NUCLEAR POWER CORPORATION OF INDIA LTD,MUMBAI vs. ADDL CIT RG 3(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 202/MUM/2004 Assessment Year: 1998-99 & ITA No. 114/MUM/2004 Assessment Year: 1999-2000 & ITA No. 4413/MUM/2004 Assessment Year: 2000-01 & ITA No. 3867/MUM/2008 Assessment Year: 2001-02 & ITA No. 4743/MUM/2007 Assessment Year: 2002-03 & ITA No. 4744/MUM/2007 Assessment Year: 2003-04 & ITA No. 4745/MUM/2007 Assessment Year: 2004-05 & ITA No. 2452/MUM/2011 Assessment Year: 2005-06 Nuclear Power Corporation of ACIT, Range-3(2), India Ltd., Aayakar Bhavan, M.K. Road, Vikram Sarabhai Bhavan, Vs. Mumbai-400021. Central Avenue, Anushakti Nagar, Mumbai-400094. PAN NO. AAACN 3154 F Appellant Respondent

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 2 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

ITA No. 3553/MUM/2011 ITA No. 3553/MUM/2011 Assessment Year: Assessment Year: 2006-07 Nuclear Power Corporation of Nuclear Power Corporation of DCIT, Large Tax Payer Unit, DCIT, Large Tax Payer Unit, India Ltd., 28th floor, Centre 1, Wor floor, Centre 1, World 8th floor, South Wing, Vikram floor, South Wing, Vikram Vs. Trade Centre, Sarabhai Bhavan, Central Sarabhai Bhavan, Central Mumbai-400005. 400005. Avenue, Anushakti Nagar, Avenue, Anushakti Nagar, Mumbai-400094. PAN NO. AAACN 3154 F AAACN 3154 F Appellant Respondent

ITA No. 4603/MUM/2007 ITA No. 4603/MUM/2007 Assessment Year: Assessment Year: 2004-05 & ITA No. 625/MUM/2009 Assessment Year: Assessment Year: 2005-06 DCIT, 3(2), M/s Nuclear Power Corporation M/s Nuclear Power Corporation Room No. 608, 6th floor, floor, of India Ltd., Vs. Aayakar Bhavan, M.K. Road, Aayakar Bhavan, M.K. Road, Centre-I, World Trade Centre, I, World Trade Centre, Mumbai-400020. 16th floor, Cuffe Parade, floor, Cuffe Parade, Mumbai-400005. PAN NO. AAACN 3154 F Appellant Respondent

ITA No. 3501/MUM/2011 ITA No. 3501/MUM/2011 Assessment Year: Assessment Year: 2006-07 DCIT-LTU, M/s Nuclear Power Corporation M/s Nuclear Power Corporation 28th floor, Centre-1, 1, World of India Ltd., Trade Centre, Cuffe Parade, Trade Centre, Cuffe Parade, Vs. Centre-I, World Trade Centre, I, World Trade Centre, Mumbai-400005. 16th floor, Cuffe Parade, floor, Cuffe Parade, Mumbai-400005. PAN NO. AAACN 3154 F Appellant Respondent

Assessee by : Mr. K. Gopal, Advocate cate Revenue by : Mr. Ashok Kumar Kardam, CIT Mr. Ashok Kumar Kardam, CIT-DR

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 3 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

: Date of last Hearing Hearing 27/10/2023 Date of pronouncement Date of pronouncement : 29/11/2023 ORDER PER Bench

These appeals by the assessee and Revenue are directed These appeals by the assessee and Revenue are directed These appeals by the assessee and Revenue are directed against separate orders passed by the Ld. First Appellate Authority against separate orders passed by the Ld. First Appel against separate orders passed by the Ld. First Appel i.e. “the Commissioner of Income ssioner of Income-tax (Appeals)” [in [in short the ld CIT(A)]. As identical issu . As identical issusses arising from same set of facts arising from same set of facts are involved in these appeals, therefore, same were heard together and involved in these appeals, therefore, same were heard together and involved in these appeals, therefore, same were heard together and disposed off by way of this consolidated or disposed off by way of this consolidated order for convenience and der for convenience and avoid repetition of facts. avoid repetition of facts.

AY 1998-99

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 4 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Rs.2,558.18 lacs, being Research & Development levy Rs.2,558.18 lacs, being Research & Development levy Rs.2,558.18 lacs, being Research & Development levy collected by the appellant. collected by the appellant. 4. Without prejudice to Ground 3 above, the learned Without prejudice to Ground 3 above, the learned Without prejudice to Ground 3 above, the learned Commissioner (Appeals) erred in holding that a portion Commissioner (Appeals) erred in holding that a portion Commissioner (Appeals) erred in holding that a portion of of of the the the amount amount amount collected collected collected towards towards towards Research Research Research & & & Development levy was not in the nature of a capital Development levy was not in the nature of a capital Development levy was not in the nature of a capital receipt exempt from tax. receipt exempt from tax. 5. The learned learned Commissioner Commissioner (Appeals) (Appeals) erred erred in in confirming as income of the appellant an amount of confirming as income of the appellant an amount of confirming as income of the appellant an amount of Rs.1,705.55 Rs.1,705.55 Rs.1,705.55 lacs, lacs, lacs, being being being Decommissioning Decommissioning Decommissioning Levy Levy Levy collected by the appellant. collected by the appellant. 6. The The The learned learned learned Commissioner Commissioner Commissioner (Appeals) (Appeals) (Appeals) erred erred erred in in in confirming as income of the appellant an amount of Rs. confirming as income of the appellant an amount confirming as income of the appellant an amount 1,836.71 1,836.71 1,836.71 lacs, lacs, lacs, being being being interest interest interest credited credited credited to to to Decommissioning Fund. Decommissioning Fund. 7. The The The learned learned learned Commissioner Commissioner Commissioner (Appeals) (Appeals) (Appeals) erred erred erred in in in confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner in taxing as income the following amounts which had in taxing as income the following amounts which had in taxing as income the following amounts which had been reduced by the appellant from been reduced by the appellant from the expenditure the expenditure incurred during construction: incurred during construction: 1 Interest income (other than on surplus funds) Interest income (other than on surplus funds) Interest income (other than on surplus funds) Rs. 276.71 lacs 2 Consultancy receipts Consultancy receipts Rs. 87.70 lacs 3 Other income Other income Rs.1216.96 lacs Total Total Rs.1581.37 lacs 8. The The The learned learned learned Commissioner Commissioner Commissioner (Appeals) (Appeals) (Appeals) erred erred erred in in in confirming the action of the Additional Commissioner of ming the action of the Additional Commissioner of ming the action of the Additional Commissioner of disallowing an amount of Rs.7 lacs as prior period disallowing an amount of Rs.7 lacs as prior period disallowing an amount of Rs.7 lacs as prior period expenditure. The appellant submits that as the expenditure. The appellant submits that as the expenditure. The appellant submits that as the expenditure had crystallized during the previous year expenditure had crystallized during the previous year expenditure had crystallized during the previous year relevant to the assessment year 1998 relevant to the assessment year 1998-99, the said 99, the said expenditure was fully allowable as a deduction. nditure was fully allowable as a deduction. nditure was fully allowable as a deduction. 9. Without prejudice to Ground No. 8 above, the learned Without prejudice to Ground No. 8 above, the learned Without prejudice to Ground No. 8 above, the learned Commissioner Commissioner Commissioner (Appeals) (Appeals) (Appeals) erred erred erred in in in not not not allowing allowing allowing deduction in respect of the expenditure treated as prior deduction in respect of the expenditure treated as prior deduction in respect of the expenditure treated as prior period in the years to which the same related to. period in the years to which the same related to. period in the years to which the same related to. 10. The learned Commissioner (Appeals) erred in rned Commissioner (Appeals) erred in confirming the action of the Additional Commissioner of confirming the action of the Additional Commissioner of confirming the action of the Additional Commissioner of disallowing an amount of Rs.53.47 lacs under section disallowing an amount of Rs.53.47 lacs under section disallowing an amount of Rs.53.47 lacs under section 43B.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 5 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

The learned Commissioner (Appeals) ought to have The learned Commissioner (Appeals) ought to have The learned Commissioner (Appeals) ought to have appreciated that the amounts were paid by the appreciated that the amounts were paid by the appreciated that the amounts were paid by the appellant appellant during the previous year and therefore were during the previous year and therefore were not to be disallowed. not to be disallowed. 11. 11. The learned Commissioner (Appeals) erred in 11. The learned Commissioner (Appeals) erred in holding that the provisions of section 115JA apply to holding that the provisions of section 115JA apply to holding that the provisions of section 115JA apply to the appellant. the appellant. 12. 12. The learned Commissioner (Appeals) erred in 12. The learned Commissioner (Appeals) erred in confirming the action of confirming the action of the Additional Commissioner the Additional Commissioner in holding that the other income of the appellant was in holding that the other income of the appellant was in holding that the other income of the appellant was not derived from the business of generation of power. not derived from the business of generation of power. not derived from the business of generation of power. 13. 13. The learned Commissioner (Appeals) erred in 13. The learned Commissioner (Appeals) erred in confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner in including the fo in including the following amounts as being part of llowing amounts as being part of book profits under section 115JA: book profits under section 115JA: Sr. No. Particulars Amount in Rs. lacs Amount in Rs. lacs a) Delayed payment charges Delayed payment charges 3,592.03 3,592.03 b) Interest on staff loan Interest on staff loan 135.46 c) Other interest Other interest 111.36 d) Provision no longer required Provision no longer required 126.08 e) Miscellaneous receipts Miscellaneous recei 446.31 f) Interest income on deposits with Interest income on deposits with 7,031.62 7,031.62 banks banks Total Total 114,42.86 114,42.86 The learned Commissioner (Appeals) ought to have The learned Commissioner (Appeals) ought to have The learned Commissioner (Appeals) ought to have appreciated that the above incomes were inextricably appreciated that the above incomes were inextricably appreciated that the above incomes were inextricably linked to the business of generation of power and were linked to the business of generation of power and were linked to the business of generation of power and were therefore derived f therefore derived from the business of generation of rom the business of generation of power. On this basis, the above amounts were to be power. On this basis, the above amounts were to be power. On this basis, the above amounts were to be excluded from book profits in accordance with excluded from book profits in accordance with excluded from book profits in accordance with Explanation (iv) to section 115JA(2). Explanation (iv) to section 115JA(2). 14. 14. The learned Commissioner (Appeals) erred in 14. The learned Commissioner (Appeals) erred in not allowing deduction for expenditure not allowing deduction for expenditure incurred by the incurred by the appellant in earning the income of Rs. 114,42.86 lacs, appellant in earning the income of Rs. 114,42.86 lacs, appellant in earning the income of Rs. 114,42.86 lacs, in computing the book profits of the appellant. in computing the book profits of the appellant. in computing the book profits of the appellant. 15. The learned Commissioner (Appeals) erred in The learned Commissioner (Appeals) erred in confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner that the appellant had utilised the share capital that the appellant had utilised the shar that the appellant had utilised the shar received during the year for earning the interest received during the year for earning the interest received during the year for earning the interest income. The learned income. The learned Commissioner (Appeals) erred in Commissioner (Appeals) erred in

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 6 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

not appreciating the facts presented during the course not appreciating the facts presented during the course not appreciating the facts presented during the course of the appeal proceedings. of the appeal proceedings. 16. Without prejudice to Grounds 11 to 15 above, Without prejudice to Grounds 11 to 15 above, the the learned learned Commissioner Commi ssioner (Appeals) (Appeals) erred erred in in confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner in making adjustments to the Profit and Loss account in making adjustments to the Profit and Loss account in making adjustments to the Profit and Loss account prepared by the appellant. prepared by the appellant. 17. The learned Commissioner (Appeals) ought to The learned Commissioner (Appeals) ought to have appreciated that no adjustments can be made to have appreciated that no adjustments can be made to have appreciated that no adjustments can be made to the Profit and Loss Account, other than those specified the Profit and Loss Account, other than those specified the Profit and Loss Account, other than those specified in the Explanation to section 115JA(2). in the Explanation to section 115JA(2). 18. The learned Commissioner (Appeals) erred The learned Commissioner (Appeals) erred confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner confirming the action of the Additional Commissioner in raising a demand for interest under section 234B of in raising a demand for interest under section 234B of in raising a demand for interest under section 234B of Rs. 8,46,25 Rs. 8,46,25,483 vide the notice of demand dated ,483 vide the notice of demand dated March 8, 2001 under section 156. March 8, 2001 under section 156. 19. The learned Commissioner (Appeals) erred in The learned Commissioner (Appeals) erred in confirming the levy of interest under section 234B of confirming the levy of interest under section 234B of confirming the levy of interest under section 234B of Rs.8,46,25,483. The appellant denies liability to such Rs.8,46,25,483. The appellant denies liability to such Rs.8,46,25,483. The appellant denies liability to such interest. interest. 20. Each one of the above grounds of appeal is rounds of appeal is without prejudice to the other. without prejudice to the other. 3. Briefly stated facts of the case are that the assessee Briefly stated facts of the case are that the assessee Briefly stated facts of the case are that the assessee is a Central Government Public Sector Central Government Public Sector Undertaking, engaged in the engaged in the business of generation of business of generation of electricity though various nuclear though various nuclear power plants situated in India ed in India including “Tarapur Atomic Power Station Tarapur Atomic Power Station” (TAPS); “Rajasthan Atomic Power Station Rajasthan Atomic Power Station” (RAPS); (RAPS); “Narora Atomic Power Station”( NAPS) , ( NAPS) , “Kakrapar Atomic Power Station Kakrapar Atomic Power Station”(KAPS) etc. The company is governed by the The company is governed by the provisions of the Atomic Energy provisions of the Atomic Energy Act, 1962. The assessee company took over the nuclear power . The assessee company took over the nuclear power . The assessee company took over the nuclear power stations from the Atomic Energy department and further developed stations from the Atomic Energy department and further developed stations from the Atomic Energy department and further developed and sold/distributed electricity generated to its customers, the tariff and sold/distributed electricity generated to its customers, the tariff and sold/distributed electricity generated to its customers, the tariff of which, however was determined by the Government of India. however was determined by the Government of India. however was determined by the Government of India. For

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 7 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the year under consideration, the assessee filed return of income on year under consideration, the assessee filed return of income on year under consideration, the assessee filed return of income on 01.12.1997 declaring income of Rs.171.41 crores 01.12.1997 declaring income of Rs.171.41 crores, before before set off of brought forward losses brought forward losses, but after setting of brought forward losses fter setting of brought forward losses, nil income was declared. The return of income filed by income was declared. The return of income filed by the assessee income was declared. The return of income filed by was selected for scrutiny and statutory notices under the Income- was selected for scrutiny and statutory notices under the Income was selected for scrutiny and statutory notices under the Income tax Act, 1961 (in short ‘the Act’) were issued and complied with. In tax Act, 1961 (in short ‘the Act’) were issued and complied with. In tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed by the Assessing Officer on the assessment order passed by the Assessing Officer on the assessment order passed by the Assessing Officer on 08.03.2001 u/s 143(3) of the Act 08.03.2001 u/s 143(3) of the Act, various additions various additions were made to the returned income. On further appeal, the Ld. CIT(A) allowed part the returned income. On further appeal, the Ld. CIT(A) allowed the returned income. On further appeal, the Ld. CIT(A) allowed relief vide impugned order dated 22.10.2003. Aggrieved, the impugned order dated 22.10.2003. Aggrieved, the impugned order dated 22.10.2003. Aggrieved, the assessee filed appeal before the assessee filed appeal before the ITAT (in short the ‘Tribunal’ ITAT (in short the ‘Tribunal’) by way of raising grounds as reproduced above. of raising grounds as reproduced above.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 8 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

jurisdiction to pass the assessment order under jurisdiction to pass the assessment order under jurisdiction to pass the assessment order under section 143(3) dated 8th March 2001 and to exercise section 143(3) dated 8th March 2001 and to exercise section 143(3) dated 8th March 2001 and to exercise the powers of performing the functions of an Assessing the powers of performing the functions of an Assessing the powers of performing the functions of an Assessing Officer. Officer. 3. The learned Additional Commissioner of Income The learned Additional Commissioner of Income The learned Additional Commissioner of Income Tax erred in passing assessment order under Tax erred in passing assessment order under Tax erred in passing assessment order under section 143(3) where the assessment proceedings section 143(3) where the assessment proceedings section 143(3) where the assessment proceedings were initiated by the Joint Commissioner of ere initiated by the Joint Commissioner of ere initiated by the Joint Commissioner of Income Tax Income Tax. Such order passed is bad in law, in the . Such order passed is bad in law, in the absence of an order transferring, jurisdiction under absence of an order transferring, jurisdiction under absence of an order transferring, jurisdiction under section 127 to the Additional Commissioner of Income section 127 to the Additional Commissioner of Income section 127 to the Additional Commissioner of Income Tax. 4. Your appellants crave leave to add, alter, amend, Your appellants crave leave to add, alter, amend, vary, Your appellants crave leave to add, alter, amend, omit or substitute the aforesaid ground of appeal or omit or substitute the aforesaid ground of appeal or omit or substitute the aforesaid ground of appeal or add a new ground or grounds of appeal at any time add a new ground or grounds of appeal at any time add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as they before or at the time of hearing of the appeal as they before or at the time of hearing of the appeal as they may be advised may be advised 5. The Ld. Counsel The Ld. Counsel for the assessee made oral arguments praying made oral arguments praying admission of additional ground and also filed written submissions. additional ground and also filed written submissions. additional ground and also filed written submissions. The relevant part of written submission written submissions is reproduced as under: reproduced as under:

a. That, in the additional ground, the Appellant has That, in the additional ground, the Appellant has That, in the additional ground, the Appellant has urged that the Additional Commissioner of Income- urged that the Additional Commissioner of Income urged that the Additional Commissioner of Income tax had no jurisdiction to act as tax had no jurisdiction to act as its Assessing Officer its Assessing Officer and hence, the assessment order passed by him is and hence, the assessment order passed by him is and hence, the assessment order passed by him is without without without jurisdiction. jurisdiction. jurisdiction. This This This was was was because, because, because, in in in compliance with section 2(7A) read with section compliance with section 2(7A) read with section compliance with section 2(7A) read with section 120(4)(b) of the Act, no authority had been given by 120(4)(b) of the Act, no authority had been given by 120(4)(b) of the Act, no authority had been given by the CBDT to either the Director General or Chief the CBDT to either the Director General o the CBDT to either the Director General o Commissioner or Commissioner nor by any of the Commissioner or Commissioner nor by any of the Commissioner or Commissioner nor by any of the said authorities in favour of the Addl. Commissioner said authorities in favour of the Addl. Commissioner said authorities in favour of the Addl. Commissioner of Income of Income-tax. Further, though the assessment assessment proceedings were initiated and carried on by the Jt. proceedings were initiated and carried on by the Jt. proceedings were initiated and carried on by the Jt. Commissioner of Income Commissioner of Income-tax, there was no transfer tax, there was no transfer of jurisdiction from him to the Addl. Commissioner of of jurisdiction from him to the Addl. Commissioner of of jurisdiction from him to the Addl. Commissioner of Income Income-tax as required by section 127 of the Act. section 127 of the Act. The Appellant submits that both the aforesaid The Appellant submits that both the aforesaid The Appellant submits that both the aforesaid grounds dealing with jurisdiction goes to the root of grounds dealing with jurisdiction goes to the root of grounds dealing with jurisdiction goes to the root of

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 9 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the matter. It is the matter. It is well settled by now that such well settled by now that such ground could be raised at any stage of und could be raised at any stage of the und could be raised at any stage of proceedings. In this regard, your attention is invited proceedings. In this regard, your attention is invited proceedings. In this regard, your attention is invited to: CIT vs. Mohd. Ayyub & Sons Agency 197 IT 637 (All) CIT vs. Mohd. Ayyub & Sons Agency 197 IT 637 (All) CIT vs. Mohd. Ayyub & Sons Agency 197 IT 637 (All) (Pg No. 1 of Case law Paper book) (Pg No. 1 of Case law Paper book) CIT vs. Jolly Fantasy World Ltd. 377 ITR 530 (Guj.) CIT vs. Jolly Fantasy World Ltd. 377 ITR 530 (Guj.) CIT vs. Jolly Fantasy World Ltd. 377 ITR 530 (Guj.) (Pg No. (Pg No. 2 to 10 of Case law Paper book) Inventors Industrial Corpn. Ltd. vs. CIT 194 IT 548 Inventors Industrial Corpn. Ltd. vs. CIT 194 IT 548 Inventors Industrial Corpn. Ltd. vs. CIT 194 IT 548 (Bom)(Pg No. 11 to 15 of Case law Paper book) (Bom)(Pg No. 11 to 15 of Case law Paper book) (Bom)(Pg No. 11 to 15 of Case law Paper book) Before the Bombay High Court, in the case referred Before the Bombay High Court, in the case referred Before the Bombay High Court, in the case referred to above, the to above, the assessee had challenged the validity assessee had challenged the validity of reassessment proceedings in of reassessment proceedings in second round of econd round of proceedings which was objected by the Revenue proceedings which was objected by the Revenue proceedings which was objected by the Revenue (see the Revenue's submissions at page 3 of the (see the Revenue's submissions at page 3 of the (see the Revenue's submissions at page 3 of the printed report). printed report). Relying upon its earlier judgment in ier judgment in he case of CWT v he case of CWT vs. N. A. Narielwala 126 IT 344 and Narielwala 126 IT 344 and the Punjab & Haryana the Punjab & Haryana High Court in Vijay K High Court in Vijay Kumar Jain v Jain vs. CIT 99 IT 349 the court held that "a ground s. CIT 99 IT 349 the court held that "a ground by which the jurisdiction of the Income by which the jurisdiction of the Income-tax Officer to tax Officer to make assessment is challenged can be allowed to make assessment is challenged can be allowed to make assessment is challenged can be allowed to be taken in an appeal before the Tribunal even be taken in an appeal before the Tribunal even be taken in an appeal before the Tribunal even though such a ground was not taken before the though such a ground was not taken before the though such a ground was not taken before the Income come-tax Officer or tax Officer or the Appellate Assistant the Appellate Assistant Commissioner. The facts in that case were that for Commissioner. The facts in that case were that for Commissioner. The facts in that case were that for the assessment year 1961 the assessment year 1961-62, the Wealth 62, the Wealth-tax Officer, acting under section 19A, had assessed the Officer, acting under section 19A, had assessed the Officer, acting under section 19A, had assessed the wealth ofthe deceased in the hands of the executor. wealth ofthe deceased in the hands of the executor. wealth ofthe deceased in the hands of the executor. On appeal, th On appeal, the Appellate Assistant Commissioner e Appellate Assistant Commissioner confirmed the assessment order. On appeal to the confirmed the assessment order. On appeal to the confirmed the assessment order. On appeal to the Tribunal, a new ground was taken for the first time Tribunal, a new ground was taken for the first time Tribunal, a new ground was taken for the first time that section 19A was introduced in the Wealth-tax that section 19A was introduced in the Wealth that section 19A was introduced in the Wealth Act with effect from April 1, 1965, and the Act with effect from April 1, 1965, and the Act with effect from April 1, 1965, and the assessment was, therefore, assessment was, therefore, without jurisdiction. The without jurisdiction. The Tribunal entertained the ground and our court Tribunal entertained the ground and our court Tribunal entertained the ground and our court upheld the order of the Trib upheld the order of the Tribunal. In Ugar Sugar unal. In Ugar Sugar Works Ltd. v Works Ltd. v. CIT [1983] 141 IT 326, ouT court was . CIT [1983] 141 IT 326, ouT court was

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 10 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

faced with a similar problem. In this case, the faced with a similar problem. In this case, the faced with a similar problem. In this case, the question question of of the Tribunal's jurisdiction ion was was considered at length. It was held that considered at length. It was held that the Tribunal's the Tribunal's jurisdiction under section 254 was restricted to jurisdiction under section 254 was restricted to jurisdiction under section 254 was restricted to passing of orders on the subject passing of orders on the subject-matter of the appeal matter of the appeal though within the four corners of the subject-matter though within the four corners of the subject though within the four corners of the subject of appeal. However, within the four of appeal. However, within the four corners of that rners of that jurisdiction, the Tribunal was clothed with almost jurisdiction, the Tribunal was clothed with almost jurisdiction, the Tribunal was clothed with almost the same powers as those of the Appellate Assistant same powers as those of the Appellate Assistant same powers as those of the Appellate Assistant Commissioner except that of enhancement. The Commissioner except that of enhancement. The Commissioner except that of enhancement. The judgment in CWT v. Narielwalla (N.A.) judgment in CWT v. Narielwalla (N.A.) (1980] 126 (1980] 126 ITR 344 (Bom) was noticed and not adversely ITR 344 (Bom) was noticed and not adversely ITR 344 (Bom) was noticed and not adversely commented upon. It was distinguished observing ommented upon. It was distinguished observing ommented upon. It was distinguished observing that (headnote) : that (headnote) : "The question as to the initial jurisdiction in making "The question as to the initial jurisdiction in making "The question as to the initial jurisdiction in making an order would stand on a different footing, as in an order would stand on a different footing, as in an order would stand on a different footing, as in such cases the such cases the question of Jurisdiction of the question of Jurisdiction of the Income Income-tax Officer would always be present as a sent as a part of the subject part of the subject-matter of the appeal at all stages matter of the appeal at all stages of the appeal, either before the Appellate Assistant of the appeal, either before the Appellate Assistant of the appeal, either before the Appellate Assistant Commissioner or the Tribunal, as, such jurisdictlon Commissioner or the Tribunal, as, such jurisdictlon Commissioner or the Tribunal, as, such jurisdictlon is always presumed to be existing in an authority is always presumed to be existing in an authority is always presumed to be existing in an authority before the passing of the order." before the passing of the order." (emphasis supplied). mphasis supplied). In CIT v. Belapur Sugar and Allied Industries Ltd. In CIT v. Belapur Sugar and Allied Industries Ltd. In CIT v. Belapur Sugar and Allied Industries Ltd. [1983] 141 IT 404, our court followed the decision in [1983] 141 IT 404, our court followed the decision in [1983] 141 IT 404, our court followed the decision in CWT v. Narielwalla (IN.A.) CWT v. Narielwalla (IN.A.) [1980] 126 ITR 344 (Bom) 126 ITR 344 (Bom) and held (headnote) : and held (headnote) : ".. that the earlier notices issued under section 148 ".. that the earlier notices issued under section 148 ".. that the earlier notices issued under section 148 of the Income the Income-tax Act, 1961, that is, the three notices Act, 1961, that is, the three notices issued on March 31, 1965, March 31, 1965, and issued on March 31, 1965, March 31, 1965, and issued on March 31, 1965, March 31, 1965, and December 10, 1965, respectively, were invalid, December 10, 1965, respectively, were invalid, December 10, 1965, respectively, were invalid, because by that time the determination under because by that time the determination under because by that time the determination under section 163 of the said Act had section 163 of the said Act had not properly taken not properly taken place. Since place. Since t these notices hese notices were invalid, were invalid, the the reassessment done in pursuance thereof was also reassessment done in pursuance thereof was also reassessment done in pursuance thereof was also invalid." invalid."

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 11 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Thus, so far as our court is concerned, it can be Thus, so far as our court is concerned, it can be Thus, so far as our court is concerned, it can be taken to be settled taken to be settled law that a point which goes to law that a point which goes to the jurisdiction of the assessment can the jurisdiction of the assessment can be allowed to be allowed to be taken in be taken in an appeal before the Tribunal even an appeal before the Tribunal even though though it was not taken before the Income it was not taken before the Income-tax Officer or the Appellate Officer or the Appellate Assistant Commissioner. Assistant Commissioner. We find that the Supreme Court also, in the case of We find that the Supreme Court also, in the case of We find that the Supreme Court also, in the case of R.J. Singh Ahluwalia v. State of Delhi, AIR 1971 SC R.J. Singh Ahluwalia v. State of Delhi, AIR 1971 SC R.J. Singh Ahluwalia v. State of Delhi, AIR 1971 SC 1552, at p. 1553, held 1552, at p. 1553, held in the context of new ground in the context of new ground raised before it for the first time: raised before it for the first time: "This ground of challenge had, of course, not been "This ground of challenge had, of course, not been "This ground of challenge had, of course, not been raised in either of the two courts below but since it raised in either of the two courts below but since it raised in either of the two courts below but since it went to the root of the case, being a jurisdictional went to the root of the case, being a jurisdictional went to the root of the case, being a jurisdictional point, we considered it just a point, we considered it just and proper to allow it to nd proper to allow it to be raised." be raised." Again, in the case of G.M. Contr Again, in the case of G.M. Contractor v. Gujarat . Gujarat Electricity Board, AIR Electricity Board, AIR 1972 SC 792 at p. 793 the 1972 SC 792 at p. 793 the Supreme Court held as under : Supreme Court held as under : "It is stated that this ground goes to the very root of "It is stated that this ground goes to the very root of "It is stated that this ground goes to the very root of the matter but was not raised befo the matter but was not raised before the High Court. re the High Court. The appellants objected to this fresh ground being The appellants objected to this fresh ground being The appellants objected to this fresh ground being allowed to be taken up, but we consider that as this allowed to be taken up, but we consider that as this allowed to be taken up, but we consider that as this ground goes to the very root of the matter, it should ground goes to the very root of the matter, it should ground goes to the very root of the matter, it should be allowed after the appellants are compensated by be allowed after the appellants are compensated by be allowed after the appellants are compensated by costs." costs." The Gujarat High Co The Gujarat High Court has, of course, taken the urt has, of course, taken the very view in its two decisions in CIT v. Nanalal very view in its two decisions in CIT v. Nanalal very view in its two decisions in CIT v. Nanalal Tribhovandas [1975) 100 ITR 734 and P. V. Doshi v. Tribhovandas [1975) 100 ITR 734 and P. V. Tribhovandas [1975) 100 ITR 734 and P. V. CIT |1978] 113 ITR 22. Indirectly, the Allahabad CIT |1978] 113 ITR 22. Indirectly, the Allahabad CIT |1978] 113 ITR 22. Indirectly, the Allahabad High Court in CIT v. Hari Raj Swarup and Sons High Court in CIT v. Hari Raj Swarup and Sons High Court in CIT v. Hari Raj Swarup and Sons (1982] 138 ITR 462, has also (1982] 138 ITR 462, has also taken the same view. ken the same view. We, therefore, hold that a ground by which the We, therefore, hold that a ground by which the We, therefore, hold that a ground by which the jurisdiction to make jurisdiction to make assessment itself is challenged assessment itself is challenged can be urged before any authority for the first time." can be urged before any authority for the first time." can be urged before any authority for the first time." Additional ground raising legal issue can be raised Additional ground raising legal issue can be raised Additional ground raising legal issue can be raised when the facts when the facts are available on record:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 12 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

b. The Appellant next relies upon the judgements of The Appellant next relies upon the judgements of The Appellant next relies upon the judgements of the Hon'ble Apex the Hon'ble Apex Court in the case of National Court in the case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (Pg No. Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (Pg No. Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (Pg No. 16 to 18 of Caselaw Paper book), Jute Corporation 16 to 18 of Caselaw Paper book), Jute Corporation 16 to 18 of Caselaw Paper book), Jute Corporation of India Ltd. vs CIT 187 IT 688 (Pg No. 19 to 24 of of India Ltd. vs CIT 187 IT 688 (Pg No. 19 t of India Ltd. vs CIT 187 IT 688 (Pg No. 19 t Caselaw Paper book) and CIT vs. S. Nelliappan 66 Caselaw Paper book) and CIT vs. S. Nelliappan 66 Caselaw Paper book) and CIT vs. S. Nelliappan 66 IT 722 (Pg No. 25 to 27 of Caselaw Paper book) and IT 722 (Pg No. 25 to 27 of Caselaw Paper book) and IT 722 (Pg No. 25 to 27 of Caselaw Paper book) and Special Bench order of the Tribunal in the case of All Special Bench order of the Tribunal in the case of All Special Bench order of the Tribunal in the case of All Cargo Global Logistic Ltd Vs DCIT (21 Taxmann 429) Cargo Global Logistic Ltd Vs DCIT (21 Taxmann 429) Cargo Global Logistic Ltd Vs DCIT (21 Taxmann 429) (Pg No. 28 to 47 of Caselaw Paper book) to (Pg No. 28 to 47 of Caselaw Paper book) to urge that an appellant can raise an additional ground raising an appellant can raise an additional ground raising an appellant can raise an additional ground raising legal issues when the necessary facts are on record. legal issues when the necessary facts are on record. legal issues when the necessary facts are on record. Issue relating to exercise of jurisdiction by the Addl. Issue relating to exercise of jurisdiction by the Addl. Issue relating to exercise of jurisdiction by the Addl. Commissioner of Income Commissioner of Income-tax raises a legal issue. tax raises a legal issue. The facts as The facts as necessary for disposal as these as these grounds would include the relevant notices grounds would include the relevant notices grounds would include the relevant notices issued by the Assessing Officer in the course of issued by the Assessing Officer in the course of issued by the Assessing Officer in the course of assessment assessment assessment proceedings proceedings proceedings as as as well well well as as as the the the notifications/ directions issued by the notifications/ directions issued by the CBDT or CBDT or the Director General or Chief the Director General or Chief Commissioner or Commissioner or Commissioner. Commissioner. The The notices not ices under under section section 143(2) and 142(1) of the Act have been issued 143(2) and 142(1) of the Act have been issued 143(2) and 142(1) of the Act have been issued by the Assessing Officer and there can be no by the Assessing Officer and there can be no by the Assessing Officer and there can be no doubt that they formed part of the record. The doubt that they formed part of the record. The doubt that they formed part of the record. The notifications notifications or or directions directions issued issued by by the the respective authorities, if any, should also be a respective authorities, if any, should also be respective authorities, if any, should also be part of part of the record, as otherwise, the Addl. CIT the record, as otherwise, the Addl. CIT could not have could not have exercised the jurisdiction as the exercised the jurisdiction as the Assessing Officer of the Appellant. Assessing Officer of the Appellant. In the course In the course of hearing before the Tribunal, the Ld. DR explained of hearing before the Tribunal, the Ld. DR explained of hearing before the Tribunal, the Ld. DR explained that the designation of the Addl. Commissioner of that the designation of the Addl. Commissioner of that the designation of the Addl. Commissioner of Income Income-tax shows that he was a part of the special that he was a part of the special range'. According to him, an Officer range'. According to him, an Officer of the special of the special range is directed to pass an assessment order in a range is directed to pass an assessment order in a range is directed to pass an assessment order in a particular case. He does not exercise general particular case. He does not exercise general particular case. He does not exercise general jurisdiction over jurisdiction over assessee's located in a particular assessee's located in a particular region or assesse region or assessee's or cases forming a class. Based e's or cases forming a class. Based thereon, it is essential that the authority, if any, thereon, it is essential that the authority, if any, thereon, it is essential that the authority, if any, granted in favour of the Addl. Commissioner of granted in favour of the Addl. Commissioner of granted in favour of the Addl. Commissioner of Income Income-tax, in the present case, should be a part of the present case, should be a part of the assessment record. The record of which the the assessment record. The record of which the the assessment record. The record of which the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 13 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

relevant facts shoul relevant facts should form part of should be the d form part of should be the assessment record or the appellate record. It does assessment record or the appellate record. It does assessment record or the appellate record. It does not mean only the facts as placed by either party not mean only the facts as placed by either party not mean only the facts as placed by either party before the Tribunal. If a view is taken that it only before the Tribunal. If a view is taken that it only before the Tribunal. If a view is taken that it only means facts available only before the Tribunal, then, means facts available only before the Tribunal, then, means facts available only before the Tribunal, then, it would be extreme it would be extremely simple for a party to not to ly simple for a party to not to produce the relevant records and thereby frustrate produce the relevant records and thereby frustrate produce the relevant records and thereby frustrate the additional ground. the additional ground. The Appellant submits The Appellant submits that, since the additional ground raises a legal that, since the additional ground raises a legal that, since the additional ground raises a legal issue for which the necessary facts forms part issue for which the necessary facts forms part issue for which the necessary facts forms part of the assessment record, the sa of the assessment record, the same may be me may be admitted. admitted. Additional ground relates to issue which could Additional ground relates to issue which could Additional ground relates to issue which could not have been raised before the A.O or the not have been raised before the A.O or the not have been raised before the A.O or the CIT(A). CIT(A). c. According to the judgement of the Full Bench of According to the judgement of the Full Bench of According to the judgement of the Full Bench of Bombay High Court Bombay High Court in Ahmedabad Electricity Co. in Ahmedabad Electricity Co. Ltd. vs. CIT 199 IT 351 (Pg No. 48 to Ltd. vs. CIT 199 IT 351 (Pg No. 48 to 58 of Caselaw 58 of Caselaw Paper book) and the Division Bench in Ultratech Paper book) and the Division Bench in Ultratech Paper book) and the Division Bench in Ultratech Cement Ltd. vs. ACIT 408 IT 500 (Pg No. 59 to 68 of Cement Ltd. vs. ACIT 408 IT 500 (Pg No. 59 to 68 of Cement Ltd. vs. ACIT 408 IT 500 (Pg No. 59 to 68 of Caselaw Paper Caselaw Paper book), an additional ground could book), an additional ground could also be permitted to be raised in a case where, also be permitted to be raised in a case where, also be permitted to be raised in a case where, evidence is to be examined which is not on record, if evidence is to be examined which is not on rec evidence is to be examined which is not on rec the party seeking to raise the additional ground the party seeking to raise the additional ground the party seeking to raise the additional ground satisfies that for good and sufficient reasons, the satisfies that for good and sufficient reasons, the satisfies that for good and sufficient reasons, the ground could not be raised before the lower ground could not be raised before the lower ground could not be raised before the lower authority. In the present case, the Appellant came to authority. In the present case, the Appellant came to authority. In the present case, the Appellant came to know of the issue concerning the jurisdiction of the know of the issue concerning the jurisdiction of know of the issue concerning the jurisdiction of AO, when it came AO, when it came across order dated 27.11.2017 across order dated 27.11.2017 passed by the Tribunal in the case of Tata Sons Ltd. passed by the Tribunal in the case of Tata Sons Ltd. passed by the Tribunal in the case of Tata Sons Ltd. Prior thereto, it was not aware of this issue. In its Prior thereto, it was not aware of this issue. In its Prior thereto, it was not aware of this issue. In its case, the assessment order was passed on case, the assessment order was passed on case, the assessment order was passed on 28.03.2001 and the appellate order by the CIT(A) on 28.03.2001 and the appellate order by the CIT(A) on 28.03.2001 and the appellate order by the CIT(A) on 22.10.2003. Since it was not aware of these issues .2003. Since it was not aware of these issues .2003. Since it was not aware of these issues before, there is good and sufficient cause for not before, there is good and sufficient cause for not before, there is good and sufficient cause for not raising the same before the AO and the CIT(A), raising the same before the AO and the CIT(A), raising the same before the AO and the CIT(A), Hence, it was fully justified in raising the same Hence, it was fully justified in raising the same Hence, it was fully justified in raising the same before the Tribunal. before the Tribunal.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 14 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

No limitation for raising of additional No limitation for raising of additional ground. ground. d. The other issue as raised by the Revenue in The other issue as raised by the Revenue in The other issue as raised by the Revenue in written submissions written submissions dated 14.06.2019 filed by them dated 14.06.2019 filed by them before the Tribunal as well as in the course of before the Tribunal as well as in the course of before the Tribunal as well as in the course of hearing is that raising of an additional ground at hearing is that raising of an additional ground at hearing is that raising of an additional ground at this stage suffers from laches and ought not to be this stage suffers from laches and ought not to b this stage suffers from laches and ought not to b admitted. The Appellant admitted. The Appellant submits that as per Rule 11 submits that as per Rule 11 of the Income of the Income-tax (Appellate Tribunal) Rules, 1963 Rules, 1963 ("the Appellate Tribunal Rules"), an appellant can ("the Appellate Tribunal Rules"), an appellant can ("the Appellate Tribunal Rules"), an appellant can with the leave of the Tribunal urge or be heard in the leave of the Tribunal urge or be heard in the leave of the Tribunal urge or be heard in support of any ground support of any ground not set forth in the not set forth in the memora memorandum of appeal. The only limitation on ndum of appeal. The only limitation on exercise of such powers by the Tribunal is that the exercise of such powers by the Tribunal is that the exercise of such powers by the Tribunal is that the party who may be affected by its decision should party who may be affected by its decision should party who may be affected by its decision should have sufficient opportunity of being have sufficient opportunity of being heard on that heard on that ground. This is the only limitation on ground. This is the only limitation on exercise of exercise of powers to adm powers to admit additional ground by the Tribunal. it additional ground by the Tribunal. There is no time limit prescribed either in the Act or There is no time limit prescribed either in the Act or There is no time limit prescribed either in the Act or the Rules or the Appellate Tribunal Rules within the Rules or the Appellate Tribunal Rules within the Rules or the Appellate Tribunal Rules within which an additional ground could be raised. which an additional ground could be raised. which an additional ground could be raised. In these circumstances, an appellant should be In these circumstances, an appellant should be In these circumstances, an appellant should be allowed to raise an add allowed to raise an additional ground before the itional ground before the commencement of the hearing of the commencement of the hearing of the appeal, which appeal, which test has been fulfilled in the present case. In this test has been fulfilled in the present case. In this test has been fulfilled in the present case. In this regard, reliance is placed on: regard, reliance is placed on: National News Print and Paper Mills Ltd. vs. CIT 223 National News Print and Paper Mills Ltd. vs. CIT 223 National News Print and Paper Mills Ltd. vs. CIT 223 ITR 688 (MP) ITR 688 (MP) (Pg No. 69 to 70 of Caselaw Pa (Pg No. 69 to 70 of Caselaw Paper book); Shilpa Associates vs. ITO (2004) 135 Taxman 277 Shilpa Associates vs. ITO (2004) 135 Taxman 277 Shilpa Associates vs. ITO (2004) 135 Taxman 277 (Raj (Pg No. 71 to 73 of Caselaw Paper book) (Raj (Pg No. 71 to 73 of Caselaw Paper book) (Raj (Pg No. 71 to 73 of Caselaw Paper book) e. The judgment in the case of Dr. V. S. Chauhan vs. The judgment in the case of Dr. V. S. Chauhan vs. The judgment in the case of Dr. V. S. Chauhan vs. DIT (Investigation) DIT (Investigation) 336 ITR 533 (All) (Pg No. 74 to 85 336 ITR 533 (All) (Pg No. 74 to 85 of Caselaw Paper book) and Kishore Jagjivandas of Caselaw Paper book) and Kishore Jagjivan of Caselaw Paper book) and Kishore Jagjivan Tanna vs JDIT (2018) 1998 Taxman.com 235 (Bom) Tanna vs JDIT (2018) 1998 Taxman.com 235 (Bom) Tanna vs JDIT (2018) 1998 Taxman.com 235 (Bom) (Pg No. 86 to 90 of Caselaw Paper book)as relied No. 86 to 90 of Caselaw Paper book)as relied No. 86 to 90 of Caselaw Paper book)as relied upon by the Ld. DR in support of his claims that the upon by the Ld. DR in support of his claims that the upon by the Ld. DR in support of his claims that the additional ground suffer from laches, additional ground suffer from laches, the Appellant the Appellant submits that they were concerned with writ petitions submits that they were concerned with writ petition submits that they were concerned with writ petition

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 15 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

before the High Courts. That writ jurisdiction of a before the High Courts. That writ jurisdiction of a before the High Courts. That writ jurisdiction of a High Court is High Court is discretionary. Even though a party discretionary. Even though a party may be entitled to a particular relief, the writ court may be entitled to a particular relief, the writ court may be entitled to a particular relief, the writ court may refuse to exercise its jurisdiction for various may refuse to exercise its jurisdiction for various may refuse to exercise its jurisdiction for various reasons not necessarily dealing with the merits. reasons not necessarily dealing with the merit reasons not necessarily dealing with the merit Both the aforesaid Both the aforesaid cases are where the Court cases are where the Court refused to exercise its writ jurisdiction as the writ refused to exercise its writ jurisdiction as refused to exercise its writ jurisdiction as petitions were delayed. In this regard, your petitions were delayed. In this regard, your petitions were delayed. In this regard, your attention is invited to para 8 of the judgment of the attention is invited to para 8 of the judgment of the attention is invited to para 8 of the judgment of the Bombay High Court, wherein it is held " In the light Bombay High Court, wherein it is held " In the light Bombay High Court, wherein it is held " In the light of the aforesaid discussion, no writ petition could the aforesaid discussion, no writ petition could the aforesaid discussion, no writ petition could have been brought by relying on the communication have been brought by relying on the communication have been brought by relying on the communication from the Revenue. from the Revenue. We are unable to agree with the We are unable to agree with the petitioner for the simple reason that petitioner for the simple reason that this Court is not this Court is not obliged to entertain belated and stale claims. The obliged to entertain belated and stale claims. The obliged to entertain belated and stale claims. The writ jurisdiction is not meant to confer benefit or writ jurisdiction is not meant to confer benefit or writ jurisdiction is not meant to confer benefit or enable litigants who sleep enable litigants who sleep over their rights to derive over their rights to derive an advantage for themselves. The writ an advantage for themselves. The writ jurisdiction is jurisdiction is equitable and discretionary and if people like the equitable and discretionary and if people like the equitable and discretionary and if people like the petitioner, who is a businessman and prudent petitioner, who is a businessman and pruden petitioner, who is a businessman and pruden enough to know as to how monies, allegedly enough to know as to how monies, allegedly enough to know as to how monies, allegedly retained illegally, have to be recovered promptly and retained illegally, have to be recovered promptly and retained illegally, have to be recovered promptly and expeditiously. He does nothing despite a favourable expeditiously. He does nothing despite a favourable expeditiously. He does nothing despite a favourable order from this Court for more than a decade. Such order from this Court for more than a decade. Such order from this Court for more than a decade. Such a litigant does not deserve any relief in our a litigant does not deserve any relief in our a litigant does not deserve any relief in our discreti discretionary onary and and equitable equitable jurisdiction. jurisdiction. The The jurisdiction is extraordinary as well. It is not meant jurisdiction is extraordinary as well. It is not meant jurisdiction is extraordinary as well. It is not meant to get over the bar prescribed in the Limitation Act, to get over the bar prescribed in the Limitation Act, to get over the bar prescribed in the Limitation Act, 1963 for bringing a suit either. This indirect and 1963 for bringing a suit either. This indirect and 1963 for bringing a suit either. This indirect and oblique way of seeking a discretionary relief has to oblique way of seeking a discretionary relief has to oblique way of seeking a discretionary relief has to be discouraged. The writ petition is, therefore, be discouraged. The writ petition is, therefore, scouraged. The writ petition is, therefore, dismissed on the ground of maintainability and dismissed on the ground of maintainability and dismissed on the ground of maintainability and delay and laches." delay and laches." As stated above, in the present case, there is no As stated above, in the present case, there is no As stated above, in the present case, there is no requirement under the Act or the Rules or the requirement under the Act or the Rules or the requirement under the Act or the Rules or the Appellate Tribunal Rules for the time Appellate Tribunal Rules for the time within whic within which an additional ground could be raised. In these an additional ground could be raised. In these an additional ground could be raised. In these circumstances, the Appellant submits that the said circumstances, the Appellant submits that the said circumstances, the Appellant submits that the said additional ground need not be dismissed as additional ground need not be dismissed as additional ground need not be dismissed as delayed. delayed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 16 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

f. Assuming Assuming Assuming without without without admitting admitting admitting that that that it it it was was was incumbent on the Appellant incumbent on the Appellant to file the additional to file the additional ground with ground within a reasonable time, it submits that it in a reasonable time, it submits that it came across the issue raised in the additional came across the issue raised in the additional came across the issue raised in the additional ground ground through through the the Tribunal Tribunal order order dated dated 27.11.2017 in the case of Tata Sons Ltd. (193 & 27.11.2017 in the case of Tata Sons Ltd. (193 27.11.2017 in the case of Tata Sons Ltd. (193 3475/ Mum/ 2006) (Pg No. 91 to 141 of Caselaw 3475/ Mum/ 2006) (Pg No. 91 to 141 of Caselaw 3475/ Mum/ 2006) (Pg No. 91 to 141 of Caselaw Paper book) dated Paper book) dated 27.11.2017 which came to its came to its notice while preparing for the present appeal. After notice while preparing for the present appeal. After notice while preparing for the present appeal. After obtaining advise on the same from the Chartered obtaining advise on the same from the Chartered obtaining advise on the same from the Chartered Accountants and the Counsel who have been briefed Accountants and the Counsel who have been briefed Accountants and the Counsel who have been briefed to appear in to appear in the mater, it was decided that the the mater, it was decided that the additional ground should be filed. additional ground should be filed. The sa The said ground has been filed on 23.07.2018. The id ground has been filed on 23.07.2018. The said issue could not have been raised by the said issue could not have been raised by the said issue could not have been raised by the Appellant either before the AO or the CIT(A) as it Appellant either before the AO or the CIT(A) as it Appellant either before the AO or the CIT(A) as it was not aware of the same at those stages. It has was not aware of the same at those stages. It has was not aware of the same at those stages. It has come to know of this issue only when the appeal come to know of this issue only when the appeal come to know of this issue only when the appeal was pending before was pending before the Tribunal. The Appellant the Tribunal. The Appellant therefore submits that the delay, if any, in filing the therefore submits that the delay, if any, in filing the therefore submits that the delay, if any, in filing the additional ground is on account of sufficient cause additional ground is on account of sufficient cause additional ground is on account of sufficient cause and may be condoned. and may be condoned. g. Similar additional grounds as raised by the Similar additional grounds as raised by the Similar additional grounds as raised by the Appellant have been admitted by the Tribunal in the Appellant have been admitted by the Tribunal in the Appellant have been admitted by the Tribunal in the following cases: following cases: i. Tata Sons Ltd. vs. ACIT (AY 2001 Tata Sons Ltd. vs. ACIT (AY 2001-02)(2016) (162 02)(2016) (162 ITD 450) (MUM - ITD 450) (MUM TRI)(see para 3.11 to 3.16 on Pg No. 151 to 152 TRI)(see para 3.11 to 3.16 on Pg No. 151 to 152 TRI)(see para 3.11 to 3.16 on Pg No. 151 to 152 of Caselaw Paper of Caselaw Paper ii. Tata Communication Ltd. vs. ACIT (AY 2002 Tata Communication Ltd. vs. ACIT (AY 2002-03) in Tata Communication Ltd. vs. ACIT (AY 2002 ITA No.7071/Mum/2005 and 1108/Mum/2008 ITA No.7071/Mum/2005 and 1108/Mum/2008 ITA No.7071/Mum/2005 and 1108/Mum/2008 vide its order dated 30.06.2017)(see para 4 and vide its ord 30.06.2017)(see para 4 and 6 on Pg No. 165 to 167 of Caselaw Paper 6 on Pg No. 165 to 167 of Caselaw Paper Tata 6 on Pg No. 165 to 167 of Caselaw Paper Sons Ltd. vs. ACIT (AY 2002-03) in ITA Nos. 193 Sons Ltd. vs. ACIT (AY 2002 03) in ITA Nos. 193 and 3745 /Mum/2006 vide its order dated and 3745 /Mum/2006 vide its order dated 27.11.2017 )(see para 12 to 17 on Pg No. 108 to 27.11.2017 )(see para 12 to 17 on Pg No. 108 to 119 of Caselaw Paper book) ; 119 of Caselaw Paper book) ; iv. Tata S Tata Sons Ltd. vs. ACIT (AY 2004-05) in ITA 05) in ITA No.2639/Mum/2009 No.2639/Mum/2009 vide vide its its order order dated dated

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 17 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

11.03.2009 )(see para 2 on Pg No. 211 to 212 of 11.03.2009 )(see para 2 on Pg No. 211 to 212 of 11.03.2009 )(see para 2 on Pg No. 211 to 212 of Caselaw Paper book) Caselaw Paper book) v. Tata Sons Ltd vs. ACIT (AY 2005 Tata Sons Ltd vs. ACIT (AY 2005-06 (ITA No 06 (ITA No 5090 / Mum/2012) dated 16.08.2019 (see 5090 / Mum/2012) dated 16.08.2019 (see 5090 / Mum/2012) dated 16.08.2019 (see para 4 on Pg No. 281 of Cas para 4 on Pg No. 281 of Caselaw Paper book). elaw Paper book). vi. Tata Communication Ltd vs. ACIT (AY 2003 Tata Communication Ltd vs. ACIT (AY 2003-04 Tata Communication Ltd vs. ACIT (AY 2003 and AY 2004 and AY 2004-05 ITA No.3972/ Mum/2007) ) No.3972/ Mum/2007) ) dated 16.08.2019 (see para 3 to 3.3 on Pg No. dated 16.08.2019 (see para 3 to 3.3 on Pg dated 16.08.2019 (see para 3 to 3.3 on Pg 241 to 246 of Caselaw Paper book) 241 to 246 of Caselaw Paper book) . In all the aforesaid cases both the aforesaid issues In all the aforesaid cases both the aforesaid issues In all the aforesaid cases both the aforesaid issues were raised were raised as additional ground before the additional ground before the Tribunal. Further in each of these cases, the delay, Tribunal. Further in each of these cases, the delay, Tribunal. Further in each of these cases, the delay, in raising of the additional ground was in excess of in raising of the additional ground was in excess of in raising of the additional ground was in excess of ten years. The Tribunal has held that the additional ten years. The Tribunal has held that the additional ten years. The Tribunal has held that the additional ground raises legal issue for which necessary facts ground raises legal issue for which necessary facts ground raises legal issue for which necessary facts are expected are expected to be available in the assessment the assessment records. The Tribunal has also held that the said records. The Tribunal has also held that the said records. The Tribunal has also held that the said issues go to the root of the matter. Since, similar issues go to the root of the matter. Since, similar issues go to the root of the matter. Since, similar position is existing in the present case, the Appellant position is existing in the present case, the Appellant position is existing in the present case, the Appellant submits that the additional grounds may be submits that the additional grounds may be submits that the additional grounds may be admitted and adjudica admitted and adjudicated by the Tribunal in ted by the Tribunal in accordance with law. accordance with law.” 6. On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) opposed admission of the additional ground. The relevant opposed admission of the additional ground. The relevant opposed admission of the additional ground. The relevant submission of the Revenue filed by the Ld. DR is reproduced as submission of the Revenue filed by the Ld. DR is reproduced as submission of the Revenue filed by the Ld. DR is reproduced as under:

“3. In this respect, th 3. In this respect, the undersigned would like to bring to your e undersigned would like to bring to your kind notice of the decision of the Hon'ble ITAT, 'L' Bench, Mumbai kind notice of the decision of the Hon'ble ITAT, 'L' Bench, Mumbai kind notice of the decision of the Hon'ble ITAT, 'L' Bench, Mumbai in the case of M/s Stock Traders Pvt Ltd in ITA No. M/s Stock Traders Pvt Ltd in ITA No. in the case of 4493/Mum/2003 and ITA No. 4737/Mum/2003 4493/Mum/2003 and ITA No. 4737/Mum/2003 wherein under wherein under similar circumstances, the similar additi similar circumstances, the similar additional grounds raised by onal grounds raised by the assessee therein was dismissed by the Hon'ble Bench after the assessee therein was dismissed by the Hon'ble Bench after the assessee therein was dismissed by the Hon'ble Bench after holding that when there is no information in possession of the holding that when there is no information in possession of the holding that when there is no information in possession of the assessee that the internal procedure of the department regarding assessee that the internal procedure of the department regarding assessee that the internal procedure of the department regarding the transfer and posting of officers has no the transfer and posting of officers has not been complied with t been complied with and the assessee in the said case after a lapse of 15 years was and the assessee in the said case after a lapse of 15 years was and the assessee in the said case after a lapse of 15 years was making a wild guess and hence did not accept the assessee's making a wild guess and hence did not accept the assessee's making a wild guess and hence did not accept the assessee's request that the assessment deserve to be quashed in as much as request that the assessment deserve to be quashed in as much as request that the assessment deserve to be quashed in as much as

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 18 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the assessing officer did not have authority of the assessing officer did not have authority of law. In this respect, law. In this respect, the Hon'ble ITAT has made detailed discussion in Para 17 the Hon'ble ITAT has made detailed discussion in Para 17 the Hon'ble ITAT has made detailed discussion in Para 17 onwards of the above referred order. It is also brought to your onwards of the above referred order. It is also brought to your onwards of the above referred order. It is also brought to your kind notice that while dismissing the similar additional ground in kind notice that while dismissing the similar additional ground in kind notice that while dismissing the similar additional ground in the above referred case, the Hon'ble Tribunal the above referred case, the Hon'ble Tribunal has considered the has considered the assessee's plea and also their reliance on the decision of the assessee's plea and also their reliance on the decision of the assessee's plea and also their reliance on the decision of the Hon'ble Bombay ITAT in the case of M/s Tata Sons Limited vs. Hon'ble Bombay ITAT in the case of M/s Tata Sons Limited vs. Hon'ble Bombay ITAT in the case of M/s Tata Sons Limited vs. ACIT (76 taxmann.com 126). Since the finding of the Horible ACIT (76 taxmann.com 126). Since the finding of the Horible ACIT (76 taxmann.com 126). Since the finding of the Horible Tribunal in the above referred case is directly appl Tribunal in the above referred case is directly applicable in the icable in the present case. So present case. So you are requested to go through the same and if you are requested to go through the same and if deemed fit may kindly be brought to the notice of the Hon'ble deemed fit may kindly be brought to the notice of the Hon'ble deemed fit may kindly be brought to the notice of the Hon'ble Bench.” 6.1 The Ld. DR further referred to a written submission filed The Ld. DR further referred to a written submission filed The Ld. DR further referred to a written submission filed (undated) by his predecessor opposing the admission of the (undated) by his predecessor opposing the adm (undated) by his predecessor opposing the adm additional ground, relevant part of which is reproduced as under: additional ground, relevant part of which is reproduced as under: additional ground, relevant part of which is reproduced as under:

The assessee has made an application in the above mentioned has made an application in the above mentioned case requesting for admission of additional grounds of appeal in case requesting for admission of additional grounds of appeal in case requesting for admission of additional grounds of appeal in this case. The this case. The assessee has stated that since the additional dditional grounds raised is purely a question of law and is dependent upon grounds raised is purely a question of law and is dependent upon grounds raised is purely a question of law and is dependent upon the facts which are already on record, the same may be admitted the facts which are already on record, the same may be admitted the facts which are already on record, the same may be admitted and adjudicated. and adjudicated. The said additional grounds of appeal challenge The said additional grounds of appeal challenge the jurisdiction of the Additional Commissioner of I the jurisdiction of the Additional Commissioner of Income Tax to ncome Tax to issue notice u/s. 143(2) and also to pass the subsequent issue notice u/s. 143(2) and also to pass the subsequent issue notice u/s. 143(2) and also to pass the subsequent assessment Order U/s 14 assessment Order U/s 143(3). In stating so, the assessee is of the (3). In stating so, the assessee is of the view that the Addl. CIT has not established that he possesses view that the Addl. CIT has not established that he possesses view that the Addl. CIT has not established that he possesses valid jurisdiction conferred on him in terms of Section 1 valid jurisdiction conferred on him in terms of Section 120(4)(b) of 20(4)(b) of the I.T. Act and hence in the absence of such an order, the the I.T. Act and hence in the absence of such an order, the the I.T. Act and hence in the absence of such an order, the assessment order passed by him is bad in law. The assesse has assessment order passed by him is bad in law. The assesse has assessment order passed by him is bad in law. The assesse has also challenged the validity of assessment proceedings, since in also challenged the validity of assessment proceedings, since in also challenged the validity of assessment proceedings, since in its view, the notice u/s. 143(2) has been issued by the A its view, the notice u/s. 143(2) has been issued by the ACIT who CIT who is a lower authority. The Assessee has heavily relied on various is a lower authority. The Assessee has heavily relied on various is a lower authority. The Assessee has heavily relied on various orders of ITAT passed in the case of TATA Sons Limited, TATA orders of ITAT passed in the case of TATA Sons Limited, TATA orders of ITAT passed in the case of TATA Sons Limited, TATA Communications Limited, TATA power Limited and others. At the Communications Limited, TATA power Limited and others. At the Communications Limited, TATA power Limited and others. At the outset, it is submitted that the additional grounds of appea outset, it is submitted that the additional grounds of appea outset, it is submitted that the additional grounds of appeal are not admissible. Some of the reasons are as under: not admissible. Some of the reasons are as under: 2.1. The assessment in this case was completed on 2.1. The assessment in this case was completed on 2.1. The assessment in this case was completed on 08.03.2001 and the appeal before ITAT was preferred by 08.03.2001 and the appeal before ITAT was preferred by 08.03.2001 and the appeal before ITAT was preferred by the assessee assessee in 2004, and this ground of the assessment in 2004, and this ground of the assessment being bad in law has been taken first b being bad in law has been taken first before this Hon'ble efore this Hon'ble Bench in 2018. Thus, for period of almost 14 years the Bench in 2018. Thus, for period of almost 14 years the Bench in 2018. Thus, for period of almost 14 years the assessee assessee has blissfully chosen to ignore this aspect and has blissfully chosen to ignore this aspect and has raked up this issue only now. This unexplained delay has raked up this issue only now. This unexplained delay has raked up this issue only now. This unexplained delay has not been backed or supported by any affidavit or has not been backed or supported by any affidavit or has not been backed or supported by any affidavit or

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 19 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

reasons and mec reasons and mechanical reliance has been placed on hanical reliance has been placed on different case laws. different case laws. 2.2 The decisions of coordinate Bench of ITAT in the case 2.2 The decisions of coordinate Bench of ITAT in the case 2.2 The decisions of coordinate Bench of ITAT in the case of Tata Sons Ltd Tata Communications Ltd etc dated on of Tata Sons Ltd Tata Communications Ltd etc dated on of Tata Sons Ltd Tata Communications Ltd etc dated on and near 31.10.2016, on which the assessee is heavily and near 31.10.2016, on which the assessee is heavily and near 31.10.2016, on which the assessee is heavily relying, has already been conside relying, has already been considered and not followed by red and not followed by another Bench of ITAT in ITA No: 4493/Mum/2003 dated another Bench of ITAT in ITA No: 4493/Mum/2003 dated another Bench of ITAT in ITA No: 4493/Mum/2003 dated 11.07.2018. A copy of this order is attached. (PB 11.07.2018. A copy of this order is attached. (PB-III) 2.3 The claim of the 2.3 The claim of the assessee of challenging the of challenging the jurisdiction after almost 14 years is therefore barred by jurisdiction after almost 14 years is therefore barred by jurisdiction after almost 14 years is therefore barred by the laches, being the laches, being in the nature of unreasonable delay in in the nature of unreasonable delay in asserting the claim which has prejudiced the party asserting the claim which has prejudiced the party asserting the claim which has prejudiced the party against whom relief is sought. against whom relief is sought. 2.4 This ground of appeal challenging the jurisdiction of This ground of appeal challenging the jurisdiction of This ground of appeal challenging the jurisdiction of the Addl CIT to pass orders U/s 143(3) was not taken the Addl CIT to pass orders U/s 143(3) was not taken the Addl CIT to pass orders U/s 143(3) was not taken before the CIT(A) and i before the CIT(A) and is not admissible as a matter of s not admissible as a matter of right. If such additional grounds, which are likely to right. If such additional grounds, which are likely to right. If such additional grounds, which are likely to change the complexion of the case, are permitted to be change the complexion of the case, are permitted to be change the complexion of the case, are permitted to be taken before higher judicial forums then that would defeat taken before higher judicial forums then that would defeat taken before higher judicial forums then that would defeat the very scheme of appellate forums conceived by the the very scheme of appellate forums conceived by the the very scheme of appellate forums conceived by the legislature. The ITAT is supposed to decide only issues gislature. The ITAT is supposed to decide only issues gislature. The ITAT is supposed to decide only issues which were the subject matter of first appeal, especially which were the subject matter of first appeal, especially which were the subject matter of first appeal, especially when the fresh ground of appeal is going to challenge the when the fresh ground of appeal is going to challenge the when the fresh ground of appeal is going to challenge the complexion of entire appeal, otherwise the entire judicial complexion of entire appeal, otherwise the entire judicial complexion of entire appeal, otherwise the entire judicial hierarchy below would becom hierarchy below would become infructuous, in this case e infructuous, in this case the forum of CIT(A). the forum of CIT(A). 2.5 The issue of jurisdiction being raised now is a mixed The issue of jurisdiction being raised now is a mixed The issue of jurisdiction being raised now is a mixed question of fact and law and not a pure question of law as question of fact and law and not a pure question of law as question of fact and law and not a pure question of law as is being claimed by the assesse. The issue raised by the is being claimed by the assesse. The issue raised by the is being claimed by the assesse. The issue raised by the assessee would require examinatio assessee would require examination of assessment n of assessment records and is likely to vary with each case. records and is likely to vary with each case. 2.6 The Department has filed a judicial paper book citing The Department has filed a judicial paper book citing The Department has filed a judicial paper book citing various case laws in which the various case laws in which the fact, as enumerated above, fact, as enumerated above, has been the ratio decidendi. (Legal Submissions against been the ratio decidendi. (Legal Submissions against been the ratio decidendi. (Legal Submissions against Additional Grounds ta Additional Grounds taken by "a" filed on 14.06.2019 ken by "a" filed on 14.06.2019 followed by Legal PB dated 20.08.19 showing that even followed by Legal PB dated 20.08.19 showing that even followed by Legal PB dated 20.08.19 showing that even on merits the ground is not maintainable) on merits the ground is not maintainable) 3.1 On merits also, the grounds proposed to be raised by the On merits also, the grounds proposed to be raised by the On merits also, the grounds proposed to be raised by the Assessee are not Assessee are not admissible. The provisions of Section 120(1), admissible. The provisions of Section 120(1), 120(2) and 120(4) of the Income Tax Act are reproduced as under: ) and 120(4) of the Income Tax Act are reproduced as under: ) and 120(4) of the Income Tax Act are reproduced as under: "Section 120. "Section 120.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 20 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

(1) Income (1) Income-tax authorities shall exercise all or any of the tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred powers and perform all or any of the functions conferred powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by on, or, as the case may be, assigned to such authorities by on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the der this Act in accordance with such directions as the der this Act in accordance with such directions as the Board may issue for the exercise of the powers and Board may issue for the exercise of the powers and Board may issue for the exercise of the powers and performance of the functions by all or any of those performance of the functions by all or any of those performance of the functions by all or any of those authorities. authorities. Explanation. Explanation.—For the removal of doubts, it is hereby For the removal of doubts, it is hereby declared that any income declared that any income-tax authority, being an authority hority, being an authority higher in rank, may, if so directed by the Board, exercise higher in rank, may, if so directed by the Board, exercise higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income the powers and perform the functions of the income the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by authority lower in rank and any such direction issued by authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under the Board shall be deemed to be a direction issued under the Board shall be deemed to be a direction issued under sub-section (1). section (1). (2) The directions of the Board under sub (2) The directions of the Board under sub-section (1) may section (1) may authorise any other income authorise any other income-tax authority to issue orders in tax authority to issue orders in writing for the exercise of the powers and performance of writing for the exercise of the powers and performance of writing for the exercise of the powers and performance of the functions by all or any of the other income the functions by all or any of the other income the functions by all or any of the other income-tax authorities authorities who are subordinate to it. (3) ……………………… ……………………… (4) Without prejudice to the provisions of sub (4) Without prejudice to the provisions of sub-sections (1) sections (1) and (2), the Board may, by general or special order, and and (2), the Board may, by general or special order, and and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as subject to such conditions, restrictions or limitations as subject to such conditions, restrictions or limitations as may be specified therein, may be specified therein, — (a) authori (a) authorise any Principal Director General or Director se any Principal Director General or Director General or Principal Director or Director to perform such General or Principal Director or Director to perform such General or Principal Director or Director to perform such functions of any other income functions of any other income-tax authority as may be tax authority as may be assigned to him by the Board; assigned to him by the Board; (b) empower the Principal Director General or Director (b) empower the Principal Director General or Director (b) empower the Principal Director General or Director General General or or Principal P rincipal Chief Chief Commissioner Commissioner or or Chief Chief Commissioner or Principal Commissioner or Commissioner Commissioner or Principal Commissioner or Commissioner Commissioner or Principal Commissioner or Commissioner to issue orders in writing that the powers and functions to issue orders in writing that the powers and functions to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the conferred on, or as the case may be, assigned to, the conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of Assessing Officer by or under this Act in respect of Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes specified area or persons or classes of persons or incomes specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be or classes of income or cases or classes of cases, shall be or classes of income or cases or classes of cases, shall be exercised or performed by an Additional Commissioner or exercised or performed by an Additional Commissioner or exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint an Additional Director or a Joint Commissioner or a Joint an Additional Director or a Joint Commissioner or a Joint Director, and, wher Director, and, where any order is made under this clause, e any order is made under this clause, references in any other provision of this Act, or in any rule references in any other provision of this Act, or in any rule references in any other provision of this Act, or in any rule made thereunder to the Assessing Officer shall be deemed made thereunder to the Assessing Officer shall be deemed made thereunder to the Assessing Officer shall be deemed to be references to such Additional Commissioner or to be references to such Additional Commissioner or to be references to such Additional Commissioner or Additional Director or Joint Commissioner or J Additional Director or Joint Commissioner or Joint Director oint Director

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 21 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

by whom the powers and functions are to be exercised or by whom the powers and functions are to be exercised or by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act performed under such order, and any provision of this Act performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner requiring approval or sanction of the Joint Commissioner requiring approval or sanction of the Joint Commissioner shall not apply." shall not apply." 3.2 Subsequent to the Cadre restructuring of the Inco Subsequent to the Cadre restructuring of the Income Tax me Tax Department in 2001, Addl CIT's/JCIT's were empowered to pass Department in 2001, Addl CIT's/JCIT's were empowered to pass Department in 2001, Addl CIT's/JCIT's were empowered to pass orders U/s 143(3). The assessee has challenged this practice in orders U/s 143(3). The assessee has challenged this practice in orders U/s 143(3). The assessee has challenged this practice in this appeal in its additional ground of appeal. In this connection, it this appeal in its additional ground of appeal. In this connection, it this appeal in its additional ground of appeal. In this connection, it is to be noted that the Board had issued various Noti is to be noted that the Board had issued various Notifications and fications and the Commissioner of Income Tax had issued subsequent the Commissioner of Income Tax had issued subsequent the Commissioner of Income Tax had issued subsequent notifications empowering the Addl CIT/JCIT to exercise all powers notifications empowering the Addl CIT/JCIT to exercise all powers notifications empowering the Addl CIT/JCIT to exercise all powers and functions of the Assessing Officers, in respect of territorial and functions of the Assessing Officers, in respect of territorial and functions of the Assessing Officers, in respect of territorial areas or persons or classes of income or cases or classe areas or persons or classes of income or cases or classes of cases. s of cases. The various notifications are attached as an enclosure and are The various notifications are attached as an enclosure and are The various notifications are attached as an enclosure and are also summarized herein which would leave no doubt that the also summarized herein which would leave no doubt that the also summarized herein which would leave no doubt that the additional ground being raised by the assessee is infructuous ab additional ground being raised by the assessee is infructuous ab additional ground being raised by the assessee is infructuous ab initio. (i) In exercise of its powers U/s 120(1) and 120 In exercise of its powers U/s 120(1) and 120(2) the Board (2) the Board issued Notification in issued Notification in S.O 732(E) dated 31.07.2001 authorizing S.O 732(E) dated 31.07.2001 authorizing the Commissioners of Income Tax to pass jurisdiction orders the Commissioners of Income Tax to pass jurisdiction orders the Commissioners of Income Tax to pass jurisdiction orders assigning jurisdiction to the authorities below. (Page 14 of PB assigning jurisdiction to the authorities below. (Page 14 of PB assigning jurisdiction to the authorities below. (Page 14 of PB-I) (ii) The Commissioners of Income Tax, CIT The Commissioners of Income Tax, CIT-Ill, Mumbai in the i in the instant case, in view of the delegated powers vide above instant case, in view of the delegated powers vide above instant case, in view of the delegated powers vide above Notification, passed order in F.No: MC Notification, passed order in F.No: MC-IlI/JURIS/2001-02 dated 02 dated 01.08.2001 assigning jurisdictions to AddIC'sIT (Addl CIT, Range 01.08.2001 assigning jurisdictions to AddIC'sIT (Addl CIT, Range 01.08.2001 assigning jurisdictions to AddIC'sIT (Addl CIT, Range 3(3) Mumbai)/JC'sIT to exercise the powers and perform all the 3(3) Mumbai)/JC'sIT to exercise the powers and perform all the 3(3) Mumbai)/JC'sIT to exercise the powers and perform all the functions under the Income Tax Act except the functions relating functions under the Income Tax Act except the functions relating functions under the Income Tax Act except the functions relating to deduction and collection of tax at source. (Page 08 of PB to deduction and collection of tax at source. (Page 08 of PB-II) II) (iii) The Board issued another Notification No. 267 /2001 dated The Board issued another Notification No. 267 /2001 dated The Board issued another Notification No. 267 /2001 dated 17.09.2001, in exercise of powers U/s 120(4)(b) directing tha 17.09.2001, in exercise of powers U/s 120(4)(b) directing tha 17.09.2001, in exercise of powers U/s 120(4)(b) directing that the JC'sIT who have been assigned jurisdictions by the respective JC'sIT who have been assigned jurisdictions by the respective JC'sIT who have been assigned jurisdictions by the respective C'sIT in subsequent to Notification No 732(E) dated 31.07.2001 C'sIT in subsequent to Notification No 732(E) dated 31.07.2001 C'sIT in subsequent to Notification No 732(E) dated 31.07.2001 shall exercise the powers and functions of the Assessing Officers shall exercise the powers and functions of the Assessing Officers shall exercise the powers and functions of the Assessing Officers in respect of jurisdiction assigned to them by the respecti in respect of jurisdiction assigned to them by the respective C'sIT. ve C'sIT. (Page 13 of PB- -I) 3.3 Upon plain reading of the above Upon plain reading of the above-mentioned Notifications that mentioned Notifications that have been attached as an enclosure, it is crystal clear that the have been attached as an enclosure, it is crystal clear that the have been attached as an enclosure, it is crystal clear that the legal requirements as envisaged u/s. 120(1), 120(2) and 120(4)(b) legal requirements as envisaged u/s. 120(1), 120(2) and 120(4)(b) legal requirements as envisaged u/s. 120(1), 120(2) and 120(4)(b) of the I.T. Act. were satisfied of the I.T. Act. were satisfied and jurisdiction was conferred on and jurisdiction was conferred on the Addl./Jt. CIT to exercise all powers and perform all functions the Addl./Jt. CIT to exercise all powers and perform all functions the Addl./Jt. CIT to exercise all powers and perform all functions of the Assessing Officer in respect of cases or classes of cases of the Assessing Officer in respect of cases or classes of cases of the Assessing Officer in respect of cases or classes of cases specified. All these Notifications are public documents and widely specified. All these Notifications are public documents and widely specified. All these Notifications are public documents and widely available. It appears t available. It appears that the assessee has omitted to take note of hat the assessee has omitted to take note of the said Notifications and therefore as stated above, it is the said Notifications and therefore as stated above, it is the said Notifications and therefore as stated above, it is

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 22 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

reiterated that the additional ground of appeal being raised is reiterated that the additional ground of appeal being raised is reiterated that the additional ground of appeal being raised is infructuous ab initio and does not merit admittance. infructuous ab initio and does not merit admittance.” 6.2. Thus, the ld DR has opposed 6.2. Thus, the ld DR has opposed the admission the admission of additional for the reasons that, firstly, additional ground has ground mainly for the reasons that , additional ground has been filed with inordinate delay of more than 14 years and that too been filed with inordinate delay of more than 14 years been filed with inordinate delay of more than 14 years without any affidavit explaining the delay, secondly secondly, the additional without any affidavit explaining the delay, ground raised being mixe ground raised being mixed question of law and facts and require d question of law and facts and require examination and investigation of fresh and investigation of fresh facts, which are not available which are not available on record of the Tribunal as well as record on record of the Tribunal as well as record of Assessing officer Assessing officer.

6.3. We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. As regards the issue of admissibility of erial on record. As regards the issue of admissibility of erial on record. As regards the issue of admissibility of the additional ground, it is undisputed that this appeal has been the additional ground, it is undisputed that this appeal has been the additional ground, it is undisputed that this appeal has been filed by the assessee in the year 2004 and the additional ground filed by the assessee in the year 2004 and the additional ground filed by the assessee in the year 2004 and the additional ground has been raised before the Tribunal for the first time in year 2018 has been raised before the Tribunal for the first time in year 201 has been raised before the Tribunal for the first time in year 201 i.e. after a lapse of almost of 14 years. In the additional ground, the i.e. after a lapse of almost of 14 years. In the additional ground, the i.e. after a lapse of almost of 14 years. In the additional ground, the assessee seeks to challenge validity of the jurisdiction of Additional assessee seeks to challenge validity of the jurisdiction of Additional assessee seeks to challenge validity of the jurisdiction of Additional Commissioner of Income Commissioner of Income-tax in passing the assessment order in the tax in passing the assessment order in the capacity of Assessing Officer. The assessee i capacity of Assessing Officer. The assessee is contending that the s contending that the Additional Commissioner of Income Additional Commissioner of Income-tax, who has passed the tax, who has passed the assessment order, was not having authority of law for passing the assessment order, was not having authority of law for passing the assessment order, was not having authority of law for passing the said assessment order. The Revenue is contending that during the said assessment order. The Revenue is contending that during the said assessment order. The Revenue is contending that during the course of the assessment proceedings or in su course of the assessment proceedings or in subsequent appellate bsequent appellate proceedings, the assessee has never objected jurisdiction of the proceedings, the assessee has never objected jurisdiction of the proceedings, the assessee has never objected jurisdiction of the Assessing Officer. The Ld DR submitted that jurisdiction of the Assessing Officer. The Ld DR submitted that jurisdiction of the Assessing Officer. The Ld DR submitted that jurisdiction of the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 23 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

case has been transferred from time to time with the Assessing case has been transferred from time to time with the Assessing case has been transferred from time to time with the Assessing officer as per the prevalent officer as per the prevalent circular/notification issued by the cation issued by the Central Board of Direct Taxes ( Central Board of Direct Taxes (CBDT) and consequent orders and consequent orders passed by the lower authorities and it is difficult to trace all those passed by the lower authorities and it is difficult to trace all those passed by the lower authorities and it is difficult to trace all those orders including administrative orders of their transfer and posting orders including administrative orders of their transfer and posting orders including administrative orders of their transfer and posting after such a long time. Whereas acco after such a long time. Whereas according to the assessee those rding to the assessee those orders passed are part of the records of the assessment, therefore, orders passed are part of the records of the assessment, therefore, orders passed are part of the records of the assessment, therefore, in view of the various decisions cited, the assessee is eligible for in view of the various decisions cited, the assessee is eligible for in view of the various decisions cited, the assessee is eligible for challenging the validity of the jurisdiction of the Assessing Officer at challenging the validity of the jurisdiction of the Assessing Officer at challenging the validity of the jurisdiction of the Assessing Officer at any stage of the appellate proceedings. ppellate proceedings.

6.4 As far as admission of additional ground during appellate As far as admission of additional ground during appellate As far as admission of additional ground during appellate proceedings is concerned is concerned, the Hon’ble Supreme Court in the case of , the Hon’ble Supreme Court in the case of NTPC Ltd. 229 ITR 383(SC) NTPC Ltd. 229 ITR 383(SC) has laid down as under what has laid down as under what circumstances, an additional groun circumstances, an additional ground could be admit d could be admitted before the Tribunal. The judgment of Hon’ble Supreme The judgment of Hon’ble Supreme Court (supra) has been supra) has been followed by the Tribunal in various decisions including the followed by the Tribunal in various decisions including the followed by the Tribunal in various decisions including the decisions relied upon by the parties before us. decisions relied upon by the parties before us. The relevant finding The relevant finding of the Hon’ble Supreme of the Hon’ble Supreme Court (supra) is reproduced as under: ced as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 24 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

assessment proceedings we fail to see why such a question should assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that not be allowed to be raised when it is ne cessary to consider that question in order to correctly assess the tax liability of an assessee. question in order to correctly assess the tax liability of an assessee. question in order to correctly assess the tax liability of an assessee. 6.5 Thus, according to the Hon’ble Supreme Court for admitting according to the Hon’ble Supreme Court for admitting according to the Hon’ble Supreme Court for admitting any additional ground, any additional ground, firstly, the question of law should be , the question of law should be involved in the additional ground involved in the additional ground raised and secondly secondly, the said question of law should arise from the facts which are on record in question of law should arise from the facts which are on record in question of law should arise from the facts which are on record in the assessment proceedings. If investigation or examination of the the assessment proceedings. If investigation or examination of the the assessment proceedings. If investigation or examination of the fresh facts is required for admitting an additional ground, then fresh facts is required for admitting an additional ground, then fresh facts is required for admitting an additional ground, then same may not be admitted by same may not be admitted by the Tribunal. In the case of the Tribunal. In the case of ACIT Vs Stock Traders p Ltd (supra), Stock Traders p Ltd (supra), also identical additional ground also identical additional ground had been raised by the assessee after lapse of substantial period but the been raised by the assessee after lapse of substantial period but the been raised by the assessee after lapse of substantial period but the Tribunal admitted the additional ground in identical circumstances. Tribunal admitted the additional ground in identical circumstances Tribunal admitted the additional ground in identical circumstances For ready reference, , said additional ground raised by concerned raised by concerned assessee and the submission of and the submission of said assessee are are reproduced as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 25 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Additional Commissioner of Income-tax, Special Range Special Range 31. Mumbai (Addl. CIT Mumbai on 22 March 2001. CIT Mumbai on 22 March 2001. We wish to humbly submit that the Addl. CIT Mumbai did submit that the Addl. CIT Mumbai did not have valid authority to perform and exercise authority to perform and exercise the powers and functions of an Assessing Officer, as per powers and functions of an Assessing Officer, as per the provisions of section 2(7A) read with section the provisions of section 2(7A) read with section 120(4)(b) of the Act and therefore, the above- -mentioned assessment order, which has been passed without assessment order, which has been passed without authority of law, shall be treated as bad in law, and be law, and be quashed. In this regard, we wish to place reliance on the decision In this regard, we wish to place reliance on the decision of the Hon'ble Mumbai Bench of the Income Tax of the Hon'ble Mumbai Bench of the Income Tax Appellate Tribunal (Mumbai ITAT) in the case of Tata Appellate Tribunal (Mumbai ITAT) in the case of Tata Sons Ltd v ACIT [2016] 76taxmann.com 126 (Mumbai Sons Ltd v ACIT [2016] 76taxmann.com 126 (Mumbai - Trib.), wherein the Hon'ble Mumbai ITAT held as under: e Mumbai ITAT held as under: .. It is well settled law thatjurisdictional conditions .. It is well settled law thatjurisdictional conditions required to be fulfilled by the Assessing Officer must be required to be fulfilled by the Assessing Officer must be performed strictly in the manner as have been performed strictly in the manner as have been prescribed and if it has not been done in the manner as prescribed and if it has not been done in the manner as prescribed under the aw, then it becomes nullity in the under the aw, then it becomes nullity in the eyes of law. Supreme Court in the case of CIT eyes of law. Supreme Court in the case of CIT v. Anjum M.H. Ghaswala. [2001] 252 ITR 1/119 Taxman ITR 1/119 Taxman 352 ofaseeygettictf it is a normal rule of constructio ofaseeygettictf it is a normal rule of construction that when a statue vests certain powers in an authority t ertain powers in an authority to be exercised in a particular manner, then that authority be exercised in a particular manner, then that authority is bound to exercise it only in the manner provided in is bound to exercise it only in the manner provided in the statute only. It is clear that impugned assessment order has been clear that impugned assessment order has been passed without authority of law inasmuch as revenue of law inasmuch as revenue has not been able to demonstrate that the Additional o demonstrate that the Additional Commissioner of Income tax who had passed the ad passed the assessment order had valid authority to perform and ad valid authority to perform and exercise the powers: and functions of an an Assessing Officer of the assessee and to pass the impugned Officer of the assessee and to pass the impugned assessment Otder. Under these circumstances, the these circumstances, the same is held as nullity and, therefore, the impugned same is held as nullity and, therefore, the impugned assessment order is quashed having been passed assessment order is quashed having been passed without authority of taw." We would also want to refer to the following We would also want to refer to the following observation of the Honble Mumbai ITAT which is observation of the Honble Mumbai ITAT which is relevant for the Appellant's case:: "No order can be sustained in the eyes of law if its "No order can be sustained in the eyes of law if its author does not have requisite sanction of the law. If author does not have requisite sanction of the law. If an order does not possess requisite strength in the an order does not possess requisite strength in the eyes of law and void ab initio, then it will remain so eyes of law and void ab initio, then it will remain so

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 26 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

even if there is acquiescence or participation by the acquiescence or participation by the assessee in the proceedings carried out. by the AO to assessee in the proceedings carried out. by the AO to frame the assessment order. It is well settled law that frame the assessment order. It is well settled law that frame the assessment order. It is well settled law that consent of the assessee cannot confer jurisdiction to an consent of the assessee cannot confer jurisdiction to an assessing officer who lacked jurisdiction under the assessing officer who lacked jurisdiction under the law." A similar view was taken by the Hon'ble Mumbai ITAT A similar view was taken by the Hon'ble Mumbai ITAT in the case of Tata Communication Ltd. (ITANo. in the case of Tata Communication Ltd. (ITANo. 6981/Mum/2005) and Tata Sons Limited (ITA 6981/Mum/2005) and Tata Sons Limited (ITA Nos. 193 & 3745/Murn/2006). Given that the aforesaid decisions were recently Given that the aforesaid decisions were recently pronounced, based on the facts of our case, we hereby f our case, we hereby attempt to file the enclosed additional ground of appeal attempt to file the enclosed additional ground of appeal in the captioned Appeal with a request that this ground in the captioned Appeal with a request that this ground may please be adjudicated by the Hon'ble Bench. may please be adjudicated by the Hon'ble Bench. The additional ground raised herein go to the very root The additional ground raised herein go to the very root of the matter and deal with the very jurisdiction and d deal with the very jurisdiction and authority of the Assessing Officer to pass the authority of the Assessing Officer to pass the assessment order. Therefore, this ground can be assessment order. Therefore, this ground can be admitted in the interest of substantial justice ustice and especially when the same is raised in a bonafide especially when the same is raised in a bonafide manner without indulging in delaying tactics. ng in delaying tactics. Further, the Appellant wishes to place reliance on the Further, the Appellant wishes to place reliance on the following decisions wherein it has been held that the following decisions wherein it has been held that the following decisions wherein it has been held that the additional ground of appeal can be raised if the facts additional ground of appeal can be raised if the facts are on record: • Jute Corporation Of India Limited 187 ITR 688 • Jute Corporation Of India Limited 187 ITR 688 (SC) • National Thermal Power Co. Limited Vs. CIT • National Thermal Power Co. Limited Vs. CIT 229 ITR 383 (SC) • Ahmedabad Electricity Co. Limited 199 ITR • Ahmedabad Electricity Co. Limited 199 ITR 351 (Bom) (FB) • Pruthvi Brokers & Shareholders Pvt Ltd (349 • Pruthvi Brokers & Shareholders Pvt Ltd (349 ITR 336) (Bom) • Ramco Cements Ltd (373 ITR 146) (Mad) • Ramco Cements Ltd (373 ITR 146) (Mad) • Mahindra & Mahindra Ltd (30 SOT3 • Mahindra & Mahindra Ltd (30 SOT374) (Mum SB) In view of the above, we request Your Honours to Honours to kindly admit our additional ground of appeal and kindly admit our additional ground of appeal and oblige by adjudicating the same on merits.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 27 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Sr. No. 1. 30.11.1998 The Appellant filed its return of income for assessment The Appellant filed its return of income for assessment year 1998-99 declaring NIL income. The designation of the income. The designation of the Assessing Officer as mentioned in the said return of Assessing Officer as mentioned in the said return of income was Joint Commissioner of Income tax income was Joint Commissioner of Income tax 2. 15.12.1998 The Appellant's return of income for assessment year The Appellant's return of income for assessment year 1998-99 was selected for scrutiny by issue of notice under 99 was selected for scrutiny by issue of notice under section 143(2) of the Act by the Jt. Commissioner of ction 143(2) of the Act by the Jt. Commissioner of Income-tax (see page 1 of paper book-I). I). 3. 16.08.2000 The Jt. Commissioner of Income-tax issued notice under tax issued notice under section 143(2) and 142(1) of the Act directing the Appellant section 143(2) and 142(1) of the Act directing the Appellant

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 28 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

to produce certain information in c onnection with the assessment for the assessment year 1998 assessment for the assessment year 1998-99(see pages 2 to 4 of paper book-II). 08.03.2001 4. The Addl. Commissioner of Income The Addl. Commissioner of Income-tax passed the assessment order under section 143(3) of the Act assessment order under section 143(3) of the Act determining its total income as per the regular determining its total income as per the regular provisions of the Act at Rs. Nil after allowing set off of brought forward of the Act at Rs. Nil after allowing set off of brought forward losses and book profits under section 115JA of the Act of losses and book profits under section 115JA of the Act of Rs.132,59, 12,000. 5. 22.10.2003 The CIT(A) disposed of the Appellant's appeal against the The CIT(A) disposed of the Appellant's appeal against the assessment order for assessment year 1998 year 1998-99 partly allowing the same. 6. 12.01.2004 Aggrieved by the appellate order of the CIT(A), the Aggrieved by the appellate order of the CIT(A), the Appellant filed an appeal before the Tribunal. Appellant filed an appeal before the Tribunal. 7. 23.07.2018 The Appellant has filed additional grounds before the The Appellant has filed additional grounds before the Tribunal including an application for Tribunal including an application for admission of the same. 8. 24.07.2018 The Appellant filed three letters with the Assessing Officer The Appellant filed three letters with the Assessing Officer 30.08.2018 requesting requesting for for information information in in connection connection with with the the 26.10.2018 additional grounds of appeal. 9. 08.02.2019 The Appellant made its RTI application seek The Appellant made its RTI application seeking information with respect to jurisdiction of the Additional Commissioner with respect to jurisdiction of the Additional Commissioner of Income-tax to pass the assessment order. tax to pass the assessment order. 10. 11.04.2019 The Appellant filed appeal against non The Appellant filed appeal against non-response of RTI application dated 08.02.2019. 7.1 For assailing the assessment orde For assailing the assessment order passed by the Additional r passed by the Additional Commissioner of Income Commissioner of Income-tax, before us, the Ld. Counsel tax, before us, the Ld. Counsel for the assessee firstly, referred to section 2(7A) of the Act , which has , referred to section 2(7A) of the Act , which has , referred to section 2(7A) of the Act , which has been amended by the Finance Act, 2007 with retrospective effect been amended by the Finance Act, 2007 with retrospective effect been amended by the Finance Act, 2007 with retrospective effect from 01.06.1994 and the Addl. CIT h from 01.06.1994 and the Addl. CIT has been defined to be an as been defined to be an Assessing Officer under under section 2(7A) r.w.s. 120(4)(b) of the Act to section 2(7A) r.w.s. 120(4)(b) of the Act to exercise or perform all or any of the powers or functions conferred exercise or perform all or any of the powers or functions conferred exercise or perform all or any of the powers or functions conferred on or assigned to an Assessing Officer under the Act. The Ld. on or assigned to an Assessing Officer under the Act. The Ld. on or assigned to an Assessing Officer under the Act. The Ld. Counsel submitted that as per s Counsel submitted that as per section 120(4)(b) of the Act, the ection 120(4)(b) of the Act, the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 29 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

CBDT has to issue a CBDT has to issue an order authorising the Director General of rising the Director General of Income-tax (DGIT) or Chief Commissioner of Income tax (DGIT) or Chief Commissioner of Income tax (DGIT) or Chief Commissioner of Income-tax (CCIT) or Commissioner of Income Commissioner of Income-tax (CIT) to issue an order in the writing tax (CIT) to issue an order in the writing that the powers and functions that the powers and functions confirmed on or assigned to the confirmed on or assigned to the Assessing Officer under this Act shall be exercised or performed by Assessing Officer under this Act shall be exercised or performed by Assessing Officer under this Act shall be exercised or performed by the Addl. Commissioner of Income the Addl. Commissioner of Income-tax. The Ld. Counsel submitted tax. The Ld. Counsel submitted that in the case of the assessee that in the case of the assessee, there was neither any order from neither any order from the CBDT to the concerne the CBDT to the concerned DGIT/CCIT/CIT nor order has been d DGIT/CCIT/CIT nor order has been issued from the said authority to assign jurisdiction to the issued from the said authority to assign jurisdiction to the issued from the said authority to assign jurisdiction to the Additional Commissioner of Income Additional Commissioner of Income-tax for exercising jurisdiction tax for exercising jurisdiction as an Assessing Officer and in absence thereof, the assessment as an Assessing Officer and in absence thereof, the assessment as an Assessing Officer and in absence thereof, the assessment order passed by the Additional order passed by the Additional Commissioner of Income Commissioner of Income-tax is illegal and bad in law. The Ld. Counsel submitted that the assessee illegal and bad in law. The Ld. Counsel submitted that the assessee illegal and bad in law. The Ld. Counsel submitted that the assessee has time and again vide letter dated 24.07.2018, 30.08.2018 and has time and again vide letter dated 24.07.2018, 30.08.2018 and has time and again vide letter dated 24.07.2018, 30.08.2018 and 26.10.2018 requested the Assessing Officer for providing details of 26.10.2018 requested the Assessing Officer for providing details of 26.10.2018 requested the Assessing Officer for providing details of jurisdiction orders passed jurisdiction orders passed by CBDT and subordinate authorities by CBDT and subordinate authorities and also filed an application on 08.02.2019 under the Right to and also filed an application on 08.02.2019 under the Right to and also filed an application on 08.02.2019 under the Right to Information Act, 2005 (RTI). However, same was not responded and Information Act, 2005 (RTI). However, same was not responded and Information Act, 2005 (RTI). However, same was not responded and the assessee preferred appeal under the RTI Act before the Pr. Chief the assessee preferred appeal under the RTI Act before the Pr. Chief the assessee preferred appeal under the RTI Act before the Pr. Chief Commissioner of Income Commissioner of Income-tax. The Ld counsel submitted that tax. The Ld counsel submitted that despite efforts made on the part of the assessee, no information in despite efforts made on the part of the assessee, no information in despite efforts made on the part of the assessee, no information in respect of jurisdiction acquired by the Addl. CIT has been provided respect of jurisdiction acquired by the Addl. CIT has been provided respect of jurisdiction acquired by the Addl. CIT has been provided to the assessee ,therefore it to the assessee ,therefore it is presumed to the assessee ,therefore it is is presumed that no presumed that that no such no such such authorization/transfer of jur authorization/transfer of jurisdiction exist in favour of the Addl. isdiction exist in favour of the Addl.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 30 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Commissioner of Income Commissioner of Income-tax. In view thereof, it might be held that tax. In view thereof, it might be held that the assessment order has been passed by him without any valid the assessment order has been passed by him without the assessment order has been passed by him without jurisdiction. The Ld. Counsel has raised the validity of jurisdiction, jurisdiction. The Ld. Counsel has raised the validity of jurisdiction, jurisdiction. The Ld. Counsel has raised the validity of jurisdiction, secondly, on the ground that no order u/s 127 of the Act has been ground that no order u/s 127 of the Act has been ground that no order u/s 127 of the Act has been passed by the Commissioner of Income passed by the Commissioner of Income-tax for transfer of tax for transfer of jurisdiction of case from Joint Commissioner of Income from Joint Commissioner of Income-tax to the from Joint Commissioner of Income Addl. Commissioner of Income Addl. Commissioner of Income-tax. In support thereof, the Ld. tax. In support thereof, the Ld. Counsel relied on foll Counsel relied on following decisions:

i. Tata Sons Ltd. vs. ACIT (AY 2001 Tata Sons Ltd. vs. ACIT (AY 2001-02) (2016) (162 ITD 02) (2016) (162 ITD 450) (AY 2001 450) (AY 2001 - 02) (MUM - TRI) (see para 3.24 to TRI) (see para 3.24 to 3.40 on Pg No. 155 to 160c of Caselaw Paper book); 3.40 on Pg No. 155 to 160c of Caselaw Paper book); 3.40 on Pg No. 155 to 160c of Caselaw Paper book); ii. Tata Communication Ltd. vs. ACIT (AY 2002-03) in Tata Communication Ltd. vs. ACIT (AY 2002 Tata Communication Ltd. vs. ACIT (AY 2002 ITA No.7071/Mum/2005 and 1108/Mum/2008 by its ITA No.7071/Mum/2005 and 1108/Mum/20 ITA No.7071/Mum/2005 and 1108/Mum/20 order dated 30.06.2017 (see para 13 to 18 on Pg No. order dated 30.06.2017 (see para 13 to 18 on Pg No. order dated 30.06.2017 (see para 13 to 18 on Pg No. 177 to 207 of Caselaw Paper book); 177 to 207 of Caselaw Paper book); iii. Tata Sons Ltd. vs. ACIT (AY 2002 Tata Sons Ltd. vs. ACIT (AY 2002-03) in ITA Nos. 193 03) in ITA Nos. 193 and and and 3745 3745 3745 /Mum/2006 /Mum/2006 /Mum/2006 vide vide vide its its its order order order dated dated dated 27.11.2017 (see para 18 on Pg No. 119 to 139 of 27.11.2017 (see para 18 on Pg No. 119 to 139 of 27.11.2017 (see para 18 on Pg No. 119 to 139 of Caselaw Paper book Caselaw Paper book) iv. iv. Tata Sons Ltd. vs. ACIT (AY 2004 iv. Tata Sons Ltd. vs. ACIT (AY 2004-05) in ITA No. 05) in ITA No. 2639/Mum/2009 vide its order dated 11.03.2019 2639/Mum/2009 vide its order dated 11.03.2019 2639/Mum/2009 vide its order dated 11.03.2019 (see para 2 (see para 2-3 & 5.1 on Pg No. 211 to 212 & 235 3 & 5.1 on Pg No. 211 to 212 & 235 respectively of Caselaw Paper book) respectively of Caselaw Paper book) v. Tata Communication Ltd vs. ACIT (AY 2003-04 and Tata Communication Ltd vs. ACIT (AY 2003 Tata Communication Ltd vs. ACIT (AY 2003 AY 2004 AY 2004-05) (ITA No.3972/Mum/2007) | dated Mum/2007) | dated 16.08.2019 (see para 6 and 6.1 on Pg No. 253 to 276 16.08.2019 (see para 6 and 6.1 on Pg No. 253 to 276 16.08.2019 (see para 6 and 6.1 on Pg No. 253 to 276 of Caselaw Paper book) of Caselaw Paper book) vi. Tata Sons Ltd vs. ACIT (AY 2005-06)(ITA No Tata Sons Ltd vs. ACIT (AY 2005 Tata Sons Ltd vs. ACIT (AY 2005 5090/Mum/2012) dated 16.08.2019 (see para 7 on Pg 5090/Mum/2012) dated 16.08.2019 (see para 7 on Pg 5090/Mum/2012) dated 16.08.2019 (see para 7 on Pg No. 282 to 295 of Caselaw Paper book) No. 282 to 295 of Caselaw Paper book) 7.2 The Ld. Counsel The Ld. Counsel for the assessee further relied on the decision ssee further relied on the decision of the Co-ordinate ordinate ordinate Bench Bench Bench of of of the the the Tribunal Tribunal Tribunal in in in ITA ITA ITA No. No. No.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 31 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

1975/Mum/2014 and ITA No. 1771/Mum/2015 for assessment 1975/Mum/2014 and ITA No. 1771/Mum/2015 for assessment 1975/Mum/2014 and ITA No. 1771/Mum/2015 for assessment year 2010-11 in the case of 11 in the case of M/s Vertiv Energy Pvt. Ltd M/s Vertiv Energy Pvt. Ltd., wherein the Tribunal has further relied on the Co the Tribunal has further relied on the Co-ordinate Bench of the te Bench of the Tribunal in the case of Tata Sons Ltd. (supra). Tribunal in the case of Tata Sons Ltd. (supra).

7.3 In view of the above submission In view of the above submissions, the learned counsel , the learned counsel for the assessee submitted that the Additional Commissioner of Income-tax assessee submitted that the Additional Commissioner of Income assessee submitted that the Additional Commissioner of Income had no authority to act as an Assessing Officer had no authority to act as an Assessing Officer for the ass the assessee and pass the impugned assessment order pass the impugned assessment order.

The learned departmental representative (DR) firstly, referred 7.4 The learned departmental representative (DR) The learned departmental representative (DR) to provision of section 124(3) of the Act which to provision of section 124(3) of the Act which inter inter-alia prescribe that no person shall be entitled to call in question the jurisdiction of that no person shall be entitled to call in question the jurisdiction of that no person shall be entitled to call in question the jurisdiction of an Assessing Officer beyond the prescribed time limit of 30 days of n Assessing Officer beyond the prescribed time limit of 30 days of n Assessing Officer beyond the prescribed time limit of 30 days of issue of notice u/s 143(2) of the Act and the final authority on such issue of notice u/s 143(2) of the Act and the final authority on such issue of notice u/s 143(2) of the Act and the final authority on such issue of jurisdiction shall be of the Director issue of jurisdiction shall be of the Director-general of Income general of Income-tax or Chief Commissioner of Income Chief Commissioner of Income-tax or Commissioner of Income r of Income-tax. He submitted that the assessee did not raise this issue of validity of He submitted that the assessee did not raise this issue of validity of He submitted that the assessee did not raise this issue of validity of jurisdiction of the Additional CIT within the prescribed time period jurisdiction of the Additional CIT within the prescribed time period jurisdiction of the Additional CIT within the prescribed time period before the Assessing Officer and therefore it should not be allowed before the Assessing Officer and therefore it should not be allowed before the Assessing Officer and therefore it should not be allowed to raise the issue at any later to raise the issue at any later stage. The ld DR relied on the decision The ld DR relied on the decision of Hon’ble Supreme Court in the case of DCIT(exemption) vs DCIT(exemption) vs of Hon’ble Supreme Court in the case of Kalinga Institute of Industrial Technology reported in (2023) Kalinga Institute of Industrial Technology reported in (2023) Kalinga Institute of Industrial Technology reported in (2023) 151 taxmann.com 434 (SC) 151 taxmann.com 434 (SC).

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 32 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

7.5 Secondly, the Ld. DR submitted that in the , the Ld. DR submitted that in the case, case, no change of jurisdiction is involved. The Ld. DR submitted that the assessment urisdiction is involved. The Ld. DR submitted that the assessment urisdiction is involved. The Ld. DR submitted that the assessment in the case is of the era of pre restructuring in the Income is of the era of pre restructuring in the Income-tax is of the era of pre restructuring in the Income Department i.e. prior to 1/08/2001. He submitted that prior to Department i.e. prior to 1/08/2001. He submitted that prior to Department i.e. prior to 1/08/2001. He submitted that prior to restructuring in the year 2001, the ‘Charge’ of the Commissioner of restructuring in the year 2001, the ‘Charge’ of the Commission restructuring in the year 2001, the ‘Charge’ of the Commission Income-tax was comprised of units namely ‘Ranges’ and ‘Special comprised of units namely ‘Ranges’ and ‘Special comprised of units namely ‘Ranges’ and ‘Special Ranges’. Until, 23/12/1998, the officers heading the ‘Ranges’ and Ranges’. Until, 23/12/1998, the officers heading the ‘Ranges’ and Ranges’. Until, 23/12/1998, the officers heading the ‘Ranges’ and ‘Special Ranges’, were designated as ‘Special Ranges’, were designated as Deputy commissioner of Deputy commissioner of Income-tax (DCIT). . During relevant time, the jurisdiction ove he jurisdiction over taxpayers below a threshold returned income a threshold returned income ( say Rs. 25 lakhs) ( say Rs. 25 lakhs) under the charge of a a Commissioner of Income-tax, was assigned to ‘Range’ ( which was called as regular Range) ch was called as regular Range), whereas cases having , whereas cases having returned income above above that threshold value were assigne were assigned to ‘Special Ranges’. The ‘Range’ was further used to be comprised of . The ‘Range’ was further used to be comprised of . The ‘Range’ was further used to be comprised of units namely ‘Circles’ and ‘Wards’. The ‘Circles were headed by units namely ‘Circles’ and ‘Wards’. The ‘Circles were headed by units namely ‘Circles’ and ‘Wards’. The ‘Circles were headed by officers of the rank of the officers of the rank of the Asst Commissioner of Income Asst Commissioner of Income-tax (ACIT), whereas wards were being he , whereas wards were being headed by the officer in the by the officer in the rank of Income-tax Officer Officer (ITO). The jurisdiction of the ‘Range’ having The jurisdiction of the ‘Range’ having pecuniary limit of returned income pecuniary limit of returned income, say from ₹ 2 lakh to 25 lakhs 2 lakh to 25 lakhs was assigned to the Asst Commissioner of income-tax (ACIT), was assigned to the Asst Commissioner of income was assigned to the Asst Commissioner of income whereas the cases of the ‘Range’, below the pecuniary limit of say ₹ whereas the cases of the ‘Range’, below the pecuniary limit of whereas the cases of the ‘Range’, below the pecuniary limit of 2 lakhs were divided amongst the ‘Wards’. In this structure, the were divided amongst the ‘Wards’. In this structure, the were divided amongst the ‘Wards’. In this structure, the regular ‘Range officer’ was not acting as regular ‘Range officer’ was not acting as Assessing Officer and only Assessing Officer and only

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 33 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the ‘Special Range’ DCIT was acting as the ‘Special Range’ DCIT was acting as an Assessing Officer, along Assessing Officer, along with ACIT and ITO.

7.7 The Ld. DR referred to Circler The Ld. DR referred to Circler No. 772 dated 772 dated 23.12.1998 issued by the CBDT issued by the CBDT, wherein the post of Dy. Commissioner Dy. Commissioner of Income-tax (DCIT) was tax (DCIT) was re-designated as Joint Commissioner of designated as Joint Commissioner of Income-tax (JCIT) with effect from 1 with effect from 1st day of October, 1998 day of October, 1998. Thus in the case of the assessee, the first notice issued under section 143(2) the case of the assessee, the first notice issued under section 143(2) the case of the assessee, the first notice issued under section 143(2) on 15/12/1998 is having designation of Joint Commissioner of is having designation of Joint Commissioner of is having designation of Joint Commissioner of Income-tax, special range cial range-32, Mumbai. The assessee has not 32, Mumbai. The assessee has not disputed the jurisdiction of disputed the jurisdiction of Joint Commissioner of I Joint Commissioner of Income-tax, special range-32, Mumbai at any point of time even in assessment 32, Mumbai at any point of time even in assessment 32, Mumbai at any point of time even in assessment years prior to to assessment assessment year 98-99. 99. The The same same Joint Joint Commissioner of Income ncome-tax issued further notices s under section 143(2) and 142(1) of the Act to the assessee 143(2) and 142(1) of the Act to the assessee in the year under in the year under consideration. The jurisdiction of the Assessing Officer in issuing . The jurisdiction of the Assessing Officer in issuing . The jurisdiction of the Assessing Officer in issuing those notices has also not been disputed by the assessee. those notices has also not been disputed by the assessee. those notices has also not been disputed by the assessee.

7.8 The learned departmental repr ed departmental representative further submitted urther submitted that, a section 2(28C) of the Act that, a section 2(28C) of the Act has been inserted by way of inserted by way of Finance, 1998 w.e.f. 01.10.1998 which defined that “Joint Finance, 1998 w.e.f. 01.10.1998 which defined that “Joint Finance, 1998 w.e.f. 01.10.1998 which defined that “Joint Commissioner” means a person appointed to be ‘Joint Commissioner” means a person appointed to Commissioner” means a person appointed to Commissioner of Income Commissioner of Income-tax’ or ‘Addl. Commissioner Addl. Commissioner of Income-tax’ u/s 117(1) of the Act. The Ld. DR submitted u/s 117(1) of the Act. The Ld. DR submitted that that in the case of assessee, initial notices u/s 143(2) and 142(1) were issued by the initial notices u/s 143(2) and 142(1) were issued by the initial notices u/s 143(2) and 142(1) were issued by the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 34 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Officer namely sh R K Goyal, who was acting as Joint Officer namely sh R K Goyal, who was acting as Joint Officer namely sh R K Goyal, who was acting as Joint Commissioner of Income Commissioner of Income-tax, Special Range 32, Mumbai. He tax, Special Range 32, Mumbai. He further submitted that somewhere be somewhere between 16/08/2000 and 8/3/2001, S tween 16/08/2000 and 8/3/2001, Sh ‘R.K. Goyal’ must have been promoted to non ‘R.K. Goyal’ must have been promoted to non-functional grad functional grade and was elevated to the Additional Commissioner of Income-tax post was elevated to the Additional Commissioner of Income was elevated to the Additional Commissioner of Income and accordingly his designation got changed to Additional and accordingly his designation got changed to Additional and accordingly his designation got changed to Additional Commissioner of Income Commissioner of Income-tax, Special Range 32, Mumbai. So there tax, Special Range 32, Mumbai. So there was no ‘dejure’ Change in status and therefore, officer issuing Change in status and therefore, officer issuing Change in status and therefore, officer issuing 143(2) notice and passing the assessment order are one and the 143(2) notice and passing the assessment order are one and the 143(2) notice and passing the assessment order are one and the same.

7.9 The Ld. DR further relied on The Ld. DR further relied on decision of the Hon’ble the Hon’ble Allahabad High Court in the case of Arun Kumar Maheshwari v. ITO [2006] Arun Kumar Maheshwari v. ITO [2006] High Court in the case of 285 ITR 179 (Allahabad) 285 ITR 179 (Allahabad) wherein the Hon’ble Court has wherein the Hon’ble Court has considered the section 2(28C) of the Act where the term ‘Joint considered the section 2(28C) of the Act where the term considered the section 2(28C) of the Act where the term Commissioner of Income Commissioner of Income-tax’ has been defined to include has been defined to include ‘Addl Commissioner of Income sioner of Income-tax’. Thus, according to the Ld. DR, the according to the Ld. DR, the assessee has not challenged the jurisdiction of the Joint assessee has not challenged the jurisdiction of the Joint assessee has not challenged the jurisdiction of the Joint Commissioner of Income Commissioner of Income-tax of Special Range 32 and as per section tax of Special Range 32 and as per section 2(28C) of the Joint Commissioner of Income 2(28C) of the Joint Commissioner of Income-tax include the Addl tax include the Addl Commissioner of Income er of Income-tax also and since in the case same officer tax also and since in the case same officer has been promoted to the post of Additional Commissioner of has been promoted to the post of Additional Commissioner of has been promoted to the post of Additional Commissioner of Income-tax and thus, thus, there was no change of jurisdiction. there was no change of jurisdiction.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 35 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

7.10. Thirdly , the learned department representative further , the learned department representative further , the learned department representative further submitted that the decisions cited by the assessee in the case of decisions cited by the assessee in the case of decisions cited by the assessee in the case of Tata Sons Ltd.(supra) and Tata Communication Ltd. (supra) relates Tata Sons Ltd.(supra) and Tata Communication Ltd. (supra) relates Tata Sons Ltd.(supra) and Tata Communication Ltd. (supra) relates to the era of the post re to the era of the post re-structuring in the Department wherein structuring in the Department wherein ‘Special Range’ had been had been abolished and the cases of special ranges abolished and the cases of special ranges were redistributed ributed among respective ‘ranges’ working under working under concerned Commissioner of Income concerned Commissioner of Income-tax, further to be distributed , further to be distributed among Assistant/ Deputy Commissioner of Income-tax ( unit among Assistant/ Deputy Commissioner of Income among Assistant/ Deputy Commissioner of Income namely ‘Circle’) and ITO ( Unit namely ) and ITO ( Unit namely ‘ward’), depending on the depending on the pecuniary limit of return of income filed. turn of income filed. The Joint Commissioner of The Joint Commissioner of Income-tax /Additional Commissioner of Income tax /Additional Commissioner of Income- -tax, who were heading the ranges, were , were given concurrent jurisdiction of Assessing given concurrent jurisdiction of Assessing Officer over all the cases under their Ranges, however, certain cases all the cases under their Ranges, however, certain cases all the cases under their Ranges, however, certain cases were assigned to them them for completing scrutiny proceedings by them. for completing scrutiny proceedings by them. In the case of Tata Sons Ltd.(supra) and Tata Communication Ltd. In the case of Tata Sons Ltd.(supra) and Tata Communication Ltd. In the case of Tata Sons Ltd.(supra) and Tata Communication Ltd. (supra), the matter under challenge was jurisdiction acquired by the (supra), the matter under challenge was jurisdiction (supra), the matter under challenge was jurisdiction Joint/ Additional Commissioner of Income Joint/ Additional Commissioner of Income-tax, Range tax, Range for passing the assessment order he assessment order under the capacity of concurrent jurisdiction under the capacity of concurrent jurisdiction. The Ld DR submitted that according to the assessee this transfer The Ld DR submitted that according to the assessee this transfer The Ld DR submitted that according to the assessee this transfer should have been by way of order u/s 127 of the Act by the should have been by way of order u/s 127 of the Act by the should have been by way of order u/s 127 of the Act by the Commissioner of Income Commissioner of Income-tax, whereas, according to the Revenue, according to the Revenue, the relevant Range officer i.e. JCIT/Addl. CIT was already having e relevant Range officer i.e. JCIT/Addl. CIT was already having e relevant Range officer i.e. JCIT/Addl. CIT was already having concurrent jurisdiction over the cases and assignment of the cases concurrent jurisdiction over the cases and assignment of the cases concurrent jurisdiction over the cases and assignment of the cases by the CIT to him/her was by the CIT to him/her was a formal procedure for transparency in formal procedure for transparency in

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 36 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

distribution of the work. distribution of the work. The Ld DR submitted that The Ld DR submitted that the issue in dispute involved in the case cited by the assessee is different and dispute involved in the case cited by the assessee is different and dispute involved in the case cited by the assessee is different and therefore ratio of those cases cannot be applied over the facts of the therefore ratio of those cases cannot be applied over the facts of the therefore ratio of those cases cannot be applied over the facts of the instant assessment year. instant assessment year.

7.11 The ld DR referred to CBDT notification No. 228/2001 dated The ld DR referred to CBDT notification No. 228/2001 dated The ld DR referred to CBDT notification No. 228/2001 dated 31/07/2001 and notifica 31/07/2001 and notification No. 267/2001 dated 17/09/2001 tion No. 267/2001 dated 17/09/2001 cited in the decision of cited in the decision of Tata Sons Ltd (supra), which have been Ltd (supra), which have been issued under section 120(4)(b) of the Act and submitted that same issued under section 120(4)(b) of the Act and submitted that same issued under section 120(4)(b) of the Act and submitted that same pertain to distribution of jurisdiction pertain to distribution of jurisdiction in post-restructuring restructuring era and thus, not related to the question of jurisdiction raised in the year the question of jurisdiction raised in the year under consideration. under consideration.

7.12 In rejoinder, the learned counsel referred to the notification In rejoinder, the learned counsel referred to the notification In rejoinder, the learned counsel referred to the notification No. 228/2001 dated 31/07/2001 and notification No. 267/2001 No. 228/2001 dated 31/07/2001 and notification No. 267/2001 No. 228/2001 dated 31/07/2001 and notification No. 267/2001 dated 17/09/2001 relied upon by the learned departmental dated 17/09/2001 relied upon by the learned departmental dated 17/09/2001 relied upon by the learned departmental representative and submitted that contention of the learned DR that representative and submitted that contention of the learned DR that representative and submitted that contention of the learned DR that said notifications would satisfy the requirement of section 120(4)(b) said notifications would satisfy the requirement of section 120(4)(b) said notifications would satisfy the requirement of section 120(4)(b) of the Act is not correct. He submitted that a mere perusal of the of the Act is not correct. He submitted that a mere perusal of the of the Act is not correct. He submitted that a mere perusal of the said notifications shows that same were not concerned with the said notifications shows that same were not concern said notifications shows that same were not concern Additional Commissioner of income Additional Commissioner of income-tax and dealt only with the tax and dealt only with the subject relating to Joint Commissioner of income subject relating to Joint Commissioner of income- -tax. He further submitted that said notification has been considered by the submitted that said notification has been considered by the submitted that said notification has been considered by the Tribunal in its lead order in the case of Tata Sons Ltd reported in Tribunal in its lead order in the case of Tata Sons Ltd r Tribunal in its lead order in the case of Tata Sons Ltd r (2016) 76 Taxman.com 126 (supra). The learned counsel submitted (2016) 76 Taxman.com 126 (supra). The learned counsel submitted (2016) 76 Taxman.com 126 (supra). The learned counsel submitted

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 37 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

that Revenue has not brought on record any order or notification that Revenue has not brought on record any order or notification that Revenue has not brought on record any order or notification issued by the Commissioner of income the Commissioner of income-tax authorising the authorising the Additional Commissioner of Income Additional Commissioner of Income-tax for acting as an Asse tax for acting as an Assessing Officer.

7.13 The learned counsel The learned counsel for the assessee, on the argument of ld on the argument of ld DR of not raising the issue of jurisdiction before the AO within the raising the issue of jurisdiction before the AO within the raising the issue of jurisdiction before the AO within the period of 30 days of issue of notice u/s 143(2) of the Act, responded period of 30 days of issue of notice u/s 143(2) of the Act period of 30 days of issue of notice u/s 143(2) of the Act that section 124 of the Act deals wi that section 124 of the Act deals with a completely distinct scenario. th a completely distinct scenario. According to him under the section 124 of the Act, an Assessing According to him under the section 124 of the Act, an Assessing According to him under the section 124 of the Act, an Assessing Officer who has been vested with jurisdiction of any area, shall Officer who has been vested with jurisdiction of any area, shall Officer who has been vested with jurisdiction of any area, shall exercise such jurisdiction within the limits of such area in respect exercise such jurisdiction within the limits of such area in respect exercise such jurisdiction within the limits of such area in respect of a specified categori of a specified categories of person and it is only when a question es of person and it is only when a question arises with respect to which Assessing Officer would exercise arises with respect to which Assessing Officer would exercise arises with respect to which Assessing Officer would exercise jurisdiction of a particular jurisdiction of a particular area, the section 124 would apply in section 124 would apply in those circumstances. He submitted that in the present case the those circumstances. He submitted that in the present case the those circumstances. He submitted that in the present case the issue involved is tha issue involved is that the Additional Commissioner of income t the Additional Commissioner of income-tax had no inherent jurisdiction or inherent jurisdiction or authority to act as an Assessing authority to act as an Assessing Officer. He submitted that this issue has already been considered Officer. He submitted that this issue has already been considered Officer. He submitted that this issue has already been considered by the Tribunal in the case of Tata sons ltd (supra). by the Tribunal in the case of Tata sons ltd (supra).

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 38 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

consideration has been issued by the Jo consideration has been issued by the Joint Commissioner of int Commissioner of income-tax, Special Range 32, Mumbai. The said jurisdiction has tax, Special Range 32, Mumbai. The said jurisdiction has tax, Special Range 32, Mumbai. The said jurisdiction has not been disputed by the assessee. The assessee is disputing only not been disputed by the assessee. The assessee is disputing only not been disputed by the assessee. The assessee is disputing only the assessment order passed by Additional Commissioner of the assessment order passed by Additional Commissioner of the assessment order passed by Additional Commissioner of Income-tax, Special Range 32. According to the tax, Special Range 32. According to the tax, Special Range 32. According to the assessee, for assignment of jurisdiction to the Additional ment of jurisdiction to the Additional CIT,range CIT,range -32, Mumbai, the CBDT should have issued a notification and in compliance the CBDT should have issued a notification and in compliance the CBDT should have issued a notification and in compliance thereof Chief Commissioner of Income thereof Chief Commissioner of Income-tax or Director General of tax or Director General of Income-tax or Commissioner of Income tax or Commissioner of Income-tax should h tax should have passed order for assigning jurisdiction to the Addl. CIT. In our opinion, the order for assigning jurisdiction to the Addl. CIT. In our opinion, the order for assigning jurisdiction to the Addl. CIT. In our opinion, the contentions of the Ld. Counsel of the assessee are without contentions of the Ld. Counsel of the assessee are without contentions of the Ld. Counsel of the assessee are without understanding understanding understanding the the the structure structure structure of of of the the the Department. Department. Department. Prior Prior Prior to to to restructuring of the Department, the cases having returned income restructuring of the Department, the cases having returned restructuring of the Department, the cases having returned more than particular returned income , which according to the ld more than particular returned income , which according to the ld more than particular returned income , which according to the ld DR was of Rs 25 lakhs, under particular charge of Commissioner of DR was of Rs 25 lakhs, under particular charge of Commissioner DR was of Rs 25 lakhs, under particular charge of Commissioner Income-tax used to be tax used to be assigned to the Special Range(s). The case of assigned to the Special Range(s). The case of the assessee was continued to be assessed unde the assessee was continued to be assessed under th r the Unit Special Range-32. The said Unit was earlier being headed by the officer 32. The said Unit was earlier being headed by the officer 32. The said Unit was earlier being headed by the officer having designated as DCIT Special Range , but in view of change of having designated as DCIT Special Range , but in view of change of having designated as DCIT Special Range , but in view of change of designation by way Circular No. 772 dated 23/12/1998, i.e. Circular No. 772 dated 23/12/1998, i.e. Circular No. 772 dated 23/12/1998, i.e. cited by the ld DR, the post of , the post of ‘Deputy Commissioner of Income r of Income-tax’ was re-designated designated as as ‘Joint Joint Commissioner Commissioner of of Income-tax’ Income and consequently the Special Range consequently the Special Range-32, Mumbai was re 32, Mumbai was re-designated from Deputy Commissioner of Income from Deputy Commissioner of Income-tax , special Range tax , special Range -32 to

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 39 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Joint Commissioner of Income Joint Commissioner of Income-tax, special Range-32 and u 32 and under the said authority , notices u/s 143(2) and 142(1) of the Act have been said authority , notices u/s 143(2) and 142(1) of the Act have been said authority , notices u/s 143(2) and 142(1) of the Act have been issued by the Joint Commissio issued by the Joint Commissioner of Income-tax Special Range tax Special Range-32 as an Assessing Officer. Till that point of time, the assessee was not Assessing Officer. Till that point of time, the assessee was not Assessing Officer. Till that point of time, the assessee was not having any objection regarding the authority having any objection regarding the authority of the Assessing of the Assessing officer.

8.1 By way of Finance Act, 1998 w.e.f. 01.10.1998 by way of section By way of Finance Act, 1998 w.e.f. 01.10.1998 by way of section By way of Finance Act, 1998 w.e.f. 01.10.1998 by way of section 2(28C) the Joint Commissioner of Income 2(28C) the Joint Commissioner of Income-tax has been defined to tax has been defined to be a person appointed to be a Joint Commissioner of Income-tax or be a person appointed to be a Joint Commissioner of Income be a person appointed to be a Joint Commissioner of Income Additional Commissioner of In Additional Commissioner of Income-tax under sub tax under sub-section (1) of section 117 of the Act. The Ld. DR has pointed out before us that section 117 of the Act. The Ld. DR has pointed out before us that section 117 of the Act. The Ld. DR has pointed out before us that the same officer was working as Joint Commissioner of Income-tax the same officer was working as Joint Commissioner of Income the same officer was working as Joint Commissioner of Income and on his promotion by way of non and on his promotion by way of non-functional selection grade, he functional selection grade, he was elevated to the post was elevated to the post of Additional Commissioner of Income of Additional Commissioner of Income-tax and therefore the Assessing Officer became the Additional and therefore the Assessing Officer became the Additional and therefore the Assessing Officer became the Additional Commissioner of Income Commissioner of Income-tax, Special Range 32. Since, as per the tax, Special Range 32. Since, as per the provisions of section 2(28C) of the Act, the Joint Commissioner of provisions of section 2(28C) of the Act, the Joint Commissioner of provisions of section 2(28C) of the Act, the Joint Commissioner of Income-tax means a person tax means a person appointed to be as Joint Commissioner appointed to be as Joint Commissioner of Income-tax or Additional Commissioner of Income tax or Additional Commissioner of Income-tax, therefore, tax or Additional Commissioner of Income he continued on the same post heading the Special Range-32 as the he continued on the same post heading the Special Range he continued on the same post heading the Special Range Assessing Officer and there was no change in the jurisdiction of the Assessing Officer and there was no change in the jurisdiction of the Assessing Officer and there was no change in the jurisdiction of the Assessing Officer in the case of the assessee. Further, regarding the r in the case of the assessee. Further, regarding the r in the case of the assessee. Further, regarding the submission of Ld. Counsel submission of Ld. Counsel for the assessee that no order u/s 127 the assessee that no order u/s 127

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 40 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

of the Act has been issued for transfer of jurisdiction from Joint of the Act has been issued for transfer of jurisdiction from Joint of the Act has been issued for transfer of jurisdiction from Joint Commissioner of Income Commissioner of Income-tax to the Additional Commissioner of tax to the Additional Commissioner of Income-tax, we are of opinion that in view of the above discussion, ax, we are of opinion that in view of the above discussion, ax, we are of opinion that in view of the above discussion, there was no requirement of issue of order u/s 127 of the Act by the there was no requirement of issue of order u/s 127 of the Act by the there was no requirement of issue of order u/s 127 of the Act by the Commissioner of Income Commissioner of Income-tax as no transfer of the case from one tax as no transfer of the case from one jurisdiction to another jurisdiction was involved and the case jurisdiction to another jurisdiction was involved and the case jurisdiction to another jurisdiction was involved and the case remained in the same jurisdiction. The decision in the cases of Tata emained in the same jurisdiction. The decision in the cases of Tata emained in the same jurisdiction. The decision in the cases of Tata Sons Ltd (supra) and Tata Communications Ltd (supra) relate to the Sons Ltd (supra) and Tata Communications Ltd (supra) relate to the Sons Ltd (supra) and Tata Communications Ltd (supra) relate to the period of post restructuring in the I d of post restructuring in the Income-tax department i.e. tax department i.e. 1/08/2001 , wherein cases were transferred to the Range Officer for 1/08/2001 , wherein cases were transferred to the Range Of 1/08/2001 , wherein cases were transferred to the Range Of completing assessment, and the assessment order passed by the completing assessment, and the assessment order passed by the completing assessment, and the assessment order passed by the Additional CIT range have been held as without authority of law. Additional CIT range have been held as without authority of law. Additional CIT range have been held as without authority of law. The other arguments whether there was no compliance by the The other arguments whether there was no compliance by the The other arguments whether there was no compliance by the assessee of section 124(3) of the Act i.e. not raising the issue of assessee of section 124(3) of the Act i.e. not raising the i assessee of section 124(3) of the Act i.e. not raising the i jurisdiction before the AO within the period of 30 days of issue of jurisdiction before the AO within the period of 30 days of issue of jurisdiction before the AO within the period of 30 days of issue of notice u/s 143(2) of the Act, are rendered merely academic; hence notice u/s 143(2) of the Act, are rendered merely academic; hence notice u/s 143(2) of the Act, are rendered merely academic; hence we are not commenting on the same. we are not commenting on the same.

8.2 In view of the above discussion, we reject the contention of the In view of the above discussion, we reject the contention of the In view of the above discussion, we reject the contention of the In the case of stock Traders Ld. Counsel for the assessee the assessee. Further, In the case of p ltd (supra) , in absence of no cogent basis fo in absence of no cogent basis for challenging the r challenging the authority of Additional Commissioner of Income dditional Commissioner of Income-tax Act in passing tax Act in passing the assessment order, the additional ground raised by the assessee the assessment order, the additional ground raised by the assess the assessment order, the additional ground raised by the assess has been dismissed by the Tribunal observing as under: has been dismissed by the Tribunal observing as under: has been dismissed by the Tribunal observing as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 41 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

“20. In this case, the only reason for the assessee's allegation In this case, the only reason for the assessee's allegation In this case, the only reason for the assessee's allegation that the above provisions are not complied with is that the that the above provisions are not complied with is that the that the above provisions are not complied with is that the notice u/s. 143(2) was notice u/s. 143(2) was issued by the ACIT. However, the by the ACIT. However, the assessment order assessment order has been passed by the Addl. CIT the Addl. CIT. We note that the assessment order was passed on that the assessment order was passed on 22.03.2001 22.03.2001 since then the assessee has got no information whatsoever then the assessee has got no information whatsoever then the assessee has got no information whatsoever and it has never ever had reason to challenge the jurisdiction of the never ever had reason to challenge the jurisdiction of the never ever had reason to challenge the jurisdiction of the Assessing Officer in this case. Ho Assessing Officer in this case. However, suddenly on wever, suddenly on 13.04.2018, the 13.04.2018, the assessee has filed an additional ground that assessee has filed an additional ground that the Assessing Officer in this case did not have any jurisdiction. the Assessing Officer in this case did not have any jurisdiction. the Assessing Officer in this case did not have any jurisdiction. We note that there is no information in the possession of the We note that there is no information in the possession of the We note that there is no information in the possession of the assessee that the internal procedure of the depa assessee that the internal procedure of the depa assessee that the internal procedure of the department regarding the transfer and posting of officers has not been regarding the transfer and posting of officers has not been regarding the transfer and posting of officers has not been complied with. The assessee in this case after a lapse of 15 complied with. The assessee in this case after a lapse of 15 complied with. The assessee in this case after a lapse of 15 years is years is making a wild guess. In our considered opinion, there making a wild guess. In our considered opinion, there is no cogent reason to accede to this request of the Id. Counsel is no cogent reason to accede to this request of the Id. Counsel is no cogent reason to accede to this request of the Id. Counsel of the assessee. The laws referred by the Id. Counsel of the of the assessee. The laws referred by the Id. Counsel of the of the assessee. The laws referred by the Id. Counsel of the assessee were rendered on assessee were rendered on the facts of those cases where the the facts of those cases where the bench upon the facts has gone into bench upon the facts has gone into the specifics and the specifics and particulars of that case. In the present case, we have already particulars of that case. In the present case, we have already particulars of that case. In the present case, we have already held the assessee' held the assessee's assertion after 15 years has no cogent s assertion after 15 years has no cogent basis whatsoever. Hence, we are unable to accept the whatsoever. Hence, we are unable to accept the whatsoever. Hence, we are unable to accept the assessee's request that assessee's request that the assessment deserves to be the assessment deserves to be quashed insamuch as the Assessing quashed insamuch as the Assessing Officer did not have the Officer did not have the authority of law. Hence, the additional ground authority of law. Hence, the additional ground raised by the ised by the assessee stands dismissed assessee stands dismissed.” 8.3 Before us also, the Ld. CIT DR has submitted that though the the Ld. CIT DR has submitted that though the the Ld. CIT DR has submitted that though the notices issued under section 143(2) of the A ed under section 143(2) of the Act are available on the ct are available on the assessment record but the relevant assessment record but the relevant notifications authorising the notifications authorising the Additional Commissio sioner of Income tax as Assessing Officer ncome tax as Assessing Officer or the order of elevation of the Joint Commissioner to the post of order of elevation of the Joint Commissioner to the post of order of elevation of the Joint Commissioner to the post of Additional Commissioner of Income Additional Commissioner of Income-tax are not available on are not available on assessment record because same assessment record because same were part of administrative part of administrative procedure and therefore procedure and therefore were not placed on the assessment record. not placed on the assessment record. He submitted that despite making despite making thorough search of all record of search of all record of the relevant authorities, those notifications the relevant authorities, those notifications / promotion orders / promotion orders could not be traced after a lapse of substantial period of more than could not be traced after a lapse of substantial period of more than could not be traced after a lapse of substantial period of more than

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 42 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

14 years. We find that in the case of hat in the case of Stock Traders P Ltd (supra), Stock Traders P Ltd (supra), the assessee had placed reliance on the decision of the Tribunal in the assessee had placed reliance on the decision of the Tribunal in the assessee had placed reliance on the decision of the Tribunal in the case of Tata Sons Ltd (supra) and Tata communication limited the case of Tata Sons Ltd (supra) and Tata communi the case of Tata Sons Ltd (supra) and Tata communi (supra) but the Tribunal after considering the submission of the ribunal after considering the submission of the ribunal after considering the submission of the parties, rejected the additional ground challenging the authority of rejected the additional ground challenging the authority of rejected the additional ground challenging the authority of the Additional Commissioner of income dditional Commissioner of income-tax , in passing the tax , in passing the assessment order. Thus assessment order. Thus, respectfully following the finding of the y following the finding of the Tribunal in the case of Stock Traders ribunal in the case of Stock Traders P Ltd (supra), we dismiss the (supra), we dismiss the additional ground raised by the assessee. itional ground raised by the assessee.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 43 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

submitted that levy collected being in the nature of a Capital submitted that levy collected being in the nature of a Capital submitted that levy collected being in the nature of a Capital receipt, it was not taxable in for the purpose of income-tax. receipt, it was not taxable in for the purpose of income receipt, it was not taxable in for the purpose of income

9.1 On the other hand, the Ld. DR submitted On the other hand, the Ld. DR submitted that issue in dispute that issue in dispute is decided against the assessee by the Tribunal in assessee’s own is decided against the assessee by the Tribunal in assessee’s own is decided against the assessee by the Tribunal in assessee’s own case for assessment year 1997 case for assessment year 1997-98 in ITA No. 4071/Mum/2001 98 in ITA No. 4071/Mum/2001 dated 05.04.2007 and dated 05.04.2007 and further appeal filed by the assessee is appeal filed by the assessee is pending before the Hon’ble High Court. pending before the Hon’ble High Court.

9.2. In the rejoinder, the Ld Counsel submitted that identical issue he rejoinder, the Ld Counsel submitted that identical issue he rejoinder, the Ld Counsel submitted that identical issue of levy of de-commissioning levy has been decided by the commissioning levy has been decided by the commissioning levy has been decided by the Tribunal in ITA No. 843/mum/2003 in ITA No. 843/mum/2003 for AY 1992-93 in favour of the assessee in favour of the assessee , which has been further upheld by the Hon’ble Bombay High Court , which has been further upheld by the Hon’ble Bombay High Court , which has been further upheld by the Hon’ble Bombay High Court vide ITA No. 1002 of 2016. No. 1002 of 2016.

9.3 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the issue in dispute is squarely covered by the decision of the Co- the issue in dispute is squarely covered by the decision of the Co the issue in dispute is squarely covered by the decision of the Co ordinate Bench of Tribunal of Tribunal in the case of the assessee assessee in ITA No. 4071/Mum/2001 for assessment year 1997 for assessment year 1997-98. The relevant part of The relevant part of the decision is reproduced as under: the decision is reproduced as under:

“14. We have heard the parties and considered their rival 14. We have heard the parties and considered their rival 14. We have heard the parties and considered their rival submissions including the authorities referred to by them. submissions including the authorities referred to by them. submissions including the authorities referred to by them. Following facts emerge on perusal of each Notification: Following facts emerge on perusal of each Notification: Following facts emerge on perusal of each Notification: A. Facts emerging on perusal of the first Notification: A. Facts emerging on perusal of the first Notification: A. Facts emerging on perusal of the first Notification:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 44 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

(1) Both the levies authorized by the Government were to be (1) Both the levies authorized by the Government were to be (1) Both the levies authorized by the Government were to be included in the tariff fixed by the assessee from its included in the tariff fixed by the assessee from its included in the tariff fixed by the assessee from its customersand were therefore c customersand were therefore collected as part of the overall ollected as part of the overall tariff. (2) The assessee was not required to part with the levies so (2) The assessee was not required to part with the levies so (2) The assessee was not required to part with the levies so collected in favour of the Government. In fact, the levies, collected in favour of the Government. In fact, the levies, collected in favour of the Government. In fact, the levies, after their collection, were to be retained by the assessee. after their collection, were to be retained by the assessee. after their collection, were to be retained by the assessee. (3) Both the levies were intended (3) Both the levies were intended to generate financial to generate financial resources to enable the assessee to use and apply them for resources to enable the assessee to use and apply them for resources to enable the assessee to use and apply them for meeting its expenditure on notified activities. meeting its expenditure on notified activities. (4) None of the levies collected by the assessee was (4) None of the levies collected by the assessee was (4) None of the levies collected by the assessee was intended to be passed over or was actually passed over to intended to be passed over or was actually passed over to intended to be passed over or was actually passed over to the Government. the Government. Both the levies were collected and retained Both the levies were collected and retained by the assessee. What the Notification provided was the by the assessee. What the Notification provided was the by the assessee. What the Notification provided was the manner in which the levies would be used by the assessee. manner in which the levies would be used by the assessee. manner in which the levies would be used by the assessee. B. Facts emerging on perusal of the second Notification: B. Facts emerging on perusal of the second Notification: B. Facts emerging on perusal of the second Notification: (1) Under the second Notification, both t (1) Under the second Notification, both the levies authorized he levies authorized by the Government were to be recovered in the tariff fixed by the Government were to be recovered in the tariff fixed by the Government were to be recovered in the tariff fixed by the assessee from its customers. In the earlier by the assessee from its customers. In the earlier by the assessee from its customers. In the earlier Notification, what was provided was that they would be Notification, what was provided was that they would be Notification, what was provided was that they would be included in the tariff. included in the tariff. (2) In the second Notification also, the asses (2) In the second Notification also, the assessee was not see was not required to part with the levies so collected in favour of the required to part with the levies so collected in favour of the required to part with the levies so collected in favour of the Government. In fact, the levies, after their collection, were to Government. In fact, the levies, after their collection, were to Government. In fact, the levies, after their collection, were to be retained by the assessee. be retained by the assessee. (3) The second Notification did not alter the fact that both (3) The second Notification did not alter the fact that both (3) The second Notification did not alter the fact that both the levies were intended t the levies were intended to generate financial resources to o generate financial resources to enable the assessee to use and apply them for meeting its enable the assessee to use and apply them for meeting its enable the assessee to use and apply them for meeting its expenditure. expenditure. (4) Second Notification also did not alter the position that (4) Second Notification also did not alter the position that (4) Second Notification also did not alter the position that none of the levies collected by the assessee would be none of the levies collected by the assessee would be none of the levies collected by the assessee would be passed over or was actually passed o passed over or was actually passed over to the ver to the Government. Both the levies were collected and retained by Government. Both the levies were collected and retained by Government. Both the levies were collected and retained by

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 45 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the assessee for its use. What the second Notification the assessee for its use. What the second Notification the assessee for its use. What the second Notification provided was the manner in which the levies would be used provided was the manner in which the levies would be used provided was the manner in which the levies would be used by the assessee for its own purposes. by the assessee for its own purposes. (5) Second Notification specificall (5) Second Notification specifically provided that both the y provided that both the levies would not form part of the tariff or sales income in the levies would not form part of the tariff or sales income in the levies would not form part of the tariff or sales income in the hands of the assessee. In other words, a distinction was hands of the assessee. In other words, a distinction was hands of the assessee. In other words, a distinction was created between the tariff forming part of sales income and created between the tariff forming part of sales income and created between the tariff forming part of sales income and the levies, which were declared to be not forming the levies, which were declared to be not forming part of the the levies, which were declared to be not forming part of the tariff or sales income of the assessee. The fact however tariff or sales income of the assessee. The fact however tariff or sales income of the assessee. The fact however remains that the levies were required to be collected along remains that the levies were required to be collected along remains that the levies were required to be collected along with tariff though under a separate head. Notwithstanding with tariff though under a separate head. Notwithstanding with tariff though under a separate head. Notwithstanding the stipulation in the second Notification that the levies the stipulation in the second Notification that the levies the stipulation in the second Notification that the levies would not form part of sales income of the assessee, the form part of sales income of the assessee, the form part of sales income of the assessee, the assessee was to retain the levies collected and use the assessee was to retain the levies collected and use the assessee was to retain the levies collected and use the same for the purposes of meeting its own capital and same for the purposes of meeting its own capital and same for the purposes of meeting its own capital and revenue expenditure on notified activities. revenue expenditure on notified activities. 15. On the factual matrix of the case, the assessee has 15. On the factual matrix of the case, the assessee has 15. On the factual matrix of the case, the assessee has all along been claiming that the income by way of levies stood along been claiming that the income by way of levies stood along been claiming that the income by way of levies stood diverted at source by an overriding title in favour of the diverted at source by an overriding title in favour of the diverted at source by an overriding title in favour of the Government and hence was not taxable. The assessing Government and hence was not taxable. The assessing Government and hence was not taxable. The assessing officer and the learned first appellate authority have officer and the learned first appellate authority have officer and the learned first appellate authority have however rejected the afores however rejected the aforesaid submission. Both of them aid submission. Both of them have held that it is a case of application of income and not have held that it is a case of application of income and not have held that it is a case of application of income and not of diversion of income at source. It is the correctness of the of diversion of income at source. It is the correctness of the of diversion of income at source. It is the correctness of the aforesaid finding, which is the subject aforesaid finding, which is the subject-matter of the present matter of the present appeal. Sometimes, a portion of the incom appeal. Sometimes, a portion of the income arising out of e arising out of the corpus held by the assessee is consumed at the source the corpus held by the assessee is consumed at the source the corpus held by the assessee is consumed at the source itself for the purpose of meeting some recurring or non itself for the purpose of meeting some recurring or non itself for the purpose of meeting some recurring or non- recurring expenditure arising out of an obligation imposed recurring expenditure arising out of an obligation imposed recurring expenditure arising out of an obligation imposed on the assessee by contract or by statute or by the law of on the assessee by contract or by statute or by the law of on the assessee by contract or by statute or by the law of the land. In such cases, a question arises whether such d. In such cases, a question arises whether such d. In such cases, a question arises whether such portion of the income so consumed or expended is to be portion of the income so consumed or expended is to be portion of the income so consumed or expended is to be treated as income assessable to tax in the hands of the treated as income assessable to tax in the hands of the treated as income assessable to tax in the hands of the assessee. The answer is that if the income before it reaches assessee. The answer is that if the income before it reaches assessee. The answer is that if the income before it reaches the hands of the assessee is divert the hands of the assessee is diverted away by superior title ed away by superior title so that the assessee, when he receives the income, has to so that the assessee, when he receives the income, has to so that the assessee, when he receives the income, has to pass it on to a third party, the portion passed on, or is liable pass it on to a third party, the portion passed on, or is liable pass it on to a third party, the portion passed on, or is liable to be passed on, is not the income of the assessee but of the to be passed on, is not the income of the assessee but of the to be passed on, is not the income of the assessee but of the person to whom it is passed on or is liable t person to whom it is passed on or is liable to be passed on. o be passed on.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 46 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

In cases of diversion of income, it is the existence of In cases of diversion of income, it is the existence of In cases of diversion of income, it is the existence of superior title which not only deprives the assessee of his superior title which not only deprives the assessee of his superior title which not only deprives the assessee of his title to the income but also requires him to part with the title to the income but also requires him to part with the title to the income but also requires him to part with the same in favour of a A third party as the assessee in receipt same in favour of a A third party as the assessee in receipt same in favour of a A third party as the assessee in receipt of the income would be receiving it both on behalf of himself e income would be receiving it both on behalf of himself e income would be receiving it both on behalf of himself and the third party by virtue of the overriding title and not and the third party by virtue of the overriding title and not and the third party by virtue of the overriding title and not exclusively for himself. In cases of diversion of income, the exclusively for himself. In cases of diversion of income, the exclusively for himself. In cases of diversion of income, the income does not accrue to the assessee at all; it, in fact, income does not accrue to the assessee at all; it, in fact, income does not accrue to the assessee at all; it, in fact, accrues to the accrues to the third party in that the destination of income third party in that the destination of income is not towards the assessee in whose hands the money is is not towards the assessee in whose hands the money is is not towards the assessee in whose hands the money is placed but towards a third party in whose favour and for placed but towards a third party in whose favour and for placed but towards a third party in whose favour and for whose benefit the title is created. Resultantly, the assessee, whose benefit the title is created. Resultantly, the assessee, whose benefit the title is created. Resultantly, the assessee, after the income stands diverted a after the income stands diverted at source by a superior t source by a superior title to a third party, would no longer be concerned with that title to a third party, would no longer be concerned with that title to a third party, would no longer be concerned with that income. 16. In Sitaldas Tirathdas' case (supra), a part of income 16. In Sitaldas Tirathdas' case (supra), a part of income 16. In Sitaldas Tirathdas' case (supra), a part of income from property paid as maintenance allowance to the from property paid as maintenance allowance to the from property paid as maintenance allowance to the dependants under a decree of the court, without the dependants under a decree of the court, without the dependants under a decree of the court, without the maintenance allowance being charged upon the property aintenance allowance being charged upon the property aintenance allowance being charged upon the property yielding income, was held to be a case of application of yielding income, was held to be a case of application of yielding income, was held to be a case of application of income. In Sijua (Jharriah) Electric Supply Co. Ltd.'s case income. In Sijua (Jharriah) Electric Supply Co. Ltd.'s case income. In Sijua (Jharriah) Electric Supply Co. Ltd.'s case (supra) the Hon'ble High Court has considered the judgment (supra) the Hon'ble High Court has considered the judgment (supra) the Hon'ble High Court has considered the judgment in Sitaldas Tirathdas' case in Sitaldas Tirathdas' case (supra) and held as under : (supra) and held as under : The concept of real income or diversion of income by an The concept of real income or diversion of income by an The concept of real income or diversion of income by an overriding title was explained by Hidayatullah, J. in the overriding title was explained by Hidayatullah, J. in the overriding title was explained by Hidayatullah, J. in the case of Sitaldas Tirathdas (supra) at pages 374 case of Sitaldas Tirathdas (supra) at pages 374-375 : 375 : In our opinion, the true test is whether the amount sought In our opinion, the true test is whether the amount sought In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his be deducted, in truth, never reached the assessee as his be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it income. Obligations, no doubt, there are in every case, but it income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the D decisive fact. is the nature of the obligation which is the D decisive fact. is the nature of the obligation which is the D decisive fact. There is a difference between an amount which a person is There is a difference between an amount which a person is There is a difference between an amount which a person is obliged to ap obliged to apply out of his income and an amount which by ply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the nature of the obligation cannot be said to be a part of the nature of the obligation cannot be said to be a part of the income of the assessee. Whereby the obligation income the income of the assessee. Whereby the obligation income the income of the assessee. Whereby the obligation income is diverted before it reaches the assessee, it is deductible; is diverted before it reaches the assessee, it is deductible; is diverted before it reaches the assessee, it is deductible; but where the income is require but where the income is required to be applied to discharge d to be applied to discharge an obligation after such income reaches the assessee, the an obligation after such income reaches the assessee, the an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first same consequence, in law, does not follow. It is the first same consequence, in law, does not follow. It is the first

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 47 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

kind of payment which can truly be excused and not the kind of payment which can truly be excused and not the kind of payment which can truly be excused and not the second. The second payment is merely an obligation to p second. The second payment is merely an obligation to p second. The second payment is merely an obligation to pay another a portion of one's own income, which has been another a portion of one's own income, which has been another a portion of one's own income, which has been received and is since applied. The first is case in which the received and is since applied. The first is case in which the received and is since applied. The first is case in which the income never reaches the assessee, who even if he were to income never reaches the assessee, who even if he were to income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on collect it, does so, not as part of his income, but for and on collect it, does so, not as part of his income, but for and on behalf of the pe behalf of the person to whom it is payable. If this test is applied, it will be seen that there has been no If this test is applied, it will be seen that there has been no If this test is applied, it will be seen that there has been no diversion of income by an overriding title at all. The amount diversion of income by an overriding title at all. The amount diversion of income by an overriding title at all. The amount appropriated to the contingencies reserve was collected by appropriated to the contingencies reserve was collected by appropriated to the contingencies reserve was collected by the assessee as its revenue from sale of el the assessee as its revenue from sale of electricity. The ectricity. The amount remained at the disposal of the assessee and for amount remained at the disposal of the assessee and for amount remained at the disposal of the assessee and for the benefit of the assessee. It could be used only for a few the benefit of the assessee. It could be used only for a few the benefit of the assessee. It could be used only for a few specified purposes but the purposes for which the fund specified purposes but the purposes for which the fund specified purposes but the purposes for which the fund could be used were all business purposes of the assessee could be used were all business purposes of the assessee could be used were all business purposes of the assessee- company. company. Payment Pay ment of of compensation compensation to to workers, workers, replacement of plant and machinery or other expenditure replacement of plant and machinery or other expenditure replacement of plant and machinery or other expenditure envisaged in para V, which we have set out earlier, are all envisaged in para V, which we have set out earlier, are all envisaged in para V, which we have set out earlier, are all normal business expenditure of a company. This is not a normal business expenditure of a company. This is not a normal business expenditure of a company. This is not a case of diversion of income before it reaches the a case of diversion of income before it reaches the a case of diversion of income before it reaches the assessee, but only a case of setting apart of a portion of the but only a case of setting apart of a portion of the but only a case of setting apart of a portion of the assessee's income under compulsion of law for the use and assessee's income under compulsion of law for the use and assessee's income under compulsion of law for the use and benefit of the assessee although the mode and the objects benefit of the assessee although the mode and the objects benefit of the assessee although the mode and the objects of the expenditure are statutorily restricted. of the expenditure are statutorily restricted. 17. In Vibhuti Glass Works 'cas 17. In Vibhuti Glass Works 'case (supra) referred to by the e (supra) referred to by the learned Commissioner (Appeals)in his order, the assessee learned Commissioner (Appeals)in his order, the assessee learned Commissioner (Appeals)in his order, the assessee was under a financial crisis. In a package offinancial was under a financial crisis. In a package offinancial was under a financial crisis. In a package offinancial assistance, the Industrial Finance Corporation agreed to assistance, the Industrial Finance Corporation agreed to assistance, the Industrial Finance Corporation agreed to grantloan of Rs. 20 lakhs to the assessee provided the grantloan of Rs. 20 lakhs to the assessee provided the grantloan of Rs. 20 lakhs to the assessee provided the State Government guaranteed the repayment and also te Government guaranteed the repayment and also te Government guaranteed the repayment and also allowed the Industrial Finance Corporation to have first allowed the Industrial Finance Corporation to have first allowed the Industrial Finance Corporation to have first charge under the mortgage deeds. The State Government charge under the mortgage deeds. The State Government charge under the mortgage deeds. The State Government agreed to do so provided the assessee transferred its agreed to do so provided the assessee transferred its agreed to do so provided the assessee transferred its business to the State Government to manage business to the State Government to manage and run the and run the same. Under the Agreement, the State Government was same. Under the Agreement, the State Government was same. Under the Agreement, the State Government was entitled to 50 per cent of the profits. The assessee entitled to 50 per cent of the profits. The assessee entitled to 50 per cent of the profits. The assessee contended that the profits earned from the glass factory contended that the profits earned from the glass factory contended that the profits earned from the glass factory was not assessable in its hands but in the hands of the was not assessable in its hands but in the hands of the was not assessable in its hands but in the hands of the Government which was runni Government which was running and managing the said ng and managing the said

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 48 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

business. It was alternatively contended that only 50 per business. It was alternatively contended that only 50 per business. It was alternatively contended that only 50 per cent of the profits could be assessed in the hands of the cent of the profits could be assessed in the hands of the cent of the profits could be assessed in the hands of the assessee. Rejecting both the aforesaid submissions, the assessee. Rejecting both the aforesaid submissions, the assessee. Rejecting both the aforesaid submissions, the Hon'ble Supreme Court has held that income earned from Hon'ble Supreme Court has held that income earned from Hon'ble Supreme Court has held that income earned from that business accrued to the assessee directly which was business accrued to the assessee directly which was business accrued to the assessee directly which was merely applied by the State Government to discharge the merely applied by the State Government to discharge the merely applied by the State Government to discharge the obligations of the assessee. obligations of the assessee. 18. On perusal of catena of decisions on the subject, it 18. On perusal of catena of decisions on the subject, it 18. On perusal of catena of decisions on the subject, it transpires that, inorder to constitute diversion of income at transpires that, inorder to constitute diversion of income at transpires that, inorder to constitute diversion of income at source source source by by by overriding overriding overriding title title title following following following facts facts facts must must must be be be established: (i) There must be income arising out of the corpus held by (i) There must be income arising out of the corpus held by (i) There must be income arising out of the corpus held by the assessee; the assessee; (ii) A portion of the income so generated must be charged to (ii) A portion of the income so generated must be charged to (ii) A portion of the income so generated must be charged to the source itself by an overriding title in favour of a t the source itself by an overriding title in favour of a t the source itself by an overriding title in favour of a third party or, in other words, the obligation must attach to the party or, in other words, the obligation must attach to the party or, in other words, the obligation must attach to the source of income in that the income itself should not accrue source of income in that the income itself should not accrue source of income in that the income itself should not accrue to the receiver and not to the receiver of the income to apply to the receiver and not to the receiver of the income to apply to the receiver and not to the receiver of the income to apply it in a particular manner; it in a particular manner; (iii) The income so charged must be pass (iii) The income so charged must be passed on or is required ed on or is required to be passed or, in other words, is required to be diverted in to be passed or, in other words, is required to be diverted in to be passed or, in other words, is required to be diverted in favour of a third party before it reaches the assessee; and favour of a third party before it reaches the assessee; and favour of a third party before it reaches the assessee; and (iv) The assessee, after the income stands diverted at (iv) The assessee, after the income stands diverted at (iv) The assessee, after the income stands diverted at source by a superior title, is no longer concerned with t source by a superior title, is no longer concerned with t source by a superior title, is no longer concerned with that income or, in other words, the assessee must be completely income or, in other words, the assessee must be completely income or, in other words, the assessee must be completely divested of any kind of dominion over the income. divested of any kind of dominion over the income. 19. Applying the aforesaid tests to the facts of the case 19. Applying the aforesaid tests to the facts of the case 19. Applying the aforesaid tests to the facts of the case before us, it is seen that the assessee was entitled to collect before us, it is seen that the assessee was entitled to collect before us, it is seen that the assessee was entitled to collect and recover the levie and recover the levies from its customers during the course s from its customers during the course of its business. The income by way of levies thus accrued to of its business. The income by way of levies thus accrued to of its business. The income by way of levies thus accrued to the assessee in its own right. The levies so collected were the assessee in its own right. The levies so collected were the assessee in its own right. The levies so collected were not only retained by the assessee but were also available to not only retained by the assessee but were also available to not only retained by the assessee but were also available to it for use and application for meet it for use and application for meeting its own expenses. The ing its own expenses. The Notifications issued by the Government simply enabled the Notifications issued by the Government simply enabled the Notifications issued by the Government simply enabled the assessee to raise the resources for meeting its own assessee to raise the resources for meeting its own assessee to raise the resources for meeting its own

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 49 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

expenses. They gave the authority to the assessee to collect expenses. They gave the authority to the assessee to collect expenses. They gave the authority to the assessee to collect the levies, which it had no authority to collect in the the levies, which it had no authority to collect in the the levies, which it had no authority to collect in the absence of the A aforesaid Notifications. The levies were ence of the A aforesaid Notifications. The levies were ence of the A aforesaid Notifications. The levies were neither required to be diverted at source nor were actually neither required to be diverted at source nor were actually neither required to be diverted at source nor were actually diverted at source in favour of any third party. Second diverted at source in favour of any third party. Second diverted at source in favour of any third party. Second Notification issued by the Government simply regulated the Notification issued by the Government simply regulated the Notification issued by the Government simply regulated the application and utilizatio application and utilization of funds. The fact that the n of funds. The fact that the reserve was created in terms of the Notification issued by reserve was created in terms of the Notification issued by reserve was created in terms of the Notification issued by the department of Atomic Energy is not really of any the department of Atomic Energy is not really of any the department of Atomic Energy is not really of any consequence. If an assessee sets apart a sum of money consequence. If an assessee sets apart a sum of money consequence. If an assessee sets apart a sum of money every year to a reserve, it cannot be said that the sum so every year to a reserve, it cannot be said that the sum so every year to a reserve, it cannot be said that the sum so set apart has been diverted at source by an overriding title. et apart has been diverted at source by an overriding title. et apart has been diverted at source by an overriding title. Similarly, if a sum is set apart under compulsion of a Similarly, if a sum is set apart under compulsion of a Similarly, if a sum is set apart under compulsion of a Notification issued by the Government, diversion of income Notification issued by the Government, diversion of income Notification issued by the Government, diversion of income at source by an overriding title does not take place. Both the at source by an overriding title does not take place. Both the at source by an overriding title does not take place. Both the levies collected a levies collected and the reserve created belonged to the nd the reserve created belonged to the assessee-com com-pany; the assessee-company had title to the company had title to the fund, dominion over the fund and also the use of the fund. fund, dominion over the fund and also the use of the fund. fund, dominion over the fund and also the use of the fund. In these circumstances, it cannot be said that there has In these circumstances, it cannot be said that there has In these circumstances, it cannot be said that there has been any diversion of income at source by an been any diversion of income at source by an overriding title overriding title from the assessee from the assessee-company or that the amount that has company or that the amount that has been appropriated to the fund does not form part of the real been appropriated to the fund does not form part of the real been appropriated to the fund does not form part of the real income of the assessee. On the facts of the case, we are in income of the assessee. On the facts of the case, we are in income of the assessee. On the facts of the case, we are in agreement with the well agreement with the well-reasoned order of the learned reasoned order of the learned Commissioner (Appeals) that it is a case of application of ner (Appeals) that it is a case of application of ner (Appeals) that it is a case of application of income and not of diversion of income at source. We income and not of diversion of income at source. We income and not of diversion of income at source. We therefore endorse his order. therefore endorse his order. 20. We have also considered the submission of the 20. We have also considered the submission of the 20. We have also considered the submission of the assessee that the assessee that the assessing officer has himself accepted assessing officer has himself accepted that there was div that there was diversion of title atpage 6 of the assessment ersion of title atpage 6 of the assessment order. We find that the assessing officer has made the order. We find that the assessing officer has made the order. We find that the assessing officer has made the aforesaid observation in the context of decommissioning aforesaid observation in the context of decommissioning aforesaid observation in the context of decommissioning charges and not in the context of the impugned levies. charges and not in the context of the impugned levies. charges and not in the context of the impugned levies. 21. The alternative plea of the assessee that t 21. The alternative plea of the assessee that the impugned he impugned levies are in the levies are in the nature of capital receipts has been dealt nature of capital receipts has been dealt with by the learned Commissioner (Appeals) in Para15 of with by the learned Commissioner (Appeals) in Para15 of with by the learned Commissioner (Appeals) in Para15 of his order. In order to constitute capital receipt, the receipt his order. In order to constitute capital receipt, the receipt his order. In order to constitute capital receipt, the receipt should be traceable to loss of capital. The assessee has not traceable to loss of capital. The assessee has not traceable to loss of capital. The assessee has not collected the levies ected the levies against loss of capital. They were against loss of capital. They were

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 50 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

included and collected along with the included and collected along with the tariff in the ordinary tariff in the ordinary course of business. Once they have been so collected, their course of business. Once they have been so collected, their course of business. Once they have been so collected, their ultimate destination or application will not change their ultimate destination or application will not change their ultimate destination or application will not change their character from being busi from being business receipts to capital receipts. In ness receipts to capital receipts. In our view, the Commissioner (Appeals) has our view, the Commissioner (Appeals) has correctly held correctly held that the impugned receipts were not capital receipts. We that the impugned receipts were not capital receipts. We that the impugned receipts were not capital receipts. We endorse his order. endorse his order. 22. We have considered all the submissions made including 22. We have considered all the submissions made including 22. We have considered all the submissions made including the judicial authorities ref authorities referred to by the parties though we erred to by the parties though we have not individually have not individually commented upon them as the decision commented upon them as the decision in the present case has turned essentially on facts. in the present case has turned essentially on facts. in the present case has turned essentially on facts. 23. In view of the foregoing, Ground Nos. 1 to 4 taken by 23. In view of the foregoing, Ground Nos. 1 to 4 taken by 23. In view of the foregoing, Ground Nos. 1 to 4 taken by the assessee are dismissed. the assessee are dismissed.” 9.4 Since the issue of de Since the issue of de-commissioning levy being different from mmissioning levy being different from the present levy of Renovation and modernization, which is the present levy of Renovation and modernization, which is the present levy of Renovation and modernization, which is covered against the assessee, thus covered against the assessee, thus, to maintain judicial to maintain judicial discipline, we are not following the discipline, we are not following the precedent in the case of de in the case of de- commissioning levy and commissioning levy and prefer to follow the the finding of the Tribunal (supra (supra) on issue of renovation and modernization levy renovation and modernization levy only. 9.5 We also note that that the assessee in assessment years i.e. 2004 assessment years i.e. 2004- 05, 2005-06 and 2006 06 and 2006-07 has admitted the collection of 07 has admitted the collection of different levies as its income and claimed d vies as its income and claimed ded eduction on the same for the purpose of section 80 e for the purpose of section 80IA of the A IA of the Act. Once the assessee itself assessee itself has admitted the receipt as income in admitted the receipt as income in subsequent years, we do not find any justification on the part subsequent years, we do not find any justification on the part subsequent years, we do not find any justification on the part of the assessee in contesting those receipt of the assessee in contesting those receipts as not taxable. as not taxable.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 51 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

9.6 In view of aforesaid discussion, t ew of aforesaid discussion, the ground Nos. 1 and 2 of the Nos. 1 and 2 of the appeal of the assessee are accordingly dismissed. appeal of the assessee are accordingly dismissed. appeal of the assessee are accordingly dismissed.

10.1 Before us, the L Before us, the Ld. Counsel of the assessee fairly agreed . Counsel of the assessee fairly agreed that the issue in dispute is covered against the issue in dispute is covered against the assessee the assessee by the Co- ordinate Bench of the Tribunal in ITA No. 4071/Mum/2001. The ordinate Bench of the Tribunal in ITA No. 4071/Mum/2001. ordinate Bench of the Tribunal in ITA No. 4071/Mum/2001. relevant part of the said decision relevant part of the said decision has already been been reproduced above while adjudicating ground Nos. 1 & 2 of the appeal. while adjudicating ground Nos. 1 & 2 of the appeal. while adjudicating ground Nos. 1 & 2 of the appeal. We also note the assessee in assessment in assessment years i.e. 2004-05, 2005 05, 2005-06 and 2006-07 has admitted the collection of different le 07 has admitted the collection of different levies as vies as its income and claimed deduction on the sam eduction on the same for the purpose of section 80 e for the purpose of section 80IA of the Act. Once, the assessee itself the assessee itself has admitted the receipt as admitted the receipt as income in subsequent years, we do not find any justification on the income in subsequent years, we do not find any justification on the income in subsequent years, we do not find any justification on the part of the assessee in contesting those rece part of the assessee in contesting those receipt as not taxable ipt as not taxable

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 52 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

10.2 The issue in dispute in the year under consideration being The issue in dispute in the year under consideration being The issue in dispute in the year under consideration being identical to the issue in dispute identical to the issue in dispute raised in assessment year 1997 in assessment year 1997-98, therefore, respectfully following finding of the Tribunal , respectfully following finding of the Tribunal , respectfully following finding of the Tribunal(supra), the ground Nos. 3 &4 ground Nos. 3 &4 of appeal of the assessee are accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 53 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

invested outside. It was contended by the assessee that was contended by the assessee that in view of was contended by the assessee that maintenance of separate fund for decommissioning levy , said maintenance of separate fund for decommissioning l maintenance of separate fund for decommissioning l receipt has been diverted from the assessee. receipt has been diverted from the assessee. It was submitted by It was submitted by the assessee that the assessee the assessee that the assessee collected De-commissioning charge commissioning charge of Rs.1.25 per Kilowatt of 1.25 per Kilowatt of electricity sold from the nuclear station in sold from the nuclear station in the country, which was subsequently increased to Rs. d to Rs. 2.00 per KWH w.e.f. 15.10.1997 w.e.f. 15.10.1997. Though in the assessment year 1997 . Though in the assessment year 1997-98 the Ld. AO accepted the contention of the assessee of the diversion accepted the contention of the assessee of the diversion accepted the contention of the assessee of the diversion of title in receipt , however for the year under consideration, the Ld. however for the year under consideration, the Ld. however for the year under consideration, the Ld. AO observed that issuing notificatio at issuing notification by the G n by the Government for utilisation of decommissioning charges decommissioning charges for specific purpose specific purpose and creating a reserve, was in the nature of appropriation of the funds was in the nature of appropriation of the funds was in the nature of appropriation of the funds out of the profit and out of the profit and was not a diversion of title, therefore, it was not a diversion of title, therefore, it does not mean that such income wou not mean that such income would be exempt from income ld be exempt from income tax. He further observed that the assessee had r observed that the assessee had credited notional interest of credited notional interest of 12% to the fund and thereafter on use of the 12% to the fund and thereafter on use of the funds; funds; the assessee had charged interest expenditure to profit and loss account. The Ld. charged interest expenditure to profit and loss account. The Ld. charged interest expenditure to profit and loss account. The Ld. AO accordingly rever accordingly reversed finding on the issue in dispute in earlier sed finding on the issue in dispute in earlier year and held that that such notional interest expenditure cannot be such notional interest expenditure cannot be allowed under the provisions of the A ed under the provisions of the Act. For reversal of his finding ct. For reversal of his finding, the Ld. AO relied on the decision of the relied on the decision of the Hon’ble Supreme Court in Hon’ble Supreme Court in the case of Distributors Baroda ltd reported in 155 ITR 120 Distributors Baroda ltd reported in 155 ITR 120 Distributors Baroda ltd reported in 155 ITR 120, wherein it is held that held that to perpetuate an error is no heroism heroism.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 54 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

11.1Before the Ld. CIT(A) the assessee claim Before the Ld. CIT(A) the assessee claimed that the collections that the collections had been made at the instance of Central G d been made at the instance of Central Government and the overnment and the amount collected had never reached the assessee by overriding title ected had never reached the assessee by overriding title ected had never reached the assessee by overriding title and same had been credited to the decommissioning fund. The and same had been credited to the decommissioning fund. and same had been credited to the decommissioning fund. contention of the assessee has been summarised by the Ld. CIT(A) contention of the assessee has been summarised by the Ld. CIT(A) contention of the assessee has been summarised by the Ld. CIT(A) as under:

“i) The responsibility of decommissioning a nuclear power facili i) The responsibility of decommissioning a nuclear power facili i) The responsibility of decommissioning a nuclear power facility rests with the Government. with the Government. ii) The decommissioning levy is collected on behalf of the Government i) The decommissioning levy is collected on behalf of the Government i) The decommissioning levy is collected on behalf of the Government of India, thus the levy belongs to the Government of India of India, thus the levy belongs to the Government of India iii) The notification states that the collection of the levy would not iii) The notification states that the collection of the levy would not iii) The notification states that the collection of the levy would not constitute revision of tar constitute revision of tariff. It is clear from the above that the levy iff. It is clear from the above that the levy collected does not form part of the tariff and profits of the Nuclear collected does not form part of the tariff and profits of the Nuclear collected does not form part of the tariff and profits of the Nuclear Power Station. Iv) The levy is required to be transferred to a separate fund Iv) The levy is required to be transferred to a separate fund Iv) The levy is required to be transferred to a separate fund irrespective of the fact whether the Nuclear Power Station has irrespective of the fact whether the Nuclear Power Station has irrespective of the fact whether the Nuclear Power Station has made a profit or not. Thus, this is a case of diversion by overriding title and profit or not. Thus, this is a case of diversion by overriding title and profit or not. Thus, this is a case of diversion by overriding title and not a case of appropriation of profits. not a case of appropriation of profits.” v) The levy is not available for the Nuclear Power Stations for the ) The levy is not available for the Nuclear Power Stations for the ) The levy is not available for the Nuclear Power Stations for the recoupment of any losses. recoupment of any losses. vi) The levy is to be utilised by the Gov vi) The levy is to be utilised by the Government of India for the ernment of India for the purposes of carrying out decommissioning activities, which purposes of carrying out decommissioning activities, which purposes of carrying out decommissioning activities, which activity is the responsibility of the Government of India. activity is the responsibility of the Government of India. 11.2 The Ld. CIT(A) however rejected the contention of the assessee The Ld. CIT(A) however rejected the contention of the assessee The Ld. CIT(A) however rejected the contention of the assessee observing as under:

“7.7. The above argument 7.7. The above argument of the Ld. A.R. in my considered opinion is of the Ld. A.R. in my considered opinion is misconceived and fallacious. It is equally misconceived for the misconceived and fallacious. It is equally misconceived for the misconceived and fallacious. It is equally misconceived for the appellant to assert that the appellant to assert that the collection has even before reaching the collection has even before reaching the hands of the appellant has been credited to the decommissioning hands of the appellant has been credited to the decommissioning hands of the appellant has been credited to the decommissioning fund. The fact fund. The fact is that it is the appellant who has collected the amount is that it is the appellant who has collected the amount from the consumers/customers and none else. Therefore, the amount from the consumers/customers and none else. Therefore, the amount from the consumers/customers and none else. Therefore, the amount so collected by the appellant as an additional levy has reached the so collected by the appellant as an additional levy has reached the so collected by the appellant as an additional levy has reached the hands of the appellant in the same manner and from the same hands of the appellant in the same manner and from the same hands of the appellant in the same manner and from the same

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 55 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

consumers as the other charges. To say that the collection has been mers as the other charges. To say that the collection has been mers as the other charges. To say that the collection has been made on behalf of the Central Govt. is again quite misconceived in as made on behalf of the Central Govt. is again quite misconceived in as made on behalf of the Central Govt. is again quite misconceived in as much as the collections has not gone to the coffers of the government much as the collections has not gone to the coffers of the government much as the collections has not gone to the coffers of the government but has remained with the appellant under its effecti but has remained with the appellant under its effective custody. It is ve custody. It is not the appellant's case that the collections in question have been not the appellant's case that the collections in question have been not the appellant's case that the collections in question have been appropriated by the Government in favour of some other party appropriated by the Government in favour of some other party appropriated by the Government in favour of some other party divesting the appellant of the use of the funds for all times to come. divesting the appellant of the use of the funds for all times to come. divesting the appellant of the use of the funds for all times to come. The collections no doubt have been mad The collections no doubt have been made for specific purpose of the e for specific purpose of the appellant's own business and no one else's. The case law cited by the appellant's own business and no one else's. The case law cited by the appellant's own business and no one else's. The case law cited by the appellant in fact supports the stand of the AO rather than that of the appellant in fact supports the stand of the AO rather than that of the appellant in fact supports the stand of the AO rather than that of the appellant. The appellant has relied upon the judgment in the case of appellant. The appellant has relied upon the judgment in the case of appellant. The appellant has relied upon the judgment in the case of CIT VS. Tolly Ju CIT VS. Tolly Junge Club Ltd. 107 ITR (SC). In this case the Club by a nge Club Ltd. 107 ITR (SC). In this case the Club by a resolution decided to collect a surcharge together with admission fee resolution decided to collect a surcharge together with admission fee resolution decided to collect a surcharge together with admission fee from every race goer. The surcharge was earmarked for local charities. from every race goer. The surcharge was earmarked for local charities. from every race goer. The surcharge was earmarked for local charities. The Supreme Court held that the surcharge did not form part The Supreme Court held that the surcharge did not form part The Supreme Court held that the surcharge did not form part of the price for admission but for the specific purpose of charity. On these price for admission but for the specific purpose of charity. On these price for admission but for the specific purpose of charity. On these facts the Supreme Court held that it was a case of over facts the Supreme Court held that it was a case of over-riding title. The riding title. The Apex Court held that the collection in that case fell in a category in Apex Court held that the collection in that case fell in a category in Apex Court held that the collection in that case fell in a category in which "the income never reaches th which "the income never reaches the assessee who, even if were to e assessee who, even if were to collect it, does so, not as a part of his income but for and on behalf of collect it, does so, not as a part of his income but for and on behalf of collect it, does so, not as a part of his income but for and on behalf of the person to whom it is payable." Thus in Tolly Gonge case the the person to whom it is payable." Thus in Tolly Gonge case the the person to whom it is payable." Thus in Tolly Gonge case the amount collected was not to remain with the Club but was to be amount collected was not to remain with the Club but was to be amount collected was not to remain with the Club but was to be disbursed in favour of disbursed in favour of outsiders who were the recipients of the charity outsiders who were the recipients of the charity collected. The collection was not used by the Club and had to be collected. The collection was not used by the Club and had to be collected. The collection was not used by the Club and had to be passed on in favour of third parties. The facts in the Tolly Gonge case passed on in favour of third parties. The facts in the Tolly Gonge case passed on in favour of third parties. The facts in the Tolly Gonge case are poles aparts from the basic facts in the appellant's case. In the are poles aparts from the basic facts in the appellant's case. In the are poles aparts from the basic facts in the appellant's case. In the appellant's case the collections made are not at all meant to be passed appellant's case the collections made are not at all meant to be passed appellant's case the collections made are not at all meant to be passed on in favour of any one else. No third party is involved claiming the on in favour of any one else. No third party is involved claiming the on in favour of any one else. No third party is involved claiming the ownership of the funds collected but the same are in the effective ownership of the funds collected but the same are in the effective ownership of the funds collected but the same are in the effective possession of the appellant only to be used for possession of the appellant only to be used for some specific business some specific business purposes. The appellant has deliberated at length by way of a purposes. The appellant has deliberated at length by way of a purposes. The appellant has deliberated at length by way of a technical jargon as to how the funds are to be used but the basic fact technical jargon as to how the funds are to be used but the basic fact technical jargon as to how the funds are to be used but the basic fact remains that the decommissioning fund is to be exclusively used for remains that the decommissioning fund is to be exclusively used for remains that the decommissioning fund is to be exclusively used for appellant's own power station/p appellant's own power station/plants which are the appellant's main lants which are the appellant's main source of power generation and sale thereof. These power plants need source of power generation and sale thereof. These power plants need source of power generation and sale thereof. These power plants need to be subjected to certain process as per the appellant's own version to be subjected to certain process as per the appellant's own version to be subjected to certain process as per the appellant's own version which include "closing down the facility and a minimum removal of the which include "closing down the facility and a minimum removal of the which include "closing down the facility and a minimum removal of the actual material coupled with continuing maintenance and surveillance, erial coupled with continuing maintenance and surveillance, erial coupled with continuing maintenance and surveillance, to a complete removal of residual radioactivity in excess of levels to a complete removal of residual radioactivity in excess of levels to a complete removal of residual radioactivity in excess of levels acceptable for unrestricted use of the facility and its cite". These acceptable for unrestricted use of the facility and its cite". These acceptable for unrestricted use of the facility and its cite". These activities, it has to be appreciated are quite normal activ activities, it has to be appreciated are quite normal activities having ities having regard to the nature of the appellant's business of power generation. regard to the nature of the appellant's business of power generation. regard to the nature of the appellant's business of power generation. What the appellant describes as decommissioning is basically an What the appellant describes as decommissioning is basically an What the appellant describes as decommissioning is basically an essential requirement of taking care of the normal life of a power plant essential requirement of taking care of the normal life of a power plant essential requirement of taking care of the normal life of a power plant with reference to its normal wear an with reference to its normal wear and tear and attendant hazards. d tear and attendant hazards. The collection of charges from customers in the course of the conduct The collection of charges from customers in the course of the conduct The collection of charges from customers in the course of the conduct of business to create adequate funds to take care of the wear and tear of business to create adequate funds to take care of the wear and tear of business to create adequate funds to take care of the wear and tear of the power plants at the instance of the Government is quite of the power plants at the instance of the Government is quite of the power plants at the instance of the Government is quite understandable understandable having having regard regard to to the the attendant attendant hazards hazards of of maintaining the power plants. maintaining the power plants. Which of the business but such Which of the business but such

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 56 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

regulation does nor a given business having regard to thes The regulation does nor a given business having regard to thes The regulation does nor a given business having regard to thes The government can always regulate the conduct of a given business government can always regulate the conduct of a given business government can always regulate the conduct of a given business having regard to the having regard to the which the appellant has made in course of sale of ellant has made in course of sale of electricity to the customers are not collections of revenue nature. There electricity to the customers are not collections of revenue nature. There electricity to the customers are not collections of revenue nature. There is no diversion of such collections at source in favour of anyone else. is no diversion of such collections at source in favour of anyone else. is no diversion of such collections at source in favour of anyone else. The charges have been collected by the appellant and have remained The charges have been collected by the appellant and have remained The charges have been collected by the appellant and have remained with the appellant in the form of a fund and have to be used only for he appellant in the form of a fund and have to be used only for he appellant in the form of a fund and have to be used only for the purposes of the appellant's business. No third party is involved. the purposes of the appellant's business. No third party is involved. the purposes of the appellant's business. No third party is involved. The funds are not to be parted with in favour of any third party. The funds are not to be parted with in favour of any third party. The funds are not to be parted with in favour of any third party. Diversion by over Diversion by over-riding title takes place only and exclusively in a usively in a situation where the income never reaches an assessee and it is situation where the income never reaches an assessee and it is situation where the income never reaches an assessee and it is passed on to a third party. In the instant case of the appellant the passed on to a third party. In the instant case of the appellant the passed on to a third party. In the instant case of the appellant the collections have been made by the appellant from the customers in the collections have been made by the appellant from the customers in the collections have been made by the appellant from the customers in the course of conduct of its business, the co course of conduct of its business, the collections are with the appellant llections are with the appellant and the fund created out of these collections is also squarely for the and the fund created out of these collections is also squarely for the and the fund created out of these collections is also squarely for the purposes of appellant's business. It is, therefore, farfetched and purposes of appellant's business. It is, therefore, farfetched and purposes of appellant's business. It is, therefore, farfetched and misconceived on the part of the assessee trying to import the concept misconceived on the part of the assessee trying to import the concept misconceived on the part of the assessee trying to import the concept of over-riding title. title. 7.8 In the conspectus of what is discussed above, I am of the In the conspectus of what is discussed above, I am of the In the conspectus of what is discussed above, I am of the considered view that the AO has rightly subjected the revenue receipts considered view that the AO has rightly subjected the revenue receipts considered view that the AO has rightly subjected the revenue receipts by way of decommissioning charges to tax by including the same in by way of decommissioning charges to tax by including the same in by way of decommissioning charges to tax by including the same in the computation of income of the appellant. I am i the computation of income of the appellant. I am in full agreement with n full agreement with the reasons recorded, case law applied and conclusions reached by the reasons recorded, case law applied and conclusions reached by the reasons recorded, case law applied and conclusions reached by the AO in the body of the impugned order of assessment apart from the AO in the body of the impugned order of assessment apart from the AO in the body of the impugned order of assessment apart from the reasons recorded and view taken on identical issues by my Ld. the reasons recorded and view taken on identical issues by my Ld. the reasons recorded and view taken on identical issues by my Ld. Predecessor in the appellate order f Predecessor in the appellate order for AY. 1997-98 as mentioned 98 as mentioned above. As such, this ground of appeal is rejected and action of the AO above. As such, this ground of appeal is rejected and action of the AO above. As such, this ground of appeal is rejected and action of the AO in bringing to tax the income relating to the decommissioning charges in bringing to tax the income relating to the decommissioning charges in bringing to tax the income relating to the decommissioning charges is confirmed.” 11.3 Regarding the issue of interest expenditure claimed by the Regarding the issue of interest expenditure claimed by the Regarding the issue of interest expenditure claimed by the assessee corresponding to the amount credited to decommissioning corresponding to the amount credited to decommissioning corresponding to the amount credited to decommissioning fund of ₹ 1836.57 lakh 1836.57 lakhs, the CIT(A) followed his finding in followed his finding in assessment year 1992 assessment year 1992-93 and confirmed the disallowance of 93 and confirmed the disallowance of interest interest interest expenditure expenditure expenditure for for for utilisation utilisation utilisation of of of the the the funds funds funds out out out of of of decommissioning fund. decommissioning fund.

11.4 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 57 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Ld. Counsel of the assessee relied on the decision of the Co-ordinate Ld. Counsel of the assessee relied on the decision of the Co Ld. Counsel of the assessee relied on the decision of the Co Bench of the Tribunal in the case of the assessee in ITA No. Bench of the Tribunal in the case of the assessee in Bench of the Tribunal in the case of the assessee in 843/Mum/2003 for assessment year 1992 for assessment year 1992-93 which 93 which has been further upheld by the Hon’ble Bombay High Court in ITA No. 1002 further upheld by the Hon’ble Bombay High Court in ITA No. further upheld by the Hon’ble Bombay High Court in ITA No. of 2016. The relevant part of the decision of the Tribunal (supra) The relevant part of the decision of the Tribunal (supra) The relevant part of the decision of the Tribunal (supra) is reproduced as under: reproduced as under:

“11. Ground No. 12 relates to the de Ground No. 12 relates to the deduction of interest credited to duction of interest credited to decommissioning reserve. Brief facts in this regard are that the decommissioning reserve. Brief facts in this regard are that the decommissioning reserve. Brief facts in this regard are that the assessee collects decommissioning charges from its customers at assessee collects decommissioning charges from its customers at assessee collects decommissioning charges from its customers at Rs.1.25 paisa or 2 paisa per kwh. As per clause 12 of the office of the Rs.1.25 paisa or 2 paisa per kwh. As per clause 12 of the office of the Rs.1.25 paisa or 2 paisa per kwh. As per clause 12 of the office of the memorandum dated 4.09.1 memorandum dated 4.09.1987, the decommissioning of a nuclear 987, the decommissioning of a nuclear power station after its useful life includes decontamination, dismantling power station after its useful life includes decontamination, dismantling power station after its useful life includes decontamination, dismantling and removal of radio active material, radio-active material, waste, and removal of radio active material, active material, waste, components and structure and it is the responsibility of the company. components and structure and it is the responsibility of the company. components and structure and it is the responsibility of the company. This decommission reserve of nuclear power station includes the ecommission reserve of nuclear power station includes the ecommission reserve of nuclear power station includes the expenditure relating to decontamination, dismantling and removal of expenditure relating to decontamination, dismantling and removal of expenditure relating to decontamination, dismantling and removal of radio-active material,waste, components and structure. With a view to active material,waste, components and structure. With a view to active material,waste, components and structure. With a view to meet the decommissioning expenditure as and when the plant i meet the decommissioning expenditure as and when the plant i meet the decommissioning expenditure as and when the plant is decommissioned, the Department of Atomic Energy issued a notice decommissioned, the Department of Atomic Energy issued a notice decommissioned, the Department of Atomic Energy issued a notice dated 22.12.1988 and 4.11.1991 directing the assessee to charge such dated 22.12.1988 and 4.11.1991 directing the assessee to charge such dated 22.12.1988 and 4.11.1991 directing the assessee to charge such decommissioning levy from its customers. decommissioning levy from its customers. Vide another notification Vide another notification dated dated dated 20.2.1997 20.2.1997 20.2.1997 a a a clarification clarification clarification was was was issued issued issued stating stating stating tha that tha the decommissioning charges so levied at on the assumption that the funds decommissioning charges so levied at on the assumption that the funds decommissioning charges so levied at on the assumption that the funds collected will carry an interest of 12% per annum. Therefore, assessee collected will carry an interest of 12% per annum. Therefore, assessee collected will carry an interest of 12% per annum. Therefore, assessee credited interest @ 12% on the decommissioning fund kept with the credited interest @ 12% on the decommissioning fund kept with the credited interest @ 12% on the decommissioning fund kept with the assessee. For the year under consideration assessee. For the year under consideration assessee credited an assessee credited an amount of Rs. 331.73 lakhs towards interest on amount of Rs. 331.73 lakhs towards interest on the decommissioning the decommissioning reserve of Rs. 917.08 lakhs. Assessee claimed the same as a deduction reserve of Rs. 917.08 lakhs. Assessee claimed the same as a deduction reserve of Rs. 917.08 lakhs. Assessee claimed the same as a deduction stating that the funds so collected by the assessee from the customers stating that the funds so collected by the assessee from the customers stating that the funds so collected by the assessee from the customers were used for the purpose o were used for the purpose of business. Justifying the same saying that f business. Justifying the same saying that the assessee borrows funds for the business purposes but for the the assessee borrows funds for the business purposes but for the the assessee borrows funds for the business purposes but for the decommissioning fund, the assessee would have had to borrow more decommissioning fund, the assessee would have had to borrow more decommissioning fund, the assessee would have had to borrow more and pay interest on them. However, the claim of the assessee was and pay interest on them. However, the claim of the assessee was and pay interest on them. However, the claim of the assessee was denied by the Ass denied by the Assessing Officer and the CIT (A) on the ground that the essing Officer and the CIT (A) on the ground that the said interest was claimed on a notional basis. Before us, Ld Counsel for said interest was claimed on a notional basis. Before us, Ld Counsel for said interest was claimed on a notional basis. Before us, Ld Counsel for the assesse argued in favour of the said claim of the assessee and the assesse argued in favour of the said claim of the assessee and the assesse argued in favour of the said claim of the assessee and clarifed that the funds so received is undisputedly not taxabl clarifed that the funds so received is undisputedly not taxabl clarifed that the funds so received is undisputedly not taxable income of the assessee and there Is no dispute on this. This Issue is only about the assessee and there Is no dispute on this. This Issue is only about the assessee and there Is no dispute on this. This Issue is only about the adopting of interest relating to the said funds. The assessee has the adopting of interest relating to the said funds. The assessee has the adopting of interest relating to the said funds. The assessee has charged the interest on the sald funds keeping in tune with the charged the interest on the sald funds keeping in tune with the charged the interest on the sald funds keeping in tune with the notification Issued by the Department o notification Issued by the Department of Atomic Energy. Otherwise, he f Atomic Energy. Otherwise, he relied on the written submissions made in para 27 of the sald written relied on the written submissions made in para 27 of the sald written relied on the written submissions made in para 27 of the sald written

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 58 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

note (supra). On the other hand, Ld DR On the other hand, Ld DR relied on the order of the on the order of the Assessing Officer and the Assessing Officer and the CIT(A). On hearing both the partles and on On hearing both the partles and on perusal of the notif perusal of the notifications referred above which are ssued by the ssued by the Department of Atomic E Department of Atomic Energy, we find the amount of Rs.917.08 lakhs nergy, we find the amount of Rs.917.08 lakhs was collected collected collected by by by the the the assessee assessee assessee form form form its its its customers customers customers towards towards towards decommissioning decommissioning funds which is almed at for use as and when the funds which is almed at for use as and when the power plant is power plant is decommissioned/ dismantled at the expiry of Its life. dismantled at the expiry of Its life. Thus, undisputedly the funds Thus, undisputedly the funds do not belong to the assessee o the assessee accordingly, the same Is found reflected in the accordingly, the same Is found reflected in the balance sheet. Now the sheet. Now the issue about the levy of Interest on the said funds which does not belong issue about the levy of Interest on the said funds which does not belong issue about the levy of Interest on the said funds which does not belong to the assessee, it was used for the purpose of the business of the e assessee, it was used for the purpose of the business of the e assessee, it was used for the purpose of the business of the assessee. Levy of interest on the sald fund was done at the instance of assessee. Levy of interest on the sald fund was done at the instance of assessee. Levy of interest on the sald fund was done at the instance of the Department of Atomic Energy. Considering the said notification, the the Department of Atomic Energy. Considering the said notification, the the Department of Atomic Energy. Considering the said notification, the charge of interest cannot be called notional inte charge of interest cannot be called notional interest as there Is a charge rest as there Is a charge on the assessee to do so. Therefore, we are of the opinion that the on the assessee to do so. Therefore, we are of the opinion that the on the assessee to do so. Therefore, we are of the opinion that the deduction of claim of Interest of Rs 331.73 lakhs is rightly claimed by deduction of claim of Interest of Rs 331.73 lakhs is rightly claimed by deduction of claim of Interest of Rs 331.73 lakhs is rightly claimed by the assessee. Accordingly, we reverse the orders of the Assessing the assessee. Accordingly, we reverse the orders of the Assessing the assessee. Accordingly, we reverse the orders of the Assessing Officer and the CIT (A) Officer and the CIT (A) on this issue. Thus, ground no.12 is allowed. on this issue. Thus, ground no.12 is allowed.” 11.5 The Hon’ble High Court Hon’ble High Court upheld the finding of the Tribunal observing as under:

“5. Having heard the learned counsel for the parties and having 5. Having heard the learned counsel for the parties and having 5. Having heard the learned counsel for the parties and having perused the documents on record, we are in agreement with the perused the documents on record, we are in agreement with the perused the documents on record, we are in agreement with the view of the Tribunal. As noted, the assessee was under directives of the the Tribunal. As noted, the assessee was under directives of the the Tribunal. As noted, the assessee was under directives of the Government of India to collect and create decommissioning reserves Government of India to collect and create decommissioning reserves Government of India to collect and create decommissioning reserves which would be utilized for decommissioning of the plant at the end of which would be utilized for decommissioning of the plant at the end of which would be utilized for decommissioning of the plant at the end of its useful life. In the meantime, the amount its useful life. In the meantime, the amount so collected from the so collected from the customers would be in the possession of the assessee and would be customers would be in the possession of the assessee and would be customers would be in the possession of the assessee and would be utilized for the purpose of its business. The Government of India, utilized for the purpose of its business. The Government of India, utilized for the purpose of its business. The Government of India, therefore, required the assessee to account for the interest which was therefore, required the assessee to account for the interest which was therefore, required the assessee to account for the interest which was also specified at 12% per also specified at 12% per annum on said funds. The interest m on said funds. The interest expenditure was claimed by the assessee by way of deduction. This expenditure was claimed by the assessee by way of deduction. This expenditure was claimed by the assessee by way of deduction. This interest expenditure was clearly business expenditure. The situation is expenditure was clearly business expenditure. The situation is expenditure was clearly business expenditure. The situation is akin to the assessee borrowing from the market, utilizing such akin to the assessee borrowing from the market, utilizing such akin to the assessee borrowing from the market, utilizing such borrowed funds for the pu borrowed funds for the purpose of business and paying interest to the rpose of business and paying interest to the creditors. No question of law arises. The creditors. No question of law arises. The Income Tax Appeal is Income Tax Appeal is dismissed.” 11.6 We have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in dispute and perused the relevant material on record . We find that dispute and perused the relevant material on record . We find that dispute and perused the relevant material on record . We find that Hon’ble High Court and the Tribunal has given finding on the issue n’ble High Court and the Tribunal has given finding on the issue n’ble High Court and the Tribunal has given finding on the issue of claim of interest expenditure for utilisation of the funds out of the of claim of interest expenditure for utilisation of the funds out of the of claim of interest expenditure for utilisation of the funds out of the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 59 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

decommissioning fund on the ground that said interest was decommissioning fund on the ground that said interest was decommissioning fund on the ground that said interest was credited to the decommissioning fund and when said fund has been credited to the decommissioning fund and when said fund has credited to the decommissioning fund and when said fund has utilized for the purpose of the business of the assessee for the purpose of the business of the assessee, interest in for the purpose of the business of the assessee respect of use of fund was respect of use of fund was eligible for deduction. The Hon’ble High eligible for deduction. The Hon’ble High Court has observed that the situation is akin to the assessee Court has observed that the situation is akin to the assessee Court has observed that the situation is akin to the assessee borrowing fund from the mar from the market and utilising such b ket and utilising such borrowed funds for the purpose of the business and paying interest to the creditors. for the purpose of the business and paying interest to the creditors. for the purpose of the business and paying interest to the creditors. Thus, as far as the issue of disallowance of interest as far as the issue of disallowance of interest expenditure of expenditure of ₹ 1836.71 lakhs is concerned concerned, the issue is squarely covered in favour squarely covered in favour of the assessee and therefore the finding of the Ld. CIT(A) to that of the assessee and therefore the finding of the Ld. CIT(A) to that of the assessee and therefore the finding of the Ld. CIT(A) to that extent is set aside and extent is set aside and matter is restored to the Assessing Officer Assessing Officer for following the decision of the Hon’ble Bombay H following the decision of the Hon’ble Bombay High Court (supra) igh Court (supra) and verify whether interest income credited has already been taxed, and verify whether interest income credited has already been taxed, and verify whether interest income credited has already been taxed, then claim of interest expenditure has then claim of interest expenditure has to be allowed to the assessee. to be allowed to the assessee. But as far as the issue of receipt collected by way of But as far as the issue of receipt collected by way of But as far as the issue of receipt collected by way of decommissioning decommissioning decommissioning charges charges charges and and and credited credited credited separate separately separate to decommissioning fund is identical to collection of the levy of decommissioning fund is identical to collection of the levy of decommissioning fund is identical to collection of the levy of renovation and modernisation renovation and modernisation fund, which we have upheld which we have upheld following the decision of the Tribunal in earlier years in preceding following the decision of the Tribunal in earlier years in preceding following the decision of the Tribunal in earlier years in preceding Para, and therefore to have consistency in our and therefore to have consistency in our view, view, we uphold the addition treating the receipt of decommissioning charges as income addition treating the receipt of decommissioning charges as income addition treating the receipt of decommissioning charges as income in the hands of the in the hands of the assessee. We also note that that the assessee in assessment years i.e. 2004 assessment years i.e. 2004-05, 2005-06 and 2006-07 has admitted 07 has admitted the collection of different levies as its income and claimed reduction the collection of different levies as its income and cla the collection of different levies as its income and cla

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 60 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

on the same for the purpose of section 80IA of the A e for the purpose of section 80IA of the Act. Once the e for the purpose of section 80IA of the A assessee itself has admitted the receipt as income in subsequent s admitted the receipt as income in subsequent s admitted the receipt as income in subsequent years, we do not find any justification on the part of the assessee in years, we do not find any justification on the part of the assessee in years, we do not find any justification on the part of the assessee in contesting those receipts those receipts as not taxable. The ground No. The ground No. 5 of the appeal of the assessee is accordingly appeal of the assessee is accordingly dismissed, whereas the ground whereas the ground No. 6(six) of the appeal of the assessee is allowed of the appeal of the assessee is allowed for statistical of the appeal of the assessee is allowed purpose.

12.1 Before the Assessing Officer, it was submitted that above Before the Assessing Officer, it was submitted that above Before the Assessing Officer, it was submitted that above receipts were having direct nexus with the having direct nexus with the activity of activity of construction of plants and does not does not constitute independent sources of the income constitute independent sources of the income therefore, should be should be reduced from the construction reduced from the construction expenses which were capitalized. It was further submitted that . It was further submitted that identical identical treatment of account has been followed by the assessee has been followed by the assessee in past in past years , which same had not been disturbed by the AO and thus and thus, in view of the ‘rule of consultancy’ ’ said income should be adjusted against the sted against the construction expenditure construction expenditure, instead of taxing separately under the instead of taxing separately under the head ‘income from other sources income from other sources’. Before the Ld. CIT(A), the . Before the Ld. CIT(A), the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 61 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

assessee explained that income under the respective head was assessee explained that income under the respective head was assessee explained that income under the respective head was having nexus with the with the construction construction activity. activity. The detailed The det submission of the assessee before the Ld. CIT(A) is reproduced as submission of the assessee before the Ld. CIT(A) is reproduced as submission of the assessee before the Ld. CIT(A) is reproduced as under:

“At the outset, we would like to provide your honor with the At the outset, we would like to provide your honor with the At the outset, we would like to provide your honor with the factual background about the nature of income that has been factual background about the nature of income that has been factual background about the nature of income that has been reduced from the construction expenses. reduced from the construction expenses. a) Interest (others Interest (others) This amount represents interest received by the appellant from This amount represents interest received by the appellant from This amount represents interest received by the appellant from the employees, contractors etc. on loans / mobilization the employees, contractors etc. on loans / mobilization the employees, contractors etc. on loans / mobilization advances granted for the purposes of the project. The advances granted for the purposes of the project. The advances granted for the purposes of the project. The expenditure in respect of such interest is included as expenditure in respect of such interest is included as expenditure in respect of such interest is included as expenditure in Schedule 6A expenditure in Schedule 6A. b) Consultancy receipts Consultancy receipts The appellant for each project designates certain individuals The appellant for each project designates certain individuals The appellant for each project designates certain individuals (engineers, etc.). These individuals are expected to devote their (engineers, etc.). These individuals are expected to devote their (engineers, etc.). These individuals are expected to devote their entire time towards the project completion activities. The entire time towards the project completion activities. The entire time towards the project completion activities. The remuneration and other expenses incurred for t remuneration and other expenses incurred for these identified hese identified individuals is not debited to the Profit and Loss Account but is individuals is not debited to the Profit and Loss Account but is individuals is not debited to the Profit and Loss Account but is included in the Schedule 6A. The construction of the Nuclear included in the Schedule 6A. The construction of the Nuclear included in the Schedule 6A. The construction of the Nuclear Power Station and its related activities take considerable Power Station and its related activities take considerable Power Station and its related activities take considerable amount of time and the engineers and the staff are not amount of time and the engineers and the staff are not amount of time and the engineers and the staff are not completely occupied at these times. In order to ensure that the completely occupied at these times. In order to ensure that the completely occupied at these times. In order to ensure that the staff are engaged in productive activities, the appellant near its staff are engaged in productive activities, the appellant near its staff are engaged in productive activities, the appellant near its locations obtain certain consultancy assignments. These locations obtain certain consultancy assignments. These locations obtain certain consultancy assignments. These assignments are taken up in order to ensure that the staff is assignments are taken up in order to ensure that the staff is assignments are taken up in order to ensure that the staff is gainfully engaged and the consultancy receipts result in the ly engaged and the consultancy receipts result in the ly engaged and the consultancy receipts result in the reduction of the total expenditure incurred during construction reduction of the total expenditure incurred during construction reduction of the total expenditure incurred during construction period. The appellant submits that in view of the fact that the entire The appellant submits that in view of the fact that the entire The appellant submits that in view of the fact that the entire expenditure of the engineers and staff has been included in expenditure of the engineers and staff has been included in expenditure of the engineers and staff has been included in Schedule 6A, the receipts are to be reduced from the same e 6A, the receipts are to be reduced from the same e 6A, the receipts are to be reduced from the same Schedule.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 62 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Without prejudice to the above, the appellant submits that the Without prejudice to the above, the appellant submits that the Without prejudice to the above, the appellant submits that the income after reducing the expenditure incurred for earning the income after reducing the expenditure incurred for earning the income after reducing the expenditure incurred for earning the same is negligible. same is negligible. c) Other income Other income The other income mainly constitutes The other income mainly constitutes the following items: the following items: i. Receipts from sale of tender forms Receipts from sale of tender forms ii. Interest from contractors on advances given Interest from contractors on advances given Interest from contractors on advances given iii. Interest received from staff engaged in the project on Interest received from staff engaged in the project on Interest received from staff engaged in the project on certain loans given. certain loans given. iv. Deposits of contractors forfeited Deposits of contractors forfeited v. Sale of scrap in respect of material used in the project Sale of scrap in respect of material used in t Sale of scrap in respect of material used in t vi. Penal interest Penal interest vii. Rent from staff / contractors Rent from staff / contractors viii. Recoveries from staff for the transport provided Recoveries from staff for the transport provided Recoveries from staff for the transport provided ix. Miscellaneous receipts Miscellaneous receipts The location wise break The location wise break-up of income is provided hereunder: up of income is provided hereunder: Sr. No. Location Amount in Rs. Lacs Details at page nos. a) Corporate office rate office 1045.96 122 b) RAPS 58.81 123 c) Kaiga 128.23 124 d) Engg. Division Engg. Division 136.81 125 - 126 e) RAPP 3 & 4 RAPP 3 & 4 203.22 127 f) TAPP 3 & 4 TAPP 3 & 4 8.34 128 Total 1,581.37 A summary is enclosed at page 129 of the compilation. A summary is enclosed at page 129 of the compilation. A summary is enclosed at page 129 of the compilation. It is submitted that the relevant expenditu It is submitted that the relevant expenditure in respect of items re in respect of items mentioned at (a), (b) and (c) above has not been claimed as a mentioned at (a), (b) and (c) above has not been claimed as a mentioned at (a), (b) and (c) above has not been claimed as a deduction in computing the total income and has been treated deduction in computing the total income and has been treated deduction in computing the total income and has been treated as capital expenditure. as capital expenditure. It is further submitted that the total expenditure incurred It is further submitted that the total expenditure incurred It is further submitted that the total expenditure incurred exceeds the income in Sche exceeds the income in Schedule 6A. On the basis of the above background, the appellant makes the On the basis of the above background, the appellant makes the On the basis of the above background, the appellant makes the following submissions: following submissions:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 63 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

The appellant invites attention to the Guidance Note on The appellant invites attention to the Guidance Note on The appellant invites attention to the Guidance Note on Treatment of Expenditure during Construction period issued by Treatment of Expenditure during Construction period issued by Treatment of Expenditure during Construction period issued by the Institute of Chartered Accountants of In the Institute of Chartered Accountants of India (ICAI). dia (ICAI). The Guidance Note states that the expenses incurred during the The Guidance Note states that the expenses incurred during the The Guidance Note states that the expenses incurred during the construction period which are directly relatable to the construction period which are directly relatable to the construction period which are directly relatable to the acquisition or construction of the assets are to be accumulated acquisition or construction of the assets are to be accumulated acquisition or construction of the assets are to be accumulated and appropriated to the cost of such assets when the project and appropriated to the cost of such assets when the project and appropriated to the cost of such assets when the project is commissioned. In the instant case, the issue for consideration is commissioned. In the instant case, the issue for consideration is commissioned. In the instant case, the issue for consideration is not in respect of the expenditure earned during construction not in respect of the expenditure earned during construction not in respect of the expenditure earned during construction period but in respect of income earned during construction period but in respect of income earned during construction period but in respect of income earned during construction period Para 17.11 of the Guidance Note deals with the treatment of Para 17.11 of the Guidance Note deals with the treatment of Para 17.11 of the Guidance Note deals with the treatment of income earned during the construction or pre income earned during the construction or pre-production period. production period. Para 17.11 reads: Para 17.11 reads: "17.11 During the construction period a project may earn "17.11 During the construction period a project may earn "17.11 During the construction period a project may earn income from miscellaneous sources income from miscellaneous sources - for example share transfer for example share transfer fees, interest income, income from hire of equipment o fees, interest income, income from hire of equipment o fees, interest income, income from hire of equipment or assets and income from sale of products manufactured during the and income from sale of products manufactured during the and income from sale of products manufactured during the period of test runs and experimental productions. It is period of test runs and experimental productions. It is period of test runs and experimental productions. It is recommended that such income should be set off against the recommended that such income should be set off against the recommended that such income should be set off against the related items of expenditure so that only net amount of the related items of expenditure so that only net amount of the related items of expenditure so that only net amount of the expenditure is expenditure is capitalized or treated as deferred revenue capitalized or treated as deferred revenue expenditure as the case may be. In either case consideration expenditure as the case may be. In either case consideration expenditure as the case may be. In either case consideration may have to be given to the question of providing for the income may have to be given to the question of providing for the income may have to be given to the question of providing for the income tax liability on such income." tax liability on such income." It can be observed from the above, the ICAI has recommen It can be observed from the above, the ICAI has recommen It can be observed from the above, the ICAI has recommended, income which is earned during the construction period can be income which is earned during the construction period can be income which is earned during the construction period can be set off against the expenditure incurred during the same p set off against the expenditure incurred during the same p set off against the expenditure incurred during the same period which would result in only which would result in only the net amount of expenditure being the net amount of expenditure being capitalised or treated as deferred revenue expenditure. capitalised or treated as deferred revenue expenditure. capitalised or treated as deferred revenue expenditure. It is submitted that the income referred to above at (a) and (b) ubmitted that the income referred to above at (a) and (b) ubmitted that the income referred to above at (a) and (b) have therefore been correctly reduced from the expenditure have therefore been correctly reduced from the expenditure have therefore been correctly reduced from the expenditure during construction period rather than treating this as income during construction period rather than treating this as income during construction period rather than treating this as income liable to tax.” .”

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 64 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

12.2 The Ld. CIT(A) however following his predecessor in The Ld. CIT(A) however following his predecessor The Ld. CIT(A) however following his predecessor assessment year 1992 sessment year 1992-93, rejected the contention of the assessee rejected the contention of the assessee and upheld the finding of the Assessing Officer. Before us, the Ld. and upheld the finding of the Assessing Officer. Before us, the Ld. and upheld the finding of the Assessing Officer. Before us, the Ld. Counsel for the assessee the assessee referred to paperbook pages 210 and 211. pages 210 and 211. for showing detail of detail of income of Rs. 1581.378 lakhs, which has been reduced from expenditure incurred reduced from expenditure incurred on construction. For ready construction. For ready reference, said detail is reproduced as under:

Sr. No. Unit Interest Consultancy Other Income Total Other Income Income Receipts 1. Corporate Office 170.92 -- 875.03 1045.95 2. RAPS 12.49 --- 46.31 58.8 3. Kaiga 4.95 --- 123.28 128.23 4. Engineering --- 87.7 136.82 Division 5. RAPP 3&4 85.93 117.29 203.22 6. TAPP 3&4 2.42 5.93 8.35 Grand Total 276.71 87.7 1167.84 1167.84 1581.37 12.3 Further on page 211, urther on page 211, in the details of corporate the details of corporate office, a sum of ₹ 8,75,02,500/- has has been stated to be received as premium on been stated to be received as premium on bonds. It was submitted bonds. It was submitted that expenses incurred for earning the incurred for earning the said receipt had already already been reduced from those receipts. A detail of se receipts. A detail of income earned and and corresponding expenditure for engineering corresponding expenditure for engineering division has been explained on page 214 to 215 of the has been explained on page 214 to 215 of the paperbook. has been explained on page 214 to 215 of the

12.4 We have heard rival submission of the parties We have heard rival submission of the parties on the issue in dispute and perused the relevant material on dispute and perused the relevant material on record. record. During the course of hearing, the learned counsel course of hearing, the learned counsel for the assessee w the assessee was asked to justify as how the interest received from employees the interest received from employees the interest received from employees for mobilization

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 65 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

advances was connected to the construction advances was connected to the construction of project project. Similarly, he was asked to justify as how the to justify as how the consultancy receipts consultancy receipts were connected with the construction of plants with the construction of plants. Similarly imilarly, regarding other receipts under the head other receipts under the head ‘other income’ reported as premium reported as premium received on bonds, the ld Counsel was asked to justify as how same , the ld Counsel was asked to justify as how same , the ld Counsel was asked to justify as how same was connected with the construction expenditure. However, the Ld. with the construction expenditure. However, the Ld. with the construction expenditure. However, the Ld. Counsel for the assessee failed to file any documen the assessee failed to file any documentary evidence in tary evidence in support of claim that support of claim that those incomes were having nexus with the were having nexus with the construction of the plants and therefore the plea of the assessee is construction of the plants and therefore the plea of the assessee is construction of the plants and therefore the plea of the assessee is accordingly rejected. We do not find any error in the order of the Ld. accordingly rejected. We do not find any error in the order of the Ld. accordingly rejected. We do not find any error in the order of the Ld. CIT(A) on the issue in dispute and a CIT(A) on the issue in dispute and accordingly, we uphold the same. we uphold the same.

13.1 Before us, the Ld. Counsel Before us, the Ld. Counsel for the assessee submitted that in the assessee submitted that in the financial statement for the year end the financial statement for the year end, total prior period expenses period expenses debited was of Rs.278.118 lakhs and after of Rs.278.118 lakhs and after set off set off of prior period income of Rs.1155.72 lakhs, t income of Rs.1155.72 lakhs, the net prior period expenses are of he net prior period expenses are of Rs.1626.54 lakhs. Though the Ld. Counsel submitted that during Rs.1626.54 lakhs. Though the Ld. Counsel submitted that during Rs.1626.54 lakhs. Though the Ld. Counsel submitted that during the course of the assessment proceedings, the the course of the assessment proceedings, the details of prior period details of prior period expenses were submitted from time to time, h re submitted from time to time, however, the Assessing owever, the Assessing Officer has recorded on page 30 of the impugned assessment order Officer has recorded on page 30 of the impugned assessment order Officer has recorded on page 30 of the impugned assessment order that no such detail of legal expenses amounting to Rs.7 lakhs was that no such detail of legal expenses amounting to Rs.7 lakhs was that no such detail of legal expenses amounting to Rs.7 lakhs was submitted and therefore, accordingl submitted and therefore, accordingly, he added the same. Before he added the same. Before

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 66 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the ld CIT(A), the Ld. Counsel of the assessee submitted that said the Ld. Counsel of the assessee submitted that said the Ld. Counsel of the assessee submitted that said expenditure crystallized duri expenditure crystallized during the year under consideration, ng the year under consideration, however, no evidence in support of owever, no evidence in support of same was filed filed before the Ld. CIT(A), therefore , he , therefore , he following the finding of his predecessor on the g the finding of his predecessor on the issue in dispute, upheld the disallowance. upheld the disallowance. Before us the learned Before us the learned counsel for the assessee the assessee submitted that total turnover of the total turnover of the assessee was around Rs. 1447.72 crore around Rs. 1447.72 crores, whereas the total prior whereas the total prior period expenses are only period expenses are only ₹ 11.55 crores, which is which is approximately 0.80%, which being normal and a small percentage .80%, which being normal and a small percentage, considering the size of organization and the locations, it should be allowed to the and the locations, it should be allowed to the and the locations, it should be allowed to the assessee.

13.2 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. te and perused the relevant material on record. te and perused the relevant material on record. Before us, also no such detail of the legal expenses amounting to Rs.7 lakhs has detail of the legal expenses amounting to Rs.7 lakhs has detail of the legal expenses amounting to Rs.7 lakhs has been filed and therefore, we do not have any option other than and therefore, we do not have any option other than to and therefore, we do not have any option other than uphold the disallowance made by the Assessing the disallowance made by the Assessing Officer. Officer.

14.1. In our opinion, the Assessing Officer has made only In our opinion, the Assessing Officer has made only In our opinion, the Assessing Officer has made only disallowance in respect of legal expenses of Rs.7 lakhs and he has disallowance in respect of legal expenses of Rs.7 lakhs and he has disallowance in respect of legal expenses of Rs.7 lakhs and he has not disturbed either prior period income or prior expenses except either prior period income or prior expenses except either prior period income or prior expenses except

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 67 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

said disallowance of Rs. 7.00 lakhs for said disallowance of Rs. 7.00 lakhs for legal expenses, which we expenses, which we have already upheld and therefore the ground No. 9 of the appeal of and therefore the ground No. 9 of the appeal of the assessee is also dismissed. the assessee is also dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 68 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

contribution should contribution should be considered as per the decision of Hon’ble be considered as per the decision of Hon’ble Supreme Court in Checkmate services P Ltd (supra). The ground Supreme Court in Checkmate services P Ltd (supra) Supreme Court in Checkmate services P Ltd (supra) No. 10 of the appeal of the assessee is accordingly allowed partly for No. 10 of the appeal of the assessee is accordingly allowed partly for No. 10 of the appeal of the assessee is accordingly allowed partly for statistical purposes.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 69 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

(1A) Every assessee, being a company, shall, for (1A) Every assessee, being a company, shall, for the purposes of this section, prepare its profit and he purposes of this section, prepare its profit and loss account for the relevant previous year in loss account for the relevant previous year in accordance with the provisions of Parts II and III of accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of , 1956 (1 of 1956) Explanation.- For the purposes of this section, For the purposes of this section, "book profit" means the net profit as shown in the "book profit" means the net profit as shown in the profit and loss account for the relevant previous profit and loss account for the relevant previous year prepared under sub-section (1A), as increased section (1A), as increased by - if any amount referred to in clauses (a) to (f) is if any amount referred to in clauses (a) to (f) is debited or, debited or, as the case may be, the amount referred to in clauses (g) as the case may be, the amount referred to in clauses (g) as the case may be, the amount referred to in clauses (g) and (h) is not credited to the profit and lo and (h) is not credited to the profit and loss account, and ss account, and as reduced by, as reduced by, It can be seen from clause (1) that the provision creates a It can be seen from clause (1) that the provision creates a It can be seen from clause (1) that the provision creates a legal fiction regarding the total income chargeab legal fiction regarding the total income chargeable to tax. le to tax. Such a fiction is applicable only to those assessees which Such a fiction is applicable only to those assessees which Such a fiction is applicable only to those assessees which (a) are Companies except the Companies engaged in the (a) are Companies except the Companies engaged in the (a) are Companies except the Companies engaged in the business of either generation or distribution of electricity, business of either generation or distribution of electricity, business of either generation or distribution of electricity, (b) that such a fiction is made applicable to the Companies (b) that such a fiction is made applicable to the Companies (b) that such a fiction is made applicable to the Companies only with only with reference to the previous year relevant to the reference to the previous year relevant to the assessment year commencing after 1st April, 1988 and assessment year commencing after 1st April, 1988 and assessment year commencing after 1st April, 1988 and ending with the 1st April, 1991, (c) ending with the 1st April, 1991, (c) connected cases. connected cases. the "total income" of the Company as computed under the Act "total income" of the Company as computed under the Act "total income" of the Company as computed under the Act is less than thirty per cent of its "boo is less than thirty per cent of its "book profit". The fiction k profit". The fiction being that the total income for the purpose of assessment being that the total income for the purpose of assessment being that the total income for the purpose of assessment shall be deemed to be 30% of the book profit. In other shall be deemed to be 30% of the book profit. In other shall be deemed to be 30% of the book profit. In other words, the Section prescribes 30% of the book profits of words, the Section prescribes 30% of the book profits of words, the Section prescribes 30% of the book profits of those Companies falling within the purview of the Section those Companies falling within the purview of the Section those Companies falling within the purview of the Section shall be treated as the total income of the Company for the be treated as the total income of the Company for the be treated as the total income of the Company for the purpose of income tax, irrespective of the fact that purpose of income tax, irrespective of the fact that purpose of income tax, irrespective of the fact that according to the accounts of the Company the "total according to the accounts of the Company the "total according to the accounts of the Company the "total income" is less than thirty per cent of the book profit. The income" is less than thirty per cent of the book profit. The income" is less than thirty per cent of the book profit. The expression "book profit" itself is expression "book profit" itself is explained in the Section as explained in the Section as meaning, the net profit as shown in the profit and loss meaning, the net profit as shown in the profit and loss meaning, the net profit as shown in the profit and loss account for the relevant previous year prepared as per the account for the relevant previous year prepared as per the account for the relevant previous year prepared as per the prescription under sub prescription under sub-section (1A) and either increased or section (1A) and either increased or decreased by various amounts specified in the various decreased by various amounts specified in the various decreased by various amounts specified in the various subsequent sub subsequent sub-clauses appended to the Explanation, the clauses appended to the Explanation, the details of which are not necessary for the purpose of this details of which are not necessary for the purpose of this details of which are not necessary for the purpose of this case. However, the operation of case. However, the operation of Section 115J came to an came to an end with 1991 end with 1991-92 assessment year onwards. 12. Subsequently, 12. Subsequently, Section 115JA came to be inserted in came to be inserted in the Income Tax Act Income Tax Act by Finance Act 2 of 1996, with 1996, with effect from 1.4.1997. The scheme of effect from 1.4.1997. The scheme of Section 115JA Section 115JA is

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 70 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

almost similar to the scheme of almost similar to the scheme of Section 115J. Two major . Two major points of difference are that the points of difference are that the new Section is applicable new Section is applicable with reference to the previous year relevant to the with reference to the previous year relevant to the with reference to the previous year relevant to the assessment year commencing from 1st April, 1997 and assessment year commencing from 1st April, 1997 and assessment year commencing from 1st April, 1997 and ending with 1st April, 2001. Secondly, the express ending with 1st April, 2001. Secondly, the express ending with 1st April, 2001. Secondly, the express exclusion of the Companies engaged in the business of exclusion of the Companies engaged in the business of exclusion of the Companies engaged in the business of either generation or either generation or distribution of electricity is absent distribution of electricity is absent under Section under Section connected cases. 115JA. The third and most 115JA. The third and most important change is that two provisos are added to sub important change is that two provisos are added to sub important change is that two provisos are added to sub- section (2) stipulating that section (2) stipulating that - "Provided that while preparing profit and loss account, the "Provided that while preparing profit and loss account, the "Provided that while preparing profit and loss account, the depreciation sh depreciation shall be calculated on the same method and all be calculated on the same method and rates which have been adopted for calculating the rates which have been adopted for calculating the rates which have been adopted for calculating the depreciation for the purpose of preparing the profit and depreciation for the purpose of preparing the profit and depreciation for the purpose of preparing the profit and loss account laid before the company at its annual general loss account laid before the company at its annual general loss account laid before the company at its annual general meeting in accordance with the provisions of meeting in accordance with the provisions of section section 210 of the Companies Act, 1956 (1 of 1956): of the Companies Act, 1956 (1 of 1956): Provided further that where a company has adopted or Provided further that where a company has adopted or Provided further that where a company has adopted or adopts the financial year under the adopts the financial year under the Companies Act Companies Act, 1956 (1 of 1956), which is different from the previous year (1 of 1956), which is different from the previous year (1 of 1956), which is different from the previous year under the Act, the method and rates for calculation or under the Act, the method and rates for calculation or under the Act, the method and rates for calculation or depreciation shall correspond to the method and rates depreciation shall correspond to the method and rates depreciation shall correspond to the method and rates which have been adopted for calculating the depreciation which have been adopted for calculating the depreciation which have been adopted for calculating the depreciation for such financial year or part for such financial year or part of such financial year falling of such financial year falling within the relevant previous year". within the relevant previous year". The further details of The further details of Section 115JA may not be may not be necessary for the present purpose. necessary for the present purpose. 13. Then came to 13. Then came to Section 115JB, which was inserted in , which was inserted in the Income Tax Act Income Tax Act by Finance Act of 2000 with effect of 2000 with effect from 1.4.2001. The relevant portion as it stands from 1.4.2001. The relevant portion as it stands from 1.4.2001. The relevant portion as it stands today reads as follows: reads as follows:- "115JB. Special provision for payment of tax by certain "115JB. Special provision for payment of tax by certain "115JB. Special provision for payment of tax by certain companies. companies.- (1) Notwithstanding anything contained in (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an any other provision of this Act, where in the case of an any other provision of this Act, where in the case of an assessee, being a company, the income assessee, being a company, the income-tax, payable on tax, payable on the total the total income as computed under this Act in respect of income as computed under this Act in respect of any previous year relevant to the any previous year relevant to the assessment year assessment year commencing on or after the 1st day of April, 2007 is less commencing on or after the 1st day of April, 2007 is less commencing on or after the 1st day of April, 2007 is less than ten per cent of its book profit, such book profit shall than ten per cent of its book profit, such book profit shall than ten per cent of its book profit, such book profit shall be deemed to be the total income of the be deemed to be the total income of the assessee and the assessee and the tax payable by the assessee on such total income shall be tax payable by the assessee on such total income shall be tax payable by the assessee on such total income shall be the amount of income the amount of income-tax at the rate of ten per cent. (2) Every assessee, being a company shall for the (2) Every assessee, being a company shall for the (2) Every assessee, being a company shall for the purposes of this section, prepare its profit and loss purposes of this section, prepare its profit and loss purposes of this section, prepare its profit and loss

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 71 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

account for the releva account for the relevant previous year in accordance with nt previous year in accordance with the provisions of Parts II and III of Schedule VI to the provisions of Parts II and III of Schedule VI to the provisions of Parts II and III of Schedule VI to the Companies Act Companies Act, 1956 (1 of 1956): Provided that while preparing the annual accounts Provided that while preparing the annual accounts Provided that while preparing the annual accounts including profit and loss ac including profit and loss account,- (i) the accounting policies; (i) the accounting policies; (ii) the accounting standards followed for preparing (ii) the accounting standards followed for preparing (ii) the accounting standards followed for preparing such accounts such accounts including profit and loss account; (iii) the method and rates adopted for calculating the (iii) the method and rates adopted for calculating the (iii) the method and rates adopted for calculating the depreciation shall depreciation shall be the same as have been adopted for opted for the purpose of preparing such accounts including profit the purpose of preparing such accounts including profit the purpose of preparing such accounts including profit and loss account and laid before the company at its and loss account and laid before the company at its and loss account and laid before the company at its annual general meeting in accordance with the provisions annual general meeting in accordance with the provisions annual general meeting in accordance with the provisions of section 210 section 210 of the Companies Act, 1956 (1 of 1956): s Act, 1956 (1 of 1956): Provided further that where the company has adopted or Provided further that where the company has adopted or Provided further that where the company has adopted or adopts the financial year under the adopts the financial year under the Companies Act Companies Act, 1956 (1 of 1956), which is different from the previous year (1 of 1956), which is different from the previous year (1 of 1956), which is different from the previous year under this Ac under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such (ii) the accounting standards adopted for preparing such (ii) the accounting standards adopted for preparing such accounts accounts including profit and loss account; (iii) the method and rates adopted for calculating the (iii) the method and rates adopted for calculating the (iii) the method and rates adopted for calculating the depreciation, shall depreciation, shall correspond to the accounting policies, unting policies, accounting standards and the method and rates for accounting standards and the method and rates for accounting standards and the method and rates for calculating the depreciation which have been adopted for calculating the depreciation which have been adopted for calculating the depreciation which have been adopted for preparing such accounts including profit and loss account preparing such accounts including profit and loss account preparing such accounts including profit and loss account for such financial year or part of such financial year failing for such financial year or part of such financial year failing for such financial year or part of such financial year failing within the within the relevant previous year". The scheme of the The scheme of the Section 115JB is similar to Section Section 115J and and Section 115JA. The difference in so far as it is The difference in so far as it is relevant relevant for for the the present present purpose purpose between Section between Section 115JB and its fore-runners (Sections 115J and 115 JA) is runners (Sections 115J and 115 JA) is as follows: as follows: All the 3 Sections (Ss.115J, 115JA and 115JB) create All the 3 Sections (Ss.115J, 115JA and 115JB) create All the 3 Sections (Ss.115J, 115JA and 115JB) create legal fictions regarding the 'total income' (a defined expression fictions regarding the 'total income' (a defined expression fictions regarding the 'total income' (a defined expression under Section 2(45) Section 2(45)of the Act) of the Companies. While the of the Act) of the Companies. While the earlier two sections mandate the department to make the earlier two sections mandate the department to make the earlier two sections mandate the department to make the assessment on a fictiti assessment on a fictitious amount of 'total income' where ous amount of 'total income' where the actual amount of total income computed in accordance the actual amount of total income computed in accordance the actual amount of total income computed in accordance with the with the I.T Act is less than 30% of the book profits of the is less than 30% of the book profits of the Company, Company, Section 115JB mandates the department to mandates the department to

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resort to the fiction in those cases where the tax payable resort to the fiction in those cases where the tax payable resort to the fiction in those cases where the tax payable on the basis of the 'total income' computed in accordance on the basis of the 'total income' computed in accordance on the basis of the 'total income' computed in accordance with the I.T.Act is less than a specified percentage (7=% with the I.T.Act is less than a specified percentage (7=% with the I.T.Act is less than a specified percentage (7=% for the years in issue) of the b for the years in issue) of the book profit. Further, Sections Sections 115JA and 115JB also stipulate a definite manner of also stipulate a definite manner of preparing the annual accounts including the profit and preparing the annual accounts including the profit and preparing the annual accounts including the profit and loss accounts. Mo loss accounts. More specifically, Section 115JB stipulates stipulates that the accounting policies, accounting standards, etc. that the accounting policies, accounting standards, etc. that the accounting policies, accounting standards, etc. shall be uniform both for the purpose of income tax as well shall be uniform both for the purpose of income tax as well shall be uniform both for the purpose of income tax as well as for the information statutorily required to as for the information statutorily required to be placed, be placed, before before before the the the annual annual annual general general general meeting meeting meeting conducted, conducted, conducted, in in in accordance with accordance with Section 210 of the Companies Act, of the Companies Act, 1956. 14. It may be mentioned here that under 14. It may be mentioned here that under Section 166 Section 166 of the Companies Act every Company is mandated to hold a the Companies Act every Company is mandated to hold a the Companies Act every Company is mandated to hold a general meeting in each year. general meeting in each year. Section 210 mandates that mandates that every year the Board of Directors of the Company in the every year the Board of Directors of the Company in the every year the Board of Directors of the Company in the general meeting shall general meeting shall lay before the Company a balance lay before the Company a balance sheet as at the end of the relevant period and also a profit sheet as at the end of the relevant period and also a profit sheet as at the end of the relevant period and also a profit and loss account for the period. Parts II and III of Schedule and loss account for the period. Parts II and III of Schedule and loss account for the period. Parts II and III of Schedule VI to the VI to the Companies Act specify the method and manner manner of maintaining the profit and loss account. of maintaining the profit and loss account. 15. However, the appellant though is by definition a 15. However, the appellant though is by definition a 15. However, the appellant though is by definition a Company under the Company under the Income Tax Act and deemed to be a and deemed to be a Company for the purpose of Company for the purpose of Income Tax Act, (by virtue of , (by virtue of the declaration under the declaration under Section 80 of the Electricity Supply of the Electricity Supply Act) it is not a Company for the purpose of Act) it is not a Company for the purpose of Companies Companies Act. Therefore, the appellant is not obliged to either to . Therefore, the appellant is not obliged to either to . Therefore, the appellant is not obliged to either to convene an annual general meeting or place its profit and convene an annual general meeting or place its profit and convene an annual general meeting or place its profit and loss account in such general meeting. As a matter of fact, loss account in such general meeting. As a matter of fact, loss account in such general meeting. As a matter of fact, a general meeting contemplated under a general meeting contemplated under Section 166 of the Companies Act is not possible in the case of the appellant Companies Act is not possible in the case of the appellant Companies Act is not possible in the case of the appellant as there are no share holders for the appellant Board. On as there are no share holders for the appellant Board. On as there are no share holders for the appellant Board. On the other hand, under the other hand, under Section 69 of the Electricity Supply Electricity Supply Act, the appellant is obliged to keep proper accounts, Act, the appellant is obliged to keep proper accounts, Act, the appellant is obliged to keep proper accounts, including the profit and loss account, and prepare an including the profit and loss account, and prepare an including the profit and loss account, and prepare an annual statement of accounts, balance sheet, etc. in such annual statement of accounts, balance sheet, etc. in such annual statement of accounts, balance sheet, etc. in such form as may be prescribed by the Central Government and form as may be prescribed by the Central Government and form as may be prescribed by the Central Government and notified in th notified in the official gazette. The prescription of the rules e official gazette. The prescription of the rules in this regard is required to be made in consultation with in this regard is required to be made in consultation with in this regard is required to be made in consultation with the Comptroller and Auditor the Comptroller and Auditor-General of India and also the and also the State Governments. Such accounts of the appellant are State Governments. Such accounts of the appellant are State Governments. Such accounts of the appellant are required to be audited by the Compt required to be audited by the Comptroller and Auditor roller and Auditor- General of India or such other person duly authorised by General of India or such other person duly authorised by General of India or such other person duly authorised by the Comptroller and Auditor the Comptroller and Auditor-General of India. The General of India. The accounts so prepared along with the audit report is accounts so prepared along with the audit report is accounts so prepared along with the audit report is required to be laid annually before the State Legislature required to be laid annually before the State Legislature required to be laid annually before the State Legislature and also to be publi and also to be published in the prescribed manner and shed in the prescribed manner and

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copies of such publication shall be made available for sale copies of such publication shall be made available for sale copies of such publication shall be made available for sale at a reasonable price, obviously for the benefit of the at a reasonable price, obviously for the benefit of the at a reasonable price, obviously for the benefit of the general public who wish to scrutinise the accounts. general public who wish to scrutinise the accounts. 16. Thus, it can be seen that coming to the maintenanc 16. Thus, it can be seen that coming to the maintenanc 16. Thus, it can be seen that coming to the maintenance of the accounts, the appellant though is deemed to be a the accounts, the appellant though is deemed to be a the accounts, the appellant though is deemed to be a "Company" "Company" - both by virtue of operation of Section 80 Section 80 of the Income Tax Act for the purpose of the Income Tax Act for the purpose of Income Tax Act ncome Tax Act and by virtue of the definition of the expression "Company" by virtue of the definition of the expression "Company" by virtue of the definition of the expression "Company" under the under the Income Tax Act (which is already examined (which is already examined earlier) the appellant is required to keep and maintain its the appellant is required to keep and maintain its accounts accounts in in a a manner mann er specified specified by by the the Central Central Government, Government, Government, but but but not not not in in in the the the manner manner manner specified specified specified in in in the Companies Act Companies Act. Therefore, the question is whether the . Therefore, the question is whether the legal fiction contemplated under legal fiction contemplated under Section 115JB can be can be pressed into service while making the assessment of pressed into service while making the assessment of pressed into service while making the assessment of income tax payable by the appellant. income tax payable by the appellant. 17. It must be remembered that 17. It must be remembered that Section 115JB creates a creates a legal fiction regarding the legal fiction regarding the total income of the assessees total income of the assessees which are Companies. The book profit of the Company is which are Companies. The book profit of the Company is which are Companies. The book profit of the Company is deemed to be total income of the assessee in the deemed to be total income of the assessee in the deemed to be total income of the assessee in the circumstances specified in the said Section, which are circumstances specified in the said Section, which are circumstances specified in the said Section, which are already noticed earlier. The expression "book profit" for the already noticed earlier. The expression "book profit" for the already noticed earlier. The expression "book profit" for the purpose of the said Section is explained in the Section ose of the said Section is explained in the Section ose of the said Section is explained in the Section itself to mean the net profit as increased or decreased by itself to mean the net profit as increased or decreased by itself to mean the net profit as increased or decreased by the various amounts shown in the various sub the various amounts shown in the various sub-clauses of clauses of the Section. The "net profit" itself must be the net profit as the Section. The "net profit" itself must be the net profit as the Section. The "net profit" itself must be the net profit as shown in the profit and lo shown in the profit and loss account of the Company. Sub ss account of the Company. Sub- section (2) mandates that the profit and loss account of the section (2) mandates that the profit and loss account of the section (2) mandates that the profit and loss account of the Company is required to be prepared in the manner Company is required to be prepared in the manner Company is required to be prepared in the manner specified therein. Though in view of the requirement specified therein. Though in view of the requirement specified therein. Though in view of the requirement under Secti Section 69 of the Electricity Supply Act the of the Electricity Supply Act the appellant is required to maintain accounts in a different appellant is required to maintain accounts in a different appellant is required to maintain accounts in a different form than the one contemplated under form than the one contemplated under Section 115JB(2) Section 115JB(2), the prescription under the prescription under Section 69 is only regarding the is only regarding the general duty of the appellant for the purpose of general duty of the appellant for the purpose of Electricity Electricity Supply Act Supply Act. Nothing in theory prevents the Parliament from . Nothing in theory prevents the Parliament from obligating the appellant to pr obligating the appellant to prepare another profit and loss epare another profit and loss account as prescribed under account as prescribed under Section 115JB(2) for the for the purpose of the purpose of the Income Tax Act. The question is whether . The question is whether such an obligati such an obligation is created under Section 115JB Section 115JB (2) in so far as the appellant is concerned. In examining the said so far as the appellant is concerned. In examining the said so far as the appellant is concerned. In examining the said question, the legislative history and the mischief sought to question, the legislative history and the mischief sought to question, the legislative history and the mischief sought to be cured by the Legislature in making the s be cured by the Legislature in making the special deeming pecial deeming provision, in our opinion, would be relevant. provision, in our opinion, would be relevant. 18. 18. Coming Coming to to the the legislative legislative history history of Section of Section 115JB and its fore-runners - Sections Sections 115J a and 115JA - we have already noticed that they we have already noticed that they

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provided for the determination of the total income of the provided for the determination of the total income of the provided for the determination of the total income of the Companies by a fictitious process. However, at the earliest Companies by a fictitious process. However, at the earliest Companies by a fictitious process. However, at the earliest point of time when such a fictitious proce point of time when such a fictitious process is invented, i.e. ss is invented, i.e. when Section Section 115J was 115J introduced, the Section Section expressly excluded from its operation bodies like the expressly excluded from its operation bodies like the expressly excluded from its operation bodies like the appellant. Coming to appellant. Coming to Section 115JA, though such express , though such express exclusion is absent, the Central Board of Direct Taxes exclusion is absent, the Central Board of Direct Taxes exclusion is absent, the Central Board of Direct Taxes issued a Circular issued a Circular - No.762 dated 18th February 1998 No.762 dated 18th February 1998 - (which is binding on the Department, see (which is binding on the Department, see K.P. Varghese v. K.P. Varghese v. I.T.O. . [(1981) [(1981) 131 ITR 597(SC)]* SC)]* and and Ranadey Ranadey Micronutrients v. Collector of Central Excise Micronutrients v. Collector of Central Excise [1996 (97) [1996 (97) ELT 19 (SC)] excluding the bodies like the appellant from ELT 19 (SC)] excluding the bodies like the appellant from ELT 19 (SC)] excluding the bodies like the appellant from the operation of the said Section. Though under the normal the operation of the said Section. Though under the normal the operation of the said Section. Though under the normal rules of interpretation of statutes the omission of a clause les of interpretation of statutes the omission of a clause les of interpretation of statutes the omission of a clause which existed in the statute at some point of time by a which existed in the statute at some point of time by a which existed in the statute at some point of time by a subsequent amendment would indicate that the legislature subsequent amendment would indicate that the legislature subsequent amendment would indicate that the legislature intended not intended not. These two circulars of the CBDT are, as we These two circulars of the CBDT are, as we shall presently point out, shall presently point out, binding on the tax department in binding on the tax department in administering or executing the provision enacted in sub administering or executing the provision enacted in sub administering or executing the provision enacted in sub- s.(2), but quite apart from their binding character, they are s.(2), but quite apart from their binding character, they are s.(2), but quite apart from their binding character, they are clearly in the nature of contemporanea expositio furnishing clearly in the nature of contemporanea expositio furnishing clearly in the nature of contemporanea expositio furnishing legitimate aid in the construction of sub legitimate aid in the construction of sub-s. (2). The rule of (2). The rule of construction by reference to contemporanea expositio is a construction by reference to contemporanea expositio is a construction by reference to contemporanea expositio is a well-established rule for interpreting a statute by reference established rule for interpreting a statute by reference established rule for interpreting a statute by reference to the exposition it has received from contemporary to the exposition it has received from contemporary to the exposition it has received from contemporary authority, though it must give way where the language of authority, though it must give way where the language of authority, though it must give way where the language of the statut the statute is plain and unambiguous. This rule has been e is plain and unambiguous. This rule has been succinctly and felicitously expressed in Crawford on succinctly and felicitously expressed in Crawford on succinctly and felicitously expressed in Crawford on Statutory Construction, 1940 Edn., where it is stated in Statutory Construction, 1940 Edn., where it is stated in Statutory Construction, 1940 Edn., where it is stated in paragraph 219 that "administrative construction (i.e., paragraph 219 that "administrative construction (i.e., paragraph 219 that "administrative construction (i.e., contemporaneous construction placed by admin contemporaneous construction placed by administrative or istrative or executive officers charged with executing a statute) executive officers charged with executing a statute) executive officers charged with executing a statute) generally should be clearly wrong before it is overturned; generally should be clearly wrong before it is overturned; generally should be clearly wrong before it is overturned; such a construction, commonly referred to as practical such a construction, commonly referred to as practical such a construction, commonly referred to as practical construction, although non construction, although non-controlling, is nevertheless controlling, is nevertheless entitled to consider entitled to considerable weight, it is highly persuasive". able weight, it is highly persuasive". to give the benefit of such clause any more to those who give the benefit of such clause any more to those who give the benefit of such clause any more to those who were getting the benefit of such exclusion clause, in our were getting the benefit of such exclusion clause, in our were getting the benefit of such exclusion clause, in our opinion, it is not an absolute rule. The other attendant opinion, it is not an absolute rule. The other attendant opinion, it is not an absolute rule. The other attendant circumstances, the context, the history and t circumstances, the context, the history and the mischief he mischief sought to be remedied by the amendment are all required sought to be remedied by the amendment are all required sought to be remedied by the amendment are all required to be examined before reaching at definite conclusion. to be examined before reaching at definite conclusion. to be examined before reaching at definite conclusion. 19. The Circular No.762 not only is binding on the 19. The Circular No.762 not only is binding on the 19. The Circular No.762 not only is binding on the respondents, respondents, respondents, but but but also also also explains explains explains the the the purpose purpose purpose in in in introducing introducing Section 115JA. The relevant portion reads as . The relevant portion reads as follows: follows:- "46.1 In recent times, the number of zero "46.1 In recent times, the number of zero-tax companies tax companies and companies paying marginal tax has grown. Studies and companies paying marginal tax has grown. Studies and companies paying marginal tax has grown. Studies

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have shown that in spite of the fact that companies have have shown that in spite of the fact that companies have have shown that in spite of the fact that companies have earned s earned substantial book profits and have paid handsome ubstantial book profits and have paid handsome dividends, no tax has been paid by them to the exchequer. dividends, no tax has been paid by them to the exchequer. dividends, no tax has been paid by them to the exchequer. 46.2 The Finance Act The Finance Act has inserted a new section section 115JA of the Income-tax Act, so as to levy a minimum tax tax Act, so as to levy a minimum tax on companies who are having book profits and paying on companies who are having book profits and paying on companies who are having book profits and paying dividends but are not paying any taxes. The scheme dividends but are not paying any taxes. The scheme dividends but are not paying any taxes. The scheme envisages the payment of a minimum tax by deeming 30 envisages the payment of a minimum tax by deeming 30 envisages the payment of a minimum tax by deeming 30 per per per cent cent cent of of of the the the book book book profits profits profits computed computed computed under under under the Companies Act Companies Act, as taxable income, in a case where , as taxable income, in a case where the total income as computed under the provisions of the total income as computed under the provisions of the total income as computed under the provisions of the Income Income-tax Act, is less than 30 per cent of the book f the book profit. Where the total income as computed under the profit. Where the total income as computed under the profit. Where the total income as computed under the normal provisions of the normal provisions of the Income-tax Act, is more than 30 , is more than 30 per cent of the book profit, tax shall be charged on the per cent of the book profit, tax shall be charged on the per cent of the book profit, tax shall be charged on the same. 46.3 The effective mi 46.3 The effective minimum alternate tax, at the existing nimum alternate tax, at the existing rates of taxation works out to 12 percent of the book rates of taxation works out to 12 percent of the book rates of taxation works out to 12 percent of the book profits. 46.4 Income arising from free trade zone (FTZ), export 46.4 Income arising from free trade zone (FTZ), export 46.4 Income arising from free trade zone (FTZ), export oriented oriented oriented undertakings undertakings undertakings (EOUs), (EOUs), (EOUs), charitable charitable charitable activities, activities, activities, investment by a venture investment by a venture capital company and othe capital company and other exempted incomes ( exempted incomes (section 10) are excluded from the ) are excluded from the purview of the alternate tax. purview of the alternate tax. 46.5 Since the alternate tax is applicable only where the 46.5 Since the alternate tax is applicable only where the 46.5 Since the alternate tax is applicable only where the normal total income computed is less than 30 per cent of normal total income computed is less than 30 per cent of normal total income computed is less than 30 per cent of the book profits, so long as the enterprises (other than FTZ ook profits, so long as the enterprises (other than FTZ ook profits, so long as the enterprises (other than FTZ units and EOUs) earning income from export profits do not units and EOUs) earning income from export profits do not units and EOUs) earning income from export profits do not have their component of export income higher than 70 per have their component of export income higher than 70 per have their component of export income higher than 70 per cent of the book profits, the provisions of cent of the book profits, the provisions of section section 115JA will not be attracted. In other words, the MAT will will not be attracted. In other words, the MAT will apply only to such cases where export profits forming part apply only to such cases where export profits forming part apply only to such cases where export profits forming part of book profits of an assessee exceed 7 of book profits of an assessee exceed 7- per cent of the per cent of the total profits. total profits. 46.6 Companies engaged in the business of generat 46.6 Companies engaged in the business of generat 46.6 Companies engaged in the business of generation and distribution of power and those enterprises engaged and distribution of power and those enterprises engaged and distribution of power and those enterprises engaged in developing, maintaining and operating infrastructure in developing, maintaining and operating infrastructure in developing, maintaining and operating infrastructure facilities under sub facilities under sub-section (4A) of section 80--IA are IA are exempted from the levy of MAT, s exempted from the levy of MAT, so that the incentive given o that the incentive given to infrastructure development is not affected". It can be to infrastructure development is not affected". It can be to infrastructure development is not affected". It can be seen from the above that the legislature took note of the seen from the above that the legislature took note of the seen from the above that the legislature took note of the fact that a number of Companies paying marginal tax and fact that a number of Companies paying marginal tax and fact that a number of Companies paying marginal tax and also zero also zero-tax has grown. Such Companies earned tax has grown. Such Companies earned substantia substantial book profits and paid handsome dividends to l book profits and paid handsome dividends to the share holders without paying any tax to the the share holders without paying any tax to the the share holders without paying any tax to the

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exchequer. Such exchequer. Such a result exchequer. Such a result a result was was achieved was achieved achieved by such by such by such Companies by taking advantage of the then existing legal Companies by taking advantage of the then existing legal Companies by taking advantage of the then existing legal position which permitted the adoption of dual accounting position which permitted the adoption of dual accounting position which permitted the adoption of dual accounting policies and practices, one for the purpose of computation licies and practices, one for the purpose of computation licies and practices, one for the purpose of computation of income tax and another for the purpose of determining of income tax and another for the purpose of determining of income tax and another for the purpose of determining the book profits for the purpose of payment of dividends. the book profits for the purpose of payment of dividends. the book profits for the purpose of payment of dividends. Therefore, the amendment was made to plug the loophole Therefore, the amendment was made to plug the loophole Therefore, the amendment was made to plug the loophole in in the law. However, the CBDT understood that the law. However, the CBDT understood that Companies engaged in the business of generation and Companies engaged in the business of generation and Companies engaged in the business of generation and distribution of electricity and Enterprises engaged in distribution of electricity and Enterprises engaged in distribution of electricity and Enterprises engaged in developing, maintaining and operating infrastructure developing, maintaining and operating infrastructure developing, maintaining and operating infrastructure facilities, as a matter of policy, are not brought within the facilities, as a matter of policy, are not brought within the facilities, as a matter of policy, are not brought within the purview of the am purview of the amendment (Section 115JA) for the reason ) for the reason that such a policy would promote the infrastructural that such a policy would promote the infrastructural that such a policy would promote the infrastructural development of the country. Such an understanding of the development of the country. Such an understanding of the development of the country. Such an understanding of the CBDT is binding on the department. CBDT is binding on the department. 20. If that is the ba 20. If that is the background in which Section 115JA Section 115JA is introduced into the introduced into the Income Tax Act, Section 115JB, which , which is substant is substantially similar to Section 115JA, in our opinion, , in our opinion, cannot have a different purpose and need not be cannot have a different purpose and need not be cannot have a different purpose and need not be interpreted in a manner different from the understanding interpreted in a manner different from the understanding interpreted in a manner different from the understanding of the CBDT of of the CBDT of Section 115JA. 21. Another submission made by the learned counsel for 21. Another submission made by the learned counsel for 21. Another submission made by the learned counsel for the appellant is that in view of the judgment of the the appellant is that in view of the judgment of the the appellant is that in view of the judgment of the Supreme Court in Supreme Court in C.I.T. v. B.C.Srinivasa Setty [(1981) [(1981) 128 ITR 294 128 ITR 294 (SC)] and CIT v. Eli Lilly and Co. (India) P.Ltd SC)] and CIT v. Eli Lilly and Co. (India) P.Ltd. [(2009) 312 ITR 225 (SC)], where the computation [(2009) 312 ITR 225 (SC)], where the computation [(2009) 312 ITR 225 (SC)], where the computation provision could not be applied in a particular case, it is provision could not be applied in a particular case, it is provision could not be applied in a particular case, it is indicative of the fact that the charging Secti indicative of the fact that the charging Section also would on also would not apply. It was held in B.S.Srinivasa Setty's case (supra) not apply. It was held in B.S.Srinivasa Setty's case (supra) not apply. It was held in B.S.Srinivasa Setty's case (supra) as follows: as follows:- "Section 45 Section 45 is a charging section. For the purpose of is a charging section. For the purpose of imposing the charge, Parliament has enacted detailed imposing the charge, Parliament has enacted detailed imposing the charge, Parliament has enacted detailed provision provisions in order to compute the profits or gains under s in order to compute the profits or gains under that head. No existing principle or provision at variance that head. No existing principle or provision at variance that head. No existing principle or provision at variance with them can with them can be applied for determining the chargeable be applied for determining the chargeable profits and gains. All transactions encompassed by s.45 profits and gains. All transactions encompassed by s.45 profits and gains. All transactions encompassed by s.45 must fall under the governance of its must fall under the governance of its computation computation provisions. A transaction to which those provisions cannot provisions. A transaction to which those provisions cannot provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s.45 to be applied must be regarded as never intended by s.45 to be applied must be regarded as never intended by s.45 to be the subject of the charge. This inference flows from the be the subject of the charge. This inference flows from the be the subject of the charge. This inference flows from the general arrangement of the provisions in the I.T.Act, where general arrangement of the provisions in the I.T.Act, where general arrangement of the provisions in the I.T.Act, where under e under each head of income the charging provision is ach head of income the charging provision is accompanied by a set of provisions for computing the accompanied by a set of provisions for computing the accompanied by a set of provisions for computing the income subject to that charge. The character of the income subject to that charge. The character of the income subject to that charge. The character of the computation provisions in each case bears a relationship computation provisions in each case bears a relationship computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging s to the nature of the charge. Thus, the charging section and ection and

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 77 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the the the computation computation computation provisions provisions provisions together together together constitute constitute constitute an an an integrated code. When there is a case to which the integrated code. When there is a case to which the integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident computation provisions cannot apply at all, it is evident computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the that such a case was not intended to fall within the that such a case was not intended to fall within the charging section. Otherwise, one charging section. Otherwise, one would be driven to would be driven to conclude that while a certain income seems to fall within conclude that while a certain income seems to fall within conclude that while a certain income seems to fall within the charging section there is no scheme of computation for the charging section there is no scheme of computation for the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act quantifying it. The legislative pattern discernible in the Act quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind th is against such a conclusion. It must be borne in mind th is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the legislative intent is presumed to run uniformly through the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each head the entire conspectus of provisions pertaining to each head the entire conspectus of provisions pertaining to each head of income. No doubt there is a qualitative difference of income. No doubt there is a qualitative difference of income. No doubt there is a qualitative difference between the charging provision and a computation between the charging provision and a computation between the charging provision and a computation provision. And ordinarily the provision. And ordinarily the operation of the charging operation of the charging provision cannot be affected by the construction of a provision cannot be affected by the construction of a provision cannot be affected by the construction of a particular computation provision. But the question here is particular computation provision. But the question here is particular computation provision. But the question here is whether it is possible to apply the computation provision. whether it is possible to apply the computation provision. whether it is possible to apply the computation provision. That pertains to the fundamental integrality of the That pertains to the fundamental integrality of the That pertains to the fundamental integrality of the statutory scheme provided for each head". ory scheme provided for each head". In Eli Lilly and Co. (India) P.Ltd. case (supra) also, the In Eli Lilly and Co. (India) P.Ltd. case (supra) also, the In Eli Lilly and Co. (India) P.Ltd. case (supra) also, the apex Court has held as follows: apex Court has held as follows:- "On the question as to whether there is any inter "On the question as to whether there is any inter-linking of linking of the charging provisions and the machinery provisions the charging provisions and the machinery provisions the charging provisions and the machinery provisions under the 1961 under the 1961 Act, we may, at the very outset, point out Act, we may, at the very outset, point out that in the case of that in the case of CIT v. B.C.Srinivasa Setty reported in reported in [1981] 128 ITR 294 this court has held that the charging [1981] 128 ITR 294 this court has held that the charging [1981] 128 ITR 294 this court has held that the charging section and the computation provisions toget section and the computation provisions together constitute her constitute an integrated code. When there is a case to which the an integrated code. When there is a case to which the an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident computation provisions cannot apply at all, it is evident computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the that such a case was not intended to fall within the that such a case was not intended to fall within the charging section". charging section". 22. Another reason is that the appellant or bodies simila 22. Another reason is that the appellant or bodies simila 22. Another reason is that the appellant or bodies similar to the appellant, which are totally owned by the to the appellant, which are totally owned by the to the appellant, which are totally owned by the Government Government - either State or Central - have no share have no share holders. Profit, if at all, made by the appellant would be holders. Profit, if at all, made by the appellant would be holders. Profit, if at all, made by the appellant would be for the benefit of entire body politic of the State of Kerala. for the benefit of entire body politic of the State of Kerala. for the benefit of entire body politic of the State of Kerala. In the final analysis, all tax In the final analysis, all taxation is meant for the welfare ation is meant for the welfare of the people in a Constitutional Republic. Therefore the of the people in a Constitutional Republic. Therefore the of the people in a Constitutional Republic. Therefore the enquiry as to the mischief sought to be remedied by the enquiry as to the mischief sought to be remedied by the enquiry as to the mischief sought to be remedied by the amendment becomes irrelevant. Therefore, we are of the amendment becomes irrelevant. Therefore, we are of the amendment becomes irrelevant. Therefore, we are of the opinion that the fiction fixed under opinion that the fiction fixed under Section 115JB cannot cannot be pressed into service against the appellant while making be pressed into service against the appellant while making be pressed into service against the appellant while making the assessment of the tax payable under the the assessment of the tax payable under the Income Tax Income Tax Act.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 78 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

16.1 The Hon’ble supreme in Civi The Hon’ble supreme in Civil No. 151,152, 154 and 13571 of l No. 151,152, 154 and 13571 of 2015 upheld the decision of Hon’ble Kerala High Court observing as upheld the decision of Hon’ble Kerala High Court observing as upheld the decision of Hon’ble Kerala High Court observing as under: 2. The judgment under appeal was rendered by the 2. The judgment under appeal was rendered by the 2. The judgment under appeal was rendered by the Division Bench of the Kerala High Court in Kerala State Division Bench of the Kerala High Court in Kerala State Division Bench of the Kerala High Court in Kerala State Electricity Board v. Dy. CIT [20101 8 taxman Electricity Board v. Dy. CIT [20101 8 taxman Electricity Board v. Dy. CIT [20101 8 taxmann.com 118/[2011]196 Taxman 1/[2010] 329 ITR 91. 118/[2011]196 Taxman 1/[2010] 329 ITR 91. 3. We have gone through the circumstances on record and 3. We have gone through the circumstances on record and 3. We have gone through the circumstances on record and considered the rival submissions. In our view, no considered the rival submissions. In our view, no considered the rival submissions. In our view, no interference is called for. We, therefore, dismiss this interference is called for. We, therefore, dismiss this interference is called for. We, therefore, dismiss this appeal. appeal. 16.2 We have heard rival submission of We have heard rival submission of the parties on the issue in the parties on the issue in dispute and perused the relevant material on record. The Hon’ble dispute and perused the relevant material on record. dispute and perused the relevant material on record. Kerala High Court(supra) (supra) observed that the assessee assessee is a company wholly owned by the wholly owned by the Government; therefore, it was not it was not obliged to either to convene an annual gene either to convene an annual general meeting or place its profit and ral meeting or place its profit and loss account in such general body meetings. The Hon’ble Kerala in such general body meetings. The Hon’ble Kerala in such general body meetings. The Hon’ble Kerala High Court has firstly firstly, held that the assessee was was required to maintain its books of accounts in a manner specified by the Central maintain its books of accounts in a manner specified by the Central maintain its books of accounts in a manner specified by the Central Government, but not in th Government, but not in the manner specified in the Companies Act, e manner specified in the Companies Act, 1956, which is the requirement of provisions of section 115JA of the , which is the requirement of provisions of section 115JA of the , which is the requirement of provisions of section 115JA of the Act, thus section 115JA should not be applicable over government Act, thus section 115JA should not be applicable over government Act, thus section 115JA should not be applicable over government companies. Secondly Secondly, referred to the CBDT Circular (supra) and referred to the CBDT Circular (supra) and observed that Comp observed that Companies engaged in business of electricity anies engaged in business of electricity generation were stated to be exempted from the provision of section were stated to be exempted from the provision of section were stated to be exempted from the provision of section 115JA of the Act and such an understanding was binding on the 115JA of the Act and such an understanding was binding on the 115JA of the Act and such an understanding was binding on the Income-tax authorities. Further tax authorities. Further, held that assessee or body similar, held that assessee or body similar, who are totally owned by the Government, have no shareholders, owned by the Government, have no shareholders, owned by the Government, have no shareholders,

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 79 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

thus profit would be for the benefit of the public at large and thus profit would be for the benefit of the public at large and thus profit would be for the benefit of the public at large and taxation being meant for the welfare of the people, the mischief taxation being meant for the welfare of the people, the mischief taxation being meant for the welfare of the people, the mischief sought to be remedied by way of amendment (i.e. be remedied by way of amendment (i.e. introduction of section 115JA/115JB 5JB becomes irrelevant, therefore, the fiction of becomes irrelevant, therefore, the fiction of section 115JB( in our case section 115JA) cannot be pressed into section 115JB( in our case section 115JA) cannot be pressed into section 115JB( in our case section 115JA) cannot be pressed into service against the assessee. service against the assessee.

16.3 The assessee before us being a company wholly owned by the The assessee before us being a company wholly owned by the The assessee before us being a company wholly owned by the Government of India, Government of India, therefore, in view of the decision of the e decision of the Hon’ble Kerala High Court (supra) Hon’ble Kerala High Court (supra), as upheld by the Hon’ble as upheld by the Hon’ble Supreme Court, we hold that th hold that the assessee is not liable not liable to be taxed under the provisions s of section 115JA of the Act. Accordingly, the of section 115JA of the Act. Accordingly, the ground of appeal of the assessee is allowed. ground of appeal of the assessee is allowed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 80 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

AY 1999-2000

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 81 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 82 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

in including the following amounts as being part of in including the following amounts as being part of in including the following amounts as being part of book profits under section 115JA: book profits under section 115JA: Sr. No. Particulars Amount a) Interest income on deposits with banks Interest income on deposits with banks 10,077.98 b) Interest Interest income income from from Inter Inter Corporate Corporate 267.46 Deposits c) Interest on staff loan 225.12 d) Interest Others 222.63 e) Delayed payment charges 9,312.97 f) Miscellaneous receipts 694.82 Total 20,800.98

The learned Commissioner (Appeals) ought to have The learned Commissioner (Appeals) ought to have The learned Commissioner (Appeals) ought to have appreciated that the above incomes were inextricably appreciated that the above incomes were inextricably appreciated that the above incomes were inextricably linked to the business of generation of power and linked to the business of generation of power and linked to the business of generation of power and were were were therefore therefore therefore derived derived derived from from from the the the business business business of of of generation of power. On this basis, the above generation of power. On this basis, the above generation of power. On this basis, the above amounts were to be excluded from book profits in nts were to be excluded from book profits in nts were to be excluded from book profits in accordance with Explanation (iv) to section 115JA (2). accordance with Explanation (iv) to section 115JA (2). accordance with Explanation (iv) to section 115JA (2). 15. The learned Commissioner (Appeals) erred in The learned Commissioner (Appeals) erred in not allowing deduction for expenditure incurred by not allowing deduction for expenditure incurred by not allowing deduction for expenditure incurred by the appellant in earning the income of Rs. 20,800.98 the appellant in earning the income of Rs. 20,800.98 the appellant in earning the income of Rs. 20,800.98 lacs, in lacs, in computing the book profits of the appellant. computing the book profits of the appellant. 16. The learned Commissioner (Appeals) erred in The learned Commissioner (Appeals) erred in holding that there is no difference in facts for the holding that there is no difference in facts for the holding that there is no difference in facts for the assessment year in appeal vis assessment year in appeal vis-à-vis the assessment vis the assessment year 1998 year 1998-1999 as regards the source of funds from 1999 as regards the source of funds from which the a which the amounts were placed in bank fixed mounts were placed in bank fixed deposits. The Commissioner (Appeals) erred in not deposits. The Commissioner (Appeals) erred in not deposits. The Commissioner (Appeals) erred in not verifying the facts for the assessment year under verifying the facts for the assessment year under verifying the facts for the assessment year under appeal. appeal. 17. Without prejudice to Grounds 12 to 16 above, Without prejudice to Grounds 12 to 16 above, the the the learned learned learned Commissioner Commissioner Commissioner (Appeals) (Appeals) (Appeals) erred erred erred in in in confirming the action of t confirming the action of the Assistant Commissioner he Assistant Commissioner in making adjustments to the Profit and Loss account in making adjustments to the Profit and Loss account in making adjustments to the Profit and Loss account prepared by the appellant. The learned Commissioner prepared by the appellant. The learned Commissioner prepared by the appellant. The learned Commissioner (Appeals) (Appeals) (Appeals) ought ought ought to to to have have have appreciated appreciated appreciated that that that no no no adjustments can be made to the Profit and Loss adjustments can be made to the Profit and Loss adjustments can be made to the Profit and Loss Account, other than those specifie Account, other than those specified in the Explanation d in the Explanation to section 115JA(2). to section 115JA(2).

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 83 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 84 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the de-commissioning fund commissioning fund respectively. The issues in dispute The issues in dispute being identical to ground Nos. 5 and 6 raised in assessment year being identical to ground Nos. 5 and 6 raised in assessment year being identical to ground Nos. 5 and 6 raised in assessment year 1998-99, therefore, following our finding in ITA No. 202/Mum/2004 99, therefore, following our finding in ITA No. 202/Mum/2004 99, therefore, following our finding in ITA No. 202/Mum/2004 for assessment year 1998 for assessment year 1998-99, the ground No. 1 is dismissed, the ground No. 1 is dismissed, whereas the ground No. 2 is allowed fo whereas the ground No. 2 is allowed for statistical purposes, r statistical purposes,.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 85 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

respectfully following the same respectfully following the same, the ground Nos. 6 to 8 of the appeal the ground Nos. 6 to 8 of the appeal of the assessee are decided mutatis mutandis. of the assessee are decided mutatis mutandis.

“12.1. With reference to this ground of appeal, the Ld. A.R. inter 12.1. With reference to this ground of appeal, the Ld. A.R. inter 12.1. With reference to this ground of appeal, the Ld. A.R. inter-alia submitted as under: under: "The learned Additional Commissioner erred in disallowing an amount of "The learned Additional Commissioner erred in disallowing an amount of "The learned Additional Commissioner erred in disallowing an amount of Rs.7 lacs as prior period expenditure. Rs.7 lacs as prior period expenditure. The appellant submits that as the The appellant submits that as the expenditure had crystallized during the previous year relevant to the expenditure had crystallized during the previous year relevant to the expenditure had crystallized during the previous year relevant to the assessment year 1998 assessment year 1998-99, the said expenditure was fully allowable as a 99, the said expenditure was fully allowable as a deduction. The appellant in the return of income at Note 4 had submitted as unde The appellant in the return of income at Note 4 had submitted as unde The appellant in the return of income at Note 4 had submitted as under: "The prior period expenses (other than depreciation) as per Schedule 13 to "The prior period expenses (other than depreciation) as per Schedule 13 to "The prior period expenses (other than depreciation) as per Schedule 13 to the audited Annual Accounts are Rs.2782.25 lacs prior to netting off of the audited Annual Accounts are Rs.2782.25 lacs prior to netting off of the audited Annual Accounts are Rs.2782.25 lacs prior to netting off of

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 86 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

prior period income of Rs.1155.11 lacs. The liability in respect of such prior prior period income of Rs.1155.11 lacs. The liability in respect of such prior prior period income of Rs.1155.11 lacs. The liability in respect of such prior period expenses have arisen period expenses have arisen during the current year. during the current year. Secondly, accordingly to the method of accounting followed by the assessee the cut accordingly to the method of accounting followed by the assessee the cut accordingly to the method of accounting followed by the assessee the cut- off date for accounting liabilities for the year is 30th June. off date for accounting liabilities for the year is 30th June. off date for accounting liabilities for the year is 30th June. Thereafter the expenditure is accounted for in the subsequent year. The said prior y expenditure is accounted for in the subsequent year. The said prior y expenditure is accounted for in the subsequent year. The said prior year's adjustments arise on this account from year to year and hence is an adjustments arise on this account from year to year and hence is an adjustments arise on this account from year to year and hence is an allowable expenditure for the Assessment Year 1998 allowable expenditure for the Assessment Year 1998-99." The details of the prior period adjustments were provided in the Annual The details of the prior period adjustments were provided in the Annual The details of the prior period adjustments were provided in the Annual Report at Schedule 13. The net amount of Rs.2,583.13 l Report at Schedule 13. The net amount of Rs.2,583.13 lacs was claimed acs was claimed as a deduction by the appellant. as a deduction by the appellant. The learned Additional Commissioner vide letter dated August 16, 2000 The learned Additional Commissioner vide letter dated August 16, 2000 The learned Additional Commissioner vide letter dated August 16, 2000 requested the appellant to submit details of the prior period expenses and requested the appellant to submit details of the prior period expenses and requested the appellant to submit details of the prior period expenses and also requested the also requested also requested the appellant the appellant appellant to to make submissions as to to make make submissions submissions as to as to why why why disallowances should not be made in respect of the said expenditure. The allowances should not be made in respect of the said expenditure. The allowances should not be made in respect of the said expenditure. The appellant submitted the information requested vide letters dated November appellant submitted the information requested vide letters dated November appellant submitted the information requested vide letters dated November 27, 2000, December 12, 2000 and January 12, 2001. The information was 27, 2000, December 12, 2000 and January 12, 2001. The information was 27, 2000, December 12, 2000 and January 12, 2001. The information was furnished in respect of each item of expen furnished in respect of each item of expenditure and explanations were diture and explanations were also provided in that respect. also provided in that respect. However, information in respect of legal However, information in respect of legal expenses aggregating to Rs.7 lakhs was not received by the appellant and expenses aggregating to Rs.7 lakhs was not received by the appellant and expenses aggregating to Rs.7 lakhs was not received by the appellant and the same could not be furnished during the course of the assessment the same could not be furnished during the course of the assessment the same could not be furnished during the course of the assessment proceedings. The learned Additional Commissioner in the assessment order held that The learned Additional Commissioner in the assessment order held that The learned Additional Commissioner in the assessment order held that the legal expenses incurred are not deductible in the absence of details. the legal expenses incurred are not deductible in the absence of details. the legal expenses incurred are not deductible in the absence of details. The appellant submits that the learned Additional Commissioner ought to The appellant submits that the learned Additional Commissioner ought to The appellant submits that the learned Additional Commissioner ought to have appreciated that producing evidence have appreciated that producing evidence in respect of every item of in respect of every item of expenditure is not possible for an organisation of the size of the appellant. expenditure is not possible for an organisation of the size of the appellant. expenditure is not possible for an organisation of the size of the appellant. The appellant further submits that the expenditure had crystallized during The appellant further submits that the expenditure had crystallized during The appellant further submits that the expenditure had crystallized during the previous year relevant to the assessment year 1998 the previous year relevant to the assessment year 1998-99 and therefore 99 and therefore ought to have been allowed by the Additional Commissioner. ght to have been allowed by the Additional Commissioner. ght to have been allowed by the Additional Commissioner. The appellant submits considering the size of the organisation and the fact The appellant submits considering the size of the organisation and the fact The appellant submits considering the size of the organisation and the fact that obtaining information from various stations located at remote places that obtaining information from various stations located at remote places that obtaining information from various stations located at remote places there are at times instances where there is a del there are at times instances where there is a delay in accounting of ay in accounting of various expenditure. Such delays in accounting should not result in the various expenditure. Such delays in accounting should not result in the various expenditure. Such delays in accounting should not result in the appellant being denied a deduction for expenditure which has been appellant being denied a deduction for expenditure which has been appellant being denied a deduction for expenditure which has been otherwise allowable otherwise allowable In view of the above, the appellant submits that the learned Additional In view of the above, the appellant submits that the learned Additional In view of the above, the appellant submits that the learned Additional Commissioner may be directed to allow deduction for the legal expenses sioner may be directed to allow deduction for the legal expenses sioner may be directed to allow deduction for the legal expenses aggregating to Rs.7 lacs. Alternatively, the appellant submits that the aggregating to Rs.7 lacs. Alternatively, the appellant submits that the aggregating to Rs.7 lacs. Alternatively, the appellant submits that the learned Additional Commissioner may be directed to allow deduction for learned Additional Commissioner may be directed to allow deduction for learned Additional Commissioner may be directed to allow deduction for the expenditure after verifying the details that the expenditure after verifying the details that may be produced at the time may be produced at the time of giving effect to the appellate order." of giving effect to the appellate order."

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 87 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

25.1 Since the ground no. 9 of the appeal has already been Since the ground no. 9 of the appeal has already been Since the ground no. 9 of the appeal has already been dismissed, dismissed, therefore, therefore the the consequent consequent claim claim of of depreciation depreciatio allowance in subsequent assessment years, if not allowed by the allowance in subsequent assessment years, if not allowed by the allowance in subsequent assessment years, if not allowed by the Assessing Officer, then it is a matter of rectification, for which the essing Officer, then it is a matter of rectification, for which the essing Officer, then it is a matter of rectification, for which the assessee should have sought proper remedy before the relevant assessee should have sought proper remedy before the relevant assessee should have sought proper remedy before the relevant income-tax authority. However, in the interest of justice, we restore tax authority. However, in the interest of justice, we restore tax authority. However, in the interest of justice, we restore the matter to the file of the Assessing officer for exam to the file of the Assessing officer for examination and to the file of the Assessing officer for exam consider the request of the assessee the request of the assessee in accordance with law. The in accordance with law. The ground is accordingly allowed for statistical purpose. ground is accordingly allowed for statistical purpose. ground is accordingly allowed for statistical purpose.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 88 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 89 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

CIT (A)] under section 250 of the Income Tax Act, 1961 ('the Act) on the CIT (A)] under section 250 of the Income Tax Act, 1961 ('the Act) on the CIT (A)] under section 250 of the Income Tax Act, 1961 ('the Act) on the following grounds: following grounds: Decommissioning charges ecommissioning charges 1. The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 2,198.10 lacs, being Decommissioning Levy collected amount of Rs. 2,198.10 lacs, being Decommissioning Levy collected amount of Rs. 2,198.10 lacs, being Decommissioning Levy collected by the appellant. by the appellant. 2. The learned CIT (A) erred in confirming as income of the appellant an The learned CIT (A) erred in confirming as income of the appellant an The learned CIT (A) erred in confirming as income of the appellant an amount amount of of Rs.2,802.93 Rs.2,802.93 lacs, lacs, being being interest interest credited credited to to Decommissioning Fund. Decommissioning Fund. Renovation & Modernisation levy Renovation & Modernisation levy 3. The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 5,495.24 lacs, being Renovation & Modernisation levy amount of Rs. 5,495.24 lacs, being Renovation & Modernisation levy amount of Rs. 5,495.24 lacs, being Renovation & Modernisation levy collected by the appe collected by the appellant. 4. The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 1,398.90 lacs, being interest credited to Renovation amount of Rs. 1,398.90 lacs, being interest credited to Renovation amount of Rs. 1,398.90 lacs, being interest credited to Renovation and Modernisation fund. and Modernisation fund. 5. Without prejudice to Grounds 3 and 4 above, the learned CIT(A) erred Without prejudice to Grounds 3 and 4 above, the learned CIT(A) erred Without prejudice to Grounds 3 and 4 above, the learned CIT(A) erred in holding that the in holding that the amount collected towards Renovation & amount collected towards Renovation & Modernisation levy was not in the nature of a capital receipt and Modernisation levy was not in the nature of a capital receipt and Modernisation levy was not in the nature of a capital receipt and accordingly taxable. accordingly taxable. Research & Development levy Research & Development levy 6. The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an The learned CIT(A) erred in confirming as income of the appellant an amount of Rs.3,297.14 lacs, being amount of Rs.3,297.14 lacs, being Research & Development levy Research & Development levy collected by the appellant. collected by the appellant. 7. The learned CIT (A) erred in confirming as income of the appellant an The learned CIT (A) erred in confirming as income of the appellant an The learned CIT (A) erred in confirming as income of the appellant an amount of Rs.885.08 lacs, being interest credited to Research and amount of Rs.885.08 lacs, being interest credited to Research and amount of Rs.885.08 lacs, being interest credited to Research and Development fund. Development fund. 8. Without prejudice to Grounds 6 and 7 above, t Without prejudice to Grounds 6 and 7 above, the learned CIT(A) erred he learned CIT(A) erred in holding that a portion of the amount collected towards Research & in holding that a portion of the amount collected towards Research & in holding that a portion of the amount collected towards Research & Development levy was not in the nature of a capital receipt and Development levy was not in the nature of a capital receipt and Development levy was not in the nature of a capital receipt and accordingly taxable. accordingly taxable. Income arising from / during construction activities Income arising from / during construction activities 9. The learned CIT(A) erred The learned CIT(A) erred in confirming the action of the Assistant in confirming the action of the Assistant Commissioner of taxing as income the following amounts which had Commissioner of taxing as income the following amounts which had Commissioner of taxing as income the following amounts which had been reduced by the appellant from the expenditure incurred during been reduced by the appellant from the expenditure incurred during been reduced by the appellant from the expenditure incurred during construction: construction: Particulars Sr. Particulars Amount Amount (Rs. (Rs. in in No. Lacs) Staff loan Staff loan 59.80 Inter Interest on others 440.83 440.83 Consultancy receipts Consultancy receipts 64.49

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 90 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Other Income (including interest Other Income (including interest 1,998.59 1,998.59 income income – other than on surplus funds) funds) Total Total 2,563.71 2,563.71 Disallowance for provision made for obsolete stock Disallowance for provision made for obsolete stock 10. The learned CIT (A) erred in confirming the action of t The learned CIT (A) erred in confirming the action of the Assistant The learned CIT (A) erred in confirming the action of t Commissioner of disallowing the provision made for loss and obsolete Commissioner of disallowing the provision made for loss and obsolete Commissioner of disallowing the provision made for loss and obsolete stock of Rs. 36.22 lacs stock of Rs. 36.22 lacs Taxability under section 115JA of the Act Taxability under section 115JA of the Act 11. 11. The leamed CIT(A) erred in holding that the provisions of section 11. The leamed CIT(A) erred in holding that the provisions of section 11. The leamed CIT(A) erred in holding that the provisions of section 115JA apply to the appellant. 115JA apply to the appellant. 12. The learned CIT(A) erred in confirming the action of the Assistant ned CIT(A) erred in confirming the action of the Assistant ned CIT(A) erred in confirming the action of the Assistant Commissioner in holding that the other income of the appellant was Commissioner in holding that the other income of the appellant was Commissioner in holding that the other income of the appellant was not derived from the business of generation of power. not derived from the business of generation of power. 13. 13. The learned CIT(A) erred in confirming the action of the Assistant 13. The learned CIT(A) erred in confirming the action of the Assistant 13. The learned CIT(A) erred in confirming the action of the Assistant Commissioner in including the following amounts as being part of ssioner in including the following amounts as being part of ssioner in including the following amounts as being part of book profits under section 115JA: book profits under section 115JA: Sr. No. Particulars Particulars Amount (Rs. In Lacs) a. Interest income on deposits with banks Interest income on deposits with banks 10.870.92 b. Interest Interest Interest income income income from from from Inter Inter Inter Corporate Corporate Corporate 184.75 Deposits Deposits c. Interest on Interest on staff loan 364.37 d. Interest Others Interest Others 445.17 e. Gain on sale of fixed assets Gain on sale of fixed assets 10.96 f. Miscellaneous receipts Miscellaneous receipts 560.24 g. Income on R & M funds and R & D funds Income on R & M funds and R & D funds Income on R & M funds and R & D funds 841.79 credited to the respective funds credited to the respective funds Total Total 13,278.20 The learned CIT (A) ought to have appreciat The learned CIT (A) ought to have appreciated that the above incomes ed that the above incomes were inextricably linked to the business of generation of power and were inextricably linked to the business of generation of power and were inextricably linked to the business of generation of power and were therefore derived from the business of generation of power. On were therefore derived from the business of generation of power. On were therefore derived from the business of generation of power. On this basis, the above amounts were to be excluded from book profits this basis, the above amounts were to be excluded from book profits this basis, the above amounts were to be excluded from book profits in accordance with Explana in accordance with Explanation (iv) to section 115JA(2). 14. The learned CIT(A) erred in not allowing deduction for expenditure The learned CIT(A) erred in not allowing deduction for expenditure The learned CIT(A) erred in not allowing deduction for expenditure incurred by the appellant in earning the income of Rs. 13,278.20 lacs, incurred by the appellant in earning the income of Rs. 13,278.20 lacs, incurred by the appellant in earning the income of Rs. 13,278.20 lacs, in computing the book profits of the appellant. in computing the book profits of the appellant. 15. 15. The learned CIT(A) erred in holding 15. The learned CIT(A) erred in holding that there is no difference in that there is no difference in facts for the assessment year in appeal vis facts for the assessment year in appeal vis-à-vis the assessment vis the assessment years 1998 years 1998-1999 and 1999-2000 as regards the source of funds from 2000 as regards the source of funds from which the amounts were placed in bank fixed deposits. The learned which the amounts were placed in bank fixed deposits. The learned which the amounts were placed in bank fixed deposits. The learned CIT(A) erred in not verifyi CIT(A) erred in not verifying the facts for the assessment year under ng the facts for the assessment year under appeal.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 91 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 92 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

same Commissioner i.e. Commissioner of inc same Commissioner i.e. Commissioner of income-ta tax-III, Mumbai. The scanned copy of scanned copy of notification issued by the Commissioner of Commissioner of income-tax-III, Mumbai, distributing the case i.e Company having Mumbai, distributing the case i.e Company having Mumbai, distributing the case i.e Company having alphabet N, under the range 3(2) lphabet N, under the range 3(2), filed by the ld DR is extracted as , filed by the ld DR is extracted as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 93 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 94 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

31.2 In view of returned inco n view of returned income of the assessee for the year under me of the assessee for the year under consideration being more than threshold limit prescribed, the case consideration being more than threshold limit prescribed, the case consideration being more than threshold limit prescribed, the case was transferred to u transferred to unit i.e. circle 3(2) , Mumbai nit i.e. circle 3(2) , Mumbai [ falling under Range 3(2), Mumbai] which was headed by the officer in the rank of which was headed by the officer in the rank of Assistant/ Deputy Commissioner of Income Commissioner of Income-tax . At the time of the tax . At the time of the issue of notice under section 143(2), the unit was headed by the issue of notice under section 143(2), the unit was headed by the issue of notice under section 143(2), the unit was headed by the officer in the rank of the Deputy Commissioner of Income-tax but officer in the rank of the Deputy Commissioner of Income officer in the rank of the Deputy Commissioner of Income subsequently, he might have been transferred and in his place subsequently, he might have been transferred and in his place subsequently, he might have been transferred and in his place officer in the rank of Asst Commissioner of income ank of Asst Commissioner of income- -tax, must have been posted, and therefore assessment order has been passed by been posted, and therefore assessment order has been passed by been posted, and therefore assessment order has been passed by the officer in the rank of Asst Commissioner of income-tax. the officer in the rank of Asst Commissioner of income the officer in the rank of Asst Commissioner of income Therefore there is no change in the jurisdiction of the assessee, Therefore there is no change in the jurisdiction of the assessee, Therefore there is no change in the jurisdiction of the assessee,

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 95 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

because it remained ed with the same unit i.e. circle-3(2) or Range 3(2) or Range-3(2) at the time of initiation of assessment proceeding as well as at the at the time of initiation of assessment proceeding as well as at the at the time of initiation of assessment proceeding as well as at the time of completion of the assessment proceeding. time of completion of the assessment proceeding. 31.2 We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of jurisdiction in passing the assessment order challenged by the assing the assessment order challenged by the assing the assessment order challenged by the assessee. The identical additional grounds raised by the assessee The identical additional grounds raised by the assessee The identical additional grounds raised by the assessee have been admitted in appeal for AY 1998 have been admitted in appeal for AY 1998-99, but after detailed 99, but after detailed discussion and following finding of the Tribunal in the case Stock discussion and following finding of the Tribunal in the case discussion and following finding of the Tribunal in the case Traders P Ltd (supra), (supra), same have been dismissed. Accordingly, same have been dismissed. Accordingly, following our finding in AY 1998 following our finding in AY 1998-99, the additional grounds of the 99, the additional grounds of the appeal for year under consideration are accordingly dismissed. appeal for year under consideration are accordingly dismissed. appeal for year under consideration are accordingly dismissed. 32. Now we take up the regular ground raised by the assessee. Now we take up the regular ground raised by the assessee. Now we take up the regular ground raised by the assessee. The ground No. one and two of the appeal of the assessee, relate to one and two of the appeal of the assessee, relate to one and two of the appeal of the assessee, relate to receipts of ₹ 2,198.10 lakhs by way of decommissioning levy and 198.10 lakhs by way of decommissioning levy and 198.10 lakhs by way of decommissioning levy and interest of rupees 2802.93 credited to decommissioning levy fund interest of rupees 2802.93 credited to decommissioning levy fund interest of rupees 2802.93 credited to decommissioning levy fund respectively. The issues in dispute being identical to ground Nos. 5 respectively. The issues in dispute being identical to ground Nos. 5 respectively. The issues in dispute being identical to ground Nos. 5 and 6 raised in assessment year 1998 raised in assessment year 1998-99, therefore, following our 99, therefore, following our finding in ITA No. 202/Mum/2004 for assessment year 1998-99, finding in ITA No. 202/Mum/2004 for assessment year 1998 finding in ITA No. 202/Mum/2004 for assessment year 1998 the issues are decided mutatis mutandis. the issues are decided mutatis mutandis.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 96 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

credited to the renovation and modernization fund respectively. credited to the renovation and modernization fund credited to the renovation and modernization fund In ground no. 5 , the assessee has prayed for treating the receipt In ground no. 5 , the assessee has prayed for treating the In ground no. 5 , the assessee has prayed for treating the of Rs. 5495.24 lakhs by way of lakhs by way of renovation and modernization renovation and modernization levy as capital receipt. The issues in dispute raised in above as capital receipt. The issues in dispute raised in above as capital receipt. The issues in dispute raised in above grounds have already been adjudicated by us in the appeal for grounds have already been adjudicated by us in the appeal for grounds have already been adjudicated by us in the appeal for assessment year 1998 assessment year 1998-99 ,therefore, following our finding in appeal 99 ,therefore, following our finding in appeal for assessment year 1998 for assessment year 1998-99, the issues in dispute are decided issues in dispute are decided mutatis mutandis.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 97 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

assessment year 1998 assessment year 1998-99 the ground no. 8 of the appeal of the appeal is adjudicated mutatis mutandis. adjudicated mutatis mutandis.

Unit Rs. TAPS 7,82,025 MApS 25,69,758 KAPS 2,70,754 Total 36,22,527 36.1 Regarding the unit KAPS egarding the unit KAPS, the assessee submitted that the assessee submitted that amount of ₹2,70,754/- represented actua represented actual loss due to fire in the go l loss due to fire in the godown. The Assessing Officer accordingly allowed the said claim of the loss, The Assessing Officer accordingly allowed the said claim of the loss, The Assessing Officer accordingly allowed the said claim of the loss, but regarding the other provisions for slow but regarding the other provisions for slow-moving stock no details moving stock no details were provided by the assessee a were provided by the assessee as how same bec s how same became obsolete. Therefore he disallowed the balance amount of Therefore he disallowed the balance amount of ₹ 33.52 lakhs while 33.52 lakhs while computing the assessed income. The Ld. CIT(A) upheld the computing the assessed income. The Ld. CIT(A) computing the assessed income. The Ld. CIT(A) disallowance observing as under: observing as under:

“15.2. I have considered the foregoing submissions. The case law cited 15.2. I have considered the foregoing submissions. The case law cited 15.2. I have considered the foregoing submissions. The case law cited by the learned by the learned A.R. is not applicable to the facts of the appellant's A.R. is not applicable to the facts of the appellant's case. I am in agreement with the AO that slow moving spares do not case. I am in agreement with the AO that slow moving spares do not case. I am in agreement with the AO that slow moving spares do not amount to mean that the same have become useless. In my considered amount to mean that the same have become useless. In my considered amount to mean that the same have become useless. In my considered opinion there is no plausible justification for the appellant to se opinion there is no plausible justification for the appellant to se opinion there is no plausible justification for the appellant to seek to book a loss by resorting to the revaluation of stock of spare parts book a loss by resorting to the revaluation of stock of spare parts book a loss by resorting to the revaluation of stock of spare parts which are meant for the appellant's own internal use. The which are meant for the appellant's own internal use. The which are meant for the appellant's own internal use. The disallowance is. Therefore, confirmed. disallowance is. Therefore, confirmed.”

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 98 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

36.2 Before us the learned counsel of the assessee submitted that efore us the learned counsel of the assessee submitted that efore us the learned counsel of the assessee submitted that provision was made on the basis of a committee s on the basis of a committee set up to et up to ascertain value of slow-moving stock/obsolete stock. It was submitted that moving stock/obsolete stock. It was submitted that moving stock/obsolete stock. It was submitted that said provision was being made consistently and has not been said provision was being made consistently and has not been said provision was being made consistently and has not been challenged in the past. The learned counsel challenged in the past. The learned counsel for the assessee relied the assessee relied on following decisions in support of its claim: ecisions in support of its claim:

a. CIT v Hotline Teletube & Components Ltd. (175 Taxman CIT v Hotline Teletube & Components Ltd. (175 Taxman CIT v Hotline Teletube & Components Ltd. (175 Taxman 286)Delhi HC) 286)Delhi HC) b. CIT v Hughes Communications India Ltd. (215 Taxman CIT v Hughes Communications India Ltd. (215 Taxman CIT v Hughes Communications India Ltd. (215 Taxman 136)Delhi HC) 136)Delhi HC) c. CIT v Becton Dickinson (India (P.) Ltd. (214 Taxman CIT v Becton Dickinson (India (P.) Ltd. (214 Taxman CIT v Becton Dickinson (India (P.) Ltd. (214 Taxman 636)(Delhi HC) 636)(Delhi HC) 36.3 We have heard riva We have heard rival submission of the parties on the issue in l submission of the parties on the issue in dispute and perused the relevant material on record. If a wrong dispute and perused the relevant material on record. If a wrong dispute and perused the relevant material on record. If a wrong claim has been allowed in the earlier year same cannot be ground claim has been allowed in the earlier year same cannot be ground claim has been allowed in the earlier year same cannot be ground for allowing in the year under consideration also. The Hon’ble for allowing in the year under consideration also. The Hon’bl for allowing in the year under consideration also. The Hon’bl Supreme Court in the case of Distributor (baroda) Private Limited istributor (baroda) Private Limited Supreme Court in the 1985 AIR 1585, 1985 SCR Supl. (1) 778 1985 AIR 1585, 1985 SCR Supl. (1) 778 held that there is no held that there is no heroism in continuing the error and it should be corrected when heroism in continuing the error and it should be corrected when heroism in continuing the error and it should be corrected when pointed out. Though the learned counsel of the assessee has relied pointed out. Though the learned counsel of the assessee has relied pointed out. Though the learned counsel of the assessee has relied on various decisions cited, but the factual information of the list of s cited, but the factual information of the list of s cited, but the factual information of the list of such stock and how same became obsolete was not submitted such stock and how same became obsolete was not submitted such stock and how same became obsolete was not submitted before the lower authorities. Before us also no such evidences have authorities. Before us also no such evidences have authorities. Before us also no such evidences have been submitted to establish that relevant stock became obsolete. been submitted to establish that relevant stock became obsolete. been submitted to establish that relevant stock became obsolete. Unless properly identified the obsolete stock or a scientific way of ly identified the obsolete stock or a scientific way of ly identified the obsolete stock or a scientific way of making provision for such an obsolete stock is produced with making provision for such an obsolete stock is produced with making provision for such an obsolete stock is produced with

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 99 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

documentary evidence, the claim of the assessee cannot be allowed. documentary evidence, the claim of the assessee cannot be allowed. documentary evidence, the claim of the assessee cannot be allowed. Therefore, we do not find a e do not find any error in the order of the Ld. CIT(A) on error in the order of the Ld. CIT(A) on the issue in dispute, and accordingly e issue in dispute, and accordingly, we uphold the same. The we uphold the same. The ground No. 10 of the appeal of the assessee is dismissed. ground No. 10 of the appeal of the assessee is dismissed. ground No. 10 of the appeal of the assessee is dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 100 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

AY 2001-02

The appellant company objects to the appellate order dated 30 The appellant company objects to the appellate order dated 30 The appellant company objects to the appellate order dated 30 March 2007 passed by the C March 2007 passed by the Commissioner of Income- -lax (Appeals)- III, Mumbai [ CIT (A)'| under section 250 of the Income Tax Act, III, Mumbai [ CIT (A)'| under section 250 of the Income Tax Act, III, Mumbai [ CIT (A)'| under section 250 of the Income Tax Act, 1961 ('the Act) on the following grounds: 1961 ('the Act) on the following grounds: Decommissioning Levy Decommissioning Levy 1. The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 2,955. 1 an amount of Rs. 2,955. 19 lacs, being Decommissioning Levy 9 lacs, being Decommissioning Levy collected by the appellant. collected by the appellant. 2. The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the appellant an amount of Rs.3,292.31 lacs, being interest credited appellant an amount of Rs.3,292.31 lacs, being interest credited appellant an amount of Rs.3,292.31 lacs, being interest credited to Decommissioning Fund. to Decommissioning Fund. Renovation & Modernisation Levy Renovation & Modernisation Levy 3. The learned CI The learned CIT(A) erred in confirming as income of the appellant T(A) erred in confirming as income of the appellant an amount of Rs. 7,387.98 lacs, being Renovation & an amount of Rs. 7,387.98 lacs, being Renovation & an amount of Rs. 7,387.98 lacs, being Renovation & Modernisation levy collected by the appellant. Modernisation levy collected by the appellant. 4. The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant an amount of Rs.2,269.66 lacs, being int an amount of Rs.2,269.66 lacs, being interest credited to erest credited to Renovation and Modernisation fund. Renovation and Modernisation fund. 5. Without prejudice to Grounds 3 and 4 above, the learned CIT(A) Without prejudice to Grounds 3 and 4 above, the learned CIT(A) Without prejudice to Grounds 3 and 4 above, the learned CIT(A) erred in holding that the amount collected towards Renovation & erred in holding that the amount collected towards Renovation & erred in holding that the amount collected towards Renovation & Modernisation levy was not in the nature of a capital receipt and Modernisation levy was not in the nature of a capital receipt and Modernisation levy was not in the nature of a capital receipt and accordingl accordingly taxable. Research & Development Levy Research & Development Levy 6. The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 4,432.79 lacs, being Research & Development an amount of Rs. 4,432.79 lacs, being Research & Development an amount of Rs. 4,432.79 lacs, being Research & Development levy collected by the appellant. levy collected by the appellant. 7. The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the appellant an amount of Rs. 1,336.46 lacs, being interest credited appellant an amount of Rs. 1,336.46 lacs, being interest credited appellant an amount of Rs. 1,336.46 lacs, being interest credited to Research and Development fund. to Research and Development fund.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 101 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 102 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 103 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Interest under section 234B Interest under section 234B 20. The learned CIT(A) erred confirming the interest charged by the The learned CIT(A) erred confirming the interest charged by the The learned CIT(A) erred confirming the interest charged by the Additional Commissioner under section 234B at Rs. 1078.08 Additional Commissioner under section 234B at Rs. 1078.08 Additional Commissioner under section 234B at Rs. 1078.08 lakhs 41. Further, vide letter dated 18/07/2018, the a ide letter dated 18/07/2018, the a ide letter dated 18/07/2018, the assessee filed additional ground, whic , which are reproduced as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 104 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

commissioning levy commissioning levy by the assessee and the interest credited on interest credited on the de-commissioning fund commissioning fund respectively. The issues in dispute The issues in dispute being identical to ground Nos. 5 and 6 raised in assessment year being identical to ground Nos. 5 and 6 raised in assessment year being identical to ground Nos. 5 and 6 raised in assessment year 1998-99, therefore, following our finding in ITA No. 2 99, therefore, following our finding in ITA No. 202/Mum/2004 99, therefore, following our finding in ITA No. 2 for assessment year 1998 for assessment year 1998-99, the issues are decided mutatis 99, the issues are decided mutatis mutandis. 43. The ground No The ground Nos. 3 to 9 of the appeal for . 3 to 9 of the appeal for year under consideration are identical to ground raised in assessment year consideration are identical to ground raised in assessment year consideration are identical to ground raised in assessment year 2000-01, accordingly following our finding in assessme 01, accordingly following our finding in assessment year 01, accordingly following our finding in assessme 2000-01, the ground No 01, the ground Nos. 3 to 9 of the year under consideration are . 3 to 9 of the year under consideration are decided mutatis mutandis. decided mutatis mutandis. 44. As far as ground No. 10 of the appeal against not allowing the As far as ground No. 10 of the appeal against not allowing the As far as ground No. 10 of the appeal against not allowing the deduction for expenditure incurred in respect of income of ₹ 2, deduction for expenditure incurred in respect of income of deduction for expenditure incurred in respect of income of 764.70 lakhs, which has held to be income assessable under the 70 lakhs, which has held to be income assessable under the 70 lakhs, which has held to be income assessable under the head “income from other sources”. While adjudicating round No. 9, head “income from other sources”. While adjudicating round No. 9, head “income from other sources”. While adjudicating round No. 9, we have already upheld the finding of the lower dy upheld the finding of the lower authorities that said authorities that said income is liable to be assessed under head “the income from other income is liable to be assessed under head “the inco income is liable to be assessed under head “the inco sources”. We are of opinion that u We are of opinion that under the provisions for nder the provisions for assessment of the income under the head assessment of the income under the head ‘income from other income from other sources’, the assessee is eligible for expenses incurred for earning , the assessee is eligible for expenses incurred for earning , the assessee is eligible for expenses incurred for earning such income. Accordingly, we restore this ground to the file of the such income. Accordingly, we restore this ground to the such income. Accordingly, we restore this ground to the Assessing Officer for verification of the c Assessing Officer for verification of the claim of the assessee and laim of the assessee and decide in accordance with law. The ground No. 10 of the appeal of in accordance with law. The ground No. 10 of the appeal of in accordance with law. The ground No. 10 of the appeal of the assessee is accordingly allowed for statistical purposes. the assessee is accordingly allowed for statistical purposes. the assessee is accordingly allowed for statistical purposes.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 105 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

“1. Even though the accounting of liability is fixed as 30th 1. Even though the accounting of liability is fixed as 30th 1. Even though the accounting of liability is fixed as 30th June, every year, return is filed almost aft June, every year, return is filed almost after six months er six months from this date. The final Balance sheet is signed almost from this date. The final Balance sheet is signed almost from this date. The final Balance sheet is signed almost after 3 months from this date. The assessee is having after 3 months from this date. The assessee is having after 3 months from this date. The assessee is having sufficient time to claim its expenses in return of Income. sufficient time to claim its expenses in return of Income. sufficient time to claim its expenses in return of Income. 2. As it is three months time i.e. 30th June is sufficient to 2. As it is three months time i.e. 30th June is sufficient to 2. As it is three months time i.e. 30th June is sufficient to account for an outstanding expense, but in event of r an outstanding expense, but in event of r an outstanding expense, but in event of something left out it can be claimed directly in the Return something left out it can be claimed directly in the Return something left out it can be claimed directly in the Return of Income which is filed around December every of Income which is filed around December every year. year. 3. From the break up of these expenses filed, the major 3. From the break up of these expenses filed, the major 3. From the break up of these expenses filed, the major expenses related to salaries and bonuses, rep expenses related to salaries and bonuses, rep expenses related to salaries and bonuses, repairs, maintenance etc. It is difficult to believe that unpaid maintenance etc. It is difficult to believe that unpaid maintenance etc. It is difficult to believe that unpaid salaries and bonuses could not be calculated and salaries and bonuses could not be calculated and salaries and bonuses could not be calculated and provided for in the book. Similarly, repairs and provided for in the book. Similarly, repairs and provided for in the book. Similarly, repairs and maintenance are on going expenses and are paid maintenance are on going expenses and are paid maintenance are on going expenses and are paid regularly to contractors. It is difficult to imag regularly to contractors. It is difficult to imagine that a ine that a period of 3 months from the year end was not sufficient period of 3 months from the year end was not sufficient period of 3 months from the year end was not sufficient for assessee to obtain bills from contractors and account for assessee to obtain bills from contractors and account for assessee to obtain bills from contractors and account them. 4. Under mercantile system of accounting, which is 4. Under mercantile system of accounting, which is 4. Under mercantile system of accounting, which is recognised as proper system of accounting by both recognised as proper system of accounting by both recognised as proper system of accounting by both institute of Chartered A institute of Chartered Accountants of India and Income ccountants of India and Income tax, all expenses related to that year should only be tax, all expenses related to that year should only be tax, all expenses related to that year should only be debited to P&L account and claim in respect of only those debited to P&L account and claim in respect of only those debited to P&L account and claim in respect of only those expenses is allowable. Any expenses that pertains to the expenses is allowable. Any expenses that pertains to the expenses is allowable. Any expenses that pertains to the period other than for which assessment is under period other than for which assessment is under period other than for which assessment is under processing is to be disallowed. Though the assessee is ng is to be disallowed. Though the assessee is ng is to be disallowed. Though the assessee is following the Mercantile System of Accounting yet the following the Mercantile System of Accounting yet the following the Mercantile System of Accounting yet the above expenses were not accounted for as per the above above expenses were not accounted for as per the above above expenses were not accounted for as per the above principle.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 106 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Hence contentions raised by the assessee is rejected and Hence contentions raised by the assessee is rejected and Hence contentions raised by the assessee is rejected and amount of Rs.542.02 lakhs claime amount of Rs.542.02 lakhs claimed during this year d during this year which pertains to last year is which pertains to last year is disallowed.” 45.1 On further appeal, the Ld. CIT(A) partly allowed relief to the n further appeal, the Ld. CIT(A) partly allowed relief to the n further appeal, the Ld. CIT(A) partly allowed relief to the assessee, wherever the assessee was able to justify crystallisation of assessee, wherever the assessee was able to justify crystallisation of assessee, wherever the assessee was able to justify crystallisation of the expenses in the year under consideration. The relevant finding the expenses in the year under consideration. The rele the expenses in the year under consideration. The rele of the Ld. CIT(A) is reproduced as under: of the Ld. CIT(A) is reproduced as under:

“9.1 Before me, the Ld. A.R. of the appellant Before me, the Ld. A.R. of the appellant Before me, the Ld. A.R. of the appellant reiterated the submissions made before the A0 during reiterated the submissions made before the A0 during reiterated the submissions made before the A0 during the assessment proceedings. He also filed a copy of the assessment proceedings. He also filed a copy of the assessment proceedings. He also filed a copy of letter dated 10th February 2004 filed before the 1 letter dated 10th February 2004 filed before the 1 letter dated 10th February 2004 filed before the 10 during assessment proceedings giving the details of during assessment proceedings giving the details of during assessment proceedings giving the details of various expenses claimed as prior period expenses. various expenses claimed as prior period expenses. various expenses claimed as prior period expenses. The reasons for claiming these expenses in the year The reasons for claiming these expenses in the year The reasons for claiming these expenses in the year under consideration have also been given in the said under consideration have also been given in the said under consideration have also been given in the said letter. According to the appellant, as against letter. According to the appellant, as against the total the total expenditure of Rs.1,93.709.11 lacs debited in the P & expenditure of Rs.1,93.709.11 lacs debited in the P & expenditure of Rs.1,93.709.11 lacs debited in the P & L Alc, the amount of Rs. 542.02 lacs claimed on L Alc, the amount of Rs. 542.02 lacs claimed on L Alc, the amount of Rs. 542.02 lacs claimed on account of prior period expenses does not constitute account of prior period expenses does not constitute account of prior period expenses does not constitute even 0.3% of the total expenditure. In such a big even 0.3% of the total expenditure. In such a big even 0.3% of the total expenditure. In such a big organisation, it is not possible to acco organisation, it is not possible to account for each and unt for each and very expenditure relating to the relevant year. very expenditure relating to the relevant year. very expenditure relating to the relevant year. Delayed receipt of some bills can never be Delayed receipt of some bills can never be avoided. avoided. Since the expenditure claimed by the appellant on Since the expenditure claimed by the appellant on Since the expenditure claimed by the appellant on account of prior period expenses account of prior period expenses is quite minuscule, it is quite minuscule, it should have been allowed by the A should have been allowed by the AO as deduction in O as deduction in the current year. It the current year. It Prada Bi was firther stated that Prada Bi was firther stated that the cut-off date for accounting liabilities for the year is off date for accounting liabilities for the year is off date for accounting liabilities for the year is 30th June. Any 30th June. Any liability crystallizing after 30th June liability crystallizing after 30th June is accounted for in the succeeding year. According to is accounted for in the succeeding year. According to is accounted for in the succeeding year. According to the appellant, the appellant, the liability in respect of prior period the liability in respect of prior period expenses claimed by the appellant at Rs.542.02 expenses claimed by the appellant at Rs.542.02 expenses claimed by the appellant at Rs.542.02 lakhs arose in the current year and, accordingly, lakhs arose in the current year and, accordingly, lakhs arose in the current year and, accordingly, these expenses are allowable while computing these expenses are allowable while computing these expenses are allowable while computing income income income of of of the the the appellant appellant appellant for for for the the the year year year under under under consideration. It was further consideration. It was further contended that the prior contended that the prior period expenses also include bonus of 82.82 lakhs period expenses also include bonus of 82.82 lakhs period expenses also include bonus of 82.82 lakhs

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 107 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

which is allowable w/s 43B on payment basis which is allowable w/s 43B on payment basis which is allowable w/s 43B on payment basis irrespective of the financial year to which the irrespective of the financial year to which the irrespective of the financial year to which the expenditure pertains. The appellant also placed expenditure pertains. The appellant also placed expenditure pertains. The appellant also placed reliance on the decision in the case of S reliance on the decision in the case of Saurashtra aurashtra Cement & Chemical Industries Ltd. 213 ITR 523 (Guj) Cement & Chemical Industries Ltd. 213 ITR 523 (Guj) Cement & Chemical Industries Ltd. 213 ITR 523 (Guj) and Nathmal Tolaram 88 IT 234 (Gauhati). In these and Nathmal Tolaram 88 IT 234 (Gauhati). In these and Nathmal Tolaram 88 IT 234 (Gauhati). In these cases, it has been held that the deduction in respect cases, it has been held that the deduction in respect cases, it has been held that the deduction in respect of the expenditure is to be allowed in the year in of the expenditure is to be allowed in the year in of the expenditure is to be allowed in the year in which the liability in respect of the e which the liability in respect of the expenditure was xpenditure was determined and crystalised. determined and crystalised. 9.2 I have carefully considered the submissions made I have carefully considered the submissions made I have carefully considered the submissions made by the appellant. The AO has merely rejecte by the appellant. The AO has merely rejected the d the claim of the appellant see claim of the appellant seeking deduction of Rs. king deduction of Rs. 542.02 lakhs in respect of prior period expenses on 542.02 lakhs in respect of prior period expenses on 542.02 lakhs in respect of prior period expenses on the ground that these expenses pertained to carlier that these expenses pertained to carlier that these expenses pertained to carlier years. Although the appellant had filed detailed years. Although the appellant had filed detailed years. Although the appellant had filed detailed submissions and paper book running into more than submissions and paper book running into more than submissions and paper book running into more than 100 pages vide its letter dated 10th Feb. 2004 but 100 pages vide its letter dated 10th Feb. 2004 but 100 pages vide its letter dated 10th Feb. 2004 but the AO has not even summarily discussed the the AO has not even summarily discussed the the AO has not even summarily discussed the contentions made by t contentions made by the appellant in the said letter. he appellant in the said letter. Simply from the fact that an expenditure relates to the Simply from the fact that an expenditure relates to the Simply from the fact that an expenditure relates to the transaction of an earlier year does not make it a transaction of an earlier year does not make it a transaction of an earlier year does not make it a liability for the earlier year unless it can be liability for the earlier year unless it can be liability for the earlier year unless it can be established that the liability was determined and established that the liability was determined and established that the liability was determined and crystallized in tha crystallized in that year. When an assessee follows When an assessee follows mercantile system of accounting, every liability mercantile system of accounting, every liability mercantile system of accounting, every liability claimed by it has to be examined as to whether such claimed by it has to be examined as to whether such claimed by it has to be examined as to whether such liability had crystallized and quantified during the liability had crystallized and quantified during the liability had crystallized and quantified during the year in which it was claimed as deduction. The year in which it was claimed as deduction. The year in which it was claimed as deduction. The liability though perta liability though pertaining to the transaction in an ining to the transaction in an earlier year might have been determined and earlier year might have been determined and earlier year might have been determined and crystallized in later year. In that case, it has to be crystallized in later year. In that case, it has to be crystallized in later year. In that case, it has to be allowed as a deduction in the relevant later year. It allowed as a deduction in the relevant later year. It allowed as a deduction in the relevant later year. It cannot be disallowed merely on the ground that it cannot be disallowed merely on the ground that it cannot be disallowed merely on the ground that it related to a transacti related to a transaction of the earlier year. In the case on of the earlier year. In the case of Saurashtra Cement & of Saurashtra Cement & Chemical Industries Ltd. Vs. Chemical Industries Ltd. Vs. CIT 213 ITR 523 (Guj), it has been held as under : CIT 213 ITR 523 (Guj), it has been held as under :- - "Merely "Merely "Merely because because because an an an expense expense expense relates relates relates to a transaction of an earlier y transaction of an earlier year it does not becom a becom a liability payable in the liability payable in the earlier year unless it can be earlier year unless it can be

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 108 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

said that the liability was defermined and said that the liability was defermined and said that the liability was defermined and crystallized in the year in question on the basis of crystallized in the year in question on the basis of crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. In maintaining accounts on the mercantile basis. In maintaining accounts on the mercantile basis. In each case where the accounts are maintained on each case where the accounts are maintained on each case where the accounts are maintained on mercantile basis it wowskaswe be f mercantile basis it wowskaswe be found in respect ound in respect of of of any any any claim, claim, claim, whether whether whether such such such liability liability liability was was was crystallized and quantified Felusing the previous crystallized and quantified Felusing the previous crystallized and quantified Felusing the previous year so as to be required to be adjusted in the year so as to be required to be adjusted in the year so as to be required to be adjusted in the books of accounts of that previous year. If any books of accounts of that previous year. If any books of accounts of that previous year. If any liability, though relating to the earlier year, liability, though relating to the earlier year, liability, though relating to the earlier year, depen depends ds upon upon making making a a demand demand and and its its acceptance by the assessee and such liability has acceptance by the assessee and such liability has acceptance by the assessee and such liability has been actually claimed and paid in the later been actually claimed and paid in the later been actually claimed and paid in the later previous years cannot be disallowed as deduction previous years cannot be disallowed as deduction previous years cannot be disallowed as deduction merely on the basis the accounts are maintained merely on the basis the accounts are maintained merely on the basis the accounts are maintained on mercantile basis and that it r on mercantile basis and that it related to a elated to a transaction of the previous year. The true profit transaction of the previous year. The true profit transaction of the previous year. The true profit and gain of a previous year are required to be and gain of a previous year are required to be and gain of a previous year are required to be computed for the purpose of determining tax computed for the purpose of determining tax computed for the purpose of determining tax liability. The basis of taxing income is accrual of liability. The basis of taxing income is accrual of liability. The basis of taxing income is accrual of income as well as actual receipt. If for want of income as well as actual receipt. If for want of income as well as actual receipt. If for want of necessary material crystallising the expenditure is cessary material crystallising the expenditure is cessary material crystallising the expenditure is not in existence in respect of which such income or not in existence in respect of which such income or not in existence in respect of which such income or expenses relate, the mercantile system does not expenses relate, the mercantile system does not expenses relate, the mercantile system does not call for the adjustment in the books of accounts on call for the adjustment in the books of accounts on call for the adjustment in the books of accounts on estimate basis. It is actually known income or estimate basis. It is actually known income or estimate basis. It is actually known income or expense expenses, right to receive or liability to pay which s, right to receive or liability to pay which has come to be crystallised, is to be taken into has come to be crystallised, is to be taken into has come to be crystallised, is to be taken into account under mercantile system of maintaining account under mercantile system of maintaining account under mercantile system of maintaining books of accounts. As estimated income or liability, books of accounts. As estimated income or liability, books of accounts. As estimated income or liability, which is yet to be crystallised, can only be which is yet to be crystallised, can only be which is yet to be crystallised, can only be adjusted as cont adjusted as contingency item but not as an ingency item but not as an accrued income or liability of that year. accrued income or liability of that year. 9.2.1 The nature of various prior period expenses claimed 9.2.1 The nature of various prior period expenses claimed 9.2.1 The nature of various prior period expenses claimed by the appellant as deduction for the year under by the appellant as deduction for the year under by the appellant as deduction for the year under consideration are as under consideration are as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 109 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Based on the above discussion, the issue regarding Based on the above discussion, the issue regarding Based on the above discussion, the issue regarding the allowability of various prior period expenses claimed by the allowability of various prior period expenses claimed by the allowability of various prior period expenses claimed by the appellant is discussed hereunder : appellant is discussed hereunder :- 9.2.1(a) TAPS TAPS - Rs. 8.08 lakhs. Neither before the AO nor before me, the appellant has filed Neither before the AO nor before me, the appellant has filed Neither before the AO nor before me, the appellant has filed any evidence to show that the liability in respect of these any evidence to show that the liability in respect of these any evidence to show that the liability in respect of these expenses xpenses xpenses has has has crystallized crystallized crystallized during during during the the the year year year under under under consideration. consideration. Although the appellant was specifically asked Although the appellant was specifically asked to file evidence during the to file evidence during the hearing of appeal but no evidence hearing of appeal but no evidence has been filed so far. In the absence of any evidence the has been filed so far. In the absence of any evidence the has been filed so far. In the absence of any evidence the claim of the appellant that claim of the appellant that these expenses had crystallized these expenses had crystallized during the year under consideration cannot be accepted. during the year under consideration cannot be accepted. during the year under consideration cannot be accepted. Accordingly, the disallowance of Rs. 8.08 lakhs made by the Accordingly, the disallowance of Rs. 8.08 lakhs made by the Accordingly, the disallowance of Rs. 8.08 lakhs made by the AO is upheld. AO is upheld. 9.2.1(6) RAPS RAPS - Rs. 130.14 lakhs. Neither before the AO nor before me, the appellant has filed Neither before the AO nor before me, the appellant has filed Neither before the AO nor before me, the appellant has filed any evidence to show that the liability in respect of these any evidence to show that the liability in respect of these any evidence to show that the liability in respect of these expenses expenses expenses has has has crystallized crystallized crystallized during during during the the the year year year under under under consideration. consideration. Although the appellant was specifically asked Although the appellant was specifically asked

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 110 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

to file evidence during the to file evidence during the hearing of appeal but no evidence hearing of appeal but no evidence has been filed so far. I has been filed so far. In the absence of any evidence the n the absence of any evidence the claim of the appellant that these expenses had crystallized claim of the appellant that these expenses had crystallized claim of the appellant that these expenses had crystallized during the year under consideration cannot be accepted. during the year under consideration cannot be accepted. during the year under consideration cannot be accepted. Accordingly, the disallowance of Rs. 130.14 lakhs made by Accordingly, the disallowance of Rs. 130.14 lakhs made by Accordingly, the disallowance of Rs. 130.14 lakhs made by the AO is upheld. the AO is upheld. 9.2.1(c) MAPS MAPS - Rs. 25.93 lakhs. (i) Repayment of electricity charges recovered from the (i) Repayment of electricity charges recovered from the (i) Repayment of electricity charges recovered from the employees - Rs.6.44 lakhs. It was submitted that the appellant company had recovered It was submitted that the appellant company had recovered It was submitted that the appellant company had recovered the clectricity charges from the employees during the period the clectricity charges from the employees during the period the clectricity charges from the employees during the period from November 1998 to February 2000. The amount from November 1998 to February 2000. The amount from November 1998 to February 2000. The amount recovered was offered to tax as income in the A.Y. 1999 overed was offered to tax as income in the A.Y. 1999 overed was offered to tax as income in the A.Y. 1999- 2000 and 2000 2000 and 2000-01. However, during the previous year 01. However, during the previous year relevant to A. Y. 2001 relevant to A. Y. 2001-02, the appellant company decided to 02, the appellant company decided to return the electricity charges thus recovered to return the electricity charges thus recovered return the electricity charges thus recovered to to the the the employees. Accordingly, an amount of R employees. Accordingly, an amount of Rs. 6.04 lakh was s. 6.04 lakh was paid back to the employees. The appellant also filed copy of paid back to the employees. The appellant also filed copy of paid back to the employees. The appellant also filed copy of bank payment voucher and other details in respect of the bank payment voucher and other details in respect of the bank payment voucher and other details in respect of the repayment. These documents appear at page 78 & 79 of the repayment. These documents appear at page 78 & 79 of the repayment. These documents appear at page 78 & 79 of the letter dated 10.2.2004 filed by the appellant before the AO letter dated 10.2.2004 filed by the appellant before the AO letter dated 10.2.2004 filed by the appellant before the AO during the assessment proceedings. Since the amount ng the assessment proceedings. Since the amount ng the assessment proceedings. Since the amount recovered from the employees in the earlier years has been recovered from the employees in the earlier years has been recovered from the employees in the earlier years has been refunded by the appellant to the employees in the year under refunded by the appellant to the employees in the year under refunded by the appellant to the employees in the year under consideration, the appellant is entitled to deduction in consideration, the appellant is entitled to deduction in consideration, the appellant is entitled to deduction in respect of amount of Rs. 6.44 l respect of amount of Rs. 6.44 lakh. Accordingly, the akh. Accordingly, the appellant is tled to deduction of Rs. 6.44 lakh on this appellant is tled to deduction of Rs. 6.44 lakh on this appellant is tled to deduction of Rs. 6.44 lakh on this account. (ii) Repairs and Maintenance expenses ) Repairs and Maintenance expenses - Rs. 17.40 lakhs. Rs. 17.40 lakhs. It has been submitted that the appellant had got the It has been submitted that the appellant had got the It has been submitted that the appellant had got the machinery repaired from M/s. machinery repaired from M/s. Bharat Heavy Electricals Ltd. Bharat Heavy Electricals Ltd. in the earlier years. The bill for Rs. 17,39,943/ in the earlier years. The bill for Rs. 17,39,943/- in respect of in respect of the same was received from BHEL during the current year the same was received from BHEL during the current year the same was received from BHEL during the current year because of which the deduction was claimed in this year. because of which the deduction was claimed in this year. because of which the deduction was claimed in this year. Along with the letter dated 10.2.2004 filed before the AO, the Along with the letter dated 10.2.2004 filed before the AO, the Along with the letter dated 10.2.2004 filed before the AO, the appellant had a appellant had also filed copies of invoices of BHEL in respect lso filed copies of invoices of BHEL in respect of these expenses. I have perused the documents filed by the of these expenses. I have perused the documents filed by the of these expenses. I have perused the documents filed by the appellant to contend that the liability in respect of these appellant to contend that the liability in respect of these appellant to contend that the liability in respect of these

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 111 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

expenses crystallized in the current year since the bills were expenses crystallized in the current year since the bills were expenses crystallized in the current year since the bills were received in the current received in the current year. The copies of the bills filed by year. The copies of the bills filed by the appellant are quite illegible and unclear. However, the appellant are quite illegible and unclear. However, the appellant are quite illegible and unclear. However, whatever can be deciphered from the bills, it is seen that the whatever can be deciphered from the bills, it is seen that the whatever can be deciphered from the bills, it is seen that the bills were raised in the month of February and March 2000 bills were raised in the month of February and March 2000 bills were raised in the month of February and March 2000 i.e. much before the previous year for t i.e. much before the previous year for the current assessment he current assessment year commenced. year commenced. No evidence has been filed by the No evidence has been filed by the appellant to show that these bills were received during the appellant to show that these bills were received during the appellant to show that these bills were received during the previous year relevant to A. Y. 2001 previous year relevant to A. Y. 2001-02. In view of these 02. In view of these facts and circumstances of the case, it cannot be accepted facts and circumstances of the case, it cannot be accepted facts and circumstances of the case, it cannot be accepted that the liability of these expenses had crystallized in the e liability of these expenses had crystallized in the e liability of these expenses had crystallized in the year under consideration. Accordingly, the addition of Rs. consideration. Accordingly, the addition of Rs. 17.40 lakh made by the AO in this regard is upheld. 17.40 lakh made by the AO in this regard is upheld. 17.40 lakh made by the AO in this regard is upheld. (iii) Reconcilation adjustment entry for material received in (iii) Reconcilation adjustment entry for material received in (iii) Reconcilation adjustment entry for material received in earlier years earlier years - Rs. 2.09 lakhs. Neither before the AO nor before me, the appellant has Neither before the AO nor before me, the appellant has Neither before the AO nor before me, the appellant has explained the nature of this entry not to speak of filing any explained the nature of this entry not to speak of filing any explained the nature of this entry not to speak of filing any evidence to prove that the liability in respect of this amount evidence to prove that the liability in respect of this amount evidence to prove that the liability in respect of this amount had crystallized in this year. Therefore, the contention of the had crystallized in this year. Therefore, the contention of the had crystallized in this year. Therefore, the contention of the appellant in respect of this amount cannot be accepted. in respect of this amount cannot be accepted. in respect of this amount cannot be accepted. Accordingly, the addition of Rs. 2.09 lakh made by the A0 on Accordingly, the addition of Rs. 2.09 lakh made by the A0 on Accordingly, the addition of Rs. 2.09 lakh made by the A0 on this count is upheld. this count is upheld. 9.2.1(d) KAPS KAPS - Rs. 189.69 lakhs. (I) Trade tax Trade tax - Rs. 14.02 lakhs. It was submitted that the appellant company had received It was submitted that the appellant company had received It was submitted that the appellant company had received crane hire charges from ane hire charges from M/s. Oswal Chemical and Fertilizer M/s. Oswal Chemical and Fertilizer Ltd. in the A.Y. 1994 Ltd. in the A.Y. 1994-95 and 1997-98. The same was offered 98. The same was offered to tax in the respective assessment years. The Trade Tax to tax in the respective assessment years. The Trade Tax to tax in the respective assessment years. The Trade Tax Officer, Sahajahanpur, UP had raised a demand of Rs. 14.02 Officer, Sahajahanpur, UP had raised a demand of Rs. 14.02 Officer, Sahajahanpur, UP had raised a demand of Rs. 14.02 lakhs on the crane hire lakhs on the crane hire charges received by the appellant. charges received by the appellant. The demand was disputed by the appellant. However, in the The demand was disputed by the appellant. However, in the The demand was disputed by the appellant. However, in the previous year relevant to A.Y. previous year relevant to A.Y. 2001-02, the appellant 02, the appellant decided to make the payment of Trade Tax. As the liability of decided to make the payment of Trade Tax. As the liability of decided to make the payment of Trade Tax. As the liability of Trade Tax was accrued during the current year, Trade Tax was accrued during the current year, Trade Tax was accrued during the current year, it was submitted that the same should be allowed as deduction in submitted that the same should be allowed as deduction in submitted that the same should be allowed as deduction in this year.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 112 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

I have considered the contention of the appellant. The I have considered the contention of the appellant. The I have considered the contention of the appellant. The payment made by the appellant payment made by the appellant is eovered by sec. 43B of IT. is eovered by sec. 43B of IT. Act. In respect of any tax, deduction is allowable only on Act. In respect of any tax, deduction is allowable only on Act. In respect of any tax, deduction is allowable only on actual payment. Since payment of Trade tax amounting Rs. payment. Since payment of Trade tax amounting Rs. payment. Since payment of Trade tax amounting Rs. 14.01,755/- has been made by the appellant on 14.7.2000, has been made by the appellant on 14.7.2000, the appellant is entitled to deduction in respect of the same the appellant is entitled to deduction in respect of the same the appellant is entitled to deduction in respect of the same w/s 43B in the assessment year 2001 w/s 43B in the assessment year 2001-02. Accordingly, 02. Accordingly, addition of Rs. 14.02 lakh made b addition of Rs. 14.02 lakh made by the AO is deleted. y the AO is deleted. (ii) Repairs & Maintenance (ii) Repairs & Maintenance - Rs. 23.37 lakhs. It was submitted by the appellant that the appellant had It was submitted by the appellant that the appellant had It was submitted by the appellant that the appellant had paid advances to various state government agencies for Civil paid advances to various state government agencies for Civil paid advances to various state government agencies for Civil work. The amount paid was debited to the advance account. work. The amount paid was debited to the advance account. work. The amount paid was debited to the advance account. The civil wor The civil work was completed in the earlier years. However, k was completed in the earlier years. However, the company did not receive any bills from the Government the company did not receive any bills from the Government the company did not receive any bills from the Government agencies after the completion of the work. The company agencies after the completion of the work. The company agencies after the completion of the work. The company during the relevant A.Y. 2001 during the relevant A.Y. 2001-02, on the basis of certification 02, on the basis of certification from the Civil Engineer, transfe from the Civil Engineer, transferred the amount from rred the amount from advances to the expense account. A copy of the letter dated advances to the expense account. A copy of the letter dated advances to the expense account. A copy of the letter dated May 19, 2001 May 19, 2001 of the Civil Engineer, Nuclear Power of the Civil Engineer, Nuclear Power Corporation was enclosed at pages 102 of the compilation Corporation was enclosed at pages 102 of the compilation Corporation was enclosed at pages 102 of the compilation filed before the AO during asstt. proccodings. It was filed before the AO during asstt. proccodings. It was filed before the AO during asstt. proccodings. It was submitted that submitted that as the status of work completed was finalised as the status of work completed was finalised in the A.Y. 2001 in the A.Y. 2001-02, the expenses must be allowed as 02, the expenses must be allowed as deduction. I have considered the contention of the appellant. On the I have considered the contention of the appellant. On the I have considered the contention of the appellant. On the basis of reply of the appellant it cannot be said that the basis of reply of the appellant it cannot be said that the basis of reply of the appellant it cannot be said that the liability in respect of the liability in respect of the expenses of Rs. 23.37 lakhs expenses of Rs. 23.37 lakhs crystallized during the previous year relevant to the A.Y. crystallized during the previous year relevant to the A.Y. crystallized during the previous year relevant to the A.Y. 2001-02. Since the expenses had crystallized prior to 02. Since the expenses had crystallized prior to 02. Since the expenses had crystallized prior to 1.4.2000, these expenses cannot be allowed as deduction for 1.4.2000, these expenses cannot be allowed as deduction for 1.4.2000, these expenses cannot be allowed as deduction for AY. 2001-02. Accordingly, the addition of Rs. 23.37 lak 02. Accordingly, the addition of Rs. 23.37 lak 02. Accordingly, the addition of Rs. 23.37 lakh made by the AO in this regard is upheld. made by the AO in this regard is upheld. (iii) Bonus - Rs. 82.82 lakhs. Rs. 82.82 lakhs. It was stated that the appellant made payment of Capacity It was stated that the appellant made payment of Capacity It was stated that the appellant made payment of Capacity Factor Award Bonus for the period 1998 Factor Award Bonus for the period 1998-99 and 1999 99 and 1999-2000 amounting Rs. 82,82,130/ amounting Rs. 82,82,130/- in the month of June 2000. It in the month of June 2000. It was contende was contended that the said deduction is allowable w/s 43B d that the said deduction is allowable w/s 43B on payment basis. on payment basis.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 113 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

I have considered the contention of the appellant. The I have considered the contention of the appellant. The I have considered the contention of the appellant. The appellant has paid the bonus of Rs. 82.82 lakh pertaining to appellant has paid the bonus of Rs. 82.82 lakh pertaining to appellant has paid the bonus of Rs. 82.82 lakh pertaining to the F.Y. 1998 the F.Y. 1998-99 and 1999-2000 in the previous year 2000 in the previous year relevant to A. Y. 2001 A. Y. 2001-02. Evidence in this regard was filed 02. Evidence in this regard was filed by the appellant at page no. 103 of the paper set out or peak by the appellant at page no. 103 of the paper set out or peak by the appellant at page no. 103 of the paper set out or peak filed before the AD. As per section 43B (6) of the 1. T.Act, the filed before the AD. As per section 43B (6) of the 1. T.Act, the filed before the AD. As per section 43B (6) of the 1. T.Act, the deduction in respect of the bonus is to be allowed in the year deduction in respect of the bonus is to be allowed in the year deduction in respect of the bonus is to be allowed in the year of payment. Accordingly, the of payment. Accordingly, the appellant is eligible for appellant is eligible for deduction in respect of the amount of Rs. 82.82 lakh in year deduction in respect of the amount of Rs. 82.82 lakh in year deduction in respect of the amount of Rs. 82.82 lakh in year under consideration. Therefore, under consideration. Therefore, the addition of Rs. the addition of Rs.82.82 lakh made by the AO is deleted. made by the AO is deleted. (iv) Leave Salary and Pension Contribution (iv) Leave Salary and Pension Contribution - Rs. 17.69 lakhs. Rs. 17.69 lakhs. According to the According to the appellant, the appellant company had made appellant, the appellant company had made contribution of Rs. contribution of Rs. 17,68,552/- to the Pay & Accounts Officer, to the Pay & Accounts Officer, Department of Atomic Energy on account of leave salary and Department of Atomic Energy on account of leave salary and Department of Atomic Energy on account of leave salary and pension fund of the employees in the previous year relevant pension fund of the employees in the previous year relevant pension fund of the employees in the previous year relevant to the A.Y. 2001 2001-02. A copy of the cheque dated 18.4.2000 he cheque dated 18.4.2000 for Rs. 3,32,69,624/ for Rs. 3,32,69,624/- which inter alia includes the payment which inter alia includes the payment of Rs. 17,68,552/ of Rs. 17,68,552/- and a copy of the letter dated 18.4.2000 and a copy of the letter dated 18.4.2000 addressed to the Pay & Accounts Officer, Department of addressed to the Pay & Accounts Officer, Department of addressed to the Pay & Accounts Officer, Department of Atomic Energy, Mumbai remitting therewith the said amou Atomic Energy, Mumbai remitting therewith the said amou Atomic Energy, Mumbai remitting therewith the said amount was filed in support of the claim. All these documents appear was filed in support of the claim. All these documents appear was filed in support of the claim. All these documents appear at page no. 104 and 105 of the paper book filed before the at page no. 104 and 105 of the paper book filed before the at page no. 104 and 105 of the paper book filed before the AO. It was contended that the said amount requires to be AO. It was contended that the said amount requires to be AO. It was contended that the said amount requires to be allowed as deduction since the liability to pay the amount allowed as deduction since the liability to pay the amount allowed as deduction since the liability to pay the amount crystallized dur crystallized during the previous year relevant to the A.Y. ing the previous year relevant to the A.Y. 2001-02. I have considered the contention of the appellant. It is seen I have considered the contention of the appellant. It is seen I have considered the contention of the appellant. It is seen that the payment of Rs. that the payment of Rs. 17,68,552/- is covered by Clause (b) is covered by Clause (b) and Clause (D of sec. 43B. Accordingly, the same is and Clause (D of sec. 43B. Accordingly, the same is and Clause (D of sec. 43B. Accordingly, the same is allowable in the A.Y. 2001 allowable in the A.Y. 2001-02 on payment basis. Therefore, on payment basis. Therefore, the addition of Rs. 17.69 lakh made by the AO on this count the addition of Rs. 17.69 lakh made by the AO on this count the addition of Rs. 17.69 lakh made by the AO on this count is deleted. 9.2.1(e) Miscellaneous Expenses Miscellaneous Expenses - Rs. 51.79 lakhs, Rs. 51.79 lakhs, Neither before the AO nor before me, the appellant has filed Neither before the AO nor before me, the appellant has filed Neither before the AO nor before me, the appellant has filed any evidence to show that the liability in any evidence to show that the liability in respect of these respect of these expenses expenses expenses has has has crystallized crystallized crystallized during during during the the the year year year under under under consideration. Although the appellant was specifically asked consideration. Although the appellant was specifically asked consideration. Although the appellant was specifically asked

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 114 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

to file evidence during the hearing of appeal but no evidence to file evidence during the hearing of appeal but no evidence to file evidence during the hearing of appeal but no evidence has been filed so far. In the absence of any evidence the has been filed so far. In the absence of any evidence the has been filed so far. In the absence of any evidence the claim of the appellant that these expenses had crystallized the appellant that these expenses had crystallized the appellant that these expenses had crystallized during the year under consideration cannot be accepted. during the year under consideration cannot be accepted. during the year under consideration cannot be accepted. Accordingly, the disallowance of Rs. 51.79 lakhs made by Accordingly, the disallowance of Rs. 51.79 lakhs made by Accordingly, the disallowance of Rs. 51.79 lakhs made by the AO is upheld. the AO is upheld. 9.2.1(f) Corporate Office 9.2.1(f) Corporate Office - Rs. 1.51 lakhs. Neither before the AO nor befo Neither before the AO nor before me, the appellant has filed re me, the appellant has filed any evidence to show that the liability in respect of these any evidence to show that the liability in respect of these any evidence to show that the liability in respect of these expenses expenses expenses has has has crystallized crystallized crystallized during during during the the the year year year under under under consideration. Although the appellant was specifically asked consideration. Although the appellant was specifically asked consideration. Although the appellant was specifically asked to file evidence during the hearing of appeal but no evi to file evidence during the hearing of appeal but no evi to file evidence during the hearing of appeal but no evidence has been filed so far. In the absence of any evidence the has been filed so far. In the absence of any evidence the has been filed so far. In the absence of any evidence the awes claim of the appellant that these expenses had awes claim of the appellant that these expenses had awes claim of the appellant that these expenses had crystallized during the year under consideration cannot be crystallized during the year under consideration cannot be crystallized during the year under consideration cannot be accepted. Accordingly, the disallowance of Rs. 1.51 lakhs accepted. Accordingly, the disallowance of Rs. 1.51 lakhs accepted. Accordingly, the disallowance of Rs. 1.51 lakhs made by the AO is uphel made by the AO is upheld. On the basis of the above discussion, the relief allowed to the On the basis of the above discussion, the relief allowed to the On the basis of the above discussion, the relief allowed to the appellant in respect of the ground of appeal at S. No. 12 is appellant in respect of the ground of appeal at S. No. 12 is appellant in respect of the ground of appeal at S. No. 12 is worked out as under: worked out as under:

Accordingly, the ground of appeal at S. No. 12 is partly Accordingly, the ground of appeal at S. No. 12 is partly Accordingly, the ground of appeal at S. No. 12 is partly allowed.” 45.2 We have heard rival submission of have heard rival submission of the party on the issue in the party on the issue in dispute and peruse the relevant material on record. The Ld. CIT(A) dispute and peruse the relevant material on record. The Ld. CIT(A) dispute and peruse the relevant material on record. The Ld. CIT(A) has given detailed bifurcations of the such expenses claimed by the has given detailed bifurcations of the such expenses claimed by the has given detailed bifurcations of the such expenses claimed by the assessee. In case of TAPS and RAPS , the assessee failed to file any assessee. In case of TAPS and RAPS , the assessee failed to file any assessee. In case of TAPS and RAPS , the assessee failed to file any

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 115 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

evidence to show that exp evidence to show that expenses crystallised during the year under enses crystallised during the year under consideration and therefore the Ld. CIT(A) has upheld the consideration and therefore the Ld. CIT(A) has upheld the consideration and therefore the Ld. CIT(A) has upheld the disallowance of ₹ 8.08 lakhs and 8.08 lakhs and ₹ 130.14 lakhs respectively. Out 130.14 lakhs respectively. Out of the expenses related to MAPS, the learned CIT(A), deleted the of the expenses related to MAPS, the learned CIT(A), deleted the of the expenses related to MAPS, the learned CIT(A), deleted the repayment of electricity charges recovered from the employees, but repayment of electricity charges recovered from the employees, but repayment of electricity charges recovered from the employees, but upheld the disallowance of repair and maintenance expenses and upheld the disallowance of repair and maintenance expenses and upheld the disallowance of repair and maintenance expenses and reconciliation adjustment entry for material received in earlier years tion adjustment entry for material received in earlier years tion adjustment entry for material received in earlier years due to to lack of documentary evidence to support crystallisation of due to to lack of documentary evidence to support crystallisation of due to to lack of documentary evidence to support crystallisation of expenses in the year under consideration. Similarly in respect of expenses in the year under consideration. Similarly in respect of expenses in the year under consideration. Similarly in respect of KAPS, the Ld. CIT(A) has deleted the addition for trade tax and KAPS, the Ld. CIT(A) has deleted the addition for trade tax KAPS, the Ld. CIT(A) has deleted the addition for trade tax bonus, whereas in respect of repair and maintenance and leave bonus, whereas in respect of repair and maintenance and leave bonus, whereas in respect of repair and maintenance and leave salary and pension contribution, the assessee failed to justify salary and pension contribution, the assessee failed to justify salary and pension contribution, the assessee failed to justify crystallisation of expenses in the year under consideration. crystallisation of expenses in the year under consideration. crystallisation of expenses in the year under consideration. Similarly the Ld. CIT(A) has disallowed the miscellaneous expenses Similarly the Ld. CIT(A) has disallowed the miscellaneous expense Similarly the Ld. CIT(A) has disallowed the miscellaneous expense and corporate office expenses due to lack of evidence supporting and corporate office expenses due to lack of evidence supporting and corporate office expenses due to lack of evidence supporting crystallisation of expenses in the year under consideration. In our crystallisation of expenses in the year under consideration. In our crystallisation of expenses in the year under consideration. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is opinion, the finding of the Ld. CIT(A) on the issue in dispute is opinion, the finding of the Ld. CIT(A) on the issue in dispute is justified and we do not find any error in the same, accordingly we justified and we do not find any error in the same, acc justified and we do not find any error in the same, acc uphold the same. Further uphold the same. Further, in ground No. 10, the assessee ha the assessee has claimed for setting off of prior period expenditure against prior claimed for setting off of prior period expenditure against prior claimed for setting off of prior period expenditure against prior period Income. In our opinion, when the item period Income. In our opinion, when the items of the prior period of the prior period income are different than the nature of the expenditure, same income are different than the nature of the expe income are different than the nature of the expe cannot be allowed to be set off against the prior period income, cannot be allowed to be set off against the prior period income, cannot be allowed to be set off against the prior period income, which has been declared by the assessee on accrual basis. As far as which has been declared by the assessee on accrual basis. As far as which has been declared by the assessee on accrual basis. As far as

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 116 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

claim of the assessee for allowing the said prior period Expenses in claim of the assessee for allowing the said prior period Expenses in claim of the assessee for allowing the said prior period Expenses in respective financial years, we are of th respective financial years, we are of the opinion that it is open for e opinion that it is open for the assessee to avail remedy provided und the assessee to avail remedy provided under statutory provisions of er statutory provisions of the Act for claim of such expenses in relevant financial /assessment ct for claim of such expenses in relevant financial /assessment ct for claim of such expenses in relevant financial /assessment years. The ground No The ground Nos. 11 to 13 of the appeal are accordingly . 11 to 13 of the appeal are accordingly dismissed.

“10. The ground of appeal at Sr.No.13 is against the action of the AO 10. The ground of appeal at Sr.No.13 is against the action of the AO 10. The ground of appeal at Sr.No.13 is against the action of the AO in disallowing expenses of Rs. 1038.88 lakhs debited by the in disallowing expenses of Rs. 1038.88 lakhs debited by the in disallowing expenses of Rs. 1038.88 lakhs debited by the appellant under the head "extra ordinary item written off. As per the appellant under the head "extra ordinary item written off. As per the appellant under the head "extra ordinary item written off. As per the assessment order, the appellant ha assessment order, the appellant had incured this expenditure on the d incured this expenditure on the delamination of the IC dome. It was explained by the appellant before delamination of the IC dome. It was explained by the appellant before delamination of the IC dome. It was explained by the appellant before the AO that this amount represented the expenditure on inner lining the AO that this amount represented the expenditure on inner lining the AO that this amount represented the expenditure on inner lining of Dome constructed in a nuclear power plant. Since this expenditure of Dome constructed in a nuclear power plant. Since this expenditure of Dome constructed in a nuclear power plant. Since this expenditure was not of recu was not of recurring nature, the AO treated the expenditure of Rs. rring nature, the AO treated the expenditure of Rs. 1038.88 lacs in the nature of capital expenditure thereby making 1038.88 lacs in the nature of capital expenditure thereby making 1038.88 lacs in the nature of capital expenditure thereby making addition of Rs. 1038.88 lacs to the income of the appellant. addition of Rs. 1038.88 lacs to the income of the appellant. addition of Rs. 1038.88 lacs to the income of the appellant. 10.1 Before me, it was submitted that the amount of Rs. 1038.88 lacs 10.1 Before me, it was submitted that the amount of Rs. 1038.88 lacs 10.1 Before me, it was submitted that the amount of Rs. 1038.88 lacs was incurred on the construction of the dome of a power plant which red on the construction of the dome of a power plant which red on the construction of the dome of a power plant which had collapsed during construction period. It was submitted that the had collapsed during construction period. It was submitted that the had collapsed during construction period. It was submitted that the said expenditure is allowable as revenue expenditure. said expenditure is allowable as revenue expenditure. 10.2 I have considered the contention of the appellant. The nature of 10.2 I have considered the contention of the appellant. The nature of 10.2 I have considered the contention of the appellant. The nature of the expenditure of Rs. xpenditure of Rs. 1038.88 lacs as explained by the appellant 1038.88 lacs as explained by the appellant before me is at variance with the nature of the said expenditure given before me is at variance with the nature of the said expenditure given before me is at variance with the nature of the said expenditure given before the AO. Further, except stating that the expenditure was before the AO. Further, except stating that the expenditure was before the AO. Further, except stating that the expenditure was incurred on the construction of a dome which had collapsed, incurred on the construction of a dome which had collapsed, incurred on the construction of a dome which had collapsed, no further explanation or corroborative evidence has been filed by the further explanation or corroborative evidence has been filed by the further explanation or corroborative evidence has been filed by the appellant. In the statement of facts also, not even a single word has appellant. In the statement of facts also, not even a single word has appellant. In the statement of facts also, not even a single word has

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 117 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

been written about the nature of this expenditure or as to why the been written about the nature of this expenditure or as to why the been written about the nature of this expenditure or as to why the said expenditure was revenue expenditure. As per said expenditure was revenue expenditure. As per section 30(a) (ii) of section 30(a) (ii) of the IT.Act, only an amount incurred on www. account of current the IT.Act, only an amount incurred on www. account of current the IT.Act, only an amount incurred on www. account of current repairs to the premises can be allowed as a deduction. The amount repairs to the premises can be allowed as a deduction. The amount repairs to the premises can be allowed as a deduction. The amount incurred on the construction of a dome cannot be considered to be in incurred on the construction of a dome cannot be considered to be in incurred on the construction of a dome cannot be considered to be in the nature of current repairs. the nature of current repairs. Therefore, the expenditure of Rs. efore, the expenditure of Rs. 1038.88 lacs incurred by the appellant on the construction of dome 1038.88 lacs incurred by the appellant on the construction of dome 1038.88 lacs incurred by the appellant on the construction of dome cannot be allowed as deduction. Accordingly, the action of the AO in cannot be allowed as deduction. Accordingly, the action of the AO in cannot be allowed as deduction. Accordingly, the action of the AO in this regard is upheld. this regard is upheld. Therefore, the ground of appeal at Sr. No. 13 is rejected. Therefore, the ground of appeal at Sr. No. 13 is rejected. Therefore, the ground of appeal at Sr. No. 13 is rejected.” 46.1 We have heard rival submission of the parties rd rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that Ld. CIT(A) has observed that no explanation or documentary Ld. CIT(A) has observed that no explanation or Ld. CIT(A) has observed that no explanation or evidence in respect of the claim of the expenditure was filed before evidence in respect of the claim of the expenditure was filed before evidence in respect of the claim of the expenditure was filed before the lower authorities. The Ld. CIT(A) has also observed that any authorities. The Ld. CIT(A) has also observed that any authorities. The Ld. CIT(A) has also observed that any amount incurred on account of current repairs to the premises can amount incurred on account of current repairs to the premises can amount incurred on account of current repairs to the premises can be allowed as revenue expenditure whereas the amount incurred be allowed as revenue expenditure whereas the amount incurred be allowed as revenue expenditure whereas the amount incurred has been claimed by the assessee for construction of a capital asset. has been claimed by the assessee for construction of a capital as has been claimed by the assessee for construction of a capital as In our opinion, the finding the finding of the Ld. CIT(A) on the issue in dispute of the Ld. CIT(A) on the issue in dispute is well reasoned, and therefore we uphold the same. The ground No. is well reasoned, and therefore we uphold the same. The ground No. is well reasoned, and therefore we uphold the same. The ground No. 14 of the appeal of the assessee is accordingly dismissed. 14 of the appeal of the assessee is accordingly dismissed. 14 of the appeal of the assessee is accordingly dismissed.

“11.2 I have considered the contention of the appellant. The AO has 11.2 I have considered the contention of the appellant. The AO has 11.2 I have considered the contention of the appellant. The AO has made the disallowance mainly because of the reason that the made the disallowance mainly because of the reason that the made the disallowance mainly because of the reason that the appellant had not filed the appellant had not filed the item wise details of obsolete stock claimed item wise details of obsolete stock claimed by the appellant at Rs. 64.08 lacs. Even before me, no such details by the appellant at Rs. 64.08 lacs. Even before me, no such details by the appellant at Rs. 64.08 lacs. Even before me, no such details have been filed. No evidence has been filed before me to show that have been filed. No evidence has been filed before me to show that have been filed. No evidence has been filed before me to show that

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 118 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

these items of stock had really become useless. Had it been so, the these items of stock had really become useless. Had it been so, the these items of stock had really become useless. Had it been so, the appellant would have disposed off these items at lower de in the would have disposed off these items at lower de in the would have disposed off these items at lower de in the succeeding years. No evidence has been filed by the appellant to succeeding years. No evidence has been filed by the appellant to succeeding years. No evidence has been filed by the appellant to show that any of show that any of these items has been disposed of below cost in the items has been disposed of below cost in the succeeding years. In absence of any succeeding years. In absence of any documentary evidence, the claim evidence, the claim made by the appellant in respect of the obsolete stock at Rs. made by the appellant in respect of the obsolete stock at Rs. made by the appellant in respect of the obsolete stock at Rs. 64.08 lacs appears to be adhoc and arbitrary. It is pertinent to note that, in lacs appears to be adhoc and arbitrary. It is pertinent to note that, in lacs appears to be adhoc and arbitrary. It is pertinent to note that, in the case of the appellant for the A.Y. 2000 the case of the appellant for the A.Y. 2000-01, similar disallowance 01, similar disallowance made by the AO has been upheld by the CIT(A) made by the AO has been upheld by the CIT(A) vide his order dated vide his order dated 15th March 2004. In view of these facts and circumstances of the 15th March 2004. In view of these facts and circumstances of the 15th March 2004. In view of these facts and circumstances of the case, the claim made by the appellant cannot be accepted. case, the claim made by the appellant cannot be accepted. case, the claim made by the appellant cannot be accepted. Accordingly, the addition of Rs.64.08 lacs made by the AO is upheld. Accordingly, the addition of Rs.64.08 lacs made by the AO is upheld. Accordingly, the addition of Rs.64.08 lacs made by the AO is upheld. Therefore, the ground of appeal at Sr. No. Therefore, the ground of appeal at Sr. No. 14 is rejected. 14 is rejected.” 47.1 We have heard rival submission of the parties and perused the e have heard rival submission of the parties and perused the e have heard rival submission of the parties and perused the relevant material on record. We note that relevant material on record. We note that neither itemised neither itemised detail of obsolete stock was filed nor any evidence was filed to show that any obsolete stock was filed nor any evidence was filed to show that any obsolete stock was filed nor any evidence was filed to show that any of those items had been disposed o of those items had been disposed off being below cost in succeeding below cost in succeeding years. In absence of any documentary evidence filed by the assessee years. In absence of any documentary evidence filed by the assessee years. In absence of any documentary evidence filed by the assessee before the lower authorities, we do not find any error in the order of authorities, we do not find any error in the order of authorities, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly uphold the the Ld. CIT(A) on the issue in dispute and accordingly uphold the the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground same. The ground No. 15 of the appeal of the assessee is No. 15 of the appeal of the assessee is accordingly dismissed. accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 119 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

AY 2002-03 50. Now we take up the appeal of the assessee for assessment year Now we take up the appeal of the assessee for assessment year Now we take up the appeal of the assessee for assessment year 2002-03. The relevant grounds raised by the assessee 03. The relevant grounds raised by the assessee in form No. 03. The relevant grounds raised by the assessee 36 filed on 20/08/2007 are reproduced as under: 36 filed on 20/08/2007 are reproduced as under:

The appellant company objects to the appellate order dated 30 March The appellant company objects to the appellate order dated 30 March The appellant company objects to the appellate order dated 30 March 2007 passed by the Commissioner of Income 2007 passed by the Commissioner of Income-tax (Appeals) tax (Appeals)- III, Mumbai [ CIT (A) '] under section 250 of the Income Tax Act, 1961 Mumbai [ CIT (A) '] under section 250 of the Income Tax Act, 1961 Mumbai [ CIT (A) '] under section 250 of the Income Tax Act, 1961 ('the Act) on the following grounds: ('the Act) on the following grounds: Decommissioning Levy Decommissioning Levy 1. The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 3,449.33 lacs, being Decommissioning Levy an amount of Rs. 3,449.33 lacs, being Decommissioning Levy an amount of Rs. 3,449.33 lacs, being Decommissioning Levy collected by the appellant. collected by the appellant. 2. The learned CIT (A) erred in confirming as i The learned CIT (A) erred in confirming as income of the appellant ncome of the appellant an amount of Rs.3,652.06 lacs, being interest credited to an amount of Rs.3,652.06 lacs, being interest credited to an amount of Rs.3,652.06 lacs, being interest credited to Decommissioning Fund. Decommissioning Fund. Renovation & Modernisation Levy Renovation & Modernisation Levy 3. The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant an an an amount amount amount of of of Rs. Rs. Rs. 8,623.31 8,623.31 8,623.31 lacs, lacs, lacs, being being being Renovation Renovation Renovation & & & Modernisation levy collected by the appellant. rnisation levy collected by the appellant. 4. The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant The learned CIT(A) erred in confirming as income of the appellant an amount of Rs.2,999.27 lacs, being interest credited to an amount of Rs.2,999.27 lacs, being interest credited to an amount of Rs.2,999.27 lacs, being interest credited to Renovation and Modernisation fund. Renovation and Modernisation fund. 5. Without prejudice to Grounds 3 and 4 above, the learne Without prejudice to Grounds 3 and 4 above, the learned CIT(A) Without prejudice to Grounds 3 and 4 above, the learne erred in holding that the amount collected towards Renovation & erred in holding that the amount collected towards Renovation & erred in holding that the amount collected towards Renovation & Modernisation levy was not in the nature of a capital receipt and Modernisation levy was not in the nature of a capital receipt and Modernisation levy was not in the nature of a capital receipt and accordingly taxable. accordingly taxable. Research & Development Levy Research & Development Levy

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 120 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 121 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 122 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 123 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

53.1 The facts in brief qua the issue in dispute are that t The facts in brief qua the issue in dispute are that t The facts in brief qua the issue in dispute are that the assessee in the computation of the total income claimed deduction assessee in the computation of the total income claim assessee in the computation of the total income claim under section 80 IA in respect of profit derived from Kakrapar under section 80 IA in respect of profit derived from under section 80 IA in respect of profit derived from atomic Power Station (KAPS). The profit of the KAPS included Power Station (KAPS). The profit of the KAPS included Power Station (KAPS). The profit of the KAPS included interest income of ₹ 48.34 lakhs 48.34 lakhs. Before the Ld. CIT(A) . Before the Ld. CIT(A), the assessee claimed that interest income was earned on loans given to the staff claimed that interest income was earned on loans given to the staff claimed that interest income was earned on loans given to the staff working at KAPS, and the staff being integral part of the unit, any working at KAPS, and the staff being integral part of the unit, working at KAPS, and the staff being integral part of the unit, income earned from such a staff had a nexus with the business income earned from such a staff had a nexus with the business income earned from such a staff had a nexus with the business operation of KAPS and accordingly chargeable under the head operation of KAPS and accordingly chargeable under the operation of KAPS and accordingly chargeable under the business income and forms part of the profit of KAPS. The assessee business income and forms part of the profit of KAPS. The assessee business income and forms part of the profit of KAPS. The assessee relied on the decision of CIT Vs The Madras Motors Ltd 257 ITR CIT Vs The Madras Motors Ltd 257 ITR relied on the decision of 60( Mad) and other decisions. The assessee also claimed and other decisions. The assessee also claimed and other decisions. The assessee also claimed deduction under section 80IA of the A under section 80IA of the Act on the miscellaneous income of ct on the miscellaneous income of ₹ 52.22 lakhs. However the Ld. CIT(A) rejected the contention of the . However the Ld. CIT(A) rejected the contention of the . However the Ld. CIT(A) rejected the contention of the assessee observing as under: assessee observing as under:

6.3.1 The eligibility of deduction us 80 6.3.1 The eligibility of deduction us 80-IA in respect of IA in respect of various items of income shown by the appellant is various items of income shown by the appellant is various items of income shown by the appellant is examined in view of the above discussion. The appe examined in view of the above discussion. The appe examined in view of the above discussion. The appellant has claimed deduction u/s 80 IA on interest received from has claimed deduction u/s 80 IA on interest received from has claimed deduction u/s 80 IA on interest received from the staff loans. There is no direct nexus of the interest the staff loans. There is no direct nexus of the interest the staff loans. There is no direct nexus of the interest income with the appellant's industrial undertaking. The income with the appellant's industrial undertaking. The income with the appellant's industrial undertaking. The nexus between the income and the industrial undertaking nexus between the income and the industrial undertaking nexus between the income and the industrial undertaking is incidental. is incidental. Therefore, the appellant is not entitled to re, the appellant is not entitled to deduction u/s 80 IA on the said income. Even in the case deduction u/s 80 IA on the said income. Even in the case deduction u/s 80 IA on the said income. Even in the case of Madras Motors Ltd. (supra) of Madras Motors Ltd. (supra) relied upon the appellant, appellant,

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 124 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the Court did not allow deduction u/s 80 HH (similar to the Court did not allow deduction u/s 80 HH (similar to the Court did not allow deduction u/s 80 HH (similar to 80-IA) on the interest received on bank deposits on the interest received on bank deposits on the interest received on bank deposits which were kept with the bank in connection with opening of were kept with the bank in connection with opening of were kept with the bank in connection with opening of letter of credit since the connection of the said interest letter of credit since the connection of the said interest letter of credit since the connection of the said interest income with the industrial income with the industrial undertaking was held to be undertaking was held to be only incidental. The Court allowed deduction u/s 80 IA only incidental. The Court allowed deduction u/s 80 IA only incidental. The Court allowed deduction u/s 80 IA only in respect of interest only in respect of interest received on belated payments received on belated payments from the customers which were directly relatable to the from the customers which were directly relatable to the from the customers which were directly relatable to the business of the industrial undertaking. The other decisions business of the industrial undertaking. The other decisions business of the industrial undertaking. The other decisions relied upon by the appellant have been rendered prior to relied upon by the appellant have been rendered prior to relied upon by the appellant have been rendered prior to the decision of Hon'ble Supreme Court in the case of the decision of Hon'ble Supreme Court in the case of the decision of Hon'ble Supreme Court in the case of Pandian Chemicals Ltd. andian Chemicals Ltd. 6.3.2 6.3.2 As regards the miscellaneous income of Rs. 6.3.2 As regards the miscellaneous income of Rs. 6.3.2 As regards the miscellaneous income of Rs. 52.22 lacs the said income consists of the following items. 52.22 lacs the said income consists of the following items. 52.22 lacs the said income consists of the following items. Sale of scrap Sale of scrap Rs. 18,20,024/- - Sale of tender forms Sale of tender forms Rs. 3,25,450/- Charges - Contractors Contractors Rs. 1,58,159/- Refund of LD charges Refund of LD Rs. 36,750/- Reimbursement of DAE Sports meet Reimbursement of DAE Sports meet Rs. 8,51,462/- Security deposit Security deposit Rs. 1,47,965/- Rental from staff Rental from staff Rs. 13,59,399/- - Rental - Contractors Contractors Rs. 2,95,849/- Charges - demonstration demonstration Rs. 1,46,890/- Others Rs. 1,80,380/- Rs.52,22,328/- As regards the sale of scrap is concerned, the same has As regards the sale of scrap is concerned, the same has As regards the sale of scrap is concerned, the same has direct nexus with the industrial undertaking. The same is direct nexus with the industrial undertaking. The same is direct nexus with the industrial undertaking. The same is eligible for deduction u/s 80IA in view of the decision in eligible for deduction u/s 80IA in view of the decision in eligible for deduction u/s 80IA in view of the decision in the case of Fenner (India) Ltd. VS. CIT 241 ITR 803 and the case of Fenner (India) Ltd. VS. CIT 241 ITR 803 and the case of Fenner (India) Ltd. VS. CIT 241 ITR 803 and Nirma Inds Ltd. Vs. ACIT 9 Nirma Inds Ltd. Vs. ACIT 95 ITD 199 (Ahd) (SB). Further, 5 ITD 199 (Ahd) (SB). Further, the appellant is also entitled to deduction us 80IA in the appellant is also entitled to deduction us 80IA in the appellant is also entitled to deduction us 80IA in respect of the Charges recovered from the Contractors at respect of the Charges recovered from the Contractors at respect of the Charges recovered from the Contractors at Rs.1,58,159/ Rs.1,58,159/- and the reimbursement of DAE Sports meet and the reimbursement of DAE Sports meet at Rs. 8,51,462/ at Rs. 8,51,462/- because the expenses incurred by the because the expenses incurred by the appellant on these items earlier had gone to reduce the ellant on these items earlier had gone to reduce the ellant on these items earlier had gone to reduce the profits for the purpose of deduction u/s 80IA. On recovery profits for the purpose of deduction u/s 80IA. On recovery profits for the purpose of deduction u/s 80IA. On recovery of these charges, the eligible profits for section 80A would of these charges, the eligible profits for section 80A would of these charges, the eligible profits for section 80A would increase to this extent. The other receipts shown by the increase to this extent. The other receipts shown by the increase to this extent. The other receipts shown by the appellant under the head m appellant under the head miscellaneous income have no iscellaneous income have no direct nexus with the direct nexus with the industrial undertaking. The nexus of undertaking. The nexus of those receipts with the industrial undertaking is indirect receipts with the industrial undertaking is indirect receipts with the industrial undertaking is indirect and incidental. Accordingly, those receipts are not eligible and incidental. Accordingly, those receipts are not eligible and incidental. Accordingly, those receipts are not eligible for deduction u/s 80IA.” for deduction u/s 80IA.”

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 125 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

53.2 Before us the lear the learned counsel for the assessee referred to the assessee referred to paperbook page 178 and relied on the submission made before the and relied on the submission made before the lower authorities and submitted that interest income being derived authorities and submitted that interest income being derived authorities and submitted that interest income being derived from the undertaking, is eligible from the undertaking, is eligible for deduction under section 80IA of for deduction under section 80IA of the Act. Regarding miscellaneous income also learned counsel ding miscellaneous income also learned counsel ding miscellaneous income also learned counsel for the assessee submitted that same is eligible for deduction under the assessee submitted that same is eligible for deduction under the assessee submitted that same is eligible for deduction under section 80IA of the act. section 80IA of the act. 53.4 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on re dispute and perused the relevant material on record. The issue in cord. The issue in dispute is regarding claim of deduction on interest income earned dispute is regarding claim of deduction on interest income dispute is regarding claim of deduction on interest income from giving loans to staff working at undertaking namely KAPS, from giving loans to staff working at undertaking namely KAPS, from giving loans to staff working at undertaking namely KAPS, under section 80IA of the A 80IA of the Act. In our opinion, the activity of ct. In our opinion, the activity of providing loans or advances to the employees providing loans or advances to the employees working at the eligible working at the eligible unit, is not part of the business activity of the undertaking. It might unit, is not part of the business activity of the undertaking. It might unit, is not part of the business activity of the undertaking. It might be a welfare activity on the part of the assessee but interest earned be a welfare activity on the part of the assessee but interest earned be a welfare activity on the part of the assessee but interest earned on such loans and advances to a staff cannot be any income derived on such loans and advances to a staff cannot be any income derived on such loans and advances to a staff cannot be any income derived from the operation of t from the operation of the power plant. In our opinion finding of the he power plant. In our opinion finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not Ld. CIT(A) on the issue in dispute is well reasoned and we do not Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same, accordingly we uphold the finding of the find any error in the same, accordingly we uphold the finding of the find any error in the same, accordingly we uphold the finding of the Ld. CIT(A) on the issue in dispute. Ld. CIT(A) on the issue in dispute. 53.5 Regarding the d Regarding the deduction in respect of the miscellaneous t of the miscellaneous income, no details have been submitted by the assessee before the income, no details have been submitted by the assessee before the income, no details have been submitted by the assessee before the lower authorities, therefore Ld. CIT(A) authorities, therefore Ld. CIT(A) is justified in rejecting the justified in rejecting the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 126 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

claim of deduction under section 80 m of deduction under section 80IA in respect of miscellaneous IA in respect of miscellaneous income. The ground No. nine of income. The ground No. nine of the appeal of the assessee is the appeal of the assessee is accordingly dismissed. accordingly dismissed. 54. In ground No. 10, the assessee has prayed for exclusion of net In ground No. 10, the assessee has prayed for exclusion of net In ground No. 10, the assessee has prayed for exclusion of net interest income from the profit of the business for the purpose of interest income from the profit of the business for the interest income from the profit of the business for the section 80IA of the A section 80IA of the Act instead of gross interest income excluded by ct instead of gross interest income excluded by the lower authorities. authorities. 54.1 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The interest dispute and perused the relevant material on record. The interest dispute and perused the relevant material on record. The interest income earned from loans and advances to the staff has been from loans and advances to the staff has been from loans and advances to the staff has been excluded by the lower lower authorities for the purpose of deduction the purpose of deduction under section 80IA of the A 80IA of the Act. In this ground, the assessee is claiming that interest expenditure should be adjusted against the claiming that interest expenditure should be adjusted against the claiming that interest expenditure should be adjusted against the interest income earned. The assessee interest income earned. The assessee has not given the details of not given the details of the interest expenditure incurred i the interest expenditure incurred in respect of the borrowing. If the n respect of the borrowing. If the borrowings were made for the purpose of extending loans and borrowings were made for the purpose of extending loans and borrowings were made for the purpose of extending loans and advances to the staff, then same could be netted off against the advances to the staff, then same could be netted off against the advances to the staff, then same could be netted off against the gross interest income, but in absence of any such nexus of the gross interest income, but in absence of any such nexus of the gross interest income, but in absence of any such nexus of the interest expenditure with the int interest expenditure with the interest income earned, erest income earned, claim of netting off cannot be allowed. The ground No. 10 of the appeal of netting off cannot be allowed. The ground No. 10 of the appeal of netting off cannot be allowed. The ground No. 10 of the appeal of the assessee is accordingly dismissed. the assessee is accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 127 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

“10. The ground of appeal at Sr. No. 13 has been taken without The ground of appeal at Sr. No. 13 has been taken without The ground of appeal at Sr. No. 13 has been taken without prejudice to ground no. 11 this ground it has been contended that the prejudice to ground no. 11 this ground it has been contended that the prejudice to ground no. 11 this ground it has been contended that the expenditure incurred in respect of the income of 336.02 lacs should expenditure incurred in respect of the income of 336.02 lacs should expenditure incurred in respect of the income of 336.02 lacs should be deducted from the said amount and only the net income should be from the said amount and only the net income should be from the said amount and only the net income should be brought to tax. However, neither in the ground of appeal nor in the brought to tax. However, neither in the ground of appeal nor in the brought to tax. However, neither in the ground of appeal nor in the

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 128 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

statement of facts or during the course of hearing of appeal, the statement of facts or during the course of hearing of appeal, the statement of facts or during the course of hearing of appeal, the appellant specified the expenses which have been incurred to earn appellant specified the expenses which have been incurred to earn appellant specified the expenses which have been incurred to earn the income of Rs. 336.02 lacs. In absence of any details or he income of Rs. 336.02 lacs. In absence of any details or he income of Rs. 336.02 lacs. In absence of any details or documentary evidence to prove that any expenditure has been documentary evidence to prove that any expenditure has been documentary evidence to prove that any expenditure has been incurred for earning the income of Rs.336.02 lacs, the claim made by incurred for earning the income of Rs.336.02 lacs, the claim made by incurred for earning the income of Rs.336.02 lacs, the claim made by the appellant cannot be accepted. the appellant cannot be accepted. Accordingly, the 13th ground is re Accordingly, the 13th ground is rejected.” 56.1 We find that Ld. CIT(A) has only referred to the ground of We find that Ld. CIT(A) has only referred to the ground of We find that Ld. CIT(A) has only referred to the ground of appeal and statement of the facts but did n statement of the facts but did not provide any ot provide any opportunity to furnish such details. Therefore in the interest of the furnish such details. Therefore in the interest of the furnish such details. Therefore in the interest of the justice and to provide one more opportunity to the assessee, claim justice and to provide one more opportunity to the justice and to provide one more opportunity to the for deduction of expenditure against the income under the head deduction of expenditure against the income under the head deduction of expenditure against the income under the head income from other sources is restored to the file of the Assessing income from other sources is restored to the file of the Assessing income from other sources is restored to the file of the Assessing Officer for verification and dec Officer for verification and deciding in accordance with iding in accordance with law. The ground of the appeal of the assessee is allowed for statistical ground of the appeal of the assessee is allowed ground of the appeal of the assessee is allowed purposes.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 129 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

of the expenses in the year under consideration, he upheld the of the expenses in the year under consideration, he upheld the of the expenses in the year under consideration, he upheld the disallowance. Before us no documentary evidence supporting Before us no documentary evidence supporting Before us no documentary evidence supporting crystallisation of those expenses in the year under consideration crystallisation of those expenses in the year under consideration crystallisation of those expenses in the year under consideration has been filed. Therefore, we do not find any error in the order of has been filed. Therefore, we do not find any error in the order of has been filed. Therefore, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the Ld. CIT(A) on the issue in dispute and accordingly we uphold the Ld. CIT(A) on the issue in dispute and accordingly we uphold the finding of the Ld. CIT(A). The ground of the Ld. CIT(A). The ground No. 14 of the appeal is 14 of the appeal is accordingly dismissed. accordingly dismissed. 58. The ground No. 15 relates to setting off the prior period The ground No. 15 relates to setting off the prior period The ground No. 15 relates to setting off the prior period Expenditure against the prior period Income. The ground No. 16 Expenditure against the prior period Income. The ground No. 16 Expenditure against the prior period Income. The ground No. 16 relates to prayer for allowing deduction of prior period expenses in riod expenses in respective financial years. Identical ground Nos. 12 and 13 raised respective financial years. Identical ground Nos. 12 and 13 raised respective financial years. Identical ground Nos. 12 and 13 raised in assessment year 2001 in assessment year 2001-02 have been rejected by us, therefore been rejected by us, therefore following our finding, the ground No following our finding, the ground Nos. 15 and 16 of the appeal are . 15 and 16 of the appeal are also dismissed. 59. The ground no. 17 re The ground no. 17 relates to disallowance of expenditure of lates to disallowance of expenditure of ₹ 82.50 lakhs out of research and development levy fund. 82.50 lakhs out of research and development levy fund. 82.50 lakhs out of research and development levy fund. 59.1Brief facts qua the issue in dispute are that t Brief facts qua the issue in dispute are that t Brief facts qua the issue in dispute are that the assessee claimed contribution of contribution of ₹ 82.5 lakhs towards setting up 82.5 lakhs towards setting up of fuelling machine test facility machine test facility at Bhaba Atomic Research Centre esearch Centre (BARC). The assessee claimed that since payment has been made out of research that since payment has been made out of research that since payment has been made out of research and development levy and development levy fund, and such levies have been treated by and such levies have been treated by the Assessing Officer as revenue receipts the Assessing Officer as revenue receipts , therefore the expenditure therefore the expenditure

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 130 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

incurred out of such R &D fund should be allowed as revenue such R &D fund should be allowed as revenue such R &D fund should be allowed as revenue expenditure. The Ld. CIT(A) has rejected the claim of expenditure expenditure. The Ld. CIT(A) has rejected the claim of expenditure expenditure. The Ld. CIT(A) has rejected the claim of expenditure as being in the nature of the capi as being in the nature of the capital expenditure. The relevant tal expenditure. The relevant finding of the Ld. CIT(A) is reproduced as under: nding of the Ld. CIT(A) is reproduced as under:

“17.2 I have considered the con I have considered the contention of the appellant. In this case, tention of the appellant. In this case, the appellant has made contribution of Rs. 82.50 lacs towards the the appellant has made contribution of Rs. 82.50 lacs towards the the appellant has made contribution of Rs. 82.50 lacs towards the setting up of Fueling Machine Test facility to Bhabha Atomic setting up of Fueling Machine Test facility to Bhabha Atomic setting up of Fueling Machine Test facility to Bhabha Atomic Research Centre. The total cost of the project is 150.30 lacs. The Research Centre. The total cost of the project is 150.30 lacs. The Research Centre. The total cost of the project is 150.30 lacs. The amount of Rs. 82.50 la amount of Rs. 82.50 lacs has been provided in respect of capital cs has been provided in respect of capital project which has to be treated as capital expenditure. Such project which has to be treated as capital expenditure. Such project which has to be treated as capital expenditure. Such expenditure is not allowable as deduction u/s 37 of the I.T.Act. The expenditure is not allowable as deduction u/s 37 of the I.T.Act. The expenditure is not allowable as deduction u/s 37 of the I.T.Act. The appellant has not made any argument or filed any evidence to claim appellant has not made any argument or filed any evidence to claim appellant has not made any argument or filed any evidence to claim that the said ex that the said expenditure is allowable under any other provisions of penditure is allowable under any other provisions of the I.T.Act. Accordingly, the appellant is not Accordingly, the appellant is not entitled to the deduction entitled to the deduction of Rs. 82.50 lacs. Therefore, the action of the AO in this regard is of Rs. 82.50 lacs. Therefore, the action of the AO in this regard is of Rs. 82.50 lacs. Therefore, the action of the AO in this regard is upheld. Therefore, the ground of appeal at Sr. No. 21 is reje Therefore, the ground of appeal at Sr. No. 21 is rejected. cted.” 59.2 We have heard rival submission of the parties on the issue in e have heard rival submission of the parties on the issue in e have heard rival submission of the parties on the issue in dispute in the light of the material available on record. The fact that dispute in the light of the material available on record. The fact that dispute in the light of the material available on record. The fact that expenditure was incurred for capital asset, which was installed at expenditure was incurred for capital asset, which was installed at expenditure was incurred for capital asset, which was installed at BARC, has not been disputed by the assessee BARC, has not been disputed by the assessee. Evidently said . Evidently said expenditure is in the nature of the capital expenditure and not expenditure is in the nature of the capital expenditure and not expenditure is in the nature of the capital expenditure and not allowable as revenue expen allowable as revenue expenditure under section 37 of the A diture under section 37 of the Act. Accordingly, we do not find any error in the order of the Ld. CIT(A) we do not find any error in the order of the Ld. CIT(A) we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and we uphold the sa on the issue in dispute and we uphold the same. The ground No. 17 me. The ground No. 17 of the appeal of the assessee is accordingly dismissed. of the appeal of the assessee is accordingly dismissed. of the appeal of the assessee is accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 131 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

of appeal was not pressed before us and therefore same is of appeal was not pressed before us and theref of appeal was not pressed before us and theref dismissed as infructuou dismissed as infructuous. 61. As far ground No. As far ground No. 19 of the appeal is concerned, we have of the appeal is concerned, we have already held that provisions of section 115 JB of the act are not already held that provisions of section 115 JB of the act are not already held that provisions of section 115 JB of the act are not applicable in the case of the assessee and therefore the consequent applicable in the case of the assessee and therefore the consequent applicable in the case of the assessee and therefore the consequent adjustment to book pr adjustment to book profit invoking section 115 JB of the Act made ofit invoking section 115 JB of the Act made by the Assessing Officer and upheld by the Ld. CIT(A), also cannot by the Assessing Officer and upheld by the Ld. CIT(A), also cannot by the Assessing Officer and upheld by the Ld. CIT(A), also cannot be sustained. The ground No. be sustained. The ground No. 19 of the appeal of the assessee is of the appeal of the assessee is accordingly allowed.

