TaxTMI 
TaxTMI 
2010 (1) TMI 941
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....of MAT liability. 4. On the facts and in the circumstances of the case, the ld. Commissioner of Income-tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 5. It is, therefore, prayed that the order of the Id. Commissioner of Income-tax (Appeals)-XIV, Ahmedabadmay be set-aside and that of the Assessing Officer be restored." ITA No. 1361/Ahd./2009 [Assessee]:- "1. On the facts and circumstances of the case and in law, the CIT(A)erred in confirming the finding of the Assistant Commissioner of Income-tax, Circle 8, Ahmedabad (hereinafter referred to has the 'AO') holding that the appellant has started providing telecommunication services during the previous year relevant to the assessment year 1996-97. 1.1 The CIT(A) erred in stating that:- (i) The appellant has started providing communications services as soon as it undertook the first activity of installation of sites and towers. (ii) The Director's report for the year ending March 31, 1996 shows that site preparation was near completion by March 31, 1996. (iii) The appellant has completed 25 per cent of the activity whic....
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.... deduction as revenue expenditure. 5. On the facts and in the circumstances of the case, the CIT(A) erred in holding that the miscellaneous income of Rs.16,60,841 and scrap sales of Rs.4,99,681 are not income derived from business of the appellant's industrial undertaking and, hence, not eligible for deduction under section 80-IA of the Act. 6. On the facts and in the circumstances of the case, the CIT(A) erred in confirming the action of the Assessing Officer in levy of interest under sections 234B and 234C where the total income was computed under the provisions of section 115JB of the Act. The appellant craves leave to add, to amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal." 2. Adverting first to ground Nos. 1 to 1.3 in the appeal of the assessee, facts, in brief, as per relevant orders are that the e-return declaring income of Rs.2,27,38,451 filed on 28-12-2006 by the assessee, a cellular service provider in the State of Gujarat, after being processed under section 143(1) of the Income-tax Act, 1961 (hereinafter to be referred to as 'the Act'), was selected....
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....ted on 11-1-1996. Referring to note No. B-9 of schedule 7 to the audited accounts for the financial year 1995-96 as also decisions in the case of CIT v. ESPN Software India (P.) Ltd. [2008] 301 ITR 368 (Delhi) and CITv. Saurashtra Cement and Chemical Industries Ltd. [1973] 91 ITR 170 (Guj.), the Assessing Officer concluded that date of license should be taken as date of commencement of business. Accordingly, it was held that the first year of providing telecommunication services was assessment year 1996-97 and not the assessment year 1997-98, as claimed by the assessee. 3. On appeal, it was contended on behalf of the assessee that mere signing the license agreement without having any infrastructure for rendering telecom services does not lead to the conclusion that the assessee had started providing the telecom services. In fact, the assessee launched its commercial services in Ahmedabad and Gandhinagar on 24-1-1997. While referring to the decisions in the case of Jt. CIT v. Sardar Sarovar Narmada Nigam Ltd. [2005] 93 ITD 321 (Ahd.), Western India Vegetable Products Ltd. v. CIT [1954] 26 ITR 151 (Bom.) and CIT v. Sponge Iron India Ltd. [1993] 201 ITR 770 (AP), the assesse....
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....rious decisions, the ld. CIT(A) further concluded that decision taken in regard to an earlier assessment year does not operate as res judicata in the subsequent year. 5. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT (Appeals). The learned AR on behalf of the assessee while carrying us through the impugned orders and the relevant documents in the paper book submitted that the company was incorporated on 14-3-1995 while certificate of commencement of business was granted on 4-4-1995. The company entered into an agreement with the Government for providing telecommunication services in the State of Gujarat vide agreement dated 11-1-1996 while the commercial services were launched only on 24-1-1997. While inviting our attention to the provisions of section 80-IA(4)(ii) of the Act, the ld. AR submitted that the words used in the section are "starts providing telecommunication services". In view of these specific words, it cannot be said that the company started providing telecommunication services when certificate of commencement of business was granted since for providing telecommunication services huge infrastructure is necessary. While....
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....-97 was the first year when the assessee started providing telecommunication services. On the other hand, the learned DR supported the findings of the ld. CIT(A). 6. We have heard both the parties and gone through the facts of the case as also the decisions referred to before us. The issue before us is as to when the assessee started providing telecom services in terms of provisions of section 80-IA(4)(ii) of the Act. The issue is not as to when the assessee set up or commenced business as has been considered by the ld. CIT(A). Undisputedly, after signing the license agreement on 11-1-1996, the assessee started the process of installation of various infrastructural facilities like telecom towers, leased lines, data circuits and other communication equipments, etc., at various sites. Mere receipt of license to provide telecommunication services without any infrastructure or resources would not result in providing telecommunication services. In this connection, it would be relevant to read the following note B-1 to the annual accounts for financial year 1995-96, which reveals as under:- "As the company has not commenced its commercial services during the year unde....
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....n the case under consideration, the Assessing Officer has not reopened the assessment proceedings for the assessment year 1996-97. Instead, the findings recorded in the assessment year 1996-97 are being reconsidered in the year under consideration. This approach of the Assessing Officer is against the settled position in law. As observed by the Hon'ble Apex Court in their aforesaid decision, Assessing Officer can reopen a question previously decided only if fresh facts come to light or if the earlier decision was rendered without taking into consideration material evidence, etc. No such material has been placed before us on behalf of the Revenue that certain fresh facts came to light or that relevant material evidence was ignored at that time in the proceedings for the assessment year 1996-97. In these circumstances, we find merit in the undisputed contentions of the ld. AR that principles of consistency should have been adhered to. In this connection, Hon'ble jurisdictional High Court in their decision in the case of Taraben Ramanbhai Patel v. ITO [1996] 84 Taxman 129 (Guj.) in the context of levy of penalty under section 271(1)(a) observed as under:- "It is no doubt tru....
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....] 257 ITR 59 (SC) and Union of India v. Satish Pannalal Shah [2001] 249 ITR 221 (SC). In our opinion, there was no good and justifiable cause to take a different view and conclude in the assessment proceedings for the year under consideration that the assessment year 1996-97 was the first year when the assessee started providing telecommunication services, without there being any change in the factual position and when the earlier decision was not challenged by the Department. As pointed out in the Director's report for the assessment year 1997-98 and the relevant accounts for that year, the assessee started providing telecommunication services only in the period relevant to the assessment year 1997-98. The evidence brought to our notice by the ld. AR on behalf of the assessee and uncontroverted by the revenue unmistakably points out that the assessee started providing telecommunication services in the period relevant to the assessment year 1997-98 and this has already been concluded in the assessment proceedings for the relevant assessment year 1997-98. In view thereof, we have no hesitation in vacating the findings of the lower authorities on this issue and, therefore, allow grou....
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....rds for 10 consecutive years as per the extant provisions. 7.1 The Assessing Officer further noticed found that the assessee exercised its option of not claiming deduction under section 80-IA from the first year of operation in the assessment year 1997-98 in view of loss in that year, as was evident from the note attached to the computation of the income for the assessment years 1997-98. Similar was the position in the assessment years 1998-99 and 1999-2000. However, in the return for the assessment year 2000-01, the assessee recorded a following note in the computation of income:- "In view of the provisions of sub-section (2) of section 80-IA of the Income-tax (sic) Act, 1961, the company exercises its option not to claim relief for tax holiday in the present year in view of the losses and would claim the same from the year in which it has gross total income." This note was recorded in view of the amendment in the provisions of section 80-IA of the Act by Finance Act, 1999 with effect from 1-4-2000. The Assessing Officer observed that the assessee having exercised the option in the assessment years 1997-98, 1998-99, 1999-2000, could not change its sta....
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....as started' prior to the words 'or starts' was to provide the tax holiday to undertaking which had already started providing telecommunication services prior to the insertion of amended provisions. While referring to Circular No. 779, dated 14-9-1999 and Circular No. 14 of 2001 and relying upon the decisions in case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC),Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198 (SC), CWT v. Vasudeo V. Dempo [1992] 196 ITR 216 (SC), Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 (SC), K.P. Varghese v. ITO [1981] 131 ITR 597 (SC), Commissioner of Customs v. Indian Oil Corpn. Ltd. [2004] 267 ITR 272 (SC), CCE v. Ratan Melting and Wire Industries [Civil Appeal Nos. 4022 of 1999, 3197 and 4789 of 2000, 1469 of 2002 and 3589-3592 of 2005, dated 14-10-2008], the assessee contended that the aforesaid circulars were binding on the Assessing Officer. Relying upon the decisions in the case of Reliance Jute and Industries Ltd. v. CIT [1979] 120 ITR 921 (SC), Maharajah of Pithapuram v. CIT [1945] 13 ITR 221 (PC), Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC) and CIT v. Goslino Mario [2008] 241 ITR 314 (Gau.), the ....
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....ssessment year 1996-97 and, therefore, the 10th year of claim is assessment year 2005-06 and, therefore, the appellant is not entitled to deduction under section 80-IA for this year. The appellant has taken a stand that provisions of section 80-IA were amended and as per amended provisions, the appellant can claim for deduction under section 80-IA in any of 10 years within a period of 15 years at the option of the appellant. According to the A.R., the appellant started claiming for the first time deduction under section 80-IA in assessment year 2005-06, as against this, the Assessing Officer has stated that under the old provisions, there was no question of exercising option and the first year of claim of the appellant was assessment year 1996-97. Therefore, the issue is which is the first year for claiming deduction under section 80-IA. The A.R.has strongly argued that first year of claim is assessment year 2005-06 when the appellant has started exercising option for claiming deduction under section 80-IA and even though it had profits in assessment year 2004-05 it had not claimed deduction under section 80-IA in assessment year 2004-05 and the A.R. has also contended that deducti....
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....e assessee who obtained license, but could not start operation till 2002, they were given the benefit of incentive provisions by such extension. The A.R. has claimed that deduction under section 80-IA cannot be thrust on the appellant in assessment year 1997-98 as the appellant has not claimed the same and that claimed means actually allowed. For this, the A.R. has relied upon the decision of Mahendra Mills Ltd 243 ITR 56 (SC). However, I do not agree with the contention of the A.R. as deduction of depreciation was the issue in Mahendra Mills Ltd. and in my view depreciation and deduction under section 80-IA stand on different footings as section 80-IA is an incentive provision and depreciation is allowed on account of wear and tear of assets and secondly, incentive under section 80-IA is allowed only in case the appellant has profits whereas the depreciation is a statutory deduction allowed even if the assessee has loss. The reliance has been made by the A.R. on the decision of Mohan Breweries and Distilleries Ltd 114 TTJ 532 (Chennai). But what that decision says is that section 80-IA as amended by Finance Act, 1999 gives an option to the assessee with effect from 1-4-2000 to cla....
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....of section 80-IA of the Act and not at the rate of 30 per cent. In the period relevant to the assessment year 1997-98, when the assessee started providing telecommunication services, it was entitled to deduction at the rate of 100 per cent of the profits for the first five years and at the rate of 30 per cent in the subsequent five years. The assessee did not actually claim any such deduction in the period relevant to the assessment year 1997-98 until the assessment year 2003-04 in view of losses. Meanwhile, provisions of section 80-IA were amended by the Finance Act, 1999 with effect from 1-4-2000 and the assessee exercised its option and consecutively became entitled to deduction at the rate of 100 per cent of the profits, the first year being assessment year 2005-06. Before this, the assessee did not make any claim for deduction under section 80-IA of the Act. While submitting that the words used in section 80-IA(4)(ii) are has started or starts...' and referring to para 48.2 of Circular issued by the CBDT, explaining the provisions relating to Direct Taxes stipulated in the Finance Act, 2001 and relying upon the decision in the case of Bajaj Tempo Ltd. (supra), learned AR submi....
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....ssment year was fixed under the statute and the assessee could not suo motu change. He added that provision for option was available to those undertaking who had after the insertion of the relevant provisions started providing telecommunication services and even thereunder option is for selection of 10 years and not lesser number of years. The ld. DR further submitted that once the assessee started providing telecommunication services, he had no option in terms of the extant provisions applicable for the assessment year 1997-98. He added that claim for deduction under section 80-IA of the Act has been examined only in the year under consideration and not in the preceding assessment years. 12. We have heard both the parties and gone through the facts of the case and the decisions cited before us. The issue before us as to whether or not the assessee is entitled to claim deduction under section 80-IA in terms of the provisions amended with effect from 1-4-2000 even when the assessee had already started providing telecommunication services in the period relevant to the assessment year 1997-98. Before proceeding further, we may have a look at the provisions relevant to the as....
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....undertaking starts to provide the telecommunication services whether basic or cellular." 12.1 The relevant provisions of section 80-IA amended by the Finance Act, 1999 with effect from 1-4-2000 read as under:- "80-IA. Deductions in respect of prof its and gains from industrial undertakings or enterprises engaged in infrastructure development, etc:- (1) Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or an enterprise referred to in subsection (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to hundred per cent of profits and gains derived from such business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, twenty-five per cent of the profits and gains for further five assessment years:- Provided that where the assessee is a company, the provisions of this subsection sh....
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....p; (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or develops a special economic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution of power or undertakes substantial renovation and modernization of the existing transmission or distribution lines:- Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of subsection (4), the provisions of this sub-section shall have effect as if for the words "fifteen years", the words "twenty years" had been substituted. (2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication ser....
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....the assessee starts providing telecommunication services. Sub-section (4)(ii) of the said section stipulated that this section 80-IA applied to any undertaking which has started or starts providing telecommunication services. Simultaneously definition of ('initial year') in terms of the old provisions was removed. Consequently, the assessee exercised its option of claiming the deduction under section 80-IA from the assessment year 2005-06. The Assessing Officer and the ld. CIT(A) are of the opinion that the relevant provisions as these stood in the period relevant to assessment year 1996-97 would determine the deduction under section 80-IA of the Act in the year under consideration. Since the assessee did not have any option in choosing the initial year as defined in the provisions relevant for the assessment year 1997-98 nor the assessee could have claimed any deduction under section 80-IA of the Act in the assessment years 1996-97 to 1999-2000 or even after until the assessment year 2003-04 due to losses while the amended provisions provided option to the undertaking which had started providing telecommunication services on or after 1-4-1995 and the assessee fulfilled all other c....
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.... of the Act mentioned as under:- "48.2 The country's telecommunication services are modernizing rapidly and are critically poised. With a view to promoting communication capacity and convergence by encouraging investment levels in these segments, the two tier benefit is being extended to include internet service providers and broadband networks. The benefit is being similarly liberalized and shall uniformly cover all undertakings, set up after 1 st April, 1995, but on or before 31 st March, 2000, and will also include undertakings set up after 31st March, 2000." 12.4-1 In the light of aforesaid decisions and the Circular issued by the CBDT, at the cost of repetition, we may reiterate that the assessee could not be denied the benefit of the amended provisions, once it fulfilled the conditions stipulated in the relevant provisions of section 80-IA of the Act. These provisions have to be construed in consonance with the avowed aim and object of the Legislature in enacting these provisions and to further these and not to defeat these. The provisions of section 80-IA have to be construed reasonably in the context of the purpose for which these provisions have been am....
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.... relevant portion of the memorandum explaining the provisions of Income-tax (Second Amendment) Bill, 1998 read as under:- "Clause 3 seeks to amend section 10A of the Income-tax Act. Under the existing provisions, tax holiday is available to newly established industrial undertakings set up in free trade zones and to units set up in software technology parks for five years out of block of initial eight years, subject to fulfilment of certain conditions. The proposed amendment seeks to extend the period of holiday from five years to ten years in order to give added thrust to exports. Clause 4 seeks to similarly extend the five-year tax holiday period to 10 years to the export oriented units under section 10B of the Income-tax Act." 7.4 As is evident from the aforesaid memorandum, the period of tax holiday is extended for and from the assessment year 1999-2000 from five years to ten years in order to give added thrust to exports. The condition about the block of initial years has altogether been removed. The case of the taxpayer for the assessment years under consideration falls within the amended provisions. The finding of the ld. CIT(A) about the identity of the u....
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....10 consecutive assessment years should be always the first year of set up of enterprise. If the intention of the Legislature is that the first year of set up is the initial assessment year to claim deduction under section 80-IA, then there is no meaning giving option to the assessee to claim deduction for 10 consecutive assessment years out of 15th years. The meaning of the section 80-IA(2) is that the assessee can exercise the option in any 10 consecutive years starting from the first year in which the undertaking begins to operate any infrastructure facility. If the assessee opts to exercise the claim for first year, it should continue to claim the deduction for another 9 years. If it opted the second year to claim deduction, it should continue for another 9 years till the 11th year; similarly if it opted to claim relief from the 3rd year, it will end in the 12th year; if it opted to claim from the 4th year then it will end in the 13th year; if it opted to claim from the 5th year it will end in the 14th year and if it opted to claim from the 6th year, it will end in the 15th year.... 6. Adverting to the facts of the case the initial assessment year in this case starts f....
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....A of the Act, the ld. CIT(A) was not justified in holding that the benefit of substituted provisions was available only to those undertakings which were granted a license after 1-4-1995 and could not start operations until 1-4-2002. We are of the opinion that such an restrictive interpretation does not emerge from the amended provisions. The ld. CIT(A) was also not justified in concluding that the assessee having exercised option in the period relevant to the assessment year 1997-98 [even though there was no such provision of exercising option and the assessee could not claim any such deduction in view of loss], provisions of section 80-IA of the Act substituted from the assessment year 2002-03 would not apply. 12.9 In view of the forgoing, ground Nos. 2, 2.1 and 2.2 in the appeal of the assessee are allowed. 13. Next ground No. 3 in the appeal of the assessee relates to confirmation of the action of the Assessing Officer in setting of losses of earlier assessment years 1997-98 to 2000-01 without giving effect to the provisions of section 79 of the Act while computing the deduction under section 80-IA of the Act. While referring to the provisions of section 80-I....
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....e been set off against the profits of the assessee from other sources. Inter alia, the ITAT relied upon the decisions in Goldmine Shares and Finance (P.) Ltd. (supra), Ashok Alco-Chem Ltd. (supra). Accordingly, the ITAT concluded in the assessment year 2005-06 that the gross total income of the assessee-company has first got to be determined after adjusting losses etc., and if the gross total income of the assessee will remain, then the assessee will be entitled to be deduction under section 80-IA(1) of the Act on that gross total income. In case, the gross total income of the assessee is nil, the assessee would not be entitled deduction under section 80-I(1) of the Act. 17. In the light of view taken by a co-ordinate Bench in the assessee's own case in the preceding assessment year, we have no alternative but to dismiss ground No. 3 in the appeal of the assessee. 18. Ground No. 4 in the appeal of the assessee relates to upholding the action of the Assessing Officer in holding that licence fees of Rs.67.51 crores paid by the assessee on a revenue sharing basis, is capital expenditure, incurred for the purpose of acquiring the license. During the course of assess....
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....n the nature of revenue expenses. However, the ld. CIT (Appeals) rejected these contentions of the assessee and upheld the disallowance made by the Assessing Officer, holding as under:- "6.3 I have considered the facts of the case and the submissions of the AR. From the details furnished, it is seen that the license fee was in the nature of capital expenditure as it was paid to acquire and keep in force the license/right to operate the telecommunication services. Further, the fee paid to keep the license in force had an enduring benefit since the appellant had obtained a right to operate the telecommunication services for a period beginning January, 1997 and ending in December, 2016. I, therefore, hold that the disallowance made by the Assessing Officer on this account is quite justified and this ground is dismissed." 20. The assessee is now in appeal against the aforesaid findings of the ld. CIT (Appeals). While inviting our attention towards pages 7 and 36 of the paper book, the learned AR on behalf of the assessee argued that up to 31-7-1999, the amount was capitalized. Subsequently in terms of new telecommunication policy (copy placed on pages 87 to 89 of th....
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....B to the agreement is at the rate of Rs.163.10 crores for the first five years and at the rate of Rs.195.72 crores for the subsequent 5 years The license fees for the first year was required to paid in lump sum prior to the signing of the agreement while for the subsequent years in quarterly instalments in advance. Undisputedly, deduction for license fees has been allowed in the preceding assessment years until the assessment year 2005-06. However, when the Assessing Officer sought to reopen the assessment for the assessment year 2005-06, the assessee moved Hon'ble jurisdictional High Court and proceedings relating to reopening of the assessment were stayed. For the year under consideration, the ld. CIT(A) upheld the disallowance of claim, treating the amount as capital expenditure. 21.1. In the light of aforesaid facts,we now proceed to an independent consideration as to whether the license fee of Rs.67.51 crores paid by the assessee on revenue sharing basis is allowable as business expenditure. In order to provide the telecom services, it is essential that the assessee makes use of the Telecom network owned by DOT. Under section 4 of the Indian Telegraph Act, 1885, the ....
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....f license fees undisputedly has been made for the use of the facilities provided by the DOT and derives its authority only from the statute. The payment is therefore inextricably bound up with the very business of the assessee and when it comes to the question of taxing the profits of that very business, it cannot be said that the claim to deduct the payment of the license fee will not be allowed. In our opinion, the amount can not be treated as capital in nature, the AO himself having allowed the claim in the preceding assessment years. The assessee has been carrying on the business of providing telecom services since the AY 1997-98. There is no change in the nature of the services rendered by the assessee since then. The assessee is already in the business of providing telecom services to the public while the license fee is for granting the assessee permission to make use of the telecom network owned by the DOT. Further in the year under consideration, the license fee is not a flat or fixed fee, but is linked to the revenue generated. Thus, it is directly related to actual working of the assessee's business. In Bombay Steam Navigation's Co. 1953 Ltd's case, it was held that the q....
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....ssessee's business. 22. Next ground no. 5 relates to the deduction under Section 80IA of the Act on the miscellaneous income of Rs.16,60,841/- and scrap sales of Rs.499681/-. Since miscellaneous income and scrap sales were not derived from the activity of the industrial undertaking of the assessee, the AO denied the claim for deduction under Section 80IA of the Act relying, inter alia, on the decision of the Ld. Commissioner of Income Tax(Appeals) in the Assessment Year 2005-2006 and decisions of the Hon'ble Apex Court in CIT vs. Pandian Chemicals Ltd.,262 ITR 278 (SC) and CIT vs. Sterling Foods (SC). 23. On appeal, the assessee contended that misc income comprise the following amounts: S. No. Particulars Amount (Rs.) 1. Recovery from call center 11,06,190 2. Cheque bouncing charges 1,88,383 3. Interest on Income Tax refund 2,20,510 4. Insurance claim 14,600 5. Inter user connect charges 67,060 6. Discount on credit cards 33,378 7. Miscellaneous credit entries in accounts 30,723 Total 16,60,841 The assessee argued that the aforesaid amounts are inextricably linked w....
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....n para 8.3 of his order reveals that the ld. CIT(A) have not passed a speaking order. We are of the opinion that the application of mind to the material facts and the arguments should manifest itself in the order. Section 250(6) of the Income Tax Act mandates that the order of the CIT(A) while disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. As is apparent from the impugned order, in our opinion, the order passed by the ld. CIT(A) is cryptic and grossly violative of one of the facets of the rules of natural justice, namely, that every judicial/quasi-judicial body/authority must pass reasoned order, which should reflect application of mind by the concerned authority to the issues/points raised before it. The requirement of recording of reasons and communication thereof has been read as an integral part of the concept of fair procedure and safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and minimizes arbitrariness in the decision-making process. We may point out that a 'decision' does not merely mea....
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....nd no. 6 in the appeal of the assessee is dismissed. 29. No additional ground having been raised in terms of the residuary ground, accordingly, this ground is dismissed. ITA No.1878/Ahd/2009 30. Now adverting to the appeal of the Revenue, ground no.1 relates to deletion of disallowance of Rs.48935/- on account of sale promotion expenses. The AO noticed that the assessee debited to the profit and loss account expenditure on account of gifts of Rs.48,935/- to the staff on the occasions of marriage etc. and the gift vouchers to the employees of the company on various occasions such as Diwali. Relying upon his own findings in the preceding assessment year, the AO concluded that marriage gifts are personal obligation of the director of the Company while the gift vouchers to the employees of the company on various occasions could not be termed as business expenditure.. Accordingly, the AO disallowed the entire amount. 31. On appeal, the ld. CIT(Appeals)while relying upon an order dated 09-01- 2009 of the ITAT in the assessee's own case for the AY2005-2006, allowed the claim of the assessee. 32. The Revenue is now in the appeal before us a....
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....ployees are covered by the decision of the Supreme Court in the case of Shahzada Nand and Sons, 108 ITR 358, wherein, it has been held that it is for the assessee to decide the commercial expediency as to what is to be given to the employees and the same cannot be disallowed. Similarly, out of general expenses no restrictions being there. In the current year, there seems o be no justification for disallowing which was incurred wholly for the purpose of business of the assessee. On the facts and in the circumstances of the case, we are of the opinion that the CIT(A) is right in deleting both the additions made by the Assessing officer. Accordingly, we uphold the order of the CIT(A) on these two grounds." From the above decision of the Tribunal, it is clear that the issue is squarely covered in favour of the assessee as the CIT(A) has categorically held that the facts being similar to earlier year. The relevant finding of CIT(A) in para-2 reads as under:- "2. The first ground of appeal is against disallowance of sales promotion expenses amounting to Rs.11,63,048/-. The AO has disallowed this amount out of sales promotion expenses on the ground that these relate to....
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....e us against the aforesaid findings of the ld. CIT(Appeals). Both the parties agreed before us that the issue is squarely covered by the decision dated 09-01-2009 by the ITAT in the assessee's own case for the Assessment Year 2005-2006. 38. We have heard both the parties and gone through the facts of the case. We find that while adjudicating a similar issue in ITA no. 1369 and 2000/Ahd /2008, a co-ordinate Bench of the ITAT in the assessee's own case for the AY 2005-2006 vide their order dated 9.1.2009 concluded as under: "35We find from the above fact that the income generated on account of bandwidth capacity and site sharing, which has direct nexus with the business income of the Industrial Undertaking, it means that the income derived from business of Industrial Undertaking is eligible for deduction u/s. 80IA(1) of the Act. In Section 80IA, the expression used is, "profits and gains derived from any business of industrial undertaking" clearly shows the intention of the legislature while inserting the words "any business of' was to give benefit of deduction not only profits and gains derived from industrial undertaking but also to give benefit of deductions in....
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.... CIT(Appeals)while relying upon an order dated 09-01- 2009 of the ITAT in the assessee's own case for the AY2005-2006, allowed the claim of the assessee. 42. The Revenue is now in the appeal before us against the aforesaid findings of the ld. CIT(Appeals). Both the parties agreed before us that the issue is squarely covered by the decision dated 09-01-2009 by the ITAT in the assessee's own case for the Assessment Year 2005-2006. 43. We have heard both the parties and gone through the facts of the case. We find that while adjudicating a similar issue in ITA no. 1369 and 2000/Ahd /2008, a co-ordinate Bench of the ITAT in the assessee's own case for the AY 2005-2006 vide their order dated 9.1.2009 concluded as under: "40. After hearing the rival contentions and going through the provisions of Section 115JB of the Act, it is seen that there is no provision under which Municipal taxes can be added while computing book profit u/s. 115JB of the Act. Moreover, the assessee argued that it has taken sites on rent in various parts of Gujarat. In the areas covered by the Municipal Corporations, the Municipal tax bills are generally received regularly. However, in ....