TaxTMI 
TaxTMI 
2014 (2) TMI 675
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....sp; 2.1 the Ld. Commissioner of Income Tax (A) ignored the fact that the amended provisions of section 43B are applicable w.e.f. A.Y. 2004-05 and not applicable in the year under consideration. 3. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) has erred in deleting the addition of Rs. 3,97,53,676/- made by the Assessing Officer by capitalizing the expenses incurred for installation of major plant. 3.1 The Ld. Commissioner of Income Tax (A) ignored the fact that the assessee did not file details regarding the nature expenditure during the assessment proceedings and only filed copy bill. 4. The appellant craves leave to add, to alter, or amend any ground of the appeal raised about at the time of the hearing. 3. Apropos deletion of addition on account of delayed payment of ESI and PF and superannuation fund. Assessing Officer disallowed a sum of Rs. 30,450/- being contribution towards ESI & PF u/s. 43B of the Act on the ground that the same was paid beyond the due date as provided under Employees Provident Fund Act. Furthermore, the contribution of Rs. 46,40,822/- towards superann....
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....l year, is payable in advance, which is certainly not what the superannuation scheme provides. The amount of contribution towards superannuation fund get qualified / cystallized only after the salary for the last month of the financial year has been paid which is on or after 31st March of that financial year and the "due date" of payment of such contribution can thus only be after and not before 31st March of the financial year. Therefore, the "due date" for deposit of superannuation fund contribution relating to financial year 2000-01 was 31.3.2002. The contribution and / or deposit of the contribution towards the superannuation fund on monthly basis is, in fact, nowhere provided in the superannuation scheme of the appellant. The aforesaid amount of Rs. 46,60,822/- being superannuation fund contribution pertaining to the months of February, 2001 and March, 2001, have been deposited in April, 2001 and May, 2001, respectively, was within 'due date' and the disallowance of the same under section 43B of the Act was totally unwarranted. It will, therefore, be appreciated that there was no default, as contemplated under section 43B of the Ac....
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....e Department, the Tribunal remitted the matter back to the file of the Assessing Officer with direction to examine the nature of the expenditure concerned with reference to the relevant documentary evidence such as bills, brochures etc. and take a fresh decision in accordance with law. 14. During the set aside proceedings assessee submitted following documents:- - Copy of invoice no. 099.0059 dated 15.09.1999 issued by Krupp Elastomertechnik, Germany for purchase of "One Heavy Duty Internal Mixer GK 255N". - Copy of Invoice No. 0505958 dated 12.10.2000 issued by Mc. Neil Akron Repiquet, France of Purchase of "Reduction Gear Box for 3 Coll Calendar". - Copy of bill of entry dated 03.11.2000 in respect of invoice no. 099.0059 dated 15.9.1999 for purchase of Heavy Duty Internal Mixer GK 255N. 15. Assessing Officer noted that assessee has not furnished any other documentary evidences. Assessing Officer observed that assessee company has not been able to establish that the said machines were part of some other machine. Assessing Officer further observed that it has only been emphasized that these ar....
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....fore, what seems to me is that the decision of the learned AO has been mainly influenced by the heavy amount of expenditure claimed by the appellant company which, I am afraid, is not the proper way of deciding the issue involved in the present case. As submitted by the learned counsels in their written submissions, the internal mixture G.K. 225 N is an integral part of Banbury G.K. 225 N which apart from mixtures also has components like body, rotors, electric motor and panels, cooling conveyers and gear boxes, Similar is the case with the roll calendars which has other components namely, gear box, rolls and rotors and electric motors and panels. Therefore, having regard to the basic parameters laid down by the Hon'ble Supreme court in the case of CIT v/s Saravana Spinning Mills (P) Ltd, since the items in question are part and parcel of Banbury mixture and 3 Roll Calendar respectively, the same would fall within the meaning of current repairs only. Further, as stated earlier, the claim of the appellant is that expenditure on the identical items have been incurred in earlier years also and the same has been duly allowed by the respective AOs in th....
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..../efficiency of the machines. Therefore, the said expenditure would be allowable as current repairs under section 31 (1) of the Act or as revenue expenditure under section 37(1) of the Act. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of CIT vs Saravana Spinning Mills (P) Ltd.: 293 ITR 201. Similar expenditure incurred on the Banbury mixture etc. had been incurred by the assessee in the earlier years, which goes on to show that it is a recurring expense incurred to keep the machine in running condition. Similar expense incurred in the past has always been allowed by the department in all the earlier assessment years. The expenditure on repair and maintenance of plant & machinery of similar nature had been consistently accepted by the department as revenue deduction. The disallowance of the expenditure in the relevant previous year is not sustainable even on the ground of consistency. Further on perusal of the details of the repair and maintenance expenditure incurred as a percentage of total receipts of the appellant in the last four years as well as in the year under appeal, it will be appreciated that an ....
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....all within the meaning of current repairs only. 20. We further note that expenditure has been incurred by the assessee on Banberry mixtures etc. in the earlier years also. This shows that it is a running expenses incurred to keep the machine in running condition. Similar expenses incurred in the past has always been allowed by the Department. Thus, the disallowance of expenditure in the relevant previous year is not sustainable even on the ground of consistency. 21. In the background of the aforesaid discussions and precedents, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A) in this regard. Accordingly, we uphold the same. ASSESSEE'S APPEAL 22. The issues raised in the Revenue's appeal read as under:- 1. That the Ld. Commissioner of Income Tax (A) erred on facts and in law in confirming the disallowance of prior period expenses amounting to Rs. 1,96,61,963/- made by the Assessing Officer holding that the appellant has failed to discharge the onus to prove that the liability in respect of earlier years expenditure has actually crystallized during the assessment year under consideration. 1.1 That the....
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....us, by way of documentary proof/ evidence that earlier years expenditure have actually been crystalised during the year. The disallowance of Rs. 1,96,61,963/- was made to prior period expense. 24. Upon assessee's appeal Ld. Commissioner of Income Tax (A) considered the various aspects of the claim and sustained the addition made by the Assessing Officer. 25. Against the above order the Assessee is in appeal before us. 26. We have considered the submissions and the issues are being adjudicated as under:- I. Electricity and Water Charges:- Bill of 89,69,692/- was raised by Delhi Electricity Board (DEB) in March, 2000 for the period June, 1994 to November, 1999 towards difference in load. As per the assessee's submissions, DEB threatened disconnection, if the amount was not paid. The disconnection was deferred subject to assessee's depositing Rs. 10 lacs. It is in the aforesaid circumstances it has been claimed that the assessee made a provisions of Rs. 89,69,692/-. The Ld. Commissioner of Income Tax (A) observed that the assessee has not accepted the said liability in as much as representation was made before the Power Ministry and only an adhoc provision was....
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....fact of incurring of such expenditure. Ld. Commissioner of Income Tax (A) has given a categorical finding that though it is the assessee's claim that the expenditure claimed was actually incurred and the liability to incur such expenditure got crystallized in the year under consideration, no supporting documents have been produced nor the same were produced before the Assessing Officer. In these circumstances, in our considered opinion, the case laws relied upon by the Ld. Counsel of the assessee are not germane to the issue herein. Under such circumstances, we find that assessee claim that the expenditure in this regard should be allowed in the current assessment year cannot be sustained as it is the duty of the assessee to satisfy the primary requirement of law that the expenditure claimed under the head 'prior period' expenses was actually laid down or expended wholly and exclusively for the purposes of the business and furthermore, the same has been incurred and got crystallized only in the year under consideration. Hence, in our considered opinion, there is no infirmity in the order of the authorities below on this issue. Accordingly, we sustain the addition made in this regar....
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....sessee has claimed that the above interest paid by the assessee was compensatory and not penal in nature. However, necessary details in this regard are not available. Under the circumstances, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A). Accordingly, we uphold the same. 31. Apropos issue of disallowance of loan procurement charges amounting to Rs. 19,20,826/- On this issue Assessing Officer noted that assessee has claimed an amount of Rs. 19,20,826/- paid to M/s Poisha Fincorp Limited, M/s Provestment Services Ltd. and M/s Peacock Chemicals Pvt. Ltd. as service charges for arranging finance for the assessee and debited under 'Bank Charges'. Assessee submitted that these charges were paid for arranging finance for the company as it was in a precarious financial position and was unable to get the finances easily. From the details Assessing Officer noted that assessee company has paid 4.5% of the amount of loan for arranging inter corporate deposits of various amounts for a period of 90-100 days. Assessing Officer noted that no further details have been furnished by the assessee. That it was nowhere explained as to what services were render....
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....s. The Assessing Officer has computed interest @ 12% per annum on the outstanding balance in respect of the following:- Modi Spg. & Wvg. Mills Co. Ltd. Rs. 1,98,51,747/- Modi Alkalies and Chemicals Ltd. Rs. 1,40,00,000/- Modi Carpet Ltd. Rs. 2,10,00,000/- Rs. 7,48,51,747/- And has disallowed the same out of interest paid by the assessee. 36. The Ld. Commissioner of Income Tax (A) deleted the addition of notional interest w.r.t. to loan advanced to the following companies:- Modi Spg. & Wvg. Mills Co. Ltd. Rs. 1,98,51,747/- Modi Alkalies and Chemicals Ltd. Rs. 1,40,00,000/- Modi Stone Ltd. Rs. 2,00,00,000/- Modi Carpet Ltd. Rs. 2,10,00,000/- Rs. 7,48,51,747/- 36.1 The Ld. Commissioner of Income Tax (A), however, sustained the addition on notional interest w.r.t. loan of Rs. 2,00,000/- advanced to Modi Stone Ltd. in the year 1977 observing that no detail had been filed by the assessee to justify that the same has been advanced in the earlier years out of the interest free funds. 37. Against the above order the Assessee is in appeal before us. 38. We have heard both the counsel and perused the records. L....