M/S AGRAWAL COAL CORP. PVT. LTD.,INDORE vs. DEPUTY COMMISSIONER OF INCOME TAX 1, INDORE

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 O R D E R PER MANISH BORAD, AM:

The above captioned three appeals filed by the revenue for Assessment Year 2012-13 to 2014-15, Cross Appeal by the assessee for 2012-13 and Cross Objections by the assessee for Assessment Year 2013-14 to 2014-15 are directed against the order of ld. Commissioner of Income-tax (Appeals)-I, Indore, dated 30.07.2018, which are arising out of the order u/s 143(3) r.w.s. 144C of the Income Tax Act dated 22.03.2016 framed by the DCIT-1(1), Indore.

1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to Rs.57,94,105/- in respect of computing Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 arm’s length price for the corporate guarantee given by the appellant on behalf of the AE.

2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance of Rs. 3,19,635/- made u/s 14A of the Act.

3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance out of colliery & repairs and maintenance expenses of Rs. 6,03,938/-. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal. Assessment Year 2013-14

1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to Rs.61,81,250/- in respect of computing arm’s length price for the corporate guarantee given by the appellant on behalf of the AE.

2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance of Rs. 3,96,046/- made u/s 14A of the Act. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance out of colliery & repairs and maintenance expenses of Rs. 5,18,568/-. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal

. Assessment Year 2014-15

1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to Rs.88,98,659/- in respect of computing Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 arm’s length price for the corporate guarantee given by the appellant on behalf of the AE.

2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance of Rs.9,39,130/- made u/s 14A of the Act.

3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance out of colliery & other administrative and general of Rs. 5,00,000/-. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal

4. At the outset, Ld. Counsel for the assessees pointed out that these three appeals by Revenue are not maintainable since they are squarely covered by CBDT’s circular No.3/2018 and subsequent amendment thereto dated 8th August, 2019 as the tax effect in each year is less than Rs.50 lakhs. It was also submitted that under the identical facts, the coordinate bench of this Tribunal vide order dated 14.8.2019 in ITA No.1398/Ahd/2004 and others in the case of ITO Vs. Dinesh Madhavlal Patel has dismissed the revenue’s appeals as non maintainable.

“5. Having considered the rival submissions and having perused the material on record, we do not have slightest of hesitation in holding that the concession extended by the CBDT not only applies to the appeals to be filed in future but it is also equally applicable to the appeals pending for disposal as on now. Our line of reasoning is this. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular no 3 of 2018 (and subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. This is evident from the following extracts from the circular dated 8th August 2019: 2. As a step towards further management of litigation. it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly. the table for monetary limits specified in Para 3 of the Circular shall read as follows:

S.No. Appeals/SLPs in Income-tax matters Monetary Limit (Rs.) 1 Before Appellate Tribunal 50,00,000 2 Before High Court 1,00,00,000 3 Before Supreme Court 2,00,00,000 3. Further, with a view to provide parity in filing of appeals in scenarios where separate order is passed by higher appellate authorities for each assessment year vis-a-vis where composite order for more than one assessment years is passed. para 5 of the circular is substituted by the following para: “5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If in the case of 5 Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. Noappeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. Further, even in the case of composite order of any High Court or appellate authority which involves more than one assessment year and common issues in more than one assessment year no appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In case where a composite order/ judgement involves more than one assessee, each assessee shall be dealt with separately”

6. Clearly, all other portions of the circular no. 3 of 2018 (supra) have remained intact. The portion which has remained intact includes paragraph 13 of the aforesaid circular which is as follows: 13. This Circular will apply to SLPs/ appeals/ cross objections/ references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/ appeals/ cross objections/references. Pending appeals below the specified tax limits in pare 3 above may be withdrawn/ not pressed.

8. Learned Commissioner (DR) then submits liberty may kindly be given to point out, upon necessary further verifications, and to seek recall the dismissal of appeals and restoration of the appeals in the cases (i) in which it can be demonstrated that the appeals are covered by the exceptions, and (ii) which are inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds Rs 50,00,000. None opposes this prayer; we accept the same. We make it clear that the appellants shall be at liberty to point out the cases which are wrongly included in the appeals so summarily dismissed, either owing to wrong computation of tax effect or owning to such cases being covered by the permissible exceptions- or for any other reason, and we will take appropriate remedial steps in this regard. 6 Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

9. In the light of the above discussions, all the appeals stand dismissed as withdrawn. As the appeals filed by the Revenue are found to be non- maintainable and as all the related cross-objections of the assessee arise only as a result of those appeals and merely support the order of the CIT(A), the cross objections filed by the assessee are also dismissed as infructuous. Ordered, accordingly.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

9. Now we take up Assessee’s cross appeal and Cross Objections raised for Assessment Year 2012-13 to 2014-15.

10. Assessee has raised following Grounds of appeal for 1.That the Ld. CIT(A) erred in not allowing the claim of deduction made under section 80IA(4) in respect of the profits of Rs.64,62,398/- derived from the eligible power generation business through Wind Mill units of the appellant. That on the facts and in circumstances of the case the claim of deduction having been made during the course of assessment proceedings is legally allowable to the appellant, which has also been allowed in subsequent years, is prayed to be now allowed. 2That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal

on or before final hearing, if necessity so arises. Assessee has also raised following additional Ground;

3. That in the facts and in the circumstances of the case and in law the appellant is entitled to deduction of cess of Rs.18,38,280/- incurred during the year under consideration which is prayed to be now allowed” C.O.No.23/Ind/2019 Assessment Year 2013-14

1.That on the facts and in the circumstances of the case and law,the respondent assessee is legally entitled to the claim deduction of cess paid of Rs.32,19,899/- for the year under consideration, which is prayed to be now allowed.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 2. The assessee craves leave to add, to alter, modify, substitute and/or withdraw all or any of the grounds of appeal at any stage of the appellate proceedings. C.O.No.24/Ind/2019 Assessment Year 2014-15

1.That on the facts and in the circumstances of the case and law,the respondent assessee is legally entitled to the claim deduction of cess paid of Rs.35,42,987/- for the year under consideration, which is prayed to be now allowed. 2. The assessee craves leave to add, to alter, modify, substitute and/or withdraw all or any of the grounds of appeal at any stage of the appellate proceedings.

11. First we will take up the ground raised by the assessee for Assessment Year 2012-13 relating to deduction u/s 80IA(4) in respect of the profits of Rs.64,62,398/- derived from the eligible power generation business.

The assessee opted the deduction u/s 80IA(4) from Assessment Year 2012-13 onwards being the initial year but did not opt for the other two eligible units. Assesse made claim during the course of assessment proceedings by filing the audit report on Form 10CCB.

However Ld. A.O rejected the claims for following 3 reasons;

(i) The claim made otherwise than by way of revised return cannot be entertained by the AO and placed reliance on the decision of the Honourable Supreme Court in the case of Goetze (India) Limited Vs CIT (2006) 284 ITR 323 (Hon'ble

Supreme Court)

(ii) The requisite Form No. 3CCB was to be obtained and also filed before due date of the return hence the claim of the appellant is not eligible to be entertained.

(iii) Profits and gains from all the three units were to be considered on consolidated basis no individually.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 13. Aggrieved with the finding of Ld. A.O assessee preferred appeal before Ld. CIT(A) but failed to succeed.

