M/s. Hindustan Zinc Limited, Udaipur V. NFAC / ACIT, Circle-2, New Delhi / Udaipur

ITA 128/JODH/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8506 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 10-10-2022
• Assessment Year: misc
• Appeal Filed On: 22-09-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Business expenditure; Opportunity of being heard; Principle of natural justice; International transaction; Rule of consistency; Earning of tax free income; Period of limitation; Competent authority; Revised return; Revenue expenditure; Capital expenditure; TDS; Rule 8D; Set aside
• Section: 147; 37; 263; 154; 2; 92C; 143(3); 92; 92D; 92B; 92F; 80HHC; 153A; 234B; 14A; 115JB; 37(1); 201(1); 143(1); 250; 80IA; 201; 144C; 274; 80IC; 143(2); 191; 207; 192; 139(4); 64; 113; 80IC; 43; 73; 13; 153(2A); 153; 22; 153C; 92CA

Judgement Text

vk;dj vihyh; vf/kdj.k] tks/kiqj U;k;ihB] tks/kiqj IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH JODHPUR. (CASE HEARD AT JAIPUR BENCH ‘DB’ JAIPUR) Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA Nos. 127 & 128/JODH/2022 Assessment Years : 2017-18 & 2018-19. M/s. Hindustan Zinc Limited, Yashad Bhawan, Swaroop Sagar Road, Udaipur. cuke Vs. National Faceless Assessment Centre, Delhi. LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAACH 7354 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Ajay Vohra (Sr. Advocate) Shri Neeraj K. Jain (Advocate) & Shri Ramit Katyal (CA) jktLo dh vksj ls@ Revenue by : Shri Sanjay Dhariwal (CIT-DR) lquokbZ dh rkjh[k@ Date of Hearing : 11.10.2022. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 15/11/2022. vkns'k@ ORDER PER BENCH : These are two appeals filed by the assessee against two orders of Assessing Officer dated 29.07.2022 & 28.07.2022 for the assessment years 2017-18 & 18-19 respectively passed u/s 143(3) r.w.s. 144C(13) read with section 144B of the Income Tax Act, 1961. Common grounds are raised in both these appeals, therefore, both these appeals are disposed off by this combined order for the sake of convenience. The assessee has raised the following grounds of appeal :- 2 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. ITA NO. 127/Jodh/2022 – A.Y. 2017-18 : “1. That the assessing officer (AO) / National Faceless Assessment Centre (NFAC) erred on facts and in law in completing assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.ws. 143(3) of the Income-tax Act ("the Act") at an income of Rs. 8445,98,12,500 as against the returned income of Rs. 63,25,11,95,270. 1.1 That on the facts and circumstances of the case and in law the order dated 29.07.2022 passed by the AO/NFAC under section 143(3) read with section 144B /144C(13) of the Act, having been passed beyond limitation provided in terms of Section 144C(13) read with section 153(3) of the Act, is illegal being barred by limitation, void ab initio and is liable to be quashed. 1.2 That on the facts and circumstances of the case and in law directions issued by the DRP after the period of 9 months prescribed in terms of section 144C(5) of the Act are barred by Limitation and thus the impugned Assessment order under section 143(3) read with section 144B/144C(13) of the Act passed pursuant thereto by the AO/NFAC is liable to be quashed. 2. That the AO/NFAC erred on facts and in law in completing the assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.w.s 143(3) of the Act at an income of Rs. 84,45,98,12,500, after making additions/ disallowances to the income of Rs. 63,90,56,88,720 determined in the intimation issued under section 143(1)(a) of the Act, and thereby making addition and disallowance also in respect of adjustments aggregating to Rs. 65,44,93,450 made in the intimation. 2.1. That the AD/NFAC erred on facts and in law in completing the assessment under section 143(3) read with section 144C(13)144B and order passed under section 154 r.w.s 143(3) of the Act in making addition and disallowance also in respect of adjustments aggregating to Rs. 65,44,93,450 made in the intimation issued under section 143(1)(a) of the Act, without issuing any show cause notice and without giving any opportunity of hearing to the Appellant, which is in contravention of the scheme of faceless assessment as provided in section 144B of the Act and such an action of the AO is against Natural justice and as such the said disallowance cannot sustain and should be deleted. 3. That the DRP/AO/ NFAC/TPO erred on facts and in law in disallowing deduction claimed by the AO under section 80-IA of the Act in respect of Captive Power Plants (CPPs) amounting to Rs. 11,08,24,50,372 (in aggregate) in respect of the following undertakings, allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer (TPO): i. by a sum of Rs. 252,02,36,273 for CPP 80MW at Chanderia Lead and Zine Smelter, ii. by a sum of Rs. 220,94,71,451 for CPP 80MW at Zawar Mines; iii. by a sum of Rs. 635,27,42,648 for CPP 160MW at Rajpura Dariba. 3 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 3.1 That the DRP/NFAC/AO/TPO erred on facts and in law in reducing the claim under section 80IA in respect of CPP units by considering the transfer pricing of the power supplied by CPP to other manufacturing unit of the Appellant @ Rs. 2.53 per unit as against Rs.7.76 to Rs.8.64 per unit considered by the Appellant being the rates at which electricity is purchased from SEBs. 3.2 Without prejudice, that the DRP/NFAC/AO/TPO erred on facts and in law in reducing the claim of deduction under section 80-IA in respect of CPP units to Nil instead of restricting the disallowance of deduction under section 80-IA to the extent of the difference between the per unit rate of Rs.7.76 to Rs. 8.64 per unit as considered by the Appellant and Rs.2.53 per unit considered by the TPO/the AO as the market price. 3.3 That the DRP/NFAC/AO/TPO erred on facts and in law in not appreciating that the specified domestic transaction of transfer of power by the Captive Power Plants (CPP) of the Appellant was appropriately benchmarked by applying the other method on the basis of rates at which the power is supplied by the State Electricity Boards (SEBs) to third party consumers. 3.4 That DRP/NFAC/AO/TPO erred on facts and in law in considering the rate at which power is supplied by the power generation companies to the State Electricity Boards ('SEBs') as an appropriate comparable for benchmarking the Specified Domestic Transaction of supply of power undertaken by the Appellant. 3.5 That the DRP/NFAC/AO/TPO erred on facts and in law in relying upon the tariff order issued by the SEBs for the purpose of undertaking benchmarking analysis without appreciating that the said rates are for supply for power by power-generation companies to SEBs for further supply to the ultimate customers and not for the consumption by SEBs themselves. 3.6 That the DRP/NFAC/AO/IPO erred on facts and in law in not appreciating that the CPP supplies continuous uninterrupted power which is critical for the operations of the appellant and is therefore, at a premium even in comparison to rates charged by SEBs for supply of power. 4. That the DRP/NFAC/AO/TPO erred on facts and in law in holding that the Appellant was not entitled to deduction u/s 80-IA of the Act amounting to Rs. 2,64,58,812 for generation and transfer of steam which is included in the profit computed for CPPs at Chanderiya and Dariba, thus reducing the claim of the Appellant u/s 80-IA by the corresponding amount in the order passed under section 143(3) read with section 144B/144C(13) and order passed under section 154 r.ws 143(3) of the Act, allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer (TPO). 4.1 That the DRP/NFAC/AO/TPO erred on facts and in taking cost of steam at NII when the powers of TPO are limited to determining the Arm's Length Price. 4 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 5. That the AO/NFAC erred on facts and in law in arbitrarily enhancing the income of the Appellant in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.ws 143(3) of the Act, by making an addition of Rs. 50,99,00,000, allegedly on account of allocation of common/HO expenses amounting to Rs. 50,99,00,000 in the order under section 92CA(3) passed by the TPO, in respect of the CPP units of the appellant eligible for deduction under section 80-IA and in respect of the undertaking eligible for deduction under section 80-IC. 5.1 That the DRP/NFAC/AO/TPO erred on facts and in apportioning Head Office expenses and depreciation on assets on turnover basis while computing profits relatable to various tax holiday units and thus reducing the claim by a sum of: A. Rs. 2,00 Cr for CPP 80 MW Chanderiya B. Rs. 3.50 Cr for CPP 80 MW Zawar C. Rs. 2.82 Cr for CPP 160 MW Rajpura Dariba D. Rs. 42.24 Cr for 80IC Unit of Pantnagar Lead and Zinc Plant (PLZP) 5.2 The DRP/NFAC/AO/TPO erred in facts and in law in holding that the deduction u/s 801A for the wind power plants (WPPs) was available only after apportioning HO expenses and depreciation on common assets on turnover basis while computing profits relatable from the following WPPs, and thus reducing the deduction claimed by a sum of Rs. 43,00,000. 6. That the DRP/NFAC/AO/TPO erred on facts and in law in enhancing the income of the eligible units under section 80-IC of Pantnagar Zinc and Lead Plant (PLZP) of the Appellant by Rs. 1543,73,18,062; and Pantnagar Silver Metal Plant (PSMP) by Rs. 1068,72,78,348, in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, allegedly on account of Transfer Pricing (TP") adjustment disregarding the arm's length price and the methodical economic analysis and benchmarking carried out by the Assessee in the TP documentation maintained by it in terms of Section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962. 6.1 That the AO/NFAC/DRP/TPO erred on facts and in law in disallowing deduction under section 80-IC of the Act in respect of the eligible units under section 80-IC of Pantnagar Zinc and Lead Plant (PLZP) of the Appellant; and Pantnagar Silver Metal Plant (PSMP) to the extent of Rs. 800,45,96,398 (in aggregate), allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ("TPO"). 6.2 That the AO/NFAC/DRP/TPO erred on facts and in law in holding that deduction u/s 80IC of the Act in respect of Pantnagar Lead & Zinc Plant (PLZP) is available by determining the income of PLZP, the eligible unit u/s 801C, in the ratio of expenditure incurred by the PLZP and other units of the Appellant, thereby making an adjustment of Rs. 1543,73,18,062. 5 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 6.3 That the AO/NFAC/DRP/TPO erred on facts and in law in holding that deduction u/s 801C of the Act in respect of Pantnagar Silver Metal plant (PSMP) is to be allowed by determining the income of PSMP, the eligible unit u/s 801C, in the Profit to Cost ratio of other eligible units of the Assessee after making disallowance of deduction in those units, thereby making an adjustment of Rs. 1068,72,78,348. 6.4 That the AO /NFAC/ DRP/TPO erred on facts and in law in disregarding the rule of consistency and not appreciating that the approach adopted by the Appellant has been accepted by the TPO in Appellant's own case in an earlier Assessment Year (ie. AY 2013-14) and the AO in the first year of the claim by the exempt units. 6.5 That the DRP/AO/NFAC/ TPO erred on facts and in law in making the adjustment by following an inappropriate approach and in the process, modifying the audited profit and loss account of the eligible units of the Appellant, which is not permitted. 6.6 That the DRP/AO/NFAC/ TPO erred on facts and in law in making the adjustment inappropriately considering the processing costs incurred by the units as the correct representative and measure of the actual contribution/value created by such units. 6.7 That the DRP/AO/NFAC/ TPO erred on facts and in law in making the adjustment holding that computation of transfer price of inter-unit transactions of PSMP unit presents exceptional difficulty and thus, considering a different approach for PSMP unit based on the Profit to Cost ratio of other eligible units of the Appellant after making disallowance of deduction in those units. 6.8 That the DRP/AO/NFAC/ TPO erred on facts and in law in making an adjustment adopting an inconsistent approach of selective allocation of profits to PLZP, PSMP units and taxable units of the Appellant, without taking into consideration the contribution made by the CPP units. 6.9 That the DRP/AO/NFAC/ TPO erred on facts and in law in disregarding the favourable judicial pronouncements while making the TP adjustment, including the ruling passed by the Hon'ble ITAT in Appellant's own case. 7. The Ld. TPO/NFAC/AO/DRP erred in facts and in law in making an adjustment of Rs. 66,54,233, ie, 15.86% of Rs. 4,19.56,073 in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 rws 143(3) of the Act, allegedly on account of mark- up on Business Support Services under normal provisions of the Act. 7.1 That the AO/NFAC/TPO/ DRP erred on facts and in law in ignoring the fact that the Appellant incurred expenses amounting to Rs. 4,19,56,073, towards third-party cost on behalf of its overseas AEs, which were in the nature of pass-through costs not involving any value addition and were rightly charged back without any mark up to the relevant AEs at cost. 7.2 The Ld. TPO/DRP/AO/NFAC erred in facts and in law in making addition of Rs. 66,54,233 on account of TP adjustment mark-up on Business Support Services, not apprecting that the similar adjustment was deleted by CIT(A)-1 6 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Udaipur, in AY 2015-16, and thus the addition made is in violation of the mandatory directions of the DRP in terms of section 144C(13) of the Act. 8. That the AO/ DRP/NFAC erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Rs. 15,31,69,157 u/s 14A of the Act, both under normal provisions and for computing Book profit under MAT as per section 115JB of the Act, not appreciating the fact that the assessee has suo moto disallowed a sum of Rs. 65,72,510 u/s 14A under the normal provisions and made adjustment of Rs. 15,31,69,157 us 14A of the Act while computing Book profit under MAT and under normal provisions of the act. 8.1 That the AO/ DRP/NFAC erred on facts and in law in making disallowance of Rs. 15,31,69,157 w/s 14A of the Act read with rule 8D of the Income tax Rules, 1962, both under normal provisions and for computing Book profit under MAT alleging that the Appellant was having huge investments and it is quite certain that administrative expenses such as salary, other services fees, printing and stationery, postage and stamp, telephone, bank charges, legal and professional fees, office expenses, clerical and other administrative expenses are made in acquiring, maintaining the tax free investments and earning the tax free income. Further, it is alleged that assessee has not established that the tax-free investments were made out of non-interest bearing funds only. 9. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s. 143(3) of the Act, of Rs. 94,55,355 w/s 35(2AB) of the Act. 9.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the required Form 3CL provided by the assessee was valid for the impugned AY 2017-18. 10. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Grass Root expenses of Rs. 54,69,30,401 being expenditure on exploration which is necessary for sustaining the existing business of mining of metals holding that such expenses pertain to prospecting operations, which did not result in commercial exploitation of mines. 10.1 That the AO/ DRP/NFAC erred on facts and in law in not appreciating that the above grass root expenditure was not incurred in respect of mining areas where the mining license is granted, and no commercial production has yet started and thus were not disallowable in terms of provisions of section 35E of the Act. 10.2 That the AO/ NFAC/DRP erred on facts and in law in not appreciating that the above grass root expenditure was held to be deductible business expenditure by the Hon'ble ITAT, Jodhpur in AY 2011-12 (in ITA No. 246&262/JODH/2017) and in AY 2012-13/ (in ITA No. 404&412/Jodh/2017). 7 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 11. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of staff welfare expenses of Rs. 23,66,67,865, being the expenses towards canteen facility, school activities, sport club, scholarship, other club, etc. holding them to be not allowable u/s 40A(9) of the Act, as well as holding them to be in the nature of corporate social responsibility expenses disallowable in terms of Explanation 2 of section 37 of the Act. 11.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the above expenses were incurred in the course of the business by the appellant pursuant to statutory or contractual obligation and were held to be deductible business expenditure in the earlier years. 12. That the AO/NFAC erred of facts and in law in allowing TDS credit of Rs. 5,74,27,821 instead of Rs. 5,86,75,126 claimed in the return of income. 13. That the AO/NFAC erred of facts and in law in levying interest under section 234B of Rs. 519,54,53,048 and interest under section 234C of Rs.588,64,174 instead of Rs. 425,34,666. 14. That the AO erred on facts and in law in initiating penalty proceedings under section 270A r.w.s 274 of the act for the alleged under-reporting of income. The Appellant craves leave to add, amend, alter or vary, any of the aforesaid grounds of appeal before or at the time of hearing of the appeal and consider each of the grounds as without prejudice to the other grounds of appeal.” 2. The brief facts of the case are that the appellant company is engaged in the business of mining of ore and manufacturing of Zinc and lead and in the process generates several by products like silver, sulphuric acid and allied products. Also, it had set up power plants for captive consumption. The power generated from such Captive Power Plants has been transferred to other manufacturing units of the appellant. 2.1 For the assessment year 2017-18, the appellant filed return of income declaring income of Rs. 63,25,11,95,270/-. Scrutiny assessment was initiated vide notice issued under section 143(2) of the Income Tax Act, 1961 and draft 8 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. assessment order was passed on 29.09.2021 under section 144C read with section 143(3) of the Act at total income of Rs. 8329,54,19,051/-. 2.2 Pursuant to the draft assessment order, objections were filed by the appellant before the Dispute Resolution Panel (DRP) which were disposed vide directions issued under section 144C(5) of the Act on 20.06.2022. Giving effect to the DRP order, the assessment order under section 143(3) read with section 144C(13)/144B and order passed under section 154 read with section 143(3) of the Act at an income of Rs. 8445,98,12,500/- as against the returned income of Rs. 6325,11,95,270/- after making the various additions/disallowances. Aggrieved by the order of A.O, the assessee is in appeal before this Tribunal. Ground nos. 1, 1.1 & 1.2 relate to assessment order barred by limitation. 3. Before us, the ld. Counsel for the assessee submitted that in terms of the provisions of sub-section (1) of Section 153 of the Act, the assessing officer is required to pass assessment order within twenty one months from the end of the relevant assessment year. 3.1 Sub Section (4) of Section 153 of the Act provides additional time of 12 months for passing the assessment order in cases where a reference is made to the Transfer Pricing officer. Accordingly, the assessing officer was required to pass final assessment order within 33 months from the end of the relevant assessment year and after considering the extended time allowed under Taxation and Other Laws 9 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. (Relaxation and Amendment of Certain Provisions) Act, 2020 the order was required to be passed on or before September 30, 2021. 3.2 The final assessment order was however passed by the assessing officer on 29.07.2022 i.e. much beyond the time limit for passing the final assessment order. 3.3 In terms of section 153(1)/(4) of the Act, and after considering the extended time allowed under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 the assessing officer was required to pass final assessment order on or before September 30, 2021 . In view of the aforesaid, it is submitted that the order dated 29.07.2022 passed by the assessing officer under sections 143(3) r.w.s. 144C(13)/144B of the Act is barred by limitation and is therefore unlawful. 3.4 Reliance is placed in this regard on the decision of the Hon’ble Madras High Court in the case of CIT vs Roca Bathroom Products Pvt Ltd (WA NO. 1609&1610 of 2021) (ref. pages 619 to 673 of CL Paper book) ,wherein the Hon’ble High Court held as under: “20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the Appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the 10 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the Appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years. 21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter-dependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal’s order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter- department arrangement and it cannot defeat the rights of the assessee” It is submitted that the Hon’ble Delhi Bench of the Tribunal too, in the case of Super Brands Ltd. UK vs ADIT (ITA No. 3115/Del/2019) (at pages 674 to 706 of CL Paper book), relying upon the aforesaid decision of the Hon’ble Madras High Court quashed the order passed by the assessing officer as barred by limitation. 3.5 In view of the aforesaid, it is submitted that the order dated 29.07.2022 passed by the assessing officer under sections 143(3) r.w.s. 144C(13)/144B of the Act is barred by limitation and is, therefore, unlawful and is liable to be quashed being invalid. 4. On the other hand, the ld. D/R submitted written submissions regarding limitation issue raised by the appellant as under :- 11 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. “ Sequence of events ( AY 2017-18) Order by TPO 31.01.2021 Draft order by AO u/s 144C(1) 29.09.2021 Directions u/s 144C(5) by DRP 20.06.2022 Assessment u/s 144C (13) 29.07.2022 1. Time limit as per section 153(1) r.w.s. 153(4) for this year was 33 months, i.e., 31.12.2020 to determine the last date to pass order by TPO. However, this time limit was extended by Taxation and Other Laws Amendment Act, 2020 dated 29.09.2020 and Notification No. 93 to 31.03.2021, which was further extended to 30.04.2021 vide Notification No. 10/2021 dated 27.02.2021, to 30.06.2021 vide Notification No. 38 dated 27.04.2021 and to 30.09.2021 vide Notification No. 74 dated 25.06.2021. 2. All the orders were passed within the time limits as prescribed u/s 144C and 92CA(3A) of the Act. 3. Sequence of events (AY 2018-19) Order by TPO 31.07.2021 Draft order by AO u/s 144C(1) 29.09.2021 Directions u/s 144C(5) by DRP 20.06.2022 Assessment u/s 144C (13) 28.07.2022 4. Time limit as per section 153(1) r.w.s. 153(4) for AY 2018-19 was 30 months, i.e., 30.09.2021 to determine the last day on which order was to be passed by the TPO. 5. All the orders were passed within the time limits as prescribed u/s 144C and 92CA(3A) of the Act for AY 2018-19 also. 6. Sub-section (1) of section 153 prescribes the general time-barring date and it does not override any other provision while section 144C is a code in itself. Sub-section (4) of section 153 prescribes that if any reference is made to the TPO, then time barring date u/s 153(1) is extended by 12 months. Sub- section (3A) of section 92CA mandates that TPO is required to pass order u/s 92CA(3) of the Act sixty days prior to the date of limitation u/s 153 of the Act. 12 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Sub-section (1) of section 144C overrides all other provisions of the Act. Sub- section (4) and (13) of section 144C overrides section 153 and 153B of the Act. The harmonious construction of all these provisions is that the TPO has to pass the order 60 days before the time-barring date u/s 153(1)/153(4) of the Act and without prejudice to any provision u/s 153 of the Act, the AO will pass order u/s 144C(13) of the Act within one month from the end of the month in which directions by the DRP u/s 144C(5) are received by him. 7. The Hon’ble Madras High Court in the case of Roca Bathroom Products Pvt Ltd has held that all proceedings should be completed within the time limit prescribed u/s 153 of the Act and this is the outer time-limit. The overriding provisions in section 144C(13) does not extend the time-limit specified in section 153 of the Act and it only means that if directions are received earlier then AO will not wait for the outer time-limit and order will be passed within one month. 8. The finding of the Hon’ble High Court was given in a writ petition wherein the Court was required to pass order of writ in a case wherein original proceedings were complete and all the orders were passed assuming the time-limits as those assumed in the present case. The petitioner never challenged the final orders u/s 144C(13) in that case in original proceedings, although orders were passed beyond the time-limits u/s 153(1)/ 153(4) of the Act. The aforesaid fact is evident from the dates mentioned at page 27 and 28 of the judgement (APB 645 and 646). It was because of inordinate delay in the remand proceedings, wherein the AO was required to pass the final order u/s 153(2A) of the Act within one year, that the Hon’ble High Court has given the above findings. The facts of the present case are totally different. Here there is no remand proceedings and essential facts which triggered the observations of the Hon’ble High Court in that case are missing. 9. With due respect to the Hon’ble High Court, the findings of the High Court in respect of the ordinary proceedings (which were not the subject matter of the remand proceedings) are contrary to the provisions of the Act, because of the following: 13 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. i. The reasoning given by the Hon’ble High Court that order u/s 144C(13) is to be passed within the limitation prescribed u/s 153 of the Act and limitation of one month does not extend the time-limit, but it curtails the time-limit, is against the legislative event. There nothing in section 153 which suggests that time-limit specified in that section will also be applicable to the order u/s 144C(13). Had this been the intention of the Legislature, then it would have mentioned section 144C(13) also in sub- section (1) of section 153 of the Act. It is to be noted that the Legislature has consciously not mentioned section 144C(13) whereas section 143(3) and 144 are mentioned in section 153(1). This is to ensure that section 144C remains a code in itself. The Hon’ble Supreme Court in the case of South India Corporation Pvt Ltd v The Secretary, Board of Revenue 1964 AIR 207 has held that: “It is settled law that a special provision should be given effect to the extent of its scope, leaving the general provision to control cases where the special provision does not apply.” (Page-13) ii. The Co-ordinate benches of the Tribunal have consistently held that in a case where reference is made to the TPO, time-limit to pass order u/s 144C(13) would be one month from the end of the month in which directions were received by the AO from the DRP. Time limit specified in section 153 has no relevance, except setting the time limit for the TPO to pass order u/s 92CA(3) of the Act. The landmark order on the issue is in the case of Honda Trading Corporation, Japan v DCIT reported in 61 taxmann.com 233 by Hon’ble Delhi Tribunal, wherein it has been held that: “ 5.16 We have heard the marathon arguments advanced by both the sides on the point. The controversy which looms large before us is to decide the nature of order referred to in section 153, thatis, whether it is draft order as contended by the ld. AR or the final assessment order as put forth by the ld. DR. We have set out supra the language of section 153, whose title is:"Time limit for completion of assessments and reassessments'. Then sub- section(1) of section 153 starts with the words: 'No order of assessment shall be made under section 143 or section 144 at any time after the expiry of' two/three years from the end of the assessment year in which the income was first assessable. Albeit a marginal note cannot control the language of a provision, yet it throws some light on the scope of the section. Marginal note of a section can be taken help of to interpret a provision, if the language as per the body of the provision accords with the same. If of the other hand, the language of a section does not concur with its heading, then obviously it is the language of the section which rules 14 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. rather than the marginal note. Reverting to the heading and language of section 153, we find that both are in complete harmony with each other. What has been mandated at both the places is the time limit for completion of assessment by means of passing an assessment order. An assessment can be said to be completed when an assessment order is passed determining the total income and also the amount of tax payable or refundable, as the case may be. The Hon'ble Supreme Court in Kalyan Kumar Ray v. CIT [1991] 191 ITR 634 has held that an assessment order involves determination of income and tax. It has been laid down that: "'Assessment' is one integrated process involving not only the assessment of the total income but also the determination of the tax. The latter is as crucial for the assessee as the former". It transpires that any order which does not determine the total income coupled with the amount of tax payable/refundable, cannot be equated with an order of assessment and till then it cannot be said that the stage of completion of assessment has arrived. xxxx 5.22 Now, we take up an important point raised by the ld. AR that if the time limit for the passing of the final assessment order international transactions having regard to the ALP was inserted the passing of the order by the TPO, being a period of sixty days prior to the date of completion of assessment as per section 153. Simultaneously, the time limit for passing of order u/s 153 in cases where a reference is made to the TPO, was also enhanced to thirty three months. Here, we would like to mention that later on this time limit u/s 153 was enhanced to three years. It means that with the insertion of section 92CA(3A), the time limit for passing of the assessment order continued to be still governed by section 153, though the time limit for passing of the order by the TPO was also set within the overall time limit prescribed u/s 153 for the passing of the assessment order. The provisions of section 144C about 'Reference to the dispute resolution panel', were inserted by the Finance (No. 2) Act, 2009 w.e.f. 1.4.2009. This led to the ushering in the era of passing the draft order. It means that up to the A.Y. 2008-09, when the mechanism of DRP and the passing of draft order was not in place, the final assessment order pursuant to the order of the TPO was required to be passed within the time limit given in section 153. However, when the institution of the DRP and the concept of passing a draft order came into being w.e.f. the A.Y. 2009-10, the time limit for the completion of assessment came to be governed by sub-section (4) or (13) of section 144C. This shows that upon the introduction of section 144C, there emerged two simultaneous time limits for completion of assessments, viz., the one which was already existing as per section 153 and the latest one, which came to be introduced through section 144C. At this stage, it is significant to note one salient feature in the time limits enshrined under subsections(4) and (13) of section 144C. Such common thread is 15 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. that the time limits given in both the sub-sections are 'notwithstanding anything to the contrary contained in section 153 or ...'. This transpires that the time limits for completion of assessment as prescribed in sub-sections (4) and (13) of section 144C have been superimposed on the time limit as given under third proviso to section 153(1) for the passing of the assessment order. Effect of the insertion of this non-obstante clause in sub sections(4) and (13) of section 144C is that the hitherto applicable time limit given in section 153 came to expressly excluded for the purposes of completion of the final assessment order pursuant to the draft order. Under this scenario, as is also instantly prevalent, the time limit for the passing of the final assessment order finds its place under sub-sections (4) or (13) of section 144C. On having covered the time limit for completion of assessment u/s 144C, now it became necessary for the legislature to remove the time limit for completion of assessment as contained in section 153. This could have been possibly done by omitting section 153, which was not possible as this section ab initio contains general time limit for completion of all assessments and reassessments and it is/was never confined only to the orders passed pursuant to the determination of the ALP by the TPO. Then the course open was either to insert a sunset clause in this regard in section 153 itself or add a non-obstante clause in section 144C(4) and (13). The legislature chose the second option and made it unequivocal by mentioning in subsections(4) and (13) that the provisions of section 153 shall not apply. There is a reason for not adding a sunset clause in section 153. The reason is that section 92CA mandating the TPO to pass order determining the ALP of international transactions, also contains sub-section (3A), which provides time limit for the passing of the order by the TPO. As per this provision inserted by the Finance Act, 2007 w.e.f. 1.6.2007, the TPO may pass order u/s 92CA(3) 'at any time before sixty days prior to the date on which the period of limitation referred to in section 153,..... for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires'. Since the time limit for passing of the order by the TPO is not direct but is linked with the time limit as per section 153, the legislature did not insert any sunset clause in section 153, which would have otherwise made the provision of sub-section (3A) of section 92CA unworkable without the insertion of a separate corresponding provision giving time limit for the passing of the order by the TPO. This is the answer to the ld. AR's poser that when the time limit for completion of assessment is contained in section 144C, then the provisions of section 153 cannot be read as meaningless except for linking it with draft order. In our considered opinion, it is overt that the time limit u/s 153 is not meaningless as the same has been retained for keeping alive the time limit given to the TPO for passing his order. 16 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 5.24 We have noticed above that the term 'draft order' has been statutorily coined u/s 144C(1). It means that the term 'draft order' has been recognized as and is actually different in ambit from the term 'assessment order'. With the insertion of section 144C, which led to the birth of the draft order, the legislature did not substitute the term 'order of assessment' with the term 'draft order' in section 153. If the intention of the legislature had been to substitute the hitherto time limit for passing of the assessment order as the time limit for the passing of draft order henceforth, on shifting the time limit for passing of the final assessment order to section 144C(4) or (13), then it would have made necessary changes in section 153 by substituting the term 'draft order' with the term 'order of assessment'. In fact, the term 'draft order' is totally absent in section 153, which indicates that it has been treated as alien to section 153. If we accept the contention of the ld. AR that after the introduction of section 144C, the time limit provided u/s 153 applies only to the draft order, it would amount to re-writing section 153 which falls in the exclusive domain of the Parliament. We are unable to read the term 'draft order' interchangeably with the term 'assessment order' in the context of section 153 or practically for any other purpose. 5.25 Now we take up the next argument of the ld. AR that if the time limit prescribed u/s 153 is considered as relating to the completion of assessment, this will leave no other provision setting out the time-frame for passing of the draft assessment order. He argued that it cannot be contemplated that the legislature has given unlimited time-frame to the AO for passing a draft order. We find that, in fact, no time limit has been prescribed for the passing of the draft order. It is also equally relevant to note that prior to the introduction of sub-section (3A) to section 92CA by the Finance Act, 2007, there was no time limit for the passing of the order by the TPO, though sub-section (3) requiring the passing of order by the TPO, was inserted by the Finance Act, 2002. It means that during the interregnum, though there was a requirement for the passing of order by the TPO, but there was no specific time limit for the passing of such order. The mere fact that no time limit has been prescribed for the passing a draft order, does not and cannot mean that the time limit for the completion of assessment given u/s 153 should be inferred as that for passing a draft order. 5.26. It is a settled legal position that where no time limit is prescribed for passing an order, then such order should be passed within a reasonable time. Section 201 requires the passing of order under sub-section (1) treating a person responsible as an assessee in default in case there is a failure to deduct tax at source or after deduction, there is a failure to pay tax at source. Prior to insertion of sub-section (3) of section 201 by the Finance (No. 2) Act, 2009 w.e.f. 1.4.2010, no time limit 17 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. was prescribed for the passing of such an order. The Honourable High Courts and the benches of the tribunal across the country have recognized the position that no time limit has been prescribed for passing an order treating a person responsible as assessee in default. Whereas the Hon'ble Calcutta High Court in British Airways v. CIT [1992] 193 ITR 439/[1991] 54 Taxman 470 has held that since no period of limitation for liability has been statutorily given, even the order passed after 6 years is valid, the Hon'ble Delhi High Court in CIT v. NHK Japan Broadcasting Corpn [2008] 305 ITR 137/172 Taxman 230 has held such order in the absence of the express time limit should be passed within a period of four years. Legislature stepped in by way of insertion of sub-section (3) to section 201 w.e.f. A.Y. 2010-11 providing the time limit for passing of the order deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time within (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed; (ii) six years from the end of the financial year in which payment is made or credit is given, in any other case. The rationale of this discussion is that the absence of a statutory time limit for passing an order is not an absolutely impossible situation. In a case, where no time limit has been prescribed, then requisite order should be passed within a reasonable time. As there is no time limit prescribed for the passing of the draft order, such order is also required to be passed within a reasonable time. Coming back to the facts of the instant case, we find that the information from the Japanese Competent authority was received by the DIT on 24.1.2014. By no standard, the passing of the draft order on 11.7.2014, that is, within a period of less than six months from the date of such receipt of information, can be construed as having been passed in an unreasonable time. As such, we jettison the view canvassed by the ld. AR that the time limit given u/s 153 should be read as relevant for the passing of draft order. 5.27 It is, therefore, summed up that the time limit for completion of assessment, or in other words, passing of the final assessment order pursuant to the order of the TPO, is contained in section 144C(4) and (13); the time limit given u/s 153 has no relation whatsoever with the passing of the draft order, which should be passed within a reasonable time; and the time limit given in section 153 is relevant for determining the time available with the TPO for passing order u/s 92CA(3). 5.28 Turning to the facts of the instant case, we find that the AO passed the final assessment order on 29.1.2015, which is well within a period of one month from the end of the month in which direction was received from the DRP on 24.12.2014. As such, we 18 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. hold that the final assessment order passed by the AO is within time prescribed u/s 144C(13). Further since the draft order has also been passed within a reasonable time, the same is also not barred by limitation. The contention of the ld. AR that the draft order passed in this case was barred by limitation, is therefore, found to be without any substance and hence repelled.” The Hon’ble Delhi Tribunal again had an occasion to deal with this issue in the case of Religare Capital Markets Pvt Ltd v ACIT and it was held that: 10. We have carefully considered the rival contentions and perused the orders of the lower authorities as well as the time lines which are under challenge before us. We do not have any hesitation in holding that the issues argued by the ld AR are squarely covered against the assessee by the decision of coordinate bench in ITA No. 1132/Del/2015 . The above order of the coordinate bench has clearly covers from para No. 5.22 onwards that in such cases the passing of the final assessment order pursuant to the order of the ld TPO as contained in section 144C(4) and (13), the time limit given u/s 153 has no relation whatsoever with the passing of the draft order, which should be passed within a reasonable time and the time limit given u/s 153 of the Act is relevant for the determination of time available with the TPO for passing order u/s 92CA(3). The facts before the coordinate bench was that the assessment order u/s 143(3) was passed on 29.01.2015 which is well within the period of one month in which the direction was received from the ld DRP on 24.12.2014, thus, the final order passed by the ld AO is within the time prescribed u/s 144C(13). As the draft order was also passed within a reasonable time same is also not barred by limitation. Against this decision no further appeal is filed by the Assessee. However, the ld AR has given a detail rebuttal to the submission of the revenue. 11. The first argument of the ld AR was that argument of the ld CIT DR that DRP proceedings are substitution of the appellant proceedings, thus, direction of the ld DRP like an appeal order therefore, provision of section 153 of the Act does not apply. The ld Authorized Representative referred to the decision of the Hon'ble Bombay High Court in 361 ITR 531 where it is held that DRP proceedings are not appellate proceedings. The Hon'ble Bombay High Court has held that the process before the ld DRP Panel is continuation of assessment proceedings as only thereafter would a final appealable assessment order be passed. However, the Hon'ble High Court further held that process before the ld DRP is a correcting mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the Assessee. 12. The ld Authorized Representative further stated that as the coordinate bench has held that the draft order is actually different in ambit from the assessment order and thus it is not appreciated that the draft assessment order is a proposed order of assessment and does not have any independent existence in law. It is not accompanied by notice of demand, not appealable and cannot be the basis of initiation of penalty. He therefore, submitted that 19 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. draft order of assessment cannot be equated with the assessment completed in pursuance of direction of DRP u/s 143(3) read with section 144C(13) of the Act. The argument of the ld AR though looks attractive but on careful examination of the same we are not impressed. The provisions of the income tax act 1961 sets out a special scheme for the assessment of an entity engaged in international transaction under Chapter X of the income tax act in terms of section 144C (1) to section 144C (14) of the income tax act. Therefore it is apparent that it is not an assessment scheme as applicable to other assesses. It is a scheme of assessment in respect of matters that included the transfer pricing adjustment. According to the provisions of section 144C (1) and order of the draft assessment proposing a variation to the income or loss as returned by the assessee is to be forwarded to the assessee by the assessing officer. On receipt of that order assessee is given 2 options to be exercised within 30 days of the receipt of the draft order either to accept the draft order and intimate the assessing officer accordingly or to file objections to the proposed variations with the dispute resolution panel and the assessing officer. If the assessee exercised an option to accept the draft order nothing else is required to be done except to complete the assessment on the basis of the draft order. Such order i.e. the draft order becomes the final order when acceptances received or the period for filing of the objection expires. Ifthe objections are filed by the assessee the dispute resolution panel issue directions as it thinks fit and enabling the assessing officer to complete and issue the order of final assessment. Provisions of subsection 6, 7, 8 and 9 of section 144C sets out the procedure to be followed by the dispute resolution panel in issue of the direction. The section further provides that every direction issued by the dispute resolution panel shall be binding on the assessing officer. Thus it seen that AO cannot tinker or apply anything further than what was mentioned in the draft assessment order except what is directed by the learned dispute resolution panel. The provisions of principles of natural justice are ingrained in the provisions of section 144C of the act. It further says a time limit of 9 months from the end of the month when the draft order is forwarded to the assessee for passing of issue of any directions. Upon receipt of the direction the AO shall pass an order of final assessment which is in conformity with the direction of the dispute resolution panel within one month from the end of the month in which the directions are received. There is no further provision of granting any opportunity to the assessee of further hearing. Thus the above provisions are a self-contained code. In this code, the role of the assessing officer ends the movement, the objections are filed by the assessee or draft order is accepted by the assessee. Therefore, the learned assessing officer cannot make any upward adjustment to the income of the assessee after passing of the draft assessment order. He also cannot initiate any further penalties which are attached to the assessment order if same are not initiated in the draft order. The rights of the variation to the income of the assessee are solely rest with the dispute resolution panel. Therefore the dispute resolution panel has a correcting power to the draft assessment order. AO does not have any power to do so. Therefore it is apparent that on the plain reading of the above provisions for all practical purposes the role of the assessing officer comes to an and the movement he passes the draft order. He 20 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. is only authorized to pass the final assessment order which is according to the directions of the learned dispute resolution panel. The above provisions also contained the separate time limits and it has its own timelines which binds the revenue as well as the assessee. The honourable Madras High Court in 398 ITR 645(2017) CIT vs Sanmina SCI India private limited in para number 7 has held that it is a self-contained code in itself. Thus, the provisions contained therein only determine the timelines of the passing of such order and not as provided u/s 153 of the act. Thus this argument of the assessee deserves to be rejected. 13. Further according to the provisions of section 253 of the Act pertaining to appeals to the tribunal, clause (d) of subsection 1 also separately carves out the appealable order as order passed by the assessing officer under subsection 3 of section 143 of section 147 of section 153A or section 153C in pursuance of the directions of the dispute resolution panel. Further, it may also be possible that in certain circumstances the provisions of section 263 of the income tax act also do not apply to orders passed under directions of the dispute resolution panel. Thus law has seen the assessment passed in pursuance of direction u/s 144C of the Act different from the regular assessment as envisaged u/s 153 of the Act. 14. The further argument of the learned authorized representative is that there is no time limit for passing of the draft assessment order under the scheme of section 144C and then same can be passed within a reasonable time is flawed. The argument advanced is that legislative intent is to progressively reduce the limitations for passing the assessment order to expedite the dispute resolution process and impart certainty & finality to assessment proceedings. As we have already held that it is a complete code in itself therefore it in fact it supports the intention of the legislature in providing expeditious resolution of the dispute between the taxpayer and tax gatherer. Thus this argument deserves to be rejected. 15. No doubt, the final order of assessment is passed pursuant to the direction of the learned dispute resolution panel but it cannot be said that that limitations provided under section 153 applies to it. As we have already held that it is a complete code in itself as held by the honourable Madras High Court, which also provides for specific limitations,if a particular procedure adopted by the assessee, then timelines provided therein will only apply. 16. Further, over and above the above decision of the Honda Trading Corp, Japan vs DCIT in ITA number 1132/del/2015 dated 15/9/2015 we also draw support from decision of the coordinate bench in case of Volvo India private limited vs ACIT IT (TP) A no. 1537/Bang/2012 dated 8/5/2019 and Acer India Pvt Ltd V DCIT 502/Bang/ 2017 dated 10/5/2019 which has also taken similar view against the assessee holding that if the assessment orders are passed within the timelines provided under section 144C of the income tax act, irrespective of the timelines prescribed under section 153of the income tax act, they are passed within the timelines provided under the law and are not time barred.” 21 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. iii. The Co-ordinate Benches have expressed the similar views in the following cases- (a) Envestmet Asset Management Pvt Ltd v ACIT, 53 taxmann.com 430 (Coachin-Trib) (b) Acer India Pvt Ltd v DCIT in IT(TP)A No. 502/Bang/2017 (c) Volvo India Pvt Ltd v ACIT in IT(TP)A No. 1537/ Bang/2012 (d) Pricewaterhouse Coopers (P) Ltd v DCIT, 117 taxmann.com 276 (Kol- Trib) Neither of the orders mentioned above were brought to knowledge of the Hon’ble Madras High Court. iv. The judgement of the non-jurisdictional High Court may have persuasive value, but it is not binding on the Hon’ble Tribunal, particularly when then various co-ordinate benches have taken the contrary view. It has been held by the Hon’ble Ahmedabad Special Bench in the case of ACIT v Goldmine Shares and Finance Pvt Ltd, 113 ITD 209 that : “54. We do not find any merits in these submissions of Mr. Vora. Firstly, the Supreme Court was dealing with the binding nature of the Supreme Court decision on the High Court, whereas we are dealing with the decision of a High Court and that too of a High Court having no jurisdiction over the case arising from a different State, which though has a high persuasive value is not binding in other jurisdiction. Secondly, the decision of Rajasthan High Court has not dealt with and was also not addressed to deal with the controversy by noticing the non obstante provisions of section 80- I(6)/80-IA(5) aforesaid. Thirdly, in any case the issue before Rajasthan High Court was whether Assessing Officer could be said to be justified to invoke section 154 to rectify the mistake which on a contentious matter is not permitted. Fourthly, a decision without noticing an existing provision of law governing the very issue in dispute cannot shut the doors of the Tribunal in considering and applying the provisions of law de hors the contrary decision of a High Court. This is because a statutory provision supersedes the contrary decision of any court including that of a High Court or even Supreme Court and has an ultimate force of law having greater force. Fifthly, in the first case it was not an actual non-consideration of a provision but as the Supreme Court itself says in the underlined portion by the intervener itself 'because they thought that "relevant provisions were not brought to the notice of the Court". ( emphasis supplied) 22 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. During the course of the hearing, the ld. AR argued that the above decision of the Special Bench has been reversed. It is submitted in this regard that reversal of decision on merits on particular issue of deduction u/s 80IA in some other case is in no way undermines the authority of the Special Bench on its view that a statutory provision supersedes the contrary decision of any court and a contrary decision of High Court does not shut the doors of Tribunal, if correct interpretation was not made. If the judgement of the hon’ble High Court is followed, then it would result in unintended consequences without any legislative sanction. As per section 92CA(3A) of the Act, the TPO is required to pass order sixty days prior to the time-barring date mentioned in section 153(1)/153(4) of the Act. Now, we take a hypothetical situation of a case, wherein the TPO used this time limit to the fullest extent possible (as has been done in this case also for AY 2018- 19). In that scenario even if we assume that no time was taken to pass the draft order and final assessment order, then also the DRP will have only two months to issue the directions. This will be against the legislative intention wherein the DRP has been given time of 9 months to issue directions as per the provisions of section 144C(12) of the Act. The DRP cannot be penalised for the time taken by the TPO and powers of DRP cannot be rendered as meaningless by resorting to such type of construction. The Act has already provided less time to the DRP in comparison to average time taken by the CsIT (Appeals) to dispose of cases. This time limit cannot be further curtailed by reading into something which is not present in the provisions. By no stretch of imagination, the function of DRP can be taken as extension of the assessment proceedings. DRP is an independent authority and it is not an income-tax authority as defined in section 116. vi. The interpretation of the Hon’ble High Court is not as per legislative intent will also be evident if we take a hypothetical example of a search case. Let us assume that last search authorization in the case was executed on 28.02.2022. In that scenario time limit for completion of the assessment u/s 23 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 143(3) for AY 2022-23 will be 31.03.2023 as per the provisions of section 153B(1)(b) of the Act. The person in whose case search was conducted can file return of income till 31.12.2022 u/s 139(4) of the Act. AO is required to issue notice u/s 143(2) and make reference to the TPO well before 31.03.2023. Thereafter time limit to complete the assessment will be extended to 31.03.2024. Now, in this case as per the interpretation of the Hon’ble High Court, passing of draft assessment order u/s 144C(1), issuing directions u/s 144C(5) and passing the final assessment order u/s 144C(13) is required to be done in just 15 months which is practically not possible and blatantly against the provisions of the Act. 10. The ld. AR during the course of the arguments had submitted that if provisions of section 153 are overlooked and not to be taken as outer limit for completing the assessment, then there will be no time-limit to pass order u/s 144C(1) of the Act, as there is no specific provision to pass order u/s 144C(1) of the Act. It is respectfully submitted that this issue has already been dealt with very elaborately and convincingly by the Hon’ble Delhi Tribunal in the case of Honda Trading Corporation in para 5.22 to para 5.26 reproduced supra. It has been discussed by the Hon’ble Tribunal that not laying down the time-limit is not a thing which is unheard of, and the same was also the case earlier with the orders u/s 201(1) of the Act and passing of the order by TPO in the initial years. Further, not laying down the time-limit in the Act does not mean that orders can be passes as per the whims and fancies of the Department and Courts will always examine whether the order has been passed within a reasonable time period or not. It is also submitted that there is an understanding with the officers of the Department that draft order is passed within the time limit provided in section 153(1)/153(4) of the Act, though it is not required in law. In this case also, draft orders u/s 144C(1) were passed within the time specified u/s 153(1) r.w.s. 153(4) of the Act. 24 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 11 (i). During the course of the proceedings, the ld. AR of the appellant has also relied upon the order of the Hon’ble Delhi Tribunal in the case of Sper Brands Ltd v ADIT. It is submitted that in that case there was no variation in income and only heads of income were changed. Therefore, the Hon’ble Tribunal held that in the given facts and circumstances draft order u/s 144C(1) was not required to be passed and therefore, extended time limit u/s 144C was not available. The AO was required to pass the assessment order within the normal time limit u/s 153 of the Act and since the orders were passed beyond that date, therefore, such orders were time-barred. In the aforementioned case, the Hon’ble Delhi Tribunal has heavily relied upon the findings of the Hon’ble Mumbai Tribunal in the case of IPF India Property, Cyprus. It is clear from para-7 of the said order ( Pg 684, Index of Case Laws-Vol.1 submitted by the appellant) that time limit gets extended when draft order is required to be passed. The Hon’ble Mumbai Tribunal has observed that- “Coming to the second part, we find that there is no dispute if no draft order was to be issued in this case, the assessment would have been time-barred on 31 st December, 2017 but the present assessment order is passed on 17 th August. 2018. Once we hold that no draft assessment order could have been issued in this case, as the provisions of section 144C(1) could not have been invoked in this case, the time limit of completion of assessment was available only upto 31 st December 2017. The mere issuance of draft assessment order, when it was legally not required to be issued, cannot end up enhancing the time limit for completing the assessment u/s 143(3).” In the present case, there is no dispute that draft assessment order was required to be issued. Once it was so, the order of the Hon’ble Mumbai Tribunal goes against the appellant, rather than supporting its cause. 11(ii). It is true that the Hon’ble Tribunal in Super Brands has allowed the appeal of the additional ground following the judgement of the Hon’ble Madras High Court in Roca Bathroom case, but factual foundations of the above case were absolutely different from the present case. Further, more importantly, the additional ground was allowed as the Department neither differentiated facts of the Roca Bathroom case from those present in that case and also did not cite the orders of the co-ordinate benches in that case. 25 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. It is clear from para-31 (Page-699) that additional ground was allowed as no distinguishing decision was brought into the knowledge of the Hon’ble Tribunal. 12. The ld. AR of the appellant during the course of the hearing placed reliance on the judgement of the Hon’ble Delhi High Court in the case of All India Lakshmi Commercial Bank Officers’ Union v Union of India reported in 150 ITR 1 probably to buttress the point that the Tribunals should follow the judgements of the High Courts. It is submitted in this regard that issue in that case was allowability of exemption for HRA u/s 10(13A) wherein the Hon’ble High Court held that looking at clause (13A) as a whole and by adopting the literal construction, the logical conclusion in the instant case was that the employees who were actually residing in their own residential houses/flats could not claim exclusion of the house rent allowance received by them from the total income under clause (13A)as those employees did not come within the specific words of the statute. Three judgements of Hon’ble Punjab and Haryana High Court were cited by the petitioners which were in favour of the petitioners, but the Hon’ble Delhi High Court dissented and ruled against the petitioners. It was observed by the High Court in para 8 that- “ 8. The petitioners also seek the quashing of the Circular No. 278, dated 26-8- 1980— [1980] 125 ITR (St.) 1, No. 298, dated 15-4-1981—[1981] 129 ITR (St.) 1, No.291, dated 4-2-1981—[1981] 130 ITR (St.) 4 and No. 342, dated 19-5-1982— [1982]135 ITR (St.) 94, in which the income-tax authorities have stated that they have not accepted the decisions of the Punjab and Haryana High Court referred to above and have moved appropriate proceedings in the Supreme Court against the same. In this view of the matter, the circulars proceed to say that income-tax would be deductible from employees in respect of HRA if such employees are residing in houses/flats owned by them. I grant that there is power in the Board under section 119 of the Act to issue orders, instructions and directions to others income-tax authorities for the proper administration of the Act and such authorities and all other persons employed in the execution of the Act have to observe these. The income-tax authorities acting anywhere in the country, however, have to respect the law laid down by the High Court, whether of the State in which they are functioning or of a different State, in the absence of any contrary decision of any other High Court. The said circulars and its language, therefore, are not in good taste. Since I am taking a view contrary to that of the Punjab and Haryana High Court, the circulars cannot be quashed.” 26 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. It is clear from the above observations that- (a) There is no finding, there are certain observations. The Hon’ble Court itself dissented from the judgement of the Hon’ble Punjab and Haryana High Court. This is important because Delhi High Court judgement was of Single Bench, wherein three judgements of the Hon’ble Punjab and Haryana High Courts were of Double Bench. (b) The observations were passed in respect of ‘income-tax authorities’ and not for Tribunals. Tribunal is not an income-tax authority and it cannot shut its eyes if any non-jurisdictional High Court delivers a judgement which is against the provisions of the Act and contrary to the law settled by various co- ordinate benches. Thus, it is clear from the above discussion that section 144C is a code in itself and time limit to complete assessment order is mentioned in section 144C(13) itself and section 153 does not come into picture while deciding the time-limit. Therefore, ground raised by the appellant on this issue needs to be dismissed as all orders were passed in both the years within the time limits as specified in section 144C(13) and section 92CA(3A) of the Act.” 5. In rejoinder, the ld. Counsel for the assessee submitted as under :- In terms of sections 153(1)/(4) of the Act, and after considering the extended time allowed under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 the assessing officer was required to pass final assessment order on or before September 30, 2021 . It was submitted that the order dated 29.07.2022 passed by the assessing officer under sections 143(3) r.w.s. 144C(13)/144B of the Act is barred by limitation and is, therefore, unlawful. In support of the contention that the assessment order passed under section 143(3) / 144C(13) of the Income-tax Act, 1961 (“the Act”) is barred by limitation, the appellant seeks to elucidate the legal position as under : 27 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Re.: Scheme of the Act with respect to assessment: The assessing officer who enjoys territorial jurisdiction over an assessee gets the jurisdiction to make assessment on filing of return by the assessee. Where the assessing officer seeks to scrutinize the return, the assessing officer issues notice under section 143(2) within the stipulated time. After collating the necessary details that may be required from the assessee and after granting an assessee adequate opportunity of being heard, the assessing Officer would pass the assessment under section 143(3) of the Act. Where the assessee had entered into international transactions within the meaning of section 92B of the Act, (“eligible assessee’) the assessing officer is required to make a reference to the Transfer Pricing Officer (“TPO”) to determine the arm’s length price (“ALP”) in respect of such international transactions. In case of such an eligible assessee, (as also defined in sub-section 15(b) of section 144C of the Act), the assessing officer is mandatorily required to pass proposed order of assessment (hereinafter referred to as ‘draft assessment order’). Once the draft assessment order is passed by the assessing officer and served on the eligible assessee, the eligible assessee may within 30 days of receipt thereof either (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with the Dispute Resolution Panel (“DRP”). [Refer section 144C(2) of the Act]. In case the eligible assessee is to accept the variations made in the draft assessment order or does not file objection thereto within the stipulated time (intending to pursue the appeal remedy before the CIT(A)), the assessing officer in such 28 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. circumstances has to pass the final assessment order within one month from the end of the month in which the acceptance is received. [Refer section 144C(4) of the Act]. Where the eligible assessee chooses to file objection before the DRP, the DRP is duty bound to dispose of the objections within 9 months from the end of the month in which the draft order is forwarded to the eligible assessee.[Refer section 144C(12) of the Act]. Upon receipt of directions issued by DRP, the assessing officer has to complete the assessment within one month from the end of the month in which the direction is received. [Refer section 144C(13) of the Act]. Re.: Limitation for framing assessment: The relevant provisions of section 153 of the Act as applicable at the relevant time read as under: “153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable:” Sub section (4) of Section 153 of the Act provides additional time of 12 months for passing the assessment order in cases where a reference is made to the Transfer Pricing officer. Re.: Legal Position: The Hon’ble Madras High Court in the case of CIT vs Roca Bathroom Products Pvt Ltd (WA NO. 1609&1610 of 2021) (ref. pages 619 to 673 of CL Paper book) held that : - DRP proceedings are continuation of the assessment proceedings; 29 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. - The assessment has to be completed within 21 months where no reference is made to the TPO and in 33 months where reference is made to the TPO; - In the additional 12 months, the draft order is to be passed, the objections to be filed, the DRP has to issue directions and final order under section 144C(13) read with section 143(3) of the Act has to be passed; - Provisions of section 144C(13) and section 153 are not mutually exclusive; - The non-obstante clause under section 144C(13) is for a limited purpose to ensure that de hors larger time being available under section 153, the final order, to be passed on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. In the opinion of the Hon’ble Madras High Court the time limit in section 144C(13) has to be subsumed within the overall limitation in section 153 of the Act and is not over and above the time limit of 33 months provided thereunder. The operative part of the order of the Hon’ble High Court is reproduced hereunder for ready reference: “20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the Appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the Appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years. 21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be 30 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter- dependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal’s order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assesse. 22. Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions. ..... ..... ..... 27. For the reasons set out herein before, we conclude as under: (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under Section 144C (12) of the Income Tax Act, (c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. 31 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed, (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act,” Following the aforesaid decision of the Hon’ble Madras High Court, which is the solitary decision of any High Court on the issue, the Delhi bench of the Tribunal in the case of Super Brands Ltd. UK vs ADIT (ITA No. 3115/Del/2019) (at pages 674 to 706 of CL Paper book), quashed the order passed by the assessing officer in the case of the assesse foreign company, [as eligible assesse under section 144C(15)(b)] beyond the limitation provided in section 153 of the Act as being barred by limitation. In the respectful submission of the Appellant, the decision of the Hon’ble Madras High Court in the case of Roca Bathroom (supra) being the only available High Court decision is binding and deserves to be followed, as held by the Hon’ble Delhi High Court in the case of All India Lakshmi Commercial Bank Officer’s Union vs UOI 150 ITR 1 (Del) (copy attached as Annexure 1), wherein the Hon’ble High Court held as under: “The income-tax authorities acting anywhere in the country, however, have to respect the law laid down by the High Court, whether of the State in which they are functioning or of a different State, in the absence of any contrary decision of any other High Court. The said circulars and its language, therefore, are not in good taste. Since I am taking a view contrary to that of the Punjab and Haryana High Court, the circulars cannot be quashed.” 32 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Similar view has been taken in the following cases holding that the Tribunal had to follow the law laid down by a non-jurisdictional High Court where there is no judgment of a jurisdictional Court: - CIT v. Highway Construction Co. (P.) Ltd.: 217 ITR 234 (Gau.) - CIT v. Abhay Kumar Jain : 281 ITR 431 (MP) -CIT v. SAE Head Office Monthly Paid Employees Welfare Trust, 271 ITR 159 (Delhi) -CIT v. Sarabhai Sons Ltd. : 143 ITR 473 @ 486 (Guj.) -CIT v. Maganlal Mohanlal Panchal (HUF)[1\1994] 210 ITR 580 (Guj.) The Special Bench of the Tribunal in the case of Maral Overseas Limited v. Addl. CIT: 136 ITD 177 (SB) @ pg 206 (Copy attached as Annexure 2) of the judgement, following the dictum of law laid down in All India Lakshmi Commercial Bank (supra) held that the Tribunal was bound by the only decision of the Hon’ble Karnataka High Court, (on the issue pending before the Special Bench) notwithstanding that the said decision was of the non-jurisdictional High Court. The relevant observations in the said judgement are reproduced hereunder: “57. Applying the proposition of law laid down by the above decision to the facts of the instant case, as the period of ten years from the year of start of manufacture has not expired as on the date when the amended provision came into force, the assessee is entitled to the benefit of tax holiday for the remaining period of ten years. It is pertinent to mention here that in the aforesaid decision, the Hon'ble Karnataka High Court went on to hold that even if the period of five years has expired as on the date of amended provisions but the period of ten years is still running, the assessee cannot be denied the benefit. Thus, the issue raised before this Special Bench is squarely covered by the aforesaid decision of the Hon'ble High Court of Karnataka. Since this is the only decision of the Hon'ble High Court on the issue, the same is binding on the Special 33 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Bench in view of the settled principle of judicial proprietary, as laid down in following cases:-............ Supreme Court in the case of Dunlop India Ltd.'s case (supra) : “We desire to add and as was said in Cassell & Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never be necessary for us to say so again that 'in the hierarchical system of courts' which exists in our country, 'it is necessary for each lower tier', including the High Court, 'to accept loyally the decisions of the higher tiers'. It is inevitable in a hierarchical system of courts that there are decisions of the supreme appellate tribunal which do not attract the unanimous approval of all members of the judiciary ...... But the judicial system only works if someone is allowed to have the last word and that last word, once spoken, is loyally accepted (See observations of Lord Hailsham and Lord Diplock in Broome v. Cassell). The better wisdom of the court below must yield to the higher wisdom of the court above. That is the strength of the hierarchical judicial system. In Cassell v. Broome [1972] AC 1027, commenting on the Court of Appeal's comment that Rookes v. Barnard [1964] AC 1129, was rendered per incuriam, Lord Diplock observed (p. 1131). "The Court of Appeal found themselves able to disregard the decision of this House in Rookes v. Barnard by applying to it the label per incuriam. That label is relevant only to the right of an appellate court to decline to follow one of its own previous decisions, not to its right to disregard a decision of a higher appellate court or to the right of a judge of the High Court to disregard a decision of the Court of Appeal." The Delhi High Court in the case of All India Lakshmi Commercial Bank Officers' Union v. UOI [1985] 20 Taxman 412, held that the income-tax authorities acting anywhere in India have to respect the law laid down by a High Court, whether of the State in which they are functioning or of a different State, in the absence of any contrary decision of any other High Court. Similar view has been taken in the following cases holding that the Tribunal had to follow the law laid down by a non-jurisdictional High Court where there is no judgment of a jurisdictional Court: - CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bom.) - CIT v. Highway ConstructionCo. (P.) Ltd. [1996] 217 ITR 234 (Gau.) 34 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. - CIT v. Smt. Nirmalabai K. Darekar [1990] 186 ITR 242/49 Taxman 74 (Bom.) - CIT v. Maganlal Mohanlal Panchal (HUF) [1994] 210 ITR 580 (Guj.).” The Hon’ble Bombay High Court in the case of CIT vs. Thane Electricity Supply Co.: 206 ITR 727, has however, taken a view contrary to aforesaid preponderant judicial position as laid down by the Hon’ble High Courts. The Supreme Court in the case of Union of India and others vs. Kamlakshi Finance Corporation Limited: 1992 Supp (1) Supreme Court Cases 443 / 55 ELT 433 (Copy attached as Annexure 3) emphasized the principles of judicial discipline as under: “It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department — in itself an objectionable phrase — and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in of tax in administration of tax laws.” 35 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Having regard to the dictum of law laid down by the Apex Court in the said judgement regarding respecting judicial hierarchy, in order to maintain judicial discipline, the Hon’ble Tribunal, it is respectfully submitted, is duty bound to follow the only decision of the Hon’ble Madras High Court directly on the point. In the present case, the assessing officer was required to pass final assessment order within 33 months from the end of the relevant assessment year and after considering the extended time allowed under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 the order was required to be passed on or before September 30, 2021. The final assessment order under section 143(3) r.w.s. 144C(13) of the Act, impugned in the present appeal, was, however, passed by the assessing officer on 29.07.2022, i.e., much beyond the time limit for passing the final assessment order and thus needs to be quashed. Re.: Contentions raised by the Ld. CIT (DR): 1) The Ld. CIT (DR) contended that the time limit for completion of assessment, etc. as provided in section 153(1) read with section 153(4) does not override any other provision of the Act; further, sub-section (1) of section 153 refers to completion of assessment under section 143 or section 144 and does not refer to section 144C of the Act; section 144C is a code in itself and, therefore, the time limit provided in section 153(1)/153(4) of the Act is for completion of assessment under section 143(3) and not an assessment completed pursuant to directions of DRP. 36 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 2) The Ld. CIT (DR) further contended that section 144C is a later provision brought on the statute now which starts with a non-obstante clause and thus overrides all other provisions including provisions, of section 153 of the Act as well. For that purpose, the Ld. CIT (DR) provide that the Assessing Officer shall notwithstanding anything contained in section 153 pass an assessment order within one month from the end of the month in which the acceptance is received for the draft assessment order or the period of filing of objections expired in which such directions of DRP are received. 3) The Ld. CIT (DR) in his written submissions has, however, sought to contend that “there nothing in section 153 which suggests that time-limit specified in that section will also be applicable to the order 144C(13). He further contended that had this been the intention of the Legislature, then it would have mentioned section 144C(13) in sub-section (1) of section 153 of the Act. It is to be noted that the Legislature consciously did not mention section 144C(13) whereas section 143(3) and 144 are mentioned in section 153(1). This is to ensure that section 144C remains a code in itself.” Reliance has also been placed on the decision of Supreme Court in the South India Corporation Pvt Ltd v The Secretary, Board of Revenue 1964 AIR 207 wherein it held that “It is settled law that a special provision should be given effect to the extent of its scope, leaving the general provision to control cases where the special provision does not apply.” 4) The decision of the Hon’ble Madras High Court in the case of CIT vs Roca Bathroom (supra) is against the legislative intent and not binding on the Hon’ble Tribunal, being decision of a non-jurisidictional High Court. For the aforesaid 37 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. proposition, the Ld. CIT DR relied upon the decision of the Special Bench of the Tribunal in the case of ACIT v. Goldmine Shares and Finance (P.) Ltd.: 113 ITD 209 (SB)(Ahd.), more particularly, para 54 of the said judgement. 5) It was further contended by the ld. CIT D/R that the decision of the Delhi High Court in the case of All India Lakshmi Commercial Bank (supra) was in any case applicable qua income tax authorities and not to the Tribunal. 6) The contrary decisions rendered by benches of the Tribunal were not brought to the attention of the Hon’ble Madras High Court and in that view of the matter, the decision of the Hon’ble Madras High Court in the case of CIT vs Roca Bathroom (supra) need not be followed by the Hon’ble Tribunal. 7) The decision in the case of Roca Bathroom (supra) is per incuriam since the earlier decision rendered by the same High Court in the case of CIT vs. Sanmina Sci India Pvt. Ltd. [Tax case (Appeal) No. 567 of 2016] was not brought to the notice of the Hon’ble High Court while rendering decision in the case of Roca Bathroom (supra). On that decision, the Madras High Court held that “It reveals a conscious decision by Legislature to limit the independent participation of the Assessing Officer in the process of assessment only to the stage of proposal of variations in terms of s.144C(1) and not thereafter. The express language of subsection (13) thereof would admit of no other interpretation.”.... “The order of draft assessment under section 144C(1) is for all intents and purposes an order of original assessment though in draft form. In this light of the matter, the order of the Tribunal to this effect is right in law and calls for no interference.” 38 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 8) The decision of the Hon’ble Delhi bench of the Tribunal in the case of Super Brands (supra) relied upon by the Appellant was passed by the Hon’ble Tribunal without application of mind. Rebuttal: It is respectfully submitted that section 144C requiring reference to the DRP is part of the procedure of the assessment. The passing of a draft assessment order, filing of objections before the DRP, disposal of objections by DRP and passing of assessment order by the assessing officer in compliance with the directions of the DRP are all part of the procedure for assessment contained in Chapter XIV of the Act. That the assessment completed under section 143(3) / 144C(13) of the Act pursuant to the directions of the DRP is an order of assessment, is further supported by the following provisions: - Section 2(8) of the Act, which defines assessment to include reassessment; - Section 253(1)(d) of the Act governing filing of appeals to the Tribunal by the eligible assessee, which reads as under: “an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order;” - Section 253(2A) of the Act (omitted by the Finance Act, 2016, w.e.f. 1-6-2016) providing Revenue the power to file appeal against the order of assessment completed pursuant to directions of the DRP, which reads as under: "(2A) The Principal Commissioner or Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under sub-section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of 39 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order." It is submitted that the proceedings before the DRP are continuation of the assessment proceedings. Reliance is placed in this regard on the decision of the Hon’ble Bombay High Court in the case of Vodafone India Service vs UOI 361 ITR 531 wherein the Hon’ble Bombay High Court held that proceedings before the DRP are continuation of assessment proceedings. The Hon’ble Court held as under: “The process before the DRP is a continuation of the assessment proceedings as only thereafter would a final appealable assessment order be passed. Till date there is no appealable assessment order. The proceeding before the DRP is not an appeal proceeding but a correcting mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the assesee. It is a continuation of the Assessment proceedings till such time a final order of assessment which is appealable is passed by the Assessing Officer” (emphasis supplied). The same view found acceptance with the Hon’ble Madras High Court in the case of Roca Bathroom, reproduced supra. The assessment order passed by the assessing officer pursuant to the directions of the DRP is an order under section 143(3) read with section 144C(13) of the Act. Such an order cannot be construed as having been passed independently and on a stand-alone basis under section 144C(13) of the Act. To put it differently, the order passed pursuant to the directions of the DRP under section 144C(13) of the Act is regarded as the assessment order; the same is the only operative assessment in case of an eligible assessee. The submission made by the Ld. CIT DR has, therefore, no legs to stand. 40 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. The provisions of section 144C(1) mandating passing of draft assessment order in case of an eligible assessee, is an exception to the ordinary rule wherein the assessing officer has to pass only one order, i.e., assessment order under section 143(3) of the Act without passing draft assessment order. The non-obstante provision in section 144C(1) of the Act is to make it mandatory for the assessing officer to pass draft assessment order in the case of an eligible assessee, contrary to the scheme of the Act wherein the assessing officer is required to pass one and only assessment order in the case of all other assessees. Having regard to the aforesaid, the non-obstante clause in section 144C(1) of the Act requiring passing of a draft assessment order in case of an eligible assessee is, therefore, to be read limited to the context, i.e., exception to the ordinary rule that there will be only one assessment order passed by the assessing officer on culmination of the assessment proceedings. Reliance is placed on the decision of the Supreme Court in CIT v. Mother India Refrigeration Industries (P.) Ltd.: 155 ITR 711 wherein it is reiterated that "legal fictions are created only for some definite purpose and these must be limited to that purpose and should not be extended beyond their legitimate field". Section 153 of the Act providing for limitation for framing an assessment contains an absolute prohibition to the effect that an order passed after the limitation prescribed there under would be non est / invalid in law. The non obstante clause in sections 144C(4) / 144C(13) does not override the provisions of section 153 of the Act. The time limit of 30 days for passing of the assessment order in terms of section 144C(4) / 144C(13) has to be read as sub time limit within the overall limitation set out in section 153 of the Act. The non-obstante clause in sections 144C(4) / 144C(13) thus seek to shorten the time available for completion of assessment to 30 days or the 41 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. over all time limit provided in section 153(1) of the Act, whichever is less. The aforesaid aspect has been duly accepted by the Hon’ble Madras High Court in the case of Roca Bathroom (supra) vide para 22 of the said judgement. As noted by the Hon’ble Madras High Court in the case of Roca Bathroom (supra) the enhanced time limit of 33 months is provided in the statute in order to take care of the time that would be taken, inter alia, in the TPO passing the order, passing of draft assessment order, objections being filed before the DRP, disposal of objections by DRP and passing of assessment order. It was the submission of the Ld. CIT DR that section 153 does not apply to an order passed under section 144C(13) pursuant to direction of the DRP since section 153 only refers to an order of assessment made under section 143 or 144 of the Act. Provisions of section 144C as stated earlier are part of the procedure of assessment and the assessment order passed by the assessing officer pursuant to the directions of the DRP is an order passed under section 143 read with section 144C of the Act. It bears repetition to point out that the limitation provided in section 153 of the Act applies to all orders of assessment including an assessment order passed in pursuance of directions of DRP. In case, section 153 of the Act is read as referring to order(s) of assessment in case of non-eligible assessees only, that would amount to creating two separate and distinct categories of assessment, viz., (i) assessment completed without recourse to section 144C; and (ii) assessment completed in pursuance of directions of DRP. Such an artificial bifurcation is not warranted by the scheme of the Act which countenances only one assessment, whether under section 143(3) or under section 143(3) read with section 144C(13) of the Act. 42 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Further, if section 153(1) of the Act were to apply only to cases of non-eligible assessees, then, in that situation, the said section would have read as under: “No order of assessment ........... other than an assessment completed in pursuance of directions of the DRP ... .... (words inserted) shall be made under section 143 or section 144 at any time after the expiry of............” In such a situation, exception to the applicability of section 153 of the Act would be achieved by doing violence to the language of the said section and reading words into the statute which are conspicuous by their absence. Having regard to the aforesaid scheme of the Act, it is the respectful submission of the appellant that over all limitation for making an assessment including in the case of an eligible assessee is 33 months from the end of the relevant assessment year which would include reference to the TPO, receipt of order from the TPO, passing of draft assessment order, filing of objections before the DRP, disposal of objections and issue of directions by DRP and passing of assessment order by the assessing officer. The time limitation in section 144C(4) or section 144C(13), as the case may be, are only sub-limits, subsumed within the overall limitation of 3 years from the end of the relevant assessment year provided in section 153 of the Act. Accordingly, the time limit of 3 years from the end of the relevant assessment year provided in section 153(1) of the Act read with third proviso thereto is absolute and applies to all assessments including those completed pursuant to the directions of the DRP. Furthermore, in case it were to be held that section 144C is an independent / self- contained code and that the limitation in section 153 of the Act would not apply in case of an eligible assessee, then, the consequence would be that there would be no limitation qua passing of the draft assessment order. In other words, the assessing 43 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. officer would be at liberty to pass the draft assessment at any time, at his whims and fancies and the only limitation that would apply in such a situation would be under section 144C(4) or section 144C(13) of the Act, as the case maybe. Such an interpretation as sought to be made by the Ld. CIT (DR) cannot, therefore, be countenanced. In case the contention of the Ld. CIT (DR) that section 153 of the Act provides for time limit for passing of a draft assessment order was to be accepted, then, that would mean reading words into the statute, which is clearly beyond the domain of the Tribunal. It is settled rule of interpretation of statutes to interpret the statute as it is; further, it is contrary to all rules of construction to read words into a statute which the Legislature in its wisdom has deliberately not incorporated. [Refer CIT vs. Ajax Products Ltd. [1965] 55 ITR 741 (SC), Smt. Tarulata Shyam vs. CIT [1971] 108 ITR 345 (SC), CIT vs. Tara Agencies [2007] 292 ITR 444 (SC) and CIT vs. Calcutta Knitwears [2014] 362 ITR 673 (SC). In view of the aforesaid, it would be appreciated that it is a settled judicial position that the Courts are duty bound to interpret the words of a statute in their ordinary sense as drafted by the Legislature and are not to resort of creative devices of judicial incorporation or modification of statutory language. It is submitted that words used in a statute, in plain and clear terms, serve as the best guide towards determination of legislative intention, and any external device, which enables a construction, contrary to such plain words of the statute, is to be avoided. 44 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Additionally, it may be pointed that it is important to bear in mind that the limitation for completing assessment / reassessment is progressively being reduced which shows the conscious intent of the Legislature to ensure speedy finality and certainty of the taxpayer’s liability. The Memorandum to the Finance (No. 2) Bill, 2009 while introducing the provisions of section 144C in the statute clarified the legislative intent in the following terms: “The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained only after a long drawn litigation till Supreme Court. Flow of foreign investment is extremely sensitive to prolonged uncertainity in tax related matter. Therefore, it is proposed to amend the Income-tax Act to provide for an alternate dispute resolution mechanism which will facilitate expeditious resolution of disputes in a fast track basis”. It is submitted that if the non-obstante clause in sections 144C(4)/ 144C(13) of the Act is interpreted as allowing the assessing officer additional time over and above the limit provided under section 153 of the Act, the same would defeat the entire purpose of expediting the dispute resolution process, by enlarging the time available for completion of assessment to almost five years from the end of the relevant previous year (four years from the end of the relevant assessment year). In view of the aforesaid, it is submitted that non-obstante provision in section 144C(13) is to be interpreted having regard to the stated intent of the Legislature to expedite the dispute resolution process. Accordingly, it is submitted that the time limitation in sections 144C(4)/144C(13) of the Act is to be read as a sub-limit, subsumed within the overall limitation of 33 months from the end of the relevant assessment year provided in section 153 of the Act. 45 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. The Ld. CIT (DR) relied upon the following decisions of the co-ordinate benches of the Tribunal to contend that in a case where reference is made to the TPO, time- limit to pass order under section 144C(13) would be one month from the end of the month in which directions were received by the AO from the DRP; time limit specified in section 153 has no relevance, except setting the time limit for the TPO to pass order u/s 92CA(3); if the assessment order is passed within the timelines provided under section 144C(13) de hors the limitation prescribed under section 153 of the Act, such order shall not be regarded as being barred by limitations: - Honda Trading Corporation, Japan vs DCIT 61 Taxmann.Com 233 (Del Trib) - Religare Capital Market Ltd vs DCIT (ITA NO. 1881/Del/2014) - Acer India Pvt Ltd vs DCIT (ITA No 502/Bang/2017) - Volvo India Pvt Ltd vs ACIT (ITA No. 1537/Bang/2012) - Envestmet Asset Management Pvt Ltd v ACIT, 53 taxmann.com 430 (Cochin-Trib) - Pricewaterhouse Coopers (P) Ltd v DCIT, 117 taxmann.com 276 (Kol Trib). The aforesaid decisions of the Tribunal were rendered prior to the decision of the Hon’ble Madras High Court in the case of CIT vs Roca Bathroom Products Pvt Ltd (Supra), wherein the Hon’ble High Court laid down the law with respect to the time limit for passing final assessment order passed pursuant to Directions of the DRP, which is contrary to the aforesaid decisions of the Tribunal. The Ld. CIT (DR) erroneously contended that the decision of the Hon’ble Delhi Tribunal in the case of Super Brands Ltd. (UK) vs. ADIT (ITA No. 2609/Del/2011) was not dealing with this issue related to limitations, as evident from perusal of the 46 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. relevant findings of the Hon’ble Delhi Tribunal in paras 27 to 31 of the said judgment. The decision of the Madras High Court in the case of CIT vs. Sanmina Sci India Pvt. Ltd. (Supra) has no relevance to the present controversy dealing with the inter play between section 153, on the one hand and section 144C(13) of the Act, on the other. It is settled law that a decision is an authority for what it decides. [Refer CIT vs Sun Engineering Works Pvt Ltd: 198 ITR 297 @ pg 320]. The finding recorded by the Hon’ble Madras High Court in that case relied upon by the Ld. CIT DR was rendered in a different context. In that view of the matter, it cannot be said that the later decision in Roca Bathroom (supra) is per incuriam since the said decision failed to notice the earlier decision in the case of Sanmina Sci India (supra), which had no bearing on the issue in dispute in the case of Roca Bathroom (supra). The view taken by the Hon’ble Madras High Court in the case of Roca Bathroom (supra), furthers the legislative intent of expediting the assessment in the case of eligible assessee, by curtailing the time limit for framing assessment in the case of such category of assessees. The decision of the Special bench in the case of Goldmine Shares (supra) does not lay down the correct law considering that the Gujarat High Court in the cases of CIT v. Sarabhai Sons Ltd.: 143 ITR 473 @ 486 (Guj.) and CIT v. Maganlal Mohanlal Panchal (HUF) [1994] 210 ITR 580 (Guj.) had held the decision of a non- jurisdictional High Court to be binding on the Tribunal. Further, the decision of the Hon’ble Rajasthan High Court cited before the Special Bench was held to be not 47 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. dealing with the controversy to be decided by the Special bench and the Special Bench in that view of the matter did not follow the said decision of the Rajasthan High Court. Furthermore, as submitted earlier, the Special Bench in the later decision of the case of Maral Overseas (supra) held the decision of non-jurisdictional High Court as binding on the Tribunal and following such judgement allowed the appeal of the assesse. For the cumulative reasons as aforesaid, the assessment order dated 29.07.2022 passed under section 143(3) read with section 144C(13) of the Act impugned in the present appeal needs to be quashed as being barred by limitation. 6. We have heard the rival contentions and perused the material available on record and also gone through the orders of the revenue authorities. The above challenge in the respective assessment years can be understood from the following chart :- Asstt. year Date of filing return of income Date of passing Draft assessment order Date of issuance of DRP directions Date of filing acceptance before assessing officer. Due date for passing Final Assessment order section Date of final assessment order 2017-18 29.11.2017 Revised on 19.11.2018 29.09.2021 20.06.2022 - 30.09.2021 29.07.2022 2018-19 29.11.2018 29.09.2021 20.06.2022 - 30.09.2021 19.07.2022 At the outset, we find that the very recently Delhi Bench-D of the Tribunal, New Delhi in a bunch of cases of Super Brands Ltd (UK) vs. The ADIT Circle 1(1)(2) International Taxation, New Delhi in ITA Nos. 3115/Del/2009, 2609/Del/2011, 654/Del/2014, 189/Del/2015, 4461/Del/2016, 869/Del/2018, 411/Del/2018, 48 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 2975/Del/2019, 5223/Del/2011, 5224/Del/2011 and 5633/Del/2012 dated 20.09.2022 have adjudicated identical issue by following the judgment of the Hon’ble Madras High Court in the case of Roca Bathroom Products Pvt. Ltd. dated 09.06.2022 by observing in Para 29 to 31 as under :- “ 29. The Hon'ble High Court of Madras in the case of Roca Bathroom Products Pvt Ltd in Writ Appeal Nos. 1517, 1519, 1609, 1610 and 1854 of 2021 and CMP Nos. 9656, 9658, 10022, 10023 and 11720 of 2021 had the occasion to address an identical issue. It would be pertinent to refer to the relevant part of the judgment, which is directly on the challenge before us, which is as under: “After an international transaction is noticed subject to satisfaction of section 92B, a reference is made to the TPO under sub-Section (1) of Section 92CA of the Act. Though the provision does not state as to when a reference is to be made, a reading of section 153 would explicit that the reference is to be made during the course of the assessment proceedings before the expiry of the period to pass an assessment order. The TPO after considering the documents submitted by the assessee is to pass an order under Section 92CA(3) of the Act. As per Section 92CA (3A), the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under Section 153 expires. As per Section 153, no order of assessment can be passed at any time after the expiry of 21 months. As per 92CA (4), the assessing officer has to pass an order in conformity with the order of the TPO. After the receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Sub-Section (5) of Section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel consisting of top and expert functionaries of the department, is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. As per sub-section (12), the DRP has no authority to issue any directions under sub- section (5) from the end of the month in which the draft order is forwarded to the eligible assessee and not from the date when the assessee submits the objections. Subsection (13) of section 144C of the Act provides that upon receipt of directions issued under sub-section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings within one month from the end of the month in which the directions are received. It goes without saying that if no objections are filed by the Assessee to the draft order, the assessing officer has to pass the final assessment order based on the draft order within one month from the end of the month in which the period for filing the objection had expired as per section 144C(4). As per the proviso to Section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only the time frame is mandatory but also the TPO has to 49 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. pass an order within 60 days. Further, the extension in the proviso referred above also automatically extends the period of assessment to 60 days as per the second proviso to Section 153. That apart, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference has been made during the course of assessment and is pending, the department gets another 12 months as per second proviso to Section 153 (1) and under Section 153(4) after amendment. In Section 153(2A), a time limit is prescribed to the Assessing officer to complete the fresh assessment within one year prior to amendment and after amendment, as per section 153 (3), the time limit has been reduced to 9 months. As per the proviso to section 153 (3) if the order is received after 1st April 2019, the time limit is one year. From the above provisions, it is very clear that various time limits have been prescribed to various mechanisms which form part of assessment proceedings, either original or on remand to expedite and bring a finality to the assessment proceedings, which can be taken to a logical end. Discussion and Findings. 18. The main contentions of the Department, through their counsel are that Section 144C is a code in itself and hence on remand by the ITAT, the power of DRP to take up the dispute on additions by TPO, is not circumscribed by Section 153 and that in the absence of any express time limits contemplated under the Act, the time limits under Section 153 for reassessment cannot be read into Section 144C more particularly when the provisions of Section 153 are excluded by the non-obstante clause in section 144C(13) and hence the proceedings are not barred by limitation. Per contra, it has been contended by the learned senior counsels appearing for the respondent(s)/assessees that the outer time limit under Section 153 is applicable to every proceedings on remand and the department having slept over the issue for several years, cannot now redo the proceedings afresh, after certain rights have vested with the assessees. Even if specific provisions are not there to deal with this situation, the proceedings must be concluded within a reasonable time and hence the impugned proceedings are liable to be struck down and rightly done so by the learned Judge. 19. Admittedly, the facts including the dates are not under dispute. As regards the appeal in W.A.No.1854 of 2021, even though the remand was on 24.01.2013 and the assessee had received the order on 08.02.2013, the first notice by the DRP was issued on 19.02.2014 and the first hearing in the Chennai office was on 10.03.2014. Therefore, it is lucid that the DRP had the knowledge of the order before 19.02.2014. The matter was heard on various dates in Chennai office and written submissions were also filed. Thereafter, the files have been transferred to Bengaluru by the CBDT notification dated 31.12.2014. The Learned Judge relying upon the findings in the batch of cases which was decided first and rendered additional findings, which have been extracted in paragraphs 10 and 11 above, has allowed the writ petitions holding that the time limit under Section 153 (2A) was not adhered to and in any case, the proceedings have not been concluded within a reasonable time. 20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original 50 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years. 21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter- dependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal’s order, when it had issued a notice on 19.02.2014 and conducted the hearing as early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee. 22. Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions. At this juncture it would be useful to refer to the following decisions: (i) Sultana Begum v. Prem Chand Jain, (1997) 1 SCC 373 at page 381: “11. The statute has to be read as a whole to find out the real intention of the legislature. 12. In Canada Sugar Refining Co. v. R. [1898 AC 735 : 67 LJPC 126] , Lord Davy observed: 51 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. “Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter.” .......... 14. This rule of construction which is also spoken of as “ex visceribus actus” helps in avoiding any inconsistency either within a section or between two different sections or provisions of the same statute. 15. On a conspectus of the case-law indicated above, the following principles are clearly discernible: (1) It is the duty of the courts to avoid a head-on clash between two sections of the Act and to construe the provisions which appear to be in conflict with each other in such a manner as to harmonise them. (2) The provisions of one section of a statute cannot be used to defeat the other provisions unless the court, in spite of its efforts, finds it impossible to effect reconciliation between them. (3) It has to be borne in mind by all the courts all the time that when there are two conflicting provisions in an Act, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is the essence of the rule of “harmonious construction”. (4) The courts have also to keep in mind that an interpretation which reduces one of the provisions as a “dead letter” or “useless lumber” is not harmonious construction. (5) To harmonise is not to destroy any statutory provision or to render it otiose.” (ii) CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57 : 2002 SCC OnLine SC 1226: “16. The courts will have to reject that construction which will defeat the plain intention of the legislature even though there may be some inexactitude in the language used. (See Salmon v. Duncombe [(1886) 11 AC 627 : 55 LJPC 69 : 55 LT 446 (PC)] AC at p. 634, Curtis v. Stovin [(1889) 22 QBD 513 : 58 LJQB 174 : 60 LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35 ITR 408]). 18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute. 19. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. (See R.S. Raghunath v. State of Karnataka [(1992) 1 SCC 335 : 1992 SCC (L&S) 286 : (1992) 19 ATC 507 : AIR 1992 SC 81] .) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006]).” (iii) Franklin Templeton Trustee Services (P) Ltd. v. Amruta Garg, 52 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. (2021) 6 SCC 736 : 2021 SCC OnLine SC 88 at page 752: “17. The concept of “absurdity” in the context of interpretation of statutes is construed to include any result which is unworkable, impracticable, illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief [ See Bennion on Statutory Interpretation, 5th Edn., p.969.] . Logic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.] . Therefore, when there is choice between two interpretations, we would avoid a “construction” which would reduce the legislation to futility, and should rather accept the “construction” based on the view that draftsmen would legislate only for the purpose of bringing about an effective result. We must strive as far as possible to give meaningful life to enactment or rule and avoid cadaveric consequences [See Principles of Statutory Interpretation by Justice G.P. Singh, 14th Edn., p. 50.]” 23. Further, similar non-obstante clause is also used in section 144C(4) with a same limited purpose to imply, even though there might be a larger time limit under Section 153, once the order of TPO is accepted or not objected to, causing a deeming fiction of acceptance, the final order is to be passed immediately. The object is to conclude the proceedings as expeditiously as possible and the authority above, the DRP will have no authority to issue directions after nine months and a further period of one month as per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India Private Ltd (supra) and Vedanta Ltd (Supra) is well founded. The timeline given under the Act is to be strictly followed.” 30. The Hon'ble High Court concluded as under: “(a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under Section 144C (12) of the Income Tax Act, (c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. 53 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed. (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act, (g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond 3 years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long, shall be applicable.” 31. As no distinguishing decision has been brought to our knowledge on this additional ground also, the impugned assessment orders are held to be barred by limitation and are, accordingly, quashed.” We, therefore, considering the decision of Coordinate Bench of Delhi Tribunal and also following the judicial pronouncement of the Hon’ble Madras High Court as discussed hereinabove, quash the assessment order as barred by limitation. Ground Nos. 2 & 2.1 relate to adjustments in intimation issued under section 143(1)(a) of the Act retained without issuing show cause notice – illegal and bad in law. 7. Before us the ld. Counsel for the assessee submitted that the impugned order passed under section 143(3) r.w.s 144C(13)/144B and under section 154 r.w.s 143(3) of the Act is in complete violation of the statutory provisions of section 144B inasmuch as the adjustments aggregating to Rs. 65,44,93,450 made in intimation issued under section 143(1)(a) of the Act have been mechanically imported by the assessing officer, without confronting the same to the assessee during the course of assessment proceedings by issuing any show-cause notice, prior to the issuance of the draft assessment order. 54 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 8. On the other hand, the ld. D/R submitted that the appellant did not file an appeal against intimation issued under section 143(1)(a) of the Act and, therefore, the same has become final. 9. In rejoinder, the ld. Counsel for the assessee submitted that the Ld. CIT (DR) failed to appreciate that the intimation under section 143(1)(a) of the Act was never made available / received by the appellant, and therefore, there was no occasion or opportunity for filing the appeal against the same. The Appellant, in fact, came to know to the said intimation issued under section 143(1)(a) only from the impugned assessment order. 9.1 As a matter of fact, there was no such proposal in the show-cause notice cum draft assessment order or at any other stage for confirming the erroneous adjustments made by CPC in the intimation issued under section 143(1)(a) of the Act and the same has been made without following the mandatory procedure of section 144B of the Act. 9.2 In the present case, there is clear and blatant violation of the statutory scheme/ provisions with respect to conduct of assessment in faceless manner as prescribed under section 144B of the Act inasmuch as the assessing officer failed to pass “revised draft assessment order” and issue another showcause notice to the assessee as mandated by clauses (xxx) to (xxx) of subsection (1), since the adjustments made u/s 143(1) imported/ confirmed/ sustained in the impugned order were not even confronted in the draft assessment order/ show-cause notice [but was merely/ silently captured in computation at end of draft assessment order]. Being so, the impugned order passed without complying with the procedure under 55 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Clauses (xx) to (xxx) of sub-section (i) of section 144B of the Act is unlawful is as much as void ab initio and is liable to be quashed. 9.3 In view of the aforesaid, it is the humble submission of the assessee company that the impugned order passed is not only in gross violation of mandatory provisions of section 144B of the Act but also principles of natural justice, and is thus, liable to be quashed at the threshold. 9.4 Without prejudice and in addition to the above, it is submitted that the additions/disallowances amounting to Rs. 65,44,93,450 made in the impugned assessment order passed under section 143(3), read with section 144C(13)/144B and under section 154 read with section 143(3) of the Act on the basis of the adjustments made in intimation issued under section 143(1)(a) of the Act, without discussion / ascribing reasons in the assessment order nor providing any details is even otherwise not sustainable and is liable to be set aside. 9.5 In the aforesaid circumstances, it is respectfully submitted that the addition / disallowance amounting to Rs.65,44,93,450 made in the impugned assessment order on the basis of the said intimation under section 143(1)(a) of the Act may kindly be remitted / set aside to the assessing officer for providing explanation / reasons and an opportunity to rebut the same. 10. We have heard the rival contentions, perused the material available on record and gone through the orders of the revenue authorities. We find that the adjustment of Rs. 65,44,93,450/- was made in the Intimation issued under section 143(1)(a) of the Act and the AO has computed the total income taking the income processed under section 143(1)(a) as the base. Against this adjustment, the 56 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. appellant has not filed any appeal. As against this, the ld. A/R has contended that Intimation under section 143(1)(a) of the Act was never made available/received by the appellant and, therefore, there was no occasion or opportunity for filing the appeal. Even the details of the adjustment are not made known to the appellant. In these circumstances, in the interest of natural justice, we deem it appropriate to direct the AO to provide the details of adjustment made in processing the return under section 143(1)(a) and liberty to the assessee-appellant to file appeal within 30 days of receipt of the details before the ld. CIT (A). Thus this ground of the assessee is allowed for statistical purposes. Ground Nos. 3-3.6 relate to disallowance of deduction claimed under section 80IA of the Act in respect of Captive Power Plants (CPPs) amounting to Rs. 11,08,24,50,372 (in aggregate) in respect of the undertakings at Chanderia Lead and Zinc Smelter, Zawar Mines and Rajpura Dariba, on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer (‘TPO’). 11. Before us the ld. Counsel for the assessee narrated the facts as under :- “ The Appellant has three Captive Power Plants (CPPs), located at (i) Chanderiya Lead Zinc Smelter (capacity 80MW), (ii) Zawar Mines (capacity 80MW) and (iii) at the Zinc smelter at Rajpura Dariba mines (capacity 160MW), engaged in generation of electricity. The CPPs were engaged in generation of electricity to be utilised for in-house consumption and these CPPs provide uninterrupted power supply to taxable units of HZL. During the FY 2016-17 (AY 2017-18), CPP units of HZL produced certain excess electricity, which was transferred by the CPPs to outside parties @ Rs.2.53 57 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. per unit. During the impugned AY 2017-18, the eligible units of the Appellant (i.e. CPPs) have generated and supplied 2,265 million units (KWH) of electricity out of which only 66 million units, which accounts for approximately 2.91% of the total transfers, were supplied to outside parties. This evidences that supply of electricity to outside parties is made in limited cases and represents supply of the excess electricity which has not been consumed by the taxable units and has to be either transmitted or destroyed, as the same cannot be stored. Such sale is non-committal in nature and only done in exceptional circumstances where only the excess electricity is sold. The CPP units have also transferred electricity to the taxable units of Appellant taking into consideration the rate at which HZL purchased electricity from SEB. During the FY 2016-17 (AY 2017-18), the market rate at which SEB supplied electricity to Appellant was INR 7.76 to INR 8.64 per KWH. The TPO, however, rejecting the contention of the Appellant MADE held that the price at which the appellant had purchased the electricity from the SEB could be used for CUP, but it was the price at which it had sold the electricity to third parties/JVVN/AVVN/JDVNN at the rates specified by RERC/CSERC which was to be used for benchmarking the transaction. The TPO accordingly concluded that the sale of electricity to third parties made @ Rs. 2.53 per unit it could be considered as internal CUP. The TPO held that the Appellant incorrectly applied CUP by taking purchase rate of the end consumer, i.e. sale rate of SEBs as sale rate for CPPs. Further, the TPO concluded that since internal CUP is available, rate of Rs. 2.53 per unit is to be considered for benchmarking the transaction of sale of power by the eligible unit to non-eligible unit and made adjustment of Rs. 1286,10,45,365/-. The AO in his final assessment order dated 29.07.2022 considered the upward adjustment but restricted it to total deduction claimed by the Appellant u/s 80IA to Rs. 1108,24,50,372 within the umbrella disallowance made under section 80IA of the Act including allocation of common expenses to eligible units and deduction towards disallowance of steam. 58 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 12. On the other hand the ld. D/R referred to the amendment made by way of insertion of Explanation section 80IA(8), with effect from assessment year 2013- 14 which read as under: “Section 80-IA ...... (8) Where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date : Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.—For the purposes of this sub-section, "market value", in relation to any goods or services, means— (i) the price that such goods or services would ordinarily fetch in the open market; or (ii) the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA.” Therefore, it was contended that since in respect of transfer of goods and services are now regarded as specified domestic transaction in terms of section 92BA of the Act, to which transfer pricing provisions apply the decisions rendered by the Hon’ble Tribunal in the appellant’s case for earlier years cannot simpliciter be followed. The AO thus disallowed the entire deduction u/s 80IA, claimed by the assessee. He further, in terms of the findings of the TPO within the umbrella disallowance, disputed the price of power charged by the assessee’s power generating units from the power consuming units invoking the provisions of section 80IA(8) of the Act. 13. In Rejoinder, the ld. Counsel for the assessee submitted that Sec. 80IA(8) provides that transfer price should be the market price while computing the profit 59 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. u/s 80IA. Explanation inserted section 80IA(8) of the Act by way Finance Act 2012 provided that the “market value” in relation to any goods or services means the arm’s length price as defined in clause (ii) of section 92F of the Act. The said Explanation reads as follows: “Explanation.—For the purposes of this sub-section, "market value", in relation to any goods or services, means— (i) the price that such goods or services would ordinarily fetch in the open market; or (ii) the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA.” Section 80IA of the Act, thus provides that the transfer price of the goods or services transacted between an eligible unit or a non-eligible unit should correspond to the market price of the goods and services so transacted. However no-where in the Act it has been prescribed that what should be the component of that price structure. The Act does not provide that what component of price structure should be included or excluded from the transfer price to arrive at the market price. In case of the Appellant, the price of power at which the consuming units can procure the power is available in the market. It is submitted that though changes have been made in respect to exercise of power within Tax Department, however, the basic intent of determination of ‘market value’ or arm’s length price by comparing a controlled transaction with an uncontrolled transaction remains the same. If the nature of transaction remains the same as in earlier years, the ratio or reasoning of the Assessing Officer in earlier years would mutatis mutandis apply to the year under consideration, irrespective of the fact that the exercise of determination of market value is undertaken by the Transfer Pricing 60 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Officer / Assessing Officer in terms of provisions of Chapter-X of the Act. In the TP documentation of the Appellant Comparable Uncontrolled Price (“CUP”) method was applied to test the arm’s length nature of the aforesaid transaction of transfer of electricity. In the present case, the price at which the Appellant purchased the electricity from the SEB has been used as an internal CUP for benchmarking this transaction. There is no dispute that the establishment of captive power plants, use of electricity produced by them and tariff for sale to State Electricity Boards is regulated by Electricity (Supply) Act, 1948 and statutory requirements therein. The Appellant cannot sell the electricity in open market and charge tariff at its will. So, the Appellant has access only to regulated market. The price for power charged by the SEB from the Appellant is the best indicator of the market price of the power for sale of power from CPP units to other units and thus, CUP has been correctly applied by the Appellant. As per TP study a premium of 15% was also charged by the captive power plants on supply of power to the non-eligible units as premium for the uninterrupted power supply. Accordingly, the price charged by the CPP units from the taxable units of HZL was established to be at arm’s length. The price for power charged by the SEB from the Appellant is the best indicator of the market price of the power for sale of power from CPP units to other units. Thus the Appellant correctly adopted the current year market price of Rs.7.76 to Rs. 8.64 per unit for transferring the electricity to other units. 61 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. The TPO/AO, however, adopted @ Rs 2.53 per unit for the relevant year which was the rate for sale to third parties as against HZL rate of Rs. 7.76 to Rs. 8.64 per unit and thereby reduced the claim u/s 80IA of the Act. The Transfer Pricing Officer merely relied on extraneous factors (which are without any basis) to conclude that the cost at which the Appellant purchase/s electricity from SEBs cannot be taken as a comparable. The Transfer Pricing Officer failed to appreciate that in terms of the Electricity Act and RERC / CSERC guidelines, Appellant is restrained from directly selling generated electricity to the consumers. The Appellant therefore, has no other option but to sell the excess (over and above self-consumption) electricity generated to JVVNL, AVVNL or JdVVNL at the predetermined rates and it cannot charge higher rate from JVVNL, AVVNL or JdVVNL. The market rate of electricity thus is not determined by the forces of demand and supply, rather the same is regulated by the Government. In spite of it, the Appellant has determined transfer price at Rs. 7.76 to Rs. 8.64 per unit as charged by SEB. Further, the fixed demand charges were stated to be for ensuring uninterrupted supply. In the assessee’s case, the Appellant has fulfilled this condition as the CPP’s have provided uninterrupted power supply to the manufacturing units. In the state of Uttarakhand, Bihar, West Bengal and Maharashtra, Governments has announced different rates for normal supply of power and uninterrupted continuous supply of power to the same industrial unit. These State Electricity Boards of these states charge a premium of 10% to 15% over and above the normal rate of power for uninterrupted power supply. 62 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Thus, under the given circumstances, the Appellant submits that the revenue recorded by the Appellant’s eligible undertaking for transfer of power to other units at the rate of Rs. 7.76 to Rs. 8.64 per unit corresponds to the market value of power. On the other hand, it is respectfully submitted that the characteristics of the arrangement under which the power is supplied by the SEB to the Appellant is a closer comparable and meets the comparability criteria for the purpose of benchmarking the transaction of transfer of power from CPP to the manufacturing unit of the assessee. In such circumstances, there is no question of further deduction of electricity duty and fixed demand charges from the market price. Regarding Judicial precedent on fair market value of transfer of power from eligible undertaking / CPP to the non-eligible undertaking/manufacturing unit. It is submitted that it is a settled judicial position that for the purpose of determination of eligible profit of a Co-generation power plant, the rate charged by the SEB is to be considered as an appropriate benchmark. Reliance is placed in this regard on the decision of the Hon’ble Chattisgarh High Court in the case of CIT v. Godawari Power & Ispat Ltd.: 223 Taxman 234 (Chhattisgarh) (Mag.). In that case, the Appellant engaged in manufacture of iron and steel, had established a captive power plant in state of Chhattisgarh to supply electricity to its steel division. It had sold power to steel division at same rate, which was charged by Chhattisgarh SEB for supply of electricity to industrial consumers. Appellant claimed deduction under section 80-IA of the Act adopting the 63 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. said rate. Assessing Officer computed market value of power supplied by Appellant to steel division by taking into account rate charged by Chhattisgarh Electricity Company Limited, Raipur for supply of electricity to the SEB. It was held by the Court that, for the purpose of computing deduction under section 80IA of the Act, the market value of power supplied by Appellant to its steel division should be computed considering rate of power charged by SEB for supply of electricity to industrial consumers. Reliance in this regard is also placed on the decision of Bombay High court in the case of CIT vs. Reliance Industries Ltd.: 421 ITR 686 (ref. Page 1011-1015 of CL Paperbook) wherein it has been held that valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers. To the similar effect is the decision of Calcutta High court in the case of CIT v. Kanoria Chemicals &Industries Ltd.: 219 Taxman 35 (Calcutta)(Mag.) and Chennai Bench of the Tribunal in the case of Sri Matha Spinning Mills (P.) Ltd. v. DCIT: 141 ITD 238. The above issue is squarely covered in favour of the Appellant by the decision of the Delhi Bench of the Tribunal in the case of CIT v. Jindal Steel & Power Limited: 16 SOT 509, wherein it was observed as under: “15. Therefore, from the aforesaid, it can be deduced that market value is an expression which denoted a price arrived at between the buyer and the seller in the open market wherein the transactions take place in the normal course of trading and competition in contrast to a situation where the price is fixed between a buyer and seller can be understood as denoting ‘market price’ since the elements of trading and competition exist. Whereas in the case of the latter situation, the price fixed between the buyer and seller cannot be understood as denoting the market price since the elements of trade and competition are conspicuous by their 64 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. absence. 16. To understand the contrasting situations, let us analyze the situation in hand. In this case, the Appellant received consent u/s 44A of the Electricity (Supply) Act, 1948 to establish and operate the captive power plant in terms of a Power Purchase-cum-Wheeling of Power Agreement dated 15-7-1999 entered between the State Electricity Board and the assessee. A copy of the said agreement has been placed in the paper book. Now, in terms of the Electricity (Supply) Act, 1948, the Legislature has put restrictions on establishment of power generating units and their functioning. The power generating units are allowed to use power for captive consumption and the surplus available, if any, is to be sold transferred to the State Electricity Boards. Section 43 of the Electricity (Supply) Act, 1948 only authorizes the State Electricity Board to enter into arrangements for purchase and sale of electricity under certain conditions. Section 43A of the Electricity (Supply) Act, 1948 also lays down rules and conditions for determining the tariff for the sale of electricity by a generating company to the State Electricity Boards. A perusal of the same reveals that the tariff is determined on the basis of various parameters contained therein. From the aforesaid, it is evident that on one hand it is only upon granting of specific consent that a private person can set up a power generating unit having restrictions on the use of power generated and at the same time the tariff at which a power generating unit can supply power to the Electricity Board is also liable to be determined in accordance with the statutory requirements. In this context it can be safely deduced that determination of tariff between the Appellant and the Board can be said to be an exercise between a buyer and seller neither in a competitive environment and nor in the ordinary course of trade and business. It is an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of present statutory guidelines. Therefore, the price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of trade and competition. Therefore, the price determined as per the PPA cannot be equated with market value as understood in common parlance. We see no reason for not holding so for the purposes of Section 80-IA(8) also. .......... From the aforesaid, an analogy that can be safely deduced is that the market value cannot be the result of a transaction which has been entered into between a buyer and a seller in a situation where one of the parties is carrying the compulsive mandate of the Legislature. The situation before us is such wherein the aforesaid analogy can be usefully applied. 65 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. As we have seen earlier, the price at which the power is supplied by the Appellant to the Board is determined entirely by the Board in terms of the statutory regulations. Such a price cannot be equated with the market value as understood for the purposes of Section 80-IA(8) of the Act. The stand of the revenue to the aforesaid effect cannot be approved. 18. Having held so, the natural corollary is to ascertain whether the price recorded by the Appellant at Rs. 3.72 pet unit can be considered to be the market value for the purposes of Section 80-IA(8) of the Act. The answer, to our mind, is in the affirmative. This is for the reason that the Appellant as an industrial consumer is also buying power from the Board and the Board supplies such power at the rate of Rs. 3.72 per unit to its consumers. This is the price at which the consumers are able to procure the power. We may consider hypothetical situation as well. Had the Appellant not been saddled with restrictions of supplying surplus power to the State Electricity Board, it would have supplied power to the ultimate consumers at rates similar to those of the Board or such other competitive rates, meaning thereby that price received by the Appellant would be in the vicinity of Rs. 3.72 per unit i.e. charged by the Board from its industrial consumers/users. Thus, under the given circumstances, it would be in the fitness of things to hold that the consideration recorded by the assessee's undertaking generating electric power for transfer of power for captive consumption at the rate of Rs. 3.72 per unit corresponds to the market value of power. Therefore, on this aspect, we uphold the stand of the Appellant and set aside order of the Commissioner (Appeals) and direct the assessing officer to allow relief to the Appellant under Section 80-IA as claimed. Appellant succeeds on this ground.” (emphasis supplied) To the same effect are the decisions of the Delhi Bench of the Tribunal in the case of Jindal Steel and Power Ltd. for assessment years 2000-01 and 2004-05 in ITA No. 3663/ Del/ 2005 and ITA No. 3319/ Del/ 2008 respectively. The appeals preferred by Revenue against the decisions of the Delhi Tribunal in that case for assessment years 2000-01 and 2001-02 have been dismissed by the Punjab & Haryana High Court vide orders dated 02.09.2008 in ITA nos. 544/ 2006 and 53/ 2008 respectively). The aforesaid claim of Appellant has also been upheld by the Tribunal in the case of 66 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Jindal Steel and Power Ltd., too, for assessment years 2002-03 and 2005-06 in ITA Nos. 608/Del/2009 and 221/Del/2009 respectively vide consolidated order dated 06.03.2014. Reliance is also placed on the decision of Jaipur bench of the Tribunal in the case of Shree Cement Ltd. v. ACIT: 160 TTJ 529 (ref. Page 2956-2974 of CL PB) wherein it was held that for the purpose of section 80-IA(8), where a basket of ‘Market Values’ (say like, independent third party transactions, grid price (average annual landed cost at which grid has sold power to the assessee), Power Exchange Price for the relevant period etc.) are available, the law does not put any restriction on the Appellant as to which ‘Market Value’ it has to adopt, it is purely the discretion of the assessee. As long as the Appellant has adopted a ‘Market Value’ as the transfer price, it is sufficient compliance of law. It was observed that the assessing officer can adopt a different value only where the value adopted by Appellant does not correspond to the ‘market value’. In case there are options, the option favourable to the Appellant is to be adopted as held in Vegetable Products Ltd 88 ITR 192 (SC). The aforesaid findings of the Jaipur bench of the Tribunal were also affirmed by the Hon’ble Rajasthan High Court, vide order dated 22.8.2017, in Income tax Appeal No 85/2014 (ref. Page 2941-2955 of CL PB) as under: “24. The issue No.2 is with regard to the claim of the assessee for the value of the goods or services for the purpose of Section 80IA(8). 25. In view of the submissions made by Mr. S. Ganesh, price which has been given to the sister concern is to be determined on the basis of principle laid down by the Supreme Court in case all the four conditions are fulfilled as stated in his submissions and more so the Tribunal has given the finding which reads as under:- 67 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. “10. We have heard the rival submissions and perused the evidence on record. We have also gone through the facts of the case, assessment order, order of CIT(Appeals), the principles and the judicial decisions relied upon and documents produced by both the parties. At the outset, we find that the revised return filed by the Assessee has been accepted by the AO 12 by clear finding in the Assessment Order. Once revised return is validly filed & accepted, the original return is non-est, as it is completely substituted by the revised return. Now let us deal with ‘Market Value’. On perusal of the assessment order & all other records, we find that facts with regard to adaptation of ‘market value’ are clear. The assessee has adopted a ‘value’ which is market value and the department has substituted the same by another value. The department is contending that the ‘market value’ as adopted by AO is the most appropriate since it represents price charged by the State Grid to various customers including the assessee. Hence, the same should be considered. The AR of the assessee submits that the value adopted by assessee represents ‘market value’ since it is based on real transactions between unrelated parties and the details for the same are available in public domain. The issue before us is whether in such situations where there are two or more market values available and if the Assessee has adopted a ‘value’ which is ‘market value’, whether it is permissible for the Revenue to still replace the same by another ‘market value’. 11. At this stage, it is necessary to refer to the relevant provisions of the Act i.e. Sec 80IA(8), which states that - “Where any goods or services held for the purposes of the eligible business are transferred to any other business carried 13 on by the assessee, or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business 68 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of transfer, then for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date” Explanation – For the purposes of this sub- section, “market value”, in relation to any goods or services, means the price that such goods or services would ordinarily fetch in the open market.” 12. On perusal of the above, it could be clearly seen that the Statute provides that the assessee must adopt ‘Market Value’ as the transfer price. In the open market, where a basket of ‘Market Values’[say like, independent third party transactions, grid price (average annual landed cost at which grid has sold power to the assessee), Power Exchange Price for the relevant period etc.] are available, the law does not put any restriction on the assessee as to which ‘Market Value’ it has to adopt, it is purely assessee’s discretion. So long as the assessee has adopted a ‘Market Value’ as the transfer price, that is sufficient compliance of law. AO can adopt a different value only where the value adopted by assessee does not correspond to the ‘market value’. Even if assessee’s Cement Unit has purchased power, also from the Grid or that assessee’s Power Unit has also partly sold its power to grid or third parties that by itself, does not 14 compel the assessee or permit the Revenue, to adopt ONLY the ‘grid price’ or the price at which the Eligible Unit has partly sold its power to grid or third parties, as the ‘market value’ for captive consumption of power to compute the profits of the eligible unit. Any such attempt is clearly beyond the explicit provisions of Section 69 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 80IA(8) of the Act. Underlying principles forming the basis of our findings given here in before in this order are also supported by the decision of Special Bench of Hon’ble Bangalore Tribunal in Aztec Software & Technology Services Ltd. Vs. ACIT [2007] 107 ITD 141 [Bang][SB] as well as Mumbai Tribunal decision in the case of ACIT Vs. Maersk Global Service Centre (I) Pvt. Ltd [2011] 133 ITD 543 [Mum] wherein while interpreting the Transfer Pricing provisions, the courts have held that it is the assessee who is the best judge to know the transactions undertaken & thus finding out the comparable cases from the vast database available in the public domain. Once the assessee has adopted the same, the AO has to examine whether the same is market price or not. AO has the power to adopt the market price only when the price adopted by the assessee does not correspond to market value. In the present case, we find that the assessee has adopted a rate at which actual transactions have been undertaken by unrelated entities. The volumes of transaction as relied upon are also substantial and hence it cannot be said that the assessee has hand picked 15 some transactions, which are beneficial to it. The DR submitted that since the assessee has itself drawn power from the grid, the grid rate represents the ‘best market value’ & hence the same should only be adopted. We are not agreeable to the above contention of the department. No doubt the grid rate is market value but there is no concept of ‘best’ market value in law. If by using the said adjective, Revenue seeks to infer that grid rate is the only market value in the present context, such inference is also clearly not tenable. Further, in case there are options, the option favorable to the Assessee is to be adopted. This is a well settled principle of law laid down by courts time and again including Supreme Court in the case of CIT Vs. Vegetable Products Ltd. [1973] 88 ITR 192 [SC] and other High Courts as pointed out by the AR. 70 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 13. In the light of the aforesaid, we hold that – (a) the value adopted by the Assesse be it value as per independent third party trading transactions or as per Power Exchange (IEX etc.) or any other independent transaction (for the relevant period and which has taken place in the relevant area where the eligible unit is located) constitute ‘market value’ in terms of explanation to Section 80IA(8); (b) the value at which State Grid has sold power to the Cement Unit of the Assessee (average annual landed cost) also constitute ‘market value’ in terms of explanation to Section 80IA(8) but the value at which State Grid or third party has purchased power from the Power Unit of the Assessee, which represents its power which is sold when not required by the Cement Unit, does not constitute ‘market value’ in terms of 16 explanation to Section 80IA(8). It is the ‘principle’ and not the ‘quantum’ which is deciding factor; (c) where a basket of ‘market values’ are available for the relevant period and relevant geographical area where the eligible unit is situated, the assessee has discretion to adopt any one of them as market value; and (d) If the value adopted by the assessee is ‘market value’ as explained above, it is not permissible for Revenue to recompute the profits & gains of the eligible unit by substituting the said value (as adopted by the Assesse) by any other ‘market value’. 14. Accordingly, we delete the disallowance as made by the AO in order u/s 143(3) on account of deduction u/s 80IA of the Act and hence the grounds 1 & 2 are accordingly decided in favor of the assessee.” 71 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 27. The said issue is also answered in favour of the assessee.” To the same effect are the following decisions of the benches of the Tribunal: - Sri Matha Spinning Mills (P.) Ltd. v. DCIT: 141 ITD 238 (Chennai.) - Prabhu Spinning Mills (P.) Ltd. v. DCIT: [2013] 33 taxmann.com 398 (Chennai Trib.) - NR Agarwal Industries Ltd vs DCIT (ITA No. 341-344/Ahd/2012) In view of the aforesaid, your Honour would appreciate that the revenue has been correctly recorded in eligible units of the Appellant based on the rates at which power is supplied by the SEB. Further, the Hon’ble ITAT Jodhpur has also allowed this ground of appeal in ITA no. 179 & 184 for AY 2008-09 (ref. pages 196-206 of CL Paper book), 262 & 246/Jodh/2017 for AY 2011-12 and 404 & 412/Jodh/2017 for 2012-13(ref. pages 570 to 577 of CL Paper book). In view of the foregoing facts and case laws, it is submitted that the disallowance made by the Ld. AO may be deleted. 14. We have heard rival contentions, perused the material available on record and gone through the orders of the revenue authorities. We find that similar issue has been considered by the coordinate bench of the Tribunal in assessee’s own case in ITA No. 184/Jodh/2012 dated 04.09.2017 for the assessment year 2008-09 wherein the Tribunal confirmed the deletion of disallowance by observing in para 261-262 as under :- “ 261. We have considered the rival contentions and the various decisions cited. We find that the Coordinate Bench of the Tribunal in the Assessee ’s 72 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. own case for AY 2004-05 in ITA No. 229/JU/2009 order dated 19.08.2011 and ITA No.455/JU/2010 order dated 29.11.2013 has held as under:- “6. We have gone through the rival submissions and the decisions cited before us. We find that the assessee had set up a Captive Power Plant namely CPP Debari of 29.62 MW and CPP Zawar of 6 MW which started generation of power in the F.Ys. 2002-03 and 2003-04 respectively. This power is consumed in other undertakings of the assessee. Transfer of power from CPP Debari & CPP Zawar are reckoned at market price which corresponds to the State Grid electricity price. The assessee has claimed deduction under section 80IA of the Act in respect of profit & gains derived from business of generation of power for CPP, Debari (being first year of the consecutive period of 10 out of 15 years). Regarding CPP, Zawar, there was no profit available for deduction under section 80IA during the year under consideration. In the original assessment order the A.O. had allowed deduction under section 80IA regarding CPP, Debari for A.Ys. 2004-05 to 2006. 7. The ld. Authorized Representative argued that all the requisite conditions, which are necessary and sine-qua-known for claiming deduction in payment of section 80IA(3), stands satisfied. 7. We incorporate or extract paragraph no. 2.2.4 at page nos. 4 to 6 of CIT(A)' s order to demonstrate as to how the assessee has fulfilled the requisite conditions: "2.2.4 The AR has further submitted that the appellant has fulfilled the three conditions as prescribed in sub-section (3) of 80/A of the Act. A. The brief submissions in respect of each of the conditions are as under: i) Profits from Eligible Business:- The undertaking is engaged in generation or generation and distribution of power which is an eligible business in terms of section 80/A 4(iv)( a). ii) Undertaking is not formed by splitting up or reconstruction of business already in existence:- The power plant was not formed by splitting of or reconstruction of business already in existence. The whole power plants were set upright from scratch and the contract for setting up of power plant 73 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. was inter alia given to Wartsila for a total consideration of Rs 69.24 Crore. In the assessment order also there was no dispute raised on this matter. (iii) No transfer of machinery/plant from other business in excess of twenty percent of value of plant and machinery: - Since the CPPs were totally new undertakings, where the suppliers including Wartsila were required to supply all the plant and machinery; hence the entire plant and machinery were new and not used one. These facts were not disputed by the AO in the impugned order. B. Option to claim deduction in 10 consecutive assessment years out of fifteen years beginning from the year in which undertaking begins to generate power:- i) CPP Debari began generation of power in FY 2002-03. The deduction u/s. 80/A could be claimed in any 10 consecutive assessment years out of block of 15 years (From FY 2002-03 to FY 2016-17). The Appellant has opted to claim deduction for a period of 10 years commencing from FY 2003-04 to FY 2012-13 which is falling under the block of 15 year. In the assessment order also there was no dispute raised on this matter. ii) The CPP Zawar of the appellant is also eligible for claim of deduction u/s.80/A. The CPP Zawar began generation of power in FY 2003-04. The deduction u/s.80/A can be claimed in any 10 consecutive assessment years out of block of 15 years (from FY 2003- 04 to FY 2017-18). However, the appellant has not opted for the 80IA claim for CPP Zawar, in view of no profits for CPP Zawar in this year under consideration. The appellant had opted to claim deduction of 80IAfor the CPP Zawar for a period of 10 years commencing from FY 2004-05 to FY 20J 3-04 which is falling under the block of 15 year period. It is evident as per reports of the Chartered Accountant duly filed for the CPP Debari and CPP Zawar along with the return of income for the relevant year. 74 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. In the assessment order also there was no dispute raised on this matter. C. Accounts of the undertaking to be audited by Chartered Accountant:- The accounts of the CPP Debari and CPP Zawar were duly audited by Chartered Accountant as defined in section 288 and certificates in Form 10CCB have been enclosed with the return of income. Kind reference is made to Page No 10-16 of PB-for CPP Debari and for CPP Zawar Mines at Page No 33-42 of PB, enclosed with this submission. These reports in the statutory form furnish the details and the quantum of deduction claimed by the Company . These reports were accompanied by the profit and loss account and balance sheet of the respective eligible undertakings. In the case of CPP Debari, the profit and loss account is at Page No 15-16 and balance sheet at Page No 14. In the case of CPP Zawari, the relevant information of profitability is at Page No 38-39 and balance sheet at Page No 37 of PB. In the case of CPP Debari and CPP Zawar Mines, since the claim of 80IA was allowed by the AO regularly in the original assessment, from the AY 2004-05 and onwards, the relevant information was attached in each of the assessment years. Kind reference is also made to the details enclosed with the submissions for the assessment years viz. AY 2005-06 and AY 2006-07 respectively in respect of CPP Debari and CPP Zawar (Please refer Page No.52-71 and 77-98 respectively of PB). Disclosure in the Directors' Report:- Further, kind attention of your Honour is invited to Directors' Report of the Annual Accounts of the FY 2002-03 at Page No 7, wherein it is inter alia stated that your Company placed special focus on power which is a major cost element and apart from taking various measures to conserve energy; .... In addition, a new 29 MW diesel generating station was commissioned at Debari zinc smelter in 2003 in a record time of around 7 months. This will reduce the cost of energy and consequently, cost of production of the Debari smelter. Similar mention was also made regarding CPP installation in the Directors' Report of the Annual Accounts for the AY 2004-05 as well." 8. In fact, this issue also stands covered in favour of the assessee. This decision of this very Bench in assessee's own case for A.Y. 2004-05 is relevant. We extract the relevant portion of this decision which are 75 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. contained in paragraph nos.2.11 to 2.12 of this order dated 19.08.2011 passed in ITA No.229/JU/2009 for A.Y. 2004-05 as under :- "2.11 We have heard both the parties. It cannot be ascertained form the assessment order that the AO has made enquiry as to allowability of deduction u/s 80IA in respect of Captive Power Plant because the power so produced has been consumed by the assessee in its other undertaking. However, there is a Board Circular that deduction u/s 80/A is available to the Captive Power Plant. The Hon'ble Madras High Court in the case of "Tamilnadu Petro Products Ltd. Vs. ACIT (supra) had an occasion to consider as to whether deduction u/s 80IA is available in respect of Captive Power Plant. It will be useful to reproduce the following paragraph from the above referred judgement. "3. The issue is directly covered by the decision of this Court dt. 7 th June, 2010 in Tax Case (Appeal Nos. 68 to 70 of 2010. The substantial question of law raised in these appeals was: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to deduction under s. 80IA of the IT Act in respect of notional profits of account of power generated from its own captive power plant and utilized by itself ?" 4. After considering the issue, the statutory requirement as prescribed under s.80-IA(l) has been stated in paras 8 and 9 of the above said judgement which reads thus:- "8. The contention that only whatever power generated from the sale to an outsider or the Electricity Board, and the profit or gain derived by such sale alone can be taken as profits or gains derived by the assessee as mentioned in s. 80-IA(1) of the IT Act, has been rejected, by the Tribunal in the order impugned. In our considered view, the Tribunal was well justified in having rejected such a stand of the appellant. Having referred to s. 80- IA(1) of the IT Act, we are also convinced that what is all to be satisfied in order to be eligible for the deduction as provided under sub-s.(l) of s. 80-IA, the assessee should have set up an undertaking or an enterprise and from and out of such an undertaking or an enterprise set up, any profit or gain is derived, falling under sub- section covered by sub-s.(4) of s.80-IA of the IT Act, such profit or gain derived by the assessee can be deducted in its entirety for a period of 10 years starting from the date of functioning of the set up. The contention that profit or gain can be claimed by the 76 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. assessee only if such profit or gain is derived by the sale of its product or power generated to an outsider cannot be the manner in which the provisions contained in s.80-IA(l ) can be interpreted. The expression 'derived' used in the said s.80-IA(l) in the beginning as well as in the last part of sub-s.(4) makes it abundantly clear that such profit or gain could be obtained by one's own consumption of the outcome of any such undertaking or business enterprise as referred to in sub-s.(4) of s. 80-IA. The dictionary meaning of the expression 'derive' in the New Oxford Dictionary of English states 'obtaining something from a specified source'. In s.80-IA(1) also no restriction has been imposed as regards the deriving profit or gain in order to state that such profit or gain derived only through an outside source alone would make eligible for the benefits provided in the said section. 9. Therefore, there is no difficulty in holding that captive consumption of the power-generated by the assessee from its own power plant would enable the respondent/assessee to derive profits and gains by working out the cost of such consumption of power in as much as the assessee is able to save to that extent which would certainly be covered by s. 80- /A( 1). When such will be the outcome out of won consumption of the power generated and gained by the assessee by setting up its own power plant, we do not find any lack of merit in the claim of the respondent / assessee when it claimed by relying upon s.80-/A( l) of the IT Act by way of deduction of the value of such units of power consumed by its own plant by way of profits and gains for the relevant assessment years ." 5. The Division Bench also relied upon the decision of the Hon'ble Supreme Court in CIT vs. Tanfac Industries Ltd., ALLOWED FOR STATISTICAL PURPOSES (c) No.18537 of 2009 reported in (2009) 319 ITR (St) 8 wherein while applying s. 80-IA of the IT Act, the Hon'ble Supreme Court took a view that the value of steam used for captive consumption by the assessee was entitled to be deducted under s.80-IA of the Act. On behalf of the Revenue, reliance was placed upon the circular of CBDT dt. 3rd Oct., 2001 and contended that the assessee was not entitled for the deductions. After making a detailed reference to the contents of the said circular, the Division Bench has stated as under in para 13 of the judgment:- 77 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. "13. A perusal of the above said circular would clearly show that it is also in favour of the assessee. The said circular is very specific that in a case of captive power unit the provision of law is also the same as in the case of the undertaking which generates and distributes the power to any other concern. Further, it is a well-established principle of law that a circular can only be made in consonance with the provisions of the enactment and the same cannot be derogatory to the purport sought to be achieved. Hence we are of the opinion that the circular relied upon by the learned counsel for the Revenue is infact in favour of the assessee and therefore the said contention also cannot be accepted. " 6. Mr. K. Subramanian, learned standing counsel for the respondent would however contend that the expression 'derived from' should be given restricted meaning in which event the claim of the appellant cannot be countenanced. According to the learned standing counsel since the business of the appellant is manufacture of petro products and generation of electricity is not its business, it cannot be held that whatever profit earned, even notional profit, by virtue of captive consumption, cannot be construed as profit earned from and out of the income derived from the business undertaking. 7. In our considered opinion, the said contention can have no application to the case on hand. In as much as we dealt with the issue in the light of s. 80-IA and in particular sub-cl. (iv) of the said section which provides for the benefit even in respect of electricity generation plant established by the assessee and the income derived from such enterprise of the assessee, it will have to be held that the assessee fully complied with the requirements prescribed under s.80-IA in order to avail the benefits provided therein. Therefore, the contention based on the interpretation of the expression 'derived from' can have no application to the case where the provisions of s.80-IA get attracted. 8. Therefore, we do not find any scope to deviate from what was held by this court in the decision dt. 7 th June, 2010 in Tax Case (Appeal ) Nos.68 to 70 of 2010. The questions of law are therefore; answered in favour of the appellant. The appeals stand allowed and the impugned orders are set aside. Consequently, connected miscellaneous petitions are closed. Mo costs." The Hon'ble Madras High Court has referred to the decision of SLP of the Department by the Hon'ble Apex Court in the case of CIT Vs. Tanfac Industries Ltd., 319 ITR 8 (St). We therefore, modify the 78 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. direction of the Id. CIT. The assessee is entitled to deduction u/s 80-IA on Captive Power Plant. 2.12 The assessee was required to file copies of the return for the assessment year 2003-04. In the return of income or in the notes to the return of income, it is not mentioned that the assessee is not claiming deduction u/s 80-IA. In the note attached with the return of income for the assessment year 2004-05, it is mentioned that Captive Power Plant has commenced generation of power during the year under consideration. In the original return, the assessee has reduced the brought forward losses and depreciation of assessment year 2003-04 and the amount is Rs.6, 10,03,072/-. It will be useful to reproduce the relevant note from the return of income for the assessment year 2004- 05:- "The Captive Power Plant unit at Zawar Mines of the company is also- eligible for deduction u/s-80IA of the Act which commenced the generation of power during the year under consideration. However, as per the enclosed report of the Chartered Accountant at Annexure 'I', there are no profits for deduction u/s 80A during the y ear under consideration. The company would claim the same whenever there are profits from this unit." Since power generation has been started during the assessment year 2004-05, therefore, the AO has not considered as to whether the depreciation for earlier year was allowable against set off of income of the earlier year because the commencement of Captive Power Plant is from assessment year 2004-05. There has been clear cut lack of enquiry for ascertaining the quantum of deduction u/s 80IA. 9. Therefore, it becomes clear from the above that the assessee has been held eligible for deduction under section 80IA of the Act in respect of Captive Power Plant, Debari. Respectfully following the above Tribunal Order, we do not find any merit in the ground raised by the Revenue in this appeal. Therefore, we confirm the impugned deletion and dismiss the appeal of the Revenue.” 262. Respectfully following the decision of the Coordinate Bench and in the absence of any distinguishing factor brought to our attention by the Ld. CIT DR, we dismiss this ground of Appeal of the Revenue.” Similar ground has also been decided by the Coordinate Bench of the Tribunal in 79 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. assessee’s own case in ITA No. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 in favour of the assessee in para 144 to 149 of its order. We, therefore, respectfully following the decisions of the coordinate Bench of the Tribunal, allow this ground of the assessee by deleting the disallowance. Ground Nos. 4-4.1 relate to disallowance of deduction u/s 80IA of the Act amounting to Rs. 2,64,58,812 for generation and transfer of “Steam” which is included in the profit computed for CPPs at Chanderiya and Dariba. 15. Before us the ld. Counsel for the assessee narrated the submissions as under :- “ It is submitted that the eligible units of the Appellant transfer steam to the taxable units on a cost-to-cost basis, without charging any profit margin. The details of transfer of steam from eligible units to other units of the Appellant are provided in the table below: Eligible Unit Sale value (INR Cr.) Cost (INR Cr.) Profit CPP CLZS 80MW 0.85 0.85 0 CPP DSC 160MW 0.31 0.31 0 The TPO held that steam is a by-product of the process of manufacturing power and it bears no cost. In case it was not utilized the same would have been wasted. Since no profit has been shown by the Appellant on transfer of steam during the impugned AY 2017-18, therefore, the TPO held that this transaction was not covered u/s 80IA(8) and it did not require any adjudication by the TPO. Thus, the TPO has made adjustment of Rs. 2,64,58,812 in the transfer pricing assessment order. 80 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 16. On the other hand, the ld. D/R referring to TPO’s order at page 90 of the Paper Book (internal page 56) wherein it is contended as under: “8.2 It may be mentioned that steam is only a by-product of the process of manufacturing power and it bears no cost. In case it was not utilised the same would have been wasted. Since no profit has been shown by the assessee on transfer of steam during the year under consideration, therefore, this transaction is not covered u/s 80IA(8), hence not require any adjudication by TPO. However, deduction u/s 80IA(8) on account of transfer of steam is Nil as per assessee as well as per TPO.” The Ld. CIT (DR) relied upon the order of the ld. CIT(A) passed for AY 2013-14 (at page 2085 of the paper book) wherein this issue has been decided against the appellant holding as under: “2.2 The AO firstly held that the CPP had been set up for generation of electricity, steam was not at “power” for the purposes of section 80IA, and therefore income from sale of steam was not eligible for deduction u/s 80IA. Without prejudice, the AO held that even if notional income from sale of steam was considered eligible for deduction u/s 80IA, the assessee had failed to furnish any details of cost of steam claimed at Rs.31,17,36,541/- to show that any specific cost attached to steam which was a waste product generated in the process of generation of electricity from coal. In these facts, sale price for notional transfer of steam (submitted by the assessee to be equal to cost of steam) was taken at NIL by the AO, reducing the income of the CPPs eligible for deduction u/s 80IA by Rs.31,17,36,541/-. 2.3 As regards the first finding of the AO, while deciding the preceding Ground, 8(b), of appeal, income from sale of steam has been held eligible for deduction u/s 80IA following the Hon. ITAT’s orders in assessee’s own case in earlier years. However, the question to be decided in this ground of appeal, i.e., whether the assessee, in the year under appeal, has been able to furnish any details of cost of steam claimed at Rs.31,17,36,541/- to show that any specific cost attached to steam which got generated in the course of generation of electricity from coal, is one to be decided in the facts of this year and therefore the assessee’s submission that the issue is covered in its favour by ITAT orders in earlier years is not acceptable. The facts in the year under appeal, as relevant to the ground of appeal, 8 (c), are net taken up. 2.4 The transfer of steam from tax exempt CPPs of the assessee to its taxable units, is specified domestic transaction u/s 92BA(iii) and as per 81 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Section 92 (2A) any income in relation to a specified domestic transaction has to be computed having regard to the arm’s length price (ALP). The AO made a reference to the TPO u/s 92C for determination of the ALP, inter alia, for the transfer of steam.” The Ld. CIT (DR) contended that steam generated in the process is by-product and is of no value. Since value of the steam generated is Nil, its cost itself is equivalent to market value and, therefore, no deduction. 17. In Rejoinder, the ld. Counsel for the assessee submitted that the eligible unit should be set up for generation, distribution or generation and distribution of power. Nowhere in the language of the section it appears that the requirement is to generate “electricity”. The word used in the language is generation of “Power”. Thus the intent of the statute is to provide the deduction to any form of power. There is no such requirement in the act that the deduction will be allowed only on the generation of the “Electricity”. The Act simply provides that the Appellant should be in the business of generation or generation and distribution of the power. The process of generation of steam and electricity in the CPP unit involves feeding of coal into the bunker of the boiler which consists of a number of water tubes through which DM water is flowing. The coal is burnt in the boiler and the temperature in the furnace converts water inside the tubes into steam which rotate the turbine. The turbine is coupled to a generator which is the actual source of electricity generation and produces the electric energy by rotation. The steam can also be diverted directly as per their process requirement. The issue which remains to be addressed here is whether the steam generated and used for processes other than generation of electricity, is power or not. Here the 82 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. appellant submits that it is a well-known fact that the Steam is power. The Webster’s Dictionary defines steam as "energy". In Webster's Abridged Dictionary, at p. 1391, the steam has been defined to mean 'power or energy’. The Oxford English Dictionary defines “Power” as mechanical or electrical energy or any form of energy or force available for application to work (as that of gravitation, running water, wind, steam, electricity. The TPO failed to appreciate that section 80 IA of the act refers to the term “Power” and this term has to be determined from the perspective of the recipient and also that “Power” cannot only mean “electricity”. Accordingly, the steam and power are one or the other form of energy and giving steam a different treatment would be contrary to the spirit of the statute. Since the steam is equated with the power it is a form of energy and power being also energy, the revenue so generated would qualify for deduction u/s. 80-IA. It is submitted that the income derived from the supply of steam is income derived from an undertaking engaged in the generation of power is a form of energy and is thus power that would qualify for the deduction under s. 80-IA of the IT Act. The Appellant therefore contends that any form of energy produced or generated and/or generated and distributed shall fall within the ambit of expression "power" used in section 80-IA(iv) and the receipts so generated shall qualify for the benefit of section 80-IA. The Appellant places reliance on the decision of Hon’ble Jaipur Tribunal in the case of DCIT vs Maharaja Shree Umaid Mills Ltd.120 TTJ 711(2009) (ref. Page 1016-1019 of CL Paper Book) in which it has been held that the income from the sale of power by a power generating unit is a receipt from the business eligible 83 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. for deduction under section 80IA. The Court while dismissing the revenues appeal in this regard observed as under: “we fully concur with the decision on the issue arrived at by learned CIT(A) that appellant is in the business of generation of power and that the steam so generated by the industrial undertaking and receipt from the business of industrial undertaking is within the meaning of s. 80-IA which would qualify for this benefit. The first appellate order is thus upheld. The ground is thus rejected.” The Appellant further places reliance on the decision of Delhi Bench of the Tribunal in the case of Sial SBEC Bioenergy Ltd. vs. Dy. CIT (83 TTJ 866) (ref. Page 1020-1030 of CL Paper Book) wherein it is held that in common parlance the word power means energy. The relevant portion of the decision is produced as under - “on an identical issue wherein dealing with the matter in detail, it has been held that the word 'power' has to be given a meaning which is in common parlance and in common parlance the word 'power' shall mean the energy only. The energy can be of any form, be it mechanical, be it electrical, be it wind or be it thermal. The steam produced by the appellant on the principle of interpretation of statute shall only be termed as power and shall qualify for the benefits available under s. 80-IA(iv), held the Tribunal.” Similar is the effect of decision in the case of Tamilnadu Petro Products Ltd. vs. ACIT (238 CTR 454 -2010). The Appellant further places its reliance on the decision of DCW Ltd vs. Addl. CIT (132 TTJ 442- Mumbai ITAT). From the perusal of this decision, it may kindly noted that the Hon’ble ITAT, Mumbai has, relying on the decision of the Apex Court in the case of CIT v. Tanfac Industries Ltd. [S.L.P.(C) No. 18537 of 84 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 2009] (319 ITR 8 and 9) held that the appellant was entitled to claim deduction under section 80-IA of the Act on the value of steam used for captive consumption by the appellant. At this juncture, it is respectfully submitted that the issue of allowability of this claim of deduction u/s 80-IA is no longer res integra and is covered by decision of Hon’ble Kolkata Bench of Tribunal in Deputy Commissioner of Income-tax, Circle-8, Kolkata vs ITC Ltd. [2015] 154 ITD 136 (Kolkata – Trib). The similar claim of steam has been allowed in Appellant’s favour in the past, in respect to Asst. Yr. 2014-15 and 2015-16 by the Hon’ble CIT(Appeals), Udaipur. The Hon’ble Jurisdictional ITAT Jodhpur in the case assessee’s own case has allowed the claim of the Appellant vide its consolidated order dated 04/09/2017 for the assessment years 2008-09 (ref. pages 208-212 of CL Paper book), 2011-12(ref. pages 349 of CL Paper book) and for the AY 2012-13. (ref. pages 349 of CL Paper book). 18. We have heard rival contentions, perused the material available on record and gone through the orders of the revenue authorities. We find that the matter is squarely covered by the decision of Coordinate Bench of the Tribunal in assessee’s own case in ITA Nos. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the Tribunal by following its earlier order in assessee’s own case in ITA Nos. 179 & 184/Jodh/2014 dated 04.09.2017 for the assessment year 2008-09 adjudicated the issue in favour of the assessee by observing in para 64-65 as under :- 64. “We have heard the rival submissions and perused the material on record. We find that this issue now stands covered in favour of the Assessee in view of the 85 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. judgment of the co-ordinate bench in the Assessee's own case dated 04.09.2017 for AY 2008-09, wherein it was held as under:- 270. Having considered the facts of the case and the decision cited at the bar, we hold that the there was no ground for the to disallow the deduction in respect of transfer of steam u/s 801A. This issue has been considered by not only the Hon'ble Madras High Court but has also been considered by the Coordinate Bench in favour of the Assessee. The Coordinate Bench in the Maharaja Shree Umaid Mils (supra.) has observed as under:- "3. The learned Departmental Representative has basically relied upon the assessment order denying the claim of deduction under section 80-1Å(4)(v) of the Act on the basis that the relief under these provisions of the law is available only in the case of generation or generation and distribution of electricity whereas the steam is only produced. He submitted that section 80-1Å(4)(iv)(b ) and (c) talks about transaction and distribution lines hence it is clear that section 80-1Å(4)(iv) in case of only electricity generation or generation and distribution provides relief and not in the case of production of steam. 4. The learned Authorised Representative on the other hand while relying upon the first appellate order submitted that in relation to the process of generation of 'electricity' or 'steam' or such other form of energy, there does not exist a difference between the words 'generation' or 'production'. Generation of electricity and production of electricity as such have the meaning synonymous to each other, likewise in the matter of steam which is colloquial to power or energy and is another form of power, the words 'generation' or 'production' only have one and the same meaning. There is, therefore, little room for any doubt that scientifically or in general parlance, production of steam and generation of steam or for that matter, production of electricity and generation of electricity, shall have the same meaning whichever of the two be the item under consideration. Regarding the sub-clauses (b) and (c) of section 80-1Å(4)( iv) deal with -transmission and distribution lines, he submitted that under clause (iv) of section 80-1Å(4) provides for deduction in case of three types of undertakings, viz., the one which is engaged in generation or generation and distribution of power, the second which starts transmission or distribution by laying a network of new transmission or distribution lines; and the third which undertakes substantial renovation and modernization of the existing network of transmission or distribution lines. All these three clauses deal with the three different categories of the undertakings. These three types of undertakings referred to in the said sub-clauses (a), (b) and (c ) are different and independent of each other. Hence while dealing with one sub-clause, inference need not and 86 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. cannot be drawn from the other sub-clause. He submitted that the word 'power' used in section 80) has not been specifically defined for the purpose of relevant provisions. As such, the dictionary meaning of the same need to be looked into like, there are transmission and distribution lines for electricity, there are transmission and distribution lines for steam too. He submitted further that in the present case of undertaking, power generation unit of the assessee was conceived ab initio to have the system of waste heat recovery for generation of steam of required pressure which could also be made available for the operations of the textile unit of the assessee. The steam so generated through the attachment of power generation unit, was by using the residual heat being exhausted by the engine while producing electric power. Such steam is thus generated as a bye-product of plant for generation of electricity. The textile unit would have itself had to generate steam for its use if the same were not available to it from the power generation unit, as was being done there before. The learned Authorised Representative also reiterated submissions made before the lower authorities while placing reliance on the decision of Delhi Bench of the Tribunal in the case of Sial SBEC Bioenergy Ltd. v. Dy. CIT [2004] 83 TTJ (Delhi) 866. He placed reliance on the following decisions : (i) Nirma Industries Ltd. v. Åsstt. CIT [2005] 95 ITD 199 (ii) CIT v. Wheels India Ltd. [1983] 141 ITR 745 (Mad), (iii) Asstt. CIT v. Maxcare Laboratories Ltd. 120051 92 ITD 11 (Cuttack), (iv) CIT v. Sundaram Clayton Ltd. [19821 133 ITR 34 (Mad), (v) CIT v. Shree Mansinghka Oil Mills (P.) Ltd. [19881 169 ITR 1581 (Born.) (vi) Åsstt. CIT v. Kunal Printers Ltd. [20051 2 SOT 414 (Åhd.), (vii) (vii) Recon Oil Industries Ltd. v. Jt. CIT [20051 2 SOT 732 (Mum.), (viii) CIT v. Bharath Sea Foods [19991 237 ITR 462 (Ker.) (ix) Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 1883 (SC), (x) (x) Å.G.S. Tiber & Chemical Industries (P.) Ltd. v. CIT [1988] 233 ITR 207 1 (Mad.), (xi) CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), (xii) CIT v. Naga Hills Tea co. Ltd. 119731 89 ITR 236 (SC), (xiii) CIT v. Podar Cement (P.) Ltd. Etc. [19971 226 ITR 6252 (SC). The learned Authorised Representative referred pp. 13 to 25 of the paper book i.e., note on utilization of steam in the textile unit of the company, audit report, balance sheet and P&L a/c for the year ended 31-3- 2003 in respect of power generation unit, gas base route. 5. Considering the above submissions, we find substance in the arguments of the learned Authorised Representative that like electricity, steam is also a form of power as per the dictionary meaning reproduced by the learned CIT(Å) at 87 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. pp. 5 and 5 (sic) of the first appellate order. We also concur with the view of the learned Authorised Representative that there is little room for any doubt that scientifically or in general parlance, 'production of steam' and 'generation of steam'; or for that matter, 'production of electricity' and 'generation of electricity', shall have the same meaning whichever of the two be the item under consideration. In this regard the learned Authorised Representative has also referred the definition of word 'generate' under section 2(29) of the Electricity Act, 2003 as per which 'generate' means to produce electricity from a generating station for the purpose of giving supply to its any premises or enabling a supplier to be so given. The Assessing Officer has tried to point out the intention of the Legislatures by referring to section 80-1A(4)(iv)( b) to infer that intention is to provide benefit to the generation of electricity only, since in the sub-clause (b) transmission and distribution lines are mentioned which can be of electricity only. Submission of the learned Authorised Representative in this regard to which we also agree remained that sub-clauses (a), (b) and (c) of section 80IA(4)( iv) provide for deduction in the cases of three types of undertaking viz. the one which is engaged in generation or generation and distribution of power; second, which start transmission or distribution lines; and the third, which undertakes substantial renovation and modernization of the existing network of transmission or distribution lines. All these three clauses deal with the three different categories of the undertaking. These three types of undertakings referred to in the said sub-clauses (a), (b ) and (c) are different and independent of each other. Thus while dealing (with) one sub-clause, inference need not and cannot be drawn from the other sub- clause. On perusal of these provisions, we agree with the plea of the learned Authorised Representative that case of the assessee falls in sub-clause (a) itself and the legislative intent inferred by the Assessing Officer with reference to sub-clause (b) is superfluous, just like there is transmission or distribution lines for electricity there are transmission and distribution lines for steam too. Therefore, there is no basis whatsoever for drawing distinction between the two or a room for any confusion between the two propositions. The 'power' and 'energy' are synonymous, which can be in several types and forms, be it heat, which is steam or mechanical or electrical, wind or be it thermal. We also agree with this plea of the learned Authorised Representative that if the intent of the Legislature remained to restore the application of the benefit of deduction under section 80-1Å to generation of electricity only, it would have been specifically so worded by using the connotation 'electrical power' only rather than the connotation 'power' omnibus. As per Chambers Twentieth Century Dictionary, steam-power; is a spell of travel by steam power; energy, force, spirit for, using, worked by steam; to rise or pass off in steam or vapour, or smell; to become dimmed with condensed vapour (often with up); to move 88 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. by means of steam. As per the Cambridge International Dictionary of English, the steam is the hot gas that is produced when water boils; steam can be used to provide power, steam turbines of a steam engine/ locomotive of the age of steam. Thus, there is no doubt, like electricity, steam is also a form of power. The arguments advanced on behalf of the assessee also find support from the decision of Delhi Bench of the Tribunal in the case of Sial SBEC Bioenergy Ltd. (supra) on an identical issue wherein dealing with the matter in detail, it has been held that the word 'power' has to be given a meaning which is in common parlance and in common parlance the word 'power' shall mean the energy only. The energy can be of any form, be it mechanical, be it electrical, be it wind or be it thermal. The steam produced by the assessee on the principle of interpretation of statute shall only be termed as power and shall qualify for the benefits available under section 80-1A(iv), held the Tribunal. Under these circumstances, we fully concur with the decision on the issue arrived at by learned CIT(Å) that assessee is in the business of generation of power and that the steam so generated by the industrial undertaking and receipt from the business of industrial undertaking is within the meaning of section 80-1Å which would qualify for this benefit. The first appellate order is thus upheld. The ground is thus rejected. " 271. Thus, respectfully following the decision of the Hon'ble Madras High Court as well as decision of the Coordinate Bench we confirm the order of the CIT(A) and dismiss this ground of Appeal of the Revenue. " 65. Hence, in view of the above ground No. 27 to 34 stands allowed in favour of the Assessee.” We, therefore, respectfully following the consistent view taken by the Co-ordinate Bench of the Tribunal as referred hereinabove, allow the ground of the assessee. Ground Nos. 5-5.2 relate to allocation of head office expenses to eligible units: 19. Before us, the ld. Counsel for the assessee submitted as under :- “ At the outset, the Appellant would like to respectfully submit that while preparing the financial accounts of the exempt units of the Appellant, all the 89 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. expenses in relation to the respective units, such as salary and administrative expenses, are duly considered. The Head Office expenses and common assets have no proximate connection with the industrial undertaking eligible for deduction under the Act. These expenses would have been incurred otherwise also had there been no tax benefit units in existence and these expenses represent common corporate expenditure which cannot be allocated or assigned to any particular unit or activity. The TPO/AO did not subscribe to the contentions of the Appellant and rejected the same by holding that captive power plants, WPPs, units at Pantnagar and Haridwar set up by Appellant have utilized various services and amenities of corporate and administrative set up of HO. According to his view, the head office should have charged the market price for services and amenities provided. As per his view, the head office expenses need to be apportioned to work out the profit of captive power plants, WPPs, PSMP and HZP, such as part of the remuneration of directors, auditors, managers, financial advisors, head office amenities are required to be allocated to 80IA, and 80IC units. The TPO has relied on the provisions of section 80IA(8) of the Act for apportioning the HO expenditure. Accordingly, the TPO/AO held that the head office expenses have to be apportioned on the basis of turnover. Various Head Office expenses like salary, rent, insurance, etc. and depreciation on the head office assets i.e. residential building, computers, furniture and fittings, motor vehicles etc. was also considered for the apportionment. That way, the expenses of Rs.4.90 Cr, 4.65 Cr, Rs. 10.97 Cr, Rs. 57.44 Cr respectively were determined to be apportioned for CPPs Chanderiya 80MW, Zawar 80MW CPP, CPP Dariba 160 MW and Pantnagar lead and Zinc plant respectively and 90 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. in the case of WPPs Rs. 2.07 Cr on the basis of turn-over while computing the eligible profits. For arriving at the amount of disallowance, the TPO has worked out the percentage of HO expenses to the Total expenses of HZL which worked out at Rs. 337.97 Cr being 32% of total head office expenses and arrived at an amount of Rs. 7.97 Cr and added the same with total HO expenses for depreciation on HO assets and apportioned total amount of Rs. 345.94 Cr on the basis of turnover of the units and made total addition of Rs. 50.99 Cr. 20. On the other hand the ld. D/R contended that head office is only the cost center and not a profit center. Reference made to the observations of the TPO at page 63 of the TPO’s order which reads as under: “6.9 The plain reading of subsection (8) of section 80 IA makes it clear that the benefit provided under this section is bound by certain limitations. The assessee is required to fulfil certain conditions to claim the above deduction. This sub section makes sure that the benefit of deduction is fair and reasonable and the quantum of deduction is such that it actually accrues. Therefore the intention of the legislature seems to be two fold, firstly it seeks to provide 100 % tax deduction on certain eligible business activities but at the same time it aspires to limit such benefit to the real eligible beneficiaries and to a quantum of profits that could be treated to have been reasonably derived from eligible business. The details of the expenses made by the exempt units of the assessee are tabulated hereunder as 6.10 In this backdrop, the case of the assessee was analysed and it is found that there is no force in the arguments of the assessee in this regard. The assessee is claiming deduction u/s 80IA in respect of Captive Power Plants, but there are certain services and amenities which are used by these units in order to enable to carry out day to day functioning and the financial management or related activities. These services are provided by the Head office of the companies. The Head office is not a separate profit centre in the case of the assesse and it has not allocated any sum for eligible units for the services/amenities provided by it. The Head office should have charged market value in respect of services provided to the eligible units to ascertain the true and fair profit of Captive Power Plants, Haridwar plant, Pantnagar Plant and Wind Power Projects. The assessee has not been able to prove that the head office assets and services are not being used by the Captive Power Plants, Haridwar plant Pantnagar Plant and WPP. The use of head office services by the Captive Power Plants and other plants are inevitable in order to arrive at the assumption that the profit has to be calculated as if Captive Power Plants, Haridwar Plant, Pantnagar 91 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Plant and WPP were an independent industrial under takings. For example the part of the remuneration of directors, auditors, managers, financial advisors, head office amenities, head office assets are required to be allocated to 80IA units. 6.12 The above position undoubtedly reveals as to from where the all CPPs and other units were being monitored and controlled. Auditors remuneration expenses, cost audit expenses, director’s related expenses, grass- root expenses and salary to non executive employees are nil in the case of CPPs, refineries and WPPs whereas the said expenses are substantial in the case of Head Office. The substantial difference in staff welfare expenses, rates and taxes, insurance, technical consultancy and watch and ward expenses paid at Head Office without earning any income and those incurred in the case of CPPs, refineries and WPPs where huge turnover was made is a glaring example to establish that CPPs and other units were being controlled and managed by the Head Office. Therefore, Head Office expenses need to be allocated to the CPPs and other units to work out their actual exempted profits.” The Ld. CIT (DR) contended that services received from head office is to be construed as transfer in terms of section 80IA of the Act and, therefore, the same is to be taken into account for determining the profit eligibility for deduction under section 80IA for the eligible unit. 21. In Rejoinder, the ld. Counsel for the assessee submitted as under :- “ The Appellant submits that the action of the TPO/AO in apportioning the expenditure incurred is not sustainable and is liable to be deleted for the following reasons - (a) The profits and gains to be derived from the eligible business As per the provisions of section 80IA (1) and 80IC of the Act, profit of the eligible units under the respective sections is to be computed by reducing the expenditure from the income of specific undertaking and expenditure /income can be treated as derived from that undertaking. The expenditure incurred by the eligible unit, in order to be reduced for computing profit of the eligible unit, should have direct nexus with manufacturing activity of the specific undertaking and expenditure /income can be treated as derived from that undertaking only if direct nexus between the 92 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. expenditure/income of that undertaking can be established. There cannot be any direct nexus between the head office expenses and eligible undertaking under section 80IA and 80IC of the Act as the same have to be incurred irrespective of manufacturing activity. The Appellant analysed the common expenses incurred by the Head office in terms of their relevance to the eligible units as below: Nature of expenses Appellant’s remarks Salary to employees - Executive - Non-Executive Staff welfare expenses All the exempt units have deployed skilled staff and their salary and all the related expenditure has already been debited in their books of account, for calculation of the profits of the tax holiday units. The staff employed at the exempt units is capable of performing the activities on their own, and the employees deputed at the Head Office do not participate in the operations/ management of these units. Rates and Taxes Insurance Watch and ward expenses Technical consultancy Expenses of this nature related to the tax holiday units have already been debited while calculation of profit of the tax holiday units. Grass Root expenses These expenses do not relate to the business of any of the running units. These are exploration related expenditure. Other expenses incurred at HO Expenses of this nature related to the tax holiday units have already been debited while calculation of profit of the tax holiday units. Depreciation on the residential building, computers, furniture and fittings, and motor vehicles Expenses of this nature related to the tax holiday units have already been debited while calculation of profit of the tax holiday units. Directors' fees The board of directors take part in strategic and key decision making for facilitating the operational activities at eligible as well as non-eligible units. In Directors' travelling expenses 93 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Nature of expenses Appellant’s remarks Auditor’s remuneration and expenses this regard, the salary cost of the board of directors may be apportioned and allocated to the eligible units. Similarly, the other expenses listed herein, are incurred for the Company as a whole and may also be apportioned between the eligible and non-eligible units, based on a rational allocation key, which would appropriately reflect the efforts undertaken by the respective units. Donation The Appellant submitted that the Head Office expenses and common assets have no proximate connection with the industrial undertaking eligible for deduction under the Act. These expenses would have been incurred otherwise also had there been no tax benefit units in existence and these expenses represent common corporate expenditure which cannot be allocated or assigned to any particular unit or activity. The TPO/AO while making the apportionment has taken all the expenditure incurred at the HO and went ahead in reducing the deduction u/s 80IA and 80IC of the Act, which in the humble submission of the Appellant, is not a correct legal position in view of the above discussion. Hence is liable to be deleted. (b) Separate books of accounts maintained for each of the unit The CPPs, HZP, and WPPs are autonomous units and maintain the books of account separately by its dedicated staff and cost is accounted for in the books of the respective units and the functioning of these industrial undertakings are independent. Further it is submitted that the separate books of accounts so maintained for CPPs Chanderiya , Dariba and Zawar; HZP; and WPPs have been duly audited by a firm of Chartered Accountants and a certificate in form No. l0CCB have been enclosed with the return of income consisting of separate balance sheet and 94 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. profit and loss account. Eligible undertakings have shown all the expenses relatable to it including depreciation on the plant and machinery of the respective CPPs, HZP and WPPs, all the running and maintenance expenses of the plant as also salary/wages and statutory dues of the manpower deployed in running and maintaining it, insurance, consultancy, freight & forwarding, and other administrative & selling expenses etc. (c) Turnover is not the correct method of apportioning Without prejudice to the above, the Appellant submits that turnover cannot be a basis for apportionment of any expenses as the turnover of the Appellant for the metal business is based on LME rates and foreign currency exchange rate which are very volatile whereas the turnover of the power plants/eligible industrial undertaking is immune to these factors. Without prejudice, it is submitted further that the turnover of the Appellant included the element of excise duty. Where the turnover of the CPPs and other eligible industrial undertakings does not include any excise duty. Expenditure in respect of salary and wages of head office do not have any relation to the turnover of operating units. Without prejudice, the TPO/AO ought to have considered that rather than applying an arbitrary approach of allocating expenses in the ratio of turnover, the apportionment, if any, was to be done in the proportion of number of employee/s in respective units, viz. on a headcount basis. The Hon’ble Delhi High Court in Commissioner of Income-tax vs EHPT India (P.) Ltd. [2013] 350 ITR 41 (ref. pages 1035-1042 of CL Paper book) has held that apportionment of 95 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. expenses should be made on a rationale and scientific basis, if no method has been prescribed under statute, and also affirmed application of headcount basis for allocating common expenses. (d) No provision for apportionment of expenditure in the Act. The TPO/AO held that the head office expenses have to be apportioned on the basis of turnover. Various Head Office expenses like salary, rent, insurance, etc. and depreciation on the head office assets i.e. residential building, computers, furniture and fittings, motor vehicles etc. was also considered for the apportionment. That way, the expenses of Rs.4.90 Cr, 4.65 Cr, Rs. 10.97 Cr, Rs. 57.44 Cr respectively were determined to be apportioned for CPPs Chanderiya 80MW, Zawar 80MW CPP, CPP Dariba 160 MW and Pantnagar lead and Zinc plant respectively and in the case of WPPs Rs. 2.07 Cr on the basis of turn-over while computing the eligible profits. The TPO also held that the head office expenses and the depreciation on the common assets have to be apportioned on the basis of turnover and not on the basis of number of employees . For arriving at the amount of disallowance, the TPO has worked out the percentage of HO expenses to the Total expenses of HZL which worked out at Rs. 337.97 Cr being 32% of total head office expenses and arrived at an amount of Rs. 7.97 Cr and added the same with total HO expenses for depreciation on HO assets and apportioned total amount of Rs. 345.94 Cr on the basis of turnover of the units and made total addition of Rs. 50.99 Cr. In line with the findings of the TPO the AO has made additions on account of apportionment of head office expenses whilst calculating the deduction u/s 80IA and 80IC of the Act. Section 80IA (8) is not applicable at all in the present case of the Appellant. Section 80IA(8) of the act applies where the goods and services held for the purpose of the 96 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. eligible business are transferred to any other business carried on by the Appellant (or vice versa). In the Appellant’s case goods and services have not been transferred from head office to the units. Units are having their on skilled staff and manpower together with the admin and other expenses which are incurred at these units for their effective operation. Also, section 80IA(8) doesn’t provide for apportionment of the expenses in the tax holiday units and non-tax holiday units. It provides for the determination of the market price of the goods and services transacted between the eligible business and non-eligible business. By apportioning the HO expenditure to the eligible units the TPO was not able to justify his obligation of determining the market price. (e) Exp. of head office be netted off against the income of the HO. Without prejudice to the aforesaid submission that no part of HO expenses and depreciation relate to the income eligible for grant of exemption u/s 80IA/ 80IC, the bifurcation or apportionment of the gross expenses of HO expenses without taking into consideration the income shown in Head Office is patently wrong. If netting of HO expenses is made with the corresponding income shown in HO, it will be crystal clear that nothing can be even remotely said to be a common expenditure attributable to such exempted income. Judicial Precedents relied upon: In case of Rajasthan State Warehousing Corporation v.s CIT(2000) 159 CTR (SC) 132 : (2000) 242 ITR 450 (SC) (ref. pages 1043-1047 of CL Paper book), the Hon’ble Supreme Court has observed at pp. 450 and 451 that 97 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. in the absence of direct nexus between the expenditure and the income of the eligible unit, there can-not be apportionment HO expenditure. “The following principles may be laid down : (i) if the income of an Appellant is derived from various head of income, he is entitled to claim deduction permissible under the respective head, whether or not computation under each head results in taxable income; (iii) if the income of an assessee arises under any of the heads of income but from different items, e.g., different house properties or different securities, etc., and income from one or more items alone is taxable whereas income from the other item is exempt under the Act, the entire permissible expenditure in earning the income from that head is deductible; and (iii) in computing the ‘profit and gains of business or profession’ when an assessee is carrying on business in various ventures and some among them yield taxable income and the others do not, the question of allowability of the expenditure under s. 37 of the IT Act, 1961, - will depend on : (a) fulfillment of requirements of that provisions, namely that (i) the expenditure should not be in the nature of capital expenditure or personal expenses of the assessee; (ii) it should have been laid out or expended wholly and exclusively for the purposes of the business or profession; and (iii) it should have been expended in the previous year: and (b) on the fact whether all the ventures carried on by him constituted one indivisible business or not; if they do the entire expenditure will be a permissible deduction, but if they do not, the principle of apportionment of the expenditure will apply, because there will be no nexus between the expenditure attributable to the venture not forming an integral part of the business and the expenditure sought to be deducted as the business expenditure of the assessee. Held, reversing the decision of the High Court, that in view of the fact that a perusal of the question itself disclosed that income from various ventures was earned in the course of one indivisible business, the impugned order upholding the apportionment of the expenditure and allowing deduction for only that proportion of it which was referable to the taxable income, was unsustainable. The contention of the Appellant is squarely and fully covered in favour of the appellant by various judicial pronouncements on this issue. The Hon’ble Madras High Court had the opportunity to deal with the issue of apportionment of Head Office expenditure in the case CIT Vs. Hindustan Lever Limited reported at [2014] 42 taxmann.com 132 (Madras) wherein the court ruled that the Doctrine of proportionality does not apply in case of common expenses incurred by Head Office 98 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. for the purpose of maintaining units. The question which arose before the Court was whether the common head office expenses cannot be apportioned to the various units on the basis of their respective turnover for the purpose of calculation of deduction under Section 10B, 80I and 80HH?" The Hon’ble Court while distinguishing the cases relied upon by revenue denied to interfere with the Tribunal order favouring the assesee. The relevant portion of the decision of the Hon’ble Court is produced as under – “2. The assessee herein, Ponds India Limited got amalgamated with Hindustan Lever Limited, Mumbai with effect from 15.10.1998. The assessee claimed deduction under Sections 80HH, 80I and 10B. The Assessing office apportioned the common administrative expenditure incurred by the Head Office for all the units on proportionate basis. The assessee also claimed deduction under Section 80HHC in respect of each of its units on the ground that the accounts for these units were separately maintained, and therefore common expenditure of the Head Office cannot be apportioned for considering the deduction under chapter VIA. Aggrieved by the order of the assessment apportioning the common expenditure incurred by the Head Office, the assessee went on appeal before the Commissioner of Income Tax (Appeal), who following his earlier order, held against the assessee. Aggrieved by the same, the assessee went on appeal before the Tribunal, so too the Revenue went on appeal as against certain relief granted to the assessee. 3. A perusal of the order of the Tribunal shows that it followed the orders relating to assessment years 1981-82 to 1991-92 dated 28.5.2002 deciding the issue in favour of the assessee. Thus, the assessee's appeals were allowed. Learned counsel for the assessee placed before this Court the Tribunal's order passed in the assessee's own case on the identical claim dealt with under paragraph 28 of the order relating to assessment year 1984-85, paragraph 53 of the order relating to assessment year 1987-88 and paragraph 77 of the order relating to assessment year 1990-91. The Tribunal pointed out that the Head Office monitored the requirement of finance and other action which were necessary for running all the units. Consequently, the administrative expenses though relatable to the various units, are expenses incurred in general, towards the well-being of the business. Thus, the Tribunal granted the relief to the assessee holding that the Head office expenses could not be proportionately distributed among the various units or allotted to any particular unit independently. The order passed by the Tribunal had not been canvassed by the Revenue before this Court by way of filing any Tax Case (Appeal) and that the order of the Tribunal had attained finality. Present Tax Case (Appeal) is filed by the Revenue as against the orders of the Tribunal relating to assessment years 1991-92, 99 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 1993-94, 1994-95 , 1995-96, 1996-97 and 1997-98. When the same was pointed out to the learned standing counsel, he placed reliance on the decision of the Apex Court in Consolidated Coffee Ltd. v. State of Karnataka [2001] 248 ITR 432 as well as to the decision of the Madhya Pradesh High Court in CIT v. Prestige Foods Ltd. [2012] 23 Taxmann.com 126, and submitted that the common expenses be apportioned among the various units depending on the turnover. We do not find that the above stated decisions would be of any assistance to the Revenue, particularly the decision of the Apex Court. 4. A reading of the Apex Court decision in Consolidated Coffee Ltd.'s case (supra) shows that it relates to the claim under the Karnataka Agricultural Income Tax Act, 1957 and a specific rule framed in 1957. The Apex Court referred to Rule 7 of the Karnataka Agricultural Income Tax Rules, which reads as follows:— "Computation of deduction on mixed income where a deduction in respect of any item admissible under Section 5 or under rule 5, is a common charge incurred for the purpose of deriving agricultural income assessable under the Act, and income chargeable under the Indian Income Tax Act, 1922, the deduction admissible under the Act shall be the actual amount relating to the income derived from agricultural operations and proved by accounts or other conclusive evidence. Where no such accounts or evidence is produced the Agricultural Income Tax Officer shall proceed to assess the income to the best of his judgment." 5. Referring to Rule 5 of the Karnataka Agricultural Income Tax Rules, the Supreme Court pointed out that the crucial words in the said rule are that the deductions admissible under the Act shall be the actual amount relating to the income derived from agricultural operations and proved by accounts or other conclusive evidence. Where no such accounts or evidence available, the Assessing officer can proceed to asses the income to the best of his judgment. In confirming the view of the Karnataka High Court, the Supreme Court also affirmed the similar view rendered by this Court in the decision of CIT v. Manjushree Plantations Ltd. [1981] 130 ITR 908 6. As far as the above stated decision is concerned, the deduction is based on Rule 5. In the absence of any specific provision in the Income Tax Act, and more so in the absence of any such provision, there being no material to show that the expenditure though common were with reference to individual units relatable to the income earned, we do not find any justifiable ground to accept the plea of the Revenue. The assessee had taken the contention that the expenses incurred was for the overall management of the units as well as for providing finance. In the circumstances, the decision of the Apex Court is misplaced. 7. As far as the decision of the Madhya Pradesh High Court in Prestige Foods Ltd.'s case (supra) is concerned, the assessee did not furnish the expenses incurred by the units for the purpose of considering the deductibility. The Madhya Pradesh High Court viewed that in the absence of any details being made available by the assessee 100 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. to establish that the particular expenses were incurred for its particular unit out of its two units, the expenses had to be treated as one for both the units which has to be divided based on the proportionate to the turnover. The question that arises for consideration is not the same as had been considered in the Madhya Pradesh High Court. It is not denied by the Revenue that assessee's units have separate accounts indicating their income and the expenses. The assessee does not claim any deduction on the expenses incurred by the Head Office. The only question is as to whether the common expenses incurred by the Head Office for the purpose of maintaining the units would nevertheless be subjected to the doctrine of proportionality for the purpose of deduction. 8. As already pointed out, the department had no grievance as regards the order passed by the Tribunal for preceding years 1984-85 onwards and that the expenses incurred were pure and simple administrative expenses, monitoring the requirements of finance and other action which are necessary in running of the business. 9. We do not find any justifiable ground to accept the plea of the Revenue. Consequently, the above Tax Case (Appeals) are rejected and the order of the Tribunal shall stand.” The assessee further places reliance in the decision of the Jurisdictional Income Tax Appellate Tribunal Jodhpur in the case of ACIT V/s P.I. Industries. (2012) 144 TTJ ((ref. pages 1048-1059 of CL Paper book)) 353 wherein the court has held that apportionment of HO expenditure & depreciation made by the AO in the ratio of depreciation of eligible units and the other business of the assessee was not tenable. It is respectfully submitted the Hon’ble Jaipur Bench of Tribunal vide order dated 24.04.2017 in ITA No. 638/JU/2008 and 606/JU/2008 for assessment year 2006-07 has adjudicated this issue [ similar view has been taken by Hon’ble Tribunal for assessment year 2005-06 vide order dated 10.04.2017 in ITA No. 612/JU/2009 ] (ref. Page 1475 – 1479 of the CL Paper Book)., holding as follows : “9. Ground no. 8 is against deletion of reduction of Rs. 87,97,262/- made by the Assessing Officer for the claim u/s 80IA of the Act. The Ld. Departmental 101 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Representatives adopted the same argue as were made in ITA No. 612/JU/ 2009. He submitted that the assessee has not apportioned the expenses related to Head Office and CPP. He submitted that Director's fee is same for the Head Officer as well. 9.1 On the contrary, Id. Counsel for the assessee submitted that the expenses are duly apportioned and the word derived from has a wide import and be construed accordingly. 9.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The identical issue was in the ITA No. 612/JU/2009 we have decided this issue in para 10.2 by observing as under:- “10.2 We have heard the rival contentions, perused the material available on records and gone through the orders of the authorities below. We find that the identical issue was in the year 2004-05 in ITA No.235/JU/2008. The coordinate Bench has decided the issue in Para 17.9 holding as under:- “17.9 We have heard the rival contention and perused the material available on record. It is settled law that when the assessee claims any allowable deduction the explanation and evidence submitted in this behalf is to be objectively considered by Id. AO. In case of any infirmity in the claim, the same should be effectively dealt and the claim should be denied by proper discharge of onus. Without effective rebuttal and objective consideration assessee's beneficial claim cannot be disallowed on assumptions and intendments. It is also settled jurisprudence that while interpreting the beneficial legislations a liberal approach should be adopted. This is so as a very strict interpretation will defeat the legislative intent of encouraging captive power plants in electricity starved nation in general and power short state of Rajasthan. Provisions of Sec. 80IA of the IT Act are undoubtedly beneficial in nature, so in case of ambiguity about its interpretation a liberal approach is mandates by settled judicial precedents. The undisputed facts which emerge from the record indicate that assessee by evidence and explanation brought on record objective material to demonstrate in this cae HO and other common assets have no proximate connection which the CPP, Debari which is an industrial undertaking eligible to deduction under section 80IA. The HO and other common assets existed even prior to installation of CPP. The alleged expenses represent general corporate expenditure which can’t be allocated or assigned to an independent unit engaged in power generating activity on standalone basis. While reducing the deduction u/s 80/A, Id. AO has ignored the crucial term ''derived from" used in sec. 80/A A term which became subject matter of judicial decision and settled by Hon'ble supreme Court This crucial omission has resulted in AO's conclusion that: (i) The proportionate depreciation of other common assets is allocable to be reduced from the profits of eligible CPP unit 102 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. (ii) The proportionate part of the employees' remuneration and benefits administrative and selling expense such a remuneration of managers, directors, auditors, financial advertisers, amenities and Head Officer assets is also require to be allocated to CPP Debari. (iii) Ld. AO instead of establishing any direct of proximate relation between these unconnected proportionate expenses reduced them from eligible profits under a notion that even the remote and unconnected proportionate expenses are allocable. (iv) The Id. AO held that HO is not a profit earning centre and Captive Power Plant, Debari is not a standalone unit, having independent functioning and a separate profit center and on such erroneous assumption reduced the deduction u/ 80IA by aforesaid expenses of other independent and functionally different units. Ld. Counsel has demonstrated that other units of the Company cannot use the fixed assets, like permanent residential buildings of Udaipur unit which are wholly and exclusively for the operation of Udaipur unit only; there is no basis to assume that they were even impliedly used by other operating units including CPP. Consequently there being no direct nexus between two independent industrial units the question of proportionate apportionment of their user or depreciation to CPP does not arise. Moreover, it has been demonstrated that the Udaipur based office equipment, furniture, fixtures, computers, motor vehicles etc. are also exclusively used for the day to day working of Udaipur Unit and they can in no way be supposed to be used for CPP. Since respective units retain control over their assets, they have no occasion of user by CPP. Rom the facts and circumstances emerging form the record and contentions. We observe that: a) No allocation of Ho and other expenses is justified since such expenditure on Ho and other units was incurred even prior to setting up of eligible CPP unit. b) The assessee is primarily engaged in the activities of mining and manufacturing of Zinc and lead metals. This business of the assessee is one and indivisible from CPP unit In the absence of any direct nexus the apportionment is not mandated by the correct interpretation of sec 80IA. c) It has not been rebutted that after the commencement of CPP activity there was no increase in the HO expense relatable to employee's remuneration & benefits an Administrative expense as a whole, in comparison to the earlier year. Rather HO expenses for the year under consideration have been reduced drastically. Thus there is no reason to assume any notional increase in these expenses after the 103 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. commencement of CPP Debari, Consequently, the conclusion that impugned allocation of expenses has no direct nexus with eligible CPP unit, has no basis or valid justification. d) Apropos expenses like, rates & taxes, fees to auditors, cot auditors, directors travelling, reimbursement of corporate expense as well as consultancy charges etc., such expenses were required to be incurred irrespective of the CPP Unit. e) Eligible profits of any industrial undertaking which exits on standalone footing, according to accepted accounting the legal principles, are to be computed after taking into account all the receipts and expenditure incurred only by it and not by notionally attributing the proportionate depreciation or administrative expenses on assumptions. f) The aforesaid expenses of salary and wages, contribution to provident fund etc. and other benefits to employee' insurance, consultancy and other administrative expense as alleged by Id. AO, have in fact, been incurred at Udaipur Office for goods manufactured i.e. zinc and lead by the appellant. Consequently, such expenditure is deductible while computing the profit of assessee's manufacturing business of zinc and lead. Any part thereof cannot be hypothetically attributed to independent CPP unit situated at Debri. Such presumptive and notional reduction of claim u/s 80IA is arbitrary and unsustainable. g) The words "derived from" have been used by the Legislature in the restricted sense and therefore, there must be direct nexus between the expenditure and industrial activity. Since there is no direct nexus of the alleged expense with CPP unit, neither allocation nor reduction of 80IA claim has justification. It is settled law that allocation, if any, cannot be made by demonstration of direct nexus between alleged proportions of expenses with power generation operations of PP unit situate at Debari, Ld. CIT(A) has rightly deleted the reduction in 80IA claim. i) The Legislature has used the words “derived from” in contradiction to the words “attributable to” in other sections. a. In the case of Cambay Electric supply Co vs. CIT 1978 CTR (SC) 50: (197) 113 ITR 84 Hon'ble Supreme Court has squarely held that the Words ''derived from" have been used by the legislature in restricted sense as the Words ''attributable to" are much wider in meaning than the words "derived from” b. Hon'ble Supreme Court in the case of IT vs. Sterling Foods (1999) 153 ITR CTR (SC) 439: (1999) 237 ITR 579 (SC) has held that or application of the words ''derived from' There must be a direct nexus 104 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. between the profits and the activity of the industrial undertaking, consequently, it is by now a settled proposition that remote or indirect nexus would not be sufficient for application of the words "derived from” c. In the case of IT vs. Strawboard Manufacturing Co Ltd. [(1989) 177 ITR 43] in the context of deduction under section BOE, Hon'ble Supreme Court held that:- "The provision for rebate has been made for the purpose of encouraging the setting up of new industries. It is necessary to remember the when a provision is made in the context of a law providing for concessional rate of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute. In our view, the controversy in question stands squarely covered by the case of Zandu Pharmaceuticals Works Ltd. (supra) in favor of the assesee. In this case assessee incurred expenditure for the R & D work in the HO and there were independent manufacturing units. Assessee claimed deduction u/s 80IA without allocating any proportionate expenses of HO Ld. AO adopted the same course as in the case of this assessee. It was held that the HO was maintained for the overall benefit of the manufacturing units only and HO was not a profit earning centre; it had no income other than the manufacturing units. Therefore, R&D expense incurred for the development of new drugs were assumed to be for the benefit of all manufacturing units. On this basis, Id. AO allocated proportionate and similarly reduced them from eligible income while calculating deduction u/s 80/A. CIT(A) and ITAT upheld AOs action rejecting the appellants contention that the R & D expense incurred by HO had nothing to do with the eligible units and proportionate expenses should not be reduced while calculating deduction u/s 80IA. Hon'ble Bombay High Court upheld assessees claim. Ld, CIT(A) in this case while deleting the reduction from assessees claim u/s BO/A has applied nearly similar observation. In view thereof no infirmity can be attributed to the order of Id. CIT(A) which is upheld. In the given facts, circumstances and legal position, we hold that the said HO Expenses with the eligible industrial undertaking i.e. CPP, therefore the unrelated proportionate HO expenses cannot be reduced while computing deduction u/s 80IA. This ground no. 12 of the Revenue is dismissed. 105 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. However, we find that the certain expenses which are common to both to the Head Office and Captive Power Plant has not been allocated Therefore, the issue. is restored to the file of the Assessing Officer for re-computation of reduction. The Assessing Officer would re-work allocation of the expenses related to the director's fees, auditor's fees and donation for charity. To this extent, the order of the Ld. CIT(A) is modified This ground of the Revenue's appeal is partly allowed for statistical purposes." 9.3 There is no change into facts and circumstances. Therefore, taking a consistent view, we restore this issue to the file of the Assessing Officer for re- computing the reduction of deduction u/s 80IA. The Assessing Officer would restrict the apportionment to the extent of Director's fee, charity and donations. The Ground no. 8 is partly allowed as discussed hereinabove for statistical purpose.” The above view has been affirmed by the decision of the Hon’ble Jodhpur Bench of the Tribunal in the assessee’s own case pertaining to AY 1992-93 to 2011-12 (ref. pages 214-218 of CL Paper book) (ref. pages 349 of CL Paper book) and also for AY 2012-13 (ref. pages 461-465, 475-476, 492 ,523 of CL Paper book) which the Hon’ble Tribunal has categorically held that turnover cannot be the basis for apportionment of Head Office expenses. The relevant finding is reproduced here under for your ready reference: 267. He also submitted that as rightly pointed out by the CIT(A) this issue was also considered by a Coordinate Bench of the Tribunal in ITA No.235/JDPR/2008 vide order dated 23.5.2016 for the AY 2004-05 and in the case of Zandu Pharmaceuticals Works Ltd. Vs. CIT (350 ITR page 366) the Tribunal decided the issue in favour of the Assessee by observing as under: “......, the controversy in question stands squarely covered by the case of Zandu Pharmaceuticals Works Ltd. (supra) in favour of the assessee. In this case assessee incurred expenditure for the R & D work in the HO and there were independent manufacturing units. Assessee claimed deduction u/s 80IA without allocating any proportionate expenses of HO. Ld. AO adopted the same course as in the case of this assessee. It was held that the HO was maintained for the overall benefit of the manufacturing units only and HO was not a profit earning center; it had no income other than the manufacturing 106 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. units. Therefore, R & D expenses incurred for the development of new drugs were assumed to be for the benefit of all manufacturing units. On this basis, ld. AO allocated proportionate and similarly reduced them from eligible income while calculating deduction u/s 80IA. CIT(A) and ITAT upheld AO’s action rejecting the appellant’s contention that the R & D expenses incurred by HO had nothing to do with the eligible units and proportionate expenses should not be reduced while calculating deduction u/s 80IA. Hon’ble Bombay High Court upheld assessee’s claim. Ld. CIT(A) in this case while deleting the reduction from assessee’s claim u/s 80IA has this case while deleting the reduction from assessee’s claim u/s 80IA has applied nearly similar observation. In view thereof no infirmity can be attributed to the order of ld. CIT(A) which is upheld. In the given facts, circumstances and legal position, we hold that the said HO Expenses and depreciation on common assets have no proximate connection whatsoever with the eligible industrial undertaking i.e. CPP, therefore the unrelated proportionate HO expenses cannot be reduced while computing deduction u/s 80IA. This ground no.12 of the revenue is dismissed.” 268. Having considered the submissions to the counsel for the Assessee refined his contentions to be correct and noted that one of disputes raised by the Assessee in the earlier order was also the basis of allocation. Hence while accepting that there was no basis for allocating expenditure of the Head Office to the eligible units he make the exception in respect of directors fee, auditors fee and donation for charity. However, we direct the Assessing Officer to apportion such expenditure on a reasonable basis and not on the basis of turnover as was done by him in the Assessment Years. For these utterly support from the decision of a Coordinate Bench in the case of ACIT Vs. P.I. Industries (144 TTJ 353) (Jodhpur) where the Tribunal has disapproved the turnover basis for allocating common expenditure. Given the nature of these expenses it would be seen that the auditors have contention and expenses for charity cannot rely be attributed to any particular unit as these are genuine expenses and in our opinion only such expenses should be attributed which have a direct bearing of the business activity.” It is the humble submission of the assessee that that the TPO/AO has erred in apportioning the head office expenses and depreciation on assets at head office and thereby reducing the quantum of deduction allowable u/s. 80IA and 80IC. Without prejudice, allocation of head office expenses to eligible units: Further, it is submitted that even if the apportionment is done, the same should be 107 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. done in a rational manner, based on the ratio of the employees working for that particular undertaking to total number of employees of the company as a whole. Details of apportionable Head Office Expenditure Particulars Amount (in INR) Directors' fees 7,597,054 Directors' travelling expenses - Auditor’s remuneration and expenses Audit fees 10,423,291 Tax audit fees - Other services 6,840,000 Out of pocket expenses 3,331,406 Cost audit and expenses 181,800 Donation 501,900,000 Total Apportionable Exp. 530,273,551 Details of Employees at HZL S. No. Particular No. of Employees A Employees at Tax Holiday Units 1,105 B Employees at Hindustan Zinc Ltd. as a whole 17,576 Formula for apportionment (Apportionable Exp.) X (No. of employee at Exempt Units) / (Total No. of Employee) = (530,273,551 X 1,105) / 17,576 = 33,338,204/- 108 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Therefore, without prejudice to the stand that no allocation of the head office expenditure required to be done to the units claiming exemption/deductions, since all the expenditure relating to the units directly / indirectly has been booked into the units while preparing individual accounts relating to this units at best, the head Office expense of INR 33,338,204/- at best could be allocated to the exempt units. 22. We have heard rival contentions, perused the material available on record and gone through the orders of the revenue authorities. We find that the coordinate Bench of the Tribunal in assessee’s own case in ITA Nos. 638 & 606/JU/2008 dated 24.04.2017 for the assessment year 2006-07 has adjudicated the issue by following its earlier order in ITA No. 612/JU/2009 dated 10.04.2017 for the assessment year 2005-06 by observing in para 9.2 to 9.3 as under :- “9.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The identical issue was in the ITA No. 612/JU/2009 we have decided this issue in para 10.2 by observing as under:- “10.2 We have heard the rival contentions, perused the material available on records and gone through the orders of the authorities below. We find that the identical issue was in the year 2004-05 in ITA No. 235/JU/2008. The coordinate Bench has decided the issue in Para 17.9 holding as under:- “17.9 We have heard the rival contention and perused the material available on record. It is settled law that when the assessee claims any allowable deduction the explanation and evidence submitted in this behalf is to be objectively considered by ld. AO. In case of any infirmity in the claim, the same should be effectively dealt and the claim should be denied by proper discharge of onus. Without effective rebuttal and objective consideration assessee’s beneficial claim cannot be disallowed on assumptions and intendments. It is also settled jurisprudence that while interpreting the beneficial legislations a liberal approach should be adopted. This is 109 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. so as a very strict interpretation will defeat the legislative intent of encouraging captive power plants in electricity starved nation in general and power short state of Rajasthan. Provisions of Sec. 80IA of the IT Act are undoubtedly beneficial in nature, so in case of ambiguity about its interpretation a liberal approach is mandates by settled judicial precedents. The undisputed facts which emerge from the record indicate that assessee by evidence and explanation brought on record objective material to demonstrate in this cae HO and other common assets have no proximate connection which the CPP, Debari which is an industrial undertaking eligible to deduction under section 80IA. The HO and other common assets existed even prior to installation of CPP. The alleged expenses represent general corporate expenditure which can’t be allocated or assigned to an independent unit engaged in power generating activity on standalone basis. While reducing the deduction u/s 80IA, ld. AO has ignored the crucial term “derived from” used in sec. 80IA A term which became subject matter of judicial decision and settled by Hon’ble supreme Court. This crucial omission has resulted in AO’s conclusion that: (i) The proportionate depreciation of other common assets is allocable to be reduced from the profits of eligible CPP unit. (ii) The proportionate part of the employees’ remuneration and benefits, administrative and selling expense such a remuneration of managers, directors, auditors, financial advertisers, amenities and Head Officer assets is also require to be allocated to CPP Debari. (iii) Ld. AO instead of establishing any direct of proximate relation between these unconnected proportionate expenses reduced them from eligible profits under a notion that even the remote and unconnected proportionate expenses are allocable. (iv) The ld. AO held that HO is not a profit earning centre and Captive Power Plant, Debari, is not a standalone unit, having independent functioning and a separate profit center and on such erroneous assumption reduced the deduction u/ 80IA by aforesaid expenses of other independent and functionally different units. Ld. Counsel has demonstrated that other units of the Company cannot use the fixed assets, like permanent residential buildings of Udaipur unit which are wholly and exclusively for the operation of Udaipur unit only; there is no basis to assume that they were even impliedly used by other operating units including CPP. Consequently there being no 110 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. direct nexus between two independent industrial units the question of proportionate apportionment of their user or depreciation to CPP does not arise. Moreover, it has been demonstrated that the Udaipur based office equipment, furniture, fixtures, computers, motor vehicles etc. are also exclusively used for the day to day working of Udaipur Unit and they can in no way be supposed to be used for CPP. Since respective units retain control over their assets, they have no occasion of user by CPP. Rom the facts and circumstances emerging form the record and contentions. We observe that: a) No allocation of Ho and other expenses is justified since such expenditure on Ho and other units was incurred even prior to setting up of eligible CPP unit. b) The assessee is primarily engaged in the activities of mining and manufacturing of Zinc and lead metals. This business of the assessee is one and indivisible from CPP unit. In the absence of any direct nexus the apportionment is not mandated by the correct interpretation of sec 80IA. c) It has not been rebutted that after the commencement of CPP activity there was no increase in the HO expense relatable to employee’s remuneration & benefits an Administrative expense as a whole, in comparison to the earlier year. Rather HO expenses for the year under consideration have been reduced drastically. Thus there is no reason to assume any notional increase in these expenses after the commencement of CPP Debari, Consequently, the conclusion that impugned allocation of expenses has no direct nexus with eligible CPP unit, has no basis or valid justification. d) Apropos expenses like, rates & taxes, fees to auditors, cot auditors, directors travelling, reimbursement of corporate expense as well as consultancy charges etc., such expenses were required to be incurred irrespective of the CPP Unit. e) Eligible profits of any industrial undertaking which exits on standalone footing, according to accepted accounting the legal principles, are to be computed after taking into account all the receipts and expenditure incurred only by it and not by notionally attributing the proportionate depreciation or administrative expenses on assumptions. f) The aforesaid expenses of salary and wages, contribution to provident fund etc. and other benefits to employee’ insurance, consultancy and other administrative expense as alleged by ld. AO, have in fact, been incurred at Udaipur Office for goods manufactured i.e. zinc and lead by the appellant . Consequently, such expenditure is deductible while computing the profit of assessee’s manufacturing business of zinc and lead. Any part thereof cannot be hypothetically attributed to 111 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. independent CPP unit situated at Debri. Such presumptive and notional reduction of claim u/s 80IA is arbitrary and unsustainable. g) The words “derived from” have been used by the Legislature in the restricted sense and therefore, there must be direct nexus between the expenditure and industrial activity. Since there is no direct nexus of the alleged expense with CPP unit, neither allocation nor reduction of 80IA claim has justification. It is settled law that allocation, if any, cannot be made by demonstration of direct nexus between alleged proportions of expenses with power generation operations of PP unit situate at Debari, ld. CIT(A) has rightly deleted the reduction in 80IA claim. i) The Legislature has used the words “derived from” in contradiction to the words “attributable to” in other sections. a. In the case of Cambay Electric supply Co vs. CIT 1978 CTR (SC) 50: (197) 113 ITR 84 Hon’ble Supreme Court has squarely held that the Words “derived from” have been used by the legislature in restricted sense as the Words “attributable to” are much wider in meaning than the words “derived from”. b. Hon’ble Supreme Court in the case of IT vs. Sterling Foods (1999) 153 ITR CTR (SC) 439: (1999) 237 ITR 579 (SC) has held that or application of the words “derived from”. There must be a direct nexus between the profits and the activity of the industrial undertaking, consequently, it is by now a settled proposition that remote or indirect nexus would not be sufficient for application of the words “derived from”. c. In the case of IT vs. Strawboard Manufacturing Co Ltd. {(1989) 177 ITR 43} in the context of deduction under section 80E, Hon’ble Supreme Court held that: “The provision for rebate has been made for the purpose of encouraging the setting up of new industries. It is necessary to remember the when a provision is made in the context of a law providing for concessional rate of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute. In our view, the controversy in question stands squarely covered by the case of Zandu Pharmaceuticals Works Ltd. (supra) in favor of the assesee. In this case assessee incurred expenditure for the R & D work in the HO and there were independent manufacturing units. Assessee claimed deduction u/s 80IA without allocating any proportionate expenses of HO Ld. AO adopted the same course as in the case of this assessee. It was held that the HO was maintained for the overall benefit of the manufacturing units only and HO was not a 112 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. profit earning centre; it had no income other than the manufacturing units. Therefore, R& D expense incurred for the development of new drugs were assumed to be for the benefit of all manufacturing units. On this basis, ld. AO allocated proportionate and similarly reduced them from eligible income while calculating deduction u/s 80IA. CIT(A) and ITAT upheld AO’s action rejecting the appellant’s contention that the R & D expense incurred by HO had nothing to do with the eligible units and proportionate expenses should not be reduced while calculating deduction u/s 80IA. Hon’ble Bomaby High Court upheld assessee’s claim. Ld. CIT(A) in this case while deleting the reduction from assessee’s claim u/s 80IA has applied nearly similar observation. In view thereof no infirmity can be attributed to the order of ld. CIT(A) which is upheld. In the given facts, circumstances and legal position, we hold that the said HO Expenses with the eligible industrial undertaking i.e. CPP, therefore the unrelated proportionate HO expenses cannot be reduced while computing deduction u/s 80IA. This ground no. 12 of the Revenue is dismissed.” However, we find that the certain expenses which are common to both to the Head Office and Captive Power Plant has not been allocated. Therefore, the issue is restored to the file of the Assessing Officer for re-computation of reduction. The Assessing Officer would re-work allocation of the expenses related to the director’s fees, auditor’s fees and donation for charity. To this extent, the order of the Ld. CIT(A) is modified. This ground of the Revenue’s appeal is partly allowed for statistical purposes.” 9.3 There is no change into facts and circumstances. Therefore, taking a consistent view, we restore this issue to the file of the Assessing Officer for re-computing the reduction of deduction u/s 80IA. The Assessing Officer would restrict the apportionment to the extent of Director’s fee, charity and donations. The Ground no. 8 is partly allowed as discussed hereinabove for statistical purpose.” The above view has also been affirmed by the Jodhpur Bench of the Tribunal in the assessee’s own case in ITA No. 184/Jodh/2012 dated 04.09.2017 for the assessment year 2008-09 by observing in para 277 as under :- “ 277. Having considered the submissions of the parties we find the contentions raised by the ld. A/R to be correct and note that one of 113 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. disputes raised by the Assessee in the earlier order was also on the basis of allocation. However, we direct the Assessing Officer to apportion such expenditure on a reasonable basis and not on the basis of turnover as was done by him in the Assessment years. For this we find support from the decision of a Coordinate Bench in the case of ACIT vs. P.I. Industries (144 TTJ 353)(Jodhpur) where the Tribunal has disapproved the turnover basis for allocating common expenditure. In our opinion only such expenses should be attributed which have a direct bearing of the business activity. With these observations this ground of revenue is partly allowed.” On the very same issue the Coordinate Bench of the Tribunal in ITA No. 246/Jodh/2017 dated 04.09.2017 for the assessment year 2011-12 observed in para 509 as under :- “ 509. We find that similar issue has been considered by us in ground no. 11 of the Revenue’s appeal for AY 2008-09 in ITA No. 184/Jodh/2012. For the reasons contained therein, we allow this ground of appeal of the assessee.” We, therefore, respectfully following the decisions as discussed above, partly allow the ground of the assessee on the above terms. Accordingly following the earlier year’s order of the coordinate Bench in assessee’s own case the Assessing Officer is directed to re-work allocation of the expenses related to the director’s fees, auditor’s fees and donation for charity to the tax holiday units. Ground Nos. 6-6.9 relate to enhancing the income of the eligible units under section 80 IC of the Act in respect of Pantnagar Zinc and Lead Plant (PLZP) and Pantnagar Silver Metal Plant (PSMP) by Rs. 800,45,96,398, allegedly on account of Transfer Pricing (“TP”) adjustment. 23. Before us, the ld. Counsel for the assessee narrated the submissions as under :- 114 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. “ HZL has zinc, lead and silver refining facilities at Pantnagar in the state of Uttarakhand, which are eligible for claiming deduction u/s 80IC of the Act. These units input cathode sheets, which are semi-finished goods manufactured by the smelting units of HZL, and produce zinc, lead and silver ingots for ultimate sale to the customer. During the course of assessment proceedings, reference was made to the TPO to determine the arm’s length price of the transaction of Transfer of Cathode from Non- eligible units to eligible units. In the instant case, since the gross cost is not easily available, variation of total cost was considered for pricing the semi-finished goods transferred to eligible units. The Appellant had adopted cost plus method to determine the transfer price of semi- finished goods, viz. Zinc & Lead Cathode and mud transferred from non-eligible to eligible units by adding a mark-up of 10% on cost incurred by the non-eligible units. The TPO while making the addition in Pantnagar Zinc & Lead Metal Plant applying PSMP did not accept the transfer pricing documentation of the Appellant. The TPO reduced the deduction claimed by the Appellant under this section by dividing the income of the Pantnagar Lead and Zinc Plant, an eligible unit u/s 80IC, in the ratio of expenditure incurred at Pantnagar unit and other units of the Appellant. TPO has rejected the Functional, Asset and Risk Analysis (FAR analysis) undertaken by the Appellant and disregarded the TP documentation maintained by the Appellant, stating that the refining units of the Appellant do not perform any significant function in the manufacturing of the final product of HZL and accordingly, 115 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. the FAR analysis undertaken by the Appellant is incorrect. Further, the Ld. TPO has proposed to reject the economic analysis undertaken by the Appellant [using Transactional Net Margin Method (TNMM) as the MAM] and has applied the Profit Split Method (PSM) for determining arm’s length price for transfer of cathode. TPO held in the impugned TP order that the cost plus approach adopted by the Appellant for valuing the transfer of semi-finished/ intermediary goods from the non- eligible units to the eligible units of the Appellant is inappropriate and has applied PSM Method (considering the processing cost incurred as the allocation key). 24. On the other hand, the ld. D/R contended as under :- (i) The Ld. CIT (DR) contended that in the Pantnagar Silver Metal Process (“PSMP”) unit significant value addition to semi-finished cathode ingots is not made and only marginal refinement / reduction in the impurities takes place. Reference to the statement of Mr. Rajesh Dua at pages 46, 56 and 61 of the paper book. (ii) The Ld. CIT (DR) contended that TP study of the appellant the arm’s length price of the eligible transactions of transfer of semi-finished cathode is not properly determined in as much as the comparable companies considered in the TP study were not appropriate for benchmarking of the eligible undertaking. (iii) Reference to pages the TP Study (at page 419-430, 434 of the paper book) none of the concern are engaged in production of lead, zinc and, therefore, the profit in respect of the same was not bench marked. (iv) The Ld. CIT (DR) supported the order of the TPO in rejecting TNMM and selecting PSM as the most appropriate method on the following basis: 116 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. • The basis of the transfer price of the goods from the Rajasthan based unit to Pantnagar Silver Metal Processing (PSMP) unit taken by the assessee at cost + 10% mark up is not reasonable but arbitrary. • The assessee’s Rajasthan based units have neither bought from nor sold refinery mud to outside parties. Similarly PSMP unit has neither bought from nor sold refinery mud to outside parties. • The refinery mud is not marketable and due to impurities and dross content in the mud, it does not have a commercial value in the open market. • There is no basis to determine the market value of cost of goods transferred and the absence of any basis whatsoever in determining the market value is creating exceptional difficulty. (v) It was contended by the Ld. CIT (DR) that the best way of determining the market value of any product on the date of transfer is the actual sale price of the product but in the present case refinery mud does not have any sale price available in the market. It was further contended that the pricing methodology adopted by the assessee as cost plus 10% mark-up is totally unrealistic in view of the facts and circumstances. (vi) It was also submitted by the Ld CIT(DR) that none of the comparable companies are engaged in mining and production of lead and zinc. (vii) The Ld. CIT (DR) contended that after the introduction of domestic transfer pricing provisions, the arm’s length price of transactions between eligible and non-eligible undertaking to be computed applying one of the prescribed methods and therefore Profit Split Method was rightly applied by the TPO. 25. In Rejoinder, the ld. Counsel for the assessee submitted regarding Manufacturing Process of PSMP Unit as under :- “ At the outset, the Appellant would like to submit that HZL has zinc, lead and silver refining facilities at Pantnagar in the state of Uttarakhand, which are eligible for 117 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. claiming deduction u/s 80IC of the Act. These units input cathode sheets, which are semi-finished goods manufactured by the smelting units of HZL, and produce zinc, lead and silver ingots for ultimate sale to the customer. The manufacturing process at the refining units is explained below: (i) The cathode sheets are transported to the refining units of HZL through containerized trucks, either by rail / road, in bundles, each weighing approx. 2.5 – 2.8 MT with MS strapped. The bundles are unloaded by the forklift and kept in the storage yard. (ii) These cathode bundles are unstrapped manually by cutter and with the help of forklift they are taken to the charging floor. The cathode sheets of approx. 1MT to 1.5 MT are charged in the furnace through the chain rollers charging system. (iii) These sheets are melted in the induction type Electrical furnace. The furnace is associated with the suction ducts and the bag house system for collecting the melting fumes and fine dust from the furnace. The temperature maintained in the furnace bath is approx. 500-510 degree centigrade. Ammonium chloride, of about 250-300 gms per MT of cathode sheets is used as flux. (iv) The molten metal then is transferred through the pump which is mounted in the furnace bath to the casting machine. Thereafter, the metal is collected in the tundish of the casting machine which further pours the metal in the moulds by the help of nozzles. (v) The casted moulds are cooled by pouring water through the recirculation pump. The moulds are demoulded in the demoulding section, to give the form of the zinc ingots. (vi) The zinc/ lead ingots are stacked by the help of the stacking robot. The stack of the ingots is then strapped by the Strapping machine, with proper tightening tension. These stacked zinc/ lead ingot bundles are then lifted by the fork lifter from the conveyor and brought to the finished goods yard for dispatch. 118 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. (vii) The following impurities are removed at various stages of the refining process- 1. The impurities of Iron (Fe), Lead (Pb), Copper (Cu) and Cadmium (Cd) are removed during melting of Cathodes at a temperature of 500-540° Centigrade. 2. All the Oxides of Iron, lead, copper & cadmium are converted to chlorides by fluxing the hot molten metal with Ammonium Chloride (NH4Cl). 3. At the above stage dross is derived which is combination of various impurities of Lead, Iron, copper, cadmium and Chlorides. 4. The dross so formed in the above stages is the impurities and has a higher melting point and hence floats on top of the molten Zinc in the furnace bath. This dross is periodically removed and SHG grade molten Zinc is casted into ingots. The Appellant would also like to submit that as explained above, the refining function is one of the significant functions, as the cathode sheets manufactured by the smelting units contain impurities such as Iron (Fe), Lead (Pb), Copper (Cu), Cadmium (Cd) and dross, that renders the cathode sheet inappropriate for consumption by the customer, thus making them unsaleable to an extent. Thus, it can be said that without the refining process, the metal produced does not have much value and the value added by the refining process to the metal enables it to fetch the premium prices in the market. The statement of Mr. Rajesh Dua and others referred to by the Ld. CIT (DR) does not contradict the aforesaid factual position regarding the manufacturing process. Mr. Rajesh Dua in his statement has merely submitted that as he comes from financial background and is not familiar with the manufacturing process. He thus submitted in the statement that was not competent to provide details / make 119 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. statement with respect to technical aspects and would consult the concerned technical department and submit reply / revert on the same thereafter. [Ref. Pg 61 of the compilation filed by the Ld. CIT (DR)]. In the statement of Mr. Ramesh J. Parmar placed at pages 64 to 71 of the compilation filed by the Ld. CIT (DR) only confirms and corroborate the aforesaid manufacturing process undertaken at PSMP plant. It is also confirmed in the said statement that the raw material, i.e., zinc, cathode, sheets received from plants in Rajasthan are further refined at PSMP which results in reduction of 2-2.5% of waste material, viz., zinc dross and consequently the finish product, viz., zinc ingots with 99.995% zinc content/purity is produced. In other words, by virtue of the technology involved in the manufacturing process at PSMP unit, zinc ignots could be manufactured which is the marketable or saleable finished product. Therefore, it is respectfully submitted the contentions of the Ld. CIT (DR) that significant value addition is not undertaken at PSMP plant is incorrect arbitrary and not supported by the material, namely, statements of the concerned technical person placed on record. Cost plus approach adopted by the Appellant is most appropriate - Consistent with OECD Guidelines Further, the Ld. TPO has stated in the impugned TP order that the cost plus approach adopted by the Appellant for valuing the transfer of semi-finished/ intermediary goods from the non-eligible units to the eligible units of the Appellant is inappropriate and has applied PSM Method (considering the processing cost incurred as the allocation key). The TPO has rejected the economic analysis undertaken by the Appellant [using Transactional Net Margin Method (TNMM) as the MAM] and has 120 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. proposed to apply the Profit Split Method (PSM) for determining arm’s length price for transfer of cathode. It is important to refer to Organization for Economic Cooperation and Development (‘OECD’) guidelines, which discusses the appropriateness of prescribed methods in different facts and circumstances. At para 2.39 of the guidelines, OECD provides that the Cost Plus Method is the most appropriate method for pricing the transfer of semi-finished goods between related parties. Quote 2.39 The cost plus method begins with the costs incurred by the supplier of property (or services) in a controlled transaction for property transferred or services provided to an associated purchaser. An appropriate cost plus mark-up is then added to this cost, to make an appropriate profit in light of the functions performed and the market conditions. What is arrived at after adding the cost plus mark up to the above costs may be regarded as an arm's length price of the original controlled transaction. This method probably is most useful where semi- finished goods are sold between associated parties, where associated parties have concluded joint facility agreements or long-term buy-and-supply arrangements, or where the controlled transaction is the provision of services. Unquote Thus, the approach of supplying semi-finished goods from non-eligible units to eligible units on a total cost plus basis is in line with the guidance provided by the OECD. In the instant case, since the gross cost is not easily available, variation of total cost was considered for pricing the semi-finished goods transferred to eligible units. In this regard, the attention of your goodself is also drawn to the discussion in respect of most appropriate method as captured in the TP Documentation of the Appellant. 121 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. It is further submitted that the appellant has undertaken a detailed economic analysis wherein suitability of every method was examined and TNMM was selected as the most appropriate method considering the nature and characteristics of the transactions undertaken between the eligible and non eligible undertaking. (Detailed functional and economic analysis at Pg 419-434 of paper book Vol 2). Further, on the basis of the aforesaid analysis, the appellant selected functionally comparable companies engaged in mining and production of aluminium and copper. It is submitted that such companies are functionally comparable to the taxable units of the appellant and a detailed business description of the aforesaid companies was provided as Annexure D of the TP documentation (Pg 457 of the paper book). It is submitted that neither the TPO nor the Ld CIT(DR) have provided any specific reasons for rejection of the companies selected by the appellant for the purpose of undertaking benchmarking analysis. The profitability of such companies was thereafter compared with the profitability of the taxable units of the appellant and since the operating margins of the taxable undertaking at 10% were higher than the operating margins of the comparable companies at 6.53%, the specified domestic transactions were considered to be at arm’s length. It is further submitted that even prior to the introduction of section 92BA of the Act, the appellant has been computing the profitability of the eligible and non-eligible undertaking on an arm’s length basis relying upon the margin prescribed under the excise rules. It is submitted that said approach of the appellant has been approved by the Tribunal in the earlier years. 122 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. It is submitted that the proviso to Section 80 IA(8) provides that “where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit.” It is submitted that in the case of the appellant the profits and gains of the non- eligible / taxable undertakings of the appellant can be reliably and correctly computed and the assessing officer has not pointed out any exceptional difficulty in computing the profit of such undertaking. The cost +10% mark up for transfer of semi-finished goods from non-eligible units to eligible units has been adopted by the appellant in all the earlier years and has been accepted not only under the Income-tax Act but also under the excise laws. In addition, the benchmarking analysis under transfer pricing provisions have been undertaken for the said transaction applied Transactional Net Margin Method which is one of the prescribed method and has been accepted in the past. The TNMM methodology has been duly supported by the transfer pricing study and based on valid comparable. Therefore, there is no basis for the Assessing Officer / TPO to reject the accepted methodology of benchmarking of such transfer of semi-finished goods undertaken by the appellant and instead of applying Profit Split Method. It is further respectfully submitted that in terms of section 80IA(8) what is required to determine is market price of the goods and services transferred. Section 80IA(8) does not provide determination profit of the eligible undertaking and for that reason also it is not open for the TPO to embark upon profit determination by resorting to 123 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Profit Split Method. For the aforesaid cumulative reasons action of the AO/TPO in rejecting Transactional Net Margin Method consistently applied by the Appellant. In line with Indian Excise Laws The Appellant’s approach of adding 10% mark-up on cost of producing cathode for transfers to eligible units is also in line with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (‘Central Excise Rules’) which reads as following – Quote Where the excisable goods are not sold by the Appellant but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods. Unquote Further, the Appellant would also like to submit that while undertaking this transaction, it has complied with relevant regulations and framework of Central Excise Rules and therefore, it would not be appropriate to disturb the pricing basis adopted by the Appellant. In this regard, the Appellant wishes to place reliance on the case of ThyssenKrupp Industries India Pvt. Ltd vs. ACIT (ITA No.6460/Mum/2012), wherein Hon’ble Mumbai ITAT held as follows: Quote 14.3. After considering the rival submissions and perusing the relevant material on record, we find that the Appellant entered into collaboration agreement with its AE for payment of 2% of contract value for manufacturing, drawing and engineering services and 5% of the selling price as royalty. The Appellant applied to the RBI seeking approval in respect of payment of royalty and technical fee through Central Bank of India. A copy of letter addressed by the Central Bank of India to the RBI dated 26.03.2008 is available on 124 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. page 240 of the paper book. Through this letter, the Central Bank of India forwarded relevant documents along with a copy of the agreement. The RBI vide its letter dated 21.04.2008 requested Central Bank of India to consider the Appellant’s case in accordance with its AP (DIR Series) No.76 dated 24.02.2007. It is in pursuance to the deemed approval by RBI under the automatic approval scheme that the Appellant made payment of royalty and technical fee to its AE. It is relevant to note that such payment has been approved or deemed to have been approved by the RBI. When a payment is made after obtaining due approval from the RBI, how its ALP can be computed at `Nil, is anybody’s guess. The fact of approval of the payment by the RBI has been succinctly recorded by the TPO in his order as well. He still chose to propose adjustment in respect of full payment. In our considered opinion, when the rate of royalty payment and fee for drawings etc. has been approved or deemed to have been approved by the RBI, then such payment has to be considered at ALP. We, therefore, direct to delete addition of `4.29 crore made by the A.O. in this regard. Unquote [Emphasis supplied] Based on the above facts, the Appellant submits that once the pricing basis is in accordance with the norms/rules provided in one of the government legislation, such basis should not be interfered unless it is shown that such transfer is vitiated by fraud, bias or a patent mistake. Under the TP provisions too, rule 10B(2) of the Income-tax Rules providing that the comparability of an “international transaction” or a specified domestic transaction, with an uncontrolled transaction shall be judged with reference to, inter alia, “...the laws and Government orders in force”. [refer clause (d) Rule 10(B)(2)]. In the present case, it is reiterated in terms of the Central Excise laws the transfer price of the semi-finished goods, viz., cathod are to be at cost plus 10% mark up and the same has mandatorily required to be followed by the appellant. The 125 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. aforesaid requirement under the Excise law would have to be taken into consideration for evaluating comparability of the specified domestic transaction in terms of the Rule 10B(2)(d) of the Income-tax Rules. In other words, the said price of cost plus 10% adopted by the appellant as the transfer price for determining the profit of the eligible unit is to be considered sacrosant and as per arm’s length and for the purpose of transfer pricing under the Income-tax Act. Similar observation was also made by Delhi ITAT in case of Abhishek Auto Industries Ltd. Vs. DCIT (ITA No. 1433/Del/2009), wherein the Hon’ble ITAT upheld that transactions approved by regulatory authorities and undertaken keeping in view the commercial need should not be challenged by the tax authorities. The relevant extract from the said ruling are reproduced below for your goodself’s kind perusal: Quote 8. We have carefully perused the record and considered the submissions of both the parties. It is a settled proposition of the law that legally binding agreements between unrelated parties cannot be disregarded without assigning any cogent reasons thereto. In this case it has not been imputed that agreements were non genuine or sham, rather they are duly approved by RBI and other regulatory agencies. It is also a settled proposition that commercial transactions are in the domain of the businessman and Income Tax Department cannot intervene in realm of intricacies of commercial expediencies involved in these arrangements. In this case if the Appellant had not entered into joint venture agreement with Takata, it would not have been able to make any sales whatsoever using their technology and raw material and the machines supplied by them. The very existence of this business in AE segment depended upon the joint venture agreement which has been duly approved by the Government of India in accordance with law. In such circumstances, we are of the view that TPO and the CIT (Appeals) were not correct in disregarding this agreement without assigning any cogent reasons except challenging the commercial need for such arrangement which is in the domain of the businessman and not of the Revenue authorities. Unquote [Emphasis supplied] 126 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Accordingly, the above methodology also aligns the approaches prescribed under different fiscal laws (viz. Income-tax Law and Excise law), which has also been accepted by the Excise authorities. Principle of consistency should be followed: The Appellant would also like to bring to your Honour’s kind attention that the Appellant had made the said claim u/s 80IC in the AY 2009-10 for first time for Hardwar Zinc Plant (HZP) and in the AY 2012-13 for Pantnagar Zinc and Lead Plant (PLZP). For the AY 2009-10 the then Ld. AO had verified the claim in detail and allowed the Appellant’s claim on merit after due verification of all facts and discussion in by way of a speaking order on the subject. While verifying and allowing the claim of the Appellant, the then AO had observed as following in his order for the AY 2009-10 (ref. Page 1681 – 1687 of the CL Paper Book): Quote “(‘’PARA 12. DEDUCTION U/S 80IC IN RESPECT OF HZL PLANT (HZP) The Appellant has claimed deduction u/s 80IC at Rs. 118,26,40,303/- in respect of income from HZP. To examine this claim, following queries were raised. “You have claimed deduction u/s 80IC at Rs. 1182640303/- in respect of HZP plant Haridwar. In this regard, you are required to furnish the following information:- a) Whether the undertaking fulfills the conditions laid down in sub section 3 of section 80IC. Please give detailed reply in respect of each condition. b) Explain in details whether provisions of sub section 2 of section 80IC apply to your unit. c) Also furnish information as has been asked in the case of CPP for claiming deduction u/s 80IA i.e. information required to be furnished by the eligible unit as per sub section 5 and sub section 7 to 12 of section 80IA. d) Explain whether cathode sheets were being sold by any particular supplier unit to HZP plant. Besides, the same unit was also making sales of cathode sheets to other consumers. If so, compare the average sale price at which cathode sheets were supplied to HZP plant as well as to other consumers/buyers. In case, cathode sheets were being sold by any unit of the Company to any consumer 127 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. other than the HZP plant, the comparison chart of the average sale price i.e. sale price to HZP plant and average sale price to other consumer/buyers be supplied. e) You are required to justify that the sale price of the cathode sheet to HZP plant was at the arms’ length price. Please also workout the cost of the cathode sheet per unit ( i.e. units at which cathode sheets were sold) and also justify that while selling cathode sheets, the supplier units of the Company has also charged reasonable profit at market rate from HZP plant. This information is required to see whether deduction u/s 80IC is being claimed on reasonable income of eligible unit as per provisions of the law. f) Explain whether all the sales of the HZP plant were to the other units or buyers not connected with the Company. g) Whether expenditure like head office expenses under the head administrative, marketing, sales and financial expenses etc. have been allocated to the eligible unit before computing deduction u/s 80IC. If not, then explain as to why such expenses be not calculated as per the working given in the order for A.Y. 2007- 08 & 2008-09 while calculating deduction u/s 80IA and accordingly profits of the eligible units be not reduced before allowing deduction u/s 80IC.” 12.1 Further vide query letter dated 08-11-2011 Appellant was required to explain as under:- a) File certified copy of final accounts of eligible unit and explain item wise as to how sale and profit on sale of scrap and other products, production of which has not been approved by the eligible authority as per approval letter, or other income be not considered for allowing deduction u/s 80 IC. Also furnish details of other income b) Furnish details of transactions with other units of Hindustan Zinc Ltd., (in respect of purchases and sales including those of capital goods) with narration nature of transactions (furnish only gross figures of different nature of transactions). c) How the cost of Zinc Cathode has been valued. Furnish costing per metric ton with appropriate breakup of expenses taken into account. Also furnish the quantitative statement of Zinc Cathode.” 12.2.During the course of hearing vide order sheet entry dated 23-11- 2011 Appellant was further required to furnish details of HO expenses and to explain why these may not allocated to HZP to work out eligible income. 12.3.In response to above queries, vide reply No. 6 dated 03-11-2011 (part ii), reply No. 7 dated 23-11-2011 and reply No. 9 dated 13-12- 2011 the Appellant interalia furnished following information:- 1. Process flow chart showing charging of cathode, use of various chemicals in electric induction furnace for melting cathode, production of buy production like dross and metallics, use of graphite pumps, casting, stamping, clamping etc. It was also explain that zinc ingots so produced contains 99.995% purity and used in galvanizing, manufacturing of zinc oxide, die casting etc. 2. The Haridwar Zinc Plant (HZP) caters only the requirement of buyers needing zinc of 99.995% purity. 128 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 3. The raw material zinc cathode does not have Harmonized System code and it is not a saleable commodity having no market anywhere. 4. Appellant claimed that deduction u/s 80IC is permissible to the unit under clause (ii) (a) of sub section 2 of section 80IC which reads as under:- “2a (ii) “ on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal”. 5 That Appellant does not produce any article or thing mentioned in schedule thirteen and it is not formed by splitting up or reconstruction of old business. Neither it has been formed by transfer to a new business of machinery or plant of old business. 6 Appellant relied on the following rulings to establish that the eligible unit is a manufacturing unit:- a) CIT Vs. Sesagoa Ltd. 271 ITR 331 b) ITO Vs. Arithant Tiles & Marbles Pvt. Ltd. 320 ITR 0079 c) CIT v. N.C. Budharaja and Co. and Another (1993) 204 ITR 412 at 423 7 That this is the first year of business activity which is started on 31- 07-2008 and therefore, the initial assessment is 2009-10. 8 The accounts of the unit have been duly audited and the other provisions of 80IC have been complied with. 9 The raw material cathode was purchased mainly from hydro-II unit of the HZL and the purchase price has been valued at 100% cost plus profit loading @ 10% even though the cathode is not saleable item. This has been done following Central Excise Valuation (determination of price of excisable goods) rule 2000, as per rule 8. Besides above, cost of transportation from Chanderiya to Haridwar which works out to 5.25 crore has been loaded against the profit of HZP itself. 10 All the sale of HZP were to the outsiders and no sales were made to the other unit of Hindustan Zinc Ltd. 11 Regarding apportionment of HO expenses, it was contended that all administrative and other expenses related to HZP have been booked. 12 Appellant furnished copy of possession letter dated 04-10-2007 showing possession of plot No. 2D1 Sector-10 in Industrial Estate, 2E, Haridwar. 13 Appellant furnished a map and a printout of Sidcul State Infrastructure and Industrial Development Co-operation of Uttaranchal taken from their website to establish that their factory is situated in eligible area where 100% under the I.T. Act is eligible. Further vide reply 10 dated 27-11-2011 the Appellant produced certified copy of letter received from Regional Manager, Sidcul IIE - Haridwar certifying that the plant of Hindustan Zinc situated at 2D-1, Sector- 10, IIE-Haridwara Uttar Khand is situated in notified area Salempur Mehdood in Khasra No. 545 which has been notified by the Government of India vide notification bearing No. SO741(E) dated 28-06-2004 as amended by Notification No. 283/2006(F.No. 142/30/2005-TPL dated 03-10-2006) for the purpose of allowing deduction u/s 80IC. Further Appellant also furnished 129 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. certificate of Tehsildar Haridwar certifying that the unit of the Appellant is situated in Khasra No. 545 which has been notified for granting deduction u/s 80IC. 12.4 On the basis of above submission, Appellant pressed claim of deduction u/s 80IC which was examined carefully. From the evidences furnished by the Appellant, it is noticed that the undertaking is situated in the notified area and that it is involved in manufacturing of article or things not covered by schedule thirteen. Therefore, the undertaking of the Appellant duly falls within the category specified in sub section 2 (a) (ii) of section 80IC and is found eligible for deduction u/s 80IC.’’)’’ Unquote [Emphasis supplied] Also, the said methodology of determining the transfer price of semi-finished goods from non-eligible to eligible units by adding a mark-up of 10% on cost incurred by the non-eligible units was also accepted by the Ld. TPO in the AY 2013-14 (ref. Page 2017 – 2018 of the CL Paper Book). The Hon’ble Jodhpur bench of the Tribunal vide order dated 4 September 2017 in Appellant’s own case for AY 2011-12 (ref. pages 359 -365 of CL Paper book) decided the issue in favour of the Appellant holding that the cost plus approach adopted by the Appellant is most appropriate considering that cathodes were not separately marketable and as such had no comparable market price available, method prescribed under excise rules (i.e. cost + 10%) should be considered as the most reasonable method, as it removes any arbitrariness and ad-hoc determination by the authorities. For AY 2012-13, the Hon’ble ITAT relied on the above order and ruled in favour of the Appellant. (ref. pages 477, 482-488, 513- 521 of CL Paper book). 26. We have heard rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. We find that the approach 130 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. adopted by the AO/CIT (A) while adjudicating the issue of deduction under section 80IC in respect of HZP is mutatis mutandis similar to the issue in hand in respect of Pantnagar Zinc and Lead Plant (PLZP) and Pantnagar Silver Metal Plant (PSMP). We find force in the submissions of the assessee that this issue was principally considered by the Co-ordinate Bench of the Tribunal in the assessee’s own case in ITA No. 246/Jodh/2017 vide order dated 04.09.2017 for the assessment year 2011-12. The Co-ordinate Bench further while dealing with the issue in assessee’s own case in ITA No. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 allowed the ground of the assessee by following its earlier decision in ITA No. 246/Jodh/2017 vide order dated 04.09.2017 for the assessment year 2011-12 by observing in para 88 to 89 as under :- “ 88. We have heard the rival submissions and perused the relevant material on record. The co-ordinate bench in the Assessee's own case for AY 2011-12 vide its order dated 04.09.2017 has decided the issue in favour of the Assessee whilst holding as under:- "533. We have given our anxious consideration to the issue at hand as well as the submissions made before us. Before we adjudicate the issue, it would be relevant to refer to the provisions of Section 801Å (8) of the Act (as applicable for assessment year under consideration) - (8) Where any goods [or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods [or services] as on that date . 131 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. [Explanation. —For the purposes of this sub-section, "market value", in relation to any goods or services, means the price that such goods or services would ordinarily fetch in the open market.] 534. A plain reading of the said provisions, very clearly provide that where any goods are transferred between the other unit and the eligible unit, the transfer price as recorded in the accounts should correspond to the market value of such goods as on the date of such transfer. The proviso further empowers the A.O. to recompute the profits of the eligible business where he encounters exceptional difficulties. However, the explanation very clearly provides that the market value in relation to any goods means the price that such goods would ordinarily fetch on sale in the open market. That being the mandate of the law, it is not proper for the revenue to read into the provisions, where there are none, and start reallocating profits without bringing anything on record as to how the transfer price adopted by the Assessee did not meet the criteria of the said provisions. We have noted that neither the A.O. nor the CIT(Å) have brought any comparable price on record in respect of the Cathode Sheets nor have been able to repel the contention of the Assessee that these goods were not a marketable product. At this stage itself when there is no comparable price of the products, we do not understand as to how the A.O. assumed jurisdiction u/s 801Å (8) and proceeded to reallocate the profits. This is not the mandate of Section 801Å (8). 535. We also find support from the decision of the Punjab & Haryana High Court in the case of Punjab Concast Steal (supra) and the Ahemdabad decision in the case of Cadila Healthcare (supra) where it has been very clearly held that before invoking the provisions of Section 801Å (8), the A.O. must first discharge the onus of bringing on record the market price of such goods. At this juncture, we are reminded of the decision of the Hon'ble Supreme Court in the case of CIT Vs. B.C. SrinivasaSetty [19811 128 ITR 294 (SC)where the Hon 'ble Supreme Court made the following observations: - "8. For the purpose of imposing the charge, Parliament has enacted detailed provisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All 132 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. transactions encompassed by section 45 must fall under the governance of its computation provisions. transaction to which those provisions cannot be applied must be regarded as never intended by section 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the Income-tax Act, whereunder each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise one would be driven to conclude that while a certain income seems to fall within the charging section, there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each head of income. No doubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computation provision at all if a certain interpretation is pressed on the charging provision. That pertains to the fundamental integrity of the statutory scheme provided for each head". 536. We do not see as to how the situation at hand is any different. We also note that apart from rejecting the contention of the Assessee in context of the valuation as per Central Excise, the A.O. has only stated that such method is not prescribed under the Income Tax Act. In our opinion given the admission of the A.O. that there is no method prescribed under the provisions of Act, we do not understand as to how the valuation done by the Assessee to determine the transfer price could be rejected. In our opinion, the transfer price determined under the excise valuation rules was the most reasonable basis for determining the transfer price. 133 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 537. As has been pointed out by the Ld. Counsel for the Assessee that this dispute has been considered by a Coordinate Bench while adjudicating on the exercise of power by the CIT under Section 263 for the ÅY: 2009- 10. We find similar issue which has been before us in ITA No. 253/Jodh/2015 for AY: 2010-11. We note that the Coordinate Bench has very categorically observed in para 31 page 73 of the order that the CIT, while exercising jurisdiction under Section 263, "was not able to point out any error, deficiency or short coming in the method as adopted by the Assessee and neither was the CIT able to point out any authority or textual support of his own formula based on expenses incurred at various locations" Thus, we have no hesitation in holding that in the absence of any error being found by the Revenue in respect of the transfer price adopted by the Assessee, the disallowance of deduction on account of allocating profits in the ratio of expenses was completely unwarranted. We further failed to understand that how does allocation of profits on the basis of expenses results in the determination of the market price as stated in the explanation to Section 801Å(8). The power that is vested in the A.O. to recompute profits under the proviso cannot be read in isolation to the main provision. This power has been vested only where an exceptional difficulty is faced by the A.O. in computing the eligible profits of the unit. The AO has not pointed out any exceptional difficulty as mandated under the act. We note that the incentive providing provisions need not be construed in a manner so as to discourage investments as was the intent behind the insertion of these provisions. It is settled position of law that the incentive provisions have to be interpreted in a manner so as to further the objective of the legislature and not to defeat it. 538. We are also constrained to observe that the CIT(Å) himself has accepted the contention of the Assessee . that profits cannot accrue equally over every unit of expense. Having come to that conclusion we also failed to understand how by applying the test of reasonableness the CIT(A) affirmed the allocation of profits on the basis of the expenditure incurred by the units. This is impermissible in law. 539. We have also analyzed the provisions of Rule 8 of the Central Excise Valuation which were applied by the Assessee for determining the transfer price which state as under:- "Where the excisable goods are not sold by the Assessee but are used for consumption by him or on his benefit in the production or 134 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods" 540. We find that the excise legislation covers an identical situation where the excisable goods are not sold by the Assessee but are used for consumption in the production or manufacture of other Articles. The Rule provides that while determining the excisable value, the Rule requires such value to be taken at 110% of the cost of production or manufacture of such goods. In our opinion, this method of valuation as sanctioned by the Central Excise Valuation Rules is the most reasonable method, in the absence of any method prescribed under the Income Tax Act, for determining such transfer price. For the reasons stated above, we find this method to be the most reasonable method as it removes any arbitrariness and ad-hoc determination by the Authorities. 541. Thus, we set aside the order of the CIT(Å) as well as the A.O. and allow the ground of the Assessee by holding that the transfer price adopted by the Assessee on the basis of Central Excise Valuation Rules and also specifically noting the fact that the Zinc Cathode Sheets were not a separately marketable commodity and as such had no market price for comparison. We direct the A.O. to allow the claim of deduction of the A.O. in respect of the Haridwar Zinc Plant under Section 80/C at Rs. 1143,71 , 94, 128/- as claimed by the Assessee. " 87. Hence, respectfully following the co-ordinate bench's decision dated 04.09.2017, ground No. 62 to 70 are decided in favour of the Assessee and against the revenue.” We, therefore, respectfully following the decision of Coordinate Bench as discussed hereinabove, allow the ground of the assessee. Ground Nos. 7-7.2 relate to addition of Rs. 66,54,233, i.e., 15.86% of Rs. 4,19,56,073 on account of mark-up on business support services: 27. Before us, the ld. Counsel for the assessee narrated the submissions as under :- 135 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. “ During the AY 2017-18, the Appellant incurred certain expenses in the nature of payments to third parties for routine administrative function on behalf of its overseas AEs which have been charged back to the relevant AEs at cost amounting to Rs. 4,19,56,073 without any mark-up. Since, the aforesaid reimbursements were third party expenses where no value addition is made by the Appellant and are subsequently reimbursed by the AEs on a cost-to-cost basis, the Appellant applied “Other Method” as it merely acted as a facilitator of payments on behalf of the AEs and did not provide any service to the AEs that would have warranted a mark-up. The TPO, however, held that the Appellant provided administrative (agency) services to its AEs acting as an intermediary and these recoveries represent business support services provided by the Appellant to its AEs and accordingly the Appellant should have charged a mark-up for providing these services. The TPO also noted that the payments have been received by the Appellant over a period ranging from 23 days to 110 days and hence, on that basis concluded that the Appellant has provided support services to its AE and thus mark-up should have been charged by the Appellant. Accordingly, the TPO has identified companies providing market support functions and after noting their average profit margins held that a mark-up of 15.86% should be applicable for these transactions. The TPO held that Cost plus method should be applied for these services and made adjustment of Rs. 66,54,233 i.e., 15.86% of Rs. 4,19,56,073 on account of mark-up on business support services. 28. On the other hand, the Ld. CIT (DR) referred to the discussions at page 136 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 113 of the TPO’s order wherein reference is made to para 7.36 of OECD Transfer Pricing Guidelines to contend that if an entity has provided administrative (agency) services to its international AE acting as an intermediary, mark-up on the same should be applied. The TPO further observed that the services provided by the assessee are not the basic function of the assessee therefore provision of the same required expenditure of major amount to the tune of lakhs and efforts of the employee of the assesse and the same should be reimbursed to the assessee by the AE. 29. In Rejoinder, the ld. Counsel for the assessee submitted as under :- “ Paragraph 7.36 of the OECD Guidelines relied upon by the TPO/the Ld. CIT (DR), reads as under: “7.36 When an associated enterprise is acting only as an agent or intermediary in the provision of services, it is important in applying the cost-plus method that the return or mark-up is appropriate for the performance of an agency function rather than for the performance of the services themselves. In such a case, it may not be appropriate to determine arm’s length pricing as a mark-up on the cost of the services but rather on the costs of the agency function itself. For example, an associated enterprise may incur the costs of renting advertising space on behalf of group members, costs that the group members would have incurred directly had they been independent. In such a case, it may well be appropriate to pass on these costs to the group recipients without a mark-up, and to apply a mark-up only to the costs incurred by the intermediary in performing its agency function.” It is respectfully submitted that since Appellant is merely acting as a pass through entity, between AE and third parties suppliers, it is not required to earn any mark up on the amount charged back to AE seeking a reimbursement as payments made to third party supplier. Reliance in this regard is placed on the decision of the Delhi High Court in case of Johnson Matthey India Private Limited vs. DCIT 380 ITR 43 (at Page 1060 – 1070 137 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. @ 1069 of the CL Paper Book).where in the Delhi High Court directed to exclude the pass through cost, being raw material purchased by an automobile component manufacturer, while computing the operating margin. The Delhi High Court held as follows: “It is further importantly pointed out that the very purpose of transfer pricing is to benchmark transactions between related parties in order to discover the true price if such entities were unrelated. If MUL had bought the PGM directly from JMUK there would have been no application of transfer pricing since MUL and JMUK are unrelated entities. MUL would have purchased the PGM just like JMIPL did on negotiated prices. There is merit in the contention that the prices at which JMIPL purchased PGM from JMUK were already at arm’s length and that it was for administrative convenience that MUL had outsourced this function to JMIPL. The submission of the Revenue that the accounting entries of JMUK do not treat the cost of PGM as a pass-through cost fails to acknowledge that JMUK is in the business of selling PGM. It does not require to charge JMIPL for processing the raw material i.e. PGM as that is passed on to MUL's vendors and thereby to MUL. The fact that JMIPL is paid a fixed manufacturing charge per unit shows that costs associated with the possible fluctuations in the price of the raw material is passed on to the customers and does not affect the profits of JMIPL. The submission of the Revenue that the international transaction between JMUK and JMIPL with regard to sale of precious metals may not be at ALP because JMIPL was a wholly owned subsidiary of JMUK does not appear to be based on any definite information but on suspicion. No convincing reason is forthcoming in the orders of the TPO, the CIT(A) or the ITAT for rejecting the alternate plea of JMIPL as regards the PLI being OP/TC-RMC.” Reliance in this regard is also placed in the decision of the Delhi High Court in the case of Li & Fung India Pvt. Ltd. vs. CIT 361 ITR 85, (ref. Page 1071 – 1093 @ 1090 - 1091 of the CL Paper Book).wherein, the Court held that for undertaking benchmarking analysis applying, it would not be appropriate to consider costs incurred by third party or unrelated enterprise to compute assessee’s net profit margin. 138 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. To the same effect is the decision of the Delhi Bench of the Tribunal in the case of Mitsubishi Corporation India Pvt Ltd vs DCIT (ITA No 5042/Del/2011) (ref. Page 1094 – 1138 @ 1130 - 1135 of the CL Paper Book).wherein the Tribunal, in a case of a distributor held that cost of purchase of traded goods is not required to be included in the cost base of the Appellant / distributor as the Appellant was neither performing any function nor assuming any risks in respect of such goods. To the same effect is the decision of the Delhi Bench of the Tribunal in the case of DCIT vs. M/s. Cheil Communication India Pvt. Ltd.: (ITA No. 712/Del/10), wherein, it has been held that, for application of TNMM, payment made by the Appellant to 3 rd party venders / media agency, need not be included in the total cost for determining the profit margin. Similarly, the absence of mark up on reimbursement of expenses was upheld by the Mumbai ITAT in the matter of M/s Cognizant Technology Solutions India Pvt Ltd vs. The Assistant Commissioner of Income Tax, ITA Nos. 114 & 2100 (Mds)/2011. (ref. Page 1139 – 1179 @ 1152 of the CL Paper Book). The relevant extract of Para 6.10 of the ruling reads as follows: “.....the fact is that the reimbursement was made on cost to cost basis and there is no rendering of any service and it does not involve service element. What is incurred is reimbursed. So, therefore, there is no profit element in the reimbursement. In such situation there is no justification in making a mark up of 5 per cent. This addition is accordingly deleted. This issue is decided in favour of the assessee.” Reliance in this regard is also placed on the ruling in the case of LG Soft India Pvt. Ltd. (ITA No,1121/Bang/2011) whereby it was held as under: “4.5 We have heard the rival submissions and perused the materials on record. We have noticed that the details of reimbursement expenses are given at page 139 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 334 of the paper book filed by the Appellant . The break-up of the Said expenses are not given in detail and it is not clear whether it is the reimbursement of expenses incurred on behalf of the AE Since the issue is not dear and there is no detailed discussion of the break-up of expenses we deem it fit and proper to remit the issue to the file of the Assessing Officer / TPO for detailed verification. We make it clear that if the receipts are mere recovery of expenses without any service then the same should not be added back to the cost base for the purpose of mark up. It is ordered accordingly." Reliance may also be placed on the following decisions of the benches of Tribunal wherein, the Tribunal held that costs paid to third parties ought to be excluded while computing operating costs of an entity acting ion the capacity of an facilitator for the purpose of applying the mark up: − Agility Logistics Pvt. Ltd. vs. ACIT (ITA No. 2000/Mum/2010) − FedEx Express Transportation and Supply Chain Services India Private Ltd vs DCIT (ITA No. 435/Mum/2014) In view of the above, it is submitted that since the appellant is merely acting as a pass through entity, between AE and third parties suppliers and is therefore, not required to earn any mark up on the amount of reimbursement charged to AE. Therefore, any addition on account of mark-up on reimbursement received by the appellant calls for be deleted. 30. We have heard the rival contentions, perused the material available on record and gone through the orders of the revenue authorities. We find that the appellant incurred certain expenses by way of payment to Third Parties for routine administrative function on behalf of the its overseas Associated Enterprises (AE) which has been charged back to the relevant AEs at cost for the reason that no value addition is made by the appellant and it is only a reimbursement by the AE on cost to cost basis. The TPO and the ld. CIT D/R, however, held that the appellant provided agency services to its AEs and, therefore, mark-up should have been 140 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. charged by the appellant for providing the services. Further payment has been received by the appellant from its AE over a period ranging from 23 days to 110 days and, therefore, mark-up should have been charged. The ld. CIT D/R referred to para 7.36 of OECD Transfer Pricing Guidelines to contend that if administrative (agency) services to its International AE acting as an intermediary, mark-up should be applied. The services provided by the assessee-appellant are not its basic function and, therefore, considering the amount involved and the effort of the employees of the appellant, mark-up should have been charged. The relevant para 7.36 of OECD Guidelines reads as under :- “7.36 When an associated enterprise is acting only as an agent or intermediary in the provision of services, it is important in applying the cost-plus method that the return or mark-up is appropriate for the performance of an agency function rather than for the performance of the services themselves. In such a case, it may not be appropriate to determine arm’s length pricing as a mark-up on the cost of the services but rather on the costs of the agency function itself. For example, an associated enterprise may incur the costs of renting advertising space on behalf of group members, costs that the group members would have incurred directly had they been independent. In such a case, it may well be appropriate to pass on these costs to the group recipients without a mark-up, and to apply a mark-up only to the costs incurred by the intermediary in performing its agency function.” As per the said Guidelines, when an Associated Enterprise incur the costs on behalf of the group members, cost that the group members would have incurred directly had they been independent, it may be appropriate to pass on the costs to group recipients without a mark-up and to apply a mark-up only to the costs incurred by the intermediary in performing its agency function. In the present case, we are of the view that the assessee-appellant is not performing any agency function but has only incurred some costs which are charged from the AEs. Thus, assessee-appellant 141 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. is merely acting as pass through entity on which no mark-up is required to be charged. This position has also been accepted by the various Hon’ble High Courts as under :- In case of Johnson Matthey India Private Limited vs. DCIT 380 ITR 43 (Delhi High Court) In the case of Li & Fung India Pvt. Ltd. vs. CIT 361 ITR 85 (Delhi High Court) In the case of Mitsubishi Corporation India Pvt Ltd vs DCIT (ITA No 5042/Del/2011)(Delhi Tribunal) In the matter of M/s Cognizant Technology Solutions India Pvt Ltd vs. The Assistant Commissioner of Income Tax, ITA Nos. 114 & 2100 (Mds)/2011.(Mumbai Tribunal) LG Soft India Pvt. Ltd. (ITA No.1121/Bang/2011)(Bangalore Tribunal) In view of the above observations, the ground of the appellant is allowed. Ground Nos. 8-8.1 relate to disallowance of Rs. 15,31,69,157 u/s 14A of the Act, both under normal provisions and for computing Book profit under MAT as per section 115JB of the Act. 31. Before us, the ld. Counsel for the assessee submitted as under :- “ During the AY 2017-18, the Appellant earned exempt income amounting to Rs.114,44,19,148 from tax-free bonds. Appellant has a separate treasury department employing two persons to look after the affairs of the treasury function. The salary of these two people which has direct nexus with the earning of the tax-free interest income has been disallowed in 142 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. computation of total income. Apart from this the administrative expenditure of location of their seat i.e. Head Office, has been offered in the ratio of no. of employees at HO and the treasury department. These investments are on auto pilot mode only and month to month changes are on account of MTM adjustments and no purchases/sales were made. These do not require constant management attention as such investment were made in the earlier years and the Appellant has only maintained the same during the year and earned tax free income. There is one employee who is full time engaged in the treasury department while there is another employee who is looking into treasury department as part time, so 100% salary of the said full time employee and 50% of the salary of the said part time employee is considered for suo moto disallowance which works out to Rs. 65,72,510. Thus, the Appellant, while computing the total income has offered the entire expenditure which is directly relatable to the earning of exempt income. The AO, however, contended that the Appellant did not make disallowance of expenses as per provisions of sections 14A of the Act read with rule 8D of the Income tax Rules, 1962. Further, the AO contended that Appellant is having huge investments and it is quite certain that administrative expenses such as salary, other services fees, printing and stationery, postage and stamp, telephone, bank charges, legal and professional fees, office expenses, clerical and other administrative expenses are made in acquiring, maintaining the tax free investments and earning the tax free income. Hence the AO held that the provisions of Rules 8D(2)(iii) of IT Rules are required to be applied for disallowance of administrative expenses in the Appellant’s case and accordingly made addition of Rs. 15,31,69,157 under Normal 143 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. provisions of the Act being expenditure incurred in relation to earning of exempt income by applying Rule 8D of the Rules. Adjustment for 14A under MAT: The AO also made adjustment for the same amount while computing book profit in terms of section 115JB of the Act. 32. On the other hand, the ld. D/R relied on the discussion at pages 17 to 18 of the final assessment order wherein it is observed as under: “It is seen that the assessee has incorrectly computed the disallowance u/s 14A on the exempt income. The income as per the profit and loss account inter-alia includes income, which are exempt from tax and on which certain expenditure have been debited to the profit & loss account. The assessee has not maintained separate books of account for the exempt income. However, the assessee itself has made disallowance of certain amount by apportioning salary relating to treasury staff and HO expenses on ad-hoc basis, which cannot be considered as rational or scientific method for making disallowance u/s 14A of the Act. The assessee has not established that the tax free investments were made out of non-interest bearing funds only. In the assessee’s case, interest bearing funds and non interest bearing funds are mixed up and the interest expenditure incurred in earning the tax free income cannot be correctly found out from the accounts maintained. Hence the provisions of Rules 8D(2)(ii) of I.T. Rules are required to be applied for disallowance of interest expenses in assessee’s case. Since the assessee has also not submitted documentary evidences to conclusively prove the investments related to non exempt income, whole of the investment appearing in the Balance Sheet is considered for computation of the disallowance u/s 14A read with Rule 8D of I.T. Rules. Further, it is seen that assessee is having huge investments. It is quite certain that administrative expenses such as salary, other services fees, printing and stationery, postage and stamp, telephone, bank charges, legal and professional fees, office expenses, clerical and other administrative expenses are made in acquiring, maintaining the tax free investments and earning the tax free income. However, the exact expenditure cannot be found out from the accounts maintained. Hence the provisions of Rules 8D(2)(iii) of I.T. Rules are required to be applied for disallowance of administrative expenses in assessee’s case. 33. In Rejoinder, the ld. Counsel for the assessee submitted that merely presuming that the Appellant must have incurred expenditure for earning exempt income, without specifying the nature of expenses, leave alone its quantification, 144 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. does not tantamount to recording of satisfaction as referred to in section 14A of the Act. Reference in this regard may be made to the following decisions: • CIT vs. Walfort Share & Stock Brokers: 326 ITR 1 (SC) • Godrej & Boyce Manufacturing Company Ltd. vs. DCIT: 394 ITR 449 (SC) • Maxopp Investment Ltd: 203 Taxman 364 (Del.) – affirmed by SC in 402 ITR 640 • H.T. Media Ltd. v. PCIT: 399 ITR 576 (Del) Reliance is also placed on the decision of the Delhi High Court in the case of Coforge India Limited: 436 ITR 546 (Del), wherein the Court, on the issue of satisfaction observed as under: “........ 13. Therefore, what emerges is, if the Appellant claims a certain amount of expenditure was incurred by him to earn the income which does not form part of the total income, the AO is required to examine the accounts, and thus, satisfy himself as to the correctness of the claim made by the Appellant about the expenditure incurred in that regard. It is when an AO is not satisfied as to the correctness of the claim made by the assessee, about the expenditure said to have been incurred by him on such income which does not form part of the total income under the Act, he then proceeds to determine the amount of expenditure, by following such method as is prescribed, i.e., Rule 8D of the Rules. 13.1 This methodology, as envisaged under Rule 8D of the Rules, is required to be followed even where the Appellant claims that no expenditure was incurred by him concerning income which does not form part of the total income under the Act. 13.2 The approach of the Tribunal has been that, since a disallowance was made, it follows logically, that the AO was not satisfied. This, according to us, is not what is envisaged under the provisions of Section 14A of the Act. The satisfaction has to be arrived at by the AO having regard to the assessee's accounts and not otherwise. Concededly, there is nothing in the record to suggest that the AO examined the accounts from this perspective. 13.3 Furthermore, in our view, because the appellant/Appellant had itself offered an amount which could be disallowed under section 14A of the Act, the onus shifted onto the revenue to ascertain, after examination of the accounts, as to whether or not the appellant's/assessee's claim was correct. It is only after the aforesaid exercise was conducted, could the AO have taken recourse to the prescribed method 145 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. i.e. Rule 8D of the Rules, for determining the expenditure, which, according to him, needed to be disallowed under section 14Aof the Act” (emphasis supplied) Further, the assessing officer cannot, apply the provisions of section 14A of the Act, automatically once the appellant is found to have earned exempt income. With respect to the allegation of the ld. AO that the appellant did not maintain separate books of accounts for exempt income, reference is made to the recent decision of the Supreme Court in the case of South Indian Bank Ltd. vs CIT: 438 ITR 1 (ref. pages 1180-1187 of CL Paper book), wherein the Court has observed that the assessing officer cannot make disallowance of deduction under Section 14A of the Act merely because the Appellant has not maintained separate accounts for expenses incurred in earning tax-free income. The assessing officer must, in order to make any disallowance under section 14A of the Act, record satisfaction that having regard to the accounts of the Appellant, suo- moto disallowance of Rs. 65,72,510, made under section 14A by the appellant is not correct. In the facts of the present case, it will be appreciated that no valid satisfaction has been recorded by the assessing officer in the assessment order, before applying Rule 8D. In that view of the matter, the action of the assessing officer in invoking the provisions of section 14A read with Rule 8D of the Rules, without recording pre- requisite satisfaction, needs to be reversed at the threshold and disallowance is liable to be deleted. 146 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. The Hon’ble ITAT Jodhpur deleted similar disallowance in Appeal No. 179 & 184 for AY 2008-09 (ref. pages 261-279 of CL Paper book) , 262 & 246/Jodh/2017 for AY 2011-12 (ref. pages 346-347 of CL Paper book) and in Appeal no. 404 & 412/Jodh/2017 for AY 2012-13 (ref. pages 427- 431 of CL Paper book) . Re.: MAT Also, any disallowance made under the normal provisions of the Act cannot be given effect to for arriving at the "Book Profit" for the purpose of Section 115JB of the Act unless it is specifically covered u/s 115JB of the Act as above. the aforesaid provision of the Act does not refer to any disallowance made u/s. 14A of the Act for arriving at the Book Profit for the purpose of Section-115JB(2) of the Act. The Appellant Company therefore contends that additions u/s 14A of the Act cannot be made under MAT provisions. Reliance in this regard is placed on the decision of the Delhi High Court in the case of PCIT vs Bhushan Steel Ltd: ITA No. 593/2015, dated 29.09.2015, wherein, the Court upheld the decision of the Tribunal that disallowance under section 14A read with Rule 8D could not be added while computing book profits as per section 115JB of the Act and declined to frame question of law. Relevant extract of the said judgment is reproduced hereunder: “7. Question No.6 concerns deletion of addition of Rs.89,00,000 made by the AO for computation of the income for the purposes of Minimum Alternate Tax (“MAT ‟) under Section 115 JB of the Act. This pertained to the expenditure incurred for earning exempt income under Section 14A read with Rule 8D. The ITAT has rightly held that this being in the nature of disallowance, and with Explanation 115JB not specifically mentioning Section 14A of the Act, the addition of Rs.89,00,000 was not 147 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. justified. The view taken by the ITAT cannot be faulted with. It is consistent with the decision in Apollo Tyres Ltd. v. Commissioner of income Tax (2002) 255 ITR 273 (SC) which held that “the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J.” The Court declines to frame a question on the above issue.” Further, the Special Bench of the Delhi Tribunal in the case of ACIT vs. Vireet Investments (P.) Ltd: 165 ITD 27 (Del Trib.), inter alia, placing reliance on the judgment of Delhi High Court in the case of Bhushan Steel Ltd. (supra), likewise held that computation under clause (f) of Explanation 1 to section 115JB(2) of the Act is to be made without resorting to computation as contemplated under section 14A read with rule 8D of the Rules. To the similar effect are the following decisions wherein it has been held that disallowance under section 14A cannot be imputed while making addition to book profits in terms of clause (f) of Explanation to section 115JB of the Act: • Pepsico India Holdings Pvt. Ltd. vs. DCIT: ITA No. 4077/Del/2015 (Del Trib.) • Kamat Hotels (India) Ltd. v. ACIT: [2018] 89 taxmann.com 225 (Mum Trib) • Quippo Telecom Infrastructure Ltd v. ACIT: ITA No.4931/Del/2010 (Del Trib.) • Shriram Capital Ltd v. DCIT (ITA. Nos.512 &513 /Mds/2015) (Chennai Trib.) • Scope Private Ltd. v. ACIT: ITA No. 8934/Mum./2010 (Mum Trib.) • Reliance Industrial Infrastructure Ltd. v. ACIT: ITA Nos. 69 & 70/Mum/2009 (Mum Trib.) • JCIT v. Reliance Capital Ltd.: ITA No. 3037/Mum/2008(Mum Trib.) • Bengal Finance and Investment (P) Ltd. v. CIT: ITA No. 5620/Mum/2010 (Mum Trib.) • Nahar Capital And Financial v. ACIT: ITA No. 1120/Chd/2011 (Mum Trib.) • ACIT vs. Spray Engineering Devices Ltd: (2012) 53 SOT 70 (Chd.) (URO.) • Cadila Healthcare Ltd. v. ACIT: 21 Taxmann.com 483 (Ahd. Trib.) 148 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. In view of aforesaid, it is submitted that addition of Rs. 15,31,69,157 made by the AO MAT under MAT provisions u/s 14A r.w.r 8D of the Rules is liable to be deleted. 34. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. We find that the issue stands covered in favour of the assessee by the decision of Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the coordinate Bench has decided the issue by following its earlier order in assessee’s own case in ITA Nos. 538 & 556/Jodh/2014 dated 04.09.2017 by observing in para 42 to 43 at pages 54-55 as under :- “ 42. We have heard the rival submissions and perused the material on record. We find that the co-ordinate bench vide its order dated 04.09.2017 has dealt with this very issue and has held as under:- "346. The revenue in its Appeal has also agitated the relief given by the CIT(Å) on the issue of 144 disallowance. In our view, based on the material available on record it is evident that the Assessee had sufficient self- generated funds to make the investments from which tax exempt income was earned. The A.O. was not correct in recording that the Assessee had failed to show that it had surplus funds. This fact is apparent on the face of the balance sheet as has been rightly pointed out by the Ld. Counsel of the Assessee. We also find that the A.O. has not discharged the onus which lay on him of recording a valid satisfaction as to how the disallowance offered by the Assessee was incorrect. We also find that the A.O. has not brought any material on record to show that the Assessee had incurred interest expenditure for making such investments. The amount of Rs.3 crores shown as an interest expenditure in Schedule 17 related to bill discounting activity undertaken by the Assessee during the relevant year and was not on account of borrowed funds. 347. Our above conclusions are supported by a recent decision of the Coordinate Bench of Mumbai Tribunal in the case of ShapoorjiPallonji (supra) 149 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. where, having considered a catena of judgments, the Tribunal made the following observations:- Thus, to conclude the Appeal of the Assessee is allowed and the Appeal of the Revenue is dismissed. " 40. Hence, in view of the above facts and binding decision of Coordinate Bench in Assessee's own case the disallowance u/s 14A of the Act is unsustainable in the eyes of law. These grounds stand allowed in favour of the Assessee.” Respectfully following the decisions of the coordinate Bench of the Tribunal in the assessee’s own case hereinabove, and also considering the consistent view taken in favour of the assessee by the various benches of the Tribunal, the ground of the assessee stands allowed. Ground Nos. 9-9.1 relate to disallowance of deduction under section 35(2AB) of the Act Rs. 94,55,355/-. 35. Before us, the ld. Counsel for the assessee submitted that during the relevant previous year, the Appellant claimed Rs. 94,55,355 as weighted deduction u/s 35(2AB) of the Act which was also certified by the tax auditor and accordingly reduced from its computation of income for the impugned AY 2017-18. The Appellant has also furnished copy of Form 3CL as required. The AO however, held that the said Form 3CL pertains to AY 2014-15 and AY 2015-16 only and made disallowance of Rs. 94,55,355. For the purposes of claiming deduction under section 35(2AB), the only requirement is that the R&D facility should be approved by DSIR. There is no provision under the Act empowering DSIR to prescribe the period and quantum of expenditure for which the weighted deduction is admissible under the Act. 150 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Sub-rule (b) to Rule 6(7A) of the Income tax Rules, 1962 (‘the Rules’) provides that the prescribed authority shall submit its report in relation to the approval of in-house R&D facility in Form No. 3CL to the Director General (Income Tax Exemptions) within 60 days of its granting approval. The said Form is merely an intimation to be sent by the prescribed authority to the department. An Appellant engaged in such R&D activity having already obtained Form 3CM approval of its facility has no role to play in such correspondence. In the present case, the in-house R & D facility of the Appellant is duly recognized by DSIR and further approval under section 35(2AB) of the Act has also been granted in Form 3CM. The substantive provision of section 35(2AB) of the Act to claim weighted deduction, in our considered view, is incurring of expenditure on scientific research at R & D centres approved by DSIR. Therefore, so long as any expenditure is incurred as such on scientific research at the approved R&D Centres, the Appellant becomes entitled to claim weighted deduction. Further once R & D facility of the Appellant has been approved by the prescribed authority and there being no dispute to the fact that Appellant has incurred the expenditure towards R&D activities, the deduction under section 35(2AB) cannot be denied merely on the ground that prescribed authority has not submitted report in Form 3CL: • Sun Pharmaceutical Industries Ltd. vs. PCIT: 162 ITD 484 (Ahd. Trib.) – affirmed in CIT v. Sun Pharmaceutical Industries Ltd.: 250 Taxman 270 (Guj.), • Sri Biotech Laboratories India Ltd. v. ACIT : 36 ITR (T) 88 (Hyd.) • DCIT v. STP Ltd.: [2021] 187 ITD 538 (Kolkata - Trib.) 151 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. • Efftronics Systems (P.) Ltd. v. ACIT: 52 ITR(T) 497 / 161 ITD 688 (Vishakhapatnam Trib.) • DCIT v. Famy Care Ltd.: 67 SOT 85/ 52 taxmann.com 461 (Mum. Trib.) In any case, it is submitted that the Appellant’s in house research and development facility was already approved by DSIR, Govt. of India, Ministry of Science & Technology and such approval was valid till 31.03.2020. The said approval till 31.03.2020 was provided in Form 3CL which was furnished before the AO vide our submission dt 02.04.2021 and 16.04.2021 and Para Number 8 of the said Form 3CL clearly shows that the approval was valid till 31.03.2020 (ref. page 599 of Merit Paper Book Vol. II ). Further, the Hon’ble Jodhpur bench of the Tribunal in the Appellant’s case for AY 2012-13 upheld the claim of weighted deduction under section 35(2AB) of the Act in respect of expenditure on scientific research at R & D centers approved by DSIR (ref. pages 534 of CL Paper book). In view of the aforesaid the disallowance of Rs. 94,55,355 is liable to be deleted. 36. On the other hand, the ld. D/R contended that the Form 3 CL pertains to assessment years 2014-15 and 2015-16 only and on that basis supported the orders of the Revenue authorities. 37. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. Similar issue has come up before the Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13. While dealing 152 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. with the issue, the Tribunal by observing in para 118 at page 158 of its order dismissed the ground of the assessee as under :- “ 118. We have considered the facts of the matter and also perused the relevant material on record. We note that the CIT(A), while principally agreeing to claim of Assessee regarding allowability of expenditure on scientific research, had directed to obtain a copy of Form 3CL. We find no infirmity with the order of the CIT(A) and hence, this ground of appeal of the Assessee is dismissed and order of the CIT(A) is confirmed.” We, therefore, respectfully following the decision of coordinate Bench of the Tribunal in the assessee’s own case, find no infirmity in the orders of the Revenue authorities. The ground is dismissed. Ground Nos. 10, 10.1 & 10.2 relate to disallowance of Grass Root expenses of Rs. 54,69,30,401/-. 38. Before us, the ld. Counsel for the assessee submitted that the expenditure incurred for finding new reserves is called “Grass Root Expenditure” and the same is debited to the head office as this does not pertain to any mine under production. The Appellant claimed the expenditure incurred on exploration activity Rs. 54,69,30,401 as allowable revenue expenditure under section 37(1) of the Income Tax Act, 1961. Details of Grass Root Exploration Expenses claimed of Rs. 54,69,30,401 is as below : (in INR) Particulars Amount Grass Root Exploration - Kayad Mines 100,906,956 Grass Root Exp-Zawar Mines 187,666,352 153 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Grass Root Exploration - RA MINES 45,772,347 Grass Root Exploration - S.K. Mine 81,027,896 Grass Root Exploration - Regional 66,561,055 Grass Root Exploration - Dariba-South 63,352,567 Grass Root Exp-BKI 1,643,228 Total 546,930,401 The expenditure incurred for finding new reserves is called Grass Root Expenditure and the same is debited to the head office as this does not pertain to any mine under production. The expenditure incurred on exploration activity is a fully allowable expenditure under section 37(1) of the Income Tax Act, 1961. Any expenditure incurred before setting up of a business is a capital expenditure, however any expenditure incurred for any extension or addition to the existing business are revenue in nature. In the case of the Appellant the business was setup in 1966 and for sustenance and extension of the existing business the Appellant has taken continuous steps to explore further sources of mineral reserves. Had the Appellant not taken steps to sustain its existing business, the closure of various mines would have led to the closure of the business of the Appellant. Thus, the Appellant submits that exploration activity undertaken by it is not an activity for extension or expansion of an existing business but for sustaining the business. The reserves and resources of our company stood at 162 Million tonnes as on 31 st March 1996 which is 404.4 Million MT as on 31 st March 2017 which shows that this activity is indispensable for the sustenance of the company and hence the Appellant has claimed such expenditure under section 37(1) of the Act. 154 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Also, section 35E sub section (1) of the Act reveals that it provides a special mechanism to allow certain expenditure incurred by a company/Appellant who is engaged in the business of exploration or prospecting of minerals over a period of 10 years. Section 35E of the Act relates to deduction for expenditure on prospecting, extraction and production for certain minerals. The Appellant do not have any new mine identified during the AY 2017-18, hence the Appellant was not eligible to claim deduction u/s 35E of the Act. It is submitted that the Hon’ble ITAT, Jodhpur has adjudicated the issue of disallowance of grass root expenditure in Appellant ’s favour in its case vide order no 404 & 412/Jodh/2017 for the AY 2012-13 relying on its own order in the case of the Appellant for the AY 2011-12 in ITA No. 246/JODH/2017 holding that the expenditure incurred by a mining company does not fall within the meaning of Mine Development expenditure as envisaged by section 35E if the expenditure is incurred in an area which falls within the existing mining license area where a mine is already under commercial production and the expenditure incurred is in an area where no mining license has been granted so far. Thus, the only situation when the expenditure incurred is covered under provision of section 35E is where the mining license is granted and no commercial production has yet started. (ref. pages 526-531 of CL Paper book). In the case of the Appellant, for the relevant year too, all the expenditure incurred fall within the criteria as laid down by the Hon’ble ITAT as all the expenditure incurred under the head grass root expenditure is either on the area where the mining lease has been granted and the mine is under commercial production in that area and as a result the same was allowed by the ITAT as explained above. 155 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 39. On the other hand, the ld. D/R contended that the grass root expenses is in the nature of prospecting operations and this expenses of Rs. 54,69,30,401 pertain to prospecting operations, which have not resulted in commercial exploration of any mine. He submitted that the AO concluded that allowability of expenditure of Rs. 54,69,30,401 has to be examined within the provisions of section 35E and has disallowed the same in the draft assessment order dt 29.09.2021. 40. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. We find that similar issue of Grass Root Expenses is covered by the decision of Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404/Jodh/2017 and 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the Tribunal following its earlier order in assessee’s own case in ITA No. 246/Jodh/2017 dated 04.09.2017 for the assessment year 2011-12 allowed the ground of the assessee by observing in para 113-114 at pages 150-155 as under :- “113. We have heard the rival submissions and perused the material on record. We notice that similar issue was considered by the coordinate bench in Assessee's own case for AY 2011-12 in ITA No. 246/Jodh/2017, vide order dated 04.09.2017. Relevant portion of the said order dated 04.09.2017 is reproduced hereunder:- "564. We have considered the rival contentions as well as the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Union Tyres (supra). As pointed out by the Ld. Counsel for the Assessee this decision of the Hon'ble Delhi High Court considers all the leading judgments of the Supreme Court including the one cited by the CIT(Å) and lays down the applicable position of law. On the facts of that case, the Hon'ble Delhi High Court held that the minute an expenditure has been examined by the A.O. in the assessment from one angle an effort by the CIT(Å) to bring the disallowance under another provision of law would tantamount to a new source of income and as such it would not be open before the CIT(Å) to make such enhancement. The relevant 156 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. discussions of the Hon'ble Delhi High Court and the conclusions are reproduced are as under:- "11. A question regarding powers of the first appellate authority came up for consideration before the Supreme Court recently in CIT v. Nirbheram Daluram [1977] 224 ITR 610/ 91 Taxman 181. Following their earlier decisions in Kanpur Coal Syndicate's case (supra) and Jute Corpn. of India Ltd. 's case (supra) though their Lordships reiterated that the appellate powers conferred on the Commissioner under section 251 could not be confined to the matter which had been considered by the ITO, as the Commissioner is vested with all the plenary powers which the ITO may have while making the assessment, but did not comment on the issue whether these wide powers also include the power to discover a new source of income. Therefore, the principle of law laid down in Shapoorji Pallonji Mistry's case (supra) and Rai Bahadur Hardutroy Motilal Chamaria's case (supra ) still holds the field. 12. Thus, the principle emerging from the aforenoted pronouncements of the Supreme Court is, that the first appellate authority is invested with very wide powers under section 251(1)(a) and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee make a grievance and ranges over the whole assessment to correct the Assessing Officer not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the Assessing Officer and determined in the course of assessment. However, there is a solitary but significant limitation to the power of revision, viz., that it is not open to the Commissioner to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subject-matter of original assessment. " 565. Thus, from the above, it can easily be discerned that the CIT(Å) cannot introduce in the assessment a new source of income and the assessment has to be confined to those items of income which was the subject matter of original assessment. The endeavor of the CIT(Å) to make a disallowance of the grass root expenses during the course of the Appellate Proceedings would tantamount to an enhancement in respect of a new source of income and as such given the bar contained on the power of the CIT(Å), we hold that the CIT(Å) was not justified in enhancing the income of the Assessee. 157 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 566. Since submissions have been made before us on merits of the matter, we feel compelled to examine the merits of allowablity of such expenditure. As has been explained by the Ld. Counsel and what is evident from the details of expenditure contained in the Chart filed before us [which forms the annexure to the order of the CIT(Å)] the expenditure of Rs. 10.16 crores was clearly in respect of existing mines for which commercial production had commenced since long. This fact is also borne out in the Assessee's submission before the CIT(Å) which have been reproduced by her from page 334 and 335 of her order. Thus, to hold that since this expenditure was exploratory in nature it was automatically covered u/s 35E of the Act is totally erroneous. We have, while deciding the Revenue's Appeal for ÅY.• 1996-97 being ITA No. 312/J0dh/2015, held that the provisions of Section 35E are not applicable where the commercial production has already commenced. For the reasons stated in our order in context of ground no. 1 in Appeal No. 312/Jodh/2015, we hold that the expenditure of Rs. 10.16 crores has to be allowed as revenue expenditure u/s 37 of the Act since it was incurred in respect of existing mines and the provisions of Section 35E had no application thereon. 567. As regards, the balance expenditure of Rs.24.47 crores, a perusal of the details contained in the annexure to the Order of the CIT(Å) reveals that such expenditure was only in respect of areas for which the Assessee was in the process of making applications for securing mining leases that being the nature of expenditure it was not covered under Section 35E of the Act. We are supported in our conclusions from a reading of sub-section 2 of Section 35E where in the last part of that section a reference has been made to expenditure on development of mine. In our understanding the nature of expenditure referred to in Section 35E refers to expenditure on prospecting after the license has been granted in respect of a certain area. Preparatory expenditure an expenditure on surveys in respect of areas where the Assessee is in the process of submitting applications and which are classified as new opportunity would not get covered by Section 35E and would be allowable u/s 37 of the Act. 568. We find that the CIT(A) has treated the entire expenditure of Rs.34.36 crores as expenditure on operations for prospecting for minerals. However, the CIT(Å) has not properly appreciated the distinction in respect of the applicability under Section 35E and clearly was an error in not appreciating that the said expenditure was facilitating the existing operation of the Assessee as well as identifying new business opportunities. It has also being rightly brought to our attention by the Ld. Counsel that the A.O. had disallowed similar expenditure being feasibility and consultancy being ground no. 6 in 158 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. revenue's Appeal being ITA No. 3/Jodh/2015 for AY : 1999-00 where we have allowed such expenditure under the provision of Section 37 of the Act. Of course, there the issue raised by the revenue was that such expenditure was capital in nature since it resulted in enduring benefit to the Assessee. We have held that apart from the fact that no enduring benefit arises from such expenditure, such expenditure was incurred for facilitating the day to day operation of the Assessee. In the end, to conclude we allow the Assessee's grounds of Appeal while holding that the CIT(Å) was not justified in exercising the power of enhancement and even otherwise on merits such grass root expenditure was allowable u/s 37 of the Act. " 114. We hold that the facts in the present appeal for Assessment Year 2012-13 are similar to Assessment Year 2011-12. Respectfully following the decision of co-ordinate bench in Assessee's own case, we allow ground No. 91 to 95 of the Assessee's appeal.” We, therefore, taking a consistent view of the matter and respectfully following the decision of the co-ordinate Benches of the Tribunal in the assessee’s own case, delete the disallowance of Grass Root expenses. The ground of the assessee is allowed. Ground Nos. 11-11.1 relate to disallowance of staff welfare expenses of Rs. 23,66,67,865/- being the expenses towards canteen facility, school activities, sport club, scholarship, other club etc. 41. Before us, the ld. Counsel for the assessee submitted that the appellant during the relevant previous year incurred Staff Welfare expenses debited to P&L account of Rs.23,66,67,865 and claimed as revenue expenditure as follows: Particulars Amount Rs. Expenses Towards Canteen Facility to Employees 8,94,78,437 Expenses Towards Cooperative Stores 18,000 159 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Expenses Towards Schooling Activities 5,19,87,170 Expenses Towards Sports Clubs 28,73,995 Expenses Towards Community Centers 2,16,050 Expenses Towards Clubs – Others 21,53,488 Scholarship Executive 25,08,518 Scholarship Non-Executive 61,32,235 Other Staff Welfare Expenses 8,12,99,972 Total 23,66,67,865 42. On the other hand, the ld. CIT (D/R) contended that the above staff welfare expenses towards canteen facility, school activities, sport club, scholarship, other club etc. were covered by provisions of section 40A(9) read with Explanation 2 of section 37 as these expenses clearly fall within the meaning of corporate social responsibility and thus made disallowance of Rs.23,66,67,865. 43. In Rejoinder, the ld. Counsel for the assessee submitted that Section 40A (9) of the Act provides for disallowance of any expenditure made by an employer towards setting up or formation of or toward contribution to any fund, trust company or association of person, BOI, society or any other institution except where such contribution is made towards the funds as described under clause (iv) or (via) of section 36, ie. contribution towards recognised provident fund or contribution towards pension fund. In respect of the amounts incurred by the Appellant toward employee welfare provisions of section 40A (9) cannot be invoked, as follows: 160 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. a. The Appellant being a large corporate house is governed by Industrial Disputes Act, Factories Act and other legislations and is under obligation to provide for such facilities to the employees as per the provisions of those statute. b. The canteen facility is required to be provided within the business premises for supplying food to the workers/employees at concessional rate as per the statutory requirements as per Factories Act and Mines Act. c. Similarly, the school expenses were incurred for running Kendriya Vidyalaya at the business location of the appellant for providing education facility to employee’s wards working at the remote and rural locations. The school expenditure were in the form of reimbursement of running expenses by Govt./other institutions. i. To encourage the employee’s children to achieve higher in the studies, the Appellant company has framed scheme to provide the scholarship to brilliant students. This act of the appellant enhances the belongingness of the employee towards the company. ii. The scholarship expenses debited by the Appellant are towards direct expenses incurred as per policy of the company. The Sports club/Community Centre is managed by the committees and expenses are reimbursed. iii. Cooperative stores are for the workmen and employees and facility provided as per contractual obligations. The above payments are as per settlement reached with the worker’s union as per terms of employment of employees. Accordingly the expenditure on staff welfare under the above mentioned heads, is not covered u/s. 40A(9) of the Act. In this regard the Appellant submits that the above payments are not covered u/s. 40A(9) relying upon the CBDT circular No. 387 dated 6.7.1989 regarding intention of provisions of section 40A(9) of the Act. It is submitted that the AO relied on the decision of the CIT(A) for 1990- 91, however, the Hon’ble ITAT for the Assessment Year 1990-91 has 161 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. allowed the appeal of the Appellant and deleted the disallowance which was earlier confirmed by the CIT(A) as above. It is further submitted that the AO has allowed such expenditure in respect of set aside matter by Hon’ble ITAT and jurisdictional Rajasthan High Court of the Appellant company for A.Y. 1992-93, A.Y.1996-97 and A.Y.1997-98. It is respectfully submitted that this issue is squarely covered in favour of Appellant vide order dated 24.04.2017 passed by Jaipur Bench of Tribunal in ITA No. 638/JU/2008 and 606/JU/2008 for assessment year 2006-07 [ similar view has been taken by Hon’ble Tribunal for assessment year 2005-06 being order dated 10.04.2017 in ITA No. 612/JU/2009 ]. Further, the Hon’ble ITAT, Jodhpur for all these AYs from AY 2008-09 to AY 2012-13 has decided the issue in favour of the Appellant (ref. pages 611 - 617 CL Paper book). 44. We have heard rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. On perusal of records, we find that the issue of Staff Welfare Expenses is covered by the decision of Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404/Jodh/2017 and 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the Tribunal following its earlier order in assessee’s own case in ITA No. 3/Jodh/2015 dated 04.09.2017 for the assessment year 1999-2000 deleted the disallowance under section 40A(9) of the IT Act by observing in para 196-197 at pages 238-241 as under :- 162 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. “ 196. We have heard the rival contentions raised at the Bar and also perused the relevant material on record. We note that the co-ordinate bench in its order dated 04.09.2017 has decided this issue in favour of the Assessee, by observing as follows :- “170. The Counsel also submitted that the Coordinate Bench of the Tribunal in the Assessee’s own case had consistently been allowing such expenditure which now stood confirmed by the jurisdictional High Court. .......... 13.5. We have heard the rival contentions and perused the material available on record. Assessee is a PSU governed by statutory as well as internal regulations for incurring the expenditure, its approval as per a hierarchical administrate frame work. On facts neither of the auditors Ld. Statutory and tax auditors have indicated anything adverse in respect of staff welfare expenditure. It is also a fact that the staff welfare expenditure is incurred through various bodies in consultation with such staff unions. These facts coupled with findings of ld. CIT (A) that expenditure is genuine, wholly for business purposed and allowed in various earlier years even after verification have neither been dislodged by revenue nor controverted in any manner except raising a specious plea that issue may be set aside again. Its vehemently contended that setting aside amounts to a burden of fresh proceedings on assessee which should not be resorted to by appellate authorities in routine and casual manner. Ld. Counsel contends that it amounts to reassessment proceedings and in this case after 15 years, various courts have expressed their strong displeasure on perfunctory reassessments. In our considered view the following propositions of law in the realm of tax jurisprudence as contended by ld. Counsel for the assessee deserve merit that : i. Principles of res judicata do not apply to IT proceedings. ii. Every assessment year is a separate and distinct unit of assessment and stands on its own facts. iii. What is settled should not be ordinarily unsettled unless there are justifiable reasons i.e. the principles of consistency as enunciated by Hon’ble Supreme Court in Radha Soami Satsang (supra). It is not disputed by revenue that the expenditure on staff welfare has been allowed by AO himself in various earlier years 163 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. while re-verifying also in set aside fresh proceedings. From the record it emerges that no specific item of expenditure is pointed out to be not covered by sec. 40A(9), no such indication is given by auditors and ld. CIT(A)’s findings on facts and law have not been dislodged by revenue. Adverting to the plea of set aside as raised by revenue, it can be acceded as no lawful justification exists to support it. In past so many years even after re- verification, AO himself has allowed such expenditure, such orders may have been passed after the impugned assessment order was passed. Respectfully following the Hon’ble Supreme Court in the case of Radha Soami Satsang we cannot gloss over the obvious legal position that revenue by its AO has allowed the staff welfare expenditure in successive assessment years after direction of Hon’ble High Court and ITAT during re-verification proceedings of set aside assessment years. The legal propositions as canvassed by ld. Counsel deserve merit, consequently we hold that the set aside of proceedings cannot be recourses by appellate authorities in perfunctory manner and there must exist valid and justifiable reasons for subjecting the assessee to second round of proceedings. The order of ld. CIT (A) on the issue of staff welfare expenditure is upheld, this ground no. 7 of the revenue is dismissed.” 171. We have considered the rival contention and have perused the orders of the Coordinate Bench as well as the relevant provisions of the Labour Laws as cited by the ld. Counsel. Given the fact that the nature of expenditure is absolutely similar as incurred by the Assessee for the earlier years we have no hesitation in upholding the order of the CIT (A) and dismissing the ground of Revenue.” 197. Hence, respectfully following the decision of the co-ordinate Bench we dismiss ground No. 16 of the Revenue’s appeal.” We further find that the issue relating to Staff Welfare Expenses has also been decided by the Jaipur Bench of the Tribunal in assessee’s own case in case of ITA No. 612/JU/2009 for the assessment year 2005-06 dated 10.04.2017 and ITA Nos. 638/JU/2008 & 606/JU/2008 for the assessment year 2006-07 dated 24.04.2017 in favour of the assessee by deleting the disallowance under section 40A(9) of the IT Act. 164 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. We, therefore, respectfully following the decision of the co-ordinate Benches of the Tribunal, delete the disallowance of staff welfare expenses. The ground of the assessee is allowed. Ground No. 12 relates to allowing TDS credit of Rs. 5,74,27,821/- instead of Rs. 5,86,75,126/- claimed in the return of income. 45. Before us, the ld. Counsel for the assessee submitted that the Assessing Officer may kindly be directed to allow TDS credit of Rs.5,86,75,126, as claimed in the return of income as against Rs.5,74,27,821 allowed in the impugned assessment order, after verification. 46. On the other hand, the ld. D/R supported the orders of the Revenue authorities. 47. We have heard rival contentions and perused the material available on record. It is the right of the assessee to get credit of the TDS deducted by deductors against tax liability. The AO is directed to verify the claim of the assessee and allow credit for TDS as per provisions of Income-tax law. The ground is allowed for statistical purposes. Ground No. 13 relates to levying interest under section 234B of Rs. 519,54,53,048/- and interest under section 234C of Rs. 588,64,174/- instead of Rs. 425,34,666/-. 48. After hearing the arguments of both the sides, we hereby direct the AO to compute interest under section 234B and 234C in accordance with law. The ground is allowed for statistical purposes. 165 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Ground No. 14 relates to initiating penalty proceedings under section 270 r.w.s. 274 of the Act for the alleged under reporting of income. 49. The ld. Counsel for the assessee has not pressed this ground. Therefore, the same is dismissed as not pressed. 50. In the result, appeal of the assessee is partly allowed. ITA NO. 128/JODH/2022 – AY 2018-19 : 51. The assessee has raised the following grounds :- “1. That the Assessing Officer (AO) / National Faceless Assessment Centre (NEAC) erred on facts and in law in completing assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.w.s. 143(3) of the Income-tax Act ("the Act") at an income of Rs. 13669,09,83,530 as against the returned income of Rs. 10715,67,60,470. 1.1 That on the facts and circumstances of the case and in law the order dated 28.07.2022 passed by the AO/NFAC under section 143(3) read with section 144B/144C(13), having been passed beyond limitation provided in terms of Section 144C(13) read with section 153(3) of the Act, is illegal being barred by limitation, void ab initio and is liable to be quashed. 1.2 That on the facts and circumstances of the case and in law directions issued by the DRP after the period of 9 months prescribed in terms of section 144C(5) of the Act are barred by Limitation and thus the impugned Assessment order under section 143(3) read with section 144B /144C(13) of the Act passed pursuant thereto by the AO/NFAC is liable to be quashed. 2. That the AO/NFAC erred on facts and in law in completing the assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.ws 143(3) of the Act at an income of Rs. 13669,09,83,530, after making additions/disallowances to the income of Rs. 1,07,81,12,53,620 determined in the intimation issued under section 143(1)(a) of the Act, and thereby making addition and disallowance also in respect of adjustments aggregating to Rs. 65,44,93,150 made in the intimation. 2.1. That the AO/NFAC erred on facts and in law in completing the assessment under section 143(3) read with section 144C(13)/144B and order passed under section 154 r.w.s 143(3) of the Act in making addition and disallowance also in respect of adjustments aggregating to Rs. 65,44,93,150 made in the intimation issued under section 143(1)(a) of the Act, without issuing any show cause notice and without giving any opportunity of hearing 166 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. to the Appellant, which is in contravention of the scheme of faceless assessment as provided in section 144B of the Act and such an action of the AO/NFAC is against Natural justice and as such the said disallowance cannot sustain and should be deleted. 3. That the DRP/AO/ NFAC/TPO erred on facts and in law in disallowing deduction claimed by the appellant under section 80IA of the Act in respect of Captive Power Plants (CPPs) amounting to Rs. 1105,98,35,634 (in aggregate) in respect of the following undertakings, allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ("TPO'): i. by a sum of Rs. 267,61,70,414 for CPP 80MW at Chanderia Lead and Zinc Smelter; ii. by a sum of Rs. 233,92,46,797 for CPP 80MW at Zawar Mines; iii. by a sum of Rs. 604,44,18,423 for CPP 160MW at Rajpura Dariba. 3.1 That the DRP/NFAC/AO/TPO erred on facts and in law in reducing the claim under section 80IA in respect of CPP units by considering the transfer pricing of the power supplied by CPP to other manufacturing unit of the Appellant @Rs. 3.78 per unit as against Rs.8.64 to Rs.8.85 per unit considered by the Appellant being the rates at which electricity is purchased from SEBS. 3.2 Without prejudice that the DRP/NFAC/AO/TPO erred on facts and in law in reducing the claim of deduction under section 80IA in respect of CPP units to nil instead of restricting the disallowance of deduction under section 80IA to the extent of the difference between the per unit rate of Rs.8.64 to Rs.8.85 per unit as considered by the Appellant and Rs.3.78 per unit considered by the TPO/the AO as the market price. 3.3 That the DRP/AO/NFAC/TPO erred on facts and in law in not appreciating that the specified domestic transaction of transfer of power by the Captive Power Plants (‘CPP') of the Appellant was appropriately benchmarked by applying the other method' on the basis of rates at which the power is supplied by the State Electricity Boards ('SEBS') to third party consumers. 3.4 That the DRP/AO/NFAC/TPO erred on facts and in law in considering the rate at which power is supplied by the power generation companies to the State Electricity Boards ('SEBs') as an appropriate comparable for benchmarking the Specified Domestic Transaction of supply of power undertaken by the Appellant. 3.5 That the DRP/AO/NFAC/TPO erred on facts and in law in relying upon the tariff order issued by the SEBs for the purpose of undertaking benchmarking analysis without appreciating that the said rates are for supply for power-by power generation companies to SEBs for further supply to the ultimate customers and not for the consumption by SEBs themselves. 167 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 3.6 That the DRP/AO/NFAC/TPO erred on facts and in law in not appreciating that the CPP supplies continuous uninterrupted power which is critical for the operations of the appellant and is therefore, at a premium even in comparison to rates charged by SEBs for supply of power. 4. That the DRP/AO/NFAC/TPO erred on facts and in law in holding that the Appellant was not entitled to deduction u/s 80IA of the Act amounting to Rs. 96,46,574 for generation and transfer of steam which is included in the profit computed for CPPs at Chanderiya and Dariba, thus reducing the claim of the Appellant u/s 80IA by the corresponding amount in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s. 143(3) of the Act, allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ("TPO"). 4.1 That the DRP/AO/NFAC/TPO erred on facts and in taking cost of steam at NIL, when the powers of TPO are limited to determining the Arm's Length Price. 5. That the AO/ NFAC erred on facts and in law in making an addition of Rs. 91,44,54,516 to the income of the Appellant in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, allegedly in respect of allocation of HQ expenses on account of the Transfer Pricing adjustments proposed/computed in the order under section 92CA(3) passed by the TPO, in respect of the CPP units of the appellant eligible for deduction under section 80IA and in respect of the undertaking eligible for deduction under section 80IC of the Act. 5.1 That the DRP/AO/NFAC/TPO erred on facts and in apportioning Head Office expenses and depreciation on assets, on turnover basis while computing profits relatable to various tax holiday units and thus reducing the claim by a sum of: A. Rs. 3.60 Cr for CPP 80 MW Chanderiya B. Rs. 3.63 Cr for CPP 80 MW Zawar C. Rs. 4.21 Cr for CPP 160 MW Rajpura Dariba D. Rs. 3.31 Cr for 80IC unit of Hardwar Zinc Plant (HZP) E. Rs. 66.97 Cr for 80IC Unit of Pantnagar Lead and Zinc Plant (PLZP) F. Rs. 9.17 Cr for 80IC Unit of Pantnagar Silver Plant (PSMP) 5.2 The DRP/AO/NFAC/TPO erred in facts and in law in holding that the deduction u/s 80IA for the wind power plants (WPPs) was available only after apportioning HO expenses and depreciation on common assets, on turnover basis while computing profits relatable from the following WPPS, and thus reducing the deduction claimed by a sum of Rs. 55,00,000. 6. That the DRP/AO/NFAC/TPO erred on facts and in law in enhancing the income of the eligible units under section 80IC of Pantnagar Zine and Lead Plant (PLZP) and Pantnagar Silver Metal Plant (PSMP) of the Appellant 168 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. by Rs. 5605.76 Crores in the order passed under section 143(3) read with section 144B/144C(13) of the Act, allegedly on account of Transfer Pricing ("TP") adjustment disregarding the arm's length price and the methodical economic analysis and benchmarking carried out by the Assessee in the TP documentation maintained by it in terms of Section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962. 6.1 That the DRP/AO/NFAC/TPO erred on facts and in law in not appreciating that non-eligible units of the appellant, being the least complex entities, ought to have been accepted as the tested party. 6.2 That the DRP/AO/NFAC/TPO erred on facts and in law in not appreciating that comparable companies were selected in the transfer pricing documentation considering the non-eligible units as the tested party and such companies are not comparable to the eligible undertaking of the appellant. 6.3 That the DRP/AO/NFAC/TPO erred on facts and in law in making protective transfer pricing adjustment by enhancing the income of the eligible units (or 80-IC units) of the Assessee by Rs. 4670.60 crore. 6.4 That the DRP/AO/NFAC/TPO erred on facts and in law in holding that deduction u/s 80IC of the Act in respect of Pantnagar Lead & Zinc Plant (PLZP) is available by determining the income of PLZP, the eligible unit u/s 80IC, in the ratio of expenditure incurred by the PLZP and other units of the Appellant, thereby making an adjustment of Rs. 3,014,61 Crores. 6.5 That the DRP/AO/NFAC/TPO erred on facts and in law in holding that deduction u/s 80IC of the Act in respect of Pantnagar Silver Metal plant (PSMP) is to be allowed by determining the income of PSMP, the eligible unit u/s 80IC, in the Profit to Cost ratio of other eligible units of the Assessee after making disallowance of deduction in those units, thereby making an adjustment of Rs. 1,470.97 crores. 6.6 That the DRP/AO/NFAC/TPO erred on facts and in law in holding that deduction u/s 80IC of the Act in respect of Haridwar Zinc Plant (HZP) is to be allowed by determining the income of HZP, the eligible unit u/s 80IC, in the Profit to Cost ratio of other eligible units of the Assessee after making disallowance of deduction in those units, thereby making an adjustment of Rs. 185.03 crores. 6.7 That the DRP/AO/NFAC/TPO erred on facts and in law in disallowing deduction under section 80IC of the Act in respect of the eligible units under section 80IC of Pantnagar Zinc and Lead Plant (PLZP) of the Appellant; and Pantnagar Silver Metal Plant (PSMP) to the extent of Rs. 1569,46,18,917 (in aggregate), allegedly on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer ("TPO"). 6.8 That the DRP/AO/NFAC/TPO erred on facts and in law in disregarding the rule of consistency and not appreciating that the approach adopted by the Appellant has been accepted by the TPO in Appellant's own case in an earlier Assessment Year (i.e. 2013-14) and the Assessing officer in the first year of the claim by the exempt units. 169 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 6.9 That the DRP/AO/NFAC/TPO erred on facts and in law in making the adjustment by following an inappropriate approach and in the process, modifying the audited profit and loss account of the eligible units of the Appellant, which is not permitted. 6.10 That the DRP/AO/NFAC/TPO erred on facts and in law in making the adjustment inappropriately considering the costs incurred by the units as the correct representative and measure of the actual contribution/value created by such units. 6.11 That the DRP/AO/NFAC/TPO erred on facts and in law in making the adjustment holding that computation of transfer price of inter-unit transactions of PSMP unit presents exceptional difficulty and thus, considering a different approach for PSMP unit based on the Profit to Cost ratio of other eligible units of the Appellant after making disallowance of deduction in those units. 6.12 That the DRP/AO/NFAC/TPO erred on facts and in law in making an adjustment adopting an inconsistent approach of selective allocation of profits to HZP, PLZP, PSMP units and taxable units of the Appellant, without taking into consideration the contribution made by the CPP units. 6.13 That the DRP/AO/NFAC/TPO erred on facts and in law in disregarding the favourable judicial pronouncements while making the TP adjustment, including the ruling passed by the Hon'ble ITAT in Appellant's own case. 7. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Rs. 15,60,21,934 u/s 14A of the Act, both under normal provisions and for computing Book profit under MAT as per section 115JB of the Act, not appreciating the fact that the assessee has suo moto disallowed a sum of Rs. 4,36,399 u/s 14A under the normal provisions and made adjustment of Rs. 15,60,21,934 u/s 14A of the Act while computing Book profit under MAT and under the normal provisions of the act. 7.1 That the AO/ NFAC/DRP erred on facts and in law in making disallowance of Rs. 15,60,21,934 u/s 14A of the Act read with rule 8D of the Income tax Rules, 1962, both under normal provisions and for computing Book profit under MAT alleging that the Appellant was having huge investments and it is quite certain that administrative expenses such as salary, other services fees, printing and stationery, postage and stamp, telephone, bank charges, legal and professional fees, office expenses, clerical and other administrative expenses are made in acquiring, maintaining the tax free investments and earning the tax free income. 7.2 That the AO/NFAC/DRP erred on facts and in law in making disallowance of Rs. 15,60,21,934 u/s 14A of the Act read with rule 8D of the Income tax Rules, 1962, both under normal provisions and for computing Book profit under MAT alleging that the assessee has not established that the tax-free investments were made out of non-interest-bearing funds only. 8. That the AO/ NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B/144C(13) 170 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. and order passed under section 154 r.w.s 143(3) of the Act, of Rs. 2,53,65,000 u/s 35(2AB) of the Act. 8.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the required Form 3CL provided by the assessee was valid for the impugned AY 2018-19. 9. That the AO/NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of Grass Root expenses of Rs. 79,63,39,579 being expenditure on exploration which is necessary for sustaining the existing business of mining of metals holding that such expenses pertain to prospecting operations, which did not result in commercial exploitation of mines. 9.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the above grass root expenditure were not incurred in respect of mining areas where the mining license is granted and no commercial production has yet started and thus were not disallowable in terms of provisions of section 35E of the Act. 9.2 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the above grass root expenditure were held to be deductible business expenditure by the Hon'ble ITAT, Jodhpur in AY 2011-12 (in ITA No. 246&262/JODH/2017) and in AY 2012-13 (in ITA No. 404&412/Jodh/2017). 10. That the AO/ NFAC/DRP erred on facts and in law in making disallowance in the order passed under section 143(3) read with section 144B /144C(13) and order passed under section 154 r.w.s 143(3) of the Act, of staff welfare expenses of Rs. 22,75,94,336, being the expenses towards canteen facility, school activities, sport club, scholarship, other club, etc. holding them to be not allowable u/s 40A(9) of the Act; as well as holding them to be in the nature of corporate social responsibility expenses disallowable in terms of Explanation 2 of section 37 of the Act. 10.1 That the AO/NFAC/DRP erred on facts and in law in not appreciating that the above expenses were incurred in the course of the business by the appellant pursuant to statutory or contractual obligation and were held to be deductible business expenditure in the earlier years. 11. That the AO/NFAC erred in facts and in law in incorrectly levying interest under section 234B and under section 234C of the Act. 12. That the AO/NFAC erred on facts and in law in initiating penalty proceedings under section 270A r.w.s. 274 of the act for the alleged under- reporting of income. The Appellant craves leave to add, amend, alter or vary, any of the aforesaid grounds of appeal before or at the time of hearing of the appeal and consider each of the grounds as without prejudice to the other grounds of appeal.” 171 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 52. Grounds raised in this appeal i.e. ITA No. 128/Jodh/2022 are common to grounds raised in ITA No. 127/Jodh/2022 which have been adjudicated herein above. Accordingly, the grounds in this appeal are being decided as under :- Ground nos. 1, 1.1 & 1.2 relate to assessment order barred by limitation. 53. We have decided identical grounds in Para 6 hereinabove for the asstt. year 2017-18. Therefore, for the same reasoning, this ground of the assessee is allowed. Ground Nos. 2 & 2.1 relate to adjustments in intimation issued under section 143(1)(a) of the Act retained without issuing show cause notice – illegal and bad in law. 54. On identical grounds, we have restored the issue to the file of AO for the assessment year 2017-18 in Para 10 hereinabove. Therefore, on the same basis we allow this ground of the assessee for statistical purposes. Ground Nos. 3-3.6 relate to disallowance of deduction claimed under section 80IA of the Act in respect of Captive Power Plants (CPPs) in respect of the undertakings at Chanderia Lead and Zinc Smelter, Zawar Mines and Rajpura Dariba, on the basis of the order passed under section 92CA(3) of the Act by the Transfer Pricing Officer (‘TPO’). 55. We have adjudicated identical ground in Para 14 hereinabove for the assessment year 2017-18 in favour of the assessee. Hence, on the basis of decision arrived therein, we allow this ground of the assessee. 172 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. Ground Nos. 4-4.1 relate to disallowance of deduction u/s 80IA of the Act for generation and transfer of “Steam” which is included in the profit computed for CPPs at Chanderiya and Dariba. 56. This ground of the assessee is covered by the decision of the Coordinate Bench of the Tribunal in assessee’s own case in ITA No. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 and in ITA Nos. 179 & 184/Jodh/2014 dated 04.09.2017 for the assessment year 2008-09. Therefore, respectfully following the decisions the Coordinate Bench and taking a consistent view of the matter, we have decided this ground in Para 18 hereinabove in favour of the assessee. This ground of the assessee is allowed. Ground Nos. 5-5.2 relate to allocation of head office expenses to eligible units: 57. This ground of the assessee is covered by the decision of the Coordinate Benches of the Tribunal in assessee’s own case in ITA No. 638 & 606/JU/2008 dated 24.04.2017 for the assessment year 2006-07, in ITA No. 612/JU/2009 dated 10.04.2017 for the assessment year 20005-06, and in ITA No. 184/Jodh/2012 for the assessment year 2008-09 & ITA No. 246/Jodh/2017 for the assessment year 2011-12 dated 04.09.2017. Therefore, respectfully following the decisions the Coordinate Bench and taking a consistent view of the matter, we have decided this ground in Para 22 hereinabove. This ground of the assessee is partly allowed. Ground Nos. 6-6.13 relate to enhancing the income of the eligible units under section 80 IC of the Act in respect of Pantnagar Zinc and Lead Plant (PLZP) and Pantnagar Silver Metal Plant (PSMP) allegedly on account of Transfer Pricing (“TP”) adjustment. 173 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 58. We have adjudicated this ground of the assessee in ITA No. 127/Jodh/2022 for the assessment year 2017-18 in Para 26 hereinabove. In the light of above discussion and following our order hereinabove, we allow this ground of the assessee. Ground Nos. 7-7.2 relates to disallowance under section 14A of the Act, both under normal provisions and for computing Book profit under MAT as per section 115JB of the Act. 59. This ground of the assessee is covered in favour of the assessee in assessee’s own case in ITA No. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 and in ITA No. 538 & 556/Jodh/2014 dated 04.09.2017 for the assessment year 2008-09 as discussed in ITA No. 127/Jodh/2022 for the assessment year 2017-18 in Para 34 hereinabove. In the light of above discussion and following our order hereinabove, we allow this ground of the assessee. Ground Nos. 8-8.1 relates to disallowance of deduction under section 35(2AB) of the Act. 60. Similar issue has come up before the Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404 & 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the matter was adjudicated against the assessee. Therefore, respectfully following the decision of the Coordinate Bench of the Tribunal, we dismiss this ground of the assessee for the assessment year 2017-18 as discussed in Para 37 hereinabove. This ground of the assessee is dismissed. Ground Nos. 9-9.2 relate to disallowance of Grass Root expenses. 174 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. 61. We find that similar issue of Grass Root Expenses is covered by the decision of Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404/Jodh/2017 and 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012-13 wherein the Tribunal following its earlier order in assessee’s own case in ITA No. 246/Jodh/2017 dated 04.09.2017 for the assessment year 2011-12 allowed the ground of the assessee. Thus, taking a consistent view above, we have allowed the identical grounds for the assessment year 2017-18. Hence, on the basis of the decision arrived in assessment year 2017-18 in Para 40, we allow the claim of the assessee. The ground of the assessee is allowed. Ground No. 10-10.1 relates to disallowance of staff welfare expenses being the expenses towards canteen facility, school activities, sport club, scholarship, other club , etc. 62. This ground of the assessee is covered in favour of the assessee by the decision of Jodhpur Bench of the Tribunal in assessee’s own case in ITA Nos. 404/Jodh/2017 and 412/Jodh/2017 dated 22.02.2018 for the assessment year 2012- 13 wherein the Tribunal following its earlier order in assessee’s own case in ITA No. 3/Jodh/2015 dated 04.09.2017 for the assessment year 1999-2000 deleted the disallowance under section 40A(9) of the IT Act. We further find that the issue relating to Staff Welfare Expenses has also been decided by the Jaipur Bench of the Tribunal in assessee’s own case in case of ITA No. 612/JU/2009 for the assessment year 2005-06 dated 10.04.2017 and ITA Nos. 638/JU/2008 & 606/JU/2008 for the assessment year 2006-07 dated 24.04.2017 in favour of the assessee by deleting the disallowance under section 40A(9) of the IT Act. 175 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. We, therefore, respectfully following the decisions of the co-ordinate Benches of the Tribunal, delete the disallowance of staff welfare expenses as discussed in Para 44 hereinabove. The ground of the assessee is allowed. Ground No. 11 of the assessee relates to levying of interest under section 234B and 234C of the Act. 63. After hearing the arguments of both the sides, we hereby direct the AO to compute interest under section 234B and 234C in accordance with law. The ground is allowed for statistical purposes. Ground No. 12 relates to initiating penalty proceedings under section 270 r.w.s. 274 of the Act for the alleged under reporting of income. 64. The ld. Counsel for the assessee has not pressed this ground. Therefore, the same is dismissed as not pressed. 65. In the result, appeals of the assessee are partly allowed. Order pronounced in the open court on 15/11/2022. Sd/- Sd/- ¼ jkBkSM+ deys'k t;arHkkbZ ½ ¼lanhi xkslkbZ½ (RATHOD KAMLESH JAYANTBHAI) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 15/11/2022. Das/ 176 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur. vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- M/s. Hindustan Zinc Limited, Udaipur. 2. izR;FkhZ@ The Respondent- NFAC Delhi/ACIT C-2, Udaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] tks/kiqj@DR, ITAT, Jodhpur. 6. xkMZ QkbZy@ Guard File {ITA No. 127 & 128/Jodh/2022} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 177 ITA Nos. 127 & 128/JODH/2022 Hindustan Zinc Limited, Udaipur.