TaxTMI 
TaxTMI 
2015 (4) TMI 101
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....d at Rs. 6,74,61,580/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who vide order dated 29-02-2008 granted partial relief to the assessee. Aggrieved by the aforesaid order of CIT(A), Revenue is now in appeal before us and has raised the following grounds:- "1. The Ld. CIT(A) has erred in law and on the facts of the case to deleting the disallowance of Rs. 1,44,038/- made u/s 14A of the Act. 2. The Ld. CIT(A) has erred in law and an the facts of the case in directing the A.O not to exclude 'other income' being bad debts recovered Rs. 2,18,454/-, Insurance claim Rs. 5,73,325/-, Sundry Creditors Rs. 1,30,148/-, Forfeiture of advances Rs. 5,53,600/- and Exchange rate fluctuation Rs. 1,09,181/-, from the business profits, for the computation of deduction u/s 80HHC. 3. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the disallowance of royalty of Rs. 37,82,693/- u/s 40(a)(i) . 4. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the disallowance of prepaid excise duty of Rs. 62,59,521/-. 5. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the disallowance of Rs. 13,....
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....able or relatable administration expenses involved on facts of the case in respect of this tax-free interest income of Rs. 10.50 lacs and no disallowance on account of prorata administration expenses is, therefore, warranted or justified even on facts of the case. It was submitted that the administration expenses, sought to be co-related, do not have any nexus with or have been incurred in relation to tax-free interest income so as to be hit by section 14A. Without prejudice to above, it was submitted that the question of disallowance under section 14A has been considered by the predecessor AO at length and made certain quantum addition thereunder which has been subject matter of review by the predecessor Hon. CIT(A). This ground has been adjudicated by his first appeal order dated 11th February, 2005 and therefore prima facie outside jurisdiction of the reassessment proceedings. It was submitted that during the year dividend warrants and two half yearly interest warrants were received and for encashing the same, there was no specific expenditure incurred during the year, further that similar disallowance made in A.Y. 2004-05 was allowed by the CIT(A)-VIII. He also relied on the....
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....ord by the Revenue to show that any specific expenditure was incurred for earning exempt income therefore, in view of the above cited decisions we do not find any error in the order of the Learned Commissioner of Income Tax (Appeals). It is confirmed and the ground of appeal of the Revenue is dismissed." 7. Before us, Revenue has not brought any contrary binding decision in its support nor could distinguish the facts of the case of the year under appeal with that of A.Y. 2004-05. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. Ground No. 2 is with respect to computation of deduction u/s. 80HHC. 8. During the course of assessment proceedings, AO noticed that assessee had claimed deduction of Rs. 59,86,965/- u/s. 80HHC of the Act. He also noticed that assessee had shown other income comprising of training fees (Rs. 1,80,000/-), insurance claim (Rs. 5,73,325/-), sundry creditors (Rs. 1,30,148/-), bad debt recovered (Rs. 2,18,454), forfeiture of advances (of Rs. 5,53,600/-) and exchange fluctuation (Rs. 1,8,181/) aggregating to Rs. 16,92,708/- and had also earned interest of Rs. 56,50,905/-. ....
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....ointed that the issue of forfeiture of advance and exchange fluctuation was not before the Co-ordinate Bench of Tribunal in A.Y. 2004-05. Ld AR on the other hand, reiterated the submission made before Ld. CIT(A) and further submitted that identical issue arose in the case of assessee for A.Y. 2004- 05 and the matter has been decided by the Tribunal in Assessee's favour. He placed on record the copy of aforesaid order for A.Y. 2004-05 in ITA No. 4231/Ahd/2007. He thus supported the order of Ld. CIT(A). 12. We have heard the rival submissions and perused the material available on record. We find that the issue of deduction u/s. 80HHC was carried by Revenue before the Hon'ble Tribunal in A.Y. 2004-05 and the issue was decided by the Co-ordinate Bench of Tribunal by holding as under:- "32. We have heard the rival submissions and perused the materials available on record. In the instant case, the Learned Commissioner of Income Tax (Appeals) directed to delete 90% of bad debts recovered, discount earned from suppliers of goods, insurance claim received, sundry credit balances in the suppliers account written back, Miscellaneous charges recovered from the customers, scrap sold and K....
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....ereas according to the AO the assessee should have deducted TDS of Rs. 18,87,700/-. AO therefore on the basis of TDS deduction made by the assessee re-worked the eligible deduction on account of royalty payment at Rs. 25,09,306/- and the balance amount of royalty of Rs. 37,82,693/- was disallowed u/s. 40(a)(i) of the Act. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A) who decided the issue in favour of the assessee by holding as under:- "6.1 Before me, the learned counsel for the appellant contended that the royalty payment is arising out of the transactions "between residents of India and residents of USA and charge of royalty under consideration is thus governed by Article 12 of the DTAA between Government of India and Government of USA entered into under section 90. The appellant, therefore, has made TDS at applicable bilateral rate of 15% as provided in Article 12 of the DTAA and hence no disallowance is warranted even on facts and law of the case. The royalty payments under consideration have been made to the collaborator based at the USA. The Article 12 of the DTAA governs bilateral tax incidence of these royalty payments. The section 195 requi....
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.... the rival submissions and perused the material available on record. We find that Ld. CIT(A) while deleting the addition has given a finding that assessee has correctly deducted the TDS as per the rates provided in DTAA entered between the Government of India and Government of USA and therefore AO was not justified in disallowing the expenditure. Before us, Revenue has not brought any material on record to controvert the findings of Ld. CIT(A). We therefore find no reason to interfere with the order of Ld. CIT(A) and thus ground of Revenue is dismissed. Ground No. 4 is with respect to deleting the disallowance of pre-paid excise duty. 18. AO noticed that assessee had debited pre-paid excise duty of Rs. 62,59,521/- and the same was claimed as deduction u/s. 43B of the Act. AO was of he view that deduction u/s. 43B is available if the expense is incurred during the year and paid on or before the due date of filing of return. He was therefore of the view that assessee has not incurred excise duty liability during the year and accordingly disallowed the claim of assessee. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who after considering the submissions....
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....e Gujarat High Court in the case of Lakhanpal National Ltd 162 ITR 240 and Berger Paints India Ltd 266 ITR 99 (SC) has deleted the addition. Before us, Revenue has not brought any contrary binding material in its support. We further find that the assessee's submissions of having followed the same method of accounting and claiming deduction of excise duty in earlier and subsequent years also have not been controverted by Revenue. In view of the aforesaid facts, we find no reason to interfere with the order of Ld. CIT(A) and thus this ground is dismissed. Ground No. 5 is with respect to deleting the disallowance on account of provision for gratuity. 22. During the course of assessment proceedings, AO noticed that Assessee had debited gratuity of Rs. 19,44,868/- in its Profit and loss Account. He further noticed that assessee has made payment of Rs. 5,96,873/- towards gratuity fund maintained by LIC. AO was of the view that out of the total provision of Rs. 19,44,869/- towards gratuity payment since assessee had not payment of Rs. 13,48,032/- to approved gratuity funds, the same was not allowable u/s. 40A(7) of the Act. He accordingly disallowed the same. Aggrieved by the order ....
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....ril, 2001 to the three employees who retired on 31.03.2001, hence, no further disallowance is required to be made . Hence the disallowance is deleted." 23. Aggrieved by the order of AO, Revenue is now in appeal before us. 24. Before us, Ld. DR supported the order of AO and further submitted that the provision of gratuity is an unascertained liability and further no details of payments were submitted by the Assessee before AO. He further submitted that Ld. CIT(A) decided the issue without calling for any remand report from AO. He therefore supported the order of AO. Ld. AR on the other hand reiterated the submissions made before Ld. CIT(A) and further submitted that the provision for gratuity was also examined in proceedings u/s. 263 of the Act and thus there was no new evidence before Ld. CIT(A). He thus supported the order of Ld. CIT(A). 25. We have heard the rival submissions and perused the material on record. We find that the Ld. CIT(A) after considering the submissions of the assessee has noted that the non-deductable provision of gratuity was disallowed by the assessee suo moto and accepted in the original assessment and no further disallowance was warranted as it wo....
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....ght any contrary material on record in its support. We therefore find no reason to interfere with the order of Ld. CIT(A). In the result, this ground of revenue is dismissed. Next ground is with respect to deletion of bad debts. 30. During the course of assessment proceedings, AO noticed that assessee has claimed bad debts. He also noticed that assessee had not justified as to how debts had become bad and also not produced evidences of recovery measures taken by the asssessee against the parties. He was therefore of the view that the bad debts cannot be allowed and accordingly considered 25% of the bad debt of Rs. 1,3,45,401/- amounting to Rs. 25,86,350/- to be not allowable and accordingly disallowed the same. Aggrieved by the order of AO, Asssessee carried the matter before Ld. CIT(A) who after considering the submissions of the assessee deleted the addition by holding as under:- "11.2 I have considered the facts of this case and also perused the assessment order. I find that the A.O. has made disallowance of bad debts at 25% of total bad debts claimed, there can not be a percentage disallowance in case of bad debt . Further the claim of bad debt had been discussed in th....