ACIT CIRCLE 1, TRICHY V. DALMIA CEMENT BHARAT LTD., DALMIAPURAM

ITA 3158/CHNY/2017

AI Insights

The case involves multiple appeals and cross objections by the Assistant Commissioner of Income Tax and M/s Dalmia Cement Bharat Ltd. concerning the assessment years 2013-14 and 2014-15. The primary issues revolved around disallowances under section 14A read with Rule 8D, treatment of subsidies as capital receipts, and the claim of additional depreciation under section 32(1)(iia). The ITAT examined the legal provisions, precedents, and the factual matrix presented by both parties to arrive at its decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824959 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 08-12-2017
• Other Referred Cases: DCIT vs. THE SARASWAT CO-OPERATIVE BANK LTD., Hon'ble Karnataka High Court in the case of United Breweries Ltd Vs. DCIT, Hon'ble Apex Court in the case of Sahney Steel and Press Works Ltd. and Others vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Assessee Lawyers: VIJAY SHAH; FAC
• Keywords: Set aside; Speculation loss; Proportionate interest; Question of law; Bad and doubtful debts; Depreciation; Additional depreciation; Commercial expediency; Capital receipt; Earning of tax free income; Wholly owned subsidiary; Rule 8D; Scheme of amalgamation
• Section: 14A; 115JB; 32(1)(iia)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘F’: NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER ITA No.3157/CHNY/2017 [Assessment Year: 2013-14] The Assistant Commissioner of Income Tax, Circle-1, Williams Road, Cantonment, Trichy, Tamil Nadu-620001 Vs M/s Dalmia Cement Bharat Ltd. Dalmiapuram, Tamilnadu, 621651 PAN-AADCA9414C Assessee Revenue Cross Objection No.63/CHNY/2018 (Arising out of ITA No.3157/CHNY2017) [Assessment Year: 2013-14] M/s Dalmia Cement Bharat Ltd. Dalmiapuram, Tamilnadu-621651 Vs The Assistant Commissioner of Income Tax, Circle-1, Williams Road, Cantonment, Trichy, Tamil Nadu-620001 PAN- AADCA9414C Assessee Revenue ITA No.3158/CHNY/2017 [Assessment Year: 2014-15] The Assistant Commissioner of Income Tax, Circle-1, Williams Road, Cantonment, Trichy, Tamil Nadu-620001 Vs M/s Dalmia Cement Bharat Ltd. Dalmiapuram, Tamilnadu, 621651 PAN-AADCA9414C Assessee Revenue Printed from counselvise.com 2 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Cross Objection No.64/CHNY/2018 (Arising out of ITA No.3157/CHNY/2017) [Assessment Year: 2014-15] M/s Dalmia Cement Bharat Ltd. Dalmiapuram, Tamilnadu-621651 Vs The Assistant Commissioner of Income Tax, Circle-1, Williams Road, Cantonment, Trichy, Tamil Nadu-620001 PAN- AADCA9414C Assessee Revenue ITA No.5416 & 5417/DEL/2017 [Assessment Years: 2013-14 & 2014-15] M/s Dalmia Cement Bharat Ltd. 11th Floor, Hansalaya Buidling, 15, Barakhamba Raod, New Delhi-110001 Vs The Assistant Commissioner of Income Tax, Central Circle-26, ARA Centre, New Delhi-110055 PAN- AADCA9414C Assessee Revenue Assessee by Shri Vijay Shah, FAC, Dr. Alka Arren, FAC, Mr. Navin Verma, ACA Revenue by Shri Shrikant Namdeo, CIT(DR) Date of Hearing 22.12.2025 Date of Pronouncement 31.12.2025 ORDER PER AMITABH SHUKLA, AM, The below mentioned appeals and cross appeals have been filed by the appellant Revenue and the assessee as per below mentioned details. S. No. Appeal Nos. AYs Appellant CIT(A) Order Details Respondent Printed from counselvise.com 3 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases 1 ITA No.3157/Chny/2017 2013- 14 The Assistant Commissioner of Income Tax, Circle-1, Tamilnadu Appeal No.496/2016- 17/CIT(A)-29 dated 29.06.2017 M/s Dalmia Cement Bharat Ltd. 2 CO.63/Chny/2018 2013- 14 M/s Dalmia Cement Bharat Ltd. Appeal No.496/2016- 17/CIT(A)-29 dated 29.06.2017 The Assistant Commissioner of Income Tax, Circle-1, Tamilnadu 3 ITA No.3158/Chny/2017 2014- 15 The Assistant Commissioner of Income Tax, Circle-1, Tamilnadu Appeal No.497/2016- 17/CIT(A)-29 dated 29.06.2017 M/s Dalmia Cement Bharat Ltd. 4 CO.64/Chny/2018 2014- 15 M/s Dalmia Cement Bharat Ltd. Appeal No.497/2016- 17/CIT(A)-29 dated 29.06.2017 The Assistant Commissioner of Income Tax, Circle-1, Tamilnadu 5 ITA No.5416/Chny/2017 2013- 14 M/s Dalmia Cement Bharat Ltd. Appeal No.496/2016- 17/CIT(A)-29 dated 29.06.2017 The Assistant Commissioner of Income Tax, Circle-1, Tamilnadu 6. ITA No.5417/Chny/2017 2014- 15 M/s Dalmia Cement Bharat Ltd. Appeal No.497/2016- 17/CIT(A)-29 dated 29.06.2017 The Assistant Commissioner of Income Tax, Circle-1, Tamilnadu 2. At the outset, it has been noted that the Registry has identified a delay of 49 days in the appeals of the Revenue filed vide ITA No.3157/Chny/2017 and ITA No.3158/Chny/2017. The reasons given by the Revenue have been Printed from counselvise.com 4 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases considered and found to be justified. The ld. Counsel for the assessee did not oppose the condonation of delay. Accordingly, we condone the delay in the appeals of the Revenue and proceed to adjudicate the same. 3. Both the contesting parties have informed that the appeals and the Cross objections in relevant years being AY 2013-14 and 2014-15, hover around common issues and hence for the purposes of convenience were heard and are being adjudicated by this common order. Upon consideration of various grounds of appeal raised by the appellant assessee and the appellant Revenue, the following is the factual matrix qua issues involved in AY 2013-14 and 2014-15 and corresponding grounds of appeal raised by the contesting parties. Sl. No. Issues Involved AY 2013-14 AY 2014-15 Assessee Appeal 5416/Del/2017 Dept. Appeal 3157/Chny/2017 Assessee Appeal 5417/Del/2014 Dept. Appeal 3158/Chny/2017 Ground No. Ground no. 1 Disallowance u/s 14A r.w.s. 8D 01-03 01 01-03 01 2 Disallowance of leave encashment on provision basis 04 - 04 05 3 Disallowance of claim of Education Cess 05 - 05 - 4 Exclusion of Subsidy being capital receitps 06 04 06 04 5 Exclusion of 07 - 07 - Printed from counselvise.com 5 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Profit on sale of fixed assets and investments 6 Claim of additional depreciation u/s 32(1)(iia) in second and subsequent years - 02 - 02 7 Claim of deduction for bad debts - 03 - 03 8 Carry forward and adjustment of Capital Loss of amalgamating - 05 - - 4. Grounds of appeal raised by the assessee for Assessment Year 2013-14 in ITA No.5417/Del/2017 are as under:- 1.0 That on the facts and in the circumstances of the case, Ld. CIT (Appeals) was not justified and erred in law in upholding the disallowance u/s 14A read with Rule 8D without appreciating the fact that expenditure amounting to Rs. 50,00,000/ - incurred towards earning exempt income has already been suo-moto offered to tax by appellant in the return of income while computing total income under regular provisions of the Act. 2.0 That on the facts and in the circumstances of the case, and without prejudice to Ground No. 1.0 taken here-in-above, Ld. CIT (Appeals) was not justified and erred in law in upholding the proportionate disallowance of interest u/s 14A read with Rule 8D(2)(ii) amounting to Rs. 5,99,00,000/- without appreciating the fact that the appellant had sufficient own funds out of which investments had been made and therefore, disallowance u/s 14A read with Rule 8D(2)(ii) is unwarranted. 3.0 That on the facts and in the circumstances of the case, and without prejudice to Ground No. 1.0 & 2.0 taken here-in-above, Ld. CIT (Appeals) was not justified and erred in law in not directing to exclude investment in subsidiary/ group companies and investments which did not yield exempt income in computing disallowance as per Printed from counselvise.com 6 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Rule 8D(2)(ii) when similar direction was given to exclude above investments in computing disallowance as per Rule 8D(2)(ii) 4.0. That on the facts and in the circumstances of the case, Ld. CIT(Appeals) was not justified and erred in law in upholding the disallowance of leave encashment claimed on provision basis amounting to Rs. 3,1249,072/ 5.0. That on the facts and in the circumstances of the case, Ld. CIT(Appeals) was not justified and erred in law in upholding the disallowance of Education Cess debited to Profit & loss account amounting to Rs. 2,47,01,708/- on the contention that the same is disallowed under the provisions of sec. 40(a)(ii) of the Act. 6.0. That on the facts and in the circumstances of the case, Ld. CIT(Appeals) was not justified and erred in law in confirming addition of capital subsidy amounting to Rs. 24,15,51,365/ - received during the year while computing Book Profit u/s 115JB of the Act. 7.0. That on the facts and in the circumstances of the case, Ld. CIT(Appeals) was not justified and erred in law in confirming the disallowance made by the A.O. on account of profit on sale of fixed assets and investments amounting to Rs. 14,39,31,725/- while computing Book Profit u/s 115JB of the Act. 5. Ground of appeal raised by the Revenue for Assessment Year 2013-14 in ITA No.3157/Chny/2017 are as under:- 1) IN RESPECT OF ADDITION U/S.SEC.14A R.W.R.8D: The learned CIT(Appeals) erred by directing the AO to recompute the disallowance under Rule8D(2)(iii) after excluding investment in group/subsidiary companies which were strategic in nature and investment which had not yielded any exempt income after verification of details of investment an its nature in the balance sheet of the assessee company. 1.1) The rule 8D(2)(ii)r.w.s.14 has not specified/defined investments whether the investments made for strategic purpose or for normal investment. Whatever be the nature of investment, whether strategic or normal investment, the expenditure towards the exempt income is not eligible and to be disallowed is the intention of the Statute and there is no limitation. In the latest ruling in the case OF DCIT VS.THE SARASWAT CO- OPERATIVEBANK LTD.(ITA No.1140&694/Mum/2012;ITA No.5627/Mum/2003& ITA No.1/ Mum/ 2014, dt.31/10/2016) the ITAT, 'E' Bench held that the strategic investment made by the assessee in its subsidiary as well in the other securities which are capable of yielding exempt income i.e. by way of Dividend etc. which are exempt from tax shall be INCLUDED while computing disallowance u/s.14A of the Act AS THE STATUTE DOES NOT GRANT ANY EXEMPTION TO THE STRATEGIC INVESTMENTS WHICH ARE CAPABLE OF YIELDING EXEMPT INCOME TO BE EXCLUDED Printed from counselvise.com 7 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases WHILE COMPUTING DISALLOWANCE U/S.14A OF THE ACT. The ITAT relied on the decision of Hon'ble Karnataka High Court in the case of United Brewaries Ltd Vs.DCIT in ITA No.419/2009,dt.31/5/2016 and also the decision of Mumbai ITAT in the case of ACIT Vs.Uma Polymers Ltd. in ITA No.5366/Mum/2012 and CO No.234/Mum/2013,dt.30/9/2015. In view of the difference rulings and question of law involved, the appeal is filed. 2) In respect of addition of Addl.Depreciation u/s.32(1)(ii) of the I.T.Act on assets installed and put to use in earlier years: DELETED -By CIT (A). The learned CIT(A) erred by relying on the decision of Hon'ble High Court of Calcutta referred by the assesee in the case of DCIT Vs.Gloster Jute Mills Ltd.(ITA No.95/Kol/2011) where in it is held that the condition of allowing additional depreciation only in the initial assessment year ceased to exist as and from 01/4/2006. The Department relies on the decision of the Hon'ble High Court of Karnataka In the case of CIT(LTU) Vs. M/s.Rittal India Pvt.Ltd(ITA No.268/2014) viewed that the TRIBUNAL HAS RIGHTLY HELD that additional depreciation allowed under Section 32(1)(aii) of the Act is ONE TIME BENEIFT. The decision supports the contention/stand of the department that additional depreciation cannot be claimed till the exhaustion of the new property. In view of the difference rulings and question of law involved, the appeal is filed. 3) Deduction in respect of provision for bad and doubtful debts: The learned Commissioner (A) erred in deleting the addition of provision for bad doubtful debts. As the deduction u/s.37(1)(vii) is allowable in respect of any bad debt which is written off as irrecoverable in the accounts of the assessee, in this case the assessee merely created a provision of bad and doubtful debts. For presentation purpose only, it was shown as netted off from Sundry Debtors in the Balance Sheet and would not amount to actual writing off of the debtors. The learned Commissioner (A) erred in deleting the addition of provision for bad doubtful debts made under Book Profit u/s.115JB. The CIT (A) decision is NOT ACCEPTABLE. Under Explanation (1)(c)of Sec. 115JB, the Book profit be increased by.\"the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities\". Since the assessee net off the debtors in the balance sheet which would not amount to actual writing off the debtors, it squarely comes into the Explanation 1(c) of Section 115JB(2), treating it as unascertained liability. 4) The learned Commissioner(A) erred in treating the following subsidies received by the assessee company as Capital Receipts. i)Sales Tax Subsidy: Rs. 9,36,29,356/- ii)Power Subsidy : Rs. 11,61,59,650/- Printed from counselvise.com 8 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases iii)Fuel surcharge adjustment subsidy: Rs.3,17,62,359/- The cases relied by the assessee and endorsed by the CIT(A) of the following cases are not applicable in this case. The facts of the following cases are different from the facts of this case. i) CIT Vs.Ponnis Sugars and Chemicals Ltd., (306 ITR 392(SC)) ii) CIT Vs. Reliance Industries Ltd.