2014 (4) TMI 479

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....nce facts are common, we have heard these petitions together and would dispose of the same by this common judgment. 3. Brief facts from Special Civil Application No.25089 of 2006 may be noted. The petitioner is a company registered under the Companies Act. For the assessment year 1995-96, petitioner had filed its return of income claiming deduction under section 35D of the Income Tax Act, 1961 ("the Act" for short). The assessee had amortized Global Depositors Receipts ("GDR" for short) issue expenses of Rs.8.77 crores (rounded off) over a period of 10 years. The claim was granted by the assessing officer after scrutiny assessment. Accordingly, the petitioner was entitled to benefit of deduction of Rs.87.73 lakhs every year for 10 years ....

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.... view of the order passed u/s.154 of the Act on 14.10.2004. The income was recomputed at Rs.57,43,17,641/- in view of CIT(A)-VI, Baroda's order dated 17.02.2005. 2. The assessee has amortized GDR (Global Depository Receipts) issue expenses over a period of 10 years and debited Rs.87.73 lakhs ( being 1/10th of the total expenditure on GDR issue) to its P & L A/c. for F.Y.1995-96 onwards. No adjustment has been made in the statement of total income, in this regard, thereby treating the expenses as deductible u/s.35D of the Act. In this regard, during the course of reassessment proceedings for A.Y.2000-01, it was seen that part of the GDR issue was used for making investments, which includes the investment of Rs.96.62 crores in UTI. On scru....

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....a period of 4 years from the end of relevant assessment years. It is equally true that in the scrutiny assessments, the assessing officer had not addressed the question of such deduction under section 35D of the Act. He had routinely accepted the same as being part of periodic claim arising out of the claim granted for the assessment year 1995-96. Admittedly, there were no queries, no answers from the petitioner, no discussion in the assessment year why such claim should be granted. 9. Point that the assessing officer seeks to raise is that in terms of the provisions contained in section 35D(3) of the Act, such claim had to be restricted to two and one-half per cent of the cost of the project or at the option of the assessee company, the....

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....de to the extent of Rs. 87.73 lakhs. The Assessing Officer restricted it to Rs. 13.50 lakhs on the ground that only eligible expenses are allowed to be spread over under Section 35D of the Act and therefore, expenses only to the extent that have nexus to the eligible projects are admissible. 5.1 Tribunal, however, noted that in last seven years, no such disallowances were made. Referring to and relying on the decision in case of Radha Satsang V. CIT 193 ITR 321, the Tribunal directed that such benefit be granted. 5.2 It is an undisputed position that claim under Section 35D of the Act did not arise for consideration for the first time. Since last several years, the Assessing Officer had granted such claim on the same consideration. Th....