ASSISSTANT COMMISSIONER OF INCOME TAX, AJMER vs. SHREE CEMENT LTD, BEAWAR

per Form 10CCB as against claimed in the return of income

inspite of the fact that Ld. CIT(Appeals) confirmed that

assesse is eligible for higher deduction u/s 80-IA of the Act.

consideration, the assessee company vide Form 10CCB has

claimed deduction u/s 80-IA amounting to Rs. 7,53,09,76,895/- in

respect to its Solid Waste Management System out of which Rs.

3,69,14,17,823/- pertains to claim w.r.t. solid waste being fly ash

and Rs. 3,83,95,59,072/- pertains to claim of solid waste being

pond ash. The assessee 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. 1,01,85,41,499/- in the computation of total income based

on the stand taken by TPO in earlier years. Balance claim of Rs.

2,67,28,76,324/- was made vide notes forming part of

computation filed along with the return of income.

129 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

the assessee company had also filed a modification petition on

13.04.2021 before A.O for revision in claim of deduction u/s 80-IA

on eligible solid waste management system. Further, during the

course of assessment proceedings, a letter before the ld. AO was

also filed on 22.07.2021 for allowing the deduction u/s 80-IA

based on claim filed in Form 10CCB. However, the A.O completed

the assessment without giving cognizance to the above petitions.

relevant finding of the ld.CIT(A) is reiterated here in below :

Error in computing deduction u/s 80-IA on SWMS (Fly Ash). 11. Ground No. 13 is in respect of error in computing deduction u/s 80- IA on Solid Waste Management System (Fly Ash). This is raised without prejudice to Ground No. 8 to 12. 11.1 The AR submitted that the A.O. in the assessment order was required to compute deduction u/s 801A in accordance with the provisions of Sec. 92CA(4). Instead of computing revised deduction u/s 80IA after taking into account order of TPO, AO added back the entire amount of adjustment to total income without taking into cognizance the amount of claim made in the computation. Hence, instead of allowing deduction u/s 80- IA of Rs. 203,39,79,752/- the AO has computed negative deduction of Rs. (63,88,96,572)/- [Rs. 101,85,41,499/- minus Rs. 1,65,74,38,071/-]. 11.2 Since the said issue has already been adjudicated in detail in Para 9 above and necessary directions have already been given to the A.O. in this regard, the said ground does not require further adjudication and hence is dismissed.

130 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

has referred the para 9 of his finding and therefore, the same is

also reproduced herein below :

9.1 The appellant vide Form 10CCB has claimed deduction u/s 80-IA amounting to Rs. 7,53,09,76,895/- w.r.t. Treated Solid Waste out of which Rs. 3,69,14,17,823/- pertains to claim of treated fly ash and Rs. 383,95,59,072/- pertains to claim of treated pond ash. However, following the conservative approach the appellant company in its return of income has restricted the claim of deduction u/s 80-IA on solid waste management system (Fly Ash) to Rs. 1,01,85,41,499/ -. The appellant has lodged the balance claim of Rs. 267,28,76,324/- vide notes to the computation forming part of return.

9.2 The appellant has further filed letter before the AO on 22.07.2021 for allowing the deduction u/s 80-IA based on claim filed in Form 10CCB. The A.O did not allow the claim as per Form 10CCB. Aggrieved by the Order of A.O, the appellant filed rectification petition. It is informed that partial relief was granted by the AO vide rectification order u/s 154 r.w.s 143(3) dated 22.09.2021 where a claim of Rs. 1,01,85,41,499 was only allowed to the appellant.

9.3 The submission of the assessee before the ld. CIT(A)xxxxxx. xx

9.4 It is observed that the appellant while computing total income in its return of income made a claim of deduction u/s 801A on Solid Waste Management System (Fly Ash) to Rs. 1018541499/- in the main computation of total income and the balance claim of Rs. 2672876324/- was lodged vide notes filed along with the return of income.

9.5 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 80AC requires that such return of income should be filed within the time limit specified u/s 139(1) to claim deduction under Chapter VIA.

9.6 In view of section 80A(5) r.w.s. 80AC, the claim of Solid Waste Management System (Fly Ash) has rightly been restricted to Rs. 1018541499/- as claimed in the main computation of total income and the balance claim of Rs. 2672876324/- which was lodged vide notes

131 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

but not in in the main return of income, cannot be considered as claimed in the return of income. 9.7 In view of above, the action of AO in allowing deduction u/s 80IA on eligible Solid Waste Management System as per Form 10CCB filed along with return of income is upheld. This ground is dismissed.

ground that assessee has made the claim in the notes to the

computation of income and the same is not in accordance with the

provisions of Section 80A(5) and restricted the claim of the

assessee up to the amount claimed vide computation of income.

appeal before us in ground no. 3.

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

132 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

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) 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.

relied upon the finding of the ld. CIT(A) on the issue. The ld. DR

133 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

submitted that as the claim of the assessee is not in accordance

with the provision of section 80A(5) the excess claim since not

claimed in the return of income the claim of the assessee is

required to be denied.

assessee relying upon the provision of section 80A(5) the same is

considered and reiterated here in below :

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.

written submissions filed by the assessee. We have also carefully

gone through the order of ld. CIT(A). From the perusal of Paper

Book filed by the assessee it could be seen that total deduction of

Rs. 753.10 Crs. was claimed on account of deduction u/s 80IA on

Solid waste management system (SWMS). In support of the

above claim, the assessee had filed report in Form 10CCB along

134 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. with the return of income wherein independent Chartered

Accountant had certified the above claim. A dispute arose since

out of the above claim, in the computation of total income the

assessee claimed Rs. 485.81 Crs. and balance claim of Rs.

267.29 Crs. was made vide Notes forming part of the return filed

along with the computation and forming integral part of the return.

It is worthwhile to note that TPO has considered the full claim of

Rs. 753.10 Crs. as per Form 10CCB in his order and out of the

above amount proposed adjustment or disallowance to the tune of

Rs. 322.47 Crs. In appeal, the above disallowance was reduced to

Rs. 4.34 Crs. by the Ld. CIT(A) thereby allowing the total claim for

Rs. 748.76 Crs. However, Ld. CIT(A) thereafter restricted the

claim to Rs. 485.21 Crs. on the contention that claim made vide

notes to return cannot be said to be claim lodged in the return and

therefore Rs. 263.55 Crs., thus, stood disallowed by Ld. CIT(A).

during the course of hearing. We find that there are various

decisions on this issue wherein it has been held that notes to the

return form an integral part of the return of income and hence any

amount claimed vide notes, is amount claimed in the return and

135 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

cannot be disallowed on the contention that the claim was not

lodged in the return of income. The co-orindate bench of Mumbai

Tribunal in ACC Limited vs ACIT (ITA No. 6082/Mum/2014 dated

16-3-2023) has held that –

“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.”

395 ITR 371 (Bom), the Hon’ble Bombay High Court has held that

“The issue whether or not the claim of quantification made by the assessee before the AO for the subject assessment years would be a fresh claim or not is academic. This is view of the fact that the impugned order has held that even if one accepts that the quantification of the amount of deduction made during the course of assessment proceedings is a fresh claim it is a settled position that it can be made before and could be considered by the appellate authorities.”

148 TTJ 213 (Del) has also held that:-

“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

136 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 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.”

08-06-2023 confirmed that deduction u/s 80IA on SWMS of Rs.

748.76 Crs. should be allowed to the assessee. Therefore

restricting the said claim merely because the claim in the

computation part of return is lower is not justified as it is the duty of

the appellate authorities to determine correct tax liability of the

assessee as laid down by Hon’ble Apex Court in NTPC vs CIT

(1998) 229 ITR 383 (SC). We further find that the full claim was

quantified and reflected in the audited accounts of SWMS as well

as in Form 10CCB both of which were duly filed along with the

return of income. This fact makes the prayer of the appellant all the

more stronger. When the claim is allowed on merit by CIT(A) and is

in terms of audited accounts and form 10CCB uploaded with return

of income and also in terms of amount reflected in the return read

with 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. AO is therefore directed to allow deduction u/s 80IA on

account of solid waste management system to the tune of Rs.

748.76 Crs. Based on the above finding of facts, this ground no. 3

137 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. of the assessee is decided in favour of the assessee and is

allowed.

made by the AO on account of claim of Education Cess of Rs.

11,89,88,742/-.

assessee’s appeal for AY 2015-16 in ITA No. 500/JPR/2023 on

claim of Education Cess under normal provision of the Act. This

ground has been extensively dealt with while dealing with

Assessee’s Appeal for AY 2015-16 in ITA No. 500/JPR/2023 and

in the light of our findings recorded therein Hence the said ground

no. 4 of the assessee is dismissed.

officer on account of payment made to transporter of Rs.

1,00,00,000/-

assessment proceedings the AO raised a query before the

assessee vide notice u/s 142(1) dated 22.04.2021 w.r.t. alleged

138 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

cash receipt of Rs. 1 Cr. from Shiv Group, Gandhidham by way of

over invoicing. The relevant extract of the query asked by the AO

is given hereunder :

“6. Further, during the survey u/s 133A of the Income Tax Act, 1961 conducted on 15-03-2018 at various premises of Shiv Group, Gandhidham, certain items were found in which a information was found out that Rs. 1 crore was sent back to Shri Cement Pvt. Ltd. on 29-07-2016, after receiving the same through cheque by over-invoicing. The same information has also been recorded in the statement of a person of interest in the survey. In this regard, you are required to furnish your explanation as to why not Rs. 1 crore be added to your income.” 174. In response to the said query, reply was submitted by the

assessee vide letter dated 31.05.2021 stating that Shiv Group

Gandhidham is one of the logistic service provider for

transportation of fuel and during the year various transactions has

been entered with the party for transportation of fuel and that no

such cash payment has been received by the company from the

aforesaid party and all the transactions were made through proper

banking channel only. The assessee company also submitted

along with its reply a confirmation letter dated 18-05-2021 from

Shiv Group wherein it has been stated that all the transactions

entered with Shree Cement Limited are genuine and there is no

case of over invoicing in respect of the same as alleged by the

department.

139 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

of Rs. 1 Cr. in the draft assessment order u/s 144C dated

24.06.2021. The assessee again in response filed a reply wherein

it was requested to the AO to produce the documents relied

upon as they have neither been shared with the appellant nor

opportunity has been given to cross verify the same.

Disregarding the same, the AO proceeded to pass order u/s 143(3)

dated 12-08-2021 making the disallowance.

taken the ground in the first appeal before the ld. CIT(A) who has

dismissed the grounds of appeal of the assessee by observing as

under :

16.6 I have gone through the facts of the case available on record and the contentions raised by the appellant and the A.O. As stated by the A.O. during the course of survey proceedings u/s 133A on the premises of Shiv Group, Gandhidham, a pen drive has been impounded wherein the name of the appellant has been mentioned in one of the excel files. Further various statements have been recorded of the personnel of Shiv Group on the basis of which it has been stated that cash has been sent to appellant by the Shiv Group. Based on such information the A.O. has issued notice to the appellant and carried out enquiry during assessment proceedings. Hence, in my view, the AO was correct in adding the amount to the total income of the appellant since he had necessary information available with him for such addition. I find no force in the contention of the AR that although such incriminating materials has been found during the course of survey at 3rd party's premises, it is the duty of the A.O. to confirm and be satisfied that the appellant has actually entered into such cash transactions.

140 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

16.7 The appellant has not been able to produce anything to the contrary that what has been alleged by the AD. Since the A.O. has incriminating materials in his possession, the contentions of the appellant in this regard deserve to be rejected. The disallowance of Rs. 1 crore as made by the A.O. is confirmed and this ground of appeal is dismissed.

grounds so raised for this issue the assessee has thus aggrieved

from the finding of the lower authority has raised the ground before

us.

assessee, the arguments in oral and written were placed on record.

The written argument raised are as under:-

i. Notices was issued by AO on 22-04-2021 proposing to make a disallowance on account of receipt by way of over invoicing amounting to INR. 1 Crs. ii. Despite the evidences submitted by the appellant vide its letter dated 31- 05-2021, AO without considering the same passed draft assessment order u/s 144C dated 24-06-2021 proposing to disallow the said amount of INR 1 Crs. iii. The appellant against the said draft order again requested vide its letter dated 22-07-2021 to share the evidences/statements and cross verify the same based on which disallowance is being proposed by AO. iv. A.O. without providing any such details made an arbitrary addition of INR 1 Crs. on the basis of statement alleged to be recorded during the survey u/s 133A conducted at 3rd party’s premises & excel file alleged to be found in a pen drive, and held that cash payments amounting to INR 1 Cr. were made to the appellant company after receiving the same amount through cheque.

141 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

v. Completion of assessment without considering the assessee’s contention and without providing any opportunity to the appellant to produce evidence or cross examine any evidence is bad in law as held in following decisions:

 Kishinchand Chellaram –vs.- CIT (1980) 125 ITR 713 (SC) [Income-tax authorities is bound to produce evidence relied upon so that the assessee could controvert the statements contained in it]  CIT -vs.- Bhanwarlal Murwatiya (2008) 215 CTR 489 (Raj): When none of the witnesses were examined before the A.O., and assessee did not have any opportunity to cross examine the statements given by the witnesses, addition cannot be made by AO.  Heirs and Legal Representatives of Late Laxmanbhai S. Patel –vs.- CIT (2010) 327 ITR 290 (Guj.) [Addition made based on statement recorded without furnishing the same to the assessee or without giving him an opportunity to cross-examination was required to be deleted on the ground of violation of the principles of natural justice]

vi. Addition based on materials collected and statement recorded during survey u/s 133A are not sustainable:  CIT –vs.- S. Kadher Khan Son (2008) 300 ITR 157 (Mad.) affirmed by Apex Court in (2013) 352 ITR 480 (SC): [Materials collected and the statement recorded during the survey u/s 133A are not conclusive piece of evidence by itself]  PCIT –vs.- Sunshine Import & Export P. Ltd. (2020) 424 ITR 195 (Bom.): [Statement recorded u/s 133A does not have any evidentiary value and that materials or information found in the course of survey proceedings could not be a basis for making any addition]  CIT –vs.- Dhingra Metal Works (2010) 328 ITR 384 (Del): [A.O. cannot make addition solely on the basis of the statement made during the course of survey]

vii. Loose papers, computer print outs, hard disk and pen drive etc. are not admissible as evidence unless corroborated  Common Cause (A Registered Society) -vs.- UOI (2017) 394 ITR 220 (SC)) : [Loose papers and electronic data not maintained regularly during the course of the business cannot be considered as admissible evidence as per the Indian Evidence Act] viii. Addition based on assumptions, presumptions, surmises and conjectures are not sustainable

142 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

 Late Shri Harshad S. Mehta –vs.- DCIT (ITA No. 5702/Mum/2017 dated 14-01-2019) [Additions cannot be sustained on the basis of assumptions and presumptions that evidences so obtained are against the assessee and without giving the opportunity to the assessee to controvert the same.]

recorded in the orders of lower authorities and submitted that the

addition is made based on the material found in survey conducted

at the premises of the Shiv Group, Gandhidham. The assessee has

merely submitted the confirmation and has not rebutted the

contention of the revenue.

written submissions filed by the assessee. We have gone through

the finding recorded in the order of the ld. AO & CIT(A) as well. The

bench noted that the apple of discord for this addition is that

whether the addition can be made on the third party evidence

without being shared to the assessee and without affording any

cross examination to the assessee for countering those relied upon

third party evidence?

143 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 181. The brief fact in relation to the issue is that the ld. AO in the

order has alleged that during survey on one Shiv Group, a pen

drive was found, and the impounded pen drive had an excel file

namely ‘cash account’. Mr. Suresh Pillai in his recorded statement

stated that transactions made against over invoicing, and cash was

sent back to Shree Cement. Against the above contention, the

appellant vide letter dated 31-05-2021 requested the AO to share

the documents based on which addition was proposed. The

appellant also requested for cross examination of the person based

on whose statement addition was proposed. The appellant vide

letter dated 22-07-2021 again requested the AO to share the

documents which has been relied upon based on which addition

was proposed in draft order. At this time the appellant filed a

confirmation from the above party before the AO which stated that

all transactions entered with the assessee by the said party were

genuine and there was no over invoicing.

allegation but has not provided supplied any relied upon

documents / details. He has also not provided the alleged

statement recorded, pen drive found or any appraisal report

144 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. forwarded by Investigation wing of the revenue from Gandhidham,

which recommended taking action against the assessee. Without

these primary and basic details / documents how addition can be

made on the third party statement or evidence. It is a settled

principle that loose papers and electronic data not maintained

regularly during the course of the business cannot be considered

as admissible evidence as per Indian Evidence Act, 1872. Not only

that the Hon’ble apex court in the case of M/s. Andaman Timbers

Industries Vs. Commissioner of Central Excise, Kolkata-II, held that

not allowing the assessee to cross-examine witnesses whose

statements were relied upon by the Adjudicating Authority resulted

in a breach of principles of natural justice. The order based solely

on witness statements was considered a serious flaw and rendered

null and void. The bench also noted that in the present case, the

assessee has filed copies of all invoices, bank statement as well as

confirmation from the said party that submitting the evidence in

support of the claim that the transactions are genuine. Hence, the

onus now shifts to department to counter them and provide

evidence that the transaction is not genuine. We find that the AO in

the present case has not discharged its onus despite repeated

requests from the assessee to provide documents to justify the

145 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. addition. In view of the above facts, we find that Ld. CIT(A) was not

justified in confirming the addition made by AO in summary without

dealing with the contentions and his finding on the contention so

raised by the assessee. This ground is therefore decided in favour

of the assessee addition made of Rs 1 Crore on the basis of mere

assumption and presumption is deleted. Ground No. 5 is

therefore allowed.

278,74,31,998/- granted to the appellant as capital receipt

which are not exigible to tax while computing total income

under normal provisions of the Act and under the provisions

of Sec. 115JB of the Act.

the appellant during the year under normal provisions of the Act as

well as under the provisions of Sec. 115JB. As regards the

exclusion of incentives under normal provisions, the same has

been extensively dealt with by us vide Ground No. 5 of assessee’s

appeal for AY 2016-17 in ITA No. 496/JPR/2023.

146 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

provisions, the appellant submitted the issue is 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 has been held to

be excluded while computing Book Profit u/s 115JB of the Act.

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.

147 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 187. Ground No. 7 relates to exclusion of deduction under

section 80IA and 80-IC in computing Book Profit under

section 115JB of the Act.

assessee’s appeal for AY 2015-16 in ITA No. 500/JPR/2023 on

claim of deduction under section 80IA and 80-IC in computing

Book Profit under section 115JB of the Act wherein this ground

has been extensively discussed. Accordingly, AO is directed to

compute Book Profit u/s 115JB of the Act after allowing deduction

under Chapter VI-A, Part C, particularly u/s 80IA & u/s 80IC of the

Act Thus ground no. 7 of appeal is therefore allowed.

while computing Book Profit u/s 115JB of the Act.

during the year, the assessee company in view of adoption of Ind-

AS had credited an amount of Rs. 676.49 Crs. as transition amount

to the retained earnings as on 01-04-2016 being notional income.

In view of Sec 115JB(2C), 1/5th of such transition amount i.e. Rs.

1,35,29,81,703/- was offered to tax while computing book profit for

148 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. the year under consideration. In addition to the said amount, as per

the provisions of Ind-AS 109, the assessee also recorded an

amount of Rs. 83,35,74,971/- being notional interest on bonds

(including Zero Coupon Bonds) and debentures and fair valuation

gain on preference shares and mutual funds amounting to Rs.

24,67,00,000/-. The said amounts were credited to the Statement

of P&L and was offered to tax while computing book profits u/s

115JB.

contended that said amount were notional in nature and hence

should be excluded from computation of book profit u/s 115JB. The

said contention was also placed before the AO during the course of

assessment proceedings as well vide letter dated 05.07.2019.

However, the AO passed order u/s 143(3) without allowing the

aforesaid claim under MAT provisions.

CIT(A). The claim of the assessee was disallowed on the

contention that due to the specific amendments brought in Sec.

115JB such amounts cannot be excluded while computation of

149 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

book profit. The relevant finding of the ld. CIT(A) is reiterated here

in below:

20.5 I have gone through the detailed submissions of the appellant on this issue. I have also gone through the adjustments made by the appellant in the financial statements on account of adoption of Ind-AS. The fact that notional entries have been recorded in the Financial Statements due to adoption of Ind AS is not disputed here. The said entries have impacted the profitability of the company which has resulted in levy of MAT on such revised profitability. However, it is noted that Legislature vide Finance Act, 2017 w.e.f. 01.04.2017 after considering the Ind-AS provisions has made appropriate amendments in Sec. 115JB wherever required. Further various clarifications on computation of Book Profit for Ind AS compliant companies has also been issued vide CBDT Circular dated 25.07.2017. Therefore, the notional amount on adoption of Ind AS taxable u/s 115JB due to specific amendments in Sec. 115JB cannot be excluded. In view of the same, these grounds are dismissed.

the assessee has challenged that finding of the lower authority

before us. In support of the ground so taken ld. AR of the assessee

submitted their contention in a written submission the same reads

as under :

i. Notional Income of INR 676.49 Crs was credited to Retained earnings as on 01-04-2016 on first time adoption of Ind-AS on account of following: Sl. Particulars Amt 1 Fair value on Zero Coupon Bonds 639.68 2 Amortization of Premium/Discount on Bonds (0.22) 3 Fair Value on Mutual Funds 22.18 4 Fair value gain/ (loss) on Preference shares 2.62 5 Reversal of Mines Reclamation Expenses (on 12.18 NPV basis)

150 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

Sl. Particulars Amt 6 Amortization of upfront fees (on NPV basis) 0.05 Total Opening Balance of Ind-AS Adjustments 676.49 1/5th of Opening Balance of Ind-AS Adjustment 135.30

One fifth of the above amount (INR 135.30 Crs.) was included while computing book profit as per provisions of Sec 115JB(2C) of the Act.

However, vide notes forming part of the Return, the aforesaid amount of INR 135.30 Crs. was claimed to be excluded under MAT, being notional income and not real income of the company, which is not even credited to Statement of P&L.

Further, the appellant on adoption of Ind-AS has offered an amount of INR 108.03 Crs. while computing book profits u/s 115JB. This comprised of (1) an amount of INR 83.36 Crs being income towards notional interest on bonds & debentures and (2) a further amount of INR 24.67 Crs., being notional fair valuation gain on preference shares and mutual funds credited to the Statement of P&L on Ind-AS adoption.

However, vide notes forming part of the Return, the aforesaid amount of Rs. 108.03 Crs. was claimed to be excluded under MAT, being notional in nature and not real income of the company.

ii. Notional income being not real profit of the company needs to be excluded while computing book profit u/s 115JB of the Act:  Syndicate Bank –vs.- ACIT (2006) 7 SOT 51 (Bang. – Tri.) [MAT u/s 115JA cannot be levied on notional income and hence notional interest on zero coupon bond, credited to P&L Account was held as not to be subjected to MAT, as there was no real accrual of income during the year. Since Provisions of Sec. 115JB are same on this aspect, this decision would equally apply to taxability of notional income under Sec. 115JB]  ITO –vs.- M/s. D.P. Communication Systems (ITA No.5212/Del./2014) [When there is unrealized notional gain on FE fluctuation, the same though credited to P&L account, is not an income taxable u/s 115JB of the Act.]

(c)Income to accrue when such income comes into existence or vests with the appellant:

Income credited to Retained earnings substantively represents notional interest income & notional fair value gain on investments, the right to receive of such interest or fair value of investment may arise only when there is actual transfer of financial instruments and not when any notional amount is credited to the P&L as per statutory requirements of Accounting Standards, without

151 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

there being any real income. Reliance is paced on the principles laid down in the following decisions:  National Handloom Development Corpn. Ltd. –vs.- DCIT (2004) 266 ITR 647 (All.) [ SC in the case of Godhra Electricity Co. Ltd. -Vs- CIT (225 ITR 746) & other decisions, have held that income tax can be levied only on real income and not imaginary or any hypothetical income. Relying thereon, Allahabad HC in this case, held that deferred interest credited to P&L account cannot be subjected to tax, being notional] (d) Objective of MAT provisions is to bring out the true working result by taxing real income of the company: Hon’ble Supreme Court in Indo Rama Synthetics (I) Ltd. –vs.- CIT (2011) 330 ITR 363 (SC) have held that the objective of MAT provisions u/s 115JB is to bring out the true working result by taxing real income of the company and hence amount credited to P&L Account due to reversal of Revaluation Reserve, cannot be subjected to MAT.”

order of the ld. CIT(A) who has considered the provision of the Act

and rightly not considered the contentions of the assessee.

perused written submissions filed by the assessee. The facts are

that due to adoption of Ind AS, the accounts of the company have

been prepared which requires various assets to be recorded at Fair

Market Value and not at Historic Cost basis. The appellant’s

contention is that due to above, various notional entries have been

passed in the books of accounts which includes notional income

credited to Profit & Loss statement. ld. CIT(A) has also stated that

152 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. the fact that notional entries have been recorded in the Financial

Statement due to adoption of Ind AS is not disputed. However, we

find that there are 2 types of notional entries passed. (a) Transition

amount on first time adaptation of Ind AS which is credited to

retained earnings and not to P&L Statement (Rs. 135.30 Crs.) and

(b) Mark to Market/Amortised cost as per Ind AS 109 on account of

fair valuation of shares and mutual funds (Rs. 108.03 Crs.). The

contention of the ld. AR of the assessee is that both are notional

income and not real income. Any income can be brought to tax only

when it is real and actual income and not mere accounting entries.

In support of its contention the AR of the assessee has relied upon

various decisions wherein it has been held that MAT u/s 115JB

cannot be levied on notional income and any amount credited to

P&L account which has not accrued during the year cannot be

considered in computing book Profit u/s 115JB of the Act.

acceptable in full on the issue on hand. Upon perusal of the

provision of section 115JB of the Act, it is noted that the legislature

has brought necessary amendments to Section 115JB to give

effect to the computation of book profit for the purpose of levy of

153 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

MAT u/s. 115 JB of the and a new section 115JB (2C) has been

introduced w.e.f. 01-04-2017 which reads as below –

“(2C) – For a company referred to in sub-section (2A), the book profit of the year of convergence and each of the following four previous years, shall be further increased or decreased, as the case may be, by 1/5th of the transition amount”

of the Act from AY 2017-18 onwards i.e. the year under appeal, we

have no doubt in rejecting the contention of the assessee and one-

fifth of the transition amount of Rs. 135.30 Crs. as referred to

herein above as (a) which has been credited to retained earnings

needs to be offered to tax while computing Book Profit u/s 115JB of

the Act.

assessee that mark to market /amortized cost as per Ind AS 109 on

account of fair valuation of shares and mutual funds (Rs. 108.03

Crs.) are notional income credited to the Profit & Loss. We could

not find any corresponding amendment in Section 115JB which

brings to tax above amount. In absence of any amendment, we are

inclined to agree to the contention of the assessee that the said

amount represents notional income credited to P&L and not real

154 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

income. It is now a settled principle that legislature can bring to tax

only real income and not notional income which has not accrued

during the year as held by Supreme Court in Godhra Electricity Co.

Ltd. Vs CIT (225 ITR 746) and others. Various courts have also

analyzed the notional income theory in computing Book Profit u/s

115JB of the Act. The bench noted that the similar issue has been

dealt in detailed by the Mumbai Bench of the ITAT in the case of

Reliance Industrial Investment and Holdings Ltd. v. Deputy

Commissioner of Income-tax 149 taxmann.com 113 (Mumbai -

Trib.) where in the ITAT holds that

155 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

5212/Del/2014) it has been held that

“When the notional gain on fluctuation in foreign exchange is not disputed by the revenue, the same is not an income taxable u/s 115JB of the Act. Moreover, when the notional income does not really form part of income in the hands of the assessee company, the same cannot be part of the profit reflecting the real results in the profit & loss account.”

amounting to Rs. 83,35,74,971/- on account of bonds and

debentures and Rs. 24,67,00,000/- on account of shares and

mutual fund aggregating to Rs. 108,02,74,971/- represents notional

income and hence needs to be excluded while computing Book

156 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

Profit u/s 115JB of the Act. Based on this observation the ground

no 8 of the assessee is therefore partly allowed.

Ground No. 9 relates to deletion of excess levy of interest u/s

234C

captioned assessment year has computed Interest u/s 234C

amounting to Rs. 1,43,60,496/- on its tax liability. The said interest

was arising on account of shortfall in payment of advance tax for

Quarter – III for AY 2017-18. The Ld. AR of the assessee submitted

that out of the interest as computed, interest amounting to Rs.

1,38,85,263/- was arising on account of shortfall on payment of

advance tax due to additional income arising as a result of first-time

adoption of Ind-AS in the captioned assessment year and due to

profit on sale of investment post the payment of advance tax for the

quarter – III. Hence, it has resulted in the excess liability of Interest

amounting to Rs. 1,38,85,263/- levied needs to be deleted.

reiterated here in below :

157 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

24.1 Charging of interest is mandatory in nature. AO is directed to recheck the computation of interest and take necessary action as per law. This ground is partly allowed.

is cryptic and has not decided this ground considering the specific

prayer of the assessee.

supported the order of the ld. CITA(A) and submitted that since the

interest chargeable u/s. 234C of the Act being mandatorily in

nature there is no merits in the grounds of the assessee is required

to be dismissed.

of the lower authorities and also perused the material placed on

record. We agree with the contention of the A/R that Section 234C, 1st proviso specifically states that interest shall not be chargeable

on account of failure to estimate shortfall arising on account of

capital gains and income chargeable to tax under Profits & Gains of

Business & Profession for the first time. We have noted that

amendment to Section 115JB have been brought vide Finance Act

2017 bringing retrospective amendment to Sec 115JB w.e.f. 1-4-

158 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 2016. Due to such retrospective effect, notional income accounted

for the first time on adoption of Ind-AS became taxable u/s 115JB

of the Act. It is a settled principle that law does not compel the

assessee to perform what is impossible to perform in advance.

Here, the assessee cannot be expected to estimate its total income

considering retrospective amendment when at the time of payment

of advance tax, no amendment was proposed by the legislature.

Performance of this impossible duty must be excused in

accordance with the maxim, ‘lex non cogitate ad impossible’ as

held by Hon’ble Supreme Court in Cochin State Power and light vs

State of Kerela (1965 AIR 1688). Based on the above finding of the

apex court read with the facts of the case, the ld. AO is directed to

delete interest levied u/s 234C of Rs. 1,38,85,263/-. This ground

no. 9 is decided in favour of the assessee and is allowed.

of the claim of depreciation @25% 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.

159 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 207. We note that the facts of this issue are identical to Additional

Ground No. 1 raised for AY 2015-16 in ITA No. 500/JPR/2023.

Based on our detailed findings given in AY 2015-16, this ground is

allowed. Hence, the ld. AO is directed to grant depreciation @25%

on such leasehold rights acquired in accordance with section

32(1)(ii) of the Act.

497/JPR/2023 is partly allowed.

491/JPR/2023 for assessment year 2017-18.

deletion by CIT(Appeals) of disallowance of Rs.

4,82,58,43,293/- on account of deduction u/s 80IA in respect of

captive power plants.

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. A/R submitted that for AY 2017-18, the facts are similar to the

facts for AY 2015-16. During the year the appellant has claimed

160 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. deduction for Power Undertakings located at various cement and

grinding units. Out of the above, deduction is claimed on New India Power undertaking for the 1st time, whereas in respect of

balance undertakings, claim had started in earlier years. The

above new Power undertaking was set up with the objective to

take initiative of setting up renewable energy-based power plants

throughout the country to cater to its power requirement. The said

undertaking comprises of power units located at Chattisgarh,

Rajasthan and upcoming unit in Karnataka in respect of which

part capex has already been incurred during the year under

consideration, with the common objective of supplying power to its

cement manufacturing unit. Since the undertaking is set up and

has commenced operations prior to 01-04-2017, it is an eligible

undertaking for the purposes of deduction u/s 80IA.

adopted Transfer Price for the purpose of power transferred by

the Power Generating Units (‘PGUs’) to the Cement

Manufacturing Unit (‘CMU’) based on annual average landed cost

rate of power sold by the State Electricity Board (‘Grid/SEB’)

during the year to the nearby manufacturing units of independent

161 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. assessees in the State of Rajasthan and Chhattisgarh by applying

Comparable Uncontrolled Price (‘CUP’) Method. These grounds

have been extensively dealt with in Departmental Appeal for AY

2015-16 in ITA No. 489/JPR/2023 and followed in Departmental

appeal for AY 2016-17 in ITA No. 490/JPR/2023 and in the light of

our findings recorded therein, we find no infirmity in the order of

the ld. CIT (A), accordingly the order of the ld. CIT (A) is upheld.

The ground no 1 of the Revenue is dismissed.

assessee by deleting the disallowance of Rs. 3,18,12,93,748/-

on account of deduction u/s 80IA on account of Solid Waste

Management System.

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. AR of the assessee submitted that for AY 2017-18, the facts

are similar to the facts for AY 2015-16. During the year, the

assessee has claimed Deduction u/s 80IA towards profits on Solid

Waste Management System set up for management of solid

waste being pond ash & fly ash. The assessee has claimed the

162 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. transfer price of treated solid waste by considering realisable

market value of clinker and thereby applying Profit Split method.

The TPO accepted the approach adopted by the assessee but

made modification by revising the PSM to 64% and rejecting the

element on freight on clinker handling from the market value. The

ld. CIT(A), accepting the realisable market value of clinker,

restricted the PSM to 79.73%. We have already dealt with this

ground on the same set of facts in Departmental Appeal for AY

2015-16 in ITA No. 489/JPR/2023 and in the light of our findings

recorded therein, we find no infirmity in the order of the ld. CIT (A),

accordingly the order of the ld. CIT (A) is upheld. The ground no.

2 of the Revenue is dismissed.

assessee by deleting the disallowance of Rs. 21,72,02,610/-

on account of deduction u/s 80IA on account of Water

Treatment System.

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. AR of the assessee submitted that for AY 2017-18, the facts

163 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. are similar to the facts for AY 2015-16. In this year also the

assessee has computed transfer price of water on the basis of

quotation obtained from Bisleri International Pvt. Ltd after certain

adjustments. However, TPO proceeded to apply Cost Plus

Method by applying the gross margin earned by other companies

of 84.30% and rejected the assessee’s methodology of

benchmarking. These grounds have been extensively dealt with in

Departmental Appeal for AY 2015-16 in ITA No. 489/JPR/2023

and in the light of our findings recorded therein, we find no

infirmity in the order of the ld. CIT (A), accordingly the order of the

ld. CIT (A) is upheld. The ground no. 3 of the Revenue is

dismissed.

assessee by deleting the disallowance of Rs. 4,70,31,231/- on

account of deduction u/s 80IA of Rail system due to

adjustment of Transfer Pricing.

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. A/R submitted that for AY 2017-18, the facts are similar to the

164 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. facts for AY 2015-16. In this year also the assessee has adopted

transfer price of services provided by RIFS to eligible/non-eligible

units by considering savings on account of gross road freight &

handling charges payable for transportation of goods by road to

the rail head, Bangur Gram (i.e. nearest railway station) and rail

freight from rail head to the final destination, determined as per

the tariff notified by the Indian Railways. Further, the assessee

has also applied PSM on the revenue so derived and allocated

34.48% of the profits to its Cement Manufacturing Unit (‘CMU’)

based on an effective Functional, Assets and Risk (‘FAR’)

analysis. These grounds have been extensively dealt with in

Departmental Appeal for AY 2015-16 in ITA No. 489/JPR/2023

and in the light of our findings recorded therein, we find no

infirmity in the order of the ld. CIT (A), accordingly the order of the

ld. CIT (A) is upheld. The ground no 4 of the Revenue is

dismissed.

For Assessment year 2018-19

165 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

consideration on 30.11.2018 disclosing total income of Rs.

3,97,76,01,600/- under the normal provisions of the Act and book

profit amounting to Rs. 16,74,01,26,358/- under provisions of Sec.

115JB of the Act. Thereafter, the revised return of income for the

captioned Assessment Year was filed on 31-03-2019, disclosing

total income of Rs. 2,07,85,79,430/- under the normal provisions

of the Act and book profit amounting to Rs. 16,74,01,26,358/-

under provisions of Sec. 115JB of the Act. Along with the

computation of total income filed with return of income, the

assessee filed notes to computation forming part of the return.

scrutiny assessment under the E-assessment Scheme, 2019 on

the following issues:

Sr. No. Issues i. Claim of Any other amount allowable as Deduction in Schedule BP ii. Stock Valuation iii Business Purchase iv Reduction of Income in Revised Return & Claim of Refund v Default in TDS & Disallowance for such default vi Refund Claim vii Deduction claimed for Industrial under taking u/s. 80IA/80IAB/80IAC/IB/IC/IBA/80ID/80IE/10A/10AA viii Unsecured Loans ix Specified Domestic Transactions

166 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

x Expenses incurred for earning Exempt income xi Deduction on account of Donation for scientific research xii Capital Gains/Income on sale of Property xiii Deduction from Total income under Chapter VI-A

under section 92CA was made to the Transfer Pricing Officer

(TPO). The TPO passed an order under section 92CA(3) of the

Act dated 31.07.2021 proposing various upward adjustments

aggregating to Rs. 11,49,87,29,378/-. The ld. AO after

incorporating the proposed adjustment made by the TPO and

after making further disallowances for various deduction claimed

by the assessee passed draft assessment order under section

144C r.w.s. 144B of the Act on 27.09.2021 determining total

income under the normal provisions of the Act at Rs.

14,12,86,20,102/-.

available u/s 144C to file objections before the Dispute Resolution

Panel, the ld. AO passed final order under section 144C read with

section 143(3) of the Act on 01.12.2021 by making various

disallowances/additions to the returned income of the assessee

as under:-

167 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. - Reduction in claim u/s 80-IA on power undertakings (Rs. 5,83,93,48,615/-) - Reduction in claim u/s 80-IA on Solid Waste Management System (Rs. 5,43,32,65,469/-) - Reduction in claim u/s 80-IA on Water Treatment System (Rs. 22,61,15,294/-) - Disallowance of Education cess (Rs. 13,91,57,647/-) - Adhoc addition on purchases treating income u/s 69B (Rs. 41,21,53,647/-)

assessee preferred an appeal before the Commissioner of Income

Tax, (Appeals-44), Delhi. The ld. CIT(A) based on the contentions

raised and considering the evidence and judicial decisions cited

partly allowed the appeal of the assessee.

the ld. CIT(A), preferred the present appeal before this tribunal.

The issues and finding being similar to that of the A. Y. 2015-16

the same is not repeated and the issue which is not there in the

year earlier the same will be dealt when we take up that specific

ground for adjudication. So, for the A. Y. 2018-19 we are taking up

the appeal of the assessee first which is registered as ITA No.

498/JPR/2023 and then that of the revenue as ITA no.

492/JPR/2023.

168 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 226. First, we take up the appeal of the assessee in ITA No.

498/JPR/2023.

assessment order u/s 143(3) r.w.s. 144C passed by Ld. AO as

invalid and void ab initio since it was time barred as passed

beyond the prescribed date and it was not passed in

accordance with the provisions of Section 144B(1)(xvi)(b) of

the Act.

said ground being technical in nature is not being pressed in the

interest of substantive justice. Hence, the said ground is not being

adjudicated. Ground No. 1 & 2 of appeal is therefore dismissed.

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. The said ground relates to non-consideration of

component of reliability charge of Rs. 1.50 per unit which the

power undertaking is eligible to charge for providing

169 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. uninterrupted and quality power supply to the cement

manufacturing units of the assessee.

Assessee’s Appeal for AY 2015-16 on 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. The ld. AR of the

assessee submitted that for AY 2018-19, the facts are similar to

the facts for AY 2015-16. This ground has been extensively dealt

with while dealing with Assessee’s Appeal for AY 2015-16 in ITA

No. 500/JPR/2023 and in the light of our detailed findings

recorded therein, we hold that reliability charge of Rs. 1.50 per

unit should be allowed to the assessee. Thus ground no. 3 of

appeal is therefore allowed.

deduction u/s 80-IA on account of Solid Waste Management

System upto the amount as claimed in the return of income

inspite of the fact that Ld. CIT(Appeals) confirmed that

assesse is eligible for higher deduction u/s 80-IA of the Act.

170 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 232. 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 ITA No. 497/JPR/2023 and in the light of our detailed

findings recorded therein, we hold that deduction u/s 80-IA 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.

made by the AO on account of claim of Education Cess of Rs.

13,91,57,647/-.

Assessee’s appeal for AY 2015-16 on claim of Education Cess

under normal provision of the Act, based on the finding recorded

in A. Y. 2015-16 the ground no. 5 has no merits. Accordingly, the

same is dismissed.

171 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

made u/s 69B on account of unexplained investments

amounting to Rs. 15,88,041/-

assessment proceedings vide Notice u/s 142(1) dated 24.12.2020

asked the following details -

“12. As per data available with the department, Assessee Company has made substantial purchases from multiple such suppliers who are either Non-Filer(s) or have filed non-business ITR or reflected a substantially lower turnover in ITR as compared to turnover shown in GSTR 1 return. Please furnish the below specified details:”

AO proposed to make disallowance of an amount equal to 8% of

Rs. 5,15,19,20,587/-, amounting to Rs. 41,21,53,647/- on account

of alleged purchases made from suppliers who are either non-filers

of ITR or filed non-business ITR or reflected a substantial lower

turnover in ITR as compared to turnover shown in their GSTR-1

return. Against above SCN, assessee vide letter dated 24-09-2021

submitted that it cannot identify the suppliers who are Non Filer(s)

or have filed non-business ITR or reflected a substantially lower

turnover in ITR as compared to the turnover shown in GSTR-1

return, as the ITR or GST return filed by the said suppliers is not

172 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. available with the assessee. Hence, the assessee requested the

ld. AO to furnish the supporting documents of Rs. 5,15,19,20,587/-

based on which disallowance is proposed.

144C on 27-09-2021 wherein the same facts have been reiterated

as it was mentioned in the Show Cause Notice dated 22.09.2021

and disallowance of Rs. 41,21,53,647/- was proposed. In response

to the said Draft Order, the assessee vide letter dated 01-10-2021

again requested ld. AO to provide the details of the parties, based

on the above request, AO issued another Notice u/s 142(1) dated

11-10-2021 wherein PAN of the suppliers along with the purchase

value was provided to the assessee. The sum total of which was

Rs. 5,65,44,992/- as against Rs. 5,15,19,29,587/- that was alleged

in the Draft Order dated 27-09-2021. In response to the said

Notice, the assessee filed detailed reply on 20-10-2021 wherein

the details along with tax invoices with the suppliers were duly

furnished.

its order u/s 143(3) dated 30.11.2021 made an addition of Rs.

173 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 15,88,040/- on the ground that there is discrepancy in purchase

amount as per Insight portal of department and purchase details

submitted by the appellant in respect to 3 parties. The said addition

has been considered as unexplained investments u/s 69B as

purchases not fully disclosed in the books of account of the

assessee.

was preferred before ld. CIT(A) wherein this ground was taken.

The ld. CIT(A) upheld the addition made by the AO by stating that

the A.O. is quite reasonable in making addition of Rs. 15,88,400/-

only as against the amount of Rs. 515 Crs. which the ld. AO

started to enquire from the assessee. However, the ld. CIT(A)

noted that the ld. A.O. erred in adding the purchases by invoking

the provisions of Sec. 69B and the same should have been

disallowed from the purchases.

authority preferred this appeal and specifically raised ground no. 6

in this appeal before us.

174 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

submission and the same is reiterated here in below:-

A. Notice was issued by AO on 22-09-2021 proposing to disallow INR. 41.21 Crs. [@ 8% on INR 515.19 Crs] based on information available with the department w.r.t. purchases of INR. 515.19 Crs. made from suppliers who were non-filers of ITR. [Refer Pg 195 to 201 of PB].

Despite request of the appellant before AO vide its letter dated 24- 09-2021 [Refer Pg 202 to 206 of PB] to provide details of such suppliers, AO without providing such details passed draft assessment order u/s 144C dated 27-09-2021 proposing to disallow the said amount of Rs 41.21 Crs [Refer Pg 207 to 209 of PB]. The appellant vide its letter dated 01-10-201 [Refer Pg 210 to 224 of PB] again requested to provide details of such suppliers. AO issued notice u/s 142(1) dated 11-10-2021 [Refer Pg 225 to 231 of PB], providing PANs of 91 suppliers along with the transaction values of INR 5.65 Crs, as against INR 515.19 Crs alleged in the Draft Order dated 27-09-2021 & Notice dated 22-09-2021.

Against the notice dated 11-10-2021, reply was filed by the appellant vide letter dated 20-10-2021 [Refer Pg 232 to 255 of PB] providing details of transactions entered with such suppliers duly supported by valid tax invoices.

A.O. proceeded to make addition of INR 15,88,040/- in the order u/s 143(3) w.r.t following 3 parties u/s 69B:- Amount Amount Name of the Differenc SN PAN as per as per Party e INSIGHT actuals Om Prakash 1. APVPP2347F 2,12,070 56,000 1,56,070 Pachpadra Sanjay Sunil 2. Tex Feb Pvt. AABCS8317E 7,200 2,700 4,500 Ltd. Anil & Sons 3. AAAPN9730C 16,05,271 1,77,800 14,27,471 Jaisalmer Total 18,24,541 2,36,500 15,88,041

W.r.t. the details of the said parties, the appellant has duly provided tax invoices of the transactions entered with the said parties vide its reply dated 20-10-2021 [Refer Pg 232 to 255 of PB]. Apart from

175 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

the said transactions, no other purchase transaction has been entered during the year with the said parties. A.O. has not provided any information of the transaction w.r.t. differential amount. Hence whether the said transaction pertains to the assessee or not could not be ascertained. A.O. merely added the differential amount on the basis of information in insight portal without verifying whether the said details are correct or not. Additions solely based on insight portal information without making any further investigation are not sustainable and are liable to be deleted:  S R Cold Storage –vs.- UOI (2022) 448 ITR 37 (All).  Anwar Mohammed Shaikh -vs.- ACIT (2023) 148 taxmann.com 288 (Bom)  Somnath Dealtrade Private Limited -vs.- UOI & Ors. (2022) 143 taxmann.com 71”

who has categorically held that the while finalizing the assessment

the ld. AO was very much fair and granted the relief for which the

assessee was eligible and thus, the ld. DR supported the finding

recorded in the orders of the lower authority.

and paper book filed by the assessee. It is seen that the ld. A.O.

has made the addition of Rs. 15,88,040/- merely on the premises

that the same is not reconciling with the details available in the

insight portal. The ld. A.O. has neither provided further details of

transactions of Rs. 15,88,040/- nor has verified whether the said

176 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. transaction pertains to the assessee. The assessee has duly

furnished the details of the transactions entered with the said

suppliers during the year under consideration and has stated that

no other transactions for purchase of goods has been undertaken

with the said suppliers. The ld. AO has not provided any document

in support of the information given in the insight portal. Thus, the

bench noted that such type of addition to income cannot be made

by the ld. AO merely by relying on the information in the insight

portal and also without providing documents based upon which

information was culled out from the insight portal. As it is held by

the various courts that the ld. Assessing officer holding co judicial

power. His role is multifaceted and is not the only adjudicator but

he serves as investigator when the assessee has furnished all the

details he is duty bound to asked the assessee the specific

defaults and the information in his possession read with the

records provided by the assessee. The bench noted that how the

assessing officer has proposed the addition and how ultimately he

made the addition is without appreciating the information placed on

record by the assessee. We see that there is no finding about

details as available in the Insight Portal and only after being

satisfied on the basis of corroborative evidence, such disallowance

177 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd.

can be made. Since the ld. A.O. failed to point out any defect in the

details supplied by the assessee, the disallowance made by the

A.O. merely on surmises and suspicion is not sustainable and

thus, directed to be deleted. Hence the ground no. 6 raised by

the assessee is allowed.

amounting to Rs. 3,39,74,28,174/- granted to the appellant as

capital receipt which are not exigible to tax while computing

total income under normal provisions of the Act and under the

provisions of Sec. 115JB of the Act.

the assessee during the year under normal provisions of the Act as

well as under the provisions of Sec. 115JB. As regards the

exclusion of incentives under normal provisions, the same has

been extensively dealt with by us vide Ground No. 5 of assessee’s

appeal for AY 2016-17 in ITA No. 496/JPR/2023.

178 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 247. With regard to exclusion of said incentives under MAT

provisions, the assessee submitted that the issue is 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 has

been held to be excluded while computing Book Profit u/s 115JB of

the Act.

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, 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. 7 raised by the assessee and for the sake of avoiding

repetition we have not repeated the same. Based on that finding

the ground no. 7 raised by the assessee stands dismissed.

179 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 249. Ground No. 8 relates to exclusion of deduction under

section 80IA and 80-IC in computing Book Profit under section

115JB of the Act.

Assessee’s Appeal in AY 2015-16 on claim of deduction under

section 80IA and 80-IC in computing Book Profit under section

115JB of the Act. This ground has been extensively dealt with in

Assessee’s Appeal for AY 2015-16 in ITA No. 500/JPR/2023 and in

the light of our findings recorded therein, AO is directed to compute

Book Profit u/s 115JB of the Act after allowing deduction under

Chapter VI-A, Part C, particularly u/s 80IA & u/s 80IC of the Act.

Ground no. 8 of appeal is therefore allowed.

while computing Book Profit u/s 115JB of the Act.

amount on first time adoption of IND-AS while computing Book

Profits u/s 115JB. The said issue has been discussed in detail in

180 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. Ground 8 for Assessee’s Appeal in AY 2017-18 in ITA No.

497/JPR/2023 wherein the assessee’s plea on the same ground

has been rejected. Ground no. 9 of appeal is therefore

dismissed.

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.

Ground No. 1 raised for AY 2015-16 in ITA No. 500/JPR/2023.

Based on our detailed findings given in AY 2015-16, this ground is

allowed. Hence, AO is directed to grant depreciation @25% on

such leasehold rights acquired in accordance with section 32(1)(ii)

of the Act.

492/JPR/2023:

181 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 257. Ground No. 1 relates to the appeal of the revenue against

deletion by CIT(Appeals) of the disallowance of Rs.

5,83,93,48,615/- on account of deduction u/s 80IA in respect

of captive power plants.

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. A/R submitted that for AY 2018-19, the facts are similar to the

facts for AY 2015-16.

for 9 Power Undertakings, located at various cement and grinding

units. Although no new undertaking has commenced operations

during the year, in one of its power undertaking, namely, New

India Power undertaking, wind power unit (being a source of

renewable energy based power plant) has been set up as

expansion of the said power undertaking having common

management and control, common set of books of accounts etc.

and entire process of approval of all the power units of the

undertaking having already been undertaken prior to 01-04-2017.

The power undertakings are supplying power to the CMUs. The

182 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. assessee has adopted Transfer Price for the purpose of power

transferred by the Power Generating Units (‘PGUs’) to the Cement

Manufacturing Unit (‘CMU’) based on annual average landed cost

of power sold by the State Electricity Board (‘Grid/SEB’) during the

year to the nearby manufacturing units of independent assessees

in the State of Rajasthan and Chhattisgarh by applying

Comparable Uncontrolled Price (‘CUP’) Method. These grounds

have been extensively dealt with in Departmental Appeal for AY

2015-16 in ITA No. 489/JPR/2023 and followed in departmental

appeal for AY 2016-17 and AY 2017-18 in ITA No. 490/JPR/2023

and 491/JPR/2023 respectively and in the light of our findings

recorded therein, we find no infirmity in the order of the ld. CIT (A),

accordingly the order of the ld. CIT (A) is upheld. The ground no.

1 of the Revenue is dismissed.

assessee by deleting the disallowance of Rs. 5,38,59,30,559/-

on account of deduction u/s 80IA on account of Solid Waste

Management System.

183 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 261. Ground No. 2 in this appeal is same as Ground 2 of

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. A/R submitted that for AY 2018-19, the facts are similar to the

facts for AY 2015-16. In this year also, the assessee has claimed

Deduction u/s 80IA towards profits on Solid Waste Management

System set up for management of solid waste being pond ash &

fly ash. The assessee has claimed the transfer price of treated

solid waste by considering realisable market value of clinker and

thereby applying Profit Split method. The TPO accepted the

approach adopted by the assessee but made modification by

revising the PSM to 48% and rejecting the element on freight on

clinker handling from the market value. The ld. CIT(A), accepting

the realisable market value of clinker, restricted the PSM to

79.73%. We have already dealt with this ground on the same set

of facts in Departmental Appeal for AY 2015-16 in ITA No.

489/JPR/2023 and in the light of our findings recorded therein, we

find no infirmity in the order of the ld. CIT (A), accordingly the

order of the ld. CIT (A) is upheld. The ground no. 2 of the

Revenue is dismissed.

184 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 262. Ground No. 3 relates to allowing the appeal of the

assessee by deleting the disallowance of Rs. 22,61,15,294/-

on account of deduction u/s 80IA on account of Water

Treatment System.

Departmental Appeal for AY 2015-16 on deduction u/s 80IA. The

ld. A/R submitted that for AY 2018-19, the facts are similar to the

facts for AY 2015-16. In this year also the assessee has

computed transfer price of water on the basis of quotation

obtained from Bisleri International Pvt. Ltd after certain

adjustments. However, TPO proceeded to apply Cost Plus

Method by applying the gross margin earned by other companies

of 81.09% and rejected the assessee’s methodology of

benchmarking. These grounds have been extensively dealt with in

Departmental Appeal for AY 2015-16 in ITA No. 489/JPR/2023

and in the light of our findings recorded therein, we find no

infirmity in the order of the ld. CIT (A), accordingly the order of the

ld. CIT (A) is upheld. The ground no. 3 of the Revenue is

dismissed.

185 ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 264. In the result, the appeal of the Revenue in ITA No.

489/JPR2023 to 492/JPR/2023 is dismissed and the appeal of

the assessee in ITA no. 496/JPR/2023 to 500/JPR/2023 are

partly allowed.

Order pronounced in the open court on 21/02/2024.

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Tk;iqj@Jaipur fnukad@Dated:- 21/02/2024 *Ganesh Kumar, PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- ACIT, Circle-2, Ajmer/ NFAC, Centre, Delhi izR;FkhZ@ The Respondent- Shree Cement Limited, Beawar 2. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. 6. xkMZ QkbZy@ Guard File { ITA Nos. 489 to 492/JP/2023 & 496 to 498 & 500/JP/2023} vkns'kkuqlkj@ By order

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