Alok Industries Ltd, Mumbai vs Assessee

The Asst. CIT Cen. Cir. 35, M/s. Alok Industries Ltd., Mumbai. Peninsula Towers, Peninsula Vs. Corporate Park, G K Marg, Lower Parel Mumbai- 400 013 PAN: AAACA0201C (Appellant) (Respondent)

ITA No.8920/M/2010 Assessment Year: 2007-08

M/s. Alok Industries Ltd., The Asst. CIT Cen. Cir. 35, Peninsula Towers, Peninsula Mumbai. Vs. Corporate Park, G K Marg, Lower Parel Mumbai- 400 013 PAN: AAACA0201C (Appellant) (Respondent)

Assessee by : Shri Rajan Vora, A.R. Revenue by : Ms. S. Padmaja, D.R.

Date of Hearing : 01.12.2014 Date of Pronouncement : 20.02.2015

ORDER

Per Sanjay Garg, Judicial Member:

These are appeals by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)], Mumbai dated 13.10.2010 pertaining to A.Y. 2007-08. As common issues are involved in these appeals, hence the same were heard together and are disposed off by this common order for the sake of convenience and brevity.

ITA No.8340/M/2010 & ITA No.8920/M/2010 2 M/s. Alok Industries Ltd.

ITA No.8920/Mum/2010: Asst. Year 2007-08 (assessee's appeal) 2. Ground nos.1 to 7 of this appeal relate to the interest income of Rs.14,73,35,367/- taxed under the head 'Income from other sources' instead of adjusting it against the interest expenditure capitalized to Incidental Expenditure during Construction (EDCP) account as both have direct nexus. At the outset, the learned AR of the assessee stated that the present issue is squarely covered by the decision of the co-ordinate Bench of the Tribunal in the assessee's own case for A.Y. 2006-07. The Tribunal, vide its order dated 17.09.2013 in ITA Nos. 6575 & 6266/Mum/2010, has restored the issue to the file of the Assessing Officer (hereinafter referred to as the AO) observing as under:

"6. We have examined the issue. There is no dispute with reference to assessee earning interest income but adjusting the same towards cost of project. The issue of having direct nexus with the borrowings has not been examined by the AO at all. In case the assessee has utilised the borrowed funds for earning the income to that extent, the interest has to be given set off to the interest paid on the borrowed funds. It was the contentions of the assessee that there is a direct nexus and these funds are not surplus funds so as to consider as income from other sources. This aspect requires examination by the AO and in case there is direct nexus with the earning of interest income with that of the borrowals, then only net interest can be brought to tax or adjusted in the construction account. Therefore, without going into the various case law relied upon by the assessee, we restore the issue to the file of the AO to examine the nexus aspect of the earning of interest income on borrowed funds, specifically borrowed for the purpose of project which is under construction and decide accordingly. The assessee is free to raise the contentions raised before us and the AO is directed to examine the facts and law before deciding the issue. In case the AO considers that there is no nexus and income from interest has to be treated as income from other sources and adjustment for higher capitalisation as requested by the assessee without prejudice to the above the contentions, is also to be examined. With these directions, the issue in grounds No. 1 to 4 are restored to the file of the AO for examination of facts and necessary consideration. Grounds are allowed for statistical purpose."

3. Respectfully following the above decision of the Tribunal in the assessee's own case for earlier assessment year for the sake of consistency, we restore the issue to the file of the AO with a direction to examine the nexus ITA No.8340/M/2010 & ITA No.8920/M/2010 3 M/s. Alok Industries Ltd.

between interest paid on borrowed funds and decide the issue in terms of the above reproduced directions given by the Tribunal for earlier assessment year.

4. Ground nos.8 to 9 of the assessee's appeal relate to the disallowance of expenditure amounting to Rs.33,00,675/- u/s. 14A of the Act. During the year the assessee earned dividend income of Rs.26,90,739/-. The assessee suo moto disallowed Rs.1,48,421/- as expenditure incurred on earning of exempt income u/s 14A of the Act. The AO computed the disallowance at Rs.3300675/- u/s 14A of the Act read with Rule 8D of the IT Rules, 1962. On appeal, the Ld. CIT(A) directed the AO to recompute the disallowance under section 14A of the Act on some reasonable basis, as per the decision of the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT"

reported in (2010) 328 ITR 81 (Bom).

5. The Ld. A.R. before us has agitated that in the earlier assessment year 2006-07 the disallowance under section 14A has been restricted by the Tribunal to 5% of the dividend income. He therefore has submitted that the disallowance be restricted to that extent.

6. We find that in the earlier assessment year 2006-07, the Ld. CIT(A) had upheld the finding of the AO for computation of disallowance under section 14A as per the provisions of Rule 8D. However, the Ld. CIT(A), during the year under consideration, has directed the AO to recompute the disallowance on some reasonable basis as per the law laid down by the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT"

(supra).

7. It may be observed that the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT" (supra) has held that ITA No.8340/M/2010 & ITA No.8920/M/2010 4 M/s. Alok Industries Ltd.

Rule 8D cannot be applied retrospectively but is applicable from assessment year 2008-09. For the assessment years prior to A.Y. 2008-09, the disallowance under section 14A can be made by the AO on some reasonable basis, if, the AO is not satisfied with the correctness of the working made by the assessee in this respect. We therefore direct that the AO will consider the working given by the assessee and if he will be satisfied in that respect, no further disallowance will be required to be made. However, if the AO will not be satisfied with the working given by the assessee, then the disallowance be made on some reasonable basis after giving the assessee due opportunity of representing its case in this respect. Subject to our above observations, the order of the Ld. CIT(A) on this issue is upheld.

8. Ground nos.10 to 13 relate to the denial of deduction u/s. 80IB on the Technology Up-gradation Fund [TUF] subsidy received amounting to Rs.6,09,82,038/-. The assessee claimed that the TUF subsidy was received as part of Technology Up-gradation Fund Scheme, wherein the lending agency reimbursed 5% interest cost to the borrower upon satisfaction of certain conditions. However, the AO excluded the subsidy on the ground that it was incentive profit received from Government of India, hence not eligible for deduction u/s. 80IB. The learned CIT(A) upheld the order of the AO.

9. We have heard both the parties and have gone through material available on record. We find that the Tribunal in the assessee's own case for A.Y.2006- 07, vide its order dated 17.09.2013 in ITA Nos. 6575 & 6266/Mum/2010, has restored the issue to the file of the AO, observing as under:

"17. We have considered the issue and examined the facts as placed on record. There is no dispute with reference to the claim and the amount of reimbursement to the assessee. It was stated that total subsidy was apportioned to the eligible units. The basis of apportionment is not placed on record nor mentioned in the order. The nexus of reimbursement by way of subsidy is to be established so as to consider the claim of assessee that ITA No.8340/M/2010 & ITA No.8920/M/2010 5 M/s. Alok Industries Ltd.

reimbursement infact reduces the interest claim. As seen from the record how the amounts are quantified, whether the amount is part of the unit interest cost claimed earlier were not examined/ not on record. After considering the arguments of both the sides, we deem it proper to set aside this particular issue to the file of the AO with the direction to examine whether the reimbursement of interest cost is reimbursement of revenue expenditure debited to the P & L Account of that eligible unit to that extent either in this year or in any earlier years. If it is so then due to reimbursement the expenditure incurred by the assessee is reduced, to the extent the profit of the industrial undertaking will increase. Therefore, to examine the interest claim out of the unit and its reimbursement by way of subsidy, the matter is restored to the file of the AO. He is directed to keep in mind the decision of the Hon'ble Gauhati High Court in the case of Mehalaya Steels Ltd. (supra) and allow the deduction under section 80IB accordingly if the nexus is established. Grounds are allowed for statistical purpose."

On identical facts, respectfully following the above decision of the Tribunal, we direct accordingly and restore the issue to the file of the AO.

10. Grounds nos.14 to 15 relate to the disallowance of provision made for doubtful debts. These grounds are not pressed by the assessee and are accordingly dismissed being not pressed.

11. Ground No.16 relates to the computation of disallowance made u/s. 14A for computing book profit u/s. 115JB. It may be observed that co-ordinate bench of the Tribunal, in the case of "M/s. Godrej Consumer Products Limited" ITA No.4963/M/11 (A.Y. 2007-08), decided on 20.11.13 while dealing with the identical issue, has held that the amount of expenditure disallowable under section 14A is to be added back while computing book profit under clause (f) of the explanation (1) to section 115 JB observing as under:

"24. Vide ground No.5 of its appeal, the assessee has agitated the action of the ld. CIT(A) in relying upon the provisions of section 14A of the Act while computing the amount of expenditure for earning exempt income which is liable for being added back to the book profits as per the provisions of section 115JB of the Income Tax Act. The submissions of the ld. A.R. has been that section 115JB of the Act is a separate code by itself and the provisions of section 14A cannot be applied for ITA No.8340/M/2010 & ITA No.8920/M/2010 6 M/s. Alok Industries Ltd.

