Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 114234 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 5 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-07-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
25-07-2023
Assessment Year
2013-2014
Appeal Filed On
04-02-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Gujarat Urja Vikas Nigam Ltd., Sardar Patel Vidyut Bhavan, Race Course Circle, Baroda-390007 PAN: AACCG2861L (Appellant) Vs The DCIT, Circle-1(1)(1), Baroda (Respondent) The DCIT, Circle-1(1)(1), Baroda (Appellant) Vs Gujarat Urja Vikas Nigam Ltd., Sardar Patel Vidyut Bhavan, Race Course Circle, Baroda-390007 PAN: AACCG2861L (Respondent) Assessee Represented: Shri M.J. Shah, Shri Jimmi Patel & Shri Rushin Patel, ARs. Revenue Represented: Shri Kamlesh Makwana, CIT-DR Date of hearing : 26-07-2023 Date of pronouncement : 31-07-2023 ITA Nos: 281 & 282/Ahd/2018 Assessment Years: 2013-14 & 2014-15 ITA Nos: 323 & 324/Ahd/2018 Assessment Years: 2013-14 & 2014-15 I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 2 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These cross appeals are filed by the Assessee and the Revenue as against separate appellate orders both dated 21.11.2017 passed by the Commissioner of Income Tax (Appeals)-1, Vadodara arising out of the assessment orders passed under section 143(3) r.w.s. 92CA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years (A.Ys) 2013-14 & 2014-15. 2. In both the appeals common grounds are raised by the Assessee and the Revenue, hence the same are disposed of by this common order. First we will take up Assessee’s appeal in ITA No. 281/Ahd/2018 relating to Assessment Year 2013-14. 3. The Grounds of Appeal raised by the Assessee in ITA No. 281/Ahd/2018 for A.Y. 2013-14 reads as under: 1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has held to consider the interest on loans raised by erstwhile GEB for the purpose of disallowance under section 14A of the IT Act, 1961. It is submitted that the disallowance is uncalled for and be directed to be deleted. 1.1 The learned Commissioner of Income Tax (Appeals) further erred in law and facts has held that in the event the disallowance under section 14A of the Act computed as per the directions comes out to be lesser than the dividend income, then such dividend income shall be treated as taxable income. 2.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts has set aside the additions of 1,08,81,663/- being Guarantee Fees paid to the Government of Gujarat in consideration of it issuing the guarantee for various unsecured loans with the direction to re-verify the claim despite the fact that the documents establishing the facts were submitted at the time of appeal hearing. 3.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of prior period expenses amounting to I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 3 273,50,000/-without appreciating the fact that such expenditure crystallized during the year and that the same has never been claimed in earlier years. 3.1 The learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in confirming the additions of prior period income amounting to 1,10,000/- on the ground that the same has not been offered in earlier years. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the prior period income has already been included in the Net Profits offered for taxation during the year. Thus the prior period income of 21,10,000/- is being taxed twice. 4.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has held that no deduction be allowed on account of Dividend Income, being an exempt income, while computing the Book Profit under section 115JB of the IT Act. 5.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has dismissed the ground relating to the initiation of penalty proceedings under section 271(1)(c) of the IT Act. 6.0. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the charging of interest under section 234B, 234C and 234D of the Income Tax Act, 1961. 7.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal. 4. The brief facts of the case is that the assessee is a Public Sector Undertaking engaged in purchase, sale and distribution of electricity. For the Assessment Year 2013-14, the assessee filed its Return of Income on 29-09-2013 declaring Nil Income after setting off Brought Forward Losses of Rs. 1,07,94,96,895/-. The assessee shown book profit u/s. 115JB of Rs. 82,07,99,000/-. The return was taken up for scrutiny assessment and various disallowances made by the Assessing Officer namely: (i) Disallowance u/s. 14A of Rs. 72,80,04,376/- (ii) Disallowance of guarantee fees (iii) Disallowance of prior period expenses (iv) Disallowance of prior period income (v) Addition on account of capital grant I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 4 (vi) Adjustment in Book Profit under 115JB including the disallowance u/s. 14A. 5. Aggrieved against the assessment order, the assessee filed an appeal before Ld. CIT(A). Regarding the first issue of disallowance u/s. 14A, the Ld. CIT(A) observed as under: “.....5.3.1. In the current assessment year, the appellant has claimed to have paid 52.36 crores as interest on working capital. There is no fresh investment during the year under consideration. Hence, the AO is directed to recompute the disallowance u/s 14A as per Rule 8D according to the following directions: a) The interest paid on working capital borrowing of Rs. 52.36 crores will not be considered for making disallowance out of interest expenses. b) The investment made in equity share of subsidiary companies of Rs.1061.61 crores during F.Y. 2008-09, 1280.28 crores during F.Y. 2009-10, 450.21 crores during F.Y. 2010-11 and 308.2 crores during F.Y. 2011-12 will not be considered for making disallowance out of interest expenses but the same will be considered for making disallowance out of administrative expenses. The appellant gets part relief accordingly. c) If the disallowance u/s14A r.w.r. 8D computed in view of above directions comes to less than the dividend income of 10,73,61,000/- treated as exempt by the AO, then instead of making disallowance, the dividend income shall be treated as taxable as shown by the appellant in the return of income.” 5. Ground No. 1 & 1.1, disallowance u/s. 14A of the Act. Both the parties submitted that this issue is squarely covered in assessee’s own case by Co-ordinate Bench of this Tribunal in ITA Nos. 11 & 37/Ahd/2013 & 3103/Ahd/2014 dated 22.10.2020 relating to the Assessment Year 2009-10 wherein the Hon’ble ITAT remanded the matter back to the file of the Assessing Officer for fresh adjudication by following earlier Assessment Year 2008-09 order as follows: “.....10. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 5 there is no ambiguity that the Learned CIT (A) has decided the issue on hand after relying on the order of his predecessor for the Assessment Year 2008-09 which was subsequently set aside by the ITAT for fresh adjudication. .............................. 10.1 As the facts of the case on hand are identical to the facts of the case as discussed above which has been set aside to the file of the AO for fresh adjudication as per the provisions of law, by the ITAT as discussed above. Respectfully following the order of this Coordinate Bench in the own case of the assessee, we set aside the issue on hand to the file of the AO for fresh adjudication in terms of the finding of the ITAT in its own case for the Assessment Year 2008-09 (Supra) as well as in accordance to the provisions of law. Hence, the ground of appeal of the assessee and the Revenue are allowed for the statistical purposes.” 5.1. Respectfully following the above decisions of our Co-ordinate Bench, for this assessment year 2013-14, we set aside the matter back to the file of Assessing Officer for fresh adjudication by examining the facts and figures and calculate the disallowance u/s. 14A of the Act. Thus the Grounds of Appeal filed by the assessee is partly allowed. 6. Regarding ground no. 2 namely Guarantee Fees paid to Govt. of Gujarat in consideration of it issuing the guarantee for various unsecured loans. Similar issue was considered by the Co-ordinate Bench of this Tribunal in assessee’s own case in ITA Nos. 11 & 37/Ahd/2013 dated 22.10.2020, wherein it was held as follows: “......19. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, there is no ambiguity that the Learned CIT (A) has decided the issue on hand after relying on the order of his predecessor for the Assessment Years 2008-09 which was also subsequently upheld by the ITAT in ITA No. 899/AHD/2012 vide order dated 22 nd June 2016. The relevant finding of the ITAT reads as under: “38. We have heard the rival contentions and perused the material on record and gone through the decision referred and relied upon by both the parties. Through this ground Revenue has I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 6 challenged the action of ld. CIT(A) deleting the disallowance of guarantee fees at Rs.4.76 crores. 39. We observe that ld. AR has referred and relied on the decision of the co-ordinate bench in the case of Gujarat Energy Transmission Corpn. Ltd. (supra), wherein similar issue regarding the claim of guarantee fees paid to Government of Gujarat has been dealt with by the Tribunal as to whether the guarantee fees is an expenditure of capital in nature or revenue in nature and has observed as under :- 35. We find that the Tribunal in its order dated 8.5.2015 cited supra has held as under: "6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) decided these issues in paras- 5.2 & 5.3 and 6.2 respectively by observing as under:- "5.2. I have considered the submissions of the ld.AR and the facts of the case. The issue relating to whether an item of expenditure lies in the capital or the revenue field has exercised the courts in numerous cases. From an analysis of such cases a few guiding principles/tests can be identified. One of the important tests for categorizing any expenditure as capital in nature is whether the laying out of the impugned expenditure results in the acquisition of creation of any new asset. Where no such asset is created, it would be indicative of an expenditure which was not capital in nature. Another test relates to the principle of "enduring benefit". "Enduring benefit" may be in the form of long lasting use of an asset or the acquisition of a right to exploit certain commercial processes, etc. In the instant case, the assessee did not acquire any right to exploit a commercial technology or process, and neither was the benefit "enduring", since the payment of guarantee commission was an annual charge. The benefit derived from payment of such commission thus lasted for exactly one year only. Such ITA No.704 and 761/Ahd/2012shortlived benefit cannot be categorized as "enduring". Hence, I am inclined to the view that the payment of guarantee commission was a revenue expenditure. 5.3. Further, the jurisdictional Bench of ITAT had occasion to consider the allowability of guarantee commission paid to a Director of the company in respect of loans taken from I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 7 the bank. In the case of Himalaya Machinery Pvt.Ltd. (ITA No.738/Ahd/2009) for AY 2006-07, the Tribunal held, vide order dt.5.6.2009, following the decision of the Rajasthan High Court in CIT v. Metalising Equipment Co.Pvt.Ltd., 8 DTR 12, that the payment of commission for guaranteeing repayment of loan was allowable as revenue expense. In the instant case, the loan has been guaranteed by the Government of Gujarat. Hence, quite apart from the other sound reasons for treating the expenditure as revenue, it would be unrealistic to say that the appellant company could derive any undue advantage or collateral benefit by making such payment to the GOG. In view of the totality of the circumstances, I am of the opinion that the AO was not justified in treating the payment of guarantee commission (Rs.8,39,04,550/-) as capital in nature. The addition is directed to be deleted. 6.2. I have considered the submissions of the ld.AR and the facts of the case. The jurisdictional Bench of ITAT has held in the case of Shri Rama Multi Tech vs. ACIT, 92 TTJ 568, that in determining the nature of expenditure incurred for obtaining loan, it is irrelevant to consider the purpose of loan. The amount spent on stamp duty, lawyer fees, etc. for obtaining loan secured by charge on its fixed assets is a revenue expenditure, because the transactions were entered into directly to facilitate the business of the company and payment of consultancy charges was made on ground of commercial expediency.In India Cements Ltd. vs. CIT, 60 ITR 52, the Supreme Court had also held that the expenditure incurred for securing the use of money for a certain period was revenue expenditure. In the instant case, the assessee has secured the loan by creating a charge (hypothecation of its assets). Hence the ratio of the above mentioned two cases would squarely apply. Accordingly, it is held that the AO was not justified in making the disallowance of Rs.45,24,582/-, which is directed to be deleted." 6.1 The ld.CIT(A) has followed the decision of the Tribunal passed in ITA No.738/Ahd/2009 for AY 2006-07 in the case of Himalaya Machinery Pvt.Ltd., dated 5.6.2009 and in the case of Shri Rama Multi Tech vs. ACIT reported at 92 TTJ 568. 6.2. The ld.CIT-DR could not distinguish the facts of the case, therefore we do not see any reason to interfere with the order I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 8 of the ld.CIT(A), same is hereby upheld. Thus, these two grounds raised in the Revenue's appeal are rejected." 36. DR could not point out any good reason as to why the above quoted order of the Tribunal should not be followed for the year under consideration. In the absence of distinguishing features being pointed out by the DR, and the facts being identical, respectfully following the above quoted decision of the Tribunal, we confirm the order of the CIT(A), and dismiss this ground of appeal of the Revenue. 40. We are of the view that the issue raised in this ground is squarely covered by the decision of co-ordinate bench referred above in the case of Gujarat Energy Transmission Corpn. (supra) and respectfully following the same, we find no reason to interfere with the order of ld. CIT(A) and uphold the same. This ground of Revenue is dismissed.” 20. As the facts of the case on hand are identical to the facts of the case as discussed above, we are incline to uphold the finding of the Ld. CIT-A. 21. Before parting, it is important to note that the revenue was in appeal in the immediate preceding Assessment Year i.e. 2008-09 before us on the following grounds of appeal: “On the facts and in the circumstances of the case and in law, the ld. CIT (Appeals) erred in deleting the addition on account of disallowance of claim of guarantee fees of Rs. 4.76 crores without appreciating that the disallowance was made as the same are enduring nature in the assessee’s business.” 21.1 The above ground of appeal raised by the Revenue for the Assessment Year 2008-09 in ITA No. 899/AHD/2012 was dismissed by the ITAT vide order dated 22 nd June 2016 which has been elaborated in the preceding paragraph. What flows from the conjoint reading of the order of the Learned CIT (A) and the ITAT for the Assessment Year 2008-09 as discussed above is that there was no enduring benefit accrued to the assessee out of guarantee fees paid by it to the government of Gujarat. As such the finding of the ITAT has to be seen in the context of the ruling of the AO and the Learned CIT (A) for the Assessment Year 2008-09. In fact, the Learned CIT(A) for the assessment Year 2008-09 held that there was no benefit accrued to the assessee which is in the enduring nature but directed the AO to verify whether such guarantee fees relates to the capital work in progress and if that be so, the same needs to be capitalized. 22. However, the assessee did not prefer any appeal against the order of the Learned CIT(A) for the Assessment Year 2008-09. In other words, the assessee was not aggrieved by the direction of the Learned CIT (A) to I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 9 verify the claim of the assessee whether such guarantee fees relates to the capital work in progress for the Assessment Year 2008-09. But the assessee for the year under consideration has challenged the direction of the Learned CIT (A) to verify whether such guarantee fee relates to the capital working progress. As the assessee did not challenge such direction of the Learned CIT(A) for the assessment Year 2008-09 before the ITAT, it implies that such direction has reached to its finality for that assessment year. Therefore, there was no dispute for the ITAT for the Assessment Year 2008-09 for the direction issued by the Learned CIT(A). Accordingly, it cannot be inferred that the order of the Learned CIT(A) for the Assessment Year 2008-09 has merged with the order of the Learned ITAT insofar the direction issued by the Learned CIT(A) to verify the claim of the assessee for the guarantee fees whether such fees relates to the capital work in progress. Accordingly, it cannot be said that the issue raised by the assessee is a covered issue by the order of the ITAT in the own case of the assessee for the Assessment Year 2008-09 as contended by the ld. AR for the assessee. In view of the above and after considering the facts in totality, the grounds of appeal of the assessee and the Revenue are dismissed. 6.1. Though the Ld. CIT(A) directed to verify the certificate filed during the appellate proceedings that the loans on which guarantee fees was paid were utilized for construction of power plants at that time and there was no capital work-in-progress in respect of such loans during the Financial Year 2012-13. Both Ld. assessee counsel as well as the Ld. D.R. could not place on record what is the giving effect order passed by the A.O. thereafter, pursuant to the direction of the Ld. CIT(A). Therefore this ground no. 2 is also set aside to the file of the Assessing Officer for proper verification and adjudication and thus this ground is partly allowed. 7. Regarding Ground No. 3 & 3.1 namely disallowance of prior period expenses of Rs. 73,50,000/- and prior period income of Rs. 1,10,000/- 7.1. At the time of hearing of the above appeals the Ld. Counsel appearing for the assessee submitted before us that the Coordinate I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 10 Bench in ITA Nos. 2885 & 2886/Ahd/2015 for A.Ys. 2010-11 & 2011-12 in the case of Gujarat Energy Transmission Corp. Ltd. has set-aside the identical issue to the file of the Ld. AO. On this aspect he has drawn our attention to Page 12 of the said order filed before us. 7.2. Ld. D.R. appearing for the Revenue, could not controvert the above submission of the assessee. 8. We find that Coordinate Bench of this Tribunal in ITA Nos. 2885/Ahd/2015 & Ors. on identical issue disposed of the ground by remitting the same to the file of the Ld. AO to adjudicate de novo with the following observation: “12. During the course of assessment, the Assessing Officer noticed that assessee company has shown prior period income of Rs. 130.05 lacs after adjustment of prior period expenses for Rs. 408.01 lacs. On query, the assessee has explained that all expenditure booked under this head crystallized in the hands of the company only during the year under consideration therefore same expenditure cannot be added back. The Assessing Officer has not accepted the submission of the assessee stating that assessee was following mercantile system of accounting in which the expenses related to the prior period were not an allowable expenses. Therefore, the prior period expenses amounting to Rs. 408.01 lacs was disallowed and added to the total income of the assessee. 13. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee stating that assessee has not made any submission showing that the prior period income was crystallized in the previous year relevant to the assessment year under consideration. 14. During the course of appellate proceedings before us, the ld counsel has submitted that similar issue in the case of Group concern Gujarat Urja Vikas Nigam Ltd. was adjudicated by the Co-ordinate Bench of the ITAT vide ITA No. 996/Ahd/2011 for assessment year 1988-89 dated 31 st May, 2017 and the issue was remanded back to the file of Assessing Officer for deciding afresh in the light of the decision of Hon’ble High Court in the case of PCIT vs. Adani Enterprises Ltd. in Tax Appeal No. 573 of 2016. The ld. Departmental Representative was fair enough not to controvert these undisputed facts and findings of Co-ordinate Bench. I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 11 15. With the assistance of ld. representatives, we have gone through the decision of Co-ordinate Bench of ITAT in the case of Group concern Gujarat Urja Vikas Nigam Ltd. vs. ACIT for assessment year 1988-89 wherein similar issue has been set aside to the file of Assessing Officer for adjudicating afresh according to the direction laid down by the Hon’ble Gujarat High Court in the case of Adani Enterprises Ltd. in Tax Appeal No. 573 of 2016. The relevant part of the decision of the Co-ordinate Bench in the Gujarat Urja Vikas Nigam Ltd. supra as cited above is reproduced as under:- “6. We have carefully heard the rival submissions and perused the orders of the authorities as well the case-laws referred. The assessee is aggrieved by the disallowance of prior period expenses of Rs.53.53crores as per Ground No.4 of its appeal. The disallowance has been made on the ground that the expenses under various heads as noted in the assessment order pertained to earlier years and the assessee which is following system of accounting should have made provision for expenses in those respective years and claimed them as deduction. We have gone through the break-up of the expenses as noted in para-8 of the assessment order and observe that certain expenses declared under the head 'other adjustments Rs.30.75 crores'; 'other charges Rs.79.34 lakhs'; 'depreciation under provided Rs.7.86 crores' etc. are ostensibly vague and does not indicate the nature of claim with sufficient particularity obscure. We simultaneously note that assessee is a State Government Undertaking and its accounts are subjected to review by CAG and therefore it cannot be postulated that there was any deliberateness in not furnishing relevant details before the revenue authorities. The bonafides of the Assessee is also augmented by the facts that the Assessee has reported staggering carry forward losses in its returned income. Thus, there is no immediate tax advantage accrued to the assessee by the claim of impugned prior period expenses per se. We therefore deem it expedient to restore the issue back to the file of AO for examining the issue de novo after verifying facts as may be considered necessary and expedient in accordance with law. The AO shall bear in mind the ratio laid down by the Hon'ble Gujarat High Court in the case of Adani Enterprises Ltd. (supra) while adjudicating the issue. Needless to say, reasonable opportunity shall be provided to the assessee while adjudicating the issue. Hence, all the contentions of the assessee are kept open. The issue raised as per Ground No.4 is thus set aside to the file of AO in terms of directions noted above. As a result, Ground No.4 is allowed for statistical purposes.” In the light of the decision of Co-ordinate Bench as cited above, we restore this issue to the file of Assessing Officer for deciding de-novo after verification the facts and material as per the ratio laid down by the Hon’ble Gujarat High Court in the case of above cited case of Adani I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 12 Enterprises Ltd. As a result, this ground of appeal of the assessee is allowed for statistical purposes. ” 8.1. Respectfully following the order passed by the Coordinate Bench of this Tribunal we are disposing of these grounds by setting aside the issue to the file of the Ld. AO for de novo adjudication by giving an opportunity of being heard to the assessee and upon considering the evidence which the assessee may choose to file at the time of hearing of the case. These ground nos. 3 & 3.1 are hereby allowed for statistical purposes. 9. The Fourth ground namely that no deduction be allowed on account of dividend income, being an exempt income, while computing the Book Profit under section 115JB of the Act. The Ld. Counsel submitted that the ld. CIT(A) has issued a direction to the A.O. to include the dividend income for computing book profit under 115JB. The Ld. CIT(A) failed to appreciate that the assessee itself while computing the book profit of Rs. 1,00,31,03,376/- has included the dividend income of Rs. 10,73,61,000/- in the above figure, which can be established on the perusal of the audited financial statement filed before the Tribunal. 9.1. We have considered the above submission of the assessee as this case is already remanded back to the file of the Assessing Officer for verification for the earlier three issues under consideration for the Assessment Year 2013-14, this issue is also remanded back to the file of the Assessing Officer for verification of the same and allow the submission of the assessee, if the same is found to be in order. I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 13 10. The remaining grounds no 5, 6 & 7 namely initiation of penalty u/s. 271(1)(c) and charging of interest u/s. 234B, 234C & 234D which are consequential in nature and does not require any separate adjudication, hence the same are left open. 11. In the result, the appeal filed by the Assessee is allowed for statistical purposes. ITA No. 323/Ahd/2018 Revenue’s appeal for A.Y. 2013-14 12. The Grounds of Appeal raised by the Revenue reads as under: 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in by restricting the disallowance u/s.14A of the Income tax Act, 1961 made by the AO and directed the AO to recompute the disallowance as the disallowance made by the Assessing Officer was as per the formula given in Rule-8D for deriving proportionate interest disallowance. In the rule there is nowhere mentioned to reduce the interest portion which is related to business purposes. In Rule 8D the formula is given for deriving proportionate interest disallowance and the AO had already had made computation of disallowance u/s.14A read with rule 8D accordingly. 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to allow the Guarantee fee after verification disregarding the applicable statutory provisions contained under section 37 of the I.T. Act which do not allow any expenditure of capital nature.". 3. "On the facts and in the circumstances of the case and in law, without following the ratio taken earlier in the case of M/s.Dakshin Gujrat Vij Co. Ltd. and other subsidiary companies of the assessee, the ld. CIT(A) erred in deleting the addition of Rs. 3750 lacs being 15% of capital grant received by the assessee which was neither reduced from the cost of capital assets nor offered portion of it as revenue receipts as treatments of grants/ subsidies given by the subsidiary companies in their accounts, but taken to 'reserve and surplus' account and utilized in investment activities." 4. "On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in directing the Assessing Officer to treat the interest income of Rs. 62.67 lacs and miscellaneous income of 270.83 lacs as business income instead of income from other sources without appreciating that the nature of the income is of purely interest and not from any activities of business or profession." 5. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that adjustment made on account of disallowance u/s 14A of the Act in computation of Book Profit u/s 115JB of the Act is not as per law without appreciating that the amount disallowable under section 14A is covered under I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 14 clause (f) of Explanation 1 to section 115JB(2) and, thus, said amount has to be added back while computing amount of book profits?" 6. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in by deleting the addition on account of prior period expenses and income amounting to Rs.74,60,000/- made by the AO without appreciating the fact that assessee is following the mercantile system of accounting in which the expenses/income related to the prior period are not an allowable expense and also in view the latest decision of the Hon'ble High Court in Kerala in the case of Shree Bhagawathy Textiles Ltd vs. Assistant Commissioner of Income-tax (2011) 199 Taxman 14 (Ker.)" 7. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in by deleting the addition on account of capital grants amounting to Rs.37,50,00,000/- made by the AO without appreciating the finding of AO" 8. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. 13. Ground No. 1 namely disallowance u/s. 14A and Ground no. 2 namely Guarantee Fees allowed as revenue expenditure which are already set aside to the file of the Assessing Officer by order in ITA No. 281/Ahd/2018 of this Bench. Therefore these two grounds filed by the Revenue are partly allowed. 14. Ground No. 3 deleting the addition of Rs. 37.50 crores being 15% of capital grant received by the assessee. It is submitted by the Ld. Counsel that the assessee has not received any fresh grant from Government of Gujarat during the Financial Year, hence the assessee has not offered any income on account of receipt of grant in the Profit and Loss Account. However the Ld. A.O. without appreciating the vital fact of non-receipt of grant made an addition on the wrong premises that the assessee should have offered 15% out of total grant of 250 crores which works out to Rs. 37.50 crores and added to the total income of the assessee. I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 15 14.1. Ld. Counsel further submitted that this issue is now in settled in favour of the assessee by the Hon’ble High Court of Gujarat in assessee’s own case for A.Y. 2010-11 filed by the Revenue in Tax Appeal No. 63 of 2020 vide judgment dated 17-02- 2020 wherein it was held as follows: “....9 So far as question No.2[c] proposed by the Revenue is concerned, the Assessing Officer in the assessment order has stated that the assessee has not received any grant of subsidy during the year under consideration but the subsidy or grant which was received in the earlier years was to be considered as income or to be reduced from the cost of assets. Therefore, the Assessing Officer estimated 15% of grant of Rs.2500 Lac which worked out at of Rs.3750 Lac as income of the assessee. 10 The assessee, therefore, being dissatisfied, filed an appeal before the CIT(A). The CIT(A) deleted the addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, and therefore, such grants cannot be reduced from cost of fixed asset of the assessee on the basis of estimate. 11 The Revenue, therefore, went in appeal before the Tribunal and the Tribunal confirmed the order passed by the CIT(A) by holding as under: “28. We have heard the rival contention and produced the material on record on this issue. During assessment, the assessing officer has stated that the assessee has not received the grant or subsidy during the year but was of the view that the subsidy or grant which was received in earlier years was to be taken to the revenue or to be reduced from the cost of assets. Therefore, the assessing officer has estimated 15% of grant of Rs. 2500 lacs which worked out at Rs.3750 lacs as income of the assessee. The Ld. CIT(A) has deleted the aforesaid addition holding that the assessee has not acquired an fixed assets on which depreciation has been claimed, therefore, such grants cannot be reduced from cost of fixed asset of the assessee company. With the assistance of ld. Authorized representatives, we have gone through the material on record pertaining to the submission of the assessee stating that the assessee has not received any grant during the year and the grants received originally from the Govt. of Gujarat were apportioned against the subsidiary companies appropriate basis. In F.Y.2007-08, the State Government vide various GRS decided to convert the grant given during the F.Y. 2005-06 to 2007-08 for implementation of Jyoti Gram Yojna (JGY) into equity share capital. Accordingly, the total grants received during the aforesaid financial years were allocated among the four distribution companies for I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 16 implementation of the aforesaid scheme of the State Government. In view of the above facts and circumstances, we do not find any infirmity with the decision of the Ld. Therefore, the aforesaid grants received cannot be treated as income of the assessee company. Accordingly, this ground of the appeal is dismissed.” 12 We are in agreement with the concurrent finding of fact arrived at by the CIT(A) as well as the Tribunal as the assessee did not acquire any fixed assets on which depreciation has been claimed, and therefore, grants cannot be reduced from cost of fixed asset of the assessee. Therefore, appeal stands dismissed qua question No.2[c] proposed by the Revenue. 14.2. Respectfully following the Jurisdictional High Court judgment, we hereby delete the addition made by the Assessing Officer and the Grounds raised by the Revenue is hereby rejected. 15. Ground No. 4 namely treatment of interest income of Rs. 62.67 lacs and miscellaneous income of Rs. 270.83 lacs as “business income” instead of “income from other sources”. The Ld. Counsel submitted that his issue is also covered against the Revenue’s appeal before the High Court of Gujarat in Tax Appeal No. 63 of 2020 wherein it was held as follows: 13 With regard to question No.2[d], the Assessing Officer noticed that as per Schedule 14, the assessee has shown other income consisting of interest on loan and advances, incentives from CPSU, etc. The Assessing Officer was of the view that this income was to be assessed as income from other sources instead of business income shown by the assessee. 14 On appeal, the CIT(A) as well as the Tribunal held that the interest income is required to be treated as business income instead of income from other sources. The Tribunal in its order observed as under: “10 We have heard the rival contentions and perused the material on record on this issue. The assessing Officer has treated the aforesaid income under the head income from other sources without controverting the submission of the assessee on the basis of which it was claimed that these income were of the nature of business income as elaborated in para seven of this order. The ld. CIT(A) has decided the issue in favour of the assessees taking that this issue was decided in favour of the assessee for assessment year 2009-10. During the course of appellate proceedings, the I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 17 Revenue has failed to controvert the aforesaid contention and the findings of the ld. ClT(A),therefore after considering the material fact that interest earned on loan and advances from deposit placed with Mega Power Project toward sits sharing of power and interest of UL pool account received from M/s. Power Grid Corporation India Ltd were directly related to the business of the assessee ,therefore, this ground of appeal of the Revenue stands dismissed.” 15 In view of above findings of acts arrived at by the Tribunal that interest earned by the assessee was directly related to the business of the assessee, no question of law much less substantial question of law arises. Therefore, appeal stands dismissed qua question No.2[d]. 15.1. Respectfully following the Jurisdictional High Court judgment which has confirmed Tribunal’s decision in assessee’s own case, we hereby held that the interest income and miscellaneous income earned by the assessee were directly related to the business of the assessee and assessable as “business income” only and not as “income from other sources”. Thus the Ground no. 4 raised by the Revenue is hereby rejected. 16. Ground no. 5 namely adjustment made on account of disallowance u/s. 14A to be added in the computation of book profit u/s. 115JB of the Act. Ld. Counsel submitted that this issue is also held against the Revenue by the High Court of Gujarat in Tax Appeal No. 63 of 2020 as follows: “....4 The question No.2[b] proposed by the Revenue is with regard to deleting the addition under Section 14A of the Act, 1961 while computing book profit under Section 115JB of the Act, 1961. The Assessing Officer while computing taxable income under Section 115JB of the Act, 1961 also added addition made under Section 14A of the Act, 1961 to the book profit. 5 The assessee being aggrieved by the addition made by the Assessing Officer under Section 14A while computing book profit of the assessee under Section 115JB of the Act, 1961 preferred an appeal before the CIT(A). The CIT(A), however, deleted addition made in the book profit on the ground that no addition could have been made in I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 18 view of the decision of this Court in the case of Alembic Ltd (Tax Appeal No.1249 of 2014) and the provisions of sub - sections (2) and (3) of Section 14A cannot be made applicable to clause (f) of Explanation to Section 115JB of the Act, 1961. 6 The Revenue, therefore, went in appeal before the Tribunal and the Tribunal relying upon the decision of the Special Bench of the ITAT in the case of ACIT vs. Vineet Investment vide 165 ITD 27 (Delhi) and the decision in Alembic Ltd upheld the order passed by the CIT(A). 7 The issue as to whether the addition made under Section 14A of the Act, 1961 while computing book profit under Section 115JB of the Act, 1961 is no more res integra. Accordingly, this Court in the case of Principal Commissioner of Income Tax vs. Gujarat Fluorochemicals Ltd [Tax Appeal No.28 of 2019 decided on 17 th June 2019] has dismissed the appeal filed by the Revenue by holding as under: “22. The third question proposed by the revenue is in context with the adjustment made on account of the disallowance under section14A in computing the book profit. In this context, the findings recorded by the ITAT are as follows: 17. Next common issue involved in both years is, whether the amount disallowed under section 14A read with rule 8D deserves to be added back in the book profit for the purpose of section 115JB. In other words, whether the additions which have been confirmed by the Tribunal at Rs.1.55 crores in the assessment year 201213 and Rs.75 lakhs in the assessment year 201314, deserves to be added back in the book profit computed for the purpose of section 115JB. 17.1 The ld. Counsel for the assessee at the very outset contended that this issue is covered in favour of the assessee by the judgment of Hon’ble Gujarat High Court in the case of CIT Vs. Alembic Ltd. in Tax Appeal No.1249 of 2014 as well as decision of Hon’ble Bombay High Court in the case of CIT Vs. Bengal Finance & Investment P. Ltd. in Tax Appeal No.337 of 2013. He placed on record copies both these decisions. Apart from the above, he placed upon reliance Special Bench decision of the ITAT in the case of CIT Vs. Vireet Investment P. Ltd. 165 ITD 27. On the other hand, ld. CITDR relied upon the order of DRP. 18. We have duly considered rival contentions and gone through the record carefully. We find that ld. DRP has relied upon the order of the ITAT, Mumbai in the case of DCIT Vs. Viraj Profiles Ltd., (2016) 46 ITR (Trib) 0626 (Mum) and held that addition required to be made in the book profit could be calculated as per Rule 8D of the Income Tax Rules. The ld. DRP thereafter made reference to decision of Hon’ble Delhi High Court in the case of CIT Vs. Geotze India Ltd., 361 ITR 505. According to the ld. DRP, this I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 19 decision has been considered by the Special Bench in the case of Vireet Investment P. Ltd. (supra) but placed reliance upon Hon’ble Bombay High Court in the case of Vodafone India Services P. Ltd. ACIT, 361 ITR 0531 (Bom) and held that DRP is not bound by the ratio laid down by the Special Bench. The discussion made by the DRP on this issue in the assessment year 201314 reads as under: “10.3 In the case of Viraj Profiles Ltd. [2015] 64 taxmann.com 52 (Mum Trib), the Hon’ble Bench has elaborately discussed the issue and held that the disallowance is liable to be calculated as per Rule 8 D of the Rules. After discussing the decisions which have also been relied on by the appellant, the Hon’ble Bench has concluded that; “In view of our foregoing discussion, we find no infirmity with the orders of the AO and we hold that the AO has rightly disallowed the expenditure of Rs.73,07,018/by invoking the provisions of Section 14a of the Act read with the Rule 8D of Income Tax Rules, 1962 for computing book profit u/s.115JB(2) of the Act read with clause (f) to Explanation 1 to clause 115JB(2) of the Act. We, therefore, set aside the orders of the CIT(A) and restore the orders of the AO. We order accordingly. In the case of CIT (Central-II) Vs. Goetze (India) Limited, the Hon’ble Delhi High Court has in ITA No.1179/2010 vide order dated 09.12.2013, held that the disallowance u/s.14A is to be taken into consideration for the purposes of calculating book profits u/s.115JB. The relevant paras of the judgment are reproduced below. “36. By order dated 16th May, 2012, the following substantial questions of law were framed in the present appeals:” (i) Whether the Income Tax Appellate Tribunal was right in holding that while computing book profit under Section 115JA (sic. Section 115JB) of the Income Tax Act, 1961, no disallowance under Section 14A was required to be made? Learned counsel for the respondents-assessee, during the course of hearing, has fairly conceded that the first question has to be answered in favour of the Revenue and against the assessee in view of specific provisions in the Explanation 1 below Section 115JB(2) clause (f). The Assessing Officer it is stated had made an addition of Rs.88,292/- to the book profits towards expenditure incurred having nexus with dividend income, which were exempt under Section 10(33). Recording the said statement, the first question is answered in favour of the appellant-Revenue and against the respondent-assessee.” The assessee has relied upon the judgment of ITAT special bench in the case of Vireet Investment Pvt. Ltd. In this regard, it is pertinent to mention that Hon’ble Bombay High Court in the case I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 20 of Vodafone India Services Pvt. Ltd. Vs. Additional Commissioner of Income Tax & Ors. (2014) 264 CTR 0030 (Bom) : (2013) 96 DTR 0193 (Bom) : (2014) 361 ITR 0531 (Bom) : (2014) 221 Taxman 0166 (Bom); has held that the proceedings before DRP are extension of assessment proceedings. Therefore, they are not bound by the decision of Tribunals unlike CIT(A) as long as the issue is not acceptable on merit and/or the issue is being contested by the department. In this case, the decision of Hon’ble Delhi High Court in the case of Goetze (India) Ltd cited above is also in favour to the department on this issue which also shows that the view of AO confirmed by the Panel is a plausible view. 19. There were contradictory orders at the end of the Tribunal. Therefore, Special Bench was constituted to consider the following question: “Whether expenditure incurred to earn exempt income computed under section 14A could not be added while computing book profit under section 115JB of the Act.” 20. When the Special Bench has considered this question, it was confronted with two decisions of the Hon’ble Delhi High Court diagonally opposite to each other. One referred by the ld. DRP also in the present case, rendered in the case of CIR Vs. Goetze India Ltd. (Supra) and other in the case of Pr. CIT Vs. Bhushan Steel. ITAT, Special Bench has reproduced both these orders in Vireet Investment P. Ltd. (supra) and thereafter it considered as to which decision ought to be followed by a subordinate authority. The department advanced an argument that in the case of Bhushan Steel, Hon’ble Delhi High Court failed to consider subsequent decision of CIT Vs. Goetze India Ltd. (supra). However, the Tribunal after placing reliance upon the decision of Hon’ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd., 88 ITR 192 (SC) and other decisions has held that it is incumbent upon it follow the decision of Hon’ble Delhi High Court in the case of Bhushan Steel. In this case, Hon’ble Delhi High Court has held as under: “ However, Ld. Senior Counsel has relied on the decision in the case of Bhushan Steel Ltd. (supra) wherein it has been held as under: “ ITA 593/2015 PR. CIT .....Appellant Through: Mr. N.P. Sahni, Senior Standing Counsel with Mr. Nitin Gulati, Advocate Versus BHUSHAN STEEL LTD. ...Respondent I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 21 Through: Ms. Kavita Jha, Advocate with Ms. Roopali Gupta, Advocate. ORDER 29.09.2015 ** ** ** ** ** ** 7. Question No.6 concerns deletion of addition of Rs.89,00,000 made by the AO for computation of the income for the purposes of Minimum Alternate Tax (MAT) under section 115JB of the Act. This pertained to the expenditure incurred for earning exempt income under section 14A read with Rule 8D. The ITAT has rightly held that this being in the nature of disallowance, and with Explanation 115JB not specifically mentioning Section 14A of the Act, the addition of Rs.89,00,000 was not justified. The view taken by the ITAT cannot be faulted with. It is consistent with the decision in Apollo Tyres Ltd. V. Commissioner of Income Tax 255 ITR 273 (SC) which held that “the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J.” The Court declines to frame a question on the above issue.” 21. Apart from the above, we have a binding precedent before us – one from Hon’ble jurisdictional High Court and other from the Hon’ble Bombay High Court. The question considered by the Hon’ble Gujarat High Court in the case of Alembic Ltd. (supra) is as under: “ Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that adjustment made on account of disallowance u/s.14A of the Act in computation of book profit u/s. 115JB of the Act is not as per law without appreciating that the amount disallwable under section 14A is covered under clause (f) of Explanation to section 115JB(2) and, thus, said amount has to be added back while computing amount of book profit? 22. The Hon’ble Gujarat High Court has replied this question as under: 7. So far as issue Nos.(iii) and (iv) are concerned, the learned counsel for the assessee has relied on the decision of this court in the case of Commissioner of Income tax-I v. Gujarat State Fertilizers & Chemicals Ltd., reported in (2013) 358 ITR 323 (Gujarat) Where this court has held in paragraph Nos.6 to 6.5 this court has observed as under: I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 22 6. So far as the fourth question is concerned, it pertains to addition of Rs.1,14,43,040/under Section 115JB of the Act being the expenditure estimated on earning of dividend income under Section 14A of the Act. 6.1 The Assessing Officer on referring to the said provision of Section 115JB(2) of the Act added the said amount considering that any amount of expenditure relatable to the income exempted under Section 10 of the Act shall need to be added in the profit shown in the ‘Profit and Loss Account’. When the matter travelled to the CIT (Appeals), since it deleted the addition of Rs.1,14,43,040/while deciding the question No.1, it consequently deleted such addition under Section 115JB of the Act on the ground that this would not serve any purpose. The Tribunal decided the said issue as follows: “94. We have considered the rival submissions and we find that similar issue was raised by Revenue as per ground No.3 above in respect of regular assessment of income and while deciding that ground, we have already upheld that disallowance of Rs.5 lakh in respect of administrative expenses will meet the ends of justice and no disallowance is called for in respect of interest expenditure. Hence, for the purpose of computing book profit u/s.115JB of the Act also, we hold accordingly and confirm the addition of Rs.5 lakh. This ground of Revenue’s appeal is partly allowed.” As rightly held by both, the CIT (Appeals) and the Tribunal, this issue has a direct correlation with the first question. It was argued by the Revenue that while computing the book profit under Section 115JB of the Act, the disallowance of interest expenditure on exempt income was wrongly negatived by both the authorities on the ground that it was not the liability for expenses, but a liability relating to assets. We find no fault in the approach adopted by both the authorities. The addition under section 115JB of the Act of a sum of Rs.1,14,43,040/-when was made as an expenditure estimated on earning of dividend income under Section 14A of the Act, without reiterating the rationale of confirming deletion of such amount as has been elaborately done at the time of deciding question No.1, this deletion requires to be confirmed.” 8. Taking into consideration the evidence on record and considering the decision of this court in the case of Commissioner of Income tax-I I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 23 vs. Gujarat State Fertilizers & Chemicals Ltd. (supra), we are of the opinion that issue Nos.(iii) and (iv) required to be answered in favour of the assessee and against the revenue. In that view of the matter, we answer questions (iii) and (iv) referred to us in favour of the assessee and against the revenue. The appeal ofrevenue is dismissed. 23. Similarly, Hon’ble Bombay High Court has formulated following question in the case of Bengal Finance & Investments P. Ltd. (supra) and replied as under: (b) Whether on the facts and in the circumstances of the case, and in law, the ITAT is justified in deleting the addition of Rs.78,84,387/- under clause (f) of Explanation 1 to Section 115JB relying upon the decision in the case of Goetze (India) Ltd. Vs. CIT (2009) 32 SOT 101 (Del.), which has been followed by ITAT, Mumbai in the cases referred to in para 5 of the impugned order without appreciating that the above decision in the case of Goetze (India) Ltd. was rendered by the ITAT, Delhi Bench on completely distinguishable set of facts, peculiar to the said case?” ...... 4. So far as question (b) is concerned, the impugned order of the Tribunal followed its decision in M/s. Essar Teleholdings Ltd. Vs. DCIT in ITA No.3850/Mum/2010 to held that an amount disallowed under section 14A of the Act cannot be added to arrive at book profit for purposes of Section 115JB of the Act. The Revenue’s Appeal against the order of the Tribunal in M/s. Essar Teleholdings (supra) was dismissed by this Court in Income Tax Appeal No.438 of 2012 rendered on 7th August, 2014. In view of the above, question (b) does not raise any substantial question of law. 24. Respectfully following the above decision, we hold that no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. We allow this ground of appeal in both the years and delete the additions.” 23. We take notice of the fact that in context with the third proposed question, the ITAT placed reliance on the following decisions: (1)CIT Vs. Alembic Ltd. (Tax Appeal No.1249/2014) (2)CITI Vs. Gujarat State Fertilizers & Chemicals Ltd. (2013) 358 ITR 323 24. The issue is squarely covered and in our opinion, no error could be said to have been committed by the ITAT in taking the view that no addition in the book profit can be made on the basis of the calculations worked out under section14A of the Act.” I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 24 8 In view of above, this Tax Appeal stands dismissed so far as question No.2[b] is concerned 16.1. Respectfully following the Jurisdictional High Court judgment, the ground raised by the Revenue to include the disallowance u/s. 14A for the purpose of computation of book profit u/s. 115JB of the Act is hereby deleted and the Ground no. 5 raised by the Revenue is hereby dismissed. 17. Ground no. 6 namely prior period expenses and prior period income. This issue is already set aside to the file of the Assessing Officer for de novo adjudication vide Para 8.1 of this order in ITA No. 281/Ahd/2018. Thus the Ground No. 6 raised by the Revenue is allowed for statistical purposes. 18. Ground no. 7 namely capital grant of Rs. 37.50 crores which is repetition of Ground no. 3 which is already dismissed vide Paragraph 14 to 14.2 of this order following Jurisdictional High Court Judgment in assesee’s own case. Thus the ground no. 7 is also dismised. 19. In the result, the appeal filed by the Revenue in ITA No. 323/Ahd/2018 is partly allowed for statistical purpose. 20. ITA No. 282/Ahd/2018 is filed by the Assessee and ITA No. 324/Ahd/2018 is filed by the Revenue have raised identical grounds except change in figures of disallowance. Thus our decisions made in ITA No. 281/Ahd/2018 and ITA No. 323/Ahd/2018 will be squarely applicable for the present appeals relating to Assessment Year 2014-15. I.T.A Nos. 281 & 323/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Gujarat urja Vikas Nigam Ltd. vs. DCIT 25 21. In the result, the appeal filed by the Assessee in ITA No. 282/Ahd/2018 and the appeal filed by the Revenue in ITA No. 324/Ahd/2018 are partly allowed for statistical purposes. Order pronounced in the open court on 31-07-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 31/07/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद
AI Insights
The case involves cross-appeals by Gujarat Urja Vikas Nigam Ltd. (the Assessee) and the DCIT, Circle-1(1)(1), Baroda (the Revenue) against the appellate orders passed by the Commissioner of Income Tax (Appeals)-1, Vadodara. The appeals pertain to the assessment years 2013-14 and 2014-15, focusing on various disallowances made under the Income Tax Act, 1961, including disallowances under section 14A, treatment of guarantee fees, and adjustments in book profit under section 115JB. The Tribunal's decision referenced previous judgments and the specific provisions of the Income Tax Act to arrive at its conclusions.
