AI Drafter 
TaxTMI 
TaxTMI 
2013 (10) TMI 969
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....efore CIT(A). CIT(A) vide order dated 30.11.2009 partly allowed the appeal of the Assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and the Assessee has also filed CO. The grounds raised by the Revenue reads as under: The Ld.CIT(A) -VIII has erred in law and on facts in deleting the addition of Rs.3,44,55,366/- made by the A.O. being the income accrued to the assessee on account of delayed payment charges, without properly appreciating the facts of the case and the material brought on record by the A.O. 1.2. In doing so, the Ld.CIT(A) has erred in law and on facts in not appreciating that the said income had accrued to the assessee as per the power purchase agreement and just because GEB had denied the liability, it could not held that there was no accrual of income. 1.3. In doing so, the Ld.CIT(A) has erred in law and on fact in not appreciating the ratio of the decisions of Hon'ble Apex Court in the case of Kerala Finance Corporation 210 ITR 129. 2. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,51,37,588/- made by the AO. On account of disallowance of Misc.expenses written off, without properly appreciating ....
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....e same when its recoverability is certain. The AO did not find the submissions of the Assessee acceptable and accordingly added Rs 3,44,55,366/- as income of the assessee. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) following the order of his predecessor decided the issue in favour of Assessee by holding as under: 6.6 I have considered that facts and submission of the Ld. A.R carefully. I have gone through the order of my Id predecessor for the A.Y 2005-06 in this regard. There is no denial of fact that the GEB authorities had denied their liability for such payments as per their letter of November 2004. When the GEB authorities have disputed the liability there was no accrual of income to the appellant in this regard. It seen that the final outcome of the dispute has been arrived at only in March 2007 i.e. much after the close of the F.Y 2005-06. Therefore, under these circumstances the addition made by the A.O cannot be sustained. Since I have already deleted the addition under reference the Id. A.R's alternative plea and other arguments are hereby rejected. 5. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. Before u....
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....enefit was expected to be derived over next five years and accordingly 1/5th of the expenditure was written off every year. The submission of Assessee was not found acceptable to AO as he was of the view that the expenditure does not relate to AY 2005- 06 and pertained to earlier years. He accordingly disallowed the claim of the assessee. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) following the order of his predecessor, decided the issue in favour of Assessee by holding as under: 7.3 I have considered the facts and submission of the Ld. A.R carefully. I have also gone through the order of my Ld. predecessor in this regard who vide his order dated 13.5.2008 deleted the addition observing as under: I have considered the submission of the A.R carefully. On consideration of the facts of the case I am of the view that when this claim is based on the past practice which has not been denied in the earlier years by the Department, and the facts being the same, there is no justification for not allowing the claim. The disallowance is therefore, deleted." 7.4 Therefore, keeping in view the legal position in this regard and the decision of my Id. ....
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....alternative contention of the assessee that even if no deduction is allowed on this account in the present year, corresponding increase in the income should be considered for the purpose of allowing deduction u/s 80IA. We direct the A.O. to consider this aspect also if it is ultimately held by him that no deduction is allowable in the present year on account of l/5th of the miscellaneous expenses i.e. Rs.116.64 lacs. The A.O. should pass necessary order as per law as per above discussion after providing adequate opportunity of being heard to the assessee. This ground of the revenue is allowed for statistical purposes. 12. Since the facts in the present ground are identical to that of AY 2005-06, we following the aforesaid order of the Co-ordinate Bench (for A.Y. 05-06), with similar directions restore the issue to the file of AO. Thus this ground of Revenue is allowed for statistical purposes. Gr 3 is with respect to allowance of deduction on interest for 80IA deduction: 13. AO noticed that Assessee while computing the deduction u/s 80IA included "other income" comprising of gross interest, other income and foreign exchange fluctuation. AO was of the view that the aforesai....
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....No. 3 relates to exclusion of the net interest while computing the deduction u/s 80IA of the Act. The brief facts relating to this ground are that the assessee claimed deduction u/s 80IA on the interest receipt of Rs. 26,09,90,500/- but the A.O considered the said receipt to be the income from other sources and therefore excluded the same while computing the deduction u/s 80IA. When the matter went before the CIT(A), the CIT(A) agreed with the AO for the proposition of law that the interest receipt do not qualify for the deduction u/s 80IA and upheld the order of the AO in the light of the decision of the Hon'ble Supreme court in the case of Sterling Foods ltd. 237 ITR 579 and Pandian Chemicals Ltd. 262 ITR 278 but on the issue of netting of interest took the view that in the case of the assessee the interest payment and interest receipt have having direct nexus. The CIT(A) further noted that in the A.Y 1999-2000 his predecessor vide his order allowed netting of the interest by setting off the interest receipt against the interest payment and directed only net amount, if any, to be excluded from the eligible profit in the case of the assessee the CIT(A) noted that the net amount of....
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....ecord. We find that on identical facts, the co-ordinate Bench of Tribunal in Assessee's own case for AY 2005-06 order dated 30.03.2012 decided the issue in favour of Assessee by holding as under: 2.6.2 Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) who has decided this issue regarding interest part on this basis that as per the order of Ld. CIT(A) for the assessment year 2004-05 dated 26.02.2007, the A.O. has to consider the interest income as well as interest expenditure which is connected with the same and rework the deduction u/s 80IA as may be necessary. It goes to show that to the extent the assessee is eligible to establish the nexus of interest expenditure with interest income by showing that the interest expenditure was incurred for earning interest income, netting has to be allowed and only such net interest income has to be excluded from business profits for the purpose of computation of deduction allowable u/s 80IA. On this aspect, we do not find any reason to interfere in the order of Ld. CIT(A). 18. Before us, the Revenue could not bring on record any contrary facts. Since the issue has already been decided in favour of Assessee by t....
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....in the nature of discount but is in the nature of interest. We further find that CIT(A) while deleting the addition has noted that the since the rebate is in the nature of discount no TDS u/s 194A is deductible on the same. Before us, the Ld. D.R. could not controvert the finding of CIT(A) by bringing any contrary material on record. In view of these facts we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. 22. In the result the appeal of the Revenue is partly allowed for statistical purposes. CO No. 124/AHD/2010 Ground No 1 & 2 are not pressed by Ld. A.R. and therefore dismissed. 23. Gr. No. 3 is with respect to accrual of interest. 24. Before us, both the parties submitted that this ground is connected to Gr. No 1 of Revenue's appeal. Since ground No 1 of Revenue's appeal has been dismissed hereinabove, the present ground becomes academic and therefore the same is dismissed. 25. Ground No 4 and its sub ground are with respect to income not considered as eligible for deduction u/s 80IA. 26. Assessee had considered foreign exchange fluctuation of Rs 4,81,000 and Rs 5,24,000 being income earned on sale of scrap, ....