SAGAR AGENCIES PVT.LTD.,AHMEDABAD vs. THE ACIT.,(OSD)CIRCLE-8,, AHMEDABAD

We come to assessee’s appeal ITA No.493/Ahd/2012. Its former substantive ground seeks to delete Section 14A r.w.8D disallowance of Rs.1,11,834/- made in the course of assessment as affirmed in lower appellate proceedings to the extent of Rs.53,037/-. There is no dispute that the assessee has derived exempt income in question in relevant previous year. The Assessing

The assessee’s latter substantive ground pleads that both the lower authorities have erred in law as well as on facts in disallowing its deduction claim of Rs.13,84,763/- u/s.80IA of the Act. The relevant facts qua this issue are in a narrow compass. The assessee admittedly had installed windmill power project in Satara District, Maharashtra. It thereafter received sales tax incentive on installation of windmill power project. Both the lower authorities hold that the said sales tax incentive amount in question is not in the nature of profit derived from eligible undertaking for the purpose of impugned deduction as per hon’ble apex court’s decision in Liberty India v. Commissioner of Income Tax (2009) 317 ITR 218 (SC).

Bothe the parties reiterate their respective pleadings in the course of hearing. The assessee also seeks to raise an additional ground that the above sales tax incentive amount disallowed in both the lower proceedings is in the nature of a capital receipt not excisable to tax. Learned Departmental Representative vehemently opposes admission of this additional ground. We find that this tribunal’s Special Bench decision in All Cargo Global Logistics Ltd. vs. DCIT

We now advert to merits of the issue. It is not in dispute that the relevant sales tax incentive scheme announced by the Maharashtra State Government does not form part of case records before us. Learned CIT(A) observes that the said scheme envisages incentive @1/6th of the cost for a period of six years on the windmills installed in Maharashtra. He then concludes that nothing depend on quantum of electricity generated from the windmill leading to the impugned eligible profit. The assessee invites our attention to a co-ordinate bench decision in (2014) 62 SOT 74 (Ahd-Trib) Jivraj Tea & Industries Ltd. vs. ACIT remitting an identical issue back to the Assessing Officer pertaining to the above sales tax incentive scheme for afresh adjudication after verifying relevant details thereof. We reiterate that such details are also not forthcoming from the instant case records. Learned Departmental Representative is also unable to rebut all these legal developments. We therefore restore the instant issue as well back to the Assessing Officer for afresh adjudication as per law. Assessee’s appeal ITA No.493/Ahd/2012 is partly accepted for statistical purposes.

This leaves us with Revenue’s appeal ITA No. 604/Ahd/2012. It raises five incentive grounds seeking to restore Assessing Officer’s action disallowing the amount of Rs.18,421/- pertaining to amortization of lease rent in respect of land, windmill depreciation claim of Rs.2,69,453/-, 14A disallowance of Rs.1,11,834/-, interest disallowance of Rs.3,01,600/- and cessation of liability addition u/s.41(1) of the Act amounting to Rs.5,09,219/-; respectively. Learned Departmental Representative fails to dispute the fact that the tax effect involved in the Revenue’s instant appeal is admittedly less than that Rs.10lacs. We find that the Central Board of Direct Taxes; hereafter the ‘Board’ has issued the circular no. 21/2015 dated 10.12.2015 clearly envisaging therein that department’s pending appeals before the tribunal/high courts are to be withdrawn/not pressed as per the above

We therefore partly accept the assessee’s appeal ITA No.493/Ahd/2012 for statistical purposes and dismiss Revenue’s appeal ITA No.604/Ahd/2012 for involving low tax effect.