“The appellant company objects to the appellate orde The appellant company objects to the appellate orde The appellant company objects to the appellate order dated 30 March 2007 passed by the Commissioner of Income 30 March 2007 passed by the Commissioner of Income 30 March 2007 passed by the Commissioner of Income-tax (Appeals)- III, Mumbai ['CIT (A)'] under section 250 of the III, Mumbai ['CIT (A)'] under section 250 of the III, Mumbai ['CIT (A)'] under section 250 of the Income Tax Act, 1961 (the Act) on the following grounds: Income Tax Act, 1961 (the Act) on the following grounds: Income Tax Act, 1961 (the Act) on the following grounds: Decommissioning Levy Decommissioning Levy 1. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant appellant appellant an an an amount amount amount of of of Rs. Rs. Rs. 3,470.39 3,470.39 3,470.39 lacs, lacs, lacs, being being being Decommissioning Levy collected by the appellant. Decommissioning Levy collected by the appellant. Decommissioning Levy collected by the appellant. 2. The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the appellant an amount of Rs.3,615.08 lacs, being interest appellant an amount of Rs.3,615.08 lacs, being interest appellant an amount of Rs.3,615.08 lacs, being interest credited to Decommissioning Fund. credited to Decommissioning Fund.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 132 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Renovation Renovation & Modernisation Levy 3. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant appellant appellant an an an amount amount amount of of of Rs. Rs. Rs. 8,675.97 8,675.97 8,675.97 lacs, lacs, lacs, being being being Renovation Renovation Renovation & & & Modernisation Modernisation Modernisation levy levy levy collected collected collected by by by the the the appellant. 4. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant an amount of Rs.3,417.72 lacs, being interest appellant an am ount of Rs.3,417.72 lacs, being interest credited to Renovation and Modernisation fund. credited to Renovation and Modernisation fund. 5. Without prejudice to Grounds 3 and 4 above, the learned Without prejudice to Grounds 3 and 4 above, the learned Without prejudice to Grounds 3 and 4 above, the learned CIT(A) erred in holding that the amount collected towards CIT(A) erred in holding that the amount collected towards CIT(A) erred in holding that the amount collected towards Renovation & Modernisation levy was not in the nature Renovation & Modernisation levy was not in the nature of a Renovation & Modernisation levy was not in the nature capital receipt and accordingly taxable. capital receipt and accordingly taxable. Research & Development Levy Research & Development Levy 6. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant an amount of Rs.5,205.58 lacs, being Research & appellant an amount of Rs.5,205.58 lacs, being Research & appellant an amount of Rs.5,205.58 lacs, being Research & Development levy collected by the appellant Development levy collected by the appellant 7. The learned CIT (A) erre The learned CIT (A) erred in confirming as income of the d in confirming as income of the appellant an amount of Rs.2036.22 lacs, being interest appellant an amount of Rs.2036.22 lacs, being interest appellant an amount of Rs.2036.22 lacs, being interest credited to Research and Development fund. credited to Research and Development fund. 8. Without prejudice to Grounds 6 and 7 above, the learned Without prejudice to Grounds 6 and 7 above, the learned Without prejudice to Grounds 6 and 7 above, the learned CIT(A) erred in holding that a portion of the amount CIT(A) erred in holding that a portion of the amount CIT(A) erred in holding that a portion of the amount collected towards Research & Development levy was not in collected toward s Research & Development levy was not in the nature of a capital receipt and accordingly taxable. the nature of a capital receipt and accordingly taxable. the nature of a capital receipt and accordingly taxable. Deduction under section 80 Deduction under section 80-IA 9. The learned CIT(A) erred in confirming the exclusion of an The learned CIT(A) erred in confirming the exclusion of an The learned CIT(A) erred in confirming the exclusion of an amount of interest income of Rs. 128.65 lakhs and amount of interest income of Rs. 128.65 lakhs and amount of interest income of Rs. 128.65 lakhs and miscellaneous incom miscellaneous income to the extent of Rs.477.45 lakhs from e to the extent of Rs.477.45 lakhs from the "Profit of the business" eligible for deduction under the "Profit of the business" eligible for deduction under the "Profit of the business" eligible for deduction under Section 80 IA of the Income Tax Act. 1961. Section 80 IA of the Income Tax Act. 1961. 10. Without prejudice to Ground No. 9, the learned CIT(A) Without prejudice to Ground No. 9, the learned CIT(A) Without prejudice to Ground No. 9, the learned CIT(A) erred in confirming the exclusion of the gross interest incom erred in confirming the exclusion of the gross interest incom erred in confirming the exclusion of the gross interest income from the "Profits of the business" eligible for deduction under from the "Profits of the business" eligible for deduction under from the "Profits of the business" eligible for deduction under Section 80 IA of the Income Tax Act, 1961 instead of the net Section 80 IA of the Income Tax Act, 1961 instead of the net Section 80 IA of the Income Tax Act, 1961 instead of the net interest income. The learned CIT(A) erred in not netting off interest income. The learned CIT(A) erred in not netting off interest income. The learned CIT(A) erred in not netting off the interest income against the interest expenditure. the interest income against the interest expenditure. the interest income against the interest expenditure.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 133 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 134 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 135 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

believes believes believes that that that the the the expenditure expenditure expenditure incurred incurred incurred towards towards towards Renovation and Modernisation could be classified as Renovation and Modernisation could be classified as Renovation and Modernisation could be classified as being revenue in nature as the expenditure has been being revenue in nature as the expenditure has been being revenue in nature as the expenditure has been incurred for an existing asset. In the accounts this ncurred for an existing asset. In the accounts this ncurred for an existing asset. In the accounts this expenditure has not been debited to the Profit & Loss expenditure has not been debited to the Profit & Loss expenditure has not been debited to the Profit & Loss account and accordingly no deduction has been account and accordingly no deduction has been account and accordingly no deduction has been claimed in computing the total income of the previous claimed in computing the total income of the previous claimed in computing the total income of the previous year. The company submits that deduction for this year. The company submits that deduction for this year. The company submits that deduction for this expenditure ought to be allowed in computing the total expenditure ought to be allowed in computing the total expenditure ought to be allowed in computing the total income of the company. The return of income has been income of the company. The return of income has been income of the company. The return of income has been filed without prejudice to this claim. filed without prejudice to this claim. Without prejudice to the above it is submitted that it is Without prejudice to the above it is submitted that it is Without prejudice to the above it is submitted that it is held that the expenditure is capital in nature, held that the expenditure is capital in nature, held that the expenditure is capital in nature, depreciation on the amounts incurred ought to be reciation on the amounts incurred ought to be reciation on the amounts incurred ought to be allowed". allowed". 22. The learned CIT(A) erred in denying the claim for The learned CIT(A) erred in denying the claim for The learned CIT(A) erred in denying the claim for deduction made by the assessee vide No. Note 8 of the notes deduction made by the assessee vide No. Note 8 of the notes deduction made by the assessee vide No. Note 8 of the notes to the return of income, which reads as under to the return of income, which reads as under - During the previous year an amount of Rs. During the previous year an amount of Rs. 14.63 lakhs 14.63 lakhs has been incurred from the Research & Development has been incurred from the Research & Development has been incurred from the Research & Development Fund. It is submitted that as the expenditure has not been It is submitted that as the expenditure has not been It is submitted that as the expenditure has not been debited to the Profit & Loss debited to the Profit & Loss Account, no deduction has Account, no deduction has been claimed. in the computation of income. The been claimed. in the computation of income. The been claimed. in the computation of income. The company submits that the amount company submits that the amount of Rs.14.63 lakhs of Rs.14.63 lakhs expended is deductible in computing the total income expended is deductible in computing the total income expended is deductible in computing the total income of the company in view of the provisions contained in of the company in view of the provisions contained in of the company in view of the provisions contained in sections 35 / 37 of the Income sections 35 / 37 of the Income-tax Act, 1961. The tax Act, 1961. The return of income has been filed without prejudice to return of income has been filed without prejudice to return of income has been filed without prejudice to this claim" this claim" 64. The assessee also raise also raised additional ground by letter dated additional ground by letter dated 18/07/2018, which is reproduced as under: 18/07/2018, which is reproduced as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 136 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

section 143(3) section 143(3) dated 14th February 2005 and to exercise the dated 14th February 2005 and to exercise the powers of performing the functions of an Assessing Officer. powers of performing the functions of an Assessing Officer. powers of performing the functions of an Assessing Officer. 3. The learned Additional Commissioner of Income Tax erred in The learned Additional Commissioner of Income Tax erred in The learned Additional Commissioner of Income Tax erred in passing assessment order under section 143(3) where the passing assessment order under section 143(3) where the passing assessment order under section 143(3) where the assessment assessment proceedings proceedings were were initiated initiate d by by the Asst. the Asst. Commissioner of Income Tax. Such order passed is bad in Commissioner of Income Tax. Such order passed is bad in Commissioner of Income Tax. Such order passed is bad in law, in the absence of an order transferring, jurisdiction law, in the absence of an order transferring, jurisdiction law, in the absence of an order transferring, jurisdiction under section 127 to the Additional Commissioner of Income under section 127 to the Additional Commissioner of Income under section 127 to the Additional Commissioner of Income Tax. 64.1 We have heard rival submission of the parties on the issu We have heard rival submission of the parties on the issu We have heard rival submission of the parties on the issue of jurisdiction in passing the assessment order challenged by the jurisdiction in passing the assessment order challenged by the jurisdiction in passing the assessment order challenged by the assessee. The identical additional grounds raised by the assessee The identical additional grounds raised by the assessee The identical additional grounds raised by the assessee have been admitted in appeal for AY 1998 have been admitted in appeal for AY 1998-99, but after detailed 99, but after detailed discussion and following finding of the Tribunal in the case Stock discussion and following finding of the Tribunal in the ca discussion and following finding of the Tribunal in the ca Traders P Ltd (supra), Traders P Ltd (supra), same have been dismissed. Accordingly, same have been dismissed. Accordingly, following our finding in AY 1998 following our finding in AY 1998-99, the additional grounds of the 99, the additional grounds of the appeal for year under consideration are accordingly admitted and appeal for year under consideration are accordingly admitted and appeal for year under consideration are accordingly admitted and dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 137 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

upheld the apportionment of upheld the apportionment of research and development expenditure research and development expenditure observing as under:

“8.2 I have carefully considered the submissions made by the I have carefully considered the submissions made by the I have carefully considered the submissions made by the appellant. The appellant is appellant. The appellant is engaged in the business of generation of in the business of generation of electricity through various units located at different electricity through various units located at different places. places. The head office looks after the research and development work relating to all office looks after the research and development work relating to all office looks after the research and development work relating to all the units at Central level. Various units of the appellant are benefited Central level. Various units of the appellant are benefited Central level. Various units of the appellant are benefited from the research and development work carried out by the corporate from the research and development work carried out by the corporate from the research and development work carried out by the corporate office. During the assessment proceedings, office. During the assessment proceedings, the appellant could not the appellant could not deny that no part of the research and development expenditure deny that no part of the research and development expenditure deny that no part of the research and development expenditure related to the units eligible for deduction us 80IA. In the case of DCIT related to the units eligible for deduction us 80IA. In the case of DCIT related to the units eligible for deduction us 80IA. In the case of DCIT Vs. Eastern Medikit Ltd (2006) 100 TTJ 383 (Del), it has been held Vs. Eastern Medikit Ltd (2006) 100 TTJ 383 (Del), it has been held Vs. Eastern Medikit Ltd (2006) 100 TTJ 383 (Del), it has been held that deduction us 80IA of the that deduction us 80IA of the IT.Act has to be computed for each unit IT.Act has to be computed for each unit independently taking into consideration the profit of each unit only. It independently taking into consideration the profit of each unit only. It independently taking into consideration the profit of each unit only. It was further held that the head office expenditure has to be allocated was further held that the head office expenditure has to be allocated was further held that the head office expenditure has to be allocated to all the units unless there are valid reasons to exclude a particular to all the units unless there are valid reasons to exclude a particular to all the units unless there are valid reasons to exclude a particular unit. In the instant case, all the units have benefited from the unit. In the instant case, all the units have benefited from the unit. In the instant case, all the units have benefited from the research and development work carried on by the head office, there research and development work carried on by the head office, there research and development work carried on by the head office, there is no reason for not allocating the R & D expenses to all the units is no reason for not allocating the R & D expenses to all the units is no reason for not allocating the R & D expenses to all the units including those eligible for deduction us 80IA. In view including those eligible for deduction us 80IA. In view including those eligible for deduction us 80IA. In view of this discussion, the action of the AO in apportioning a sum of Rs 747.48 discussion, the action of the AO in apportioning a sum of Rs 747.48 discussion, the action of the AO in apportioning a sum of Rs 747.48 lacs out of the total R & D expenditure of Rs. 13.75 crores is upheld. lacs out of the total R & D expenditure of Rs. 13.75 crores is upheld. lacs out of the total R & D expenditure of Rs. 13.75 crores is upheld. Accordingly, the addition of Rs. 747.48 lacs made by the AO on this Accordingly, the addition of Rs. 747.48 lacs made by the AO on this Accordingly, the addition of Rs. 747.48 lacs made by the AO on this account is confirmed. account is confirmed. Therefore, the grou Therefore, the ground of appeal at Sr. No. 11 is rejected. nd of appeal at Sr. No. 11 is rejected.” 67.1 We have heard rival submission of the parties and perused the e have heard rival submission of the parties and perused the e have heard rival submission of the parties and perused the relevant metal on record. The Ld. CIT(A) has observed that research relevant metal on record. The Ld. CIT(A) has observed that research relevant metal on record. The Ld. CIT(A) has observed that research and development expenses have been incurred by the office. Before and development expenses have been incurred by the office. Before and development expenses have been incurred by the office. Before us the assessee has not provided details of e has not provided details of specific R&D specific R&D activity carried out by the head office and whether same was not related to carried out by the head office and whether same was carried out by the head office and whether same was the electricity production activity of the plant eligible for deduction the electricity production activity of the plant eligible for deduction the electricity production activity of the plant eligible for deduction under section 80IA of the A 80IA of the Act. In absence of any such information ct. In absence of any such information, the action of the lower lower authorities in allocating the said authorities in allocating the said R & D

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 138 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

expenditure towards the profit from the undertaking eligible for expenditure towards the profit from the undertaking eligible for expenditure towards the profit from the undertaking eligible for deduction under section 80IA is justified and we do not find any deduction under section 80IA is justified and we do not find any deduction under section 80IA is justified and we do not find any error in the order of the Ld. CIT(A) in upholding the allocation of the error in the order of the Ld. CIT(A) in upholding the alloc error in the order of the Ld. CIT(A) in upholding the alloc R&D expenditure to the eligible units. The ground No. 11 of the R&D expenditure to the eligible units. The ground No. 11 of the R&D expenditure to the eligible units. The ground No. 11 of the appeal of the assessee is accordingly dismissed. appeal of the assessee is accordingly dismissed. 68. The ground Nos s. 12 to 15 of the appeal of the assessee relates . 12 to 15 of the appeal of the assessee relates to rejection of reducing certain incomes from the expenditure to rejection of reducing certain incomes from the expenditure to rejection of reducing certain incomes from the expenditure incurred during construction period. The identical rounds raised in incurred during construction period. The identical rounds raised in incurred during construction period. The identical rounds raised in assessment year 2001 assessment year 2001-02 have been decided by us 02 have been decided by us, therefore relevant ground No. 12 to 15 of the present appeal are also decided relevant ground No. 12 to 15 of the present appeal are also decided relevant ground No. 12 to 15 of the present appeal are also decided mutatis mutandis. 69. The ground Nos.16 to 18 of the appeal Nos.16 to 18 of the appeal relate relate to prior period expenses of ₹ 552.41 lakhs. The identical 552.41 lakhs. The identical grounds have been rounds have been adjudicated by us in the appeal for assessment year 2001-02 and adjudicated by us in the appeal for assessment year 2001 adjudicated by us in the appeal for assessment year 2001 2002-03. Following our finding on those assessment years, the 03. Following our finding on those assessment years, the 03. Following our finding on those assessment years, the ground No. 16 to 18 of the appeal are decided mutatis mutandis. ground No. 16 to 18 of the appeal are decided mutatis mutandis. ground No. 16 to 18 of the appeal are decided mutatis mutandis. 70. Ground of 19 Ground of 19 of the appeal relates to provision made for of the appeal relates to provision made for obsolete stock. This ground of the appeal obsolete stock. This ground of the appeal was not pressed before us not pressed before us and therefore same is dismissed as infructuous. and therefore same is dismissed as infructuous. 71. As far ground No. 20 ground No. 20 of the appeal is concerned, we have of the appeal is concerned, we have already held that provisions of se already held that provisions of section 115 JB of the act are not ction 115 JB of the act are not applicable in the case of the assessee and therefore the consequent applicable in the case of the assessee and therefore the consequent applicable in the case of the assessee and therefore the consequent adjustment to book profit invoking section 115 JB of the Act made adjustment to book profit invoking section 115 JB of the Act made adjustment to book profit invoking section 115 JB of the Act made

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 139 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

by the Assessing Officer and upheld by the Ld. CIT(A), also cannot by the Assessing Officer and upheld by the Ld. CIT(A), also cannot by the Assessing Officer and upheld by the Ld. CIT(A), also cannot be sustained. The grou be sustained. The ground No. 20 of the appeal of the assessee is nd No. 20 of the appeal of the assessee is accordingly allowed. 72. The ground No. 21 of the appeal relates to denial of claim of he ground No. 21 of the appeal relates to denial of claim of he ground No. 21 of the appeal relates to denial of claim of deduction for renovation and modernisation expenditure. deduction for renovation and modernisation expenditure. deduction for renovation and modernisation expenditure.

72.1 Brief facts qua the issue in dispute are that the assessee Brief facts qua the issue in dispute are that the assessee Brief facts qua the issue in dispute are that the assessee claimed that said expenditure was not debited to the profit and loss ed that said expenditure was not debited to the profit and loss ed that said expenditure was not debited to the profit and loss account and accordingly no deduction was claimed while computing account and accordingly no deduction was claimed while computing account and accordingly no deduction was claimed while computing total income of the previous year, but same has been claim total income of the previous year, but same has been claim total income of the previous year, but same has been claim separately . The Ld. CIT(A) rejected the claim observing as under: separately . The Ld. CIT(A) rejected the claim observing as under: separately . The Ld. CIT(A) rejected the claim observing as under:

“17.1 I have carefully considered the submissions of the appellant. I 17.1 I have carefully considered the submissions of the appellant. I 17.1 I have carefully considered the submissions of the appellant. I have also perused the note no. 7 given in the return of income. Not have also perused the note no. 7 given in the return of income. Not have also perused the note no. 7 given in the return of income. Not to speak of giving the details of expenditure incurred from the to speak of giving the details of expenditure incurred from the to speak of giving the details of expenditure incurred from the Renovation and Modernisation Fund, even the amount spen Renovation and Modernisation Fund, even the amount spen Renovation and Modernisation Fund, even the amount spent from the said fund has not been specified by the appellant before me or the said fund has not been specified by the appellant before me or the said fund has not been specified by the appellant before me or before the AO. In absence of any details or other information the before the AO. In absence of any details or other information the before the AO. In absence of any details or other information the claim of the appellant cannot be accepted. claim of the appellant cannot be accepted. Accordingly, the ground of appeal at Sr.no. 29 is rejected. Accordingly, the ground of appeal at Sr.no. 29 is rejected. Accordingly, the ground of appeal at Sr.no. 29 is rejected.” 72.2 We have heard rival submission of the parties and perused the heard rival submission of the parties and perused the heard rival submission of the parties and perused the relevant material on record. In absence of any details of the on record. In absence of any details of the on record. In absence of any details of the expenditure filed, the Ld. CIT(A) expenditure filed, the Ld. CIT(A)is justified in rejecting the claim of justified in rejecting the claim of the assessee. No such details have been filed before us also. the assessee. No such details have been filed before us also. the assessee. No such details have been filed before us also. Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in we uphold the finding of the Ld. CIT(A) on the issue in we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground of the appeal of the assessee. dispute and dismiss the ground of the appeal of the assessee. dispute and dismiss the ground of the appeal of the assessee.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 140 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

development fund. It was claimed by the assessee that said lopment fund. It was claimed by the assessee that said lopment fund. It was claimed by the assessee that said expenditure had not been debited to the profit and loss account and expenditure had not been debited to the profit and loss account and expenditure had not been debited to the profit and loss account and therefore no deduction had been claimed in the computation of the therefore no deduction had been claimed in the computation of the therefore no deduction had been claimed in the computation of the income. The Ld. CIT(A) rejected the claim observing as under: income. The Ld. CIT(A) rejected the claim observing as under: income. The Ld. CIT(A) rejected the claim observing as under:

“18.1 I have considered the contention of the appellant. Before me, I have considered the contention of the appellant. Before me, I have considered the contention of the appellant. Before me, the appellant has furnished the details of R & D expenses incurred the appellant has furnished the details of R & D expenses incurred the appellant has furnished the details of R & D expenses incurred out of the Research and Development Fund. As per the details filed out of the Research and Development Fund. As per the details filed out of the Research and Development Fund. As per the details filed by the appellant, it has incurred an expenditure of Rs. 14, by the appellant, it has incurred an expenditure of Rs. 14, by the appellant, it has incurred an expenditure of Rs. 14,63,152/- on the leveling of R & D site. As per the resolution passed by the on the leveling of R & D site. As per the resolution passed by the on the leveling of R & D site. As per the resolution passed by the Board of the appellant company, there is proposal to construct Board of the appellant company, there is proposal to construct Board of the appellant company, there is proposal to construct building for R & D at cost of Rs. 2.63 lacs. The amount of Rs. building for R & D at cost of Rs. 2.63 lacs. The amount of Rs. building for R & D at cost of Rs. 2.63 lacs. The amount of Rs. 14,63,152/- has also been incurred in connection with has also been incurred in connection with the construction of the building which is capital in nature. Such types of construction of the building which is capital in nature. Such types of construction of the building which is capital in nature. Such types of expenses are not allowable w/s 37 of the I.T.Act. The appellant has expenses are not allowable w/s 37 of the I.T.Act. The appellant has expenses are not allowable w/s 37 of the I.T.Act. The appellant has not made any argument or filed any evidence to claim that the said not made any argument or filed any evidence to claim that the said not made any argument or filed any evidence to claim that the said expenditures is allowable under any other prov expenditures is allowable under any other provisions of the I.T.Act. isions of the I.T.Act. In view of these facts and circumstances of the case, it is held that In view of these facts and circumstances of the case, it is held that In view of these facts and circumstances of the case, it is held that the appellant is not entitled to deduction of Rs. 14,63,152/ the appellant is not entitled to deduction of Rs. 14,63,152/ the appellant is not entitled to deduction of Rs. 14,63,152/- being amount spent out of the Research & Development Fund. amount spent out of the Research & Development Fund. amount spent out of the Research & Development Fund. Accordingly, the ground of appeal at Sr.No Accordingly, the ground of appeal at Sr.No. 30 is rejected. . 30 is rejected.” 73.1 We have perused the finding of the Ld. CIT(A) and h e have perused the finding of the Ld. CIT(A) and heard rival e have perused the finding of the Ld. CIT(A) and h submission of the parties. The assessee has not disputed that the submission of the parties. The assessee has not disputed that the submission of the parties. The assessee has not disputed that the expenditure has been incurred in relation with construction of the expenditure has been incurred in relation with construction of the expenditure has been incurred in relation with construction of the building for research and development building for research and development. The expenses and . The expenses and construction of the building for the purpose of research and construction of the building for the purpose of research and construction of the building for the purpose of research and development is in the nature of the capital expenditure. Before us development is in the nature of the capital expenditure. Before us development is in the nature of the capital expenditure. Before us the learned counsel has not submitted any evidence to support that the learned counsel has not submitted any evidence to support that the learned counsel has not submitted any evidence to support that said expenditure was in the nature of reve said expenditure was in the nature of revenue expenditure. In the nue expenditure. In the facts and circumstances of the case, we do not find any error in the facts and circumstances of the case, we do not find any error in the facts and circumstances of the case, we do not find any error in the finding of the Ld. CIT(A) on the issue in dispute and we accordingly finding of the Ld. CIT(A) on the issue in dispute and we accordingly finding of the Ld. CIT(A) on the issue in dispute and we accordingly

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 141 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

uphold the same. The ground No. 22 of the appeal of the assessee is uphold the same. The ground No. 22 of the appeal of the assessee is uphold the same. The ground No. 22 of the appeal of the assessee is accordingly dismissed. accordingly dismissed.

AY 2004-05 75. Now we take up the appeal of the assessee for assessment year Now we take up the appeal of the assessee for assessment year Now we take up the appeal of the assessee for assessment year 2004-05. The ground raised by the assessee wide for No. 36 dated 05. The ground raised by the assessee wide for No. 36 dated 05. The ground raised by the assessee wide for No. 36 dated 28/06/2007, reproduced as under: oduced as under:

“The appellant company objects to the appellate order dated 30 The appellant company objects to the appellate order dated 30 The appellant company objects to the appellate order dated 30 March 2007 passed by the Commissioner of Income March 2007 passed by the Commissioner of Income-tax (Appeals) tax (Appeals)- III, Mumbai [*CIT (A) under section 250 of the Income Tax Act. III, Mumbai [*CIT (A) under section 250 of the Income Tax Act. III, Mumbai [*CIT (A) under section 250 of the Income Tax Act. 1961 ('the Act) on the following grounds: 1961 ('the Act) on the following grounds: Decommissioning Levy sioning Levy 1. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant appellant appellant an an an amount amount amount of of of Rs. Rs. Rs. 3,052.70 3,052.70 3,052.70 lacs, lacs, lacs, being being being Decommissioning Levy collected by the appellant. Decommissioning Levy collected by the appellant. 2. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant an amount of Rs.4103.80 appellant an amount of Rs.4103.80 lacs, being interest lacs, being interest credited to Decommissioning Fund credited to Decommissioning Fund Renovation & Modernisation Levy Renovation & Modernisation Levy 3. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant an amount of Rs. 5361.98 lacs, being Renovation & appellant an amount of Rs. 5361.98 lacs, being Renovation & appellant an amount of Rs. 5361.98 lacs, being Renovation & Modernisation levy collected by the appellant. Modernisation levy collected by the appellant. 4. The learned CIT(A) erred in confirming as income of the rned CIT(A) erred in confirming as income of the rned CIT(A) erred in confirming as income of the appellant an amount of Rs.3,624.04. lacs, being interest appellant an amount of Rs.3,624.04. lacs, being interest appellant an amount of Rs.3,624.04. lacs, being interest credited to Renovation and Modernisation fund. credited to Renovation and Modernisation fund. 5. Without prejudice to Grounds 3 and 4 above, the learned CIT(A) Without prejudice to Grounds 3 and 4 above, the learned CIT(A) Without prejudice to Grounds 3 and 4 above, the learned CIT(A) erred in holding that the amount collect erred in holding that the amount collected towards Renovation ed towards Renovation & Modernisation levy was not in the nature of a capital receipt & Modernisation levy was not in the nature of a capital receipt & Modernisation levy was not in the nature of a capital receipt and accordingly taxable. and accordingly taxable.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 142 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Research & Development Levy Research & Development Levy 6. The leamed CIT(A) erred in confirming as income of the The leamed CIT(A) erred in confirming as income of the The leamed CIT(A) erred in confirming as income of the appellant an amount of Rs.3,217.19 lacs, being Research & appellant an amount of Rs.3,217.19 lacs, being Research & appellant an amount of Rs.3,217.19 lacs, being Research & Development levy collected by the appellant. elopment levy collected by the appellant. 7. The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the The learned CIT (A) erred in confirming as income of the appellant an amount of Rs. 1877.47 lacs, being interest appellant an amount of Rs. 1877.47 lacs, being interest appellant an amount of Rs. 1877.47 lacs, being interest credited to Research and Development fund. credited to Research and Development fund. 8. Without prejudice to Grounds 6 and 7 above, the learned CI Without prejudice to Grounds 6 and 7 above, the learned CIT(A) Without prejudice to Grounds 6 and 7 above, the learned CI erred in holding that a portion of the amount collected towards erred in holding that a portion of the amount collected towards erred in holding that a portion of the amount collected towards Research & Development levy was not in the nature of a Research & Development levy was not in the nature of a Research & Development levy was not in the nature of a capital receipt and accordingly taxable capital receipt and accordingly taxable Deduction under section 80 Deduction under section 80-IA 9. The learned CIT(A) erred in confirming the exclusion of an The learned CIT(A) erred in confirming the exclusion of an The learned CIT(A) erred in confirming the exclusion of an amount of interest income of Rs. 281.63 lakhs and other unt of interest income of Rs. 281.63 lakhs and other unt of interest income of Rs. 281.63 lakhs and other income to the extent of Rs.658.85 lakhs from the "Profit of the income to the extent of Rs.658.85 lakhs from the "Profit of the income to the extent of Rs.658.85 lakhs from the "Profit of the business" eligible for deduction under Section 80 IA of the business" eligible for deduction under Section 80 IA of the business" eligible for deduction under Section 80 IA of the Income Tax Act, 1961 Income Tax Act, 1961 10. Without prejudice to Ground No. 9, the learned CIT(A) erre Without prejudice to Ground No. 9, the learned CIT(A) erred in Without prejudice to Ground No. 9, the learned CIT(A) erre confirming the exclusion of the gross interest income and other confirming the exclusion of the gross interest income and other confirming the exclusion of the gross interest income and other income from the "Profits of the business" eligible for deduction income from the "Profits of the business" eligible for deduction income from the "Profits of the business" eligible for deduction under Sect under Section 80 IA of the Income Tax Act 1961 instead of the 1961 instead of the net income. The learned CIT(A) erred in not netting off the net income. The learned CIT(A) erred in not netting off the net income. The learned CIT(A) erred in not netting off the interest income and other income against the interest and other interest income and other income against the interest and other interest income and other income against the interest and other expenditure. expenditure. Income Income Income reduced reduced reduced from from from expenditure expenditure expenditure incurred incurred incurred during during during Construction Period Construction Period 11. The learned CIT(A) erred in confirming the action of the The learned CIT(A) erred in confirming the action of the The learned CIT(A) erred in confirming the action of the assessing officer in taxing as income, the following amounts assessing officer in taxing as income, the following a assessing officer in taxing as income, the following a which had been reduced by the appellant company from the which had been reduced by the appellant company from the which had been reduced by the appellant company from the expenditure incurred during construction period: expenditure incurred during construction period: Sr. No. Particulars Amount (Rs. In Lakhs) 1. Interest on Staff Loan Interest on Staff Loan 215 46 2. Penal Interest recovered from employees Penal Interest recovered from employees 0.87 3. Sale of Power Sale of Power 44.54 4. Other income Other income 766.01 1,007.74 Total Total

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 143 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 144 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

The ground Nos. 1 and 2 of the appeal relate to receipt of de- 77. The ground Nos. 1 and 2 of the appeal relate to The ground Nos. 1 and 2 of the appeal relate to commissioning levy y by the assessee and the interest credited on interest credited on the de-commissioning fund commissioning fund respectively. The issues in dispute The issues in dispute

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 145 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

being identical to ground Nos. 5 and 6 raised in assessment year being identical to ground Nos. 5 and 6 raised in assessment year being identical to ground Nos. 5 and 6 raised in assessment year 1998-99, therefore, following our finding in ITA No. 202/Mum/2004 99, therefore, following our finding in ITA No. 202/Mum/2004 99, therefore, following our finding in ITA No. 202/Mum/2004 for assessment year 1998 ear 1998-99, the issues are decided mutatis 99, the issues are decided mutatis mutandis.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 146 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

,therefore, respectfully following the same the ground Nos. 6 to 8 of ,therefore, respectfully following the same the ground Nos. 6 to 8 of ,therefore, respectfully following the same the ground Nos. 6 to 8 of the appeal of the assessee are decided mutatis mutandis. the appeal of the assessee are decided mutatis mutand the appeal of the assessee are decided mutatis mutand

82.1 The brief facts, the issue in dispute that the assessee shown The brief facts, the issue in dispute that the assessee shown The brief facts, the issue in dispute that the assessee shown tax-free free exempted exempted income income from from investments, investments, however however no no disallowance for earning such exempted income disallowance for earning such exempted income was was shown by the assessee. Before the Assessing Officer assessee submitted that assessee. Before the Assessing Officer assessee submitted that assessee. Before the Assessing Officer assessee submitted that

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 147 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

company has made investment of company has made investment of ₹ 2,63,198 lakhs in bonds as per s in bonds as per the recommendation of the the recommendation of the ‘Ahluwalia committee’ of G ’ of Government of India. It was submitted that those India. It was submitted that those Bonds were compulsorily allotted were compulsorily allotted by the different Electricity Board for converting existing debt as by the different Electricity Board for converting existing debt as by the different Electricity Board for converting existing debt as investment. It was e investment. It was explained that investment in Bond ained that investment in Bond was from internal funds i.e. debt and not from borrowed funds and therefore debt and not from borrowed funds and therefore debt and not from borrowed funds and therefore no disallowance of interest could be made under the provisions of no disallowance of interest could be made under the prov no disallowance of interest could be made under the prov section 14A of the A section 14A of the Act. The Assessing Officer accepted the ct. The Assessing Officer accepted the contention regarding the contention regarding the interest disallowance, however he pointed interest disallowance, however he pointed out that assessee has not made any disallowance towards out that assessee has not made any disallowance towards out that assessee has not made any disallowance towards administrative expenses incurred for earning exempted income. The administrative expenses incurred for earning exempted income. The administrative expenses incurred for earning exempted income. The Assessing Officer made disallowance of proportionate administrative Assessing Officer made disallowance of proportionate administrative Assessing Officer made disallowance of proportionate administrative expenses, computed as un expenses, computed as under:

“9.4 The expenses on the earning of tax 9.4 The expenses on the earning of tax-free incomes have to be free incomes have to be estimated. A fair basis of the estimate would be apportionment of estimated. A fair basis of the estimate would be apportionment of estimated. A fair basis of the estimate would be apportionment of the administrative expenses on the ratio of tax the administrative expenses on the ratio of tax-free income to the free income to the turnover of the assessee. turnover of the assessee. Total turnover as per P &L a Total turnover as per P &L account 597177.96 lakhs 597177.96 lakhs Income from Tax Income from Tax-free bonds 55,759.58 lakhs Administrative expenses as per P &L account Administrative expenses as per P &L account Rs. 2,11,959.79 lakhs Rs. 2,11,959.79 lakhs Less: expenses relatable only to industrial activity: Less: expenses relatable only to industrial activity: Rs. In lakhs Rs. In lakhs 1. Fuel charges Fuel charges 54,179.32 54,179.32 2. Heavy water charges Heavy water charges 35,871.30 1.30 3. Auxillary consumption of power Auxillary consumption of power 47,095.98 47,095.98 4. Stores and spares Stores and spares 1,766.52 1,766.52 5. Repairs to Plant &machinery Repairs to Plant &machinery 7,104.01 7,104.01 31767.17 6. Rebates and discount Rebates and discount 31767.17 Total Total 1,77,784.30 1,77,784.30 Allocable expenses 2,11,959.79 Allocable expenses 2,11,959.79 - 1,77,784.3 1,77,784.3

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 148 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

= 34,175.49 lakhs = 34,175.49 lakhs Expenses on tax Expenses on tax-free interest: = 34,175.49 X 55,759.58 34,175.49 X 55,759.58 597177.96 = Rs. 31,91,02,695 = Rs. 31,91,02,695 In view of the above, the provision made by Rs.31,91,02,695 is In view of the above, the provision made by Rs.31,91,02,695 is In view of the above, the provision made by Rs.31,91,02,695 is disallowed in computing the total income of the assessee. disallowed in computing the total income of the assessee. disallowed in computing the total income of the assessee. Para 9.4 of the Assessing Officer of the Assessing Officer” 82.2 On further appeal appeal, the Ld. CIT(A) upheld the disallowance . CIT(A) upheld the disallowance observing as under:

“11.2 I have carefully considered the submissions of the appellant. 11.2 I have carefully considered the submissions of the appellant. 11.2 I have carefully considered the submissions of the appellant. As per section 14A of the I.T.Act, no deduction shall be allowed in As per section 14A of the I.T.Act, no deduction shall be allowed in As per section 14A of the I.T.Act, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to respect of expenditure incurred by the assessee in relation to respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under I.T.Act. me which does not form part of the total income under I.T.Act. me which does not form part of the total income under I.T.Act. Therefore, while computing income of assessee, all the expenses Therefore, while computing income of assessee, all the expenses Therefore, while computing income of assessee, all the expenses relating to exempt income have to be disallowed. In the case of DCIT relating to exempt income have to be disallowed. In the case of DCIT relating to exempt income have to be disallowed. In the case of DCIT Vs. S.G. Investment & Industries Ltd 89 ITD 14 (Cal.), it ha Vs. S.G. Investment & Industries Ltd 89 ITD 14 (Cal.), it ha Vs. S.G. Investment & Industries Ltd 89 ITD 14 (Cal.), it has been held that, in section 14A, the expression "expenditure incurred by held that, in section 14A, the expression "expenditure incurred by held that, in section 14A, the expression "expenditure incurred by the assessee in relation to income which does not form part of total the assessee in relation to income which does not form part of total the assessee in relation to income which does not form part of total income" should be given a wide meaning income" should be given a wide meaning and it cannot be construed and it cannot be construed in a narrow or restricted manner. If such a wid in a narrow or restricted manner. If such a wider meaning is given, er meaning is given, the said expression would encompass not only the direct or the said expression would encompass not only the direct or the said expression would encompass not only the direct or proximate expenditure incurred for the purpose of making or earning proximate expenditure incurred for the purpose of making or earning proximate expenditure incurred for the purpose of making or earning exempt income but would include all other expenses attributable or exempt income but would include all other expenses attributable or exempt income but would include all other expenses attributable or in relation to exempt income. In other wo in relation to exempt income. In other words, it would signify or rds, it would signify or imply both direct and indirect relationship between the expenditure imply both direct and indirect relationship between the expenditure imply both direct and indirect relationship between the expenditure and the exempt income. Further, in the case of Southern Petro and the exempt income. Further, in the case of Southern Petro and the exempt income. Further, in the case of Southern Petro Chemical Industries Vs. DCIT (2005) 3 SOT 157 (Chennai), it has Chemical Industries Vs. DCIT (2005) 3 SOT 157 (Chennai), it has Chemical Industries Vs. DCIT (2005) 3 SOT 157 (Chennai), it has been held that investment decisions a been held that investment decisions are very strategic decisions in re very strategic decisions in which top management is involved and, therefore, proportionate which top management is involved and, therefore, proportionate which top management is involved and, therefore, proportionate management expenses are required to be deducted while computing management expenses are required to be deducted while computing management expenses are required to be deducted while computing the dividend income for the purpose of section 10(33). Similar the dividend income for the purpose of section 10(33). Similar the dividend income for the purpose of section 10(33). Similar decision has been given in the case decision has been given in the case of ACIT Vs. Premier of ACIT Vs. Premier Consolidated Capital Trust (1) Ltd. (2004) 4 SOT 793 (Mumbai) ; Consolidated Capital Trust (1) Ltd. (2004) 4 SOT 793 (Mumbai) ; Consolidated Capital Trust (1) Ltd. (2004) 4 SOT 793 (Mumbai) ; JCIT Vs. Holland Equipment Co. B.V (2005) 3 SOT 810 (Mumbai) ; JCIT Vs. Holland Equipment Co. B.V (2005) 3 SOT 810 (Mumbai) ; JCIT Vs. Holland Equipment Co. B.V (2005) 3 SOT 810 (Mumbai) ; Rhythm Exports Pvt.Ltd. Vs. ITO 97 TTJ 493 (Mumbai) and ACIT Vs. Rhythm Exports Pvt.Ltd. Vs. ITO 97 TTJ 493 (Mumbai) and ACIT Vs. Rhythm Exports Pvt.Ltd. Vs. ITO 97 TTJ 493 (Mumbai) and ACIT Vs. Dakshesh S. Shah 90 Dakshesh S. Shah 90 ITD 519 (Mumbai). In the case of Rhythm e case of Rhythm Exports Pvt.Ltd. (supra), it has been held that it is the duty of the Exports Pvt.Ltd. (supra), it has been held that it is the duty of the Exports Pvt.Ltd. (supra), it has been held that it is the duty of the assessee to allocate the expenditure to exempt income w/s 14A but assessee to allocate the expenditure to exempt income w/s 14A but assessee to allocate the expenditure to exempt income w/s 14A but

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 149 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

in case the assessee fails to allocate the same, the AO has no option in case the assessee fails to allocate the same, the AO has no option in case the assessee fails to allocate the same, the AO has no option but to disallow the same on propo but to disallow the same on proportionate basis. The decision of rtionate basis. The decision of Hon. Bombay High Court in the case of General Insurance Hon. Bombay High Court in the case of General Insurance Hon. Bombay High Court in the case of General Insurance Corporation of India supra) and other decisions relied upon by the Corporation of India supra) and other decisions relied upon by the Corporation of India supra) and other decisions relied upon by the appellant are not applicable since the same was rendered in respect appellant are not applicable since the same was rendered in respect appellant are not applicable since the same was rendered in respect of section 80M and before the int of section 80M and before the introduction of section 14A in IT.Act. roduction of section 14A in IT.Act. In view of this discussion, the action of the AO in ==disallowing In view of this discussion, the action of the AO in ==disallowing In view of this discussion, the action of the AO in ==disallowing expenditure of Rs. Rs. 31,91,02,695/ expenditure of Rs. Rs. 31,91,02,695/- /s 14A of the I.T.Act is /s 14A of the I.T.Act is upheld. (Addition upheld. (Addition confirmed Rs. 31,91,02,695/-). Therefore, grounds of appeal at Sr.no. 15 herefore, grounds of appeal at Sr.no. 15 and 16 are rejected. and 16 are rejected.” 82.3 Before us the learned counsel us the learned counsel for the assessee referred to the assessee referred to paperbook page 190 and submitted that as far as exempted income paperbook page 190 and submitted that as far as exempted income paperbook page 190 and submitted that as far as exempted income is concerned, the assessee received che , the assessee received cheques from state electricity from state electricity boards toward interest, which boards toward interest, which were deposited in bank account and sited in bank account and no other administrative cost was incurred by the assessee for no other administrative cost was incurred by the assessee for no other administrative cost was incurred by the assessee for earning the exempted income. earning the exempted income.

82.4 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and peruse dispute and perused the relevant material on record. Prior to the relevant material on record. Prior to assessment year 2008 t year 2008-09, rule 8D of Income-tax Rules, 1962 ( in tax Rules, 1962 ( in short the rules) was not in operation and it was discretion of the short the rules) was not in operation and it was discretion of the short the rules) was not in operation and it was discretion of the Assessing Officer to disallow expenses corresponding to earning of Assessing Officer to disallow expenses corresponding to earning Assessing Officer to disallow expenses corresponding to earning exempted on a reasonable basis. In the case, the Assessing Officer exempted on a reasonable basis. In the case, the Assessing Officer exempted on a reasonable basis. In the case, the Assessing Officer has disallowed the administrative expenses in proportion to the has disallowed the administrative expenses in proportion to the has disallowed the administrative expenses in proportion to the ratio of exempted income to the total turnover of the assessee. But ratio of exempted income to the total turnover of the assessee. But ratio of exempted income to the total turnover of the assessee. But as per the submission of the assessee, assessee is receiving tax-free as per the submission of the assessee, assessee is receiving tax as per the submission of the assessee, assessee is receiving tax interest income on bonds invested in state electricity board, and no interest income on bonds invested in state electricity interest income on bonds invested in state electricity efforts except depositing the cheques orts except depositing the cheques of the interest were deposited of the interest were deposited

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 150 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

in the bank. In such circumstances, we are of the opinion that in the bank. In such circumstances, we are of the opinion that in the bank. In such circumstances, we are of the opinion that disallowance proportional to the receipt of interest is too excessive. disallowance proportional to the receipt of interest is to disallowance proportional to the receipt of interest is to At maximum, some percentage of adminis At maximum, some percentage of administrative expenses on trative expenses on salary, office establishment expenses etc would be sufficient to salary, office establishment expenses etc would be sufficient to salary, office establishment expenses etc would be sufficient to cover expenses corresponding to earning of exempted income. cover expenses corresponding to earning of exempted income. cover expenses corresponding to earning of exempted income. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue Accordingly, we set aside the finding of the Ld. CIT(A) on the issue Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore the matter to the f in dispute and restore the matter to the file of the Assessing Officer ile of the Assessing Officer for making disallowance on for making disallowance on some reasonable basis . The assessee is reasonable basis . The assessee is directed directed to to provide provide details of expenses expenses including including office office establishment expenses related to employees engaged in work establishment expenses related to employees engaged in work establishment expenses related to employees engaged in work related to earning of of exempted income so that Assessing Officer at Assessing Officer after verification of the same may be in position to decide the after verification of the same may be in position to decide the after verification of the same may be in position to decide the quantum of disallowance on reasonable basis. The ground Nos. 15 quantum of disallowance on reasonable basis. The ground No quantum of disallowance on reasonable basis. The ground No and 16 of the appeal and 16 of the appeal of assessee are accordingly allowed for are accordingly allowed for statistical purposes.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 151 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

counsel of the assessee submitted that this ground was not pressed counsel of the assessee submitted that this ground was not pressed counsel of the assessee submitted that this ground was not pressed by the assessee and therefore accordingly it is dismissed as by the assessee and therefore accordingly it is dismissed as by the assessee and therefore accordingly it is dismissed as infructuous.

“18.1 I have carefully considered the submissions of the appellant. 18.1 I have carefully considered the submissions of the appellant. 18.1 I have carefully considered the submissions of the appellant. I have also perused the note no. 6 given in the return of income. I have also perused the note no. 6 given in the return of income. I have also perused the note no. 6 given in the return of income. Not to speak of giving the details of expenditure incurred from the speak of giving the details of expenditure incurred from the speak of giving the details of expenditure incurred from the Renovation and Modernisation Fund, even the amount spent from Renovation and Modernisation Fund, even the amount spent from Renovation and Modernisation Fund, even the amount spent from the said fund has not b the said fund has not been specified by the appellant b een specified by the appellant before me or before the AO. In absence of any details or other information the before the AO. In absence of any details or other information the before the AO. In absence of any details or other information the claim of the appellant cannot be accepted. Accordingly, the ground claim of the appellant cannot be accepted. Accordingly, the ground claim of the appellant cannot be accepted. Accordingly, the ground of appeal at Sr.no.32 is rejected. of appeal at Sr.no.32 is rejected.”

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 152 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

86.1 We have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in dispute and perused d the material available on record. We find that the material available on record. We find that before us also no details of expenditure claimed to have incurred or details of expenditure claimed to have incurred or details of expenditure claimed to have incurred or innovation and modernisation have been filed for determination innovation and modernisation have been filed for determination innovation and modernisation have been filed for determination whether the same were in the nature of the revenue expenditure or whether the same were in the nature of the revenue expenditure or whether the same were in the nature of the revenue expenditure or capital expenditure. In such circumstances, we do not find any capital expenditure. In such circumstances, we do not find any capital expenditure. In such circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute in order of the Ld. CIT(A) on the issue in dispute in order of the Ld. CIT(A) on the issue in dispute in rejecting the claim of the assessee. The ground No. 22( sic) of the rejecting the claim of the assessee. The ground No. 22( sic) of the rejecting the claim of the assessee. The ground No. 22( sic) of the appeal of the assessee is accordingly dismissed. appeal of the assessee is accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 153 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

As regard the delayed payment charges amounting Rs. 32433.04, it As regard the delayed payment charges amounting Rs. 32433.04, it As regard the delayed payment charges amounting Rs. 32433.04, it is seen that the appellant supplies power to various electricity is seen that the appellant supplies power to various electricity is seen that the appellant supplies power to various electricity boards. In case the payment is not made by the boards in time, the In case the payment is not made by the boards in time, the In case the payment is not made by the boards in time, the appellant charges interest at certain rate from them on delayed appellant charges interest at certain rate from them on delayed appellant charges interest at certain rate from them on delayed payments. In this way interest of Rs. 32433.04 was recovered by the In this way interest of Rs. 32433.04 was recovered by the In this way interest of Rs. 32433.04 was recovered by the appellant during the year from the trade debtors. In the case of appellant during the year from the trade debtors. In the case of appellant during the year from the trade debtors. In the case of Nirma Industries Ltd. Vs. DCIT 283 IT 402(Guj), Mayank Electro Ltd. Vs. Industries Ltd. Vs. DCIT 283 IT 402(Guj), Mayank Electro Ltd. Vs. Industries Ltd. Vs. DCIT 283 IT 402(Guj), Mayank Electro Ltd. Vs. I.T.O. 71 TTJ 612(Ahd), JCIT Vs. Sidheshwari Paper Udyog Ltd. 94 I.T.O. 71 TTJ 612(Ahd), JCIT Vs. Sidheshwari Paper Udyog Ltd. 94 I.T.O. 71 TTJ 612(Ahd), JCIT Vs. Sidheshwari Paper Udyog Ltd. 94 ITD 187(Del), it has been held that deduction w/s 80 IA is allowable ITD 187(Del), it has been held that deduction w/s 80 IA is allowable ITD 187(Del), it has been held that deduction w/s 80 IA is allowable on interest receved from trade debtors for late pa on interest receved from trade debtors for late payment of sales yment of sales consideration. Respectfully following these decisions, the AO is consideration. Respectfully following these decisions, the AO is consideration. Respectfully following these decisions, the AO is directed to allow deduction w/s 80IA to the appellant in respect of directed to allow deduction w/s 80IA to the appellant in respect of directed to allow deduction w/s 80IA to the appellant in respect of the amount of Rs. 32433.04 lakh the amount of Rs. 32433.04 lakh. Further, the appellant is also entitled to deduction w/s 80IA in Further, the appellant is also entitled to deduction w/s 80IA in Further, the appellant is also entitled to deduction w/s 80IA in respect of the write back of provision no longer required. These the write back of provision no longer required. These the write back of provision no longer required. These provisions were created on account of certain expenses debited to the provisions were created on account of certain expenses debited to the provisions were created on account of certain expenses debited to the profit and loss account. These expenses had earlier gone to reduce profit and loss account. These expenses had earlier gone to reduce profit and loss account. These expenses had earlier gone to reduce the profits for the purpose of deduction w/s 80IA. On write back the profits for the purpose of deduction w/s 80IA. On write back the profits for the purpose of deduction w/s 80IA. On write back of the provision in respect of these expenses, the eligible profits for the provision in respect of these expenses, the eligible profits for the provision in respect of these expenses, the eligible profits for section 80A would increase to this extent. Accordingly, the AO is section 80A would increase to this extent. Accordingly, the AO is section 80A would increase to this extent. Accordingly, the AO is

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 154 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

directed to allow deduction u/s 80IA to the appellant in respect of the directed to allow deduction u/s 80IA to the appellant in respect of the directed to allow deduction u/s 80IA to the appellant in respect of the amount of Rs. amount of Rs.41.90 lakhs. The other receipts The other receipts shown by the appellant under the head shown by the appellant under the head miscellaneous income have no direct nexus with the industrial miscellaneous income have no direct nexus with the industrial miscellaneous income have no direct nexus with the industrial undertaking. The nexus of those receipts with the industrial undertaking. The nexus of those receipts with the industrial undertaking. The nexus of those receipts with the industrial undertaking is indirect and incidental. Accordingly, those receipts are undertaking is indirect and incidental. Accordingly, those receipts are undertaking is indirect and incidental. Accordingly, those receipts are not eligible for deduct not eligible for deduction us 80IA.” 89.1 We have heard rival submission of the parties on the issue in e have heard rival submission of the parties on the issue in e have heard rival submission of the parties on the issue in dispute and perused d the relevant material on record. We find that the relevant material on record. We find that Hon’ble Gujarat High Court in the case of Nirma industries Ltd( High Court in the case of Nirma industries Ltd(283 High Court in the case of Nirma industries Ltd( ITR 402 ), observed that when an assessee observed that when an assessee enters into a contract for enters into a contract for sale of its products it could either stipulate (a) that interest at the sale of its products it could either stipulate (a) that interest at the sale of its products it could either stipulate (a) that interest at the specified rate which would be charged on the unpaid sale price and specified rate which would be charged on the unpaid sale price and specified rate which would be charged on the unpaid sale price and added to the outstanding till the time of realization, or (b) that in added to the outstanding till the time of realization, or (b) that in added to the outstanding till the time of realization, or (b) that in case of delay the pa case of delay the payment for sale of products worth Rs. 100 to yment for sale of products worth Rs. 100 to carry the sale price of Rs. 102 for first month's delay, Rs. 104 for carry the sale price of Rs. 102 for first month's delay, Rs. 104 for carry the sale price of Rs. 102 for first month's delay, Rs. 104 for second month's delay , Rs. 106 for third month's delay and so on. If second month's delay , Rs. 106 for third month's delay and so on. If second month's delay , Rs. 106 for third month's delay and so on. If the contention of revenue is accepted merely because the assessee the contention of revenue is accepted merely because the assessee the contention of revenue is accepted merely because the assessee has described the additional sale proceeds as interest in case of ribed the additional sale proceeds as interest in case of ribed the additional sale proceeds as interest in case of contract as per illustration, (a) above, such payment would not be contract as per illustration, (a) above, such payment would not be contract as per illustration, (a) above, such payment would not be profits derived from industrial undertaking, but in case of profits derived from industrial undertaking, but in case of profits derived from industrial undertaking, but in case of illustration (b) above, if the payment is described as sale price it illustration (b) above, if the payment is described as sale price it illustration (b) above, if the payment is described as sale price it would be profits derived from the industrial undertaking. This can uld be profits derived from the industrial undertaking. This can uld be profits derived from the industrial undertaking. This can never be, because in sum and substance these are only two modes never be, because in sum and substance these are only two modes never be, because in sum and substance these are only two modes of realizing sale consideration, the object being to realize sale of realizing sale consideration, the object being to realize sale of realizing sale consideration, the object being to realize sale proceeds at the earliest and without delay. Purchaser pays higher proceeds at the earliest and without delay. Purchaser pays hi proceeds at the earliest and without delay. Purchaser pays hi

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 155 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

sale price if it delays payment of sale proceeds. In other words, this sale price if it delays payment of sale proceeds. In other words, this sale price if it delays payment of sale proceeds. In other words, this is a converse situation to offering of cash discount. Thus, in is a converse situation to offering of cash discount. Thus, in is a converse situation to offering of cash discount. Thus, in principle, in reality, the transaction remains the same and there is principle, in reality, the transaction remains the same and there is principle, in reality, the transaction remains the same and there is no distinction as to the source. It is incorrect no distinction as to the source. It is incorrect to state that the to state that the source for interest is the outstanding sale proceeds. Thus, source for interest is the outstanding sale proceeds. Thus, source for interest is the outstanding sale proceeds. Thus, according to the Gujarat High Court, when interest is paid on according to the Gujarat High Court, when interest is paid on according to the Gujarat High Court, when interest is paid on delayed payment, it can be treated as higher sale price which is delayed payment, it can be treated as higher sale price which is delayed payment, it can be treated as higher sale price which is converse situation to offering of cash discount because the converse situation to offering of cash discount be converse situation to offering of cash discount be transaction remains the same and there is no distinction as to the transaction remains the same and there is no distinction as to the transaction remains the same and there is no distinction as to the source. Looking from this angle, the interest becomes part of the source. Looking from this angle, the interest becomes part of the source. Looking from this angle, the interest becomes part of the hire sale price and is clearly derived from the sales made and is not hire sale price and is clearly derived from the sales made and is not hire sale price and is clearly derived from the sales made and is not divorced there from. It is, thus, the direc divorced there from. It is, thus, the direct result of the sale of goods t result of the sale of goods and the income is derived from the Business of industrial and the income is derived from the Business of industrial and the income is derived from the Business of industrial undertaking.

89.2 We find that the Ld. CIT(A) has followed decision of the Hon’ble the Ld. CIT(A) has followed decision of the Hon’ble the Ld. CIT(A) has followed decision of the Hon’ble Gujarat High Court on the issue in dispute. Before us High Court on the issue in dispute. Before us, the learned High Court on the issue in dispute. Before us DR has not brought DR has not brought on record any contrary decision of the on record any contrary decision of the jurisdiction High Court and therefore we do not find any error in the jurisdiction High Court and therefore we do not find any error in the jurisdiction High Court and therefore we do not find any error in the order of the Ld. CIT(A) on the issue in dispute in following the order of the Ld. CIT(A) on the issue in dispute in following the order of the Ld. CIT(A) on the issue in dispute in following the finding of the Hon’ble Gujarat High Court finding of the Hon’ble Gujarat High Court (supra). The groun . The ground No. one of the appeal of the R al of the Revenue is accordingly dismissed. evenue is accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 156 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

lakhs while working out book prof s while working out book profit under section 115 it under section 115JB of the Act. The Ld. CIT(A) deleted the provision for doubtful that in advances The Ld. CIT(A) deleted the provision for doubtful that in advances The Ld. CIT(A) deleted the provision for doubtful that in advances added by the Assessing Officer to the net profit while computing added by the Assessing Officer to the net profit while computing added by the Assessing Officer to the net profit while computing book profit under section 115 it under section 115JB of the Act relyi ct relying on judicial precedents mentioned in impugned order. precedents mentioned in impugned order.

90.1 Before us learned counsel of the assessee Before us learned counsel of the assessee Before us learned counsel of the assessee relied on the decision of the Tribunal in ITA no. 4463/Del/2009 ibunal in ITA no. 4463/Del/2009. . Further we find that in earlier assessment years we have already held that that in earlier assessment years we have already held that that in earlier assessment years we have already held that provisions of section 115 JB of the act are not applicable in the case section 115 JB of the act are not applicable in the case section 115 JB of the act are not applicable in the case of the assessee and therefore the consequent adjustment to the of the assessee and therefore the consequent adjustment to the of the assessee and therefore the consequent adjustment to the book profit is also not applicable in the case of the assessee. book profit is also not applicable in the case of the assessee. book profit is also not applicable in the case of the assessee. Accordingly the ground Accordingly the ground No.2 of the appeal raised by the revenue is of the appeal raised by the revenue is dismissed.

AY 2005-06

The appellant company objects to the order dated 18 November The appellant company objects to the order dated 18 November The appellant company objects to the order dated 18 November 2008 passed by the Commissioner of Income ssed by the Commissioner of Income-Tax (Appeals) Tax (Appeals)-III, Mumbai [ CIT(A)] under section 250 of the Income Tax Act, 1961 Mumbai [ CIT(A)] under section 250 of the Income Tax Act, 1961 Mumbai [ CIT(A)] under section 250 of the Income Tax Act, 1961 (“the Act") on the following among other grounds: (“the Act") on the following among other grounds: Decommissioning Levy Decommissioning Levy

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 157 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 158 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

for deduction under Section 80 IA of the Act instead of the net for deduction under Section 80 IA of the Act instead of the net for deduction under Section 80 IA of the Act instead of the net income. The learned CIT(A) erred in not netting off the interest income. The learned CIT(A) erred in not netting off the interest income. The learned CIT(A) erred in not netting off the interest income and miscellaneous income and miscellaneous income against the interest and income against the interest and other expenditure. other expenditure. Income Income Income reduced reduced reduced from from from expenditure expenditure expenditure incurred incurred incurred during during during construction construction 9. 9. The learned CIT(A) erred in confirming the action of the 9. The learned CIT(A) erred in confirming the action of the 9. The learned CIT(A) erred in confirming the action of the Assessing Officer in taxing as income, the following amounts Assessing Officer in taxing as income, the following amounts Assessing Officer in taxing as income, the following amounts which had been reduced which had been reduced by the appellant company from the by the appellant company from the expenditure incurred during construction period: expenditure incurred during construction period: Sr. No. Particulars Amount (Rs. In Lakhs) 1. Interest on Staff Loan Interest on Staff Loan 91.29 2. Penal Interest recovered from employees Penal Interest recovered from employees 5.77 3. Sale of Power Sale of Power 49.29 4. Other income Other income 1,672.00 1,818.35 Total Tota 10. 10. Without prejudice to Ground No. 9 above, the learned CIT(A) 10. Without prejudice to Ground No. 9 above, the learned CIT(A) 10. Without prejudice to Ground No. 9 above, the learned CIT(A) erred in not directing Additional Commissioner of Income-tax erred in not directing Additional Commissioner of Income erred in not directing Additional Commissioner of Income ('Addl. CIT*) to allow a deduction for expenditure incurred in ('Addl. CIT*) to allow a deduction for expenditure incurred in ('Addl. CIT*) to allow a deduction for expenditure incurred in respect of the income of Rs. 1.818.35 lakhs brought to tax. respect of the income of Rs. 1.818.35 lakhs brought to t respect of the income of Rs. 1.818.35 lakhs brought to t 11. 11. Without prejudice to Grounds Nos. 9 & 10 above, the 11. Without prejudice to Grounds Nos. 9 & 10 above, the 11. Without prejudice to Grounds Nos. 9 & 10 above, the learned CIT(A) erred in not directing the Addl. CIT to re-compute learned CIT(A) erred in not directing the Addl. CIT to re learned CIT(A) erred in not directing the Addl. CIT to re the depreciation allowable to the appellant company pursuant the depreciation allowable to the appellant company pursuant the depreciation allowable to the appellant company pursuant to the exclusion of the income reduced from expenditure during to the exclusion of the income reduced from expenditure during to the exclusion of the income reduced from expenditure during construction period. uction period. 12. 12. Without prejudice to the appeals) preferred by the appellant 12. Without prejudice to the appeals) preferred by the appellant 12. Without prejudice to the appeals) preferred by the appellant in the earlier assessment years, the learned CIT(A) erred in not in the earlier assessment years, the learned CIT(A) erred in not in the earlier assessment years, the learned CIT(A) erred in not re-computing the depreciation allowance, as due to the computing the depreciation allowance, as due to the computing the depreciation allowance, as due to the appellant company pursuant to the exclusion of income reduced appellant company pursuant to the exclusion of income re appellant company pursuant to the exclusion of income re from from from expenditure expenditure expenditure during during during construction construction construction period period period in in in earlier earlier earlier assessment years. assessment years. Prior period expenses Prior period expenses 13. 13. The learned CIT(A) erred in confirming the disallowance of 13. The learned CIT(A) erred in confirming the disallowance of 13. The learned CIT(A) erred in confirming the disallowance of prior period expenses of Rs. 1,991.02 lakhs. prior period expenses of Rs. 1,991.02 lakhs. 14. 14. Without prejudice to the above, the learned 14. Without prejudice to the above, the learned CIT(A) / 14. Without prejudice to the above, the learned Assessing Officer may be directed to disallow only the net prior Assessing Officer may be directed to disallow only the net prior Assessing Officer may be directed to disallow only the net prior period expenditure, if any, after setting off prior period period expenditure, if any, after setting off prior period period expenditure, if any, after setting off prior period expenditure against prior period income. expenditure against prior period income.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 159 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 160 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the additional ground the additional grounds for the year under consideration for the year under consideration are also dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 161 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

95.1 The learned Assessing Officer noted that delayed payment Assessing Officer noted that delayed payment Assessing Officer noted that delayed payment charges emanated from the debit balance lyi from the debit balance lying with the debtors and ng with the debtors and therefore same is not profit of the industrial unit directly and it therefore same is not profit of the industrial unit directly and it therefore same is not profit of the industrial unit directly and it could be considered as profit attributable to the business of the could be considered as profit attributable to the business of the could be considered as profit attributable to the business of the assessee but not derived from the business of the assessee. assessee but not derived from the business of the assessee. assessee but not derived from the business of the assessee. Similarly regarding the provision no l Similarly regarding the provision no longer required, the Assessing onger required, the Assessing Officer held that same are not part of the income of the year under Officer held that same are not part of the income of the year under Officer held that same are not part of the income of the year under consideration. Similarly Similarly the claim of scrap sales for deduction was the claim of scrap sales for deduction was also disallowed. The Ld. CIT(A) allowed the deduction under section also disallowed. The Ld. CIT(A) allowed the deduction under section also disallowed. The Ld. CIT(A) allowed the deduction under section 80 IA in respect of those receipts observing as under: hose receipts observing as under: hose receipts observing as under:

“2. Ground No.9 is against excluding from the profits of the Ground No.9 is against excluding from the profits of the Ground No.9 is against excluding from the profits of the business eligible for deduction u/s. 80IA the following amounts: business eligible for deduction u/s. 80IA the following amounts: business eligible for deduction u/s. 80IA the following amounts: 1. Interest income Interest income Rs. 91.74 lakhs Rs. 91.74 lakhs 2. Delayed payment charges Delayed payment charges Rs. 2555.06 lakhs Rs. 2555.06 lakhs 3. Miscellaneous Income Miscellaneous Inc Rs. 407.08 lakhs Rs. 407.08 lakhs 4. Provision no longer required Provision no longer required Rs. 60.82 lakhs. Rs. 60.82 lakhs. 2.1 This issue has been discussed in detail by my predecessor 2.1 This issue has been discussed in detail by my predecessor 2.1 This issue has been discussed in detail by my predecessor Appellate Commissioner in appellant's appeal for Assessment Year Appellate Commissioner in appellant's appeal for Assessment Year Appellate Commissioner in appellant's appeal for Assessment Year 2004-05. In that appeal, Appellate Commissioner has gone in 05. In that appeal, Appellate Commissioner has gone in 05. In that appeal, Appellate Commissioner has gone into the details of variety of decisions on the issue under consideration and details of variety of decisions on the issue under consideration and details of variety of decisions on the issue under consideration and has held that appellant is not entitled to deduction us. 80IA in has held that appellant is not entitled to deduction us. 80IA in has held that appellant is not entitled to deduction us. 80IA in respect of interest income. As far as delayed payment charges and respect of interest income. As far as delayed payment charges and respect of interest income. As far as delayed payment charges and provision no longer required are concerned. The d provision no longer required are concerned. The d provision no longer required are concerned. The decision of my predecessor is in favour of appellant. There is no change in the facts predecessor is in favour of appellant. There is no change in the facts predecessor is in favour of appellant. There is no change in the facts as far as interest, delayed payment charges and provision no longer as far as interest, delayed payment charges and provision no longer as far as interest, delayed payment charges and provision no longer required are concerned. Therefore, Assessing Officer is directed to required are concerned. Therefore, Assessing Officer is directed to required are concerned. Therefore, Assessing Officer is directed to allow deduction u/s. 80IA in respec allow deduction u/s. 80IA in respect of delayed payment charges t of delayed payment charges and in respect of provision no longer required. The decision of and in respect of provision no longer required. The decision of and in respect of provision no longer required. The decision of Assessing Officer in respect of interest is upheld. As far as Assessing Officer in respect of interest is upheld. As far as Assessing Officer in respect of interest is upheld. As far as miscellaneous income is concerned, it is noticed that majority of these miscellaneous income is concerned, it is noticed that majority of these miscellaneous income is concerned, it is noticed that majority of these incomes, details of which hav incomes, details of which have been filed in the appellate e been filed in the appellate proceedings cannot be said to be derived from appellant's business proceedings cannot be said to be derived from appellant's business proceedings cannot be said to be derived from appellant's business activity. However, two of these incomes, charges from contractors at activity. However, two of these incomes, charges from contractors at activity. However, two of these incomes, charges from contractors at

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 162 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Rs, 1, 11,124/ Rs, 1, 11,124/- and sale of scrap at Rs.7,76,029/ and sale of scrap at Rs.7,76,029/- are directly having nexus with the manu having nexus with the manufacturing activity of appellant. Therefore, facturing activity of appellant. Therefore, Assessing Officer is directed to grant deduction in respect of these Assessing Officer is directed to grant deduction in respect of these Assessing Officer is directed to grant deduction in respect of these two items. The claim of deduction in respect of balance miscellaneous two items. The claim of deduction in respect of balance miscellaneous two items. The claim of deduction in respect of balance miscellaneous income is rejected. income is rejected.” 95.2 We have heard rival submission of the parties o have heard rival submission of the parties o have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The Ld. CIT(A) the relevant material on record. The Ld. CIT(A) has followed finding of his predecessor as far as delayed payment has followed finding of his predecessor as far as delayed payment has followed finding of his predecessor as far as delayed payment charges and provision no longer required in view of no change of the charges and provision no longer required in view of no change of the charges and provision no longer required in view of no change of the facts as compared to the immediately p facts as compared to the immediately preceding assessment year. receding assessment year. As well as issue of the deduction on delayed payment charges, we As well as issue of the deduction on delayed payment charges, we As well as issue of the deduction on delayed payment charges, we have decided issue in favour of the assessee in assessment year have decided issue in favour of the assessee in assessment year have decided issue in favour of the assessee in assessment year 2004-05. As far as provision no longer required, we are of the 05. As far as provision no longer required, we are of the 05. As far as provision no longer required, we are of the opinion that same are in respect of th opinion that same are in respect of the business operation of the e business operation of the assessee and since the said income assessee and since the said income crystallized in in the year under consideration, the Ld. CIT(A) consideration, the Ld. CIT(A) is justified in considering the same justified in considering the same for deduction under section 80 deduction under section 80IA in the year under consideration. IA in the year under consideration. Regarding charges from contra Regarding charges from contractors amounting to ₹ 1,11,124/- and sale of a scrap amounting to Rs. sale of a scrap amounting to Rs. 7,76,029/-, the Ld. CIT(A) held , the Ld. CIT(A) held that same are directly having nexus with the manufacturing activity that same are directly having nexus with the manufacturing activity that same are directly having nexus with the manufacturing activity of the assessee. The learned DR failed to rebut such finding of the of the assessee. The learned DR failed to rebut such finding of the of the assessee. The learned DR failed to rebut such finding of the Ld. CIT(A). In view of our discussion, we do not find any error in the of our discussion, we do not find any error in the of our discussion, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we order of the Ld. CIT(A) on the issue in dispute and accordingly order of the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground uphold the same. The ground No.1 of the appeal of the R the appeal of the Revenue is accordingly dismissed. accordingly dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 163 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

“I have perused the facts of the case. I have also analyzed Schedule I have perused the facts of the case. I have also analyzed Schedule I have perused the facts of the case. I have also analyzed Schedule 7 Note No. 12 forming part of the accounts. It is a fact that investment 7 Note No. 12 forming part of the accounts. It is a fact that investment 7 Note No. 12 forming part of the accounts. It is a fact that investment on which tax free fence Tries, Incom on which tax free fence Tries, Income has been earned by appellant e has been earned by appellant had to be compulsorily acquired by the appellant on the basis of had to be compulsorily acquired by the appellant on the basis of had to be compulsorily acquired by the appellant on the basis of recommendation of Ahluwalia Committee of Govt. of India. is, recommendation of Ahluwalia Committee of Govt. of India. is, recommendation of Ahluwalia Committee of Govt. of India. is, therefore, an investment where appellant does not have to devote therefore, an investment where appellant does not have to devote therefore, an investment where appellant does not have to devote any attention or time with regard attention or time with regard to either its maintenance or with. to either its maintenance or with. regard to change of the investment pattern or with regard to earning regard to change of the investment pattern or with regard to earning regard to change of the investment pattern or with regard to earning income from these funds. To my mind, this is a case where appellant income from these funds. To my mind, this is a case where appellant income from these funds. To my mind, this is a case where appellant is not spending anything either for maintaining the investments Or, is not spending anything either for maintaining the investments Or, is not spending anything either for maintaining the investments Or, for earning tax for earning tax free income thereon. Therefore, it is held that free income thereon. Therefore, it is held that investments under consideration are outside the scope of Sectior! investments under consideration are outside the scope of Sectior! investments under consideration are outside the scope of Sectior! 14A. The disallowance made by Assessing Officer is therefore disallowance made by Assessing Officer is therefore disallowance made by Assessing Officer is therefore deleted.” 96.1 We have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in dispute and perused d relevant material on record. We find that relevant material on record. We find that identical issue of the identical issue of the disallowance under section 14A in respect of under section 14A in respect of

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 164 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

the administrative expenses has been restored by us to the file of the administrative expenses has been restored by us to the file of the administrative expenses has been restored by us to the file of the Assessing Officer in assessment year 2004 the Assessing Officer in assessment year 2004-05 in case of app in case of appeal of assessee, and therefore following our finding in assessment , and therefore following our finding in assessment , and therefore following our finding in assessment year 2004-05, the issue of disallowance of administrative expenses for 05, the issue of disallowance of administrative expenses for 05, the issue of disallowance of administrative expenses for earning exempted income is restored back to the file of the earning exempted income is restored back to the file of the earning exempted income is restored back to the file of the Assessing Officer. The ground Assessing Officer. The ground No.2 two of the appeal of th No.2 two of the appeal of the Revenue is accordingly allowed for statistical purposes. is accordingly allowed for statistical purposes.

AY 2006-07

The appellant c The appellant company objects to the order dated 28 February 2011 ompany objects to the order dated 28 February 2011 passed by the Commissioner of Income passed by the Commissioner of Income-Tax (Appeals), Large Tax Tax (Appeals), Large Tax Payer Unit, Mumbai [*CIT(A)] under section 250 of the Income Tax Payer Unit, Mumbai [*CIT(A)] under section 250 of the Income Tax Payer Unit, Mumbai [*CIT(A)] under section 250 of the Income Tax Act, 1961 ('the Act') on the following among other grounds: Act, 1961 ('the Act') on the following among other grounds: Act, 1961 ('the Act') on the following among other grounds: Decommissioning Le Decommissioning Levy 1. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant, appellant, appellant, an an an amount amount amount of of of Rs. Rs. Rs. 3,021.02 3,021.02 3,021.02 lakhs lakhs lakhs being being being Decommissioning Levy collected by the appellant company. Decommissioning Levy collected by the appellant company. Decommissioning Levy collected by the appellant company. Interest on Decommissioning Fund Interest on Decommissioning Fund 2. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant, an amount of Rs. 3.594.39 lakhs being interest pellant, an amount of Rs. 3.594.39 lakhs being interest pellant, an amount of Rs. 3.594.39 lakhs being interest credited to the Decommissioning Fund. credited to the Decommissioning Fund. Interest on Renovation & Modernisation Fund Interest on Renovation & Modernisation Fund 3. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant, an amount of Rs. 3,269.47 lakhs being interest appellant, an amount of Rs. 3,269.47 lakhs being interest appellant, an amount of Rs. 3,269.47 lakhs being interest credited to the Renovation and Modernisation ited to the Renovation and Modernisation Fund. Fund.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 165 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Interest on Research & Development Fund Interest on Research & Development Fund 4. The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the The learned CIT(A) erred in confirming as income of the appellant, an amount of Rs. 1,934.30 lakhs being interest appellant, an amount of Rs. 1,934.30 lakhs being interest appellant, an amount of Rs. 1,934.30 lakhs being interest credited to the Research and Development Fund. credited to the Research and Development Fund. DISALLOWANCE UNDER SECTION 14A ANCE UNDER SECTION 14A 5. 5. The learned CIT(A) erred in confirming the disallowance of 5. The learned CIT(A) erred in confirming the disallowance of 5. The learned CIT(A) erred in confirming the disallowance of expenses under Section 14A of the Act of Rs.4.073.58 lakhs. expenses under Section 14A of the Act of Rs.4.073.58 lakhs. expenses under Section 14A of the Act of Rs.4.073.58 lakhs. 6. 6. The learned CIT(A) erred in ignoring the fact that the appellant 6. The learned CIT(A) erred in ignoring the fact that the appellant 6. The learned CIT(A) erred in ignoring the fact that the appellant company had not incurred any expenditure fo company had not incurred any expenditure for earning the tax r earning the tax free interest income and accordingly, the disallowance under free interest income and accordingly, the disallowance under free interest income and accordingly, the disallowance under Section 14A is not warranted. Section 14A is not warranted. 7. 7. The learned CIT(A) erred in directing the Assessing Officer to 7. The learned CIT(A) erred in directing the Assessing Officer to 7. The learned CIT(A) erred in directing the Assessing Officer to determine the expenditure incurred for earning exempt income determine the expenditure incurred for earning exempt income determine the expenditure incurred for earning exempt income based on the criteri based on the criteria which is same as Rule 8D, although Rule a which is same as Rule 8D, although Rule 8D is not applicable for assessment year 2006 8D is not applicable for assessment year 2006-07. 8. 8. The learned CIT(A) erred in not considering the submissions 8. The learned CIT(A) erred in not considering the submissions 8. The learned CIT(A) erred in not considering the submissions made by the appellant company in its correct perspective. made by the appellant company in its correct perspective. made by the appellant company in its correct perspective. 9. 9. The learned CIT(A) erred in not consider 9. The learned CIT(A) erred in not considering the submissions of ing the submissions of the appellant company to allow the expenditure of Rs. 2,062.97 the appellant company to allow the expenditure of Rs. 2,062.97 the appellant company to allow the expenditure of Rs. 2,062.97 lakhs, disallowed by the appellant in the return of income under lakhs, disallowed by the appellant in the return of income under lakhs, disallowed by the appellant in the return of income under Section 14A of the Act, following the assessment order passed in Section 14A of the Act, following the assessment order passed in Section 14A of the Act, following the assessment order passed in the appellant company's own case for the the appellant company's own case for the assessment year assessment year 2004-05. 10. 10. 10. 10. The The The appellant appellant appellant company company company therefore therefore therefore prays prays prays that that that the the the disallowance under section 14A of the Act be deleted. disallowance under section 14A of the Act be deleted. disallowance under section 14A of the Act be deleted. 11. 11. Without prejudice to the above, the disallowance of expenses 11. Without prejudice to the above, the disallowance of expenses 11. Without prejudice to the above, the disallowance of expenses under section 14A of the Act is on a higher side and must be under section 14A of the Act is on a higher side and must be under section 14A of the Act is on a higher side and must be reduced considering the facts of the appellant company. reduced considering the facts of the appellant company. reduced considering the facts of the appellant company. Income Income Income reduced reduced reduced from from from expenditure expenditure expenditure incurred incurred incurred during during during construction construction 12. 12. The learned CIT(A) erred in confirming the action of the 12. The learned CIT(A) erred in confirming the action of the 12. The learned CIT(A) erred in confirming the action of the Assessing Officer in taxing as income, the following amounts Assessing Officer in taxing as income, the following amounts Assessing Officer in taxing as income, the following amounts which had been r which had been reduced by the appellant company from the educed by the appellant company from the expenditure incurred during construction period: expenditure incurred during construction period: Sr. No. Particulars Amount (Rs. In Lakhs) 1. Interest on Staff Loan Interest on Staff Loan 98.76 2. Penal Interest recovered from employees Penal Interest recovered from employees 76.50 3. Sale of Power Sale of Power 1,321.31 4. Other income Other income 1,185.53

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 166 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Total Total 2,682.10 13. 13. Without prejudice to Ground No. 12 above, the learned CIT(A) 13. Without prejudice to Ground No. 12 above, the learned CIT(A) 13. Without prejudice to Ground No. 12 above, the learned CIT(A) erred in not considering the submissions of the appellant erred in not considering the submissions of the appellant erred in not considering the submissions of the appellant company to allow a deduction for expenditure incurred in respect company to allow a deduction for expenditure incurred in respect company to allow a deduction for expenditure incurred in respect of the income of Rs. 2,682.10 lakhs brought to of the income of Rs. 2,682.10 lakhs brought to tax. 14. 14. Without prejudice to Grounds Nos. 12 & 13 above, the 14. Without prejudice to Grounds Nos. 12 & 13 above, the 14. Without prejudice to Grounds Nos. 12 & 13 above, the learned CIT(A) erred in not directing the Assessing Officer to re- learned CIT(A) erred in not directing the Assessing Officer to re learned CIT(A) erred in not directing the Assessing Officer to re compute the depreciation allowable to the appellant company compute the depreciation allowable to the appellant company compute the depreciation allowable to the appellant company pursuant to the exclusion of the income reduced from pursuant to the exclusion of the income reduced from pursuant to the exclusion of the income reduced from expenditure du expenditure during construction period. 15. 15. Without prejudice to the appeals) preferred by the appellant 15. Without prejudice to the appeals) preferred by the appellant 15. Without prejudice to the appeals) preferred by the appellant company in the earlier assessment years, the learned CIT(A) company in the earlier assessment years, the learned CIT(A) company in the earlier assessment years, the learned CIT(A) erred in not re erred in not re-computing the depreciation allowance, as due to computing the depreciation allowance, as due to the appellant company pursuant to the exc the appellant company pursuant to the exclusion of income lusion of income reduced from expenditure during construction period in earlier reduced from expenditure during construction period in earlier reduced from expenditure during construction period in earlier assessment years. assessment years. Prior period expenses Prior period expenses 16. 16. The learned CIT(A) erred in confirming the disallowance of 16. The learned CIT(A) erred in confirming the disallowance of 16. The learned CIT(A) erred in confirming the disallowance of prior period expenses of Rs. 354.04 lakhs prior period expenses of Rs. 354.04 lakhs 17. 17. The learned CIT(A) erred in 17. The learned CIT(A) erred in not considering the submissions not considering the submissions made by the appellant company in correct perspective. made by the appellant company in correct perspective. made by the appellant company in correct perspective. 18. 18. The appellant company prays that the prior period expenses 18. The appellant company prays that the prior period expenses 18. The appellant company prays that the prior period expenses should be allowed as deduction. should be allowed as deduction. 19. Without prejudice to the above, the learned CIT(A) / Assessing Without prejudice to the above, the learned CIT(A) / Assessing Without prejudice to the above, the learned CIT(A) / Assessing Officer may Officer may be directed to disallow only the net prior period be directed to disallow only the net prior period expenditure, if any, after setting off prior period expenditure expenditure, if any, after setting off prior period expenditure expenditure, if any, after setting off prior period expenditure against prior period income. against prior period income. 20. Without prejudice to above grounds, the learned CIT(A) erred in Without prejudice to above grounds, the learned CIT(A) erred in Without prejudice to above grounds, the learned CIT(A) erred in not accepting the submission of the appellant co not accepting the submission of the appellant company to allow mpany to allow deduction of the prior period expenses in the respective deduction of the prior period expenses in the respective deduction of the prior period expenses in the respective assessment years, to which it pertains. assessment years, to which it pertains. Provision made for Obsolete Stock Provision made for Obsolete Stock 21. 21. The learned CIT(A) erred in confirming the disallowance of 21. The learned CIT(A) erred in confirming the disallowance of 21. The learned CIT(A) erred in confirming the disallowance of the provision made for obsolete stock of Rs. 30 the provision made for obsolete stock of Rs. 300.95 lakhs. 0.95 lakhs. Addition of consultancy charges Addition of consultancy charges 22. 22. The learned CIT(A) erred in not adjudicating on the issue 22. The learned CIT(A) erred in not adjudicating on the issue 22. The learned CIT(A) erred in not adjudicating on the issue relating to addition of the consultancy income of Rs. 36.17 lakhs. relating to addition of the consultancy income of Rs. 36.17 lakhs. relating to addition of the consultancy income of Rs. 36.17 lakhs.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 167 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 168 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Sr. No. Particulars Amount (Rs. In Lakhs) 1. Decommissioning Reserve Decommissioning Reserve 3,021.02 2. Interest on decommissioning Reserve Interest on decommissioning Reserve 3,594.39 3. Interest on Renovation & Modernization Interest on Renovation & Modernization 3,269.47 Reserve Reserve 4. Interest on Research & Development Reserve Interest on Research & Development Reserve 1,934.30 5. Disallowance under section 14A of the Act Disallowance u 4.073.58 Total Total 15,892.76 98. The assessee has has filed additional ground vide filed additional ground vide it’s letter dated 18/07/2018, which are reproduced as under: 18/07/2018, which are reproduced as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 169 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 170 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Assessing Officer invoked Rule 8D of R ing Officer invoked Rule 8D of Rules and computed ules and computed disallowance of interest expenditure amounting to rupees to Rs. disallowance of interest expenditure amounting to rupees to disallowance of interest expenditure amounting to rupees to 2544. 42 lakhs [under rule 8D(2)(ii) of rules] and disallowance of . 42 lakhs [under rule 8D(2)(ii) of rules] and disallowance of . 42 lakhs [under rule 8D(2)(ii) of rules] and disallowance of administrative expense administrative expenses amounting to rupees to ₹ 1529.16 lakhs [ 1529.16 lakhs [ under rule 8D(2)(iii) @ 0.5 % of average investment] totaling to Rs. under rule 8D(2)(iii) @ 0.5 % of average investment] totaling to Rs. under rule 8D(2)(iii) @ 0.5 % of average investment] totaling to Rs. 4073.58 and after subtracting the and after subtracting the su-moto disallowance by the disallowance by the assessee, made net disallowance disallowance under section 14A amounting to under section 14A amounting to ₹ 2010.61 lakhs. The relevant computation of disallowance by the AO e relevant computation of disallowance by the AO e relevant computation of disallowance by the AO is reproduced as under: as under:

3.5 The working of disallowance u/s. 14A read with Rule 8D is as 3.5 The working of disallowance u/s. 14A read with Rule 8D is as 3.5 The working of disallowance u/s. 14A read with Rule 8D is as follows: Sr. No. Particulars Amount (Rs. In Lakhs) a. Opening Balance of Investment Opening Balance of Investment 302291.45 b. Closing Balance of investment Closing Balance of inve 309372.05 c. Average Investment (a+b) /2 Average Investment (a+b) /2 305831.75 23549.00 d. Total interest debited to P&L A c. Total interest debited to P&L A c. e. Total Asset as per Balance sheet Total Asset as per Balance sheet 2723628.55 i) Opening Balance 2937416.49 Closing Balance ii) f. Average total assets i.e. [e (i) and e(ii)]/2 Average total assets i.e. 2830522.52 g. Disallowance under Rule 8D(ii) i.e. dx Dis 2544.42 c/f c/f h. Disallowance under rule 8D(ii) = 0.5% Disallowance under rule 8D(ii 1529.16 of the average investment of the average investment i. Total disallowance under Rule 8D r.w.s Total disallowance under Rule 8D r.w.s 4073.58 14A ie. g + h 14A ie. g + h

101.2 The Ld. CIT(A) upheld the action of the Assessing Officer Ld. CIT(A) upheld the action of the Assessing Officer Ld. CIT(A) upheld the action of the Assessing Officer of invoking rule 8D of the rules, but regarding the claim of interest voking rule 8D of the rules, but regarding the claim of interest voking rule 8D of the rules, but regarding the claim of interest expenditure out of head office expenses out of head office expenses reduced while claiming reduced while claiming

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 171 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

deduction under section 80 uction under section 80IA of the Act, the Ld. CIT(A) directed the ct, the Ld. CIT(A) directed the Assessing Officer to verify the claim of the assessee so as to avoid Assessing Officer to verify the claim of the assessee so a Assessing Officer to verify the claim of the assessee so a double disallowance. 101.3 We have heard rival submission of the parties and We have heard rival submission of the parties and We have heard rival submission of the parties and perused the relevant material on record. We find that in AY 2004-05 perused the relevant material on record. We find that perused the relevant material on record. We find that and 2005-06, the Assessing Officer has accepted the claim of the the Assessing Officer has accepted the claim of the the Assessing Officer has accepted the claim of the assessee that no interest expenditu assessee that no interest expenditure has been incurred for making re has been incurred for making investment in tax-free bonds, therefore the Assessing Officer in free bonds, therefore the Assessing Officer in free bonds, therefore the Assessing Officer in assessment year 2004 assessment year 2004-05 and 2005-06 made disallowance under made disallowance under section 14A of the Act only in respect of the administrative expenses ct only in respect of the administrative expenses ct only in respect of the administrative expenses in proportion to the exempted in proportion to the exempted income to the total turnover of the income to the total turnover of the assessee. In the year under consideration the assessee has accepted assessee. In the year under consideration the assessee has accepted assessee. In the year under consideration the assessee has accepted the method of disallowance of administrative expenses adopted by the method of disallowance of administrative expenses adopted by the method of disallowance of administrative expenses adopted by the Assessing Officer in assessment year 2004 the Assessing Officer in assessment year 2004-05 and accordingly 05 and accordingly made su-moto disallow disallowance of ₹ 2,062.97 lakhs out of the 62.97 lakhs out of the administrative expenses as incurred for earning the exempted administrative expenses as incurred for earning the exempted administrative expenses as incurred for earning the exempted interest income. But in the year under consideration, the Assessing interest income. But in the year under consideration, the Assessing interest income. But in the year under consideration, the Assessing Officer has rejected the Officer has rejected the su-moto disallowance made by the assessee de by the assessee and invoked Rule 8D of Income ule 8D of Income-tax , rules 1962 , which was x , rules 1962 , which was introduced by the CBDT wide notification dated 04/03/2008. introduced by the CBDT wide notification dated 04/03/2008. introduced by the CBDT wide notification dated 04/03/2008. According to According to According to the Assessing Officer said the the Assessing Officer Assessing Officer said said rule rule rule was was was having having having retrospective application. But we find that Hon’ble Supreme Court Hon’ble Supreme Court retrospective application. But we find that in the case of CIT Vs Essar Technologies Ltd ( C CIT Vs Essar Technologies Ltd ( Civil Appeal No. CIT Vs Essar Technologies Ltd ( C

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 172 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

2165 of 2012) held that held that Rule 8D is applicable only from ule 8D is applicable only from assessment year 2008 assessment year 2008-09 onward and can’t be applied for prior and can’t be applied for prior assessment years. Therefore the computation of disallowance Therefore the computation of disallowance made Therefore the computation of disallowance under section 14A of the A under section 14A of the Act following Rule 8D for for the AY under consideration is rejected. is rejected.

101.4 The fact that no interest has been incurred for The fact that no interest has been incurred for The fact that no interest has been incurred for investment in the bonds bearing tax investment in the bonds bearing tax-free interest income income has been accepted by the Assessing Officer in assessment accepted by the Assessing Officer in assessment year 2004 year 2004-05 and 2005-06, therefore no disallowance 06, therefore no disallowance for interest can be made under can be made under section 14A of the Act ct in the year under consideration in the year under consideration following the Rule of consistency Rule of consistency. As far as disallowance for administrative as disallowance for administrative expenses, the assessee itself expenses, the assessee itself has made suo-moto moto disallowance following the method of disallow following the method of disallowance adopted by the Assessing ance adopted by the Assessing Officer in assessment year 2004 Officer in assessment year 2004-05. Therefore the disallowance 05. Therefore the disallowance made by the Assessing Officer following the rule 8D is rejected. The made by the Assessing Officer following the rule 8D is rejected. The made by the Assessing Officer following the rule 8D is rejected. The finding of the Ld. CIT(A) on the issue in dispute are set aside . We finding of the Ld. CIT(A) on the issue in dispute are set aside finding of the Ld. CIT(A) on the issue in dispute are set aside find that identical issue find that identical issue of the disallowance under section 14A in of the disallowance under section 14A in respect of the administrative expenses has been restored by us to respect of the administrative expenses has been restored by us to respect of the administrative expenses has been restored by us to the file of the Assessing Officer in assessment year 2004-05, and the file of the Assessing Officer in assessment year 2004 the file of the Assessing Officer in assessment year 2004 therefore following our finding in assessment year 2004-05, the therefore following our finding in assessment year 2004 therefore following our finding in assessment year 2004 issue of disallowance of administrative expenses for earning nce of administrative expenses for earning nce of administrative expenses for earning exempted income is restored back to the file of the Assessing exempted income is restored back to the file of the Assessing exempted income is restored back to the file of the Assessing

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 173 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Officer. The grounds of the appeal of the assessee from of the appeal of the assessee from Nos. 5 to 11 are accordingly allowed are accordingly allowed for statistical purposes. 102. The ground No The ground Nos. 12 to 15 of the appeal relates to certain f the appeal relates to certain incomes reduced from the expenditure incurred during the incomes reduced from the expenditure incurred during the incomes reduced from the expenditure incurred during the construction period and this claim of the assessee has been rejected construction period and this claim of the assessee has been rejected construction period and this claim of the assessee has been rejected by the Ld. CIT(A). We note that identical grounds have been by the Ld. CIT(A). We note that identical grounds have been by the Ld. CIT(A). We note that identical grounds have been adjudicated by us in appeal for earlie adjudicated by us in appeal for earlier assessment years from 2002 r assessment years from 2002- 03 to 2005-06, and therefore following our finding 06, and therefore following our finding, the ground No the ground Nos. 12 to 15 of the appeal decided 12 to 15 of the appeal decided mutasis mutandis. 103. The ground Nos. 16 to 20 of the appeal relate s. 16 to 20 of the appeal relate to disallowance of prior period Expenses. We note that iden of prior period Expenses. We note that identical grounds have been tical grounds have been adjudicated by us in appeal for earlier assessment years from 2002- adjudicated by us in appeal for earlier assessment years from 2002 adjudicated by us in appeal for earlier assessment years from 2002 03 to 2005-06, and therefore following our finding 06, and therefore following our finding, the ground No the ground Nos. 16 to 20 of the appeal are decided 16 to 20 of the appeal are decided mutasis mutandis. . 104. The ground No. No. 21 of the appeal relates to disallowance of to disallowance of provision for obsolete stock. The said ground provision for obsolete stock. The said ground was not pressed by the assessee and therefore same is dismissed as infructuous. the assessee and therefore same is dismissed as infructuous. the assessee and therefore same is dismissed as infructuous. 105. The ground No. 22 of the appeal relates to addition for The ground No. 22 of the appeal relates to addition for The ground No. 22 of the appeal relates to addition for consultancy income of consultancy income of ₹ 36.17 lakhs.The Assessing Officer observed Officer observed from the tax audit report that consultancy service charges of ₹ from the tax audit report that consultancy service charges of from the tax audit report that consultancy service charges of 36.17 lakhs were shown as receivable were shown as receivable but was not credited in the was not credited in the profit and loss account. The assessee explained that the bill toward profit and loss account. The assessee explained that the bill toward profit and loss account. The assessee explained that the bill toward

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 174 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

consultancy service amounting to consultancy service amounting to ₹ 36.17 lakhs was raised but lakhs was raised but same were forwarded for quality assurance inspection or test report forwarded for quality assurance inspection or test report forwarded for quality assurance inspection or test report and therefore same was not recognised as income during the and therefore same was not recognised as income during the and therefore same was not recognised as income during the relevant assessment year. The Assessing Officer rejected the relevant assessment year. The Assessing Officer rejected the relevant assessment year. The Assessing Officer rejected the contention of the assessee on the ground that contention of the assessee on the ground that the assessee was the assessee was following mercantile system of the accounting and therefore following mercantile system of the accounting and therefore following mercantile system of the accounting and therefore assessee ought to have offered this amount for tax purposes. Before assessee ought to have offered this amount for tax purposes. Before assessee ought to have offered this amount for tax purposes. Before the Ld. CIT(A) , the assessee challenged this addition while the Ld. CIT(A) , the assessee challenged this addition while the Ld. CIT(A) , the assessee challenged this addition while computing book profit computing book profit under section 115 JB of the A Act. However, we find that Ld. CIT(A) has allowed his ground in favour of the assessee find that Ld. CIT(A) has allowed his ground in favour of the assessee find that Ld. CIT(A) has allowed his ground in favour of the assessee observing as under:

“Ground 60 Addition of consultancy service charges Addition of consultancy service charges I have perused the nature of the consultancy service charges and I have perused the nature of the consultancy service charges and I have perused the nature of the consultancy service charges and understand that the case pertain understand that the case pertain to the revenue recognition to the revenue recognition principles being followed by the appellant company from year to principles being followed by the appellant company from year to principles being followed by the appellant company from year to year. As per the revenue recognition policies of the appellant company, As per the revenue recognition policies of the appellant company, As per the revenue recognition policies of the appellant company, it recognises the income only after the approval is received from it recognises the income only after the approval is received from it recognises the income only after the approval is received from the Quality Assurance depar the Quality Assurance department. This principle cannot be tment. This principle cannot be challenged saying that the books of accounts are maintained challenged saying that the books of accounts are maintained challenged saying that the books of accounts are maintained using mercantile system. Accordingly, the above addition cannot using mercantile system. Accordingly, the above addition cannot using mercantile system. Accordingly, the above addition cannot be said to be permissible for computing book profits under section be said to be permissible for computing book profits under section be said to be permissible for computing book profits under section 115JB of the Act. 115JB of the Act. Accordingly, th Accordingly, the above ground no. 60 is allowed. (relief allowed e above ground no. 60 is allowed. (relief allowed for 115JB Rs. 36.17 lakh) for 115JB Rs. 36.17 lakh)” 105.1 Accordingly Accordingly this ground, being infructuous being infructuous, same is dismissed.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 175 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 176 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

does not include ‘tea bushes tea bushes’ or the ‘livestock’ or ‘building’ or ‘furniture and fittings furniture and fittings’. In view of the above discussion, the w of the above discussion, the Assessing Officer restricted the depreciation on the building at the Assessing Officer restricted the depreciation on the building at the Assessing Officer restricted the depreciation on the building at the rate of the 10% allowable for factory buildings, observing as under: rate of the 10% allowable for factory buildings, observing as under: rate of the 10% allowable for factory buildings, observing as under:

“7.5. In the light of aforesaid discussion I have no hesitation 7.5. In the light of aforesaid discussion I have no hesitation 7.5. In the light of aforesaid discussion I have no hesitation whatsoever inferring th whatsoever inferring that the addition is to building by virtue of at the addition is to building by virtue of ruling of the Hon'ble Apex Court and also by virtue of statutory ruling of the Hon'ble Apex Court and also by virtue of statutory ruling of the Hon'ble Apex Court and also by virtue of statutory provisions in the form of Section 43(3). The impugned assets falls provisions in the form of Section 43(3). The impugned assets falls provisions in the form of Section 43(3). The impugned assets falls within the class of bldg i.e. factory bldg and does not fall within within the class of bldg i.e. factory bldg and does not fall within within the class of bldg i.e. factory bldg and does not fall within the class of plant and machinery. Accordingly the assessee is plant and machinery. Accordingly the assessee is plant and machinery. Accordingly the assessee is granted depreciation at the rate applicable to the factory bldg i.e. granted depreciation at the rate applicable to the factory bldg i.e. granted depreciation at the rate applicable to the factory bldg i.e. 10%. Since the assessee has not provided any data or material 10%. Since the assessee has not provided any data or material 10%. Since the assessee has not provided any data or material when the addition on this account is made to class of plant and when the addition on this account is made to class of plant and when the addition on this account is made to class of plant and machinery therefore it is taken of having put into use for a period herefore it is taken of having put into use for a period herefore it is taken of having put into use for a period less than 182 days.Consequently assessee has been granted less than 182 days.Consequently assessee has been granted less than 182 days.Consequently assessee has been granted depreciation @5%. It is not ascertainable form the material on depreciation @5%. It is not ascertainable form the material on depreciation @5%. It is not ascertainable form the material on record that at what rate i.e. 15% or 80% or 100% assessee has record that at what rate i.e. 15% or 80% or 100% assessee has record that at what rate i.e. 15% or 80% or 100% assessee has claimed deprecia claimed depreciation on account of this addition. However, to tion on account of this addition. However, to avoid unwarranted disallowance on this avoid unwarranted disallowance on this account, as a matter of account, as a matter of abundant precaution it is assumed that the assessee has claim abundant precaution it is assumed that the assessee has claim abundant precaution it is assumed that the assessee has claim depreciation on the impugned assets at the rate of 15%. depreciation on the impugned assets at the rate of 15%. depreciation on the impugned assets at the rate of 15%. Accordingly, excess claim of Accordingly, excess claim of depreciation at the rate of 10% depreciation at the rate of 10% (i.e.15% -5% = 10%) stands disallowed. The disallowance on this 5% = 10%) stands disallowed. The disallowance on this 5% = 10%) stands disallowed. The disallowance on this account works out to Rs. 53,43,70,410/ works out to Rs. 53,43,70,410/-.” 107.1 Before us the learned counsel efore us the learned counsel for the assessee submitted that the assessee submitted that Ld. CIT(A) has not decided this issue of the classification of the Ld. CIT(A) has not decided this issue of the class Ld. CIT(A) has not decided this issue of the class asset under plant and machinery. set under plant and machinery.

107.2 We have heard rival submission of the parties on the We have heard rival submission of the parties on the We have heard rival submission of the parties on the issue in dispute and peruse issue in dispute and perused relevant material on record. The Ld. relevant material on record. The Ld. CIT(A) has referred to the submission of the assessee on the issue CIT(A) has referred to the submission of the assessee on the issue CIT(A) has referred to the submission of the assessee on the issue in dispute, which are reproduced as under: hich are reproduced as under:

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 177 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

“The learned Addl. Commissioner erred in not considering the The learned Addl. Commissioner erred in not considering the The learned Addl. Commissioner erred in not considering the submissions made by the appellant company in its correct submissions made by the appellant company in its correct submissions made by the appellant company in its correct perspective. The appellant is a Public Sector Enterprise wholly owned by The appellant is a Public Sector Enterprise wholly owned by The appellant is a Public Sector Enterprise wholly owned by Government of India, engaged in the Government of India, engaged in the business of generation of business of generation of electricity. In the process of generating nuclear power, the electricity. In the process of generating nuclear power, the electricity. In the process of generating nuclear power, the appellant company requires Reactor building, Service Building, appellant company requires Reactor building, Service Building, appellant company requires Reactor building, Service Building, Pump house building & Turbine building. Pump house building & Turbine building. As per Note No. 5 of Annexure VI of the Tax Audit Report As per Note No. 5 of Annexure VI of the Tax Audit Report As per Note No. 5 of Annexure VI of the Tax Audit Report "Additions to Plant & Machinery includes an amount of Rs. ns to Plant & Machinery includes an amount of Rs. ns to Plant & Machinery includes an amount of Rs. 53,437 lacs relating to Building constructed in TAPP # units 3 & 53,437 lacs relating to Building constructed in TAPP # units 3 & 53,437 lacs relating to Building constructed in TAPP # units 3 & 4, which in view of the appellant company are composite part of 4, which in view of the appellant company are composite part of 4, which in view of the appellant company are composite part of Plant & Machinery and therefore should be classifled under Plant & Machinery and therefore should be classifled under Plant & Machinery and therefore should be classifled under 'Plant & Machinery 'Plant & Machinery' block of asset". In this connection, it was submitted by the appellant company In this connection, it was submitted by the appellant company In this connection, it was submitted by the appellant company that "The building taken as plant & machinery are not the "The building taken as plant & machinery are not the "The building taken as plant & machinery are not the simple building but the reactor building. It is the structure simple building but the reactor building. It is the structure simple building but the reactor building. It is the structure at requisite pressure to sustain the chain reaction for at requisite pressure to sustain the chain reaction for at requisite pressure to sustain the chain reaction for power generation. Hence, it has been clubbed under power generation. Hence, it has been clubbed under power generation. Hence, it has been clubbed under plant & machinery. In view of above, the same has been plant & machinery. In view of above, the same has been plant & machinery. In view of above, the same has been classified under the head 'Plant & Machinery block of classified under the head 'Plant & Machinery block of classified under the head 'Plant & Machinery block of asset and depreciation in respect of the same should be asset and depreciation in respect of the same should be asset and depreciation in respect of the same should be allowed as a deduction." allowed as a deduction." The AO has rel has relled on the decision of the Hon'ble Supreme Court led on the decision of the Hon'ble Supreme Court in the case of Anand Theatre and the definition of the "Plant" in the case of Anand Theatre and the definition of the "Plant" in the case of Anand Theatre and the definition of the "Plant" provided in section 43(3) of the Act and rejected the contention provided in section 43(3) of the Act and rejected the contention provided in section 43(3) of the Act and rejected the contention of the appellant and further stated as under: of the appellant and further stated as under: "Accordingly, the assessee is gra "Accordingly, the assessee is granted depreciation at the nted depreciation at the rate applicable to factory building l.e. 10%. Since the rate applicable to factory building l.e. 10%. Since the rate applicable to factory building l.e. 10%. Since the assessee has not provided any data or material when assessee has not provided any data or material when assessee has not provided any data or material when the addition on this account Is made to class of plant and the addition on this account Is made to class of plant and the addition on this account Is made to class of plant and machinery therefore it is taken of having put into use for machinery therefore it is taken of having put into use for machinery therefore it is taken of having put into use for a period less than 182 davs. Consequently assessee has iod less than 182 davs. Consequently assessee has iod less than 182 davs. Consequently assessee has been granted depreciation @5%. been granted depreciation @5%. It Is not ascertainable It Is not ascertainable from the material on record that at what rate i.e. @15% or from the material on record that at what rate i.e. @15% or from the material on record that at what rate i.e. @15% or

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 178 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

80% or 100% appellant has claimed deprecation on 80% or 100% appellant has claimed deprecation on 80% or 100% appellant has claimed deprecation on account of this addition. However, to avoid unwarranted account of this addition. However, to avoid account of this addition. However, to avoid disallowance on this account, as a matter of abundant disallowance on this account, as a matter of abundant disallowance on this account, as a matter of abundant precaution it is assumed that appellant has claimed precaution it is assumed that appellant has claimed precaution it is assumed that appellant has claimed depreciation on the impugned assets at the rate of 15%. depreciation on the impugned assets at the rate of 15%. depreciation on the impugned assets at the rate of 15%. Accordingly, excess claim of depreciation at the rate of Accordingly, excess claim of depreciation at the rate of Accordingly, excess claim of depreciation at the rate of 10% (l.e. 15% 10% (l.e. 15% -5%) =10%) stand disallowed)" stand disallowed)" In this connection, the appellant company submitted that as per In this connection, the appellant company submitted that as per In this connection, the appellant company submitted that as per the Concise Oxford dictionary the word "Reactor is defined as the Concise Oxford dictionary the word "Reactor is defined as the Concise Oxford dictionary the word "Reactor is defined as under: "an apparatus or structure in which a controlled nuclear "an apparatus or structure in which a controlled nuclear "an apparatus or structure in which a controlled nuclear chain reaction releases energy" chain reaction releases energy" Further, the w Further, the word "building" is defined as under: "1. a permanent fixed structure forming an enclosure and "1. a permanent fixed structure forming an enclosure and "1. a permanent fixed structure forming an enclosure and providing protection from the elements (e.g. a house, providing protection from the elements (e.g. a house, providing protection from the elements (e.g. a house, school, factory, or stable). school, factory, or stable). 2. the constructing of such structures. 2. the constructing of such structures. Turbine Building Turbine Building The Turbine Building is The Turbine Building is an enclosed metal and girder structure an enclosed metal and girder structure that houses: (1) Turbine, generator and the support lubrication and cooling (1) Turbine, generator and the support lubrication and cooling (1) Turbine, generator and the support lubrication and cooling systems, (2) Condensate (2) Condensate-feedwater systems supply water to the steam feedwater systems supply water to the steam generators (3) Circulating water to and from condenser, (3) Circulating water to and from condenser, (4) Electrical s (4) Electrical switchgear rooms that supply electrical power to witchgear rooms that supply electrical power to plant components, plant components, (5} Demineralised water system that supplies clean water for (5} Demineralised water system that supplies clean water for (5} Demineralised water system that supplies clean water for cooling plant components, and cooling plant components, and

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 179 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

(6) Control Room outside the building are the transformers that (6) Control Room outside the building are the transformers that (6) Control Room outside the building are the transformers that either supply power to the plant fo either supply power to the plant for start-up or that supply up or that supply power to the grid for distribution power to the grid for distribution In view of the above, the appellant company submitted that as In view of the above, the appellant company submitted that as In view of the above, the appellant company submitted that as such nomenclature does not affect the nature of the assets. The such nomenclature does not affect the nature of the assets. The such nomenclature does not affect the nature of the assets. The essence of classification of assets should be based on the use essence of classification of assets should be based on the use essence of classification of assets should be based on the use of the assets. One type of assets may be considered as the assets. One type of assets may be considered as the assets. One type of assets may be considered as the 'Bullding' for an entity whereas the same assets can be 'Bullding' for an entity whereas the same assets can be 'Bullding' for an entity whereas the same assets can be considered as 'Plant' for another entity. considered as 'Plant' for another entity. The appellant submitted that for determining the nature of an The appellant submitted that for determining the nature of an The appellant submitted that for determining the nature of an asset one needs to examine on the basis of asset one needs to examine on the basis of functional test. In functional test. In CIT v Navodaya (2004) 271 IT 173(Ker), CIT v Navodaya (2004) 271 IT 173(Ker), the Hon'ble High court the Hon'ble High court found exception for a film studio, because it could be modified ception for a film studio, because it could be modified ception for a film studio, because it could be modified to suit different settings necessary for production of films, so to suit different settings necessary for production of films, so to suit different settings necessary for production of films, so that the functional test cannot be disregarde that the functional test cannot be disregarded. Bulldings as d. Bulldings as ordinarily understood are buildings according to particular ordinarily understood are buildings according to particular ordinarily understood are buildings according to particular specifications, while plant is understood in a more flexible specifications, while plant is understood in a more flexible specifications, while plant is understood in a more flexible sense as necessary for business. While a building, which sense as necessary for business. While a building, which sense as necessary for business. While a building, which merely houses the business, cannot be treated as plant, where merely houses the business, cannot be treated as plant, where merely houses the business, cannot be treated as plant, where such building is used as a tool of the trade with which the such building is used as a tool of the trade with which the such building is used as a tool of the trade with which the business itself business itself is carried on. it can count as a plant. is carried on. it can count as a plant. In the instant case, reactor building, turbine bullding, service In the instant case, reactor building, turbine bullding, service In the instant case, reactor building, turbine bullding, service building and pump house building are classified as 'Plant'. building and pump house building are classified as 'Plant'. building and pump house building are classified as 'Plant'. On a perusal of On a perusal of the above note, it is observed that these the above note, it is observed that these structures are designed to support the power generation. For structures are designed to support the power generation. For structures are designed to support the power generation. For example, Reactor building is a structure at requisite pressure to example, Reactor building is a structure at requisite pressure to example, Reactor building is a structure at requisite pressure to sustain the chain reaction for power generation chain reaction for power generation Turbine building, on the other hand, d Turbine building, on the other hand, designed to control the esigned to control the effect of oil and gas fire that can occur from the TMOT and the effect of oil and gas fire that can occur from the TMOT and the effect of oil and gas fire that can occur from the TMOT and the Generator Hydrogen Cooling system. Generator Hydrogen Cooling system. Service building is designed for safety against unacceptable Service building is designed for safety against unacceptable Service building is designed for safety against unacceptable exposure to radio activity during handling and storage of spent exposure to radio activity during handling and storage of spent exposure to radio activity during handling and storage of spent fuel. Pump house building is a Condenser circulating water pump p house building is a Condenser circulating water pump p house building is a Condenser circulating water pump house, which has been provided for each individual unit. The house, which has been provided for each individual unit. The house, which has been provided for each individual unit. The

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 180 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

level of the pump house and pumping head of CW pumps have level of the pump house and pumping head of CW pumps have level of the pump house and pumping head of CW pumps have been optimised on the bass of varying water levels, in the been optimised on the bass of varying water levels, in the been optimised on the bass of varying water levels, in the forebay, CW Pump House forebay, CW Pump House and the Main Condenser. CCW Pump and the Main Condenser. CCW Pump House has open wet walls and facility for providing stop logs House has open wet walls and facility for providing stop logs House has open wet walls and facility for providing stop logs etc. Condenser circulating water is pumped through the main etc. Condenser circulating water is pumped through the main etc. Condenser circulating water is pumped through the main condenser and discharge from condenser is led through condenser and discharge from condenser is led through condenser and discharge from condenser is led through separate discharge channel to the outfall struc separate discharge channel to the outfall structure for suitable ture for suitable discharge of warm water into the sea. discharge of warm water into the sea. EFFECT OF AMENDMENT IN ACT EFFECT OF AMENDMENT IN ACT The appellant company submitted that the definition of Plant The appellant company submitted that the definition of Plant The appellant company submitted that the definition of Plant has been amended by Finance Act, 2003 with effect from 1 has been amended by Finance Act, 2003 with effect from 1 has been amended by Finance Act, 2003 with effect from 1-4- 2004. Effect of which would be that all buildings, wh 2004. Effect of which would be that all buildings, wh 2004. Effect of which would be that all buildings, where business is carried on, could not be treated as plant. However, business is carried on, could not be treated as plant. However, business is carried on, could not be treated as plant. However, functional test was understood to mean that buildings specially functional test was understood to mean that buildings specially functional test was understood to mean that buildings specially designed for special use, as in the case of hospitals, hotels and designed for special use, as in the case of hospitals, hotels and designed for special use, as in the case of hospitals, hotels and auditoriums, were treated as plant entitling higher deprec auditoriums, were treated as plant entitling higher deprec auditoriums, were treated as plant entitling higher depreciation to such buildings. to such buildings. In the instant case, the functions of the asset are akin to a In the instant case, the functions of the asset are akin to a In the instant case, the functions of the asset are akin to a power generating plant. Also the asset cannot be used as a power generating plant. Also the asset cannot be used as a power generating plant. Also the asset cannot be used as a building for multi building for multi-purpose utilities. The asset Is in the existence purpose utilities. The asset Is in the existence with a limited purpose of generating elec with a limited purpose of generating electricity. The asset may tricity. The asset may have nomenclature of a building but serves the commercial have nomenclature of a building but serves the commercial have nomenclature of a building but serves the commercial function of a plant. function of a plant. The appellant also submitted that in the earlier year and The appellant also submitted that in the earlier year and The appellant also submitted that in the earlier year and subsequent assessment years, the nuclear reactors were subsequent assessment years, the nuclear reactors were subsequent assessment years, the nuclear reactors were treated as machinery by the assessing off treated as machinery by the assessing off treated as machinery by the assessing officer and no disallowance was made by the AO in respect of the same. disallowance was made by the AO in respect of the same. disallowance was made by the AO in respect of the same. In view of the above discussion, I hold that the asset is in the In view of the above discussion, I hold that the asset is in the In view of the above discussion, I hold that the asset is in the nature of plant. nature of plant. CAPITALIZATION OF TAPS CAPITALIZATION OF TAPS-4 The AO had held that the appellant had not provided any data The AO had held that the appellant had not provided any data The AO had held that the appellant had not provided any data or material when the or material when the addition on ascount of factory building is addition on ascount of factory building is made to class of plant and machinery. Therefore it was taken made to class of plant and machinery. Therefore it was taken made to class of plant and machinery. Therefore it was taken of having put into use for a period less than 182 days. of having put into use for a period less than 182 days. of having put into use for a period less than 182 days.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 181 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

Consequently the appellant company was granted deprecation Consequently the appellant company was granted deprecation Consequently the appellant company was granted deprecation @ 5% (50% of 10% ie. rate of depreca @ 5% (50% of 10% ie. rate of deprecation applicable to building). tion applicable to building). In this regard, the appellant submitted that the date of In this regard, the appellant submitted that the date of In this regard, the appellant submitted that the date of commercial operation of TAPS commercial operation of TAPS -4 was 12.9.2005 and hence the 4 was 12.9.2005 and hence the assets are put into use from this date and therefore are put into assets are put into use from this date and therefore are put into assets are put into use from this date and therefore are put into use for more than 180 days. In this connect use for more than 180 days. In this connection, a letter dated ion, a letter dated 12 September 2005 written by the appellant company to 12 September 2005 written by the appellant company to 12 September 2005 written by the appellant company to Western Regional Electricity Board was submitted during the Western Regional Electricity Board was submitted during the Western Regional Electricity Board was submitted during the course of appellate proceedings. course of appellate proceedings. In view of above, since the asset was put into use for more than In view of above, since the asset was put into use for more than In view of above, since the asset was put into use for more than 180 day, depreciation on 180 day, depreciation on the same should be allowed at the the same should be allowed at the rate 15% instead of 5% as allowed by AO in the assessment rate 15% instead of 5% as allowed by AO in the assessment rate 15% instead of 5% as allowed by AO in the assessment order. I have perused the facts and contentions provided by the I have perused the facts and contentions provided by the I have perused the facts and contentions provided by the appellant company. I have also perused the letter dated 12 appellant company. I have also perused the letter dated 12 appellant company. I have also perused the letter dated 12 September 2005 written by the appellant September 2005 written by the appellant company to Western company to Western Regional Electricity Board. Perusing the aforesald letter, it can Regional Electricity Board. Perusing the aforesald letter, it can Regional Electricity Board. Perusing the aforesald letter, it can be concluded that the plant was operational as on 12 be concluded that the plant was operational as on 12 be concluded that the plant was operational as on 12 September 2005. September 2005. In view of the above case, the A is directed to allow the In view of the above case, the A is directed to allow the In view of the above case, the A is directed to allow the depreciation for the entire year. depreciation for the entire year.” 107.3 We agree with the contention of the learned counsel of We agree with the contention of the learned counsel of We agree with the contention of the learned counsel of the assessee that Ld. CIT(A) has not given a specific finding on the the assessee that Ld. CIT(A) has not given a specific finding on the the assessee that Ld. CIT(A) has not given a specific finding on the issue of classification of the building under the category of plant issue of classification of the building under the category of plant issue of classification of the building under the category of plant and machinery by the assessee. But as far as facts related to the and machinery by the assessee. But as far as facts related to th and machinery by the assessee. But as far as facts related to th issue in dispute as whether the building which is part of the reactor issue in dispute as whether the building which is part of the reactor issue in dispute as whether the building which is part of the reactor could be termed as could be termed as ‘plant and machinery’, available on record, , available on record, therefore, both parties argued before us to decide the issue on therefore, both parties argued before us to decide the issue on therefore, both parties argued before us to decide the issue on merit. In our opinion, the merit. In our opinion, the ld. Assessing Officer has foll Assessing Officer has followed the ratio of the Hon’ble Supreme Court in the case of M/s Anand theatre M/s Anand theatre of the Hon’ble Supreme Court

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 182 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

(supra), and referred to and referred to the relevant provisions of the A the relevant provisions of the Act, we do not find any error on the part of the Assessing Officer in restricting the find any error on the part of the Assessing Officer in restricting the find any error on the part of the Assessing Officer in restricting the depreciation at the rate of the 10% o depreciation at the rate of the 10% of written down value of the f written down value of the building under reference. No other decision contrary to the decision building under reference. No other decision contrary to the decision building under reference. No other decision contrary to the decision cited by the Assessing Officer has been brought to our knowledge; cited by the Assessing Officer has been brought to our cited by the Assessing Officer has been brought to our therefore, we uphold the finding of the Assessing Officer. The we uphold the finding of the Assessing Officer. The we uphold the finding of the Assessing Officer. The ground No. 29 of the appeal of of the appeal of the assessee the assessee is accordingly dismissed. 108. In ground No. 30 In ground No. 30, the assessee is aggrieved with the direction , the assessee is aggrieved with the direction given by the Ld. CIT(A) for verification of the supplementary tax given by the Ld. CIT(A) for verification of the supplementary tax given by the Ld. CIT(A) for verification of the supplementary tax audit report in respect of the claim of the additional depreciation. audit report in respect of the claim of the additional depreciation. audit report in respect of the claim of the additional depreciation. 108.1 The brief facts qua the issue in dispute that in the ef facts qua the issue in dispute that in the ef facts qua the issue in dispute that in the original return of income for the assessment year under original return of income for the assessment year under original return of income for the assessment year under consideration the assessee claimed depreciation under section 32 consideration the assessee claimed depreciation under section 32 consideration the assessee claimed depreciation under section 32 amounting to ₹ 74,750.81 lakhs, however in the re 750.81 lakhs, however in the re 750.81 lakhs, however in the revised return of income it claimed depreciation at depreciation at ₹ 159,643.98 lakhs. The reason 643.98 lakhs. The reason for difference was explained as misclassification of the asset and for difference was explained as misclassification of the asset and for difference was explained as misclassification of the asset and arithmetical error while computing the written down value. Before error while computing the written down value. Before error while computing the written down value. Before the Ld. CIT(A) the assessee filed . CIT(A) the assessee filed ‘engineer’s certificate certificate’ for valuation of plant and machinery eligible for depreciation at the rate of the of plant and machinery eligible for depreciation at the rate of the of plant and machinery eligible for depreciation at the rate of the 80% and 100 % ( hundred percent hundred percentile). It was submitted by the . It was submitted by the assessee that the above errors above errors were identified during the ta during the tax audit for assessment year 2008 for assessment year 2008-09. A copy of the relevant annexure to tax 09. A copy of the relevant annexure to tax

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 183 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

audit report for assessment audit report for assessment year 2008-09 was also submitted 09 was also submitted during the course of the appeal during the course of the appeal before ld CIT(A). It was further . It was further submitted that assessee submitted that assessee obtained supplementary tax audi supplementary tax audit report from the tax auditor in which revised claim of the depreciation was from the tax auditor in which revised claim of the depreciation was from the tax auditor in which revised claim of the depreciation was certified by the auditor and reason for the claim of additional certified by the auditor and reason for the claim of additional certified by the auditor and reason for the claim of additional depreciation were stated. In view of the additional supplementary depreciation were stated. In view of the additional supplementary depreciation were stated. In view of the additional supplementary tax audit report, the Ld. CIT(A) directed the Ass tax audit report, the Ld. CIT(A) directed the Assessing Officer to essing Officer to verify and allow the ground of the appeal. In our opinion, there is the ground of the appeal. In our opinion, there is the ground of the appeal. In our opinion, there is no error in the finding of the Ld. CIT(A) on the issue in dispute and no error in the finding of the Ld. CIT(A) on the issue in dispute and no error in the finding of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The ground No. 30 of the appeal of accordingly we uphold the same. The ground No. 30 of the appeal of accordingly we uphold the same. The ground No. 30 of the appeal of the assessee is accordingly dismi the assessee is accordingly dismissed. 109. The ground no. 31 of the appeal relates The ground no. 31 of the appeal relates to to increase in net profit for the purpose of computation of book profit u/s 115JB of profit for the purpose of computation of book profit u/s 115JB of profit for the purpose of computation of book profit u/s 115JB of the Act. 110. The ground no The ground nos. 31 & 32 being general in nature 31 & 32 being general in nature, are dismissed as infructuous. dismissed as infructuous.

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 184 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 185 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

head office expenses to the respective unit and allocation of head office expenses to the respective unit and allocation of head office expenses to the respective unit and allocation of unidentifiable expenses on the basis of ratio of aggregate of annual expenses on the basis of ratio of aggregate of annual expenses on the basis of ratio of aggregate of annual net sale of electrical energy and annual capital outlay . The relevant net sale of electrical energy and annual capital outlay . The relevant net sale of electrical energy and annual capital outlay . The relevant finding of Ld. CIT(A) qua the issue in dispute is reproduced as Ld. CIT(A) qua the issue in dispute is reproduced as Ld. CIT(A) qua the issue in dispute is reproduced as under:

“ALLOCATION OF PROPORTIONATE ADMINISTRATIVE ALLOCATION OF PROPORTIONATE ADMINISTRATIVE ALLOCATION OF PROPORTIONATE ADMINISTRATIVE EXPENSES TO THE EXPENSES TO THE UNITS CLAIMING DEDUCTION UNITS CLAIMING DEDUCTION UNDER SECTION 80lA OF THE ACT UNDER SECTION 80lA OF THE ACT The appellant company submitted that the A while The appellant company submitted that the A while The appellant company submitted that the A while passing passing passing the the the assessment assessment assessment order, order, order, has has has apportioned apportioned apportioned proportionate administrative and other expenses debited proportionate administrative and other expenses debited proportionate administrative and other expenses debited to Profit & Loss account to units claiming deducti to Profit & Loss account to units claiming deduction under on under section 80lA of the Act of Rs. 11,557.04 lakhs stating that section 80lA of the Act of Rs. 11,557.04 lakhs stating that section 80lA of the Act of Rs. 11,557.04 lakhs stating that administrative expenses debited to the aforesaid units is administrative expenses debited to the aforesaid units is administrative expenses debited to the aforesaid units is not proportionate to and on much lower side as compared not proportionate to and on much lower side as compared not proportionate to and on much lower side as compared to the administrative & other expenses shown in Profit & to the administrative & other expenses shown in Profit & to the administrative & other expenses shown in Profit & loss account. In this connection, the appellant company submitted that this connection, the appellant company submitted that this connection, the appellant company submitted that each unit of NPCIL is a profit center. All the expenses each unit of NPCIL is a profit center. All the expenses each unit of NPCIL is a profit center. All the expenses relating to each unit is captured at the respective unit and relating to each unit is captured at the respective unit and relating to each unit is captured at the respective unit and no unrelated expenditure is debited to any site/ unit. The no unrelated expenditure is debited to any site/ unit. The no unrelated expenditure is debited to any site/ unit. The identifiable Head office identifiable Head office expenses are transferred to the expenses are transferred to the respective locations. respective locations. Unidentifiable head office expenses are allocated to Power Unidentifiable head office expenses are allocated to Power Unidentifiable head office expenses are allocated to Power stations and projects in the ratio of aggregate of annual stations and projects in the ratio of aggregate of annual stations and projects in the ratio of aggregate of annual net sale of electrical energy & annual capital outlay. net sale of electrical energy & annual capital outlay. net sale of electrical energy & annual capital outlay. Hence, the administrative and Hence, the administrative and other expenses shown in other expenses shown in the consolidated Profit & Loss Account is a consolidation of the consolidated Profit & Loss Account is a consolidation of the consolidated Profit & Loss Account is a consolidation of the expenses of all units including that of 80lA units and the expenses of all units including that of 80lA units and the expenses of all units including that of 80lA units and therefore, there is no unrelated/common expenditure for therefore, there is no unrelated/common expenditure for therefore, there is no unrelated/common expenditure for apportionment to the units eligible for deduction under apportionment to the units eligible for deduction under apportionment to the units eligible for deduction under Section 801A. Section 801A. It was submitted that all the identifiable & unidentifiable It was submitted that all the identifiable & unidentifiable It was submitted that all the identifiable & unidentifiable expenses are apportioned to the units claiming deduction expenses are apportioned to the units claiming deduction expenses are apportioned to the units claiming deduction under section 80lA as mentioned above, no disallowance under section 80lA as mentioned above, no disallowance under section 80lA as mentioned above, no disallowance

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 186 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

should be made in respect of administrative & other should be made in respect of administrative & other should be made in respect of administrative & other expenses. On the basis of above, it was submitted that in the asis of above, it was submitted that in the asis of above, it was submitted that in the computation of deduction under section 80 computation of deduction under section 80-IA, the actual IA, the actual administration and other expenses incurred and debited to administration and other expenses incurred and debited to administration and other expenses incurred and debited to the Profit & Loss Account the Profit & Loss Account ought to be considered. It was ought to be considered. It was submitted by the appellant that the bala submitted by the appellant that the balance expenditure nce expenditure debited in shit kin dhe consolidated Profit & Loss Account debited in shit kin dhe consolidated Profit & Loss Account debited in shit kin dhe consolidated Profit & Loss Account do not have any bearing to the units claiming deduction do not have any bearing to the units claiming deduction do not have any bearing to the units claiming deduction under section 80 under section 80-IA of the Act. Accordingly, no portion of IA of the Act. Accordingly, no portion of the said expenditure ought to be deducted in the the said expenditure ought to be deducted in the the said expenditure ought to be deducted in the computation of de computation of deduction under section 80-IA of the Act. IA of the Act. I have considered the submissions of the Ld. Counsel and I have considered the submissions of the Ld. Counsel and I have considered the submissions of the Ld. Counsel and in view of the details brought on record in view of the details brought on record - the same is the same is allowed and AO is directed to give relief accordingly. This allowed and AO is directed to give relief accordingly. This allowed and AO is directed to give relief accordingly. This ground of appeal is allowed. ground of appeal is allowed.” 111.2 We have heard rival submission of the parties on the heard rival submission of the parties on the heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We issue in dispute and perused the relevant material on record. We issue in dispute and perused the relevant material on record. We find that Ld. CIT(A) considered the submission of the assessee that find that Ld. CIT(A) considered the submission of the assessee that find that Ld. CIT(A) considered the submission of the assessee that each unit of the assessee is a profit centre and all the expenses each unit of the assessee is a profit centre and all the expenses each unit of the assessee is a profit centre and all the expenses relating to the unit are captured at the respective unit and only the unit are captured at the respective unit and only the unit are captured at the respective unit and only unidentifiable head office expenses are allocated to power stations unidentifiable head office expenses are allocated to power stations unidentifiable head office expenses are allocated to power stations and projects in the ratio of annual net sale of electrical energy and and projects in the ratio of annual net sale of electrical energy and and projects in the ratio of annual net sale of electrical energy and annual capacity outlay. In our opinion, the assessee has allocated annual capacity outlay. In our opinion, the assessee has alloca annual capacity outlay. In our opinion, the assessee has alloca head office expenses head office expenses not identified to particular unit not identified to particular unit on the basis of a reasonable allocation key. Accordingly the Ld. CIT(A) has held a reasonable allocation key. Accordingly the Ld. CIT(A) has held a reasonable allocation key. Accordingly the Ld. CIT(A) has held that no portion of said administrative expenses ought to be directed that no portion of said administrative expenses ought to be directed that no portion of said administrative expenses ought to be directed in the computation of the deduction under secti in the computation of the deduction under section 80 on 80IA of the Act. In our opinion, there is nowhere in the order of the Ld. CIT(A) on In our opinion, there is nowhere in the order of the Ld. CIT(A) on In our opinion, there is nowhere in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The the issue in dispute and accordingly we uphold the same. The the issue in dispute and accordingly we uphold the same. The

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 187 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

ground No. one of the appeal of the revenue is accordingly ground No. one of the appeal of the revenue is accordingly ground No. one of the appeal of the revenue is accordingly dismissed. 113. The ground No The ground Nos. 2 (two) and 3 (three) of the appeal of the of the appeal of the Revenue are general in nature and therefore same are dismissed as are general in nature and therefore same are dismissed as are general in nature and therefore same are dismissed as infructuous. 114. In the result, the appeals are allowed /dismissed as indicated the appeals are allowed /dismissed as indicated the appeals are allowed /dismissed as indicated in below table: S. ITA No. AY Assessee/ Result Result No. Revenue 1 202/Mum/2004 202/Mum/2004 98-99 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 2 114/Mum/2004 114/Mum/2004 99-2000 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 3 4413/Mum/2004 2000-01 4413/Mum/2004 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 4 3867/Mum/2008 2001-02 3867/Mum/2008 Assessee Allowed partly for Allowed partly for statistic statistical purpose 5 4743/Mum/2007 2002-03 4743/Mum/2007 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 6 4744/Mum/2007 2003-04 4744/Mum/2007 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 7 4745/Mum/2007 2004-05 4745/Mum/2007 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 8 4603/Mum/2007 2004-05 4603/Mum/2007 Revenue Dismissed. Dismissed. 9 2452/Mum/2011 2005-06 2452/Mum/2011 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose 10 625/Mum/2009 625/Mum/2009 2005-06 Revenue Allowed partly for Allowed partly for statistical purpose statistical purpose 11 3553/Mum/2011 2006-07 3553/Mum/2011 Assessee Allowed partly for Allowed partly for statistical purpose statistical purpose

M/s Nuclear Power Corporation of India Ltd.. M/s Nuclear Power Corporatio 188 ITA Nos. 202, 114, 4413/M/2004, ITA Nos. 202, 114, 4413/M/2004, 3867/M/2008, 4743 to 4745/M/2007, 3867/M/2008, 4743 to 4745/M/2007, 2452/M/2011 & Ors 2452/M/2011 & Ors

12 3501/Mum/2011 2006-07 3501/Mum/2011 Revenue Allowed partly for Allowed partly for statistical purpose statistical purpose Order pronounced in the open Court on nced in the open Court on 29/11 /11/2023. Sd/ Sd/- Sd/ Sd/- (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 29/11/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to rwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai