The ACIT, (OSD), Range-1, Ahmedabad V. Gujarat Paguthan Energy Corporation Ltd., Ahmedabad

ITA 691/AHD/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0257 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Bad and doubtful debts; Provision of bad debts; Revenue expenditure; TDS; Set aside
• Section: 40(a)(ia); 80G; 80IA; 80HH

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ I.T.A. NO. 691/AHD/2014 ( / ASSESSMENT YEAR : 2008-09) ACIT(OSD) RANGE-1, AHMEDABAD / VS. GUJARAT PAGUTHAN ENERGY CORPORATION PVT. LTD. 6 TH FLOOR, CHANAKYA BUILDING, OFF. ASHRAM ROAD, AHMEDABAD- 380009 ./ ./ PAN/GIR NO. : AAA CG7 999 P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SMT. APARNA AGARWAL, CIT DR / RESPONDENT BY : SHRI S. N. SOPARKAR, AR / DATE OF HEARING 24/06/2019 !'# / DATE OF PRONOUNCEMENT 28/06/2019 $%/ O R D E R PER SUDHANSHU SRIVASTAVA - JM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 26.12.2013 PASSED BY THE LD. CIT(A)-XXI, AHME DABAD (HEREINAFTER CALLED THE CIT(A)) AND PERTAINS TO ASS ESSMENT YEAR 2008-09. ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 2 - 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE CORPORATION IS ENGAGED IN THE BUSINESS AND GENERATION OF ELECTRICA L ENERGY. THE RETURN OF INCOME WAS FILED DECLARING A TOTAL INCOME OF RS. 47,92,44,535/- AFTER CLAIMING DEDUCTION UNDER SEC. 80IA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) TO THE EXTENT OF RS. 112,03,60,252/-. THE BOOK PROFIT WAS COMPUTED AT RS. 286,03,86,500/-. THE CASE WAS SELECTED FOR SCRUTIN Y UNDER CASS GUIDELINES AND THE ASSESSMENT WAS COMPLETED AT A GR OSS TOTAL INCOME OF RS. 98,02,16,500/- AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES- 1. DISALLOWANCE OF MISCELLANEOUS EXPENSES- RS. 72, 80,514/- . 2. DISALLOWANCE UNDER SEC. 40(A)(IA)- RS. 28,85,2 9,912/-. 3. DISALLOWANCE OF CAPITAL EXPENSES- RS. 3,37,080/ -. 4. DISALLOWANCE UNDER SEC. 80G OF THE ACT- RS. 5,8 2,000/-. 2.1 THE ASSESSING OFFICER (AO) ALSO RECOMPUTED THE ASSESSEES CLAIM UNDER SEC. 80IA OF THE ACT. THE BOOK PROFITS WERE COMPUTED BY THE AO AT RS. 3,90,60,30,430/-. 2.2 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT( A) WHO PARTLY ALLOWED THE ASSESSEES APPEAL BY DELETING THE DISAL LOWANCE PERTAINING TO MISCELLANEOUS EXPENSES AND THE DISALL OWANCE UNDER SEC. 40(A)(IA) OF THE ACT. THE LD. CIT (A), HOWEVE R, CONFIRMED THE ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 3 - DISALLOWANCE PERTAINING THE CAPITAL EXPENSES AND DO NATIONS UNDER SEC. 80G OF THE ACT. 2.3 NOW, AGGRIEVED, THE DEPARTMENT IS BEFORE THIS T RIBUNAL (ITAT) AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DEL ETING THE DISALLOWANCE OF MISCELLANEOUS EXPENDITURE OF RS. 72 .80 LACS DESPITE THE FACT THE SAME DID NOT PERTAIN TO THE PREVIOUS Y EAR AND THE ASSESSEE FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELE TING THE DISALLOWANCE OF RS. 28.85 CRORES MADE U/S. 40(A)(IA ) DESPITE THE FACT THAT THE ASSESSEE HAD NOT DEDUCTED TAX DEDUCTED AT SOURCE ON THE SAID PAYMENT OF REBATE O GUVNL WHICH HAD A CHARACTER OF INTEREST ON WHICH TAX DEDUCTED AT SOURCE WAS REQUIRED TO BE DED UCTED U/S. 194A. 3. THE CIT(A) HAS NOT APPRECIATED THE FACT THAT ACT UAL REBATE FOR EARLY PAYMENT WOULD BE REDUCED AT THE TIME OF PAYME NT AND NOT PAID BACK AT A LATER DATE. THE DELAYED PAYMENT CHARGES W ERE VOLUNTARILY TREATED AS INTEREST BY GUVNL SO CHARGE FOR EARLY PA YMENT IS ALSO REQUIRED TO BE TREATED AS INTEREST ON THE SAME ANAL OGY. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOLD ING THE NET INTEREST INCOME IS TO BE EXCLUDED FROM THE ELIGIBLE PROFIT FOR COMPUTATION OF DEDUCTION U/S. 80IA OF THE ACT IN AB SENCE OF ANY SUCH PROVISION IN THE ACT. THE CIT(A) HAS NOT APPRECIAT ED THE FACT THAT THE ASSESSEE HAS FAILED TO ESTABLISH A NEXUS BETWEEN TH E INTEREST EXPENDITURE AND INTEREST INCOME INCIDENTAL TO THE E LIGIBLE BUSINESS. 5. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELE TING THE DISALLOWANCE OF DEDUCTION U/S. 80IA OF RS. 1.16 CRO RES DESPITE THE FACT THAT THE ASSESSEE HAD ARBITRARILY APPORTIONED INTEREST EXPENDITURE AND BAD DEBTS BETWEEN ELIGIBLE AND NON- ELIGIBLE UNITS RESULTING IN EXCESS CLAIM OF DEDUCTION U/S. 80IA. 6. THE CIT(A) HAS ERRED IN LAW AND FACTS IN DIRECTI NG THE AO TO ALLOW REDUCTION OF RS. 85.59 CRORES FROM BOOK PROFI T BEING EARLIER YEARS PROVISION FOR BAD DEBTS DESPITE THE FACT THAT THE SAME WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE AO HAD GIVEN A FINDING THAT THE CONDITIONS OF CLAUSE (I) TO EXPL ANATION 1 TO SECTION 115JB(2) ARE NOT FULFILLED. ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 4 - 3.0 AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIV E (AR) APPEARING ON BEHALF OF THE ASSESSEE CORPORATION SUBMITTED THA T GROUND NO. 1 OF THE DEPARTMENTS APPEAL WAS COVERED IN FAVOUR OF TH E ASSESSEE BY THE EARLIER ORDERS OF THE ITAT AHMEDABAD BENCH FOR ASSE SSMENT YEARS (AY) 2005-06, 2006-07 AND 2007-08. OUR ATTENTION W AS DRAWN TO THE RELEVANT PARAGRAPHS OF THE ITAT ORDERS PLACED IN TH E PAPER BOOK IN THIS REGARD AND IT WAS SUBMITTED THAT THE LD. CIT ( A) HAD FOLLOWED THE EARLIER ASSESSMENT YEARS ORDER AND HAD SET ASIDE T HE ISSUE TO THE FILE OF THE AO. THE LD. AR SUBMITTED THAT THERE WAS NO INFIRMITY THE DIRECTION ISSUED BY THE LD. CIT (A) TO MODIFY THE O RDER AS PER THE ORDER OF THE ITAT IN A.YS. 2005-06 AND 2006-07 IN A SSESSEES OWN CASE. 4.0 THE LD. CIT DR PLACED EXTENSIVE RELIANCE ON THE FINDINGS OF THE AO AND SUBMITTED THAT THE LD. CIT (A) HAD ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE. SHE, HOWEVER, COULD NOT CONTROVERT THE FACT THAT THE ISSUE STOOD COVER AGAINST THE REVENUE AND IN FAVOUR OF THE DEPARTMENT BY THE ORDERS OF THE ITAT IN ASSESSE ES OWN CASE IN A.YS. 2005-06, 2006-07 AND 2007-08. 5.0 WITH RESPECT TO GROUND NOS. 2 AND 3, WHEREIN TH E DEPARTMENT HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN DEL ETING THE DISALLOWANCE OF RS. 28,85,29,912/- MADE UNDER SEC. 40(A)(IA), THE LD. ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 5 - AR SUBMITTED THAT THE LD. CIT (A) HAD, ON THIS ISSU E, FOLLOWED THE ORDER OF HIS PREDECESSOR AND THE REVENUES APPEAL A GAINST THE ORDER OF THE LD. CIT (A) HAD BEEN DISMISSED BY THE ITAT. IT WAS FURTHER SUBMITTED THAT FOR A.Y. 2007-08 ALSO THE TRIBUNAL H AD RETURNED A FINDING IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. 6.0 IN RESPONSE, THE LD. CIT DR PLACED RELIANCE ON THE FINDINGS AND OBSERVATIONS OF THE AO BUT COULD NOT CONTROVERT THE FACT THAT THE ISSUE STOOD COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT IN A.YS. 2006-07 AND 2007-08 IN A SSESSEES OWN CASE. 7.0 WITH RESPECT TO GROUND NO. 4 CHALLENGING THE AC TION OF THE LD. CIT (A) IN DIRECTING THE AO TO EXCLUDE NET INTEREST INCOME FOR COMPUTATION OF DEDUCTION UNDER SEC. 80IA OF THE ACT , THE LD. AR SUBMITTED THAT THIS ISSUE ALSO STOOD COVERED IN FAV OUR OF THE ASSESSEE INASMUCH AS THE LD. CIT (A) HAS FOLLOWED THE ORDERS OF HIS PREDECESSOR IN A.YS. 2002-03, 2005-06, 2006-07, 200 7-08, 1998-99 AND 1999-00. IT WAS FURTHER SUBMITTED THAT THE ITA T AHMEDABAD BENCH IN ASSESSEES OWN CASE FOR A.YS. 2005-06 AND 2006-07 HAD ACCEPTED THE PRINCIPLE OF NETTING OF INTEREST INCOM E FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SEC. 80IA OF THE ACT AND, THEREFORE, ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 6 - THE SAME SHOULD BE FOLLOWED AND THE DEPARTMENTS GR OUND SHOULD BE DISMISSED. 8.0 THE LD. CIT DR SUPPORTED THE FINDINGS AND OBSER VATIONS OF THE AO ON THIS ISSUE AS WELL. 9.0 WITH RESPECT TO GROUND NO. 5 OF THE DEPARTMENT S APPEAL PERTAINING TO THE DELETION OF DISALLOWANCE OF DEDUC TION UNDER SEC. 80IA TO THE TUNE OF RS. 1,16,33,381/-, THE LD. AR S UBMITTED THAT THE ASSESSEE WAS HAVING TWO GENERATING UNITS WHICH WERE ELIGIBLE FOR DEDUCTION UNDER SEC. 80IA OF THE ACT AND THE ELIGIB ILITY PERIOD FOR THE THIRD UNIT WAS OVER. IT WAS SUBMITTED THAT THE ASS ESSEE HAD FURNISHED THE RELEVANT DETAILS OF THE APPORTIONMENT OF THE EX PENDITURE BETWEEN THE THREE UNITS WHICH WAS ON THE BASIS OF SALES TUR NOVER RATIO/ACTUAL EXPENDITURE INCURRED. IT WAS SUBMITTED THAT AS PER THE AO THERE WAS NO SPECIFIC PATTERN FOR APPORTIONING PROVISION FOR BAD DEBTS, FUEL EXPENSES AND INTEREST EXPENSES. THE LD. AR ALSO SU BMITTED THAT THE BIFURCATION DONE BY THE CORPORATION WAS BASED ON TH E METHOD WHICH HAD CONSISTENTLY BEEN FOLLOWED FROM YEAR TO YEAR IN THE PAST AND THAT THERE WAS NO CHANGE. IT WAS ARGUED THAT A METHOD W HICH HAS BEEN CONSISTENTLY FOLLOWED IN THE PAST AND HAS BEEN ACCE PTED BY THE DEPARTMENT SHOULD NOT BE DISTURBED BY PICKING UP ON LY SPECIFIC HEADS OF EXPENSES AND REALLOCATING THEM. IT WAS FURTHER SUBMITTED THAT THE ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 7 - LD. CIT(A) HAD ACCEPTED THE CORRECT ALLOCATION ON P AGE 14 OF THE IMPUGNED ORDER AND HAD OBSERVED THAT IF THE CORRECT WORKING IS MADE THE EFFECT WILL BE NIL AFTER CONSIDERING THE DEBIT AND CREDIT ON BOTH THE SIDES WHEREAS THE AO HAD COMMITTED AN ERROR BY TAKING TWO DIFFERENT FIGURES. THE LD. AR SUBMITTED THAT THE L D. CIT (A) HAD RETURNED A FACTUAL FINDING ON THE ISSUE WHICH WAS C ORRECT AND NEEDED NO FURTHER ALTERATION. 10.0 IN RESPONSE, THE LD. CIT DR PLACED RELIANCE ON THE FINDINGS AND OBSERVATIONS OF THE AO. 11.0 WITH RESPECT TO GROUND NO. 6 WHICH CHALLENGED THE ACTION OF THE LD. CIT (A) IN DIRECTING THE AO TO ALLOW REDUCTION OF RS. 85,59,05,230 FROM THE BOOK PROFITS BEING EARLIER YE AR PROVISION FOR BAD DEBTS, THE LD. AR SUBMITTED THAT THIS GROUND OF THE REVENUE IS MISCONCEIVED INASMUCH AS THE LD. CIT (A) HAS GIVEN NO SUCH DIRECTION. IT WAS SUBMITTED THAT THE AO HAS BEEN D IRECTED TO VERIFY THE CLAIM OF THE ASSESSEE REGARDING DISALLOWANCE OF AMO UNT OF PROVISION FROM A.Y.S 2001-02 TO 2008-09 AND, THEREAFTER, ALLO W THE CLAIM. IT WAS SUBMITTED THAT, THUS, THERE IS NO DIRECTION TO ALLOW REDUCTION OF THE AMOUNT STATED IN THE GROUND AND THAT THE SAME W AS TO BE ALLOWED ONLY AFTER VERIFICATION OF THE CLAIM BY THE AO AND, THEREFORE, THE GROUND WAS MISCONCEIVED. ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 8 - 12.0 IN RESPONSE, THE LD. CIT DR PLACED RELIANCE ON THE FINDING OF THE AO. 13.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. GROUND NO. 1 OF THE REVENUES APPEAL CHALLENGES THE ACTION OF THE LD. CIT (A) IN DELETING THE DISAL LOWANCE OF RS. 72,80,514/-. IT IS SEEN THAT THE LD. CIT (A), WHIL E DELETING THIS DISALLOWANCE PERTAINING TO MISCELLANEOUS EXPENDITUR E. HAS NOTED THAT, ADMITTEDLY, THE IMPUGNED EXPENDITURE DID NOT RELATE TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND WAS INCURRED IN EARLIE R YEAR AND ALSO PERTAINED TO EARLIER YEAR, BUT ALL THE SAME, THE SA ME WAS TREATED AS DIFFERRED REVENUE EXPENDITURE BY THE ASSESSEE AND T HE CLAIM IS MADE FROM YEAR TO YEAR ON THE BASIS OF MATCHING CONCEPT HAVING REGARD TO THE BENEFIT AVAILABLE OVER NUMBER OF YEARS FROM F.Y . 