DCIT, CIRCLE - 11(1), KOLKATA, KOLKATA vs. M/S. GRAPHITE INDIA LTD., KOLKATA

आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री संजय गगग, न्याधयक सदस्य एवं श्री संजय अवस्थी, लेखा सदस्य के समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & SRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No.: 473/KOL/2018 Assessment Year: 2007-08 DCIT, Circle-11(1), Kolkata......................................................Appellant Vs. M/s. Graphite India Ltd…………………….................................Respondent [PAN: AAACC 0457 C] C.O. No.: 65/KOL/2018 Arising Out of I.T.A. No.: 473/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd...........................................................Appellant [PAN: AAACC 0457 C] Vs. DCIT, Circle-11(1), Kolkata...................................................Respondent Appearances: Department represented by: Rakesh Kumar Das, CIT, DR. Assessee represented by: Ruchira Lakhotia & Renu Agarwal, AR. Date of concluding the hearing : July 30th, 2024 Date of pronouncing the order : September 13th, 2024 ORDER Per Sanjay Awasthi, Accountant Member: This is a batch of two appeals, in which ITA No. 473/KOL/2018 is filed by the Department and the Cross Objection No. 65/KOL/2018 is filed by the assessee. For the sake of convenience, both appeals are disposed off by way

I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. of this single order. In this case, the appellant filed return of income on 30.10.2007 declaring total income of Rs. 67,43,92,923/-. It is seen that the appellant is a public limited company which is engaged in the business of manufacturing and sale of calcined petroleum coke and graphite electrodes. The appellant has manufacturing units at Durgapur, Nasik, Bangalore and Baruni. The appellant also generates power from captive power plant situated in Bangalore, Chunchunkatte, Nasik and Peehali. Through the assessment order u/s 144C(3) read with Section 143(3) of the Income Tax Act, 1961 (in short the 'Act') dated 06.01.2011 the Assessing Officer (hereinafter referred to as ld. 'AO') made several enhancements to the returned income for which the appellant approached the Commissioner of Income Tax-22, Kolkata (Appeals) [hereinafter referred to as ld. 'CIT(A)']. The ld. CIT(A) vide his order dated 22.12.2017 deleted some of the allegations and confirmed several others. Thereafter, the Department has filed the substantive appeal before Hon'ble ITAT challenging the relief given by the ld. CIT(A) and on those issues whereby the appellant was not successful, he has approached the ITAT through the Cross Objection. 1.1. The Income Tax Department has challenged the action of ld. CIT(A) through the following grounds of appeal in ITA No. 473/KOL/2018: “1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the taxes or levies are to be included in the electric tariff. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not applying section 62 of Electricity Act, 2003. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in overlooking consistent view of the jurisdictional high courts in the cases of Kanoria Chemicals & Industries Ltd., [2013] 35 taxmann.com 566 (Calcutta), ITC Ltd., [2015] 64 taxmann.com 214 (Calcutta) etc. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not allowing application of provisions of section 80IA(10) of the Act, despite having common expenses pertaining to normal income and income eligible for deduction u/s 801A of the Act. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not allowing application of provisions of section 80IA(10) of the Act

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. merely on the basis of last year’s order, while principles of res judicata does not apply in tax matters. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the assessee is eligible for deduction u/s. 801A after adjusting entire interest by applying provision u/s. 80IA(10) whereas on fact the said interest is relatable to both normal income and income eligible u/s. 80IA of the Act. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing the claim of the assessee u/s. 80IA ignoring the law laid down by jurisdictional High Court in the case of ALFA Tie-up (P.) Ltd., [2013] 31 taxmann.com 277 (Calcutta). 8. That on the facts and in the circumstances of the case, the CIT(A) has erred in ignoring the fact that the land was purchased by assessee on 24.04.1987 and, thereby, disregard cost of acquisition as on the date of purchase. 9. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred both in law and in facts in not appreciating that provision of corporate guarantee provided by the assessee company in favour of its AE constitutes an international transaction as per explanation to Section 92B with retrospective effect from 01.04.2002 and accordingly an arm’s length charge is to be computed in relation to said transaction as per the relevant provisions of the income tax law. 10. That on the facts and in the circumstances of the case, the Id. C1T(A) has erred in not appreciating the fact that the provision of the guarantee by the assessee company to its AE by way of entering into a written agreement (which has been submitted to independent lender) constitutes an international transaction for which an arm’s length price needs to be determined as per the relevant provisions of income tax laws. 11. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the independent lender has granted loan to the AE placing reliance on the asset base of the assessee company by virtue of the corporate guarantee given by the assessee company to its AE and hence, the provision of corporate guarantee by the assessee company confers substantial benefit to the AE which leads to the conclusion that the provision of corporate guarantee is not a shareholder activity and an arm’s length charge needs to be determined in relation to the said transaction. 12. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating that the creditworthiness of the AE has increased substantially on account of corporate guarantee provided by the assessee company to its AE and hence, the provision of corporate guarantee

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. is not a shareholder activity and an arm’s length charge needs to be determined in relation to the said transaction. 13. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating that the assessee company may not have incurred any apparent cost by way of provision of guarantee but the financial risk exposure of the assessee company becomes high by the quantum of loan guaranteed by it which justifies determination of arm’s length charge in relation to the corporate guarantee given by the assessee company to its AE. 14. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating that the receipt of loan by the AE from an independent lender by virtue of the corporate guarantee provided by the assessee company to its AE increase the profit potential of the AE thereby generating substantial benefit for the business of the AE and hence, the provision of corporate guarantee is not a shareholder activity and an arm’s length charge needs to be determined in relation to the said transaction. 15. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the adjustment made by the Ld. AO/Ld. TPO by simply relying on the assessee’s own cases in earlier years, but ignoring that the revenue is in appeal against the said impugned orders and the matter is not finalised. 16. That the appellant craves leave to add, alter/or amend any of the grounds of appeal during the course of hearing.” 1.2. For the sake of convenience, the grounds will be treated on the basis of issues and will be grouped together as under: i) Ground nos. 1 to 3 – inclusion of tax in computation of transfer price of power for computing deduction u/s 80IA of the Act. ii) Ground nos. 4 to 5 – allocation of common expenses to the captive power generating units while computing deduction u/s 80IA of the Act. iii) Ground nos. 6 & 7 – deletion of interest allocated to power units for computing deduction u/s 80IA of the Act. iv) Ground no. 8 – issue of capital gain on transfer of land – consideration of cost of acquisition. v) Ground nos. 9 to 15 – transfer pricing adjustment with respect to corporate guarantee given by the appellant to its associated enterprises.

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. 2. Before us the ld. A/R pointed out that except for the issue concerning computation of long-term capital gains as per ground no. 8 all other issues were more or less covered in favour of the appellant by orders of ITAT in appellant’s own cases for previous years. For this purpose, ld. A/R took us through a detailed paper book and various authorities relied on by him. 2.1. Ld. D/R read out relevant portions from the ld. AO’s order and was content to rely on the findings given thereon. 3. We have carefully considered the rival arguments and gone through the impugned order and all the documents placed before us for consideration. For the sake of convenience, the grounds bunched together, issue-wise are being adjudicated. 3.1. Ground nos. 1 to 3 pertain to the inclusion of tax levy in computation of transfer price of power for computing deduction u/s 80IA of the Act is seen to be squarely covered in favour of the appellant by the ITAT’s orders in appellant’s own case for several previous years. However, for the sake of convenience, the relevant portions from the ITAT’s order for AY 2006-07 [ITA No. 2022/KOL/2010] may be extracted as under: “Ground no. 6 is on the exclusion of tax or duty in the computation of TP of power for computing deduction u/s 80(a)(ia) of the Act. This issue is covered in favour of the assessee by the decisions of the Tribunal in the assessee's own case for the Assessment Years 2003-04, 2004-05 & 2005-06. The ld. DR, relied on the order of the jurisdictional High Court in the case of Commissioner of Income-tax, Kolkata - III v. ITC Ltd. [2015] 64 taxmann.com 214 (Calcutta). This Bench of the Tribunal has considered this issue and in its order dt. 09/11/2016, ITA 399/Kol/2008 for Assessment Year 2004-05 & ITA No. 538/Kol/2008 for the Assessment Year 2004-05, has at para 6, held as follows:- "6. As far as Gr. No.1 of the revenue is concerned, it is not in dispute before us that identical issue has been decided in favour of assessee by the following decisions of Hon'ble ITAT in assessee’s own case for:- AY 2001-02 (ITA No. 949/Kol/05 dtd 06-12-07) [Pg. no. 11-16 of order] AY 1999-00 (ITA No. 1926/Kol/05 dtd 06-12-07) [Pg. no. 22 of order] AY-2002-03 (ITA No. 1981/Kol/05 dtd 10-01-2008) [Pg. no. 3-4 of order]

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. AY 2003-04 (ITA No. 559/Kol/2008 dtd 24-08-2016) [Pg. no. 16 of order] It was also brought to our notice that the Departmental appeal before Hon'ble Calcutta High Court against the order of Hon'ble 1TAT has also been dismissed for A.Y. 1999- 00 & A.Y. 2001-02 vide ITA No. 733 of 2008 dtd. 10-12- 2008 [Pg. no. 3-4 of order] & for A.Y. 2002-03 vide ITA No. 715 of 2008 dtd. 17-09-2008. In view of the above we do not find any merits in Gr.No.1 raised by the Revenue. We may also add that the issue is now settled in the case of assessee since the Department has accepted the decision of Hon’ble Calcutta High Court and has not preferred further appeal before the Supreme Court. The learned DR however, brought to our notice a decision of the Hon'ble Calcutta High Court in the case of CIT Vs. ITC Ltd. (2015) 64 Taxmann.com 214 (Cal) wherein the Hon'ble Calcutta High Court took the view in the context of the provisions of Sec.80IA(8) of the Act that while computing deduction u/s.80IA Assessee cannot benefit based on the rates chargeable by distribution licensee from consumer and that the benefit could only be claimed on basis of rate fixed by Tariff Regulation Commission for sale of electricity generating companies. He therefore requested that the decision rendered by the Tribunal in Assessee's case needs to be reviewed in the light of the decision rendered by the Hon'ble Calcutta High Court. We have considered his submission and are of the view that in the light of the decision of the Hon'ble Calcutta High Court in Assessee's own case upholding the order of the Tribunal accepting the plea of Assessee, a view contrary to the one expressed in Assessee’s own case has to be followed. We are therefore unable to accept the plea of the learned DR before us." 11. Respectfully following the same, we allow Ground No. 6.” 3.2. Respectfully following the finding extracted (supra), these three grounds are allowed in favour of the assessee. However, before parting with this issue, it is seen that in the ground itself the Department has mentioned that ld. CIT(A) has erred in overlooking the view of Hon'ble Jurisdictional High Court in the case of CIT vs. Kanoria Chemicals & Industries Ltd. reported in [2013] 35 taxmann.com 566 (Calcutta). It is seen that this case does not help the Revenue as the following extract from the head note would imply that it does not in any way negate the finding of ITAT in appellant’s own case (supra). The Department had preferred an appeal before the Hon'ble Calcutta High Court for AY 2004-05 on this issue, among others, but this issue was not pressed. For all intents and purposes, this issue had attained finality in favour of the assessee. The relevant head note from the Kanoria Chemicals case (supra) is extracted as under:

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. “Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure development undertakings [Sub-section (8)] - Assessee set up a unit for generation and distribution of power to its chemical works division and charged rate at which said division would have purchased electricity from SEB/UPPCL - Surplus power which could not be stored was sold to UPPCL at lesser price - While computing deduction under section 80- IA, Assessing Officer reduced profit shown by assessee by taking price at which electricity was sold to UPPCL - Whether price which had been adopted by assessee for electricity generated by eligible business transferred to its other business would be considered for purpose of computation of profits and gains of eligible business in terms of section 80-IA(8) - Held, yes [Para 3] [In favour of assessee]” 4. Ground nos. 4 to 5 pertaining to allocation of common expenses to the power undertaking for computing deduction u/s 80IA of the Act are seen to be covered in favour of the appellant. For this issue, the ld. AO found that various common expenditures like advertisement expenses, auditors’/directors’ remuneration, guest house expenses etc. were not considered in the profit and loss account of the power units. Thereafter, ld. AO proceeded to allocate such expenses to the power undertakings on an ad- hoc basis on a formula worked out by him. The ld. CIT(A) was persuaded by the arguments that all expenses considered for allocation here by the ld. AO were already debited to the account of the respective eligible undertakings for the purpose of computing deduction u/s 80IA of the Act. Ld. CIT(A) on this reasoning and the fact that this issue was already decided in favour of the appellant for AY 2003-04 to AY 2006-07, granted relief. It is seen that in the latest decision available for AY 2006-07 in ITA No. 2022/KOL/2010 this issue has been decided in favour of the appellant as per paragraph 13 on page 16 of this order. It is seen that the finding in the impugned order is in line with the finding given by the ITAT in assessee’s own case for AY 2003-04 to AY 2005-06. This issue, among others, was taken to the Hon'ble Calcutta High Court for AY 2004-05 by the Department, but it is seen that this particular issue was not pressed and therefore, it has to be presumed that the matter has attained finality in favour of the assessee. 5. Ground nos. 6 to 7 pertain to deletion of interest allocated to power units while computing deduction u/s 80IA of the Act. For this issue, the ld.

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. AO found that while computing deduction u/s 80IA of the Act interest expenditure of Rs. 0.92 Crore incurred with respect to the power generating unit was debited in the profit and loss account. The ld. AO apportioned aggregate interest pertaining to other division of Rs. 32.15 Crore in the ratio of capital investment in power generating units to total capital investment of the company and thereafter arrived at amount of Rs. 5.22 Crore, in an ad-hoc manner. Thereafter, ld. AO proceeded to attribute Rs. 4.30 Crore [Rs. 5.22 Crore (-) Rs. 0.92 Crore] to power generating unit. The ld. CIT(A) is seen to have relied on the order of ITAT in assessee’s own cases for AY 2003-04 to AY 2005-06 to grant relief. It is seen that for AY 2006-07 (supra) there is a finding given in paragraph 12 at page 16 that this issue is squarely covered in favour of the assessee by the order of the ITAT in assessee’s own case for AY 2003- 04 to AY 2005-06. On this finding relief was granted. At this juncture, we can do no better than to respectfully follow the finding given for AY 2006-07 and grant relief to the assessee. 6. Ground no. 8 pertains to computation of capital gain on transfer of land. For this issue, the ld. AO has recorded a finding that during the year under consideration the assessee sold part of its land measuring 41.5 acres (approximately) situated at Bangalore to one Prestige White Field Investments and Bright Enterprises Pvt. Ltd. for a total consideration of Rs. 111 Crore. The said land was allotted to the assessee on lease from 28.02.1972 by the Mysore Industrial Area Development Board (in short ‘MIADB’). The deed of sale was executed on 24.04.1987 for a total value of Rs. 4,68,082/-, which represented adjustment of lease premium of Rs. 81,650/-, rent of Rs. 3,26,600/- and excess usance charge of Rs. 59,832/- paid by the assessee to MIADB during the lease period. The ld. AO noticed that the appellant had computed LTCG on sale of part of the land by taking cost of acquisition as the fair market value as on 01.04.1981. Before the ld. AO, the appellant submitted that the land in question was in his possession since the year 1972 as per the terms of the lease-cum-sale agreement with MIADB. The appellant relied on Section 53A of the Act of the Transfer of Property Act to claim ownership since the year 1972. The ld. AO relied on the case of CIT vs. Dr. V.V. Mody reported in [1996] Page 8 of 23

I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. 85 Taxman 125 (Karnataka) to hold that the cost of acquisition for the purposes of LTCG has to be on the date 24.04.1987, being the date on which the said land was transferred to the assessee as per the sale deed and not on 28.02.1972 as claimed by the assessee. 6.1. It is seen thereafter that the ld. CIT(A) was persuaded by the argument of the appellant before him that the case of Dr. V.V. Mody (supra) pertains to AY 1983-84 where part performance of the contract did not fall within the ambit of Section 2(47)(v) of the Act. It has been further recorded that definition of “transfer” was amended with effect from 01.04.1988 to include part performance of the contract as per Section 53A of the Transfer of Property Act, 1882. He accordingly held that the case of Dr. V.V. Mody (supra) was no longer a good law for deciding the issue at hand. It is seen that ld. CIT(A) has relied on several later decisions to arrive at the conclusion that the cost of acquisition should be as on 01.04.1981 since the appellant was holding the land since 28.02.1972. 6.2. In this matter there are several facts which deserve to be highlighted in as much as the allotment of land was on “lease-cum-sale basis” and the rate of allotment of Rs. 10,000/- per acre. This sale price was already decided in 1970 by this agreement and did not change at the time of subsequent sale agreement in the year 1987. It is important to note that the asset was effectively transferred to the appellant vide this agreement (28.02.1972) itself. Since the terms and conditions for executing a final sale agreement were effectively frozen in 1972 and the land was transferred to the appellant for the purpose of setting up of a synthetic graphite factory, it is necessary to conclude that the appellant became owner for the purposes of LTCG through agreement dated 28.02.1972 itself and not when the sale deed was executed on 24.04.1987. For this purpose, reliance needs to be placed on the case of South India Minerals Corporation vs. ACIT reported in [2019] 417 ITR 306 (Madras). In this case the assessee was allotted two industrial sheds by Small Industries Development Corporation in 1988. However, the sale deed for these sheds was executed only in 1996. It was to be considered that the assessee

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. had been holding the property ever since time of allotment in 1988 itself and thereby sale of said sheds in 1996 would give rise to LTCG. Some extracts from this case deserve to be recorded for reference: “■ The short issue which falls for consideration is the date to be reckoned for the purposes of computing the capital gains, in other words, it has to be seen as to whether the capital gains arising on the transfer has to be treated as the short-term capital gains or a long term capital gain as claimed by the assessee. To arrive at a decision to this question, it is necessary to look into the factual position, more particularly, the terms and conditions of allotment. The promoter of the industrial establishment is a wholly owned Government of Tamil Nadu Undertaking. The allotment is made to the successful applicants and an order of allotment is issued which, in fact, is the vital document, by which, the assessee acquired right to enter upon the property. [Para 6] ■ The order of allotment states that the assessee has executed the sale deed before taking over possession of the property. It is not in dispute that the assessee has complied all those conditions and there is no breach of any of the conditions contained in the order of allotment or the lease-cum-sale deed. As pointed out earlier, tentative cost is fixed by the SIDCO while allotting the property which in the instant case is Rs.8.34 lakhs, 20 per cent of the tentative cost of the land and building allotted to the assessee is recovered as margin money that being a sum of Rs.1.66 lakhs. The balance cost of the sheds has to be paid with interest in ten equal half yearly instalments after the expiry of two years moratorium period, as per the schedule given separately. The moratorium interest shall be paid which will be raised by the Branch Office. The moratorium period for the commencement of repayment is two years from the date of financial effect. Thus, the amount which is paid by the assessee as margin money and the subsequent payment effected by the assessee in ten equal half yearly instalments after the expiry of moratorium period are all to be reckoned to be part of the sale consideration payable for the industrial sheds. [Para 7] ■ The Assessing Officer, the Commissioner (Appeals) and the Tribunal have held that the assessee becomes the owner of the property only on 11-1-1996 and having transferred the property in about 12 months' time, the capital gains arising there from should be computed as short- term capital asset. To examine the correctness of such decision, it is to necessary to take note of the definition of 'short-term capital asset' under section 2(42A). [Para 8] ■ In terms of the above definition, short-term capital asset means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer. The word which is of at most significance in section 2(42A) is the word 'held'. The definition does not use the expression 'purchase' or 'owned', but specifically uses the word 'held'. It is

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. not expected to add any words or phrases in a statute, more particularly, in a taxation statute and the same has to be read as it is. Apart from the above definition, the definition of the word "transfer" also assumes significance in the instant case, which has been defined under section 2(47). The definition stood amended and sub-clause (v) was inserted by Finance Act, 1987 with effect from 1-4-1998. [Para 9] ■ In terms of sub-clause (v) of section 2(47), any transaction involving allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 will also fall within the ambit of transfer. Thus, on a conjoint reading of section 2(42A) and section 2(47)(v), makes it evidently clear that holding of property does not essentially mean holding of a property pursuant to an absolute deed. [Para 10] ■ The agreement between SIDCO and the assessee refers the assessee as the 'lessee purchaser'. The agreement specifically states that the price of the sheds has been tentatively fixed by SIDCO and part of this has already been paid by the assessee and the balance amount was agreed to be paid in instalments. Further, the agreement states that SIDCO had transferred the property to the firm by way of lease for the time being with the ultimate object of selling the property to the lessee purchaser, the firm, but on the fulfilment of the terms and conditions laid down therein. [Para 11] ………………………………………… ………………………………………… ■ Thus, the order passed by the Assessing Officer treating the industrial sheds as a short-term capital asset is incorrect and it should be treated as a long-term capital asset and the gains arising therefrom should be assessed as low tax effect. [Para 19] ………………………………………… ………………………………………… 14. Our view is strengthened by the decision of the Karnataka High Court in the case of ITO v. R. Sathyanarayana, I.T.A. No. 25 of 2001, dated 17.12.2007 wherein, the Court took note of the fact that the assessee was put in possession of the property in 1992 and was enjoying the property as that of an absolute owner except to fulfil the terms and conditions of the lease-cum-sale deed. In other words, the assessee was enjoying the property as an owner and that he was put in possession of the property in terms of the agreement and such possession has to be treated as if he was enjoying the property under the part performance of the contract as defined under Section 53A of the TP Act. Thus, the Court held that if the assessee was enjoying the property under the provisions of the TP Act, it has to be considered the date of ownership from the date on which he was put in

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. possession of the property. Accordingly, the Court held that the transaction has to be treated as a long term capital gains, as the assessee was enjoying the property for more than 36 months. 15. In the case of CIT v. Ved Prakash Rakhra [2012] 26 taxmann.com 166/210 Taxman 605 (Kar.), the Court took note of the decision in the case of V.V. Mody (supra) and after noting that the said decision refers to the insertion of sub-Clause (v) to Section 2(47) of the Act, held that insertion of sub-Clause (v), which provides that any transaction involving allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the TP Act, will also come within the ambit of transfer is relevant.” 6.3. Considering the discussion and the case relied on, it is held that the LTCG needs to be computed from the date of original allotment i.e. 28.02.1972 and not from the date of the sale deed executed on 24.04.1987. Accordingly, this ground is decided in favour of the assessee. 7. Ground nos. 9 to 15 pertain to the issue of transfer pricing adjustment with respect to Corporate Guarantee (in short ‘CG’) given by the assessee to its Associated Enterprises (in short ‘AE’), assessed at Rs. 3,35,13,140/-. The facts on this issue may be mentioned briefly to appreciate the controversy. The assessee is in the business of manufacturing and marketing of graphite electrodes, anodes, carbon paste etc. and to expand its business globally the appellant set up wholly owned subsidiaries in Netherlands and Germany. For the purposes of overseas expansion, a total amount of Euro 6.5 million were required to acquire assets. For arranging the said amount of Euro 6.5 million the assessee made an equity infusion of Euro 2.5 million and arranged a debt funding of Euro 4 million through ICICI Bank UK Ltd. The AEs also availed the loans for working capital purposes. It is for arranging this amount that the appellant provided a CG for arranging the said loans. The Transfer Pricing Officer (in short ‘TPO’) assessed a CG fees @ 3% per annum as an Arm’s Length Price (in short ‘ALP’) for the CG so provided by the appellant. It is a matter of record that this issue is a recurring matter in the appellant’s case and the ld. CIT(A) has relied on the assessee’s own case for AY 2006-07 (ITA No. 2022/KOL/2010 dated 08.09.2017) and the cases of Tega Industries Limited vs. DCIT in ITA No. 1912/KOL/2012 and the case of Bharti Airtel Ltd.

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. vs. ACIT reported in [2014] 161 TTJ 428 (Delhi - Trib.) to grant relief to the appellant on the basis of finding that CG could not be an international transaction for the purposes of Section 92B of the Act. Though the appellant has relied on the findings in its own case in the previous year relied upon by the ld. CIT(A) but the ld. A/R has also relied on a number of other authorities to contend that provision of CG were in the nature of shareholder service for which no amount was chargeable or payable by him. Needless to say, the ld. A/R has relied on a number of authorities to canvas his point. It is seen that the findings in the appellant’s own case for AY 2008-09 in ITA Nos. 472 & 474/KOL/2018 and CO Nos. 64 & 66/KOL/2018 order dated 22.11.2019. In this case the issue of CG has been dealt with as under: “6. The Revenue's latter substantive ground in Assessment Year 2008-09 pleads that the CIT(A) has erred in law and on facts in deleting assessee's corporate guarantee's arm's length price's adjudication of Rs.2,35,40,061/- made by the Assessing Officer as per the Transfer Pricing Officer's order. Its case is that a corporate guarantee amounts to an international transaction as per section 92B Explanation inserted by the Finance Act 2012 w.e.f. 01.04.02. We find no merit in Revenue's instant grievance since various judicial precedents (2016) 157 ITD 132(Ahd), Tega Industries Ltd. vs. DCIT (ITA 1912/Kol/2012 dated 21.09.16) & Bharti Airtel Ltd. vs. Addl. CIT (2014 64 SOT 50 (URO) take note of the foregoing legislative amendment to hold that a corporate guarantee is not an international transaction u/s 92B of the Act. We decline the Revenue's instant grievance and main appeal ITA No.474/KOl/2018 therefore.” 7.1. However, for the immediately preceding year (AY 2006-07), the appellant’s contention was accepted on different grounds in as much as the contention of the appellant was supported on the basis of a two limbed argument: (i) that CG is not an international transaction; and (ii) that the amendments brought in by the Finance Act, 2012 with retrospective effect from 1.4.2002, are not retrospective but prospective. Expanding on this theme further the Coordinate Bench of ITAT is seen to have relied on the case of EIH Ltd. vs. Commissioner of Income Tax (AY 2010-11), order dated 09.06.2017 (Kolkata ITAT) and the case of Marico Ltd. Vs. ACIT (2016) reported in 70 taxmann.com 214 (Mum Trib) to arrive at the conclusion, in favour of the

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. assessee, that CG is neither an international transaction, nor is the amendment to section 92B of the Act retrospective. 7.2. Perhaps anticipating a counter view to this line of reasoning the Ld. AR has submitted as under: “Hon'ble High Court of Madras in the case of PCIT vs. M/s. Redington (India) Limited [T.C.A. Nos. 590 & 591 of 2019] has not considered the aforesaid judgments while deciding the issue. Hence, the judgment in case of Redington (Supra) is per-incuriam. It is submitted that when there is a conflict between different High Courts, the view which is favourable to the assessee needs to be adopted. Reliance in this regard has been placed on the decision of Bombay High Court in the case of K. Subramanian & ANR. Vs. Siemen's India Ltd. & ANR. (1985) 156 ITR 11 (BOM): (1983) 36 CTR (BOM) 197: (1983) 15 Taxman 594 [Annexure - 18 of CLPB (Refer page 164 of CLPB; Para No. 2)]. Further, in Redington, Madras High Court placed reliance on the decision of Prolifics Corporation Limited [TS-497-ITAT-2014 (HYD)-TP] to uphold that there may not be immediate charge on P & L account, but inherent risk cannot be ruled out in providing guarantees. However, Madras High Court has not considered the decision in case of Micro Inks (Supra) while deciding the issue. Further, the judgment in case of Prolifics was upheld as "Non-Binding" in Micro Inks (Supra) [Annexure - 13 of CLPB (Refer page 121 of CLPB; Para No. 49)]. Thus reliance by Madras High Court on the decision of Prolifics (supra) is misplaced and accordingly the decision is per-incuriam.” 7.3. It is seen that in neither of the years sought to be relied upon, in the appellant’s own case, the Hon’ble Benches of ITAT- Kolkata had the benefit of a subsequent judgement of the Hon’ble Madras High Court in the case of PCIT vs. Redington (India) Ltd. reported in [2021] 430 ITR 298 (Madras), order dated 10.12.2020 in which this issue involving an unambiguously worded statute stating clearly that the amendment to section 92B of the Act was retrospectively effective from 01.04.2002, has been settled conclusively as under: The argument of the assessee is that prior to the amendment brought about in section 92B by Finance Act, 2012, the Tribunal had decided that furnishing of a guarantee by an assessee was not an 'international transaction' as it did not fall within any of the limbs of section 92B. It is submitted that to get over the judicial pronouncement, the explanation was inserted. The argument is that clause (c) of the Explanation supports the case of the assessee inasmuch as the Explanation makes it clear that giving of a Corporate Guarantee is not a service. Without

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. prejudice to the said contention, it is submitted that only Corporate Guarantee is given by the assessee, which are in the nature of lending are covered under clause (c) of Explanation 1 to section 92B. Further, it is submitted that the nature of transactions covered by clause (e) specifically include even those transactions which may not have a 'bearing on the profit, income, losses or assets of such enterprises at the time of transaction' are covered if they have such a bearing 'at any future date'. It is argued that the language used in the Explanation makes it clear that in so far as the transactions that fall within the main part of section 92B are concerned, such transactions must have a bearing on profit, income, losses or assets of an assessee in the year in which the transaction is effected. In the assessee's case, the Corporate Guarantees represent a contingent liability and lay dormant and have no bearing on the current year's profits, income or losses of an assessee and Corporate Guarantee are not covered within the definition of international transaction. It is submitted that applying 'doctrine of fairness' as explained by the Supreme Court of India in the case CIT v. Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466 the explanation ought to be read as prospective in its application and retrospective in its effect such that it will also cover within its ambit guarantees issued prior to the introduction of the Explanation by Finance Act, 2012. [Para 70] ■ A new Enactment or an Amendment meant to explain the earlier Act has to be considered retrospective. The Explanation inserted in section 92B by Finance Act, 2012 with retrospective effect from 1-4-2002 commences with the sentence 'for the removal of doubts, it is hereby clarified that'. [Para 72] ■ An Amendment made with the object of removal of doubts and to clarify, undoubtedly has to be read to be retrospective and Courts are bound to give effect to such retrospective legislation. [Para 73] ■ In Co-operative Co. Ltd. v. CIT 2008 taxmann.com 1086 (SC), it was held that when an amendment is brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. The Explanation in section 92B specifically has been given retrospective effect and it is clarificatory in nature and for the purpose of removal of doubts. This issue was considered by this Court in the case of Sudexo Food Solutions India (P.) Ltd. v. State of Tamil Nadu [Tax Case (Revision) Nos. 14 & 15 of 2013, dated 30-4-2019]. [Para 74] ■ The concept of bank Guarantees and Corporate Guarantees was explained in the decision of the Hydrabad Tribunal in the case of Prolifics Corpn. Ltd v. Dy. CIT [2015] 55 taxmann.com 226/68 SOT 104 (URO). In the said case, the revenue contended that the transaction of providing Corporate Guarantee is covered by the definition of international transaction after retrospective amendment made by Finance Act, 2012. The assessee argued that the Corporate Guarantee is an additional guarantee, provided by the Parent company. It does not involve any cost of risk to the shareholders. Further, the retrospective amendment of section 92B does not enlarge the scope of the term 'international transaction' to include the Corporate Guarantee in the nature provided by the assessee therein. The

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. Tribunal held that in case of default, Guarantor has to fulfil the liability and therefore, there is always an inherent risk in providing guarantees and that may be a reason that Finance provider insist on non-charging any commission from Associated Enterprise as a commercial principle. Further, it has been observed that his position indicates that provision of guarantee always involves risk and there is a service provided to the Associate enterprise in increasing its creditworthiness in obtaining loans in the market, be from financial institutions or from others. There may not be immediate charge on profit & loss account, but inherent risk cannot be ruled out in providing guarantees. U1 and adjustment are to be made on guarantee commissions on such guarantees provided by the Bank directly and also on the guarantee provided to the erstwhile shareholders for assuring the payment of Associate Enterprise. The case of Redington (India) Ltd. (supra) leaves no room for doubt that the amendment in question is retrospective, as clearly mentioned in the statute itself, and would thus apply to the present case. Accordingly, it is required to respectfully differ from the findings of the Coordinate Bench orders in the appellant’s own case to hold that CG is an international transaction and would need to be considered for arm’s length pricing. 7.4. Before parting with this issue, the contention of the Ld. AR that the Redington case is per-incuriam of several authorities relied upon in as much as “anti-abuse legislation” can only be prospective, needs to be briefly discussed. The broader issue here would be of judicial discipline in as much as when there is a clear judgement of a High Court on the issue of whether the amendment to section 92B of the Act is retrospective or prospective, then to be persuaded by any argument that the same is per-incuriam of several Apex Court judgements on general issues, other than the one under consideration, would amount to violating the principles of judicial discipline. To illustrate this reasoning, we can refer to the case of Yucca Finvest (P.) Ltd. vs. Dy. CIT reported in [2006] 101 ITD 403, where it has been held that: "Unless a contrary decision is given by the jurisdictional High Court which is binding on the Tribunal, it should respect the law laid down by another High Court." It has been stated, inter alia, by the ITAT, Mumbai Bench that: "Our view is fortified by the decision of the Hon’ble Bombay High Court in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589, wherein it was held that

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. unless a contrary decision is given by a competent High Court which is binding on the Tribunal in Bombay, it should respect the law laid down by another High Court. It observed as under: It should not be overlooked that the Income-tax Act is an All-India stature and if an Income-tax Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that section 140A(3) was non-existent, the order of penalty there-under cannot be imposed by the authority under the Act. Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. When the Tribunal set aside the order of penalty it did not go into the question of intra vires or ultra vires. It did not go into the question of constitutionality of section 140A(3). That section was already declared ultra vires by a competent High Court in the country and an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question." The above ruling that the decision of another High Court should be followed unless there is a contrary decision of another High Court was approved by the Hon’ble Bombay High Court in CIT vs. Jayantial Ramanlal & Co. [1982] 137 ITR 257/8 Taxman 188, Siemens India Ltd. vs. K. Subramanian, ITO [1983] 143 ITR 120/13 Taxman 146 and R. Parthasarathy, Asstt. Collector of Central Excise vs. Dipsi Chemicals (P.) Ltd. [1988] 173 ITR 497 (Bom.). The ITAT, Panaji Bench in ITO v. Dilip Shirodkar [2004] 2 SOT 947, also expressed the view that once a higher authority than the Tribunal has expressed a view, the Tribunal has to respectfully follow the same even though that decision may be of a non-jurisdictional High Court, it observed as under: ". . . In the hierarchical judicial system that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, therefore, once an authority higher than this Tribunal has expressed an opinion on that issue, we have to respectfully follow the same. Such a High Court being a non-jurisdictional High Court does not alter the position as laid down by the Hon’ble Bombay High Court in the matter of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589. . . ." Considering the discussion above it is clear that till either the Hon’ble Jurisdictional High Court or the Hon’ble Apex Court do not pass any orders having a contrary position to the judgement of Redington (India) Ltd. (supra), Page 17 of 23

I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. this Bench is bound to follow that judgement, considering the norms of judicial discipline. To this extent, orders of different Benches of ITAT relied upon by the appellant would not constitute valid reference points. For instance, the case of M/s. Emami Ltd (ITA No. 1958/Kol/2017), order dated 03.04.2019), relied upon by the Ld. AR does not have the benefit of the Redington judgement (supra) and it has been held that neither is CG an international transaction nor does the amendment to section 92B of the Act retrospective. Clearly the Redington case (supra) changes this position. Accordingly, it is held that the said amendment to section 92B of the Act will be applicable to the year under consideration and there can be no hesitation in holding that “Corporate Guarantee” is an international transaction and will thus be eligible for ALP. 7.5. The records reveal that the Ld. TPO has adopted an ALP of 3% following some rates quoted by the HSBC Bank and is seen to have made an upward adjustment of Rs. 3,35,13,140. On this issue it is felt that a CG offered by a commercial bank would definitely be on the higher side as compared to a CG offered by a company to its subsidiaries or associated enterprises. The Ld. AR has argued, without prejudice to their claim of CG not being an international transaction for the year under consideration, and has stated that in any case there cannot be any upward adjustment of more than 0.25%. For this proposition reliance has been placed on the case of M/s. Everest Kanto reported in 232 Taxman 307 (Bom), a copy of which was supplied to us during the course of hearing. On a perusal of the Everest Kanto case (supra) it is seen that if one were to read paras 4 and 10 of this order conjointly then it is clear that CG charged by a commercial Bank cannot be equated with CG charged by a corporate entity from its AEs. There can obviously be no argument on this proposition, as has already been mentioned earlier. However, the Hon’ble Bombay High Court has confirmed the 0.5% commission charged by the Appellant and merely disagreed with the upward adjustment @ 3%. Thus, the appellant does not have a sound case for considering 0.25% as commission, as asked for based on the Everest Kanto case (supra). On the other hand, a

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. review of cases on this subject, reveals that a CG commission of 0.5% or even above this has been held to be reasonable in the following cases: (i) NCC Ltd 157 taxmann.com 144 (Hyd-Trib) (ii) Aurobindo Pharma Ltd 152 taxmann.com 469 (Hyd-Trib) (iii) Havells India Ltd 140 taxmann.com 576 (Delhi-Trib) (iv) Electro Steel Castings Ltd 125 taxmann.com 308 (Kol-Trib) (v) Mahindra & Mahindra Ltd 117 taxmann.com 518 (Mum-Trib) (vi) Tata Consultancy Services Ltd 121 taxmann.com 190 (Mum-Trib) It is understood that TP adjustments are actually estimations arrived at after analysis of relevant data. Accordingly, here also there would need to be an estimation of CG commission. It is in this light that following the decisions in the above mentioned cases, the CG commission is restricted to 0.5% as against 3% worked out by the ld. AO/TPO. The appellant gets consequential relief. CO No. 65/KOL/2018 8. The grounds of appeal raised by the assessee are as follows: “1.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in disallowing provision for leave encashment amounting to Rs. 1,18,66,264/- u/s 43B of the Act. 2.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in law in confirming the disallowance made by the AO on account of Education Cess amounting to Rs. 70,74,281/-. 3.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in law in confirming the addition of Rs. 96,23,88,188/- to the book profit u/s 115JB on account of profit on sale of fixed assets. 4.0 That the respondent craves leave to add, amend, modify, rescind, supplement or alter any of the grounds stated here-in-above either before or at the time of hearing of the appeal.” 9. The first ground pertains to the grievance arising of the ld. CIT(A) disallowing provision for leave encashment u/s 43B of the Act. The appellant

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. is seen to have claimed for leave encashment amounting to Rs. 1,18,66,264/- . This was disallowed by the ld. AO and the said disallowance was confirmed by ld. CIT(A) as it was admittedly hit by the provisions of Section 43B(f) of the Act. In fact, the disallowance was restricted to Rs. 88,15,635/- as the assessee was seen to have paid Rs. 30,50,629/- before the due date of filing of the return. It was pointed out by the ld. D/R that this matter was squarely covered against the assessee in light of the decision in the case of Union of India vs. Exide Industries Ltd. reported in [2020] 425 ITR 1 (SC). To settle this issue conclusively, the head notes from the Exide Industries Ltd. (supra) may be extracted as under: “Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deduction to be allowed only on actual payment (Clause (f)) - Leave Encashment Scheme envisages payment of certain amount to employees in lieu of their unused paid leaves in a year - It forms a part of service conditions and its nature is pro-employee - However, an employer, seeking deduction from tax liability in advance in name of discharging liability of leave encashment without actually extending such payment to employee, may simply refuse to pay when time for such payment arises upon retirement (or otherwise) of employee - Consequently, innocent employee will be entangled in litigation in evening of his/her life for claiming a hard earned right without any fault on his part - Concomitantly, it would entail in double benefit to employer being advance deduction from tax liability without any burden of actual payment and refusal to pay as and when occasion arises - It is such mischief that clause (f) in section 43B seeks to subjugate and, with application of clause (f), eligibility for deduction arises in previous year in which payment liability is actually made and not in which provision was made in that regard, irrespective of system of accounting followed by assessee - Whether thus, clause (f) of section 43B is constitutionally valid and operative for all purposes - Held, yes - [Paras 40 and 42][In favour of revenue]” In light of this, this issue is decided against the assessee and in favour of the Revenue. 10. In the second issue, it is seen that the assessee has claimed education cess amounting to Rs. 70,74,281/-, which was debited to the profit and loss account and pertains to income tax, dividend distribution tax and fringe benefit tax. It seen that this was raised as an additional ground before the ld. CIT(A) who admitted the same for adjudication and thereafter relying on the

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. case of Sesa Goa Ltd. vs. JCIT in ITA No. 72/PNJ/2012 order dated 08.03.2013, held this issue to be against the assessee. Before us, the ld. A/R has stated that the issue is covered in favour of the assessee in its own case for AY 2008-09 in CO No. 66/KOL/2018, wherein the claim of education cess is seen to have been allowed relying upon the decision of Hon'ble Rajasthan High Court in the case of Chambal Fertilisers & Chemicals Ltd. vs. JCIT reported in [2019] 107 taxmann.com 484 (Rajasthan). 10.1. However, it is seen that the decision of the Hon'ble Rajasthan High Court in the case of Chambal Fertilisers & Chemicals Ltd. (supra) has been reversed by the Hon'ble Apex Court vide order dated 14.12.2022 reported in [2022 145 taxmann.com 420 (SC)] and also in the same assessee’s case in the matter reported in 147 taxmann.com 285 (SC). As per the judgment by the Hon'ble Apex Court, education cess claimed by the assessee company u/s 37(1) of the Act was to be disallowed since as per Explanation 3 to Section 40(a)(ii) of the Act inserted by the Finance Act, 2022 with effect from 01.04.2005, made it clear that any surcharge or cess forms part of “tax” and same could not be allowed as deduction while computing profits and gains of business. Relevant extract from the judgement reported in 147 taxmann.com 285 is as under: “Learned senior advocate appearing on behalf of the respondent-assessee states that in view of the amendment vide the Finance Act, 2022 with retrospective effect from 1-4-2005 to section 40(a)(ii) of the Income-tax Act, 1961, the present appeal has to be allowed. 3. In view of the statement made, we direct that the Education cess paid by the respondent-assessee would not be allowed as an expenditure under section 37 read with 40(a)(ii) of the Income-tax Act, 1961.” Considering the judgment of the Hon'ble Apex Court, this issue is decided against the assessee and in favour of the Revenue. 11. The third ground pertains to the confirming of the addition of Rs. 96,23,88,188/- to the book profit u/s 115JB of the Act on account of profit on sale of fixed assets. On this issue, the ld. AO has relied on several decisions, namely in the case of CIT vs. Veekaylal Investment Co. (P.) Ltd.

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. reported in [2001] 116 Taxman 104 (Bombay) and the case of Rain Commodities Ltd. vs. DCIT reported in [2010] 40 SOT 265 (Hyderabad) (SB) and disallowed the claim of the assessee. The ld. CIT(A) confirmed the action of ld. AO relying on the same authorities as was done by the ld. AO. During the course of arguments, the ld. A/R fairly mentioned that the case of Rain Commodities Ltd. (supra) still holds the fort and on that basis the issue is against the appellant. It may be briefly mentioned that though Section 47 of the Act contains transactions which are not regarded as transfer however, it was held in the case of Rain Commodities Ltd. v. Dy. CIT [2010] 40 SOT 265 (Hyd.) (SB) that the provisions of Section 47 are not applicable in case of calculation of books profits as per MAT. This is so because Section 115JB begins with a non obstante clause, "Notwithstanding anything contained in any other provisions of this Act. . ."; which implies that the normal provisions of the Act are not applicable to this Section. Further, capital gain earned by the assessee is included in the net profit determined as per profit and loss account prepared under the Companies Act. Thus, in the absence of any provision for exclusion of exempted capital gain in the computation of book profit under the provisions contained in Explanation to Section 115JB of the Act, the assessee shall not be entitled to the exclusion thereof. Considering the order in the case of Rain Commodities Ltd. (supra), this issue is decided against the appellant and in favour of the Revenue. 12. In the result, considering the discussions made above, the appeal filed by the Revenue is partly allowed and the cross objection filed by the assessee are dismissed. Order pronounced in the open Court on 13th September, 2024. Sd/- Sd/- [Sanjay Garg] [Sanjay Awasthi] Judicial Member Accountant Member Dated: 13.09.2024 Bidhan (P.S.)

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I.T.A. No.: 473/KOL/2018 C.O. No.: 65/KOL/2018 Assessment Year: 2007-08 M/s. Graphite India Ltd. Copy of the order forwarded to: 1. DCIT, Circle-11(1), Kolkata. 2. M/s. Graphite India Ltd., 31, Chowringhee Road, Kolkata, West Bengal, 700016. 3. CIT(A)-22, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

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