground No 5, Department has raised the following grievance: On the facts and in the circumstances of the case and in law the CIT(A) erred in deleting the addition of Rs.6,71,43,085/- in respect of interest payment made to SBI Bank- Bahrain Branch holding that provisions of Sec. 194A is not applicable and hence disallowance u/s.40(a) is not called for. 29. The Assessing Officer has dealt with the issue at Para No. 13 to 13.3 of Assessment Order. The Assessing Officer has observed that Assessee Company has not made any disallowance u/s 40(a)(i) for interest on ECB Loan from State Bank of India, Bahrain on the ground that State Bank of India being a Banking Company under the Banking Regulation Act, 1990, provision of Section 194A is not applicable. This contention of assessee is not found acceptable to Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident banking company does not come within the purview of TDS as per the provision of section 194A(3)(iii) of the Act. The only dispute is with regard to the residential status of lender of external commercial borrowings to the assessee and interest payment on such external commercial borrowings. The assessee claims that it has borrowed external commercial borrowings from Singapore branch and which is a main lender of the loan. Therefore, any interest payment to ICICI Bank Ltd., Singapore branch is not coming within the provisions of section 195 of the Act. No doubt, any payment made to a resident banking company is outside the purview of provision of section 195 of the Act. Similarly, any payment made to a non-resident including a banking company is coming within the provision of section 195 of the Act. The primary dispute is with regard to the residential status of payee in Singapore and the lender of external commercial borrowings. As per the letter of Jt. CIT(OSD)-3(1), Mumbai, the residential status of the ICICI Bank Ltd., has been clarified .. 46. It is observed that Ld.CIT(A) in his order has given finding that Bahrain Branch of State Bank of India (SBI) is part of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order as in para 15.9 to 15.12 of the order. Following the rule of consistency, I am in full agreement with my predecessor s Hence, I hold that the appellant company is not eligible for deduction u/s.80-1A in respect of TG 2 as held in para 15.1 of the appellate order referred above. However, in respect of TG 3 on the similar analogy, I direct the A.O. to allow the deduction u/s.80-IA to the appellant as held by my predecessor in para 15.12 of the appellate order. With this observation, the appellant this ground of appeal is partly allowed. 38. Against the observation of CIT(A), Revenue has filed further appeal for deduction u/s 80IA claimed for TG-3 whereas Assessee has filed further appeal for deduction u/s 80IA claimed and denied for TG-2. Both Ld AR and DR have relied upon arguments as were made in appellate hearing for A.Y. 2005-06 in assessee s own case. 39. Similar issue was considered by us in the Department Appeal in Ground no 9 and held as under: 60.Considered the rival submissions and material placed on record. The Assessee has claimed deduction u/s 80IA on two units purchased from Tata Power Limited and such deduction is denied on the ground that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire business of TG-2 and TG-3 power plant was transferred to the assessee. The undertaking of the assessee was not formed by the splitting up of the business. On this issue, Hon ble Bombay High court in the case of CIT v. Sonata Software Ltd [2012] 21 taxmann.com 23 has held as under:- Section 10A of the Income-tax Act, 1961 - Free trade zone - IOCL set up a software division in 1980s - IOCL made an application for setting up an undertaking in a Software Technology Park (STP) for which an approval was obtained on 30-9-1993 - Plant and machinery for said undertaking was imported in July, 1994 and first export was effected in October, 1994 - Thus, manufacturing activities, commenced in STP undertaking after stipulated date of 1-4-1994 as provided in section 10A - Subsequently, in October 1994 itself, IOCL transferred entire software division as a going concern on slump sale basis to assessee - It was apparent from records that ownership of business or undertaking changed hands and, thus, it could not be regarded as a case of reconstruction - It was also undisputed that entire business of software was transferred to assessee, and, thus, assessee-undertaking could not be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Bombay High Court in the case of CIT v. Dandeli Ferro Alloys P. Ltd. [1995] ITR 1, in which the Bombay High Court held that the facts on record clearly established that the amalgamated company was already incorporated and formed and had come into existence on March, 1973 and had become an industrial undertaking carrying on industrial and commercial activities on and from June 20, 1973, i.e., prior to the amalgamation of the amalgamating company with the amalgamated company, which had become effective from October 31, 1973. The amalgamated company was not formed by the splitting up, or the reconstruction, of a business already in existence. Therefore, the Tribunal was right in holding that the assessee company was entitled to relief under sections 80J and 80HH of the Act . 63. The CBDT had also accepted the above legal position with regard to deduction under section 84 of Income Tax Act, 1922 (Section 80J of Income-tax Act, 1961), way back in 1963 and clarified the matter vide Letter: F No 15/5/63-IT (A-I), dated 13 December 1963, which reads as under:- The Board agree the benefit of section 84 attaches to the undertaking and not to the owner, thereof. The succ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that unit is established by split up or reconstruction of entire business. Considering ratio laid down by various courts as referred supra, assessee is entitled to deduction u/s 80IA on two units purchased from Tata Power Company Limited. 67. It is emanating from assessment order and order of Ld.CIT(A) that TG-2 started commercial production from 1 st April 1995 and no deduction was claimed till A.Y. 1998-99 as such unit was incurring losses. The assessee was eligible for deduction u/s 80IA for such unit in A.Y. 1999-2000 but no deduction was claimed as there was no positive Gross Total Income of assessee but it is fact that assessee was eligible for deduction was mentioned in notes forming part of return of income. It is undisputed fact that Assessing Officer has not disputed such claim in assessment proceedings. Subsequently, such unit was transferred to Tata Power Company and was again re-purchased by assessee in current year and assessee has claimed deduction u/s 80IA. So far as observation of Ld.CIT(A) that assessee is not entitled for such deduction as 80IA was not claimed by undertaking during the period A.Y.2000-2001 to AY 2004-05, it is observed that Ld.CIT(A) hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 80IA/80I/80IC. 7. That on the facts and in the circumstances of the case, and without prejudice to the Ground No. 6, taken here-in-above the Ld. CIT (Appeals) has grossly erred in not considering the additional ground in respect of inclusion of turnover of the respective tax holiday unit in arriving at the total turnover for quantifying proportionate amount of disallowance of Indirect Head Office expenses in computing deduction u/s 80IA/80IB/80IC 43. The Assessing Officer has dealt with the issue at Para No. 14.6 to 14.9 of Assessment Order. The brief facts of the case as discussed in assessment order are that assessee has claimed deduction u/s 80IA with respect to its power plant at Kymore, Jamnul Wadi and has not apportioned Head Office expenses at listed at Para No. 14.8 of assessment order on the ground that same does not have any direct nexus with such units. However, such explanation was not accepted by Assessing Officer and allocated such expenses on the basis of turnover of assessee company and turnover of respective power units. 44. This issue is dealt by CIT(A) at Para No. 16.3 of his order as under: 16.3 I have considered the A.O. s order as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the stand of the assessee that the head office expenses cannot be allocated to all the units, as deductions and allowance of eligible units are required to be taken into account while treating such units as profit centres, and computing the profits accordingly. The fiction of the eligible units being treated on a standalone basis does not require that the profits of the units are to be computed as if they are independent of each other, and once that fiction sets in, the expenses incurred by someone other than eligible unit, in the interest of the eligible unit, are to be taken into account while computing the profits of the eligible unit. Accordingly, the allocation of expenses, as the learned Assessing Officer rightly contends, must be done. The assessee has further contended that HO expenses are not derived from‟ or derived by‟ the eligible undertakings, and, for this reasons, these expenses cannot be allocated to the eligible undertaking. We see no reasons to decline allocation of head office expenses to ensure that the profits of the eligible units are correctly worked out, on the basis of hypothetical independence embedded in the eligible units being treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate order passed in its own case for A.Y. 2002-03 to 2004-05 and contended that no such adjustment is required to be made. The Ld. DR has relied upon finding given by Assessing Officer and argued that order of Assessing Officer may be restored. 51. Similar issue was considered by us in the Department Appeal Ground no 11 in AY 2005-06 and held as under: 80.Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee s own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided issue in its favour. The relevant finding is reproduced herein below: 14.2.3. Revenue is in appeal, challenging the relief granted by CIT(A). We have heard the rival contentions and perused the record. While the Departmental Representative relied upon the assessment order, the Authorised Representative of the Assessee reiterated the submissions made before the lower authorities and relied upon the decision of the Tribunal in Assessee s own case for the Assessment Year 2002-03 and 2003-04 wherein the Tribunal had granted relief to the Assessee. 14.2.4. We note that the Hon ble Bombay High Court has, in the case of CIT vs. Echj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by CIT(A) for the A.Y. 1998-99 also and against the said decision, the revenue is not in appeal. It is reiterated that the adjustment can only be made in view of Section 115JB of the Act which has been specified in Explanation to Section 115JB of the Act. In view of the said circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. (Emphasis Supplied) 14.2.6. In view of the above, we confirm the order of CIT(A) and hold that provision for Wealth-Tax of INR 70,00,000/- is not required to be added back while computing Book Profits under Section 115JB of the Act. Accordingly, Ground No 8 raised by the Revenue is dismissed. 81. Respectfully following the decision of coordinate bench referred supra, addition of provision for wealth tax made while computing book profit u/s 115JB is deleted. Accordingly, this ground of appeal in Departmental Appeal is dismissed . 52. Respectfully following the above decision, we dismiss the ground raised by the revenue. 53. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 14.3.4. We note that in the immediately preceding assessment year (AY 2003-04), identical issue has been decided in favour of the Assessee. The relevant extract of the common order, dated 13.03.2019, passed by the Tribunal in 4242 4988/MUM/2007 for the Assessment Year 2003-04 reads as under: 46. Under this issue the revenue has challenged the allowance of claim of provision for additional gratuity in computing book profit u/s 115JB of the Act amounting to ₹.1,21,90,817/-. The proposition is the same which has been discussed above while deciding the issue no. 15. The finding of the CIT(A) in this regard is hereby reproduced as under.: 38.2 I have considered the submission made on behalf of the appellant. Respectfully following the order of Hon ble Tribunal for the A.Y. 1990-91 as well as my own orders for AY 1998-99 in appeal no. CIT(A)- I/IT/232/04-05 the addition made by the Assessing Officer is deleted and the ground stands allowed in favour of the appellant. 47. On appraisal of the said finding, we noticed that this issue has been covered by decision of Hon ble ITAT in the assessee s own case for the A.Y. 1990-91 in ITA. No.2361/M/1995 in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue has been decided by my predecessor in A.Y.-2004- 05 2005-06 in favour of the appellant. Hence on the basis of reasoning given in the aforesaid orders, I consider it proper and appropriate not to deviate from the orders of erstwhile CIT(A) referred as above. Thus, this ground of appeal is accordingly adjudicated. 60. Against the observation of Ld.CIT(A), department has filed appeal. Before us, Ld. AR has relied upon appellate order passed in its own case for A.Y. 2002-03 to 2004-05 and contended that no such adjustment is required to be made. The Ld. DR has relied upon finding given by Assessing Officer and argued that order of Assessing Officer may be restored. 61. Similar issue was considered by us in the Department Appeal in Ground No 13 in AY 2005-06 and held as under: 89.Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee s own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided this issue in its favour. The relevant finding is reproduced herein below: 14.4.4. We have considered the rival contentions and perused the material on record. We note that the CIT(A) has granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f erstwhile CIT(A) referred as above. Thus, this ground of appeal is accordingly adjudicated. 65. Against the above observation of CIT (A), department has filed further appeal. The Ld. AR has relied upon the finding of CIT(A) and contended that Section 115JB is an alternative mode of taxation where taxation is not on the basis of total income as computed under the Act but it is on the basis of the book profit computation. The AR has mainly relied upon following decisions in support of claim. (i) CIT v. Bhari Information Technology Systems (P.) Ltd. [(2012) 340 ITR 593 (SC)] (ii) DCIT v. Syncome Formulations (I) Ltd. [2007] 106 ITD 193 (Mumbai Tribunal) (SB)] 66. The Ld. DR has relied upon finding given by Assessing Officer and argued that order of Assessing Officer may be restored. 67. Similar issue was considered by us in the Department Appeal in Ground No 18 in AY 2005-06 and held as under: 118. Considered the rival submissions and material placed on record. It is relevant to refer to provisions of Section 115JB on statue for year under consideration. (iv) the amount of profits eligible for deduction under section 80HHC, computed under clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation 1 to section 115JB of the Act was very much in force. The provisions of section 294 of the Act provides that the provisions specified under the statute as on 1st day of the assessment year shall be prevalent. As such, the clause (iv) of explanation 1 to section 115JB of the Act was very much in force as on the 1st day of the assessment year. Accordingly the assessee contended that it cannot be denied the benefit of the deduction provided under clause (iv) to section 115JB of the Act. 96.2. However, the Assessing Officer disregarded the contention of the assessee by observing that the amendment by the Finance Act 2011 was brought under the statute with retrospective effect i.e. 1-4-2005 wherein the benefit given to the assessee under clause (iv) of explanation 1 of section 115JB of the Act was denied to the assessee. Accordingly, the AO did not allow the deduction of the amount of ₹ 79,58,97,799/- to the assessee while calculating the amount of profit under section 115JB of the Act. 97. Aggrieved assessee preferred an appeal to the learned CIT-A, who confirmed the order of the AO by observing as under: I have considered the assessment order, facts on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject to the conditions specified in that section; or 101.1. The above benefit to the assessee was denied by the Finance Act 2011 with retrospective effect 01-04-2005. Admittedly, at the time of filing the return of income the assessee was entitled for the benefit as discussed above. But on a later date there was an amendment by the finance Act 2011 which denied the benefit to the assessee with retrospective effect. The Hon'ble Supreme Court in the case of Star India Pvt. Ltd vs. Commissioner of Central Excise reported in 280 ITR 321 has held that the benefit granted under the statute to the assessee cannot be withdrawn by way of retrospective amendment. The relevant extract of the Judgment reads as under: It was clear from the language of the validation clause of section 148 of the Finance Act, 2002, that the liability was extended not by way of clarification but by way of amendment to the Finance Act with retrospective effect. It is well-established that while it is permissible for the Legislature to retrospectively legislate, such retrospectivity is normally not permissible to create an offence retrospectively. There were clear judgments, decrees or order of cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound raised by the department is dismissed. This ground of appeal in Departmental Appeal is dismissed. 68. Respectfully following the above decision, we dismiss the ground raised by the Revenue. 69. In the Ground No 12, Department has raised the following grievance: On the facts and the circumstances of the case and in law the CIT(A) erred in directing the AO to exclude Rs 13,00,000/- being amount withdrawn from share premium account while computing book profit u/s 115JB of the Act. 70. The Assessing Office has dealt with this issue at Para No. 26.1 of his order and referred to decision of Hon ble Supreme court in the case of Apollo Tyres Limited 255 ITR 273 and observed that reduction claimed by the assessee on account of withdrawal from share premium amount does not come under any of the items stated in the explanation and he denied such deduction as claimed in return of income. This issue is dealt by CIT(A) at Para No. 24.2 of his order as under: 24.2 I have considered the A.O. s order as well as the appellant s A/R submissions. Further I have also taken note of earlier orders in the appellant s own case of Hon'ble ITAT as well as of my predecessor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹.76,63,200/- is deleted. Hence this ground of appeal is allowed. 51. On appraisal of the above said finding, we noticed that the claim of the Revenue is in connection with the deletion of addition made in respect of amount withdrawn from share premium account in computation of book profit u/s 115JB of the Act. The claim was allowed in view of the decision of Hon ble ITAT Mumbai in the assessee s own case for the A.Y.1990-91 in ITA. No. 5259 4895/Mum/2007. Further the matter has been adjudicated by Hon ble ITAT in the assessee s own case for the A.Y. 1998- 99 in ITA. No.6320/M/2003. Since the case of the assessee has squarely covered by decision of the Hon ble ITAT in the assessee s own case, therefore, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. (Emphasis Supplied) 21.4. In view of the above, we do not find any infirmity in the order passed by CIT(A). Accordingly, we confirm the order of CIT(A) holding that amount of INR 9,66,64,158/-, transferred from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that order of Assessing Officer may be restored. 77. Similar issue was considered by us in the Department Appeal in Ground No 16 in AY 2005-06 and held as under: 104. Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee s own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided this issue in favour of assessee. The relevant finding is reproduced herein below: 6.4. We have considered the rival contentions and perused the material on record. The CIT(A) has allowed the claim of the Assessee applying the principles laid down by the Hon ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT (supra), The accounts of the Assessee have been prepared in accordance with Parts II and III of Schedule VI to the Companies Act and the same has been duly certified by the statutory auditors, and therefore, in absence of any specific clause in Section 115JB(2) of the Act providing for increase of Book Profits by the amount of VRS expenses, no further adjustment is called for on this account. In the immediately preceding assessment year (AY 2003-04), identical issue has been decided in favour of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt by CIT(A) at Para No.26.4 of his order as under. 26.4 I have considered the A.O. s order as well as the appellant s A/R submission. Having considered both, I find that similar issue has been decided by my predecessor in favour of the appellant. Hence considering the same, I consider it proper and appropriate not to deviate from the orders of erstwhile CIT(A) and accordingly allow the claim of the appellant. This ground is thus allowed. 81. Against the observation of CIT(A), department has filed appeal. Before us, Ld. AR relied upon finding of CIT(A) and argued that issue is in favour of assessee by decision of Coordinate Bench for A.Y. 2002-03 to 2004-05. The Ld. DR has relied upon finding given by Assessing Officer and argued that order of Assessing Officer may be restored. 82. Considered the rival submissions and material placed on record. On this issue, coordinate bench in assessee s own case for A.Y. 2004-05 in ITA No 5259/MUM/2007 dated 27/05/2022 has decided the issue in favour of assessee. The relevant finding is reproduced herein below: 17. Ground No. 16: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case for the A.Y. 2002-03 (supra), therefore, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue. 17.5. Applying the principles laid down by the Hon ble Supreme Court in the Apollo Tyres Ltd. (supra) and respectfully following the decisions of the co-ordinate bench of the Tribunal in the case of the Assessee for the Assessment Year 2002-03 (ITA No. 4987/Mum/2007 others) and Assessment Year 2003-04 (ITA No. 4988/Mum/2007), we confirm the order of CIT(A) holding that capital expenditure of INR 14,16,56,815/- debited to Profit Loss Account is not required to be added back while computing book profits under Section 115JB of the Act. Accordingly, Ground No. 16 raised by the Revenue is dismissed. 83. Respectfully following decision of coordinate bench referred supra, we uphold finding of CIT(A) for deleting addition being capital expenditure debited to Profit Loss account comprising of WDV of assets and on account of cost not owned by company in computing book profit. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserved in computing group profit of provisions of section 115JB of ₹.50 crores. 5.1. During the course of hearing before us, representatives of both the sides agreed that identical issue had been decided in favour of the assessee, by the Tribunal while adjudicating the appeals for AY.s.1997-98 (ITA/3298/Mum/01), 1998-99 (ITA/639/M/03), 1999-00 (ITA/7594/Mum/04), 2000-01 (ITA/9570/Mum/04). We find that the decision of the Tribunal for AY.1998-99 for exclusion debenture redemption reserved had not been challenged by the department before the Hon'ble High Court and thus the order has attained finality. It is also found that the Hon'ble Bombay High Court of Bombay had dismissed the departmental appeal with regard to the issue while deciding the appeal for AY 1999-00. Considering the above facts we decide the last additional ground against the AO. 130 It is matter of fact that department has not challenged the appellate order of A.Y. 1998-99 before Hon ble High court and matter has attained finality. Hon ble Bombay High court in the case of Raymond Limited [2012] 21 taxmann.com 60 has held that Amount set apart as a Debenture Redemption Reserve (DRR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g perused the same, I find that it has been clearly mentioned in the said office memorandum that industries `eligible for such incentive will be environment friendly with potential for local employment and use of local resources. In para3.1 of the said office memorandum, it has been mentioned that fiscal incentive to new units and existing units on their substantial expansion as defined. Even the exemption of excise duty for a period of 10 years outright granted from the date of commencement of commercial production. Thus, it is clear that the excise duty subsidy is provided with the intention of providing opportunity to local employment and use of local resources. Further to that, the subsidy in the form of 100% outright exemption is provided for a period of 10 years from the date of commencement of commercial production. Thus, meaning of the said scheme is that the excise duty exemption incentive, which the appellant has claimed as capital in nature will arise only to the appellant, if it commenced the production after substantial expansion as envisaged under the aforesaid memorandum dated 07/01/2003. Further to that this expansion of the existing unit must generate potential for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the details submitted by the appellant suggests that the expansion as claimed by appellant company was undertaken admittedly for enhancement of production of capacity of the following; - Before expansion as on 06.01.2003 Addition on expansion % of Increase Remarks 1. Production capacity a) Production capacity of clinker b) Installed capacity of cement 2700 TPD 9.84 LTPA 1800TPD 10.16 LTPA 67% 103% 2. Investment in plant and machinery 16,190.50 lacs 10,983.72 lacs 68% Details as per annexure1(b) 3. Connected land 26,635 MW 4.10 MW 15% 4. Employment 564 nos. - - 9.8 It is apparently evident that enhancement of production of capacity of clinker comes at Serial No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26/06/06, and stated that:- The notification No.50/2003-(Supra) does not cast any legal obligation on them to submit any of the list documents or called for. The contention that in absence of these documents we would not be eligible to the exemption granted under the said notification is not legally sustainable. ii) That the only requirement under notification No. 50/2003-(supra) is to file an option letter with the Assistant Commissioner of Central Excise which they have very diligently complied with vide their communication dated 07/03/05. The unit has also complied with all other legal formalities for carrying out substantial expansion, viz. obtaining permission from the Director of Industries, State of Himachal Pradesh, for carrying out substantial expansion and after carrying out substantial expansion ACC Gagal-I has from time to time kept the department informed regarding the commencement of trial production and subsequently the commencement of commercial production. Necessary certificates confirming that the expansion has been undertaken have also been obtained from the Director of Industries and District Industries Centre. iii) Without prejudice to the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was completed on 03/05/05 though no proof or evidence from any of the agency was furnished who might have carried out the expansion plan as stated by the appellant to suggest or establish that the commissioning of expansion of Gagal Unit I has taken place. The appellant company merely filed huge list of plant machinery giving details as per Annexure 1(c) of part F of submission from page 2034 to 2052 stating the invoice number, date, supplier name and description of material. The perusal of the same suggest that a substantial number of invoices are of date prior to office memorandum No.l(10)/2001/NER dated 07/01/2003 notification number 50/2003 central excise dated 10/06/03. The same are enumerated in Sr. No.l to 118 from page 2034 to 2037 Serial number 121, 123, 213. This clearly establish that the investment which are claimed to be invested in compliance to notification no.50/2003 dated 10/06/03 is not correct, but basically same was in a normal course of upgradation plan of the plant which find place of mention in the Annual report of the appellant company of F.Y.-2003-04 as stated above. Even I find that the subsequent details of different invoices are purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alles. 3. The existing unit after expansion will not be entitled for any additional/ new benefits/incentives under the existing incentive rules 1999 of the state Govt. 4. The additional power can be made available by HPSEB at 132 KV. 5. In this regard following facts are needed to be taken on record. a) The application for expansion was made through letter dated 29/10/04 for approval of General Manager, Distt. Industrial Centre, Bilaspur (appearing on page 149 150 of paper book of part A) and another letter dated 23/11/05 from Director of industries, Himachal Pradesh, which merely says that proposal of undertaking has been taken on record. The letter of director of industries of 23/11/05 is appearing on page 166 of paper book of part A, which merely states of keeping the proposal for undertaking substantial expansion on record, but it is clear from the above stated facts in earlier para s that the appellant claim that expansion was completed on 03/05/05 itself is in doubt. In addition to this, the appellant s reference of sanction /6r approval of expansion plan by letter of director of industries dated 05/07/04 was made in following manner. The same is extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat purpose of incentive of exemption of Central Excise is production operation based only as the same is available to the appellant company only after the commencement of commercial production only. Thus, the crucial point is that such incentive of exemption of Central Excise of production incentive in the sense that the appellant would be entitled to such fiscal incentive only after it goes to commercial production. Hence, such receipt could be trade receipt or revenue receipt only following fundamental rule of purpose test as envisaged by the Apex Court in the case of Sahney Steel Press Works Ltd. Vs. CIT (1997)228ITR 253 (SC) and CIT vs. Ponni Sugars Chemicals Ltd, (2008) reported in 306 ITR 392 (SC). In the background of above stated facts of the receipt of exemption of Central Excise which arise to appellant company only subsequent to commencement of commercial production only, I am of the considered view that the appellant claim raised through this ground of appeal is or from the spirit of truth of the notification of Govt, of India as discussed earlier. 9.15 Hence, in my considered view, such receipt can only be held to be revenue receipt and by no stretch of imagi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allowed. On the other hand, Ld. DR has relied upon finding of Assessing Officer and CIT(A) in year under consideration. Further she relied on the ruling of AAR New Delhi (2007) 165 taxmann.com 627 and argued that finding of the authorities needs to be confirmed. 97. Considered the rival submissions and material placed on record. On this issue, coordinate bench in the case of Ambuja Cement Limited in ITA No 2428/Mum/2013 2366/Mum/2013(A.Y.2006-07) dated 31/10/2022 has held as under: 17. So far as this grievance of the assessee is concerned, the relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has availed excise duty exemption, amounting to Rs 46,83,11,376, in respect of their Darlaghat Unit, HP, and it was claimed as a capital receipt in nature. It was also noted that in terms of general Exemption No, 51 (Notification No. 50/2003 dated 10th June 2003) the assessee is entitled to 100% excise duty exemption for a period of ten years in respect of its cement manufacturing plant at Darlaaghat. The assessee s submission was that this exemption was in response to the announcement made by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no longer a relevant test. What is material is as to what is the purpose of the scheme in question, and a call about the object and purpose of the scheme is to be taken in a holistic manner and on the basis of the scheme on an overall basis. The approach adopted by the learned CIT(A) was not only legally incorrect but wholly superficial. The following observations by Hon ble jurisdictional High Court, in the case of PCIT Vs Welspun Steel Limited [(2019) 103 taxmann.com 436 (Bom)] are relevant in this regard 6. Having heard the learned Counsel for the parties on this question, we notice that, the Government of Gujarat Sales Tax Incentive Scheme was envisaged to promote large scale investments in the Kutch District since on account of devastating earth-quake, development of the district had suffered. The Scheme envisaged that, the same was confined only with the Kutch District. Similar, being the purpose and philosophy of the Government of India, while granting excise duty exemption, we may not separately take note of the back-ground thereof. In view of these facts, the question arises is - whether the Tribunal was justified in holding that Sales Tax and Excise duty exemption e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e complexes offer various entertainment facilitate for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that Government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to multiplex theatre complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct multiplex theatre complexes, the idea being that exemption from entertainment duty for a period of three years and partial remission for a period of two years should go towards helping the industry to set up such highly capital intensive entertainment centres. This being the case, it is difficult to accept Mr. Narasimha's argument that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post construction, that is when cinema tickets are actually so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd tribal areas were undeveloped or under-developed. Entrepreneurs were not willing to set up industries in such undeveloped or underdeveloped areas. The industries were concentrating only in urban areas. In other words, rapid urbanization was taking place. So far as the State of Gujarat is concerned, there was rapid industrial growth in cities like Baroda, Ahmedabad and Surat resulting in strain on municipal services. Urbanization created several problems such as pollution, growth of slums etc. It was also necessary to have balanced growth of industry in different regions. However, as pointed out above, entrepreneurs were reluctant to set up industries in backward areas. These areas were identified as backward because there was un-development or underdevelopment of industries in these areas. It was, therefore, that the Government decided to give financial incentives to encourage and induce entrepreneurs to move to backward areas and establish industries there so that the region may develop and promote the welfare of the people living in that region. One of the incentives which the Government decided to grant was cash subsidy so that entrepreneurs could utilize such cash subsidy fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the basis adopted for determining the cash subsidy with reference to the cost or value of fixed assets was only a measure for quantifying the subsidy and it could not be said that the subsidy was given for the specific purpose of meeting any portion of the cost of the fixed assets. The subsidy was granted to compensate the entrepreneur for the hardship and inconvenience which he might encounter while setting up industries in backward areas. 11. Similar issue came up for consideration again before the Gujarat High Court in CIT v. Swastik Sanitary Works Ltd. [2006] 286 ITR 544. It was a case in which, the Government subsidy was intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries. In such a case, specified percentage of the fixed capital cost, which was the basis for determining the subsidy, would be granted. The Court held that, such basis for determining the subsidy was only a measure adopted under the scheme to quantify the financial aid and it was not a payment, directly or indirectly to meet any portion of the actual cost of acquisition of capital asset. It was held and observed as under: ' In so far as que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deleted. In the result, related grounds in Assessee s Appeal are allowed. 99. In the Ground No 2 Assessee has raised the following grievance: 2. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in directing the AO to determine the direct and indirect expenditure for disallowance u/s 14A inspite of the fact that no such expenditure was incurred for earning the exempt income. 100. The Assessing Office has dealt with this issue at Para No. 4 of his order. The relevant facts are that Assessee has shown exempt dividend income of ₹.26,04,97,698/- in Return of Income. The Assessing Officer has observed that while filing return of income, assessee has not made any suo moto disallowance for expenditure incurred for earning exempt income. He observed that Rule 8D has been framed according to provisions of Sub Section 2 3 of Section 14A of the Act and such Rule 8D has retrospective operation of law. The Assessing Officer has relied upon decision of Mumbai ITAT decision in the case of Daga Capital Management Pvt Limited in support of its claim. He computed disallowance under Rule 8D read with Section 14A at ₹.8.80 crore which compr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions. (i) South Indian Bank Ltd. v. CIT [(2021) 438 ITR 1 (SC)] (ii) HDFC Bank v. DCIT [(2016) 383 ITR 529 (Bombay HC)] (iii) CIT v. HDFC Bank Ltd. (366 ITR 505) (Bom.) (iv) Reliance Utilities Power Limited (313 ITR 340) (Bom.) 103. The Ld.AR of the assessee has alternatively contended that in the case of Ambuja Cement Limited, Mumbai ITAT has considered disallowance u/s 14A @ 1% of exempt income as reasonable disallowance in ITA No 5883 5927 of 2012 for A.Y.2005-06. 104. The Ld. DR has relied upon finding given in assessment order and contended that order of Assessing Officer may be restored. 105. Considered the rival submissions and material placed on record. It is observed that Assessing Officer has not made disallowance u/s 14A applying rule 8D as it was not in statute in the year under consideration. Though Rule 8D is not applicable in year under consideration, it is fact on record that assessee has earned exempt (dividend) income and for earning such income, reasonable expenditure ought to have been incurred. So far as proportionate interest disallowance u/s 14A is concerned, it is observed that Assessee has sufficient own funds in the form of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet the investments. In the facts of that case, it was noted that the said presumption was established considering the finding of fact returned by the first appellate authority as affirmed by the Tribunal which is identical in the present case. 7.1 We also note that the said decision of this Court has been affirmed by the Supreme Court in CIT v. Reliance Industries Ltd. [2019] 102 taxmann.com 52/261 Taxman 165/410 ITR 466. 107. Respectfully following the binding decision of Hon'ble Supreme Court and Hon'ble Jurisdictional High Court referred supra, disallowance u/s 14A made by Assessing Officer in connection with proportionate interest disallowance is deleted. 108. So far as disallowance of other administrative expenditure is considered, it is observed that coordinate bench in the case of Ambuja Cement Limited in ITA No 5883 5927 of 2012 for A.Y. 2005-06 has held as under: 22. Having heard the rival contentions and having perused the material on record, we are of the considered view that disallowance @ 1% of tax-exempt income will meet the ends of justice for the reason that the period pertains to the preamendment law and rule 8D does not, therefore, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the meaning defined as slump sale u/s. 2(42C) of the Income-tax Act. I find that the appellant company has more or less made similar submission before me as it was submitted before the AO. The appellant s claim is basically based upon the Valuation Report carried out by the Registered Valuer which was done on the request of the appellant company. But, I find after perusal of the sale agreement carried out between the appellant company and the purchaser i.e. M/S.ACE Refractories Ltd vide agreement dated 29.09.2005, mentioning that no cognizance was at all assigned to the Valuation Report while the sale value of the undertaking of refractory business of the appellant company. Even I find that in para 3.1 of Page 17 of the sale agreement, the total consideration mentioned of Rs.257 crores in lieu of the transfer of the business of refractories undertaking, nowhere in the entire sale agreement or anywhere is assigned the item-wise consideration of specific asset of the said business as claimed by. the appellant company. The said valuation was carried out by the appellant company for the sake of its own known purpose. Even I find that nowhere in the sale agreement dated 29.09.2005, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets. In relation to capital assets being an undertaking or division transferred by way of such sale, the net worth of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48. Every assessee, in the case of slump sale, shall furnish in the prescribed form alongwith the return of income, a report of an accountant as defined in the Explanation below sub-section (2) of section 288, indicating the computation of the net worth of the undertaking or division, as the case may be, and certifying that the net worth of the undertaking or division, as the case may be, has been correctly arrived at in accordance with the provisions of this section. Explanation 1. - For the purposes of this section, net worth shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed concept. The concept of slump sale , which was hitherto judicially recognized has not been codified and inserted in the form of clause (42C) in section 2 of the I.T. Act, What was earlier judge-made law is now a codified law. In Premier Automobiles Ltd. v. ITO 264ITR193 OM.), the Hon ble Jurisdictional High Court has held at page 223 of the said Report thus: The concept of slump sale initially was evolved under judge-made law which has subsequently been recognized by the Legislature by inserting 2(42C)..... Thus, the definition of slump sale in section 2(42C) is nothing but codification of what was hitherto judicially hitherto judicially recognized. Section 2(42C) is nothing but declaration of the existing law of slump sale. As regards the taxability of gains from slump sale, the Hon ble High Court has held at page 235 of the said Report as under: In this appeal, we were only required to consider whether the transaction was a slump sale and having come to the conclusion that there was a sale of business as a whole, we have to remand the matter back to the Assessing Officer to compute the quantum of capital gains. For that purpose, the Assessing Officer will have to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the appellant has referred to Annexure-52 i.e. Off the Agenda of dated 12 th July, 2005 appearing on Page 1059 of the Paper Book of Part Relevant portion of the said Agenda also which I consider appropriate to extract is as under: ICICI Venture through their Advisors, M/s. ICICI Securities with whom the company has been having a direct dialogue for some time now is the only party which has submitted its fined binding offer for the Refractories Business. The salient elements of their offer are as under: (i). The consideration for the business will be Rs.2570 million, i.e. the enterprise value being paid for the business. (ii). ACC Refractories Business will be transferred as a going concern on an as is where is basis' as a slump sale or a slump sale with an item-wised/category break up (i.e. land, plant machinery, copyright, technical know-how etc.) in a manner, which minimizes transaction costs and provides maximum tax and other structural benefits to both ACC and ICICI Venture. (iii). ICICI Venture is at a level of preparedness where it is confident of completing the financial and accounting and legal due diligence, etc. and closing the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any value added stamp, transfer or registration taxes pertaining to the transfer of the Refractory Business, all of which are payable by the Purchaser (the Purchase Price ) 13.13 Even taking note of the Business Transfer Agreement between ACC Ltd. and ACE Refractories Ltd., clearly suggests that the entire business of refractory was transferred to the Transferee. In the entire agreement, nowhere any value to any asset has been separately assigned for the entire consideration of Rs.257 crores. It has been mentioned that the transfer of business concern is stipulated and that is only the lump sum price determined between the Transferor and Transferee. Therefore, I find that taking note of the entire Business Transfer Agreement and its index and the schedules wherein the refractory business of the appellant company was transferred to the Transferee as a going concern, in my considered view, the transfer was only a slump sale. It cannot be given any other colour when the intention, purpose and the specific clauses of the agreement read it as a slump sale. 13.14 The appellant s act of getting the valuation done and trying to disclose the income arising on account of trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is evident from the plain reading of the provisions of the section that the assessee does not fulfill the conditions laid down in the section itself and is not entitled to claim deduction only on that count. (2) The Supreme Court in the case of Padmasundara Rao (Deed.) Ors. Vs. State of Tamil Nadu Ors. reported in 257 ITR 147 has observed that it is well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the legislature itself. The Court further observed that while interpreting a provision the Court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of the process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. The principles of casus omissus cannot be supplied by judicial interpretative process. Two principles of construction - one relating to casus omissus and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has made these illustrations in the Board Note and Agenda Item No.1 with the sole intention to have benefit of lesser tax liability which has no sanctity of the provisions of law. Hence, in my considered view, the AO s action was completely justified and in accordance with the provisions of law. Further to that, . I also want to make this observation that the case laws relied upon by the appellant of Artex Manufacturing Co. of the Apex Court reported in 227 ITR 260(SC) and other decisions referred in the submission in support of its contention are delivered by the Apex Court prior to the enactment of the provisions of section 50B of the Act. 13.16 Further, I am of the considered view that once there is an explicit provision available on the statute for taxing such business transaction then, deriving any analogy or benefit from a decision of the Apex Court, which is pronounced prior to the enactment of the said provision is not warranted at all, when the said provisions are amply clear and explicit. Hence, when there is no ambiguity in the provisions of law, then any interpolation or addition to the explicit provision is not permitted in the spirit of law as held by H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page No. 29 to 55 of the order. Both the Assessing Officer the Ld.CIT(A) have dealt with the assessee's submissions (both factual and legal) in great detail and after analysis of the provision of section 50B brought on statute w.e.f. 01.04.2000; drawing the reference from clauses of the Business Transfer Agreement entered between the assessee and the purchaser i.e. M/S. ACE Refractories Ltd; and distinguishing the various case laws relied upon by the assessee, have come to the conclusion that the sale of the refractory business is not an itemized sale of various business assets but a slump sale u/ s. 50B of the Act.Ld.DR relied on the orders passed by the Assessing Officer and Ld.CIT(A). 116. Considered the rival submissions and material placed on record. It is observed that assessee has divested its refractory business for total consideration of ₹.257.47 crores to ACE refractories Limited. While filing return of income, the assessee has shown income on the basis of such sale treating the same as item-wise sale on the basis that assessee company got valuation done of individual assets of the undertaking by the approved valuer. Thus, sale consideration received which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Ld.CIT(A) for reasons stated supra. 119. The Assessee has filed appeal against above addition. During the course of appellate hearing, Ld AR has mainly referred to provisions of Section 50B of the Act and relied upon the decision of Hon ble Supreme court in the case of CIT v. Artex Manufacturing Co 227 ITR 260 and argued that sale consideration had been arrived at by taking into consideration the value of various assets as assessed by the valuer and it is clear that the said transaction involved assigning values to the individual assets and liabilities hence such transaction of the assessee does not fall under the ambit of Slump Sale . The Ld. AR has also referred to relevant submissions and documents filed before Assessing Officer and Ld.CIT(A) in support of his claim. On the other hand, Ld. DR has mainly relied upon finding given by lower authorities, brought to our notice various observations made by the lower authorities and contended that working of capital gain u/s 50B made by Assessing Officer needs to be upheld. 120. On the other hand, Ld. DR has also referred to relevant terms of BTA agreement and submitted that the section 50B is introduced in 1.4.2000, in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... division as appearing in its books of account: Provided that any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth. Explanation 2.--For computing the net worth, the aggregate value of total assets shall be,-- (a) in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (i) of sub- clause (c) of clause (6) of section 43; (b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and (c) in the case of other assets, the book value of such assets. Further, Section 2 (42C) of the Act defines slump sale means the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to the individual assets and liabilities in such transfer. Section 50B was introduced by virtue of the Finance Act, 1999 w.e.f. 1 st April, 2000 to provide for special provisions for computation of capital gains in the case of slump sale. Prior to the insertion of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the written down value and the actual cost, then the surplus amount to the extent of such excess will have to be treated as capital gains for the purpose of taxation. In the second case, in the agreement for sale of the entire business as a going concern, there was nothing to indicate the price attributable to assets like machinery, plant or building out of the sale consideration amount. Therefore, the Supreme Court held that provisions of section 41(2) were not applicable. It is for this reason that in the definition of slump sale in the proposed new clause (42C), it has been provided that the sale should be for a lump sum consideration without values being assigned to individual assets and liabilities. 124. It is relevant to refer to decision of the Supreme Court in the cases of CIT v. Artex Mfg. Co. [1997] 227 ITR 260 wherein the gains were held to be taxable: Section 41(2), read with section 45, of the Income-tax Act, 1961 - Balancing charge - Assessment year 1967-68 - Assessee-firm sold its business as a going concern - Plant, machinery and dead-stocks were revalued by valuers and sale consideration was arrived at though there was no reference to value of plant, machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49.42 crore (nearly ₹ 250 crore). It is undisputed fact that in the board note, it is clearly mentioned that transaction would be item wise sale. The assessee has brought on record that sale of refractory business was preceded by bidding and assessee had declared a floor price of ₹.250 crore for the bidding purpose and such fact is mentioned in Board note and such price was based on values assigned to various assets as mentioned in valuation report. The lower Authorities have never doubted the genuineness of such valuation report determining value of each assets/liabilities. It is found that bind letter, the purchaser has mentioned that the transaction may be structured as a slump sale or slump sale with an item wise category wise break up. When entire transaction was approved in Shareholder meeting, it was never stated that assessee is selling the undertaking on Slump Sale basis which also supports the contention of assessee that provisions of Section 50B is not applicable to it. It is observed that both assessing officer and CIT(A) has applied provisions of Section 50B by simply relying upon relevant para of BTA wherein it is stated that vendor agrees to sell, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable properties as well as other intangible assets and agreed consideration of all assets were at ₹.257 crore. It was submitted that this para was inserted for very specific purpose to avoid any dispute between seller and purchaser regarding agreed consideration of transfer of assets of undertaking. As held herein above, both buyer and seller were very well aware that transfer of undertaking was item wise sale and not on lumpsum basis. In the present case, assessee has valued each assets separately in valuation report and same was already on record of AO along with the fact that bid letter as well as Board note clearly states that transaction would be item wise sale and such facts cannot be ignored. Hon ble Madras High court in the case of CIT v. Shiva Distilleries Ltd [2020] 116 taxmann.com 929 has held that Where transfer price of undertaking was based on individual assets and liabilities, said sale would not qualify as 'Slump Sale' as per section 2(42C) . In the case of Sanmar Speciality Chemicals Limited [2020] 118 taxmann.com 78, similar view is rendered by Hon ble Madras High court. 129. So far as observation of Ld.CIT(A) that valuation was carried out by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of transfer. Therefore, it could not be said that the transfer was a slump sale only for the reason that the tea estate was transferred to the buyer as a 'going concern . It is observed that the revenue carried the matter by way of an appeal before Hon ble Calcutta High Court in ITA No. 203 of 2016, which was dismissed by judgment and order dated 29th June, 2018. Similar view is given by Hon ble Cochin ITAT in the case of Harrisons Malayalam Ltd [2009] 32 SOT 497. 131. So far as reliance placed by Ld. DR on the decision of Hon ble Kerala High court in the case of CIT v. Accelerated Freeze Drying Co. Ltd [198 Taxman 18], wherein assessee-company, engaged in seafood processing and export of products of its own factories, transferred one of its industrial units as a going concern during the relevant assessment year for certain consideration. The consideration agreed was the aggregate value for the land, building, machinery and all equipment s with liabilities specifically mentioned in the agreement entered into between the parties. The sale was in two parts; one sale deed executed and registered covered land and building, and for the purpose of payment of stamp duty and regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and in the circumstances of the case, the Ld. CIT (Appeals)was not justified and grossly erred in treating the ground claiming deduction u/s 80Ia in respect of Unit-Chanda, Tikkaria, Madukarai and Chaibasaas infructuous. 134. During the course of appellate proceedings, Ld AR has not pressed this ground of appeal hence same is dismissed as not pressed. 135. In the Ground No 9 Assessee has raised the following grievance: 9. That on the facts and in the circumstances of the case, necessary direction may please be given to the A.O. to allow deduction in respect of Education Cess on Income Tax, Fringe Benefit Tax and Dividend Distribution tax in computing total income. 136. During the course of appellate proceedings, Ld.AR has not pressed this ground of appeal hence same is dismissed as not pressed. 137. In the Ground No 10 and 11 Assessee has raised the following grievance: - 10. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified and grossly erred in confirming the denial of claim of exclusion of profit on sale of fixed assets of Rs. 1,83,49,29,359/- in computing Book Profit u/s 115JB. 11. That on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1. During the relevant previous year the Assessee had credited to the Profit Loss Account net profits on sale of fixed assets amounting to INR 10,98,70,597/-. In the original return of income, while computing book profit under Section 115JB of the Act, the Assessee omitted to exclude aforesaid profit on sale of fixed assets. However, in the revised return, while computing book profits under Section 115JB of the Act the same were excluded. In response to query raised during the course of assessment proceedings, the Assessee, vide letter dated 16.11.2006, filed detailed submission substantiating the claim. However, the Assessing Officer rejected the claim of the Assessee by placing reliance on the judgment of Hon ble Bombay High Court in the case of CIT vs. Veekay Lal Investments Co. Pvt. Ltd. : 249 ITR 597 (Bom) 19.2. Being aggrieved, the Assessee filed before CIT(A) on this issue. 19.4. We note that in the immediately preceding Assessment Year 2003-04, the Tribunal has decided this issue in favour of the Revenue, vide common order 13.03.2019 passed in ITA No. 4242/MUM/2007 and ITA No. 4988/MUM/2007, holding as under: 52. Under this issue the revenue has challenged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a specific provision viz., section 112 of the Act, therefore, the provisions of section 115JB of the Act, which is a general provision cannot be made applicable to the case of the assessee. For yet another reason, the assessee has to be given the benefit of indexed cost of acquisition as considering the profits on sale of land without giving the benefit of indexed cost of acquisition results in taxing the income other than actual/real income. In other words, a mere book keeping entry cannot be treated as income. . 143. On perusal of the aforesaid decision, it is evident that the assessee will be entitled to indexed cost of acquisition while computing capital gains u/s 115JB of the IT Act. It is also to be noted that in the immediately preceding year i.e. AY 2004-05, Coordinate bench has held that long term capital gains credited in the books of accounts is taxable to which even the Ld. AR fairly conceded. However, it was only during the current year as well as AY 2005-06 that the Ld. AR of the assessee referred to the decision of Hon ble Karnataka High Court as relied and reproduced supra. Extensively relying on it he claimed that the indexed cost of acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High court and Karnataka High court referred herein below: (i) Wipro Limited v. DCIT [IT(TP)A No. 2556 of 2019 (Bangalore Tribunal)] (ii) Reliance Infrastructure Ltd. V. CIT [ (2016) 390 ITR 271 (Bom HC)] (iii) Wipro Ltd. v. DCIT (382 ITR 179 (Karnataka) (iv) Bank of India v. ACIT [ITA No.869 of 2018 dated March 04, 2021 (Mumbai Tribunal)] 147. On the other hand, Ld DR has argued that Assessing Officer was correct in making addition u/s 115JB of the Act and in support of her claim, she relied upon decision of AAR v. New Delhi Bank of India [165 Taxmann.com 627]. 148. Considered the rival submissions and material placed on record. It is observed that identical facts have been discussed by Hon ble Bombay High court in the case of Reliance Infrastructure Limited v. CIT [76 Taxmann.com 257 (2016)]and held as under: II. Section 40(a)(ii) of the Income-tax Act, 1961 - Business disallowance - Taxes (Foreign tax) - Assessment year 1983-84 - Indian assessee executed projects in Saudi Arabia and paid taxes there - Whether since foreign tax was paid on a part of global income which had accrued or arisen in India, to extent of said tax, benefit of double taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of this sub-clause, any sum paid on account of any rate or tax levied includes any sum eligible for relief of tax under Section 90A.] (i) We have considered the rival submissions. So far as the question relating to the Tribunal not following its order in the case of the applicant itself for A.Y. 1979-80, we find that there is a justification for the same. This is so as the decision of this Court in S. Inder Singh Gill (supra) was noted by the Tribunal on an identical issue while passing the order for the subject assessment year. Thus, the Tribunal had not erred in not following its order for A.Y. 1979-80. In fact, the decisions of this Court in South East Asia Shipping Co. (supra) and Tata Sons Ltd. (supra), which are being relied upon in preference to Inder Singh Gill (supra) cannot be accepted as both the orders being relied upon by the applicant was rendered not at the final hearing but on applications under Section 256(2) of the Act and at the stage of admission under Section 260A of the Act. This unlike the judgment rendered in a Reference by this Court in S. Inder Singh Gill (supra). Moreover, the decision in South East Asia Shipping Co. (supra) is not availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was on the aforesaid general principle, universally accepted, that this Court answered the question posed to it in S. Inder Singh Gill (supra) in favour of the Revenue. (l) We would have answered the question posed for our consideration by following the decision of this Court in S. Inder Singh Gill (supra). However, we notice that the decision of this Court in S. Inder Singh Gill (supra) was rendered under the Indian Income Tax Act, 1922 and not under the Act. We further note that just as Section 40(a)(ii) of the Act does not allow deduction on tax paid on profit and/or gain of business. The Indian Income Tax Act, 1922 Act also contains a similar provision in Section 10(4) thereof. However, the Indian Income Tax Act, 1922 contains no definition of tax as provided in Section 2(43) of the Act. Consequently, the tax paid on income/profits and gains of business/profession anywhere in the world would not be allowed as deduction for determining the profits/gains of the business under Section 10(4) of the Indian Income Tax Act, 1922. Therefore, on the state of the statutory provisions as found in the Indian Income Tax Act, 1922 the decision of this Court in S. Inder Singh Gil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act. In view of the above, Explanation inserted in 2006 to Section 40(a)(ii) of the Act, would require in the context thereof that the definition of the word tax under the Act to mean also the tax which is eligible to the benefit of Sections 90 and 91 of the Act. However, this departure from the meaning of the word tax as defined in the Act is only restricted to the above and gives no license to widen the meaning of the word tax as defined in the Act to include all taxes on income/profits paid abroad. (o) Therefore, on the Explanation being inserted in Section 40(a)(ii) of the Act, the tax paid in Saudi Arabia on income which has accrued and/or arisen in India is not eligible to deduction under Section 91 of the Act. Therefore, not hit by Section 40(a)(ii) of the Act. Section 91 of the Act, itself excludes income which is deemed to accrue or arise in India. Thus, the benefit of the Explanation would now be available and on application of real income theory, the quantum of tax paid in Saudi Arabia, attributable to income arising or accruing in India would be reduced for the purposes of computing the income on which tax is payable in India. (p) It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is accordingly allowed. 150. In the result, appeal of assessee is partly allowed. ITA NO. 417/MUM/2014 (ASSESSEE APPEAL) 151. We now take up the appeal filed by the assessee in ITA No 417/Mum/2014. 152. In the Ground No.1, Assessee has raised the following grievance: 1(a) That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) [here-in-after referred to as Ld. CIT (Appels)] erred in computing direct and indirect expenditure for disallowance u/s.14A inspite of the fact that no such expenditure was incurred for earning the exempt income. 1(b) That on the facts and in the circumstances of the case, and without prejudice to ground no.1(a), the Ld. CIT (A) erred in applying ratio of investment and total funds to the total interest expense considering the fact that interest expenses were incurred on borrowing used specific purposes. 1(c). That on the facts and in the circumstances of the case, and without prejudice to ground no.1(a), the Ld. CIT (A) erred in considering ad-hoc amount of Rs.30,00,000/- as expenses of treasure Department for the purpose of computing disallowance u/s.14A. 153. It is observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's appeal related disallowance u/s 14A adjudicated by giving reference of exclusion of amount transfer to debenture redemption reserve. ITA NO.5655/MUM/2011 (A.Y: 2006-07) 2. Assessee has raised additional ground for the A.Y.2006-07 which was not adjudicated on oversight, accordingly, we proceed to dispose of this ground by way of this corrigendum. In the additional ground the assessee has raised ground that outstanding BIS Marking fees of ₹.477,161/-, which was disallowed u/s 43B in A.Y.2005-06, it was prayed that this payment was made subsequently in the current assessment year and the assessee failed to claim the same in the return of Income. It was submitted that the assessee is entitled to raise the genuine and legal issue before the appellate authorities in additional ground by relying on the decision of Hon ble Bombay High Court in the case of CIT v. Pruthvi Brokers and Shareholders P Ltd [349 ITR 336]. On the other hand, Ld DR objected for the above proposition and the assessee could claim the same in the return of income and also not claimed by filing the revised return of income. 3. Considered the rival submissions and material plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 96 in fact we are modifying the Para 95 and 96 as under: 95 96 . During the course of appellate proceedings, Ld.AR has not pressed this ground of appeal hence same is dismissed as not pressed. 6. At Para No. 112, 113 114 we have adjudicated the ground raised by the assessee with regard to disallowance u/s. 14A, however, inadvertently reliance was incorporated relating to Debenture redemption reserve issue, which is the mistake apparent in the Tribunal order. As there is mistake with respect to reference and extraction, we modify Para No. 113 114 of the Tribunal order in A.Y.2010-11 as under: - 113. Similar issue was considered by us in the Assessee s Appeal in Ground No 1 in AY 2008-09 and held as under: - 10. Considered the rival submissions and material placed on record. So far as proportionate interest disallowance u/s 14A is concerned, it is observed that Assessee has sufficient own funds in the form of share capital and reserves and surplus in comparison with investment in shares made by it. On this issue, Hon'ble Supreme Court in the case of South Indian Bank Ltd [2021] 130 taxmann.com 178 has held as under: Section 14A of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentical in the present case. 7.1 We also note that the said decision of this Court has been affirmed by the Supreme Court in CIT v. Reliance Industries Ltd. [2019] 102 taxmann.com 52/261 Taxman 165/410 ITR 466. 12. Respectfully following the binding decision of Hon'ble Supreme Court and Hon'ble Jurisdictional High Court referred supra, disallowance u/s 14A made by Assessing Officer in connection with proportionate interest disallowance deleted by the Ld.CIT(A) is sustained. 13 So far as disallowance of other administrative expenditure is considered, it is observed that Hon'ble Delhi ITAT in the case of Vireet Investment Pvt. Ltd. [165 ITD 27] has held as under: Section 14A of the Income-tax Act, 1961 read with rule 8D of the Incometax Rules, 1962 - Expenditure incurred in relation to exempt income not includible in total income - Assessment year 2008-09 - Whether only those investments are to be considered for computing average value of investment which yielded exempt income during year - Held, yes [Para 11.16][Matter remanded] 14. The above referred decision has been followed by co-ordinate Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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