TMI Blog2024 (3) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold that the assessee is entitled to claim remaining 50% depreciation of such 20% which is equal to the actual cost of new plant and machinery, accordingly ground no-I raised by the assessee is allowed. Nature of expenses - Deduction on proportionate basis of the compensation paid in connection with the mining activity for obtaining limestone, used as raw material for manufacturing of cement - AO disallowed the claim of the said expenditure by observing that the same was capital expenditure in nature - HELD THAT:- As decided in assessee own case [ 2023 (2) TMI 341 - ITAT KOLKATA] held that payment of compensation to persons whose rights are infringed by the mining activity is revenue in nature. Nature of receipt - amount received by the assessee as industrial promotion assistance from the State Govt. - revenue v/s capital receipt - HELD THAT:- As decided in Tribunal [ 2023 (2) TMI 341 - ITAT KOLKATA] to hold that the interest subsidy is to be treated only as a capital receipt and accordingly the grounds raised by the assessee in this regard are allowed. Disallowance u/s 14A r.w.r.8D - HELD THAT:- The impugned order of the CIT(A) is modified and it is directed that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 30.05.2019 of the Commissioner of Income Tax (Appeals)-22, Kolkata [hereinafter referred to as CIT(A) ] passed u/s 250 of the Income Tax Act (hereinafter referred to as the Act ). First, we take up revenue s appeal ITA No.1964/Kol/2019. 2. ITA No.1964/Kol/2019 : The revenue in this appeal has taken the following grounds of appeal: 1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the adjustment made by the AO/TPO amounting to Rs. 124,76,75,528/- for transaction in respect of transfer of power/electricity. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) had failed to appreciate the analysis undertaken by the TPO while concluding the said transaction were not at the arm s length. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) had failed to appreciate that, even if we consider the electricity board rate i.e. rate at which assessee purchases power from the distributors, for transfer pricing purpose, adequate adjustment has to be made for the costs which the distributors incurs towards transmission of power and other additional costs for arriving at arm s length pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepared in accordance with the provisions of Companies Act and these incentives were credited to Profit amp; Loss Account, and no adjustment is allowed for computation of Book Profit u/s.115JB other than prescribed under explanation 1 to section 115JB(2). 13. Whether on the facts and circumstances of the case as well as in law, Ld. CIT(A) has erred in deleting upward adjustment made to Book Profit for disallowance computed u/s. 14A read with rule 8D. 14. That the appellant craves for leave to add, delete and modify any of the grounds of appeal before or at the time of hearing. 3. Ground Nos.1 to 5 - A perusal of the above reproduced grounds No. 1 to 5 of the appeal would reveal that the sole issue raised by the revenue through these grounds is relating to the action of the CIT(A) in deleting the addition of Rs. 124,76,75,528/- made by the Assessing Officer on account of transfer pricing adjustment in respect of the price of the power transferred by the section 80IA eligible captive power plant of the assessee to the non-eligible manufacturing units of the assessee and thereby, reducing the claim of deduction claimed by the assessee u/s 80IA of the Income Tax Act. 3.1 Both the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged by the State Electricity Board. 11.1. Ld. AO, however, reworked the profits of the power plants for the assessment year under reference by substituting the value of electricity adopted by the assessee with much lower figures. Such lower figures were taken by the ld. AO from orders passed by the concerned State Electricity Regulatory Commission. For the State of Rajasthan, the ld. AO referred to an order dated November 16, 2010 passed by the Regulatory Commission of that State determining the annual fixed charges and energy charge in accordance with the statutory parameters and norms in respect of power generated by Rajasthan Rajya Vidyut Utpadan Nigam at its different generating stations and supplied to electricity distribution companies. The tariff was separately determined for each generating station based on different elements of cost incurred at each such station. For the State of Madhya Pradesh, the ld. AO referred to an order dated March 3, 2010 passed by the Regulatory Commission of that State determining, in accordance with the statutory parameters and norms, the fixed charges and energy charges for each generating station of the Madhya Pradesh Power Generating Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riff fixed by the State Regulatory Commission. This Hon ble Tribunal took note of the fact that in one of the years before it, the assessee in fact sold electricity at rates higher than that charged from it by the State Electricity Board. This Hon ble Tribunal held that when it was permissible for the assessee to sell electricity to consumers at rates higher than that paid to the State Electricity Board, the prices charged by the State Electricity Board were a very good indication of the market value of electricity. This Hon ble Tribunal thus concluded that the assessee did not commit any error in adopting such prices for working out the amount eligible for deduction under section 80IA of the Act. 11.3. The Hon ble Tribunal by an order dated September 13, 2017 for the assessment year 2010-11 (Page 153, at Pp 159- 162 of the Paper Book, paragraph 3 at paragraphs 13-16) followed the said decision for the assessment years 2008-09 and 2009-10 on this issue. 11.4. It is further submitted that against the said decision of the Hon ble Tribunal dated August 25, 2017 for the assessment years 2008-09 and 2009-10 the department preferred appeal before the Hon ble Calcutta High Court under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the distribution licensee by a generating company and that benefit cannot be claimed on the basis of rate chargeable by the distribution licensee from the consumer. The Assessee however pointed out to the Tribunal that the view taken by the Hon ble Calcutta High Court in the case of ITC Ltd. (supra) was taken on the basis of the provisions of Indian Electricity Act, 1910 and Electricity (Supply) Act, 1948 that were in force up to the year 2003. It was pointed out before the Tribunal that The Electricity Act, 2003 (hereinafter referred to as the 2003 Act ) repealed the erstwhile legislation and the new legislation came into force on June 10, 2003. The 2003 Act was applicable and in force during the previous years relevant to the Asst Years 2009-10. It was also pointed out before the Tribunal as per the provisions of the 2003 Act and the regulations made in terms thereof by the States of Madhya Pradesh and Rajasthan, it was open to an assessee having a captive power plant to sell electricity even to a consumer at a mutually agreed rate. In other words, under the provisions of the 2003 Act and the regulations made there under it is not the position that a captive power plant can sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee nevertheless made the computation for the purpose of section 80IA of the Act with reference to the price charged from it by the State Electricity Board. In such circumstances, we hold that, when it was permissible for the assessee to sell electricity to consumers and distribution licensees at rates higher than that paid by it to the State Electricity Board, the price charged by the State Electricity Board would be a very good indication of the market value of electricity and the assessee did not commit any error in adopting such price for working out the amount eligible for deduction u/s 80IA of the Act. 14. After coming to the conclusion that the decision of the Hon ble Calcutta High Court in the case of ITC Ltd. (supra) would not be applicable to the case of the Assessee, the Tribunal thereafter went into the question as to what would be appropriate rate to the adopted as sale price by the TPP unit of the Assessee to its Cement manufacturing units. The Tribunal thereafter referred to the decision of the Hon ble Supreme Court in the case of Thiru Arooran Sugars Ltd. v CIT, (1997) 227 ITR 432 (SC), as to the meaning of the word Market Price wherein in the context of market pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ented the market value even though the assessee was not required to charge electricity duty. 5.6.6. In view of our aforesaid findings, we direct the Id AO to accordingly modify the earlier years profits also which were modified by him, in the same lines as directed for Asst Years 2008-09 and 2009-10 herein. Accordingly, the grounds raised by the assessee in this regard deserve to be allowed and that of the revenue deserve to be dismissed. 16. The aforesaid decision of the tribunal would apply to the present AY also. Respectfully following the order of the Tribunal we allow grounds 2 to 4 6 raised by the assessee in its appeal and dismiss ground no. l raised by the revenue in its appeal. 11.5. Since the issues raised before us are squarely covered by the decision of this Tribunal in assessee s own case for preceding assessment year i.e. AY 2010-11 and Revenue being unable to controvert this fact by placing any other binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A). Thus, common ground no. 2 for AY 2011- 12 AY 2012-13 raised by the Revenue is dismissed. 9.4. We, further, observe that ld. CIT(A) after considering the facts of the case for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is noted that both the parties have in principle accepted and agreed that the most appropriate method for determination of ALP of power tariff is CUP Method. In the Ld. TPO's opinion the power tariff orders issued the relevant SECs was the most relevant indicator of the arm's length price for power supplied by CPPs. Apart from relying on the orders of the regulatory authorities determining the tariff, the Ld. TPO also took into account the judgment of the Hon'ble Calcutta High Court in ITC Limited reported in (2015) 64 Taxman.com 214 wherein the Hon'ble Court had held that the CPPs were not permitted to sell power to anyone else but to power distribution companies and that too at the controlled rates notified by the regulatory authorities. The Ld. TPO also took into consideration the fact that during the relevant year the appellant itself had sold 3,32,891 units generated by CPP in Rajasthan on IEX where per unit price realized was Rs. 4.95. Keeping in view these facts and documents the Ld. AO concluded that the rates adopted by the appellant at Rs. 6.76/6.85 per unit Rs. 6.79/Rs.6.84 per unit for the CPPs at Rajasthan Madhya Pradesh was excessive and did neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CPP at Rajasthan, it is noted that the eligible unit had supplied power to the AE as well as unrelated enterprises i.e. lEX/Grid. It is however noted that the power which the eligible undertaking supplied to non- AEs did not even constitute 0.11% of the total power generated by the CPP during the relevant year. In the circumstances therefore the rate at which the transaction was conducted by the eligible unit with non-AEs cannot be considered to be reliable data because the facts indicate that such sale was more in nature of reducing effective cost of generation by selling the excess power generated rather than incurring the generation loss. On the contrary however, in the case of CPP at Rajasthan also it is noted that the cement manufacturing undertaking to which the eligible unit supplied power, had procured substantial quantity of power throughout the year from unrelated enterprise i.e. SEB and therefore the tariff at which the said AE, i.e. non-eligible unit purchased power from SEB represented reliable internal CUP. I therefore find that even after introduction of domestic transfer pricing provisions to specified domestic transactions and becoming applicable to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the TP Study Report and accordingly ALP of the power captively consumed has been benchmarked at ALC of power purchased by the tested party from SEB. The assessee also duly reported these transactions in the audited report in Form 3CEB. Accordingly to the TPO the average rate of Rs. 3.47 per unit calculated on the basis of sale data of power by independent CPPs/IPPs as determined by various tariff orders would be the ALP of the domestic specified transactions. Accordingly the TPO recommended adjustment to the tune of Rs. 6,75,22,00,000/- and the AO passed the draft assessment accordingly. According to the assessee the internal CUP has to be used for the determination of ALP at which the non-eligible units/manufacturing units procured the power from unrelated party i.e. SEB. Now the issue before us whether the CUP method can be applied to bench mark specified domestic transactions of transferring power by CPPs to non eligible units. We have also perused the provisions as contained in Rule 10B of the Income Tax Rules which provide as to where the CUP can be and has to be applied. We observe from the said rule 10B that we have to see the price at which the property, goods or servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... series of decisions namely PCIT vs. Gujarat Alkalies Chemicals Ltd. (supra), CIT vs. Godawari Power Ispat Ltd. (supra) and Reliance Infrastructure Ltd. in ITA No. 2180 of 2011 (Bombay-High Court) and the decision of Coordinate Bench of Kolkata in the case of DCIT vs. Birla Corporation Ltd. in ITA No. 971/Kol/2012 for AY 2008-09. We note that in all the above decisions, the AALC at which the power is purchased by the non-eligible unit of the assessee was considered to be the fair market value / transfer price of power supplied by the eligible unit to the non-eligible unit. Before us, the Ld. A.R also argued that non-eligible units has to be held as a tested party and AALC at which the power was purchased by the tested party from SEB/ third party is the most appropriate ALP to bench mark the transfer of power supplied by eligible unit to noneligible unit. The said view of the assessee is squarely covered by the two decisions of Hon'ble Benches namely Star Paper Mills Ltd. vs. DCIT (supra) and DCIT vs. Balrampur Chini Mills Ltd. (supra). Having considered the ratio laid down, we are of the view that there is no infirmity in the order of Ld. CIT(A) which is a very reasoned and spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 and Revenue being unable to controvert this fact by placing any other binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A). Thus, common ground no. 2 for AY 2013-14 2014-15 regarding transfer pricing adjustment made for deduction u/s 80IA of the Act raised by the Revenue are dismissed. 4. Both the ld. representatives have submitted that the issue is squarely covered in favour of the assessee by the above decision of the Tribunal in the own case of the assessee for earlier assessment years. Therefore, respectfully following the same, for the sake of consistency, this issue is decided in favour of the assessee and against the revenue. Ground Nos.1 to 5 of Revenue s appeal are hereby dismissed. 5. Ground No.6 Vide Ground No.6, the revenue has assailed the order of the CIT(A) in allowing the claim of balance additional depreciation of Rs. 12,19,30,258/-. 6. The brief facts relating to the issue are that the assessee purchased and installed new plant and machinery in the preceding year but put to use the same for a period less than 180 days in that year. In view of the 2nd Proviso to section 32(1) of the Act, for the assessment year 2014- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -08. 10.1. It is submitted that the identical claim of the assessee for the assessment year 2007-08 was allowed by the Hon ble Tribunal by an order dated December 8, 2014 (page 83 at Pp 86-88 of Paper Book-paragraphs 10 at 15-18). The Hon ble Tribunal also allowed the said claim for the assessment years 2008-09 and 2009-10 by a consolidated order dated August 25, 2017 (Page 140 at Pp 142-144 of Paper Book-paragraphs 7 at 7.2) and for the assessment year 2010-11 by an order dated September 13, 2017 (Page 180 at Pp 182-185 of Paper Book paragraphs 46 at 52-53). The orders of this Hon ble Tribunal for the assessment years 2008-09, 2009-10 and 2010-11 were passed after taking into consideration the judgment of the Hon ble Karnataka High Court in CIT v. Rittal India (P) Limited, (2016) 380 ITR 423 (Karn). Subsequently, the Hon ble Madras High Court in CIT vs. Shri T.P. Textiles (P.) Ltd., [2017] 394 ITR 483 (Mad) [Page 1 at Pp 4-8 of Compilation of Case Laws] has agreed with the Hon ble Karnataka High Court. The issue is thus covered in favour of the assessee. We find that this Tribunal in assessee s own case for AY 2010-11 dealt with this issue and decided in assessee s favour observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iia) of the Act in the corresponding assessment year 2007-OS for the reason that the new machinery was acquired after 01-10-2006. The relevant portions at page no 's at 9 and 10 of which is reproduced herein below for below for better understanding: The language used in clause (iia) of the said section clearly provides that a further sum equal to 20 per cent, of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) . The word shall used in the said clause is very significant. The benefit which is to be granted is 20 per cent, additional depreciation. By virtue of the proviso referred to above, only 10 per cent, can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10 per cent, additional deduction can be availed of in the subsequent assessment year, otherwise the very purpose of insertion of clause (iia) would be defeated because it provides for 20 per cent, deduction which shall be allowed. It has been consistently held by this court, as well as the apex court, that the beneficial legislation, as in the present case, should be given l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is entitled to claim remaining 50% depreciation of such 20% which is equal to the actual cost of new plant and machinery, accordingly ground no-I raised by the assessee is allowed. Respectfully following the same, we dismiss Ground No. 2 raised by the revenue . Respectfully following the said decision supra, we hold that the assessee is entitled for remaining portion of additional depreciation in the asst years 2008-09 and 2009-10 and accordingly the grounds raised by the assessee in this regard are allowed. 53. Respectfully following the decision of the Tribunal the assessee is entitled to additional depreciation (remaining portion). Thus ground no. 1 raised by the assessee is allowed. 10.2. Since the issues raised before us are squarely covered by the decision of this Tribunal in assessee s own case for preceding assessment year i.e. for AY 2010-11 referred above and Revenue being unable to controvert this fact by placing any other binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A). Thus, common ground no. 1 for AY 2011-12 AY 2012-13 raised by the Revenue is dismissed. 8.1. Since the issues raised before us are squarely covered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure in nature. The ld. CIT(A), however, decided this issue in favour of the assessee following the orders of the Tribunal in assessee s own case for A.Y 2006-07 to 2010-11. The ld. counsel for the assessee has submitted that this issue has been consistently decided in favour of the assessee by the Coordinate Benches of the Tribunal in the earlier assessment years. He, in this respect, has relied upon the latest decision of the Tribunal 07.02.2023 passed in ITA Nos.2142 2143/Kol/2018 in relation to Assessment Years 2013-14 2014-15, wherein, the identical ground raised by the department has been dismissed by the Tribunal relying upon the earlier decision of the Tribunal in the own case of the assessee. The relevant part of the order of the Tribunal dated 07.02.2023 (supra) is reproduced as under: Revenue s common Ground no. 3 for AY 2013-14 2014-15 relating to the claim of compensation paid for obtaining limestone connected to mining activity: 10. We have heard rival contentions and perused the records placed before us. We find that this Tribunal in assessee s own case for AY 2011- 12 2012-13 dealt with this issue and decided in assessee s favour observing as follows: 12. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paper Book, paragraphs 2 at 2.2), by following its order for the assessment year 2006-07. The Hon ble Tribunal dismissed the Department s appeal for the assessment year 2010-11 (Page 163 at Pp 164-165 of the Paper Book-paragraphs 18 at 22-23) by following its order for the assessment years 2008-09 and 2009-10. 12.3. The Department preferred appeals before the Hon ble Calcutta High Court against the orders of this Hon ble Tribunal for the assessment years 2007-08 [ITAT 80/2015 and GA 1714/2015 Page 47 at 52 Question 2(c) of the Compilation of Case Laws] and for the assessment year 2010-11 [ITA 124/2019-Supplementary Affidavit affirmed by the Department Page 36 at Page 43 Question 14(c) of the Compilation of Case Laws]. The Hon ble High Court, by orders dated September 26, 2019 (Pages 45-46 of the Compilation of Case Laws) and March 11, 2020 (Page 29 at Page 30 of the Compilation of the Case Laws) respectively, was pleased not to admit the said appeals filed by the department on this issue for the assessment years 2007-08 and 2010-11. Further, this issue was not raised by the department before the Hon ble Calcutta High Court in ITA No. 125/2019 preferred for the assessment years 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment years 2007-08 (page 3, para 4), 2008-09 (page 55, para 4) and 2009- 10 (page 110, para 5). It was submitted that in this year also, the compensation amount of Rs. 23,71,3401- should be held to be revenue in nature and an admissible deduction. 21. The CIT(A) deleted the addition made by the AO by following the order of the Tribunal in ITA No. 1936/Kol of 2010. Aggrieved by the order of the CIT(A), the revenue has raised Gr.No.2 before the Tribunal. 22. At the time of hearing, it was brought to our notice that identical issue was considered by the Tribunal in assessee s own case for A.Y.2008-09 and 2009-10 in ITA Nos. 971/Kol/2012 298/Kol/.2013 and this tribunal on an identical issue held as follows: 2.2. We have heard the rival submissions. We find that the issue under dispute is squarely covered by the decision of this tribunal in assessee s own case for the Asst Year 2006-07 wherein it was held that We have heard the parties and perused the material placed on record. The I A. Counsel for the assessee has elaborated the facts of the case making reference of several decisions of Tribunal and Hon'ble Supreme Court and High Courts. After careful consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. representatives have submitted that the issue is squarely covered in favour of the assessee by the above decision of the Tribunal in the own case of the assessee for earlier assessment years. Therefore, respectfully following the same for the sake of consistency, this issue is decided in favour of the assessee and against the revenue. Ground No.7 of Revenue s appeal is hereby dismissed. 11. Ground No.8 Vide Ground No.8, the revenue has assailed the decision of the CIT(A) in holding that the amount received by the assessee of Rs. 31,86,63,403/- as industrial promotion assistance from the State Govt. is capital in nature as against the observation of the Assessing Officer that the same was a revenue receipt liable to taxation. The ld. counsel, in this respect, has submitted that the assessee undertook expansion of its cement unit in Durgapur, West Bengal at a cost of about Rs. 100 crore and increased the manufacturing capacity from 0.6 million tonnes per annum to 1.6 million tonnes per annum. The expansion was practically a new unit. Commercial production post-expansion commenced in December, 2005. The said expansion undertaken by the assessee qualified as a Mega Project under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble unless and until production had commenced. The Assessing Officer included the said amount in the assessable income of the assessee and that was affirmed by the Commissioner (Appeals). On further appeal, the Tribunal deleted the additions holding that the refund was a development subsidy in the nature of a capital receipt. On reference, the High Court set aside the order of the Tribunal. On further appeal by assessee Hon ble SC held while distinguishing the decision of Hon ble M.P. High Court on identical facts- 34. The Madhya Pradesh High Court in the case of CIT v. Dusad Industries 162 ITR 734, dealt with a case where Government had framed a scheme for granting sales tax subsidies to industries set up in backward areas. The High Court was of the view that the object of the scheme was not to supplement the profits made by industries. In that view of the matter, the High Court held that the subsidies given under the said scheme by the Government to newly set up industries were capital receipts in the hands of the industries and could not be taxed as revenue receipts. In that case, 75 per cent of the sales tax paid in a year for a period of five years from the day of starting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dated 07.02.2023 (supra) is reproduced as under: Revenue s common Ground no. 4 for AY 2013-14 2014-15 regarding the issue of treating of industrial promotion assistance from the State Government as capital receipt: 11. We have heard rival contentions and perused the records placed before us. We find that this Tribunal in assessee s own case for AY 2011- 12 2012-13 has dealt with this issue and decided in assessee s favour observing as follows: 13. We have heard rival contentions and perused the records placed before us. The fourth common ground of the Department s appeal relates to the assessee s claim that industrial promotion assistance of Rs. 16,94,84,638/- received from the West Bengal State Government is a capital receipt and cannot be subjected to tax. The said amount was received by the assessee in terms of the West Bengal Incentive Scheme, 2000 (hereinafter referred to as the 2000 Scheme ) for expansion undertaken at the assessee s Durgapur Cement Works involving an investment of about Rs. 100 crore. 13.1. The material facts are that the assessee undertook expansion at its cement unit in Durgapur, West Bengal at a cost of about Rs. 100 crore and increased the manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 260A of the Act being ITA No. 125/2019, GA No. 3548/2018 (Page 11 at Pp 23-24 Question 10(i) of the Compilation of Case Laws). The Hon ble High Court by an order dated September 12, 2019 was pleased not to admit the said question (Page 9-10 of the Compilation of Case Laws). 13.4. The identical question involving the 2000 Scheme came up for consideration recently before the Hon ble Calcutta High Court in PCIT vs. Budge Budge Refineries Limited, (2022) 139 taxmann.com 124 (Calcutta) and the revenue s appeal against the order of the Hon ble Tribunal was dismissed. We find that this Tribunal in assessee s own case for AY 2010-11 dealt with this issue and decided in assessee s favour observing as follows: 29. At the time of hearing, it was agreed by both the parties that identical issue was considered by this Tribunal in assessee s own case in A.Y.2008-09 and 2009-10 in ITA Nos. 971/Kol/2012 and ITA No.942/Kol/2013, 298/Kol/2013 and 329/Kol/2013 and this tribunal in its order dated 25.8.2017, on the aforesaid issue held as follows: 4.3. We have heard the rival submissions and perused the materials available on record including the paper book containing the entire West Beng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n detail and which are undisputed. It is admitted that the assessee's issue of Sales Tax Incentive is capital in nature for the reason that the very scheme under which the expansion of the unit and subsidy under Rajasthan Sales Tax Scheme, 1998 was received explains the purpose of the scheme as incurring capital expenditure for installation of plant and machinery and for eligible for fixed capital investment. Even the issue of assessee is covered in its favour by Tribunal's decision in assessee's own case all along from AYs 2002-03 to 2006-07. It is not brought to our notice by the Revenue that the matter has been decided by Hon ble Calcutta High Court, despite a query from the Bench. In such circumstances, and taking a consistent view, we hold that the CIT(A) has rightly treated the sales tax subsidy receipt as 'capital in nature'. 8. In respect to the issue of application of Explanation-10 to Sec.43(1) of the Act we find from the facts of the case that the Rajasthan Govt, has framed a incentive scheme i. e., R.S.T/C.S.T. Exemptions Scheme 1998 for encouragement of setting up of industrial project or expansion of existing industrial projects. It is also a fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Explanation provides that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. It is further, provided thereunder, that where such subsidy or grant or reimbursement of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee. In order to invoke Explanation 10, it is necessary to show that the subsidy was directly or indirectly used for acquiring an asset. This is again a question of fact. The relatable subsidy to such asset can be reduced from the cost only if it is found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue is dismissed. 11.1. Since the issues raised before us are squarely covered by the decision of this Tribunal in assessee s own case for preceding AYs 2011- 12 AY 2012-13 except for the change in figure and Revenue being unable to controvert this fact by placing any other binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A). Thus, common ground no. 4 for AY 2013-14 2014-15 raised by the Revenue are dismissed. 14. So far as the reliance of the ld. DR on the decision of the Hon ble Supreme Court in Sahney Steel Press Works Ltd. v. CIT (supra) is concerned, it is to be noted that the said decision has subsequently been considered by the Hon ble Supreme Court in the case of CIT-I Vs. M/s Chaphalkar Brothers, Pune and Others in Civil Appeal Nos. 6513- 6514 of 2012 order dated 7.12.2017. The Hon'ble Supreme Court while deliberating on the earlier decisions of the Supreme Court in the cases of Sahney Steel Press Works Ltd. Hyderabad Vs. CIT, A.P.-1, Hyderabad Vs. 1997 (7) SCC 765, CIT, Madras Vs. Pooni Sugars and Chemicals Limited 2009 (9) SCC 337 and further of the Hon'ble J K High Court in the case of Shri Balaji Alloys Vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept of a Complete Family Entertainment Centre, more popularly known as Multiplex 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 k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of the revenue s appeal is hereby dismissed. 17. Ground No.9 Vide this Ground of Appeal, the revenue has agitated the action of the CIT(A) in holding that the amount received by the assessee as interests subsidy from the state government was capital in nature as against the revenue receipt treated by the Assessing Officer. 18. The ld. counsel for the assessee, in this respect, has submitted that the nature of the interest subsidy was same i.e. Capita Receipt as noted above in respect of investment incentives given by the Govt. and that even subsequently, the said interest subsidy was renamed as Capital Investment Subsidy under the amended Rajasthan Investment Promotion Scheme, 2003 in respect of expansion undertaken at the assessee s Chanderia Cement Works. The ld. counsel has submitted that the issue is identical as raised vide Ground no.8 of the revenue s appeal. He, in this respect, has relied upon the latest decision of the Tribunal 07.02.2023 passed in ITA Nos.2142 2143/Kol/2018 in relation to Assessment Years 2013-14 2014-15, wherein, the identical ground raised by the department has been dismissed by the Tribunal, relying upon the earlier decision of the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K) and the judgment of the Hon ble Supreme Court on appeal therefrom reported as CIT v. Shree Balaji Alloys, (2017) 80 taxmann.com 239 (SC) as also the judgment of the Hon ble Supreme Court in CIT v. Meghalaya Steels Limited, (2016) 383 ITR 217 (SC).The order dated August 25, 2017 for the assessment years 2008-09 and 2009-10 was followed by the Hon ble Tribunal for the assessment year 2010- 11 decided by an order dated September 13, 2017 (Page 190 at pages 193-194 of the Paper Book paragraphs 68 at 73-74). A still later decision in the assessee s favour is that of the Hon ble Calcutta High Court in PCIT v. Ankit Metal and Power Limited, (2019) 416 ITR 591 (Cal) (Page 76 at Pp 84,86-87 of the Compilation of Case Laws). It is submitted that this ground is covered in favour of the assessee. We find that this Tribunal in assessee s own case for AY 2010-11 dealt with this issue and decided in assessee s favour observing as follows: 73. At time of hearing, it was agreed by the parties before us that identical issue arose for consideration in Assessee s own case for AY 2009-10 and in that year, the Hon ble Tribunal in ITA No. 942/Kol/2013 and ITA No.329/Kol/2013 by its order dated 25.8.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 19.4.2016 in Civil Appeal No.10061 of 2011 held that the interest subsidy was a capital receipt in view of its decision in Ponni Sugars (supra) and further held that even if it was treated as a revenue receipt, then the assessee was entitled to deduction under section 80IB/80IC as profits derived from eligible business according to its judgment in CIT v Meghalaya Steels Ltd., (2016) 383 ITR 217 (SC). Hence respectfully following the said decision of the Hon ble Supreme Court in Balaji Alloys supra, we hold that the interest subsidy is to be treated only as a capital receipt and accordingly the grounds raised by the assessee in this regard are allowed. 74. Respectfully following the decision of the Tribunal in Assessee s own case, we hold that the interest subsidy in question is a capital receipt not chargeable to tax. Thus, ground nos. 10 and 11 raised by the assessee are allowed. 14.2. Since the issues raised before us are squarely covered by the decision of this Tribunal in assessee s own case for preceding assessment year i.e. AY 2010-11 and Revenue being unable to controvert this fact by placing any other binding precedence in its favour, we fail to find any infirmity in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/-. 20.2. On appeal, the Commissioner of Income Tax (Appeals) following the decisions of the Tribunal in the assessee s own case for the assessment years 2008-09 to 2010-11 directed the Assessing Officer to consider only those investments which yielded dividend income but excluding investments in subsidiary companies, for computing the disallowance under section 14A read with rule 8D(2)(iii). 21. Before us, the ld. DR has made the following submissions: 1. On this issue reliance is placed on Maxopp Investment Ltd. v. CIT, New Delhi [2018] 91 taxmann.com 154 (SC), wherein Hon ble Supreme Court held inter alia in para 35 that The aforesaid reasoning would be applicable in cases where shares are held as investment in the investee company, may be for the purpose of having controlling interest therein. On that reasoning, appeals of Maxopp Investment Limited as well as similar cases where shares were purchased by the assessees to have controlling interest in the investee companies have to fail and are, therefore, dismissed. I may be mentioned that in Maxopp Investment Ltd. [2011] 15 taxmann.com 390 (Delhi) [affirmed by SC as above] the Hon ble High Court inter alia held in Para 31 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum of disallowance. Therefore, a it is clear from a conjoint reading of the two judgements quoted above that the Ld.CIT(A) was not justified in directing the AO to compute the disallowance u/r 8D(2)(iii) by considering only the dividend bearing investments and by excluding the strategic investments. This decision deserves to be reversed and the lower authorities may, therefore, be directed accordingly. 22. The ld. counsel for the assessee, however, has submitted that the assessee had made investments out of its own funds in shares of companies and mutual funds. That the mutual fund investments of the assessee were not in equity-oriented funds and hence, the proceeds at maturity/redemption of the same were not exempt from taxation but would attract capital gains tax. That substantial amount was invested in mutual fund investments for which there was no provision of providing any dividend. That, some of the mutual fund schemes, however, have yielded dividend income, however, the said dividend was reinvested by the assessee without being actually receiving the same. He has further submitted that the assessee has made calculation of the suo moto disallowance of expenditure after c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d units of mutual funds. The assessee offered a disallowance of Rs. 6,40,792/- as expenditure incurred in relation to the exempt income. The disallowance offered by the assessee comprised salary and other employee related costs on proportionate basis as also establishment expenses. The ld. AO invoked rule 8D and worked out the disallowance at the rate of 0.5% of the average of the opening and closing values of investment amounting to Rs. 5,77,72,000/-. After deducting the disallowance of Rs. 6,40,792/- made by the assessee, the ld. AO disallowed Rs. 5,71,31,208/-. On appeal, the ld. CIT(A) following the decisions of the Hon ble Tribunal in the assessee s own case for the assessment years 2008-09 to 2010-11 directed the ld. AO to consider all investments (excluding investments in subsidiary companies) which yielded dividend income for computing the disallowance under section 14A read with rule 8D(2)(iii). 15.2. Before us, ld. Counsel for the assessee stated that the material facts are that the assessee is in the business of manufacturing cement, jute goods, vinoleum, auto trim parts, etc. From time to time, the assessee makes investments out of its own funds in shares of companies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments (including in non-equity oriented mutual fund growth schemes) did not provide for payment of any dividend. Upon redemption/disposal of all such investments, the assessee would be liable for capital gains tax. The income from such investments is not exempt under the provisions of the Act. Even in respect of the assessee s investments in other schemes of mutual funds providing for payment of dividend, the assessee is liable for capital gains tax upon disposal/redemption of the units since such schemes are also not equity oriented. Similarly, in respect of the assessee s investments in unquoted equity shares of companies, it will have to pay capital gains tax upon disposal thereof. It is only the dividend received by the assessee in respect of the dividend schemes of the mutual funds which is not taxable in the assessee s hands because of payment of dividend distribution tax by the mutual funds. 15.5. Further ld. Counsel for the assessee submitted that in course of the assessment proceedings, the assessee submitted a detailed statement in respect of the expenditure of Rs. 6,40,792/- offered by it for disallowance as incurred in relation to the exempt dividend income. In the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of its investment portfolio. This is apparent from the findings of the ld. AO in paragraphs 11.2 and 11.3 at page 15 of the assessment order: 11.2 Carefully considering the above submission, contention of the assessee is partly accepted. Disallowance u/s. 14A is worked out by invoking Rule 8D of the IT Rules since it is applicable for current assessment. The amount of disallowance is worked out as follows: Opening value of investment : 114165.22 lacs Closing value of investment : 116920.91 lacs Average value : 115543.07 lacs 0.5% of the above : 577.72 lacs 11.3 In view of above Rs. 5.71,31,208/- [Rs. 5,77,72,000 less Rs. 6,40,792] is further disallowed u/s. 14A and added back to total income. It is submitted that ld. AO did not dispute the correctness of the assessee s computation of the expenditure to be disallowed. The only reason given by ld. AO for making the disallowance was that rule 8D was applicable for the assessment year. It is submitted even rule 8D stipulates that ld. AO can resort to sub-rule (2) only where ld. AO, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of expenditure made by the assessee. It is submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, the nature of the loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the Assessing Officer. [emphasis added] 15.8. Ld. Counsel for the assessee further submitted that in Kesoram Industries Ltd. vs. PCIT [2022] 441 ITR 648 (Cal), the Hon ble Calcutta High Court was pleased to hold as follows: 6. Two important issues have been pointed out in the aforementioned decision. Firstly that the provisions of section 14A has to be interpreted, particularly, the words that in relation to the income that does not form part of total income. Therefore, it was held that the principle of apportionment of expenses comes into play as that is the principle which is incorporated in section 14A of the Act. With regard to as to how the power under section 14A(2) read with rule 8D of the Rules could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in earning exempt income. It cannot therefore be said that once the AO rejects the mode of computation of disallowance u/s.14A of the Act as made by the Assessee, he has no other option but to resort to Rule 8D of the Rules . [emphasis added] 15.10. Ld. Counsel for the assessee that in the instant case, ld. AO not having expressed any dis-satisfaction with the assessee s claim of expenditure incurred in relation to exempt income, he was not entitled to invoke section 14A(2) or rule 8D(2)(iii). Where an assessee is engaged in multiple income earning activities and the same set of employees and infrastructure are used for all the activities, some taxable and some exempt, the common expenses incurred in respect of such employees and infrastructure have to be necessarily apportioned between the taxable and exempt activities. As held by the Hon ble Supreme Court in CIT v. Walfort Share and Stock Brokers P. Ltd., (2010) 326 ITR 1(SC) and in Maxopp s case (supra), the principle of apportionment of expenses comes into play as that is the principle which is incorporated in section 14A of the Act. The assessee adopted a reasonable basis for such apportionment. The ld. AO did not find an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idend income for concluding the disallowance u/s 14A of the Act r.w. Rule 8D(3) of the I.T. Rules. Relevant finding of this Tribunal is reproduced below: 42 At the time of hearing both the parties agreed that identical issue was considered and decided by the tribunal in assessee s own case in ITA No.971/Kol/2012, 942/Kol/2013, 298 329/Kol/2013 for A. Y.2008-08 and 2009-10 in its order dated 25.8.2017 and this Tribunal on the identical issue held as follows: 3.3. We have heard the rival submissions and perused the materials available on record. The Id DR vehemently relied on the order of the Id AO. The ld. AR prayed that the disallowance made by the assessee voluntarily at Rs 4,00,096/- which was later revised to Rs 4,43,903/- based on the devotion of certain executives of the organization for managing the investment portfolio and other indirect expenses connected thereon, should be accepted and the ld. AO had not given any proper finding as to why the said disallowance was not proper. He simply resorted to computation mechanism provided in Rule 8D of the Rules and made disallowance thereon under the third limb of Rule 8D(2)(iii). Alternatively he prayed that 0.5% of dividend bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion given above. No disallowance under section 14A read with rule 8D(2)(i) and (ii) can be made in this case. We also find lot of force in the argument of the ld. AR that the investments made in subsidiaries would fall under the category of strategic investments as they are admittedly made only for the purpose of obtaining controlling interest in the said companies and not for the purpose of earning dividend income which is exempt. Hence they would stand differently from other regular investments. Reliance in this regard is placed on the decision of this tribunal in the case of Dy CIT vs Selvel Advertising (P) Ltd reported in (2015) 58 taxmann.com 196 (Kol Trib). We also find that the reliance placed in this regard by the Id A R on the decision of the Hon'ble Delhi High Court in the case of CIT vs Oriental Structural Engineers Pvt Ltd in ITA 605/2012 dated 15.1.2013 wherein it was held that It was the contention of the revenue that Rule 8D of the Income Tax Rules. 1962 had not been applied properly in respect of the assessment year 2008-09. This aspect has been considered by the Tribunal in detail and it has observed as under: It was the contention of the revenue that Rule 8D o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary companies) which yielded dividend income to the assessee for computing disallowance u/s 14A of the Act r.w. Rule 8D of the Rules. Accordingly the grounds raised in this regard are partly allowed for statistical purposes. 43. Respectfully following the aforesaid decision we partially uphold the order of CIT(A) and dismiss ground no.4 raised by the revenue and partly allow ground nos. 12 and 13 raised by the assessee and direct the AO to consider all investments (excluding investments in subsidiary companies) which yielded dividend income to the assessee for computing disallowance u/s 14A of the Act r.w. Rule 8D(2)(iii) of the Rules. 15.13. Since the issues raised before us are squarely covered by the decision of this Tribunal in assessee s own case for preceding assessment year i.e. AY 2010-11 and assessee fail to prove that there is change of facts in the years under appeal vis- -vis preceding AY 2010-11 and also Revenue being unable to controvert by placing any other binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A). Thus, common ground no. 6 for AY 2011-12 AY 2012-13 raised by the Revenue is dismissed. 13.1. Since the issues raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own case for AY 2011- 12 2012-13 dealt with this issue and decided in assessee s favour observing as follows: 16. The seventh common ground of the Department s appeal is against the decision of the ld. CIT(A) directing the ld. AO to exclude the subsidy/incentive from book profit under section 115JB of the Act. The ld. AO rejected the assessee s claim to exclude the following incentives in computing Book Profit u/s 115JB of the Act: Particulars Amount (in Rs. ) Interest Subsidy received from Govt. of Rajasthan under Rajasthan Investment Promotion Scheme, 2003 Rs. 3,04,22,210 Incentive from Govt. of West Bengal in the form of Industrial Promotion Allowance Rs. 16,94,84,638 Total Rs. 19,99,06,848 The ld. AO held that the accounts were prepared in accordance with the provisions of Companies Act and these incentives were credited to Profit Loss Account. Besides, the claim was not made through IT Return or Revised IT return and therefore fresh claim raised during the course of assessment proceedings was not accepted in view of decision of Hon ble Supreme Court in case of Goetze (India) Ltd, [2006] 284 ITR 323 (SC). On appeal, the ld. CIT(A) granted relief to the assessee relying upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2 of the Act. 16.2. What can be taxed u/s 115JB of the Act is the total income which is income as defined in section 2(24) of the Act chargeable under section 4 and computed in the manner laid down in section 115JB. What is not income within the meaning of section 2(24) is outside the purview of the Act; cannot form subject matter of the charge of tax under section 4; cannot form part of total income and cannot be subjected to tax either under the normal computation provisions or under section 115JB of the Act. The absence of provision in section 115JB of the Act for exclusion of such capital receipt credited to the profit and loss account cannot result in its taxation. 