2002-03 I.E. THE YEAR IN WHICH THE EXPENDITURE WAS INCURRED. THE LD . CIT (A) HAS NOTED THAT A SIMILAR CLAIM WAS DISALLOWED BY THE AO IN AYS 2005-06 AND 2006-07 BUT THE DISALLOWANCE WAS DELETED BY THE LD. CIT (A) AND THE DEPARTMENTS FURTHER APPEAL HAD BEEN DISMISSED BY THE AHMEDABAD BENCH OF THE ITAT. WE HAVE ALSO PERUSED THE ORDER OF THE AHMEDABAD BENCH FOR A.Y. 2005-06 IN ITA NO. 2839/AHD/2008 WHE REIN, VIDE ORDER DATED 30.03.2012, ITAT HAD RESTORED THE ISSUE TO THE FILE OF THE AO TO VERIFY THE FACTS AND IF IT WAS FOUND THAT IF IN A.Y. 2003-04 PRO- ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 9 - RATA DEDUCTION WAS CLAIMED AND ALLOWED, THEN FOR A. Y. 2005-06 ALSO NO DISALLOWANCE WAS REQUIRED. WE ALSO KNOW THAT SI MILAR DIRECTIONS HAVE BEEN GIVEN BY THE ITAT IN A.YS. 2006-07 AND 20 07-08 ALSO. ACCORDINGLY, THE ISSUE OF MISCELLANEOUS EXPENDITURE HAS RIGHTLY BEEN RESTORED TO THE FILE OF THE AO BY THE LD. CIT (A). IDENTICAL FACTS HAD ARISEN IN A.Y.S. 2005-06, 206-07 AND 2007-08 AND TH E LD. CIT (A) HAS DIRECTED THE AO TO MODIFY THE ORDER ON THE ISSUE AS PER THE DIRECTIONS OF THE ITAT IN A.YS. 2005-06 AND 2006-07. ACCORDIN GLY, WE UPHOLD THE RESTORATION OF THE ISSUE TO FILE OF THE AO AND DISMISS GROUND NO. 1 OF THE DEPARTMENTS APPEAL. 13.1 COMING TO THE GROUND NOS. 2 AND 3 WHICH CHALLE NGE THE ACTION OF THE LD. CIT (A) IN DELETING THE DISALLOWANCE OF RS. 28,85,29,912/- BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NOT DEDUCTING TDS ON PAYMENT OF REBATE TO GUVNL, IT IS SEEN THAT, AS PER THE SUBMISSION OF THE ASSESSEE, THE ENTIRE ELECTRIC ITY GENERATED BY THE ASSESSEE IS SOLD TO THE GUJARAT ELECTRICITY BOARD ( GUVNL) AND, THUS, THE BOARD IS THE ONLY CUSTOMER OF THE ASSESSEE. FUR THER, IN PURSUANCE OF VARIOUS AGREEMENTS ENTERED INTO WITH VARIOUS STA KE-HOLDERS, REBATE WAS ALLOWED FOR PROMPT PAYMENT BY THE ELECTRICITY B OARD FROM THE BASIC SALE PRICE FIXED. THE AO TREATED THE IMPUGNE D AMOUNT AS INTEREST PAYMENT BY THE ASSESSEE TO THE ELECTRICITY BOARD WHEREAS IT IS THE ASSESSEES CONTENTION THAT IT WAS ONLY A REBATE ALLOWED IN THE FORM ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 10 - OF DISCOUNT AND, THEREFORE, THE SAME WAS NOT WITHIN THE PURVIEW OF SEC. 40(A)(IA) OF THE ACT. THE LD. CIT (A) HAS DEL ETED THE DISALLOWANCE BY FOLLOWING THE ORDER OF HIS PREDECES SOR FOR A.Y. 2006- 07 WHEREIN A SIMILAR DISALLOWANCE WAS DELETED AND T HE DEPARTMENTS APPEAL WAS DISMISSED BY THE ITAT. WE NOTE THAT THE ISSUE IS COVERED AGAINST THE REVENUE BY THE ORDER OF THE ITAT INASMU CH AS IN ITA NO. 1031/AHD/2010, VIDE ORDER DATED 20.09.2013, ITAT HA S NOTED IN PARAGRAPH 21 THAT IT WAS AN UNDISPUTED FACT THAT TH E ENTIRE SALES OF THE ASSESSEE WERE TO GUVNL AND THE PAYMENTS RECEIVED BY THE ASSESSEE FROM IT WERE TOWARDS SALES FROM THE CUSTOMERS. IT HAS BEEN FURTHER NOTED IN THE ORDER THAT NOTHING WAS BROUGHT ON RECO RD BY THE REVENUE TO DEMONSTRATE THAT THE REBATE GIVEN WAS NOT IN THE NATURE OF DISCOUNT BUT WAS IN THE NATURE OF INTEREST. IN THE PRESENT CASE BEFORE US ALSO THE REVENUE COULD NOT DISTINGUISH THE FACTS AS NOTED BY THE TRIBUNAL IN A.Y. 2006-07 WITH THE FACTS AS AVAILABLE IN THE YEA R UNDER CONSIDERATION THAT THE A.Y. 2008-09. ACCORDINGLY, RESPECTFULLY FOLLOWING THE RATIO OF THE SAID ORDER WE FIND NO RE ASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AND WE DISMISSED THE GROUND NOS. 2 AND 3 OF THE REVENUES APPEAL. 13.2 GROUND NO. 4 CHALLENGES THE ACTION OF THE LD. CIT (A) IN DIRECTING THE AO TO EXCLUDE ONLY THE NET INTEREST I NCOME FOR THE PURPOSE OF DEDUCTION UNDER SEC. 80IA OF THE ACT. W E FIND THAT ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 11 - IDENTICAL ISSUE HAS BEEN DECIDED BY THE ITAT AHMEDA BAD BENCH IN ASSESSEES OWN CASE FOR A.YS. 2002-03, 2005-06, 200 6-07, 2007-08, 1998-99 AND 1999-00. WE ALSO NOTE THAT THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NIRMA LTD. REPORTED IN (2014) 367 ITR 2012 (GUJ.) HAS HELD THAT IN COMPUTING THE SPECIAL DEDUCTIONS UNDER SEC. 80, 80IA AND 80HH NET INCOMES NOT DERIVED FROM INDUSTRIAL UNDERTAKING SHOULD BE EXCLUDED. IN REACHING THIS C ONCLUSION THE GUJARAT HIGH COURT HAS RELIED ON THE RATIO OF THE J UDGMENT OF THE HONBLE APEX COURT IN ACG ASSOCIATE CAPSULES PVT. L TD. VS. CIT REPORTED IN (2012) 343 ITR 89 (SC). ACCORDINGLY, R ESPECTFULLY FOLLOWING THE ORDERS OF THE ITAT IN ASSESSEES OWN CASE AS AFOREMENTIONED AS WELL AS THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NIRMA LTD. (SUPRA) WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE ALSO AND WE DISMISSED GROUND NO. 4 OF THE REVENUES APPEAL. 13.3 COMING TO THE GROUND NO. 5 WHEREIN THE DEPARTM ENT HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN DELETIN G THE DISALLOWANCE OF RS. 1,16,33,881/-, WHICH HAD BEEN MADE BY THE AO BY REAPPORTIONING THE ASSESSEES ALLOCATION OF CLAIM F OR BAD DEBTS, FUEL EXPENSES AND INTEREST EXPENSES, WE NOTE THAT IN THI S REGARD THE LD. CIT (A) HAS OBSERVED AND ACCEPTED THAT THERE IS DIFFERE NCE IN THE CALCULATION BY THE ASSESSEE AND THE CALCULATION MAD E BY THE AO AND ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 12 - THE MAJOR