JSW Steel Limited, Mumbai V. AddlCIT, Bangalore

ITA 858/BANG/2011

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6776 (ITAT-MUMBAI)
• Duration Of Justice: 10 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 02-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DANESH BAFNA
• Keywords: Capital asset; Business income; Revision of order; Depreciation; Business expenditure; Search and seizure; Question of law; Cost of acquisition; Capital receipt; Revised return; Unabsorbed depreciation; Revenue expenditure; Reassessment proceedings; Capital expenditure; Rule 8D; Set aside; Capital Gains
• Section: 68; 37; 56; 263; 10; 11; 139; 143(3); 244A; 153A; 234B; 14A; 115JB; 37(1); 80G; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI AMARJIT SINGH (JUDICIAL MEMBER) ITA No. 858/BANG/2011 Assessment Year: 2007-08 JSW Steel Limited, Jindal Mansion, 5A, Dr. G. Deshmukh Marg, Mumbai-400026. Vs. The Addl. CIT, Range 11, Bangalore. PAN No. AAACJ 4323 N Appellant Respondent ITA No. 8530/MUM/2011 Assessment Year: 2007-08 DC. CC.46, R.No. 659, 6th floor, Aayakar Bhavan, M.K. Road, Mumbai-20. Vs. M/s JSW Steel Ltd., Jindal Mansion, 5-A, Dr. G Deshmukh Marg, Mumbai-400026. PAN No. AAACJ 4323 N Appellant Respondent ITA No. 876/MUM/2015 Assessment Year: 2007-08 M/s JSW Steel Ltd., JSW Centre, Bandra Kurla Complex, Mumbai-400051. Vs. DCIT, Central Circle 46, 6th flr., Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AAACJ 4323 N Appellant Respondent JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 2 ITA No. 1339/MUM/2015 Assessment Year: 2007-08 Dy. CIT, Central Circle-8(3), [Erstwhile DCIT, CC-46, Mumbai] R.No. 659, 5th floor, Aayakar Bhavan, M.K. Road, Mumbai-20. Vs. M/s JSW Steel Ltd., JSW Centre, Bandra Kurla Complex, Mumbai-400051. PAN No. AAACJ 4323 N Appellant Respondent Assessee by : Mr. Danesh Bafna & Mr. Hirali Desari, ARs Revenue by : Mr. Achal Sharma, CIT-DR Date of Hearing : 22/02/2022 Date of pronouncement : 16/03/2022 ORDER PER OM PRAKASH KANT, AM These cross appeals by the assessee and the Revenue are directed against two separate orders dated 19/08/2011 and 01/12/2014, passed by the Ld. Commissioner of Income-tax (Appeals)-I, Bangalore and the Commissioner of Income-Tax (Appeals)-47, Mumbai respectively, for assessment year 2007-08. The first set of cross appeals are in relation to original assessment proceedings, whereas the second set of cross appeals are in relation to search assessment proceedings. As common issues are involved in these appeals, same were JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 3 herded together and disposed off by way of this consolidated order for convenience and avoid reputation of facts. 2. First, we take up the cross appeals in relation to original assessment proceedings. The grounds raised in respective appeals of the assessee (ITA No. 858/Bang/2011 and the revenue (ITA No. 8530/M/2011) are reproduced as under: 2.1 Grounds of appeal of the assessee 1. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) ('CIT(A)] has legally erred in upholding the action of the learned Additional Commissioner of Income-tax, Range 11, Bangalore ('Addl. CIT') of disallowing the Appellant's claim of Rs,21,93,812 under Section 37(1) the Income Tax Act, 1961 ('the Act), being contribution made to Rajiv Gandhi Institute of Steel Technology. It is prayed that the learned Addl. CIT be directed to allow deduction of Rs.21,93,812 under Section 37(1) of the Act. 2. On the facts and in the circumstances of the case, the learned CIT(A) has legally erred in upholding the action of the learned Addl. CIT of disallowing expenditure incurred on upfront fees of Rs.1,15,20,193 on the ground that the same should be added to Cost of Plant and Machinery. It is prayed that the learned Addl. CIT be directed to allow deduction for expenditure incurred on upfront fees of Rs.1,15,20,193. 2.2 Grounds of appeal of the Revenue JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 4 1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in directing the AO to treat sales tax incentives concessions I refund of Rs. 54.02 crores as capital receipt and to recompute business income by reducing the said amount." 2. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the disallowance of depreciation of Rs.7,80,30,000/- by holding that sales tax subsidy cannot be deducted from cost of assets for computing depreciation. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing depreciation of Rs.5,79,08,466/- on increased WDV of assets, without appreciating the reasons discussed by the AO in the assessment order. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in holding that interest of Rs. 7,26,71,000/- is assessable as 'Business Income' and not 'Income from Other Sources', without taking into consideration the decision of the Hon'ble Supreme Court in the case of M/s. Tuticorin Alkali Chemicals & Fertilizers Ltd. reported in 227 ITR 172. 5. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in directing the AO to quantify the disallowance u/s 14A as per principle of proportion as against application of Rule 8D r.w.s14A as held by the A.O. 2.3 The assessee has also filed an additional ground on 24/04/2012, which is reproduced as under: “The above-mentioned appeal is fixed for hearing and disposal before your Honours on June 4, 2012. In this connection, we are enclosing herewith additional grounds of appeal, in triplicate. We request your Honours to admit the additional grounds as the consideration of these grounds would JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 5 not require any investigation into fresh facts in accordance with the powers vested in you.” 3. The Ld. counsel of the assessee submitted that additional ground being purely of the legal nature and no investigation of the fresh facts is required, same might be admitted in view of the decision of the Hon’ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383 (SC). The ld. DR objected for admission of the additional ground. 4. We have heard parties on the issue of the admission of the additional ground. The Hon’ble Supreme Court in the case of NTPC Ltd (supra) has held where the tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 4.1 We find that all the facts in relation to the issue in dispute raised in additional ground are on the record and ground is being legal in nature, same is admitted for adjudication. 5. Briefly stated facts of the case are that during the year under consideration, the assessee company is engaged in mining of Iron ore to manufacturing of steel products. The assessee company filed its return of JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 6 income for the year under consideration on 30/10/2007 declaring income of ₹10,80,39,02,855/-. The return of income filed by the assessee was selected for the scrutiny assessment. The scrutiny assessment under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) was completed on 18/12/2009 after making various additions and disallowances. In the said assessment order income under the regular provisions of the Act is assessed at ₹12,79,73,73,047/-and ‘book profit’ under section 115 JB of the Act has been assessed at ₹19,65,61,21,057/-. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved with the finding of the Ld. CIT(A), both the assessee and the Revenue are before the Tribunal by way of raising grounds as reproduced above. 5.1 With regard to the additional ground, the Ld. counsel of the assessee relied on the decision of the Tribunal in ITA No. 156/Bang/2011 in the case of the assessee for assessment year 2006-07, wherein identical ground has been adjudicated in favour of the assessee. The Ld. DR on the other hand submitted that as per the provisions of the Act, profit is declared in the books of accounts maintained as per the Company Act and subject to inclusion/exclusion of income listed in section 115 JB of the Act, for book profit is required to be computed in terms of section 115JB of the Act. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 7 6. We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. In the additional ground, the assessee is seeking for reducing amount of ‘sales tax subsidy’ being capital receipt, from the ‘book profit’ computed under section 115 JB of the Act. We find that Tribunal (supra) in the case of the assessee for assessment year 2006-07 following the Special Bench in the case of Sutlej Cotton Mills Ltd Vs ACIT (supra) directed the Assessing Officer to exclude amount of sales tax subsidy received from the computation of the ‘book profit’. The relevant finding of the Tribunal is reproduced as under: “46. We have heard both the parties, perused the material available on record and gone through orders of the authorities below along with case laws cited by both parties. The limited issue came up for our consideration from cross objection filed by the assesee is whether, sales tax subsidy being capital in nature shall be reduced from book profit computed u/s 115JB of the I.T.Act, 1961 or not. We find that the coordinate bench of ITAT, Mumbai Tribunal in assesee's own case for AY 2004-05 in ITA.No.923/Bang/2009, had considered an identical issue and held that where a receipt is held to JSW Steel Limited be capital in nature not chargeable to tax under the normal provision of the Act, the same cannot be taxed u/s 115JB of the I.T. Act, 1961. 47. We further noted that Hon'ble Kolkata High Court, in the case of Ankit Metal & Power Ltd. In ITA no. 155 of 2018 had considered an identical issue and after considering the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. Vs. CIT (supra) held that when a receipt is not in the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 8 character of income as defined under section 2(24) of the I.T.Act, 1961, then it cannot form part of the book profit u/s 115JB of the I.T.Act, 1961. The Hon'ble High court, further observed that sales tax subsidy received by the assesee is capital receipt and does not come within definition of income under section 2(24) of the I.T.Act, 1961 and when, a receipt is not a in the nature of income, it cannot form part of book profit u/s 115JB of the I.T.Act, 1961. The Court, further observed that the facts of case before the Hon'ble Supreme Court in the case of Apollo Tyres Limited (supra) were altogether difference, where the income in question was taxable, but was exempt under a specific provision of the Act, and as such it was to be included as a part of book profit, but where the receipt is not in the nature of income at all, it cannot be included in book profit for the purpose of computation u/s 115JB of the I.T. Act, 1961. 48. We further noted that the ITAT special bench of Kolkata Tribunal, in the case of Sutlej Cotton mills Ltd. vs. ACIT (1993) (45 ITD 22), held that a particular receipt, which is admittedly not an income cannot be brought to tax under the deeming provisions of section 115J of the Act, as it defies the basic intention behind introduction of provisions of section 115JB of the Act. The ITAT JSW Steel Limited Jaipur bench, in case of ACIT vs. Shree Cement Ltd, had considered an identical issue and held that incentives granted to the assesee is capital receipt and hence, cannot be part of book profit computed u/s 115JB of the Act. Similarly, the ITAT Kolkata Bench, in the case of Sipca India Pvt. Ltd. Vs DCIT 186 TTJ 289 had considered an identical issue and held that when, subsidy in question is not in the nature of income, it cannot be regarded as income even for the purpose of book profit u/s 115JB of the Act, though credited in the profit and loss account and have to be excluded for arriving at the book profit u/s 115JB of the Act. 49. Insofar as, case laws relied upon by the department , we find that all those case laws have been either considered by the Tribunal or High Court JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 9 and came to conclusion that in those cases the capital receipt is in the nature of income, but by a specific provision, the same has been exempted and hence, the came to the conclusion that, once particular receipt is routed through profit and loss account, then it should be part of book profit and cannot be excluded, while arriving at book profit u/s 115JB of the Act 1961. 50. In this view of the matter and considering the ratio of case laws discussed hereinabove, we are of the considered view that when a particular receipt is exempt from tax under the Income tax law, then the same cannot be considered for the purpose of computation of book profit u/s 115JB of the I.T.Act 1961. Hence, we direct the Ld. AO to exclude sales tax subsidy received by the assesee amounting to Rs. 36,15,49,828/- from book profits computed u/s 115JB of the I.T. Act, 1961.” 6.1 As the issue in dispute raised in the additional ground before us is identical to the issue decided by the Tribunal (supra), respectfully following the same, in the year under consideration also, the Assessing Officer is directed to exclude amount of sales tax subsidy received by the assessee for the purpose of computation of the ‘book profit’ under section 115 JB of the Act. The additional ground of the appeal is accordingly allowed. 7. The ground No. one of the appeal of the assessee relates to disallowance amounting to ₹21,93,812/- under section 37(1) of the Act for payment to ‘Rajiv Gandhi Institute of Steel Technology’. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 10 7.1. The brief qua the issue in dispute are that assessee made a contribution of ₹21,93,812/-to the Rajiv Gandhi Institute of Steel Technology and claimed the same as deduction under section 37(1) of the Act. The assessee submitted that this Institute was located in the company’s premises at ‘Thoranagallu’ and was functioning as a training institute for steel professionals and for catering training needs of employees including the assessee. The assessee accordingly claimed that contribution was for providing training to company’s employees and therefore being in nature of business expenditure, same is allowable under section 37(1) of the Act. The Assessing Officer however held that during the year under consideration, the institute was a government Institute and therefore any contribution to such institute should have been made and claimed in accordance with the provision of section 80G of the Act, and therefore same is not allowable under section 37(1) of the Act. 8. The Ld. CIT(A) observed in respect of the institute as under: “18. The Appellant contended before me that RGIST is functioning as Training Institute for steel professionals and is also catering to the training needs of the employees of the Appellant. The Board of the Appellant had accorded its approval for taking over the GIST for its effective running and management to enable the Government of Karnataka for effective implementation of the above decision. In line with this decision of the Board, GIST was completely taken over by the Appellant and eventually the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 11 Government stake was reduced to nominal. The same was evident from the Mandatory Disclosure at the Appellant's website. The Appellant plans to transform this Institute.” 9. After considering the submission of the assessee, the Ld. CIT(A) confirmed the disallowance observing as under: “19. The Appellant further contended that the training was necessary to increase the efficiency of the employees and to make them technically sound for smooth operations of the business. Since there was no other training Institute in the vicinity of the Company the employees of the Appellant were sent for the training in that Institute In support of this, the Appellant filed the details of the employees trained in the Institute. RGIST also conducted various coordinated programs for the benefit of the employees of the Appellant. In view of the above the appellant claims the expenditure as for the purpose of its. business 20. On a careful consideration of the facts and material on record, it is observed that the contributions to GIST are made not in the shape of fees for providing training to the employees of the Appellant Company. Such is being paid in the shape of donation only. Therefore, it cannot be held that the expenditure had been incurred wholly and exclusively for the purpose of business. Therefore, the same is not allowable as revenue expenditure under section 37(1) of the IT. Act. In view thereof, the addition is confirmed. This ground is decided against of the Appellant.” 10. Before us, the Ld. counsel of the assessee submitted that payment to the institute has been made wholly and exclusively for the purpose of the business of the assessee and therefore the contribution made is allowable as deduction JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 12 in view of the decision of Hon’ble Bombay High Court in the case of Krishan Sahkari Sakhar Karkhana Ltd Vs CIT (1998) 229 ITR 577(Bom) and decision of Hon’ble Karnataka High Court in the case of Mysore Kirloskar Ltd. Vs CIT(1987) 166 ITR 836 (Karn.). 11. On the other hand, the ld. DR relied on the order of the lower authorities and submitted that contribution was made in the form of voluntary donation and not as an expenditure for availing services of training for employees and therefore not in the nature of expenditure incurred wholly and exclusively for the purpose of the business. 12. We have heard rival submission of the parties and perused the relevant material on record. It is undisputed that assessee has made contribution to the Institute and not made payment against any specific invoice raised by the institute for training of employees. In the case of Krishana Sahkari Sakhar Karhkana Ltd. (supra), the assessee was registered as Cooperative Society engage in sale of sugar and paid its contribution to ‘Education fund’ of the state federal society as required under section 68 of Maharashtra Co-operative Societies Act and claimed the same as business expenditure. The ITO allowed the claim but the Commissioner, acting under section 263 set aside the assessment and directed disallowance of the claim, which was upheld by the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 13 Tribunal. But on further appeal, Hon’ble Bombay High Court referred to the decision of CIT vs Malyalam Plantation Ltd (1964) 53 ITR 140 wherein it is observed that the expression “for the purpose of the business” is wider in scope than the expression “for the purpose of earning profits” which take into account not only the day-to-day running of the business, but also the rationalization of its administration and modernization of its machinery. It may include measures for preservation of the business and for the protection of its assets and property from expropriation, coercive process or assumption of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for the carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. The only limitation is that the purpose should be the purpose of the business, that is to say, the expenditure incurred should be for the carrying on a business and the such should incur it in his capacity as a person carrying on the business and it cannot include some expense for the purpose un-connected with the business. The Hon’ble High Court after considering other decisions on the issue in dispute allowed the contribution made by the assessee to the ‘Education Fund’ of the state federal society as allowable business expenditure observing as under: “9. It is clear from the provisions of section 68 of the Maharashtra Co-operative Societies Act read with rule 53 of the rules that it is a statutory JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 14 obligation of the co-operative society to contribute to the education fund at the rates prescribed in rule 53. In the instant case, the assessee was liable to pay to the education fund at the rate of 25 paise per ton of sugarcane crushed per year, subject, however, to the maximum of Rs. 50,000. This contribution, the assessee had to pay because it was carrying on the business of running the sugar factory and was engaged in crushing sugarcane. If no sugarcane was crushed, no contribution was required to be paid to the education fund. That being so, it is clear that the contribution made by the assessee to the State federal society under section 68 of the Maharashtra Co-operative Societies Act read with rule 53 of the rules was an expenditure directly connected or related to the carrying on of the assessee's business. 10. As stated above, the law is well-settled that for the purpose of Income-tax, any contribution made or expenditure incurred by the assessee which is directly connected or related to the carrying on of the assessee's business or which results in a benefit to the assessee's business has to be regarded as allowable deduction under section 37(1) of the Income-tax Act, 1961. In the instant case, it is difficult to say that the contribution made by the assessee was not directly connected or related to the carrying on of the business of the assessee. In fact, it was a statutory obligation of the assessee to contribute the amounts in question to the education fund of the State federal society, It is, therefore, an allowable deduction under section 37(1) of the Act.” 12.1 Further, in the case of Mysore Kirloskar Ltd (supra), the assessee company constituted a trust with an object to provide education for the children of its employees and ex-employees. In furtherance of its objects, the trust established a school near the industry of the assessee. The assessee donated certain amount to the said trust and claimed part of its as business JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 15 expenditure under section 37(1) of the Act. The ITO disallowed the claim of the assessee and Tribunal also upheld on the two ground; first, the section 80G was applicable and not section 37(1) in respect of the donation and second, since the school run by the trust was also open to the children of the persons who were not exclusively the employees or ex-employees of the assessee. The Hon’ble High Court after analyzing the relevant provisions of section 80 G and 37(1) of the Act, allowed donation made to the school as expenditure under section 37(1) of the Act observing as under: “4. Following the above decision, we answer the question in the affirmative and against the assessee. 5. This takes us to question No. 3. To answer this question, we may set out some relevant facts : The assessee is a public limited company engaged in the manufacture and selling of tools, lathes, etc. The assessment year is 1976-77. By a deed dated August 15, 1958, the company has constituted trust called the "Mysore Kirloskar Education Trust". Clause (3) of the trust deed is relevant and it reads : "The Trustees shall hold the trust funds and the income thereof upon trust to apply the same for the promotion and encouragement of education principally of the children of the employees and ex-employees of the settlor at Harihar by providing or by establishing conducting the continuing or by arranging or procuring the establishment, conduct and continuance of places of instruction of all kinds whatsoever including primary, secondary JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 16 or technical schools, colleges, imparting higher or university education or academics or by any other ways and means whatsoever or otherwise howsoever". 6. At the constitution of the trust, the settlor has contributed a sum of Rs. 5,000 with the intent that the same shall be dedicated in perpetuity for the promotion and encouragement of education principally of the children of the employees and ex-employees of the company. 7. The primary object of the trust, therefore, is to provide education for the children of employees and ex-employees of the settlor of the trust, Harihar is not a developed city. The assessee has, however, established its industry there. It has to attract technocrats and men of managerial skill. They would not come to settle there unless there are facilities for them and for their children's education. That was, perhaps, the object with which the trust was constituted. 8. In furtherance of the above object, the trust has established a school at Harihar. To that school, the children of the employees, ex-employees of the assessee and also from the public are admitted. 9. It is said that the assessee-company has been donating every year a certain sum to meet the expenditure of the school. In the accounting year relevant to the assessment year, the assessee has donated Rs. 62,000 and claimed out of it 61.1 per cent, by way of deduction under section 37(1) of the Act. That claim was based on the ground that 61 per cent. of the school children are the children of the employees and the ex-employees of the assessee. The Income-tax Officer did not allow the exemption as claimed. He, however, allowed 50 per cent, of the donation as deduction under section 80G of the Act.” JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 17 12.2 When we examine the claim of the assessee of allowing the deduction for contributions made to the institute, in the light of above decisions, we find that contribution has been made by the assessee for furtherance of its business by way of training or skilling to its employees. The main beneficiary of the institute is assessee company and respectfully following the decision cited above, the claim of deduction under section 37 (1) for the contribution made to institute is allowed. The ground No. one of the appeal of the assessee, is accordingly allowed. 12.3 The ground No. 2 (Two) of the appeal of the assessee relates to disallowance of upfront fee of ₹1,15,20,193/-paid to banks for availing loans for the purpose of construction of captive power plant. According to the assessee, the expenditure of ‘upfront fee’ was paid to the bank after putting captive power plant to use and expenditure being similar to interest on loans, therefore in terms of section 36 (1)(iii) of the Act, payment made after putting the asset to use, is revenue in nature and should be allowed accordingly. According to the Assessing Officer the expenditure was in relation to capital asset and therefore was not allowable as revenue expenditure. The Ld. CIT(A) upheld the disallowance observing as under: JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 18 “25. I have considered the facts of the case and perused the assessment order, submissions of the Appellant as well as the judicial pronouncements on the subject. The A.O. is of the opinion that upfront fees had been paid to raise the loan to purchase Plant & Machinery of the captive Power Plant and therefore, should have been capitalized. The A.R. argued that since the upfront fees were paid after the plant and machinery were put to use, it is allowable as revenue expenditure. I see both are looking to two different sides of the same claim but I observe the A.O's visualization gives the correct picture and nature of expenditure. The upfront fees may be paid at any time, i.e. before the purchase of plant and machinery or even after its purchase and use but such does not render it the characteristic of revenue expenditure. The fact that upfront fees was paid for raising the loan for purchase of capital assets viz., plant and machinery for setting up the units of Captive Power Plant itself proves that the expenditure is capital in nature and hence disallowable. Hence addition is confirmed. This ground is thus decided against the Appellant.” 13. The Ld. counsel of the assessee relied on the decision of Hon’ble Madras High Court in the case of CIT Vs Super Spinning Mills Ltd (2008) 296 ITR 168 (Mad) and CIT vs Sri Meenkshi Mills Ltd (1979) 120 ITR 211 (Mad). The Ld. counsel submitted that Hon’ble Madras High Court has held that ‘upfront fee’ paid to the bank for availing loan for purchase of capital asset is allowable as revenue expenditure and same does not bring into existence an asset of enduring nature. The Ld. counsel submitted that ‘upfront fee’ has to be paid to the bank even if loan is not sanctioned and therefore it is not connected with the purpose for which loan is availed. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 19 14. The Ld. DR on the other hand relied on the order of the lower authorities and submitted that the loan was taken for the purchase of capital asset and therefore the expenditure connected to the purchase of capital asset is also capital in nature. 15. We have heard rival submission of the parties and perused the relevant material on record including the case laws relied upon by the parties. The issue in dispute in the ground raised is whether the ‘upfront fee’ paid for availing bank loan in relation to purchase of Capital Asset is capital expenditure. The loans were used for construction of captive power plant of the assessee. The expenditure on captive power plant has been capitalized by the assessee, however the expenditure incurred for ‘upfront fee’ of ₹1,15,20,193/-was claimed by the assessee as revenue expenditure, as same was paid after the plant was put to use. This factual position has not been disputed by the Revenue. The assessee has claimed the said expenditure as revenue expenditure treating the expenditure of ‘upfront fee’ as analogous to ‘interest’ expenditure, wherein section 36(1)(iii) of the Act has specifically prescribed for treating interest expenditure after the date of putting the asset to use as revenue expenditure. The contention of the Ld. CIT(A) is however that irrespective of whether the upfront fee is paid before the purchase of the plant JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 20 and machinery or after the purchase of the plant and machinery, the character of the payment remains capital in nature. The Hon’ble Madras High Court in the case of Super Spinning Mills Ltd. (supra) has held the expenditure of ‘upfront fee’ paid to bank for availing loan for setting up of a new unit as revenue expenditure. The relevant finding of the Hon’ble High Court is reproduced as under: “6. After careful consideration of the respective submissions of learned counsel on either side, I am of the view that there is no substance or merit in the preliminary objection raised. In Jeypore Sugar Co. Ltd.'s case [1980] 124 ITR 518 (Mad), the Division Bench of this court sustained an objection on behalf of the Revenue to the jurisdiction of this court to entertain a writ petition at the instance of an assessee on the file of the Income-tax Officer, 'A' Ward, Circle-I, Kakinada, challenging the notice for reassessment issued and served at the office of the assessee at Chagallu once again within the jurisdiction of the assessing authority. As a matter of fact, the Division Bench pointed out that the petitioner, the assessee in that case, had not taken any steps for transferring its file to Madras where its administrative office was situate and as the assessing authority had territorial jurisdiction over the assessee and inasmuch as the notice was issued from Kakinada and served at a place Chagallu, no part of the cause of action arose in Madras. The Division Bench was also of the view that mere location of the administrative office was not relevant to the question of jurisdiction. Unlike the fact situation in the said case, in the case on hand, it is specifically contended that subsequent to the impugned order, the registered office of the petitioner company had been transferred to the present Commissioner having jurisdiction over the petitioner's case, the first respondent, viz., the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 21 Commissioner of Income-tax, Coimbatore. The learned counsel for the assessee argued that any order that this court may have to pass in the light of the subsequent events has to be implemented only by the first respondent within the jurisdiction of this court. The decision referred to by counsel for the assessee also lends support to the above stand of the petitioner. Consequently, in my view, the decision relied upon for the Revenue has no application to the present case. In K. S. Rashid and Son's case , the Supreme Court expressed the view that there are only two limitations placed on the exercise of the powers by a High Court exercising jurisdiction article 226 of the Constitution of India, viz., (i) the writs issued by the High Court cannot run beyond the territories subject to its jurisdiction and (ii) the person or authority to whom the High Court is empowered to issue writs must be amenable to its jurisdiction either by residence or location within those jurisdictions. Relying upon this, learned counsel contended that the rule is required to be issued to the first respondent only in the changed circumstances and there is no impediment for this court to entertain the writ petition and proceed to decide the same on merits. The decision in J. K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of U. P. , was also relied upon to say that, when the records and files relating to the petitioner assessee have already been sent to the first respondent, a writ cannot be issued to the second respondent who is outside the jurisdiction and who has passed the order at this stage. In Seth Paluram Dhanania v. ITO [1960] 39 ITR 429, a Division Bench of the Madhya Pradesh High Court expressed the view that even though original notices were issued by the Income-tax Officer, Special Circle-I, Nagpur, having regard to the subsequent transfer of the cases to the authorities at Calcutta and later to the authorities at New Delhi, the writ petition was held not to be maintainable before the said court. There can be no controversy over the fact that, after the insertion of article 226(2) by the Constitution (Fifteenth Amendment) Act, 1963, any High Court may also exercise its powers under article 226(1), if the cause of JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 22 action wholly or in part arises for the exercise of such power in relation to the territories under its control notwithstanding that the seat of such Government or authority or the residence of such persons was not within that territory. There is no controversy or dispute over the claim made by the assessee in this case that, subsequent to the passing of the impound order, not only the registered office of the petitioner company was changed but the relevant income-tax files also stood transferred to the jurisdiction of the first respondent who is well within the territorial limits and jurisdiction to this court. As claimed by counsel for the assessee, even if the impugned order is to be set aside or any direction is to be given, it is the first respondent who has to implement the same and not the second respondent who ceased to have jurisdiction over the matter any longer. Consequently, I am of the view that the petitioner has sufficient cause of action to maintain this writ petition before this court. The preliminary objection, therefore, fails and shall stand rejected.” 15.1 Thus Hon’ble High Court has held that if interest paid on borrowed loan could be held to revenue expenditure, the expenditure incurred for obtaining the loan for setting up the new unit should also be considered as revenue expenditure. In the case also, the assessee before the Assessing Officer submitted to treat upfront fee as analogous to interest payment for availing loans for purchase of capital asset. The assessee particularly referred to section 36(1)(iii) of the Act which prescribes treating of interest payment for money borrowed for the purchase of the capital asset, after putting the said capital asset to use, as revenue expenditure. Thus, respectfully following the finding of the Hon’ble Madras High Court (supra), the ‘upfront fee’ paid after putting the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 23 capital asset to use in respect of loan for said capital asset, is held to be revenue in nature. The Ground No. 2 (Two) of the appeal of the assessee is accordingly allowed. 16. Now we take up the appeal of the Revenue having ITA No. 8530/Mum/2011 for assessment year 2007-08. 17. The ground No. one of the appeal relates to treatment of sales tax subsidy amounting to ₹54.02 crores by the Ld. CIT(A) as capital receipt . 18. Before us, the Ld. DR submitted that during the year the assessee company has received sales tax refund in relation to ‘New Industrial Policy 1993’ and consequent notification issued by the Government of Karnataka for exempting the assessee from sales tax liability for a period of 14 years from the date of commercial production. He submitted that identical sales tax subsidy received in assessment year 2006-07 under the same industrial policy has been held by the Tribunal in the case of the assessee as capital receipt, but the issue has been challenged by the Department before higher appellate forum and therefore, he relied on the order of the Assessing Officer to support the ground of the appeal raised. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 24 19. The Ld. counsel of the assessee submitted that sales tax refund during the year under consideration has been received under the ‘Industrial Policy 1993’ of Government of Karnataka and subsequent notification issued, which is in continuation to sales tax refund received in the assessment year 2006-07 and held as capital receipt by the Tribunal in ITA No. 156/Bang/2011. 20. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that sales tax refund in the year under consideration is received under the same policy and the notification of the Government of Karnataka, under which the assessee received the sales tax refund in assessment year 2006-07. In the assessment year 2006-07, the Tribunal (supra) has held the said sales tax refund or subsidy as capital receipt. The relevant finding of the Tribunal is reproduced as under: “28. We have heard both the parties, perused the material available on record and gone through orders of the authorities below along with plethora of case laws cited by both parties. As we discussed in earlier year paragraph, the facts clearly indicates that in the year 1993 the Government of Karnataka proposed a new industrial policy, 1993 and package of incentives and concession with an objective to attract new industrial investments and to accelerate industrial development in the state to promote the development of backward regions and generate employment for the local people. It is also an admitted fact those in terms of the said policy, in the year 1994, the assessee proposed to set up a integrated steel JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 25 plant for manufacturing of 1.25 million tons per annum (MTPA) of Hot rolled (HR) Coils at Village Torangallu, Bellary Hospet, Karnataka state with an initial investment of Rs. 3,200 crores. It is also not in dispute that the assesee has made an application under the industrial policy to the Government of Karnataka, for which the order has been passed by the Government of Karnataka granting exemption from payment of purchase tax and entry tax and also exemption from payment of sales tax on sale of finished goods. 29. In this factual back ground, if you examine the claim of the assesee that sales tax subsidy received from State government of Karnataka is capital or reveune in nature which is liable to tax, one has to understand the purpose for which said subsidy was given by the State Government. If you go through, the industrial policy, 1993 announced by the State Government and consequent notification issued there under, it is abundantly clear that the incentive scheme was granted within an objective to attract new industrial investments in the state of Karnataka and to accelerate industrial development in backward areas of Karnataka. In other words, the subsidy was granted to the assesee for setting up of a unit and to incentives was given to promote industry in a backward area of Karnataka and thereby generating employment in the state. Thus, the purpose of the concession/incentives was clearly not to provide general assistance to carry on its business as alleged by the Ld.AO. Further, there is a distinction between the subsidy given with the objective of encouraging the industrial growth and setting up industries in back ward areas and subsidy given with the object of assisting industries for a period after they are set up. Accordingly, if the purpose of the subsidy is to help its business/expanded its business, the subsidy must be treated as to have been given for capital purposes, whereas if it is given by way of assistance to the assessee in carrying of its trade/business, it has to be treated as a trading receipts. This controversy has been examined by the Hon'ble Supreme Court and also JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 26 various high courts, in light of industrial policy of various state Governments and came to the conclusion that the mechanism, the source, point in time and the form in which subsidy has been granted are irrelevant and what is relevant is only the purpose for which the subsidy is granted to decide, whether the subsidy is revenue or JSW Steel Limited capital in nature. The Hon'ble Supreme Court in the case of Chaphalkar Brothers (supra) had considered an identical issue, in the light of setting up a new multiplex theatre complex and held that if, the object of the scheme was to promote cinema houses by constructing multiplex theatres, then irrespective of the fact that the multiplexes have been constructed out of the own funds or borrowed funds, the receipt of subsidy would be on capital account. Further, the Hon'ble Supreme Court, while delivering the judgment has considered its earlier decision in the case of Sahney Steel & Press Works Ltd. vs CIT(supra) and held that even in Sahney Steel and press works Ltd(supra), the court has considered the purpose for which, the said subsidy was given and came to the conclusion that in the facts of those case, the subsidy was given for running of business after commencement of production and hence, opined that subsidy/incentive received is in the nature of revenue receipt. 30. A similar issue has been considered by the Hon'ble Gujarat High Court, in the case of Birla VXL Ltd. in ITA No.s 316 to 318 of 2013, where it was held that the purpose of the subsidy is relevant to decide the nature, whether it is on capital account or revenue account. The court further held that though, the benefit was computed in terms of sales tax liability in the hands of the recipient, the same was not meant to be given any benefit and day to day functioning of the business or for making the industry more profitable. The principle aim of the scheme was to cover the capital outlay already made by the assesse in undertaking special modernization of its existing industry. A similar view has been expressed by the Hon'ble Gujarat High court, in the case of Munjal Auto industries (supra). The Hon'ble Jammu & Kashmir High Court, JSW Steel Limited in the case of Shri Balaji JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 27 Alloys ITA No. 02/2010 had considered an identical issue and held that the purpose for which subsidy was given is very relevant to decide the nature of recipient, but not the manner in which such subsidy was quantified. The Hon'ble Gujarath High court in the case of Shivshakti Flour Mills (P.) in ITA No 06/2014 had considered an identical issue and held that the purpose of the transfer subsidy was to encouraging investment and thereby stimulate industrial activity in difficult and far flung states in the North Eastern region for creating employment opportunities. Therefore, it is in the nature of capital receipt. The Hon'ble Bombay High Court, in the case of Welspun Steel Ltd. Vs CIT (103 taxann.com 436) held that the scheme was envisaged to encourage investment, which would in turn provide fresh employment opportunity in the district, which has suffered due to devastating earthquake. The computation of subsidy may be on the basis of sales tax or excise duty. But, nevertheless, the purpose test would ensure that, the subsidy was capital in nature. The Hon'ble Kolkata High Court in the case of Shyam Steel Industries Ltd. (303 CTR 628) had expressed similar view and held that purpose test is most relevant to decide the nature of subsidy. The sum and substance of the ratio laid down by Hon'ble Supreme Court and various High Courts are that if the assistance/subsidy was given to enable to set up a new unit or to expand the existing unit in the backward area, the receipt of the subsidy was on capital account. 31. In this case, on perusal of facts, it is abundantly clear that the assesse has setup a new industry under the Industrial policy, 1993 of Government of Karnataka and package of incentives and concessions given by the state of Karnataka was to accelerate JSW Steel Limited industrial development in the state of Karnataka. The said subsidy, although was qualify in terms of sales tax exemption on purchase of raw materials and plant and machinery and also, on sale of finished goods after commencement of production, but the purpose of the subsidy was to reimburse the cost of expenditure incurred for setting up the new industry. Therefore, we are of the considered view JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 28 that when, the subsidy was given with an object to effect new industries in the backward area of the state in terms of sales tax exemption, then the said subsidy shall be treated as capitol receipt. The Ld. CIT(A) after considering relevant facts has rightly held that subsidy received by the assessee from state Government of Karnataka is for the purpose of setting up of a new industry and in the nature of capital receipt not charitable tax. We do not find any error in the findings of the Ld. CIT(A) and hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the revenue.” 20.1 The Ld. CIT(A) has also treated the sales tax refund amount received during the year under consideration as capital receipt following his own finding in assessment year 2006-07. As identical issue is involved in the year under consideration, respectfully following the finding of the Tribunal in assessment year 2006-07, the sales tax subsidy received of ₹ 54.02 crore during the year under consideration is held to be capital in nature. We do not find any error or infirmity in the order of the Ld. CIT(A) and we uphold the same. The ground No. 1 (One) of the appeal of the Revenue is accordingly dismissed. 21. The ground No.2 (Two) of the appeal of the Revenue relates to deletion of disallowance of depreciation of ₹7,80,30,000/-attributable to sales tax subsidy received of ₹54.02 crores. 22. Brief facts qua the issue in dispute are that the sales tax subsidy received by the assessee of ₹54.02 crore has been treated by the Assessing Officer as JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 29 subsidy received to meet the cost of plant and machinery, accordingly he directed the assessee to rework out the ‘depreciation on plant and machinery’ after reducing the sales tax subsidy amount. As per the working submitted by the assessee, the Assessing Officer made disallowance of the excess claim of depreciation amounting to ₹7,80,30,000/-. Before the Ld. CIT(A), the assessee contended that subsidy cannot be reduced from the cost of the asset, because the subsidy was not given to meet the cost of asset. The Ld. CIT(A) after considering the submission of the assessee deleted the disallowance of depreciation observing as under: “14. On a careful consideration of the facts brought before me, arguments adduced by the Appellant as well as the judicial pronouncements on the subject, it is observed that the working provided by the appellant to the AO in respect of depreciation after reducing the amount of sales tax exemption of Rs.54.10 cr from the cost of assets cannot be treated as the stand accepted by the appellant since the aforesaid working was provided only on the insistence of the AO. Further even on merits the subsidy cannot be reduced from the cost of asset because the subsidy was not given to meet the cost of asset. The Government, in order to determine the amount of cash subsidy, decided to follow one of the recognized methods of working it out on the basis of the amount invested by an entrepreneur in acquiring capital assets and specified a certain percentage of the amount so invested in the capital assets as cash subsidy. The basis adopted for determining the cash subsidy with reference to the cost or value of fixed assets was only a measure for quantifying the subsidy and the subsidy was not given for the specific purpose of meeting any portion of the cost of the fixed assets. Consequently, JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 30 the subsidy did not form part of the actual cost of plant and machinery within the meaning of section 43 of the Income-tax Act. 1961. Thus based on the decisions relied by the appellant and the for the reasons stated above it is held that the amount of subsidy cannot be deducted from the cost of assets for computing depreciation, In view thereof, the A0 is directed to delete the disallowance of depreciation of Rs.7,80,30,000. This ground is decided in favour of the Appellant.” 23. Before us, the Ld. DR relied on the order of the lower authorities and submitted that subsidy has been granted up to the extent of purchase value of plant and machinery and therefore it is to meet the cost of the asset and hence should be reduced from the cost of the asset as per section 43 of the Act. 24. The Ld. counsel of the assessee on the other hand relied on the order of the Hon’ble Supreme Court in the case of PJ chemicals Ltd (1994) 210 ITR 830 (SC) and submitted that subsidy received which is not for the specific purpose of meeting a portion of the cost of the asset, even though quantified as percentage of the cost of such asset, cannot be reduced from the actual cost of the asset for the purpose of computing depreciation. He further submitted that Hon’ble Bombay High Court in the case of KCA Ltd (2006) 283 ITR 65(Bom) has given similar finding. 25. We have heard rival submission of the parties in the light of the material available on record and the decisions relied upon by the parties. The Assessing JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 31 Officer has treated the sales tax from cost or subsidy received by the assessee as provided to meet cost of asset, and therefore he has reduced the amount of sales tax subsidy written down value of assets, which has resulted into reducing claim of depreciation of the assessee amounting to ₹7,80,30,000/-. While deciding the issue of sales tax subsidy as capital receipt, the assessee has brought on record application dated 29/01/1994 under the industrial policy of the Government of Karnataka for grant of infrastructural assistance and incentive under the New Industrial Policy of 1993. In response to the application, the Government of Karnataka, passed an order No. CI 29 SPI 94, Bangalore Dated 11/10/1994 granting exemption from payment of purchase tax and entry tax on all machines, plant and equipment and other production assets acquired for the implementation of the project, for a period of 14 years. It also included exemption from payment of sales tax on sale of finished goods, by product and waste products. Further exemption was granted from payment of purchase tax and entry tax and all raw material. It is the contention of the assessee that subsidy was provided to encourage private sector participation in development of infrastructure including establishment of industrial estate. The subsidy was provided by way of refund of sales tax paid, which was restricted to hundred percent value cost of the fixed asset. In background of these facts, the Assessing Officer is of the view that subsidy has been given to JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 32 meet the cost of the asset, whereas subsidy has been given to the extent of amount invested in plant and machinery as un-quantification of the subsidy and not for meeting cost of such assets. The revenue has not been able to substantiate that subsidy was granted to the assessee for the purpose of reducing cost of plant and machinery. Before us the assessee has relied on the decision of the Hon’ble jurisdiction High Court in the case of Welspun Steel Ltd (2019) 103 taxmann.com 436 (Bombay), wherein similar subsidy was given under the industry policy for setting up of new industry in Kutch district of Gujarat. Before the Hon’ble High Court following question of law was raised: “2(b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that subsidy cannot be considered as payment directly or indirectly to meet any portion of the actual cost ignoring the fact that if the assessee claims the same as capital receipt, the same shall be reduced from the cost of asset and depreciation claim should be on the net value/cost of the asset after reducing the amount of incentives in terms of Explanation 10 to Section 43(1) of the Act?” 25.1 The Hon’ble High Court decided the question as under: 9. The second question raised by the Revenue is consequent of the first question, in which, the Revenue argues that, if the subsidy is treated as a capital in nature, the same must bring down assessee's costs of acquisition of plant and machinery. The assessee's claim of depreciation to that extent must shrink. Assessee argues that, the Tribunal correctly held that, the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 33 subsidy had not been given in relation to acquisition of plant or machinery and that, therefore, same cannot be adjusted towards cost of acquisition. 10. It is undoubted that, the subsidy had no relation to the assessee's acquisition of plant or machinery. It was to be granted to an industry which had set up the new industrial unit in the District of Kutch. In such back-ground, question - arises whether such subsidy would be adjustable towards assessee's costs of acquisition of capital assets. We may notice that, a similar question was considered by Division Bench of Gujarat High Court in case of CIT v/s. Grace Paper Industries Pvt. Ltd., reported in 183 ITR 591. The Court noted that, the subsidy was granted by the Government for development of industries in back-ward areas. It was not part of the actual cost of plant or machinery. The Court, therefore, held that it could not have been deducted towards costs of acquisition. The Court held as under:- S.R.JOSHI itxa-1743-2016-group.odt " We have carefully considered the provisions relating to the grant of cash subsidy under the schemes framed by the Central Government and the State Government. The Central Government as well as the State Government noticed that areas specified as backward areas and tribal areas were undeveloped or under- developed. Entrepreneurs were not willing to set up industries in such undeveloped or under-developed areas. The industries were concentrating only in urban areas. In other words, rapid urbanization was taking place. So far as the State of Gujarat is concerned, there was rapid industrial growth in cities like Baroda, Ahmedabad and Surat resulting in strain on municipal services. Urbanization created several problems such as pollution, growth of slums etc . It was also necessary to have balanced growth of industry in different regions. However, as pointed out above, entrepreneurs were reluctant to set up industries in backward areas. These areas were identified as backward because JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 34 there was un-development or under-development of industries in these areas. It was, therefore, that the Government decided to give financial incentives to encourage and induce entrepreneurs to move to backward areas and establish industries there so that the region may develop and promote the welfare of the people living in that region. One of the incentives which the Government decided to grant was cash subsidy so that entrepreneurs could utilize such cash subsidy for any purpose connected with the establishment of industries in the backward areas. Once the decision to give cash subsidy was taken, the Government had to work out some method to determine the quantum of such subsidy. In other words, the question as to how the amount of cash subsidy should be determined had to be considered by the Government. The Government, in order to determine the amount of cash subsidy, decided to follow one of the recognized methods of working it out on the basis of the amount invested by an entrepreneurs in acquiring capital assets as cash subsidy. The scheme does not say as to in what manner the subsidy was granted is to be utilized. In other words, the entrepreneur to whom the subsidy was granted was free to utilize it in any manner he liked. It would, therefore, appear that quantification of subsidy on the basis of investment was a measure adopted by the Government for convenience to work out the subsidy. If subsidy could be utilized by the entrepreneur in any manner he liked, could it be said that it was S.R.JOSHI itxa-1743-2016-group.odt granted for meeting the cost of the capital assets? In our opinion, taking an overall view of the various provisions of the scheme, it is difficult to hold that cash subsidy was granted to entrepreneur to meet the cost of the fixed assets or part thereof. The cost of the fixed assets was merely adopted as a measure for working out subsidy. In fact, a careful examination of the scheme reveals that it is the value of the fixed assets and not JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 35 its cost which is adopted as the basis for computing the amount of the subsidy. Emphasis on value and not the cost is evident from the fact that land and building already owned by an industrial unit, cost of tools, jigs, dies and moulds, transport charges, insurance premium, erection cost, value of second-hand machinery purchased by an industrial unit etc. were to be taken into account while computing the value of fixed assets for the purposes of subsidy. In other words, it was the value of the fixed assets which formed the basis for computation of subsidy to be granted under the scheme. Subsidy, in our opinion, did not meet the cost of the fixed assets directly or indirectly. Under the scheme of the Central Government or the scheme of the State Government, cash subsidy was quantified by determining the same at a specified percentage of the value/ cost of the fixed assets. Therefore, as observed above, the basis adopted for determining the cash subsidy with reference to the cost or value of fixed assets was only a measure for quantifying the subsidy and it could not be said that the subsidy was given for the specific purpose of meeting any portion of the cost of the fixed assets. The subsidy was granted to compensate the entrepreneur for the hardship and inconvenience which he might encounter while setting up industries in backward areas." 11. Similar issue came up for consideration again before the Gujarat High Court in CIT v/s. Swastik Sanitary Works Ltd., reported in 286 ITR 544. It was a case in which, the Government subsidy was intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries. In such a case, specified percentage of the fixed capital cost, which was the basis for determining the subsidy, would be granted. The Court held that, such basis for determining the subsidy S.R.JOSHI itxa-1743-2016-group.odt was only a measure adopted under the scheme to quantify the financial aid and it was not a payment, directly or indirectly to meet any JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 36 portion of the actual cost of acquisition of capital asset. It was held and observed as under:- " In so far as question No.2 is concerned, this court finds that the same is squarely covered by the decision of the Supreme Court in CIT v. P. J. Chemicals Ltd., [1994] 210 ITR 830. In the said case, after review of the law on the point, the Supreme Court has held as under (headnote): " Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure adopted under the scheme to quantify the financial aid, is not a payment, directly or indirectly, to meet any portion of the 'actual cost'. The expression 'actual cost' in section 43(1) of the Income Tax Act,1961, needs to be interpreted liberally. Such a subsidy does not partake of the incidents which attract the conditions for its deductibility from 'actual cost'. The amount of subsidy is not to be deducted from the 'actual cost' under section 43(1) for the purpose of calculation of depreciation etc." No question of law, therefore, arises in this respect.” 25.2 Respectfully following the above decision, we are of the opinion that in the instant case also subsidy has been given for encouraging the entrepreneurs for establishing industries in backwards area and the quantum of financial aid and the quantum of subsidy has been determined maximum upto the investment in plant and machinery but payment is not directly or indirectly to JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 37 meet any portion of the actual cost of asset as defined under section 43(1) of the Act. In view of facts and circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The ground No. 2 of the appeal of the Revenue is accordingly dismissed. 26. The ground No. 3 (Three) of the appeal relates to disallowance of consequential depreciation of ₹ 5,79,08,466/- on increased written down value (WDV) of the assets transferred on amalgamation. 27. The brief facts qua the issue in dispute are that in previous year relevant to assessment year 2006-07, some companies merged with the assessee company and the assessee claimed depreciation on the written down value of the assets received from the merged company. The Assessing Officer was of the view that conditions stipulated under section 72A(2) for setting off of unobserved depreciation were not satisfied in the case . In assessment year 2006-07, the Assessing Officer disallowed the said excess claim of depreciation of the assessee, however Ld. CIT(A) deleted the said disallowance. In the year under consideration also the Assessing Officer disallowed the depreciation claimed on relevant part of the WDV, but the Ld. CIT(A) following his finding in assessment year 2006-07, deleted the disallowance. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 38 28. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the Tribunal in assessment year 2006-07 has deleted the disallowance of depreciation in respect of WDV of merged companies. The relevant finding of the Tribunal is reproduced as under: “15. We have heard both the parties, perused the material available on record and gone through orders of the authorities below along with certain case laws cited by both the parties. The only dispute under consideration is whether, the written down value of the assets transferred on amalgamation was to be computed in the hands of the amalgamated company considering the unabsorbed depreciation, i.e depreciation not given effect to, in the assessment of the amalgamating companies. The provisions of Explanation (2) and (3) to section 43(6), which explains what, will be the WDV of assets in the hands of amalgamated company, in the cases of amalgamation. Similarly, section 32(2), which provides for carry forward of unabsorbed depreciation and section 72A, which provides for carry forward of business loss and unabsorbed depreciation in the hands of the amalgamated company in the cases of amalgamation. If you go through, Explanation (2) to section 43(6), it is very clear that the word used therein speaks about depreciation ‘actually allowed’ in relation to said preceding year in case of amalgamated company. Thus, in view of Explanation (2) to section 43(6) of the Act, the WDV in the hands of the assesse as on 01/4/2005 (appointed date) would be the WDV of block of assets as on 31/03/2004 as reduced by the depreciation ‘actually allowed’ during the said preceding year i.e FY 2004-05 in the hands of the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 39 amalgamating companies. Accordingly, the WDV of assets transferred on amalgamation in the hands of the amalgamating company has to be necessarily computed in terms of Explanation (2) to section 43(6) of the Act. As can be seen from the above, in terms of Explanation (2) to section 43(6), while computation the WDV on amalgamation, depreciation actually allowed has to be reduced. However, the case of the AO is that Explanation (3) has to be read into Explanation (2) and accordingly, the WDV of assets transferred on amalgamation has to be computed after reducing the total depreciation in the hands of the amalgamated companies. Accordingly, it is necessary to read and comprehend as to why provision of section (3) to section 43(6) of the Act, cannot be applied in the facts of the present case. Explanation (3) to section 43(6) states that any depreciation, which is carry forward u/s 32(2) of the Act, shall be deemed to be depreciation actually allowed. As can be seen from the above, Explanation (2) and (3) to section 43(6) of the Act, both used the term depreciation actually allowed. However, as against Explanation (2), Explanation (3) to section 43(6) of the Act, operates as a deeming fiction, wherein depreciation which is carried forward u/s 32(2) of the Act, is deemed to have been actually allowed. In our considered view, Explanation (3) being a deeming fiction, operates only in a particular conditions and in order to remove an anomaly, which otherwise would have been created under the other provisions of the Act. It thus follows that while interpreting Explanation (3), one needs to be aware of the intention of the statute. These provisions along with their intent have been explained elaborately by the Hon’ble Bombay High Court, in the case of Hindustan Petroleum Corporation Limited (supra), where it was held that explanation (3) to section 43(6) of the Act, seeks to find certain anomalies which would have otherwise exists under the Act. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 40 The intention of explanation (3) is not a simply to nullify the provision of explanation (2) to section 43(6), as has been read by the Ld.AO. This is also evident from the fact that the Explanation (2) has been introduced from 01.4.1988, whereas Explanation (3) was always on statute, which clearly implies that Explanation (3), which is a legal/deeming fiction, was not introduced to nullify the impact of Explanation (2) of the Act. Accordingly, in terms of Explanation (3) to section 43(6), in the present case, unless the unabsorbed depreciation of the amalgamating companies is carried forward in the hands of the amalgamated company u/s 32(2) of the Act, Explanation (3) cannot be read into Explanation (2) to simply conclude that depreciation ‘actually allowed’ also includes unabsorbed depreciation. 16. The meaning of the term actually allowed is interpreted by the Hon’ble Supreme Court, in the case of CIT vs. Doom Dooma India Ltd. (2009) 310 ITR 392 (SC), wherein it has been held that, the term ‘depreciation actually allowed’ means depreciation of which the assessee has received effective advantage or benefit and not merely, which is notionally allowed or which is allowable. Accordingly, the words actually allowed under Explanation ‘(2) only mean depreciation, which has been given effect to, in the computation of income of the amalgamating companies and will not include unabsorbed depreciation. This legal proposition is supported decision of Hon’ble Bombay High Court, in the case of CIT vs Silical Metallurgic Ltd. (2000) 324 ITR 29 Mad HC). Where, the Hon’ble Court held that the statutory provision makes it clear that the WDV of the asset would be the actual cost of the assets of the assessee less depreciation allowed to the company. Any unabsorbed depreciation, which was not set off for carry forward could not be taken into account. A similar view was taken by the Bombay High Court in the JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 41 case of CIT vs. Hindustan Petroleum Corporation Ltd. (supra). Further, it is relevant to note that a Special Leave Petition filed against the aforesaid High Court decision has been dismissed by the Hon’ble Supreme Court on merits in SLP (C) No. 19054 of 2008(SC). A similar proposition has been laid down by the Hon’ble Madras High Court, in the case of EID Parry India’s vs CIT (ITA.No. 1311 & 1312/2005) (Mad HC). 17. In the present case, the Ld. AO has alleged that the unabsorbed depreciation of the amalgamating companies will be carried forward in the hands of the amalgamating companies in terms of section 72A of the Act. We find that in all above decisions of various high courts, we noted that the applicability of provision of section 72A had been considered and even after the courts held that deprecation actually allowed shall not include any unabsorbed depreciation. Therefore, we are of the considered view that the WDV in the hands of the amalgamated company was to be calculated without considering the unabsorbed depreciation of the amalgamating companies, for which set off was never allowed. The Ld.CIT(A) after considering relevant facts has rightly deleted additions made by the Ld.AO. Hence, we are inclined to uphold the findings of Ld.CIT(A) and reject ground taken by the revenue.” 28.1 Since the issue of depreciation in respect of written down value of the assets of the merged companies is consequential to value of the depreciation in assessment year 2006-07, respectfully following the finding of the Tribunal, we uphold the order of the Ld. CIT(A) on the issue in dispute. The ground No. three of the appeal of the Revenue is accordingly dismissed. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 42 29. Ground No. 5 (Five) of the appeal of the Revenue relates to treatment of interest of ₹7,26,71,000/- as business income instead of income from other sources. 30. The brief facts qua the issue in dispute are that interest income of ₹7,26,71,000/- from investment in fixed deposits with banks etc. was set off against the interest paid and the net interest paid of ₹399.54 Crores was debited to profit and loss account. According to the Assessing Officer, in view of the decision of the Hon’ble Supreme Court in the case of Tutikorin alkali chemicals and Fertilizers Vs CIT 227 ITR 172, the interest income was to be assessed under the head ‘income from other sources’ rather than ‘profit and gain of business’. The Ld. CIT(A) following his finding in assessment year 2006-07 directed the Assessing Officer to assess the interest income under the head ‘profit and gains of business’. 31. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that interest on fixed deposit has been earned which were kept with the banks in the normal course of the business for extending guarantee to the government authorities, in respect of the disputed tax, duties and letter of credits opened for import of capital goods. This interest income has been treated by the assessee as business JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 43 income. In assessment year 2006-07 also similar business income was treated by the assessee as business income, however held by Assessing Officer as income under the head ‘income from other sources’. We find that identical issue of interest income by the assessee from fixed deposit has been held to be business income by the Tribunal in assessment year 2006-07. The relevant finding of the Tribunal is reproduced as under: “21. We have heard both the parties and perused the material available on record. Initially, the ITAT, Bangalore Tribunal ruled in favour of the assessee by holding that interest income arising to the assesee was to be taxed under the head Business Income. The Department appealed against the said order of the Bangalore Tribunal before the Hon’ble Karnataka High Court, wherein the order of the Tribunal was set aside. Basis, the aforesaid decision of the Hon’ble Karnataka High court, the AO taxed the interest income under the head income from other sources. Thereafter, against the said order of the Hon’ble Karnataka High Court, the assesse preferred an appeal before the Hon’ble Supreme court, wherein the Hon’ble Supreme Court vide order dated 29th September, 2009 in SLP (Civil Appeal) No. 6555 of 2009 set aside the order of the Hon’ble Karnataka High Court and directed to answer the question of law, which was raised before it. In set aside proceedings, the Hon’ble High Court vide its order dated 17/08/2011 had decided the issue in favour of the assessee and held that interest income earned by the assessee from fixed deposit in the normal course of business was to be taxed as business income. The relevant findings of the court are as under:- JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 44 "23. Therefore, from the aforesaid judgment, ii is dear, that till the company commences its business and earns income, if they have kept their surplus funds in short deposits in order to earn interest that interest income is chargeable under section 56 of the Act, However, once the assesses commences business and earns income and in addition to the income so corned, the company also earns interest by way of such deposits, then the said income cannot be construed as income from other sources......................... 34. Therefore, in the facts of the case, wee are satisfied that the finding recorded by the Tribunal, is on a proper appreciation of the material on record keeping in mind the law on the point and is just and proper and does not call for any interference. Accordingly, the substantial questions of law are answered in favour of the assesee and against the revenue." 22. The Hon’ble Karnataka High Court has also distinguished the case of Tuticorin Alkali Chemicals & Fertilizers (supra), in the following paragraphs:- 21. Reliance is placed by the revenue on this judgment of the Apex Court in the case of TLTICORIN ALKALI CHEMICAIS & FERTILIZERS LTD VS. COMMISSIONER OF INCOME TAX reported in (1997) 227 ITR 172 (SC). 22. In the aforesaid judgment, Ike Supreme Court has made the position dear at para 4, which reads as "4. The basic proposition that has to be borne in mind in this case is that it is possible for a company to have six different sources of income, each one of wh.ifh will be chargeable to income-tax 'Profits and gains of business or profession' is only vie of the head under JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 45 which the company's income is liable to assessed to tax. If a company has not commenced business, there cannot be any question of assessment of its profits and gains of business. That does not mean that does not mean that until and unless the company commences its business^ its income from any other source will not be noted. If the company even before it commences business, invests the surplus, fund in its hand for purchase of land or house property and later sells it of profit, the gain made by the company will be assessable under the head Capital gains. Similarly, if a company purchases a rented house and gets rent, which rent will be assessable to tax under section22 of the Act as income fro house property. Likewise, a company may have income from other sources. It ay buy shares and get dividends. Such dividends will be taxable under section 56. The company may also as in this case, keep the surplus fund in short term deposits in order to earn interest. Such interest will be chargeable under section 56. The company has chosen not to keep its surplus capital idel, but has decided to invest it fruitfully. The fruits of such investment will clearly be of revenue nature.” 23. Therefore, from the aforesaid judgment, it is clear that till the company commences its business and earns income, if they have kept their surplus funds in short deposits in order to earn interest that income is chargeable under section 56 fo the Act. However, once the assessee commences its business and earns income and in additions to the income so earned, the company also earns interest by way of such deposits, then the said income cannot be construed as income from other sources.” 23. From the above decision, it is clear that the matter has been finally settled by the Hon’ble Karnataka High Court, in favor of the assesee and hence, we are of the considered view that there is no error in the findings of Ld.CIT(A) in treating interest income from JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 46 fixed deposits under the head income from business and accordingly, we reject ground taken by the revenue.” 32. Respectfully following the finding of the Tribunal, the interest income is held to be assessed under the head ‘profit and gains of business’. The ground No. 4 (Four) raised by the Revenue is accordingly dismissed. 33. Ground No.5 (Five) of the appeal relates to disallowance under section 14A of the Act. 34. Brief facts qua the issue in dispute are that assessee had not made any disallowance under section 14A of the Act as according to the assessee no expenditure was incurred for earning of exempted dividend income. However, the Assessing Officer applying the Rule 8D(iii) of Income Tax Rules,1962 (in short ‘the Rules’) disallowed a sum of ₹69,50,000/-being 0.5% of the average value of the investment in assets which could yield exempted income. 34.1 The assessee challenged the disallowance on three grounds. Firstly, the assessee made few investment for strategic purpose with the primary object to facilitate and promote the business interest of the company and not with a view to earning any dividend income and therefore expenditure incurred in relation to such investment was deductible as business expenditure. Secondly, no disallowance was required in respect of the investment when no dividend JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 47 income was earned by the assessee. Thirdly no disallowance under section 14A could be made in respect of investment in foreign companies, where income was already offered for the tax purposes. 35. The Ld. CIT(A) allowed the claim of the assessee that no disallowance could be made for investment made in foreign companies. In respect of other two grounds, the Ld. CIT(A) instead of applying rule 8D directed the Assessing Officer to disallow the expenditure in proportion of the exempted income earned to the total income subject to an upper limit of ₹5 lakh, which was offered by the assessee for disallowance. 36. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. As far issue of disallowance deleted by the Ld. CIT(A) in respect of foreign investment is concerned, we do not find any error in the order of the Ld. CIT(A), as dividend income from said investment is not exempted in the hand of the assessee and therefore question of disallowance under section 14A of the Act does not arise in case of such investments. As far as, strategic investments are concerned, the Hon’ble Supreme Court in Maxopp India Investment Ltd. v. CIT in Civil Appeal No. 104-109 of 2015 has settled the issue that such strategic investments are liable for disallowance under section 14A of the Act. This is also settled that in JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 48 assessment year 2007-08, the rule 8D was not applicable, and therefore where an assessee is not able to quantify the exact disallowance, the disallowance under section 14A could be made on the basis of a reasonable estimate. In our opinion, the disallowance of expenses under section 14A upheld by the Ld. CIT(A) in proportion of exempted income is one of the reasonable method. As no other method except Rule 8D(iii) has been pointed out by the Revenue for estimation of disallowance of expenses towards earning of exempted income, we concur with the finding of the Ld. CIT(A) and uphold disallowance computed by him. The ground No. 5 (Five) of the appeal of the Revenue is accordingly dismissed. 37. Now we take up the cross appeals in relation to search assessments made under section 153A of the Act for assessment year 2007-08. 37.1 The grounds raised by the assessee and the revenue and the assessee in their respective appeals are reproduced as under: 37.1 Ground of appeal of Assessee 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the DCIT in not allowing the claim of the Appellant of Rs.21,93,812/- u/s.37(1) of the Income Tax Act' 1961 on account of the Contribution made to towards Rajiv Gandhi Institute of Steel Technology. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 49 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the DCIT in not allowing the exclusion of the Sales Tax Subsidy of Rs.54,02,00,000/- from the Book Profits for the purpose of MAT Computation. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the Appellant was not permitted to raise a fresh claim in the search assessment proceedings. 37.2 Grounds of appeal of the Revenue 1. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the Assessing Officer to delete the additions, on the issues on which relief has already been granted by CIT(A) Bangalore in Original Appeal Proceedings. 2. Whether in the facts and circumstances of the case and in law, the ld. CIT(A) is justified in directing the A to consider the refund of Sales Tax of ₹54,02,00,000/- as Capital Receipt. 3. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the AO to restore the cost of fixed asset by the amount of Sales Tax subsidy and thereby allow consequential depreciation of ₹7,80,30,000/-. 4. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the AO to allow expenditure incurred on upfront fees of ₹1,15,20,103/- 5. Whether in the facts and circumstances of the case and in law, the ld. CIT(A) is justified in directing the AO to allow depreciation on the expenditure of Rs. 1,15,20,193/- incurred on upfront fees which was disallowed on the ground as the same should be added to cost of Plant and Machinery. 6. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the AO to consider the increased written JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 50 down value of the assets received from the merged companies thereby allowing the depreciation of ₹ 5,79,08,466/ - 7. Whether in facts and circumstances of the case and in law, the Id. CIT(A) is justified in directing the AO to treat interest income of Rs. 7,26,71,000/- as income from business and profession. 8. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the AO to re-compute the disallowance u/s. 14A following the proportionate method as directed by the Ld. CIT(A)-I, Bangalore in the original appellate order ignoring the fact that department has not accepted the order and filed appeal with the Hon'ble ITAT on this issue which is pending. 9. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing consequential depreciation of Rs. 26,12,427/- in respect of loss of Rs. 2,04,89,627/- incurred during FY 2005-06 on cancellation of forward contract considered as Capital Expenditure as per CIT(A)'s order. 10. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing consequential depreciation of ₹3,80,48,443/- in respect of loss of ₹39,78,92,211/- incurred during FY 2004-05 on cancellation of forward contract considered as Capital Expenditure as per CIT(A)'s order. 11. Whether in the facts and circumstances of the case and in law, the Ld. CITIA) is justified in deleting the addition made by the Assessing Officer u/s. 14A for the purpose of computing Book Profit u/s. 115JB of the Act. 12. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the Assessing Officer to re-compute the interest u/s. 234B casted on the Assessee Company due to retrospective amendment relying on the decision of Hon'ble ITAT Mumbai in the case of JSW Energy Ltd. for AY 2006-07 ignoring the fact that the department has JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 51 not accepted the decision and filed appeal with Hon 'ble High Court on this issue which is pending. 13. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the Assessing Officer to re-compute interest u/s. 234C on the basis of returned income instead of income declared in the return of income filed in response to notice u/s. 153A relying on the decision of Hon'ble ITAT Mumbai in the case of JSW Energy Ltd. for AY 2006-07 ignoring the fact that the department has not accepted the decision and filed appeal with Hon'ble High Court on this issue which is pending. 14. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in directing the AO to grant interest u/s. 244A in respect of refund, if any due to the Assessee Company on account of Self Assessment Tax paid relying on the decision of the Hon 'ble ITAT in the Assessee Company's own case for AY 2007-08 ignoring the fact that the department has not accepted the decision and filed appeal with Hon'ble High Court on this issue which is pending. 38. Briefly stated facts of the case are that consequent to search and seizure action in the case of the assessee, notice under section 153A Act was issued requiring the assessee to file return of income. In response to said notice the assessee filed return of income on 20/12/2011 declaring total income of Rs.988,77,61,031/. While assessing the income under search assessment, the Assessing Officer begin computation of total income with the business income of ₹13,73,93,92,153/- declared in the return of income under section 153A and thereafter made additions which were sustained in the order of the appellate authority in original assessment proceedings. As on the date of the passing of JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 52 the impugned assessment order, the order of the first appellate authority i.e. the Ld. CIT(A) in original assessment proceedings was only available, the Assessing Officer retained the addition sustained by him. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved both the assessee and the Revenue are in appeal before the Tribunal raising the grounds is reproduced above. 39. In ground No. 1 (One), the assessee has challenged confirming of the addition of ₹21,93,812/- by the Ld. CIT(A) for contribution made by the assessee towards Rajiv Gandhi Institute of Steel Technology. This addition was made by the Assessing Officer in original assessment proceedings and confirmed by the Ld. First Appellate Authority in appellate proceedings against original assessment. The present Ld. CIT(A) also following the finding of the Ld. First Authority in original appellate proceedings, confirmed the disallowance. 40. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that Assessing Officer has only added this disallowance while computing the total income as this disallowance was made in the original assessment and was upheld by the Ld. CIT(A) in original appellate proceedings. Since this disallowance has already been deleted by us while deciding the appeal of the assessee in ITA No. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 53 858/Mum/2011 against the order of the Ld. First Appellate Authority in original appellate proceedings, therefore the disallowance sustained by the Ld. CIT(A) in present proceeding also does not survive. Accordingly, the ground of the appeal of the assessee is allowed. 41. As far as ground No. 2 (Two) and 3 (Three) of the appeal are concerned, the Ld. counsel of the assessee submitted that it is undisputed that claim for exclusion of sales tax subsidy from the book profit for the purpose of MAT computation was not made in original assessment or first appellate proceedings but the claim has been made first time before the Tribunal in original appellate proceedings. According to the assessee consequent effect of the total income has to be given while computing the total income under order u/s 153A and consequent order giving effect to the appellate orders. 42. The Ld. DR on the other hand submitted that identical issue of claim of exclusion of sales tax subsidy from the book profit for the purpose of MAT computation has been rejected by the Tribunal while adjudicating the appeals in relation to 153A proceedings for assessment year 2006-07 and therefore in present proceeding also the fresh claim of exclusion of sales tax subsidy from the book profit cannot be entertained. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 54 43. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Before the Ld. CIT(A) assessee made claim for exclusion of sales tax subsidy of ₹54.02 crores from the book profit for the purpose of MAT computation. The Ld. CIT(A) denied this claim of the assessee observing as under: “12.4 I find that the appellant had never made claim of reduction of sales tax incentive from Book Profit during original assessment or appellate proceedings. The claim has been raised for the first time during the reassessment proceedings u/s 153A. In the case of Goetze (I) Ltd vs CIT 284 ITR 323 (SC), it has been held by Hon'ble Supreme Court that claims of deduction before AO can be allowed to be made by filing a revised return. The appellant had opportunity to do so during the original assessment proceedings. Even otherwise, a legal ground could have been raised before appellate authorities, which the appellant failed to exercise and assessment proceedings became final. Hon' ble Rajasthan High Court has held in the case of Jai Steel India vs ACIT 259 TR 281 that the provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the A and/ or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. The search assessment proceedings in cases where original assessments have achieved finality cannot be left open to assessee to take advantage of raising fresh claims which would not have been available to it had there been no search action. The ground of appeal is dismissed.” JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 55 43.1 Thus, according to the Ld. CIT(A) no fresh claim of deduction can be allowed in search assessment or in appellate proceedings related to search assessments. We find that identical issue has been decided against the assessee in assessment year 2006-07 by the Tribunal in ITA No.875 and 1338/Mum/2015 while adjudicating the appeals in relation to search assessments. The relevant finding of the Tribunal is reproduced as under: “8. Upon careful consideration, we note that this issue of claim of the assessee that the sales tax subsidy being a capital receipt should be reduced from book profit computation u/s 115JB was subject matter of assessee’s appeal with ITAT in the course of regular assessment for AY 2006-07. The assessee had raised this issue by way of CO and ITAT has duly decided this issue in favour of assessee. However, the present case before us is assessment u/s 153A of the Act pursuant to search and assesee is himself claiming that this is a case of non abated assessment. It is noted that assessee has not made any such claim in the return filed pursuant to notice u/s 153A of the Act. It has also not filed any revised return in this regard. The claim was rejected by Ld. CIT(A) on the touchstone of Hon’ble Rajasthan High Court decision cited above that in case of non-abated assessment fresh claim cannot be allowed. We do not find any infirmity in the order of Ld. CIT(A). Hence, we uphold the same.” 43.2 Respectfully following the same, we hold that no fresh claim can be allowed to the assessee in present appellate proceedings in view of the decision of the Hon’ble Rajasthan High Court in the case of Jai Steel India versus ACIT JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 56 259 ITR 281 (Raj). The ground Nos. 2 (Two) and 3 (Three) of the appeal of the assessee are dismissed. 44. However, as far as argument of the Ld. counsel that issue has been allowed by the Tribunal in AY 2006-07 in original appellate proceeding, we may like to mention that the claim of the assessee of exclusion of sales tax subsidy from book profit has been also allowed by the Tribunal in original appellate proceedings for AY 2007-08 in ITA No. 858/Mum/2011, therefore, assessee is at liberty to seek rectification of the total income computed in search assessment for AY 2007-08 i.e. the year under consideration consequent to the change in total income in original proceedings. 45. The Ground No. 1 (One) to 10 (Ten) raised in the appeal by the Revenue are in relation to addition/disallowances which were made in original assessment proceeding by the Assessing Officer and he has simply added those additions/disallowances for computing the total income under search assessments. He has not made any specific addition or disallowance in respect of the grounds raised above except addition of disallowance u/s 14A in MAT computation. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 57 46. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Since the Assessing Officer has merely repeated the addition/ disallowances made in the original proceedings and no specific addition except addition of 14A disallowance while computing book profit has been made. Therefore, the grounds raised infructuous in nature and no specific adjudication on these issues is required in present appellate proceedings. The effect of the finding of the appeal eight authorities in original appellate proceeding is only required to be given while computing the total income under search assessment. We find that identical grounds have been dismissed by the Tribunal in assessment year 2006-07. The relevant finding of the Tribunal is reproduced as under : “10. At the outset, on this issue Ld. Counsel of the assessee submitted that all the issues raised are covered in favour of the assessee by the decision of ITAT in the appeal against CIT(A) order in original proceedings u/s.143(3). He submitted that Ld.CIT(A) has followed earlier appellate order, which has been duly approved by the ITAT. 11. On careful consideration, we note that the AO has a specifically made only one addition in the course of present assessment, which relates to computation of book profit which reads as under:- “One of the adjustments to be made while computing the book profit u/s. 115JB is to increase the net profit as per P & L a/c. by the amount(s) of expenditure relatable to JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 58 any income to which [sec 10 (other than provisions contained in clause (38 thereof) or section 11 or section 12 apply]. It is observed that while computing the total income under the normal provisions of the Act, assessee has considered expenditure u/s. 14A at Rs.10,06,722/- as relatable to exempt dividend income. However, while computing the book profit u/s. 115JB, the same expenditure is not added back to the book profit. Accordingly, while working out book profit u/s. 115JB, adjustment in respect of expenditure u/s. 14AofRs, 10,06, 722/- is also being made.” 12. Further, we note that he has repeated the additions made in original assessment by observing that the relief allowed by CIT(A) on this issue in subject matter of appeal before ITAT and hence, he is retaining the same. Ld.CIT(A) has granted the relief on all those issues, on which CIT(A) has granted relief in original assessment order. He has held that he is restoring all the reliefs granted by the CIT(A). On this issue of 14A disallowance, Ld.CIT(A) adjudicated this issue by holding that no incriminating material was found on this issue during search and he has followed jurisdiction High Court decision in the case of CIT vs Murli Agro Products in ITA 36 of 2009 vide order dated 29/10/2010 and special Bench of ITAT in the case of All Cargo Global Logistics 137 ITD 287. 13. We note that the ITAT has duly granted relief on the issues, which were raised in earlier round in the normal assessment u/s 143(3) vide order dated 29/11/2019 [112 taxmann.com 55] in assessee’s own case. Hence, on all those issues relief granted by the Ld. CIT(A) does not need to be interfere. Hence, we uphold the same. Moreover, this being an unabated assessment pursuant to notice u/s 153A, JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 59 hence, addition made by the AO are not with reference to any cogent material found in search. Hence, assessment u/s 153A on those issues is bad on this count too.” 47. Before us the Ld. counsel of the assessee has submitted that the Ld. CIT(A) has only followed earlier appellate orders in original proceedings only. Then, respectfully following the finding of the Tribunal (supra), the relevant grounds are accordingly dismissed as infructuous. 48. The ground No. 11 relates to deletion of the addition made by the Assessing Officer under section 14A for the purpose of computing book profit. The identical ground has been adjudicated by the Tribunal in assessment year 2006-07 as under: “14. On the issue of disallowance made u/s 14A for the purpose of 115JB, we note that Ld.CIT(A) is correct in holding that the same is not sustainable as no incriminating material was found during search as this is non abated assessment. Hence, we uphold the order of Ld.CIT(A) of this issue.” 49. Accordingly, respectfully following the finding of Tribunal (supra), in the year under consideration also, we upheld the order of the Ld. CIT(A) and dismiss the ground of the Revenue. 50. As regards the ground Nos. 12 to 14 same are covered by the order of the Tribunal in ITA No. 244/Bang/2010 vide order dated 22.03.2013 and the Ld. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 60 CIT(A) has also followed the same. Therefore, we don’t find any infirmity in the order of Ld. CIT(A) on the issue-in-dispute inserted in grounds. Accordingly, we uphold the finding of the Ld. CIT(A) on those issues. The ground No. 14 is covered by the decision of jurisdictional High Court in the case of Indian Oil Corporation Ltd. (supra). The Ld. CIT(A) has followed binding precedent and therefore we don’t find any error in the order of Ld. CIT(A) on this issue. Accordingly, we uphold finding of the Ld. CIT(A) on this issue. The ground No. 12 to 14 of the appeal are accordingly dismissed. 51. The result of captioned appeal are summarized as under: ITA Nos. Assessment Year Result 858/M/2011 2007-08 Allowed 8530/M/2011 2007-08 Dismissed 876/M/2015 2007-08 Partly Allowed 1339/M/2015 2007-08 Dismissed. Order pronounced in the open Court on 16/03/2022. Sd/- Sd/- (AMARJIT SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 16/03/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. JSW Steel Ltd. ITA No.s 858/M/2011 & Ors. 61 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai