DCIT-LTU - 2, MUMBAI vs. AMBUJA CEMENTS LTD , MUMBAI

5. In the case of PCIT Vs Delhi International Airport Pvt Ltd [(2022) 144 taxmann.com 80 (Del)], Hon‟ble Delhi High Court has observed as follows: 8. In the opinion of this Court, the present case is covered by the Division Bench judgment in Cheminvest Ltd. v. CIT, [2015] 61 Taxmann.com 118 (Delhi), wherein this Court has held that the expression 'does not form part of the total income' in Section 14A of the Act means that there should be an actual receipt of income which is not includible in the total income, during the relevant previous year for the ITA Nos. 1889 and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 3 of 99 purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. „ 9. Furthermore, this Court in Pr. Commissioner of Income Tax (Central)-2 v. M/s Era Infrastructure (India) Ltd. in vide judgment and order dated 20th July, 2022 has dealt with the issue of amendment made by the Finance Act, 2022 to Section 14A of the Act. The relevant portion of the said judgment is reproduced hereinbelow: "8. Consequently, this Court is of the view that the amendment of Section 14A, which is "for removal of doubts" cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood."

6. In the light of this legal position, the disallowance under section 14A is not sustainable in law. We, therefore, delete the impugned disallowance of Rs 53,64,316. The assessee gets the relief accordingly.

7. Ground no. 1 is thus dismissed.

8. In ground no. 2, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in not allowing the deduction for Education Cess levied on Income Tax, Dividend Distribution Tax and Fringe Benefit Tax aggregating to Rs. 15,76,96,788/- as allowable expenditure in computing the total income under the normal provisions of the Act.”

9. Learned counsel, however, submits that the assessee does not wish to press these grievance, and this ground of appeal

, therefore, may be dismissed as not pressed. The prayer is accepted. The ground of appeal is dismissed as not pressed.

10. Ground no 2 is thus dismissed in the terms indicated above.

11. In ground no. 3, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in not allowing the claim of leave encashment amounting to Rs. 10,78,90,641/-on provision basis based on actuarial valuation in computing the total income. . The Ld CIT(A) failed to record any cogent reason and concluded against the appellant merely because of stay on operation of judgment in case of Bharat Earth Movers Vs CIT (2000) 245 ITR 428(SC).”

12. Learned representatives fairly agree that whatever is decided on the above issue for the assessment year 2006-07, the cross-appeals for which were heard along with this set of cross- and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 4 of 99 appals will apply mutatis mutandis for this assessment year as well. While dealing with the assessment year 2006-07, we have held as follows:

44. Learned counsel for the assessee fairly submits that the issue now stands covered against the assessee, and deduction on a provision basis is indeed inadmissible. He, however, prays that a direction may be given that the Assessing Officer at least allows it on a payment basis as and when the payments are actually made. Learned Departmental Representative does not oppose this prayer, though he adds that the deduction can only be allowed when it is otherwise admissible, and that aspect of the matter will have to be examined by the Assessing Officer. That is indeed the correct approach. While we dismiss the grievance of the asseseee, we make it clear that the Assessing Officer will take a call, as and when the payment is actually made, on the admissibility of deduction in accordance with the law.

13. We have no reasons to take any other view of the matter than the view so taken by us in the assessee‟s own case. The grievance of the assessee is, in terms of and subject to the above observations which will apply mutatis mutandis in this assessment year as well, rejected.

14. Ground no.3 is thus dismissed.

15. In ground no. 4, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the denial of claim for exclusion of interest u/s 244A of Rs. 5,83,17,899 received during the year without cognizing the fact that the interest income was contingent in nature at provisional assessment stage and can be said to accrue only on completion of further pending proceeding.”

16. This grievance, though raised before the CIT(A) for the first time, was not pressed by the assessee. Yet, the assessee is in appeal on the same issue, but has not advanced any arguments in support of the same. It appears that the assessee does not wish to pursue the grievance.

17. Ground no. 4 is thus treated as not pressed

18. In ground no. 5, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in not allowing exclusion of profit on sale of investment amounting to Rs. 87,51,71,262/- being capital profits in computing Book Profit us 115JB of the Act.”

19. Having heard the rival contentions and having perused the material on record, we are of the considered view that the assessee also deserves to succeed on this ground of appeal on a foundational issue. The reason is this. There is no dispute that the amount in question was in the capital field, and that it does not, therefore, is not required to be routed through the profit and and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 5 of 99 loss account. On such facts, and in the case of Shivalik Ventures Pvt Ltd Vs DCIT [(2015) 60 taxmann.com 214 (Mum)], a coordinate bench of thisb Tribunal has, inter-alia, held that “In view of the above said legal provisions, the assessee has contended that the profits and gains arising on transfer of a capital asset by a company to its subsidiary company does not fall under the definition of "Income" as given in sec. 2(24) of the Act and hence it does not enter into the computation provisions of the Income tax Act. Accordingly it was contended that, an item of receipt which is not considered as "income" at all and which does not enter into the computation provisions of the Income tax Act, cannot be subjected to tax u/s 115JB of the also”. Learned Departmental Representative has not been able to show anything contrary to this decision of the coordinate bench. In this view of the matter, and respectfully following the views of the coordinate bench, we uphold the plea of the assessee and direct the Assessing Officer to delete the impugned addition to the book profits under section 115JB. The assessee gets the relief accordingly.

20. Ground no. 5 is thus allowed.

21. In ground no. 6, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the addition of Rs. 11,27,14,969/- provision for interest on income-tax in computing Book Profit u/s 115JB of the Act.”

22. No specific arguments were advanced in support of this plea. In any event, the law is clear and unambiguous, as Explanation 1 to Section 115JB categorically provides that “income tax paid or payable, and the provision in respect thereof” is to be added back to the book profits under section 115JB. We thus see no merits in the assessee's plea and reject the same.

23. Ground no. 6 is thus dismissed.

24. In ground no. 7, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in adding Rs. 53,64,316/- being notionally allocated expenditure which is alleged to be incurred to earn dividend income in computing Book Profit u/s 115JB of the Act.”

25. Having heard the rival contentions and having perused the material on record, we are of the considered view that the assessee deserves to succeed in this plea for the reason that, eventually, there is no disallowance under section 14A on the facts of this case, and, in any event, the issue is covered, as regards the question of adjustment of book profits under section 15JB for the 14A disallowance, in favour of the assessee, by a special bench decision in the case of ACIT Vs Vireet Investments Pvt Ltd [(2017) 82 taxmann.com 415 (Del SB)]. The assessee gets relief on this point as well.

26. Ground no. 7 is thus allowed. and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 6 of 99

27. In ground no. 8, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in not granting the benefit of tax rate of 5% as per Article 10 of India-Mauritius treaty for determining the tax rate on dividend declared.”

28. No specific arguments are advanced in support of this plea, and, this plea is, accordingly, dismissed as not pressed. 29. Ground no. 8 is thus dismissed. 30. In the result, the appeal of the assessee is partly allowed in the terms indicated above. 31. We now take up the appeal filed by the Assessing Officer. 32. In ground no. 1, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the appeal of the assessee and holding the sales tax incentives as capital in nature?" 33. Learned representatives fairly agree that materially identical issues have come up for our consideration in the assessment years 2005-06 to 2009-10, which were heard along with these appeals, and whatever we decide for the assessment year 2005-06 will follow mutatis mutandis in this assessment year as well. Vide our order dated 31st October 2022, accepting the plea of the assessee and rejecting 34. the plea of the revenue, we have held as follows: 5. The relevant material facts, so far as necessary for adjudication of these grievances, are as follows. The assessee before us is a company engaged in the business of manufacturing of cement and generation of electricity. The assessee has set up its plants in different parts of the country, and as the location of some of these plants was in backward areas, the assessee had received certain sales tax concessions from the respective State Governments. These concessions were in the nature of exemptions and remissions etc, and were granted under specific schemes announced, under the industrial policies, from time to time. During the relevant previous year, the assessee received amounts aggregating to Rs 169,93,34,752, but all these receipts were treated as tax exempt on account of being in the nature of capital receipts. When income tax return filed by the assessee was subjected to the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee had a lodged a claim for exclusion of Rs 169.93 crores, being sales tax exemption/incentives received by it, as capital receipt, and hence not liable to tax. The Assessing Officer declined this claim, primarily on the basis of certain and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 7 of 99 observations in the judgments in the cases of Tamilnadu Sugar Corporation Ltd Vs CIT [(2001) 251 ITR 843 (Mad)], CIT Vs Rajaram Maize Products [(2001) 251 ITR 427 (SC)], CIT Vs S KumarsTyre Manufacturing Co [(2004) 266 ITR 325 (MP)], and CIT Vs Abhishek Industries Ltd [(2006) 286 ITR 1 (P&H)]. The entire amount of Rs 1169.93 crores was added to income of the assessee. Aggrieved, assssee carried the matter in appeal before the CIT(A). Learned CIT(A) took note of the fact that these amounts pertained to five different units under four schemes- namely Maharshtra‟s Dispersal of Industries Package Scheme of Incentives 1993 (Maratha Unit), Punjab‟s Industrial Incentives Code under the Industrial Policy, 1996 (Ropar and Bhatinda Units), Rajasthan‟s Sales Tax New Incentives Scheme for Industries, 1989 (Rabriyawas Unit), and Exemptions/ Concessions to Industries Excise & Taxation Department Notification No EXN C(9)2/9- dated 31-1-2-1994 (Himachal Unit). He discussed these schemes in quite a bit of detail-to the extent wordings of the preamble of the schemes are concerned, and concluded that while the amounts aggregating to Rs 130,57,12,796, in respect of Punjab and Maharashtra Schemes, are indeed capital receipts in nature, and exempt from tax as such, the amounts aggregating to Rs 39,36,21,956 are revenue in nature, and to that extent the Assessing Officer was justified in including the same in taxable income. None of the parties is satisfied. While the assessee is aggrieved of the amount of Rs 39,36,21,956 being included in his taxable income, the Assessing Officer is aggrieved of the learned CIT(A)‟s granting relief of Rs 130,57,12,796. Both parties are in appeal before us. 6. We have heard the rival contentions, perused the material on record, and duly considered the facts of the case in the light of the applicable legal position. 7. We find that the learned CT(A) has, in his elaborate analysis, primarily followed the Special Bench decision in the case of DCIT Vs Reliance Industries Ltd [(2004) 88 ITD SB 273 (Mum)]. Upon analysis of this decision, he has noted that „for deciding the nature of subsidy, whether capital or revenue, what should be seen and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry‟, as is also held by Hon‟ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to attract them to the underdeveloped and developing areas of the State, and to promote the growth of the industry in the State, in the preamble to the scheme. It is on this basis that he has held that so far as the subsidies given by the Maharashtra and Punjab States are concerned, these are required to be treated as capital in nature, whereas, the subsidies received from the State Governments of Himachal Pradesh and Rajasthan, in the absence of specific mention to the effect in the preambles of the subsidy schemes that these subsidies are required to be held to be revenue in nature. However, in our considered view, the approach of discerning the purpose of the subsidy, solely from the specific words used in the preamble of the scheme and without examining the overall scheme of and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 8 of 99 the Act- which is admittedly to promote the growth of industry, is incorrect and superficial. The subsidies so received can be said to be revenue in nature unless these subsidies are for augmenting the profits of the assessee, and that is not even the case of the revenue. The CIT(A) is simply swayed by the wording of the preamble of the scheme- something clearly impermissible. These subsidy schemes are materially similar in nature, and there are, by now, a number of decisions of the coordinate benches, as also Hon‟ble Courts above, dealing with these schemes. It is also important to bear in mind the fact that the subsidies received by the assessee are in the nature of sales tax subsidies, and dealing with sales tax subsidies, Hon‟ble Gujarat High Court, in the case of CIT Vs Nirma Ltd [(2017) 397 ITR 49 (Guj)], has observed as follows:

7. So far as second issued as to Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT (A) and in directing the Assessing Officer to consider the Sales-tax exemption benefit of Rs. 5,45,81,171/- as capital receipts is concerned, Mr.Mehta contended that in view of the decision of the Calcutta and Punjab High Court, the Tribunal has committed an error in reversing the view taken by CIT (Appeals) so far as Tax Appeal No.226 of 2010 is concerned, wherein the CIT (A), after discussing the evidence has held in favour of the department. In this regard, he has relied upon the decision of High Court of Bombay in the case of CIT v. Reliance Industries Ltd. [2010] 8 taxmann.com 218/[2011] 339 ITR 632, wherein it is held that object of subsidy being to set up new units in backward area is a capital receipt and another decision of High Court of Calcutta in the case of CIT v. Chhindwara Fuels [2001] 114 Taxman 707/[2000] 245 ITR 9, wherein it is held that subsidy in the form of refund of sales-tax received after commencement of production cannot be treated as capital receipt.

8. On the other hand, Mr. Soparkar, learned counsel appearing for the respondent contended that so far as Tax Appeal No.226 of 2010 is concerned, after discussing the evidence on record, the Tribunal has followed earlier decision and discussed the issue in detail in para 54 and 55 of its decision, which reads as under:— "54. Per contra, the learned D.R. Supported the orders passed by the Assessing Officer and the learned CIT (A). Referring to the judgment in Sahney Steel and Press Works Limited v. CIT 228 ITR 253 (SC), he submitted that the impugned sales tax exemption increased the profits of the assessee by eliminating the expenses which the assessee would have had to incur later and therefore the impugned receipts were in the revenue field. He also referred to Explanation (10) to Section 43 (1) of the Income Tax Act inserted in with effect from 01/04/99 to emphasise that the action of the assessee in not reducing the cost of assets by the amount of subsidy for working out the Written Down Value was indicative of the fact that the impugned receipts were not in the nature of capital receipts. and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 9 of 99 55. We have heard both the parties and considered their rival submissions. Perusal of the scheme extending the aforesaid incentives to "prestigious" units announced by Government of Gujarat on 26/07/91 makes it amply clear that the scheme was announced to attract investment in core sector industry having potential, to spur industrial growth in ancillary, tertiary and secondary sector of the economy. The other scheme announced by the Government of Gujarat as Capital Investment Incentive Scheme on 11th September 1995 was intended to attract investments to generate greater employment in less industrially developed areas of Gujarat and also to secure balanced development of industries in Gujarat through dispersal of industries in the most backward area and backward areas. It is thus clear that the object of both the scheme was to ensure development of backward areas or for development of core sector industries in the State or for generating the employment. Perusal of both the schemes shows that the incentives extended to the eligible units were, inter alia, through exemption from payment of Sales Tax. Thus, the object of both the schemes was to attract capital investment to ensure development of backward areas and the modality or mechanism chosen to attract such investment was, inter alia, through exemption from payment of sales tax." 9. He further contended that in view of decisions of this Court in CIT v. Birla VXL Ltd. [2013] 32 taxmann.com 330/215 Taxman 117 (Guj.) and in Dy. CIT v. Munjal Auto Industries Ltd. [2013] 37 taxmann.com 115/218 taxman 135 (Guj.) the issue is squarely covered and the decisions which are sought to be relied upon by learned advocate for the appellant are not applicable in the facts of the present case. In the case of Birla VXL Ltd. (supra), this Court has observed as under:— '12. It can thus be straightaway seen that the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-to-day functioning of the business, or for making the industry more profitable. The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry. 13. In a recent decision dated 28th January 2013 in Tax Appeal No. 450 of 2012 and connected appeals, we had an occasion to examine the nature of incentives received by the assessee from the State Government in the form of entertaining tax waiver for setting up multiplexes. In such context, we had in wake of the revenues contention that the receipt was revenue in nature, held and observed as under : "From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expansion and diversification of an existing unit. As noted, such subsidy was available and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 10 of 99 only to a new industrial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, new construction, plant and machinery etc. The entitlement was related to percentage of fixed capital investment. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that the character of the subsidy in the hands of the recipient whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of fund is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. But, if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade." 14. In the result, we do not find that the Tribunal has committed any error. No question of law, therefore, arises. Tax Appeals are therefore dismissed.' 10. In the case of Munjal Auto Industries Ltd. (supra), this Court has observed as under:— "7. From the provisions of the said scheme, it clearly emerges that the subsidy though computed in terms of sales tax deferment or waiver, in essence it was meant for capital outlay expended by the assessee for set up of the unit in case of a new industrial unit and for expansion and diversification of an existing unit. As noted, such subsidy was available only to a new industrial unit or a unit undertaking expansion or diversification. Fixed capital investment has been defined as to include various investments in land under use, new construction, plant and machinery etc. The entitlement was related to percentage of fixed capital investment. 8. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that the character of the subsidy in the hands of the recipient whether revenue or capital will ITA Nos. 1889 and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 11 of 99 have to be determined, having regard to the purpose for which the subsidy is given. The source of find is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. Such But if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of production, such subsidy must be treated as assistance for the purpose of the trade."

11. He also submitted that in view of above decisions, these appeals may not be entertained.

8. In the case of JCIT Vs Grasim Industries Limited ( and Ors; order date 29th April 2022), a coordinate bench has dealt with these legal issues in considerable detail and observed as follows:

5.3.5. …………. the dominant purpose for which the incentive scheme per se introduced by the respective State Governments was only for the purpose of setting up of industries in the respective areas for industrial development in State and also to accelerate development and absolutely not for augmenting the profits of the assessee. Effectively, the schemes of various State Governments envisaged the rapid industrialisation, growth and new employment generation in the respective areas which would in turn promote the growth of the State. Hence, it could be safely concluded that subsidy / incentive granted is only for setting up of the units based on the fixed percentage of the capital cost and not for running the business of the assessee. Moreover, even this subsidy which is determined based on sales tax assessment orders for 9 years, 6 years etc., are subject to maximum outer limit already fixed under the respective schemes. Though the quantification of the subsidy has been made post commencement of business, the measurement of subsidy is immaterial. In our considered opinion, none of the schemes contemplated to finance the assessee in the form of subsidy / incentive for meeting the working capital requirements of the assessee company post commencement of business. Hence, by applying the purpose test, apparently, the subsidy / incentive received in the instant case would only have to be construed as capital receipts not chargeable to income tax. In this regard, we find that ld. AR placed reliance on the decision of Hon‟ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., reported in 306 ITR 392, wherein the incentive conferred under and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 12 of 99 that scheme were two fold. First, in the nature of higher free sale sugar quota and second, in allowing the manufacturer to collect Excise duty on sale price on the free sale sugar in excess of the normal quota, but to pay to the Government only the Excise duty payable on the price of levy sugar. The Hon‟ble Supreme Court in para 14 of its decision had held that “character of receipt of subsidy has to be determined with respect to the purpose for which the subsidy is given. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial.” In fact, the Hon‟ble Supreme Court while rendering this decision had duly considered its earlier decision in the case of Sahney Steel and Press Works Ltd., reported in 228 ITR 253 and had absolutely no quarrel with that judgement. Rather, it concurred with the decision rendered in Sahney Steel and Press Works Ltd., case. In this regard, it would be relevant to reproduce the operative portion of the decision of Hon‟ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., as under:- 14. The second case is Lincolnshire Sugar Co. Ltd. v. Smart 20 TC 643. In that case it was found that Lincolnshire Sugar Co. Ltd carried on the business of manufacturing sugar from home grown beet. The company was paid various sums under British Sugar Industry (Assistance) Act, 1931, out of monies provided by the Parliament. The question was whether these monies were to be taken into account as trade receipts or not. The object of the grant was that in the year 1981, in view of heavy fall in prices of sugar, sugar industries were in difficulty. The Government decided to give financial assistance to certain industries in respect of sugar manufactured by them from home-grown beet during the relevant period. Lord Macmillan held that— "What to my mind is decisive is that these payments were made to the company in order that the money might be used in their business." He further observed that: "I think that they were supplementary trade receipts bestowed upon the company by the Government and proper to be taken into computation in arriving at the balance of the company's profits and gains for the year in which they were received."

9. Such decision was considered in case of Ponni Sugars and Chemicals Ltd.(supra) and the Apex Court held and observed as under : “13. The main controversy arises in these cases because of the reason that the incentives were given through the mechanism of price differential and the duty differential. According to the Department, price and costs are essential items that are basic to the profit making process and that any price related mechanism would normally be presumed to be revenue in nature. In other words, according to the Department, since incentives were given through price and duty differentials, the character of the impugned incentive in this case was revenue and not capital in nature. On the other hand, according to the assessee, what was relevant to decide the character of the incentive is the purpose test and not the mechanism of payment.

ITA Nos. 1889 and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 20 of 99 37….The observations of the Madras High Court lend support to the view that the purpose and object of the Scheme under which the subsidy is given is of more fundamental importance than the fact that the subsidy was received after the commencement of production or conditional upon it. Therefore, in our view and with respect, the Tribunal in the case of Reliance Industries Ltd. ( supra) had correctly interpreted and understood the ratio of the judgment of the Supreme Court in Sahney Steel & Press Works Ltd.‟s case (supra).

38. In this view of the matter, we answer the question referred to us in the affirmative. 5.4.2. The ld. AR vehemently submitted that the department did not challenge the decision of the Special Bench before the Hon‟ble Bombay High Court. However, he fairly stated that there was a subsequent decision of the Division Bench of this Tribunal which followed the Special Bench and that Division Bench order was challenged by the Revenue before the Hon‟ble Bombay High Court. The Hon‟ble Bombay High Court while disposing of the said appeal did not reverse the decision of the Special Bench and accepted the same. When that appeal was further challenged by the Revenue before the Hon‟ble Supreme Court, the Hon‟ble Supreme Court remitted the matter back to the Hon‟ble Bombay High Court. Accordingly, he argued that the decision of Special Bench was never reversed by the Hon‟ble Supreme Court as stated by the ld. Special Counsel for the Revenue and accordingly still is a good law and therefore a binding precedent on this Division Bench. In fact, in assessee‟s own case for A.Y.2001-02 in of 2015 dated 18/12/2018 before the Hon‟ble Jurisdictional High Court, wherein the question Nos. c & d was exactly on this point. For the sake of convenience, the question Nos. c & d raised by the Revenue before the Hon‟ble Jurisdictional High Court is reproduced hereunder:- “(c) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in restoring the issue of taxability of the sale tax exemption benefit of Rs.58 crores availed by the assessee to the file of the Assessing Officer for deciding afresh after considering the decision of the Special Bench of the ITAT in the case of DCIT V. Reliance Industries Ltd., 88 ITD 273, which has not been accepted by the Revenue? (d) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in entertaining the additional ground without appreciating that the assessee had treated the amount of sales tax exemption benefit of Rs.58 crores as revenue receipt and had included this amount in the returned income and it had been taxed accordingly and the assessee did not raise this issue before the CIT(A) and the issue had attained finality?” 5.4.3. While disposing of the questions Nos. c & d, the Hon‟ble Jurisdictional High Court categorically held that the decision of the Special Bench of Tribunal and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 21 of 99 had not been reversed or stayed by any higher judicial forum and it holds good as on date. The relevant operative portion of the judgement of Hon‟ble Jurisdictional High Court in this regard is reproduced as under:- “3. We will first address the questions no. (c) and (d), which are different elements of the same issue. The respondent assessee had received a subsidy. It is undisputed that up to the level of Income Tax Appellate Tribunal, the assessee did not raise a contention that such subsidy was towards capital account and, therefore, not taxable. However, before the Tribunal such a contention was raised. The Tribunal by the impugned judgment relied upon its earlier judgment for the Assessment Year 1999-2000 in case of this very assessee and restored the issue back to the Assessing Officer. In the earlier order, the Tribunal had remanded the issue to the file of the Assessing Officer "to decide the issue afresh after considering the decision of Special Bench of the Tribunal in the case of Reliance Industries Ltd. (supra)". Thus, the Tribunal remanded the issue back to the Assessing Officer to be decided in the light of the Special Bench judgment in the case of Reliance Industries Ltd. The Revenue's grievance in this respect is two fold. It was contended that the issue was raised for the first time before the Tribunal and the same should not have been permitted. Secondly, the view of the Tribunal in case of Reliance Industries Ltd. was challenged before the High Court. The High Court in a judgment dated 15.04.2009 in Income Tax Appeal No. 1299 of 2008 had held that no question of law in this respect arises and thereby confirmed the judgment of the Tribunal. It was pointed out that against this judgment of the High Court, the Department had approached the Supreme Court and the Supreme Court had held that a question of law did arise. The Supreme Court framed a question and placed the matter back before the High Court. We are informed that this appeal is still pending.

5. As long as the material exists on record, a contention raised by the assessee for the first time before the Tribunal, cannot be barred. So much is clear from series of judgments of various Courts including of this Court in case of CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. (2012) 349 ITR 336. It is not the case of the Revenue that the assessee in the context of its contention on the nature of the subsidy, desired to produce additional evidence. It is true that the judgment of this Court confirming the order of the Tribunal in case of Reliance Industries Ltd. has been partially reversed by the Supreme Court. A question of law has been framed and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 22 of 99 and placed for consideration of the 4 of High Court. However, this does not mean that the judgment of the Tribunal as on today stands reversed or stayed. In any case, quite apart from the judgment in the case of Reliance Industries Ltd. of the Special Bench of the Tribunal, it is always been for the assessee to contend before the Assessing Officer by pointing out the relevant clauses of the subsidy that in law the subsidy cannot be treated to be towards revenue account. It would be equally open for the Revenue to oppose such a contention if so advised. The Assessing Officer and the Revenue authorities would have to take a decision in accordance with law. These questions, therefore, are not considered.” (emphasis applied by us while placing reliance on the decision of Hon‟ble Jurisdictional High Court) 5.4.4. Against this judgement on other issues, the Revenue preferred an SLP before the Hon‟ble Supreme Court and the same was dismissed vide order dated 23/08/2019 in SLP (Civil) Diary No.22929/2019. In other words, the Revenue while preferring SLP before the Hon‟ble Supreme Court did not even challenge this ground of subsidy and the decision of Special Bench of Tribunal in the case of Reliance Industries Ltd., Hence, the order of the Hon‟ble Jurisdictional High Court in assessee‟s own case for A.Y.2001-02 had become final on the very same issue. Though the said decision has been rendered for subsequent assessment year as compared to the years under consideration before us, in view of identical facts and the same legal issue, and more especially, in order to address the fact of binding precedent of Special Bench decision in the case of Reliance Industries Ltd., this Bench deems it fit to place reliance on the said decision also of the Hon‟ble Jurisdictional High Court. Accordingly, we categorically hold that the decision of the Special Bench still holds the field and is a good law. The entire contentions raised by the ld. Special Counsel for the Revenue in this regard are hereby dismissed. 5.4.5. Further, we find that the Co-ordinate Bench of Ahmedabad Tribunal in the case of ACIT vs. Genus Electrotech Ltd., reported in 72 taxmann.com 101 had an occasion to consider the fact of Special Bench decision in a more elaborate manner. The relevant operative portion is reproduced hereunder:- “11. We find that so far as the Special Bench decision of this Tribunal in the case of Reliance Industries Ltd. (supra) is concerned, it still holds the field. All that has happened, as a result of Hon'ble Supreme Court's decision dated 9th September 2011, is that Hon'ble Bombay High Court has now admitted the question "whether, on the facts and circumstances of the case, the Hon'ble Tribunal was right in holding that sales tax exemption was a capital receipt" and will, in due course though, adjudicate on this legal issue. To that extent, Hon'ble Bombay High Court's order dated 15th April 2009, to the extent of declining to admit this question, stands reversed. However, the decision of the Special Bench still holds good as the same has not, and at least not yet, even been examined by Hon'ble and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 23 of 99 Bombay High Court. Mere admission of appeal against a decision, as is elementary, does not affect the biding nature of a judicial precedent. The Special Bench decision, in the case of Reliance Industries Ltd. (supra), was not reversed by Hon'ble Supreme Court, but was directed to be examined, on merits, by Hon'ble Bombay High Court. That is quite different from disapproving the special bench decision, but it appears that the coordinate bench was led to believe, and there could not have been any other reason for ignoring the special bench decision, that this Special Bench decision is reversed. That is patently incorrect, and when we pointed it out to the learned Commissioner (DR), he did not have much to say except to rely upon the coordinate bench decision which seems to have followed that approach. The coordinate bench, in the case of Jindal Steel & Power Ltd. (supra), did indeed travel much beyond its limited mandate in ignoring a binding judicial precedent simply because appeal against that special bench decision is now pending before Hon'ble Bombay High Court. When posed with a special bench decision and a division bench directly on the issue, though touching different chords, we have no difficulty in recognizing our limitations. The wisdom of a division bench, even if superior- as strenuously argued by the learned Commissioner, has to make way for the higher wisdom of a larger bench. It is this faith of judicial hierarchical system that is the strength of our functioning, and we must follow the same. We, therefore, regret our inability to follow the division bench in the case of Jindal Power, no matter how deeply we respect and admire the work of all our colleagues, and we would rather be guided by the special bench decision - which is exactly what another division bench, on the same set of facts as before us, did in the case of Ajanta Manufacturing Ltd. (supra). As for learned Commissioner (DR)'s suggestion that we should follow the jurisdictional High Court decision in the case off Colourman Dyechem Ltd. (supra), we find that Their Lordships, in this case, were dealing with an entirely different type of subsidy which was clearly dealing with an expansion situation. However, we would rather refrain from making any further detailed observations on this issue, as we are alive to the fact that Hon'ble jurisdictional High Court, in Tax Appeal No 358 of 2012, has admitted appeal against the decision of this Tribunal in Ajanta's Manufacturing Ltd. case (supra) and all these issues will now come up for consideration of Their Lordships. The fact that appeal is admitted does not, as we have stated earlier as well, does not affect the binding nature of the judicial precedents. There is no dispute before us that the scheme under which the sales tax and excise duty subsidy are given to this assessee are the same as in the case of Ajanta Manufacturing Ltd. (supra). All the material facts being the same, there is no reason to take any other view of the matter than the view so taken by the coordinate bench. We must, therefore, uphold the conclusions arrived at by the Commissioner (Appeals), which are in consonance with the Special Bench decision in the case of Reliance Industries Ltd. (supra) and coordinate bench decision in the case of Ajanta Manufacturing Ltd. (supra), and decline to interfere in the matter.” (emphasis supplied by us) and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 24 of 99 5.4.6. In view of the above, no fault could be attributed on the ld. CIT(A) placing reliance on the decision of the Special Bench of the Tribunal and granting relief to the assessee in the instant case.

9. In the Special Bench decision in the case of Reliance Industries Ltd (supra), what came up for consideration was specifically the sales tax subsidy, and that decision, as we seen in the elaborate analysis of the coordinate bench- as extracted above still holds good in law. In the case of CIT Vs Chaphalkar Brothers [(2018) 400 ITR 279 (SC)], Hon‟ble Supreme Court has held that where the object of respective subsidy schemes of State Governments was to encourage the development of Multiple Theatre Complexes, incentives would be held to be capital in nature and not revenue receipts, and, following the same logic, the sales tax subsidy schemes, which are admittedly to encourage industrial growth in the specific areas and the overall scheme in all the sales tax subsidy and exemption schemes unambiguously indicate so, are capital receipts in nature.

35. We see no reasons to take any other view of the matter than the view taken by the coordinate bench in the assessee‟s own case for the immediately preceding assessment year. Respectfully following the same, we uphold the plea of the assessee and dismiss the grievance of the assessee. The relief granted by the CIT(A) in this regard also stands approved and confirmed.

36. Ground no 1 is thus dismissed. 37. In ground no. 2, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the appeal of the assessee and holding that gain arising out of pre-payment of deferred sales tax liability as a capital receipt?" 38. As learned representatives fairly agree, whatever we decide, on this issue in the appeals for the preceding assessment years, which were also heard along with these cross appeals, will also follow mutatis mutandis on this assessment year as well. This issue is covered, in favour of the assessee, by Hon‟ble jurisdictional High Court‟s judgment in the case of CIT Vs Sulzer India Ltd [(2014) 369 ITR 717 (Bom)] which is now approved by Hon‟ble Supreme Court in the case of CIT Vs Balkrishna Industries Ltd [(2017) 88 taxmann.com 273 (SC)]. In fact, in some of the assessment years, even the ground of appeal of the Assessing Officer admits this position and challenges the relief granted only on the ground that the matter has not reached finality as appeal is pending before the Hon‟ble Supreme CourtVide our order of even date dealing with the assessment year 2008-09, we have, inter-alia, observed as follows:

23. A plain reading of the above ground of appeal

clearly shows that, even going by the stand of the Assessing Officer, the issue is covered in favour of the assessee, by Hon‟ble jurisdictional High Court judgment in the case of CIT Vs Sulzer India Ltd [(2014) 369 ITR 717 (Bom)] but yet the appeal has been filed because the revenue has and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012

13. Page 25 of 99 challenged the correctness of the said judgment. That very approach is simply erroneous because it is only elementary in law that the mere pendency of the appeal, against a binding judicial precedent, in a higher judicial forum does not dilute, curtail or otherwise narrow down its binding nature. As long as the binding judicial precedent holds good in law, as it does unless it is upturned or reversed by a higher judicial forum, it binds the lower judicial forums. That apart, even otherwise, the view taken by Hon‟ble Bombay High Court in Sulzer‟s case (supra) now stands approved and confirmed by Hon‟ble Supreme Court in the case of CIT Vs Balakrishna Industries Limited [(2017) 88 taxmann.com 273 (SC)] wherein Their Lordships have, inter alia, observed as follows:

……..The main judgment is dated 05.12.2014 which was rendered in a batch of appeals with leading case known as 'The CIT v. Sulzer India Ltd. [2015] 54 taxmann.com 161/229 Taxman 264/[2014] 369 ITR 717 (Bom.). It is this judgment which has been followed in other cases. Therefore, for the sake of convenience, we shall refer to the facts as noted in Sulzer India Ltd.'s case (supra).

4. The Assessee M/s. Sulzer India Ltd. filed return of income for the assessment year 2003-04 on 27th November, 2013, declaring total income at Rs. 10,59,76,986/-, claiming deduction under section 80HHC of the I.T. Act in the sum of Rs. 82,48,864/-.

7. A glimpse of the facts taken note of, shows that the assessee herein had collected the sales tax in the sum of Rs. 7,52,01,378/-. As per the Scheme floated by the Government of Maharashtra, for those assessees who set up their industries in the backward area, the sales tax liability was deferred for a period of 7 years and, thereafter, it can be paid over a period of 7 years under the Deferral Scheme of 1983 and over a period of 6 years under the Deferral Scheme of 1988. However, under the Scheme of 1988, the Government of Maharashtra promoted premature or payment of deferral sales tax at Net Present Value (NPV).

10. After hearing the counsel for the parties at length, we are of the view that the aforesaid approach of the High Court is without any blemish, inasmuch as all the requirements of Section 41(1) of the Act could not be fulfilled in this case.

24. In view of these discusssions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A), and decline to interfere in the matter.

39. In view of these discussions, as also bearing in mind the entirety of the case as also our decisions in assessee‟s own cases for the immediately preceding assessment years, we approve and confirm the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.

40. Ground no. 2 is thus dismissed. 41. In ground no.3, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the appeal of the assessee and holding excise duty exemption availed by the assessee as capital receipt?" 42. Learned representatives fairly agree that whatever we decide in the assessee‟s cross- appeals for the assessment year 2006-07 and other preceding assessment years, which was heard along with these appeals, will mutatis mutandis in this assessment year as well. Vide our order dated 31st October 2022, and dealing with the same issue on the admittedly same set of facts, we have decided this issue in favour of the assessee, and observed, inter alia, as follows: and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 29 of 99

17. So far as this grievance of the assessee is concerned, the relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has availed excise duty exemption, amounting to Rs 46,83,11,376, in respect of their Darlaghat Unit, HP, and it was claimed as a capital receipt in nature. It was also noted that in terms of general Exemption No, 51 (Notification No. 50/2003 dated 10th June 2003) the assessee is entitled to 100% excise duty exemption for a period of ten years in respect of its cement manufacturing plant at Darlaaghat. The assessee‟s submission was that this exemption was in response to the announcement made by the Hon‟ble Prime Minister to the effect that tax and central excise concession are made to attract investments in the industrial sector for special category states, including Uttarakhand. The Assessing Officer noted that “though it is apparent from the excise notification that exemption is granted for only those units which are located in the backward areas and which have undertaken substantial expansion, however incentives are available only post production” and therefore he “finds no difference in sales tax and excise exemption claimed”. Following the stand taken for sales tax exemption etc, he held that the excise exemption receipts are also revenue in nature. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) also confirmed the stand of the Assessing Officer on the short ground that the exemption notification does not specifically state the object and purpose of the concession to be promotion of industry in the specified areas etc. The assessee is aggrieved, and is in appeal before us.

will apply mutatis mutandis here as well. That apart, once the Assessing Officer himself also accepts that the object and purpose of the excise exemption scheme are to promote the industry is set up, or being subjected to substantial expansion, in the backward areas, it cannot be open to the revenue even to suggest that the object and purpose of the scheme are to promote industries in backward areas. The Assessing Officer had declined the relief on a technical ground about at what stage the receipts materialize, whether post-production or pre- production. That test, as is the settled legal position now, is no longer a relevant test. What is material is as to what is the purpose of the scheme in question, and a call about the object and purpose of the scheme is to be taken in a holistic manner and on the basis of the scheme on an overall basis. The approach adopted by the learned and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 30 of 99 CIT(A) was not only legally incorrect but wholly superficial. The following observations by Hon‟ble jurisdictional High Court, in the case of PCIT Vs Welspun Steel Limited [(2019) 103 taxmann.com 436 (Bom)] are relevant in this regard:

6. Having heard the learned Counsel for the parties on this question, we notice that, the Government of Gujarat Sales Tax Incentive Scheme was envisaged to promote large scale investments in the Kutch District since on account of devastating earth-quake, development of the district had suffered. The Scheme envisaged that, the same was confined only with the Kutch District. Similar, being the purpose and philosophy of the Government of India, while granting excise duty exemption, we may not separately take note of the back-ground thereof. In view of these facts, the question arises is - whether the Tribunal was justified in holding that Sales Tax and Excise duty exemption enjoyed by the assessee under the said subsidy scheme, was not taxable as revenue receipt. Such and similar issue has came up before different High Courts and Supreme Court on the numerous occasions. Reference to all those judgments would be un-necessary. However, the principle that has evolved is that, not the nomenclature of the subsidy or the fact that, the computation of the subsidy benefit is in terms of tax payable, would not be conclusive. What is to be examined in each case is the purpose for granting such subsidy. We may refer to the decision of the Supreme Court in case of CIT v. Chaphalkar Bro. [2017] 88 taxmann.com 178/[2018] 252 Taxman 360/400 ITR 279. It was a case arising out of judgment of this Court in which, the dispute between assessee and the Revenue was with respect to subsidy granted to the multiplex cinema operators in the form of entertainment tax waiver. The subsidy was granted in view of the fact that, industry was highly capital intensive. The Revenue argued that, the subsidy was revenue in nature. This Court after referring to several decisions of the Supreme Court including the case of CIT v. Ponni Sugars and Chemicals Ltd. [2008] 306 ITR 392/174 Taxman 87 and Sahney Steel and Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253 (SC) held that, subsidy had not been granted for construction but only after setting up of a new industry which was in the nature of assistance given for the purpose of carrying on business.

7. On further appeal by the Revenue, Supreme Court confirmed the decision of this Court. It was noted that, Maharashtra Government's subsidy was not in form of an exemption from payment of entertainment duty to multiplex theater complex. The scheme was introduced to start new cinema houses in the State. The Supreme Court observed that, in such circumstance, the purpose tests for grant of subsidy should be applied. It was concluded as under:— "Applying the aforesaid test contained in both Sahney Steel as well as Ponni Sugars, we are of the view that the object, as stated in the statement of and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 31 of 99 objects and reasons, of the amendment ordinance was that since the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past, the concept of a complete family entertainment centre, more popularly known as multiplex theatre complex, has emerged. Those complexes offer various entertainment facilitate for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that Government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to multiplex theatre complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct multiplex theatre complexes, the idea being that exemption from entertainment duty for a period of three years and partial remission for a period of two years should go towards helping the industry to set up such highly capital intensive entertainment centres. This being the case, it is difficult to accept Mr. Narasimha's argument that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post construction, that is when cinema tickets are actually sold. We hasten to add that the object of the scheme is only one - there is no larger or immediate object. That the object is carried out in a particular manner is irrelevant, as has been held in both Ponni Sugars and Sahney Steel."

8. In the present appeal also, as noted, the subsidy was granted under schemes framed by the State and the Central Government, to be given to the assesses who set up new industry in Kutch District. The scheme was envisaged to encourage investment which would in turn, provide fresh employment opportunity in the district which had suffered due to devastating earthquake. The computation of subsidy may be on the basis of sales tax or excise duty. Nevertheless, the purpose test would ensure that, the subsidy was capital in nature.

9. The second question raised by the Revenue is consequent of the first question, in which, the Revenue argues that, if the subsidy is treated as a capital in nature, the same must bring down assessee's costs of acquisition of plant and machinery. The assessee's claim of depreciation to that extent must shrink. Assessee argues that, the Tribunal correctly held that, the subsidy had not been given in relation to acquisition of plant or machinery and that, therefore, same cannot be adjusted towards cost of acquisition.

10. It is undoubted that, the subsidy had no relation to the assessee's acquisition of plant or machinery. It was to be granted to an industry which had set up the new industrial unit in the District of Kutch. In such back- and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 32 of 99 ground, question - arises whether such subsidy would be adjustable towards assessee's costs of acquisition of capital assets. We may notice that, a similar question was considered by Division Bench of Gujarat High Court in case of CIT v. Grace Paper Industries (P.) Ltd. [1990] 183 ITR 591/52 Taxman

18. The Court noted that, the subsidy was granted by the Government for development of industries in back-ward areas. It was not part of the actual cost of plant or machinery. The Court, therefore, held that it could not have been deducted towards costs of acquisition. The Court held as under:— "We have carefully considered the provisions relating to the grant of cash subsidy under the schemes framed by the Central Government and the State Government. The Central Government as well as the State Government noticed that areas specified as backward areas and tribal areas were undeveloped or under-developed. Entrepreneurs were not willing to set up industries in such undeveloped or under-developed areas. The industries were concentrating only in urban areas. In other words, rapid urbanization was taking place. So far as the State of Gujarat is concerned, there was rapid industrial growth in cities like Baroda, Ahmedabad and Surat resulting in strain on municipal services. Urbanization created several problems such as pollution, growth of slums etc . It was also necessary to have balanced growth of industry in different regions. However, as pointed out above, entrepreneurs were reluctant to set up industries in backward areas. These areas were identified as backward because there was un-development or underdevelopment of industries in these areas. It was, therefore, that the Government decided to give financial incentives to encourage and induce entrepreneurs to move to backward areas and establish industries there so that the region may develop and promote the welfare of the people living in that region. One of the incentives which the Government decided to grant was cash subsidy so that entrepreneurs could utilize such cash subsidy for any purpose connected with the establishment of industries in the backward areas. Once the decision to give cash subsidy was taken, the Government had to work out some method to determine the quantum of such subsidy. In other words, the question as to how the amount of cash subsidy should be determined had to be considered by the Government. The Government, in order to determine the amount of cash subsidy, decided to follow one of the recognized methods of working it out on the basis of the amount invested by an entrepreneurs in acquiring capital assets as cash subsidy. The scheme does not say as to in what manner the subsidy was granted is to be utilized. In other words, the entrepreneur to whom the subsidy was granted was free to utilize it in any manner he liked. It would, therefore, appear that quantification of subsidy on the basis of investment was a measure adopted by the Government for convenience to work out the subsidy. If subsidy could be utilized by the entrepreneur in any manner he liked, could it be said that it was granted for meeting the cost of the capital assets? In our opinion, taking an overall view of the various provisions of the scheme, it is difficult to and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 33 of 99 hold that cash subsidy was granted to entrepreneur to meet the cost of the fixed assets or part thereof The cost of the fixed assets was merely adopted as a measure for working out subsidy. In fact, a careful examination of the scheme reveals that it is the value of the fixed assets and not its cost which is adopted as the basis for computing the amount of the subsidy. Emphasis on value and not the cost is evident from the fact that land and building already owned by an industrial unit, cost of tools, jigs, dies and moulds, transport charges, insurance premium, erection cost, value of second-hand machinery purchased by an industrial unit etc. were to be taken into account while computing the value of fixed assets for the purposes of subsidy. In other words, it was the value of the fixed assets which formed the basis for computation of subsidy to be granted under the scheme. Subsidy, in our opinion, did not meet the cost of the fixed assets directly or indirectly. Under the scheme of the Central Government or the scheme of the State Government, cash subsidy was quantified by determining the same at a specified percentage of the value/ cost of the fixed assets. Therefore, as observed above, the basis adopted for determining the cash subsidy with reference to the cost or value of fixed assets was only a measure for quantifying the subsidy and it could not be said that the subsidy was given for the specific purpose of meeting any portion of the cost of the fixed assets. The subsidy was granted to compensate the entrepreneur for the hardship and inconvenience which he might encounter while setting up industries in backward areas."‟

11. Similar issue came up for consideration again before the Gujarat High Court in CIT v. Swastik Sanitary Works Ltd. [2006] 286 ITR 544. It was a case in which, the Government subsidy was intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries. In such a case, specified percentage of the fixed capital cost, which was the basis for determining the subsidy, would be granted. The Court held that, such basis for determining the subsidy was only a measure adopted under the scheme to quantify the financial aid and it was not a payment, directly or indirectly to meet any portion of the actual cost of acquisition of capital asset. It was held and observed as under:— 'In so far as question No.2 is concerned, this court finds that the same is squarely covered by the decision of the Supreme Court in CIT v. P. J. Chemicals Ltd., [1994] 210 ITR 830. In the said case, after review of the law on the point, the Supreme Court has held as under (head note): "Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure adopted under the scheme to quantify the financial aid, is not a payment, directly or indirectly, to meet and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 34 of 99 any portion of the 'actual cost The expression 'actual cost' in section 43(1) of the Income Tax Act,1961, needs to be interpreted liberally. Such a subsidy does not partake of the incidents which attract the conditions for its deductibility from 'actual cost'. The amount of subsidy is not to be deducted from the 'actual cost' under section 43(1) for the purpose of calculation of depreciation etc."

20. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee. The Assessing Office is, accordingly, directed to delete the impugned addition….

43. In view of the above discussions, as also bearing in mind the entirety of the case, we see no legally sustainable merits in the grievance of the Assessing Officer. The views expressed by the learned CIT(A), being in conformity with our decisions for the preceding assessment years, meet our approval. We, therefore, confirm and approve the relief granted by the CIT(A) and decline to interfere in the matter.

44. Ground no. 3 is thus dismissed.

45. In ground no.4, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the disallowance of Community Welfare Expenses?"

46. This is a legacy issue and pertains to the expenditure incurred for community welfare as the factories of the assessee are concerned in backward areas and the expenditure is incurred for the smooth functioning of the business. Right from the assessment years 1988-89 to 1994-95, the coordinate benches have allowed appeal of the assessee on this point, and from the assessment years 1995-96 to 2004-05, in which the first appellate authority has deleted similar disallowance, the coordinate benches have rejected the grievances of the Assessing Officer, against the reliefs so granted by the CIT(A). Learned Departmental Representative does not dispute this position but relies upon the stand of the Assessing Officer nevertheless.

47. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches all along. Respectfully following the same, we uphold the relief granted by the learned CIT(A) and decline to interfere in the matter.

48. Ground no. 4 is thus dismissed.

49. In ground no.5, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the pre-operative expenses amounting to Rs. 71,07,28,259/- , whereas the assessee itself claimed these expenses as capital expenses in the books of accounts adding it to capital work in progress/fixed assets?" and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 35 of 99

, in favour of the assessee, as follows:

96. In ground no.8, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the pre-operative expenses amounting to Rs. 39,82,07,328/-whereas the assessee itself claimed these expenses as capital expenses in the books of accounts adding it to capital work in progress/fixed assets?"

97. During the assessment proceedings, the Assessing Officer noted that the assesee has made this claim only by way of a revised return and that no such claim was originally made by the assessee. It was also noted that the books maintained under the Companies Act also show these expenses as capital expenses, which in an indicative, even if not conclusive, evidence of the expenses being in the nature of capital expenses. The judicial precedents relied upon by the assessee in support of the claim were noted, and left at that, and it was observed that “the assessee is a big company assisted by a battery of lawyers and chartered accountants, but in its original return of income no deduction on account of these expenses uis claimed which amounts to an admission that these expenses are not revenue expenses in nature” and that “this shows that lodging this claim is only an afterthought of the assessee, with no substantial basis”. The Assessing Officer also observed that “some of the above expenses are for setting up the business, and not the expansion of the existing ones” though he did not specifically point out any such expenses. The Assessing Office thus proceeded to disallow the entire amount of pre-operative expenses. Aggrieved, assessee carried the matter in appeal before the CIT(A) who, after taking note of the detailed submissions, held that the expenses, being in the nature of expenses incurred for the expansion of existing business, cannot be disallowed. Accordingly, the disallowance was deleted. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us.

98. We have heard the rival submissions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position.

99. The short grievance raised before us by the Assessing Officer is whether, even when the expenditure is shown in the books of accounts, it can be treated as revenue in nature. That question, in our considered view, stands concluded in favour of the assessee. In the case of CIT Vs Havells India Ltd (ITA Nos 55 and 57 of 2012; judgment dated 21 May 2012), Hon‟ble Delhi High Court has, in this context, observed, speaking through Hon‟ble Justice Easwar, that “The fact that in and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 36 of 99 the books of account the assessee had capitalised the expenses does not prevent the assessee from claiming them as revenue expenses since the question of allowance of expenses has to be considered in the light of the legal position and the accounting treatment cannot be conclusive”. The limited grievance raised by the Assessing Officer is thus devoid of any legally sustained merits, and we reject the same. In any event, even on merits, the well reasoned order of the learned CIT(A), in our considered view, does not merit any interference. We approve the conclusions arrived at by the learned CIT(A) on this point and decline to interfere in the matter.

51. We see no reasons to take any other view of the matter than the view so taken by us in assessee‟s own cases for the preceding assessment years. Respectfully following the same, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.

52. Ground no. 5 is thus dismissed.

53. In ground no.6, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the additional depreciation on all the eligible assets acquired before 01.04.2008?"

54. Learned representatives fairly agree that this issue is also covered by coordinate bench decisions, including in the assessee‟s own cases for the preceding assessment years, even as the learned Departmental Representative relied upon and justified the stand of the Assessing Officer. In the case of DCIT Vs Gloster Jute Mills Limited [(2017) 88 taxmann.com 738 (Kol)], which has been subsequently followed by the other benches- including Mumbai benches, the coordinate bench has, inter-alia, observed as follows:

24. Ground No. 3 raised by the revenue reads as follows :- "3. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law by allowing assessee's claim of additional depreciation of plant and machinery on original cost in the year subsequent to the year of acquisition and installation and thereby has erred in deleting the addition of Rs.54,21,617/- without appreciating the fact that such additional depreciation is allowable on plant and machinery only in the year of acquisition and installation."

25. This ground of appeal relates to the claim of the Assessee for additional depreciation u/s.32(1)(iia) of the Act. The undisputed facts are that the original cost of the new machinery purchased and installed by the Assessee after 31-3-2005 but before 1-4-2006 in the 100% EOU and DTA unit Rs.29,77,470 and Rs.2,41,30,615. The WDV of these machineries as on 1-4-2006 was Rs.24,51,920/- and Rs.1,81,50,266/- respectively. The Assessee availed of additional depreciation @ and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 37 of 99 20% on the original cost of the machinery at Rs.5,95,494/- and Rs.48,26,123/- respectively in AY 2006-07. In AY 2007-08 also the Assessee claimed additional depreciation at 20% of the original cost viz., Rs.5,95,494 and Rs.48,26,123 respectively in all depreciation totaling Rs.54,21,617/-.

26. According to the AO, the deduction u/s.32(1)(iia) of the Act is granted only to "new" plant and machinery and once depreciation is granted in the 1st year in which the machinery is installed or put to use, the machinery ceases to be a new machinery and therefore additional depreciation cannot be allowed. The plea of the Assessee however was that Section 32(1)(iia) of the Act merely provides that further to the normal depreciation at the prescribed rates, an additional depreciation shall be allowed to the assessee at the rate of 20% on new plant and machinery acquired and installed after 31-03-2005. However, the period the period during which such additional depreciation shall be allowed is not specified in the Act. Thus, one may conclude that the allowance of additional depreciation shall not only be restricted to the initial year but continue to second and subsequent years.

27. The claim for additional depreciation was however rejected by the CIT(A) for the reason that additional depreciation is available only in respect of new plant and machinery acquired and installed after 31-03-2005. The word 'new' is not defined in the Act. According to the Shorter Oxford Dictionary the word 'new' means "not existing before; now made, or brought into existence, for the first time". The AO held that the assets on which additional depreciation was claimed by the assessee is neither "new" nor brought into existence in the hands of the assessee in the relevant previous year. It is already used in earlier years and is already depreciated and, therefore, old in the hands of the assessee in the previous year. He held that the qualification that the asset should be new was basic qualification for entitlement of additional depreciation as laid down in the provisions of Sec.32(1)(iia) of the Act and that conditions was not satisfied in the case of the Assessee. The AO accordingly disallowed the claim of the Assessee for additional depreciation.

28. Before we set out the conclusions of the CIT(A) on this issue, it would be worthwhile to examine the history of scheme of allowance by way of additional depreciation in the Act. 'Sec.32 Depreciation. (1) In respect of depreciation of— (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed— and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 38 of 99 (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:

Section 32(1)(iia) of the Act was originally introduced by the finance (no.2) Act, 1980 w.e.f. 1-4-1981 reads thus (the sub-section existed upto 31-3-1988 and was deleted thereafter): "(iia) in the case of any new machinery or plant (other than ships and aircraft) which has been installed after the 31st day of March, 1980 but before the 1st day of April, 1985, a further sum equal to one-half of the amount admissible under clause (ii) (exclusive of extra allowance for double or multiple shift working of the machinery or plant and the extra allowance in respect of machinery or plant installed in any premises used as a hotel) in respect of the previous year in which such machinery or plant is installed or, if the machinery or plant is first put to use in the immediately succeeding previous year, then in respect of that previous year :" Sec.32(1)(iia) of the Act as reinserted by finance (No.2) Act, 2002 w.e.f. 1-4-2003, reads thus: '(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2002, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to fifteen per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii): Provided that such further deduction of fifteen per cent shall be allowed to— (A) a new industrial undertaking during any previous year in which such undertaking begins to manufacture or produce any article or thing on or after the 1st day of April, 2002; or (B) any industrial undertaking existing before the 1st day of April, 2002, during any previous year in which it achieves the substantial expansion by way of increase in installed capacity by not less than *[ten per cent ]:

"Subs. for "twenty-five per cent" by Finance (No. 2) Act, 2004, (w.e.f. 1-4-2005)." Sec.32(1)(iia) as substituted by Finance Act, 2005, (w.e.f. 1-4-2006) reads as follows: "(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii):"' and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 39 of 99

30. The CIT(A) after considering the aforesaid scheme and history of the provisions of Sec.32(1)(iia) of the Act, deleted the addition made by AO observing as follows :— "I have considered the submissions of the Ld. A/R and find substance in the contention of the Appellant. On a conjoint reading of the provisions of section 32(1)(iia) inserted by Finance (No. 2) Act, 1980 and reinserted by Finance Act, 2002 it is evident that the said sections specifically restricted the allowability of additional depreciation in the year of installation of P&M. However, in the section 32(1)(iia) amended vide Finance Act, 2005 Legislature had omitted the proviso wherein it was provided that such depreciation could be claimed only in the initial assessment year. This being a specific omission it could be construed that the intent of the Legislature was not to restrict the allowance of additional depreciation to the year in which the assets are installed but also in the second and subsequent years provided that the aggregate depreciation does not exceed the cost of the asset. It is settled law that a fiscal statute has to be interpreted the basis of the language used therein and not interpreted out of context the same as held by Apex Court in the case of Orissa State Warehousing Corporation, Mohammad Ali Khan and Madurai Mills Co. Ltd. (Referred to by the Appellant.) and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 40 of 99 Further, it is also imperative to state that Section 32(1)(iia) is a beneficial provision enacted with the view to provide benefit to the assessee. The same is also evident from the Explanatory Notes to the Finance Act, 2005 wherein it has been clarified that in order to encourage investment the provisions of sec. 32(1)(iia) have been amended. In so far as the language used in the provision in concerned one has to construe the language beneficially and in favour of the assessee as held by the Jurisdictional High Court in the case of Indian JuteMill Association in 134 ITR 68. There is little merit in the contention of the AO that the asset is not new in the second year. In my view for claiming additional depreciation the assessee has to acquire and install the plant & machinery after 31-03-2005 and the same should be new in the year of installation. There is no requirement that the assets should be new in the year of claim of additional depreciation. For the reasons aforesaid I am of the view that in terms of provisions of Section 32(1)(iia), additional depreciation is available in AY 2006-07 and subsequent years in respect of all new plant & machinery acquired and installed after 31-03-2005 subject to overall criteria that total depreciation does not exceed the actual cost. Hence Ground No. 4 is decided in favour of the Appellant." 31. Aggrieved by the order of CIT(A) the revenue has raised ground no.3 before the Tribunal. The ld. DR placed reliance on the order of the AO. The ld. Counsel for the assessee submitted that fiscal statute shall be interpreted on the basis of the language used therein and not de hors the same. It was argued that Clause (iia) to Sec. 32(1) was first introduced vide Finance (No. 2) Act, 1980 w.e.f. 01-04-81 and was applicable till AY 1987-88. The clause was subsequently re-introduced vide Finance Act, 2002 w.e.f. 01-04-03. On perusal of clause (iia) to Sec. 32(1) as existed during the aforesaid period, it could be seen that the legislature conferred the benefit of additional depreciation only in the first AY when the asset was installed and first put to use. However vide Finance Act, 2005, clause (iia) to Sec. 32(1) was amended w.e.f. 01-04-06 wherein the condition of claiming additional depreciation only in the initial AY was deleted. It was submitted that since the specific condition for claim of additional depreciation in one year has been done away with, it should be construed as the intention of the legislature to allow additional depreciation in subsequent years as well. Reliance was placed on the following decisions wherein it has been held that a fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. Even if there is a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation :— - Orissa State Warehousing Corpn. v. CIT [1999] 103 Taxman 623/237 ITR 589 (SC) - Prakash Nath Khanna v. CIT [2004] 135 Taxman 327/266 ITR 1 (SC) and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 41 of 99 - Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345 (SC) - Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147 (SC)

Apart from the above, it was also pointed out that DTC Bill 2013 has proposed expressly that additional depreciation would be allowed in the FY in which the P&M is used for the first time and those provisions are not made with retrospective effect. It was argued that the legislature has consciously not restricted the allowance of additional depreciation on the original cost for AY 2006-07 till AY 2013-14 to one year only and therefore the additional depreciation should be allowed on the original cost of the asset for the second and subsequent years as well. It was submitted that the condition imposed by the relevant provisions was that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/ s 32(1)(iia) and not new in subsequent years.

, and consistent with the past history of the case of the assessee, we have held that the excise duty exemption is, in the light of the objects of the scheme, is a capital receipt. As a corollary to this finding in the case of the case for this, as also the other related preceding assessment year, this ground of appeal becomes infructuous inasmuch as this ground of appeal proceeds on the assumption that excise duty exemption is revenue in nature. Grievance of the Assessing Officer is thus dismissed as devoid of legally sustainable merits.

62. Ground no. 8 is thus dismissed.

63. In ground no.9, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances and in the law, the Ld. CIT(A) was right in directing the Assessing Officer to compute Surcharge @ 7.5% instead of @10% while computing Tax us 115-O of the Act?"

64. So far as this grievance of the Assessing Officer is concerned, we have noted that it is an undisputed position that, in terms of the provisions of Finance Act 2010 the applicable surcharge was 7.5%, that the related Finance Bill was introduced in the Parliament on 26th February 2010, and that, in terms of the provisions of Section 294 of the Income Tax Act, “If on the 1st day of April in any assessment year provision has not yet been made by a Central Act for the charging of income-tax for that assessment year, this Act shall nevertheless have effect until such provision is so made as if the provision in force in the preceding assessment year or the provision proposed in the Bill then before Parliament, whichever is more favourable to and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 43 of 99 the assessee, were actually in force”. It was on this basis of this factual and legal position, and following Hon‟ble Supreme Court‟s judgment in the case of Kesoram Industries & Cotton Mills Ltd Vs CWT [(1966) 59 ITR 767 (SC)], that the learned CIT(A) has granted the impugned relief. No material has been brought before us to dislodge these findings and contrary to the legal position set out above. In this view of the matter, we see no reasons to disturb the conclusions arrived at by the learned CIT(A). We approve the same and decline to interfere in the matter.

65. Ground no. 9 is thus dismissed.

66. In the result, the appeal of the revenue is dismissed.

67. To sum up, while the appeal of the assessee for the assessment year 201-11 is partly allowed, the appeal of the revenue for the assessment year 2010-11 is dismissed. Assessment year 2011-12 These cross appeals are directed against the order dated 11th March 2019 passed by the 68. learned CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12.

69. We will first take up the appeal filed by the assessee.

70. In ground no. 1, the assessee has raised the following grievances: a) On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals)-7 (hereinafter referred to as Ld. CIT (A)] erred in confirming the action of the Additional Commissioner of Income-tax (Large tax payer Unit) [hereinafter referred to as 'AO'] in adding back Rs. 1,83,76,076/- on the contention that the same is notional and contingent in nature. b) The Appellant prays that the aforesaid addition be deleted.

71. So far as this ground of appeal is concerned, the relevant material facts are like this. During the course of the assessment proceedings, the Assessing Officer noticed that the assessee had debited a sum of Rs 1,83,76,076 under the head „Employees Compensation Expenses‟ under the employee stock option scheme, being the loss on stock options offered to the employees. This was computed on the basis of the difference between the offer price of shares to employees and the fair market value of the shares as on the date on the declaration of the scheme. Reliance was also placed on Hon'ble Madras High Court's judgment in the case of CIT Vs PVP Ventures Limited [(2014) 101 ITR 161 (Mad)], wherein the difference between the market value of the shares and the value at which the shares were allotted to employees under ESOP was held to be an allowable deduction. The Assessing Officer was, however, of the view that this is notional, and best a contingent expense in nature inasmuch it is not certain as to how many employees will actually exercise the option, and what will be the share price on the date of the exercise. The and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 44 of 99 claim of the assessee was thus declined as premature. He also relied upon a decision of the coordinate bench of this Tribunal, in the case of Ranbaxy Laboratories Ltd Vs ACIT [(2009) 124 TTJ 771 (Del)]. Aggrieved, the assessee carried the matter in appeal before the CIT(A) without success. The assessee is not satisfied and is in further appeal before us.

72. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position.

73. We find that in assessee‟s own case, in the matter of revision proceedings for the assessment year 2013-14 and in the judgment reported as Ambuja Cements Ltd Vs CIT [(2022) 140 taxmann.com 347 (Mum)] a coordinate bench has, following the Special Bench decision in the case of Bicon Ltd Vs DCIT, rejected revenue‟s reliance on the decision of Ranbaxy Laboratories (supra). While doing so, the coordinate bench has observed that, “We find that the decision of the Hon'ble Special Bench of Bangalore Tribunal in the case of Biocon Ltd. (supra) says that the discount premium should be claimed evenly over the vesting period. In the instant case, from the aforesaid disclosures made in the audited financial statements, it is very much evident that the vesting period is only one year. Hence, the entire discount premium had to be claimed as expenditure in the year of vesting. From the above tabulation reproduced in page 149 of the factual paper book, it could be seen that the date of grant is 22-4-2010 and the one year period gets over on 22-4-2011 which falls in A.Y. 2012-13. Hence, the vesting period falls during A.Y. 2012-13. We find that no ESOP expenses are debited by the assessee in A.Y. 2013-14 which is accepted by the ld. PCIT itself and which fact is also staring from the audited financial statements of the assessee. Hence, the additional compensation cost of Rs. 32.55 Crores on account of ESOP has been debited as 'expenditure' by the assessee in the year of vesting i.e. A.Y. 2012-13 rightly, which is also in consonance with the decision of the Hon'ble Special Bench of Bangalore Tribunal in the case of Biocon Ltd. (supra)”. It is also important to bear in mind the fact that once one of the Hon‟ble High Courts, even if non-jurisdictional, takes a view of the matter contrary to what the Tribunal has said, we have to follow the same humbly. A coordinate bench of the Tribunal, in the case of Tej International Pvt Ltd Vs DCIT [(2000) 69 TTJ 650 (Del)], has observed that “In the hierarchical judicial system that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, therefore, one a authority higher than this Tribunal has expressed an opinion on that issue, we are no longer at liberty to rely upon earlier decisions of this Tribunal even if we were a party to them. Such a High Court being a non-jurisdictional High Court does not alter the position as laid down by Hon‟ble Bombay High Court in the matter of CIT v. Godavari Devi Saraf [1978] 113 ITR 589 (Bom.)….” The authorities below were, therefore, not justified in simply brushing aside the judgment of Hon‟ble Madras High Court in the case of PVP Ventures (supra). In any event, even on merits, we may usefully refer to the observations made by a coordinate bench in the case of Dheeraj Amin Vs ACIT [(2016) 71 taxmann.com 288 (Bang)], wherein and after analysing the judgment of Hon‟ble Supreme Court in the case of Chainrup Sampatram Vs CIT [(1953) 54 ITR 506 (SC)], the coordinate bench, speaking through one of us (i.e. the Vice President), observed that “The principle is thus unambiguous. The principles of conservatism, and considerations of prudence, in the accounting treatment require that no anticipated profits be treated as income until the profits are realized, and, at the same and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 45 of 99 time, an anticipated loss to be deducted from commercial profits, at the first sign of its reasonable possibility”. Viewed thus, as long as a loss, even though it may not actually have crystallized, can be reasonably estimated, as indeed has been done in this case, it has to be taken into account in the computation of business income. In view of these discussions, as also following the views of the coordinate bench in the assessee‟s own case, we uphold the plea of the assessee. The Assessing Officer is, accordingly, directed to delete the impugned disallowance of Rs 1,83,76,076. The assessee gets the relief accordingly.

74. Ground no. 1 is thus allowed.

75. In ground no. 2, the assessee has raised the following grievances: a) On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO in adding back Rs. 1,79,533/- as notional expenses incurred towards earning exempt dividend income u/s 14A of the Act r.w.r 8D of the Income-tax Rules, 1962 ('the Rules'). b) The Appellant prays that the addition u/s. 14A rwr 8D be deleted.

76. In a connected ground of appeal, i.e. ground no. 11, the assessee has also raised the following grievance: Addition of Rs. 1,79,533/- being notional expenditure incurred to earn exempt income while computing book profits us. 115JB of the Act: a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in adding Rs. 1,79,533/- being notionally allocated expenditure allegedly incurred to earn dividend income in computing Book Profit u/s 115 B. b) The Appellant prays that the AO be directed to exclude the amount of disallowance made u/s. 14A while computing book profits u/s. 115JB.

77. We find that an identical issue came up for our consideration in the assessee‟s own case for the assessment year 2008-09, and while dealing with the same and after hearing the parties and perusing the records, we have, vide our order of even date, has held as follows:

5. So far as these grievances of the assessee are concerned, it is sufficient to take note of the fact that so far as this assessment year is concerned, it is the first assessment year post insertion of rule 8D and as is the settled legal position in this regard, rule 8 D is to be applied for computing the disallowance. To that extent, our decisions for the preceding assessment years will not hold good. However, since the assessee has not used any borrowed funds, no amount shall be disallowed under rule 8 D in respect of the interest. On this issue, Hon‟ble jurisdictional High Court has, and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 46 of 99 in the case of PCIT Vs Shapoorji Pallonji & Co Ltd [(2020) 117 taxmann.com 625(Mum)] has, inter alia, observed as follows: 6. On thorough consideration we find that the principle of apportionment does not arise in this case as the jurisdictional facts have not been pleaded by the Revenue. In fact Tribunal while affirming the order of the first appellate authority noted that the first appellate authority had deleted the addition made by the assessing officer under section 14-A of the Act by observing that the interest-free fund available with the respondent - assessee was far in excess of the advance given. Tribunal further noted that the Revenue does not dispute the said finding and relying on the decision of this Court in CIT v. Reliance Utilities & Power Ltd. [2009] 178 Taxman 135/313 ITR 340, affirmed the deletion made by the first appellate authority. 7. We have perused the decision of this Court in Reliance Utilities & Power Ltd. (supra) wherein it has been held that if there are funds available with the assessee, both, interest-free and overdraft and/ or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the assessee if the interest-free funds were sufficient to meet the investments. In the facts of that case, it was noted that the said presumption was established considering the finding of fact returned by the first appellate authority as affirmed by the Tribunal which is identical in the present case. 7.1 We also note that the said decision of this Court has been affirmed by the Supreme Court in CIT v. Reliance Industries Ltd. [2019] 102 taxmann.com 52/261 Taxman 165/410 ITR 466.

6. Accordingly, while disallowance of the assessee is upheld in principle, the quantum shall stand reduced, upon verification of necessary facts, in the light of the above legal position. To this extent, this ground of appeal

is allowed for statistical purposes. As regards the question of adjustment of book profits under section 15JB for the 14A disallowance, we find that this aspect of the matter stands concluded, in favour of the assessee, by a special bench decision in the case of ACIT Vs Vireet Investments Pvt Ltd [(2017) 82 taxmann.com 415 (Del SB)]. The assessee gets relief on this point as well.

7. Ground nos. 1 is thus allowed for statistical purposes, and ground no. 4 is thus allowed.

78. We see no reasons to take any other view of the matter than the view so taken by us in the assessee‟s own case. Respectfully following the same, we restrict the disallowance under section 14A under rule 8D so as not to disallow any amount on account of interest, and delete the adjustment on account of 14A disallowance from book profits computed under section 115 JB. The assessee gets the relief accordingly. and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 47 of 99

79. Ground nos. 2 is thus allowed for statistical purposes in the terms indicated above, and ground no. 11 is allowed.

80. In ground no. 3, the assessee has raised the following grievances: a) On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of AO in reducing the claim for deduction u/s 80-IA on captive power generating units by an amount of Rs. 78,84,57,823/- by modifying the basis adopted by the Appellant for determining the 'market value' of power captively consumed. b) The CIT(A) was not justified and grossly erred in not following the binding judicial precedents without providing any cogent reasons; c) The Appellant prays that the AO be directed to allow deduction u/s. 801A as claimed by the Appellant. 81. So far as this grievance of the assessee is concerned, the relevant material facts are as follows. The power requirements of the assessee‟s cement manufacturing units are mainly fulfilled by the captive power plants set up therein. In case of any additional requirements, the cement manufacturing units also purchase the electricity directly from the State Electricity Boards. In the computation of the deduction under section 80IA, the „market value‟ is required to be taken into account. The assessee has taken the market value as the average annual landed cost supplied by the State power grid to its cement manufacturing units. Its on this basis that the deduction under section 80IA is computed, and an independent auditor, in form 10CCB, certified the same. The Assessing Officer, however, was of the view that as the data about „the actual market value‟ of the electricity actually traded across India, between the electricity supply companies, is available in the public domain, the same should be adopted. Accordingly, he adopted the simple average of the state wise average annual purchase price of power by Tata Power Trading Co Ltd, National Thermal Power Corporation Ltd and Power Trading Corporation Ltd, as available on the respective website, for computation of deduction under section 80IA. An addition of Rs 78,84,57,823/- was accordingly made. Aggrieved, assessee carried the matter in appeal but without success. The assessee is not satisfied and is in further appeal before us. 82. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 83. The issue as to which market value of the power is to be taken into account in the computation of profit for deduction under section 80IA, i.e. the market value to the end consumer or market value in the power trading companies, is no longer res integra. There are several decisions of the coordinate benches holding that it is market value for the customer which must be adopted for this purpose, such as in the case of West Coast Paper Mills Ltd Vs JCIT [(2006) 100 TTJ 833 (Mum)]. The same were the views of another coordinate bench in and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 48 of 99 the case of Reliance Industries Ltd. Hon‟ble jurisdictional High Court has upheld the Tribunal‟s order holding that it is price to the consumer, and not the intra-power companies trading price, which must be taken into account. Rejecting admission of a substantial question of law against the order of the Tribunal Hon‟ble jurisdictional High Court, in the case of CIT Vs Reliance Industries Limited [(2020) 421 ITR 686 (Bom)] has, in this regard, observed as follows: 4. Question (c) pertains to the dispute between the department and the assessee regarding the rate at which the electricity generated by one unit of the assessee- company and provided to the another be valued. The assessee contended that such valuation should be at the rate at which the electricity distribution companies are allowed to supply electricity to the consumers. The revenue on the other hand argues that the appropriate rate should be the rate at which the electricity is purchased by the distribution companies from the electricity generating companies. 5. This controversy arose in the background of the fact that the assessee had set up a captive power generating unit and claimed deduction under Section 80IA of the Income Tax Act, 1961 ("the Act" for short) in respect of the profits arising out of such activity. Obviously, therefore the attempt on the part of the assessee was to claim larger profit under the unit which was eligible for such deduction as against this, attempt of the revenue would be see that the ineligible unit shows greater profit. 6. The Tribunal in the impugned judgment extracted extensively from the order of CIT (Appeals) and independent reasons for confirming the same. In such order CIT (Appeals) had placed reliance on an earlier judgment of the Tribunal in case of Reliance Infrastructure Ltd. v. Addl. CIT [2011] 9 taxmann.com 186 (Mum. - Trib.). Learned counsel for the assessee had placed on record a copy of the judgment of the Tribunal in case of Reliance Infrastructure limited. In such judgment an identical issue came up for consideration. The Tribunal by detailed judgment had held and observed as under:— "44. In the given facts and circumstances of the case, we are of the view that the profits of the business of generation of power worked out by the Assessee on the basis of the price that it paid to TPC for purchase of power continues to be the best basis even after the order of MERC and therefore the same has to be accepted as was done in the past and as approved by the ITAT in Assesssee's case. We therefore dismiss ground No.4 of the revenue." 7. Counsel for the assessee pointed out that the judgment of the Tribunal in case of Reliance Infrastructure Ltd. (supra) was carried in appeal by the revenue before the High Court in Income Tax Appeal No.2180 of 2011, such appeal was dismissed making following observations:— "6. As far as question (d), namely, the claim relating to purchase price from Tata Power Company is concerned and that was for the deduction under Section 80IA, and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 49 of 99 the ITAT in paragraph 21 onwards has noted the factual findings and also referred to the order of the Maharashtra Electricity Regulatory Authority (for short "MERC"). Paragraph 36 set outs as to how the claim arose. The claim has been considered in the light of Section 80IA and particularly proviso and explanation thereto. The Tribunal eventually held that till the Assessment Year 2005-2006, the Revenue considered the rate at which the power was purchased by the Assessee from Tata Power Company as market value. There is nothing brought on record as to how the rate determined by the MERC is the true market value. The Assessee gave explanation that the rates determined by the MERC do not reflect the correct market rate. The finding is that the mode of computation and deduction under Section 80IA requires no deviation from the past. The findings of fact and to be found in paragraphs 42 to 50 also reflect that the very issue came up for consideration for the Assessment Year 2003-2004. For the reasons assigned by the ITAT and finding that the attempt is to seek reappreciation and reappraisal of the factual data that we come to a conclusion that even question (d) as framed is not a substantial question of law." 8. Thus, the issue at hand had been examined by this Court on earlier occasion and the view of the Tribunal under similar circumstances was approved. 9. Additionally, we also notice that similar issue came up for consideration before Chhattisgarh High Court in case of CIT v. Godawari Power & Ispat Ltd. [2014] 42 taxmann.com 551/223 Taxman 234, in which the Court held and observed as under: "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 could have purchased power in the open market. The rate of power to a supplier is not the market rate to 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." 10. Gujarat High Court in case of Pr. CIT v. Gujarat Alkalies & Chemicals Ltd. [2017] 395 ITR 247/88 taxmann.com 722 also had occasion to examine such an issue. It referred to earlier order in case of Asstt. CIT v. Pragati Glass Works (P.) Ltd. [Tax Appeal No. 1646 of 2010, dated 30-1-2012] in which following observations were made:— "7. To our mind, Tribunal has committed no error. Assessing Officer and CIT (Appeals) while adopting Rs. 4.51 per unit as the value of electricity generated by eligible unit of assessee and supplied through its non eligible unit only worked out cost of such electricity generation. In fact CIT (Appeals) in terms recorded that Rs. 4.51 was computed as the reasonable value of the electricity generated by eligible and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 50 of 99 unit of assessee. This amount included Rs. 4.17 per unit which was the cost of electricity generation and Rs. 0.34 per unit which was duty paid by the assessee to GEB for such power generation. Thus the sum of Rs. 4.51 per unit only represented the cost of electricity generation to the assessee. In Section 80IA(8) of the Act what is required to be ascertained is the market value of the goods transferred by the eligible business, when such transfer is by eligible business to another non eligible business of the same assessee and the consideration recorded in the accounts of the eligible business does not correspond to market value of such goods. Term "Market Value" is further explained in explanation to said sub-section to mean in relation to any goods or services, price that such goods or services will ordinarily fetch in the open market. To our mind sum of Rs. 4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof. It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 11. Judgment of Calcutta High Court in case of CIT v. ITC Ltd. [2016] 236 Taxman 612/[2015] 64 taxmann.com 214 was also brought to our notice in which the said High Court has taken a different stand. However, since the issue has already been examined by this Court earlier and in view of the decisions of the Chhattisgarh and Gujarat High Court, we see no reason to entertain this question. 84. In view of the above, as bearing in mind the entirety of the case- including the fact that in assessee‟s own case for several preceding assessment years, the Assessing Officer had disputed the approach adopted by the assessee, we deem it fit and proper to uphold the plea of the assessee, and direct the Assessing Officer to delete the impugned adjustment of Rs 78,84,57,823. The assessee gets the relief accordingly. 85. Ground no. 3 is thus allowed. 86. In grounds nos. 4 & 5, the assessee has raised the following grievances: Ground No. 4: Disallowance of claim made for Rail System u/s 80-IA of the Act amounting to Rs.1,43,88,44,360/-: and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 51 of 99 a) On facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO in denying the deduction claimed by the Appellant u/s. 801A of the Act in respect of Rail System b) The Appellant prays that the AO be directed to allow the deduction u/s. 801A towards rail system to the Appellant as claimed. 87. So far as this grievance of the assessee is concerned, only a few material facts need to be taken note of. During the course of assessment proceedings, the Assessing Officer took note of the fact that the assessee has claimed deduction under section 80IA on rail system comprising of railway sidings, railway tracks, loading and unloading systems, at Ropar, Maratha, Sankrail, Farraka and Bhatapara units. He also the assessee‟s contention that these rail systems alongside the cement plants are to enable the transportation of raw material (i.e. coal etc) and finished goods (i.e. cement) to and from the cement plants of the assessee. The assesse‟s claim that the rail system meets all the requirements of Section 80IA(4) was also noted. The method adopted for computing the income was being excess of road freight and handling charges payable for transportation of goods by road to the nearest railhead, over the tariff payable for transportation of goods from railway siding to the rais head as per tariff notified by the Indian Railways. This claim, however, did not find favour with the assessee this time, even though the same stand of the assessee was accepted for three consecutive preceding assessment years. After elaborately discussing the things in detail, and extensively referring to investigations carried out in the case of Ultratech Cements Limited, the Assessing Officer concluded that (a) the so called rail system of the assessee company is simply a private rail siding, and is not any infrastructure of public utility; (b) the agreements entered into between the assessee company and the Indian Railways consisting of terms and conditions for private sidings, and could not be viewed as an agreement for building, operating and maintenance of a rail system; (c) the conditions stipulated under section 80IA have not been satisfied; (d) the actual operation of the rail system (i.e. running of the goods train) was being done by the Indian Railways and not the assessee company; (e) all the four cement plant sites were notified as independent booking stations and the freight was charged for the entire distance- including the distance from these private sidings to the railheads; (f) the notional profit computation is incorrect; and (g) the decisions of the Tribunal were not applicable as these critical facts were not placed before the Tribunal. The claim for deduction under section 80IA in respect of the rail system was rejected. Aggrieved, assessee carried the matter in appeal but without success. Learned CIT(A) reiterated the same arguments and upheld the stand of the Assessing Officer. The assessee is not satisfied and is in further appeal before us. 88. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 89. We find that the very case, on the basis of investigation in which the authorities below had decided the matter in favour of the assessee, came up before a coordinate bench of this Tribunal, and, in the said case, the matter was decided in favour of the assessee. In the said judgment, reported as Ultratech Cement Ltd Vs ACIT [(2017) 88 taxmann.com 907 (Mumbai)], the coordinate bench has held as follows: and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 52 of 99 9. During the course of assessment AO disallowed assessee's claim of deduction u/s.80IA in respect of profit of rail systems. The assessee made this claim on the ground that it had earned profit by operating its rail systems at Hirmi [Chhattisgarh], Tadipatri [AP], Arakkonam [Tamil Nadu] and Durgapur [West Bengal]. In the context, during the assessment proceedings it was explained that the assessee had inherited those rail systems [along with cement plants-Hirmi Cement Works, A P Cement Works, Arakkonam Cement Works & West Bengal Cement Works] out of demerger from L&T Ltd. at all those locations; that the rail systems were set-up by L&T Ltd. [and that way by the assessee company as it had inherited the cement plants from L&T Ltd. by way of demerger] to enable the transportation of raw material [coal etc] and finished goods [i.e. cements] at their cement plants through railway wagons, at all the said; four locations. It was explained that prior to putting up those rail systems, the assessee used to transfer the material from the cement plants [at all the four locations] to the nearest railway station and vice versa on road through trucks. Before the AO the claim of deduction was justified by assessee by taking the plea that the various conditions as prescribed u/s 80IA(4) was met with in as much as it had entered into an agreement with the government through department of Railways for developing, maintaining and operating the rail system [infrastructure facility]; and that in pursuance thereof it had developed the integrated rail system in between the plant and the nearest railway track [of Indian Railways] and running it [in between] for movement of the inward and outward material so as to enable it to transport the materials from its plants straightaway to the various destinations and vice versa at all those four locations; and that by way of such operation of rail systems, it has been able to save the expenses for loading [at those plants] into the trucks, road freight and expenses for unloading and loading the same at the site of nearest Indian railways and that resulted into the. profit of such rail systems. 10. However, the AO noted that those agreements were for laying out private sidings and not for any rail system [as referred to in Explanation (a) to the clause (t) of sub-section (4) section 80IA in reference to the infrastructure facility] as claimed by the assessee that railway had laid down those [sidings] partly on the land belonging to the railways and partly belonging to the assessee company so as to facilitate the transportation of raw materials/cement bags through railway wagons [from / to their plant sites]. The AO also noted that the assessee [rather L&T Ltd.] had primarily requested the' railway department to extend the sidings [railway tracks] to the site of cement plants of the company so as to enable it to transport its goods [raw material & cement] from/to their plant sites itself [so that it could avoid transportation through the roads till the nearest railway station and loading and unloading etc]; that on such request the railway authorities conducted survey and laid down sidings and charged the assessee for laying out the railway track and other related infrastructure. The AO also noted that the wagons were actually run on those sidings by the railway authority and not by the assessee company. The AO also took note that railway authorities had posted its staff for weighing raw material/ cement bags loaded/unloaded by the assessee; and that all activities were directly or indirectly being carried out by the railway authorities and the assessee only reimbursed the expenses or charges levied by the railways in r/o siding maintenance etc. as per the agreement. The AO inferred that the so called "rail system" [of the assessee company] is not a self reliant, independent unit; and that it is providing services to the cement plants of the assessee company only. The AO also stated that railway department do not allow operation of the railways by any private enterprise and for that reason it [railway department] had formulated a Build-own-lease- transfer (BOLT) scheme whereby the private enterprises could set-up the necessary and crucial components of a railway system and provide that on lease to Indian Railways for maintenance and operation; and in the context referred to the CBDT circular No. 733, dated 03.01.1996 whereby the benefit of Sec. 80IA was also extended to such rail system constructed / developed by the private enterprises as per the said BOLT scheme. By that circular, the Board had also clarified that such concession would be available only to an infrastructure facility meant for development of rail systems and not to any other infrastructural facility including rolling stocks. The AO also observed that the assessee, had not given the said railway system or the crucial component thereof on lease to the railway department [had it been so, the profit by way of lease rent from such rail. system would have qualified for deduction u/s 80lA as per the concession given by the aforesaid circular]. Finally, the ITA Nos. 1889 and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 53 of 99 AO held that assessee was not eligible to claim the deduction u/s 80lA in r/o such rail systems and disallowed the claim accordingly.

11. In its appellate order CIT(A) noted that the issue has come up first in A.Y. 2004-05. In that year, the assessee had claimed deduction of Rs 15.63 crores in r/o rail system at Hirmi, Raipur District, Chattisgarh. In A.Ys. 2005- 06 & 2006-07, the assessee claimed deduction of Rs.16.30 crs. & Rs 20.95 crs. respectively in r/o that rail system at Hirmi. In A.Y. 2007- 08, the claim was made in r/o two more rail systems [one at Tadipatri in Andhra Pradesh & the other at Arakkonam in Tamil Nadu]. The total claim for that year amounted to Rs 52.38 crs. [Rs 21.09 crs. -Hirmi; Rs 25.56 crs. -Tadipatri & Rs 5.73 crs. -Arakkonam]. In A.Y. 2008-09, the claim extended to one more rail system at Durgapur [West Bengal] and the total claim amounted to Rs 61.56 crs. This claim for AY 2009-10 i.e. for the year under consideration had risen to 73.13 crs.

12. The rail systems at all these four locations viz. Hirmi, Tadipatri, Arakkonam & Durgapur are said to have commenced the operations in AY. 2000-01, AY. 1999-00, AY. 2001-02 ft AY. 2002-03 respectively [refer assessee's reply dated 06.01.2014] It was further observed by CIT(A) that the L&T Ltd. on whose request the private sidings were set up at all these four locations, never claimed any such deduction u/s 80IA(4). The deductions are being claimed by the assessee company since AY. 2004-05, after the various cements plants were transferred to the assessee company [in the year 2003- 04] as per demerger scheme. In AY. 2004-05, claim was made [for the first time] in respect of such Rail System at Hirmi. Then in AY. 2007-08, it started claiming deduction in respect of rails systems at Tadipatri and Arakkonam and then in AY. 2008-09 for Durgapur also. From AY. 2009-10 and onwards the claim pertains to all the four units.

13. The CIT(A) further noted that in Ays. 2004-05 & 2005-06, the Hon'ble ITAT vide its order dated 20.08.2009 in & 7736/Mum/2007 had decided this issue in the favour of assessee. Later that decision of the tribunal was followed by the ITAT in its [assessee] case in AY. 2006-07 [ ITA No. 2604/M/09 order dated 31.5.2010] and in AYs 2007-08 & 2008-09 [ITA Nos. 8143/mum/2010 and 1813/Mum12012, order dated 28.02.2014]. The relevant part of the Tribunal's decision in AY. 2004- 05 is reproduced hereunder: "13. Regarding the issue in r/o deduction u/s 80lA on profit of Rail system at Hirmi, the AO rejected the claim on the ground that the rail system is not a profit centre but it is a cost centre and that the rail system is not an independent unit but it is 100% depending on the cement unit. Detailed submissions filed by the assessee which are reproduced in the assessment order was not found satisfactorily to the AO. Detailed submissions were again filed before the CIT(A). It was explained that the company had established a cement plant in Hirmi, The nearest available railway siding was at a distance of around 15 km. from the plant. To facilitate inward and outward movement of goods, the assessee developed infrastructure facility of rail system which was made operating in 1999. The assessee company duly entered into an agreement with the railways, which is a part of Government of India. It was submitted that there was option available u/s 80lA with the assessee to claim deduction for any of 10 consecutive years as its own choice. The assessee has opted for claiming the deduction from A.Y. 2004-05 on wards. It was submitted that the income offered for tax by the assessee includes income from rail system and that certificate of M/s Sharp & Tannan, CA in Form No. 10CCB certifying the correctness of the aforesaid claim was duly submitted to the AO. 13.1. It was further submitted that the rail system is a profit centre. The rail system is engaged in business of providing transportation facility to the cement plant, profit of which is embedded in the profit of the assessee company as a whole. It was submitted that by developing this infrastructure facility, there has been saving in transportation cost and overall profits of the company have increased due to such savings. It was such that the mere fact that it does not raise an invoice from its railway unit to its cement unit cannot govern the tax implication of the profits delivered by the rail system. In support of its contention that treatment of a transaction in books of accounts cannot govern the tax statement reliance was placed on the decision of the Supreme Court in the case of Kadernath Jute Manufacturing Company Ltd. 82 ITR 362; in the case of Tutcorin Alali Chemicals and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 54 of 99 Ltd. in 227 ITR 172; in the case of Godhra Electricity Company in 91 Taxman 91; in the case of Bokaro Steel Ltd in 263 ITR 315 and in the case of Sutlet Cotton Mills Ltd. in 116 ITR 1 and submitted that it would be totally incorrect to say that an assessee who raises internal invoices would be entitled to benefit of Sec 80IA and an assessee who does not raise internal invoices would not be entitled to such benefit. 13.2. The assessee further submitted that Sec. 80IA(8) itself contemplates a situation where goods or services are transferred by an eligible undertaking to non-eligible undertaking and vice versa. In such cases, deduction is to be allowed based on the market value of such goods or services. It was further submitted that the section itself envisages situation of captive consumption. Reliance was placed on the decision reported in 59 ITR 514 (Guj.) and 254 ITR 17 (Bom). 13.3. Further reliance was also placed on the decision of the Supreme Court in the case of Tata Iron & Steel Company Ltd. in 48 ITR 123 and stated that in that case, the assessee was engaged in the business of extraction of iron ore and manufacturing of iron and steel therefrom. The final product sold by the company was the finished iron and steel. Under some statute, a cess was leviable on the annual net profits derived from the mines. It was contended that since no iron ore extracted is sold to an outsider, no profits could be said to have been derived from the extracting activities. This argument was advanced based on the principle that a person cannot make profits out of himself, The Supreme Court negative this argument and held that despite captive consumption of iron ore certain profits can be regarded as having derived from the extraction activities. The Supreme Court ruled in favour of bifurcating the total profits into two activities viz. the extraction activity and the manufacturing activity. It was therefore submitted that in view of the above, it is not correct to say that the assessee does not earn any profits from its rail system merely because the rail system is used for the captive purposes of the cement plant. 13.4. It was further submitted that the Board Circular No. 733 dated 03.01.1996 states that deduction u/s 80lA is applicable to an infrastructure facility meant for development of rail system. It was contended that the AO has categorically stated in para 5.2.3 of his order that rail system was developed by L&T and was inherited by the assessee out of demerger. It was further submitted that in a demerger all the property of the undertaking is necessarily transferred by the demerged company to the resulting company, therefore it is immaterial whether the rail system was developed by L&T Ltd. or by the resulting company i.e. the assessee. Further it was submitted that the facility of rail system consists of all that is required to carry on the railway activity in an organized and systematic manner. The activity of rail system is real and substantial and it is carried on with said purpose viz transportation of goods from one place to another and thereby augmenting profits of the company as a whole by saving transportation cost which it would have otherwise incurred. It was further submitted that the profits derived from the rail systems are clearly arising out of the business of developing operating and maintaining the rail system. 13.5. It was further submitted that substantial investment has been made in developing the railway system. There is an agreement with the railways for operating and maintaining the rail system. It employs required personnel directly or through the railway authorities and it bearing the salary cost relating thereto. It was submitted that the rail system is developed on the basis of entirely different technology and employs different equipment and machinery from those applied by the cement unit for cement production. It is was further submitted that the rail system is not formed by splitting up or reconstruction of a business already in existence or by the transfer to a new business of machinery previously used for any purpose. It was therefore argued that the rail system is not a part of the cement unit but is an, independent unit. It was further submitted' that the conditions specified in Sec. 8OIA(4)(i) in r/o an infrastructure facility are fully satisfied in the present case. The rail system is owned by the assessee company which is a company registered in India. The assessee has entered into an agreement with the Railways for operating and maintaining the new infrastructure facility. It has started operating and maintenance the infrastructure facility after 01.04.1995. and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 55 of 99 14. After considering the submission and perusing the material on record, the CIT(A) was satisfied with the explanation of the assessee and taking into consideration the various case laws held that the assessee is eligible for deduction us BOIA in rlo profits from rail system. Accordingly, the AO was directed to allow deduction u/s 80IA. Now the department is in appeal here before the Tribunal.

15. The Id. DR on the other hand placed reliance on the order of the AO and on the other hand the Id counsel of the assessee placed reliance on the order of the CIT(A). Attention of the Bench was drawn on para 5.2 of the order of the AO and then on the provision of Sec 8OIA clause 2 and sub- clauses 3&4. It was further explained that the assessee can avail benefit of deduction u/s 80IA in 10 years of his choice out of 15 years period. The provisions are very clear. Attention of the Bench was also drawn on the copy of the agreement placed at page .93 of the paper book. It was further submitted that all the conditions of Sec. 80IA have been fulfilled. Reliance was placed on the decision reported in 40 ITR 123. It was submitted that the ClT(A) has discussed the issue extensively and the findings of the ld. CIT(A) remained uncontroverted. Therefore the order of the CIT(A) is liable to be confirmed in this regard.

16. We have heard the rival submission and considered them carefully: We have also perused the various material placed on record on which our attention was drawn. After taking into consideration we find that the CIT(A) has dealt with the aspect in detail. Contention raised before the ClT(A) on behalf of the assessee were not found incorrect or false. Conditions of Sec. 80IA have been fulfilled by the assessee. Thereafter, the CIT(A) came to the conclusion that the assessee is eligible for deduction u/s 80IA. The findings of the Id. CIT(A) are given in para 3.10 are as under :- 3.10 After perusal of the facts of the case, findings given by the AO and submissions made by the appellant, I find that the only issues in this case is whether the appellant is eligible for deduction u/s. 80IA in r/o profits derived from the rail system. There is no dispute that the appellant (i) is a company (if) has developed the rail system and (iii) it" has entered into an agreement for operation and maintenance of the rail system with the railways i.e the Government. Thus all the 3 conditions required to be fulfilled as per Sec. 80IA(4)(i) have been satisfied by the appellant. Moreover rail system is defined in explanation to sec. 80IA(4)(i) as an infrastructure facility. Further separate books of account are being maintained by the appellant. The mere fact that internal invoices are not raised does not mean that the rail system is not a profit centre. It is also found that all the doubts raised by the AO in the assessment order have been fully explained by the appellant the AO has himself stated in the assessment order that the rail system was developed by L&T Ltd which has been inherited by the appellant as a result of the demerger and Circular No. 733 dated 03.01.1996categorically stated that benefit of sec. 80IA is applicable to development of rail system and there is no gain saying that fact that the appellant has developed the rail system and is operating and maintaining the same. After perusal of the facts as well as the judicial pronouncements quoted above it is therefore held that the appellant is eligible for deduction u/s 80IA in r/o profits from rail system. In view of the same, the AO is directed to allow deduction u/s 80IA of Rs. 15,64,33,576/-17. As stated above neither the findings of the Id CIT(A) could 'be controverted by the Id DR nor any other material was brought on record to establish otherwise. Therefore in view of the uncontroverted reasoning given by the Id. CIT(A) we confirm his order on this issue also."

14. After having all the above observation, the CIT(A) noted that the issue of the allowability of the assessee's claim u/s 80IA(4) in respect of ' Rail Systems' as referred to by the assessee has been examined by him afresh from the point of view of the relevant provisions of the Act and the facts as to whether the 'Rail System' as referred to by the assessee could indeed be treated as the infrastructure facility for which deduction u/s 80lA is intended to by the legislature; and whether the assessee operated that rail system.

15. Replies and justification filed by assessee was not accepted by CIT(A) and he held that the rail system of the assessee do not fall within the definition of the infrastructure facility, as the same could not be treated as a facility of public utility. For this reason the assessee company was held to be not and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 56 of 99 entitled for the deduction u/s.80IA in r/o the profit, from the operation of rail system. Reasons for the same was as under:- 16. The CIT(A) observed that the agreements under reference were not at all any agreements for developing, maintaining and operating any infrastructure facility to which benefit of exemption is intended to be given in Section 80IA. For this reason also the assessee company was held to be not entitled for deduction u/s.80IA in r/o the profit from the operation of rail system.

17. The CIT(A) also observed that L&T Ltd., who have developed the said rail system was also not eligible u/s.80IA on operations of those rail systems under the provisions that existed at the relevant time i.e., prior to 01/04/2002 when such infrastructure facility was said to have become operational.

18. The CIT(A) observed that the L&T Ltd., did not claim exemption on operation of those rail systems. Rather the assessee company has started claiming exemption from AY. 2004-05 after the ownership over the cement plants together with such rail systems were transferred to it following the demerger scheme in FY. 2003-04.

19. The CIT(A) further observed that the provision of railway track, signals, level crossings etc are the essential components of a rail system but that in itself would not give rise to any profit. For that movement of traffic [i.e. material] is to be made over those railway tracks. The profit would arise by charging the freight thereon.

20. The CIT(A) further observed that as per' the agreement, the railway track, signals, level crossings etc were laid out on the cost of L&T Ltd. The cost of maintenance was also to be borne by L&T Ltd. [and now by the assessee]. On that only expenses are incurred and there would be no profit element. Then the issue arises of running the wagons onto those tracks. As per the agreement, the assessee was not permitted to run the wagon onto those tracks.

21. As per CIT(A), it is not a case of running of railways [goods train] by L&T Ltd. or the assessee company on those private sidings and as such the assessee did not run any rail system onto those private sidings. Therefore, it cannot be said that the assessee company had operated any rail systems at all. Therefore the deduction u/s 80lA would not be available to it onto the profit, if any, from such rail systems.

22. The CIT(A) also observed that there is very limited profit on operation of such rail system and the claim made by assessee u/s.80IA is exorbitant.

23. In view of the above discussion, the CIT(A) concluded that assessee's claim of deduction u/s.80IA is not allowable. However, by observing that the Tribunal has allowed the claim of assessee in the Ays. 2004-05, 2006-07 to 2008-09, to follow the judicial discipline, he followed the order of Tribunal and allowed assessee's claim in the A.Y.2009-10. However, by stating that new facts have been brought on record in the A.Y. 2010-11, he declined claim of deduction u/s. 80IB(4).

24. With regard to the disallowance, deduction u/s. 80IA(4), Revenue is in appeal before us in the A.Y. 2009-10, whereas assessee is in appeal for the A.Y. 2010-11.

25. It was vehemently argued by learned AR that Revenue authorities have not considered the eligibility requirement u/s.80IA as brought by the Finance Act 2001 wherein Finance Act, 2001 has deleted the requirement of the assessee to transfer the infrastructure facility to the concern Government authorities within prescribed time. He contended that CIT(A) has wrongly applied the provisions of law as applicable prior to 01/04/2002 while considering the assessee's claim for deduction for the Ays.2009-10 and 2010-11 under consideration. Learned A.R threadbare taken us to the objections raised by the CIT(A) and the reply filed by the assessee controverting each and every objection of the CIT(A). Our attention was invited to the amended provisions of Section 80IA(4) which does not require infrastructure facility to be a public facility for allowing deduction u/s. 80IA. Our attention was also invited to the terms and conditions of the agreement entered between the assessee company and the railway department which contained conditions for construction of and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 57 of 99 railway sidings, development of sidings, laying of tracks, signaling system and all the essential components of rail system. The terms of the agreement also provided for its operation and maintenance. He vehemently argued that the rail systems were developed in accordance with the agreements entered with the Indian Railways, wherein assessee was allowed to operate and maintain these sidings under supervision and as per the guidelines of Indian Railway. Our attention was invited to the various clauses particularly Class 2, 6, 7(a), 17 and 8(b) which stipulate for construction of railway sidings at the cost of the assessee. Construction work was awarded either to railway or third party contractors based on their expertise and the work was undertaken under the supervision of the Railways. Clause 6 is specifically provided for payment in advance to the railway administration, the total estimated cost of the work done by the party and thus by the railway administration. Clause 7(a) stipulate that assessee will provide and deliver at site the permanent way and other materials in accordance with the railway administration standard and specifications. Clause 17 stipulate that assessee shall provide labour for and bear the cost of all Operations on the siding. Clause 9(b) provides for maintenance and other charges for the operation of the sidings at assessee's cost and expense to the satisfaction of railway administration.' 26. Learned AR also argued that all the conditions of Section 80IA(4) was complied with for claiming deductions. Learned AR also invited our attention to the observation of CIT(A) with respect to the freight rate insofar as CIT(A) has wrongly considered the rate for quintals as against per Metric Ton adopted by assessee while computing eligible amount of deduction u/s.80IA (4). It was also contended by learned AR that assessee has started claiming deduction for rail system u/s.80IA only from A.Y.2004-05 since it has satisfied all the conditions as prescribed u/s.80IA (4).

29. Learned AR relied on following judicial pronouncements in support of the proposition that benefit allowed in earlier year cannot be denied in subsequent years.

50. The question of allowability of the deduction u/s. 80IA in respect of rail systems has been settled in earlier years by the Hon'ble ITAT in assessee's own case. The facts and the agreements were also placed before authorities in those years. Therefore, the claim based on same facts needs to be allowed following the principle of Consistency in assessment proceedings. Even though the 'principles of res judicata' do not apply to income tax proceedings and each assessment year being a separate unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be appropriate to allow the position to be changed in a subsequent year. The above principles have been accepted in the undernoted case: ♦ H.A. Shah & Co v. CIT [1956] (30 ITR 618) (Bom.) ♦ Amalgamated Coalfields Ltd. v. Janapada Sabha AIR 1964 SC 1013 ♦ Cruch of South India Trust Association v. Telugu Church Council [1996] 2 SCC 520 and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 64 of 99 ♦ Radhasoami Satsang (supra) 51. From the record we also found that the overall profits of the company have increased due to such commercial benefits and the same should have been treated as the revenue of the rail systems, which is the Fair Market Value of the services provided by the undertaking as per the provisions of Sec. 80IA(8) and the assessee is entitled for benefit u/s 80IA accordingly. However, the basis adopted for calculating the revenue from rail system by the assessee has been conservatively considered as lower of the freight chargeable through Rail and Road freight saved. The rail freight being lower is considered after further discounting it by 50% based on the circular of Indian Railways for the freight chargeable upto the nearest railway station.

Rail Systems at No. of Engines / Locomotives No.of Wagons Hirmi 2 49 Tadipatri 2 76 Arakkonam 1 30 Durgapur 2 30

100. So far as this grievance of the assessee is concerned, only a few material facts need to be taken note of. During the course of the assessment proceedings, the Assessing Officer noted that while computing the deduction under section 80IA in respect of captive power plants, ports and rail systems, the assessee had debited the expenses directly attributable to the eligible units, net of CENVAT credit availed, wherever applicable, on the expenditure incurred. These CENVAT credits are available under the excise provisions and adjusted against the excise duty liability on goods produced by the related cement manufacturing units. In effect, the component of expenses of statutory duties/ taxes is credited directly to „CENVAT receivable account‟ without routing it through the profit and loss account. The Assessing Officer was of the view that Section 80A(IA) provides for exemption in respect of „profit derived by an eligible undertaking‟ for the specified purposes, but the critical words are “derived from” and, therefore, “it is only the expenditure, which had a direct and proximate (immediate) nexus with the earning of profit from eligible undertaking that could be taken into consideration for determining such profits”. It was also noted that the eligible unit is to be viewed as an independent unit on the standalone basis, as Section 80IA(5) requires such an eligible unit to be treated “as if such eligible business were the only source of income of the assessee during the previous year relevant to the assessment year”. Accordingly, the Assessing Officer reduced the eligible deductions under section 80IA, by the amount of CENVAT credits attributable to eligible units, as the expenses were not booked through the profit and loss account, and, to that extent, the profits stood distorted/ inflated. These allocations were done on the basis of turnover “in the absence of any item wise details”. Aggrieved, inter-alia, by these adjustments on account of CENVAT credit, assessee carried the matter in appeal before the CIT(A) but without success. The assessee is not satisfied and is in further appeal before us.

113. Ground no. 8 is thus dismissed in the terms indicated above.

114. In ground no. 9, the assessee has raised the following grievances: Disallowance of claim of leave encashment of Rs. 6,54,66,319/- a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of AO in not allowing the claim of leave encashment amounting to Rs. 6,54,66,319 / -. b) The Appellant prays that the AO be directed to allow the claim of the Appellant.

44. Learned counsel for the assessee fairly submits that the issue now stands covered against the assessee, and deduction on a provision basis is indeed inadmissible. He, however, prays that a direction may be given that the Assessing Officer at least allows it on a payment basis as and when the payments are actually made. Learned Departmental Representative does not oppose this prayer, though he adds that the deduction can only be allowed when it is otherwise admissible, and that aspect of the matter will have to be examined by the Assessing Officer. That is and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 80 of 99 indeed the correct approach. While we dismiss the grievance of the asseseee, we make it clear that the Assessing Officer will take a call, as and when the payment is actually made, on the admissibility of deduction in accordance with the law.

120. Ground no. 10 is thus allowed.

121. Ground no. 11 has already been discussed earlier in this order and is allowed. No further adjudication is, as such, required.

122. In ground no. 12, the assessee has raised the following grievances: and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 81 of 99. Addition of Rs. 6,54,66,319/- in respect of leave encashment on provision basis while computing book profits u/s. 115 B of the Act: a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO in not excluding the provision for leave encashment while computing book profits u/s. 115JB. b) The Appellant prays that the AO be directed to exclude the provision for leave encashment while computing book profits u/s. 115JB.

123. To adjudicate on this ground, it is sufficient to take note of the fact that the assessee had debited Rs 6,54,66,319 on account of the provision for the leave encashment claims. The Assessing Officer added back the said amount in the computation of book profits under section 115JB on the ground that this represents a contingent liability. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without success. The assessee is not satisfied and is in appeal before us.

124. Having heard the rival contentions and having perused the material on record, we are of the considered view that the stand of the Assessing Officer is unsustainable in law in view of the Hon‟ble Supreme Court‟s judgment in the case of Bharat Earth Movers Ltd Vs CIT [(2000) 245 ITR 428 (SC)] wherein Their Lordships have observed that “we are satisfied that the provision made by the appellant-company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability”. Accordingly, we delete the impugned adjustment. The assessee gets the relief accordingly.

125. In ground no. 13, the assessee has raised the following grievances: On the facts and circumstances of the case, and in law, the CIT(A) erred in confirming the action of the AQ and thereby denying, the benefit of Article 10 of the India Mauritius Double Tax Avoidance Agreement (DIAA'), in respect of dividend declared by the Appellant to Holding Investment Ltd Mauritius and accordingly, the tax on distributed income ought to have been levied it the rate of 5 percent.

128. Ground no. 13 is thus allowed for statistical purposes.

Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the pre-operative expenses amounting to Rs. 10,73,50,135/, whereas the assessee itself claimed these expenses as capital expenses in the books of accounts adding it to capital work in progress/ fixed assets?

147. This is also a recurring issue and has come up for consideration in assessee‟s own case for several preceding assessment years. In our order for the assessment year 2009-10, this issue has been discussed at length from paragraphs 96-100, and in the assessee‟s own case for the immediately preceding year 2010-11, which is being disposed of vide this consolidated order, and for the detailed reasons set out in paragraphs 48-51 and following the decisions in the preceding assessment years referred to therein, we have upheld the similar relief allowed to the assessee. We see no reasons to take any other view of the matter for this assessment year. Respectfully following our decisions in the assessee‟s own cases, we uphold the relief granted by the learned CIT(A) on this count as well. We thus confirm the conclusions arrived at by the CIT(A) on this count as well, and decline to interfere in the matter.

148. Ground no. 7 is thus dismissed.

149. In ground no.8, the Assessing Officer has raised the following grievance: "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the additional depreciation on all the eligible assets acquired before 01.04.2009?" and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 85 of 99

150. This is also a recurring issue and has come up for consideration in assessee‟s own case for several preceding assessment years. In the assessee‟s own case for the immediately preceding year 2010-11, which is being disposed of vide this consolidated order, and for the detailed reasons set out in paragraphs 52-55 and following the decisions in the preceding assessment years referred to therein, we have upheld the similar relief allowed to the assessee. In doing so, we have mainly followed decision of a coordinate bench in the case of DCIT Vs Gloster Jute Mills Ltd [(2017) 88 taxmann.com 738 (Kol)]. We see no reasons to take any other view of the matter for this assessment year. Respectfully following our decisions in the assessee‟s own cases, we uphold the relief granted by the learned CIT(A) on this count as well. We thus confirm the conclusions arrived at by the CIT(A) on this count as well, and decline to interfere in the matter.

is rendered infructuous and is dismissed as such. 157. Ground no. 10 is also dismissed. 158. In the result, the appeal of the revenue is dismissed. and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012

13. Page 86 of 99

159. To sum up, while the appeal of the assessee for the assessment year 2011-12 is partly allowed, the appeal of the revenue for the assessment year 2011-12 is dismissed. Assessment year 2012-13 160. These cross-appeals and cross-objections pertain to the same assessee and are directed against the order dated 05th January 2018 passed by the learned CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2012-13 161. We will first take up the appeal filed by the assessee. 162. In ground no. 1, the assessee has raised the following grievances: 1(a). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the Assessing Officer ('AO') in reducing the claim of deduction u/s. 80-IA of the Act in respect of captive power generating units by an amount of Rs. 2,36,57,93,191/- by making adjustment in the "market value' of power captively consumed. 1(b). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in computing 'market value' of power captively consumed based on average of the purchase price of power in various States across India by Tata Power Trading Company Limited, National Thermal Power Corporation and Power Trading Corporation without appreciating the fact that the same does not represent the market value of the power. 1(c). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in the adjustment made which was in utter disregard of the principles of natural justice since the document on the basis of which the market value of electricity was computed by the AO was never made available to the appellant. 1(d). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in not accepting the Average Annual Landed Cost (AALC) of power purchased from State Electricity Board for the purpose of computing 'market value' of power captively consumed.

163. While dealing with the same issue for the immediately preceding assessment year, and for the detailed reasons set out in paragraphs 79 to 84 earlier in this order, we have decided this and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 87 of 99 issue in favour of the assessee. We see no reasons to take any other view of the matter than the view so taken for the immediately preceding assessment year, i.e. 2011-12. As a matter of fact, the orders for the said assessment year extensively rely upon, and refer to, this assessment year. Therefore, respectfully following our decision for the assessment year 2011-12, we uphold the plea of the assessee, and direct the Assessing Officer to delete the adjustments made by him in this regard. The assessee gets the relief accordingly.

164. Ground no. 1 is thus allowed.

165. In ground nos. 2 & 3, the assessee has raised the following grievances: 2(a). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in not allowing the claim of tax holiday u/s 80-IA aggregating to Rs. 1,56,56,92,349/- on infrastructure facility, being Rail System, developed, operated and maintained by the appellant at various locations. 2(b). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in holding that for the purpose of claim of tax holiday u/s 801A on infrastructure facility, being Rail System, the same should be a facility for public utility. The Ld. CIT(A) also erred in concluding that the Appellant was not operating rail system merely because sidings were laid from / upto the plant site. 2(c). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in holding that the agreements entered into between the Appellant and the Indian Railways cannot be termed as an agreement for developing, operating and maintaining an infrastructure facility i.e. Rail System for the purpose of claiming tax holiday u/ s801A. 2(d). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in holding that the claim of deduction u/s 80IA on Rail System is a false claim without appreciating the fact that the same has been allowed by his predecessors in earlier assessment years on same set of facts after due verification. 2(e). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the action of the AO in respect of the disallowance which was in utter disregard of the principles of natural justice since the order of the Ld. CIT(Appeals) - 5 in the case of Ultratech Cements Limited on the basis of which the claim of deduction u/s 80IA on Rail System has been treated as a and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 88 of 99 false claim was never made available to the appellant. The Ld. CIT(A) failed to appreciate and ought to have held that since the said decision of the CIT(A) in Ultratech's case has been overturned by the Hon'ble Mumbai Tribunal, therefore the very basis of the AO no longer survives and therefore deduction deserves to be allowed to the Appellant. 2(f). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT (A) was not justified and grossly erred in confirming the action of the AO in disallowing the claim of deduction u/s 80IA on Rail System on mere conjectures, surmises and preconceived notion. 2(g). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in rejecting the method of computing deduction u/s 80IA on Rail System adopted by the Appellant and applying method which is unsustainable in law. 2(h). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in confirming the AO's action who himself was in a quandary in suggesting two alternative methods for computing deduction us 801A on Rail System and thus was not justified in not quantifying the exact amount of deduction available to the appellant if deduction u/s 80-IA on allowance of deduction in appellate proceedings. 2(i) Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred and not justified in not deciding upon the AO's suggestion that in case the appellant was found to be eligible in appellate proceedings, adjustments on account of allocated HO expenses and "CENVAT" expenses were to be made while determining the claim.

166. While dealing with the same issue for the immediately preceding assessment year, and for the detailed reasons set out in paragraphs 79 to 84 earlier in this order, we have decided this issue in favour of the assessee. We see no reasons to take any other view of the matter than the view so taken for the immediately preceding assessment year, i.e. 2011-12. As a matter of fact, the orders for the said assessment year extensively rely upon, and refer to, this assessment year. Therefore, respectfully following our decision for the assessment year 2011-12, we uphold the plea of the assessee, and direct the Assessing Officer to delete the adjustments made by him in this regard. The assessee gets the relief accordingly. 167. Ground no. 2 is thus allowed. 168. In ground no. 3, the assessee has raised the following grievance: and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 89 of 99 3(a). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in rejecting the method of computing deduction u/s 80IA on infrastructure facility, being Port, adopted by the appellant and concluding without basis that the method adopted by the Appellant cannot be accepted. 3(b). Without prejudice to above, on the facts and in the circumstances of the case and in law, the method of computation of tax holiday u/s 80IA on Port adopted by the AO and confirmed by Ld. CIT(A) suffers from computational error since the AO has reduced gross transport receipts from total turnover of the Port instead of reducing the net transport receipts. 3(c) Without prejudice to above, n the facts and in the circumstances of the case and in law, the Ld. CIT(A), while rejecting the method adopted by the appellant to determine the eligible profits as "Perusable from commercial point" but "not in accordance with specific provisions of Section 80 IA(8)", failed to suggest any alternative method and computation, and thereby was completely unjustified & erred in law in rejecting the claim filed by the appellant as a whole, especially when the eligibility of the benefit was never in question. 169. While dealing with the same issue for the immediately preceding assessment year, and for the detailed reasons set out in paragraphs 88 to 99 earlier in this order, we have decided this issue in favour of the assessee. We see no reasons to take any other view of the matter than the view so taken for the immediately preceding assessment year, i.e. 2011-12. As a matter of fact, the orders for the said assessment year extensively rely upon, and refer to, this assessment year. Therefore, respectfully following our decision for the assessment year 2011-12, we uphold the plea of the assessee, and direct the Assessing Officer to delete the adjustments made by him in this regard. The assessee gets the relief accordingly. 170. Ground no. 3 is thus allowed. 171. In ground no. 4, the assessee has raised the following grievances: 4(a). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in agreeing with the AO in treating CENVAT credit availed on inputs and capital goods used in the undertakings eligible for deduction u/s 801A as cost of the eligible undertakings. 4(b). Without prejudice to above, on the facts and in the circumstances of the case and in law, assuming without admitting that if it is held that CENVAT credit relating to undertakings eligible for deduction u/s 80IA is required to be reduced from the profits of the eligible undertakings, such adjustment should be made on the basis of the actual Cenvat Credit availed on Inputs and capital goods used in the undertakings eligible for deduction u/s 80IA. and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 90 of 99 4(c). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in agreeing with the AO's action of apportioning CENVAT credit on the basis of turnover of the undertakings eligible for deduction u/s 80IA computed in the audited accounts filed along with Form 10CCB instead of turnover of the eligible undertakings recomputed in the order u/s 143(3). 4(d). Without prejudice to above, on the facts and in the circumstances of the case and in law, assuming without admitting that if it is held that CENVAT credit relating to undertakings eligible for deduction u/s 80IA is required to be allocated, such allocation should be made on the basis of total cost of the respective eligible undertaking to the total cost (aggregate of cost of cement manufacturing unit and cost of the eligible unit) instead of allocation on the basis of turnover made in the order u/s 143(3).

172. While dealing with the same issue for the immediately preceding assessment year, and for the detailed reasons set out in paragraphs 100 to 105 earlier in this order, we have decided this issue in favour of the assessee. We see no reasons to take any other view of the matter than the view so taken for the immediately preceding assessment year, i.e. 2011-12. As a matter of fact, the orders for the said assessment year extensively rely upon, and refer to, this assessment year. Therefore, respectfully following our decision for the assessment year 2011-12, we uphold the plea of the assessee, and direct the Assessing Officer to delete the adjustments made by him in this regard. The assessee gets the relief accordingly.

173. Ground no. 4 is thus allowed.

174. In ground no. 5, the assessee has raised the following grievances: 5(a). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in agreeing with the AO in apportioning indirect Head Office expenses aggregating to Rs. 3,20,52,36,186/- and in adjusting such allocated amount in computing Tax Holiday u/s 80IA/80IC, without establishing any nexus between the nature of expenses and the eligible units of the appellant. 5(b). Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in agreeing with the AO in apportioning indirect Head Office expenses on the basis of turnover of the undertakings eligible for tax holiday u/s 80IA/80IC computed in the audited accounts filed along with Form 10CCB instead of turnover of the eligible undertakings recomputed in the order u/s 143(3). and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 91 of 99 5(c). Without prejudice to above, on the facts and in the circumstances of the case and in law, assuming without admitting that if it is held that indirect Head Office expenses is required to be allocated, such allocation should be made on the basis of total cost of the respective eligible undertaking to the total cost of the appellant company instead of allocation on the basis of turnover made in the order u/s 143(3).

175. While dealing with the same issue for the immediately preceding assessment year, and for the detailed reasons set out in paragraphs 106 to 111 earlier in this order, we have decided this issue against the assessee in principle but have given some relief on the basis of allocation of expenses. We see no reasons to take any other view of the matter than the view so taken for the immediately preceding assessment year, i.e. 2011-12. As a matter of fact, the orders for the said assessment year extensively rely upon, and refer to, this assessment year. Therefore, respectfully following our decision for the assessment year 2011-12, we uphold the plea of the assessee, and direct the Assessing Officer to make necessary adjustments in the quantum of adjustments, as resulting from the revised basis of allocation. Subject to these observations, plea of the assessee is rejected.

176. Ground no. 5 is thus partly allowed in the terms indicated above.

177. In ground no. 6, the assessee has raised the following grievance:‟ “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the AO's action and agreeing with CIT(A) order in AY 2008-09 in not allowing deduction for Education Cess levied on Income Tax and Dividend Distribution Tax aggregating to Rs. 18,89,63,516/- in computing total income under the normal provisions of the Act.”

179. Ground no. 6 is thus dismissed.

180. In ground no. 7, the assessee has raised the following grievance: “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified and grossly erred in confirming the AO's action of not allowing deduction in respect of leave encashment on provision basis amounting to Rs. 14,98,42,484/- in computing total income under the normal provisions of the Act. The Ld CIT(A) failed to record any cogent reason and concluded against the appellant merely because of stay on operation of judgment in case of Bharat Earth Movers Vs CIT (2000) 245 ITR 428(SC).” and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 92 of 99 181. Learned representatives fairly agree that whatever is decided on the above issue for the assessment year 2006-07, the cross-appeals for which were heard along with this set of cross- appalls will apply mutatis mutandis for this assessment year as well. While dealing with the assessment year 2006-07, we have held as follows:

44. Learned counsel for the assessee fairly submits that the issue now stands covered against the assessee, and deduction on a provision basis is indeed inadmissible. He, however, prays that a direction may be given that the Assessing Officer at least allows it on a payment basis as and when the payments are actually made. Learned Departmental Representative does not oppose this prayer, though he adds that the deduction can only be allowed when it is otherwise admissible, and that aspect of the matter will have to be examined by the Assessing Officer. That is indeed the correct approach. While we dismiss the grievance of the asseseee, we make it clear that the Assessing Officer will take a call, as and when the payment is actually made, on the admissibility of deduction in accordance with the law.

by the Appellant that the Appellant ought to be granted the benefit of Article 10 of the India Mauritius Double Tax Avoidance Agreement on the dividends declared to Holderind Investments Ltd., Mauritius. 10(b). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not admitting additional evidences submitted by the Appellant. 10(c). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have held that the dividend declared by the Appellant should have been and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012 13. Page 95 of 99 liable to dividend distribution tax (DDT') at the rate of 5 percent as against 16.2225 percent and the refund of excess DDT paid ought to have been allowed to the Appellant.

195. Ground no. 13 is thus allowed for statistical purposes.

On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the additional depreciation u/s. 32(1)(üa) on all the eligible assets acquired on or after 01.04.2005 instead of 01.04.2011, to the tune of Rs.267,03,82,371/-

ITA Nos. 1889 and 1241/Mum/2018, 2384, 2958, 3475 and 3843/Mum/2019 Assessment years: 2010-11, 2011-12 and 2012-13 Page 98 of 99 219. In ground no. 8 and 9, which we will trake up together, the Assessing Officer has raised the following grievance: "On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the addition, amounting to Rs.8,63,37,421/-, on account of cessation of liability towards sundry creditors, which was outstanding for a very long period of time. "On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in ignoring the decision dated 20.07.2012 of Hon'ble Delhi High Court, in the case of CIT vs. Chipsoft Technology Put. Ltd., in of 2011.” 220 To adjudicate on these grievances, it is sufficient to take note of the fact that the outstanding credit balances for more than three years, which aggregated to Rs 8,63,37,421, were treated as cessation of income by the Assessing Officer and brought to tax. The Assessing Officer was of the view that when dues are outstanding for so long, they cease to be in existence either because creditors are not demanding it or because they cannot demand it on account of the operation of law. Aggrieved, the assessee carried the matter in appeal before the CIT(A), who deleted this addition by observing that just because these entries are old entries, these entries cannot be added to the income of the assessee, that these amounts were allowed in the earlier years as well and that there is nothing to indicate that there is any cessation or remission of these liabilities. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us.