JCIT (OSD)CEN CIR 1(4), MUMBAI vs. GRASIM INDUSTIRES LTD, MUMBAI

O R D E R Per Saktijit Dey, VP: Captioned cross appeals arise out of order dated 12.02.2016 of learned Commissioner of Income Tax Appeal)-13, Mumbai, pertaining to Assessment Year (AY) 2009-10.

Assessee’s Appeal (A.Y. 2009-10)

2. In so far as Ground No.1 is concerned, at the outset, learned counsel for the assessee submitted that ground has become infructuous. Accordingly, this ground is dismissed.

3. In Ground No.2, assessee has contested the taxability of interest earned of Rs.63,01,861/- on income tax refund.

4. Before us, it is a common point between the parties that the issue has been decided in favour of the assessee in earlier assessment years.

5. Having considered rival submissions, we find that while deciding identical issue in assessee’s case in in A.Y. 2007-08, the Tribunal has held as under:

“30. Having considered rival submissions and perused the materials on record. We find that the coordinate Bench has decided the issue in favour of the assessee in Assessment Year 2002-03. Whereas, in Assessment Years 2004-05 and 2005- 06, issue was restored back to the Assessing Officer for verification. While giving effect to the order of the Tribunal, the Assessing Officer has allowed assessee’s claim.

31. Considering the above, we direct the Assessing Officer to allow assessee’s claim of deduction u/s. 80IA of the Act in respect of rental income. This ground is allowed.

32. The dispute in Ground No.8 is with regard to taxability of interest on income tax refund.

33. Briefly the facts are, in the year under consideration, the assessee had received certain amount towards interest on income tax refund. Whereas, it had also paid interest to the Department under various provisions of the Act. In the computation of income, the assessee had set off the interest paid against the interest received and offered net interest income of Rs.3.94 crores. While verifying assessee’s claim, the Assessing Officer was of the view that interest paid on income tax is not an allowable deduction u/s. 40(a)(ii) of the Act. Accordingly, he added back an amount of Rs.2.35 crores to the income of the assessee. Though, the assessee contested the aforesaid addition before learned First Appellate Authority, however, it was unsuccessful.

1. 1. Director of Income Tax vs. Bank of America NT and SA in of 2012 (Bom) judgment dated 03.07.2014.

2. ACIT, Mumbai vs. M/s. Tata Sons Ltd., Mumbai in ITA No. 4630/Mum/2016. 3. Arthur Anderson & Co. vs. ACIT [2010] 324 ITR 240 (Bombay). 4. Lupin Ltd. vs. ACIT [2018] 94 taxmann.com 282.

34.1 Whereas, learned DR submitted, netting off of interest received against the interest paid essentially results in allowing deduction of interest paid by the assessee as business expenditure u/s. 37(1) of the Act, which is not permissible. In support of such contention learned counsel relied upon following decisions:

1. 1. Bharat Commerce & Industries Ltd. vs. CIT [ 1998] 230 ITR 733 (SC) 2. Aruna Mills Ltd. vs. CIT [1957] 31 ITR153 (Bombay).

35. We have considered rival submissions and perused the materials on record. It is observed, while considering identical nature of dispute in case of DIT vs. Bank of America NT and SA (Supra), the Hon'ble Jurisdictional High Court has held as under: “3. Even with regard to the question No.2 we do not find that it is a substantial question of law. The Tribunal found that the Assessee Bank received interest on refund of taxes paid. It also paid interest on the taxes which were payable. The Assessee sought to set off the interest paid against the interest received and offered the net interest received to tax. We do not see that such findings of the Tribunal are vitiated in law. All that the Tribunal has done earlier and now is that in the case of this Assessee simply because the exercise carried out by it does not result in loss of revenue and there could not be any prohibition for the same, allowed it. That is how the Assessing Officer's order is set aside. We do not see how any larger controversy or question arises for our consideration. Mr.Pinto would refer to Section 57 of the Income Tax Act, 1961 in that regard and submit that this course would be adopted by other Assessees as well and in that event the order passed by this Court would come in the way of the Revenue in investigating and probing such exercise by other Assessees.

4. We do not see how this order can be cited as precedent inasmuch as the Assessee before the Tribunal and before us paid interest to the Income Tax Department amounting to Rs.10,26,906/- . The Assessee claimed that this was business expenditure and this should have been allowed. The Assessee has received the interest of Rs.1,07,57,930/-. It was submitted that the amount of interest paid by the Assessee should have been allowed to be set off against the interest deposited with the Department and taxed in the hands of the Assessee. The argument was that the interest paid to and received from is the same party i.e. Government of India and therefore, both transactions should be taken together.

6. Respectfully following the decision of the Tribunal, we decide the issue in favour of the assessee. This ground is allowed.

7. In Ground No. 3, the assessee has contested disallowance of depreciation on assets forming part of the block of asset but subsequently let out.

8. We have considered rival submission, we find this is a recurring issue between the parties for past assessment year. While deciding the issue, in the latest order passed in A.Y. 2007-08 (Supra), the Coordinate Bench has held as under:-

“3. In Ground No.2, the assessee has contested the disallowance of claim of depreciation amounting to Rs.5,29,658/-.

4. Briefly the facts are, the assessee is a resident corporate entity engaged in manufacturing and trading activities. For the assessment year under dispute, assessee had filed its return of income on 30.10.2007, declaring income of Rs.1920,40,47,165/-. Subsequently, assessee filed its revised return of income on 17.03.2009, declaring income of Rs.1923,71,32,402/-. In course of assessment proceeding, the Assessing Officer (AO) noticed that the assessee had claimed depreciation on let out office premises. He further observed that the rent received from such let out office premises was offered to tax under the head ‘income from house property’. He further noticed that, though, the assessee had reduced the Written Down Value (WDV) of the let-out premises from the value of block of assets, however, in course of assessment proceeding, the assessee claimed that it is entitled to depreciation on the entire block of assets without reducing WDV of the let out premises. In support of such contention, assessee furnished a detailed note supported by judicial precedents. The Assessing Officer, however, did not accept assessee’s claim. He observed that while computing ‘income from house property’, the assessee has claimed 30% deduction towards maintenance charges out of the annual rental value. Hence, assessee cannot be allowed further deduction by way of depreciation. Accordingly, he disallowed assessee’s claim.

5. Though, assessee contested the disallowance in appeal preferred to learned First Appellate Authority, however, the disallowance was sustained.

6. Before us, learned counsel appearing for the assessee submitted that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in its own case in A.Y. 2005-06. Further, he relied upon the following decisions:

1. 1. G.R. Shipping Ltd. vs. DCIT in ITA No. 822/Mum/2005.

2. Bhavani Gems Pvt. Ltd. vs. Pr. CIT in ITA No. 766/Mum/2021.

3. Bodal Chemical Ltd. [2019] 112 taxmann.com 217. He also referred to CBDT Circular No. 469 dated 23.09.1986.

23. We have considered the submissions of both sides and perused the material available on record. It is evident from the record that the property under question was purchased by the assessee in the assessment year 1987-88. Since its acquisition, the said property forms part of the block of assets for the purpose of claiming depreciation under the Act. It is the claim of the assessee that in the preceding years the assessee used this property as one of its office premises. In the year under consideration, the said property was let out and the rental income was offered to tax under the head “Income from House Property , after claiming a deduction under section 24 of the Act. The AO, vide assessment order, worked out the disallowable depreciation in respect of the aforesaid property while allowing deduction claimed under section 24 of the Act.

owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed— (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed; (ii ) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: ………..

Explanation 2.—For the purposes of this sub- section "written down value of the block of assets" shall have the same meaning as in clause (c) of sub- section (6) of section 43.

26. Section 43(6)(c) of the Act reads as under:- “(c) in the case of any block of assets,— (i) in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988, the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,— (A) by the increase by the actual cost of any asset falling within that block, acquired during the previous year; (B) by the reduction of the moneys payable in respect of any asset falling within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased; and (C) in the case of a slump sale, decrease by the actual cost of the asset falling within that block as reduced—

(a) by the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922) in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) by the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 as if the asset was the only asset in the relevant block of assets, so, however, that the amount of such decrease does not exceed the written down value;] (ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i).

27. It is the plea of the assessee that since the property was acquired in the assessment year 1987-88 and forms part of the block of assets, therefore, the lower authorities have erred in carving out the depreciation for this property and disallowing the same. Since the assessee is the owner of the property from the assessment year 1987-88 and the same was also used as one of its office premises in preceding years, therefore, we are of the view that the conditions laid down in section 32 of ownership of the asset and usage for the purpose of business are satisfied in the present case. We find that the only basis on which the AO/learned CIT(A) disallowed the depreciation is that the assessee has rented out the property during the year and offered the income under the head “Income from House Property”, after claiming deduction under section 24 of the Act. In this regard, it is pertinent to note that the property in question forms part of the block of assets since the assessment year 1987-88 and the depreciation on the entire block was also allowed. The Revenue has also not disputed this fact. It is settled that once any asset forms part of the block of assets, it losses its individual identity, and thus for the purpose of depreciation, only the block of assets has to be considered. This aspect is sufficiently evident from Circular No.469 issued on 23/09/1986, which reads as under:- 6.3 As mentioned by the Economic Administration Reforms Commission (Report No. 12, para 20), the existing system in this regard requires the calculation of depreciation in respect of each capital asset separately and not in respect of block of assets. This requires elaborate book-keeping and the process of checking by the Assessing Officer is time consuming. The greater differentiation in rates, according to the date of purchase, the type of asset, the intensity of use, etc., the more disaggregated has to be the record- keeping. Moreover, the practice of granting the terminal allowance as per section 32(1)(iii) or taxing the balancing charge as per section 41(2) of the Income-tax Act necessitate the keeping of records of depreciation already availed of by each asset eligible for depreciation. In order to simplify the existing cumbersome provisions, the Amending Act has introduced a system of allowing depreciation on block of assets. This will mean the calculation of lump sum amount of depreciation for the entire block of depreciable assets in each of the four classes of assets, namely, buildings, machinery, plant and furniture.

28. Further, as per section 43(6)(c)(i)(B) of the Act, the written down value in the case of any block of assets is reduced by the money payable when the asset is sold or discarded or demolished or destroyed. However, in the present case, the assessee continued to own this property, and the same was only let out during the year. In any case, this section also does not provide for carving out depreciation for disallowance, as is done by the AO in the present case. We find that the Hon‟ble Delhi High Court in CIT v/s Oswal Agro Mills Ltd. [2012] 341 ITR 467 (Delhi), observed as under:- “32. Another significant and contemporaneous development, which needs to be noticed is that the Legislature has also deleted the provision for allowing terminal depreciation in respect of each asset, which was previ- ously allowable under section 32(1) (iii) and also taxing of balancing charge under section 41(2) in the year of sale. Instead of these two provisions, now whatever is the sale-proceed of sale of any depreciable asset, it has to be reduced from the block of assets. This amendment was made because now the assessees are not required to maintain particulars of each asset separately and in the absence of such particular, it cannot be ascertained whether on sale of any asset, there was any profit liable to be taxed under section 41(2) or terminal loss allowable under section 32(1) (iii) . This amendment also strengthen the claim that now only detail for "block of assets" has to be maintained and not separately for each asset.

29. Thus, in view of the above, once the property forms part of the block of assets, carving out the depreciation for the said property and disallowing the same goes against the spirit of allowing depreciation on the entire block of depreciable assets. Before concluding, we may note that in this appeal the Revenue has not disputed the claim of deduction under section 24 of the Act in respect of the property which forms part of the block of assets. Thus, merely because the Revenue has accepted the claim of deduction under section 24 of the Act doesn’t mean that the property which forms part of the block of assets will cease to be so. Therefore, the disallowance of depreciation of Rs. 45,681 made by the AO is deleted. As a result, ground No. 4 raised in assessee’s appeal is allowed.”

9. Keeping in view the parity in factual position and also the fact that the issue has been decided in assessee’s own case, we respectfully follow the decision of the Coordinate Bench, as referred to above, and direct the Assessing Officer to allow the claim of depreciation. This ground is allowed.”

9. Facts being identical, respectfully following the decisions of the Coordinate Benches, we allow assessee’s claim. The Assessing Officer is directed to delete the addition. This ground is allowed.

10. In Ground No.4, assessee has challenged disallowance of administrative

11. Having considered rival submission, we find identical issue came up for consideration before the Coordinate bench in assessee’s appeal relating to A.Y. 2008-

41. Applying the ratio laid down by the Hon’ble Supreme Court referred to above, we hold that the disallowance made by the AO is unsustainable. Accordingly, we direct the AO to delete the disallowance. This ground is allowed.”

12. Facts being identical, respectfully following the decision of the Coordinate Bench, we direct the AO to allow assessee’s claim. This ground is allowed.

13. In Ground No.5, assessee has challenged disallowance of deduction u/s. 80IA of the Act on other income, being rent received from housing accommodation allotted to employees.

14. Having considered rival submissions, we find, identical issue came up for consideration past assessment years. In the latest order passed in assessment year 2007- 08 (Supra), the Coordinate Bench has held as under:-

“26. In Ground No.7, the assessee has challenged the disallowance of deduction of Rs.65,090/- u/s. 80IA of the Act qua rental income.

27. Briefly the facts are, while verifying assessee’s claim of deduction u/s. 80IA of the Act in course of assessment proceeding, the Assessing Officer noticed that the assessee had not excluded miscellaneous/other income not derived from the profits of the undertaking, while claiming deduction u/s.80IA of the Act. On further examination, he found that the assessee had claimed u/s.80IA in respect of rental income of Rs.65,090/- . Being of the view that rental income cannot form part of profit derived from the undertaking, the Assessing Officer disallowed assessee’s claim. Such disallowance was also confirmed by the First Appellate Authority.

29. The learned D.R. agreed with the submission of the assessee.

15. Facts being identical, respectfully following the decision of the Coordinate bench, we allow assessee’s claim. This ground is allowed.

“56. In Ground No.1, Revenue has challenged deletion of disallowance made u/s. 43B of the Act.

57. Briefly the facts are, in course of assessment proceeding, the AO noticed that certain payment aggregating to Rs.9,60,89,112/-, though were covered under Clause-(b) to (f) of Section 43B of the Act, however, assessee has not disallowed them while computing its income. He, therefore, called upon the assessee to explain why such payments should not be disallowed. In response, assessee submitted that such payments are not covered u/s. 43B of the Act. It was submitted by the assessee that as per Explanation-2 to Section 43B of the Act, which only refers to Clause (a) of Section 43B “any sum payable” would mean a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law. It was submitted by the assessee that since Explanation-2 does not refer to Clause (b) to (f) of Section 43B, the meaning of any sum payable as provided under Explanaiton-2 will not cover the payments falling under clause (b) to (f) of Section 43B. The AO, however, did not accept the contention of the assessee that disallowed the deduction claimed. Assessee contested the disallowance before learned First Appellate Authority.

58. After considering the submissions of the assessee in the context of facts and material on record, learned CIT(A) noticed that identical issue has been decided in favour of the assessee in the preceding assessment year. Following the decision taken therein be deleted the disallowance.

59. Before us, it is a common point between the parties that the issue is squarely covered in favour of the assessee by the decisions of the Tribunal in its own case in past assessment years.

22. In Ground No.2, Department has challenged the deletion of disallowance made on account of contribution to local organizations.

23. Having considered rival submissions, we find that this is a recurring issue between the parties in past several assessment years. In the latest order passed in A.Y. 2007-08 (supra), while deciding identical issue, the Tribunal has held as under:

“61. In Ground No.2, the, Revenue has challenged the deletion of disallowance of contribution to local organizations.

62. Briefly the facts are, in course of assessment proceeding, the AO noticed that under the head miscellaneous expenses, the assessee had claimed expenses of Rs.19,08,941/-. On further verification, we found that the payments were made towards contribution to various local organizations located in and around the areas where the plant / office of the company is situated. Holding that such payment did not came within the purview of Section 37(1) of the Act, the AO disallowed the claim. While deciding the issue, learned First Appellate Authority allowed assessee’s claim.

65. Respectfully following the consistent view of Hon’ble Jurisdictional High Court and coordinate Bench, we uphold the decision of learned First Appellate Authority by dismissing the ground.”

24. Facts being identical, respectfully following the decision of the coordinate Bench, we uphold the order of learned First Appellate Authority by dismissing the ground.

25. In Ground No.3, Department has challenged deletion of disallowance made of rural development expenses of Rs.2,91,22,561/-.

26. Having considered rival submissions, we find identical issue was decided by the Coordinate Bench in past assessment years in favour of the assessee. In the latest order passed in A.Y. 2007-08 (Supra), the Coordinate Bench has held as under:

“66. In Ground No.3, Revenue has challenged the deletion of disallowance of rural development expenses.

28. In Ground No.4, the Department has challenged the deletion of disallowance made of Rs.4,26,968/- on account of cost of production of advertisement films.

“71. In Ground No.4, the Department has challenged deletion of disallowance of cost of production of advertisement films.

30. Facts being identical, respectfully following the decision of Coordinate Bench, we uphold the decision of learned First Appellate Authority by dismissing the ground.

31. In Ground No.6, assessee has contested the deletion of disallowance of delayed payment of employees’ contribution to provident fund and labour welfare u/s. 36(i)(va) of the Act.

33. Following the ratio laid down by the Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd. (Supra), we uphold the disallowance made by the AO.

34. In Ground No.7, the Department has challenged the deletion of disallowance made of Rs.62,99,180/-on expenses incurred on SAP ERP.

“21. In Ground No.6, the assessee has contested the disallowance of SAP ERP expenses claimed as revenue expenditure.

24. The learned D.R. agreed with the submissions of learned counsel of the assessee.

25. Having considered rival submissions, we find, in assessee’s own case in Assessment Years 2002-03- and 2003-04, the Tribunal had allowed assessee’s claim of revenue expenses. Facts being identical, respectfully following the decisions of the Coordinate Benches, we allow assessee’s claim and direct the Assessing Officer to delete the disallowance. Of course, the depreciation allowed has to be withdrawn. This ground is allowed. ”

36. Facts being identical, respectfully following the decision of Coordinate bench, we uphold the decision of the learned First Appellate Authority while dismissing the ground.

1. 1. Aditya Birla Novo Ltd. in

2. Grasim Industries Ltd. vs. Addl. CIT in ITA No. 1065/Mum/2017 3. Aditya Birla Nuvo Ltd. vs. Addl. CIT in ITA No.4220/Mum/2015 4. DCIT LTU vs. Aditya Birla Nuvo Ltd. in ITA No. 3178/Mum/2012.

5. Aditya Birla Nuvo Ltd. vs. DCIT in

6. Bicon Ltd. vs. DCIT [2013] 35 taxmann.co, 335 (Bang.Trib) (SB) 7. DCIT vs. CBRE South Asia (P.) Ltd. [2024] 163 taxmann.co, 256 (Del.Trib)

8. Bhartiya International Ltd. [2024] 158 taxmann.com 239 (Del. Trib) 9. Lemon Tree Hotels Ltd. vs. Addl. CIT in (Del.Trib). 10 CIT vs. PVP Ventures 23 taxmann.co. 286 (Mad. HC).

25. Learned DR relied upon the observations of the AO and learned First Appellate Authority.

39. Facts being identical, respectfully following the decision of the Coordinate Bench, we uphold the decision of learned First Appellate Authority by dismissing the ground.

40. In Ground No.9, the dispute is with regard to nature of receipt of Rs.3,55,77,205/- from sale of Certified Emission Reduction (CER) commonly known as carbon credit, whether capital or revenue in nature. Though the assessee claimed that the sale of CER is not out of any business activity, hence, has to be treated as capital, hence, has not chargeable to tax, the AO, however, disallowed assessee’s claim and treated it as income of the assessee. The assessee contested the aforesaid disallowance before learned First Appellate Authority. After considering the submissions of the assessee in the context of facts and materials on record, learned First Appellate Authority relying upon certain judicial precedents held that receipts are in the nature of capital receipt, hence, not taxable.

1413, 2461 & 2462/Mum/2018.

(Bom. H.C.)

5. Aditya Birla Nuvo Ltd. vs DCIT. in ITA No. 3033/Mum/2012

7. DCM Shriram Industries Ltd. vs. ACIT, in ITA No. 1000/Del/2022

8. Essel Mining & Industries Ltd. vs. DCIT in ITA No. 602/Mum/2021

9. Dwarikesh Sugar Industries Ltd. vs. NFAC in ITA No. 562/Mum/2022

6491/Mum/2018 (Mum. Trib.)

16. PCIT vs. Gujarat Fluro Chemicals Ltd. [2023) 295 taxmann.com 200 (Guj. HC)

17. Kedarnath Jute Manufacturing Com. Ltd. vs. CIT, 82 ITR 363 (SC).

45. In view of the aforesaid, we do not find any justifiable reason to interfere with the decision of learned First Appellate Authority. This ground is dismissed.

47. Having considered rival submissions, we find while deciding identical issue in assessee’s case in A.Y. 2007-08 (supra), Tribunal has held as under:

“43. The additional Ground No.1 is on the issue of taxability of dividend received of Rs.4,47,43,736/- from Alexandria Carbon Black Company incorporated and registered in Egypt. It is the case of the assessee that prior to amendment to Section 90 of the Act by Finance Act, 2003 dated 01.04.2004, as per the meaning of the term “may be taxed” would mean that only the source country has the right to tax income earned in such country and the resident country does not have any taxing rights. Thus, it was pleaded by the assessee that the dividend received from the Egyptian Company is taxable in source country i.e. Egypt. Notably, in assessee’s case in A.Y. 2002-03, the Tribunal had decided the issue in favour of the assessee. However, while deciding the issue in assessee’s case in A.Y. 2004-05, the Tribunal took a contrary view and held that the dividend received is taxable in India. Identical view was reiterated by the Tribunal while deciding the issue in assessee’s case in Assessment Year 2005-06 vide order dated 04.07.2023 in ITA No. 3517/Mum/2006. Learned counsel appearing for the assessee fairly conceded that in view of the subsequent decisions of the Tribunal, the issue has to be decided against the assessee. However, he added that the issue is now pending for adjudication before the Hon'ble High Court.

44. Be that as it may, on perusal of the record, we find that in assessee’s own case in A.Ys 2004-05 and 2005-06, the Tribunal has held that the dividend received from the Egyptian company is taxable in India.

48. Facts being identical, respectfully following the decision of Coordinate Bench, we reverse the decision of learned First Appellate Authority and uphold the addition made by the Assessing Officer. This ground is allowed.

Undisputedly, the expenditure in dispute was incurred in connection with the sale of Vikram Ispat Unit.

While deciding the issue in A.Y. 2005-06, the Bench has held as under:

“75. The issue arising in ground no.6, raised in assessee‟s appeal, is pertaining to the apportionment of Head Office expenses to the Units eligible for deduction under section 80IA of the Act.

55. This issue has been dealt with by the ld. CIT(A) vide his order in page 15-16, para 23.5 & 23.6. We found that the issue has been decided by the Tribunal in assessee's own case in its favour in assessment years 1994-95 to 1998-99 and the Department is not in appeal against the order of the Tribunal. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the order of ld. CIT(A) on this issue..‖ 110. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised

by the revenue. We order accordingly.‖ 110. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in relevant assessment year. This issue has been decided in favour of the assessee in the preceding years also. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, ground no.9, raised in Revenue's appeal is dismissed.

77. In the absence of any allegation regarding the change in facts or in law in the present case, we find no reason to deviate from the conclusion so reached by the coordinate bench in the preceding year. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding years. Therefore, respectfully following the judicial precedent in assessee‟s own case cited supra, ground no.6, raised in Revenue‟s appeal is dismissed.”

60. Having considered rival submissions, we find that this is a recurring issue between the parties from past assessment years. While deciding the issue, the latest order passed in A.Y. 2008-09 vide and the Tribunal has held as under:

“95. We have carefully considered rival submissions and perused materials on record. Factual matrix reveals that A.Y. 2003-04 was the initial assessment year wherein, the assessee claimed deduction u/s. 80IA of the Act in respect of Rail System. Though, the AO rejected assessee’s claim, however, learned First Appellate Authority allowed it. When the dispute reached Tribunal, after taking note of enter factual position, the Tribunal in order dated 13.06.2023 in and not only held that the initial assessment year of claim is A.Y. 2003-04 but the assessee is entitled to claim deduction u/s. 80IA of the Act. The same view was reiterated by the Tribunal while deciding appeals for A.Y. 2004-05 vide ITA Nos. 3439 and 4337/Mum/2005 order dated 23.06.2023 and in A.Y. 2005-06 vide ITA No. 3517 and 3854/Mum/2006, order dated 04.07.2023. There is nothing new in the submissions now advanced by learned Departmental Representative, as we find, the very same submissions were made before the Tribunal in A.Ys. 2003-04 to 2005-06. Interestingly, though in A.Y. 2007-08, learned First Appellate Authority had granted similar deduction to the assessee, however, the Department has not filed any appeal against the Tribunal. Such selective approach of the Department cannot be understood.

63. Having considered rival submission, we find that this is a recurring issue between the parties from past assessment year. While deciding the issue, in the latest order passed in A.Y. 2007-08 (Supra), the Coordinate bench has held as under:

“46. In additional Ground No.2, the assessee has challenged the taxability of subsidy received from the Central Government under technology upgradation and fund (TUF). It is the case of the assessee that the subsidiary received, being of capital nature, is not taxable.

also this issue was remanded back to the file of the learned assessing officer. Therefore based on this the learned AO proceeded to examine the claim of the assessee that whether the interest subsidy received under technology upgradation fund scheme is revenue receipt or capital receipt. It is also to be noted that assessee itself has reduced the above subsidy from the interest expenditure debited to the profit and loss account. Thus, assessee itself treated it as a revenue income and not capital expenditure. However in assessee's own case in ITA number 4220 and 4704/M/2014 dated 24/2/2020 it has been held that the subsidy received by the appellant company under technology upgradation fund scheme is capital receipt. The coordinate bench held as under:- “8. Ground No. 11: 11. "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in directing to treat the interest subsidy of ₹ 15,23,25,727/- as capital in nature." 38.1 In ground No.11 the Revenue has assailed the findings of CIT(A) in holding interest subsidy from ₹ Technology Up gradation Fund(TUF) 15,23,25,727/- as capital in nature. The ld. Authorized Representative for the assessee submitted that the Hon'ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd. in DB Income Tax appeal No.31/2019 decided on 19/09/2019 has held subsidy received under TUF as capital in nature. Similar view has been taken by Mumbai Tribunal in the case of ACIT vs. SVG Fashions Ltd. in for assessment year 2012-13 decided on 17/07/2018. The ld. Authorized Representative for the assessee to further buttress his submissions placed reliance on the following decisions:- (1) CIT vs. Gloster Jute Mills Ltd. ,96 taxmann.com 303 (2) CIT vs. Sshyam Lal Bansal, 200 Taxman 14 (P&H) 38.2 The ld. Authorized Representative for the assessee further submitted that CIT(A) has decided this issue after seeking remand report of Assessing

Officer and examining TUF scheme in details. The ld. Authorized Representative for the assessee further submitted that the Tribunal in assessee's appeal for assessment year 2009-10 (supra) has admitted this issue raised in additional ground of appeal and has restored to Assessing Officer for fresh adjudication.

39. The ld. Departmental Representative submitted that the issue may be restored to Assessing Officer for reconsideration in line with Tribunal order in assessee's appeal for Assessment Year 2009-10.

40. Both sides heard. The assessee has received subsidy under TUF scheme. The assessee has claimed the subsidy as capital receipt, whereas, the Department treated the subsidy as Revenue in nature. We find that the Hon'ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd.(supra) examined the scheme in the light of various decisions and held the subsidy under TUF scheme as capital in nature. Similar view has been taken by the Hon'ble Calcutta High Court in the case of CIT vs.Gloster Jute Mills Ltd.(supra). Thus, in view of above judgements of Hon'ble High Courts, we see no infirmity in the findings of CIT(A). The same are upheld and ground No.11 of the appeal is dismissed.

41. In the result, appeal of the Revenue is partly allowed for statistical purpose.‖

07. Therefore in view of the above decision of the coordinate bench the issue is squarely covered in favour of the assessee wherein it has been held that interest subsidy received under technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account is still capital in nature and therefore not chargeable to tax. Further the argument of the learned departmental representative has also been negated about the applicability of explanation 10 to section 43 (1) of the act by the decision of the coordinate bench in case of orbit exports (supra). In view of this both the grounds of appeal raised by the learned assessing officer are dismissed.”

53. Therefore, respectfully following the decision of the coordinate bench cited supra, we direct the AO to treat the subsidy received under the TUF Scheme as capital in nature. As a result, the additional grounds raised by the assessee vide application dated 06/04/2015 are allowed.”

64. Finding parity, in facts, we uphold the decision of learned First Appellate Authority by dismissing the grounds.

Order pronounced in the open court on 23/05/2025 Sd/- Sd/- (N.K. Billaiya) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 23/05/2025 Aks/- Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,