DCIT Corporate Circle 2(1), CHENNAI V. The India Cements Ltd., CHENNAI

ITA 2416/CHNY/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7187 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 23-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M. SRINIVASA RAO
• Assessee Lawyers: SAROJ KUMAR
• Keywords: Capital asset; Depreciation; Business expenditure; Earning of tax free income; Notional interest; Capital receipt; Commercial expediency; Revenue expenditure; Capital expenditure; Rule 8D
• Section: 115JB; 80IA; 201; 13; 22; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN , ACCOUNTANT MEMBER ITA NO S . 2 412, 2413, 2414, 2415 & 2416 /CHNY/ 201 9 ASSESSMENT YEAR S : 20 11 - 12, 2012 - 13, 2014 - 15, 2015 - 16 & 2016 - 17 THE DEPUTY COMMISSIONER OF INCO ME TAX, CORPORATE CIRCLE - 2 (1), ROOM NO. 5 11, 5 TH FLOOR, WANAPARTHY BLOCK, 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600 034. VS. M/S. THE INDIA CEMENTS LIMITED, NO.827, DHUN BUILDING, ANNA SALAI, CHENNAI 600 0 02. [PAN: AAACT 1728P ] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR . M. SRINIVASA RAO , CIT - DR /RESPONDENT BY : MR. SAROJ KUMAR , ADVOCATE / DATE OF HEARING : 12 . 1 2 .2019 / DATE OF PRONOUNCEMEN T : 12 .12 .2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : TH E S E ARE FIVE APPEAL S FILED BY THE REVENUE . ITA NOS.2412 & 2413/CHNY/201 9 ARE APPEALS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER S OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) - 6 , CHENNAI I N ITA NO S . 181 & 182/CIT(A) - 6/2017 - 18 DATED 20.05.2019 FOR THE ASSESSMENT YEAR S 201 1 - 1 2 AND 2012 - 13 AND ITA NOS.2414, 2415 & 2416/CHNY/201 9 ARE APPEALS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDERS OF THE LEARNED ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 2 - : COMMISSIONER OF INCOME TAX (APPEALS) - 6, CHENNAI IN I.T.A. NO.541/CIT(A) - 6 /2016 - 17; I.T.A. NO.187/CIT(A) - 6/2017 - 18 & I.T.A. NO.124/CIT(A) - 6/2018 - 19 , ALL DATED 20.05.2019 FOR THE ASSESSMENT YEARS 2014 - 15, 2015 - 16 & 2016 - 17 . 2 . AS ALL THE APPEALS RELATE TO THE SAME ASSESS EE AND INVOLVE COMMON ISSUES, CONSEQUENTLY ALL THESE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER. IN THE DISPOSAL OF THESE APPEALS, IT IS PROPOSED TO DECIDE THE ISSUES SPECIFICALLY AND THEN REFER TO THE GROUND IN EACH OF THE APPEAL AGAINST EACH OF THE ISSUES. 3. MR. M. SRINIVASA RAO, CIT - DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI MR. SAROJ KUMAR , ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 4. ISSUE - 1: NOTIONAL INTEREST ON ANNUITY ADVANCE TO SUBSIDIARY : IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ASSESSEE HAD DEBITED THE INTEREST AND OTHER BORROWING COSTS TO THE PROFIT AND LOSS ACCOUNT. IT WAS A SUBMISSION THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CHARGED INTEREST AT THE RATE OF 8% ON THE ADVANCE G IVEN TO ONE OF ITS SUBSIDIARIES M/S. TRINETRA CEMENT LIMITED (FORMERLY INDO - ZINC LIMITED). HOWEVER, THE ASSESSEE HAD NOT CHARGED INTEREST ON THE ADVANCE GIVEN TO FOUR OTHER SUBSIDIARIES NAMELY ICL FINANCIAL SERVICES LIMITED, ICL SECURITIES LIMITED, ICL IN TERNATIONAL LIMITED AND INDUSTRIAL CHEMICALS AND MONOMERS LIMITED. 4.1 WHEN QUESTIONED, THE ASSESSEE CLAIMED THAT THE ADVANCE HAD BEEN MADE TO THE FOUR COMPANIES FOR PROTECTING AND HOLDING STRATEGIC INTEREST IN ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 3 - : THOSE COMPANIES AND IN VARIOUS BUSINESS INITI ATIVES. IT WAS SUBMITTED THAT THE ADVANCES HAD BEEN MADE ON COMMERCIAL EXPEDIENCY AND TAKING INTO CONSIDERATION THE UNDERLYING COMMERCIAL CONSIDERATION , THE ASSESSEE HAD CLAIMED THAT THE SAID ADVANCE WAS GIVEN TO THE COMPANIES IN VARIOUS BUSINESS ACTIVITI ES SUCH AS SUGAR, POWER GENERATION, PACKING AND FINANCES, ETC. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LIMITED REPORTED IN 288 ITR 1 (SC). THE CLAIM OF THE ASSESSEE HAS NOT BEEN ACCE PTED BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER ON THE GROUND THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LIMITED WAS ON REVIEW BY THE HONBLE SUPREME COURT , MADE AN ADDITION REPRESENTING THE NOTIONAL INTEREST AT THE RATE OF 8% ON THE SAID LOANS GRANTED TO THE SUBSIDIARY COMPANIES. IT WAS A SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN I.T.A. NOS.778 & 779 /MDS/2008 FOR THE ASSESS MENT YEAR 2003 - 04 & 2004 - 05 DATED 15.07.2009 , AS ALSO THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN I.T.A. NO.1343/CHNY/2010 DATE D 01.01.2016 WHEREIN IN PARA - 17 FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 IN I.T.A. NO.1403/MDS/2010 HAS HELD AS FOLLOWS IN PARA - 10. 19. THE ASSESSING OFFICER FOUND THAT THE BORROWED FUNDS WERE ADVANCED TO SUBSIDIARY COMPANIES AND NO INTEREST WAS CHARGED. ACC ORDINGLY, THE ASSESSING OFFICER COMPUTED NOTIONAL @ 6% ON THE ADVANCES MADE TO SUBSIDIARY COMPANIES. WHILE HEARING THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 - 08 IN I.T.A. NO.1343/MDS/2010 IN THE EARLIER PART OF THIS ORDER, THIS TRIBUNAL FOUND THA T THE SUBSIDIARY COMPANIES USED THE FUNDS ADVANCED BY THE ASSESSEE FOR BUSINESS PURPOSES. THEREFORE, IN VIEW OF THE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 4 - : JUDGEMENT OF THE APEX COURT IN S.A. BUILDERS LIMITED (SUPRA) EVEN IF THE BORROWED FUNDS WERE DIVERTED FOR MAKING ADVANCES TO SUBSIDIARY COM PANIES, THERE CANNOT BE ANY DISALLOWANCE OF INTEREST. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.20.08 CRORES. 5. IN REPLY, THE LEAR NED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. IT WAS A SUBMISSION THAT THE ASSESSEE IS MAINTAINING TWO STANDARDS , ONE CHARGING INTEREST ON THE SUM OF THE LOANS TO ITS SUBSIDIARIES AND IN RESPECT OF THE OTHER , NO INTEREST IS BEING CHARGED . IT WAS A SUBMISSION THAT CONSISTENCY IS TO BE MAINTAINED AND THE NOTIONAL INTEREST IN RESPECT OF THE NON - INTEREST BEARING ADVANCE AS GIVEN IS LIABLE TO BE LEVIED. 6. AS IT IS NOTICED THAT THE ISSUE OF THE NOTIONAL INTEREST ON THE ANNUITY ADVANCE TO SUBSIDIARIES IS NOW SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR VARIOUS ASSESSMENT YEARS AND AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED JUDICIAL DISCIPLINE IN FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS REFERRED TO SUPRA , AS ALSO ON THE GROUND THAT THE R EVENUE HAS NOT BEE N ABLE TO DISLODGE THE FINDINGS ON THE LEARNED CIT(A), WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. CONSEQUENTLY, THIS ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE . 7. ISSUE - 2: DISALLOWANCE U/S.14A R.W.RULE 8D(2)(III) OF THE ACT: IT WAS SUBMITTED BY THE LEARN ED AUTHORIZED REPRESENTATIVE THAT IN THE COURSE OF THE ASSESSMENT, THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE U/S.14A ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 5 - : R.W.RULE 8D, A S THE ASSESSEE HAS ALSO SHOWN TO HAVE RECEIVED DIVIDEND WHICH WAS CLAIMED AS EXEMPT. THE ASSESSING OFFICER HAD MADE TH E DISALLOWANCE U/S.14A R.W.RULE 8D . ON APPEAL, THE LEARNED CIT(A) HAD FOLLOWED THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE AND HAD DIRECTED THE ASSESSING OFFICER TO DETERMINE AND RESTRICT THE DISALLOWANCE U/S.14A TO 0 .5% ON THE AVERAGE INVESTMENT AS PROVIDED UNDER CLAUSE - (III) OF RULE 8D(2). IT WAS A SUBMISSION OF THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CA SE IN I.T.A. NO.1343/MDS/2010 DATED 01.01.2016 WHEREIN IN PARA - 56 IT HAS BEEN HELD AS FOLLOWS: 56. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LEARNED DR, THE ASS ESSEE EARNED EXEMPTED INCOME OF RS.2,11,76,000 - IN ASSESSMENT YEAR 2010 - 11 AND RS.1,65,32,000/ - IN ASSESSMENT YEAR 2011 - 12. EVEN THOUGH THE ASSESSEE CLAIMS THAT OWN FUNDS WERE AVAILABLE FOR MAKING SUCH HUGE INVESTMENT, THE ASSESSEE HAS TO ENGAGE THE CONSU LTANT AND UTILIZE THE INFRASTRUCTURE FACILITIES TO MONITOR THE INVESTMENT. THE ASSESSEE BEING A CORPORATE ENTITY, WITHOUT ENGAGING MANPOWER, WOULD NOT HAVE EARNED RS.2,11,76,000/ - DURING THE YEAR UNDER CONSIDERATION. THEREFORE, A PART OF THE EXPENDITURE INCURRED IN THE MANPOWER AND INFRASTRUCTURE FACILITIES DIVERTED FOR EARNING EXEMPTED INCOME HAS TO BE DISALLOWED. AS RIGHTLY SUBMITTED BY THE LEARNED DR, THE ASSESSING OFFICER HAS COMPUTED 0.5% OF THE AVERAGE INVESTMENT AS EXPENDITURE BY APPLYING THIRD LI MB OF RULE 8D. RULE 8D(2)(III) PROVIDES FOR DISALLOWANCE OF AN AMOUNT EQUAL TO 0.5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME, SHALL BE DISALLOWED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE MO DIFIED AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW 0.5% OF THE AVERAGE VALUE OF INVESTMENT, THE INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. 8. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE AS SESSING OFFICER. 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 6 - : 10. IN THE CIRCUMSTANCES, AS IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSES SEES OWN CASE REFERRED TO SUPRA, AND THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS OF THE LEARNED CIT(A), WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. CONSEQUENTLY, THIS ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 11. ISSUE - 3: DEPRECIATION OF FRANCHISE RIGHTS: IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ASSESSEE COMPANY WAS THE OWNER OF THE CHENNAI FRANCHISE OF BCCI IPL BY NAME OF IPL - CHENNAI SUPER KINGS . IT WAS A SUBMISSION THAT THE ASSESSEE HAD BEEN AWARDED THE FRANCHISE RIGHTS OF CHENNAI SUPER KINGS FOR A PERIOD OF TEN YEARS FOR AN AMOUNT OF RS.364.00 CRORES. IN THE SECOND HALF OF THE ASSESSMENT YEAR 2008 - 09, THE ASSESSEE HAD TO PAY AN AMOUNT OF RS.36.4 CRORE S PER ANNUM. THE ASSESSEE WAS CLAIMING DEPRECIATION ON THE SAID AMOUNT. THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT , IN THE CASE OF THE ASSESSEE, THE FRANCHISE HAS BEEN SUSPENDED AND THE ASSESSEE HAD NOT BEEN TAKING PART IN THE TO URNAMENT. IT WAS A SUBMISSION THAT THE ISSUE WAS NOW SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN I.T.A. NO.1343/MDS/2010 DATED 01.01.2016 , WHEREIN IN PARA - 25 & 26 IT HAS BEEN HELD AS FOLLOWS: 2 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE IS A SUCCESSFUL BIDDER FOR FRANCHISE RIGHTS OF CHENNAI SUPERKING. THE COST OF THE FRANCHISE RIGHTS IF RS.364 CRORES WHI CH HAS TO BE PAID IN 10 YEARS @ 36.4 CRORES PER ANNUM. THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE FRANCHISE RIGHT BEING AN INTANGIBLE ASSET UNDER EXPLANATION (3) TO SEC.32(1) OF THE ACT. THIS IS NOT IN DISPUTE. THE ONLY DISPUTE IS ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 7 - : WHETHER THE ASSE SSEE IS ENTITLED FOR DEPRECIATION ON THE COST OF THE FRANCHISE RIGHTS OR ON THE AMOUNT PAID DURING THE YEAR UNDER CONSIDERATION. WE HAVE THROUGH THE PROVISIONS OF SEC.32 OF THE ACT. SEC.32(1) CLEARLY SAYS THAT IN CASE OF AN ASSET USED FOR GENERATION OR GE NERATION AND DISTRIBUTION OF POWER, DEPRECIATION HAS TO BE ALLOWED ON THE ACTUAL COST OF THE ASSET AT THE RATE PRESCRIBED. IN CASE OF BLOCK OF ASSETS, DEPRECIATION HAS TO BE ALLOWED ON THE WRITTEN DOWN VALUE AT THE RATE PRESCRIBED. IN THIS CASE, THE PRES CRIBED RATE FOR FRANCHISE RIGHTS IS 25%. IT IS NOT IN DISPUTE THAT THE ASSESSEE ACQUIRED THE FRANCHISE RIGHTS DURING THE YEAR UNDER CONSIDERATION. THE COST OF BLOCK OF ASSETS WAS INCREASED TO THE EXTENT OF RS.364 CRORES. SINCE THE COST OF THE FRANCHISE RIGHTS IS ADMITTEDLY RS.364 CRORES, AS PER THE TERMS AND CONDITIONS OF THE BID, THE ASSESSEE HAS TO PAY RS.364 CRORES IN 10 YEARS PERIOD. THE ASSESSEE HAS TO PAY RS.36.4 CRORES EVERY YEAR. HOWEVER, THE COST OF BLOCK OF ASSETS WAS INCREASED TO THE EXTENT OF RS.364 CRORES. IT IS NOT A CASE OF SUBSIDY OR DISCOUNT IN THE COST WHICH WAS GIVEN TO THE ASSESSEE. IN SUCH A CASE, THE COST OF FRANCHISE RIGHTS WOULD BE REDUCED TO THE EXTENT OF SUBSIDY OR DISCOUNT, IF ANY, GIVEN TO THE ASSESSEE. IT IS ADMITTED CAS E OF BOTH PARTIES THAT THE COST OF RS.36.4 CRORES WAS TO BE PAID IN 10 EQUAL INSTALLMENTS. THEREFORE, THE COST OF ASSET IS RS.364 CRORES AND NOT RS.36.4 CRORES. WHEN THE COST OF BLOCK OF ASSETS WAS INCREASED TO THE EXTENT OF RS.364 CRORES, THE TRIBUNAL I S OF THE CONSIDERED OPINION THAT DEPRECIATION HAS TO BE ALLOWED ON THE COST OF BLOCK OF ASSETS INCREASED. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN RESTRICTING THE DEPRECIATION AT RS.36.4 CRORES WHICH WAS SAID TO BE PAID DURING THE YEAR UNDER C ONSIDERATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ENTIRE COST OF THE FRANCHISE RIGHTS HAS TO BE TAKEN INTO CONSIDERATION FOR COMPUTATION OF DEPRECIATION. THE ASSESSEE ALSO FILED APPEAL AGAINST THE ORDER OF THE CIT(A), RESTRICTING THE DEPR ECIATION ON THE AMOUNT ACTUALLY PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. WHILE ADJUDICATING THE ASSESSEES APPEAL AT PARA - 34 HEREINUNDER THIS TRIBUNAL FOUND THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE COST OF RS.364 CRORES. ACC ORDINGLY, THE ORDER OF THE CIT(A) IS MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON THE ENTIRE COST OF RS.364 CRORES. 26 IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.A.604/MDS/2012 IS DISMISSED. 12. IN REPLY, THE LEARNED DEP ARTMENTAL RE PRESENTATIVE SUBMITTED THAT THE CHENNAI SUPERKINGS WAS SUSPENDED AND CONSEQUENTLY FOR THE RELEVANT YEARS THE DEPRECIATION WAS NOT ALLOWABLE. IT WAS ALSO A SUBMISSION THAT THE DEPRECIATION HAS BEEN WRONGLY ALLOWED. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 14. A PERUSAL OF THE ORDER OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL REFERRED TO SUPRA IN PARA - 25 & 26 CLEARLY SHOWS THAT THE TRIBUNAL CONSIDERED THESE ISSUES AND HAS HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. FURTHER, FOR THE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 8 - : EARLIER YEARS, THE DEPRECIAT ION HAVING ALREADY BEEN ALLOWED, NOW IT WOULD NOT BE OPEN TO DIS ALLOW SUCH DEPRECIATION AS THE SAME WOULD AFFECT THE W . D .V ALSO. FURTHER, THE PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2014 - 15, IN PARA - 8.1 TO 8.6 SHOWS THAT THE ASSESSEE HAS CLAIMED ONLY 18.89 CRORES AS DEPRECIATION AND THE ASSESSING OFFICER HAS GIVEN AN ENHANCED DEPRECIATION OF AN ADDITIONAL AMOUNT OF RS.12.92 LAKHS RESULTING A DEPRECIATION OF RS.31.81 CRORES. SIM ILARLY, FOR THE ASSESSMENT YEAR 2015 - 16, THE ASSESSEE HAD CLAIMED 14.17 LAK HS, WHEREAS THE ASSESSING OFFICER HAS GRANTED RS.32.05 CRORES. THUS, THE ASSESSING OFFICER HAS IN FACT GRANTED THE ASSESSEE HIGHER DEPRECIATION THAN WHAT HAS BEEN CLAIMED BY THE AS SESSEE. A PERUSAL OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT THE LEARNED CIT(A) HAS FOLLOWED JUDICIAL DISCIPLINE IN FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL REFERRED TO SUPRA, WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON THE ENTIRE COST OF RS.364 CRORES. IN THE CIRCUMSTANCES, AS IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE REFERRED TO SUPRA AND AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED JUDICIAL DISCIPLINE IN FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE , THE FINDINGS O F THE LEARNED CIT(A) STANDS CONFIRMED. IN THE RESULT, THE ISSUE IS DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 15. ISSUE - 4 : SALES TAX SUBSIDY AS CAPITAL RECEIPTS: IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT IN THE COURSE OF ASSESSMENT, THE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 9 - : ASSESSING OFFICER HAD TREATED THE SUBSIDY RECEIVED B Y THE ASSESSEE FROM THE STATE GOVERNMENT OF MAHARASTRA AND TELENGANA IN THE FORM OF SALES TAX INCENTIVES WHICH HAD BEEN CLAIMED BY THE ASSESSEE AS CAPITAL RECEIPTS AS BEING THE INCOME OF THE ASSESSEE. IT WAS A SUBMISSION BY THE LEARNED AUTHORIZED REPRESEN TATIVE THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE IN I.T.A. NOS.1339, 1340, 1341 & 1342/MDS/2010 DATED 12.05.2017, WHEREIN IN PARA - 7 & 7.1 UNDER SIMILAR CIRCUMSTANCES, THE SUBSID Y RECEIVED BY THE ASSESSEE IS FROM THE JAPANESE GOVERNMENT WHICH WAS USED BY THE ASSESSEE FOR IMPORTING WASTE HEAT RECOVERY PLANT HAS BEEN HELD IN FAVOUR OF THE ASSESSEE WHICH IS EXTRACTED AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL ON RECORD. IN THE FIRST INSTANCE, IT IS SEEN THAT THE ASSESSEE HAD PASSED A NOTIONAL ENTRY DEBITING ITS FIXED ASSETS AND CREDITING RESERVES UNDER THE HEAD DEFERRED INCOME. THE LD. AR AGUED THAT NO DEPRECIATION HAS BEEN CLAIMED ON THE INCREASED COS T OF FIXED ASSETS. ON FULFILLMENT OF THE EXPORT OBLIGATION, THE ASSESSEE HAD REVERSED THE RESERVE AND CREDITED ITS INCOME WHICH WAS CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCOME. THE NOTIONAL ENTRIES PASSED BY THE ASSESSEE CANNOT RESULT IN ANY INCOME OR EXPENDITURE. IN THIS REGARD, WE REFER THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. MOGUL LINES LTD. (46 ITR 590)(BOM), WHEREIN IT WAS OBSERVED THAT THE MATTER OF TAXABILITY COULD NOT BE DECIDED ON THE BASIS OF THE ENTRIES, WHICH THE ASS ESSEE MIGHT CHOOSE TO MAKE IN HIS ACCOUNT, BUT HAD TO BE DECIDED IN ACCORDANCE WITH THE PROVISIONS OF LAW. WHAT WOULD DETERMINE TAXABILITY IS NOT WHETHER THE ASSESSEE HAS SHOWN A PARTICULAR ITEM AS A PROFIT OR LOSS IN THE ACCOUNTING YEAR, BUT WHETHER THE SAID ITEM COULD BE REGARDED EITHER AS A PROFIT OR LOSS UNDER THE PROVISION OF THE ACT. THE SUPREME COURT HAS ALSO TAKEN A SIMILAR VIEW IN THE CASE OF CIT V. SHOORJI VALLABHDAS & CO. (46 ITR 144), WHEREIN IT WAS HELD AS UNDER : INCOME - TAX IS A LEVY ON IN COME. THOUGH THE INCOME - TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS RECEIPT, YET THE SUBSTANCE OF THE MATTER IS THE INCOME. IF INCOME DOES NOT RESULT AT ALL, THERE CANNO T BE A TAX, EVEN THOUGH IN BOOK - KEEPING, AN ENTRY IS MADE ABOUT A HYPOTHETICAL INCOME, WHICH DOES NOT MATERIALIZE. WHERE INCOME HAS, IN FACT, BEEN RECEIVED AND IS SUBSEQUENTLY GIVEN UP IN SUCH CIRCUMSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT, E VEN THOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INCOME CAN BE SAID NOT HAVE RESULTED AT ALL, THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT, IN CERTAIN CIRCUMSTANCES, HAVE BEEN MADE IN THE BOOKS OF ACCOUNT. SUBSEQUENTLY, THE SUPREME COURT IN THE CASE OF STATE BANK OF INDIA V. CIT (157 ITR 67) HAS REFERRED TO THE DECISION OF MOGUAL LINES AND HAS HELD AS FOLLOWS : ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 10 - : IT IS WELL SETTLED THAT THE WAY IN WHICH ENTRIES ARE MADE BY THE ASSESSE E IN ITS BOOKS OF ACCOUNT IS NOT DETERMINATIVE OF THE QUESTION WHETHER THE ASSESSEE HAD EARNED ANY PROFIT OR SUFFERED ANY LOSS. SINCE THE IMPUGNED SUM HAS NEITHER ACCRUED NOR WAS RECEIVED BY THE ASSESSEE AND WAS BASED ONLY ON THE REVERSAL OF A NOTIONAL E NTRY PASSED EARLIER, THE AMOUNT OF 3,35,24,771/ - CANNOT BE TREATED AS INCOME. 7.1 IN OUR OPINION, THE PROVISIONS OF SEC.28(IV) OF THE ACT ARE ALSO NOT ATTRACTED IN THIS CASE, SINCE THE ASSESSEE HAD NOT RECEIVED ANY BENEFIT OR PERQUISITE BUT HAD ONLY PAS SED NOTIONAL ENTRIES IN ITS BOOKS OF ACCOUNTS. WHEN THE ASSESSEE PAID CONCESSIONAL DUTY, IT IS THE DUTY PAYBLE AS PER THE RELEVANT STATUTE AND THERE WAS NO BENEFIT OR PERQUISITE ACCRUING TO THE ASSESSEE. STATUTORY LEVY WILL NOT RESULT IN A CONCESSION OR BENEFIT TO THE ASSESSEE. FURTHER, IT WAS A CONDITIONAL CONCESSION INASMUCH IF THE ASSESSEE DID NOT ACHIEVE THE REQUIRED EXPORTS, IT MAY HAVE TO PAY THE ENTIRE CUSTOMS DUTY. THE BENEFIT CONNECTED WITH THE ACQUISITION OF A CAPITAL ASSET CANNOT BE BROUGHT T O TAX U/S.28(IV) OF THE ACT. IT IS TO BE NOTED THAT THE SUPREME COURT IN THE CASE OF CIT V. PONNI SUGARS AND CHEMICALS LTD. (306 ITR 392) HAS HELD THAT THE CHARACTER OF RECEIPT IN THE HANDS OF THE ASSESSEE HAS TO BE DETERMINED WITH RESPECT TO THE PURPOSE FOR WHICH THE SUBSIDY IS GRANTED. IN OTHER WORDS, ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TIME AT WHICH SUBSIDY IS PAID IS NOT RELEVANT. THE SOURCE IS IMMATERIAL. IF THE OBJECT OF THE SUBSIDY IS TO ENABLE THE ASSESSEE TO RUN THE BUSINESS MORE P ROFITABLY THEN THE RECEIPT IS ON THE REVENUE ACCOUNT. ON THE OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UNDER THE SUBSIDY SCHEME IS TO ENABLE THE ASSESSEE TO SET UP NEW UNIT OR TO EXPAND AN EXISTING UNIT THEN THE RECEIPT OF SUBSIDY WOULD BE ON CAPITAL AC COUNT. APPLYING THE ABOVE PRINCIPLE LAID DOWN BY THE APEX COURT, IT MAY BE CONCLUDED THAT SINCE THE CONCESSION WAS LINKED TO THE IMPORT OF CAPITAL GOODS, THOUGH CONDITIONAL ON FULFILLING EXPORT OBLIGATION, IT WAS A CONCESSION ON THE CAPITAL ACCOUNT. THE ASSESSEE IS ALSO NOT ALLOWED TO USE THE IMPORT ENTITLEMENT IN ANY MANNER OTHER THAN FOR IMPORT OF CAPITAL GOODS. WE AGREE WITH THE ARGUMENT OF THE LD. AR THAT THERE IS NO BENEFIT OR PERQUISITE THAT ACCRUED TO THE ASSESSEE ON ACCOUNT OF THIS TRANSACTION AN D IT DOES NOT HAVE ANY COMPONENT OF REVENUE NATURE AND HENCE, THE PROVISIONS OF SEC.28(IV) OF THE ACT DOES NOT APPLY. FOR INVOKING SEC.28(IV) OF THE ACT, THE PRE - REQUISITE CONDITIONS ARE THAT THE BENEFIT / PRE - REQUISITE MUST ARISE FROM THE BUSINESS OF AN ASSESSEE AND THAT THERE MUST BE A NEXUS OR CONNECTION BETWEEN THE BUSINESS OF AN ASSESSEE AND THE BENEFIT / PERQUISITE SOUGHT TO BE TAXED. IN THIS CASE, BOTH THE CONDITIONS ARE ABSENT. THEREFORE, WE FIND THAT THE CIT(APPEALS) IS JUSTIFIED IN GIVING DIRE CTION THE AO TO DELETE THE DISALLOWANCE MADE. FURTHER, IN OUR OPINION, IT IS A NOTIONAL ENTRY IN ITS BOOKS OF ACCOUNT AND NOT EFFECTING THE REAL PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND THE PROVISIONS OF SEC.28(IV) HAVE NO APPLICATION. THIS GROUND IS DISMISSED. 16. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 18. A PERUSAL OF THE ORDER OF T HE LEARNED CIT(A) CLEARLY SHOWS THAT THE LEARNED CIT(A) HAS CATEGORICALLY CONSIDERED THE FACT THAT IF THE OBJECT OF THE SUBSIDY IS TO ENABLE THE ASSESSEE TO RUN A BUSINESS MORE PROFITABLY, THEN THE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 11 - : RECEIPT IS ON REVENUE ACCOUNT. ON THE OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UNDER THE SUBSIDY IS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT OR TO EXPAND ITS EXISTING UNIT, THEN THE RECEIPT OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. THE LEARNED CIT(A) HAS ALSO CONSIDERED THE PRINCIPLES LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. PONNI SUGARS AND CHEMICALS LIMITED [2008] 306 ITR 392 (SC). IN THE PRESENT CASE, THE LEARNED CIT(A) HAS ALSO RECOGNIZED THE FACT THAT THE SUBSIDY WAS GRANTED TO THE ASSESSEE AS INCENTIVE TO INV EST IN BACKWARD AREAS AND CONSEQUENTLY THE SAID SUBSIDY GRANTED BY THE GOVERNMENT IN FACT WAS CAPITAL RECEIPT. IT IS ALSO NOTICED THAT THE LEARNED CIT(A) HAS RECOGNIZED WITH THE FACT THAT THE CEMENT MANUFACTURING PLANT AT PARLI, BEED DISTRICT IN THE STATE OF MAHARASHTRA COMES UNDER THE INDUSTRIAL PROMOTION POLICY OF THE GOVERNMENT OF MAHARASHTRA AND THE P ACKAGE S CHEME OF I NCENTIVES 2007 INVITED BY THE DIRECTORATE OF INDUSTRIES, GOVERNMENT OF MAHARASHTRA AND CONSEQUENTLY THE ASSESSEE HAS MADE A FIXED CAPI TAL INVESTMENT OF NEARLY 152 CRORES AS ON 31.03.2011. IT IS AFTER RECOGNIZING THIS THAT THE LEARNED CIT(A) HAS GRANTED THE ASSESSEE THE BENEFIT OF TREATING THE SAID SUBSIDY AS A CAPITAL RECEIPT BY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. PONNI SUGARS AND CHEMICALS LIMITED, REFERRED TO SUPRA. THIS BEING SO AND ALSO CONSIDERING THE FACT THAT THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS OF THE FACT AS ARRIVED BY THE LEARNED CIT( A) ON THIS ISSUE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 12 - : ON THIS ISSUE. CONSEQUENTLY, THE ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 19. ISSUE - 5: FOREIGN CUR RENCY MONETARY ITEM TRANSACTION: IT WAS SUBMIT TED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT IN THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD A DDED BACK AN AMOUNT UNDER THE HEAD AMORTIZATION TO DEFER REVENUE EXPENDITURE FOREX LOSS AND AN AMOUNT UNDER THE HEAD AD DITIONS TO FOREIGN CURRENCY - M ONETARY I TEM T RANSACTION DIFFERENCE ACCOUNT HAD BEEN REDUCED. ON BEING QUESTIONED, THE ASSESSEE HAS STATED THAT THE LOAN WAS OBTAINED FOR THE GENERAL PURPOSE AND T HAT THE DIFFERENTIAL REDUCED WAS THE FOREX TRANSACTION LOSS I NCURRED DURING THE YEAR. IT WAS SUBMITTED THAT AS PER THE NOTIFICATION TO MCA DATED 29.12.2011, FOREX LOSS RELATING TO LOANS TAKEN FOR THE PURPOSE OF ACQUIRING FIXED ASSETS WERE ADMITTEDLY TO BE ADDED TO THE COST OF FIXED ASSET AND DEPRECIATED, WHEREAS TH E FOREX LOSS ON ACCOUNT OF LOAN TAKEN FOR GENERAL PURPOSE WAS TO BE ACCUMULATED IN THE FOREIGN CURRENCY MONETARY ITEM TRANSACTION DIFFERENCE ACCOUNT AND AMORTIZATION OVER THE BALANCE PERIOD OF THE LOAN. IT WAS SUBMITTED THAT THE ASSESSEE WAS ELIGIBLE TO C LAIM THE ENTIRE LOSS INCURRED TOWARDS THE FOREX FLUCTUATIONS AS THE LOSS HAD BEEN TAKEN FOR THE GENERAL PURPOSE BUT HAD INSTEAD TO A CONSERVATIVE MEASURE CLAIMED THE FOREX LOSS AS AMORTIZED. IT WAS A SUBMISSION THAT THE LEARNED ASSESSING OFFICER IN THE CO URSE OF ASSESSMENT HELD THAT THE CAPITAL MCA CIRCULARS ARE NOT BI NDING ON THE REVENUE AND CONSEQUENTLY THE ASSESSING OFFICER TREATED THE AMORTIZED AMOUNT AS CAPITAL EXPENDITURE. IT WAS A SUBMISSION THAT ON APPEAL, THE LEARNED CIT(A) FOLLOWING ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 13 - : THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. WOODWARD GOVERNOR INDIA (P) LIMITED REPORTED IN [2009] 312 ITR 0254 DIRECTED THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM ON FOREX LOSS IN RESPECT OF THE FOREIGN CURRENCY MO NETARY ITEM TRANSACTION. 20. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 21. IT WAS A SUBMISSION THAT THE ASSESSEE ITSELF HAD CLAIMED THE SAID AMOUNT AS A DEFERRED REVENUE EXPENDITURE WHICH WAS AMORTIZED. IT WAS A SUBMISSION THAT CONSEQUENTLY THE SAME WAS NOT ALLOWABLE AS THE REVENUE EXPENDITURE. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 23. A PERUSAL OF THE FACT IN THE PRESENT CASE C LEARLY SHOWS THAT THE ASSESSEE HAS IN THE COMPUTATION STATEMENT FOR INCOME TAX PURPOSE ADDED BACK THE AMORTIZED DEFERRED REVENUE EXPENDITURE FOREX LOSSES , NOR IT IS UNDISPUTED THAT THE LOAN WAS TAKEN FOR THE GENERAL PURPOSE. THE NET OF THE TRANSACTION S BE TWEEN AMORTIZATION OF THE DEFERRED REVENUE EXPENDITURE AND THE ADDITION TO THE FOREIGN CURRENCY MONETARY ITEM TRANSACTION DIFFERENCE ACCOUNT IS THE ACTUAL FOREX LOSS, MORE SO THE NET LOSS THAT THE ASSESSEE IS ENTITLED TO. IT IS TO THIS NET LOSS THAT THE A SSESSEE HAS APPLIED THE MCA CIRCULAR DATED 29.12.2011 AND THE SAME WAS ACCUMULATED IN THE FOREIGN CURRENCY MONETARY ITEM TRANSACTION ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 14 - : DIFFERENCE ACCOUNT AND AMORTIZED OVER THE BALANCE PERIOD OF LOSS. THE AMORTIZATION HAS BEEN DONE BY APPLYING THE NOTIFICAT ION ISSUED BY THE MCA CIRCULAR DATED 29.11.2011 BUT IN THE MEMO RANDUM OF TOTAL INCOME THE AMORTIZED SUM WAS ADDED BACK AND THE ENTIRE EXPENSES CLAIMED. THUS, IT IS NOT THE ISSUE AS TO THE ASSESSEE HAVING AMORTIZED THE DEFERRED REVENUE EXPENDITURE BUT THIS IS IN FACT A FORE X LOSS INCURRED BY THE ASSESSEE ON ACCOUNT OF A LOAN TAKEN FOR THE GENERAL PURPOSE. THIS IS ADMITTEDLY TO BE ALLOWED ON THE REVENUE FILED IN LINE TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. WOODWARD GOVERNOR INDIA (P) LIMITED REFERRED TO SUPRA. IT MUST ALSO BE MENTIONED HERE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS NOT DISTURBED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE LOSS WAS CAPITAL. THE ASSESSING OFFICER IS DIS ALLO WING THE CLAIM ONLY ON THE GROUND THAT THE MCA CIRCULAR ARE NOT BINDING ON THE DEPARTMENT . A S NO ERROR IN THE ACCOUNTS OF THE ASSESSEE NOR H AS ANY FACTS HAS BEEN BROUGHT OUT TO SHOW THAT THE FORE X LOAN TAKEN BY THE ASSESSEE WAS FOR THE CAPITAL ASSET . 24. THIS BEING SO, AS ALSO ON THE FACT THAT THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS OF THE FACTS AS ARRIVED BY THE LEARNED CIT(A) IN HIS ORDER, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) AND THE SAME STANDS UPHELD. IN TH E RESULT, THE ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 25. ISSUE - 6: DEPRECIATION OF UPS RESTRICTED TO 60% : IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT IN THE COURSE OF ASSESSMENT, THE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 15 - : ASSESSEE HAD CLAIMED DEPRE CIATION ON UPS AT 60% AND THE ASSESSING OFFICER HAD TREATED THE SAME AS PLANT & MACHINERY AND CONSEQUENTLY HAD GRANTED THE ASSESSEE DEPRECIATION AT LOWER RATES. IT WAS A SUBMISSION ON APPEAL THAT THE LEARNED CIT(A) HAD FOLLOWED THE DECISION OF THE CO - OR DINATE BENCH OF THIS TRIBUNAL IN THE CASE OF INDIAN OVERSEAS BANK VS. ADDITIONAL COMM ISSIONER OF INCOME TAX REPORTED IN I.T.A. NO.99/MDS/2010 DATED 19.03.2013, WHEREIN FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S. ORIENT CERAMI CS AND INDUSTRIES LIMITED HAD HELD THAT THE UPS FORMS PART OF THE COMPUTER SYSTEM AND THEREFORE WAS ENTITLED FOR DEPRECIATION AT 60% BEING THE RATE OF DEPRECIATION FOR COMPUTERS. THE LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 26. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 28. THE ISSUE AS TO WHETHER THE UPS IS LIABLE TO BE CONSIDERED AS PART OF THE COMPUTER SYSTEM AND THEREFORE ENTITLED FOR RATE OF 60% BEING THE RATE ELIGIBLE FOR COMPUTERS ADMITTEDLY IS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF INDIAN OVERSEAS BANK LIMITED REFERRED TO SUPRA AS ALS O THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF DATACRAFT INDIA LIMITED, MUMBAI [2011] 9 ITR (T) 712 (MUM) (SB ). ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 16 - : AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED THE JUDICIAL DISCIPLINE IN FOLLOWING THE D ECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL AS ALSO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CERAMICS AND INDUSTRIES LIMITED , WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A). CONSEQUENTLY , THE ISSUE IS HEL D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 29. ISSUE - 7 : DEDUCTION U/S.80IA : IN RESPECT OF THE ADJUSTMENT OF THE RATE IN RESPECT OF THE ELECTRICITY CONSUMED UNDER THE CAPTIVE CONSUMPTION . IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTAT IVE THAT IN THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAD REWORKED THE DEDUCTION U/S.80IA. IT WAS A SUBMISSION THAT THE ASSESSEE OWNED A WIND MILL AT KAYATHAR AND WASTE HEAT RECOVERY PLANT AT VISHNUPURAM. WHEN COMPUTING THE ELIGIBLE DEDUCTION U/S.8 0IA, THE ASSESSEE HAD ADOPTED THE FREE MARKET RATE PER UNIT OF ELECTRICITY FOR ARRIVING AT THE PROFITS OF THE UNDERTAKINGS. IT WAS A SUBMISSION THAT THE ASSESSING OFFICER HAD ADOPTED THE RATES PRESCRIBED BY THE TNERC AND APERC RESPECTIVELY IN RESPECT OF T HE PRICES AT WHICH THEY PURCHASED POWER AND CONSEQUENTLY REDUCED THE ALLOWABLE DEDUCTION U/S.80IA OF THE ACT. IT WAS A SUBMISSION THAT ON APPEAL THE LEARNED CIT(A) HAD FOLLOWED THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VELA YUDHASWAMY SPINNING MILLS VS DEPUTY COMMISSIONER OF INCOME TAX REPORTED IN [2012] 19 TAXMAN.COM 28 (CHEN) AS ALSO THE DECISION OF EVEREADY SPINNING MILLS VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN 17 TAXMAN.COM 254 ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 17 - : (CHEN.) AND HAD HELD THAT THE M ARKET VALUE OF THE POWER CAPTIVE CONSUMPTION SHOULD BE COMPUTED CONSIDERING THE RATE OF POWER IN THE OPEN MARKET AND IT SHOULD NOT BE COMPARED WITH THE RATE OF POWER AT WHICH POWER COULD HAVE BEEN SOLD TO SEBS , AS THIS IS NOT THE RATE FOR WHICH THE CONSUME R COULD HAVE PURCHASED POWER IN THE OPEN MARKET. IT WAS A SUBMISSION THAT SIMILAR VIEW HAS BEING TAKEN BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. SARANYA TEXTILES VS. THE ASSISTANT COMMISSIONER OF INCOME TAX IN I.T.A. NO.1294/CHNY/2019 DATED 27.11.2019 WHEREIN IT HAS BEEN HELD AS FOLLOWS: 6. BY INVESTING IN THE WIND MILL, THE ASSESSEE HAS SAVED ITSELF FROM THE COST OF PURCHASING POWER FROM THE TAMIL NADU ELECTRICITY BOARD. OBVIOUSLY, IT IS WHAT THE ASSESSEE SAVES THAT IS TO BE CONSIDER ED AND NOT THE PRICE AT WHICH THE TAMIL NADU ELECTRICITY BOARD WOULD HAVE PURCHASE POWER FROM THE ASSESSEES WIND MILL. THE TAMIL NADU ELECTRICITY BOARD COULD PURCHASE POWER AT RS.2.90 PAISE PER UNIT AND THEN THERE WOULD BE ADD - ON COST AND SERVICE CHARGE WHICH WOULD RESULT IN THE COST OF POWER REACHING TO RS.5.50 PER UNIT COST TO THE ASSESSEE. THE DIFFERENTIAL WOULD BE THE ACTUAL INFRASTRUCTURAL COST INCURRED BY THE TAMIL NADU ELECTRICITY BOARD. CONTRARY TO THE INFRASTRUCTURE OF TNEB IS THE INFRASTRUCTUR AL COST OF THE ASSESSEE REPRESENTING THE INVESTMENT IN THE WIND MILL WHICH IS A DEPRECIABLE ASSET ALSO. THEREFORE, IT IS NOT THE PRICE AT WHICH THE TAMIL NADU ELECTRICITY BOARD WOULD PURCHASE THE POWER FROM THE ASSESSEE THAT IS TO BE ADOPTED BUT THE PRICE AND COSTS THAT THE ASSESSEE SAVES BY MAKING THE INVESTMENT AND DOING CAPTIVE CONSUMPTION. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER IS DIRECTED TO RE - COMPUTE THE DEDUCTIONS U/S.80IA BY ADOPTING THE FIGURE OF RS.5.50 PER UNIT AS AGAINST RS.2.90 PER UNI T ADOPTED BY THE ASSESSING OFFICER. 30. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DEDUCTION U/S.80IA IS ON THE INCOME AND NOT ON THE PROFITS. THE PROFITS WOULD COME WHEN THERE IS TRANSACTION BETWEEN THE TWO DIFFERENT ENTITIES . THE ASSESSEE CANNOT MAKE A PROFIT BY TRANSACTING WITH ONESELF AND THEREFORE WHEN CAPTIVE CONSUMPTION OF POWER GENERATED BY THE ASSESSEE IS CONSIDERED, THE RATE AT WHICH THE SEBS PURCHASE POWER HAVE TO BE CONSIDERED AS AGAINST THE OPEN MARKET PRICE. IT W AS FURTHER A SUBMISSI ON THAT WHEN THE ASSESSEE DOES ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 18 - : CAPTIVE CONSUMPTION OF THE POWER GENERATED BY ITS OWN WIND MILL AND WASTE HEAT TREATMENT PLANT, THE ASSESSEE HAS ALREADY MADE SAVINGS IN SO FAR AS THE CLAIM OF DEDUCTION U/S.80IA IS MADE. IT WAS A SUBMIS SION THAT THE ORDER OF THE LEARNED ASSESSING OFFICER WAS LIABLE TO BE RESTORED. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 32. A PERUSAL OF THE FACTS IN THE PRESENT CASE CLEARLY SHOWS THAT THE ASSESSEE HAS BEEN CAPTIV E LY CONSUMING THE ELECTRICITY GENERATED FROM ITS WIND MILL AS ALSO THE HEAT WASTE RECOVERY TREATMENT PLANT. ADMITTEDLY, THE ASSESSEE IS ENTITLED TO THE DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF THE ELECTRICITY GENERATED AND CONSUMED. THIS IS NOT IN DISPUTE. THE DISPUTE HAS RISEN FOR COMPUTING THE DEDUCTION U/S.80IA OF THE ACT. THE ISSUE ADMITTEDLY IS COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VELAYUDHASWAMY SPINNING MILLS VS DEPUTY COMMISSIONER OF I NCOME TAX REFERRED TO SUPRA AND AS ALSO THE DECISION IN THE CASE OF EVEREADY SPINNING MILLS VS. ASSISTANT COMMISSIONER OF INCOME TAX REFERRED TO SUPRA . A SIMILAR VIEW HAS ALSO BEEN TAKEN IN THE CASE OF M/S. SARANYA TEXTILES VS. THE ASSISTANT COMMISSIONER O F INCOME TAX, WHEREIN ONE OF US IS A PARTY. THIS VIEW OF OURS IS ALSO SUPPORTED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GUJARAT ALKALIES CHEMICALS LIMITED REPORTED IN 395 ITR 247(GUJ.), WHEREIN IT HA S BEEN HELD THAT THE DEDUCTION U/S.80IA WAS ALLOWABLE TO THE FOR GENERATION OF POWER FOR CAPTIVE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 19 - : CONSUMPTION AND THAT THE RATE OF POWER GENERATION AT WHICH THE ELECTRICITY B OARD SUPPLIED POWER TO ITS CONSUMERS RATHER THAN THE RATE AT WHICH THE POWER GENERA TING COMPANIES SUPPLY ITS POWER TO THE ELECTRICITY BOARD WAS TO BE TAKEN AS THE PRICE. FURTHER, THIS VIEW HAS BEEN SUPPORTED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE INDUSTRIES LIMITED IN I.T. A. NO.1056/CHNY/2016 DATED 0.01.2019 AND AS ALSO THE DECISION OF THE HONBLE CHHATTISGARH HIGH COURT IN THE CASE OF GODAVARI POWER AND ISPAT LIMITED REPORTED IN [2014] 4 2 TAXMAN.COM 551 (CHHATTISGARH). AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED JUDICIAL DISCIPLINE BY FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF SRI VELAYUDHASWAMY SPINNING MILLS VS DEPUTY COMMISSIONER OF INCOME TAX AND EVEREADY SPINNING MILLS VS. ASSISTANT COMMISSIONER OF INCOME TAX REFERRED TO SUPRA, AS IT IS NOTICED T HIS VIEW HAS ALSO BEEN APPROVED BY THE HONBLE HIGH COURTS REFERRED TO SUPRA, WE FIND NO ERROR IN THE ORDER OF THE LEARNED CIT(A) WHICH CALLS FOR ANY INTERFERENCE. IT MAY BE MENTIONED HERE THAT THE DEDUCTION U/S.80IA IS THE DEDUCTION FROM THE TOTAL INCOME OF THE ASSESSEE THE PROFITS AND GAINS OF AN ELIGIBLE UNDERTAKINGS. THE HONBLE GUJARAT HIGH COURT HAS CATEGORICALLY ADMITTED THAT THE DEDUCTION U/S.80IA IS PERMISSIBLE FOR CAPTIVE CONSUMPTION AND EVEN THE RATE AT WHICH THE DEDUCTION IS TO BE COMPUTED. CONSEQUENTLY, THE ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 33. ISSUE - 8: DISALLOWANCE U/S.14A R.W.RULE 8D WHILE COMUTING BOOK PROFIT U/S.115JB OF THE ACT: IT WAS SUBMITTED BY THE LEARNED AUTHORIZED ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 20 - : REPRESENTATIVE THAT THE LEARNE D ASSESSING OFFICER HAD IN THE COURSE OF ASSESSMENT INCLUDED A DISALLOWANCE U/S.14A R.W.RULE8D WHILE COMPUTING THE MAT U/S.115JB OF THE ACT. IT WAS A SUBMISSION THAT IN VIEW OF THE DECISION OF THE HONBLE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ASSI STANT COMMISSIONER OF INCOME TAX VS. VIREET INVESTMENT PRIVATE LIMITED REPORTED IN 58 ITR (TRIB), DELHI SPECIAL BENCH (SB) 313 (DELHI) , T HE COMPUTATION UNDER CLAUSE (F) OF THE EXPLANATION - 1 TO SECTION 115JB (2) IS TO BE MADE WITHOUT REDUCING THE COMPUTATIO N AS CONTEMPLATED U/S.14A R.W.RULE.8D OF THE INCOME TAX ACT, 1962. IT WAS ALSO A SUBMISSION THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS IN THE ASSESSEES OWN CASE IN I.T.A. NO.1343/MDS/2010 REFERRED TO SUPRA IN PARA - 70 & 71 IS AS FOLLOWS: 70. THE NE XT ISSUE FOR CONSIDERATION IS WITH REGARD TO ADDITION OF EXPENDITURE ATTRIBUTABLE TO EARNING EXEMPT INCOME WHILE COMPUTING THE BOOK PROFIT U/S.115JB OF THE ACT. 71. SINCE THE DISALLOWANCE UNDER RULE 8D WAS CONFIRMED AT 0.5% OF THE AVERAGE VALUE OF INVEST MENT, INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOME, BOTH FOR REGULAR COMPUTATION AS WELL AS COMPUTATION U/S.115JB OF THE ACT, THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION. HOWEVER, THE ORDERS OF THE LOWER AUTHORITIES ARE MODIFIED AND THE AS SESSING OFFICER IS DIRECTED TO DISALLOW 0.5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS RESTRICTED THE DISALLOWANCE TO 0.5% OF THE AVERAGE VALUE OF THE INVEST MENT. 34. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 35. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 21 - : 36. A PERUSAL OF THE ORDER OF THE L EARNED CIT(A) SHOWS THAT HE HAS FOLLOWED THE PRINCIPLES LAID DOWN BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE AND RESTRICTED THE DISALLOWANCE TO 0.5% OF THE AVERAGE INVESTMENT TO BE CONSIDERED FOR DISALLOWANCE UNDER BOTH THE REGULA R PROVISIONS AND ALSO IN COMPUTING THE BOOK PROFITS U/S.115JB OF THE INCOME TAX ACT, 1961. AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED THE PRINCIPLES LAID DOWN BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL AS ALSO THE PRINCIPLES ENUNCIATED BY THE SP ECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. VIREET INVESTMENT PRIVATE LIMITED REFERRED TO SUPRA, WE FIND NO ERROR IN THE ORDER OF THE LEARNED CIT(A) WHICH CALLS FOR ANY INTERFERENCE. IN THE RESULT, THE ISSUE IS HEL D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 37. ISSUE - 9: DISALLOWANCE U/S.37 AS BUSINESS EXPENDITURE FOR THE PAYMENT MADE TO NATIONAL COUNCIL FOR CEMENT & BUILDING MATERIALS: IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE AS SESSEE HAD TO CONTRIBUTE TO THE NATIONAL COUNCIL FOR CEMENT AND BUILDING MATERIALS [NCCBM] WHICH WAS A GOVERNMENT OF INDIA ORGANIZATION. NCCBM CARRIED OUT SIGNIFICANT ST UDY IN THE AREAS OF LOW - GRADE LIME STONE AND OTHER NATURAL WASTES IN THE CEMENT MANUFA CTURE TO INCREASE SUSTAINABILITY OF NATURAL RESOURCES. THE CONTRIBUTION WAS WORKED OUT AT THE RATE OF 0.75 PAISE PER TONNE ON THE TOTAL PRODUCTION. THE PAYMENTS WERE MADE FOR AUGMENTING THE RESEARCH ACTIVITY BY THE SAID ORGANIZATION WHICH BENEFITS THE CE MENT INDUSTRY INCLUDING THE ASSESSEE. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 22 - : IT WAS A SUBMISSION THAT THE ASSESSING OFFICER HAD DISALLOWED THE SAME. IT WAS A SUBMISSION ON APPEAL THAT THE LEARNED CIT(A) CONSIDERED THE FACT THAT NCCBM IS AN APEX BODY FUNCTIONING UNDER THE MINISTRY OF COMMERCE AND INDUSTRIES, GOVERNMENT OF INDIA AND CARRIES OUT SIGNIFICANT STATUS IN THE CEMENT RELATED FIELDS , T HE LEARNED CIT(A) HAS HELD THAT THE CONTRIBUTIONS TO SUCH GOVERNMENT ORGANIZATION IN GENERAL IS A BUSINESS EXPENDITURE BECAU SE ANY DEVELOPMENTS FROM SUCH STUDIES CAN BE USED FOR THE ASSESSEES BUSINESS. CONSEQUENTLY, THE LEARNED CIT(A) DIRECTED THAT THE EXPENDITURE WAS ALLOWABLE U/S.37 OF THE INCOME TAX ACT, 1961. THE LEARNED CIT(A) HAD FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VEN KATA SATYANARAYANA RICE MILL CONTRACTORS VS. COMMISSIONER OF INCOME TAX [1997] REPORTED IN 89 TAXMAN.COM 92 (SC) AS ALSO THE PRINCIPLES LAID DOWN IN THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. CHEMICA LS AND PLASTICS INDIA LIMITED [2007] REPORTED IN 165 ITR 158 (MAD.), WHEREIN IT WAS HELD THAT, WHERE THE CONTRIBUTION WAS MADE BY THE ASSESSEE TO THE CHAMBER OF COMMERCE WHOSE ACTIVITIES ARE CLOSELY LINKED WITH THE WELFARE OF THE CORPORATE ENTITIES WHO ARE MEMBERS THEREIN AND WHOSE INTERESTS ARE TAKEN CARE OFF BY THAT CHAMBER, IRRESPECTIVE OF WHETHER THE EXPENSES INCURRED ARE COMPULSORILY OR OTHERWISE , IT COULD BE SAID THAT THE PAYMENT MADE BY THE ASSESSEE WAS FOR THE PURPOSE OF BUSINESS AND SATISFIED THE C OMMERCIAL EXPEDIENCY TEST . IT WAS A SUBMISSION THAT THE PAYMENT HAVE BEEN MADE FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THE SAME WAS ALLOWABLE. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 23 - : 38. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSE SSING OFFICER. 39. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 40. AS IT IS NOTICED THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO NCCBM WHICH IS AN APEX BODY FUNCTIONING UNDER THE GOVERNMENT OF INDIA AND DOING SIGNIFICANT STUDY AND R ESEARCH IN CEMENT RELATED FIELD, O BVIOUSLY, THE RESULTS FROM THE SAID ST UDY WOULD BE IN THE INTEREST OF THE ASSESSEES BUSINESS. THIS BEING SO, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VENKATA SATYANARAYAN A RICE MILL CONTRACTORS VS. COMMISSIONER OF INCOME TAX [1997] REFERRED TO SUPRA AS ALSO COMPLYING THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. CHEMICALS AND PLASTICS INDIA LIMITED REFERRED TO SUPRA, WE ARE OF THE VIEW THAT THE EXPENDITURE IS A BUSINESS EXPENDITURE AND ALLOWABLE U/S.37 OF THE INCOME TAX ACT, 1961. 41. THIS BEING SO AND ALSO ON ACCOUNT OF THE FACT THAT THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS AS ARRIVED BY THE L EARNED CIT(A) ON THIS ISSUE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A) ON THIS ISSUE. CONSEQUENTLY, THE SAID ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 42. IN I.T.A.NO.2412/CHNY/2019, I N THE REVENUES APPEAL IN GROUND NO S . 1 .1 TO 1.3 THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN GRANTING ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 24 - : DEDUCTION U/S. 80IA WITH REGARD TO THE ADJUSTMENT OF RATE IN RESPECT OF THE ELECTRICITY CONSUMED FOR CAPTIVE CONSUMPTION. THE ISSUE HAS BEEN DISCUSSED IN PARAGRAPHS 29 TO 32 ABOVE. THE ISSUE IS HELD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, THE SAID GROUNDS RAISED IN THE REVENUES APPEAL STANDS DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 43. IN I.T.A.NO.2413/CHNY/2019 , IN THE REVENUES APPEAL IN GROUND NS.1.1 TO 1.3, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN GRANTING THE DEDUCTION U/S.80IA WITH RESPECT TO THE ADJUSTMENT OF THE RATE IN RESPECT OF THE ELECTRICITY CONSUMED FOR CAPTIVE CONSUMPTION. TH E ISSUE HAS BEEN DECIDED IN PARAGRAPHS 29 TO 32 ABOVE IN FAVOUR OF THE ASSESSEE. CONSEQUENTLY, GROUND NOS.1.1 TO 1.3 OF THE REVENUES APPEAL STANDS DISMISSED. 43.1 IN GROUND NOS.2.1 AND 2.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF DEDUCTION U/S.37 IN RESPECT OF THE CONTRIBUTION TO GOVERNMENTAL ORGANIZATIONS. THIS IS IN RESPECT OF THE BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE IN RESPECT OF THE PAYMENTS MADE TO THE NATIONAL COUNCIL FOR CEMENT AND BUIL DING MATERIALS. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 37 TO 41 IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.2.1 AND 2.2 IN THE REVENUES APPEAL STANDS DISMISSED. 43.2 IN RESPECT OF THE GROUND NOS.3.1 AND 3.2, THE REV ENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF THE SALES TAX SUBSIDY BY TREATING THE SAME AS CAPITAL RECEIPTS. THE ISSUE HAS BEEN ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 25 - : ADJUDICATED IN PARAGRAPHS 15 TO 18 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVE NUE. CONSEQUENTLY, GROUND NOS.3.1 AND 3.2 OF THE REVENUES APPEAL STANDS DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 44. IN I.T.A. NO. 2414/CHNY/2019, IN THE REVENUES APPEAL IN GROUND NOS.1.1 TO 1.3, THE REVENUE HAS CHALLENGED TH E ACTION OF THE LEARNED CIT(A) IN DELETING THE ADDITION MADE ON RECOGNIZING NOTIONAL INTEREST ON THE ANNUITY ADVANCES TO THE SUBSIDIARY COMPANIES. THIS ISSUE HAS BEEN ADJUDICIATED BY US IN PARAGRAPHS 4 TO 6 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.1.1 TO 1.3 OF THE REVENUES APPEAL STANDS DISMISSED. 44.1 IN GROUND NOS.2.1 TO 2.4, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF THE EXPENS ES U/S.14A TO 0.5% TO THE AVERAGE VALUE OF THE INVESTMENT. THE SAID ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 7 TO 10 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.2.1 TO 2.4 OF THE REVENUES APPEAL STANDS DISMISSED. 44.2 IN GROUND NOS.3.1 AND 3.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN ALLOWING THE DEPRECIATION ON THE ENTIRE FRANCHISE COST OF RS.364 CRORES. THE SAID ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 11 TO 14 ABOVE IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.3.1 AND 3.2 OF THE REVENUES APPEAL STANDS DISMISSED. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 26 - : 44.3 IN GROUND NOS. 4.1 AND 4.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF SALES TAX SUBSIDY BY TREATING THE SAME AS CAPITAL RECEIPT. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 15 TO 18 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.4.1 AND 4.2 OF THE REVENUES APPEAL STANDS DISMISSED. 44.4 IN GROUND NOS.5.1 AN D 5.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF THE FOREIGN CURRENCY MONETARY ITEM TRANSACTION. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 19 TO 24 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENU E. CONSEQUENTLY, GROUND NOS.5.1 AND 5.2 OF THE REVENUES APPEAL STANDS DISMISSED. 44.5 IN GROUND NOS.61. TO 6.4, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE DEPRECIATION FOR THE UPS TO BE GRANTED AT THE RATE OF 60% AS A GAINST 15%. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 25 TO 28 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.6.1 TO 6.4 OF THE REVENUES APPEAL STANDS DISMISSED. 44.6 IN GROUND NOS.7.1 AND 7.2, THE REVENUE HAS CHAL LENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE ADJUSTMENTS MADE REGARDING THE DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF THE RATE OF ELECTRICITY CONSUMED UNDER CAPTIVE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 27 - : CONSUMPTION. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 29 TO 32 ABOVE IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.71. & 7.2 OF THE REVENUES APPEAL STANDS DISMISSED. 44.7 IN GROUND NO.8.1, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO APPLY ONL Y CLAUSE (III) OF RULE 8D WHILE COMPUTING THE DISALLOWANCE U/S.14A FOR NORMAL COMPUTATION OF TOTAL INCOME AND FOR THE PURPOSE OF COMPUTATION OF BOOK PROFITS U/S.115JB. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 7 TO 10 AND 33 TO 36 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NO.8.1 OF THE REVENUES APPEAL STANDS DISMISSED. 44.8 IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.A.NO.241 4 /CHNY/2019 IS DISMISSED. 45. IN I.T.A. NO. 2415/MDS/2019 , IN THE REVENUES APPEAL IN GR OUND NOS.1.1 TO 1.3, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE ADDITION MADE ON RECOGNIZING NOTIONAL INTEREST ON THE ANNUITY ADVANCES TO THE SUBSIDIARY COMPANIES. THIS ISSUE HAS BEEN ADJUDICATED BY US IN PARAGRAPHS 4 TO 6 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.1.1 TO 1.3 OF THE REVENUES APPEAL STANDS DISMISSED. 45 .1 IN GROUND NOS.2.1 TO 2.4, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 28 - : THE EXPENSES U/S.14A TO 0.5% TO THE AVERAGE VALUE OF THE INVESTMENT. THE SAID ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 7 TO 10 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.2.1 T O 2.4 OF THE REVENUES APPEAL STANDS DISMISSED. 4 5 .2 IN GROUND NOS.3.1 AND 3.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN ALLOWING THE DEPRECIATION ON THE ENTIRE FRANCHISE COST OF RS.364 CRORES. THE SAID ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 11 TO 14 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.3.1 AND 3.2 OF THE REVENUES APPEAL STANDS DISMISSED. 4 5 .3 IN GROUND NOS. 4.1 AND 4.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF SALES TAX SUBSIDY BY TREATING THE SAME AS CAPITAL RECEIPT. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 15 TO 18 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.4.1 AND 4.2 OF THE REVENUES A PPEAL STANDS DISMISSED. 4 5 .4 IN GROUND NOS.5.1 AND 5.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF THE FOREIGN CURRENCY MONETARY ITEM TRANSACTION. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 19 TO 24 ABOV E IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.5.1 AND 5.2 OF THE REVENUES APPEAL STANDS DISMISSED. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 29 - : 4 5 . 5 IN GROUND NOS. 6 .1 AND 6 .2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE ADJUSTMENTS M ADE REGARDING THE DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF THE RATE ELECTRICITY CONSUMED UNDER CAPTIVE CONSUMPTION. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 29 TO 32 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS .71. AND 7.2 OF THE REVENUES APPEAL STANDS DISMISSED. 4 5 . 6 IN GROUND NO. 7 .1, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO APPLY ONLY CL A USE (III) OF RULE 8D WHILE COMPUTING THE DISALLOWANCE U/S.14A FOR NORMAL COMPUTATION OF TOTAL INCOME AND FOR THE PURPOSE OF COMPUTATION OF BOOK PROFITS U/S.115JB. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 7 TO 10 AND 33 TO 36 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NO. 7 .1 OF THE REVENUES APPEAL STANDS DISMISSED. 45.7 IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.A.NO.2415/CHNY/2019 IS DISMISSED. 46. IN I.T.A. NO.2416/MDS/2019, IN THE REVENUES APPEAL IN GROUND NOS.1.1 TO 1.3, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEAR NED CIT(A) IN DELETING THE ADDITION MADE ON RECOGNIZING NOTIONAL INTEREST ON THE ANNUITY ADVANCES TO THE SUBSIDIARY COMPANIES. THIS ISSUE HAS BEEN ADJUDICATED BY US IN PARAGRAPHS 4 TO 6 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTL Y, GROUND NOS.1.1 TO 1.3 OF THE REVENUES APPEAL STANDS DISMISSED. ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 30 - : 46.1 IN GROUND NOS.2.1 TO 2.4, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF THE EXPENSES U/S.14A TO 0.5% TO THE AVERAGE VALUE OF THE INVESTMENT. THE SAID ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 7 TO 10 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS.2.1 TO 2.4 OF THE REVENUES APPEAL STANDS DISMISSED. 46 .2 IN GROUND NOS. 3.1 AND 3.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF SALES TAX SUBSIDY BY TREATING THE SAME AS CAPITAL RECEIPT. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 15 TO 18 ABOVE IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE. CONSEQUENTLY, GROUND NOS.3.1 AND 3.2 OF THE REVENUES APPEAL STANDS DISMISSED. 4 6 . 3 IN GROUND NOS. 4 .1 AND 4 .2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF THE FOREIGN CURRENCY MONETARY IT EM TRANSACTION. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 19 TO 24 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS. 4 .1 AND 4 .2 OF THE REVENUES APPEAL STANDS DISMISSED. 4 6 . 4 IN GROUND NOS. 5 .1 AND 5 .2, THE REVENUE H AS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE ADJUSTMENTS MADE REGARDING THE DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF THE RATE ELECTRICITY CONSUMED UNDER CAPTI VE CONSUMPTION. THE ISSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 29 TO 32 ABOVE ITA NO S . 2412, 24 13, 2414, 2415 & 2416/CHNY/2019 : - 31 - : IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NOS. 5 1. AND 5 .2 OF THE REVENUES APPEAL STANDS DISMISSED. 4 6 . 5 IN GROUND NO. 6 .1, THE REVENUE HAS CHALLENG ED THE ACTION OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER TO APPLY ONLY CLAUSE (III) OF RULE 8D WHILE COMPUTING THE DISALLOWANCE U/S.14A FOR NORMAL COMPUTATION OF TOTAL INCOME AND FOR THE PURPOSE OF COMPUTATION OF BOOK PROFITS U/S.115JB. THE I SSUE HAS BEEN ADJUDICATED IN PARAGRAPHS 7 TO 10 AND 33 TO 36 ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENTLY, GROUND NO. 6 .1 OF THE REVENUES APPEAL STANDS DISMISSED. 46.6 IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.A.NO.2416/CHN Y/2019 IS DISMISSED. 4 7 . IN THE RESULT, THE APPEAL S OF THE REVENUE IN ITA NOS.2412, 2413, 2414, 2415 & 2416/CHNY/2019 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH DECEMBER , 2019 IN CHENNAI. SD/ - ( . ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER / CHENNAI, / DATED: 12 TH DECEMBER , 2 019 . IA, SR. PS SD/ - ( ) (GEORGE MAT HAN) /JUDICIAL MEMBER / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF