JCIT (OSD)CEN CIR 1(4), MUMBAI V. GRASIM INDUSTIRES LTD, MUMBAI

ITA 3334/MUM/2016

AI Insights

The case involves cross appeals by M/s Grasim Industries Ltd. and the DCIT, Central Circle 1(4), Mumbai, concerning various tax issues for the Assessment Year 2009-10. The appeals addressed multiple grounds, including the taxability of interest on income tax refunds, the nature of income from the sale of carbon credits, and the treatment of certain expenditures and receipts under the Income Tax Act. The Tribunal's decisions were largely influenced by precedents set in earlier years and the specific provisions of the Income Tax Act applicable to the circumstances of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360569 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Assessment Year: 2009-2010
• Other Referred Cases: Director of Income Tax vs. Bank of America NT and SA, ACIT, Mumbai vs. M/s. Tata Sons Ltd., Mumbai, Arthur Anderson & Co. vs. ACIT, Lupin Ltd. vs. ACIT, Bharat Commerce & Industries Ltd. vs. CIT, Aruna Mills Ltd. vs. CIT, CIT vs. M/s Credit Agricole Corporate and Investment Bank, CIT vs. Oswal Agro Mills Ltd., CIT vs. PVP Ventures, CIT vs. Subhash Kabini Power Corporation Ltd., CIT vs. VMD Mills P. Ltd., CIT vs. Best Corporation Ltd., PCIT vs. Lanco Tanjore Power Co. Ltd., CIT vs. Wescare (India) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J. D. MISTRI
• Assessee Lawyers: KISHOR DHULE
• Keywords: Set aside; Capital asset; Revised return; Revenue expenditure; Business expenditure; Question of law; Depreciation; Capital receipt; Capital expenditure
• Section: 32; 90; 43B; 37(1)

Judgement Text

" ` IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP AND SHRI N.K. BILLAIYA, AM ITA No. 2224/Mum/2016 (Assessment Year: 2009-10) M/s Grasim Industries Ltd. (Corporate Finance Division) A-2, Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai - 400030 Vs. DCIT, Central Circle 1(4), Room No. 902, Old CGO Building, Mumbai-400020 (Appellant) : (Respondent) PAN NO. AAACG 4464B ITA No. 3334/Mum/2016 (Assessment Year: 2009-10) DCIT, Central Circle 1(4), Room No. 902, Old CGO Building, Mumbai-400020 Vs. M/s Grasim Industries Ltd. (Corporate Finance Division) A-2, Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai - 400030 Appellant by : Shri J.D. Mistri, Sr. Advocate, Shri Madhur Agarwal, And Respondent by : Shri Dr. Kishor Dhule, CIT(DR) (Appellant) (Respondent) Date of Hearing : 06.03.2025 Date of Pronouncement : 23.05.2025 O R D E R Per Saktijit Dey, VP: Captioned cross appeals arise out of order dated 12.02.2016 of learned Commissioner of Income Tax Appeal)-13, Mumbai, pertaining to Assessment Year (AY) 2009-10. 2 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. ITA No. 2224/Mum/2016 Assessee’s Appeal (A.Y. 2009-10) 2. In so far as Ground No.1 is concerned, at the outset, learned counsel for the assessee submitted that ground has become infructuous. Accordingly, this ground is dismissed. 3. In Ground No.2, assessee has contested the taxability of interest earned of Rs.63,01,861/- on income tax refund. 4. Before us, it is a common point between the parties that the issue has been decided in favour of the assessee in earlier assessment years. 5. Having considered rival submissions, we find that while deciding identical issue in assessee’s case in ITA No. 5925/Mum/2010 in A.Y. 2007-08, the Tribunal has held as under: “30. Having considered rival submissions and perused the materials on record. We find that the coordinate Bench has decided the issue in favour of the assessee in Assessment Year 2002-03. Whereas, in Assessment Years 2004-05 and 2005- 06, issue was restored back to the Assessing Officer for verification. While giving effect to the order of the Tribunal, the Assessing Officer has allowed assessee’s claim. 31. Considering the above, we direct the Assessing Officer to allow assessee’s claim of deduction u/s. 80IA of the Act in respect of rental income. This ground is allowed. 32. The dispute in Ground No.8 is with regard to taxability of interest on income tax refund. 33. Briefly the facts are, in the year under consideration, the assessee had received certain amount towards interest on income tax refund. Whereas, it had also paid interest to the Department under various provisions of the Act. In the computation of income, the assessee had set off the interest paid against the interest received and offered net interest income of Rs.3.94 crores. While verifying assessee’s claim, the Assessing Officer was of the view that interest paid on income tax is not an allowable deduction u/s. 40(a)(ii) of the Act. Accordingly, he added back an amount of Rs.2.35 crores to the income of the assessee. Though, the assessee contested the aforesaid addition before learned First Appellate Authority, however, it was unsuccessful. 3 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 34. Before us, learned counsel appearing for the assessee submitted that the interest paid to the Department and received from the Department is on a single account, as the parties are same. Therefore, the payment and receipt of interest has to be netted off. In support of such contention, learned counsel relied upon the following decisions: 1. Director of Income Tax vs. Bank of America NT and SA in ITA No. 177 of 2012 (Bom) judgment dated 03.07.2014. 2. ACIT, Mumbai vs. M/s. Tata Sons Ltd., Mumbai in ITA No. 4630/Mum/2016. 3. Arthur Anderson & Co. vs. ACIT [2010] 324 ITR 240 (Bombay). 4. Lupin Ltd. vs. ACIT [2018] 94 taxmann.com 282. 34.1 Whereas, learned DR submitted, netting off of interest received against the interest paid essentially results in allowing deduction of interest paid by the assessee as business expenditure u/s. 37(1) of the Act, which is not permissible. In support of such contention learned counsel relied upon following decisions: 1. Bharat Commerce & Industries Ltd. vs. CIT [ 1998] 230 ITR 733 (SC) 2. Aruna Mills Ltd. vs. CIT [1957] 31 ITR153 (Bombay). 35. We have considered rival submissions and perused the materials on record. It is observed, while considering identical nature of dispute in case of DIT vs. Bank of America NT and SA (Supra), the Hon'ble Jurisdictional High Court has held as under: “3. Even with regard to the question No.2 we do not find that it is a substantial question of law. The Tribunal found that the Assessee Bank received interest on refund of taxes paid. It also paid interest on the taxes which were payable. The Assessee sought to set off the interest paid against the interest received and offered the net interest received to tax. We do not see that such findings of the Tribunal are vitiated in law. All that the Tribunal has done earlier and now is that in the case of this Assessee simply because the exercise carried out by it does not result in loss of revenue and there could not be any prohibition for the same, allowed it. That is how the Assessing Officer's order is set aside. We do not see how any larger controversy or question arises for our consideration. Mr.Pinto would refer to Section 57 of the Income Tax Act, 1961 in that regard and submit that this course would be adopted by other Assessees as well and in that event the order passed by this Court would come in the way of the Revenue in investigating and probing such exercise by other Assessees. 4. We do not see how this order can be cited as precedent inasmuch as the Assessee before the Tribunal and before us paid 4 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. interest to the Income Tax Department amounting to Rs.10,26,906/- . The Assessee claimed that this was business expenditure and this should have been allowed. The Assessee has received the interest of Rs.1,07,57,930/-. It was submitted that the amount of interest paid by the Assessee should have been allowed to be set off against the interest deposited with the Department and taxed in the hands of the Assessee. The argument was that the interest paid to and received from is the same party i.e. Government of India and therefore, both transactions should be taken together. 5. We do not find that the Tribunal has, in permitting this exercise, in any way violated any of the provisions of the Income Tax Act, 1961. It was a peculiar situation between the Assessee and the Department. The Tribunal has followed the similar exercise in the case of very Assessee on the prior occasion as well. In such circumstances we are of the opinion that the second question also does not raise any substantial question of law.” 36. Identical issue was also considered by the Hon'ble Jurisdictional High Court in case of CIT vs. M/s Credit Agricole Corporate and Investment Bank in ITA No. 27 of 2016. While deciding the issue, the Hon'ble Jurisdictional High Court following the decision in case of DIT vs. Bank of America (Supra), decided the issue in favour of the assessee. Even the other decisions cited by learned counsel for the assessee are in line with the ratio laid down by the Hon'ble Jurisdictional High Court in case of Bank of America (Supra). In so far as the decision relied upon by learned DR are concerned, on careful examination, we are of the view that they are factually distinguishable as the issue of netting off of interest paid with interest received was not involved. Thus, respectfully following the decision of Hon'ble Jurisdictional High Court referred to above, we allow the ground in favour of the assessee.” 6. Respectfully following the decision of the Tribunal, we decide the issue in favour of the assessee. This ground is allowed. 7. In Ground No. 3, the assessee has contested disallowance of depreciation on assets forming part of the block of asset but subsequently let out. 8. We have considered rival submission, we find this is a recurring issue between the parties for past assessment year. While deciding the issue, in the latest order passed in A.Y. 2007-08 (Supra), the Coordinate Bench has held as under:- 5 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. “3. In Ground No.2, the assessee has contested the disallowance of claim of depreciation amounting to Rs.5,29,658/-. 4. Briefly the facts are, the assessee is a resident corporate entity engaged in manufacturing and trading activities. For the assessment year under dispute, assessee had filed its return of income on 30.10.2007, declaring income of Rs.1920,40,47,165/-. Subsequently, assessee filed its revised return of income on 17.03.2009, declaring income of Rs.1923,71,32,402/-. In course of assessment proceeding, the Assessing Officer (AO) noticed that the assessee had claimed depreciation on let out office premises. He further observed that the rent received from such let out office premises was offered to tax under the head ‘income from house property’. He further noticed that, though, the assessee had reduced the Written Down Value (WDV) of the let-out premises from the value of block of assets, however, in course of assessment proceeding, the assessee claimed that it is entitled to depreciation on the entire block of assets without reducing WDV of the let out premises. In support of such contention, assessee furnished a detailed note supported by judicial precedents. The Assessing Officer, however, did not accept assessee’s claim. He observed that while computing ‘income from house property’, the assessee has claimed 30% deduction towards maintenance charges out of the annual rental value. Hence, assessee cannot be allowed further deduction by way of depreciation. Accordingly, he disallowed assessee’s claim. 5. Though, assessee contested the disallowance in appeal preferred to learned First Appellate Authority, however, the disallowance was sustained. 6. Before us, learned counsel appearing for the assessee submitted that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in its own case in A.Y. 2005-06. Further, he relied upon the following decisions: 1. G.R. Shipping Ltd. vs. DCIT in ITA No. 822/Mum/2005. 2. Bhavani Gems Pvt. Ltd. vs. Pr. CIT in ITA No. 766/Mum/2021. 3. Bodal Chemical Ltd. [2019] 112 taxmann.com 217. He also referred to CBDT Circular No. 469 dated 23.09.1986. 7. Per contra, learned Departmental Representative (DR) strongly relied upon the observations of the Departmental Authorities. He submitted, for claiming depreciation, two conditions have to be fulfilled. Firstly, the assessee must be owner of the assets and secondly the assets must be used for business. He submitted, since the property was let out and not used for the purpose of business, the assessee would not be entitled to claim depreciation. In support, he relied upon the decision of the Coordinate Bench in case of Emco Dyestuff (P.) Ltd. vs. DCIT, Mumbai [2019] 108 taxmann.com 206 (Mumbai-Trib). 8. We have considered rival submissions and perused the materials on record. We have also applied our mind to the decisions relied upon. It is observed, identical issue came up for consideration before Coordinate Bench in A.Y. 2005-06. While dealing with the issue, the coordinate Bench in ITA No.3517/Mum/2006, dated 04.07.2023 has held as under: 6 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. “23. We have considered the submissions of both sides and perused the material available on record. It is evident from the record that the property under question was purchased by the assessee in the assessment year 1987-88. Since its acquisition, the said property forms part of the block of assets for the purpose of claiming depreciation under the Act. It is the claim of the assessee that in the preceding years the assessee used this property as one of its office premises. In the year under consideration, the said property was let out and the rental income was offered to tax under the head “Income from House Property”, after claiming a deduction under section 24 of the Act. The AO, vide assessment order, worked out the disallowable depreciation in respect of the aforesaid property while allowing deduction claimed under section 24 of the Act. 24. Before proceeding further, it is pertinent to note certain provisions of the Act that are relevant to the issue at hand. The term “block of assets” is defined in section 2(11) of the Act, as under:- \"block of assets\" means a group of assets falling within a class of assets comprising— (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, in respect of which the same percentage of depreciation is prescribed;” 25. Further, the relevant provisions of section 32, reads as under:- ―Depreciation 32.(1) In respect of depreciation of— (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, 7 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed— (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed; (ii ) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: ……….. Explanation 2.—For the purposes of this sub- section \"written down value of the block of assets\" shall have the same meaning as in clause (c) of sub- section (6) of section 43. 26. Section 43(6)(c) of the Act reads as under:- “(c) in the case of any block of assets,— (i) in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988, the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,— (A) by the increase by the actual cost of any asset falling within that block, acquired during the previous year; (B) by the reduction of the moneys payable in respect of any asset falling within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased; and (C) in the case of a slump sale, decrease by the actual cost of the asset falling within that block as reduced— 8 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. (a) by the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922) in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) by the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 as if the asset was the only asset in the relevant block of assets, so, however, that the amount of such decrease does not exceed the written down value;] (ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i). 27. It is the plea of the assessee that since the property was acquired in the assessment year 1987-88 and forms part of the block of assets, therefore, the lower authorities have erred in carving out the depreciation for this property and disallowing the same. Since the assessee is the owner of the property from the assessment year 1987-88 and the same was also used as one of its office premises in preceding years, therefore, we are of the view that the conditions laid down in section 32 of ownership of the asset and usage for the purpose of business are satisfied in the present case. We find that the only basis on which the AO/learned CIT(A) disallowed the depreciation is that the assessee has rented out the property during the year and offered the income under the head “Income from House Property”, after claiming deduction under section 24 of the Act. In this regard, it is pertinent to note that the property in question forms part of the block of assets since the assessment year 1987-88 and the depreciation on the entire block was also allowed. The Revenue has also not disputed this fact. It is settled that once any asset 9 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. forms part of the block of assets, it losses its individual identity, and thus for the purpose of depreciation, only the block of assets has to be considered. This aspect is sufficiently evident from Circular No.469 issued on 23/09/1986, which reads as under:- 6.3 As mentioned by the Economic Administration Reforms Commission (Report No. 12, para 20), the existing system in this regard requires the calculation of depreciation in respect of each capital asset separately and not in respect of block of assets. This requires elaborate book-keeping and the process of checking by the Assessing Officer is time consuming. The greater differentiation in rates, according to the date of purchase, the type of asset, the intensity of use, etc., the more disaggregated has to be the record- keeping. Moreover, the practice of granting the terminal allowance as per section 32(1)(iii) or taxing the balancing charge as per section 41(2) of the Income-tax Act necessitate the keeping of records of depreciation already availed of by each asset eligible for depreciation. In order to simplify the existing cumbersome provisions, the Amending Act has introduced a system of allowing depreciation on block of assets. This will mean the calculation of lump sum amount of depreciation for the entire block of depreciable assets in each of the four classes of assets, namely, buildings, machinery, plant and furniture. 28. Further, as per section 43(6)(c)(i)(B) of the Act, the written down value in the case of any block of assets is reduced by the money payable when the asset is sold or discarded or demolished or destroyed. However, in the present case, the assessee continued to own this property, and the same was only let out during the year. In any case, this section also does not provide for carving out depreciation for disallowance, as is done by the AO in the present case. We find that the Hon‟ble Delhi High Court in CIT v/s Oswal Agro Mills Ltd. [2012] 341 ITR 467 (Delhi), observed as under:- “32. Another significant and contemporaneous development, which needs to be noticed is that the Legislature has also deleted the provision for allowing terminal depreciation in respect of each asset, which was previ- ously allowable under section 32(1) (iii) and also taxing of balancing charge under section 41(2) in the year of sale. Instead of these two provisions, now 10 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. whatever is the sale-proceed of sale of any depreciable asset, it has to be reduced from the block of assets. This amendment was made because now the assessees are not required to maintain particulars of each asset separately and in the absence of such particular, it cannot be ascertained whether on sale of any asset, there was any profit liable to be taxed under section 41(2) or terminal loss allowable under section 32(1) (iii) . This amendment also strengthen the claim that now only detail for \"block of assets\" has to be maintained and not separately for each asset. 33. Having regard to this legislative intent contained in the aforesaid amendment, it is difficult to accept the submission of the learned counsel for the Revenue that for allowing the depreciation, user of each and every asset is essential even when a particular asset forms part of 'block of assets'. Acceptance of this contention would mean that the assessee is to be directed to maintain the details of each asset separately and that would frustrate the very purpose for which the amendment was brought about. It is also essential to point out that the revenue is not put to any loss by adopting such method and allowing depreciation on a particular asset, forming part of the 'block of assets' even when that particular asset is not used in the relevant assessment year. Whenever such an asset is sold, it would result in short-term capital gain, which would be exigible to tax and for this reason, we say that there is no loss to revenue either.” 29. Thus, in view of the above, once the property forms part of the block of assets, carving out the depreciation for the said property and disallowing the same goes against the spirit of allowing depreciation on the entire block of depreciable assets. Before concluding, we may note that in this appeal the Revenue has not disputed the claim of deduction under section 24 of the Act in respect of the property which forms part of the block of assets. Thus, merely because the Revenue has accepted the claim of deduction under section 24 of the Act doesn’t mean that the property which forms part of the block of assets will cease to be so. Therefore, the disallowance of depreciation of Rs. 45,681 made by the AO is deleted. As a result, ground No. 4 raised in assessee’s appeal is allowed.” 11 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 9. Keeping in view the parity in factual position and also the fact that the issue has been decided in assessee’s own case, we respectfully follow the decision of the Coordinate Bench, as referred to above, and direct the Assessing Officer to allow the claim of depreciation. This ground is allowed.” 9. Facts being identical, respectfully following the decisions of the Coordinate Benches, we allow assessee’s claim. The Assessing Officer is directed to delete the addition. This ground is allowed. 10. In Ground No.4, assessee has challenged disallowance of administrative expenses incurred in respect of retirement benefit trust. 11. Having considered rival submission, we find identical issue came up for consideration before the Coordinate bench in assessee’s appeal relating to A.Y. 2008- 09. While deciding the issue vide order dated 21.05.2025 in ITA No. 5982/Mum/2011 and 6758/Mum/2011, the Coordinate Bench has held as under:- “38. We have considered rival submissions and perused the materials on record. Undoubtedly, the Commissioner of Income Tax has granted separate approvals to employees’ gratuity fund and provident fund created by the assessee. However, while granting approval, the CIT has observed that the expenses borne by the assessee for administration of the funds/trusts shall not be allowed as deduction while computing the profit and gains from business. The issue arising for consideration, is whether the aforesaid condition imposed by CIT is valid. On a reading of Section 36(1)(iv) of the Act, it appears that any sum paid by the assessee as an employer by way contribution towards recognized provident fund is to be allowed as deduction subject to such condition as the Board may prescribe. Whereas, Section 36(1)(v) of the Act says any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund has to be allowed as deduction. Unlike Section 36(1)(iv) Section 36(1)(v) is not subject to any condition. 39. According of approval for recognized provident fund and gratuity fund are provided under Part-A and Part-B of the 4th Schedule to the Income Tax Act. While Rule-4 under Part-A to the 4th Schedule prescribes the condition for approval of recognized provident fund, Rule-2 and 3 prescribes the conditions for approval of gratuity fund. 12 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 40. On going through these provisions, we were unable to locate any condition prescribing that the expenses incurred by the company in managing the fund/trust shall not be allowed as deduction in computing the profit and gains from business/profession. There is no dispute regarding either the incurring of the expenditure or its genuineness. Thus, when the assessee has incurred certain expenses in course of its business it has to be allowed as deduction. The provisions contained in the statute empower the approving authority to grant approval strictly in terms with the prescribed rules. The rules nowhere suggest that approval has to be granted by putting a limitation on the allowability of administrative expenses. That being the factual and legal position, in our view, the approving authority cannot impose conditions in addition to the condition prescribed under the Rules. In this context, we refer to the following observations of the Hon’ble Supreme Court in case of Continental Construction Ltd. vs. CIT(Supra):- “……….. Section 80-O only empowers the Board to approve of a contract on being satisfied that it gives rise to receipts qualifying for deduction under section 80-O and nothing more. In fact the various terms and conditions of the Board's letter of approval (in relation to which arguments have been addressed before us) are totally redundant and unnecessary. All that the Board has to do is to approve of an agreement for the purposes of section 80-O. It has nothing more to do. Its approval cannot be tentative or provisional or qualified. It cannot be hedged in with conditions and restrictions of the nature set out in the Board's letter. It cannot limit the relief to certain assessment years only; it cannot restrict or enlarge the scope of the relief that can be granted under the section. The assessment years for which relief is available, the extent of the receipts that qualify for deduction and all other incidents flow from the language of the section.” 41. Applying the ratio laid down by the Hon’ble Supreme Court referred to above, we hold that the disallowance made by the AO is unsustainable. Accordingly, we direct the AO to delete the disallowance. This ground is allowed.” 12. Facts being identical, respectfully following the decision of the Coordinate Bench, we direct the AO to allow assessee’s claim. This ground is allowed. 13 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 13. In Ground No.5, assessee has challenged disallowance of deduction u/s. 80IA of the Act on other income, being rent received from housing accommodation allotted to employees. 14. Having considered rival submissions, we find, identical issue came up for consideration past assessment years. In the latest order passed in assessment year 2007- 08 (Supra), the Coordinate Bench has held as under:- “26. In Ground No.7, the assessee has challenged the disallowance of deduction of Rs.65,090/- u/s. 80IA of the Act qua rental income. 27. Briefly the facts are, while verifying assessee’s claim of deduction u/s. 80IA of the Act in course of assessment proceeding, the Assessing Officer noticed that the assessee had not excluded miscellaneous/other income not derived from the profits of the undertaking, while claiming deduction u/s.80IA of the Act. On further examination, he found that the assessee had claimed u/s.80IA in respect of rental income of Rs.65,090/- . Being of the view that rental income cannot form part of profit derived from the undertaking, the Assessing Officer disallowed assessee’s claim. Such disallowance was also confirmed by the First Appellate Authority. 28. Before us, learned counsel appearing for the assessee submitted that issue is squarely covered in favour of the assessee in its own case in earlier assessment years. He submitted, in A.Ys. 2004-05 and 2005-06, while giving effect to the order of the Tribunal, the Assessing Officer has allowed claim of deduction u/s. 80IA of the Act in respect of rental income. 29. The learned D.R. agreed with the submission of the assessee. 30. Having considered rival submissions and perused the materials on record. We find that the coordinate Bench has decided the issue in favour of the assessee in Assessment Year 2002-03. Whereas, in Assessment Years 2004-05 and 2005-06, issue was restored back to the Assessing Officer for verification. While giving effect to the order of the Tribunal, the Assessing Officer has allowed assessee’s claim. 31. Considering the above, we direct the Assessing Officer to allow assessee’s claim of deduction u/s. 80IA of the Act in respect of rental income. This ground is allowed.” 15. Facts being identical, respectfully following the decision of the Coordinate bench, we allow assessee’s claim. This ground is allowed. 14 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 16. In the result, appeal is partly allowed. ITA No. 3334/Mum/2016 Revenue’s Appeal (A.Y. 2009-10) 17. Though, the registry has notified delay of 208 days in filing the appeal, however, after perusing the materials on record, we are of the view that the delay due to wrong mentioning of date of communication of appellate order in Column-9 of Form-36. Since, the First Appellate order was passed on 12.02.2016 the order could not have been received by the Department in August, 2015. On perusal of authorization memo, it is noticed that learned First Appellate Authority’s order was received by the Department on 14.03.2016. Thus, in our view, there is no delay in filing the appeal. 18. In Ground No.1, Revenue has challenged deletion of disallowance made u/s.43B of the Act. 19. Before us, it is a common point between the parties that identical issue has been decided in favour of the assessee in past assessment years. 20. On perusal of materials on record, it is observed that in the latest order passed in A.Y. 2007-08 (supra), the Tribunal while deciding identical issue has held as under: “56. In Ground No.1, Revenue has challenged deletion of disallowance made u/s. 43B of the Act. 57. Briefly the facts are, in course of assessment proceeding, the AO noticed that certain payment aggregating to Rs.9,60,89,112/-, though were covered under Clause-(b) to (f) of Section 43B of the Act, however, assessee has not disallowed them while computing its income. He, therefore, called upon the assessee to explain why such payments should not be disallowed. In response, assessee submitted that such payments are not covered u/s. 43B of the Act. It was submitted by the assessee that as per Explanation-2 15 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. to Section 43B of the Act, which only refers to Clause (a) of Section 43B “any sum payable” would mean a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law. It was submitted by the assessee that since Explanation-2 does not refer to Clause (b) to (f) of Section 43B, the meaning of any sum payable as provided under Explanaiton-2 will not cover the payments falling under clause (b) to (f) of Section 43B. The AO, however, did not accept the contention of the assessee that disallowed the deduction claimed. Assessee contested the disallowance before learned First Appellate Authority. 58. After considering the submissions of the assessee in the context of facts and material on record, learned CIT(A) noticed that identical issue has been decided in favour of the assessee in the preceding assessment year. Following the decision taken therein be deleted the disallowance. 59. Before us, it is a common point between the parties that the issue is squarely covered in favour of the assessee by the decisions of the Tribunal in its own case in past assessment years. 60. Having considered rival submissions, we find, it is a recurring issue continuing since AY 1986-87 onwards. It is further observed, in past assessment years, the Tribunal has consistently decided the issue in favour of the assessee. The latest order being for AY 2005-06 (Supra). There being no change in the factual position, respectfully following the decisions of the Tribunal in assessee’s own case, we uphold the decision of learned First Appellate Authority. This ground is dismissed.” 21. Facts being identical, respectfully following the decision of the coordinate Bench, we uphold the order of learned First Appellate Authority by dismissing the ground. 22. In Ground No.2, Department has challenged the deletion of disallowance made on account of contribution to local organizations. 23. Having considered rival submissions, we find that this is a recurring issue between the parties in past several assessment years. In the latest order passed in A.Y. 2007-08 (supra), while deciding identical issue, the Tribunal has held as under: 16 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. “61. In Ground No.2, the, Revenue has challenged the deletion of disallowance of contribution to local organizations. 62. Briefly the facts are, in course of assessment proceeding, the AO noticed that under the head miscellaneous expenses, the assessee had claimed expenses of Rs.19,08,941/-. On further verification, we found that the payments were made towards contribution to various local organizations located in and around the areas where the plant / office of the company is situated. Holding that such payment did not came within the purview of Section 37(1) of the Act, the AO disallowed the claim. While deciding the issue, learned First Appellate Authority allowed assessee’s claim. 63. We have considered rival submissions and perused the materials on record. It is a common point between the parties that the issue has been consistently decided in favour of the assessee by the Tribunal in past assessment years. 64. Having perused the materials on record, we find that from AY 1988- 89 onwards identical issue has been decided in favour of the assessee not only by the Tribunal but even by the Hon’ble High Court. In fact in the latest order passed for AY 2005-06. The Tribunal has decided the issue in favour of the assessee. 65. Respectfully following the consistent view of Hon’ble Jurisdictional High Court and coordinate Bench, we uphold the decision of learned First Appellate Authority by dismissing the ground.” 24. Facts being identical, respectfully following the decision of the coordinate Bench, we uphold the order of learned First Appellate Authority by dismissing the ground. 25. In Ground No.3, Department has challenged deletion of disallowance made of rural development expenses of Rs.2,91,22,561/-. 26. Having considered rival submissions, we find identical issue was decided by the Coordinate Bench in past assessment years in favour of the assessee. In the latest order passed in A.Y. 2007-08 (Supra), the Coordinate Bench has held as under: “66. In Ground No.3, Revenue has challenged the deletion of disallowance of rural development expenses. 17 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 67. Briefly the facts are, in course of assessment proceeding, the AO noticed that the assessee has claimed deduction towards Rural Development expenses amounting to Rs.1,20,40,455/-. When called upon to justify such claim, assessee submitted that the expenses were incurred on rural development activities, such as construction of roads in nearby villages and schools, water supply, women empowerment program, self help training, food expenses, help in mass marriage, medical camp, eye camp, tree plantation, ration distribution during flood, family planning camp, sulabh toilets at villages etc. It was submitted by the assessee, since the expenditure incurred is purely for the purpose of business of the assessee it was allowable. The AO, however, did not agree with the claim of the assessee and held that such expenses are not for the purpose of business. Accordingly, he disallowed. 68. Before us, it is a common point between the parties that the issue is squarely covered by the earlier decisions of the Tribunal and Hon’ble Jurisdictional High Court in assessee’s own case. 69. Having considered rival submissions, we find, this is a recurring issue between the parties from AY 1998-99 onwards. We have further observed that the Tribunal has taken a consistent view and decided the issue in favour of the assessee up to AY 2005-06 (Supra). 70. Respectfully following the consistent view of the Coordinate Benches, we uphold the decision of learned First Appellate Authority. This Ground is dismissed.” 27. Facts being identical, respectfully following the decision of the Coordinate Bench, we uphold the order of learned First Appellate Authority by dismissing the ground. 28. In Ground No.4, the Department has challenged the deletion of disallowance made of Rs.4,26,968/- on account of cost of production of advertisement films. 29. Having considered rival submissions, we find, identical issue came up for consideration before Tribunal in assessee’s case in past assessment years. In the latest order passed for A.Y. 2007-08 (supra), the Tribunal has held as under: “71. In Ground No.4, the Department has challenged deletion of disallowance of cost of production of advertisement films. 18 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 72. Briefly facts are, in course of assessment proceeding, the AO noticed that the assessee had debited Rs.45,26,190/- towards cost of production of advertisement films. 73. Being of the view that such expense is of capital nature, the AO disallowed it. While deciding the issue, learned First Appellate Authority followed the decision taken in earlier assessment year and allowed assessee’s claim. 74. Before us, it is a common point between the parties that the issue has been consistently decided in favour of the assessee in past assessment years. 75. Having perused the material on record, we find that the issue first time came up for consideration before the Tribunal in assessees’s own case in AY 1976-77. While deciding the issue, the Tribunal allowed assessee’s claim. Subsequently, the Tribunal reiterated the same view in AYs 1976-77 in AYs 2001-02, 2002-03, 2003-04, 2004-05 and 2005-06. Learned counsel further brought to our notice that up to AY 2002-03, the Department has accepted the decision of the Tribunal. 76. Be that as it may, respectfully following the consistent view of the Tribunal in assessee’s own case, we uphold the decision. Ground is dismissed.” 30. Facts being identical, respectfully following the decision of Coordinate Bench, we uphold the decision of learned First Appellate Authority by dismissing the ground. 31. In Ground No.6, assessee has contested the deletion of disallowance of delayed payment of employees’ contribution to provident fund and labour welfare u/s. 36(i)(va) of the Act. 32. Before us, parties have agreed that the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd vs Commissioner of Income Tax 143, taxmann.com 178 (SC). Hence, issue has to be decided in favour of the Department. 33. Following the ratio laid down by the Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd. (Supra), we uphold the disallowance made by the AO. 19 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 34. In Ground No.7, the Department has challenged the deletion of disallowance made of Rs.62,99,180/-on expenses incurred on SAP ERP. 35. Having considered rival submissions, we find that this is recurring issue between the parties since past assessment year. In the latest order passed in A.Y. 2007-08 (supra), the Coordinate Bench has held as under: “21. In Ground No.6, the assessee has contested the disallowance of SAP ERP expenses claimed as revenue expenditure. 22. Briefly the facts are, in the year under consideration, the assessee had incurred expenditure of Rs.5,79,04,479/- towards implementation of SAP ERP. In the notes appended to the computation of income, the assessee claimed it as revenue expenditure. In course of assessment proceedings, while responding to the query raised by the Assessing Officer, the assessee filed a detailed submission justifying the claim. The Assessing Officer, did not accept assessee’s claim and treated it as capital expenditure. Of course, the Assessing Officer computed depreciation at the rate of 60%. The aforesaid decision of the Assessing Officer was also confirmed by learned First Appellate Authority. 23. Before us, learned counsel appearing for the assessee submitted that the issue is squarely covered by the decisions of the Coordinate Bench in assessee’s own case as well as various other decisions. 24. The learned D.R. agreed with the submissions of learned counsel of the assessee. 25. Having considered rival submissions, we find, in assessee’s own case in Assessment Years 2002-03- and 2003-04, the Tribunal had allowed assessee’s claim of revenue expenses. Facts being identical, respectfully following the decisions of the Coordinate Benches, we allow assessee’s claim and direct the Assessing Officer to delete the disallowance. Of course, the depreciation allowed has to be withdrawn. This ground is allowed. ” 36. Facts being identical, respectfully following the decision of Coordinate bench, we uphold the decision of the learned First Appellate Authority while dismissing the ground. 37. In Ground No.8, the Department has challenged allowance of employee’s stock option cost amounting to Rs.5,55,63,521/-. 20 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 38. Having considered rival submissions, we find identical issue came up for consideration in assessee’s case in A.Y. 2008-09. While deciding the issue in order dated 21.05.2025 in ITA No. 5982/Mum/2011, the Coordinate Bench has held as under: “ 23. Briefly the facts are, while verifying the computation of income filed by the assessee, the Assessing Officer noted that though the assessee had added an amount of Rs.4,89,82,986/- to profit as per books towards employees’ compensation cost under ESOS scheme. However, in the note to the computation income the assessee had claimed that the employee’s stock option is allowable as deduction. Further in course of assessment proceeding, the assessee furnished the employees’ stock option scheme and made the detailed submission justifying the claim of deduction. However, relying upon the decision of the Coordinate Bench in the case of Ranbaxy Laboratory Pvt. Ltd., the Assessing Officer rejected assessee’s claim. Learned First Appellate Authority upheld the decision of the Assessing Officer. 24 Before us, learned counsel appearing for the assessee submitted that employees’ stock option cost as revenue expenditure has to be allowed. Proceeding further, he submitted that issue stands covered by plethora of orders passed by the Tribunal including the decision of the ITAT Bangalore Special Bench in the case of Biocon Ltd. vs. DCIT (2013) 35 taxmann.com 335 which stood affirmed by the Hon’ble Karnataka High Court (276) taxman.com 1. He further relied upon the following decisions: 1. Aditya Birla Novo Ltd. in ITA No.5848/Mum/2017 2. Grasim Industries Ltd. vs. Addl. CIT in ITA No. 1065/Mum/2017 3. Aditya Birla Nuvo Ltd. vs. Addl. CIT in ITA No.4220/Mum/2015 4. DCIT LTU vs. Aditya Birla Nuvo Ltd. in ITA No. 3178/Mum/2012. 5. Aditya Birla Nuvo Ltd. vs. DCIT in ITA No.563/Mum/2018 6. Bicon Ltd. vs. DCIT [2013] 35 taxmann.co, 335 (Bang.Trib) (SB) 7. DCIT vs. CBRE South Asia (P.) Ltd. [2024] 163 taxmann.co, 256 (Del.Trib) 21 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 8. Bhartiya International Ltd. [2024] 158 taxmann.com 239 (Del. Trib) 9. Lemon Tree Hotels Ltd. vs. Addl. CIT in ITA No.4588/Del/2013 (Del.Trib). 10 CIT vs. PVP Ventures 23 taxmann.co. 286 (Mad. HC). 25. Learned DR relied upon the observations of the AO and learned First Appellate Authority. 26. We have considered rival submissions and perused the materials on record. We have also applied our mind to the Judicial precedents cited before us. It is observed, in case of Aditya Birla Nuvo Ltd. (Supra) which amalgamated to the assessee company, the Tribunal has consistently taken a view that these expenses had to be allowed as Revenue expenditure. In the latest order passed in ITA No.1885/Mum/2018 dated 25.07.2024, the Tribunal has also followed its earlier decision in assessee’s case and upheld order of learned First Appellate Authority allowing deduction. Facts being identical, respectfully following the consistent view of the Coordinate Bench, we direct the Assessing Officer to allow assessee’s claim. This ground is allowed. ” 39. Facts being identical, respectfully following the decision of the Coordinate Bench, we uphold the decision of learned First Appellate Authority by dismissing the ground. 40. In Ground No.9, the dispute is with regard to nature of receipt of Rs.3,55,77,205/- from sale of Certified Emission Reduction (CER) commonly known as carbon credit, whether capital or revenue in nature. Though the assessee claimed that the sale of CER is not out of any business activity, hence, has to be treated as capital, hence, has not chargeable to tax, the AO, however, disallowed assessee’s claim and treated it as income of the assessee. The assessee contested the aforesaid disallowance before learned First Appellate Authority. After considering the submissions of the assessee in the context of facts and materials on record, learned First 22 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. Appellate Authority relying upon certain judicial precedents held that receipts are in the nature of capital receipt, hence, not taxable. 41. Before us, learned Departmental Representative (DR) submitted that when the assessee itself has treated it as revenue by crediting to the profit and loss account it cannot be treated as capital. He submitted, whether the assessee has treated CER as capital asset as part of the inventory has not been verified by the learned First Appellate Authority. 42. Per contra, learned counsel for the assessee submitted that issue is squarely covered by plethora of judicial precedents including orders passed by the various benches of the Tribunal. In support, he relied upon the following decisions: 1. Ultra Tech Cement in ITA No. 1412, 1413, 2461 & 2462/Mum/2018. 2. Pr. CIT VS. Dodson Lindblom Hydro Power P. Ltd. in ITA Nos. 1820 of 2016 (Bom. H.C.) 3. Aditya Birla Nuvo Ltd. vs. ACIT in ITA No. 5848/Mum/2017 4. Grasim Industries Ltd. vs. Addl. CIT in ITA No. 1065/Mum/2017 5. Aditya Birla Nuvo Ltd. vs DCIT. in ITA No. 3033/Mum/2012 6. My Home Power Ltd. (2012) 27 taxmann.com 27 (Hyd Tribunal) 7. DCM Shriram Industries Ltd. vs. ACIT, in ITA No. 1000/Del/2022 8. Essel Mining & Industries Ltd. vs. DCIT in ITA No. 602/Mum/2021 9. Dwarikesh Sugar Industries Ltd. vs. NFAC in ITA No. 562/Mum/2022 10. Navin Flurine International Ltd in ITA No.5301/Mum/2014 and ITA No. 6491/Mum/2018 (Mum. Trib.) 11. CIT vs. Wescare (India) Ltd., 138 taxmann.com 184 (Mad. H.C.) 23 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 12. CIT vs. Subhash Kabini Power Corporation Ltd. [2016] 385 ITR 592 (Kar. H.C.) 13. CIT vs. VMD Mills P. Ltd. [2021] 435 ITR 316 (Mad. H.C) 14. PCIT vs. Lanco Tanjore Power Co. Ltd. [2021] 434 ITR 671 (Mad. H.C.) 15. CIT vs. Best Corporation Ltd. [2022] 446 ITR 211 (Mad. H.C.) 16. PCIT vs. Gujarat Fluro Chemicals Ltd. [2023) 295 taxmann.com 200 (Guj. HC) 17. Kedarnath Jute Manufacturing Com. Ltd. vs. CIT, 82 ITR 363 (SC). 43. We have considered rival submissions and perused the materials on record. We have also applied our mind to the decisions relied upon. The issue whether the receipts arising on sale of CER, otherwise known as carbon credit, are taxable as revenue receipt or in the nature of capital receipt is more or less settled in favour of the assessee. 44. In the decisions cited before us, notably, in case of Dodson Lindblom Hydro Power P. Ltd. (Supra), the Hon’ble jurisdictional High Court, while considering the identical issue, has taken note of the view expressed by Hon’ble Andhra Pradesh High Court in case of CIT vs. My Home Power Ltd. vs. DCIT, [2013] 21 ITR (T) 186, Hon’ble Karnatka High Court in the case of CIT vs. Subhash Kabini Power Corporation Ltd. [2016] 385 ITR 592 (Kar.) has agreed with the decision of the Tribunal that receipt from sale of carbon credit are in the nature of capital receipt. 45. In view of the aforesaid, we do not find any justifiable reason to interfere with the decision of learned First Appellate Authority. This ground is dismissed. 46. In Ground No.10, Department has challenged the deletion of addition of 10,02,60,458/-, being dividend received from M/s Alexandria Carbon Black Co. It is a common point between the parties that in past assessment years the issue has been decided against the assessee and in favour of the Department. 24 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 47. Having considered rival submissions, we find while deciding identical issue in assessee’s case in A.Y. 2007-08 (supra), Tribunal has held as under: “43. The additional Ground No.1 is on the issue of taxability of dividend received of Rs.4,47,43,736/- from Alexandria Carbon Black Company incorporated and registered in Egypt. It is the case of the assessee that prior to amendment to Section 90 of the Act by Finance Act, 2003 dated 01.04.2004, as per the meaning of the term “may be taxed” would mean that only the source country has the right to tax income earned in such country and the resident country does not have any taxing rights. Thus, it was pleaded by the assessee that the dividend received from the Egyptian Company is taxable in source country i.e. Egypt. Notably, in assessee’s case in A.Y. 2002-03, the Tribunal had decided the issue in favour of the assessee. However, while deciding the issue in assessee’s case in A.Y. 2004-05, the Tribunal took a contrary view and held that the dividend received is taxable in India. Identical view was reiterated by the Tribunal while deciding the issue in assessee’s case in Assessment Year 2005-06 vide order dated 04.07.2023 in ITA No. 3517/Mum/2006. Learned counsel appearing for the assessee fairly conceded that in view of the subsequent decisions of the Tribunal, the issue has to be decided against the assessee. However, he added that the issue is now pending for adjudication before the Hon'ble High Court. 44. Be that as it may, on perusal of the record, we find that in assessee’s own case in A.Ys 2004-05 and 2005-06, the Tribunal has held that the dividend received from the Egyptian company is taxable in India. 45. Respectfully following such consistent view of the coordinate Bench, we decide the issue against the assessee. This ground is dismissed.” 48. Facts being identical, respectfully following the decision of Coordinate Bench, we reverse the decision of learned First Appellate Authority and uphold the addition made by the Assessing Officer. This ground is allowed. 49. In Ground No.11, Department has challenged deletion of disallowance made of Rs.1,29,63,943/- representing expenses incurred on transfer of Vikram Ispat Unit. 50. Briefly the facts are, in course of assessment proceeding, while computing the income under the head profit and gains of business and profession, the AO added back 25 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. expenses of Rs.1,29,63,943/- incurred in relation to slump sale Vikram Ispat Unit, apparently, on the reason that it is related to sale of capital assets. Assessee contested the disallowance before learned First Appellate Authority. 51. Being of the view that expenses has been incurred in normal course of business learned First Appellate Authority allowed the deduction. However, he directed the AO to recompute the capital gain arising on sale of Vikram Ispat Unit in A.Y. 2010-11 after withdrawing deduction allowed for the expenditure. 52. We have considered rival submissions and perused the materials on record. Undisputedly, the expenditure in dispute was incurred in connection with the sale of Vikram Ispat Unit. 53. Before us, it is the contention of learned counsel for the assessee that before actual sale some pre-sale work were required to be done, which necessitated the expenditure. He submitted, since expenditure was incurred in this year and the sale was effected in subsequent year, the assessee had claimed the deduction in the year under consideration. 54. Learned DR submitted, since the expenditure is linked to sale of asset, it has to be treated as capital expenditure and can be allowed as deduction while computing capital gain. 55. Having considered rival submissions, we are of the view that the expenditure incurred, in any, case has to be allowed either as revenue expenditure or capital expenditure while computing capital gain on sale of Vikram Ispat Unit. Undisputedly, the capital gain from sale of the unit has been offered to tax in A.Y. 2010-11. In fact, learned First Appellate Authority has given clear direction to the AO to withdraw the 26 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. deduction allowed for the expenditure incurred while computing capital gain. Thus, in our view, there is only a timing difference in claim of expenditure. Hence, it is revenue neutral. In view of aforesaid, we uphold the decision of learned First Appellate Authority while dismissing the ground. 56. In Ground No.12, assessee has challenged allowance of deduction u/s. 80IA of the Act on head office expenses. 57. Having considered rival submissions, we find identical issue came up for consideration before the coordinate bench in past assessment year in assessee’s case. While deciding the issue in A.Y. 2005-06, the Bench has held as under: “75. The issue arising in ground no.6, raised in assessee‟s appeal, is pertaining to the apportionment of Head Office expenses to the Units eligible for deduction under section 80IA of the Act. 76. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal, vide order dated 13/06/2023, passed in assessee‟s own case for the assessment year 2003-04 cited supra, while deciding similar issue in favour of the assessee by following the decision rendered in the preceding year, observed as under:- ―109. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee, by observing as under:- ―109. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - ―54. The issue in ground No. 18 pertains to the apportionment of head Office expenses while computing deduction u/s 80IA of the Act. 27 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. 55. This issue has been dealt with by the ld. CIT(A) vide his order in page 15-16, para 23.5 & 23.6. We found that the issue has been decided by the Tribunal in assessee's own case in its favour in assessment years 1994-95 to 1998-99 and the Department is not in appeal against the order of the Tribunal. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the order of ld. CIT(A) on this issue..‖ 110. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly.‖ 110. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in relevant assessment year. This issue has been decided in favour of the assessee in the preceding years also. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, ground no.9, raised in Revenue's appeal is dismissed. 77. In the absence of any allegation regarding the change in facts or in law in the present case, we find no reason to deviate from the conclusion so reached by the coordinate bench in the preceding year. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding years. Therefore, respectfully following the judicial precedent in assessee‟s own case cited supra, ground no.6, raised in Revenue‟s appeal is dismissed.” 58. There being no factual difference, respectfully following the decision of the Coordinate bench, we uphold order of learned First Appellate Authority while dismissing the ground. 59. In Ground No.13, Department has challenged allowance of claim of deduction u/s. 80IA of the Act in respect of Rail System at Raipur and Hotgi. 60. Having considered rival submissions, we find that this is a recurring issue between the parties from past assessment years. While deciding the issue, the latest order passed in A.Y. 2008-09 vide ITA No. 5982/Mum/2011 and ITA No. 6758/Mum/2011, the Tribunal has held as under: 28 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. “95. We have carefully considered rival submissions and perused materials on record. Factual matrix reveals that A.Y. 2003-04 was the initial assessment year wherein, the assessee claimed deduction u/s. 80IA of the Act in respect of Rail System. Though, the AO rejected assessee’s claim, however, learned First Appellate Authority allowed it. When the dispute reached Tribunal, after taking note of enter factual position, the Tribunal in order dated 13.06.2023 in ITA No. 4754/Mum/2004 and ITA No. 5978/Mum/2004, not only held that the initial assessment year of claim is A.Y. 2003-04 but the assessee is entitled to claim deduction u/s. 80IA of the Act. The same view was reiterated by the Tribunal while deciding appeals for A.Y. 2004-05 vide ITA Nos. 3439 and 4337/Mum/2005 order dated 23.06.2023 and in A.Y. 2005-06 vide ITA No. 3517 and 3854/Mum/2006, order dated 04.07.2023. There is nothing new in the submissions now advanced by learned Departmental Representative, as we find, the very same submissions were made before the Tribunal in A.Ys. 2003-04 to 2005-06. Interestingly, though in A.Y. 2007-08, learned First Appellate Authority had granted similar deduction to the assessee, however, the Department has not filed any appeal against the Tribunal. Such selective approach of the Department cannot be understood. 96. Be that as it may on careful analysis, we have found that factual position relating to the issue in dispute in the impugned assessment year is identical to the facts involved in A.Ys. 2003-04 to 2005-06. Therefore, we do not find any justifiable reason to deviate from the view expressed consistently by the Coordinate Bench in assessee’s own case in discussed above. In view of aforesaid, we uphold the decision of learned First Appellate Authority by dismissing the grounds raised.” 61. Facts being identical, respectfully following the decision of the Coordinate bench, we uphold the order of learned CIT(A) by dismissing the ground. 62. In Ground No.14, the Department has raised the issue of taxability of TUF subsidy. 63. Having considered rival submission, we find that this is a recurring issue between the parties from past assessment year. While deciding the 29 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. issue, in the latest order passed in A.Y. 2007-08 (Supra), the Coordinate bench has held as under: “46. In additional Ground No.2, the assessee has challenged the taxability of subsidy received from the Central Government under technology upgradation and fund (TUF). It is the case of the assessee that the subsidiary received, being of capital nature, is not taxable. 47. Having considered rival submissions and perused the materials on record, we find, identical issue came up for consideration before the Tribunal in assessee’s own case in Assessment Year 2005-06 (Supra). While deciding the issue, the Tribunal has taken a view in favour of the assessee by holding that the subsidy received under the TUF scheme is capital in nature. The observations of the Tribunal in this regard are as under: “52. As per the assessee, the TUF subsidy is provided by the Central Government to sustain and improve the competitiveness and overall long-term viability of the Textile Industry and as an incentive for technology upgradation of the textile industry. It was submitted that the subsidy is granted via - Resolution on TUFS on Techno-Operational parameters by the Ministry of Textiles in March 1999. We, at the outset, find that while deciding a similar issue the coordinate bench of the Tribunal in the case of subsidiary of the assessee held the interest subsidy received under the TUF scheme is capital in nature. The relevant findings of the coordinate bench of the Tribunal in DCIT v/s M/s Grasim Industries Ltd (successor to Aditya Birla Novo Ltd.), ITAs No. 84/Mum./2023 and 356/Mum./2023, vide order dated 12/06/2023, observed as under:- “06. We have carefully considered the rival contention and perused the orders of the lower authorities as well as the decision of the coordinate bench. During the course of hearing before the coordinate bench in ITA number 2525/M/2014 for assessment year 2009 - 10, assessee raised an additional ground stating that interest subsidy received under technology upgradation fund scheme amounting to ₹ 83,426,992/- is revenue receipt. The coordinate bench as per paragraph number 12 of that decision remanded back this issue to the file of the learned assessing officer for de novo adjudication in accordance with the law. This decision was arrived at by in the earlier years 30 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. also this issue was remanded back to the file of the learned assessing officer. Therefore based on this the learned AO proceeded to examine the claim of the assessee that whether the interest subsidy received under technology upgradation fund scheme is revenue receipt or capital receipt. It is also to be noted that assessee itself has reduced the above subsidy from the interest expenditure debited to the profit and loss account. Thus, assessee itself treated it as a revenue income and not capital expenditure. However in assessee's own case in ITA number 4220 and 4704/M/2014 dated 24/2/2020 it has been held that the subsidy received by the appellant company under technology upgradation fund scheme is capital receipt. The coordinate bench held as under:- “8. Ground No. 11: 11. \"On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in directing to treat the interest subsidy of ₹ 15,23,25,727/- as capital in nature.\" 38.1 In ground No.11 the Revenue has assailed the findings of CIT(A) in holding interest subsidy from Technology Up gradation Fund(TUF) ₹ 15,23,25,727/- as capital in nature. The ld. Authorized Representative for the assessee submitted that the Hon'ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd. in DB Income Tax appeal No.31/2019 decided on 19/09/2019 has held subsidy received under TUF as capital in nature. Similar view has been taken by Mumbai Tribunal in the case of ACIT vs. SVG Fashions Ltd. in ITA No.704/Mum/2016 for assessment year 2012-13 decided on 17/07/2018. The ld. Authorized Representative for the assessee to further buttress his submissions placed reliance on the following decisions:- (1) CIT vs. Gloster Jute Mills Ltd. ,96 taxmann.com 303 (2) CIT vs. Sshyam Lal Bansal, 200 Taxman 14 (P&H) 38.2 The ld. Authorized Representative for the assessee further submitted that CIT(A) has decided this issue after seeking remand report of Assessing 31 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. Officer and examining TUF scheme in details. The ld. Authorized Representative for the assessee further submitted that the Tribunal in assessee's appeal for assessment year 2009-10 (supra) has admitted this issue raised in additional ground of appeal and has restored to Assessing Officer for fresh adjudication. 39. The ld. Departmental Representative submitted that the issue may be restored to Assessing Officer for reconsideration in line with Tribunal order in assessee's appeal for Assessment Year 2009-10. 40. Both sides heard. The assessee has received subsidy under TUF scheme. The assessee has claimed the subsidy as capital receipt, whereas, the Department treated the subsidy as Revenue in nature. We find that the Hon'ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd.(supra) examined the scheme in the light of various decisions and held the subsidy under TUF scheme as capital in nature. Similar view has been taken by the Hon'ble Calcutta High Court in the case of CIT vs.Gloster Jute Mills Ltd.(supra). Thus, in view of above judgements of Hon'ble High Courts, we see no infirmity in the findings of CIT(A). The same are upheld and ground No.11 of the appeal is dismissed. 41. In the result, appeal of the Revenue is partly allowed for statistical purpose.‖ 07. Therefore in view of the above decision of the coordinate bench the issue is squarely covered in favour of the assessee wherein it has been held that interest subsidy received under technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account is still capital in nature and therefore not chargeable to tax. Further the argument of the learned departmental representative has also been negated about the applicability of explanation 10 to section 43 (1) of the act by the decision of the coordinate bench in case of orbit exports (supra). In view of this both the grounds of appeal raised by the learned assessing officer are dismissed.” 53. Therefore, respectfully following the decision of the coordinate bench cited supra, we direct the AO to treat the 32 ITA No.2224 & 3334/Mum/2016 A.Y. 2009-10 Grasim Industries Ltd. subsidy received under the TUF Scheme as capital in nature. As a result, the additional grounds raised by the assessee vide application dated 06/04/2015 are allowed.” 48. Facts being identical, respectfully following the decision of the Coordinate Bench, we direct the Assessing Officer to delete the addition.” 64. Finding parity, in facts, we uphold the decision of learned First Appellate Authority by dismissing the grounds. 65. In the result, appeal is partly allowed. 66. To sum up, both the appeals are partly allowed. Order pronounced in the open court on 23/05/2025 Sd/- Sd/- (N.K. Billaiya) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 23/05/2025 Aks/- Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "