1992 (1) TMI 148 - AT - Income Tax

Tribunal partially allows appeal, directs re-examination of claims, upholds disallowances.

Dunlop India Limited. Versus Assistant Commissioner Of Income-Tax.

The Tribunal partly allowed the appeal, directing re-examination of certain claims. The disallowance of Rs. 2057.77 lakhs under Section 43B and interest ... Advance Tax, Amnesty Scheme, Assessed Tax, Carry Forward, Excise Duty, High Court, Interest Payable By Assessee, Previous Year, Revised Return, Words And Phrases Issues Involved:1. Disallowance of Rs. 2057.77 lakhs under Section 43B of the Income-tax Act, 1961.2. Additional liability of Rs. 625 lakhs under Section 43B.3. Charging of interest under Section 215.4. Disallowance of Rs. 15,09,100 under Section 40A(5).5. Disallowance of Rs. 49,000 as contribution to Workers' Benevolent Fund.6. Depreciation and investment allowance on various items.7. Relief under Sections 80J and 80HH.8. Disallowance of Rs. 30,00,000 as bad debts.Issue-wise Detailed Analysis:1. Disallowance of Rs. 2057.77 lakhs under Section 43B:The main controversy relates to the disallowance of Rs. 2057.77 lakhs under Section 43B of the Income-tax Act, 1961. The assessee, a public limited company, had a total excise duty liability of Rs. 8312.41 lakhs, out of which Rs. 6,664.77 lakhs was paid and allowed as a deduction. The remaining liability included Rs. 1022.64 lakhs debited in the Profit & Loss Account. The Assessing Officer disallowed this amount under Section 43B, considering it as an outstanding liability of duty. The CIT(A) further noted that the total unpaid liability was Rs. 1647.64 lakhs and added another Rs. 625 lakhs, making the total disallowance Rs. 2057.77 lakhs. The Tribunal upheld the CIT(A)'s decision, stating that the entire amount represented statutory liability for excise duty incurred during the year and was covered by the provisions of Section 43B.2. Additional Liability of Rs. 625 lakhs under Section 43B:The CIT(A) found that the outstanding excise liability was Rs. 1647.64 lakhs, but only Rs. 1022.64 lakhs was debited to the Profit & Loss Account. The assessee had adjusted Rs. 625 lakhs representing liabilities of earlier years no longer required. The CIT(A) enhanced the assessment by Rs. 625 lakhs, stating that the entire amount of Rs. 1647.64 lakhs should have been disallowed under Section 43B. The Tribunal agreed with the CIT(A), noting that the assessee had adopted a sophisticated device to show a lower outstanding liability and that the entire amount was subject to disallowance under Section 43B.3. Charging of Interest under Section 215:The Assessing Officer charged Rs. 4,71,59,042 as interest under Section 215 for shortfall in the payment of advance tax. The assessee contended that the disallowance under Section 43B and failure to allow proper benefit of TDS and deposits with IDBI led to the shortfall. The CIT(A) upheld the levy of interest, stating that the assessee was liable to pay interest from 1-4-1984 up to the date of payment of self-assessment tax. The Tribunal directed the Assessing Officer to exclude the amount added under Section 43B for computing 'assessed tax' for the levy of interest, considering the stay order from the High Court.4. Disallowance of Rs. 15,09,100 under Section 40A(5):The disallowance was made for cash reimbursement of medical expenses and house rent allowance to employees beyond the prescribed limits. The CIT(A) directed the Assessing Officer to recompute the amount disallowable after excluding the admissible limit for 71 employees. The Tribunal, citing the decision of the Calcutta High Court in CIT v. Indian Explosives Ltd., directed the Assessing Officer to examine the details afresh and pass a fresh order.5. Disallowance of Rs. 49,000 as Contribution to Workers' Benevolent Fund:The CIT(A) confirmed the disallowance, stating that the contribution was inadmissible under Section 40A(9). The Tribunal held that the contributions made under a settlement with workers were covered under exceptions provided in Section 40A(9) and directed the Assessing Officer to delete the disallowance.6. Depreciation and Investment Allowance on Various Items:The assessee claimed depreciation and investment allowance on moulds, machinery, and other items. The CIT(A) directed the Assessing Officer to re-examine the claims and allow proper depreciation and investment allowance. The Tribunal upheld this direction, noting that the matter needed further examination and that the assessee's shifting stand required a thorough review by the Assessing Officer.7. Relief under Sections 80J and 80HH:The assessee claimed relief under Sections 80J and 80HH in additional grounds of appeal. The CIT(A) directed that if the claim was allowed in earlier years, consequential relief should be allowed in the current year. The Tribunal admitted the additional grounds and directed the Assessing Officer to examine the claim and allow appropriate relief in accordance with the law.8. Disallowance of Rs. 30,00,000 as Bad Debts:The assessee claimed bad debts of Rs. 30,00,000 in additional grounds of appeal. The CIT(A) refused to entertain the claim, stating that it was an afterthought. The Tribunal agreed, noting that the claim was not justified and that the original admission by the assessee was not shown to be erroneous. The Tribunal declined to interfere with the CIT(A)'s refusal to entertain the grounds of appeal relating to bad debts.Conclusion:The Tribunal partly allowed the assessee's appeal, directing the Assessing Officer to re-examine certain claims and make necessary adjustments in accordance with the law. The disallowance of Rs. 2057.77 lakhs under Section 43B and the charging of interest under Section 215 were upheld, with specific directions for recomputation. The disallowances under Sections 40A(5) and 40A(9) were to be re-examined, and the claims for depreciation, investment allowance, and relief under Sections 80J and 80HH were to be considered afresh. The claim for bad debts was rejected.