TaxTMI 
TaxTMI 
2012 (5) TMI 237
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....ls which were there in A.Y. 1998-99 also were argued by both the sides and have been dealt with in separate order. In the present appeals grounds similar to those for A.Y. 1998-99 have not been argued separately by conceding by the rival parties that the facts and circumstances are similar. We will, therefore, simply follow the decision taken by us for assessment year 1998-99 in respect of such similar grounds in the batch of present appeals. ITA No.4672/Mum/2003 : Asst.Year 1999-2000 : Assessee's appeal : 3. First ground of the assessee's appeal is against the confirmation of disallowance of Dassara pooja expenses of Rs.21,91,523. This ground is similar to assessee's ground for assessment year 1998-99 which we have allowed vide para 3 of the said order. Ground no.2 is against the confirmation of disallowance of sports club expenditure of Rs.1,64,925. This ground is similar to ground no.2 for assessment year 1998-99 which we have allowed vide para 5 of the order. Following the view taken in immediately preceding year, we allow these two grounds of appeal. 4. Ground no.3 is against the confirmation of disallowance of contribution to Death Benevolent Fund / Scheme amounting to Rs.....
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.... income chargeable under the head "Profits and gains of business or profession" shall be in accordance with the method of accounting regularly employed by the assessee and further adjusted to include the amount of any tax, duty, cess etc. paid or incurred by the assessee to bring the goods to the place of its location as on the date of valuation. According to the prescription of this section, which is applicable to the year under consideration, the amount of tax, duty, cess etc. is liable to be included in the value of purchases, sales, opening and closing stock. It is not appropriate to include the closing Modvat in the figure of closing stock without modifying the figures of purchases, sales and opening stock. The Hon'ble jurisdictional High Court in CIT Vs. Mahalaxmi Glass Works Pvt. Ltd. [(2009) 318 ITR 116 (Bom.)] and the Hon'ble Delhi High Court in CIT Vs. Mahavir Alluminium [(2008) 297 ITR 77 (Del.)] have held to this extent. As the authorities below have not adjusted other figures with the amount of tax, duty, cess etc., we set aside the impugned order and restore the matter to the file of A.O. for deciding it afresh in accordance with the afore-noted judgements and the pro....
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....w taken by the learned CIT(A) on this issue. This ground is not allowed. 15. Ground no.2 is against the deletion of disallowance of Rs.1,45,250 being club expenses. This ground is similar to ground no.2 for assessment year 1998- 99. This aspect has been discussed in para 27 of the order. Following the view taken for assessment year 1998-99, we approve the opinion of the learned CIT(A) on this issue. This ground is not allowed. 16. Ground no.3 is against allowing deduction of Rs.2,70,801 being expenditure on ISO certification. This ground is similar to ground no.4 for assessment year 1998-99 which has been discussed in para 30 of our order for the said year. Following the view taken in the immediately preceding year, we uphold the impugned order and dismiss this ground of appeal. 17. Last ground of the Revenue's appeal is against deletion of addition of Rs.53,74,474 being expenses from Global Depository Receipts issue. This ground is similar to the last ground of the Revenue's appeal for assessment year 1998- 99, which has been disposed off by us through para 34 of the said order. Following the view taken by us in the said earlier year, we overturn the impugned order on this issu....
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....ered opinion, is not acceptable. From the language of section 147 it is abundantly clear that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assess or reassess such income "and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section". From the language of section 147 it is manifest that once the reassessment has been validly initiated, the A.O. assumes jurisdiction not only to assess such income in respect of which notice u/s 148 was issued but also all such other items of income which come to his notice during the course of proceedings under this section having the effect of escapement of income. We, therefore, hold that the contention raised by the learned A.R. in this regard is not acceptable. These three grounds are not allowed. 21. Ground nos.4 and 5 about loss on exchange rate fluctuation on outstanding foreign currency loans of Rs.3,29,41,000 was not pressed by the learned A.R. These grounds are, therefore, dismissed. 22. Ground n....
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.... any sale made by the assessee, cannot also be claimed as bad debt. Now we take up the contention that this amount should be allowed as business loss. The learned A.R. admitted that the amount was advanced to sister-concern. On a specific query it was admitted that there were no purchase or sale transaction with M/s Bilt Electronics Private Limited. It, therefore, shows that the amount was simply given as loan to the sister-concern and there cannot be any question of treating it as trading advance. Coming to the contention about the commercial expediency and the reliance of the learned A.R. on certain decisions, we find that this contention cannot be accepted for the reason that the relation between the assessee and M/s Bilt Electronics Private Limited is not that of holding and subsidiary company but that of the sister-concerns only. The parameters for allowing deduction in respect of irrecoverable amount advanced to subsidiary company by holding company are different from those given by one sister-concern to another sister-concern. The obvious reason is that the subsidiary company is wholly or at least partly dependent on its holding company. It is in the advancement of the inter....
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....s made in assessment u/s 147, the claim for depreciation be allowed. Without prejudice to the above arguments it was stated that if the Bench was not inclined to accept assessee's contention in this regard then the written down value of the assets be accordingly increased. In the opposition, the learned Departmental Representative relied on the judgment of the Hon'ble Supreme Court in the case of Chettinad Corporation (P) Ltd. Vs. CIT [(1993) 200 ITR 320 (SC)] by contending that the claim of the assessee was not admissible. 28. We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact that in the original return filed by the assessee, no claim for depreciation allowance u/s 32 was made. Only when notice u/s 148 was issued, the assessee filed return and made claim for depreciation u/s 32 for the first time. The primary question which falls for our consideration is as to whether any fresh benefit can be claimed in the proceedings u/s 147. The Hon'ble Supreme Court in the case of Sun Engineering Works (P) Ltd. (supra) has held that in the reassessment proceedings it is not open to assessee to claim a review of the concluded items....
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....bserved that the claim for depreciation u/s 32 is independent of and unconnected with the items of income added by the A.O. in assessment u/s 143(3) r.w.s. 147. As such this deduction cannot be allowed. 29. We are however inclined to accept the other prayer of the assessee and rightly so, that if the depreciation allowance is not to be actually allowed then the written down of the assets, which was reduced by claiming depreciation should be accordingly increased. It is, therefore, directed that the written down value of the assets of the assessee for the succeeding year, subject to verification by the AO, should be considered as gross of the depreciation amounting to Rs.63,16,01,082 which has not been allowed in the current year. This ground is not allowed. 30. In the result, the appeal is partly allowed for statistical purposes. ITA No.5811/Mum/2006 : Asst.Year 2001-2002 : Assessee's appeal : 31. First ground is against the confirmation of disallowance of Rs.1.21 crore u/s 14A of the Act. This ground is similar to the ground raised in assessment year 1998-99, which has been disposed off in our separate order by remitting the matter to the file of A.O. with certain directions. ....
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....rt from the Assessing Officer on this issue proceeded to uphold the assessment order. In our considered opinion, the approach so adopted does not merit acceptance. It is expected from the authorities below that only the correct facts be considered which are germane to the decision. If the facts of the earlier year are considered and reproduced in the subsequent year, when the facts are materially different, such a course of action cannot get the seal of approval from any judicial body. Without going into the merits of the addition, we set aside the impugned order on this score and remit the matter to the file of A.O. for deciding it afresh as per law after allowing a reasonable opportunity of being heard to the assessee by considering the correct facts relevant to the current year alone. 36. Last ground is against not allowing exemption u/s 10(23G) in respect of capital gain of Rs.20,49,33,542 arising on the shares of M/s.Skycell Communication Limited. The facts apropos this ground are that the assessee sold shares of M/s Skycell Communication Limited, which secured cellular phone operator licence for the city of Chennai, in the year under consideration and claimed such capital ga....
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....respect of investment made on or after 1st June, 1998. Doubts were expressed in different quarters about the granting of exemption available u/s 10(23G) in respect of investment made prior to 1st June, 1998 for assessment year 1999- 2000 and onwards. Vide Circular No.772 dated 23.12.1998 the position has been clarified vide para 10.3 as under:- "10.3 The amended provisions would apply only in respect of investments made on or after 1st June, 1998. Doubts had been expressed in different quarters about the continuance of exemption available u/s 10(23G) in respect of investments made prior to 1st June, 1998 for assessment year 1999-2000 and onwards. The Central Board of Direct Taxes have clarified by way of a press release that the exemption available under the provisions of section 10(23G), prior to its amendment by the Act, will continue to govern the investments made prior to 1st June, 1998. The Rules and Forms in this regard have since been notified vide notification No.S.O.897(E) dated 12th October, 1998 [(1998) 149 CTR (St) 48]." (Emphasis supplied by us) 39. Accordingly the Finance Act, 1998 introduced Explanation 2 providing as under:- "Explanation 2. : For the removal of ....
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....y providing that the exemption will be available on the investment made prior to 1st June, 1998. As the shares in question have been actually sold in the year under consideration and the Assessing Officer has allowed the benefit in respect of other shares acquired in 1997 / 1998, in our considered opinion, there is no logic in denying the exemption u/s 10(23G) in respect of the shares which were purchased on 31.01.1996. We have noticed above that the exemption under this provision is available on income resulting from the transfer of shares and not from the purchase of shares. If the eligible shares as sold in the relevant period, exemption cannot be denied simply on the ground that such shares were purchased in 1996. Our view is fortified by the order passed by the Hyderabad Bench of the Tribunal in the case of V.B.C.Ferro Alloys Limited Vs. ACIT [(2007) 107 ITD 367 (Hyd.)] for the assessment year 2000-2001 and 2001-2002 in which it has been categorically held that section 10(23G) inserted by the Finance Act, 1999 is declaratory and hence retrospective in operation. In this case also, the assessee has been entitled to exemption u/s 10(23G) on long term capital gain arising on infr....
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....the assessee had received Rs.459.22 crore of unsecured and secured loans as on 31.03.2003. The Assessing Officer observed that the assessee had advanced huge amounts to its associate concerns amounting to Rs.11,29,06,903. Considering the fact that the assessee has paid interest at the rate of 13.50% on inter-corporate deposit, the A.O. held that the proportionate interest on the amounts advanced to its sister-concerns was not deductible. Applying the rate of 13.50% on Rs.11.29 crore, the A.O. made disallowance of Rs.1,76,04,933. The learned CIT(A) observed that the Assessing Officer had applied rate of 13.50% on such diversion of funds to the tune of Rs.11.29 crore for the entire year. Considering the fact that the A.O. disallowed interest on advance given to JCT Electronics Limited which was amalgamated with the assessee-company, the disallowance of interest to that extent was not called for. Applying the rate of 9.01% interest, the learned CIT(A) reduced the disallowance to Rs.11,62,912. The assessee is aggrieved against this addition. 44. We have heard the rival submissions and perused the relevant material on record. It is observed that the assessee gave loan of Rs.11.29 crore....