Gujarat Mineral Development Corporation Ltd., Ahmedabad V. The Dy. CIT.,Circle-4(1)(1), Ahmedabad

ITA 873/AHD/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1408 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gift; Business income; Depreciation; Earning of tax free income; Proportionate interest; Notional interest; Revised return; Unabsorbed depreciation; Rule 8D; Set aside
• Section: 271(1)(c); 143(3); 142(1); 14A; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NOS. 873 & 2951/AHD/2015 (ASSESSMENT YEAR : 2011-12) GUJARAT MINERAL DEVELOPMENT CORPORATION LTD., KHANIJ BHAVAN, 132FT RING ROAD, UNIVERSITY GROUND, AHMEDABAD. VS. DY. CIT, CIRCLE -4, & CIT(A)-2 AHMEDABAD I.T.A. NO. 1369/AHD/2015 (ASSESSMENT YEAR : 2011-12) THE DCIT, CIRCLE 4, AHMEDABAD. VS. GUJARAT MINERAL DEVELOPMENT CORPORATION LTD., KHANIJ BHAVAN, 132FT RING ROAD, UNIVERSITY GROUND, AHMEDABAD. [PAN NO. AACG 7987 P] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S. N. SOPARKAR & PARIN SHAH, A.R. RESPONDENT BY : MS. APARNA AGARWAL, CIT-D.R. DATE OF HEARING 14.03.2019 DATE OF PRONOUNCEMENT 06.06.2019 O R D E R PER MS. MADHUMITA ROY - JM: THESE FIRST TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS DATED 27.02.2015 AND 21.08.2015, BO TH PASSED BY THE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 2 - COMMISSIONER OF INCOME TAX (APPEALS)-2, AHMEDABAD U NDER SECTION 143(3) AND SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED A S TO THE ACT) RESPECTIVELY FOR ASSESSMENT YEAR 2011-12 . THE THIRD APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 27. 02.2015 PASSED BY THE LEARNED CIT(A)-2, AHMEDABAD UNDER SECTION 143(3) OF THE ACT FOR A.Y. 2011- 12. ITA NO.873/AHD/2015 FOR A.Y. 2011-12: 2. IN THIS APPEAL THE ASSESSEE CHALLENGES THE ENHAN CEMENT OF INCOME OF THE APPELLANT BY RS.6,63,71,309/- BEING ALLOCATION OF H EAD OFFICE EXPENSES TO POWER PROJECT AT AKRIMOTA UNIT WHICH IS SUBJECTED T O DEDUCTION U/S 80IA. 3. IT APPEARS FROM THE RECORDS THAT THE ASSESSEE, A GOVERNMENT COMPANY ORIGINALLY FILED ITS RETURN OF INCOME FOR A.Y. 2011 -12 ON 28.09.2011 DECLARING TOTAL INCOME OF RS.557,66,01,050/- FOLLOWED BY REVI SED RETURN ON 04.02.2012 WITHOUT CHANGING THE FIGURE OF TOTAL INCOME AND AGA IN ON 10.09.2012, A REVISED RETURN DECLARING TOTAL INCOME AT RS.555,33,44,360/- WAS FILED BY THE ASSESSEE. UPON SCRUTINY NOTICE U/S 143(2) DATED 06.08.2012 FO LLOWED BY A NOTICE U/S 142(1) WAS SERVED UPON THE ASSESSEE. THE ASSESSMENT WAS FINALIZED INTER ALIA UPON MAKING DISALLOWANCE OF DEDUCTION U/S 80IA OF R S.31,15,94,168/- WHICH WAS IN TURN DELETED BY THE LEARNED CIT(A). HOWEVER, WHILE DECIDING THE ISSUE RELATED TO DEDUCTION U/S 80IA THE LEARNED CIT(A) RE DUCED AN AMOUNT OF RS.6,63,71,309/- TOWARDS ALLOCATION OF HEAD OFFICE EXPENSES IN RESPECT OF AKRIMOTA POWER PROJECT U/S 80IA OF THE ACT WHICH IS UNDER CHALLENGE BEFORE US BY THE ASSESSEE. THE BRIEF FACTS LEADING TO SUCH ENHANCEMENT IS THIS THAT THE LEARNED CIT(A) NOTED THAT CERTAIN COMMON EXPENDITUR E INCURRED IN THE HEAD ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 3 - OFFICE WERE NOT ALLOCATED TO THE ELIGIBLE UNITS. AC CORDING TO HIM THE HEAD OFFICE EXPENSES WHICH ARE NOT UNIT SPECIFIC SHOULD BE ALLO CATED TO THE UNITS OWNED BY THE APPELLANT IN PROPORTION TO THE TURNOVER. SHOW-C AUSE, THEREFORE, WAS ISSUED TO THE ASSESSEE AS TO WHY DEDUCTION CLAIMED BY IT B E NOT REDUCED TO THE EXTENT OF HEAD OFFICE EXPENSES PERTAINING TO THE ELIGIBLE UNITS FOR WHICH THE DEDUCTION U/S 80IA HAS BEEN CLAIMED. IN REPLY TO THE SAME THE ASSESSEE ON 25.02.2015 SUBMITTED THAT THE EXPENSES PERTAINING TO THE POWER PROJECT WHERE ACCOUNTED FOR IN THE BOOKS OF POWER PROJECT ONLY AND THERE WA S NO HEAD OFFICE EXPENSES ALLOCATED TO WORK OUT THE CLAIM FOR DEDUCTION U/S 8 0IA OF THE ACT. HOWEVER, SUCH CONTENTION OF THE APPELLANT WAS REJECTED AND E NHANCEMENT OF INCOME BY REDUCING THE ALLOCATION OF HEAD OFFICE EXPENSES OF RS.6,63,71,309/- WAS ORDERED BY THE LEARNED CIT(A). 4. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT IN THE BOOKS OF THE HEAD OFFICE INCOME IS MORE THAN EXPENSES ON ACCOUNT OF I NTEREST EARNED BY THE HEAD OFFICE AND THEREFORE NO ALLOCATION OF EXPENSES HAS BEEN DONE. HOWEVER, SUCH PLEA OF THE ASSESSEE WAS NOT FOUND TENABLE AND ULTI MATELY DISALLOWANCE WAS MADE. FURTHER THAT, IT WAS ARGUED THAT THE HEAD OFF ICE WAS TREATED AS A PROFIT CENTRE AND THUS THERE IS NO ALLOCATION OF EXPENSES TO ANY OF THE PROJECT. ON THE CONTRARY, THE LEARNED DR RELIED UPON THE ORDERS PAS SED BY THE LEARNED CIT(A). 5. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED TH E RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND WHILE REDUCING THE ALL OCATION OF HEAD OFFICE EXPENSES RESULTING INTO ENHANCEMENT OF THE INCOME O F THE APPELLANT, THE LEARNED CIT(A) OBSERVED AS FOLLOWS: ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 4 - WHILE DECIDING THE ISSUE RELATED TO DEDUCTION UNDE R SECTION 80 I-A, IT WAS NOTICED, THAT THE APPELLANT HAS NOT COMPUTED TH E DEDUCTION UNDER SECTION 80 I-A CORRECTLY. IT WAS NOTED THAT THE COM MON EXPENDITURE WHICH ARE INCURRED AT THE HEAD OFFICE WERE NOT ALLO CATED TO THE ELIGIBLE UNITS. THE HEAD OFFICE LOOKS AFTER THE ACTIVITY AND CONTROL THE WORK OF ALL DIFFERENT UNITS OF THE ASSESSEE APPELLANT COMPANY. THEREFORE, IT IS LOGICAL THAT ALL THE HEAD OFFICE EXPENSES WHICH ARE NOT UNIT SPECIFIC SHOULD BE ALLOCATED TO ALL THE UNITS OWNED BY THE A PPELLANT IN PROPORTION OF THE TURNOVER. THE CRITERIA FOR LOCATING THE EXPE NSES SHOULD BE BASED ON THE TURNOVER OF EACH DIFFERENT UNIT AS THAT IS T HE MOST SCIENTIFIC BASIS ON WHICH THE EXPENSES CAN BE ALLOCATED. ACCORDINGLY , THE APPELLANT WAS SHOW CAUSED AS TO WHY THE DEDUCTION CLAIMED BY IT B E REDUCED TO THE EXTENT OF PROPORTIONATE HAD OFFICE EXPENSES PERTAIN ING TO THE ELIGIBLE UNITS FOR WHICH THE DEDUCTION UNDER SECTION 80 I-A HAS BEEN CLAIMED. THE APPELLANT VIDE LETTER DATED 25/02/2015 HAS SUBM ITTED THAT THE EXPENSES PERTAINING TO THE POWER PROJECT WERE ACCOU NTED FOR IN THE BOOKS OF POWER PROJECT ONLY AND, THEREFORE, NO HAD OFFICE EXPENSES WERE ALLOCATED TO WORK OUT THE CLAIM FOR DEDUCTION UNDER SECTION 80 I-A. IT HAS FURTHER BEEN SUBMITTED BY THE APPELLANT THAT IN THE BOOKS OF THE HEAD OFFICE, INCOME IS MORE THAN EXPENSES ON ACCOUNT OF INTEREST EARNED BY THE HEAD OFFICE AND, THEREFORE, NO ALLOCATION OF EX PENSES HAS BEEN DONE. THE HEAD OFFICE WAS TREATED AS A SEPARATE PROFIT CE NTRE APED SEGMENT AND, THEREFORE, THERE WAS NO ALLOCATION OF EXPENSES TO ANY OF THE PROJECTS. ON A CAREFUL CONSIDERATION OF THE ENTIRE FACTS RELA TED TO THE ISSUE IT IS NOTED THAT EVEN THOUGH THE HEAD OFFICE HAS BE EN TREATED BY THE APPELLANT HAS A SEPARATE UNIT AND THE INCOME HAS BE EN COMPUTED ON THAT BASIS WHICH HAS RESULTED INTO A POSITIVE INCOME ON ACCOUNT OF INTEREST EARNED BY VARIOUS DEPOSITS IN THE HEAD OFFICE, THE CLAIM OF THE APPELLANT CANNOT BE ACCEPTED. THERE ARE ALWAYS CERTAIN EXPENS ES SUCH AS SALARIES OF THE ACCOUNTING DEPARTMENT, VARIOUS DIRECTORS OF THE COMPANY, VARIOUS AUDIT EXPENDITURE AND OTHER EXPENSES WHICH ARE COMM ON TO ALL THE UNITS AND ARE BORNE BY THE HEAD OFFICE. IT WOULD, THEREFO RE, BE APPROPRIATE IF THE EXPENDITURE IS ALSO ALLOCATED TO EACH UNIT IN O RDER TO WORK OUT THE CORRECT PROFIT OF THAT UNIT. SINCE THE APPELLANT IS CLAIMING DEDUCTION UNDER SECTION 80 I-A ON ACCOUNT OF POWER PROJECT IN COME IT WOULD BE APPROPRIATE TO ALLOCATE THE EXPENSES PERTAINING TO THAT UNIT IN THE HEADQUARTER TO WORK OUT THE CORRECT CLAIM OF DEDUCT ION. IN ABSENCE OF ANY ALLOCATION THE APPELLANT WOULD END UP GETTING M ORE DEDUCTION AND ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 5 - CLAIMING MORE BENEFIT. THEREFORE, THE ALLOCATION OF HEAD OFFICE EXPENSES IS ACCORDINGLY DONE IN THE FOLLOWING MANNER:- DETAILS OF EXPENSES OF HEAD OFFICE WHICH ARE NOT ATTRIBUTED TO PROJECTS CODE PARTICULARS TOTAL EXPENSES OF H.O. ALLOWABLE EXPENSES OF HO UNDER INCOME TAX ACT 20110 LEAVE ENCASHMENT 3221469 3221469 20113 OVERTIME 320988 320988 20117 SALARIES 69121129 69121129 20141 C.P.F. CONTRIBUTION 4462593 4462593 20143 PENSION CONTRIBUTION 924604 924604 20145 PF INSPECTION EXPENSES 1262188 1262188 20152 BOOKS & PERIODICALS 66714 66714 20155 G.S.L.I. CONTRIBUTION 40529 40529 20158 L.T.C. / H.T.C EXPENSES 411643 411643 20160 MEDICAL EXPENSES 2430373 2430373 20162 STAFF TRAINING EXPENSES 1027704 1027704 20164 STAFF WELFARE EXPENSES 1952584,6 1952584.6 20181 EDLI INSURANCE PREMIUM 876000 876000 20182 GROUP GRATUITY CONTRIBUTION 34606434 34606434 20185 VRS EXPENSES 14631123 14631123 20401 BUILDING REPAIRS & 1233485 1233485 20428 DG SET SPARES 167735 167735 20431 ELECTRICAL GOODS 150926 150926 20439 MACHINERY REPAIRS AND 100352 100352 20481 COMPUTER REPAIRS AND 46001 46001 20482 ELECTRICAL REPAIRS AND 9012 9012 20485 MAINTENANCE SERVICE CHARGES 3584999 3584999 20487 SUNDRY REPAIRS AND 567949 567949 20489 VEHICLE REPAIRS AND MAINT 780071 780071 20490 VEHICLE SPARES 24800 24800 20506 SURVEY & DATA COLLECTION 26401745 26401745 ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 6 - 21004 TRANSPORTATION EXPENSES 17150 17150 21201 RATES, TAXES & LAND REVENUE 2496460.69 2496460.69 21301 INSURANCE PREMIUM EXPENSES 2904779 2904779 21501 CONVEYANCE EXPENSES 269134 269134 21503 PETROL, DIESEL & OIL (FOR 2173541 2173541 21504 T.A.D.A TO CHAIRMAN 8947 8947 21505 T.A.D.A. TO MANAGING 541001.5 541001.5 21506 T.A.D.A. TO OTHERS 411752 411752 21507 T.A.D.A. TO STAFF 2154977 2154977 21508 VEHICLES HIRE CHARGES 983436 983436 21601 ADVERTISEMENT AND PUBLICITY 11650750 11650750 21602 COMPUTER STATIONARY AND 505958 505958 21603 INTERNET COMMUNICATION 940712 940712 21604 POSTAGE AND TELEGRAMS 2042897 2042897 21605 SATELLITE COMMUNICATION 134723 134723 21606 STATIONERY & PRINTING 1902803 1902803 21607 TELEPHONE EXPENSE 1227142.29 1227142.29 21703 PAID TO STATUTORY AUDITORS 10000 10000 21701 STATUTORY AUDIT FEES 474290 474290 21702 STATUTORY AUDITORS FEES FOR 110300 110300 21801 INTEREST ON FIXED TERM 986301 986301 21806 BANK COMMISSION 229354.15 229354.15 21805 INTEREST ON O/D & OTHER 160000 160000 21804 INTEREST ON SALES- 2644879 2644879 22101 BOOKS & PERIODICALS FOR 123714 123714 22118 BUSINESS PROMOTION EXP. 8233308 8233308 22104 COMPUTER DATA JOB WORK 32917 32917 22105 COMPUTER SOFTWARE EXPENSES 812059 812059 22109 ELECTRICITY EXPENSES FOR 6744762 6744762 22113 FILING FEES (UNDER INCOME) 5000 5000 22115 FOREST / 240992 240992 22116 GIFT ARTICLES 264095 264095 22120 INAUGURATION OR 1431842 1431842 22123 LICENSE FEES 204500 204500 ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 7 - 22125 MEMBERSHIP & SUBSCRIPTION 230748 230748 22127 MISCELLANEOUS EXPENSES 338927 338927 22103 PENALTY PAID 464687 0 22111 REFRESHMENT / ENTERTAINMENT 1613623 1613623 22144 REVENUE STAMPS EXPENSES 969 969 22133 SEMINAR EXPENSES 18000 18000 22135 SECURITY EXPENSES 12658306 12658306 22147 SERVICE CHARGES EXP. 5641 5641 22146 SHARE CUSTODIAN FEES 723541 723541 22136 SHARE LISTING FEES 82725 82725 22137 SHARE TRANSFER FEES 15443 15443 22141 TENDER FEES (PAID BY 234374 234374 22182 CONSULTANCY CHARGES 8951663 8951663 22183 INTERNAL AUDIT FEES 248175 248175 22181 LEGAL AND PROFESSIONAL FEES 6133431 6133431 22189 PROFESSIONAL OTHER CHARGES 6910 6910 22501 FIXED ASSETS WRITTEN OFF 188978 0 22502 PETTY ASSETS WRITTEN OFF 102044 0 23101 REMUNERATION TO MANAGING 1293533 1293533 23301 SITTING FEES AND ALLOWANCES 172500 172500 23601 DONATION 127349292 127349292 22701 DEPRECIATION 22098660 22098660 23802 ROUNDING OFF A/C 4384 4384 23801 SUNDRY BALANCES WRITTEN OFF 283393.27 0 24201 PRIOR PERIOD ADJUSTMENTS 5491725 0 24401 INCOME TAX PROVISION FOR 1960000000 0 24501 WEALTH TAX FOR THE CURRENT 233000 0 24601 DEFERRED PROVISION FOR THE 138239265 0 TOTAL 2508681565 403678472 THE CLAIM OF DEDUCTION UNDER SECTION 80IA WILL ACCO RDINGLY BE REDUCED BY THIS AMOUNT AND THE AMOUNT ADMISSIBLE FOR DEDUCT ION WOULD BE AS UNDER: (I) 80IA DEDUCTION AS CLAIMED IN THE ROI - RS.31,1 5,94,168/- (II) REDUCTION FOR ALLOCATION OF HO EXPENSES - RS.6, 63,71,309/- ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 8 - NET ALLOWABLE DEDUCTION U/S 80IA OF THE ACT - R S.24,52,22,859/- ACCORDINGLY, THE DEDUCTION CLAIMED BY THE APPELLANT IS REDUCED TO THAT EXTENT AND THE INCOME IS ENHANCED. 6. IT APPEARS FROM THE ORDER THAT THE ASSESSEE ACCE PTED THE ALLOCATION MADE BY THE LEARNED CIT(A) IN RESPECT OF THE UNITS EXCEP T AKRIMOTA POWER PROJECT WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT . NO EXPLANATION, WHATSOEVER, HAS BEEN FORTHCOMING IN THIS ASPECT. TA KING INTO CONSIDERATION THE NATURE OF EXPENDITURE AS EVIDENT AT PAGE 64, 65 & 6 6 OF THE IMPUGNED ORDER, WE FIND SOME OF THEM MAY NOT BE DIRECTLY LINKED WIT H THE CONCERNED POWER PROJECT UNIT AT AKRIMOTA; THE SHARE TRANSFER FEE, S EMINAR EXPENSE, SECURITY EXPENSES, DONATION, SUNDRY BALANCES, TELEPHONE EXPE NSES OUGHT NOT TO HAVE BEEN ALLOCATED ON THE BASIS OF THE TURNOVER TO VARI OUS UNITS. THEY ARE NEITHER REQUIRED TO BE ALLOCATED TO THE POWER PROJECT UNIT AS WELL. WE FIND NO JUSTIFICATION AND/OR RATIONAL AS TO HOW THESE EXPEN SES LINKED TO THE POWER PROJECT UNIT PARTICULARLY. ON THE OTHER HAND THOUGH SOME OF THE EXPENDITURE PERTAIN TO THE ELIGIBLE UNIT BUT PROPER LINKAGE HAS NOT BEEN POINTED OUT WHICH SHOULD HAVE BEEN MADE BY THE LEARNED CIT(A) UPON CO NSIDERING THE CONCRETE DOCUMENTS OF SUCH EXPENDITURE TO THE SAID POWER PRO JECT UNIT. NEITHER IT IS ASCERTAINABLE FROM THE ORDER THAT ANY VERIFICATION DURING THE APPELLATE PROCEEDING WAS MADE BEFORE ENHANCING THE INCOME OF THE ASSESSEE BY REDUCING THE ALLOCATION OF HEAD OFFICE EXPENSES TO THE SAID UNIT. IN THAT VIEW OF THE MATTER, WE FIND IT FIT AND PROPER TO SET ASIDE THE ISSUE TO THE FILE OF THE LEARNED CIT(A) FOR VERIFICATION OF THE SAME AFTER GOING THR OUGH THE DETAILS OF EXPENDITURE INCURRED BY THE HEAD OFFICE IN RESPECT OF AKRIMOTA POWER PROJECT UNIT AND UPON ESTABLISHING LINKAGE AND/OR NEXUS OF SUCH EXPENDITURE TO THAT OF THE ELIGIBLE POWER PROJECT UNIT TO PASS THE ORDER I N ACCORDANCE WITH LAW KEEPING IN VIEW OF THE NATURE OF EXPENDITURE AS MEN TIONED ABOVE. THEREFORE, ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 9 - THE LEARNED CIT(A) SHOULD GIVE CATEGORICAL FINDING IN RESPECT OF THE EXPENDITURE WHICH CANNOT BE ALLOCATED TO AKRIMOTA P OWER PROJECT UNIT AFTER DUE VERIFICATION OF THE SUPPORTING DOCUMENTS PROVID ED BY THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSEE WILL ALSO RENDER CO -OPERATION BY PROVIDING THE DETAILS OF EXPENSES OF THAT PARTICULAR UNIT TO THE LEARNED CIT(A) AT THE TIME OF HEARING OF THE ISSUE. THE LEARNED CIT(A) IS FURTHER DIRECTED TO GIVE A PERSONAL HEARING TO THE ASSESSEE AND TO TAKE INTO CONSIDERAT ION THE EVIDENCES WHICH THE ASSESSEE MAY CHOOSE TO FILE AT THE TIME OF SUCH HEA RING. HENCE, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2951/AHD/2015 FOR A.Y. 2011-12: 7. THE ASSESSEE IN THIS PARTICULAR APPEAL CHALLENGE D THE ORDER DATED 21.08.2015 PASSED BY THE LEARNED CIT(A) U/S 271(1)( C) OF THE ACT, 1961 ARISING OUT OF THE QUANTUM APPEAL WHEREBY AND WHERE UNDER THE DEDUCTION CLAIMED BY THE APPELLANT HAS BEEN REDUCED TO THE TU NE OF RS.6,63,71,309/- THEREBY ENHANCING THE INCOME OF THE APPELLANT WHICH HAS BEEN SET ASIDE TO THE FILE OF THE LEARNED CIT(A) BY US IN ITA NO.873/AHD/ 2015 FOR A.Y. 2011-12. IN THAT VIEW OF THE MATTER, THE INSTANT APPEAL FILE D BY THE ASSESSEE BECOMES INFRUCTUOUS. HENCE, THE APPEAL IS DISMISSED AS INFR UCTUOUS. ITA NO.1369/AHD/2015 FOR A.Y. 2011-12: 8. THE REVENUE HAS FILED FOLLOWING GROUNDS OF APPEA L: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO MAKE PROPORTIONATE DISALLOWANCE OUT OF TOTAL DIS ALLOWANCE OF RS.47,83,671/- BY THE AO U/S 36(1)(III) OF THE I.T. ACT, 1961, THOUGH THE ASSESSEE COULD NOT PROVE NEXUS OF INTERE ST OF INTEREST FREE LOANS GIVEN TO OTHERS WITH INTEREST FREE FUND. ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 10 - 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.42,90,471/- MADE BY THE AO U/S 1 4A R.W.R. 8D OF THE I.T RULES. FURTHER, THE LD.CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS BY DIRECTING THAT THE DISALLOWANCE SHOULD NOT BE DONE ON ADMINISTRATIVE EXPENSES AS NO EXEMPT INCOME HAS BEE N EARNED IN THIS YEAR. THIS IS AGAINST CBDT CIRCULAR NO.5/2014 DTD.11.02.2014 WHICH WARRANTS DISALLOWANCE U/S 14A IS TO BE DONE EVEN IN CASES WHERE NO EXEMPT INCOME HAS BEEN EARNED IN A PARTICULAR 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.5,00,000/- TOWARDS DEPRECIATION ON ACCOUNT OF MULTI METAL PROJECT AS ASSESSEE COULD NOT PRODUC E ANY SUPPORTING DOCUMENT FOR THE ASSETS AND THAT THE SAI D ASSETS HAD BEEN PUT TO USE FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE DURING THE PERIOD UNDER CONSIDERATION . 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IA OF THE ACT FOR RS.31,15,94,168/-. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 6. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 9. GROUND NO.1: THE REVENUE HAS CHALLENGED THE ORDER PASSED BY THE LEARNED CIT(A) IN DIRECTING TO MAKE PROPORTIONATE D ISALLOWANCE OUT OF TOTAL DISALLOWANCE OF RS.47,83,671/- MADE U/S 36(1)(III) OF THE ACT. 10. THE BRIEF FACTS LEADING TO THIS CASE IS THAT DU RING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS NOTICED THAT THE ASSE SSEE HAS ADVANCED LOANS AND MADE INVESTMENT IN GROUP COMPANIES. IT WAS FURTHER NOTICED THAT PROPORTIONATE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 11 - INTEREST ON THE SAME IS NOT DISALLOWED BY THE ASSES SEE IN ITS COMPUTATION OF INCOME OR PROFIT AND LOSS ACCOUNT. NEITHER ANY INTE REST HAS BEEN CHARGED FROM THOSE SUBSIDIARY AND/OR SISTER CONCERNS. A SHOW-CAU SE, THEREFORE, DATED 17.12.2013 WAS ISSUED TO THE ASSESSEE AS TO WHY DIS ALLOWANCE ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE WOULD NOT BE MADE U/S 36(1)(III) OF THE ACT. IN REPLY WHEREOF THE ASSESSEE MENTIONED TH E NAME OF TWO SISTER CONCERNS OF GMDC NAMELY BHAVNAGAR ENERGY CO. LTD. A ND GUJARAT ALLUMINA & BAUXITE LTD. IT WAS FURTHER CONTENDED THAT THE AM OUNT WAS GIVEN TO THOSE SISTER CONCERNS IN THE PREVIOUS YEARS AND THAT TOO FOR BUSINESS PURPOSE ONLY. NEITHER ANY AMOUNT WAS GIVEN IN THE CURRENT YEAR EI THER FOR BUSINESS PURPOSE TO THOSE CONCERNS. THUS THERE IS NO DIVERSION OF FUNDS TO THESE CONCERNS AND NOTIONAL INTEREST INCOME NEED NOT TO BE APPLIED. IT WAS FURTHER CONTENDED THAT NO AMOUNT HAS BEEN PAID TO THE ABOVE COMPANIES OUT OF THE BORROWED FUNDS. THE ASSESSEE-APPELLANT COMPANY IS PAYING INTEREST O N VARIOUS TERM LOANS WHICH HAS BEEN GRANTED FOR SPECIFIC PROJECT AND THUS INTE REST ON COST HAVING DIRECT NEXUS WITH THE SAID PROJECT. THE SUBMISSION MADE BY THE APPELLANT COMPANY WAS NOT FOUND SUITABLE IN THE ABSENCE OF ANY SUPPOR TING DOCUMENTS / EVIDENCES FURNISHED BY THE ASSESSEE AS OPINED BY THE LEARNED AO. IT WAS ALSO OBSERVED THAT THE ASSESSEE FAILED TO PROVE THAT IT HAS AMPLE INTEREST FREE FUNDS TO PROVE HIS CLAIM GENUINE. HE, THEREFORE, CAME TO A CONCLUS ION THAT THE APPELLANT COMPANY HAD USED BORROWED FUND FOR NON INTEREST BEA RING ADVANCES AND PROPORTIONATE INTEREST OF RS.47,83,671/- BEING 12% OF THE ENTIRE LOAN, ADVANCES TO TUNE OF RS.3,98,63,925/- GIVEN TO THOSE SISTER C ONCERNS WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE WHICH WAS IN TURN DELETED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL PREFERRED BY THE REVENUE BEFORE US. ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 12 - 11. AT THE TIME OF HEARING OF THE INSTANT APPEAL, T HE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THE UNDERLYING PRINCIPLE OF OWN FUNDS AND BORROWED FUNDS AS DISCUSSED IN THE MATTER OF CIT VS. RELIANCE UTILITI ES & POWER LTD REPORTED IN 178 TAXMAN 135 (BOMBAY). IT WAS FURTHER CONTENDED T HAT EVEN IF SUCH COMPANIES ARE RELATED COMPANY TO THE APPELLANT THEN ALSO DURING THE YEAR THE APPELLANT COMPANY PAID UP CAPITAL OF RS.63,60,000/- AND FREE RESERVE & SURPLUS OF RS.16,06,16,98,572/- FOR THE PURPOSE OF MAKING OF SUCH PAYMENTS. IN THE SIMILAR SET OF FACTS, THE LEARNED CIT(A) SIN CE IN A.Y. 2010-11 DIRECTED THE LEARNED AO FOR COMPUTING THE DISALLOWANCE AFTE R EXCLUDING THE INTEREST HAVING DIRECT NEXUS WITH THE PURPOSE FOR WHICH THE MONEY HAS BEEN BORROWED; IN THE YEAR UNDER CONSIDERATION IDENTICAL ORDER HAS BEEN PASSED. HENCE, THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE R ELIED UPON THE ORDER PASSED BY THE FIRST APPELLATE AUTHORITY. THOUGH THE LEARNE D DR RELIED UPON THE ORDER PASSED BY THE LEARNED AO FAILED TO CONTROVERT THE S UBMISSION MADE BY THE LEARNED AR IN SUPPORT OF HIS CASE. 12. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED T HE RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND THAT DURING THE APPELL ATE PROCEEDING, THE APPELLANT COMPANY SUBMITTED FOLLOWING BEFORE THE LEARNED CIT( A): 1.1. 'THE APPELLANT COMPANY HAD GIVEN ADVANCE OF R S.7,50,000/- TO BHAVNAGAR ENERGY CO. LTD AND RS.3,91,13,925/- TO GU JARAT ALLUMINIUM & BAUXITE LTD DURING THE PREVIOUS YEARS. THE LD ASSESSING HAD DISALLOWED THE AMOUNT OF RS.47,83,671 /- U/S 36(1)(III) OF THE INCOME TAX ACT,1961 CONSIDERING T HAT SUCH AMOUNT HAS BEEN ADVANCED TO THE GROUP COMPANIES. 1.2. THE LD ASSESSING OFFICER HAS FAILED TO APPREC IATE FACT THAT BHAVNAGAR ENERGY CO. AND GUJARAT ALLUMINIUM & BAUXI TE LTD ARE NOT THE GROUP COMPANIES OF GUJARAT MINERAL DEVE LOPMENT CORPORATION LTD. THE LD. ASSESSING OFFICER HAD FURT HER ERRED IN ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 13 - NOT APPRECIATING THE FACT THAT SUCH ADVANCES HAD BE EN MADE IN PREVIOUS YEAR FOR THE PURPOSE OF BUSINESS ONLY, HEN CE NO DISALLOWANCE SHOULD BE CALLED FOR U/S 36(I)(III) OF THE INCOME TAX ACT,1961. 1.3. NO DISALLOWANCE WAS REQUIRED TO BE MADE OUT O F INTEREST EXPENSE, AS THE COMPANY WAS MAKING PAYMENT OF INTER EST ON VARIOUS TERM LOANS (COPY OF DETAILS OF INTEREST EXP ENSE ATTACHED ON PAGE NO.287 OF THE PAPER BOOK) AND SUCH TERM LOA NS HAD BEEN GRANTED FOR SPECIFIC PROJECT, HENCE SUCH INTER EST COST HAD DIRECT NEXUS WITH SUCH RESPECTIVE PROJECT. THE LEND ING BANKS HAD GRANTED LOANS FOR THE POWER PROJECT OF THE APPELLAN T COMPANY AND SUCH LENDERS ALSO MONITOR THE END USE OF SUCH L OANS. HENCE NO AMOUNT OF BORROWED FUNDS HAD BEEN UTILIZED FOR T HE PURPOSE OF GRANTING SO CALLED NON BUSINESS ADVANCES. 1.4. HOWEVER THE LD. ASSESSING OFFICER HAD WITHOUT CONSIDERING THE ABOVE FACT DISALLOWED THE AMOUNT OF RS.47,83,671/- U/S 36(1)(III) OF THE INCOME TAX ACT,1961. THE LD. ASSESSING OFFIC ER HAD ALSO FAILED TO APPRECIATE UNDERLYING PRINCIPLE OF OWN FU NDS & BORROWED FUNDS AS SET OUT IN THE CASE OF COMMISSION ER OF INCOME TAX V. RELIANCE UTILITIES & POWER LTD 178 TA XMAN 135(BOM.) WITHOUT PREJUDICE TO WHAT IS STATED ABOVE , WE WOULD FURTHER LIKE TO STATE THAT EVEN IF SUCH COMPANIES A RE RELATED COMPANY TO THE APPELLANT THAN ALSO DURING THE YEAR THE APPELLANT COMPANY HAS PAID UP CAPITAL OF RS.63,60,000/- AND F REE RESERVE & SURPLUS OF RS.1606,16,98,572/- FOR THE PURPOSE OF MAKING OF SUCH PAYMENTS. 1.5. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, WE WOULD LIKE TO STATE THAT ON ONE HAND THE LD. A.O. STATES THAT THE APPEL LANT HAS FAILED TO FURNISH AND PROVE NEXUS THAT THE ADVANCES WERE M ADE FROM INTEREST FREE FUNDS, ON THE OTHER HAND, WHILE CALCU LATING THE DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF INCOME FROM POWER PLANT, THE APPELLANT HAS CONSIDERED INTEREST OF RS. 11,34,24,434/- AS RELATABLE TO INCOME EARNED FROM SUCH POWER PLANT . THIS FACT IS VERY MUCH ACCEPTED. THE BALANCE AMOUNT OF INTEREST OF RS.3,25,59.873/- & RS.68,48,106/- REPRESENTED INTER EST IN RESPECT OF OTHER TERM LOANS & INTEREST ON INCOME TAX, SALES TAX, SERVICE TAX AND OTHER MISCELLANEOUS INTEREST FOR LATE PAYME NTS RESPECTIVELY, WHICH HAS NO CONNECTION WITH THE ADVA NCES IN QUESTION. IN RESPECT OF THE USE OF THE FUND BORROWE D FOR THE TERM LOAN WE WOULD LIKE TO STATE THAT END USE OF FUND AR E CLOSELY MONITORED BY THE SANCTION AUTHORITY, HENCE SUCH FUN D CANNOT BE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 14 - USED FOR ADVANCING THE RELATED PARTIES. NOW IF THE INTEREST OF RS. 11,34,24,434/- WAS DIRECTLY RELATABLE TO POWER PLAN T, RS.3,25,89,873/- FOR OTHER TERM LOAN FOR THE PURCHA SE OF MACHINERIES AND THE REMAINING AMOUNT IS FOR LATE PA YMENT OF TAXES ETC., THE DISALLOWANCE U/S 36(1)(III) IS NOT JUSTIFIED.' WE HAVE CAREFULLY CONSIDERED THE ORDER PASSED BY TH E LEARNED CIT(A) AND THE AO AS WELL. IT APPEARS FROM THE RECORD THAT THE LEARNED AO WAS OF THE VIEW THAT THE APPELLANT HAS FAILED TO EXPLAIN THE P URPOSE OF BUSINESS FOR WHICH THE LOAN WAS GIVEN BUT THE APPELLANT SUBMITTED THAT THE LOAN GIVEN TO THOSE COMPANIES WERE FOR THE PURPOSE OF BUSINESS AND THER E WAS A DIRECT NEXUS WITH THOSE COMPANIES. IT WAS FURTHER SUBMITTED BY THE AP PELLANT THAT MOST OF THE INTEREST EXPENSES INCURRED BY THE APPELLANT WERE IN THE NATURE OF DIRECT EXPENSES WHICH HAVE CLEAR NEXUS WITH THE PURPOSE FO R WHICH IT HAS INCURRED. RS.11.34 CRORES DIRECTLY RELATABLE TO POWER PLANT A ND RS.3.25 CRORES FOR THE TERM LOAN FOR PURCHASE OF MACHINERY AND THE OTHER A MOUNT WAS FOR LATE PAYMENT OF TAXES AS SUBMITTED BY THE ASSESSEE WAS D ULY CONSIDERED BY THE LEARNED CIT(A) IN HIS CONCLUDING PART OF THE ORDER. IT IS PERTINENT TO MENTION THAT SIMILAR ISSUE WAS DECIDED BY THE SAME LEARNED CIT(A) IN ASSESSEES OWN CASE FOR A.Y. 2010-2011 BY DIRECTING THE AO FOR COM PUTING THE DISALLOWANCE AFTER EXCLUDING THE INTEREST, THOSE ARE HAVING DIRE CT NEXUS WITH THE PURPOSE FOR WHICH THE MONEY HAS BEEN BORROWED. ONLY UPON CONSID ERING THE SIMILAR DETAILS INCLUDING DETAILS RELATING TO THE INTEREST ON FIXED TERM LOAN PERTAINING TO HEAD OFFICE BORROWING AMOUNTING TO RS.9,86,301/-, INTERE ST ON OVER DRAFT AND OTHER MISCELLANEOUS INTEREST PERTAINING TO HEAD OFFICE AM OUNTING TO RS.1,60,000/- AND RS.7,399/- FOR MATAS MADH WHICH ARE GENERAL PU RPOSE INTEREST EXPENDITURE THE LEARNED CIT(A) CAME TO A CONCLUSION THAT THE SAME CANNOT BE ATTRIBUTED FOR SPECIFIC PURPOSE. THE LEARNED CIT(A) WORKED OUT THE INTEREST EXPENDITURE TO THE TUNE OF RS.11,53,706/- FOLLOWING THE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 15 - EARLIER DECISION TAKEN BY HIM IN ASSESSEES OWN CAS E AS FOR A.Y. 2010-11. THE LEARNED CIT(A) FURTHER DIRECTED THE LEARNED AO TO R E-COMPUTE THE PROPORTIONATE DISALLOWANCE BY TAKING THE TOTAL INTE REST EXPENDITURE AT RS.11,53,706/- WHICH IN OUR CONSIDERED VIEW IS WITH OUT ANY AMBIGUITY. HENCE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE FIR ST APPELLATE AUTHORITY SO FAR AS TO WARRANT INTERFERENCE. THE QUESTION IS ACCORDINGL Y ANSWERED IN THE AFFIRMATIVE, I.E. IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. HENCE, REVENUES APPEAL FOUND TO BE DEVOID OF ANY MERIT AN D DISMISSED. 13. GROUND NO.2: THE REVENUE HAS ALSO CHALLENGED THE DELETION OF DISALLOWANCE OF RS.42,90,471/- U/S 14A R.W.R. 8D OF THE INCOME TAX RULE. 14. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS NOTICED THAT THE APPELLANT COMPANY HAS MADE TOTAL INVESTMENT IN SHAR ES & MUTUAL FUNDS TO THE TUNE OF RS.1,32,60,88,170/-. THE COMPANY HAS ALSO E ARNED EXEMPT INCOME I.E. DIVIDEND INCOME TO THE TUNE OF RS.3,28,01,063/-. SH OW-CASE, THEREFORE, DATED 17.12.2013 WAS SERVED UPON THE ASSESSEE AS TO WHY D ISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 R.W.R. 8D OF THE INCOME TA X ACT, 1962 WOULD NOT BE MADE. IN REPLY THE ASSESSEE SUBMITTED THAT THE ASSE SSEE TOOK LOAN FOR ITS WIND POWER PROJECT AND SUCH TERM LOAN HAD BEEN GRANTED F OR SPECIFIC PROJECT, HENCE SUCH INTEREST COST HAD DIRECT NEXUS WITH SUCH RESPE CTIVE PROJECT. NO AMOUNT OF BORROWED FUNDS HAD BEEN UTILIZED FOR THE PURPOSE OF INVESTMENT. APART FROM THAT, IT WAS FURTHER CONTENDED THAT THE COMPANY HAD SUFFICIENT FUNDS AT THE TIME OF INVESTMENTS IN SECURITIES FROM WHICH SAID EXEMPT INCOME HAS BEEN GENERATED. SINCE THE COMPANY HAS NOT BORROWED FUNDS FOR THE PURPOSE OF INVESTMENTS THE QUESTION OF APPLICABILITY OF SECTIO N 14A R.W.R. 8D DOES NOT AND CANNOT ARISE AT ALL. IN SUPPORT OF HIS CLAIM THE AS SESSEE ALSO RELIED UPON THE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 16 - JUDGMENT PASSED BY THE ITAT, MUMBAI BENCH IN THE MA TTER OF SHOPPERS STOP LTD.-VS-ACIT WHEREIN IT WAS HELD THAT WHEN THE ASSE SSEE HAS MADE INVESTMENTS OUT OF HIS OWN FUNDS SECTION 14A WILL N OT BE APPLIED. IN FACT, THE TAX AUDITOR OF THE COMPANY HAS ALREADY WORKED OUT D ISALLOWANCE U/S 14A TO THE TUNE OF RS.51,66,612/- BEING 0.5% OF THE AVERAGE V ALUE OF INVESTMENT TO COVER ALL INCIDENTAL AND ADMINISTRATIVE EXPENSES, WHICH H AS BEEN ADDED BACK TO THE INCOME OF THE APPELLANT. FURTHER ADDITION IS NOT RE QUIRED AS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED AO. HOWEVER, THE CONTE NTION MADE BY THE ASSESSEE IN SUPPORT OF HIS CASE HAS NOT BEEN ACCEPT ED BY THE LEARNED AO. HE, THUS, UPON APPLICATION OF SECTION 14A R.W.R. 8D WOR KED OUT THE TOTAL DISALLOWANCE AT RS.94,57,083/-. THE ASSESSEE ITSELF SINCE DISALLOWED THE AMOUNT OF RS.51,66,612/-. THE BALANCE AMOUNT OF RS. 42,90,471/- HAS BEEN DISALLOWED BY THE LEARNED AO AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL, THE SAME WAS PARTLY ALLOWED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL FILED BY THE REVENUE BEFORE US. 15. AT THE TIME OF HEARING OF THE INSTANT APPEAL, T HE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT IT IS A SETTLED PRINCIPLE OF LAW THAT WHEN THERE ARE FUNDS AVAILABLE, BOTH INTER EST FREE AND OVERDRAFT AND LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT IN VESTMENT WOULD BE OUT OF INTEREST FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY AS HELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE MATTER OF CIT-V S-RELIANCE UTILITIES & POWERS LTD REPORTED IN 178 TAXMAN 135 (BOMBAY). IN THAT VIEW OF THE MATTER, WHEN BOTH INTEREST FREE AND INTEREST BEARING FUNDS ARE AVAILABLE WITHIN THE BASIC PRESUMPTION IS THAT IT IS AVAILABLE FROM INTEREST F REE FUNDS. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAS PAID UP CAPITAL OF RS.63 CRORES, AND FREE RESERVE & SURPLUS OF RS.1606 CRORES AS AGAINST THE TOTAL INVESTMENT OF RS.132 ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 17 - CRORES. NO INTEREST BEARING FUND HAS BEEN UTILIZED FOR THE PURPOSE OF MAKING SUCH INVESTMENTS AND THEREFORE DISALLOWANCE AS MADE BY THE LEARNED AO TO THE TUNE OF RS.42,90,471/- UPON APPLICATION OF SECT ION 14A R.W.R. 8D HAS BEEN RIGHTLY DELETED BY THE LEARNED CIT(A). ON THE CONTR ARY, THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE LEARNED AO. 16. WE HAVE HEARD THE RESPECTIVE PARTIES, AND PERUS ED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE HAVE CAREFULLY CONSIDERED T HE ORDER PASSED BY THE LEARNED CIT(A) WHICH IS AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS MADE DISALLOWANCE UNDER SECTION 14A BY APPLYING THE PROV ISIONS OF RULE 8D. IT HAS BEEN HELD BY HIM THAT THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THAT THE INVESTMENT HAS BEEN MADE OUT OF THE INTERE ST-FREE FUNDS AND AFTER GIVING THE CREDIT OF THE DISALLOWANCE ALREADY MADE BY THE APPELLANT, A DISALLOWANCE OF RS. 42,90,471/- HAS BE EN MADE. THE APPELLANT ON THE OTHER HAND HAS SUBMITTED THAT DURI NG THE YEAR, THE INTEREST EXPENDITURE WHICH ARE SHOWN AND CLAIMED IN THE PROFIT AND LOSS ACCOUNT HAVE BEEN INCURRED EXCLUSIVELY FOR THE POWE R PLANT OF THE APPELLANT COMPANY. NO EXPENDITURE CLAIMED IN INTERE ST IS FOR GENERAL PURPOSE, SO THAT IT CAN BE LOCATED FOR THE PURPOSE OF RULE 8D. IT HAS ALSO BEEN SUBMITTED BY THE APPELLANT THAT THE INVESTMENT OF RS. 52.83 CRORES WERE MADE PRIOR TO 01/04/2000 AND AT THAT TIME THE APPELLANT COMPANY WAS DEBT FREE. THE INVESTMENTS MADE DURING THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT IN QUESTION WERE ALSO OUT OF THE INTERNAL FUNDS WHICH WERE INTEREST-FREE. THE APPELLANT COMPANY HAS NOT M ADE ANY FRESH BORROWINGS DURING THE YEAR BUT MADE THE REPAYMENTS OF THE LOAN. THE APPELLANT HAS ALSO SUBMITTED THAT IN RESPECT OF THE INVESTMENTS OF RS. 29.20 CRORES, THE APPELLANT HAS NOT EARNED ANY DIVI DEND INCOME AND, THEREFORE, THE SAME SHOULD NOT BE CONSIDERED FOR MA KING THE DISALLOWANCE. ON A CAREFUL CONSIDERATION OF ENTIRE FACTS OF THE C ASE, IT IS NOTED THAT THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THA T NO EXPENDITURE HAS BEEN INCURRED FOR EARNING THE DIVIDEND AND THE EXEM PT INCOME. IN FACT IT'S OWN AUDITOR HAS WORKED OUT A DISALLOWANCE IN T HE RETURN OF ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 18 - THEREFORE, THE CLAIM OF THE APPELLANT THAT NO EXPEN DITURE HAS BEEN INCURRED IS NOT ACCEPTABLE. REGARDING, THE DISALLOW ANCE OUT OF INTEREST, IT IS NOTED THAT THE INTEREST EXPENDITURE OF RS. 11 .34 CRORES WAS RELATABLE TO INCOME EARNED FROM POWER PLANT AND, THEREFORE, T HE SAME SHOULD NOT BE CONSIDERED FOR MAKING THE DISALLOWANCE UNDER SEC TION 14A. THE BALANCE AMOUNT OF RS. 3.25 CRORES IS INTEREST IN RE SPECT OF OTHER TERM LOANS AND RS. 68,48,106/- IS SHOWN AS THE EXPENDITU RE HAS BEEN INCURRED ON ACCOUNT OF BANK COMMISSION CHARGES, INT EREST ON SALES TAX, SERVICE TAX, INTEREST PAID ON INCOME TAX. HOWEVER, A PERUSAL OF THE DETAILS SUBMITTED BY THE APPELLANT SHOW THAT THE AP PELLANT HAS INCURRED AN AMOUNT OF RS. 11,53,706/- ON INTEREST ON OVERDRA FT AND OTHER MISCELLANEOUS INTEREST AND INTEREST PAID TO OTHERS AND THE SAME IS DIRECTLY NOT ALLOCABLE TO ANY OTHER SPECIFIC USE. T HE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY EXPLANATION REGARDING THIS IN TEREST EXPENDITURE AND ANY JUSTIFICATION THAT THIS INTEREST HAS NOT BE EN INCURRED ON THE FUNDS WHICH HAVE BEEN UTILISED FOR MAKING THE INVES TMENT GIVING EXEMPT INCOME. ACCORDINGLY, ONLY THIS AMOUNT OF INTEREST S HOULD BE TAKEN FOR THE PURPOSE OF MAKING DISALLOWANCE BY APPLYING THE PROVISIONS OF RULE 8D. THE AO IS ACCORDINGLY DIRECTED TO WORK OUT THE DISALLOWANCE BY TAKING THE INTEREST OF RS.11,53,706/-. IT IS, HOWEV ER, NOTED THAT CERTAIN DISALLOWANCE OUT OF THIS AMOUNT HAS ALREADY BEEN MA DE UNDER SECTION 36(I)(III) OF THE ACT WHICH HAS BEEN DECIDED BY ME IN THE PRECEDING GROUND OF APPEAL. THE TOTAL DISALLOWANCE SO MADE UN DER BOTH THE SECTIONS SHOULD NOT EXCEED THE TOTAL INTEREST EXPEN DITURE OF RS. 11,53,706/-. REGARDING, THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE, IT IS NOTED THAT THE CLAIM OF APPELLAN T THAT IT HAS NOT EARNED ANY TAX FREE INCOME IN RESPECT OF THE INVESTMENT OF RS. 29.20 CRORES AND NO DISALLOWANCE UNDER SECTION 14A SHOULD BE MADE ON ACCOUNT OF THIS INVESTMENT IS ACCEPTABLE KEEPING IN VIEW THE JUDGME NT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CORRTECH ENERGY PRIVATE L IMITED IN TAX APPEAL NO. 239 OF 2014 REPORTED IN 45 TAXMANN.COM 1 16 (GUJARAT). IT HAS BEEN HELD BY THE HONOURABLE COURT THAT, IF NO E XEMPTION ON ACCOUNT OF THE INCOME GENERATED FROM THE INVESTMENT HAS BEE N CLAIMED, NO DISALLOWANCE UNDER SECTION 14A SHOULD BE MADE. RESP ECTFULLY FOLLOWING THE JUDGMENT, THE INVESTMENT OF RS. 29.20 CRORE SHO ULD BE EXCLUDED FOR WORKING OUT THE DISALLOWANCE OUT OF INTEREST, AS WE LL AS, OUT OF THE ADMINISTRATIVE EXPENDITURE. HOWEVER, IT IS NOTED TH AT THE APPELLANT HAS ITSELF MADE A DISALLOWANCE OF RS. 51,66,612/- ON AC COUNT OF ADMINISTRATIVE EXPENSES BY TAKING 0.5% OF THE AVERA GE VALUE OF ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 19 - INVESTMENT. AFTER EXCLUDING THE INVESTMENT OF RS. 2 9.20 CRORES, THE DISALLOWANCE COMES TO THE SAME AMOUNT WHICH HAS BEE N DISALLOWED BY THE APPELLANT ITSELF. ACCORDINGLY NO FURTHER DISALL OWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE IS CALLED FOR. IT APPEARS FROM THE RECORDS THAT THE APPELLANT HAS INCURRED AN AMOUNT OF RS.11,53,706/- INTEREST ON OVER DRAFT AND OTHER MIS CELLANEOUS INTEREST AND INTEREST PAID TO OTHERS AND THE SAME IS DIRECTLY NO T ALLOCABLE TO ANY OTHER SPECIFIC USE. IN THE ABSENCE OF ANY EXPLANATION REN DERED BY THE ASSESSEE THAT THIS INTEREST HAS NOT BEEN INCURRED ON THE FUNDS WH ICH HAS BEEN UTILIZED FOR MAKING THE INVESTMENT GIVING EXEMPT INCOME, THE LEA RNED CIT(A) DIRECTED THE AO TO WORK OUT THE DISALLOWANCE TAKING INTO CONSIDE RATION THE SAID INTEREST OF RS.11,53,706/-. SINCE CERTAIN DISALLOWANCE HAD ALRE ADY BEEN MADE BY THE LEARNED CIT(A) U/S 36(1)(III) OF THE ACT IT WAS ALS O OBSERVED BY THE LEARNED CIT(A) THAT TOTAL DISALLOWANCE SHOULD NOT EXCEED TO THE TOTAL INTEREST EXPENDITURE OF THE SAID AMOUNT OF RS.11,53,706/- WH ICH ACCORDING TO US WITHOUT ANY INFIRMITY AND/OR ANY ERROR. SO FAR AS T HE ADMINISTRATIVE EXPENDITURE IS CONCERNED THE FACT THAT THE ASSESSEE HAS NOT EAR NED INTEREST INCOME IN RESPECT OF INVESTMENT OF RS.29.20 CRORES HAS BEEN RIGHTLY T AKEN INTO CONSIDERATION AND THEREFORE DISALLOWANCE U/S 14A HAS BEEN DISREGARDED BY THE LEARNED CIT(A). KEEPING IN VIEW ALL THE RATIO LAID DOWN IN THE JUDG MENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CORRTECH E NERGY PVT. LTD. WHERE IT HAS HELD THAT IF NO EXEMPTION ON ACCOUNT OF INCOME GENE RATED FROM INVESTMENT HAS BEEN CLAIMED, NO DISALLOWANCE U/S 14A SHOULD BE MAD E. IT WAS FURTHER OBSERVED BY THE LEARNED CIT(A) THAT SINCE THE APPEL LANT ITSELF MADE DISALLOWANCE TO THE TUNE OF RS.51,66,612/- ON ACCOU NT OF ADMINISTRATIVE EXPENSES BY TAKING 0.5% OF THE AVERAGE VALUE OF INV ESTMENT, NO FURTHER DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITU RE IS CALLED FOR. THE JUSTIFICATION GIVEN BY THE LEARNED CIT(A), IN OUR C ONSIDERED VIEW IS PROPER ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 20 - AND DOES NOT WARRANT INTERFERENCE. HENCE, THE SAME IS UPHELD. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 17. GROUND NO.3: THE ORDER PASSED BY THE LEARNED CIT(A) IN DELETING THE DEPRECIATION OF RS.5,00,000/- IS ALSO UNDER CHALLEN GE BEFORE US BY THE REVENUE. 18. THE BRIEF FACTS LEADING TO THE CASE IS THIS THA T THE ASSESSEE CLAIMED DEPRECIATION ON THE ASSETS IN RESPECT OF MULTI-META L PROJECT AT AMBAJI. SINCE THE SAID PROJECT WAS NONFUNCTIONAL AND DID NOT OPERATE AT ALL DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS SERVED WITH A SHOW- CAUSE DATED 17.12.2013 AS TO WHY DISALLOWANCE OF THE SAID AMOUNT SHOULD NOT B E MADE ON MULTI-METAL PROJECT. HOWEVER, THE REPLY RENDERED BY THE ASSESSE E WAS NOT FOUND ACCEPTABLE BY THE LEARNED AO. HE THUS DISALLOWED THE SAME WHIC H WAS IN TURN DELETED BY THE LEARNED CIT(A) IN APPEAL. HENCE, THE CHALLENGE BEFORE US. 19. AT THE VERY OUTSET OF THE HEARING OF THE ISSUE, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE MATTER IS SQUARELY COVERED IN THE ASSESSEES OWN CASE ON THE IDENTICAL ISSUE BY THE JUDGMENT PASSED BY THE LEARNED TRIBUNAL IN ITA NO.402/AHD/20 05 FOR A.Y. 2001-02. THE COPY WHEREOF IS ALSO ANNEXED TO THE PAPER BOOK AT PAGE 221. THE LEARNED DR, HOWEVER, FAILED TO CONTROVERT THE SAID CONTENTI ON MADE BY THE LEARNED AR OF THE ASSESSEE. 20. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEV ANT MATERIALS AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE CO-ORDINAT E BENCH IN FAVOUR OF THE ASSESSEE ON THE IDENTICAL ISSUE IN THE APPEAL PREFE RRED BY THE REVENUE. THE RELEVANT PORTION OF THE SAID JUDGMENT IS AS FOLLOWS : ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 21 - 4.1 GROUND NO.1 IS REGARDING DELETION OF DISALLOWA NCE OF RS.5 LACS BEING DEPRECIATION ON MULTIMODAL PROJECT AT AMBAJI. 4.2 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION HI ASSESSEE'S OWN EASE FOR THE ASSESSMENT YEAR 1998-99 AND 1999-2000 IN I.T.A. NO.1392 AND 1422/AHD/2003. HE FARTHER SUBMITTED THAT THE RELEVANT PORTION OF THIS TRIBUNAL ORDER IS AT PARA 19-23 WHICH ARE AVAI LABLE ON PAGE 81-82 OF THE' DECISION PAPER BOOK. HE FURTHER SUBMITTED THAT THIS TRIBUNAL ORDER WAS FOLLOWED BY THE TRIBUNAL IN ASSESSMENT YE AR 1997-98 HI I.T.A. NO. 2728/AHD/2000 AND THE RELEVANT DISCUSSION IS IN PARA 84 OF THE TRIBUNAL ORDER ON PAGE 76 OF THE DECISION PAPER BOO K. 4.2.1 LD. D.R. OF THE REVENUE ALTHOUGH SUPPORTED T HE ORDER OF THE A.O. BUT HE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT YEAR AS COMPARED TO EARLIER THREE YEARS FOR WHICH THE TRIBU NAL DECISION HAD BEEN CITED BY THE LD. A.R. HENCE, WE DO NOT FIND AN Y REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THIS GROU ND OF THE REVENUE IS REJECTED. WE, THEREFORE RESPECTFULLY RELYING UPON THE SAID JU DGMENT DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. HENCE, REVENUES APPEAL IS DISMISSED. 21. GROUND NO.4: THIS GROUND RELATES TO THE DECISION PASSED BY THE LEARNED CIT(A) IN DELETING DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IA OF RS.31,15,94,168/-. 22. DURING THE COURSE OF ASSESSMENT PROCEEDING, UPO N VERIFICATION OF COMPUTATION OF INCOME IT WAS NOTICED THAT THE ASSES SEE COMPANY CLAIMED DEDUCTION OF RS.31,15,94,168/- U/S 80IA OF THE ACT. THE APPELLANT COMPANY IS HAVING POWER PROJECT. A SEPARATE ACCOUNT FOR THE SA ID POWER PROJECT HAS BEEN MAINTAINED BY THE COMPANY. THE SAME WAS SEPARATELY AUDITED BY THE CHARTERED ACCOUNTANT. BASED ON SUCH AUDITED COMPANY THE APPEL LANT COMPANY CLAIMED SUCH DEDUCTION U/S 80IA OF THE ACT. SHOW-CAUSE, DAT ED 06.12.2013 WAS ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 22 - THEREFORE, ISSUED UPON THE ASSESSEE WITH A REQUEST TO FURNISH A SEPARATE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR ASCERTAINING THE PROFIT OF THE SAID POWER PROJECT UNIT. THE ASSESSEE WAS FURTHER DIRECTED TO SHOW-CAUSE AS TO WHY THE LOSSES AND DEPRECIATION WHICH HAS BEEN SET OFF AGAI NST OTHER BUSINESS INCOME OF THE CORPORATION SHOULD NOT BE SET OFF AGAINST THE P OWER PROJECT INCOME OF RS.31.16 CRORES. THE ASSESSEE SUBMITTED AS FOLLOWS: '...NOTIONAL BROUGHT FORWARD OF LOSS OF THE EARLIER YEARS U/S.80-IA(5): YOUR GOODSELF HAS ASKED US TO EXPLAIN AS TO WHY AS PER THE PROVISIONS OF SUB SECTION (5) OF SECTION SOLA, LOSS OF EARLIER YE ARS IN RESPECT OF POWER PROJECT, THOUGH SET OFF AGAINST THE INCOME OF OTHER UNITS IN EARLIER YEARS, BE NOT SET OFF NOTIONALLY IN DETERMINING THE DEDUCTION U/S.80IA. IN THIS REGARD, WE WOULD LIKE TO SUBMIT AS UNDER; ANALYSIS OF S.80-IA(5): S.80-IA(5) READS AS UNDER: 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WH ICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DE TERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSM ENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSE QUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR REL EVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMI NATION IS TO BE MADE.' THERE IS NO DISPUTE THAT SUBSECTION (5) CREATES A F ICTION. THE FICTION MANDATES A NOTIONAL CARRY FORWARD OF LOSS FROM ELIG IBLE BUSINESS PRESUMING THAT THE ELIGIBLE BUSINESS IS THE ONLY SO URCE OF INCOME. THE MOOT ISSUE IS THE YEAR OF APPLICABILITY OF THE FICT ION. FOR EASY ANALYSIS, SS. (5) IS DIVIDED INTO PHRASES AS BELOW: (A) FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION; ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 23 - (B) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR; (C) ELIGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME ; (D) DURING THE PREVIOUS YEAR RELEVANT TO THE INITIA L ASSESSMENT YEAR; (E) AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO A ND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE; PHRASE (C) INTRODUCES THE FICTION 'ELIGIBLE BUSINES S WAS THE ONLY SOURCE OF INCOME' AND PHRASE (D) PROVIDES FOR ITS APPLICAB ILITY 'DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YE AR'. PHRASES (C) AND (D) COLLECTIVELY MEAN THAT THE LOSS OF THE YEARS CO MMENCING FROM THE INITIAL ASSESSMENT YEAR (I.E., THE FIRST YEAR OF CL AIM) ALONE IS TO BE NOTIONALLY CARRIED FORWARD AND NOT LOSSES OF THE YE ARS PRIOR TO THE INITIAL ASSESSMENT YEAR. PHRASES (A) AND (B) PROVIDE THAT WHEN THE DETERMINA TION OF QUANTUM OF DEDUCTION IS TO BE MADE FOR ANY YEAR FROM THE SECON D YEAR OF THE CLAIM (YEAR AFTER THE INITIAL ASSESSMENT YEAR), IT IS ONL Y THE LOSS OF THAT YEAR AND SUBSEQUENT YEARS THAT IS REQUIRED TO BE SET OFF AGAINST THE PROFIT OF THE ELIGIBLE BUSINESS AND NOT THE LOSS FOR ANY EARL IER YEAR INCLUDING THE INITIAL ASSESSMENT YEAR. THEREFORE, LOSS FROM THE ELIGIBLE BUSINESS IN THE Y EARS PRIOR TO THE INITIAL ASSESSMENT YEAR ABSORBED AGAINST THE PROFITS OF OTH ER BUSINESSES NEED TO BE NOTIONALLY BROUGHT FORWARD AND HAS NO EFFECT ON THE DEDUCTION CLAIMED. ACCORDINGLY, THE FICTION U/S.80-IA(5) IS APPLICABLE ONLY FROM THE SECOND YEAR OF CLAIM AND NOT PRIOR TO IT. THE TRUE INTENTI ON OF SS.(5) CAN BE EASILY UNDERSTOOD BY IMAGINING THE ABSENCE OF IT. F OR EXAMPLE, WHERE THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80-IA FOR TH REE YEARS AND THERE IS A LOSS IN THE 4 TH YEAR OF CLAIM IN A BLOCK OF TEN YEARS, IN ABSENCE OF SS.(5), THE ASSESSEE CAN CONTINUE TO DEDUCTION ON T HE PROFIT FROM 5 TH YEAR IGNORING LOSS INCURRED IN THE 4 TH YEAR IF IT HAS BEEN SET OFF AGAINST ANY OTHER INCOME. BY VIRTUE OF THE FICTION IN SS.(5), T HE LOSS OF THE 4 TH YEAR IS TO BE SET OFF AGAINST THE INCOME BEFORE CLAIMING DE DUCTION FOR THE 5 TH YEAR. THEREFORE, SS(5) WILL OPERATE ONLY DURING THE PERIOD OF TEN YEARS OF CLAIM AND ONLY FORM THE SECOND YEAR OF THE CLAIM. S S.(5) IS THUS NOT RENDERED REDUNDANT.. ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 24 - IN SUPPORT OF THE CONTENTION MADE BY THE ASSESSEE R ELIANCE WAS ALSO PLACED ON THE JUDGMENT PASSED BY DIFFERENT COURT O F LAW. HOWEVER, SUCH PLEA OF THE ASSESSEE WAS NOT FOUND TENABLE BY THE LEARNE D AO. HE, ULTIMATELY CAME TO A CONCLUSION THAT THE INITIAL ASSESSMENT YEAR FO R THE PURPOSE OF SECTION 80IA(5) SHALL BE THE YEAR OF COMMENCEMENT OF ELIGIB LE BUSINESS AND THE LOSS OR UNABSORBED DEPRECIATION SHALL BE NOTIONALLY BROUGHT FORWARD FROM THE SAID YEAR EVEN IF THE LOSS OR UNABSORBED DEPRECIATION HAS ALR EADY BEEN SET OFF WITH THE INCOME OF NON-ELIGIBLE BUSINESS IN EARLIER YEARS BY VIRTUE OF THE PROVISION OF THE ACT. IN THIS PARTICULAR CASE, THE INITIAL YEAR SHOULD BE 2005-06 I.E. THE YEAR OF COMMENCEMENT OF ELIGIBLE BUSINESS. RELYING UPON THE JUDGMENT PASSED BY THE HONBLE ITAT, AHMEDABAD IN THE CASE OF ACIT-VS- GOLDMINE SHARES AND FINANCE PVT. LTD. THE ASSESSEE CLAIMED FOR DEDUCTIO N OF RS.31,15,94,168/- U/S 80IA HAS BEEN DISALLOWED AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL, THE SAME WAS DELETED BY THE LE ARNED CIT(A). HENCE, THE INSTANT APPEAL BEFORE US. 23. AT THE TIME OF HEARING OF THE INSTANT APPEAL, T HE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT PASSED BY THE HONBLE ITAT IN ITA NO.997/AHD/2015 IN ASSESSEES OWN CASE FOR A.Y. 201 0-11. FURTHER THAT, THE LEARNED CIT(A) IN HIS OWN ORDER RELIED UPON THE ORD ER PASSED BY HIM IN ASSESSEES CASE FOR THE SAME YEAR OF 2010-11 IN FAV OUR OF THE ASSESSEE. HOWEVER, THE LEARNED DR RELIED UPON THE ORDER PASSE D BY THE LEARNED AO. 24. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED T HE RELEVANT MATERIALS AVAILABLE ON RECORDS. AS IT APPEARS FROM THE RECORD S THAT THE LEARNED ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION OF THE AS SESSEE BY CONSIDERING THE CARRY FORWARD LOSSES OF THE ELIGIBLE UNIT FROM THE DATE OF COMMENCEMENT OF THE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 25 - BUSINESS. HE NOTIONALLY CALCULATED THE CARRY FORWAR D LOSSES OF THOSE UNITS AND SET OFF THE SAME BEFORE CALCULATING THE PROFIT OF E LIGIBLE UNIT. BUT THE LEARNED CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE DEALT WITH THIS PARTICULAR ASPECT OF THE MATTER IN THE MANNER AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80 I-A BY CONSIDER ING THE CARRY FORWARD LOSSES OF THE ELIGIBLE UNIT FROM THE DATE O F COMMENCEMENT OF BUSINESS. HE NATIONALLY CALCULATED THE CARRY FORWAR D LOSSES OF THOSE UNITS AND SET-OFF THE SAME BEFORE CALCULATING THE P ROFITS OF ELIGIBLE UNIT. IT HAS BEEN HELD BY HIM THAT, SINCE THERE IS NO PRO FIT AFTER SETTING OFF THE NOTIONAL LOSS AND DEPRECIATION, THE CLAIM CANNOT BE ALLOWED. IT IS NOTED THAT THE ISSUE IS COVERED BY MY ORDER IN THE CASE O F THE APPELLANT IN APPEAL NO.CIT(A)-2/DCIT, CIR. 4/174/2013-14 DATED 2 9/01/2015 FOR A Y 2010 - 11. FOR THE SAKE OF CLARITY THE FINDINGS G IVEN BY ME IN THAT ORDER IS REPRODUCED HEREUNDER:- 'I HAVE CAREFULLY PERUSED THE ORDER AND SUBMISSION MADE BY THE AR OF THE APPELLANT. THE AO HAS RECOMPUTED THE DEDU CTION UNDER SECTION 80IA OF THE ACT CLAIMED BY THE APPELLANT. H E HAS CONSIDERED THE UNABSORBED DEPRECIATION OF THE ELIGI BLE UNIT IN EARLIER YEARS AS UNADJUSTED DEPRECIATION AND ACCORD INGLY CONSIDERED THE SAME AS BROUGHT FORWARD DEPRECIATION OF THE ELIGIBLE UNIT AND AFTER ADJUSTING UNABSORBED DEPREC IATION, THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT HA S BEEN ALLOWED. THE APPELLANT HAS COMMENCED THE PRODUCTION FROM A. Y. 2005 - 06, BUT MADE THAT CLAIM FOR THE FIRST TIME I N A Y 2010 - II. THE APPELLANT ON THE OTHER HAND HAS SUBMITTED THAT THE LOSSES FROM ELIGIBLE BUSINESS IN THE YEARS PRIOR TO INITIA L ASSESSMENT YEAR ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS NEED NOT BE NATIONALLY BROUGHT FORWARD AND, THEREFORE, THE DEDU CTION SHOULD NOT BE REDUCED. ON A CAREFUL CONSIDERATION OF THE ENTIRE FACTS OF T HE CASE, IF IS NOTED THAT THE ISSUE WHETHER THE DEDUCTION UNDER SE CTION 80IA OF THE ACT IS TO BE ALLOWED WITHOUT ADJUSTING THE NOTIONAL BRO UGHT FORWARD LOSSES AND DEPRECIATION OF EARLIER YEARS IS TO BE ALLOWED OR NOT, IS ALMOST LEGALLY SETTLED NOW. IT IS NOTED FROM THE PERUSAL O F VARIOUS JUDICIAL PRONOUNCEMENTS THAT THE PREPONDERANT JUDICIAL OPINI ON IS IN FAVOUR OF ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 26 - THE APPELLANT. THE LEADING JUDGMENT ON THE ISSUE IS THAT OF HONOURABLE HIGH COURT OF MADRAS IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PRIVATE LIMITED (SUPRA). THE JUDGMENT HAS SUBSEQUEN TLY BEEN FOLLOWED BY SEVERAL OTHER COURTS AND TRIBUNALS. THE BASIC PR INCIPLE THAT HAS BEEN LAID DOWN BY VARIOUS COURTS IS THAT THERE SHOU LD BE NO CARRY FORWARD LOSS PERTAINING TO THE ELIGIBLE UNIT, IF TH E LOSSES OF ELIGIBLE UNIT HAD EARLIER BEEN ADJUSTED WITH THE LOSSES OF OTHER UNITS PRIOR TO THE INITIAL ASSESSMENT YEAR. THE INITIAL ASSESSMENT YEA R IS THE YEAR IN WHICH THE APPELLANT MAKE THE CLAIM FOR THE FIRST TIME AND NOT THE YEAR IN WHICH THE ELIGIBLE UNIT COMMENCES PRODUCTION. AS PER THE PROVISIONS OF ACT A CLEAR OPTION HAS BEEN GIVEN TO THE APPELLANT FOR CH OOSING THE INITIAL YEARS OF ASSESSMENT. IN THE CASE OF THE APPELLANT T HE APPELLANT HAS CHOSEN THE SUBSEQUENT YEAR LATER TO THE YEAR IN WHI CH THE PRODUCTION COMMENCED. THERE IS NO NEED TO NATIONALLY SET-OFF T HE LOSSES OF THAT UNIT FOR ALLOWING THE DEDUCTION. LOSSES AND DEPRECIATION OF THE YEARS EARLIER TO THE INITIAL ASSESSMENT YEAR WHICH HAVE BEEN ALRE ADY ABSORBED AGAINST THE PROFITS OF OTHER BUSINESS CANNOT BE NATIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINES S FOR COMPUTING THE DEDUCTION UNDER SECTION 80 IA OF THE ACT. IN THE CA SE OF APPELLANT, AS IT IS CLEAR FROM THE DETAILS, THE LOSSES HAVE BEEN ADJ USTED IN EARLIER YEARS PRIOR TO THE INITIAL ASSESSMENT YEAR. IN THE PRESEN T YEAR, THERE IS NO UNADJUSTED BUSINESS LOSS AND DEPRECIATION LOSS AND ACCORDINGLY, THE CLAIM HAS RIGHTLY BEEN MADE BY THE APPELLANT. RELIA NCE IS ALSO PLACED ON RECENT JUDGMENTS OF ITAT AHMEDABAD IN THE CASE OF S ADBHAV ENGINEERING LTD, 45 TAXMANN.COM 333 AND IN THE CASE OF JIVRAJ TEA & INDUSTRIES LTD. 42 TAXMANN.COM 462. THE HEAD NOTE O F THE DECISION IN THE LATER CASE IS REPRODUCED HEREUNDER:- 'SECTION 80-IA OF THE INCOME-TAX ACT, 1961 - DEDUCT IONS - PROFITS AND GAINS FROM INFRASTRUCTURE UNDERTAKINGS (COMPUTA TION OF DEDUCTION) - WHETHER WHEN AN EXPORTER EXERCISES OPT ION OF CHOOSING INITIAL ASSESSMENT YEAR AS CULLED OUT IN S UB-SECTION (2) OF SECTION 80-IA FROM WHICH IT CHOOSES ITS 10 YEARS OF DEDUCTION OUT OF 15 YEARS, THEN ONLY LOSSES OF YEARS STARTING FROM INITIAL- ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD; LO SS PRIOR TO INITIAL ASSESSMENT YEAR WHICH HAS ALREADY BEEN SET- OFF CANNOT BE BROUGHT FORWARD AND ADJUSTED INTO PERIOD OF TEN YEA RS FROM INITIAL ASSESSMENT YEAR-HELD, YES- WHETHER WHERE AS SESSEE HAD NOT SUFFERED ANY LOSS IN RELEVANT YEARS AND BROUGHT FORWARD LOSS OR DEPRECIATION DID NOT RELATE TO INITIAL YEARS, SA ME COULD NOT BE ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 27 - REDUCED FOR DETERMINING AMOUNT FOR WHICH DEDUCTION IS TO BE ALLOWED UNDER SECTION 80-IA - HELD, YES [PARA 28]' THE JUDICIAL PRONOUNCEMENTS RELIED BY THE AO SUCH A S GOLDMINE SHARES & 6.3 FINANCE (P) LTD (SUPRA) IS RESPECTFULL Y DISTINGUISHED AS THE JUDGEMENT HAS BEEN CONSIDERED BY HONOURABLE ITA T AHMEDABAD AND HONOURABLE HIGH COURT OF MADRAS IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PRIVATE LIMITED (SUPRA). IN VIEW OF THE ABOVE DISCUSSION, THE REDUCTION- OF CLAIM UNDER SECTION 80 L-A MADE B Y THE AO IS DIRECTED TO BE DELETED.' FOLLOWING THE FINDINGS GIVEN BY ME IN THE ABOVE ORDER, THE DISALLOWANCE MADE BY THE AO IS DIRECTED TO BE DELET ED. HE IS DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT AS PER THE CALC ULATION GIVEN BY HIM AND AS PER THE LAW. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. THE INITIAL ASSESSMENT YEAR, AS HELD BY THE LEARNED CIT(A) IS THE YEAR IN WHICH THE APPELLANT MADE THE CLAIM FOR THE FIRST TI ME EXERCISING OPTION AND NOT THE YEAR IN WHICH THE ELIGIBLE UNIT COMMENCES PRODU CTION AS PER CLEAR PROVISION OF LAW. SINCE THE APPELLANT HAS CHOSEN TH E SUBSEQUENT YEAR LATER TO THE YEAR IN WHICH THE PRODUCTION COMMENCED NO NECES SITY WAS FOUND TO NOTIONALLY SET OFF THE LOSSES OF THAT UNIT FOR ALLO WING THE DEDUCTION. IN THE INSTANT CASE, LOSSES HAVE BEEN ADJUSTED IN THE EARL IER YEARS PRIOR TO THE INITIAL ASSESSMENT YEAR, NO UNADJUSTED BUSINESS LOSS OR DEP RECIATION LOSS SINCE NOT THERE THE CLAIM HAS RIGHTLY BEEN MADE BY THE APPELL ANT AS HOLD BY THE LEARNED CIT(A). THE JUDGMENT PASSED IN THE MATTER OF SADBHA V ENGINEERING LTD. PASSED BY THE CO-ORDINATE BENCH REPORTED IN 45 TAXM ANN.COM 333 AND THE JUDGMENT PASSED BY THE HONBLE ITAT, AHMEDABAD IN T HE MATTER OF JIVRAJ TEA & INDUSTRIES LTD. REPORTED IN 42 TAXMANN.COM 462 WA S ALSO RELIED UPON BY THE LEARNED CIT(A). ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 28 - WE HAVE ALSO CAREFULLY CONSIDERED THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO.997/AHD/2015 FOR A.Y. 2010-11. THE RELEVANT PORTION WHEREOF IS AS FOLLOWS: 7. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD CAREFULLY. WE CONSIDER THAT THE INITIAL ASSE SSMENT YEAR IS THE YEAR IN WHICH THE ASSESSEE MAKES THE CLAIM FOR THE FIRST TIME AND NOT THE YEAR IN WHICH THE ELIGIBLE UNIT COMMENCES PRODUCTION, IN THE CASE OF THE ASSESSEE THE INITIAL ASSESSMENT YEAR WILL BE A.Y. 2 010-11 AS THE ASSESSEE HAS MADE FIRST TIME CLAIM OF DEDUCTION UNDER SECTIO N 80IA OF THE ACT AND THE ASSESSMENT YEAR 2005-05 THE YEAR IN WHICH THE P RODUCTION WAS COMMENCED. FURTHER IN THIS CONNECTION, WE HAVE GONE THROUGH THE ABOVE REFERRED CIRCULAR OF THE CBDT WHICH IS REPROD UCED AS UNDER:- CIRCULAR NO.1/2019 [F.NO.200/31/2015-ITA-1], DATED 15-2- 2016 SECTION 80-IA OF THE INCOME-TAX ACT, 1961 ('ACT'), AS SUBSTITUTED BY THE FINANCE ACT, 1999 WITH EFFECT FROM 01.04.200 0, PROVIDES FOR DEDUCTION OF AN AMOUNT EQUAL TO 100 % OF THE PR OFITS END GAINS DERIVED BY AN UNDERTAKING OR ENTERPRISE FROM AN ELIGIBLE BUSINESS (AS REFERRED TO IN SUB-SECTION (4) OF THAT SECTION) IN ACCORDANCE WITH THE PRESCRIBED PROVISIONS. SUB-SECT ION (2) OF SECTION 80-IA FURTHER PROVIDES THAT THE AFORESAID D EDUCTION CAN BE CLAIMED BY THE ASSESSEE, AT HIS OPTION, FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS (TWENTY YEARS IN CERTAIN CASES) BEGINNING FROM THE YEAR IN WHICH THE UNDERTA KING COMMENCES OPERATION, BEGINS DEVELOPMENT OR STARTS P ROVIDING SERVICES ETC. AS STIPULATED THEREIN. SUB-SECTION (5 ) OF SECTION 80- IA FURTHER PROVIDES AS UNDER 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OW'S- O-, OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIB LE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SH ALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTIO N UNDER THAT SUBSECTION FOR THE ASSESSMENT YEAR IMMED IATELY SUCCEEDING INO INITIAL ASSESSMENT YEAR OR ANY SUBSE QUENT ASSESSMENT YEA/, BE COMPUTED AS IF SUCH ELIGIBLE BU SINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURI NG THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YE AR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLU DING ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 29 - THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE'. IN THE ABOVE SUB-SECTION, WHICH PRESCRIBES THE MANN ER OF DETERMINING THE QUANTUM OF DEDUCTION, A REFERENCE H AS BEEN MADE TO THE TERM 'INITIAL ASSESSMENT YEAR'. IT HAS BEEN REPRESENTED THAT SOME ASSESSING OFFICERS ARE INTERP RETING THE TERM 'INITIAL ASSESSMENT YEAR' AS THE YEAR IN WHICH THE ELIGIBLE BUSINESS/ MANUFACTURING ACTIVITY HAD COMMENCED AND ARE CONSIDERING SUCH FIRST YEAR OF COMMENCEMENT/OPERATI ON 3IC ITSELF AS THE FIRST YEAR FOR GRANTING DEDUCTION, IGNORING THE CLEAR MANDATE PROVIDED UNDER SUB-SECTION (2) WHICH ALLOWS A CHOICE TO THE ASSESSEE FOR DECIDING THE YEAR FROM WHICH IT DE SIRES TO CLAIM DEDUCTION OUT OF THE APPLICABLE SLAB OF FIFTEEN (OR TWENTY) YEARS. THE MATTER HAS BEEN EXAMINED BY THE BOARD. IT IS AB UNDANTLY CLEAR FROM SUB-SECTION (2) THAT AN ASSESSEE WHO IS ELIGIBLE TO CLAIM DEDUCTION U/S 80-IA HAS THE OPTION TO CHOOSE THE INITIAL/ FIRST YEAR FROM WHICH IT MAY DESIRE THE CLAIM OF DE DUCTION FOR TEN CONSECUTIVE YEARS, OUT OF A SLAB OF FIFTEEN (OR TWE NTY) YEARS, AS PRESCRIBED UNDER THAT SUB-SECTION. IT IS HEREBY CLA RIFIED THAT ONCE SUCH INITIAL ASSESSMENT YEAR HAS BEEN OPTED FOR BY THE ASSESSEE, HE SHALL BE ENTITLED TO CLAIM DEDUCTION U/S 80-IA F OR TEN CONSECUTIVE YEARS BEGINNING FROM THE YEAR IN RESPEC T OF WHICH HE HAS EXERCISED SUCH OPTION SUBJECT TO THE FULFILLMEN T OF CONDITIONS PRESCRIBED IN THE SECTION. HENCE, THE TERM INITIAL ASSESSMENT YEAR' WOULD MEAN THE FIRST YEAR OPTED FOR BY THE AS SESSEE FOR CLAIMING DEDUCTION U/S 80-IA. HOWEVER, THE TOTAL NU MBER OF YEARS FOR CLAIMING DEDUCTION SHOULD NOT TRANSGRESS THE PRESCRIBED SLAB OF FIFTEEN OR TWENTY YEARS, AS THE CASE MAY BE AND THE PERIOD OF CLAIM SHOULD BE AVAILED IN CONTINUITY . THE ASSESSING OFFICERS ARE, THEREFORE, DIRECTED TO ALLOW DEDUCTION U/S 80-IA IN ACCORDANCE WITH THIS CLARIFI CATION AND AFTER BEING SATISFIED THAT ALL THE PRESCRIBED CONDI TIONS APPLICABLE IN A PARTICULAR CASE ARE DUTY SATISFIED, PENDING LI TIGATION ON ALLOWABILITY OF DEDUCTION U/S 80 IA SHALL ALSO NOT BE PURSUED TO THE EXTENT IT RELATES TO INTERPRETING 'INITIAL ASSE SSMENT YEAR' AS MENTIONED IN SUB-SECTION (5) OF THAT SECTION FOR WH ICH THE STANDING COUNSELS/D.R.S BE SUITABLY INSTRUCTED. THE ABOVE BE BROUGHT TO THE NOTICE OF ALL ASSESSING OFFICERS CON CERNED.' ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 30 - IN IS CLEAR FROM THE ABOVE CITED CIRCULAR OF THE CB DT THAT ASSESSEE WHO IS ELIGIBLE TO CLAIM DEDUCTION U/S 80-IA HAS THE OP TION TO CHOOSE THE INITIAL/ FIRST YEAR FROM WHICH IT MAY DESIRE THE CL AIM OF DEDUCTION FOR TEN CONSECUTIVE YEARS, OUT OF A SLAB OF FIFTEEN (OR TWE NTY) YEARS, AS PRESCRIBED UNDER THAT SUB-SECTION. IN THE LIGHT OF THE ABOVE FACTS AND CIRCULAR OF THE BOARD WE DO NOT FIND ANY ERROR IN T HE FINDINGS OF THE LD.. CIT(A), THEREFORE, THE APPEAL OF THE REVENUE ON THI S ISSUE IS DISMISSED. TAKING INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER, RESPECTFULLY RELYING UPON THE ORDER PASSED BY THE CO-ORDINATE BE NCH IN ASSESSEES OWN CASE, WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A) WHICH ACCORDING TO US IS JUST AND PROPER SINCE THE SAID ORDER ALLOWING DEDUCTION U/S 80IA HAS BEEN PASSED FORMING THE RATI O LAID DOWN BY THE CO- ORDINATE BENCH. THE APPEAL PREFERRED BY THE REVENUE IS, THUS, FOUND TO BE DEVOID OF ANY MERIT AND HENCE DISMISSED. 25. GROUND NO.5 & 6 ARE USUAL GROUNDS HENCE NO ORDER NEED BE PASSED. 26. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PART LY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06/06/2019 SD/- SD /- ( PRAMOD KUMAR ) ( M S. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 06/06/2019 PRITI YADAV, SR.PS ITA NOS. 873, 2951 &1369/AHD/2015 GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. ASST.YEAR 2011-12 - 31 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-2, AHMEDABAD. 5. , ! ', #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER , //TRUE COPY// / (DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 28.05.2019 (DICTATION PAGES 7) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/05/2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29.05.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER