TaxTMI 
TaxTMI 
TaxTMI 
2013 (2) TMI 601
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....learned CIT(Appeals) of the disallowance made by the AO on account of proportionate interest attributable to the advances given by the assessee to its subsidiary/group companies at concessional interest rate or interest free is raised in the following grounds : Assessment Year Ground No. 1994-95 1 1998-99 1 1999-2000 2 2000-01 1 2001-02 2 2002-03 2 3. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. It is observed that the similar disallowance on account of interest attributable to the advances given by the assessee to its subsidiary company was made in the case of the assessee for the earlier years. In assessment year 1989-90, this issue was referred to a Third Member and vide the Third Member decision reported as DCIT vs. Indian Hotel Co. Ltd. in 92 ITD 97 (Mum) (TM), the same was decided in favour of the assessee by a majority view holding that the relevant advances having been made by the assessee to its subsidiary company wholly and exclusively for the purpose of its business, the disallowance of interest attributable to the said advance was not justified. Following the said Third Member decision for a....
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....was duly offered to tax by the assessee in the relevant year. A similar view has been taken by the Tribunal in the immediately succeeding year i.e. assessment years 1996-97 and 1997-98. As the issue involved in the years under consideration as well as all the material facts relevant thereto are similar to assessment years 1995-96 to 1997-98, we respectfully follow the order of the Tribunal for the said years and uphold the impugned order of the learned CIT(Appeals) giving relief to the assessee on this issue. The relevant grounds of the Revenue's appeals are accordingly dismissed. 7. The next common issue involved in the five years under consideration i.e. assessment years 1998-99 to 2002-03 relating to deletion by the learned CIT(Appeals) of the addition made by the AO on account of notional gain on conversion of foreign exchange deposit placed by the assessee with its wholly owned subsidiary company is raised in the following grounds : Assessment Year Ground No. 1998-99 3 1999-2000 4 2000-01 5 2001-02 7 2002-03 5 8. The relevant facts of the case giving rise to this issue are as follows : The assessee company had set up a wholly owned subsidiary company, namely, Ta....
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....eals) and it was submitted on behalf of the assessee before him that AS-11 was wrongly applied by the AO in its case. It was pointed out that as per AS-11, only monetary items were liable to be reported using the foreign exchange rate on the last date of the previous year while non-monetary items were required to be reported using only the exchange rate as prevailing on the date of relevant transaction. It was contended that as per the classification made in AS-11, non-monetary items included investment in equity shares and since the shareholders' deposit placed by the assessee company with TIHK was akin to investment in equity shares and it was in the nature of investment blocked for a very long period of 10 years, the same was rightly reported/recognized at the exchange rate prevailing on the transaction date. As regards the comments by the Auditors in their report, it was submitted on behalf of the assessee company that the same was not in the nature of any qualificatory remark but it was in the nature of only a clarificatory remark made by the Auditors. As regards the exchange gain declared by the assessee in assessment year 1996-97, it was submitted that it was related to repa....
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.... According to the AO, as per the said accounting standard, the investment made in shareholders' deposit with TIHK by the assessee company was required to be recognized at the exchange rate prevailing on the last date of the relevant previous year. However, as submitted on behalf of the assessee before the learned CIT(Appeals) as well as before us, only the monetary items are required to be reported/recognized at the exchange rate prevailing on the last date of the relevant previous year whereas non-monetary items are required to be reported/recognized at the exchange rate prevailing on the date of relevant transaction. As per the classification made in AS-11, monetary items mainly include amounts held on current account, such as, cash receivables, payables etc. while non-monetary items include amounts held on capital account, such as, fixed assets, investment in shares etc. In the present case, the shareholders' deposit represented the amount held by the assessee on capital account inasmuch as it was convertible into equity shares within a period of 10 years and if not so converted, it was liable to be refunded to the assessee company only after a period of 10 years. In our opinion....
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....o. 1994-95 4 1998-99 5 1999-2000 5 2000-01 3 2001-02 4 2002-03 4(a) 16. After considering the rival submissions and perusing the relevant material on record, it is observed that a similar issue has been consistently decided by the Tribunal in favour of the assessee in the earlier years. In assessment year 1992-93, the Tribunal vide its order dated 10th Sept., 2004 passed in ITA No. 3530/Mum/1996 upheld the order of the learned CIT(Appeals) allowing the deduction claimed by the assessee for expenses incurred on replacement of carpets following the orders of the coordinate bench in assessee's own case for the earlier years upto assessment year 1991-92. Similarly, in the subsequent years upto 1997- 98, the Tribunal followed its orders for the earlier years and decided a similar issue in favour of the assessee. The decision of Hon'ble Rajastan High Court in the case of CIT vs. Lake Palace Hotels and Motels P. Ltd. 258 ITR 562 was also referred to and relied upon by the Tribunal wherein a similar issue was decided in favour of the assessee. Respectfully following these judicial pronouncements, we uphold the impugned orders of the learned CIT(Appeals) allowing the assessee's....
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....TD 719 (Del)(SB) wherein it was held that the provisions of section 234D are applicable only prospectively i.e. from assessment year 2004- 05. 22. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. It is observed that section 234D has been amended by the Finance Act, 2012 with retrospective effect from 01-06-2003 whereby Explanation 2 has been inserted declaring that the provisions of section 234D shall also apply to assessment year commencing before the first day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date. In the present case, the assessment year involved in assessment year 2001-02 which is commencing before the first day of June, 2003 and since the assessment for the same has been completed on 22-03-2004 i.e. after 1st June, 2003, the provisions of section 234D are clearly applicable and the assessee is liable to pay interest u/s 234D as per the amendment made by the Finance Act, 2012 with retrospective effect from 01-06-2003. We, therefore, set aside the impugned order of the learned CIT(Appeals) cancelling the interest levied by the AO u/s 234D and restore that ....
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....ppeal filed before the learned CIT(Appeals). It was submitted on behalf of the assessee before the learned CIT(Appeals) that the method of accounting for interest was changed as required by AS-10 issued by the Institute of Chartered Accountants of India and accordingly interest charged to the profit & loss account in the earlier years was reversed in the books of account merely to comply with the requirements of AS-10. It was contended that this treatment given in the books of account, however, had no implication on the taxable income of the assessee and, therefore, the amount of credit appearing in the profit & loss account was reduced while computing the total income for the year under consideration. It was submitted on behalf of the assessee that it did not receive any benefit from the lenders either by way of waiver of interest or any refund by virtue of the entries passed in its books of account and even no depreciation was claimed u/s 32 of the Act on the amount of interest now capitalized in the books of account. It was contended that the assessee company thus did not receive any benefit from the relevant entries passed in the books of account reversing/crediting the interes....
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....um allowed as deduction as deferred sales tax liability was later written back in the books which was held to be taxable income. 69.1 It may also be stated here that the appellant after writing off the interest had itself shown as income by crediting the profit and loss account but claimed the same not taxable in the return filed. Thus, the appellant is following doubles standards on the issue and its approach is selfcontradictory. The entries in the books of account cannot be ignored as lightly as done by the appellant. In this connection, it would be relevant to make reference to some of the decisions on such aspect. In the case of JCIT vs Tirumalal chemicals Ltd. (2006) 9 SOT 744(Mum)- in which on similar claim, it was held that whether the entries in the books of account are decisive or not would depend on facts of the case and they cannot be lightly discarded unless they are shown to be incorrect either on facts or law. The entries in the books cannot be regarded incorrect by the person maintaining it unless shown to be incorrect. If the entries are consistent with the method of accounting and show correct profit and are also consistent with the provisions ....