M/S BHARAT RASAYAN LIMITED,NEW DELHI vs. DCIT, DELHI

The twin appeals filed by the assessee are centering around common issue and hence, for the purposes of convenience were heard together and are being adjudicated by this common order. We will consider AY: 2016-17 as the lead year and the decision therein shall apply mutatis mutandis to the assesse’s appeal for AY: 2017-18.

The first issue emanating from the grounds of appeal raised by the assessee is regarding the denial of its claim of deduction u/s 80IA. The order of ld. CIT(A) in para 5 and 5.1 on pages 4 & 5 alludes towards following facts seminal to the controversy :

The ld. Counsel for the assessee vehemently argued against the denial of the claim by the ld. CIT(A). Ld.Counsel submitted that the reliance of ld. CIT(A) on the cited judicial precedents is unfounded as the same is upon the constitutional validity of provisions of Section 80A(5). The ld. Counsel submitted that on identical facts of satisfaction of provisions of Section 80IA, the revenue has allowed the assessee its claim of deduction under Section 80IA in AY: 2018- 19 and subsequent years. The ld. Counsel argued that mere omission on part of the assessee to have claimed deduction u/s 80IA cannot be fatal to allowance of the claim per se while determining tax liability of the assessee. In support of its contention the ld. Counsel has placed on record a voluminous paper book inter alia containing orders u/s 143(3) passed in assessee’s case for AY: 2018-19. The ld. Counsel also drew our attention to CBDT instruction No. 14 of 1955 mandating that an assessing officer is bounden to allow an assessee on the deductions, relief and rebate that are available to the assessee, whether claim or not. The ld. Counsel further placed reliance upon a plethora of judicial precedents as supporting its claim u/s 80IA which was not claimed through the return of income.

The ld. DR argued in favour of the order Ld. CIT(A). Full reliance was placed upon the decision of Hon’ble Delhi High Court in the case of Nath Brothers and of Hon’ble Bombay High Court in the case of EBR Enterprises.

We have heard rival submissions in the light of material available on records. The first and foremost issue which comes up for consideration is as to whether the assessee is entitled for claiming deduction u/s 80IA on issue of infrastructure and power generation or not. We have noted that it is not revenue’s case that the assessee’s has made an ineligible claim. We have noted that in AY: 2018-19 the ld. AO through his order dated 26.04.2021 allowed the assessee’s claim of deduction u/s 80IA without any interference. Thus, it is clear that there is no infirmity per se in the claim of deduction u/s 80IA made by the appellant. The next issue that comes up for consideration is as to whether an assessee is entitled for grant of a claim of deduction which was omitted to have been made through the original return of income. The Hon’ble Apex Court in its decision in Goetze India have mandated that an appellate Tribunal is entitled to admit a claim of deduction which could not be made through the original return of income. Hon’ble Apex Court in the case of Dilip Kumar have also held that a taxpayer is entitled for its claim of any deduction if it satisfies all the conditions prescribed in the statute.

It is settled principle of law that consistency in their approach to specific issues is a hallmark for all quasi judicial authorities. There cannot be a case of taking divergent decisions on issues having same facts. In the above analogy the claim of the assessee u/s 80IA for AY: 2016-17 deserves to be examined. We have noted that on identical facts the ld. AO allowed the assessee its claim of

The next issue raised by the assessee is regarding its claim of treating incentives received under the focus product scheme (FPS) as capital receipts under normal provisions of the Act and u/s 115JB of the Act. As per brief factual matrix appellant had availed export benefit of Rs.1,04,97,960/- in the form FPS and which was included while calculating taxable income of the assessee. This claim was made before us through an additional ground of appeal.

It is the case of the assessee that FPS is grnated by the government for the purpose of improving export competitiveness in global market and employment generation in the country. In support the assessee drew our attention to the paper book inter alia containing the FPS scheme, copies of ledger account showing amounts of export benefit received, details of employees etc. The ld. Counsel drew our attention to decision of Hon’ble Rajasthan High Court in the case Nitin Spinners 116 taxman.com 26. It was submitted that the SLP of the department

The ld. DR objected to assessee’s application under Rule 27 for this additional claim.

We have heard rival submission in the light of material available on record. Rule 27 of the Tribunal Rules permit an appellant to make a claim which could not be made before the lower authorities and consequently no infirmity can be find in assessee’s claim per se. We have noted that in assessee’s own case for AY: 2014-15 in ITA No. 1231/Del/2019 (supra) this Tribunal has held that the assessee is entitled for benefit of FPS scheme. Hon’ble Rajasthan High Court has also held veracity of claim made qua FPS scheme. We have also noted that ld. DR could not distinguish facts of AY: 2016-17 with those of AY: 2014-15. Accordingly in respectful compliance to the order of this Tribunal as well as for the purposes of consistency, we direct the ld. AO to allow the assessee benefit of FPS for AY: 2016-17 also. The ground of appeal raised by the assessee is therefore allowed.

The first issue raised through grounds of appeal is regarding the denial of assessee’s claim of deduction u/s 80IA. Both the parties concede that facts for AY: 2017-18 are identical to those of AY: 2016-17. Accordingly, applying principles of mutatis mutandis, we direct the ld. AO to adjudicate the matter in line of our observations and directions given for AY: 2016-17 in para 5 to 7 above.

The next issue raised by the assessee through its ground of appeal is regarding a disallowance made by ld. AO u/s 14A amounting to Rs.9,08,754/-. The ld. CIT(A) has confirmed the order of ld. AO as evident from notings in para 6 & 6.1 of the appellate order. The ld. Counsel vehemently argued that it has not earned any exempt income during the year and that therefore there cannot be any disallowance u/s 14A. It was submitted that the lower authorities have also accepted this fact of assessee not earning any exempt income during the year. The ld. Counsel has placed reliance upon a plethora of judicial pronouncements including of Hon’ble Apex Court in the case of Oil Industry Development Board 103 taxmann.com 326, of Hon’ble Delhi High Court in the case of IL & FS Energy Development Company 84 taxman.com 186 etc. to bring home the point that no disallowance u/s 14A is permissible in cases where no exempt income was earned during the year.

The ld. DR placed reliance upon the order of lower authorities.

We have heard rival submissions in the light of material available on record. Hon’ble Apex Court in the case of Oil Industry Development Board has held that disallowance u/s 14A is not permissible in the absence of an exempt income. Accordingly in respectful compliance to the order of Hon’ble Apex Court we are of the considered view that, there is no case of disallowance in the hands of the assessee u/s 14A. We therefore, set aside the order of lower authorities and direct the ld. AO to delete the impugned disallowance of Rs.9,08,754/- made u/s 14A. The ground of appeal raised by the assessee is therefore, allowed.

In the result, the appeal of the assessee in ITA No. 6064/Del/2024 and ITA No. 6065/Del/2025 for AY: 2016-17 & 2017-18 are allowed for statistical purposes.