RELIANCE INFRASTRUCTURE LTD, MUMBAI V. ADDL CIT RG 10(1), MUMBAI

ITA 3407/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8025 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AWUNGSHI GIMSON
• Keywords: Depreciation; Additional depreciation; Earning of tax free income; Question of law; Revised return; Unabsorbed depreciation; Revenue expenditure; Capital expenditure
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4345/MUM/2015 (ASSESSMENT YEAR: 2011-12) D C I T - 14(3)(1) VS. M/S RELIANCE INFRASTRUCTURE LT D. ROOM NO. 455, 4TH FLOOR AAYAKAR BHAVAN M.K. MARG, MUMBAI 400020 H BLOCK, 1ST FLOOR, D.A.K.C. KOPARKHAIRANE NAVI MUMBAI 400710 PAN AACR7446Q APPELLANT RESPONDENT ITA NO.3407/MUM/2015 (ASSESSMENT YEAR: 2011-12) M/S RELIANCE INFRASTRUCTURE LT D. VS. D C I T - 14(3)(1) DEVIDAS LANE, NEARL MTNL OFF. SVP ROAD, BORIVALI (W) MUMBAI 400103 ROOM NO. 455, 4TH FLOOR AAYAKAR BHAVAN M.K. MARG, MUMBAI 400020 PAN AACR7446Q APPELLANT RESPONDENT APPELLANT BY: SHRI AWUNGSHI GIMSON RESPONDENT BY: SHRI JITENDRA SANGHVI & SHRI DEEPAK JAIN DATE OF HEARING: 28.11.2017 DATE OF PRONOUNCEMENT: 20.12.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF THE CIT(A) DATED 28.04.2015. 2. IN ASSESSEES APPEAL THE ASSESSEE HAS NOT PRESSED G ROUND NO.1. THEREFORE THE ONLY GROUND REMAIN FOR OUR DISPOSAL R EADS AS UNDER: - 2. THE LEARNED CIT(A) ERRED DIN CONSIDERING ALL IN VESTMENTS (EXCLUDING INVESTMENT IN SUBSIDIARIES) CAPABLE OF E ARNING TAX FREE INCOME WHETHER THEY HAVE YIELDED TAX FREE INCOME OR NOT FOR COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D. ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 2 YOUR APPELLANT SUBMITS THAT ONLY THOSE INVESTMENTS (EXCLUDING INVESTMENT IN SUBSIDIARIES) WHICH HAD ACTUALLY YIEL DED TAX FREE INCOME DURING THE YEAR OUGHT TO HAVE BEEN CONSIDERE D WHILE WORKING OUT DISALLOWANCE U/S. 14A R.W. RULE 9D. 3. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSI DERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT SIMILAR ISSUE RELATING TO THE DELETION OF DISALLOWANCE MADE UNDER SECTION 14A R.W. RULE 8D HAS ALSO BEEN TAKEN BY THE REVENUE BY WAY O F GROUND NOS. 3 & 3.1 IN THEIR APPEAL, WHICH READ AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DIRECTING THE AO NOT TO CONSIDER THE INTER EST EXPENSES FOR WORKING OUT THE DISALLOWANCE U/S 14A R.W. RULE 8D. 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO EXCLUDE THE INVESTMENT S MADE IN SUBSIDIARY COMPANIES BY THE ASSESSEE WHILE WORKING OUT THE AVERAGE INVESTMENT @ 0.5% AS MANDATED BY THE RULE 8 D OF THE INCOME TAX RULES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS EARNED EXEMPT INCOME FROM THE INVESTMENT IN SUB SIDIARY COMPANIES. 4. SINCE THIS ISSUE INVOLVED IN BOTH THE APPEALS RELA TE TO THE DISALLOWANCE MADE UNDER SECTION 14A, WE THEREFORE D ECIDED TO DISPOSE OFF THIS ISSUE FIRST INSTEAD OF DECIDING THE OTHER GROU ND TAKEN BY THE REVENUE IN ITS APPEAL. THE FACTS RELATING TO THE DISALLOWAN CE MADE UNDER SECTION 14A R.W. RULE 8D ARE THAT THE ASSESSEE HAS COMPUTED THE DISALLOWANCE UNDER SECTION 14A AT ` 39,12,99,320/- IN THE ORIGINAL RETURN OF INCOME CONSIDERING ALL THE INVESTMENTS CAPABLE OF EARNING TAX FREE INCOME WHICH ARE EXEMPT UNDER SECTION 14A. SUBSEQUENTLY, DURING THE COURSE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED REVIS ED COMPUTATION OF DISALLOWANCE UNDER SECTION 14A AT ` 86,27,620/-. FURTHER, BY WAY OF ANOTHER SUBMISSION HE REDUCED THE DISALLOWANCE UNDER SECTIO N 14A TO ` 50,20,000/- RELYING ON THE DECISION OF IN THE CASE OF IT VS. RE LIANCE UTILITIES AND POWER LTD. (313 ITR 340) BUT THE AO DISALLOWED THE SUM OF ` 39,12,93,402/- ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE. THE ASSE SSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) ASSESSEE SUBMITTED TH AT DURING THE YEAR THE ASSESSEE RECEIVED FOLLOWING EXEMPT INCOME: - ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 3 SR. NO. PARTICULARS AMOUNT ( ` `` ` ) EXEMPT U/S. 1 INTEREST ON 6.85%IIFCL TAX FREE BONDS 6,85,00,000 10 2 DIVIDEND ON SHARS 39,60,000 10(34) 3 DIVIDEND ON MUTUAL FUND UNITS 105,45,85,293 10(35) TOTAL 112,70,45,293 5. THE ASSESSEE HAS WORKED OUT THE DISALLOWANCE AT ` 39,12,93,402/- TAKING INTO ACCOUNT ALL THE INVESTMENTS WHETHER THE Y YIELDED TAX FREE INCOME OR NOT. IT WAS SUBSEQUENTLY REVISED BY THE A SSESSEE TO ` 86,27,620/- AND ULTIMATELY ` 40,20,000/-. IT WAS POINTED OUT THAT THE CIT(A) IN A.Y. 2010-11 VIDE HIS ORDER DATED 04.12.2019 PARTIALLY D ECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DIRECTING THE AO THAT INT EREST EXPENSES NEED NOT BE CONSIDERED FOR DISALLOWANCE UNDER RULE 8D(2)(II) SINCE ASSESSEES OWN FUNDS ARE MORE THAN THE INVESTMENT. THE CIT(A) ALSO HELD IN THAT YEAR THAT FOR THE PURPOSE OF COMPUTATION OF DISALLOWANCE UNDE R RULE 8D(2)(III) BEING 0.5% OF THE AVERAGE VALUE OF INVESTMENT, THE INVEST MENT IN THE SUBSIDES NEED NOT BE CONSIDERED BUT DID NOT ACCEPT ASSESSEE S CONTENTION THAT ONLY THOSE INVESTMENTS ON WHICH TAX FREE INCOME HAS BEEN RECEIVED DURING THE YEAR FOR THE PURPOSE OF THE DISALLOWANCE. IT WAS AL SO NOTED BY THE CIT(A) THAT DURING A.Y. 2010-11 THE ASSESSEE HAS RAISED AD DITIONAL GROUND THAT THE DISALLOWANCE OF INTEREST EXPENSES UNDER RULE 8D (2)(II) AND 8D(2)(III) SHOULD NOT BE WAIVED WITH RESPECT TO THE INVESTMENT WHICH ARE MADE IN SUBSIDIARY COMPANIES OF THE ASSESSEE. THE CIT(A) DU RING A.Y. 2010-11 FOLLOWING THE DECISION OF GARWARE WALL ROPES LTD. V S. ADDL. CIT 46 TAXMANN.COM 18 AND J.M. FINANCIAL LTD. VS. ADDL. CI T IN ITA NO. 4521/MUM/2012 DATED 26.03.2014 DIRECTED NOT TO DISA LLOW UNDER RULE 8D(2)(II) AND 8D(2)(III) IN RESPECT OF INVESTMENT I N SUBSIDIARY COMPANIES AS THEY WERE MADE FOR CONTROLLING STOCK. IT WAS ALSO D IRECTED BY THE CIT(A) IN A.Y. 2010-11 THAT NO INTEREST DISALLOWANCE IS TO BE MADE IN THIS REGARD AS THE ASSESSEES RESERVES AND SURPLUS ARE MORE THAN A SSESSEES TOTAL INVESTMENT BUT IT WAS HELD THAT HOWEVER, THE DISALL OWANCE OF 0.5% OF THE AVERAGE INVESTMENT CAN BE MADE FOR ADMINISTRATIVE E XPENSES. THE CIT(A) ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 4 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND FOLLOWING THE DECISION IN A.Y. 2010-11 HELD AS UNDER: - 6.4 I HAVE CONSIDERED APPELLANT'S SUBMISSIONS. IN THIS CASE APPELLANT HAD SUO MOTTO ORIGINALLY DISALLOWED RS.39 ,12,93,402/- U/S.14A AND LATER SUBMITTED SUBMISSIONS DURING THE ASSESSMENT PROCEEDINGS REDUCING THE DISALLOWANCE U/S.14A RS.86 ,27,6207- AND FURTHER ANOTHER SUBMISSIONS WAS SUBMITTED THAT DISA LLOWANCE SHOULD BE RS.50,20,000/- RELYING ON THE DECISION OF CIT VS . RELIANCE UTILITIES AND POWER LTD. 313 ITR 340. 6.4(I) NOW THE ISSUE HAS TO BE CONSIDERED HERE IS W HERE APPELLANT HIMSELF SUO MOTTO HAD DISALLOWED BUT ''LATER BASED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT I.E. CIT VS. RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 THE APPELLANT HAD MODIFIED THE DIS ALLOWANCE WHETHER THIS IS TO BE CONSIDERED. THIS ISSUE HAD CO ME INTO CONSIDERATION OF BOMBAY HIGH COURT IN THE CASE OF C IT VS. PRUTHVI BROKERS AND SHAREHOLDERS 349 ITR 336 WHEREIN IT IS HELD THAT 'IF THE CLAIM OF THE APPELLANT DURING APPELLATE PROCEEDING IS LEGAL IN NATURE THEN THIS CLAIM HAS TO BE CONSIDERED IF NO VERIFICA TION IS REQUIRED ON THESE FACTS.' IN THIS CASE NO FURTHER VERIFICATION IS REQUIRED IN THE FACTS OF THE CASE, HENCE, THIS CLAIM OF THE APPELLANT IS CONSIDERED. 6.4(II) REGARDING DISALLOWANCE U.S.14A, THIS ISSUE HAD COME INTO CONSIDERATION OF CIT(A) 2010-11 WHEREIN IN PARA 10. 3 IT IS HELD AS UNDER: '10.3 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. THE A.O. HAD DISALLOWED RS.37,34,41,170/- U/S.14A. THIS DISALLOWANCE IS FOR THE EXPENDITURE RELATED TO INTEREST AND ADMI NISTRATIVE EXPENDITURE. HOWEVER, WHEN WE EXAMINE APPELLANT'S O WN FUNDS, THE APPELLANT IS HAVING SHARE CAPITAL OF RS.244.92 CROR ES AND RESERVES OF RS. 14366.19 CRORES. THE SHARE CAPITAL AND RESERVES , IN THE APPELLANT'S BALANCE SHEET IS TOGETHER I.E. TOTALLING TO RS.14611 CRORES THE TOTAL INVESTMENT FOR EARNING EXEMPT INCOME IS R S. 10119.57 CRORES. HERE APPELLANT'S OWN FUNDS IS MORE THAN THE INVESTMENTS, HENCE, NO DISALLOWANCE IS REQUIRED FOR INTEREST U/S .14A R.W. RULE 8D(2)(I) IN VIEW OF BOMBAY HIGH COURT DECISIONS IN THE CASES OF RELIANCE UTILITIES AND POWER LTD,. 178 TAXMAN 135, CIT VS. HDFC BANK LTD. ITA NO.330 OF 2012 AND WINSOME TEXTILE IN DUSTRIES LTD. 319 ITR 204 (P&H). HOWEVER THE A.O. IS DIRECTED TO DISALLOW 0.5% OF THE AVERAGE INVESTMENT FOR ADMINISTRATIVE-EXPENSE. DURING APPELLATE PROCEEDINGS THE APPELLANT HAD FILE D ADDITIONAL GROUND STATING THAT DISALLOWANCE U/S.14A AS PER RUL E 8D SHOULD BE MADE CONSIDERING ONLY THOSE INVESTMENT ON WHICH IS TAX FREE INCOME IS RECEIVED DURING THE YEAR. ON THIS ISSUE APPELLAN T HAD RELIED ON THE DECISION OF CHEMINVEST LTD. SPECIAL BENCH. ON CONSI DERING THE ABOVE DECISION, ITAT HELD THAT 'IF THERE IS NO EXEMPT INC OME EARNED, THEN NO ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 5 DISALLOWANCE IS REQUIRED U/S.14A', HOWEVER, IN OUR CASE, THERE ARE TWO INCOMES WHERE APPELLANT HAD EARNED EXEMPT INCOM E AND ANOTHER INVESTMENT APPELLANT HAD NOT EARNED ANY EXEMPT INCO ME. WHEN WE EXAMINE THE CASE OF CHEMINVEST LTD., IN THIS CASE T HERE IS ONLY ONE INVESTMENT IN WHICH NO INCOME IS EARNED, BUT IN OUR CASE IN SOME INVESTMENT THERE IS EXEMPT INCOME EARNED IN SOME IN VESTMENT NO EXEMPT INCOME IS EARNED. HENCE, FACTS ARE DISTINGUI SHABLE IN THIS CASE, THEREFORE, APPELLANT'S CLAIM IS DISMIS'SED ON THIS ISSUE. THE APPELLANT HAD RAISED ADDITIONAL GROUND THAT DISALLO WANCE OF INTEREST AND EXPENSES UNDER RULE (3D(2)(II) AND-8D(2)(III) S HOULD NOT BE MADE WITH RESPECT TO INVESTMENT WHICH ARE MADE IN THE SU BSIDIARY COMPANY OF THE APPELLANT. THE APPELLANT HAD RELIED ON THE D ECISION OF GARWARE WALL ROPES LTD. VS. ADDL. CIT 46 TAXMANNI.COM 18, J . M FINANCIAL LTD. VS. ADDL. CIT ITA NO.4521/MUM/2012 DTD. 26.03. 2014. ON EXAMINATION OF THE ABOVE CASES, THE ITAT HELD THAT INVESTMENTS IN SUBSIDIARY COMPANIES WERE INVESTMENTS WERE MADE FOR CONTROLLING STAKE, NO DISALLOWANCE CAN BE MADE U/S.14A R.W. RUL E 8D(2)(II) AND 8D(2)(III). HENCE, FOLLOWING THE ABOVE DECISIONS, T HE A.O. IS DIRECTED NOT TO DISALLOW UNDER RULE 8D(2)(II) AND 8D(2)(III) . IN CONCLUSION THE A.O. IS DIRECTED THAT NO INTEREST DISALLOWANCE IS TO BE MADE IN THIS CASE AS APPELLANT'S RESERVES AND SURPL US ARE MORE THAN APPELLANT'S TOTAL INVESTMENT. HOWEVER, DISALLOWANCE OF 0.5% OF AVERAGE INVESTMENT CAN BE MADE FOR ADMINISTRATIVE E XPENSES. IN THIS DISALLOWANCE ALSO NO DISALLOWANCE CAN BE MADE ON TH E INVESTMENTS FOR THE SUBSIDIARY COMPANIES. HENCE, THIS GROUND OF APPEAL IS PARTY ALLOWED.' FOLLOWING THE ABOVE DECISION OF CIT(A) IN EARLIER Y EAR, IN THIS CASE SHARE CAPITAL OF THE APPELLANT IS RS.267.47 CRORES, RESERVES & SURPLUS IS RS. 17,400 CRORES. HERE THE INVESTMENT OF RS.12, 584 CRORES IS LESS THAN THE CAPITAL AND THE RESERVES, THEN NO INTEREST CAN BE DISALLOWED IN VIEW OF BOMBAY HIGH COURT DECISIONS IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 AND C IT VS.HDFC LTD. 330 ITR 212. HOWEVER, THE A.O. IS DIRECTED TO COMPU TE 0.5% OF AVERAGE INVESTMENT BUT WHILE COMPUTING 0.5% OF AVER AGE INVESTMENT THE INVESTMENT IN SUBSIDIARY COMPANY IS TO BE EXCLU DED. 6.4(III) FURTHER APPELLANT HAD FILED ADDITIONAL GRO UND IN WHICH APPELLANT CONTENTION IS THAT EVEN INVESTMENT ON WHI CH THERE IS NO TAX FREE INCOME IS EARNED, THIS IS TO BE EXCLUDED FROM CALCULATING 0.5% OF AVERAGE INVESTMENTS. THIS ISSUE HAD COME INTO CONSI DERATION OF CIT(A) IN A.Y.2010-11 IN PARA 10.3 REPRODUCED ABOVE I.E. P ARA 6.4(II). FOLLOWING THE ORDER, GROUND OF APPEAL IS DISMISSED. 6.4(IV) REGARDING SECOND ADDITIONAL GROUND FOR REDU CING THE INVESTMENT IN SUBSIDIARY COMPANY FROM COMPUTING 0.5 % OF AVERAGE INVESTMENT. THIS ISSUE HAD COME INTO CONSIDERATION OF CIT(A) IN A.Y.2010-11 IN PARA 10.3 REPRODUCED ABOVE I.E. PARA 6.4(II) WHEREIN IT IS HELD THAT THIS HAS TO BE EXCLUDED WHILE COMPUTIN G 0.5% OF AVERAGE ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 6 INVESTMENT FOR EXPENDITURE INVOLVED IN ADMINISTRATI VE EXPENSES. THIS GROUND OF APPEAL IS PARTLY ALLOWED. TO SUM UP, THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDE RS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE CIT(A) HAS GIV EN A CLEAR CUT FINDING OF FACT THAT INVESTMENT OF THE ASSESSEE, WHICH IS AMOU NTING TO ` 585 CRORES, IS LESS THAN THE ASSESSEES CAPITAL RESERVE AND ACCORD INGLY FOLLOWING THE DECISION IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (313 ITR 340) AND CIT VS. HDFC BANK LTD. 366 TRIBUNAL 505 DE LETED THE DISALLOWANCE IN RESPECT OF INTEREST BUT DIRECTED TH E AO TO COMPUTE 0.5% OF THE AVERAGE INVESTMENTS AND WHILE COMPUTING THE 0.5 % OF THE AVERAGE INVESTMENTS IN THE SUBSIDIARY COMPANY DIRECTED TO E XCLUDE AND DISMISSED THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE FOR EXC LUDING FROM CALCULATION OF 0.5% OF THE AVERAGE INVESTMENT ON WHICH THERE IS NO TAX FREE INCOME IS EARNED FOLLOWING THE ORDER OF THE CIT(A) FOR A.Y. 2 010-11. THE CIT(A) ALSO FOLLOWING THE ORDER FOR A.Y. 2010-11 DIRECTED THE A O TO EXCLUDE WHILE COMPUTING 0.5% OF THE AVERAGE INVESTMENT EXPENDITUR E INVOLVED IN ADMINISTRATE EXPENSES. 7. WE NOTED THAT AGAINST THE DELETION OF DISALLOWANC E MADE UNDER SECTION 14A THE REVENUE WENT IN APPEAL BEFORE THE T RIBUNAL BY TAKING THE FOLLOWING GROUNDS OF APPEAL IN A.Y. 2010-11: - 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO NOT TO CONSIDE R THE INTEREST EXPENSES FOR WORKING OUT THE DISALLOWANCE U/S. 14A R.W. RULE 8D. 6.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE AO TO EXCLUDE THE INVESTMENTS MADE IN SUBSIDIARY COMPANIES BY THE ASSESSEE WHILE WORKING OUT AVERAGE INVESTMENT @50% AS MANDATED BY THE RULE 8D OF THE IT RULES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS EARNED EXEMPT INCOME FROM THE INVESTMENT IN SUBSIDI ARY COMPANIES. 8. THE ASSESSEE HAS ALSO CAME IN APPEAL BEFORE THE TRI BUNAL BY TAKING THE FOLLOWING GROUND OF APPEAL: - ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 7 2. THE LEARNED CIT(A) ERRED IN CONSIDERING ALL INV ESTMENTS (EXCLUDING INVESTMENT IN SUBSIDIARIES) CAPABLE OF E ARNING TAX FREE INCOME WHETHER THEY HAVE YIELDED TAX FREE INCOME OR NOT FOR COMPUTATION OF DISALLOWANCE U/S. 14A R.W. R.8D. YOUR APPELLANT SUBMITS THAT ONLY THOSE INVESTMENTS (EXCLUDING INVESTMENT IN SUBSIDIARIES) WHICH HAD ACTUALLY YIEL DED TAX FREE INCOME DURING THE YEAR OUGHT TO HAVE BEEN CONSIDERE D WHILE WORKING OUT DISALLOWANCE U/S 14A R.W. R. 8D. 9. THE TRIBUNAL DISPOSED OFF THE GROUNDS OF APPEAL TAK EN BY THE REVENUE BY OBSERVING IN ITA NO. 1422/MUM/2014 VIDE ORDER DATED 02.06.2017 AS UNDER: - 2.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT T HE ASSESSEE HAD WORKED OUT THE DISALLOWANCE U/S 14A OF THE ACT AT R S.37,34,41,170/- IN ITS REVISED RETURN OF INCOME. THE DISALLOWANCE U /S14A WAS REDUCED TO RS.37,34,41,170/- IN THE REVISED RETURN OF INCOM E ON ACCOUNT OF CHANGE IN ASSETS, INVESTMENTS AND INTEREST EXPENSE ON WITHDRAWAL OF THE DEMERGER SCHEME. THE ABOVE DISALLOWANCE WAS WOR KED OUT TAKING ALL INVESTMENTS WHETHER THEY HAVE YIELDED AN Y INCOME DURING THE YEAR OR NOT AND ALSO CONSIDERING INTEREST EXPEN SE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS AS PER THE PROVISIONS OF SECTION 14A OF THE ACT R.W.R. 8D OF THE RULES IN RESPONSE TO WHICH THE ASSESSEE HAD FILED A REVISED COMPUTATION OF FREE INCOME WAS EARNED/RECEIVED DURI NG THE YEAR. THE ASSESSEE HAS SHOWED THE INVESTMENTS ON WHICH EXEMPT INCOME IS RECEIVED AND THOSE INVESTMENTS ON WHICH NO INCOME I S RECEIVED. THE ASSESSEE SUBMITTED THAT DISALLOWANCE OF INTEREST UN DER RULE 8D(2)(II) IS NOT WARRANTED IN THE FACTS OF THE ASSESSEE'S CAS E AS THE ASSESSEE HAD SUFFICIENT AMOUNT OF INTEREST FREE FUNDS AVAILA BLE WITH THEM IN FORM OF SHARE CAPITAL AND RESERVES. THE INTEREST FR EE FUNDS AVAILABLE ARE AS UNDER: - OPENING CLOSING SHARE CAPITAL 226.07 244.92 RESERVES 10,897.88 14,366.19 TOTAL 11,123.95 14,611.11 AS AGAINST THE ABOVE, THE TOTAL INVESTMENTS AS APPE ARING IN THE BALANCE SHEET ARE AS UNDER: - IN CRORES OPENING CLOSING TOTAL INVESTMENTS YIELDING TABLE INCOME (A) 8,487.02 6,263.63 ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 8 ALL TAX FREE INVESTMENTS THAT CAN YIELD TAX FREE INCOME (B) 3,660.08 3,755.94 INVESTMENTS WHICH HAS GIVEN TAX FREE INCOME DURING THE YEAR (INCLUDED IN (B) ABOVE) 1,104.61 1,104.61 TOTAL (A)+(B) 12,147.10 10,019.57 THE APPELLANT RELIES UPON THE FOLLOWING DECISIONS O F THE HIGH COURTS IN SUPPORT OF THEIR CONTENTION THAT IF THE CAPITAL AND RESERVE IS MUCH MORE THAN THE INVESTMENT IT IS PRESUMED THAT THE INVESTM ENT HAS BEEN MADE OUT OF OWN FUNDS AND THEREFORE DISALLOWANCE OF INTEREST UNDER SECTION 14A OF THE ACT CANNOT BE MADE. WE FIND FORC E IN THE ARGUMENT OF LD COUNSEL AND IN THE GIVEN FACTS OF THE CASE WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AN D WE CONFIRM THE ORDER OF CIT(A) . THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 10. DURING THE IMPUGNED ASSESSMENT YEAR, WE NOTED, THE REVENUE HAS COME IN APPEAL BEFORE US TAKING SIMILAR GROUNDS BEI NG GROUND NOS. 3 & 3.1 AS HAS BEEN TAKEN AGAINST THE ORDER OF THE CIT(A) D URING A.Y. 2010-11. DURING THE ASSESSMENT YEAR THE TRIBUNAL HAS GIVEN A FINDING THAT THE ASSESSEE HAS MUCH MORE INTEREST FREE FUNDS AS COMPA RED TO THE INVESTMENT MADE BY THE ASSESSEE. FOR THE IMPUGNED A SSESSMENT YEAR THE CIT(A) HAS GIVEN A CLEAR FINDING THAT THE SHARE CAP ITAL AND RESERVE & SURPLUS OF THE ASSESSEE ARE MUCH MORE THAN THE INVE STMENT MADE BY THE ASSESSEE AND THE CIT(A) HAS DELETED THE DISALLOWANC E FOLLOWING THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 AND CIT VS. HD FC LTD. 330 ITR 212. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 1422 & 1480/MUM/201 5 FOR A.Y. 2010-11 DISMISS THE GROUND NOS. 3 AND 3.1 TAKEN BY REVENUE. 11. NOW COMING TO THE GROUND OF THE ASSESSEE IN ITS APP EAL, WE NOTED THAT THE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS SIMILAR TO THE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN A.Y. 2010-11 IN ITA NO. 1480/MUM/2015 AND WE NOTED THAT THIS TRIBUNAL UNDER PARA 28 OF TH E ORDER DATED 02.06.2017 HELD AS UNDER WHILE DISPOSING OF THIS GR OUND: - ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 9 28. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASS ESSEE STATED THAT THIS ISSUE IS SETTLED BY FOLLOWING TRIBUNALS JUDGE MENT IN THE CASES OF CIT VS. M/S DELITE ENTERPRISES (I.T.A NO. 110 OF 20 09) (BOM), ACB INDIA LTD. VS. ACIT (2015) 62 TAXMANN.COM 71 (DELHI ) & CIT VS. SHIVAM MOTORS (P) LTD. (2015) 55 TAXMANN.COM 262 (A LLAHABAD). IN VIEW OF THE ABOVE THE LEARNED COUNSEL FOR THE ASSES SEE REQUESTED THE BENCH TO SET ASIDE THIS ISSUE BACK TO THE FILE OF T HE AO TO ASCERTAIN THE INVESTMENT GIVING RISE TO TAXABLE INCOME AND NON-TA XABLE INCOME AND ACCORDINGLY, TAXABLE INVESTMENTS CAN BE EXCLUDED WH ILE MAKING DISALLOWANCE. WE ARE IN AGREEMENT WITH THE ARGUMENT OF THE ASSESSEE AND ACCORDINGLY, WE REMAND THIS ISSUE BACK TO THE F ILE OF THE AO. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNA L IN ASSESSEES OWN CASE IN A.Y. 2010-11 IN ITA NO. 1480/MUM/2015 WE SET ASI DE THE ORDER OF THE CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE BACK TO THE FILE OF THE AO TO ASCERTAIN THE INVESTMENTS GIVING RISE TO TAXABLE IN COME AND NON TAXABLE INCOME AND ACCORDINGLY THE TAXABLE INVESTMENT CAN B E EXCLUDED WHILE TAKING THE DISALLOWANCE. WE ALSO NOTED THAT SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SP ECIAL BENCH IN ITA NO. 502/DEL/2012 DATED 16.06.2017 IN WHICH THE SPECIAL BENCH HAS TAKEN SIMILAR VIEW. THUS, THE GROUND TAKEN BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO. 1 IN REVENUES APPEAL READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF RS.17,79, 20,026/- ON ACCOUNT OF REPLACEMENT OF ELECTRICITY METERS, EVEN THOUGH THE IMPUGNED EXPENDITURE IS INHERENTLY CAPITAL IN CHARA CTER AS INSTALLATION AND REPLACEMENT OF ELECTRICITY METERS GIVEN TO THE END CUSTOMERS IS CAPITAL EXPENDITURE AND THE METER DEPO SITS RECEIVED AGAINST THE SAME IS SHOWN AS CAPITAL ADVANCE BY THE ASSESSEE. 13. THE BRIEF FACTS OF THIS GROUND ARE THAT THE AO DISA LLOWED EXPENDITURE AMOUNTING TO ` 17,79,20,026/- INCURRED BY THE ASSESSEE ON REPLACEM ENT OF ELECTRICITY METERS NOT DEBITED IN ITS PROFIT & LOSS ACCOUNT. BY HOLDING THAT THE SAME TO BE CAPITAL EXPENDITURE AND AO ALLOWED D EPRECIATION TO THE ASSESSEE AMOUNTING TO ` 2,00,16,003/-. THE CIT(A) RELYING ON THE ORDER OF THE ITAT FOR ASSESSMENT YEARS 2008-09 AND 2010-11 D ELETED THE DISALLOWANCE. AFTER HEARING THE RIVAL SUBMISSIONS W E NOTED THAT THIS ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 10 TRIBUNAL IN THE CASE OF THE ASSESSEE FOR A.Y. 2010- 11 CONFIRMED THE ORDER OF THE CIT(A) DELETING THE SAID DISALLOWANCE AS THE SAID ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HON'BLE HIGH COURT IN ASSESSMENT YEARS 2001-02, 2002-03, 2003-04, 2006 -07, 2007-08 AND 2008-09 BY HOLDING AS UNDER: - 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSE SSEE STATED THAT THIS ISSUE IS COVERED BY HIGH COURT JUDGEMENT IN AS SESSEES OWN CASE FOR AYS 2001-02, 2002-03, 2003-04, 2006-07, 2007-08 AND 2008-09. HE PARTICULARLY REFERRED TO BOMBAY HIGH COURT ORDER IN INCOME TAX APPEAL NO. 277 OF 2009 DATED 01-07-2013 WHEREIN HON BLE HIGH COURT HELD AS UNDER: - '(II) IN ANY VIEW OF THE MATTER, THE EXPENDITURE I NCURRED ON THE REPLACEMENT OF THE ELECTRICITY METERS WAS HELD TO B E CAPITAL EXPENDITURE BY THE ASSESSING OFFICER. THIS WAS ON T HE GROUND THAT THIS ELECTRICITY METERS WERE INSTALLED AT THE PREMISES OF THE CUSTOMERS AFTER TAKING DEPOSIT FROM THE CONSUMERS A ND IT LED TO AN ENDURING BENEFIT TO IT. IN APPEAL, THE CITA(A) H AS ALLOWED THE APPEAL OF THE RESPONDENT- ASSESSEE HOLDING THAT EXP ENSES INCURRED ON REPLACEMENT OF ELECTRICITY METERS IS OF REVENUE NATURE WHILE FOLLOWING THE ORDERS OF HIS PREDECESSO RS FOR THE EARLIER ASSESSMENT YEAR. ON FURTHER APPEAL BY THE R EVENUE, THE TRIBUNAL HELD THAT THESE ELECTRICITY METERS HAVE TO BE REPLACED PERIODICALLY ON ACCOUNT OF OBSOLESCENCE, METERS BUR NING OUT OR BECOMING FAULTY ETC. AND THESE EXPENSES ARE NECESSA RILY REQUIRED TO BE INCURRED FOR THE PURPOSES OF CARRYIN G OUT BUSINESS OPERATIONS. THE EXPENDITURE IS INCURRED FO R THE PURPOSES OF ENABLING THE RESPONDENT- ASSESSEE TO CA RRY OUT ITS BUSINESS MORE EFFICIENTLY AND MORE PROFITABLY. THE REPLACEMENT OF METERS DOES NOT INCREASE THE GENERATION AND/OR D ISTRIBUTION CAPACITY OF ELECTRICITY. MOREOVER, AS HELD BY THE S UPREME COURT IN THE MATTER OF EMPIRE JUTE CO. LTD. V/S. CIT (124 ITR 1), THE TEST OF ENDURING BENEFIT IS NOT A CONCLUSIVE TE ST TO BE APPLIED MECHANICALLY WITHOUT CONSIDERING THE FACTS OF A GIV EN CASE. IN THE ABOVE FACTS, THE EXPENSES ON REPLACEMENT OF ELE CTRICITY METERS WOULD BE ON REVENUE AND NOT ON CAPITAL ACCOU NT. (III) THE COUNSEL FOR THE RESPONDENT HAS NOT BEEN A BLE TO POINT OUT THAT HOW THE CONCLUSION OF THE TRIBUNAL IN THE EARLIER YEARS WILL NOT BE APPLICABLE TO THE PRESENT ASSESSMENT YE AR. THE COUNSEL FOR THE REVENUE HAS ALSO NOT BEEN ABLE TO S HOW THAT THE FINDING OF FACT ARRIVED AT BY THE TRIBUNAL IS PERVE RSE AND/OR ERRONEOUS. IN THE ABOVE VIEW, WE SEE NO REASON TO ENTERTAIN QUESTION (A). ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 11 4. SO FAR AS QUESTIONS (B) TO (E) ARE CONCERNED, CO UNSEL FOR THE PARTIES ARE AGREED THAT ALL THE AFORESAID QUEST IONS ARE COVERED IN FAVOUR OF THE RESPONDENT- ASSESSEE AND A GAINST THE REVENUE BY THE DECISION OF THIS COURT RENDERED ON 2 6 JUNE 2013 IN RESPECT OF THE SAME RESPONDENT- ASSESSEE IN INCO ME TAX APPEAL NO.1688 OF 2009. IN THE ABOVE VIEW OF THE M ATTER AND FOR THE REASONS MENTIONED IN OUR ORDER DATED 26 JUN E 2013 THE INCOME TAX APPEAL NO.1688 OF 2009, WE SEE NO REASON S TO ENTERTAIN QUESTIONS (B) TO (E) AS PROPOSED BY THE R EVENUE. 5. WE FIND THAT CONSISTENTLY THIS ISSUE HAS BEEN HELD IN FAVOUR OF ASSESSEE AND HENCE RESPECTFULLY FOLLOWING THE HONB LE HIGH COURT, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVEN UES APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010-11 WE AFFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NO. 1 TAKEN BY THE REVENUE. 14. GROUND NO. 2 TAKEN BY THE REVENUE READS AS UNDER: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PROPORTIONATE APPO RTIONMENT OF HEAD OFFICE EXPENSES AND ALLOCATION OF RS.8,60,62,1 42/- TO GOA UNIT, RS.11,08,59,778/- TO SAMALKOT UNIT AND RS.28, 01,080/- TO WINDMILL UNIT RESPECTIVELY OF THE ASSESSEE COMPANY, WHILE COMPUTING THE PROFITS OF ELIGIBLE BUSINESS FOR DEDU CTION U/S 80IA,BY THE AO. 15. THE BRIEF FACTS OF THIS GROUND ARE THAT THE AO APP ORTIONED HEAD OFFICE EXPENSES FOR GOA UNIT ` 8,60,62,142/-, SAMALKOT UNIT ` 11,08,59,778/- AND TO WINDMILL UNIT ` 28,01,080/- AND REDUCED THE AMOUNT OF ELIGIBLE PROFIT FOR ALLOWING DEDUCTION TO THE ASSESSEE UNDER SECTION 80IA. THE CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A. Y. 2008-09 AND A.Y. 2009-10 BY OBSERVING IN PARA 4.3 AS UNDER: - 4.3 I HAVE CONSIDERED APPELLANTS SUBMISSIONS. THIS ISSUE HAD COME INTO CONSIDERATION OF THE CIT(A) IN A.Y. 2010- 11 WHEREIN IN PARA 5.2 IT IS HELD AS UNDER: - 5.2 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS ISSUE HAD COME INTO CONSIDERATION OF HON'BLE I TAT IN A.Y. 2008-09 AND CIT(A) IN A.Y. 2009-10 HELD AS UNDER: ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 12 '11. THIS ISSUE HAS BEEN DISCUSSED BY THE TRIBUNAL IN ITS ORDER CITED SUPRA FROM PARAS 14 TO 18, WHEREIN THE TRIBUN AL HAS DECIDED THE ISSUE IN FAVOUR OF' THE ASSESSEE FOR TH E REASONS STATED THEREIN. SINCE THE ISSUE BEFORE US IS IDENTI CAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE CITE D SUPRA, CONSEQUENTLY, THE GROUND RAISED BY THE REVENUE IS T REATED AS DISMISSED.' CIT(A)S ORDER IN A.Y. 2009-10 '4.1. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. THIS ISSUE WAS ALSO THERE IN APPELLANT'S OWN CASE IN THE EARLIER ASSESSMENT YEARS. IN A.Y. 2007-08, MY PREDECESSOR C IT(A)-1 MUMBAI VIDE ORDER DATED 27-01-2010, BY FOLLOWING TH E CIT(A) APPEAL ORDER OF A.Y. 2006-07, DIRECTED THE AO, NOT TO ALLOCATE THE HEAD OFFICE EXPENSES AGAINST THE GOA UNIT, SAMA LKOT UNIT AND WINDMILL UNIT AND GRANT DEDUCTION U/S 80 IA FOR THOSE UNITS ON THE PROFITS WITHOUT ALLOCATING THE HEAD OFFICE E XPENSES. IN A.Y. 2007-08, THE ITAT, MUMBAI, FOLLOWING THE ITAT DECISIONS IN A.Y. 2002-03 TO 2006-07, DISMISSED THE DEPARTMENT 'S GROUND OF APPEAL AND DIRECTED TO THE AO TO ACCEPT THE AL LOCATION OF HEAD OFFICE EXPENSES AS DONE BY THE APPELLANT. THER E ARE SOME DECISIONS OF COURT/TRIBUNAL HOLDING THAT HEAD OFF ICE EXPENSES ARE REQUIRED TO BE ALLOCATED TO 80-IA UNITS. HOWEV ER, IN APPELLANT'S OWN CASE, THE ITAT HAS DECIDED THE ISSU E IN APPELLANT'S FAVOUR. THE DECISION OF ITAT IN APPELLA NT'S OWN CASE IS BINDING ON LOWER JUDICIAL AUTHORITY I.E. CIT(A). THEREFORE, SINCE THE ISSUE UNDER CONSIDERATION IS COVERED IN FAVOUR OF APPELLANT BY THE ITAT ORDERS, THE ALLOCATION MADE BY AO IN TH E YEAR UNDER CONSIDERATION IS DELETED. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED.' FOLLOWING THE ABOVE DECISIONS OF ABOVE ORDERS THE A .O. IS DIRECTED TO ALLOW ALLOCATION MADE BY THE APPELLANT FOR THE HEAD OFFICE EXPENSES. THE AMOUNT DISALLOWED FOR ALLOCA TION OF HEAD OFFICE EXPENSES IS DELETED. THIS GROUND OF APPEAL I S ALLOWED. FOLLOWING THE ABOVE DECISION OF CIT(A), THE ALLOCAT ION OF HEAD OFFICE EXPENSES BY A.O. IS DISALLOWED. THIS GROUND OF APP EAL IS ALLOWED. 16. WE NOTED THAT SIMILAR ISSUE HAS ARISEN IN A.Y. 201 0-11 IN ITA NO. 1422/MUM/2015 IN WHICH THE TRIBUNAL CONFIRMED THE O RDER OF THE CIT(A) BY OBSERVING AS UNDER: - 8. NOW BEFORE US, THE LEARNED COUNSEL FOR THE ASSE SSEE STATED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY ASSE SSEES OWN CASE OF HONBLE HIGH COURT DECISION FOR AYS 2006-07 AND 200 7-08 AND HE PARTICULARLY REFERRED TO INCOME TAX APPEAL NO. 2180 OF 2011 ORDER ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 13 DATED 17-04-2014, WHEREIN, THIS ISSUE IS DEALT WITH AT PARA 5 WHICH READS AS UNDER: - 5. INSOFAR AS THE QUESTION (C) IN RELATION TO HEAD OFFICE EXPENSES IS CONCERNED, THE FINDINGS OF FACT BY THE ITAT FOR THE PRIOR ASSESSMENT YEARS HAVE BEEN REFERRED TO AND IF AT ALL ANY REFERENCE IS NEEDED, PARAGRAPHS 17 AND 18 OF THE IT AT'S ORDER ARE COMPLETE ANSWERS. THEREFORE, THE FACTUAL FINDIN GS DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW IN RELATION T O THIS CLAIM AS WELL. .' 9. RESPECTFULLY, FOLLOWING THE HONBLE HIGH COURT, WE CONFIRM THE ORDER OF CIT(A), HENCE, THIS ISSUE OF REVENUES APP EAL IS DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y. 2010-11 WE AFFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NO. 2 TAKEN BY REVENUE. 17. GROUND NO. 4 TAKEN BY THE REVENUE READS AS UNDER: - 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, WHETHER THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO THE ASSESSEE CO MPANY AS THE ACCOUNTS OF THE ASSESSEE ARE PREPARED ACCORDING TO PROVISIONS OF ELECTRICITY SUPPLY ACT? 18. BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE AO COMPUTED THE BOOK PROFIT UNDER SECTION 115JB AND THEREBY COMPUTED THE MINIMUM ALTERNATE TAX. THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE CIT(A) AGREED WITH THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS PREPARING ITS ACCOU NT UNDER THE REGULATORY ACT INSTEAD OF COMPANIES ACT AND THERE IS NO REQUIR EMENT FOR COMPUTATION OF MINIMUM ALTERNATE TAX UNDER SECTION 115JB AND UL TIMATELY IN PARA 7.3 HELD AS UNDER:- 7.3 I HAVE CONSIDERED APPELLANT'S SUBMISSIONS. TH IS ISSUE HAD COME INTO CONSIDERATION OF CIT(A) IN A.Y. 2010-11 WHEREI N IN PARA 11.2 IT IS HELD AS UNDER: 11.2 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCE S OF THE CASE. THIS ISSUE HAD COME INTO CONSIDERATION OF HON'BLE I TAT IN A.Y.2008-09 AND CIT(A) IN A.Y. 2009-10 HELD AS UNDE R: ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 14 HON'BLE ITAT IN A. Y.2008-09 '11. WE FIND THAT THE TRIBUNAL, IN ITS ORDER CI TED SUPRA, IN ASSESSEE'S OWN, VIDE PARAS 37 TO 40, HAS DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE. SINCE THE ISSUE BEFORE US I S IDENTICAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE CITED SUPRA, CONSEQUENTLY, THE GROUND RAISED BY THE REVEN UE IS TREATED AS DISMISSED.' CIT(A)'S ORDER IN A.Y. 2009-10: '8.1. I HAVE CONSIDERED THE FACTS OF THE CASE. THE ITAT IN APPELLANTS OWN CASE IN EARLIER YEARS I.E. FROM A.Y. 2001-02 TO 2007-08 HAS HELD THAT THE PROVISIONS OF SECTION 115 JB WERE NOT APPLICABLE IN APPELLANT'S CASE. THE' ITAT HELD THAT THE APPELLANT WAS FOLLOWING THE ACCOUNTING POLICIES UNDER THE ELE CTRICITY SUPPLY ACT AND PREPARED ITS ACCOUNTS IN VIEW OF THOSE VERY POLICIES. FOLLOWING THOSE VERY POLICIES, THE ACCOUNTS IN ACCO RDANCE WITH PART II AND PART III, SCHEDULE VI OF THE COMPANIES ACT WERE NOT APPLICABLE AT ALL. THERE WAS NO POSSIBILITY FOR PRE PARING THE ACCOUNTS IN ACCORDANCE WITH THE PART II AND PART II OF SCHEDULE-OF THE COMPANIES ACT AS THE PROVISIONS OF SECTION 115J B COULD NOT BE FORCED. THE ITAT IN APPELLANTS OWN CASE IN EARLI ER YEARS HELD THAT THE PROVISIONS OF SECTION 115 JB WERE NOT APPL ICABLE, IN APPELLANT'S CASE. FOLLOWING THE ORDERS OF ITAT IN A PPELLANTS OWN CASE IN THE EARLIER YEARS, IT IS HELD THAT THE PROV ISIONS OF SECTION 115 JB WERE NOT APPLICABLE IN THE CASE OF THE APPEL LANT. THIS GROUND OF .APPEAL IS THEREFORE ALLOWED.' FOLLOWING THE ABOVE ORDER APPELLANT'S COMPILING ACC OUNTS UNDER REGULATORY ACT INSTEAD OF COMPANIES ACT AS REQUIRED FOR THE COMPUTATION U/S 115JB. FOLLOWING THE ABOVE ORDER SE C. 115JB IS NOT APPLICABLE IN THE APPELLANT'S CASE. THE COMPUTA TION OF BOOK PROFIT OF APPELLANT IS DELETED. THIS GROUND OF APPE AL IS ALLOWED.' AS APPELLANT IS NOT FOLLOWING COMPANIES. ACT FOR OF FICE ACCOUNTING PURPOSE, IT IS FOLLOWING ELECTRICITY SUPPLY ACT, HE NCE BOOM PROFIT U/S. 115JB IS NOT APPLICABLE. THIS GROUND OF APPEAL IS ALLOTTED. 19. AS AGREED BY BOTH THE PARTIES, SIMILAR ISSUE HAS AR ISEN DURING A.Y. 2010-11 IN ITA NO. 1480/MUM/2015 IN WHICH THIS TRIB UNAL DISMISSED THE GROUND TAKEN BY THE REVENUE BY OBSERVING AS UNDER: - 17. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASS ESSEE STATED THAT THE TRIBUNAL CONSISTENTLY FROM AY 2001-02 TO 2009-1 0 HOLDING THE ISSUE IN ASSESSEES FAVOUR BY FOLLOWING THE TRIBUNA L DETAILED ORDER IN ITA NO. 218/MUM/2005 FOR AY 2001-02, WHEREIN TRIBUN AL HAS HELD AS UNDER: - ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 15 23 WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. THE CONTENTIONS RAISED BY THE ID COUNSEL OF THE ASSESSEE THROUGH WRITTEN NOTE/ SUBMISSIONS ARE AS U NDER: 'COMING TO THE FIRST ISSUE OF LEVY OF TAX U/S. 1 15 JB, THE ASSESSEE COMPANY SUBMITS THAT SECTION 11 5JB REQUIRES EVERY COMPANY TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE W ITH THE PROVISIONS OF PARTS 11 AND HI OF SCHEDULE VITO THE COMPANIES ACT, 2956. THE ASSESSEE COMPANY IS AN ELECTRICITY C OMPANY TO WHICH THE PROVISIONS OF ELECTRICITY SUPPLY ACT APPL IES. THE SAID ELECTRICITY SUPPLY ACT REQUIRES THE ASSESSEE COMPAN Y TO FOLLOW VARIOUS ACCOUNTING POLICIES WHILE PREPARING THE ACC OUNTS. THE ACCOUNTS ARE THEREFORE REQUIRED TO BE PREPARED IN A CCORDANCE WITH THE SAID PROVISIONS OF ELECTRICITY SUPPLY ACT. IT IS SUBMITTED THAT SECTION 211(1) OF THE COMPANIES ACT, 1956 REQU IRES EVERY COMPANY TO PREPARE THE BALANCE SHEET TO GIVE TRITE AND FAIR VIEW OF THE STATE OF AFFAIRS IN THE FORM SET OUT IN PART I OF SCHEDULE VI OF THE COMPANIES ACT. PROTHSO TO SECTION 211(1) HOW EVER STATES THAT THIS PROVISION WILL NOT APPLY TO A COMPANY ENG AGED IN THE GENERATION OR SUPPLY OF ELECTRICITY FOR WHICH A FOR M OF BALANCE SHEET HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERN ING SUCH CLASS OF COMPANY. SIMILAR SECTION 211(2) OF THE CO MPANIES ACT REQUIRES EVERY COMPANY TO PREPARE A PROFIT AND LOSS ACCOUNT TO GIVE A TRUE AND FAIR VIEW OF THE PROFIT OR LOSS OF THE COMPANY AND FURTHER REQUIRES THE COMPANY TO COMPLY WITH THE REQ UIREMENTS OF' PART H OF SCHEDULE VI OF THE COMPANIES ACT. PROVISO TO SECTION 211(2) FURTHER EXEMPTS THE COMPANY ENGAGED IN THE B USINESS OF GENERATION OR SUPPLY OF ELECTRICITY WHERE A FORM OF PROFIT AND LOSS ACCOUNT HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVE RNING SUCH CLASS OF COMPANY. SECTION 616 OF THE COMPANIES ACT FURTHER PROVIDES THAT THE PROVISIONS OF THE COMPANIES ACT S HALL APPLY TO COMPANIES ENGAGED GENERATION IN SUPPLY OF ELECTRICI TY, EXCEPT INSOFAR AS THE SAID PROVISIONS ARE INCONSISTENT WIT H THE PROVISIONS OF ELECTRICITY SUPPLY ACT, 1948. THUS TH E PROVISIONS 'OF ELECTRICITY SUPPLY ACT WHICH ARE DIFFERENT FROM THE PROVISIONS OF THE COMPANIES ACT PREVAIL.' AS SUBMITTED THAT SECTION 115 JB INTRODUCED WITH EF FECT FROM 1.4.2001 I.E. AY 2001-02 HAS INCORPORATED PROVISION S RELATING TO COMPENSATION OF BOOK PROFIT WHICH ARE DIFFERENT F ROM THE PROVISIONS RELATING TO THE SAME IN SECTION 115J OR 115JA. SECTION 115J REQUIRES EVERY COMPANY TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF P ART II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. 'BOOK PR OFIT' IS, DEFINED TO MEAN THE NET PROFIT AS SHOWN IN THE PROF IT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. SECT ION 115JA ALSO REQUIRES EVERY COMPANY TO PREPARE ITS PROFIT A ND LOSS ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 16 ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PART I I AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. HOWEVER A P ROVISO IS ADDED TO SPECIFY THAT WHILE PREPARING THE PROFIT AN D LOSS ACCOUNT THE DEPRECIATION SHOULD BE CALCULATED ON TH E SAME METHOD AND RATES WHICH HAVE BEEN ADOPTED FOR CALCUL ATING THE DEPRECIATION FOR THE PURPOSE OF PREPARING THE PROFI T AND LOSS ACCOUNT LAID BEFORE THE COMPANY AT ITS ANNUAL GENER AL MEETING. THUS UNDER SECTION 115J THE PROFIT AND LOSS ACCOUNT PREPARED FOR THE PURPOSE OF 11,53 CAN HAVE DIFFERENT METHOD AND RATE OF DEPRECIATION THEN USED WHILE PREPARING THE PROFIT A ND LOSS ACCOUNT WHICH HAS BEEN LAID BEFORE SHAREHOLDERS IN THE ANNUAL GENERAL MEETING. SECTION 11 .5JA HAS BROUGHT ABOUT THE ABOVE CHANGE IN ORDER TO PLUG THE DEVICE OF HAVING DIFFER ENT DEPRECIATION AMOUNTS BETWEEN THE ACCOUNTS PRESENTED BEFORE THE SHAREHOLDERS AND THE ACCOUNTS PREPARED FOR THE PURP OSE OF COMPUTATION OF BOOK PROFIT'. SECTION 115JB ALSO REQUIRES EVERY COMPANY TO PREPAR E ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PART II AND HI OF SCHEDULE VI OF THE COMPANIES ACT, 1956. HOWEVER WHILE PREPARING THE ACCOUNTS INCLUDING PROFIT AND L OSS ACCOUNT THE COMPANY HAS TO FOLLOW SAME METHOD AND RATES OF CALCULATING DEPRECIATION AS HAS BEEN ADOPTED FOR THE PURPOSE OF PREPARING PROFIT AND LOSS ACCOUNT AS LAID BEFORE THE SHAREHOL DERS IN THE ANNUAL GENERAL MEETING. SECTION 115JB FURTHER REQUI RES EVERY COMPANY TO FOLLOW THE SAME ACCOUNTING POLICIES AND ACCOUNTING STANDARDS WHICH HAVE BEEN FOLLOWED WHILE PREPARING THE ACCOUNTS WHICH ARE LAID BEFORE THE SHAREHOLDERS IN THE ANNUAL GENERAL MEETING. THUS UNDER SECTION 115JB, THE PROF IT AND LOSS ACCOUNT WHICH IS REQUIRED TO HE PREPARED BY EVERY C OMPANY HAS TO ADOPT THE FOLLOWING: THE PROFIT AND LOSS ACCOUNT 'SHOULD HE IN ACCORDANCE WITH THE PROVISIONS OF PART II AND III O F SCHEDULE VI OF THE COMPANIES ACT. THE ACCOUNTS AND THE PROFIT AND LOSS ACCOUNT SO PRE PARED IN ACCEPTANCE WITH PART 11 AND 1FF OF SCHEDULE VI OF T HE COMPANIES ACT: SHOULD AGAIN FOLLOW THE SAME (A) THE ACCOUNTIN G POLICIES) (B) THE ACCOUNTING STANDARDS AND (C) THE RATES OF DEPRE CIATION, AS HAVE BEEN ADOPTED FOR THE PURPOSE OF PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT LAID BEFORE SHARE HOLDERS IN THE ANNUAL GENERAL MEETING. THE THRUST OF THE ABOVE PROVISIONS IS THAT THE PROF IT AND LOSS ACCOUNT FOR THE PURPOSE OF SECTION 1 15JB MUST BE I N ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. FURTHER T HE ACCOUNTING POLICIES, ACCOUNTING STANDARDS AND METHOD AND RATES OF DEPRECIATION ADOPTED IN PROFIT AND LOSS ACCOUNT FOR THE PURPOSE OF SECTION 115JB SHOULD BE SAME AS ADOPTED IN THE P ROFIT AND ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 17 LOSS ACCOUNT LAID BEFORE THE SHAREHOLDERS IN THE AN NUAL GENERAL MEETING. AS STATED EARLIER, ELECTRICITY COMPANY IS EXEMPTED BY THE COMPANIES ACT TO FOLLOW THE PROVISIONS OF THE COMPA NIES ACT AS REGARDS MATTERS WHICH ARE INCONSISTENT WITH THE PRO VISIONS OF THE ELECTRICITY SUPPLY ACT. ELECTRICITY SUPPLY ACT HAS THE FOLLOWING PROVISIONS, WHICH ARE DIFFERENT FROM THE COMPANIES ACT. UNDER THE ELECTRICITY SUPPLY ACT, DEPRECIATION ON A DDITION TO FIXED ASSETS CAN BE PROVIDED ONLY FROM THE SUBSEQUENT YEA R OF ADDITION AND NOT IN THE YEAR OF ADDITION WHEREAS UN DER THE COMPANIES ACT, THE DEPRECIATION IS TO BE PROVIDED I N THE YEAR OF ADDITION AND EVEN IN THE PART OF THE YEAR. RATE OF DEPRECIATION, UNDER ELECTRICITY SUPPLY ACT IS LOWER THAN THE RATE OF DEPRECIATION UNDER THE COMPANIES ACT. ELECTRICITY SUPPLY ACT PERMITS ONLY STRAIGHT LINE M ETHOD OF DEPRECIATION WHEREAS COMPANIES ACT PERMITS BOTH STR AIGHT LINE METHOD AND WRITTEN DOWN VALUE METHOD. UNDER THE ELECTRICITY SUPPLY ACT, DEPRECIATION IS R ESTRICTED TO 90% OF THE COST OF THE ASSETS WHEREAS UNDER THE COMPANI ES ACT ENTIRE ASSET VALUE IS ALLOWED TO BE WRITTEN OFF. WHEN AN ELECTRICITY COMPANY HAS INCURRED LOSSES AND UNABLE TO BEAR THE BURDEN OF DEPRECIATION, AN AMOUNT EQUAL TO THE UNABSORBED DEPRECIATION HAS TO BE TRANSFERRED TO TH E DEPRECIATION RESERVE WHICH WILL BE CHARGED TD PROFI T AND LOSS ACCOUNT OF THE YEAR IN WHICH THE PROFITS ARE MADE A ND WILL, BECOME THE ADDITIONAL DEPRECIATION CHARGE OF THAT Y EAR. UNDER THE ELECTRICITY SUPPLY ACT, THE COMPANY HAS T O CAPITALIZE CERTAIN REPLACEMENT EXPENSES LIKE METERS AND THE DE PRECIATION IN THE BOOKS WHEREAS UNDER THE COMPANIES ACT, THE SAID REPLACEMENT EXPENSES HAVE TO BE WRITE OFF AS REVENU E EXPENDITURE. UNDER THE ELECTRICITY SUPPLY ACT, IF THE PROFIT OF THE COMPANY IN A YEAR IS IN EXCESS OF THE AMOUNT OF REASONABLE RETUR N AS COMPUTED UNDER THE ELECTRICITY ACT, 1/3RD OF SUCH E XCESS AT EXCEEDING 5% OF THE AMOUNT OF REASONABLE RETURN ONL Y IS AT THE DISPOSAL OF THE COMPANY. OUT OF THE BALANCE EXCESS, 50% IS TO BE APPORTIONED TO TARIFF AND DIVIDEND CONTROL RESERVE AND BALANCE 50% IS TO BE DISTRIBUTED IN FORM OF PROPORTIONAL RE BATE ON THE AMOUNTS COLLECTED FROM THE SALE OF ELECTRICITY AND METER RENTALS AND TO HE CARRIED FORWARD IN THE ACCOUNT OF COMPANY FOR THE DISTRIBUTION TO THE CONSUMERS. TARIFF AND DIVIDEND CONTROL RESERVE IS AVAILABLE TO THE COMPANY WHEN THE CLEAR PROFITS AS ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 18 COMPUTED UNDER THE ELECTRICITY SUPPLY ACT IS LESS T HAN THE REASONABLE RETURN IN ANY SUBSEQUENT YEAR. THERE IS NO SIMILAR PROVISION IN THE COMPANIES ACT. UNDER THE ELECTRICI TY SUPPLY ACT, THE COMPANY HAS TO CREATE VARIOUS RESERVES OUT OF T HE RETAINED EARNING I.E. CONTINGENCY RESERVES, WHICH CAN BE UTI LISED OR THE HAPPENING OF CERTAIN EVENTS, AND THE COMPANY HAS TO INVEST THE SAID RESERVES IN TRUST SECURITIES. THERE IS NO SIMI LAR PROVISION IN THE COMPANIES ACT. IN THE ACCOUNTS) WHICH ARE PRESENTED BEFORE THE SHA REHOLDERS IN THE ANNUAL GENERAL MEETING THE ASSESSEE, COMPANY HA S FOLLOWED THE ABOVE ACCOUNTING POLICIES AS PER THE REQUIREMEN T OF ELECTRICITY SUPPLY ACT. THE ABOVE ACCOUNTING POLICIES ARE NOT I N ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. SINCE THE PROFIT AND LOSS ACCOUNT TO BE PREPARED FOR THE PURPOSE OF SECT ION 115J)3 HAS TO FOLLOW THE SAME ACCOUNTING POLICIES AS ARE F OLLOWED IN THE ACCOUNTS PRESENTED BEFORE THE SHAREHOLDERS, THE PRO FIT AND LOSS ACCOUNT TO BE PREPARED UNDER THE COMPANIES ACT WILL NOT BE IN ACCORDANCE WITH THE PROVISIONS OF SCHEDULE VI OF TH E COMPANIES ACT. THUS IF THE PROFIT AND LOSS ACCOUNT IS PREPARE D IN ACCORDANCE WITH THE PROVISIONS OF SCHEDULE VI OF TH E COMPANIES ACT) THE ACCOUNTING POLICIES TO BE FOLLOWED IN PREP ARATION OF SUCH PROFIT AND LOSS ACCOUNT WILL NOT BE SAME AS FOLLOWE D IN THE PROFIT AND LOSS ACCOUNT PRESENTED BEFORE THE SHAREHOLDERS IN THE ANNUAL GENERAL MEETING. THUS THERE IS A BREAKDOWN O F THE PROVISIONS OF SECTION 1 15J.B IN AS MUCH AS THE PRO FIT AND LOSS ACCOUNT CANNOT BE PREPARED IN ACCORDANCE WITH THE P ROVISIONS OF THE COMPANIES ACT FOLLOWING THE SAME ACCOUNTING POL ICIES AS FOLLOWED IN THE ELECTRICITY ACCOUNTS PRESENTED BEFO RE THE SHAREHOLDERS.' FURTHER, RELIANCE WAS PLACED ON THE DECISION OF THE SUPREME COURT IN THE CASE.LIQUIDATOR, PALAI CENTRAL BANK LTD. IN 150 ITR 539. IT WAS FURTHER SUBMITTED IN THEIR OWN CASE FOR AY 1988- 89, THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SE C. 115J ARE NOT APPLICABLE. 24. AFTER TAKING INTO CONSIDERATION THE ORDER OF TH E ASSESSING OFFICER, LD CIT(A) AND THE SUBMISSIONS OF THE ID DR AND THE ID COUNSEL OF THE ASSESSEE, WE FIND THAT THE ASSESSEE DESERVES TO SUCCEED ON THIS ISSUE. 24.1 WE NOTED THAT THE ASSESSEES MAIN CONTENTION I S THAT THE COMPANY HAS PREPARED ITS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF THE ELECTRICITY SUPPLY ACT AND NOT IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART III OF SCHE DULE VI OF THE COMPANIES AD. THE ASSESSEE THEREFORE SUBMITS THAT T HERE CANNOT BE COMPUTATION OF 'BOOK PROFIT' AS REQUIRED BY EXPL ANATION TO SECTION 1 153B. THE ASSESSEE HAS SUBMITTED THAT UND ER THE COMPANIES ACT, THE ELECTRICITY COMPANIES ARE ALLOWE D TO PREPARE ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 19 THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET I N ACCORDANCE WITH THE STATUTE UNDER WHICH THEY ARE OPERATING TO THE EXTENT THE PROVISIONS OF SAID STATUTE ARE NOT IN ACCORDANCE WI TH OR ARE DIFFERENT FROM COMPANIES ACT. THE ASSESSEE HAD SUBM ITTED THAT THERE ARE MAJOR DIFFERENCES IN THE PROVISIONS BETWE EN THE COMPANIES ACT AND ELECTRICITY SUPPLY ACT IN PREPARA TION OF ACCOUNTS. AS THE PER ELECTRICITY SUPPLY ACT, THE FO LLOWING ARE THE MAJOR DIFFERENCES: - I) UNDER THE ELECTRICITY SUPPLY ACT, DEPRECIATION ON ADDITION TO FIXED ASSETS CAN BE PROVIDED ONLY FROM THE SUBSE QUENT YEAR OF ADDITION AND NOT IN THE YEAR OF ADDITION WHEREAS UN DER THE COMPANIES ACT, THE DEPRECIATION IS TO BE PROVIDED I N THE YEAR OF ADDITION AND EVEN IN THE PART OF THE YEAR. II) RATE OF DEPRECIATION, UNDER ELECTRICITY SUPPLY ACT IS LOWER THAN THE RATE OF DEPRECIATION UNDER THE COMPANIES A CT. (III) ELECTRICITY SUPPLY ACT PERMITS ONLY STRAIGHT -LINE METHOD OF DEPRECIATION WHEREAS COMPANIES ACT PERMITS BOTH STR AIGHT LINE METHOD AND WRITTEN DOWN METHOD. IV) UNDER THE ELECTRICITY SUPPLY ACT, DEPRECIATION IS RESTRICTED TO 90% OF THE COST OF THE ASSETS WHEREAS UNDER THE COMPANIES ACT ENTIRE ASSET VALUE IS ALLOWED TO BE WRITTEN OFF . V) WHEN AN ELECTRICITY COMPANY HAS INCURRED LOSSES AND UNABLE TO BEAR THE BURDEN OF DEPRECIATION, AN AMOUN T EQUAL TO THE UNABSORBED DEPRECIATION HAS TO BE TRANSFERRED T O THE DEPRECIATION RESERVE WHICH WILL BE CHARGED TO PROFI T AND LOSS ACCOUNT OF THE YEAR IN WHICH THE PROFITS ARE MADE A ND WILL BECOME THE ADDITIONAL DEPRECIATION CHARGE OF THAT Y EAR. VI) UNDER THE ELECTRICITY SUPPLY ACT, THE COMPANY HAS TO CAPITALIZE CERTAIN REPLACEMENT EXPENSES LIKE METERS AND PROVIDE THE DEPRECIATION IN THE BOOKS WHEREAS UNDER THE COM PANIES ACT, THE SAID REPLACEMENT EXPENSES HAVE TO BE WRITTEN OF F AS REVENUE EXPENDITURE. VII) UNDER THE ELECTRICITY SUPPLY ACT, IF THE PROFI T OF THE COMPANY IN ANY YEAR IS IN EXCESS OF THE AMOUNT OF R EASONABLE RETURN AS COMPUTED UNDER THE ELECTRICITY ACT, 1/3RD OF SUCH EXCESS NOT EXCEEDING 5% OF THE AMOUNT OF REASONABLE RETURN ONLY IS AT THE DISPOSAL OF THE COMPANY. OUT OF THE BALANCE EXCESS, 50% IS TO BE APPORTIONED TO TARIFF AND DIVI DEND CONTROL RESERVE AND BALANCE 50% IS TO BE DISTRIBUTED IN FOR M OF PROPORTIONAL REBATE ON THE AMOUNTS COLLECTED FROM T HE SALE OF ELECTRICITY AND METER RENTALS AND TO BE CARRIED FOR WARD IN THE ACCOUNT OF COMPANY FOR THE DISTRIBUTION TO THE CONS UMERS. TARIFF AND DIVIDEND CONTROL RESERVE 'IS AVAILABLE TO THE C OMPANY WHEN ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 20 THE CLEAR 'PROFITS AS COMPUTED UNDER THE ELECTRICIT Y SUPPLY ACT IS LESS THAN THE REASONABLE RETURN IN ANY SUBSEQUENT Y EAR. THERE IS NO SIMILAR PROVISION IN THE COMPANIES ACT. VIII) UNDER THE ELECTRICITY SUPPLY ACT, THE COMPANY HAS TO CREATE VARIOUS RESERVES OUT OF THE RETAINED EARNING CONTINGENCY RESERVES WHICH CAN BE UTILISED ON THE HAPPENING OF CERTAIN EVENTS AND THE COMPANY HAS TO VEST THE SAID RESERVES IN TR UST SECURITIES. THERE IS SIMILAR PROVISION IN THE COMPA NIES ACT. SECTION 115JB REQUIRES EVERY ASSESSEE BEING A COMPA NY TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE W ITH THE PROVISIONS OF PARTS II & III OF SCHEDULE VI TO THE COMPANIES ACT. WHILE PREPARING ANNUAL ACCOUNTS INCLUDING PROFIT AN D LOSS ACCOUNT, THE COMPANY HAS TO FOLLOW THE SAME I.E. AC COUNTING POLICIES; ACCOUNTING STANDARD ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; THE MET HOD AND RATES, ADOPTED FOR CALCULATING THE DEPRECIATION, WHICH HAV E BEEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFI T AND LOSS ACCOUNT ARID LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF SECTIO N 210 OF THE COMPANIES ACT, 1956. 24.2 FROM THE ABOVE REQUIREMENT OF THE PROVISO TO S ECTION 11 53B(2), IT IS CLEAR THAT THE ELECTRICITY COMPANY HA S TO COMPLY WITH THE PROVISIONS OF PARTS II & III OF SCHEDULE VI AND THE SAME TIME FOLLOW THE SAME ACCOUNTING POLICIES, ACCOUNTING STA NDARD AND METHOD AND RATE OF DEPRECIATION AS FOLLOWED IN THE ACCOUNTS WHICH ARC PRESENTED IN THE ANNUAL GENERAL MEETING. 24.3 THE ASSESSEE HAS CLAIMED THAT THE ACCOUNTS LAI D BEFORE THE ANNUAL GENERAL MEETING HAVE FOLLOWED THE ACCOUNTING POLICIES WHICH ARE REQUIRED TO BE FOLLOWED UNDER THE ELECTRI CITY SUPPLY ACT AND WHICH ARE NOT IN ACCORDANCE WITH THE COMPAN IES ACT. THE ASSESSEE HAS DRAWN ATTENTION TO THE REQUIREMENT OF THE ELECTRICITY SUPPLY ACT WHICH PROVIDES FOR THE ACCOU NTING POLICY IN RESPECT OF EXPENSES ON REPLACEMENT OF METERS TO BE CAPITALIZED WHEREAS THE SAME IS NOT IN ACCORDANCE WITH THE COMP ANIES ACT AT THE SAME IS REQUIRED TO BE WRITTEN OFF. PROVISO TO SECTION 115JB REQUIRE THE ELECTRICITY COMPANY TO FOLLOW THE SAME ACCOUNTING POLICY WHILE PREPARING THE ACCOUNTS IN ACCORDANCE W ITH PARTS 11 & III OF SCHEDULE VI AND IF THE SAID POLICY OF CAPI TALIZING THE REPLACEMENT OF METERS IS FOLLOWED IN PREPARING THE ACCOUNTS UNDER COMPANIES ACT, THE ACCOUNTS WILL NOT BE IN AC CORDANCE WITH PARTS II & ILL OF SCHEDULE VI OF THE COMPANIES ACT. THE ELECTRICITY COMPANY THEREFORE CANNOT AND WILL NOT B E ABLE TO PREPARE THE ACCOUNTS UNDER THE COMPANIES ACT FOLLOW ING THE SAME ACCOUNTING POLICY WHICH IS MANDATED BY THE PRO VISO TO SECTION 115JB(2) TO BE FOLLOWED. ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 21 24.4 THE ASSESSEE FURTHER BROUGHT TO OUR NOTICE THE CASE OF DEPRECIATION. RATE OF DEPRECIATION UNDER THE ELECTR ICITY SUPPLY ACT IS LOWER THAN THE RATES PROVIDED UNDER THE COMP ANIES ACT AND IF THE RATES AS PROVIDED IN THE ACCOUNTS PRESEN TED BEFORE THE ANNUAL GENERAL MEETING I.E. ELECTRICITY ACT ACCOUNT S, THE DEPRECIATION AT THE SAME RATES IN THE ACCOUNTS FOR THE COMPANIES ACT WILL BE BELOW WHAT IS REQUIRED UNDER THE COMPAN IES ACT AND THEREFORE THE ACCOUNTS SO PREPARED UNDER THE COMPAN IES ACT WILL NOT BE IN ACCORDANCE WITH PARTS II & III OF SCHEDUL E VI. 24.5 THE ASSESSEE ALSO REFERRED TO THE REQUIREMENT OF ELECTRICITY SUPPLY ACT AS REGARDS THE REAL PROFITS AND REASONAB LE RETURN, IN THE ACCOUNTS UNDER THE ELECTRICITY SUPPLY ACT, THE EXCESS OF PROFITS IS REQUIRED TO BE TRANSFERRED TO TARIFF AND DIVIDEND CONTROL RESERVE AND ALSO TO BE DISTRIBUTED TO THE CONSUMERS . THIS TREATMENT IS NOT IN CONSONANCE WITH THE ACCOUNTING POLICY WHICH IS PERMITTED UNDER THE COMPANIES ACT AS THE COMPANY IS REQUIRED TO DISCLOSE THE ENTIRE PROFIT EARNED IRRES PECTIVE OF THE, SAME BEING MORE OR LESS THAN REASONABLE RETURN, PAR T IT OF SCHEDULE VI REQUIRES THE PROFIT AND LOSS ACCOUNT SH ALL BE SO MADE OUT AS CLEARLY TO ACCOUNTING POLICY OF TRANSFERRIN G THE EXCESS PROFITS TO BE UNDER THE ELECTRICITY SUPPLY ACT CANN OT BE FOLLOWED UNDER THE COMPANIES ACT AND IF FOLLOWED THE ACCOUNT S WILL NOT BE IN ACCORDANCE PARTS II & III OF SCHEDULE VI. 24.6 IT WAS, THEREFORE, SUBMITTED THAT AN ELECTRICI TY COMPANY CAN NOT PREPARE THE ACCOUNTS UNDER PART II & III OF SCH EDULE VI OF THE COMPANIES ACT FOLLOWING THE SAME ACCOUNTING POLICIE S AS FOLLOWED IN THE ACCOUNTS UNDER THE ELECTRICITY SUPP LY ACT WHICH ARE PRESENTED BEFORE THE COMPANY IN ANNUAL GENERAL MEETING. THE ASSESSEE THEREFORE SUBMITTED THAT THE PROVISION S OF SECTION 115JB(2) AS MANDATED BY THE FIRST PROVISO CANNOT B E COMPLIED WITH. 24.7 ATTENTION OF THE BENCH WAS ALSO DRAWN TO THE PROVISIONS OF SECTION, 115JA. PROVISO TO SECTION 115JA(2) HAS PRO VIDED THAT WHILE PREPARING PROFIT AND LOSS ACCOUNT UNDER PARTS II & III OF SCHEDULE VI THE SAME METHODS AND RATES WHICH ARE AD OPTED FOR CALCULATION OF DEPRECIATION IN THE ACCOUNTS PRESENT ED BEFORE THE COMPANY IN ANNUAL GENERAL MEETING SHOULD BE FOLLOWE D. THERE WAS NO PROVISION FOR FOLLOWING THE SAME ACCOUNTING POLICIES AND SAME ACCOUNTING STANDARDS IN BOTH THE ACCOUNTS AS P REPARED UNDER THE ELECTRICITY SUPPLY ACT AND UNDER THE COMP ANIES ACT. THIS MATERIAL DEPARTURE IN SECTION 115JB FROM THE P ROVISIONS IN SECTION 115JA HAS RESULTED IN THE ACCOUNTS TO BE PR EPARED UNDER THE COMPANIES ACT FOLLOWING THE SAME ACCOUNTING POL ICIES AND SAME ACCOUNTING STANDARDS UNWORKABLE AND ANY SUCH A TTEMPT TO MAKE THE ACCOUNTS WILL BE NOT IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 22 25 AS PER THE CONTENTIONS OF THE ID COUNSEL OF THE ASSESSEE, THERE WILL BE A BIG ANOMALY IN PREPARING THE ACCOUN TS AS PER ELECTRICITY SUPPLY ACT AND AS PER COMPANIES ACT. TH E HON'BLE SUPREME COURT IN THE CASE OF CIT VS. OFFICIAL LIQUI DATOR, PALAI CENTRAL BANK LTD., IN 150 ITR 539, ON WHICH RELIANC E WAS PLACED BY THE ID COUNSEL OF THE ASSESSEE SUPPORTS THE CASE BY THE ASSESSEE. THIS CASE WAS UNDER SUPER PROFITS TAX ACT . IN THIS CASE E WAS A BANKING COMPANY, WHICH WENT INTO LIQUI DATION. FOR .. THE ASSESSING OFFICER WAS OF THE OPINION THAT T HEIR TAXABLE E WOULD ATTRACT LIABLE TO SUPER PROFITS TAX ACT UNDER THE ACT THE SUPER PROFIT TAX IS LEVIABLE IN RESPECT OF CHARGEAB LE PROFITS, WHICH ARE IN EXCESS OF STANDARD DEDUCTION AS SPECIFIED IN THIRD SCHEDULE IN THE SAID ACT. STANDARD DEDUCTION WAS DE FINED TO MEAN AN AMOUNT EQUAL TO SIX PERCENT OF THE CAPITAL OF THE COMPANY OR RS.50,000 WHICHEVER IS HIGHER. THE ISSUE AROSE AS TO WHETHER A COMPANY IN LIQUIDATION CAN BE SAID TO HAV E A PAID-UP CAPITAL AND RESERVES. THE SUPREME COURT CAME TO CON CLUSION THAT AFTER LIQUIDATION OF COMPANY THERE CAN NOT BE ANY S HARE CAPITAL. SUPREME COURT FURTHER HELD THAT ONCE THE PROVISIONS CONTAINED IN THE ACT FOR COMPUTING THE CAPITAL OF THE COMPANY AN D ITS RESERVES CANNOT HAVE ANY APPLICATION, THE 'STANDARD DEDUCTIO N IS INCAPABLE OF ASCERTAINMENT, AND THE CHARGE OF SUPER PROFITS TAX UNDER SECTION 4 OF THE ACT IS NOT ATTRACTED. IN THI S CASE THE DEFINITION OF 'STANDARD DEDUCTION' WAS TO MEAN SIX PERCENT OF THE CAPITAL OR RS.50,000 WHICHEVER IS HIGHER OUT OF TWO LIMBS OF THE CALCULATION, ONE LIMB BEING CAPITAL WAS NOT CAPABLE OF ASCERTAINMENT. SUPREME COURT HELD THAT WHEN ONE LIM B IS NOT CAPABLE OF ASCERTAINMENT THE WHOLE PROVISION FAILS, IN OTHER WORDS THERE IS 'BREAKDOWN' OF THE WHOLE PROVISION A ND THE PROVISION CANNOT HE APPLIED. 25.1. WHILE DECIDING SO, THE HON'BLE SUPREME COURT HAS TAKEN INTO CONSIDERATION ITS OWN DECISION IN THE CASE OF CIT VS B C SRINIVASA SETTY IN 128 JTR 294 WHEREIN SUPREME COUR T HAD POINTED OUT THAT UNDER THE SCHEME OF THE INCOME TAX ACT CHARGE OF TAX WILL NOT GET ATTRACTED UNLESS THE CASE OR TR ANSACTION FALLS UNDER THE GOVERNANCE OF THE RELEVANT COMPUTATION PR OVISIONS. THE SUPREME COURT IN B.C. SRINIVASA SETTY'S CASE AS OBS ERVED AS UNDER:- 'THE CHARACTER OF THE COMPUTATION PROVISIONS IN EAC H CASE BEARS A RELATIONSHIP TO THE NATURE OF THE CHARGE. THUS, T HE CHARGING SECTION AND THE COMPUTATION PROVISIONS TOGETHER CON STITUTE AN INTEGRATED CODE. WHEN THERE IS A. CASE TO WHICH THE COMPUTATION PROVISIONS CANNOT APPLY AT ALL, IT IS EVIDENT THAT SUCH A CASE WAS NOT INTENDED TO FALL WITHIN THE CHARGING SECTION. O THERWISE, ONE WOULD BE DRIVEN TO CONCLUDE THAT WHILE A CERTAIN IN COME SEEMS TO FALL WITHIN, THE CHARGING SECTION, THERE IS NO SCHE ME OF ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 23 COMPUTATION FOR QUANTIFYING IT. THE LEGISLATIVE PAT TERN DISCERNIBLE IN THE ACT IS AGAINST SUCH A CONCLUSION'. 26. AFTER GOING THROUGH THE RATIO OF THE DECISIONS OF THE HONBLE SUPREME COURT, IT IS CLEARLY SEEN THAT WHERE SOMETH ING IS NOT POSSIBLE THEN THE ASSESSEE CANNOT BE FORCED TO DO S O UNDER SPECIFIC PROVISIONS OF LAW. THOSE PREVISIONS OF LAW CANNOT BE FOLLOWED BECAUSE IT IS IMPOSSIBLE TO DO SO. THE DOC TRINE OF IMPOSSIBILITY IS SQUARELY APPLICABLE ON THE FACTS O F THE PRESENT CASE BECAUSE IT IS NOT POSSIBLE TO PREPARE THE ACCO UNTS UNDER THE COMPANIES ACT BECAUSE THE ASSESSEE IS PREPARING THE ACCOUNTS AS PER THE POLICIES OF ELECTRICITY SUPPLY ACT. 26.1 THE HON'BLE SUPREME COURT IN THE CASE OF KWALI TY BISCUITS LTD IN 284 ITR 434 HAS HELD THAT PROVISIONS OF SEC. 23413 & 234C ARE NOT APPLICABLE IN RESPECT TO COMPUTATION O F DEDUCTION U/S 1153 BECAUSE THE COMPUTATION OF PROFIT UNDER TH E PROVISIONS OF SEC. 115J HAS TO BE MADE ON THE BASIS OF BOOK PR OFIT AND SINCE THE ENTIRE EXERCISE OF COMPUTING THE INCOME UNDER S ECTION 115J CAN ONLY BE DONE AT THE END OF THE FINANCIAL YEAR, AND THE PROVISIONS OF SEC. 207, 208, 209 & 210 CANNOT BE MA DE APPLICABLE 'UNTIL AND UNLESS THE ACCOUNTS ARE AUDIT ED AND THE BALANCE SHEET PREPARED. THE RATIO OF THIS DECISION HELPS THE CASE OF THE ASSESSEE BECAUSE IT IS NOT POSSIBLE TO PREPA RE THE ACCOUNTS IN ACCORDANCE WITH PART II &III OF SCHEDULE VT OF T HE COMPANIES ACT FOR THE PURPOSE OF PROVISIONS OF SEC. 115JB. TH EREFORE, IN VIEW OF THE RATIO OF THIS DECISION, IN OUR CONSIDER ED VIEW, THE PROVISIONS OF SEC. 115JB CANNOT BE ATTRACTED OF THE PRESENT CASE. 27. THE ISSUE IN REGARD TO DOCTRINE OF IMPOSSIBILIT Y HAS BEEN DISCUSSED OF THE TRIBUNAL IN THE CASE OF M/S DIVINE HOLDINGS PVT. LTD 180/MUM/2000 VIDE ORDER DATED 26.6.2001. THE TR IBUNAL IN PARA 8 HAS OBSERVED THAT THE ASSESSEE DID WHATEVER WAS POSSIBLE ON ITS PART. IT IS WELL-KNOWN PRINCIPLES ' LAW CANONIZED IN THE DICTUM 'LEX NON COGIT AD IMPOSSIBILIA'. LAW CAN NOT COMPEL YOU TO DO THE IMPOSSIBLE.' AGAIN THIS RATIO HAS BEE N CONSIDERED IN THE CASE OF SHRI HITEWSH S MEHTAM IN ITA NO. 2469/M UM/2002 VIDE ORDER DATED 7.5.2004. IN THE CASE OF GROWMORE LEASING INVESTMENTS LTD, THE TRIBUNAL HAS AGAIN TAKEN INTO CONSIDERATION THE RATIO OF THE DECISION OF THE TRIBUNAL IN CASE O F DIVINE HOLDINGS PVT LTD (SUPRA) AND HAS HELD THAT THE ASSESSEE CANN OT FORCE TO DO SOMETHING, WHICH IS NOT POSSIBLE FOR IT. IN VIEW OF THE' ABOVE FACTS AND CIRCUMSTANCES, IT CAN BE EASILY HELD THAT A PER SON CANNOT BE FORCED TO DO SOMETHING IMPOSSIBLE. THE LAW DOES NOT COMPEL A MAN TO DO THAT WHICH HE CANNOT POSSIBLE PERFORM. TH E LAW CREATES A DUTY OR CHARGE, AND THE PARTY IS DISABLE TO PERFORM IT, WITHOUT ANY DEFAULT IN HIM, AND HAS NO REMEDY OVER, THERE THE LAW WILL IN GENERAL EXCUSE HIM ARID THOUGH IMPOSSIB ILITY OF PERFORMANCE IS IN GENERAL NO EXCUSE FOR NOT PERFORM ING AN ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 24 OBLIGATION WHICH A PARTY HAS EXPRESSLY UNDERTAKEN B Y CONTRACT YET WHEN THE OBLIGATIONS ONE IMPLIED BY LAW, IMPOSS IBILITY OF PERFORMANCE IS A GOOD EXCUSE. THUS IN A CASE IN WHI CH CONSIGNEES OF A CARGO WERE PREVENTED FROM UNLOADING A SHIP PROMPTLY BY REASON OF A DOCK STRIKE, THE COURT, AFT ER HOLDING THAT IN THE ABSENCE OF AN EXPRESS AGREEMENT TO UNLOAD IN A SPECIFIED TIME THERE WAS IMPLIED OBLIGATION TO UNLOAD WITHIN A REASONABLE TIME, HELD THAT THE MAXIM LEX NON COGIT AD IMPOSSIB ILIA APPLIED. 28 AS DISCUSSED ABOVE WHEN IT IS NOT POSSIBLE TO PR EPARE THE ACCOUNTS UNDER THE COMPANIES ACT FOR THE PURPOSE OF COMPUTATION U/S 115JB, THEREFORE, ASSESSEE CANNOT H E FORCED TO PREPARE THE ACCOUNTS WHEN IT IS NOT POSSIBLE. THERE FORE, WE ARE IN AGREEMENT WITH THE CONTENTIONS OF IN AS MUCH AS THE ACCOUNTING POLICIES FOLLOWED IN THE ..ACCOUNTS IF FOLLOWED FO R THE PREPARATION OF COMPANIES ACT. 1 NOT DISCLOSE TRUE A ND FAIR VIEW AND WILL NOT BE IN ACCORDANCE WORK PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT. THE RATIO OF THE DECISIONS OF THE HON7BLE SUPREME COURT AND THE RATIO OF THE DECISION OF THE TRIBUNAL DISCUSSED ABOVE ARE IN SUPPORT OF THE CONTENTIONS O F THE ASSESSEE. WE FURTHER FOUND THAT THE ISSUE OF APPLIC ABILITY OF SEC. 115J CAME BEFORE THE TRIBUNAL FOR AY 88-89. TAKING INTO CONSIDERATION THE PREPARATION OF ACCOUNTS UNDER THE ELECTRICITY ACT AND OTHER CONTENTIONS THE ASSESSEE INCLUDING TH E DECISIONS OF THE SUPREME COURT IN THE CASE OF B.C.SRINIVASA SETT Y (SUPRA), THE TRIBUNAL HAS HELD THAT. THE PROVISIONS OF SEC. 115J ARE NOT ATTRACTED ON THE FACTS OF THE PRESENT CASE. 29 AS DISCUSSED ABOVE, THE ASSESSEE IS FOLLOWING TH E ACCOUNTING POLICIES UNDER THE ELECTRICITY SUPPLY AC T AND PREPARED ITS ACCOUNTS IN VIEW OF THOSE VERY POLICIES. FOLLOW ING THOSE VERY POLICIES, THE ACCOUNTS IN ACCORDANCE WITH PART II & III OF SCHEDULE VI OF THE COMPANIES ACT ARE NOT APPLICABLE AT ALL. ONCE THERE IS NO POSSIBILITY FOR PREPARING THE ACCOUNTS IN ACCORD ANCE WITH THE PART II & 11 OF SCHEDULE VI OF COMPANIES ACT THEN T HE PROVISIONS OF SEC. 115JB CANNOT BE FORCED. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE HON'BLE SUPREME COURT AND THE DECI SION OF THE TRIBUNAL FOR AY 88-89, WE HOLD THAT PROVISIONS OF S EC. 115JB ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. TAKING CONSISTENT VIEW, WE CONFIRM THE ORDER OF CIT (A) AND HENCE, APPEAL OF REVENUE ON THIS ISSUE IS DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNA L IN ASSESSEES OWN CASE IN ITA NO. 1480/MUM/2015 WE AFFIRM THE ORDER OF THE CIT(A). THUS, GROUND NO. 4 TAKEN BY THE REVENUE STANDS DISMISSED. ITA NOS. 4345 & 3407/MUM/2015 M/S RELIANCE INFRASTRUCTURE LTD. 25 20. GROUND NO. 5 RELATES TO EXCLUSION OF DISALLOWANCE O F ` 39,12,93,402/- UNDER SECTION 14A R.W. RULE 8D FROM THE BOOK PROFIT OF THE ASSESSEE. WHILE DISPOSING GROUND NO. 4 RESPECTFULLY FOLLOWING THE D ECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010-11 WE CONFIRME D THE ORDER OF THE CIT(A) THAT PROVISIONS OF SECTION 115JB ARE NOT APP LICABLE TO ASSESSEE COMPANY, THEREFORE, GROUND NO. 5 TAKEN BY REVENUE B ECOME INFRUCTUOUS. THEREFORE THE SAME STANDS DISMISSED AS SUCH AS AGRE ED BY BOTH THE PARTIES. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED WHILE THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2017. SD/ - SD/ - (RAVISH SOOD) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 20 TH DECEMBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -22, MUMBAI 4. THE CIT - 14, MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.