9911796707
TMI Blog2023 (7) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The assessee is engaged in the manufacturing and trading of Viscose Staple Fiber, Textile, Power, Cement, Sponge Iron, Shipping, Plant & Machinery. The Assessing Officer ("AO"), vide order dated 20/02/2006, passed under section 143(3) of the Act, assessed the total income of the assessee at Rs. 1196,50,28,870, after making certain additions/disallowances to the income declared by the assessee. The learned CIT(A), vide impugned order, granted partial relief to the assessee. Being aggrieved, both, the assessee as well as the Revenue, are in appeal before us. ITA no.3517/Mum./2006 Assessee's Appeal - A.Y. 2005-06 3. The assessee, in its appeal, has raised the following grounds:- "The appellant prefers an appeal against the order of the Commissioner of Income Tax (Appeals) - XXVI [hereinafter referred as "CIT (A)"] on the following amongst other grounds each of which is without prejudice to any other. 1. Disallowance under section 43B 1.1. On the facts and circumstances of the case and in law, the CIT (A) erred in not allowing the amounts paid or written back during the previous year amounting to Rs. 1,87,21,814/-, which had already been disallowed in the past un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.10 crores towards loss on loans given to subsidiary Company. 6.2. The CIT (A) ought to have held that the loss of Rs. 37.10 crores is allowable deduction while computing taxable business income. 7. Disallowance u/s. 40(a)(ia) 7.1. On the facts and circumstances of the case and in law, the CIT (A) erred in upholding the action of AO in disallowing the liability of Rs. 2,67,92,244/- towards year-end expenses applying provision of section 40 (a)(ia). 7.2. The CIT (A) ought to have deleted the disallowance and held that the provision of section 40(a)(ia) are not applicable in the case. 8. Deduction u/s. 80G 8.1. On the fact and circumstance of the case and in law, the CIT(A) erred in upholding the action of AO in rejecting claim of deduction u/s. 80G of Rs. 29,772/-. 8.2. The CIT (A) ought to have held that deduction u/s. 80G is allowable against the taxable profit of the Company. 9. Miscellaneous Receipts 9.1. On the facts and circumstance of case and in law, the CIT(A) erred in upholding the action of AO that miscellaneous receipts of Rs. 5,71,169/- (Rs. 95,09,733/- less Rs. 89,38,564/-) is not income derived from undertaking eligible for deduction u/s. 80IA. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the coordinate bench of the Tribunal in assessee's own case in Grasim Industries Ltd. v/s ACIT, in ITA no.4753/Mum./ 2004 and ITA no.5584/Mum./2004, for the assessment year 2002-03, wherein the coordinate bench, while dismissing the similar issue, following the earlier decision rendered in assessee's own case, observed as under:- "6. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum./2003 dated 22.10.2014 held as under: - "2. Rival contentions have been heard and perused the record. The assessee is engaged in manufacturing and sale various products. During the course of scrutiny assessment, the A.O. disallowed assessee's claim of deduction u/s 43-8 of the Act in respect of liabilities disallowed in earlier years which are paid/written back in the current year. The A.O. found that in the computation of income an amount of Rs. 10.85 crores has been considered as disallowance u/s 43-8 (a) of the Act by the assessee itself. However, an amount of Rs. 1.31 crores was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready been allowed by the AO vide aforesaid order. 10. In view of the aforesaid submissions of the learned Sr. Counsel, ground no.2, raised in assessee's appeal is rendered academic and therefore, is left open. 11. The issue arising in ground no.3, raised in assessee's appeal, is pertaining to the taxability of Sales Tax exemption received by the assessee. 12. The brief facts of the case pertaining to the issue, as emanating from the record, are: During the year under consideration, the assessee availed Sales Tax exemption benefit of Rs. 143.12 crore from the State Governments for setting-up of industries in the notified area. The assessee claimed that the Sales Tax exemption is a capital receipt not chargeable to tax and, therefore, is to be excluded from the profit while computing the income taxable under the head "Income From Business". 