TaxTMI 
TaxTMI 
2007 (2) TMI 277
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....aval Education Trust, in view of the provisions contained in section 40A(9) of the Act. It was mentioned that he erred in not following the decision of the Hon'ble Andhra Pradesh High Court in the case of CIT v. Wazir Sultan Tobacco Co. Ltd. [1988] 169 ITR 139 and that of the CIT (Appeals) in assessee's own case for assessment years 1987-88 to 1998-99. In the course of hearing before us, the learned counsel for the assessee fairly conceded that this issue has been decided against the assessee in earlier years by the Hon'ble ITAT, Mumbai Bench 'F', Mumbai, in ITA Nos. 3211 and 3212/Mum./2000 for assessment years 1997-98 and 1998-99, a copy of which was placed in the paper book on pages 6 to 11. Paragraph 14 of the order deals with this issue, wherein it is mentioned that this very issue was considered by the Tribunal in the case of the assessee for assessment year 1995-96. In that order it was held that the deduction is not permissible in view of the provision contained in section 40A(9) of the Act and, consequently, the appeals of the revenue for assessment years 1997-98 and 1998-99 were allowed. Respectfully following that decision, this ground is dismissed. 3. Ground No. 2 is ag....
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....t demand notices were dated 29-5-2001 and 16-6-2000, the dates falling in the previous years relevant to assessment years 2001-02 and 2002-03 respectively. The expenses had been recognized as previous years' expenses in the audit report. Therefore, the expenses were held not to be deductible in the computation of income of this year. Before the learned CIT (Appeals) it was represented that the Inspector made the enquiry and inspection in the financial year 1999-2000 and the demand was paid in the subsequent financial year. Therefore, it was contended that if the liability was not deductible in this year, it may be, without prejudice to the claim of the assessee for this year, allowed in the next financial year. The learned CIT (Appeals) furnished the details of the liabilities in paragraph 3.3 of his order. It was pointed out that the liability pertained to the years 1993-94, 1994-95 and 1995-96, aggregating to Rs. 15,95,438. Interest of Rs. 6,11,075 was also charged. The assessee had not made any provision in the accounts for the liabilities of assessment years 1996-97 and 1997-98. A provision aggregating to- Rs. 4 lakh was made in the accounts of this year for these liabilities o....
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....n the assessee as principal employer and it depended upon its acceptance by the assessee. The demand was made on 29-5-2000 and paid on 29-6-2000. Both these dates do not fall in the year under consideration. The rest of the liability was demanded in the financial year 2002-03 and paid in that year. Therefore, the ratio of the aforesaid case does not advance the case of the assessee, but goes against the assessee. 3.4 Further, the learned counsel relied on the decision of Hon'ble Bombay High Court in the case of CIT v. United Motors (India) Ltd. [1990] 181 ITR 347. The question in that case was whether on the facts and in the circumstances of the case, the amount of Rs. 76,680 was deductible as expenditure in the assessment for the accounting period relevant to assessment year 1972-73? The terms and conditions of the service of workmen employed by the assessee were governed by the award. The Trade Unions gave a notice to the assessee terminating the award with effect from two months thereafter. This fact was taken notice of and a provision of Rs. 1 lakh was made in the books for the impending liability. The negotiations between the employer and the union resulted in settlements on ....
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....on Pvt. Ltd., as borne out by the order of the Deputy Director on page 2. Therefore, it was pointed out that it cannot be said that the assessee was totally unaware of non-payment by the sister concern. The assessee had not made provisions in earlier years, as borne out by the order of the learned CIT (Appeals) in paragraph 3.3. Therefore, it was his case that either these liabilities were deductible in the years in which the provisions ought to have been made, namely, assessment years 1996-97 and 1997-98 or in the year in which the liability was actually fastened on the assessee, namely, assessment years 2001-02 and 2002-03. 5. We have considered the facts of the case and rival submissions. It is a matter of fact that the impugned liability was partly that of M/s. Sakanson Pvt. Ltd., a sister concern and partly that of the assessee. In absence of discharge of the liabilities, enquiries were conducted and finally an order was passed on 29-5-2000. The liability as per that order was to be paid within 15 days, but was actually paid by the assessee on 29-6-2000. It is no doubt true that the assessee made a provision in accounts for the year 1999-2000 on the basis of the enquiry lette....
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....N/05 except for change in the amounts under different points of addition. The assessee has also taken up a new ground that the learned CIT(A) erred in confirming the disallowance of depreciation of Rs. 20,05,480 on buildings and Rs. 1,44,44,830 on machinery, totalling to Rs. 1,64,50,310, in relation to capital subsidy, allegedly pertaining to buildings and machinery on the basis of assumed bifurcation made by the Assessing Officer. This issue has been discussed by the learned CIT(A) in paragraphs 16 to 18 of his order. It is mentioned that the assessee signed an agreement with National Dairy Development Board (hereinafter called the NDDB) on 20-4-1994, for loan to be used for expansion and addition to chilling center. Simultaneously, NDDB granted subsidy by way of agreement signed on 20-4-1994 of an amount of Rs. 16.62 crore. The assessee received subsidy amount of Rs. 7,78,34,115 up to 31-3-1999, as the close of the relevant previous year. As per the agreement of subsidy, it was given for machinery required for the project. On perusal of accounts, it was found that assets of the value of Rs. 33,18,20,381 were transferred to the fixed asset account in this year. In the course of a....
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.... judgment relied upon by the assessee. This Explanation provides that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement, by whatever name called, then, so much of the cost as is relatable to such subsidy, grant or reimbursement will not be included in the actual cost of the asset to the assessee. Thus, it was only that cost, which was actually paid or payable by the assessee, that forms the cost under section 43(1) and consequently, the cost for the purpose of deduction of depreciation. Accordingly, he upheld the order of the Assessing Officer in this behalf. 16.4 Before us, the learned counsel of the assessee posed a question whether Explanation 10 to section 43(1) was applicable prospectively or retrospectively. It was his view that if it operates prospectively, then, the decision has to go in favour of the assessee. He posed another question whether cost of asset can change from time to time. It was his case that subsidy received after 1-4-1999 only can be deducted f....
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....essee, resulting in lowering the amount of deduction by way of depreciation in computation of his income. It is not merely procedural in nature. Therefore, we are of the view that Explanation 10 is substantive in nature and contents. The impact of this decision is that it operates prospectively unless otherwise provided in the Act. The Act provides that this provision shall come into force with effect from 1-4-1999, which means that it is applicable to the assessment for assessment year 1999-2000 and onwards. 16.7 The second question posed by the learned counsel was whether the cost of an asset can change from time to time. We have a statutory provision in section 43A of the Act regarding consequence of a change in rate of exchange on the cost of an asset in respect of a foreign exchange denominated asset. The section provides that the cost shall be increased or decreased depending upon the increase or decrease in the liability on account of fluctuation in rate or rates of foreign exchange. By now law is well settled that such change should be reckoned from year to year, depending upon the rate of exchange at the close of the previous year. Therefore, in view of this statutory pro....
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....licable to the assessment year 1999-2000. Thus, the subsidy received in the previous year relevant to assessment year 1999-2000 only is not to be included in the actual cost. Thus, the result of this discussion is that this ground of appeal is partly allowed." 6.2 As against the aforesaid, the learned D.R. referred to paragraphs 4.2 and 4.3 of the order of the learned CIT (Appeals). It is mentioned that the special capital incentive had accrued to the assessee in financial year 1995-96 when eligibility certificate was issued by SICOM on 15-9-1995. The amount was received in this year and, therefore, adjustment was made in the book value of plant and machinery in this year. Since the incentive accrued in financial year 1995-96, it was argued that provisions of the aforesaid Explanation 10 were not applicable. The learned CIT (Appeals) pointed out that the assessee made adjustment in the book value of plant and machinery on receipt basis and mercantile basis was not followed for this purpose. In view thereof, it was held that the aforesaid provision was applicable to the facts of this case. The case of the learned DR was that the cost or the WDV can change from year to year, dependi....