14. Now the assessee is in appeal before the Tribunal for Assessment Year 2012-13.

15. At the outset Ld. Counsel for the assessee submitted that assessee’s claim of being eligible for deduction u/s 80IA(4) of the Act is not disputed as in the subsequent assessment years such claim has been allowed. However as regards the issues raised in the appeal that whether legitimate claim can be denied by the Ld. A.O merely for not filing revised return of income and not filing the audit reports in support of the deduction and also with regard to the issue that whether the deduction u/s 80IA(4) is to be granted for each unit rather than consolidated profits of all the eligible units run by the assessee out of which for few of the units assessee has not opted the initial assessment year for claiming deduction, all are squarely covered by the following various judicial pronouncements deciding in favour of the assessee:-

For the proposition that the rightful claim made during the course of assessment proceedings cannot be denied by taking Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 recourse of revised return and shelter of the case of Goetz India. It is the benevolent duty of Assessing Officer to assess the correct taxable income of a person as per law even if the assessee fails to claim the same in the return of income. (i) Hon'ble Apex Court in the case of CIT vs. Mahalaxmi Sugar Mills Co. Ltd 58 CTR 0138. (ii) Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders (P) Ltd (2012) 349 ITR 036. (iii) Hon'ble I.T.A.T. Indore in the case of ACT vs. M/s. Admanum Finance Limited, Indore, 807 & 808/Ind/2014. For the proposition that furnishing of audit report in Form 10CCB along with the return is directory not mandatory and the same can be filed even at the assessment/appellate stage. (iv)Hon'ble Delhi High Court in the case of CIT vs. Contimeters Electrical Pvt. Ltd (2009) 317 ITR 0249. (v) Hon'ble’bl;e Madhya Pradesh High Court in the case of CIT V/s Panama Chemicals Works (2007) 292 ITR 0147. (vi) Hon'ble I.T.A.T. Ahmedabad in the case of ACIT Vs Gujarat Info Petro Ltd (2015) 43 CCH 0112. (vii) Hon'ble Supreme Court in the case olf CIT vs. Surya Merchants Limited SLP(C) No.6729 of 2017. For the proposition that each unit is an independent unit and profit and loss of each unit need to be considered on individual basis not consolidated basis for claiming deduction under section 80IA(5). (viii) CBDT Circular No.1/2016 dated 15.02.2016 regarding clarification of term ‘initial assessment year’ in section 80IA(5) of the Act.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 (ix) Hon'ble Madras High Court in the case of Commissioner of Income Tax Vs G.R.T. Jewelers (India) Pvt. Ltd (2016) 95 CCH 0072. (x) Hon'ble Supreme Court in the case of Commissioner of Income Tax & Anr vs. Yokogawa India Ltd (2017) 291 CTR 0001. (xi) Hon'ble I.T.A.T. Chennai Bench in the case of M/s. Shriram Properties Pvt. Ltd vs. ACIT (2013) 36 CCH 0297. (xii) Hon'ble I.T.A.T. Ahmedabad Bench in the case of Sadbhav Engineering Ltd V/s DCIT (2013) 38 CCH 0105.

16. Ld. Departmental Representative vehemently argued and supported the orders of both the lower authorities and also relied on the judgment of Hon'ble High Court of Himachal Pradesh in the case of CIT V/s Deepak Gupta and Rajiv Sharma, JJ (2012) 26 Taxmann.com 129 (HP).

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 (i) Whether the Ld. A.O is duty bound to compute the correct income of the assessee even if the claim has not been made in the return of income but subsequently made during the course of assessment proceedings along with necessary documentary evidence in the form of audit report without filing revised return.

(ii) That whether the assessee should be denied the benefit of deduction u/s 80IA(4) of the Act just for not making the claim in the regular return of income and not filing revised return of income even if the audit report in Form 10CCB is filed during the course of assessment proceedings along with making the claim.

(iii) Whether the deduction u/s 80IA(4) is to be provided for each eligible unit or the losses of other eligible units should be first set off against the profits of other units and the balance profit

(if any) is only eligible for deduction u/s 80IA(4) of the Act.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 21. Ld. Counsel for assessee also submitted that the above circular has been judicially noted and approved in many judgments and is being relied upon in support of the appellant’s claim. It is pertinent to recall here the very purpose of assessment which is nothing but to assess the correct income of an assessee and compute the legitimate tax payable on such income. A claim which is legally allowable to the assessee cannot be disallowed by brushing aside the same in the grab of drawing incorrect interpretation from the pronouncement rendered by Honourable Supreme Court, ignoring the provisions enacted undr the Act and also under the Constitution of India which has overrinding and superseding effect over the all prevalent laws including Income Tax Act. That in the case of appellant, due to the rejection of a legitimate claim, the correct income has not been ascertained and the purpose of assessment has been defeated.

21A. Ld. Counsel for the assessee also submitted that the appellant’s ignorance to claim correct deduction in the return of income cannot be taken to the advantage by the assessing officer and it is the benevolent duty of assessing officer to assess the Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 correct income of a person as per law even if the assessee fails to claim any benefit legitimately due to him.

“ There is a duty cast on the ITO to apply the relevant provisions of the Indian IT Act for the purpose of determining the true figure of the assesee’s taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set off, in cannot relieve the ITO of his duty to apply s. 24 in an appreciate case”.

“128. We have heard the rival contention of both the parties. Looking to the facts and circumstances of the case, we find that the assessee treated debtors of Rs. 35,24,407/- as bad debts 17 Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 and actually written them off in the books of accounts. However since a provision for NPA of Rs. 11,90,575/- in respect of these debtors was already created earlier, the balance net amount of Rs. 23,33,832/- was only debited to profit and loss account as bad debts written off during the year. The amount of Rs. 11,90,575/ - actually written off in the books in this year as bad debts and was adjusted against provision for NPA created in earlier years, was also required to be allowed in this year, as the NPA provision created in earlier years was always disallowed and never claimed as deduction. However the company inadvertently did not claim this amount separately in the computation at the time of filing of the return. The same was claimed through a revised computation of income was filed during the course of assessment proceedings bringing all the relevant facts to the notice of the AO that this figure of Rs. 11,90,575/- be allowed as deduction as bad debts actually written off in the books of accounts in this year. Details of bad debts actually written off, provision made and copies of ledger accounts of all the debtors reflecting the actual write off in the books of accounts, were also filed before the AO. Copies of income tax returns of earlier years were also filed to substantiate that NPA provisions were disallowed by the assessee in the respective years. The AO rejected the same on the premise that claims made through a revised return could only be entertained. He relied on the decision of the Hon 'ble Supreme Court in the case of Goetze India Ltd. The CIT(A) observed that the AO rejected the claim merely stating that since the claim was not made by filing a revised return u/s 139(5) in view of the decision of the Hon'ble Apex Court in the case of Goetze India the claim cannot be accepted. The CIT(A)

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 has also stated that when the bad debts are actually written off in the books of accounts as irrecoverable the said claim is allowable to the appellant u/ s 36(1)(vii) read with section 36(2). Since the amount of Rs. 11,90,575/- was actually written off from the debtors account in this year, the claim made by the appellant is a legitimate claim and is allowable. The AO is bound to assess the correct income and for this purpose the AO may grant relief suo-moto or on being pointed out by the assessee in the course of assessment proceedings.

Hon’ble Apex Court held that;

“Deduction under section 80-IB-Allowability-Claim not made in return - Assessee having duly furnished the documents and submitted Form No. 10CCB during the assessment proceedings, claim for deduction under section 80-IB by way of an application was admissible There was no requirement for filing any revised return - No substantial question of law arises - Goetze India Ltd. Vs. CIT (2006) 204 CTR (SC) 182 (2006) 284 ITR 323 (SC) distinguished”.»

24. Respectfully following the above decision of the Tribunal we are of the considered view that Ld. A.O has not justified in declining the legitimate claim made by the assessee during the course of assessment proceedings relating to deduction u/s 80IA(4) of the Act irrespective of the fact that claim was neither made in in original return of income nor revised return was filed. First sub issue raised in ground no.1 is decided in favour of assessee.

25. As regards to second sub issue that whether the Ld. A.O was justified in denying the benefit u/s 80IA(4) of the Act for not filing the audit report in Form 10CCB along with the return of income, we observe that Hon'ble Jurisdictional High Court in the case of CIT Vs. Panama Chemicals Works (supra) dealt the similar issue holding that the claim of the assessee u/s 80IA(4) is justified if it has not filed the audit report in Form 10CCB along with return of income but submitted later on during the assessment proceedings. The Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 relevant extract of the Hon'ble High Court judgment is reproduced below:-

“7. We are of the view that even if an assessee fails to file information in Form No. 10CCB along with the return, he cannot be divested of the benefit of s. 80-1. It is not a case where the form was filed after the assessment, but before it and, therefore, when the authorities assessed the income, the form was before the AO. Under these circumstances, we find that the approach of the CIT(A) and the Tribunal was proper.

8. Even in the judgment of CITI' vs. Shivanand Electronics (supra), their Lordships of the Bombay High Court have observed that the position may be different when an assessee does a particular act not within the specified time but after the expiry thereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the objects sought to be achieved by prescribing the time-limit, it would be the duty of the officer to consider the documents, even submitted belatedly. Thus, this decision also supports the view that even if the prescribed form is submitted belatedly, the AO has to proceed on the basis of the claim made.

9. We, therefore, hold that in the facts and circumstances of the case, the Tribunal was justified in law in holding that the claim of the assessee under s. 80-1 is justified even if he had not filed the audit report in Form No. 10CCB along with the return. We, therefore, answer the question against the Revenue and in favour of the assessee.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 of the Act raised before us that whether before allowing deduction u/s 80IA(4) of the Act, profit and loss of each unit needs to be considered on individual basis or consolidated profit & loss of all the eligible units basis, we find that assessee runs three wind mill units, one at Jodha, (Rajasthan) and two at Shajapur, (Madhya Pradesh). Out of the three units which are eligible for deduction u/s 80IA() of the Act assessee has opted Assessment Year 2012-13 as initial assessment year for claiming deduction u/s 80IA(4) of the Act for only Jodha unit, (Rajasthan). For the other two units assessee has not opted for deduction u/s 80IA(4) of the Act since post depreciation their were losses, Ld. A.O combined the profit and loss of all the three eligible units which resulted in loss due to which no deduction u/s 80IA(4) of the Act was allowed.

26A. Ld. Counsel for the assessee contended that the option of choosing initial assessment year for claiming deduction u/s 80IA(4) of the Act is with the assessee. On the basis of this discretion assessee made claim for deduction only for Jodha unit. Thus, the profits of the Jodha wind mill unit at Rs.64,62,398/- should have been allowed to the assessee.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

“8. We have considered the rival submissions, perused the orders of the lower authorities and materials available on record. The undisputed facts of the case are that the assessee is eligible for deduction u/s 80IB in respect of profits derived by it from its 'Samruddhi' and 'Spandhana' projects. Further the gross taxable income of the assessee was comprised of the following elements:

(i) Profit from 'Samruddhi' and 'Spandhana' : Rs.2,23,22,237/- (ii) Loss from two Projects viz.'Shreyas' and 'Coimbatore': Rs.2,87,7l,682/- (iii) Interest income : Rs. 3,20,87,4211-

Gross total income: Rs. 2,56,37,975/- Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

On the above facts, the issue before us is whether the assessee is entitled for deduction u/s 80IA of Rs.2,23,22,237/- or not in view of the fact that though there is gross total income of higher amount of Rs.2,56,37,975/-, but in view of the fact that amount computed under the head 'business income' by aggregating profits and losses of all business is loss of Rs.64,49,445/-.

undertakings separately. If there is a profit derived from such industrial undertaking, the deduction under section 80-IB will follow. The loss from such eligible industrial undertaking will go out of reckoning. There is no warrant for reducing the loss of one eligible undertaking from the profit of the other eligible undertaking. Such an interpretation will lead to violence to the unambiguous language of section, which otherwise talks of granting deduction in respect of the 'profits and gains derived from such industrial undertaking'. If we were to read the section in a way that has been read by the authorities below, then instead of the phrase extracted in the preceding line, it should have been 'aggregate of profits and gains derived from such industrial undertakings'. It is, therefore, abundantly clear that there is no reference to the aggregate of profits from all the eligible industrial undertakings. We are, therefore, of the considered opinion that if there is profit derived from a particular industrial undertaking, that will qualify for deduction without reduction of loss suffered by any other eligible industrial undertaking(s).

10. Section 80IB(13) reads as under:

(13) The provisions contained in sub-section (5) and sub- sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible business under this section22."

"(5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee 25 Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made."

12. Thus, a reading of the above provisions shows that for determining the amount which qualifies for deduction u/s 80lB(1), one has to compute the income from eligible business as if the eligible business was the only source of income of the assessee. In other words, the income or loss from other business or other activities are to be ignored for the purpose of determining the amount which is eligible for deduction u/s 80IB(l) of the Act.

13. Section 80A(1) provides that in computing total income of the assessee, there shall be allowed from the gross total income the deductions specified in sections 80-C to 80-U. Sub-section (2) further provides that the aggregate amount of deductions under this Chapter shall not in any case exceed the gross total income of the assessee. The gross total income has been defined under section 80B (5) to mean 'the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter.' It therefore follows that the primary step for considering the grant of deductions under Chapter VI-A is to determine the gross total income, which, in turn, is computed by aggregating the income from all the sources in this year after adjusting the losses of the current year under any head. The brought forward loss or unabsorbed depreciation etc., are also reduced. The resultant figure is determined as gross total income. To put it simply gross total income is the income available at the disposal of the assessee immediately before allowing deductions under Chapter VI-A. If the gross total income is say Rs. 100 and the assessee is entitled to deduction under section 80-IB at Rs. 150, then the amount of deduction under section 80-IB will be restricted to Rs. 100 as per the mandate of section 80A which provides that the deductions Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

shall be allowed from the gross total income and the aggregate amount of all the deductions shall not in any case exceed the gross total income of the assessee. If however the amount of eligible relief under section 80-IB is say Rs. 90, then full amount will be eligible for deduction because the amount of the eligible relief does not exceed the gross total income. Therefore it is mandatory to work out the eligible amount of deduction under various sections of Chapter VI-A individually and then such aggregate amount has to be restricted to the amount of gross total income as computed under section 80B(5), which means the income available after adjusting all the brought forward losses and unabsorbed depreciation etc.

(i) Amount of profit derived from eligible business; and (ii) The amount of gross total income of the assessee

The amount of profit derived from eligible business qualifies for deduction u/s 80IB subject to the amount of gross total income of the assessee. There is absolutely no relevance for this purpose of the amount which is arrived at by aggregating income from all the different business of the assessee which is the amount assessable as business income of the assessee.

steels, which was also an industry covered in the Fifth Schedule. The assessee sustained loss in the alloy steel industry but profit in the other industry. It claimed deduction in respect of the profit without reducing the loss from the alloy steel industry. The ITO held that the assessee will be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture. The High court decided the point in assessee's favour. The revenue assailed the judgment of the Hon'ble High Court before the Hon'ble Supreme Court. While affirming the view taken by the Hon'ble High Court, it was held that in computing the profits for the purpose of deduction under section 80E, the loss incurred by the assessee in the manufacture of alloy steels (a priority industry) could not be set off against the profits of the manufacture of automobile ancillaries (another priority industry) and hence the assessee was entitled to deduction at the specified rate on the entire profits of the automobile parts industry included in the total income without deducting there from the loss in the alloy steel manufacture. Facts involved in the instant appeal are mutatis mutandis similar.

17. In the instant case, we observe that gross total income of the assessee is Rs.2,56,37,975/- after adjusting losses suffered by the assessee in the other two 'projects viz. 'Shreyas' and 'Coimbatore'. There are no brought forward losses or unabsorbed depreciation. The claim of deduction u/s Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

80IB in respect of the two eligible units viz. 'Spandhana' and 'Samruddhi' of Rs.2,23,22,237/- is obviously less than the gross total income. In our considered opinion, the Assessing Officer as well as the Id. CIT(A) erred in interpreting the relevant provisions when they held that the losses suffered by the assessee from two projects, viz. 'Shreyas' and 'Coimbatore' be reduced from the profits of the other two units viz. 'Spandhana' and 'Samruddhi' for granting deduction u/s 80IB. Accordingly, the impugned orders of the lower authorities are set aside. The Assessing Officer is directed to allow deduction u/s 8018 on the profits derived by the assessee from two projects viz. 'Spandhana' and 'Samruddhi' of Rs.2,23,22,237/-. Thus, the grounds of appeal of the assessee are allowed.

“13. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The undisputed facts of the case in the years under appeal is that the assessee claimed deduction u/s.80-IB of the Act. The AO computed the claim for deduction allowable u/s.80-IA to the assessee by allocating the losses of other units against the profits of the eligible units in proportion to the turnover of the assessee. On appeal, the CIT(A) confirmed the action of the AO on the ground that in the appeal for A Ys 2003-04 & 2004-05,the CIT(A) has confirmed the action of the AO. The Id.AR has submitted that due to smallness of the amount involved, the assessee though filed the appeal before the Tribunal in AYs 2003-04 & 2004-05 but had withdrawn the same and, therefore, the appeals of the assessee were dismissed as Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 withdrawn. Thus, as the Tribunal has dismissed the appeals of the assessee for want of prosecution, it cannot be a decision on merits which can be applied in the subsequent years in the case of the assessee. We find force in the argument of the Id.AR of the assessee since the appeal of the assessee for AYs 2003-04 & 2004-05 was dismissed in limine by the Tribunal, therefore the ratio in the said decision is not a binding precedent to be applied to the assessee for the subsequent years on the same issue. We find that the issue as pointed out by the Id.AR of the assessee is covered in favour of the assessee by the decision of Chennai Bench of the Tribunal in the case of M/s. Shriram Properties Pvt.Ltd. vs. ACIT (supra), wherein it was held that the profit derived from a particular eligible Industrial undertaking is qualified for deduction u/s.80IB without reduction of loss suffered by any other eligible industrial undertaking, subject to gross total income of assessee. Thus, this ground of the appeal of the assessee is allowed for all the years under appeal”.

"The matter has been examined by the Board. It is abundantly clear from Sub-Section (2) that an assessee who is eligible to claim deduction u/ s 80JA has the option to choose the initial! first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years) as prescribed under that Sub-Section. It is hereby clarified that once such initial assessment year has been opted for by the assessee) he shall be entitled to claim deduction u/ s 80JA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfilment of conditions prescribed in the section. Hence) the term 'initial assessment year) would mean the first year opted for by the assessee for claiming deduction u/ s 80JA. However) the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years) as the case Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 may be and the period of claim should be availed in continuity."

Further since the assessee opted claim u/s 80IA(4) of the Act for only Jodha unit, the loss of other two eligible undertakings were not required to be set off against the profits of Jodha unit since assessee had opted Assessment Year 2012-13 as initial assessment year for claiming deduction u/s 80IA(4) of the Act only for Jodha unit and not for other two units at Shajapur (M.P.). Ld. A.O is therefore directed to allow the deduction u/s 80IA(4) of the Act at Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 Rs.64,62,398/-. Accordingly Ground No.1 raised by the assessee for Assessment Year 2012-13 is allowed.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

For the proposition that the cess is an allowable expenditure and is not hut by the disallowance contemplated u/s 40(a)(ii) of the Act. (i) Hon'ble Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Limited D.B.I.T.A No.52/2018 dated 31.7.2018. (ii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs. Eicher Motors Ltd (2007) 293 ITR 0464. (iii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs Bhopal Sugar Industries Ltd(1998) 233 ITR 0429. (iv) Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd Vs. CIT (1993) 199 ITR 0351.

The relevant extract of the judgment of the Hon’ble High Court in this case is mentioned below:-

(i) Hon’ble High Court of judicature for Rajasthan Bench, Jaipur in the case of CIT, Kota V/s Chambal Fertilizers and Chemicals

Ltd, Kota D.B. IT No.52/2018 order dated 31.7.2018 raised 35 Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 following substantial question of law:-

“3.Whether under the facts and circumstances of the case the Ld. ITAT has not erred in holding that the education cess is a disallowable expenditure u/s 40(a)(ii) of the Act?

“Regarding Question no.3, Mr. Jhanwar has taken us to the order of CIT(A) and tribunal and strongly relied upon the circular dt. 18.5.1967 which reads as under:-

CTR ENCYCLOPAEDIA ON INDIAN TAX LAWS CIRCULAR F.NO. 91/58/66-ITJ(19) DT. 18TH MAY, 1967

BUSINESS EXPENDITURE

SECTION 40(a)(ii)

Recently a case has come to the notice of the Board where the ITO has disallowed the ‘cess’ paid by the assessee on the ground that there has been no material change in the provisions of s. 10(4) of the old Act and s.40(a)(ii) of the new Act.

2.The view of the ITO is not correct. Clause 40(a)(ii) of the IT Bill, 1961 as introduced in the Parliament stood as under:

“(ii) any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains”.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

When the matter came up before the Select Committee, it was decided to omit the word ‘cess’ from the clause. The effect of the omission of the word ‘cess’ is that only taxes paid are to be disallowed in the assessments for the year 1962-63 and onwards.

3.The Board desire that the changed position may please be brought to the notice of all the ITOs so that further litigation on this account may be avoided.”

Reliance were placed by the Ld. Counsel for the assessee on the following judgments;

In Instalment Supply (P) Ltd & Ors Vs/ Union of India & Ors

(1962) 2 SCR 644, it has been held as under:-

“19. There is another answer to the point of res judicata raised on behalf of the petitioners, relying upon the decision of the Punjab High Court in Installment Supply Ltd, New Delhi v State of Delhi MANU/PH/0068/1956. It is well settled that in matters of taxation there is no question of res judicata because such year’s assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period. (See the decision in the House of Lords in Society of Medical Officers of Health v. Hope (Valuation Officer) (1960) A.C. 551 approving and following the decision of the privy Council in Broken Hill Proprietary Company Limited v Municipal Council of Broken Hill (1925) A.C. 94.

In Godrej & Boyce Manufacturing Company Ltd vs. Dy. Commissioner of Income Tax & ors (2017) 247 Taxman 361 Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019

(SC), it has been held as under:-

“33.While answering the said question this Court considered the object of insertion of Section 14A in the Income Tax Act by Finance Act, 2001, details of which have already been noticed. Noticing the objects and reasons behind introduction of Section 14A of the Act this Court held that:

Expenses allowed can only be in respect of earning of taxable income.

In paragraph 17, this Court went on to observe that:

Therefore, one needs to read the words “expenditure incurred” in Section 14A in the context of the scheme of the Act and, if so read, it is clear that it disallows certain expenditure incurred to earn exempt income from being deducted from other income which is includible in the “total income” for the purpose of chargeability to tax.

The views expressed in Walfort Share and Stock Brokers P.Ltd (supra), in our considered opinion, year again militate against the plea urged on behalf of the assessee.

34. For the aforesaid reasons, the first question formulated in the appeal has to be answered against the Appellant-Assessee by holding that Section 14A of the Act would apply to dividend income on which tax is payable Under Section 115-0 of the Act.”

The Hon’ble High Court decided the issue holding that;

“12. We have heard counsel for the parties.

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 Apart from the Supreme Court decision referred that assessment year is independent and word Cess has been rightly interpreted by the Supreme Court that the Cess is not tax in that view of the matter, we are of the considered opinion that the view taken by the tribunal on issue no.3 is required to be reversed and the said issue is answered in favour of the assessee”

Agrawal Coal Corporation Pvt. Ltd to 803/Ind/2018, CO Nos.23 &24/Ind/2019 42. In the result all the three appeals of the revenue are dismissed and cross appeal and Cross Objections filed by the assessee are allowed.

Order pronounced in open Court on 28.11.2019.