13. The AO, vide assessment order passed under section 143(3) of the Act, held that the State Governments have not given any amount of subsidy either in cash or in-kind to the assessee. It was further held that the object of the government is to grant Sales Tax exemption is to increase sales. It was further held that under the scheme, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption Scheme (Madhya Pradesh Industrial Policy & Action Plan, 1994) * Sales Tax Waiver Scheme (Package of Fiscal Incentives offered by Government of Tamil Nadu to Industries) * Punjab Industrial Incentive Code under the Industrial Policy, 1996 * Haryana Valued Added Tax Act, 2003 * Sales Tax Exemption Scheme (M.P. Vanijyikar Adhiniyam, 1994) * Sales Tax Incentive Scheme (Incentives offered by Government of Gujarat under the New Incentive Policy-Capital Investment Incentive (General) Scheme-1995-2000) 55. We find that the taxability of sales tax exemption received under the schemes of the State of Maharashtra, Haryana, Rajasthan, and Madhya Pradesh came up for consideration before the coordinate bench of the Tribunal in assessee's own case in JCIT v/s Grasim industries Ltd, in ITA No. 2155/Mum/2016 etc., for the assessment years 1996-97 to 2000-01. The coordinate bench vide order dated 29/04/2022 decided a similar issue in respect of these schemes in favour of the assessee and held that the subsidy/incentive received by the assessee is in the nature of capital receipt and not chargeable to tax. We find that after analysing each sales tax subsidy scheme, the coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Supreme Court in para 14 of its decision had held that ―character of receipt of subsidy has to be determined with respect to the purpose for which the subsidy is given. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial." In fact, the Hon'ble Supreme Court while rendering this decision had duly considered its earlier decision in the case of Sahney Steel and Press Works Ltd., reported in 228 ITR 253 and had absolutely no quarrel with that judgement. Rather, it concurred with the decision rendered in Sahney Steel and Press Works Ltd., case. In this regard, it would be relevant to reproduce the operative portion of the decision of Hon'ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., as under:- "14. The second case is Lincolnshire Sugar Co. Ltd. v. Smart 20 TC 643. In that case it was found that Lincolnshire Sugar Co. Ltd carried on the business of manufacturing sugar from home grown beet. The company was paid various sums under British Sugar Industry (Assistance) Act, 1931, out of monies provided by the Parliament. The question was whether these monies were to be taken into acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee commenced its production. The said payments were trade for a period of five years calculated from the date of commencement of production in the assessee's factory. The subsidies are operational subsidies and not capital subsidies." 56. Thus, respectfully following the aforesaid decision, rendered in assessee's own case, we are of the considered view that the sales tax exemption received by the assessee, in the year under consideration, under the similar schemes of the State of Maharashtra, Haryana, Rajasthan, and Madhya Pradesh are in the nature of capital receipts and therefore not taxable in the hands of the assessee. 57. As regards the Sales Tax Waiver Scheme (Package of Fiscal Incentives offered by the Government of Tamil Nadu to Industries), forming part of the paper book from pages 289-334, we find that the objective of the scheme was for fostering the pace of industrialisation and to enhance the competitiveness of Tamil Nadu for attracting a large share of industrial projects. Accordingly, the Government of Tamil Nadu introduced the aforesaid scheme which includes capital subsidies and sales tax concessions. From page No. 294 of the paper book, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996. We find that in the scheme, inter-alia, the capital subsidy is provided to the new large and medium units set up in the notified area as mentioned in Annexure-I of the scheme. We find that under the said scheme certificate of eligibility was also issued to the assessee in respect of Vikram Bathinda Cement Grinding Unit. Thus, the dominant purpose for which this incentive scheme was introduced is also for setting up the industry in the notified area to promote industrial growth in the State. Therefore, we are of the considered view that the sales tax exemption received by the assessee under the scheme is also in the nature of capital receipt. Therefore, in view of the above, the sales tax exemptions received by the assessee under all the schemes of various State Governments, as noted above, are in the nature of capital receipt, and thus, are not taxable in the hands of the assessee. Accordingly, grounds no.7.1 and 7.2 raised in assessee's appeal are allowed." 17. In the absence of any allegation regarding the change in facts or in law in the present case, we find no reason to deviate from the conclusion so reached by the coordinate bench in the preceding year. Therefore, respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined part of the block of assets in the year under consideration and accordingly, the depreciation was computed. 22. On the other hand, the learned Departmental Representative ("learned DR") submitted that the assessee has not used the property for business purposes during the year under consideration and rather the same was let out. The learned DR further submitted that the property should be ready to use for claiming depreciation, which is not so in the present case. 23. We have considered the submissions of both sides and perused the material available on record. It is evident from the record that the property under question was purchased by the assessee in the assessment year 1987-88. Since its acquisition, the said property forms part of the block of assets for the purpose of claiming depreciation under the Act. It is the claim of the assessee that in the preceding years the assessee used this property as one of its office premises. In the year under consideration, the said property was let out and the rental income was offered to tax under the head "Income from House Property", after claiming a deduction under section 24 of the Act. The AO, vide assessment order, worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased; and (C) in the case of a slump sale, decrease by the actual cost of the asset falling within that block as reduced- (a) by the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922) in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) by the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 as if the asset was the only asset in the relevant block of assets, so, however, that the amount of such decrease does not exceed the written down value;] (ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced a system of allowing depreciation on block of assets. This will mean the calculation of lump sum amount of depreciation for the entire block of depreciable assets in each of the four classes of assets, namely, buildings, machinery, plant and furniture." 28. Further, as per section 43(6)(c)(i)(B) of the Act, the written down value in the case of any block of assets is reduced by the money payable when the asset is sold or discarded or demolished or destroyed. However, in the present case, the assessee continued to own this property, and the same was only let out during the year. In any case, this section also does not provide for carving out depreciation for disallowance, as is done by the AO in the present case. We find that the Hon'ble Delhi High Court in CIT v/s Oswal Agro Mills Ltd. [2012] 341 ITR 467 (Delhi), observed as under:- "32. Another significant and contemporaneous development, which needs to be noticed is that the Legislature has also deleted the provision for allowing terminal depreciation in respect of each asset, which was previ- ously allowable under section 32(1) (iii) and also taxing of balancing charge under section 41(2) in the year of sale. Instea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no.5, raised in assessee's appeal, is pertaining to the adjustment of the amount receivable from the debtors against the provision for doubtful debts made in the assessment year 1986-87. 31. Before us, the learned Sr. Counsel, at the outset, submitted that in the assessment year 1986-87, the deletion of disallowance of provision for doubtful debts was upheld by the coordinate bench of the Tribunal, which order has further been affirmed by the Hon'ble jurisdictional High Court. In view of the submissions of the learned Sr. Counsel, ground no.5, raised in assessee's appeal is rendered academic and therefore is kept open. 32. The issue arising in ground no.6, raised in assessee's appeal, is pertaining to the disallowance of loss on loans given to subsidiary companies. 33. The learned Sr. Counsel, at the outset, wishes to withdraw this ground on the basis that relief has already been allowed in assessment year 2007-08. Accordingly, ground no.6, raised in assessee's appeal is dismissed as withdrawn. 34. The issue arising in ground no.7, raised in assessee's appeal, is pertaining to the disallowance of provision made towards liability for year-end expenses under section 40(a)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest, excess/short provision, prior period adjustments, rent, miscellaneous receipts, job charges, exchange rate difference, export incentive, profit on the sale of DEPB license, notice pay and sludge sales. As per the assessee, all these receipts are directly connected with and derived from the eligible business, and therefore, should be considered for computation of deduction under section 80-IA of the Act. As is evident from the record, the learned CIT(A) only examined the receipts from job charges and excess provisions