The Principal Commissioner Of Income-Tax, Vadodara 1 v. Gujarat Energy Transmission Corporation Ltd

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 186 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME-TAX, VADODARA 1 Versus GUJARAT ENERGY TRANSMISSION CORPORATION LTD. ==========================================================Appearance:MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATHandHONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 11/09/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.This tax appeal under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal “C” Bench, Ahmedabad dated 5[th] September, 2019 in the ITA No.2716/Ahd/2013 for the A.Y.2007-08. 2.The Revenue has proposed the following question of law for the consideration of this Court; “Whether on the facts and in circumstances of the case, the Income Tax Appellate Tribunal has erred in law and on facts in upholding the order of the CIT (A) in deleting the addition made by the Assessing Officer on account of capital grant being @ 15% of total grant of Rs.25,000 Lacs?” 3.On the proposed substantial question of law, the CIT (Appeals) recorded the following findings; “The reasons for making disallowance of above amount of Rs.872.91 lacs as mentioned by AO in the assessment order as well as above submission of the appellant have been considered. In this regard it is mentioned that my Ld. Predecessor i.e. CIT (A)-I, Baroda in his appellate order for A.Y. 2008-09 in appellant's own case in appeal No.CAB-1/164/10-11 dated 30.01.2012 has upheld the action of the assessing officer on identical issue. Following the decision of Ld. CIT (A) as given in his appeal order the action of the AO in making addition of Rs.672.91 lakh is confirmed for the year under consideration also. Thus, the ground of appeal no.2 of the appellant is dismissed.” 4.The aforesaid findings recorded by the CIT (A)) came to be affirmed by the Tribunal while dismissing the appeal filed by the Revenue, holding as under; “The assessee filed following ground of appeal: "1.0 The learned Commissioner of Income Tax(Appeals) erred in law and fact has confirmed additions of Rs.8,72,91,000/- on account of Capital Grants & Subsidies and Consumers' Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant. 2.0 The learned Commissioner of Income Tax(Appeals) has erred in law and an facts in confirming the interest income from staff loans & advances and others amounting to Rs.1,77,06,000/- as Income from Other Sources as against the Business Income and thereby disallowing the claim of set off of business losses of earlier years against the said income. 3.0 Without prejudice to the Ground No. 2.0 above, the learned Commissioner of Income Tax(Appeals) has erred in law and on facts in not allowing the set off of unabsorbed depreciation of earlier years against the interest income of Rs.1,77,06,000/- assessed as Income from Other Sources. 4.0 The learned Commissioner of Income Tax(Appeals) erred in law and on facts has set aside the restriction of the claim of carry forward of unabsorbed business losses and unabsorbed depreciation of earlier years by erroneously taking certain assessment orders of erstwhile GEB for the Asst. Yea-s 2003-04, 2004-05 and 2005-06 with the direction to re-verify the claim. 5.0 The learned Commissioner of Income Tax(Appeals) has erred in law and facts in charging interest under section 234B, 234Cand 234Dof the Income Tax Act, 1961. 4.0 The learned Commissioner of Income Tax(Appeals) erred in law and on facts has set aside the restriction of the claim of carry forward of unabsorbed business losses and unabsorbed depreciation of earlier years by erroneously taking certain assessment orders of erstwhile GEB for the Asst. Yea-s 2003-04, 2004-05 and 2005-06 with the direction to re-verify the claim. 5.0 The learned Commissioner of Income Tax(Appeals) has erred in law and facts in charging interest under section 234B, 234Cand 234Dof the Income Tax Act, 1961. 6.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal." 18. Ground No.1 this Ground has already been decided against the assessee by us in ITA No.652/Ahd/2013 for A.Y. 2009-10 at para 13 hereinabove. In the absence of any change circumstances same shall apply mutatis mutandis. 19. Ground No.2 this Ground has already been decided in favour of the assessee by us in ITA No.652/Ahd/2013 for A.Y. 2009-10 at para 15 hereinabove. In the absence of any change circumstances same shall apply mutatis mutandis. 20. Ground No.3 This ground relates to the order passed by the Learned CIT(A) in not allowing the set off of unabsorbed depreciation of earlier years against interest income assessed as income from other sources. 21. It appears from the records that the Learned CIT(A) has already been pleased to direct the Learned AO to allow the set off of unabsorbed depreciation loss against the income from other sources of Rs.1,77,06,000/- and hence the issue has become infructuous and dismissed as infructuous. 22. Ground No.4 The assessee has challenged the order passed by the Learned CIT(A) to revivify the claim of carry forward of unabsorbed business loss and depreciation. 23. It appears from the records that the Learned CIT(A) has already been pleased to direct the Learned AO to allow the set off of unabsorbed depreciation against the interest income and business income and unabsorbed business loss against the business income of the year under consideration. Hence, the issue has become academic and virtual infructuous. Thus, dismissed. 24. Ground No.5 and 6: These grounds of appeals are consequential in nature and no separate adjudication is required.“ 5.We take notice of the fact that in the Tax Appeal No.63 of 2020 filed by the Revenue against the very same assessee, the very same question was proposed for the consideration of the Court as proposed in the present appeal. The question, as proposed, was answered against the Revenue and in favour of the assessee. We may refer to the relevant observations in the order passed by this Court dated 17[th ]February, 2020 in the Tax Appeal No.63 of 2020. The same reads thus; “9 So far as question No.2[c] proposed by the Revenue is concerned, the Assessing Officer in the assessment order has stated that the assessee has not received any grant of subsidy during the year under consideration but the subsidy or grant which was received in the earlier years was to be considered as income or to be reduced from the cost of assets. Therefore, the Assessing Officer estimated 15% of grant of Rs.2500 Lac which worked out at of Rs.3750 Lac as income of the assessee. 10 The assessee, therefore, being dissatisfied, filed an appeal before the CIT(A). The CIT(A) deleted the addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, and therefore, such grants cannot be reduced from cost of fixed asset of the assessee on the basis of estimate. 11 The Revenue, therefore, went in appeal before the Tribunal and the Tribunal confirmed the order passed by the CIT(A) by holding as under: 10 The assessee, therefore, being dissatisfied, filed an appeal before the CIT(A). The CIT(A) deleted the addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, and therefore, such grants cannot be reduced from cost of fixed asset of the assessee on the basis of estimate. 11 The Revenue, therefore, went in appeal before the Tribunal and the Tribunal confirmed the order passed by the CIT(A) by holding as under: “28. We have heard the rival contention and produced the material on record on this issue. During assessment, the assessing officer has stated that the assessee has not received the grant or subsidy during the year but was of the view that the subsidy or grant which was received in earlier years was to be taken to the revenue or to be reduced from the cost of assets. Therefore, the assessing officer has estimated 15% of grant of Rs.2500 lacs which worked out at Rs. 3750 lacs as income of the assessee. The Ld. CIT(A) has deleted the aforesaid addition holding that the assessee has not acquired an fixed assets on which depreciation has been claimed, therefore, such grants cannot be reduced from cost of fixed asset of the assessee company. With the assistance of ld. Authorized representatives, we have gone through the material on record pertaining to the submission of the assessee stating that the assessee has not received any grant during the year and the grants received originally from the Govt. of Gujarat were apportioned against the subsidiary companies appropriate basis. In F.Y.200708, the State Government vide various GRS decided to convert the grant given during the F.Y. 2005-06 to 200708 for implementation of Jyoti Gram Yojna (JGY) into equity share capital. Accordingly, the total grants received during the aforesaid financial years were allocated among the four distribution companies for implementation of the aforesaid scheme of the State Government. In view of the above facts and circumstances, we do not find any infirmity with the decision of the Ld. Therefore, the aforesaid grants received cannot be treated as income of the assessee company. Accordingly, this ground of the appeal is dismissed.” 12 We are in agreement with the concurrent finding of fact arrived at by the CIT(A) as well as the Tribunal as the assessee did not acquire any fixed assets on which depreciation has been claimed, and therefore, grants cannot be reduced from cost of fixed asset of the assessee. Therefore, appeal stands dismissed qua question No.2[c] proposed by the Revenue.” 6.In view of the aforesaid, we see no good reason to entertain this appeal being devoid of any merit. The Tribunal could not be said to have committed any error in passing the impugned order. 7.In the result, this appeal fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J)