Income Tax Appellate Tribunal - Ahmedabad
Chiripal Industries ... vs Dcit, Central Circle-2(1), Aaykar ... on 30 July, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH
Before: Smt. Annapurna Gupta, Accountant Member
And Shri T.R. Senthil Kumar, Judicial Member
ITA No. 883/Ahd/2023 &
C.O. No. 4/Ahd/2024
Assessment Year. 2017-18
The DCIT, Chiripal Industries Ltd.
Central Circle-2(1), Survey No. 199/200/1,
Ahmedabad Vs 2, Saijpur Gopalpur,
Pirana Road, Piplej,
Ahmedabad-382405
PAN: AAACC8513B
Chiripal Industries Vs The DCIT,
Ltd. Central Circle-2(1),
Survey No. Ahmedabad
199/200/1, 2,
Saijpur Gopalpur,
Pirana Road, Piplej,
Ahmedabad-382405
PAN: AAACC8513B (Respondent)
(Appellant)
Revenue Represented: Shri Hargovind Singh, Sr. D.R.
Assessee Represented: Shri Saurabh Soparkar, A.R.
Date of hearing : 18-06-2025
Date of pronouncement : 30-07-2025
आदे श/ORDER
PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Revenue as against the appellate order dated 16.08.2023 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad arising out of the assessment order I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 2 DCIT Vs. Chiripal Industries Ltd.
passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Year 2017-18. Cross Objection is filed by the Assessee as against the above Department appeal.
2. Brief facts of the case is that the assessee is a Company engaged in the business of manufacturing and processing of textile products. For the Asst. Year 2017-18, assessee filed its Return of Income on 06-11-2017 claiming a loss of Rs. 12,24,01,961/- and book profit u/s. 115JB of the Act of Rs.40,62,81,000/-. The return was taken for limited scrutiny and assessment made disallowing u/s. 80IA of Rs. 4,82,07,712/- and disallowance u/s. 14A r.w. Rule 8D of Rs.60,46,187/-.
3. Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A) who deleted the addition following decision of this Tribunal in assessee's own case relating to the earlier Asst. Year 2016-17 in ITA No. 292/Ahd/2020 vide order dated 15-07-2022.
3.1. Regarding the second addition namely disallowance u/s. 14A, the Ld. CIT(A) directed to make the disallowance to the extent of dividend income of Rs.670/- received by the assessee and the balance disallowance of Rs.60,46,042/- were directed to be deleted.
4. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal:
I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 3 DCIT Vs. Chiripal Industries Ltd.
1. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and/or on facts in deleting the disallowance of Rs.4,82,07,712/- made under section 80IA of the I.T. Act?
2. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and/or on facts in restricting the disallowance made under section 14A of the I.T. Act of Rs. 60,46,042/- to Rs. 670/-?
5.. Ld. Sr. D.R. appearing for the Revenue supported the order passed by the assessing officer and pleaded to confirm the disallowances.
6. Per contra Ld. Senior Counsel Shri S.N. Soparkar appearing for the assessee submitted that the disallowance u/s. 80IA of the Act made by the assessing officer was deleted by Ld. CIT(A) following the order passed by this Tribunal relating to Asst. Year 2014-15 in ITA No. 2582/Ahd/2017 and relating to Asst. Year 2016-17 in ITA No. 292/Ahd/2020 and drawn our attention to the relevant paragraph.
7. We have given our thoughtful consideration and perused the materials available on record and the case laws relied by the assessee. The facts of the case is that the assessee was carrying on the business of manufacturing and trading of yarn, fabrics and garments. The AO noted that the assessee has claimed deduction of Rs.4,82,07,712/- u/s 80IA of the Act. The assessee had shown activity of power generation and has shown plant and machinery used for such activity at Rs.7,66,75,468/-. The A.O. noted that the power plant was originally installed by the erstwhile concern M/s Shanti Processor Ltd and belonged to period prior to 01.04.2005. I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 4 DCIT Vs. Chiripal Industries Ltd.
The old machinery used was of Rs. 7,11,23,416/-as against the total value of Rs.7,66,75,468/-. Therefore the A.O. held that the power plant was set up by transfer of old and previously used machinery, the value of which was more than 90% of the total value of the plant and he therefore invoked the provision of Explantion-2 of Sec. 80IA(3) of the Act and disallowed the claim of deduction after rejecting the explanation offered by the assessee.
7.1. Before the CIT(A), the assessee submitted that M/s Shanti Processor Ltd was merged with the assessee company with effect from 01.04.2005 and the assessee company fulfilled all the conditions necessary for claiming deduction u/s 80IA of the Act. It had also brought to his notice that the CIT(A) had allowed the claim in the previous assessment years, wherein similar disallowance on same reasoning was made by the AO. It is also seen that the AO had rejected the contention of the assessee by following precedence in earlier years.
8. Whereas Co-ordinate Bench of this Tribunal in assessee's own case for the Asst. Year 2014-15 followed the earlier years' order namely Asst. Years 2010-11 to 2012-13 by observing as follows:
4. During the course of appellate proceedings before us, the ld. counsel at the outset brought to our notice that identical issue on similar facts in the case of assessee itself was decided by the Co-ordinate Bench of the ITAT vide ITA No. 900/Ahd/2016 and ITA No. 1547/Ahd/2016 for the assessment year 2010-11 to 2012-13. The ld. departmental representative could not controvert the same and nothing has brought to our notice suggesting that the decision of Hon'ble ITAT is not applicable. With the assistance of Ld. representatives, we have gone through the aforesaid decision of the Coordinate Bench of the ITAT. Relevant part of the decision is reproduced as under:-
I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 5 DCIT Vs. Chiripal Industries Ltd.
"25. We have heard both the sides and perused the material on record carefully. It was undisputed fact that that entire plant was new one and machinery were purchased by Shanti Processor Ltd which was amalgamating company and since the same were not used prior to 01/04/2005 and in the assessment order u/s. 143(3) for A.Y.2009-10 & A.Y.2010-11 the assessing officer had allowed the deduction on identical issue and similar facts.
The assessee has started the generation of energy in the previous year relevant to A.Y. 2006-07 and started claiming deduction u/s. 80IA(4) of the Act from assessment year 2009-10, which was first year of its claimed and the same was allowed meaning thereby the A.O. was satisfied that the assessee had fulfilled all the conditions. It is also noticed that the assessee has explained its entitlement for the impugned claim of deduction under section 80IA(12) as under:-
"The power plant, in question, was transferred to assessee company under the scheme of Amalgamation of two companies viz Shanti Processors Ltd & Chiripal Petro chemicals Ltd. M/s Shanti Processors Ltd. was amalgamating company & Chiripal Petro Chemicals Ltd. was amalgamated Company under the provisions of the Companies Act, 1956. The scheme of Amalgamation was approved by Hon'ble High Court of Gujarat, vide its order dated 31/03/2006 w.e.f. 01/04/2005. It is also added that name of the company Chiripal Petro Chemicals Ltd. was changed to Chiripal Industries Ltd. as per approval of Registrar of Companies of Gujarat (A copy of both the orders are enclosed herewith for your honour's kind perusal and record purpose.) At this point, the assessee company would like to submit the definition of amalgamation , tax concessions available to amalgamated company and other provisions, for your honours kind perusal as under: A. Definition of amalgamation :
According to section 2(1B) of the Income-tax Act, 1961 (hereinafter referred to as the Act), amalgamation in relation to companies means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the company with which they merge or which is formed as a result of the merger, as the amalgamated company) in such a manner that:-
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a. All the property of the amalgamating company or companies immediately before the amalgamation becomes the property of the amalgamated company by virtue of amalgamation. b. All the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of amalgamation. Shareholders holding not less than 3/4th in value of the shares in amalgamating company or companies (other than shares held there is immediately before the amalgamation or by a nominee for the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation, otherwise than as a result of the acquisition of the property one company by another company pursuant to the purchase of such property by the other company as a result of distribution of such property to the other company after the winding up of first mentioned company.
B. Tax concessions to the amalgamated company: The amalgamated company shall be eligible for tax concessions only if the following two conditions are satisfied:
I. The amalgamation satisfies all the three conditions laid down in section2(lB) and II The amalgamated company is an Indian company. If the above conditions are satisfied the amalgamated company shall be eligible for following tax concessions:
(a) Expenditure on Scientific Research Section 35(5):
(b) Expenditure on acquisition of patent rights or copy rights Section 35A(6):
(c) Expenditure of know-how Section 35AB(3):
(d) Treatment of preliminary expenses Section 35D(5):
(e) Amortization of expenditure in case of amalgamation Section 35DD
(f) Treatment of capital expenditure on family planning Section 36(1)(ix):
(g) Treatment of Bad debts section 36(1)(vii):
(h) Deduction available u/s 80IA & 80IB:
(i) Carry forward and set off Business Losses & unabsorbed depreciation of the amalgamating company."
I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 7 DCIT Vs. Chiripal Industries Ltd.
We observe the assessing officer has not disproved these material facts and disallowed the claim of deduction on presumption basis without considering the relevant legal provision as elaborated in the findings of the Ld.CIT(A). The relevant legal provision has already been elaborated by the Ld. CIT(A) in his findings that as per the provisions of section 80IA(12) when any undertaking of an Indian Company which is entitled to deduction under this section is transferred before the expiry of the period specified in this section to another Indian Company then as per clause (b) the provision of this section shall apply to the amalgamated Company as they would have applied to the amalgamating Company if the amalgamation had not taken place and the provisions of subsection (12) would only apply if the amalgamating Company was eligible for claiming deduction u/s 80IA. It is demonstrated from the above facts and circumstances that the assessing officer has disallowed the claim of the assessee on presumption basis that addition of Rs. 71,12,34,167- was old plant and machinery without bringing on record evidence to substantiate that specified machinery was purchased by Shanti processor Ltd and the assessing officer has also failed to disproved the material fact that similar claim was allowed to the assessee in the assessment year 2009-10 on fulfilling of all the conditions.
In the light of the above facts, legal findings and elaborated findings of the Ld. CIT(A) as supra in this order we do not find any error in the decision of the Ld.CIT(A), therefore, the appeal of the revenue is dismissed."
8.1. Similarly for the Asst. Year 2016-17, Co-ordinate Bench of this Tribunal in ITA No. 292/Ahd/2020 dated 15-07-2022 held as follows:
7. We have heard Ld. DR and perused all the relevant material available on record. Since the amalgamation company which is the assessee company has taken the power plant from amalgamation company the statutory tax deduction which were available to amalgamating company are also applicable to small company le assessee company as per law. The Tribunal in assessee's own case for A.Y. 2011-12 also granted the said relief. Therefore, ground nio.1 of the Revenue's appeal is dismissed.
I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 8 DCIT Vs. Chiripal Industries Ltd.
9. Following the above decisions of Co-ordinate Bench of this Tribunal in assessee's own case, Ground No. 1 raised by the Revenue is devoid of merits and is liable to be dismissed.
10. Ground No. 2 namely restricting the disallowance to Rs.670/- u/s. 14A r.w. Rule 8D made of Rs.60,46,042/-. The A.O. noted that the assessee has claimed various types of expenditure, but has not apportioned any amount to income that was not includable in the total income of the assessee. Therefore the A.O. invoked provisions of Section 14A r.w. Rule 8D(2)(ii) and disallowed 1% of average monthly investment and arrived the disallowance at Rs. 60,46,712/-.
10.1. In the appeal proceedings, the assessee claimed that it has received exempt income in the form of dividend Rs. 670/- only. The assessee also stated that the investments made were out of its own funds and therefore the disallowance made by the A.O. was not tenable as no borrowed funds were used for making investment in shares and mutual funds. Further there were sufficient share capital and reserves and surplus available to invest in the said shares and mutual funds. The assessee further stated that Rs. 30.57 crores in the form of strategic investment in Nandan Denim Ltd. Thus the disallowance u/s. 14A cannot exceed the exempted income namely Rs. 670/-. Considering the above submission, the Ld. CIT(A) restricted the disallowance to the dividend income earned by the assessee by observing as follows:
I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 9 DCIT Vs. Chiripal Industries Ltd.
"......7.4 The appellant cited several case laws, including the jurisdictional HC orders, in favour of its argument that disallowance u/s 14A cannot exceed the exempt income earned during the year. It is added that the amendment made in this regard by the Finance Act 2022 by way of insertion of explanation has been held to be prospective in nature by the Delhi HC in the case Era Infrastructure (India) Ltd (2022) 141 taxmann.com 289 (Delhi) which has been followed by the ITAT Ahmedabad in several orders. Following the judicial precedent, I direct the AO to limit the disallowance u/s 14A of the Act to Rs 670/- i.e. actual amount of dividend. Balance amount of Rs 60,46,042/- is directed to be deleted. Ground of appeal 2 is partly allowed."
11. We do not find any infirmity in the order passed by the Ld. CIT(A) who has restricted the disallowance to the extent of dividend income received by the assessee namely Rs. 670/- which is confirmed by Jurisdictional High Court in the case of Corrtech Energy Pvt. Ltd. reported in 372 ITR 97. Thus the Ground No. 2 raised by the Revenue is devoid of merits and the same is liable to be dismissed.
12. In the result, the appeal filed by the Revenue is dismissed.
C.O. No. 4/Ahd/202413. The Grounds of Cross Objection raised by the Assessee are as follows:
1. In law and in the facts of the appellant's case, Hon'ble ITAT may direct the Ld. Assessing Officer to reduce the assessed income of the assessee by Rs. 9,25,83,096/-as such receipt is capital receipt in form of interest subsidy received under Technology Upgradation Fund Scheme (TUFS) which was inadvertently offered in Income while filing Return of Income by assessee instead of reducing from plant and machinery.
2. In law and in the facts of the appellant's case, Hon'ble ITAT may direct the Ld. Assessing Officer to reduce the assessed income of the assessee by I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 10 DCIT Vs. Chiripal Industries Ltd.
Rs. 1,21,00,216/-as such receipt is capital receipt in form of power subsidy received under Technology Upgradation Fund Scheme (TUFS) which was inadvertently offered in Income while filing Return of Income by assessee instead of reducing from plant and machinery.
3. The appellant craves leave to add to amend or to raise any further grounds of appeal as case may arise.
14. Ld. Sr. Counsel submitted that the assessee received interest subsidy of Rs.9,25,83,096/- and power subsidy of Rs.1,21,00,216/- under TUFS that is (Technology Upgradation Fund Scheme) being capital receipt not chargeable to tax. However inadvertently the assessee offered the same as income in the Return of Income. Similar issue was considered in assessee's own case in ITA No. 708/Ahd/2023 for the Asst. Year 2014-15 thereby Co-ordinate Bench set aside this issue for fresh adjudication and allowed the appeal. Similar directions be issued for the present assessment year.
15. Ld. Sr. D.R. appearing for the Revenue could not dispute the above submission of the assessee counsel.
16. We have perused the order passed by Co-ordinate Bench of this Tribunal in ITA No. 708/Ahd/2023 dated 02-04-2024 wherein it was discussed elaborately as follows:
11. The only interconnected issue raised by the assessee in the additional grounds of appeal is that the total income and the book profit of the assessee should be reduced by the sum of ₹ 3,96,42,334.00 representing the interest subsidy received under Technology Upgradation Fund Scheme being capital receipt not chargeable to tax.
12. At the outset, the learned counsel for the assessee before us submitted that this Tribunal in the case of DCIT versus M/s Jindal worldwide limited in ITA No. 1843/AHD/2016 involving identical issue has I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 11 DCIT Vs. Chiripal Industries Ltd.
admitted additional ground of appeal and set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. Accordingly, the ld. AR before us contended that such finding of the ITAT in the case cited above is also applicable in the instant set of facts. Therefore, the ld. AR submitted that similar direction can also be issued by the ITAT in the case on hand.
13. On the other hand, the ld. DR before us opposed to admit the additional ground of appeal raised by the assessee in the light of the ratio of the judgment of Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC)
14. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the issue raised by the assessee in the additional ground of appeal is identical to the issue in the case of M/s Jindal worldwide limited cited above where in the ITAT has observed as under:
11. We sha ll now tur n t o the additional ground raised by the assessee in its cross objection which read s as und er:
"On the facts and the circumstances of the case and in law, the interest subsidy of Rs.2,16,45,161 received by the assessee under Technology Upgradation Fund Scheme (TUFS) for Textile and Jute industries during the above assessment year should be treated as capital receipt."
11.1 The additional ground has been admitte d to a djud icate the le gal issue in t he light of the availa ble view take n b y the co-ord inate bench in DC IT vs. M/ s. Ad ani Gas L td . ITA Nos. 775/ Ahd/2014 & Ors. order dated 17.10. 2018. The releva nt operative par a of the order of the c o-ord inate be nch is reproduced hereunder:
"21.4 A legal issue also cropped up in the course of hearing as to whether additional ground could be raised in a cross objection filed by the assessee under s.253(4) of the Act. On being enquired on this aspect of the matter, it was submitted on behalf of the assessee that there is no perceptible distinction between the position of law qua cross objection in the matter of filing additional ground. It was submitted that a cross objection has all the trappings of a regular appeal more so in the light of language employed under s.253(4) of the Act.
21.5 We find ourselves in agreement with the propositions made on behalf of the assessee that in a cross objection, there is no I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 12 DCIT Vs. Chiripal Industries Ltd.
bar to raise legal issues for the first time before ITAT. A cross objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and it is required to be disposed in same manner as an appeal. Even where the appeal is withdrawn or dismissed for default, cross objection may nevertheless be heard and determined. Cross objection is nothing but an appeal, a cross appeal at that. This apart, raising of additional ground would only enable the authority concern to correctly assess the tax liability of the assessee. Similar view has been expressed by the co-ordinate bench in the case of ITO vs. Jasjit Singh (Del) in cross objection Nos. 138 to 142/Del/2014 interim order dated 23.09.2014. We thus do not see any impediment in entertaining the additional grounds. The relevant facts are available on record.
21.6 In so far as the merits of the claim made in additional ground is concerned, we observe that where the AO has readjusted the quantum of depreciation in the subsequent assessment year, the assessee is within its legitimate rights to be granted depreciation in AY 2009-10 as per the figures worked by the AO himself. We do not see any perceptible reason for not admitting such claim of the assessee. We also find bonafides in the plea of the assessee for raising new claim on account of depreciation by way of additional ground at this belated stage. The order for the AY 2012-13 was passed on 29.03.2015. By virtue of this order, the assessee came to know about the revision in the claim of depreciation concerning AY 2012-13. By that time, the order of the CIT(A) dated 13.12.2013 was already passed. Therefore, the assessee was incapacitated to put forward such new claim towards depreciation on goodwill amounting to Rs.5,57,63,315/- for which relevant facts are duly available on record in the light of the decision of Hon'ble Supreme court in the case of Goetze (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC) & NTPC vs. CIT 229 ITR 383 (SC).
22. In the result, additional ground raised by the assessee is allowed."
11.2 Having admitted the ad ditional ground for ad jud ication as noted above w e now t urn to the releva nt facts touc hing t he issue. As pointed out on behalf of the assesse e, a Technology Upgradation Fund Sc heme (TUFS) was introduced in 19 99 to catalyze investme nts in te xtile ind ustries. The purpose of scheme und er which the s ubsid y was given wa s sta ted to be to s us tain and prove the compe titive ness and for long t erm viability of te xtile I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 13 DCIT Vs. Chiripal Industries Ltd.
ind ustry. T he concerned ministry of textile ad opted TUFS scheme envis aging technolo gy upgr adation of the ind ustry as per the sc heme. The object of the scheme was to enhance sustainable growth in value chain fo r overall growth of textile industry. Pursuant to T UFS, cer tain subsid y benefits by way of int erest on reimbursement of loans taken from aut horized agencies for investme nt in plant and machiner y for spinning uni ts and other mac hiner ie s in textile industry was availed by textile sector.
11.3 In t his background, it was cont end ed on behalf of t he assesse e that the assessee herein as obtained subsid y by wa y of reimbursement of interest under the scheme. T he assessee has treated the afo resaid interest reimburseme nt s ubsid y mistake nly as revenue receip t i n the P&L account and disclosed the same b y way of net off from interest e xpens es. The ta xable income was thus stated to be overstat ed to this exte nt. It was co nte nded that the chara cter of such subsid y in t he hands of recipient assessee is capital in nat ure having regard to the purpose for which the s ubsidy was give n i.e. acceleration of development of textil e industry.
11.4 Reference was made to the note s forming part of t he financial account de tailing the i nterest subsidy aggregating to Rs.2,16, 45, 161/- as reduced from the interest costs. Our attention was also adverted to Notes to t he Financia l State me nt wherein suitable disclosure was mad e towards claim of interest sub sid y.
11.5 In the circumstances , it is the case of t he assessee that where suc h subsidy is intend ed and bestowed not with t he object of running the business but with a solemn object of attracting industr ial investment or exp ansio n, such interest subsid y is in t he nat ure of ca pital r eceipt a nd therefore cannot b e reduced from the in terest costs. It is thus cont end ed that such capital receip t is not chargeable to t ax in the relevant AY 2012-13 in question being a capital receipt.
12. We find that the issue is squarely cover ed in favour of the assee ssee by the decision of t he Hon'ble Supreme Cour t in CIT vs. Chaphalkar Brother s Pune [2017] 88 ta xmann.com 178 (SC); C IT vs. Meghalaya Steels Ltd . [2016] 67 taxmann. com 158 (SC ) and CIT vs. Sham L al Bansal [20 11] 11 taxmann. com 369 (P&H). In the light of aforesaid jud gments, we find merit in the plea of the assessee that having regar d to t he object a nd purposes of the scheme, the interest subsid y is required to be treated as capital receipt of non-ta xable I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 14 DCIT Vs. Chiripal Industries Ltd.
nat ure having regard to the propositions laid down in the judicial pr oceedings noted above.
13. The aforesaid view is also for tified by the legislature in view of a mendment as per sub clause (xviii) to Section 2(24) of the IT Act as inserted by the Finance Act, 20 15 which read s as under:
"[(xviii) assistance in the f orm of a subsidy or grant or cas h ince ntive or d uty d rawback or waiver or concession or reimburseme nt (by whatever nam e ca lled ) by the Centra l Government or a Sta te Government or any aut hority or body or agency i n cash or kind to the assesse e [other tha n, --
(a) the subsidy or gra nt or reimbursement whic h is tak en into account for d etermination of the actual c ost of t he asset in a ccor dance with the pro visions of Explanation 10 to clause (1) of section 43; or
(b) ............... .......... ."
A cla im on be half of the assessee, as a c orollary to sai d amendme nt, suc h a capital receipt m ay become c hargeable to tax which is otherwise a capital receipt w. e. f. 01. 04. 2016. The aforesaid amendment has t hus co me into force w.e.f. AY 2016-17 w hich reinforces the impression of such capita l receipt bei ng o ut of tax net f or the assessme nt year in questio n.
14. Thus, on first principles, we find our selves in tot al agreement wit h the contentions on behalf of the assessee for no n char geability o f suc h capital receipts rega rd less of its treatment in books as reve nue receipt s. We are however conscious in same v ain that the issue ha s been raised for t he fir st time before the Tribunal. The Revenue authorities ha d no occasion to look into t he relevant facts. We accord ingly consid er it expedient to restore the issue to the file of t he A O for verification of relevant fact ual aspe cts toward s quantum of receipt of interest subsidy and releva nt documentation in this regard , if so considered necessary in t he opinion of t he AO. The AO sha ll accordingly gran t relief to the assessee in accordance with law in t he light of our observations and I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 15 DCIT Vs. Chiripal Industries Ltd.
shall e xclude t he s ubsidy from the ambit of taxation on being satisfied about the factual correct ness on quantum of suc h subsid y.
15. In t he result, the a dditional gro und raised by the assesse e in its cross objectio n is allowed for statistica l purposes.
14.1 As the issue raised before us is identical to issue discussed above, therefore respectfully following the order of the coordinate bench discussed above, we admit the additional ground of appeal of the assessee and set aside the issue to the file of the AO for fresh adjudication as per the provisions of law and in the light of the order of the tribunal in the case of M/s Jindal worldwide limited discussed above. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
14.2 Before parting, it is important to note that the appeal before us emanates from the order passed under section 143(3) read with section 147 of the Act. Therefore, a question strikes to our mind whether the assessee can seek relief by way of additional claimed raised in the additional ground of appeal in the income escaping proceedings. In this regard, we note that there was identical issue before the Hon'ble Karnataka High Court raised in the case of Karnataka State Co-operative Apex Bank Limited Vs. DCIT reported in 130 taxmann.com 114 wherein it was held as under:
11. In the instant case, admittedly, there is no original assessment order in the case of the assessee and it was only an intimation under section 143(l) of the Act, which cannot be treated to be an order in view of decision of the Supreme Court in Rajesh Jhaveri (supra). Therefore, the question of reassessment of the income of the assessee by the Assessing Officer does not arise. In the proceeding under section 148 of the Act, it was the first assessment and the same could have been done considering all the claims of the assessee.
Therefore, the decision rendered by the Supreme Court in Sun Engineering Works (P.) Ltd. had no application to the fact situation of the case. Even assuming for the sake of argument that if an intimation under section 143(1) of the Act is considered to be an order of assessment, in the subsequent reassessment proceeding, the original assessment proceeding get effaced and the Assessing Officer was required to consider the proceeding de novo and to consider the claim of the assessee.
14.3 The above judgment was rendered by the Hon'ble Karnataka High Court after considering the decisions of the Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC), V. Jaganmohan Rao v. CIT and Excess Profit Tax, [1970] 75 ITR 373 (SC), ITO v. Mewalal Dwarka Prasad, [1989] 176 ITR 529/43 Taxman 40 (SC), 'ITO v. K.L. Srihari (HUF) [2001] 118 Taxman 890/250 ITR 193 (SC), and 'Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd.' [2007] 291 ITR 500/161 Taxman 316 (SC) and reached a conclusion that even assuming for the sake of argument that if an intimation under section 143(1) of the Act is considered to be I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 16 DCIT Vs. Chiripal Industries Ltd.
an order of assessment, in the subsequent reassessment proceedings, the original assessment proceedings gets effaced and the Assessing Officer was required to consider the proceedings de novo and to consider the claim of the assessee.
14.4 It is also to be noted that the above judgment was challenged before the Hon'ble Supreme Court which has been admitted by the Hon'ble Supreme Court reported in 138 taxmann.com 23. However, we note that no stay on the operation of Hon'ble Karnataka High Court has been granted. Thus, respectfully following the judgment of Hon'ble Karnataka High Court, we set aside the issue raised by the assessee in the additional ground of appeal for fresh adjudication as per the provisions of law. Hence, the additional ground of appeal of the assessee is allowed for the statistical purposes.
16.1. Respectfully following the above decision of Co-ordinate Bench of this Tribunal, we hereby set aside the issue of TUFS subsidy received by the assessee to the file of Jurisdictional Assessing Officer for fresh consideration by giving proper opportunity of hearing to the assessee and allow the claim as per the provisions of law. Thus the Ground raised by the Assessee are allowed for statistical purpose.
17. In the result, the Cross Objection filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 30 -07-2025 Sd/- Sd/-
(ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad : Dated 30/07/2025
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No 17
DCIT Vs. Chiripal Industries Ltd.
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद