JT. CIT (ODS) - CC -1(4), MUMBAI vs. ULTRATECH CEMENT LTD., MUMBAI

1. These appeals filed by the assessee as well as the Revenue against the findings of the Learned Commissioner of Income-tax (Appeals)-47, Mumbai [hereinafter in short “Ld.CIT(A)”], relate to Assessment Years 2013-14 and 2014-15 in the matter of order passed u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 (In short ‘Act’).

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ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited ITA No. 1466/MUM/2021 (A.Y. 2013-14) - (ASSESSEE APPEAL)

by the assessee are as under: -

1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) [LD.CIT(A)] erred in confirming the order passed by the learned Asst. Commissioner of Income-tax, Central Circle 1(4), Mumbai (DCIT) under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (IT Act).

2. On the facts and in the circumstances of the case and in law, the learned LD CIT(A) erred in confirming that the reassessment was validly carried out by DCIT, despite the following: Four years had elapsed from the end of relevant - assessment year and having disclosed fully and truly all material facts necessary for assessment, no reassessment proceedings is permissible under the law No fresh facts or new material has been brought on - record evidencing escapement of income, Reassessment based on same set of facts as existing - in the original assessment, is nothing but mere change of opinion which is not permitted Review of own assessment order is not permissible in - the reassessment proceedings Reassessment proceedings based on audit objection - is not sustainable

3. On the facts and in the circumstances of the case and in law, the learned LD CIT(A) erred in upholding the disallowance made by DCIT in respect of the deduction claimed by assessee (being successor to amalgamating company) amounting to Rs.27,05,29,884 u/s 35DD of the IT Act pertaining to the amalgamation expenses incurred by the amalgamating company. The Learned LD CIT(A) erred in not appreciating that there is no restriction u/s35DD for claiming such expenses and upon amalgamation, all assets and liabilities including any unexpired tax claim of amalgamating company were succeeded by assessee and assessee becomes eligible/ liable (as the case may be) for the same.

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ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 4. On the facts and in the circumstances of the case and in law, the learned LD CIT(A) erred in treating following expenditure incurred on installing assets/contributing for installing assets on the premises of third party for which it does not get any ownership, as deferred revenue expenditure and allowing equal amount of deduction over a period of five years beginning from the assessment year under consideration: Installation of fenders at Jetty not owned by the - assessee amounting to Rs. 1,12,18,870 Setting up of fly ash handling system at Bellary - Thermal Power Station under Karnataka Power Corporation Limited amounting to Rs. 1,57,09,226 Civil pavement work etc. at Truck Tailor Yard - amounting to Rs. 1,83,62,648 on land owned by Cement Transport association He erred in not appreciating that there is no provision in the IT Act whereby any expenditure can be treated as deferred revenue expenditure 5. On the facts and in the circumstances of the case and in law, the learned LD CIT(A) erred in upholding the disallowance made by learned DCIT in respect of expenditure incurred on purchase of IPL tickets, meet and greet expenses amounting to Rs.2,40,88,814 despite the fact that such expenditure was incurred to promote the appellant Company’s business amongst the dealers/selling agents/business associates, which ultimately results in overall revenue growth of the Appellant.

(A.Y. 2013-14) - (REVENUE APPEAL)

1. 1. Whether on the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) was justified in not treating the expenditure of Rs.9,30,09,475 as capital expenditure when the assessee did not prove during the assessment proceedings that the expense incurred in ownership of such assets and therefore, the decision of Hon’ble Bombay High Court in CIT vs. Excel Industries Limited (1980) 122 ITR 995 is not applicable to the assessee.

2. Whether on the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) was justified in not treating the expenditure of Rs.1,14,72,860 as capital expenditure, when the Page No. 4 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited same was of the nature of Rehabilitation and Resettlement (R&R) cost associated with land acquisition and therefore is capital expenditure and Rehabilitation and Resettlement (R&R) cost are inseparable and compulsory part of Government policies related to land acquisition and thus the assessee cannot claim them separately as revenue expenditure.

3. Whether on the facts and in the circumstances of the case and in law, the Ld. LD CIT(A) was justified in treating the expenditure of Rs.4,52,90,744 as deferred revenue expenditure over a period of five years when the learned LD CIT(A) himself held such expenditure to be in capital in nature and when there is no provision of deferred revenue expenditure under the Income- tax Act, 1961.

5. The first issue to be decided in the present appeal of the assessee is about the validity of reassessment.

7. For the said year, proceedings u/s 153C r.w.s. 153A were initiated against the assessee. An order dated 29.03. 2016 was passed u/s.153C r.w.s. 144C(3) r.w.s. 143(3) of the Act assessing the total income at ₹.30,84,36,71,563. Being aggrieved, the assessee filed an appeal before the Ld. Commissioner of Income Tax (Appeals) against the disallowances and claims rejected by the Assessing Officer in the Page No. 5

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited assessment. The Ld CIT(A) decided the appeal vide his order dated 20.02.2018 allowing substantial relief on various grounds raised by the assessee.

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ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited iv) The said expenses were incurred by M/s SCL for the purpose of its demerger from M/s GIL. In light of the scope set out in the provisions of 35DD of the Income Tax Act, 1961, M/s SCL which has ceased to exist consequent upon its merger with the Assessee company, the demerger expenditure incurred by the SCL towards its demerger from M/s GIL, two years prior to the amalgamation, does not survive statutorily to enjoy the benefits allowable u/s 35DD of the Act. Thus, the assessee has availed undue deduction u/s 35DD of the Income Tax Act, 1961, in respect of this amount of Rs, 27,05,29,884/-, in contravention to the specific provisions of section 35DD of the Income Tax Act, 1961, thereby causing escapement of income to that extent. It is further observed from the assessment records that the assessee, from its computation of total income, has deducted an amount of Rs. 14,97,73,078/- being Revenue Expenditure. The assessee has capitalized the aforesaid expenditure in its books of accounts; however, the same is claimed as Revenue Expenditure stating that the concerned assets are not owned by it. As per the provision of Section 37 of the Act, any expenditure (not being expenditure of the nature described in Section 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly-and exclusively for the purpose of the business or profession are allowed. Thus, the assessee has availed undue deduction of Rs. 14,97,73,078/- in contravention to the provisions of section 37 of the Income Tax Act, 1961, thereby causing escapement of income to that extent. Although the documents/material, suggesting escapement of income, were available on records at the time of completion of assessment u/s 143(3) r.w.s 153C of the Act, the same were remained to be examined by the AO. Therefore, 'he case can be reopened on the basis of the materials available on record which are suggesting escapement of income. In this regard, reliance can be placed on the order dated 11/08/2017of the Hon'ble ITAT pronounced in the case of M/s Mahyco Seeds Limited. In this case, similar issue has came up for adjudication before the Hon'ble ITAT and the Hon'ble ITAT upheld the action of the AO of reopening the assessment proceedings stating that "though the assessee claims to have furnished necessary details before the AO at the time of original assessment, the records clearly indicate that the AO has not examined the issue of deduction claimed towards stamp duty Page No. 7

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited paid on demerger of units which shows non application of mind by the AO to the facts in the right perspective of specific provisions of section 35DD of the Act. Therefore, we are of the considered view that there is no merit in the contention of the assessee that reopening is made on the basis of mere change of opinion. Though the assessee has relied upon a plethora of judgments in support of its arguments, all the judgments referred to by the assessee are rendered under different facts. In most of the cases, the issue has been either examined by the AO in the original assessment proceedings or the assessee has fully disclosed all material facts necessary for completing the assessment. In this. case, on perusal of the facts, we find that the assessment order is silent on the application of mind by the AO to the correct facts in the light of the specific provisions of section 35DD of the Act. Therefore, we are of the view that it is not a case of mere change of opinion and hence, we reject the legal ground raised by the assessee". Further, Hon'ble Bombay High Court in the case of Indian Hume Pipe Company Limited v/s ACIT (2012) 348 ITR 0439) has elucidated that, for the purpose of First Proviso to Section 147 of the Income Tax Act, 1961, - Full and true disclosure of material facts u/s 148 means disclosures must be full and true and cannot be garbled or hidden in the crevices of the documentary material which has been filed by the assessee with AO. Therefore, in view of the above stated facts, I have reasons to believe that income to the tune of Rs. 42,03,02,962/- has escaped assessment within the meaning of the provisions of section 147 of the Act, for A.Y 2013-14 due to the failure on the part of the assessee to make the full and true disclosure of material facts.”

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited section 147. In this regard, it is stated that section 147 of the IT Act, empowers the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. It is pertinent to mention here that, Section 147 of the Act, does not require the AO to arrive at a final conclusion that the income of the Assessee had escaped assessment. All that is required at the stage of initiation of proceedings for reassessment is for the AO to form a reasonable belief on tangible material that the income of the Assessee has escaped assessment. In Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd.: 291 ITR 502, the Supreme Court has explained the above in the following words: - “Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion”. 4.2. It is settled position that the AO is not required to establish adequacy/sufficiency of material and escapement of income at the time of issue of notice u/s 148 of the Act. Woollen Mills Ltd. Vs. ITO [1999] (236 ITR 34) in which the court has held that there should be prima-facie some material on the basis of which the department could re-open the case and the sufficiency or correctness of the material is not a thing to be considered at this stage. 4.2.1 The reopening of assessment is valid in view of decision of Hon’ble Supreme Court in case of CIT vs. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) and Bombay high court in writ petition (L) No.3114 of 2014. Hon’ble Supreme Court in case of Kelvinator of India Ltd. (Supra) was of the view that the AO has power to reopen an assessment, provided there is “tangible material” to come to the conclusion that there was escapement of income from assessment. 4.3 The assessee’s contention with respect to the deductions claimed under section 35DD and under section 37 of the IT Act is also not acceptable on the grounds that although the documents/material, suggesting escapement of income, were available on records at the time of completion of assessment u/s 143(3) r.w.s 153C of the Act, the same were remained to be examined by the AO. Therefore, the case can be reopened on the basis of the materials available on record which are suggesting Page No. 9

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited escapement of income. In this regard, reliance can be placed on the order dated 11/08/2017 of the Hon’ble ITAT pronounced in the case of M/s Mahyco Seeds Limited. In this case, similar issue has came up for adjudication before the Hon’ble ITAT and the Hon’ble ITAT upheld the action of the AO of reopening the assessment proceedings stating that “though the assessee claims to have furnished necessary details before the AO at the time of original assessment, the records clearly indicate that the AO has not examined the issue of deduction claimed towards stamp duty paid on demerger of units which shows non application of mind by the AO to the facts in the right perspective of specific provisions of section 35DD of the Act. Therefore, we are of the considered view that there is no merit in the contention of the assessee that reopening is made on the basis of mere change of opinion. Though the assessee has relied upon a plethora of judgments in support of its arguments, all the judgments referred to by the assessee are rendered under different facts. In most of the cases, the issue has been either examined by the AO in the original assessment proceedings or the assessee has fully disclosed all material facts necessary for completing the assessment. In this case, on perusal of the facts, we find that the assessment order is silent on the application of mind by the AO to the correct facts in the light of the specific provisions of section 35DD of the Act. Therefore, we are of the view that it is not a case of mere change of opinion and hence, we reject the legal ground raised by the assessee”. Further, Hon’ble Bombay High Court in the case of Indian Hume Pipe Company Limited v/s ACIT [(2012) 348 ITR 0439] has elucidated that, for the purpose of First Proviso to Section 147 of the Income Tax Act, 1961, - Full and true disclosure of material facts u/s 148 means disclosures must be full and true and cannot be garbled or hidden in the crevices of the documentary material which has been filed by the assessee with AO. 4.3.1 The assessee in its return of income, filed for A.Y.2013-14, had claimed deduction of Rs. 45,04,25,465/- u/s 35DD of the Act. The said deduction was claimed by the assessee as being on account of the expenditure incurred towards merger of M/s Samruddhi Cement Limited (hereinafter referred to as SCL) with the assessee company. The assessee’s claim was not disturbed while passing the assessment order u/s 143(3) r.w.s 153C of the IT Act. However, on examination of the assessment records, it is seen that the deduction of Rs.45,04,25,465/- claimed u/s 35DD of the Act, is comprised of Rs.17.99 crores relating to the amalgamation of M/s SCL with the assessee company M/s UCL and Rs.27.05 crores relates to the one-fifth amortized expenditure for demerger from M/s Grasim Industries Limited (hereinafter referred to as GIL), in the Assessment Year 2010-11. M/s SCL, on demerger from M/s

Page No. 10 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited GIL had availed of two amortized amounts of Rs.27.05 crores, being one-fifth of the expenditure incurred for demerger and amalgamation thereafter with the Assessee Company M/s UCL, on which Rs.1 crore has been claimed (Rs.27.05 crores is inclusive of Rs.20 lakhs viz. 1/5th of Rs.1 crore). In effect the Assessee Company i.e. UCL has claimed apportioned amortized expenditure of Rs.27.05 crores relating to the demerger of SCL from GIL, and further expenditure incurred for amalgamation of SCL with UCL, after two years. 4.3.2 Section 35DD of the Act, was inserted by the Finance Act, 1999 (which is effect from 01/04/2000) to provide for amortization of expenditure incurred for the purpose of amalgamation and demerger. It reads as under – Amortisation of expenditure in case of amalgamation or demerger. 35DD. (1) Where an assessee, being an Indian company, incurs any expenditure, on or after the 1st day of April, 1999, wholly and exclusively for the purposes of amalgamation or demerger of an undertaking, the assessee shall be allowed a deduction of an amount equal to one-fifth of such expenditure for each of the five successive previous years beginning with the previous year in which the amalgamation or demerger takes place. (2) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under any other provision of this Act. A plain reading of the provision of the above Section of the Income Tax Act, 1961, provides for any expenses incurred towards amalgamation or demerger shall only be available to the Assessee company which actually incurs these expenses on this account and it is not available to the successor company, like 35D of the Income Tax Act, 1961, wherein such eligibility has been expressly provided for. By contrast, in the provisions of Section 35DD of the Income Tax Act, 1961, there is a complete absence of provision for such benefit. Therefore, by applying the Principles of General Clauses Act, until and unless provided for specifically by the Act, the absence of such provisions, disentitles the Assessee Company to avail the benefit on this account. 4.3.3 In the instant case under consideration, the expenses claimed as allowable u/s 35DD of the Act, are inclusive of the expenses incurred by M/s SCL for the purpose of its demerger from M/s GIL. Therefore, the assessee’s claim of deduction to the extent of Rs.27,05,29,884/- is not correct and accordingly not allowable u/s 35DD of the Act, for the following two reasons:- The expenses to the tune of Rs. 27,05,29,884/- (being 1/5 of the demerger expenses) were incurred by M/s SCL.

12. Aggrieved, the assessee challenged the reassessment order before the Ld.CIT(A) both on merits as well as on the validity of reopening. The Ld CIT(A) upheld the action of the Assessing Officer on validity of reopening as well as on issues related to disallowance of claim u/s 35DD Page No. 12

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited and expenditure incurred for IPL ticket purchase and meet and greet. As regard the expenditure incurred on assets not owned but claimed as revenue expenditure, the Ld.CIT(A) has partly allowed assessee’s appeal by directing to treat few expenditures as purely revenue expenses and few other as deferred revenue expenses to be spread over a period of five (5) years.

14. Considered the rival submissions and material placed on record. At the outset, we find that the notice issued u/s.148 is dated 31.03.2019 which is admittedly issued beyond a period of four years from the end of the relevant assessment year. Hence, the proviso to Section 147 would come into operation requiring the Assessing Officer to prove that there has been failure on the part of the assessee to make full and true disclosure of the material facts. Any failure on account of assessee in making full and true disclosure needs to be clearly stated in the reasons recorded for reopening by the tax authorities. The Ld.AR of the assessee has emphasised that the reasons recorded by the Assessing Officer nowhere indicates any failure committed by the assessee with regard to Page No. 13

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited disclosure of full and true facts in the course of original assessment proceedings. Accordingly, it was urged that the reassessment order should be held as bad in law and should be quashed on this count itself.

15. The Ld.AR invited the attention of the Bench towards Computation of Total Taxable Income and notes to the return of income filed with the Assessing Officer immediately after filing original return of income. In the notes so filed, the assessee has categorically provided a detailed working and explanation relating to the amount claimed as deduction u/s. 35DD of the Act. The relevant extract of notes to the original return of income is reproduced below: - “Erstwhile SCL had incurred expenses on demerger (Stamp duty etc.) of Rs.131,16,29,000/- during FY 2009-10, adjusted out of general reserve. The erstwhile Company has claimed 1/5th deduction of such expenditure for each of the two-consecutive year/period (FY 09-10 & FY 10-11) before it got amalgamated with the Assessee Company. Further in relation to demerger, the erstwhile SCL had also incurred expenditure amounting to Rs.2,50,80,368/- during FY 09-10 & Rs. 59,40,049 during FY 10-11, which was debited to P&L account, the erstwhile company has disallowed the said expenditure in its Return of Income pertaining to above periods. Out of aforesaid expenditure of Rs.2,50,80,368/-, erstwhile SCL had already claimed deduction of 1/5th of such expenditure, for two consecutive years, i.e. (for FY 09-10 and FY 10-11 of Rs.1,00,32,147/-) before it got amalgamated with Assessee Company. Further, out of the expenditure of Rs.59,40,049/- erstwhile SCL had already claimed deduction of 1/5th for one year i.e. (for FY 10-11 of Rs. 11,88,010/-) before it got amalgamated with Assessee Company. Page No. 14

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited Based on the above facts, the Assessee Company has claimed the rest of the deduction of Demerger Exp. (1/5th each year) from second / third year onwards….”

16. Further, Ld.AR brought to our notice the revised return of income filed by the assessee wherein the claim of deduction u/s. 35DD of the Act was revised. The assessee had again filed notes to return of income with regard to such revised claim along with the basis for making such additional claim vide letter dated 31.12.2014.

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ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited on records during the original assessment proceedings. The relevant extract of the reasons is reproduced below:

“Although the documents / materials, suggesting escapement of income, were available on records at the time of completion of assessment u/s 143(3) r.w.s. 153C of the Act, the same were remained to be examined by the AO. Therefore, the case can be reopened on the basis of the materials available on record which are suggesting escapement of income….”

Page No. 16 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 20. Further, in the case of New Delhi Television v. DCIT [(2020) 116 taxmann.com 151 (SC)], has held that reopening of the assessment beyond four years is bad in law when the tax payer has disclosed the facts at the time of original assessment proceedings and the Assessing Officer did not draw any adverse inference regarding the same. The observations of the Hon'ble Supreme Court is as under: "24. Coming to the second question as to whether there was failure on the part of the assessee to make a full and true disclosure of all the relevant facts, the case of the assessee is that it had disclosed all facts which were required to be disclosed.

26. Even before the assessment order was passed on 03.08.2012, the assessing officer was aware of the entities which had subscribed to the convertible bonds. This is apparent from the communication dated 08.04.2011. The case of the revenue is that the assessee did not disclose the amount subscribed by each of the entities and furthermore the management structure of these companies. We are not in agreement with this submission of the revenue. It is apparent from the records of the case that the revenue was aware of the entities which subscribed to the convertible bonds. It has been urged that these are bogus companies, but we are not concerned with that at this stage. The issue before us is whether the revenue can take the benefit of the extended period of limitation of 6 years for initiating proceedings under the first proviso to Section 147 of the Act. This can only be done if the revenue can show that the assessee had failed to Page No. 17 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited disclose fully and truly all material facts necessary for its assessment. The assessee, in our view had disclosed all the facts it was bound to disclose. If the revenue wanted to investigate the matter further at that stage it could have easily directed the assessee to furnish more facts.

31. The revenue now has come up with the plea that certain documents were not supplied but according to us all these documents cannot be said to be documents which the assessee was bound to disclose at the time of assessment. The main ground raised

by the revenue is that the assessee did not disclose as to who had subscribed what amount and what was its relationship with the assessee. As far as the first part is concerned it does not appear to be correct. There is material on record to show that on 08.04.2011 NNPLC had sent a communication to the Deputy Director of Income Tax (Investigation), wherein it had not only disclosed the names of all the bond holders but also their addresses; number of bonds along with the total consideration received. This chart forms part of the assessment orders dated 03.08.2012 in the case of M/s.NDTV Labs Ltd. and M/s. NDTV Lifestyle Ltd. The said two assessment orders were passed by the same officer who had passed the assessment order in the case of the assessee on the same date itself. Therefore, the entire material was available with the revenue.

32. A number of decisions have been cited as to what is meant by true and full disclosure. It is not necessary to multiply decisions, as law in this regard has been succinctly laid down by a Constitution Bench of this Court in Calcutta Discount Co. Ltd. vs. Income tax Officer, Companies District I, Calcutta and Another, wherein it was held as follows : "(8)...The words used are "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year". It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In Page No. 19

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise -- the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. Thus, when a question arises whether certain income received by an assessee is capital receipt, or revenue receipt, the assessing authority has to find out what primary facts have been provided, what other facts can be inferred from them, and taking all these together, to decide what the legal inference should be. (9) There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income-tax Officer might have discovered, the Legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example -- "I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account books and the documents." His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment." Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them -- including particular entries in account books, particular portions of documents and documents, and other

Page No. 20 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. (10) Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else -- far less the assessee - - to tell the assessing authority what inferences -- whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences -- whether of facts or law -- he would draw from the primary facts. (11) If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn?" A careful analysis of this judgment indicates that the Constitution Bench held that it is the duty of the assessee to disclose full and truly all material facts which it termed as primary facts. Nondisclosure of other facts which may be termed as secondary facts is not necessary. In light of the above law, we shall deal with the facts of the present case.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited subsequent to the assessment order, and we have already dealt with the same while deciding Issue No.1. However, that cannot lead to the conclusion that there is nondisclosure of true and material facts by the assessee."

