TaxTMI 
TaxTMI 
2015 (7) TMI 163
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmitted that this issue is covered in favour of the assessee by various Tribunal orders in assessee's own case for assessment year 1985-86 and 1986-87 and copy of which are available in the paper book. 5. We have considered the rival submissions. We find that the issue in the present year in respect of proportionate premium on redemption of debenture is squarely covered in favour of the assessee by the judgment of Hon'ble Apex Court rendered in the case of Madras Industrial Development Corpn. Ltd. vs. CIT 225 ITR 802 wherein it was held that discount of debentures is revenue expenditure allowable proportionately over the period of debentures. Respectfully following this judgment of Hon'ble Apex Court, we decline to interfere in the order of CIT(A) on this issue. Ground No. 1 is rejected. 6. Ground No. 2 is as under. "2. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in allowing the prospecting expenditure under section 35E." 7. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court in the case of India Cements Ltd. vs. CIT (Supra). Respectfully following the same, we decline to interfere in the order of CIT(A) on this issue. This ground is rejected. 12. Ground No. 4 is as under: "4. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in allowing the 100% equity issue expenses." 13. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 14. We have considered the rival submissions. We find that this issue is now squarely covered against the assessee and in favour of the Revenue by the judgment of Hon'ble Supreme Court rendered in the case of Brooke Bond India Ltd. vs. CIT [1997] 225 ITR 798 (SC). This judgment of Hon'ble Supreme Court is dated 27/02/97 whereas the assessment order is dated 21/04/1995 and hence, reference was not made by the Assessing Officer to this judgment and disallowance was made by him on some different basis but once the judgment has been rendered by Hon'ble Apex Court and the matter is covered against the assessee by this judgment, the relief allowed by learned CIT(A) without considering that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....I, Kanpur has erred in law and on facts in deleting the addition of Rs. 9,02,000/- on account of maintenance expenses of other guest house except for Kota Guest House without appreciating the facts that the assessee did not maintain the books in respect of guest houses except for Kota Guest House." 22. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1985-86 and relevant pages are available on pages 113 to 114 of the paper book. 23. We have considered the rival submissions. We find that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1985-86 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary view. This ground is rejected. 24. Ground No. 6(c) is as under: "6(c) That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of Rs. 13,94,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....verdraft." 31. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1984-85 in I.T.A. No.749/Del/88 and relevant pages are available on pages 296 to 299 of the paper book. 32. We have considered the rival submissions. We find that on this issue regarding notional interest on advances made to J. K. Satoh Agricultural Machines Ltd., addition has been deleted by CIT(A) as per Para 11 of his order by following the Tribunal order in assessee's own case for assessment year 1984-85 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary view. This ground is rejected. 33. Ground No. 9 is as under: "9. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in holding the know-how fee of Rs. 37,38,838/- as revenue expenditure." 34. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and capitalized. The assessee has to satisfy that no such depreciation was claimed in the present year or in any succeeding year and if the assessee is able to do so, no disallowance should be made in the present year as has been claimed by the assessee to the extent of 1/6th of these two expenses being Rs. 37,38,838/- and Rs. 5,43,436/-. With these observations, this ground is allowed for statistical purposes." 36. As per above Para, we find that the issue was restored by the Tribunal to the file of the Assessing Officer for fresh decision with the direction that the assessee should establish before the Assessing Officer that no depreciation was claimed and allowed in respect of this expenditure of Rs. 2,24,33,031/-. Accordingly, in the present year also, we set aside the order of CIT(A) and restore the matter to the file of the Assessing Officer for fresh decision with similar directions as were given by us in assessment year 1987-88 as per Para No. 48 of the order reproduced above. With these observations, this ground of Revenue is allowed for statistical purposes. 37. Ground No. 10(a) is as under: "10(a) That the Commissioner of Income Tax (Appeals)-II, Kanpur has erre....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." 44. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1985-86 and 1988-89 and relevant orders are available in paper book. 45. We have considered the rival submissions. We find that this issue is covered in favour of the assessee by both the Tribunal orders cited by Learned A.R. of the assessee in assessee's own case for assessment year 1985-86 and 1988-89. Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary view. This ground is rejected. 46. Ground No. 12 is as under: "12. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the disallowance of Rs. 4,12,886/- on account of Air-Craft Expenses even though the assessee could not provide the details of persons who traveled and purpose of visit and place of travel in spite of specific opportunity given." 47. Learned D. R. of the Revenue supported the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed CIT(A) as per Para 21 of his order appearing on pages 28 to 30 of his order, which is reproduced below for the sake of ready reference:- "21. Ground No.18: Capital Expenditure Debited to Profit & Loss A/c.- Rs. 2,38,09,100/-. This issue has been dealt with by the AO in his order at pages 45 & 46. The facts of the case are that in the report of Spl. Auditors, they have pointed out certain items of capital expenditure which were debited by the appellant in their Profit and Loss A/c. The total of those items comes to Rs. 2,31,63,516/-, which was disallowed by AO. In appeal, learned counsel for the appellant has placed before me bifurcation of Rs. 2,31,63,516/- as under: S.No Particulars of head Amount (Rs) 1. Repairs & plant & machinery 12682673 2. Telephone expenses 355250 3. Repairs to building 6389883 4. Staff training expenses 5067 5 Freight & Handling 543838 6 Transport Expenses 1001 7 Gardening Expenses 54517 8 Commitment Charges 230239 9 Revenue Stamp Papers 5100 10 Expenses on Raising Loan 125000 11 &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." and Rs. 26,787/- under the head "Travelling Expenses" as reported by spl. Tax auditors in Annexure '1A' of their report. The Assessing Officer is, therefore, further directed to examine the claim of the appellant and if there is double disallowance made, the same be deleted/rectified." 54.1 From these paras from the order of CIT(A), we find that out of total expenses of Rs. 2,38,09,910/-, the relief was allowed by the CIT(A) for Rs. 1,04,80,843/-. The nature of expenses for which relief was allowed by CIT(A) is telephone expenses, repairs/renovation of building, staff training expenses, freight and handling, transport expenses, insurance premium, office maintenance etc. and a clear finding has been given by learned CIT(A) that these expenses are of revenue in nature. Considering the nature of expenses, we are of the considered opinion that no interference is called for in the order of CIT(A) on this issue because these expenses cannot be stated to be capital expenditure. Hence, we decline to interfere in the order of CIT(A). Ground No. 14 is rejected. 55. Ground No. 15 is as under: "15. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....994-95, the Tribunal vide combined order dated 29/09/2010 restored the matter back to the file of the Assessing Officer for re-examination in the light of the appellate decision for earlier years, copy of which is available on pages 247 to 248 of the paper book. 63. We have considered the rival submissions. We find that admittedly, in assessment year 1994-95, the Tribunal has restored the matter back to the file of the Assessing Officer for fresh decision and accordingly, in the present year also, we set aside the order of CIT(A) and restore the matter to Assessing Officer for fresh decision with the same directions as were given by the Tribunal in assessment year 1994-95 in its order dated 29/09/2010. Ground No. 17(a) is allowed for statistical purposes. 64. Ground No. 17(b) is as under: "17(b) That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the disallowance of Rs. 28,03,253/- on account of depreciation on amount of Foreign exchange rate fluctuation of Tary cod Unit even though the claim was hit by provisions of section 43A." 65. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment year 1993-94 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary view. This ground is rejected. 73. Ground No. 18(c) is as under: "18(c) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 12,83,315/- even though no details of expenses were filed as well as these expenses were not meant wholly and exclusively for business purposes." 74. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1995-96 and relevant pages are available on page 262 of the paper book. 75. We have considered the rival submissions. We find that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1995-96 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary vie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1981-82, 1982-83, 1993-94 & 1995-96. Copy of the order is available on paper book. 84. We have considered the rival submissions. We find that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1981-82, 1982-83, 1993-94 & 1995-96 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary view. This ground is rejected. 85. Ground No. 20(b) is as under: "20(b) On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the disallowance upto 70% i.e. Rs. 6,45,618/- on account of customary presentation expenses even though the expenditure hit by section 37(2A) of the Act." 86. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1985....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w. This ground is rejected. 94. Ground No. 20(e) is as under: "21. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,57,969/- ignoring that no details were furnished even though specific opportunity was given." 95. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 96. We have considered the rival submissions. We find that it is noted by CIT(A) in Para 28(e) of his order that the Assessing Officer has disallowed a sum of Rs. 1,57,969/- stating that the amount was given to the employees of the company for expenditure and other ad hoc expenses for which no details/vouchers have been kept. He has also given a finding that in assessment year 1995-96, the CIT(A) has allowed similar claim of the assessee in that year. Before us, Learned D.R. of the Revenue did not bring any Tribunal order to show that the order of CIT(A) in assessment year 1995-96 has been reversed by the Tribunal. Hence, we do not find any reason to interfere in the order of CIT(A). This ground is rejected. 97. Ground No. 21 is as under: "21. On the facts and in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 23 is as under: "23. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition on account of enhancement value of opening stock." 104. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 105. We have considered the rival submissions. We find that this issue was decided by learned CIT(A) as per Para 31 of his order, which is reproduced below for the sake of ready reference:- "31. Ground No.28: Enhancement of Opening Stock because of closing stock enhanced in A.Y. 1989-90 This issue has been discussed by AO in his order at page 87. The facts of the case are that the appellant has claimed enhancement of valuation of Opening stock because value of the closing stock was enhanced in the A.Yr. 1989-90 which became the opening stock of the year under consideration but the same was disallowed by AO on the ground that the issue has not become final and pending before appellate authorities. The facts remains that in the assessment order for the assessment year 1989-90, value of closing stock of raw-material and finished goods were enhanced ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....allowance even though no supporting documents in support of creation of necessary reserves under sub-section 4 of section 32A was produced by the assessee." 107. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1985-86. We find that the issue was decided by learned CIT(A) on the basis that the Assessing Officer is directed to quantify the assessee's claim for investment allowance subject to deduction in the year of creation of necessary reserve by the assessee. Hence, it is seen that no actual relief has been allowed by CIT(A) but the assessee will get the relief in the year in which the reserve is created by the assessee as required u/s 32A of the Act. We do not find any infirmity in this decision of CIT(A). We, therefore, decline to interfere in the order of CIT(A). 108. Ground No. 25(a) is as under: "25(a) That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of Rs. 6,34,147/- on account of pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tent of 50% of the expenses on the basis that such expenses are in respect of employees of the assessee. We do not find any reason to interfere in the order of CIT(A) on this issue. This ground is rejected. 114. Ground No. 26 is as under: "26. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the disallowance of Rs. 3,87,455/- on account of closing stock of Spare Parts even though the assessee could not prove that all items charged under this head were routed through stores in spite of specific opportunity given." 115. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is squarely covered in favour of the assessee by the Tribunal order in assessee's own case in I.T.A. No.795/Del/87 for assessment year 1983-84 and copy of relevant order is available on pages 347 and 349 of the paper book. 116. We have considered the rival submissions. We find that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for assessment year 1983-84 in I.T.A. No.795/Del/1987 and Learned D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue is covered in favour of the assessee by the Tribunal order in assessment year 1983-84 and 1984-85 and the Tribunal deleted the disallowance in that year. In the present year, Learned D.R. of the Revenue could not point out any difference in facts and therefore, in the present year also, we do not find any reason to take a contrary view and therefore, in line with the Tribunal decision in assessee's own case for assessment year 1987-88, this issue is decided in favour of the assessee. This ground is allowed. 124. Ground No. 2 is as under: "2. In-land Travelling Expenses c) Not allowing Rs. 24,790/- being expenses relating to the wives of the Directors/employees by not appreciating the facts of the case. d) Not allowing the expenses of an order of Rs. 7,40,300/- holding it to be traveling expenses on guest as reported by Special Tax Auditors." 125. Learned A.R. of the assessee reiterated the same contentions, which were raised before learned CIT(A). Learned D. R. of the Revenue supported the order of learned CIT(A). 126. We have considered the rival submissions. We find that it is noted by learned CIT(A) on page No. 17 of his order that out of foreign travelling ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as also not considering the judicial pronouncement pressed into service by the appellant. (e) In confirming disallowance of a sum of Rs. 1,00,000/- on the ad hoc basis towards depreciation on other assets of guest house. (f) In confirming disallowance of Rs. 1,0,000/- towards other maintenance expanses of guest house." 130. It was submitted by Learned A.R. of the assessee that identical issue was raised by the assessee in its appeal for assessment year 1987-88 in I.T.A. No.336/Lkw/2010 as per ground No. 13(a) and 13(b) and since this appeal is already heard, this issue may be decided in line with the decision of the Tribunal in assessment year 1987-88. Learned D.R. of the Revenue supported the order of CIT(A). 131. We have considered the rival submissions. We find that in assessment year 1987-88 also, similar issue was raised by the assessee before the Tribunal and in that year, as per Para 263 of the Tribunal order, the disallowance on account of depreciation on guest house was confirmed in that year. Accordingly, ground No. 3(a) being disallowance of Rs. 1,66,962/- on account of depreciation on guest house is confirmed in the present year also. Ground No. 3(a) i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e have considered the rival submissions. We find that in assessment year 1987-88, this issue was decided by the Tribunal as per Para 270 of its order and it was held by the Tribunal in that year that since CIT(A) has upheld the disallowance of 50% of the expenses, his order is in line with the Tribunal order for assessment year 1985-86 and on this basis, the Tribunal rejected ground No. 14 in that year. Accordingly, in the present year also, this issue is decided against the assessee. This ground is rejected. 139. Ground No. 5 is as under: "5. Kamla Retreat Expenses Confirming disallowance of Rs. 1,45,058/- being 50% of the expenditure by wrongly treating the same as expenditure hit by section 37(4)/37(5) of the Act." 140. It was submitted by Learned A.R. of the assessee that similar issue was raised by the assessee in its appeal for assessment year 1987-88 as per ground No. 3 in that year and therefore, in the present year also, this issue may be decided on similar line. 141. Learned D. R. of the Revenue supported the order of learned CIT(A). 142. We have considered the rival submissions. We find that in assessment year 1987-88, this issue was decided by the Trib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Para 19 of his order on page No. 27 wherein it was noted by him that in assessment year 1989-90, the assessee had offered a sum of Rs. 2,32,572/- being capital expenditure and on such capital expenditure, the assessee is claiming depreciation in the present year. In the assessment order, it is noted by the Assessing Officer on page No. 41 that in assessment year 1989-90, the CIT(A) has confirmed the disallowance of depreciation on such capital expenditure of Rs. 2,32,572/-. We are of the considered opinion that merely because the assessee has incurred a capital expenditure, the depreciation cannot be allowed unless the assessee is able to establish that such capital expenditure has resulted into creation of a capital asset and what is the nature of such capital asset such as land, building, plant & machinery, furniture etc. and whether capital asset was put into use for business purpose in the relevant year. Unless the assessee is able to establish that the capital expenditure has resulted into creation of capital asset and such asset was put to use for business purposes, depreciation cannot be allowed. We do not find any reason to interfere in the order of CIT(A) on this issue bec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r: "10. Cash payment in excess of Rs. 10,000/- Confirming disallowance of an order of Rs. 4,11,645/- being genuine cash payment in excess of Rs. 10,000/- though all these payments fall to be governed by second proviso to section 40A(3) and while simultaneously not following the judicial pronouncement pressed into service by the appellant." 159. It was submitted by Learned A.R. of the assessee that similar issue was raised by the assessee in its appeal for assessment year 1987-88 as per ground No. 10 in that year and therefore, in the present year also, this issue may be decided on similar line. 160. Learned D. R. of the Revenue supported the order of learned CIT(A). 161. We have considered the rival submissions. We find that in assessment year 1987-88, this issue was decided by the Tribunal as per Para 253 of the Tribunal order and in that year, it is noted by the Tribunal that it was conceded by the assessee that this issue is covered against the assessee by the tribunal order for assessment year 1988-89. Accordingly, in the present year also, this issue is decided against the assessee. This ground is rejected. 162. Ground No. 11 is as under: "11. Employees We....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 12.6% was confirmed by him. Since the decision of CIT(A) is in line with the decision for assessment year 1987-88 and it is not shown by the assessee that in assessment year 1987-88, the Tribunal has allowed any relief to the assessee over and above the relief allowed by learned CIT(A), we do not find any reason to interfere in the order of CIT(A) on this issue. Accordingly part (b) of ground No. 12 is rejected. 171. Ground No. 13 is as under: "13. Sales Promotion Expenses (a) Not allowing Rs. 1,65,585/- holding it to be entertainment expenses. (b) Upholding disallowance of Rs. 2,76,694/- (30% of total expenditure of Rs. 9,22,312/-) being expenses on presentation of articles." 172. It was submitted by Learned A.R. of the assessee that similar issue was raised by the assessee in its appeal for assessment year 1987-88 as per ground No. 4 in that year and therefore, in the present year also, this issue may be decided on similar line. 173. Learned D. R. of the Revenue supported the order of learned CIT(A). 174. We have considered the rival submissions. We find that in assessment year 1987-88, the issue in dispute was regarding confirming disallowance of Rs. ....