The ACIT, GNR Circle, Gandhinagar V. Gujarat State Energy Generation Ltd, Ahmedabad

ITA 28/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0642 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR WITH PARIN SHAH
• Keywords: Business income; Depreciation; Business expenditure; Opportunity of being heard; Earning of tax free income; Revised return; Unabsorbed depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: S H RI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE DCIT /ACIT , GANDHINAGAR CIRCLE, GANDHINAGAR (APPELLANT /RESPONDENT ) VS GUJARAT STATE ENERGY GENERATION LTD., BLOCK NO - 15, UDHYOG BHAVAN, SECTOR NO. 11, GANDHINAGAR PAN: AABCG 1359 A (RESPONDENT /APPELLANT ) GUJARAT STATE ENERGY GENERATION LTD., BLOCK NO - 15, UDHYOG BHAVAN, SECTOR NO. 11, GANDHINAGAR PAN: AABCG 1359 A (APPELLANT /RESPONDENT ) VS THE A CIT, GANDHINAGAR C IRCLE, GANDHINAGAR (RESPONDENT / APPELLANT ) REVENUE BY : S H RI JAMES KURIAN, SR. D.R. ASSESSEE BY: S H RI S.N. SOPARKAR WITH P ARIN SHAH , A.R. DATE OF HEARING : 09 - 08 - 2 016 DATE OF PRONOUNCEMENT : 31 - 08 - 2 016 I T A NO S . 945 / A HD/20 11 & 28/AHD/2 013 A SSESSMENT YEAR 200 7 - 08 & 2008 - 09 ITA NO S . 591 /AHD/20 11 & 185 /AHD/2013 ASSESSMENT YEAR 200 7 - 08 & 2008 - 09 I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 2 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE ASSESSEE AND REVENUE HAVE FILED THE INSTANT FOUR CROSS APPEALS FOR A.Y. 2007 - 08 AND 2008 - 09 , AGAINST SEPARATE ORDERS OF T HE CIT(A) , GANDHINAGAR, AHMEDABAD DATED 30 - 12 - 2010 AND 03 - 10 - 201 IN APPEAL NO S . CIT(A)/GNR/138/2009 - 10 AND CIT(A)/GNR/159/2010 - 1 ; RESPECTIVELY, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. A COMBINED PERUSAL O F THE CASE FILE REVEALS THAT SOME INTER CONNECTED ISSUES ARE RAISED IN THE TWO ASSESSMENT YEARS BEFORE US. THE ASSESSEE AT THIS STAGE FILES A COMPLETE CHART OF VARIOUS ISSUES RAISED IN THE INSTANT FOUR APPEALS. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING CORRECTNESS THEREOF . WE ACCORDINGLY PROCEED ASSESSMENT YEAR WISE FOR THE SAKE OF CONVENIENCE AND BREVITY. ASSESSMENT YEAR 2007 - 08 A SSESSEE S APPEAL ITA 591/AHD/20 11 & REVENUE S CROSS APPEAL ITA 945/AHD/2011 3. WE COME TO ASSESSEE S APPEAL IT A 591/AHD /2011. ITS FIRST SUBSTAN T I VE GROUND ASSAILS CORRECTNESS OF THE CIT(A) S ORDER CONFIRMING SECTION 14A R.W. RULE 8D DISALLOWANCE OF RS. 3,31,844/ - . THE ASSESSEE COMPANY GENERATES POWER. IT E - FILED ITS RETURN ON 30 - 10 - 2007 DECLARING NIL INCOME. THE SAME W AS PROCESSED. THE ASSESSING OFFICER TOOK UP SCRUTINY THEREAFTER. THE ASSESSEE HAD I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 3 DEBITED INTEREST EXPENDITURE OF RS. 33,22,97,205/ - IN ITS P & L ACCOUNT. IT FURTHER PURCHASED EQUITY SHARES OF TWO ENTITIES M/S GUJARAT SCIENCE AT ACTION LTD. AND GUJARAT STATE FUEL MANAGEMENT LTD AMOUNT ING TO RS. 25 LACS EACH. THE ASSESSING OFFICER IN ASSESSMENT ORDER INVOKED RULE 8D TO COMPUTE THE IMPUGNED INTEREST DISALLOWANCE OF RS. 3,31,844/ - BY FOLLOWING APPORTIONMENT METHOD. THE CIT(A) UPHOLDS THE SAME. 4. HEARD BOTH THE SIDES. THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT DECLARED ANY EXEMPT INCOME IN THE IMPUGNED ASSESSMENT YEAR. HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. CORR TECH ENERGY PVT. LTD. (2014) 45 TAXMANN.COM 116 HOLDS THAT SECTION 14A DISALL OWANCE IS NOT EXIGIBLE IN ABSENCE OF ANY EXEMPT INCOME SINCE THE SAME COMES INTO PLA Y ONLY IN RELATION TO SUCH AN INCOME. THE REVENUE FAILS TO POINT OUT ANY SUCH MATERIAL SHOWING EXEMPT INCOME. WE FOLLOW HON BLE JURISDICTIONAL HIGH COURT DECISION IN DELE TING THE IMPUGNED SECTION 14A R.W. RULE 8D DISALLOWANCE. THIS FIRST SUBSTANTIVE GROUND SUCCEEDS ACCORDINGLY. 5. THE ASSESSEE S NEXT SUBSTANTIVE GROUND PLEADS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN NOT CONSIDERING INSURANCE CLAIM OF RS. 1,83,50,09 0/ - QUA MATERIAL DAMAGE AND LOSS OF PROFITS AND ON ACCOUNT OF FLOODS INVOLVING CORRESPONDING FIGURE OF RS. 21,81,715/ - AND RS. 1,61,68,375/ - ; RESPECTIVELY TO BE ELIGIBLE FOR SECTION 80IA DEDUCTION. THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER DATED 03 - 12 - 2009 THAT NOTWITHSTANDING THE FACT THAT ABOVE STATED SUMS HAD NOT I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 4 BEEN CLAIMED AS SECTION 80IA DEDUCTION AFTER SET OFF OF EARLIER YEARS LOSSES RESULTING NIL INCOME , THE SAME WAS FURTHER NOT ALLOWABLE SINCE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING IN QUESTION. 6. THE CIT(A) AFFIRMS THE ASSESSING OFFICER S ACTION AS UNDER: - (B) AS FAR AS THE COMPENSATION RECEIVED FOR THE LOSS OF MATERIAL IS CONCERNED, IT IS DIRECTLY RELATED TO THE COST OF RAW MATERIAL AND COMPENSATES FOR THE LOSS OF IT. IT IS A RECOVERY AKIN TO SALE OF SCRAP CREATED IN THE MANUFACTURING PROCESS OR REMAINING OUT OF RAW MATERIAL. SUCH PROFITS HAVE BEEN HELD BY DIFFERENT COURTS AS BEING PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKING. THE AO IS DIRECTED, TO WORK OUT COMPENSATIO N RECEIVED FOR SUCH LOSS AND ALLOW DEDUCTION U/S. 80IA ON THIS. . AS FAR AS GROUND NO.6 IS CONCERNED, THIS INCOME IS BUSINESS INCOME BUT NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. THE GROUND IS DECIDED ACCORDINGLY REGARDING THIS INCOME. (C) THE THIRD CO MPENSATION RECEIVED IS TO COMPENSATE FOR THE PROFITS WHICH THE ASSESSEE WOULD HAVE EARNED BUT COULD NOT EARN BECAUSE THE PLANT WAS SHUT FOR A PERIOD DUE TO THE FLOODS. THIS COULD NOT BE SAID TO BE DERIVED FROM THE INDUSTRIAL UNDERTAKING AS NO MANUFACTURING PROCESS WAS DONE TO EARN THIS. FURTHER, BY NO STRETCH OF IMAGINATION WE CAN SAY THAT PROFIT FOR NOT ABLE TO RUN AN INDUSTRIAL UNDERTAKING IS PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING. IT IS IN FACT BUSINESS INCOME BUT NOT INCOME DERIVED FROM INDUSTRI AL UND ERTAKING. THE AO IS DIRECTED TO CALCULATE THIS TYPE OF COMPENSATION AND THE ACTION OF THE AO OF DENYING DEDUCTION U/S.80IA ON SUCH INCOME IS CONFIRMED. AS FAR AS GROUND NO.6 IS CONCERNED, THIS INCOME IS BUSINESS INCOME AS IT HAS BEEN EARNED BECAUSE O F A COMPENSATION FOR ITS BUSINESS ACTIVITIES BUT NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. THE GROUND IS DECIDED ACCO RDINGLY REGARDING THIS INCOME. 7. BOTH THE PARTIES REITERATE THEIR RESPECTIVE STANDS IN THE COURSE OF HEARING. THERE IS NO DISPUTE A BOUT THE FACT THAT THE ASSESSEE IS OTHERWISE ELIGIBLE FOR SECTION 80IA DEDUCTION. HON BLE JURISDICTIONAL HIGH COURT IN (2013) 33 TAXMANN.COM 19 4 CIT VS. SRIRAMA MULTITECH I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 5 LTD HAS ALREADY DISAGREED WITH A SIMILAR R EVENUE S CONTENTION IN CASE OF SECTION 80 IA CLAIM ON LOSSES DUE TO FIRE INCIDENT TO HOLD THAT BUT FOR THE SAME DESTROYING RAW MATERIAL, THE ASSESSEE WOULD HAVE CONSUMED THIS MATERIAL IN FINISHED GOODS AND PROFITS FROM SALE THEREOF WOULD BE ELIGIBLE FOR SECTION 80IA DEDU CTION. AND THAT PASSING OF INSURANCE CLAIM REDUCES THE LOSS ARISING OUT OF THE INDUSTRIAL UNDERTAKING IN QUESTION . HON BLE HIGH C OURT CONCLUDES THAT SUCH RECOUPING OR REDUCTION OF LOSS CANNOT BE KEPT OUT OF THE P URVIEW OF SECTION 80IA . THE REVENUE NEITHER POINTS OUT ANY EXCEPTION THER ETO ON FACTS NOR ON LAW. WE ACCORDINGLY ACCEPT THIS SUBSTANTIVE G ROUND . THE ASSESSING OFFICER IS DIRECTED TO TREAT THE GROSS SUM IN QUESTION OF RS. 1,83,50,090/ - AS ASSESSEE S PROFITS ELIGIBLE SECTION 80IA DEDUCTION. 8 . THE ASSESSEE S NEXT THREE SUBSTANTIVE GROUNDS ASSAIL CORRECTNESS OF THE LOWER AUTHORITIES ORDERS HOLDING ITS INTEREST INCOME, RENT RECEIPT AND MISCELLANEOUS INCOME OF RS. 30,919/ - , RS. 3 , 58 , 539/ - AND RS. 98 , 096/ - ; RESPECTIVELY AS NOT ELIGIBLE FOR SECTION 80IA DEDUCTION SINCE NOT DERIVED FROM THE ELIGIBLE U NDERTAKING. THE ASSESSE DOES NOT FILE ITS MISCELLANEOUS INCOME DETAILS. HONB BLE JURISDICTIONAL HIGH COURT S DECISION 367 ITR 12 CIT VS. NIRMA LTD. UPHOLDS SIMILAR DISALLOWANCE OF SECTION 80IA DEDUCTION ; HOWEVER SUBJECT TO THE CONDITION THAT INTEREST INCOME IN QUESTION IS TO BE COMPUTED AFTER ADOPTING NETTING FORMULA ONLY. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO RE - COMPUTE THE ASSESSEE S INTEREST INCOME IN QUESTION BY ADOPTING NETTING FORMULA AND CONFIRM THE CIT(A) S I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 6 FI NDINGS UNDER CHALLENGE IN PRINCIPLE . THE ASSESSEE S SUBSTANTIVE GROUND NOS. 3 TO 5 FAIL EXCEP T TO THE EXTENT OF NETTING EXE RCISE HEREINABOVE. 9 . THE ASSESSEE S LAST SUBSTANTIVE GROUND AVERS THAT THE CIT(A) HAS ERRED IN CONFIRMING HGP SPARES WRITTEN OFF DISALLOWANCE OF RS. 49,85,327/ - OUT OF THE GROSS DISALLOWANC E FIGURE OF RS. 1,02,19,446/ - MADE IN ASSESSMENT ORDER. THE REVENUE S FOURTH SUBSTANTIVE GROUND SEEKS TO REVIVE THE ENTIRE DISALLOWANCE AMOUNT. WE ACCORDINGLY TAKE UP THIS ENTIRE ISSUE TOGETHE R FOR DISPOSAL. 10 . THIS CASE FILE DEMONSTRATES THAT THE ASSESSEE HAD STATED DISALLOWABLE EXPENDITURE OF CAPITAL NATURE AMOUNTING TO RS. 1,02,19,446/ - IN ITS TAX AUDIT REPORT. IT HOWEVER DID NOT DISALLOW TH E SAME IN ITS INCOME STATEMENT. THE ASSESSING OFFICER DISALLOWED/ADDED THE ENTIRE SUM IN THIS FACTUAL BACKDROP. THE CIT(A) PARTLY CONFIRMS THE IMPUGNED DISALLOWANCE AS UNDER: - AS FAR AS THE WRITE OFF OF HGP SPARES IS CONSIDERED, IN FACT, THE ASSESSEE HAS CLAIMED ONLY RS. 49,85,327/ - AS O&M EXPENSE S. THE REMAINING RS. 52,34,120/ - OUT OF TOTAL WRITE OFF OF RS. 1,02,19,446/ - WAS NOT CLAIMED BY THE ASSESSEE BEING RELATED TO PRIOR PERIOD. THE AO HAS WRONGLY DOUBLY DISALLOWED BY RS. 52,34,120/ - ALREADY DISALLOWED BY ASSESSEE ITSELF. THIS ADDIT ION SHOULD BE DELETED BY THE ASSESSING OFFICER. AS FAR AS THE CLAIM OF RS. 49,85,327/ - AS O&M EXPENSES - IS CONCERNED, THE ASSESSEE HAS SUBMITTED THAT 'APPELLANT HAS AMORTIZED THE VALUE OF HGP SPARES OVER A PERIOD OF 14 YEARS. THE SAME IS TREATED AS EXPENSES IN THE B OOKS OF ACCOUNT ACCORDINGLY. DURING THE YEAR UNDER APPEAL, APPELLANT HAS ENTERED INTO ERECTING, PROCUREMENT AND COMMISSIONING - EPC CONTRACT WITH ALSTHOM INDIA PVT . LTD - THE ORIGINAL EQUIPMENT MANUFACTURER - OEM. AS PER THE CONTRACT, THE APPELLANT IS REQUIRED TO CARRY OUT VARIOUS I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 7 TYPES OF INSPECTION AS DIRECTED BY OEM. DURING THE COURSE OF INSPECTION VARIOUS PARTS ARE REPAIRED / REPLACED / REFURBISHED UNDER THE CLOSE SUPERVISION OF TECHNICIANS OF OEM. DURING THE YEAR UNDER APPEAL, APPELLANT CARRIED OUT C - LNSPEC TION OF ITS TURBINE. OEM IT WAS CLEARLY SHOWN THAT OUT OF THE BLADES SENT CERTAIN BLADES WHICH CANNOT BE USED AND ACCORDINGLY THE APPELLANT SCRAPED THIS BLADES. THUS, THIS IS NOTHING BUT WRITE OFF OF SPARES SPARES WHICH ARE NOT USABLE AND ACCORDINGLY HGP S PARES RS. 52,34,120 / - HAS BEEN WRITTEN OFF AND DEBITED TO PRIOR PERIOD ADJUSTMENT ACCOUNT AND NOT CLAIMED AS EXPENSES AND BALANCE AMOUNT OF RS. 49,85,32 7 / - HAS BEEN CLAIMED AS REVENUE EXPENDITURE.' IT IS CLEAR FROM THE ASSESSEE'S REPLY THAT THESE EXPENSES WERE AMORTIZED. ONCE THESE WERE AMORTIZED THIS FORM PART OF ASSETS AND WDV OF THE CORRESPONDING BLOCK OF ASSETS. ANY SCRAPPING OFF COULD ONLY EFFECT THE BLOCK AS DECIDED IN THE CASE OF YAMAHA MOTORS (SUPRA) BY THE DELHI HIGH CO URT AND CANNOT BE CONSIDERED AS REVENUE EXPENDITURE. IN THE CIRC UMSTANCES, THE DISALLOWANCE OF RS. 49,85,327/ - IS UPHELD. THIS LEAVES BOTH THE PARTIES AGGRIEVED. 11 . WE COME TO ASSESS EE S GRIEVANCE FIRST. THERE IS NO DISPUTE THAT IT HAS ITSELF CAPITALIZED THE IMPUGNED SUM OF HGP SPARES IN QUESTION . THE CIT(A) QUOTES HON BLE DELHI HIGH COURT DECISION IN CIT VS. YAMAHA MOTOR INDIA PVT. LTD (2010) 328 ITR 297 TO HOLD THAT SUCH A PLEA LEAD S TO REDUCTION OF THE CORRESPONDING WRITTEN DOWN VALUE FIGURE OF THE RELEVANT BLOCK OF ASSET S. WE FIND NO REASON TO INTERFERE I N THE LOWER APPELLATE FINDINGS. THE ASSESSEE FAILS IN ITS CORRESPONDING SUBSTANTIVE GROUND. WE COME TO REVENUE S GRIEVANCE NOW SEEKING TO REVIVE THE ENTIRE DISALLOWANCE FIGURE OF HGP SPARES IN QUESTION . IT HAS COME O N RECORD THAT THE ASSESSING OFFICER INVOKED DOUBLE DISALLOWANCE OF RS. I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 8 52,34,120/ - . THE CI T(A) ADOPTS THE VERY REASONING FOR AGREEING WITH ASSESSEE S CONTENTIONS. THIS CRUCIAL FINDING GOES UN - REBUTTED IN THE COURSE OF HEARING BEFORE US. WE REJECT REVENU E S CORRESPONDING GROUND AS WELL IN THIS FACTUAL BACKDROP. ASSESSEE S APPEAL ITA 591/AHD/2011 IS PARTLY ACCEPTED. 12 . WE COME TO REVENUE S CROSS APPEAL ITA 945/AHD/2011. ITS FIRST SUBSTANTIVE GROUND PLEADS THAT THE CIT(A) HAS ERRED IN DIRECTING TH E ASSESSING OFFICER TO ALLOW DEPRECI ATION TO THE ASSESSEE AS PER WDV METHOD AS CHANGED FROM STRAIGHT - LINE METHOD IN ASSESSMENT YEAR 2002 - 03. BOTH PARTIES AGREE THAT THIS TRIBUNAL IN ASSESSEE S OWN CASES FOR ASSESSMENT YEAR 2002 - 03 AND 2006 - 07 INVOLVING IT A 1271/AHD/2006 AND 1777/AHD/2009 HAS REJECTED SIMILAR REVENUE S CONTENTIONS. IT IS FURTHER STATED TO BE A RECURRING ISSUE INVOLVING THE VERY CONTROVERSY. WE ACCORDINGLY FOLLOW CO - ORDINATE BENCH DECISION IN ABSENCE OF ANY DISTINCTION BEING POINTED OUT AT R EVENUE S BEHEST. ITS FIRST SUBSTANTIVE GROUND ACCORDINGLY FAILS. 13 . THE REVENUE S NEXT SUBSTANTIVE GROUND STATES THAT THE CIT(A) HAS ERRED IN ALLOWING ASSESSEE S CLAIM OF SECTION 80IA DEDUCTION ON MATERIAL DAMAGES OF RS . 21,81,71 5/ - . W E HAVE ALRE ADY ADJUDICATED THE VERY ISSUE IN ASSESSEE S APPEAL HEREINABOVE BY FOLLOWING HON BLE JURISDICTIONAL HIGH COURT DECISION . THIS GROUND IS ACCORDINGLY REJE CT ED. I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 9 14 . THE REVENUE S THIRD SUBSTANTIVE GROUND ASSAILS CORRECTNESS OF THE LOWER APPELLATE ORDER AS SESSEE S SCRAP SALE OF RS. 2,53,996/ - AS ELIGIBLE FOR SECTION 80IA DEDUCTION. BOTH PART IES INFORM THE BENCH THAT HON BLE JURISDICTIONAL HIGH COURT IN 282 ITR 758 HARJIV ANDAS J. JAVERI S CASE HAS HELD SUCH AN INCOME TO BE ELIGIBLE FOR THE IMPUGNED DEDUCTI ON. THIS SUBSTANTIVE GROUND IS ACCORDINGLY DECLINED. 15 . THE REVENUE S NEXT SUBSTANTIVE GROUND SEEKING TO REVIVE DISALLOWANCE/ADDITION OF HGP SPARES COST OF RS. 52,34,120/ - ALREADY STANDS ADJUDICATED IN ASSESSEE S APPEAL DECIDED HEREINABOVE . THE SAME IS ACCORDINGLY REJECTED. 16 . THE REVENUE S FIFTH SUBSTANTIVE GROUND ASSAILS CORRECTNESS OF THE LOWER APPELLATE FINDINGS DELETING DISALLOWANCE/ADDITION O F RS. 4,72,285/ - QUA EXPENDI TURE INCURRED AS PREMIUM PAID ON REDEMPTION OF DEBENTURES. THE ASSESSING OFFICER TREATED THE SAME AS CAPITAL EXPENDITURE. THE C IT(A) IS OF THE OPINION THAT SUCH AN EXPENDITURE INCURRED ON REDEMPTION OF BONDS IS ALWAYS A REVENUE EXPENDITURE . HE OBSERVES THAT ASSESSEE HAS ALWAYS AN OPTION EITHER TO CLAIM THIS OUTGO OVER THE ENT IRE BOND PERIOD OR IN LUMPSUM ON REDEMPTION. LD. DEPARTMENTAL REPRESENTATIVE IS UNABLE TO DISPUTE THIS OPTION AVAILABLE WITH THE ASSESSEE. WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A). T HIS REVENUE S GR OUND FAILS . 17 . THE REVENUE S SIXTH SUBSTANTIVE GROUND CHALLENGES CIT(A) S DIRECTIONS TO THE ASSESSING OFFICER TO DELETE SECTION 14A DISALLOWANCE I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 10 OF RS. 3,31,844/ - WHILST COMPUTING SECTION 115JB BOOK PROFITS. THE SAME IS RENDERED INFRUCTUOUS SINCE THE DISALLOWANCE ITSELF STANDS DELE TED IN ASSESSEE S CROSS APPEAL HEREINABOVE. 18 . THE REVENUE S SEVENTH SUBSTANTIVE GROUND PLEADS THAT THE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE PRIOR PERIOD EXPENSES OF RS. 35,40,229/ - IN COMPUTING SECTION 115JB BOOK PROFITS. WE FIND THAT THE HON BLE JURISDICTION AL HIGH COURT IN CASE OF MEGHMAN I ORGANICS LTD. TAX APPEAL NO. 109 TO 112 OF 2010 ADJUDICATES THIS ISSUE AGAINST THE REVENUE AS UNDER: - ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE SAME TO DETERMINE THE BOOK PROFIT OF THE COMPANY. THE TRIBUNAL, THEREAFTER, RECORDED AS UNDER. - WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS REDUCED RS.71,16,879/ - IN ITS AUDITED PROFIT & LOSS ACCOUNT WHICH WAS ADOPTED BY THE COMPANY IN ITS AGM. AS THE AFORESAID PRIOR PERIOD EX PENSES WERE REDUCED FOR ARRIVING AT THE BOOK PROFIT WHICH WAS ACCEPTED BY THE AUDITORS OF THE COMPANY AND BY THE COMPANY ITSELF IN THE AGM, THEN NO ADJUSTMENTS OTHER THAN THE ADJUSTMENT SPECIFIED IN EXPLANATION TO SECTION 115JA(2) OF THE INCOME TAX ACT, 19 61 WAS PERMISSIBLE. WE, THEREFORE, DO NOT FIRXFANY ERROR IN THE ORDER OF THE ID. CIT(APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DIS MISSED.' 8. FROM THE ABOVE, IT CAN BE GATHERED THAT CIT(APPEAL S) AS WELL AS THE TRIBUNAL BOTH WER E OF THE OPINION THAT WHEN THE BOOK PROFIT OF THE ASSESSEE COMPANY DULY AUDITED AND ACCEPTED THE BOOK PROFIT AT RS.9.56 CRORES, THE ASSESSING OFFICER THEREAFTER COULD NOT HAVE ADDED THE SUM OF RS.71 LAKHS SINCE PRIOR PE R IOD EXPENSES DOES NOT FIND PLACE IN ANY OF THE CLAUSES OF EXPLANATION TO SUB - SECTION(2) OF SECTION 115JA. I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 11 WE FOLLOW THE VERY REASON IN ABSENCE OF ANY EXCEPTION BEING POINTED OUT AT RE VENUE S BEHEST. THIS SUBSTANTIVE GROUND IS DECIDED IN ASSESSEE S FAVOUR. 19 . THE REVENUE S EIGHT SUBST A NTIVE GROUND AVERS THAT THE CIT(A ) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE PROVISION FOR FRINGE BENEFIT TAX OF RS. 4,23,149/ - IN COMPUTING SECTION 115JB BOOK PROFITS. L D. COUNSEL POINTS OUT THAT THE CENTRAL BOARD OF DIRECT TAXES IN ITS CIR CLE 08/2005 HAS ALREADY ISSUED NECESSARY CLARIFICATION AS FOLLOWED BY THE TRIBUNAL IN (2012) 26 TAXAMAN.COM 87 (MUM) ASB INTERNATIONAL VS. DCIT TO HOLD THAT FRINGE BENEFIT TAX AMOUNT HAS TO BE EXCLUDED FOR COMPUTING THE IMPUGNED BOOK PROFIT. WE ADOPT THE VERY REASONING TO REJECT THIS SUBSTANTIVE GROUND AS WELL. 20 . THE REVENUE S LAST SUBSTANTIVE GROUND PLEADS THAT THE LOWER APPELLATE AUTHORITY HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW SET OFF EARLIER YEARS UNABSORBED DEPRECIATION AGAINST OTHE R INCOME. WE FIND THAT HON BLE JURISDICTIONAL HIGH COURT IN A RECENT CASE IN (2013) 354 ITR 240 GENERAL MOTORS INDIA LTD. VS. DCIT HAS CONSIDERED ALL AMENDMENTS IN SECTION 32(2) OF THE ACT UPTO THE FINANCE ACT, 2001 TO CONCLUDE THAT UNABSORBED DEPREC IA TIO N OF EARLIER ASSESSMENT YEAR HAS TO BE SET OFF AGAINST CURRENT YEARS INCOME AS PER LAW. THE REVENUE FAILS TO POINT OUT ANY EXCEPTION TO THIS SETTLED LAW. THE CIT(A) S FINDINGS UNDER CHALLENGE ARE ACCORDINGLY CONFIRMED. REVENUE S APPEAL I TA 945/AHD/2011I S REJECTED . I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 12 ASSESSMENT YEAR 2008 - 09 ASSESSEE S APPEAL ITA 185/AHD/2013 AND REVENUE S APPEAL ITA 28/AHD/2013 21 . WE COME TO ASSESSEE S APPEAL ITA 185/AHD/2013. ITS FIRST SUBSTANTIVE GROUND CHALLENGES SECTION 14A DISALLOWANCE OF RS. 2,99,331/ - . WE NO TICE THAT IT HAS NOT DECLARED ANY EXEMPT INCOME IN THE IMPUGNED ASSESSMENT YEAR AS WELL. WE ACCORDINGLY FOLLOW HON BLE JURISDICTIONAL HIGH C OURT DECISION IN CASE OF CORRECTECH (SUPRA) TO DEL E TE THE IMPUGNED DISALLOWANCE . THIS FIRST SUBSTANTIVE GROUND SUC CEEDS. 22 . THE ASSESSEE S SECOND SUBSTANTIVE GROUND CHALLENGES PRIOR PERIOD EXPENDITURE DISALLOWANC E OF R S. 43,67,834/ - AS MADE BY BOTH THE LOWER AUTHORITIES. ITS EXPLANATION THROUGHOUT IS THAT THE IMPUGNED EXPENSES STOOD CRYSTALIZED IN THE RELEVANT PR EVIOUS YEAR ONLY. THE ASSESSING OFFICER DISALLOWED THE SAME INTER ALIA ON THE GROUND THAT IT FOLLOWED MERCANTILE METHOD OF ACCOUNTING AND INCURRED THE EXPENDITURE IN QUESTION IN EARLIER ASSESSMENT YEARS. THE C IT(A) CONFIRMS THE SAME AS UNDER: - 5. THE TH IRD GROUND OF APPEAL IS AGAINST DISALLOWANCE OF PRIOR PERIOD EXPENSES WHILE CALCULATING INCOME UNDER THE NORMAL PROVISION OF THE ACT OF RS. 43,67,834/ - . 5.1 THE AO HAS OBSERVED THAT THE EXPENSES ACCRUED IN EARLIER YEARS AND IS NOT ALLOWABLE IN MERCANTI LE SYSTEM OF ACCOUNTING. HE I HAS ALSO OBSERVED THAT MAJOR PART IS DUE TO CLAIMED DOUBLE UPLOADING OF INVENTORY IN ASS 2006 - 07 AMOUNTING TO RS 40,47,569/ - AND ERROR IF ANY SHOULD HAVE BEEN RECTIFIED THROUGH FILLING A REVISED RETURN. I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 13 5.2 THE MA IN PLEAS OF THE ASSESSEE AGAINST THE DISALLOWANCE ARE: A) THE A.O. HAS GROSSLY ERRED IN LAW AND ON FACTS IN DISALLOWING PRIOR PERIOD EXPENSES OF RS. 43,67,834/ - . THE A.O. HAS FAILED TO APPRECIATE THAT THE APPELLANT HAS OFFERED PRIOR PERIOD INCOME OF RS. 15,90,562/ - (LNCOME RS. 59,58,396/ - LESS EXPENSES RS. 43,67,834/ - ) WHILE CALCULATING INCOME UNDER THE NORMAL PROVISION OF THE ACT AND WHILE CALCULATING BOOK PROFIT U/S. 115JB OF THE ACT. B) THE A.O. GROSSLY ERRED IN LAW AND ON FACTS IN DISALLO WING RS. 52,436/ - PERTAINING TO 'PROVISION FOR SUPERANNUATION PAYABLE FOR THE YEAR 2006 - 07' WHICH WAS ALREADY DISALLOWED BY THE APPELLANT. C) THE A.O. HAS FAILED TO APPRECIATE THAT THE EXPENSES ARE IN THE NATURE OF SHORT PROVISION OF EARNED LEAVE, INTERES T EXPENSES, PROVISION FOR SUPERANNUATION, INVENTORY UPLOADED TWICE, ETC. AND ARE RELATED TO EARLIER YEARS BUT THEY ARE INCURRED DURING THE YEAR AND CRYSTALLIZED DURING THE YEAR. 5.3 I HAVE GONE THROUGH THE FACTS OF THE CASE. ONLY THE CORRECT INCOME OF THE ASSESSMENT YEAR IS TO BE ASSESSED. THERE IS NO SUBSTANCE IN THE CLAIM THAT THE SO CALLED PRIOR PERIOD EXPENSES WERE PERTAINING TO THE CURRENT YEAR OR THE LIABILITY ACTUALLY CRYSTALLIZED DURING THE YEAR. IN FACT ALL THESE ARE BASICALLY ACCOUNTING MISTAKES, WHERE EXPENSES WERE NOT CORRECTLY COMPUTED OR DEBITED IN THE YEAR THE EXPENSES WERE INCURRED. IN FACT, THE MAJOR PART IS DUE TO CLAIMED DOUBLE UPLOADING OF INVENTORY IN ASS 2006 - 07 AMOUNTING TO RS. 40,47,569/ - . THE INCOME HAS BEEN CLAIMED SHOWN EXCESS IN THAT YEAR AND IT IS NOT EVEN AN EXPENSE. THERE IS NO CASE FOR ALLOWING THE EXPENSES/WRONG EXCESS INCOME SHOWN EARLIER EXPENSE OF THE CURRENT YEAR. RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS: CADILA PHARMACEUTICALS LTD 25 TAXMANN.COM 519 (AHMEDABAD.) 'B ENCH B . COSMO FILMS LTD ; 24 TAXMANN.COM 189 (DELHI);ITAT DELHI BENCH 'B ON THE ALTERNATE, IT HAS BEEN PLEADED THAT THE PRIOR PERIOD INCOME SHOWN BY IT AMOUNTING TO RS. 15,90,562/ - BE REDUCED. THE APPELLANT HAS BROUGHT NOTHING ON RECORD ABOUT THE NATURE OF INCOME IN QUESTION AND HOW IT IS ACCRUED IN ANY OTHER YEAR BUT FOR THE I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 14 ASSESSMENT YEAR UNDER QUESTION. THE PLEA CANNOT BE ACCEPTED. THE GROUND OF APPEAL IS DISMISSED. 23 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. NEITHE R OF THE LOWER AUTHORITIES SPECIFICALLY REJECTS ASSESSEE S CLAIM THAT THE IMPUGNED EXPENDITURE PERTAINING TO EARLIER ASSESSMENT YEARS STOOD CRYSTALLISED IN RELEVANT PREVIOUS YEAR ONLY. THE ASSESSEE HAS FURTHER FOLLOWED NETTING FORMULA. THIS LEADS US TO A N INFERENCE THAT BOTH THE LOWER AUTHORITIES HAVE ASSESSED PRIOR PERIOD EXPENSES WITHOUT ALLOWING PRIOR PERIOD EXPENDITURE. THIS TRIBUNAL IN ITA 1859/AHD/2011 ADANI ENTERPRISES LTD. VS. ADDITIONAL CIT DECIDED ON 01 - 01 - 2016 QUOTES HON BLE DELHI HIGH COURT D ECISION IN (2010) 328 ITR 17 CIT VS. EXXON MOBIL LUBRICANT PVT. LTD TO HOLD THIS UNILATERAL ACTION OF ASSESSING ONLY THE PRIO R PERIOD INCOME AS NOT SUSTAINABLE . HON BLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO. 566/AHD/2016 UPHOLDS THE SAME. WE DRAW SU PPORT THEREFROM THAT THE IMPUGNED PRIOR PERIOD EXPENDITURE DESERVES TO BE ALLOWED. THIS SECOND SUBSTANTIVE GROUND SUCCEEDS. 24 . THE ASSESSEE S THIRD SUBSTANTIVE GROUND AVERS THAT THE CIT(A) HAS ERRED IN CONFIRMING ASSESSING OFFICER S ACTION IN HOLDING THAT REFUND OF INSURANCE PREMIUM OF LO SS OF GROSS PROFITS OF RS. 1,22,99,228/ - HAS NOT ELIGIBLE FOR SECTION 80IA DEDUCTION. THE ASSESSING OFFICER ADOPTED DERIVE D FROM REASONING AS IN THE PRECEDING ASSESSMENT YEAR TO INVOKE THE IMPUGNED DISALLOWANCE . T HE CIT(A) UPHOLDS THE SAME AS FOLLOWS: - THE APPELLANT HAS SUBMITTED THAT IT HAS PAID INSURANCE I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 15 PREMIUM OF RS. 4,93,88,918/ - FO R F.Y. 2005 - 06 AND RS. 3,94,39,042/ - FOR F.Y. 2006 - 07. THE APPELLANT FURTHER SUBMITS THAT W HILE CALCULATING INSURANCE PREMIUM, INSURANCE COMPANY CONSIDERS GROSS PROFIT AS PER ESTIMATE GIVEN BY COMPANY FOR THAT PARTICULAR YEAR AND ON THAT BASIS INSURANCE PREMIUM IS PAID FOR THAT PARTICULAR YEAR. SUBSEQUENTLY, AFTER FINALIZATION OF ACCOUNTS OF RES PECTIVE YEAR, IF THERE ARE ANY CHANGES IN GROSS PROFIT, INSURANCE COMPANY RE - CALCULATES THE PREMIUM BASED ON ACTUAL FIGURES FOR THAT PARTICULAR YEAR AND THEN THE INSURANCE COMPANY REFUNDS THE PREMIUM OR DEMANDS FOR THE PREMIUM AMOUNT FOR THAT PARTICULAR YE AR BASED ON THE FINALIZATION OF ACCOUNTS. I NSURANCE COMPANY HAS REFUNDED RS. 7 7,48 ,482/ - FOR THE F.Y.2005 - 06 AND RS. 44,70,745.68 FOR F.Y. 2006 - 07. THE APPELLANT HUMBLY SUBMITS THAT IT HAS PAID INSURANCE PREMIUM FOR F.Y. 2005 - 06 AND F.Y. 2006 - 07 AND CLAIME D THE SAME AS BUSINESS EXPENSES. NOW, APPELLANT HAS RECEIVED THE REFUND OF THE SAME AND HENCE, APPELLANT HAS RIGHTLY CONSIDERED THE SAME AS BUSINESS INCOME. AS THE INSURANCE EXPENSES ARE CONSIDERED AS ALLOWABLE BUSINESS EXPENSES, REFUND OF THE SAID PREMIUM IS ALSO CONSIDERED AS BUSINESS INCOME. THE INSURANCE EXPENSES ARE CONSIDERED AS WELL AS REFUND OF THE INSURANCE PREMIUM IS ALSO CONSIDERED AS ELIGIBLE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. THE INSURANCE CLAIM HAS BEEN GIVEN TO COMPENSATE FOR THE PR OFITS WHICH THE ASSESSEE WOULD HAVE EARNED BUT COULD NOT EARN. THIS COULD NOT BE SAID TO BE DERIVED FROM THE INDUSTRIAL UNDERTAKING AS NO MANUFACTURING PROCESS WAS DONE TO EARN THIS. FURTHER, BY NO STRETCH OF IMAGINATION WE CAN SAY THAT PROFIT FOR NOT ABLE TO RUN AN INDUSTRIAL UNDERTAKING AT THE DESIRED PROFITABILITY LEVEL IS PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING. IT IS IN FACT BUSINESS INCOME BUT NOT INCOME D FROM INDUSTRIAL UNDERTA KING. THE ACTION OF THE AO OF DENYI NG DEDUCTION U/S.80IA ON SUCH I NCOME IS CONFIRMED. 25 . THERE IS NO DISPUTE ABOUT THE CRUCIAL FACT THAT THIS ASSESSEE S CLAIM OF THE IMPUGNED INSURANCE PREMIUM COMPUTED ON ESTIMATED GP ALREADY STANDS ACCEPTED AS ITS BUS INESS EXPENDITURE. ITS INSURER REVISES THE SAME AFTER FINALIZATIO N OF ACCOUNT S AND CONSEQUENTIAL GP COMPUTATION. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING NATURE OF I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 16 ASSESSEE S INSURANCE PREMIUM TO BE THAT OF COST OF MANUFACTURING FROM WHICH THE IMPUGNED REFUND HAS ARISEN. HON BLE APEX COURT IN CIT VS. MEGHALAYA STEEL S (2016) 383 ITR 217 (SC) DEALS WITH AN IDENTICAL DERIVE FROM ISSUE QUA TRANSPORT, INTEREST AND POWER SU BSIDY GIVEN BY THE GOVERNMENT. THEIR LORDSHIP S HOLD ALL THESE CASH ASSISTA NCE(S) REIMBURSEMENTS; WHOLLY OR IN PART , OF THE COSTS ACTUALLY INCURRED IN THE RELEVANT MANUFACTURING PROCESS. AND THAT NET PROFITS COULD BE CALCULATED CORRESPONDING TO BUSINESS CO STS FROM SALE PRICE WHICH OTHER - WISE HAS TO BE HELD AS TO HAVE BEEN DERIVED FROM THE ELIGIBLE BUSINESS ONLY. WE APPLY THE SAME REASONING HEREIN AS W ELL TO CONCLUDE THAT THE IMPUGNED REFUNDS REDUCE ASSESSEE S COST OF MANUFACTURE/BUSINESS EXPENDITURE ONLY. THE SAME ARE HELD TO BE ITS PROFITS AND GAINS FROM TH E ELIGIBLE UNDER THE PROVISIONS OF THE ACT. THIS SUBSTANTIVE GROUND SUCCEEDS ACCORDINGLY. 26 . THE ASSESS EE S NEXT THREE SUBSTANTI V E GROUNDS CHALLENGE THE LOWER AUTHORITIES ACTION IN HOLDING THAT INTEREST AMOUNT OF RS. 19,42,377/ - FROM BONDS OF SSNNL, RS. 66779/ - FROM HBA INTEREST AND RS. 2 LACS OF SUPERVISION CHARGES FOLLOWED BY RENTAL INCOME OF RS. 3,88,524/ - AND THAT U NDER THE HEAD SALE OF INVENTRIES OF RS. 5,19,336/ - AS NOT ELIGIBLE FOR SECTION 80IA DEDUCTION SINCE NOT DERIVED FROM THE ELIGIBLE UNDERTAKING. LD. COUNSEL REPRESENTING ASSESSEE SUBMITS AT THE OUTSET THAT THE IMPUGNED INTEREST I NCOME HAS TO BE NETTED AS IN PRECEDING ASSESSMENT YEAR HEREINABOVE AND THE REMAINING ISSUES HAVE TO BE DECIDED IN REVENUE S FAVOUR AS PER HON BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIRMA LTD. I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 17 (SU P R A). WE APPRECIATE THIS FAIR STAND TO UPHOLD THE LOWER APPELLATE FINDINGS QUA THESE GROUNDS EXCEPT TO THE EXTENT OF NETTING FORMULA PERTAINING TO INTEREST ISSUE. 27 . THE ASSESSEE S LAST SUBSTANTIVE GROUND CHALLENGES CORRECTNESS OF THE LOWER APPELLATE ORDER CONFIRMING INTEREST ON BILL DISCOUNTING O F R S. 1,07,70413/ - . WE NOTICE THAT THE CIT(A) HAS REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER AS UNDER: - 7. THE FIFTH GROUND OF APPEAL IS AGAINST ADDITION ON ACCOUNT OF REIMBURSEMENT O F INTEREST ON BILL DISCOUNTING RS. 1,07,70,413/ - . THE AO HAS OBSE RVED THAT THIS IS THE INCOME OF THE ASSESSEE ON WHICH EVEN TDS HAS BEEN DEDUCTED AND THEREFORE, SHOULD HAVE BEEN DISCLOSED AS PART OF TOTAL INCOME. 7.1 THE APPELLANT HAS SUBMITTED THAT COMPANY PAYS BILL DISCOUNTING CHARGES TO BANK AND THE SAME IS DEBITED TO 'BANK CHARGES' ACCOUNT. THEREAFTER THE SAID BILL DISCOUNTING CHARGES ARE RECOVERED FROM GUJARAT URJA VIKAS NIGAM LTD. - GUVNL. FOR THAT GSEG RAISES DEBIT NOTE TO GUVNL. GUVNL MAKES PAYMENT OF THE SAME AFTER DEDUCTING TDS AT APPLICABLE RATE. GSEG CREDITS SUCH BILL CHARGES TO 'BANK CHARGES' ACCOUNT. IT HAS BEEN SUBMITTED THAT: 'WE DRAW YOUR ATTENTION TO THE FOLLOWING. SCHEDULE - O - INTEREST & FINANCIAL CHARGES RS. DEBENTURE INTEREST 159,853,575 INTEREST ON TERM LOANS 135,888,240 INTEREST ON WORK ING CAPITAL LOANS 73,829 FINANCIAL CHARGES 10,943,703 TOTAL 306,759,347 I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 18 FURTHER, BREAK UP OF FINANCIAL CHARGES ARE AS UNDER. FINANCIAL CHARGES RS. TRUSTEE REMUNERATION ( BONDS ) 286,001 BANK CHARGES 8,393,958 PREPAYMENT CHARGES TO GIIC 2,263,744 TOTAL 10,943,703 WE ARE ENCLOSING HEREWITH COPY OF LEDGER ACCOUNT OF BANK CHARGES (ANNEXURE - 6) FROM THE SAME, YOUR HONOUR WILL THEREFORE APPRECIATE THAT REIMBURSEMENT OF BILL DISCOUNTING CHARGES WHICH IS RECOVERED FROM GUVNL IS CREDITED TO BANK CHARGES ACCOUNT AND AS A RESULT. BANK CHARGES EXPENSES IS REDUCED AND THUS REIMBURSEMENT OF BILL DISCOUNTING CHARGES IS AUTOMATICALLY GETS ADJUSTED AGAINST THE BANK CHARGES EXPENSES. IN SHORT, 'BANK CHARGES' ACCOUNT IS SHOWN AT 'NET' FIGURE. WE HAV E THEREFORE ALREADY OFFERED INCOME. HENCE QUESTION OF TREATING THE REIMBURSEMENT OF BILL DISCOUNTING AS INCOME ONCE AGAIN DOES NOT ARISE. THE APPELLANT REQUEST YOUR HONOUR THAT IMPUGNED ADDITION ON ACCOUNT OF REIMBURSEMENT OF INTEREST ON BILL DISCOUNTING RS. 1,07,70,413/ - AS MADE BY THE LEARNED A.O. MAY KINDLY BE DELETED.' 7.2 I HAVE GONE THROUGH THE FACTS OF THE CASE. IT IS CLEAR THAT THE APPELLANT HAS DEBITED THE BANK CHARGES AFTER ADJUSTING THE BILL DISCOUNTING INCOME OF RS. 1,07,70,413/ - . THE ADDITION MADE BY THE AO RESULTS IN DOUBLE ADDITION AND IS NOT JUSTIFIED. HOWEVER, THE AO IS DIRECTED TO VERIFY THE COMPUTATION OF BANK CHARGES AFTER GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD AND EXPLAIN THE ACCOUNTING WHILE GIVING THE EFFECT TO THIS ORDER. 2 8 . HEARD BOTH SIDES. IT HAS COME ON RECORD THAT IT S A CASE OF DOUBLE ADDITION OF THE IMPUGNED DISCOUNTING INCOME . THE CIT(A) APPEARS TO HAVE REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER TO I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 19 VERIFY COMPUTATION OF BANK CHARGES SINCE THE RELEVANT DET AI LS ARE NOT IN THE CASE FILE. LEARNED COUNSEL FAILS TO REBUT THE SAME BY TAKING US TO THE RELEVANT EVIDENCE IN THE CASE FILE. WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE C IT(A). THIS SUBSTANTIVE GROU ND IS ACCORDINGLY DECLINED. ASS ESSEE S APPEAL I TA 185/AHD/2013 PARTLY SUCCEEDS. 29 . WE COME TO REVENUE S APPEAL ITA 28/AHD/2013. ITS SOLE SUB STANTIVE GRIEVANCE IS THAT THE C IT(A) HAS ERRED IN ALLOWING DEPRECIATION AS PER WRITTEN DOWN VALUE METHOD AS AGAINST STRAIGHT - LINE FOLLOWED UP TO THE ASSESSMEN T YEAR 2002 - 03. BOTH PARTIES FAIRLY STATE THAT OUR FINDINGS ON THE VERY ISSUE IN PRECEDING ASSESSMENT YEAR SQUARELY COVERS THE SAME. THIS REVENUE S GROUND IS ACCORDINGLY REJECTED. SO IS IT S APPEAL ITA 28/AHD/2013. 30 . THE ASSESSEE S TWO APPEAL NOS. 59 1/AHD/2011 AND ITA 185/AHD/2013 ARE PARTLY ACCEPTED. REVENUE S APPEALS ITA 945/AHD/11 AND 28/AHD/2013 ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 31 - 08 - 201 6 SD/ - SD/ - ( N.K. BILLAIYA ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 31 /08 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE I.T.A NO S . 945 & 591 /AHD/20 11 & 28 &185/AHD/2013 PAGE NO DCIT /ACIT VS. GUJARAT STATE ENERGY GENERATION LTD . 20 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,