Page No. 23 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited “13. On the aforesaid touchstone, re-adverting to the facts of the case, first and foremost, it is imperative to note that the reasons recorded for the proposed reopening are conspicuously silent on the aspect that the income escaped assessment on account of failure to make full and true disclosure of all material facts relevant for the assessment, by the assessee. An assertion that the petitioner suppressed facts is singularly lacking. What accentuates the situation is the fact that after initial scrutiny assessment under section 143(3) of the Act, 1961, the petitioner preferred an appeal before CIT [A] and thereafter pursuant to the order passed by CIT [A], the assessment was finalized on 26th April 2007. In this context, the assertion of the petitioner that it had furnished explanation and submitted documents in response to the multiple notices at the stage of initial assessment could not be controverted. To add to this, in the reasons for the proposed reopening, there is not a whisper about the non-disclosure on the part of the petitioner. Since the assessment order was sought to be reopened beyond four years and post-assessment under section 143(3) of the Act, 1961, failure to demonstrate that there was a failure on the part of the petitioner to make a true and full disclosure of all material facts, erodes the legality of the exercise of power under section 147 of the Act, 1961.

Page No. 24 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited turnover of 10A is to be excluded therefrom. According to the Assessing Officer, the choice of the second method by the department resulted in escapement of income as excess DIT relief to the extent of Rs. 3,67,31,204/- had been allowed. This inference is a classic example of change of opinion as it is rooted in expediency of exercise of one option over another.

“In the present case also, it appears that though the assessee may have submitted before the Assessing Officer, namely before DCIT Circle 2(2) Mumbai, while filing the Return of Income, as to how deduction u/s 35DD was being claimed by it, however later the jurisdiction of the case was transferred to Central Circle 1(4) Mumbai and therefore it is not clear whether this letter was in notice of the AO or was available on his record while passing the order u/s 153C of the Act, which was later reopened by the AO u/s 148. It is not quite clear that any such evidence was filed at the time of assessment proceedings and therefore this particular evidence, may not have been actively before the Assessing Officer and therefore could not be considered by him. Thus the then Assessing Officer failed to apply his mind to the same and may not have considered the relevant facts contained in these letters.”

Page No. 25

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 25. In this regard, Ld.AR made a reference to various additions made in the assessment order passed by the Assessing Officer u/s 153C wherein the Assessing Officer had referred to the notes to return of income which were filed by the assessee. Further, the Ld.AR also drew our attention to the copy of letter dated 28.12.2015 filed with the Assessing Officer who has passed the order u/s 153C of the Act, wherein the assessee had again submitted the copies of notes to original and revised return of income. It is clear from the above that allegation of the Ld.CIT(A) has no legs to stand. Even otherwise, if there was any doubt the Ld.CIT(A) could have called for the information from the Assessing Officer himself. In our view, he has brought in his scepticism to decide on a very important issue which for a quasi-judicial authority is not the correct approach.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited the Supreme Court in CIT V/s. Kelvinator of India Ltd. [2010] 320 ITR 561(SC) that the Assessing Officer has a power only to reassess and has no power to review the assessment order. Thus, it held that no re-opening notice can be issued which is premised on a change of opinion. It further goes on to hold that before interference with a proposed reopening of the assessment, the Court should verify whether the assessment order made earlier has expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. In fact, in this case we find that the assessment orders passed in regular assessment proceedings do refer to examining the computation of income filed alongwith the Return of Income. Moreover, the Assessment order in regular assessment proceedings in terms disallowed some of the claims made for deduction under Section 143(3) of the Act. Therefore, in the present facts, we are prima-facie of the view that, the Assessing Officer has by necessary implication allowed the claim. Moreover, the basic document for completing the assessment under Section 143(3) of the Act is the computation of income. Therefore, to the extent the claims made for deduction in the computation of come, were disallowed by the Assessing Officer, discussion on the same is found in the assessment order. It is an accepted position that the assessment orders would necessarily deal only with the claims being disallowed and not with the claims being allowed. This is for the reason as observed by the Gujarat High Court in CIT Vs. Nirma Chemicals Ltd 309 ITR 67, that if the Assessing Officer was to deal with all the claims which were to be allowed in the assessment order, the result would be an epictome. This is so, as it would cast an impossible burden upon the Assessing Officer considering his workload and the period of limitation. There was also no reason in the present facts for the Assessing Officer to ask any queries in respect of this claim of the petitioner, as the basic document viz. computation of income at note 21 (Assessment Year 2013-14) and note 22 (Assessment Year 2014-15) thereof explained the basis of the claim being made to the satisfaction of the Assessing Officer. Thus, it must necessarily be inferred that the Assessing Officer has applied his mind at the time of passing an assessment order to this particular claim made in the basic document viz. computation of the income by not disallowing it in proceedings under Section 143(3) of the Act as he was satisfied with the basis of the claim as indicated in that very document. Therefore, where he accepts the claim made, the occasion to ask questions on it will not arise nor does it have to be indicated in the order passed in the regular assessment proceedings. Thus, issuing the impugned notices on the above ground would, prima-facie, amount to a change of opinion.” (Emphasis supplied).

Page No. 27

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 27. Further, we note that as required under the proviso to section 147 of the Act, the reasons recorded by the Assessing Officer absolutely indicate nothing as a failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. The reasons recorded by the Assessing Officer, a copy of which is provided to the assessee is the basic document through which the Assessing Officer communicates about the basis on which he has reopened the assessment. If there is no indication about the failure on part of assessee to disclose material facts in the reasons, it can be inferred that there is none. It is well settled that the reasons recorded by the Assessing Officer should speak for itself. The Hon’ble Jurisdictional High Court in the case of Hindustan Unilever Ltd. v. ACIT [268 ITR 332 (Bom)] has held as under: -

“20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear Page No. 28

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the court, on the strength of the affidavit or oral submissions advanced.”

28. On the other hand, the Ld.DR in his defence relied upon the newly inserted Explanation (1) to section 147 of the Act to put across an argument that subsequent to the insertion of the said Explanation, reassessment is valid even on the basis of material already available on record. It is observed that the Assessing Officer and Ld.CIT(A) also placed reliance on the said explanation. In our view, the provisions of said Explanation (1) to section 147 is reproduced below for reference.

“Explanation – 1:-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.”

Page No. 29

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 29. The above Explanation was considered by the Hon’ble Jurisdictional High Court in case of Rajbhushan Omprakash Dixit v. DCIT [264 taxman 222]. The court’s observation vis-à-vis, validity of reassessment proceeding on the material available on records is as under: -

“As per this Explanation thus, production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the first proviso to Section 147. Here is not a case where the Assessee is seeking to rely on a disclosure which the Revenue can seek to bring within the fold of the said Explanation. Here is a case where the Department already had collected certain documents and materials which were before the Assessing Officer at the time of framing assessment. If the Assessing Officer did not, for some reason, advert to such material or did not utilize the same, he surely cannot allege that the Assessee failed to disclose truly and fully all material facts.”

30. Similarly, the Hon’ble Delhi High Court in case of Ranbaxy Laboratories Ltd v. DCIT 351 ITR 23 dealt with the Explanation 1 to section 147 of the IT Act and observed as under: -

“13. Mr Maratha appearing on behalf of the respondents, vehemently supported the re-opening of the assessment in respect of the assessment year 2003-04 and submitted that there was failure on the part of the assessee to fully and truly disclose all material facts which were necessary for assessment. He strongly relied upon the 4th reason, that is, of club expenses by stating that the assessee had not disclosed this at the time of the assessment. On a pointed query, Mr Maratha could not show as to which particular information or material fact had not been disclosed by the assessee at the time of the original assessment proceedings. Page No. 30

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited He only sought to place reliance on Explanation 1 to Section 147 which reads as under:- "Explanation 1: Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso." However, we do not see as to how Mr Maratha could place reliance on the said Explanation. Insofar as all the purported reasons other than the reason pertaining to club expenses are concerned, specific queries had been raised and the Assessing Officer had considered the material placed by the petitioner before him. As regards club expenses, Mr Maratha states that since no specific query had been raised, Explanation 1 would get triggered. We do not agree with this submission. This is so because the club expenses were specifically mentioned at serial No. 17(d) of the tax audit report in Form No. 3CD which was annexed along with the return. This was a clear statutory disclosure on the part of the assessee with regard to the claim of club expenditure. It was not a piece of evidence which was hidden in some books of accounts from which the Assessing Officer could have possibly, with due diligence, discovered the same. On the contrary, this was material which was placed before the Assessing Officer along with the return which the Assessing Officer was duty bound to go through before completing the assessment. Clearly this does not fall in the category of material which is referred to in Explanation 1 to Section 147 of the said Act.”

Page No. 31

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 32. Further, it is also noted that while passing the order for disposal of the objection raised by the assessee the Assessing Officer had relied upon the decision of the Hon’ble Supreme Court in case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. [291 ITR 502] in support of the argument that all that is required for the Assessing Officer is to form a reasonable belief on tangible material that the income of the assessee has escaped assessment.

33. In the case before the Hon’ble Supreme Court, the original assessment was completed u/s.143(1) of the Act and thereafter the assessment was reopened. Despite no regular assessment, the Hon’ble Supreme Court specifically observed that even if the reassessment has been made in respect of assessment originally completed u/s.143(1) of the Act, the necessary ingredients of Section 147 of the Act with regard to availability of tangible material which leads the Assessing Officer to form a belief that income of the assessee has escaped assessment, should be present. Hence, this decision would not advance the case of the revenue and in-fact strengthens the case of the assessee.

Page No. 32

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited [236 ITR 34 (SC)] is ill placed since in the said decision also it has been held that there was some prima-facie material with the department on the basis on which reassessment was initiated. The Hon’ble Court held that the sufficiency or correctness of the material is not a thing to be considered at the stage of reassessment. In the present case, there is no prima facie material placed on records by the Assessing Officer. A perusal of the assessment framed u/s 143(3) r.w.s 147 of the Act shows that there is not even a whisper of non-disclosure of any material facts. There is no reference to any new fact or any new material which came to light of the Assessing Officer after framing of the original assessment order. In fact, adverse inference has been drawn only from the material which, were very much available on the records. These glaring facts make the decisions relied upon by the Ld.DR is distinguishable.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 36. In the case before the Hon’ble Bombay High Court, the assessee had made a claim of exemption u/s.54EC of the Act in the computation of income but the date on which the amounts were invested were not mentioned anywhere in the records furnished with the Assessing Officer which are critical for determining the eligibility since the investments were required to be made within the prescribed time frame. The assessment order also did not deal with the said aspect. In this factual background of the case, the Hon’ble High Court had held that there was a complete failure on the part of the assessee to disclose fully and truly material facts that were necessary for conclusion of the assessment. There is no such observation made by the Assessing Officer in the instant case before us. Hence, this decision relied on by the tax authorities is distinguishable on facts.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited The High Court also observed that the Assessing Officer must satisfy the twin condition of information or material in his possession and the extent of disclosure of primary facts by the assesse.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited for the relevant assessment year had escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts. The Income tax officer had all the material facts before him when he made the original assessment. He cannot now take recourse to Section 147(a) to remedy the error resulting from his own oversight.”

Page No. 36

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 41. In this connection, it is worth noting the decision of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (320 ITR 561) wherein it was held that the Assessing Officer cannot proceed to reopen the assessment on the basis of mere change of opinion. The Hon'ble Supreme Court held as under:

"... Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' failing which we are afraid Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion', which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re-assess. But re- assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion' is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion' as an in- built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material ' to come to the conclusion that there is escapement of income from assessment. Reasons must have a link with the formation of the belief." The Hon’ble Court further observed as under: “Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words ‘reason to believe’ but also inserted the word ‘opinion’ in section 147. However, on receipt of representations from the companies against omission of the words ‘reason to believe’, the Parliament reintroduced the said expression and deleted the word ‘opinion’ on the ground that it would vest arbitrary powers in the Assessing Officer." The Delhi High Court in CIT vs. Kelvinator of India Limited [2002] 256 ITR 1 (Del.) [decision affirmed by the Supreme Court in [2010] 320 ITR 561 (SC)] held that if two interpretations are possible, the interpretation which upholds constitutionality, it is trite, should be Page No. 37

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited favoured. In the event it is held that by reason of section 147 if the ITO exercises his jurisdiction for initiating a proceeding for reassessment only upon a mere change of opinion, the same may be held to be unconstitutional. We are therefore of the opinion that section 147 of the Act does not postulate conferment of power upon the A.O. to initiate reassessment proceeding upon his mere change of opinion. If "reason to believe" of the A.O. is founded on an information which might have been received by the A.O. after the completion of assessment, it may be a sound foundation for exercising the power under section 147 read with section 148 of the Act. An order of assessment can be passed either in terms of sub-section (1) of section 143 or sub-section (3) of section 143. When a regular order of assessment is passed in terms of the said sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act, 1872, judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong.

Page No. 38

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited presumption during original assessment, do not warrant the initiation of a proceeding u/s 147 of the Act.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited wherein it has been held that the opinion of the Audit Party on a point of law cannot be regarded as "information" within the meaning of Section 147(b) of the Act, for the purpose of reopening an assessment. This view has been also confirmed in various other decisions viz. i. CIT v/s Lucas T.V.S. Limited. 249 ITR 306 (SC), ii. Indian & Eastern Newspaper Society v/s. CIT 119 ITR 996 (SC), iii. Vijaykumar M. Hirakhanawala HUF v/s ITO 287 ITR 443 ( Born.), iv. Reckitt Benckiser Healthcare India P. Ltd v/s. DCIT 74 Taxmann.com 260, v. Adani Exports v/s DCIT 240 ITR 224 (Guj.), vi. Rajalakshmi Textile processors ltd, v/s. CIT 235 ITR 178 (Mad.), vii. CIT v/s Ram Mangatrarn 312 ITR 100 (P & H), and viii. Waldies Ltd v/s. ITO 246 ITR 29 (Cal.).

Page No. 40

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited Company from 01.07.2010 had incurred certain expenses in relation to its demerger from Grasim Industries Limited in the year 2009-10. Such expenditure was disallowed in the respective return of income by SCL and only 1/5thportion was claimed in accordance with provisions of section 35DD of the Act for that year. The expenses incurred on demerger is allowable as deduction equally over a period of 5 years. Out of eligible 5 year of claim for such expenditure, SCL had made claim in initial two years of its existence and thereafter it got amalgamated with the assessee Company. The balance claim of 1/5th expenditure is being made by the assessee in its return of income starting from AY 2012-13

Page No. 41

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited such claim in the hands of the resulting company similar to that u/s 35D of the Act, no such benefit can be allowed in the hands of the resulting company i.e. the assessee.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited into shoes of the predecessor and hence the condition of income being offered in earlier year gets satisfied.

Page No. 43

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 53. In this regard our attention was drawn to the decision of the Chennai Tribunal in case of ACIT v. Caplin Point Laboratories in order dated 31.01.2014 in ITA No.667/ MDS/ 2013. The ITAT in this case has held that MAT credit will be available to the assessee despite no express provision for the same in section 115JAA of the Act. The relevant findings of the ITAT is as under:

“…. Ld. CIT(Appeals) after considering the submissions of the assessee and by following the decision of the ITAT in the case of M/s. Ranganathan Industries Private Limited v. Addl. CIT in 2004 vide order dated 30.11.2007, in which it has been held has under: "Upon a careful consideration of the issue we find that, after amalgamation, the assessee company is entitled to all the assets, claims, etc. of the erstwhile company, which is also supported by Hon'ble High Court order in this regard. Further, when the assessee company is now being assessed in place of erstwhile company and the TDS credit pertaining to the erstwhile company is being given credit to the assessee company, there is no reason why a different treatment should be given to the MAT credit available pertaining to the erstwhile company. We do not agree with the learned Commissioner of Income Tax (Appeals) that there is need for specific mention in this regard in Section 115JAA as the Carry forward of MAT credit of erstwhile company by amalgamated company is in-built in the scheme of amalgamation as well as the scheme of MAT credit. Hence, we set aside the order of learned Commissioner of Income Tax (Appeals) in this regard and decide the issue in favour of the assessee. "

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 54. The Ld.AR pointed out that the aforesaid view has been confirmed by various Tribunal holding that there is no specific restriction under the law barring the resulting company to claim MAT credit, the same should be available to the resulting company despite no specific provision to this effect in the Act. Few decisions in which the above stand has been confirmed are as under: i. Ambuja Cement Limited vs. DCIT, of 2018 (Mum Tribunal) vide order dated 17 June 2019 ii. Adani Gas Ltd. vs. ACIT, ITA No.2241 of 2011 (Ahd Tribunal) iii. Skol Breweries Ltd. vs. ACIT, ITA No.2313 of 2017 (Mum Tribunal)

Page No. 45

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited specific provisions in other sections to entitle the amalgamated company to claim the deductions to which the amalgamating company was entitled to and such language is missing in section 43B of the Act. The Ld. DRP concurred with the view of the Assessing Officer. The Tribunal while deciding this issue has referred to the scheme of the amalgamation approved by the relevant High Court wherein it was provided that all debts, liabilities, contingent liabilities, duties, obligations and guarantees of the Amalgamating companies shall be taken over by the Assessee, the MAT credit being an asset of the earlier company would be available to the assessee at its disposal for utilization.

Page No. 46

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited under the Act. The law laid down by the Hon'ble High Court, in the scheme of demerger would apply as operation of law. In this regard, the Kolkata Tribunal in the case of Electrocast Sales India Ltd. v. DCIT [2018] 170 ITD 507 (Kol.), has held as under:

“4.4 We find that the scheme of amalgamation would be approved by the Hon'ble High Court only after ensuring that the same is not prejudicial to the interests of its members or to public interest. Hence the merger scheme approved by the Hon'ble High Court having in mind the larger public interest, cannot be disturbed by the revenue merely because the assessee is not entitled for benefits u/s 72A of the Act. …. Hence it could be safely inferred that the Court would exercise due diligence and would conduct detailed enquiries before sanctioning the scheme. A scheme formulated for the purposes of tax evasion cannot be held to be in 'public interest' and hence the same cannot be sanctioned under the provisions of Companies Act, 1956. The fact that the Hon'ble Calcutta High Court had accorded its sanction to the scheme of amalgamation in the assessee's case implies that the same had been done by considering representations from the various fields and by duly considering the tax evasion point for income tax purposes. 4.4.1 Further we find that the provisions of section 394A of the Companies Act, 1956 reads as under:— Notice to be given to Central Government for applications under sections 391 and 394 - The court shall give notice of every application made to it under section 391 or 394 to the Central Government, and shall take into consideration the representations, if any, made to it by that Government before passing any order under any of these sections. Hence if there be any objections for the income tax department, they could raise the same at that stage i.e. prior to sanction of scheme by the court. Once the scheme is approved, it implies that the same has been done after duly considering the representations from the Government / revenue.”

Page No. 47

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 59. In the present case also, it is noted that the Scheme of Amalgamation specifically provides that all the tax benefits and exemptions shall be available to the amalgamated company i.e. the assessee. There cannot be any doubt that the Hon’ble High court had followed the normal procedure to call for and address any objection of the tax authorities on any of the content of the Scheme. Accordingly, since the Scheme is approved by the Hon’ble High Courts of Bombay and Gujarat, the objection raised by the authorities now cannot be approved.

The assessee had incurred certain expenditure which results - in coming into existence of a capital asset for which the assessee does not get the ownership The case of the assessee is that such expenditure has to be - incurred purely because of business expediency

Page No. 48

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited The assessee has claimed such expenditure as revenue - expenditure as per the provisions of section 37(1) of the Act The assessee has placed on records agreement with - respective parties for incurring such expenditure.

Construction of supply line and plant for supply of power- - An agreement was reached with M.P. Poorv Kshetra Vidyut Vitaran Company Ltd. (MPPKVVCL) for construction of supply line for uninterrupted supply of required power based on the understanding that the supply line and plant shall be owned by electric supply company. Cement manufacturing is a power intensive process and hence obtaining assurance for uninterrupted power supply augments the purpose of business. Cost of transmission supply line and related equipment – The - Assessee entered into agreement with power supply company Dakshinanchal Vidyut Vitaran Nigam Ltd. (DVVNL) through Electricity Distribution Division (E.D.D-III) for laying down of transmission supply line and related equipment for Page No. 49

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited supply of power – With the arrangement, the Company ensured receiving uninterrupted supply of required power. Rehabilitation expenses of Mohanpura village – The assessee - purchased land of Mohanpura village which was in the area under mining lease granted to the assessee company. As a result the villagers of Mohanpura village were required to be rehabilitated. The assessee company constructed a new school, temple, chopal & toilets etc. at the new location and handed over these assets to the village panchayat. Expenses incurred on installation of fenders at Jetty – As per - the notification issued by Gujarat Maritime Board (GMB) and communication between assessee and authorities of GMB, the responsibilities of maintenance and repair of jetty along with structures required its plant at Kovaya, Gujarat were to be taken care by the assessee. In order to protect the jetty from damage that may arise due to movement of ship and tugs, D type rubber fenders were installed surrounding the jetty by the assessee. Such Jetty is owned by the Gujarat Maritime Board but used by the assessee for its captive use for imports and exports.

Page No. 50

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited Expenses incurred on setting up of Fly ash handling system - at Bellary Thermal power station (BTPS) under Karnataka Power Corporation Ltd. (KPCL) - The assessee had set up a Fly ash handling system for efficient collection of Fly ash generated from power station. Such Fly ash is used as a raw material in the cement manufacturing process. With the Flyash handling system, the assessee has ensured smooth and constant supply of this essential raw material from KPCL. In this arrangement as well, the ownership of the assets remains with BTPS and KPCL. Expenses incurred on civil pavement work etc. at Truck - Tailor Yard – Assessee had entered in to a lease agreement with cement transport association for allowing parking of transporters vehicle on their plot of land known as Truck Trailor yard. During the year, the assessee incurred expenditure for levelling of surface of such yard along with expenditure on building concrete road, constructing office for transporters, boundary wall etc. for the amenities to be provided to truck drivers. This ensured smooth movements of its goods to and from the factory premises.

Page No. 51

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited Expenses incurred on installation of 1500 KVA HT power line - – Assessee entered into agreement with Cochin Port Trust (CPT) for receiving power supply on the understanding that the assessee will construct and pay the required cost of supply line which shall be owned by CPT.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assesse's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case..."

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited to the assessee. Moreover, it was only a part of the cost of construction of these roads that was contributed..."

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited were laid for that Beneficiation Plant as has been pointed out by the Tribunal in its order. Once the purpose of the Beneficiation Plant is properly understood, it is obvious that the advantage consisted merely in facilitating the conduct of the assessee's business and enabling the assessee to carry on its business more efficiently or more profitably, but the capital, in the sense of the block capital, was remaining untouched by the expenditure of this amount of Rs. 20.46 lakhs. Hence, in the commercial sense, it was not an advantage in the capital field. Since it left the fixed capital of the assessee employed for the main business of mining untouched and the advantage was not in the capital field, it could not be said to be an expenditure of a capital nature. As we have pointed out, while arriving at this conclusion, we are prepared to proceed on the footing that the advantage which the assessee-company got was an advantage of an enduring nature, but applying the test culled out by the Supreme Court in Empire Jute Co.'s case [1980] 124 ITR 1, it is obvious that, in spite of the presumption, it can be held on the facts and circumstances of this case that the expenditure was not of a capital nature but was of a revenue nature."

Page No. 55

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited “Here, the bridge is one, which is built across the river. The bridge is not owned by assessee. It is built by the government, and the assessee does not acquire any rights of ownership over the bridge in the short-term or in the long run by reason of the contribution that it agreed to pay towards the construction of the bridge. So far as the assessee is concerned, the payment made is an outgo in return for which it receives no addition to the value of any of the assets owned by it. The bridge merely facilitates the movement of the workmen to gain access to the assessee's factory and to return home, and also for the movement of the goods over the bridge. The facts of this case are such as to bring it within the ratio of the decision in the case of L. H. Sugar Factory and Oil Mills (P) Ltd. v. CIT, (1980) 125 ITR 293 (SC). We, therefore, do not see any justification for calling for a reference. The Tribunal has rightly held that the amount is to be treated as revenue expenditure. The assessment year is 1991-92. The petitions are dismissed."

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited municipality, and the assessee-company, whereby the Company undertook, firstly, to supply water to municipality and provide water pipelines, secondly supply electricity for street lighting and put up a transmission line therefor, and thirdly, to concrete the main road from the factory to railway station. Based on the facts, the Hon’ble Apex Court observed that expenditure laid out by the assessee has not resulted in bringing into existence any capital assets for the Company. It was, thus, held that the expenditure was revenue in nature and deductible in computing the profits of the company.

i. CIT vs. Sociedade De Fomento Industrial Pvt. Limited (123 taxmann.com 38) Bombay High Court ii. CIT vs. Salgaocar Mining Industries Limited (108 taxmann.com 116) Bombay High Court

Page No. 57

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 74. The assessee incurred such expenditure out of commercial expediency and such expenditure although resulted in the benefit of enduring nature but since the ownership of such assets never belonged to the assessee or will always remain with either such third parties or Government authorities, the expenditure was not on capital account.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited improve its business relations and therefore, it passes the test of commercial expediency. These expenses are essential for maintaining a healthy business relationship and advancement of the business objectives of the organisation.

“The assessee which is a private limited company is a distinct assessable entity as per the definition of "person" under Section 2(31) of the Act. Therefore, it cannot be stated that when the vehicles are used by the directors, "even if they are personally used by the directors" the vehicles are personally used by the company, because a limited company by its very nature cannot have any "personal use". The limited company is an inanimate person and there cannot be anything personal about such an entity”

Page No. 59

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 80. Considered the rival submissions and material placed on record, we observe from the record, the disallowance was upheld by the Ld.CIT(A) on the ground that the assessee has not furnished documentary evidence to prove that such expenditure was incurred for distributors, dealers and stockists and thus held that such expenses were personal in nature and incurred for family & friends. No evidences were placed on record to prove such an allegation.

Page No. 60

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 1778/Ahd/2016 dated 11.01.2022 wherein the Tribunal has observed that in order to maintain secrecy of the business of the assessee it is not incumbent for the assessee to disclose personal details of recipient of gift.

Page No. 61

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited i) Ground No.1 is general in nature and requires no adjudication. ii) Ground No. 2 relates to validity of reopening. The Assessing Officer in the case before us has not placed reliance on any new tangible material for framing the reassessment and the only material referred by the Assessing Officer is the assessment records of the assessee. We also fail to persuade ourselves to believe that while framing the original assessment order, the Assessing Officer did not look into the computation of total taxable income and relevant notes especially when details with respect to most of the additions made in the assessment order are flowing from the notes to return of income.

Further, regarding assets not owned which are claimed as revenue expenditure by the assessee, there was specific questionnaire issued by the Assessing Officer during the course of original assessment proceeding and a detailed submission was filed by the assessee in Page No. 62

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited support of its claim. With these facts on records, it cannot be said that there was a failure on the part of the assessee to disclose all or any material facts necessary to complete the assessment. iii) We concur with the arguments put forth by the Ld.AR and the position taken by the Hon’ble Jurisdictional High Court in case of SBI (supra). We are of the view that if the assessee provides all the information (including filing of computation and notes to computation) and the Assessing Officer refers to it while passing the assessment order without making any observations regarding the claim not disputed, it will be assumed that the Assessing Officer has applied his mind to those issues. iv) The facts present before us clearly indicate that the Assessing Officer had no new tangible material which formed the basis of reopening the assessment. The Assessing Officer has himself acknowledged the fact by stating as under Page No. 63

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited "although the documents/material, suggesting escapement of income, were available on records at the time of completion of assessment u/s 143(3) r.w.s. 153C of the Act, the same were remained to be examined by the Assessing Officer .” Thus, the only material referred by the Assessing Officer is part of the assessment records and hence this leads to the conclusion that there was no failure on part of the assessee to disclose fully and truly all material facts necessary for conclusion of assessment. v) In view of the above, we are of the view that once the relevant data / information / material is placed on records by the assessee with the Assessing Officer, it cannot be said that there was omission or failure on the part of the assessee to disclose fully and truly all material facts. If, therefore, based on same set of facts the Assessing Officer intends to reassess any income it will tantamount to change of opinion which is not allowed under the Act. vi) The Explanation 1 to section 147 of the Act does not enlarge the power of the assessing authorities to Page No. 64

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited review the assessment. It is a precautionary provision to discharge the assessee not to submit the relevant information in the garb of information which is difficult to review and take decision. Thus, when the assessee has submitted complete and clear details which are easy to review for the authorities, they cannot take recourse of the above explanation for their own wrong. They are expected to carry out their function diligently and regularly. Reliance on the decision in the case of Mahyco Seeds Limited v. DCIT (ITA No. 2235/Mum/2016) is therefore misplaced. vii) We are inclined to follow the judicial precedents of the Hon’ble Supreme Court and the Hon’ble jurisdictional High Court on the impugned subject to hold that the assumption of jurisdiction u/s 147 by the Assessing Officer, is based only on change of opinion, made without any tangible material that constituted new information and hence the reopening of assessment u/s 148 and consequential reassessment order passed u/s 147 is bad in law. Page No. 65

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 86. Even otherwise on the issues raised on merits in the reassessment, we have held as under: -

Page No. 66

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited Court) where the expenses incurred on installation on transmission lines were held as revenue in nature.

Page No. 67

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 93. Attention of the Bench in this regard was invited to the order of the Hon’ble Delhi High Court in case of CIT v. Adhunik Niryat Ispat Ltd in IT Appeal No. 2090 of 2010, wherein it has been held that when the grounds for reopening the reassessment do not exist any longer and no additions were ultimately made on that account, the addition in respect of the other items, which were not part of the " reasons to believe" cannot be made.Similar finding has been given by the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd v. CIT [(2011) 242 CTR 117 (Del)]. We are in agreement with this contention put forth by the Ld.AR.

Page No. 68

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited expenditure incurred in connection with assets not owned by the assessee either by treating the same as revenue expenditure or allowing the same as deferred revenue expenditure.

ASSESSMENT YEAR: 2014-15 (A.Y. 2014-15) – ASSESSEE APPEAL

“1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) [CIT(A)] erred in confirming the order passed by the learned Asst. Commissioner of Income-tax, Central Circle 1(4), Mumbai (DCIT) under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (IT Act). 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming that the reassessment was validly carried out by DCIT. despite the following:

Page No. 69 ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited No fresh facts or new material has been brought on - record evidencing escapement of income; Reassessment based on same set of facts as existing - in the original assessment, is nothing but mere change of opinion which is not permitted; Review of own assessment order is not permissible in - the reassessment proceedings; Reassessment proceedings based on audit objection - is not sustainable.

3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance made by DCIT in respect of the deduction claimed by appellant (being successor to amalgamating company) amounting to Rs.27,05,29,884 u/s 35DD of the IT Act pertaining to the amalgamation expenses incurred by the amalgamating company. The Learned CIT(A) erred in not appreciating that there is no restriction u/s 35DD for claiming such expenses and upon amalgamation, pursuant to the scheme approved by Hon'ble High Court, all assets and liabilities including any unexpired tax claim of amalgamating company were succeeded by appellant Company and appellant Company becomes eligible/ liable (as the case may be) for the same.

4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in treating following expenditure incurred on installing assets/contributing for installing assets on the premises of third party for which it does not get any ownership, as capital expenditure: Setting up of fly ash handling system at Thermal - Power Plant Chhabra Unit 3 & 4 under Rajasthan Rajya Vidyut Utpadan Nigam Limited amounting to Rs. 14,70,55,410; Construction of concrete pavement work near fly ash - silo at Harduaganj Thermal Power Station (Unit 8), Kasinpur under U.P. Rajya Vidyut Utpadan Nigam Limited amounting to Rs.38,08,220;

Page No. 70

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited Setting up of Fly ash handling system at Bellary - Thermal Power Station under Karnataka Power Corporation Limited amounting to Rs 70,75,959, Without prejudice to above, and in the alternative the learned CIT(A) ought to have directed the learned DCIT to allow depreciation on expenditure treated as capital in nature and erred in not adjudicating this separate ground raised by the appellant

5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance made by learned DCIT in respect of expenditure incurred towards purchase of IPL tickets, meet and greet expenses amounting to Rs.2,27,87,975 despite the fact that such expenditure was incurred to promote the goodwill of the appellant Company amongst the dealers/selling agents/business associates, which ultimately results in overall revenue growth of the appellant Company. The Appellant Company craves leave to add, alter, amend or delete the aforesaid grounds of appeal from time to time and upto the date of hearings.”

100. Ground no. 2 of the appeal relate to challenging the validity of reassessment.

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited absence of any new material, reopening of assessment on the basis of material already on record at the time of assessment would merely tantamount to change of opinion which is not allowed even within the period of four years. We apply the ratio of the decision in the case of Parveen P. Bharucha v. DCIT [(2012) 348 ITR 325 (Bom)] in this regard. Accordingly, we allow Ground no.2 of the assessee’s appeal and direct the Assessing Officer to delete the disallowance.

104. Ground no. 4 of the appeal relate to claim made by the assessee with respect to assessee’s claim towards expenditure incurred in Page No. 72

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited connection with assets not owned by the assessee by treating the same as revenue expenditure

106. Ground no. 5 of the appeal relate to claim made by the assessee for expenditure incurred towards purchase of IPL tickets, meet and greet expenses

Page No. 73

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited allow Ground No.5 of the assessee’s appeal and direct the AO to delete the disallowance.

(A.Y. 2014-15) – REVENUE APPEAL

1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in allowing the capital expenditure of Rs. 12,72,93,009/- incurred for capital assets at the premise of third party?

2. "Whether on the facts and in the circumstances of the case and in law, the nature and character of capital assets undergo change of usability from capital asset to revenue asset, if such capital asset is installed at the premise of third party for procurement of raw utilisation?" material and optimum 3. "Whether on the facts and in the circumstances of the case and in law, since the assessee did not prove ownership of any assets for the expenses incurred in power line transmission, would the decision of the Hon'ble Bombay High Court in CIT vs. Excel Industries Ltd. (1980) 122 ITR 995 be applicable to the assessee?

4. "Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in not treating the expenditure of Rs. 14,55,267/- incurred for Rehabilitation and Resettlement (R & R) as capital expenditure, ignoring the fact that such expenditure is directly attributable, inseparable and compulsory part for land acquisition for projects within the meaning of Government policies for land acquisition and that the assessee shall not have discretion to separately claim such expenses as revenue expenditure?

5. "The appellant craves leave to add, delete, alter, modify, rectify, substitute or otherwise any or all of the grounds of appeal at or before the time of hearing of the appeal”

Page No. 74

ITA NO. 1789 & 1466/MUM/2021 (A.Y: 2013-14) & 220/MUM/2022 (A.Y: 2014-15) M/s UltraTech Cement Limited 110. Ground no. 1 to 4 of the appeal relate to allowance of claim towards expenditure incurred in connection with assets not owned by the assessee either by treating the same as revenue expenditure or allowing the same as deferred revenue expenditure.

Order pronounced in the open court on 28th June, 2023.