DCM SHRIRAM LTD,NEW DELHI vs. ACIT, CIRCLE-7(1), NEW DELHI

ORDER PER MANISH AGARWAL, AM : These captioned appeals are filed by the Revenue and the assessee for various AYs. Since in all the appeals, certain issues are common therefore, these are decided separately by a common order for the sake of convenience and brevity.

S.No. Description of Specified Domestic Amount (Rs.) transactions 1. Purchase of finished goods (Fertilizers) 18,70,16,242 2. Interest paid on inter-corporate deposits/loan 13,40,391 3. Rental expenditure 4,28,13,157 4. Director’s Remuneration 13,08,54,514 5. Remuneration paid to relative of director 41,56,788 6. Director’s sitting fees 15,35,000 7. Commission paid to directors 1,29,49,000 8. Purchase of Goods (PVC Compounds) 5,57,003 Total 38,12,22,095

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 7. Aggrieved by the said order, the Revenue is in appeal before the Tribunal where the Revenue has taken following grounds of appeal- 1. “Whether on facts and in circumstances of the case and in law, the CIT(A) erred in law & on facts in not appreciating the facts of the case and deleting the adjustment on transfer of power in Rajasthan Region when the internal CUP data was not available.

2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in law & on facts in deleting the adjustment proposed by the TPO on account of transfer of steam.

3. The appellant craves, leave, modify, add or forego in any ground(s) of appeal at any time before or during the hearing of this appeal.”

8. The Revenue vide letter dated 23.04.2025 has raised following additional grounds of appeal- 1. “Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in law & on facts in deleting the addition made by the AO to the tune of Rs. 1,52,00,000/- as per provisions of Section 14A of the Income Tax Act, 1961?

2. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in law & on facts in deleting the addition made by the AO in the MAT income to the tune of Rs. 1,52,00,000/- as per provisions of Section 14A of the Income Tax Act, 1961?”

9. Ground No.1 raised by the Revenue is with respect to the deletion of adjustment made towards transfer of power generated in Rajasthan of INR 7,96,94,566/- from eligible unit to non-eligible unit and claimed deduction u/w 80IA on the same. The assessee owns various captive power plants for production of power and supply of power generated therein amongst the other units. The power production units are eligible for deduction under section 80IA of the Act and therefore, the power transferred from eligible unit to non-eligible unit has been treated as specified domestic transaction and according to the assessee, the value charged was at ALP. The assessee in its TP-SR has justified the prices charged for & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 supply of power by applying Internal CUP in the form of prices at which power was sold/purchased from respective State Electricity Board. The TPO accepted all the transactions be as per ALP other than transactions between eligible and non-eligible units of Kota where TPO has benchmarked the average price of Internal CUP as adopted by the appellant-assessee and External CUP in the form of IEX price and proposed the adjustment of INR 7,96,94,566/-. Ld. CIT(A) while observing that the TPO in assessee’s own case for AY 2016-17 vide order passed under section 92CA(iii) of the Act dated 31.10.2019 has made no adjustment on this account and further observed that between AYs 1997-98 to 2013-14 and in AY 2016-17, no such adjustments were made and thus, deleted the adjustment made by the TPO by following the rule of consistency.

10. Before us, Ld. CIT DR for the Revenue supported the order of TPO and AO with respect to the adjustment made towards reduction in deduction claimed u/s 80IA from the profits from transfer of electricity generated by the eligible units to non-eligible units and prayed for the confirmation of the order of AO/TPO.

In its TP analysis / TP Study, the appellant has justified the price charged by In its TP analysis / TP Study, the appellant has justified the price charged by In its TP analysis / TP Study, the appellant has justified the price charged by it for the supply of power by applying an internal CUP in the form of price at it for the supply of power by applying an internal CUP in the form of price at it for the supply of power by applying an internal CUP in the form of price at which power was sold / purchased from the respective State Electricity which power was sold / purchased from the respective State Electricity which power was sold / purchased from the respective State Electricity Boards. The TPO, accepted all the transactions to be in arms length other TPO, accepted all the transactions to be in arms length other TPO, accepted all the transactions to be in arms length other than the transaction involving the eligible and non than the transaction involving the eligible and non-eligible units of Kota eligible units of Kota which she benchmarked using the average price of the internal CUP as which she benchmarked using the average price of the internal CUP as which she benchmarked using the average price of the internal CUP as adopted by the appellant and the external CUP in t adopted by the appellant and the external CUP in the form of lEX price and he form of lEX price and accordingly proposed TP adjustment to the tune of $ 7,96,94,566. accordingly proposed TP adjustment to the tune of $ 7,96,94,566. accordingly proposed TP adjustment to the tune of $ 7,96,94,566. The primacy of internal comparables wherever available, over the external The primacy of internal comparables wherever available, over the external The primacy of internal comparables wherever available, over the external ones is already a settled issue. Hon'ble Delhi Bench ITAT in the case of ones is already a settled issue. Hon'ble Delhi Bench ITAT in the case of ones is already a settled issue. Hon'ble Delhi Bench ITAT in the case of & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 Destination of the World (Subcontinent) (P) Ltd. v. ACIT [12 taxmann.com 310 (Del)], held that - "Preference should be given first to the internal comparables and reference has to be made so the results of independent enterprises only when the former course of action is not possible." Similarly, Hon'ble Mumbai ITAT in the case of Teenimont ICB (P) Ltd. v. ACIT |2012] 24 taxmann.com 28 (Mum) (TM) held that - "Thus where potential comparable is available in the shape of an uncontrolled transaction of the same assessee, it is likely to have higher degree of comparability vis-a-vis comparables identified amongst the uncontrolled transactions of third parties. The underlying object behind computing ALP of an international transaction is to find out the profits which such enterprise would have earned if the transaction had been with some third party instead of related party. When the data is available showing profit margin of that enterprise itself from a third party, it is always safe and advisable to have recourse to such internal comparable case. The reason is patent that the various factors having bearing on the quality of output, assets employed, input cost etc, continue to remain by and large same in case of an internal comparable. The effect of difference due to such inherent factors on comparison made with the third parties, gets neutralized when comparison is made with internal comparable. Ex consequenti, it follows that an internal comparable uncontrolled transaction is more noteworthy vis-a-vis its counterpart i.e. external comparable." Hon 'ble ITAT, Hyderabad, relying on the above ruling of Teonimont ICB in the case of NTT Data Global Delivery Services Ltd. v. DCIT [ITA No. 505/Hyd/2014) also held that - "This view expressed by Hon'ble third Member was followed by ITAT, Mumbai Bench and ITAT Bangalore Bench, in the decisions cited before us by Ld. AR, while observing that internal comparables should get preference over external comparables. Therefore, applying aforesaid principle to the facts of the present case, it can be held that, as the assessee during the year has undertaken transactions with both AEs and non-AEs, and as claimed, has not only maintained segmental details of such transactions, but, has also undertaken comparative analysis in its TP study, it has to be looked into an objective manner before rejecting the same." Similarly, it has been affirmed in a number of decisions that the rate of power charged by the State Electricity Boards constitute the 'market value' of the goods which it would fetch in the open market and this meets the standards of section 80IA(8) of the Income Tax Act. Hon'ble Chhatisgarh High Court in the case of Godawari Power & Ispat Ltd. [42 taxmann.com 55] held that - "31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 could have purchased power in the open market. The rate of power to a supplier is not the market rate 10 a consumer in the open market.

32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer.

33. It is admitted by the Department that in Chattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power. & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 34. The CIT(Appeals) and the Tribunal had righty computed the market rate of the power after considering it with the rate of power available in the open marker namely the price charged by the Board”. Hon ble Gujarat high Court in the case of Gujarat Alkalies & Chemicals Ltd. 188 taxmann. com 722) has held that rate of 7 4.51 per electricity unit charged by aversee's eligible unit from non-eligible unit represented cost of electricity generation to the assevee especially when it is not in dispute that SEB charged ≥ 5.00 per unit for supplying electricity to other industries including non-eligible unit of the assessee itself. The case of the appellant when analyzed in the light of the above backdrop and judicial precedents, makes it amply clear that the TPO has erred in selectively disregarding an evisting internal comparable in respect of one eligible unit at Kota while at the same time accepting the ALP determined on the basis of the same internal comparable in respect of other eligible units at Hariawan, Ajbapur, Loni and Bharuch. Similarly, the TPO's approach of using the average of an external CUP (IEX Data) and the internal CUP (JVVNL rate) to benchmark the ALP is also not proper. The law and rules don't approve of averaging of the prices of an internal and one external CUP data. The concept of averaging under the CUP method is not provided under the provisions of law. Once a direct CUP is available after an appropriate FAR analysis, then that in itself is sufficient to be used for benchmarking the transactions undertaken by an entity. It is also seen that the appellant has been consistently adopting the same yardstick to benchmark the rates charged by its various eligible units from non-eligible units from A.Y. 1997-98 to A.Y. 2014-15. The AO/TPO has accepted the approach adopted by the appellant during all these years. Similarly, the appellant has filed a copy of order for subsequent A.Y. i.e. A. Y. 2016-17 passed u/s 92CA(3) dated 31.10.2019 from where also it is noted that no adjustment or addition has been made on this issue of supply of power. This is the solitary year in between A.Y. 1997-98 onwards till A.Y. 2016-17 that an addition has been made that too only in one of the power plants at Kota. In my view, this is not a regular and consistent approach by the Assessing Officer. I accept the contentions of the appellant that rule of consistency also favour the case of the appellant. Although principle of res-judicata are not applicable to the income tax proceedings yet the rule of consistency is required to be adhered to in case of no change in facts and circumstance of case from the previous years. Appellant's reliance on various case laws in its submissions is well placed. Accordingly and in view of the above, addition made by AO amounting to Rs. 7,96,94,566/- on account of ALP adjustment in power supply from eligible to non-eligible unit is directed to be deleted. Ground of Appeal

No. 2 (including 2.0 to 2.7) is decided in favour of the appellant.

14. Further in assessee’s own case for AY 2014-15 in the Co-ordinate Bench of the Tribunal has & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 deleted the additions made on account of adjustment in the price and transfer of power between eligible units to non-eligible units by making following observations- 30. Firstly if we look at the rate Indian energy exchange which is stated to be pertaining to Rajasthan region is Rs 2.55 per kilowatt whereas the rates at which the power was purchased by the assessee in Rajasthan from SEBs ₹ 8.35 per kilowatt. This shows that the rates at which the power is sold by SEBs is 3.30 times higher than the rates which are quoted by Indian energy exchange. It is also undisputed fact that most of the power is supplied in Rajasthan region by Jaipur Vidhyout Vitran Nigam Limited and used by the consumers. Whereas there is no data available that how much power is being sold at the platform of Indian energy exchange in Rajasthan region.

31. It is also an undisputed fact that product comparability is a critical element while applying cup method and needs to be closely examined. In case if there are any differences identified between the controlled and uncontrolled transaction that would affect price, adjustment should be made to the price of the uncontrolled transaction is in order to make the same comparable to the controlled transaction is. No doubt the product similarity exist in the above transactions. However comparability Under the cup method depends on the similarity with respect to the following factors also which could materially affect the price in uncontrolled transaction i. quality of the product ii. contractual terms (i.e. scope and terms of warranties provided, sales are purchased volume, credit terms, transport terms) iii. level of market (i.e. whole sale or retail etc) iv. geographic market in which the transaction takes place v. date of the transaction vi. intangible property associated with the sale, foreign currency risks and alternatives realistically available to the buyer and seller the learned transfer pricing officer has used the average sale price for the financial year 2013 – 14 available at the Indian energy exchange. Therefore there cannot be much of the grievance when the assessee also charges the same rate for the whole year. However the claim made by the assessee before us which remains uncontroverted is that Indian energy exchange is not the main exchange where the power is traded. As per the Indian power market journey so far and way forward June 2014 report published by Indian energy exchange which is available in public domain has categorically stated that the size of power exchange-based market has grown to 3% approximately of the total electricity generated. Therefore the argument of the learned transfer pricing officer that Indian energy exchange is the main exchange where nearly 95 – 96% of power is traded is a negative by the & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 report of Indian energy exchange itself. Therefore it is apparent that it is the very minuscule part of the total power traded. Further the Indian energy exchange is a spot exchange and cannot be compared with the continuous power supplied by SEBs to the assessee. Of course, in Indian energy exchange there would always be a doubt about the availability of continuous power. This shows that there are material differences existing between the transaction entered into by the assessee for transfer of power and the rates stated by Indian energy exchange. Undoubtedly the rates quoted at Indian energy exchange are based on the bid price rather than the actual quantity consumed by the assessee. Even otherwise the data is not available in the public domain and learned transfer pricing officer has used the powers u/s 133 (6) of the act to obtain such rates i.e. data. Furthermore the Indian energy exchange rates are also required to be adjusted for the various levies and other variable charges of transmission et cetera as well as the transmission loss. Even otherwise the assessee has submitted the land rate at Indian energy exchange which shows the average price at ₹ 6.36 per kilowatt by taking base rate at Rs 2.55. Even if the average of the SEBI rates at ₹ 8.35 per kilowatt and the landed rate at Indian energy exchange at ₹ 6.36 per kilowatt is averaged out it comes to ₹ 7.355 per kilowatt which is more than the rates at which the power is transferred from eligible unit to non-eligible unit at Kota Rajasthan by the assessee i.e. at ₹ 6.30 kilowatt.

32. There is no doubt that the rates at which the SEBs supplies power to the assessee is an perfect external cup. Such rates are ₹ 8.35 per kilowatt. Rates of Indian energy exchange shown at Rs 2 .55 per kilowatt. If the rates of SEB compared with the rates of Indian energy exchange clearly shows that there is a wide disparity between the two rates. It is not in dispute that SEB in Rajasthan is supplying power to majority of the consumer using electricity. Therefore, much sanctity is attached to the rates adopted by SEBs. However, the learned transfer pricing officer has failed to show the reason of such a wide disparity between the rates of Indian energy exchange which is a spot exchange compared with the rates at which the energy is actually consumed in that geographical region. This does not mean that the quoted price cannot be used for the comparability analysis in cup method. But if the prices are so divergent and the difference between the two external cup becomes irreconcilable, the external cup price which is more reliable should be used. Therefore, in our view, IEX rates for these reasons cannot be said to be an external cup available for invoking the provisions of first proviso to Section 92C (2) of the act.

33. Further in case of the assessee for assessment year 2015 – 16 , external corporate of purchase price of power from SEB is used as a comparable discarding the Indian energy exchange rate by the learned CIT – A, and the same order has not been challenged before the higher forum, it becomes final. This shows that in the subsequent year the learned transfer pricing officer/assessing officer has accepted the methodology of benchmarking the transaction of transfer of power in Rajasthan from eligible unit to non eligible unit at the purchase price of power from SEB. & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 34. In view of the above facts we do not find any infirmity in the benchmarking analysis of the assessee wherein the assessee has considered rate of ₹ 6.30 per kilowatt against the rate of power purchase paid by the assessee to Jaipur Vidyiut Vitran Nigam Limited at the rate of ₹ 8.35 per kilowatt, using the external cup for comparability. Accordingly, the ground number 2 of the appeal of the assessee is allowed and the transfer pricing adjustment of ₹ 265,298,490/– is deleted.”

15. It is relevant to state that such order of ITAT is confirmed by the Hon’ble Jurisdictional High Court in vide order dated 02.05.2024, the Hon’ble High Court has held that Revenue has failed to controvert the assertions that rates in IEX are for power purchase and not for power consumption whereas electricity supply by power distribution company is charged on the basis of power consumed. The Hon’ble Court further followed the Judgement of Hon’ble Supreme Court in the case of Jindal Steel & Power Ltd. (supra) and held the order of the Tribunal as reasonable order and confirmed the same. The observations of the Hon’ble Court as contained in para 43 to 60 are reproduced as under-

43. In the present case, the question is to determine the market value or the ALP of power supplied by power plants established by the Assessee to its other units. Supplying of electricity is governed by the Electricity (Supply) Act, 1948 and Electricity Act, 2003. The transmission of electricity is also governed by the Electricity Rules, 2005.

44. Thus, the market for supply of electricity is regulated. Thus, to apply the CUP method, it would be necessary to ascertain the comparable transactions that are similar in material aspects and there is no difference between the transactions which has a bearing on the price of the power supplied.

45. The question whether the average IEX rate at which power is traded on IEX, is a comparable uncontrolled transaction, is required to be evaluated by determining whether there are any differences between the specified domestic transaction6 and the uncontrolled transaction of trade on the IEX.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 46. The Assessee states - and the same is not controverted - that the availability of power on IEX is unpredictable and the supply of power is unreliable.

48. In view of the above, it is contended that power traded on IEX cannot be compared with the power supplied by a SEB.

49. It is not disputed that IEX is a platform, which is used by power producing units to sell surplus power for short term requirements. IEX is not a platform for sourcing continuous power for power consuming units. It is also pointed out that there is a high level of volatility in the IEX rates as it depends on immediate availability of surplus electricity.

51. We find considerable merit in the Assessee's contention that the transactions of sale and purchase of power on the IEX is not comparable to the regular supply of power by the SEB or the power distribution companies. Undisputedly, IEX is not a source for uninterrupted power on the basis of which any power consumer can set up its unit. It is also not disputed that there is a wide fluctuation in the IEX rates. The Revenue has also not controverted the assertion that rates for power quoted on IEX are for power purchased and not for power consumed. Thus, if an entity bids for certain quantity of power on IEX and is successful, it is required to pay for the same. However, the electricity supplied by power distribution companies is charged on the basis of the power consumed, which is recorded in the metering devices.

52. It is also clear that the said material differences between the electricity supplied by SEBs or power distribution companies and those secured by bidding on IEX would have a significant bearing on the price of power.

53. As noted above, the CUP method is an appropriate method only in cases where there is sufficient degree of identity between the tested transactions and comparable uncontrolled transactions. The CUP method & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 cannot be applied where there is significant dissimilarity between the comparable transactions and it is not feasible to determine an adjustment to eliminate the impact of the said differences on the prices of comparable transactions.

57. We also consider it apposite to refer to the recent decision of the Supreme Court in Commissioner of Income Tax v. Jindal Steel and Power Limited7. The principal issue involved in the said decision was the determination of market value of goods and services. In terms of Clause (i) of Explanation to Sub-section (8) of Section 80IA of the Act, the market value in relation to goods and services would mean the price that such goods or services would ordinarily fetch in the open market. In the aforesaid context, the Supreme Court had considered the question of what would constitute an open market in the context of determining the market value of electricity supplied by captive power units of the assessee in that case. In that case, the assessee had entered into an agreement with the SEB of State of Madhya Pradesh to supply surplus electricity at the rate of ₹2.32 per unit. However, the Assessee had (2024) 460 ITR 162 computed the revenue from supply of electricity to its own unit at the rate of ₹3.72 per unit. It was the Assessee's case that the market value of the electricity was ₹3.72 per unit as that was the rate charged by the SEB for supply of electricity to industrial consumers including the Assessee. The learned ITAT had accepted the assessee's stand and had set aside the order passed by the CIT(A) rejecting the assessee's appeal in that regard. The High Court had also rejected the Revenue's appeal by referring to its earlier decision where the question of law had been answered against the Revenue and in favour of the Assessee.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 58. The Revenue had approached the Supreme Court assailing the orders passed by the learned ITAT and the High Court. In the aforesaid context, the Supreme Court had held as under: "23. This brings to the fore as to what do we mean by the expression "open market" which is not a defined expression.

24. Black's Law Dictionary, 10th Edition, defines the expression "open market" to mean a market in which any buyer or seller may trade and in which prices and product availability are determined by free competition. P. Ramanatha Aiyer's Advanced Law Lexicon has also defined the expression "open market" to mean a market in which goods are available to be bought and sold by anyone who cares to. Prices in an open market are determined by the laws of supply and demand.

60. In view of the above, the questions of law are answered in favour of the Assessee and against the Revenue.”

16. Thus, by respectfully following the judgement of Hon’ble High Court and Co-ordinate Bench of the Tribunal in the case of assessee itself and also by respectfully following the judgement of Hon’ble Supreme court in the case of Jindal Steel & Power ltd. (supra), we find no infirmity in the order of the Ld. CIT(A) in deleting the adjustment made on account of transfer of power from eligible units to non-eligible units and accordingly, the adjustment of INR 7,96,94,566/- has rightly been deleted by ld. CIT(A) which order is hereby upheld. Ground No.1 raised by the Revenue is thus, dismissed.

18. In first appeal, Ld. CIT(A) has deleted the addition by placing reliance on the judgement of Hon'ble High court in the case of CIT vs Cushman & Wakefield 367 ITR 730 (Del.).

19. Against the said order, the Revenue is in appeal before the Tribunal.

20. Before us, ld. CIT DR for the Revenue stated that the TPO has held that the steam is a by-product and generated during the production activity and its cost has already been absorbed in the manufacturing activity therefore, it has no cost remained. Ld. CIT DR submits that the AO/TPO has not considered the cost of the steam however, the steam is consumed by non-eligible units and therefore, its cost is to be determined on the basis of consumption. Ld. CIT DR thus, requested that the matter may be sent back to the file of AO/TPO for re-working of cost of steam based on consumption. He further, submitted that steam is produced in the process of other production activity and such steam is transferred to power generating units thus the AO should consider this aspect also while determining the cost of stem. He prayed accordingly.

21. On the other hand, Ld. AR for the assessee submitted that steam has been sold by the eligible units to non-eligible units at cost and no markup is done on the said transaction. Ld. AR submitted that before the TPO, the assessee has filed cost sheet of cost of production of steam duly certified by the Chartered Accountant however, the TPO has observed that the assessee has not filed any basis for determination of such cost. Ld.AR further submits that this issue has been settled in favour of the assessee by the Co-ordinate Bench of the Tribunal in assessee’s own case for AY 2014-15 wherein identical adjustment was made by the AO/TPO which was deleted by the Tribunal. Ld. AR further submits that the Department upto AY 2013-14 had accepted benchmarking methodology followed by the assessee however, for the first time, did not accept the methodology of the assessee in AY 2014-15 which as observed above has been deleted by the Hon’ble ITAT which order stood confirmed by the Hon’ble High Court in dated 02.05.2024 where no substantial questional of law is admitted on this issue. He thus prayed that the order of ld. CIT(A) deserves to be uphold in this count.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 39. In the annexure – 2 it is given and examples of the total steam cost to be determined in the manner when it is transferred to other units as Under:- “Examples of Steam cost – Transfer to Other units Steam cost per tonne works out to Rs 471.09 as illustrated under Annexure 2. If steam is transferred to other unit, distribution cost will be in addition to the above cost as illustrated below 1 Steam generation cost as 5.3.1 above Rs 471.09 Per MT 2 Distribution cost : Operation & Maintenance cost of distribution line Depreciation Other Total Distribution cost Per MT Rs 1.00 Rs 0.75 Rs 0.75 Rs 2.50 3. Inter Unit transfer cost Rs. 473.59 Cost of a utility determined as per para 5.3.2 plus share of administrative overhead to be charged.”

40. Therefore, from the above analysis it is apparent that the learned revenue authorities have incorrectly held that there is no cost of production of steam.

41. Even otherwise steam is a commercially viable product and it is a form of power and therefore it cannot be said to be produced at nil cost. The assessee has submitted a detailed cost sheet duly certified by the cost accountant following the standards issued by the Institute of cost and works accountant for determining the exact cost of steam, it has also been certified by the chartered accountant and further a chartered engineer certificates is also provided. All these cost statement duly certified by the professionals were rejected by the learned revenue authorities without any basis.

43. Further in case of the assessee for assessment year 2015 – 16 the learned CIT – capital has rejected the action of the learned transfer pricing officer of determining the arm’s-length price of steam at nil and upheld the assessee’s approach of benchmarking the transfer price of steam at cost. This order has been accepted by the revenue and no further appeal has been filed. Therefore this issue becomes final with respect to the determination of ALP of transfer of steam at cost by the eligible unit to non eligible unit.

15. In this regard, the CIT (A) recorded the following findings: "2. The appellant has also claimed deduction under section 80 IA on account of sale of steam to the chemical plant. "The steam was generated by the power plant in the boiler and part of it was also utilised for the chemical process of the non-eligible unit. The AO has held that the appellant was not entitled to the deduction on account of sale of steam to the power plant. It has been held by her that steam does not fall within the meaning of "power". In this reference she has made reliance on the judgment of honourable ITAT Ahmadabad in the case of N R Agrawal Industries Ltd v. DCIT dated 26/07/2013. The appellant on the other hand has submitted that the value of steam should be considered for arriving the profit as the scheme is being gererated for generation of electricity and after utilising the same for electricity generation the balance steam is used for the chemical process. Therefore, it is a byproduct and therefore, the deduction was admissible. On a careful consideration of the facts related to the issue, it is noted that that appellant is generating steam at high-pressure and temperature and the steam is being fed into turbine and the steam which is coming out from turbine is utilised for the chemical process. The details on record to show that the turbine utilised by the appellant for generation of the power is a back pressure turbine. In back pressure turbine the intake is of highpressure steam which is used for generation of power and the exhaust steam is also at certain pressure so that it can utilised for some other purpose. The design of the turbine is done in such a manner so that all energy of the steam is not utilised by the turbine for generation of power but certain part of it is released in the exhaust steam also. Therefore, the design of the turbine used by the appellant is in such a manner that the exhaust steam is at a certain pressure so that it can be utilised for some other work. Accordingly, this steam cannot be consider as a by product but it is intentionally being produced or generated for a specific purpose. Further the intention of the legislature was to provide deduction for generation of electricity and not for generation of steam. The intention is clearly evident from the perusal of the speech of the honourable Finance Minister while introducing the & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 provisions for deduction in the budget. The use of word 'power' is intended for 'electricity' as the other relevant sections clearly mentioned the word 'electricity'. The honourable Bench of ITAT Ahmadabad while deciding the issue in N.R.Agrawal Industries Private Limited has discussed these aspects in detail and accordingly relying on the judgment it is held that the appellant is not entitled for deduction under section 80 I-A on sale of such steam to its chemical plant. Accordingly, the decision of the AO in this regard is upheld.

3. For the purpose of calculation the quantum of deduction and allocation of expenditure incurred for production of steam the appellant had given certain information-related to the heat value of steam (Enthalpy). The details given by the appellant were also forwarded to the AO and she has also given her comments on the same. In order to arrive at a logical conclusion it would be useful to understand the process involved. The appellant has installed a boiler which generates high-pressure steam at a very high temperature. The steam is first fed in the turbine where part of the heat energy of the steam is utilized in generating the electricity and the balance energy available in the steam coming out from the turbine is utilised in the chemical process. The appellant is incurring expenses such as coal consumption, boiler running, depreciation of boiler and other machinery and the building in which the whole generation plant is housed. The expenditure for the steam, which is utilised in generation of power, and the balance steam which is utilised by the chemical plant can be determined by distributing the same in proportion to the heat value (Enthalpy) of the inlet steam and the outlet steam of the turbine. As per the details available on record the heat value of the inlet steam at 65.5 KG/cm2 is 793 kcal per KG whereas the heat value of the output steam at 3.5 KG/cm2 is 653.7 kcal per KG. The quantity of input and output steam remains the same and only the calorific value of the heat value goes down as part of the energy is utilised for generation of power. Accordingly, the expenses can be apportioned in the ratio of enthalpy of the inlet and output steam. The same is worked out as under:— Total enthalpy of the steam coming out of the boiler 793 kcal per KG The enthalpy of the steam coming out of the turbine 653 kcal per KG The enthalpy utilised by the turbine for generation 139 kcal per KG of electricity Percentage of energy utilised in the generation of 17.66% electricity Total expenses for Boiler 1800000 Generation of steam to be allocated on a percentage expenses basis & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 Boiler maint 1 728903 Coal expenses 38733894 Depreciation other 10522945 than turbine Total expenses 52785832 Expenses for steam utilised for 17.66% of 52785832 Generation of electricity 9321977

In addition to above expenses for generation of steam, the expenses of head office of the appellant company which looks after the management or the affairs of-the Company and also the power plant are also to be disallowed on proportionate basis. It is also noted that the appellant has taken loan from financial institutions for installing the power plant. The appellant is also paying huge amount of interest on the loan. Proportionate allocation of the interest expenditure should also be done and added to the cost of generation of steam. Since the details related to the expenses of head office as well as interest expenditures are not available before me, the AO is directed to work out the proportionate allocation of the interest expenditure should also be done and added to the cost of generation of steam. Since the details related to the expenses of head office as well as interest expenditure are not available before me, the AO is directed to work out the proportionate allocation of these expenses by obtaining suitable details from the AO. The details of following expenses are readily available from record:— Expenses for generation of steam 9321977 Depreciation on turbine 1289189 Electricity duty 787872 The AO is also directed to verity the above figures. Accordingly the AO is directed to rework the deduction under section 80I-A claimed by the appellant as indicated in the preceding discussion."

16. The Tribunal, concurred with the aforesaid findings recorded by the CIT (A), by taking support of the decision of a Co-ordinate Bench of the ITAT, Mumbai, in the case of West Cost Paper Mills (P.) Ltd. v. CIT, [2014] 52 taxmann.com 268. As regards section 80IA of the Act, strong reliance has been placed on behalf of the Revenue on the decision of this Court in the case of CIT v. Atul Ltd. [2016] 74 taxmann.com 255. In Atul Ltd. (supra), the assessee had established a new power plant by expending a sum of Rs. 14.62 Crore and claimed deduction under section 80IA. The Assessing Officer upon examination of such claim, arrived at the conclusion that the production of power would require boiler and also a turbine since the & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 boiler would manufacture steam which would be a raw material for the production of power with the aid of turbine and such a plant would be a new industrial undertaking capable of generating electricity. The case of the assessee was that in the existing power plant the assessee had excess steam production capacity which was to be utilised by the turbine installed in the new plant. The Assessing Officer ultimately rejected the case of the assessee on the ground that the turbine should be treated as an independent power generating unit and thereby disallowed the claim of deduction under section 80IA of the Act.

17. The assessee carried the matter in appeal. The CIT (A) held that no industrial undertaking would come into existence within the meaning of the provisions contained in section 80IA of the Act by transferring the boiler or by installing new machinery for the purpose of generation of the power. The appeal came to be dismissed and the assessee carried the matter before the Tribunal. The Tribunal dismissed the appeal.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 22. The word "Power" should be understood in common parlance as "Energy". "Energy" can be in any form being mechanical, electricity, wind or thermal. In such circumstances, the "steam" produced by the assessee can be termed as power and would qualify for the benefits available under section 80IA(4) of the Act.”

45. Further Hon’ble Supreme Court in CIT v. Tanfac Industries Ltd., SLP (C) No. 18537 of 2009 [319 ITR 8 (st)] wherein while applying section 80-IA of the IT Act, the Hon’ble Supreme Court took a view that the value of steam used for captive consumption by the assessee was entitled to be deducted under section 80-IA of the Act.

46. Therefore it is apparent that i. steam is a valuable sources of power ii. it has cost of production, iii. There are methods and Costing Standards for determining the cost of production of steam. iv. Assessee has transferred the steam from eligible units to noneligible units at cost only. v. Such cost is certified by the Cost Accountant, Chartered Accountant, and Chartered Engineers. vi. It cannot have Nil cost 47. In view of above facts, we are of the view that ld Revenue authorities erred in holding that the steam does not have any cost and therefore steam transferred by assessee’s eligible units to non eligible units at cost, which is determined by Cost accountants and Other professional, has the Arms length price of Rs Nil instead of cost of Rs 103745275/- . Therefore we allow ground number 3 of the appeal and direct the learned transfer-pricing officer to delete the addition of ₹ 1,035,745,275 which was made determining the arm’s-length price of transfer of steam from eligible unit to non-eligible unit by considering the cost of production of the steam at Rs. Nil.”

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 5. “Question C pertains to the transfer of steam from the eligible unit to the non-eligible unit of the assessee. The appellant seeks to contend that since steam was a by-product of the business and would have been included in the cost of power generation, it should not have been taken into account. We, however, find that the aforesaid issue and aspect was concerned with the transfer of steam to the non-eligible unit and for the purposes of which the assessee would have been justified in relying on the cost of production. We therefore, are of the opinion that Question C raises no substantial issue.”

25. The additional grounds of Revenue are in respect to the addition of INR 1.52 crores made by invoking the provision of section 14A read with Rule 8D of Income Tax Rules, 1962 (“Rules”).

26. Brief facts leading to this issue are that AO observed that the assessee itself, has made disallowance of INR 63,50,558/- in the return of income in terms of Rule 8D(2)(iii) of the Income Tax Rules, 1962 (the Rules) on account of administrative expenses at the rate of 0.5% of average value of investments. While computing such disallowance, the company has considered only those investments which yielded exempt income. The AO by observing that Revenue has not accepted the claim of the assessee in preceding years. The & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 AO by applying the provision of Rule 8D(2)(ii) of the Rules made proportionate disallowances which comes to INR 1.52 crores.

27. In first appeal, Ld.CIT(A) by following the judgement in assessee’s own case for AY 2008-09 of Hon’ble Jurisdictional High Court and further, Co-ordinate Bench of Tribunal in AY 2010-11 has deleted the disallowance made.

28. Before us, Ld. CIT DR supported the order of AO and submits that though the assessee has made disallowance under Rule 8D(2)(iii) of the Rules however, since the company had paid interest on the funds borrowed therefore, the proportionate disallowance under Rule 8D(2)(ii) should have been made and therefore, he requested for the restoration of the addition made by the AO.

29.1. On merits, the assessee submits that the AO has taken the average value of investment on INR 127.01 crores as against which the assessee is having own reserves and surplus of INR 1673.56 crores as on 31.03.2014 and of INR 1857.06 crores as on 31.03.2015 which is much more than the average value of investment and therefore, no disallowance is required to be made. With respect to the adjustment of the disallowances in the book profit, Ld.AR relied upon the judgement of Special Bench of ITAT, Delhi Benches in the case of Vireet Investment Private limited [2017] 82 taxmann.com 415 (Delhi-Trib.) and submits that section 115JB is a separate code and has to be interpreted in its literal sense and therefore, no adjustment should be made on account of disallowance under section 14A of the Act in the book profits. He thus prayed for the confirmation of the order of Ld. CIT(A) in deleting the disallowance under section 14A and further requesting that the same should not be included in the book profits computed u/s 115JB for the purpose of MAT.

30. We have heard the rival contentions and perused the material available on record. In this case, the assessee has already made the disallowances of INR 63,50,558/- on account of administrative expenses @ 0.5% of average value of investments as provided under rule 8D(2)(iii) of the Rules. The AO without proving any nexus between the borrowed funds and investment made which has & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 yielded exempt income, computed further disallowance of INR 1.52 crores out of interest payment made on the borrowed funds. The assessee has demonstrated that it had sufficient interest free funds in the shape of Capital and Reserves and therefore, no disallowance should be made under section 14A read with Rule 8D(2)(ii) of the Rules. The Hon’ble Supreme Court in the case of South Indian Bank limited reported in TS-849-SC-2021 has also expressed this view. Further, the Co-ordinate Bench of Tribunal had consistently been taken the view that where interest free funds are more than the value of investments which yielded exempt income, no disallowance should be made u/s 14A read with Rule 8D(2) of the Rules. Thus, by following the judgement of Hon’ble Supreme Court and various Hon’ble High Courts, we find no infirmity in the order of Ld. CIT(A) in deleting the disallowance made u/s 14A by the AO more particularly when this issue has already settled in assessee’s own case wherein AY 2014-15 under identical circumstances, the addition/disallowance made was deleted by the Co-ordinate Bench of ITAT and on further appeal by revenue, the Hon’ble Jurisdictional High Court has not admitted substantial question of law on this issue. With regard to the inclusion of book profit under section 115 JB, we followed the judgement of Special Bench in the case of Virit Investment (supra) where it is held that no addition could be made on account of disallowance under section 14A to the book profit. This being so, we do not find any force in the arguments of Ld. CIT DR accordingly, the additional grounds of appeal taken by the Revenue are dismissed.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 31. In the result, the appeal filed by the Revenue is dismissed.

(AY 2016-17) [Assessee’s appeal] 32. This appeal has been filed by the assessee against the assessment order dt. 22.04.2021 passed u/s 143(3) r.w.s.144C(13) r.w.s. 144B of the Act after giving effect to the order of Hon’ble DRP dated 03.03.2021 pertaining to assessment year 2016-17.

33. Since the grounds of appeal

taken by the assessee in captioned appeal are very extensive and argumentative thus, the assessee was directed to file the concise grounds of appeal which are filed by the assessee vide letter dated 24.05.2024. The concise grounds of appeal reads as under- 1. “That the Learned Assessing Officer (ld. AO) has erred in law and on facts, and in the circumstances of the appellant's case in making an addition/adjustment of Rs.1,04,88,00,979/- on account of transfer pricing issues and making an addition/disallowance of Rs.54,14,870 /- on account of non-transfer pricing issues pursuant to the directions of learned Dispute Resolution Panel-I, New Delhi (ld. DRP) dated 03.03.2021. GROUNDS OF APPEAL IN RESPECT OF TRANSFER PRICING ADJUSTMENTS Transfer of Steam - Adjustment of Rs.104,88,00,979/-

2. That the Ld. DRP/TPO and consequently the Id. AO have erred in law and facts and in circumstances of the case in making an adjustment of Rs.1,04,88,00,979/- in respect of specified domestic transaction of transfer of steam by eligible power units to non-eligible units [at its cost of production] by treating its arm's length price /cost of production at NIL on wholly erroneous, superficial and arbitrary grounds including as follows:- 2.1 By not appreciating that steam being a commercially valuable product has to be transferred to a related party at an arm's length price and therefore, whether it has a cost or not, is irrelevant for purpose of determination of its ALP under transfer pricing legislation.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 2.2 By not appreciating the business model of the assessee's eligible power plant which is based on the co-generation model. 2.3 By observing that the primary objective of the assessee in generation of power and steam as such is a by-product.

4. The Ld. DRP/TPO and consequently the Id. AO have grossly erred in not following rule of consistency by disregarding the same methodology followed by appellant since financial year 2005-06 which has also been approved by the ld. CIT(A) in assessee's own case for A.Y. 2015-16.

5. Without prejudice to above grounds, the Id. TPO DRP/TPO and consequently the Id. AO have erred by not limiting the transfer pricing adjustment to the extent of deduction u/s 80-IA of the Act claimed by respective eligible power units of the assessee and thereby making an excess disallowance to the tune of Rs.40,65,76,101/-. GROUNDS OF OBJECTIONS AGAINST CORPORATE TAX DISALLOWANCES Additional Disallowance u/s 14A of Rs.4,14,870/- 6. The Ld. DRP/AO has erred in law and in facts and in the circumstances of the assessee by enhancing the disallowance u/s 14A of the Act, to the tune of Rs.54,14,870/- by attributing the interest expenses incurred by the assessee to earning of exempt income invoking rule 8D(2)(ii) which is wholly untenable in law and based on conjectures and surmises.

8. The Ld. DRP/AO has erred in making above additional disallowance u/s 14A of the Act disregarding the Hon'ble Jurisdictional High Court order in assessee's own case for AY 2008-09, Hon'ble ITAT's orders for AY 2009- 10 and AY 2010-11 and Id. CIT(A)'s order for AY 2015-16.

9. That the Id. AO has grossly erred in law and on facts and circumstances of the case in not following the directions of the Id. DRP by not deleting the aforesaid disallowance as the revenue has not yet filed any appeal /petition against the judgment of Hon'ble High Court of Delhi in assessee case for A.Y. 2008-09 till date [as per the information available and to the best of knowledge of the assessee]. Incorrect computation book profits u/s 115JB of the Act & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 10. The Ld. DRP/AO has grossly erred in law and in facts and in the circumstances of case by making an addition of 54,14,870/- to the book profits u/s 115JB on account of enhanced disallowance u/s 14A of the Act. Claim made during the proceedings before the Id. DRP 11. That the Ld. DRP and consequently Id. AO have grossly erred in law and on the facts & circumstances of the assessee's case in not allowing assessee's claim raised before Id. DRP for allowing deduction of 'Education Cess' amounting to 133,85,194/- u/s 37 of the Act paid or payable under normal provision of the Act.

Assessment u/s 143(3) void-ab-initio: 12. Without prejudice, the Id. AO, Id. Transfer Pricing Officer (TPO) and subsequently Id. DRP have grossly erred in law and in facts and circumstances of the case in not appreciating that assessment proceedings u/s 143(3) and transfer pricing proceedings u/s 92CA of the Act are vitiated being void-ab-initio as no valid notice u/s 143(2) of the Act was served on the assessee within the statutory time limit prescribed under that sub-section (viz. 30th September, 2017).

13. Without prejudice to above, the Id. AO has grossly erred in law and on facts and circumstances of the case in not following the directions of the Id. DRP (at Page no.11 of Directions) by not 'elaborating and incorporating the details of issue and service of notice u/s 143(2) of the Act in the final assessment order as directed by the Id. DRP. The final assessment order, which is in gross non-compliance of the binding directions of Id. DRP, is thus void and liable to be quashed. Other grounds 14. That the penalty proceedings initiated u/s 271(1)(c) are on wholly illegal and untenable grounds since there was no concealment of any income nor submission of inaccurate particulars of income, nor any other default according to law by the assessee.

38. During the course of hearing vide application dated 18.05.2023, the assessee has taken additional grounds of appeal

No.32 and 33 wherein the assessee had requested for re- determination of the ALP of steam from eligible unit at INR 4,15,89,33,008/- as against INR 1,09,61,42,586/- and further requested for consequential enhancement in the deduction of claim under section 80IA of the Act. The additional grounds of appeal so raised as under-

32. “That the Hon'ble ITAT may be pleased to re-determine the arm's length price of steam transferred from eligible unit to non eligible units at 4.15.89.33.008/- [instead at its cost of production at 1,09,61,42,586/-] which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KwH) as certified by the Chartered Engineer with the ALP rate of electricity": and 33. That the Hon'ble ITAT may be pleased to allow the consequential enhanced deduction u/s 80-IA of the Act that would be available to the assessee by considering the equivalent value of steam as determined above in ground no. 32."

39. In support of the additional ground, Ld. AR for the assessee submitted that the assessee has valued the steam transfer from its eligible units to non-eligible units at its cost of production without any markup on the same. Based on the judgement in case of group companies and also the other companies as delivered by the Co- ordinate Bench of ITAT, the assessee has made further claim of & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 deduction where the value of steam is computed by multiplying the quantity of steam that can be expressed in terms of equivalent units of electricity in KWH with the rate of electricity which was upheld /approved. In support the same assessee also filed a certificate of Chartered Engineer. The assessee has also filed the additional evidences under rule 29 of the Rules which contained the following- (i) detailed working of enhancement deduction under section 80 IA of the act; (ii) Engineer Certificate computing the equivalent value of steam; (iii) supplementary form 10CCB alongwith power action of eligible plants; (iv) addendum to form 3CEB for AY 2016-17;

(v) supplementary transfer pricing study report; and (vi) directions dated 26.03.2021 of Hon’ble DRP-2, Delhi in assessee group case namely M/s. SRF Limited for AY 2016-17.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 In the said directions, the Hon'ble DRP-2, New Delhi has adjudicated the matter in the favor of the said appellant and vide its directions dated 26.03.2021 have expounded various principles to determine the Arm's Length Price with respect to transfer of Steam. In the said directions, the Hon'ble DRP-2, New Delhi strongly relied on the certificates issued by the Chartered Engineer wherein the chartered engineer has chartered engineer has computed the equivalent value of steam actually produced transferred by the eligible unit of the assessee to the non-eligible units and accordingly, directed the Ld. AO that no adjustment is required in the appellant's case. As stated above, the said directions of the Hon'ble DRP-2, New Delhi has been issued on 26.03.2021, therefore it is not possible for the assessee to submit the said chartered engineer certificates obtained in line with the said directions, during the Income Tax proceedings for the AY 2016-17 before the Ld. TPO. Further, the Hon'ble DRP pronounced its directions vide order dated 03.03.2021, therefore such claim of enhanced deduction u/s 80-IA could not be raised before the Hon'ble DRP. Now, In line with the aforesaid directions, the assessee has obtained certificates from the chartered engineer for the eligible units (Refer Annexure II) wherein the chartered engineer has computed the equivalent value of steam actually produced transferred by the eligible unit of the assessee to the non-eligible units and wishes to submit before your honour as additional evidence. Therefore, it is prayed before your honour to kindly accept the same as per Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 while adjudicating the matter.”

42. Ld.AR further filed a written submissions wherein Ld. AR has placed reliance on various judicial pronouncements on the admission of additional evidences which is as under- Legal submission on admission of additional evidences “We would also like to respectfully submit with regard to the admission of additional evidence as under: Rule-29, Income-tax (Appellate Tribunal) Rules, 1963: Production of additional evidence before the Tribunal "29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced." As discussed above, the assessee realized to claim higher amount of deduction only after the judgments supporting such methodology came to knowledge of the assessee, thus, assessee could not submit the said evidences at the time of proceedings before the Id. AO. Hence, it is prayed before your honour to kindly admit the same now in order to impart complete justice to the assessee to advance the substantial cause. In this regard, reliance is placed on the observation made by the Hon'ble Supreme Court, which defines the term "for any other substantial cause", in case of K. Venkatramaiah v. Α. Seetharama Reddy, AIR 1963 SC 1526, that under rule 27(1) of Order 41 of the Code of Civil Procedure, "That the appellate court has power to allow additional evidence not only if it requires such evidence "to enable it to pronounce judgment" but also for "any other substantial cause." There may be cases where even though the court finds that it is able to pronounce judgment on the state of the record as it is and so it cannot strictly say that it requires additional evidence "to enable it to pronounce judgment," it still considers that in the interest of & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 justice something which remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence "for any other substantial cause"." In case of Arjan Singh v. Kartar Singh, AIR 1951 SC 193, wherein the Hon'ble SC remarked as "The legitimate occasion for the application of Order 41, rule 27 is when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent, not where a discovery is made, outside the court of fresh evidence and the application is made to impart it. The true test, therefore, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced." The Hon'ble Delhi High Court in case of Text Hundred India Pvt. Ltd. [TS- 13-HC-2011(DEL)] places reliance on the said judgements of Hon'ble Supreme Court (supra) and observed that: "Para 12. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect."

44. On the other hand, Ld. CIT DR seriously objected the admission of additional grounds as well as admission of additional evidences by making a detailed submissions which reads as under- 1. “With regard to above mentioned appeal, the assessee has raised two additional grounds of appeal

(GOA 32 and 33) vide its submission dated19.05.2023, which are reproduced below as under :- "32. That the Hon'ble ITAT may be pleased to re-determine the arm's length price of steam transferred from eligible unit to non - eligible units at Rs. 4,15,89,33,008/- [instead at its cost of production at 1,09,61,42,586/-) which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KWH) as certified by the Chartered Engineer with the ALP rate of electricity";

33. That the Hon'ble ITAT may be pleased to allow the consequential enhanced deduction u/s 80-IA of the Act that would be available to the assessee by considering the equivalent value of steam as determined above in ground no. 32."

2. Further, in order to re-determine the arm's length value of steam and consequently to enhance the deduction under section 80 IA of the Act, the assessee has also made application for submission of following additional evidences under Rule 29 of ITAT: a) Detailed working of enhanced deduction u/s 80-IA of the Act. b) Chartered engineer's certificate computing the equivalent value of steam. c) Supplementary Form 10CCBs along with power accounts of all the eligible plants. d) Addendum to Form 3CEB for the AY 2016-17. e) Supplementary Transfer Pricing Study. f) Directions dated 26.03.2021 of Hon'ble DRP-2, New Delhi in assessee group's concern case namely SRF Limited for the AY 2016-17.

3. At the outset, objection is raised for admission of above mentioned additional grounds of appeal and the additional evidences for the detailed reasons mentioned below: (i) The additional grounds filed by the assessee are not in respect of a question of law. Rather, the same pertains to an issue that is entirely factual in nature. The adjudication of the said grounds will require & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 examination and discovery of new facts, which are not on the records of the Assessing Officer. (ii) On perusal of the additional grounds raised and the additional evidence sought to be admitted, it is noted that the assessee has changed the basis on which the value of steam transferred from the eligible unit to the non- eligible unit is to be determined. This is entirely a new issue, that was not raised before the Assessing Officer or the Hon'ble DRP earlier. This issue is now sought to be raised before the Hon'ble Tribunal for the first time. This issue is entirely factual in nature and facts required for determination of such issue are not on the file of the lower authorities. In support of its changed stand, the assessee is now seeking admission of additional documents such as Chartered engineer's certificate, supplementary T.P.study, supplementary form 10CCB, addendum to Form 3CEB. Etc. These documents were never filed/produced before the lower authorities. Thus, the assessee is trying to make an entirely new case which was not before the lower authorities. In my respectful submission, as per the law, the assessee cannot raise an entirely new issue or make out an entirely new case, which was not before the lower authorities, for the first time before the Hon'ble Tribunal, when the facts required for determination of such issue are not available on the file of the lower authorities i.e. Assessing Officer or the Hon'ble DRP. (iii) If an entirely new set of evidences are admitted by the Hon'ble Tribunal at this stage, and additional grounds of appeal are also admitted to determine an issue on the basis of such new evidences for the first time before the Tribunal, it would be akin to carrying out a fresh assessment in the case for determination of a new issue. In my respectful submission, it would be contrary to the provisions of the law. (iv) It is pertinent to highlight here that enhanced claim of deduction under section 801A is not being made by the assessee on account of some error in computation of deduction in the return of income filed or documents filed before the Assessing Officer. Rather, the assessee is trying to change entire basis of determination of value of steam by relying on fresh sets of documents and evidences. Therefore, it cannot be considered as mere enhancement of the claim of deduction made before the Assessing Officer. Rather, it will qualify as making a new claim relying on new evidences produced before Tribunal. (v) Even though enhanced claim is in respect of transaction of transfer of steam from eligible unit to non-eligible unit which was before the Assessing officer, since whole basis of determination of value of such steam is sought to be changed, it would qualify as a new issue being raised for the first time before Hon'ble Tribunal. Materially different method of determination of value of steam by taking help of entirely new set of documentary evidences would tantamount to raising a new issue. (vi) As per ITAT Rule 29, none of the parties to the appeal is entitled to admission of additional evidence as a matter of right. However, Hon'ble

ITA Nos.927 & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 Tribunal has the authority to allow production of additional evidence for the reasons mentioned in ITAT Rule 29. It is respectfully submitted that such discretion vested with Hon'ble Tribunal is required to be exercised to bring on record those relevant documents, which are necessary for judicious adjudication of the issues arising from proceedings before the lower authorities. In other words, such discretion should not be allowed to be used to enable a party to the dispute-i.e., the assessee in this case to create an entirely new factual issue before the Hon'ble Tribunal for the first time. (vii) The assessee has contended that similar issue of redetermination of ALP of steam and consequent enhancement of deduction under section 801A has been restored to the Assessing officer by the Hon'ble Tribunal for verifying the claim of the assessee and deciding the issue in the case of its group concern, i.e., DCM Shriram Industries Ltd.(combined order dated 15.03.2023 in for AY 17-18 and for AY 16-17). In this regard, it is noted that in said order of Hon'ble Tribunal, there is no discussion with regard to any objection raised to admission of additional ground and additional evidences and disposal of such objection by the Hon'ble Bench. Thus, said order is silent on this aspect. Hence, the finding of Hon'ble Tribunal in the said case can not be any help to the assessee in light of specific objection being raised to admission of additional grounds of appeal and additional evidences by the undersigned. (viii) In view of the above discussion, it is respectfully submitted that both the additional evidence and the additional ground of appeal sought to be admitted by the assessee in this case may kindly be rejected in light of the discussion made above. (ix) In this regard, reliance is placed upon the judgment of the Hon'ble Allahabad High Court in the case of Sarika Jain [84 taxmann.com 64], where the Hon'ble High Court while explaining the power of the ITAT under section 254 of the I.T.Act has held as under:

16. In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act.

17. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that "it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 in adding the aforesaid amount in the income of the appellant- assessee under Section 68 of the Act.

18. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act. the entire order of the Tribunal stand vitiated in law." (Emphasis supplied) In the instant case too, the issue based on which enhanced claim of deduction is being sought by the assessee was not subject matter of dispute all through before ITAT. Hence ration of above judgment of Hon'ble High Court is squarely applicable to the case of assessee.

4. In addition to the above, it is submitted that it is a fact that the assessee had not claimed the so-called enhanced deduction in the return of income. The moot question is as to whether the assessee entitled to claim any new deduction u/s Chapter-VIA without claiming the same in the original return of income filed u/s 139(1) of the IT Act. The relevant provisions of Income Tax Act with regard to claim of deductions u/s Chapter VIA are discussed below. 4.1 Whether the person can claim 801A deductions by filing letter during assessment proceedings? The provisions of 'Income Tax Act' for claiming deductions in chapter VIA: Sub section 5 of section 80A provides that no deductions under chapter VIA shall be allowed, if not claimed in the return of income. For ready reference, the provision of section 80A (5) are reproduced below:- "5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 108 or section 10BA or under any provision of this Chapter under the heading "C.-Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder." Further the section 80AC of I.T. Act provides that no deductions shall be allowed unless the return is filed or before the due date mentioned in the section 139(1) of the IT Act. For ready reference, the provision of section 80AC are reproduced below:- 80AC. Deduction not to be allowed unless return furnished.-Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after- (I) The 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-18 or section 80-IC or section 80-ID or section 80-IE; (ii) The 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.-Deductions in respect of certain incomes", & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139." Thus both these sections i.e. section 80A (5) and section 80AC lays down the primary conditions for claiming deductions and the conjoint reading of both the sections bring out the following pre conditions for claiming deductions under chapter VIA. (1) No deductions u/s 801A/80 IB/80 IC etc. shall be allowed if the deductions are not claimed in the return of income. (2) The return of income must be filed on or before the due date mentioned in the section 139(1) of the IT Act. Thus, the I.T. Act clearly provides that both the above conditions are to be satisfied as these are primary conditions for claiming deductions under chapter VIA. If the assessee satisfies these primary conditions, only then the AO verifies the eligibility of the assessee for claiming these deductions. From the facts of the case, it is crystal clear that the assessee company has not claimed such enhanced deductions u/s 801A for transfer of steam in the original return of income. The assessee is now claiming the enhanced deduction u/s 801A based on some Chartered engineer's certificate. Thus, as the assessee failed to claim the so-called enhanced deductions u/s 801A in the original return of income, it is clearly hit by the provision of section 80A(5) r.w.s. 80AC of the IT Act and accordingly these deductions under chapter VIA cannot be allowed to the assessee. 4.2 Reliance is placed on the decision of Hon'ble Rajkot Tribunal in the case of M/S Patel Brass Works Pvt. Ltd. Vs. ACIT, Circle 5 Rajkot in ITA No. 60/RJT/2020. The facts of the case are similar, as in that case also, the assessee had made a claim under section 80 IA during the assessment stage. The AO and the CIT appeal had rejected the claim by relying on Goetze India judgement and also relying on the provisions of section 80 A(5) and 80 IA (7) and because form no. 10 CCB was not furnished along with return of income. The assessee in that case had also relied on the decision of Hon'ble Apex Court in the case of Jute Corp. Of India for admission of the claim, however, the Hon'ble Tribunal while relying on section 80 A(5) of the Act and the decision of Hon'ble Gujarat High Court in the case of Rachna infrastructure Pvt. Ltd. (2022) 138 taxmann.com 416 (Gujarat) has rejected the claim of the assessee. Reliance is also placed on the recent decision of the Hon'ble Coordinate Pune Bench in the case of Income Tax Officer vs. Jagtap Patil Promoters and Builders in 147 taxmann.com 199 (2023) In this case, the Hon'ble Tribunal after analyzing several case laws and the provisions of the Income Tax Act, has clearly held that assessee is not eligible for deduction u/s 801B(10) as it had not claimed such deductions in the original return of income. The Ratio of the above cases squarely applies in the instant case also.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 4.3 Whether the assessee can claim deductions in chapter VIA by filing letter/report of chartered engineer during assessment proceedings? As per section 139(5) of the IT Act, a person can revise his return of income if he discovers any omission or wrong statement in the original return of income. Thus, revised return can be filed only when there is an omission or any wrong statement. Revised return cannot be transformed into a return u/s 139(1) of the IT Act, meaning thereby, that even by filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed u/s 139(1) of the IT Act. Thus a person cannot make any new claim under the revised return of income on the ground that he has forgotten to file a claim in the original return of income filed u/s 139(1) of the IT Act. Thus, by the conjoint reading of section 80A(5), 80AC and section 139(1) and 139(5) of the IT Act, it is clear that the assessee cannot file a fresh claim of chapter VIA deductions, by filing the revised return of income. This proposition of claiming exemptions/benefits u/s 10(8) even in the revised return of income has been discussed by the Hon'ble Supreme Court of India in the case of Pr. CIT vs. Wipro Ltd. in 140 taxmann.com 223 (SC) 2022. It has been held that for claiming benefit u/s 108, the claim has to be made in the original return of income filed u/s 139(1) of the IT Act. Being pertinent, the relevant para of the Hon'ble Supreme Court decision is reproduced below; "9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under section 139(1) and cannot transform it into a return under section 139(3), in order to avail the benefit of carrying forward or set-off of any loss under section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set-off of any loss. Filing a revised return under section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 108 (8) and furnishing the declaration as required under section 108(8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 108 (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature." The provision of section 801A(7) provides that deductions from profits and gains shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deductions is claimed, have been audited by accountant. Further Income Tax Rules 18888 provides the conditions for claiming deductions u/s 801A/8018/80IC. The sub rule 2 of Income Tax Rule 18BBB, provides that a separate report is to be furnished by each undertaking or enterprise of the assessee claiming deductions 801 or u/s 801A or 8018 or 80IC Act shall be accompanied by P&L account and balance sheet of the enterprises as if the undertaking or the enterprise were a distinct entity. Also the Form No.10CCB has been provided in the Income Tax Rules which is for audit report ought to be filed by all assessee who wants to claim deductions u/s 801A/801/80IC. This form/report is to be filed for each undertaking and audit report has to be furnished one month prior to the due date of filing of return of income. From the facts of the case, it is clear that at the time of filing of original return of income, the assessee company did not comply with the rule 18BBB and form 10CCB on account of transfer of steam, and the same has not been filed before furnishing of return of income for claiming the enhanced deduction u/s 801A. The conditions prescribed in Rule 18BBB are almost similar to the provisions of section 10B(8) of the IT Act. In the above referred decision of Pr. CIT vs. Wipro Ltd, the Hon'ble Supreme Court has clearly laid down that for claiming benefit u/s 108(8), the twin conditions i.e. of furnishing of the declaration to the AO in writing and the same to be furnished before the due date of filing of return of income under section 139 (1) of the IT Act are required to be fulfilled. Being very pertinent, the relevant extract, i.e. para 8 of the Hon'ble Supreme Court judgment is reproduced below:- 8. While considering the issue involved, whether the time limit within which the declaration is to be filed as provided under section 10B (8) is mandatory or directory, Section 108 (8) is required to be referred to, which reads as under: "10B (8) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date for furnishing the return of income under sub-section (1) of Section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years." On a plain reading of section 108 (8) of the IT Act as it is, i.e., "where the assessee, before the due date for furnishing the return of income & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of section 108 may not be made applicable to him, the provisions of section 108 shall not apply to him for any of the relevant assessment years", we note that the wording of the section 108 (8) is very clear and unambiguous. For claiming the benefit under section 108 (8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of section 139 of the IT Act are required to be fulfilled and/or satisfied. In our view, both the conditions to be satisfied are mandatory. It cannot be said that one of the conditions would be mandatory and the other would be directory, where the words used for furnishing the declaration to the assessing officer and to be furnished before the due date of filing the original return of income under sub-section (1) of section 139 are same/similar. It cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee. Thus, from the perusal of the above, it has been made crystal clear by the Hon'ble Supreme Court that both the conditions i.e. declaration in writing and submission of the same before the filing of return of u/s 139(1) are to be mandatory satisfied for claiming exemptions. The ratio of the Hon'ble Supreme Court decision is applicable to this case also and in the instant case the assessee was required to mandatory comply with the conditions of filing of the audit report for each project and the same was required to be filed before the due date of filing of return of income u/s 139(1) of IT Act. From the perusal of the facts of the instant case, above noted mandatory conditions were not complied by the assessee for the so called enhanced claim of deductions u/s chapter VIA and accordingly the assessee has to be denied the enhanced deduction on account of transfer of steam, as claimed by filing of letter during assessment stage based on some chartered engineers report. The same has been reiterated by the Hon'ble Supreme Court in the case of Wipro Ltd. (cited above) in its operative part, which being very pertinent is reproduced below:- "14. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under section 108(8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in section 108(8) of the IT Act. We hold that for claiming the benefit under section 108(8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with. Accordingly, the question & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 of law is answered in favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under section 10B(8) of the IT Act on non-compliance of the twin conditions as provided under section 108(8) of the IT Act, as observed hereinabove. The present Appeal is accordingly Allowed. However, in the facts and circumstances of the case, there shall be no order as to costs. Thus in the instant case also, the assessee was required to furnish the form 10CCB before the due date of filing of original return of income u/s 139(1) and because of the failure of the assessee to do the same, the enhanced deduction under chapter VIA cannot be allowed to the assessee on account of transfer of steam of Rs 350,71,75,273/-. Also, in the Wipro case, it is specifically mentioned by the Hon'ble Supreme Court that in taxing statute, the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption as sought by an assessee. In the instant case also, as the assessee is claiming deductions, the provisions of the IT Act are to be strictly applied and accordingly the deductions are to be denied to the assessee. In view of the above discussion, the assessee is not entitled to enhance the claim of deduction under section 80-1A of the Income Tax Act at this stage.”

has been raised as identified in the said application as also additional evidence under Rule 29 has been filed with a prayer to admit the same. As submitted in the detailed explanation as to what triggered the assessee to file the additional ground of appeal, it is submitted that additional ground of appeal enhances the claim u/s 80-IA upon existing claim made in the return. In fact, your honour would notice that the assessee had already filed a claim u/s 80-IA which has also been partially allowed by the Assessing Officer after making some adjustments as per the order of the Transfer Pricing Officer. As per law, the assessee should have claimed a higher deduction u/s 801A which had been omitted to claim because the determination of the enhanced claim u/s 801A arising from the transfer of steam came to knowledge of assessee by certain judgements namely Nectar Lifesciences Limited, Shahi Exports Pvt. Ltd. as also the directions of the Hon'ble DRP-II, New Delhi in the case of SRF Limited based on which judgements, the assessee realized that it should have claimed a higher amount of deduction u/s 801A of the Income Tax Act on account of transfer of steam. During the course of hearing, the Id. DR requested the bench to allow him to file a written submission against the said issue. The written submission filed by the Id. DR does not have any new point on the said issue, all points in the submission are same which were raised/argued orally during the hearing on 24th April, 2025 and the assessee hereby is filing rejoinder against the said submission as follows: - We would like to respectfully submit with regard to the admission of additional evidence as under: Rule-29, Income-tax (Appellate Tribunal) Rules, 1963: Production of additional evidence before the Tribunal

29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced."

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 As discussed above, the assessee realized that enhanced deduction could be claimed only after the judgments supporting such methodology came to its knowledge and therefore, the assessee could not submit the said evidences at the time of proceedings before the Id. AO. Hence, it is prayed that contention of Id. DR are not acceptable and assessee's grounds and evidence be admitted on this point. In this regard, further reliance is placed on the observation made by the Hon'ble Supreme Court, which defines the term "for any other substantial cause", in case of K. Venkatramaiah v. A. Seetharama Reddy, AIR 1963 SC 1526, that under rule 27(1) of Order 41 of the Code of Civil Procedure, "That the appellate court has power to allow additional evidence not only if it requires such evidence "to enable it to pronounce judgment" but also for "any other substantial cause." There may be cases where even though the court finds that it is able to pronounce judgment on the state of the record as it is and so it cannot strictly say that it requires additional evidence "to enable it to pronounce judgment," it still considers that in the interest of justice something which remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence "for any other substantial cause"," Similarly, the Hon'ble Delhi High Court in case of Text Hundred India Pvt. Ltd. [TS-13-HC-2011(DEL)] places reliance on the said judgements of Hon'ble Supreme Court (supra) and observed that: A copy of the said judgement was filed before your honours on 25.04.2025. "Para 12. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect." Further, reliance is hereby placed on the following cases wherein the additional evidences as filed by the assessee has been accepted, which have a material bearing and go to the root of the matter needs to be decided by the Tribunal deserves to be accepted to impart complete justice to the assessee: & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 a) South Konkan Distilleries [AIR 2009 SC 1177 b) HL. Malhotra and Company Private Limited vs. DCIT [ITA 211/2020], Delhi High Court as reported in 2021-TIOL-507- HC(Delhi), c) Seven N Consulting Pvt Ltd [TS-342-ITAT-2016(DEL)-TP d) GE Energy Parts Inc. [TS-400-ITAT-2014(DEL)], e) Rolls-Royce Marine India Private Limited [TS-841-ITAT- 2017(Mum)-TP, f) Bhrigus Software (India) Pvt. Ltd. [TS-179-ITAT-2013(HYD)-TP). Furthermore, Id. DR's submission on the assessee's reliance on the ITAT ruling in the case of assessee's group concern namely DCM Shriram Industries Limited [ITA no. 1000/D/2022 for AY 2017-18 and for AY 2016-17] stating that "since there is no discussion with regard to any objection raised to admission of additional ground and additional evidences in the order and order is silent on this aspect, therefore the finding of Hon'ble Tribunal in the said case cannot be of any help to the assessee in light of specific objection raised to admission of additional grounds of appeal and additional evidences" is unjustified, misplaced and suffers from illegality as it beyond the scope and authority of Id. DR to pass such comments on Hon'ble ITAT order and moreso where said ITAT order has not been challenged by the department. The Id. DR has incorrectly interpreted the Id. AR's contention. The reliance on the said decision by Id. AR was not in relation to the admission of additional grounds or evidence. Rather, the Id. AR cited the judgment solely on the basis of factual similarity, as in the case of DCM Shriram Industries Limited (supra), the Hon'ble ITAT had remitted the identical issue back to the file of the Assessing Officer to examine the said issue as fresh as per provisions of law. The relevant extract of the said order is reproduced herewith as follows: -

8. The next issue is with reference to re-determination of ALP of steam transferred from eligible unit to non-eligible units and consequent enhancement of deduction under section 801A of the Act. This issue arises in assessment years 2016-17 and 2017-18.

9. We have considered rival submissions and perused the materials on record. As could be seen from the materials placed before us, this issue was raised for the first time by the assessee before the Tribunal through additional grounds in assessment year 2016-17. In assessment year 2017-18, as well, the assessee did not raise the issue in course of assessment proceedings. Even, before learned DRP no specific objection was raised in this regard. It is the say of the assessee, in course of proceedings before the DRP, the assessee has raised the issue of enhanced claim of deduction under section 801A of the Act through submissions. However, learned DRP has completely ignored the issue while issuing the directions.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 10. Having heard the parties and considering the fact that neither the Assessing Officer, nor learned DRP have examined this particular claim of the assessee, we are inclined to restore this issue to the file of the Assessing Officer for verifying assessee's claim and deciding the issue in accordance with law, However, the Assessing Officer is directed to provide reasonable opportunity of being heard to assessee. The grounds are allowed for statistical purposes." Further, it may also be noted that the evidences and ground pertaining to this issue for enhanced claim has been raised/filed in AY 2016-17 before your honours, while for rest of the years, i.e. AY 2018-19 and AY 2020-21, the claim was raised before Id. AO/TPO, for which the Id. DR did not place any objections / arguments. Therefore, in the interest of justice, it was the request of the assessee that since all three years have the identical issue with regard to the enhanced claim same treatment should be afforded in all three years. The Id. DR during the course of hearing and in the written submission has also relied upon the section 80A and 80AC of the Act, Rule 18BBB of the Act stating that the assessee failed to claim the so-called enhanced deduction u/s 80-IA in the original return of income, it is clearly hit by provision of section 80(5) r.w.s 80AC of the IT Act and accordingly these deductions under chapter VI-A cannot be allowed to the assessee. He further relied upon the following judicial precedents to contend that the assessee cannot file a fresh claim of chapter VI-A deductions by filing the revised return of income at the assessment stage and not in original return of income. a) M/s Patel Brass Works Pvt. Ltd. Vs. ACIT, Circle 5 Rajkot [ITA no. 60/RJT/2020] b) Rachna infrastructure Pvt. Ltd. [2022] 138 taxmann.com 416 (Gujarat) c) ITO vs. Jagtap Patil Promoters and Builders 147 taxmann.com 199(2023) The Id. DR also placed reliance on the judgment of Hon'ble Supreme Court in the case CIT vs. Wipro Ltd. In 140 taxmann.com 223(SC) 2022 stating that mandatory conditions were not complied by the assessee for the so- called enhanced claim of deduction u/s 80-IA as it was claimed by filing a letter during assessment stage based on the chartered engineer certificate. In this regard, it is submitted that assessee has raised an enhanced claim of deduction which is not a fresh claim of deduction u/s 80-1A of the Act, it is only a correction/revision of the original claim of deduction under section 80-IA of the Act already claimed by the assessee in the original return of income filed u/s 139(1) of the Act on or before the due date. In the instant case of the assessee, the claim was duly raised in the return of income originally filed before the due date of the return filing. Thus, the contentions of ld. DR on this point are not acceptable.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 Reliance is placed on the following judicial precedents which are applicable to the assessee's case and has also distinguished the ruling of Hon'ble Supreme Court in CIT vs. Wipro Ltd. In 140 taxmann.com 223(SC) 2022: - a) Shree Bhavani Power Projects (P) Ltd. Vs. ITO [2024] 165 taxmann.com 733(Delhi) (P.no 409-419 of CLC) "31. One of the reasons which appears to have weighed upon the Supreme Court while rendering its decision in Wipro Limited (supra) was of Section 10B being an exemption provision. This is evident from the Supreme Court significantly observing that Section 10B(8) being an exemption provision not being liable to be compared with Section 32(1)(ii-a) and which was concerned with a claim for additional depreciation. Regard must also be had to the fact that Section 10B(1) is essentially concerned with the grant of exemptions to newly established hundred per cent export-oriented undertakings and the deduction of profits and gains derived by such an enterprise. Sub-section (8) thereof enables an assessee to opt out of the exemption provisions contained therein subject to a requisite declaration being submitted. Since such a declaration would have an immediate and indelible bearing on the assessment of the Return of Income itself, it would clearly be liable to be viewed as a mandatory requirement warranting such a declaration being made at the outset itself and the statutory prescriptions made in that regard being liable to be strictly adhered to.

32. The aforesaid position may be contrasted with Section 80-IA(7), and which is principally concerned with deductions that may be claimed and the Audit Report being made available for examination by the AO. In these writ petitions, we are in any case concerned solely with whether a failure to digitally upload the Audit Report could be said to be destructive. It is for the aforenoted reasons that we are inclined to hold that Wipro Limited (supra) is distinguishable and that it would be the principles enunciated in G.M. Knitting (supra) which would govern the present matters." b) PCIT vs. Oracle (OFSS) BPO Services Ltd. [2019] 102 taxmann.com 396(Delhi) "22. Our attention was, however, drawn to the observations of the Division Bench that the objective behind the amendment was to defeat multiple claims of deduction and ensure hetter compliance. Certainly, the amended provisions ensure better compliance of the statutory provisions. Reference to the expression 'multiple claims of deduction' would be with reference to the stipulation that deduction should be claimed under a particular provision and it cannot be shifted and treated as deduction claimed under the other provision. Language of Sub-section 5 to Section 80 A does not state that the deduction once claimed under a particular section cannot be & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 corrected and modified before the Assessing Officer. Indeed, the Assessing Officer can examine the claim for deduction and can make adjustment/disallowance. We would not read in the amended provision, a stipulation barring and restricting the assessee from revising the computation/claim for deduction made in accordance with Section 80A (5) of the Act." Thus, based on the above submissions and judicial position, it is prayed before your honours that the ground and evidence filed by the assessee on the issue of enhanced claim of deduction w/s 80-IA may kindly be admitted and respectfully following the order of Hon'ble ITAT in the case of DCM Shriram industries Limited (ITA No 1000/D/2022 for AY 2017-18), the claim of the enhanced deduction under section 80-IA may kindly be remitted back to the file of the assessing officer for verification and to be allowed as per law.”

47. Now by taking additional grounds of appeal

, the assessee has made revised / additional claim of INR 2,99,49,20,010/- of deduction u/s 80. IA towards transfer of steam from eligible units to non-eligible units. The assessee has claimed that it is based on the order of Hon’ble DRP-II, New Delhi dated 26.03.2021 in case of & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 group concerns M/s. SRF Ltd. for AY 2016-17 where the additional claim was considered and allowed by the Hon’ble DRP. The assessee’s claim is that the Hon’ble DRP while allowing the additional claim in the case of group concern M/s. SRF Ltd. placed reliance on the certificate issued by Chartered Engineer. As the Ld. DRP had issued directions only on 26.03.2021, it was not possible for the assessee to make such additional claim before the AO who has already passed the final assessment order after the directions of Ld. DRP on 28.12.2019. Thus under these circumstances, this additional claim is made for the first time before the Tribunal by filing additional grounds of appeal and further by filing additional evidences. With regard to the admission of additional grounds of appeal, we find that the additional ground taken are legal in nature where the assessee has claimed the revised / additional deduction u/s 80. IA of the Act. The Hon’ble Supreme Court in the case of NTPC vs CIT 229 ITR 383 has held that any legal claim could be made at any stage of the proceedings. It is further seen that the Revenue has challenged the admission of additional grounds for the reason that it is a fresh claim made by the assessee. Since it is not made through the income tax return filed u/s 139(1) of the Act, such claim could not be admitted. For this reliance was placed in the case of PCIT vs Wipro Ltd.(supra) wherein the Hon’ble Supreme Court has held that, one of the mandatory conditions is that for claiming the benefit u/s 10B(8) of the Act, the twin conditions of furnishing the declaration to the AO in writing and the same must be furnished before the due date of filing of return of income u/s 139(1) of the Act are required to be fulfilled and are satisfied which & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 conditions are mandatory. It cannot be said that one of the conditions would be mandatory and other is directory. However, in the instant case, it is seen that the assessee has not made afresh claim of deduction u/s 80IA of the Act before us, but the claim of the deduction u/s 80IA of the Act was made in the return of income which was revised to an upward figure and for which the additional claim is lodged before the Tribunal for the first time. Therefore, the judgement of Hon’ble Supreme Court in the case of Wipro Ltd. (supra) is not applicable to the facts of the present case. The Hon’ble Delhi High Court in the case of PCIT vs Oracle (OFSS) BPO Services Ltd. (2019) 102 taxmann.com 396 (Del.) has held that “the Act does not debar the assessee to correct or modify the deduction once claimed under particular section.” The AO indeed can examine the claim of deduction and can make additions/disallowances.

50. In the instant case, since the draft assessment order, the direction by the Hon’ble DRP and the final assessment order was passed prior to the direction given by ld.DRP in the case of M/s. SRF Ltd. therefore, these evidences could not be filed before the lower authorities. This is a reasonable cause for admission of the additional evidences at this stage.

9. We have considered rival submissions and perused the materials on record. As could be seen from the materials placed before us, this issue was raised for the first time by the assessee before the Tribunal through additional grounds in assessment year 2016-17. In assessment year 2017-18, as well, the assessee did not raise the issue in course of assessment proceedings. Even, before learned DRP no specific objection was raised in this regard. It is the say of the assessee, in course of proceedings before the DRP, the assessee has raised the issue of enhanced claim of deduction under section 801A of the Act through submissions. However, learned DRP has completely ignored the issue while issuing the directions.

10. Having heard the parties and considering the fact that neither the Assessing Officer, nor learned DRP have examined this particular claim of the assessee, we are inclined to restore this issue to the file of the Assessing Officer for verifying assessee's claim and deciding the issue in accordance with law, However, the Assessing Officer is directed to provide reasonable opportunity of being heard to assessee. The grounds are allowed for statistical purposes."

54. Ground Nos.6 to 9 are in relation to disallowance of INR 54,14,870/- made by the AO by invoking the provision of rule 8D(2) of the Rules.

55. Heard both the parties and perused the material available on record. This issue has already been decided by us in favour of assessee in Revenue’s appeal for AY 2015-16 in ITA No. 927/Del/2022. Thus, by following the observations made therein, the disallowance u/s 14A made in the year under appeal is hereby deleted. Accordingly, Ground of appeal Nos.6 to 9 are allowed.

56. Ground No.10 raised by the assessee is in relation to the adjustment of disallowance u/s 14A to the book profits computed u/s 115JB of the Act.

taken by the Revenue in its appeal in for AY 2015- & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024

16. Thus, by respectfully following the observations made therein, we hold that no adjustment could be made in the book profits on account of disallowance made u/s 14A of the Act. Ground No.10 of the assessee is accordingly, allowed.

58. Ground No.11 raised by the assessee is in respect to the deduction of INR 1,33,85,194/- u/s 37 of the Act.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 63. Ground No.15 raised by the assessee is with respect of charging of interest u/s 234C of the Act.

(AY- 2018-19) [Assessee’s appeal] 66. This appeal is filed by the assessee against the assessment order dated 30.08.2022 passed u/s 143(3) r.w.s.144C(13) of the Act as a consequence of directions by Hon’ble DRP vide its order dated 16.06.2022 pertaining to assessment year 2018-19.

Sl.No. Particulars (Nature of Adjustment) Amount (In Rs.) 1. Transfer of Steam 98,20,41,276 2. Transfer of electricity from eligible unit 70,40,57,860 to non-eligible unit 3. Sale of Seeds 1,49,75,000 4. Interest on Loan given 1,61,77,929 5. Interest on receivables 36,77,478 Adjustment u/s92CA 172,09,29,543

70. Against such order, the assessee is in appeal before the Tribunal. The assessee has taken the following grounds of appeals:- General Grounds 1. “That the Ld. Assessing Officer ("AO") has erred in law and on facts, in the circumstances of the assessee's case in making the addition/ adjustment to tune of 1,69,03,44,466/- on account of transfer pricing issues and addition /disallowance of 11,37,92,673/- on account of corporate tax issues. The Id. AO has also erred in making an addition of 8,70,000/- in the computation of 'books profits' u/s 115JB of the Act under the MAT provisions.

2. That the ld. AO has erred in not entertaining and granting the enhanced claim of deduction to tune of 6,74,78,23,731 u/s 80-1A of the Act raised by the assessee during the course of transfer pricing proceedings / assessment proceedings as well as before the Id. DRP and also inspite of specific directions of the ld. DRP to consider such claim of the assessee.

3. That the assessment order passed by the ld. AO u/s 143(3) r.w.s. 144C(13) of the Act dated 30th August, 2022 is bad in law. The adjustment/ addition/disallowances are on wholly illegal, untenable and on erroneous grounds. COMMON GROUND OF OBJECTIONS AGAINST THE FINAL ASSESSMENT ORDER Incorrect name as well as incorrect PAN mentioned in the directions passed by the ld.DRP u/s 144C(5) of the Act

4. That the Id. DRP has erred in facts and on the circumstances of the case by mentioning the incorrect PAN in the directions passed u/s 144C(5) of the Act dated 16th June, 2022 as well the incorrect name and incorrect PAN in the intimation letter of order u/s 144C(5) of the Act dated 28th June, 2022.

5. It is humbly prayed before the Hon'ble ITAT that directions passed by the lid. DRP dated 16th June, 2022 being vitiated by a non- curable defect u/s 292B of the Act and consequently the final assessment order passed by the Id. AO u/s 143(3) r.w.s. 144C(13) of the Act dated 30th August, 2022 pursuant to such directions of ld.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 DRP u/s 144C(5) of the Act be held as null & void and hence liable to be quashed. Draft Assessment order and final assessment order are null & void 6. That the draft assessment order dated 21" September, 2021 passed by the Id. AO is null & void and is liable to be quashed being passed in gross violation to the statutory provisions of the Act on the following accounts: a) that principles of natural justices have been flouted as both the transfer pricing adjustment and corporate tax additions have been made by the Id. AO without issuing any show cause notice on any issue and thus depriving the assessee of its fair and reasonable opportunity of being heard; and b) that statutory procedure laid down in clause (xvi)(b) of sub-section (1) of section 144B of the Act r.w. sub-section (9) of that section prescribing the issuance of show cause notice along with draft assessment order in prescribed manner has not been followed by the Id. AO before passing the draft assessment order u/s 144C of the Act dated 21" September, 2021.

7. That the Id. DRP has erred in law and in facts and circumstances of the case in not quashing the draft assessment order which is vitiated being null and void and instead validating the action of ld. AO by giving him direction to pass speaking order.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 b) not giving the allowance of deduction u/s 43B of the Act amounting to 45,04,47,576/-claimed by the assessee in its return of income, being the amounts actually paid during the year which were earlier added back in the computation of previous assessment year(s).

11. That the Id. AO has erred in facts and circumstances of the case in not rectifying the above mistakes apparent from records by incorrectly holding that assessee did not provide any documentary evidence and failed to explain the same.

12. That the Hon'ble ITAT may be pleased to direct the Id. AO to rectify the above mistakes apparent from records while computing the total income of the assessee. GROUNDS OF OBJECTIONS AGAINST TRANSFER PRICING ADJUSTMENTS Transfer of Electricity from Eligible to Non-Eligible Units- adjustment of ₹70,40,57,860/- 13. That the Id. DRP has erred in not dealing with/ adjudicating the assessee's various grounds of objections on merits, in the backdrop of favourable order of the Hon'ble ITAT in assessee's own case for the AY 2014-15 on the issue.

14. That even otherwise, the Id. TPO/AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid adjustment/addition as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further no records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO. Grounds on merits not adjudicated by ld. DRP 15. That Ld. TPO and consequently the Ld. AO have erred in law and on facts and in circumstances of the assessee's case in: a) taking 6.36 per unit as arm's length price (ALP) for transfer of electricity being the average of following: (i) Indian Energy Exchange (IEX) rates @3.25 per unit [external price obtained by the Id. TPO from IEX website]; and (ii) assessee's comparable uncontrolled price data in form actual purchase of electricity from respective state electricity board (SEB)- JVVNL[@ 9.47 per unit); and then b) comparing the above average rate with assessee's actual transfer price [@ 8.52 per unit) and making adjustment of 70,40,57,860/- being the difference between the two rates i.e. [8.52 (-) 6.36 per unit] & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 multiplied with quantities of electricity transferred i.e. 32,59,52,713 units by assessee's eligible power plant at Kota to non-eligible unit.

17. That Ld. TPO and consequently the Ld. AO have erred in law and on facts and in circumstances of the assessee's case in treating the rates of electricity traded on IEX, as comparable uncontrolled rates/prices. IEX Transactions are not at all comparable with the assessee's transactions on account of following factors: - a) that modus operandi and business model of IEX which is an spot energy exchange b) that rates obtained from IEX which is only a platform and not SEB do not qualify as an appropriate comparable data under CUP method. c) that there are material differences between the functional profile and terms and conditions of transaction entered into by the assessee and those taken from IEX.

18. The Ld. TPO and consequently the Ld. AO have erred in law and on facts and circumstances of the case in averaging the data of two different systems viz. assessee's internal CUP and IEX spot rates and erroneously treating such average rate as ALP for the purpose of making the aforesaid adjustment in respect of transfer of electricity by eligible power plant at Kota.

19. That the Ld. TPO has erred in ignoring the assessee's reliance on Safe harbor rules (SHR) provided in Rule 10THC of Income-tax Rules, 1962 and on various judicial precedents on the issue which corroborates the assessee's methodology of taking SEB rates as comparable uncontrolled price.

20. That without prejudice, the Id. TPO and consequently the Id. AO have erred in not appreciating that IEX rates as obtained are only basic rates and various other charges viz. fixed charges, POC charges, RPO Charges, distribution charges, NLDC Charges, load charges, electricity duty, cesses etc. have been completely disregarded.

21. The Ld. TPO and consequently the ld. AO have erred in law and on facts and circumstances of the case in not following the rule of consistency by disregarding the methodology followed by the assessee for transfer of electricity since assessment year 1997-98 which has been accepted by the department in past and has also been upheld by the Hon'ble ITAT and the Id. CIT(A) in assessee's own case for the AY 2014-15 and AY 2015-16 respectively.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 22. It is humbly prayed before the Hon'ble ITAT that the transfer pricing adjustment of ₹70,40,57,860/- in respect of transaction of transfer of electricity by the eligible power plant at Kota be directed to be deleted. Transfer of Steam from Eligible to Non-Eligible Units-adjustment of 98,20,41,276/- 23. That the Id. DRP has erred in not dealing with adjudicating the assessee's various grounds of objections on merits, in the backdrop of favourable order of the Hon'ble ITAT in assessee's own case for the AY 2014-15 on the issue.

24. That even otherwise, the Id. TPO/AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid adjustment/addition as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further no records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO. Grounds on merits not adjudicated by ld. DRP 25. That the Ld. DRP/TPO and consequently the Id. AO have erred in law and facts and in circumstances of the case in making an adjustment of 98,20,41,276/- in respect of specified domestic transaction of transfer of steam by eligible power units to non- eligible units [at its cost of production] by treating its arm's length price /cost of production at NIL on wholly erroneous, superficial and arbitrary grounds.

26. That the Ld. TPO and consequently the Ld. AO have erred in not appreciating the modus-operandi of the assessee's eligible power plants which is based on the co-generation model and thus erred in making irrelevant, incorrect and unnecessary observations about the assessee's business process.

27. That the Ld. TPO and consequently the Ld. AO have exceeded their jurisdictions by questioning the business expediency of the transaction of steam by treating the value of a commercially valuable product at NIL which is beyond the mandate of transfer pricing statute.

28. The Ld. TPO and consequently the Ld. AO have erred in law and on facts and circumstances of the case in not following rule of consistency by disregarding the same methodology followed by assessee since inception i.e. FY 2005-06 which has also been upheld by the Hon'ble ITAT & the Id. CIT(A) in assessee's own case for the AY 2014-15 and the AY 2015-16 respectively. Enhanced Claim of deduction u/s 80-IA of the Act raised during the assessment proceedings as well as before the Id. DRP & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 29. That the Id. TPO and consequently the Id. AO has erred in law and the facts and circumstances of the case by not entertaining the enhanced claim of deduction u/s 80-IA of the Act inspite of the specific binding directions of the Id. DRP vide para no. 4.6.1 w.r.t. the enhanced claimed raised by the assessee during the course of transfer pricing proceedings / assessment proceedings as well as before the Id. DRP w.r.t. the re-determination of value of steam and consequent enhancement of deduction u/s 80-IA of the Act.

