The Principal Commissioner of Income-tax, Vadodara 1 v. Gujarat Energy Transmission Corporation Ltd
[Citation -2020-LL-0911-94]

Citation 2020-LL-0911-94
Appellant Name The Principal Commissioner of Income-tax, Vadodara 1
Respondent Name Gujarat Energy Transmission Corporation Ltd.
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 11/09/2020
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags set off of unabsorbed depreciation • unabsorbed depreciation loss • unabsorbed business loss • grant of subsidy • business income • capital grants • other sources
Bot Summary: 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. 5.0 The learned Commissioner of Income Tax(Appeals) has erred in law and facts in charging interest under section 234B, 234C and 234D of the Income Tax Act, 1961. The same reads thus; 9 So far as question No.2c 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. The Assessing Officer estimated 15 of grant of Rs.2500 Lac which worked out at of Rs.3750 Lac as income of the assessee. The assessing officer has estimated 15 of grant of Rs.2500 lacs which worked out at Rs. 3750 lacs as income of the assessee. 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.


C/TAXAP/186/2020 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 186 of 2020 PRINCIPAL COMMISSIONER OF INCOME-TAX, VADODARA 1 Versus GUJARAT ENERGY TRANSMISSION CORPORATION LTD. Appearance: MR.VARUN K.PATEL(3802) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE 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 Income Tax Act, 1961 (for short Act, 1961 ) is at instance of Revenue and is directed against order passed by Income Tax Appellate Tribunal C Bench, Ahmedabad dated 5th September, 2019 in ITA No.2716/Ahd/2013 for A.Y.2007-08. 2. Revenue has proposed following question of law for consideration of this Court; Whether on facts and in circumstances of case, Income Tax Appellate Tribunal has erred in law and on facts in upholding order of CIT (A) in deleting addition made by Assessing Officer on account of capital grant being @ 15% of total grant of Rs.25,000 Lacs? 3. On proposed substantial question of law, CIT (Appeals) recorded following findings; Page 1 of 5 Downloaded on : Wed Sep 30 07:55:37 IST 2020 C/TAXAP/186/2020 ORDER reasons for making disallowance of above amount of Rs.872.91 lacs as mentioned by AO in assessment order as well as above submission of 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 action of assessing officer on identical issue. Following decision of Ld. CIT (A) as given in his appeal order action of AO in making addition of Rs.672.91 lakh is confirmed for year under consideration also. Thus, ground of appeal no.2 of appellant is dismissed. 4. aforesaid findings recorded by CIT (A)) came to be affirmed by Tribunal while dismissing appeal filed by Revenue, holding as under; assessee filed following ground of appeal: "1.0 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 ground that appellant should transfer 15% of total Grants/subsidies/consumer contribution received during year as against 10% offered by appellant. 2.0 learned Commissioner of Income Tax(Appeals) has erred in law and facts in confirming interest income from staff loans & advances and others amounting to Rs.1,77,06,000/- as Income from Other Sources as against Business Income and thereby disallowing claim of set off of business losses of earlier years against said income. 3.0 Without prejudice to Ground No. 2.0 above, learned Commissioner of Income Tax(Appeals) has erred in law and on facts in not allowing set off of unabsorbed depreciation of earlier years against interest income of Rs.1,77,06,000/- assessed as Income from Other Sources. 4.0 learned Commissioner of Income Tax(Appeals) erred in law and on facts has set aside restriction of claim of carry forward of unabsorbed business losses and unabsorbed depreciation of earlier years by erroneously taking certain assessment orders of erstwhile GEB for Asst. Yea-s 2003-04, Page 2 of 5 Downloaded on : Wed Sep 30 07:55:37 IST 2020 C/TAXAP/186/2020 ORDER 2004-05 and 2005-06 with direction to re-verify claim. 5.0 learned Commissioner of Income Tax(Appeals) has erred in law and facts in charging interest under section 234B, 234C and 234D of Income Tax Act, 1961. 6.0 appellant craves leave to add to, alter, delete or modify any of grounds of appeal either before or at time of hearing of this appeal." 18. Ground No.1 this Ground has already been decided against assessee by us in ITA No.652/Ahd/2013 for A.Y. 2009-10 at para 13 hereinabove. In absence of any change circumstances same shall apply mutatis mutandis. 19. Ground No.2 this Ground has already been decided in favour of assessee by us in ITA No.652/Ahd/2013 for A.Y. 2009-10 at para 15 hereinabove. In absence of any change circumstances same shall apply mutatis mutandis. 20. Ground No.3 This ground relates to order passed by Learned CIT(A) in not allowing set off of unabsorbed depreciation of earlier years against interest income assessed as income from other sources. 21. It appears from records that Learned CIT(A) has already been pleased to direct Learned AO to allow set off of unabsorbed depreciation loss against income from other sources of Rs.1,77,06,000/- and hence issue has become infructuous and dismissed as infructuous. 22. Ground No.4 assessee has challenged order passed by Learned CIT(A) to revivify claim of carry forward of unabsorbed business loss and depreciation. 23. It appears from records that Learned CIT(A) has already been pleased to direct Learned AO to allow set off of unabsorbed depreciation against interest income and business income and unabsorbed business loss against business income of year under consideration. Hence, 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 fact that in Tax Appeal No.63 of 2020 Page 3 of 5 Downloaded on : Wed Sep 30 07:55:37 IST 2020 C/TAXAP/186/2020 ORDER filed by Revenue against very same assessee, very same question was proposed for consideration of Court as proposed in present appeal. question, as proposed, was answered against Revenue and in favour of assessee. We may refer to relevant observations in order passed by this Court dated 17th February, 2020 in Tax Appeal No.63 of 2020. same reads thus; 9 So far as question No.2[c] proposed by Revenue is concerned, Assessing Officer in assessment order has stated that assessee has not received any grant of subsidy during year under consideration but subsidy or grant which was received in earlier years was to be considered as income or to be reduced from cost of assets. Therefore, Assessing Officer estimated 15% of grant of Rs.2500 Lac which worked out at of Rs.3750 Lac as income of assessee. 10 assessee, therefore, being dissatisfied, filed appeal before CIT(A). CIT(A) deleted addition holding that 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 assessee on basis of estimate. 11 Revenue, therefore, went in appeal before Tribunal and Tribunal confirmed order passed by CIT(A) by holding as under: 28. We have heard rival contention and produced material on record on this issue. During assessment, assessing officer has stated that assessee has not received grant or subsidy during year but was of view that subsidy or grant which was received in earlier years was to be taken to revenue or to be reduced from cost of assets. Therefore, assessing officer has estimated 15% of grant of Rs.2500 lacs which worked out at Rs. 3750 lacs as income of assessee. Ld. CIT(A) has deleted aforesaid addition holding that assessee has not acquired fixed assets on which depreciation has been claimed, therefore, such grants cannot be reduced from cost of fixed asset Page 4 of 5 Downloaded on : Wed Sep 30 07:55:37 IST 2020 C/TAXAP/186/2020 ORDER of assessee company. With assistance of ld. Authorized representatives, we have gone through material on record pertaining to submission of assessee stating that assessee has not received any grant during year and grants received originally from Govt. of Gujarat were apportioned against subsidiary companies appropriate basis. In F.Y.200708, State Government vide various GRS decided to convert grant given during F.Y. 2005-06 to 200708 for implementation of Jyoti Gram Yojna (JGY) into equity share capital. Accordingly, total grants received during aforesaid financial years were allocated among four distribution companies for implementation of aforesaid scheme of State Government. In view of above facts and circumstances, we do not find any infirmity with decision of Ld. Therefore, aforesaid grants received cannot be treated as income of assessee company. Accordingly, this ground of appeal is dismissed. 12 We are in agreement with concurrent finding of fact arrived at by CIT(A) as well as Tribunal as 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 assessee. Therefore, appeal stands dismissed qua question No.2[c] proposed by Revenue. 6. In view of aforesaid, we see no good reason to entertain this appeal being devoid of any merit. Tribunal could not be said to have committed any error in passing impugned order. 7. In result, this appeal fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid Page 5 of 5 Downloaded on : Wed Sep 30 07:55:37 IST 2020 Principal Commissioner of Income-tax, Vadodara 1 v. Gujarat Energy Transmission Corporation Ltd
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