2017 (8) TMI 1721 - HC - Income Tax

Tribunal Upholds Key Tax Deductions; Disallows Depreciation Claims; Clarifies Sales Tax and Donation Treatments.

Pr. Commissioner of Income Tax, Kota Versus M/s. Chambal Fertilizers & Chemicals Ltd.

The Tribunal's decisions were consistently upheld across various contested issues. The deduction u/s 80IA for a captive power plant on DG Set was ... Deduction u/s 80IA - captive power plant on DG Set when the power consumption was by the assessee company - addition on account of depreciation on catalyst which was not allowable as per Section 32 - sales tax collected and converted into loan - treating pre-payment of deferred sales tax liability as income - donation to DAV trust disallowed - deduction u/s 50B towards net current assets at their book value - ITAT deleted the additions - HELD THAT:- The issue no. 1 to 6 are covered by the decision of this Court in the case of same assessee in Tax Appeal [2017 (5) TMI 1500 - RAJASTHAN HIGH COURT]. Revenue appeal dismissed. Issues:1. Deduction u/s 80IA to captive power plant on DG Set.2. Addition of depreciation on catalyst.3. Addition on account of sales tax collected and converted into loan.4. Treatment of pre-payment of deferred sales tax liability as income.5. Addition for donation to DAV trust.6. Club expenses incurred for the membership of employees.7. Deduction towards net current assets at book value for calculating capital gain.8. Disallowance of rent paid to wife of Vice Chairman of Company.9. Disallowance of claimed deductions u/s 43B for various payments.10. Addition of brokerage and consultancy expenses paid to M/s Zuari Investment Ltd.11. Addition of software consultancy charges paid to M/s ISG Novasoft Technology.Analysis:1. The appellant challenged the Tribunal's decision allowing deduction u/s 80IA to a captive power plant on DG Set. The issue was whether the Tribunal was justified in reversing the CIT(A)'s findings. The Tribunal's decision was upheld based on a previous judgment.2. The addition of depreciation on catalyst was disputed. The Tribunal's deletion of this addition was upheld, as it was found not allowable under Section 32 and Income Tax Rules.3. The addition on account of sales tax collected and converted into a loan was contested. The Tribunal's decision to delete this addition was upheld based on detailed facts and law analysis.4. The treatment of pre-payment of deferred sales tax liability as income was questioned. The Tribunal's decision to delete this addition was upheld, considering the timing of the incentive notification by the State Govt.5. The addition for donation to DAV trust was challenged. The Tribunal's deletion of this addition was upheld, as it was found not wholly and exclusively for the business purpose.6. Club expenses incurred for employee membership were disputed. The Tribunal's decision to allow these expenses u/s 37 was upheld, as it was deemed for the business purpose.7. The deduction towards net current assets at book value for calculating capital gain was contested. The Tribunal's decision was upheld, treating it as the cost of acquisition.8. The disallowance of rent paid to the wife of the Vice Chairman was disputed. The Tribunal's deletion of this disallowance was upheld due to lack of justification by the appellant.9. The disallowance of claimed deductions u/s 43B for various payments was challenged. The Tribunal's decision to delete this disallowance was upheld, as the appellant failed to prove previous disallowances.10. The addition of brokerage and consultancy expenses paid to M/s Zuari Investment Ltd. was disputed. The Tribunal's decision to delete this addition was upheld based on the nature of expenses and income scheme.11. The addition of software consultancy charges paid to M/s ISG Novasoft Technology was contested. The Tribunal's decision to delete this addition was upheld, considering the nature of expenses and income scheme.