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TMI Blog2024 (12) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... as passed and served on 31.03.2023. The assessee being aggrieved with the draft assessment order has filed objections before the Dispute Resolution Pannel (DRP). The objections of the assessee, after affording opportunities of being heard were disposed of by the Ld. DRP vide their order u/s 144C(5) of the Act on 30.12.2023. The directions accorded by the Ld. DRP have been incorporated by the Ld. AO in the impugned order, making certain disallowances. Being dissatisfied with such additions the assessee has filed the present appeal. 2. The grounds of appeal raised by the assessee are as under: A. Ground No. 1 - Disallowance of deduction under sec 80-IA of the Act on account of downward adjustment in arm's length price for transfer of power from captive power unit ('eligible unit') to stee manufacturing unit ('non-eligible unit') [ INR 17,15,69,527/-1] 1.0 That on the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer ('Ld. TPO') / AO / Hon'ble Dispute Resolution Panel ('DRP') erred in reducing claim for deduction under sec 80-IA of the Act by INR 17,15,69,527/- considering arm's length price (AL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MAT] without adducing any reasons for the same. E. Ground No. 5 - Short Grant of interest under sec 244A of the Act. 5.0 That on the facts and in the circumstances of the case and in law, the Ld. AO erred in computing interest under section 244A of the Act for a period of 15 months instead of 46 months (i.e. April 2020 to January 2024) without adducing any reasons for the same. F. Ground No. 6 - Difference in total income as per assessment order & computation sheet. 6.0 That on the facts and in the circumstances of the case and in law and without prejudice to preceding ground, the Ld. AO erred in computing tax on total income of INR 8,52,84,930/- instead of total income of INR 8,52,70,750/- computed in the assessment order. G. Ground No. 7: Initiation of penalty proceedings under sec 271AA & Sec 270A of the Act 7.0 That on the facts and in the circumstances of the case and in law, Ld. AO erred in initiating penalty proceedings under sec 27 IAA & 270A of the Act. H. Ground No. 8 - General 8.0 That on the facts and circumstances of the case and in law, draft assessment order under section 144C(1) of the Act dated 31-03-2023, final assessment order under section 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order u/s 144C(1) was passed on 31.03.2023. To challenge the said draft assessment order, the assessee has filed its objections before the Dispute Resolution Pannel (herein after referred to as "DRP") u/s 144C(2) of the Act within the stipulated time. After due consideration to the objections raised by the assessee, the DRP has passed an order u/s 144C(5) of the Act on 30.12.2023, wherein the view taken by the Ld. TPO was approved and the Ld. AO was directed to give effect of the downward adjustment by bringing down the deduction claimed u/s 80IA as per the downward adjustments proposed by the Ld. TPO. 6. Another observations of the Ld. AO was pertaining to claim of deduction by the assessee u/s 80G of the Act for Rs. 4 lacs (Being 50% of Rs. 8 lac). It is noticed by the Ld. AO that the assessee has added back the amount of CSR and donation of Rs. 24,30,309/-, and has further claimed deduction u/s 80G of Rs. 4.00 lacs, which was spend out of the said CSR expense. A show cause in this respect issued to the assessee to furnish its explanation, in response a detailed submission was furnished by the assessee but the same was rejected and an addition of Rs. 4.00 lac was made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,532 ALP Adjustment 17,15,69,527 1.5 After receiving the order of the TPO u/s. 92CA(3) of the Act, dated 15-11-2022, the A.O passed the draft assessment order under sec 144C(1) dated 31-03-2023 giving effect to the aforesaid downward adjustment and treated the entire deduction under sec 80-IA of the Act as income and also disallowed its claim for deduction u/s. 801A of the Act. The assessee filed an objection before the Dispute Resolution Panel (DRP) which vide its order dated 30-12- 2023 upheld the contentions of the TPO / AO. 1.6 Basis the directions of the DRP, the AO passed the final assessment order dated 29-01-2024 computing the total income under normal provisions at INR 8,52,70,750/-. Being aggrieved with the aforesaid order, the assessee filed before the Raipur Bench of the Hon'ble ITAT. 2.0 Case laws in favour of the assessee on the aforesaid issue Case Laws Related to Assessment Year Decision DCIT -vs.- Mahendra Sponge and Power (P.) Ltd. [20241 159 taxmann.com 147 (Raipur - Trib.) [Refer Page Nos. 4-13] ITA No.197/RPR(2017 dated 29-072022. [Refer Page Nos. 24-291 ITA No.196/RPR/2019 dated 05-08-2022. [Refer Page Nos. 30-51] 2015-16 2013-14 2014-15 "m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 127 - 132] DCIT -vs.- M/S. IFB Agro Industries Ltd (I.T.A. Nos. 490 & 491/kol/2019) dated 08-02- 2024. [Refer Page Nos. 133 - 150] 2013-14 & 2014-15 Kolkata ITAT while dealing with issue relating to determination of arm's length price for transfer of power from eligible unit to non- eligible unit relied on the decision of Apex Court in the Jindal Steel & Power Limited (supra) and held that power tariff maintained by WBSEB for selling of power to its consumers shall be the arm's length price for transfer of power from eligible unit to non-eligible unit. The said decision clearly shows that the decision of Supreme Court in the case of Jindal Steel & Power Limited (supra) even applies to cases post introduction of provisions of specified domestic transaction in case of transfer price of power. Nectar Lifesciences Ltd -vs.-ACIT [2022] 138 taxmann.com 557 (Delhi- Trib.) [Refer Page Nos. 151 - 1621 2013-14 Market rate on which any industrial undertaking or consumer would be getting electricity should be applied as CUP for benchmarking transaction of sale of electricity. 2.1 In addition to above, there are multiple decisions of Tribunals (including Kolkata, Delhi, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in hand in the backdrop of the contentions advanced by the Ld. authorized representatives of both the parties. As stated by the Ld. AR, and rightly so, the issue involved in the present appeal is squarely covered by the aforementioned orders passed by the Tribunal in assessee's own cases, viz. in ITA No. 159/BLPR/201 1 dated 19-6 2015 for A.Y. 2008-09, ITA No. 197/RPR/2017 dated 29-7-2022 for A.Y. 2013-14 and ITA No. 196/RPR/2019 dated 5- 8-2022 for A.Y. 2014-15 as well as the by the judgment of the Hon'ble High Court of Chhattisgarh in the case of Godawari Power and [spat Ltd (supra). We find that the Tribunal vide its order passed in the case of Mahendra Sponge & Power Ltd. (Supra) had after exhaustive deliberations vacated the disallowance of the assessee l s claim for deduction u/s 801A(4)(iv)(a) of the Act, observing as under: "6. We shall first deal with the grievance of the department that the CIT(Appeals) had gravel) erred in law and facts of the case in vacating the disallowance of the assessee's claim for deduction u/s. 801A(4)(iv)(a) of the Act amounting to Rs. 3,86,20,902/-. 7. Controversy involved qua the issue in hand lies in a narrow compass, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's claim for deduction u/s. 801B of the Act. Accordingly, the A.O after receiving the order passed by the TPO u/s. 92CA(3) of the Act, dated 31-10-2017, therein vide his order passed u/s 143(3), dated 26-12-2017 reduced the assessee's claim for deduction u/s. 801A(4)(iv) to Rs. Nil. 10. Before us, it is the claim of the Ld. Authorized Representative (for short 'AR') for the assessee that the issue involved in the present appeal is squarely covered by the order passed by the Tribunal in its own case for the immediately preceding assessment year 201314 in ITA No. 197/RPR/2017, dated 29-7-2022, wherein, the declining by the AO of the assessee l s claim u/s. 801A(4)(iv) on identical facts had been restored by the Tribunal. 11. The Ld. Departmental Representative (for short 'DR') fairly conceded to the submissions put forth by the Ld. AR. 12. Ostensibly, as stated by the Ld. AR, and rightly so, the aforesaid issue in hand is squarely covered by the order that was passed by the Tribunal while disposing off the appeal of the assessee for the immediately preceding year i.e, assessment year 2013-14, wherein the Tribunal after relying on its earlier order had ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Board is a sale to a company which itself supplies power to the consumers. It is not sale of power to the consumer. 30. The Steel-Division of the Assessee is a consumer. The CPP of the Assessee supplies electricity to the Steel-Division. Had the Steel-Division not taken power from the CPP then it had to purchase power from the Board. The CPP has charged the same rate from the Steel Division that the Steel-Division had to pay to the Board if the power was purchased from the Board. 31. The market value of the power supplied to the Steel-Division should not be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. 33. It is admitted by the Department that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not set-aside or stayed by the Hon'ble Apex Court the same holds the ground and have to be ritually followed by the lower authorities. We, thus, in terms of our aforesaid observations finding no merit in the declining of the assessee's claim for deduction u/s.801A(4)(iv)(a) of Rs. 4,38,73,880/- by the A.O. which had rightly been vacated by the CIT(Appeals), uphold the latter's order. Thus, the Grounds of appeal Nos. (a) to (c) raised by the Revenue are dismissed in terms of our aforesaid observations." We, thus, respectfully following the view taken by the Tribunal in the assessee's own case as culled out hereinabove, finding no merit in the declining of the assessee's claim for deduction u/s. 80IA(4)(iv)(a) of Rs. 3,86,20,992/- by the A.O. during the year under consideration, which had rightly been vacated by the CIT(Appeals), uphold the latter's order. Thus, the Grounds of appeal No(s). 1 & 2 raised by the Revenue are dismissed in terms of our aforesaid observations." 9.3 In view of aforesaid observations, since the issue is duly deliberated upon by the Hon'ble Jurisdictional High Court of Chhattisgarh in the case of CIT v Godavari Power & Ispat Ltd. (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e surplus electricity (after supplying electricity to its industrial units) to the State Electricity Board only and not to any other authority or person. Therefore, the surplus electricity had to be compulsorily supplied by the assessee to the State Electricity Board and in terms of Sections 43 and 43A of the 1948 Act, a contract was entered into between the assessee and the State Electricity Board for supply of the surplus electricity by the former to the latter. The price for supply of such electricity by the assessee to the State Electricity Board was fixed at Rs. 2.32 per unit as per the contract. This price is, therefore, a contracted price. Further, there was no room or any elbow space for negotiation on the part of the assessee. Under the statutory regime in place, the assessee had no other alternative but to sell or supply the surplus electricity to the State Electricity Board. Being in a dominant position, the State Electricity Board could fix the price to which the assessee really had little or no scope to either oppose or negotiate. Therefore, it is evident that determination of tariff between the assessee and the State Electricity Board cannot be said to be an exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board's rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act. 9.4 In view of aforesaid observations, we are unable to comprehend and concur with the impugned order of Ld. AO on the aforesaid issue, which is squarely covered by the aforesaid decisions (supra). Therefore, in absence of any distinguishing facts or features which could have been brought on record by the revenue, having identical issue, respectfully following the principle of law laid down by Hon'ble High Apex Court and Hon'ble Jurisdictional High Court, ground no. 1 of the assessee's present appeal is allowed. 10. Ground no. 2 & 3: Disallowance of deduction u/s 80G of the Act and double disallowance of deduction u/s 80G of the Act. 10.1 Apropos, ground no. 2 & 3 of the appeal regarding disallowance u/s 80G and double disallowance of the same amount, Ld. AR have furnished a written submission, the same is extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incurred for donation out of the amount designated for CSR expenses which were disallowed by the assessee as per provisions of section 37 of the Act, it is the submission of Ld. AR that as per recent decision by the various coordinate benches of Income Tax Appellate Tribunal, the assessee is eligible to claim deduction u/s 80G in respect of donations which form part of spend towards CSR. Reliance was placed on following judgments: (i) Power Mech Projects Ltd. vs. Deputy Commissioner of Income Tax reported in (2023) 156 Taxmann.com 575 (Hyd. Trib) dated 31.08.2023, wherein the observations of the tribunal are as under: 8. We have gone through the record in the light of the submissions made on either side. Insofar as the payments made to the PM Relief Fund and to the institutions enumerated by the learned AR are concerned, it is a matter of verification. Learned Assessing Officer disallowed such a deduction not on the ground of non-payments, but because the assessee claimed such spending incompliance with their legal obligation under section 135 of the Companies Act. According to the learned Assessing Officer, by showing such an amount as spending incompliance with section 135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to support the contention of Revenue. On the other hand, section 80G(2)(iiihk) and (iiihl) of the Act expressly provide that such sums donated for Swatch Bharath Kosh and Clean Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR, meaning thereby the donations made towards Swatch Bharath Kosh and Clean Ganga Fund spent as a part of CSR are not qualified for deduction under section 80G of the Act. Out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G(2)(iiihk) and (iiihl) of the Act. 13. This aspect has been dealt with by successive Co-ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure u/s. 135 of Companies Act, that sum donated to Swach Bharat Kosh & Clean Ganga Fund will be eligible for 100% deduction u/s. 80G of the Act [refer section 80G (1)(i) and subject to section 80G (4)]. However, such a restriction in respect of expenditure made by an assessee to any other fund or institution as referred to in sub clause (iv) of clause (a) of sub-section 2 of section 80G of the Act had not been placed by the Legislature. And if the Parliament desired, it could have been made such kind of restriction or any restriction like in the case of donation to Swach Bharat Kosh & Clean Ganga Fund. So the assertion of Ld. PCIT that AO could not have allowed deduction u/s 80G of the Act to an assessee on the CSR expenditure/donation to an institution u/s 80G(2)(a)(iv) which is enjoying certificate 80G(5)(vi) of the Act, is erroneous and therefore cannot be accepted. For this, we rely on the interpretation maxim "Expression Unius Esl Exclusio Alterius" which is a Latin phrase that means "express mention of one thing excludes all others. This is one of the rules used in interpretation of Statutes. The phrase indicates that items not on the list are assumed not to be cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can claim deduction of fifty percent of the donation of Rs. 1 crores paid to any other registered charitable trust u/s 80G(2)(iv) read with Section 80G(1)(ii) of the Act. Situation 4 : The company has contributed Rs. 1 crore to Prime Minister's National Relief Fund and Rs. 1 crore to any other charitable trust registered u/s 80G(5) of the Act. Tax Treatment: The entire CSR expenditure of Rs.2 crores is to be disallowed and added back in terms of Explanation 2 to Section 37(1) of the Act. The company can claim deduction for hundred percent of the donation of Rs. 1 crores paid to Prime Minister's National Relief Fund u/s 80G(2)(iiia) read with Section 80G(1)(i) of the Act. The company claim deduction to the extent of fifty percent of the donation of Rs. 1 crores paid to any other registered charitable trust u/s 80G(2)(iv) read with Section 80G(1)(ii) of the Act. 23. As discussed supra, we concur with the contention of the assessee that since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. [Swachh Bharat Kosh and Clean Ganga Fund] has impliedly not made any prohibition/restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration to (i) Shri Marwadi Pathshala Samiti (Bitti Committee) of Rs. 7,50,000/- and (ii) Rajashthan Gokalyan of Rs. 50,000/- and claimed 50% of the same u/s 80G of the Act. The parties to whom the donations were made are undoubtedly, the institutions, other than the specified institutions / funds i.e., Swatch Bharat Kosh and Clean Ganga Fund for which express condition is prescribed in the statute u/s 80G(2)(iiihk) and (iiihl) that, any donation made to Swatch Bharat Kosh and Clean Ganga Fund out of spend towards CSR are not qualified for deduction u/s 80G of the Act. For the sake of clarity and interpretation, sub clause (iiihk) and (iiihl) of sub section 2 of Section 80G is reproduced as under: 80G(2) (iiihk) [the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013, (18 of 2013); or [Inserted by Finance Act, 2015 (No. 20 of 2015), dated 14.5.2015.] (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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