16.3. It is submitted by ld. Counsel for the assessee that this issue is now squarely covered in favour of the assessee by the judgment of the Hon ble Calcutta High Court in PCIT vs. Ankit Metal Power Ltd., [2019] 416 ITR 591 (Cal) [Page 76 of the Compilation of Case Laws]. The said decision also deals with the aspect relating to claim made otherwise than by filing a return/revised return. Particular reference is invited to Paragraphs 30-33 of the judgment [Pages 87-88 of the Compilation of the Case Laws], which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said decision held as follows: .In the circumstances of the case, we dismiss the Civil Appeal. However, we make it clear that the issue in this case is limited to the power of the Assessing Authority and does not impinge on the power of the Income Tax Appellate Tribunal under Section 254 of the Income Tax Act, 1961. This judgment was followed by our Court in the case of Britannia Industries Ltd. (supra) holding that Tribunal has the power to entertain the claim of deduction not claimed before the Assessing Officer by filing revised return. Respectfully following the aforesaid decision as well as the view already taken by us in this case that the aforesaid subsidies are capital receipt and not an 'income' and not liable to Tax Tribunal in exercise of its power under Section 254 of the Income Tax Act justified this claim though no revised return under Section 139 (5) of the Act was filed before the Assessing Officer. We answer both the question Nos. 1 and 2 in negative and in favour of assessee. (emphasis added) 16.4. Since the issue stands squarely covered by the Hon'ble Jurisdictional High Court in the case of Ankit Metal and Power Limited (supra), we fail to fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of upward adjustment made to book profit on account of the disallowance computed under section 14A read with rule 8D. The assessee had disallowed a sum of Rs. 6,40,792/- in the computation of its book profit in terms of clause (f) of Explanation 1 to section 115JB of the Act on account of expenditure relatable to exempt dividend income. Whilst working out the disallowance under section 14A of the Act read with rule 8D of the Rules under the normal computation provisions, ld. CIT(A) made a further disallowance of Rs. 5,71,31,208/-. The same disallowance of Rs. 5,71,31,208/- was made in the computation of book profit under section 115JB of the Act. On appeal, ld. CIT(A) held that the provisions of section 14A and rule 8D cannot be applied in the computation of book profit under section 115JB of the Act. He placed reliance on the judgment of the Hon ble Calcutta High Court in CIT v. Jayshree Tea and Industries Limited in ITAT 47 of 2014 and G.A. 1501 of 2014 decided on November 19, 2014. 17.1. It is submitted that this question is decided in favour of the assessee by the judgment of the Hon ble Calcutta High Court in Jayshree Tea s case (supra) (page 152 of the Compilation of Case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermining the book profits under section 115JB of the Act cannot be sustained. Any disallowance computed under section 14A of the Act pertain to computation of income under normal provisions of the Act and cannot be read into the provisions of section 115JB of the Act pertaining to computation of book profits by levy of Minimum Alternate Tax (MAT) and there is no express provision in clause (f) of Explanation 1 to section 115JB of the Act to that extent. For the aforementioned reasons, the third substantial question of law is answered against the revenue and in favour of the assessee. (emphasis added) 17.3. Respectfully following the judgments/decisions referred herein above, we fail to find any infirmity in the finding of ld. CIT(A) in deleting upward adjustment made to book profit for disallowance computed u/s 14A r.w. Rule 8D of the Rules. Thus, common ground no. 8 raised by the Revenue for AY 2011- 12 AY 2012-13 are dismissed. 16.1. Respectfully following the judgments/decisions referred herein above, we fail to find any infirmity in the finding of ld. CIT(A) in deleting upward adjustment made to book profit for disallowance computed u/s 14A r.w. Rule 8D of the Rules. Thus, comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book profits. However, we do not find force in the aforesaid contention of the ld. counsel for the assessee in this respect. It is to be pointed out that as per Explanation 1(f), the book profit means the profit shown in the statement of profit and loss account as increased by the amount of expenditure relatable to the exempt income. The said amount of expenditure has already been ordered to be determined as per our observations made above while adjudicating the issue relating to the disallowance u/s 14A vide Ground No.10 of the revenue s appeal. It has to be further noted that section 115JB in itself does not prescribe any procedure to calculate the expenditure relatable to exempt income earned by the assessee. The said provision has been separately and specifically placed in the Act u/s 14A of the Act. Therefore, the book profits of the assessee are liable to be increased by the expenditure as calculated u/s 14A of the Act as provided under Explanation 1 to Clause (f) of section 115JB of the Act. In view of this, it is directed that the book profits will be increased u/s 115JB of the Act by the disallowance calculated as per our directions given while adjudicating Ground No.10 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of leave encashment is available only in the year of actual payment. It is then submitted by ld. Counsel for the assessee that ld. AO may be directed to allow deduction in respect of the amount actually paid on account of leave encashment during the previous year relevant to the AY 2013-14 2014-15. 21.3. We also find that this issue came for adjudication before this Tribunal in assessee s own case for AY 2011-12 2012-13 and the following was held by this Tribunal: 22.3. We also find that this issue came for adjudication before this Tribunal in assessee s own case for AY 2010-11 and the following was held by this Tribunal: 67. We have considered his submissions and are of the view that this liability is purely notional and cannot be allowed as deduction. It is an admitted position that there is no out flow on this account in any assessment year and the liability is notional and is based purely on entries in the books of account on the basis of notional figures. This may be relevant for the purpose of showing the true and fair view of the state of affairs of the assessee as is required for reporting to shareholders and other public authorities. When it comes to computing total i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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