32. It is prayed that the Hon'ble ITAT may be pleased to pass the following order: a. that assessee be allowed the enhanced claim of 6,74,78,23,731/-u/s 80-IA of the Act considering the equivalent value of steam based on the certificate of chartered engineer and corroborated by the supplementary form no. 10CCBs, which is in line with Id. DRP-II directions in case of SRF Limited for the AY 2016-17. b. without prejudice to above and in any case, the assessee's approach of transferring the steam at cost of production is at arm's length and hence adjustment made amounting to 98,20,41,276/- in respect of transfer of steam may be deleted. Sale of hybrid seeds - Adjustment of 14,17,000/- 33. That the Id. DRP/TPO and consequently the Id. AO have erred in law and facts and circumstances of the case in making an adjustment of 14,17,000/- in respect of international transaction of sale of hybrid seeds to the associated enterprise on wholly illegal and erroneous grounds.

34. The Ld. TPO and consequently the Id. AO have erred in law and facts and in circumstances of the case by not accepting the comparability analysis conducted by the assessee on account of following erroneous grounds:

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 a) rejecting the turnover filter applied by the assessee contending the same as not being an appropriate filter. b) Rejecting some of the assessee's comparables by allegedly claiming that the comparables are either persistent losses making or functionally not comparable with the assessee's bioseed segment.

35. The Ld. TPO and consequently the Id. AO have erred in law and facts and in circumstances of the case by conducting a fresh search process and resultantly adding new companies as comparables, which should not be accepted due to following reasons: a) that the FAR analysis, output of each stage of quantitative filter and PLI computation of the comparables as selected by the Ld. TPO has not been provided to the assessee neither as part of the SCN nor separately, which is against the principles of natural justice. b) that on the basis of FAR analysis conducted by the assessee, the new comparables of Id. TPO are both product-wise and functionally incomparable with the assessee's bioseed segment. c) without prejudice to the above, the PLIs of new comparables as computed by the Ld. TPO are at variance with the PLIs as computed by the assessee and if correct PLIs are considered, then assessee's PLI falls within such ALP range and hence no adjustment is warranted.

36. That the Id. TPO and consequently the Id. AO has erred in law and the facts and circumstances of the case by not considering the submissions of the assessee and by passing a non-speaking order inspite of the specific binding directions of the Id. DRP vide para no. 4.7.3 to verify the factual contentions of the assessee w.r.t. the comparability analysis of the comparables selected/rejected by the Id. TPO.

37. That the Ld. TPO and consequently the Id. AO have erred in ignoring the fact that the AEs of the assessee have been incurring losses. Therefore, there is no profit shifting by the assessee to its AEs by virtue of the transaction under consideration and hence no ALP adjustment is warranted on the same.

38. That the Id. TPO has failed to appreciate that assessee's SBG division PLI [OP/OC] @18.86% is same for AE sales of hybrid seeds which is only ₹11.38 Crores and non-AE sales of hybrid seeds which is around 400.27 Crores and thus AE sales are ALP under internal TNMM as well.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 40. It is prayed before the Hon'ble ITAT that adjustment made by the Ld. TPO/AO in respect of sale of hybrid seeds may kindly be deleted by upholding the assessee's approach determination of ALP. Interest on Loan Given-Adjustment of NIL 41. Without prejudice to the fact that adjustment made on account interest income on foreign currency loan granted to the AE has been deleted following the Id. DRP directions [ being a rectification of apparent mistake), the Id. DRP/TPO and consequently the Id. AO have erred on principle in imputing the adhoc interest rate @LIBOR+400 basis points and rejecting the interest charged by the assessee @ LIBOR+350 basis points i.e. 4.72% on foreign currency loan granted to its AE [Subsidiary- Bioseed Holding PTE Ltd.].

42. The Ld. TPO and consequently the Ld. AO have erred in imputing the above ad-hoc interest rate by: a) disregarding, without affording any cogent reason, the comparability analysis carried out by the assessee in its TP study which is based on the RBI Master Circular and OECD guidelines. b) not appreciating that assessee's interest rate is at ALP having regard to the internal comparable uncontrolled prices (CUP) data available at LIBOR+220 basis points being interest rate charged by IFC and LIBOR+145 basis points being interest rate charged by SCB from the assessee. c) ignoring the settled judicial position on the issue which have held that 'LIBOR only without any spread is an appropriate benchmark for the purpose of benchmarking foreign currency loans to AEs.

43. The Id. TPO and consequently Id.AO have erred on the facts and in law in imputing adhoc interest rate @ LIBOR+400 basis points i.e. 6.49%, without providing any basis to arrive at such rate in the show cause notice issued by him.

44. That the Ld. TPO and consequently the Ld. AO has erred in law and on facts and in circumstances of the case in erroneously justifying the rate of LIBOR+400 bps directly in its order by making reference to arbitrary parameters like credit ratings, country risk premium, miscellaneous factors etc.

45. That the Ld. TPO and consequently the Id. AO have erred in ignoring the fact that the assessee has earned interest income on loan granted to its AE, while on the other hand the AE has been incurring losses. Therefore, there is no profit shifting to its AE by virtue of this transaction and hence no variation of benchmark interest rate is warranted on the same.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 46. That the Ld. TPO and consequently the Ld. AO have erred in law and facts and in circumstances of the case in not following the rule of consistency ignoring that same methodology has been consistently followed by the assessee for past many years, which has been accepted by the revenue in past.

47. That the Ld. TPO and consequently the Ld. AO have erred in making the factual computational error apparent from records by considering the LIBOR rate from globalrates.com @ 2.49% which relates to FY 2018-19 (instead of correct LIBOR rate of 1.475% which pertains to current FY 2017-18).

48. It is prayed that the Hon'ble ITAT may be pleased to pass the following order: a. That 'LIBOR only' is the appropriate interest rate to benchmark the transaction of foreign currency loan granted to the AE. b. Without prejudice, to the above, the assessee's approach of computing the interest income by considering interest rate @ LIBOR+350 basis points i.e. 4.72% meets the arm's length principle. Interest on Receivables- Adjustment of ₹28,28,330/- 49. That the Id. DRP/TPO and consequently the Id. AO has erred in law and on facts and circumstances of the case in making an adjustment of 28,28,330/- on the ground that interest income offered by the assessee @ 4.75% on outstanding receivables from AEs does not meet the arm's length principle.

50. That the Id. DRP/TPO and consequently the Id. AO have erred in making the above adjustment by disregarding the credit period offered by the assessee to its AEs at 175 days from date of invoice and instead taking a credit period of 60 days only which is unjustified and unreasonable and against the rule of commercial expediency.

51. That the Id. TPO and consequently the Ld. AO have erred in ignoring the fact that interest cost for a period of 6 months has already been factored by the assessee while computing the sale price for sale of hybrid seeds to its AEs and thus no benefit has been provided to the AEs by way of delay in receipt of outstanding receivables.

52. That the Id. TPO and consequently the Ld. AO has erred in making the adjustment in respect of receivables ignoring that the said transaction is intrinsically connected and subsumed in transaction of sale of hybrid seeds itself which has already been benchmarked and examined under TNMM and thus no separate adjustment on account of interest on receivable is warranted under the law.

53. That the Id. TPO and consequently the Ld. AO have erred in not appreciating:

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 a) that the assessee has a granted the credit period of 175 days or more to both AEs and the third parties; and b) that the assessee has not been charging interest on account of delay in receipt of outstanding receivables from third parties wherein the delay in receipt of payment is much higher as compared to the delay in case of AEs.

54. The Ld. TPO and consequently the Ld. AO have erred in making such an adjustment by: a) disregarding the comparability analysis carried out by the assessee in its TP study which is based on the RBI Master Circular and OECD guidelines, without affording any cogent reason. b) ignoring the settled judicial position on the issue which have held that 'LIBOR only without any spread is an appropriate benchmark for the purpose of benchmarking interest on receivables from its AEs.

55. The Id. TPO and consequently the Id. AO have erred on the facts and in law in imputing ad-hoc interest rate @ LIBOR+400 basis points i.e. 6.49%, without providing any basis to arrive at such rate in the show cause notice issued by him.

56. The Ld. TPO has erred in law and facts and in circumstances of the case in erroneously justifying the rate of LIBOR+400 bps directly in its order by making reference to arbitrary parameters like credit ratings, country risk premium, miscellaneous factors etc.

57. That the Ld. TPO and consequently the Id. AO have erred in ignoring the fact that the assessee has earned interest income on delayed receipt from outstanding receivables from its AE, while the said AEs have been incurring losses. Therefore, there is no profit shifting to its AE by virtue of this transaction and hence no ALP adjustment is warranted on the same.

59. The Ld. TPO and consequently the Ld. AO have erred in making following factual computational errors which are apparent from records while working out the adjustment of interest on receivables from its AE: a) the Ld. TPO has also considered the delay pertaining to preceding year/succeeding year and hence computed the interest wrongly for the said extended period & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 b) the Ld. TPO has considered the LIBOR rate from globalrates.com @ 2.49% which relates to FY 2018-19 (instead of correct LIBOR rate of 1.475%which pertains to current FY 2017-18).

60. It is prayed before Hon'ble ITAT that adjustment made in respect of Interest on delayed payment of receivables may kindly be deleted by upholding the assessee's approach of charging interest on receivables from AEs above the LIBOR rate at ALP. GROUNDS OF OBJECTIONS AGAINST CORPORATE TAX ISSUES Additional disallowance u/s 14A-28,70,000/- 61. The Ld. AO has erred in law and in facts and in the circumstances of the case in making an additional disallowance to the tune of ₹8,70,000/- u/s 14A of the Act r.w.r 8D(2)(ii) without issuing any show cause notice and also in contravention of statutory procedure laid down in clause (xvi)(b) of sub-section (1) of section 144B of the Act r.w. sub-section (9) that section. On merits-without prejudice to above 62. The Ld. AO has erred in law and in facts and in the circumstances of the assessee by making additional disallowance u/s 14A of the Act r.w.r. 8D(2)(ii), to the tune of 8,70,000/- based on the assumption that some kind of expenditure has to be incurred to carry out the investment activities and earning exempt income which is wholly untenable in law and based on conjectures and surmises.

64. The Ld. AO has while upholding/enhancing disallowance u/s 14A of the Act r.w.r 8D(2)(ii) of the Income Tax rules, erred in disregarding the fact that no expenditure is disallowable, as assessee's own interest free funds/surplus funds are much more than the amount of investments.

65. The Ld. AO has erred in making the above disallowance u/s 14A of the Act by not following the Judgment of Hon'ble Jurisdictional High Court in assessee's own case for the AY 2008-09, Hon'ble ITAT's order for the AY 2010-11 and Hon'ble CIT(A)'s order for AY 2011-12, AY 2013-14 and AY 2015-16 all in favour in assessee's own case.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 67. It is prayed before Hon'ble ITAT that additional disallowance u/s 14A r.w.r.8D(2)(ii) by the Ld. AO may kindly be deleted. Addition to Books profits u/s 115JB-adjustment of₹ 8,70,000/- 68. That the Ld. AO has erred in law and in facts and circumstances of the case by making an addition of ₹8,70,000/- to the book profits u/s 115JB on account of enhanced disallowance u/s 14A of the Act.

69. That the Id. AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid addition as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further no records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO.

73. The Ld. AO has erred in law and in facts and in the circumstances of the case by considering the valuation as made by the stamp value authorities, which is merely a prima facie rate and can only be a starting point of an inquiry but the same cannot be a sole concluding reason for making addition u/s 50C of the Act.

74. That the assessee hereby objects before the Hon'ble ITAT, the action of Id. AO of adopting the stamp duty value of lands as their full value of consideration u/s 50C of the Act against their actual sale consideration which should also be treated as arm's length price as the lands have been sold to independent third parties only.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 76. That the Id. AO has erred in law and on facts and circumstances of the case by sustaining the above addition merely to keep the issue alive by blindly following the order of preceding year without carrying out any independent enquiry or without referring the matter to the valuation officer to determine the fair market value of the property.

77. That the Id. AO has erred in law and on facts and circumstances of the case in not following the binding directions of the Id. DRP by not deleting the aforesaid addition as according to the best of the knowledge of the assessee no intimation of filing any appeal before the Hon'ble High Court has been received and further no records of filing such an appeal is available on the official website of Delhi High Court till the passing of the order dated 30th August, 2022 by the Id. AO.

78. It is prayed before Hon'ble ITAT that addition u/s 50C of the Act made by the Ld. AO may kindly be deleted. Addition on account of notional Interest- 8,73,37,548/- 79. The Ld. AO has erred in law and in facts and in the circumstances of the case in making the addition of 8,73,37,548/- being notional interest without issuing any show cause notice and in contravention of statutory procedure laid down in clause (xvi)(b) of sub-section (1) of section 144B of the Act r.w. sub-section (9) that section.

80. Without prejudice to above, the Ld. DRP/AO has erred in ignoring the fact that such interest income has not been recognized by the assessee due to inherent uncertainty in realization of such income which is in accordance with the recognized principles of accounting of income.

81. It is prayed before Hon'ble ITAT that the addition made by the Ld. AO in relation to interest income not recognized by the assessee may kindly be deleted. Addition on the basis of undisclosed sale (mismatch in form 26QB)- 1,57,80,000/- 82. The Ld. AO has erred in law and in facts and in the circumstances of the case in making an addition of ₹1,57,80,000/-on the basis of mismatch between sale of property reported in ITR and reflecting in form no. 26QB without issuing any show cause notice and in contravention of statutory procedure laid down in clause (xvi)(b) of sub-section (1) of section 144B of the Act r.w. sub-section (9) that section.

83. That the Ld. AO has erred in law and in facts and in the circumstances of the case in making the ad-hoc and arbitrary addition in respect of above mismatch solely on the basis of amount reflected in the Form no.26QB and in complete disregard to the assessee's submission that based on the records there is no such & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 sale of captioned land by the assessee during the year under consideration.

84. That the Id. DRP/AO has erred in law in not making the further enquiries after the assessee's submissions and further failed to provide the relevant information and documentary evidences in relation to sale of captioned land to the assessee for rebuttal.

85. That the Id. AO has erred in law and the facts and circumstances of the case by not considering the submissions of the assessee and by not passing a speaking order inspite of the specific binding directions of the Id. DRP vide para no. 4.14.1 w.r.t. in this regard.

86. It is prayed before Hon'ble ITAT that the ad-hoc addition made by the Ld. AO for mismatch between ITR and Form no.26QB may kindly be deleted. ADDITIONAL CLAIMS RAISED BEFORE HON'BLE DRP Allowance of Foreign tax Credit-18,27,359/- 87. That the Id. DRP and consequently the Id. AO has erred in law and in facts and circumstances of the case in rejecting the assessee's claim of foreign tax credit (FTC) amounting to 18,27,359/- solely on the technicality of the issue that since claim does not fall in the category of 'variation made by the AO' no intervention of the Id. DRP at this stage is called for.

88. That the Hon'ble ITAT may be pleased to grant an claim of foreign tax credit (FTC) amounting to 18,27,359/- against the tax liability of the assessee u/s 90 of the Act, which had not been claimed and granted to the assessee due to late deduction and deposit of the same by the deductor. The said FTC pertains to the interest income receivable by the assessee from its subsidiary company- Bioseed Holdings Pte, Singapore for the AY 2018-19. Penalty 89. The Ld. AO has erred in law & circumstances of the case by initiating penalty proceedings u/s 270A of the Act. Others 90. The aforesaid grounds of appeal

are without prejudice to one another.

91. The assessee craves leave to add, amend, alter, change vary or substitute any of the aforesaid grounds or raise an additional ground if it becomes necessary to do so in the interest of justice.”

71. Ground No.1 to 3 and 89 to 91 are general in nature, hence dismissed.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 72. Ground Nos. 4 to 9 raised by the assessee are in respect of the deficiencies in the draft assessment order and final order with respect to name, PAN etc. since they were not pressed by the assessee therefore, same are dismissed.

75. He thus prayed that the disallowance was made without providing any reason for making such addition/disallowance. Ld.AR for the assessee also submits that the ld. DRP has directed the AO to allow the claim after making verification of the same. However, the AO simply stated that no details were filed by the assessee and therefore, dismissed the claim of the assessee. Ld.AR therefore, requested to delete the disallowance so made by the CPC.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 Thus, by following the observations made therein, we allow Ground Nos. 13 to 22 of the assessee and direct the AO to allow the deduction u/s 80IA of the Act of INR 70,40,57,860/- being the amount of deduction claimed towards sale of electricity from eligible units to non-eligible units.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 (i) Basant Agro Tech (India) Ltd. The TPO has rejected this comparable as it has failed net worth filter. It was the contention of the assessee that as per financial statement of the company, it could be seen that the company has positive net worth in preceding as well as in succeeding years. In this regard, the table of net worth of the year under appeal in the preceding and succeeding years is as under:- Financial Net Worth [Amount Year (Rs.) in Crore] 2015-16 99.6 (PB P.No.978) 2016-17 104.56(PB P.No.980) 2017-18 110.64 (PB P.No.982) 2018-19 117.31 (PB P. No.984) 2019-20 126.15 (PB P.No.986)

Since the company M/s Basant Agro Tech (India) Ltd. has positive net worth and also the same is accepted suitable comparison for benchmarking the transaction in subsequent AY. Under these circumstances we find no reason to exclude the same from the final set of comparables accordingly, we direct the AO/TPO to include this company as a suitable comprable. (ii) Maharastra Hybrid Seeds Co.Ltd. This comparable was rejected by TPO for the reason that it had failed in PBT (“profit before tax”) filter since the said company is in losses consistently. In this regard, the Ld.AR drew our attention to the financial statements of the company available in Paper Book pages 988 to 990 according to which, in the year under appeal, the company is having profit before taxes of INR 8.07 crores in FY & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 2016-17 which is 1.82 % of the sales. Further, it is seen that in the year under appeal and in FY 2015-16 relevant to YA 2016-17, the company was in losses and therefore, we are not in agreement with the contention of the assessee that this company is to be included in the final set of comparable accordingly, we find no infirmity in the order of AO/TPO to exclude the same from the final set of comparables. (iii) Metahelix Life Science Ltd. (Now Rallis India Ltd.) The TPO has rejected this comparable by holding that it is not functionally comparable. In this regard, Ld. AR drew our attention to page 998 of Paper Book which is the financial statement of Rallies India Ltd. wherein in Note No.43 of the financial statement for the year ended on 31.03.2018, the function of the company of the Seed Division is stated. According to it, the company is having identical product line of hybrid seeds and also engaged in production, R&D and activity of marketing seeds. The turnover of the bio-seeds segment is also at similar level if compared with the assessee. In view of these facts, in our considered opinion, this company could be included in the final set of comparables. Accordingly, we direct to include this company in the final set of comparables.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 90. In view of above discussion, Ground Nos. 33 to 40 raised by the assessee are partly allowed.

94. The assessee has benchmarked the transactions using other method as most appropriate method for benchmarking. As per the assessee, it has sold hybrid seeds on a credit period of 175 days based on acceptable market practice following in this line of trade and charged interest @ 4.75 % on receivable where the delay is over and above 175 days, as mutually agreed. During the year, the assessee has received INR 57,97,251/- on such outstanding receivables however, the TPO instead of 180 days has taken the period of 30 days for computing the delay. Ld. DRP while deciding & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 the objections raised by the assessee has directed the TPO to use LIBOR + 400 basis points as benchmark rate for computing interest on receivables and further directed to take credit period of 60 days as against 30 days taken by the TPO. Accordingly, the TPO has computed the adjustment of INR 28,28,330/-. The ld. AR submits that the TPO has taken incorrect LIBOR of 2.49% which is applicable for year 2018 whereas the correct rate was 1.37% prevailing in the year under consideration. For this, he referred the TP study report wherein the average rate is taken at 1.37% as LIBOR rate of FY 2017-18. Regarding the credit period, the assessee contended that the credit period was allowed at 60 days by Ld. DRP whereas in assessee’s own case for AY 2020-21, the credit period of 175 days has been accepted by the TPO itself.

ITA Nos.927 & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 95. Ld.AR further submits that the assessee has already factored the benefit to the AE by way of delay payment on receivables while computing the cost of sale of hybrid seeds and thus no adjustment is required to be made. In this regard, he placed reliance on the judgement of Hon’ble Jurisdictional High Court in the case of Kusum Health Care Pvt.Ltd. reported in TS-412-SC-2017 (Del)- TP. In the last, he submits that in the case of group concerns, M/s. SRF Ltd., this issue has been decided in favour of the assessee by the Co-ordinate Bench in AY 2010-11 in and in for AY 2014-15 and thus requested for deletion of the adjustment made.

103. The addition has been made by the AO, being the difference between actual sale consideration and the value determined by stamp value authorities for charging stamp duty on the sale of two pieces of land situated in Pharenda and Salon wherein the difference was INR 59,28,125/- and INR 38,77,000/- respectively. The assessee claimed before Ld. DRP that the issue is squarely covered by the decision of Co-ordinate Bench of the ITAT in assessee’s own case for AY 2014-15 for which Ld. DRP has given directions that if the said order is not challenged before the higher & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 forums, the disallowance made be deleted. The AO in final assessment order observed that the issue pertaining to Section 50C of the Act. It is seen that AO while making the addition in final assessment order observed that in AY 2015-16, the issue has been set aside to the file of the AO by the Co-ordinate Bench of the Tribunal with the direction to refer the matter to DVO for determination of fair market value and the assessee was also directed to raise all the issues before the DVO about real character of the property.

104. Before us, Ld.AR for the assessee submits that the addition has been made without issue show cause notice and further by ignoring the fact that the actual price of land was less than the consideration received. It is further submitted by Ld. AR that the assessee has objected the valuation made by the Stamp Authority therefore, it is the duty of the AO to refer the matter for valuation to determine the FMV however, this has not been done. He thus requested that addition made deserves to be deleted. In the alternate, Ld. AR requested that the matter may be referred to DVO for determination of FMV as on the date of transfer.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 109. Before us, Ld.AR for the assessee submits that the subsidiary company was incurring heavy losses and short of funds, therefore, the recovery of interest was doubtful. Accordingly, it was decided to account for the amount of TDS as income only which was received in the shape of tax credit. It is further submitted that the balance amount of interest was received in FY 2022-23 and offered for taxation in AY 2023-24 relevant to FY 2022-23 and therefore, taxing the same on accrual basis in the year under appeal would tantamount to double taxation of same income and thus, it is requested that the addition made deserves to be deleted.

113. Before us, Ld.AR for the assessee submits that the assessee has filed necessary re-conciliation before the AO and submits that no such transaction as reported in Form 26QB was carried out by the assessee. The addition was made without issuing show cause notice and further without considering the submissions made. Ld.AR further submits that Ld. DRP has directed the AO to consider the submissions of the assessee and decide the issue however, in final assessment order, the AO without making verification as directed by Ld. DRP, made the addition. With respect to the merits of the additions, Ld.AR submits that during the year under appeal, assessee had sold property situated at Village Raghupur, Salon for INR 2.20 crores which includes the consideration for both land and building. The assessee has already reported this transaction under the head “Income from Capital Gains” and paid due taxes thereon.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 Ld.AR further drew our attention to the addition made u/s 50C of INR 38,77,000/- being the difference between sale consideration and stamp value of the said property and thus submits that the AO has already considered this transactions however, made the addition which tantamount to double addition. Ld. AR, therefore, requested for the deletion of the addition.

116. Ground Nos. 87 to 88 raised by the assessee are in respect of the additional claim of foreign tax credit of INR 18,27,359/-.

(AY : 2020-21) [Assessee’s appeal]

ITA Nos.927 & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 wherein by following the judgement of Hon’ble High Court in dated 21.01.2025, wherein the Hon’ble Jurisdictional High Court upheld the order of the Co-ordinate Bench of the Tribunal in for AY 2014-15. Thus, by following the observations made by us in ITA no. 927/Del/2022, Ground No.6 of the assessee is allowed.

129. In this ground, the assessee has challenged the adjustment of INR 24,99,155/- made by the AO/TPO on account of interest on loans given.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 137. From perusal of the above chart, it is seen that most of the payments were made to the financial institutions. Besides this certain payment of interest was made towards the late payment of GST/custom duty. Assessee has deduction tax at source on the payments wherever applicable however, item-wise verification is not possible at this stage. Therefore, we direct the AO to verify the claim of the assessee in terms of the chart given herein above and decide this issue in accordance with law. With this direction, Ground of appeal No.10 raised by the assessee is partly allowed for statistical purposes.

142. Ld.AR further submits that the show cause notice was issued at the fag end of the proceedings therefore, the necessary details could not be filed. Ld. AR further submits that as per insight portal, the details of INR 6.42 crores was with regard to the purchase of vehicles and however, assessee had sold the vehicles which fact was grossly ignored by the AO and therefore, requested for the deletion of the addition so made.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 145. Ground of appeal No.13 taken by the assessee is with regard to the disallowance of INR 7,36,890/- made by invoking the provision of section 14A of the Act.

147. Ground No.14 taken by the assessee is with regard to the addition on account of foreign exchange fluctuation of INR 6,85,505/-.

148. In this regard, Ld.AR submitted that while processing the return u/s 143(1) of the Act, the CPC vide its order dated 25.12.2021 has made addition of INR 17,29,52,164/- which includes loss on sale of fixed assets of INR 17,22,66,659/- and loss on foreign exchange fluctuation of INR 6,85,505/-. The assessee in order to avoid litigation, has accepted such disallowance however, in regular assessment u/s 143(3) of the Act, the AO further made this disallowance of INR 6,85,505/- thus, it is double addition. Accordingly, Ld.AR requested for the deletion of the same.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 150. Heard both parties and perused the material available on record. From the perusal of the intimation order passed u/s 143(1) of the Act, it is seen that the CPC has already made disallowance of INR 6,85,505/- however, the AO in final order without following the directions of Ld. DRP of making factual claim of double addition, made further disallowance of INR 6,85,505/-. Thus, it is double disallowance made both by the CPC and AO.

153. This issue has been decided by us in assessee’s appeal for AY 2016-17 in wherein we direct the AO to delete this disallowance u/s 14A from the book profits computed for the purpose of MAT u/s 115JB of the Act.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 155. Grounds of appeal Nos.16 to 19 are general in nature, need no adjudication. Hence, Ground Nos.16 to 19 raised by the assessee are dismissed.

(AY : 2020-21) [Assessee’s appeal] 157. This appeal is filed by the assessee against the order of ld. Addl/JCIT(A)-5, Mumbai dismissing the appeal of the assessee vide order dated 06.02.2024 in Appeal No. ADDL/JCIT(A)-5 MUMBAI/10002/2019-20 arising out of the intimation order passed u/s 143(1) of the Act dated 25.12.2021 by CPC.

168. Before us, ld. AR for the assessee submits that while computing the total income in Annexure-“Deduction under Chapter VIA” deduction u/s 80IA of the Act claimed by assessee is & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 disallowed by observing that the assessee has claimed deduction u/s 80IA more than the sum of amounts mentioned in Form 10CCB. Hence, deduction u/s 80 IA will be restricted to the extent of amounts mentioned in Form 10CCB. In this regard, Ld. AR for the assessee drew our attention amounts certified by auditors in Form 10CCB eligible for deduction u/s 80IA on each eligible project which are available at pages 280 to 477 of the Paper Book relating to eligible units situated at Hariawan, Lakhimpur, Ajbapur, Loni and Bharuch. It is further stated by ld. AR that in final assessment order transfer pricing adjustment of INR 1,01,70,00,629/- were made towards the withdrawal/deduction u/s 80IA from transfer of power/steam from the eligible unit to non-eligible unit thus the remaining deduction claimed u/s 80IA was allowed. However, from the perusal of tax computation sheet, it is seen that the deduction u/s 80IA was not allowed to the assessee and further addition was made on account of transfer price adjustment made which tantamount to double addition.

170. Ground No.5 raised by the assessee is in respect of the adjustment of provision of gratuity of INR 1,10,62,352/-.

& 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 175. Ground of appeal No.8 raised by the assessee is with regard to the adjustment of INR 5,40,85,615/- towards the bonus payable which is disallowed u/s 43B of the Act.

177. Ground No.9 raised by the assessee is with regard to the adjustment of INR 22,57,72,816/- on account of provision of leave encashment.

O & 2587/Del/2022, & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 704/Del/2021, 4328 & 1495/Del/2024 & 2587/Del/2022, 704/Del/2021, 4328 & 1495/Del/2024 182. From the perusal of the above, it is established, there is no dispute with regard to the availability of the foreign tax in the hands of assessee even by CPC, therefore, the AO is directed to allow foreign tax credit of INR 12,76,950/- to the assessee. Ground of appeal No.11 of the assessee’s appeal is accordingly, allowed.

183. Ground No.12 is with regard to the MAT credit available to the assessee and not allowed. After considering the argument of both the parties, the AO is directed to verify the MAT credit available to the assessee and further directed to allow the same as per law.