computing the book profit under section 115JB of the Act. In support of his submissions he has relied upon an authority of the Delhi Bench of the ITAT styled as 'Goetze (India) Ltd. vs. CIT'[2009] 32 SOT 101 (Delhi) which has been subsequently followed by the other benches of the Tribunal in the following cases:

1. Ovira Logistics Ltd. (ITA No.3230/Mum/2012 & 2439/Mum/2012) dated August 30, 2013.

2. Bengal Finance & Investments Private Ltd. (ITA No.5937/Mum/2010) dated July 31, 2012

3. Essar Teleholdings Ltd. (ITA No.3850/Mum/2010) dated July 29, 2011

4. Goetze (India) Ltd. reported in 32 SOT 101.

25. On the other hand the ld. D.R. has relied upon another authority of the Mumbai Bench of the Tribunal in the case of 'ITO vs. RBK Share Broking (P) Ltd.' [2013]37 taxmann.com 128, wherein it has been held that the amount disallowable under section 14A is to be added back while computing book profit under section 115JB.

26. In view of the divergent views of the different benches of the Tribunal on this issue, it has become incumbent upon us to discuss the law laid down by the Delhi bench of the ITAT in the case of Goetze (India) Ltd. and the Mumbai Bench of the ITAT in the case of RBK Share Broking (P) Ltd. in the light of the provisions of section 14A as well as section 115JB of the Act.

27. In Goetze (India) Ltd. the Delhi bench of the ITAT while holding that the provisions of section 14A cannot be imported to clause (f) of the explanation to section 115JA has observed as under:

"4.6 We have considered the facts of the case and rival submissions. We may at the outset consider the provisions contained in clause (f) of the Explanation to section 115JA and sub-section (1) of section 14A of the Act.

Under the aforesaid clause (f) the amount of expenditure relatable to any added to the book profit. Under the provisions contained in section 14A, no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. Since we are dealing with the issue of expenditure relating to dividend income, a matter falling under Chapter III, it becomes clear on perusal of these two provisions that they are similar in nature. Clause (f) uses the words "expenditure relatable to any income", while section 14A uses the words "expenditure incurred by the assessee in relation to income". These words have the same meaning. We may also add here that section 14A contains two more sub-section, sub-section (2) and sub-section (3), which do not find a place in the clause (f). Therefore, insofar as computation of adjusted book profit is concerned, provisions of sub-section (2) and sub-section (3) of section 14A cannot be imported into clause (f)."

ITA No.8340/M/2010 & ITA No.8920/M/2010 7 M/s. Alok Industries Ltd.

28. From the perusal of the above reproduced observations of the Delhi bench of the ITAT, it can be gathered that the Delhi bench of the Tribunal has categorically held that the provisions of sub-section (1) of section 14A and clause (f) of the explanation to section 115JA are similar in nature and have the same meaning. However, it has been observed that the other two sub sections of 14A i.e. sub section (2) and sub section (3) do not find a place in clause (f) of the explanation to section 115JA, hence it was held that so far the computation of adjusted book profit is concerned, provisions of sub section (2) and sub section (3) of section 14A cannot be imported into clause (f). With due respect to the finding given by the Delhi bench of the ITAT, we may observe that the case before the Delhi Bench of the Tribunal in Goetze (India) Ltd. (Supra) was related to assessment year 2000-01 whereas sub section (2) and sub section (3) to section 14A have been inserted by the Finance Act, 2006 w.e.f. 01.04.07. Meaning thereby prior to 01.04.07, the provisions of section 14A were akin to the provisions of clause (f) of the explanation to section 115JA. Since the case before the Delhi bench of the Tribunal was pertaining to assessment year 2000-01, under such circumstances, the provisions of sub section (2) and sub section (3) of section 14A otherwise were not applicable for that year, so far the computation of the adjustment of book profits was concerned.

We may further observe that the different provisions of the Act are to be read in harmony and in consonance with each other, unless or until specifically provided to be read otherwise. When we read section 14A with clause (f) of the explanation to section 115JA or clause (f) of the explanation (1) to section 115JB, we do not find that they have any type of conflict with each other. What has been provided under sub section (1) of section 14A is that the expenditure incurred for exempt income is not allowable as a deduction whereas under sub section (2) a method of computation of such expenditure has been provided and in sub section 3 to section 14A it has been mentioned that such method would be applicable even in cases where the assessee claims that no expenditure has been incurred by him in relation to exempt income. Under clause (f) of the explanation (1) of section 115JB it has been provided that the amount of expenditure relatable to exempt income is to be added back in the book profits while computing tax under section 115JB. The contention of the Ld. A.R. that only the expenditure which finds mention in the profit and loss account is required to be added back and not the expenditure as assessed under section 14A does not have any force as no such provision is there under section 115JB. When we read the provisions of section 14A along with section 115JB, it becomes clear that the expenditure relatable to exempt income as provided under sub section (1) of section 14A is required to be added back while computing book profit under section 115JB. We do not find any confliction in the above said two provisions of the Act. The Mumbai bench of the Tribunal while dealing with the similar issue in RBK Share Broking (P) Ltd. has observed as under:

"6. Be that as it may, we will proceed to decide this ground on merits as well because it involves a pure legal issue as to whether the amount disallowed u/s 14A can be added while computing the book profit u/s 115JB of the Act.

ITA No.8340/M/2010 & ITA No.8920/M/2010 8 M/s. Alok Industries Ltd.

The learned AR relied on certain decisions to bring home the point that the amount disallowed u/s 14A cannot be added to net profit for computing `book profit' u/s 115JB. On the other hand, the learned Departmental Representative took us through the language of clause (f) of Explanation (1) to section 115JB, as per which the amount of expenditure relatable to any exempt income is to be added back to the net profit shown in the profit and loss account. At this juncture, it would be relevant to note that `Book profit' u/s 115JB is computed as per Explanation (1) to sub-section (2) of section 115JB. This Explanation provides that "book profit" means net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by certain amounts specified under clauses (a) to (i) if debited to the profit and loss account and clause (j) if not credited to the profit and loss account. The amount so determined is further adjusted by reducing the amounts specified in clauses (i) to (vii). The amount which eventually results is the amount of `book profit' on which tax liability is determined u/s 115JB. Clause(f) to Explanation (1) provides that the net profit shown in the profit and loss account shall be increased by : "(f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause 38 thereof) or section 11 or section 12 apply;". A bare perusal of clause (f) of Explanation (1) makes it abundantly clear that the amount of expenditure "relatable to"

any exempt income, other than section 10(38), is liable to be added back to the amount of net profit as shown in the profit and loss account. When we turn to the language of section 14A, it transpires that it talks of disallowing any expenditure incurred `in relation to' income not includible in the total income. Sub-section (1) of this provision provides that : "For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act." The expression "in relation to" used for making disallowance u/s 14A has been employed in Explanation (1) to section 115JB(2) as expenditure "relatable to", in more or less the same form. It is manifest that the amount of dividend is exempt u/s 10(33) [not section 10(38)] of the Act. Thus any expenditure 'relatable to' the exempt dividend income would fall under clause (f). The ld. AR argued that unless an amount is specifically debited to the Profit and loss account in respect of an exempt income, the same cannot be brought within the purview of clause (f) of the Explanation 1 to section 115JB(2). He stated that since the disallowance u/s 14A is computed as per rule 8D, the origin of the expenses disallowed cannot be traced to the profit and loss account and hence it cannot be covered within the mischief of clause (f) of the Explanation. We fail to find any logic in this submission because of the clear language of the Explanation 1, which provides in unequivocal terms that the amount of expenditure `relatable to' the exempt income shall be added back. Neither the language of clause (f) expressly refers to the amount specifically debited to the profit and loss account nor there can be an implication in this regard. What has been contemplated by ITA No.8340/M/2010 & ITA No.8920/M/2010 9 M/s. Alok Industries Ltd.

the provision is the amount of the expenditure `relatable to' the exempt income. Further, the amount disallowable u/s 14A is always part of the expenses specifically debited to the profit and loss account. It is axiomatic that unless any expenditure is incurred and claimed as deduction, there can be no question of any hypothetical disallowance u/s 14A. It, therefore, follows that the amount disallowable u/s 14A is covered under clause(f) of Explanation (1) to section 115JB(2). Our view is fortified by another order dated 29 August, 2012 passed by the Mumbai Bench of the tribunal in the case of Esquire P. Ltd, Mumbai (ITA No.5688/Mum/2011). As the assessment year under consideration is assessment year 2008-2009 in which disallowance u/s 14A is required to be computed as per Rule 8D and further it is this amount which has been disallowed and also added to the amount of net profit for computing `book profit' u/s 115JB, we see no reason to disturb the impugned order on this issue. This ground fails."

29. The view taken by the Mumbai bench of the Tribunal is the latest view which has been taken after duly considering the previous decisions as has been mentioned in the opening lines of Para 6 of the order as reproduced above. We are in agreement with the latest view of the Mumbai Bench of the Tribunal taken in the case of RBK Share Broking (P) Ltd. and in view of our observations made above, it is held that the amount of expenditure disallowable under section 14A is to be added back while computing book profit under clause (f) of the explanation (1) to section 115 JB."

12. In view of the observations made above in the case of "Godrej Consumer Products Ltd." (Supra), it is held that the expenditure found disallowable under section 14A can be added back while computing book profits under section 115 JB of the Act. Since in the case in hand, we have restored the issue of disallowance u/s 14A of the Act to the file of the A.O., hence, it is held that whatsoever expenditure would be found by the AO as disallowable under section 14A, the same can be added back while computing book profit under section 115JB in the case of the assessee.

13. Grounds No.17 & 18 relate to levy of interest u/s 234B of the Act. The assessee contended before the Ld. CIT(A) that at the relevant point of time there are various decisions including the decision of Hon'ble Supreme Court in case of "CIT Vs Kwality Biscuits Ltd." 284 ITR 434 wherein it had been held ITA No.8340/M/2010 & ITA No.8920/M/2010 10 M/s. Alok Industries Ltd.

that no interest u/s 234B and 234C was leviable once the Income Tax is determined u/s 115JB. Assessee further contended that the non-payment of advance tax on the book profit was under bonafide belief of the assessee and therefore, the interest u/s 234B and 234C cannot be charged.

14. The Ld. CIT(A), however, did not accept the contention of the assessee and held that levy of interest u/s 234B and 234C was mandatory and consequential and hence confirmed the same.

15. Before us, at the outset, the Ld. AR of the assessee has relied upon the decision of the Co-ordinate Bench of the Tribunal in the case of "Charbhuja Industries Pvt. Ltd. vs. ACIT" ITA Nos.6901 & 6902/M/2012 order dated 24.01.2014, wherein the Co-ordinate Bench of the Tribunal, while adjudicating the identical issue has observed as under:

"5. We have considered the rival submissions as well as relevant material on record. There is no dispute regarding the fact that during the assessment years under consideration the settled law on the point was the decision of the Hon'ble Supreme Court in case of CIT Vs Kwality Biscuits Ltd. 284 ITR 434 as well as a number of other decisions including decisions of Hon'ble Jurisdictional High Court in case of Snowcem India Ltd. Vs DCIT 313 ITR 170 and in case of CIT Vs Natural Gems Ltd. 327 ITR 269 wherein it has been held that no advance MAT was payable by the company. Therefore, the assessee had no reason to belief or foresee a subsequent decision fastening the liability of payment of advance tax. Even otherwise the decision in case of JCIT Vs Rolta India Ltd. (supra) is a subsequent decision and therefore, the impossibilities at the relevant point of time cannot be thrashed upon the assessee. In the facts and circumstances as discussed above no fault can be found with the assessee in not depositing the advance tax of MAT in view of the decision of the Hon'ble Supreme Court as well as various decisions of the Hon'ble High Court. The assessee had the bonafide reason to believe that advance tax was not payable in respect of MAT u/s 115JB as it was settled law laid down by the Hon'ble Supreme Court and Hon'ble High Court which hold good till the subsequent decision of Hon'ble Supreme Court in case of JCIT Vs Rolta India Ltd. (supra). Therefore, prior to the decision of Hon'ble Supreme Court in case of JCIT Vs Rolta India Ltd. (supra) settled proposition of the law on the point was that no advance tax was payable on MAT computed u/s 115JB and accordingly, the interest u/s 234B and 234C cannot be levied for non-deposit of advance tax on MAT for the year under consideration. Hence, we delete the levy of interest u/s 234B and 234C in this case."

ITA No.8340/M/2010 & ITA No.8920/M/2010 11 M/s. Alok Industries Ltd.

16. Being in agreement with the above findings of the co- ordinate bench, this issue is decided accordingly and the interest levied u/s 234B/234C is accordingly ordered to be deleted.

Additional Grounds :

17. Ground No.19 pertains to disallowance of provision for leave encashment of Rs.1,96,06,008. This ground has been taken for the first time before this Tribunal only as an additional ground. In view of the submissions of the assesse that the issue involved is legal, the same is admitted for hearing. During the year the assessee made a provision of leave encashment on actuarial basis which was disallowed by the AO as a provision in view of the provisions of section 43B(f) of the I.T.Act.

18. The Ld. AR of the assessee has submitted that on the identical issue, the matter has been restored by the Tribunal to the file of the AO in the own case of the assessee for immediate preceding assessment year 2006-07. We have gone through the said order dated 17.9. 2013 wherein the Tribunal in para 7 of the said order has observed as under:

"7. Ground No. 5 pertains to disallowance of leave encashment of `1,03,25,488/-. During the year the assessee made a provision of leave encashment on actuarial basis which was disallowed by the AO as a provision. The learned CIT(A), relying on Section 43B(f) of the Act, confirmed the same. It was the submission that the claim was made on the basis of the decision of the Hon'ble Calcutta High Court in the case of Exide Industries Ltd. 292 ITR 470 wherein the provisions of 43B(f) was struck down.

However, at present the said judgment of the Hon'ble High Court was stayed by the Hon'ble Supreme Court and the matter is pending before the Hon'ble Supreme Court. It was submitted that the matter may be restored to the file of the AO for adjudication as per the decision of the Hon'ble Supreme Court in the case of Exide Industries Ltd. (supra). Keeping in view of the pendency of the matter before the Hon'ble Supreme Court, we restore the matter to the file of the AO for fresh adjudication as and when the decision of the Hon'ble Supreme Court is rendered on this issue. Ground is considered allowed for statistical purpose."

ITA No.8340/M/2010 & ITA No.8920/M/2010 12 M/s. Alok Industries Ltd.

19. Respectfully following the above decision for the sake of consistency, we restore the matter on this issue to the file of the AO directing him to decide this issue for the year under consideration also in the light of the directions given by the Tribunal for earlier assessment year.

20. Ground No.20 relates to the claim of the assessee that the entire TUF subsidy received during the year amounting to Rs.36,70,68,568/- is capital receipt and, hence, not liable to be taxed. This ground has also been raised for the first time before us only. However, considering that the issue being legal in nature, the same is admitted for adjudication. We find that identical issue has been considered and decided by the Tribunal in the assessee's own case for A.Y. 2006-07 (supra). We find that the Tribunal has restored the matter to the file of the AO observing as under:-

"18. Grounds No. 14 & 15 are additional grounds raised by the assessee that the amount received under TUF scheme is capital in nature and not chargeable to tax. The facts of the TUF scheme were stated by the AO in the order and accordingly there is no dispute with reference to applicability of TUF scheme. The assessee received, as per its statement, an amount of `45 crores but in the ground it is stated that the amount of subsidy of `4.93 crores is capital in nature. However, the ground is with reference to amount of `4.93 crores which is to be considered as capital in nature as per the submissions of the assessee. Since this issue was not examined by the AO at all, we admit the additional ground and restore the matter to the file of the AO to examine the claim afresh keeping in mind the principles laid down by the Hon'ble Supreme Court on the issue of subsidy and also other case laws. Also to be kept in mind the issue in grounds 12 and 13 above where assessee claimed deduction u/s 80IB. Grounds restored to the file of the AO for examination."

21. Facts for this year also being identical, respectfully following the above referred to decision of the Tribunal, we direct accordingly and restore the issue to the file of the AO.

22. In view of our above observations, the appeal of the assessee is therefore, partly allowed for statistical purposes.

ITA No.8340/M/2010 & ITA No.8920/M/2010 13 M/s. Alok Industries Ltd.

ITA No.8340/Mum/2010: Asst. Year 2007-08 (Revenue's appeal) 23. The sole issue raised by the Revenue through its grounds of appeal is relating to finding of the Ld/ CIT(A) in directing the AO to recompute the disallowance u/s 14A of the Act on some reasonable basis as per the decision of the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT" reported in (2010) 328 ITR 81 (Bom). In view of our finding given on this issue in the assessee's appeal above, we do not find any merit in this issue. The appeal of the Revenue, subject our observations made above on this issue, is therefore dismissed.

24. In the result, appeal of the assessee is partly allowed for statistical purposes and the appeal of the Revenue is dismissed.

Order pronounced in the open court on 20.02.2015.

Sd/- Sd/- (R.C. Sharma) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 20.02.2015. * Kishore, Sr. P.S.

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [

By Order

Dy/Asstt. Registrar, ITAT, Mumbai.