2018 (1) TMI 1558 - HC - Income Tax

Appeal Disputes Tribunal Decision on Tax Issues for 2006-07

The appeal challenged the Income Tax Appellate Tribunal's decision on various issues for the assessment year 2006-07. The key disputes included the ... Deduction u/s 80IA - Tribunal held that the Head Office expenses cannot be allocated to profits derived from 100% export oriented units falling under Section 80IA - HELD THAT:- For the reasons as indicated in our order in [2018 (1) TMI 900 - BOMBAY HIGH COURT] and [2018 (1) TMI 1557 - BOMBAY HIGH COURT ] in respect of the same Respondent-Assessee for the assessment year 2002-03 and 2003-04, the question as proposed does not give rise to any substantial question of law. Thus, not entertained. Claim of depreciation on 'goodwill' - HELD THAT:- Issue herein was also raised by the Revenue in [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same Respondent­-Assessee relating assessment year 2002-­03. We have by an order passed today not entertained the Income Tax Appeal on this issue / question. Accordingly, for the reasons mentioned in our order passed today this question does not give rise to any substantial question of law. Thus, not entertained. Disallowance u/s 14A being 0.5% of the average nonstrategic investments -TDS provisions applicability for the provisions made at the year end - amount claimed as provision for leave encashment in view of Section 43B(f) of the Act? - Appeal is admitted on the substantial questions of law at Nos. 1, 2 and 3 hereinabove. Issues:1. Disallowance under Section 14A2. Applicability of TDS provisions3. Provision for leave encashment under Section 43B(f)4. Allocation of Head Office expenses5. Claim of depreciation on 'goodwill'Disallowance under Section 14A:The appeal challenges the order passed by the Income Tax Appellate Tribunal related to the assessment year 2006-07. The Revenue questions the Tribunal's decision to restrict the disallowance under Section 14A to a specific amount despite substantial exempted income and investments. The issue revolves around whether the Tribunal's decision was correct considering the circumstances of the case and the law. The key contention is the adequacy of the disallowance amount in relation to the exempted income and investments.Applicability of TDS provisions:The second issue raised by the Revenue questions the Tribunal's decision on the applicability of TDS provisions for provisions made at the yearend. The Tribunal's reliance on previous decisions regarding TDS provisions in specific cases is under scrutiny. The crux of the matter is whether the Tribunal's decision aligns with the law and the factual circumstances of the case.Provision for leave encashment under Section 43B(f):The third issue pertains to the Tribunal's decision to allow the amount claimed as provision for leave encashment in view of Section 43B(f) of the Income Tax Act. The dispute centers around the interpretation and application of the relevant section in allowing the provision for leave encashment. The question is whether the Tribunal's decision was legally sound given the facts and circumstances of the case.Allocation of Head Office expenses:The fourth issue questions the Tribunal's ruling on the allocation of Head Office expenses to profits derived from 100% export-oriented units falling under Section 80(A). The dispute involves whether the Tribunal was correct in its decision regarding the allocation of expenses and the application of Section 80(A) in this context. The crux of the matter is the proper allocation of expenses in relation to the profits derived from specific units.Claim of depreciation on 'goodwill':The final issue concerns the Tribunal's decision to allow the claim of depreciation on 'goodwill.' The controversy lies in whether the Tribunal's decision to permit depreciation on goodwill was in accordance with the law and the factual circumstances of the case. The key point of contention is the eligibility of goodwill for depreciation and the correctness of the Tribunal's decision in this regard.