TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 259
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....aimed in I. T. A. No. 615 of 2009 and in I. T. A. No. 610 of 2009, an additional question relating to the disallowance of Rs. 40,000 on account of survey report has been raised. The facts are being extracted from I. T. A. No. 609 of 2009. 2. I. T. A. No. 609 of 2009 has been preferred by the Revenue under section 260A of the Income-tax Act, 1961 (in short, "the Act") against the order dated March 27, 2009, annexure A. III passed by the Tribunal in I. T. A. No. 3756/Del./2000 for the assessment year 1994-95. All the appeals were admitted on January 22, 2010, to consider the following substantial questions of law : "A. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 2,97,924 made by the Assessing Officer on account of the expenses incurred on raising the share capital even though the expenditure to raise the share capital do not fall within the ambit of the provisions of section 35D of the Income-tax Act, 1961 ? &....
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....aring the net loss of Rs. 4,71,39,320 was filed on November 30, 1994. The first revised return was filed on December 12, 1994, declaring the net loss of Rs. 4,71,98,910. The second revised return was filed on February 22, 1996, declaring the net loss of Rs. 4,75,57,488. The assessment was completed under section 143(3) of the Act, vide order dated January 28, 1997, annexure I at an income of Rs. 4,84,38,074 in which many additions/disallowances were made as per the assessment order. The assessee filed an appeal against the order before the Commissioner of Income-tax (Appeals) ("the CIT(A)"). Vide order dated June 8, 2000, annexure II, the Commissioner of Income-tax (Appeals) partly allowed the appeal. Not satisfied with the order, the Revenue filed an appeal before the Tribunal. With regard to first issue regarding the expenses incurred on raising the share capital, the Assessing Officer made disallowance of Rs. 2,97,924 claimed under section 35D of the Act in respect of capital raising expenses being one-tenth of Rs. 29,79,237 on the ground that these were not covered under section 35D of the Act. On appeal, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 2,97....
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....; "14. In the fourth revised statement of computation of income/loss filed on November 18, 1996, the assessee has claimed the deduction under section 35D with the remarks that without prejudice to their claim of expenditure in the respective assessment year pending before the Income-tax Appellate Tribunal and the Commissioner of Income- tax (Appeals) for adjudication. The claim was at Rs. 7,84,424 out of which Rs. 2,97,924 had been claimed as one-tenth of expenses incurred during the period relevant to the assessment year 1994-95 amounting to Rs. 29,79,237 being capital raising expenses. The balance amount pertained to the assessment years 1991-92 and 1992-93. The claim for the assessment years 1991-92 and 1992-93 is not being allowed as the matter is pending in the respective assessment years before the Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) for adjudication. Necessary rectification will be carried out under sections 154/155 of the Income-tax Act, 1961, as and when the matter is finally adjudicated by the hon'ble Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals). As regards the claim of....
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..... No. 3756 for the assessment year 1994-95, ground No. 11 in I. T. A. No. 2049 for the assessment year 1995-96, it was submitted that the Commissioner of Income-tax (Appeals) erred in directing allowance of one-tenth of the said expenditure by invoking the provisions of section 35D of the Act. In the reply, learned authorised representative vehemently supported the order of the Commissioner of Income-tax (Appeals). 18. We have considered the rival submissions. We have also perused the orders of the Commissioner of Income-tax (Appeals). It is noticed that this issue is squarely covered by the decision of the Rajasthan High Court in the case of Multi Metals Ltd., reported in [1991] 188 ITR 151 (Raj) as also the decision of the Bombay High Court in the case of Goa Carbon Ltd. [1994] 73 Taxman 68 (Bom). It is noticed that the expenditure on debentures were raised for the expansion of the business and the same falls under the provisions of section 35D of the Act. In view of this, we are of the view that the finding of the Commissioner of Income-tax (Appeals) in directing one-tenth of the expenditure as allowable b....
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....antee commission has been filed. Without any agreement for the payment of guarantee commission the same could not be allowed as a business expenses. There is no explanation as to why the asset have not been used as collateral security by M/s. Nuchem Investment (P.) Ltd. for raising loan for themselves. Part of the payment period is not relevant to this assessment year. In view of these facts, the guarantee commission paid to M/s. Nuchem Investment (P.) Ltd. of Rs. 3,60,000 is dis allowed. Moreover, the payment is also covered by the provisions of section 40A(2)(b) of the Income-tax Act as M/s. Nuchem Investment (P.) Ltd. is the sister concern of this group." 10. The Commissioner of Income-tax (Appeals) deleted the guarantee commission paid to the sister concern for pledging them 321 acres of land as collateral security by following the decision of the Allahabad High Court in L. H. Sugar Factories and Oil Mills P. Ltd. v. CIT [1982] 137 ITR 277 (All) and the Delhi High Court in the case of CIT v. Indian Aluminium Cables Ltd. (No. 1) [1990] 184 ITR 516 (Delhi). It was recorded thus : "8....
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.... also his submission that this issue had been allowed for the assessment year 1993-94 in the assessee's own case in the security assessment passed under section 143(3) of the Act. He vehemently supported the order of the Commissioner of Income-tax (Appeals). 20. We have considered the rival submissions. It is noticed that the Commissioner of Income-tax (Appeals) has considered the issue and has also followed the decision of the hon'ble jurisdictional High Court in the case of Indian Aluminium Cables Ltd. (No. 1) [1990] 184 ITR 516 (Delhi). It is further noticed that the fact that the loan was taken for which the immovable property of the sister concern of the asses see has been pledged was for the purpose of the business of the assessee is not in dispute. Obviously, if the property of the sister concern of the assessee is pledged for the business purpose of the asses see, the sister concern is entitled to be given a guarantee commission/ commission charges. In the circumstances, we are of the view that the finding of the Commissioner of Income-tax (Appeals) by respectfully following ....
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....e addition made for the expenditure incurred for the accommodation for employees for business purposes is, therefore, deleted. The assessee gets relief of Rs. 37,767." 14. The Tribunal upheld the deletion in the following terms : "25. In regard to the issue of the disallowance of the maintenance expenses of the guest house, which is ground No. 9 in I. T. A. No. 3756 for the assessment year 1994-95, it was submitted by the learned Departmental representative that the Commissioner of Income-tax (Appeals) erred in deleting the said addition. In reply, the learned authorised representative submitted that the addition had been made on the ground that the expenditure had been incurred for the maintenance of the place for the staying of the company's employees for the business of the assessee-company. It was his sub mission that the Commissioner of Income-tax (Appeals) had rightly deleted the addition. 26. We have considered the rival submissions. It is noticed that the Revenue has not disputed the fact that the ex....
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....issue of the disallowance of the inauguration expenses which is ground No. 14 in I. T. A. No. 3756 for the assessment year 1994-95, it was fairly agreed by both the sides that the issue was squarely covered by the decision of this Tribunal in the assessee's own case for the assessment year 1993-94, referred to para graph, wherein paragraph 92 of the said order, the issue has been held against the Revenue. Respectfully following the decision of this Tribunal in the assessee's own case for the assessment year 1993-94, the finding of the Commissioner of Income-tax (Appeals) on this issue stands upheld." In view of the finding of fact recorded by the Commissioner of Income-tax (Appeals) and, the Tribunal deleting the addition, no error is noticed in the approach adopted by them which may require intervention of this court. E. Trading additions 17. The Assessing Officer made an addition of Rs. 30,26,723 on account of trading addition by applying the gross profit rate of 52 per cent. instead of 51.7 per cent shown by the assessee after rejecting book results declared in the MDF division. The Commissioner of Income-tax (Appeals) deleted the said addition holding that the gross ....
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....he deletion of the trading addition which is ground No. 17 in I. T. A. No. 3756 for the assessment year 1994-95, it was fairly agreed that this issue was covered by the decision of the co-ordinate Bench of this Tribunal in the assessee's own case for the assessment year 1993-94, referred to supra wherein para graphs 76-80 of the said order this issue has been decided in favour of the assessee and the finding of the Commissioner of Income-tax (Appeals) on this issue has been upheld. Respectfully following the decision of this Tribunal in the assessee's own case for the assessment year 1993-94, the finding of the Commissioner of Income-tax (Appeals) on this issue stands upheld." The Commissioner of Income-tax (Appeals) and the Tribunal have followed the earlier decision in the case of the assessee for the assessment year 1993-94 which was not shown to have been upset by any higher court. Thus, the approach of the Commissioner of Income-tax (Appeals) and the Tribunal cannot be faulted on this deletion. 19. The findings recorded by the Commissioner of Income-tax (Appeals) and upheld by the Tribunal on all the issues are based on appreciation of evidence on record which have n....