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2005 (2) TMI 748
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....nvenience. Revenue's Appeal I.T.A. No. 2062/Mum./1999 for assessment year 1995-96 (concise grounds) On the facts and in the circumstances of the case in law : (i) the ld. CIT(A) has erred in holding that unabsorbed depreciation of Rs. 3,66,60,505 for Kurkumbh Unit for assessment year 1994-95 which has been set off against other income of the assessee for the assessment year 1994-95 can't be carried forward and reduced while computing deduction under section 80-IA of the I.T. Act for assessment year 1995-96. (ii) The ld. CIT(A) erred in holding that Global Profit method adopted by the Assessing Officer in determining the actual income of Kurkumbh Unit eligible for deduction under section 80-IA is erroneous and thereby directing the Assessing Officer to allow deduction under section 80-IA amounting to Rs. 5,70,67,970. (iii) The ld. CIT(A) has erred in holding that as per section 80-IA(9) Kurkumbh Unit has to be treated as a separate business from the business of manufacturing taking place in other units of assessee. (iv) The ld. CIT(A) has erred in directing the Assessing Officer to adopt assessee's computation for allowing deduction under....
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....ght transaction and the transaction is at arms length and is a bona fide finance lease without appreciating that CIT(A) himself has given a finding that the value of the assets is highly jacked up merely to provide higher depreciation to the assessee and also that no income from lease rental from the leased assets had been accounted for in the year under consideration and date of commencement of the lease is doubtful. III. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting an addition of Rs. 48,01,865 made by the Assessing Officer on account of unutilized Modvat credit. IV. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the disallowance of Rs. 2,24,383 and Rs. 2,87,718 respectively made by the Assessing Officer on account of expenditure incurred on gift articles and dry fruits under Rule 6B of the I.T. Rules. V. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting a disallowance of Rs. 73,366 which was made by the Assessing Officer under rule 6D. I.T.A. No. 4619/Mum./2000 for assessment year 1997-98 1.(i....
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...., as per the appellant, do not represent market prices in the context of insignificant volume of the transactions and, in not accepting the appellants contentions that in such cases the transfer prices should be based on or derived from the representative market price being the cost of actual purchases or the prevailing procurement prices. (b) Not directing the valuation of the opening stock at the rates adopted by him for valuation of transfers in the year under consideration. (c) Not considering as part of eligible profit, interest and misc. receipts and miscellaneous earning on technology transfer included in other income. 3. The CIT(A) erred in confirming the disallowance of : (a) Rs. 11,93,012 being 25% of the foreign travel expenses of Dr. Y.K. Hamied, Chairman and Managing Director of the company following the order of the CIT(A) for earlier year. (b) Rs. 4,25,256 being 10% of foreign travel expenses of all persons other than Dr. Y.K. Hamied. 4. The CIT(A) erred in confirming the disallowance of Rs. 4,39,073 being expenditure on food etc. incurred on staff debited to staff welfare expenses by treating the same as entertai....
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.... (d) Taking the global profit percentage, in respect of goods where selling price of Cipla was not available, at 20.31% instead of 25.48%. 2. The CIT(A) erred in confirming the disallowance of : (a) Rs. 8,35,516 being 25% of the foreign travel expenses of Dr. Y.K. Hamied, Chairman and Managing Director of the Company following the order of the CIT(A) for earlier year. (b) Rs. 3,83,699 being 10% of foreign travel expenses of all persons other than Dr. Y.K. Hamied. 3. The CIT(A) erred in confirming the decision of the JCIT, Spl. Range-23, Mumbai of treating Rs. 9,87,763 being expenditure on food etc. incurred on staff debited to staff welfare expenses, as entertainment expenses. 4. The CIT(A) erred in confirming the decision of the JCIT of treating 10% of canteen expenses amounting to Rs. 6,53,232 as entertainment expenses. 5. The CIT(A) has erred in confirming the stand of JCIT of taking the total turnover of the appellants, at Rs. 4,78,46,06,928 as against Rs. 4,51,88,60,159 taken by them for the purpose of working out the deduction under section 80HHC by including sales tax as part of total turnover. 6. The CIT(A) e....
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....ioned issue No. 2 in Department's appeals, as the arguments also have been made before us in respect of this issue first for the sake of convenience. This issue is contained in ground Nos. V and II in assessment years 1995-96 and 1996-97 respectively. The ld. DR has submitted that this issue pertains to the matter of Lease and buy back transaction wherein the assessee had purchased two boilers from M/s. Triveni Engineering Works Ltd. (TEWL) and subsequently leased back to them. He has contended that the ld. CIT(A) had restored the issue to Assessing Officer, who has framed the consequent fresh assessment repeating the same addition/disallowance and the assessee is already in appeal in the 2nd ground, so this issue has now been rendered academic. The ld. AR of assessee agreed that this has now become infructuous in this appeal as the assessee is already in appeal in 2nd round on this issue. As such, considering the contentions and the facts of the case, we find this issue to have become academic and in turn, infructuous. We, therefore, dismiss this issue accordingly for the reason of the same having become academic and in the turn infructuous. 9. Issue No. 1 pertains to deduction....
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.... year related to assessment year 1995-96. He has contended that the Kurkumbh Unit had already started in assessment year 1994-95 and the year under appeal being assessment year 1995-96 was 2nd year of Kurkumbh Unit. He has contended that the Assessing Officer took the stand that the earlier years' depreciation/unabsorbed loss which was set off against other income of assessee in assessment year 1994-95 was to be set off against income of Kurkumbh unit in assessment year 1995-96 and accordingly the Assessing Officer reduced the eligible profit of this unit by the amount of unabsorbed depreciation. He has contended that as per assessee, the initial assessment year was assessment year 1995-96 inasmuch as assessment year 1994-95 was the trial period and for this the assessee relied on the provision of section 80-IA[12(c)]. He has contended that sub-section [12(c)] of section 80-IA defines initial assessment year being related to previous year in which the industrial undertaking "begins to manufacture or produce" articles or things; and that the assessee having started production in the previous year related to assessment year 1994-95 the initial assessment year of assessee was assessme....
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....essee has contended that there is no finding of carrying forward in assessment year 1994-95; and it is only after finding of C/F that in subsequent year there can be set off. Referring to pages 1 to 12 PB, containing assessment order for assessment year 1994-95, he has contended that in this order there is no finding that there is unabsorbed depreciation of assessment year 1994-95 and is allowed to be carried forward. There should be finding in the preceding year 1994-95 which is not there and so there cannot be set off in assessment year 1995-96. He has cited Sri Rajarathinam Transports (P.) Ltd. v. CIT [1993] 199 ITR 203 (Mad.) in support of above contention. 12. He has contended that 80-IA(7) will apply to 2nd year following initial assessment year. He has contended that the question as to which year is initial assessment year no more arises for determination by the Tribunal inasmuch as the Assessing Officer himself has given finding of fact that assessment year 1995-96 is the initial assessment year. In this regard, he has referred to para No. 2 on page 2 and para 2nd on page 5 of Assessing Officer. He has contended that the contention of ld. DR that in assessment year 1994-....
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....as no question of C/F finding in assessment year 1994-95. 14. We have considered the rival contentions, relevant material on record as also the cited decisions. In CIT v. Cellulose Products of India Ltd. [1991] 192 ITR 155 (SC) the assessee was engaged in the business of manufacture of chemical products namely Carboxy Methyl Cellulose (CMC), cellulose pulp and other chemical products. The assessee was granted licence for manufacture of sodium carboxy methyl. The respondent installed plant in which was manufactured cellulose pulp, which, in its turn, was to be used as a raw material for manufacture of carboxy methyl cellulose. The production of cellulose pulp was started from March 18, 1961 while production of carboxy methyl cellulose was started from June 15, 1961 "The ITO took the view that since the respondent had started production of cellulose pulp from March 18, 1961, it had begun to manufacture or produce finished articles or goods in the year ending on March 31, 1961, and consequently, the assessment year 1961-62 was the first year in which the assessee was entitled to relief under section 84. According to him, the relief contemplated by section 84 being available only fo....
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....he meaning assigned to it in the Explanation to section 33B; (c )'initial assessment year' means the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning." 16. From the perusal of record, we find that in assessment year 1994-95 there was trial production only and not the commercial production of any article or thing; neither was there any commercial production of the end/finished product for marketing or to be sold by assessee, nor was there any such production of an intermediary article or product which itself was a marketable product. The Assessing Officer himself has accepted this fact that there is no denying the fact that commercial operations started during assessment year 1995-96 and for the purpose of deduction under section 80-IA assessment year 1995-96 is the first year of claim. As such, considering all the facts and circumstances of the case, we find that the commercial production having been started by assessee in assessment year 1995-96, the 'in....
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....d proper. The third concised ground is against the finding of the CIT(A) that the Kurkumbh undertaking has to be treated as a separate business from the business of manufacturing taking place in other units of the assessee. And the fourth ground of appeal raised is against the direction of the CIT(A) to the Assessing Officer to adopt assessee's computation for allowing deduction under section 80-IA and also holding that the rates applied by the assessee for transfer in and out of Kurkumbh unit are in keeping with the market price in terms of section 80-IA(9) and are in order. In substance, this ground of appeal is common with the Revenue's ground of appeal No. 1 in each of assessment years 1996-97 and 1997-98. We, therefore, deal with the issue of computation of profits derived by the industrial undertakings for all 3 years in a consolidated manner. 18. The facts, relevant to the issue, under our consideration, as ascertainable from the material on record including the fact-sheet, synopsis, write up etc. furnished by the parties before us as also the contentions made by the two rival representatives, may for convenience, be stated as under: (i) The assessee, engaged in ....
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....y Rs. 2.98 crores and the values of receipts are understated by Rs. 2.72 crores. (x) Annexure 'A' to the order of CIT(A) contains cases where the Assessing Officer has alleged undervaluation of receipts. The aggregate amount of under-valuation as per the said Annexure 'A' is of Rs. 2.62 crores (Rs. 2.72 crores stated by Assessing Officer incorrectly due to an arithmetical calculation error in respect of the transfer at Sr. No. 1 in Annexure 'A') Annexure 'B' to the order of the CIT(A) contains cases of receipts by Kurkumbh where the value of receipts would have decreased if Assessing Officer were to have adopted the same transfer pricing policy which he has adopted in Annexure 'A' for increasing the value of receipts. Annexure 'C' to the order of the CIT(A) contains the working of under-valuation of issues by Kurkumbh as alleged by the Assessing Officer. Annexure 'D' to the order of the CIT(A) contains those cases where value of issues would have increased if the Assessing Officer were to have adopted the same transfer pricing policy, which has been adopted by him for the valuation of issues in Annexure 'C' for decreasing the value of issues. ....
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....sold from Kurkumbh. He has contended that there is negative margin in Bulk Drug. He has contended that as per cost audit report the net actual profit of Kurkumbh unit is of Rs. 1.74 crores (Rs. 1.39 crores on domestic sales of formulations + Rs. 35 lakhs on exports formulation) then how the assessee company has declared a net profit of Rs. 9 crores as per its computation for deduction under section 80-IA for Kurkumbh unit. He has contended that the basis for this given by assessee is mentioned on pages 13 mad 14 of assessment order. He has contended that the pricing mechanism adopted by assessee for purchases and sales of intermediate/bulk drug from and to Kurkumbh unit vis-á-vis the other units shows that for certain items the assessee has taken domestic price while for other items the assessee has taken export price; and there is difference between local/domestic price and the export price. He has contended that on pages 14 and 15 of assessment order, the Assessing Officer has given chart showing the rate adopted for determining the margin in cost audit and the rate adopted in determining net profit for deduction under section 80-IA in respect of transfers in (receipt) and....
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....ld by the company. 24. He has contended that as a result:- "(a) For internal transfers, Assessing Officer has valued the bulk drugs at cost of production (without any mark-up towards profit percentage) where the drugs are not actually sold by the company - Annexure 'A' to the order of CIT(A). (b) For the drug intermediates, the concept of derived market price is ignored - Annexure 'C' to the order of CIT(A). (c) The concept of representation or most appropriate market price is ignored - Annexure 'A' to the order of CIT(A). (d) The Assessing Officer has applied this method only selectively i.e., where his method results into diminution of the profits derived under section 80-IA. Conversely if the adoption of the very same method is not applied in such cases. Please refer Annexures 'B' & 'D' to the order of CIT(A). (e) The Assessing Officer has not re-allocated the expenses in the ratio of the revised turnover of the undertakings based on his method. (f) Closing stock of transfers-in was not revalued as per the revised rates." 25. The ld. AR of assessee has contended that the Tribunal is to consider and adjudicate upon the q....
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....alganga and Kurkumbh in the year under consideration, namely, assessment year 1995-96. He has contended that the transfer pricing policy adopted for all the inter-unit transfers, including the transfers in and out of Kurkumbh undertaking, is common. 27. The ld. AR of assessee has contended that the Assessing Officer has observed in para 3a on page 8 of assessment order that the ratio of taxable income to the turnover of the company, as a whole, is 6% whereas in respect of Kurkumbh undertaking, the same works out at 19% and so he felt that the pricing strategy of the products received or issued by Kurkumbh which engineered such a net profit of the new undertaking, is disproportionate. He has contended that these observations of Assessing Officer are based on overall macro analysis but the Assessing Officer failed to consider a number of relevant aspects like taking taxable returned income of assessee-company after considering depreciation on leased assets in respect of leasing activity without adding back the depreciation on leased assets for appropriate comparison; not considering the proportion of other expenses (other than pricing of materials transferred in and out of Kurkumb....
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....erms of section 80-IA(9) prescribes the statutory supersession over the costs as per the costing records; and secondly that the Assessing Officer failed to consider the other side where the costs as per costing records are lower than the transfer price adopted in the case of receipts of Kurkumbh unit (Annexure 'B') and vice versa and those cases where transfer prices are less than costs in the case of issues of Kurkumbh unit (Annexure 'D'). 30. The ld. AR of assessee has contended that on page 16 of assessment order the Assessing Officer has illustrated six instances where the average sale price realization are more than the transfer price adopted by the assessee in case of receipts at Kurkumbh. The Assessing Officer has concluded that in such cases, the market related prices have been given a go-by. He has contended that out of six instances, 3 instances of transfers were of such nature, where the Kurkumbh undertaking had transferred these goods to the other undertaking and therefore, if at all, the profits had come to be understated rather than being overstated. In another instance, the fact of alleged defective transfer pricing was a nominal sum of Rs. 34,164. He has contende....
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....ily regulated controlled prices. Reliance is placed on the decision of Allahabad High Court in the case of Vijay Kumar Kedia v. CED [1976] 104 ITR 302 . In respect of items 3 and 9, the method of transfer pricing adopted is identical with that adopted in the case of transfers out as per Annexure 'C' to the order of CIT(A). It has been contended that the Assessing Officer has applied the principles propounded by him only in a selective manner where the cost of inputs were increased by the Assessing Officer and the prices of issues out were reduced by the Assessing Officer without considering the fact that by the application of very same principles in certain cases the cost of inputs will diminish [Annexure 'B' to the order of CIT(A)] and the prices of issues will increase [Annexure 'D' to the order of CIT(A)]. 33. The Assessing Officer has further observed on page 16 of assessment order that in such cases where sales have been registered of the Intermediates received by Kurkumbh, the average sale price will be the market driven rate. He has contended that the ld. CIT(A) has accepted the submission of assessee that where there is an evidence of more than one market price, the pric....
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....s are based on the rate of final bulk drugs on the basis of yields, the receipt should also have been based on the rate of formulations on the basis of yield. He has contended that the price of formulations is not taken into consideration at all both in cases of receipts and issues. He has contended that the inappropriateness of adoption of formulation pricing has been considered by the ld. CIT(A) by referring to the submissions made before him on page 38, Para 40 of the Appellate order. 38. He has contended that on pages 19 and 20 of assessment order the Assessing Officer has mentioned that the principles contained in section 80-IA(9) can be applied only if the goods transferred by the undertaking are held for the purpose of business of the undertaking and conversely, the goods received by the undertaking should be held for the purpose of business by the other undertakings. He has contended that this observation of Assessing Officer is unsustainable for the reason that if these observations of Assessing Officer were to be accepted then such a qualifying undertaking will not be able to derive any profits at all under section 80-IA. Citing in the case of Textile Machinery Corpn. ....
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....such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods as on the date : Provided that where, in opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.-In this sub-section, "market value", in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market." 42. In our opinion sub-section (9) of section 80-IA is to be read alongwith sub-section (7). A conjoint reading of both of these clauses leaves no room for doubt that the qualifying undertaking is to be treated as if it is the only source of income of the assessee. That is to say, the transaction of the qualifying undertaking with the othe....
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....nt of actual and comparable market prices presents exceptional difficulties contains this principle itself in that the transactions of the undertaking have to be assigned a commercial value based on the economic concept of value addition. In other words if direct evidence of market price is available then assigned market prices to the transfers will result in the depiction of the profits of the undertaking on commercial prices. The same results will be achieved if an appropriate commercial value is assigned to the transactions of the undertaking where the direct and comparable market price is not available but the commercial value is derived by the process of extrapolation of the prices of the final saleable output. We find substance in proposition canvassed before us on behalf of the assessee that one has to assume a hypothetical market and a hypothetical price in the context of section 80-IA(9) and that statutory regulatory control prices can also be applied as representative market prices. 45. On careful consideration of various facts brought on record and argument raised before us, we hold that Assessing Officer has failed to establish that the assessee has in respect of KK ....
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....he may exclude the same from the eligible profit to be considered for deduction under section 80-IA. 47. In assessment years 1996-97 and 1997-98, the ld. CIT-DR has raised his contention regarding the admission of additional evidence by the CIT(A) in the form of cost auditor's report. He has contended that this record was never produced before Assessing Officer during the assessment proceedings nor even at the stage of remand report and thus the Assessing Officer was precluded from making his submission on the said report and thus the action of the CIT(A) in relying upon the said evidence was in contravention of rule 46A of the Income-tax Rules and therefore, the matter regarding computation of deduction under section 80-IA be set aside and sent back to the CIT(A) for readjudication for compliance with rule 46A. 48. As against the above, the ld. AR of the assessee has contended that the said report of the cost auditor was not in the nature of additional evidence requiring compliance of rule 46A. He has further contended that the ld. CIT(A) had exercised his powers correctly in terms of section 250 of the Income-tax Act and there was no contravention of the provisions of rule ....
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.... the profits, which are actually earned by the undertaking on direct sales in respect of which there was no dispute whatever. It has been contended that the revenue should not have any grievance whatsoever against the conceptual mechanism adopted by CIT(A) which ultimately found reflection in the report submitted by Cost Auditor. 51. The ld. CIT (DR) supported the order of the Assessing Officer. It was emphasized by the ld. CIT (DR) that the circumstances brought out by the Assessing Officer in the assessment order were more than sufficient to justify the invocation of the proviso to section 80-IA(9). The Assessing Officer's action in applying the Global Profit Percentage was the logical culmination of his action in the correct invocation of the proviso to section 80-IA(9). 52. The ld. CIT-DR has also contended that the ld. CIT(A) has accepted the assessee's contention that duty drawback received on exports, which is major component of Income from Other Sources should be treated as part of the profits derived from the undertaking. It has been contended that the decision of the CIT(A) was directly in conflict with the decision of the Supreme Court in the case of CIT v. Sterlin....
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.... section 80-IA(9) requires that the captive transfers should be assigned a commercial value so as to depict the profits of the undertaking on commercial principles as if the undertaking is the solitary source of income of the assessee. For this purpose, market price of the transferred goods is required to be ascertained. In case such ascertainment presents exceptional difficulties, the Assessing Officer is empowered to compute the profits on such reasonable basis as he may deem fit. It is clear that the proviso does not empower the Assessing Officer at all to negate the concept of derivation of the profit of the undertaking on commercial principle by assigning commercial values to the transaction of the undertaking. The objective of the main section 80-IA and the proviso thereto is identical namely to derive the profits of the undertaking on commercial principles as if the undertaking is only source of the income. Considering the ratio of Tata Iron & Steel Co. Ltd. v. State of Bihar [1963] 48 ITR 123 (SC) wherein it has been held that the profits of each activity of an enterprise is required to be ascertained in a distributive sense, we are of the view that the proviso to section 8....
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....red which is debited to the profit and loss account and the Delhi Tribunal has considered this very aspect. Though the receipt of duty drawback is treated as deemed income under section 28, what the Tribunal has held is that this receipt, in substance, has the effect of reducing the corresponding expenditure debited to the profit and loss account. 57. In assessment year 1995-96, we have upheld the ld. CIT(A)'s impugned appellate order wherein the ld. CIT(A) had directed the Assessing Officer to allow deduction under section 80-IA in accordance with the computation submitted by assessee-appellant. However, in assessment years 1996-97 and 1997-98 the ld. CIT(A) has not accepted the assessee's claim in total but partly only while quantifying the profits of eligible undertaking for the purpose of deduction under section 80-IA. In our considered opinion the fact-situation basically being identical, we need justifiably follow our decision rendered above on similar issue in assessment year 1995-96 and apply the same principle/rationale in assessment years 1996-97 and 1997-98 as well. Since the method of computation of eligible profit for the purpose of deduction under section 80-IA is ....
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....s observed in para 52 of his impugned appellate order that all these three items of repairs expenses have been booked by assessee under the head "Current Repairs". The Assessing Officer treated the expenses for preserving and maintaining the existing assets as current repairs but the expenses for renewal/restoration of machinery, furniture, fittings etc. to be not falling within current repairs and accordingly, treating the same to be rendering the assets as to be of more durable character disallowed the same holding the same to be of capital nature. The ld. CIT(A) has noted that similar expenses have been allowed by the department in earlier years as revenue expenditure. The ld. CIT(A) however, considered the fact-situation together with the legal position held the expenses to be falling within the ambit of section 37 of Income-tax Act and accordingly deleted the addition of Rs. 57,82,509. Considering the facts and circumstances of the case as also the legal position, we find no fault with the impugned order of ld. CIT(A) and so we decline to interfere with the same. 64. Issue No. 4 pertains to deletion of addition of unutilized Modvat credit in closing stock. This issue is con....
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....the case of CIT v. Allana Sons (P.) Ltd. [1995] 216 ITR 690 as also Tribunal's order in assessee's own case for assessment year 1992-93 deleted the addition holding that there being no logo the issue was covered in favour of assessee by the aforesaid judgment/order. As such, considering the facts and circumstances of the case and respectfully following the above mentioned judgment/order, we find no fault with the impugned order of ld. CIT(A) in deleting the addition made by Assessing Officer in respect of gift articles which do not bear any logo and in turn, have no advertisement value. As regards the issue No. 5(ii), being in respect of expenses on dry fruits, the same is covered in favour of assessee by Tribunal's order in assessee's own case for assessment year 1994-95 rendered on 24-7-2003 in ITA No. 6342/Mum./1997 by 'F' Bench of ITAT, Mumbai, copy of which is placed on record before us. In the cited order the Tribunal has followed earlier order dated 16-4-2003 of Tribunal rendered in assessee's own case for assessment year 1993-94 in ITA No. 6208/Mum./1996 and treating the issue covered thereby deleted the addition that was made by Assessing Officer on account of expend....
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.... Food Exp. on staff of Rs. 4,39,073 for assessment year 1996-97 & Rs. 9,87,763 for assessment year 1997-98 4 3 - 10% of Canteen Exp. 5 4 5. Disallowance u/r 6D - per trip 7 6 6. Deduction under section 80HHC - Sales Tax & E. Duty 6 5 7. Lease & Buyback - Restored 8 - 8. Freight Elements in Cl. Stock 9 7 73. Issue No. 1 pertains to taxability of interest on right issue proceeds as income in assessment year 1996-97 as against the plea of assessee to treat this interest income as taxable in assessment year 1997-98. The ld. AR of assessee has contended that the dispute involved in this issue is as to whether the interest income is taxable in assessment year 1996-97 or in assessment year 1997-98. He has contended that as per assessee this interest-income is taxable in 1997-98 whereas the department's case is to tax it in assessment year 1996-97. He has contended that the fact-situation is that in assessment year 1996-97 the assessee made offer for right shares. He has contended that one of the conditions thereof was that shares will be listed in Bombay Stock Exchange and until the ....
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....t accrues year-to-year. He has accordingly contended that in this case therefore the interest accrues in assessment year 1996-97 and so the same is taxable in assessment year 1996-97. He has contended that all the companies are following the same procedure and there is no reason for postponement of taxability of income. 75. We have considered the rival contentions, the relevant material on record including the write up of the ld. DR as also the cited decisions. In Smt. Rama Bai v. CIT [1990] 181 ITR 400 (SC) it was held that the interest on enhanced compensation for land compulsorily acquired awarded by the Court accrued not on the date of the order of the Court granting enhanced compensation but accrued from the date when possession of land was taken and it accrued from year-to-year. However, this case is quite distinguishable from the case under our consideration on facts. On the contrary CIT v. Henkel SPIC (India) Ltd. [2004] 266 ITR 490 (Mad.), is directly on the issue and on identical facts, that is on the issue of accrual of interest on share application money deposited in the bank during the period between receipt of share application money and finalisation of....
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....Expenses, as contained in Ground Nos. V and IV in assessment years 1996-97 and 1997-98 respectively. The ld. AR of assessee has contended that this issue is covered partly in favour of assessee and partly against assessee by Tribunal's order for assessment year 1995-96 rendered in ITA No. 2157/Mum./1999. The ld. DR has supported the orders of authorities below. 80. We have considered the rival contentions, relevant material on record as also the cited decisions. From the perusal of record we find that in assessment year 1995-96 the Tribunal following the earlier orders of Tribunals for assessment years 1993-94 and 1994-95 has disallowed a sum of Rs. 2,00,000 out of 3.94 lakhs which is roughly about more than 50% and in assessment year 1994-95 the disallowance of Rs. 6 lakhs was sustained out of an expenditure of Rs. 13.88 lakhs. The figures in the remark column of assessee's chart regarding issues/matters in assessee's appeals contains incorrect figures in this regard. A perusal of CIT(A)'s impugned appellate order in assessment year 1996-97 reveals that vide para 11 on page 49 of his order, he has observed as under : "(1) Expenditure on staff on food and refreshment during l....