JCIT (OSD), New Delhi V. M/s. DCM Shriram Consolidated Ltd., New Delhi

ITA 1836/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7342 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: V RAJ KUMAR
• Keywords: Depreciation; Opportunity of being heard; Rule of consistency; Deemed export
• Section: 80HHC; 37(1); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1836/DEL./2016 (ASSESSMENT YEAR : 2002-03) M/S. BHARAT HEAVY ELECTRICALS LTD., VS. DCIT, CO.CI RCLE 2(1), CORPORATE FINANCE, BHEL HOUSE, NEW DELHI. SIRI FORT, NEW DELHI-110 049. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE AND SHRI V. RAJ KUMAR, ADVOCATE REVENUE BY : SMT. APARNA KARAN, CIT DR DATE OF HEARING : 16.10.2018 DATE OF ORDER : 15.01.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. BHARAT HEAVY ELECTRICALS LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FIL ING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 27.01.2006 PASSED BY LD. CIT (APPEALS)-V, NEW DELHI ON THE GR OUNDS INTER ALIA THAT :- 1(A) THAT THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE DISALLOWANCE OF THE CLAIM OF PROVISIONS AMOUNTING TO RS.322.83 (RS.327.22 4.39) CRORES AS PER SCHEDULE 18, TREATING THE SAME AS NOT ASCERTAINED L IABILITIES. ITA NO.1836/DEL./2016 2 1(B) THAT WITHOUT PREJUDICE TO THE ABOVE, THE LEARN ED CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLD ING THE DISALLOWANCE OF THE CLAIM OF PROVISIONS FOR LIQUIDA TED DAMAGES AMOUNTING TO RS.42.12 CRORES AS PER SCHEDULE 18, TR EATING THE SAME AS NOT ASCERTAINED LIABILITIES (REFER TO PARA NO.3 PAGE NO.1&2 OF DCIT ORDER DATED 25.02.2005) (REFER TO PARA NO.2 PAGE NO.2 OF CIT (A) ORDER DATE D 27.01.2006) 2. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S OF THE CASE IN UPHOLDING THE DISALLOWANCE OF INTEREST PAID ON INCOME TAX AMOUNTING TO RS.L,81,17,628. (REFER TO PARA NO.3 PAGE NO.3 OF CIT(A) ORDER DATED 27.01.2006) 3.A THAT THE LEARNED CIT (A) HAS ERRED IN LAW AND O N FACTS OF THE CASE IN CONFIRMING THE DEDUCTION U/S 80-O TO RS .1,29,16,182 INSTEAD OF RS.1,57,50,000. 3.B THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FAC TS OF THE CASE IN UPHOLDING THE DEDUCTION OF ESTIMATED AMOUNT OF RS.94,46,058 ON ACCOUNT OF EXPENSES INCURRED TO EA RN THE INCOME FROM THE AMOUNT ELIGIBLE FOR DEDUCTION U/S 8 0-0. 3.C THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FAC TS OF THE CASE IN NOT CONSIDERING THE FULL AMOUNT OF FOREIGN EXCHANGE REALIZED IN RESPECT OF FEES FOR TECHNICAL SERVICES ELIGIBLE FOR DEDUCTION U/S 80-O. (REFER TO PARA NO.4 PAGE NO.2 &3 OF DCIT ORDER DATE D 25.02.2005) (REFER TO PARA NO.5 PAGE NO.3 OF CIT(A) ORDER DATED 27.01.2006) 4(A) THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND O N FACTS OF THE CASE IN NOT ALLOWING DEDUCTION OF RS.48,19,71,4 36 UNDER SECTION 80HHC BUT RESTRICTING THE SAME TO RS.36,80, 68,813. 4(B) THAT THE LEARNED CIT( A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE ADDITION TO TOTAL TURNOVE R ITEMS WHICH ITA NO.1836/DEL./2016 3 ARE NOT PART OF TURNOVER FOR THE PURPOSE OF COMPUTI NG CLAIMS U/S 80HHC. 4(C) THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND O N FACTS OF THE CASE IN UPHOLDING THE REDUCTION OF THE PROFIT O F THE COMPANY BY 90% LEASE RENTAL, OTHER OPERATIONAL INCOME, OTHE R RECEIPTS AND INTEREST INCOME, WHICH FORM PART OF BUSINESS IN IND IA AND AS ELIGIBLE FOR BENEFIT U/S 80HHC. 4(D) THE LEARNED CIT( A ) ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE DEDUCTION OF THE CARRIED FORWARD B USINESS LOSS FROM THE PROFIT OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. (REFER TO PARA NO.5 PAGE NO.3 TO 6 OF DCIT ORDER DA TED 25.02.2005) (REFER TO PARA NO.6 PAGE NO.4 OF CIT(A) ORDER DATED 27.01.2006) 5(A) THAT HE LEARNED CIT( A ) ERRED IN LAW AND ON F ACTS OF THE CASE IN CONFIRMING THE DEDUCTION OF RS.8,21,59,986 AGAINST THE CLAIM OF THE COMPANY FOR RS.9,82,63,507/- U/S 80IA. 5(B) THAT THE LEARNED CIT( A ) ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE DEDUCTION OF THE BROUGHT FORW ARD LOSS FROM CLAIM OF THE COMPANY U/S 80IA. 5(C) THAT THE LEARNED CIT( A ) ERRED IN LAW AND ON FACTS OF THE CASE IN NOT ALLOWING CLAIM PERTAINING TO AY 2001-02 IN RESPECT OF THOSE PROJECTS FOR WHICH PROFIT WAS COMPUTED FOR TH E PURPOSE OF DEDUCTION U/S 80IA IN AY 2001-02. (REFER TO PARA 6 PAGE NO.6-8 OF DCIT ORDER DATED 25 .02.2005) (REFER TO PARA NO.7 PAGE NO.5-6 OF CIT(A) ORDER DAT ED 27.01.2006) 6. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN. AND ON FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF THE AMOUNT OF RS.14,32,000 ON ACCOU NT OF DEPRECIATION INCLUDED IN PRIOR PERIOD EXPENDITURE. (REFER TO PARA NO.7 PAGE NO.8 OF DCIT ORDER DATED 2 5.02.2005) (REFER TO PARA NO.8 PAGE NO.6-7 OF CIT(A) ORDER DAT ED 27.01.2006) ITA NO.1836/DEL./2016 4 7. THAT THE LEARNED CIT( A ) ERRED IN LAW AND ON FA CTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF AN EXPENDITU RE OF RS.12,52,000 ON ACCOUNT OF VILLAGE DEVELOPMENT AND SOCIAL WELFARE EXPENSES UNDER 20 POINT PROGRAMME. (REFER TO PARA NO.8 PAGE NO.8 OF DCIT ORDER DATED 2 5.02.2005) (REFER TO PARA NO.9 PAGE NO.8 OF CIT(A) ORDER DATED 27.01.2006) 8. THAT THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN NOT ALLOWING DEDUCTION ON ACCOUNT OF TH E ADDITIONS MADE IN AY 1997-98 TO 1999-2000 IN RESPECT OF INTER EST ON LINE OF CREDIT EXTENDED TO APSEB WHICH WAS NOT RECEIVED. (REFER TO PARA NO.10 PAGE NO.8 OF CIT(A) ORDER DATE D 27.01.2006) 9. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE NOT ALLOWING THE AMOUNT PAID TO THE FOLLOW ING :- I/ NETHRAJOTHI RS.2500 II/ VISUALLY IMPAIRED WOMEN ASSOCIATION - RS.5000 (REFER TO PARA NO.L1 PAGE NO.8-9 OF CIT(A) ORDER DA TED 27.01.2006) 10. THAT THE LEARNED DCIT HAS ERRED IN LAW AND ON FACTS OF THE CASE IN INITIATING PENALTY PROCEEDINGS U/S 271( 1)(C) OF INCOME TAX ACT. (REFER TO PAGE NO.9 OF DCIT ORDER DATED 25.02.2005) (REFER TO PARA NO. 13 PAGE NO.9 OF CIT(A) ORDER DAT ED 27.01.2006). 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS A PUBLIC SECT OR UNDERTAKING ENGAGED IN THE MANUFACTURING OF POWER GENERATION EQ UIPMENT AND OTHER HEAVY INDUSTRIAL ELEMENTS. ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FRO DEDUCTION OF ENTIRE AMOUN T OF PROVISION OF ITA NO.1836/DEL./2016 5 RS.327,22,64,000/- BY FOLLOWING ASSESSMENT YEAR 200 0-01 ON THE GROUND THAT THERE IS NO EVIDENCE TO SHOW THAT THESE PROVISIONS ARE IN THE NATURE OF ASCERTAINED LIABILITIES. AO ALSO MADE DISALLOWANCE OF CLAIM OF PROVISION OF LIQUIDATED DAMAGES MADE BY THE ASSESSEE AMOUNTING TO RS.42.12 CRORES AS PER SCHEDULE 18 ON THE SAME GROUND THAT THE PROVISION IS NOT AN ASCERTAINED LIA BILITY. AO ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 8 0-O OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) TO THE T UNE OF 30% OF THE NET RECEIPT ON THE GROUND THAT THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT TO ASCERTAIN THE COMPONEN TS OF DIRECT / INDIRECT EXPENSES TO EARN RECEIPTS COVERED U/S 80-O OF THE ACT NOR ANY SUCH DETAILS HAVE BEEN FURNISHED. 3. AO ALSO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF EXPENSES INCURRED TO EARN THE INCOME FRO M THE AMOUNT ELIGIBLE FOR DEDUCTION U/S 80-O OF THE ACT AND ESTI MATED THE AMOUNT TO THE TUNE OF RS.94,46,058/-. ASSESSEES CLAIM FO R DEDUCTION U/S 80HHC OF RS.48,19,71,436/- HAS BEEN RESTRICTED BY T HE AO TO THE TUNE OF RS.36,80,68,813/- BY COMPUTING THE PROFITS OF THE BUSINESS AFTER ADJUSTING CARRY FORWARD BUSINESS LOSSES. AO ALSO REDUCED THE PROFIT OF THE COMPANY BY 90% OF LEASE RENTAL, OTHER OPERATIONAL INCOME, OTHER RECEIPTS AND INTEREST INCOME WHICH FO RMED PART OF THE BUSINESS IN INDIA AND IS ELIGIBLE FOR BENEFIT U /S 80HHC OF THE ITA NO.1836/DEL./2016 6 ACT. AO ALSO COMPUTED CARRY FORWARD BUSINESS LOSSE S FROM THE PROFIT OF THE BUSINESS TO COMPUTE THE DEDUCTION U/S 80HHC. ASSESSEES CLAIM FOR DEDUCTION U/S 80IA TO THE TUNE OF RS.9,82,63,507/- HAS BEEN ALLOWED TO THE EXTENT OF RS.8,21,59,986/- BY CALCULATING THE OWN PROFIT AFTER SETTING OF BROU GHT FORWARD LOSSES AND DEDUCTION WAS ALLOWED @ 30% OF THE RESULTING PR OFIT. AO ALSO DISALLOWED THE AMOUNT OF RS.14,32,000/- CLAIMED BY THE ASSESSEE ON ACCOUNT OF DEPRECIATION INCLUDED IN PRIOR PERIO D EXPENDITURE ON THE GROUND THAT THE ASSESSEE IS FOLLOWING MERCANTIL E METHOD OF ACCOUNTING AND TO PROVE THIS FACT THAT ASSESSEE HAS NOT PLACED ANY MATERIAL TO SHOW THAT SUCH EXPENSES HAVE CRYSTALLIZ ED DURING THE YEAR UNDER ASSESSMENT. 4. AO ALSO MADE DISALLOWANCE OF RS.12,52,000/- CLAI MED BY THE ASSESSEE ON ACCOUNT OF VILLAGE DEVELOPMENT AND SOCIAL WELFARE EXPENSES UNDER 20 POINT PROGRAMME VIDE SCHEDULE 16 OF THE PROFIT & LOSS ACCOUNT AS THE ASSESSEE HAS FAILED TO PROVE THE BUSINESS PURPOSE OF SUCH EXPENDITURE. AO HAS DISALLOWED DED UCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF ADDITION MADE IN AYS 1997- 98 TO 1999-00 IN RESPECT OF INTEREST ON LINE OF CRE DIT EXTENDED TO APSEB WHICH WAS NOT RECEIVED. AO HAS ALSO NOT ALLO WED THE AMOUNT PAID BY THE ASSESSEE TO NETRAJOTHI AND VISUA LLY IMPAIRED ITA NO.1836/DEL./2016 7 WOMEN ASSOCIATION TO THE TUNE OF RS.2,500/- & RS.5, 000/- RESPECTIVELY. 5. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL. FEE LING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUNDS NO.1(A) & 1(B) 7. UNDISPUTEDLY, THE ASSESSEE COMPANY HAS CLAIMED D EDUCTION OF RS.3,27,22,64,000/- WHICH INCLUDES FOR PROVISION FOR NON- MOVING STOCK AMOUNTING TO RS.4,38,91,000/- AND PROV ISION FOR LIQUIDATED DAMAGES TO THE TUNE OF RS.42,11,93,000/- BEING THE PROVISIONS DEBITED TO P&L ACCOUNT AS PER SCHEDULE 1 1 AND CLAIMED THE SAME TO BE DEDUCTED WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE BY CLAIMING THE SAME AS ASCERTAINED LIABIL ITY. HOWEVER, AO AS WELL AS CIT (A) HAVE DISALLOWED THE SAME ON T HE GROUND THAT THESE PROVISIONS ARE NOT IN THE NATURE OF ASCE RTAINED LIABILITY BY FOLLOWING AY 2000-01. ITA NO.1836/DEL./2016 8 8. UNDISPUTEDLY, ASSESSEE COMPANY IS MAINTAINING IT S ACCOUNT IN MERCANTILE SYSTEM. IT IS ALSO NOT IN DISPUTE TH AT THE ASSESSEE COMPANY IS A GOVERNMENT OF INDIA UNDERTAKING AND IT S ACCOUNTS ARE AUDITED BY STATUTORY AUDITOR AND CONTROLLER & AUDIT OR GENERAL (C&AG). IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HA S CLAIMED THAT THE LIABILITY WHICH HAS ACCRUED THOUGH TO BE DISCHARGED AT A FUTURE DATE HAS TO BE DEDUCTED WHILE WORKING OUT THE PROFIT AND GAINS OF THE BUSINESS BEING ASCERTAINED LIABILITY. 9. HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS VS. CIT (2000) 245 ITR 428 RELIED UPON BY THE ASSESSEE COMPANY DEALT WITH THE ISSUE IN CONTROVERSY BY HOLDING THAT WHEN A BUSINESS LIABILITY HAS DEFINITELY ARISING IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MADE HAVE TO BE QUANTIFIED AND HAVE TO BE DISCHARGED IN A FUTURE DATE. OPERAT IVE PART OF THE RATIO OF THE JUDGMENT IS EXTRACTED FOR READY PERUSA L AS UNDER :- THE LAW IS SETTLED: IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUC TION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE T O BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. WHAT SH OULD BE CERTAIN IS THE INCURRING OF THE LIABILITY IT SHO ULD ALSO BE CAPABLE OF BEING ESTIMATED WITH REASONABLE CERTA INTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBL E. IF THESE REQUIREMENTS ARE SATISFIED, THE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRAESENTI THOUG H IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MA KE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILIT Y SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN. ITA NO.1836/DEL./2016 9 APPLYING THE PRINCIPLES LAID DOWN IN METAL BOX CO. OF INDIA LTD. V. THEIR WORKMEN [1969] 73 ITR 53 (SC) AND CALCUTTA CO. LTD. V. CIT [1959137 ITR 1(SC ), IT MUST BE HELD THAT THE PROVISION MADE BY THE ASSE SSEE- COMPANY FOR MEETING THE LIABILITY INCURRED BY IT UN DER THE LEAVE ENCASHMENT SCHEME PROPORTIONATE WITH THE ENTITLEMENT EARNED BY EMPLOYEES OF THE COMPANY, INCLUSIVE OF THE OFFICERS AND THE STAFF, SUBJECT TO THE CEILING ON ACCUMULATION AS APPLICABLE ON THE RELEVA NT DATE, WOULD BE ALLOWABLE AS DEDUCTION OUT OF THE GR OSS RECEIPTS FOR THE ACCOUNTING YEAR DURING WHICH THE PROVISION WAS MADE FOR THE LIABILITY THE LIABILITY WAS NOT A CONTINGENT LIABILITY THE HIGH COURT WAS NOT RIGHT IN TAKING A VIEW TO THE CONTRARY. 10. WHEN THE BUSINESS LIABILITY OF THE ASSESSEE COM PANY FOR MAKING PROVISIONS OF RS.327,22,64,000/- IS NOT DISP UTED AND ACCOUNT OF THE ASSESSEE COMPANY ARE AUDITED BY STAT UTORY AUDITOR AND C&AG, THE DEDUCTION CANNOT BE DISALLOWED MERELY ON THE GROUND THAT THE LIABILITY HAS TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. SO, IN VIEW OF THE MATTER, THIS ISSUE IS REQUIRED TO BE SET ASIDE TO THE AO TO DECIDE AFRESH IN THE LIGHT O F THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN BHARAT EAR TH MOVERS (SUPRA). SO, GROUNDS NO.1(A) & 1 (B) ARE DETERMINE D IN FAVOUR OF THE ASSESSEE COMPANY FOR STATISTICAL PURPOSES. GROUND NO.2 11. GROUND NO.2 IS DISMISSED HAVING NOT BEEN PRESSE D DURING THE COURSE OF ARGUMENTS. ITA NO.1836/DEL./2016 10 GROUNDS NO.3.A, 3.B & 3.C 12. ASSESSEE HAS CLAIMED DEDUCTION OF RS.1,57,50,00 0/- COMPUTED @ 30% OF THE GROSS RECEIPT OF RS.5.25 CROR ES ELIGIBLE FOR DEDUCTION U/S 80-O OF THE ACT, WHICH HAS BEEN REDUC ED TO RS.1,29,16,182/- ON THE GROUND THAT THE ASSESSEE HA S NOT FURNISHED DETAIL OF DIRECT AND INDIRECT EXPENSES TO EARN SUCH RECEIPTS HOWEVER, IT IS THE CASE OF THE ASSESSEE THAT ITS CL AIM HAS BEEN DULY CERTIFIED BY STATUTORY AUDITORS ATTACHED WITH THE R ETURN OF INCOME FOR PERUSAL OF THE AO. ASSESSEE ALSO CLAIMED THAT EVEN DURING ASSESSMENT PROCEEDINGS, THE DETAILS OF THE CLAIM HA VE BEEN GIVEN TO THE AO AND EVEN THEN THE AO HAS ALLOWED DEDUCTION F OR ESTIMATED EXPENSES ON PRO-RATA BASIS. 13. WE ARE OF THE CONSIDERED VIEW THAT WHEN THE CLA IM OF THE ASSESSEE U/S 80-O IS DULY CERTIFIED BY STATUTORY AU DITOR AND HAS BEEN PERUSED BY THE AO, THE AO HAS ERRED IN ESTIMATING T HE EXPENDITURE SO AS TO COMPUTE THE DEDUCTION U/S 80-O OF THE ACT. IN THESE CIRCUMSTANCES, THIS ISSUE IS ALSO SET ASIDE TO THE AO TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE BY IDENTIFYING THE EXPENDITURE ON ACTUAL BASIS FOR DED UCTION AGAINST THE GROSS RECEIPTS FOR THE PURPOSE OF SECTION 80-O OF THE ACT. ASSESSEE IS ALSO DIRECTED TO FURNISH RELATABLE DETA ILS TO THE AO TO ITA NO.1836/DEL./2016 11 DECIDE THE ISSUE IN CONTROVERSY. SO, GROUNDS NO.3. A, 3.B & 3.C ARE DETERMINED IN FAVOUR OF THE ASSESSEE FOR STATISTICA L PURPOSES. GROUNDS NO.4(A), 4(B), 4(C) & 4(D) 14. THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.4 8,19,71,436/- U/S 80HHC HAS BEEN RESTRICTED TO RS.36,80,68,813/-. AO ALSO NOTICED THAT THE ASSESSEE HAS NOT INCLUDED SCRAP SA LES RECEIPTS FROM SALE OF SURPLUS STOCK IN THE TOTAL TURNOVER. AO AL SO REDUCED 90% OF THE RECEIPTS BY WAY OF LEASE RENTAL AND OTHER OPERA TION INCOME INCLUDING OTHER RECEIPTS AND INTEREST INCOME TO COM PUTE THE DEDUCTION U/S 80HHC OF THE ACT AND AO HAS ALSO SET OFF CARRY FORWARD BUSINESS LOSSES FOR THE COMPUTATION OF BUSI NESS PROFIT FOR THE PURPOSE OF DEDUCTION U/S 80HHC OF THE ACT. AO ALSO DECLINED THE DEDUCTION FOR DEEMED EXPORT ON THE GROUND THAT NO FOREIGN EXCHANGE HAS BEEN EARNED OUT OF THOSE TRANSACTIONS. 15. SO FAR AS QUESTION OF INCLUDING THE SALE OF SCR AP, SURPLUS STORES AND SALES-TAX FROM TOTAL TURNOVER IS CONCERN ED, THIS ISSUE HAS ALREADY BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY T HE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO.2753/DEL/1998 & ORS . IN AY 1991-92 ONWARDS IN ASSESSEES OWN CASE, WHEREIN THE COORDI NATE BENCH OF THE TRIBUNAL DIRECTED THE AO TO RECOMPUTE THE DEDUCTION EXCLUDING THE SALE OF SCRAP, SURPLUS STORES AND SAL ES-TAX FROM TOTAL TURNOVER. SO, IN VIEW OF THE MATTER, SALE OF SCRAP , SURPLUS STORES ITA NO.1836/DEL./2016 12 AND SALES-TAX ARE ORDERED TO BE EXCLUDED FROM THE T OTAL TURNOVER AND AO TO RECOMPUTE THE DEDUCTION ACCORDINGLY. 16. SO FAR AS QUESTION OF DEDUCTION OF PROFIT OF 90 % ON ACCOUNT OF LEASE RENTAL, OTHER OPERATIONAL INCOME, OTHER RE CEIPTS AND INTEREST INCOME BY AO/CIT(A) IS CONCERNED, IT IS UNDISPUTED FACT THAT PARTIAL RELIEF IN THIS REGARD HAS BEEN GIVEN TO THE ASSESSEE ON SAME ITEMS BY LD. CIT (A) IN AY 2004-05, COPY OF ORDER I S AVAILABLE AT PAGES 229 TO 238 OF THE PAPER BOOK. SO, WE ARE OF THE CONSIDERED VIEW THAT WHEN THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO IS DIRECTED TO DECIDE THIS ISSUE A FRESH BY FOLLOWING THE DECISION RENDERED BY THE LD. CIT (A) IN AY 2004 -05 BY FOLLOWING THE RULE OF CONSISTENCY BY PROVIDING AN O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, GROUNDS NO.4(A), 4(B), 4(C) & 4(D) ARE DETERMINED IN FAVOUR OF THE ASSESSE E FOR STATISTICAL PURPOSES. GROUNDS NO.5(A), 5(B) & 5(C) 17. AO ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSE E U/S 80IA TO THE TUNE OF RS.8,21,59,986/- AS AGAINST CLAIMED DEDUCTION OF RS.9,82,63,507/- CALCULATING THE PROFIT AFTER SETTI NG OFF BROUGHT FORWARD LOSSES AND ALLOWED THE DEDUCTION @ 30% OF T HE RESULTING PROFITS. AO ESTIMATED THE DEDUCTION OF CARRY FORWA RD LOSSES TO REDUCE THE CLAIM ON ASSUMPTIVE BASIS. ITA NO.1836/DEL./2016 13 18. UNDISPUTEDLY, PROFITS OF THE ASSESSEE COMPANY F ROM THE ELIGIBLE PROJECTS FROM THE PREVIOUS YEARS HAVE NOT BEEN CONSIDERED. NO DOUBT, THERE WAS OVERALL BUSINESS LOSSES IN THE ASSESSEE COMPANY BUT ELIGIBLE PROJECTS U/S 80IA GAINED THE P ROFITS FROM THE PROJECTS. IT IS ALSO NOT IN DISPUTE THAT IN AY 200 1-02, ASSESSEE COMPANY WAS ENTITLED FOR DEDUCTION U/S 80IA WHICH W AS NOT GIVEN AS THERE WAS LOSS UNDER THE HEAD BUSINESS OR PRO FESSION. IT APPEARS THAT AO HAS ONLY CONSIDERED THE LOSS OF AY 2001-02 BUT HAS NOT CONSIDERED THE PROFIT OF THE PROJECT COMPUT ED U/S 80IA IN RESPECT OF AY 2001-02. SO, WE ARE OF THE CONSIDERE D VIEW THAT AO IS TO RECOMPUTE THE CLAIM OF THE ASSESSEE U/S 80IA KEEPING IN VIEW THE ACTUAL FIGURES AS PER AUDITED ACCOUNTS OF THE A SSESSEE. SO, GROUNDS NO.(A), (B) & (C) ARE DETERMINED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES. GROUND NO.6 19. GROUND NO.6 IS DISMISSED HAVING NOT BEEN PRESSED DU RING THE COURSE OF ARGUMENTS. GROUND NO.7 20. AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON ACCOUNT OF VILLAGE DEVELOPMENT AND OTHER SOCIAL WELFARE EXPENS ES ON THE GROUND THAT THESE EXPENSES ARE BEYOND ITS OBJECTIVE S. UNDISPUTEDLY, THESE EXPENSES WERE INCURRED BY THE A SSESSEE IN ITA NO.1836/DEL./2016 14 ORDER TO EXECUTE THE 20 POINT PROGRAMME PURSUED BY THE GOVERNMENT OF INDIA THROUGH FUNDS DONATED BY THE GO VERNMENT COMPANIES AS A PART OF SOCIAL RESPONSIBILITY. WHEN THE CORPORATE SOCIAL RESPONSIBILITY (CSR) IS RECOGNISED ACTIVITIE S OF THE COMPANIES, ALL THESE EXPENSES ARE ALLOWABLE EXPENSE S. PRIOR TO FINANCE (NO.2) ACT OF 2014 FROM 01.04.2015, ALL THE SE EXPENSES INCURRED ON CSR WERE ALLOWABLE FOR DEDUCTION IRRESP ECTIVE OF THE QUALIFICATION CONTAINED FOR ALLOWABILITY OF THE BUS INESS EXPENDITURE IN SECTION 37(1) OF THE ACT. MOREOVER, SUCH EXPENS ES HAVE BEEN ALLOWED BY THE CIT (A) ITSELF IN ASSESSEES OWN CAS E FOR AYS 2004- 05 AND 2005-06 BY RELYING UPON THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN HINDUSTAN PETROLEUM CORPOR ATION LTD. VS. DCIT 98 TAXMAN 33 . SO, THE AO IS DIRECTED TO ALLOW THESE EXPENSES AS DEDUCTION BY FOLLOWING THE RULE OF CONS ISTENCY AS SIMILAR EXPENSES HAVE ALREADY BEEN ALLOWED BY THE R EVENUE ITSELF IN AYS 2004-05 AND 2005-06. SO, GROUND NO.7 IS DET ERMINED IN FAVOUR OF THE ASSESSEE. GROUND NO.8 21. IT IS THE CLAIM OF THE ASSESSEE THAT IT HAS EXT ENDED A LINE OF CREDIT TO APSEB IN RESPECT OF SUPPLY MADE TO VIJAYA WADA TPS ON WHICH SIMPLE INTEREST WAS PAID AND WAS TREATED AS I NCOME ALTHOUGH THE MEMORANDUM OF UNDERSTANDING (MOU) PROVIDED FOR CHARGING ITA NO.1836/DEL./2016 15 OF COMPOUND INTEREST. ASSESSEE CLAIMED TO HAVE EXP LAINED ALL THESE FACTS IN SCHEDULE 19 OF THE ANNUAL ACCOUNTS A TTACHED WITH THE INCOME-TAX RETURN BUT AO/CIT(A) HAVE NOT ALLOWED TH E DEDUCTION ON ACCOUNT OF ADDITION MADE IN AYS 1997-97 & 1999-0 0 QUA THE INTEREST ON LINE OF CREDIT EXTENDED TO APSEB WHICH WAS NOT RECEIVED. LD. AR FOR THE ASSESSEE CONTENDED THAT T HIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN AYS 1997- 98 & 1998-99 IN ITA NOS.1833 & 1834/DEL/2006 ORDER DATED 11.03.2 011, COPY AVAILABLE AT PAGES 185 TO 193 OF THE PAPER BOOK, AN D AY 1999-00 IN ITA NO.1835/DEL2006 ORDER DATED 26.10.2017, COPY AVAILABLE AT PAGES 194 TO 207 OF THE PAPER BOOK. 22. HOWEVER, LD. CIT (A) HAS ALSO NOT DEALT WITH TH E ISSUE AND DISPOSED OF THE GROUND BY STATING THAT THIS GROUND IS ACADEMIC IN NATURE. SO, IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE IS REQUIRED TO BE SET ASIDE TO AO T O DECIDE AFRESH IN THE LIGHT OF THE DECISION TAKEN BY THE REVENUE IN E ARLIER YEARS. SO, GROUND NO.8 IS DETERMINED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES GROUND NO.9 23. AO/CIT (A) HAVE DISALLOWED THE CLAIM OF THE ASS ESSEE U/S 80G OF THE ACT. NOW, IT IS CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT THIS CLAIM IS ALLOWABLE IN ENTIRETY U /S 37(1) OF THE ACT ITA NO.1836/DEL./2016 16 IN VIEW OF THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE CITED AS HPCL VS. DCIT (SUPRA). W HEN INCURRENCE OF EXPENDITURE MADE BY THE ASSESSEE BY W AY OF DONATION TO CARRY OUT THE WELFARE ACTIVITIES FOR NETHRAJOTHI AND VISUALLY IMPAIRED WOMEN ASSOCIATION IS NOT IN DISPUTE, THE S AME ARE ALLOWABLE EXPENSES U/S 37(1) OF THE ACT. IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNA L IN HPCL VS. DCIT (SUPRA) IN FAVOUR OF THE ASSESSEE. SO, WE ORD ER TO ALLOW THE AMOUNT OF RS.2,500/- AND RS.5,000/- INCURRED BY THE ASSESSEE COMPANY ON NETHRAJOTHI AND VISUALLY IMPAIRED WOMEN ASSOCIATION RESPECTIVELY. SO, THIS GROUND IS DETER MINED IN FAVOUR OF THE ASSESSEE. GROUND NO.10 24. GROUND NO.10 BEING PREMATURE NEEDS NO SPECIFIC FINDINGS. 25. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF JANUARY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 15 TH DAY OF JANUARY , 2019 TS ITA NO.1836/DEL./2016 17 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-V, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.