2015 (10) TMI 2739 - AT - Income Tax

Tribunal Decision: Grounds Allowed, Remanded for Adjudication, Dismissed on Precedents

The Tribunal allowed certain grounds for statistical purposes, remanded others for fresh adjudication, and dismissed some based on prior decisions and ... Disallowance of Interest in respect of advances to companies/other concerns - AO noticed that the assessee has not charged interest on the loans given to subsidiary and other companies - Held that:- Tribunal in the assessee’s own case for the assessment years 1991-92 to 1998-99, AY 2003-04 and the Tribunal has restored this issue to the file of AO for fresh adjudication following the precedent laid down by the Hon’ble Apex Court in S.A.Builders [2006 (12) TMI 82 - SUPREME COURT]. Therefore, this being identical issue, the same view may be taken as taken earlier by this Tribunal. Disallowance of balance 4.5th deferred revenue expenditure in the next four years in accordance with the provisions of section 35DDA - Held that:- An identical issue had come up before this Tribunal in the assessee’s own case for the assessment year 1998-99 and the Tribunal following the decision of jurisdictional High Court in Bhore Industries Ltd [2003 (2) TMI 20 - BOMBAY HIGH COURT] allowed the claim of the assessee. Disallowance of interest on securities - Held that:- Similar issue had come up before the Tribunal and the Tribunal following the decision rendered in the case of Jamshri Rajitsinghji Spinning and Weaving Mills Limited V/s Inspecting Assistant Commissioner [1991 (12) TMI 83 - ITAT BOMBAY-A] has decided this issue in favour of the assessee. The facts being the same and consistent with the view so take by this Tribunal in earlier year, we allow the claim of the assessee for this year too. Addition being pooja expenses - Held that:- This is an allowable expenditure. Accordingly, we allow the claim of the assessee. Payment to relatives of deceased employees - Held that:- We are of the considered opinion that the issue raised by the assessee in these grounds stands covered in favour of the assessee. To maintain consistency with the decision taken by the Tribunal in earlier years, we allow taken by the assessee for this year also and direct the AO to allow deduction. Reduce the claim of depreciation on total scrap sales - Held that:- We find that the assessee has claimed depreciation on total scrap sales which comprises different type of the assets. The assessee failed to produce value of each assets on which it claimed depreciation. Therefore, this facts needs to be verified to come to an exact price of each assets and depreciation therefore, respectfully following the Tribunal orders and citation relied upon by the assessee. We set aside the order of the ld. CIT(A) and restore this issue to the file of the AO for fresh application of mind. Accordingly, Grounds allowed for statistical purposes. Expenses incurred by the assessee in respect of cloth coupons issued to the shareholders - expenses incurred is wholly and fully for the purposes of business. Setting off the expenses against dividend income - Held that:- In the present case, the assessee neither before the AO nor the ld.CIT(A) or the Tribunal produced any documents how the assessee is eligible for deduction of the expenditures incurred for earning dividend income. We find that the ld. CIT(A) restricted the claim to 50%. Therefore, we are of the considered opinion, that this facts requires details investigation and verification at the level of AO to determine the exact expenditure incurred by the Assessee. The AO is directed to follow the decision rendered by the Hon’ble High Court in Godrej & Boyce Mfg. Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT). Disallowance of excess expenses incurred towards repairs and maintenance of house property - Held that:- Tribunal earlier in the assessee’s own case decided this issue against the assessee. The ld. AR could not produce any material to compel us to come to the different conclusion as taken by the Tribunal earlier - decided against assessee. Issues Involved:1. Disallowance of interest on advances to companies.2. Deferred revenue expenditure.3. Disallowance of interest on securities.4. Import duty benefit.5. Pooja expenses.6. Payment to relatives of deceased employees.7. Depreciation on sale of Micro Machine Division.8. Expenses on cloth coupons issued to shareholders.9. Setting off expenses against dividend income.10. Repairs and maintenance expenses of house property.Detailed Analysis:1. Disallowance of Interest on Advances to Companies:The assessee challenged the disallowance of interest amounting to Rs. 1,63,12,256 on advances to various companies. The AO added this amount to the total income, which was upheld by the CIT(A). The Tribunal, following its previous decisions and the precedent set by the Hon'ble Supreme Court in S.A. Builders, restored the issue to the AO for fresh adjudication. Thus, the ground was allowed for statistical purposes.2. Deferred Revenue Expenditure:The assessee claimed a deduction of Rs. 22,21,08,642 for expenses related to voluntary retirement, retrenchment compensation, and ex-gratia payments. The AO disallowed the claim, but the CIT(A) allowed 1/5th of the expenditure for the year under consideration and deferred the rest. The Tribunal, referencing its earlier decision and the jurisdictional High Court's ruling in Bhore Industries Ltd, allowed the entire claim for the year, setting aside the CIT(A)'s order.3. Disallowance of Interest on Securities:The AO added Rs. 15,840 as interest on securities to the total income, which was confirmed by the CIT(A). The Tribunal noted that similar additions had been upheld in previous years and thus dismissed the ground.4. Import Duty Benefit:The AO added Rs. 422.93 lakhs as estimated import duty benefit. The CIT(A) restored the issue to the AO for allowance in the relevant years. The Tribunal, following its earlier decision in the case of Jamshri Rajitsinghji Spinning and Weaving Mills Ltd, allowed the claim for the year.5. Pooja Expenses:The AO disallowed Rs. 2,30,445 claimed as pooja expenses, which was upheld by the CIT(A). The Tribunal, referencing its decisions in earlier years, allowed the claim, recognizing it as an allowable expenditure.6. Payment to Relatives of Deceased Employees:The AO disallowed Rs. 3,49,027 paid to relatives of deceased employees, following jurisdictional High Court decisions. The CIT(A) set aside the issue for verification. The Tribunal, maintaining consistency with its earlier decisions, allowed the claim and directed the AO to allow the deduction.7. Depreciation on Sale of Micro Machine Division:The AO reduced the depreciation by Rs. 2,49,99,735 on the sale of the Micro Machine Division, which was upheld by the CIT(A). The Tribunal restored the issue to the AO for fresh adjudication, following its earlier decision and relevant precedents.8. Expenses on Cloth Coupons Issued to Shareholders:The AO disallowed Rs. 77.66 lakhs claimed as business expenditure for cloth coupons issued to shareholders. The CIT(A) allowed 50% of the claim. The Tribunal upheld the CIT(A)'s decision, dismissing the ground.9. Setting Off Expenses Against Dividend Income:The AO disallowed Rs. 3,50,98,649 as expenses incurred for earning dividend income, invoking Section 14A. The CIT(A) reduced the disallowance to 50%. The Tribunal, referencing the jurisdictional High Court's decision in Godrej & Boyce Mfg. Co. Ltd, remanded the issue to the AO for detailed investigation and verification.10. Repairs and Maintenance Expenses of House Property:The AO restricted the deduction for repairs and maintenance to 25% of Rs. 34,76,882, which was upheld by the CIT(A). The Tribunal, following its earlier decision in the assessee's case, dismissed the ground.Conclusion:The Tribunal allowed some grounds for statistical purposes, remanded others for fresh adjudication, and dismissed a few based on earlier decisions and relevant precedents. The appeal was partly allowed for statistical purposes.