TaxTMI 
TaxTMI 
TaxTMI 
2014 (2) TMI 600
X X X X Extracts X X X X
X X X X Extracts X X X X
....eligible undertaking qualified u/s 10B of the Act. SR NO. PARTICULARS OF INCOME AMOUNT (Rs.) 1. Sale of hoops and wrappers 8,08,590 2. Discount/Bonus on store items 1,55,590 3. Staff agreement deposit forfeited 13,406 4. Recovery against damaged property 600 5. Notice period salary received from staff 21,762 6. Sundry balance written off 7,445 7. Unclaimed salary forfeited 2,729 8. Octroi refund 2,025 9. Other income 200 TOTAL 10,12,347 2. The appellant prays that it be held that the above receipts are qualified for deduction under Section 10B of the Act. 3. Without prejudice to above, if at all the action of the CIT(A) is confirmed, then, in that case, only the net receipt be excluded for the purpose of computing deduction u/s 10B of the Act" 2. The assessee is aggrieved against the confirmation of the disallowances made by the A.O. relating to the income/receipts as detailed above which are dealt herewith separately. 1. Sale of hoops and wrappers (Rs.8,08,590): The ld. CIT(A) while confirming the disallowance relating to sale of hoops and wrappers has observed as under: 2.5 I find tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he course of production. So the sales on Hoops & Wrappers fall in the same category as that of sales of Store Bardana. There is no difference between the two as both the said materials are in the shape of packing materials and the income from packing material credited under the head Store Bardana Sales has already been allowed in the earlier years. We agree with the contentions raised by the ld. A.R. to the extent that Hoops & Wrappers are the packing materials like other Store Bardana. The income from the sale of the said packing material has consistently been allowed to the assessee in the earlier years. The ld. D.R. before us could not bring any point to the effect that sales from Hoops & Wrappers is different from the sales of Store Bardana Sales. Accordingly the income derived from the sale of Hoops & Wrappers Sales is hereby directed to be allowed. 2. Discount/Bonus on Store Items (Rs.1,55,590/-) The ld. CIT(A) has disallowed the receipts under the above said head observing as under: "2.6 As regards miscellaneous receipts, it may be noted that Discount/Bonus on store items purchased from suppliers has no conne....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (Rs.13,406): The ld. A.R. has been fair enough to admit that this issue is covered against the assessee vide findings of the co-ordinate bench of this Tribunal given in ITA No.5935/Mum/06 for the assessment year 2003-04 observed as under: "4.4 Item No.iii. Staff Agreement Deposit is covered gainst assessee in earlier years. We find that this issue has been decided against assessee in ITA No.3890 and 3507/Mum/2005 dated 13th July, 2009 in assessment year 1999- 2000 in para 20 and in ITA No.3906/Mum/2005 for assessment year 2001-02 vide Para 14. We do not intend to disturb the accepted position. Hence we hold that this amount did not qualify for exemption under section 10B as these are not held to be the receipts derived from the industrial undertaking" 5. Respectfully following the consistent findings given by the Tribunal in the own case of the assessee for earlier years on this issue, this issue is decided against the assessee. 4. Recovery Against Damaged Property (Rs.600/-) The ld. A.R. has not pressed this issue before us. Hence the same is decided against the assessee. 5. Notice Peri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9. Other Income (Rs.200/-) This issue has not been pressed by the ld. A.R. before us hence the finding of the ld. CIT(A) on this issue is hereby upheld. Ground No.II The ground No.II read as under: "Treatment of capital receipt as revenue receipt: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO of treating capital receipt of Rs.60,552/-, being security deposit forfeited, as revenue receipt as against capital receipt treated by the appellant. However since deduction has not been made by the appellant, there would not be any effect on the total income. 2. Appellant prays that it be held that the above receipt be treated as capital in nature." 7. The ld. A.R. has been fair enough to admit that this ground is squarely covered against the assessee in the own case of the assessee vide order of the Tribunal passed in ITA No.5935/Mum/06 for the assessment year 2003-04. The relevant finding of the Tribunal is reproduced as under: "5. Ground No.2 pertains to the issue of treating the forfeit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the amounts are compensatory in nature or penal in nature. The findings of the ITAT in assessment year 2001-02 on the issue are as under: 41. This issue has been dealt with by the Tribunal in ITA Nos.3925 & 4170/Mum/2005 in assessment year 2000-01,in Paras 69, 70 and 71 which read as under: '69. Before us, it was submitted that the amounts disallowed by the CIT(A) are basically of compensatory nature and therefore the same should have been allowed. In this regard, reliance was placed on the decisions of Hon'ble Supreme Court in the case of Prakash Cotton Mills Pvt. Ltd. Vs. CIT (201 ITR 684) (SC) and Standard Batteries Ltd. Vs. CIT (211 ITR 444) (SC). 70. On the other hand, the ld. D.R. relied on the order of CIT(A). 71. After considering the rival submissions, we find that the Hon'ble Supreme Court in the cases of Prakash Cottom Mills Pvt. Ltd. (supra) and Standard Batteries Ltd. Vs. CIT (supra) has observed that whatever is paid to the Govt. authorities, though known as penalty, but if the same is of compensatory nature, then t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso has been restored by the Tribunal to the file of the AO in the own case of the assessee for assessment year 2003-04 in ITA No.5935 observing as under: "7. Ground No.4 pertains to the disallowing the leasehold amount written off in various Divisions of Rs.1,80,291/-. 7.1 The learned counsel submitted that this issue has been restored to the file of AO in assessee's own case in AY 2001-02 and 2002-03. After going through the order of the Tribunal, we find that this issue has been set aside to the file of the assessing officer following the earlier years' order after observing and holding as under: '24. The issue had been set aside to the file of the AO in the preceding year in ITA Nos.3925 & 4170/Mum/2005 in assessment year 2000-01, for reexamination of the issue in the light of the Special Bench decision of the Tribunal in the case of Mukund Ltd. Reported in 106 ITD 231 (Mum SB) for finding the nature of the premium part. Respectfully following the order, we set aside the order of CIT(A) and restore the issue to the file of the AO for passing fresh order on the impugned issue after proper opportunity to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The Assessing Officer has disallowed the lease expenses of Rs.16,23,610/- as against 1/10th claimed at Rs.81,180/- by the assessee. Since this issue has been decided in the earlier year allowing the assessees claim, therefore, in this year also, we do not find any reason to deviate from the same. Accordingly, this ground is allowed in favour of the assessee." 14. So respectfully following the consistent finding of the ld. co-ordinate bench of this Tribunal relating to earlier assessment years, this issue is decided in favour of the assessee. Ground No.VI The ground No.VI read as under: "Treating business Income as 'Income from house property: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO in treating Rs.8,79,282/- being income from the exploitation of business asset, as 'property income' as against 'business income' treated by the appellant. 2. The CIT(A) further erred in confirming the action of the AO in not allowiong expenses and depreciation amounting to Rs.13,36,979/- (Rs.12,83,805/- + Rs.53,174/-) in respect of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eign travelling expenses of the wife of the director. 2. The appellant prays that it be held that the expenditure on foreign travelling of director's wife be allowed as revenue expenditure." 17. It may be observed that the issue came into consideration before the Hon'ble High Court in the own cases of the assessee pertaining to earlier years. The said issue has been decided by the Hon'ble Bombay High Court in favour of the assessee in appeal No.4218/09 relating to assessment year 1996-97 as well appeal No.3723/09 relating to assessment year 1997-98 decided vide order dated 21.06.11. The findings of the Hon'ble High Court passed in appeal No.4218/09 on this issue are reproduced as under: "3. As regards the third question is concerned, the Tribunal following its decision in the assessee's own case for earlier years has allowed the claim of the assessee. As held by this court in the case of Commissioner of Income-Tax vs. Alfa Laval (I) Ltd., reported in (2006) 282 ITR 445 (Bom.), the expenditure on foreign travel expenses of Director's wife may be allowed, depending on the status of the parties, nature or character of the trade or venture, the purpose for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The appellant prays that it be held that the interest paid be allowed to the appellant" 21. This issue is also covered against the assessee vide findings of the tribunal given in the own case of the assessee in ITA No.5935/Mum/2006 for assessment year 2003-04 vide para 11, which is reproduced as under: "11. Ground No.8 pertains to the action of AO of disallowing the amount of Rs.3,03,477/- being the interest paid to SSI Units on delayed payments. The learned Counsel fairly admitted that this issue stands covered against assessee in assessee's own case in earlier AYs. After going through the orders passed by the ITAT in 2001-02 and 2002-03, we find that the Tribunal has recorded a finding that this issue stands covered against assessee in assessee's own case from AYs 1990-01 onwards. In view of the admitted position, this issue is decided against assessee and the ground is rejected." 22. Respectfully following the consistent findings given by the Tribunal in the own case of the assessee for earlier years on this issue, this issue is decided against the assessee. Ground No.X Ground No.X of the appeal of the assessee read as under: "Disallowance of pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 Thus, respectfully following the aforesaid decision, this issue is restored to the file of the Assessing Officer with a similar direction and to adjudicate the same after getting the details from the assessee. Accordingly, this ground is allowed for statistical purposes." 24. Since in the earlier years, the issue has already been restored back to the file of the A.O., so it will be just and proper for this year also to direct the A.O. to decide the same as per the directions given by the co-ordinate bench of this Tribunal for the earlier years relating to the same issue. Hence, this issue is restored back to the file of the A.O. and the A.O. is directed to decide the same in terms of the order dated 12.06.13 of the co-ordinate bench of this Tribunal as reproduced above. Ground No.XI This ground of appeal is reproduced as under: "Disallowance of deduction under Chapter VI-A of the Act 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not giving finding as to whether after giving effect to the orders of all the appellate authorities, if the 'Gross Total Income' turns out to be positive, then, in that case, to the ext....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee. Ground No.XIII(A) 28. The next issue in this appeal of the assessee is whether the sales tax is to be excluded from the total turnover while computing u/s.80HHC of the Act. The ground no. XIII(A) of the appeal read as under: "Addition of sales tax to the total turnover for the purpose of Section 80HHC 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not giving any finding as to whether sales tax be treated as part of total turnover for the purpose of Section 80HHC of the Act." The appellant prays that the sales tax be not treated as part of total turnover while computing deduction u/s. 80HHC of the Act." 29. We have heard the rival contentions, perused the material on record. It may be observed that the co-ordinate Bench of the tribunal in "Banco Products (India) Ltd." ITA No.1450/Ahd/2006 dated 30-6-2010 following the decision of Apex Court in the case of Lakshmi Machine Works, has dismissed the Revenue's appeal by holding as under:- "8. At the outset, Ld. Counsel for the assessee argued that this issue is squarely covered in favour of the assessee by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y is neutralized under the DEPB scheme, by granting a duty credit against the export product and this credit can be utilised for paying customs duty on any item which is freely importable. DEPB is 'cash assistance' receivable by a person against exports under the scheme of the Government of India and falls under Section 28(iiib) of the Act. Accordingly, DEPB is chargeable to income tax under the head 'Profits and Gains of Business or Profession' even before it is transferred by the taxpayer. Under Section 28(iiid) of the Act, any profit on transfer of DEPB is chargeable to income tax under the head 'Profits and Gains of Business or Profession' as an item separate from cash assistance under Section 28(iiib) of the Act. The face value of the DEPB will fall under Section 28(iiib) of the Act, the difference between the sale value and the face value of the DEPB will fall under Section 28(iiid) of the Act. The cost of acquiring DEPB is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB which accrues to a person against exports has a cost element in it. This issue is thus decided accordingly. The A.O. is directed to comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en properly maintained in accordance with the Companies Act. It is further held that the AO thereafter has limited powers of making increases and reductions as provided for in the Explanation to the said section. The Apex Court further held that the AO does not have the jurisdiction to go beyond the net profits shown in the P&L a/c, except to the extent provided in the Explanation to s.115J of the IT Act. In the instant case, the accounts maintained by the assessee are certified by the auditors. Under the circumstances, the book adjustment made by the AO being contrary to the decision of the Apex Court, question No.1 is answered in the negative and in favour of the assessee." 34. In view of the finding given by the Hon'ble High Court following the law laid down by the Hon'ble Apex Court in Apollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521 : (2002) 255 ITR 273 (SC), this issue is decided against the Revenue and in favour of the assessee and finding of the ld. CIT(A) in respect of the said issue are hereby upheld. Ground No.2 "2. On the facts and in the circumstances of the case, Ld. CIT(A) erred in holding that tax on profit distributed as dividend u/s. 115-O is allo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r Sub-section (2) of Section 115-O makes it clear that tax on distribution of profit has to be paid by a domestic company even if no income tax is payable in the year in which dividend is distributed by the company. We have also considered the order of Tribunal, Panaji Bench in the case of Salgaocar Mining Ind. (P.) Ltd. (supra), wherein interest on income tax was excluded from the said clause as both were to be treated separately. Since in the present case also, tax on distributed profit is different than income tax payable, the same cannot be covered under Clause (a) to Explanation to Sub-section (2) of Section 115JB. 36. So far as the action of learned Commissioner (Appeals) in deleting the addition following the Circular No. 8 dated 29-8-2005 by CBDT, in our considered opinion, such action of learned Commissioner (Appeals) was based on the correct appreciation of the spirit of the Circular. In our considered opinion on distribution of profit payable as per provision of Section 115-O of the Act is of similar nature as fringe benefit tax payable under Chapter XII-H of the Act, since both are payable at the time of incurring dividend to shareholders which are not oth....