The Dy.Commissioner of Income Tax, Circle-1(1)(1), Vadodara V. Gujarat Urja Vikas Nigam Ltd., Baroda

MA 6/AHD/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT), Circle 1(1)(1), Ahmedabad, as the appellant, and Gujarat Urja Vikas Nigam Ltd., Vadodara, as the respondent. The Revenue filed two Miscellaneous Applications seeking rectification of the Tribunal's consolidated order dated 26.4.2019, which dismissed the Department's appeal regarding the disallowance of capital grants while computing book profit under section 115JB. The Tribunal's earlier decision relied on its findings concerning the normal provisions of income computation, which the Revenue argued was a mistake apparent on record. However, the Tribunal upheld its original decision, stating that the issue of capital grants adjustment to book profits under section 115JB was not explicitly raised in the grounds of appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133544 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 02-01-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 115JB

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER Misc. Application No.5 & 6 /Ahd/2020 IN ITA No.3359 and 3360/Ahd/2015 Assessment Year :2011-12 and 2012-13 The DCIT, Cir.1(1)(1) Ahmedabad. Vs. Gujarat Urja Vikas Nigam Ltd. Sardar Patel Vidyut Bhavan Race Course Circle Vadodara 390 007 PAN : AACCG 2861 L अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : Shri Manish J. Shah, AR Revenue by : Shri Ravindra, Sr.DR स ु नवाई क तार ख/Date of Hearing : 03/02/2023 घोषणा क तार ख /Date of Pronouncement: 08/02/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present two Misc. Applications have been filed by the Revenue seeking rectification in the orders of the ITAT passed in the case of the assessee for Assessment Year (A.Y) 2011-12 & 2012-13 in ITA Nos.3359 & 3360/Ahd/2015 respectively vide consolidated order dated 26.4.2019. 2. The mistake sought to be rectified, admittedly is identical in both the cases and for the sake of convenience, we are reproducing contents of the Miscellaneous application (MA) filed by the Revenue in MA No.5/Ahd/2020 as under: MA No.5 & 6 /Ahd/2020 2 “In the case of M/s Gujarat Urja Vikas Nigam Ltd for AY 2011-12, an appeal was filed by the department under appeal in ITA No.3359/Ahd/2015 before the Hon'ble ITAT against the order of CIT(Appeals)-!, Vadodara dated 21.09.2015 APPEAL NO. CAB-l/96/2014-15.The Hon'ble ITAT, while finalizing: 1. The appeal filed by the Department is dismissed by Hon'ble ITAT, Ahmedabad on the issue of disallowance of capital grants while computing book profit u/s 115JB of the Act, by relying on its decision on the issue of disallowance of capital grants while computing income under normal provisions. Therefore, it constitutes a mistake apparent on record and hence it is prayed that same may be rectified. Relief claimed in application It is therefore prayed that the Hon'ble I.T.A.T. "B" Ahmedabad may recall its order dated 26.04.2019 in I.T.A. NO. 3359/Ahd/2015, wherein the Hon'ble I.T.A.T. "B" Bench, Ahmedabad dismissed the appeal of the Department relying on the issue other than that disputed as above. It is also prayed that the Hon'ble ITAT, Ahmedabad may kindly decide the grounds of appeal raised by the department on merits of the case.” 3. A perusal of the above application reveals that the mistake pointed out by the Revenue in the order of the ITAT is that the ITAT dismissed the issue of disallowance of capital grants by the AO which was allowed by the ld.CIT(A), considering it in the context of computing the income of the assessee under the normal provisions of the Act, while the Revenue had agitated the same in the context of adjustment of disallowance of capital grants to the book profits of the assessee as per the provisions of section 115JB of the Act. 4. We have gone through order of the ITAT. We find no merit in the contentions of the Revenue. We have noted that the grounds raised by the Revenue on the issue of disallowance of capital grants at Ground No.6, makes no mention of the issue in the context of section 115JB of the Act . The said groundreads as under: “6. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting the addition on account of capital grants amounting to Rs.38,03,82,000/- made by the AO without appreciating the finding of the AO.” MA No.5 & 6 /Ahd/2020 3 5. The ITAT dealt with this issue at para 28 (page no.22) of its order upholding the finding of the ld.CIT(A) and dismissing the ground raised by the Revenue as under: “28. We have heard the rival contention and produced the material on record on this issue. During assessment, the assessing officer has stated that the asssessee has not received the grant or subsidy during the year but was of the view that the subsidy or grant which was received in earlier years were to be taken to the revenue or to be reduced from the cost of assets. Therefore, the assessing officer has estimated 15% of grant of Rs. 2500 lacs which worked out at Rs. 3750 lacs as income of the assessee. The ld. CIT(A) has deleted the aforesaid addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, therefore ,such grants cannot be reduced from cost of fixed asset of the assessee company. With the assistance of ld. authorized representatives, we have gone through the material on record pertaining to the submission of the assessee stating that the assessee has not received any grant during the year and the grants received originally from the Govt. of Gujarat were apportioned against the subsidiary companies on appropriate basis. In F.Y. 2007-08, the State Government vide various GRS decided to convert the grant given during the F.Y. 2005-06 to 2007-08 for implementation of Jyoti Gram Yojna (JGY) into equity share capital. Accordingly, the total grants received during the aforesaid financial years were allocated among the four distribution companies for implementation of the aforesaid scheme of the State Government. In view of the above facts and circumstances, we do not find any infirmity with the decision of the Ld. therefore, the aforesaid grants received cannot be treated as income of the assessee company. Accordingly, this ground of the appeal is dismissed.” 6. The ITAT, as is evident from the above, upheld the order of the Ld.CIT(A) deleting the addition made by the AO on account of capital grants under the normal provisions of the Act. 7. Clearly the issue now raised by theRevenue inits present application, of adjudication of capital grants as adjustment to the Book Profits of the assessee as per section 115JB of the Act,as not adjudicated by the ITAT, was never raised in its grounds of appeal before the ITAT. The same was pointed out to the Ld.DR who responded by filing a report of the AO on this matter before us dated 15.7.2021 in both the years which reads as under: Vide order 11/8.143(3) dated 30.11.2014, addition of Rs.38,03,82,000/- @ 15% of Rs.253,58,78,ooo/- was made on account of Capital Grants. Further, adjustment of Rs-38,03,82,0007- on account of Capital Grant was also made in the book profit u/s.115JB of the Act. The MA No.5 & 6 /Ahd/2020 4 addition of Rs.38,03,82,000/- in regular income was confirmed by the Ld.CIT(A) vide his order No.CAB-1/96/2O14-15 dated 21.09.2015 but adjustment of the said amount of Rs.38,03,82,0007- in book profit was deleted by the Ld. CIT(A). The department filed appeal before the ITAT, Ahmedabad vide ITA No.3359/Ahd/2015 on the above issues of deletion by the Ld.CIT(A) along with other issues of deletions by the Ld.CIT(A). The assessee had also filed appeal before the Hon'ble Tribunal against the order of the Ld.CIT(A). The Hon'ble ITAT in its combined order ITA Nos.3358, 1988, 3359 & 336o/Ahd/2015- A.Y.2008-09, A.Y.2010-11, A.Y.2O11-12 & A.Y.2O12-13 (Revenue Appeal) and ITA Nos. 3437, 2014, 3438 & 3439/Ahd/2015- A.Y.2008-09, A.Y.2010-11, A.Y.2011-12 & A.Y.2012-13 (Assessee Appeal) dated 26.04.2019 has deleted addition of Rs.38,03,82,000/- in regular income on account of Capital Grant. Under para 25 of its combined order dated 26.04.2019 the Hon'ble ITAT has remarked as under: 25. As the facts in all the four grounds of appeals are similar, so, we take 2nd ground of ITA No.l988/Ahd/2015 as lead case and its findings will also be applicable to Ground No.4 of ITA No.3438/Ahd/2015, Ground No.6 of ITA No.3359/Ahd/2015 and Ground No.3 of ITA No.3360/Ahd/2015. It can be seen from the findings given by the Hon'ble ITAT, in para No.28 of its order, that the aforesaid grants received cannot be treated as income of the assessee company. Decision of the Hon'ble ITAT on the same issue has not been accepted by the department. In this case the Ld.CIT(A) has allowed the appeal of the assessee on account of addition of Capital Grant u/s.115JB and confirmed the addition of the Capital Grant under normal provision. In scrutiny report of CIT(A) order, the AO has suggested to file appeal against the decision of CIT(A) for Capital Grant addition under normal income as well as addition of u/s.115JB of the I.T.Act. The same is mentioned on last page of scrutiny report. Moreover, in the grounds of the appeal to ITAT at point No.6 the ground is raised as " on Fact and circumstances of the case and in law, the Ld.CIT(A) erred In deleting the addition on account of Capital Grant amounting to Rs.380382000/- made by AO without appreciating the finding of AO." It is pertinent to mention that Ld.CIT(A) has allowed the addition of Capital Grant u/s.115JB of the I.T.Act, so it can be said that the grounds of deletion of Capital Grant u/s.115JB of the I.T.Act was taken before the Hon'ble ITAT. However, the Hon'ble ITAT has not given any findings/adjudication in respect of the adjustment of the sum of Rs.38,03,82,000/- on account of Capital Grant in book profit u/s.115JB of the Act. The Hon'ble ITAT was also expected to give its adjudications/findings on the issue of addition of Rs.38,03,82,ooo/- in regular income of the assessee as well as adjustment of the said amount in book profit u/s.115JB of the Act. Accordingly MA was filed vide MA No.05/Ahd/2020 in ITA No.3359/Ahd/2015. So there is infirmity in the ITAT order dated 26104.2019 as it has not adjudicated the issue of adjustment of Rs.38,03,82,000/- in book profit.” 8. The sum and substance of the report of the AO is that while the grounds raised before the ITAT did not mention specifically the MA No.5 & 6 /Ahd/2020 5 issue to be adjudicated in the context of section 115JB of the Act, but it was this, which was actually implied in the said grounds, since the ld.CIT(A) had deleted this adjustment made to the book profit and Revenue had come in appeal against the said adjustment. We are not convinced with this report of the AO. Any ground raised for adjudication has to be in clear terms and cannot be vague so as to leave any scope for exercising any presumption or conjectures on the grievance of the parties raised in the grounds. Even otherwise, it was the duty of the ld.DR during the course of hearing to have pointed out this fact, since being an Officer of the Court he was duty bound to appraise the Court the correct context in which its grounds were raised. In the absence of the same, the Revenue cannot now come up before us by way of this Miscellaneous Application pointing out that this ground before the ITAT was vaguely worded and thus incorrectly/ incompletely understood by the ITAT. 9. Even otherwise, there is no merit in this contention of the Revenue now, because as long as the addition made on account of capital grants by the AO stood deleted by the ITAT in its order at para reproduced above, there remains no question of any adjustment to the book profits of the assessee on this count. For this reason also, we hold that there is no merit in the present MA filed by the Revenue. As a consequence, both the MAs filed by the Revenue are dismissed. 10. In the result, both MAs of the Revenue are dismissed. Order pronounced in the Court on 8 th February, 2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 08/02/2023