TaxTMI 
TaxTMI 
2014 (10) TMI 474
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.... framed u/s 143(3) vide order dated 27.3.2006 and the total income was determined at Rs. 1,24,63,924/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) vide order dated 25.01.2007 allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. The grounds raised by the Revenue reads as under:- 1. The Ld.CIT(A) erred in law and on the facts of the case in deleting the disallowance of Rs. 27,99,225/-, being proportionate interest expenses relatable to the advance of Rs. 5,44,25,000/- made to M/s. Shubham Appliances (P) Ltd, for implementation of new project which could not take off, after holding that the A.O. did not bring anything on record to show that the said advances were made out of borrowed funds ignoring the fact that it is the onus of the assessee, who claims any expenditure to prove that said expenditure including the expenditure claimed u/s, 36(i)(iii) was for business purposes, as held in the cases reported at 258 ITR 363{DEL), 254 ITR 449(DEL) etc. 2. The ld.CIT(A) has erred in law and on the facts of the case in holding that the assessee had otherwise interest free funds ignoring the fact that ....
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....t expenses claimed to the total funds available and disallowed the same. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) deleted the addition made by AO by holding as under:- 4.1 I have considered the above submissions. As per Board resolution dated 19.02.2003, it was resolved to give interest free advance of Rs. 600 lakhs to Shubham Appliances P. Ltd. The relevant portion of the resolution is reproduced as under: " The chairman informed the Board that the Company has appointed Shubham Appliances Pvt. Ltd for technical assistance for improving efficiency of the existing vanaspati plant at Rakhial. Shubham Appliances P. Ltd has also made presentation before the Board. After discussion at length, members of the Board approved to advance Rs. 600 lacs to Shubham Appliances P. Ltd. and authorize Shri. D.P. Goyal, Resident Director to take necessary actions and decisions in the matter from time to time. Members of the Board them passed the following resolution. "RESOLVED THAT the company do take technical assistance and technical know how for improving" the efficiency of the Vanaspati plant located at Rakhial and authorize Shri. D.P. Goyal, Resident Di....
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.... submitted that no details of the project etc were submitted before the AO for his perusal. He further placed reliance on the decision of Ahmedabad Tribunal in the case of Inamulhaq S Iraki (ITA No 243/Ahd/2011 order dated 31.1.2012). On the other hand the Ld.A.R. reiterated the submissions made before CIT(A). He further submitted that the project could not be implemented and therefore the money was received back by the assessee. He pointed to the ledger account placed at page 20, 21 of the paper book. He further submitted that the advance was for the purpose of business, Subham Appliances was not a related party of the Assessee and the transaction has not been doubted. He further submitted that the Assessee was having sufficient interest free funds in the form of Capital and Reserves and therefore the presumption was that the interest free funds have been used for the purpose of making advance. He also placed reliance on the decisions in the case of Raghuvir Synthetics 354 ITR 222 (Guj), Reliance Utility & Power Ltd 313 ITR 340 (Bom) and S A Builders 288 ITR 1 (SC). 7. We have heard the rival submissions and perused the material on record. It is a fact that Rs. 5.44 crores was gi....
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....nses incurred on advertisement and publicity amounting to Rs. 9,60,000/- is not allowable expenditure. As against this, it is submitted that payment towards publicity and advertisement was made to M/s Kamyani Sales P. Ltd. for the first time during A.Y. 2002-03 and same was repeated during the period relevant to-current assessment year, in support of the above. claim, the following documents were filed before me: (i) copy of advertisement contract performance report dated 12.04.2003 of Kamayani Sales Promotion P. Ltd., Kolkata. (ii) Copy of Bill dated 30.04.02 for remuneration for services rendered by kamayani Sales. (ii) Copy of form No. 16A issued by the appellant company to Kamayani Sales for payment of remuneration and TDS thereon. (iv) Copy of survey report "Madhuram Vanaspati" prepared by Kamayani Sales Agency for 2002-03. (v) Printed pamphlets of products of Madhusudan Industries Ltd. (Page 178 to 184 of the paper book). 6. I have considered the above submission and gone through the documents. On perusal of the above documents it is clear that Kamayani Sales has rendered services to the appellant company for the period 1.04.2002 to 31.03.2003 for which total payment of....
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.... remit the issue to the file of AO to decide the issue afresh as per law and after considering the evidences filed by the Assessee before CIT(A). Needless to state that AO shall grant an adequate opportunity of hearing to the Assessee. Thus this ground of Revenue is allowed for statistical purposes. 4th ground is with respect to deleting the disallowance of Rs. 2,92,226 on account of sales promotion expenses: 12. A.O noticed that Assessee had paid Rs. 2,92,226/- to Gujarat Soaps ltd on account of salesman appointed for sales. He also noticed that Gujarat Soaps Ltd had not made any sales for Assessee during AY 2001-02, 2002-03 and 2003-04 and therefore according to AO there was no justification for the payment of sales promotion expenses. He accordingly disallowed the payment. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who deleted the addition by holding as under:- 6.2 I have considered the above submission and gone through the facts of the case. The appellant company vide agreement dated 31.7.98 has requisitioned the services of Gujarat Soaps P. Ltd. for marketing its products. It is agreed between the parties as per clause 4 of the agreement as under....
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....tween Assessee and Gujarat Soaps P. Ltd. for allowing the expenses. We find that the aforesaid agreement was not before AO but was considered by CIT(A) for deleting the addition. We therefore feel that in the interest of justice and fair play, the AO be granted an opportunity to examine the agreement and other submissions made by Assessee before CIT(A). We therefore remit the issue to the file of AO to decide the issue afresh and as per law and after considering the additional evidences filed by the Assessee before CIT(A). Needless to state that AO shall grant adequate opportunity of hearing to the Assessee. Thus this ground of Revenue is allowed for statistical purposes. 5th ground is with respect to deletion of disallowance of prior period expenses amounting to Rs. 3,59,317/- 16. A.O noticed that Assessee had debited prior period expenses of Rs. 3,59,317/-. AO noted that since the Assessee did not furnish any evidence to prove that the liability of prior period crystallized during the year and since the Assessee was following mercantile system of accounting the expenses which did not pertain to the year could not allowed and therefore he disallowed the expenses. Aggrieved by the....
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....at AO shall grant an adequate opportunity of hearing to the Assessee. Thus this ground of Revenue is allowed for statistical purposes. 19. In the result, the appeal of the Revenue is partly allowed for statistical purposes. ITA No. 548 /AHD/2008 (for A.Y. 2004-05) The grounds raised by Revenue reads as under:- 1. The Ld.CIT(A) erred in law and on the facts of the case in deleting the disallowance of Rs. 7,09,101/-, being proportionate interest expenses relatable to advances made to Esquire Holding Pvt. Ltd and Shubham Appliances Pvt. Ltd. 2. The Ld. CIT(A) erred in law and on the facts of the case in deleting the disallowance of Rs. 11,52,000/- out of advertisement and publicity expenses. 3. The Ld. CIT(A) erred in law and on the facts of the case in deleting the disallowance of Rs. 2,68,348/- out of sales promotion expenses. 4. The Ld.CIT(A) erred in law and on facts of the case in directing the A.O to compute the deduction u/? 80HHC unit-wise ignoring the fact that the Ld. CIT(A) himself had given contrary decision in the assessee's own case for A.Yrs.2000-01 & 2001-02 wherein the action of the A.O in taking all the units as a whole for the purpose of deduction u/s 80H....
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.... of the view that the aforesaid income were not eligible for deduction u/s 80HHC. He accordingly worked out the deduction (30% of eligible deduction) at Rs. 16,865/-. Aggrieved by the order of AO, the matter was carried before CIT(A). CIT(A) granted partial relief by holding as under:- 8.2 I have carefully considered the submissions made by the ld. Authorised Representative. As regards the issue whether profits of the company as a whole are to be considered or the profits and turnover of only the export units are to be considered for working out deduction u/s. 80HHC, it is noticed that the appellant has claimed deduction u/s. 80HHC after taking into account the export sales made by the Solvent Extraction Divisions, situated at Nimbhahera in Rajasthan and Rakhial. In A.Y. 1993-94 the Hon'ble ITAT dated 6-7-2005 has upheld the order of CIT (A) giving direction to the A.O. to consider only the total turnover of units I,II & III of the sanitaryware division for the purpose of computing deduction u/s.80HHC as submitted by the A.R. at page 102 of the paper book. The CIT(A)-VIII had also held for A.Y. 1998-99 vide order dated 30-1-2003 in para 11.5 that for the purpose of section 80H....
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....e issue of considering the turnover of the unit and exclusion of sales tax and excise duty for the purpose of calculation of deduction u/s 80HHC was also decided in Assessee's favour by Tribunal in AY 2001-02. He also submitted a chart giving the breakup of miscellaneous income which as under:- 24. From the chart he pointed out that the issue of sale of scrap and bad debts recovery is covered in its favour by the decision of co-ordinate Bench in AY 2001-02. With respect to Miscellaneous income and sauda settlement, he submitted that the issue is covered against the assessee by the decision of Tribunal for Ay 2001-02. He therefore submitted that following the decision in earlier years, the issue be decided. 25. We have heard rival submissions and perused the material on record. We find that the issues connected with deduction u/s 80HHC for AY 2001-02 was raised was by Assessee and Revenue before Tribunal. The coordinate Bench of Tribunal decided various issues in AY 2001-02 (ITA No 782 & 765 of 2007 vide order dated 30.3.2012 by holding as under:- 2. The 1st ground of appeal filed by the Revenue is that the CIT(A) erred in directing the Assessing Officer to exclude Excise Dut....
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....f calculation of deduction under section 80 HHC of the Act. The assessee is in appeal through its ground no. 2 challenging the order of CIT(A) in respect of deduction for excluding of miscellaneous income Rs. 10,61,619/- and interest income Rs. 1,153/- and Rs. 1,938/-. The Revenue is in appeal against the balance amount for which the CIT(A) directed to allow the claim of the assessee u/s. 80HHC of the Act. 9 At the time of hearing, the Ld. Authorised Representative submitted that the sale stores/scrap at Rs. 8,61,923/-, sales rounding off Rs. 547/-, Sundry Dr./written off Rs. 53/-, Foreign Exchange variation Rs. 29,503/- & bad debt recovered Rs. 15,894/- are to be decided in favour of the assessee treating the same as income by various Benches of I.T.A.T. and other orders on the issue. However, interest received on PCD Rs. 1,153/- & Rs. 1,938/-, house rent received 79,279/- & Sauda Settlement Rs. 73,665/- may be decided against the assessee. Accepting learned AR submissions we decide accordingly. As regards miscellaneous income of Rs. 10,61,619/-, the Ld. Authorised Rcpresentative did not press for want of break up of the miscellaneous income of Rs. 10,61,619/-. In the light of th....