TaxTMI 
TaxTMI 
2015 (1) TMI 511
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.... assessment order dated 31.12.2009 & rectification order dated.30.06.2010 passed by the Ld Assessing Officer are void ab intio, against the natural justice, unjustified ,erroneous ,arbitrary , contrary to facts ,bad in law, without jurisdiction and / or in excess of jurisdiction and legally untenable. 2. That the learned Assessing Officer has misconstrued /mis-appreciated the facts and the exclusion of Rs. 2,51,00,337/- while computing the deduction of " Power profits" U/s 801A of the Act and the determination of deduction of Rs. 203,55,84,247/- in stead of Rs. 206,05,01,377/- is contrary to facts, based on irrelevant consideration presumptions, conjectures and surmises without any evidence on record, arbitrary incorrect and legally not tenable. 3. That the Ld Assessing Officer has failed to apply the settled judicial pronouncements and has erroneously excluded Rs. 2,51,00,337/- While computing the deduction of "Power Profits u/s 80IA of the Act. 4. That without prejudice to above the Ld .A.O has erred on fact and law not to determine Rs. 2,51,00,337/-as income as derived from power business eligible for deduction under section 80IA and treated as income from other sources while....
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....e assessee is in appeal before us. 5. Ground No.1 is general in nature, hence requires no adjudication. 6. Apropos Ground Nos.2,3,4 & 5, brief facts are that, during the course of assessment proceedings, the Assessing Officer, on perusal of schedule-10 of the audited profit and loss account, noticed that 'other income' disclosed by the assessee was as under: Sl.No. Nature of receipt Total receipt in Rs. 1. Income from investment/deposits 25,77,43,691 2. Int. on refund of advance income tax 45,061 3. Int. income from employees & others 19,06,515 4. Receipt for rent, elect.charges 80,43,368 5. Sundry receipt 29,50,613 6. Sale of scrap 1,19,30,199 7. Profit on sale of disposal of fixed assets 2,69,642 Total: 28,28,89,089 He was of the opinion that deduction u/s. 80IA was not allowable, inter alia, in respect of income from investment/deposits as the income was not derived from business of generation of electricity. 7. After considering the assessee's submissions, the Assessing Officer restricted the deduction under section 80-IA of the Act to Rs. 203,54,01,040/- , inter alia, observing as under: "The issue is similar to the ea....
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....nt Therefore, these grounds raised by the assessee are rejected." 9. At the time of hearing, ld counsel for the assessee fairly conceded that above issue has been decided by the Tribunal against the assessee in earlier assessment year. However, the appeal has been filed before the Hon'ble Jurisdictional High Court and, therefore, in order to keep the issue alive, these grounds may be decided as per the decisions of earlier assessment years for the reasons given in assessment year 2003-04. 10. In view of above submissions of ld counsel for the assessee, we dismiss Ground Nos.2 to 5. 11. As far as Ground No.6 is concerned, brief facts of the case are that the assessee had incurred a sum of Rs. 95,94,541/- as peripheral development expenses and debited to P&L account. After examining the assessee's contention, the AO disallowed Rs. 61,91,054/-, inter alia, observing as under: "It is seen that most of the under mentioned items of expenditure are not related to the business of the assessee and are of voluntary in nature and thus prima facie inadmissible. Such expenses are not proved to be incidental to the carrying on the business and incurred wholly and exclusively for runn....
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....ent year also. 14. We have considered the submissions of parties and perused the record of the case. In assessment year 2009-10, out of the total expenses of Rs. 89,70,409/-, ld CIT(A) has directed to restrict the disallowance to an amount of Rs. 25,41,312/- on account of peripheral development because the amount paid through Corporation office at Bhubaneswar was not in connection with business. In the present assessment year, ld CIT(A) has clearly observed that the assessee had not clarified that the expenditure had been incurred in respect of area where industrial activity was being carried out. Therefore, the facts for assessment year 2009-10 are distinguishable from the facts for assessment year 2007-08. The assessee has not been able to controvert the findings of ld CIT(A). As the expenditure had not been incurred in respect of area where industrial activity was being carried out, the same canot be held to be wholly and exclusively for the purposes of business. In view of this, Ground No.6 is dismissed. 15. As far as Ground No.7 is concerned, facts of the case are that the Assessing Officer noticed that some of the expenses under the head 'entertainment expenses' app....
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....s and reimbursement of service tax for assessment year 2007-08. Ld CIT(A) observed that an amount of 67, 656/- related to period May 2005 to March 2007 and same was paid as and when bill was raised, therefore, the liability had arisen during the period relevant to instant assessment year. Accordingly, he directed the AO to allow Rs. 67,656/-. However, for the balance amount i.e. Rs. 7,75,792/-, he disallowed on the ground that the same were not related to assessment year 2008-09. 25. At the time of hearing, ld counsel for the assessee submitted that the expenses are supported with documents/evidences. He submitted that since the payments are made during the assessment year under consideration, same should be allowed. He furnished a detailed chart as under: Sl.No. Particulars Amount (Rs.) Remarks 1. Cabling & lighting for period 1.11.06 to 30.3.07 1,03,929 Paid during 07-08 2. Supervision charges for period from 18.11.2006 to 18.12.2006 84,180 Paid during 07-08 3. Reimbursement of service trax for 2005- 06 & 2006-07 to Shree Viswakarma Construction 3,62,778 The party claimed during 2007-08 4. Lunch provided to Police personnel during strike on 29.7.06 to 3.9.2006 ....
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.... that whether the total amount of Rs. 1,08,77,070/- included the amount of Rs. 33,12,500/- as claimed by the assessee was to be verified by the AO. Accordingly, he directed the AO to verify the same and recompute the disallowance accordingly. However, in sum and substance, he confirmed the action of the AO following the assessment year 2004-05, by excluding an amount of Rs. 33,12,500/- and confirming the addition of Rs. 75,64,170/-. Being aggrieved, assessee is in further appeal before us. 30. At the time of hearing, ld counsel for the assessee submitted that the details of peripheral development expenses are supported with approval/voucher, etc and the same are incurred for the business of the assessee. 31. We have heard the rival contentions and perused the record of the case. We do not find any reason to interfere with the order of ld CIT(A) for the reasons given in respect of Ground No.6 for assessment year 2007-08 (supra). Hence, this ground is rejected. 32. Ground No.8 relates to disallowance of Rs. 4,09,128/- on account of entertainment expenses. 33. The AO observed that some of the expenses under the head 'entertainment expenses' appeared to be personal in natur....
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....me had already been taxed in earlier year and getting adjusted in the impugned assessment year, he directed the AO to delete Rs. 1,06,66,620/-. Accordingly, he confirmed the balance amount of Rs. 7,93,787/-. Aggrieved, the assessee is in appeal before us. 42. Having heard both the sides, we find that an amount of Rs. 7,93,787/- were the expenses related to earlier years. The AO has observed that the same relates to assessment year 2008-09. In view of this, we direct the AO to allow the expenditure in the year in which the expenditure crystallized. Hence, ground No.3 is allowed for statistical purposes. 43. Ground No.4 relates to disallowance of Rs. 4,36,937/- on account of entertainment expenses on estimation. 44. This issue came up for consideration in assessment year 2007-08 vide ground No.7 and for the reasons given in assessment year 2007-08, we allow this ground. 45. In the result, appeal filed by the assessee is partly allowed for statistical purposes. 46. Now we take up the appeal of the revenue for assessment year 2008-09 in ITA No.636/CTK/2012. "1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the amount of Rs. 33,12,5....
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....that the expenditure was not related to business. Hence, department is in appeal before us. 15 OPGC 48. Having heard both the sides, we do not find any reason to interfere with the order of ld CIT(A) since staff welfare expenditure was incurred during the course of conducting business activity of the assessee. Ground No.2 of the revenue is dismissed. 49. Apropos Ground No.3, having heard both the sides, we find that the amount of Rs. 67,656/- being the prior period expenses included staff over time for the period May 2005 to March, 2007 and was paid when the bill was raised. Since the amount was paid during the year under consideration, we are of the view that ld CIT(A) is justified in deleting the said amount. Hence, this ground is rejected 50. Ground of cross objections filed by the assessee are in support of the order of ld CIT(A). Since we have upheld the order of ld CIT(A), cross objections are rendered infructuous. 50. In the result, appeal filed by the revenue and cross objection filed by the assessee for A.Y. 2008-09 are dismissed. 51. The department has taken the following grounds in its appeal for the assessment year 2009-2010 in ITA No.145/Ctk/2013: 1. "On the fact....
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..... 4. For that, in consideration of overall facts the order of the CIT (A) is justified in deleting the amount of Rs. 1,14,60,407/- on account of Prior Period Expenses as the income has already been taxed in the earlier year and getting adjustment in the impugned assessment year due to rectification of bills earlier raised, whereas, has committed an error on fact and law while confirming the disallowance to the extent of Rs. 7,93,787/- 53. Ground No.1 of revenue's appeal is similar to ground No.2 for assessment year 2009- 2010 in assessee's appeal. For the reasons given therein for assessment year 2009-2010, we do not find any reason to interfere with the order of ld CIT(A). Accordingly, we reject this ground. 54. Ground No.2 is similar to Ground No.2 taken by the revenue for assessment year 2008- 09. For the reasons given therein, we reject this ground. 55. Apropos Ground No.3, facts are that the Assessing Officer noticed that the assessee had taken loan from Power Finance Commission on which it paid certain interest every year. However, TDS was not deducted while making such payment. He, therefore, concluded that there was violation of section 194A and, therefore, made....