M/s Oswal Woollen Mills Ltd., Ludhiana V. ACIT, C-7, Ludhiana

ITA 1161/CHANDI/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4430 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-1969
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Keywords: Depreciation; Additional depreciation; Earning of tax free income; Revised return; Rule 8D; Set aside
• Section: 139; 143(3); 14A; 115JB; 80IB; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B” CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L NEGI, JUDICIAL MEMBER आयकर अपील सं./ITA Nos. 1210 & 1211/Chd/2019 Ǔनधा[रण वष[ / Assessment Years : 2012-13 & 2013-14 The ACIT, Circle-7, Ludhiana बनाम M/s Oswal Woollen Mills Ltd., G.T. Road, Sherpur, Ludhiana ̾थायीलेखासं./PAN NO: AAACO1973F अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent आयकर अपील सं./ITA Nos. 1161 & 1162/Chd/2019 Ǔनधा[रण वष[ / Assessment Years : 2012-13 & 2013-14 M/s Oswal Woollen Mills Ltd., G.T. Road, Sherpur, Ludhiana बनाम The ACIT, Circle-7, Ludhiana ̾थायीलेखासं./PAN NO: AAACO1973F अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Hearing through video Conferencing Ǔनधा[ǐरतीकȧओरसे/Assessee by : Shri Navdeep Sharma, Advocate राजèवकȧओरसे/ Revenue by : Sh. Sandeep Dahiya, CIT DR & Sh. Ashok Kumar, Addl. CIT स ु नवाईकȧतारȣख/Date of Hearing : 09.02.2021 उदघोषणाकȧतारȣख/Date of Pronouncement : 05.05.2021 आदेश/Order Per R.L. Negi, Judicial Member: The Revenue and the assessee have filed the captioned cross appeals against the two orders, both dated 01.06.2019 for the Assessment Years 2012-13 & 2013-14), passed by the learned Commissioners of Income Tax 2 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana (Appeals)-3, Ludhiana [for short ‘the Ld. CIT(A)], whereby the Ld. CIT(A) has partly allowed the appeals preferred by the assessee against the assessment orders passed u/s 143(3) of the Income Tax Act, 1961 (for short 'the Act'). Since all the appeals pertain to the same assessee and the issues raised by the parties are common, these were clubbed, heard together and are being disposed of by this common and consolidated order for the sake of convenience. ITA No. 1210/Chd/2019 AY 2012-13 2. Brief facts of the case pertaining to the assessment year 2012-13 are that the assessee, a public limited company, engaged in the business of manufacturing of woolen yarn and garments, filed its return of income for the assessment year under consideration declaring total income of Rs. 41,22,58,328/- under the normal provisions and Rs. 55,39,18,266/- under section 115JB of the Act. Later on, the assessee revised its return and declared its income at Rs. 40,78,82,513/- The case was selected for scrutiny and the AO passed assessment order u/s 143(3) of the Act determining the total income of the assessee at Rs. 43,26,29,567/- under the normal provisions after making addition of Rs. 1,27,78,174/- on account of disallowance u/s 14A of the Act read with rule 8D of the Income Tax Rules, addition of Rs.29,49,499/-on account of disallowance u/s 36(1)(iii), addition of Rs. 41,96,383/- on account of disallowance u/s 36(1)(iii) proviso and addition of Rs. 48,23,000/- on account of disallowance of carbon credits. Further, the AO determined the income of the assessee and section 115JB at 3 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana Rs.57,15,19,440/- after making addition of Rs. 1,27,78,174/- on account of disallowance u/s 14A read with Rule 8D and addition of Rs. 48,23,000/- on account of carbon credits disallowance. The assessee challenged the assessment order before the ld. CIT(A). The ld. CIT(A) after hearing the assessee partly allowed the appeal of the assessee. The ld. CIT(A) restricted the disallowance u/s 14A r.w rule 8D to the exempt income earned by the assessee, allowed the additional depreciation claimed by the assessee abd directed the AO not to apply Rule 8D for computing book profit u/s 115JB and deleted the addition made on account of carbon credit disallowance. The Revenue and the Assessee have filed the cross appeals against the said findings of the ld. CIT(A) 3. The Revenue has challenged the impugned order by raising the following grounds of appeal: - i) "Whether on the facts and in the circumstances ices of the case and in law, the Ld. CIT(A), is justified in restricting the disallowance u/s 14A without appreciating the observation of Hon'ble Supreme Court in Maxopp investment Ltd., Reported in (2018) 91 taxmann.com 154 (SC) that as per section 14A(1) of the Act, deduction of that expenditure is not to be allowed which has been incurred by the assessee in relation to income which does not form part of the total income under this Act?" ii) "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the claim of additional depreciation to be carried forward as the assessee has never claimed this carry forward of additional depreciation in its return of income and there are no provisions under the Income Tax Act to make amendment in the return of income at the assessment stage without revising the return and that this argument of the Revenue is well supported by the decision of the 4 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana Hon'ble Supreme Court in the case of Goetze (India) Ltd Vs. CIT 284 ITR 323 in which the Hon'ble Court has dismissed the appeal of the assessee on the issue whether the appellant assessee could make a claim for deduction other than by filing a revised return?" iii) "Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified directing the AO not to apply Rule 8D while computing the disallowance for the purpose of Book profit u/s 115JB?" iv) "Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition by considering the receipt on a/c of carbon credit as Capital in nature?" v) That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 4. On the other hand, the assessee has filed cross appeal against the order passed by the Ld. CIT(A) on the following effective grounds: - 1. a) That the worthy CIT(A)-3, Ludhiana erred in law and on facts in upholding the applicability of rule 8D in spite of fact that the appellant itself computed the disallowance on proportionate basis u/s 14A of the Act. Directions may be given to compute the disallowance u/s 14A on proportionate basis as held in appellant own case in Assessment Year 2010-11. b) Without prejudice & in alternative, Worthy CIT(A)-3, Ludhiana, i) further erred in law and on facts in not giving directions to compute the disallowance by taking the average total investment on which the dividend exempt income accrued instead of total average investments. Directions be given to compute the disallowance by considering only those investments on which exempt income is earned, as 5 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana held by Hon'ble ITAT Special Bench in Vireet Investment Ltd...165 ITD 0027 (SB). ii) further erred in law and on facts in not giving directions to compute the disallowance u/s 14A read with rule 8D, by excluding interest paid on term loan of Rs 17,44,95,000/-, interest on working capital loan of Rs 14,16„44,000/- as well as other borrowing cost of Rs. 15,31,000/- and interest paid to parties Rs 2,63,47,000/- for business purposes which are directly attributable to business receipts subjected to tax. Directions be given to compute the disallowance by excluding the above-mentioned interest expenses while computing disallowance u/s 14A read with rule 8D. 2. That the Worthy CIT(A)-3, Ludhiana erred in law and on facts in upholding the addition/disallowance of Rs. 1,44,21,842/- being disallowance of interest paid on working capital loan and term loan for purchase of investments in spite of the fact that fresh investments made during the year under consideration were made out of the funds available from the liquidated investments and the internal accruals. Directions be given to delete the said disallowance as the appellant has sufficient own funds in the shape of capital and reserves. 3. That the Worthy CIT(A)-3, Ludhiana erred in law and on facts in upholding the addition/disallowance of Rs. 41,96,383/- being disallowance of interest of CC account, for purchase of fixed assets. Directions be given to delete the said disallowance as the appellant has sufficient own funds in the shape of capital and reserves.” 6 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana 5. Since ground No. 1 of the Revenue’s appeal and grounds raised by the assessee in its cross appeal are on the issue of restricting the disallowance u/s 14A read with Rule 8D of the Income Tax Rules (Rules) by the Ld. CIT(A), we take the aforesaid ground for adjudicating the issues raised by the revenue and the assessee. 6. The Ld. Departmental Representative submitted before us that the Ld. CIT(A) has restricted the addition to the exempt income of the assessee ignoring the ratio laid down by the Hon’ble Supreme Court in the case of Maxopp Investment Ltd. (2018) 91 taxmann.com 154 (SC). The Ld. DR further submitted that u/s 14A (1) of the Act, no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to the income which does not form part of the total income under the Act. Accordingly, the Ld. DR submitted that the impugned order may be set aside and the order passed by the AO may be restored. 7. On the other hand, the ld. Counsel for the assessee submitted that the issue pertaining to the disallowance u/s 14A read with Rule 8D has already been dealt with by the Chandigarh Bench of the Tribunal in assessee’s appeal ITA No. 37/Chd/2015 for the assessment year 2010-11, wherein the Tribunal has restricted the disallowance to Rs. 9,36,183/- computed by the assessee on proportionate basis as against the addition of Rs. 1,18,64,346/- made by the AO. The Ld. Counsel further submitted that in the present case, the assessee has submitted working of disallowance on proportionate basis computed in accordance with the order of the jurisdictional Tribunal rendered in assessee’s appeal for the assessment year 2010-11, as per which the disallowance for the assessment year under consideration comes to Rs. 3,10,650/-. The Ld. Counsel accordingly submitted that since the action of the Ld. CIT(A) is not in accordance with the decision of the Tribunal, the same is liable to bet aside. Without 7 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana prejudice, the Ld. Counsel submitted that the disallowance may be computed by taking average investment on which dividend income accrued instead of average of total investment. The Ld. Counsel relied on the decision of the special Bench of the Delhi Tribunal in the case of ACIT vs. Vireet Investment Ltd. ITA No. 165 ITD 27 (Spl. Bench), decisions of the Chandigarh Bench of the Tribunal in the case of Ramtech Software Solutions Pvt. Ltd vs. CIT, ITA No.477.Chd/2015 and Nahar Poly Films Ltd. ITA No 76/Chd/2017. The Ld. Counsel further contended that the disallowance may be computed after excluding interest on working capital and term loans. To substantiate his contestation, the Ld. Counsel relied on the judgment of the Hon’ble Supreme Court in the case of Godrej & Boyce Manufacturing Co Ltd. Vs. DCIT 394 ITR 449 (SC), judgment of the Hon’ble High Court of Punjab and Haryana in the case of CIT vs. Max India Ltd. 388 ITR 81 (Pb. & Haryana.) decisions of the Mumbai Benches of the Tribunal in the case of Bennett Coleman & Co Ltd. Vs. Addl. CIT 168 ITD 631 (Mum) and High Tech Engg. Vs. ITO 164 ITD 94 (Mum.) and the decision of the Chandigarh Bench of the Tribunal in the case of ACIT vs. Avon Cycles ITA No. 931/Chd/2013. 8. We have heard the rival submissions of the parties and gone through the material on record including the cases relied upon by the Ld. Counsel for the assessee and the Ld. D.R. As pointed out by the Ld. counsel, the coordinate Bench of the Tribunal has dealt with the identical issue in assessee’s own appeal for the assessment year 2010-11 and directed the AO to restrict the disallowance u/s 14A of the Act, to proportionate amount computed by the assessee. The findings of the coordinate Bench read as under: - “4. Being aggrieved by the above order of the Assessing Officer, the assessee preferred appeal before the Ld. CIT(A). It was pleaded before the Ld. CIT(A) that the funds from which the investments were made were mixed funds. That the 8 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana assessee was possessed of sufficient own / interest free funds to meet the investment in question. That as per law laid down by the Hon'ble jurisdictional High Court in the case of ‘Bright Enterprises Ltd. vs CIT’ (ITA No. 224 of 2013) dated 24.7.2015 (supra), wherein, it has been held that if there are interest free funds available to meet the investment, a presumption would arise that investment had been made out of the interest free funds generated or available with the company, therefore, no interest disallowance was attracted. It was also pleaded that the assessee had not incurred any expenses out of the administrative expenditure for the investment yielding dividend income. That the assessee made suo motu disallowance of administrative expenses incurred vis-a-vis total income earned by the assessee. However, the Ld. CIT(A) did not agree with the above contention of the assessee and upheld the disallowance made by the Assessing Officer. 5. Before us, the Ld. Counsel for the assessee has submitted a chart to show that the assessee was having sufficient interest free own funds in the shape of capital, reserves & surplus and cash accrual to meet the investments in question. A perusal of the said chart revels that the total capital reserves and surplus of the assessee during the financial year under consideration 2009-10 were at Rs. 19405.71 lacs and the total cash accruals of the assessee during the year were at Rs. 11071.90 lacs. The total investment during the year including the own old investments were only at Rs. 5809.29 lacs, which shows that the own / interest free funds of the assessee were sufficient to meet the investments. The issue is, thus, covered by the various decisions of the Hon'ble High Courts including that of the Hon'ble Jurisdictional High Court in ‘Bright Enterprises Ltd vs CIT’ (ITA No. 224 of 2013) dated 24.7.2015, wherein, it has been held that if assessee has funds / interest free funds available with it to make investment, the presumption will be that investment made by the assessee is out of own funds. The issue is also squarely covered by the recent decision of the Hon'ble Supreme Court in ‘CIT (LTU) Vs. Reliance Industries Ltd.’ [2019] 410 ITR 466 (SC). We, therefore, do not find any infirmity in the order of the Ld. CIT(A) on this issue. In view of the above, no disallowance of interest expenditure is attracted in this case. 9 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana 6. So far as the administrative expenses are concerned, the assessee has given a scientific formula for calculating the disallowance out of administrative expenses. However, we find that the assessee while taking the total administrative expenses has not considered the personal expenses and other allowances. The authorized representative of the assessee, before us, has submitted another chart, wherein, the personnel expenses and other allowances have been included and thereby the proportionate of disallowance out of administrative expenses has been computed as under: - “Disallowance u/s 14A In case of regular computation Amount (In Rs.) 1.Amount of dividend income 10656014 2. Operating income 6336864325 3 % of dividend income 0.00168 4. Amount of expenses 556724538 5. Proportionate amount of disallowance of expensed to earn dividend 936183 Details of expenses a. Interest paid to others 21202161 b. Administrative expenses 130240267 c. Personal expenses and other allowances 405282110 556724538” 7. None of the lower authorities have pointed out any defect in the computation of proportionate disallowance computed by the assessee except that certain part of the administrative expenses were not taken into consideration which has been taken into consideration in the computation made above. Even the assessee has claimed that it has not incurred any administrative expenses for earning of tax-exempt income. The Assessing Officer in this respect has not recorded any dissatisfaction taking into consideration the accounts of the assessee. The Hon'ble Bombay High Court in the case of ‘Godrej & Boyce Manufacturing Co.’ 328 ITR 81 has held that under section 14A of the Act, resort can be made to Rule 8D of the Income Tax Rules for determining the amount of 10 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Sub section (2) does not ipso facto enable the Assessing Officer to apply the method prescribed by the rules straightaway without considering whether the claim made by the assessee in respect of such expenditure is correct. The satisfaction of the Assessing Officer must be arrived at on an objective basis. In a situation where the accounts of the assessee furnish an objective basis for the Assessing Officer to arrive at a satisfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rules. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and in the event that he comes to the conclusion that he is not satisfied with the claim of the assessee. We may further observe that the Hon'ble Delhi High Court in a recent decision has further given a similar view in the case of "CIT vs. Taikisha engineering India Ltd." (supra) and has held that the AO having regard to the accounts of the assessee is required to record his satisfaction that the self or voluntarily expenditure offered by the assessee or claim that no expenditure has been incurred by the assessee in relation to earning of exempt income was not correct or the same was unsatisfactory on examination of the accounts of the assessee. Without recording such a satisfaction, he cannot proceed to apply Rule 8D for the computation of disallowance under section 14A. However, as observed above, in the case in hand, the Assessing officer has not followed the guidelines of objective satisfaction as laid down by the Hon'ble Bombay High Court in the case of ‘Godrej & Boyce’ (supra) while making the disallowance. Neither the Assessing Officer nor the Ld. CIT(A) has pointed out any defect in the working given by the assessee in computing suo motu disallowance except that a certain part of tax relating to the personnel expenditure and other allowances were not taken into consideration. In the working given before us, as reproduced above, whereby, the proportionate amount of disallowance of expenditure to earn dividend income has been computed at Rs. 9,36,183/- by including the personnel expenditure and certain other expenses, as noted above. In view of this, the disallowance of administrative expenses is restricted to Rs. 9,36,183/-. However, the assessee will get the benefit / set 11 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana off at the suo motu disallowance offered by the assessee in the return of income at Rs. 1,33,928/- and accordingly the addition is restricted to Rs. 8,02,255/-.” 9. We notice that the assessee had raised the identical ground in its appeal before the Tribunal for the assessment year 2010-11 as the Ld. CIT(A) had confirmed the disallowance u/s 14A of the Act, computed under Rule 8D of the Rules. In respect of disallowance under Rule 8D(ii), the contention of the assessee was that it had sufficient own interest free funds to meet the investment in question. Contention of the assessee in respect of disallowance under Rule 8D(iii) was that it had not incurred any administrative expenses for earning exempt income. Since the AO had not recorded any dissatisfaction taking into consideration the accounts of the assessee, the coordinate Bench directed the AO to restrict the disallowance to the proportionate amount computed by the assessee after including the personal expenditure and certain other expenses. The contention of the Ld. Counsel is that there is no change in the facts of the present case and the assessee has submitted the working in this case in accordance with the order passed by the Tribunal in asssessee’s own case for the assessment year 2010-11. 10. The Ld. DR did not controvert the contention of the Ld. Counsel that there is no material change in the facts of the present case. During the course of arguments, the Ld. DR submitted that even if the disallowance is to be computed as per the order of the Tribunal rendered in assessee’s appeal for the assessment year 2010-11, the working submitted by the assessee cannot be accepted as correct without verifying the same by the AO. Accordingly, the Ld. DR submitted that the issue may be sent back to the AO for determining the disallowance considering the plea of the assessee that the issue involved is covered by the order of the Tribunal. The assessee has placed on record the working of proportionate 12 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana disallowance after including the personal expenditure. Under these circumstances, we do not find any reason to take a different view in this assessment year. Hence, respectfully following the decision of the coordinate Bench rendered in assessee’s own case for the assessment year 2010-11, we send this issue back to the AO for ascertaining as to whether the working submitted by the assessee is in accordance with the direction given by the coordinate Bench in assessee’s own case for the assessment year 2010-11 and in case it is found correct, to restrict the disallowance to the computation made by the assessee. Further we find merit in the alternative plea of the Ld. Counsel that the disallowance u/s 14A read with Rule 8D (2) cannot exceed the exempt income earned by the assessee. The contention of the Ld. counsel is based on the ratio laid down by the Hon’ble Delhi High Court in the case of Joint Investment (P) Ltd. Vs. CIT, 372 ITR 694 (Delhi), Trident Ltd. Vs ACIT, ITA No. 184/Chd/2016, ACIT vs Rico Casting Ltd. ITA No. 724/Chd/2014 and Maxopp Investment Ltd Vs CIT 402 ITR 640(SC), in the said cases, the ITAT, the Hon’ble High Court and the Hon’ble Supreme Court have held that disallowance u/s 14A read with Rule 8D cannot exceed the exempt income. Hence, we further direct the AO to restrict the disallowance to the exempt income of the assessee in case the disallowance exceeds the exempt income while computing the same as per direction of the coordinate Bench given in assessee’s case for the assessment year 2010-11 discussed above. We therefore do not find any merit in the first ground of appeal of the revenue. Accordingly, Ground No I of the revenue’s appeal id dismissed and cross appeal filed by the assessee is allowed for statistical purposes. 11. Vide ground No. 2, the Revenue has challenged the action of the Ld. CIT(A) in allowing claim of additional depreciation during the assessment proceedings. The Ld. DR 13 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana submitted before us that since the assessee had not claimed carry forward of additional depreciation in its return of income, there is no provision under the Income Tax Act to make amendment in the return of income at the assessment stage without revising the return. The Ld. DR relied on the judgement of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs CIT 284 ITR 323 to substantiate his contention. 12. On the other hand, the Ld. counsel for the assessee submitted that this issue is covered in favour of the assessee by the decisions of Chandigarh Bench of the Tribunal in the case of ACIT Vs Budhewal Cooperative Society Ltd, ITA No. 1077/Chd/2012 and the judgement of the Hon’ble Punjab & Haryana High Court in the case of CIT Vs Ramco International 332 ITR 306 (P&H). Since, the Ld. CIT(A) has decided this issue in favour of the assessee by following the decision of the Tribunal and the ratio laid down by the Hon’ble jurisdictional High Court, there is no merit in the contention of the Revenue. 13. We have perused the material on record including the cases relied upon by the Ld. Counsel for the assessee. As pointed out by the Ld. Counsel, the coordinate Bench in the case of Budhewal Cooperative Sugar Mills Ltd. Vs ACIT (supra) following the ratio laid down by the Hon’ble Jurisdictional High Court in the case of CIT vs Ramco International (supra) allowed the identical claim of the assessee made on the basis of a letter filed after the last date on which the revised return could have been filed u/s 139 (5) and not filing revised return. The findings of the coordinate Bench read as under: - “9. We have heard the rival contentions and perused the record. The assessee is a cooperative society constituted of farmers and is engaged in the marketing of agricultural produce grown by its members. The assessee society is running sugar mills. I n t h e p r ec e d i n g y e a r s t h e assessee had made a claim for deduction under section 8oP(2)(a)(iii) of the Act, which was disallowed b y the CIT (Appeals) and the Tribunal and was upheld by the Hon'ble Punjab & Haryana High Court as reported in 14 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana Karnal Cooperative Sugar Mills Ltd. Vs. CIT [253 ITR 659 (P&H)]. In view of the above said, the assessee while filing the return of income f o r t h e c a p t i o n e d a s s e s s m e n t y e a r d e c l a r e d i t s i n c o m e o f R s . 4 7 , 5 0 , 1 6 0 / - and did not claim any deduction under section 8oP(2)(a)(iii) of the Act. However, during the course of assessment proceedings, the assessee by way of letter dated 15.12.2004 pointed out that the issue decided by the Division Bench of the Hon'ble Punjab & Haryana High Court against the assessee, has been referred to a Larger Bench of the Hon'ble Punjab & H a r y a n a H i g h C o u r t a n d c o n s e q u e n t l y i t w a s e n t i t l ed t o t h e c laim of deduction under section 8oP(2)(a)(iii) of the Act. The assessee by way of the said letter dated 15.12.2004 made the aforesaid claim of deduction under section 8oP(2)(a)(iii) of the Act. However, the same was rejected by the Assessing Officer on the premise that the assessee had not filed the revised return within the stipulated period as provided under the Act and the claim was made only by way of letter dated 15.12.2004, which was not entertainable. The Assessing Officer also rejected the claim of the assessee as the issue before the Larger Bench of the Hon'ble Punjab & Hary a n a H i g h C o u r t w a s p e n d i n g f o r d i s p o s a l . The CIT (Appeals), however, admitted that the issue had been settled in favour of the assessee by the Larger Bench of the Hon'ble Punjab & Haryana High Court in assessee's own case reported in 315 ITR 351 (P&H) and the assessee was eligible for the said deduction claimed under section 8oP(2)(a)(iii) of the Act. However, the claim of the assessee was rejected as the assessee had failed to furnish a revised return of income in respect of the said claim of deduction. 10. The case of the assessee before us is that the revised claim of deduction was made before the CIT (Appeals) also and the same should have been entertained in view of the settled position of law. The claim by way of letter dated 15.12.2004 was rejected by the authorities below in view of the ratio laid down by the Hon'ble Supreme Court in Goetze (India) Limited Vs. CIT (Supra) wherein it has been laid down that any claim made otherwise than in the return of income or the revised return of income cannot be entertained by the Assessing Officer. However, the plea of the assessee is that it had made the said claim even before the CIT (Appeals) as the issue had been settled in favour of the assessee b y t h e L a r g e r B e n c h o f t h e H o n ' b l e P u n j a b & H a r y a n a H i g h C o u r t i n assessee's own case reported in 315 ITR 351 (P&H) and the same should have been allowed by the CIT (Appeals). 11. W e f i n d t h a t t h e H o n ' b l e P u n j a b & H a r y a n a H i g h C o u r t i n C IT V s . Ramco International (supra) allowed the claim of deduction under section 80IB of the Act as the form No. 10CCB in respect of the said claim was filed during the assessment proceedings and it was held that the assessee was not to make 15 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana any fresh claim and had duly furnished and submitted the form for deduction, there was no requirement of filing any revised return. The plea of the Revenue before the Hon'ble High Court that the judgment of Hon'ble Supreme Court in Goetze (India) Limited Vs. CIT (supra) was applicable and deduction was not allowable, was not accepted by the Hon'ble Court. 12. In view of the above said ratio laid down by the Hon'ble Punjab & H a r y a n a H i g h C o u r t i n C I T V s . R a m co I n t e r n a t i o n a l (s u p r a ) , w e a r e o f the view that the claim of deduction made by the assessee under section 80P(2)(a)(iii) of the Act is to be considered in the present facts and circumstances of the case, even though the assessee had raised said claim by way of letter dated 15.12.2004 and had not furnished any revised return of income. The assessee had raised the issue before the CIT (Appeals) and even before us. Further the issue on merits had been decided in favour of the assessee by the Full Bench of the Hon'ble P u n j a b & H a r y a n a H i g h C o u r t ( s u p r a ) . Further the appeals filed by the assessee against the earlier appeals dismissed by the Division Bench of the Hon'ble Punjab & Haryana High Court were decided by the Hon'ble Apex Court in Morinda Co-op. Sugar Mills & Ors. Vs. CIT, Chandigarh in Civil Apll No.2445 of 2005, vide judgment dated 26.9.2012, and it was held that the claim of the assessee whether the process undertaken by it was manufacturing or not, it had to be tested on the principle laid down in the case of CIT Vs. Oracle Software India Ltd. [320 ITR 546 (SC) wherein it had been held as under: "The terms 'manufacture' implies a change, but every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. However, this test of manufacture needs to be seen in the context of the above process. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word 'manufacture'." 13. The Hon'ble Supreme Court in assessee's own case thus held that the above test has to be applied and adjudicated on case-to-case basis. It depends on the type of product which ultimately emerges from a given operation. In our view, this aspect has not been examined by the Courts below. The matter was set aside to the file of the CIT (Appeals) with directions to decide and ascertain whether the operation undertaken by the assessee was or was not manufacture. In view of our admitting the claim of the assessee vis-a-vis deduction under section 80P(2)(a)(iii) of the Act and following the ratio laid down by the Hon'ble Supreme Court in assessee's own case, we remit the present issue also back to the file of the CIT (Appeals) to decide the issue in line with the directions of the Hon'ble 16 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana Apex Court. The ground No.2 raised by the assessee is allowed for statistical purposes. 14. The Ld. CIT(A) has decided this ground of appeal in favour of the assessee by following the decision of the coordinate Bench in the case of Budhewal Cooperative society Ltd. (supra) and the other cases relied upon by the assessee. In our considered view, the findings of the Ld. CIT(A) are based on the decision of the coordinate Bench discussed above. We further notice that the case law relied upon by the Ld. DR has already discussed and considered by the coordinate Bench of the Tribunal in the case relied upon by the Ld. counsel. We, therefore, do not find any reason to take a different view in this case. Hence, respectfully following the decision of the coordinate Bench discussed above, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal of the Revenue. 15. Vide Ground No. 3, the Revenue has challenged the action of the Ld. CIT(A) in directing the AO not to apply Rule 8D for the purpose of computing income u/s 115JB. The Ld. DR submitted before us that the Ld. CIT(A) has wrongly directed the AO not to apply Rule 8D while computing income u/s 115JB, however, fairly admitted that this issue is covered in favour of the assessee by the order of the Chandigarh Bench of the Tribunal in the case of ACIT Vs Nahar Capital & Financial Services Ltd ITA No. 1124/Chd/2014 for AY 2011-12, ITA No. 1353/Chd/2012 for the AY 2009-10 and ITA No. 1120/Chd/2011 for the AY 2008-09 and in the case of CIT Vs Vireet Investment (P) Ltd 165 ITD 27 (Special Bench) ITAT. 16. On the other hand, the Ld. Counsel submitted that since the said ground is covered in favour of the assessee by the decision of the special Bench of the Tribunal in the case of CIT 17 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana Vs Vireet Investment (P) Ltd (supra) and other cases of the coordinate Benches, there is no merit in this ground of appeal of the Revenue. 17. Admittedly, this ground of appeal has already been decided in favour of the assessee by the coordinate Bench in the cases referred above. The Special Bench of the ITAT Delhi has categorically held in the case of CIT Vs Vireet Investment Pvt Ltd. (supra) that Rule 8D cannot be applied while computing book profit u/s 115JB of the Act. Since, the findings of the Ld. CIT(A) are in accordance with the decision of the coordinate Bench and the decision of the Special Bench of the ITAT Delhi, in our considered view, there is no merit in this ground of appeal of the Revenue. Hence, in view of the decisions referred above, we uphold the findings of the Ld. CIT(A), we dismiss this ground of appeal of the Revenue. 18. Vide ground No.4, the Revenue has challenged the action of the Ld. CIT(A) in treating the Carbon Credit Receipts as capital in nature. The Ld. Counsel for the assessee submitted before us that this issue is covered in favour of the assessee by the decision of the Chandigarh Tribunal in assessee’s own case ITA No. 1122/Chd/2014 for the AY 2010-11. 19. On the other hand, the Ld. CIT(A) admitted that the Chandigarh Bench decided the identical issue in favour of the assessee in its own case for the AY 2010-11. 20. We have perused the material on record. We notice that the Coordinate Bench has already decided the identical issue in favour of the assessee in assessee’s own case for the AY 2010-11 by following the decision of the coordinate Bench in ITA No. 389/Chd/2013 in the case of DCIT Vs Kotla Hydro Power Pvt Ltd. Since the findings of the Ld. CIT(A) are based on the decision of the coordinate Bench, we do not find any reason to interfere with the findings of the Ld. CIT(A). Accordingly, we uphold the findings of the Ld CIT(A) and dismiss this ground of appeal of the Revenue. 18 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana ITA No. 1211/Chd/2019 AY 2013-14 The facts of the present case are identical to the facts of the assessee’s case for the AY 2012-13, decided above except the amount the additions made by the AO. Further, the issues raised by the parties are common in both the cases. Hence, we do not consider it necessary narrate the facts of this case to avoid repetition. 2. Ground No.1 of the present appeal is identical to ground No.1 of the revenue’s appeal ITA No. 1210/Chd/2019 for the AY 2012-13 and grounds of cross appeals filed by the assessee for the assessment year 2013-14 are identical to the grounds of cross appeal file for the assessment year 2012-13. We have set aside Ground No. 1 of the revenue’s appeal and ground raised by the assessee in its cross appeal for the assessment year 2012-13 and allowed the cross appeal filed by the assessee for statistical purposes and since there is no material change in the facts of the present case, our findings in assessee’s appeal for the AY 2012-13 shall mutatis mutandis apply in the present case also. 3. Similarly, ground No.2 of the present appeal is identical to Ground No. 2 of the assessee’s appeal for the AY 2012-13 aforesaid. We have dismissed this ground of appeal of the Revenue in ITA No. 1210/Chd/2019 and since there is no material change in the facts of the present case except the amount of claim made by the assessee. Consistent with our findings, we dismiss this ground of appeal of the assessee for the reasons mentioned in Revenue’s appeal ITA No. 1210/Chd/2019 (supra). 4. Further, ground No.3 of the present appeal is identical to ground No. 3 of the Revenue’s appeal in assessee’s case in AY 2012-13. Since we have dismissed this ground of appeal of the Revenue in ITA No. 1210/Chd/2019 for the AY 2012-13, for the same reasons, we dismiss this ground of appeal of the Revenue in the present case. 19 ITA Nos. 1210 & 1211-c-2020 & 1161 & 11162-c-2020- M/s Oswal Woolen Mills Ltd., Ludhiana In the result, the appeal filed by the revenue and the assessee for the assessment years 2012-13 and 2013-14 are partly allowed for statistical purposes. Order pronounced on 05.05.202. Sd/- Sd/- ( N.K. SAINI) (R.L.NEGI) उपाÚय¢ /Vice President ÛयाǓयक सदèय/ Judicial Member Dated : 05.05.2021 2021 “आर.के.” आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. आयकरआय ु Èत (अपील)/ The CIT(A) 5. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयआͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 6. गाड[फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar