1 911.itxa1161.13.doc sbw IN HIGH COURT OF JUDICATURE AT BOMBAY rt ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1161 OF 2013 ou Commissioner of Income Tax LTU ..Appellant Versus M/s. ACC Limited ..Respondent C ........... Mr. Suresh Kumar for Appellant. Mr. Niraj Sheth i/b. M/s. Mint & Confreres for Respondent. h ........... igCORAM: S. C. DHARMADHIKARI AND A. K. MENON, JJ. H DATE : 31st MARCH, 2015. P.C.: After having heard Mr. Suresh Kumar, learned counsel, y appearing in support of this Appeal for Revenue and Mr. Sheth, ba learned counsel, appearing for Assessee, we are of opinion that order passed by Tribunal and impugned in this Appeal by Revenue om does raise some substantial questions of law. All more, when they are subject matter in case of this very Assessee in Income Tax Appeal B No.2192 of 2009. 2] Appeal according to Mr. Suresh Kumar raises following substantial questions of law: 1/6 ::: Downloaded on - 17/08/2015 17:15:16 ::: 2 911.itxa1161.13.doc (A) Whether on facts and in circumstance of case and in law, Tribunal was right in holding that road transport rt subsidy received by Assessee Company of Rs.22,93,57,398/ was capital receipt and not revenue receipt as held by Assessing Officer? ou (B) Whether on facts and in circumstance of case and in law, Tribunal was right in holding that compulsory afforestation expenses amounting to Rs.7,72,750/ paid by C Assessee Company to Rajasthan State Forest Department was revenue in nature? (C) Whether on facts and in circumstance of case and in h law, Tribunal was right in allowing interest expenditure amounting to Rs.21,36,57,000/ incurred by Assessee Company ig on amounts borrowed and utilized for new advantages/facilities which were not related to expansion of business even though same were clearly capital in nature? H (D) Whether on facts and in circumstance of case and in law, Tribunal was right in allowing interest expenditure incurred by Assessee Company on amounts borrowed and utilized for expansion of business even though same were clearly capital y in nature? ba (E) Whether on facts and in circumstance of case and in law, Tribunal was right in treating power tariff freeze amounting om to Rs.4,15,70,325/ and electricity duty incentive amounting to Rs.1,71,38,000/ as capital receipts not liable to tax? (F) Whether on facts and in circumstance of case and in law, Tribunal was right in treating sales tax incentive subsidy B amounting to Rs.10,24,64,834/ as capital receipts not liable to tax? (G) Whether on facts and in circumstance of case and in law, Tribunal was right in holding that dividend distribution tax paid by Assessee Company was not to be considered as income tax paid in computing book profits under section 115JA? (H) Whether on facts and in circumstance of case and in 2/6 ::: Downloaded on - 17/08/2015 17:15:16 ::: 3 911.itxa1161.13.doc law, Tribunal was right in holding that transfer to Debenture Redemption Reserve was to be excluded in computing book profits rt under section 115JA? (I) Whether on facts and in circumstance of case and in ou law, Tribunal was right in allowing amount of Rs.1,78,00,000/ paid by Assessee Company to HPSEB as peak load infringement charges for excess withdrawal of power even though such expenditure was penal in nature? C (J) Whether on facts and in circumstance of case and in law, Tribunal was right in allowing amount of Rs.41,54,952/ paid by Assessee Company to MPSEB and Rs.3,90,390/ paid to h KSEB even though such expenditure was penal in nature? 3] ig As far as question Nos.(B), (C) and (D) on page No.5 and 6 are H concerned, all that Tribunal has done is to rely upon earlier orders passed by it. They relate to same issue and questions and identical Assessee. In circumstances, following Tribunal's orders of prior y ba assessment years, Assesee's ground was allowed. We do not think that Tribunal committed any error of law apparent on face of om record nor its order can be termed as perverse. When issue is factual and Tribunal has consistently followed its order for prior assessment years, then, these questions cannot be treated as substantial. Appeal B to that extent is dismissed. 4] As far as question No.(H) on page 7 is concerned, that pertains to transfer to Debenture Redemption Reserve and whether that is to be 3/6 ::: Downloaded on - 17/08/2015 17:15:16 ::: 4 911.itxa1161.13.doc excluded in computing book profits under section 115JA of Income rt Tax Act, 1961. ou 5] Mr. Suresh Kumar was fair to point out that Division Bench of this Court dealt with this very question in case of Commissioner of C Income Tax 2 V/s. Raymond Ltd. Division Bench by its order dated 20th March, 2012 in Income Tax Appeal No.1324 of 2010 answered similar h question against Revenue and in favour of Assessee. Therefore, ig Appeal is also dismissed in so far as question No.H is concerned. H 6] In so far as question Nos.(I) and (J) are concerned, they pertain to payments made to State Electricity Boards for drawing excess y ba power supply. This expenditure towards making such payments was termed as penal in nature by Revenue. Assessee contended om otherwise. Assessee submitted that this is nothing but payment of additional charges for excess power supply. Such questions have been dealt with in case of M/s. VRM Share Broking Pvt. Ltd. order of B Tribunal in case of Commissioner of Income Tax 4 V/s. VRM Share Broking Pvt. Ltd. has been followed and applied in this case and to uphold grounds/claim of Assessee (see page 124 para 8.1, 8.3 of Tribunal's order). 4/6 ::: Downloaded on - 17/08/2015 17:15:16 ::: 5 911.itxa1161.13.doc 7] Revenue challenged order passed by Tribunal in rt case of VRM Share Broking Pvt. Ltd. by filing Appeal to this Court, namely, Income Tax Appeal No.2249 of 2009. That Appeal filed by ou Revenue was dismissed by Division Bench of this Court on 4 th January, 2010 holding that questions raised and of identical nature are not C substantial questions of law. In these circumstances, Appeal preferred by Revenue is devoid of merits on these two questions. h 8] ig In light of above discussion, we proceed to admit Appeal H only on following questions: (i) Whether on facts and in circumstance of case and in law, Tribunal was right in holding that road transport subsidy received y ba by Assessee Company of Rs.22,93,57,398/ was capital receipt and not revenue receipt as held by Assessing Officer? om (ii) Whether on facts and in circumstance of case and in law, Tribunal was right in treating power tariff freeze amounting to Rs.4,15,70,325/ and electricity duty incentive amounting to B Rs.1,71,38,000/ as capital receipts not liable to tax? (iii) Whether on facts and in circumstance of case and in law, Tribunal was right in treating sales tax incentive subsidy amounting to Rs.10,24,64,834/ as capital receipts not liable to tax? 5/6 ::: Downloaded on - 17/08/2015 17:15:16 ::: 6 911.itxa1161.13.doc (iv) Whether on facts and in circumstance of case and in law, rt Tribunal was right in holding that dividend distribution tax paid by Assessee Company was not to be considered as income tax paid in ou computing book profits under section 115JA? 9] Respondents waive service. C (A. K. MENON,J.) (S. C. DHARMADHIKARI, J.) h ig H wadhwa y ba om B 6/6 ::: Downloaded on - 17/08/2015 17:15:16 ::: The Commissioner of Income-tax­-LTU v. M/s. ACC Limited