TaxTMI 
TaxTMI 
2013 (8) TMI 810
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....s for determining capital vis-à-vis revenue nature of an expenditure and the expenses, being in capital field and giving an advantage of enduring nature, constitute capital expenditure as settled in the case of Ballimal Naval Kishore vs CIT 224 ITR 414 (SC)." 4. Ld. D.R. of the Revenue supported the assessment order whereas Ld. A.R. supported the order of Ld. CIT(A). We have considered the rival submissions and we find that this issue was decided by Ld. CIT(A) as per para 4.2 of his order, which reads as under:- "4.2 It is observed that the same issue came up before me in A.Y. 2006-07, and that the facts are identical in this year. Under the circumstances, following my appellate order for the earlier years, the impugned expenditure is held to be revenue in nature and the addition of Rs. 74.40 lacs is directed to be deleted." 5. From the above para, we find that this issue was decided by Ld. CIT(A) on this basis that facts are identical in this year as compared to facts in A.Y. 2006-07. We do not find any basis regarding this decision of Ld. CIT(A) because even if the expenses are incurred in respect of fire fighting equipments in the present year and in A.Y. 2006-07, it i....
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....it is these borrowings which were utilized to earn exempted income and the co-relation between the borrowings and utilization can not be reflected in the balance sheet prepared on a particular date. 2 (c). The ld. CIT(A) failed to appreciate that, it was up to the assessee to prove by furnishing day-to-day cash flow that no interest - bearing funds were deployed to earn exempted income and, in the absence of the same, the Assessing Officer was justified in drawing inference as per the ratio settled in the case of CIT vs. Motor General Finance Ltd. 254 ITR 449 (Del) since confirmed in principle by the Supreme Court in the case of Motor General Finance vs CIT 267 ITR 381 (SC). 2(d). The ld. CIT(A) erred in deleting the disallowance by putting arbitrary and narrow meaning on the term 'incurred' in section 14A when this section nowhere refers to incurring of expressly quantified expenditure in relation to exempted income and, instead, uses the wider expression "in relation to" and not "for earning of". 7. Ld. D.R. of the revenue supported the assessment order whereas Ld. AR of the assesses supported the order of Ld. CIT(A). He also submitted that the own funds of the assessee is far....
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....rted assessment order whereas Ld. A.R. supported the order of Ld. CIT(A). He also pointed out that amount mentioned in the grounds of appeal is only Rs. 16.31 lacs but the correct amount is Rs. 1631 lacs. He further submitted that the assessee has been regularly following the method of accounting subsidy on receipt basis in the relevant accounting year and further subsidies, if any, becoming due on account of final right of subsidy being notified, is accounted for in next accounting year. He also submitted that the accounts of the assessee were finalized on 04-05-2007 whereas the notification on the basis of which, the subsidy of Rs. 1631 lacs was accounted for was passed on 9th May, 2007 and 14th May, 2007 and therefore, this subsidy income has accrued in the next financial year and was accordingly accounted for in next year 2007-08 relevant for assessment year 2008-09 and therefore, the order of Ld. CIT(A) on this should be confirmed. 11. We have considered rival submissions and perused the material available on record and gone through the orders of authorities below. We find that this issue was decided by Ld. CIT(A) at para 6.2 in his order and for the sake of ready reference, ....
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....d. CIT(A) on this issue. This ground is therefore, rejected. 13. Ground No. 4 of the Revenue reads as under:- "4(a) On the facts, in the circumstances of the case and law, the learned CIT(Appeals) erred in relying on the decision of Hon. ITAT in the case of Alembic Ltd for A.Y,2003-04 bearing ITA No.3594/Ahd/2007 dated 6.6.2006 wherein the Hon. ITAT allowed the appeal of the assessee in respect of claim of assessee U/s. 80IA(4) by taking the price of electricity supplied by GEB. 4(b) On the facts and circumstances of the case, the learned CIT(Appeals) as well as the Hon. ITAT did not rely on the decision in the case of Chettinad Cement Corporation Ltd. in the ITA No.l026(MDS)/2005 for A.Y-2001-02 on the ground that the assessee had captive power generation plant and therefore the claim was not allowable." 14. Ld. D.R. supported the assessment order. He also submitted that in the present case, Tribunal's decision rendered in the Chetinad Cement Corporation should be followed in preference to other Tribunal's decision rendered in Alembic Ltd (supra). Ld. A.R. supported the order of Ld. CIT(A). He also stated that this issue is covered in favour of the assessee by the judgment of ....
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....ng the fact that such expenditure in relation to capital assets constitutes capital expenditure, which is specifically excluded in section 37(1), and the principle of spread over can be applied only in relation to the expenditure of revenue nature as settled in Madras industrial Investment Corporation Ltd. vs. CIT 225 ITR B02 (SC)." 17. Ld. D.R. supported the assessment order whereas Ld. A.R. of the assessee supported the order of Ld. CIT(A). It was also submitted that the assessee has paid Rs. 2.75 crores to financial consultants in financial year 2003-04 (A.Y. 2004-05) for corporate restructuring. He also submitted that as per Tribunal order in assessee's own case for A.Y. 2004-05, the decision of Ld. CIT(A) was confirmed as per which he held that this expenditure of Rs. 2.75 crores should allowed over a period of six years i.e. Rs. 4283333 in each of these six years. He also submitted that in the present year, this issue is squarely covered in favour of the assessee by this Tribunal decision. We have considered rival submissions and since this issue has already been decided by the Tribunal in favour of the assessee in A.Y. 2004-05 and the decision of Ld. CIT(A), is on that line....
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....d of Revenue is also rejected. 21. Ground No. 7 is as under:- "7(a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the adjustment of book profit u/s 115JB by the estimated gratuity provision of Rs. 3,73,68,158/- made on the basis of actuarial valuation, which is an unascertained liability as specifically settled in the case of shree Sajjan Mills Ltd. vs. CIT 156 ITR (SC) & Indian Molasses Co. Pvt.Ltd. vs CIT 37 ITR 66 (SC). The ld. CIT(A) wrongly equated this liability with that of leave encashment which accrues year to year on account of the eligible employees not availing of leave during the year whereas gratuity liability provided in respect of all the employees on actuarial basis is purely contingent on their retirement in future and the mere fact that the accounting practice formulated as AS-15 enjoins such provision does not render it as ascertained liability as settled in the case of Indian Molasses Co. Pvt. Ltd. Vs CIT 37 ITR 66,76-76 (SC) and Tuticorin Alkali Chemicals & Fertilizers Ltd. vs CIT 227 ITR 172 (SC). 7(b) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the adjustm....