DCIT (LTU)-2, Mumbai V. M/S RELIANCE INDUSTRIES LTD., Mumbai

ITA 2344/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7351 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 11-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Depreciation; Transfer pricing; Business expenditure; International transaction; Additional depreciation; Earning of tax free income; Source of fund; Retrospective amendment; Capital receipt; Revenue expenditure; Capital expenditure; Rule 8D; Set aside; Liquidation; CHAPTER IV
• Section: 28; 271(1)(c); 43B; 143(3); 10AA; 80HHC; 14A; 115JB; 80IB; 32(1)(iia); 37(1); 80G; 10B; 43D; 80IA; 274; 80HH; 44BB; 64; 113; 43; 48; 73; 72; 13; 22; 92CA

Judgement Text

ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 1 of 105 INCOME TAX APPELLATE TRIBUNAL MUMBAI ̳J‘ BENCH, MUMBAI [Coram: Pramod Kumar (Vice President) and Amarjit Singh (Judicial Member)] ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Deputy Commissioner of Income Unit (LTU-2) Mumbai. ....................... Appellant Vs. Reliance Industries Limited ....................... Respondent 3 rd Floor, Maker Chamber-IV, 222, Nariman Point, Mumbai 400021 [PAN: AAACR5055K] ITA Nos.1645 & 2876/Mum/2019 Assessment Years: 2014-15 & 2015-16 Reliance Industries Limited ....................... Appellant 3 rd Floor, Maker Chamber-IV, 222, Nariman Point, Mumbai 400021[PAN: AAACR5055K] Vs. Deputy Commissioner of Income Unit (LTU-2) Mumbai. ......................Respondent Appearances: Madhur Agarwal along with Moksha Mehtafor the appellant Ms. Vatsalaa Jhafor the respondent Date of concluding the hearing : December 9, 2021 Date of pronouncement the order : March 8,2022 O R D E R Per Pramod Kumar, VP:- 1. These four appeals pertain to the same assessee, involve some common and interconnected issues, and were heard together. As a matter of convenience, therefore, all the four appeals are being disposed of by this consolidated order. 2. We will first take up ITA No. 2344/Mum/2019, i.e. the appeal filed by the Assessing Officer against the order 31 st January 2019 passed by the learned CIT(A) in the matter of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 2 of 105 assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2014-15. 3. In the first ground of appeal, the Assessing Officer has raised the following grievanceby way of a question posed for our consideration: ―Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of sales tax incentive/subsidy of Rs. 524,44,02,597/- holding it as capital in nature?‖ 4. So far as this ground of appeal is concerned, it is sufficient to take note of the fact that the assessee had, during the relevant previous year, received sales tax subsidy of Rs 524,44,02,597 and claimed it to be a capital receipt not chargeable to tax. The Assessing Officer, however, rejected this stand and held that the said amount is taxable, as a revenue receipt, under section 28 of the Act. Aggrieved, assessee carried the matter in appeal before the CIT(A), and the learned CIT(A), following decisions of the coordinate benches from the assessment years 1994-95 to 2012-13, deleted the said addition. While doing so, learned CIT(A) observed as follows: I have considered the facts and submissions made by the assessee and have also perused thedecision of the Special Bench of Mumbai ITAT in assessee's own case wherein it was held: "The question for consideration is whether the Tribunal in the case of RelianceIndustries Ltd. (supra) had correctly appreciated and interpreted the ratio of thedecision of the Supreme Court in Sahney Steel & Press Works Ltd.‘s case (supra).On a careful reading of the order of the Tribunal in the case of Reliance IndustriesLtd. (supra), it appears to us that the ratio of the judgment in Sahney Steel & PressWorks Ltd 's case (supra) has been correctly interpreted and appreciated by the Bench. [Para 28] The Scheme framed by the Government of Maharashtra in 1979 and formulated by its Resolution dated 5-1-1930 has been analysed in detail by the Tribunal in its order in RIL for the assessment year 1985-86 which we have already referred to in extenso. On an analysis of the Scheme, the Tribunal has come to the conclusion that the thrust of the Scheme is that the would become entitled for the sales lee incentive even before the commencement of the production which implies that the object of the incentive is to fund a part of the cost of the setting up of the factory in the notified backward area. The Tribunal has, at more than one place, stated that the thrust of the Maharashtra Scheme was the industrial development of the backward districts as well as generation of employment thus establishing a direct nexus with the investment in fixed ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 3 of 105 capital assets. It has been found that the entitlement of the industrial unit to claim eligibility for the incentive arose even while the industry was in the process of being set up. According to the Tribunal, the Scheme was oriented towards and was subservient to the investment in fixed capital assets. The sales tax incentive was envisaged only as an alternative to the cash disbursement and by its very nature was to be available only after production commenced. Thus, in effect, it was held by the Tribunal that the subsidy in the form of sales tax incentive was not given to the for assisting it in carrying out the business operations. The object of the subsidy was to encourage the setting up of industries in the backward area. [Para 28] Thus, the interpretation of the Tribunal, of the ratio laid down in the judgment of the Supreme Court in Sahney Steel & Press Works Ltd.'s case (supra) cannot be stated to be erroneous. The Tribunal did recognise, as the Supreme Court itself recognised, that the object with which the subsidy was given is decisive. It did recognise, following the distinction pointed out by the Supreme Court that if the subsidy is given for setting up or expansion of the industry in a backward area, it will be capital, irrespective of the modality or the source of funds through or from which it is given and that if monies are given for assisting the in carrying out the business operations only after, and conditional upon, the commencement of production, it would be revenue. It was only for the purpose of bringing out this distinction that the Tribunal had analysed the features of the Maharashtra Scheme of 1979 and had come to the conclusion that the subsidy given under the Scheme had a direct nexus with the fixed capital investment and that it could not be said that the subsidy was given with the object of assisting or lending a helping hand to the in its business operations. (Para 29) The Tribunal was thus aware of the distinction between the subsidy given with the object of setting up the industry and the subsidy given after the industry commences production and conditional upon the commencement of production. Factually, the Tribunal found that the appellant's case which fell under the Maharashtra Scheme, was a case where the subsidy was given for the purpose of facilitating the to set up an industry in Patalganga, Raigad District, which is a notified area. The actual disbursement took place afer the commenced production, but, according to the Tribunal, it was only a mode of disbursement and had nothing to do with the object for which the subsidy was given. Thus, it was found that the Tribunal did notice the crucial observations of the Supreme Court in Sahney Steel & Press Works Ltd.'s case (supra) which gave primacy to the object of the subsidy over the fact that it was given after the commencement of production. [Para 30] ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 4 of 105 The Tribunal's observations made on the basis of the observations of the Supreme Court in Sahney Steel & Press Works Ltd's case (supra) also show that the Tribunal was alive to the distinction between the character of the subsidy given with the object of promoting industrial growth in a particular area and the subsidy given conditional upon the commencement of production and after actual commencement of production. In our opinion also, it is not correct to understand the judgment as laying down the broad proposition that wherever the subsidy is given after the commencement of production and conditional upon the same, it should be treated as a revenue receipt in the hands of the assessee, irrespective of the object for which the subsidy was granted. The object for which the subsidy is granted, in our opinion also, takes primacy over the fact that it was given after the commencement of production and conditional upon the same. That the Supreme Court itself recognised this position has been amply made clear in its observations [Para 33] With great respect, we are therefore unable to share the opinion expressed in Bajaj Auto Ltd.'s case (supra) that the Tribunal in its order in the case of Reliance Industries Ltd. (supra) for the assessment year 1985-86 did not correctly interpret the ratio laid down by the Supreme Court in Sahney Steel & Press Works Ltd.'s case (supra). [Para 34)‖ The Special Bench has also considered the other relevant judicial pronouncements while giving the finding that the subsidy received by the assessee was a capital subsidy not liable to tax. The facts during the year under consideration are the same as in the earlier years. In the immediate preceding assessment year, following the decision of the Special Bench, the issue has been decided in favour of the assessee by my predecessor. Accordingly, following the Special Bench decision discussed above, further also relying on the orders of my predecessors in preceding assessment years including the order for immediate preceding assessment year i.e. A.Y.2013-14 and order of the Hon'ble ITAT for AY 1994-95 to AY 2012-13, I am inclined to allow the assessee's claim for treatment of Notional Sales tax of Rs.524,44,02,597/- as Capital receipt not liable to tax. This ground of appeal is therefore allowed. 5. The Assessing Officer is aggrieved and is in appeal before us. 6. Learned representatives fairly agree that, as rightly noted by the learned CIT(A), this issue is covered, in favour of the assessee, by the coordinate bench decisions in the assessee‟s own cases for the assessment years 1994-95 to 2012-13. No reasons have been pointed out to us as to why we should not follow these decisions of the coordinate benches in the assessee‟s own cases. In view of this position, respectfully following these binding judicial precedents- including the special bench decision, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 5 of 105 7. Ground no. 1 is thus dismissed. 8. In the ground no. 2, the Assessing Officer has raised the following grievance by way of a question posed for our consideration: Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing depreciation as claimed by the assessee by holding that the claim of depreciation for the year was optional in nature? 9. So far as this grievance of the Assessing Officer is concerned, the relevant material facts are like this. So far as the pre 1 st April 2002 position is concerned, i.e. prior to insertion of Explanation 5 to Section 32(1) of the Act, the assessee had not claimed the depreciation on certain assets. The written down value of these assets thus remained constant till 31 st March 2002. The Assessing Officer, however, proceeded to recompute the written down value by thrusting depreciation for the period prior to 1 st April 2002, and recomputed the admissible depreciation, by making consequential adjustments. The depreciation thus disallowed worked out to Rs 105,94,57,649. While making this disallowance, the Assessing Officer observed as follows: 5. Depreciation not claimed in the Income-tax Return of Earlier Years: 5.1 On perusal of the return of the income of the assessee, it is seen that the assessee Company had not claimed deprecation on the power plants at Hazira - STG, CTG-V & VI, and at Patalganga CPP-II till A.Y. 2001-02. Similarly, depreciation had also not been claimed at Cracker unit at Hazira, Oil & Gas division, SBM, Polypropylene and paraxylene complex at Jamnagar & Refinery till A.Y. 2001-02. The Assessee Company has been allowed depreciation on these assets as discussed in para 5 of the assessment order of AY 2013-14 which is reproduced as under : 5.1.1 "Accordingly, in view of the consistent stand taken by the department, the claim of depreciation of the Assessee Company is reworked as Annexure "A" forming part of this order. The Assessee Company is entitled for depreciation of only Rs.6447,59,69,037/- as against the claim made of Rs.6518,82,98,458/-" 5.1.2 Though the Ld. Commissioner of Income-tax (Appeals) has deleted the said allowance of depreciation in the various orders in these Assessment Years, the department has preferred an appeal before the Hon'ble ITAT in these Assessment Years. Accordingly, in view of the consistent stand taken by the department, the claim of depreciation of the Assessee Company is reworked as Annexure ̳A‘ forming part of this order. The Assessee Company is entitled for depreciation of only Rs. 6418,60,98,039/- as against the claim made of Rs. 6524,55,55,688/-. The difference in the department's calculation of depreciation amount and the claim of the assessee amounting to Rs. 105,94,57,649/- is due to the fact that the department has been giving depreciation to the assessee leading to reduction in WDV prior to year when the assessee started making the claim of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 6 of 105 depreciation. Hence, there has been difference in WDV as per working of the department and the working of the assessee and that has led to the difference in calculation of depreciation. Accordingly an addition of Rs. 105,94,57,649/- is being made to the total income of the assesse. Penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars are initiated separately. 5.1.3 Further, during the assessment proceedings, it is also noted that has claimed depreciation under "Oil and Gas division" in respect of KG-D6 basin/Block of Rs 726,75,62,145/-. As has been discussed in detail under subsequent paragraphs (para 14.7) of this order, the assesse company is entitled for a depreciation of Rs. 575,79,90,895/-, accordingly an addition of Rs. 150,05,71,250/- is made to the total income of the assessee................ 10. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Learned CIT(A), following her predecessor „sorder for the assessment year 2013-14 and the decisions of coordinate benches in the assessee‟s own case for the earlier assessment years, deleted the said addition. Aggrieved by the relief so granted by the learned CIT(A), the Assessing Officer is in appeal before us. 11. Having heard the rival contentions, and having perused the material on record, we see no reasons to interfere in the conclusions arrived at by the learned CIT(A) on this aspect either. The first appellate order for the assessment year 2013-14, based on which the impugned relief was granted by the CIT(A), has since come up for consideration before a coordinate bench of this Tribunal, and the coordinate bench has approved the said order of the CIT(A). While doing so, the coordinate bench has observed as follows: We find that learned CIT(A) has granted relief following earlier orders of ITAT. He had noted that it was held that the claim for depreciation cannot be thrust upon the assessee. Nevertheless, the Assessing Officer has consistently rejected the claim of the assessee based on the stand taken at assessment stage in earlier year. Learned CIT(A) noted that current year issue is consequential. Accordingly, following earlier orders of ITAT in assessee‘s own case, he decided the issue in favour of the assessee. It is not the case that earlier years decision of ITAT has been reversed by Hon'ble High Court. Learned Departmental Representative also did not dispute that this issue is covered in favour of the assessee. Hence, we uphold the order of learned CIT(A). The Revenue‘s ground is dismissed 12. Respectfully following the views of the coordinate bench, and particularly as no reasons for not following the views so expressed by the coordinate bench have been pointed out to us by the learned Departmental Representative, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 13. Ground no. 2 is thus dismissed. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 7 of 105 14. In ground no. 3, the Assessing Officer has raised the following question for our adjudication: Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Act r. w. Rule 8D(2)(iii) to 0.5% by taking the average value of that investment which have yielded a dividend during the year under consideration? 15. This issue is required to be taken up along with the ground of appeal no. 10 (additional ground of appeal) raised by the assessee. The said ground of appeal, raised by the assessee, is as follows: The learned CIT(A) Mumbai erred in directing the AO to compute the disallowance under section 14A of the Act, by invoking the provisions of Rule 8D of the income tax Rules, while computing income under normal provisions of the Act without recording any satisfaction for rejection of the disallowance computed by the appellant under section 14A of the Act. 16. So far as the additional ground of appeal is concerned, we find that this grievance is ill-conceived inasmuch as, at page 58 of the assessment order, the Assessing Officer has specifically observed that “since the assessee has not correctly apportioned any expenses as having been incurred for earning this exempt income, I am not satisfied with regard to correctness of the claim of expenditure made by the assessee, and, accordingly, provisions of rule 8D of the Income Tax Rules are being invoked”. It cannot, therefore, be said that the Assessing Officer has proceeded to make the disallowance under section 14A r.w.r 8D without recording satisfaction for rejection of the disallowance computed by the assessee”. 17. As regards the Assessing Officer‟s grievance that the learned CIT(A) has erred in directing the Assessing Officer to take into account only such investments as having yielded dividends during the year under consideration, we find that this issue is covered, in favour of the assessee, by several decisions of the coordinate benches, in assessee‟s own case, for the assessment years 2010-11 to 2012-13. Learned Departmental Representative does not dispute this position, nor does he point out any specific reasons for our not following these coordinate bench decisions, but he relies upon the stand of the Assessing Officer nevertheless. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches, in assessee‟s own cases for the assessment years 2010-11, 2011-12 and 2012-13, and, respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point as well, and decline to interfere in the matter. 18. Ground no. 3 of the Assessing Officer, as also ground no. 10 of the assessee, are thus dismissed. 19. In ground number 4 of the Assessing Officer, the following question has been posed for our adjudication: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 8 of 105 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Act r.w Rule 8D(2)(iii) to the amount calculated by the assessee for the purpose of income u/s. 115JB of the Act? 20. In a connected grievance raised by the assessee, by way of ground no. 2 in the cross- appeal filed by the assessee and which we must take up together with this issue in the departmental appeal, the following grievance has been raised: The Learned CIT(A) erred in directing the AO to compute the disallowance under clause (f) of Exp 1 to section 115JB(2) i.e. expenditure relating to exempt income, when no such disallowance ought to have been made while computing book profit u/s 115JB of the Act, relying on Tribunal decision in appellant's own case for AY 2009-10 vide corrigendum order dated 02.04.2008. 21. So far as this grievance of the assessee is concerned, it is sufficient to take note of the fact that after computing the disallowance under section 14A, and relying upon the Explanation 1(f) to Section 115JB(1) of the Act, the disallowance under section 14A is also to be added to the book profits. In appeal, learned CIT(A) upheld the adjustment in principle but restricted the quantum to the disallowance as computed by the assessee under section 14A, rather than the actual disallowance made under section 14A read with rule 8D. While doing so, the learned CIT(A) observed as follows: I have considered the facts and the submission of the Appellant. I find strength in the arguments of the Appellant on the ground relating to disallowance made under section 14A r.w.r. 8D, where the Appellant has relied on the decision of Bombay High Court in case of CIT vs. Reliance Utilities and Power Limited (313 ITR 340 ) wherein it has been held that where the own funds of the is more than the investments made on which exempt income has been earned no disallowance can be made out of interest expenditure. Following the above decision I am of the considered view that the Appellants own funds far more exceed investments made on which exempt income has been earned, therefore I direct the AO to delete the disallowance made us.14A out of interest expenditure. With regard to disallowance made out of other expenses being 0.5% of average value of investments, I have perused the submission made by the Appellant and the various judgments which the Appellant has relied upon, which were delivered by various courts. In this regard relying on various judicial pronouncements I direct the AO to recompute the disallowance @ 0.5% by taking average value of those investment which have yielded dividend during the year under consideration or the expenditure disallowed by the Appellant, whichever is higher while computing income under normal provisions. However for the purpose of calculating the disallowance under clause (f) of Explanation 1 to section 115JB, relying on the special bench decision in the case of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 9 of 105 VireetInvestments Pvt Ltd (TTA No 502/Del/2012) and ITAT order in the appellants own case for A.Y. 2010-11 to A.Y. 2012-13 dated 28.09.2018, I direct the AO to restrict the disallowance to the amount calculated by the assessee. Similar issue with respect to computation of disallowance us 14A while computing income under normal provisions was decided by the Hon'ble ITAT for AY 2008-09 and AY 2009-10 and my predecessor in favour of the appellant. Consequently following the earlier year's decision, of the Hon'ble ITAT and my predecessor this ground of appeal is, therefore, partly allowed. 22. The assessee is aggrieved and is in appeal before us. 23. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 24. We find that in the immediately preceding assessment year in assessee‟s own case, a coordinate bench has decided this issue in favour of the assessee, and observed as follows: On this issue the subject matter is whether for the purpose of computation of book profit under section 115 JB disallowance under section 14A have to be taken into account or not. The learned counsel of the assessee this regard has referred to ITAT decision in assessee‘s own case. We note that this issue is covered in favour of the assessee by the decision of honourable Bombay High Court in the case of Commissioner of income tax vs Bengal finance and investment private limited, wherein the honourable High Court by the order dated 5/1/18 held that disallowance under section 14A cannot be added under section 115JB. Respectfully following the precedent from honourable jurisdictional High Court, we decide this issue in favour of the assessee. 25. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we direct the Assessing Officer to delete the impugned adjustment for disallowance under section 14 A in the book profit computed under section 115JB. The assessee gets the relief accordingly 26. Once we uphold the connected grievance of the assessee, the grievance so raised by the Assessing Officer must be held to be academic, and, as such, infructuous. 27. Ground no. 4 of the Assessing Officer‟s appeal is thus dismissed as infructuous, as ground no. 2 of the assessee is allowed. 28. In ground no. 5, the Assessing Officer has posed the following question for our adjudication: Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the disallowance of deduction u/s. 80IB(9) of the Act holding ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 10 of 105 that the assessee shall be eligible to claim deduction u/s. 80IB(9) of the Act in respect of profits ―not allowed as deduction u/s. 10 AA of the Act. 29. Learned representatives fairly agree that this issue is also covered, in favour of the assessee, by a decision of the coordinate bench in the assessee‟s own cases for the assessment years 2011-12 and 2013-14. Vide its order, the coordinate bench, in the assessee‟s own case for the assessment year 2013-14, has observed as follows 75. At the outset, the Ld. Counsel of the assessee submitted that this ground is covered in favour of the assessee by the ITAT order in assessee‘s own case for A.Y. 2011-12 to 2012-13. 76. Brief facts on this case and A.O.‘s observation are as under: This ground of appeal pertains to disallowance of deduction u/s.80IB(9) of the Act of Rs.6,98,07,88,519/- in respect of Refinery SEZ Unit. The assessee company is engaged in the business of extraction of natural resources including Petroleum and gas, refining of petroleum products, etc. The Company has set up a refinery at Motikhavdi, P. O. Digvijaygram, Jamnagar- 361130 in the Special Economic Zone (SEZ) area for refining of mineral oil. The refinery commenced commercia! production on 01/04/2009. During the year under consideration, the appellant earned profit and gains of Rs. 7530,26,45,346/- (after making adjustment towards Depreciation as per Income Tax Act, 1961, profit/loss on sale of assets and disallowance u/s 43B) from its above eligible unit. This very fact has been verified and confirmed by the AO at para 13.8.lof his order. As the refinery is situated inthe Special Economic Zone, company claimed deduction of Rs. 6832,18,56,826/- u/s 10AA of the IT. Act, as per Form 56F(Revised) submitted by the appellant on its export turnover. Section 10AA of the Act allows to a unit, deduction of profits and gains derived from the export of article or things or services for a specified period if the assessee fulfils certain conditions specified under that section. Since the assessee had complied with the conditions specified u/s 10AA, it claimed 100% deduction of profit and gains earned in respect of export turnover from its Jamnagar Refinery SEZ undertaking u/s. 10AA of the Act. The Form 56F (Revised) filed by the assessee, has been verified by the AO and there is no dispute as regards the quantum of deduction worked out therein. Since the deduction allowable u/s 10AA is restricted to export profit, the assessee claimed deduction of Rs.6832,18,56,826/- out of the total profit of Rs.7530,26,45,346/- of the eligible undertaking. Further a deduction of Rs.698,07,88,519/- [i.e. Rs.7530,26,45,346 profit of the undertaking - (less) Rs. 6832,18,56,826/-] is claimed as deduction u/s. 801B(9) of the Act as per Form 10CCB submitted by the appellant. The appellant's claim of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 11 of 105 deduction of eligible profit u/s 10AA and 80IB{9) of the Act has not exceeded the profit of the undertaking in respect of SEZ refinery unit. Section 80IB(9) of the Act provides deduction in respect of profit and gains derived from an undertaking for specified period if the undertaking is engaged in refining of mineral oil and begins such refining process on or after the 1st day of October, 1998. Accordingly, the assessee submitted that it had complied with the conditions specified u/s 80IB(9J of the Act and it claimed deduction of the balance profits and gains u/s 80-18(9) of the Act. The Form 10CCB (Revised) filed by the assessee/ has been verified by the AO and there is no dispute as regards the quantum of deduction worked out therein. The assessee's claim of deduction of eligible profit u/s 10AA and 80IB(9) of the Act was based on various judgments and as per the provisions of law. The assessee during the course of assessment proceedings has furnished detailed submission to the AO on the above issue vide its letter no. RIL/ASPRQ/12-13/13, which was not accepted by the AO. The AO has disallowed the assessee's claim of deduction u/s 80IB(9) of the Act of Rs.698,07,58,520/-, discussed this issue in para 13 of the assessment order. The conclusion of the AO is as under: "13.9 However the assessee has sought to make a claim of further deduction of Rs.698,07,88,520/- (vide Form No.10CCB) u/s.80IB(9) of the Act, probably by having misconceived notion that profits of undertaking to the extent of Rs.6832,18,56,826/-only have been claimed and allowed as deduction u/s.10AA of the Act, and the balance (Rs.7530,26,45,346 MINUS Rs.6832,18,56,826/-) can further be claimed u/s.80IB(9) of the Act Whereas the fact remains that entire profits of Rs.7530,26,45,346/- have been claimed and allowed for deduction u/s.10AA, and accordingly no further deduction under any other sections of the Act can be allowed or entertained in respect of the profits of the unit of Rs.7530,26,45,346/ "13.10 For the reasons mentioned above in detail, I am of the view that deduction U/s.10AA as claimed by assessee and computed on the basis of "entire profit of the unit", subject to the provisions of the Act such as section 10AA(7), has to be allowed at Rs.6832,18,56,826/- and in view of the scheme and provisions of the Act, no deduction can be allowed to the assessee u,/s80IB of the Act. Therefore, claim of deduction u/s.80IB of the Act of Rs.698,07,88,519/- disallowed and the same is added back to the income of the assessee company." 77. Upon the assessee‘s appeal, the ld. CIT(A) discussed the submission of the assessee and the provision of the Act. He was not convinced with the assessee‘s submission. He rejected the case laws relied upon by the assessee and placed reliance upon several decisions of Hon‘ble Delhi High Court and Hon‘ble Karnataka High Court and rejected the assessee‘s ground in this regard. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 12 of 105 78. Against the above, the assessee is in appeal before us. We note that identical issue was decided by this tribunal in assessee‘s own case vide order dated 28.09.2018 for A.Y. 2010-11 to 2012-13 as under: 76. We have heard rival contentions and perused the record. The dispute between the parties revolve around sec. 80A(4) and sec.80IA(9) of the Act, For the sake of convenience, we extract below both the provisions:- ―80A(4) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading "C-Deductions in respect of certain incomes", where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be." "80IA(9) Where any amount of profits and gains of an undertaking or of an Enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading "C.—Deductions in respect of certain incomes", and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be." The provisions of sec. 80A(4) uses the expression "where any amount of profits ....... of undertaking .....is claimed and allowed as deduction under any of those provisions for any assessment year... deduction in respect of, and to the extent of, such profits shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking...". The expressions "any amount of profits...", "claimed and allowed" and "deduction in respect of and to the extent of such profits" are, in our view, crucial words that need to be understood while interpreting this provision. The expression "any amount of profits....", in our view, would also mean "a portion of profit". The expression "claimed and allowed", in our view, would mean that the deduction actually allowed on the portion of profit. The expression "in respect of and to the extent of such profits", in our view, would mean the portion of profit so allowed as ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 13 of 105 deduction (under sec. 10A or 10AA or 10B or 10BA or any provisions of Chapter VI under the heading "C-deductions in respect of certain incomes") is not eligible for deduction under any other provisions of the Act to the extent so allowed. In the instant case, the assessee has been allowed deduction u/s 10AA of the Act only to the extent of Rs. Rs.4379.1.3 crores against the profit of Rs.5036.35 crores. The above said amount is the amount claimed and allowed u/s 10AA of the Act. Hence the deduction in respect of such profits and to the extent of Rs.4379.13 crores shall not be allowed under any other provisions of the Act. Had the expression "to the extent of not been there in sec. 80A(4), there is a possibility to say that the expression "in respect, of refers to the entire profit of Rs.5036.35 crores. Accordingly we are of the view that there is merit in the contentions of the assessee. Our view is further fortified by the expression "shall in no case exceed the profits and gains of such undertaking. as the case may be". The above said expression visualises the situation that an assessee may be claiming deduction under different provisions of the Act for the profits derived from the same undertaking. Hence the provisions of sec. 80A(4) visualises that the deduction in respect of profits and gains of an undertaking may be claimed under different provisions and hence the restriction is only for that portion of profit claimed and allowed as deduction under setc. 10A or 10AA or 10B or 10BA or any provisions of Chapter VI under heading "C - deductions in respect, of certain incomes" shall not be eligible for deduction under any other provisions of the Act. For the remaining portion of profit, the assessee is eligible to claim deduction under any other section. 77. The Id CIT(A) has referred to the decision rendered by Hon'ble Delhi High Court in the case of TEI Technologies P Ltd (supra). Following observations made by Hon'ble High Court, which has been extracted by Ld CIT(A) at page 84 of his order, in fact, support our view:- "This section seems to indicate, as contended by the Revenue, that Section 10A or Section 10B are only deduction provisions. No doubt, the assumption underlying the sub-section is that Section 10A and Section 10B are deduction provisions and once a deduction is allowed to the assessee under those sections, the same profits shall not be allowed as a deduction under any other provision of this Act for the same assessment year and that in any case the deduction shall not exceed the profits and gains of the eligible undertaking or unit or enterprise or business, as the case may be. Even if Section 10A/Section 10B are construed as exemption provisions, sub-section (4) of Section 80A cannot defeat such construction. The sole object of the sub-section is to ensure that double benefit does not result to an assessee in respect of the same income, once ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 14 of 105 under Section 10A or Section 10B or under any of the provisions of Chapter-VIA and again under any other provisions of the Act. The Hon'ble Delhi High Court has explained that the objective of sec. 80A(4) of the Act is to ensure that double benefit does not result to an assessee in respect of same income. 78. The decision rendered by Hon'ble Karnataka High Court in the case of Sasken Communication Technologies Ltd (supra) is with regard to the deduction claimed u/s. 10A/10AA and u/s 80HHE of the Act. Both these deductions are related to income derived on export of computer software. The question that was considered was - whether the "export turnover" considered for deduction u/s. 10A/10AA can be included in the total turnover for computing deduction u/s 80HHE of the Act. However the facts of the present case is different. The decision rendered by Hon'ble Delhi High Court in the & of Revicra Home Furnishings (supra), relied upon by Ld CIT(A), also deal with claim for deduction under two different Section of the Act for "same income". The decision rendered by Hon'ble Delhi High Court in the case of KEI Industries Ltd (supra) proceeds on the view that the deductions provided u/s 10A/10B/10AA in Chapter EII arc "exemption" provisions and the deductions provided under Chapter VIA (801A, 80IB etc) are deduction provision. Though the above said interpretation is contrary to the decision rendered by Hon‘ble Bombay High Court in the case of Black &Veath Consulting P Ltd (251 CTR 265), yet the ratio of the decision rendered by Hon'ble Delhi High Court is that the double benefit is not available in respect of same income. 79. The assessee has relied upon the decision rendered by Hon'ble Bombay High Court in the case of Associated Capsules (P) Ltd (supra). The High Court was concerned with the eligibility of the assessee to claim deduction u/s 80IA and 80HHC of the Act. The provisions of sec. 80IA(9) provided that where any amount of profits and gains of an undertaking is claimed and allowed under sec. 80IA(1) for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Chapter VIA and shall in no case exceed the profits and gains of such eligible business or undertaking. The Hon'ble Bombay High Court held that the provisions of sec. 80IA(9) affects only allowability of deduction and not computation of deduction. This decision rendered by Hon'ble Bombay High Court supports the case of the assessee that sec. 80A(4) and sec. 801A(9) restricts only allowability of deduction and not "computation of deduction". 80. The ld CIT(A) has expressed the view that the assessee has adopted two different parameters for computing deductions u/s 10AA ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 15 of 105 and u/s 80IB(9) of the Income Tax Act, 1961. We have noticed earlier that, during the year under consideration, the assessee earned profit of Rs.5036.35 crores from this unit. As per the formula prescribed in scc. 10AA of the Act, the deduction allowable u/s 10AA on the above said profit worked out to Rs.4379.13 crores. Against the profit of Rs.5036.35 crores arid the deduction actually allowed u/s 10AA of the Act was Rs.4379.13 crores. The difference between the two figures was Rs.657.22 crores. The assessee claimed deduction of Rs.421,39 crores u/s 80IB(9) of the Act, which was over and above the amount of Rs.4379.13 crores claimed u/s.10AA of the Act. The amount of deduction of Rs.421.38 crores u/s. 80IB(9) of the Act was arrived at by the assessee as under: Profit from Refinery in SEZ - 5036.35 crores Less: Set off brought forward - 4614.96 crores 421.39 crores The assessee was constrained to restrict the deduction u/s. 80IB(9) of the Act to Rs.421.39 crores on account of the specific provisions contained in sec. 80IA(5), which mandates that the quantum of deduction u/s.80IB of the Act shall be computed as if such eligible business were the only source of income of the assessee. Since the Act provided different methodologies to compute deduction u/s.10AA and u/s.80IB(9) of the Act, the assessee was required to adopt different parameters for computing deduction. 81. In view of the foregoing discussions, we are of the view that the assessee shall be eligible to claim deduction u/s. 80IB(9) of the Act in respect of profits ― not allowed as deduction u/s. 10AA‖ of the Income Tax Act, 1961. Accordingly, we set aside the vide taken by ld. CIT(A) and A.O. on this issue.‖ Since the above decisions is in assessee‘s own case, and it has not been brought before us that this has been reversed by the Hon'ble Jurisdictional High Court, respectfully following the principle of stare decisis, we set aside the order of the authorities below and decide this issue in favour of the assessee 30. Respectfully following the views of the coordinate bench, and particularly as no reasons for not following the views so expressed by the coordinate bench have been pointed out to us by the learned Departmental Representative, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 31. Ground no. 5 is thus dismissed. 32. In ground no. 6, the Assessing Officer has raised the following grievance: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 16 of 105 Whether, on the facts and in the circumstances of the case and in law, the Id.CIT(A) erred in deleting the disallowance of Rs. 228,39,15,312/- incurred by the assessee on aborted blocks of other contract areas underproduction Sharing contracts other than KGD? 33. This issue is also continuing from the past assessment years. While computing the 80IB(9) deduction, the assessee had reduced it by Rs 228,39,15,312, being unsuccessful exploration cost in respect of areas, other than KGD-9 on which the profits were made. When asked to justify the same, the assessee submitted that the provisions of section 80IB(9) are required to be read with the provisions of Section 80IA(5) which, inter alia, requires that the profits of the eligible business are required to be computed as if that business is the only source of income. Accordingly, the losses required in other exploration on other blocks, in addition to the profits from the blocks from which the income is earned, are also required to be taken into account. Elaborate legal submissions were also made in support of this broad proposition. None of these submissions, however, impressed the Assessing Officer. He was, inter alia, of the view that such an accounting practice and claim of the assessee company is in patent violation of the mandatory provisions of clause 17.2.2 of the PSC agreement signed in respect of its undertaking which laid down the manner in which deduction for such expenses are to be allowed. He was of the view that the deduction under section 80IB(9) are to be computed without any regard to the losses on aborted exploration. Aggrieved, the assessee carried the matter in appeal. Learned CIT(A) reversed the stand of the Assessing Officer, and upheld the plea of the assessee by observing as follows: 16.3 Decision: I have considered the facts of the case and the submissions made by the assessee. The issue for consideration is whether cost of abortive/unsuccessful blocks (other independent undertakings) are be reduced while computing the profits of a successful block (KGD in the assessee's case which is independent undertaking) for the purpose of claiming deduction u/s 80-IB(9). The assessee was engaged in the business of exploration and production of mineral oil. The assessee was awarded 30 contract areas under separate production sharing contracts (PSC) signed with the Government of India. The above contract areas were awarded on bidding in separate auction for each contract area. There is no dispute that for the purpose of claiming deduction us.80IB (9) of the Act each contract area constituted an independent undertaking. Since the assessee had complied with the conditions specified u/s 80IB(9) of the Act, it claimed deduction of the profits and gains of KGD undertaking u/s 80-IB(9) of the Act. While computing the profits and gains of KGD undertaking for the purpose of claiming deduction under the section 80IB(9) of the Act, the provisions of section 80IA(5) are applicable, which provide that for the purposes of determining the quantum of deduction, the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 17 of 105 profits and gains of the eligible business shall be computed as if such eligible business were the only source of income of the assessee. Accordingly, the assessee has correctly not reduced the unsuccessful exploration cost incurred in contract area other than KGD, which has been made in the computation of income u/s 42 (1)(a) against the entire income of the assessee company while computing the business income. The AO has however, rejected the above claim of the assessee and has reduced the amount of Rs. 228,39,15,312/- being the abortive cost of wells incurred in contract areas other than KGD while computing deduction u/s,80IB(9) of the Act in respect of KGD undertaking. In doing so, he has relied on the provisions of Article 17.2.2. of the Production Sharing Contract (PSC). However, on harmonious reading of the provisions of Article 17 of the PSC, it can be concluded that the deduction under Article 17.2.2 in respect of abortive/unsuccessful blocks is to be allowed to a Company while computing its profits and gains from the business of Petroleum Operations. Thus, the same are not be reduced for the purpose of computing the profits of an Undertaking' eligible for deduction u/s 801B. Similar issue has been allowed to appellant in the immediately preceding assessment year ie. for AY 2013-14. Futher, similar issue has been decided by the ITAT in favour of the appellant for A.Y. 2011-12. The relevant extract of ITAT order for A.Y. 2011-12 is reproduced below. 108. We notice that the article/clause 17.2.2 of PSC allows deduction of expenses relating to aborted blocks against the profit arising from other blocks. In our view, the assesse was right in contending that the article/clause 17.2.2 was concerned with the computation of income at entity level in terms of sec. 42 of the Act. The article/clause 17.2.5 of PSC states that all other provisions of Income Tax Act shall apply. The PSC does not deal with the deduction given u/s 80IB(9) of the Act and hence the provisions of the Act shall apply. Hence the deduction u/s. 80IB(9) of the Act has to be computed in terms of sec. 80IB of the Act.sec. 80IB (13) of the Act provides that the provisions of sec. 80IA(5) shall apply and under the provisions of sec. 80IA(5) of the Act, the profits and agins of eligible business, for the purpose of sec. 80IB, shall be computed as if such eligible business were the only source of income of the assesse. In view of these provisions, the deduction us 80IB(9) has to be computed after ascertaining profits and gains of eligible business in terms of sec 80IB(5) of the Act. Hence there is no scope to adjust expenses relating to other "undertakings" while computing deduction ws 80IB(9) of the Act. Hence, we are of the view that the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 18 of 105 decision rendered by Ld CIT(A) does not call for any interference and accordingly we uphold the same. Thus, this ground of appeal is allowed and AO is directed to compute the profits of KGD undertaking on a standalone basis as per the provisions of 80IA(5), for the purpose of claiming deduction under the section 80IB(9) of the Act. The AO is accordingly, directed that cost in respect of abortive/unsuccessful blocks are not be reduced while computing the profits of the undertaking viz: KGD which is eligible for deduction was 801B(9). This ground of appeal is accordingly allowed. 34. The assessee is aggrieved and is in appeal before us. 35. As learned representatives fairly agree, this issue is also covered, in favour of the assessee, by decisions of the coordinate benches, in assessee‟s own case, for the assessment years 2011-12, 2012-13 and 2013-14. Referring to earlier decisions of the coordinate benches, the order dated 10 th November 2020, for the assessment year 2013-14, observes as follows: At the outset on this issue learned Counsel of the assessee submitted that the issue is covered in favour of the assessee by the ITAT on this issue for A.Y. 2011- 12 to 2012-13 as under :- ―107. We have heard rival contentions on this issue. We have noticed earlier that the Ld CIT(A) has decided this issue in favour of the assessee by holding that each contract is a separate undertaking and hence the expenses relating to aborted blocks of different contracts cannot be reduced from the profit from sale of mineral oil obtained from another contract. The operative portion of CIT(A) on this issue are extracted below:- "49. Decision: I have considered the facts of the case and the submissions made by assessee. The issue for consideration is whether cost of abortive/ unsuccessful blocks (other independent undertakings) are be reduced while computing the profits of a successful block (KGD in the assessee's case which is independent undertaking) for the purpose of claiming deduction u/s 80-IB(9).The assessee was engaged in the business of exploration and production of mineral oil. The assessee was awarded 31 contract areas under separate production sharing contracts (PSC) signed with the Government of India. The above contract areas were awarded on bidding in separate auction for each contract area. There is no dispute that for the purpose of claiming deduction u/s. 80IB(9) of the Act each contract area constituted an independent undertaking. Since the assessee had complied with the conditions specified u/s. 80IB(9) of the Act, it claimed deduction of the profits and gains of KGD undertaking u/s. 80-IB(9) of the Act. While computing the profits and gains of KGD undertaking for the purpose of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 19 of 105 claiming deduction under the section 80IB(9) of the Act, the provisions of section 80IA(5) are applicable, which provide that for the purposes of determining the quantum of deduction, the profits and gains of the eligible business shall be computed as if such eligible business were the only source of income of the assessee. Accordingly, the assessee has correctly not reduced the unsuccessful exploration cost incurred in contract area other than KGD, which has been made in the computation of income u/s 42(l)(a) against the entire income of the assessee company while computing the business income. The AO has however, rejected the above claim of the assessee and has reduced the amount of Rs.2042.69 crores being the abortive cost of wells incurred in contract areas other than KGD while computing deduction u/s. 80IB(9) of the Act in respect of KGD undertaking. In doing so, he has relied on the provisions of Article 17.2.2. of the Production Sharing Contract (PSC). However, on harmonious reading of the provisions of Article 17 of the PSC, it can be concluded that the deduction under Article 17.2.2 in respect of abortive/unsuccessful blocks is to be allowed to a Company while computing its profits and gains from the business of Petroleum Operations. Thus, the same are not be reduced for the purpose of computing the profits of an ̳Undertaking‘ eligible for deduction u/s. 80IB. Thus, this ground of appeal is allowed and AO is directed to compute the profits of KGD undertaking on a standalone basis as per the provisions of 80IA(5), for the purpose of claiming deduction under the section 80IB(9) of the Act. The AO is accordingly, directed that cost in respect of abortive/unsuccessful blocks are not be reduced while computing the profits of the undertaking viz. KGD which is eligible for deduction u/s. 80IB(9). This ground of appeal is accordingly allowed.‖ 108. We notice that the article/clause 17.2.2 of PSC allows deduction of expenses relating to aborted blocks against the profit arising from other blocks. In our view, the assessee was right in contending that the article/ clause 17.2.2 was concerned with the computation of income at entity level in terms of sec. 42 of the Act. The article/clause 17.2.5 of PSC states that all other provisions of Income tax Act shall apply. The PSC does not deal with the deduction given u/s 80IB(9) of the Act and hence the provisions of the Act shall apply. Hence the deduction u/s 80IB(9) of the Act has to be computed in terms of sec. 80IB of the Act. Sec. 80IB(13) of the Act provides that the provisions of sec. 80IA(5) shall apply and under the provisions of sec. 80IA(5) of the Act, the profits and gains of eligible business, for the purposes of sec. 80IB, shall be computed as if such eligible business were the only source of income of the assessee. In view of these provisions, the deduction u/s 80IB(9) has to be computed after ascertaining ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 20 of 105 profits and gains of eligible business in terms of sec. 80IA(5) of the Act. Hence there is no scope to adjust expenses relating to other ―undertaking‖ while computing deduction u/s 80IB(9) of the Act. Hence, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference and accordingly we uphold the same. Since facts are identical and it is not the case that above decision of ITAT has been reversed by Hon‘ble Jurisdictional High Court, we uphold the order of learned CIT(A). 36. Respectfully following the views so expressed by the coordinate bench in assessee‟s own case, for the immediately preceding assessment year, we uphold the conclusions arrived at by the learned CIT(A) on this point as well, and decline to interfere in the matter. 37. Ground no. 6 is also thus dismissed. 38. In ground no. 7, the Assessing Officer has raised the following grievance: Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing deduction u/s 80IB(9)(ii) of the Act at Rs 879,91,97,445/- instead of Rs.39,33,87,348 as held by the Assessing Officer? 39. So far as this issue is concerned, it is also fully covered by the decision of the coordinate bench in assessee‟s own case for the immediately preceding assessment year. During the course of the assessment proceedings, the Assessing Officer declined deduction under section 80IB(9) in respect of KGD 6 undertaking which extracted crude oil, natural gas and condensate, on the ground that the deduction under section 80IB(9) is admissible in respect of extraction of mineral oil which includes crude oil but not natural gas and condensate. Learned CIT(A) however reversed the stand so taken by the Assessing Officer by relying upon Hon‟ble Gujarat High Court‟s judgment in the case of Niko Resources Vs UOI (copy placed before us at pages 2144-45 of the legal paper book), a decision of the coordinate bench in assessee‟s own case for the assessment year 2011-12 and decision of learned CIT(A), in assessee‟s own case for the assessment year 2013-14. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us. 40. Having heard the rival contentions and having perused the material on record, we find that learned CIT(A)‟s decision for the assessment year 2013-14, which forms the basis of the impugned relief, has travelled in appeal before a coordinate bench, and the coordinate bench, vide order dated 10 th November 2020, confirmed the relief so granted by the CIT(A) by observing, inter alia, as follows: I have considered the facts of the case and submissions made by the assessee. The issue for consideration is whether the term 'mineral oil' u/s 80-IB(9) includes natural gas and condensate. The assessee company is engaged in the business of extraction of natural resources including Petroleum and gas, refining of petroleum ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 21 of 105 products etc. On 12.04.2000 the assessee alongwith M/s Niko Resources Limited entered into a PSC with the Government of India ['GOI'] for obtaining a Petroleum Mining Lease in respect of Development area specified therein namely Block KG- DWN-98/3 (KGD) for extraction and exploration of mineral oil i.e. 'Petroleum'. Although the term 'mineral oil' is defined in section 42, 44BB and 293A of the Act, the same is not defined in Section 80-IB of the Act. When one refers to following statutes dealing with mineral oil, petroleum and natural gas etc, natural gas is treated as a part of 'mineral oil' viz: a) The Oil fields (Regulation Development) Act, 1948 b) The Mines and Minerals (Development and Regulation) Act, 1959 c) The Oil industry (development) Act, 1974 d) The Regulation for foreign direct investment in India e) Notification issued (No GSR 304(E) dated March 31, 1983 for extending the applicability of the Act to the continental shelf of India f) New Exploration Licensing Policy g) Petroleum Tax Guide published by the Ministry of Petroleum and Natural Gas, Government of India The issue is whether natural gas is mineral oil and is eligible for deduction u/s. 801B(9) of the Act has already been considered by the Hon"ble Income Tax Appellate Tribunal Ahmedabad Bench in the case of NIKO Resources Limited Vs. DCIT [22 DTR 225] and held that natural gas is mineral oil eligible for deduction u/s 80IB(9) of the Act. The above decision of the ITAT has been further confirmed by the Hon'ble Gujarat High Court (reported in 374 ITR 369) by placing reliance upon the decision of the Supreme Court in the case of Association of Natural Gas &Ors.Vs Union of India &Ors.(2004) 4 SCC 489. The Hon'ble Gujarat High Court has also held that the insertion of sub-clause (iv) to Section 80-IB(9) does not mitigate against meaning attributed to the expression "mineral oil" by the Apex Court, Entry 53 of List I does not refer to Natural Gas separately. Further, Hon'ble Gujarat High Court has also rejected the contention raised by the Department, that petroleum products and natural gas have been made part of mineral oil only through inclusive provisions contained in Sections 42, 44BB and 293A and its conspicuous absence in section 80-IB has to be inferred that the purpose of Section 80-IB, mineral oil would include petroleum products and natural gas. Similar issue has been allowed to appellant in the immediately preceding assessment year i.e. for AY 2014-15. Further, similar issue has been decided by the ITAT in favour of the appellant for AY. 2011-12. The relevant extract of ITAT order for A.Y.2011-12 is reproduced below. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 22 of 105 "112 Since identical issue has been decided by Hon'ble Gujarat High Court in favour of the assesse in the case of NIKO Resources Lid (which holds 10% share in the block) and since the LD CIT(A) has followed the same, we do not find any infirmity in the order passed by Ld CIT(A) on this issue. On perusal of the aforesaid facts and following the decision of the Gujarat High Court (supra) and recent ITAT order in appellant‘s own case for A. Y. 2011-12, I hold that the term 'mineral oil', for the purpose of claiming deduction u/s 80-IB(9) of the Act includes natural gas and condensate and therefore the assessee claim for deduction us 80IB(9) of the Act in respect of both natural gas and condensate is accordingly allowed. Accordingly, this ground of appeal is accordingly allowed. 41. Respectfully following the views so expressed by the coordinate bench in assessee‟s own case, for the immediately preceding assessment year, we uphold the conclusions arrived at by the learned CIT(A) on this point as well, and decline to interfere in the matter. 42. Ground no. 7 is also thus dismissed. 43. In ground nos. 8, 9 and 10, which we will take up together, the Assessing Officer has raised the following grievances: 8. ―Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) erred in allowing appeal of the assessee and directing the Assessing Officer to recompute the profits and deductions taking into consideration the revised interest expenditure as submitted by the assessee?‖ 9. ―Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing appeal of the assesses and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee?" 10. "Whether, on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in allowing appeal of the assessee and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee?‖ 44. So far as these grievances are concerned, the relevant material facts are as follows. These grievances pertain to the revision of deductions claimed under sections 80IB and 80AA for KGD6 Unit, Refinery SEZ Unit and PP SEZ Unit. The revision was on account of a revision, on account of some factual corrections, in interest expenditure to be considered for computing these deductions. The assessee made these revisions, by way of filing a letter, and revised standalone accounts and revised form 10CCB and 56F, in the course of the assessment proceedings. These claims were rejected by the Assessing Officer in the light of Hon‟ble Supreme Court‟s judgment in the case of Goetze India Ltd Vs CIT [(2006) 282 ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 23 of 105 ITR 323 (SC)]. Interestingly, even while rejecting the claim (for example at page 82 of the assessment order), the Assessing Officer himself has observed as follows: .....the assessee, vide letter no. RIL/Aspro/AY 14-15/11 dated 15 th December 2017, had submitted that the interest amount debited to the profit and loss account has been erroneously computed at Rs 516,77,11,652 instead of Rs 420,87,00,000 on account of the reasons specified in the said letter. The claim of the assessee is not considered now. The assessee has made the claim by not filing the revised return but filing submissions during the assessment proceedings. Accordingly, the claim is not acceptable in view of the decision in the case of Goetze India Ltd Vs CIT 282 ITR 323 SC. The claim of the assessee is not even verified. If the appellate authorities allow the claim of the assessee company, then the computation of interest expenses is to be verified along with documentary evidence. 45. Even in declining the claim, thus, the Assessing Officer had indicated that it was on account of limitations placed on him by the Goetze decision (supra), he could not have accepted the claim. There was no issue on the merits on the claim. In appeal before the CIT(A), learned CIT(A) accepted the claim and directed the Assessing Officer to recompute the same. Learned CIT(A) noted that the Goetze decision does not impinge on the powers of the appellate authorities. In effect thus the claim was admitted by the CIT(A) but the computation was directed to be done by the Assessing Officer. However, the Assessing Officer is aggrieved and in appeal before us. 46. Having heard the rival contentions and having perused the material on record, we see no reasons to interfere in the findings of the CIT(A) on this point either. As a matter of fact, the Assessing Officer‟s observations, as extracted earlier, would show that his only point was that he did not have the powers to admit the claim in the assessment order, but he was alive to the fact that the appellate authorities did not have this limitation, and that apparently was the reason that the Assessing Officer stated that the necessary verification will be done in case of admission of claim by the appellate authorities. His grievance before us thus does not make sense and seems somewhat mechanical or ritualistic. In any event, in the case of CIT Vs Pruthvi Brokers and Shareholders Pvt Ltd [(2012) 349 ITR 336 (Bom)], Hon‟ble jurisdictional High Court has observed that “It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254”. While there is a specific reference to the powers of the Tribunal, as was the issue before Their Lordships, these observations hold equally good in respect of the powers of the Commissioner (Appeals). It is also important to bear in mind the fact that it was not even a fresh claim, it was simply a request for correction in the claim which was already made. Keeping in view of these discussions, as also bearing in mind the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 24 of 105 entirety of the case, we approve conclusions arrived at by the learned CIT(A), and decline to interfere in the matter on this count as well. 47. Grounds nos. 8, 9 and 10 are thus dismissed. 48. In ground no. 11, the Assessing Officer has raised the following grievance: ―Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing the appeal of the assessee and directing the assessing officer to exclude the amount of notional sales tax incentive while computing Book Profit u/s. 115JB of the Act.?‖ 49. The short point requiring our adjudication in this ground of appeal is whether the amount of notional sales incentives is to be excluded from the book profits or not. During the relevant previous year, the assessee had received a sum of Rs 523,72,52,550 from the Government of Gujarat and Rs 71,50,047 from the Government of Uttar Pradesh. These amounts were treated as capital receipts by the assessee, and which we have confirmed, following the coordinate bench decisions for the preceding assessment years, as such, earlier in this order. In the computation of book profits, however, this amount was included in the book profits. When grievance against this amount being included in the book profit was raised before the learned CIT(A), he upheld the plea of the assessee and observed as follows: On perusal of the submission filed by the appellant, it is observed that the main contentionof the appellant is that a capital receipt which is not chargeable to tax under normalprovisions of the Act also cannot be brought to tax under the provisions of Section 115JB. In this regard the appellant has relied upon the following: The provisions of Section 115JB have to be considered subject to charging provisionsunder Section 4 of the Act and an item of income which is otherwise not chargeable to taxcannot be subjected under tax under MAT provisions unless specifically provided for. Since the legislature itself has created parity between income under normal provisions andbook profit so far as exempted receipts are concerned, if this logic is extended further,items of receipt which are not income at all and hence fall outside the purview of thecomputation of income under normal provisions cannot be included in "book profit" u/s115JB of the Act. Relying on provisions of sub-section section 5 to Section 115JB of the Act which reads as"save as otherwise provided in this section, all other provisions of the Act shall apply toevery assesse, being a company, mentioned in this section", it is submitted that sinceSection 115JB for the relevant assessment year does not provide for any specific inclusionof a subsidy or a capital receipt for computing ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 25 of 105 book profit, other provisions of the Act haveto be applied for determining whether such receipt has to be taken into account forcomputing book profit. Thus provisions of Section 4 and Section 2(24) will necessarilyapply for computation of book profit u/s 115JB and as such applying the aforesaidprovisions, the sales tax subsidy being capital in nature and outside the ambit of chargingsection 4, has to be reduced while computing book profit u/s 115JB of the Act. The intention of legislature for introducing MAT provisions (Section 115J, 115JA and 115JB) was to levy tax on companies availing tax incentives and tax concessions under the IT Act and pays less tax although they have huge profits in books. The said transaction does not result into any such deductions but results into a receipt not having character of income. The definition of "income" as per Section 2(24) of the Act was amended by Finance Act 2015 whereby vide clause (xviii) has been inserted with effect from 0lst April, 2016 to include subsidy under the definition of income. This has prospective effect from AY 2016-17 and hence not applicable for the year under appeal. Further, the appellant has also distinguished the Special Bench of the Hon'ble Tribunal in the case of Rain Commodities Lid Vs DCIT. I have carefully considered the submissions of the appellant and the cases relied upon before me and also the order passed by my predecessor on this issue. Further, I have also considered the recent ITAT judgement (dated 28.09.2018 refer para 21 page no 8 of the ITAT judgement) passed in the case of the appellant for AY 2010-11 where this issue was raised by way of additional ground for the first time before the Hon 'ble ITAT. The relevant extract of the ITAT judgement is copied below: "23. We heard the parties on this issue. The Ld A.R placed his reliance on various case laws and submitted that Tribunal / High Court has held that the capital receipts, which are not liable for taxation under the Income tax, are to be excluded from Net profit for the purpose of computing book profit u/s. 115JB of the Act. The Ld A.R submitted that the Sales tax incentive is embedded in the Sales revenue and the same has been held to be capital receipt under normal provisions of the Act. Accordingly he submitted that the same is required to be reduced from Net Profit for the purposes of sec. II5JB of the Act. On the contrary, the Ld D.R submitted that the provisions of sec. II5JB do not contain any provision for exclusion capital receipts. He submitted that the AO has only power to examine whether books of accounts are certified by authorities under Companies Act, 1956 as having been properly maintained in accordance with Companies Act and thereafter the AO has limited power to increase ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 26 of 105 and reduce items as provided in Explanation to sec. 115JB of the Act. In support of this proposition, the Ld D.R placed his reliance on the decision rendered by the Special bench of Tribunal in the case of Rain Commodities Ltd (2010) (40 SOT 265). We notice that an identical issue was considered by the co-ordinate bench in the case of M/s. Alok Industries Ltd (ITA No.1017/Mun/2017 dated 21.05.2018) and has been held that the Capital receipts cannot be included in the Book Profit u/s.115JB of the Act. We notice that an identical view has been expressed in several other cases also by the co-ordinate benches. For the sake of convenience, we extract below the relevant observations made by the Co- ordinate bench in the case of Alok Industries Ltd (supra): 25. Contention of learned AR was as under:- i. Section 115JB should be considered subject to charging provisionunder sectionSection 4 read with the definition of an "income under Section 2(24). ii. The definition of income under Section 2(24) has been amended by the Finance Act 2015 to include subsidy within its scope, but only with prospective effect from AY 2016-17. iii. Therefore, such subsidy which is capital in nature cannot be brought within the purview of Section 115JB as the charging provision fails. iv. Also, the intention of the legislature in bringing Section 115JB on statute should also be considered [Refer Memorandum explaining Finance Bill 1987 165 ITR (St) 152 at 167. It is only when the company is claiming deductions under the Profits and Gains from Business or Profession and/or deductions under Chapter VIA, the alternative scheme of taxation attempts to bring the book profit to tax. The impugned transaction does not result into any such deductions but results into a receipt not having character of income. v. Thirdly, clause ii to Explanation 1 to Section 115JB which excludes exempt income referred to in Section 10 should also be logically extended to exclude the receipt which does not have the character of income at all. 26. Further, from the judgments as discussed above, it becomes crystal clear that the subsidy received by the company under the TUF Scheme of the Ministry of Textile, Govt. of India is for helping the growth of textile industries and therefore capital in nature and outside the ambit of section 4 of Income tax Act. Accordingly, the said receipt cannot be taxed as income of the Company. Article 265 of the Constitution of India lays down that no taxes shall be levied or collected except with the authority of law. Further, entry 82 of the Seventy ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 27 of 105 Schedule of the Constitution of India lays down that the Central Government has the right to levy tax on income. Further, section 4 of the Income Tax Act 1961 which provides for the charge, specifies that every assessee shall be charged for any assessment year income tax in respect of the total income of the previous year. 27. The main charging section provides for levy of income tax only in respect of income of the assessee. Once an item is not considered as income of the person as the same constitutes capital receipt, it shall not be subjected to tax under this Act. Therefore, once the subsidy received under the TUF scheme is held to be capital in nature, it comes outside the meaning of the term "income" and therefore outside the ambit of section 4 i.e the charging section. Unless, specifically made taxable such subsidy cannot be taxed as income. Once the subsidy received cannot be taxed under section 4, there cannot arise any taxability under section 115JB of the Act, which merely provides for an alternate mechanism for computation of income and tax thereon. Thus, an item which is not otherwise taxable cannot be subjected to tax under the MAT provision without any express authority in this behalf. Also, if we look at Explanation 1 to Section 115JB(2), we find that the legislature has defined 'book profit‘. For calculation of such book profit, one has to reduce certain items, which inter alia include, item ―ii‖ which states that ̳the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, if any such amount is credited to the profit and loss account". Thus, what can be discerned from above item is that, for calculation of book profit one has to reduce those items of income which do not form part of total income under normal provisions. If that be the case, then it logically follows that those items which do not constitute income at all cannot for part of book profit and no MAT can be levied thereon at all, Even sub section (5) of section 115JB states that ̳Save as otherwise provided in this section, all provisions of this Act shall apply to every assessee, being a company, mentioned in this section. Thus, provisions of section 4 and section 2(24) shall necessarily apply for computation of book profit and MAT u/s. I15JB and as such provisions of section 115JB cannot override the provision of section 4, which is the basic charging section. Accordingly, looked at from whichever angle, the subsidy has to be reduced from the book profit for computation of MAT under section 115JB. 28. We found that issue is covered by the following decision of the Tribunal / High Court, wherein it was held that under the MAT provisions ws.115JB is not applicable to capital receipts/exempt income. Accordingly, in light of the aforesaid submissions and placing reliance on the recent ITAT judgement (dated 28.09.2018) for AY 2010-11 (relevant para referred above), I decide the issue in favour of the appellant and direct the AO to exclude the amount of Notional Sales Tax Incentive while computing book profits u/s 115JB of the Act. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 28 of 105 This ground is accordingly allowed. 50. The Assessing Officer is aggrieved and is in appeal before us. 51. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 52. We find that, as noted by the coordinate bench in the immediately preceding assessment year, the matter was all along decided in favour of the assessee- as evident from the observation that “The assessee submits that this issue is covered in favour of the assessee by the ITAT decision in assessee on case for assessment year 10-11 to 12- 13. We note that identical ground was dealt with by the ITAT in its order as referred above. The tribunal has referred to the decision of ITAT in the case of DCIT vs. M/s. Alok Industries Limited (in ITA Nos. 900 to 906/Mum/2019 vide order dated 16.07.2020 and quoted there from. Thereafter, the ITAT has concluded that ―consistent with the view taken by the coordinate benches on an identical issue we direct the assessing officer to exclude the amount of sales tax incentive from the net profit for the purpose of computed book profit under section 115 JB of the act as the same is capital in nature.” Yet, a different view was taken in the immediately preceding assessment year, not on merits but by sending the matter back to the CIT(A) for fresh adjudication on the ground that “in the case of DCIT vs. M/s. Alok Industries Limited (supra), in a subsequent decision for A.Ys. 2006-07 to 2011-12 dated 16.07.2020, this tribunal has adjudicated the same issue and directed that “the learned CIT(A) is directed to consider this issue de novo after taking into account the aforesaid Hon'ble Jurisdictional High Court decisions [i.e. in the case of CIT vs Veekaylal Investment Co. (P.) Ltd., 249 ITR 597 (Bom.]” That approach, however, is contrary to the stand taken by Hon‟ble Madras High Court, in the case of CIT Vs Metal and Chromium Plater Pvt Ltd [(2019) 415 ITR 123 (Mad)] wherein Their Lordships have, inter alia, observed that “The Bombay High Court in the case of Veekaylal Investments (supra) considers the inclusion of capital gain for the purposes of assessment under section 115J. Both judgements are rendered in the context of Section 115J which does not contain a provision analogous to sub-sections (4) of section 115JA or (5) of section 115JB of the Act. Thus while an assessment u/s 115J would be concluded exclusively on the basis of the book profits as adjusted by the items set out in the Explanation thereunder, in an assessment in terms of sections 115JA or JB, the adjusted book profits would be further subjected to the effect of other provisions of the Act that are specifically brought into play by virtue of sub-sections (4) of section 115JA and (5) of section 115JB”. Once a higher court holds that Hon‟ble jurisdictional High Court‟s judgment in the case of Veekaylal Investments (supra), which was delivered in the context of section 115J, does not apply in terms of section 115JB, we cannot be at liberty to be guided by the coordinate bench decision implying otherwise. The very foundation of deviation by the coordinate bench does not, therefore, hold good in law. In any event, this issue is decided on merits in favour of the assessee by Hon‟ble Calcutta High Court in the case of PCIT Vs Ankit Metal & Power Ltd [(2019) 416 ITR 591 (Cal)] wherein Their Lordships have, inter alia, observed that “In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 29 of 105 'capital receipt' and does not fall within the definition of 'Income' under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under Section 115JB of the Act, 1961. In the case of Appollo Tyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation under Section 115JB of the Income Tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961”. There is no decision contrary thereto by the Hon‟be jurisdictional High Court. While on the issue as to which judicial precedent be followed in such a situation, we find guidance from a rather decision of a coordinate bench, in the case of Siro Clinpharm Pvt Ltd Vs ITO [(2021) 131 taxmann.com 73 (Mum)], wherein, speaking through one of us (i.e. the Vice President), the coordinate bench has observed as follows: 7. .......... We may usefully take note of the observations of Hon'ble Supreme Court in the case of Asstt. CCE v. Dunlop India Ltd. [1985] 154 ITR 172, wherein the Their Lordships quoted, with approval, from the decision of House of Lords to the effect that "We desire to add and as was said in Cassell & Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of courts" which exists in our country, "it is necessary for each lower tier", including the High Court, "to accept loyally the decision of the higher tiers". "It is inevitable in hierarchical system of courts that there are decisions of the Supreme appellate Tribunal which do not attract the unanimous approval of all members of the judiciary... But the judicial system only works if someone is allowed to have the last word, and that last word, once spoken, is loyally accepted" and observed that. . . "the better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system." The principle is thus unambiguous. As a rule, therefore, judicial discipline warrants that the wisdom of a lower tier in the judiciary has to make way for higher wisdom of the tiers above. Unlike the decisions of Hon'ble jurisdictional High Court, which bind us in letter and in spirit on account of the binding force of law, the decisions of Hon'ble non-jurisdictional High Court are followed by the lower authorities on account of the persuasive effect of these decisions and on account of the concept of judicial propriety. In the case of CIT v. Godavaridevi Saraf [1978] 113 ITR 589 (Bom.), Hon'ble jurisdictional High Court took note of a non- jurisdictional High Court and held that the Tribunal, outside the jurisdiction of that Hon'ble High Court and in the absence of a jurisdictional High Court decision to the contrary, could not be faulted for following the same. Their Lordships observed that, "It should not be overlooked that the Income-tax Act is an All-India statute.......... Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land". Of course, these observations were in ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 30 of 105 the context of a provision being held to be unconstitutional, an issue on which the Tribunal could not have adjudicated anyway, as evident from the observation "Actually, the question of authoritative or persuasive decision does not arise in the present case because a Tribunal constituted under the Act has no jurisdiction to go into the question of constitutionality of the provisions of that statute" but nevertheless the respect for the higher judicial forum was unambiguous. In Tej International (P.) Ltd. v. Dy. CIT [2001] 118 Taxman 59 (Delhi) (Mag.), a coordinate bench has, on this issue, observed that "In the hierarchical judicial system that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, therefore, one a authority higher than this Tribunal has expressed an opinion on that issue, we are no longer at liberty to rely upon earlier decisions of this Tribunal even if we were a party to them. Such a High Court being a non-jurisdictional High Court does not alter the position...". . There can, however, be exceptions to this situation on account of a variety of reasons, and these exceptions come into play only when the views are of non-jurisdictional High Court which, do not, legally speaking, bind the lower tiers of judiciary. In our considered view, so far as the precedence value of a non- jurisdictional High Court's judgment is concerned, the position has been very well summed up by a coordinate bench decision, in the case of Bank of India (supra), wherein, speaking through one of us (i.e. the Vice President), the coordinate bench has observed as follows: While dealing with judicial precedents from non-jurisdictional High Courts, we may usefully take of observations of Hon'ble jurisdictional High Court in the case of CIT v. Thana Electricity Co. Ltd [(1994) 206 ITR 727 (Bom)], to the effect "The decision of one High Court is neither binding precedent for another High Court nor for the courts or the Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect". Unlike the decisions of Hon'ble jurisdictional High Court, which bind us in letter and in spirit on account of the binding force of law, the decisions of Hon'ble non-jurisdictional High Court are followed by the lower authorities on account of the persuasive effect of these decisions and on account of the concept of judicial propriety-factors which are inherently subjective in nature. Quite clearly, therefore, the applicability of the non-jurisdictional High Court is never absolute, without exceptions and as a matter of course. That is the principle implicit in Hon'ble Supreme Court's judgment in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd. [(2008) 305 ITR 227 (SC)] wherein Their Lordships have upheld the plea that "non- consideration of a decision of Jurisdictional Court or of the Supreme Court can be said to be a mistake apparent from the record". The decisions of Hon'ble non-jurisdictional High Courts are thus placed at a ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 31 of 105 level certainly below the Hon'ble High Court, and it's a conscious call that is required to be taken with respect to the question whether, on the facts of a particular situation, the non-jurisdictional High Court is required to be followed. The decisions of non-jurisdictional High Courts do not, therefore, constitute a binding judicial precedent in all situations. To a forum like us, following a jurisdictional High Court decision is a compulsion of law and absolutely sacrosanct that way, but following a non-jurisdictional High Court is a call of judicial propriety which is never absolute, as it is inherently required to be blended with many other important considerations within the framework of law, or something which cannot be, in deserving cases, deviated from. [Emphasis, by underlining, supplied by us] 8. No specific reasons for not following the non-jurisdictional High Court decision in Redington's case (supra) have been pointed out to us. It is not even the case of the assessee, and rightly so, that the issue decided by Hon'ble Madras High Court is not the same as we are called upon to decide in this case, that there are conflicting decisions of Hon'ble non-jurisdictional High Court on the issue or that there are any other good and sufficient reasons for not following this judicial precedent. There is nothing more than Bank of India decision (supra) to justify our taking a decision at variance with the decision of a non-jurisdictional High Court, but then this decision by the coordinate bench is on its own unique facts and it recognizes the fundamental principle that it is more of an exception that the decisions of the non-jurisdictional High Court are not followed. At one place, this decision, inter alia, states that "To a forum like us, following a jurisdictional High Court decision is a compulsion of law and absolutely sacrosanct that way, but following a non-jurisdictional High Court is a call of judicial propriety.....-which can...be, in deserving cases, deviated from". Implicit in this observation is the fact that not following non-jurisdictional High Court decision is more of an exception than the rule. There have to be very strong and good reasons not to follow even non jurisdictional High Court decisions. It is not, therefore, open to us in the present situation, as has been contended by the learned counsel, to simply disregard this judicial precedent from Hon'ble Madras High Court, and follow the decision of the coordinate bench, in assessee's own case, in favour of the assessee. The fact that the decisions in assessee's own cases were authored by one of us, the claim that these decisions elaborately deal with certain aspects which may or may not have been examined by Hon'ble High Court and the apprehension that it may not have been argued on certain important facets, are wholly irrelevant. Once Their Lordships of a higher judicial forum express their esteemed views on any subject, the views expressed by us, in the past, on that issue, have to make way for the higher wisdom of Their Lordships. As for the facets not argued nor not considered, even if any, as is laid down by the apex Court in the case of Ambika Prasad Mishra v. State of UP AIR 1980 SC 1762 : [1980] 3 SCC 719 (p. 1764 of AIR 1980 SC) "Every new discovery nor argumentative novelty cannot undo or ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 32 of 105 compel reconsideration of a binding precedent A decision does not lose its authority merely because it was badly argued, inadequately considered or fallaciously reasoned...." Similarly, in the case of Kesho Ram & Co. v. Union of India [1989] 3 SCC 151, it was stated by the Supreme Court thus: "The binding effect of a decision of this Court (as indeed any superior court) does not depend upon whether a particular argument was considered or not, provided the point with the reference to which the argument is advanced subsequently was actually decided in the earlier decision". The more we ponder upon the correct course to be adopted in such matters as is before us, the more we are convinced with respect to the binding nature of decisions of even Hon'ble non-jurisdictional High Courts, unless there are specific good reasons not to do so. The doubts, if at all, and somewhat nightmarish doubts at that, arise about the manner in which Bank of India decision (supra) could be interpreted so as to destabilize the well settled norms of judicial discipline, but neither do we need to perpetuate an error, even if there be any, nor do we need to examine to that aspect any deeper at this stage. There is, thus, no legally sustainable justification, on the facts of this case, to disregard the views expressed by Hon'ble Madras High Court in Redington's case (supra). Given the important judicial developments by way of a binding legal precedent, directly on the issue, even if from a non-jurisdictional High Court, we cannot simply treat this issue as covered by decisions of the coordinate bench, and thus disregard the esteemed views expressed by a higher judicial forum. 53. In any event, even with respect to the earlier assessment years, this issue was decided, in favour of the assessee, in the assessee‟s own case. The only reason for taking a deviation, in the immediately preceding assessment year, was the applicability of Veekaylal Investment decision (supra) but that reasoning has now been specifically disapproved by Hon‟ble Madras High Court holding that the said decision does not apply in the case of section 115JB- as in this case. In view of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this count as well. 54. Ground no. 11 is also thus dismissed. 55. In ground no. 12, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) right in allowing appeal of the assessee and directing the assessing officer to allow the weighted deduction at 200% in respect of R&D expenditure u/s. 35(2AB) of the Act as claimed by the assessee.?‖ 56. So far as this grievance is concerned, the relevant material facts are as follows. In the course of the assessment proceedings, the Assessing Officer disallowed Rs 8.66 crores for weighted deduction under section 35(2AB) in respect of research and development expenditure by observing as follows: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 33 of 105 21.1 On perusal of the computation of income statement, it is seen that during the year under consideration the assesse company has claimed weighted deduction under section 35(2AB) of the Act @ 200% in respect of Research and Development Expenditure as under: Sr. No Nature of Expenditure Amount of Expenditure incurred (Rs. In crore) Amount of weighted deduciton claimed (Rs. In crore) 1 Revenue Expenditure 156.25 312.51 2 Capital Expenditure 50.87 101.73 Total 207.12 414.24 21.2 During the course of assessment proceedings, the assesse was asked to furnish copy of Form 3CL issued by the Department of Scientific and Industrial Research (DSIR) for AY 2014-15. The assesse vide Letter No RIL/Aspro/AY14- 15/11 dated 15.12.2017 has furnished the same. As per the report issued by DSIR, the amount of expenditure eligible for deduction u/s 35(2AB) is as under: Sr. No Nature of Expenditure Amount of Expenditure incurred (Rs. In crore) Amount of weighted deduciton claimed (Rs. In crore) 1 Revenue Expenditure 152.81 305.62 2 Capital Expenditure 49.98 99.96 Total 202.79 405.58 21.3 As per the report issued by DSIR the total deduction allowable u/s 35(2AB) is Rs. 405.58 crores whereas the assesse has claimed a deduction of Rs. 414.24 crores. Hence Rs. 8.66 crores (414.24 crores less 405.58 cores) being the additional claim made by the assesse u/s 35(2AB) of the Act is hereby disallowed. 57. Aggrieved, the assessee carried the matter in appeal before the CIT(A). In the proceedings before the learned CIT(A), it was pointed out that the law, as it stood at the relevant point of time, empowered the DSIR only to approve the facility for the purpose of research and development expenses under section 35(2AB), and it was only with effect 1 st July 2016 that the DSIR was alsorequired to quantify the eligible weighted deduction. The plea was accepted by the learned CIT(A) and it was held that so far the present assessment year is concerned, which is a pre-amendment assessment year, the quantification by the DSIR cannot restrict the eligibility for deduction as long as expenses are actually incurred in a DSIR approved facility. The Assessing Officer is aggrieved and is in appeal before us. 58. Having heard the rival contentions, and having perused the material on record, we see no reasons to interfere in the findings of the learned CIT(A)- particularly as there are now a number of decisions of the coordinate benches holding that so far as assessment years prior to 2016-17 are concerned, the DSIR‟s limitingthe quantification of expenditure incurred on ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 34 of 105 research and development expenses on a DSIR approved facility would not come in the way of weighted deduction under section 35AB. We are of the considered view that as long as the expenditure is actually incurred in the DSIR approved facility, which is not even in dispute in the present case, the entire expenses will have to be allowed as a deduction. This is also so held by several decisions of the coordinate benches, including in the cases of JCIT Vs Reliance Life Sciences Pvt Ltd (2130/Mum/2018), Glenmark Pharmaceutical Ltd Vs ACIT (5651/Mum/2017), ACIT Vs Crompton Greaves Ltd (111 taxmann.com 338) and Cummins India Ltd Vs DCIT (309/Pune/2014). In view of these discussions, and bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this point as well. 59. Ground no. 12 is thus dismissed. 60. In ground no. 13, the Assessing Officer has raised the following four questions for our adjudication:- "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the TP adjustment of Rs.19,38,27,643/- in respect of interest , on delayed realization of receivables based on earlier years‘ decisions, which is in violation of Rule 10B(4) on contemporaneous nature of comparable data, as interest rate varies every year?" "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in not considering the cost of borrowing for the assessee adopted by the TPO to benchmark the interest chargeable on receivables and instead adopting adhoc Libor plus a spread of 200 bps as adopted by the assessee?" "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) is correct in not considering the cost of borrowing for the assessee adopted by TPO to benchmark interest chargeable on receivables when the sale price is determined to recover the cost of business, which is inclusive of the cost of borrowing?" "Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is correct in ignoring the basic tenet of the transfer pricing as enshrined in section 92F(ii), as in a third party unrelated uncontrolled circumstances the assessee would have recovered the interest on receivables considering the cost of borrowing in its hands?" 61. The short point requiring our adjudication on this ground of appeal is whether the assessee‟s benchmarking of the interest on the delayed realization of debts at 200 bps above the LIBOR is correct or not. The TPO has made the adjustment of Rs 19,38,27,643 by benchmarking the interest on the delayed realization of debtors at the assessee‟s average cost of funds (including short term and long term, domestic and foreign borrowings) and using cost plus mark up based on the Bloomberg data, which has been computed at 4.76% for the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 35 of 105 USA and 6.15% for Tanzania. In appeal, following the stand taken by the coordinate benches in the assessee‟s own case for the assessment years 2010-11 to 2012-13 and CIT(A)‟s order in the assessee‟s own case for the assessment year 2013-14, deleted the impugned ALP adjustment and upheld the benchmarking of LIBOR plus 200 bps as adopted by the assessee. The Assessing Officer is aggrieved and is in appeal before us. 62. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 63. We find that in the immediately preceding assessment years, consistently this approach of the assessee, at the even lower spread of 150 bps, has been all along accepted by the coordinate benches. In any case, no case has been made out that the spread of 200 bps is lower than the arm‟s length price. As regards the cost-plus method on the cost of funds, we find it is fundamentally flawed inasmuch as it treats all the types of borrowing at par and proceeds on the erroneous assumption that the arm‟s length price of the debt has, at its basis, cost of funds available to the tested party- particularly when these funds are of significantly different tenures and different currencies. In view of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A)- which is, in any event, in harmony with the decisions of the coordinate benches in assessee‟s own, and decline to interfere in the matter. 64. Ground No. 13 is also thus dismissed. 65. In ground no. 14, which once again has several parts in the grounds of appeal and all, but first, parts are no more than arguments in support of the grievance, the Assessing Officer has raised the following grievances: Whether on the facts and circumstances of the case and in law, theLd.CIT(A) is correct in deleting the TP adjustment of Rs. 25,16,59,278/- as interest on investment said to be in preference shares of AEs treated by the TPO as loan in nature of Rs.652.40 crores? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the TP adjustment by merely placing reliance on earlier years decisions without going through the new facts brought-on record by the TPO this year independently? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the TP adjustment by merely treating it as recharacterisation without looking into facts of case?‖ Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the vital fact that though the said investment is stated to be compulsorily convertible preference shares, the assesses said to have redeemed ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 36 of 105 50 crore number of such shares on 16.04.2013 at the same face value at 0.01 euro per share (Rs. 32,22,00,444) without any arm's length return from the AE RGBV, proving the claim of "compulsorily convertible" as dubious, which shows the investment in the AE is essentially interest free loan in nature? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assesses redeemed the investment as above, it again stated to have invested in the same FY 2013-14, on 10.03.2014, 262,13,30,100 numbers of preference shares (Rs.222,66,88,853) in RGBV at the same face value of 0.01 euro per share without any return, which again shows the nature as current account loan transaction?‖ Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the vital fact that though the said investment is stated to be compulsorily convertible preference shares, the assessee said to have redeemed 2,90,720 said preference shares in RIME in the FY 2012-13 at par with same value of AED 290,72,00,000 (INR 430.70 crores) at which it was invested, without any arm's length return from the AE RGBV, proving the claim of "compulsorily convertible "as dubious, which shows the investment in the AE is essentially interest free loan in nature? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring another vital fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RGBV had positive incomes of 33,31,606 Euro for FY 2009-10, 1,09,313 Euro for FY 2010-11, 18,923 Euro for FY 2011-12 and 22,332 Euro for FY 2012-13, the assessee has not accounted any such return on accrual basis leading to base erosion to India, casting severe doubts on the nature of entire investment, which is otherwise an interest free loan? Whether on the facts and circumstances of the case and in law, theLd. CIT(A) is correct in ignoring the fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RGBV had positive incomes of 11,494,125 UAE Dirhams, 5,188,402 Dirhams and $742,069 during the calendar years 2007,2008 and 2009 respectively, the assessee has not accounted any such return on accrual basis leading to base erosion to India, casting severe doubts on the nature of entire investment, which is otherwise an interest free loan? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RIME had positive incomes of 11,494,125 UAE Dirhams, 5,188,402 Dirhams and $ 742,069 during the calendar years 2007, 2008 and 2009 respectively, the assessee has not accounted any such return on accrual basis leading to base erosion to India, ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 37 of 105 casting severe doubts on the natures of entire investment, which is otherwise an interest free loan?‖ Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the fact that the AE RGBV incurred losses from FY 2013-14 onwards and there is no rationale for making investments to the level of Rs. 222,66,88,853/- (2,62,13,30,100 number of the said preference shares), that to, at the fag end of the FY knowing fully well that the AE is incurring losses and there is no possibility of getting any return as the stipulated 5% coupon rate, which no unrelated party in uncontrolled circumstances would have done within the meaning of section 92F(ii)?‖ ―Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the fact that the assessee has not furnished any detailed valuation report for the value of the preference shares said to be invested as above in RGBV preference shares and also for the value of AED 1000 per preference share in the AE RIME which again casts cloud on the nature of the investment?‖ Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assessee has not furnished any detailed valuation report for the value of the preference shares said to be invested as above in RGBV preference shares and also for the value of AED 1000 per preference share in the AE RIME which again casts cloud on the nature of the Investment? Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the facts that the AE RIME has been making losses continuously from calendar year 2010 to 2015 and though is net worth is negative, the assessee has shown to have invested in the said preference shares, which is not an arm‘s length behavior?‖ Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the facts that the situation in the case of the AE-RGBV is much worse and it has been making very meager profit during the FYs 2010-11 to 2012-13 and loss during the FY 2013-14 and has been in liquidation process from FY 2014-15 and its net worth is also negative only, though the assessee claimed to have made investment in said preference shares, which is not an arm‘s length behavior?‖ Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in not appreciating the sham nature of the nomenclature and form of the transaction ―compulsorily convertible preference share‖, when the investment was redeemed losing the significance of ―compulsory convertible‖; never ever been converted into equity shares at any point of time further losing its nature, ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 38 of 105 and never even received the coupon rate of return losing the nature of preference share, thus rendering the transaction essentially an interest free loan?‖ Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in over-looking the fact that though the stated preference shares should carry a fixed rate of dividend, the assessee has not accounted any such return which casts cloud on the real nature of investment being interest free loan?‖ Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that an amount of Rs.652.4 crores has flown out of India in the garb of preference share investment in the AEs without any return leading to base erosion in India, which cannot be an arm's length situation in uncontrolled circumstances as in Section 92F(ii)? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the very essence of transfer pricing as to whether unrelated enterprises under uncontrolled conditions would enter into such transactions within the meaning of section 92F(ii)? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not perceiving the intention of the assessee in providing loans in the garb of preference shares thereby avoiding tax liability on the interest? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the economic substance of the transaction which is essentially loan though its external form is stated to be investment in preference shares, as the basic tenet of transfer pricing is that the transaction is to be seen in uncontrolled circumstances in thiro party situation as per Section 92F(ii)? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assessee has entered into an "arrangement, understanding or action in concert" with its AE within the meaning of section 92F(v) whereby huge funds have flown out of India for no return, which no unrelated independent party would have done within the meaning of section 92F(ii) which in turn became possible because of the special relationship existed between the assessee and its AEs? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in failing to "look through" the "substance" of transaction and instead "looked at" the superficial "form" of the transaction to arrive at the decision that the investment is quasi-equity in nature whereas in substance it is "loan" in nature and that the "form" of investment in preference shares was used to avoid taxation of interest leading to base erosion in India ? ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 39 of 105 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in ignoring the amendment by way of Explanation (i)(c) inserted by Finance Act 2012, with retrospective effect from 1.4.2002 whereby the capital investment could be covered as an international transaction under "capital financing" and such transaction would yield accrued interest which is 'income' for the purposes of section 92(1), so as to be dealt under Chapter X of the Income tax Act? Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the essential character of the transaction is "loan" in "substance" which the assessee camouflages as 'preference share‘ in order to avoid tax liability on the interest that accrues coupled with the base erosion in India by shifting of huge amount of Rs. 652.4 crores out of India without any return? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct In ignoring the BEPS (Base Erosion and Profit Shifting) Action Plan 9 of which India is a party which mandates that transactions can be disregarded for TP purposes where they lack commercial rationality, as far as proper return on investments is concerned? Whether on the facts and circumstances of the case and in law, the Id. CIT(A) is correct in Ignoring the BEPS Action Plan which emphasizes substance over form, economic reality over legal form and conduct of parties over contracts for evaluating a transaction from transfer pricing angle? Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in not realizing the fact that if such practices are allowed under transfer pricing unchecked without setting it right for arm's length return, it would lead to base erosion to this country as huge funds as in this case could be siphoned out of this country in the garb of alleged preference shares in AE, even though the actual character is essentially loan which should be earning interest, which again would be yielding tax revenue to this country? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the decision of Hon'ble Delhi High court in the case of CIT v/s EKL Appliances Ltd, (345 ITR 241) wherein it has been held that recharacterisation of transaction is permissible in exceptional circumstances as that of assessee as under?Two exceptions have been allowed to the aforesaid principle and they are – (i) where the economic substance of a transaction differs from its form; and ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 40 of 105 (ii) where the form and substance of the transaction are the same but arrangements made in relation to the transaction, viewed in their totality, differ from those Which would have commercially rational manner. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the interest relying on the decision of the Hon'ble High Court in the case of Vodafone India Service P. Ltd (Writ Petition No. 871 of 2014), as the decision held that the shortfall or excess in investment is capital in nature and so cannot be added as income, whereas in the instant case, capital itself has not been considered for adjustment and that the capital was considered as loan and only the accrued interest has been considered as the income? Whether on the facts and circumstanced of the case and in law, the Ld. CIT(A) is correct in not appreciating the order o the Hon'ble Tribunal in assessee's own case for AY 2010-11 while relying on it, in which it has been held recharacterisation is possible when the transaction is sham or substantially at variance with the stated form, and ignoring that there are enough pointers as above for the impugned year to show that the transaction is loan which is substantially at variance with the stated form of preference share? 66. So far as this set of issues raised by the Assessing Officer is concerned, the relevant material facts are as follows. The assessee has made investments in non-cumulative compulsorily convertible preference shares of its subsidiary companies, bearing a coupon rate of 5% p.a. This transaction was converted as a loan simpliciter, and, accordingly, benchmarking was done on the basis of Bloomberg database. The Assessing Officer noted that even though the assessee was entitled to a yield of 5% of the value there was no dividend declaration in many cases, and no person would enter into such transactions in a real commercial world. He was of the view that this transaction needs to be recharacterized as its economic substance differs from its purported form. It is in this background that an arm‟s length price adjustment of Rs 25,16,59,278 was made by treating these investments as loans for all practical purposes. Aggrieved, assessee carried the matter in an appeal before the learned CIT(A) who deleted this arm‟s length price adjustment on the basis of decisions of the coordinate benches for the assessment years 2010-11, 2011-12 and 2012-13 as also her predecessor‟s order for the assessment year 2013-14. The Assessing Officer is aggrieved and is in appeal before us. 67. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 68. We find that, while dealing with the same issue for the assessment year 2013-14, a coordinate bench of the Tribunal has, inter alia, observed as follows: It is noted that that this Tribunal in assessee‘s own case in A.Y. 2010-11 to 2012- 13 has decided the identical issue as under:- ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 41 of 105 ―48. We heard the parties on this issue and perused the record. The learned D.R strongly supported the order passed by AO, while the Ld A.R supported the order passed by Ld CIT(A). We notice that the Ld CIT(A) has followed the decision rendered by Hon‘ble jurisdictional High Court in the case of Besix Kier Dabhol (supra) in order to hold that re-characterisation of transaction is not permissible. In the case of Bharti Airtel Ltd (supra), the Delhi ITAT has held that it is not open to the TPO to recharacterise transaction under Income tax Act, unless it is found to be sham or bogus. It was further held that, even under judge-made law, recharacterisation is possibly only if transactions are found to be substantially at variance with the stated form. In the absence of any such finding and also in the absence of anything on record to show that unrelated applicant was to be paid interest for the period ending till the date of allotment of shares, the ITAT deleted the addition. In the case of Bharti Airtel Ltd (supra), there was delay in allotment of shares and still, the Tribunal held that re- characterisation is not permissible. In the instant case, it is seen that the preference shares have been allotted within the year itself. The AO/TPO has not shown that the transactions are sham or bogus nor it was shown that the apparent is not real. It was also not shown that the unrelated share applicant has been paid any interest for the period commencing from date of subscription to the date of allotment of shares. It has been held that the amendment made by Finance Act 2012 including capital financing transactions as international transactions cannot be applied retrospectively. The Ld A.R further submitted that the Preference shares carry coupon rate of 5%, which is higher than the 6 months Libor plus 300 bps.‖ We further note that it has been submitted before us that the above decision is squarely applicable in as much as no fresh investment has been done during the A.Y. 2013-14. Furthermore, as pointed out by learned Counsel of the assessee from Hon'ble Bombay High Court decision in the case of Pr. CIT Vs. M/s. Aegis Limited (supra) supports the above proposition. We may refer the Hon'ble High Court decision as under :- ―The respondent-assessee is a Company registered under the Companies Act. For the Assessment Year 2009-10, the assessee was subjected to transfer pricing regime. Question no.1 arises out of the action of the Revenue to tax notional interest in the hands of the assessee through transfer pricing. The facts are that, during the period relevant to the assessment year in question, the assessee had subscribed to redeemable preferential shares of its Associated Enterprises (―AE‖ for short) and redeemed some of its shares at par. The Transfer Pricing Officer (―TPO‖ for short) held that the preference shares were equivalent to interest free loans advanced by the assessee and accordingly charged the interest on notional basis. The Tribunal by the impugned judgment, deleted the addition by observing that the TPO had re-characterised the transaction of subscription of shares into advancing of unsecured loans. The Tribunal did not accept such conclusion, inter-alia on the grounds that the TPO cannot disregard the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 42 of 105 apparent transaction and substitute the same without any material of exceptional circumstances pointing out that the assessee had tried to conceal the real transaction or that the transaction in question was sham. The Tribunal observed that the TPO cannot question the commercial expediency of the assessee entered into such transaction. 3. We are broadly in agreement with the view of the Tribunal. The facts on record would suggest that the assessee had entered into a transaction of purchase and sale of shares of an AE. Nothing is brought on record by the Revenue to suggest that the transaction was sham. In absence of any material on record, the TPO could not have treated such transaction as a loan and charged interest thereon on notional basis. No question of law arises.‖ Furthermore, we note that as submitted no fresh investment is made during the year. That the shares were allotted in earlier years. The new issue raised by Revenue on the theory of preponderance are not sustainable as nothing has been cogently brought on record. As pointed out by the learned Counsel of the assessee the examples mentioned in the grounds above do not relate to current year and it is trite that every year is different for transfer pricing purpose. Subsequent year instances cannot give a carte blanche to the Assessing Officer to make adjustment and render the Tribunal decision ceasing to be a precedent. Accordingly in the background of the aforesaid decision and precedent we uphold the order of learned CIT(A) 69. We are in considered agreement with the views so expressed by the coordinate bench. In any event, the subscription for compulsorily convertible preference shares cannot be compared with a simple loan because it is a case of quasi capital and the significant reward for this investment by the assessee is the opportunity to own the equity- something inherently incompatible with a loan transaction simpliciter. It cannot be open to the revenue authorities to ignore this aspect of the matter and compare the rewards on a compulsorily convertible preference share with the rewards on a loan transaction. The rewards for the investment for a limited period, i.e. the period till the conversion into shares takes place, cannot be considered in isolation from the overall transaction as a whole. The decision of the CIT(A) for the assessment year 2013-14, which is relied upon in the impugned order, has already been confirmed by a coordinate bench as above. As regards plea of the Assessing Officer that the CIT(A) has simply relied upon the earlier decisions of the coordinate benches, without taking a fresh look at the facts, it is an admitted position that there are no changes in the facts in circumstances of the case and there is not even a fresh investment in the present year, and, such being the facts, there cannot indeed be any justification for disregarding the binding legal precedents. This plea of the Assessing Officer is ill-conceived. Similarly, his grievance about reasons for recharacterization having been ignored is not really incorrect as there is a specific consideration by the coordinate benches, as indeed by us, as to why these reasons of recharacterization do not hold good in law. As regards the claim of these transactions being dubious in nature, just because of the timing of conversion at the same value, as long as the conversion of preference shares is within the permissible time frame, nothing turns on the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 43 of 105 timing against the assessee. Many of the issues being raised in the grounds of appeal are neither on the specific findings of fact, nor even specific arguments on facts before us, and have not been raised in the TPO‟s order. Just because if the assessee was to give loans, rather than make investments in the compulsorily convertible shares, the Indian tax base would not have been eroded cannot be reason enough to disregard the reality of investment having been made in the compulsorily convertible preference shares, and proceed to benchmark the transaction as that of a loan. The BEPS action plan, unless it results in an appropriate amendment in law, and the change in the definition of international transaction, including capital financing in its ambit, has no impact on the stand of the CIT(A) because what has been held is that this transaction cannot be compared with a loan. In the light of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) on this point as well, and decline to interfere in the matter. 70. Ground no. 14 is all thus dismissed. 71. In ground no. 15, which again has several parts and all of which we will take up together, the Assessing Officer has raised the grievances, all of which we will take up together, as follows: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s Ace BPO Services Pvt, Ltd.(Ace BPO) as the comparable without appreciating that it is functionally dissimilar as its core competence is health care back office support system whereas tested party (assessee) is providing consultancy and support service in the field of petroleum products? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in including M/s Allsec Technologies Ltd, as the comparable without appreciating that it is functionally dissimilar as it is engaged into ITES service whereas benchmarking is done for MCS and BSS? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s Axis Integrated Systems Ltd. without appreciating that it is functionally similar as both the assessee and the comparable are engaged in providing high end management and business support services? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s BNR Udyog Ltd. without appreciating that it is functionally similar, as only business support service segment of comparable has been considered for benchmarking the transaction?‖ 72. So far as this set of grievances is concerned, it is sufficient to take note of the facts that the assessee has rendered management consultancy services and business support ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 44 of 105 services to its associated enterprise at cost plus 7% mark up. This transaction was benchmarked on the basis of the transactional net margin method (TNMM) with certain comparables including Ace BPO Services Pvt Ltd and Allsec Technologies Limited. These comparable were rejected and the Transfer Pricing Officer introduced comparables of BNR Udyog Ltd and Axis Integrated Systems Ltd on the basis of, what he described as, functional similarity. On this basis, an ALP adjustment of Rs 67,84,423 was made by the Assessing Officer. When the matter travelled in appeal before the CIT(A), the comparison of Axis Integrated Systems was rejected and the inclusion of Allsec was upheld. The Assessing Officer is aggrieved and is in appeal before us. 73. Having heard the rival contentions and having perused the material on record, we find that there is no occasion to interfere in the findings of the CIT(A) on this point either. As regards BNR Udyog, as a comparable is concerned, the plea is clearly ill-conceived, as, at page 198 of the impugned order, the CIT(A) has observed that “BNR Udyog is accepted as a comparable to the appellant, and that “the contentions of the appellant have been examined and rejected”. As for the inclusion of Allsec Technologies Limited and exclusion of Axis Integrated Systems is concerned, this is precisely what coordinate benches, in assessee‟s own cases on the same set of facts for the assessment years 2012-13 and 2013-14, have held, and no reasons have been pointed out for deviating from the stand so taken by the coordinate benches on the same set of facts. These grievances of the Assessing Office must, therefore, be rejected. We do so. As regards the plea against the inclusion of Ace BPO Services as a comparable, learned counsel for the assessee submits, that aspect of the matter is wholly academic inasmuch, with Ace BPO as comparable or without Ace BOP as comparable, the transaction value is at arm‟s length. Learned Departmental Representative does not dispute that aspect of the matter. In view of these discussions, conclusions arrived at by the CIT(A), even though conceded by the learned counsel on the point of inclusion of Ace BPO, donot call for any interference. We confirm the deletion of the impugned ALP adjustment by the CIT(A) ad decline to interfere in the matter. 74. Ground no. 15 is thus also dismissed. 75. In ground no. 16, which again has several questions for our adjudication, the Assessing Officer has raised the following grievance: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the addition of Rs. 58,16,290/- with regard to transfer pricing adjustment on Provision of support services for drilling operations to AE?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating that the contract between AE and a foreign government is not determinative of arm‘s length price?‖ ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 45 of 105 ―Whether on the facts and circumstances of the case and in law the Ld. CIT(A)is correct in failing to understand that the contract between the AE and the foreign government was to avoid base erosion for the Kurdish government and it would not avoid Indian jurisdiction to arrive at the ALP of the transaction unless it is prohibited by any Bilateral Investment Treaty?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating the fact that at best the agreement with Kurdish government would only serve as evidence for the cost incurred and it could not be read into much for ALP determination in the absence of any binding Bilateral Treaty between Indian and Iraq?‖ "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in holding that the transaction is covered u/r 10B(2)(d) in the absence of any laws and Government orders in force and equating an agreement between the AE and the regional government for incurring of cost with ̳law or government order in force‘ for ALP of the transaction?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the cost-to-cost basis of support services to the AE, without understanding the basic tenet of the transfer pricing u/s. 92F(ii) that no unrelated assessee in uncontrolled circumstances in third party situation would have rendered services on cost-to-cost basis leading to base erosion in India?‖ 76. So far as this set of grievances of the Assessing Officer is concerned, the relevant material facts are like this. The assessee has entered into a „Production Sharing Agreement‟ with the Government of Kurdistan for the exploration and development of petroleum in the specified area. Under the said PSC, any professional or administrative services rendered by the affiliates of the AE had to be on „cost to cost basis‟. The stand of the assessee was that since the provisions of rule 10B(2)(d), which provide thatan uncontrolled transaction being judged with respect to “conditions prevailing in the markets in which the respective parties to the transactions operate, including the geographical location and size of the markets, the laws and Government orders in force, costs of labour and capital in the markets, overall economic development and level of competition and whether the markets are wholesale or retail”, will be attracted, and viewed thus, the cost to cost transaction is an arm‟s transaction on the facts of this case. The TPO, however, rejected this plea, holding the PSC of no relevance in the manner, and proceed to compute arm‟s length price of the transaction at 17.21% mark up. An addition of Rs 58,16,290 was thus made. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A), following the orders of the coordinate benches in assesee‟s own cases for the assessment years 2011-12 and 2012-13 and following his predecessor‟s order for the assessment year 2013-14, deleted the ALP adjustment of Rs 58,16,290. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 46 of 105 77. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 78. We find that the decision of the CIT(A) for the assessment year 2013-14, on the basis of which impugned relief was granted by the CIT(A), has already been approved by a coordinate bench. The issue is thus covered in favour of the assessee by decisions of the coordinate benches in assessee‟s own cases for the assessment years 2011-12, 2012-13 and 2013-14. No reasons as to why we must not follow the decision have been pointed out to us. Undoubtedly, one of the critical factors in determining the ALP, as recognized by rule 10B(2)(d), is conditions prevailing in the market in which AEs operate, and once it‟s a legal condition precedent in entering the transaction in the respective PSC market is that the AE‟s affiliates are not allowed to have any mark up on a supply of services to the AE, the determination of ALP is required to be having regard to this condition. Viewed thus, the cost to cost rendition of services can be indeed be viewed as an arm‟s length transaction. In view of these discussions, and being consistent with the co-ordinate bench decisions, we uphold the action of the CIT(A) and decline to interfere in the matter. 79. Ground no. 16 is also thus dismissed. 80. In ground no 17, the assessee has raised the following questions for our adjudication: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing to restrict the TP adjustment of corporate guarantee fee which is split into 50:50 as against the split of 60:40 charged by the TPO for the impugned year merely relying on the Tribunal and the CIT(A)‘s order for earlier year in assessee‘s own case, which is violative of Rule 10B(4) on the need to be contemporaneous nature of the comparable data?‖ Whether on the facts and circumstances of the case and in law, the Ld, CIT(A) is correct in restricting the rate ignoring the fact that the rate depends on various variables such as risk profile, credit profile, place of loan, time period & rate of interest and that all these variables vary from company to company and one rate cannot be applied in an ad hoc manner to all the AE‘s across the board which will be violative of provisions of Rule 10B?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the rate arrived at by the assessee based on Yield Spread Approach dividing the interest differential between the assessee and 50:50 in an ad hoc unscientific manner, instead of dividing it on the basis of FAR analysis between the assessee and the AE‘s? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the assessee‘s method of Yield Spread Approach, whereas it is anybody‘s knowledge that the assessee and the AE‘s cannot be considered on ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 47 of 105 the same footing for attributing the interest differential advantage equally, as FAR significantly differ between the assessee and the AE‘s? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not passing a speaking order on the FAR analysis carried out by the TPO for attributing the interest differential in a more conservative manner at 60:40 ratio and simply accepting the assessee‘s ad hoc unscientific ratio of 50:50 without any backing of FAR analysis?‖ 81. The issues so raised pertain to benchmarking of the corporate guarantees. This benchmarking has been done on the basis of yield spread approach, based on the offer letters issued by the bench. The assessee has taken into account interest rate quoted by the bank with and without the corporate guarantee issued by the assessee company. The difference between these two rates is equally divided between the assessee and the AE inasmuch as the corporate guarantee is benchmarked on the basis of 50% of the difference. While there is no dispute on the method of ascertaining the ALP, all that has been done by the TPO is that instead of 50:50 division of the spread, he has modified it to 60:40 i.e. 60% benefit to the assessee and 40% benefit to the AE. There is no justification for this change. In appeal, following accepted earlier decisions of the coordinate benches on this issue, in the assessee‟s own case, the CIT(A) has accepted 50:50 allocation of spread. The Assessing Officer is aggrieved and is in appeal before us. 82. Having heard the rival contentions and having perused the material on record, we find that this is a purely factual matter, which permeates from year to year, and once the coordinate benches have consistently held, right from 2011-12 onwards, that 50:50 allocation is reasonable, and there is no change in the material facts, we see no reasons to take any other view of the matter than the view so taken by the coordinate benches in assessee‟s own cases for the preceding assessment years. We, therefore, approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 83. Ground no. 17 is also thus dismissed. 84. In ground no. 18, the Assessing Officer has raised the following questions for our adjudication: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s BVG India Ltd., without appreciating that it is functionally similar as it is engaged in the business support service only?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s Empire Industries Ltd. the comparable for benchmarking the transaction of provision of business support service without ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 48 of 105 appreciating that it is functionally dissimilar as it is engaged in the manufacture of machine tools, industrialequipment, real estate whereas the tested party (assessee) is engaged in the service sector?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in accepting functionally dissimilar companies as comparable without appreciating that including such comparables will defeat the very purpose of benchmarking?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s ICRA Management Consulting Services Ltd. as comparable without appreciating that it is having substantially lower turnover i.e. 25.73 crores whereas segmental turnover of the tested party is 1138 crores, overlooking the fact that non-application of turnover filter will defeat the very purpose of benchmarking the transaction and also ignoring the decision of Hon'ble Karnataka high court in case of Acusis software India Private Limited (ITA No .223/2017) in this regard?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s Spectrum Business Solutions Ltd. as comparable without appreciating that it is having substantially lower turnover i.e. 8.23 crores only whereas the segmental turnover of tested party is 1138 crores, overlooking the fact that non-application of turnover filter will defeat the very purpose of benchmarking the transaction and also ignoring the decision of Hon'ble Karnataka high court in case of Acusis software India Private Limited (ITA No .223/2017) in this regard? 85. Learned representatives fairly agree that so far as this issue is concerned, it is also now covered in favour of the asseseee inasmuch as in the immediately preceding assessment year in assessee‟s own case, a coordinate bench has upheld the exclusion of BVG India Limited, as a comparable, and inclusion of Empire Industries Limited as a comparable. Once BVG is excluded and Empire Industries is included, in the valid comparables for the purpose of the benchmarking analysis under the TNMM- as has been done in this case, learned representatives agree that the adjudication on comparability of Spectrun Business Solutions Ltd and ICRA Management Consulting Services Ltd will become academic. 86. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in assessee‟s own case for the immediately preceding assessment year. Respectfully following the same, and subject to the observations as above, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 87. Ground no. 18 is also thus dismissed. 88. In the result, the appeal filed by the Assessing Officer for the assessment year 2014- 15 is dismissed in the terms, and subject to the observations, above, is dismissed. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 49 of 105 89. We now take up ITA No. 1645/Mum/2019, i.e. the appeal filed by the assessee against the order dated 31 st January 2019 passed by the learned CIT(A) in the matter of assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2014-15. 90. In the first ground of appeal, the assessee has raised the following grievance: The learned Commissioner of Income-tax - (Appeals - 57) {hereinafter referred to as CIT(A)} erred in rejecting the Appellant's alternative plea that there is a deemed payment of sales tax and therefore the amount of Rs. 524,44,02,597/- is allowable as per the provisions of Section 43B of the Income-tax Act, 1961 ("Act"). The Appellant submits that there is a deemed payment of Sales tax which is allowable u/s,43B of the Act and the CIT(A) ought to have given a decision on this issue in favour of the Appellant. 91. While dealing with the first ground of appeal filed by the Assessing Officer, earlier in this very order, we have upheld the CIT(A)‟s finding that the receipt of Rs 524,44,02,597 on account of sales tax subsidy is capital in nature. In this view of the matter, this ground of appeal is wholly academic and infructuous. Accordingly, in conformity with the stand of the coordinate benches from assessment years 1994-95 to 2013-14, we decline to interfere in the matter. The action of the CIT(A) is confirmed. 92. Ground no. 1 is thus dismissed. 93. In the second ground of appeal, the assessee has raised the following grievance: The Learned CIT(A) erred in directing the AO to compute the disallowance under clause (f) of Exp 1 to section 115JB(2) i.e. expenditure relating to exempt income, when no such disallowance ought to have been made while computing book profit u/s 115JB of the Act, relying on Tribunal decision in appellant's own case for AY 2009-10 vide corrigendum order dated 02.04.2008. 94. We have already dealt with this plea, while dealing with a connected ground of appeal in the appeal filed by the Assessing Officer, earlier in this order. We have thus upheld this ground, and on that basis, rejected the Assessing Officer‟s grievance on quantification part as infructuous. 95. In view of the above position, the plea of the assessee is thus upheld. 96. Ground no. 2 is this allowed. 97. In ground no. 3, the assessee has raised the following grievance: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 50 of 105 The CIT(A) erred in confirming the disallowance of depreciation of Rs. 4,54,933/-on the opening WDV of capitalized value of goods purchased from P.K. Agarwal Group concerns Viz (Durga Iron & Steel Ltd. and Surajbhan Rajkumar Pvt. Ltd.) in A.Y. 2003-04. 98. Learned representatives fairly agree that this issue is covered against the assessee by the decisions of the cordi ate benches in assessee‟s own case. Respectfully following these decisions, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 99. Ground no. 3 is thus dismissed. 100. In ground no. 4, the assessee has raised the following grievance: The CIT(A) erred in disallowing the deduction of Rs 520,25,03,446/- u/s 37(1) of the Act, being expenses incurred on corporate social responsibility (CSR) on the ground that it does not fall under business expenditure. 101. During the course of the scrutiny assessment proceedings, the Assessing Officer noted that the assessee has incurred an expenditure of Rs 520,25,03,446 on account of certain corporate social responsibility work undertaken by the assessee company. The Assessing Officer was of the view that this expenditure cannot be treated as relatable to the business activity of the company. He further noted that Explanation 2 to Section 37(1), introduced with effect from 1 st April 2015, clearly provided that „for the removal of doubts, it is hereby declared that for the purpose of sub section (1) any expenditure incurred by the assessee on the activities relating to corporate social responsibility referred to in Section 135 of the Companies Act 2013 shall not be deemed to be expenditure incurred by the assessee for the purpose of the business or profession”. He observed that “the amendment is clarificatory in nature, as it is stated to be in so many words, and we should, therefore, hold that the expenses in discharging corporate social responsibility are not deductible in the computation of business income”. The disallowance was thus made. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is not satisfied and is in further appeal before us. 102. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 103. While dealing with the deductibility of corporate social responsibility expenses, so far as period prior to insertion of Explanation 2 to Section 37(1) is concerned, it is useful to take note of a coordinate bench decision in the case of ACIT Vs Jindal Power Ltd [(2016) 70taxmann.com 389 (Raipur)] wherein, speaking through one of us (i.e. the Vice President), it was observed thus: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 51 of 105 16. We have noted that fundamental objection of the Assessing Officer is that the expenses is voluntary, not mandatory and not for business purposes. As for the contention that the expenses being in the nature of voluntary expenses, which are not mandatory, and which the assessee was not statutorily required to incur, are not admissible deduction in computation of business income, we are of the considered view that as long as expenses are incurred wholly and exclusively for the purposes of earning the income from business or profession, merely because some of these expenses are incurred voluntarily, i.e. without there being any legal or contractual obligation to incur the same, those expenses do not cease to be deductible in nature. In other words, it is not necessary that every expense that could be allowed as a deduction should be such as a hardnosed and perhaps devoid of senses of compassion, businessman alone would incur in furtherance of his business pursuits. We find guidance from a passage from the judgment of House of Lords in the case of Atherton v. British Insulated &Helsbey Cables Ltd. [1925] 10 Tax Cases 155 (HL), referred to with approval by the Hon'ble Supreme Court in the case of CIT v. ChandulalKeshavlal& Co. [1960] 38 ITR 601, which reads as follows: "It was made clear in the above cited cases of Usher's Wilshire Brewery v. Bruce (supra) and Smith v. Incorporated Council of Law Reporting [1914] 6 Tax Cases 477 that a sum of money expended not with a necessity and with a view to direct immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency and in order to indirectly facilitate, carrying on of business may yet be expended wholly and exclusively for the purpose of the trade; and it appears to me that the findings of the CIT in the present case, bring the payment in question within that description. They found (in words which I have already quoted) that payment was made for the sound commercial purpose of enabling the company to retain the existing and future members of staff and for increasing the efficiency of the staff; and after referring to the contention of the Crown that the sum of Sterling Pound 31,784 was not money wholly and exclusively laid out for the purpose of the trade under the rule above referred to, they found deduction was admissible thus in effect, though not in terms, negativing the Crowns contentions. I think that there was ample material to support the findings of the CIT, and accordingly hold that this prohibition does not apply." It will, therefore, be clear that even if an expense is incurred voluntarily, it may still be construed as 'wholly and exclusively'. Explaining this principle, Hon'ble Supreme Court has, in the case of Sassoon J David & Co. (P) Ltd.v. CIT [1979] 118 ITR 261/1 Taxman 485inter alia observed that : "It has to be observed here that the expression "wholly and exclusively" used in s. 10(2)(xv) of the Act does not mean "necessarily". Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under s. 10(2)(xv) of the Act even though there was no compelling necessity to incur such expenditure. It is relevant to refer at this stage to the legislative history of s. 37 of the IT Act, 1961, which corresponds to s. 10(2)(xv) of the Act. An attempt was made in the IT Bill of 1961 to lay down ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 52 of 105 the "necessity" of the expenditure as a condition for claiming deduction under s. 37. Sec. 37(1) in the Bill read "any expenditure, laid out or expended wholly, necessarily and exclusively for the purposes of the business or profession shall be allowed." The introduction of the word "necessarily" in the above section resulted in public protest. Consequently, when s. 37 was finally enacted into law, the word "necessarily" came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under s. 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law." 17. The next issue is whether it is for the purposes of business or not. We may, in this regard, usefully refer to the observations of a coordinate bench of this Tribunal, speaking through one of us (i.e. the Accountant Member) and in the case of Hindustan Petroleum Corporation Ltd v Dy. CIT [2005] 96 ITD 186/[2004] 141 Taxman 33 (Mum.) (Mag.), as follows: "7. We find that as held by Hon'ble Karnataka High Court in the case of Mysore Kirloskar Ltd. v. CIT [1987] 166 ITR 836, while 'the basic requirements for invoking sections 37(1) and 80G are quite different', 'but nonetheless the two sections are not mutually exclusive'. Thus, there are overlapping areas between the donations given by the assessee and the business expenditure incurred by the assessee. In other words, there can be certain amounts, though in the nature of donations, and nonetheless, these amounts may be deductible under section 37(1) as well. Therefore, merely because an expenditure is in the nature of donation, or, to use the words of the CIT(A), 'promoted by altruistic motives', it does not cease to be an expenditure deductible under section 37(1). In Mysore Kirloskar Ltd.'s case (supra), Their Lordships have observed that even if the contributions by the assessee is in the forms of donations, but if it could be termed as expenditure of the category falling in section 37(1), then the right of the assessee to claim the whole of it as a deduction under section 37(1) cannot be declined. What is material in this context is whether or not the expenditure in question was necessitated by business considerations or not. Once it is found that the expenditure was dictated by commercial expediencies, the deduction under section 37(1) cannot be declined. As to what should be relevant for examining this aspect of the matter, we may only refer to the observations of Hon'ble Supreme Court in the case of Sri Venkata Satyanarayna Rice Mill Contractors Co. v. CIT [1997] 223 ITR 1012: *. . . any contribution made by an assessee to a public welfare fund which is directly connected or related with the carrying on of the assessee's business or which results in the benefit to the assessee's business has to be regarded as an allowable deduction under section 37(1) of the Act. Such a donation, whether voluntary or at the instance of the authorities concerned, when made to a Chief Minister's Drought Relief Fund or a District Welfare Fund established by the District Collector or any other fund for the benefit of the public and with a view ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 53 of 105 to secure benefit to the assessee's business, cannot be regarded as payment opposed to public policy. It is not as if the payment in the present case had been made as an illegal gratification. There is no law which prohibits the making of such a donation. The mere fact that making of a donation for charitable or public cause or in public interest results in the Government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount under section 37(1) of the Act when such payment had been made for the purpose of assessee's business. 8. In the case of CIT v. Madras Refineries Ltd. [2004] 266 ITR 170 1, Hon'ble Madras High Court has upheld deductibility of the amount spent by the assessee even on bringing drinking water to locality and in aiding local school. While doing so, Their Lordships observed as follows: The concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the locality in which business is located in particular. Being a good corporate citizen brings goodwill of the local community as also with the regulatory agencies and society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill . . . . 9. Let us now take a look at the undisputed facts of this case. The assessee is a company owned by the Government of India and working under the control and directions of the Government of India. As the statement of facts clearly sets out, the expenditure on 20-Point Programmes was incurred in view of specific directions of the Government of India. This factual aspect is not even disputed or challenged by the Revenue at any stage. It cannot but be in the business interest of the assessee-company to abide by the directions of the Government of India which also owns the assessee-company. In any event, as observed by the Hon'ble Madras High Court in Madras Refineries Ltd.'s case (supra), monies spent by the assessee as a good corporate citizen and to earn the goodwill of the society help creating an atmosphere in which the business can succeed in a greater measure with the help of such goodwill. The monies so spent therefore are required to be treated as business expenditure eligible for deduction under section 37(1) of the Act. What is the expenditure for the implementation of 20-point plant after all? It is solely for the welfare of the oppressed classes of society, for which even the Constitution of India sanctions positive discrimination, and for contribution to all around development of villages, which has always been the central theme of Government's development initiatives. An expenditure of such a nature cannot but be, to use the words employed by the Hon'ble Madras High Court in Madras Refineries Ltd.'s case (supra), 'a concrete expression of care and concern for the society at large' and an expenditure to discharge the responsibilities of a 'good corporate citizen which brings goodwill of with the regulatory agencies and ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 54 of 105 society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill." 18. We have also take note of the fact that in view of insertion of Explanation 2 to Section 37(1), with effect from 1st April 2015, which provides that "for the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession", the expenses incurred in discharging corporate social responsibility are not deductible in computation of business income. Learned Departmental Representative submits that this amendment should be treated as clarificatory in nature, as it is stated to be in so many words, and we should, therefore, hold that the expenses in discharging corporate social responsibility were outside the ambit of expenses deductible under section 37(1). 19. We are unable to see legally sustainable merits in this plea either. The amendment in the scheme of Section 37(1), which has been introduced with effect from 1st April 2015, cannot be construed as to disadvantage to the assessee in the period prior to this amendment. This disabling provision, as set out in Explanation 2 to Section 37(1), refers only to such corporate social responsibility expenses as under Section 135 of the Companies Act, 2013, and, as such, it cannot have any application for the period not covered by this statutory provision which itself came into existence in 2013. Explanation 2 to Section 37(1) is, therefore, inherently incapable of retrospective application any further. In any event, as held by Hon'ble Supreme Court's five judge constitutional bench's landmark judgment, in the case of CIT v. Vatika Townships Pvt Ltd (2014) 367 ITR 466/227 Taxman 121/49 taxmann.com 249 (SC), the legal position in this regard has been very succinctly summed up by observing that "Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law." It may appear to be some kind of a dichotomy in the tax legislation but the well settled legal position is that when a legislation confers a benefit on the taxpayer by relaxing the rigour of pre-amendment law, and when such a benefit appears ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 55 of 105 to have been the objective pursued by the legislature, it would be a purposive interpretation giving it a retrospective effect but when a tax legislation imposes a liability or a burden, the effect of such a legislative provision can only be prospective. We have also noted that the amendment in the scheme of Section 37(1) is not specifically stated to be retrospective and the said Explanation is inserted only with effect from 1st April 2015. In this view of the matter also, there is no reason to hold this provision to be retrospective in application. As a matter of fact, the amendment in law, which was accompanied by the statutory requirement with regard to discharging the corporate social responsibility, is a disabling provision which puts an additional tax burden on the assessee in the sense that the expenses that the assessee is required to incur under a statutory obligation in the course of his business are not allowed deduction in the computation of income. This disallowance is restricted to the expenses incurred by the assessee under a statutory obligation under section 135 of Companies Act 2013, and there is thus now a line of demarcation between the expenses incurred by the assessee on discharging corporate social responsibility under such a statutory obligation and under a voluntary assumption of responsibility. As for the former, the disallowance under Explanation 2 to Section 37(1) comes into play, but, as for latter, there is no such disabling provision as long as the expenses, even in discharge of corporate social responsibility on voluntary basis, can be said to be "wholly and exclusively for the purposes of business". There is no dispute that the expenses in question are not incurred under the aforesaid statutory obligation. For this reason also, as also for the basic reason that the Explanation 2 to Section 37(1) comes into play with effect from 1st April 2015, we hold that the disabling provision of Explanation 2 to Section 37(1) does not apply on the facts of this case. 104. We further find that another coordinate bench has, in assessee‟s own case for the immediately preceding assessment year, deleted the similar disallowance. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches, and, in any case, no specific reasons for doing so have been pointed out to us. We have also noted that there is not even doubt on the bonafides and reasonableness of the expenses, and that the dispute before us, as elaborated earlier, is confined to the nature of the amendment being clarificatory. That issue, for the detailed reasons set out above- with which we are in considered agreement, must be held to only prospective in effect. In this view of the matter, and respectfully following the esteemed views of the coordinate benches, we delete the impugned disallowance of Rs 520,25,03,446. The assessee gets the relief accordingly. 105. Ground no. 4 is thus allowed. 106. In ground no. 5, the assseee has raised the following grievance: The CIT(A) erred in restricting the Appellant's claim for investment allowance u/s 32AC of the Act to Rs. 130,26,48,964/- (being 15% of Rs. 868,43,26,433, subject to AO verifying the revised figures as per CA certificate dt. 12.10.2018), ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 56 of 105 as against the Appellant's claim of Rs. 406,63,37,137/- under a misconceived notion that the provisions of section 32AC are not applicable for assets acquired prior to 01st April, 2013 and installed in Financial Year (FY) 2013-14 107. So far as this issue in the appeal is concerned, a few material facts need to be taken note of. The assessee had claimed investment allowance of Rs 406,63,37,137 under section 32AC of the Act, which was computed @ 15% on the additions to the assets, i.e. Rs 1862,08,83,681. While the Assessing Officer accepted the claim with respect to additions to the assets to the extent of Rs 848,80,14,416 as these assets were acquired during the relevant previous year and installed during the same previous year, the Assessing Officer declined the investment allowance with respect to the remaining assets of Rs 1862,08,83,681 on the ground that these assets were acquired prior to 1 st April 2013 but installed in the relevant previous year. The stand of the Assessing Officer that investment allowance under section 32AC will be available only when the assets are acquired in the same period, and that the assets acquired prior to 1 st April 2013 will not be eligible for the benefit of Section 32 AC. The Assessing Officer noted that Section 32AC was introduced in the Finance Act 2013, with effect from 1 st April 2014, for encouraging substantial investment in plant and machinery and provided for incentive for “acquisition and installation of new plant and machinery by manufacturing companies”- as was evident from the Explanatory Memorandum to the Finance Act, 2013. It was thus urged that “acquisition and installation” must be read together. The Assessing Officer thus concluded as follows: 19.5.5 A plain reading of the provisions of the Section and the Explanatory Notes clearly reflect the intention behind the introduction of the Section which is to incentivize investment in P&M by manufacturing companies, who invests above a certain threshold (l00 crore) within a period between 01.04.2013 and 31.03.2015. The provisions of the Section and Explanatory Notes thereof clearly spell out that an assessee intending to claim the benefit or the Section must acquire and install the P&M within the aforementioned period and as such there is no scope left for any interpretation otherwise. It is pertinent to mention here that the deduction under section 32AC is investment linked which is to be made in a specific period and thus any claim of deduction without investment in that specific period is ultra virus. Since, deduction under section 32AC is allowed only on the assets acquired and installed during FY 13-14, the assessee's claim of deduction on assets acquired prior to 01.04.2013 but installed during FY 13-14 is disallowed. Accordingly, deduction u/s 32AC is allowed @15% on Rs. 522,40,48,126 which works out to Rs. 78,36,07,218. Further as per para 14.6.2 above, the assessee is eligible for deduction u/s 32AC which was not claimed In the Return of Income in respect of additions categorized as Plant & Machinery in the KGD6 Block. Hence an additional deduction of Rs. 54,58,29,120 is allowed in the computation of income. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 57 of 105 19.5.6 Thus total deduction u/s 32AC is computed at Rs.132,94,36,33 (Rs.78,36,07,218 plus Rs.54,58,29,120). Since the assessee has claimed deduction u/s 32AC of Rs.406,63,37,137/- the balance sum Rs.273,69,00,799/- is hereby disallowed and added to the income of assessee. 108. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. While rejecting this plea of the assessee, learned CIT(A) has observed as follows: In the original return of income filed by the assessee, the assessee company had claimed investment allowance of Rs.406,63,37,137/- u/s 32AC of the Act @ 15% on asset additions (amounting to Rs.27,10,88,98,098) under the head "Plant and Machinery" Out of the total claim of the assessee company, investment allowance of Rs.78,36,07,218/- was claimed @ 15% on assets acquired and installed during FY 2013-14 amounting to Rs.522,40,48,126 and balance deduction of Rs.328,2729,919/- was claimed @ 15% on assets amounting to Rs.2188,48,66,122 acquired prior to 01st April, 2013 but installed in FY 2013-14, which has been disallowed by the AO. Thus the crux of issue in appeal is, whether investment allowance is available on asset acquired prior to 1st April, 2013 but installed in FY 2013-14. Although for the year under appeal, the provisions of sub-section 1 of section 32AC are applicable (which provide investment allowance 15% to a manufacturing company who has acquired and installed after 31 March 2013 and before 1 st April 2015, new plant and machinery of Rs.100 cr or more), the appellant has relied on the subsequent provisions and amendments which place importance on the condition of installation' for granting of investment allowance. In this connection, the appellant has submitted that Investment Allowance u/s 32AC is available on installation of new asset for which reliance was placed by the appellant on the provisions of sub-Section 1(A) inserted by the Finance (No.2) Act, 2014, w.e.f 1-4-2015 which are reproduced hereunder at the cost of repetition. ―(1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year: Provided that no deduction under this sub-section shall be allowed tor the assessment year commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under sub-section (1) for the said assessment year.‖ The appellant has submitted that it can be observed that investment allowance is available on assets installed during any previous year. Thus it was accepted by ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 58 of 105 the legislature that both acquisition and installation cannot/would not happen in a particular financial year and hence the purpose of Section 32AC would be defeated if an assessee is called upon to both acquire and install the new asset in the same financial year. Since there are 4 stages of an asset cycle viz: acquisition, installation, usage and discard, investment allowance under section 32AC is available to any assessee only when the second stage is completed i.e. when the asset is actually installed by the assessee. Thus even if assets are acquired by the assessee, if they are not installed during the period specified, no allowance is available under Section 32AC. Further, the appellant during the course of appellant proceedings has submitted that the value of assets acquired prior to 1st April, 2013 and installed post in FY 2013- 14 has been inadvertently submitted by the appellant as Rs.2188,48,66,122. The appellant in this regard has submitted that it was asked to furnish the breakup only at the fag end of the assessment ie. on 18.12.2017. The matter being time barring, the appellant in its efforts to comply immediately submitted the details. The appellant submits that only after the assessment was completed, it realized its mistake and hence wishes to furnish the revised breakup. Accordingly, the appellant vide letter dated 16.10.2018 has submitted a copy of the CA certificate dated 12.10.2018 and specimen copies of invoices, on perusal of which it can be observed that assets acquired and installed during FY 2013-14 amounts to Rs.868,43,26,433 (instead of Rs.522,40,48,126 earlier submitted during the course of assessment proceedings) and asset acquired prior to 01st April, 2013 but installed in FY 2013-14 amounts to Rs.1842,45,71,66 (instead of Rs.2183,48,6,122 earlier submitted during the course of assessment proceedings). The total assets on which investment allowance has been claimed remains unchanged to Rs.2710,88,98,098. Accordingly, the appellant has submitted that, without prejudice to its ground of appeal that the disallowance of investment allowance uls 32AC ought to be deleted, the disallowance even if upheld should be restricted to the revised figure of Rs.276,36,85,749 (being 15% of Rs.1842,45,71,664) which has been now submitted by the appellant in course of appellant proceedings. Thus the claim on investment allowance on assets acquired and installed during FY 2013-14 has increased from Rs. (36,07,218/- to Rs.130,26,48,964 (being 15% of Rs.868,43,26,433). I have gone through the submissions of the appellant. However I do not agree with the contention of the appellant. It is pertinent to discuss what is the language of the sec 32AC (1) because the appellant's facts of the case are governed by sec 32AC (1) and not subsequent amendment made in sub section32AC (1A). ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 59 of 105 Sec. 32 AC (1) says ―Where an assessee, being a Company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after 31 st day of March, 2013 but before the 1 st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then there shall be allowed a deduction, (a) for the assessment year commencing On the 1st day of April, 2014, of as sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31 st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and (b) for the assessment year commencing on the 1 st day of April, 2015, of as sum equal to fifteen per cent of the actual cost of new assets acquired and installed after the 31 st day of March, 2013 but before the 1 day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a). From the plain reading of the sec 32 AC (1) it is seen that this section specifically mentions that this acquires and installed new asset after 31 st day of march 2013. And so the word ―and‖ connotes that acquisition and installation should both be after March 2013. The basic intention of the legislature in introducing sec 324C was to invite more new investments above 100 crores and the incentive was given in acquiring and installing new asset after 31 st March 2013 to 1 st April 2015. These dates are very important and the interpretation of the section has to made on the basis of language of the section. Hence, I find the Assessing Officer has rightly disallowed the claim of the appellant. Now coming to the without prejudice submissions to the ground of appeal that the disallowance should be restricted to the revised figure of Rs.276,36,85,749 (being 15% of Rs.1842,45,71,664) which has been now submitted by the appellant in course of appellant proceedings. Thus the claim on investment allowance on assets acquired and installed during FY 2013-14 has increased from Rs.78,36,07,218/- to Rs.130,26,48,964 (being 15% of Rs.868,43,26,433). I have gone through the submission. Hence I direct the AO to allow deduction us 32AC on assets acquired and installed during FY -2013-14 after due verification based on the revised figure as certified in the CA certificate dated 12.10.2018. Hence the ground of appeal is dismissed but the AO is directed to verify the revised figure. 109. The assessee is not satisfied and is in further appeal before us. 110. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 60 of 105 111. We have noted that, as pointed out by the learned counsel, the words used in Section 32(1)(iia) are materially similar inasmuch as it refers to “new machinery or plant...... which has been acquired and installed after the 31st day of March, 2005” and yet, in the case of PCIT Vs IDMC Ltd [(2017) 393 ITR 441 (Guj)], Hon‟ble Gujarat High Court has observed that “The purpose and object of granting additional depreciation under Section 32(1)(iia) of the IT Act is stated hereinabove i.e. to encourage the industries by permitting the assessee setting up the new undertaking/installation of new plant and machinery and to give a boost to the manufacturing sector by allowing additional depreciation deduction. Thus, as rightly held by the learned ITAT the provision of section 32(1)(iia) of the IT Act is required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) of the IT Act will lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery”. Clearly thus the expression „acquisition and installation‟ are required to be read in a manner in which even if the acquisition is one year and installation is in another year, the year in which both the conditions, that is acquisition and installation are completed, would be the year in which „acquisition and installation‟ is said to be completed. A view thus indeed seems possible, and that is what Their Lordships have approved, that when a plant and machinery is installed in one year, even if it is acquired in an earlier year, it will be treated as „acquired and installed‟ in the year of installation of plant and machinery. No contrary decision has been cited before us. We may reiterate that the expression used in Section 32(1)(iia) is materially the same as it refers to “new machinery or plant...... which has been acquired and installed after the 31st day of March, 2005”. When this judicial precedent and the legal positionwere put to the learned Departmental Representative, all that was submitted before us was that it was a case in which delay in the installation was held to be with sufficient justification, whereas there is no such justification in the present case. We do not think that is a material distinction because what is relevant in the present case is whether an installation of a plant and machinery in a previous year, even though the same is acquired in an earlier previous year, could be treated as „acquisition and installation‟ and the answer that Their Lordships have given is in positive. As we have noted earlier in this decision, the mere fact that Hon‟ble High Court judgment is a non- jurisdictional High Court, in the absence of a contrary decision by Hon‟ble jurisdictional High Court, the said judicial precedent continues to be binding on the lower judicial forums particularly when no other specific reasons, except as discussed above- which has been rejected on merits, for not following the Hon‟ble Gujarat High Court judgment in the case of IDMC (supra) have been pointed out to us. As regards the reasons explaining and justifyingbonafides of the delay in installation of plant and machinery, as submitted to us during the hearing, given our findings as above, it is not really necessary to adjudicate on the correctness of the claim of the assessee at this stage. We may also add that the learned counsel for the assessee has also cited several other decisions in support of the same proposition, but, having taken note of a binding judicial precedent from a higher judicial forum, there is no need to specifically deal with the same. 112. Respectfully following theviews of the Hon‟ble Gujarat High Court, we uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance of investment allowance under section 32AC. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 61 of 105 113. Ground no. 5 is thus allowed. 114. In ground no. 6, which is revised vide letter dated 7 th September 2020, the assessee has raised the following grievance: 6. The learned CIT(A) Mumbai erred in allowing the deduction in respect of export profits of SEZ unit u/s 10AA of the Income tax Act, 1961 (Act) with reference to the income computed under the head 'profits and gains of business or profession' of the SEZ unit instead of 'gross profits and gains' of SEZ unit, as interpreted by Supreme Court in the recent judgement in the case of Vijay Industries. The Apex court while interpreting the provisions of section 80HH relevant to AY 1979-80 and 1980-81 has held that phrase "profits and gains" means gross profits of the business i.e. before computing income as specified in section 30 to 43D of me Act in para (18) and (19) as under: "It is most humbly submitted that the concept 'profits and gains s a wider concept than the concept of 'income'. The profits and gains/loss are arrived at after making actual expenses incurred from the figure of sales by the assessee. It does not include any depreciation and investment allowance, as admittedly these are not the expenses actually incurred by the assessee. However, the term 'income' does take into consideration the deductions on account of depreciation and investment allowance. Therefore, the term profits and gains are not synonymous with the term 'income' ..... 19) Reading of Section 80HH along with Section 80A would clearly signify that such a deduction has to be of gross profits and gains, i.e., before computing the income as specified in Sections 30 to 43D of the Act." Without prejudice to the above, the appellant prays that while computing the commercial profit of the SEZ unit eligible for deduction 10AA of the Act (to the extent of export), depreciation charged in the books as per the Companies Act 1956 ought to have been reduced, instead of the depreciation allowed u/s. 32 of the Income Tax Act 1961. 115. Learned representatives fairly agree that this issue is also a covered issue by a decision of the coordinate bench in the assessee‟s own case for the immediately preceding assessment year. In the said decision, the coordinate bench has, inter alia, observed as follows: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 62 of 105 125. In this regard we note that section 80HH with which the honourable Supreme Court was concerned with, provided that where the gross total income of the assessee includes any profits and gains derived from an industrial undertaking, or the business of the hotel to which this section applies, there shall in accordance with an subject to the provisions of this section be allowed in computing the total income of the assessee deduction from such profits and gains of an amount equal to 20% thereof. 126. The provision of section 10 AA provides that in computing the total income of an assessee following deduction shall be allowed –..... Percent of profits and gains derived from exports. 127. From the above it is amply clear that the language of section 80 HH and 10 AA are parimateria in as much as both the section provides that in computing the total income of the assessee deduction shall be allowed at certain percentage of profit and gains derived128. Now it was the meaning of above referred ―profit and gains‖ derived that honourable Supreme Court expounded that the same refers to profits which are commercial profit and without deducting the depreciation and investment allowance as per the income tax act. 129. Thus the contention of the learned counsel of the assessee that languages of both the above section are parimateria is to be accepted. The submission of the learned departmental representative that the languages are different is not at all sustainable in light of the above said discussion. The distinction brought out by the learned departmental representative is not based upon a proper and full reading of the concerned section. The suggestion of the learned departmental representative that section 80 HH does not deal with profit and gains derived is totally fallacious. The term derived has been very much used and the same in facts controls the provision of section 80 HH. Hence learned departmental representative submission in this regard is not sustainable. 130. The submission of the learned departmental representative and the stand of the revenue will succeed only when the explanation below section 10 AA is considered as clarificatory. The said explanation inserted by Finance Act 2017 with effect from 1/4/18 provides that ―For the removal of doubts, it is hereby declared that the amount of deduction under this section shall be allowed from the total income of the assessee computed in accordance with the provisions of this act, before giving effect to the provisions of this section and the deduction under this section shall not exceed such total income of the assessee‖. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 63 of 105 131. In this regard it is noted that the provisions of section 80 AB are parimatereia with the provisions of this explanation. Section 80 AB reads as under: ―Deductions to be made with reference to the income included in the gross total income. 80AB. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading "C.—Deductions in respect of certain incomes" in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee an which is included in his total income. 132. This section was introduced by Finance Act 1980 with effect from 1.4.1981. 133. A bare reading of the above makes it clear that the explanation below section 10 AA and provision of section 80 AB are parimateria. Honourable Supreme Court in the case of Vijaya industries (supra) has expounded that provision of section 80 AB are prospective. In our considered opinion the ratio from the above honourable Supreme Court decision also applies here and accordingly the explanation below 10 AA has to be construed to be prospective. Hence the same cannot be invoked in determining the amount of deduction in the present assessment year. The learned departmental representative submission that the same is clarificatory accordingly fails. 134. Furthermore learned departmental representative submission that the decision of Vijaya industries was rendered without considering other decisions in this regard is not at all sustainable. This decision of honourable Supreme Court in the case of Vijaya Industries (supra) is a recent decision rendered by the larger bench of 3 of their Lordships from the honourable court. By no stretch of imagination it can be said that the subject dealt with by the elaborate speaking and reasoned recent order by this larger bench of the honourable Supreme Court is to be overlooked by referring to other decisions of lesser strength in judicial hierarchy. Hence the learned departmental representative submission that while rendering this decision other decisions were not referred is not at all acceptable. It is settled law that decision rendered by the honourable Supreme Court is the law of the land and is totally binding upon all the other courts and tribunals. Furthermore, the submission of learned Departmental Representative that other decisions have not been considered by the Hon'ble ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 64 of 105 Supreme Court is without any substance. Moreover, as cogently brought by learned Counsel of the assessee in para 9 of his submission, the reference to decision ofPlastibends India Ltd. (supra) here is not applicable. Suffice is to reiterate here that it dealt with a deduction provision under section 80IA, which falls under Chapter VI-A and is therefore covered by provisions of section 80AB (i.e. the deeming fiction to provide deduction only from income as included in the gross total income of the assessee). In the appellant's case the deduction is claimed under section 1OAA of the Act which is not covered in section 80AB. That the legislature in its wisdom has not made 80AB applicable to section 10A/10AA/10B/10BA/ 10C of the Act, even though the said sections provide for deduction to be granted to an assessee. Secondly, deduction under section 10AA of the Act (prior to the amendment made by Finance Act 2017 by way of insertion of Explanation) was to be given at the stage of computing the gross total income of the eligible undertaking under Chapter IV of the Act i.e. prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. This has been held by the Supreme Court in the case of CTT v. Yokogawa India Ltd 391 ITR 274 (SC) in the context of section 10A of the Act. Plastiblends India deals with a situation of computation of deduction under Chapter VIA of the Act i.e. after computing the gross total income of the eligible undertaking under Chapter IV of the Act. 135. The other submission of the learned departmental representative is that section 10 AA is a part of chapter 3 and is essentially an exemption section. This the learned departmental representative himself contradicts by submitting that though post-amendment such an exemption is available in form of deduction from profit and gains derived from the undertaking. The reading of section 10AA clearly shows that the section itself provides that the same is a deduction provision. Honourable Supreme Court in the case of CIT versus Yokogawa India Ltd civil appeal No. 8498 of 2013 another‘s had the occasion to consider this aspect. The honourable Supreme Court settled the issue by holding that the amendment in section 10A has altered the nature of the provision from providing exemption to providing for deductions. The deductions under section 10A are prior to the commencement of the exercise to be undertaking under chapter VI of the Act i.e aggregation of income and set off of loss. The above exposition is applicable on all fours here. Hence the submission of learned departmental representative year also doesn‘t succeed. The last claim of The learned departmental representatives submission is that decision of honourable Supreme Court in the case of Commissioner of Customs (Import) versus Dilip Kumar and company and others Civil Appeal No. 3327 of 2007 dated 30/7/2018 provides that interpretation needs to be done strictly and in case of ambiguity the same needs to be interpreted in favour of the revenue. Here we find that it cannot be said that after the elaborate and well reasoned and speaking order rendered by the recent larger bench of three of their Lordships of the honourable Supreme Court there can be any scope of ambiguity in the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 65 of 105 interpretation of the meaning of word profit and gains with reference to which the discussion is being made here. Accordingly the submission of the learned departmental representative does not oxygenate the revenue‘s stand. 136. Accordingly in the background of aforesaid discussion and the precedent from the Hon'ble Supreme Court we direct the assessing officer to grant the deduction under section 10 AA with reference to the profit and gains as determined by the honourable Supreme Court in the case of Vijay Industries (supra). ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 66 of 105 116. Respectfully following the views so expressed by the coordinate bench, with which we are in considered agreement, we uphold the plea of the assessee in principle and direct the Assessing Officer to grant the relief accordingly. 117. Ground no. 6 is thus allowed. 118. In ground no. 7, the assessee has raised the following grievance: 7. Reference to the Transfer Pricing Officer ('TPO') under section 92CA of the Act, 7.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of learned Assessing Officer ('AO') in making a reference of the Appellant's case to the TPO, without applying his mind and without recording his satisfaction, thereby making the entire process of referring the matter to the TPO as invalid; 7.2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not stating reasons to show that any of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied before making an adjustment to the total income of the Appellant; 7.3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not demonstrating the motive of the Appellant, to carry out transactions between an eligible business and other business, to reduce the taxable profits by manipulating the prices of its Specified Domestic transactions, either at the stage of invoking or initiating the assessment or at the stage of framing the assessment; 7.4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not demonstrating that the course of business between the Appellant and the closely connected person was so arranged that it produces to the Appellant more than ordinary profits which might be expected to arise in its eligible business. 119. Learned counsel for the assessee does not press these grievances and the ground of appeal is thus dismissed as not pressed. 120. Ground no.7 is thus dismissed. 121. In the ground no. 8, the assessee has raised the following grievances: 8. Inter-unit transfer of Power: 8.1. On the facts and in the circumstances of the case and in law, the learned AO erred in making and the learned CIT(A) erred in confirming the transfer ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 67 of 105 pricing adjustment of INR 147,12,37,934 in relation to the transaction of inter- unit transfer of Power from the Captive Power Plant ('CPP') to Other Manufacturing Division ('OMD') by computing the arm's length rate-for each four power plants, GTG VIII, GTG IX, STG-II and CPP-II at INR 4.57, INR 4.58, INR 5.55 and INR 5.09 per KHW without considering INR 6.49 per KHW as determined by the Appellant; 8.2. On the facts and in the circumstances of the case and in law, the learned AO erred in reducing and the learned CIT(A) erred in confirming the reduction of deduction by INR 17,03,76,595 claimed under section 80IA of the Act; 8.3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in rejecting the economic analysis or the benchmarking analysis of the Appellant, on the application of internal Comparable Uncontrolled Price Method by the Appellant, without providing any cogent reasons; 8.4. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the learned AO in accepting the economic analysis of the learned TPO without providing cogent reasons and specifically:  failed to appreciate that the level of market of the comparable transaction adopted by the learned TPO, is different as compared with the level of market in which appellant (manufacturing units) operate; and  Erred in confirming the action of the AO/TPO of determining the arm's length rate for each four captive power plants after making adjustment to the comparable's fixed cost based on Plant Load Factor. 122. So far as this ground of appeal is concerned, the assessee has certain captive power plants, namely CPP GTG VII Hazira, CPP GTG IX Hazira, STGII Hazira and CPP II Gandhar, which are eligible for deduction under section 80IA. These four eligible units have supplied electricity to Hazira Manufacturing Division (HMD) and Dahej Manufacturing Division (DMD) of the assessee company. The rate at which the electricity is so supplied is Rs 6.49 per KWH, and it is exactly the same at which an external supplier of power (i.e. Dakshin Gujarat Vij Company Limited- DGVCL in short) is supplying the power to the manufacturing units of the assessee company. It is on this basis that the assessee claimed the electricity sale transaction between its CPPs and manufacturing units to be at arm‟s length. Based on the price at which an external vendor, namely DGVCL, is supplying power to the manufacturing divisions of the assessee company, the assessee applied Internal CUP (comparable uncontrolled price) method for the benchmarking. This benchmarking, however, was rejected by the Transfer Pricing Officer. The TPO was of the view that DGVCL was not a manufacturer of the electricity and it was only supplying the electricity purchased from others, and, therefore, its price is bound to be higher. He then proceeded to obtain information from Gujarat State Electricity Corporation Ltd and analyze the data with respect to the plant load factor (PLF) and the financial costs of its various manufacturing units. He then applied these details, with suitable PLF adjustment, which worked out to Rs 4.50, Rs 4.52, Rs 5.41 and Rs 4.99 per KWH for electricity supplied by CPP GTG VII Hazira, CPP ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 68 of 105 GTG IX Hazira, STGII Hazira and CPP II Gandhar respectively. These prices were used as external CUP inputs, and based thereon an ALP adjustment of Rs 147,12,37,934 was made. Aggrieved, assessee carried the matter in appeal before the learned CIT(A) but without any success. In a very brief operative portion of her order, learned CIT(A) observed as follows: I have carefully perused the order of the learned TPO and the submissions made by the appellant during the course of the appellate proceedings. The facts under consideration for the AY 2014-15 are similar to the facts in the AY 2013-14. This ground of appeal has been dismissed by the order of the CIT(A) for Ay 2013-14 vide order dated 9 th October 2017 para 27.3 Therefore, respectfully following the order of the CIT(A) in the appellant‘s case for the AY 2013-14, and maintaining consistent stand, this ground of appeal is dismissed. 123. The assessee is aggrieved of the stand so taken by the learned CIT(A) and is in appeal before us. 124. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 125. We find that the learned CIT(A)‟s order for the assessment year 2013-14, based on which the impugned ALP adjustment has been sustained, has come up for consideration before a coordinate bench which has, reversing the stand of the learned CIT(A), observed as follows: 168. We have heard both the counsel and perused the records. Learned counsel of the assessee contended that assessee has benchmarked the transaction using internal cup by considering the manufacturing unit as a tested party and comparing the inter unit power rate at which the power was purchased by the manufacturing units from the third-party DGVC. That in the case of Reliance Industries Ltd for assessment year 2005-06 to assessment year 2012-13 the ITAT Mumbai has upheld that the power rate charged by DGVCL for determining the market rate of unit rate of electricity. 169. Furthermore it is the contention that Hon‘ble High Court has rejected the appeal of the revenue for assessment year 2006-07 and has discussed non applicability of judgement of Hon‘ble Calcutta High Court in the case of CIT vs. ITC Ltd. 170. Learned counsel of the assessee further pleads that he is relying upon the decision of honourable Supreme Court in the case of Radha Soami Satsang vs. CIT (1992) 193 ITR 321 (SC), for the proposition that on the ground of consistency also DG VCL rate should be accepted. It is further contended that market value of electricity supplied by the CPP unit to the other unit would be the same as charged by the Gujarat Electricity Board to the end consumers. In this regard learned Counsel of the assessee also referred to ITAT decision and ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 69 of 105 Hon'ble Gujarat High Court decision. It is further contention that honourable Supreme Court has also rejected the special leave decision filed by the Commissioner of income tax, Ahmedabad and the principle down by the honourable High Court has attained finality in favour of the assessee. 171. With regard to ground No. 10.4 it is the contention of the learned counsel of the assessee that he will not press this ground if ground No. 10.3 is decided in favour of the assessee. 172. In this ground the assessee contends that assessee‘s CPP is supplying power to the manufacturing unit that is the customer and learned Transfer Pricing officer has applied rate at which power generating unit is selling to power distribution which will then sell to the end consumer. Hence the level of market is different. 173. It is further contended that rate which electricity is supplied by GEB to the end consumer is to be considered as the market rate at which the captive power plant can sell power to other unit. 174. Upon careful consideration we find that for the purpose of 80IA(8), the rate of electricity as taken by the assessee has been consistently approved by the ITAT and Hon‘ble Jurisdictional High Court also. We may refer here the provisions of section 80IA(8):- Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (8) Where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date: Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.—For the purposes of this sub-section, "market value", in relation to any goods or services, means— ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 70 of 105 (i) the price that such goods or services would ordinarily fetch in the open market; or (ii) the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA. 175. The rate charged by the assessee has been duly accepted by the Tribunal and upheld by the Hon‘ble Jurisdictional High Court in the case of CIT vs. M/s. Reliance Industries Ltd. (in ITA No. 1056 of 2016 dated 30.01.2019), which reads as under: 4. Question (c) pertains to the dispute between the department and the assessee regarding the rate at which the electricity generated by one unit of the assessee-company and provided to the another be valued. The assessee contended that such valuation should be at the rate at which the electricity distribution companies are allowed to supply electricity to the consumers. The revenue on the other hand argues that the appropriate rate should be the rate at which the electricity is purchased by the distribution companies from the electricity generating companies. 5. This controversy arose in the background of the fact that the assessee had set up a captive power generating unit and claimed deduction under Section 80IA of the Income Tax Act, 1961 ("the Act" for short) in respect of the profits arising out of such activity. Obviously, therefore the attempt on the part of the assessee was to claim larger profit under the unit which was eligible for such deduction as against this, attempt of the revenue would be see that the ineligible unit shows greater profit. 6. The Tribunal in the impugned judgment extracted extensively from the order of CIT (Appeals) and independent reasons for confirming the same. In such order CIT (Appeals) had placed reliance on an earlier judgment of the Tribunal in case of Reliance Infrastructure Limited Vs. Addl. CIT, Range 1(1), Learned counsel for the assessee had placed on record a copy of the judgment of the Tribunal in case of Reliance Infrastructure limited. In such judgment an identical issue came up for consideration. The Tribunal by detailed judgment had held and observed as under:- "44. In the given facts and circumstances of the case, we are of the view that the profits of the business of generation of power worked out by the Assessee on the basis of the price that it paid to TPC for purchase of power continues to be the best basis even after the order of MERC and therefore the same has to be accepted as was done in the past and as approved by the ITAT in Assesssee's case. We therefore dismiss ground.‖ ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 71 of 105 7. Counsel for the assessee pointed out that the judgment of the Tribunal in case of Reliance Infrastructure limited (supra) was carried in appeal by the revenue before the High Court in Income Tax Appeal No.2180 of 2011, such appeal was dismissed making following observations:- "6. As far as question (d), namely, the claim relating to purchase price from Tata Power Company is concerned and that was for the deduction under Section 80IA, the ITAT in paragraph 21 onwards has noted the factual findings and also referred to the order of the Maharashtra Electricity Regulatory Authority (for short "MERC"). Paragraph 36 set outs as to how the claim arose. The claim has been considered in the light of Section 80IA and particularly proviso and explanation thereto. The Tribunal eventually held that till the Assessment Year 2005-2006, the Revenue considered the rate at which the power was purchased by the Assessee from Tata Power Company as market value. There is nothing brought on record as to how the rate determined by the MERC is the true market value. The Assessee gave explanation that the rates determined by the MERC do not reflect the correct market rate. The finding is that the mode of computation and deduction under Section 80IA requires no deviation from the past. The findings of fact and to be found in paragraphs 42 to 50 also reflect that the very issue came up for consideration for the Assessment Year 2003-2004. For the reasons assigned by the ITAT and finding that the attempt is to seek reappreciation and reappraisal of the factual data that we come to a conclusion that even question (d) as framed is not a substantial question of law." 8. Thus, the issue at hand had been examined by this Court on earlier occasion and the view of the Tribunal under similar circumstances was approved. 9. Additionally, we also notice that similar issue came up for consideration before Chhattisgarh High Court in case of Commissioner of Income-tax, Raipur Vs. Godawari Power &Ispat Limited1, in which the Court held and observed as under: "31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier. it should have been compared with the market ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 72 of 105 10. Gujarat High Court in case of Principal Commissioner of Income- Tax Vs. Gujarat Alkalies and Chemicals Ltd. also had occasion to examine such an issue. It referred to earlier order in case of Asst. CIT Vs. Pragati Glass Works Pvt. Ltd.2 in which following observations were made:- "7. To our mind, Tribunal has committed no error. Assessing Officer and CIT(Appeals) while adopting Rs.4.51 per unit as the value of electricity generated by eligible unit of assessee and supplied through its non eligible unit only worked out cost of such electricity generation. In fact CIT(Appeals) in terms recorded that Rs.4.51 was computed as the reasonable value of the electricity generated by eligible unit of assessee. This amount included Rs.4.17 per unit which was the cost of electricity generation and Rs.0.34 per unit which was duty paid by the assessee to GEB for such power generation. Thus the sum of Rs.4.51 per unit only represented the cost of electricity generation to the assessee. In Section 80IA(8) of the Act what is required to be ascertained is the market value of the goods transferred by the eligible business, when such transfer is by eligible business to another non eligible business of the same assessee and the consideration recorded in the accounts of the eligible business does not correspond to market value of such goods. Term "Market Value" is further explained in explanation to said sub-section to mean in relation to any goods or services, price that such goods or services will ordinarily fetch in the open market. To our mind sum of Rs.4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof. It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 11. Judgment of Calcutta High Court in case of Commissioner of Income- tax, Kolkata - III Vs. ITC Ltd. was also brought to our notice in which the said High Court has taken a different stand. However, since the issue has already been examined by this Court earlier and in view of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 73 of 105 the decisions of the Chhattisgarh and Gujarat High Court, we see no reason to entertain this question.‖ 176. Here we note that the assessing officer while expounding that rate duly approved under 80 IA(8) is to be changed for Transfer Pricing purposes has placed reliance upon honourable Calcutta High Court decision in the case of ITC Ltd. We find that the view of TPO and learned CIT(appeals) also by relying upon Calcutta High Court decision in ITC Ltd that market value basis duly approved by the honourable Bombay High Court shall change for the purpose of domestic transfer pricing regimen here is not at all sustainable. The reliance by learned CIT(appeals) on honourable Calcutta High Court decision in the case of ITC Limited supra has been distinguished by the honourable jurisdictional High Court. The honourable jurisdictional High Court has chosen not to follow the Calcutta High Court decision. Hence in our considered opinion, the authorities below have misled themselves by relying upon Calcutta High Court decision in this regard. This decision has not found favour with honourable jurisdictional High Court. 177. Thus we find that the view of the authorities below that the definition of the market value shall change for the purpose of domestic transfer pricing regimen is not at all sustainable. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and decide issue in favour of the assessee. 126. Once the very decision, based on which the impugned decision of the CIT(A) has its foundational basis, stands disapproved by a coordinate bench, the stand of the learned CIT(A) cannot meet our judicial approval. In any event, we are in considered agreement with the view taken by the coordinate bench in the assessee‟s own case for the immediately preceding assessment year, and we are unable to see any legally sustainable basis for rejection of internal CUP on the facts of this case. Respectfully following the views so expressed by the coordinate bench, which, in turn, follows the views of other coordinate benches and Hon‟ble jurisdictional High Court in assessee‟s own case, we uphold the plea of the assessee. Accordingly, the impugned ALP adjustment of Rs 147,12,37,934 stands deleted. 127. Ground no. 8 is thus allowed. 128. We now take up the additional grounds of appeal filed by the assessee. Having heard the parties on the admissions of these grounds of appeal, and having regard to the well-settled legal position in the light of the Hon‟ble Supreme Court‟s judgment in the case of NTPC Vs CIT [ (1998) 229 ITR 383 (SC)], these grounds are admitted. 129. As regards the first additional ground of appeal, we have already adjudicated upon the same while dealing with the related ground of Assessing Officer‟s appeal, and rejected the same. We, therefore, reject this additional ground of appeal. 130. The additional ground of appeal no. 1 is thus rejected. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 74 of 105 131. In the second and third additional grounds of appeal, the following grievances have been raised: The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs.1,45,90,856 accrued under the Technology Upgradation Fund (TUF) Scheme, being a capital receipt not liable to tax, while computing income under the normal provisions of the Act. The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs. 1,45,90,856 accrued under the TUF scheme, from the Book profit computed u/s 115 JB of the Act being capital receipt and not income liable to tax. 132. Learned representatives fairly agree that as the related facts have not come up for examination before any of the authorities below, even upon admission of these grounds of appeal, these issues are only required to be remitted to the file of the Assessing Officer for fresh adjudication in accordance with the law, by way of a speaking order and after giving an opportunity of hearing to the assessee. We order accordingly. 133. Additional grounds of appeal nos. 2 and 3 are thus allowed for statistical purposes. 134. In the result, the appeal of the assessee for the assessment year 2014-15 is partly allowed in the terms indicated above. 135. We will now take up the ITA No. 3945/Mum/2019, i.e. the appeal filed by the Assessing Officer against the learned CIT(A)‟s order dated 27 th March 2019 in the matter of assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2015-16. 136. In the first ground of appeal, the Assessing Officer has raised the following grievance: Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of a sales tax incentive/subsidy of Rs. 20,23,744/- holding it as capital in nature? 137. Learned representatives fairly agree that whatever we decide in ground no. 1 in the Assessing Officer‟s appeal for the assessment year 2013-14 will also apply mutatis mutandis on this issue as well. Vide paragraph nos. 3-7 in our decision for the assessment year 2013- 14, earlier in this consolidated order, we have rejected this plea and confirmed the findings of the learned CIT(A) on this issue. We, therefore, have no reasons to take any other view of the matter than the view so taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 138. Ground no. 1 is thus dismissed. 139. In ground no. 2, the Assessing Officer has raised the following grievance: ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 75 of 105 ―Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing depreciation as claimed by the assessee by holding that the claim of depreciation for the year was optional in nature?" 140. Learned representatives fairly agree that whatever we decide in ground no. 2 in the Assessing Officer‟s appeal for the assessment year 2013-14 will also apply mutatis mutandis on this issue as well. Vide paragraph nos. 8-13 in our decision for the assessment year 2013- 14, earlier in this consolidated order, we have rejected this plea and confirm the findings of the learned CIT(A) on this issue. We, therefore, have no reasons to take any other view of the matter than the view so taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 141. Ground no. 1 is thus dismissed. 142. In ground nos. 3(a) and (b), which we will take up together, the Assessing Officer has raised the following question for our adjudication: (a) Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the Act r. w. Rule 8D(2)(iii) to 0.5% by taking average value of that investment which have yielded dividend during the year under consideration? (b) Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance under section 14A of the Act to the amount disallowed by the assessee for the purpose of income under section 115JB of the Act. 143. This issue is required to be taken up along withthe ground of appeal no. 8 (additional ground of appeal raised by the assessee) as under: The learned CIT(A) Mumbai erred in directing the AO to compute the disallowance under section 14A of the Act, by invoking the provisions of Rule 8D of the income tax Rules, while computing income under normal provisions of the Act without recording any satisfaction for rejection of the disallowance computed by the appellant under section 14A of the Act. 144. Learned representatives fairly agree that whatever we decide in the ground no. 3 and 4 in the Assessing Officer‟s appeal for the assessment year 2013-14 and the assessee‟s additional ground of appeal, at no. 10, will also apply mutatis mutandis on this issue as well. In this assessment year also, the Assessing Officer has, in para 7.5 at page 34, categorically observed that “since the assessee has not correctly apportioned any expenses as having been incurred for earning this exempt income, I am not satisfied with regard to the correctness of claim of expenditure made by the assessee”. The material facts thus remain the same. Vide paragraph nos. 14-25 in our decision for the assessment year 2013-14, earlier in this consolidated order, we have rejected the plea of the assessee as also plea of the Assessing Officer, and thus confirm the findings of the learned CIT(A) on both of these issues. We, therefore, have no reasons to take any other view of the matter than the view so ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 76 of 105 taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 145. Ground no. 3(a)and (b) of the Assessing Officer as also ground no. 8 of the assessee, are thus dismissed. 146. In ground no. 3(c), the Assessing Officer has raised the following grievance: Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in in deleting the addition of wealth tax, while computing the book profits under section 115JB of the Act. 147. Learned representatives fairly agree, even as learned Departmental Representative vehemently relies upon the assessment order- as usual, that the issue is now covered by Hon‟ble jurisdictional High Court‟s judgment, in assessee‟s own case – reported as CIT Vs Reliance Industries Ltd [(2020) 423 ITR 236 (Bom)] wherein Their Lordships have, inter alia, observed as follows: 2. Question (i) pertains to Revenue's contention that for computing the assessee's Book profits under Section 115JB of the Income Tax Act, 1961 ("the Act" for short), provision made by the assessee for wealth tax should be excluded. The Tribunal was of the opinion that the section itself refers to the income tax paid or payable or the provisions made therefore. This would not include the provision made for wealth tax. The Tribunal relied on a decision of this Court in the case of CIT v. Echjay Forgings (P.) Ltd. [2001] 116 Taxman 322/251 ITR 15 in which such an issue had come up for consideration. 3. Learned counsel for the Revenue, however, submitted that the decision of this Court in the case of Echajay Forgings (P.) Ltd. (supra) proceeded on the concession made by the Revenue's counsel and the Tribunal, therefore, committed an error in treating it as ratio of the High Court decision. On the other hand, the learned counsel for the assessee submitted that even otherwise, the statutory provision being clear, there is no scope for interpretation. 4. Section 115JB of the Act pertains to special provision for payment of tax by certain companies. As is well known, detailed provisions have been made to compute the book profit of the assessee for the purpose of the said provision. Explanation 1 contains list of amounts to be added while computing assessee's book profit under Section 115JB of the Act. Clause (a) thereof reads as under:— "(a) the amount of income-tax paid or payable, and the provision therefor," Likewise, clause (c) reads as under:— "(c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities," ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 77 of 105 In plain terms, clause (a) as noted above refers to amount of income tax paid or payable or the provision made therefor. The legislature has advisedly not included wealth tax in this clause. By no interpretative process, the wealth tax can be included in clause (a). The Revenue, further made a vague attempt to bring this item in clause (c) noted above. Clause (c) would include the amount set aside for provisions made for meeting liabilities other than ascertained liabilities. For applicability of this clause, therefore, fundamental facts would have to be brought on record which in the present case, the Revenue has not done. In fact, the entire thrust of the Revenue's argument at the outset appears to be on clause (a) which refers to the income tax which according to the Revenue would also include wealth tax. This question, therefore, is not required to be entertained. [Emphasis, by underlining, supplied by us] 148. As we take note of the above legal position, we may also take note of the fact that the similar relief granted by the CIT(A), in the immediately preceding assessment year, has not even been challenged in appeal before us.In this view of the matter, respectfully following the views so expressed by the Hon‟ble jurisdictional High Court, and in consonance with the coordinate bench decisions, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 149. Ground no. 3(c) is also thus dismissed. 150. In ground no. 4(a), the Assessing Officer has raised the following grievance: 4 (a) ―Whether, on the facts and in the circumstances of the case and in law, the Id.CIT(A) erred in deleting the disallowance of Rs. 1026,68,74,864 incurred by the assessee on aborted blocks of other contract areas under Production Sharing Contracts other than KGD?" 151. Learned representatives fairly agree that whatever we decide in ground no. 6 in the Assessing Officer‟s appeal for the assessment year 2013-14 will also apply mutatis mutandis on this issue as well. Vide paragraph nos. 32-37 in our decision for the assessment year 2013- 14, earlier in this consolidated order, we have rejected this plea and confirm the findings of the learned CIT(A) on this issue. We, therefore, have no reasons to take any other view of the matter than the view so taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 152. Ground no. 4 (a) is thus dismissed. 153. In ground no. 4 (b), the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing deduction u/s 80IB(9)(ii) of the Act at Rs 604,61,83,730/- instead of Rs.NIL as held by the Assessing Officer?" ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 78 of 105 154. So far as this grievance of the Assessing Officer is concerned, it is sufficient to take note of the fact that the deduction under section 80IB(9), amounting to Rs 604,61,83,730 was declined for the short reason that this deduction is allowable for mineral oil, which, according to the Assessing Officer, includes crude oil but not natural gas and condensate. The correctness of this approach, which has been reversed by the CIT(A) aggrieved by which the assessee is in appeal before us, has come up for our consideration earlier in this order while dealing with the assessment year. Learned representatives, therefore, fairly agree that whatever we decide in ground no. 7 in the Assessing Officer‟s appeal for the assessment year 2013-14 will also apply mutatis mutandis on this issue as well. Vide paragraph nos.38-42 in our decision for the assessment year 2013-14, earlier in this consolidated order, we have rejected this plea and confirm the findings of the learned CIT(A) on this issue. We, therefore, have no reasons to take any other view of the matter than the view so taken by us for the assessment year 2013-14. Respectfully following the same, we confirm the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter. 155. Ground no. 1 is thus dismissed. 156. In ground no. 5, the Assessing Officer has raised the following grievance: ―Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) was right in allowing the appeal of the assessee and directed the Assessing Officer to allow investment allowance on assets acquired prior to 01.04.2013 and installed in FY 2013-14? 157. So far as this grievance of the assessee is concerned, it is noted that the assessee had claimed the investment allowance under section 32 AC of Rs 1954,43,98,216, being 15% of the asset addition under the head plant and machinery, but, after withdrawal of claim with respect of KGD6 Unit, it was revised to Rs 1552,33,45,856. Out of this claim, so far as the assets acquired during the relevant previous year and installed during the same previous year were concerned, the Assessing Officer granted the investment allowance of Rs 1239,40,15,856 under section 32AC. However, the remaining claim of investment allowance was rejected by the Assessing Officer by observing, inter alia, as follows: 16.5.5 A plain reading of the provisions of the Section and the Explanatory Notes clearly reflect the intention behind the introduction of the Section which is to incentivize investment in P&M by manufacturing companies, who invests above a certain threshold (100 crore) within a period between 01.04.2013 and 31.03.2015. The provisions of the Section and Explanatory Notes thereof clearly spell out that an assessee intending to claim the benefit of the Section must acquire and install the P&M within the aforementioned period and as such there is no scope left for any interpretation otherwise. It is pertinent to mention here that the deduction under section 32AC is investment linked which is to be made in a specific period and thus any claim of deduction without investment in that specific period is ultra virus. 16.5.6 In view of above, deduction under section 32AC is allowed only on the Plant & machinery acquired and installed during FY 13-14 & F.Y 14-1, and the assessee's claim of deduction on Plant & machinery acquired prior to 01.04.2013 ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 79 of 105 but installed during FY 13-14 is disallowed. Accordingly, the claim of the assessee of Rs.312,93,30,000/- on the plant & machinery of Rs.2086,22,00,000/- acquired before 1 st April 2013 is hereby disallowed. 158. When the matter travelled in appeal before the CIT(A), learned CIT(A) reversed the disallowance so made by the Assessing Officer on the ground that a specific provision to enable the said claim was inserted by virtue of Section 32AC(1A). While doing so, learned CIT(A) observed as follows: The crux of issue in appeal i.e. whether investment allowance is available on asset acquired prior to 0lst April, 2013 but installed in FY 2013-14. In this connection, I agree with the contention raised by the appellant that Investment Allowance u/s 32AC is available on installation of new asset for which reliance was placed by the appellant on the provisions of sub-Section 1 (A) inserted by the Finance (No. 2) Act, 2014, w.e.f. 1-4-2015 which are reproduced hereunder at the cost of repetition "(1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year: Provided that no deduction under this sub-section shall be allowed for the assessment year commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under sub-section (I) for the said assessment year, " On perusal of sub-section 1A (highlighted in bold), it can be observed that investment allowance is available on assets installed during any previous year. Thus it was accepted by the legislature that both acquisition and installation cannot/would not happen in a particular financial year and hence the purpose of Section 32AC would be defeated if an assesse is called upon to both acquire and install the new asset in the same financial year. Since there are 4 stages of an asset cycle viz: acquisition, installation, usage and discard, investment allowance under section 32AC is available to any assesse only when the second stage is completed i.e. when the asset is actually installed by the assesse. Thus even if assets are acquired by the assesse, if they are not installed during the period specified, no allowance is available under Section 32AC. I agree with the submission of the appellant that the section emphasizes on installation of the assets for granting investment allowance. This is further clarified from the amendment brought in sub-section 1A of the Act vide the Finance Act, 2016 which is reproduced below at the cost of repetition. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 80 of 105 "Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets [acquired during any previous year exceeds twenty-five crore rupees and such assets are installed on or before the 31 day of March, 2017], then, there shall be allowed a deduction of a sum equal fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year" As can be seen, the amendment (highlighted in bold) in sub-section 1A to Section 32AC clearly provides for investment allowance on assets acquired during any previous year but installed on or before 31.03.2017. Thus the emphasis was to give investment allowance only if the same are installed on or before 31/03/2017. This is further corroborated if one refers to the 1st proviso to sub-section 1A of Section 32AC of the Act. The said proviso was also amended to clarify that investment allowance will be available on installation of assets, where installation and acquisition is in two different years. The amended proviso is also reproduced below for your ready reference: "Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed" Thus here also the emphasis is on the installation of assets and not on acquisition. Thus the intention of Section 32AC all along was to provide investment allowance on new plant and machinery only in the year of installation even if assets have been acquired in a year other than the year of installation. I wish to state that on similar issue for AY 2014-15, I had decided the appeal against the assessee relying on the provisions of section 32AC(1). However w.e.f 1 st April 2015, subsection 32AC(1A) was inserted by the Finance (No 2) Act 2014,which is relevant for the year under appeal and which has been rightly relied upon by the appellant alongwith subsequent amendments thereto and also on the proviso to 32AC(1A) Hence in light of the above, I agree with the submission made by the appellant although the section uses the phrase "acquired and installed", investment allowance is only allowed when the assets are actually "installed" by the assesse during the relevant year. Accordingly, I direct the AO to allow investment allowance on assets acquired prior to 01 st April, 2013 and installed in FY 2013-14. 159. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us. 160. Having heard the rival contentions and having perused the material on record, we find that theobservations made in paragraphs 111 and 112 will be equally applicable in the present context, and, in the light of the law laid down by Hon‟ble Gujarat High Court in the case of IDMC (supra), the conclusions arrived at by the learned CIT(A) must be approved for this ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 81 of 105 short reason alone inasmuch as even in the asset in question is acquired in an earlier previous year but installed in the relevant previous year, it will be eligible for the benefit of investment allowance under section 32AC. As we have upheld the relief granted by the CIT(A) on this short reason, it is not really necessary to examine the reasoning adopted by the CIT(A) for the said conclusion. That aspect of the matter, as of now, is academic. We, therefore, approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this point as well. 161. Ground no. 5 is thus dismissed. 162. In the ground nos. 6, the Assessing Officer has raised the following grievance: 6. ―Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing appeal of the assesses and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee?" 7 "Whether, on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in allowing appeal of the assessee and directing the assessing officer to recompute the profit and deductions u/s 10AA in respect of Polypropylene (PP) SEZ taking into consideration the revised interest expenditure as submitted by the assessee ?" 8 ―Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in allowing appeal of the assessee and directing the assessing officer to recompute the profit and deductions taking into consideration the revised interest expenditure as submitted by the assessee ?" 163. So far as these grievances are concerned, the relevant material facts are as follows. These grievances pertain to the revision of deductions claimed under sections 80IB and 10AA for Refinery SEZ Unit and PP SEZ Unit. The revision was on account of a revision, on account of some factual corrections, in interest expenditure to be considered for computing these deductions. The assessee made these revisions, by way of filing a letter, and revised standalone accounts and revised form 10CCB and 56F, in the course of the assessment proceedings. These claims were rejected by the Assessing Officer in the light of the Hon‟ble Supreme Court‟s judgment in the case of Goetze India Ltd Vs CIT [(2006) 282 ITR 323 (SC)].Even in declining the claim, thus, the Assessing Officer had indicated that it was on account of limitations placed on him by the Goetze decision (supra), he could not have accepted the claim. There was no issue on the merits on the claim. In appeal before the CIT(A), learned CIT(A) accepted the claim and directed the Assessing Officer to recompute the same. Learned CIT(A) noted that the Goetze decision does not impinge on the powers of the appellate authorities. In effect thus the claim was admitted by the CIT(A) but the computation was directed to be done by the Assessing Officer. However, the Assessing Officer is aggrieved and in appeal before us. 164. Having heard the rival contentions and having perused the material on record, we see no reasons to interfere in the findings of the CIT(A) on this point either. As a matter of fact, the Assessing Officer‟s observations, as extracted earlier, would show that his only point was ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 82 of 105 that he did not have the powers to admit the claim in the assessment order, but he was alive to the fact that the appellate authorities did not have this limitation, and that apparently was the reason that the Assessing Officer stated that the necessary verification will be done in case of admission of claim by the appellate authorities. His grievance before us thus does not make sense and seems somewhat mechanical or ritualistic. In any event, in the case of CIT Vs Pruthvi Brokers and Shareholders Pvt Ltd [(2012) 349 ITR 336 (Bom)], Hon‟ble jurisdictional High Court has observed that “It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254”. While there is a specific reference to the powers of the Tribunal, as was the issue before Their Lordships, these observations hold equally good in respect of the powers of the Commissioner (Appeals). It is also important to bear in mind the fact that it was not even a fresh claim, it was simply a request for correction in the claim which was already made. Keeping in view of these discussions, as also bearing in mind the entirety of the case, we approve conclusions arrived at by the learned CIT(A), and decline to interfere in the matter on this count as well. 165. Grounds nos. 6,7 and 8 are thus dismissed. 166. In ground no. 9, the Assessing Officer has raised the following grievance: Whether, on the facts and in the circumstances of the case and in law, the ld CIT(A) right in allowing appeal of the assessee and directing the assessing officer to exclude the amount of Notional sales tax incentive while computing Book Profit u/s 115JB of the Act? 167. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in ground no. 11 in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 51-53, we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 168. Ground no. 9 is thus dismissed. 169. In ground no. 10, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Id CIT(A) right inallowing the appeal of the assessee and directing the assessing officer to allow the weighted deduction at 200% in respect of R&D expenditure u/s 35(2AB) of the Act as claimed by the assessee? ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 83 of 105 167. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in the ground no. 12 in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 56-59, we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 168. Ground no. 10 is thus dismissed. 169. In ground no. 11, which has several sub parts, the Assessing Officer has raised the following grievances: (a) "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the TP adjustment of Rs.8,40,44,575/- in respect of interest charged on delayed realization of receivables based on earlier years decisions which is in violation of Rule 10B(4) on contemporaneous nature of comparable data, as interest rate vary every year?" (b) "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in not considering the cost of borrowing for the assessee adopted by the TPO to benchmark the interest chargeable on receivables and instead adopting adhoc Libor plus spread of 200 bps as adopted by the assessee?" (c) "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in not considering the cost of borrowing for the assessee adopted by TPO to benchmark interest chargeable on receivables when the sale price is determined to recover the cost of business, which is inclusive of cost of borrowing?" (d) "Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is correct in ignoring the basic tenet of the transfer pricing as enshrined in section 92F(ii), as in a third party unrelated uncontrolled circumstances the assessee would have recovered the interest on receivables considering the cost of borrowing in its hands?" 167. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in the ground no. 13 in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 60-64 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 84 of 105 168. Ground no. 11 is thus dismissed. 169. In ground no. 12, which also has several subparts in the nature of arguments in support of the core grievance against CIT(A)‟s deletion of the ALP adjustment of Rs 31,50,75,257, the Assessing Officer has raised the following questions for our adjudication: ―Whether on the facts and circumstances of the case and in law, theLd.CIT(A) is correct in deleting the TP adjustment of Rs. 31,50,75,257/- as interest on investment said to be in preference shares of AEs treated by the TPO as loan in nature ofRs.652.40 crores? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the TP adjustment by merely placing reliance on earlier years decisions without going through the new facts brought-on record by the TPO this year independently? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the TP adjustment by merely treating it as recharacterisation without looking into facts of case as to why it has been recharacterised so? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the vital fact that though the said investment is stated to be compulsorily convertible preference shares, the assesses said to have redeemed 50 crore number of such shares on 16.04.2013, 183.27 crore number of such shares on 06.06.2014 and 27.66 crore number of such shares on 28.10.2014 at the same face value at 0.01 euro per share without any arm's length return from the AE RGBV, proving the claim of "compulsorily convertible" as dubious, which shows the investment in the AE is essentially interest free loan in nature? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assesses redeemed the investment as above, though the investment was stated to be made only few months back in the FY 2013-14, on 10.03.2014, 262,13,30,100 number of preference shares (Rs.222,66,88,853) in RGBV at the same face value of 0.01 euro per share without any return, which again shows the nature as current account loan transaction and not compulsorily convertible preference shares as claimed by the assesses? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the vital fact that though the said investment is stated to be compulsorily convertible preference shares, the assessee said to have redeemed 2,90,720 said preference shares in another AE-RIME in the FY 2012-13 at par with same value of AED 290,72,00,000 (INR 430.70 crores) at which it was invested, without any arm's length return from the AE, proving the claim of "compulsorily convertible "as dubious, which shows the investment in the AE is essentially interest free loan in nature? ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 85 of 105 ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring another vital fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RGBV had positive incomes of 33,31,606 Euro for FY 2009-10, 1,09,313 Euro for FY 2010-11, 18,923 Euro for FY 2011-12 and 22,332 Euro for FY2012-13, the assessee has not accounted any such return on accrual basis leading to base erosion to India, casting severe doubts on the nature of entire investment, which is otherwise an interest free loan? ―Whether on the facts and circumstances of the case and in law, theLd. CIT(A) is correct in ignoring the fact that though the assessee is eligible for compulsory 5% coupon rate on the said investment and though the AE RIME had positive incomes of 11,494,125 UAE Dirhams, 5,188,402 Dirhams and $742,069 during the calendar years 2007,2008 and 2009 respectively, the assessee has not accounted any such return on accrual basis leading to base erosion to India, casting severe doubts on the nature of entire investment, which is otherwise an interest free loan? ―Whether on the facts and circumstances of 'the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the AE RGBV incurred losses from FY 2013- 14 onwards and there is no rationale for making investments to the level of Rs.222,66,88,853/- (2,62,13,30,100 number of the said preference shares), that too, at the fag end of the FY 2013-14 knowing fully well that the AE is incurring losses and there is no possibility of getting any return as the stipulated 5% coupon rate, which no unrelated party in uncontrolled circumstances would have done within the meaning of section 92F(ii)? ―Whether on the facts and circumstances of the case and in law, the C!T(A) is correct in ignoring the fact that the AE RIME has been making losses continuously from calendar year 2010 to 2014 and though its net worth is negative, the assesses has shown to have invested in the said preference shares, which is not an arm's length behavior, which no unrelated party would have done so looking from the angle section 92F(ii)? ―Whether on the facts and circumstances of the case and in law, the C/T(A) is correct in ignoring the fact that the situation in the case of the AE - RGBV is much worse and it has been making very meager profit during the FYs 2010-11 to 2012-13 and loss during the FYs 2013-14 and 2014-15 and has been in liquidation process from FY 2014-15 and its networth is also negative only, and in spite of that the assessee claimed to have made investment in said preference shares, which is not an arm's length behavior which no unrelated party would have done so looking from the angle section 92F(H)? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assessee has not furnished any detailed valuation report for the value of the preference shares said to be invested as above in RGBV preference shares and also for the value of AED 1000 per ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 86 of 105 preference share in the AE RIME which again casts cloud on the nature of the Investment? ―Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the facts that the AE RIME has been making losses continuously from calendar year 2010 to 2015 and as such the share value under NA Vis negative and even if it is to be valued under DCF method based on RBI's Circular for outbound shares, the actual cash flows during these years are negative and so its value would be negative only? ―Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the facts that the AE RGBV has been making very meager profit during the FYs 2010-11 to 2012-13 and loss during the FY 2013-14 and has been under liquidation process from AY 2014-15 and if its outbound shares are valued under DCF, it would also be negative only? ―Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring and failing to see the facts of subsequent events happened well before she passes her order that the AE RGB is wound up on 23.03.2016 and on that very same day all its pending alleged preference shares of 593,90,00,000 numbers of face value Euro 5,93,90,000 (INK 417.49 crore) were claimed to have been transferred at the same par value to another AE RIME which is again a continuously loss making company from calendar year 2010 to 2015, assessee booking huge loss of Rs. 113.3 crore under the head capital gains for AY 2016- 17, and the source for the continuously loss making company RIME to the said purchase was again flowing from alleged preference shares investment of assesse into RIME, thus what is essentially a loan transaction was projected as share transaction leading to base erosion to India, raising huge questions as to which continuously loss making company would buy the shares of another wound-up company on the date of winding-up, which clearly shows that the alleged preference share transaction is a sham one with a motive of avoiding taxation of interest, as the real nature of the transaction is interest free loan? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating the sham nature of the nomenclature and form of the transaction "compulsorily convertible preference share", when the investment was redeemed losing the significance of "compulsorily convertible"; never ever been converted into equity shares at any point of time further losing its nature; and never ever received the coupon rate of return losing the nature of preference share, thus rendering the transaction essentially an interest free loan ? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct-in over-looking the fact that though the stated preference shares should carry a fixed rate of dividend, the assesses has not accounted any such return which casts cloud on the real nature of investment being interest free loan? ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 87 of 105 ―Whether on the facts and circumstances of the case and in law, the Ld, CIT(A) is correct in ignoring the fact that an amount of Rs.502.41 crores has flown out of India in the garb of preference share investment in the AEs without any return leading to base erosion in India, which cannot be an arm's length situation in uncontrolled circumstances as in Section 92F(ii)? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the very essence of transfer pricing as to whether unrelated enterprises under uncontrolled conditions would enter into such transactions within the meaning of section 92F(ii)? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not perceiving the intention of the assessee in providing loans in the garb of preference shares thereby avoiding tax liability on the interest? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the economic substance of the transaction which is essentially loan though its external form is stated to be investment in preference shares, as the basic tenet of transfer pricing is that the transaction is to be seen in uncontrolled circumstances in thiro party situation as per Section 92F(ii)? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact that the assessee has entered into an "arrangement, understanding or action in concert" with its AE within the meaning of section 92F(v) whereby huge funds have flown out of India for no return, which no unrelated independent party would have done within the meaning of section 92F(ii) which in turn became possible because of the special relationship existed between the assessee and its AEs? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in failing to "look through" the "substance" of transaction and instead "looked at" the superficial "form" of the transaction to arrive at the decision that the investment is quasi-equity in nature whereas in substance it is "loan" in nature and that the "form" of investment in preference shares was used to avoid taxation of interest leading to base erosion in India ? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in ignoring the amendment by way of Explanation (i)(c) inserted by Finance Act 2012, with retrospective effect from 1.4.2002 whereby the capital investment could be covered as an international transaction under "capital financing" and such transaction would yield accrued interest which is 'income' for the purposes of section 92(1), so as to be dealt under Chapter X of the Income tax Act? ―Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in ignoring the essential character of the transaction is "loan" in "substance" which the assessee camouflages as 'preference share‘ in order to avoid tax liability on the interest that accrues coupled with the base erosion in ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 88 of 105 India by shifting of huge amount of Rs. 502.41 crores out of India without any return? ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct In ignoring the BEPS (Base Erosion and Profit Shifting) Action Plan 9 of which India is a party which mandates that transactions can be disregarded for TP purposes where they lack commercial rationality, as far as proper return on investments is concerned? ―Whether on the facts and circumstances of the case and in law, the Id. CIT(A) is correct in Ignoring the BEPS Action Plan which emphasizes substance over form, economic reality o over legal form and conduct of parties over contracts for evaluating a transaction from transfer pricing angle? Whether on the facts and circumstances of the case and in law, the CIT(A) is correct in not realizing the fact that if such practices are allowed under transfer pricing unchecked without setting it right for arm's length return, it would lead to base erosion to this country as huge funds as in this case could besiphoned out of this country in the garb of alleged preference shares in AE, even though the actual character is essentially loan which should be earning interest, which again would be yielding tax revenue to this country? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the decision of Hon'ble Delhi High court in the case of CIT v/s EKL Appliances Ltd, (345ITR 241) wherein it has been held that recharacterisation of transaction is permissible in exceptional circumstances as that of assessee as under?Two exceptions have been allowed to the aforesaid principle and they are – (i) where the economic substance of a transaction differs from its form; and (ii) where the form and substance of the transaction are the same but arrangements made in relation to the transaction, viewed in their totality, differ from those Which would have commercially rational manner. ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the interest relying on the decision of the Hon'ble High Court in the case of Vodafone India Service P. Ltd (Writ Petition No. 871 of 2014), as the decision held that the shortfall or excess in investment is capital in nature and so cannot be added as income, whereas in the instant case, capital itself has not been considered for adjustment and that the capital was considered as loan and only the accrued interest has been considered as the income? ―Whether on the facts and circumstanced of the case and in law, the Ld. CIT(A) is correct in not appreciating the order o the Hon'ble Tribunal in assessee's own case for AY 2010-11 while relying on it, in which it has been held recharacterisation is possible when the transaction is sham or substantially at variance with the stated form, and ignoring that there are enough pointers as ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 89 of 105 above for the impugned year to show that the transaction is loan which is substantially at variance with the stated form of preference share? 169. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in the ground no. 14 in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 67-70 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 170. Ground no. 12 is thus dismissed. 171. In ground no. 13, with several subpartsin the nature of arguments embedded in it, raises the following questions for our adjudication: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s Ace BPO Services Pvt, Ltd.(Ace BPO) as the comparable without appreciating that it is functionally dissimilar as its core competence is health care back office support system whereas tested party (assessee) is providing consultancy and support service in the field of petroleum products? Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in including M/s Allsec Technologies Ltd, as the comparable without appreciating that it is functionally dissimilar as it is engaged into ITES service whereas benchmarking is done for MCS and BSS? Whether On the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s Axis Integrated Systems Ltd. without appreciating that it is functionally similar as both the assessee and the comparable are engaged in providing high end management and business support services? 172. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in ground no. 15 in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 71-74 we have rejected this grievance of the assessee. Accordingly, the inclusion of Allsec Technologies Ltd is to be included in the comparables and Axis Integrated Systems Ltd is confirmed. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 173. Ground no. 13 is thus dismissed. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 90 of 105 174. In ground no. 14, which has several parts in the nature of arguments in support of core grievance against deletion of ALP adjustment of Rs 34,21,041 on account of provision of services to the AE without any markup, the Assessing Officer has raised the following grievances: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the addition of Rs. 34,21,041/-with regard to transfer pricing adjustment on Provision of support services for drilling operations to AE?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating that the contract between AE and foreign government is not determinative of arms length price?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in failing to understand that the contract between the AE and the foreign government was to avoid base erosion for the Kurdish government and it would not avoid Indian jurisdiction to arrive at the ALP of the transaction unless it is prohibited by any Bilateral Investment Treaty?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating the fact that a best the agreement with Kurdish government would only serve as evidence for cost incurred and it could not be read into much for ALP determination in the absence of any binding Bilateral Treaty between Indiaand Iraq?‖ ―Whether on the facts and circumstances of the case and in law the Ld. CIT(A)is correct in holding that the transaction is covered u/s 10B(2)(d) in the absence of any laws and Government orders in force and equating an agreement between the AE and the regional government for incurring of cost with law or government order in force for ALP of the transaction?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the cost-to-cost basis of support services to the AE, without understanding the basic tenet of the transfer pricing u/s 92F(H) that no unrelated assessee in uncontrolled circumstances in third party situation would have rendered services on cost-to-cost basis, leading to base erosion in India?‖ 175. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in the ground no. 16in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 75-79 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 176. Ground no. 14is thus dismissed. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 91 of 105 177. In ground no. 15, which again has several parts in the nature of arguments, the Assessing Officer has raised the following grievances: "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in directing to restrict the TP adjustment of corporate guarantee fee which is split into 50:50 as against the split of 60:40 charged by the TPO for the impugned year merely relying on the Tribunal and the CIT(A)'s order for earlier year in assessee's own case, which is violative of Rule 10B(4) on the need to be contemporaneous nature of the comparable data?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in restricting the rate ignoring the fact that the rate depends on various variables such as risk profile, credit profile, place of loan, time period & rate of interest and that all these variables vary from company to company and one rate cannot be applied in an ad hoc manner to all the AE‘s across the board which will be violative of provisions of Rule 10B?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the rate arrived at by the assessee dividing the interest differential between the assessee and the AEs at 50:50 in an ad hoc unscientific manner, instead of dividing it on the. basis of FAR analysis between the assessee and the AEs?‖ ―Whether on the facts and circumstances of the case and in law, the Ld, CIT(A) is correct in accepting the assessee's division of interest differential 50:50 between the assessee and the AEs, whereas it is anybody's knowledge that the assessee and the AEs cannot be considered on the same footing for attributing the interest differential advantage equally, as FAR significantly differ between the assessee and the AEs?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) Is correct in not passing a speaking order on the FAR analysis carried out by the TPO for attributing the interest differential in a more conservative manner at 60:40 ratio and simply accepting the assessee's ad hoc unscientific ratio of 50:50 without any backing of FAR analysis?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in equating the huge assessee with less credit-worthy small AEs in assigning the interest differential equally which is not possible at any stretch of imagination, ignoring the scientific apportionment done by the TPO based on FAR analysis?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in observing the 60:40 split of interest differential carried out by TPO is adhoc and without any basis, without properly going through the scientific FAR analysis carried out by the TPO?‖ ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 92 of 105 ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in passing a non-speaking order in as much as she observed as 'The FAR analysis done by the TPO is not appropriate" without adducing reasons as to why it is not appropriate?‖ ―Whether on the facts and circumstances of the case and in law, after having observed that the FAR analysis done by the TPO is not appropriate and powers being coterminous, the CIT(A) is correct in not carrying out appropriate FAR analysis on her own, or getting it done by the TPO by remanding the case u/s 250(4) r.w.r. 46A and deciding the issue taking into account such remand report?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in passing a non-speaking order in as much as she held the split of 50:50 of interest differentia is correct without adducing any reasons as 'to how the equal split between the assessee and the AEs would be correct, whereas it is anybody's knowledge that the huge assessee and the less creditworthy AEs cannot be equated on any parameter?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the 50:50 split of interest differential based on earlier years orders of A Y2011-12 to A Y2014-15 without understanding the fact that the FAR analysis could vary year-on-year and passing order without depending on independent FAR analysis done for the impugned A Y 2015-16?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the artificial division of short-term guarantee and long- term guarantee made by the assessee, without appreciating the observations of the TPO It his order that when the corporate guarantee charge is for one year the assessee has not given the rationale for working capital (short term) and non- working capital (long term) distinctions and that the assessee has not given any data for such classification of corporate guarantee and not proved the same?‖ ―Whether on law, the Ld. CIT(A) is correct in accepting the artificial division of short-term guarantee and long-term guarantee made by the assessee, without appreciating the fact that the data given in the table appearing in page No.62 to 64 of the TPO's Order shows that the assessee has taken guarantee for 90 days under short term as well as under long term and guarantee for 275 days also under long term as well as under short term, which clearly indicates that the classification of corporate guarantee done by the assessee is ad hoc, unscientific, artificial and so is untenable?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in relying upon the order of her predecessor for AY 2011-12 stating it as speaking order, without appreciating the fact that her predecessor, for upholding the yield spread approach of the assessee, relied on the decision of Hon'ble Gujarat High Court in CIT Vs Adani Wilmar Ltd (Tax Appeal No.240 of 2014 dated 07.04.2014) which nowhere discusses about the method at all?‖ ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 93 of 105 ―Whether on the facts and circumstances of the case and in law, the Ld, CIT(A) is correct in relying upon the order of her predecessor and order of Hon'ble Tribunal for A Y2012-13, ignoring that the Hon'ble Tribunal in assessee's own case for A Y2012-13 set aside the order of the CIT(A) on this issue with a specific direction to the TPO to verify the correctness o the method claimed by the assessee in its original order in I.T (TP)A, No.5842/Mum/2017 dated 28.09.2018 and also in the M.A order in M.A.No.736/Mum/2018 dated 2.1.2019?‖ 178. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in ground no. 17in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 80-83 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 179. Ground no. 15is thus dismissed. 180. In ground no. 16, with several arguments having been made part of the ground of appeal itself, the Assessing Officer has raised the following grievances: ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in excluding the comparable M/s B VG India L td, without appreciating that it is functionally similar as it is engaged in the business support service only?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s Empire Industries Ltd. the comparable for benchmarking the transaction of provision of business support service without appreciating that it is functionally dissimilar as it is engaged in the manufacture of machine tools, industrialequipment, real estate whereas the tested party (assessee) is engaged in the service sector? ― ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in accepting functionally dissimilar company as comparable without appreciating that including such comparables will defeat the very purpose of benchmarking?‖ ―Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in including M/s ICRA Management Consulting Services Ltd. as comparable without appreciating that it is having substantially lower turnover i.e. 28.91 crores where as segmental turnover of tested party is 577 crores, overlooking the fact that non application of turnover filter will defeat the very purpose of benchmarking the transaction and also ignoring the decision of Hon'ble Karnataka high court in case of Acusis software India Private Limited (ITA No .223/2017) in this regard? Whether On the facts and circumstances of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 94 of 105 the case and in law, the Ld. CIT(A) is right in including M/s Spectrum Business Solutions Ltd. as comparable without appreciating that it is having substantially lower turnover i.e. 8.53 crores only whereas segmental turnover of tested party is 577 crores, overlooking the fact that non application of turnover filter will defeat the very purpose of benchmarking the transaction and also ignoring the decision of Hon'ble Karnataka high court in case of Acusis software India Private Limited (ITA No .223/2017) in this regard?‖ 181. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the Assessing Officer, that whatever we decide in ground no. 18 in the Assessing Officer‟s appeal for the assessment year 2014-15 will apply mutatis mutandis on this ground of appeal as well. Vide our detailed decision earlier in this order, and for the detailed reasons we have set out in paragraphs 84-87 we have rejected this grievance of the assessee. The observations made therein will be equally applicable here as well. Respectfully following the said decision, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 182. Ground no. 16is thus dismissed. 183. In the result, the appeal of the Assessing Officer for the assessment year 2015-16 is dismissed. 184. We now take up the ITA No. 2876/Mum/2019, i.e. the appeal filed by the assessee against the order dated 27 th March 2019passed by the learned CIT(A) in the matter of assessment under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2015-16. 185. In the first ground of appeal, the assessee has raised the following grievance: The Learned CIT(A) erred in directing the AO to compute the disallowance under clause (f) of Exp 1 to section 115JB(2) i.e., expenditure relating to exempt income, when no such disallowance ought to have been made while computing book profit u/s.115JB of the Act, relying on Tribunal decision in appellant's own case for AY 2009-10 vide corrigendum order dated 02.04.2008. 186. We find that, while dealing with the identical ground of appeal for the immediately preceding assessment year in this very order at paragraphs 20-25, we have decided this issue in favour of the assessee. We see no reasons to take any other view of the matter than the view so taken by us earlier in this order in the assessee‟s own case. The observations so made in para 20-25 will apply mutatis mutandis on this grievance as well. We, therefore, uphold the plea of the assessee on this issue. 187. Ground no. 1 is thus allowed. 188. In ground no. 2, the assessee has raised the following grievance: The CIT(A) erred in confirming the disallowance of depreciation of Rs.3,86,693/- on the opening WDV of the capitalized value of goods purchased from P.K. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 95 of 105 Agarwal Group concerns Viz (Durga Iron & Steel Lid. and Surajbhan Rajkumar Pvt. Ltd.) in A.Y. 2003 - 04. 189. Learned counsel for the assessee submits that this ground of appeal is covered against the assessee by decisions of the coordinate benches for the assessment years 2006-07 to 2013-14, and, as such, he does not wish to press the same. 190. Ground no. 2 is thus dismissed as not pressed. 191. In ground no. 3, the assessee has raised the following grievance: 3. The learned CIT(A) Mumbai erred in allowing the deduction in respect of export profits of SEZ unit u/s 10AA of the Income tax Act, 1961 (Act) with reference to the income computed under the head 'profits and gains of business or profession' of the SEZ unit instead of 'gross profits and gains' of SEZ unit, as interpreted by Supreme Court in the recent judgement in the case of Vijay Industries. The Apex court while interpreting the provisions of section 80HH relevant to AY 1979-80 and 1980-81 has held that phrase "profits and gains" means gross profits of the business i.e. before computing income as specified in section 30 to 43D of me Act in para (18) and (19) as under: "It is most humbly submitted that the concept 'profits and gains s a wider concept than the concept of 'income'. The profits and gains/loss are arrived at after making actual expenses incurred from the figure of sales by the assessee. It does not include any depreciation and investment allowance, as admittedly these are not the expenses actually incurred by the assessee. However, the term 'income' does take into consideration the deductions on account of depreciation and investment allowance. Therefore, the term profits and gains are not synonymous with the term 'income' ..... 19) Reading of Section 80HH along with Section 80A would clearly signify that such a deduction has to be of gross profits and gains, i.e., before computing the income as specified in Sections 30 to 43D of the Act." Without prejudice to the above, the appellant prays that while computing the commercial profit of the SEZ unit eligible for deduction 10AA of the Act (to the extent of export), depreciation charged in the books as per the Companies Act 1956 ought to have been reduced, instead of the depreciation allowed u/s. 32 of the Income Tax Act 1961. 192. Learned Representatives fairly agree that whatever we decide on ground no. 6 in the assessee‟s appeal for the assessment year 2014-15, which has been heard along with this appeal, will hold good for this assessment year as well. In our decision on the said ground, earlier in paragraphs 114-117, we have, following the coordinate bench decision for the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 96 of 105 assessment year 2013-14 in the assessee‟s own case, upheld the said plea of the assessee. We are in considered agreement with the views so taken by the coordinate bench, and respectfully following the said decision, we uphold the plea of the assessee in this assessment year as well. 193. Ground no. 3 is thus allowed. 194. In ground no. 4, the assessee has raised the following grievance: 4. Reference to the Transfer Pricing Officer ('TPO 1 ) under section 92CA of the Act. 4.1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of learned Assessing Officer ('AO') in making a reference of the Appellant's case to the TPO, without applying his mind and without recording his satisfaction, thereby making the entire process of referring the matter to the TPO as invalid; 4.2. On the facts and in the circumstances of the case and in taw, the learned CJT(A) erred in confirming the action of the learned Assessing Officer innot stating reasons to show that any of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied before making an adjustment to the total income of the Appellant; 4.3. On the facts and in the circumstances of the case and in law, the learned C!T(A) erred in confirming the action of the learned AO of not demonstrating The motive of the Appellant to shift profits outside of India by manipulating the prices charged in its international transaction, either at the stage of invoking, or initiating the assessment or at the stage of framing the assessment, in its international transaction, either at the stage of invoking or initiating the assessment or at the stage of framing the assessment; 4.4. On the facts and in the circumstances of the case and in law. the learned CIT(A) erred in confirming the action of the learned AO in not demonstrating the motive of the Appellant, to carry out transactions between an eligible business anti other business, to reduce the taxable profits by manipulating the prices of its Specified Domestic transactions, either at the stage of invoking or initiating the assessment or at the stage of framing the assessment; 4.5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not demonstrating that the course of business between the Appellant and the closely connected person was so arranged that it produces to the Appellant more than ordinary profits which might be expected to arise in its eligible business 195. Learned counsel submits that he does not wish to press this ground of appeal. Learned Departmental Representative has no objection to this prayer. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 97 of 105 196. Ground no. 4 is thus dismissed as not pressed. 197. In ground no. 5, the assessee has raised the following grievance: 5. Management Consultancy Services and Business Support Services rendered to AEs: 5.1 The learned CIT(A) erred in rejecting the Appellant's comparable Tech process Solutions Limited, on the ground of functional dissimilarity. 5 2. The learned CIT{A) erred in accepting the TPO's cherry picked comparable BNR Udyog Ltd, without providing any cogent reasons. 198. While dealing with a connected grievance earlier in this order in ground no. 14 of the appeal of the Assessing Officer, we have already held that, following the decision in the immediately preceding assessment year, Allsec Technologies Ltd is to be included in the comparables and Axis Integrated Systems Ltd is to be excluded. In this view of the matter, the assessee‟s challenge about Techprocess Solutions Ltd and BNR Udyog Limited is wholly academic inasmuch as with these comparables, or without these comparables, the transaction price does not call for any ALP adjustment. The grievance raised by the assessee is thus dismissed as infructuous. 199. Ground no. 5 is thus dismissed as infructuous. 200. In ground no. 6, the assessee has raised the following grievance: „ 6. Inter-unit transfer of Power: 6.1 On the facts and in the circumstances of the case and in law, the learned AO erred in making and the learned CIT(A) erred in confirming the transfer pricing adjustment of INR 34,96,00,286 relation to the transaction of inter-unit transfer of Power from the Captive Power Plant ('CPP') to Other Manufacturing Division ('OMD') by computing the arm's length rate for power plants, GTQ VIII, and GTG IX, at INR 5.43 and INR 6.23 per KHW, respectively without considering INR 6.70 per KHW as determined by the Appellant; 6.2, On the facts and in the circumstances of the case and in law. the learned AO erred in making and the teamed CIT(A) erred in confirming an adjustment of INR 34,96,00,236/-, without considering the facts that during the year under consideration no income based deductions, under section 80IA of the Act, has been claimed by the aforesaid power plants. 6.3. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the action of the learned A.O. in accepting the economic analysis of the learned TPO without providing cogent reasons and specifically. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 98 of 105  Failed to appreciate that the level of the market of the comparable transaction adopted by the learned TPO, is different as compared with the level of market in which appellant (manufacturing units) operate; and  erred in confirming the action of the AO/TPO of determining the arm's length rate of captive power plants after making adjustments to the comparable's fixed cost based on Plant Load Factor. 201. So far as this ground of appeal is concerned, the assessee has certain captive power plants, namely CPP GTG VII Hazira, CPP GTG IX Hazira, STGII Hazira and STG-II Hazira, which are eligible for deduction under section 80IA. These four eligible units have supplied electricity to Hazira Manufacturing Division (HMD) and Dahej Manufacturing Division (DMD) of the assessee company. The rate at which the electricity is so supplied is Rs 6.70 per KWH, and it is exactly the same at which an external supplier of power (i.e. Dakshin Gujarat Vij Company Limited- DGVCL in short) is supplying the power to the manufacturing units of the assessee company. It is on this basis that the assessee claimed the electricity sale transaction between its CPPs and manufacturing units to be at arm‟s length. Based on the price at which external vendor, namely DGVCL, is supplying power to the manufacturing divisions of the assessee company, the assessee applied Internal CUP (comparable uncontrolled price) method for the benchmarking. This benchmarking, however, was rejected by the Transfer Pricing Officer. The TPO was of the view that DGVCL was not a manufacturer of the electricity and it was only supplying the electricity purchased from others, and, therefore, its price is bound to be higher. He then proceeded to obtain information from Gujarat State Electricity Corporation Ltd and analyze the data with respect to the plant load factor (PLF) and the financial costs of its various manufacturing units. He then applied these details, with suitable PLF adjustment, and computed the prices on which these CPPs should have supplied the power to the HMD and DMD. These prices were used as external CUP inputs, and based thereon an ALP adjustment of Rs 34,96,00,236was made. Aggrieved, the assessee carried the matter in appeal before the learned CIT(A) but without any success. In a very brief operative portion of her order, learned CIT(A) observed as follows: I have carefully perused the order of the learned TPO and the submissions made by the appellant during the course of the appellate proceedings. The facts under consideration for the AY 2014-15 are similar to the facts in the AY 2013-14 and 2014-15. This ground of appeal has been dismissed by the order of the CIT(A) for Ay 2013-14 vide order dated 9 th October 2017 para 27.3 and for AY 2014-15 dated 31 st January 2019, vide para 40.3 Therefore, respectfully following the order of the CIT(A) in the appellant‘s case for the AY 2013-14 and 2014-15, and maintaining a consistent stand, this ground of appeal is dismissed. 202. The assessee is aggrieved of the stand so taken by the learned CIT(A) and is in appeal before us. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 99 of 105 203. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 204. We find that the learned CIT(A)‟s order for the assessment year 2013-14, based on which the impugned ALP adjustment has been sustained, has come up for consideration before a coordinate bench which has, reversing the stand of the learned CIT(A), observed as follows: 168. We have heard both the counsel and perused the records. Learned counsel of the assessee contended that assessee has benchmarked the transaction using internal cup by considering the manufacturing unit as a tested party and comparing the inter unit power rate at which the power was purchased by the manufacturing units from the third-party DGVC. That in the case of Reliance Industries Ltd for assessment year 2005-06 to assessment year 2012-13 the ITAT Mumbai has upheld that the power rate charged by DGVCL for determining the market rate of unit rate of electricity. 169. Furthermore it is the contention that Hon‘ble High Court has rejected the appeal of the revenue for assessment year 2006-07 and has discussed non applicability of judgement of Hon‘ble Calcutta High Court in the case of CIT vs. ITC Ltd. 170. Learned counsel of the assessee further pleads that he is relying upon the decision of honourable Supreme Court in the case of Radha Soami Satsang vs. CIT (1992) 193 ITR 321 (SC), for the proposition that on the ground of consistency also DG VCL rate should be accepted. It is further contended that market value of electricity supplied by the CPP unit to the other unit would be the same as charged by the Gujarat Electricity Board to the end consumers. In this regard learned Counsel of the assessee also referred to ITAT decision and Hon'ble Gujarat High Court decision. It is further contention that honourable Supreme Court has also rejected the special leave decision filed by the Commissioner of income tax, Ahmedabad and the principle down by the honourable High Court has attained finality in favour of the assessee. 171. With regard to ground No. 10.4 it is the contention of the learned counsel of the assessee that he will not press this ground if ground No. 10.3 is decided in favour of the assessee. 172. In this ground the assessee contends that assessee‘s CPP is supplying power to the manufacturing unit that is the customer and learned Transfer Pricing officer has applied rate at which power generating unit is selling to power distribution which will then sell to the end consumer. Hence the level of market is different. 173. It is further contended that rate which electricity is supplied by GEB to the end consumer is to be considered as the market rate at which the captive power plant can sell power to other unit. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 100 of 105 174. Upon careful consideration we find that for the purpose of 80IA(8), the rate of electricity as taken by the assessee has been consistently approved by the ITAT and Hon‘ble Jurisdictional High Court also. We may refer here the provisions of section 80IA(8):- Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (8) Where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date: Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.—For the purposes of this sub-section, "market value", in relation to any goods or services, means— (i) the price that such goods or services would ordinarily fetch in the open market; or (ii) the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA. 175. The rate charged by the assessee has been duly accepted by the Tribunal and upheld by the Hon‘ble Jurisdictional High Court in the case of CIT vs. M/s. Reliance Industries Ltd. (in ITA No. 1056 of 2016 dated 30.01.2019), which reads as under: 4. Question (c) pertains to the dispute between the department and the assessee regarding the rate at which the electricity generated by one unit of the assessee-company and provided to the another be valued. The assessee contended that such valuation should be at the rate at which the electricity distribution companies are allowed to supply electricity to the consumers. The revenue on the other hand argues that the appropriate rate should be the rate at which the electricity is purchased by the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 101 of 105 distribution companies from the electricity generating companies. 5. This controversy arose in the background of the fact that the assessee had set up a captive power generating unit and claimed deduction under Section 80IA of the Income Tax Act, 1961 ("the Act" for short) in respect of the profits arising out of such activity. Obviously, therefore the attempt on the part of the assessee was to claim larger profit under the unit which was eligible for such deduction as against this, attempt of the revenue would be see that the ineligible unit shows greater profit. 6. The Tribunal in the impugned judgment extracted extensively from the order of CIT (Appeals) and independent reasons for confirming the same. In such order CIT (Appeals) had placed reliance on an earlier judgment of the Tribunal in case of Reliance Infrastructure Limited Vs. Addl. CIT, Range 1(1), Learned counsel for the assessee had placed on record a copy of the judgment of the Tribunal in case of Reliance Infrastructure limited. In such judgment an identical issue came up for consideration. The Tribunal by detailed judgment had held and observed as under:- "44. In the given facts and circumstances of the case, we are of the view that the profits of the business of generation of power worked out by the Assessee on the basis of the price that it paid to TPC for purchase of power continues to be the best basis even after the order of MERC and therefore the same has to be accepted as was done in the past and as approved by the ITAT in Assesssee's case. We therefore dismiss ground.‖ 7. Counsel for the assessee pointed out that the judgment of the Tribunal in case of Reliance Infrastructure limited (supra) was carried in appeal by the revenue before the High Court in Income Tax Appeal No.2180 of 2011, such appeal was dismissed making following observations:- "6. As far as question (d), namely, the claim relating to purchase price from Tata Power Company is concerned and that was for the deduction under Section 80IA, the ITAT in paragraph 21 onwards has noted the factual findings and also referred to the order of the Maharashtra Electricity Regulatory Authority (for short "MERC"). Paragraph 36 set outs as to how the claim arose. The claim has been considered in the light of Section 80IA and particularly proviso and explanation thereto. The Tribunal eventually held that till the Assessment Year 2005-2006, the Revenue considered the rate at which the power was purchased by the Assessee from Tata Power Company as market value. There is nothing brought on record as to how the rate determined by the MERC is the true market value. The Assessee gave explanation that the rates determined by the MERC do not reflect the correct market rate. The finding is that the ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 102 of 105 mode of computation and deduction under Section 80IA requires no deviation from the past. The findings of fact and to be found in paragraphs 42 to 50 also reflect that the very issue came up for consideration for the Assessment Year 2003-2004. For the reasons assigned by the ITAT and finding that the attempt is to seek reappreciation and reappraisal of the factual data that we come to a conclusion that even question (d) as framed is not a substantial question of law." 8. Thus, the issue at hand had been examined by this Court on earlier occasion and the view of the Tribunal under similar circumstances was approved. 9. Additionally, we also notice that similar issue came up for consideration before Chhattisgarh High Court in case of Commissioner of Income-tax, Raipur Vs. Godawari Power &Ispat Limited1, in which the Court held and observed as under: "31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier. it should have been compared with the market 10. Gujarat High Court in case of Principal Commissioner of Income- Tax Vs. Gujarat Alkalies and Chemicals Ltd. also had occasion to examine such an issue. It referred to earlier order in case of Asst. CIT Vs. Pragati Glass Works Pvt. Ltd.2 in which following observations were made:- "7. To our mind, Tribunal has committed no error. Assessing Officer and CIT(Appeals) while adopting Rs.4.51 per unit as the value of electricity generated by eligible unit of assessee and supplied through its non eligible unit only worked out cost of such electricity generation. In fact CIT(Appeals) in terms recorded that Rs.4.51 was computed as the reasonable value of the electricity generated by eligible unit of assessee. This amount included Rs.4.17 per unit which was the cost of electricity generation and Rs.0.34 per unit which was duty paid by the assessee to GEB for such power generation. Thus the sum of Rs.4.51 per unit only represented the cost of electricity generation to the assessee. In Section 80IA(8) of the Act what is required to be ascertained is the market value of the goods transferred by the eligible business, ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 103 of 105 when such transfer is by eligible business to another non eligible business of the same assessee and the consideration recorded in the accounts of the eligible business does not correspond to market value of such goods. Term "Market Value" is further explained in explanation to said sub-section to mean in relation to any goods or services, price that such goods or services will ordinarily fetch in the open market. To our mind sum of Rs.4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof. It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 11. Judgment of Calcutta High Court in case of Commissioner of Income- tax, Kolkata - III Vs. ITC Ltd. was also brought to our notice in which the said High Court has taken a different stand. However, since the issue has already been examined by this Court earlier and in view of the decisions of the Chhattisgarh and Gujarat High Court, we see no reason to entertain this question.‖ 176. Here we note that the assessing officer while expounding that rate duly approved under 80 IA(8) is to be changed for Transfer Pricing purposes has placed reliance upon honourable Calcutta High Court decision in the case of ITC Ltd. We find that the view of TPO and learned CIT(appeals) also by relying upon Calcutta High Court decision in ITC Ltd that market value basis duly approved by the honourable Bombay High Court shall change for the purpose of domestic transfer pricing regimen here is not at all sustainable. The reliance by learned CIT(appeals) on honourable Calcutta High Court decision in the case of ITC Limited supra has been distinguished by the honourable jurisdictional High Court. The honourable jurisdictional High Court has chosen not to follow the Calcutta High Court decision. Hence in our considered opinion, the authorities below have misled themselves by relying upon Calcutta High Court decision in this regard. This decision has not found favour with honourable jurisdictional High Court. 177. Thus we find that the view of the authorities below that the definition of ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 104 of 105 the market value shall change for the purpose of domestic transfer pricing regimen is not at all sustainable. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and decide issue in favour of the assessee. 205. As regards the CIT(A)‟s order for the assessment year 2014-15, that order has also been reversed, as decided in the appeal for the assessment year 2014-15, earlier in this order earlier. Once the decisions, based on which the impugned decision of the CIT(A) has its foundational basis, stand disapproved by a coordinate bench, the stand of the learned CIT(A) cannot meet our judicial approval. In any event, we are in considered agreement with the view taken by the coordinate bench in the assessee‟s own case for the immediately preceding assessment year, and we are unable to see any legally sustainable basis for rejection of internal CUP on the facts of this case. Respectfully following the views so expressed by the coordinate bench, which, in turn, follows the views of other coordinate benches and Hon‟ble jurisdictional High Court in the assessee‟s own case, we uphold the plea of the assessee. Accordingly, the impugned ALP adjustment of Rs 34,96,00,236stands deleted. 206. Ground no. 6 is thus allowed. 207. In ground no. 7, the assessee has raised the following grievance: The learned CIT(A) erred in rejecting the comparable company namely Cameo Corporate Services Limited without providing any cogent reasons. 208. Learned representatives agree, even as learned Departmental Representative relies upon the stand of the authorities below, thatthis issue is covered by the decision of a coordinate bench in the assessee‟s own case for the assessment year 2013-14 wherein the coordinate bench, ain paragraph 156 of the order, has remitted the matter regarding plea for inclusion of Cameo Corporate Services Ltd, as a comparable, to the file of the Assessing Officer for having the matter examined by the TPO on the same, and deciding the matter on that basis. It has been so done on the ground that there was no occasion for the TPO to examine the matter since the said comparable was not included in the assessee‟s transfer pricing analysis. This reason holds good in the present context as well. We, therefore, deem it fit and proper to remit the matter to the Assessing Officer with the direction as above. Ordered, accordingly. 209. Ground no. 7 is thus allowed for statistical purposes. 210. We now take up the additional grounds of appeal filed by the assessee. Having heard the parties on the admissions of these grounds of appeal, and having regard to the well-settled legal position in the light of the Hon‟ble Supreme Court‟s judgment in the case of NTPC Vs CIT [(1997) 229 ITR 383 (SC)], these grounds are admitted. ITA Nos.1645 & 2876/Mum/2019 ITA Nos.2344 & 3945/Mum/2019 Assessment Years: 2014-15 & 2015-16 Page 105 of 105 211. As regards the first additional ground of appeal, we have already adjudicated upon the same while dealing with the related ground of Assessing Officer‟s appeal, and rejected the same. We, therefore, reject this additional ground of appeal. 213. The additional ground of appeal no. 1 is thus rejected. 214. In the second and third additional grounds of appeal, the following grievances have been raised: The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs.1,23,93,743 accrued under the Technology Upgradation Fund (TUF) Scheme, being a capital receipt not liable to tax, while computing income under the normal provisions of the Act. The learned CIT(A) Mumbai, erred in not excluding the interest subsidy of Rs.1,28,98,743 accrued under the TUF scheme, from the Book profit computed u/s 115 JB of the Act being capital receipt and not income liable to tax. 215. Learned representatives fairly agree that as the related facts have not come up for examination before any of the authorities below, even upon admission of these grounds of appeal, these issues are only required to be remitted to the file of the Assessing Officer for fresh adjudication in accordance with the law, by way of a speaking order and after giving an opportunity of hearing to the assessee. We order accordingly. 216. Additional grounds of appeal nos. 2 and 3 are thus allowed for statistical purposes. 217. In the result, the ITA No. 2876/Mum/2019, i.e. the appeal filed by the assessee for the assessment year 2015-16, is partly allowed in the terms indicated above. Pronounced in the open court today on the 8 th day of March 2022. Sd/xx Sd/xx Amarjit Singh Pramod Kumar (Judicial Member) (Vice President) Mumbai, dated the 8th day of March 2022. Copies to: (1) The Applicant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order etc True Copy Assistant Registrar Income Tax Appellate Tribunal Mumbai benches, Mumbai