Tribunal allows and disallows expenses in complex tax case, based on prior rulings and interpretations.

The case involved various issues including disallowance of premium paid to BMRDA, prior period expenses, disallowance of PF and ESI payments, expenditure on tax-free bonds, additional ground for prior period expenses, revenue's appeal on VSAT shifting expenses, and revenue's appeal on interest under section 36(1)(iii). The Tribunal partly allowed both appeals, confirming some disallowances while directing specific allowances on certain expenses. The decisions were based on previous rulings and interpretations of the nature of expenditures involved in the case.

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Issues Involved:
1. Disallowance of premium paid to BMRDA.
2. Prior period expenses.
3. Disallowance of PF and ESI payments.
4. Disallowance of expenditure on tax-free bonds.
5. Additional ground for prior period expenses.
6. Revenue's appeal on VSAT shifting expenses.
7. Revenue's appeal on interest u/s 36(1)(iii).

Summary:

1. Disallowance of Premium Paid to BMRDA:
The assessee challenged the CIT(A)'s order confirming the disallowance of Rs. 1,13,25,250/- paid to BMRDA, treating it as capital in nature. The issue was previously decided against the assessee in ITA No. 2181/Mum/1999 for A.Y. 1995-96, where it was held that the payment for leasehold land for 99 years was capital in nature and not allowable as a deduction. Consequently, the ground was rejected.

2. Prior Period Expenses:
- Professional Fees: Bills received during the impugned year, though dated prior, were crystallized during the year. The A.O. was directed to allow Rs. 82,000/-.
- Hire Charges: Rs. 43,418/- paid to M/s. Anil Electric Co. was not allowed as there was no evidence of bills received during the year.
- Software Expenses: Rs. 73,510/- was disallowed as it was accounted for in the previous year and not crystallized during the current year.
- Travelling Expenses: Rs. 8,272/- was allowed as the claim was made during the relevant year.
- Meeting & Conference Expenses: Rs. 8,521/- was allowed as the bill was received during the current year.

3. Disallowance of PF and ESI Payments:
The CIT(A) confirmed the disallowance of Rs. 5,790/- paid beyond the due date. However, amounts paid by the time the return was filed were allowed based on the Supreme Court decision in CIT vs. Alom Extrusions Ltd. 319 ITR 306.

4. Disallowance of Expenditure on Tax-Free Bonds:
The A.O. disallowed 2% of the expenditure, while the CIT(A) restricted it to 0.5%. The Tribunal opined that a 1% disallowance would meet the end of justice, rejecting the assessee's ground.

5. Additional Ground for Prior Period Expenses:
The assessee raised an additional ground for Rs. 1,78,562/- disallowed in A.Y. 1999-2000. The issue was restored to the A.O. to consider the expenditure after the decision for A.Y. 1999-2000 by the ITAT.

6. Revenue's Appeal on VSAT Shifting Expenses:
The A.O. treated Rs. 2,09,10,000/- as capital expenditure, but the CIT(A) allowed it as revenue expenditure. The Tribunal upheld the CIT(A)'s decision, stating that the expenditure was for realigning existing networks and did not provide an enduring advantage.

7. Revenue's Appeal on Interest u/s 36(1)(iii):
The A.O. disallowed interest of Rs. 22,89,103/- capitalized in the books. The CIT(A) allowed it as revenue expenditure, following earlier years' decisions and Supreme Court rulings. The Tribunal upheld the CIT(A)'s order, rejecting the Revenue's ground.

Conclusion:
Both appeals were partly allowed, with specific directions and confirmations on various grounds as detailed above.

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