DIFFERENCE IN THE COMPUTATION WAS ON ACCO UNT OF REALLOCATION FOR PROVISION OF BAD DEBTS. THE LD. CIT (A) HAS NO TED THAT THE ELIGIBLE PROFIT HAS TO BE WORKED OUT BY ADDING BACK THE PROVISION FOR BAD DEBTS TO PROFIT BEFORE TAX AND, THEREFORE, WHAT EVER AMOUNT IS TO BE CONSIDERED AS PROVISION, THE SAME WOULD ALSO REQUIR ED TO BE ADJUSTED FOR THE RESPECTIVE UNITS FOR THE PURPOSE OF WORKING OUT ELIGIBLE PROFIT. THE LD. CIT (A) HAS FURTHER NOTED THAT IF AS PER TH E AO THE PROVISION SHOULD BE DIFFERENT, THEN THE PROFIT BEFORE TAX ALS O WILL HAVE ADJUSTED BY THE SAME FIGURE AND, THEREFORE, THERE WILL BE NO DIFFERENCE IN THE PROFIT ELIGIBLE FOR DEDUCTION FOR CLAIM UNDER SEC. 80IA OF THE ACT. WE FIND THAT THIS OBSERVATION OF THE LD. CIT (A) IS LO GICAL AND CORRECT AND THE AO HAS ERRED IN TAKING TWO DIFFERENT SETS OF FI GURES, ONE FOR REALLOCATING THE PROVISION AND THE OTHER WHICH HAS BEEN DEDUCTED FOR THE PURPOSE OF COMPUTATION OF CLAIM UNDER SEC. 80IA . IF THE SAME FIGURE IS TAKEN FOR THE PROVISION AS WELL AS FOR TH E PURPOSE OF COMPUTATION OF CLAIM UNDER SEC. 80IA, THE RESULTANT EFFECT WILL BE ZERO. WE FIND NO REASON, ACCORDINGLY, TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AS WELL AND WE DISMIS S GROUND NO. 5 RAISED BY THE DEPARTMENT. 13.4 AS FAR AS GROUND NO. 6 OF THE DEPARTMENTS APP EAL IS CONCERNED WHICH CHALLENGES THE ACTION OF THE LD. CIT (A) IN D IRECTING THE AO TO ALLOW THE ASSESSEE BENEFIT OF REDUCTION OF RS. 85,5 9,05,230/-, WE AGREE ITA NO.691/AHD/2014 [ACIT VS. GUJARAT PAGUTHAN ENERGY PVT. LTD.] A.Y. 2008-09 - 13 - WITH THE CONTENTION OF THE LD. AR THAT THIS GROUND OF THE DEPARTMENT IS MISCONCEIVED INASMUCH AS THE LD. CIT (A) IN PARA 11 .2 OF THE IMPUGNED ORDER HAS ONLY DIRECTED THAT THE AO IS TO VERIFY THE CLAIM OF THE ASSESSEE REGARDING THE DISALLOWANCE OF AMOUNT O F PROVISION FROM A.YS. 2001-02, 2008-09 AND ALLOW THE CLAIM IN VIEW OF CLAUSE (I) OF EXPLANATION 1 OF SEC. 115JB. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A) IN ISSUING SUCH DIRECTION AND, UNDISPUTEDLY , THE ISSUE IS TO BE DECIDED BY THE AO AFTER DUE EXAMINATION AND VERIFIC ATION OF THE ASSESSEES CLAIM IN THIS REGARD. ACCORDINGLY, WE D ISMISS GROUND NO. 6. 14. IN THE FINAL RESULT, THE APPEAL OF THE DEPARTME NTS STANDS DISMISSED. SD/- SD/- (AMARJIT SINGH) (SUDHANSHU SRIVA STAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 28/06/2019 TANMAY TRUE COPY !' #' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. $ / ASSESSEE 3. ) *+ , / CONCERNED CIT 4. ,- / CIT (A) 5. 012 33*+, *+#, 56$)$ / DR, ITAT, AHMEDABAD 6. 289 : / GUARD FILE. BY ORDER / $% , ;/5 *+#, 56$)$ < THIS ORDER PRONOUNCED IN OPEN COURT ON 2 8/06/2019