Adani Power Ltd, Ahmedabad V. The DCIT, Circle-1(1)(1), Ahmedabad

CO 7/AHD/2021

AI Insights

The case involves multiple appeals by the Revenue and the Assessee, Adani Power Ltd, concerning various disallowances and adjustments made by the Assessing Officer (AO) under the Income Tax Act. The main issues revolved around transfer pricing adjustments, disallowance of depreciation on leasehold land and other assets, and disallowance under Section 14A related to exempt income. The Tribunal examined each issue in light of the submissions, evidence presented, and relevant legal precedents, including previous judgments by the Supreme Court and other High Courts. The Tribunal's decision reflects a detailed analysis of the legal provisions and the factual matrix of the case, leading to a balanced resolution of the disputes.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114320 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 24-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 04-02-2021
• Other Referred Cases: Kalpataru Power Transmission Ltd. vs. DCIT, Soma Textile & Industries Ltd. vs. DCIT, Cotton Naturals (I) (P.) Ltd. vs. PCIT, Godrej & Boyce Manufacturing Co. Ltd. vs. Dy. CIT & Anr., Essar Teleholdings Ltd. vs. CIT, Maxopp Investment Ltd. vs. CIT, Sayaji Iron & Engg Co vs. CIT, Adani Gas Limited vs. DCIT, Adani Wilmar Limited vs. DCIT, Torrent Cable vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEES MW THERMAL POWER STATION COMMISSIONED
• Keywords: Depreciation; Transfer pricing; Earning of tax free income; Revenue expenditure; Rule 8D; Set aside
• Section: 144; 14A; 115JB; 37(1); 48; 101; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The DCIT, Circle-1(1)(1), Ahmedabad (Appellant) Vs Adani Power Ltd., Adani House, Nr. Mithakhali Six Road, Navrangpura, Ahmedabad PAN: AABCA2957L (Respondent) Adani Power Ltd., Adani House, Nr. Mithakhali Six Road, Navrangpura, Ahmedabad PAN: AABCA2957L (Appellant) Vs The DCIT, Circle-1(1)(1), Ahmedabad (Respondent) Assessee Represented: Shri Vartik Choksi & Shri Dhrunal Bhatt, A.R. Revenue Represented: Shri Aarsi Prasad, CIT-DR Date of hearing : 25-07-2023 Date of pronouncement : 29-09-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- ITA Nos: 284, 333, 334, 522 & 543/Ahd/2020 Assessment Years: 2012-13 to 2016-17 ITA Nos: 313, 314 & 372/Ahd/2020 & C.O. Nos. 07 & 08/Ahd/2021 Assessment Years: 2012-13 to 2016-17 I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 2 These cross appeals are filed by the Revenue and the Assessee and Cross Objections filed by the assessee are as follows: ITA No. Asst. Yrs. CIT(A) order dated Filed by Time Barred by 284/A/2020 2012-13 31-01-2020 Revenue 59 days 313/A/2020 2012-13 31-01-2020 Assessee 71 days 333/A/2020 2013-14 11-02-2020 Revenue 60 days 314/A/2020 2013-14 11-02-2020 Assessee 59 days 334/A/2020 2014-15 25-03-2020 Revenue 31 days 372/A/2020 2014-15 25-03-2020 Assessee 45 days 522/A/2020 2015-16 28-08-2020 Revenue No delay C.O. 7/A/21 2015-16 28-08-2020 Assessee No delay 543/A/2020 2016-17 21-09-2020 Revenue No delay C.O. 8/A/21 2016-17 21-09-2020 Assessee No delay 2. The Registry has noted that there is delay in filing the above appeals as stated in the above table. These appeals are filed by the Revenue and Assessee during June, 2020 which period falls under COVID-19 Pandemic situation, thus following Hon’ble Supreme Court judgment dated 23.9.2021 in M.A. No. 665 of 2021 in suo- moto Writ Petition (Civil) No.3 of 2020, the Hon’ble Supreme Court has excluded time limit for filing appeal from 15.3.2020 till 02.10.2021. Thus, there is no delay in filing the above appeals and we take up all the appeals for adjudication. 3. We take Assessment Year 2012-13 as the lead case. The Grounds of Appeal raised by the Revenue in ITA No. 284/Ahd/ 2020 for A.Y. 2012-13 reads as under: I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 3 (1) The CIT(A) has erred in law and in facts in restricting the transfer pricing adjustment of Rs. 18,84,29,994/- to Rs.7,38,23,348/-. (2) The CIT(A) has erred in law and in facts in deleting the addition of Rs.23,23,742/- made u/s 35D of the Act on account of share issue expenses. (3) The CIT(A) has erred in law and in facts in deleting the addition of Rs.10,34,40,606/- made on account of disallowance of depreciation of lease hold land. (4) The CIT(A) has erred in law and in facts in restricting the Section 14A disallowance of Rs.15.09.01,219/- to Rs. 11,55,681/- under the general provisions. (5) The CIT(A) has erred in law and in facts in deleting the Section 115JB adjustment of Rs. 15,09,01,219/-. (6) The CIT(A) has erred in law and in facts in deleting the depreciation disallowance of Rs.2,32,47,992/-. (7) The CIT(A) has erred in law and in facts in deleting the disallowance of Rs.1,16,90,000/- on account of travelling expenses. (8) It is, therefore, prayed that the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored. 4. The Grounds of Appeal raised by the Assessee in ITA No. 313/ Ahd/2020 for A.Y. 2012-13 reads as under: 1. On the facts and circumstances of the case, the Ld.CIT(A) erred in confirming the addition to the extent of Rs.7,38,23,348/- from out of the total addition of Rs.18,84,29,994/- made by the Assessing Officer by way of adjustment in Arm's Length Price of international transactions on the basis of order of the Transfer Pricing Officer. 2. On the facts and circumstances of the case, the Ld.CIT(A) erred in confirming the disallowance to the extent of Rs.92,66,513/- from out of total disallowance of Rs.1,15,90,255/ made by the Assessing Officer from out of the deduction claimed by the appellant company u/s.35D of the IT Act. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 4 3. On the facts and circumstances of the case, the Ld.CIT(A) erred in confirming the disallowance to the extent of Rs.34,63,248/- from out of total disallowance of Rs.4,14,26,852/- made by the Assessing Officer from out of additional claim for deduction made by the appellant company u/s.35D of the IT Act. 4.On the facts and circumstances of the case, the Ld.CIT(A) erred in confirming the addition of Rs.2,64,48,471/- made by the Assessing Officer by bringing to the charge of tax the aforesaid interest income which was capitalized in the books of account of the appellant company under the head "Work-in-Progress". 5. On the facts and circumstances of the case, the Ld.CIT(A) erred in confirming the disallowance to the extent of Rs.11,55,681/- from out of total disallowance of Rs.15,09,01,219/- made by the Assessing Officer u/s.14A of the IT Act read with Rule 8D of the IT Rules. 6. On the facts and circumstances of the case, the Ld.CIT(A) erred in confirming the disallowance of depreciation of Rs.53,466/- made by the Assessing Officer on the assumption that the appellant company claimed excess depreciation @ 15% on certain assets instead of 10%. 7. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 5. The Grounds raised by the Assessee in C.O. No.7/Ahd/2021 for A.Y. 2015-16 reads as under: 1 On the facts and circumstances of the case, the Ld. CIT(A) erred in confirming the disallowance of depreciation of Rs.32,834/- made by the Assessing Officer on the assumption that the appellant company claimed excess depreciation @ 15% on certain assets instead of 10%. 2. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 6. The Grounds raised by the Assessee in C.O. No.8/Ahd/2021 for A.Y. 2016-17 reads as under: I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 5 1 On the facts and circumstances of the case, the Ld. CIT(A) erred in confirming disallowance u/s 14A at Rs.1,87,053./- He ought to have deleted entire disallowance made by AO in assessment order. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in confirming the disallowance of depreciation of Rs.27,909/- made by the Assessing Officer on the assumption that the appellant company claimed excess depreciation @ 15% on certain assets instead of 10%. 3. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 7. The issues/grounds filed by the Revenue before us are summarized as follows: No Department Grounds ITA 284/A/20 A.Y. 2012-13 ITA 333/A/20 A.Y.2013-14 ITA 334/A/20 A.Y.2014-15 ITA 522/A/20 A.Y.2015-16 ITA 543/A/20 A.Y.2016-17 No . Particulars Gr.Nos./Amoun ts (in lacs) Gr.Nos./Amou nts (in lacs) Gr.Nos./Amou nts(in lacs) Gr.Nos./Amount s(in lacs) Gr.Nos./Amoun ts(in lacs) 1 T P Adjustment 1 11.46 lacs 1 5.03 lacs 1 0.23 lacs 1 1.32 lacs - - 2 Disallowance u/s 35D 2 0.23 lacs 2 0.23 lacs - - 2 0.13 lacs - - 3 Depreciation on leasehold land 3 10.34 lacs 3 9.91 lacs - - - - - - 4 Disallowance u/s. 14A Rule 8D 4 14.97 lacs 4 45.45 lacs 2 77.11 lacs 3 56.42 lacs 1 84.06 lacs 5 Adjustment to book profit w.r.t. 14A 5 15.09 lacs 5 45.45 lacs 3 77.11 lacs 4 55.42 lacs - - 6 Excess depreciation 6 2.32 lacs 6 5.02 lacs 4 5.80 lacs - - - - 7 Travelling Exp disallowed 7 1.16 lacs 7 1.24 lacs 5 1.39 lacs 5 1.64 lacs 2 77.37 lacs 7.1. The issues/grounds filed by the Assessee before us are summarized as follows: I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 6 No Assessee’s Grounds ITA 313/A/20 A.Y. 2012-13 ITA 314/A/20 A.Y.2013-14 ITA 372/A/20 A.Y.2014-15 C.O. 7/A/21 A.Y.2015-16 C.O. 8/A/21 A.Y.2016-17 No . Particulars Gr.Nos./Amoun ts (in lacs) Gr.Nos./Amou nts (in lacs) Gr.Nos./Amou nts(in lacs) Gr.Nos./Amounts (in lacs) Gr.Nos./Amounts (in lacs) 1 TP Adjust ment w.r.t. interest 1 7.38 lacs 1 5.78 lacs - - - - - - 2 Disallowan ce u/s 35D 2 0.23 lacs 2 0.92 lacs 1 0.92 lacs - - - - 3 Additional claim u/s. 35D 3 34.63 lacs 3 0.34 lacs 2 0.34 lacs - - - - 4 Interest Capitali zed 4 2.64 lacs - - - - - - - - 5 14A disall owance 5 0.11 lacs 4 0.045 lacs - - - - 1 1.87 lacs 6 Excess deprecia tion claimed 6. 0.53 lacs 6 0.053 lacs 3 0.038 lacs 1 0.032 lacs 2 0.027 lacs 7.2. Since the Grounds raised by the rival parties are common for different asst. years, for the sake of convenience and better understanding, the appeals are disposed of by dealing with the same issue wise. 8. TP Adjustment: The brief fact of this issue is that the assessee company is engaged in setting up, owning and running of power plants. As per Form No. 3CEB and Appendix C submitted by the assessee, it has given details of loans advanced to M/s. Adani Shipping Pte Ltd of Rs.407,47,66,961 and M/s. Adani Power [Overseas] Ltd., Singapore of Rs.3,02,551. The assessee has not charged any interest on the amounts advanced to its AEs as loan for purchase of Vessels, which will be required for transportation of coal for assessee’s 4620 MW Thermal Power Station commissioned I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 7 at Mundra Kutch, Gujarat. During the year, the assessee company received back part of the amount and balance amount of Rs.301.73 crores was outstanding as on the end of the year. The loans advanced has been treated as being in the form of quasi-equity investment and accordingly the assessee has not charged any interest on this amount. Prima facie, both these loans are long term loans given to the AEs. Hence, they needed to be benchmarked as such. As per form 3CEB filed by the assessee, the loans have been described as 'quasi equity’ for time charter of ship for long term. 8.1. Ld Transfer Pricing Officer [hereinafter referred as TPO] after issuing show cause notice has examined the prime lending rates in Singapore as well as examined the loan transaction in US $, entered into by the AEs to arrive at suitable rate. It is clarified that the Singapore PLR which is at 5.38% has been used as CUP, support has been drawn from the study of the deal scan data available with his office and supplied to the assessee along with show cause notice. PLR is the rate at which banks lend to their highly rated borrowers. In light of this fact, the rate of 5.38% arrived at earlier year is found to be correct and in line with the normal banking rates prevalent in the year of lending. Accordingly, an interest rate of 5.38% is taken to be Arm's Length Interest rate which should have been charged on the amount lent by the assessee to its AE. Further the AEs of the assessee have entered into a guaranteed loan transaction with Axis bank at a rate of 4% Adding 1.5% as a guarantee risk carried in the present case, the Arm's Length interest would be 6.106%. Since two interest rates are available, an average of these two rates is adopted as the fair I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 8 Arm's Length rate of interest which comes to 5.743%. Thus the TPO held that correct rate of 5.743% is adopted for computation of Arm's Length interest amount liable to be received by the assessee from its AE and therefore the Ld TPO made an upward adjustment of Rs. 18,84,29,994/-. 8.2. On appeal before the Ld CIT[A] it was held that on perusal TP Order, it is apparent that benchmarking of interest rate on loan advanced by Assessee Company to its Associated Enterprise being Adani Shipping Pvt Limited and Adani Power Overseas Limited was made by the AO. Similar adjustments were also made in earlier Asst. Years 2010-11 and 2011-12 and identical addition has been made in the present Asst. year 2012-13. On very same facts, the Ld CIT[A] decided this issue vide his order dated 20-10-2015 and has dealt with arguments made by the Assessee as well as the Ld AO and that order was followed by his predecessor CIT (Appeals) vide order dated 30-06-2016. As findings given by Ld TPO while making such adjustment are similar to findings given in earlier Assessment Years, the same were disposed of by the Ld CIT[A] observing as follows: “... 4.4 It is observed that there is no change in transactions during the year. The terms and conditions of loan, nature of business with AEs, currency and other relevant parameters of entire transactions remain the same. On these facts, following the decision referred supra, I hold that loan granted by Appellant to AEs are subject to transfer pricing adjustment. However, so far as rate is concerned, as held in Appellant's own case for earlier Assessment Years, interest rate needs to be worked out after applying filters like loan dominated in the US currency were to be considered, loans with tranche amount USD were to be considered, loans with tranche purpose I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 9 Acquisition line', 'Shipping Finance were to be considered loans with tranche type 'Acquisition facility and Term Loan facility were to be considered, tenure below 36 months were excluded, only Libor linked loans were considered and loans given in industry of 'Shipping, Transportation' and 'Mining' were to be considered and on this basis, total 11 companies were found. Further, in such 11 companies, one of the company, was tour operating company hence only 10 comparables were found and average rate of interest after considering average three months libor is worked out at 2.25% as against 5.743% adopted by AO in current year and 2.234% adopted in preceding Assessment Year. On this basis, addition in the case of Appellant is reduced to Rs.7,38,23,348/- as under: Date Opening balance Addition Deduction Closing Days Interest Adani Shipping PvtLtd 01-04-2011TP 4076883884 0 0 4076883884 30-06-20 11 30144895 3845543 4068573236 1051290950 2017292286 91 2,28,07.158 01-07-2011 3017282286 3017282286 275 5,10,09,383 31-3-2012 0 3017282286 Adani Power Pvt Ltd 31-03-2012 302551 302551 365 6807 Total 7,38,23,348 Thus, addition made by TPO for Rs. 18,84,29,994/- is restricted to Rs. 7,38,23,348/-. This ground of appeal is partly allowed.” 9. Aggrieved against the appellate order restricting the TP adjustment to Rs.7.38 crs from Rs.18.84 crs both the Revenue and assessee are in appeal before us. At the outset Ld. Counsel Sri. Vartik Choksi appearing for the assessee submitted before us that the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier Asst. Years 2010-11 and 2011-12 in ITA Nos. 3563, 3562/ Ahd/2015 & 2216, 2268/Ahd/2016 dated 10-02-2023 held I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 10 that the Ld. CIT(Appeals) has not erred in facts and in law in restricting the computation of interest to the period for which the loans advanced by the assessee to its AEs, and brought to our attention to the relevant portion of the order as follows: “... 7. ... We have heard the rival contentions and perused the material on record. In our considered view, we find no infirmity in the order of Ld. CIT(Appeals) so as to interfere with his findings. Firstly, the issue whether the said advance could be treated as quasi capital, we are of the considered view that Ld. CIT(Appeals) has observed correctly that in the instant set of facts, it is only when the assessee was confronted to benchmark the interest on the aforesaid advances made by the assessee towards AE’s, it came up with the alternate contention that the said amount could be treated as quasi capital. In the instant facts, as correctly noted by Ld. CIT(Appeals), there is nothing on record which could support the fact that the said advances by the assessee towards AEs were in the nature of quasi- capital. Both the TPO and Ld. CIT(Appeals) have made detailed observations on this aspect and we concur with the same. In the case of Kalpataru Power Transmission Ltd. [2022] 142 taxmann.com 428 (Ahmedabad - Trib.), the Ahmedabad ITAT has held that where advances were given by assessee to its AEs and no interest was charged on these advances contending that they were not loans but were quasi-capital in nature, since assessee was unable to substantiate same with evidence, advances were in nature of loans and transfer-pricing adjustment made by charging interest applying LIBOR was justified. In the case of Soma Textile & Industries Ltd. [2015] 59 taxmann.com 152 (Ahmedabad - Trib.), the Ahmedabad ITAT held that comparable uncontrolled price of quasi-capital loan, cannot be nil, unless it is only for a transitory period and de facto reward for said value of money is opportunity for capital investment or such other benefit. The ITAT made the following note-worthy observations: ■ The expression 'quasi-capital' is relevant from the point of view of highlighting that a quasi-capital loan or advance is not a routine loan transaction simplictor. The substantive reward for such a loan transaction is not interest but opportunity to own capital. As a corollary to this I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 11 position, in the cases of quasi-capital loans or advances, the comparison of the quasi-capital loans is not with the commercial borrowings but with the loans or advances which are given in the same or similar situations. In all the decisions of the coordinate benches, wherein references have been made to the advances being in the nature of 'quasi-capital', these cases referred to the situations in which (a) advances were made as capital could not be subscribed to due to regulatory issues and the advancing of loans was only for the period till the same could be converted into equity, and (b) advances were made for subscribing to the capital but the issuance of shares was delayed, even if not inordinately. ■ Clearly, the advances in such circumstances were materially different than the loan transactions simplicitor and that is what was decisive so far as determination of the arm's length price of such transactions was concerned. The reward for time value of money in these cases was opportunity to subscribe to the capital, unlike in a normal loan transaction where reward is interest, which is measured as a percentage of the money advanced. [Para 9] ■ On a conceptual note, several types of debts, particularly long- term unsecured debts, and revenue participation investments could be termed as quasi-capital. So far as arm's length price of such transactions are concerned, this cannot be 'nil' because, under the comparable uncontrolled price method, such other transactions between the independent enterprises cannot be at 'nil' consideration either. Nobody would advance loan, in arm's length situation, at a nil rate of interest. The comparable uncontrolled price of quasi-capital loan, unless it is only for a transitory period and the de facto reward for this value of money is the opportunity for capital investment or such other benefit, cannot be nil. As for the intent of the assessee to treat this loan as investment, nothing turns on it either. Whether assessee wanted to treat this loan as an investment or not does not matter so far as determination of arm's length price of this loan is concerned; what really matters is whether such a loan transaction would have taken place, in an arm's length situation, without any interest being charged in respect of the same. ■ As for the contention regarding crucial role being played by, or visualized for, this AE, there is no material on record to demonstrate the same or to justify that even in an arm's length situation, a zero interest rate loan would have been justified to such an entity. A lot of emphasis has also been placed on the fact that the loan was out of the GDR funds, and, for this reason, the interest-free loan was justified. There is no logic in this explanation either. Even when the loan is given out of the GDR funds held I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 12 abroad, the arm's length price of the loan is to be ascertained. The source of funds is immaterial in the present context. 8. The next issue for consideration is that whether the interest rate has to be determined with reference to the PLR as prevalent in Singapore or the market determined interest rate applicable to the currency concerned in which the loan has to be repaid i.e. USD. In our considered view, Ld. CIT(Appeals) has not erred in facts and in law in holding that the ALP of the interest rate for the loan advanced to a foreign subsidiary should be computed based on the market determined rate applicable to the currency in which the loan has to be repaid i.e. USD. The High Court in the case of Cotton Naturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi) has held that arm's length interest rate for loan advanced to foreign subsidiary by Indian company should be computed based on market determined interest rate applicable to currency in which loan has to be repaid. In the case of Assotech Moonshine Urban Developers (P.) Ltd. [2020] 121 taxmann.com 220 (Delhi - Trib.), the Delhi ITAT held that where assessee made payment towards interest on FCCDs denominated in Indian Rupee to its AE, interest should be market determined interest rate applicable to currency in which loan has to be repaid. 8.1 Further, we are also the considered view that Ld. CIT(Appeals) has not erred in facts and in law in restricting the computation of interest to the period for which the loans advanced by the assessee to its AEs.” 9.1. Per Contra Ld CIT DR Sri. Aarsi Prasad appearing for the Revenue could not contravent the above legal position and could not place on record details of further appeal filed by the Revenue before the Hon’ble High Court of Gujarat as against the decision of this Tribunal in assessee’s own cases cited supra. In the above circumstances Ld CIT DR strongly relied upon order of the Ld TPO and pleaded to up hold the same and allow Revenue’s ground on this issue. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 13 10. We have given our thoughtful consideration and perused the materials available on record and including the Paper Books filed by the assessee and the case laws relied thereon. There seems to be no change in facts for the present assessment year with that of the earlier assessment years 2010-11 and 2011-12. The Ld CIT[A] determined the average rate of interest after considering average three months Libor is worked out at 2.25% as against 5.743% adopted by AO with that of the preceding asst years. Further the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier asst years up held the average interest rate determined by the CIT[A] and also followed other decisions of the Co-ordinate Benches in Kalpataru Power Transmission Ltd. [2022] 142 taxmann.com 428 (Ahmedabad - Trib.), wherein it was held that where advances were given by assessee to its AEs and no interest was charged on these advances contending that they were not loans but were quasi-capital in nature, since assessee was unable to substantiate same with evidence, advances were in nature of loans and transfer-pricing adjustment made by charging interest applying LIBOR was justified. Similarly in the case of Soma Textile & Industries Ltd. [2015] 59 taxmann.com 152 (Ahmedabad - Trib.), it was held that Comparable Uncontrolled Price [CUP] of quasi-capital loan, cannot be nil, unless it is only for a transitory period and de facto reward for said value of money is opportunity for capital investment or such other benefit. The Hon’ble Delhi High Court in the case of Cotton Naturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi) has held that arm's length interest rate for loan advanced to foreign subsidiary by Indian company should be computed based on the market determined interest rate I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 14 applicable to currency in which loan has to be repaid. Respectfully following the above judicial precedents, the Revenue failed to make out any ground in their favour with supporting judgements. We therefore upheld the order of Ld CIT[A] and thereby the ground raised by the both the Revenue and Assessee are hereby dismissed. 11. Disallowance under Section 35D and Additional Claim: The brief facts related to this issue is the assessee claimed deduction u/s.35D of the Act of Rs.11.09 crores for share issue expenses incurred in connection with Initial Public Offer during the Asst Year 2010-11. The AO restricted the expenditure not connected with Public issue and made disallowance of Rs.92.66 lacs. Similarly for the present Asst. year 2012-13 the Ld AO made disallowance under Section 35D of the Act based upon finding given in Asst Year 2010- 11, by observing that the Assessee has not claimed any new deduction in the year under consideration, but it is either third year or second year of claim, therefore identical addition has been made in current year. 11.1. On appeal before the Ld CIT[A] it was held that disallowance made in current year is exactly the same figure as was made in earlier years, disallowance under Section 35D for Rs.1,15,90,255/- is restricted to Rs.92,66,513/- and relief of Rs.23,23,742/- is granted. So far as additional claim made in the year under consideration, it is observed that identical claim was also made by the assessee which was allowed at para 5.3.3 of the Appellate Order I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 15 of A.Y. 2010-11 and para 4.4 (iv) of the Appellate order in A.Y. 2011-12. Considering the detailed findings given therein, additional relief of Rs.3,79,63,604/- is given to the assessee, which are similar to findings given in earlier Assessment Year the same were disposed of by the Ld CIT[A] observing as follows: “... Considering the observations made by my predecessor CIT (Appeals)-3 and as facts of year under consideration are similar with facts in immediately preceding Assessment Year, disallowance made by Assessing Officer is dealt with as under: (1) The Assessing Officer has made disallowance of Rs.92,66,513/- and similar disallowance was made in AY 2010-11 and same is upheld by my predecessor CIT (Appeals) at para 5.3.1 of his order and on similar ground, addition made in current year is upheld (ii) The Assessing Officer has made disallowance of Rs.9,92,306/- and similar disallowance was made in A.Y.2010-11 and same is deleted by my predecessor CIT (Appeals) at para 5.3.2 of his order and on similar ground, addition made in current year is deleted. (iii) So far as disallowance of Rs.13,31,436/- is concerned, it is observed that Appellant has incurred such expenditure in relation to IPO made in A.Y.2010-11 and is related to incentive/ commission payable to brokers for monitoring report of IPO. The Assessing Officer has not given any reason for making such disallowance in Assessment Order even though Appellant has provided detailed submission which is reproduced at page 5 of Assessment Order. As above expenditure is directly linked with public issue expenditure, disallowance made by Assessing Officer for Rs. 13,31,436/- is deleted. (iv) So far as additional claim made by Appellant for allowing higher deduction under Section 35D is concerned, it is observed that similar claim was also made in A.Y. 2010-11 (at that time Assessment Order for year under consideration was already passed) and such claim was accepted by my predecessor CIT (Appeals) at para 5.3.3. it is also observed that Department has not filed any appeal against such relief given by my predecessor CIT (Appeals) hence following the reasons given in above referred order, further relief of Rs. 3,79,63,604/- is allowed to Appellant. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 16 In nutshell, addition made by Assessing Officer for Rs.1,15,90,255/- is restricted to Rs.92,66,513/- and Appellant is allowed relief of Rs.23,23,742/-. Simultaneously, income of year under consideration is required to be reduced by additional relief or Rs.3,79,63,604/- as computed herein above. The related ground of appeal is partly allowed. As disallowance made in current year is exactly the same figure as was made in earlier year, disallowance under Section 35D for Rs.1,15,90,255/- is restricted to Rs.92,66,513/- and relief of Rs.23,23,742/- is granted. So far as additional claim made in year under consideration, it is observed that identical claim was also made by Appellant which was allowed at para 5.3.3 of Appellate Order of AY 2010-11 and para 4.4 (iv) in AY 2011-12. Considering the detailed findings given therein, additional relief of Rs.3,79,63,604/- is given to Appellant. This ground of appeal is, thus, partly allowed.” 10.2. Aggrieved against the appellate order restricting the deduction u/s. 35D to Rs.23,23,742 from Rs.1,15,90,255 both the Revenue and Assessee are in appeal before us. At the outset Ld. Assessee Counsel Sri Vartik Choksi submitted before us that the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier Asst. Years 2010-11 and 2011-12 in ITA Nos. 3563/ Ahd/2015 & Others dated 10-02-2023 [cited supra] held that the Ld. CIT(Appeals) has not erred in facts and in law these expenses are related to share issue expenditure and hence covered with the scope of section 35D of the Act and brought to our attention to the relevant portion of the order as follows: “... 12. While in principle, we are of the view that the term “being” u/s 35D means that the list is inclusive list and there is scope for expansion of the expenses to be considered is eligible deduction provided the same have been incurred for public issues expenditure. However, at the same time, we also agree with the view of Ld. CIT(Appeals) that the onus is on the assessee to prove expenditure I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 17 falls within the ambit of section 35D of the Act and those items specified in s. 35D(2)(iv) of the Act. On a perusal of list of expenditure disallowed by AO and also confirmed by Ld. CIT(Appeals) viz vehicle hiring charges, travelling consultant, foreign travelling expenses, filing fees etc. the CIT has not erred in facts and in law in holding that the onus is on the assessee to prove that the above expenses have been incurred in connection with share subscription. The onus is on the assessee to substantiate that the expenses are connection with share subscription, which onus, as correctly pointed out by Ld. CIT(Appeals) has not been discharged in the instant facts. 12.1 In the instant facts, while we are of the view that definition under section 35D is inclusive, however, the scope thereof is not unrestricted and the assessee is under obligation to prove that the expenses incurred are directly/indirectly connected with share subscription/issue expenses so as to be eligible for deduction under section 35D of the Act. In absence of the assessee producing any evidence to the above effect, Ld. CIT(Appeals) has not erred in facts and in law in confirming the disallowance of the above expenses. Accordingly, this issue is restored to the file of Ld. A.O. to verify how the above expenses are in relation to share subscription/issue expenses along with supporting documentary evidences and relief may be allowed after carrying out necessary verification. 13. In the result, ground number 2 of the assessee’s appeal is allowed for statistical purposes. ... ... ... ... 47. We observe that the order has been passed by Ld. CIT (Appeals) on similar lines as previous year’s order. 48. With respect to relief of Rs. 23,23,742/-, against which the Department is in appeal, Ld. CIT(Appeals) has given a specific finding how these expenses are related to share issue expenditure and hence covered with the scope of s. 35D of the Act. Accordingly, we find no infirmity in the finding of Ld. CIT(Appeals) and the appeal of the Department is dismissed with respect to relief granted by Ld. CIT(Appeals). “ I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 18 12. We have given our thoughtful consideration and perused the materials available on record and including the case laws relied thereon. There seems to be no change in facts for the present assessment year with that of the earlier assessment years. With respect to relief of Rs. 23,23,742/-, against which the Department is in appeal, Ld. CIT(Appeals) has given a specific finding that how these expenses are related to share issue expenditure and hence covered with the scope of section 35D of the Act. Accordingly, we find no infirmity in the finding of the Ld. CIT(Appeals) and the appeal filed by the Revenue is dismissed on this count. 12.1. As far as assessee’s Grounds of appeal that the Ld.CIT(A) erred in confirming the disallowance to the extent of Rs.92,66,513/- from out of total disallowance of Rs.1,15,90,255/ made by the AO from out of the deduction claimed by the appellant company u/s.35D of the IT Act. Co-ordinate Bench of this Tribunal restored this issue to the file of Ld. A.O. to verify how the above expenses are in relation to share subscription/issue expenses along with supporting documentary evidences and relief may be allowed after carrying out necessary verification. Respectfully following the above decision, we hereby set aside this issue to the file of Ld AO to make necessary verification and thus the Grounds of Appeal raised by the assessee is partly allowed. 13. Depreciation on Lease hold land: On examination of the computation of the income, the assessee claimed depreciation of Rs.10,34,40,606/= on account of lease hold land of Rs.1,12,10,912 Infrastructure usage of Rs.8,61,06966/- and Ash dumping facility I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 19 of Rs.61,22,729/=. The assessee was asked to explain the allowability of depreciation on Leasehold land as per Income Tax Act. The assessee explained that there is no addition during the year, Agreements dated 28-12-2006 and 01-01-2010 were entered with Adani Ports & Special Economic Zone Ltd [APSEZL] to take on Lease basis lands measuring 293 Hectares of lands at Village Tunda and Siracha for a period of 25 years to setup SEZ. As per the lease deed, the assessee company is required to pay upfront lease charges as well as nominal lease rent annually and return back the lease hold land after 25 years. As per this arrangement there is no new asset has come into existence, as the set up of SEZ is used by the assessee to carry on the business of transmission of power. The assessee claimed the upfront lease charges and nominal annual rent as eligible expenses u/s.37 of the Act. Similarly amortization of upfront charges paid for acquiring right to use all the infrastructure facilities like access on main/approach Road and internal service road for movement of personnel, right of way/corridor to lay its telecom cable from nearest junction box and to lay its water pipeline for bringing water from the nearest tap-off point and tapping point for electrification from the nearest sub- station, etc. Similarly, APSEZL had agreed to provide dumping facility for the Ash on land owned by it on payment of upfront charges of Rs.10 crore and yearly fees of Rs.1 crore for a period of 15 years. The assessee company has amortized said upfront charges over period of tenure of agreement i.e. 15 years and accordingly claimed Rs.61,22,729 during the year under consideration as deduction u/s.37 of the Act, in view of ratio laid I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 20 down by the Hon’ble Apex Court in the case of Madras Industrial- Investment Corptn Ltd -Vs- CIT reported in 225 ITR 802 [SC]. 13.1. However the AO has made disallowance of amortization being depreciation on leasehold land based upon finding given in the previous Asst. Years 2010-11 and 2011-12. On very same facts, the CIT[A] vide order dated 20th October, 2015 has dealt with arguments made by Assessee as well as the AO and such order is followed by CIT (Appeals) vide his order dated 30th June, 2016 for the earlier Assessment Years as follows: “... 39. On careful consideration of both the decisions of Jurisdictional High court and Ahmedabad ITAT, it is observed that Hon'ble High court has held that lease premium paid by assessee is in nature of advance rent and is required to be allowed as revenue expenditure, whereas Hon'ble Ahmedabad ITAT has allowed the claim of amortisation of lease premium over lease period following the decision of Hon'ble Gujarat High court referred supra. It is pertinent to note that similar claim of amortisation of lease premium of land in appellant's group case being Adani gas Limited was allowed by CIT(A) III vide his order dated 12/12/2013 for AY 2009-10, CIT(A)-I vide his order dated 15/05/2015 for A.Y. 2010-11 and vide his order dated 15/07/2015 for A.Y. 2011-12. As facts of appellant's case are similar to facts discussed by Hon'ble Ahmedabad ITAT being binding decision, claim of appellant regarding amortisation of lease premium for Rs 13,46,45,288/- is allowed. This ground of appeal is allowed." In view of above referred finding, as the issue and the facts are identical to the AY10-11, the disallowance made by Assessing Officer for Rs. 10,79,33,090/- is deleted. This ground of appeal is allowed." During the course of appellate hearing, ARs of the Appellant have further referred to decision of Hon'ble Ahmedabad ITAT in the case of Adani Gas Limited being one of the Group concerns of Appellant Company wherein Hon'ble Ahmedabad ITAT vide its order dated 17th October, 2018 in ITA No, 775/Ahd/2014, 2346 and 2797/Ahd/2015 has deleted the addition made by the AO and held as under: "11. Ground no.3 of Revenue's appeal concerns addition of Rs 39.77 Lakhs towards amortization of lease hold land. In the I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 21 scrutiny assessment, it was observed by the AO that the assessee has amortized an amount of Rs.39,77,765/- on account of lease hold land It was submitted on behalf of the assessee that lease hold land of longer period (generally tenure of lease is 99 years) is required to construct CNG stations the expenses of which are required to be amortized. The claim of the assessee was not accepted by the A0 on the ground that there is no provision of claim of the amount written off/amortized against the lease hold land in the Income Tax Act. 12. Amortization is an accounting term that refers to the process of allocating the cost of an asset over a period of time and hence it is nothing else than depreciation. The allowability of costs towards amortization of lease hold land is in question. Having heard the rival submissions on the issue, we find that the CIT(A) has rightly appreciated the facts in perspective and concluding the issue in favour of the assessee in the light of decision of Hon'ble Gujarat High Court in the case of DCIT vs Sun Pharmaceuticuls Industries Ltd [2009] 227 CTR 206 (Guj). We do not see any infirmity in the reasoning given by the CIT(A) while deleting the aforesaid disallowance of amortization of lease hold lands. We thus decline to interfere. 13. In the result, Ground no.3 of the Revenue's appeal is dismissed." It is observed that similar issue is decided in favour of Appellant in earlier Assessment Year as well as by Hon'ble Ahmedabad ITAT in one of the Group cases being Adani Gas Limited. Relying upon these decisions, disallowance of depreciation made by AO for Rs.10,34,40,606/- is hereby deleted. This ground of appeal is allowed.” 13.1. Aggrieved against the appellate order deleting the claim of depreciation on lease hold land of Rs.10.34 crs, the Revenue is in appeal before us. Ld. Counsel appearing for the assessee submitted that this issue is also covered by the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier Asst. Years 2010-11 and 2011-12 in ITA Nos.3563/Ahd/2015 & Ors dated 10-02-2023 [cited supra] wherein it was categorically held that the Ld. CIT(Appe als) has not erred in facts and in law and claim of depreciation on I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 22 leasehold land is allowable. Thus Ld Counsel brought to our attention to the relevant portion of the order as follows: “... 26. We have heard the rival contentions and perused the material on record. We are in agreement with the observations made by Ld. CIT(Appeals) in the appellate order. The Gujarat High Court in the case of Sun Pharmaceuticals 329 ITR 479 (Gujarat) held that where assessee took a land on lease for 99 years at a nominal rent of Rs. 40 per year and paid a sum of above Rs. 48 lakhs as advance rent, as land was not acquired by assessee, advance rent was allowable as revenue expenditure and could not be treated as capital expenditure. Again, Gujarat High Court in the case of Mahavir Inductomelt (P.) Ltd.[2017] 88 taxmann.com 562 (Gujarat) held that amount of premium paid by assessee with respect to plot allotted by Gujarat Maritime Board to it on lease of ten years would be allowable as revenue expenditure in its business of ship breaking. In the case of Delhi International Airport (P.) Ltd [2018] 89 tax mann.com 326 (Delhi - Trib.), the ITAT held that one time payment of upfront fee for acquiring right to operate and maintain airport for 30 years, cannot be reckoned for purpose of acquisition of business, but it could be reckoned as lease premium or licence fee and had to be treated as revenue expenditure. In the case of United Phosphorus Ltd.[2015] 56 taxmann.com 354 (Gujarat), the High Court held that premium paid for leasehold land is allowable as revenue expenditure. In view of the consistent position taken by various Courts including the Gujarat High Court, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in allowing this Ground of Appeal of the assessee. 27. In the result, Ground Number 2 of the Department’s appeal is dismissed. 14. We have given our thoughtful consideration and perused the materials available on record and the case laws relied thereon. There seems to be no change in facts for the present assessment year with that of the earlier assessment years. Co-ordinate of this Tribunal followed jurisdictional High Court Judgements namely I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 23 Sun Pharmaceuticals 329 ITR 479; Mahavir Inductomelt (P.) Ltd. [2017] 88 taxmann.com 562; United Phosphorus Ltd.[2015] 56 taxmann.com 354 wherein the Hon’ble High Court held that premium paid for leasehold land is allowable as revenue expenditure. In our considered view “Amortization” is an accounting term that refers to the process of allocating the cost of an asset over a period of time and hence it is nothing else than depreciation. We do not see any infirmity in the findings arrived by the CIT(A) while deleting the aforesaid disallowance of amortization of lease hold lands following Jurisdictional High Court judgements, and we are declined to interfere the above findings. Thus the grounds of appeal raised by the Revenue is hereby dismissed. 15. Disallowance u/s.14A read with Rule 8D and adding the same while computing book profit u/s.115JB : This issue relates to disallowance of expenditure to the extent of Rs.15,09,01,219/- under Section 14A of the Act read with Rule 8D of the Income Tax Rules and also adding the same while computing the total income of the Assessee under Section 115JB of the Act. 15.1. The AO has observed that assessee made investment in equity shares as well as made transaction of purchase and sale of mutual fund from which exempt income of Rs.34,15,722/- is earned during the A.Y. 2012-13. The AO has referred to CBDT Circular No. 5/2014 dated 11-02-2014 and contended that even if there is no exempt income, disallowance of expenditure related to earning of exempt income is required to be made. The Assessee claimed various expenses such as salary/wages, office expenses, I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 24 travelling expenses, printing & stationary, Director's sitting fees, etc., and part of such expenditure is attributable to investment portfolio. The AO has relied upon decision of Hon'ble Delhi ITAT in the case of Caninvest Ltd -Vs- ITO and Hon'ble Supreme Court in the case investment in equity shares, disallowance under Section 14A is applicable. On this basis AO has applied Rule 8D and computed disallowance under Section 14A at Rs.15,31,61,260/- which is comprising of interest disallowance of Rs.5,37,70,760/ and administrative expenditure of Rs.9,93,90,500/. But as the assessee made suo-motu disallowance of Rs.22,60,041/-, therefore the Ld AO made net disallowance of Rs.15,09,01,219/- Similar adjustment is also made by the Ld AO while computing book profit under Section 115JB of the Act. 15.2. During the course of appellate proceedings before Ld CIT[A], the assessee contended that no interest disallowance can be made under Rule 8D, as the assessee has sufficient own funds to cover such investments for which they relied upon various decisions. The assessee in its alternate submission also contended that interest expenditure considered by the AO for the purpose of making disallowance also includes specific expenses being interest on term loan, buyers' credit, etc., and such expenditure cannot be considered for making disallowance of interest expenditure under Section 14A of the Act. It was also contended by the assessee that as it has earned interest income of Rs.283.45 crores, such income should be netted off against interest expenditure. The assessee also contended that as it has earned exempt income of Rs.34.15 lacs, disallowance cannot exceed such income as held by Hon'ble I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 25 Supreme Court in the case of State Bank of Patiala and Hon'ble Ahmedabad ITAT in various decisions. The Ld CIT [A] considered the above submissions and restricted the disallowance to the extent of dividend income earned by the assessee, by observing as follows: 8.4 On perusal of relevant facts on record, it is found that appellant has earned exempt income of Rs.34,15,722/- whereas AO has made disallowance under Section 14A at Rs.22,60,041/-. It is observed that Hon'ble High Court of Punjab & Haryana in case of PCIT V/S State Bank of Patiala 99 taxmann.com 285 has held that disallowance under Section 14A cannot exceed exempt income. SLP filed by Revenue against the said decision is dismissed by Supreme Court 99 taxmann.com 286 and has held as under. Section 144, read with section 263, of the Income-tax Act, 1961- Expenditure incurred in relation to income not includible in total income (Computation of)-Assessment year 2010-11-In course of assessment, Assessing Officer made addition on account of apportionment of expenses against exempted income under section 14A. Commissioner passed a revisional order directing Assessing Officer to enhance amount of addition under section 14A, revisional order as well as consequent assessment order passed by Assessing Officer enhancing - Tribunal set aside addition made under section 14A - High Court upheld order of Tribunal holding that amount of disallowance under section 14A could be restricted to amount of exempt income only and not a higher figure - Whether on facts, SLP filed against decision of High Court was to be dismissed- Held, yes [Para 1][In favour of assessee] Further, Hon'ble Delhi High Court in the case of PCIT V/S Caraf Builders & Construction Pvt. Limited 101 Taxmann.com 167. Further, Hon'ble Ahmedabad ITAT in one of the Group case of appellant being Adani Wilmar Limited in ITA No. 1696/Ahd/2017 dated 15th November, 2019 has also restricted disallowance under Section 14A to the extent of exempt income. Considering the above judicial pronouncements and the facts of the case on hand disallowance under Section 14A made by AO is I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 26 restricted at Rs.34,15,722/- and as appellant has already made disallowance under Section 14A at Rs.22.60.041/-, net disallowance is restricted to Rs.11,55,681/-. 16. Aggrieved against the appellate order restricting the disallowance u/s.14A to the extent of dividend income both the Revenue and Assessee are in appeal before us. At the outset Ld. Counsel for the assessee Sri. Vartik Choksi submitted before us that Ld AO has not recorded his dis-satisfaction on the suo-moto disallowance made by the assessee before invoking Rule 8D of the Rules and thereby the entire disallowance made u/s.14A RWR 8D is liable to be deleted and relied upon Mumbai Tribunal decision in the case of Prism Cement Ltd [ITS No.804 & 805/Mum/2018 and Co-ordinate Bench decision of this Ttribunal in the case of Lok Prakashan Ltd in ITA No.131/Ahd/2018. 16.1. Per contra Ld CIT DR Shri Aarsi Prasad appearing for the Revenue brought to our attention the dis-satisfaction recorded by the Ld AO at para 6.3 in the assessment order and submitted that this argument has no basis and liable to be rejected. However the Ld CIT DR pleaded that the entire disallowance of Rs.15,09,01,219/- made u/s.14A of the Act read with Rule 8D is to be sustained and allow the Revenue appeal. 17. We heard rival arguments and perused the materials available on record. The submission of the assessee that the Ld AO has not recorded his dis-satisfaction on the suo-moto disallowance made by the assessee before invoking Rule 8D of the Rule is found to be not I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 27 correct. The Ld AO has recorded his dis-satisfaction at para 6.3 in the assessment order, the same is reproduced as follows: “...6.3 The contentions of the assessee have been perused but not found acceptable. The assessee company has contended that it has got huge amount of interest free funds in the form of cash profit and therefore, the investment were made out of these interest free funds. This contention of the assessee is not tenable at all for the reason that it has not produced any material on record to establish that no amount of interest bearing fund has been utilized to make the investment at any point of time. It was for the assessee to show by production of materials on records that, the shares were acquired from funds available in its hand at relevant point of time without taking benefit of any loans. However, the assessee's contention that the interest cost which has been borrowed for specific purpose, should be excluded for working out the disallowance u/s 14A r.w. Rule 8D, is found to be acceptable. In view of the provisions of Rule 8D(2)(ii) (wherein the value of 'A' has to be taken being the interest expenditure which has been directly relatable to the exempt investments. Accordingly, the specific purpose borrowings and interest thereon is liable to be excluded while working of the disallowance under Rule 8D(2)(1) of the I. T. Rules. Further, Section 14A of the IT Act clearly stipulates as under: "Expenditure incurred in relation to income not includible to total income. For the purpose of computing the total under this chapter, 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 this act." Further the assessee must have incurred administrative expenses such as documentation, salaries of employees, handling the investment portfolio, administrative overheads like stationery, telephone, computer, office equipments, vehicles etc. every year, a part of which can be attributed to the investment port folio. It is also to be noted that, Section 14A disallow expenditure "in relation to income which does not form part of total income" and in order for the expenditure to be disallowed, actual income need not be earned. The contention of the assessee company that it has not utilized interest bearing funds to make the investment which fetches exempt income is also not tenable for the reason that it has no produced any material on record to establish that no amount of interest bearing fund has been utilized to make the investment at any point of time. It was for the I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 28 assessee to show by production of materials on records that, the shares were acquired from funds available in its hand at relevant point of time without taking benefit of any loans, but the assessee could not prove its argument in this respect. In view of the discussion held above and the position of law with regard to the applicability of provisions of section 8D as interpreted by the various judicial decisions, I am not satisfied with regards to the accounts of the assessee-company in relation to earning income that does not form part of the total income of the assessee-company.” 17.1. It is seen from the above observation made by the Ld AO, he has clearly recorded the dis-satisfaction before invoking Rule 8D, therefore the case laws relied by the assessee is not applicable to the facts of the present case and therefore this argument is hereby rejected. As far submission of the Ld CIT DR to sustain the entire disallowance of Rs.15,09,01,219/- made u/s.14A rw Rule 8D, this argument is also we do not find any merits in it. Section 14A read with Rule 8D which provide for disallowance of expenditure incurred in relation to income which does not form part of the total income, had been subject matter of a number of controversies. The issues had finally travelled up to the Hon’ble Supreme Court and has settled many important issues in regard to application of provisions of section 14A rwr 8D vide three judgments delivered in the case of Godrej & Boyce Manufacturing Co. Ltd. v. Dy. CIT & Anr. (2017) 394 ITR 449 (SC); CIT v. Essar Teleholdings Ltd. (2018) 401 ITR 445 (SC) and Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC). The same are summarized as follows:  No disallowance on account of interest expense if borrowed funds have not been used for investments. The Apex Court vide para 38 of the judgment in the case of Godrej I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 29 & Boyce held that in the absence of any basis disclosed by the Assessing Officer establishing a reasonable nexus between the expenditure to be disallowed and dividend income received and also in the absence of any basis that any part of the borrowings of the assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available disallowance cannot be made. The Hon’ble Court in the judgment of Maxopp Investment also vide para 41 while holding that recording of satisfaction is necessary, it has specifically been observed that “further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares / making the investment in shares is to be examined by the AO.”  In case own funds are more than the investments no disallowance on account of interest is to be made. The Hon’ble Supreme Court in the case of Godrej & Boyce has specifically taken note of the fact in that case investments were only of ₹ 125.54 crore whereas own funds of the company were of ₹ 280.64 crore which was interest free funds in the form of share capital and reserves. In the circumstances it was held by the Supreme Court that the fact that any part of the borrowings of the assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available remains unproved by any material whatsoever. Therefore, no disallowance for interest was to be made.  Disallowance is to be restricted to exempt income. In the case of Maxopp Investment, the Hon’ble Court had taken note of the facts of the case vide para 5 wherein amount of disallowance u/s. 14A was determined at ₹ 67.74 lakh but the Assessing Officer had restricted the same to the amount of dividend income received and claimed as exempt of ₹ 49.90 lakh. Again while recording the facts of the case of State Bank of Patiala, the Hon’ble Court has noted the fact that the Assessing Officer had restricted the disallowance to the amount of exempt income after applying the formula contained in Rule 8D. CIT(A), however, had issued the notice of enhancement and disallowed the entire expenditure claimed by the assessee instead of restricting the disallowance to the amount of exempt income as done by the I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 30 Assessing Officer. ITAT and the High Court had deleted the total disallowance. The Hon’ble Supreme Court vide para 40 has again specifically taken note of the fact that while passing the assessment order the Assessing Officer had restricted the disallowance to the amount which was claimed as exempt income. CIT(A) had disallowed the entire amount of expenditure. Hon’ble Court held “that the view of the CIT(A) was clearly untenable and rightly set aside by the ITAT. Therefore, on facts, the Punjab & Haryana High Court has arrived at a correct conclusion by affirming the view of the ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court”. Accordingly, the issue stands approved by the Supreme Court that disallowance is to be restricted to the amount of exempt income. 17.1. Respectfully following the above judicial precedents we hereby confirm that the disallowance u/s.14A rwr 8D is restricted to the extent of exempt income earned by the assessee only, thus the grounds raised by both Revenue and the Assessee are devoid of merits and the same are hereby dismissed. 18. So far as adjustment made by the AO while computing book profit under Section 115JB, the assessee relied upon decision of the ITAT and contended that no such adjustment can be made. The Ld CIT [A] considered the above submissions and deleted the addition made by the AO, by observing as follows: “ ... 8.5 So far as disallowance under Section 14A r.w.s. 115JB of the Act is concerned, the AO has not given any specific finding for such adjustment made in assessment order. It is observed that this issue has been dealt with by Hon'ble Ahmedabad ITAT in one of the Group cases of appellant being Adani Logistic Limited for A.Y. 2014-15 in ITA No.57/Ahd/2018 vide order dated 22nd October, 2019 and held as under: I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 31 8. It appears that the Learned AO disallowed Rs.89,72,884/- u/s.14A of the Act by applying provision of Rule 8D while calculating income under the provision of section 115JB-MAT. It is the case of the assessee that the Ld AO erroneously disallowed u/s 14A by applying the provision of Rule 8D while calculating the income under provision of Section 115JB- MAT when it has been decided in number of judgments that so far as computation of adjusted book profit is concerned provision of section 2 and sub section 3 of section 14A cannot be imported into clause). In support of his argument the Ld AR has also relied upon the judgment passed by the Special Bench of ITAT at Delhi in the matter of ACIT, Circle 17(1) -Vs- Vireet Investment (P) Ltd. On the other hand, Learned DR relied upon the order passed by the authorities below. 9. Heard the respective parties, perused the relevant materials available on record. We have also carefully considered the judgment in the matter of Vireet Investment (P) Ltd. The relevant portion whereof is as follows: The question is, whether the amount or amounts of expenditure relatable to exempt income as contemplated in clause (f) to Explanation I to section 115JB(2) could be arrived at by resorting to provisions of section 144 or not. The department, contention, is that the object of section 14A and clause (f) to Explanation 1 to section 115JB(2) is same and, therefore, it cannot be disputed that section 14A can be resorted to for finding out the expenditure relatable to any income which is exempt. [Para 6.2] When the question arises as to the applicability of similar provisions in different parts of the statute, then it is not only legitimate but proper to read both the provisions in their context. If context is same, different meaning cannot be assigned. It is to be found out that what mischief was intended to be remedied by inserting a particular section. The intention of the legislature once is manifested in a particular section in the statute then said intention cannot be given a different meaning, if a similar provision has been incorporated in a different section in the statute. The intention of the Legislature must be found out by reading the statute as a whole. [Para 6.3] Literal meaning cannot always be followed logically, because sometimes it tends to defect the obvious intention of the I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 32 Legislature and results in producing a wholly unreasonable result. [Para 6.4] Thus, the submission of Department is that when basic object and purpose of section 144 and clause () to Explanation I to section 115JB(2) is same, then it cannot be said that merely because section 144 has not been mentioned in clause (), it has no application. The mode of computation with same purpose cannot be differently made merely because section 115JB creates a deeming section. The object of deeming provisions is to substitute the total income computed under normal provisions by that computed under MAT provisions. Submission of department is that this cannot be extended to computation for same items under normal as well as MAT provisions. Under the provisions of section 144, both direct and indirect expenses in relation to earning of exempt income are to be reduced. Therefore, different meaning cannot be ascribed in clause (1) and, therefore, the submission of the assessee that only directly relatable expenditure is to be reduced, cannot be accepted. [Para 6.10] 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 144. read with rule 8D of the Income-tax Rules, 1962." We find from the issue citation that in the same set of facts the computation under clause (f) of explanation I to section 115JB as has been done by the authorities below u/s 144 r.w.r. 8D of the Income Tax Act, 1962 is not permissible and hence the Ld. CIT(A) deleted such disallowance without any ambiguity so as to warrant interference. Hence, this ground of appeal preferred by the Revenue is devoid of any merit and thus dismissed. This ground of appeal preferred by the assessee is thus allowed. Similar view is also taken by Hon'ble Ahmedabad ITAT in the case of Torrent Cable referred supra. As Hon'ble Ahmedabad ITAT has followed the decision of Hon'ble Delhi Special Bench in the case of Vireet Investments referred supra, adjustment made by AO while computing book profit under Section 115JB for Rs. 15,09,01,249/- is deleted. Thus Ground No. 5 (A) is partly allowed and Ground No. 5(B) is allowed. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 33 18.1. Respectfully following the above judicial precedents we hereby delete the adjustment made by the AO while computing book profit under Section 115JB for Rs.15,09,01,249/-, thus the grounds raised by the Revenue is devoid of merits and the same are hereby dismissed. 19. The next Ground of appeal relates to disallowance of excess depreciation for Rs.2,32,47,992/-. The AO has made disallowance of depreciation on expenditure capitalized by the assessee, which includes depreciation incurred during project development phase. The similar disallowance is made by AO in the Asst. Years 2010-11 and 2011-12 were deleted by the CIT[A] vide his orders dated 20-10-2015 and 30-06-2016. For the present Asst year 2012-13 on appeal before the Ld CIT[A] deleted the addition observing as follows: “... In the present case, appellant has computed depreciation on assets used during pre-commencement of business operation and such depreciation is considered as part of project development expenditure to be allocated to various fixed constructed by appellant and such depreciation is not claimed as revenue expenditure in earlier years. Considering these facts and decision of Hon'ble Gujarat High court and Hon'ble Mumbai ITAT referred supra, it is held that if certain assets are used in pre-operative period to assist the setting up of plant and machinery, then depreciation on such "assisting assets" is rightly part of pre-operative expenses like any other direct or indirect cost and appellant is entitled to claim depreciation on cost of new assets including depreciation capitalized to such new assets as part of cost. In nutshell, the disallowance of depreciation made by Assessing Officer for Rs 2,10,16,786/- is deleted. This ground of appeal is allowed. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 34 Following the observation made in preceding Assessment Year, as the issue and the facts are identical to the AY10-11, disallowance of depreciation made by Assessing Officer for Rs. 1,78,64,268/- is deleted. This ground of appeal is allowed." As facts of the year under consideration are identical with facts of the earlier year, disallowance made by AO for Rs.2,32,47,992/- is deleted. This ground of appeal is allowed. 19.1. The Ld CIT DR has no serious argument on the above issue. Per contra assessee counsel drawn our attention to para 36 of the decision in assessee’s own case rendered by the Co-ordinate Bench the Co-ordinate Bench of the Tribunal, wherein it is held as follows: “.....36. The Department is in appeal before us against the order passed by Ld. CIT(Appeals) deleting the disallowance referred to above. We observe that in the case of Sabari Mills (P.) Ltd[1977] 109ITR451 (Madras), the High Court held that pre-production expenses incurred in connection with bringing actual assets into existence and to put them in working condition have to be included in actual cost of assets for granting depreciation allowance and development rebate. The Mumbai ITAT in the case of Gujarat Ambuja Cements Ltd.[2005] 4SOT59 (Mum.) the assessee started commercial production since October 1986. Prior to this, assessee charged depreciation on some fixed assets, which were put to use before start of commercial production. The Assessee capitalized pre-operative expenses including depreciation on such assets in accordance with accounting practices of ICAI. The ITAT held that once pre-operative expenses having direct or indirect nexus with setting up of business or installation of machinery can be capitalized, then there is no reason why they are not entitled to depreciation as per Rules. The ITAT held that assessee was entitled to depreciation as per rules on capitalized value of pre-operative expenses including depreciation charged on assets used in pre-operative period. In the case of Glass Lines Equipments Co. Ltd.[2001] 119 TAXMAN 813 (GUJ.), the High Court held that as regards depreciation, capitalisation of depreciation is impermissible if assessee has claimed amount of depreciation on revenue account. In the event of the assessee having not claimed amount of depreciation relatable to assets of the office on revenue account, the assessee would be permitted to capitalise the same. 37. In the instant facts, Ld. CIT(Appeals) has a specific finding that the assessee has not claimed the above depreciation as revenue expenditure in any of the earlier years. Accordingly, in view of the above rulings, I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 35 including that of the jurisdiction Gujarat High Court, we are of the considered view that the assessee is eligible to capitalize the depreciation on cranes, trucks and other plant and machinery which were used to bring the power generating units into existence, during the pre-commencement period by adding the same to the cost of such power generating units. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) while allowing the assessee's ground of appeal on this issue.” 19.2. Respectfully following the above judicial precedents, we hereby dismiss the ground raised by the Revenue on depreciation disallowance. 20. The next Ground of appeal relates to disallowance of Travelling expenses. The AO made ad hoc disallowance of 10% of travelling expenditure at Rs.1,16,90,000/- following similar disallowances made by the AO in the earlier Asst Years 2010-11 and 2011-12. On appeal before the Ld CIT[A] deleted the addition observing as follows: “... On careful consideration of entire facts, it is observed that during the course of assessment proceedings, appellant has given complete details of travelling payments made to Karnavati Aviation along with purpose of expenditure, bills raised by party etc and same are not found to be incorrect. Even, appellant has submitted trip wise details of aircraft used by executives, employees and directors of appellant company along with date, route and name of persons who travelled in the aircraft for the month of August, 2009 and no specific discrepancy was pointed out by Assessing Officer. The Assessing Officer has proceeded to make adhoc disallowance on presumption that personal usage cannot be denied but this observation of Assessing Officer cannot be sustained in view of specific details submitted by appellant and same are not found to be incorrect. The Hon'ble Gujarat High court in the case of Sayaji Iron & Engg Co Vs CIT 253 ITR 749 has held as under: I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 36 "Section 37(1) of the Income-tax Act, 1961, read with sections 198 and 309 of the Companies Act, 1956 - Business expenditure - Allowability of-Assessment year 1979-80 - Whether when vehicles belonging to an assessee-company are used by its directors, for personal or other purposes, it would be wrong to hold that vehicles are personally used by company, because a limited company by its very nature cannot have any 'personal use-Held, yes - Whether once expenditure on cars in question is in terms as provided in sections 309 and 198 of the Companies Act, 1956 there cannot be any 'non business' purpose insofar as assessee-company is concerned - Held, yes - Whether, therefore, no disallowance of car expenses can be made in hands of assessee-company on account of personal use of cars by directors - Held, yes" It is further observed that Ld. CIT(A) I in group concern 's case of Adani Enterprise Ltd (Appeal order CIT(A)-VI/Add.CIT,Cir- 1/235/2014-15 dated 5th June 2015) has deleted similar disallowance made by Assessing Officer. Considering the facts discussed herein above and following the decision of Hon'ble Gujarat High court referred supra, disallowance of Rs 63,02,960/- made by Assessing Officer is deleted. This ground of appeal is allowed." As facts of the present year are similar to the facts of immediately preceding Assessment Year i.e. 2010-11, the disallowance made by Assessing Officer for Rs. 99,90,000/- is deleted. This ground of appeal is allowed. During the course of appellate hearing, ARS of the Appellant have also referred to decision of Hon'ble Ahmedabad ITAT in the case of Adani Enterprises Limited, one of the Group concerns of Appellant Company (ITA No.2305 and 2531/Ahd/2015), vide order dated 12 February, 2019 deleted identical disallowance of 10% of travelling expenses. As facts of the case are similar, following the decisions referred supra, addition made by AO for Rs. 1,16,90,000/- is deleted. This ground of appeal is allowed. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 37 20.1. The Ld CIT DR has no serious argument on the above issue. Per contra assessee counsel drawn our attention to para 41 of the decision in assessee’s own case rendered by the Co-ordinate Bench of this Tribunal, wherein it is held as follows: “... 41. The Department is in appeal before us against the order passed Ld. CIT(Appeals) deleting the disallowance made by the AO. From the facts placed before us, we find no factual infirmity in the order of Ld. CIT(Appeals), who after making a detailed factual analysis, has in our considered view, correctly allowed the assessee’s appeal in the present set of facts. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) with respect to this ground of appeal so as to call any interference. 42. In the result, ground number 6 of the Department’s appeal is dismissed.” 21. Since there is no change is facts for the present assessment year, we hereby dismiss the ground raised by the Revenue on travelling expenses. 22. The next issue is relating to interest capitalized. The AO bringing to the charge of tax interest income of Rs.2,64,48,471/- which was capitalized under the head work-in-progress in the books of account of the appellant company. On appeal before the CIT [A] who dismissed the same by observing as follows: "6.3 I have carefully considered the Assessment Order. The Assessing Officer has observed that Appellant Company has not proved that interest income amounting to Rs.54,59,419/- is directly linked with power generating units being Phase-II, Phase-III and Phase-IV of the project and transmission line. The Assessing Officer has also observed that interest income earned on FD is for common purpose and Appellant Company could not submit a single evidence to establish that same are directly linked to power generating units. Even during the Appellate Proceedings, Appellant has failed to establish nexus of FD with power project carried out by I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 38 Appellant hence observations made in Appellate Order for A.Y. 2010-11 are not applicable in year under consideration. The Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Limited 227 ITR 172 wherein it is held that interest earned on fixed deposits having no nexus with project development expenditure is required to be taxed as income from other sources. Thus, addition made by Assessing Officer for Rs. 54,59,419/- is upheld and this ground of appeal is dismissed." As facts of the year under consideration are identical, addition made by AO for Rs.2,64,48,471/- is confirmed. This ground of appeal is dismissed.” 22.1 On further appeal by the assessee, the Ld. CIT-DR submitted that this issue was held against the assessee by the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier assessment years which held as follows: “...50. The facts of this ground of appeal are similar to ground of appeal number 3 of the Department for assessment year 2010-11. 50.1 However, during the year under consideration, as opposed to last year, Ld. CIT(Appeals) gave a specific finding that the interest earned by the assessee during the pre-commencement period is not in any way linked with power generating units. The Ld. CIT(Appeals) has given a specific finding “even during the appellate proceedings, appellant has failed to establish nexus of everyday with power project carried out by appellant hence observations made in appellate order for AY 2010-11 are not applicable in year under consideration”. While we are in agreement with the view that in case assessee is able to establish a nexus between interest on deposits made and the power project, the interest income would not be taxed as income from other sources. However, at the same time, if the assessee is unable to establish such nexus, as pointed out by Ld. CIT(Appeals), then in such case, the interest income so earned is taxable as “ income from other sources”. Before us, the counsel for the assessee submitted that on similar facts, ld. CIT(A) for assessment year 2010-11 gave relief to the assessee. However, we observe that both the Assessing Officer and ld. CIT(A) have given specific finding on facts that in the instant year the assessee company has failed to establish the direct link with the power I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 39 generating units and fixed deposits made for common purposes. Both the Assessing Officer and ld. CIT(A) gave a specific finding that there is no nexus between the fixed deposit made and the power generating units in respect of which the fixed deposits were made for common purposes. 51. In the result, ground number 4 of the assessee’s appeal is dismissed.” 23. There is no change in the facts in the present case. Therefore respectfully following the findings rendered by the Co-ordinate Bench of this Tribunal, this ground raised by the assessee on interest income capitalized is hereby dismissed. 24. The next Ground of Appeal relates to disallowance of depreciation for Rs.53,466/- on the ground that Assessee claimed depreciation @ 15% on certain assets as against @10%. 24.1. On appeal before Ld. CIT(A) by the assessee, the Ld. CIT(A) dismissed this ground observing as follows: 11.3 It is observed that the AO has made disallowance of depreciation electrical fittings. The similar disallowance is made by AO in AY 2010-11 and 20 Further, addition made in AY 2010-11 was deleted by undersigned vide order dated October, 2015 and addition made in AY 2011-12 was deleted by my predecessor (Appeals) vide his order dated 30th June, 2016. The relevant part of the said order reproduced herein below: "10.3 I have carefully considered the Assessment Order and the submission filed by the Appellant. The Assessing Officer has observed that Appellant has claimed depreciation @15% on electrical fittings whereas it is eligible for deduction @ 10% and on this basis he made disallowance of Rs. 61.871 relying upon observation made in A.Y. 2010-11.The above addition made in A.Y. 2010-11 was confirmed by my predecessor CIT (Appeals)-3, Ahmedabad in his order dated 20 October, 2015 as under: I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 40 "On careful consideration of entire facts along with decision of Hon'ble Ahmedabad ITAT relied upon by appellant, it is observed that appellant has not given exact details of addition to prove its contention that such asset is part of electric installation eligible for depreciation @ 15%. The appellant has not proved that assets acquired cannot be used without plant & machinery or integral part of such plant. The appellant has made general submission and such submission is without any supporting evidences hence disallowance of Rs 1,212 made by Assessing Officer is upheld. This ground of appeal is dismissed." In view of observation made in A.Y. 2010-11, as referred herein above, as the issue and the facts are identical to the AY10- 11,disallowance of depreciation made by Assessing Officer for Rs. 61,871/- is confirmed. This ground of appeal is dismissed." In view of the earlier order referred to above, addition made by AO is confirmed. This ground of appeal is dismissed.] 24.2. On further appeal by the assessee before this Tribunal, the Ld. Counsel submitted that this issue is covered in favour of the assessee by the Co-ordinate Bench of this Tribunal observing as follows: 21. We have heard the rival contentions and perused the material on record. We are in agreement with the contention of the counsel for the assessee that the AO has itself observed that the assessee has made addition in electrical fittings of ₹ 24, 230/- on which it claimed depreciation @ 15%. Accordingly, when this fact has not been disputed by the AO, Ld. CIT(Appeals) has erred in facts and in holding that assessee has not given exact details of addition. On the allowability of the rate of depreciation, we observe that the issue is covered in favour of the assessee in the case of Cera Sanitaryware Ltd. [2016] 68 taxmann.com 433 (Ahmedabad - Trib.), which has held that if electrical fittings, fans etc., are integral part of plant or machinery, depreciation is to be allowed at same rate which is applicable to plant and machinery. Further, ITAT Ahmedabad in the case of Century Tiles Ltd. [2014] 51 taxmann.com 515 (Ahmedabad - Trib.) held that Electric installations that were part of plant and machinery, are eligible to depreciation as plant and machinery. I.T.A Nos. 284 & 313/Ahd/2020 and 8 Ors. A.Ys. 2012-13 & 2016-17 Page No DCIT Vs. Adani Power Ltd. 41 21.1 In view of the above observations, ground number 4 of the assessee’s appeal is allowed. 25. Respectfully following the above decisions, this ground raised by the assessee is hereby allowed. 26. In the result, the appeal filed by the Revenue and Assessee are partly allowed. 27. Since the facts in other assessment years are also identical, the decision rendered in ITA No. 284/Ahd/2020 and 313/Ahd/2020 will be squarely applicable mutatis mutandis for the other Assessment Years 2013-14 to 2016-17 in ITA Nos. 333, 334, 314, 372, 522 & 543/Ahd/2020 and C.O. Nos. 07 & 08/Ahd/2021. 28. In the net result, the Revenue appeal, Assessee appeal and Cross Objection are partly allowed. Order pronounced in the open court on 29 -09-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 29/09/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद