Paschim Gujarat Vij Co.Ltd., Baroda V. The Addl.CIT.,Range-4, Baroda

ITA 2082/AHD/2012

AI Insights

The case involves multiple appeals by Paschim Gujarat Vij Company Ltd. against various orders of the Income Tax Officer concerning the assessment years 2008-09 to 2012-13 and 2014-15. The primary issues revolved around the treatment of capital grants and subsidies, depreciation claims, and the classification of certain incomes as business income or income from other sources. The ITAT's decision highlighted the need for a consistent approach in handling similar issues across different assessment years, often restoring matters to the Assessing Officer for re-evaluation based on precedents and specific legal provisions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125365 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 16-09-2012
• Other Referred Cases: P. J. Chemicals Ltd. vs. CIT, Sawhney Steel (P) Ltd. vs. CIT, GETCL vs. CIT, Odisha Power Generation Corporation vs. ACIT, Gujarat Energy Transmission Corporation Ltd. vs. ACIT, Madhya Gujarat Vij Company Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Keywords: Capital asset; Business income; Depreciation; Cost of acquisition; Tax effect; Revised return; Set aside; Capital Gains
• Section: 12; 28; 271(1)(c); 2; 11; 115JB; 43; 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o . 17 10 /A h d /2 01 2 ( A ss es s me n t Y e a r : 20 0 8 - 0 9) Pa sc h i m G uj ar a t V i j C o mpa n y Ltd . , Sa r da r P a te l V id yu t B ha v a n , R a c e Co ur s e C ir cle , B ar od a Vs .I nc o me Ta x Of f ic e r , War d- 4 ( 2 ) , B ar od a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) I .T .A . N o . 20 82 /A h d /2 01 2 ( A ss es s me n t Y e a r : 20 0 9 - 1 0) Pa sc h i m G uj ar a t V i j C o mpa n y Ltd ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a V s. A d dl. C o mm i s s i on e r o f I n c o m e Ta x , R a n ge -4 , B ar o d a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) I .T .A . N o . 3 2 3/ A h d /2 0 1 5 ( A s s es s m en t Ye ar s : 2 0 1 0- 11 ) Pa sc h i m G uj ar a t V i j C o mpa n y Ltd ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a V s. A s s t. C o m mi s s i one r o f I n c o me Ta x , C ir cl e - 4 , B ar o d a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) I .T .A . N o . 9 8 /A hd / 2 0 15 ( A s s es s m en t Ye ar s : 2 0 1 0- 11 ) D e p ut y C o m m i ss io ne r o f I nc o m e Ta x , C ir cl e - 2( 1) ( 2) , B ar o d a V s. M/ s . Pa sc hi m Gu j a r a t Vij C o m p a n y Lt d ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 2 - I .T .A . N o . 3 2 4/ A h d /2 0 1 5 ( A s s es s m en t Ye ar s : 2 0 1 1- 12 ) Pa sc h i m G uj ar a t V i j C o mpa n y Ltd ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a V s. A s s t. C o m mi s s i one r o f I n c o me Ta x , C ir cl e - 4 , B ar o d a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) I .T .A . N o . 9 9 /A hd / 2 0 15 ( A s s es s m en t Ye ar s : 2 0 1 1- 12 ) D e p ut y C o m m i ss io ne r o f I nc o m e Ta x , C ir cl e - 2( 1) ( 2) , B ar o d a V s. M/ s . Pa sc hi m Gu j a r a t Vij C o m p a n y Lt d ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) I .T .A . N o . 15 21 /A h d /2 01 6 ( A s s es s m en t Ye ar s : 2 0 1 2- 13 ) Pa sc h i m G uj ar a t V i j C o mpa n y Ltd ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a V s. A s s t. C o m mi s s i one r o f I n c o me Ta x , C ir cl e - 4 , B ar o d a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) I .T .A . N o . 3 0 0/ A h d /2 0 1 8 ( A s s es s m en t Ye ar s : 2 0 1 4- 15 ) Pa sc h i m G uj ar a t V i j C o mpa n y Ltd ., Sa r da r Pa tel V id yu t B ha v a n , R ac e C o ur se C ir cle , B ar od a V s. A s s t. C o m mi s s i one r o f I n c o me Ta x , C ir cl e - 2 ( 1) ( 2) , B ar o d a [ P A N N o . AA D C P1 45 3C ] (Appellant) .. (Respondent) ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 3 - I .T .A . N o . 2 9 3/ A h d /2 0 1 8 ( A s s es s m en t Ye ar s : 2 0 1 4- 15 ) A s s is ta n t C o mm i ss i on e r of I nc o m e Ta x, C ir cl e - 2( 1) ( 2) , V a d o da r a V s. M/ s . Pa sc hi m Gu j a r a t Vij C o m p a n y Lt d ., Pa sc h i m G uj ar a t V i j S ev a Sa da n , O f f. N a na Ma v a M a in R o a d, L a x m i na g a r , R a jk o t [P A N N o .AA D C P1 45 3C] (Appellant) .. (Respondent) Appellant by : Shri Mehul K. Patel, A.R. Respondent by: Shri Kamlesh Makwana, CIT D.R. D a t e of H ea r i ng 22.08.2023 D a t e of P r o no u n ce me nt 19.09.2023 O R D E R PER BENCH:- These bunch of appeals have been filed by both the Assessee and the Revenue against the orders passed by the Ld. Commissioner of Income Tax (Appeals)-III & 2 (in short “Ld. CIT(A)”), Baroda / Vadodara vide orders dated 14.05.2012, 08.06.2012, 07.10.2014, 15.10.2014, 22.03.2016 & 17.11.2014 passed for the Assessment Years 2008-09 to 2012-13 & 2014-15. Since common issues for consideration are arising for the Assessment Years under consideration before us, all the above mentioned appeals are being disposed of by way of a common order. ITA No. 1710/Ahd/2012 (A.Y. 2008-09)(Assessee’s Appeal):- 2. The assessee has raised the following grounds of appeal:- “1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the reduction of the amount of Capital Grants & Subsidies and Consumers’ Contribution aggregating to Rs.4,52,84,97,000/- ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 4 - from the total cost of the Plant & Machinery for the purpose of allowing depreciation and has thereby confirmed the restriction of the appellant’s claim of depreciation to Rs.96,64,65,332/- as against Rs.1,56,20,72,882/- claimed by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions Rs.1,000/- on account of expenditure booked under the head penalty expenses without considering the fact that the penalties were not for contravention of any law. 3.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has dismissed the ground relating to the initiation of penalty proceedings under section 271(1)(c) of the I T Act. 4.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal.” Ground No. 1:- Reduction of capital grants from cost of Plant & Machinery for depreciation 3. The brief facts in relation to this ground of appeal are that during the course of assessment proceedings, the Assessing Officer observed that the assessee had received substantial capital grants during the year under consideration. While the Assessing Officer agreed with the contention of the assessee that such capital grant are capital in nature, however, he held that in view of Explanation 10 to Section 43(1) of the Act the assessee should have reduced the capital grants from the cost of capital assets to arrive at the actual cost of assets on which depreciation should have been claimed by the assessee. Accordingly, the Assessing Officer reduced the aggregate of capital subsidy, grant and consumers’ contribution received by the assessee amounting to Rs. 45284.97 lakhs from the cost of Plant & Machinery on a pro-rata basis. The Assessing Officer worked out the ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 5 - allowable depreciation at Rs. 96,64,65,332/- as against the depreciation of Rs. 1,56,20,72,882/- claimed by the assessee. 4. In appeal before Ld. CIT(A), the assessee submitted that such subsidy / capital grant has not been given to the assessee to meet the actual cost of asset, but the subsidy / capital grant has been given to the assessee as incentive to electrify the backward areas. Accordingly, the assessee’s case is covered by the Supreme Court decision in the case of P. J. Chemicals Ltd. 121 CTR 201. However, the Ld. CIT(A) dismissed the appeal of the assessee with the following observations:- “5.3 I have considered the facts of the case as also the observation of the AO. It is undisputed fact that the capital grant and consumer contribution is towards cost of capital assets as described in the balance sheet itself. Since these grants are towards cost of capital assets, the issue is squarely covered by the decision of Hon’ble Supreme Court in the case of Sawhney Steel(P) Ltd. This fact is undisputed. Therefore there is no error in the findings of the AO. In fact, if appellant’s submission is accepted, the whole amount would be liable to tax during the year as the appellant’s practice of offering 10% of the yearend balance as income is not sustainable under the provisions of I.T. Act,1961. This ground is therefore dismissed.” 5. Before us, the Counsel for the assessee submitted that the Assessing Officer has followed the order of Madhya Gujarat Vij Company Ltd. for A.Y. 2006-07. However, it was submitted that in the case of Madhya Gujarat Vij Company Ltd., the ITAT has set-aside this issue / ground to the Assessing Officer in ITA No. 1709/Ahd/2012 vide order dated 28.02.2022. Accordingly, it was submitted that the issue may be set-aside to the file of the Assessing Officer in line with the order passed by the Ahmedabad Tribunal in the case of Madhya Gujarat Vij Company Ltd. refer to above. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 6 - 6. It would be useful to reproduce the relevant extract of the decision of the ITAT Ahmedabad for ready reference:- “3. Brief facts relating to the issue are that the Assessing Officer (A.O.) observed that in schedule 4 to the Balance Sheet as on 31.03.2008, the assessee company had reserves comprising the following deferred government grants, subsidies and contributions: Particulars RESERVES As on 31.03.2008 Rs. in lakh Government Grants Subsidies Subsidies towards of capital assets 7637.86 Grant towards cost of Capital Assets 224.88 Consumer Contributions Consumer Contributions 2308.68 Consumer contributions towards capital assets 13573.85 Total 23745.27 Therefore, the A.O. asked the assessee to explain the nature of Government's Grants- Capital and why only 10% of this has been written back and shown as income of Rs. 2382.99 lakh under the head 'Other income' in the schedule -20 to the audited profit and loss account. The A.O. also asked the assessee to explain the nature of Consumers' contributions and why only 10% of this had been back as income of Rs. 256.52 lakh under the head 'Other income' in the schedule -20 to the audited profit and loss account. The assessee submitted before the A.O. that government disbursed the financial assistance in the form of government grants, for the infrastructural development in the field of electricity distribution, for certain under developed area and class of consumers. The benefit from the development of the same accrued to the company over a longer period of time and hence, it had written back every year @10% of the year end balance, as per the accounting policy of the company. In respect of the consumers' contribution, the assessee submitted that the company has developed infrastructure of electrical line and cable network systems to provide the electricity at the consumers' doorstep and as per the rules framed by the Gujarat Electricity Regulatory Commission, the company recovered the amount towards the same from new consumers while releasing the ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 7 - connection to such customers. The benefit from the development of the same accrued to the company over a longer period of time and hence it had written back every year @10% of the year end balance. The A.O. accepted the contention of the assessee that capital grants from the Government and Consumers' contribution are capital in nature, but held that the treatment of 10% transferred to P & L account every year is not in accordance with the provisions of the I.T. Act, 1961. The A.O. held that the assessee company should have reduced the same from the capital asset to arrive at the actual cost. Accordingly, the A.O. reduced the aggregate of capital subsidy, grant and consumers' contribution received of Rs. 26384.78 lakh from the cost of plant and machinery on a pro-rata basis. The A.O. also worked out the allowable depreciation at Rs. 48,00,29,924/- as against the depreciation ofRs. 81,48,93,308/- claimed by the assessee. 3.1 The Ld. CIT(A) upheld by the order of the A.O. following the order of the Ld. CIT(A) in the case of the assessee itself for assessment year 2006-07. 4. Before us, Ld. Counsel for the assessee pointed out that the appeal of the assessee for assessment year 2006-07 stood adjudicated by the ITAT in ITA No. 2583/Ahd/2010 vide order dated 09.11.2016 wherein the issue has been restored back to the A.O. to adjudicate afresh after verifying apportioned amount of granted relating to different assets. Our attention was drawn to the relevant findings of the ITAT at Para 17 of the order is as under: 17. We have heard the rival contentions and perused the material on record. Through this ground assessee has challenged the order of ld. CIT(A) sustaining the disallowance of depreciation at Rs.10,84,81,976/- by observing that capital subsidy and grant received are to be reduced from fixed asset and depreciation to be allowed on the remaining balance. We observe that the Government gives grant/subsidy to the holding company and then it is allocated to the assessee which is one of the subsidiary company and further such subsidy are not granted to actually to meet the cost but are granted as an inclusive of rural economically backward unviable areas. Assessee received subsidies on different schemes viz. Rural Electrification and ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 8 - Tribal area Electrification and the assets cannot be bifurcated into Rural/Tribal area etc. 17.1 There is no dispute to the fact that the grants received from the Government are capital in nature but they have not been given specifically for acquiring a particular asset. In such situation provision of section 43(1) Explanation 10 of the Act squarely applies for the treatment of such capital grant. Relevant provisions of section 43(1) of the Act read as under :- 43. In sections 28 to 41 and in this section, unless the context otherwise requires (1) "actual cost" means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met96 directly or indirectly by any other person or authority: [Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967, [but before the 1st day of March, 1975,] and is used otherwise than in a business of running it on hire for tourists, exceeds twenty- five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees.] [Explanation 10.--Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee : Provided that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee.] ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 9 - 17.2 Proviso to Explanation -10 to section 43(1) contemplates that subsidy or grant or reimbursement which cannot be relatable to the assets acquired then grant amount to be apportioned in the assets at the same proportion as such assets bears all the assets. We further observe that ld. Assessing Officer has given following finding for application of explanation -10 to section 43(1) by observing as follows:- 4.2 The contention of the assessee that Consumer's Contribution and Capital Grant are capital in nature is found tenable, but its treatment, of 10% thereof transferred to P & L account every year is not in accordance with the provisions of the Act. As envisaged in explanation 10 to section 43(1), where a portion of the cost an asset acquired by the assessee has been met directly or indirectly by the Central Government or State Govt. or any Authority established under any law, or by any other person, in the form of subsidy or grant or reimbursement then in a case where the subsidy is directly relatable to the asset, such subsidy shall not be included in the actual cost of the assets. In a case, where such subsidy or Grant or reimbursement, is of such nature that, it cannot be directly relatable to any particular assets, so much of the amount which bears to the total subsidy or reimbursement or Grant the same proportion as such asset bears to all the assets in respect of which or with reference to which such grant or subsidy or reimbursement is received shall no be included in the actual cost of that assets to the assessee. 4.3 In view of the clear provisions of the Act as stated supra and the assessee himself have admitted that the subsidy and grant received are towards Capital assets, the assessee should have reduced the same from the Capital asset to arrive at the actual cost. However the assessee has failed to do so and also not furnished the details of fixed assets in respect of which the subsidy and grants have been received. Hence and inference is drawn that the Govt. grants/subsidy and consumers' contribution are relatable to fixed assets of plant & machinery. The assessee has claimed depreciation on Plant & Machinery as under: ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 10 - 17.3 We further observe that similar type of issue came up before the Tribunal in the case of GETCL(supra) which was adjudicated by the Co-ordinate Bench by observing as follows :- 20. We find that in the instant case, the CIT(A) held that excess depreciation claimed on account of capital grant comes to Rs.18.93 crores being 15% of Rs.176,62,04,718/-, i.e. Rs.26,49,30,708/- minus Rs.17,20,37,655/-, which amounts to Rs.9,28,93,053/-, and 15% of Rs.6427.94 lakhs amounting to Rs.964.191 lakh. The submissions of the assessee before us is that the uniform rate of 15% adopted by the CIT(A) is not justified. As per provisions of section 43(1} of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. The DR could not point out any mistake in the above submission of the assessee. which we find is in accordance with law. We, therefore, set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO for adjudication afresh after verifying the proportionate amount of grant relating to different asset, and applying the actual rate of depreciation which relate to these assets. Thus, this ground of appeal of the assessee is allowed for statistical purpose. 17.4 In the light of the decision of the Co-ordinate Bench discussed above and in the light of proviso to Explanation -10 to section 43(1) of the Act we find it justified to restore the issue back to the file of Assessing Officer to adjudicate afresh after verifying the apportioned amount of grant relating to different assets and calculate the depreciation at the rates applicable to such assets. Needless to mention that all necessary details will be provided by the assessee to the Assessing Officer in order to calculate the correct amount of depreciation, Ld. Assessing Officer to provide proper opportunity of being heard should be given to the assessee. Accordingly, this ground of assessee is allowed for statistical purposes. 5. Ld. D.R. fairly agreed with the same. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 11 - 5.2 In view of the above, since the Ld. CIT(A) has followed the order of the Ld. CIT(A) in the case of the assessee for assessment year 2006- 07 while treating the entire capital subsidy grant and consumers contribution as capital in nature thus reducing the cost of capital asset and as a consequence the claim of depreciation thereon, and which issue has been restored back to the A.O. by the ITAT with the direction to determine the proportionate amount of grant relating to each asset, the said decision will apply to the present case also following which the issue in the present case also is restored back to the A.O. to be decided in accordance with the direction of the ITAT in assessment year 2006-07.” 7. In view of the above decision of ITAT Ahmedabad in which this issue has been restored back to the Assessing Officer by the ITAT with the direction to determine the proportionate amount of grant relating to each asset, the present issue is also restored back to the Assessing Officer to decide the matter in accordance with the direction of ITAT for A.Y. 2008- 09. 8. Accordingly, Ground No. 1 of the assessee’s appeal is allowed for statistical purposes. Ground No. 2:- Disallowance of penalty expenses 9. During the course of assessment, the Assessing Officer observed that the assessee has debited a sum of Rs. 1,000/- on account of penalty on statutory liabilities and therefore, he added the same to the total income of the assessee. 10. In appeal, Ld. CIT(A) confirmed the addition by observing that the assessee has not explained the nature of penalty levied for statutory liabilities. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 12 - 11. Before us, the Counsel for the assessee submitted that this penalty was levied on account of delay in deposit of statutory liabilities and was not on account of contravention of any law. Accordingly, the same may not be added to the income of the assessee. 12. In view of the above submissions of the assessee that the penalty was only on account of delayed payment of statutory levies and not on account of any infraction of law and further Department has also not brought forth any argument to demonstrate that this amount represented penalty for infraction / contravention for any law, this amount is directed to be deleted. 13. In the result, Ground No. 2 of the assessee’s appeal is allowed. 14. Before us the Counsel for the assessee submitted that he shall not pressing for the Ground Nos. 3 & 4, and accordingly, the same are dismissed as not pressed. 15. In the result, the appeal of the assessee in ITA No. 1710/Ahd/2012 is partly allowed for statistical purposes for A.Y. 2008-09. ITA No. 2082/Ahd/2012 (A.Y. 20009-10)(Assessee’s Appeal):- 16. The assessee has taken the following grounds of appeal:- “1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.28,90,00,000/- on account of Capital Grants & Subsidies and Consumers’ Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) erred in law and facts has confirmed the additions Rs.65,58,000/- on account of difference in ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 13 - the balance lying in the account of Gujarat Energy Transmission Corporation Ltd., on account of energy sales. 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions with respect to the interest income from staff loans & advances amounting to Rs.1,13,70,000/- as income from Other Sources as against the Business Income. 4.0 The learned Commissioner of Income Tax (Appeals) erred in law and facts has set aside the additions with respect to the Income from Gain on Sale of Fixed Assets amounting to Rs.1,47,88,000/- with the direction to re-verify the claim in terms of the provisions of section 50 of the I T Act. 5.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal.” Ground No. 1:- Addition @15% of capital grants and subsidies (Rs. 28,90,00,000/-) 17. We observed that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2008-09 in ITA No. 1710/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 1 of the assessee’s appeal for A.Y. 2008-09. 18. In the result, Ground No. 1 of the assessee’s appeal is allowed for statistical purposes. Ground No. 2:- Difference on account of Gujarat Energy Transmission Corporation for energy sales (Rs. 65,58,000/-) 19. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer observed that there was an un- reconciled difference of Rs. 65.58 lakhs pertaining to energy bills with ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 14 - respect to electricity consumption raised by the assessee on Gujarat Energy Transmission Corporation (in short “GETC”). The Assessing Officer observed that accounting of the said bills was done in A.Y. 2009-10 and the balance with GETC was reconciled in A.Y. 2010-11. Accordingly, the Assessing Officer held that since the assessee is following the mercantile system of accounting, the aforesaid amount is liable to be brought to tax within the impugned assessment year itself. Accordingly, the Assessing Officer added the amount of Rs. 65.58 lakhs to the total income of the assessee. 20. In appeal, the Ld. CIT(A) dismissed the appeal of the assessee with the following observations:- “6.3 I have considered the appellant’s submission and the AO’s order. I agree with the AO that this amount of Rs. 65.58 lacs is the income of the appellant for AY 2009-10 and it should have been accounted for in this year itself. This represents the electricity sold by the appellant to GETCO which has been accounted for by GETCO but not accounted for by the appellant in the AY 2009-10. Hence this ground of appeal is dismissed.” 21. The assessee is in appeal before us against the aforesaid order passed by the Ld. CIT(A). Before us, the Counsel for the assessee submitted that the dispute is only regarding the year of taxability and there is no tax effect as the assessee company is assessed at the same rate of taxation. 22. In response Ld. D.R. relied on the observations made by the Ld. CIT(A). We observe that in the case of PCIT vs. Adani Infrastructure and Developers Pvt. Ltd. in Revenue Tax Appeal No. 01 of 2021 the Gujarat High Court held that there can be no addition for income offered in ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 15 - subsequent year if the tax effect remains the same. In this case the Gujarat High Court observed that whether professional fee received by the assessee was offered to tax in the subsequent year, no addition could be made on account of said fee during the relevant assessment year, as the same would amount to double taxation, which would be contrary to the provisions of law. In view of the above decision, since in the instant case it is an undisputed fact that the necessary reconciliation was carried out in the immediately succeeding year and the corresponding un-reconciled amount was offered to tax in the subsequent year, respectfully following the decision of Hon’ble Gujarat High Court on this issue, in our considered view, this addition is liable to be deleted. Accordingly, the matter is being restored to the file of Ld. AO to verify that this amount has been offered to tax in the subsequent assessment year. 23. In the result, Ground No. 2 of the assessee’s appeal is allowed for statistical purposes. Ground No. 3:- Interest from staff loan treated as “income from other sources” instead of “business income” (Rs. 1,13,70,000/-) 24. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer treated the interest income received by the assessee from staff loan and advances amounting to Rs. 1,13,70,000/- under the head “Income from Other Sources” under Section 56 of the Act. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 16 - 25. In appeal, the assessee submitted that such interest on loans received by the assessee is ordinary business income and cannot be treated as income from other sources, since the employees are retained by the assessee to run the business of the company and accordingly the loans given to them is out of such business expediency and the interest earned thereon is business income. The Ld. CIT(A) dismissed the appeal of the assessee with the following observations:- “7.2 In have considered the appellant’s submissions. The appellant is not in the business of money lending. Hence interest income from staff loan has been rightly taxed under the head “Other Sources”. But the interest earned from suppliers/other parties during the ordinary course of business is an income derived from the business of the appellant and hence this is directed to be taxed as income from business.” 26. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). Before us, the Counsel for the assessee submitted that the issue is covered in favour of the assessee in view of the order of the Hon’ble High Court of Orissa at Cuttack in the case of Odisha Power Generation Corporation dated 11.03.2022 in ITA No. 01 of 2015. Further, the Counsel for the assessee submitted that similar issue has been set-aside by the ITAT Ahmedabad to the Assessing Officer in the case of Gujarat Energy Transmission Corporation Ltd. in ITA No. 2855/Ahd/2015 vide order dated 27.07.2022. Accordingly, in view of the aforesaid order, it was requested that the matter may be restored to the file of the Assessing Officer for carrying out the necessary verification and passing appropriate orders as per law. It would be useful to reproduce the relevant extracts of the order of ITAT Ahmedabad in the case of Gujarat Energy Transmission Corporation Ltd. (supra) for ready reference:- ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 17 - “10. Ground No.2:- Confirming income as “other income” instead of business income interest on loans to staff and other advances to the tune of Rs. 1,79,18,000/- has been challenged before us by the assessee. 11. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee with all his fairness submitted before us that the identical issue has been decided by the Coordinate Bench in the case of Gujarat Energy Transmission Corpn. Ltd. in ITA No. 3441/Ahd/2015 for A.Y. 2012-13. On this aspect he has drawn our attention to Page 8 of the Paper Book filed before us. However, by and under the order passed by the Hon’ble Orissa High Court in the case of Odisha Power Generation Corporation Ltd. vs. ACIT, Circle-2(2), Bhubaneswar & ors. in ITA Nos. 1, 2, 3 of 2015 and ITA Nos. 24 & 25 of 2009 the issue has been decided otherwise. A copy of the same has also been submitted before us by the Ld. Counsel appearing for the assessee. 12. On the other hand, the Ld. D.R. relied upon the order passed by the authorities below. 13. We have heard the rival submissions made by the respective parties, and we have also perused the relevant materials available on record and also gone through the order passed by the Hon’ble Orissa High Court in the case of Odisha Power Generation Corporation Ltd. (supra). It appears that the Hon’ble Orissa High Court while dealing with the issue the Court was pleased to observe as follows: “12. The Assessee offered an explanation regarding interest income earned by it, from advances given to its employees as well as provision of electricity and water charges collected from water through its employees and contractors for facilities in the township, receipt from transit hostel, sale of scrap, insurance claim etc. The facilities were given to its employees for better conditions of employment. This was to improve the overall efficiency of the undertaking which is devoted to the single purpose of generation of power. The Court, therefore, has no difficulty in accepting the submission of the Assessee that the interest received on advances and loans given to its employees are receipts in normal course of carrying its business and should be considered as income derived from its essential business ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 18 - activities. Likewise, the late payment by GRIDCO for the electricity supplied, is sought to be made up by GRIDCO by issuing bonds on which the Assessee earns interest. This also therefore, has a direct nexus with the essential business activity of the Assessee.” In that view of the matter we find it fit and proper to direct the Ld. AO to consider the issue afresh upon examining the same in regard to the head of income upon considering the relevant evidence in the light of the observation made by the Hon’ble High Court as mentioned hereinabove. We, thus, pass order accordingly. This ground is allowed for statistical purposes.” 27. In light of the aforesaid order passed by ITAT Ahmedabad on identical set of facts the matter is being restored to the file of the Assessing Officer to consider the issue afresh after taking into consideration the relevant evidence and thus, pass orders accordingly as per law. 28. Accordingly, Ground No. 3 of the assessee’s appeal is allowed for statistical purposes. Ground No.4:- Taxing gain on sale of assets as income from other sources instead of business income (Rs. 1,47,88,000/-) 29. The issue under consideration with respect to this ground of appeal is whether the Assessing Officer erred in facts and in law in treating the gain on sale of fixed assets as “income from other sources” for the purposes of the Income Tax Act. Before us, the Counsel for the assessee submitted that gain on sale of fixed asset is governed by Section 50 of the Act and hence taxable as “business income”. Before us, the Counsel for the assessee relied on the decision in the case of Madhya Gujarat Vij Company Ltd. in ITA No. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 19 - 2080/Ahd/2012 vide order dated 18.08.2023, wherein the ITAT decided this issue in favour of the assessee on identical set of facts. 30. It would be useful to reproduce the relevant extracts of the ITAT ruling for ready reference:- “17.3 Regarding the income on the sale of fixed assets, we note that there is a direct provision under section 50 of the Act which reads as under: Special provision for computation of capital gains in case of depreciable assets. 50. Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following modifications :— (1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of assets during the previous year, exceeds the aggregate of the following amounts, namely :— (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 20 - such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets; (2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets: 17.4 The assets which have gone into the block of assets is eligible for depreciation as provided under section 32 of the Act. However, once the block ceases to exist for any reason and any gain arises then the same shall be treated as income under the head capital gain only. There is a specific and direct provision under section 50 of the Act dealing with the situation enumerated above. Accordingly, we do not find any infirmity in the finding of the learned CIT(A). Thus, in view of the above detailed discussion, the grounds of appeal raised by the assessee are hereby partly allowed for statistical purposes.” 31. In view of the decision of ITAT Ahmedabad on identical issue, Ground No. 4 of the assessee’s appeal is allowed. However, during the course of arguments we observed that there is some discrepancy between the figure of capital gains on sale of fixed assets as per the revised return of income filed by the assessee and the figure taken by the Assessing Officer in the assessment order. Therefore, while deciding this issue, the Assessing Officer is directed to verify the correct figure of gain on sale of fixed asset in the assessee’s set of facts. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 21 - 32. In the result, Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. 33. Ground No. 5 of the assessee’s appeal is general and does not require any specific adjudication. 34. In the result, the appeal of the assessee for A.Y. 2009-10 is allowed for statistical purposes. ITA No. 323/Ahd/2015(A.Y. 2010-11)(Assessee’s Appeal):- 35. The assessee has raised the following grounds of appeal:- “1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.43,26,55,500/- on account of Capital Grants & Subsidies and Consumers' Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.1,95,42,000/- on account of the balance lying in the Inter unit Balance account and balance in remittance in transit. 3.0 The learned Commissioner of Income Tax (Appeals) erred in law and an facts has confirmed the additions of prior period expenses amounting to Rs.46,67,000/- without appreciating the fact that such expenditure crystallized during the year and that the same has never been claimed in earlier years. 4.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions with respect to the interest income from staff loans & advances amounting to Rs.1,03,66,000/- as Income from Other Sources as against the Business Income. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 22 - 5.0 The learned Commissioner of Income Tax (Appeals) erred in law and facts has set aside the additions with respect to the Income from Gain on Sale of Fixed Assets amounting to Rs.68,56,000/- with the direction to re-verify the claim in terms of the provisions of section 50 of the I T Act. 6.0 The appellant craves leave to add to alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal” Ground No.1:- Addition @15% of capital grants and subsidies (Rs. 36,31,35,350/-) 36. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2009-10 in ITA No. 2082/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 1 of the assessee’s appeal for A.Y. 2009-10. 37. In the result, Ground No. 1 of the assessee’s appeal is allowed for statistical purposes. Ground No.2:- Addition on account of difference in inter-unit balance and remittance in transit (Rs. 3,58,30,000/-) 38. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer made addition of Rs. 3,58,30,000/- on account of balance lying in the inter-unit balance account and balance in remittance in transit. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 23 - 39. In appeal, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:- “6.3 I have considered the appellant’s submission and the AO’s observation. I agree with the AO that this amount of Rs. 3,58,30,000/- is the income of the appellant for AY 2010-11 and it should have been accounted for in this year itself. The appellant is following mercantile system of accounting and hence, all the receipts are required to be accounted for in the year in which these have accrued. Hence, the AO’s action is upheld and this ground of appeal is dismissed.” 40. Before us, the Counsel for the assessee submitted that the un- reconciled balance in respect inter-unit transfer and remittance in transit has been reconciled in the next and the subsequent assessment years. Therefore, the dispute is only regarding the year of taxability and there is no tax effect as the assessee company is assessed to tax at the same rate of taxation. 41. We observe that we have already decided this issue in Ground No. 2 of the assessee’s appeal in ITA No. 2082/Ahd/2012 for A.Y. 2009-10. Accordingly, this issue is being restored to the file of Assessing Officer to carry out the necessary verification whether the aforesaid un-reconciled balance amount to Rs. 3.58 crores has been offered to tax by the assessee in the subsequent years. 42. In the result, the Ground No. 2 of the assessee’s appeal is allowed for statistical purposes. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 24 - Ground No. 3:- Addition of prior period expenses (Rs.7,95,64,000/-) 43. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer observed that the assessee had claimed prior period expenses of Rs. 79.64 lakhs and the same were not added in the computation of income. During the course of assessment the assessee submitted that looking into huge volume and wide area network of the assessee company, the prior period expenditure is accounted in this year due to misclassification / error and omission of previous years. The assessee submitted that the aforesaid prior period expenses cannot be disallowed since the aforesaid expenses have not been claimed by the assessee in any of the previous assessment years. However, the Assessing Officer held that it is a settled law that prior period expenses cannot be claimed by the assessee during the impugned assessment year and accordingly, he added back an amount of Rs. 7,95,64,000/- to the income of the assessee on account of prior period expenses. 44. In appeal, Ld. CIT(A) confirmed the addition with the following observations:- “7.3 I have considered the appellant's submission and the AO's observation. The explanation filed by the appellant before the AO was that these expenses were not accounted in earlier year due misclassification/error and omission in the previous years. Thus, the appellant had accepted before the AO that these expenses had accrued in earlier years but could not be claimed in those years due to mistake/omission. Now, during the appellate proceeding, the appellant has changed its explanation and claimed that these expenses crystallized during the current year. But, no evidence or detail in ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 25 - support of this new claim has been filed. Thus, it is evident that these expenses have not accrued during the current year and hence, cannot be allowed in this year. Hence, the AO’s action is upheld and this ground of appeal is dismissed.” 45. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). At the outset, the Counsel for the assessee submitted that the assessee during the impugned year under consideration has also offered prior period income and only the net prior period expenses have been claimed. Therefore, while the Department has conveniently taxed the prior period income during the impugned assessment year, however, prior period expenses have been disallowed. Further, the assessee placed reliance in the case of Gujarat Energy Transmission Corporation Ltd. in ITA No. 2855/Ahd/2015 vide order dated 27.07.2022, in which the Ahmedabad Tribunal set-aside the issue to the file of Assessing Officer for carrying out necessary verification. Accordingly, it was requested that the matter may be set-aside to the file of Assessing Officer in light of the aforesaid decision, to carry out the necessary verification. 46. Before deciding the issue it would be useful to reproduce the relevant extracts of the Ahmedabad Tribunal order ruling in the case of Gujarat Energy Transmission Corporation Ltd. (supra), for ready reference:- “14. Ground No.3:- Disallowance of prior period expenses of Rs. 8,79,06,000/- is under challenged before us. 15. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the Coordinate Bench in ITA No. 3441/Ahd/2015 for A.Y. 2012-13 has set-aside the identical issue to the file of the Ld. AO. On this aspect he has drawn our attention to Page 11 of the Paper Book filed before us. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 26 - 16. We have heard the rival submissions made by the respective parties, and we have perused the relevant materials available on record. 17. We find that Coordinate Bench on the identical issue disposed of the ground by remitting the same to the file of the Ld. AO to adjudicate de novo with the following observation: “12. During the course of assessment, the Assessing Officer noticed that assessee company has shown prior period income of Rs. 130.05 lacs after adjustment of prior period expenses for Rs. 408.01 lacs. On query, the assessee has explained that all expenditure booked under this head crystallized in the hands of the company only during the year under consideration therefore same expenditure cannot be added back. The Assessing Officer has not accepted the submission of the assessee stating that assessee was following mercantile system of accounting in which the expenses related to the prior period were not an allowable expenses. Therefore, the prior period expenses amounting to Rs. 408.01 lacs was disallowed and added to the total income of the assessee. 13. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee stating that assessee has not made any submission showing that the prior period income was crystallized in the previous year relevant to the assessment year under consideration. 14. During the course of appellate proceedings before us, the ld counsel has submitted that similar issue in the case of Group concern Gujarat Urja Vikas Nigam Ltd. was adjudicated by the Co-ordinate Bench of the ITAT vide ITA No. 996/Ahd/2011 for assessment year 1988-89 dated 31 st May, 2017 and the issue was remanded back to the file of Assessing Officer for deciding afresh in the light of the decision of Hon’ble High Court in the case of PCIT vs. Adani Enterprises Ltd. in Tax Appeal No. 573 of 2016. The ld. Departmental Representative was fair enough not to controvert these undisputed facts and findings of Co-ordinate Bench. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 27 - 15. With the assistance of ld. representatives, we have gone through the decision of Co-ordinate Bench of ITAT in the case of Group concern Gujarat Urja Vikas Nigam Ltd. vs. ACIT for assessment year 1988-89 wherein similar issue has been set aside to the file of Assessing Officer for adjudicating afresh according to the direction laid down by the Hon’ble Gujarat High Court in the case of Adani Enterprises Ltd. in Tax Appeal No. 573 of 2016. The relevant part of the decision of the Co- ordinate Bench in the Gujarat Urja Vikas Nigam Ltd. supra as cited above is reproduced as under:- “6. We have carefully heard the rival submissions and perused the orders of the authorities as well the case-laws referred. The assessee is aggrieved by the disallowance of prior period expenses of Rs.53.53crores as per Ground No.4 of its appeal. The disallowance has been made on the ground that the expenses under various heads as noted in the assessment order pertained to earlier years and the assessee which is following system of accounting should have made provision for expenses in those respective years and claimed them as deduction. We have gone through the break-up of the expenses as noted in para-8 of the assessment order and observe that certain expenses declared under the head 'other adjustments Rs.30.75 crores'; 'other charges Rs.79.34 lakhs'; 'depreciation under provided Rs.7.86 crores' etc. are ostensibly vague and does not indicate the nature of claim with sufficient particularity obscure. We simultaneously note that assessee is a State Government Undertaking and its accounts are subjected to review by CAG and therefore it cannot be postulated that there was any deliberateness in not furnishing relevant details before the revenue authorities. The bonafides of the Assessee is also augmented by the facts that the Assessee has reported staggering carry forward losses in its returned income. Thus, there is no immediate tax advantage accrued to the assessee by the claim of impugned prior period expenses per se. We therefore deem it expedient to restore the issue back to the file of AO for examining the issue de novo after verifying facts as may be considered necessary and ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 28 - expedient in accordance with law. The AO shall bear in mind the ratio laid down by the Hon'ble Gujarat High Court in the case of Adani Enterprises Ltd. (supra) while adjudicating the issue. Needless to say, reasonable opportunity shall be provided to the assessee while adjudicating the issue. Hence, all the contentions of the assessee are kept open. The issue raised as per Ground No.4 is thus set aside to the file of AO in terms of directions noted above. As a result, Ground No.4 is allowed for statistical purposes.” In the light of the decision of Co-ordinate Bench as cited above, we restore this issue to the file of Assessing Officer for deciding de-novo after verification the facts and material as per the ratio laid down by the Hon’ble Gujarat High Court in the case of above cited case of Adani Enterprises Ltd. As a result, this ground of appeal of the assessee is allowed for statistical purposes. ” 18. Respectfully relying upon the order passed by the Coordinate Bench we are disposing of the ground by setting aside the issue to the file of the Ld. AO for de novo adjudication upon giving an opportunity of being heard to the assessee and upon considering the evidence which the assessee may choose to file at the time of hearing of the matter. This ground is allowed for statistical purposes.” 47. Respectfully following the decision rendered by Ahmedabad Tribunal in the case of Gujarat Energy Transmission Corporation Ltd. in ITA No. 2855/Ahd/2015, this issue is being restored to the file of Ld. AO for de novo adjudication upon giving an opportunity of being heard to the assessee and upon considering the evidences which the assessee may choose to file at the time of hearing of the matter. 48. In the result, Ground No. 3 of the assessee’s appeal is allowed for statistical purposes. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 29 - Ground No.4:- Interest from staff loan treated as income from other sources instead of business income(Rs. 97,85,000/-) 49. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2009-10 in ITA No. 1710/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee’s appeal for A.Y. 2008-09. 50. In the result, Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. Ground No.5:- Taxing gain on sale of assets as income from other sources instead of business income (Rs. 65,76,000/-) 51. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2009-10 in ITA No. 2082/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 4 of the assessee’s appeal for A.Y. 2009-10. 52. In the result, the Ground No. 5 of the assessee’s appeal is allowed statistical purposes. 53. Ground No. 6 is general in nature and do not require any specific adjudication. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 30 - ITA No. 98/Ahd/2015(A.Y.2010-11)(Department’s Appeal):- 54. The Department has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, Ld. C.I.T. (A) erred in treating income from interest of Rs. 2,62,11,000/- earned from supplier/other parties as business income instead of income from other sources as treated by the A.O. by merely accepting the submission of the assessee and without appreciating the fact that income from interest were not generated from day to day business of assessee company and the assessee had failed to substantiate its claim with cogent and acceptable reasons with documentary evidence. 2. On the facts and in the circumstances of the case and in law, Ld. C.I.T. (A) erred in treating income from miscellaneous receipts of Rs. 16,43,69,000/- as business income instead of income from other sources as treated by the A.O. by merely accepting the submission of the assessee and without appreciating the fact that income from interest were not generated from day to day business of assessee company and the assessee had failed to substantiate its claim with cogent and acceptable reasons with documentary evidence. 3. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.” Ground No.1:- Treating interest from suppliers as business income instead of income from other sources (Rs. 2,62,11,000/-) 55. The brief issue for consideration with respect to this ground of appeal is whether the interest of Rs. 2,62,11,000/- earned by the assessee on various credit balances of suppliers / other parties is liable to be taxed as business income or as income from other sources. The Assessing Officer taxed the aforesaid receipts as income from other sources in the assessment order. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 31 - 56. In appeal, the Ld. CIT(A) allowed the appeal of the assessee with the following observations:- “8.3 In have considered the appellant’s submissions. The appellant is not in the business of money lending. Hence interest income from staff loan has been rightly taxed under the head “Other Sources”. But the interest earned from suppliers/other parties during the ordinary course of business is an income derived from the business of the appellant and hence this is directed to be taxed as income from business. Similarly, miscellaneous receipts have been earned by the appellant during the ordinary course of its business and hence, the same are to be taxed as business income. Accordingly, these are directed to be taxed as business income.” 57. On going through the facts of the instant case we find no infirmity in the order of Ld. CIT(A) who has held that since such interest is received on credited balances of suppliers and other parties which is in the ordinary course of business, the same is liable to be taxed as business income in the hands of the assessee. 58. In the result, Ground No. 1 of the Department’s appeal is dismissed. Ground No.2:- Treating income from miscellaneous receipts as business income instead of income from other sources (Rs. 16,43,69,000/-) 59. The brief facts in relation to this ground of appeal are that during the impugned assessment year, the assessee earned certain miscellaneous income amounting to Rs. 16,43,69,000/- which was taxed by the Assessing Officer as “income from other sources” instead of “business income”. The ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 32 - break-up of such miscellaneous income as tabulated below for ready reference:- Particulars Amt (in lacs) Sale of Scrap 199.27 Sale of Tender Forms 108.26 Income From Supervision Charges On Execution of Job/Deposit works 48.00 Registration Fees – Suppliers, Contractors 3.54 Administration & Supervision Cost Absorbed in the Cost Of Fabricated materials 845.49 Penalty Recovered From Employee 10.29 Development Charges 19.34 Other Miscellaneous Receipts 409.05 Total 1643.69 60. In appeal, Ld. CIT(A) allowed the appeal of the assessee with the following observations:- “ Similarly, miscellaneous receipts have been earned by the appellant during the ordinary course of its business and hence, the same are to be taxed as business income. Accordingly, these are directed to be taxed as business income. ” 61. Before us, the Counsel for the assessee submitted that looking into the nature of receipts viz. scrap sales, sale of tender forms, supervision charges received, registration fees received from suppliers / contractors, administration and supervision cost in the cost of fabricated materials, penalty recovered from employees, development charges etc., Ld. CIT(A) has rightly held that such miscellaneous income has been earned by the assessee company during the ordinary course of its business, hence, the same are to be taxed as business income. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 33 - 62. Looking into the facts of the instant case, we find no infirmity in the order of Ld. CIT(A) on this issue so as to call for any interference. 63. In the result, Ground No. 2 of the Department’s appeal is dismissed. 64. Ground No. 3 of the Department’s appeal is general in nature does not require any specific adjudication. 65. In the result, the appeal filed by the Department in ITA No. 98/Ahd/2015 for A.Y. 2010-11 is dismissed. ITA No. 324/Ahd/2015(A.Y. 2011-12)(Assessee’s Appeal):- Ground No.1:- Addition @ 15% of capital grants & subsidies as against 10% offered by appellant (Rs.43,26,55,500/-) 66. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2009-10 in ITA No. 2082/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 1 of the assessee’s appeal for A.Y. 2009-10. 67. In the result, Ground No. 1 of the assessee’s appeal is allowed for statistical purposes. Ground No.2:- Addition on account of difference in inter-unit balance and remittance in transit (Rs. 1,95,42,000/-) ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 34 - 68. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 2 of the assessee’s appeal for A.Y. 2010-11. 69. In the result, the Ground No. 2 of the assessee’s appeal is allowed for statistical purposes. Ground No.3:- Addition of prior period expenses (Rs.46,67,000/-) 70. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee’s appeal for A.Y. 2010-11. 71. In the result, the Ground No. 3 of the assessee’s appeal is allowed for statistical purposes. Ground No.4:- Interest from staff loan treated as income from other sources instead of business income (Rs.1,03,66,000/-) 72. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 4 of the assessee’s appeal for A.Y. 2010-11. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 35 - 73. In the result, the Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. Ground No.5:-Issue of taxing gain on sale of assets as “income from other sources” instead of “business income”(Rs. 69,56,000/-) 74. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 5 of the assessee’s appeal for A.Y. 2010-11. 75. In the result, the Ground No. 5 of the assessee’s appeal is allowed for statistical purposes. 76. Ground No. 6 of the assessee’s appeal is general in nature do not require any specific adjudication. 77. In the result, the appeal of the assessee in ITA No. 324/Ahd/2015 for A.Y. 2011-12 is allowed for statistical purposes. ITA No. 99/Ahd/2015(A.Y. 2011-12)(Department’s Appeal):- 78. The Department has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, Ld. C.I.T. (A) erred in treating income from interest of Rs. 79,90,000/- earned from supplier/other parties as business income instead of income from other sources as treated by the A.O. by merely accepting the submission of the assessee and without appreciating the fact that income from interest were not generated from day to day business of ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 36 - assessee company and the assessee had failed to substantiate its claim with cogent and acceptable reasons with documentary evidence. 2. On the facts and in the circumstances of the case and in law, Ld. C.I.T. (A) erred in treating income from miscellaneous receipts of Rs. 8,83,12,000/- as business income instead of income from other sources as treated by the A.O. by merely accepting the submission of the assessee and without appreciating the fact that income from interest were not generated from day to day business of assessee company and the assessee had failed to substantiate its claim with cogent and acceptable reasons with documentary evidence. 3. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.” Ground No.1:- Treating interest from suppliers as “business income” instead of “income from other sources” (Rs.79,90,000/-) 79. We observe that this issue has already been dismissed in Department’s appeal for A.Y. 2010-11 in ITA No. 98/Ahd/2015. Accordingly, this ground is dismissed as per directions given in Ground No. 1 of the Department’s appeal for A.Y. 2010-11. 80. In the result, Ground No. 1 of the Department’s appeal is dismissed. Ground No.2:- Treating income from miscellaneous receipts as “business income” instead of “income from other sources” (Rs.8,83,12,000/-) 81. We observe that this issue has already been dismissed in Department’s appeal for A.Y. 2010-11 in ITA No. 98/Ahd/2015. Accordingly, this ground is dismissed as per directions given in Ground No. 1 of the Department’s appeal for A.Y. 2010-11. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 37 - 82. In the result, Ground No. 2 of the Department’s appeal is dismissed. 83. Ground No. 3 of the Department’s appeal is general in nature and does not require any specific adjudication. 84. In the result, the appeal of the Department in ITA No. 99/Ahd/2015 for A.Y. 2011-12 is dismissed. ITA No. 1521/Ahd/2016(A.Y. 2012-13)(Assessee’s Appeal):- 85. The assessee has raised the following grounds of appeal:- “1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.63,96,13,350/- on account of Capital Grants & Subsidies and Consumers Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.1,42,00,000/- on account of the balance lying in the Inter unit Balance account and balance in remittance in transit. 3.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of prior period expenses amounting to Rs.1,96,76,000/- without appreciating the fact that such expenditure crystallized during the year and that the same has never been claimed in earlier years. 4.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions with respect to the interest income from staff loans & advances, fixed deposits and advances to others amounting to Rs.1,80,27,000/- as Income from Other Sources as against the Business Income. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 38 - 5.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has set aside the additions with respect to the Income from Gain on Sale of Fixed Assets amounting to 2,59,05,000/-. 6.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal.” Ground No.1:-Addition @15% of capital grants & subsidies as against 10% offered by appellant(Rs.63,96,13,350/-) 86. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2009-10 in ITA No. 2082/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 1 of the assessee’s appeal for A.Y. 2009-10. 87. In the result, Ground No.1 of the assessee’s appeal is allowed for statistical purposes. Ground No.2:- Addition on account of difference in inter-unit balance and remittance in transit(Rs.1,42,06,000/-) 88. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 2 of the assessee’s appeal for A.Y. 2010-11. 89. In the result, Ground No. 2 of the assessee’s appeal is allowed for statistical purposes. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 39 - Ground No. 3:- Addition of prior period expenses (Rs.1,96,76,000/-) 90. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee’s appeal for A.Y. 2010-11. 91. In the result, Ground No. 3 of the assessee’s appeal is allowed for statistical purposes. Ground No.4:- Interest from staff loan treated as income from other sources instead of business income(Rs. 1,80,27,000/-) 92. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 4 of the assessee’s appeal for A.Y. 2010-11. 93. In the result, Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. Ground No.5:- Issue of taxing gain on sale of assets as income from other sources instead of business income. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 40 - 94. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 5 of the assessee’s appeal for A.Y. 2010-11. 95. In the result, Ground No. 5 of the assessee’s appeal is allowed for statistical purposes. 96. Ground No. 6 of the assessee’s appeal is general in nature and do not require any specific adjudication. 97. In the result, the appeal of the assessee in ITA No. 1521/Ahd/2016 for A.Y. 2012-13 is allowed for statistical purposes. ITA No. 300/Ahd/2018(A.Y. 2014-15)(Assessee’s Appeal):- 98. The assessee has raised the following grounds of appeal:- “1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.31,47,80,000/- on account of Capital Grants & Subsidies and Consumers Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of prior period expenses amounting to Rs.1,37,05,000/- without appreciating the fact that such expenditure crystallized during the year and that the same has never been claimed in earlier years. 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the additions with respect to the interest ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 41 - income from staff loans & advances, fixed deposits and advances to others amounting to Rs.2,45,50,000/- as Income from Other Sources as against the Business Income. 4.0 The learned Commissioner of Income Tax (Appeals) erred in law and facts has set aside the additions with respect to the Income from Gain on Sale of Fixed Assets amounting to Rs.2,56,10,000/- with the direction to re-verify the claim in terms of the provisions of section 50 of the IT Act. 5.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the action of Assessing Officer in treating the Miscellaneous Receipts amounting to Rs.25,02,07,000/- as Income from Other Sources as against the Business Income and thereby disallowing the claim of set off of business losses of earlier years against the said income. 6.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the additions of Rs.2,77,09,000/- on account of the balance lying in the Inter unit Balance account and balance in remittance in transit. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that there was no unreconciled balance during the year. 7.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal” Ground No.1:- Addition @15% of capital grants & subsidies as against 10% offered by appellant (Rs.31,47,80,000/-) 99. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2009-10 in ITA No. 2082/Ahd/2012. Accordingly, the matter is being restored to the file of the Assessing Officer ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 42 - to pass order as per directions in Ground No. 1 of the assessee’s appeal for A.Y. 2009-10. 100. In the result, Ground No.1 of the assessee’s appeal is allowed for statistical purposes. Ground No.2:- Addition of prior period expenses (Rs.1,37,05,000/-) 101. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 3 of the assessee’s appeal for A.Y. 2010-11. 102. In the result, Ground No. 2 of the assessee’s appeal is allowed for statistical purposes. Ground No.3:- Interest from staff loan treated as income from other sources instead of business income(Rs.2,45,50,000/-) 103. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 4 of the assessee’s appeal for A.Y. 2010-11. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 43 - 104. In the result, Ground No. 3 of the assessee’s appeal is allowed for statistical purposes. Ground No.4:- Issue of taxing gain on sale of assets as income from other sources instead of business income(Rs.2,56,10,000/-) 105. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 5 of the assessee’s appeal for A.Y. 2010-11. 106. In the result, Ground No. 4 of the assessee’s appeal is allowed for statistical purposes. Ground No.5:- Taxability of Miscellaneous receipts as income from others sources instead of business income (Rs.25,02,07,000/- & Rs.22,51,06,000/-) 107. The brief facts in relation to this ground of appeal are that during the impugned assessment year, the assessee earned certain miscellaneous income amounting to Rs. 25,02,07,000/- which were taxed by the Assessing Officer as income from other sources instead of business income. The break-up of such miscellaneous income is tabulated below for ready reference:- ACCOUNT HEAD Amt. Rs. (In lakh) Income from Staff quarters 3.51 Income from Contractors, Post Office, Bank etc. 0.22 ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 44 - Excess stock found on Physical Verification 1.95 Recovery of water charges from employees /contractors 2.13 Reservation deposit forfeited 0.54 Rec. for tpt. & vehicle exp other than staff 0.78 Sale of tender forms 233.54 Supervision charges on execution of job/deposit work 538.82 Registration fees – Suppliers, contractors 10.10 Penalties recovered from employees 0.15 Insurance premium recovered for HBA loan 6.23 Rebate for Prompt Payment – purchase of power 5.43 Other Miscellaneous Receipts 1698.28 Receipt under Right to Information Act, 2005 0.40 TOTAL 2502.07 108. In appeal, Ld. CIT(A) confirmed the addition with the following observations:- “4.5 Ground No. 6 pertains to the action of Assessing Officer in assessing the miscellaneous receipts of Rs.25,02,07,000/- as income from other sources. On perusal of the details furnished and also available in the assessment order, I find that some of the items are pertaining to the business income such as excess stock found of physical verification, sale of tender forms, registration fees from suppliers and contractors rebate for prompt payment by the purchaser of power etc. and hence the Assessing Officer is directed to consider the same as business income. Other items have to be treated as income from other sources because they have no direct nexus with the business activity of the appellant and accordingly the action of the Assessing Officer to that extent is confirmed. Thus appellant succeeds partly in respect of Ground No. 6.” 109. Before us, the Counsel for the assessee submitted that the Assessing Officer has followed the order of Madhya Gujarat Vij Company Ltd. for A.Y. 2010-11. However, it was submitted that in the case of Madhya Gujarat Vij Company Ltd., the ITAT has set-aside this ground to the Assessing Officer in ITA No. 680/Ahd/2014 vide order dated 18.08.2023. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 45 - Accordingly, it was submitted that the issue may be set-aside to the file of the Assessing Officer in line with the order passed by the Ahmedabad Tribunal in the case of Madhya Gujarat Vij Company Ltd. referred to above. 110. It would be useful to reproduce the relevant extract of the decision of the ITAT Ahmedabad for ready reference:- “42. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the issue on hand is interconnected with issue raised by the assessee in respect of treatment of interest income on loans to staff in ITA No. 561/AHD/2014 which we have set aside to the file of the AO for fresh adjudication vide paragraph number 36 of this order. Therefore, we hereby set aside the issue of treatment of miscellaneous income whether it is business income or income from other sources to the file of the AO fresh adjudication in accordance with the direction provided while adjudicating the issue of interest income in assessee’s appeal and as per the provision of law. Hence, the ground of appeal of the revenue is hereby allowed for statistical purposes.” 111. In view of the above decision of ITAT Ahmedabad in which this issue has been restored back to the Assessing Officer by the ITAT with the direction to determine the issue treatment of miscellaneous income the present issue is also restored back to the Assessing Officer to decide the matter in accordance with the direction by ITAT for A.Y. 2010-11. 112. Accordingly, Ground No. 5 of the assessee’s appeal is allowed for statistical purposes. Ground No.6:- Addition on account of difference in inter-unit balance and remittance in transit (Rs.2,77,09,000/-) ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 46 - 113. We observe that this issue has already been set-aside to the Assessing Officer in assessee’s appeal for A.Y. 2010-11 in ITA No. 323/Ahd/2015. Accordingly, the matter is being restored to the file of the Assessing Officer to pass order as per directions in Ground No. 2 of the assessee’s appeal for A.Y. 2010-11. 114. In the result, Ground No. 6 of the assessee’s appeal is allowed for statistical purposes. 115. Ground No. 7 of the assessee’s appeal is general in nature and do not require any specific adjudication. 116. In the result, the appeal of the assessee in ITA No.300/Ahd/2018 for A.Y. 2014-15 is allowed for statistical purposes. ITA No. 293/Ahd/2018(A.Y.2014-15)(Department’s Appeal):- 117. The Department has raised the following grounds of appeal:- “1.1 That on the facts and circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition to book profits u/s 115JB towards grants and subsidies. 1.2 That on the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in deleting the addition to book profits u/s 115JB towards grants and subsidies by erroneously accepting the assessee's reliance on the CIT(A)'s order for AY 2012-13, even though this issue did not arise in the CIT(A)'s order for AY 2012-13, and assessment for AY 2012-13 has been reopened on this issue. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 47 - 2.1 That on the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in treating miscellaneous receipts "such as excess stock found on physical verification, sale of tender forms, registration fees from suppliers and contractors rebate for prompt payment by the purchaser of power etc" as business income instead of income from other sources by merely accepting the submissions of the assessee and without appreciating that the such miscellaneous receipts were not generated from day to day business activity, and the assessee had failed to controvert the findings of the A.O., and failed to substantiate its claim with necessary documentary evidence. 2.2 That on the facts and circumstances of the case and in law, the Ld. C.I.T.(A) erred in treating miscellaneous receipts "such as excess stock found on physical verification, sale of tender forms, registration fees from suppliers and contractors rebate for prompt payment by the purchaser of power etc." as business income, and in not unequivocally upholding the decision of the A.O. 3. The appellant craves leave to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal.” Ground Nos.1.1&1.2:- Deleting addition made to book profit u/s 115JB towards grants and subsidies (Rs.81,36,52,000/-) 118. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer made addition of Rs. 81,36,52,000/- @ 5% of grants and subsidies added to the book profit under Section 115JB of the Act. 119. In appeal, Ld. CIT(A) allowed the appeal of the assessee with the following observations:- “4.1.1. The other part of this ground pertains to the addition of Rs.81,36,52,500/- being 5% of grants and subsidies added to Book Profit u/s. 115JB. In this regard, the Ld. Authorized Representative has relied upon the decision of CIT(A) in its own case in A.Y. 2012-13 ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 48 - wherein it has been held that addition made under normal provision on account of capital grant/subsidies cannot be made to be Book Profit u/s. 115JB. Accordingly, the Assessing Officer is directed to delete the same.” 120. Before us, the Counsel for the assessee submitted that since similar addition made to normal computation of income in A.Y. 2014-15 has been set-aside to the file of the Assessing Officer for de novo consideration, the matter may also be restored to the file of Ld. AO for fresh consideration. Accordingly, the matter is being restored to the file of Ld. AO for necessary rectification as per law. 121. In the result, Ground Nos. 1.1 & 1.2 of the Department’s appeal are allowed for statistical purposes. Ground No.2.1&2.2:- Treating income from miscellaneous receipts as business income instead of income from other sources. 122. We observe that this issue has already been dismissed in Department’s appeal for A.Y. 2010-11 in ITA No. 98/Ahd/2015. Accordingly, this ground is dismissed as per directions given in Ground No. 2 of the Department’s appeal for A.Y. 2010-11. 123. In the result, Ground No. 2.1 & 2.2 of the Department’s appeal are dismissed. 124. Ground No. 3 of the Department’s appeal is general in nature and does not require any specific adjudication. ITA No. 1710/Ahd/2012 & 08 others Paschim Gujarat Vij Company Ltd. vs. ITO & Others Asst. Years –2008-09 to 2012-13 & 2014-15 - 49 - 125. In the result, the appeal of the Department in ITA No. 293/Ahd/2018 for A.Y. 2014-15 is dismissed. 126. In the combined result, the appeals filed by the assessee are partly allowed for statistical purposes and the appeals filed by the Department are dismissed. This Order pronounced in Open Court on 19/09/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 19/09/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 13&14.09.2023 2. Date on which the typed draft is placed before the Dictating Member 15.09.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 18.09.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .09.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 19.09.2023 7. Date on which the file goes to the Bench Clerk 19.09.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................