TaxTMI 
TaxTMI 
2014 (8) TMI 767
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....eiterated the same contentions which were made before CIT(A). He placed reliance on the following judicial pronouncements: (i) Commissioner of Income-tax Vs Bhor Industries Ltd. [2003] 264 ITR 180 (Bom) (ii) Commissioner of Income-tax Vs Dinesh Kumar Goel [2011] 331 ITR 10 (Del) 4. On the other hand, Learned D.R. of the Revenue supported the order of learned CIT(A). 5. We have considered the rival submissions. We find that the CIT(A) has decided this issue in accordance with the provisions of section 35DDA, which has been inserted with effect from 01/04/2001 i.e. assessment year 2001-2002. As per the provisions of this section, where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee at the time his voluntary retirement, 1/5th of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year and the balance shall be deducted in equal installments for each of the four immediately succeeding previous years. In the present case, the assessee has made payment of Rs. 1,35,47,32....
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....Devices" irrespective of the period to which it is put to use since appellant made the claim in accordance with Appendix 1 of rule 5 of the I.T. Rules 1962 being the Table of Rates." 7. Learned A.R. of the assessee reiterated the same arguments which were raised before the CIT(A). 8. Learned D.R. of the Revenue supported the orders of the authorities below. 9. We have considered the rival submissions. We find that this issue has been decided by learned CIT(A) as per Para 4.2.1 and 4.2.2 of his order, which are reproduced below for the sake of ready reference: "4.2.1 I have considered the reply and the reasoning of the Assessing Officer. Since the depreciation under section 32(1)(ii) is block of asset on the basis of such percentage on the written down value thereof as may be prescribed, the assessee was entitled to the claim of 100% on the WDV. However, this claim is subject to the second proviso to clause (ii) of sub section (1) of section 32 which states that where an asset referred to in clause (ii) etc. is acquired by the assessee during the previous year and is put to use for the purpose....
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....h were used for less than 180 days in the present year. Regarding the opening balance also, he has directed the Assessing Officer to verify the record of the assessment year 2001-02 and recompute the depreciation allowable by allowing 100% depreciation on opening WDV arrived at as on 01.04.2001. These directions of the CIT(A) are in line with the provisions of 2nd proviso to clause (ii) of sub section (1) of section 32 of the Act and hence, we decline to interfere in the order of CIT(A) on this issue also. Accordingly, ground No. 2 is rejected. 10. Ground No. 3 is as under: "3. Because, the Learned CIT(Appeals) has erred in overlooking the provisions of sec.43B relating to disallowance of Rs. 1,40,57,860/- on account of payment of gratuity paid under the scheme of LIC but disallowed the said amount by invoking the provisions of sec.40A(7) of the I.T. Act." 11. On this issue also, Learned A.R. of the assessee reiterated the same arguments, which were made before the CIT(A). 12. Learned D.R. of the Revenue supported the orders of the authorities below. 13. We have considered the rival submissions. We find that the ....
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....Ground No. 4 is as under: "4. Because, the learned lower authorities failed to appreciate that though the grant for electric vehicle of Rs. 50,00,000/- was sanctioned on 30.3.2002, disbursed and released vide letter dated 10.4.2002 by the Ministry was to be utilized till 30.6.2002." 16. On this issue also, Learned A.R. of the assessee reiterated the same arguments which were made before CIT(A). 17. Learned D.R. of the Revenue supported the orders of the authorities below. 18. We have considered the rival submissions. We find that this issue was decided by CIT(A) as per Para 4.10 and 4.10.1 of his order, which are reproduced below for the sake of ready reference: "4.10 Ground no. 10 relates to the addition of Grants for Electric vehicle. The assessee relies on GO. No. 6/4/12/2001- NT dated 21/8/01 issued by Govt. of India, Ministry of Non- Conventional Energy Sources for the implementation of project entitled Demonstration of Battery Operated Three Wheelers (BOTWS) whereby grant of Rs. 100 lakhs was sanctioned and against the said sanct....
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....ich was received in the next assessment year cannot be utilized in the present year and as per the matching principle, this grant should be considered as income in the next year. Hence, on this issue, we reverse the order of CIT(A) and delete this addition. Accordingly, ground No. 4 is allowed. 19. In the result, the appeal of the assessee stands partly allowed. 20. Now we take up the appeal of the Revenue for assessment year 2002-03 i.e. I.T.A. No.58/Lkw/2011. In this appeal, the Revenue has raised the following grounds: "1. Ld. CIT (A) has erred in law and facts in deleting addition of Rs. 40,59,237/- on account of "Salary & Wages & Bonus" and Rs. 32,74,781/- on account of "Power & Fuel" being prior year expenses whereas as per Accounting Standards only those expenses are allowable as deduction which are incurred & recorded in financial statements of the periods to which they relate." 21. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A). 22. We have considered the rival submissions. We find that this issue was....
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....ng Officer erred in not understanding the accounting policy adopted by the appellant, AS-5 as issued by the Institute of Chartered Accountants of India and not accepting the judicial pronouncement as held in Case of Bharat Earth Movers Ltd. v/s CIT (2000) 112 Taxman 61 (SC) and CIT Delhi-II v/s Khaitan Fertilizers & Chemicals Ltd. (2008) 175 Taxman 195 (Delhi)." 27. It was submitted by Learned A.R. of the assessee that these expenses although pertain to earlier year have crystallized in the present year and therefore, the same are allowable in the present year. 28. As against this, Learned D.R. of the Revenue supported the orders of the authorities below. 29. We have considered the rival submissions. We find that this issue has been decided by CIT(A) as per Para 4.4 & 4.5 of his order, which are reproduced below for the sake of ready reference: "4(4)The expenses claimed on account of prior period expenses are tabulated as under- Head A. Yr 2003-2004 A. Yr 2004-2005 Raw Materials 1,52,336 16,84,198 Salaries Wages and Bonus 63,78,008 28,748 Repairs 25,656 1,146 ....
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....e crystallized during the present year. Hence, on this issue, we do not find any reason to interfere in the order of CIT(A). 30. In the result, the appeal of the assessee stands dismissed. 31. Now we take up the appeal of the assessee for assessment year 2003-04 i.e. I.T.A. No.87/Lkw/2011, which is arising out of the original assessment order passed by the Assessing Officer u/s 143(3) of the Act on 28/03/2006. 32. In this appeal, the assessee has raised the following grounds: "1. Because, the learned lower authorities failed to appreciate that the appellant was entitled for 100% of depreciation on electric vehicles irrespective of the period to which it is put to use. 2. Because, the Learned CIT(Appeals) has erred in overlooking the provisions of sec.43B relating to disallowance of Rs. 1,63,05,942/- on account of payment of gratuity paid under the scheme of LIC but disallowed the said amount by invoking the provisions of sec.40A(7) of the I.T. Act. 3. Because, the learned lower authorities failed to appreciate that the grant for electric vehicle of Rs. 1,00,00,000/- ....
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....rder that out of sponsored grant of Rs. 200 lac, Rs. 100 lac was received by the assessee in the present year and the same was offered to tax and balance Rs. 100 lac was shown by the assessee as current liability in the balance sheet. Hence, it is seen that this Rs. 100 lac was not received in the present year and when the grant is not received, the same cannot be utilized in the present year and therefore, on the basis of matching principle, this grant should be taken as income in the year of receipt because only after receipt of the grant, it can be utilized and if the assessee does not utilize even after receipt, then the same should be taxed in the year of receipt irrespective of the fact that the expense was not incurred but when the grant itself has not been received, it should not be taxed as income. Accordingly, in the present year, we hold that this balance amount of Rs. 100 lac should not be taxed in the present year because the same was not received in the present year. This addition is deleted. Ground No. 3 is allowed. 36. Regarding ground No. 4, we find that while deciding the appeal of the assessee for assessment year 2002-03, we have deleted the addition in that y....
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....e said interest subsidy was given on account of the fact that as per policy of the company, the company was required to give house building loan to its employees at an interest rate of 6.5%, but due to paucity of funds the company could not honour its commitments hence, the company allowed its employees to borrow house building loan and the interest exceeding 6.5% as paid to the financial institutions was reimbursed to the employees. Accordingly, the same was treated as expense of the company. 4.5.1 I have considered the assessment order and the grounds of appeal. The Assessing Officer has examined the issue in the context of commercial expediency and has held that the interest subsidy cannot be allowed as a business expenditure. It has been held in the case of Amarjothi Pictures v. CIT [1968] 69 ITR 755 (Mad.)/CIT vs. Gobald Motor Service (P.) Ltd. [1975] 100 ITR 240 (Mad.) that the expediency of the expenditure is not for the revenue to consider. That is a matter entirely left to the judgment of the assessee concerned. In allowing or disallowing a deduction the revenue has, of course, to have regard to the requisites of section 10(2)(xv) of the 1922 Act [cor....
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.... account of payment of gratuity paid under the scheme of LIC but disallowed the said amount by invoking the provisions of sec.40A(7) of the I.T. Act. 2. Because, the learned lower authorities treated the grant for electric vehicle of Rs. 1,00,00,000/- as its income in assessment year 2003-04 whereas the appellant had considered the said amount in the books of account as its income in assessment year 2004-05, accordingly the said income of Rs. 1,00,00,000/- was treated as income twice in assessment years 2003-04 & 2004-05 hence the lower authorities erred in treating the amount of Rs. 1,00,00,000/- as income in assessment year 2003-04. 3. Because, the Learned CIT(A) has erred in overlooking the provisions of sec. 36(l)(vii) of the Income Tax Act, 1961 by disallowing Rs. 623660/- on account of Bad and Doubtful Debts, Advances and others written off." 43. Regarding ground No. 1, it was agreed by both the sides that this issue is identical in both the earlier assessment years i.e. assessment year 2002-03 and 2003-04 and this issue can be decided on similar lines. While deciding this issue in earlier years, we ....
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....bsp;2. Ld. CIT (A) has erred in law and facts in deleting the addition of Rs. 7,33,446/- on account of benevolent expenses relying on the decision in the case of CIT Vs. E.I.D. Parry India Limited (1999) 105 Taxman 153/240 ITR 253 (Mad.) They have failed to appreciate that the assessee failed to prove that the expenses are wholly for the purpose of business. The decisions in the case of Goodlas Nerolac Paints Ltd. Vs. CIT (Bom.) 137 ITR and in the case of Tamil Nadu Minerals Ltd. vs. JCIT (I.T.A.T.), Chennai 05 ITD 294 are therefore applicable to the facts of the case." 49. Both the sides agreed that this issue is identical to the issue raised by the Revenue in assessment year 2003-04. In assessment year 2003-04, this issue was decided in favour of the assessee and accordingly on similar line, this issue is decided in favour of the assessee in the present year also. 50. In the result, the appeal of the Revenue stands dismissed. 51. Now we take up the appeal of the Revenue for assessment year 2005-06 i.e. I.T.A. No.61/Lkw/2011. In this appeal, the Revenue has raised the following grounds: "1. Ld. CIT (A) ....
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....raised the following grounds: "1. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,75,236/- on account of "interest subsidy on house building loans" relying on the decision in the case of CIT vs. E.L.D. Parry India Limited (1999) 105 Taxman 153/240 ITR 253 (Mad). He failed to appreciate that the said expenses are not wholly for the purpose of business and are not allowable. In doing so he failed to follow the decision in following cases: (a) Goodlas Nerolac Paints Ltd. vs. CIT (Bom) 137 ITR (b) Tamil Nadu Minerals Ltd. vs. JCIT (I.T.A.T. Chennai) 05 ITD 194 2. The CIT(A) has erred in law arid on facts in deleting the addition of Rs. 2,73,82,796/- made by A.O. out of gratuity paid under LIC Scheme. The Ld. CIT(A) failed to appreciate that the payment related to an earlier year and since no provision had been made by the assessee in that year, the payment was not allowable as deduction as per the provision of section 40A(7)(b) of the I.T. Act. Reliance in this regard ....