TaxTMI 
TaxTMI 
2015 (4) TMI 92
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....circles. The company also trades in handsets and accessories which are integral part of the nature of business in which the assessee is operating. During the course of scrutiny assessment, the A.O. observed that the assessee has shown capital work-inprogress at Rs. 398.15 million. In this context, the A.O. referred para 11(a) of Part-B, being Notes to Accounts of Schedule - 19 forming part of the accounts and observed that the auditors in this para have provided certain details of work-in-progress which reveal that the work-in-progress has been reduced by the income during pre-operative period of Rs. 3.80. million. A.O. further found that upto 31.3 .2002 there was no pre-operative income. Therefore he inferred on the basis of this Schedule that the entire pre-operative income has been accrued to the assessee during the previous year relevant to the assessment year under consideration. As per the A.O. in view of Supreme Court decision in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CIT (227 ITR 172) it was obligatory on the part of the assessee to offer this income for taxation. Since the assessee has failed to do so, the same was brought to tax in this assessment y....
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.... the Tribunal was as under:- "4.5 We have considered the rival submissions as well as relevant material on record. So far as the admissibility of the fresh claim first time before the appelate authority is concerned, we find that an identical issue was before the Hon'ble Supreme Court in the case of National Thermal Power Corporation Ltd. Vs. CIT (supra). The issue in the said case emerged from the fact that the assessee offered an amount to tax in the return of income which was not taxable as income. The inclusion of the said amount was not objected by the assessee even before the CIT(A) and only after filing appeal before the Tribunal the assessee raised a ground by way of forwarding a letter. In those facts, Hon'ble Supreme Court has held that when it is found that non taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal first time so long as relevant facts are on record in respect of that item. We have already reproduced the relevant finding of the Hon'ble Supreme Court in the foregoing paras while discussing the ground no. 2. It is clear from the decision of Hon....
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....ure. (ii) Capital expenditure will qualify for deduction as per Section 35ABB of the Act." 4.6 We further note that this Tribunal in the cae of Mahanagar Telephone Nigam Ltd. Vs. ACIT(supra) as well as in the cae of ACIT Vs. Vodafone Essar Gujarat Ltd. (supra) along with other no. of decision has taken a similar view. Following the decisions of Hon'ble Delhi High Court in the case of CIT Vs. Bharati Hexacom ltd. & Others as well as other decisions relied upon by the assessee, we allow the claim of the assessee." 7. As the facts and circumstances of the case during the year under consideration are para materia, respectfully following the decision of the Tribunal, we direct the A.O. to allow the assessee's claim of licence fees paid under revenue sharing scheme to telephone department. We direct accordingly. 8. The first grievance of Revenue relates to allowing provident fund dues amounting to Rs. 1,70,388/-. We found that the ld. CIT(A) has allowed the claim by applying the provisions of section 43B of the Act wherein deduction n respect of provident fund was allowed on payment basis. The ld. CIT(A) held that the amount has been paid during the year under consideration and there....
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....le making the disallowance, Assessing Officer has argued that the nomenclature suggests that expenditure has been incurred for projection and development of the brand and therefore it is of capital nature. He has, accordingly, made the disallowance. By the impugned order, the ld. CIT(A) allowed the claim after having the following observation:- 7.2 I have perused the facts of the case and I find the only basis for making disallowance is nomenclature of expenditure, This is not a rational base for making this disallowance. If Assessing Officer wanted to disallow expenditure, he ought to have gone to the nature of this expenditure and analyzed its allowability. This has not been done at all. I also notice that the amount has been considered in earlier assessment years and has been allowed revenue expenditure to the appellant. Therefore, it is held that disallowance of an expenditure only on the basis of its nomenclature is not justified at all. Accordingly, addition made is deleted." 13. It was contended by the ld. Senior A.R. Mr. J.D. Mistry that the payment is recurring in nature and does not give any enduring benefit to the assessee. The assessee gets only right to use the brand....
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....rlier assessment orders, this expenditure has been held to be revenue in nature by the A.O. himself. No distinguishing feature was brought on record by the A.O. during the year under consideration to justify the disallowance of assessee's claim. Accordingly, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance of brand servicing fee paid by the assessee insofar as findings recorded by the ld. CIT(A) had not been controverted by the ld. CIT - DR by bringing any positive materials on record. 18. The next grievance of the Revenue i.e. ground No. 5 relates to disallowance of interest for interest free loans advanced to subsidiaries. By the impugned order, the ld. CIT(A) deleted the disallowance of interest after having following observation:- "9. Ground No.9 is against disallowance of interest amounting to Rs. 32,34,00,000/- on the ground that interest free loans have been advanced to subsidiaries. According to Assessing Officer, during the year under consideration, appellant has paid interest of Rs. 1983.27 Million. In contrast appellant has advanced funds to subsidiaries amounting to Rs. 3090.S7 Million, on which no interest has been charged. He has con....