written back and considered the same to be business profits for computing deduction under section 80-IA of the Act. While, the other receipts, as noted above, under the broad category of 'miscellaneous receipts' were not examined by any of the lower authorities to determine whether they are derived by the undertaking or the enterprise from the eligible business, as per the provisions of section 80-IA of the Act. Therefore, in view of the above, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication as per law, after examining each and every receipt under the category of 'miscellaneous receipts', which were excluded from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 as under;- "We have heard the parties and considered the rival submissions. These refunds have been granted to the assessee in the year under consideration and therefore they would partake the character of income of the assessee. If however, any refund has been found to be not refundable to the assessee and consequently the interest granted is withdrawn the same would not partake the character of income. We accordingly direct the Assessing Officer to reduce from the taxability of the aforesaid interest granted to the assessee, the amount which has been withdrawn subsequently. We direct accordingly." 8. It was argued by the Id. A.R. that benefit of interest so allowed by the department was subsequently withdrawn as a result of the appellate orders should be given to the assessee and the interest subsequently withdrawn should not be taxed and for this, reliance was placed on the decision of the Tribunal in the case of Avada Trading Co. (P.) Ltd. vs. ACIT (2006) 100 ITD 131. 9. We have considered the rival contentions. As far as the taxability of interest amounting to Rs. 13,64,09,609/- is concerned, granted alongwith interest. However, if in the subsequent year refund of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in light of the amendment in section 90 of the Act, vide Finance Act, 2003, w.e.f. 01/04/2004, by observing as under:- "65. The issue arising in the aforesaid additional ground of appeal is pertaining to the taxability of dividend received from Egyptian company. Since, the issue raised by way of additional ground is a legal issue, which can be decided on the basis of material available on record, we are of the view that the same can be admitted for consideration and adjudication in view of the ratio laid down by the Hon'ble Supreme Court in NTPC Ltd. (supra). During the year under consideration, the assessee received Rs. 1,16,24,021 as a dividend from M/s Alexandria Carbon Black Company S.A.E., a company incorporated and registered under the laws of Egypt (U.A.R.). It is the plea of the assessee that the aforesaid dividend received from the Egyptian company is not taxable in India. We find that a similar issue came up for consideration before the coordinate bench of the Tribunal in assessee's own case in assessment year 2003-04. Vide order dated 13/06/2023 cited supra, the coordinate bench observed as under:- "65. Having considered the submissions of both sides, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxable in other contracting State that is country of source then country of resident i.e., India is precluded from including the same income in India; * Thirdly, the Hon'ble Supreme Court in Azadi Bachao Andolan (supra), has approved the reasoning of R.M. Muthaiah (supra) in an entirely different context, therefore, it cannot be held that the Hon'ble Supreme Court has carved out any express law on the phraseology of "may be taxed"; * Fourthly, in P.V.A.L. Kulandagan Chettiar (supra's) the Hon'ble Supreme Court has specifically refrained from giving any such interpretation of "may be taxed" and affirmed the decision of High Court on a different reasoning and grounds. Thus, this decision does not carve out any express law on the phrase "may be taxed"; and * Lastly, the Hon'ble Supreme Court in Turquoise Investments & Finance Ltd. (supra) has not only confirmed the decision of R.M. Muthaiah (supra) but also decision of the M.P. High Court, wherein extensively reliance was placed on the decision of S.R.M. Firm (supra). Thus, this decision of the Hon'ble Supreme Court in a way has confirmed the entire reasoning of the S.R.M. Firm (supra) which, in our opinion, is slightly diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf". In exercise of the powers so vested in the Central Government, vide notification no. 91 of 2008 dated 28th August 2008, it was notified as follows: In exercise of the powers conferred by sub-section (3) of section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that where an agreement entered into by the Central Government with the Government of any country outside India for granting relief of tax, or as the case may be, avoidance of double taxation, provides that any income of a resident of India "may be taxed" in the other country, such income shall be included in his total income chargeable to tax in India in accordance with the provisions of the Income-tax Act, 1961 (43 of 1961), and relief shall be granted in accordance with the method for elimination or avoidance of double taxation provided in such agreement. 11. The effect of Hon'ble Supreme Court's judgment in Kulandagan Chettiar's case (supra) thus was clearly overruled by the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the ratio laid down by the Hon'ble Supreme Court in NTPC v/s CIT, [1998] 229 ITR 383 (SC). 52. As per the assessee, the TUF subsidy is provided by the Central Government to sustain and improve the competitiveness and overall long-term viability of the Textile Industry and as an incentive for technology upgradation of the textile industry. It was submitted that the subsidy is granted via - Resolution on TUFS on Techno-Operational parameters by the Ministry of Textiles in March 1999. We, at the outset, find that while deciding a similar issue the coordinate bench of the Tribunal in the case of subsidiary of the assessee held the interest subsidy received under the TUF scheme is capital in nature. The relevant findings of the coordinate bench of the Tribunal in DCIT v/s M/s Grasim Industries Ltd (successor to Aditya Birla Novo Ltd.), ITAs No. 84/Mum./2023 and 356/Mum./2023, vide order dated 12/06/2023, observed as under:- "06. We have carefully considered the rival contention and perused the orders of the lower authorities as well as the decision of the coordinate bench. During the course of hearing before the coordinate bench in ITA number 2525/M/2014 for assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TUF scheme in details. The ld. Authorized Representative for the assessee further submitted that the Tribunal in assessee's appeal for assessment year 2009-10 (supra) has admitted this issue raised in additional ground of appeal and has restored to Assessing Officer for fresh adjudication. 39. The ld.Departmental Representative submitted that the issue may be restored to Assessing Officer for reconsideration in line with Tribunal order in assessee's appeal for Assessment Year 2009-10. 40. Both sides heard. The assessee has received subsidy under TUF scheme. The assessee has claimed the subsidy as capital receipt, whereas, the Department treated the subsidy as Revenue in nature. We find that the Hon'ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd.(supra) examined the scheme in the light of various decisions and held the subsidy under TUF scheme as capital in nature. Similar view has been taken by the Hon'ble Calcutta High Court in the case of CIT vs.Gloster Jute Mills Ltd.(supra). Thus, in view of above judgements of Hon'ble High Courts, we see no infirmity in the findings of CIT(A). The same are upheld and ground No.11 of the appeal is dismissed. 41. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Hon'ble Supreme Court in JCIT Vs. Chambal Fertilisers & Chemicals Ltd., [2022] 145 taxmann.com 420 (SC) allowed the Revenue's appeal against the Hon'ble Rajasthan High Court's decision in Chambal Fertilisers & Chemicals Ltd. Vs. JCIT, [2019] 107 taxmann.com 484 (Raj.) and held that education cess paid by the respondent-assessee would not be allowed as an expenditure under Section 37 read with 40(a)(ii) of the Act. Therefore, in view of the above, the additional grounds raised by the assessee vide application dated 30/01/2019, are dismissed. 57. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA no.3854/Mum./2006 Revenue's Appeal - A.Y. 2005-06 58. The Revenue, in its appeal, has raised the following grounds:- "1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs. 5,04,15,408/-u/s. 43B by relying upon the order of the ITAT in the assessee's case for the AY 1993-94 without appreciating that the department had not accepted the same by filing an appeal u/s. 260A. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal, vide order dated 13/06/2023, passed in assessee's own case for the assessment year 2003-04 cited supra, while deciding similar issue in favour of the assessee by following the decision rendered in the preceding year, observed as under:- "73. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee, by observing as under:- "48. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under:- "31. Ground No. 1 in Revenue's appeal relates to the disallowance u/s 43B of the Act which has been dealt with by the A.O. at para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under:- "78. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee, by observing as under:- "52. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under:- "32. With regard to the contribution to the local organization, the issue has been dealt with by the A.O. at page 6 -7, para 10 of his order. The ld. CIT(A) deleted the addition/disallowance by dealing the issue at page 3, para 7 of his order wherein he has followed the order of the Tribunal in earlier years. 33. We have considered the rival contentions and we found that the issue has been decided by the Tribunal consistently in favour of the assessee in the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in the preceding year, decided the similar issue in favour of the assessee by observing as under:- "60. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under:- "38. Ground No. 6 of Revenue's appeal relates to the disallowance of rural development expenses. The A.O. has dealt with this issue at page 9, para 15 and the ld. CIT(A) has dealt with this issue at page 4-5, para 11 of his order. We found that the issue has been decided by the Tribunal in assessee's own case in its favour in assessment years 1998-99, 1999-00 & 2000-01. We further found that the Department on this ground is not in appeal before the Hon'ble High Court in these years. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the order of the ld. CIT(A) for deleting the rural development expenses amounting to Rs. 66,08,937/-." 61. Respectfully following the above decision, we sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng advertisement films has been dealt with by the A.O. at page 15-16, para 26. The ld. CIT(A) deleted the same after having observed at page 12-13, para 21 of his order. We found that the issue has already been settled by the Tribunal in assessee's own case in A.Y. 1976-77 and no ground was taken by the Department before the Hon'ble High Court. Similar issue has been decided by the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd., 124 ITR 1 (SC). Accordingly, we do not find any infirmity in the order of the ld. CIT(A) deleting the disallowance by observing that advertisement film was made only for advertisement and its useful life is very short and such films do not add to the capital structure of the company." 95. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly." 98. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in relevant assessment year. This issue is recurring in nature and has been decided in favour of the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in CIT vs HDFC Bank Ltd., [2014] 366 ITR 505 (Bom.) held that where assessee's own funds and other non-interest bearing funds were more than the investment in tax-free securities, no disallowance under section 14A of the Act can be made. We further find that the Hon'ble Supreme Court in South Indian Bank Ltd. vs CIT, [2021] 438 ITR 001 (SC) held that disallowance under section 14A of the Act would not be warranted where interest-free own funds exceed the investment in tax-free securities and in such a case the investment would be presumed to be made out of assessee's own funds. Therefore, respectfully following the law laid down by the Hon'ble Supreme Court and the Hon'ble jurisdictional High Court in cases cited supra, we find no infirmity in the impugned order in deleting the disallowance made under section 14A. Accordingly, ground no.5, raised in Revenue's appeal is dismissed. 75. The issue arising in ground no.6, raised in assessee's appeal, is pertaining to the apportionment of Head Office expenses to the Units eligible for deduction under section 80IA of the Act. 76. Having considered the submissions of both sides and perused the material availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding year. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding years. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, ground no.6, raised in Revenue's appeal is dismissed. 78. The issue arising in ground no.7, raised in assessee's appeal, is pertaining to the claim of deduction under section 80IA of the Act in respect of profit derived from Rail System at Raipur, and Hotgi. 79. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 23/06/2023, passed in assessee's own case for the assessment year 2004-05 cited supra, while deciding a similar claim in favour of the assessee in respect of Rail System at Raipur and Hotgi, observed as under:- "107. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal, vide order dated 13/06/2023, passed in assessee's own case for the assessment year 2003-04 cited supra, while deciding similar claim in favour of the assessee in respect of Rail System at Raipur, observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court 82 ITR 363 Kadernath Jute Mfg. Co. Ltd Vs. CIT and 227 ITR 172 Tuticurin Alkali Chemical Ltd. 16.6 The appellant further submitted that Sec. 80IA(8) itself contemplates a situation where goods or services are transferred by an eligible undertaking to non eligible undertaking and vice versa. In such cases, deduction is to be allowed based on the market value of such goods or services. It was submitted that Section Itself envisages situation of captive consumption. Reliance was placed 59 ITR 514(Gui.) Anil Starch Ltd. vs CIT. 254 ITR 187(Bom.) CIT vs. Win Laboratories Pvt Ltd and 48 ITR 123(SC) Tata Iron & Steel Co. Ltd. vs State of Bihar. 16.6 Further, it was submitted that the facility of Rail System consists of all that is required to carry on the railway activity in an organised and systematic manner. The activity of Rail System is real and substantial and it is carried on with a said purpose, namely, transportation of goods from one place to another and thereby augmenting profits of the company as a whole by saving transportation cost which it would have otherwise incurred. The profits derived from the Rail System are clearly arising out of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op Rubber Co (1) Ltd. 107 ITR 182 (Cal.) it was held that for the purpose of tax holiday benefits it is not necessary that the eligible unit must maintain separate books of account. 6.12 The appellant submitted that the number of employees directly employed in the eligible business is not relevant at all. There is an agreement with the railway authority for operation and maintenance of the Rail System and under the said agreement, the operations and maintenance is to be carried out by the railways and the appellant bears the cost of the employees deputed by the railway authorities for this purpose. It is settled position that in order to compute the number of workers, casual and other workers appointed through the contractors have to be taken into consideration. The number of employees, including appointed through the railway authorities, would far exceed 10. The appellant relied 152 ITR 152(Kar.), K.G. Yediyurappa & Co, and 99 Taxmann 229 Vikshana Tdg & Investment Pvt Ltd. In any case, the condition of employing a minumum of 10 workers is not applicable to an infrastructure enterprise. 16.13 The appellant argued that the AO's allegations that it has no control over the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h clause and therefore the same is not in conformity with the provisions of the Act. From the perusal of the record, it is evident that aforesaid submissions made by the learned DR were not the basis for disallowance under section 80-IA of the Act. In this regard, the following observations of the Special Bench of the Tribunal in Mahindra and Mahindra Ltd vs DCIT, [2009] 30 SOT 374 (Mumbai) (SB), becomes relevant:- "In our considered opinion the learned Departmental Representative has no jurisdiction to go beyond the order passed by the Assessing Officer. He cannot raise any point different from that considered by the Assessing Officer or CIT(A). His scope of arguments is confined to supporting or defending the impugned order. He cannot set up an altogether different case. If the learned DR is allowed to take up a new contention de hors the view taken by the Assessing Officer that would mean the learned A.R. stepping into the shoes of the CIT exercising jurisdiction under section 263. We, therefore, do not permit the learned DR to transgress the boundaries of his arguments." 125. Therefore, on this preliminary basis only, as noted by the Special Bench of the Tribunal in the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of profits from the rail system. As a result, ground no.11 raised in Revenue's appeal is dismissed." 108. The learned DR made similar submissions, as were made in the preceding assessment year. The learned DR reiterated that the operations commenced prior to entering of the agreement by the assessee with the concerned Railway Authorities. We find that the coordinate bench of the Tribunal in the preceding year duly considered similar arguments of the learned DR and found no merits in the same. We also find that as per section 80IA(4) of the Act, one of the conditions for applicability of the section is that there has to be an agreement entered with the other Statutory Body for developing or operating and maintaining or developing, operating and maintaining a new infrastructure facilities. No material has been brought on record to show that such an agreement does not exist in the present case and the only plea raised by the learned DR is that such an agreement is post the commencement of operation and, therefore, the assessee does not satisfy the conditions as provided in section 80IA(4) of the Act for availing the benefit of the said section. However, we find that the language ..... X X X X Extracts X X X X X X X X Extracts X X X X
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