Case Law Details
DCIT Vs JSW Steel Limited JSW Centre (ITAT Mumbai)
Conclusion: For deduction on carbon credits, Section 80-IA deduction on the sale of CERs must be allowed; gains from the prepayment of deferred sales tax constituted capital receipts, meaning Commissioner’s relief required no interference. Regarding deduction of Creditor Write-Back Tax, based on the rule of consistency and identical relief granted by the ITAT in assessee’s prior assessment periods, addition under Section 28(iv) regarding the write-back of project creditors was ordered to be deleted.
Held: The issues arose for consideration was whether income from the sale of Certified Emission Reductions (CERs), gains from prepayment of Sales Tax deferrals, and the write-back of project creditors could be adjusted or exempted based on judicial consistency and prior Tribunal orders in the assessee’s own case. For AY 2013-14, assessee claimed a Section 80-IA deduction on income generated from selling Certified Emission Reductions (CERs). AO disallowed it purely because it was rejected in prior years, ignoring favorable ITAT decisions on the exact same issue for the assessee and its sister concern. For AY 2014-15 and 2015-16, the assessee treated gains from the prepayment of Sales Tax deferrals as non-taxable capital receipts. The AO treated these gains as taxable revenue receipts. Further, assessee wrote back long-standing project creditor liabilities into the Profit & Loss Account as provisions no longer required. AO taxed this write-back under Section 28(iv) as a ceased liability, ignoring past ITAT rulings that deleted identical additions for this specific assessee. It was held that regarding deduction on carbon credits, as the facts remained identical to prior years where binding ITAT decisions favored the assessee, judicial discipline dictated that the Section 80-IA deduction on the sale of CERs must be allowed. ITAT co-ordinate bench had already established in the assessee’s own case that gains from the prepayment of deferred sales tax constituted capital receipts, meaning the Commissioner’s relief required no interference. Regarding deduction of Creditor Write-Back Tax, based on the rule of consistency and identical relief granted by the ITAT in the assessee’s prior assessment periods, the addition under Section 28(iv) regarding the write-back of project creditors was ordered to be deleted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. These three appeals by revenue and Cross Objections (C.O.) therein by assessee are directed again the separate orders of learned CIT(A)-56 Mumbai, for assessment years (AYs) 2013-14 to 2015-16.
In all appeals and in C.O.(s), the parties have raised certain common grounds of appeal, certain facts in all years are common, thus, with the consent of both the parties all the appeals and C.O.(s) were clubbed heard together and are decided by common order to avoid the conflicting decisions. For appreciation of facts, the facts in AY 2013-14 are treated as lead case. The revenue has raised following grounds of appeals;
(1) Whether on the facts and circumstances of the case and in law the Ld. CITT(A) was justified in deleting the transfer pricing adjustment of Rs. 80,59,129/- on account of addition made by the transfer pricing officer towards interest on loans advanced by the assessee to its Associated Enterprises.
(2) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment by relying on the order of Hon’ble !TAT in the case of JSW Energy Ltd vs DCIT, in ITA No. 2316/Mum/2017 without appreciating that the facts of the international transaction of JSW Energy Ltd were different than that of the assessee’s international transaction of loans of current year?
(3) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment by applying the judgment in the case of the assessee for A. Y 2008-09 to A. Y 2011-12 without considering the fact that the transfer pricing study is highly facts- based exercise based on contemporaneous data and it differs from case to case and that all the factors in Rule 108 have to be considered for every case and every year independently and that a rate decided in a different case for different set of facts and for different year cannot be adopted as such to the instant assessee, which would be violative of the specific provisions in Rule 108?
(4) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing to restrict the TP adjustment of Corporate Guarantee to 0.35% instead of 2.00% made by the Transfer Pricing Officer on account of corporate guarantee fee issued by assessee in favour of its associated enterprises?
(5) Whether on the facts and circumstances of the case and in law, the Ld. CTF(A) is justified in setting the corporate guarantee rate at 0.35% without considering the fact that in the benchmarking undertaken by the assessee they had arrived at ALP corporate guarantee commission rate which is more than 0.35%, for instance, the assessee has offered a guarantee fee of Rs. 61,39,319/-against JSW Steel (Netherlands) B. V. which is 0.63%?
(6) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without considering the benchmarking undertaken by the assessee and the benchmarking undertaken by the TPO?
(7) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justifieddeleting the adjustment without considering the flaws pointed by the TPO in benchmarking undertaken by the assessee?
(8) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without giving any findings as to how the judgments relied by Hon’ble ITAT applied to the case of the assessee?
(9) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without realizing the fact that the transfer pricing study is highly facts-based exercise based on contemporaneous data and it differs from case to case and that all the factors in Rule 108 have to be considered for every case and every year independently and that a rate decided in a different case for different set of facts and for different year cannot be adopted as such to the instant assessee, which would be violative of the specific provisions in Rule 108?
(10) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision other cases, which is in violation of provisions of Rule 108 of IT Rules as credit ratings and the interest rate vary every year?
(11) On the facts and circumstances of the case and in law, the Ld CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without adopting any of the methods prescribed in Section 92C which is violation of law?
(12) Whether on the facts and in the circumstances of the case and in law, the Ld. CTT(A) erred in deleting the disallowance of the deduction claimed amounting to Rs. 58,87,28,619/-u/s. 80-IA in respect of the Rail System, without adequately considering the facts and findings brought out by the Assessing Officer, specifically that the claim of deduction has been made since AY 2008-09 and has been allowed by the Assessing Officer in subsequent years in a routine manner without thorough examination of the issue?
(13) Whether on the facts and in the circumstances of the case and in law, the Ld. CTr(A) erred in deleting the disallowance of the deduction claimed amounting to Rs. 58,87,28,619/-u/s. 80-IA in respect of the Rail System, without adequately considering the decision in the case of Ultratech Cements Ltd for AY 2009-10 and 2010-11, which the Assessing Officer relied upon and findings brought out by the Assessing Officer?
(14) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of the deduction claimed amounting to Rs.37,37,39,881/- u/s 80-IA in respect of the Water System, without adequately considering the findings presented by the Assessing Officer and the fact that the assesses objection on this issue was rejected by the Hon’ble DRP-1 (WZ)Mumbai, via order under Section 144C(5) dated 29.12.2016, thereby failing to maintain consistency with the departmental stance?
(15) Whether on the facts and in the circumstances of the case and in law, the L.d. CIT(A) erred in deleting the disallowance u/s. 14A of the Act, by overlooking the computational procedure prescribed in Rule 8D of the Income Tax Rules, 1962, which must be followed for making any disallowance u/s. 14A?
(16) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A), Mumbai, erred in deleting the disallowance u/s 14A of the Act from the total income on the grounds of non-application of mind as a quasi-judicial authority while recording dissatisfaction as required u/s 14A, without appreciating that the Assessing Officer provided detailed reasoning in paragraph 7 of the assessment order while invoking Rule 8D r. w.s. read with Section 14A? Furthermore, the CIT(A) failed to consider that the Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. vs. CIT (ITA No. 616 of 2010) held that both direct and indirect expenditures must be considered for determining the expenditure disallowable u/s 14A, and affirmed the constitutional validity of the Rules framed.?
(17) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the deduction amounting to Rs.17,07,64,671/- claimed u/s. 80-1A in respect of income from the sale of CERs, without properly appreciating the facts and circumstances brought out by the AO that the alleged receipt is not derived from eligible business and not considered it as capital receipt?
(18) Whether on the facts and in the circumstances of the case and in law, the L.d. CIT(A) erred in allowing the deduction amounting to Rs.17,07,64,671/- claimed u/s. 80-1A in respect of income from the sale of CERs, without properly appreciating the facts and circumstances brought out by the AO that the alleged receipt is not derived from eligible business and not considered it as capital receipt?
(19) The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
2. On receipt of notice of memorandum of appeal of revenue, the assessee filed its C.O. raising following grounds;
(i) On the facts and circumstances of the case as well as law, the Id CIT(A)has erred in confirming the action of AO in passing the assessment order under section 143(3) rws 144C(3) of the Income Tax Act, which is time barred as per the provisions of the Act, therefore, the impugned assessment order is bad in law and required to be quashed.
(ii) The respondent craves leave to add, amend alter or delete the said ground of appeal.
3. Perusal of record shows that there is 55 days’ delay in filing Cross Objection (CO). The assessee has filed an application for condonation of delay of the CO. the application is supported with the affidavit of Jayant Acharya, Joint Managing Director of the assessee company. The Id Authorised representative (AR) of the assessee submits that delay is not intentional or deliberate but due to the facts that the assessee -company was in the process of seeking legal opinion from consultant on the issue of limitation in passing final order by AO. And ultimately it was recommended to file. The Id AR for the assessee submits that there is small delay and it may be condoned.
4. On the other hand, the learned Commissioner of Income Tax-departmental representative (CIT-DR) for the revenue not opposed the plea in condoning the delay in filing CO. Thus, considering the facts explained before us, and the facts that Id CIT-DR has not opposed the delay in filing such CO. Hence, the delay in filing appeal is condoned. Now adverting to the merit of the case.
5. Facts in brief as extracted from the orders of lower authorities are that the appellant/ assessee is a domestic company engaged in the business of integrated steel manufacturing, filed its return of income on 29.11.2013 declaring total income of Nil after claim of deduction under section 80IA of the Act amounting to Rs.5,80,17,78,541/-. The case was selected for scrutiny. The assessee while filing return of income reported specified domestic transaction (SDT) with its associated enterprises (AE) as mandated under section 92E of the Income Tax Act, 1961 in Form 3CEB. Consequent upon, a reference was made under section 92CA to the Transfer Pricing Officer (TPO) vide office order dated 17.10.2014 for computation of Arm’s Length Price(ALP) of the specified domestic transactions. The TPO passed an order under section 92CA (3) dated 01.11.2016 and made transfer pricing adjustment amounting to Rs.16,51,87,465/- on account of interest on advances given to AE and corporate guarantee fee. On receipt of report of TPO, the AO forwarded a draft of the proposed order of assessment under section 144C(1) of the Act on 30.12.2016. The assessee instead of filing objections before Dispute Resolution Penal (DRP), opted to file appeal before CIT(A). Thus, the AO passed final assessment order u/s.143(3) r.w.s. 144C (3) on 10.02.2017 assessing the total income of the appellant at Rs.16,51,87,470/- by making additions/ disallowances, consisting adjustment on account of interest on loans given to AE amounting to Rs. 80,59,129/-, adjustment on account of Corporate Guarantee fee amounting to Rs. 15,71,28,336/-, disallowance of deduction claimed under section 80IA of the Act on account of Rail System amounting to Rs. 58,87,28,619/-, disallowance of deduction claimed under section 80IA of the Act on account of water supply system amounting to Rs. 37,37,39,881/-. Additional disallowance under section 14A of Rs.44,37,99,039/- and also added such disallowance of Rs.45,11,00,884/- while computing book profit under section 115JB for MAT calculation. Disallowance of deduction claimed under section 80IA of the Act on account of Sale of CER amounting to Rs. 17,06,64,671/-. On appeal before Id CIT(A), the assessee was allowed substantial relief to the assessee on various grounds of appeal. Aggrieved by the order of Id CIT(A), the revenue has filed present appeal before Tribunal.
6. We have heard the submissions of Id CIT-DR for the revenue and the Id authorised representative (AR) of the assessee. At the outset of hearing the Id AR of the assessee submits that all the grounds of appeal raised by the revenue are covered by the decision of Tribunal either in assesses own case for other years or in cases assesses group case. The Id CIT(A) also allowed relief to the assessee by following such decisions. The Id AR of the assessee also filed copy of decisions of Tribunal in by which the different grounds of appeal are covered.
7. Ground No. 1 & 2 of the appeal relates to the deleting the addition/ TP adjustment of interest of loan to its associated enterprises (AE) of Rs. 80,59,129/-. The Id AR of the assessee submits that these grounds of appeal are covered by the decision of Tribunal in assesses group case in JSW Energy Limited Vs DCIT in ITA No. 2316/Mum/2017, wherein similar disallowance was deleted by the Tribunal, copy of the decision is already placed on record.
8. On the other hand, the Id CIT-DR for the revenue supported the order of assessing officer.
9. We have considered the rival contentions of the parties and find that TPO made adjustment on account of interest on loan advanced by the assessee to its AE by taking view that as per Bloomberg database the corresponding rates of interest applicable for loan transactions is Libor plus 600 bps.The TPO examined the Bloomberg Data based rate as it is provided LIBOR interest rates on loan based on geographical location of both the borrowers and lender, tender of loan, security given and interest charged. On considering the data based search on Bloomberg suggested interest rate on loan transaction at LIBOR + 600 bps. The TPO worked out / suggested the addition of Rs. 80,59,129/-. Before Id. CIT(A), the assessee stated that similar issue / addition was made in case of assessee’s sister concern in JSW Energy Ltd. in A.Y. 2011-12 & 2012-13, however, on appeal before Tribunal the assessee was allowed relief in IT(TP)A No. 2452 & IT(TP)A 2316/Mum/2017 we find that Id.CIT(A) by following the decision of Tribunal deleted the addition by taking view that course have taken a view that ALP rate of interest in case of loan advanced to AE would be determined on the basis of rate of interest being charged in the county where the loan is received / consumed. Such ratio has been followed in a series of decision. We find that assessee has already shown to have charged interest of more than the interest rate directed in assessee’s group case in JSW Energy Ltd. (supra). The assessee has charged interest on LIBOR + 500 bps from February, 2013 and LIBOR + 350 bps from April 2012. Thus, in view of aforesaid factual and legal position we do not find any merit in the grounds of appeal raised by assessee.
10. Ground no. 3 to 11 relates to TP adjustment on account of corporate guarantee. The Id. AR of the assessee submits these grounds of appeal are also covered in favour of assessee in assessee’s own case for A.Y. 2008-09 to 2011-12 wherein the appeal of revenue has been dismissed and restricted the adjustment on corporate guarantee commission at 0.35%.
11. On the other hand, the Id. CIT-DR for the revenue submits that there are contrary decision wherein similar corporate guarantee, commission has been considered @ 0.50%.
12. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that TPO while suggesting the addition @ 2% on corporate guarantee on the basis of decision of his predecessor in A.Y. 2012- 13. Before Id. CIT(A), the assessee submitted that in A.Y. 2008-09 to A.Y. 2011-12, the assessee had offered similar corporate guarantee fee on the basis of interest saved approach, which had been accepted by Id. CIT(A) in all earlier years thus, changing the methodology in subsequent years without any change in the fact is erroneous. The Id. CIT(A) on considering the submission of assessee held that contention of assessee that they had offered similar corporate guarantee fee on the basis of interest saved approach, which had been accepted by Id. CIT(A) in A.Y. 2008-09 to 2011-12, which was accepted by Id. CIT(A). The revenue filed appeal before Tribunal wherein in a common order for A.Y. 2008-09 to 2011-12 in ITA (s) No. 4632, 5325 & 5326/M/2027 dated 30.06.2023, the appeal of revenue was decided in favour of assessee. The Tribunal in its order dated 30.06.2023 directed that transaction on corporate guarantee fees be charged as 0.35%. Thus, we find that Id. CIT(A) followed the order of Tribunal in assessee’s own case for earlier years. Hence, we do not find any merit in ground no. 3 to 11. In the result, ground no. 3 to 11 are dismissed.
13. Ground No. 12 to 14 relates to deleting the disallowance of deduction under section 80IA in respect of Rail system and Water System. The Id AR of the assessee submits that these grounds of appeal are also covered in favour of the assessee and again the revenue by the order of Tribunal in assessee’s own case in ITA No. 4062, 4063, 4064 & 4086/Mum/2017 dated 30.11.2017, wherein the order of Pr. CIT under section 263, wherein Id. CIT(A) raised issue that claim of deduction under section 80IA on account of Railway siding and water proof project and captive power consumption was not verified. The Tribunal had set aside / quashed such order of Pr. CIT under section 263. And further appeal of revenue has not been admitted by Hon’ble High Court.
14. On the other hand the Id. CIT-DR for the revenue submits that mere quashing of order under section 263 is not sufficient, when the assessee does not fulfil the condition for such allowance.
15. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that assessing officer, in para 5.1 of assessment order has recorded that assessee has been claiming deduction in respect of rail system from A.Y. 2008-09 and it was allowed by assessing officer. However, the Id. Pr. CIT-4, Mumbai revised the order from A.Y. 2008-09 to 2011-12. However, in A.Y. 2012-13, the claim of assessee for deduction under section 80IA in respect of rail system and water system was disallowed. The AO in A.Y. 2013-14 disallowed claim of rail system as well as water system under section 80IA on the basis of his predecessor. However, on appeal before Id. CIT(A), the assessee contended that order of Pr. CIT under section 263 for A.Y. 2008-09 to 2011-12 has been quashed by Tribunal in ITA No. 4062, 4063, 4064 & 4086/Mum/2017 dated 30.11.2017. The Id. CIT(A) by following the decision of Tribunal allowed relief to assessee in respect of Rail system as well as water system. We find that further appeal by revenue before High Court has not been admitted. Thus, both the issues have attained the finality. In the result, ground no. 12 to 14 are dismissed.
16. Ground no. 15 & 16 relates to deleting disallowance under section 14A. The Id. AR of the assessee submits that these grounds of appeal are also covered in favour of assessee by the decision of Bombay High Court in HDFC Bank Ltd. vs DCIT reported in (2016) 67 taxmann.com 42 (Bombay) and by the decision of Special Bench of Delhi Tribunal in ACIT vs Vireet Investment 82 taxmann.com 415 (SB) (Delhi Trib.).
17. On the other hand, the Id. CIT-DR for the revenue supported the order of assessing officer. The Id. CIT-DR submits that suo moto disallowance offered by assessee was not accepted by assessing officer. The assessing officer rejected the suo moto disallowance of Rs. 73.01 lacs and computed the disallowance as per Rule 8D. The assessing officer allowed the set off of suo moto disallowance and worked out the disallowance of Rs. 44.37 crore and also adjusted the book profit under section 115JB.
18. We have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. We find that assessee has shown exempt income of Rs. 5.89 crore only. The assessee has made suo moto disallowance of Rs. 73.01 lacs. We find that before Id. CIT(A) the assessee contended that assessing officer has not recorded satisfaction as to why the suo moto disallowance is not correct before invoking Rule 8D. Correctness of suo moto disallowance under section 14A has not been disputed by assessing officer. The Id. CIT(A) recorded that while making disallowance of interest expenses the AO computed interest disallowance of Rs. 30.11 crore and on account of indirect expenditure, the AO considered .5% of average value of investment which does not form part of total income and arrived at Rs. 14.29 crore. Thereby made total disallowance at Rs. 44.11 crore and after allowing suo moto disallowance computed disallowance of Rs. 44.37 crore. We find that Id. CIT(A) on considering the reserve and surplus and share capital with assessee which is of Rs. 19,937.37 crore. The assessee has made investment of Rs. 4636.06 crore thus, interest free funds are in far excess to the investment made by assessee. The Id. CIT(A) recorded that jurisdictional High Court in Reliance Utilities and Power Limited 313 ITR 340 (Bombay) and in CIT vs HDFC Bank Ltd. (165 ITD 659 Bom) held that when interest free funds are in far excess comparative to investment made for tax free securities, there is a presumption that investment which has been made in tax free securities, has come out of interest free funds available with assessee and hence no disallowance of interest is warranted. So far indirect expenditure being 5.00% of average value of monthly investment at Rs. 14.29 crore, is concerned, the Id. CIT(A) directed that AO to compute the disallowance @ 0.5% of average value of only those investments which yielded exempt income during the year and also to consider suo moto disallowance and thereby allowed part relief. We find that while given such direction, the Id. CIT(A) followed the decision of jurisdiction High Court in HDFC Bank Ltd. (supra) as well as decision of Special Bench in case of Vireet Investments (P) Ltd. (supra). We find that while allowing part relief to the assessee the Id. CIT(A) followed the binding precedent. Thus, we do not find any reasons to interfere with the finding of Id. CIT(A). In the result, ground no. 15 & 16 of the appeal is also dismissed.
19. Ground no. 17 & 18 relates to allowing the deduction in respect of sale of Certified Emission Reductions (CERs). The Id. AR of the assessee submits that these grounds of appeal are also covered by the decision of Tribunal in assesses ‘ own case for A.Y. 2012-13 in ITA No. 2116/M/2017 dated 04.05.2023.
20. On the other hand, the Id CIT-DR for the revenue submits that for claiming deduction under Section 80IA, profits must be “derived from” the eligible business. CER is not derived from business.
21. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. We find that during the year under consideration that assessee received Rs. 17.07 crore on account of CERs. The assessee claimed deduction of such receipt under section 80IA, the assessing officer disallowed such claim by taking view that it has been disallowed in earlier years and the assessee is in appeal before Id CIT(A). We find that Id CIT(A) allowed relief to the assessee on the basis of decision of Tribunal in assesses own case for AY 2008-09 to 2011-12 in ITA(s) No. 4632,5325 to 5326/M/2027, wherein the order of sister concern of assessee in JSW Energy Limited in ITA No. 463/Mum/2014 dated 31.07.2015 was followed. Considering the facts that Id CIT(A) allowed relief to the assessee by following decisions of Tribunal in assesses own case and in sister concern, hence, we do not find any infirmity in the order of Id CIT(A), which we affirm. In the result, the ground no, 17 & 18 of the appeal are dismissed.
22. In the result, the appeal of the revenue is in ITA No.5188/M/2024 is dismissed.
ITA No. 5189/M/2024 for AY 2014-15 by revenue.
23. The revenue has raised following grounds of appeals;
1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) justified in deleting the transfer pricing adjustment of Rs. 1,95,34,363/- on account of addition mode by the transfer pricing officer towards interest on loans advanced by the assessee to its Associated Enterprises?
2. Whether on the facts and in the circumstances of the case, the LA CIT(A) was justified in deleting the adjustment by relying on the order of Hon’ble ITAT in the case of JSW Energy Ltd. vs DCIT in ITA No. 2316/Mum/2017 without appreciating that the facts of the international transaction of JSW Energy Ltd. were different than that of the assessee’s International transaction of loans of current year?
3. Whether on the facts and in the circumstances of the case, the Lal. CIT(A) was justified in deleting the adjustment by applying the judgment in the case of the assessee for AY 2008-09 to AY 2011-12 without considering the fact that the transfer pricing study is highly fact-based exercise based on contemporaneous data and it differs from case to case and that all the factors in Rule 108 have to be considered for every case and every year independently and that a rote decided in a different case for different set of facts and for different year cannot be adopted as such to the instant assessee, which would be violative of the specific provisions in Rule 10B?
4. Whether on the facts and circumstances of the case and in lave, the Ld. CITTA) was justified in directing to restrict the TP adjustment of Corporate Guarantee to 0.35% instead of 2.00% mule by the Transfer Pricing Officer on account of corporate guarantee fee issued by assessee in favour of its associated enterprises?
5. Whether on the facts and circumstances of the cave and in low, the Ld. CITYA) is justified in setting the corporate guarantee rate at 0.35% without considering the fact that in the benchmarking undertaken by the assessee they had arrived at ALP corporate guarantee commission rate which is more than 0.35%, for instance, the assessee has offered a guarantee fee of Rs. 22,36,48,691/-against JSW Steel (Netherlands) B. V. which is 0.63%?
6. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without considering the benchmarking undertaken by the assessee and the benchmarking undertaken by the TPO?
7. Whether on the facts and in the circumstances of the case, the Ld. CITT(A) was justified in deleting the adjustment without considering the flaws pointed by the TPO in the benchmarking undertaken by the assessee?
8. Whether on the facts and in the circumstances of the case, the Ld CITTA) was justified in setting the corporate guarantee rate at 0.35% without giving any findings as to how the judgements relied by Hon’ble ITAT applied to the case of the assessee.
9. On the facts and circumstances of the case and in law, the Ed. CIF(A) erred in holding the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without realizing the fact that the transfer pricing study is highly facts-based exercise based on contemporaneous data and it differs from cave to case and that all the factors in Rule 10B have to be considered for every cave and every year independently and that a rate decided in a different case for different set of facts anal for different year cannot be adopted as such to the instant assessee, which would be violative of the specific provisions in Rule 10B?
10. On the facts and circumstances of the case and in low, the Id. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision other cases, which is it violation of provisions of Rule 108 of IT Rules as credit ratings and the interest rate vary every year?
11. On the facts and circumstances of the case and in low, the Ld. CIT(A) erred in holding the fee for the guarantee issued by the Instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases without adopting any of the methods prescribed in Section 920 which is violation of law?
12. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was justified in directing the Assessing Officer to consider the gain on prepayment of Sales Tax deferrals of Rs. 160,85,02,589/- as Capital Receipt Ignoring the fact that the gain prepayment of Sales tax was in the nature of incentive/concession and revenue in nature as per the propose test of Government of Karnataka’s Scheme?
13. Whether on the facts and the circumstances of the case in love, the Lal CITA) was justified in directing the Assessing Officer to exclude sales tax subsidy while computing income 115JB of the Act without appreciating the facts and circumstances of the case?
14. Whether on the facts and in the circumstances of the cave, and in law, the Ld. CIT(A) was Justified in granting deduction u/s 80IA in respect of the Railway system, without appreciating the fact that the Rail system was not un infrastructure facility within the meaning of the explanation to Section 80IA(4)(i) of the IT Act and that the assessee had not set up on enterprise to curry on the business of developing, operating and maintaining on infrastructure facility within the meaning of that section?
15. “Whether on the facts and in the circumstances of the case, and in law, the Ld. CITIA) was justified in granting deduction u/s 80IA in respect of the water supply system, without appreciating the fact that the agreement entered into by the assessee with the State Government was merely for permission to the assessee to draw the water, and not on agreement for: (1) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility, within meaning of Section 801A(4)(i)”
16. “Whether on the facts and in the circumstances of the case and in law, the Lal CIVIA) was justified in granting deduction u/s 80-LA in respect of the water supply system, without appreciating the fact that the agreement was entered into by the assessee with the State Government in the year 1996, and assessee had not fulfilled the conditions u/s 801A(4) as existing in the year 1996?
17. Whether on the facts and the circumstances of the case and in low, the Ed. CITYA) way justified in deleting the addition of Rs. 29,44,59,516/-u/s 28(iv) of the Act on account of write off of Project Creditors, without appreciating the facts as discussed by the Assessing Officer in the Assessment Order?
18. “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance us. 144 of the Act, by overlooking the computational procedure prescribed in Rule 8D of the Income Tax Rules, 1962, which must be followed for making any disallowance u/s, 14A”
19. Whether on the facts and circumstances of the case and in low, the Id. CIT(A) was justified in deleting disallowance u/s 14Ar.w.r 8D of the Act while computing book profit us 11538 of the Act without appreciating the facts?
20. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”
24. Ground no. 1 & 2 relates to deleting the addition on account of interest on loan advanced to AEs. We find that these grounds of appeal are similar to the ground no. 1 & 2 in appeal for A.Y. 2013- 14 which we have already dismissed by following the decision of Tribunal in assessee’s group case in JSW Energy Ltd. vs DCIT (supra). Thus, following the principle of consistency these grounds of appeal are dismissed with similar observation.
25. Ground no. 3 to 11 relates to deleting transfer pricing adjustment on account of corporate guarantee commission. We find that these grounds of appeal are similar to the ground no. 3 to 11 in appeal for A.Y. 2013-14 which we have already dismissed by following the decision of Tribunal in assessee’s own case in A.Y. 2008-09 to 201112 dated 30.06.2023. Thus, following the principle of consistency these grounds of appeal are dismissed with similar observation.
26. Ground no. 12 relates to considering the Sales Tax deferrals as capital receipt. The Id. AR of the assessee submits that this ground of appeal is covered by the decision of Tribunal in assessee’s own case for A.Y. 2008-09 to 2011-12 wherein decision in assessee’s own case for A.Y. 2006-07 reported in (2020) 180 ITD 505 (Mumbai Trib.) was followed.
27. 0n the other hand, the Id. CIT-DR for the Revenue submits that refund was in the nature of concession and purpose test has to be considered. Though, the Id. CIT-DR for the Revenue submits that there is favourable decision in assessee’s own case in earlier year.
28. We find that before the assessing officer, the assessee in order to claim Sales Tax deferrals as capital receipt relied upon the decision of Special Bench of Mumbai Tribunal in Sujler India Ltd. vs JCIT, which has been upheld by High Court. The assessing officer disregarded the submission of assessee and held that the decision of High Court in case of Sujler India has not been accepted by department and further appeal has been filed in the Supreme Court. We find that Id. CIT(A) while allowing the relief to the assessee recorded that similar claim of deduction was allowed to the assessee company by his predecessor in appeal for the AY 2013-14 and AY 2015-16. We further find that similar relief was allowed to the assessee in a detailed discussion by co-ordinate bench of Tribunal in A.Y. 2008-09 to 2011-12 (Supra) in order dated 30.06.2023. Thus, we do not find any reason to interfere in the order of Id. CIT(A). IN the result, ground no. 12 of the appeal is dismissed.
29. Ground no. 13 relates to excluding Sales Tax subsidy while computing book profit under section 115JB. Considering the fact that we have upheld the order of Id. CIT(A) on ground no. 12, hence this ground of appeal have become infructuous. In the result, ground no. 13 is dismissed.
30. Ground no. 14 relates to deduction under section 80IA in respect of railway system and ground no. 15 & 16 relates to deduction under section 80IA in respect of water supply system. We find that these grounds of appeal are similar to grounds no. 12 to 14 in of appeal A.Y. 2013-14, which we have dismissed on the basis of decision of Tribunal in assessee’s case for A.Y. 2012-13 in ITA No. 2116/m/2017 dated 04.05.2023. Thus, following the principle of consistency, these grounds of appeal are dismissed with similar observation. In the result, ground no. 14 to 16 are dismissed.
31. Ground no. 17 relates to deleting the addition of Rs. 29.44 crore added under section 28(iv) on account of write off a project creditors. The Id. AR of the assessee submits that this ground of appeal is also covered by the decision of Tribunal in assessee’s own case for A.Y. 2012-13 in ITA No. 2116/M/2017.
32. On the other hand, Id. CIT-DR for the Revenue supported the order of assessing officer. The Id. CIT-DR submits that assessee has taken a loan for purchase of asset that is plant & machinery, which has been capitalized. If the credit balance is write off same is to be taxed as income of assessee.
33. We have considered the submission of both the parties and find that assessee claimed an amount of Rs. 29.44 crore as provisions no longer required, return back in respect of project creditors. The assessing officer brought the same to tax such provision by taking view that credit balance on losing its character of a liability is return back in the P & L A/c and to be taxed as income under section 28(iv) of the Act. We find that in assesse’s own case for A.Y. 2012-13, the assessing officer made identical observation while making addition under section 28(iv) of the Act. We find that co-ordinate bench of Tribunal in assessee’s own case for A.Y. 2012-13 on similar ground of appeal and on relying upon the decision of Tribunal in assessee’s own case for A.Y. 2004-05 in ITA No. 930/Bang/2009 dated 13.01.2017 allowed relief to the assessee. Thus, we find that this ground of appeal is covered in favour of assessee and against the revenue. In the result, ground no. 17 of the appeal is dismissed.
34. Ground no. 18 & 19 relates to deleting the disallowance under section 14A and excluding from such disallowance from book profit under section 115JB. We find that these grounds of appeal are similar to the ground no. 15 & 16 in appeal for A.Y. 2013-14, which we have already dismissed by following the order of assessee’s own case or on the basis of decision of superior courts. Thus, following the principle of consistency, these grounds of appeal are also dismissed with similar observation.
35. In the result, appeal of Revenue for A.Y. 2014-15 is dismissed.
ITA No. 5189/Mum/2024 for A.Y. 2015-16 by Revenue
36. The Revenue has raised following grounds of appeal.
1. Whether on the facts and circumstances of the case and in lane the Ld. CIT(A) was justified in deleting the transfer pricing adjustment of Rs. 2,53,24,154/- on account of addition made by the transfer pricing officer towards interest on loans advanced by the assessee to its Associated Enterprises?
2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment by relying on the order of Hon’ble ITAT in the case of JSW Energy Ltd vs DCIT, in ITA No. 2316/Mum/2017 without appreciating that the facts of the international transaction of JSW Energy Lid were different than that of the assessee’s international transaction of loans of current year?
3. Whether on the facts and in the circumstances of the case, the Ld. CITI(A) was justified in deleting the adjustment by applying the judgment in the case of the assessee for A.Y 2008-09 to 4.Y 2011-12 without considering the fact that the transfer pricing study is highly facts-based exercise based on contemporaneous data and it differs from case to case and that all the factors in Rule 108 have to be considered for every case and every year independently and that a rate decided in a different case for different set of facts and for different year cannot be adopted as such to the instant assessee, which would he violative of the specific provisions in Rule 10B?
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing to restrict the TP adjustment of Corporate Guarantee to 0.35% instead of 1.00% made by the Transfer Pricing Officer on account of corporate guarantee fee issued by assessee in favour of its associated enterprises?
5. Whether on the facts and circumstances of the c; se and in law, the Ld. CIT(A) is justified in setting the corporate guarantee rate at 0.35% without considering the fact that in the benchmarking undertaken by the assessee hey had arrived at ALP corporate guarantee commission rate in the range of 0.215 to 1.71% for different corporate guarantees?
6. Whether on the facts and in the circumstance % of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without considering the benchmarking undertaken by the assessee and the benchmarking undertaken by the TPO?
7. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment without considering the flaws pointed by the TPO in the benchmarking undertaken by the assessee?
8. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without giving any findings as to how the judgments relied by Hon’ble ITAT applied to the case of the assessee?
9. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without realizing the fact that the transfer pricing study is highly facts-based exercise based on contemporaneous data and it differs from case to case and that all the factors in Rule 10B have to be considered for every case and every year independently and that a rate decided in a different case for different set of facts and for different year cannot beadopted as such to the instant assessee, which would be violative of the specific provisions in Rule 10B?
10. 0n the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision other cases, which is in violation of provisions of Rule 10B of IT Rules as credit ratings and the interest rate vary every year?
11. 0n the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without adopting any of the methods prescribed in Section 92C which is violation of law?
12. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s. 14A of the Act, by overlooking the computational procedure prescribed in Rule 8D of the Income Tax Rules, 1962, which must be followed for making any disallowance u/s. 14A?
13. Whether on the facts and in the circumstances of the case and in lave, the Ld. CIT(A). Mumbai, erred in deleting the disallowance u/s 144 of the Act from the total income on the grounds of non-application of mind as a quasi-judicial authority while recording dissatisfaction as required u/s 144, without appreciating that the Assessing Officer provided detailed reasoning in paragraph 7 of the assessment order while invoking Rule 8D r.w.r. 14A? Furthermore, the CIT(A) failed to consider that the Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Lad, vs. CIT (ITA No. 616 of 2010) held that both direct and indirect expenditures must be considered for determining the expenditure disallowable u/s 14A, and affirmed the constitutional validity of the Rules framed?
14. Whether on the facts and the circumstances of the case and in lave, the Ld. CIT(A) erred in directing the Assessing Officer to consider the gain on prepayment of Sales Tax deferrals of Rs. 441,08,53,217/- as Capital Receipt ignoring the fact that the gain of prepayment of Sales tax was in the nature of incentive/concession and revenue in nature as per the purpose test of Government of Karnataka’s Scheme?
15. Whether on the facts and the circumstances of the case in law, the Ld. CIT(A) erred in directing the Assessing Officer to exclude sales tax subsidy while computing income u/s 1153B of the Act without appreciating the facts and circumstances of the case?
16. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) is right in holding that the benefit received by the assessee on account of waiver of principal loans and interest payable is capital in nature and is not taxable while ignoring the ratio laid by Hon’ble Apex Court in the case of Commissioner of Income Tax vs. T. V. Sundaram lyengar & Sons?
17. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 19,42,13,629/- u/s 28(iv) of the Act on account of write off of Project Creditors, without appreciating the facts as discussed by the Assessing Officer in the Assessment Order?
18. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary
37. Ground no. 1 & 2 relates to deleting the addition on account of interest on loan advanced to AEs. We find that these grounds of appeal are similar to the ground no. 1 & 2 in appeal for A.Y. 2013-14 which we have already dismissed by following the decision of Tribunal in assessee’s group case in JSW Energy Ltd. vs DCIT (supra). Thus, following the principle of consistency these grounds of appeal are dismissed with similar observation.
38. Ground no. 3 to 11 relates to deleting transfer pricing adjustment on account of corporate guarantee commission. We find that these grounds of appeal are similar to the ground no. 3 to 11 in appeal for A.Y. 2013-14 which we have already dismissed by following the decision of Tribunal in assessee’s own case in A.Y. 2008-09 to 201112 dated 30.06.2023. Thus, following the principle of consistency these grounds of appeal are dismissed with similar observation.
39. Ground no. 12 & 13 relates to deleting the disallowance under section 14A and excluding from such disallowance from book profit under section 115JB. We find that these grounds of appeal are similar to the ground no. 15 & 16 in appeal for A.Y. 2013-14, which we have already dismissed by following the order of assessee’s own case or on the basis of decision of superior courts. Thus, following the principle of consistency, these grounds of appeal are also dismissed with similar observation.
40. Ground no. 14 relates to considering the Sales Tax deferrals as capital receipt. We find that this ground of appeal is similar to ground no. 12 in appeal for A.Y. 2014-15, which we have dismissed by following the order of Tribunal in assessee’s own case for A.Y. 2008-09 to 2011-12 wherein decision in assessee’s own case for A.Y. 2006-07 reported in (2020) 180 ITD 505 (Mumbai Trib.) was followed. Thus, this ground of appeal is dismissed with similar direction.
41. Ground no. 15 relates to excluding Sales Tax subsidy while computing book profit under section 115JB. Considering the fact that we have upheld the order of Id. CIT(A) on ground no. 14, hence this ground of appeal have become infructuous. In the result, ground no. 15 is dismissed.
42. Ground no. 16 & 17 relates to deleting the addition of Rs. 19.42 crore added under section 28(iv) on account of right of project creditors. We find that this ground of appeal is similar to the ground no. 17 of appeal for A.Y. 2014-15, which we have dismissed by following the decision of Tribunal in assessee’s own case for A.Y. 2012-13. Thus, following the principle of consistency, these grounds of appeal are also dismissed with similar observation.
43. In the result, appeal of Revenue for A.Y. 2015-16 is dismissed.
C.O. No. 47/Mum/2024 in ITA No. 5188/Mum/2024 (AY: 2013-14)
C.O. No. 48/Mum/2024 in ITA No. 5189/Mum/2024 (AY: 2015-16)
C.O. No. 236/Mum/2025 in ITA No. 4223/Mum/2025 (AY: 2014-15)
44. We find that assessee has raised similar ground in its C.O. as raised in A.Y. 2013-14. Considering the facts that we have dismissed the appeal of revenue in all three years on merit, therefore specific adjudication on the ground raised in C.O. has become academic. Hence, the same are dismissed as infructuous.
45. In the result, the appeals of Revenue in A.Y. 2013-14, 2014-15 & 2015-16 are dismissed. C.O. by assessee in all three years has been dismissed as infructuous.
Order was pronounced in the open Court on 30/04/2026.
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