TaxTMI 
TaxTMI 
2015 (1) TMI 833
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....999 1991-92 480/2006 12/07/05 940/Ahd/1999 1990-91 1169/2006 06/09/05 2176/Ahd/1999 1993-94 1170/2006 06/09/05 2177/Ahd/1999 1994-95 1188/2006 23.12.2005 128/Ahd/1996 1992-93 1.1 These matters were admitted by this Court for consideration of the following substantial question/s of law: TAX APPEAL NO. 378 OF 2002 Whether on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in deleting the addition made by the Assessing Officer under section 32B(6) of the Income Tax Act, 1961? TAX APPEAL NO. 454 OF 2000 1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal has substantially erred in law in deleting the addition made under section 32AB(6) of the Act ? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal has substantially erred in law in directing to allow separate relief under sections 80HH and 80I of the Act? TAX APPEAL NOs. 480 & 481 OF 2006 Whether on the fact....
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....of 2006 is concerned, the return of income was filed on 30.06.1992 by the assessee showing total loss. Thereafter, the income was revised on 14.06.1993 and the total income was shown as Rs. 1,69,970/-. The assessing Officer during the assessment proceedings disallowed the claim of the the assessee with regard to stamping expenses, bank guarantee expenses, Advocate fees, bank commission and bank interest. The Assessing Officer worked out the fresh total income at Rs. 6,05,470/- on 03.03.2005. On appeal filed by the assessee before CIT(A), the CIT (Appeals) allowed the same. On appeal before the Tribunal by the revenue, by impugned order, Tribunal confirmed the order passed by CIT(A). 2.3 Being aggrieved and dissatisfied with the impugned orders passed by the Tribunal, the revenue has preferred the present Tax Appeals for consideration of the aforesaid substantial question/s of law. 3. Mr. Manish Bhatt, learned Senior Standing Counsel appearing for the revenue has drawn the attention of this Court to the provisions of section 32AB, more particularly, sub-clause (6) of the Act and strongly contended that the Tribunal has erred by overlooking the fact that deduction u/s 32AB(1) i....
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....use of the amount withdrawn is not in accordance with the spirit of Section 32AB(1) and 32AB(4) of the Act. He submitted that the assessee is therefore not entitled to the incentive as stipulated as per the provisions of Section 32AB(1) of the Act. 4.2 Mr. Mehta submitted that so far as questions raised in Tax Appeal No. 454 of 2000 are concerned, that for availing any benefit under the provisions of the Act new machinery ought to have been purchased after 01.01/08.1986 which is after the scheme came into force. He has relied upon the decision of the Apex Court in the case of Commissioner of Income Tax vs. Calcutta Knitwears reported in [2014] 362 ITR 673(SC). 5. Mr. S.N. Soparkar, learned Senior Counsel appearing with Mr. B.S. Soparkar, learned advocate for the assessee supported the impugned orders passed by the Tribunal. He submitted that considering the provisions of section 32AB, more particularly sub-clause (1) and (6) and the provision of clause 9 of the Scheme, it is clear that the requirement is repayment of principal amount of specified term loans and the purpose of term loans is not elaborated further. 5.1 Mr. Soparkar has taken this Court to the findings of bot....
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....on referred to as the scheme) to be framed by the Central Government, or if the assessee is carrying on the business of growing and manufacturing tea in India, to be approved in this behalf by the Tea Board, the assessee shall be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of- (i) a sum equal to the amount, or the aggregate of the amounts, so deposited and any amount so utilised; or (ii) a sum equal to twenty per cent of the profits of business or profession as computed in the accounts of the assessee audited in accordance with subsection (5), whichever is less : Provided that where such assessee is a firm, or any association of persons or any body of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or as the case may be, any member of such firm, association of persons or body of individuals: Provided further that no such deduction shall be allowed in relation to the ....
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....bsp; (iv) the amounts carried to any reserves, by whatever name called; (v) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (vi) the amount by way of provision for losses of subsidiary companies; and (vii) the amount or amounts of dividends paid or proposed, if any debited to the profit and loss account; and as reduced by any amount or amounts withdrawn from reserves or provisions, if such amounts are credited to the profit and loss account . (4) No deduction under sub-section (1) shall be allowed in respect of any amount utilised for the purchase of- (a) any machinery or plant to be installed in any office premises or residential accommodation, including any accommodation in the nature of a guest-house; (b) any office appliances (not being computers); (c) any road transport vehicles; (d) any machinery or plant, the whole of the actual cost....
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....ccount either before or after the expiry of a period of five years from the date of deposit. (5AA) Where any amount, standing to the credit of the assessee in the deposit account, is withdrawn during any previous year by the assessee in the circumstance specified in clause (a) or clause (d) of sub-section (5A), the whole of such amount shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year, as if the business had not closed or, as the case may be, the firm had not been dissolved. (5B) Where any amount standing to the credit of the assessee in the deposit account is utilised by the assessee for the purposes of any expenditure in connection with the business or profession in accordance with the scheme, such expenditure shall not be allowed in computing the income chargeable under the head "Profits and gains of business or profession". (6) Where any amount, standing to the credit of the assessee in the deposit account, released during any previous year by the Development Bank for being utilised by t....
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....pany were partners of the firm immediately before the succession. (8) The Central Government may, if it considers it necessary or expedient so to do, by notification in the Official Gazette, omit any article or thing from the list of articles or things specified in the Eleventh Schedule. (9) The Central Government may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the provisions of this section shall not apply to any class of assessees, with effect from such date as it may specify in the notification. (10) Where a deduction has been allowed to an assessee under this section in any assessment year, no deduction shall be allowed to the assessee under sub-section (1) of section 32A in the said assessment year (hereinafter referred to as the initial assessment year) and a block of further period of four years beginning with the assessment year immediately succeeding the initial assessment year. Explanation.-In this section,- (a) "computers" does not include calculating machines and calculating devices; ....
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....not more than once in every three calendar months, by making an application in Form D: Provided that no such application shall be granted unless the depositor has, for a minimum period of one year prior to the date of such withdrawal, in his account a minimum balance of an amount which is not less than the amount to be withdrawn. (b) On receipt of the request for withdrawal, the deposit office shall, as soon as may be, pay the amount to the depositor through a credit to the designated account. (c) The amount credited to the designated account under clause (b) shall be utilised by the depositor within fifteen working days from the date of such credit for the purpose for which the amount has been withdrawn; and the amount or any part thereof which has not been so utilised shall be refunded to the Development Bank and on such refund, the amount or part thereof, as the case may be, shall be treated as a fresh deposit in the account for the purposes of withdrawal under clause (a) of sub-paragraph (2) of paragraph 9 above." 7. A plain reading of section 32AB of the Act and the Scheme shows that as in the case of assesse....
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....ates announced by the F.M., the retained earnings and internal resources generation of the companies would improve. As mentioned in paras 5.12 to 5.18 of the LTFP, the investment allowance had tended to favour the large and more established enterprises, partly because such concerns could set off investment allowance against profits of old established units without waiting for profits from fresh investments. The new scheme of investment deposit account will be neutral as between small and large companies and will also insulate the timing of investment decisions from tax considerations. This measure should help to reduce the premium on spending which taxation of business profit inevitably creates, and thus curb the conspicuous extravagance in the corporate sector. The new scheme should also help to neutralise the bias in favour of borrowing and needless capacity creation The new scheme differs from the existing provisions of investment allowance as under : (a) The existing provisions of the investment allowance apply to only those assessees- (i) who purchase a ship or aircraft, which is first put to use in the business of the assessee ; or ....
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....the designated Development Bank. (d) The investment allowance is allowed at 25 per cent of the actual cost of the plant, machinery, ship or aircraft to the assessee. As against this, under the new scheme, the entire cost of the ship or aircraft or plant or machinery will qualify for deduction, if the same is up to 20 per cent of the profits of the eligible business or profession. (e) Under the new provisions, the deduction is not admissible unless the accounts of the business or profession of the assessee, other than a company or a co-operative society have been audited by an accountant and the assessee furnishes along with the return of his income, the report of such audit in the prescribed form, duly signed and verified by such an accountant. No such audit is required as a condition for availing of the benefit of the existing investment allowance. (f) Subject to the fulfilment of the required conditions, the benefit of investment allowance continues to be available if the sale or transfer of a ship or an aircraft or plant or machinery is made as per a scheme of amalgamation. Such deduction is not provided in the ne....
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....be implied. One can only look fairly at the language used." 26. Lord Granworth in Grundy v. Pinniger, (1852) 1 LJ Ch 405 has observed that: "To adhere as closely as possible to the literal meaning of the words used, is a cardinal rule from which if we depart we launch into a sea of difficulties which it is not easy to fathom." That is to say, once the literal rule is departed, then any number of interpretations can be put to a statutory provision, each Judge having a free play to put his own interpretation as he likes. This would be destructive of the edifice of fiscal legislations which impose economic duties and sanctions. "9.1 The Apex Court in the case of Mysore Minerals Ltd (supra) has held that section 32 of the Income-tax Act confers a benefit on the assessee and that the provision should be so interpreted and the words used therein should be assigned such meaning as would enable the assessee securing the benefit intended to be given by the Legislature to the assessee. It is also well- settled that where there are two possible interpretations of a....