CHIRIPAL INDUSTRIES LIMITED,AHMEDABAD V. DCIT, CENTRAL CIRCLE-2(1), AAYKAR BHAVAN

CO 4/AHD/2024

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted certain disallowances made by the Assessing Officer under section 80IA and partially under section 14A r.w. Rule 8D of the Income Tax Act, 1961. The Assessee, Chiripal Industries Ltd., had claimed deductions under these sections which were initially disallowed by the AO but were later contested and partially overturned by the CIT(A). The Tribunal, referencing previous decisions and the specific circumstances of the case, upheld the CIT(A)'s decision on the grounds that the Assessee met the necessary conditions for the deductions claimed. Furthermore, the Tribunal set aside the issue of the TUFS subsidy for re-evaluation by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713215 (ITAT-AHMEDABAD)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: DCIT vs. M/s Jindal Worldwide Limited, DCIT vs. M/s Adani Gas Ltd., ITO vs. Jasjit Singh (Del)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FOLLOWING PRECEDENCE; PRINTED FROM COUNSELVISE.COM; PRINTED FROM COUNSELVISE.COM
• Keywords: Set aside; Reassessment proceedings; Bad and doubtful debts; Depreciation; Capital receipt; Capital expenditure; Earning of tax free income; Unabsorbed depreciation; Rule 8D; Scheme of amalgamation
• Section: 147; 148; 143(3); 14A; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The DCIT, Central Circle-2(1), Ahmedabad Vs Chiripal Industries Ltd. Survey No. 199/200/1, 2, Saijpur Gopalpur, Pirana Road, Piplej, Ahmedabad-382405 PAN: AAACC8513B Chiripal Industries Ltd. Survey No. 199/200/1, 2, Saijpur Gopalpur, Pirana Road, Piplej, Ahmedabad-382405 PAN: AAACC8513B (Appellant) Vs The DCIT, Central Circle-2(1), Ahmedabad (Respondent) Revenue Represented: Shri Hargovind Singh, Sr. D.R. Assessee Represented: Shri Saurabh Soparkar, A.R. Date of hearing : 18-06-2025 Date of pronouncement : 30-07-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the appellate order dated 16.08.2023 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad arising out of the assessment order ITA No. 883/Ahd/2023 & C.O. No. 4/Ahd/2024 Assessment Year. 2017-18 Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 2 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18. Cross Objection is filed by the Assessee as against the above Department appeal. 2. Brief facts of the case is that the assessee is a Company engaged in the business of manufacturing and processing of textile products. For the Asst. Year 2017-18, assessee filed its Return of Income on 06-11-2017 claiming a loss of Rs. 12,24,01,961/- and book profit u/s. 115JB of the Act of Rs.40,62,81,000/-. The return was taken for limited scrutiny and assessment made disallowing u/s. 80IA of Rs. 4,82,07,712/- and disallowance u/s. 14A r.w. Rule 8D of Rs.60,46,187/-. 3. Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A) who deleted the addition following decision of this Tribunal in assessee’s own case relating to the earlier Asst. Year 2016-17 in ITA No. 292/Ahd/2020 vide order dated 15-07-2022. 3.1. Regarding the second addition namely disallowance u/s. 14A, the Ld. CIT(A) directed to make the disallowance to the extent of dividend income of Rs.670/- received by the assessee and the balance disallowance of Rs.60,46,042/- were directed to be deleted. 4. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal: Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 3 1. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and/or on facts in deleting the disallowance of Rs.4,82,07,712/- made under section 80IA of the I.T. Act? 2. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and/or on facts in restricting the disallowance made under section 14A of the I.T. Act of Rs. 60,46,042/- to Rs. 670/-? 5.. Ld. Sr. D.R. appearing for the Revenue supported the order passed by the assessing officer and pleaded to confirm the disallowances. 6. Per contra Ld. Senior Counsel Shri S.N. Soparkar appearing for the assessee submitted that the disallowance u/s. 80IA of the Act made by the assessing officer was deleted by Ld. CIT(A) following the order passed by this Tribunal relating to Asst. Year 2014-15 in ITA No. 2582/Ahd/2017 and relating to Asst. Year 2016-17 in ITA No. 292/Ahd/2020 and drawn our attention to the relevant paragraph. 7. We have given our thoughtful consideration and perused the materials available on record and the case laws relied by the assessee. The facts of the case is that the assessee was carrying on the business of manufacturing and trading of yarn, fabrics and garments. The AO noted that the assessee has claimed deduction of Rs.4,82,07,712/- u/s 80IA of the Act. The assessee had shown activity of power generation and has shown plant and machinery used for such activity at Rs.7,66,75,468/-. The A.O. noted that the power plant was originally installed by the erstwhile concern M/s Shanti Processor Ltd and belonged to period prior to 01.04.2005. Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 4 The old machinery used was of Rs. 7,11,23,416/-as against the total value of Rs.7,66,75,468/-. Therefore the A.O. held that the power plant was set up by transfer of old and previously used machinery, the value of which was more than 90% of the total value of the plant and he therefore invoked the provision of Explantion-2 of Sec. 80IA(3) of the Act and disallowed the claim of deduction after rejecting the explanation offered by the assessee. 7.1. Before the CIT(A), the assessee submitted that M/s Shanti Processor Ltd was merged with the assessee company with effect from 01.04.2005 and the assessee company fulfilled all the conditions necessary for claiming deduction u/s 80IA of the Act. It had also brought to his notice that the CIT(A) had allowed the claim in the previous assessment years, wherein similar disallowance on same reasoning was made by the AO. It is also seen that the AO had rejected the contention of the assessee by following precedence in earlier years. 8. Whereas Co-ordinate Bench of this Tribunal in assessee’s own case for the Asst. Year 2014-15 followed the earlier years’ order namely Asst. Years 2010-11 to 2012-13 by observing as follows: 4. During the course of appellate proceedings before us, the ld. counsel at the outset brought to our notice that identical issue on similar facts in the case of assessee itself was decided by the Co-ordinate Bench of the ITAT vide ITA No. 900/Ahd/2016 and ITA No. 1547/Ahd/2016 for the assessment year 2010-11 to 2012-13. The ld. departmental representative could not controvert the same and nothing has brought to our notice suggesting that the decision of Hon’ble ITAT is not applicable. With the assistance of Ld. representatives, we have gone through the aforesaid decision of the Coordinate Bench of the ITAT. Relevant part of the decision is reproduced as under:- Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 5 “25. We have heard both the sides and perused the material on record carefully. It was undisputed fact that that entire plant was new one and machinery were purchased by Shanti Processor Ltd which was amalgamating company and since the same were not used prior to 01/04/2005 and in the assessment order u/s. 143(3) for A.Y.2009-10 & A.Y.2010-11 the assessing officer had allowed the deduction on identical issue and similar facts. The assessee has started the generation of energy in the previous year relevant to A.Y. 2006-07 and started claiming deduction u/s. 80IA(4) of the Act from assessment year 2009-10, which was first year of its claimed and the same was allowed meaning thereby the A.O. was satisfied that the assessee had fulfilled all the conditions. It is also noticed that the assessee has explained its entitlement for the impugned claim of deduction under section 80IA(12) as under:- \"The power plant, in question, was transferred to assessee company under the scheme of Amalgamation of two companies viz Shanti Processors Ltd & Chiripal Petro chemicals Ltd. M/s Shanti Processors Ltd. was amalgamating company & Chiripal Petro Chemicals Ltd. was amalgamated Company under the provisions of the Companies Act, 1956. The scheme of Amalgamation was approved by Hon'ble High Court of Gujarat, vide its order dated 31/03/2006 w.e.f. 01/04/2005. It is also added that name of the company Chiripal Petro Chemicals Ltd. was changed to Chiripal Industries Ltd. as per approval of Registrar of Companies of Gujarat (A copy of both the orders are enclosed herewith for your honour's kind perusal and record purpose.) At this point, the assessee company would like to submit the definition of amalgamation , tax concessions available to amalgamated company and other provisions, for your honours kind perusal as under: A. Definition of amalgamation : According to section 2(1B) of the Income-tax Act, 1961 (hereinafter referred to as the Act), amalgamation in relation to companies means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the company with which they merge or which is formed as a result of the merger, as the amalgamated company) in such a manner that:- Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 6 a. All the property of the amalgamating company or companies immediately before the amalgamation becomes the property of the amalgamated company by virtue of amalgamation. b. All the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of amalgamation. Shareholders holding not less than 3/4th in value of the shares in amalgamating company or companies (other than shares held there is immediately before the amalgamation or by a nominee for the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation, otherwise than as a result of the acquisition of the property one company by another company pursuant to the purchase of such property by the other company as a result of distribution of such property to the other company after the winding up of first mentioned company. B. Tax concessions to the amalgamated company: The amalgamated company shall be eligible for tax concessions only if the following two conditions are satisfied: I. The amalgamation satisfies all the three conditions laid down in section2(lB) and II The amalgamated company is an Indian company. If the above conditions are satisfied the amalgamated company shall be eligible for following tax concessions: (a) Expenditure on Scientific Research Section 35(5): (b) Expenditure on acquisition of patent rights or copy rights Section 35A(6): (c) Expenditure of know-how Section 35AB(3): (d) Treatment of preliminary expenses Section 35D(5): (e) Amortization of expenditure in case of amalgamation Section 35DD (f) Treatment of capital expenditure on family planning Section 36(1)(ix): (g) Treatment of Bad debts section 36(1)(vii): (h) Deduction available u/s 80IA & 80IB: (i) Carry forward and set off Business Losses & unabsorbed depreciation of the amalgamating company.\" Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 7 We observe the assessing officer has not disproved these material facts and disallowed the claim of deduction on presumption basis without considering the relevant legal provision as elaborated in the findings of the Ld.CIT(A). The relevant legal provision has already been elaborated by the Ld. CIT(A) in his findings that as per the provisions of section 80IA(12) when any undertaking of an Indian Company which is entitled to deduction under this section is transferred before the expiry of the period specified in this section to another Indian Company then as per clause (b) the provision of this section shall apply to the amalgamated Company as they would have applied to the amalgamating Company if the amalgamation had not taken place and the provisions of subsection (12) would only apply if the amalgamating Company was eligible for claiming deduction u/s 80IA. It is demonstrated from the above facts and circumstances that the assessing officer has disallowed the claim of the assessee on presumption basis that addition of Rs. 71,12,34,167- was old plant and machinery without bringing on record evidence to substantiate that specified machinery was purchased by Shanti processor Ltd and the assessing officer has also failed to disproved the material fact that similar claim was allowed to the assessee in the assessment year 2009-10 on fulfilling of all the conditions. In the light of the above facts, legal findings and elaborated findings of the Ld. CIT(A) as supra in this order we do not find any error in the decision of the Ld.CIT(A), therefore, the appeal of the revenue is dismissed.” 8.1. Similarly for the Asst. Year 2016-17, Co-ordinate Bench of this Tribunal in ITA No. 292/Ahd/2020 dated 15-07-2022 held as follows: 7. We have heard Ld. DR and perused all the relevant material available on record. Since the amalgamation company which is the assessee company has taken the power plant from amalgamation company the statutory tax deduction which were available to amalgamating company are also applicable to small company le assessee company as per law. The Tribunal in assessee's own case for A.Y. 2011-12 also granted the said relief. Therefore, ground nio.1 of the Revenue's appeal is dismissed. Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 8 9. Following the above decisions of Co-ordinate Bench of this Tribunal in assessee’s own case, Ground No. 1 raised by the Revenue is devoid of merits and is liable to be dismissed. 10. Ground No. 2 namely restricting the disallowance to Rs.670/- u/s. 14A r.w. Rule 8D made of Rs.60,46,042/-. The A.O. noted that the assessee has claimed various types of expenditure, but has not apportioned any amount to income that was not includable in the total income of the assessee. Therefore the A.O. invoked provisions of Section 14A r.w. Rule 8D(2)(ii) and disallowed 1% of average monthly investment and arrived the disallowance at Rs. 60,46,712/-. 10.1. In the appeal proceedings, the assessee claimed that it has received exempt income in the form of dividend Rs. 670/- only. The assessee also stated that the investments made were out of its own funds and therefore the disallowance made by the A.O. was not tenable as no borrowed funds were used for making investment in shares and mutual funds. Further there were sufficient share capital and reserves and surplus available to invest in the said shares and mutual funds. The assessee further stated that Rs. 30.57 crores in the form of strategic investment in Nandan Denim Ltd. Thus the disallowance u/s. 14A cannot exceed the exempted income namely Rs. 670/-. Considering the above submission, the Ld. CIT(A) restricted the disallowance to the dividend income earned by the assessee by observing as follows: Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 9 “……7.4 The appellant cited several case laws, including the jurisdictional HC orders, in favour of its argument that disallowance u/s 14A cannot exceed the exempt income earned during the year. It is added that the amendment made in this regard by the Finance Act 2022 by way of insertion of explanation has been held to be prospective in nature by the Delhi HC in the case Era Infrastructure (India) Ltd (2022) 141 taxmann.com 289 (Delhi) which has been followed by the ITAT Ahmedabad in several orders. Following the judicial precedent, I direct the AO to limit the disallowance u/s 14A of the Act to Rs 670/- i.e. actual amount of dividend. Balance amount of Rs 60,46,042/- is directed to be deleted. Ground of appeal 2 is partly allowed.” 11. We do not find any infirmity in the order passed by the Ld. CIT(A) who has restricted the disallowance to the extent of dividend income received by the assessee namely Rs. 670/- which is confirmed by Jurisdictional High Court in the case of Corrtech Energy Pvt. Ltd. reported in 372 ITR 97. Thus the Ground No. 2 raised by the Revenue is devoid of merits and the same is liable to be dismissed. 12. In the result, the appeal filed by the Revenue is dismissed. C.O. No. 4/Ahd/2024 13. The Grounds of Cross Objection raised by the Assessee are as follows: 1. In law and in the facts of the appellant's case, Hon'ble ITAT may direct the Ld. Assessing Officer to reduce the assessed income of the assessee by Rs. 9,25,83,096/-as such receipt is capital receipt in form of interest subsidy received under Technology Upgradation Fund Scheme (TUFS) which was inadvertently offered in Income while filing Return of Income by assessee instead of reducing from plant and machinery. 2. In law and in the facts of the appellant's case, Hon'ble ITAT may direct the Ld. Assessing Officer to reduce the assessed income of the assessee by Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 10 Rs. 1,21,00,216/-as such receipt is capital receipt in form of power subsidy received under Technology Upgradation Fund Scheme (TUFS) which was inadvertently offered in Income while filing Return of Income by assessee instead of reducing from plant and machinery. 3. The appellant craves leave to add to amend or to raise any further grounds of appeal as case may arise. 14. Ld. Sr. Counsel submitted that the assessee received interest subsidy of Rs.9,25,83,096/- and power subsidy of Rs.1,21,00,216/- under TUFS that is (Technology Upgradation Fund Scheme) being capital receipt not chargeable to tax. However inadvertently the assessee offered the same as income in the Return of Income. Similar issue was considered in assessee’s own case in ITA No. 708/Ahd/2023 for the Asst. Year 2014-15 thereby Co-ordinate Bench set aside this issue for fresh adjudication and allowed the appeal. Similar directions be issued for the present assessment year. 15. Ld. Sr. D.R. appearing for the Revenue could not dispute the above submission of the assessee counsel. 16. We have perused the order passed by Co-ordinate Bench of this Tribunal in ITA No. 708/Ahd/2023 dated 02-04-2024 wherein it was discussed elaborately as follows: 11. The only interconnected issue raised by the assessee in the additional grounds of appeal is that the total income and the book profit of the assessee should be reduced by the sum of ₹ 3,96,42,334.00 representing the interest subsidy received under Technology Upgradation Fund Scheme being capital receipt not chargeable to tax. 12. At the outset, the learned counsel for the assessee before us submitted that this Tribunal in the case of DCIT versus M/s Jindal worldwide limited in ITA No. 1843/AHD/2016 involving identical issue has Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 11 admitted additional ground of appeal and set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. Accordingly, the ld. AR before us contended that such finding of the ITAT in the case cited above is also applicable in the instant set of facts. Therefore, the ld. AR submitted that similar direction can also be issued by the ITAT in the case on hand. 13. On the other hand, the ld. DR before us opposed to admit the additional ground of appeal raised by the assessee in the light of the ratio of the judgment of Hon’ble Supreme Court in the case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC) 14. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the issue raised by the assessee in the additional ground of appeal is identical to the issue in the case of M/s Jindal worldwide limited cited above where in the ITAT has observed as under: 11. We shall now turn to the additional ground raised by the assessee in its cross objection which reads as under: “On the facts and the circumstances of the case and in law, the interest subsidy of Rs.2,16,45,161 received by the assessee under Technology Upgradation Fund Scheme (TUFS) for Textile and Jute industries during the above assessment year should be treated as capital receipt.” 11.1 The additional ground has been admitted to adjudicate the legal issue in the light of the available view taken by the co-ordinate bench in DCIT vs. M/s. Adani Gas Ltd. ITA Nos. 775/Ahd/2014 & Ors. order dated 17.10.2018. The relevant operative para of the order of the co-ordinate bench is reproduced hereunder: “21.4 A legal issue also cropped up in the course of hearing as to whether additional ground could be raised in a cross objection filed by the assessee under s.253(4) of the Act. On being enquired on this aspect of the matter, it was submitted on behalf of the assessee that there is no perceptible distinction between the position of law qua cross objection in the matter of filing additional ground. It was submitted that a cross objection has all the trappings of a regular appeal more so in the light of language employed under s.253(4) of the Act. 21.5 We find ourselves in agreement with the propositions made on behalf of the assessee that in a cross objection, there is no Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 12 bar to raise legal issues for the first time before ITAT. A cross objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and it is required to be disposed in same manner as an appeal. Even where the appeal is withdrawn or dismissed for default, cross objection may nevertheless be heard and determined. Cross objection is nothing but an appeal, a cross appeal at that. This apart, raising of additional ground would only enable the authority concern to correctly assess the tax liability of the assessee. Similar view has been expressed by the co-ordinate bench in the case of ITO vs. Jasjit Singh (Del) in cross objection Nos. 138 to 142/Del/2014 interim order dated 23.09.2014. We thus do not see any impediment in entertaining the additional grounds. The relevant facts are available on record. 21.6 In so far as the merits of the claim made in additional ground is concerned, we observe that where the AO has readjusted the quantum of depreciation in the subsequent assessment year, the assessee is within its legitimate rights to be granted depreciation in AY 2009-10 as per the figures worked by the AO himself. We do not see any perceptible reason for not admitting such claim of the assessee. We also find bonafides in the plea of the assessee for raising new claim on account of depreciation by way of additional ground at this belated stage. The order for the AY 2012-13 was passed on 29.03.2015. By virtue of this order, the assessee came to know about the revision in the claim of depreciation concerning AY 2012-13. By that time, the order of the CIT(A) dated 13.12.2013 was already passed. Therefore, the assessee was incapacitated to put forward such new claim towards depreciation on goodwill amounting to Rs.5,57,63,315/- for which relevant facts are duly available on record in the light of the decision of Hon’ble Supreme court in the case of Goetze (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC) & NTPC vs. CIT 229 ITR 383 (SC). 22. In the result, additional ground raised by the assessee is allowed.” 11.2 Having admitted the additional ground for adjudication as noted above we now turn to the relevant facts touching the issue. As pointed out on behalf of the assessee, a Technology Upgradation Fund Scheme (TUFS) was introduced in 1999 to catalyze investments in textile industries. The purpose of scheme under which the subsidy was given was stated to be to sustain and prove the competitiveness and for long term viability of textile Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 13 industry. The concerned ministry of textile adopted TUFS scheme envisaging technology upgradation of the industry as per the scheme. The object of the scheme was to enhance sustainable growth in value chain for overall growth of textile industry. Pursuant to TUFS, certain subsidy benefits by way of interest on reimbursement of loans taken from authorized agencies for investment in plant and machinery for spinning units and other machineries in textile industry was availed by textile sector. 11.3 In this background, it was contended on behalf of the assessee that the assessee herein as obtained subsidy by way of reimbursement of interest under the scheme. The assessee has treated the aforesaid interest reimbursement subsidy mistakenly as revenue receipt in the P&L account and disclosed the same by way of net off from interest expenses. The taxable income was thus stated to be overstated to this extent. It was contended that the character of such subsidy in the hands of recipient assessee is capital in nature having regard to the purpose for which the subsidy was given i.e. acceleration of development of textile industry. 11.4 Reference was made to the notes forming part of the financial account detailing the interest subsidy aggregating to Rs.2,16,45,161/- as reduced from the interest costs. Our attention was also adverted to Notes to the Financial Statement wherein suitable disclosure was made towards claim of interest subsidy. 11.5 In the circumstances, it is the case of the assessee that where such subsidy is intended and bestowed not with the object of running the business but with a solemn object of attracting industrial investment or expansion, such interest subsidy is in the nature of capital receipt and therefore cannot be reduced from the interest costs. It is thus contended that such capital receipt is not chargeable to tax in the relevant AY 2012-13 in question being a capital receipt. 12. We find that the issue is squarely covered in favour of the asseessee by the decision of the Hon’ble Supreme Court in CIT vs. Chaphalkar Brothers Pune [2017] 88 taxmann.com 178 (SC); CIT vs. Meghalaya Steels Ltd. [2016] 67 taxmann.com 158 (SC) and CIT vs. Sham Lal Bansal [2011] 11 taxmann.com 369 (P&H). In the light of aforesaid judgments, we find merit in the plea of the assessee that having regard to the object and purposes of the scheme, the interest subsidy is required to be treated as capital receipt of non-taxable Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 14 nature having regard to the propositions laid down in the judicial proceedings noted above. 13. The aforesaid view is also fortified by the legislature in view of amendment as per sub clause (xviii) to Section 2(24) of the IT Act as inserted by the Finance Act, 2015 which reads as under: “[(xviii) assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency in cash or kind to the assessee [other than,— (a) the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43; or (b) ……………………..” A claim on behalf of the assessee, as a corollary to said amendment, such a capital receipt may become chargeable to tax which is otherwise a capital receipt w.e.f. 01.04.2016. The aforesaid amendment has thus come into force w.e.f. AY 2016-17 which reinforces the impression of such capital receipt being out of tax net for the assessment year in question. 14. Thus, on first principles, we find ourselves in total agreement with the contentions on behalf of the assessee for non chargeability of such capital receipts regardless of its treatment in books as revenue receipts. We are however conscious in same vain that the issue has been raised for the first time before the Tribunal. The Revenue authorities had no occasion to look into the relevant facts. We accordingly consider it expedient to restore the issue to the file of the AO for verification of relevant factual aspects towards quantum of receipt of interest subsidy and relevant documentation in this regard, if so considered necessary in the opinion of the AO. The AO shall accordingly grant relief to the assessee in accordance with law in the light of our observations and Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 15 shall exclude the subsidy from the ambit of taxation on being satisfied about the factual correctness on quantum of such subsidy. 15. In the result, the additional ground raised by the assessee in its cross objection is allowed for statistical purposes. 14.1 As the issue raised before us is identical to issue discussed above, therefore respectfully following the order of the coordinate bench discussed above, we admit the additional ground of appeal of the assessee and set aside the issue to the file of the AO for fresh adjudication as per the provisions of law and in the light of the order of the tribunal in the case of M/s Jindal worldwide limited discussed above. Hence the ground of appeal of the assessee is allowed for the statistical purposes. 14.2 Before parting, it is important to note that the appeal before us emanates from the order passed under section 143(3) read with section 147 of the Act. Therefore, a question strikes to our mind whether the assessee can seek relief by way of additional claimed raised in the additional ground of appeal in the income escaping proceedings. In this regard, we note that there was identical issue before the Hon’ble Karnataka High Court raised in the case of Karnataka State Co-operative Apex Bank Limited Vs. DCIT reported in 130 taxmann.com 114 wherein it was held as under: 11. In the instant case, admittedly, there is no original assessment order in the case of the assessee and it was only an intimation under section 143(l) of the Act, which cannot be treated to be an order in view of decision of the Supreme Court in Rajesh Jhaveri (supra). Therefore, the question of reassessment of the income of the assessee by the Assessing Officer does not arise. In the proceeding under section 148 of the Act, it was the first assessment and the same could have been done considering all the claims of the assessee. Therefore, the decision rendered by the Supreme Court in Sun Engineering Works (P.) Ltd. had no application to the fact situation of the case. Even assuming for the sake of argument that if an intimation under section 143(1) of the Act is considered to be an order of assessment, in the subsequent reassessment proceeding, the original assessment proceeding get effaced and the Assessing Officer was required to consider the proceeding de novo and to consider the claim of the assessee. 14.3 The above judgment was rendered by the Hon’ble Karnataka High Court after considering the decisions of the Hon’ble Supreme Court in the case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC), V. Jaganmohan Rao v. CIT and Excess Profit Tax, [1970] 75 ITR 373 (SC), ITO v. Mewalal Dwarka Prasad, [1989] 176 ITR 529/43 Taxman 40 (SC), 'ITO v. K.L. Srihari (HUF) [2001] 118 Taxman 890/250 ITR 193 (SC), and 'Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd.' [2007] 291 ITR 500/161 Taxman 316 (SC) and reached a conclusion that even assuming for the sake of argument that if an intimation under section 143(1) of the Act is considered to be Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 16 an order of assessment, in the subsequent reassessment proceedings, the original assessment proceedings gets effaced and the Assessing Officer was required to consider the proceedings de novo and to consider the claim of the assessee. 14.4 It is also to be noted that the above judgment was challenged before the Hon’ble Supreme Court which has been admitted by the Hon’ble Supreme Court reported in 138 taxmann.com 23. However, we note that no stay on the operation of Hon’ble Karnataka High Court has been granted. Thus, respectfully following the judgment of Hon’ble Karnataka High Court, we set aside the issue raised by the assessee in the additional ground of appeal for fresh adjudication as per the provisions of law. Hence, the additional ground of appeal of the assessee is allowed for the statistical purposes. 16.1. Respectfully following the above decision of Co-ordinate Bench of this Tribunal, we hereby set aside the issue of TUFS subsidy received by the assessee to the file of Jurisdictional Assessing Officer for fresh consideration by giving proper opportunity of hearing to the assessee and allow the claim as per the provisions of law. Thus the Ground raised by the Assessee are allowed for statistical purpose. 17. In the result, the Cross Objection filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 30 -07-2025 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 30/07/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) Printed from counselvise.com I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd. 17 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "