M/s. Torrent Power Ltd., Ahmedabad V. The ACIT, Circle-4(1)(2), Ahmedabad

CO 41/AHD/2019

AI Insights

The case involves multiple appeals and cross objections related to the assessment years 2012-13 and 2013-14 concerning the income tax assessments of Torrent Power Limited. The primary issues revolved around the eligibility of certain incomes for deductions under section 80-IA of the Income Tax Act, 1961, and the treatment of these incomes as capital or revenue receipts. The Income Tax Appellate Tribunal examined various incomes such as the sale of carbon credits, interest on delayed payments, and other miscellaneous receipts, and determined their eligibility for deductions under section 80-IA. The Tribunal's decision was influenced by precedents and judicial interpretations regarding the nature of these incomes and their connection to the business activities of the assessee.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 135699 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 18-10-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 31-03-2019
• Other Referred Cases: My Home Power Limited, CIT v. Maheshwari Devi Jute Mills Ltd., Alembic Limited, CIT v. SubhashKabini Power Corporation Ltd, CIT v. D.G. Gopala Gowda, CIT v. Metrochem Industries Ltd., CIT v. Jikar A. Saiyed, CIT v. Winsome Textile Industries Ltd., CIT v. Prakash Oils Ltd, CIT v. Jayashree Tea Industries Ltd., CIT v. Nirma Industries Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Depreciation; Business expenditure; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Question of law; Cost of acquisition; Bad and doubtful debts; Right to appeal; Capital receipt; TDS; Rule 8D; Set aside; Liquidation; CHAPTER IV
• Section: 14A; 115JB; 37(1); 80G; 80IA; 113; 13

Judgement Text

आयकरअपील यअ धकरण, अहमदाबाद यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ D’’BENCH, AHMEDABAD BEFORESHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकरअपीलसं./ITA Nos. 14& 2047/AHD/2018 With CO.Nos.41& 120/Ahd/2019 नधा रणवष /Asstt. Years: 2012-13& 2013-14 A.C.I.T., Circle-4(1)(2), Ahmedabad. Vs. M/s. Torrent Power Limited, Torrent House, Off. Ashram Road, Ahmedabad-380009. PAN: AACCT0294J (Applicant) (Respondent) Assessee by : Shri Vartik Choksi, A.R Revenue by : Shri Ritesh Parmar, CIT. D.R स ु नवाईक तार ख/Date of Hearing : 19/10/2022 घोषणाक तार ख/Date of Pronouncement: 28/12/2022 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeals and COs have been filed at the instance of the Revenue and the assessee against the separate orders of the Learned Commissioner of Income Tax (Appeals)-8, Ahmedabad, (in short “Ld.CIT(A)”) arising in the matter of assessment order passed under s. 143(3)of the Income Tax Act 1961 (here-in-after referred to as "the Act"). The assessee has filed the Cross Objection in the Revenue’s appeal bearing ITA No.14 & 2047/AHD/2018 for the Assessment Years 2012-2013 & 2013-14. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 2 2. First, we take up ITA No. 14/Ahd/2018, an appeal by the Revenue pertaining to the AY 2012-13. 3. The Revenue has raised the following grounds of appeal: 1. "that the Id. CIT(Appeals) erred in law and on facts in deleting the addition made on account of disallowance of deduction u/s. 80-IA of the Income Tax Act, 1961 amounting to Rs.3,21,68,86,818/-." 2. "that the Ld. ClT(Appeals) erred in law and on facts in not appreciating the facts that the assessee had not shown the outstanding number of Certified Emission Reductions in its balance sheet as on 31.03.2012 neither it had shown the name as capital asset but had shown the same as business receipts. " 3. "that the Id. CIT(Appeals) erred in law and on fads in not appreciating the fact. 1 ; that the Certified Emission Reductions/ Carbon Credit is an entitlement or privilege accrued to the assessee in the course of carrying on power generation activity, it cannot be said that such Carbon Credit is an accretion of capital asset. " 4. "that the Id. CIT(Appeals) erred in law and on facts in deleting the addition made on account of disallowance of delayed payment charges from customers u/s. 80-IA of the Income Tax Act, 1961 amounting to Rs.2,73,55,535/-," 5. "that the Id. CIT(Appeals) erred in law and on facts in deleting the addition made on account of disallowance of interest from customers on late receipt u/s. 80-IA of the Income TaxAct, 1961 amounting to Rs. 7,65,09,33'57-" 6. "that the Id. CIT(Appeals) erred in law and on facts in directing the A.O. to allow deduction u/s. 80-IA of the Income Tax Act, 1961 on account of income from shifting of services amounting to Rs.3,28,035/-." 7. "that the Id. ClT(Appeals) erred in law and on facts in directing the A. O. to allow deduction u/s. 80-IA of the Income Tax Act, 1961 on account of liquidated damages /rebate amounting to Rs.2,12,41,2671-. " 8. "that the Id. CIT(Appeals) erred in la\\> and on facts in not appreciating the facts that the such income is incidental to the main business of the assessee company and does not have direct nexus with the business income of the assessee, eligible for deduction n/s. 801A of the Income Tax Act, 1961." 9. "that the Id. CIT(Appeals) erred in law and on facts in allowing deduction it/s. 80-IA of the Income Tax Act, 196] on account of Sale of scraps amounting to Rs. 10,45,41,099/-. " 10 ''that the Id. CIT(Appeals) erred in law and on facts in allowing deduction ii/s. 80G(Rs.6,38,77,000 @ 50% & Rs.25,00,000 @100%) and 80GGB (Fs.1,45.00,000/-) of the Income tax Act, 1961 even though there is no profit left out after deducting of 100% of profit of eligible unit. " 11. "that the Id. C1T (Appeals) erred in law and on facts in deleting the disallowance u/s. 14A r. w. rule 8D of the Income Tax Act, 1961 in respect of investment in shares of subsidiary companies totaling to Rs.5,44,65,313/-from which dividend was not earned." ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 3 12. "that the Id. CIT (Appeals) erred in law and on facts in not appreciating that there is no requirement in law for earning of dividend income to make disallowance u/s. 14A r. w. rule 8D, and the name is reiterated in CBDT Circular No. 5 of 2014." 13. that the Id. CIT (Appeals) erred in law and on facts in deleting the addition made on account of disallowances of interest expense u/s. 36(I)(iii) of the Income Tax Act, 1961 amounting to Rs.5,39,54,436/- given to its subsidiary companies" 14. "that the Id. CIT (Appeals) erred in law and on facts in ignoring the fact pointed out by the A.O. during the assessment proceedings that the assessee company had not entered into any transactions with the subsidiary companies and thus it cannot be turned as "Commercial Expediency"." 15. "that the Id. CIT (Appeals) erred in law and on facts in ignoring the fact pointed out by the A.O. during the assessment proceedings that the assessee company failed to discharge the onus to prove that interest free fund were available with the assessee while advancing interest free loan. 16. "that the Id CIT (Appeals) erred in law and on facts in deleting the addition made to book profit u/s. 14A r, w. rule 8D of the Income Tax Act, 1961 totaling to Rs.6,78,94,834/-" 17. "that the Id. CIT (Appeals) erred in law and on facts in deleting the addition made on account of not granting of credit for dividend distribution tax(DDT)amountingtoRs.42,15,37,467/-" 18. "that the Id. CIT (Appeals) erred in law and on facts in not appreciating the fact that no credit is allowable in respect of dividend distribution tax against income tax payable by the assessee." 4. The interconnected issue raised by the Revenue vide ground Nos. 1 to 3 of its appeal is that the learned CIT-(A) erred in deleting the disallowances of deduction under section 80-IA of the Act for Rs. 321,68,86,818/- on account of income on sale of certified emission Reduction by treating the same as capital asset. 5. The facts in brief are that the assessee is a public company and engaged in the business of generation and distribution of electricity. The AO during the assessment proceedings found that the assessee has shown income of Rs. 321,68,86,818/- from the sale of Carbon Credit (certified Emission Reduction) which was included in the eligible profit of Surat Generation Unit (in Short SUGEN) and claimed deduction under section 80-IA of the Act. As per the assessee, it was given the benefit of Carbon credit for the reason of reduction in the emission of carbon while generating the electricity and therefore it can be said that it has direct link with the activity of power generation. Therefore, the same should be eligible for deduction under section 80 IA of the Act. The assessee alternatively contended that if it is denied the benefit of carbon credit as deduction under section 80 IA of the Act, then the same should be treated as capital receipt not chargeable to tax. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 4 6. However, the AO disagreed with the contention of the assessee. As per the AO the benefit of carbon credit and the activity carried out by the assessee are separate and independent activity. It does not represent any byproduct of the activity carried out by the company. The benefit of carbon credit is worked out based on some complex formula which has no link with the generation of the power. Thus, the same cannot be treated as profit eligible for deduction under section 80IA of the Act. The AO further observed that the carbon credit is in the form of the incentive given to the assessee on account of reduction in the emission of carbon which ultimately results the reduction in the pollution. Thus, such incentive is given, to encourage the industrial undertaking, for reduction in the emission of the carbon. Thus, such benefit to the assessee is in the nature of incentive which is taxable under the provisions of section 28(iv) of the Act. Accordingly, the AO did not treat the same as capital receipt of the assessee. Hence, the AO made the addition of Rs. 321,68,86,818/- to the total income of the assessee. 7. Aggrieved assessee preferred an appeal to the learned CIT-A who deleted the addition made by the AO by observing as under: 4.4 The submission is considered. It is observed that Appellant has shown income from sale of CERs as 'other operating income' of SUGEN. The Appellant has claimed deduction under Section 80-lA on such income which is denied by AO on the ground that it is not linked with industrial undertaking. The Appellant has taken alternate ground that sale of CERs is capital receipt which is denied by AO on the ground that it is business receipt under Section 28(4) of the Act and Appellant itself has shown such income as revenue receipt in profit & loss account. This issue has been discussed by Hon'ble Hyderabad ITAT in the case of My Home Power Limited 151 TTJ 616 as under; 24. We have heard both the parties and perused the material on record. Carton credit is in the nature of "an entitlement" received to improve world atmosphere and environment reducing carbon, heat and gas emissions. The entitlement earned for carbon credits can, at best, be regarded as a capital receipt and cannot be taxed as a revenue receipt. It is not generated or created due to carrying on business but it is accrued due to "world concern". It has been made available assuming character of transferable right or entitlement only due to world concern. The source of carbon credit is world concern and environment. Due to that the assessee gets a privilege in the nature of transfer of carbon credits. Thus, the amount received for carbon credits has no element of profit or gain and it cannot be subjected to tax in any manner under any head of income. It is not liable for tax for the assessment year under consideration in terms of sections 2(24), 28, 45 and 56 of the Income-tax Act, 1961. Carbon credits are made available to the assessee on account of saving of energy consumption and not because of its business. Further, in our opinion, carbon credits cannot be considered as a bi- product It is a credit given to the assessee under the Kyoto Protocoland because of international understanding. Thus, the assessees who have surplus carbon credits can sell them to other assessees to have capped emission commitment under the Kyoto Protocol. Transferable carbon credit is not a result or incidence of one's business and it is a credit for reducing emissions. The persons having carbon credits get benefit by selling the same to a person who needs carbon credits to overcome ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 5 one's negative point carbon credit. The amount received is not received for producing and/or selling any product, bi-product or for rendering any service for carrying on the business. In our opinion, carbon credit is entitlement or accretion of capital and hence income earned on sale of these credits is capital receipt For this proposition, we place reliance on the judgment of the Supreme Court in the case of CIT v. Maheshwari Devi Jute Mills Ltd. [1965] 57 ITR 36 wherein held that transfer of surplus loom hours to other mill out of those allotted to the assesses under an agreement for control of production was capital receipt and not income. Being so, the consideration received by the assessee is similar to consideration received by transferring of loom hours. The Supreme Court considered this fact and observed that taxability of payment received for sale of loom hours by the assessee is on account of exploitation of capital asset and it is capital receipt and not an income. Similarly, in the present case the assessee transferred the carbon credits like loom hours to some other concerns for certain consideration. Therefore, the receipt of such consideration cannot be considered as business income and it is a capital receipt. Accordingly, we. are of the opinion that the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration. Carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated • due to environmental concerns. Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission. It does not increase profit in any, manner and does not need any expenses. It is a nature of entitlement to reduce carbon emission, however, there is no cost of acquisition or cost of production to get this entitlement. Carbon credit is not in the nature of profit or in the nature of income. 25. Further, as per guidance note on accounting for Self-generated Certified Emission Reductions (CERs) issued by the Institute of Chartered Accountants of India (ICAI) in June, 2009 states that CERs should be recognised in books when those are created by UNFCCC and/or unconditionally available to the generating entity. CERs are inventories of the generating entities as they are generated and held for the purpose of sale in ordinary course. Even though CERs are intangible assets those should be accounted as per AS-2 (Valuation of inventories) at a cost or market price, whichever is lower. Since CERs are recognizedas inventories, the generating assesses should apply AS-9 to recognise revenue in respect of sale of CERs. 26. Thus, sale of carbon credits is to be considered as capital receipt. This ground is allowed. It is observed that Hon'ble Hyderabad ITAT has elaborately considered issue of taxing income from sale of CERs and held that such income is not liable to tax as revenue receipt in terms of Section 2(24), 28, 45 and 56 of the Act. Further, said decision was upheld by Andhra Pradesh High Court in 365 ITR 82 which reads as under: "Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as (Carbon credits) - Assessment year 2007-08 - Appellant-company was engaged in business of power generation through biomass power generation unit - It received carbon credits, namely, carbon Emission Reduction Certificates for its project activity of switching off fossil fuel from naptha and diesel to biomass - It transferred said cation credits and offered receipt from said transfer as capital receipt - However, Assessing Officer treated said receipt as business income and brought same to tax -Tribunal held that carbon credit not being an offshoot of business but an offshoot of environmental concern, amount received on their transfer had no element of profit or gain - Whether since carbon credit was not even linked with power generation, Tribunal was justified in its decision' Held, yes [Para 2] [In favour of appellant]" It is also observed that identical issue came up for consideration before Hon'ble Ahmedabad ITAT in the case of Alembic Limited in ITA No. 1912/AHD/2012, dated 9 th December, 2016 wherein Assessee itself has shown sale of CERs as business receipt but Hon'ble ITAT has accepted the claim of Appellant for treating such income as capital receipts. The relevant extract of the said judgment are as under: ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 6 "19. Adverting to the additional ground No.1 in respect of income from realization of carbon credits, which is taxed as Revenue receipt. The Id. Counsel for the appellant, at the outset, contends that the Hon'ble Karnataka High Court in the case of CIT vs. SubhashKabini Power Corporation Ltd, [2016] 69 taxmann.com 394 (Karnataka) dealt with the issue at length and relied on various judicial pronouncements, holding income received from realizationof carbon credits as capital in nature. The Hon'ble Karnataka High Court in paragraph 6 of its order (supra) has dealt with the issue at length and squarely held that the carbon credits are generated out of environmental concerns which does not have any character of trading activity; therefore, any receipt from an activity which is not a trading activity is capital in nature by following observation:- 19.1 The Hon'ble High Court further relied on the judgment of Hon'ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd[2014] 46 taxmsnn.com 314/365ITR 82 and the judgment of Hon'ble Karnataka High Court in the case of CIT vs. D.G. Gopala Gowda, [2013] 354 ITR 501, which have taken the same view on realization of carbon credits as capital receipt There is no contrary judgment and the two Hon'ble High Courts, i.e. Andhra Pradesh High Court and Karnataka High Court, having taken a concurrent view on this matter, are to be followed in judicial discipline. 19.2 The Id. Departmental Representative, on the other hand, contends that the realization from carbon credits has been treated by the appellant itself as revenue income and offered to tax and in fact in actualities they are revenue receipt, However, no adverse judgment on this has been cited. 20. We have heard the rival contentions, perused the material availableon record and gone through the orders of the authorities below. The additional ground stands already admitted. The duty of the ITA T is to ensure that fair, just and proper assessment is made. Merely because the appellant was of the opinion that the receipt was Revenue in nature cannot act as an estoppels against it when the law as interpreted by Hon'ble High Courts takes a view at variance with the appellant The law is settled that the Revenue cannot stand benefited from a tax which is not leviable in right earnest. We find merit in the contentions of the Id. Counsel for the appellant that the Hon'ble Kamataka High Court in the case of SubhashKabini Power Corporation Ltd (supra) and the Hon'ble Andhra Pradesh High Court in the case of My Home Power Ltd (supra), have taken a view that the carbon creditrealization is capital in nature. No contrary judgment is cited, Therefore, respectfully following these judgments, this additional ground ofthe appellant In respect of realization of carbon credit as capital receipt is allowed. Thus, this additional ground is accordingly allowed." It is added that the above finding given by the Hon'ble Tribunal later on was confirmed by the Hon'ble Gujarat High Court in Tax Appeal No. 553 of 2017 dated 28/08/2017 wherein it was held as under: "6. The last surviving question pertains to the treatment that the appellant's income from trading of carbon credits should be given. The Tribunal held that receipts should be in the nature of capital receipts and therefore, would not invite tax. This issue has been examined by two High Courts. The Kamataka High Court in case of CIT v. SubhashKabini Power Corporation Ltd. reported in (2016) 385 ITR 592 (Karn) and Andhra Pradesh High Court in case of Commissioner of Income tax v. My Home Power Limited reported in (2014) 365 ITR 82 (AP) have held that receipts of carbon credit are in nature of revenue receipts. Following the decision of said two High Courts, this question is also not considered." In view of observations made hereinabove, and relying upon decisions referred supra, income from sale of CERs is held as capital receipt hence issue as to whether Appellant is entitled for deduction under Section 80-IA or not has become infructuous and academic hence not adjudicated while deciding present appeal. This ground of appeal is thus allowed. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 7 8. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 9. Both the learned DR and the AR before us vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that there are several orders/ judgments wherein it has been held that the carbon credit received by the assessee represents the capital receipt which is not chargeable to tax. Some of the judgments are illustrated below: 10.1 The Hon’ble Andhra Pradesh High Court in case of CIT vs. My Home Power Ltd reported in 46 taxmann.com 314 in identical fact and circumstances has held as under: 3. We have considered the aforesaid submission and we are unable to accept the same, as the learned Tribunal has factually found that "Carbon Credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns." We agree with this factual analysis as the assessee is carrying on the business of power generation. The Carbon Credit is not even directly linked with power generation. On the sale of excess Carbon Credits the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. In the circumstances, we do not find any element of law in this appeal. 10.2 Likewise, this Tribunal in case of Gujarat Fluorochemicals Ltd vs. DCIT reported in 97 taxmann.com 10 after considering several judicial Pronouncement including the observation of Hon’ble Jurisdictional High Court in case of Alembic Ltd in Tax Appeal No. 553 of 2017 has held that the receipt on account of sale of Carbon credit are to be treated as capital receipts which is not chargeable to tax. The relevant finding of the Tribunal is extracted as under: 41. Thus, taking into consideration resolution of litigation on this issue by the Legislature itself, which had made provision for taxation of such receipts at the rate of 10% from the assessment year 2018- 19 as well as authoritative pronouncements of Hon'ble jurisdictional High Court, we are of the view that receipts received by the assessee on sale of carbon credit are to be treated as capital receipts and not liable to tax. 10.3 In view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned CIT-A. Hence we uphold the same and direct the AO to ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 8 delete the addition made by the AO. Hence, the ground of appeal of the revenue is hereby dismissed. 11. The next interconnected issue raised by the Revenue in ground Nos. 4to 9 is that the learned CIT (A) erred in allowing the deduction claimed by the assessee under section 80-IA of the Act with respect to certain incomes which are not eligible for deduction under section 80IA of the Act. 12. The AO during the assessment proceedings found that there were several incomes shown by the assessee under different heads which were not directly arising from the activity of distribution of power. The details of the same stand as under: 1. Delayed payment charges from the customer Rs. 2,73,55,535/- 2. Interest from customer Rs. 7,65,09,335/- 3. Shifting services Rs. 3,28,035/- 4. Liquidated damages/rebate Rs. 2,12,47,267/- 5. Sale of scrap Rs. 10,45,41,099 12.1 Nevertheless, the assessee has claimed deduction under section 80IA of the Act by treating them as profit derived from the business of distribution of power. However, the AO disputed the deduction with respect to such items of income. However, in appellate proceeding the learned CIT(A) held the above items of income as eligible for deduction under section 80IA of the Act. Thus the Revenue is in appeal before us. For the sake of convenience, we proceed to adjudicate each item of income shown by the assessee and claimed deduction under section 80IA of the Act in the manner as detailed below: Delayed payment charges from customers 13. At the outset, we note that identical issue came before this tribunal in the own case of the assessee for AY 2008-09 in ITA No. 776 & 738/Ahd/2012 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09-12-2021. The relevant finding of the Bench is extracted as under: ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 9 80. We have heard the rival contentions of both the parties and perused the materials available on record. The late fees charged by the assessee from the customers on account of delayed payment within the time has direct nexuses with the activity of the business of the assessee i.e. distribution of electricity. Thus to our understanding such amount of delayed payment charges is very much eligible for deduction under section 80-IA of the Act. In holding so we draw support and guidance from the judgment of Hon’ble Gujarat High Court in the case of Nirma Industries Ltd. Vs. DCIT reported in 283 ITR 402 where in it was held as under: “When the assessee enters into a contract for sale of its products it could either stipulate (a) that interest at the specified rate would be charged on the unpaid sale price and added to the outstanding till the point of time of realisation, or (b) that in case of delay the payment for sale of products worth Rs. 100 to carry the sale price of Rs. 102 for first month’s delay, Rs. 104 for second month’s delay, Rs. 106 for third month’s delay and so on. If the contention of Revenue is accepted, merely because the assessee has described the additional sale proceeds as interest in case of contract as per illustration (a) above, such payment would not be profits derived from industrial undertaking, but in case of illustration (b) above, if the payment is described as sale price it would be profits derived from the industrial undertaking. This can never be, because in sum and substance these are only two modes of realising sale consideration, the object being to realise sale proceeds at the earliest and without delay. Purchaser pays higher sale price if it delays payment of sale proceeds. In other words, this is a converse situation to offering of cash discount. Thus, in principle, in reality, the transaction remains the same and there is no distinction as to the source. It is incorrect to state that the source for interest is the out-standing sale proceeds. It is not the assessee’s business to lend funds and earn interest. The distinction drawn by Revenue is artificial in nature and is neither in consonance with law nor commercial practice. 30. The Tribunal was, therefore, not justified in holding that while computing deduction under section 80-I of the Act, interest received from trade debtors towards late payment of sales consideration is required to be excluded from the profits of the industrial undertaking as the same cannot be stated to have been derived from the business of the industrial undertaking. 31. In the result, both the questions stand answered as hereinbefore. The appeal is accordingly allowed and stands disposed of. 80.1 From the preceding discussion we note that the judgment was rendered in connection with the interest income which is eligible for deduction under section 80-I of the Act but the principles laid down therein can also be adopted to the provisions of section 80-IA of the Act in the given facts and circumstances. In view of the above we do not find any infirmity in the order of learned CIT (A). Hence the issue raised by the revenue is dismissed. 13.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 10 deduction under section 80-IA of the Act with respect to delayed payment charges from customers. Interest from customer 14. At the outset, we note that identical issue came before this Tribunal in own case of the assessee for A.Y. 2008-09 in ITA No. 776 & 738/Ahd/2012 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09-12-2021. The relevant finding of the Bench is extracted as under: 59. We have heard the rival contentions of both the parties and perused the materials available on record. Once a bill is raised to the customer, it is expected from the customer to make the payment within the time provided therein. In case of any delay, the interest charged by the assessee from the customers represents the compensation for the delay payment. In other words, it is an opportunity loss to the assessee for the delay in the payment, had the money been realized by the assessee in the time, the same would have been exploited in some remunerative activity but the assessee was deprived. Thus the interest was charged which partakes the character of the sale proceeds. Thus to our understanding such amount of interest is very much eligible for deduction under section 80-IA of the Act. In holding so we draw support and guidance from the Judgment of Hon’able Gujarat High Court in the case of Nirma Industries Ltd Vs. DCIT reported in 283 ITR 402 where in it was held as under: “However, the parties having made elaborate submissions, the matter may be examined from a slightly different angle. When the assessee enters into a contract for sale of its products it could either stipulate (a) that interest at the specified rate would be charged on the unpaid sale price and added to the outstanding till the point of time of realisation, or (b) that in case of delay the payment for sale of products worth Rs. 100 to carry the sale price of Rs. 102 for first month’s delay, Rs. 104 for second month’s delay, Rs. 106 for third month’s delay and so on. If the contention of Revenue is accepted, merely because the assessee has described the additional sale proceeds as interest in case of contract as per illustration (a) above, such payment would not be profits derived from industrial undertaking, but in case of illustration (b) above, if the payment is described as sale price it would be profits derived from the industrial undertaking. This can never be, because in sum and substance these are only two modes of realising sale consideration, the object being to realise sale proceeds at the earliest and without delay. Purchaser pays higher sale price if it delays payment of sale proceeds. In other words, this is a converse situation to offering of cash discount. Thus, in principle, in reality, the transaction remains the same and there is no distinction as to the source. It is incorrect to state that the source for interest is the out-standing sale proceeds. It is not the assessee’s business to lend funds and earn interest. The distinction drawn by Revenue is artificial in nature and is neither in consonance with law nor commercial practice. 30. The Tribunal was, therefore, not justified in holding that while computing deduction under section 80-I of the Act, interest received from trade debtors towards late payment of sales consideration is required to be excluded from the profits of the industrial undertaking as the same cannot be stated to have been derived from the business of the industrial undertaking. 31. In the result, both the questions stand answered as hereinbefore. The appeal is accordingly allowed and stands disposed of.” ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 11 59.1 From the preceding discussion we note that the judgment was rendered in connection with the provisions of section 80I of the Act but the principles laid down therein can also be adopted to the provisions of section 80-IA of the Act. In view of the above, we do not find any infirmity in the order of learned CIT (A). Hence the issue raised by the Revenue is dismissed. 14.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IA of the Act with respect to interest from customer. Shifting Services 15.1 At the outset, we note that identical issue came before this tribunal in own case of the assessee for AY 2011-12 in ITA No. 3178/Ahd/2016 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09-12-2021. The relevant finding of the Bench is extracted as under:. 215. Before parting, Income from shifting services of the meters given to the customers, have direct proximity with the business of the assessee. Therefore, we do not find any infirmity in the order of learned CIT (A). At the time of hearing, the learned AR has not brought anything on record contrary to the finding of the learned CIT (A). Hence we decline to interfere in the order of the learned CIT (A). Thus the ground of appeal of the revenue is hereby dismissed. 15.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IA of the Act with respect to Shifting Services. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 12 Liquidation damage/ Rebate 16. The assessee during the year has shown receipt of Rs. 2,12,47,267/- being liquidation damages/rebate in Ahmedabad Distribution unit, Surat Distribution unit and Surat generation unit. The assessee submitted that the liquidation damages were received from suppliers in case of short or late supply of materials or deficiency in materials supplied/ services rendered etc. Likewise, the assessee has received rebate under CERC regulation for prompt payment of transmission charges to PGCIL. Accordingly, the assessee contended that the above amount was received in the ordinary course of business and having direct nexus with the activity of distribution of power. Hence, the same is eligible for deduction under section 80-IA of the Act. 16.1 However, the AO disagreed with the submission of the assessee and held that amount of compensation received from supplier and rebate availed on account of prompt payment to PGCIL does not have any nexus with the activity of the power distribution or generation. The above receipt is in the nature of income being compensation and incentive and therefore, the same is outside the preview of income from the activity of distribution or generation of power. Hence, the assessee is not eligible for deduction under section 80-IA of the Act on such receipts of Rs. 2,12,47,267/- only. 17. On appeal by the assessee, the learned CIT(A) deleted the disallowances of the deduction made by the AO by observing as under: 5.6.3 The submission is considered. So far as income in form of liquidated damages recovered from late payment made by customers is concerned, it is inextricably linked with purchase cost of eligible unit and it reduces the cost incurred by appellant. Similarly rebate is nothing but reduction of purchase cost made by appellant as it is towards prompt payment of transmission charges. Hon'ble Delhi High Court in case of BSNL [73 taxmann.com 98] has held as under: "Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings (Telecommunication services) - Assessment years 2004-05 to 2008-09 - Appellant was engaged in business of providing telecommunication services - It claimed deduction under section 80-IA in respect of profits and gains derived from following six items: extraordinary items, refund from universal service fund, interest from others, liquidated damages, excess provision written back and others including sale of directories, publications, form, waster paper, etc. - Assessing Officer held that in terms of provisions of sub-section (2A) of section 80-IA profits and gains derived from above six items could not be said to be derived from eligible business of appellant and accordingly disallowed claim for deduction -Tribunal held that first degree nexus implicit in words 'derived from' used in ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 13 section 80-IA(1) was not required for computation of deduction in case of undertaking engaged in providing telecommunication services, since words 'derived from' did not occur in sub-section (2A) of section 80-IA - It accordingly allowed appellant's claim for deduction under section 80-IA - Whether Tribunal was justified In its view - Held, yes [Paras 6 and 14] [In favour of appellant] Similar view is taken by Hon'ble MP High Court in case of CIT v Prakash Oils Ltd dated 08.03.2011 [58 DTR 279] in case of liquidated damages income. Hon'ble Gujarat High Court in the case of CIT vs Metrochem Industries Ltd. [[2017] 79 taxmann.com 440 has also allowed deduction u/s 80IA on Kasar and discount which is similar in nature of rebate as discussed herein above. Relying upon decisions referred supra, the AO is directed to allow deduction u/s SOIA on liquidated damages/rebate. 18. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 19. The learned DR before us contended that income to the assessee under the head liquidation damages and rebate does not arise from the activity of power generation and distribution and therefore the same is not eligible for deduction under section 80 IA of the Act. 20. On the contrary, the learned AR contended that the income to the assessee as discussed above directly relates to the activity of power generation and distribution. Therefore, the same is eligible for deduction under section 80 IA of the Act. 21. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we note that the damages were received by the assessee in connection with the purchases made by the eligible unit. The amount of liquidated damages represents the receipt of the assessee from the supplier who failed to supply or caused delay in supplying the materials to the eligible unit. Thus, it appears that such damages has direct link from the activity generation and distribution of power. Besides the above, if the assessee would have reduced the cost of material purchase by the amount of liquidated damages, there would not have been any question of showing any income under the captioned head and consequently denying the deduction claimed by the assessee under section 80 IA of the Act. It is just a manner of presentation. As such, the assessee has represented the liquidated damages separately as income but it ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 14 has a live link with the activity of the assessee. Accordingly, we hold that the assessee is eligible for deduction on such liquidated damages. 21.1 Moving forward, the rebate fetched by the assessee on account of quick payment made to PGCIL has direct link with the activity of the assessee being distribution of power. Similarly, the amount of rebate received by the assessee has been presented in the financial statement in a different format. As such, the assessee instead of showing the rebate income as a separate items income, it could have adjusted such rebate against the payment made to PGCIL. In such an event, there would not have been any question for disclosing any income under the captioned head and consequently disallowing the deduction claimed by the assessee under the provisions of section 80 IA of the Act. Accordingly, we hold that the assessee is eligible for deduction on such rebate. Sale of Scrap 22. The assessee during the year under consideration realized an amount aggregating to Rs. 10,45,41,099/- on account of sale of scrap from the eligible unit of Ahmedabad, Bhiwandi and Surat. The amount realized on sale of scrap was included in the claim of deduction under section 80-IA of the Act. However, the AO was of the view that the income shown by the assessee by way of scrap sale is not directly arising from the activity of power generation but incidental to the business of the assessee. Accordingly, the same cannot be made subject to deduction under section 80 IA of the Act. 23. On appeal, the learned CIT-A was pleased to allow the deduction to the assessee under the provisions of section 80 IA of the Act with respect to the sales of scrap by observing as under: 5.8.3 The submission is considered. So far as deduction under Section 80-IA on sale of scrap is concerned, it is observed that same has been shown by Appellant as business income and the same is accepted by AO as such. The AO has not brought any evidences to suggest that same relates to capital assets. The income has been credited in distribution units and AO has not proved that such sale of scrap does not relate to business of power distribution undertaken by various units.•. Hon'ble Gujarat High Court in the case of CIT V/s Jikar A. Saiyed 42 taxman.com 403 has held as under: 'Section 80-/B of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings [Computation of deduction] - Assessment year 2001-02 -Whether in view of orders passed in cases of Dy, CIT v. Harjivanda$JuthabhaiZaveri[2002j 258 ITR 785/[2003] 132 Taxman 923 (Guj.)and CIT v. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 15 Sadhu Forging Ltd. [2011] 336 ITR 444/200 Taxman 1/11 taxmann.com 322 (Delhi), Tribunal was justified in holding that assesses, engaged in manufacturing card boxes, was entitled to deduction under section 80-iB in respect of income arising from sale of scrap - Held, yes [Para 6][ln favour of assessee" Relying upon the binding decision of the Hon'ble Court, supra, AO is directed to allow deduction under Section 80-IA on sale of scrap. 24. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 25. The learned DR before us contended that the income shown by the assessee by way of sale of scrap is not arising from the activity of power generation and distribution. Therefore, the same cannot be allowed as deduction under the provisions of section 80 IA of the Act. 25.1 On the other hand, the learned AR contended that the assessee instead of adjusting the impugned income against the expenses has classified income from other sources in the financial statement. As such, there is no income to the assessee from the sale of scrap/consumable materials in real sense except it is reducing the cost incurred by the assessee in the course of its business i.e. power generation and distribution. Therefore, the same should be eligible for deduction under section 80 IA of the Act. 26. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy before us relates whether the income shown by the assessee under the head scrap sale is eligible for deduction under section 80 IA of the Act. The learned CIT-A has given a categorical finding that the scrap sale has been generated by the assessee from the sale of consumable items which has no link with the fixed assets. Generally, the sale of fixed asset is adjusted against the block of assets if the particular block of asset exists in the books of accounts under the provisions of the Income Tax Act. However, in the case on hand since the sale of scrap represents the consumable items which have not been classified as fixed assets and no depreciation of whatsoever has been claimed by the assessee, then the question of making any adjustment on account of sale of ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 16 scrap against the block of assets does not arise. The learned DR at the time of hearing has not controverted the finding of the learned CIT-A. 26.1 When the consumable stores are purchased by the assessee, they are directly debited in the profit and loss account and the balance if remaining at the end of the year is shown as closing stock in the profit and loss account after making the adjustment of the consumption which is debited in the profit and loss account. Thus in effect only the amount of material consumed is claimed as deduction against the income of the assessee. If obsolete stores have been sold out in the year under consideration the same will be shown as income in the profit and loss account at the sale price and simultaneously the corresponding material cost of the consumables will be debited in the profit and loss account. Thus in effect the losses that the assessee has incurred on account of obsolescence of consumable materials is reduced by the amount of sale’s realization. It is a matter manner of presentation in the books of accounts about the sale of consumable materials. If the assessee instead of showing the sale of the consumable materials as income and adjusting the same against the cost of the consumables sold by it there will not be any income in the books of accounts of the assessee and accordingly the question of disallowances of deduction under the section 80IA of the Act will not arise. Thus, merely the assessee has presented the sale of consumable stores in a particular manner, the assessee cannot be debarred from claiming the deduction under the provisions of section 80IA of the Act. It is also pertinent to note that the income from the sale of consumable stores used in the eligible unit has direct link with the generation and distribution of power, therefore on this score as well, the assessee cannot be denied the benefit of the deduction under section 80IA of the Act. Accordingly, we uphold the order of the learned CIT-A, and direct the AO to delete the addition made by him. Hence the grounds of appeal of the revenue is dismissed. 27. The next issue raised by the Revenue vide ground no. 10 of its appeal is that the learned CIT(A) erred in deleting the disallowance of deduction made by the AO under section 80G and 80GGB of the Act. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 17 28. The assessee has made certain donations from different units and claimed deduction under section 80G/80GGB on the same which are detailed as under: Particulars Abd-Distri Bhiwandi Surat DUGEN SUGEN Total Political Donation 80GGB 14500000 14500000 Other Donation 80G-100% 2500000 2500000 Other Donation 80G-50% 23800000 10077500 10000000 20000000 63877500 Total 40800000 10077500 10000000 20000000 28.1 The assessee has disallowed the same while computing the deduction under section 80-IA of the Act, however claimed deduction of the same separately from its Gross Total Income under the provisions of section 80G/80GGB of the Act. 28.2 The AO was of the view that such donation shown in the profit and loss account of the eligible undertaking cannot be claimed as deduction under the provisions of section 80G /80GGB of the Act from the gross total income of the assessee. It is for the reason that the entire amount of profit with respect to such eligible undertaking has already been allowed as deduction under the provisions of section 80-IA of the Act. Accordingly, the AO issued a show cause notice to the assessee proposing to disallow the deduction claimed under section 80G/GGB of the Act. 28.3 The assessee in response thereto submitted that the deduction under section 80G/80GGB of the Act is eligible/allowed from the Gross Total Income when the payment is made to certain organizations specified therein. On the contrary the deduction under section 80-IA of the Act is provided for the specified business activity carried on by the assessee. Thus, the deductions under section 80G/80GGB of the Act and 80-IA of the Act are mutually exclusive and independent to each other. The assessee while claiming the deduction under section 80-IA of the Act against the profit of the specified business can also claimed the deduction under section 80G/80GGB of the Act separately. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 18 28.4 However, the AO disregarded the contention of the assessee by observing that there remained no taxable profit after claiming the deduction under section 80-IA of the Act in the specified undertaking. Accordingly, the AO disallowed the deduction of T 1,45,00,000/- being political donation u/s 80GGB of the Act, and T 25,00,000/- being other donation under section 80G of the Act eligible for 100% deduction and T 6,38,77,500/- being other deduction under section 80G of the Act eligible for 50% deduction. 29. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by following the order of his predecessor CIT (A) in the own case of the assessee for AY 2008-09 to 2010-11. 30. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us. 31. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 32. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that identical issue came up before this tribunal in the own case of the assessee for the AY 2008-09 in ITA No. 776 & 738/Ahd/2012 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09-12-2021. The relevant finding of the bench is extracted as under: 114. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the present case relates whether the assessee can claim the deduction under section 80G and 80GGB of the Act for the donations made by the undertaking eligible for deduction under section 80-IA of the Act. The deduction under section 80-IA of the Act is allowed to the assessee with respect to the business referred therein is carried on by the assessee. That particular business is known as the undertaking which is considered as separate and independent to other activities of the assessee. Thus the deduction under section 80-IA of the Act is specific for the eligible undertaking. If the eligible undertaking derives any income from the activity other than those business referred therein, then, the same cannot be allowed as deduction under section 80-IA of the Act. On the same reasoning, if there is any expense/payment made by the eligible undertaking which is not in connection with the business referred under the provisions of section 80-IA of the Act, the same expenses/payment has to be excluded for determining the eligible profit. Thus, the amount eligible for deduction under section 80-IA of the Act is computed from the business referred therein only. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 19 114.1 Now coming to the case on hand the donations paid by the assessee against the eligible undertaking which is qualified for deduction under section 80G/80GGGB of the Act, the same cannot be considered as an expense/payment against the specific business/undertaking eligible for deduction under section 80-IA of the Act. It is for the reason that the donation under section 80G/80GGB of the Act does not relate to the activity of eligible undertaking. In other words, the payment under section 80G/80GGB of the Act is eligible for deduction on account of the payment made to the specific institution irrespective of the business whether it is eligible or non-eligible carried on by the assessee. 114.2 There is no dispute to the fact that the amount of donation was claimed by the assessee in the profit and loss account of the eligible undertaking which has been disallowed while computing the eligible profit. Certainly, the profit of the eligible undertaking will increase by the amount of disallowance made by the assessee on account of the donations paid to the institutions which is entitled for deduction under section 80G/80GGB of the Act. It has to be disallowed/added back while computing the eligible profit of the business referred therein under section 80-IA of the Act. It is for the reason that this donation does not relate to the business referred under section 80-IA of the Act which is eligible for deduction. But the same can be claimed as deduction by virtue of the provisions of section 80G/80GGB of the Act separately subject to the conditions specified therein. Hence, we do not find any infirmity in the order of learned CIT (A). Thus, the ground of appeal of the Revenue is dismissed. 32.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of the Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this Tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed. 33. The next issue raised by the Revenue vide ground Nos. 11 & 12 of its appeal is that the learned CIT (A) erred in deleting the disallowances of Rs. 5,44,65,313/- under section 14A read with rule 8D of the Income Tax Rules. 34. The AO during the assessment proceedings found that the assessee has made investment in the shares of subsidiary companies from which it is able to earn exempted income in the form of LTCG and dividend income. The AO also found that the assessee has made suo-moto disallowances of Rs. 1,34,29,521/- under section 14A r.w. rule 8D of income tax rule. However, the AO observed certain deficiencies in the computation of disallowances made by the assessee under rule 8D of Income Tax Rule. Therefore, the AO re-computed the amount of disallowance as per the rule 8D of Income Tax Rule which ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 20 came at Rs. 6,78,94,834/- only. The AO after giving benefit of suo-moto disallowances made by the assessee for Rs. 1,34,29,521/- made a disallowance of Rs. 5,44,65,313/- under section 14A r.w.r. 8D of Income Tax Rules. 35. Aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that no exempt was income earned during the year, hence no disallowance under section 14A r.w.r. 8D of Income Tax Rules is required to be made. 36. The learned CIT(A) after considering the facts in totality deleted the addition made by the AO by observing as under: 7.2 The submission is considered. The AO has made disallowance under Section 14A applying Rule 8D, the Appellant has not earned any exempt income during the year which is not disputed by AO. The Hon'ble Gujarat High Court in the case of Corrtech Energy Pvt. Limited 45 taxman.com 116 on identical disallowance under Section 14A when no exempt income is earned, the Court has held as under: 4. Counsel for the Revenue submitted that the Assessing Officer as well as ClT(Appeals) had applied formula of rule B'J of the Income Tax Rules, since this case arose after the assessment year 20C,;-2Q10. Since in the present case, we are concerned with the assessment year 2009-2010, such formula was correctly applied by the Revenue. We however, notice that sub-section(l) of section 14A provides that for the purpose of computing total income under chapter IV of the Act, no deduction shall be allowed in respect of expenditure incurred by the assesses in relation to income which does not form part of the total income under the Act. In the present case, the tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the tribunal held that disallowance under section 14A of the Act could not be made, In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of C/TvWinsome Textile Industries Ltd. [2009J 319 ITR 204 in which also the Court had observed as under: "7. We do not find any merit in this submission. The judgement of this court in Abhishck Industries Ltd {2006} 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that context. In the present case, admittedly the assessee did not make any claim for exemption. In such a situation section 14A could have no application." 5. We do not find any question of law arising, Tax Appeal is therefore dismissed." Similar view is also given by Hon'ble Delhi High Court in the case of Cheminvest Limited V/s CIT61 taxmann.com 118. It is also observed that similar disallowance made by AO is deleted by CIT (Appeals) - 7 in case of Appellant for A.Y. 2011-12 vide her order dated 29 th September, 2016. The AO also stated the CBDT circular as a basis lo apply Section 14A r.w. Rule 8D. In this reference it is to be noted that the circular cannot detract from the provisions of law. The law as interpreted by judicial authority is considered as law settled. In the decision of five members bench of ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 21 Supreme Court in the case of CCE v/s Ratnam Melting & Wire Ind (SC) Civil Appeal No. 1469/2002, the observation is follows: "Circular and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supremo Court or o High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarification/circulars issued by the Central Government and .of the Stato Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the Court. It is for the Court to declarewhat the particular provision of statute says and it is not for the Executive looked al from another angle, a circular which is contrary to the statutory has realty no existence in taw," The conclusion of the matter is that the law declared by Supreme Court is binding in terms of Article 141 of the Constitution. The Assessing Officer cannot simply brush aside the interpretation by Courts, in view of the aforesaid discussion, the disallowance made by the Assessing Officer invoking the provisions of Section 14A of the Act is not correct and hence, same is deleted. Accordingly, ground No. 6, 7 and 8 of the appeal are allowed. 37. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 38. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 39. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that identical issue came up for hearing before this tribunal in the own case of the assessee for AY 2011-12 in ITA No. 3178/Ahd/2016 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09-12-2021. The relevant finding of the Bench is extracted as under: 210. We have heard the rival contentions of both the parties and perused the materials available on record. There is no ambiguity to the fact that there was no dividend/exempted income earned by the assessee in the year under consideration. Accordingly, there cannot be any disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule in view of the judgment of Hon’ble Gujarat High Court in the case of Corrtech Energy Ltd reported in 372 ITR 97 wherein it was held as under: Section 14A(1) provides that for the purpose of computing total income under chapter IV, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the instant case, the Tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the Tribunal held that disallowance under section 14A could not be made. In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed that where the assessee did not make any claim for exemption, section 14A could have no application. 210.1 In view of the above, there is no dispute to the fact that the assessee was not supposed to make any disallowance in the return of income under the provisions of section 14A read with section ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 22 rule 8D of Income Tax Rule. 210.2 Now the question arises, whether the assessee can claim the benefit of the disallowance made by the assessee in the income tax return before the judicial forum. It is the trite law that the income tax has to be levied on the income which is determined under the provisions of the Act. The assessee for any reason has offered any income which was not chargeable to tax, the revenue is not expected to deny the benefit to the assessee for which it was entitled. 210.3 It is also pertinent to note that the assessee has filed the return of income for the year under consideration dated 29-9-2011 wherein the disallowance of T 1,57,95,815/- was made under the provisions of section 14A read with rule 8D. At that point of time, there was no clarity on the issue whether there will not be any disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule if there was no exempted income. However this clarity was brought on a later date by the Hon’ble Gujarat High Court in the case of Corrtech Energy Ltd (Supra) vide order dated 24-3- 2014. The contents of the order has already been reproduced in the preceding paragraph. Thus, there remains no ambiguity that the assessee was not aware of the provisions of law at the time of filing the return of income. 210.4 Be that as may be, the assessee cannot be deprived from the benefits provided under the provisions of law more particularly in a situation where the proceedings of the assessee for the year under consideration were pending before the higher authorities on same issues. 210.5 In view of the above and after considering the facts in totality, we hold that the disallowance under section 14A read with rule 8D of Income Tax Rule was not warranted. Hence the ground of appeal of the assessee is allowed whereas ground of appeal of the Revenue is dismissed in view of above discussion. 39.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of the Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this Tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed. 40. The next issue raised by the Revenue vide ground Nos. 13 to 15 of its appeal is that the learned CIT (A) erred in deleting disallowances of interest for Rs. 5,39,54,436/- made by the AO on account of diversion of interest bearing fund. 41. The AO during the assessment proceedings found that the assessee has advanced interest free loans to its subsidiaries. Accordingly, the AO calculated the proportionate amount of interest @ 10% amounting to T 5,39,54,436/- attributable to such loan and disallowed the same by adding to the total income of the assessee. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 23 42. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO on reasoning that the assessee was having sufficient interest free fund to extend the interest free loan and advances. 43. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us. 44. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 45. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that identical issue came up before this tribunal in the own case of the assessee for AY 2010-11 in ITA No. 2025/Ahd/2013 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09- 12-2021. The relevant finding of the Bench is extracted as under: 187. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the own fund of the assessee exceeds the amount of loans provided without charging interest thereon. The own fund of the assessee stands at Rs. 3960.15 crore only whereas the amount of loans and advances to subsidiary stands at Rs. 49.79 crore only which can be verified form the financial statement available on record. Thus, a presumption can be drawn that such amount of loan advances have been provided by the assessee out of its own fund. Therefore, there cannot be any disallowance of interest expenses. Hence the ground of appeal of the Revenue is hereby dismissed. 45.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed. 46. The next issue raised by the Revenue vide ground no. 16 is that the learned CIT (A) erred in deleting the addition made to the books profit u/s 115JB of the Act by the ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 24 amount of Rs. 6,78,94,834/- being disallowances under section 14A read with rule 8D of the Income Tax Rules. 47. The AO while computing the income under the normal provisions of the Act has made the disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule. As per the AO, the same has to be added while computing the book profit under section 115JB of the Act. Accordingly, the AO has done so by adding the sum of Rs. 6,78,94,834/- to the book profit of the assessee under section 115JB of the Act. 48. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by observing that once the disallowance under section 14A of the Act read with rule 8D of Income Tax Rule has been deleted, the consequential adjustment under books profit also cannot be sustained. 49. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us. 50. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 51. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that identical issue came up before this tribunal in own case of the assessee for A.Y. 2008-09 in ITA No. 738/Ahd/2012 where the issue has been decided in favour of the assessee and against the Revenue vide order dated 09-12- 2021. The relevant finding of the Bench is extracted as under: 124. We have heard the rival contentions of both the parties and perused the materials available on record. The AO in the instant case has made the disallowance u/s 14A r.w.r. 8D of the Income Tax Rules for Rs. 38,18,571/- while determining the income under normal computation of income. Further, the AO while determining the income under Minimum Alternate Tax (MAT) as per the provisions of section 115JB of the Act, has added the disallowance made under the normal computation of Income under section 14A r.w.r. 8D of Income Tax Rule for Rs. 38,18,571/- to the book profit in pursuance to the clause (f) of explanation 1 to section 115JB of the Act. 124.1 However, we note that in the recent judgment of Special Bench of Hon’ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of addition while determining the net profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 25 “In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962.” 124.2 The ratio laid down by the Hon’ble Tribunal is squarely applicable to the facts of the case on hand. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 124.3 However, it is pertinent to note that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon’ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- “We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act.” 124.4 Given above, we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. (Supra). 124.5 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we note that there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts & circumstances, we feel that adhoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the Revenue is partly allowed. 51.1 Before us, no material has been placed on record by the learned AR or DR to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, learned AR or DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we set-aside the finding of the learned CIT(A) and direct the AO make adhoc disallowances @ 1% of exempted income. However, in the given facts and circumstances, ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 26 we find that there was no exempt income in the year under consideration, therefore there cannot be any disallowance while computing the book profit under section 115JB of the Act. Thus, the ground of appeal raised by the Revenue is hereby dismissed. 52. The next issue raised by the Revenue vide ground Nos. 17 & 18 of its appeal is that the learned CIT(A) erred in deleting the addition of Rs. 42,15,37,467/- made on account credit of dividend distribution tax. 53. The assessee has raised the ground of appeal before the learned CIT-A as detailed below: In law and in the facts and circumstances of the appellant’s case, the learned Assessing Officer has grossly erred in not at all considering the Credit for Dividend Distribution Tax paid amounting to Rs.42,15,37,467/- available to the appellant up to the year under consideration while determining the demand of tax payable for the year under consideration. 53.2 Based on the above ground of appeal, the learned CIT-A has held as under: The eleventh and twelfth ground of appeal relate to not granting of credit for dividend distribution tax (DDT) for Rs.44,15,37,467 and short grant of TDS for Rs.2,83,716. The AO is directed to verify the payments of DDT made by Appellant and allow credit of such taxes while giving effect to this order. The AO also directed to verify the claim of Appellant regarding short credit of TDS and if it is found that income pertaining to such TDS is already offered to tax, credit of such TDS needs to be given while giving effect to this order. 53.3 From the above direction, we note that the learned CIT-A has just instructed the AO to allow the claim of the assessee subject to the direction. As such, at the time of hearing the learned DR has not brought any infirmity in the direction given by the learned CIT-A. Accordingly, we do not find any infirmity in the order of the learned CIT-A and therefore decline to interfere in the same. Hence the ground of appeal of the revenue is hereby dismissed. 54. In the result appeal of the Revenue is hereby dismissed. Coming to CO. No. 41/Ahd/2019 by the assessee in ITA No. 14/Ahd/2018 for A.Y. 2012-13. 55. The assessee has raised the following grounds of objection: ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 27 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the finding of the learned Assessing Officer that Street Light Maintenance Net Income of Rs.1,08,66,911 is not eligible for deduction u/s.80-IA of the IT. Act. 2. Without prejudice to ground No.1, the learned CIT(A) erred in confirming the finding of the learned Assessing Officer that the expenditure of Rs.5,92,12,205 claimed by the Respondent- company as incurred in relation to the Street Light Maintenance Income, is not supported by evidence and thereby restricting the deduction in respect of such expenditure to the extent of Rs. 4,12,12,6657- only.55.1 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the learned Assessing Officer's finding that bad debt recovery of Rs.93,15,306 in respect of Ahmedabad unit and Rs.38,97,867 in respect of the Surat unit are not eligible for deduction u/s.80-IAof the IT. Act. 4. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the finding of the learned Assessing Officer that interest deposits amounting to Rs.1,37,41,456/- and Rs.61,45,411 being other interest income are not eligible for deduction u/s.80-IA of the IT. Act. 5. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the finding of the learned Assessing Officer that rental income of Rs.5,36,138 in respect of Ahmedabad unit and Rs.83,293 in respect of Surat unit are not eligible for deduction u/s.80-IAofthe!.T. Act. 6. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the finding of the learned Assessing Officer that other miscellaneous receipts of Rs.62,95,181 in respect of Bhiwandi Distribution unit are not eligible for deduction u/s.80-IA of the IT. Act. 7. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the finding of the learned Assessing Officer that Store Billing Charges of Rs.1,18,67,206 received from Ahmedabad Municipal Corporation for supply of material like bulbs and tube-lights for street lighting, are not eligible for deduction u/s.80-IA of the IT. Act. 8. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the finding of the learned Assessing Officer that Sales-tax refund of Rs. 1,41,575, rent recovery charges of Rs.60,473, miscellaneous income of Rs. 1,47,270 and excess provision in respect of depreciation written back amounting to Rs.1,11,198 are not eligible for deduction u/s.80-IA of the IT. Act. 9. Without prejudice to ground No.8, the learned CIT(A) has erred in not appreciating the fact that the excess provision in respect of depreciation written back amounting to Rs.1,11,198 does not form part of taxable income of the Respondent-company as the book depreciation is not allowed as deduction to the assessee and therefore, its reversal in books of account should be excluded from the total income of the Respondent-company. 10. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of cross objections either before or during the course of hearing of the same. 55.1 The assessee also filed additional ground of objection vide letter dated 22-10-2021 which are as under: Appellant craves leave to raise these additional grounds of Cross Objections before the Hon'ble ITAT. These are legal grounds and therefore, as per the decision of Hon'ble Supreme court in the case of National Thermal Power (229 ITR 383), it can be raised before the Hon'ble ITAT. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 28 In view of the above, the appellant hereby raises following grounds as additional grounds of Cross Objections, which is without prejudice to the grounds raised by the appellant while filing appeal in Form 36A. "1- Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests for admission of its additional claim and for allowing deduction of Rs. 9,84,48,624/- in respect of Education Cess and the Secondary and Higher Education Cess on income tax, on the ground that such expenditure is allowable business expenditure u/s 37(1) of the Act as per settled legal precedents. 2. Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests for admission of its additional claim and for allowing deduction of Rs.1,89,74,745/- in respect of Education Cess and the Secondary and Higher Education Cess on Dividend Distribution Tax, on the ground that such expenditure is allowable business expenditure u/s.37(1) of the Act as per settled legal precedent. 3. Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests for admission of its additional claim and for not including the proceeds of Rs. 3,21,68,86,818/- received on sale of carbon credits, while computing the Book Profit u/s. 115JB of the Act on the ground that it is income in the nature of "capital receipts" as per the settled legal precedents. 56. The first objection raised by the assessee vide ground nos. 1 & 2 is that the learned CIT(A) erred in sustaining the disallowance of deduction under section 80-IA of the Act for Rs. 1,08,66,911/- representing street light maintenance income on the reasoning that it is not derived from the activity of power generation. 57. The assessee during the year under consideration earned gross of income of Rs. 5,20,79,576/- from streetlights maintenance in pursuance to the agreement entered into with Ahmedabad Municipal Corporation which was claimed as deduction under section 80- IA of the Act. As per the assessee, the activity of maintaining the streetlights directly relates to its business of distribution of power. It is for the reason that the assessee cannot distribute the power in the streetlights until and unless it maintains them. Accordingly, the assessee contended that the income derived by it from the maintenance of the streetlights maintenance should also be eligible for deduction under section 80IA of the Act. 57.1 Without prejudice to the above, the assessee also contended that during the year it incurred expense of Rs. 11,40,67,489/- in relation to maintenance of streetlights contracts. Out of above cost, an amount of Rs. 5,48,55,284/- has already been adjusted against impugned income. Therefore, if the assessee is denied the benefit of deduction under section 80-IA of the Act from its streetlight maintenance activity, then the net amount of ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 29 expenditure should only also be excluded from computation of income under section 80-IA of the Act. Accordingly, the assessee claimed that it incurred net expenses of Rs. 71,31,629/- over the income from streetlights maintenance. (note: there appears some typographical mistake in the amount of net expense i.e. 71,31,629.00.) 57.2 However, the AO disregarded the contention of the assessee by observing that the income from the maintenance of streetlights activity is not derived from the power distribution activity. The maintenance activity is altogether separate and independent to the power distribution activity. It is not necessary for providing the maintenance services to AMC that the assessee should be engaged in the activity of power distribution. Accordingly, the AO held that the income from streetlights maintenance services cannot be made eligible for deduction under section 80IA of the Act. 57.3 The AO further held that the claim of the assessee that it incurred a cost of Rs. 11,40,67,489/- cannot be accepted for the reason that the same is not supported by the evidences. There was also no explanation furnished by the assessee that how it worked the amount of Rs. 71,31,629/- being the expenditure over income. Nevertheless, the AO held that expenses incurred by the assessee in relation to maintenance services cannot be denied. Therefore, the AO estimated the profit from the activity of streetlight maintenance services at Rs. 1,08,66,911/- being 0.00065% of total revenue and excluded the same from the computation of income under section 80-IA of the Act. 58. Aggrieved assessee preferred an appeal to the learned CIT (A), who confirmed the finding of the AO by following the order of his predecessor CIT(A) in own case of the assessee for AY 2010-11. 59. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us by this cross objection. 60. The learned AR before us contended that the provisions of section 80-IA of the Act are beneficial provisions and therefore the same has to be read liberally. Likewise, the ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 30 activity of streetlight maintenance is closely connected with the activity of distribution of power. Thus, the same is eligible for deduction under section 80 IA of the Act. 61. On the other hand, the learned DR before us vehemently supported the order of the authorities below. 62. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that identical issue with respect to the eligibility of deduction of income from the activity of streetlight maintenance services came up before this tribunal in the own case of the assessee for AY 2008-09 in ITA No. 776 &738/Ahd/2012 where the issue has been decided against the assessee. The relevant finding of the Bench is extracted as under: 38. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 80IA of the Act, inter-alia, provides the deduction to the undertaking which is engaged in generation or generation and distribution of power. The essential ingredients for claiming deduction under Section 80-IA (1) of the Act read as under: (a) the 'gross total income' of an assessee should include profits and gains; (b) those profits and gains are derived by an undertaking or an enterprise from a business referred to in sub-section (4); (c) the assessee is entitled for deduction of an amount equal to 100% of the profits and gains derived from such business for 10 consecutive assessment years; and (d) in computing the 'total income' of the Assessee, such deduction shall be allowed. 38.1 The profit derived by undertaking from the business referred under sub section (4) of the Act is eligible for deduction under section 80IA of the Act. The provisions of Section 80-IA of the Act provides for deduction of the profits derived from the business by an undertaking or enterprise, engaged inter alia, in generation or generation and distribution of power. The expression ‘derived from the business’ has generated a lot of controversy. To our understanding, it refers to the effective source from which the income arises. But to find out the effective source, the term derived from indeed demands an enquiry into the genealogy of the product which should be stopped as soon as the effective source is discovered. 38.2 At this juncture it is important to refer judgment of SC in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) which have interpreted the term ‘derived from’. The relevant decisions of the Supreme Court: "The Legislature has deliberately used the expression ‘attributable to’, having a wider import than the expression ‘derived from’, thereby intending to cover receipts from sources other than the actual conduct of the business of the specified industry." (p.85) 38.3 From the ratio of the aforesaid decision of the Apex Court, it is clear that the phrase ‘derived from’ covers receipts from the actual conduct of business of the specified industry as provided under section 80-IA of the Act. 38.4 Likewise, as per the Bombay High Court in the case of Hindustan Lever Ltd. v. CIT [1980] 121 ITR 951/3 Taxman 390, the word ‘derived’ as far as incometax law is concerned, has been given a narrow meaning - a strict meaning, by the courts and has been understood in the restricted sense of a direct derivation and not understood in the broad sense as equivalent to be derived directly or ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 31 indirectly. In other words, only the proximate source has to be considered and not the source to which it may ultimately be referable. 38.5 In the light of the aforesaid discussion, it may be safely concluded that the expression "Profit and gain derived from an Industrial undertaking" used in sections 80-IA of the Act, will include all the profits and gains earned by the Industrial undertaking by the actual conduct of its business. It would mean that all the income which has a direct nexus with the business of the Industrial Undertaking, will be includible in such profits and gains. Thus, we are of the view that profit and gain earned by the assessee from the services of maintenance of street light are not the profit and gain from the activity or undertaking of generation and distribution of power. As there is no nexus between the business of power distribution and maintenance /service of street light. Thus, we hold that profit and gains derived from street light maintenance services should not be included in amount of deduction under section 80IA of the Act. Hence we do not find any infirmity in the finding of the authority below. Accordingly the assessee’s ground of appeal is dismissed 62.1 Respectfully following the above finding of coordinate bench in own case of the assessee, we hold that the assessee is not eligible for deduction of income derived from the services of streetlight maintenance. 62.2 Regarding the alternate contention of the assessee that it should be allowed to be adjusted the income of streetlight maintenance with the corresponding expenses. We find force in the alternate contention of the assessee. However, the onus lies upon the assessee to furnish the supporting evidences of the expenses incurred against the income from streetlight maintenance. But we find from the concurrent finding of the authorities below that no such detail has been furnished by the assessee. As such in the absence of necessary details, the AO was pleased to estimate the income of the assessee. In other words, the AO has given the benefit of the expenses against the income from streetlight maintenance on ad hoc basis. Even before us, the learned AR has not brought anything on record about the expenses incurred against such street light maintenance income. Thus in the absence of such details, we do not find any merit in the argument of the learned AR of the assessee. Before parting, we also note that the basis adopted by the AO for computing the income relating to streetlight maintenance does not seem to the proper. It is because, the AO has considered all the income of the assessee for working out the profit from the activity of streetlight maintenance instead of making the estimate directly on the income shown by the assessee under the head streetlight maintenance. In simple words, the AO could have estimated the profit on some reasonable basis in relation to the gross income shown by the assessee from the activity of streetlight maintenance. As such, we are of the ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 32 view that the justice shall be served to the assessee and the revenue, if the income of the assessee from the streetlight maintenance is estimated at the rate of 8% of Rs. 5,48,55,284/- being gross income from the streetlight maintenance activity. Hence the ground of appeal of the assessee is partly allowed. 63. The next objection raised by the assessee vide ground no. 3 is that the learned CIT(A) erred in sustaining the disallowance of deduction claimed under section 80-IA of the Act for Rs. 93,15,306/- and Rs. 38,97,867/- on account of recovery of bad debts in Ahmedabad unit and Surat unit. 64. The assessee during the year has shown income on account of recovery of bad debts amounting to Rs. 2,88,72,977/- and Rs. 59,68,563/- with respect to Ahmedabad and Surat units respectively and same was included in the deduction claimed under section 80IA of the Act. The assessee submitted that bad debt and their recovery arise from business of distribution of power, therefore,the same is eligible for deduction under section 80-IA of the Act. The assessee alternatively submitted that during the year it has written off bad debts to the tune of Rs. 1,95,57,671/-, Rs. 8,34,21,345/- and 20,70,696/- in respect of Ahmedabad unit, Bhiwandi unit and Surat unit respectively. Therefore, in case, the income on account bad debt recovery is not considered for deduction under section 80- IA of the Act then the amount of bad debt should also be excluded while computing the deduction under section 80-IA of the Act. 64.1 However, the AO was of the view that no benefit of bad debts recovery can be granted by allowing deduction under section 80IA of the Act for the reason that the amount of bad debt was recognized by the assessee when its unit was not eligible for deduction under section 80-IA of the Act. If the deduction under section 80-IA of the Act is allowed, then the same would lead to the double deduction. Firstly, when these bad debts were written off in the books of account in the earlier year and secondly when these bad debts were recovered in the form of deduction under section 80-IA of the Act. However, the AO found that there were bad debts written off in the year under consideration of Rs. 1,95,57,671/- and Rs. 20,70,696/- in connection with Ahmedabad unit and Surat unit ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 33 which was allowed to be net of against such bad debts recovered. Thus, the AO effectively excluded the sum of Rs. 93,15,306/- and Rs. 38,97,867/- from the amount of deduction claimed under section 80IA of the Act for Ahmedabad unit and Surat Unit. 65. Aggrieved assessee preferred an appeal to the learned CIT (A). The assessee before the learned CIT (A) reiterated the submission as made during assessment proceeding. 65.1 However the learned CIT (A) disregarded the contention of the assessee by observing that the AO has given categorical finding that the bad debts were claimed in the earlier years which were also allowed as deduction when the undertaking was not eligible for deduction under section 80-IA of the Act. Therefore, any recovery of such bad debts cannot be allowed as deduction under section 80 IA of the Act. The finding of the AO has not been controverted by the assessee. The learned CIT(A) also found that identical disallowance was also made in earlier year being AY 2008-09 to 2010-11 which has been confirmed by the ld. predecessor CIT(A). Thus, the learned CIT(A) confirmed the disallowance made by the AO. 66. Being aggrieved by the order of learned CIT (A) the assessee is in appeal before us. 67. The learned AR before us contended that the bad debts were recovered with respect to the eligible undertaking. Therefore, the same should be eligible for deduction under section 80 IA of the Act. 68. On the other hand, the ld. DR vehemently supported the order of the authorities below. 69. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that identical issue with respect to the eligibility of deduction of income from the activity of streetlight maintenance services came before this Tribunal in the own case of the assessee for AY 2008-09 in ITA No. 776 &738/Ahd/2012 where the issue has been decided in favour of the assessee vide order dated 09-12-2021. The relevant finding of the Bench is extracted as under: ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 34 45. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there is no dispute to the fact that the bad debs recovery shown by the assessee as income in the year under consideration pertains to the undertaking eligible for deduction under section 80IA of the Act. The allegation of the AO was that the bad debts recovery represents the amount which was claimed as deduction by the assessee in the earlier year when the undertakings were not eligible for deduction under section 80IA of the Act. Thus, the assessee has claimed double benefit firstly by claiming the deduction of bad debts when the undertakings were not eligible for deduction under section 80IA of the Act and secondly by showing the income of Bad debt recovery when the undertakings were eligible for deduction under section 80IA of the Act. On this reasoning, the AO did not allow the benefit of deduction under section 80IA of the Act qua such bad debts recovery. However, this dispute has been resolved by the ITAT (Ahmedabad) in the case of RadhaMadhav Industries Vs. ITO reported in 8 taxmann.com 63 wherein it was held as under: 11.We have considered the rival submissions and perused the material on record. In our considered view the matter requires to be re-examined so as to give a finding by the Assessing Officer whether these amounts written back by the assessee were claimed as deduction in any earlier year. If such deduction was claimed and allowed in any earlier year then clearly there was reduction of profit in those earlier years and once the creditors remit the liability or liability ceased to exist and assessee declared it as part of the profit then nexus of such profit written back with the industrial undertaking is not severed. It is because while allowing deduction the eligible profits of the business derived from the industrial undertaking were reduced as they were allowable expenditure. Once the liability ceased to exist in favour of the assessee then they become profits of the assessee in the current year as per provisions of section 41(1). When we examine the nexus of the profit with the industrial undertaking it is not to be seen as to from whom the profit is derived but it is to be seen whether it is derived from the business. So long money is recoverable from the parties or payable to the parties during the course of business the transactions have a direct nexus with the business and one cannot view these transactions away from the business. Such transactions include receipts and payment of money in cash or in kind immediately or on credit and are part of business activities. If the assessee has to make the payment to the above four parties, which were standing in the balance sheet as creditors and which have been claimed as business deduction in an earlier year then only course left to the assessee is either to make the payment or if no payment is legally required, to show as profit under section 41(1) which has been so done by the assessee. There is a clear and direct business connection of such cessation or remission and such profits taxable under section 41(1) can be held as derived from industrial undertaking. The arguments of the ld. DR that they are not current year's profit from manufacturing activity is devoid of any merit because deduction under section 80-IA is available only on profits derived from industrial undertaking which is carrying on manufacturing activities and it is not confined to only current year's profit as per P&L account. The deduction under section 80-IA or 80-IB is available on profits and gains computed in accordance with section 20A-43D which includes section 41(1) also. 12. Thus where Assessing Officer finds that claim has already been allowed in the earlier year then such benefit under section 80-IA should be given to the profits taxed under section 41(1). The argument of ld. AR is that once it has declared profits under section 41(1) it would mean that assessee has already claimed and allowed deduction thereof in earlier years but in our considered view it requires verification and for that matter we restore the matter to the file of Assessing Officer. Accordingly this ground of assessee is allowed for statistical purposes. 45.1 From the above, there remains no ambiguity to the fact that the assessee is eligible for deduction under section 80 IA of the Act with respect to the impugned bad debt recovery shown as income in the year under consideration. Thus the ground of appeal of the assessee is allowed. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 35 69.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we hereby set aside the finding of the learned CIT(A). Thus, the ground of objection raised by the Assessee is hereby allowed. 70. The next objection raised by the assessee vide ground no. 4 is that the learned CIT(A) erred in sustaining the disallowances of deduction under section 80-IA of the Act for Rs. 1,37,41,456/- and Rs. 61,45,411/- on account of FD interest income and interest on IT refund. 71. The assessee has shown interest income of T 1,37,41,456/- on fixed deposit and Rs. 61,45,411/- on income tax refund which was claimed as deduction under section 80-IA of the Act. As per the assessee, the fixed deposits were made by the undertakings eligible for deduction under section 80 IA of the Act namely Ahmedabad distribution unit and Surat distribution unit. The assessee alternatively contended that if the benefit of deduction under section 80-IA is denied to it, then, the expenditure incurred by way of interest on such deposits should be netted off. 71.1 However, the AO found that the amount of interest income from the fixed deposits and IT refund are not arising from the activity of distribution of power. Therefore, the same is not eligible for deduction under section 80-IA of the Act. Likewise, the alternate contention for netting of the interest income is not maintainable for the reason that there was no nexus brought on record by the assessee suggesting that there was the expenditure incurred by the assessee against such fixed deposit in the form of interest. Thus, the AO was pleased to exclude the gross amount of interest income being from FD and IT refund from the amount eligible for deduction under section 80-IA of the Act. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 36 72. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO. 73. Being aggrieved by the order of the learned CIT (A), the assessee in appeal before us. 74. The learned AR before us contended that the interest was recovered with respect to the eligible undertaking. Therefore, the same should be eligible for deduction under section 80 IA of the Act. 75. On the other hand, the ld. DR vehemently supported the order of the authorities below. 76. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that identical issue with respect to the eligibility of deduction of income from the activity of interest on FD and income tax refund came up before this Tribunal in the own case of the assessee for AY 2008-09 in ITA No. 776 &738/Ahd/2012 where the issue has been decided against the assessee. The relevant finding of the Bench is extracted as under: 52. We have heard the rival contentions of both the parties and perused the materials available on record. Undeniably, the fixed deposits were made by the eligible undertakings and interest was earned thereon. On perusal of the order of the AO, we also note that there was surplus fund available with the assessee which was parked in the fixed deposits. The relevant contentions of the assessee before the AO reads as under: “the assessee company submitted that it has invested its money in fixed deposits so as to earn income the time the funds under provide business activities” 52.1 Thus, from the above it is transpired that the assessee has not made fixed deposits under any obligation in the course of carrying on the business of distribution of power. However, it is also a fact on record the impugned interest income was offered by the assessee as business income which was also accepted by the revenue in the assessment proceedings. The provisions of Section 80-IA of the Act provides for deduction of the profits derived from the business by an undertaking or enterprise, engaged inter alia, in generation or generation and distribution of power. But the interest income was not arising to the assessee from the activity of distribution of power. Thus, on the same reasoning given in the relation to streetlight maintenance activity in para no. 38 of this order, the impugned income is not eligible for deduction under section 80-IA of the Act. Therefore the authority below rightly excluded the same from the computation of deduction under section 80IA of the Act. Hence the assessee ground of appeal is dismissed. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 37 76.1 Before us, no material has been placed on record by the learned AR or DR to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, learned AR or DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we hereby confirm the finding of the learned CIT(A). Thus, the ground of objection raised by the Assessee is hereby dismissed. 77. The next objection raised by the assessee vide ground no. 5 is that the learned CIT(A) erred in sustaining the disallowance of deduction claimed under section 80-IA of the Act for Rs. 5,36,138/- and Rs. 83,293/- representing Rental income with respect to Ahmedabad unit and Surat Unit. 78. The assessee has provided staff quarters to the employees against the rent who were engaged in the activity of power distribution. Accordingly, the assessee was of the view that such the receipt of rent cannot be segregated from the activity of power distribution. Thus, the assessee claimed that the impugned rental income of T 6,19,431/- (Rs. 5,36,138 + Rs. 83,293/-) is eligible for deduction under section 80-IA of the Act. The assessee alternatively contended that if it is denied the benefit of deduction under section 80-IA of the Act, then only the net income from the rent after adjusting the corresponding expenses should only be considered for excluding from the amount of deduction. 78.1 The AO was of the view that the impugned rental income has no connection with the power distribution activity. Therefore, the same cannot be allowed as deduction under section 80-IA of the Act. Likewise, the alternate contention of the assessee was also rejected by the AO in the absence of the necessary information about the expenditure incurred by it against such rental income. Thus, the AO excluded the gross amount of rental income of T 6,19,431/- from the amount eligible for deduction under section 80-IA of the Act. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 38 79. Aggrieved assessee preferred an appeal to the learned CIT (A) who also confirmed the finding of the AO. 80. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 81. The learned AR before us contended that the employees from whom the rental income was recovered were actually working with the eligible undertaking. Therefore, such rental income has proximity with the power distribution activity. Thus, the same is eligible for deduction under section 80 IA of the Act. 82. On the contrary the learned DR before us vehemently supported the order of the authorities below. 83. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that identical issue with respect to the eligibility of deduction of income from the activity of renting out the staff quarters came up before this tribunal in the own case of the assessee for AY 2008-09 in ITA No. 776 &738/Ahd/2012 where the issue has been decided partly in favour of the assessee. The relevant finding of the Bench is extracted as under: 73. We have heard the rival contentions of both the parties and perused the materials available on record. The deduction under section 80-IA of the Act is available to the assessee with respect to the profit derived from the activity of power distribution. The rental income from the employees, though working for the eligible undertaking, cannot be construed as income derived from the activity of power distribution. It is for the reason that there is no immediate nexuses between the activity of power distribution and the rental income from the staff working for the eligible undertaking. The provisions of Section 80-IA of the Act provides for deduction of the profits derived from the business by an undertaking or enterprise, engaged inter alia, in generation or generation and distribution of power. But the rental income was not arising to the assessee from the activity of distribution of power. Thus, on the same reasoning given in the relation to streetlight maintenance activity in para no. 38 of this order, the impugned income is not eligible for deduction under section 80-IA of the Act. Thus in view of the above discussion we are of the opinion that the rental income received from employee should not be included in the computation of deduction under section 80IA of the Act as the same is not the profit or gain derived from the eligible business activity. 73.1 Before parting a question arises what about the depreciation claimed by the assessee with respect to such building being the staff quarters. If the income is not eligible for deduction under section 80-IA of the Act then in our considered view the corresponding depreciation should also be excluded from the profit of the eligible undertaking. Likewise, the expenses incurred in connection with the maintenance of such staff quarters should also be excluded. Accordingly, we direct the AO to ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 39 exclude the rental income from the amount of eligible profit net of the expenses qua to such rental income. Hence the ground of appeal of the assessee is partly allowed. 83.1 Before us, no material has been placed on record by the learned AR or DR to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, learned AR or DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we hereby set aside the finding of the learned CIT(A). Thus, the ground of objection raised by the Assessee is hereby partly allowed. 84. The next objection raised by the assessee vide ground no. 6 is that the learned CIT(A) erred in sustaining the disallowance of deduction under section 80-IA of the Act for Rs. 62,95,181/- representing miscellaneous receipt with respect to Bhivandi unit. 85. The assessee during the year has shown receipt from other miscellaneous income of Rs. 62,95,181/- in Bhiwandi distribution unit which includes receipt such as Invoice TCD Income, Incentive income, Registration Fee, Cheque Return Charges and various other Misc. Incomes. The assessee claimed the same as eligible income under section 80IA of the Act. 85.1 However, the AO held that the impugned receipts are not directly linked to the activity of power distribution. Therefore, the same cannot be held as income derived from the eligible business under section 80-IA of the Act. Hence, the AO excluded the same from the computation of eligible profit under section 80-IA of the Act. 86. On appeal by the assessee, the learned CIT-A confirmed the finding of the AO by observing as under: However, so far as other miscellaneous receipts of Rs.62,95,181/- is concerned. Appellant has given general explanation regarding incentive income or deduction from contractors bill for late submission but not established such claim with evidences hence it is held that such income is not eligible under section 80-IA of the Act. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 40 87. Being aggrieved by the order of the learned CIT-A, the assessee is in cross objection before us. 88. The learned AR before us contended that the other misc. income being incentive, invoice TCD income, test report charges, excess amount recovered from GETCO are inextricably connected to the business of power generation. Hence,thesame should be allowed as deduction under section 80IA of the Act. 89. On the other hand, the learned DR vehemently supported the finding of the lower authorities. 90. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee has shown miscellaneous receipts as income amounting to T 62,95,181/- only. The breakup of the same stands as under: Particulars Amount(Rs.) Incentive Income 1688995 Invoice TCD Income 1453059 Other Revenue 3153127 Total 6295181 90.1 The sum of T 16,88,995/- represents incentive to the assessee on account of collection made of the arrears of Maharashtra State Electricity Distribution Company Ltd (MSEDCL). Admittedly, the incentive given by MSEDCL is not connected with the generation and distribution activity of the assessee. Thus, the same is not eligible for deduction under the provisions of section 80IA of the Act. However, while excluding the impugned miscellaneous receipt, the assessee is eligible for deduction of the expenses incurred, if any, against such miscellaneous (incentive income) receipt. 90.2 Moving further, we note that the amount of T 14,53,059/- represents the receipts from the contractors on account of various reasons such as detailed below: i. late submission of the bill ii. penalty for poor quality ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 41 iii. HR penalty iv. safety violation penalty 90.3 Admittedly, the miscellaneous receipts discussed above is not connected with the generation and distribution activity of the assessee. Thus, the same is not eligible for deduction under the provisions of section 80IA of the Act. However, while excluding the impugned miscellaneous receipt, the assessee is eligible for deduction of the expenses incurred, if any, against such miscellaneous receipt. 90.4 With respect to the other income of Rs. 31,53,127/-, we find that no detail has been furnished by the assessee in support of his contention that such other revenue represents the income from the activity of power generation and power distribution. In the absence of any nexus, we do not find any reason to interfere in the finding of the learned CIT-A. Accordingly, we confirm the same. Hence, the ground of appeal of the assessee is partly allowed. 91. The next objection raised by the assessee vide ground no. 7 is that the learned CIT(A) erred in confirming the disallowance of deduction under section 80-IA of the Act for Rs. 1,18,67,206/- representing receipt of store billing charges. 92. The AO during the assessment proceedings found the assessee was in agreement with Ahmedabad Municipal Corporation for street light maintenance. In the process of maintenance services, the assessee also supplied material such as bulb, tube lights etc. on requirement basis. The cost of the same separately recovered by the assessee from the AMC and the same was included the profit of eligible business. The AO was of the view such receipts are not related the assessee’s eligible business of power distribution. Hence, the AO excluded the same from the computation of eligible profit under section 80-IA of the Act. 93. On appeal by the assessee, the learned CIT-A confirmed the finding of the AO by observing as under: ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 42 The Appellant has carried out street light maintenance activity for AMC for which various material charges in form of bulbs, tube lights are separately recovered from AMC. The AO has treated such income of Rs.1,18,67,2067- as income not eligible for deduction under Section 80-IA on the ground that as street light maintenance income is not held as eligible for deduction, such income also cannot be subject matter of deduction. On the other hand, Appellant has argued that such income is part of distribution services as contended while dealing with income relating to street light maintenance hence such income is eligible for deduction. However, this contention of Appellant cannot be accepted for the reasons given by undersigned while adjudicating issue of allowability of deduction under Section 80-IA on street light maintenance, supra. The Appellant has also contended that expenditure incurred for Rs. 99,24,9057-need to be allowed from above receipt. This claim was denied by AO on the ground that no supporting documents were submitted and even such details are not submitted in present Appellate Hearing hence alternate contention of taxing of net income cannot be allowed. 94. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us in the cross objection. 95. The learned AR before us conceded that the issue on hand is covered against the assessee by the order of this tribunal in own case of the assessee for A.Y. 2011-12 bearing CO No. 25/Ahd/2017. 96. On the other learned DR vehemently supported the order of the authorities below. 97. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that identical issue with respect to the eligibility of deduction of income from the activity of store billing charges came up before this tribunal in the own case of the assessee for AY 2011-12 in CO No. 25/Ahd/2017 where the issue has been decided against the assessee. The relevant finding of the Bench is extracted as under: 222.1 Before parting, we note that the AMC store billing activity of the assessee was not connected with the distribution of power. Therefore the same was not allowed by the learned CIT (A) while computing the deduction under section 80 IA of the Act. At the time of hearing the learned AR has not brought anything on record contrary to the finding of the learned CIT (A). 97.1 Before us, no material has been placed on record by the learned AR or DR to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, learned AR or DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 43 decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we hereby set aside the finding of the learned CIT(A). Thus, the ground of objection raised by the Assessee is hereby dismissed. 98. The next issue raised by the assessee in ground No. 8 and 9 of its CO is that the learned CIT-A erred in denying the benefit of deduction under section 80 IA of the Act with respect to certain incomes amounting to Rs. 4,60,516/-. 99. The assessee in the year under consideration has shown other income of Rs. 23,81,508 with respect to its different units. The details of the same stands as under: Particulars Amount (Rs.) A Surat Distribution 1 Income from shifting of services 328035 2. Refund against sales tax 141575 3. Capacitor Rent Recovery Charges 60473 4. Other Misc. Icome 147270 677353 B Bhiwandi Distribution 1 Excess provision of depreciation w/o 111198 111198 C SUGEN 1. Net Gain/(Loss) On Foreign Currency Transactions 1592957 1592957 TOTAL 2381508 99.1 However, the AO was of the view that such other income is not eligible for deduction under section 80IA of the Act as it has no nexus with the activity of power generation and power distribution carried out by the assessee. Thus, the AO disallowed the same and added to the total income of the assessee. 100. Aggrieved assessee preferred an appeal to the learned CIT-A who partly confirmed the order of the AO by observing as under: In view of binding decision of Hon'ble Gujarat High Court referred supra, it is held that Appellant is entitled for deduction under Section 80-IA on gain on foreign currency transaction for Rs.15,92,957. So far as income from shifting of services for Rs.3,28,025 is concerned AO ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 44 has already made separate addition hence disallowance under Section 80-IA made again is deleted. So far as other income being refund of sales tax, rent recovery charges, miscellaneous income and excess provision for depreciation written back are concerned, Appellant has not proved that such incomes are inextricably linked with business operations and even no details were submitted during the course of Assessment Proceedings hence addition made by AO to that extent is confirmed. 101. Being aggrieved by the order of the learned CIT-A, the assessee is in cross objection before us. 102. The learned AR before us contended that the other incomes are directly connected to the activity of power generation and distribution. Therefore, the same should be considered for the purpose of the deduction under section 80-IA of the Act. 103. On the other hand the learned DR vehemently supported the order of the authorities below. 104. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that both the lower authorities i.e. AO and learned CIT-A has given concurrent finding that the other income being refund against sales tax for Rs. 1,41,575, rent recovery charges of Rs. 60,475, other miscellaneous income of Rs. 1,47,270 and excess provision for depreciation written back of Rs. 1,11,198/- are directly linked with the activity of generation and distribution of power. It is the trite law that the income, which has direct nexus with the activity of power generation and power distribution carried out by the assessee, are eligible for deduction under section 80IA of the Act. In other words, there has to be proximity between the income shown by the assessee viz a viz income derived from the activity of eligible undertaking. The onus lies upon the assessee to establish such nexus. However, what we find is this that the assessee before us failed to establish such nexus. Therefore, we decline to interfere in the order of the authorities below. Hence, the ground of objection raised by the assessee is hereby dismissed. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 45 Now coming to the additional ground of objection raised by the assessee. 105. At the outset, we note that the learned AR for the assessee at the time of hearing submitted that he has been instructed not to press the issue raised by the assessee in additional ground nos. 1 and 2 of its objection. Hence, the same are dismissed accordingly as not pressed. 106. The assessee in the additional ground of objection bearing No. 3 has requested that the carbon credit of T321,68,86,818/-being capital receipt should not be taken into consideration while computing the book profit under the provisions of section 115JB of the Act. 107. At the outset, we note that the assessee vide letter dated 22-10-2021 has filed the additional ground of objection. It was pleaded by the assessee in the application filed for the admission of the additional ground of appeal that the issue raised in the additional ground of appeal goes to the root of the matter and the necessary facts are available on record. Accordingly, it was prayed by the learned AR for the assessee that the same should be admitted for adjudication. 108. On the other hand, the learned DR opposed to admit the additional ground of appeal on the reasoning that it was not raised before the authorities below. 109. We have heard both the parties and perused the materials available on record. The Hon’ble Supreme Court in the case of National Thermal Power Co. Limited vs. CIT, reported in 229 ITR 383, has held as under:- “ Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 46 Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 109.1 The view that the Tribunal is confined only to the issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from the facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 109.2 Since the claim of the assessee is purely legal claim and entire facts are available on records. Thus, it is not justified in not admitting the purely legal ground raised by the assessee for the first time. Hence, the additional ground of objection raised by the assessee is hereby admitted. 109.3 At the time of hearing, the learned AR on behalf of the assessee contended that the carbon credit being capital receipt should not be considered for the purpose of calculating the book profit under the provisions of section 115JB of the Act. The learned AR in support of his contention has relied on various orders submitted in the written submission filed by the assessee, which is available on record. 110. On the other hand, the learned DR could not controvert the argument advanced by the learned AR for the assessee. 111. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute to the fact that the amount received by the assessee on the sale of carbon credit of T 321,68,86,818/- is capital receipt not chargeable to tax under the normal computation of income. There are series of judgments wherein it has been held that once a receipt, which is not chargeable to tax, by its nature then the same cannot be subject to tax under the provisions of book profit as specified under section 115JB of the Act. In holding so, we draw support and guidance from the judgment ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 47 of Hon’ble Kolkata High Court in case of PCIT vs. Ankit Metal & Power Ltd. reported in 109 taxmann.com 93 where it was held as under: 27. In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital receipt' and does not fall within the definition of 'Income' under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under Section 115JB of the Act, 1961. In the case of AppolloTyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation under Section 115JB of the Income Tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961. 111.1 In view of the above we hold that the amount received by the assessee on the sale of carbon credit being capital in nature cannot be made subject to tax under the provisions of MAT as specified under section 115 JB of the Act. Hence, the additional ground of appeal of the assessee is hereby allowed. 112. In the result, the cross objection of the assessee is hereby partly allowed. Coming to ITA No. 2047/Ahd/2018 an appeal by the Revenue for A.Y. 2013-14 113. The Revenue has raised the following grounds of appeal: 1) "that the Ld. CIT (A) has erred in law and on the facts in treating the income from sale of CERs ascapital receipt and deleting the Disallowance of CERs of Rs.41,45,02,512/- 2)that the Ld. CIT (A) has erred in law and on the facts in deleting the additions made while making certain adjustments from the profits of the eligible unite while computing the deduction u/s. 80IA of the l.T. Act as under:. (a) that the Ld. CIT (A) has erred in taw and on the facts in deleting the addition made on account of interest on delayed payment to customers on sale amounting to Rs. 3,49.84,75/- and delayed payment charges of Rs. 6,09,84,470/-. (b) that the Ld. CIT (A) has erred in law and on the facts in deleting the addition made on account of late delivery payment of Rs.11,30,229,/- and supplier's discount and penalty of Rs.1,06,07,952/-. (c) that the Ld. CIT (A) has erred in law and on the facts in deleting, the addition made on account of miscellenaneous receipts of Scrap Sales of Rs. 2,42,03,238;- (d) that the Ld. CIT (A) has erred in law and on the facts in deleting the addition made on account of UI(Unscnednted Interchange) Income of Rs.3,66,81,586/- (e) that the Ld. CIT (A) has erred in law and on the facts in deleting the addition made on account of Meter fixing fees of Rs.41,5l,680/- ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 48 (f) that the Ld. CIT (A) has erred in law and on the facts In deleting the addition of Income –from Shifting of services of Us. 33,81 329/- (g) that the Ld. CIT (A) has erred in law and on the facts in deleting the addition made on account of Liquidated, damage of Rs.4,32,144/- (h) that the Ld. CIT (A) has erred in law and on the facts in deleting addition made on discount of (Jain on foreign currency transaction of Rs.56, 56,459/- 3) that the Ld. CIT (A) has erred in law and on the facts in deleting the addition made on account of disallowance u/s. 14A r.w r 8D of the l.T. Act of Rs.7,82,31,933/- 4) that the Id. CIT (A) has erred in law and on the facts in deleting the addition made, on account of disallowance of interest expenditure made on account of diversion of borrowed funds for making interest free advances to subsidiary companies of Rs.7,49,50,542/- 5) that the Ld.CIT(A) has erred in law and on the facts in deleting the addition made on account of disallowing deductions claimed by the assessee company u/s.80G of Rs.25,00,000/- and u/s.80GGB of Rs.3,50,00,000/- 6) that the Ld.CIT(A) has erred in law and on the facts in deleting the addition to Book Profit u/s.14A r.w.r. 8D of the Act of Rs.10,79,29,887/- 114. The first issue raised by the Revenue vide ground No. 1 of its appeal is that the learned CIT-(A) erred in treating income on sale of certified emission Reduction for Rs. 41,45,02,512/- as capital receipt. 115. At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2013-14is identical to the issues raised by the Revenue in ITA No. 14/AHD/2018 for the assessment year 2012-13. Therefore, the findings given in ITA No. 14/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 10 of this order against the Revenue. At the time of hearing, the learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 116. The next issue raised by the Revenue in ground No. 2of its appeal is that the learned CIT (A) erred in allowing the deduction claimed by the assessee under section 80- IA of the Act with respect to certain incomes which are not eligible for deduction under section 80IA of the Act. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 49 117. At the outset, the breakup of the other income raised in the ground of appeal stand as under: S.Nos. Heads of income Amount 1. Interest from customer on delayed payment Rs. 3,49,84,075/- 2. Delayed payment charges from customer Rs. 6,09,84,470/- 3. Income from shifting services Rs. 33,88,329/- 4. Liquidation damages Rs. 4,32,144/- 5. Misc. Income on sale of scrap Rs. 2,42,03,238/- 6. Supplier discount and penalty Rs. 1,06,07,470/- 7. Late delivery payment Rs. 11,30,229/- 8. Unscheduled interchange income Rs. 3,66,81,586/- 9. Meter fixing fee Rs. 41,51,680/- 10. Gain on foreign currency exchange Rs. 56,56,459/- 118. The items of income in serial No. 1 to5 were also there in the appeal of the revenue pertaining to the assessment year 2012-13 in ITA No. 14/AHD/2018. Therefore, the findings given in ITA No. 14/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 13 to 26 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the grounds of appeal filed by the Revenue to the extent above stated item nos. 1 to 5 are hereby dismissed. 118.1 However, we note that the items of income mentionedat serial numbers 6 to 10were raised by the revenue 1 st time and therefore they need to be dealt and adjudicated separately. Accordingly, we take up the issues in seriatim as detailed below: Supplier discount and penalty &Late delivery payment: Rs. 1,06,07,470/- &Rs. 11,30,229/- ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 50 119. The assessee during the year has shown receipt of Rs. 1,06,07,470/- and Rs. 11,30,229/- as supplier discount and late delivery payment respectively and same was claimed as eligible income for deduction under section 80IA of the Act. The assessee during the assessment proceeding submitted that it gets discount @ 2% on prompt/timely payment made to GETCO (Gujarat Electricity Transmission Corporation) which is shown under the head supplier discount. Likewise, it also received an amounts of Rs. 11,30,229/- from the suppliers because of late delivery/supply of materials. Thus, both these receipt, ultimately reduced the purchase cost/distribution cost. 119.1 However, the AO disagreed with the submission of the assessee and held that the said receipt is not derived from the activity of power distribution activity as the same has no direct nexus with eligible activity of power distribution. Hence, the AO excluded the receipt of Rs. 1,06,07,470/- &Rs. 11,30,229/- from the income eligible for deduction under section 80IA of the Act. 120. On appeal by the assessee, the learned CIT-A deleted the disallowance of deduction made by the AO by observing as under: “On careful consideration of the entire facts, it is observed the income in form of late delivery payment is inextricably linked with purchase cost of eligible unit and it reduces the cost incurred by appellant. Similarly, Supplier’s Discount and Penalty is nothing but reduction of purchase cost made by appellant as it is towards prompt payment of transaction charges. Hon’ble Delhi High Court in case of BSNL [73 taxmann.com 98] has held as under: Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings (Telecommunication services) - Assessment years 2004-05 to 2008-09 - Assessee was engaged in business of providing telecommunication services - It claimed deduction under section 80-IA in respect of profits and gains derived from following six items: extraordinary items, refund from universal service fund, interest from others, liquidated damages, excess provision written back and others including sale of directories, publications, form, waster paper, etc. - Assessing Officer held that in terms of provisions of sub-section (2A) of section 80-IA profits and gains derived from above six items could not be said to be derived from eligible business of assessee and accordingly disallowed claim for deduction - Tribunal held that first degree nexus implicit in words 'derived from' used in section 80-IA(1) was not required for computation of deduction in case of undertaking engaged in providing telecommunication services, since words 'derived from' did not occur in sub-section (2A) of section 80-IA - It accordingly allowed assessee's claim for deduction under section 80-IA - Whether Tribunal was justified in its view - Held, yes [Paras 6 and 14] [In favour of appellant] ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 51 Similar view is taken by Hon’ble MP High Court in the case of CIT vs Prakash Oils Ltd dated 08.03.2011 [58 DTR 279] in case of Late delivery payment charges. Hon’ble Gujarat High Court in the case of CIT vs Metrochem Industries Ltd. [[2017] 79 taxmann.com 440 has also allowed deduction u/s 80IA on Kasar and discount which is similar in nature of Supplier’s Discount and Penalty as discussed herein above. I find the deduction on these items were allowed in the earlier years in appellant’s own case by the CIT(A). Facts of the case continue to be the same. In this view the matter and also relying upon decisions referred supra, the Assessing Officer is directed to allow deduction u/s 80IA on Late delivery payment of Rs.11,30,229 and Supplier’s Discount and Penalty for Rs. 1,06,07,982/-. Related grounds of appeal is allowed.” 121. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 122. The learned DR before us contended that the said income are not having direct nexus with the eligible business of the assessee. As such the above said receipt are only incidental to the activity of the assessee. Hence same cannot be allowed for deduction. 123. On the hand the learned AR before us contended that impugned incomes are directly connected to the activity of power generation and distribution. Therefore, the same should be considered for the purpose of the deduction under section 80 IA of the Act. 124. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee in connection with the purchases made by the eligible unit received the certain amount from the supplier on late delivery/supply of material. Thus, it appears that such receipt has direct link from the activity of generation and distribution of power. Besides the above, if the assessee reduces the cost of material purchase by the amount of late delivery charges, there would not have been any question of showing the impugned income and consequently denying the deduction claimed by the assessee under section 80 IA of the Act. It is just a manner of presentation of the income and expense. As such, the assessee has represented the late delivery charges separately as income instead of reducing the cost. Admittedly, the corresponding expenses i.e. material purchases has been allowed as deduction against the income from generation and distribution of power. Thus,it has a live link with the activity of the assessee. Accordingly, we hold that the assessee is eligible for deduction on such receipt of late delivery charges. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 52 124.1 Moving forward, the supplier discount and penalty fetched by the assessee because of quick payment made to GETCO has direct link with the activity of the assessee being distribution of power. Similarly, the amount of discount received by the assessee has presented in the financial statement in a different format. As such, the assessee instead of showing such discount income as a separate items income, it could have adjusted such receipt against the payment made to GETCO. In such an event, there would not have been any question of showing the impugned income and consequently for disallowing the deduction claimed by the assessee under the provisions of section 80 IA of the Act. Accordingly, we hold that the assessee is eligible for deduction on such discount. Unscheduled interchange income Rs. 3,66,81,586/- 125. The AO during the assessment proceedings found that the assessee claimed deduction under section 80IA of the Act on the amount of Rs. 3,66,81,586/- being unscheduled interchange income. The AO further found that such receipt was in the nature of penalty levied on the buyer on account of over drawing of the power. Therefore, the AO was of view that such receipt was not having direct link with activity of power distribution. As such, the same is mere incidental to the activity of the assessee and such incidental receipt cannot be allowed as deduction under section 80IA of the Act in view of precedent laid down by the Hon’ble Supreme Court in case of Pandian Chemicals Ltd reported 262 ITR 278. Hence, the AO excluded such receipt from the income eligible for deduction under section 80IA of the Act. 126. On appeal by the assessee, the learned CIT-A deleted the disallowances of deduction made by the AO by observing as under: “On careful consideration of the facts stated above, it is observed that this UI income is nothing but the sale consideration for excess supply of electricity through Gujarat Energy Transmission Corporation (GETCO). As explained earlier many a times the transmitter transmits excess electricity than the quantity billed. Appellant does not come to know about it since the monitoring of such excess or short fall is managed by the mediator which is GETCO itself. When there is short fall appellant is charged and such expense are claimed by the appellant from the respective unit. Such short fall or excess is essentially part of the sales the only difference from the normal trading activity is that, in this case appellant has to supply the electricity to its client through GETCO and the details of such short fall and excesses are maintained by GETCO and the appellant is billed periodically. Considering these facts, it is clear that the activity being part of sale of electricity the income thereon has direct and proximate link with the core activity of the appellant. Accordingly, the claim of ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 53 deduction u/s 80IA of the Act made by Appellant for UI income for Rs. 3,66,81,586 is allowed. Related ground of appeal is allowed.” 127. The learned DR before us contended that the said income is not having direct nexus with the eligible business of the assessee. As such, the above said receipt is only incidental to the activity of the assessee. Hence, same cannot be allowed for deduction. 128. On the hand, the learned AR before us contended that impugned incomes are directly connected to the activity of power generation and distribution. Therefore, the same should be considered for the purpose of the deduction under section 80 IA of the Act. 129. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, wenote that in the process of supply of electricity through GETCO, sometimes there were excess or short transmission of electricity to customer than the billed unit. On such excess transmission of electricity, the assessee charged consideration. Thus, it appears that such receipt has direct link from the activity generation and distribution of power as it is charged on the excess supply of power. In our considered view, such receipt is part parcel to the sales made by the assessee. Accordingly, we hold that the assessee is eligible for deduction on such discount. Meter fixing fee: Rs. 41,51,680/- 130. The assessee during the year has shown receipt of Rs. 41,51,680/- from meter fixing services provided to the customer and claimed the same as income eligible for deduction under section 80IA of the Act. However, the AO was of the view that such services provided to the customer are not interlinked with the power distribution activity. As such, the impugned receipt do not contain any element of generation or distribution of power. Thus, the AO excluded the same from the eligible profit. 131. On appeal by the assessee, the learned CIT-A deleted the disallowances of deduction made by the AO by observing as under: “On careful consideration of the facts stated above, it is observed that work of distribution of electricity is impossible without fixing of meters. Also, the amount of electricity consumed by customer can only be measured through meters. Hence, the revenue from the distribution activity is directly dependent upon the meters. Therefore, meter fixing testing and fault attending activities are ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 54 an inevitable part of distribution activity of the Appellant. Considering these facts, it is held that Meter fixing Fees, Testing Fees, Fault attending fees, etc. are inextricably linked to the distribution business of the Appellant and has direct and proximate link with the eligible activity, hence it is eligible for claiming deduction u/s 80IA of the Act. It is also observed that even in case of Appellant my predecessor CIT(A) has consistently allowed meter shifting charges as eligible for deduction under Section 80-IA and nature of income remains the same, therefore, hence the claim of deduction u/s 80IA of the Act made by Appellant on Meter fixing Fees, Testing Fees, etc. for Rs. 41,51,680/- is allowed. Related ground of appeal is allowed.” 132. The learned DR before us contended that the said income is not having direct nexus with the eligible business of the assessee. As such, the above said receipt is only incidental to the activity of the assessee. Hence, same cannot be allowed as deduction. 133. On the hand, the learned AR before us contended that impugned incomes are directly connected to the activity of power generation and distribution. Therefore, the same should be considered for the purpose of the deduction under section 80 IA of the Act. 134. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee was in receipt of an amount of Rs. 41,51,680/- from the meter fixing services, testing fee, fault attending fee etc. The AO held that the such receipts are not derived from the activity of the generation or distribution of power. At the outset, we note that electricity to the end customer cannot made available to the customer without fixing meter. Further, meter is necessary for measurement of unit supplied to particular customer and based on which bills are issued. Thus, in our considered opinion meter fixing services has direct link with the activity of distribution of power. Therefore, the assessee is eligible for deduction under section 80IA of the Act on such receipt. Gain on foreign currency exchange: Rs. 56,56,459/- 135. The assessee claimed gain of Rs. 56,56,459/- on account of foreign currency fluctuation as income eligible for deduction under section 80IA of the Act for its Surat Generation unit. The assessee in support of its claim submitted that such currency fluctuation gain arises because of import of material, natural gas and equipment used for the purpose of generation of power in Surat Generation unit. Hence, the impugned gain of ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 55 currency fluctuation has direct nexus with the activity of power generation. Therefore, the same is eligible for deduction under section 80IA of the Act. The assessee in support of its contention also referred to various case laws. 135.1 However, the AO disagreed with the claim of the assessee. The AO found that the loss/gain arising from the receipt or payment of foreign currency has nothing to do with business activity of the assessee. Such gain or loss is purely based on market condition of the particular currency, which is not in the control of the assessee. Further, such gain or loss recognized in the books separately from sale or purchases is as per the disclosure requirement made under the accounting standard 11 issued by the ICAI. The AO further found that deduction under section 80IA is eligible to the assessee only for the income derived from the eligible business i.e. generation or distribution of power but the gain on currency rate fluctuation is not derived from the eligible business. Hence, the AO excluded the same from the computation of eligible income under section 80IA of the Act. 136. On appeal by the assessee, the learned CIT(A) deleted the disallowance made by the AO by observing as under: “The Appellant has mainly argued that gain on foreign exchange transaction relates to exchange rate fluctuation relating to material imported, equipment purchased and supply of natural gas for generation of electricity. The Appellant has mainly relied upon decisions of Hon'ble Gujarat High Court in the case of Deverson Industries Limited 55 taxman.com 189, Metrochem Industries Limited 79 taxrnan.com 440. It is observed that the facts are similar to A.Y. 2012-13 in whichmy predecessor CIT(A) has held as under: “5.9.3 The submission is considered. It is observed that Appellant has explained the nature of gain on foreign currency transactions during Assessment Proceedings hence AO is not correct in holding that such details were not submitted. So far as merits of the case is concerned, it is observed that gain on foreign exchange fluctuation is on account of different rates of exchange on the dates of transactions and the rate of exchange on the balance sheet date or settlement or liability which is nothing but revenue in nature and directly related to business operations carried out by industrial undertaking. In this connection, reliance is placed on the following decisions of Hon’ble Gujarat High Court: (i) CIT vs Deversons Industries Ltd. [[2015] 55 taxmann.com 189] dated 18.12.2014: “Section 80-IA of the Income-tax Act, 1961 – Deductions – Profits and gains from infrastructure undertakings (Computation of deductions) – Assessment years 1995-96 to 2000-01 – Appellant firm was engaged in business of manufacturing and sale of dyes – Whether while computing deduction under section n80-IA, exchange rate difference should be treated to be derived ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 56 from industrial undertaking whereas duty drawback should not be treated as delivered from Industrial Undertaking – Held, yes [Para 7] [Partly in favour of appellant]” (ii) CIT vs Metrochem Industries Ltd [[2017] 79 taxmann.com 440] dated 19.07.2016 “II Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings (Computation of deduction) - Assessment years 1994-95, 1996-97 and 1997-98 - Foreign exchange fluctuation and duty drawback is an income derived from industrial undertaking, eligible for deduction under sections 80-I and 80-IA [In favour of assessee]” In view of binding decision of Hon’ble Gujarat High Court referred supra, it is held that Appellant is entitled for deduction under Section 80-IA on gain on foreign currency transaction for Rs. 15,92,957.” Facts on the case continue to be same and also respectfully relying upon the judgment of jurisdictional High Court as above and following the decisions of my predecessor CIT(A), deduction under Section 80-IA towards Gain on Foreign currency transaction for Rs. 56,56,469 is allowed. Related ground of appeal is allowed.” 137. The learned DR before us contended that the said income does not have direct nexus with the eligible business of the assessee. As such, the above said receipt is only incidental to the activity of the assessee. Hence same cannot be allowed for deduction under section 80IA of the Act. 138. On the hand, the learned AR before us contended that impugned incomes are directly connected to the unit of power generation and distribution. Therefore, the same should be considered for the purpose of the deduction under section 80 IA of the Act. 139. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, wenote that gain on account of foreign currency rate fluctuation arises to the assessee on the outstanding liability against import of materials, equipment and natural gas utilized in generation of power. Such gain was treated as income not derived from the eligible business activity by the AO. However, on appeal the learned CIT-A was pleased to allowed the plea of the assessee that such income is derived from the eligible business. 139.1 From the preceding discussion we note that impugned gain of foreign currency rate fluctuation arises on import of material, equipment and natural gas which were utilized in generation of power. Thus, the same has direct and live nexus with the eligible business. At ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 57 this point, we also referred the judgment of Hon’ble Gujarat High Court in case of CIT vs. Deverson Industries Ltd. reported in 55 taxmann.com 440 where it was held as under: 5. So far as question regarding foreign exchange difference is concerned, the same is squarely governed by the decision of this Court in the case of CIT v. Priyanka Gems [2014] 367 ITR 575/51 taxmann.com 259 (Guj.) wherein this Court has answered the question in favour of the assessee and held that that the foreign exchange gain arising out of the fluctuation in the rate of foreign exchange cannot be divested from the export business of the assessee and once export is made, due to variety of reasons, the remission of the export sale consideration may not be made immediately and that all foreign currencies received by the assessee need not be converted into Indian Rupees on the last date of the accounting period. 139.2 The above case law is in relation to export business whereas the case on hand of the appellant assessee has made import of materials and equipment for the eligible unit. But the principle laid down by the Hon’ble Court in the case cited above is squarely applicable in the case on hand. Thus, in view of the above, the ground of appeal of the Revenue is hereby dismissed. 140. The next issue raised by the Revenue in ground No. 3of its appeal is that the learned CIT (A) erred in deleting the addition made under section 14A r.w.r 8D of Income Tax Rule for Rs. 7,82,31,933/- only. 141. At the outset, we note that the issues raised by the revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 14/AHD/2018 for the assessment year 2012-13. Therefore, the findings given in ITA No. 14/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 39 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied in the year under consideration i.e. AY 2013-14. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 142. The next issue raised by the Revenue in ground No. 4of its appeal is that the learned CIT (A) erred in deleting the disallowance of diversion of interest bearing fund for Rs. 7,49,50,542/-. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 58 143. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 14/AHD/2018 for the assessment year 2012-13. Therefore, the findings given in ITA No. 14/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 45 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 144. The next issue raised by the Revenue in ground No. 5 of its appeal is that the learned CIT (A) erred in deleting the disallowance of deduction claimed under section 80G and 80GGB of the Act. 145. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 14/AHD/2018 for the assessment year 2012-13. Therefore, the findings given in ITA No. 14/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 32 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 146. The next issue raised by the Revenue in ground No. 6of its appeal is that the learned CIT (A) erred in deleting the addition made to the books profit u/s 115JB of the Act by the amount of Rs. 10,79,29,887/- being disallowance under section 14A read with rule 8D of Income Tax Rules. 147. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 59 14/AHD/2018 for the assessment year 2012-13. Therefore, the findings given in ITA No. 14/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 51 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 148. In the Result the appeal file by the Revenue is dismissed. Coming to CO No. 120/Ahd/2019 by the assessee in ITA No. 2047/Ahd/2018 for A.Y. 2013-14. 149. The assessee has raised the following grounds of objection: 1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in denying deduction u/s 80IA of the Act on interest income on deposits amounting to Rs. 56,07,267/- Act when no such denial is called for. 1.1 On the facts and in the circumstances of the case, the learned CIT(A) ought to have appreciated that as there is net interest expenditure in industrial undertaking eligible for deduction u/s 80IA, such deduction cannot be denied on gross interest income in view of binding decision of Hon'ble Gujarat High court in the case of K. Khodidas Patel Specific Family Trust v/s. ACIT dated 11.11.2014 [Tax Appeal No. 316 of 2001 and CIT v/s. RameshchandraS.Patel dated 03.12.2013 [Tax Appeal No. 663 of 2006]: 2. On the facts and in the circumstances of the case, the learned CIT(A)' has erred in denying deduction u/s.80-IA of the IT. Act on the other miscellaneous receipts of Rs. 1,28,50 , 949/-. Comprising of following items without appreciating the fact that such income is inextricably connected with industrial undertaking eligible for such deduction. Particulars Amount (in Rs.) Incentive Income-Collection 16,42,702/- Invoice TCD Income 24,01,431/- GSPL Credit for the period 83,42, 041/- Congestion Charges Payment 1,53,052/- Recovery from Vendors towards Contractual obligation 1,82,000/- Refund of excess demurrage charges 47,000/- Transport Recovery from employees 42,202/- ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 60 Other Misc. Income 40,521/- Total Miscellaneous Income 1,28,50,949/- 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the finding of the learned Assessing Officer under section 36(1 )(va) of the Act for Rs. 47,874/- on account of late payment of ESIC, hence no such disallowance is called for. 4. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of cross objections either before or during the course of hearing of the same. 149.1 The assessee also filed additional grounds of objection vide letter dated 22-10-2021 which are as under: Appellant craves leave to raise this additional ground of Cross Objections before the Hon'ble ITAT. This is legal ground and therefore, as per the decision of Hon'ble Supreme court in the case of National Thermal Power (229 ITR 383), it can be raised before the Hon'ble ITAT. In view of the above, the appellant hereby raises following ground as additional ground of Cross Objections, which is without prejudice to the grounds raised by the appellant while filing appeal in Form 36A. "1. Without prejudice to all the grounds raised, in law and in the facts and circumstances of the appellant's case, the appellant requests for admission of its additional claim and for allowing the reduction of its Book Profit u/s. 115JB of the Act by Rs. 23,80,78,403/-, being Debenture Redemption Reserve created during the year, as per the settled legal precedents. In view of the above, the additional ground raised may kindly be admitted in view of natural justice to the appellant. 150. The first objection raised by the assessee vide ground no. 1 is that the learned CIT(A) erred in sustaining the disallowances of deduction under section 80-IA of the Act for Rs. 56,07,267/- on account of FD interest income. 151. At the outset, we note that the issues raised by the assessee in its grounds of cross objection for the A.Y. 2013-14 are identical to the issues raised by the assessee in CO No. 41/AHD/2019 for the assessment year 2012-13. Therefore, the findings given in CO No. 41/AHD/2019 shall also be applicable for the year under consideration i.e. AY 2013-14. The objection of the assessee for the assessment 2012-13 has been decided by us vide paragraph No. 76 to 76.1 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of cross objection filed by the assessee is hereby dismissed. ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 61 152. The next objection raised by the assessee vide ground no. 2 is that the learned CIT(A) erred in sustaining the disallowance of deduction under section 80-IA of the Act for Rs.1,28,50,949/- representing the miscellaneous receipts. 153. At the outset, we note that the issues raised by the assessee in its grounds of cross objection for the A.Y. 2013-14 are identical to the issues raised by the assessee in CO No. 41/AHD/2019 for the assessment year 2012-13. Therefore, the findings given in CO No. 41/AHD/2019 shall also be applicable for the year under consideration i.e. AY 2013-14. The objection of the assessee for the assessment 2012-13 has been decided by us vide paragraph No. 92 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of cross objection filed by the assessee is hereby partly allowed. 154. The next objection raised by the assessee vide ground no. 3 is that the learned CIT(A) erred in sustaining the addition of employee’s contribution to ESIC on account of late deposit. 155. At the outset, we note that the issues raised by the assessee in its grounds of cross objection is covered against the assessee by the order of the Hon’ble Jurisdictional High Court in case of GSRTC reported in 366 ITR 170. Thus, respectfully following the same the ground of objection raised by the assessee is hereby dismissed. Now coming to additional grounds of objection 156. At the outset, we note that the learned AR for the assessee at the time of hearing submitted that he has been instructed not to press the issue raised by it (the assessee) in ground Nos. 1 and 2 of additional grounds of objection. Hence the same are dismissed accordingly as not pressed. 157. The assessee in the additional ground of objection bearing No. 3 has requested that the carbon credit of T 41,45,02,512/- being capital receipt should not be taken into ITA nos.14 & 2047/AHD/2018 With C.O.No.41 & 120/Ahd/2019 A.Ys. 2012-13 & 2013-14 62 consideration while computing the book profit under the provisions of section 115JB of the Act. 158. At the outset, we note that the issues raised by the assessee in its additional grounds of cross objection for the A.Y. 2013-14 are identical to the issues raised by the assessee in CO No. 41/AHD/2019 for the assessment year 2012-13. Therefore, the findings given in CO No. 41/AHD/2019 shall also be applicable for the year under consideration i.e. AY 2013-14. The objection of the assessee for the assessment 2012-13 has been decided by us vide paragraph No. 111 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of cross objection filed by the assessee is hereby allowed. 159. In the combined results, both the appeal filed by the Revenue are dismissed and CO’s filed by the assessee are partly allowed whereas the additional grounds filed by the assessee in the COs are also partly allowed. Order pronounced in the Court on 28/12/2022 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 28/12/2022 Manish/Tanmay TRUE COPY आदेशक त ल प े षत/Copy of the Order forwarded to : आदेशान ु सार/BY ORDER, उप/सहायकपंजीकार ( Dy./Asstt.Registrar) आयकरअपील यअ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धतआयकरआय ु त/ Concerned CIT 4. आयकरआय ु त(अपील) / The CIT(A) 5. !वभागीय $त$न ध, आयकरअपील यअ धकरण/ DR, ITAT, 6. गाड&फाईल / Guard file.