(339 ITR 0632(Bom HC)) iii)CIT Vs.Maruti Suzuki India Ltd.(ITA No.1927/Del/2010-ITAT-Delhi iv) CIT Vs. Meghala Steels Ltd v)Shree Balaji Alloys Vs.CIT(2011) 333 ITR 335(J&K) 4.1) Further the Commissioner(Appeals) erred by endorsing the inference of the assessee a that the subsidy is of capital nature based on the \"objectives\" of the Industrial Policy of the Andra Pradesh government. The Objectives listed in the Policy show cases the Govt.'s intention to achieve the policy. The Objectives listed will not define subsidy as capital or revenue. The Objective is general in nature to attain the goal of industrial growth of the State. The terms and conditions offered by the Govt. in the Scheme will decide it whether a subsidy is capital or revenue. 4.2) Further the incentives are production incentives in the sense that the company would be entitled to these incentives only AFTER IT STARTED PRODUCTION. THESE SUBSIDIES WERE NOT TO MAKE ANY PAYMENT DIRECTLY FOR SETTING UP OF THE INDUSTRIES. 4.3) The subsidies received by the assesee are within the purview of the principles laid down to treat the subsidy as revenue receipts by the HON'BLE APEX COURT IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. AND OTHERS VS.CIT(228 ITR 253). As observed by the Apex Court the assessee was free to use the money in its business entirely as it liked and WAS NOT OBLIGED TO SPEND THE MONEY FOR A PARTICULAR PURPOSE like expansion of the unit/purchase of machinery/purchase of capital goods/purchase of raw materials /repayment of loans like in the case of Ponni Sugars & Chemicals Ltd. In view of the different rulings and question of law involved appeal is filed. 5) Carry forward and adjustment of Long Term Capital Loss of amalgamating company with the amalgamated company ie. the assessee company.. The learned CIT(Appeals)erred in deleting the addition of the LTCG ie allowed the amalgamated company the assessee company to set off the Long Term Capital loss of the amalgamating company (.M/s.Dalmia Cement Ventures Ltd.) The CIT(A) concurred with the reliance of the assessee in the case of ACIT Vs.Caplin Point Laboratories Ltd. 5.1) In the Chapter -VI-Aggregation o Income and Set off the loss of the Income tax Act, 1961 sections 72A,72AB and 72AA deal with the exceptions. In respect of carry forward of loss and set off in the cases of amalgamation or demerger etc. Sec.72A is attracted. In this section for the definition Printed from counselvise.com 9 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Accumulated Loss, the loss under the Profits and Gains of Business or Profession(Not being a loss sustained in speculation Loss is only mentioned. THE LOSS SUCH AS LOSS ON HOUSE PROPERTY/LOSS ON CAPITAL IS NOT INCLUDED. 5.2) Further in the Sec.74 dealing with capital loss, carry forward/set off of capital loss by the amalgamating company/amalgamated company is not discussed and the applicability of the Section is subject to the other provisions of the Chapter.. 5.3) The CIT(A) further erred in accepting the contention that as the Hon'ble High Court of Chennai has accepted the Scheme of Amalgamation, the loss can be carry forward and set off. The Hon'ble High Court passed the scheme to carry out the amalgamation subject to the fulfillment of provisions of relevant Acts such as I.T.Act, Sales Tax Act etc. To substantiate the stand, Department relied on the conditions stipulated in Col.4 of the Scheme of Amalgamation under the Head Compliance with Tax Laws. 5.4) Further the Dept. relies on the decision of Clariant Chemicals (I)Ltd. Vs. ACIT (ITA No.4281/Mum/2011) ITAT, Mumbai. • 6. At the outset, ld. Counsel for the appellant assessee submitted that grounds of appeal numbers 4, 5 and 7 raised by it vide ITA No.5416 and 5418/Del/2017 for AY’s 2013-14 & 2014-15 are not pressed. Accordingly, grounds of appeal numbers 4, 5 and 7 raised vide ITA No.5416 and 5418/Del/2017 are dismissed. Disallowance u/s 14A r.w.s. 8D in AY’s 2013-14 & 2014-15 7. The appellant assessee through its grounds of appeal numbers 01 to 03 and the Revenue through its grounds of appeal numbers 01 is contesting the order of Ld CIT(A) for AY’s 2013-14 & 2014-15 respectively. Thus, the appellant assessee is contesting relief not granted to it and revenue is contesting part relief granted to the assessee. For the purpose of this order, we will consider the figures for AY 2013-14. As the facts for AY 2014-15 have been Printed from counselvise.com 10 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases reported to be identical, the decision taken for AY 2013-14 shall apply mutatis mutandis in AY 2014-15 as well. 8. We will first consider the grounds of appeal 01 to 03 raised by assessee vide ITA No.5416/Del/2017. As per brief factual matrix of the case concerning AY 2013-14, during the year, the assessee had shown to have earned exempt dividend income u/s 10(34)/10(35) amounting to Rs. 19.11 Crs. In the Return of Income, the assessee had suo-moto offered a sum of Rs. 0.50 Crs. towards disallowance u/s 14A. Before the AO, , the assessee had also contended that since it had sufficient own funds out of which investments have been made, therefore the question of further disallowance u/s 14A do not arise. The Ld. AO invoking provisions of Rule 8D made an additional disallowance of Rs. 12.86 Crs. [Rule 8D(2)(ii) for interest – Rs. 5.99 Crs. & Rule 8D(2)(iii) for expenses - Rs. 7.37 Crs.). The Ld. CIT(A) gave partial relief by confirming the disallowance under Rule 8D(2)(ii) i.e., proportionate interest of Rs. 5.99 Crs. and directing the AO to recompute disallowance as per Rule 8D(2)(iii) after excluding investments which are strategic in nature while computing average value of investments for the purpose of computing disallowance u/s 14A. 9. The ld. Counsel for the assessee primarily argued that it had sufficient own funds for making investment. It was submitted that the investments in respect of which dividend has been received by the appellant during the year Printed from counselvise.com 11 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases have been acquired by the appellant from its own funds. It was submitted that total interest free funds constituting Share Capital plus Free Reserves & Surplus amounted to Rs. 2,798 Crs. as on 31-03-2013 & Rs. 2,674 Crs. as on 31-03- 2012. On the other hand, the investment stood at Rs. 1,752 Crs. and Rs. 1,198 Crs. as on 31-03-2013 and 31-03-2012 respectively. Therefore, disallowance u/s 14A stated to be unwarranted. In support of its arguments, the ld. Counsel has placed on record a voluminous paper book indicating availability of surplus own funds. The appellant assessee has placed reliance upon the decision of Hon’ble Apex Court in South Indian Bank Ltd. -vs.- CIT (2021) 438 ITR 1 (SC) holding that in case interest free own funds available with assessee exceeds its Investments, it could be presumed that Investments were made through assessee own funds. Hence, no disallowance u/s 14A could be made. The said decision of Apex Court was stated to have been followed in the case of DCIT – vs.- Dalmia Bharat Sugar & Industries Limited of this Tribunal as it ITA No. 4317/Del/2014 dated 14-11-2023 as well as a plethora of other decisions of Hon’ble Karnataka High Court, Hon’ble Bombay High Court and Ahmedabad Tribunal. 10. Per Contra, the ld. DR relied upon the order of the authorities below. 11. We have heard rival submissions in the light of material available on records. We have noted from para-7.4 and 7.5 of the order of the ld. CIT(A) that he has sustained the order of ld. Assessing Officer in cryptic and a Printed from counselvise.com 12 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases summary manner without countering the evidences produced by the appellant. Even the appellant’s reliance upon judicial precedence has been summarily dismissed holding that ‘….the case laws relied upon by the appellant are distinguishable on facts and in law…..’. From the details submitted by the appellant, we have noted that the argument of availability of surplus own funds is made out in favour of the assessee. We have also noted that judicial precedents relied upon also support the view that no disallowance under section 14A read with Rule-8D(ii) is permissible in cases where the assessee had surplus own funds. Accordingly, we are of the considered view that no disallowance under section14A read with Rule-8D(ii) was required to be made. We therefore set-aside the order of the ld. CIT(A) and direct the ld. AO to delete the addition of Rs.5.99 Crores. The grounds of appeal nos. 01 to 03 raised by the appellant assessee in ITA No.5416/Del/2017 are therefore allowed. 12. Since, the facts of the case in AY 2013-14 are identical to those in AY 2014-15, decision therein shall apply mutatis mutandis. Accordingly, the grounds of appeal number 01 to 03 contested by the assessee through in ITA No.5417/Del/2017 are also allowed. 13. We now will consider the ground of appeal no.1 raised by the appellant revenue in its appeal at 3157/Chny/2017. The ld. AO had noted that during the year under consideration, the assessee had earned exempt dividend income of Printed from counselvise.com 13 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Rs.19.11 Crs. In the Return of Income, the assessee had suo-moto offered a sum of Rs.0.50 Crs. towards part salary and administrative expenses of the employees engaged in investment activities. Other than the above, no other expenditure was shown to have been incurred to earn exempt income. The ld. AO rejected the contentions of the assessee and proceeded to make a disallowance in the assessment order of Rs.12.86 Crores(13.36 Crores worked by the AO minus .050 Crores already offered by the assessee). The ld. CIT(A) after considering details and submissions in the light of contemporaneous judicial precedents proceeded in para 8.8 of his order to direct the AO to recompute the disallowance under Rule-8D(2)(iii). 14. The ld. Counsel for the assessee reiterated the arguments taken before the ld. First Appellate Authority, submitting that the order is based upon correct understanding the facts of the case. 15. The ld. CIT-DR Shri Srikant Namdeo placed reliance upon the order of ld. Assessing Officer. It was argued that the AO has made additions after understanding true facts of the case. 16. We have heard the rival submissions in the light of material available on records. Invocation of statutory provisions to make any disallowance under Rule-8D(2)(iii) necessarily entails recording of an objective satisfaction by the Assessing Officer before making any disturbance to assessee’s calculation. It is trite law that unavailability of any such objective satisfaction by the Assessing Printed from counselvise.com 14 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Officer would make any disallowance untenable in the eyes of law. We have noted from the impugned assessment order that recording of any such satisfaction is missing. In the case of Godrez & Boyce Manufacturing Company Ltd. 394 ITR 449, Hon’ble Apex Court has held it is imperative for the AO to establish that based upon the accounts of the assessee, the disallowance made under section 14A by it is unacceptable. The impugned principle has been followed by this Tribunal in its decision in the case of Hindustan Times Ltd. Vide ITA No.1629/Del/2012 dated 31.01.2024. Accordingly, the decision of ld. CIT(A) directing the AO to recompute the disallowance is sustained and the ground of appeal no.01 raised by the appellant Revenue in appeal no.3157/Chny/2017 is dismissed. 17. Since, the facts of the case in AY 2013-14 are identical to those in AY 2014-15, decision therein shall apply mutatis mutandis. Accordingly, the grounds of appeal number 01 contested by the Revenue through in ITA No.3157/Del/2017 is also dismissed. Disallowance of leave encashment on provision basis 18. The appellant assessee has through grounds of appeal no.04 in ITA No.5416 and 5417/Del/2017 for AYs 2013-14 and 2014-15 contested the confirmation of disallowance made by the ld. AO. As stated hereinabove, the said ground was not pressed and hence stands dismissed. It has however been noted that the appellant Revenue through its ground of appeal no.5 in ITA Printed from counselvise.com 15 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases No.3158/Chny/2017 for AY 2014-15, contesting that the decision of ld. CIT(A) shows that impugned liability is an unascertained liability and therefore it attracts provisions of Explanation-1(f) of Section 115JB. Unascertained liabilities fall within the preview of Explanation-1(f) of Section 115JB and therefore liable for inclusion qua calculation of book profits. Accordingly, in view of withdrawal of its contest by the assessee on the core issue of leave encashment, as well as statutory prescription of section 115JB, the ground of appeal no.5 raised by the Revenue is allowed. Exclusion of Subsidy being Capital receipt 19. The appellant assessee through its grounds of appeal number 06 and the Revenue through its grounds of appeal number 04 is contesting the order of Ld CIT(A) for AY’s 2013-14 & 2014-15 respectively. Thus, the appellant assessee is contesting relief not granted to it and revenue is contesting part relief granted to the assessee. For the purpose of this order, we will consider the figures for AY 2013-14. As the facts for AY 2014-15 have been reported to be identical, the decision taken for AY 2013-14 shall apply mutatis mutandis in AY 2014-15 as well. 20. We will first consider the grounds of appeal 06 raised by assessee vide ITA No.5416/Del/2017. As per factual matrix of the case available for AY 2013-14, the ld. AO had made an addition on account of Sales Tax subsidy, & Power subsidy while computing Book Profit u/s 115JB of Rs. 24,15,51,365/-. It Printed from counselvise.com 16 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases was submitted that the assessee had set up a newly integrated cement plant of 2.5 MTPA at Chhinnakomeria in Kadappa district of Andhra Pradesh. The said plant has been set up with a fresh capital investment of Rs. 580 Crs. and has been commissioned on 21-03-2009. In terms of “Industrial Investment Promotion Policy 2005-2010” issued by Industries & Commerce Department, Government of Andhra Pradesh, industrial units set up in specified areas with a capital investment of Rs. 100 Crs. or more for manufacturing/producing articles will qualify as “Mega Projects” and were eligible for following fiscal incentives for a period of five years. The incentives available included Sales Tax Subsidy in the nature of reimbursement of 25% of the sales tax paid, Power Subsidy in the nature of cost reimbursement at specified rate. During the year, the subsidy accrued to the assessee included Sales Tax Subsidy of Rs. 9.36 Crs. and power Subsidy of Rs. 14.80 Crs. [netted off with Power and Fuel]. In its return of income, the same was excluded under normal provision as well as while computing the Book Profit u/s 115JB, by the assessee holding it to be in the nature of capital receipts. The ld. A.O. disallowed the above claim on the contention that these incentives are production incentives as they are granted after the company commences production. Thus, as evident from Para 13.6 to 13.19 of the assessment order, it was concluded that the incentives were given to enable the assessee to run the business profitably and were operational subsidies. Further, apropos to Para 12.0 to 12.8 of the order the subsidy was not allowed by the ld. AO, as exclusion under MAT provisions on the contention Printed from counselvise.com 17 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases that Explanation 1 to Sec. 115JB of the Act does not permit such specific deduction while computing Book Profit. In appeal, the Ld. CIT(A) granted partial relief by holding subsidy as capital receipts under normal provisions. However, regarding the claim of exclusion of Subsidy under MAT provisions, Ld. CIT(A) upheld the order of the A.O. while relying upon decision of Supreme Court in Apollo Tyres Ltd. –vs.- CIT (2002) 122 Taxman 562 (SC). 21. It is the case of the appellant assessee that the decision of ld. CIT(A) in confirming the action of the ld. AO qua inclusion of capital subsidy while computing books profit under section 115JB of the Act is incorrect. It has been contended that the capital receipt do not bear character of income and hence the same is not includible in book profit under section 115JB. The ld. Counsel placed reliance upon the decision of Hon’ble Kolkata High Court in the case of Ankit Metal and Power Ltd. 109 taxmann.com 93 which after considering the decision of Apollo Tyers Ltd. (supra) concluded that as interest and power subsidy do not fall in the definition of income under section 2(24), it cannot be included as book profit under section 115JB. The ld. Counsel invited attention to a catena of other cases on the same principle. 22. Per Contra, the ld. DR would like to place reliance on the orders of the lower authorities. 23. We have heard the rival submission in the light of material placed on record. We have noted that the ld. AO has extensively dealt the issue in paras- Printed from counselvise.com 18 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases 12 to 12.08 of his order vividly elaborating as to why the impugned amounts were liable for inclusion under section 115JB. The ld. First Appellate Authority has also examined the issue at length in paras-22 to 22.16 of his order. While doing so both the lower authorities have examined judicial precedents covering the subject. We have noted that the reliance placed upon the decision of the Hon’ble Apex Court in the case of Appolo Tyres (supra) is also based upon correct understanding and appreciation of the facts of the case. Accordingly, we are of the considered opinion that no case of any intervention to the order of the ld. CIT(A) is made out at this stage. We therefore confirm the order of ld. CIT(A) and dismiss ground of appeal no. 06 raised by the assessee. 24. Since, the facts of the case in AY 2013-14 are identical to those in AY 2014-15, decision therein shall apply mutatis mutandis. Accordingly, the grounds of appeal number 06 contested by the assessee through in ITA No.5417/Del/2017 is also dismissed. 25. As regards ground of appeal no.04 of the Revenue in ITA No.3157/Chny/2017, the Revenue is agitating treatment of the impugned subsidy amounts as capital receipts by the ld. CIT(A). The ld. AO had qua his discussions in para 13.6 to 13.9 of his order held that the impugned subsidies were operational subsidies and made addition of Rs.24,15,51,365/-. Printed from counselvise.com 19 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases 26. Per Contra, the ld. CIT-DR placed reliance upon the order of Ld. AO. It was argued that the action of the AO is based upon correct understanding of the facts and reliance upon relevant judicial precedents. 27. It is the case of the assessee that the order of the ld. CIT(A) is based upon proper understanding of the issues involved. Arguments taken before the ld. CIT(A) were reiterated. The assessee has placed upon records a voluminous paper book, inter alia, containing government instructions for the subsidy, extracts of its financials, etc., in support of its arguments. 28. We have heard the rival submission in the light of material placed on record. We have noted that the ld. CIT(A) has concurred with the submissions of the assessee that the impugned amounts of subsidy were given not for encouragement of business but for the overall development and growth of State of Andhra Pradesh. We have noted that Hon’ble Apex Court in the case of Ponny Sugars & Chemical Ltd. held that nature of any subsidy is to be determined with respect to the purpose for which is granted. Time of disbursal and source/mode of subsidy is immaterial. We have noted that ld. CIT(A) has rightly distinguished the decision of Meghalaya Steels Ltd. (383 ITR 217) of Hon’ble Apex Court concluding that in the impugned case, the issue was as to whether subsidy is admissible for deduction under section 80IB/80IC or not. The issue of capital receipt vs revenue receipts was not agitated there. The ld. CIT(A) after examining various documents placed by the assessee held that the Printed from counselvise.com 20 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases prime object of the impugned subsidies was to create employment, accelerate industrial growth, boost industrial investment in Andhra Pradesh for its wide spread economic development. Accordingly, we find that the decision of ld. CIT(A) is based upon correct understanding of the facts of the case. We therefore do not feel any need for any intervention in the order of the ld. CIT(A) at this stage. The same is therefore sustained and the ground of appeal no.4 raised by the Revenue in ITA No.3157/Chny/2017 is dismissed. 29. Since, the facts of the case in AY 2013-14 are identical to those in AY 2014-15, decision therein shall apply mutatis mutandis. Accordingly, the grounds of appeal number 04 contested by the Revenue through in ITA No.3158/Chny/2017 is also dismissed. Revenue’s remaining grounds in ITA No.3157 & 3158/Chny/2017 30. The next issue raised by Revenue through its ground of appeal no.02 in the above two ITAs for AY 2013-14 and 2014-15 respectively is regarding the decision of Ld. CIT(A) in allowing the appellant’s claim of additional deprecation under section 32(1)(iia). We have noted that the issue for the two years is based on identical facts and hence decision taken qua ITA No.3157 for AY 2013-14 shall apply mutatis mutandis to ITA No.3158 for AY 2014-15. For the purpose of this order, we consider the fact and figures for AY 2013-14. As per brief factual matrix of the case the assessee had claimed deduction towards additional depreciation amounting to Rs. 14,37,34,124/- i.e. @ 20% on Printed from counselvise.com 21 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases all the eligible assets acquired on or after 01-04-2010 but before 31-03-2012, subject to the conditions specified in Sec. 32(1)(iia) and subject to overall criteria that total depreciation does not exceed the actual cost. Apropos to discussions in Para 7.2 – 7.4 of assessment order, the ld. AO disallowed the claim stating that Sec. 32(1)(iia) allows claim of additional depreciation in only the first year in which the asset is installed and put to use. Upon consideration, Ld. CIT(Appeals) allowed the claim relying on the decision of Hon’ble Kolkata Tribunal in DCIT –vs.- Gloster Jute Mills Ltd. (2017) 88 taxmann.com 738 (Kol – Trib.). 31. Per contra, the ld. DR relied upon the order of ld. AO and argued that the decision of ld. CIT(A) is not correct. 32. The ld. Counsel for the assessee submitted that Sec. 32(1)(iia) states that additional depreciation shall be allowed @ 20% on ‘new’ plant & machinery acquired and installed after 31-03-2005 subject to conditions prescribed therein. It was contended that the appellant assessee duly satisfied all the conditions as mentioned in Sec 32(1)(iia). It was further argued that vide first proviso to Sec 32(1)(iia), the Act itself defines the limitations and specifies the conditions in which such claim of additional depreciation shall not be available. If the asset does not fall under the restrictive provisions of Sec. 32(1)(iia), the assets are eligible for claim of additional depreciation in subsequent years. It was argued that if the intention of the legislature was to allow the benefit only in the initial Printed from counselvise.com 22 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases year then the provision of the Act would have expressly prescribed and that in absence of such specific provision, it can be said that the legislature has intended to provide the relief in subsequent years also. The ld. Counsel placed reliance upon a catena of decisions of Mumbai and Kolkata Tribunal holding that the provisions of Sec. 32(1)(iia) as amended by Finance Act, 2005 w.e.f. 01.04.2006 do not explicitly postulates allowance of depreciation in the first year only. It was accordingly requested that the order of the Ld. CIT(A) may be confirmed. 33. We have heard rival submissions in the light of materials placed on record. We have noted that, as observed by the ld. CIT(A), the issue is fairly covered in favour of the assessee vide its decision of the Hon’ble Co-ordinate Bench of Kolkata Tribunal in ITA No.95/Kol/2011, in the case of DCIT vs Gloster Jute Mills Ltd. (2017) 88 taxmann.com 738 (Kol - Trib.). We have noted that the decision of learned First Appellate Authority is based upon correct facts of the case and does not require any intervention at this stage. Accordingly, we confirm the order of the ld. CIT(A) and dismissed ground of appeal no. 02 raised by the Revenue in ITA No.3157/Chny/2017. 34. Since, the facts of the case in AY 2013-14 are identical to those in AY 2014-15, decision therein shall apply mutatis mutandis. Accordingly, the grounds of appeal number 02 contested by the Revenue through in ITA No.3158/Chny/2017 is also dismissed. Printed from counselvise.com 23 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases 35. The next issue raised by Revenue through its ground of appeal no.03 in the above two ITAs for AY 2013-14 and 2014-15 respectively is regarding the decision of Ld. CIT(A) in allowing the appellant’s claim of provision for bad debts under normal provision and under MAT under section 115JB amounting to Rs.1,34,34,000/-. We have noted that the issue for the two years is based on identical facts and hence decision taken qua ITA No.3157 for AY 2013-14 shall apply mutatis mutandis to ITA No.3158 for AY 2014-15. For the purpose of this order, we consider the fact and figures for AY 2013-14. As per brief factual matrix the assessee has debited in its P&L A/c provision for bad and doubtful debts of Rs. 1.34 Crs. The said provision was netted off with debtors in the Balance Sheet. The assessee held that as the same represents actual write off it was not added back under normal provisions & MAT. As evident from para 11.2 of the assessment order, the ld. A.O. disallowed the claim stating that deduction is available on actual bad debts written off and not on provision. Before the ld. CIT(A), the assessee placed reliance upon the decision of Hon’ble SC in Vijaya Bank –vs.- CIT 323 ITR 166 (SC) & Hon’ble Karnataka HC in CIT –vs.- Yokogawa India Ltd. (2012) 204 Taxman 305 (Kar.). Upon considering the same, ld. CIT(A) proceeded to delete the impugned addition. 36. Per Contra, the ld. CIT-DR argued in favour of the decision of ld. Assessing Officer. Printed from counselvise.com 24 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases 37. The ld. Counsel for the assessee submitted that the issue is squarely covered by the decision of Hon’ble Apex Court in Vijaya Bank -vs.- CIT (2010) 323 ITR 166 (SC) wherein it has been held that the amount of provision for bad & doubtful debts is reduced from loans and advances or debtors from the asset side of the balance sheet. Such treatment amounts to actual write-off A provision for doubtful debt such presented in accounts would be regarded as an allowable expenditure u/s 36(1)(vii). Further reliance was placed upon the decision of a Co-ordinate Bench of this Tribunal in the case of Religare Finvest Ltd. –vs.- DCIT [I.T.A. No. 4796/Del/2017 dated 13.07.2023] and of the Ahmedabad Tribunal in the case of Vidres India Ceramics Pvt. Ltd. -vs.- DCIT [I.T.A No. 2521/Ahd/2017 dated 17.05.2019. On the issue of treatment under section 115JB reliance was placed upon the decision of Hon’ble Karnataka High Court in CIT –vs.- Yokogawa India Ltd. (2012) 204 Taxman 305 (Kar.). which was stated to have been upheld in ACIT -vs.- Delhi State Industrial and Infrastructure Development Corporation Ltd. [ITA No.7265/Del/2019 dated 26.09.2023 of this Tribunal. It was accordingly requested that the decision of the ld. CIT(A) may be confirmed. 38. We have heard rival submissions in the light of material placed on record. We have noted that a Co-ordinate Bench of this Tribunal in the case of Religare Finvest Ltd. as at ITA No.4796/Del/2017, while, inter alia, considering decision of Hon’ble Apex Court in the Vijya Bank case held as under:- Printed from counselvise.com 25 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases “…….We have heard both parties, perused the materials. The Co- ordinate bench of the Tribunal in Assessee’s own case for the Assessment Year 2010-11 vide order dated 10/12/2021 in I.T.A. No. 2559/Del/2016 (A.Y 2010-11), while dealing with the similar issue of disallowance of bad debts written off by the assessee, decided the same in favour of the Assessee in following manners: “12. In the case of Vijaya Bank v. Commissioner of Income Tax: 323 ITR 166, the assessee made a provision for bad and doubtful debt by debiting the amount of bad debt to the Profit and Loss Account so as to reduce the profits of the year, and also the provision account so created was debited and simultaneously the amount of loans and advances or debtors stood reduced and, consequently, the provision account stood obliterated. Further, loans and advances or the sundry debtors of the assessee as at the end of the year lying in the Balance Sheet was shown as net of \"provisions for doubtful debt\" created by way of debit to the Profit and Loss Account of the year. Learned Assessing Officer disallowed deduction on the ground that the entry made by the assessee was a mere provision and could not be equated with actual write off of bad debts in terms of the section. Ld. CIT(A) and the Tribunal allowed the assessee’s claim, but the High Court reversed the order of the CIT(A) and the Tribunal. On appeal by the assessee, Hon’ble 8 Apex Court, while reversing the order of the High Court and referring to its earlier ruling in the case of Southern Technologies Ltd. v. JCIT: 320 ITR 577 held that the credit entry in each and every individual debtor’s account was not necessary to constitute actual write off of bad debts. Hon’ble apex Court explained the impact of Explanation to section 36(1)(vii) and the concept of write off as follows: “To understand the above dichotomy, one must understand ‘how to write off’. If an assessee debits an amount of doubtful debt to the P&L Account and credits the asset account like sundry debtor’s Account, it would constitute a write off of an actual debt. However, if an assessee debits ‘provision for doubtful debt’ to the P&L Account and makes a corresponding credit to the ‘current liabilities and provisions’ on the Liabilities side of the balance sheet, then it would constitute a provision for doubtful debt. In the latter case, assessee would not be entitled to deduction after April 1, 1989.” Hon’ble Apex Court observed that if the assessee had not only debited the P&L account but also correspondingly reduced the amount from Debtors A/c on the assets side of the Balance Sheet and, consequently, at the end of the year, the figure shown on the assets side was net of the Printed from counselvise.com 26 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases alleged provision, amounted to actual write off for the purpose of availing benefit of deduction under the section. 13. Having considered the material placed on record, Ld. CIT(A) reached a conclusion on facts that the assessee had already disallowed in the computation of income the provision for NPA of Rs. 26,06,230/- and general provision of loans to the tune of Rs. 9,07,19,756/-created by it for the financial year 2009-10 which was reported separately in schedule R of the profit and loss account for the said year. Ld. CIT(A) further found that the learned Assessing Officer did not make any 9 adverse comments in respect of the reduction of loans and advances by an amount of Rs.47,40,16,508/in the Balance Sheet of the assessee which is clearly a writing off of bad debts in the books of accounts of the assessee. Basing on the record Ld. CIT(A) recorded a finding that the writing off of the loans of Rs.47, 40,16, 508/-is an actual writing off and not a provision and the same is bona fide and based on its commercial expediency of the assessee. 14. On a careful consideration of the matter and analyzing the facts in the light of the addition of the Hon’ble Apex Court in the case of Vijaya Bank (supra), we are of the considered opinion that in this matter the assessee not only debited the amount of doubtful debt to the P&L Account but in fact registered the value of assets in the Balance Sheet, and therefore we find that it’s not the case of mere creating provision but actual writing off of the bad debts, and accordingly the assessee is entitled to the deduction under section 36(1)(vii) of the Act. On this premise we uphold the findings of the Ld. CIT(A) and dismiss ground No. 1 of the appeal.” 25. By respectfully following the order of the Co-ordinate Bench in Assessee’s own case for A.Y. 2010-11 (supra), we find no merit in the Ground No. 2 of the Revenue, for A.Y. 2012-13, A.Y 2013-14 and A.Y 2015-16. Further we find merit in Assessee’s Ground No. 3 for A.Y. 2014-15, accordingly, Ground No. 2 of the Revenue in I.T.A. No. 5202/Del/2017, I.T.A. No. 1005/Del/2018 and ITA No. 7553/Del/2018 are dismissed and Assessee’s Appeal Ground No. 3 in I.T.A.7856/Del/2017 is allowed…..”. 39. We have noted that the facts of the present case are identical to those in the case of Religare Finvest (supra). Accordingly, in respectful compliance to the decision (supra) and also for the purposes of consistency, we do not feel any Printed from counselvise.com 27 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases need to disturb the findings of the ld. CIT(A) at this stage, the same are therefore confirmed. 40. As regards the issue of treatment under section 115JB, we have noted that Hon’ble Karnataka High Court in the case Yokogava India Ltd. 204 taxman 305 have held that the provisions are not liable for addition under section 115JB. This view has been upheld by a Co-ordinate Bench of this Tribunal in the case of Delhi State Industrial and Infrastructure Corporation Ltd. as at ITA No.7265/Del/2019. We have noted that the decision of ld. CIT(A) in para -20.4 of his order, following decision of Hon’ble Apex Court in the case of Vijaya Bank as well of this Tribunal in the case of Flex Foods, holding that the provisions for doubtful debts is an allowable deduction under section 115JB is also correct. Accordingly, on the issue of treatment of the provisions for doubtful debts under section 115JB also the arguments of the Revenue are non- maintainable. We therefore confirm the order of the ld. CIT(A) and dismiss the ground of appeal no.3 raised by the Revenue. 41. Since, the facts of the case in AY 2013-14 are identical to those in AY 2014-15, decision therein shall apply mutatis mutandis. Accordingly, the grounds of appeal number 03 contested by the Revenue through in ITA No.3158/Chny/2017 is also dismissed. 42. The next issue raised by the Revenue vide ground of appeal no.5 in ITA No.3157/Chny/2017 is regarding the carry forward and adjustment of Long Printed from counselvise.com 28 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Term Capital Loss of amalgamating company amounting to Rs.2,05,96,629/-. Brief facts of the case are that during the year, Dalmia Cement Ventures Limited (DCVL), 100% subsidiary company of the assessee company, got amalgamated with the assessee company w.e.f. 01-04-2012 vide order of Hon’ble High Court dated 13-11-2013. The assessee had contended that vide Para 5(f) of the Approved scheme DCVL was entitled to avail/claim all the benefits under the various laws, as applicable with respect to DCVL, as were being availed/ claimed by DCVL. Accordingly, the brought forward capital loss of DCVL available for set off amounting to Rs. 3,36,45,844/- was transferred to the assessee company. Out of the same, the assessee, during the year, had claimed set off of unabsorbed LTCL amounting to Rs. 2,05,96,629/- in its return of income for AY 2013-14. The ld. AO disallowed the claim on the contention that u/s 72A(1) only unabsorbed business loss & depreciation of the amalgamating company is available to amalgamated company. The Ld. CIT(A) allowed the claim holding that the Scheme as approved by Hon’ble High Court, all the assets & liabilities including the capital loss would be transferred to appellant company. 43. Per Contra, ld. CIT-DR relied upon the order of ld. Assessing Officer contesting the relief accorded by the ld CIT(A). 44. The ld. Counsel for the assessee argued that this issue is squarely covered by the decision of Hon’ble Pune Tribunal in ACIT –vs.- Capgemini Technology Printed from counselvise.com 29 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases Services Limited [ITA No. 1857/PUN/2017 dated 30-08-2022] wherein it has been held that the benefit of carry forward and set off of long term capital loss is to be allowed to the amalgamated company. The Tribunal held that all the benefits under the Income Tax Act, due to the amalgamating company should devolve upon the amalgamated company because of principle of succession relying on the principle laid down by Hon’ble Supreme Court in CIT –vs.- T Veerabhadra Rao (1985) 155 ITR 152 (SC). Similar view was reported to have been taken by the Hon’ble Kolkata ITAT in the case of Electrocast Sales India Ltd. –vs.- DCIT [ITA No. 2145/Kol/2014 dated 09-03-2018. It was argued that there is no bar under the Income Tax Act to deny the carry forward and set of capital loss of amalgamating company in the hands of amalgamated company. 45. We have heard the rival submissions in the light of material placed on record. The ld. CIT(A) has accorded relief to the assessee on the premise that in scheme of amalgamations approved by Hon’ble High Court, all the assets and liabilities are taken over by the company taking over and therefore the losses will have to be allowed to the assessee. We have noted from para-18 to 18.3 of the order of ld. CIT(A) that he has allowed relief after carefully considering the facts of the case in the light of material available before him as well as judicial precedents covering the matter. We have noted that there is no infirmity in the decision of ld. CIT(A). Accordingly, we confirm the order of the ld. CIT(A) and dismiss the grounds of appeal no.05 raised by the appellant Revenue in ITA No.3157/Chny/2017. Printed from counselvise.com 30 ITA Nos.3157, 3158/Chny/2017 and ITA Nos. 5416 & 5417/Del/2017 along with other cases 46. The assessee has raised Cross Objection Nos.63/Chny/2018 and 64/Chny/2018 for AYs 2013-14 and 2014-15, respectively. The ld. Counsel for the assessee submitted that the impugned Cross Objections have been raised qua grounds of appeal no.02, 03 and 05 of Revenue’s appeal for ITA No.3157 & 3158/Chny/2017. Apropos to the discussions above, as we have dismissed the impugned grounds of appeal raised by the Revenue, the impugned Cross Objection Nos.63/Chny/2018 and 64/Chny/2018 for AYs 2013-14 and 2014-15, respectively raised by the assessee have become infructuous and hence are dismissed. 47. In the Result the appeal of the Revenue in ITA No.3157/Chny/2017 and 3158/Chny/2017 and appeal of the assessee in ITA No.5416 & 5417/Del/2017 are partly allowed. Further, Cross Objection Nos.63/Chny/2018 and 64/Chny/2018 filed by the assessee are dismissed. Order pronounced in the open court on 31st December, 2025. Sd/- Sd/- [MADHUMITA ROY] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 31.12.2025 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "