TaxTMI 
TaxTMI 
2012 (10) TMI 396
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....: The Hon'ble Commissioner of Income Tax (Appeals) has erred in law and facts in confirming disallowance of Rs. 13,00,86,333/-. He has failed to appreciate that product development expenses are deductible u/s 35(2AB) of the Act and he ought to have granted weighted deduction thereon. 5. Outstanding creditors u/s 41(1) Rs. 10,41,178/-: The Hon'ble Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the addition of Rs. 10,41,178/- u/s 41(1) of the Act. 6. Disallowance u/s 14A: The Hon'ble Commissioner of Income Tax (Appeals) has erred in law and facts in setting aside this matter to the A.O for recalculation of disallowance. He ought to have deleted the addition of Rs. 34,52,466/-. 7. The Hon'ble Commissioner of Income Tax (Appeals) has erred in law and facts in confirming the action of Assessing Officer in charging interest u/s 234 B and 234 C of the Act." 3 At the time of hearing, the learned A.R. of the assessee has submitted that the assessee does not press ground number 1, being general in nature and therefore, the same may be dismissed as not pressed. 3.1 The learned D.R. has no objection, if the ground number 1 in the assessee's appeal is dis....
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....n and the same was settled in the month of August 2005. The learned AR has pointed out that though the date of bill is 17th Feb 2005; however, the assessee received the same only in the year under consideration i.e. after 31st March 2005 and consequently, the expenditure was booked and payment was made by the assessee during the year under consideration. 5.2 The learned A.R of the assessee has thus submitted that when the expenditure was booked by the assessee during the year under consideration as the bill raised and received by the assessee only during the year under consideration, then the disallowance made by the CIT(A) on the ground that the expenditure pertains to the earlier year, is not justified. He has further submitted that there is no revenue effect because the rate of tax in case of assessee in the earlier year as well as in the year under consideration is the same. The learned A.R. has took us to the relevant invoices at page number 2 to 5 of the paper book and submitted that the 1st two bills are raised in on 3rd May 2005 whereas the 3rd bill was raised on 13th September 2005; therefore, the expenditure was crystallised and accrued only in the month of May and Septe....
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....o the earlier year, is not justified and the same is accordingly deleted. 8 Ground number 3 regarding repair and maintenance expenses. 8.1 During the course of assessment proceedings, the Assessing Officer noticed that the assessee had incurred expenses ofRs. 11,59,65,361/- towards repair and maintenance. The Assessing Officer asked the assessee to file the details of the expenditure. After examining the details of the expenditure incurred towards repair and maintenance, the Assessing Officer held that some of the expenditure was capital in nature and not allowable. Accordingly, the Assessing Officer disallowed Rs. 79,76,021/- being capital in nature. 8.2 On appeal, the CIT(A) has restricted the disallowance toRs.. 14,35,542/- and balance addition ofRs..65,40,479/- has deleted. 9 Before us, the learned A.R. of the assessee has submitted that the entire expenditure was incurred is revenue in nature; because the same was for the purpose of repairing and maintenance. He has referred the details of the expenditure at page number 6 of the paper book, which was disallowed by the CIT(A) and submitted that except the expenditure ofRs.. 53,752/- incurred in relation to erection a....
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....re, the same are allowable under section 31 of the income tax act. 10.4 As regards the expenditure in relation to erection & commission of effluent treatment plant, the same is capital in nature because it has resulted bringing a new asset into existence; however, the Assessing Officer is directed to allow the applicable depreciation on the same. Accordingly, in view of the facts and circumstances, the disallowance made by the CIT(A) is deleted except the expenditure incurred in relation to erection and commission of effluent treatment plant for which the claim of the assessee at 100% depreciation is to be considered by the Assessing Officer. 11 Ground number 4 is regarding product development expenses. 11.1 In the revised return of income, the assessee claimed the sum of Rs. 34,44.46,393/-, being the expenditure incurred on Mahape, Sanpadeand Goa plant. The expenditure incurred on Mahape and Sanpade was claimed under section 35 (2AB) and those incurred at Goa plant was claimed under section 37 (1) of income tax act. The Assessing Officer disallowed the claim of the assessee by following the order for the assessment year 2005 - 06 and observed that the facts of the case i....
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.... i.e under section 35(2AB) and section 37(1) as the case may be. The AO shall provide reasonable opportunity of hearing to the assessee. Accordingly, respective ground of the appeal of the assessee is allowed." 13.1 It was also brought to our notice that for the assessment year 2001-02 similar issue has been considered and decided by honourable High Court in assessee's own case vide order dated 20th September 2011 as under: "4. The argument Of the revenue is that since 'land' is specifically excluded from the purview of Section 35(1)(iv) of the Act, it must be held that the buildings used for research and development are also excluded from the purview of Section 35(1)(iv) of the Act. We see no merit in the above conterttlon because, firstly, when the legislature specifically excludes only the land from the purview of Section 35(i)(iv) it would be improper to enlarge the scope of the expression 'land' to include 'building'. Secondly whenever the legislature intended to exclude both land and building from the purview f any provision, for example Section 35(2AB) the legislature has specifically excluded both the land and building, In th. present case, deduction is sought on b....
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....1) of the income tax act is deleted. 16 Ground no. 6 is regarding disallowance under section 14A. 16.1 The Assessing Officer noticed that the assessee had exempt income on account of dividend amounting toRs..4,09,997/-. The Assessing Officer accordingly, disallowed a sum ofRs.. 34,52,466/- in addition toRs. 1,21,000/- already disallowed by the assessee itself under section 14A. The Assessing Officer disallowed this amount on account of interest attributable to the investment in shares as per section 14 A by applying Rule 8D of the income tax rules. 16.2 On appeal, the CIT(A) set aside the issue to the record of the Assessing Officer to re-compute the disallowance under section 14A as per the decision of honourable jurisdictional High Court. 17 Before us, the learned A.R of the assessee has submitted that this issue was considered and decided by this Tribunal in assessee's own case for the assessment year 2005-06 in assessee's favour. He further submitted that the facts for the assessment year under consideration are identical to that of the assessment year 2005-06. He has pointed out that the assessee's own funds and surplus are more than the investment made in the shares; ther....
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.... order of the CIT (A) on this issue is confirmed. Thus, ground No. 2 of the assessee's appeal and ground No.2 of the revenue's appeal both are dismissed." 3. Since facts are identical therefore it is covered by the order of Income Tax Appellate Tribunal in assessee's own case, we follow the same. The Assessing Officer is directed accordingly." 19 In view of the decision of this Tribunal in assessee's own case for the assessment year 2005-06 the issue is set aside to the record of the Assessing Officer to consider and decide the issue afresh. The Assessing Officer is directed to consider the availability of assesse's own funds as well as the investment in foreign companies and dividend received from the foreign company is not exempted income while deciding the issue. 20 The revenue in appeal ITA number 7512/Mum/2010 has raised the following effective grounds: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing depreciation on royalty payments made to M/s.Lylca Labs Ltd. 2. On the facts and in the circumstances of the case and in law, the Ld. CJT(A) erred in deleting addition made on account of employees contribution to the Provident....
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....red by the order of ITAT in assessee's own case, we accordingly following the order cited supra confirm the order of the Ld. CIT(A) on this issue." 23 Since the facts are identical and the CIT(A) has allowed the claim of the assessee by following the order for the assessment year 2005-06; therefore, this issue is covered in favour of the assessee and against the revenue. Accordingly, following the earlier order of this Tribunal, we decide this issue against the revenue and in favour of the assessee 24 Ground number 2 regarding disallowance under section 43B for delayed payment of PF and ESI C. 23.1 The Assessing Officer disallowed a sum ofRs.. 8,31,399/- under section 43B of the income tax act on the ground that the amount relating to PF/ESIC payments were paid belatedly. 23.2 On appeal, the CIT(A) has deleted the addition by considering the fact that the payment was made within the grace period of 5 days as provided in the statute and an identical issue was considered for the assessment year 2005-06. 24 We have heard the learned D.R. as well as ld AR of the assessee and considered the relevant material on record. There is no dispute that the payment was made within the....