Income Tax Appellate Tribunal - Raipur
Bhagwati Power And Steel Ltd., Raipur, ... vs Assistant Commissioner Of Income Tax, ... on 31 May, 2024
आयकर अपीलीय अिधकरण, रायपुर यायपीठ, रायपुर
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR
ी र वश सूद, याियक सद य एवं ी अ ण खोड़ पया, लेखा सद य के सम ।
BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
(ITA No. 84/RPR/2024)
(Assessment Year: 2020-21)
Bhagwati Power and Steel Limited, V Assistant Commissioner of Income Tax-
D-22, Sector 5, Devendra Nagar, S Central Circle 2, Raipur
Raipur- 492001, Chhattisgarh
PAN: AACCB4646A
(अपीलाथ /Appellant) . ( यथ / Respondent)
.
िनधा रती क ओर से /Assessee by : Shri Amit Ganatra & Shri Vivek Churiwala,
CA's
राज व क ओर से / Revenue by : Shri S. L. Anuragi, CIT-DR
सुनवाई क तार ख / Date of Hearing : 10.05.2 024
घोषणा क तार ख / Date of Pronouncement : 31.05.2 024
आदे श / O R D E R
Per Arun Khodpia, AM:
The present appeal is filed by the assessee against the order of the Assistant Commissioner of Income Tax, Central Circle-2, Raipur (in short "The Ld. AO") u/s 143(3) r.w.s. 144C(13) dated 29.01.2024, wherein certain issue regarding specified domestic transaction reported in form no. 3CB furnished u/s 92E of the Income Tax Act, 1961 (in short "The Act") has been referred to the Transfer Pricing Officer (in short "Ld. TPO") under the prescribed guidelines issued by CBDT vide instruction no. 3/2016 dated 10.03.2016 with regard to computation of Arm's Length Price (ALP). The order of Ld. TPO u/s 92CA(3) dated 15.12.2022 in this context proposing downward adjustment was communicated to the assessee by issuing a draft assessment order u/s 2 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited 144C(1) of the Act, which was passed and served on 31.03.2023. The assessee being aggrieved with the draft assessment order has filed objections before the Dispute Resolution Pannel (DRP). The objections of the assessee, after affording opportunities of being heard were disposed of by the Ld. DRP vide their order u/s 144C(5) of the Act on 30.12.2023. The directions accorded by the Ld. DRP have been incorporated by the Ld. AO in the impugned order, making certain disallowances. Being dissatisfied with such additions the assessee has filed the present appeal.
2. The grounds of appeal raised by the assessee are as under:
A. Ground No. 1 -- Disallowance of deduction under sec 80-IA of the Act on account of downward adjustment in arm's length price for transfer of power from captive power unit ('eligible unit') to stee manufacturing unit ('non-eligible unit') [ INR 17,15,69,527/-1] 1.0 That on the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer ('Ld. TPO') / AO / Hon'ble Dispute Resolution Panel ('DRP') erred in reducing claim for deduction under sec 80-IA of the Act by INR 17,15,69,527/- considering arm's length price (ALP) for transfer of power from eligible unit to non-eligible unit at the rate at which power generating company supplies power to power distribution company [INR 3.42 / unit] instead of the rate at which Chhattisgarh State Power Distribution Company Limited ('CSPDCL') supplies power to captive power plant [INR 5.77/unit].
1.1 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in confirming the concept of tested party and application of FAR analysis by the Ld. TPO at the time of determining the arm's length price for transfer of power under Comparable Uncontrolled Price (CUP) method without appreciating the fact that concept of tested party does not apply to CUP method.3 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited 1.2 That on the facts and in the circumstances of the case and in law and without prejudice to the preceding grounds, the Ld. AO / Hon'ble DRP erred in upholding downward adjustment to arm's length price for transfer of power by disregarding the principle laid down by Jurisdictional Tribunal & High Court a subsequently affirmed by Apex Court in the case of CIT vs. Jindal Steel & Power Ltd. [2023] 157 taxmann.com 207 (SC) that market value / price for transfer of power from eligible unit to non-eligible unit should be the price at which State Electricity Board supplies power to consumer in open market.
B. Ground No. 2 - Disallowance of deduction under sec 80G of the Act [INR 4,00,000/-] 2.0 That on the facts and in the circumstances of the case and in law, the Ld. AO / Hon'ble DRP erred in denying deduction of INR 4,00,000/- claimed by the appellant under sec 80G of the Act.
C. Ground No. 3 -- Double Disallowance of deduction under section 80G of the Act [ INR 4,00,000/-] 3.0 That on the facts and in the circumstances of the case and in law and without prejudice to the preceding ground, the Ld. AO erred in making double disallowance of INR 4,00,000/- by not allowing claim for deduction under sec 80G of the Act and making separate addition of said amount to total income.
D. Ground No. 4 -- Non adjustment of brought forward MAT Credit 4.0 That on the facts and in the circumstances of the case and in law and without prejudice to preceding grounds, the Ld. AO erred in not adjusting available MAT Credit from tax payable under norml provisions of the Act [to the extent of difference between tax under normal provisions and MAT] without adducing any reasons for the same.
E. Ground No. 5 -- Short Grant of interest under sec 244A of the Act.
5.0 That on the facts and in the circumstances of the case and in law, the Ld. AO erred in computing interest under section 244A of the Act for a period of 15 months instead of 46 months (i.e. April 2020 to January 2024) without adducing any reasons for the same.
F. Ground No. 6 -- Difference in total income as per assessment order & computation sheet.
4 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited 6.0 That on the facts and in the circumstances of the case and in law and without prejudice to preceding ground, the Ld. AO erred in computing tax on total income of INR 8,52,84,930/- instead of total income of INR 8,52,70,750/- computed in the assessment order.
G. Ground No. 7: Initiation of penalty proceedings under sec 271AA & Sec 270A of the Act 7.0 That on the facts and in the circumstances of the case and in law, Ld. AO erred in initiating penalty proceedings under sec 27 IAA & 270A of the Act.
H. Ground No. 8 - General
8.0 That on the facts and circumstances of the case and in law, draft
assessment order under section 144C(1) of the Act dated 31-03-2023, final assessment order under section 143(3) r.w.s. 144C(13) of the Act date 29- 01-2024 and the directions issued by Hon'ble DRP under section 144C(5) of the Act dated 30-12-2023 are without jurisdiction, invalid, bad in law and are liable to be quashed.
3. Briefly stated, the assessee is a company filed its returned of income electronically for the AY 2020-21 on 18.01.2021 declaring total income of Rs. Nil. Case of the assessee was selected for scrutiny through CASS. Notice u/s 143(2) and 142(1) of the Act a/w detailed questionnaire were issued. From the assessment order, it is emanating that during the year under consideration, the assessee was engaged in manufacturing of Sponge Iron, Billets and Structural Steel a/w running of a captive power plant. The main source of income is through sale / revenue of these products manufactured by the assessee company. Ld. AO after perusal of the submissions of the assessee and explanations being dissatisfied on certain issues have made certain additions.
5 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited
4. It is noticed by the Ld. AO that during the year under consideration the assessee has reported aggregate value of specified domestic transactions at Rs. 42,14,95,059/- in form no. 3CEB furnished u/s 92E of the Act. The Assessee has generated power and transferred the goods to its associated enterprises and for this, the method used for price determination is arm's length u/s 92C(1) of the Act. For the said reason, the case of the assessee was referred to Transfer Pricing Officer (hereinafter referred to as "TPO"), as per guideline by CBDT Instruction 3/2016 dated 10.03.2016 to compute the price at arm's length for AY 2020-21. In due course, after conducting necessary proceedings, the TPO has passed an order u/s 92CA(3) of the Act and after determination of Arm's Length Price (ALP) rate, computed the downward adjustment as per following statement:
Sl. Particulars of Total Units Amount of Rate per Rate per ALP No. Supply of of Power Unit ALP unit Power Transferred transferred (Rs.) i. Bhagwati 7,30,77,641 42,14,95,059/- 5.77/Kwh 3.42/Kwh 24,99,25,532/-
Power and
steel Limited
(Manufacturing
Division)
ALP revenue to eligible units (A) 24,99,25,532/-
Total revenue of eligible unit (B) 42,14,95,059/-
Downward Adjustment (B-A) 17,15,69,527/-
5. The aforesaid downward adjustment for Rs. 17,15,69,527/- was added to the income of the assessee for the AY 2020-21, accordingly a draft assessment order u/s 144C(1) was passed on 31.03.2023. To 6 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited challenge the said draft assessment order, the assessee has filed its objections before the Dispute Resolution Pannel (herein after referred to as "DRP") u/s 144C(2) of the Act within the stipulated time. After due consideration to the objections raised by the assessee, the DRP has passed an order u/s 144C(5) of the Act on 30.12.2023, wherein the view taken by the Ld. TPO was approved and the Ld. AO was directed to give effect of the downward adjustment by bringing down the deduction claimed u/s 80IA as per the downward adjustments proposed by the Ld. TPO.
6. Another observations of the Ld. AO was pertaining to claim of deduction by the assessee u/s 80G of the Act for Rs. 4 lacs (Being 50% of Rs. 8 lac). It is noticed by the Ld. AO that the assessee has added back the amount of CSR and donation of Rs. 24,30,309/-, and has further claimed deduction u/s 80G of Rs. 4.00 lacs, which was spend out of the said CSR expense. A show cause in this respect issued to the assessee to furnish its explanation, in response a detailed submission was furnished by the assessee but the same was rejected and an addition of Rs. 4.00 lac was made.
7. Aggrieved by the aforesaid additions, assessee preferred an appeal before us, against the order of Ld. AO framed u/s 143(3) r.w.s. 144C(13) of the Act dated 29.01.2024.7 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited
8. Ground wise discussion, delegation and adjudication to the present appeal are as follows:
9. Ground No. 1: Disallowance of deduction u/s 80IA 9.1 The facts pertaining to issue and the written submissions, as furnished before us by the Ld. AR of the assessee are extracted as under:
A. Ground No. 1 - Disallowance of deduction under sec 80-IA of the Act on account of downward adjustment in arm's length price for transfer of power from captive power unit ('eligible unit') to steel manufacturing unit ('non- eligible unit') [INR 17,15,69,527/-] 1.0 Facts of the case 1.1 Bhagwati Power and Steel Limited ('BPSL' or 'assessee' or 'Company') which is engaged in the manufacture of sponge iron, billets, re-rolled products through hot charging process and generation of power, had e-filed its return of income for AY 2020-21 on 18-01-2021, declaring an income under normal provisions as Nil.
1.2 The assessee had broadly two divisions, viz. (i) steel division (non -eligible unit) & (ii) power division (eligible unit). The assessee had computed deduction u/s. 801A of the Income-tax Act, 1961 ('Act') of INR 18,74,05,572/- (claim was restricted to the amount of gross total income of INR 10,03,06,795) The aforesaid deduction was computed considering the transfer price of power sold to its steel division at INR 5.77/ unit [based on tariff issued by Chhattisgarh State Electricity Regulatory Commission (CSERC)(Category -
HV-4, Steel)].
1.3 On a perusal of the Form 3CEB, it was observed by the AO that the assessee had entered into certain Specified Domestic Transactions (SDT) during the year. Accordingly, the AO after getting the approval of the PCIT-I, Raipur made a reference to the Transfer Pricing Officer (TPO), Ahmedabad for computation of Arm's Length Price (ALP) in relation to the specified domestic transaction.
1.4 The TPO vide his order passed u/s. 92CA(3) of the Act dated 15-12-2022 suggested a downward adjustment of Rs. 17,15,69,527/- w.r.t the value of power sold by the assessee to its steel division which is as under:
Particulars Amount (INR)
Transaction value @Rs.5.77/unit 42,14,95,059
Transaction value @Rs. 3.42/unit 24,99,25,532
ALP Adjustment 17,15,69,527
1.5 After receiving the order of the TPO u/s. 92CA(3) of the Act, dated 15-11-2022, the A.O passed the draft assessment order under sec 144C(1) dated 31-03-2023 giving effect to the aforesaid downward adjustment and treated the entire deduction under sec 80-IA of the Act 8 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited as income and also disallowed its claim for deduction u/s. 801A of the Act. The assessee filed an objection before the Dispute Resolution Panel (DRP) which vide its order dated 30-12- 2023 upheld the contentions of the TPO / AO.
1.6 Basis the directions of the DRP, the AO passed the final assessment order dated 29-01-2024 computing the total income under normal provisions at INR 8,52,70,750/-. Being aggrieved with the aforesaid order, the assessee filed before the Raipur Bench of the Hon'ble ITAT.
2.0 Case laws in favour of the assessee on the aforesaid issue
Case Laws Related to Decision
Assessment Year
DCIT -vs.- Mahendra Sponge 2015-16 "market value" of power supplied
and Power (P.) Ltd. [20241 159 by assessee to its steel division
taxmann.com 147 (Raipur - shall be computed by considering
Trib.) [Refer Page Nos. 4-13] rate at which power is available in
2013-14 open market, namely, price that is
ITA No.197/RPR(2017 dated 29- charged by electricity board and it
072022. [Refer Page Nos. 24-291 should not be compared with rate
2014-15
of power when it was sold to a
ITA No.196/RPR/2019 dated 05-08-
supplier.
2022. [Refer Page Nos. 30-51]
ACIT -vs.- Animesh Ispat 2016-17 In cases where assessee-company
Private Limited [2023] 152 purchased power from its AE, the
taxmann.com ALP of said transaction shall be
market value of power at which
297 (Raipur - Trib.)
power was available to consumers
[Refer Page Nos. 52 - 61] in open market and not the rate at
which power was purchased by
SEB who was a supplier.
DCIT -vs.- Hira Ferro Alloys 2009-10 to 2011-12 Market value of power supplied by
Ltd 120181 90 taxmann.com 430 assessee should be computed
(Raipur considering rate of power charged
- Trib.) by Chhattisgarh State Electricity
Board (CSEB) for supply of
[Refer Page Nos. 62 - 731
electricity to its industrial
consumers.
DCIT -vs.- Godawari Power & 2011-12 Market value of power supplied by
Ispat assessee to steel division should be
computed considering rate of
Ltd 120181 100 taxmann.com power charged by Chhattisgarh
528 State Electricity Board for supply
(Raipur - Trib.) of electricity to industrial
consumers.
[Refer Page Nos. 74 - 87]
CIT -vs.- Jindal Steel & Power 2001-02 to 2011-12 Apex Court has dismissed
multiple Revenue appeals and also
9 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited
Limited [2023] 157 allowed assessee's appeal in the
taxmann.com 207 (SC) case of ITC Ltd (CA No. 9920 of
2016) on the issue of transfer price
[Refer Page Nos. 88 - 122] of power and held that market
value / transfer price of power
And supplied by the eligible unit
(power plant) to its non-eligible
unit (industrial undertaking)
ITC Ltd (CA No. 9920 of 2016)
should be computed by
dated 07-12-2023. considering the rate at which the [Refer Page Nos. 123 - 126] State Electricity Board supplied power to the industrial consumers in the open market. Further, the principle that emanates from the judgement is that the said rate should be considered as arm's length price for the purpose of transfer pricing. The said decision of Apex Court has approved decisions of multiple high courts including jurisdictional high court in the case of CIT, Raipur -vs.-
Godawari Power & Ispat Limited (2014) 42 taxmann.com 551 (Chhattisgarh). [Refer Page Nos. 127 - 132] DCIT -vs.- M/S. IFB Agro 2013-14 & 2014-15 Kolkata ITAT while dealing with Industries Ltd (I.T.A. Nos. 490 issue relating to determination of arm's length price for transfer of & 491/kol/2019) dated 08-02- power from eligible unit to non-
2024. eligible unit relied on the decision of Apex Court in the Jindal Steel [Refer Page Nos. 133 - 150] & Power Limited (supra) and held that power tariff maintained by WBSEB for selling of power to its consumers shall be the arm's length price for transfer of power from eligible unit to non-eligible unit.
The said decision clearly shows
that the decision of Supreme Court
in the case of Jindal Steel & Power
Limited (supra) even applies to
cases post introduction of
provisions of specified domestic
transaction in case of transfer price
of power.
Nectar Lifesciences Ltd -vs.- 2013-14 Market rate on which any
ACIT [2022] 138 taxmann.com industrial undertaking or consumer
557 (Delhi- Trib.) would be getting electricity should
be applied as CUP for
[Refer Page Nos. 151 - 1621 benchmarking transaction of sale
of electricity.
10 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited
2.1 In addition to above, there are multiple decisions of Tribunals (including Kolkata,
Delhi, Mumbai, Ahmedabad, Hyderabad etc) for the period post the introduction of specified domestic transaction wherein it has been held that arms-length price of power should be the market rate at which the State Electricity Board supplied power to the industrial consumers in the open market. Few of the decisions have been summarised below and not discussed in detail for the sake of brevity:
DCIT -vs.- Vishal Fabrics Ltd [20221 139 taxmann.com 30 (Ahmedabad - Trib.) Tata Chemicals Ltd -vs.- DCIT 120231 155 taxmann.com 461 (Mumbai - Trib.) DCIT -vs.- Dhunseri Ventures Limited [20221 144 taxmann.com 110 (Kolkata - Trib.) DCIT -vs.- Birla Corporation Ltd. (ITA Nos. 2142 & 2143/Kol/2018) dated 07-02- 2023.
ACIT -vs.- Philips Carbon Black Ltd [20221 142 taxmann.com 325 (Kolkata - Trib.) DCIT -vs.- Kesoram Industries Ltd (ITA. No. 1864-1778/Kol/2019) dated 28-10-2021. Jayant Agro Organics Limited -vs.- Addl. CIT (ITA No.6073-6074/Mum/2019) dated 14-09-2021.
Bharathi Cement Corporation Pvt Ltd -vs.- DCIT [20231 151 taxmann.com 151 (Hyd.
- Trib.).
Sree Rayalaseema Hi-Strength Hypo Ltd -vs.- DCIT [20231 146 taxmann.com 168 (Hyd.- Trib.) Meghmani Finechem Ltd -vs.- NeAC [20231 151 taxmann.com 440 (Ahd. - Trib.) ACIT -vs.- Nandan Denim Ltd [20231 156 taxmann.com 287 (Ahd. - Trib.) 2.2 Needless to say, the law propounded by the Supreme Court is to be considered as the law of the land. Further, t} principles of judicial discipline require that orders of higher appellate authorities should be followed unreservedly subordinate authorities.
9.2 Based on aforesaid facts and submissions, it is the assertion of Ld. AR that since the issue in hand is already dealt with, deliberated and decided by the by the coordinate bench of the ITAT, Raipur in the case of DCIT vs. Mahendra Sponge and Power (P.) Ltd. in ITA NO. 299/RPR/2023 reported in (2024) 159 taxmann.com 147(Raipur-Trib). Dated 30.01.2023, wherein the relevant observations of the tribunal pertaining to the computation of ALP of power transferred for the purpose of claim u/s 80IA has been discussed at length and was decided in favour of the assessee in terms of judgments and 11 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited principle of law laid down by Hon'ble Apex Court and Hon'ble Jurisdictional High Court, are as under:
11. We have thoughtfully considered the issue in hand in the backdrop of the contentions advanced by the Ld. authorized representatives of both the parties. As stated by the Ld. AR, and rightly so, the issue involved in the present appeal is squarely covered by the aforementioned orders passed by the Tribunal in assessee's own cases, viz. in ITA No. 159/BLPR/201 1 dated 19-6 2015 for A.Y. 2008-09, ITA No. 197/RPR/2017 dated 29-7-2022 for A.Y. 2013-14 and ITA No. 196/RPR/2019 dated 5-
8-2022 for A.Y. 2014-15 as well as the by the judgment of the Hon'ble High Court of Chhattisgarh in the case of Godawari Power and [spat Ltd (supra). We find that the Tribunal vide its order passed in the case of Mahendra Sponge & Power Ltd. (Supra) had after exhaustive deliberations vacated the disallowance of the assessee l s claim for deduction u/s 801A(4)(iv)(a) of the Act, observing as under:
"6. We shall first deal with the grievance of the department that the CIT(Appeals) had gravel) erred in law and facts of the case in vacating the disallowance of the assessee's claim for deduction u/s.801A(4)(iv)(a) of the Act amounting to Rs. 3,86,20,902/-.
7. Controversy involved qua the issue in hand lies in a narrow compass, i.e., sustainability of the triggering of Section 801A(8) of the Act by the A.O for declining the assessee's claim of deduction u/s. of Rs. 3,86,20,902/-.
8. Shorn of unnecessary details, the assessee company which is engaged in the business manufacturing and trading of sponge iron, steel ingots and generation of power has two divisions, viz (1) steel division; and (ii) power division. The profit of the power division eligible for deduction u/s. 801A(4)(iv)(a) of the Act. This is the seventh year of claim deduction by the assessee u/s. 801A(4)(iv)(a) of the Act.12 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited
9. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had transferred electricity produced 'in its captive power plant to its steel division and associate concerns, while for the remaining electricity was sold to the State electricity board, viz. Chattisgarh State Electricity Board (For short "CSEB"). It was observed by the A.O. that the assesee company had transferred/sold electricity generated by its power plant as under:
Sl.No Particulars No. of Units Rate/unit . 1. Electricity Board 25,94,801 1.88 2. Steel Division 2,81,62,876 4.30 3. Animesh Ispat (P) Ltd. 1,92,34,190 4.30
Considering the fact that though the assessee company had sold power to CSEB at the rate of Rs. 1.88 per unit, but had sold/transferred the same to its steel division and associate concerns at a higher value, i.e, at the rate of Rs. 4.30 per unit, the AO with the prior approval of the Pr. CIT, Raipur made a reference u/s.92CA(1) of the Act to the Transfer Pricing Officer (TPO) for computing the arm's length price (ALP) of the specified domestic transactions of the assessee with its associate enterprise viz. Animesh Ispat (P) Ltd. The T PO vide his order passed u/s.92CA(3) of the Act, dated 31-10-2017 did not find favour with the benchmarking carried out by the assessee of its specified domestic transactions with its AE. Accordingly, the TPO on the basis of the reasoning recorded in his aforesaid order adopted the rate of Rs. 1.88/- per unit, i.e, the rate at which electricity was sold by the assessee to CSEB and determined the ALP of the assessee's specified domestic transaction at Rs. 1.88/- per unit. On the basis of his aforesaid observations, the TPO proposed a downward adjustment of Rs. 1 1,47,00,658/- and advised a revision of the assessee's claim for deduction u/s. 801B of the Act. Accordingly, the A.O after receiving the order passed by the TPO u/s. 92CA(3) of the Act, dated 31-10-2017, therein vide his order passed u/s 143(3), dated 26-12-2017 reduced the assessee's claim for deduction u/s. 801A(4)(iv) to Rs. Nil.
10. Before us, it is the claim of the Ld. Authorized Representative (for short 'AR') for the assessee that the issue involved in the present appeal is squarely covered by the order passed by the Tribunal in its own case for the immediately preceding assessment year 201314 in ITA No. 197/RPR/2017, dated 29-7-2022, wherein, the declining by the AO of the assessee l s claim u/s.801A(4)(iv) on identical facts had been restored by the Tribunal.13 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited 11 . The Ld. Departmental Representative (for short 'DR') fairly conceded to the submissions put forth by the Ld. AR.
12. Ostensibly, as stated by the Ld. AR, and rightly so, the aforesaid issue in hand is squarely covered by the order that was passed by the Tribunal while disposing off the appeal of the assessee for the immediately preceding year i.e, assessment year 2013-14, wherein the Tribunal after relying on its earlier order had observed as under:
"10. Controversy involved qua the issue in hand lies in a narrow compass, i.e., as to whether or not the A.O had rightly triggered the provisions of Section 801A(8) of the Act by adopting the domestic purchase price of electricity by CSEB as the "market rate" and justifiably scaled down the assessee's claim for deduction u/s.801A(4)(iv)(a) by an amount of Rs. 4,38,75,880/-?. In our considered view, as claimed by the Ld. AR, and rightly so, the aforesaid issue as on date is squarely covered by the order of the Tribunal in the assessee's own case for the assessment year 2008-09, i.e.AClT-1(2) v. Mahindra Sponge and Power Limited i ITANo.159/BLPR/2011, dated 19-6-2015. In its aforesaid order the Tribunal had after drawin support from the judgment of the Hon'ble High Court of Chhattisgarh in the case of CIT v Godawari Power & Ispat Ltd. (supra), found favor with the claim of the assessee and observed that the "market value" of the power supplied by the assessee to its steel division was rightl computed by considering the rate at which power was available in the open market, namel the price that was charged by the electricity board. For the sake of clarity, the relevan observations of the Tribunal in the assessee's own case for A.Y. 2008-09 are culled out a under:
6. At the outset, it is informed that the issue is squarely covered by the decision of Bilaspur Bench of the Tribunal in the case of ACIT v/s Godavari Power & lspat Ltd. [20.11]-133-ITD 502 (Bilaspur). In the compilation of the assessee at page 12, the respondent-assessee has also placed reliance on the order of Hon'ble High Court of Chhattisgarh at Bilaspur in the Tax case No. 31, 34,32 of 2012 dated 2nd August, 2013 pronounced in the case of CIT v Godavari Power & Ispat Ltd. wherein on this very fact that the said assessee was a manufacturer of Iron steel and captive power plant has supplied electricity to its manufacturer unit which was at higher rate than the power supplied to Chhattisgarh State Electricity Board; the Hon'ble High Court has held as under :
"28. The Chhattisgarh-Company is a company which is generating power. It is neither consumer of the electricity, nor it is supplying power to a consumer. It 14 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited also cannot sell power to any consumer directly: it has to compulsorily sell it to the Board.
29. The power sold by the Chhattisgarh-Company to the Board is a sale to a company which itself supplies power to the consumers. It is not sale of power to the consumer.
30. The Steel-Division of the Assessee is a consumer. The CPP of the Assessee supplies electricity to the Steel-Division. Had the Steel-Division not taken power from the CPP then it had to purchase power from the Board. The CPP has charged the same rate from the Steel Division that the Steel-Division had to pay to the Board if the power was purchased from the Board.
31. The market value of the power supplied to the Steel-Division should not be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market.
32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer.
33. It is admitted by the Department that in Chhattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power.
34. The CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders.
35. In view of above, the question is decided against the Department and in favour of the Assessee. The tax appeals have no merit. They are dismissed.
7. Since, this issue has already been decided by Hon'ble Jurisdictional High Court as discussed hereinabove, therefore, we find no force in this 15 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited ground of Revenue. Before we conclude this judgment, it is also worth to mentioned that the Id. CIT(A) has taken into consideration "market price"
and thereafter granted part relief by sustaining the disallowance of Rs. 1 1,76,763/-. The relevant paragraph of ld. ClT(A) has already been reproduced above. The Id. AR has stated at BAR that the assessee has not challenged the said partial relief and no appeal was preferred. Thus, under the totality of the facts and circumstance of the case, as also law pronounced by the Hon'ble Jurisdictional High Court, we hereby reject this ground of revenue."
11. As the facts and issue involved in the present appeal of the assessee remains the same as were there before the Tribunal in its own case for AY 2008-09, therefore, we are unable to comprehend as to on what basis the A.O. had declined to follow the same. At this stage, we may herein observe that it is neither a fact nor the case of the department that the aforesaid order of the Tribunal had either been set-aside or stayed by the Hon'ble High Court which would have otherwise justified the declining on its part to follow the same. Apart from that, we find absolutely no justification on the part of the A.O. in not following the binding judgment of the Hon'ble High Court in the case of CIT v. Godawari Power & [spat Ltd. (supra) which seizes the issue under consideration. Admittedly, the Department had assailed the aforesaid judgment of the Hon'ble High Court by filing a SLP before the Hon'ble Apex Court but again,as long as the said judicial pronouncement is not set-aside or stayed by the Hon'ble Apex Court the same holds the ground and have to be ritually followed by the lower authorities. We, thus, in terms of our aforesaid observations finding no merit in the declining of the assessee's claim for deduction u/s.801A(4)(iv)(a) of Rs. 4,38,73,880/- by the A.O. which had rightly been vacated by the CIT(Appeals), uphold the latters order. Thus, the Grounds of appeal Nos. (a) to (c) raised by the Revenue are dismissed in terms of our aforesaid observations."
16 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited We, thus, respectfully following the view taken by the Tribunal in the assessee's own case as culled out hereinabove, finding no merit in the declining of the assessee's claim for deduction u/s. 80IA(4)(iv)(a) of Rs. 3,86,20,992/- by the A.O. during the year under consideration, which had rightly been vacated by the CIT(Appeals), uphold the latter's order. Thus, the Grounds of appeal No(s). 1 & 2 raised by the Revenue are dismissed in terms of our aforesaid observations."
9.3 In view of aforesaid observations, since the issue is duly deliberated upon by the Hon'ble Jurisdictional High Court of Chhattisgarh in the case of CIT v Godavari Power & Ispat Ltd. (supra), wherein Hon'ble Court has decided that "the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier; it should have been compared with the market value of power supplied to a consumer".
Whereas, in the present case, against the binding judgment of the Hon'ble High Court, the Arm's Length Price (ALP) adopted for transfer of power from eligible unit to non-eligible unit at the rate at which power generating company supply powers to power distribution company by the Ld. AO on the recommendation of Ld. TPO which was further approved by Ld. DRP instead of the rate at which Chhattisgarh State Power Distribution Company Ltd. supplies the power to its consumers. The view of Hon'ble Jurisdictional High Court was subsequently affirmed by the Apex Court in the case of CIT Vs. Jindal Steel and Power Ltd. reported in (2023) 157 Taxmann.com 207 (SC) (supra),wherein Hon'ble Apex Court as held as under:
17 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited
25. Therefore, the expression "market value" in relation to any goods as defined by the explanation below the proviso to sub-section (8) of Section 80-IA would mean the price of such goods determined in an environment of free trade or competition. "Market value" is an expression which denotes the price of a good arrived at between a buyer and a seller in the open market i.e., where the transaction takes place in the normal course of trading. Such pricing is unfettered by any control or regulation; rather, it is determined by the economics of demand and supply.
26. Under the electricity regime in force, an industrial consumer could purchase electricity from the State Electricity Board or avail electricity produced by its own captive power generating unit. No other entity could supply electricity to any consumer. A private person could set up a power generating unit having restrictions on the use of power generated and at the same time, the tariff at which the said power plant could supply surplus power to the State Electricity Board was also liable to be determined in accordance with the statutory requirements. In the present case, as the electricity from the State Electricity Board was inadequate to meet power requirements of the industrial units of the assessee, it set up captive power plants to supply electricity to its industrial units. However, the captive power plants of the assessee could sell or supply the surplus electricity (after supplying electricity to its industrial units) to the State Electricity Board only and not to any other authority or person. Therefore, the surplus electricity had to be compulsorily supplied by the assessee to the State Electricity Board and in terms of Sections 43 and 43A of the 1948 Act, a contract was entered into between the assessee and the State Electricity Board for supply of the surplus electricity by the former to the latter. The price for supply of such electricity by the assessee to the State Electricity Board was fixed at Rs. 2.32 per unit as per the contract.
This price is, therefore, a contracted price. Further, there was no room or any elbow space for negotiation on the part of the assessee. Under the statutory regime in place, the assessee had no other alternative but to sell or supply the surplus electricity to the State Electricity Board. Being in a dominant position, the State Electricity Board could fix the price to which the assessee really had little or no scope to either oppose or negotiate. Therefore, it is evident that determination of tariff between the assessee and the State Electricity Board cannot be said to be an exercise between a buyer and a seller in a competitive environment or in the ordinary course of trade and business i.e., in the open market. Such a price cannot be said to be the price which is determined in the normal course of trade and competition.
29. Section 43A of the 1948 Act lays down the terms and conditions for determining the tariff for supply of electricity. The said provision makes it clear that tariff is determined on the basis of various parameters. That apart, it is only upon granting of specific consent that a private entity could set up a power generating unit. However, such a unit would have restrictions not only on the use of the power generated but also regarding determination of tariff at which the power generating unit could supply surplus power to the concerned State Electricity Board. Thus, determination of tariff of the surplus electricity between a power generating company and the State Electricity Board cannot be said to be an exercise between a buyer and a seller under a competitive 18 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited environment or a transaction carried out in the ordinary course of trade and commerce. It is determined in an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of the extant statutory guidelines. Therefore, the price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of trade and competition. Consequently, the price determined as per the power purchase agreement cannot be equated with the market value of power as understood in the common parlance. The price at which the surplus power supplied by the assessee to the State Electricity Board was determined entirely by the State Electricity Board in terms of the statutory regulations and the contract. Such a price cannot be equated with the market value as is understood for the purpose of Section 80IA (8). On the contrary, the rate at which State Electricity Board supplied electricity to the industrial consumers would have to be taken as the market value for computing deduction under section 80-IA of the Act.
30. Thus on a careful consideration, we are of the view that the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board's rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act.
9.4 In view of aforesaid observations, we are unable to comprehend and concur with the impugned order of Ld. AO on the aforesaid issue, which is squarely covered by the aforesaid decisions (supra). Therefore, in absence of any distinguishing facts or features which could have been brought on record by the revenue, having identical issue, respectfully following the principle of law laid down by Hon'ble High Apex Court and Hon'ble Jurisdictional High Court, ground no. 1 of the assessee's present appeal is allowed.
10. Ground no. 2 & 3: Disallowance of deduction u/s 80G of the Act and double disallowance of deduction u/s 80G of the Act.
19 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited 10.1 Apropos, ground no. 2 & 3 of the appeal regarding disallowance u/s 80G and double disallowance of the same amount, Ld. AR have furnished a written submission, the same is extracted as under:
B. Ground No. 2 - Disallowance of deduction under sec 80G of the Act [INR 1.0 Facts of the case 1.1 The assessee has incurred aggregate corporate social responsibility (CSR) expenditure and donations of INR and charged the same to the Profit & loss Account. The entire CSR expenditure of INR 24,30,309/- has been disallow( in the computation of total income under sec 37 of the Act.
1.2 The said amount includes donation of INR [Shree Marwari Pathshala Samiti (Bitti Committee) Rs.7,50,000/-, Rajasthan Gokalyan of Rs.50,000/-] which was claimed under sec 80G of the Act of INR (beil 50% of donation amount) was claimed.
1.3 Ld. AO disallowed the deduction under sec 80G of the Act of INR on the contention that one payment can be simultaneously kept in two different heads -- CSR & Donation and also when an expense is incurred under a le obligation the same cannot be in the nature of donation and be eligible for 80G benefits. The disallowance was uph by the DRP.
2.0 Submission before the Hon'ble Members 2.1 On perusal of Sec 80G of the Act, it is seen that exceptions have been carved out in respect of donations made Swachh Bharat Kosh and Clean Ganga Fund that deduction under sec 80G of the Act shall be allowed in respect of s donations only if the same does not form part of CSR expenditure under sec 135(5) of the Companies Act, 2013.
2.2 However, no such exceptions had been carved out in respect of other donations i.e. deduction under sec 80G shall be allowed in respect of such donations even if the same forms part of CSR expenditure.
2.3 The aforesaid understanding has been approved by the Co-ordinate Bench of the Tribunal in the following cases:
Power Mech Projects Ltd. -vs. DCIT [20231 156 taxmann.com 575 (Hyd. - Trib.) Optum Global Solutions (India) (P.) Ltd. -vs.- DCIT [20231 154 taxmann.com 651 (Hyd.- Trib.) Sling Media Pvt. Ltd. vs DCIT [20221 135 taxmann.com 164 (Bangalore
- Trib.) First American (India) Pvt. Ltd -vs.- ACIT (ITA No.1762/Bang/2019) JMS Mining Pvt. Limited Vs PCIT [20211 130 taxmann.com 118 (Kolkata - Trib.) 20 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited FNF India Pvt. Limited Vs ACIT [20211 133 taxmann.com 251 (Bangalore - Trib.) Goldman Sachs Services (P) Ltd. v. JCIT [20201 (117 taxmann.com
535) (ITAT Bangalore) 10.2 Apropos, the aforesaid issue regarding allowability of expenditure incurred for donation out of the amount designated for CSR expenses which were disallowed by the assessee as per provisions of section 37 of the Act, it is the submission of Ld. AR that as per recent decision by the various coordinate benches of Income Tax Appellate Tribunal, the assessee is eligible to claim deduction u/s 80G in respect of donations which form part of spend towards CSR. Reliance was placed on following judgments:
(i) Power Mech Projects Ltd. vs. Deputy Commissioner of Income Tax reported in (2023) 156 Taxmann.com 575 (Hyd. Trib) dated 31.08.2023, wherein the observations of the tribunal are as under:
8. We have gone through the record in the light of the submissions made on either side. Insofar as the payments made to the PM Relief Fund and to the institutions enumerated by the learned AR are concerned, it is a matter of verification. Learned Assessing Officer disallowed such a deduction not on the ground of non-payments, but because the assessee claimed such spending incompliance with their legal obligation under section 135 of the Companies Act.
According to the learned Assessing Officer, by showing such an amount as spending incompliance with section 135 of the Companies Act, the assessee had the benefit of compliance with such a provision and, therefore, the matter ends there insofar as such payments are concerned. Except the business expenditure covered by section 30 to 36 of the Act as stipulated under section 37(1) of the Act, no other expenditure is allowable and this position is made amply clear by insertion of Explanation-2 to section 37(1) of the Act. It says that any expenditure 21 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited incurred towards the activities relating to CSR, shall not be deemed to be an expenditure incurred for the purpose of business.
9. It is, therefore, clear that the question that is relevant to be answered on this issue is whether the donations given for compliance with the provisions under section 135 of the Companies Act, to the institutions mentioned in section 80G(2) of the Act are qualified for deduction under section 80G of the Act also.
10. Explanation-2 to section 37(1) of the Act says that any expenditure relatable to the discharge of CSR, is not a business expenditure and cannot be allowed as such. On this aspect, there is no contradiction of the fact submitted by the learned AR that in compliance with this requirement, the assessee does not claim any deduction of such amount spent as CSR under any of the provisions between 30 and 36 of the Act, and sue moto disallowed the same by adding it back to the P&L account. It is only thereafter the business income of the assessee is computed in accordance with the principles laid down for computation of the profits and gains of business or profession in sections 28 to 44DB of the Act. By this, the assessee seeks compliance with Explanation-2 of section 37 of the Act and, therefore, the Revenue shall not have any grievance. Whether or not the assessee sue moto disallowed the spend towards the CSR while computing the business income is a verifiable fact.
11. After computing the business income, while computing the total income of the assessee, the assessee is invoking the benefit under chapterVIA by claiming deduction of the sums under section 80G of the Act. According to the Revenue, when once such sum went to satisfy the requirement of section 135 of the Companies Act, the benefit gets exhausted and such an amount is no more available for the purpose of claiming deduction under section 80G of the Act.
12. Coming to the Income Tax Act, 1961, there is no express provision to support the contention of Revenue. On the other hand, section 80G(2)(iiihk) and (iiihl) of the Act expressly provide that such sums donated for Swatch Bharath Kosh and Clean Ganga Fund shall be the amounts other than the sums spent by the assessee in pursuance of CSR, meaning thereby the donations made towards 22 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited Swatch Bharath Kosh and Clean Ganga Fund spent as a part of CSR are not qualified for deduction under section 80G of the Act. Out of so many entries under section 80G(2) of the Act, only donations in respect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G(2)(iiihk) and (iiihl) of the Act.
13. This aspect has been dealt with by successive Co-ordinate Benches in the cases relied upon by the assessee. While elaborately discussing this issue in the case of JMS Mining (P.) Ltd. (supra), the Kolkata Bench of the Tribunal discussed this issue in the following manner:
"22. From a bare reading of the section 80G of the Act we note that deduction under this section has to be made in accordance with and subject to the provisions of this section i.e. section 80G of the Act. As per this section i.e. section 80G of the Act, an amount equal to fifty percent (50%) of the aggregate of the sums specified in sub-section 2 [refer subclause (iv) of Clause (a) of Sub-section 2 of section 80G of the Act read with section 80G (1) (ii)] which allows the donation given to any other Fund or any institution to which this section applies and if it satisfies the requirement of sub-section (5) of section 80G of the Act, then 50% of the donation is allowable expenditure [refer section 80G (1) (ii)]even if the assessee has included the expenditure as CSR Expenditure because there is no prohibition or restriction placed by the Parliament on such a donation even if shown as CSR expenditure. The reason for saying so is that in section 80G of the Act certain restrictions in respect of deduction in respect of two (2) donations are expressly seen in this Section. So the Parliament has expressed its intention clearly by bringing in restriction in respect of expenditure classified by an assessee company while claiming deduction u/s. 80G of the Act i.e. CSR expenditure related to Swachh Bharat Kosh and Clean Ganga Fund. So if an assessee makes some donation to these projects and include/classify it as CSR expenditure while claiming deduction u/s.
80G of the Act then it will be allowed only the amount that is other than the sums spent by the assessee in pursuance of CSR u/s. 135 of the Companies 23 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited Act. In other words, if an assessee company spends only the mandatory expenditure of 2% of net profit for CSR activity, which includes the amount of donation to Swach Bharat Kosh & Clean Ganga Fund (iiihk) and (iiihi) of clause (a) of sub-section (2) of section 80G of the Act, then deduction u/s. 80G of the Act is not allowable, which can be illustrated by giving certain examples (infra). However, in a case scenario, wherein the assessee expends the mandatory expenditure and gives donation to these two projects i.e. over and above the mandatory CSR expenditure u/s. 135 of Companies Act, that sum donated to Swach Bharat Kosh & Clean Ganga Fund will be eligible for 100% deduction u/s. 80G of the Act [refer section 80G (1)(i) and subject to section 80G (4)]. However, such a restriction in respect of expenditure made by an assessee to any other fund or institution as referred to in sub clause (iv) of clause (a) of sub-section 2 of section 80G of the Act had not been placed by the Legislature. And if the Parliament desired, it could have been made such kind of restriction or any restriction like in the case of donation to Swach Bharat Kosh & Clean Ganga Fund. So the assertion of Ld. PCIT that AO could not have allowed deduction u/s 80G of the Act to an assessee on the CSR expenditure/donation to an institution u/s 80G(2)(a)(iv) which is enjoying certificate 80G(5)(vi) of the Act, is erroneous and therefore cannot be accepted. For this, we rely on the interpretation maxim "Expressio Unius Esl Exclusio Alterius" which is a Latin phrase that means "express mention of one thing excludes all others. This is one of the rules used in interpretation of Statutes. The phrase indicates that items not on the list are assumed not to be covered by the Statute. When something is mentioned expressly in a Statute, it leads to the presumption that the things not mentioned are excluded. This is an aid to the construction of Statutes. Applying the legal maxim 'expressio unius est exclusio alterius', it can be safely inferred that when the Legislature in particular has provided for only the above referred two specific exceptions in Section 80G, then it is the implied intent of the Legislature to permit deduction u/s 80G in respect of CSR contributions made to funds/organizations referred to in all other sub-clauses of Section 80G [other than (iiihk) and (iiihl)] of the Act. The above analysis made by us, can be cumulatively illustrated by the following examples for ease of understanding purpose only and should not be cited for making claim which should be made subject to the facts and law involved in each case and also subject to section 80G(4) of the Act:
Example: A company has reported eligible net profit u/s 135 of Companies Act, 2013 at Rs.100 crores. The minimum CSR contribution of 2% under Section 135(5) of the Act works out to be Rs. 2 crores.24 ITA No. 84/RPR/2024
Bhagwati Power and Steel Limited Situation 1: The company has been spent the required minimum CSR contribution of Rs 2 crores towards construction of roads & schools in the vicinity of the backward area where the factory is located.
Tax Treatment: The entire CSR expenditure of Rs.2 crores is to be disallowed and added back in terms of Explanation 2 to Section 37(1) of the Act.
Situation 2 : The company has contributed Rs.3 crores to Swach Bharat Kosh.
Tax Treatment: The entire CSR expenditure of Rs.3 crores is to be disallowed and added back in terms of Explanation 2 to Section 37(1) of the Act. In terms of Section 135(5) of the Act read with Section 80G(iiihk) only the excess sum paid amounting to Rs. 1 crores [ 3 crores - 2% of 100 crores] can be availed as deduction u/s 80G of the Act.
Situation 3: The company has contributed Rs.l crore to Swach Bharat Kosh and Rs.1 crore to any other charitable trust registered u/s 80G(5) of the Act.
Tax Treatment: The entire CSR expenditure of Rs.2 crores is to be disallowed and added back in terms of Explanation 2 to Section 37(1) of the Act. In terms of Section 135(5) of the Act read with Section 80G(iiihk) the donation of Rs.l crores made to Swach Bharat Kosh is not eligible for deduction u/s 80G of the Act. The company can claim deduction of fifty percent of the donation of Rs. 1 crores paid to any other registered charitable trust u/s 80G(2)(iv) read with Section 80G(1)(ii) of the Act.
Situation 4 : The company has contributed Rs.1 crore to Prime Minister's National Relief Fund and Rs. 1 crore to any other charitable trust registered u/s 80G(5) of the Act.
Tax Treatment: The entire CSR expenditure of Rs.2 crores is to be disallowed and added back in terms of Explanation 2 to Section 37(1) of the Act.
The company can claim deduction for hundred percent of the donation of Rs. 1 crores paid to Prime Minister's National Relief Fund u/s 80G(2)(iiia) read with Section 80G(1)(i) of the Act. The company claim deduction to the extent of fifty percent of the donation of Rs. 1 crores paid to any other registered charitable trust u/s 80G(2)(iv) read with Section 80G(1)(ii) of the Act.
23. As discussed supra, we concur with the contention of the assessee that since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. 25 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited [Swachh Bharat Kosh and Clean Ganga Fund] has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible under Section 80G of the Act. In this context we find that the assessee has made donation of Rs. 1.25 crores on 20.01.2016 by RTGS dated 19.01.2016 through UCO Bank which is evident from page 18 of PB which is received by Shree Charity Trust which was 80G(5)(vi) certificate of the Department dated 15.01.2009 placed at page 17 of PB. The assessee has also made payment of Rs. 10 Lakhs to Pt. Jashraj Music Academy Trust which is found placed at page 22 & 23 and the approval u/s 80G (5)(vi) of the Act in respect of Pt. Jashraj Music Academy Trust is found placed at page 19 of PB dated 30.03.2012 given by Director of Income Tax (Exemption). Therefore, since the assessee satisfies the condition u/s. 80G of the Act of the donees, the assessee's claim for deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO. Thus we are of the opinion that the action of the AO allowing the claim u/s. 80G of the Act is a plausible view and is in line with the ratio of the decision of Tribunal cited (supra). Therefore we find that the Ld. PCIT has not been able to make out a case that on this issue raised by him, the AO's order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking revisional jurisdiction. Therefore, the usurpation of jurisdiction by Ld. PCIT u/s 263 of the Act is bad in law and therefore need to be quashed and we order accordingly".
14. We are in agreement with such observations and findings of the Coordinate Bench of the Tribunal and while respectfully following the same, we hold that inasmuch as the assessee satisfied the conditions of section 80G of the Act, the assessee is entitled to claim deduction under section 80G of the Act in respect of such donations which formed part of the spend towards CSR. Accordingly, we hold this ground in favour of the assessee.
15. In view of the above, this appeal of assessee is allowed.
26 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited 10.3 Similar findings are observed by other coordinate benches of this tribunal in the cases referred to (supra) by the Ld. AR in the written submissions extracted herein above.
10.4 In light of the aforesaid findings, referring to the facts of the present case, we may herein observe that the donations were extended by the assessee during the year under consideration to (i) Shri Marwadi Pathshala Samiti (Bitti Committee) of Rs. 7,50,000/- and (ii) Rajashthan Gokalyan of Rs. 50,000/- and claimed 50% of the same u/s 80G of the Act.
The parties to whom the donations were made are undoubtedly, the institutions, other than the specified institutions / funds i.e., Swatch Bharat Kosh and Clean Ganga Fund for which express condition is prescribed in the statute u/s 80G(2)(iiihk) and (iiihl) that, any donation made to Swatch Bharat Kosh and Clean Ganga Fund out of spend towards CSR are not qualified for deduction u/s 80G of the Act. For the sake of clarity and interpretation, sub clause (iiihk) and (iiihl) of sub section 2 of Section 80G is reproduced as under:
80G(2) (iiihk) [the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013, (18 of 2013); or [Inserted by Finance Act, 2015 (No. 20 of 2015), dated 14.5.2015.] (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the 27 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited assessee in pursuance of Corporate Social Responsibility under sub-
section (5) of section 135 of the Companies Act, 2013, (18 of 2013);
10.5 In terms of aforesaid observations, as in the present case admittedly the donations extended by the assessee are to Shri Marwadi Pathshala Samiti (Bitti Committee) of Rs. 7,50,000/- and Rajashthan Gokalyan of Rs. 50,000/- as discernible from para 15 of the assessment order and such parties does not fall under the exception carved out u/s 80G(2)(iiihk) and (iiihl), thus, the assessee is entitled for claim of donations paid under the provisions of Section 80G in respect of payments made towards donations which formed part of the spend towards CSR.
Consequently, we concur with the contention raised by the assessee in the present appeal in its ground no. 2, however, for the purpose of verification of facts that such donations which the assessee have made satisfies the conditions of Section 80G of the Act for which no specific finding is emanating from the orders of authorities below, we restore this issue back to the file of Ld. AO for fresh adjudication in terms of our aforesaid observations.
10.6 Adverting to Ground No. 3 of the present appeal that there was an error on the part of Ld. AO in making double disallowance of deduction claim u/s 80G for Rs. 4.00 lacs. As the issue regarding donation u/s 80G in ground no. 2 is restore to the file of Ld. AO, we find it appropriate to restore 28 ITA No. 84/RPR/2024 Bhagwati Power and Steel Limited ground no. 3 having connected issue for verification of the facts and to re-
adjudicate, in terms of the error pointed out by the assessee.
10.7 Consequently ground no. 2 & 3 of the present appeal are partly allowed for statistical purpose in terms of our aforesaid observations.
11. Ground no. 4, 5, 6, 7 & 8 :
These grounds are consequential, general or academic in nature on which no separate adjudication is called for, thus, the same are dismissed.
12. In the result, the appeal of the assessee is allowed / partly allowed for statistical purposes.
Order pronounced in the open court on 31/05/2024.
Sd/- Sd/-
(RAVISH SOOD) (ARUN KHODPIA)
याियक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
रायपुर/Raipur; दनांक Dated 31/05/2024
Vaibhav Shrivastav
आदे श क ितिल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant-
2. यथ / The Respondent-
3. आयकर आयु (अपील) / The CIT(A),
4. The Pr. CIT -1, Raipur, (C.G.)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur
6. गाड फाईल / Guard file.
29 ITA No. 84/RPR/2024Bhagwati Power and Steel Limited // स या पत ित True Copy // आदे शानुसार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur