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TMI Blog2023 (7) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... iled chart of the issues and how there stand covered in favour of the assessee by Co-ordinate Bench order dated 27.05.2019 in ITA No. 2749/Del/2013 for A.Y. 2008-09 and order dated 11.03.2016 in ITA no. 2677/Del/2011 with ITA no. 3061/Del/2011 for A.Y. 2006-07, has been filed which could not be disputed by Ld. DR. Nor anything was cited by Ld. DR to differentiate on facts or any question of law. 4. The grounds raised in ITA no. 5978/Del/2017 for A.Y. 2014-15 substantially covers the grounds for the other two assessment years for assessment year 2015-16 and 2016-17. Therefore, the grounds raised in ITA No. 5978/Del/2017 are reproduced below for convenience of determination of all the appeals :- "1.Ld. Commissioner of Income Tax (Appeals) erred in law and on the facts of the case in deleting the addition of Rs. 32,74,33,022/- made by the AO on account of deduction claimed u/s 80IAB. " 2. "Ltd. Commissioner of Income Tax (Appeals) erred in law and on the facts of the case in deleting the addition of Rs. 345,81,30,671/- made by the AO on account of revenue recognition as per POCM. " 3. "Ld. Commissioner of Income Tax (Appeals) erred in law and on the facts of the case in deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure pertaining to the prior period." 15. "The appellant craves leave to modify, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." GROUND NO. 1 5. The issues arises out of addition made by Ld. AO on account of deduction claim u/s 80IAB. In the assessee's own case for A.Y. 2008-09 (supra) the issue has been considered by the Tribunal as it arose for the first time in A.Y. 2008-09. It can be appreciated in the findings of the Coordinate Bench in para no. 46 to 80 that a reasoned finding has been given including the fact that in the group concern cases on identical circumstances and similar reasoning given by the AO, the Tribunal has allowed the claim of deduction u/s 80IAB. Accordingly, the Bench is inclined to reject ground no. 1. GROUND NO. 2 6. The issue arises out of the addition made by Ld. AO on account of Revenue recognition as per POCM. In assessee's own case for A.Y. 2006-07 (supra) issue has been considered against the Revenue with relevant finding in para no. 35 to 42. It can be observed that in A.Y. 2006-07, the issues are restored to the files of Ld. AO to make further inquiries in respect of Mangolia project and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and in this respect it is evident that the interest earned by the company is more than the net interest debited in the accounts on the term loans and thus there is no question of making any adhoc disallowance. This is further fortified by the fact that the balance sheet of the company in the schedule 16 as on 31.03.2014 shows the closing inventory of Rs. 8,112.24 crore which indicates the use of the substantial amount of interest bearing funds. In view of the above, it is held that capitalization of interest of Rs:/I34734,87,000/- on notional basis by the Assessing Officer based on various permutations was not justified and accordingly the same is deleted. The Assessing officer is directed to modify the assessment order accordingly." 8. Co-ordinate Bench in para no. 49 of ITA No. 2677/Del/2011, A.Y. 2006-07 has observed as follows : "49. We have carefully considered the rival contentions. It appears that the AO has made this addition mainly because of note mentioned by assessee in its accounting policies with respect to borrowing costs according to Accounting Standard 16 issues by ICAI. We have perused notes attached to financial statements and we are of opinion that these not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not for the purpose of acquisition of any capital asset but for its inventory. We do not find any restriction in provisions contained u/s 36(1 )(iii) which provides that the interest can be disallowed if incurred for the purpose of inventory as provided under Accounting Standard 16. Apparently, in this case, there is no allegation that interest is not paid on capital borrowed for the purpose of the business. Hon'ble Mumbai High Court in the case of C1T vs. Lokhandwala Constructions Industries Ltd. [131 taxman 810] has held as under :- "4. From the facts found by the Tribunal on record, it is clear that assessee undertook two-fold activities. It bought and sold flats. Secondly, the assessee was also engaged in the business of construction of buildings. The profits from both the activities were assessed under section 28 of the Income-tax Act. In this case, we are concerned with the second activity (hereinafter referred to, for the sake of brevity, as "Kandivali Project"). According to the Commissioner, loan was raised for securing land/development rights from the Mandal. That, the loan was utilised for purchasing the development rights, which, according to the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has followed the projection completion method :- (i) ACIT vs. Tata Housing Development Company Ltd. - 45 SOT 9 (Bom.); (ii) DCIT vs. Thakar Developers - 115 TTJ 841 (Pune); (iii) DCIT vs. K. Raheja Pvt. Ltd. - (2006) TIOL 220 ITATMUM.; (iv) K. Raheja Development Corporation vs. DCIT in ITA No.240/Bang./97 dated 22.09.1997 - In this case, reference application filed by the Department has also been . rejected by the Hon'ble Karnataka High Court vide its order dated 08.11.2000 in Civil Petition No.832/2000 (IT). Before us, Id. DR could not cite any decision against the claim of the assessee, therefore, respectfully following the decision of Hon'ble Bombay High Court and as well as various coordinate Benches, cited above, we do not concur with the view of CIT (A) on disallowance of interest of Rs. 24.75 crores u/s 36(1) (iii) of the Act. The alternative argument of the assessee regarding adoption of any artificial formula for the purpose of computing interest disallowance. Ld. CIT (A) has presumed proportion of utilisation of funds in absence of the nexus holding that assessee has used mixed funds. Honourable Bombay High court in case of CIT V Reliance Utilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into account the fact that this issue has been decided in favour of the assessee for A.Y. 2006-07 by the Tribunal and no further appeal to the High Court has been filed. Further he observed that the issue has been examined by his predecessor in A.Y. 2009-10 and the addition made by Ld. AO was deleted. Ld. AR has pointed out that Assessing Officer himself has not made addition on this issue in A.Y. 2016- 17. Thus following the Tribunal's findings for A.Y. 2006-07 there is no substance in the ground as raised, the same is decided against Revenue. GROUND NO. 6 12. The issue arises out of the addition made by Ld. AO on account of non-allocation of proportionate over head expenditure to other group entities and the issue was first raised in decided in favour of assessee in assessee's own case for A.Y. 2006-07(supra). Ld. CIT(A) has deleted the addition on the basis of findings arrived in assessee's own case by the predecessor for A.Y. 2009-10. The issue has been decided in favour of the assessee for A.Y. 2012-13 and 2013-14(supra) by relevant finding in para 10.3 as follows :- "10.3 On careful perusal of the facts, we find that the basis adopted by the assessing officer while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e findings for A.Y. 2006-07 and AO himself has not made addition on this issue in A.Y. 2016-17. Thus following the Tribunal's findings for A.Y. 2006-07, the ground has no substance, the same has rejected. GROUND NO. 10 16. The issue arises out of addition made by Ld. AO on account of depreciation claimed on DLF Central Building. Ld. CIT(A) has followed the order of predecessor for A.Y. 2009-10 and deleted the addition. It was canvassed before Ld. CIT(A) that the issue is covered in favour of the assessee the orders of Ld. CIT(A) in the preceding assessment years 2006-07 to 2011-12. Ld. AR has pointed out that department has not preferred any appeal before the Tribunal challenging the relief given by Ld. CIT(A) and Ld. AO himself has not made addition on this issue in A.Y. 2016-17. As finality stands attached to the relief given by Ld. CIT(A) in AY 2006-07 to 2011-12, there is no substance in the ground, same is rejected. GROUND NO. 11 17. The issue arises out of addition made by the Ld. AO on account of personal nature expenses attributed to the use of helicopter and aircraft expenses treating them as not incurred wholly & exclusively for business purpose. Ld. CIT(A) taking int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directors and other employees of the company is personal in nature because of the limited company is an in animated person and there cannot be anything personal about such an entity. He further followed the decision in case of Sayaji Iron and engineering Co Ltd 253 ITR 749 and deleted the addition/disallowance. The learned departmental representative could not show us any reason to state that the expenditure incurred by the assessee on such travel expenditure of aircraft and helicopter can be considered as a personal expenditure of a company. There were no contrary decision is pointed out before us. In view of this we do not find any infirmity in the order of the learned CIT - A in deleting the above disallowance. Accordingly ground number 16 and 17 of the appeal of the learned assessing officer is dismissed." This has been followed subsequently in assessee's own case for A.Y. 2010-11 and 2011-12 (supra). In the light of aforesaid, following aforesaid, the ground has no substance, the same is decided against the Revenue. GROUND NO. 12 18 The issue arises out of the addition made by Ld. AO on account of carbon credits. Ld. CIT(A) following various judicial pronouncements in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of aforesaid respectfully following the findings of ld. Coordinate Bench, there is no substance in the ground of Revenue, the same is dismissed. GROUND NO. 13 19. The issue arises out of the addition on account of short/non-allocation of proportionate overhead expenditure to windmills at Gujrat and Karnataka. Ld. CIT(A) has made following relevant findings in para no. 21.1 and 21.2 reproduced as below : "21.1 Having gone through the submissions of the assessee, the order of assessment passed by the Assessing Officer and the material evidences placed on the record, it emerges from the facts of the case that the Assessing Officer made the disallowance of the expenditure of Rs. 14,31,00,000/- on account of allocation to the windmills at Karnataka and Gujrat. The Assessing officer is of the view that the assessee has nto allocated the establishment, finance and general administrative cost to the windmill division and proceeded to make the allocation of the expendioture on the basis of the percentage of the total income of the windmill division in proportion to the net profit of the DLF as a whole. The Assessing Officer accordingly made the adhoc allocation of the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. The impugned disallowance was deleted by CIT(A). 22.2 The Ld. DR supported the order of assessing officer and submitted that allocation of expenses to windmill units in Gujarat and Karnataka as done by the assessing officer is correct. 22.3 The Ld. Counsel for the assessee filed synopsis on this issue and argued that separate books of account are maintained in respect of eligible windmill unit in Gujarat and Karnataka and there is no case of any short allocation of expenses. It was further submitted that working of profit in these units is supported from certificate in Form 10CCB issued by Chartered Accountant. The Ld. Counsel also relied upon the decision of Addl. CIT v. Delhi Press Patra Prakashan [2006] 10 SOT 74 (Delhi) (URO). 22.4 We have considered the rival submissions and gone through the orders passed by sub-ordinate authorities. The issue before us is allocation of expenses to eligible units claiming deduction u/s 80IA and consequential disallowance in the hands of the assessee company. In short, the assessing officer has observed that common expenses pertaining to units claiming exemption u/s 80IA have been claimed by the assessee company and same are not al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment accordingly." The Ld. DR was unable to controvert the finding recorded by CIT(A). On closer perusal of assessment order, we find that assessing officer has not given any basis for making impugned disallowance and the only reasoning behind the allocation of expense is that windmill units have not claimed any expenses on account of finance, establishment or general admin cost. The Ld. AR has drawn our attention to form 10CCB which contained complete working of profit and claim of various expenses incurred for running these units. It is self evident that separate set of books of account are maintained for respective windmill unit at Gujarat and Karnataka. In these circumstances, unless there is some material or conclusive finding on record that books of account of these units are not correct or expenses pertaining to these units have not been claimed, there could be no case of any notional allocation of expenses in the ratio of income. The assessment order is silent on this aspect and merely contains working of disallowance by allocation expenses in the ratio of income which in our view is not sustainable. At this juncture, it is pertinent to make reference to decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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