SHREE CEMENT LIMITED,BANGUR NAGAR vs. ACIT, CENTRAL CIRCLE, AJMER

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 1517/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2019-20 cuke Shree Cement Limited Assistant Commissioner of Vs. Admin Block Masuda Road, Income Tax, Beawar [Raj.] , H. O. Beawar, Central Circle, Ajmer Ajmer LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCS 8796 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Dilip B. Desai, FCA jktLo dh vksj ls@ Revenue by : Shri Arvind Kumar, CIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 16/04/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 24/06/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

Aforesaid appeal by the assessee for Assessment year 2019-20 arise out of the order of the learned Addl./Joint Commissioner of Income Tax (Appeals)-02, Gurugram, National Faceless Appeal Centre [ for short CIT(A) ] dated 19.11.2024 in the matter of an order framed by Assistant Director of Income Tax, CPC, Bangalore [ for short AO ] as per provision of section 143(1) of the Income Tax Act, 1961 [ for short Act ] on 15.01.2021.

“1. That on the facts and in the circumstances of the case, the ld. CIT(Appeals) was not justified and erred in not deleting the disallowance of Rs. 1,58,85,223/- u/s 36(1)(va) of the Act on account of delayed contribution to Provident Fund by 1 day due to technical issue in the website of State Bank of India (SBI) which was not attributable to the appellant.

2. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in confirming the disallowance made on account of claim of Health and Education Cess of Rs. 8,47,73,077/- while computing Book profit u/s 115JB of the Act.

3. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal.”

2.1 Vide petition dated 19.12.2024 the assessee - appellant made a prayer to admit the additional grounds. That application so made by the assessee-appellant reads as under:

1.0 We beg to refer to the captioned appeal filed against the captioned order of Ld. CIT(A) for the captioned assessment year, which is yet to be decided by this Hon'ble Tribunal. The assessee humbly submits that the Apex Court, time and again, has held that claim(s) can be raised for the first time before the Appellate Authorities, if the facts are on record. Reliance in this regard is placed on judgement of Supreme Court in National Thermal Power Co. Ltd. -vs.- CIT (1998) 229 ITR 383(SC), wherein it is held that the power of the Tribunal should not be restricted u/s 254 of the Act to decide only the grounds which arise from the order of the Commissioner (Appeals). The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law and both the assessee as well as the Department have right to raise additional ground appeal and file cross-objections before the Tribunal. The Tribunal can thus consider the additional ground arising from the facts which are available on record so as to correctly assess the tax liability of an assessee. The similar view has also been held by Apex court in Jute Corporation of India Ltd. vs. - CII (1991) 187 [TR 688 (SC).

Shree Cement Limited vs. ACIT 1.1 In this regard, we humbly pray for the inclusion of the additional grounds in the above appeal as enunciated in Exhibit-1. The assessee also humbly submits that the facts with respect to additional ground are available on record and accordingly does not require any further investigation of facts. 2.0 Inclusion of Reliability Charge while computing Transfer Price for Power undertakings u/s 80-IA. 2.1 During the year under consideration, the appellant has claimed deduction/u/s 80-IA in respect of its power undertakings. While computing Deduction u/s 801A, in terms of Sec. 80-1A(8) and 80A(6) r.w.s 92F of the Act, the Arm's Length Price (ALP) of the power transferred was determined by considering the Average Annual Landed Cost (AALC) of power sold by the Grid during the year to the assessee and/or similarly placed nearby manufacturing units of independent assessee's in the State of Rajasthan, Chhattisgarh & Karnataka, by applying Comparable Uncontrolled Price (CUP) method. Since, Power Undertakings of the appellant provides long term uninterrupted power supply by captive power plant to cement manufacturing units of the appellant, the appellant is of the view that transfer price of power should further be increased by Reliability charge of Rs. 1.50 per unit while computing deduction u/s 80-1A of the Act as held in appellant's own case by this Hon'ble Tribunal for earlier years. [For Addl. Ground No.1] 3.0 Claim of deduction u/s 80-1A on eligible Solid Waste Management System as per Form 10CCB filed along with return of income 3.1 The appellant has claimed deduction u/s 80-1A amounting to Rs. 769.50 Crs in Form 10CCB in respect to its Solid Waste Management System (Fly Ash). However, the appellant in the return of income claimed deduction u/s 80-1A of Rs. 142.66 Crs. based on disallowance made in earlier years by the department. In the notes forming part of the return, the appellant made the full claim as quantified in the report in Form 10CCB and made a request to the AO to restore the claim based on the final decision of judicial authorities in earlier years. Now since the earlier year's dispute has attain finality, the AO may be directed to grant the balance claim of Rs. 626.84 Crs, for the year under consideration based on decision of Hon'ble Tribunal in appellant's own case in earlier years. [For Addl. Ground No. 2] 4.0 Non-consideration of Incentives as Capital Recript while computing Total Income under regular provisions and Book Profit u/s 1151B

4.1 During the year under consideration, the appellant has been granted incentives of Rs 273.38 Crs. from various state governments on account of setting up of various undertakings. Such incentives being reward granted, which is capital in nature should not fall within the definition of Income u/s 2(24) of the Act in view of the decisions of Hon'ble Apex Court in the case of CIT-vs-Ponni Sugars de Chemicals Ltd. (2008) 306 TTR 392 (SC), CIT-vs-Shree Balaji Alloys (2016) 287 CTR 459 (SC) & in appellant's own case by Hon'ble Jurisdictional Rajasthan High Court vide order dated 22-08-2017 for earlier years, thereby not exigible to tax under normal provisions as well as under the provisions of Sec. 115JB. The appellant is also of the view that the incentives in the nature of capital receipt cannot be brought within the purview of Sec. 2(24)(xviii) in absence of any express provision to tax income in the nature of capital receipt and in absence of any corresponding amendment to See 28 of IT Act, being the charging section. The aforesaid claim along with full details has duly been made by the appellant in the notes forming part of computation of total income. [For Additional Ground No. 3] 5.0 Allowability of depreciation on leasehold rights on land u/s 32(1)(ii) being business or commercial right acquired during the year under consideration 5.1 During the year under consideration an amount of Rs. 20.95 Crs. has been incurred by the appellant in respect to lease hold rights on land acquired by the appellant from different parties. Such rights are for carrying on the business and is in the nature of "business or commercial right" eligible for depreciation u/s 32(1)(i) of the Act as held as held in appellant's own case by this Hon'ble Tribunal for earlier years. [For Additional Ground No. 4] 6.0 Claim of Deduction u/s 80-1A & 80-IC while computing Book Profits u/s 11518 6.1 During the year under consideration, the appellant has claimed deduction u/s 80-1A and 80-IC in respect of its power undertakings and infrastructure facilities under normal provisions of the Act. The appellant vide notes forming part of computation of Total Income also lodged said claim in computing Book. Profit u/s 115]B in view of provisions of Sec. 11518(5) of the Act and as per principle held in appellant's own case by this Hon'ble Tribunal for earlier years. [For Additional Ground No. 5] 7.0 Non-consideration of Indexation benefit on transfer of Long Term Capital Asset while computing book profits u/s 115JB Shree Cement Limited vs. ACIT 7.1 During the year under consideration, the appellant has debited net amount of Rs. 1,60,52,531/- to its statement of P&L which represents loss on sale of assets [on which indexation benefit is available under 2st proviso to Section 48]. In terms of Section 45 of Income Tax Act, Long Term Capital Loss of Rs. 25,80,63,017/-has been computed on such assets after considering indexation benefit. In terms of provisions of Section 115JB(5) and as held in Best Trading And Agencies Ltd. -vs- DCIT (IT'A No. 191/2011 dated 26-08-2020)(Karn. HC), gain or loss as per the provisions of Income Tax Act (Le. after indexation) on such assets is to be considered while computing book profit u/s 115JB. The aforesaid claim has duly been made by the appellant in the notes forming part of computation of total income. [For Additional Ground No. 6] 8.0 Prayer 8.1 In view of the above, the appellant most respectfully prays for admission of the additional grounds enclosed in Exhibit-1 in the captioned appeal preferred before the Hon'ble Tribunal.

2.2 With the above application, vide Exhibit-1 the additional grounds were submitted for consideration in the present appeal;

Additional Grounds

1. That on the facts and in the circumstances of the case, necessary direction may be given to the A.O. to allow the claim of reliability charge of Rs. 1.5/unit in computing Transfer Price of Power for the purpose of Deduction u/s 80- IA in respect to its eligible power undertakings.

2. That on the facts and in the circumstances of the case, necessary direction may be given to the A.O. to allow the claim of deduction u/s 80-IA on eligible Solid Waste Management System as per Form 10CCB filed along with return of income.

3. That on the facts and in the circumstances of the case, necessary direction may be given to the A.O. to consider incentives amounting to Rs. 273,37,71,986/- granted to the appellant, as capital receipts not exigible to tax while computing total income under normal provisions of the Act and under the provisions of Sec. 115JB of the Act.

Shree Cement Limited vs. ACIT 4. That on the facts and in the circumstances of the case, necessary direction may be given to the A.O. to allow the claim of depreciation on leasehold rights u/s 32(1)(ii) being business or commercial right acquired during the year under consideration.

5. That on the facts and in the circumstances of the case, necessary direction may be given to the A.O. to allow the claim of Deduction u/s 80-IA and 80-IC while computing book profit u/s 115JB of the Act.

6. That on the facts and in the circumstances of the case, necessary direction may be given to the A.O. to allow indexation benefit on transfer of Long term Capital Assets while computing book profit u/s 115JB in view of provisions of Sec 115JB(5) of the Act.

7. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal.

3. So far as raising the additional grounds before the Income Tax Appellate Tribunal (ITAT) during an appeal against an assessment made under section 143(1) of the Act, it is important to understand the legal framework governing such admissions.

Based on the judgments provided, additional grounds can be raised under certain conditions, particularly when they involve questions of law and do not require new facts to be introduced. The legal basis for admission of additional grounds is decided based on the Supreme Court decision in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 wherein it has been established that the ITAT has the discretion to allow new grounds to be raised, especially when these grounds are purely legal and based on facts already on record. The tribunal is not confined to correctly assess tax liability.

This precedent was reinforced in the judgment of the Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 holding that that additional grounds should be admitted if they arise from the existing facts and are legal in nature.

Same ruling was upheld in the case of Mehul V. Vyas v. Income Tax Officer (2017) and Touch Wood Projects Pvt. Ltd. v. ITO (2016) also support the admission of additional grounds if they are based on legal questions that do not require new evidence. Thus, based on that precedent we note that when the assessee is in appeal against an assessment under section 143(1), the grounds raised must be justified as not willful omissions and should ideally relate to the computation of total income as noted in the assessment. If the additional grounds pertain to legal issues that are significant for the determination of tax liability, they can be considered for adjudication.

This Jaipur bench while dealing with the case of Shri Krishnaraj Build Home Private Limited in admitted additional grounds stating that facts already on record cannot be ignored when even the provision of the law deals with such situation and the grounds which are tribunal's discretion to allows for such admissions when necessary for a fair assessment. In summary, additional grounds raised in an appeal against an assessment under section 143(1) is admitted as they are legal in nature and arise from the existing records, as supported by several judicial precedents cited by the assessee vide their application.

4. Succinctly, the fact as culled out from the records is that the assessee-appellant is a Public Limited Company engaged inter alia in the business of manufacture and sale of cement and generation and sale of power. The assessee offered the gross total income to the tune of Rs. 13,96,22,38,877 and claimed deduction under chapter VIA for the same amount and therefore, the net total income as per the ITR filed on 30.11.2019 was Rs. Nil under the normal provision of the Act. Whereas the income as per Book profit in accordance with the provision of section 115JB of the Act was computed at Rs. 10,01,04,83,895/-. On the said book profit tax liability was computed at Rs. 2,15,71,39,155/- thereby generating MAT credit of Rs. 2,15,71,39,155. After taking credit of total taxes paid for an amount of Rs. 2,32,70,65,210 the appellant has claimed a refund of Rs. 16,99,26,055 in the original return of income filed on 30.11.2019. section 143(1) of the Act on 15.01.2021. While processing that ITR learned Assistant Director of Income Tax CPC Bangalore [for short AO ] has made certain adjustments out of which the assessee challenged the following adjustment in this appeal; a) Disallowance on account of delay in deposit of Employees contribution to PF and ESI u/s. 36(1)(va) (Rs. 1,59,50,882). During the previous year the assessee deposited employees’ contribution to Provident Fund and Employee State Insurance within the due dates as prescribed under the respective Act except with few delays as duly reported in the Tax Audit Report. However, AO vide intimation u/s 143(1) dated 15/01/2021 has disallowed an amount of Rs.

1,59,50,882 u/s 36(1) (va) of the Act ignoring the fact that the deposit has been duly made by the appellant before the due date of filing return of income u/s 139(1) of the Act i.e. 30.11.2019. b) Vide impugned intimation CPC added back “Health and Education

Cess” of Rs. 8.48 cr. while computing book profits u/s. 115JB. appeal before the ld. CIT(A). Apropos to the grounds so raised in this appeal, the relevant finding of the ld. CIT(A) is reiterated here in below:

6. Decision:

6.1 On Grounds of Appeal No. 4:- This ground of appeal is related to the disallowing an amount of Rs. 1,59,50,882/- u/s 36(1)(va) of the Act on account of delayed contribution to Provident Fund and Employee State Insurance without appreciating the fact that all the deposits were duly made by the appellant before the due date of filing of return of income u/s 139(1) of the Act.

The main contention of the department is that a sum of Rs.1,59,50,882/- is being disallowed since these contribution to EPF & ESI were made beyond the due dates prescribed in the relevant statutes. The matter has now been put to rest with the judgement of Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd. Vs Commissioner of Income Tax-1, [2022] 143 taxmann.com 178 (SC)/448 ITR 518 (SC) wherein the Hon'ble Apex Court has held that Section 43B(b) of the I.T. Act does not cover employees' contributions to PF, ESI etc. deducted by employer from salaries of employees and that employees' contribution has to be deposited within the due date u/s 36(1)(va) of the I.T. Act, Le, due dates under the relevant employees welfare legislation like PF Act, ESI Act etc. falling which the same would be treated as income in the hands of the employer u/s 2(24)(x) of the L.T. Act. Therefore, vide this judgement the issue of deposit of employees contribution towards PF/ESIC late beyond the due date stipulated under the Relevant Statute concerning PF/ESIC but deposited before the due date prescribed u/s 139(1) for filing of return of income has been decided squarely in favour of revenue.

6.2 In view of the discussions as above, and respectfully following the judgement of the Hon'ble Supreme Court of India (discussed supra), I hold that the employees' contribution to EPF and ESI should be remitted before the due date as per explanation to section 36(1)(va) of the I.T. Act, ie, on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s 43B of the I.T. Act. Therefore, the disallowance on account of late deposit of employee contribution to PF and ESI is upheld. Hence, the AO correctly made the addition u/s 143(1). Thus, the action of the AO on making addition u/s 143(1) of the Act is confirmed and the ground of appeal raised by the appellant is dismissed.

6.6 On Grounds of Appeal No 7:-This groundof appealis related to disallowances of Rs. 8,47,12,846/- while computing Book profit u/s 115JB During the year under consideration, the appellant company has computed book profits u/s 115JB amounting to Rs. 10,01,04,83,895/-. AO while passing Intimation u/s 143(1) dated 15-01-2021, an amount of Rs. 10,09,51,96,741/- has been computed as book profits u/s 115JB, thereby disallowing an amount of Rs. 8,47,12,846/-. Net disallowance of Rs. 8,47,12,846/- comprises of following components:-

(i) Disallowance of Health and Education Cess of Rs. 8,47,73,077/-.

The levy of additional tax or Surcharge was introduced for the first time by the Finance Act of 2004 Chapter II of the said Act pertains to Rates of Income Tax and Section 2(11) covers the levy of "cess" for the first time under the "Chapter: Rates of Income Tax". A careful reading of the same which is reproduced below will exemplify the fact that the Legislature intended it to be a Rate of Tax and also as an additional surcharge: "(11) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income-tax", so as to fulfil the commitment of the Govemment to provide and finance universalized quality basic education, calculated at the rate of two per cent of such income-tax and surcharge.”

When "Cess" in the form of additional surcharge was contemplated for the first time by the Finance Act of 2004, is nothing but a part of income-tax in the form of additional surcharge. chargeable under the provisions of the Act.

A cautious analysis of the contents of Sec. 2(11) of the Finance Act 2004 would illustrate that the "cess" levied to garner funds to provide quality education is certainly a rate of tax, and is nothing but an additional surcharge.

Hon'ble Supreme Court in the case of CIT vs. K. Srinivasan (83 ITR 346) elucidated the concept of surcharge and equated it with an additional tax. The Court referred to the dictionary meaning of the word "surcharge" to mean that "to charge too much or in addition" and also "additional tax". The Court, thereafter, held that income tax is tobe charged in four different ways- basic charge, surcharge, special surcharge and additional surcharge. Therefore, even additional charges form part of income tax and surtax.

In the backlight of the judgment of the Hon'ble Supreme Court in the case of K. Srinivasan, reference is invited to memorandum of Finance Bill of 2004 wherein it was emphasized that:

"An additional surcharge, to be called the Education Cese EN

A logical conclusion on the combined reading of the memorandum to Finance Bill, 2004 and the judgement of Hon'ble Supreme Court that education cess will ultimately form a part of the Incometax and, hence is to be disallowed.

Also, the education cess is application of profits after they have arisen. In other words, it is not a charge on the profits, but an allocation or an apportionment which is made thereafter. They assessee pays cess only when taxable profits arise and do not, when it is a loss, despite the business activity being undertaken.

Further, amendment brought in vide Finance Act, 2022 w.e.f 01.04.2005. Further, Cess is nothing but Income Tax only and is charged at the rates prescribed in Section 2 of the Finance Act and shall further be increased by an additional surcharge to be known as the 'Cess'. The term 'cess' has not been defined in the Act, neither in the Finance Act nor in the Constitution. However, an inclusive definition of the term 'taxation' has been provided in the Constitution to include the imposition of any tax or impost, whether general or local or special. Cess is a special kind of tax which takes its identity from the principal levy. Surcharge and any cess have been levied by the Parliament in addition to the income tax, in exercise of its powers under Article 271 of the Constitution, by way of section 2 read with first schedule to the Finance Act. The Court thus having regard to the legislative history held that surcharge and additional surcharge (Cess) being charged in addition to income tax in exercise of constitutional powers are nothing but tax on income. Levy of Cess in addition to income tax is the charge of income tax itself at an increased rate.

In view of the discussion made above, the addition is sustained and Ground of appeal is dismissed.

6. Aggrieved with that order of the ld. CIT(A) the assessee is in appeal raising therein the grounds arising from the order of the ld. CIT(A) and the raised by the assessee, ld. AR of the assessee, has filed the written submissions in respect of the various grounds raised which reads as follows :

6.1 In addition to the above written submission, the ld. AR appearing on behalf of the assessee submitted that ;

1.0 The appellant has claimed deduction u/s 80-IA amounting to Rs. 769.50 Crs in Form 10CCB in respect to its Solid Waste Management System (Fly Ash). In the return of income, the assesse had claimed deduction u/s 80-IA of Rs. 142.66 Crs. in view of disallowance made in earlier years by the department and assessee’s appeal was pending for consideration.

2.0 The Assessee had duly disclosed above facts in the Tax Audit Report & Notes forming part of the return of income. Therein, the assesse further informed that the deduction, as quantified in the report in Form 10CCB be kindly allowed considering the decision of judicial authorities in pending appeal(s) of the assesse for earlier years.

3.0 Since then the earlier year’s appeals have been decided by co-ordinate bench of this Hon’ble Tribunal vide order dated 7th Aug. 2023 passed with respect to AY 2014-15 and vide order dated 21st Feb. 2024 passed with respect to AY 15- 16 to 18-19.

4.0 In view of above, the additional ground filed by the asseessee be please allowed with directions to AO to allow the balance claim of Rs. 626.84 Crs. for the year under consideration.

5.0 In furtherance to above, the assesse finds it duty bound to bring to knowledge of this Hon’ble Court the following:

6.0 A survey was carried out at the premises of the appellant in June 2023. During the survey, the team visited the plants located at Beawar, Ras, Nawalgarh in Rajasthan & Panipat in Haryana, looked into the business operations of the appellant and also took statements of few of the employees in relation to deduction claimed u/s 80-IA by the company in respect of its Solid Waste Management Systems (SWMS). The said deductions are being claimed from AY 2013-14 onwards which had been subjected to scrutiny proceedings u/s 143(3) by the AO as well as by TPO in all the years. The same has also been subjected to litigation before the appellate authorities including before this Hon’ble Tribunal as well. It is also be worthwhile to note that the deductions under Chapter VIA for SWMS is already under sunset effective from 01-04-2017 and no new tax holiday are available to new SWMS set up thereafter.

7.0 Post survey proceedings, Revenue is disputing the eligibility of such claim u/s 80IA. Since decision on the said claim for AY 2019-20 is before your Honours, it is our duty to bring Revenue’s contentions before this Hon’ble Bench. The above claims have already been adjudicated by the Hon’ble Tribunal post the aforesaid Survey Proceedings while disposing off the appeals for AY 2015-16 to AY 2018-19 and allowed after considering relevant facts and also decision of Hon’ble ITAT for earlier years. The eligibility of Solid Waste Management System has also been duly considered by the Hon’ble Tribunal at Para No. 78 to 79 at Pg 63-64 of its Order dated 21-02-2024 in for AY 2015-16. Further, Department vide Order u/s 143(3) for AY 2013-14 dated 16-12-2014 which is the first year of eligibility of claim of SWMS, had looked into this claim in great detail, including scrutiny of all the activities being carried out by this facility. In addition to the verification of the activities, AO has also verified its interlinkage with the cement manufacturing operations and computed detailed functional analysis and functional split between the SWMS facility and the cement operations [Refer Pg 11-18 of the Assessment Order at Pg 16-18 for detailed operations and functions performed by the SWMS as analysed by Department]. It is humbly submitted that in the aforesaid assessment order for AY 2013-14, because of the interlinkage of the facility with the cement unit the department disallowed the partial claim by applying Profit Split Method (PSM) resulting into splitting the total profit from the said activity into profit attributable to above eligible facility and profit attributable to cement unit. The appellant duly accepted the above methodology and did not dispute the same before the appellate authorities only because the same was correct and as per the law.

8.0 Issues contested by the department on SWMS claim, based on the survey proceedings are summarized below:

7. To support the contention raised in the written submission reliance was placed on the following evidence / records :

Exhibit Particulars Page No. Statement of Eligible Solid Waste Management System on which 1 1. deduction u/s 80-IA has been claimed Statement showing screenshots of videography of SWMS taken (hiring 2. 2-8 survey proceedings Functions performed by Solid Waste Management System as filed 3. 9-17 before the department Extract of Order of TPO dated 31-01-2020 for AY 2015-16 4. 18-41

Extract of Order of TPO dated 29-01-2021 for AY 2016-17 5. 42-65

Extract of Order of TPO dated 29-01-2021 for AY 2017-18 6. 66-81

Extract of Order of TPO dated 31-07-2021 for AY 2018-19 7. 82-103 Guidelines issued in June'2023 by Ministry of Environment, Forests & 8. 104-125 Climate Change (MOEF & CC) Notification dated 14-09-1999 issued by Ministry of Environment And 9. Forest 126-136 Report of Ministry of Urban Development issued in May, 2000 137-144 10.

Definition of Solid waste as per OECD 11. 145-147 Decision of Hon'ble Pune Tribunal in ITO —vs.- Dirk India Pvt Ltd. (In 12. 148-152 dated 24-10-2018) 13. Solid Waste Management Rules, 2016 153-168

Hazardous Waste Management Rules, 2016 169-180 14. Notification dated 31-12-2021 issued by Ministry of Environment And 15. 181-192 Forest Extract of statement given by Shri Dev Karan Gurjar (sarpanch) during 16. 193-196 survey proceedings

8. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the disallowance on account of alleged delay in deposit of Employee’s contribution to PF had been proceeds at the end of the assessee within the due day and it was delayed at the end of the payee bank and to that effect relevant material is placed on record at page 26 & 27 of the paper book filed. Therefore, based on the decision relied upon in the written submission the disallowance is required to be vacated.

As regards the second ground of appeal ld. AR of the assessee vehemently argued that Health and Education cess is not included in the Explanation 1 & 2 to section 115JB(2) of the Act and therefore, the same cannot be considered as income tax for the purpose of clause (1) to Explanation 1 to section 115JB(2) of the Act and for that he referred the memorandum to Finance Bill 2018 which clearly states that Education Cess discontinued and new cess Health and Education Cess came to substitute and submitted that there is no corresponding amendment brought into the Act vide section 115JB of the Act and therefore the same is not part of the income tax. To drive home to this contention, he relied upon the detailed written submission filed.

As regards the additional ground raised, he first submitted that the legality of the additional ground which we have already incorporated while discussing the admission of additional ground and therefore, the said arguments are not repeated here.

Coming to additional ground no.1 the ld. AR of the assessee submitted that the same is covered by the decision of this bench for A.Y.

2015-16 to 2018-19 and the same requires same direction to allow the claim of reliability charge of Rs. 1.5 per unit in computing Transfer Price of power for the purpose of deduction u/s. 80IA in respect of its eligible power undertaking.

Vide additional ground no. 2 the ld. AR of the assessee submitted that direction be given to allow the claim of deduction u/s 80IA on eligible solid waste management system as per Form no. 10CCB filed as the said claim is also covered by the decision of this co-ordinate bench for A. Y. 2015-16 fact that a survey was carried out at the premises of the assessee - appellant in June 2023. During the survey, the team visited the plants located at Beawar, Ras, Nawalgarh in Rajasthan & Panipat in Haryana, looked into the business operations of the appellant and took statements of few of the employees in relation to deduction claimed u/s 80-IA by the company in respect of its Solid Waste Management Systems (SWMS). The said deductions are being claimed from A.Y. 2013-14 onwards which had been subjected to scrutiny proceedings u/s 143(3) by the AO as well as by TPO in all the years. The same has also been subjected to litigation before the appellate authorities including before this Hon’ble Tribunal as well.

While submitting so he also stated that the deductions under Chapter VIA for SWMS is already under sunset effective from 01-04-2017 and no new tax holiday are available to new SWMS set up thereafter. Revenue in post survey proceedings disputing the eligibility of such claim u/s 80IA. Since the issue on the said claim for A.Y. 2019-20 is under consideration he stated the contention raised by the revenue and his reply on it. He stated that the above claims have already been adjudicated by the Hon’ble Tribunal post survey Proceedings while disposing off the appeals for AY 2015-16 to AY 2018-19 and allowed after considering relevant facts. He also submitted considered vide Para No. 78 to 79 at Pg 63-64 of the order of this tribunal for AY 2015-16. Further, Department vide Order u/s 143(3) for AY 2013-14 dated 16-12-2014 which was the first year of eligibility of claim of SWMS, had looked into this claim in greater detail, including scrutiny of all the activities being carried out by this facility. In addition to the verification of the activities, AO has also verified its interlinkage with the cement manufacturing operations and computed detailed functional analysis and functional split between the SWMS facility and the cement operations [Refer Pg 11-18 of the Assessment Order at Pg 16-18 for detailed operations and functions performed by the SWMS as analyzed by Department]. Therefore, the assessment order for AY 2013-14, because of the interlinkage of the facility with the cement unit the department disallowed the partial claim by applying Profit Split Method (PSM) resulting into splitting the total profit from the said activity into profit attributable to above eligible facility and profit attributable to cement unit. The appellant duly accepted the above methodology and did not dispute the same before the appellate authorities only because the same was correct and as per the law. He also relied on a detailed distinguishable note on the issue raised by the revenue as filed. distinguish those finding and submitted that the claim is allowable as the reward is not covered in the amended definition of income u/s. 2(24(xviii) and therefore, he relied upon the written submission.

Whereas additional ground no. 4 & 5 also covered by the decision of earlier years and he submitted that the directions be given based on the finding already on record.

Vide Ground no 6 he seeks direction to allow the indexation benefit on transfer of long-term capital assets while computing the book profit u/s. 115JB(5) of the Act.

9. Ld. DR is heard who relied on the findings of the lower authorities. He also submitted that the ld. CIT(A) has considered all the aspect of the matter but considering the decision of the apex court in the case of Checkmate Services Ltd. (Supra) there is no merits in the arguments advanced. As regards the ground for disallowance of Health and Education Cess he also emphasized on the decision of CIT Vs. K. Srinivasan and thereby raised the same contention as raised in the order of the ld. CIT(A) vide para 6.6 of his order. As regards the other issue he relied upon the written submission which reads as under : -

No. CIT(DR-1)/ITAT/JPR/2025-26/92 �दनांक: 16.04.2025 माननीय सद�यगण, ब�च ए. आयकर अपील�य अ�धकरण, जयपुर महोदय / महोदया, Sub: Appellate proceedings before the Hon'ble ITAT, Jaipur in the case of Shree Cement Ltd. (PAN:AACCS8796G), for A.Y. 2019-20-reg

Please find enclosed written submission in continuation of arguments made during the course of hearing along with self-explanatory report of AO with respect to grounds of appeal of the assessee.

It has been pointed by the AO in point number-3 of AO's report on the following issues:- a) Inclusion of Reliability Charge while computing Transfer Price for Power undertaking u/s 80IA. b) Claim of deduction u/s 80IA on eligible Solid Waste Management System as per Form 10CCB filed alongwith return of income. c) Allowability of depreciation on leasehold rights on land u/s 32(1)(ii).

That the department is in further appeal against the composite order of Hon'ble ITAT in appeal no. 496 to 498 & 500/JP/2023 dated 21.02.2024 passed for A.Y. 2015-16 to 2018-19 where the Hon'ble ITAT has allowed the appeal of the assessee on this ground. The decision of Hon'ble ITAT was not accepted because this additional ground was raised by the assessee before Ld. CIT(A) and Ld. CIT(A) had not allowed the same as the same was neither claimed by the assessee in its original nor during the assessment proceedings. The same issue was also raised before CIT(A) in AY 2014-15 and the issue was elaborately discussed by the CIT(A) in the said order. While rejecting the claim CIT(A) has relied upon decision of Hon'ble Supreme Court in the case of Pr. CIT Vs Wipro Limited (2022) 140 Taxmann. Com 2023 wherein the Hon'ble Supreme Court in para 9 of the order has laid down that assessee cannot be permitted to substitute the original return by filing a revised return under 139(5) of the Act and taking a contrary stand and/or claiming the exemption which was specifically not claimed earlier while filing the original return of income. Apex Court in the case cited supra stated that even a revised return could not be of any help to the appellant as the Apex Court has stated that by filing the revised return, the assessee cannot be permitted to substitute the original return filed under section 139(1).

Further, on claim of deduction u/s 80IA on eligible solid management system section 80A(5) states that no deduction shall be allowed to the assessee in case of failure to make the claim of deduction under chapter VIA in the return of income. Further, section 80A(C) requires that such return of income should be filed within the time limit specified u/s 139(1) to claim deduction under chapter VIA. It has also been reported by AO that a survey action was initiated in the case of the assessee on 21.06.2023. During the survey, it was found out that there was no Solid Waste Management System and Water Treatment System as envisaged under section 80-IA of the Act in existence anywhere in the plants of the assessee. Findings of the survey have established wrong claim of deduction on account of profit shown from SWM, WTS and NIPU. Hence, the deductions claimed by the assessee are liable to be rejected.

The assessee has submitted case of Jute Corporation of India vs. CIT (53 Taxmann 85) to justify admission of additional grounds of appeal. However, the kind attention of the Bench is attracted to para 6 and 7 of the said order which makes such admission of additional grounds conditional, stating that the appellant authority must be satisfied that the grounds raised was Bonafide and that the same could not have been raised earlier for good reasons. The satisfaction of the AAC depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose. In Rai Kumar Srimal v. CIT [1976] 102 ITR 525, a Division Bench of the Calcutta High Court presided over by Sabyasachi Mukharji, J, as he then was, held that the AAC was entitled to admit new ground or evidence either suo motu or at the invitation of the parties. If he is acting on being invited by the assesee, then there must be some ground for admitting new evidence in the sense that there must be some explanation to show that the failure to adduce earlier the evidence sought to be adduced before the AAC was not wilful and not unreasonable.

The self-explanatory report of the AO is enclosed for your kind perusal. The following case laws as relied by the revenue are also enclosed for your kind perusal.

SL. NO. CASE LAWS PAGE NO. 1 Pr. CIT vs. Wipro Limited (2022) 140 taxmann.com 2023 1 to 11 2 Jute Corporation of India Ltd. vs. Commissioner of Income 1 to 6 tax, [1990] 53 taxman 85 (sc)/[1991] 187 irt 688 (sc) 3 K. Srinivasan vs. Commissioner of Income-tax [1972] 83 itr 1 to 3

346 (sc) [05.11.1971] 4 Checkmate Services Pvt. Ltd. vs. Commissioner of Income 1 to 6 tax-1 civil appeal no. 2833 of 2016

10. In addition to the above written submission, the ld. DR submitted that; No. ACIT/CC/AJM/2025-26/39 Date: 15.04.2025 To, The Commissioner of Income-tax (DR-1), ITAT, Jaipur. Respected Sir,

Sub:-Appellate proceedings before the Hon'ble ITAT, Jaipur in the case of M/s Shree Cement Ltd., (PAN:AACCS8796G) for A.Y. 2019-20-reg-

Kindly refer to your email dated 11.04.2025, on the subject cited above. In this connection, it is submitted that the assessee had e-filed its ROI for AY 2019-20 on 30.11.2019 declaring total income of Rs. NIL (Deemed total income under AMT/MAT of Rs. 10,01,04,83,895) which was processed u/s 143(1) on 15.01.2021 Through intimation u's 143(1), income of the assessee company was determined at Rs. 4,06,74,400/- by the CPC

2. Against the intimation dated 15.01.2021, the assessee has filed appeal before the Ld. Addl./JCIT(A)-2, Gurugram on 12.02.2021. The Ld. Addl./JCIT(A) vide his order in appeal No. NFAC/2018-19/10030682 dated 19.11.2024, partly allowed the appeal of the assessee.

3. Aggrieved with the order of the Ld. AddlI/JCIT(A), the assessee has filed further appeal before the Hon'ble ITAT, Jaipur Bench on the ground ie. disallowance u/s 36(1)(va) on account of delayed contribution to provident fund. Apart from this, the assessee also raised additional grounds, mentioned as below:

a) Inclusion of Reliability Charge while computing Transfer Price for Power undertaking u/s 80IA b) Claim of deduction u's 80IA on eligible Solid Waste Management System as per Form 10CCB filed alongwith return of income c) Non-consideration of Incentive as Capital Receipt while computing Total Income under regular provisions and Book Profit u/s 115JB d) Allowability of depreciation on leasehold rights on land u/s 32(1)(1) e) Allowability of Indexation benefit on transfer of Long Term Capital Asset

4.1 On the basis of above information, notice u/s 148A(b) was issued on 27.03.2023 and after considering the reply of the assessee, order u/s 148A(d) was passed on 17.04.2023 with prior approval of PCIT, Udaipur. Consequently, notice u/s 148 was also issued on 17.04.2023.

4.2 Against the order u/s 148A(d) and notice u/s 148 dated 17.04.2023, assessee company filed a writ petition before the Hon'ble Rajasthan High Court in DB Civil Writ Petition No. 7702/2023. The Hon'ble High Court passed the order on 20.02.2025 whereby order us 148A(d) dated 17.04.2023 was set-aside and matter remitted back to the AO to pass the order afresh after dealing with the objection raised by the petitioner company.

4.3 In order to comply with the directions of the Hon'ble High Court, notice was issued to the assessee company. In compliance thereto, reply was filed by the assessee company Ongoing through facts and material available on the record and submission of the assessee, contention of the assessee was found correct. Accordingly, proceedings-initiated u/s 148A of the Act were dropped.

5. The assessee is engaged in the business of manufacture and sale of cernent and a survey action was initiated in its case on 21.06.2023. During the survey, new facts came to fore which established that the deductions under section 80-IA claimed by the assessee on account of profits from Solid Waste Management (SWM) systems, Water Treatment Systems (WTS) and Power generated by New India Power Undertaking (NIPU) were not admissible for various reasons. In AY 2019-20, the assessee had claimed deduction of Rs. 1361,26,23,613/- u/s 80-IA of the Income-tax Act, 1961 which included deduction of Rs. 1151,51,16,282/- on account of profits of Solid Waste Management Systems, Rs. 24,35,61,273/- on account of profit of Water Treatment Systems and Rs. 85,43,30,848/- on account of profit of New India Power Undertaking (NIPU).

5.1 During the survey, it was found out that there was no Solid Waste Management System and Water Treatment System as envisaged under section 80-IA of the Act in existence anywhere in the plants of the assessee. Findings of the survey have established wrong claim of deduction on account of profit shown from SWM, WTS and NIPU. The claim was inadmissible, fraudulently claimed, inconsistent with law and based on misrepresentation of facts as well as misinterpretation of law, hence, the deductions claimed by the assessee were liable to be rejected. Accordingly, notice u/s 148A(b) of the Income-tax Act, 1961 was issued to the assessee on 30.03.2025 for making compliance on or before 21.04.2025. Reply of the assessee is awaited.

6. Further, the required additional grounds of appeal wise report, is as under:

a) Inclusion of Reliability Charge while computing Transfer Price for Power undertaking u/s 80IA In the assessment years A.Y. 2015-16 to 2018-19, the AO had rejected the claim of the assessee regarding allowability of Reliability charge of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80-IA of the Act. This claim was related to the component of reliability charge of Rs. 1.50 per unit which the power undertaking is eligible to charge for providing uninterrupted and quality power supply with exclusivity to the cement manufacturing units of the assessee.

The assessee before the TPO submitted that "The rate Rs. 4.12 per unit only represent the short term opportune sale rate of power sold to third parties in situation of surplus power available with the captive power plant of the assessee. Since the captive power plant has been set up in holding huge capital, outflow with the primary objective of supplying, long-term and interrupted power supply to the cement manufacturing units of the assessee, a reliability charges for such an interrupted and quality supply of power. @ of 21.5 per unit may further be allowed to be part of transfer price of power. The said inclusion of 21.5 per unit is based on the order of Haryana electricity regulatory commission dated 14.03.2013 wherein the commission has agreed for collection of Reliability charges (21.5 per unit) by the grid on account of committed power supply over 24 hours over and above the tariff rate.

Since, the TPO has not considered this issue the assessee has challenged the issue before the Id. CIT(A) who after considering the submission of the assessee held as under:

"8.12 The appellant in its written submission has also prayed to allow reliability charge of Rs. 1.5 per unit for uninterrupted power supply in computing the transfer price of power

8.12.1. The above contention of the appellant was rejected by the TPO vide his order dated 31.03.2020 by stating as follows. "As regards claim of Rs. 1.5 per unit being reliability charges, this submission of the assessee is not acceptable as firstly it pertains to Haryana Electricity Regulator authority and not to Rajasthan Electricity Regulatory authority and hence not applicable to the case of assessee. Secondly the terms and conditions are different in this case from the case of assessee. Assessee is not supplying power to third party on 24 hour basis. Thus the submissions of the assessee in this regard are not acceptable".

During further appeal by the assessee company, the Hon'ble ITAT in its composite order in appeal No. 496 to 498 & 500/IP/2023 dated 21.02.2024 passed for A.Y. 2015-16 to 2018-19,hasallowed the appeal of the assessee on this ground. The decision of the Hon'ble ITAT was not accepted because this additional ground was raised by the assessee before L.d. CIT(A) and Ld. CIT(A) had not allowed the same as the same was neither claimed by the assessee in its original nor during the assessment proceedings. The same issue was also raised before CIT(A) in AY 2014-15 and the issue was elaborately discussed by the CIT(A) in the said order. While rejecting the claim CIT(A) has relied upon decision of Hon'ble Supreme Court in the case of Pr. CIT Vs Wipro Limited (2022) 140 TaxMann.Com 2023 wherein the Hon'ble Supreme Court in para 9 of the order has laid down that assessee cannot be permitted to substitute the original return by filing a revised return under 139(5) of the Act and taking a contrary stand and/or claiming the exemption which was specifically not claimed earlier while filing the original return of income. Apex Court in the case cited supra stated that even a revised return could not be of any help to the appellant as the Apex Court has stated that by filing the revised return, the assessee cannot be permitted to substitute the original return filed under section 139(1). In this case, assessee has not filed a revised to claim reliability charges of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80-1A of the Act and therefore, same was rightly rejected by the Ld. CIT(A). However, Hon'ble ITAT has allowed the same without giving an opportunity of being heard to the Assessing Officer. There is no reference to any remand report being sought on additional grounds in this case.

Hon'ble ITAT has referred that facts were similar to the facts for AY 2015-16 and the issue was decided in favour of assessee in the very same order. It is pertinent to mention here this issue for AY 2015-16 was decided in view of the fact that identical issue has already been decided in the assessee own case for AY 2014- 15 in dated 07.08.2023. It is worthwhile to mention here that the said decision was not accepted by the revenue and appeal u/s 260A has already been filed before Hon'ble High Court. Further, the said decision for AY 2015-16 to 2018-19was not accepted by the revenue and appeal u/s 260A has been recommended for AY 2015-16 to 2018-19.

On this issue, further appeal before the Hon'ble High Court is pending for the A.Y. 2014-15 to 2018-19. b) Claim of deduction u/s 80IA on eligible Solid Waste Management System as per Form 10CCB filed along with return of income

The assessee in its Form 10CCB has claimed deduction u/s 80-IA for A.Y. 2015- 16 to 2018-19 on account of Treated Solid Waste However, the A.O. did not allow the claim as per Form 10CCB. Aggrieved by the Order of A.O, the appellant filed rectification petition, and partial relief was granted by the AO vide rectification order u/s 154 rw.s. 143(3) dated 31.01.2021. On first appeal, the Ld. CIT(A) had dismissed the appeal of the assessee on this ground During further appeal by the assessee company, the Hon'ble ITAT in its composite order in appeal No. 496 to 498 & 500/JP/2023 dated 21.02.2024 passed for A.Y. 2015-16 to 2018-19, has allowed the appeal of the assessee on this ground, with following comments:-

"Ground No. 4 in this appeal is same as Ground 3 of Assessee's Appeal for AY 2017-18 on claim of deduction u/s 80-IA on account of Solid Waste Management System under normal provision of the Act as per Form 10CCB. The facts in this ground are similar to the facts as discussed in AY 2017-18. This ground has been extensively dealt with in Assessee's Appeal for AY 2017-18 in and in the light of our detailed findings recorded therein, we hold that deduction u/s 80-1A on account of Solid Waste Management System under normal provision of the Act should be allowed as per Form 10CCB, Ground no. 4 of appeal is therefore allowed"

In this regard, it is worthwhile to mention that Hon'ble ITAT has completely ignored the provision of section 80A(5) of the Act. Section 80A(5) states that no deduction shall be allowed to the assessee in case of failure to make the claim of deduction under chapter VIA in the return of income. Further, section 80A(C) requires that such return of income should be filed within the time limit specified u/s 139(1) to claim deduction under chapter VIA. It is further submitted that there is no provision of notes to return of income in the Act and no such notes to return of income are required to file online and therefore, same cannot be treated as part of return of income. Thus, any claim made by the notes or letter which is not claimed in ITR is not allowable.

It is further submitted that decision of the Hon'ble ITAT was not accepted because this ground was raised by the assessee before Ld. CIT(A) and Ld. CIT(A) had not allowed the same as the same was neither claimed by the assessee in its original return of income. Decision of Hon'ble Supreme Court in the case of Pr. CIT Vs Wipro Limited (2022) 140 TaxMann.Com 2023 wherein the Hon'ble Supreme Court in para 9 of the order has laid down that assessee cannot be permited to substitute the original return by filing a revised return under 139(5) of the Act and taking a contrary stand and or claiming the exemption which was specifically not claimed earlier while filing the original return of income, Apex Court in the case cited supra stated that even a revised return could not be of any help to the appellant as the Apex Court has stated that by filing the revised return, the assessee cannot be permitted to substitute the original return filed under section 139(1). In this case, assessee has claimed additional deduction u/s 80IA of the Act during assessment proceedings which was not claimed in original return of income and therefore, same was rightly rejected by the Ld. CIT(A). However, Hon'ble ITAT has allowed the same without giving an opportunity of being heard to the Assessing Officer

In view of section 80A(5) r.w.s. 80AC, the claim of Solid Waste Management System (Fly Ash) has rightly been made by the AO and confirmed by Ld. CIT(A). It is also pertinent to mention here that Hon'ble ITAT has referred decision in the case of assessee on this issue for AY 2017-18 in the very same order and allowed the appeal of the assessee. It is worthwhile to mention here that decision of Hon'ble ITAT on this issue has not been accepted for AY 2017-18 and further appeal on the issue has been recommended.

On this issue, further appeal before the Hon'ble High Court is pending for the A.Y. 2014-15 to 2018-19. c) Non-consideration of Incentive as Capital Receipt while computing Total Income under regular provisions and Book Profit u/s 115JB

This issue related to incentives granted to the assessee company as capital receipt which were not exigible to tax while computing total income under normal provisions of the Act and under the provisions of Sec. 115JB of the Act. With regard to exclusion of said incentives under MAT provisions, the assessee had submitted before the Hon'ble ITAT that the issue was already covered in favour of the assessee by the decision of Hon'ble Rajasthan HC in assessee's own case in AY 2006-07 to AY 2009-10 (ITA No. 85-87/2014 & 227/2016 vide Orders dated 22-08-2017) wherein the incentives being in the nature of capital receipt were held to be excluded while computing Book Profit u's 115JB of the Act.

However, the Hon'ble ITAT while deciding the issuein its composite order in appeal No. 496 to 498 & 500/JP/2023 dated 21.02.2024, held that "considering the amendment made in the Act and detailed finding given by the Hon'ble Bombay High Court in the judgment of Serum Institute of India Private Limited (Supra) and the amendment made vide Finance Act, 2015 by which sub clause (xviii) to section 2(24) of the Act is inserted, for which we have in detailed given our finding here in above while dealing with the ground no. 5 of the assessee's appeal in ITA no. 496/JPR/2023. The said finding recorded there in squarely applies to ground no. 6 raised by the assessee and for the sake of avoiding repetition we have not repeated the same. Based on that finding the ground no. 6 raised by the assessee stands dismissed"

As the issue has been decided in favour of revenue, hence, no further appeal has been filed by the department on this issue. d) Allowability of depreciation on leasehold rights on land u/s 32(1)

For the A.Y. 2015-16 to 2018-19, the assessee has taken additional ground before the Hon'ble ITAT related to claim of depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature. The appellant had submitted that such rights have been acquired for carrying on the business and hence was in the nature of "business or commercial right" eligible for deprecation 25% u/s 32(1)(n) of the Act. The assessee further submitted that the issue was covered in favour of the assessee by decision of Hon'ble Jaipur Tribunal in appellant's own case for AY 2014-15 vide order dated 07-08-2023 (ITA 152/JP/2023).

The Hon'ble ITAT held that we note that this issue was not raised before the Assessing Officer during the course of assessment proceedings or before the Ld. CIT(A). It is noted that the leasehold rights have been capitalized in the books under the head leasehold land. The aforesaid audited accounts were also submitted before the Assessing officer during the course of assessment proceeding, hence the claim of depreciation on expenditure incurred in respect to acquisition of leasehold rights on land is purely a legal issue for which the relevant facts are already available on record before the authorities. Respectfully following the decisions of Apex Court, we admit the aforesaid question of law on merits raised by the assessee in respect to allowability of depreciation on expenditure incurred in respect to leasehold rights on land".

The Hon'ble further noted that this issue has already been adjudicated and decided in favour of assessee vide order dated 07.08.2023 in for AY 2014-15 and the relevant findings of the bench in that year is reproduced hereunder:

“21.5 On going through the aforesaid judicial pronouncements, the important principle that emerges is that expenditure incurred on acquiring the land is a capital expenditure and hence cannot be allowed However, the expenditure incurred on acquiring land on lease is different from the expenditure incurred on acquisition of land. On acquiring land on lease from the government, the assessee has to pay certain upfront premium on lease which is the price paid for acquiring the rights of land and not the land itself and the ownership of the land vests with the lessor of the land. The lessee is liable to return the land to its original owner after the expiry of the lease and does not have ownership rights over the land. On such facts, courts have held that such rights acquired by the assessee which is used for the purpose of its business is an intangible asset in the nature of business or commercial right. Such intangible assets being "business or commercial right" is entitled to depreciation als 32(1)(u) of the Act. Hence, AO is directed to grant depreciation @25% on such leasehold rights acquired of Rs. 14,93,25,916/- in accordance with section 32(1)(u) of the Act. The additional ground no. 1 raised by the assessee is allowed"

Thus, the Hon'ble ITAT held that such intangible assets being "business or commercial right" was entitled to depreciation u/s 32(1)(ii) of the Act, hence, directed the AO to grant depreciation @25% on such leasehold rights in accordance with the provision of section 32(1)(1) of the Act.

The decision of the ITAT was not accepted. In this regard.it is submitted that an additional ground was raised by the assessee before Hon'ble ITAT requesting to grant depreciation (@25% on leasehold rights in accordance with section 32(1)(ii) of the Act and Hon'ble ITAT has allowed the appeal of the assesse. No opportunity of being heard was given to the Assessing Officer and there is no reference to any remand report being sought on additional grounds in this case. On the perusal of the Order of the ITAT, it has found that the issue under consideration is whether the leasehold rights is considered as intangible assets and hence eligible for depreciation under section 32(1)(ii)?

It is further submitted that decision of the Hon'ble ITAT was not accepted because assessee has not claimed depreciation on expenditure incurred in respect to Shree Cement Limited vs. ACIT acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature at the time of filing its return of income. Since, assessee has not claimed depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u's 32(1)(ii) being business or commercial right of similar nature at the time of filing its return of income, the same cannot be allowed at a later stage in the appellate proceedings. Reliance, in this regard, is heavily placed on decision of Hon'ble Supreme Court in the case of Pr. CIT Vs Wipro Limited (2022) 140 TaxMann.Com 2023 wherein the Hon'ble Supreme Court in para 9 of the order has laid down that assessee cannot be permitted to substitute the original return by filing a revised return under 139(5) of the Act and taking a contrary stand and/or claiming the exemption which was specifically not claimed earlier while filing the original return of income. Apex Court in the case cited supra stated that even a revised return could not be of any help to the appellant as the Apex Court has stated that by filing the revised return, the assessee cannot be permitted to substitute the original return filed under section 139(1). In this case, assesse has claimed depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature nor filed a revised return to claim depreciation on expenditure incurred in respect to acquisition of leasehold rights on land u/s 32(1)(ii) being business or commercial right of similar nature and therefore, same was rightly rejected by the Ld. CIT(A). However, Hon'ble ITAT has allowed the same without giving an opportunity of being heard to the Assessing Officer. There is no reference to any remand report being sought on additional grounds in this case.

In the case of Mahanadi Coalfields Ltd. Vs DCIT (ITAT Cuttack) AY 2015-16 ITAT states that, this issue is covered by decision of the Tribunal in assessee's own case for the previous assessment year i.e. A.Y.2014-2015 in order dated 20.03.2018. The assessee has raised these additional grounds as per the direction of Hon'ble High Court of Orissa, Cuttack in W.P (C) No.24 of 2013 and Misc. Case No.5716 of 2013 order dated 20.3.2013. In view of above, ITAT admit these additional grounds for consideration. On merits also, ITAT find force in the submission of Id D.R. that the depreciation is not allowable u/s.32(1)(iii) of the Act in respect of intangible assets, which is supported by judicial pronouncements cited above. In view of above, ITAT dismiss these grounds filed by the assessee. In view of above, ITAT hold that the lease hold rights are not eligible for depreciation u's. 32(1)(ii) of the Act considering it as intangible rights and, accordingly, dismiss the ground of appeal of the assessee.

Shree Cement Limited vs. ACIT Further Hon'ble High Court of Bombay in the case of CIT vs. Techno Shares Stocks Ltd., 225 CTR 337 (Bom), wherein, it has been held that the depreciation under section 32 is restricted to the tangible intangible assets which are specifically enumerated therein and depreciation is not allowable on all tangible intangible assets. In the decision of ITAT Mumbai Benches in the case of Dabur India ltd. vs. ACIT, 159 TTJ 563 (Mumbai), wherein also, it was held that the tenancy rights cannot be construed as intangible assets falling within meaning Explanation to section 32(1) and, therefore, there is no question of allowing depreciation on said rights.

Hon'ble ITAT has referred that facts are similar to the facts for AY 2015-16 and the issue has been decided in favour of assessee in the very same order. It is pertinent to mention here this issue for AY 2015-16 was decided in view of the fact that identical issue has already been decided in the assessee own case for AY 2014-15 in dated 07.08.2023. It is worthwhile to mention here that the said decision was not accepted by the revenue and appeal u/s 260A has already been filed before Hon'ble High Court. It is further that the said decision for AY 2015-16 has not been accepted by the revenue and appeal u/s 260A has been recommended for AY 2015-16.

On this issue, further appeal before the Hon'ble High Court is pending for the A.Y. 2014-15 to 2018-19. e) Allowability of Indexation benefit on transfer of Long Term Capital Asset

This issue has not been taken into consideration in the assessment proceedings for past assessment years. Hence, no further proceedings is pending at any level.

11. Now considering the contentions, submission and evidence placed on record we proceed towards dealing with each ground raised by the assessee including the additional ground one by one herein after. on account of alleged delay in deposit of Employee’s contribution to Provident Fund u/s 36(1)(va).

12.1 The brief facts on the issue are that the assessee on 15-04-2019 had initiated the process of making payment of contribution to Employee’s Provident Fund Organisation [EPFO] for the month of March’ 2019 amounting to Rs. 2,98,33,589/- through internet banking, which included an amount of Rs. 1,58,85,223/- towards Employee’s contribution to such Provident Fund.

Though the said amount was processed by the appellant for payment within the due date on 15-04-2019, however due to technical glitch in the online Payment Platform of receiving bank i.e. State Bank of India’s [ SBI ] website, the said payment could not be effected by the bank on 15-04- 2019. The assessee to support this contention placed on record the letter issued by SBI, wherein the bank acknowledge that fact and consequently the bank completed credit on 16-04-2019, resulting in delay of 1 day after the due date as prescribed under the Employees’ Provident Scheme, 1952.

But as there was an alleged delay the same was reported by the tax auditor in their Tax Audit Report in Form no. 3CD. The ld. AO based on that the Act, on account of alleged delay in deposit of employee’s contribution to provident fund for the month of March’ 2019.

12.2 The assessee- appellant, aggrieved by that adjustment, preferred an appeal before ld. CIT(A) who disposed off that ground placing reliance on the decision of Hon’ble Apex Court in Checkmate Services (P) Ltd –vs-. CIT (2022) 143 Taxmann.com 178 (SC) and thereby confirmed the disallowance.

12.3 Feeling dissatisfied the assessee- appellant is before this tribunal contending that disallowance and thereby to support their contention the assessee – appellant submitted the following written submission;

A. The appellant had processed the payment within the due date only and there was no delay on part of the appellant. Actual credit of funds did not happen at bank’s end due to technical glitch at PF Online Payment Platform. Hence SBI, in the attached certificate [PB pg. 27] have categorically confirmed that the appellant have duly made the payment on 15th April 2019, that is within the due date. In the light of the facts as above, there is no delay and hence disallowance u/s 36(1)(va) is not tenable. Further the decision of Hon’ble Apex Court in the case of Checkmate (Supra) does not apply in the present case. On the contrary there are decisions which support deduction in the facts and circumstances of the appellant’s case:

Hon’ble Ahmedabad Tribunal in Gujarat Fluorochemicals Ltd. –vs.- DCIT (2018) 97 taxmann.com 10 (Ahm. Trib.) have held that when employees contribution to PF was made before the due date, but on account of certain Shree Cement Limited vs. ACIT technical objection, cheques deposited was returned, which ultimately after removal of objection was cleared after the due date, such payment must be considered within the due date. The said decision has further been affirmed by Hon’ble Gujarat High Court in PCIT –vs.- Gujarat Fluorochemicals Ltd. (R/Tax Appeal No. 11 & 28 of 2019 dated 17-06-2019)(Guj HC)

Similarly, Hon’ble Delhi Tribunal in Magic Software Pvt. Ltd. -vs.- DCIT (ITA No. 654/Del/2024 dated 29-07-2024) has held that where the assessee was prevented to make online payment owing to technical glitches in the Provident Fund online payment platform, the assessee cannot be penalized for the unresponsive platform of the Provident Fund Department. Assessee cannot be asked to do what is impossible for him to do. Thus, the provisions of Sec. 36(1)(va) requires to be read down appropriately in tune with doctrine of impossibility.

Similar view has been unanimously taken in the following judicial pronouncements:

- Protiviti India Member Pvt. Ltd. vs. ACIT (ITAs No. 2958 & 2959/Del/2022 dated 14-02-2024) - Rai Bahadur Narain Singh Sugar Mills Ltd. –vs.- ACIT (ITA No. 1645/Del/2022 dated 06-09-2023) - Inox Leisure Ltd. –vs.- DCIT (ITA No. 23/Ahd/2022 dated 05-07-2023)

B. Disallowance was confirmed by CIT(A) without considering the alternate ground of the appellant that delay is not account of any default of the assessee.

CIT(A) merely relied on decision of Hon’ble Apex Court in Checkmate Services (P) Ltd –vs-. CIT (2022) 143 Taxmann.com 178 (SC) without considering the fact that said decision of Hon’ble Apex Court is not applicable in instant case.

In case of Checkmate (supra) it was held that if there is a delay in the payment by the assessee beyond the prescribed due date provided in the respective Act, the same shall be treated as the income of the assessee.

However, in the present case, the delay in depositing the PF was not on account of failure of the assessee but was attributable to technical issue at bank’s end, therefore, the appellant should not be fastened with the liability based on decision of Apex Court wherein there was no such issue before the Court.

Apex Court in case of Checkmate (supra). In the said decision, the Hon’ble Apex Court while dealing with the question of law that whether provisions of Section 43B i.e payment within due date of filing of return of income u/s 139(1) of the Act, should also be applicable to employee’s contribution towards various welfare funds such as PF, ESI etc. The Hon’ble Court decided that issue in favour of Revenue and held that if there is a delay in the payment of employees contribution towards PF by the appellant beyond the prescribed due date as provided in the respective Act, then the same shall be treated as the income of the appellant and provisions of section 43B are not applicable in such case and after the decision of the apex court there is no scope to grant the relief to the assessee.

12.5 We have heard the rival contentions & perused material placed on record and the written submissions filed. Based on the record the bench noted that the assessee - appellant on 15-04-2019 initiated the payment of Rs. 2,98,33,589/- which includes Rs. 1,58,85,223/- of employees’ contribution towards provident fund for the month of March’2019. For this payment the verification process could not be completed as is evident from the challan status of 15-04-2019 at 9:28 AM placed on record. The assessee - appellant approached the bank wherein the bank advanced the said payment could not be processed on the same day on 15-04-2019. To confirm that fact the said bank issued a letter to the payee i.e. the assessee – appellant vide letter dated 15-04-2019 and ultimately on resolving that glitch the payment was credited on 16.04.2019 00.00 hours [ paper book page 25]. That is why that payment was considered as delayed by one day.

Resultantly the assessee- appellant submitted the alleged delay was beyond the control of the appellant and hence the said delay cannot be said to have on account of any default committed by the assessee – appellant, but on account of technical glitch at the online payment platform i.e website of SBI, and hence it should be construed that such payment was within the due date and consequent to that fact on record the deduction claimed by the assessee cannot be denied. To support this contention following judicial pronouncements were cited and relied upon; a) Hon’ble Gujarat High Court in PCIT –vs.- Gujarat Fluorochemicals Ltd. (R/Tax Appeal No. 11 & 28 of 2019 dated 17-06-2019)(Guj HC) at Para 28 has given its relevant findings on the said issue as follows:

Shree Cement Limited vs. ACIT 45. After considering submissions of the both the sides, we find that though the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Corporation (supra) has held that if the payment to PF and ESI are not being made within the due date prescribed under those Act, then deduction will not be available to the assessee. However, in the present case, so far as payment of � 21,47,672/is concerned, from the explanation of the assessee, it is discernible that it has made payment before the due date, but on account of certain technical objection, cheques deposited have been returned, which ultimately after removal of objection was cleared. Thus, it could be construed that payment was within the due date and therefore, deduction ought to be granted to the assessee. We allow the claim of the assessee qua � 21,47,672/- b) Identical issue has also been dealt by Hon’ble Delhi Tribunal in Magic Software Pvt. Ltd. -vs.- DCIT (ITA No. 654/Del/2024 dated 29-07- 2024) as follows: “The salutary issue involves disallowance of the employees’ contribution to PF relatable to wages for May, 2021 on the contours of Section 36(1) (va) r.w. Sect ion 2(24)(x) of the Act owing to one day delay in deposit of Employees’ Contribution. As amply demonstrated on behalf of the assessee, the assessee has made every possible attempt to adhere to the stipulated payments timeline provided under the Provident Fund Act towards employers as well as employees’ contribution. However, the payment could not be made due to website failure and glitches which fact is also manifestly discernible from material available on record. The payment was ultimately made with one day delay as soon as the assessee could make the payment through the online plat form provided under the PF Laws.

c) Similarly, Hon’ble Delhi Tribunal in Protiviti India Member Pvt. Ltd. vs.

ACIT (ITAs No. 2958 & 2959/Del/2022 dated 14-02-2024, has given its relevant findings at para 3 of its order as follows:

Shree Cement Limited vs. ACIT 3. Before us, learned counsel for the assessee submitted that most of the employees’ contributions to PF and ESI account have been paid within the due date, however, in some cases the delay is only marginal of 3 to 7 days. The delay is not attributable to the assessee because the EPFO website was not working properly due to which EPF challan could not be generated. In support, he has also filed copy of email written to SRO, Noida, EPFO, stating that EPFO site was not working on these dates. He has also filed copy of screenshots of the site showing that it was out of order. This has also been explained before the CIT(A) also. Once the delay is not attributable to the assessee because of the EPFO website was not working and was out of order, then the assessee cannot be said to have violated any deadline of the provisions of the respective Act. Thus, it cannot be said that there is a delay in depositing of PF and ESI within the prescribed due date. Here it is not a case of whether the decision of Hon’ble Supreme Court in case of Checkmate (supra) has to be applied because the Hon’ble Supreme Court has held that if there is a delay in the payment beyond the prescribed due date provided in the respective Act, the same shall be treated as the income of the assessee. Once the delay in depositing the PF and ESI is not on account of failure of the assessee, but the failure of the system of website itself as it was out of order and challans cannot be uploaded, then it cannot be held that the assessee should be fastened with such a liability. Accordingly, the disallowance confirmed by the CIT(A) is deleted.

The fact of the assessee - appellant is identical to the issues raised in the above decisions and hence is squarely covered by the said decisions.

Section 36(1)(va) was introduced as a measure to penalize the employers who mis-utilize contributions to the provident fund by withholding the same.

In the present case, the appellant had no intent in withholding such payment and had made the payment of employees contribution towards PF within the stipulated timelines. However, the receipt could not be effected due to website failure which was beyond the control of the appellant.

Hence, the said delay not attributable to the assessee - appellant cannot be considered as a delay for the purpose of Sec. 36(1)(va) of the Act. As is evident from the record that the delay in deposit of aforesaid employee’s appellant, but was attributable to technical hitch at bank’s end. Therefore, it would be too harsh to fasten the assessee - appellant with such liability that too on account of delay by one day which is otherwise also attributable to fault of website of bank. Since the assessee - appellant had made best efforts to make the aforesaid payment within due date, employee’s contribution of Rs 1.59 Crs towards PF should be construed to be paid within due date as prescribed u/s 36(1)(va) of the Act and deduction in respect to same ought to be granted to the assessee - appellant. Based on these observations and discussion we thus set aside the order of the CIT(A) on this issue and direct the ld. AO to delete the disallowance made on account of delay in deposit of Employee’s contribution to Provident Fund u/s 36(1)(va) of Rs. 1,58,85,223/- while computing Total Income.

Resultantly, ground no 1 as raised by the appellant is therefore allowed.

13. Ground no 2 relates to disallowance of Health and Education cess while computing Book Profit u/s 115JB. The brief facts related to the issue is that the ld. AO disallowed a sum of Rs. 8.48 Crores pertaining to ‘Health and Education Cess’ and added back the same to the book profits computed u/s 115JB of the Act, against which the appellant preferred ld. CIT(A), by placing reliance on the judgment of the Hon’ble Supreme Court in the case of CIT vs. K. Srinivasan [(1972) 83 ITR 346 (SC)] & amendment brought vide Finance Act, 2022, upheld the disallowance made by observing that cess is in the nature of additional surcharge and therefore falls within the meaning of "income-tax".

13.1 While pleading this ground before us the ld. AR of the assessee stated that the adjustment in respect to 'Health and Education Cess' is beyond the scope of Section 115JB, as neither Explanation 1 nor Explanation 2 to Section 115JB(2) includes ‘Health and Education Cess’ within its ambit & hence no further adjustment is required to be made to compute book profit u/s 115JB of the Act. Key submissions presented in support of the claim reads as follows:

(i) As per clause (a) of Explanation 1 to Sec. 115JB, amount of income tax paid or payable is required to be added back for computing book profit. (ii) As per clause (iv) & (v) of Explanation 2 to Sec. 115JB(2), for the purpose of clause (a) to Explanation 1 to Sec. 115JB(2), income tax shall include ‘Education cess’ and ‘Secondary and Higher Education cess’ on income tax as levied by the Central Act. (iii)On perusal of above, it is noted that only ‘Education Cess’ and ‘Secondary & Higher Education Cess’ are required to be added back while computing book profit u/s 115JB.

Shree Cement Limited vs. ACIT (iv) The said Explanation does not include ‘Health and Education Cess’. In absence of specific inclusion of ‘Health and Education cess’ in Explanation 2 to Sec. 115JB(2), the same cannot be considered as ‘income tax’ for the purpose of clause (a) to Explanation 1 to Sec. 115JB(2) of the Act. (v) Memorandum to Finance Bill, 2018, clearly stated that ‘Education Cess’ & ‘Secondary & Higher Education Cess’ has been discontinued and new cess by the name of ‘Health & Education Cess’ shall be levied @ 4%.

(vi) However, no corresponding amendment has been brought under Explanation 2 to Sec. 115JB to include disallowance of ‘Health & Education Cess’.

(vii) Hon’ble Apex Court in Prakash Nath Khanna –vs.- CIT (2004) 266 ITR 1 (SC) has held that while interpreting a provision the court only interprets the law and cannot legislate it. Hon’ble Apex Court has further held that legislative casus omissus cannot be supplied by judicial interpretative process and that it is for the Legislature to amend, modify or repeal it, if deemed necessary. The Similar view has been taken in Smt. Tarulata Shyam -vs.- CIT (1977) 108 ITR 345 (SC). (viii) Similarly, Hon’ble Apex Court in Godrej & Boyce Manufacturing Company Ltd. –vs.- DCIT (2017) 81 taxmann.com 111 (SC) has held that where the words of the statute are clear and unambiguous, recourse cannot be had to principles of interpretation other than the literal view.

Reliance is further placed on following decision : - CIT –vs.- Echjay Forgings (P) Ltd. (2001) 251 ITR 15 (Bom HC) : After examining the definition of ‘income-tax’ under clause (a) of the Explanation to Sec. 115J(1A), it was held that, since payment of wealth-tax is not contemplated under the said clause, net profit shall not be increased by the amount of wealth tax paid by the assessee. - CIT –vs.- Bhushan Steel (ITA 324/2012 dated 24-08-2012) (Del.HC): Fringe benefit tax is not specifically mentioned under the definition of income tax under Explanation-2 to Sec 115JB, therefore the same is not required to be added back for the purpose of computation of book profit.

Similar view has been held in the following judicial pronouncements: - Rashtriya Chemicals & Fertilisers Ltd. –vs.- CIT (ITA No. 3625/Mum Trb/2017 dated 14-02-2018)[w.r.t. Fringe benefit tax] - Caterpillar India Private Limited –vs.- DCIT (ITA 1722/Mds/2012 dated 17-02- 2017) (Che Tri.) [w.r.t. Wealth tax] Shree Cement Limited vs. ACIT - ITO –vs.- Vintage Distillers Limited. (2010) 130 TTJ 79 (Del. Tri) [w.r.t. Fringe benefit tax] - Usha Martin Industries –vs.- JCIT (2003) 81 TTJ 518 dated 24-03-2000 (Kol. Tri) [w.r.t. Wealth tax] B. Ld. CIT(A) has relied upon the decision of Hon’ble Apex Court in CIT –vs- K. Srinivasan (1972) 83 ITR 346 (SC). In the said decision, the Hon’ble Court observed that although under the Act, Sec. 4 is the charging section yet income-tax can be charged only where the Central Act which, in the present case, will be the Finance Act, enacts that income-tax shall be charged for any assessment year at the rate or rates specified therein. The scheme of the Finance Act of 1971 appears to leave no room for doubt that the term "income-tax" as used in s. 2 includes surcharge. For the purpose of Sec. 115JB, income-tax refers to the base rate or only the tax rate. This is evident from Sec. 115JB(1) where it is mentioned that if income-tax payable on total income is less than 18.5% of book profit, such book profit shall be deemed to be total income and tax payable shall be @ 18.5%. Hence, for the purpose of Explanation 1 & 2 to Sec. 115JB as well, income-tax represents only the tax rate and not surcharge. Hence, the said decision of Hon’ble Court does not apply in the present case.”

13.2 Per contra, the ld. DR representing the revenue heavily relied upon the findings of the ld. CIT(A) and argued that the finding of the ld. CIT(A) is more reasoned and same is required to be sustained.

13.3 We have heard the rival submissions and perused the material on record & judicial pronouncements serviced before us. The moot question here as raised is to determine whether 'Health and Education Cess' is to be added under section 115JB of the Act or not, before doing so let us examine the provision as it is enacted.

115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2012, is less than eighteen and one-half per cent of its book profit, such book profit shall Shree Cement Limited vs. ACIT be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of eighteen and one-half per cent.

Following proviso shall be inserted in sub-section (1) of section 115JB by the Taxation Laws (Amendment) Act, w.e.f. 1-4-2020:

Provided that for the previous year relevant to the assessment year commencing on or after the 1st day of April, 2020, the provisions of this sub-section shall have effect as if for the words "eighteen and one-half per cent", occurring at both the places, the words "fifteen per cent" had been substituted. ………. Explanation 1.—For the purposes of this section, "book profit" means the profit as shown in the statement of profit and loss for the relevant previous year prepared under sub-section (2), as increased by— (a) the amount of income-tax paid or payable, and the provision therefor; or Explanation 2.—For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include— (i) any tax on distributed profits under section 115-O or on distributed income under section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time.

13.4 On perusal of the above provision, we note the following points for consideration:

• Book profit has to be computed for the purpose of Sec 115JB of the Act. • Profit as shown in the statement of profit and loss for the relevant year needs to be increased by certain items as specified in Explanation 1 to Sec 115JB • Clause (a) of Explanation 1 to Section 115JB requires addition of “the amount of income-tax paid or payable” to the net profit. • Explanation 2 clarifies that “income-tax” for the purposes of clause (a) includes “Education Cess” and “Secondary and Higher Education Cess”. • However, the said Explanation does not refer to the “Health and Education Cess” as introduced by the Finance Act, 2018 w.e.f. AY 2019–20. express amendment in Explanation 2 to Section 115JB(2) to include ‘Health and Education Cess’ within the definition of ‘income-tax’, such an item cannot be deemed to be included by any analogy or judicial extension for computing book profit u/s 115JB of the Act. He also referred to the legislative history & motive of the government behind the introduction of aforesaid cess, while hearing which we reiterate as follows:

Introduction of Education Cess in the year 2004 Memorandum to Finance Bill, 2004: An additional surcharge, to be called the Education Cess to finance the Government’s commitment to universalise quality basic education, is proposed to be levied at the rate of two per cent on the amount of tax deducted or advance tax paid, inclusive of surcharge.” [Emphasis Added] Finance (No. 2) Bill, 2004 “(11) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income-tax", so as to fulfil the commitment of the Government to provide and finance universalised quality basic education, calculated at the rate of two per cent of such income tax and surcharge.” Introduction of Secondary and Higher Education Cess in the year 2007 Memorandum to Finance Bill, 2007 The additional surcharge, called the "Education Cess on income-tax" for the purposes of the Union, shall continue to be levied at the rate of two per cent of income-tax and surcharge in all cases so as to fulfil the commitment of the Government to provide and finance universalised quality basic education. It is proposed to levy an additional surcharge, called the "Secondary and Higher Education Cess on income-tax", at the rate of one per cent of income-tax and surcharge (not including the "Education Cess on income-tax") in all cases so as to fulfil the commitment of the Government to provide and finance secondary and higher education.”

Shree Cement Limited vs. ACIT [Emphasis Added] Finance Bill, 2007 “(12) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be also increased by an additional surcharge for purposes of the Union, to be called the "Secondary and Higher Education Cess on income- tax", calculated at the rate of one per cent of such income-tax and surcharge, so as to fulfil the commitment of the Government to provide and finance secondary and higher education.” Introduction of Health and Education Cess in the year 2018 Memorandum to Finance Bill, 2018 “Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” shall be discontinued. However, a new cess, by the name of “Health and Education Cess” shall be levied at the rate of four per cent. of income tax including surcharge wherever applicable, in the cases of persons not resident in India including company other than a domestic company. Finance Bill, 2018 “(13) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by the applicable surcharge, for the purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for the purposes of the Union, to be called the “Health and Education Cess on income-tax”, calculated at the rate of four per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance quality health services and universalised quality basic education and secondary and higher education:”

13.6 Ld. AR based on the above intention as referred herein above submitted that after going through the intent & objectives of the government as enumerated in the Finance Bill & Memorandum to Finance Bill for various year, behind introduction of various cess from time to time under Income Tax Act, the ld. AR of the assessee - appellant summarized following points:

Shree Cement Limited vs. ACIT • "Education Cess on income-tax" @ 2% was introduced vide Finance Bill 2004, to fund universal quality of basic education. • "Secondary and Higher Education Cess on income-tax" @ 1% was introduced vide Finance Bill 2007, to fund secondary and higher education. • As per Finance Bill, 2018 & Memorandum to Finance Bill 2018, ‘Existing cess i.e Education Cess @ 2% and “Secondary and Higher Education Cess @ 1% shall be discontinued. • The above cess shall be replaced by a new cess namely ‘Health and Education Cess @ 4% which is different from existing cess, as purpose of the said cess not only includes to fund universalised quality basic education and secondary and higher education quality but also to fulfil the objective of the government to take care of the health of rural families below poverty line. • As, no corresponding amendment has been brought under Explanation 2 to Sec. 115JB to include disallowance of ‘Health & Education Cess’, the same is therefore not required to be added back to compute book profit u/s 115JB of the Act. 13.7 He also submitted that unlike regular taxes, cess is imposed for specific purposes, such as funding education, healthcare or other welfare initiatives. The revenue collected through cess is exclusively utilised for its intended purpose and cannot be used for any other expenditure. The term “education cess”, "Secondary and Higher Education Cess on income-tax" and ‘Health and Education Cess’ are all three different kinds of cess which has been introduced by the parliament from time to time to fulfil its various specific objectives as enumerated in respective Finance Bill. Memorandum to Finance Bill, 2018 clearly states that ‘Existing cess i.e Education Cess @ 2% and “Secondary and Higher Education Cess @ 1% shall be discontinued and shall be replaced by a new cess namely ‘Health and Education Cess @ 4%. Though the objective of collecting ‘Health & Education cess’ do include within its ambit to provide for universal quality of collection was further extended to finance quality health services to be provided to specific sections of society. Such redefined objective of the government without any explicit bifurcation within the 4% between health and education goes on to show that there’s no statutory or budgetary mechanism to allocate specific percentages to health vs. education. This means it’s not transparent how much is going to each sector, even though both are cited as purposes. Since health services were not part of the original education cess objectives, the introduction of this combined cess effectively expands the scope and creates a new category of cess by the name of ‘Health & Education Cess’, which definitely do not finds its place under Explanation-2 to Section 115JB. The AR of the appellant at this point further submitted that as the specific levy of ‘Health & Education Cess’ which was a new cess introduced vide Finance Act, 2018, has not been mentioned under Explantion-2 to Section 115JB, in absence of such amendment, such cess cannot be added back for the purpose of computing book profit u/s 115JB of the Act. The appellant in this regard also drew our attention towards various judicial pronouncements wherein it has been held that the court cannot legislate by interpretation and where the language of the statute is clear, no addition or substitution can be made by implication.

Khanna –vs.- CIT (2004) 266 ITR 1 (SC) wherein following has been rendered by the Hon’ble Court:

14. While interpreting a provision the court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the Legislature to amend, modify or repeal it,if deemed necessary - Rishab Agro Industries Ltd. v. P.N.B. Capital Services Ltd. [2000] 5 SCC 515. The legislative casus omissus cannot be supplied by judicial interpretative process 13.8 He also serviced the decision of Hon’ble Apex Court in Smt. Tarulata Shyam -vs.- CIT (1977) 108 ITR 345 (SC) wherein it has been held that:

“It is urged that the principle in the last limb of sub-section (1) of section 108 of the Commonwealth Act should also be read into the Indian statute. It is maintained that the omission of such words from sections2(6A)(e) and 12(1B) does not show that the intendment of the Indian legislature was different. According to the counsel what is explicit in section 108(1) of the Commonwealth Act, is implicit in sections 2(6A)(e) and12(1B) and the general scheme of the Act which requires that the assessment is to be made on the basis of total income of the whole previous year. Such a view, concludes Mr. Sharma, would also be in consonance with reason and justice. We have given anxious thought to the persuasive arguments of Mr. Sharma. His arguments, if accepted, will certainly soften the rigour of this extremedy drastic provision and bring it more in conformity with logic and equity. But the language of sections 2(6A)(e) and 12(1B) is clear and unambiguous. There is no scope for importing into the statute words which are not there. Such importation would be, not to construe, but to amend the statute. Even if there be a casus omissus, the defect can bf remedied only by legislation and not by judicial interpretation. To us, there appears no justification to depart from the normal rule of construction according to which the intention of the legislature is primarily to be gathered from the words used in the statute. It will be well to recall the words of Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64(KB) at page 71, that:

Shree Cement Limited vs. ACIT "……in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to he judicial mind to be.”

13.9 Further to that reliance was also placed in the case of Godrej & Boyce Manufacturing Company Ltd. –vs.- DCIT (2017) 81 taxmann.com 111 (SC), wherein it has been held that ;

13.10 Based on those contention he submitted that the principle of interpretation where the words of the statute are clear and unambiguous recourse cannot be had to principles of interpretation other than the literal view will also apply in the instant case. Reliance was also placed on the specifically mentioned in the Explanation to Section 115J / 115JB cannot be added back for computation of book profit. Bombay High Court in CIT v.

Echjay Forgings (P) Ltd. [(2001) 251 ITR 15 (Bom)] held the following while dealing with the issue of wealth tax to be considered under Explanation 2 for the purpose of computing book profit:

“I) Addition of wealth-tax paid by the assessee to the net profit 6. Mr. Desai, the learned senior counsel for the department, fairly concedes that the net profit, as shown in theprofit and loss account, will not be increased by the amount of wealth-tax paid because under clause (a) of theExplanation to section 115J(1A), what is contemplated is the amount of income-tax paid. Under the saidclause, payment of wealth-tax is not contemplated. Therefore, the net profit shall not be increased by theamount of wealth-tax paid by the assessee.”

13.11 Ld. AR of the assessee to support the view also relied on the decision of Delhi High Court in CIT –vs.- Bhushan Steel (ITA 324/2012 dated 24-08-2012) (Del.HC) wherein the court held that :

10. The question is accordingly answered in favour of the assessee on the ground that the AO had wrongly added back FBT to net profit, when the same is an allowable deduction as FBT does not fall under the expression “income tax”, under Explanation 1 to section 115JB (2). Consequently the Revenue’s contentions fail and its appeal is dismissed.”

13.12 On this issue various other decisions of Tribunal relied upon as listed herein below :

• Rashtriya Chemicals & Fertilisers Ltd. v. CIT (ITA No. 3625/Mum/2017): Fringe benefit tax is not specifically mentioned under the definition of income tax under Explanation-2 to Sec 115JB, therefore the same is not required to be added back for the purpose of computation of book profit. • ITO v. Vintage Distillers Ltd. [(2010) 130 TTJ 79 (Del. Trib.): The Finance Act, 2008, retrospectively amended Section 115JB to add back "deferred tax" to book profit, but FBT was not included, reinforcing that FBT should not be added back. Additionally, while FBT is disallowed as a business expense under Section 40(a)(ic), there is no statutory requirement to add it back under MAT calculations. The Revenue's argument that no external reference (such as Board Circulars) is needed fails because the statutory language of Section 115JB is clear—"income tax" does not include FBT. Therefore, FBT should not be added back while computing MAT liability. • Caterpillar India Pvt. Ltd. v. DCIT (ITA No. 1722/Mds/2012): Provision for wealth tax need not be added back to the book profits u/s 115JB of the Act. Reference has been made to Echjay Forgings (P) Ltd. (supra) • Usha Martin Industries v. JCIT [(2003) 81 TTJ 518 (Kol. Trib.)] It was held that clause (a) of the Explanation to Sec. 115JA provides for disallowance of any provision made for income-tax only. Since the term wealth-tax chargeable under Wealth Tax Act, 1957, cannot be held as income-tax and the provision for liability to pay wealth-tax cannot be added back to the net profit for the purpose of computing the book profit by invoking the provision of clause (a) or any other clause of the Explanation of s. 115JA(2) of the Act. submitted that Explanation 2 to Sec 115JB is to be strictly read and no other words can be imported therein other than that mentioned therein.

When the matter was carried before the ld. CIT(A) he relied upon the decision of Apex Court in CIT –vs- K. Srinivasan (1972) 83 ITR 346 (SC).

Ld. CIT(A) also relied upon the subsequent amendment to Section 40(a)(ii) by the Finance Act, 2022 wherein it was clarified that the term "tax" shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. On this aspect ld. AR of the assessee submitted that the decision of K. Srinivasan (supra) was rendered in a totally different context in the year 1971 and has no link whatsoever with provisions of Sec. 115JB which itself was introduced three decades thereafter in the year 2001. In the aforesaid decision, Apex Court was dealing with the question of whether income-tax in context of Section 2(2) of Finance Act, 1964 also includes surcharge & additional surcharge and should be levied on salary income earned by the assessee. Their reference was made to the Income Tax as per the Finance Act. However, in the present case, for the purpose of computing book profit u/s 115JB, Income-tax has already been defined in Explanation 1 & 2 to Section 115JB. Hence, the said decision of Hon’ble Court does not support the the amendment to Section 40(a)(ii) is specific to computation under the head “Profits and Gains of Business or Profession” and is not applicable to the computation of book profits under Section 115JB. Further, Explanation 3 to Section 40(a)(ii) commences with the phase as follows:

“For the removal of doubts, it is hereby clarified that for the purposes of this sub- clause, the term "tax" shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax;” Therefore, he submitted that the deeming fiction, that the term "tax" shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax, applies exclusively for the purposes of Section 40(a)(ii) and cannot be construed as a general definition or extended to other provisions of the Act i.e Section 115JB of the Act. Based on these overall arguments he submitted that in the absence of specific legislative mandate in Explanation 2 to Section 115JB, 'Health and Education Cess' cannot be equated with 'income-tax' for the purpose of computing book profits, and therefore, no addition on this account can be sustained u/s 115JB. Accordingly, the disallowance made by the AO and confirmed by the CIT(A) in respect of Health and Education Cess amounting to Rs. 8,47,73,077/- is hereby directed to be deleted. In the result, the Ground no. 2 raised by the assessee – appellant is allowed. the assessee and vide para 3 we have discussed as to the admissibility of these additional ground raised by the assessee. As discussed, vide para 3 that all the facts in respect to the issues which were raised in the additional ground are already on record before the department and only the legal grounds has been raised by the assessee - appellant which are also squarely covered by the decision of this bench in appellant’s own case for earlier years. Ld. AR relied upon the decision in National Thermal Power Co. Ltd. –vs.- CIT (1998) 229 ITR 383(SC) & Jute Corporation of India Ltd.

- vs. - CIT (1991) 187 ITR 688 (SC) where it was held that the power of the Tribunal should not be restricted u/s 254 of the Act to decide only the grounds which arise from the order of the Commissioner (Appeals).

Tribunal can consider the additional ground arising from the facts which are on record to correctly assess the tax liability of an assessee.

14.1 Ld. DR as regards the additional ground raised; he strongly opposed admission of additional grounds and has filed a written submission dated 16-04-2025 in support of his contention. Along with his submission, the Ld. DR has also filed report from the office of the Assessing Officer, Ajmer.

While the hearing, the ld. DR has placed heavy reliance on the decision of contended that any claim which is not made in the return of income cannot be allowed to the assessee.

14.2 We have gone through all the submissions & documents placed on record by the ld. DR & ld. AR of the assessee-appellant. The appellant has raised six additional grounds in this appeal which we admit considering the fact as discussed and following the decision of the apex court we proceed to deal with the additional grounds raised herein after.

15. Additional Ground No. 1 relates to the inclusion of Reliability charge of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80-IA of the Act.

15.1 The facts as placed by the appellant are that during the year the appellant had claimed deduction u/s 80-IA in respect of its power undertakings. The assessee – appellant filed Form No. 10CCB certifying the claim of deduction u/s 80IA was on record along with Return of Income at the e-filing website. While computing Deduction u/s 80IA, in terms of Section 80-IA(8) and 80A(6) r.w.s. 92F of the Act, the Arm’s Length Price Annual Landed Cost (‘AALC’) of power sold by the State Electricity Board during the year to nearby manufacturing. The AR of the appellant further submitted that while computing Deduction u/s 80IA on such power units, the AALC of power sold by the State Electricity Board does not include the reliability charge of INR 1.50 per unit, which should form part of the Arm’s length price chargeable by the power undertakings for supplying long term and uninterrupted power supply to the manufacturing unit(s) of the appellant.

15.2 Ld. AR argued while hearing that it has set up captive power plants (CPP) which require huge capital outflow and were set up with the primary objective of supplying long term uninterrupted power supply to the cement manufacturing units (CMUs) of the appellant. Further the cement industry, being a continuous process industry requires uninterrupted power supply on 24-hour basis which is provided by the CPP of the appellant. The CPP being set up exclusively for the CMUs carries a risk of having a sole customer, although that is the requirement & huge advantage for CMUs.

Therefore, the service provided for this continuous and uninterrupted supply of power and for providing exclusivity to CMUs should be covered in favour of the appellant by decision of this Jaipur bench of ITAT in appellant’s own case for AY 2014-15 vide order dated 07-082023 (ITA No. 152/JP/20023) & for AY 2015-16 to AY 2018-19 vide order dated 21- 02-2024 (ITA No. 496 to 498 & 500/JP/2023).

15.3 Per Contra, ld. DR relied on the contention raised in the written submission wherein he mainly raised the following contentions:

(i) Claim of reliability charge was not filed vide original return nor during assessment proceedings and was even disputed by the CIT(A) in AY 2014- 15 on the basis of decision of PCIT –vs.- Wipro Limited (2022) 140 Taxmann.com 223 (SC) claim is not allowable. (ii) Hon’ble ITAT while passing order for AY 2015-16 to AY 20-18-19 in its composite order dated 21-02-2024 has allowed the claim without giving an opportunity of being heard to the AO. (iii) No reference to any remand report being sought on additional grounds have been made in the said case. (iv) Revenue has filed appeal before the High Court against the said decision of Tribunal, hence the said decision is not acceptable.

15.4 On the issue raised by the assessee the bench noted that the identical contentions of the department in respect to admissibility of said ground on claim of reliability charge has also been raised before this Tribunal in AY 2014-15; while dealing with that similar issue the bench vide order dated 07-08-2023 has held as under :

Shree Cement Limited vs. ACIT 5. We have carefully heard the rival contentions and perused written submissions filed by the assessee. We have also carefully gone through the order of ld. CIT (A). The judicial precedents as relied upon during the course of hearing have duly been deliberated upon. Our decision on the subject matter would be as given in succeeding paragraphs.

5.1 First of all we will decide with regard to the issue raised by ld. CIT (A) on the admissibility of the ground. In this regard, after hearing both the parties, we are of the view that ld. CIT (A) while relying upon the decision of Hon’ble Supreme Court in the case of PCIT vs. Wipro Ltd.(2022) 446 ITR 1 (SC) had dismissed the claim of the assessee. However, in our view the reliance placed on the decision of Wipro Ltd (supra) by ld. CIT (A) is erroneous and not applicable in the present facts because of the following :-

(a) In Wipro Ltd. (supra), the issue was decided against he assessee on the grounds that to withdraw the claim of exemption under section 10B(8), declaration was required to be filed within the due date prescribed under section 139(1) which was not complied with and that the original return was filed under section 139(1) and not under section 139(3). Hence, revised return cannot be filed to claim carry forward of losses for the first time. Supreme Court itself at para 9 of the order has held that the assessee can file a revised return in a case where there is an omission or a wrong statement.

(b) In the case at hand the issue involved is determination of Arms’ Length Price (or transfer price) for determining the quantum of deduction under section 80IA already claimed in the original return of income. The judgment of Hon’ble Supreme Court in case of Wipro, is applicable to cases wherein “new claim” is filed by way of revised return for claiming “exemption” under section 10B of the IT Act. In the present case, there is no new claim being lodged but only modification in the existing claim already made in the return of income.

(c) The Hon’ble Supreme Court, on plain reading of the section 10B, which is for claiming of exemption, held that “ ….. we note that the wording of the section 10B(8) is very clear and unambiguous. For claiming the benefit under section 10B(8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of section 139 of the IT Act are required to be fulfilled and/or satisfied. …. It cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee” (extract from para 8).

Contrary to the case of Wipro Ltd., there is no breach of statutory timelines, neither there is claiming of any exemption in the present case of the assessee.

Shree Cement Limited vs. ACIT (d) It is further noteworthy that the Hon’ble Supreme Court in Wipro’s case (supra), clearly distinguished the mechanism of allowing claim of deduction under Chapter VIA (as applicable in the present case) with mechanism of allowing claim in respect to exemption. On this aspect, Supreme Court in case of Wipro (supra) has held that “ Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries (P) Ltd. (supra), …… section 10B(8) is an exemption provision …… Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with ”incomes which do not form a part of total income”, cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with “directions to be made in computing total income”. Thus even in the words of Supreme Court, the decision given in case of Wipro does not have any applicability to the cases involving chapter VIA. Thus the decision of Supreme Court in case of GM Knitting, which pertains to claiming of deduction, would be applicable to the present case, instead of decision of Wipro, which pertains to claiming of exemption.

(e) We further noticed that recently the above issue came up before the Hon’ble Kolkata Tribunal in the case of Captain Steel India Ltd. vs. DCIT in dated 01.02.2023, wherein Kolkata Tribunal held that claim under section 80JJAA, by way of an additional ground, can be admitted before ld. CIT (A) and the decision of Hon’ble Supreme Court in Wipro (supra) is applicable on claims made under Chapter III and is not applicable on claim made under Chapter VIA via additional ground of appeal.

5.2 We have also gone through the decisions in the case of National Thermal Power Ltd. vs. CIT (1998) 229 ITR 383 (SC) wherein the Hon’ble Supreme Court has held that the ITAT has jurisdiction to examine a question of law which even did not arose before the lower authorities but was raised first time before the ITAT.

5.3 In the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) wherein the Hon’ble Bombay High Court has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words ‘could not have been raised’ must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts.

5.4 In the case of CIT vs. Jai Parabolic Springs Ltd (2008) 306 ITR 42 (Delhi), the Hon’ble Delhi High Court has held that there is no prohibition of powers of the Tribunal to entertain an additional ground which was not raised before the lower authorities.

Shree Cement Limited vs. ACIT 5.5 Apart from above, under similar circumstances the Coordinate Bench of ITAT Delhi Bench in the case of M/s. Crystal Crop Protection (P) Ltd. vs. DCIT in while relying upon different decisions of higher courts had held as under :- “ 9. In the case of Jute Corporation of India Ltd. Vs CIT vide order dated 04.09.1990, 1991 AIR 241 held that the Hon’ble Apex Court while adjudicating on the issue of additional ground held that the declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminous with that of the Income Tax Officer. If that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitation if any prescribed by the statutory provisions. In the absence of any statutory provisions to the contrary the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter.

15. On perusal of the above provision, it is noted the Legislature specifically excluded the A.O.'s power to determine sum 'refundable' to the assessee on completion of assessment under sub-section (3) of Section 143 of the Act. The intention of the Legislature in introducing amended Section 143(3) was explained by the CBDT in Circular No. 549 dated 31.10.1989 wherein the Board stated that under the amended provisions, the Smt. Sharmila Kumar, AY- 2011- Shree Cement Limited vs. ACIT 12 Assessing Officer in an assessment order passed under section 143(3) cannot assess income at a figure lower than the returned income, nor can loss be assessed at a figure higher than the returned, and therefore no tax paid with reference to the returned income can now be refunded to the assessee on completion of regular assessment.

16. Year 1998 -- The above provision was later on substituted by the Finance (No.2) Act of 1998 and the power to determine 'sum refundable' to the assessee by the Assessing Officers in the proceedings u/s 143(3) was reinstated by the Legislature. The relevant provision, as it stands now reads as under:

"(3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment."

17. The CBDT Circular No. 772 dtd. 23.12.1998-- explaining the above substituted provision of Section 143(3) explicitly stated that under the erstwhile provisions, there was no provision to issue refund and the Assessing Officer was only empowered to determine the sum payable by the assessee, but under the amended provisions the A.O. is empowered to provide for determination of sum payable by the assessee as well as the refund of any amount due to him.

20. Further, the CBDT Circular No. 14(XL-35 dated 11.04.1955) wherein it is held as under: "3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Smt. Sharmila Kumar, AY- 2011-12 department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should"

21. Further, we also note that the relief sought cannot be refused merely because the assessee has omitted to claim the relief as held by the Hon'ble Supreme Court in Anchor Pressings P. ltd. Vs. CIT 161 ITR 159. Hence, keeping in view the entire facts on record, the judicial pronouncements of the Hon’ble Apex Court on the issue of allowability of the claim, we hereby hold that the assessee is eligible to raise the issue at appellate levels.”

5.6 The coordinate bench of ITAT Jaipur in the case of Mayur Uniquoters Ltd. vs. CIT in and has also held that assessee is entitled to raise additional claim before the appellate authorities.

5.7 Even otherwise, the assessee has not lodged any fresh claim as what has happened in the case of the appellant is that it has not lodged any new claim but is only praying for a modification of existing claim made on account of adjustment of price of power plant on account of continue power supply commitment.

5.8 The issue of revision of claim is covered in favour of the appellant by the decision of Hon’ble Rajasthan High Court in case of CIT vs. Gokuldass & Co. (2002) 253 ITR 633 (Rajasthan), wherein the assessee had raised a claim for weighted deduction under section 35B during the assessment proceedings before the AO. The Hon’ble Court upheld the decision of Tribunal and held that the Appellate Authority has the power to consider a larger amount if the materials supporting that claim are already available on record.

5.9 As differentiated hereinabove that the decision of Hon’ble Supreme Court in the case of PCIT vs. Wipro Ltd. (supra) is clearly not applicable as the assessee is not making new claim but revising the claim of price of power supply, in the facts of the present case. On the contrary, in view of our categorical finding above and also keeping in view the decision of Hon’ble Supreme Court in the case of National Thermal Power corporation Ltd. (supra), Jute Corporation of India (supra) and Shree Cement Limited vs. ACIT other citations discussed by us above, we are of the view that assessee could raise additional ground before ld. CIT (A) as well as before us for revising claim of deduction already made in the return of income.”

15.5 On being consistent with the finding so recorded wherein the decision of Wipro Ltd. (Supra) has already been discussed and duly considered by this Bench vide its order dated 07-08-2023. In the said decision, it has been noted that the assessee - appellant has not lodged any fresh claim but was only praying for a modification of existing claim made on account of adjustment of price of power plant on account of continue power supply commitment. The aforesaid contention was well supported by the decision of Hon’ble Rajasthan High Court in Gokuldass & Co. (supra). The case was even poised in favour of the appellant by decision of Hon'ble Apex Court in the case of National Thermal Power (supra) & Jute Corporation (supra) wherein it was held that additional ground which purely raises the question of law should be admitted by the appellate authorities even though such claim is not lodged in the return of income. Regarding the contention of the department that no opportunity of being heard being provided to AO or no remand report was called for in respect to such additional ground, it is noted from the order of this Tribunal for earlier years that Departmental Representative [DR] was present during the course of hearing and due opportunity was given by the bench to the ld. DR as well. Further, the Tribunal in earlier years. Also, no new facts have been placed on record by the appellant. Ld. DR has also not pointed out any new facts brought in by the appellant. Having considered the written submissions of AO, by which effective opportunity is exercised by him to bring on record any fact, which otherwise requires consideration of this Tribunal while admitting the additional ground, the argument of the ld. DR that remand report has not been sought, does not stand as we have already considered the submission of the ld. AO and that of the ld. DR on the issue. As the assessee - appellant has only raised a legal issue which was also adjudicated by the Tribunal in earlier years.

15.6 Ld. DR in his submission have also contended that orders for earlier years of this Tribunal is not acceptable as the department has further preferred an appeal before the Hon’ble Rajasthan High Court. The said contention of the department is not acceptable as in the absence of any change in the facts and law, there is no reason to depart from the decision already rendered by this Tribunal on the same issue in earlier years. Merely because an appeal against the order of this Tribunal has been preferred by the Revenue before the High Court, does not make the decision of this Hon’ble High Court which is not the case in the present appeal. Filing of appeal before the Hon’ble High Court against the decision of this Tribunal for earlier years will not have any effect since the Hon’ble High Court has neither set aside the order of this Tribunal nor granted any stay. Further, in absence of any change in facts or circumstances of the case, there is no reason to deviate from the earlier decision of this very Bench.

15.7 Therefore, the contentions as raised by ld. DR in his written submission are not maintainable and therefore, we do not hesitate to admit the aforesaid question of law on merits raised by the appellant in respect to inclusion of Reliability charge of Rs. 1.50 per unit in computing Transfer Price of Power for the purpose of deduction u/s 80-IA of the Act.

15.8 So, thereby going to decide the issue on merit the bench noted that this issue has already been adjudicated on merits as well and decided in favour of appellant – assessee vide order dated 21-02-2024 in to 498 & 500/JP/2023 for AY 2015-16 to AY 2018-19. The relevant findings of this Tribunal is reproduced herein below:

Shree Cement Limited vs. ACIT “14. We have heard the rival contentions, perused material placed on record and the written submissions supported with the respective party’s contentions. We have also gone through the decision cited by both the parties to drive home their respective contentions. The bench noted that on the identical issue there is a decision of the coordinate bench in assessee’s own case for AY 2014-15 in dated 07-8-2023. The issue has been discussed in detailed at Para 8 at Page 19 of the said order. While deciding the issue, reliance has also been placed on the decision of Hindustan Zinc in ITA No. 127 & 128/Jodh/2022 dated 15-11-2022 wherein the claim of the assessee @15% has been allowed for uninterrupted power supply. The ld. AR of the assessee pointed out that there in that case of the assessee had claimed 15% premium on Grid rate wherein the present case, the assessee is claiming fixed rate of Rs. 1.50 per unit. We find that in the decision of Hindustan Zinc (Supra) the assessee has not urged the contention that exclusive capex has been made by the Captive Power undertaking for it’s manufacturing unit. It is seen that various regulatory commissions have fixed the reliability charge at the time the power is supplied by the DISCOMs to various consumers where there is no exclusive capex for a particular consumer. However, in the present case, the Captive Power Undertaking has incurred huge capex only for the CMU to exclusively provide power only to such unit.

16. We note that the issue has already been decided on principles in favour of the appellant in earlier year (i.e. in AY 2014 15) wherein it has been held that the reliability charge shall form part of the transfer price of power. We further, from the facts of the assessee’s case as stated above, where there is both exclusivity (resulting in huge capex for single user) advantage and uninterrupted power supply, we on facts, agree with the assessee’s claim that Rs. 1.50/unit is the minimum reliability surcharge at arm’s length principles. As regards the contention of the ld. CIT(A) that the said rate of reliability charge does not pertain to Rajasthan and hence not applicable, in this regard, the co-ordinate bench in AY 2014-15 in assessee’s own case has held as under:- “Though both the orders of commission does not pertain to the state of Rajasthan being state in which power undertakings of the assessee is situated, however we do not think that the aforesaid fact is of much relevance here as what is to be considered is whether the concept of collection of reliability charge is justifiable Shree Cement Limited vs. ACIT and being practiced in the industry or not. We note that such concepts are not unfamiliar and have become common industry practice in some states.” Considering the above discussion, ground No. 2 of assessee’s appeal is therefore allowed.”

15.9 As there is no change in the set of facts on the issue on hand and in the year under consideration, on being consistent to follow earlier decision of this Tribunal, we direct the ld. AO for inclusion of Reliability charge of Rs. 1.5/unit while computing Transfer Price for Power undertakings u/s 80-IA of the Act for the year under consideration as well. Accordingly, we consider the additional ground no. 1 raised by the assessee – appellant is therefore, allowed.

16.1 The brief facts related to the issue are that during the year, the appellant vide Form 10CCB filed along with the return of income have claimed deduction u/s 80-IA amounting to Rs. 769.50 Crs. w.r.t. eligible Solid Waste Management System (SWMS-Fly Ash) based on Profit Split Method (PSM), taking ~79% of the profits as attributable to SWMS based on in the Transfer Pricing Certificate in Form 3CEB filed along with the return of income. However, in the Tax Audit Report filed by the Tax Auditor reported an amount of Rs. 142.66 Crs. w.r.t claim u/s 80-IA in respect to SWMS (Fly ash) computing the Deduction based on stand taken by the Revenue in Transfer Pricing Order for AY 2014-15, where Cost Plus Method (CPM) was adopted by the TPO. The Tax Auditor in his report, while reporting the claim of Deduction u/s 80IA on SWMS (Fly ash) of Rs. 142.66 Crs. stated that the said claim may be modified to Rs. 769.50 Crs. in case the PSM method adopted by the appellant in respect to claim of SWMS (Fly ash) is upheld by the appellate authorities in earlier years. Accordingly, the appellant while filing of return of income had adopted a conservative approach and restricted the claim of deduction u/s 80-IA on solid waste management system (Fly Ash) to Rs. 142.66 Crs. in the computation of total income based on the stand taken by TPO in earlier years with balance claim of Rs. 626.84 Crs duly made in Form 10CCB read along with Notes to Tax Audit Report read along with notes forming part of Return of Income which has been placed on record by the appellant in the Paper book filed before this Bench. as adopted in Form 10CCB by the appellant in respect to its claim of SWMS in earlier years has since been upheld by decision of Jaipur Tribunal in appellant’s own case for AY 2014-15 vide order dated 07-08-2023 (ITA No. 152/JP/20023) & for AY 2015-16 to AY 2018-19 vide order dated 21-02- 2024 (ITA No. 496 to 498 & 500/JP/2023) and hence the revised claim of SWMS (Fly ash) amounting to Rs 769.50 Crs as certified by the auditors in the statutory form 10CCB may please be considered and duly prayed before this bench to allow the balance claim of Rs. 626.84 Crs in respect to claim of SWMS.

16.3 Ld. DR on behalf of the revenue has placed strong reliance on the Report of AO dated 15-04-2025 duly placed on record before this bench. It is noted that the department is disputing the admissibility of claim on its merits mainly on the following contentions:

(i) Hon’ble Tribunal while rendering the decision in earlier year on the issue of allowability of claim of SWMS has completely ignored the provisions of Section 80A(5) & 80AC, which states that no deduction shall be allowed in case of failure to make the claim of deduction under chapter VIA in the return of income. Further, any claim made vide notes is not admissible. (ii) Claim of SWMS(Fly ash) was not filed in the return of income and therefore rightly disallowed by the CIT(A) in earlier year on the basis of decision of PCIT –vs.- Wipro Limited (2022) 140 Taxmann.com 223 (SC). (iii) Hon’ble ITAT while passing order for earlier year vide order dated 21-02- 2024 has allowed the claim without giving an opportunity of being heard to the AO.

16.4 At the outset, we note that in AY 2014-15, ld. AO adopted Cost Plus Method while computing Deduction u/s 80IA on SWMS. In subsequent years, i.e from AY 2015-16 to AY 2018-19, the ld. AO himself adopted the Profit Split method thus accepting the method adopted by the appellant in Form 10CCB. Considering the same, this Tribunal in earlier years for AY 2015-16 to AY 2018-19 accepted the PSM method adopted by the appellant in Form 10CCB by relying on its earlier decision for AY 2014-15.

Relevant extract of the said order for AY 2015-16 to AY 2018-19 dated 21- 02-2024 is reproduced herein below:

“85.We also find that the above issue has been dealt by this Bench in AY 2014-15 vide order dated 7-8-2023 in ITA No. 142/JP/2023. The findings of co-ordinate Bench is reproduced herein below:-

“34.1. We find that the ld. CIT (A) while dealing with the matter has considered the various aspects of the matter vigorously at great length and following the judicial precedents of Hon’ble Supreme Court and Hon’ble High Courts, partly allowed the claim of the assessee by observing in para 9.5 to 9.13 of his order as under : “9.5 The AR filed orders of TPO passed for subsequent AYs i.e. AY 2015- 16, AY 2016-17 and AY 2017-18. It was pointed out by the AR that in all these years, the TPO has accepted the approach adopted by the appellant, though with certain modifications. It is only the current assessment year i.e. AY 2014-15, that the TPO has rejected the method adopted by appellant. It was therefore contended that since in earlier years as well as in later years, TPO has not disputed the method, there was no reason for disputing the same in this year. 9.6 The appellant has computed the income of the Solid Waste Management System by following the cost saving approach wherein revenue has been recognised based on savings on account of using treated pond ash as a substitute Shree Cement Limited vs. ACIT of clinker for manufacture of cement. The concept of adoption of savings approach to determine revenue has been recognized in various international TP literatures. Further, India recognizes the concept of location savings which is evident from Chapter D.3 i.e. ‘Transfer Pricing Practices and Challenges in India’ of the UN Manual. Hence, savings approach adopted by the appellant cannot be out-rightly rejected. For the purpose of applying savings approach, comparison needs to be made with a product which can be used as a substitute of another product (clinker and treated pond ash in instant case).

9.7 From perusal of the assessment order, it can be seen that the TPO has nowhere doubted the functional comparability w.r.t. clinker and in-fact himself applied the margin earned on sale of clinker for determination of transfer price of SWMS. TPO’s rejection of CUP method on the contention that strict comparability is required for applying the said method also is not correct. OECD Guidelines at Para 1.109 clearly states that uncontrolled transactions involving different product but having similar functionality may be considered as a comparable. Guidelines also states that it may be acceptable to broaden the scope of the comparability analysis to include uncontrolled transactions involving products that are different, but where similar functions are undertaken. TPO’s rejection of above guidelines in the order therefore does not seem to be fair. Guidelines also states that it may be acceptable to broaden the scope of the comparability analysis to include uncontrolled transactions involving products that are different, but where similar functions are undertaken. TPO’s rejection of above guidelines in the order therefore does not seem to be fair.

9.8 The appellant also relied upon various judicial pronouncements wherein notional cost has been considered to be market value in terms of Section 80IA (8) of the Act. In CIT vs. Thiagarajar Mills Ltd. in Tax Case(Appeal) Nos.68 to 70 of 2010 dated 07-06-2010, it was held that captive consumption of power generated by the assessee from its own power plant would enable the assessee to derive profit and gains by working out the cost of such consumption of power in as much as the assessee is able to save to that extent which would certainly be covered by Sec. 80IA (1). SLP filed against the aforesaid decision has since been dismissed by Apex Court in CIT vs. Thiagarajar Mills Ltd. (CC 2717- 2719/2011) (SC) dated 21-02- 2011. Further, Hon. Bombay High Court in Hindustan Petroleum Corporation Ltd. vs. DCIT [(2010) 328 ITR 534 (Bom – HC)], has observed that the savings in consumption of Low Sulphur Heavy Stock (LSHS) as fuel due to the use of steam generated as a by-product in the generation of electricity is allowable for deduction u/s 80- IA. Thus, aforesaid judgments show that courts have also 102recognized the concept of savings approach based on which profitability of the undertaking was computed and accordingly the deduction u/s 80IA of the Act was claimed.”

“9.9 Based on an inquiry from NTPC made u/s 133(6) of the Act, the TPO has given a finding that pond ash or fly ash does not have any cost and it is sold to the user free of cost. This reasoning of TPO is not justified because what TPO is Shree Cement Limited vs. ACIT referring to is a waste product which does not have any use and hence it is sold free of cost. In the present case, SWMS facility of the appellant is engaged in waste management wherein it is converting the waste material which is raw pond ash and fly ash into a usable product by treating the waste product and converting it into a product which has substantial realisable value. The very starting point of the TPO, that the appellant is using pond ash and comparing the same with a free product is grossly erroneous and ignores the processes undertaken to make waste usable.”

9.10 It is very relevant to note fact that TPO has accepted the computation method adopted by appellant in earlier year as well as in later years. When year after year, department has not disputed the computation method adopted by appellant rejecting the same in one particular year, without any change in the facts and law, is not justified. As, pond ash in its raw form cannot be used in the manufacture of cement and that it requires a series of processes to make it usable, it is not reasonable to treat transfer of treated waste in the form of pond ash and fly ash from SWMS to Cement Manufacturing Unit of the appellant at NIL value.

9.11 Coming to the next question of what should be the benchmarking of the treated solid waste transferred by SWMS. Since, treated solid waste is not readily available in the market, the appellant applying the functionality test has compared the product with the product being replaced i.e. clinker and adopted the rate based on the savings approach. TPO himself has agreed that the product of the appellant is comparable to that of clinker based on functionality test and accordingly has applied the margin of clinker. Since, in manufacture of cement, the solid waste is replacing clinker in equal quantity and because of its use, the appellant is saving equivalent quantity of clinker, benchmarking would be justified by adopting realisable value of clinker to determine the revenue of SWMS facility.

9.12 However, I do not agree completely with the benchmarking model of the appellant. Solid waste management undertaking cannot generate the entire profit (100%) by itself and certain portion of the profits needs to be attributed to the Cement Manufacturing Unit (CMU) based on functions, assets and risk analysis carried on by the two entities, i.e., SWMS & CMU. Thus, Profit Split Method seems to be the most appropriate method in the instant case and a profit share needs to be allocated to the CMU as well. Identical methodology has been applied by the TPO/AO in earlier year i.e., AY 2013 -14. For the year under consideration the appellant has claimed 100% profits of SWMS. However, TPO is of the view that entire profits cannot be attributable to SWMS and accordingly, attributed a part of the profits to SWMS and balance to CMU based on FAR analysis. Since in the preceding year, above split has been derived by department at 79.73%, there is no reason why the appellant should be granted 100% profits as attributable to SWMS in the current year. The above order of A.O. on this issue in A.Y. 2013-14 has attained finality since the appellant has not filed any appeal on this issue. This view gets support from the decision of Supreme Court in Radhasoami Satsang. vs.

9.13. In view of the above, applying the split of 79.73% in the current year, profits attributable to SWMS comes to Rs. 1,19,91,87,501/- as against 1,50,40,60,581/- and eligible deduction u/s 80IA comes to Rs. 1,15,99,49,817/- as against Rs. 1,46,48,22,897/- as claimed by the appellant in its return of income. The AO is therefore directed prima facie to allow deduction u/s 80IA on account of Solid Waste Management of Rs. 1,15,99,49,817/- and disallowance of Rs. 30,48,73,080/- made by the AO is confirmed and balance disallowance is deleted. The AO is directed to re-check this working carefully while giving appeal effect. These grounds are therefore partly allowed.”

Therefore, in the facts and circumstances of the case, following the judgments of Hon’ble Supreme Court and Hon’ble High Courts and also considering the detailed order of the ld. CIT (A), we are of the view that the ld. CIT (A) has passed a reasoned order and no interference is required. Accordingly the order of the ld. CIT (A) is upheld. This ground of the Revenue is dismissed.”

(a) Identical issue has been decided in favour of the assessee by this Tribunal in assessee’s own case for AY 2014-15 vide dated 7-8-2023. In the above decision it has been held that Solid waste, being Pond Ash and Fly Ash which is the waste generated by thermal power plant and used by the respondent for manufacture of cement, is substitute by clinker and thus realisable market value of clinker can be used to determine the transfer price of solid waste.

(b) FAR analysis done by the department @79.73% is fair and appropriate since SWMS does not earn 100% of profit on its own as claimed by the appellant. Department is not permitted to modify the FAR analysis year after year without there being change in facts of the case and hence FAR done @64% by the TPO in current year is not correct.

(c) Since solid waste management unit is responsible for doorstep delivery of clinker to the Cement unit, therefore entire savings on account of clinker including freight and handling expenses of such clinker at cement unit should be considered Shree Cement Limited vs. ACIT as transfer price of solid waste. Freight should therefore form part of benchmarking model.

16.5 It is therefore noted that the dispute on transfer pricing methodology for computing claim of SWMS i.e PSM vis a vis Cost plus Method has since been decided in favour of the appellant by this Tribunal from AY 2014-15 to AY 2018-19 wherein it has been held that claim of SWMS must be allowed by adopting PSM @79.73%. It is in this context that the AR of the assessee - appellant prayed before this Tribunal to allow the claim of SWMS(fly ash) for the year under consideration as well based on such methodology as confirmed by the this Tribunal in earlier year.

16.6 Though, on account of principle of consistency, we find that the claim of SWMS (Fly ash) should be allowed to the appellant in this year as well, based on PSM method as allowed by this Tribunal in earlier year, however we note that ld. DR has raised objections against such claim by raising contentions of non-fulfilment of conditions as prescribed u/s 80A(5) & section 80AC of the Act. It is noted that similar contentions was also raised by the department before this Tribunal in AY 2017-18 wherein this Tribunal has held as follows :

“162. In support of the ground so raised the ld. AR of the assessee submitted his written submission as under :- i. Deduction claimed u/s 80-IA w.r.t eligible Solid Waste Management System(SWMS) was as follows: - Form 10CCB : INR 753.10 Crs - Return of Income: INR 753.10 Crs [INR 485.81 Crs in computation part of ITR-6 (based on stand taken by TPO in earlier years) & balance INR 267.29 Crs vide Notes forming part of the Return] ii. Disallowance proposed by TPO/AO w.r.t SWMS [based on claim lodged in Form 10CCB] was INR 322.47 Crs. The aforesaid disallowance was reduced to INR 4.34 Crs vide order of CIT(A) dated 08-06-2023, thereby allowing deduction w.r.t SWMS for INR 748.76 Crs. iii. Deduction w.r.t. SWMS was thereafter restricted to INR 485.21 Crs by CIT(A) and balance deduction of INR 263.55 Crs thus stood disallowed which was made vide Notes to Return. iv. Hon’ble Jaipur Tribunal in assessee’s own case for AY 2014-15 while dealing with the similar issue has allowed the claim of reliability charge in computing deduction u/s 80-IA on the ground that though the same was not claimed in Return but is allowable since no new claim is lodged and assessee is only praying for modification of existing claim.

Reliance in this regard was placed by Jaipur ITAT on decision of Hon’ble Rajasthan High Court in CIT –vs.- Gokuldas & Co (2002) 253 ITR 633 (Raj). v. Similar view has been taken by Hon’ble Delhi High Court in Influence -vs.- CIT [2015] 55 taxmann.com 192 (Del) & PCIT -vs.- Oracle (OFSS) BPO Services Ltd [2019] 102 taxmann.com 396 (Del) wherein re-computation of deduction u/s 80HHC & exemption u/s 10A respectively during assessment proceedings were not considered as new claim & hence were allowed to the assessee. vi. Notes to the Return form an integral part of the Return of Income and hence any amount claimed vide the note, is amount claimed in the Return and cannot be disallowed on the contention that the claim was not lodged in the Return. Reliance is placed on - ACC Limited –vs.- ACIT (ITA No. 6082/Mum/2014 dated 16- 03-2023)(Mum ITAT) - CIT –vs.- B. G. Shirke Construction Technology (P.) Ltd [2017] 395 ITR 371 (Bom.) -ACIT –vs.- SIL Investment Ltd. (ITA No. 2431/Del/2010 dated 04-05-2012) (Del ITAT)

Shree Cement Limited vs. ACIT vii. CIT(A) has itself confirmed in the order dated 08-06-2023 that deduction u/s 80-IA on SWMS of INR 748.76 Crs should be allowed to the assessee. Therefore, restricting the said claim merely because the claim in the computation part of the Return is lower, is totally unjustified, as it is the duty of the assessing & the appellate authorities to determine correct tax liability of the assessee. Reliance is placed on the decision of Hon’ble SC in the case NTPC -Vs- CIT (1998) 229 ITR 383 (SC). viii. Full Claim quantified and reflected in Audited Accounts of the SWMS & Form 10 CCB duly uploaded before filing of the Return of Income. This fact makes prayer of the Assessee all the stronger. When the claim allowed on merit by CIT(A) is in terms of (1) the Audited Accounts and Form 10CCB duly uploaded and also (2) in terms of the amount reflected in the Return read with the Notes forming part of the return, there is no reason to restrict the claim to the amount reflected in the computation part of the Return. Reliance is placed on all the decisions referred to here in above.

Deductions to be made in computing total income. 80A. (1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U. xxxxxxx (5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder.

“77. It is observed that in above referred case, the fact was that the assessee has made claim in notes to the return of income and claim was not reflected in actual quantum of income in absence of its quantification. Considering such facts, ITAT Bench has held that claim made in the notes to return form integral part of return of income and further observed that a claim made in notes to return of income, though without any quantification of such claim will be considered as a valid claim in the return of income. The finding of ITAT Bench was also upheld by Hon’ble Bombay High Court in 79 Taxmann.com 306.”

“49. So far as regards the claim made by the assessee, it is on record that the assessee had duly filed the audit report in Form No. 10CCB vide letter dated 7th Nov 2008 before the AO, in which audit report, deductions under s. 80IA(12)/80IB(12) of the Act were duly certified to have been claimed by the assessee. It is undisputed that the claim was made by way of a note appended to the original return of income. It cannot be gainsaid that the note to the return of Shree Cement Limited vs. ACIT income formed an integral part of the return. That being the position, obviously, it cannot be held that the deduction was not claimed in the return of income.”

16.7 We note that the present case is identical to facts of earlier year.

From the perusal of Paper Book filed by the appellant it could be seen that total deduction of Rs. 769.50 Crs. has been claimed on account of deduction u/s 80IA on SWMS-Fly Ash which is duly supported by report in Form 10CCB certified by an independent Chartered Accountant which has been filed along with the return of income. The Tax Auditor in the Tax Audit Report have also reported the full claim of Rs. 769.50 Crs. which has also been filed along with the return of income. We note that this is not a case of any failure to make any 80-IA claim in Return of income to attract provisions of Section 80A(5) or 80AC of the Act. It is noted that full claim of Rs 769.50 Crs has been lodged in Form 10CCB and also reported in Tax filed before the due date. Hence, provisions of Section 80A(5) have been duly complied with. Further, Section 80AC only requires the return of income to be filed within the due date prescribed u/s 139(1). There is no dispute on this fact at all that the appellant had duly filed its return of income on 30-11-2019 which is within the prescribed due date. Hence, we note that the present case is squarely covered by the decision of this Tribunal of earlier year in appellant’s own case for AY 2017-18 & 2018-19 wherein identical claim of SWMS (Fly ash) was allowed to the assessee- appellant.

The other contentions raised by the Department in respect to reliance on the case of Wipro Ltd (supra) and further appeal before Hon’ble Rajasthan High Court against earlier order of this Tribunal for earlier year, are similar to Additional Ground No. 1 which has already been dealt with here in above.

On this issue ld. DR has also submitted a report of the AO with respect to the present appeal where vide the report of AO dated 15-04- 2025 wherein also AO has referred to the aforesaid survey proceedings and contended that the claim of the appellant on SWMS is incorrect since no such Solid Waste Management System exists on ground as envisaged u/s 80-IA of the Act. It has been further alleged by the AO that the claim is inadmissible and inconsistent with law and thus liable to be rejected.

17.1 As is evident from the above that rival parties refer to the survey proceedings wherein revenue disputed that claim of the assessee. Since the alleged dispute raised during the survey on admissibility of claim of Deduction u/s 80IA on SWMS, goes to the root of the ground raised by the assessee - appellant, we find it important to adjudicate the issues raised by the department before we give final decision on the allowability of this additional ground. This is more so important since now the revenue is eligible for the above deduction or not.

While hearing on the issue, both the parties brought on record various facts and written submission as to the dispute raised by the revenue in the survey proceeding carried out at the business premises of the assessee – appellant. Those arguments and submission are dealt herein below paras.

17.2 The contention / brief facts as stated by the ld. AR of the assessee – appellant are as under : a) A survey was carried out at the premises of the appellant in June 2023. During the survey, the team visited the plants located at Beawar, Ras, Nawalgarh in Rajasthan & Panipat in Haryana, looked into the business operations of the appellant and also took statements of few of the employees in relation to deduction claimed u/s 80-IA by the company in respect of its Solid Waste Management Systems (SWMS). b) The said deductions are claimed by the assessee from assessment year 2013-14 onwards. That claim were subjected to scrutiny proceedings as per provision of section 143(3) of the Act. That exercise was subjected to verification not only by the ld. AO but by the Transfer Pricing Officers of the revenue [ for short TPO ] for all the years. Not only that for that claim they made certain adjustments which were also litigated before the appellate forum including this tribunal. c) As is evident that the deductions under chapter VIA for SWMS is already under sunset clause w.e.f. 01.04.2017 and from that date no new tax holidays are available to new SWMS set up thereafter. d) The revenue by conducting the survey proceeding and thereafter the post survey proceeding started disputing the eligibility of such claim u/s. 80IA. e) Ld. AR of the assessee – appellant stated that since this tribunal is deciding the said claim for the year under consideration i.e. A. Y. 2019-20 he brought Shree Cement Limited vs. ACIT on record the contention of the assessee – appellant against the contention of revenue before this bench which are as under : i) The claim of the assessee for SWMS have already been adjudicated in the various assessment proceeding and even post survey the claim was allowed by this tribunal while dealing with the appeal of the assessee for A. Y. 2015-16 to 2018-19 and directed to allow the claim for these years following the claim allowed in earlier years. ii) The above claims have already been adjudicated and allowed for all the years. iii) The eligibility of the claim of SWMS has already been duly considered by the revenue in the very first year i.e. assessment year 2013-14 vide order under section 143(3) of the Act dated 16.12.2014 being the first year of claim wherein the revenue had looked into this claim in greater detail, including scrutiny of all the activities being carried out by this facility. iv) For that year ld. AO not only made the verification of the activity but has also verified its interlinkage with the cement manufacturing operations and computed detailed functional analysis and functional split between the SWMS facility and the cements operations. v) He also submitted that in that assessment proceeding ld. AO not only verified the claim but he has because of the interlinkage of the facility with the cement unit the department disallowed the partial claim by applying the profit split Method [ PSM ] resulting into profit attributable to cement unit. The assessee – appellant duly accepted the above methodology and did not dispute the same before the appellate authorities only because the same was considered in accordance with the law and thereby not challenged that adjustment.

17.3 With the above background the ld. AR of the assessee – appellant brought to our notice the contentions of the revenue in respect of this claim of SWMS based on the survey proceeding conducted. The contention of the revenue and the explanation of the assessee on the issue as raised are discussed here in below :

S.No. Contention of the Revenue Explanation / reply to those contentions 1. SWMS of the appellant do not (i) This contention is factually incorrect exist. The facility that exists and untenable. During Survey, I.T. cannot be said to be an authorities visited the plant premises infrastructure facility or and have taken videography of the undertaking within the meaning functions undertaken by SWMS. of the Act. In other words, it is Videography taken during the survey not a legally eligible itself proves the existence of SWMS infrastructure undertaking. facilities. [Refer SPB Pg No. 2-8]

(ii) The department has duly accepted, even during Survey Proceedings, that appellant set up ash handling system. The infrastructure set up by the appellant for the said facility has also been verified by the Department during the survey and has been duly accepted to be in existence. There have been no allegations of assets existing on paper only or assets recorded in the books being bogus. Only alleged dispute is that such ash management system cannot be said to be a solid waste management system as envisaged u/s 80IA of the Act. Hence, in effect, the department is actually not disputing the existence but merely contending that the processes carried out by SWMS are ineligible activity for the purpose of Section 80IA and hence it is contended that the appellant is not eligible for deduction in respect of SWMS u/s 80IA.

(iii) Eligibility of SWMS has since been verified in Initial Year of claim i.e. AY 2013-14 and hence reverification of same in subsequent years without any change in the material facts is not permissible. [Refer: CIT -vs.- Tata Communications Internet Services Ltd. (2012) 251 CTR 290 (Del. – HC) [SLP dismissed by the Supreme Court in CIT –vs.- Tata Communications Ltd.

(SLP (C) No. 34804/2012 dated 02-09- 2021]; PCIT –vs.- M/s BT Global Communication India Pvt. Ltd. (2024) 466 ITR 714 (Del.)]

(iv) Eligibility as well as quantification of deduction u/s 80IA on SWMS has been examined by different AOs/TPOs year on year and has also been adjudicated by the appellate authorities. Transfer Pricing authorities have carried out full-fledged FAR analysis year on year over a period of last 10 years which is not possible without verifying the functions, the assets, the risks and other aspect of the infrastructure facility.

(v) As a matter of fact, in all of the years, starting from AY 2013-14, Revenue has held the Appellant’s claim to be eligible for deduction u/s 80IA but is now disputing the Appellant’s eligibility to deduction in respect of its SWMS in any of the assessment proceedings under section 143(3) or in appeal before CIT(A) or ITAT or even in their pending appeal before HC for earlier years. Only dispute by Revenue is on quantification. [Refer SPB Pg No. 18- 103] 2. During the survey various new It is very important to go through and facts have come into the understand these so-called new facts that knowledge of department and have come to the knowledge of department hence it cannot be said that during the survey which, as per eligibility cannot be verified or department’s contention, it was not aware in challenged in subsequent years earlier years: of claim.

(a) Fly Ash/Ash is not a solid waste or even hazardous waste.

(b) Mandatory condition of signing of agreement with local authority have not been complied with.

(c) Reclassification of ash handling infrastructure as SWM system is nothing but splitting up or reconstruction of business already in existence which is prohibited u/s 80IA.

From perusal of the above 3 points which department alleges to be new facts, it leaves beyond doubt that none of the contentions of department are actually new facts but at best are incorrect or outright untenable legal issues.

- Whether fly ash can be regarded as a solid waste or not as per section 80IA, how can that be a new fact? Is the department alleging that it was not aware that the claim of the appellant u/s 80IA was on fly ash or ash and not on other solid waste?

- The agreement with Gram Panchayat cannot be regarded as agreement with local authority. Is this a new fact which department was not aware earlier? These agreements are part of the 10CCB report which certifies the claim u/s 80IA. What new finding of fact on the agreement have been unearthed during survey?

- Whether the ash handling system which is reclassified as SWM system can be said to be splitting or reconstruction of business is a new finding of fact? Again, is this a new fact or new legal issue or dispute which department is proposing to raise in the year 2023 after a period of more than 10 years when the new eligible facilities had commenced in year 2012 and when tax holidays have already attained sun-set in 2017.

It is therefore humbly submitted that the allegations of the department that during survey new facts have been unearthed is grossly untrue, misleading and unjustified.

No. 104-125].

MOEF has issued separate notifications from time to time for management of fly ash, improper disposal of which had led to environmental issues including soil and water contamination. Refer Notification No. S.O.763 (E) dated 14- 09-1999 (as amended from time to time) which deals with utilization of fly ash from coal or lignite based thermal power plants. [Refer SPB Pg No. 126-136] Therefore, ash generated from thermal power plant is undoubtedly a waste which was required to be disposed off in an environment friendly manner as emphasised in the above notifications. (iv) Besides MOEF, Ministry of Urban Development, Government of India has also defined solid waste as industrial waste and its major generators being thermal power plant producing coal ash. [Refer SPB Pg No. 137-144] (v) Organisation for Economic Co-operation and Development (OECD) has also defined solid waste to include industrial Waste. [Refer SPB Pg No. 145-147] (vi) For Income Tax purposes also the issue has also been examined by the judicial authorities. In ITO –vs.- Dirk India Pvt Ltd. (In dated 24- 10-2018), the Hon’ble Pune Tribunal has duly taken cognizance of the fact that fly ash is a waste generated from coal fired electricity generating power and disposal of the same is eligible for deduction u/s 80IA. [Refer SPB Pg No. 148-152] (vii) In the case of the appellant, Fly ash has duly been considered as a solid waste by the income tax authorities in earlier years. The same has also been explicitly mentioned in the orders passed by the assessing officers, CIT(Appeals) as well as Hon’ble Tribunal.

SWM Rules itself clarifies that industrial and other wastes are covered under separate rules framed under the Environment (Protection Act), 1986 & hence same are not covered under SWM Rules 2016. [Refer SPB Pg No. 153-168] Further, though handling of fly ash is excluded from scope of Hazardous Rules, 2016, the said rule itself mentions that separate notification shall be issued for such wastes being fly ash. [Refer SPB Pg No. 169-180]. Subsequently, MOEF & CC have issued separate Notificatiotopsoil31-12-2021 on disposal of ash from thermal power plants to protect the environment and prevent dumping and disposal of fly ash on land to conserve the top soil [Refer SPB Pg No. 181-192].

4. Mandatory condition of signing (i) As per Sec. 80-IA, the assessee is of agreement with local authority required to enter into an agreement with have not been complied with. Central Govt., State Govt or local authority or any other statutory body. Further, Sarpanch of the Gram (ii) The term “Local Authority” is not defined Panchayat has no jurisdiction to in Sec. 80(IA) but the same has been sign such agreement since area defined u/s 10(20) of the Income Tax Act of operation of ash handling is and includes ‘Panchayat’ as referred to spread across large in clause (d) of article 243 of the geographical expanse. There Constitution. In absence of anything to are no correspondences with the the contrary in Sec. 80(IA), the definition assessee and Gram Panchayat given in section 10(20) can be duly before signing agreement relied. Hence, agreement entered with the Gram Panchayat is duly in accordance with the provisions of the Income Tax Act and it duly satisfies the conditions laid down in Sec. 80-IA of the Act. (iii) Solid waste is ultimately getting disposed of at the appellant’s plant. It is at this place that entire solid waste is brought for disposal and not at the place from where it is collected or transported. Hence, the appellant has entered into agreement with the Gram Panchayat which has jurisdiction over the plant area. (iv) The agreement entered, has been duly confirmed by the Sarpanch whose statement was taken during the survey proceedings. He has confirmed that prior to signing the agreement, meeting was duly held. Panchayat Secretary was also present in the said meeting. Quorum of the meeting was informed i.e. Vice Chairperson and other ward members were also present. [Refer SPB Pg No. 193-196]. Thus, there is no non- compliance in entering into agreements.

It would be also pertinent to consider that the agreement with gram panchayat had been entered a decade ago, further compliance with terms and conditions of the agreement has also been done year after year by the assesse. Looking to this glaring fact, the contention about the validity of agreement is dehors the Income Tax Act and therefore without jurisdiction and untenable.

Sec. 80IA(4)(iv) [Power undertaking] and not to SWMS which is an infrastructure facility defined in Sec. 80IA(4)(i). Hence, the allegation is not tenable legally. (ii) The appellant has claimed deduction u/s 80IA only on its new infrastructure facility set up and has not claimed any deduction on any of its old facilities. Date of commissioning of the infrastructure facilities along with the documentary evidence, plant capitalization etc. were not only part of assessment records, TP documentation study report but were duly produced during the survey proceedings itself. Department has not disputed that the facility on which deduction is claimed is not new but old. It has only alleged that since the appellant had such facility earlier also hence the new facility should be regarded as reconstruction which is not legally correct proposition. Incidentally, in respect of Pond Ash, it did not have such facility before and in respect of Fly Ash, such facility were at other places. (iii) Huge investments have been made for setting up new infrastructure for Solid Waste Management not only at its premises but also at the premises of Thermal Power Stations. It is only after making the said investments and setting up & commencement of such new facilities, that the claim in respect of the corresponding infrastructure facility was considered. Moreover, commencement of new facilities at altogether new locations i.e in the state of Uttar Pradesh on 30.10.2015, at Chhattisgarh on 24.02.2015, at Haryana on 27.04.2015 and at Bihar on 09.07.2014, which were 17.4 On the other hand ld. DR strongly argued that considering the survey findings, new facts have come to fore which establish that the deduction claimed u/s. 80IA on SWMS should not be allowed at all.

17.5 We have gone through the arguments raised by both the parties while hearing of the case as well as by way of written submissions placed on record. We have also gone through the report of the ld. Jurisdictional Assessing Officer [ JAO ], Ajmer which is also placed on record. It is noted that in the said report, the JAO has referred to the findings of survey team, who carried out the survey at the premises of the assessee – appellant.

While hearing of this case and vide subsequent submissions, detailed arguments have been put forward by both the sides on the survey findings as discussed above on the claim of Solid Waste Management System (SWMS) and thereby the claim made u/s 80IA of the Act. The stand of the revenue is that although the claim has since been allowed to the assessee – appellant since assessment year 2013-14 onwards, however since new facts come on record in the survey proceeding the said claim so made u/s. are on following four reasons:

(1) There is no solid waste management facility which exist at all. What exist is the fly ash handling facility which cannot be regarded as solid waste management facility eligible for deduction u/s 80IA. (2) Fly ash and Pond ash are not solid waste or even a hazardous waste but are raw material for manufacture of cement. Hence, disposal of fly ash while manufacturing cement cannot be regarded as a solid waste management system. (3) Ash handling system is an essential and inseparable part of cement plant and does not have an independent existence. Therefore, reclassification of fly ash handling infrastructure as SWMS is nothing but splitting up or reconstruction of business already in existence which is prohibited u/s 80IA. (4) Agreement as entered by the appellant with Gram Panchayat cannot be regarded as valid agreement since Gram Panchayat is not a Local Authority and hence mandatory condition required u/s 80IA of signing agreement with local authority has not been complied with.

17.5 Having considered the contentions of the revenue while survey, we have also gone through the written submission and arguments raised against those contention by the ld. AR of the assessee. We have also gone through the evidence filed in the paper book.

Here the apple of discord is whether Solid Waste Management System of the appellant is an eligible Infrastructure Facility as per provision of section 80IA of the Act or not. To examine that issue let us understand what the condition precedent to be an eligible infrastructure facility. For that following conditions to be fulfilled:-

“(4) This section applies to— (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely:— (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that …… Provided further that nothing contained in this section shall apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017. Explanation.—For the purposes of this clause, "infrastructure facility" means— (a) ……………; (b) ……………; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) ……………;” (Emphasis Added)

17.6 As is evident from the provision of the section that any assessee engaged in developing, operating and maintaining an infrastructure facility any profits derived from the said facility. From the record as submitted we note that for the first year of claim of deduction i.e. for assessment year 2013-14 as claimed by the assessee – appellant u/s 80IA on SWMS a detailed verification on eligibility as well as on quantification was carried out by the ld. AO. That order u/s 143(3) for AY 2013-14 dated 16-12-2014 placed on record. On going through the said order, we note that the reply of the assessee - appellant dated 24-11-2014 was reproduced in the assessment order u/s 143(3) wherein the assessee - appellant has mentioned each condition prescribed in section 80IA and its submissions on fulfillment of such conditions. In the said order, the following findings have been noted by the ld. AO:-

17.8 Going further whether said facility is an eligible solid waste management facility as contemplated by the provisions of Section 80IA or department needs to be adjudicated and verified first and the same are dealt with as under:

(a) Revenue contends that the Fly Ash is not a solid waste. The revenue on that issue contends that fly ash cannot be regarded as solid waste or a hazardous waste. It is a raw material for manufacturing cement.

Hence the facility set up by appellant in the form of Ash Handling System is not a solid waste management system.

To answer the above issue, we have gone into the provisions of the Act & find that the term ‘Solid Waste Management System’ or ‘Solid Waste’ has not been defined under the Income Tax Act. The appellant has claimed that pond ash/fly ash is nothing but a solid waste. We note that to run Thermal power plants, coal is burnt from where energy is produced. The remains of the coal after burning is in the form of ash which is a waste generated by such thermal power plant. It has been stated by the assessee - appellant that this waste when kept open in the environment causes serious air and water pollution. Considering the serious implications of such waste existing in the environment, way back in year 1999, MOEF i.e.

Ministry of Environment and Forest, had come out with separate Notification No. S.O.763 (E) dated 14-09-1999 laying down guidelines for plants, improper disposal of which had led to environment issues including soil and water contamination. The notification has been issued stating the following objective: -

‘Whereas, it is necessary to protect the environment, conserve top soil and prevent the dumping and disposal of fly ash discharged from coal or lignite based thermal power plant on land.”

Even in the latest guidelines issued by the said Ministry of Environment, Forest and Climate Change (MOEF & CC) in 31-12-2021 and again in June 2023, fly ash has been recognized as solid waste and has listed environmental hazards associated with its disposal;

8.1 Disposal of Solid Wastes As a consequence of combustion of coal, larger particles produced through agglomeration in furnace zone, due to heavy weight, do not escape easily into the atmosphere, rather, they settle down into pipeline because of gravitational pull and are termed bottom ash. Bottom ash contains unburned carbon to the extent of 3 – 12 % and it constitutes less than 20 % of the total ash content of the coal. The remainder which enters the connective zones of the boiler us called Fly ash. Ash severely pollutes the atmosphere. Physical and chemical changes in the mineral matter and the variation between coal, fly ash and chemical distribution occurs in fly ash is based on combustion process. Coalescence of minerals during combustion found most dominant process during the transformation of coal minerals to ash. Activation of coarse fly ash particles showed more adsorption capacity by controlling gasification of the unburned carbon. (emphasis added)

Besides MOEF, Ministry of Urban Development, Govt. of India has also defined solid waste as industrial waste and its major generators being thermal power plant producing coal ash.

Therefore, ash generated from thermal power Therefore, ash generated from thermal power plants is undoubtedly a solid is undoubtedly a solid waste and a hazardous waste which was requ waste and a hazardous waste which was required to be disposed off in an ired to be disposed off in an environmentally friendly manner as friendly manner as emphasized in the above notifications. in the above notifications.

We note that it is mandatory for the thermal power stations to dispose off We note that it is mandatory for the thermal power stations to dispose off We note that it is mandatory for the thermal power stations to dispose off the ash generated at its premises completely. Such ash is being collected the ash generated at its premises completely. Such ash is being collected the ash generated at its premises completely. Such ash is being collected from the thermal power stations by the appellant and is being managed at from the thermal power stations by the appellant and is being managed at from the thermal power stations by the appellant and is being managed at its premises. Such solid waste is being disposed off in an environment its premises. Such solid waste is being disposed off in an environment its premises. Such solid waste is being disposed off in an environment friendly manner by consuming in manuf friendly manner by consuming in manufacture of cement as a substitute for acture of cement as a substitute for clinker. Such effective management of waste by turning it into useful clinker. Such effective management of waste by turning it into useful clinker. Such effective management of waste by turning it into useful product in our view is nothing but solid waste management. product in our view is nothing but solid waste management. product in our view is nothing but solid waste management.

The contention of the revenue The contention of the revenue that Solid Waste Management Rules that Solid Waste Management Rules 2016 does not cover fly a 2016 does not cover fly ash does not mean that fly ash is not a solid waste. sh does not mean that fly ash is not a solid waste.

On perusal of the said Rules, it has been noted that the said rules itself On perusal of the said Rules, it has been noted that the said rules itself On perusal of the said Rules, it has been noted that the said rules itself clarify that industrial and other wastes are covered under separate rules that industrial and other wastes are covered under separate rules that industrial and other wastes are covered under separate rules framed under the Environment (Protection Act), 1986 & h framed under the Environment (Protection Act), 1986 & h framed under the Environment (Protection Act), 1986 & hence same are from Hazardous Rules, 2016, which also clarifies that separate notification shall be issued for fly ash. As already noted earlier, MOEF has come out with separate notifications for fly ash from time to time and since said notifications are specifically issued for Fly ash, it does not get covered in composite SWM Rule 2016 or Hazardous Rules 2016. Hence reliance on above rules by the department to contend that fly ash is not solid waste is not correct. On the issue we note that ITAT Pune in the case of ITO –vs.- Dirk India Pvt Ltd. (In dated 24-10-2018) have also duly taken cognizance of the fact that fly ash is a waste generated from coal fired electricity generating power station and disposal of the same is eligible for deduction u/s 80IA. Relevant extract of the finding so recorded is reproduced here in below :

“In the instant case the assessee has made claim of section 80IA and filed all details with AO. The AO has examined the same and then denied it stating that the fly ash is one of the ingredients in manufacture of Pozzocrete. This view of AO is not correct. On examination of composition of Pozzocrete it is observed that fly ash is the major component. Pozzocrete is processed fly ash for eco friendly, more durable and performance improved concrete. It is obtained by processing fly ash product as a by-product at coal-fired electricity generating power stations. The word solid waste management is not defined in income tax. As per Glossary of environment statistics* Solid waste management refers to the supervised handling of waste material from generation at the source through the recovery processes to disposal. In the instant case the assessee procures the fly ash from MSEB. The fly ash so procured is processed and Pozzocrete. Pozzocrete has a successful history 'Of use in concrete around the world as Pozzolanic material. Therefore assessee is handling the waste material generated from coal fired electricity generating power Shree Cement Limited vs. ACIT stations to its final disposal. This makes the assessee qualify as solid waste management company. In view of the aforesaid discussion and facts of the case the assessee being solid waste management company as envisaged under section 80IA(4) explanation c, in my opinion, as it qualifies the condition mentioned under section 80IA(4), it is entitled for deduction under section 80IA of the Act. The AO is directed to allow the claim of section 80IA after proper verification” [*Glossary of Environment Statistics issued by Department for Economic and Social Information and Policy Analysis, United Nations, New York, in the year 1997. The same has also been referred by Organisation for Economic Co- operation and Development in OECD Glossary of Statistical Terms issued in 2008] In the aforesaid decision, the assessee raised the issue of allowability of Deduction u/s 80IA(4) on management and use of fly ash for manufacture of Pozzocrete as Solid Waste Management System which was not originally claimed in the Return of Income but was claimed later. The said claim was not accepted by the Assessing Officer. The CIT(A) examined the issue and considered the assessee to be eligible for claiming Deduction u/s 80IA(4). The Tribunal upheld the order of the CIT(A) and dismissed the appeal of the Revenue.

Against that decision of the tribunal revenue did not bring on record of having reversed that finding by any higher forum and therefore, on being consistent to the finding of the Tribunal in the said case, it is not open to the Revenue to challenge the very same issue in other assessee as per the explicit principles laid down by Hon’ble Apex Court in UOI -vs.- Kaumudini Narayan Dalal & Anr (2001) 249 ITR 219 (SC) where the Court held that it assessee and challenge its correctness in the case of other assessee without just cause. Said view is also upheld in Berger Paints India Ltd. -vs.- CIT (2004) 266 ITR 99 (SC) & CIT vs Narendra Doshi (2002) 254 ITR 606 (SC).

Thus, having gone through the assessment orders passed in the case of the assessee by the different Assessing Officers and Transfer Pricing officers from AY 2013-14 onwards, in all the orders, it has been accepted by department that Pond ash and Fly ash which are generated by thermal power plant & are used in manufacture of cement and such solid wastes are managed by the solid waste management system set up by the assessee - appellant. The fact that assessee - appellant is managing ash generated from thermal power stations is not disputed by any authority. In the survey proceedings, the view is being taken by the Revenue that such fly ash is not a solid waste. This view is not correct. In any case, it cannot be considered as a new fact but is merely a different contention which the revenue is now raising. It is not the case of the Department that during the survey it has found out that the appellant is not using fly ash. It is merely stating that same cannot be considered as a solid waste. Hence, we have no doubt in holding that this is not a new fact which department has found contention of the revenue, and we hold that fly ash and pond ash are undoubtedly a solid waste. The assessee - appellant had filed written submissions wherein extracts from the videography taken during the survey proceedings in the form of pictorial representation showing the activities and functions carried out by the SWM facility. From perusal of the same, it is evident that SWMS of the appellant carries out series of activities of collection, treatment, transportation, storage & safe disposal of fly ash & pond ash. Therefore, said activities which ultimately results into disposal of above solid waste and prevents it from causing environmental hazards, shall be considered as solid waste management system and hence is undoubtedly eligible for deduction u/s 80-IA of the Act. At this stage one more argument put up by the revenue is that since solid waste management system has not been defined u/s 80IA, the system as contemplated u/s 80IA is in relation to sanitation and municipal solid waste only with an objective to augment the urban infrastructure. In support of the above contention, the department has relied on the budget speech of the finance minister. We find no merit in this argument. We are unable to find the term ‘Municipal’ or ‘Urban Area’ used anywhere in the budget speech or in the Act. Thus, limiting the ambit of deduction u/s 80IA to Municipal or not permissible. It would not be correct to interpret that environmental and climate problems only relate to urban areas and not to rural areas. The root problem of disposal of solid waste starts with thermal power plants which may be located anywhere and generally they are located at the outskirts of the cities only or in rural areas. Hence, to argue that the intention of the legislature was to encourage solid waste management only in urban and municipal areas and not rural and outside municipal areas would be grossly unjustified and could never have been the intention of the Government.

We, therefore, find no merits in this contention of the department even on this aspect it fails.

(b) Revenue also claims that Ash handling system is an essential and inseparable part of cement plant and does not have an independent existence. Hence, SWM system is nothing but splitting up or reconstruction of business already in existence & hence not eligible for deduction u/s 80IA.

Here revenue contended that during survey proceedings it has been noted that the ash handling system and cement plant are inseparable and hence there does not exist any solid waste management system which is independent on its own. Further, during survey based on statement of few handling system was present since beginning of the cement plant. Based on said findings, as per revenue, the appellant is not entitled to deduction u/s 80IA since it tantamount to restructuring of the business already in existence. On this issue ld. AR of the assessee submitted that these contentions of the revenue are not only in correct on facts but also legally not tenable. He further stated that none of the assessee - appellant’s SWMS have been formed as a result of any restructuring of business already in existence. They are all newly set up, as has been already confirmed in the assessment proceeding for earlier years and that Revenue has not produced any evidence to the contrary.

Ld. AR further referring to the relevant provision of the Act submitted that in any case and without prejudice to appellant’s submission on the restriction of splitting up and reconstruction of business already in existence as stipulated in section 80IA(3) is not applicable in relation to the claim of Section 80IA(4)(i) i.e infrastructure facility. Hence, even if it is assumed that there is a reconstruction of business already in existence, then also, deduction u/s 80IA cannot be denied to the assessee - appellant.

For that it would be appropriate to go through the relevant provision of the Act which reads as under :

3) This section applies to an undertaking referred to in clause (ii) or clause (iv) of sub-section (4) which fulfils all the following conditions, namely :— (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose: ….. Section 80IA(4) (4) This section applies to— (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely:— (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c)it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that where an infrastructure facility…. Explanation.—For the purposes of this clause, "infrastructure facility" means— (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea;

(ii) any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite Shree Cement Limited vs. ACIT service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the 31st day of March, 2005. Explanation.—For the purposes of this clause, "domestic satellite" means a satellite owned and operated by an Indian company for providing telecommunication service (iii) ……. (iv) an undertaking which,— (a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2017; (b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2017: Provided that the deduction under this section to an undertaking under sub- clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution; (c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April, 2004 and ending on the 31st day of March, 2017.

As is evident from the above provision that restriction of splitting up & reconstruction of business already in existence is stated u/s 80IA(3) of the Act. Provision of section 80IA(3) is applicable only in respect to undertaking referred to in Section 80IA(4)(ii) which are telecom undertakings and Section 80IA(4)(iv) which are Power undertakings. The appellant’s claim u/s 80IA on Solid waste management system is under section 80IA(4)(i) which clearly is not covered by the restrictive provisions of Section 80IA(3) of the Act. Hence, we find force in the contention so raised by the ld. AR of the assessee – appellant alternatively that even this allegation of the revenue has no force and is not tenable. splitting and reconstruction is not a condition precedent for claiming deduction u/s 80-IA by SWMS. Thus, we now come to other factual contentions of the revenue.

As is evident from past assessment records that while discussing the functional analysis carried out by SWMS of the assessee - appellant in assessment order of earlier years, both AO & TPO has pointed out the interlink & interdependence of SWMS with the Cement Unit and the common space and assets used between them. Based on those factual observations, both the AO & TPO had applied Profit Split Method (PSM) thereby splitting the overall profit of SWMS between the SWMS and Cement unit. The revenue stated that facts in the assessment order of earlier years about various infrastructure facility being SWMS, newly set up by the appellant. Further, we also note that various activities are being carried out by SWMS of the assessee- appellant which are totally separate and carried out independently, some of which are carried out at source point of collection of fly ash/pond ash i.e at thermal power plant site, which has no link whatsoever with the cement plant of the assessee - appellant.

Though there may be some interdependence between the SWMS & Cement Units but that does not mean that eligible facility is not is not a new fact since the said fact is clear from the orders passed by the revenue itself in earlier years and in any case, the said contention is not tenable on merits of the case.

The bench noted from the accounts and audit report filed in Form 10CCB by the assessee - appellant, wherein it has been clearly established that the appellant has claimed deduction u/s 80IA only on its new infrastructure facility set up and has not claimed any deduction on any of its old facilities. The date of commissioning of the infrastructure facilities along with the documentary evidence, plant capitalization etc. were not only part of assessment records and TP documentation study report and were duly produced during the survey proceedings itself. Revenue is not alleging that the facility on which deduction is claimed is not new but old. It has only alleged that since the appellant had similar facility earlier also hence the new facility should be regarded as reconstruction which is not a correct proposition both factually as well as legally. We further find force in the Appellant’s submissions that the old facility which the department is referring to were all for Fly ash and that also at different locations. The appellant has claimed Deduction u/s 80IA only in respect of its new SWMS both in respect of Fly ash as well as Pond ash. Further, Pond Ash facilities commissioned its operation only from 23-06-2009. Further, the appellant started its business operations at new locations which were not there earlier like in the state of Uttar Pradesh on 30.10.2015, at Chhattisgarh on 24.02.2015 and at Bihar on 09.07.2014. Hence, these facilities cannot be old when the appellant had no operations earlier in the above locations.

From the perusal of the Balance Sheet and the fixed asset details appended to the form 10CCB, it leaves us beyond doubt that those above facilities have been set up with huge capital expenditure not only at the appellant’s location but also at the premises of thermal power plants which have no connection whatsoever with the cement unit of the appellant.

Department has not contested that the appellant has not incurred these capital expenditures. Neither is it alleged that these assets appearing in the balance sheet of these eligible facilities are not correct or exist only on papers. Hence, we find no merit in the case of the revenue that the assessee - appellant has been claiming deduction on old facilities.

(c) Now coming to the issue of Agreement with Gram Panchayat whether the same is valid agreement or not. In the survey proceeding revenue contended that mandatory conditions of signing of agreement with local authority have not been complied with in the appellant’s case. As per such agreement since the area of operation of ash handling is spread across large geographical expanse. Further, the appellant could not produce any correspondence which it had with the Gram Panchayat before signing the agreement. On this contention ld. AR of the assessee vehemently stated that this contention of the department also devoid of any merit & in any case, it cannot be said to be a new finding at all in course of the survey proceedings. The agreements under consideration are being filed year on year by the assessee - appellant along with the Auditors’ report in Form 10CCB. Revenue in its earlier years order has categorically given findings in the assessment order on such agreement and has accepted it to be valid while approving the eligibility of the assessee - appellant for deduction u/s 80IA. Now suddenly after so many years, it is alleged that such agreements are invalid and that Gram Panchayat cannot be regarded as Local Authority as specified in Section 80IA of the Act. On this issue we note that under the Income Tax Act itself, term local authority has been defined in the Explanation to Section 10(20) as below –

“Section 10(20) – ….. Explanation – For the purposes of this clause, the expression ‘local authority’ means (i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or (ii) ….. ”

Thus, in absence of any definition in Section 80IA, the above definition as referred to in section 10(20) can be relied upon. Even otherwise, in the case of the Appellant’s, their plants are located in remote areas where the local authority is the Gram Panchayat only. Hence, we find no merit in the argument of the revenue that Gram Panchayat cannot be regarded as local authority, and we hold that agreement entered into by the assessee - appellant duly complies with the condition as referred to in Section 80IA(4)(i)(b) of the Act.

The other contention that gram panchayat has no jurisdiction also is invalid since the appellant has entered into agreement with Local Authority of the area of the plant of the assessee - appellant where ultimate disposal of solid waste is taking place which is important and not of other places from where, say, such solid waste is collected or transported etc. We also note that there is no requirement in the Act for entering into multiple agreements for claiming a deduction u/s 80-IA of the Act.

Revenue has further alleged that the assessee - appellant - could not produce any correspondence which it had with the Gram Panchayat before signing the agreement. This contention of the department is pointing to allegations about the authenticity of the agreements. We have gone which were taken during the course of survey by the departmental authorities. Answers to Questions 22 to 25 specifically deals with the mechanism adopted by Gram panchayat before signing the agreement wherein the Sarpanch have not only clarified that all due compliance and processes were carried out at the time of signing the agreement in the form of holding of meeting, passing of resolution, timing of the meeting as well as other persons who attended the meeting before signing of the agreement. This leaves beyond doubt the fact that the above contention of the revenue is also not correct that due processes were not followed before signing this agreement. Further, we find that there is consensus-ad-idem between the parties to the agreement, hence casting doubt upon the existence and validity of agreement has no force and is not tenable.

Thus, we hold that “Yes” Gram Panchayat is considered a local authority. This is supported by various judgments that outline the legal status and functions of a Gram Panchayat within the framework of local self-governance in India. The judgment upon which we get support of our view are as under : i) Velpur Gram Panchayat - Appellant Versus Asst. Director of Marketing, Guntur – Respondent wherein the Hon’ble Andhra Pradesh High Court held that a Gram Panchayat is a self-governing body with sovereign powers to regulate and impose penalties, indicating its status as a local authority.

Shree Cement Limited vs. ACIT ii) Kurapati Bangaraiah And 17 Others Petitioners v. Govt. Of A.P (2014) wherein the Hon’ble High Court held that “Gram Panchayat as a body constituted for the local administration of a village, further supporting its classification as a local authority”. iii) Apurba Das v. State Of Assam And Ors. (2009); This case discusses the three-tier system of Panchayati Raj and reinforces that Panchayats, including Gram Panchayats, are units of local self-government. iv) Vivekanand Yadav v. State Of U.P (2010): It defines a Gram Panchayat as a local body governing a village and highlights its governance under the Panchayat Raj Act. v) Gollapalli Gangadhar Rao And Ors. v. State Of Andhra Pradesh And Ors. (2014): This judgment reiterates that under Article 243-G of the Constitution, Panchayats, including Gram Panchayats, are endowed with powers necessary to function as institutions of self-government, affirming their local authority status. vi) Maharashtra Rajya Grampanchayat Karmachari v. Secretary, Rural Development Department, Maharashtra State (2014): This case discusses the functions and roles of Gram Panchayats, further supporting the notion of their authority in local governance.

Thus, based on the discussion so recorded herein above and the judgement relied upon clearly establishes that Gram Panchayats function as local authorities with defined powers and responsibilities in local governance.

(d) As regards the contention that separate costing code is not maintained for SWMS for that contention ld. DR submitted that no cost code is allocated to solid waste management or fly ash. It was further stated that whenever material relating to fly ash is issued, it is issued on the cost code, which is the cost code of the manufacturing department. Hence, the DR strongly contended that the entire system relating to fly ash is categorized as part and parcel of a manufacturing plant. No separate department exists as such. existence of SWMS in detailed manner, hence the allegation of the revenue that no SWMS exists merely because there is no separate cost code for SWMS does not seem to be a valid ground. The AR of the appellant duly brought on record that separate books of accounts are prepared by the appellant in respect to claim of SWMS which is duly audited by an independent chartered accountant as per provisions of Section 80-IA(7) of the Act. Further the provisions of Section 80-IA(5) require that once the business is eligible for deduction u/s 80-IA, the quantum of the deduction is to be computed as if such eligible business were the only source of income of the appellant. Ld. AR submitted that the books of accounts is having code(s) for receipt, consumption, inventory and from those code only the appellant has identified all the related income & expenditure items with respect to said eligible business. Based on the same, separate books of accounts are prepared and audited u/s 80-IA(7) of the Act. The assessee - appellant thus having duly complied with the same and have furnished audited accounts of the eligible facilities which had been filed along with Form 10CCB. Further, the AR submitted that the appellant never contended that solid waste in the form of ash is not used by the company in manufacturing of the cement. Further, there is no restriction in the Act inputs or on captive production/ generation of any output. To support this view we get support from the decision of Hon’ble Calcutta High Court in CIT –vs.- Orient Papers Mills Ltd (1974) 94 ITR 73 (Cal) [affirmed by Apex Court in (1989) 176 ITR 110(SC)] & CBDT letter dated 03-10-2001 wherein it is clarified that tax holiday u/s 80-IA shall be available to undertakings engaged in generation of power for captive consumption. In fact, power generated by its power plant is also captively used by the cement plant for manufacturing of cement. The said activity of captive power generation and consumption has been accepted by the Revenue to be eligible for deduction u/s 80-IA of the Act in appellant’s own case, year on year. Hence adopting a contrary view for any captive consumption of solid waste is invalid. We agree with the above contentions of the AR of the assessee - appellant and do not find any merits in the contention raised by the revenue.

(e) Going further at this stage it is important to examine the contention that whether section 80IA in so far as it applies to infrastructure facility particularly Solid Waste Management System was never intended to cover private infrastructure facility. facility was introduced for the 1st time by Finance Act, 1995 w.e.f 01-04- 1996 by inserting sub section 4A to Section 80-IA. Vide Section 80IA(12)(ca), infrastructure facility was defined to mean road, highway, bridge, airport, port or rail system or any other public facility of similar nature as may be notified by board. Thus, in essence, the tax holiday was in respect of ‘Public’ infrastructure facility. The definition of infrastructure facility was modified by Finance (No.2) Act, 1996 w.e.f 01-04-1997 as under:

(ca) "infrastructure facility" means— (i) a road, highway, bridge, airport, port or rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette; (ii) a water supply project, irrigation project, sanitation and sewerage system;

The modification by Finance (No.2) Act of 1996 was distinct. Clause (i) covered, road, highway, bridge etc or any other public facility of similar nature as may be notified. Thus, clause (i) covered public infrastructure facilities. The criteria of infrastructure facility to be ‘public’ was not provided in clause (ii) which covered water supply project, irrigation project, sanitation & sewerage system. The intention of the legislature is very clearly visible from two categories of infrastructure facility as stated in the amended definitions as reproduced above.

1998 & Finance Act, 1999 w.e.f 01-04-1998 by expanding its scope but maintaining the basic criteria as explained above. Then Finance Act, 1999 substituted the then Section 80-IA into section 80-IA & Sec 80-IB.

Till AY 2000-01, Solid Waste Management System was not covered by the definition of Infrastructure facility. The tax holiday on Solid Waste Management System was introduced by Finance Act, 2000 w.e.f 01/04/2001 by adding it to the definition of infrastructure facility. The definition infrastructure facility as modified by Finance Act, 2000 w.e.f 01- 04-2001 reads as under:

Explanation —For the purposes of this clause, "infrastructure facility" means,— (a ) a road, bridge, airport, port, inland waterways and inland ports, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette; (b) a highway project including housing or other activities being an integral part of the highway project; and (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;

In the above definition, it could be clearly seen that clause (a) covers ‘public’ infrastructure facility and clause (b) & clause (c) covers infrastructure facility specified therein without any restriction as to ‘public’ or otherwise. SWMS was added in the clause (c) & hence there were no We find that the Government realised the need for development of infrastructure facility at all places and without any qualifying restriction. It was felt necessary to encourage the development of infrastructure in all specified areas without any restrictive tag. Hence, the definition of infrastructure facility was further modified by Finance Act, 2001 w.e.f 01-04- 2002 as follows:

Explanation.— For the purposes of this clause, "infrastructure facility" means— (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway or inland port.

From the above it could be seen that the requirement of any infrastructure facility to be ‘public’ in nature has been completely taken out from the definition of infrastructure facility. The definition so amended has remained unchanged from 01-04-2002 till date, making the intention of the government abundantly clear beyond iota of doubt. While on the subject and to ensure fair assessment of the tax holiday in the present case it is also necessary to examine if the appellant’s eligibility is impacted by explanation to Section 80-IA which reads as under:

Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub- Shree Cement Limited vs. ACIT section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1)

In the case of the appellant, we find that it operates Solid Waste Management system. Further for the said purpose, it procures ash from independent power plant at arm’s length on principal to principal basis.

That being the case, appellant’s case is not a works contract awarded to it by any person (including Central & State Government) and executed by Solid Waste Management System of the assessee-appellant. Hence, the restrictive covenants of the aforesaid explanation to Section 80-IA also does not apply to the appellant. Further there is no stipulation in Section 80-IA that deduction in respect to Solid Waste Management System is only available to assessee’s who produces solid waste. On the contrary, the deduction is available to any & every assessee who develops, operates & maintains Solid Waste Management System. Further, there is no denial in Section 80-IA to deduction thereunder, to assessee’s who develops, operates & maintains Solid Waste Management System as a part of or in course of business.

17.9 Based on the discussion so recorded herein above we summarize our finding on the issue as under : finding of facts which have been unearthed by the revenue in the survey proceedings. Even the ld. DR did not demonstrate any new facts coming out of the survey which justifies that the appellant is not eligible for deduction u/s 80IA on its Solid Wast

Management System.

(b) The claim of the assessee since assessment year 2013-14 has been verified and after considering the necessary verification by bringing material on record the eligibility of the claim was allowed vide assessment order passed under section 143(3) of the Act on 16.12.2014. As there was no new material brought on record that claim which has been allowed by due process of law by the ld. AO and ld. TPO cannot be permissible to dispute subsequently on the reasons which were already been explained herein above and the same being no new facts or material to dispute the claim of the assessee- appellant and therefore, the said claim cannot be disputed at this stage.

(c) As the ld. AO and ld. TPO made adjustment in the claim of the assessee the same were tested in appellate i.e. before the Commissioner of Income (Appeals) and this Tax Tribunal and the facts.

(d) As is evident that Survey proceedings in fact justifies the existence of solid waste management facility as could be seen from the videography, statements recorded of the sarpanch and the functional analysis noted by the survey team.

(e) Pond Ash and Fly Ash are both undoubtedly Solid Waste’ and its effective disposal by the appellant by utilizing the same in manufacture of cement represents ‘Solid Waste management

System’.

(f) Agreement entered into by the appellant with Gram Panchayat duly satisfies the condition required as per 80IA(4)(i)(b) of the Act.

(g) Restrictive condition of 80IA(3) is not applicable for infrastructure facility in the form of SWMS which is eligible for deduction u/s 80IA(4)(i). Even otherwise, the appellant has been claiming deduction only on its new facilities set up and therefore there is no splitting or reconstruction of the old facility for claiming deduction u/s 80IA. hazardous waste and there is no requirement for such SWMS to be set up only in urban areas.

(i) Separate books of accounts have been maintained by the appellant for its SWMS & are duly audited by an independent chartered accountant in accordance with Sec 80IA(7) of the Act.

(j) Infrastructure facility as specified u/s 80-IA are not restricted to ‘Public’ infrastructure and the claim of deduction u/s 80-IA is available to both public and private infrastructure facility as well.

(k) The Solid Waste Management System of appellant is procuring fly ash/pond ash from thermal power plants on principal to principal basis and hence, the same cannot be considered as works contract or the appellant conducting the operations on sub-contract basis.

(l) At this stage we also would like to take support of the decision of the apex court in the case of Parashuram Pottery Works Co. Ltd Vs ITO [

1977] 106 ITR 1 wherein the apex court held that “It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that Shree Cement Limited vs. ACIT there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi- judicial controversies as it must in other spheres of human activity. So far as the income-tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, this cannot be said in the present case. The appeal is consequently allowed, the judgment of the High Court is set aside and the impugned notices are quashed.”

Based on the discussion so recorded and the points that we have summarized herein above, in our considered view, the solid waste management system as set up by the appellant satisfies all the conditions as provided in section 80IA(4) read with clause (c) of the Explanation to the said section and is thus eligible for deduction under section 80IA(1) of the Act.

In the light of this discussion we direct the ld. AO to allow deduction u/s 80IA on account of the solid waste management system (fly ash) as stated above, following our decision in earlier year & by following PSM method & based on FAR of 79.73%. Based on the above finding of facts, additional ground no. 2 raised by the assessee – appellant is allowed.

18. Now we take up the additional ground no. 3 which relates to exclusion of various incentives in the form of reward being capital receipt 115JB.

19. The brief facts of the case are that the appellant has availed in the form of reward being, Sales Tax Subsidy & Electricity Duty Exemption amounting to Rs. 273.38 Crs. which was granted under incentive schemes of various state governments for promotion of setting up of new units/ expansion of existing units & to create employment opportunities under various Central and State incentive schemes being Rajasthan Investment Promotion Scheme, 2010 (RIPS 2010), Rajasthan Investment Promotion Scheme, 2014 (RIPS 2014), Bihar Industrial Incentive Policy 2011(BIPS, 2011), Bihar Industrial Incentive Policy 2016 (BIPS, 2016), New Industrial Policy, 2003 (NIP, 2003) and UP Infrastructure & Industrial Investment Policy, 2012 (UIIP, 2012). The appellant has claimed the above incentives as capital receipt in its return of income vide notes forming part of the computation of income and has therefore prayed before this bench to admit the said ground and decide the case in accordance with law.

20. In support of the ground so raised the ld. AR of the assessee - appellant argued based on the following written submission as under:-

A. ‘Incentives’ in the form of Reward, constitute capital receipt and are not taxable Hon’ble Jaipur Tribunal in Mayur Uniquoters Ltd. –vs.- CIT (ITA No. 02/JP/2022 dated 09-11-2022) have held that incentives in the form of Reward cannot be considered as ‘assistance’ u/s 2(24)(xviii). Such incentives were held to be capital receipts, not chargeable to tax, by relying upon the decisions of Jurisdictional HC in PCIT -vs- Nitin Spinners Ltd. (2020) 116 Taxman.com 26 (Raj) and J&K HC in Shree Balaji Alloys -vs- CIT (2011) 333 ITR 335 (SLP rejected by SC in both the cases). Similar view has been taken by Hon’ble Chennai Tribunal in ACIT –vs.- Eastman Exports Global Clothing (P) Ltd. & others (I.T.A. Nos. 3326/Chny/2019 dated 20- 09-2024) wherein it has been held that benefits received in the form of reward does not fall within the provisions of Sec. 2(24)(xviii) of the Act. In case of the appellant, the incentives has been granted for promotion of setting up of new industrial undertakings and creating employment opportunities. It is only after meeting the desired objectives of the State Government, said incentives are granted to the appellant. Hence, this incentives are in the form of ‘Reward’. Thus, following the decision of the Hon’ble Jaipur Tribunal in Mayur Uniquoters (supra), the incentives in case of appellant are capital receipts not chargeable to tax even after the amendment u/s 2(24)(xviii) of the Act. B. Directly covered by the decisions of Hon’ble Jaipur Tribunal, Rajasthan HC and Supreme Court: Present issue is also settled in favour of appellant by following judicial pronouncements of the Apex Court & as below:- - CIT –vs.- Ponni Sugars & Chemicals Ltd. (2008) 306 ITR 392 (SC) [Excise subsidy] - CIT –vs.- Shree Balaji Alloys (2016) 138 DTR 36 (SC).[ Excise Refund & Interest Subsidy] - CIT –vs.- Birla VXL Ltd. (2013) 90 DTR 376 (Guj) affirmed by Apex Court vide Civil Appeal No. 8907, 10396 & 10666 of 2013(2016) 138 DTR 36 (SC). [Sales Tax Exemption] Further, it has been consistently held in appellant’s own case by the decisions of Hon’ble Rajasthan High Court in AY 2003-04 to AY 2009-10 vide Order dated 22- 08-2017 that Incentives received by the assessee are in the nature of capital receipts not chargeable to tax either under normal provisions or under provisions of MAT. Further, Hon’ble Jaipur Tribunal vide its order dated 28-12-2017 for AY 2012-13 & AY 2013-14 and order dated 07-08-2023 for AY 2014-15 after relying on the Shree Cement Limited vs. ACIT decision of Rajasthan High Court in earlier years in the appellants own case, has held that Incentives received including electricity duty exemption by the appellant is in the nature of capital receipt and hence is not chargeable to tax.

C. The decision of Serum Institute is not applicable in the present case:

From A.Y. 2016-17 to 2018-19, the said issue was decided by Hon’ble Jaipur Tribunal against the assessee by relying on the decision of Serum Institute of India -Vs- UOI (WP No. 3735 of 2021 dtd. 4-12-23), wherein the issue before the Hon’ble Bom HC was regarding the constitutional validity of the sub-clause (xviiii) introduced in the definition of income u/s 2 of the Act. Answering the said question of law, it was held by the Hon’ble Court that amendment to s. 2(24) by the insertion of sub-cl. (xviii) by the Finance Act, 2015 cannot be held to be violative of any of the provisions of Constitution.

The appellant in the present appeal or in earlier appeals has never raised any query regarding constitutional validity of the said sub-clause (xviii). Hence reliance on such decision is not appropriate.

Further, in the case of Serum Institute (supra), the new unit was set up, claim was lodged and pertained to years, all after AY 2016-17, after the definition of income was amended. The said facts can be clearly distinguished in case of the Assessee in respect of its incentives which pertains to years before AY 2016-17 and to such incentives, without prejudice to other submissions, the aforesaid amendment has no application.

D. Mere inclusion of subsidy etc. in the definition of ‘income’, without corresponding inclusion under any of the ‘heads of income’, cannot be subjected to income tax

Subsidy, though added in the definition of income by way of deeming fiction, has not been included in the charging section 28, unlike the erstwhile proposed Direct Tax Code, where it was proposed to be added also in the charging section 33 [PB Pg No. 497-500]. Hence, such income cannot be brought to tax. Reliance is placed on the decisions of Hon’ble SC in Nalinikant Ambalal Mody - vs.- CIT [1966] 61 ITR 428 (SC) and Hon’ble Calcutta High Court in CIT –vs.- Justice R . M. Dutta (1989) 180 ITR 86 (Cal)

E. Decision of Hon’ble Jaipur Tribunal in assessee’s own case for AY 2016- 17 to AY 2018-19 vide order dated 21-02-2024 a. Vide para 130 of the said order, this Hon’ble Bench has interpreted the meaning of the term ‘Reward’ & ‘Assistance’. The appellant humbly submits that its arguments of considering incentives as reward stand more on a stronger

Interpretation of the term ‘Reward’ vide Para 130 of Applicability in case of Appellant order dated 21-02-2024 A reward is given in return for Incentives has been granted for setting up an act or achievement of New Industrial undertakings or creation of additional employment. It can be monetary or non- Monetary benefits has been received monetary Given as a gratitude for good Incentives granted for promotion of Govt. work, faithfulness, or helping objectives i.e Industrialization & someone in need employment creation b. In the said order, it has been stated that there is no amendment u/s 28 or 56 specifically including subsidy for the reason that such classification will depend upon the nature, purpose of such subsidy. The said contention is not correct as wherever the legislature intends to include income under two heads, it provides the same under both heads mentioning that the one shall be subject to another. For eg. Any sum received under Keyman policy is taxable u/s 28(vi) under the head ‘Profits & Gains from business or profession’, however, if due to any reason, same is not included under the head PGBP, then the same shall be chargeable to tax under the head Other Sources u/s 56(ii)(iv). c. In the said order, it has been stated that Sec. 145B(3) has also dealt with the year of taxability of subsidy. Said Sec. 145B(3) is not applicable in the present case on account of the following:

- Sec. 145B(3) does not specify the charging section for taxability of Incentives. It only specifies that certain income as referred in Sec 2(24)(xviii), shall be deemed to be the income of the assessee in the year of receipt if not already charged to income tax in previous year.

- Provisions of Sec. 145B(3) intends to tax only those income on receipt basis which are otherwise chargeable to tax as per provisions of Act and not those income which are capital receipts not chargeable to tax. d. The issue was also decided against the assessee by relying on the decision of Serum Institute (supra). It was stated that argument of absence of head of income was negated by the Tribunal by relying on the decision of Apex Court in Poona Electric Supply Co Ltd. Vs. CIT [AIR 1966 SC 30 ]. In Serum Institute (supra), the said decision of Apex Court is merely quoted at Para 19.

Shree Cement Limited vs. ACIT However, how the same negates the assessee’s argument could not be understood. Further, reliance was placed on Para 21 of the decisions of Serum Institute (supra). At Para 21 of the said decision, with due respect, would humbly like to submit that though argument on absence of head of income u/s 28 was mentioned before the Hon’ble Bombay HC, however, the Court nowhere in its order or in the said para has dealt with the said contention and has merely upheld the constitutional validity of amendment made u/s 2(24)(xviii) of the Act.

F. Incentives, being in the nature of capital receipts, cannot be brought to tax u/s 115JB (where there is no amendment)

The issue is squarely covered in favour of the Assessee, by the decisions of Hon’ble Rajasthan HC in assessee’s own case in AY 2006-07 to AY 2009-10 (ITA No. 85-87/2014 & 227/2016 vide Orders dated 22-08-2017).

21. Ld DR on behalf of the Department submitted that since the issue has already been decided by this Tribunal against the appellant vide order dated 21-02-2024 for AY 2016-17 to AY 2018-19, there is no change in facts or law in the current year, therefore this ground is liable to be decided against the assessee - appellant.

Having admitted the said ground we proceed to decide the same on merits of the case. ground has already been decided by this Tribunal against the appellant vide order dated 21-02-2024 in appellant’s own case for earlier year. Even though still pressed before this bench to reconsider its earlier decision in view of judicial pronouncements rendered in Mayur Uniquoters Ltd. –vs.- CIT (ITA No. 02/JP/2022 dated 09-11-2022 & ACIT –vs.- Eastman Exports Global Clothing (P) Ltd. & others (I.T.A. Nos. 3326/Chny/2019 dated 20-09- 2024).

22.1 We note that the issue has been covered against the appellant in its own case by the decision of Jaipur Tribunal in 496 to 498/JP/2023 pertaining to AYs 2016-17 to AY 2018-19. In the said decision, the issue has been decided against the appellant by relying on the decision of Serum Institute (Supra). The appellant has brought to the notice of this Bench that the issue before the Hon’ble Bombay High Court was regarding the constitutional validity of the sub-clause (xviii) introduced in the definition of income u/s 2(24) of the Act. Answering the said question of law, it was held by the Hon’ble High Court that amendment to Sec. 2(24) by the insertion of (xviii) by the Finance Act, 2015 cannot be held to be violative of any of the provisions of Constitution. In the present case, the appellant has never Hence the said decision should not apply. The Ld. AR also brought our attention towards the recent decision of Chennai Tribunal in ACIT –vs.- Eastman Exports Global Clothing (P) Ltd. (ITA No. 3326/Chny/2019 dated 20-09-2024) where after taking note of the decision of the Bombay High Court in Serum Institute (Supra), the Tribunal held the following:-

“18. On careful reading of para 10 above, we note that the assessee/petitioner therein challenged the constitutional validity of impugned subclause (xviii) to section 2(24) of the Act, whereby, contending all incentives given in whichever form by the Government and with whatever purpose of objective are to be treated as income, irrespective of the fact as to whether or not the same is in the nature of capital assistance and or revenue assistance, which clearly establishes that the assessee/petitioner therein challenged constitutional validity of the insertion of sub-clause (xviii) to section 2(24) of the Act. Further, on careful reading of paras 41 and 43, the Hon’ble High Court was pleased to observe that there is no perversity or gross disparity resulting in clear or hostile discrimination by inserting impugned sub-clause and held the amendment to section 2(24) by insertion of the sub-clause (xviii) through Finance Act, 2015, is a perfect example of a legislative endeavour to align the definition of “income” with the evolving economic landscapes and judicial precedent of it being an inclusive and elastic term. Further, observed, amendment to section 2(24) by insertion of the impugned sub-clause that includes various subsidies and concessions only indicates the well established jurisprudential path ensuring that the income tax laws remain attuned to the economic realities and continue to serve as a vital cog in the nation’s fiscal machinery. Therefore, in our opinion, there was no adjudication nor law laid down by the Hon’ble High Court of Bombay with regard to the applicability of words or items as contemplated in sub-clause (xviii) to section 2(24) of the Act, thus, we do not find force in the arguments of the ld. DR that the Hon’ble High Court of Bombay was pleased to hold all incentives given in general form by the Government for whatever purpose or objective are to be treated, as income………

22.2 The Ld. A/R further pointed out that even otherwise, although the decision of Serum Institute has been decided against the assessee which states that subsidy shall be duly covered within the definition of Sec.

2(24)(xviii), however, whether the incentives in the nature of reward are to be covered by the definition of Sec. 2(24)(xviii) have not been dealt by the decision of Bombay High Court. The Ld. AR also referred to the above decision of Chennai Tribunal to point out what is a reward. The reward as defined therein in the said decision is stated as under:-

22.3 The Ld. AR argued that assistance is defined as the provision of money, resources or information to help someone. It has been stated by the Ld. AR that the incentives granted to the assessee is not to help or to assist the appellant to set up the same. Even without the said assistance, the appellant would have set up the industries. Hence, it is not only in lieu of getting assistance that the appellant was able to set up the industry for which the incentives have been granted. In fact, incentives have been granted as a reward for recognition of the efforts of the appellant for setting up large scale units which are benefiting the society. Hence, this is a clear case of reward. In the earlier order, although the Tribunal distinguished between the reward and assistance, however, how the appellant’s case is falling under assistance has not been stated therein. In the present case of the appellant, the incentive is not granted on making of investment for setting up new facility. The scheme mandates that the new unit so set up is achieving the target in the area of manufacturing and selling of finished products within a specified time frame and in a specified territorial area. which needs to be granted, the said reward is granted upon achieving the sale of produced. To put it in other words, if the new facility set up is not able to achieve the sale target in the targeted territory, then despite the investment made, assessee - appellant will not be getting any reward. On going through the judgement of Chennai Tribunal and argument of the Ld. AR, we note that this aspect was not dealt with while adjudicating similar issue in earlier order for AY 2016-17 to AY 2018-19 dated 21-02-2024. No reward would have been received by the appellant merely for the reason of setting up of the units, until the appellant would not have commenced the operations and achieved the sales. Hence, incentives were granted as a reward, only on commencement of operations of the unit and on achieving the sale thresholds mentioned in the Scheme.

22.4 Ld. AR also stated that the incentive received by the appellant is seen to be in the nature of reward, whether such reward is outside the ambit of Sec. 2(24)(xviii) has been dealt by the Chennai Tribunal as under:-

“43. We hold that as per the Foreign Trade Policy-2015, the benefit given by way of MEIS scrips are rewards, the meaning of which is completely different from the Shree Cement Limited vs. ACIT meaning of the term “assistance” under the provisions of section 2(24)(xviii) of the Act. We hold that the benefit by way of MEIS scrips could not fall within the meaning of the terms “subsidy or grant or cash incentive or duty draw back or waiver or concession or reimbursement provided under section 2(24)(xviii) of the Act. We hold the ICDS-VII is not applicable as it deals with Government grants only, but not inclusive of the duty credit scrips under MEIS, which are rewards. We hold that the benefit under Foreign Trade Policy-2015 received being MEIS scrips cannot fall within the meaning of cash assistance under section 28(iiib) of the Act. We hold the sums received as a sale of MEIS scrips credited to the profit and loss account, the said treatment in the books of accounts by itself cannot be determinative of taxability of said receipt. Thus, the benefit derived by way of sale MEIS scrips in the open market is not an income with the meaning of provisions under section 21(24)(xviii) of the Act. Therefore, we find no infirmity in the order of the ld. CIT(A) for the reasons recorded therein and also for discussion made by us in the aforementioned paragraphs, the grounds raised by the Revenue fails and are dismissed”

22.5 Ld. AR also stated that co-orindate bench of this Tribunal in Mayur Uniquoters Ltd. –vs.- CIT (ITA No. 02/JP/2022 dated 09-11-2022) held the following:-

“24. The underlying facts in this issue are that appellant had received export incentives in form of the Merchandise Exports from India Scheme (MEIS) amounting to Rs. 2,89,31,297/- and claiming it as capital receipt treating the same as reward. This is not an assistance in any form rather reward granted to export of certain goods as per the FTP. As the same does not fall within the definition of income and hence it is not chargeable to tax. In this regard, we may refer to the decision of Hon’ble jurisdictional High court as referred by the Ld. AR in the case of PCIT vs. M/s Nitin Spinners Limited (116 taxmann.com 26) wherein it has been held that incentive under Focus Market Scheme as per Foreign Trade Policy was a capital receipt since the Central Government gave the subsidy to enhance Indian Export potential in the International Market and it was not granted to meet the cost of expenditure to meet the competition of the Indian Textile market. Further the SLP filed by the department against the above decision was dismissed by Hon'ble Supreme Court in 2021 (130) Taxmann.com 402.

Shree Cement Limited vs. ACIT 125. As the assessee did not find any favour from the ground so raised before the ld. CIT(A) the assessee has carried the matter before us as in ground no. 5. In support of the ground so raised the ld. AR of the assessee argued based on the following written submission as under :-

(a) Directly Covered by the decisions of Hon’ble Jaipur Tribunal, Rajasthan HC and Supreme Court: ‘Incentives’ in the form of Reward, constitute capital receipt and are not taxable

Hon’ble Jaipur Tribunal have held in Mayur Uniquoters Ltd. –vs.- CIT (ITA No. 02/JP/2022 dated 09.11.2022) that export incentives received under Foreign Trade Policy in AY 2018-19, post amendment of Section 2(24), for promotion of manufacturing and export of notified goods are incentives in the form of Reward, which are capital receipts, not chargeable to tax, relying upon the decisions of Jurisdictional HC in PCIT -Vs- M/s Nitin Spinners Ltd. (116 Taxman.com 26) and J&K HC in Shree Balaji Alloys -Vs- CIT (333 ITR 335) (SLP rejected by SC in both the cases). Hon’ble Tribunal further held that incentive in the form of Reward cannot be considered as ‘assistance’.

In case of the Assessee, the incentives are received for promotion of setting up of new industrial undertakings and are incentives in the form of Reward. Thus, following the decision of the Hon’ble Jaipur Tribunal in Mayur Uniquoters (supra), the incentives in case of Assessee are Capital Receipt.

(b) It has been consistently held in assessee’s own case by the decisions of Hon’ble Rajasthan High Court in AY 2006-07 to AY 2009-10 vide Order dated 22- 08-2017.[Refer Pg 80-81 of Order of CIT(A) dated 08-06-2023] that Incentives received by the assessee being in the nature of capital receipts are not chargeable to tax, both under normal tax provisions as well as under Section 115JB (MAT). Further, excise exemption has been allowed as capital receipt by the AO in his order u/s 143(3) for all earlier years based on the decision of Apex Court in CIT vs Shree Balaji Alloys (2016) 287 CTR 459 (SC).

(c) Further the decision of Mum HC in Serum Institute of India -Vs- UOI (WP No. 3735 of 2021 dtd. 4-12-23) is not applicable to the facts of the present case, as the constitutional validity of the amendment to section 2(24), amending the definition of ‘income’ has not been challenged by the Appellant.

(d) Further, in the case of Serum (supra), the new unit was set up, claim was lodged and pertained to years, all after AY 2016-17, that is after the definition of income was amended. The said facts can be clearly distinguished in case of the appellant in respect of its incentives, which pertain to years before AY 2016-17 and to such incentives, without prejudice to other submissions, the aforesaid amendment has no application.

(e) Mere inclusion of subsidy etc. in the definition of ‘income’, without corresponding inclusion under any of the ‘heads of income’, cannot be subjected to income tax

Reliance is placed on the decisions of Hon’ble SC in Nalinikant Ambalal Mody - vs.- CIT [1966] 61 ITR 428 (SC) and Hon’ble Calcutta High Court in CIT –vs.- Justice R . M. Dutta (1989) 180 ITR 86 (Cal)

(f) Subsidy, though added in the definition of income by way of deeming fiction, has not been included in the charging section 28, unlike the erstwhile proposed Direct Tax Code, where it was proposed to be added also in the charging section 33.

(g) Subsidy not taxable in absence of accrual

Without prejudice to the aforesaid submissions, claim of exclusion in respect of Incentives include Incentive to the tune of INR 282.30 Crs. in respect of RIPS 2003, pertaining to earlier years (commencement of commercial production in 2007), which has not been granted or approved and where the matter is sub- judice. In fact, the said amount has neither been approved nor received even as on date. Even the dispute has not yet been resolved. Hence in absence of approval &/or receipt &/or resolution of dispute, which is pending since more than a decade, there is no question of treating such book entry as taxable income. Reliance is placed on the decision of SC in Kedarnath Jute Manufacturing Co. Ltd. -Vs- CIT (1971) 82 ITR 363(SC), where it has been categorically held that accounting entries are not sine qua non in determining taxability of income. Further reliance is placed on the decision of Hon’ble Gujarat High Court in CIT – vs.- Bavla Gopalak Vividh Karyakarisahakari Mandli Ltd. (2002) 253 ITR 97 (Guj) wherein it has been held that where final decision on dispute regarding subsidy had not reached, it could not be said that income had accrued to the assessee.

Reward Assistance A reward is given in return for Assistance refer to aid or help an act or achievement provided to someone It can be monetary or non It’s the act or result of assisting monetary Given as a gratitude for good Not necessarily tried to work, faithfulness, or helping achievement ; it’s about supporting someone in need others. Examples: Bonuses, medals, Examples: Offering guidance, certificates, promotions lending a hand, providing resources.

131.Thus, both the difference between reward and assistance is summarized as to the fact that rewards acknowledge accomplishments, while assistance focuses on aiding and supporting others. Thus, looking to these differences we are of the considering view that the assessee has not received the rewards but has received the assistance and after the amendment made in the section 2(24)(xviii) such assistance is considered as income of by the Finance Act, 2015 and therefore, all the arguments made by the ld. AR of the assessee has no leg to stands. Thus, on the ground raised by the assessee after going through the records and arguments of both the parties noted as under : a) Under section 2(24) of the Act a capital receipt cannot be charged to income tax unless it is specifically included as income therein. b) The Finance Act 2015 introduced section 2(24)(xviii) wherein any form of subsidy was brought into definition of income. Such subsidy maybe in case or in kind. It also includes grant cash incentive duty drawback, waiver, construction or reimbursement of all kind. c) The exceptions are provided under clause (a) the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43; or (b) the subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or a State Government, as the case may be; d) Therefore with effect from 1.4.2016 all such receipts are income. e) All prior decision of all courts holding it to be capital receipt are now no more good laws. f) Intention of this amendment is to be support the law with ICDS VII relating to the government grants. g) Distinction is lift only with (1) grants pertaining to depreciable assets and (2) grants pertaining to non depreciable asset (3) grants received as compensation, waiver, reimbursement and (iv) other grants and (v) non monetary grants.

Shree Cement Limited vs. ACIT h) There is press release dated 05.05.2015 that it does not apply to individuals and having business income to save government relief measures. i) When subsidy is included in the definition of income provision of section 14 shall apply to determine under which head said income falls. So section 14 will classify the income under the respective heads. j) There is no amendment under section 28 or section 56 to include specifically subsidy taxable under those respective heads for the reason that such classification will depend upon the nature, purpose of such subsidy. k) Amendment is constitutionally valid as held by Bombay High Court in case of Serum Institute of India Private Limited [157 taxmann.com 107]. l) Provision of section 145B(3) has also dealt with the year of taxability of the susidy. m) In paragraph 12(g) of the Serum Institute decision (supra) the argument of absence of head of income was raised stating that in the absence align amendment in the Section 28, subsidy still remain outside the taxation. Court answered it by relying upon decision of apex court in the case Poona Electric Supply Co Ltd. Vs. CIT [ AIR 1966 SC 30 ] negated these arguments. So, now this argument is decided by the Bombay High Court against the assessee.

132.In addition, we would also like to reiterate here in below the finding of the Hon’ble Bombay High Court in the judgment of Serum Institute of India Private Limited (Supra) recorded at para 21: 21. Before the amendment through the Finance Act, 2015, the Supreme Court applied the “purpose test” to determine whether a subsidy was a capital receipt or revenue receipt. In the landmark cases of Sahney Steel and Press Works Ltd.(Supra) and Ponni Sugars and Chemicals Limited(Supra), the Court held that if the subsidy’s purpose was to help the assessee run the business more profitably or meet daily expenses, it was considered a revenue receipt(and thus taxable). Conversely, if the subsidy aimed at setting up a new or expanding an existing unit, it was deemed a capital receipt (and not taxable). The Finance Act, 2015 significantly altered the landscape introducing sub clause (xviii) to section 2(24) of the Act. This amendment defined any assistance in the form of subsidy, grant, cash incentive, duty drawback, waiver, concession reimbursement provided by the Central or State as income, hence taxable, unless used to determine the actual cost of an asset. This amendment sought to end disputes by making all subsidies taxable unless they fell under an exclusion category;

133.In the light of the above discussion, we do not find any merits in the grounds so raised by the assessee, ergo we dismiss the ground no. 5 raised by the assessee. parties we are of the considered that we do not find any force in the arguments raised by the ld. AR of the assessee and based on the decision so taken by the bench in we dismiss the additional ground no. 3 raised by the assessee – appellant.

23.1 On the other hand, the ld. DR on behalf of the revenue has placed strong reliance on the Report of AO dated 15-04-2025 duly placed on admissibility & merits of said ground mainly on the following contentions:

� Hon’ble ITAT while passing order for earlier year vide order dated 07-08-2023 has allowed the claim without giving an opportunity of being heard to the AO. � Since the claim was not made in the Return of income, depreciation is not allowable in view of decision of Hon’ble Apex Court in Wipro Ltd (Supra) � Revenue has filed appeal before High Court against the said decision of Tribunal, hence the said decision is not acceptable. � Claim is not allowable in view of decision of ITAT Cuttak in decision of Mahanadhi Coalfields, decision of Bombay High Court in CIT –vs.- Techno Shares Stocks Ltd (225) CTR 337 (Bom) & Mumbai Tribunal in Dabur India Ltd. –vs.- ACIT (2014) 159 TTJ 563 (Mum)

23.2 We have heard the rival contention of both the parties. We note that this issue was not raised before the Assessing Officer or before the Ld. CIT(A). It is noted that claim of depreciation on expenditure incurred in respect to acquisition of leasehold rights on land is purely a legal issue for which the relevant facts are already available on record before the authorities. Similar findings have been given by this Tribunal while rendering decision in appellant’s own case for AY 2014-15. Relevant extract of the said order is reproduced herein below:

20.1 It is noted that while adjudicating Ground No.4 of the assessee's appeal above, we have already stated by relying on the decision of Hon'ble Apex Court in the case of National Thermal Power (supra) & Jute Corporation Iulia (supra) that additional ground which purely raises the question of law should be admitted by the appellate authorities even though such claim is not lodged in the return of income. In the present case, the subject matter of the additional ground goes to the root of the case and is decisive of the total tax liability of the assessee. This being a legal issue, the relevant facts of which are already on record, involves adjudication on question of law. The Hon'ble Supreme Court in National Thermal Power Co. Ltd. vs.CIT (1998) 97 Taxman 358/229 ITR 383 has observed that:

" the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item” . Answering the question posed before it in affirmative, their Lordships held that on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee and the Tribunal has jurisdiction to examine the same. We find that the additional ground raised before the tribunal involves a pure questions of law and no fresh investigation of facts is necessary for its determination. As such, the additional ground is admitted and espoused for disposal on merits.” Respectfully following the same, we admit the aforesaid question of law on merits raised by the assessee in respect to allowability of depreciation on expenditure incurred in respect to leasehold rights on land. 23.3 Respectfully following the decisions of Apex Court, we note that the aforesaid question of law raised by the appellant in respect to allowability of depreciation on expenditure incurred in respect to leasehold rights on land is liable to be admitted. year for AY 2014-15 to AY 2018-19 has been rendered by this Tribunal without providing any opportunity of being heard to the department. This contention of the department has already been adjudicated by this bench while adjudicating Additional Ground No.1 above wherein it has been held that due opportunity has been provided to DR representing on behalf of the department to submit his arguments in respect to all the grounds involved in respective appeal and further there is no need to ask for remand report from AO, if all the facts are on record. Hence, these contentions of the department are liable to be rejected.

Ld. DR placed reliance on the decision of Wipro Ltd (supra) is also totally misplaced as discussed by us while adjudicating Additional Ground No.1 above, wherein it has been held that said decision is applicable to cases wherein “new claim” is filed by way of revised return for claiming “exemption” and not in cases dealing with claim of deductions under other chapters of the Act. Since, claim in the present case has been lodged in respect to deduction u/s 32 of the Act, the said decision of Wipro Ltd is not applicable in the present facts of the case.

As regards the contention of the department of filing further appeal before Hon’ble Rajasthan High Court against such order of this Tribunal for adjudicating Additional Ground No.1 above and therefore is liable to be dismissed. Therefore, we do not hesitate to admit the said Additional ground No. 4 in respect to the claim of depreciation on leasehold right.

23.5 Now, coming to the issue on merits, the bench noted that this issue has already been adjudicated and decided in favour of assessee - appellant vide order dated 07-08-2023 for AY 2014-15, the relevant finding is reiterated here in below ;

Shree Cement Limited vs. ACIT "Similarly, in assessment years 2009-10 and 2013-14, the assessing officer had held the payment of lease premium to be in the nature of capital expenditure. The Hon'ble DRP, however, allowed the appellant depreciation on the premium paid for acquiring of leasehold rights of land, considering the same as an intangible asset in the nature of business or commercial right which is eligible for depreciation under section 32(1)(ii) of the Act. The Assessing officer, however, erred in not giving effect to such binding directions of the DRP. On appeal, the Hon'ble Tribunal directed the assessing officer to pass necessary orders give effect to the direction of the Hon'ble DRP. Recently, the Hon'ble Tribunal has in the order dated 14.04.2021 passed for assessment year 2015-16, allowed the claim for depreciation on leasehold right in land which was not claimed in the return of income but raised by way of additional ground before the Tribunal, by observing as under:- "63.0.0 We have heard both the parties and have perused the material available on record. Though this claim was not made before the lower authorities, we find that the additional ground raised by the assessee raises a pure question of law, facts for the same are on record. We accordingly admit the additional ground of appeal raised by the assessee following the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co Ltd. vs. CIT 229 ITR 383 (SC). 63.0.1 We also find that the issue on merits is squarely covered in favour of the assessee by the order dated 24.10.2016 passed by Tribunal in the preceding assessment years, i.e. AY 2010-11 and AY 2011-12 wherein the Tribunal held that lease premium charges were not allowable revenue deduction. However, the Tribunal allowed the alternate plea raised by the assessee company and held the premium paid for acquisition of lease hold rights to be an intangible asset, independent from the land itself, eligible for depreciation under section 32(1)(ii) of the Act. 63.0.2 Accordingly, we also find that the issue on merits is squarely covered in favour of the assessee by the order dated 24.10.2016 passed by Tribunal in the preceding assessment years, i.e. AY 2010-11 and AY 2011-12 wherein the Tribunal held that lease premium charges were not allowable revenue deduction. However, the Tribunal allowed the alternate plea raised by the assessee company and held the premium paid for acquisition of lease hold rights to be an intangible asset, independent from the land itself, eligible for depreciation under section 32(1)(ii) of the Act. Accordingly, we hold that the assessee is eligible for depreciation at 25% on lease hold rights acquired in Haridwar and Neemrana. As regards the land at Haridwar, Shree Cement Limited vs. ACIT the AO is directed to allow the claim of depreciation as per opening WDV carry forward from the earlier years. In so far as the depreciation of land at Neemrana is concerned the same shall be allowed after verification of the relevant payments claimed to have been made by the assessee. In view of the above, the aforesaid issue is squarely covered in favour of the appellant by orders passed by the Hon’ble Tribunal for assessment years 2009-10 to 2011-12, 2013-14 and 2015-16.

81. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that the assessee has though not claim the amortization expenses in the return of income made the claim before the learned assessing officer. Such claim is required to be adjudicated in accordance with the law as it has already been decided in the assessee’s own case for earlier years. In the earlier years, the coordinate bench has allowed the claim of the assessee for assessment year 2009-10 to 2011-12, 2013-14 and 2015-16. Therefore, the issue squarely covered in favour of the assessee. Accordingly, we allow ground number 21 of the appeal and direct the learned Assessing officer to grant deduction of the amortization expenses to the assessee.” 21.3 Further in Vasant Chemicals Pvt. Ltd. vs. ITO (ITA No. 2182 of 2017/Hyd dated 17-08-2021)(Hyd) it was contended by the assesse that one time premium paid for acquiring leasehold right on land for a period of 33 years from Andhra Pradesh Industrial Infrastructure Corporation Ltd is an intangible asset as per section 32(1)(ii) of the Act as the payment allows the appellant to exercise a right in the nature of license or commercial right over the property over a specific period for conducting its business activities. Relying on the decision of its co-ordinate bench in ACIT vs. Progressive Constructions Ltd (2018) 92 taxmann.com 104 (Hyd), Hyderabad Tribunal allowed the claim of depreciation on such leasehold rights on land. 21.4 The aforesaid issue has also been covered in favour of the assessee in the following judicial pronouncements: Karnataka Emta Coal Mines Ltd. vs. ACIT (ITA No. 2135/Bang/2018 dated 14-11- 2022) NMDC Ltd vs. JCIT (2015) 56 taxmann.com 396 (Hyd Trib.) DIT vs. National Mineral Development Corporation Ltd. (ITA No. 1593/Hyd/2014, dated: 20-03-2015) Bangalore International Airport Ltd. vs. DCIT (2023) 146 taxamann.com 206 (Kar)

Shree Cement Limited vs. ACIT 21.5 On going through the aforesaid judicial pronouncements, the important principle that emerges is that expenditure incurred on acquiring the land is a capital expenditure and hence cannot be allowed. However, the expenditure incurred on acquiring land on lease is different from the expenditure incurred on acquisition of land. On acquiring land on lease from the government, the assessee has to pay certain upfront premium on lease which is the price paid for acquiring the rights of land and not the land itself and the ownership of the land vests with the lessor of the land. The lessee is liable to return the land to its original owner after the expiry of the lease and does not have ownership rights over the land. On such facts, courts have held that such rights acquired by the assessee which is used for the purpose of its business is an intangible asset in the nature of business or commercial right. Such intangible assets being "business or commercial right" is entitled to depreciation u/s 32(1)(ii) of the Act. Hence, AO is directed to grant depreciation @25% on such leasehold rights acquired of Rs. 14,93,25,916/- in accordance with section 32(1)(ii) of the Act. The additional ground no. 1 raised by the assessee is allowed.

23.6 The said finding was followed by this tribunal vide its order dated 21- to 498 & 500/JP/2023 for AY 2015-16 to AY 2018-

19. The relevant findings of the bench in that year is also reproduced hereunder:

“60. Now, coming to the issue on merits, the bench noted that this issue has already been adjudicated and decided in favour of assessee vide order dated 07.08.2023 in for AY 2014-15. The relevant findings of the bench in that year is reproduced hereunder: “21.5 On going through the aforesaid judicial pronouncements, the important principle that emerges is that expenditure incurred on acquiring the land is a capital expenditure and hence cannot be allowed. However, the expenditure incurred on acquiring land on lease is different from the expenditure incurred on acquisition of land. On acquiring land on lease from the government, the assessee has to pay certain upfront premium on lease which is the price paid for acquiring the rights of land and not the land itself and the ownership of the land vests with the lessor of the land. The lessee is liable to return the land to its original owner after the expiry of the lease and does not have ownership rights over the land. On such facts, courts have held that such rights acquired by the assessee which is used for Shree Cement Limited vs. ACIT the purpose of its business is an intangible asset in the nature of business or commercial right. Such intangible assets being "business or commercial right" is entitled to depreciation u/s 32(1)(ii) of the Act. Hence, AO is directed to grant depreciation @25% on such leasehold rights acquired of Rs. 14,93,25,916/- in accordance with section 32(1)(ii) of the Act. The additional ground no. 1 raised by the assessee is allowed.”

23.7 On being consistent with the finding so recorded in earlier year by the co-ordinate bench on the issue in the year under consideration, we note that such intangible assets being "business or commercial right" is entitled to depreciation u/s 32(1)(ii) of the Act. We note that the ld. AO in its remand report as filed by ld. DR has referred to the decision of Mahanadi Coalfields –vs.- DCIT (ITA No.174/CTK/2018 dated 05-06-2020)(Cuttack Tri) wherein the Tribunal held that leasehold rights are not eligible for depreciation u/s 32(1)(ii) of the Act by relying on the decision of earlier years. The said decision of Mahanadi Coalfields (supra) has already been distinguished by Hon’ble Hyderabad Tribunal in Vasant Chemicals Pvt. Ltd. –vs.- ITO (ITA No. 2182/Hyd/2017 dated 17-08-2021) wherein the Tribunal has held the following :

Coupled with this, this tribunal’s Special Bench in ACIT Vs. Progressive Constructions Ltd., (2018) 92 taxmann.com 104 (Hyd) decides the issue in Shree Cement Limited vs. ACIT assessee’s favour that a right to operate any asset forms an intangible asset u/s.32(1)(ii) of the Act entitled for depreciation.

23.8 Therefore we note that in view of the decision of Special Bench in ACIT –vs.- Progressive Constructions Ltd. (2018) 92 Taxmann.com 104 (Hyd), the decision of Cuttack Tribunal has been distinguished & is no longer applicable. It was further noted that in the appellant’s own case in AY 2014-15 to AY 2018-19, this Tribunal after considering the decision of Vasant Chemicals (supra) has allowed the issue in favour of the appellant as follows:

21.3 Further in Vasant Chemicals Pvt. Ltd. vs. ITO (ITA No. 2182 of 2017/Hyd dated 17-08-2021)(Hyd) it was contended by the assesse that one time premium paid for acquiring leasehold right on land for a period of 33 years from Andhra Pradesh Industrial Infrastructure Corporation Ltd is an intangible asset as per section 32(1)(ii) of the Act as the payment allows the appellant to exercise a right in the nature of license or commercial right over the property over a specific period for conducting its business activities. Relying on the decision of its co- ordinate bench in ACIT vs. Progressive Constructions Ltd (2018) 92 taxmann.com 104 (Hyd), Hyderabad Tribunal allowed the claim of depreciation on such leasehold rights on land.

Court in CIT-vs.- Techno Share & Stocks Ltd. (2010) 323 ITR 69 (Bom) wherein it has been held that stock exchange membership card does not fall in any of the categories of intangible assets as mentioned in Sec.

32(1)(ii), hence depreciation cannot be allowed on the same. The said decision of Hon’ble Bombay High Court has since been reversed by the Hon’ble Supreme Court in Techno Share & Stocks Ltd. –vs.- CIT (2010)

327 ITR 323 (SC), since we have gone through the decision of the Hon’ble Apex Court and it is noted that Hon’ble Apex Court held that said membership right is a business or commercial right which is similar to a license or franchise and is declared to be an intangible asset, eligible for depreciation u/s 32(1)(ii) of the Act.

Ld. DR has also referred to the decision of Mumbai Tribunal in Dabur India Ltd. –vs.- ACIT (2014) 159 TTJ 563 (Mum) wherein it has been stated that tenancy rights are not intangible assets for the purpose of Section 32(1)(ii) of the Act as the same does not grant any license to the appellant.

We note that in the case of the appellant, leasehold rights have been acquired over the mining land which is nothing but in the nature of license without which the business operations cannot be carried out. Hence, the said decision is not applicable in the present case. Further, the said Coalfields (Supra) which has since been distinguished in Vasant Chemicals (Supra) as referred above. Hence the said decision is also not applicable to the facts of the case.

23.10 Therefore we do not hesitate to follow the decision of this bench in earlier years wherein the said issue after relying on various judicial pronouncements has been decided in favour of the assessee -appellant.

Apart from above, ld. AR of the appellant has also prayed before this bench to give directions to AO to allow depreciation on opening written down value of leasehold rights as on 01-04-2018 amounting to Rs 126.02 Crs, on which depreciation u/s 32(1)(ii) has already been allowed by this Tribunal in earlier years from AY 2014-15 to AY 2018-19 details of which has been submitted at Pg 501 of the Paper book. Since the claim of depreciation on leasehold right acquired in said years has been allowed by this Tribunal, we find that in all fairness, depreciation on written down value of such leasehold rights should also be allowed to the appellant in the year under consideration as well. Hence, ld. AO is directed to grant depreciation on such leasehold rights in accordance with the provision of section 32(1)(ii) of the Act not only on expenditure incurred during the year under consideration but also on opening written down value of such assets such workings. Accordingly, the additional ground no. 4 raised by the assessee - appellant is allowed.

24.1 Before us, the ld. AR appearing on behalf of the appellant submitted that the claim of deduction under section 80-IA and 80-IC while computing Book Profit under section 115JB of the Act has been lodged vide Notes to Return of Income which has been placed at Pg 51 of the Paper Book. It was further argued that the aforesaid ground raised being purely legal in nature may kindly be admitted. Reliance was placed on the decisions of Apex Court in the case of National Thermal Power Corporation Ltd. (supra) and Jute Corporation of India Ltd. (supra) The ld. AR further submitted that the issue is covered in favour of the appellant by decision of Hon’ble Jaipur Tribunal in appellant’s own case for AY 2014-15 vide order dated 07-08- 2023 (ITA 152/JP/2023) and AY 2015-16 to AY 2018-19 vide order dated 21-02-2024 (ITA No. 496 to 498 & 500/JP/2023).

24.2 On the other hand, the ld. DR did not raise any objection to the admissibility of said additional ground. on record. It is noted that claim of deduction under section 80-IA and 80-IC while computing Book Profit under section 115JB of the Act is purely a legal issue for which the relevant facts are already available on record before the authorities. Respectfully following the decisions of Apex Court, we admit the aforesaid question of law on merits raised by the appellant in respect to claim of deduction under section 80-IA and 80-IC while computing Book Profit under section 115JB of the Act.

24.4 Now, coming to the issue on merits, the appellant has claimed deduction u/s 80-IA & 80-IC under normal provisions of the Act on its eligible infrastructure facilities and undertakings. The appellant contended that the said claim of deduction u/s 80-IA & 80-IC is also allowable while computing Book Profit u/s 115JB of the Act. Since the claim is already made in the return of income along with the computation notes, the AR submitted that it cannot be said that the appellant has not made the claim in the return. The AR also contended that said claim is in accordance to the provisions of Sec. 115JB(5) and is duly supported by the decision of this Bench in earlier years in appellant’s own case as well as by the decision of Hon’ble Karnataka High Court in CIT –vs.- Metal & Chromium Plater (P)

Hon’ble Apex Court in Civil Appeal No. 9620 of 2018 dated 17-09-2018] 24.5 We have carefully considered rival contentions pursued the paper books and judicial precedents relied upon. The issue in this ground is whether the deduction available to the appellant u/s 80-IA & 80-IC under the normal computation of total income, should also be reduced from the computation of book profit u/s 115JB of the Act. This issue has been decided in favour by the coordinate bench in appellant's own case for AY 2015-16 to AY 2018-19 in appellant’s own case wherein Bench has held as under :-

“37. On the issue on hand, we observe that there is a direct decision of Hon’ble Mumbai Tribunal in Neha Home Builders Pvt Ltd vs CIT (2018) 195 TTJ 506 (Mum) on deduction u/s 80IB in the context of section 115JB. In the said case, the co-ordinate bench has categorically held that if any income is not taxable because of a specific provision of the Act, the same will not form part of Book Profit u/s 115JB unless provided otherwise. Hence, in the absence of any provision to the contrary in section 115JB, deduction u/s 80IB shall be available while computing Book Profit u/s 115JB of the Act and the relevant finding of the co-ordinate bench is as under:- (a) Sub-sec 5 clearly provides that all the provisions of the I.T act will be applicable to the computation governed by sec. 115JB. As such if any income is not taxable because of a specific provision of the Act, the same will not form part of Book profit u/s 115JB. Like Sec. 80IB(10) exclude the income from housing project for taxation purpose under normal provisions of the Act. Thus, it will not be taxable u/s 115JB. (b) Dealing with the matter, sub-section (5) which says that save as otherwise provided in this section. Similar provision was incorporated in sub sec (4) of sec 115JA which is the predecessor of sec 115JB. But absent in section 115J which Shree Cement Limited vs. ACIT preceded sec 115JA. This peculiar provision raised a controversy as to the legal implication of insertion of sub-sec (5) and sub-sec (4) in sec 115JB and 115JA respectively. This legal issue has been considered by Mumbai Bench of the Tribunal in the case of ITO v. Frigsales (India) Ltd. [2005] 4 SOT 376 (Mum). The issue related to capital gains arising on a depreciable asset which is exempt u/s 50 of the Act. Taking notice of sub-sec (4) of sec 115JA which provisions, as stated above, was not available in sec 115J, the tribunal held that the exempt income under sec 50 would remain exempted as per provisions of sub-sec (4) of sec 115JA and therefore, capital gain arising to an assessee u/s 50 on a depreciable asset is liable to be excluded from calculation of deemed profits u/s 115JA. Exemption/ deduction allowed by one provision of the Act cannot be taken away by another provision of the Act. Sec. 115JA, the predecessor to Sec. 115JB, was introduced to the statute book and the budget speech of the finance minister while introducing the Bill in the House and also to the subsequent board circular, for levying a minimum alternate tax to those companies which were though paying handsome dividends to its shareholders and had good amount of book profit, was, nevertheless, filing a return of nil income for the purpose of income tax.

(c) When once the assessee company had developed housing project, where the income is exempted u/s 80IB(10), the assessee company had legitimate expectation to enjoy the benefit of exemption and even a legitimate expectation being in the nature of an assurance in law if it flows out of the statutory provisions, that cannot be denied to the assessee company. Reliance is placed on the following judicial pronouncements. (I) Mrf Ltd v. Asstt. CST [2006] 148 STC 225 (SC) (II) Bannari Amman Sugars Ltd. v. CIT [2005] 1 SCC 625 (III) M P Oil Extraction v. State of MP [1997] 7 SCC 592

(d) The receipts which are not taxable cannot bring to tax under any other section.” CIT v. D.P. Sandu Bros. [2005] 273 ITR 1/142 Taxman 713 (SC).

(e) In the newly inserted sec. 115JC the legislature clearly mention that "deduction claimed, if any, under the heading "C.-Deductions in respect of certain incomes";, i.e. If the legislature have intention :; not give benefit of sec. 80IB(10) for the purpose of MAT calculation then legislature will also provide same type of provision in section 115JB which is currently absent, i.e. legislature wants to give benefit of deduction u/s 80IB(10) for the purpose of sec. 115JB calculation.

(f) Hon'ble Gujarat High Court in case of CIT v. Indian Petrochemicals Corpn. Ltd. [2016] 74 taxmann.com 163 held that deduction u/s.80HHC can be allowed while computing book profit u/s.115JA even though assessee had no taxable income under normal provisions of Act. Similarly, Kerala High Court in case CIT v. D.C. Mills (P.) Ltd. [2016] 387 ITR 64/[2017] 79 taxmann.com 340 held that where two views are possible and AO has taken one plausible view, such order of the AO cannot be branded as prejudicial to the interest of Revenue. In this case, assessee was entitled for deduction of profit on export business. AO allowed setting off loss Shree Cement Limited vs. ACIT incurred in one unit against profit of other two units which were as per the judicial pronouncements. It was held that Commissioner taking a different view and branding the order of the AO erroneous and prejudicial to the interest of the revenue was not justified.

(g) In the instant case assessee was undisputedly entitled for deduction u/s.80IB(10) in respect of housing profit. Accordingly, AO while framing scrutiny assessment order allowed the same out of normal income as well as while computing book profit. However, according to the Ld. CIT, the assessee is liable to pay the MAT on the profit earned u/s.80IB (10). In terms of the decision of Supreme Court in case of Max India Ltd. (supra) whenever two views are possible and the AO has taken one view, with which the CIT does not agree, it cannot be treated as an erroneous order, prejudicial to the interests of the Revenue.

(h) ITAT Mumbai Bench in case of Frigsales (India) Ltd., (supra) held that a receipt which is not in the nature of income cannot be taxed as income u/s.115JA. The head notes of the case reads as under:— “Section 115JA, read with section 50, of the Income-tax Act, 1961 -Minimum alternate tax - Assessment year 1998-99 - Whether a receipt, which is not in nature of income, can be taxed as income under section 115JA - Held, no - Whether exempt income under section 50 would remain exempted as per provisions of sub-section (4) of section 115JA -Held, yes - Whether, therefore, capital gain arising to an assessee under section 50 on a depreciable asset is liable to be excluded from calculation of deemed profits under section 115JA - Held, yes.” (i) In ITO v. Suraj Jewellery (India) Ltd. [2008] 21 SOT 79 (Mum.), Mumbai Tribunal again held that capital receipts which do not constitute income under the Act cannot be brought to tax net by employing the mechanism of section 115JB. The Tribunal further held that section 115JB has not intended to bring all non-income items within the domain of the Act.

(j) By inserting sub-sec. (4) in sec. 115JA and sub-sec. (5) in sec. 115JB, the legislature has made both these sections as part of the Act now. Further, In Sutlej Cotton Mills Ltd. v. Asstt. CIT [1993] 45 ITD 22 (Cal.) (SB) Special Bench held that the expression book profit u/s. 115J is intended to be confined to business profit and that the term book profit is not intended to include profit in realization of any asset. It is further held that what is specifically exempted u/s. 54E could not be taxed u/s. 115J. This decision supports our contention.

(k) Supreme Court in the case of D. P. Sandhu Bro. held that the receipts which are not taxable cannot brought to tax under any other section. Deduction claimed by assessee in the instant case u/s.80IB (10) is not taxable under the normal provisions of the Act cannot be treated as part of book profit u/s.115JB, hence, the ld. AO has adopted one of the possible view.

Shree Cement Limited vs. ACIT (l) Based on the above, Hon’ble Tribunal in the case if Neha Builders (supra) finally held that income arising from development of housing projects are not taxable (Sec 80IB(10) and were excluded from its purview. Therefore, Sec. 80IB(10) income will not be part of MAT income and MAT tax. Thus, the assessment order was rightly passed and cannot be termed as erroneous & prejudicial to interest of revenue.”

42. Thus it is clear that three high court decisions have held that sub-section (5) of Sec 115JB, the application of other provisions are open, except if specifically

51. One important aspect also needs to be analyzed. Sub section (1) of Section 115JB has non-obstante clause. The said sub-section provides that in case of a company, if the income tax payable on total income as computed under the Income Tax Act is less than 18.5% of its book profit, then book profit shall be deemed to be its total income and 18.5% of the said book profit will be the tax payable by the corporate assessee on such total income. Because of the non- obstante clause, this provision of sub-section (1) for levy of tax on book profit, overrides other provisions of the Act where under tax can be levied only on its total income. The non-obstante clause has overriding effect for sub-section (1) of Sec 115JB and not entire Section 115JB.

24.6 On being consistent to the findings recorded by the coordinate bench on this issue in earlier year, we note that deduction u/s 80IA/80IC should also be allowed while computing Book Profit u/s 115JB of the Act for the year under consideration as well. However, the quantum of deduction u/s 80IA/80IC to be allowed under Book Profit should be the quantum as allowed under Normal provisions of the Act. It has been noted that the claim of deduction u/s 80IA under normal provisions has been disputed by the Ld. DR based on survey findings as mentioned in the remand report of AO dated 15-04-2025. The AO have stated that the appellant is not eligible to claim deduction u/s 80IA on Solid Waste Management System (SWMS), Water Treatment System (WTS) & New India Power Undertaking (NIPU).

The contentions of the Ld. DR as well as the appellant on deduction u/s 80IA on Solid Waste Management System have already been adjudicated in the aforesaid grounds. The Ld. DR has further stated that the appellant is that the department is challenging the above two tax holiday claims mostly on similar lines like SWMS based on their findings during survey proceedings. The factual and the legal positions in our view are the same like the SWMS claim because of the following reasons; i. The above claims are already looked into by us while adjudicating the issues for AY 2015-16 to AY 2018-19 and duly recorded in our order dated 21-02-2024 and is not being repeated. The above decision of this bench was rendered post survey proceedings and it is only after being satisfied with the eligibility of the undertakings that the quantum of the deduction u/s 80-IA was adjudicated. Our above view finds support from the decision in Aqua Plumbing vs ACIT (2011) 140 TTJ 496 (Agra) as well as by Hon’ble Delhi High court recently in PCIT vs Verizone Communications India Pvt Ltd (ITA No 6 of 2023 dtd 16-11-2023). ii. The eligibility of these claims have been verified by the department in the initial assessment years as well as by the appellate authorities in those years. iii. The department has challenged these claims in appeal before the High court wherein they have only challenged the quantification and not challenged the eligibility. That being the case, we see no ground to deviate from earlier year orders.

Therefore, considering the above, the contention of the department is not accepted on both the above count. Hence, ld. AO is directed to grant deduction u/s 80IA/80IC as allowed in the aforesaid paras while computing Book Profit u/s 115JB of the Act as well. Hence, the additional ground no. 5 raised by the appellant is allowed. under section 115JB of the Act. On this issue ld. AR of the assessee – appellant submitted that the claim of indexation benefit is purely legal in nature may kindly be admitted since no new facts are being brought on record.

25.1 On the other hand, the ld. DR relied upon its written submission as already argued by him for earlier additional grounds.

25.2 We have heard the rival contentions and perused the material placed on record. We note that this claim was duly lodged in the Return of Income along with the computation notes filed in the Paper Book. It is noted that while adjudicating additional ground no. 1 above, we have already decided this issue by relying on the decision of Hon'ble Apex Court in the case of National Thermal Power (supra) & Jute Corporation Iulia (supra) that additional ground which purely raises the question of law should be admitted by the appellate authorities even though such claim is not lodged in the return of income. In the present case, the subject matter of the additional ground goes to the root of the case and is decisive of the total tax liability of the appellant. This being a legal issue, the relevant facts of which following the decision of the apex court, we admit the aforesaid question of law on merits raised by the appellant in respect to allowability of indexation benefit u/s 115JB of the I.T. Act.

25.3 Now, coming to the issue on merits, the brief facts on the issue are that the appellant during the assessment year under appeal had debited an amount of Rs. 1.61 Crs. being loss on sale of certain long term capital assets. However, the said loss if computed as per the provisions of Sec. 45 r.w.s 48/ r.w.s 55(2)(ac) of the I.T. Act (after indexation/grandfathering benefit), would result in Long Term Capital Loss amounting to Rs. 25.81 Crs., which in accordance with the provisions of Sec.115JB(5) should be reduced while computing Book Profit u/s 115JB of the Act. Details of such loss have been duly placed on record at Pg 504-506 of the Paper Book.

Based on that facts ld. AR claimed that a net loss of Rs. 24.20 Crs. (Rs.

25.81 Crs. - Rs. 1.61 Crs.) needs to be allowed while computing book profit u/s 115JB of the I.T. Act. He submitted that in view of provisions of Section 115JB(5), special provisions as contained u/s 112 [which provides for taxation of transfer of Long term capital assets, other than equity instruments, after Indexation benefit under 2nd proviso to Sec 48] & u/s being equity instruments, after grandfathering benefit u/s 55(2)(ac)], should also be applicable while computing book profit u/s 115JB. Accordingly, in view of above provisions, net loss of Rs. 24.20 Crs on long term capital assets as per provisions of Sec 112 r.w.s. 48 & Sec 112A r.ws 55(2)(ac), is required to be reduced while computing book profit u/s 115JB of the Act. In support of the said contention, the Ld. AR relied on the decisions of Best Trading and Agencies Ltd. -vs.- DCIT (2020) 428 ITR 52 (Kar.), Ludhiana Leasing Pvt. Ltd. -vs.- DCIT [ITA No. 241/CHD/2023 dated 21-05-2024] and on the decision of the Coordinate Bench of the Jaipur Tribunal in appellant’s own case for AY 2015-16 to AY 2018-19 in to 498 & 500/JP/2023.

25.4 On the other hand, the Ld. DR submitted that there is no basis for the appellant to claim indexation benefit on sale of long-term capital assets under the provisions of section 115JB of the Act.

25.5 We have heard the rival contentions and perused the material placed on record. The issue raised by the assessee – appellant in this ground has been dealt with by the Hon’ble Karnataka High Court in the case of Best Trading and Agencies Ltd. -vs.- DCIT (2020) 428 ITR 52 (Kar.). In the said decision the Hon’ble Court has observed that the benefit of indexed cost of purpose of computing book profit u/s 115JB of the Act. The findings of the Court are as under:

“Thus, by virtue of sub-s. (5) of s. 115JB, the application of other provisions of the Act are open, except if specifically barred by the section itself. The indexed cost of acquisition is a claim allowed by s. 48 of the Act to arrive at the income taxable under the income from capital gains. The difference between the sale consideration and indexed cost of acquisition represents the actual cost(to be read as ‘gain’) of the assessee, which is taxable as per s. 45 of the Act at the rates provided under s. 112 of the Act. There is no provision in the Act to prevent the assessee from claiming indexed cost of acquisition on the sale of asset in case, where the assessee is subjected to s. 115JB of the Act. In any case, since, the indexed cost of acquisition is subjected to tax under a specific provision viz., s. 112 of the Act, therefore, the provisions of s. 115JB of the Act, which is a general provision cannot be made applicable to the case of the assessee. For yet another reason, the assessee has to be given the benefit of indexed cost of acquisition as considering the profits on sale of land without giving the benefit of indexed cost of acquisition results in taxing the income other than actual/real income. In other words, a mere book keeping entry cannot be treated as income.”

25.6 The issue is also dealt with by Chandigarh bench of this tribunal in the case of Ludhiana Leasing Pvt. Ltd. -vs.- DCIT [ITA No. 241/CHD/2023 dated 21-05-2024]. The finding of the co-ordinate bench is reiterated herein below ;

“6. …… However, so far as the alternate contention of the ld. Counsel that the assessee is entitled to the benefit of indexed cost of acquisition in line with the provisions of section 48 of t he Act is concerned, the issue is squarely covered in favour of the assessee by the various decisions. The Hon’ble Karnataka High Court in the case of Best Trading and Agencies Ltd. v. DCIT (supra) has held that the benefit of indexed cost of acquisition is applicable to an assessee while computing capital gain for the purpose of computation of book profit u/s 115JB of the Act. The relevant part of the order of the Karnataka High Court is reproduced as under: “13. Section 115JB(5) of the Act reads as under: "(5) Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee being a company, mentioned in this Section." Thus, by virtue of sub-Section (5) of Section Shree Cement Limited vs. ACIT 115JB, the application of other provisions of the Act are open, except if specifically barred by the Section itself. The indexed cost of acquisition is a claim allowed by Section 48 of the Act to arrive at the income taxable under the income from capital gains. The difference between the sale consideration and indexed cost of acquisition represents the actual cost of the assessee, which is taxable as per Section 45 of the Act at the rates provided under Section 112 of the Act. There is no provision in the Act to prevent the assessee from claiming indexed cost of acquisition on the sale of asset in case, where the assessee is subjected to Section 115JB of the Act. In any case, since, the indexed cost of acquisition is subjected to tax under a specific provision viz., Section 112 of the Act, therefore, the provisions of Section 115JB of the Act, which is a general provision cannot be made applicable to the case of the assessee. For yet another reason, the assessee has to be given the benefit of indexed cost of acquisition as considering the profits on sale of land without giving the benefit of indexed cost of acquisition results in taxing the income other than actual / real income. In other words, a mere book keeping entry cannot be treated as income.” � Respectfully following the aforesaid judgments on the issue, it is held that the assessee is entitled to the benefit of indexed cost of acquisition while computing book profit u/s 115Jb of the Act.”

25.7 The issue is also covered by the decision of the Coordinate Bench of this Tribunal, Jaipur, in appellant’s own case in to 498 & 500/JP/2023 dated 21-02-2024. The findings is reproduced here in below :

“50. In view of several binding judicial precedents of Honourable High courts stated above holding that since 115JB(5) does not specify any particular claim to be excluded or included under the said provisions, said decision has lost its persuasive value. Further, the said sub-section applies to all the provisions of the Act and not to any particular claim or section…..

Court stated herein above we hold that as per sub-section (5) of Section 115JB, the application of other provisions is open, except if specifically barred by the section itself. Therefore, the said sub-section applies to all the provisions of the Act and not to any claim or section. Further, Ld. DR could not point any contrary decision on this issue before this Bench. We, therefore, taking into consideration the facts and circumstances of the case as discussed herein above, and following judgment of the Hon'ble High Court and taking the consistent view taken by the Coordinate Benches of this Tribunal, allow the claim of the appellant. Ld. AO is directed to allow the claim after due verification of the working.

In the result, the appeal of the assessee - appellant in ITA No.

1517/JPR/2024 is partly allowed.

Order pronounced in the open court on 24/06/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 24/06/2025 Shree Cement Limited vs. ACIT *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shree Cement Limited, Ajmer 2. izR;FkhZ@ The Respondent- ACIT, Central Circle, Ajmer 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No. 1517/JP/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत