TaxTMI 
TaxTMI 
2014 (5) TMI 956
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....Mum/2003 - Assessee's appeal 3. Ground No. 1 relates to disallowance of Rs. 15,46,767/- u/s. 37(4) of the Act in respect of Guest House expenses. 4. This issue find place at para-3, page-2 of assessment order and para-7 at page-11 of the order of the Ld. CIT(A). It is the say of the assessee that the expense of Rs. 15,46,767/- comprises of three heads - (a) Salary and wages to staff - Rs. 4,77,809/- (b) Repairs and renovation charges - Rs. 2,37,017/- (c) Food expenses(net of recoveries)- Rs. 8,31,941/- 5. It is the say of the Ld. Counsel that similar issue came up for hearing before the Tribunal in assessee's own case in ITA Nos. 5181 & 5452/M/02 pertaining to A.Y. 1985-86. 6. We have carefully perused the order of the Tribunal (supra). We find that this issue has been decided vide para-16 onwards. The finding of the Tribunal is at para-20 page-9 of its order. Expenses under the first two items i.e. Salaries & wages and repairs and renovation expenses has been confirmed by the Tribunal. As regards, the disallowance of food expenses to the tune of Rs. 8.31.941/-, we find that the Tribunal has followed the decision in the case of Tata Engineering & Locomotive Co. Ltd. Vs DCIT ....
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....as disallowed the same on the ground that the same was not incurred for the purpose of business of the assessee company. The Ld. CIT(A) has decided against the assessee. The finding of the Ld. CIT(A) is at page- 46, para 13 of his order. 12. The Ld. Senior Counsel pointed out that the assessee has been allowed depreciation on such expenditure. We find that the Tribunal in assessee's own case in ITA No. 4604/M/96 for A.Y. 1992-93 at page-82 para 73 of its order has directed the AO to allow depreciation on the foreign travel expenses added to the cost of the machinery. Facts being identical, respectfully following the decision of the Tribunal (supra), we direct the AO to allow depreciation as per law. This ground of the assessee is accordingly allowed. 13. Ground No. 4 relates to disallowance of Bhanwad prospecting & survey expenses of Rs. 59,366/-. 14. The Ld. Counsel for the assessee pointed out that the assessee has been allowed deduction u/s. 35(E) of the Act. Considering this fact, the grievance of the assessee becomes otiose. Ground No. 4 is accordingly dismissed. 15. Ground No. 5 relates to the disallowance of foreign exchange fluctuation loss of Rs. 33,89,396/- and furthe....
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....re. 23. The AO has discussed this issue at page-6 para-15 of his order and the Ld. CIT(A) has decided the grievance at para-12 page 44 of his order. We find that the similar issue has come up before the Tribunal in assessee's own case for A.Y. 1985-86 in ITA No. 5181/M/02. We find that the Tribunal has discussed this issue at para-66 and the findings of the Tribunal is given at para-70 of its order. We find that the Tribunal has followed the decision of the Tribunal in assessee's own case for A.Yrs 1981-82 & 1982-83 in ITA No. 1579/M/98 and allowed the deduction. Facts being identical, respectfully following the decision of the Tribunal (supra) in assessee's own case, we direct the AO to allow the expenses of Rs. 2,22,508/-. This ground of the assessee is accordingly allowed. 24. Ground No. 8 relates to the part disallowance of Delhi expenses to the extent of Rs. 75,000/- out of total disallowance of Rs. 2,00,000/- made by the AO. 25. The AO has discussed this issue at para-19, page-8 of his order and the same issue has been partly allowed by the Ld. CIT(A) vide para-11, page-41 of his order. 26. We find that a similar issue has come up for hearing before the Tribunal in assess....
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....ssed for the payment for the financial year 1985-86. It is the say of the Counsel that since the liability has been accepted during the year under consideration, the same should be allowed as deduction. As regards freight expenses paid by the consignee distributor, the Ld. Counsel submitted that the consignee distributors did not claim freight relating to the year 1983-84 but the assessee has accepted the same and accounted for in the books of account in the year under consideration. 32. We have considered the rival submissions and perused the orders of the lower authorities. We have also the benefit of the order of the Hon'ble Gujarat High Court (supra). We find that the Hon'ble Gujarat High Court has held that "merely because an expense relates to a transaction of an earlier year, it does not become a liability payable in the earlier year unless it can be said that the liability is determined and crystallized in the year in question on the basis of maintaining account on the mercantile basis. In each case, when the accounts are maintained on mercantile basis, it has to be found in respect of any claim whether such liability was crystallized and quantified during the previous yea....
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....ntical as far as royalty of limestone at Rs. 1,71,003 is concerned, we restore this issue back to the files of the AO to verify the payments as per the provisions of Sec. 43B and if found correct, may allow the deduction. This grievance of the assessee is allowed for statistical purposes. 37. As regards interest on outstanding electricity duty of Rs. 11,55,597/-, the Tribunal in assessee's own case in ITA No. 5181/M/02 for A.Y. 1985-86 at para-75 of its order has held that interest on electricity deposit is neither duty nor tax, therefore, it is out of the scope of the Section 43B of the Act. Facts being identical, respectfully following the decision of the Tribunal in assessee's own case, the AO is directed to delete the addition of Rs. 11,55,597/-. 38. As regards Mineral Rights Tax of Rs. 55,55,738/-, the AO has discussed this issue at page-10, para-23 of his order wherein the AO sought explanation from the assessee as to why Rs. 55,55,738/- should not be disallowed u/s. 43B of the Act to which the assessee contended that this amount is outstanding on account of payment of Mineral Rights tax. According to the assessee, this amount was a part of the cost of the minerals to the a....
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....r authorities. It is not in dispute that the company purchased limestone on which MRT was payable to the suppliers. It is also not in dispute that the assessee has discounted MRT in its purchase consideration payable to the suppliers of the lime stone which means that to the extent of MRT, the assessee has retained the money from the suppliers on the pretext that it will make the payment to the Government. Therefore, by not paying the said amount to the Government, the assessee has retained public fund with itself. As the assessee itself has agreed to pay the MRT on the limestone purchased by it and as it has not discharged the liability till the end of the accounting year, we do not find any reason to tamper with the findings of the Ld. CIT(A). The disallowance in respect of Mineral Right tax to the tune of Rs. 55,55,738/- is accordingly confirmed. Ground No. 11 is dismissed. 43. Ground No. 12 relates to disallowance of premium on redemption of debentures of Rs. 9,64,286/- made during the year though relating to assessment years 1983-84, 1984-85 & 1985-86. 44. The AO has discussed this issue at page-11, para-24 of his order. Findings of the Ld. CIT(A) can be found at page-9, par....
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..... 125 of the Customs Act, fine paid is penal in nature and not compensatory in nature and accordingly confirmed the disallowance made by the AO. 48. Before us, the Ld. Counsel for the assessee reiterated what has been said before the lower authorities. The Ld. Counsel also relied upon the decision of the Hon'ble Supreme Court in the case of CIT Vs Ahmedabad Cotton Mfg. Co. Ltd reported in 205 ITR 163. 49. We have considered the rival submissions and perused the orders of the lower authorities and the material evidence brought on record. It is not in dispute that the assessee has imported spare parts. It is also not in dispute that on those spare parts, the assessee was made to pay a fine of Rs. 2,00,000/- to the custom authorities. It is the say of the Counsel that u/s. 125 of the Customs Act, what has been paid by the assessee is a fine to avoid confiscation of its goods i.e. spare parts which were urgently needed for its business. In examining the claim of an assessee that the payment made by such assessee is a deductible expenditure u/s. 37, although called penalty all that is to be seen is whether the law or scheme under which the amount was paid required such payments to be ....
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....t in assessee's own case for A.Y. 1984-85, the Tribunal has restored back this issue to the files of the AO to consider the claim of the assessee after taking into consideration the I.T. Rule-5 of 1984-85 and two case laws relied upon by the Ld. Counsel for the assessee. A perusal of the said order of the Tribunal show that the assessee has placed reliance on the decision of Allahabad High Court in the case of CIT Vs Indian Turpentine 75 ITR 533 and also the decision of Madras High Court in the case of Jagadeeshchandran 75 ITR 697. Respectfully following the decision of the Tribunal, we restore this issue back to the file of the AO. The AO is directed to decide this issue afresh as per the findings given in assessee's own case for A.Y. 1984-85. This part of the ground is allowed for statistical purposes. 55. As regards depreciation on ship Veer Varuna amounting to Rs. 44,30,500/-, we find that a similar issue came up for hearing in assessee's own case before the Tribunal in A.Y. 1985-86 vide ITA No. 7455/M/02. The issue relates to ground No. 2 of that appeal. We find that the Tribunal in that case has followed the earlier decision of the Tribunal in assessee's own case for A.Y. 19....