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2015 (5) TMI 151
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....ogether for the sake of convenience and thus proceed by referring to the facts for A.Y. 1999-2000 in ITA No. 1087/AHD/2011. 3. The relevant facts as culled out from the material on record are as under. 4. Assessee is a company stated to be engaged in the business of generation and distribution of electricity. Assessee filed its original return of income for A.Y. 1999-2000 on 28.12.1999 declaring total income at Rs. Nil after setting off of unabsorbed depreciation of earlier years. Subsequently, a revised return was filed on 01.09.2000 and the loss was revised at Rs. 340,36,33,232/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 28.03.2002 and the total loss was determined Rs. 246,31,70,566/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 16.02.2011 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A) Assessee is now in appeal before us and has raised the following grounds:- 1. The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of prior period expenses amounting to Rs....
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....quently, vide letter dated 3rd July, 2014, Assessee has raised an additional ground which reads as under:- The employees' cost of Rs. 4,75,22,871/- ought to be allowed in Asst. Year 1999-2000 in view of the following finding of the Assessing Officer in his assessment order for the Asst. Year 1998-99:- "As regards, the employees cost of Rs. 4,75,22,871/-, on perusal of the General Standing Order No. 325 dated 3.6.1998, it is noted that the order is issued beyond the period of the previous year and the payment of arrears w.e.f. 1.1.1996 to the date of issue of the order will be paid by July, 1998, that too beyond the period of the previous year and thus, if at all the contention of the assessee is considered, the liability is crystallized in the subsequent year, i.e. in assessment year 1999-2000. As such, the claim of the assessee cannot be entertained and thus accordingly rejected." 6. The reason for taking up additional ground was stated that the AO while framing the assessment for A.Y. 1998-99 had disallowed the claim of expenses for the reason that according to him the claim arises in A.Y. 1999- 2000. The Ld. AR therefore submitted that the additional ground now rais....
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....he year under consideration are identical to that of A.Y. 97-98, following the order of Hon'ble Tribunal for A.Y. 1997-98, the issue may be remitted to the file of A.O. He also placed reliance on the decision in the case of Saurashtra Cement & Chemical vs. CIT (1995) 213 ITR 523 (Guj.) Ld. D.R. on other hand pointed to the findings of A.O and submitted that the onus lies on the assessee to substantiate its claim and in the absence of details filed by the Assessee, A.O was fully justified in making a disallowance. He thus supported the order of A.O and ld. CIT(A). 10. We have heard the rival submissions and perused the material on record. In the present case, the expenses were disallowed by the AO for the reason that Assessee did not furnish the required details and justify the claim of expenses. We find that in A.Y. 97-98 similar issue of disallowance of prior period expenses was before the co-ordinate Bench of Tribunal. The co- ordinate Bench of Tribunal vide order dated 26.06.2009 had set aside the issue to AO by holding as under:- 2. The first ground is against the disallowance of the prior period expenses of Rs. 91,70,76,125. The disallowance has been made on the grou....
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....ly disallowed the claim of bad debts of Rs. 3,81,76,827/-. Aggrieved by the order A.O, Assessee carried the matter before ld. CIT(A) who decided the issue by holding as under:- 6. The third ground of appeal is against disallowance of Rs. 3,81,76,827/- being bad debts. 6.1 AO mentions that assessee had claimed deduction of Rs. 2,71,31,732/- as actual bad and doubtful debts written off whereas actual write off works out to Rs. 23,31,40,205/-. Further provision amounting to Rs. 3,81,76,827/- was not added to the computation of income and neither written off which was thus added as disallowable provision. 6.2 In appeal, it is submitted that the actual bad debts written off during the year was Rs. 30.94 crores (27.13+3.82). The opening provision was 97.17 crore and the closing provision was Rs. 93.36 crore and the provision during the year charged to P&L was Rs. 27.13 crore. 6.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. Prima facie the contention of appellant seems to be correct. The AO may verify the figures from the schedules and allow the loss actually written off in the books. Ground No.3 is allowe....
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....s are not furnished by Assessee, then A.O shall be free to decide the issue based on the material on record. In the result, this ground of Assessee is allowed for statistical purposes. Ground no. 3 is with respect to disallowance of expenditure incurred on rehabilitation and restoration work as a result of cyclone. 16. On perusing Schedule 16 of the annual statement of accounts, A.O noticed that Assessee had claimed loss of Rs. 21,91,00,234/- on account of flood, cyclone, fire etc and extraordinary credit of Rs. 10 crore under the head "subsidy against losses". A.O also noted that before him it was admitted that the losses claimed were based on the estimate and that Government of Gujarat had granted an amount of Rs. 10 crore against the losses. A.O in the order has noted that the Assessee did not produce anything to establish that the loss claimed by the Assessee were actual losses and were not merely an estimate and was therefore of the view that the losses on the basis of provision are not allowable. He accordingly disallowed the claim of loss. With respect to the grant of Rs. 10 crore received from Government, A.O was of the view that it was granted by the Government by wa....
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....e have heard the rival submissions and perused the material on record. We find that the grant of Rs. 10 crore received by the Assessee from Government of Gujarat was considered by the A.O to be cessation of trading liability and therefore taxable under heads of "profit and gains of business". We find that this issue has not been decided by ld. CIT(A). With respect to the disallowance of Rs. 21,91,00,234/- on account of flood, cyclone etc, we find that CIT(A) has remitted the issue to be file of AO and further the decision of ld. CIT(A) on the issue to be cryptic. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesaid amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that before us, no details of the loss claimed have been filed by the asses....
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.... while disallowing the claim has noted that in the absence of details, the nature and liability of the expenses could not be ascertained and determined and therefore he disallowed 10% of the expenses. We also find that the decision of ld. CIT(A) on the issue to be cryptic and further the matter was allowed subject to verification by A.O. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesaid amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that before us, no details of the losses and its nature have been filed by the assessee and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual needs re- examination at the ....
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.... and cannot be allowed. The A.O. also mentioned that Rs. 8.16 crores of miscellaneous receipts was not accounted for though services were rendered in execution of works. Thus Rs. 9.28 crore was added to the total income. 9.2 In appeal it is submitted that alleged understatement of profit is only due to the accounting entries made in the books of accounts and that there is no question of adding back the amount to the profit. It is also contended that necessary effect of the understatement of entries have been given in assessment year 2000-01 and that if the addition is confirmed in the instant year the same should be deleted in A.Y. 2000-01. 9.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. The rationale and the basis for various additions/disallowances by A.O. on issues raised by C & A G is perfectly in order as the assessee is following mercantile system of accounting. Addition of Rs. 9.28 crore is thus confirmed. However, the alternate plea of the appellant is acceptable and the A.O. may delete the same amount, if it is shown to be offered for tax in assessment year 2000-01. Ground no. 6 is dismissed. 25. Ag....
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....alled for by them. In case the details are not furnished by Assessee, then A.O shall be free to decide the issue based on the material on record. In the result, this ground of Assessee is allowed for statistical purposes. Ground no. 6 is with respect to disallowance u/s. 43B. 28. A.O noticed that Assessee has claimed payment of bonus as an expense. He also noticed that company had paid bonus of Rs. 1,18,18,588/- but in the computation of income had claimed deduction of Rs. 1,28,24,131/-. The Assessee was asked to furnish the evidence in respect of excess amount claimed in the computation of income on account of bonus payment. A.O noted that since the Assessee did not furnish any evidence, the excess payment of Rs. 10,05,543/- was disallowed u/s. 43B of the Act. Aggrieved by the order A.O, Assessee carried the matter before ld. CIT(A) who decided the issue by holding as under:- 10.3 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order, The appellant is directed to submit all details to AO and AO is directed to verify the figures vis a vis last year details and allow the claim in terms of section 43B. The ground is allo....
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....essing Officer in his assessment order for the Asst. Year 1998-99:- "As regards, the employees cost of Rs. 4,75,22,871/-, on perusal of the General Standing Order No. 325 dated 3.6.1998, it is noted that the order is issued beyond the period of the previous year and the payment of arrears w.e.f. 1.1.1996 to the date of issue of the order will be paid by July, 1998, that too beyond the period of the previous year and thus, if at all the contention of the assessee is considered, the liability is crystallized in the subsequent year, i.e. in assessment year 1999-2000. As such, the claim of the assessee cannot be entertained and thus accordingly rejected." 33. Before us, ld. A.R. has submitted that the additional ground be adjudicated, in view of the fact that its claim in earlier year 98-99 came to be disallowed only for the reason that according to A.O it arose in A.Y. 1999-2000. Before us, ld. A.R. has also given an undertaking that the Assessee will not press the additional ground now taken in assessment year 1998-99. 34. We find that A.O while deciding the issue in A.Y. 1998-99 has held as under:- "As regards, the employees cost of Rs. 4,75,22,871/-, on perusal of the G....
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....5,34,791/- despite the fact that all the facts necessary for deciding the issue were submitted at the time of hearing of the appeal. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of Rs. 1,34,882/- being purchase of small and low value items below Rs. 500/-without assigning any cogent reasons whatsoever. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of Rs. 49,04,039/- being amount of shortages on physical verification of stock and pilferage of stock on the ground that details justifying that the same are revenue in nature may be filed before the Assessing Officer. 4. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Rs. 4,44,69,750/- being loss on account of fixed assets destructed due to floods, cyclone etc., on the ground that the necessary details may be provided to the Assessing Officer. 5. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the additions of Rs. 9,96,00,000/- on ac....
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....n setting aside the issue relating to the additions of Rs. 104,97,00,000/- on account of the alleged understatement of income which was reported by the C&AG in its report despite the fact all the facts necessary for deciding the issue were submitted before the learned Commissioner (Appeals). 39. The grounds raised by Assessee in A.Y. 2002-03 (ITA No. 1090/AHD/2011) reads as under:- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Bad Debts of Rs. 8,,44,02,003/- despite the fact that all the facts necessary for deciding the issue were submitted at the time of hearing of the appeal. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Rs. 8,85,75,392/- being loss on account of loss of fixed assets destructed due to floods, cyclones etc., debited under the head Extra-ordinary Items on the ground that the necessary details may be provided to the Assessing Officer. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the disallowance of Loss on Exchange Rate Variation amounting to Rs. 3,00,64,200/- ....
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....side the issue relating to the disallowance of cost of raising finance amounting to Rs. 2,12,86,344/- on the ground that the appellant may furnish details to the Assessing Officer as to whether the expenditure was of capital nature or revenue nature. 4. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to the disallowance of an amount of Rs. 38,28,000/- being the loss on sale of scrap on the ground that the necessary details may be provided to the Assessing Officer. 5. The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the disallowance of Rs. 22,56,000/- being the waiver of HBA Loans allowed to the employees on the death of the employees while in service on the ground that the same is a capital loss. 6. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the disallowance of Rs. 5,95,48,269/- being loss on sale of fixed assets on the ground that the necessary details may be provided to the Assessing Officer. 7. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in setting aside the issue relating to....
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....ng that the same are revenue in nature may be filed before the Assessing Officer. 43. Before us, ld. A.R. submitted that grounds No. 1, 4 & 5 in ITA No. 1088/AHD/2011 for A.Y. 2000-01, grounds No. 1, 4, & 7 in ITA No 1089/AHD/2011. for A.Y 2001-02, Grounds No. 1, 2 & 5 in ITA No. 1090/AHD/2011 for A.Y. 2002-03, grounds No. 1 in ITA NO. 1091/AHD/2011 for AY 2003-04, ground No 1 in ITA No 1109/Ahd/2011 for AY 2004-05 and ground No. 1 in ITA No. 1110/AHD/2011 for AY 2005-06 are identical and similar to the grounds raised in ITA NO. 1087/AHD/2011 for A.Y. 1999-2000 except for the amounts and therefore the submissions made by him are also applicable to the aforesaid grounds. The aforesaid submissions of ld. A.R. were not objected to by ld. D.R. In view of the aforesaid facts, and for the reasons given while disposing the appeal for A.Y. 1999-2000 hereinabove and for similar reasons and with similar directions, we allow the aforesaid grounds raised in different assessment years for statistical purposes. Now we take up remaining grounds in ITA NO. 1088/A/2011 for A.Y. 2000-01. Ground no. 2 is with respect to disallowance of small items and ground no. 3 is with respect to write of....
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....ciated that in case a block is empty or has no WDV, no depreciation is admissible. Although it is emphasized before me that all the items are revenue in nature but in the absence of details, this fact could not be verified. The appellant is directed to provide necessary details to the AO and elaborate that none of the capital items is part of the loss claimed and that the capital items have been suitably considered in the depreciation calculation and is not part of the loss claimed. However if there are capital items which are claimed as loss these would stand disallowed with corresponding higher depreciation as per provisions of sec.32, 2(11), 43(1) and 43(6). The ground is allowed subject to verification and aforesaid directions. Grounds No. 3, 4 and 5 are allowed subject to verification and aforesaid directions. 45. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 46. Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A). Ld. D.R. on the other hand submitted that in the absence of details, A.O was justified in disallowing the expenses. He thus supported the order of A.O. 47. We have heard the rival submissions and perused the ma....
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....identical to the grounds raised in A.Y. 2000-01, we therefore for the reasons stated herein while disposing of ground no. 2 and 3 for A.Y. 2000-01 and for similar reasons and directions allow the grounds for statistical purposes. Now we take up ground No 5 & 6 which are considered together. 51. A.O noticed that Assessee has claimed infructuous capital expenses written off of Rs. 15,81,825/- and loss of obsolesce of fixed assets of Rs. 1,20,965/-. A.O was of the view that the expenses being capital in nature was not allowable and accordingly disallowed the same. A.O also noted that Assessee had claimed loss on sale of fixed assets of Rs. 75,96,145/-. A.O was of the view that the same was also not allowable as being capital in nature and accordingly disallowed the claim. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who upheld the order of A.O by holding as under:- 6.6 I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. I arm in agreement with appellant that loss of stock, consumables etc. is revenue in nature. The appellant is directed to provide complete details of such revenue items. The ....
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..... CIT(A) on the issue to be cryptic and he had directed the A.O to verify the figures and thereafter allow the claim of loss. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesaid amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that before us, no details of the expenses claimed have been filed by the assessee and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re-examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adeq....
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....italized and allowed as depreciation from the year in which assets were first put to use. Ground no. 8 is allowed subject to verification and aforesaid directions. 57. Aggrieved by the order of Ld.CIT(A), Assessee is now in appeal before us. 58. Before us, at the outset, ld. A.R. fairly conceded that the issue is now covered against Assessee by the decision of Apex Court in the case of ACIT vs. Elecon Engg. Co. Ltd. 322 ITR 20 (SC) and therefore the issue has to be decided against the Assessee. 59. We have heard ld. A.R. In view of the submission of ld. A.R. that the issue is covered against the assessee by the decision of H'ble Apex Court. In view of the aforesaid facts, we dismiss the ground of assessee and thus this ground is dismissed. Ground no. 4 is with respect to disallowance of loss of sale of scrap. 60. A.O noticed that Assessee has claimed loss of Rs. 54.74 lacs on account of loss of sale of scrap. He was of the view that there cannot be loss on sale of scrap in view of the fact that the initial value of scrap is Rs. Nil. In response to the query of A.O, Assessee submitted that it had the practice of transferring residual value of 10% of total cost of ....
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.... to decide the issue de novo after considering the submissions of the Assessee and in accordance with law. Needless to state that A.O shall grant adequate opportunity of hearing to the Assessee. We also direct the Assessee to co-operate with the Revenue authorities by promptly filing and submitting all the details called for by them. In case the details are not furnished by Assessee, then A.O shall be free to decide the issue based on the material on record. In the result, this ground of Assessee is allowed for statistical purposes. 64. In the result, the appeal of Assessee in ITA No 1090/A/2011 for AY 2002-03 is partly allowed for statistical purposes. ITA No. 1109/AHD/2011 ( for A.Y. 2004-05) Now we take up remaining grounds of ITA No. 1109/AHD/2011 for A.Y. 2004-05 65. Before us, both the parties submitted that ground no. 2 to 6 for the year under appeal are similar to grounds for A.Y. 05-06 and therefore the submissions made by them in AY 05-06 would be applicable to the present grounds. 66. We have heard the rival submissions and perused the material on record. Before us, since both the parties have submitted that the issue being identical to the ground raised i....
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....the deduction must be allowed, provided that there is no provision against it, express or implied, in the Act." 7.3.1 This principle was followed by the Supreme Court in the case of Indore Malwa United Mills Ltd. The key issue is whether the loss claimed arises directly from the carrying on the business or it has some connection with the business. It is submitted before me that the housing loans are disbursed to the employees at interest as a facility and to earn their loyalties and thus the expenditure is for business purposes. The Appellant is in the business of generation and in distribution of power and the advances are not in the course of the carrying on of the business but these are only having some connection with operational efficiency of the business. In my humble opinion the loss claimed is plain and simple capital loss which is not allowable. Ground No. 7 is dismissed. 70. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 71. Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A) and submitted that the claim of Assessee be allowed. On the other hand, ld. D.R. supported the order of A.O and CIT(A). 72. We have heard the....