TMI Blog2023 (8) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... . This ground of appeal appears to have been no merit and thus dismissed. Nature of expenses - disallowance being guarantee fees paid to Government of Gujarat - HELD THAT:- We find that the Ld. CIT(A) following the order passed by his predecessor for A.Ys. 2008-09 [ 2016 (6) TMI 1391 - ITAT AHMEDABAD ] wherein guarantee fees was directed to be allowed as revenue expenditure subject to verification of the certificate filed during the appellate proceedings that the loans on which guarantee fees was paid were duly utilized for construction of power plants at that time and there was no capital work-in-progress in respect of such loans during F.Y. 2014-15. Thus, we do not find any reason to interfere with the observations passed by the Ld. CIT(A). Hence, we uphold the same. This ground of appeal preferred by the Revenue is found to be devoid of any and thus, dismissed. Addition being 15% of capital grants - HELD THAT:- As perused the order passed by the Co-ordinate Bench in [ 2023 (7) TMI 1378 - ITAT AHMEDABAD] in assessee s own case, wherein issue has been discussed and decided in favour of the assessee upon deleting the addition made by the Ld. AO being addition of 15% of capital gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to allow the Guarantee fee after verification disregarding the applicable statutory provisions contained under S 37 of the I.T. Act which do not allow any expenditure of capital nature. 3. On the facts and in the circumstances of the case and in law, without following the ratio taken earlier in the case of M/s. Dakshin Gujrat Vij Co. Ltd. and other subsidiary companies of the assessee, the Id. CIT(A) erred in deleting the addition of Rs. 3750 lacs being 15% of capital grant received by the assessee which was neither reduced from the cost of capital assets nor offered portion of it as revenue receipts as treatments of grants/ subsidies given by the subsidiary companies in their accounts, but taken to 'reserve and surplus' account and utilized in investment activities. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in directing the Assessing Officer to treat the interest income of Rs. 65.88 lacs and miscellaneous income of 16.34 lacs as business income instead of income from other sources without appreciating that the nature of the income is of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y. 2015-16 whereby and whereunder the issue has been remitted to the file of the Ld. AO for fresh adjudication upon examination of the facts and figures and to calculate the disallowance to be made under Section 14A of the Act. Copy of order dated 14.12.2022 passed by the Co-ordinate Bench has been duly submitted before us by the Ld. AR. On perusal of which, it appears that the contention made by the assessee is acceptable. The Co-ordinate Bench in ITA No.406/Ahd/2019 for A.Y. 2015-16 on identical issue passed order in the following manner: 3.2. The assessing officer has made an addition in the book profit by adding the amount of disallowance made u/s. 14A while calculating the taxable profit u/s. 115JB of the Act. The Ld. CIT(A) following the decision of the Co-ordinate Bench in the case of Gujarat State Energy Generation Ltd. in ITA No. 1777/Ahd/2009 for the Assessment Year 2006-07 has given relief to the assessee by holding that disallowance made u/s. 14A is not required to add back to the book profit. However the Ld. CIT(A) issued a direction to the Assessing Officer to include the dividend income while computing book profit. 4. Aggrieved against these additions, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and perused the materials available on record. From the preceding discussion, there is no ambiguity that the Learned CIT (A) has decided the issue on hand after relying on the order of his predecessor for the Assessment Year 2008-09 which was subsequently set aside by the ITAT for fresh adjudication. The relevant finding of the ITAT reads as under: 8. On the other hand, ld. DR supported the orders of lower authorities. 9. We have heard the rival contentions and perused the material on record. In these grounds raised by the assessee and the Revenue challenge the action of ld. CIT(A). We observe that an addition of Rs.152.46 crores was sustained, made by ld. Assessing Officer which was sustained to Rs.61.46 crores by ld. CIT(A) and, therefore, assessee has raised the ground against the sustained addition of Rs.61.46 crores whereas Revenue has challenged the deletion of Rs.91 crores out of the disallowance u/s 14A of the Act. 10. In ITA No.1874/Ahd/2010 vide its order dated 20.6.2014 the Tribunal adjudicated the issue relating to disallowance u/s 14A and held as under :- 7. We have heard the rival submissions and perused the orders of lower authorities and materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue Department is hereby admitted for adjudication. At the outset, it is worth to mention that the impugned addition of Rs.18796.82 lacs was made by the AO without having any discussion in respect of the applicability of Section 14A of the IT Act. Likewise, learned CIT(A) has also not discussed the applicability of the provisions of Section 14A of IT Act, however, after considering the merits of the case, deleted the addition. With this clarification, we have examined the facts and the issue as emerged from the corresponding assessment order passed u/s. 143(3), dated 26.12.2008. It was noted by the AO that the assessee had claimed a huge amount of interest expenditure of Rs. 19360.59 lacs, as per the following bifurcation. (Rs. in lacs) Particulars Amount Interest on Term Loans 8981.35 Working Capital 8184.50 Others 677.63 Bank Charges Guarantee Fees 591.65 ---------- 19435.13 Less: Interest Capitalized 74.54 ---------- 19360.59 4.1 At the same time, it was also found by the AO that the assessee had made the investment of Rs.5,47,709.74 lacs on which dividend earned was at Rs.508.18 lacs. The AO's objection was that on one hand the assessee has diverted the huge funds towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of subsidiary companies as pan of the financial restructuring plan approved by the Government of Gujarat which was integral to the demerger. This was clearly commercially expedient for the appellant company. The business itself was viable only under the plan of restructuring, which required the company to have crossholdings in the unbundled companies of GEB. In fact, the appellant became the holding company of the generating and transmission companies. Looking to the facts and circumstances of the case, I am of the opinion that there was no diversion of borrowed funds for nonbusiness purposes. Accordingly, the addition of Rs. 18796.82 lacs is directed to be deleted. 6. With this factual background, we have heard both the sides. Learned DR has primarily placed reliance on a decision of respected Special Bench of ITAT Mumbai in the case of ITO V/s. Daga Capital Management Pvt. Ltd., 117 ITD 169 (Mum) (SB). Learned DR has also pleaded that in one of the assessment year, i.e., in A.Y. 2007-08 learned CIT(A) had sustained the same nature of addition. From the facts of the case, we have noted that there was re-structuring according to which erstwhile GEB was demerged into seven differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged company is transferred in a demerger scheme and as a result a resulting company comes into existence. The resulting company in consideration of such transfer of an undertaking of the demergerd company issues shares to the share holders of the demerged company. Therefore, the responsibility of the resulting company was also required to be ascertained by the AO. This is the first aspect, which was not examined by the AO and the order of the Revenue Authorities are silent on this subject. 6.3 Next question is about the huge amount of interest expenditure claimed by the assessee. The AO is required to examine first the correctness of the claim. Whether the interest on term loans, bank charges and guarantee fees were in respect of the business of the assessee. Thereafter, the AO is also required to give a clear finding about the borrowings made by the assessee on which the said interest was paid. The next step is that the AO has to examine the sources of the funds which were invested for earning the dividend income. If the source of such investment is out of the interest bearing borrowings, then only the question of disallowance of interest would arise, otherwise not. On the other h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow a latest decision of Hon'ble Bombay High Court pronounced in the case of Godrej Boyce Mfg. Co. Ltd. Mumbai vs. Dy. CIT in Income tax Appeal No.626 of 2010 and Writ Petition No.758 of 2010 order dated 12/08/2010, { now reported as 328 ITR 81(Bom) } wherein the Hon'ble High Court has upheld the constitutional validity of section 14A of the I.T. Act, 1961 and held that the Assessing Officer should determine as to whether the assessee has incurred any expenditure (direct or indirect) in relation to dividend income and/or income from mutual fund which do not form part of the total income as contemplated U/s. 14A of the I.T. Act, 1961. It has also been directed that the Assessing Officer can adopt a reasonable basis for effecting the apportionment. It has also been observed by the Hon'ble Court that while making that determination, the Assessing Officer should provide a reasonable opportunity to the assessee of producing its accounts and material having a bearing on the facts and circumstances of the case. 6.1. In this judgement at the end, the Hon'ble Court has also recapitulated the conclusion and pronounced that a finding is required whether the investment in shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprises (supra), Munjal Sales Corporation (supra) and Radhasoami Satsang (supra) holding that there must be consistency and definiteness in the approach of the revenue would not apply to the facts of the present case, because of the material change introduced by Section 14A by way of statutory disallowance in certain cases. There, the decisions of the Tribunal in the earlier years would have no relevance in considering disallowance in assessment year 2002-2003 in the light of Section 14A of the Act. 73. For the reasons which we have indicated, we have come to the conclusion that under Section 14A(1) it is for the Assessing Officer to determine as to whether the assessee had incurred any expenditure in relation to the earning of income which does not form pan of the total income under the Act and if so to quantify the extent of the disallowance. The Assessing Officer would have to arrive at his determination after furnishing an opportunity to the assessee to produce its accounts and to place on the record all relevant material in support of the circumstances which are considered to be relevant and germane. For this purpose and in light of our observations made earlier in this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2002-03 shall stand remanded back to the Assessing Officer. The Assessing Officer shall determine as to whether the assessee has incurred any expenditure (direct or indirect) in relation to dividend income / income from mutual funds which does not form part of the total income as contemplated under Section 14A. The Assessing Officer can adopt a reasonable basis for effecting the apportionment. While making that determination, the Assessing Officer shall provide a reasonable opportunity to the assessee of producing its accounts and relevant or germane material having a bearing on the facts and circumstances of the case. 6.4 Due to the decision of the Hon'ble Bombay High Court, it is legally correct to refer this issue back to the stage of the AO to be decided de novo as per the guidelines of the Hon'ble Court. The outcome of the above discussion is that the Additional Ground raised by the Revenue may be treated as allowed but only for statistical purpose. 8. In the absence of any distinguishing features pointed out by the Departmental Representative, facts being identical, respectfully following the precedent we restore this issue back to the file of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. This is clearly contrary to the main objective with which S. 14A was enacted. 2.2 Broadly stated, the new Rule 8D provides as under : (i) The method prescribed in the Rule is to be applied only if the AO is not satisfied with : (a) The correctness of the claim of expenditure incurred for earning the exempt income made by the assessee or (b) The claim made by the assessee that no expenditure has been incurred for earning exempt income. (ii) The method prescribed in the Rule states that the expenditure in relation to income which does not form part of the total income shall be the aggregate of the following amounts : (a) The amount of expenditure directly relating to income which does not form part of total income. (b) In the case of interest on borrowed funds which is not directly attributable to any particular income or receipt, the amount computed in accordance with this following formula : A x B C A = Amount of interest, other than the amount of interest which is directly attributable to the exempt income stated in (a) above. B = The average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions wherein the disallowance u/s 14A of the Act on account of interest expenditure are held to be incorrect if the assessee has sufficient equity and general reserve to cover the investments. 14. We are, therefore, of the view that applying the decision of the coordinate bench in assessee s own case in ITA No.1874 1821/Ahd/2010 for Asst. Year 2007-08 is dated 20.6.2014 the matter is set aside to the file of Assessing Officer to examine the facts and figures of the case in the light of our observations made above in order to arrive at a final conclusion as to whether disallowance u/s 14A is to be made and if so, then the amount thereof which in no case should exceed the exempted income earned by assessee during the year under appeal. It is needless to mention that ld. Assessing Officer shall allow reasonable and sufficient opportunity of hearing to the assessee before adjudicating the same. These grounds of assessee and the Revenue are allowed for statistical purposes. 15. Now we take ground no.3 of assessee s appeal which reads as below :- 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the enhancement of Book Profit computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, it was submitted by the Ld. Counsel that certificate of utilization was furnished before the Ld. CIT(A) contending that the loans on which guarantee fee was paid were utilized for construction of power plant and there was no work-in-progress in respect of such loans borrowed during the F.Y. 2014-15. It was further submitted that identical issue was considered by the Tribunal in assessee s own case for A.Y. 2015-16. A copy whereof has duly been submitted before us. The issue has been directed to be verified and to be adjudicated by the Ld. AO on the basis of the submission made by the Ld. Counsel appearing for the assessee before us which has not been controverted by the Ld. DR. Upon perusal of the order passed by the Co-ordinate Bench, it appears that by setting aside the issue to the file of the Ld. AO, the Co-ordinate Bench has been pleased to observe as follows: 4.3. Regarding ground no. 2 namely guarantee fees paid to Govt. of Gujarat related to capital work-in-progress which needs to be capitalized. The Ld. Counsel for the assessee submitted that the certificate of utilization was already furnished before the Ld. CIT(A) stating that the loans on which guarantee fees was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est relates to the principle of enduring benefit . Enduring benefit may be in the form of long lasting use of an asset or the acquisition of a right to exploit certain commercial processes, etc. In the instant case, the assessee did not acquire any right to exploit a commercial technology or process, and neither was the benefit enduring , since the payment of guarantee commission was an annual charge. The benefit derived from payment of such commission thus lasted for exactly one year only. Such ITA No.704 and 761/Ahd/2012 short lived benefit cannot be categorized as enduring . Hence, I am inclined to the view that the payment of guarantee commission was a revenue expenditure. 5.3. Further, the jurisdictional Bench of ITAT had occasion to consider the allowability of guarantee commission paid to a Director of the company in respect of loans taken from the bank. In the case of Himalaya Machinery Pvt. Ltd. (ITA No.738/Ahd/2009) for AY 2006-07, the Tribunal held, vide order dt. 5.6.2009, following the decision of the Rajasthan High Court in CIT v. Metalising Equipment Co. Pvt. Ltd., 8 DTR 12, that the payment of commission for guaranteeing repayment of loan was allowable as revenue ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the above quoted decision of the Tribunal, we confirm the order of the CIT(A), and dismiss this ground of appeal of the Revenue. 40. We are of the view that the issue raised in this ground is squarely covered by the decision of co-ordinate bench referred above in the case of Gujarat Energy Transmission Corpn. (supra) and respectfully following the same, we find no reason to interfere with the order of ld. CIT(A) and uphold the same. This ground of Revenue is dismissed. 20. As the facts of the case on hand are identical to the facts of the case as discussed above, we are incline to uphold the finding of the Ld. CIT-A. 21. Before parting, it is important to note that the revenue was in appeal in the immediate preceding Assessment Year i.e. 2008-09 before us on the following grounds of appeal: On the facts and in the circumstances of the case and in law, the ld. CIT (Appeals) erred in deleting the addition on account of disallowance of claim of guarantee fees of Rs. 4.76 crores without appreciating that the disallowance was made as the same are enduring nature in the assessee s business. 21.1 The above ground of appeal raised by the Revenue for the Assessment Year 2008-09 in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to verify the certificate filed during the appellate proceedings that the loans on which guarantee fees was paid were utilized for construction of power plants at that time and there was no capital work-in-progress in respect of such loans during the Financial Year 2014-15. Both the assessee counsel as well as the Ld. D.R. could not place on record what is the giving effect order passed by the A.O. thereafter, pursuant to the direction of the Ld. CIT(A). Therefore this ground no. 2 is also set aside to the Assessing Officer for proper verification and adjudication. 9. We find that the Ld. CIT(A) following the order passed by his predecessor for A.Ys. 2008-09 2014-15, wherein guarantee fees to the tune of Rs.80,34,000/- was directed to be allowed as revenue expenditure subject to verification of the certificate filed during the appellate proceedings that the loans on which guarantee fees was paid were duly utilized for construction of power plants at that time and there was no capital work-in-progress in respect of such loans during F.Y. 2014-15. Thus, we do not find any reason to interfere with the observations passed by the Ld. CIT(A). Hence, we uphold the same. This ground of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15% out of total grant of 250 crores which works out to Rs. 37.50 crores and added to the total income of the assessee. 14.1. Ld. Counsel further submitted that this issue is now in settled in favour of the assessee by the Hon ble High Court of Gujarat in assessee s own case for A.Y. 2010-11 filed by the Revenue in Tax Appeal No. 63 of 2020 vide judgment dated 17-02-2020 wherein it was held as follows: .9 So far as question No.2[c] proposed by the Revenue is concerned, the Assessing Officer in the assessment order has stated that the assessee has not received any grant of subsidy during the year under consideration but the subsidy or grant which was received in the earlier years was to be considered as income or to be reduced from the cost of assets. Therefore, the Assessing Officer estimated 15% of grant of Rs.2500 Lac which worked out at of Rs.3750 Lac as income of the assessee. 10 The assessee, therefore, being dissatisfied, filed an appeal before the CIT(A). The CIT(A) deleted the addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, and therefore, such grants cannot be reduced from cost of fixed asset of the assessee on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Revenue is hereby rejected. 15. Considering the above order passed by the Co-ordinate Bench, we do not find any reason to interfere with the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO. This ground of appeal found to be devoid of any merit and thus dismissed. 16. Ground No. 4 relates to treatment of interest income amounting to Rs.65.88 Lacs and miscellaneous income of Rs.16.34 Lacs. 17. Ld. Counsel appearing for the assessee submitted that the issue is covered in favour of assessee by the order of the Co-ordinate Bench in assessee s own case for Asst. Years 2013-14 2014-15 in ITA Nos.281 282/Ahd/2018 323 324/Ahd/2018, wherein Tribunal has deleted the identical addition made on the issue of taxability of interest income and miscellaneous income. 18. Such contention made by the Ld. AR has not been controverted by the Ld. DR with all his fairness. 19. We have perused the order passed by the Co-ordinate Bench in ITA Nos.281 282/Ahd/2018 323 324/Ahd/2018 in assessee s own case, wherein issue has been discussed and decided in favour of the assessee upon deleting the addition made by the Ld. AO. The relevant portion whereof is as follows: 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cellaneous income earned by the assessee were directly related to the business of the assessee and assessable as business income only and not as income from other sources . Thus the Ground no. 4 raised by the Revenue is hereby rejected. 20. We do not find any reason to interfere with the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO. This ground of appeal found to be devoid of any merit and thus dismissed. 21. Ground No.5 relates to adjustment in book profit under Section 115JB of the Act for the disallowance under Section 14A of the Act. 22. Ld. Counsel appearing for the assessee submitted that the impugned issue is covered in favour of assessee by the judgment of Hon'ble Gujarat High Court in Assessee's own case for A.Y. 2010-11 in Tax Appeal No.63 of 2020, judgment dated 17.02.2020. Recently, the ITAT by following the aforesaid judgment of Hon'ble Gujarat High Court, in assessee's own case for Asst. Years 2013-14 2014-15 in ITA Nos.281 282/Ahd/2018 323 324/Ahd/2018 has deleted the addition made on the aforesaid issue of adjustment in book profit under Section 115JB for disallowance made under Section 14A of the Act. 23. Such contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 14A in computing the book profit. In this context, the findings recorded by the ITAT are as follows: 17. Next common issue involved in both years is, whether the amount disallowed under section 14A read with rule 8D deserves to be added back in the book profit for the purpose of section 115JB. In other words, whether the additions which have been confirmed by the Tribunal at Rs.1.55 crores in the assessment year 201213 and Rs.75 lakhs in the assessment year 201314, deserves to be added back in the book profit computed for the purpose of section 115JB. 17.1 The ld. Counsel for the assessee at the very outset contended that this issue is covered in favour of the assessee by the judgment of Hon ble Gujarat High Court in the case of CIT Vs. Alembic Ltd. in Tax Appeal No.1249 of 2014 as well as decision of Hon ble Bombay High Court in the case of CIT Vs. Bengal Finance Investment P. Ltd. in Tax Appeal No.337 of 2013. He placed on record copies both these decisions. Apart from the above, he placed upon reliance Special Bench decision of the ITAT in the case of CIT Vs. Vireet Investment P. Ltd. 165 ITD 27. On the other hand, ld. CITDR relied upon the order of DRP. 18. We have duly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents-assessee, during the course of hearing, has fairly conceded that the first question has to be answered in favour of the Revenue and against the assessee in view of specific provisions in the Explanation 1 below Section 115JB(2) clause (f). The Assessing Officer it is stated had made an addition of Rs.88,292/- to the book profits towards expenditure incurred having nexus with dividend income, which were exempt under Section 10(33). Recording the said statement, the first question is answered in favour of the appellant-Revenue and against the respondent-assessee. The assessee has relied upon the judgment of ITAT special bench in the case of Vireet Investment Pvt. Ltd. In this regard, it is pertinent to mention that Hon ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd. Vs. Additional Commissioner of Income Tax Ors. (2014) 264 CTR 0030 (Bom) : (2013) 96 DTR 0193 (Bom) : (2014) 361 ITR 0531 (Bom) : (2014) 221 Taxman 0166 (Bom); has held that the proceedings before DRP are extension of assessment proceedings. Therefore, they are not bound by the decision of Tribunals unlike CIT(A) as long as the issue is not acceptable on merit and/or the issue is bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oning Section 14A of the Act, the addition of Rs.89,00,000 was not justified. The view taken by the ITAT cannot be faulted with. It is consistent with the decision in Apollo Tyres Ltd. V. Commissioner of Income Tax 255 ITR 273 (SC) which held that the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J. The Court declines to frame a question on the above issue. 21. Apart from the above, we have a binding precedent before us one from Hon ble jurisdictional High Court and other from the Hon ble Bombay High Court. The question considered by the Hon ble Gujarat High Court in the case of Alembic Ltd. (supra) is as under: Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that adjustment made on account of disallowance u/s. 14A of the Act in computation of book profit u/s. 115JB of the Act is not as per law without appreciating that the amount disallwable under section 14A is covered under clause (f) of Explanation to section 115JB(2) and, thus, said amount has to be added back while computing amount of book pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on earning of dividend income under Section 14A of the Act, without reiterating the rationale of confirming deletion of such amount as has been elaborately done at the time of deciding question No.1, this deletion requires to be confirmed. 8. Taking into consideration the evidence on record and considering the decision of this court in the case of Commissioner of Income tax-I vs. Gujarat State Fertilizers Chemicals Ltd. (supra), we are of the opinion that issue Nos.(iii) and (iv) required to be answered in favour of the assessee and against the revenue. In that view of the matter, we answer questions (iii) and (iv) referred to us in favour of the assessee and against the revenue. The appeal of revenue is dismissed. 23. Similarly, Hon ble Bombay High Court has formulated following question in the case of Bengal Finance Investments P. Ltd. (supra) and replied as under: (b) Whether on the facts and in the circumstances of the case, and in law, the ITAT is justified in deleting the addition of Rs.78,84,387/- under clause (f) of Explanation 1 to Section 115JB relying upon the decision in the case of Goetze (India) Ltd. Vs. CIT (2009) 32 SOT 101 (Del.), which has been followed by ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee had accounted for net prior period expenditure of Rs.48,636/- which was duly disallowed in the computation of income and therefore, the Ld. CIT(A) deleted the addition. It was further submitted that nothing was brought on record by the Ld. DR to refute the aforesaid finding of fact. 28. We have also considered the order passed by the Ld. CIT(A), wherein issue has been discussed and granted relief by deleting the addition made by the Ld. AO in the following manner: 6.2 During the course of the current appellate proceedings, the AR of the appellant has submitted as under: Grond No.4 Additions on account of Prior Period Expenses 1.0 The learned Assessing Officer has made an addition of Rs 49,000/- out of the prior period expenses without considering the fact that the such expenditure crystallized during the year. 1.1 It is submitted that during the year, the Company has accounted Prior Period Expenses of Rs. 48.636 under the head Prior Period Expenses/Income in the Profit Loss Account. The nature of expenses explaining the fact that the liability to pay such expenditure was crystallized only during the year was explained during the assessment proceeding The learned Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant to mention that the Ld. DR has not been able to controvert such contention made by the Ld. AR. 33. We have heard the rival contentions made by the respective parties and we have also perused the relevant materials available on record and carefully considered the order passed by the Co-ordinate Bench as mentioned herein above. While dealing with the appeal and deleting the addition made by the Revenue of the Co-ordinate Bench has been pleased to observe as follows: 14. Ground No. 3 deleting the addition of Rs. 37.50 crores being 15% of capital grant received by the assessee. It is submitted by the Ld. Counsel that the assessee has not received any fresh grant from Government of Gujarat during the Financial Year, hence the assessee has not offered any income on account of receipt of grant in the Profit and Loss Account. However the Ld. A.O. without appreciating the vital fact of non-receipt of grant made an addition on the wrong premises that the assessee should have offered 15% out of total grant of 250 crores which works out to Rs. 37.50 crores and added to the total income of the assessee. 14.1. Ld. Counsel further submitted that this issue is now in settled in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Yojna (JGY) into equity share capital. Accordingly, the total grants received during the aforesaid financial years were allocated among the four distribution companies for implementation of the aforesaid scheme of the State Government. In view of the above facts and circumstances, we do not find any infirmity with the decision of the Ld. Therefore, the aforesaid grants received cannot be treated as income of the assessee company. Accordingly, this ground of the appeal is dismissed. 12 We are in agreement with the concurrent finding of fact arrived at by the CIT(A) as well as the Tribunal as the assessee did not acquire any fixed assets on which depreciation has been claimed, and therefore, grants cannot be reduced from cost of fixed asset of the assessee. Therefore, appeal stands dismissed qua question No.2[c] proposed by the Revenue. 14.2. Respectfully following the Jurisdictional High Court judgment, we hereby delete the addition made by the Assessing Officer and the Grounds raised by the Revenue is hereby rejected. 15. Ground No. 4 namely treatment of interest income of Rs. 62.67 lacs and miscellaneous income of Rs. 270.83 lacs as business income instead of income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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