TaxTMI 
TaxTMI 
2011 (12) TMI 519
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....convenience. The assessee has raised as many as 16 grounds of appeal in this appeal. 3 Ground no.1 of the assessee's appeal is general in nature and therefore does not require any adjudication. 4 Ground nos.2.1, 2.2 and 2.3 of the assessee's appeal are not pressed, therefore, the same are dismissed, as not pressed. Ground nos.3.1 and 3.2 as well as Ground nos.6 and 7 of the assessee's appeal are also not pressed and hence the same are dismissed, as not pressed. Remaining Ground nos.4, 5, 8 to 16 are as under:- [4] In law and in the facts and circumstances of the appellant's case, the Ld. CIT (A) has erred in confirming the disallowance of Rs. 10.50 lakhs incurred on feasibility study to convert molten Ammonium Nitrate Melt manufactured by the appellant in to prill form. While doing so, he has not appreciated that the appellant is already engaged in the business of fertilizers and chemicals and therefore, conversion of molten Ammonium Nitrate Melt manufactured in to prill form is not a new business and that it is expansion of existing business. In this connection, the appellant relied on the decision of CIT(A) in its own case in A.Y. 1986-87 and following decisions: ....
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.... has erred in upholding the views of the Assessing Officer and not appreciating that the GDR issue made by the appellant was mainly for the purpose of capital expenditure in connection with the expansion plan of the appellant and since there was some time to commence expansion/extension of projects, the appellant had temporarily deployed part of proceeds of GDR issue in the units of UTI. [11.1] In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in confirming the disallowance of Rs. 900,10,279/-being the amount of deduction claimed u/s. 36(1) (iii) in respect of money borrowed for expansion of existing business. While doing so, he has also erred in not following the order of CIT(A) in the case of the appellant for the A.Y. 1998-99 and the decision of the Gujarat High Court in the case of Core Healthcare Ltd. (251-ITR-61) (Guj) and Alembic Glass Industries Ltd. (103-ITR-715) (Guj) [11.2] In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in reaching the conclusion that the amendment to section 36(1) (iii) is applicable retrospectively and therefore, applicable to the period prior to the A.....
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....ome-tax proceedings are independent and the matter had to be decided on merits in the light of the principles settled by authoritative jurisdictional pronouncements. [1(b)] The CIT(A) failed to appreciate the legal principles, that onus u/s 36(1)(iii) lies on the assessee to prove that each loan is used for the purposes of the business and there is no presumption in law that it is own capital or surplus funds that were diverted for non-business purposes, as settled in the case of Kishanchand Chellaram vs. CIT 114 ITR 654 (Bom), R Dalmia vs. CIT 133 ITR 169 (Delhi), CIT vs. M S Venkateshwaran 222 ITR 163 (Mad), K Somasundaram & Brothers vs. CIT 238 ITR 939 (Mad) and CIT vs. Motor General Finance Ltd. 254 ITR 449 (Delhi) which was confirmed in principle by the Supreme Court in the case of Motor General Finance vs. CIT 267 ITR 381 (SC). [2(a)] On the facts and in the circumstances of the case, the CIT(A) erred in allowing the expenses of Rs. 38,32,725/- on protecting the assets of M/s Gujara Narmada Auto Ltd. (GNAL), a sister concern of the assessee, without appreciating the legal position that a subsidiary company is a separate legal entity and the business of the subsidiary ca....
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....ing upon decisions of various courts of law, disallowed the claim of the assessee and added Rs. 10.50 lakhs to the income of the assessee. 7 The learned CIT(A) confirmed the action of the AO. 8 Before us, the learned counsel for the assessee, Mr. M P Sarda, argued that one of the products manufactured by the assessee is Ammonium Nitrate which is in liquid form. To have value addition in the existing unit, it was decided to carry out feasibility study to convert Molten Ammonium Nitrate melt into Prilled Form with additional investment. M/s Tata Economic Consultancy Services (Mumbai) was appointed to carry out market feasibility and M/s Uhde India Ltd. was appointed to prepare techno economic feasibility report for the said project. Both the parties completed their respective assignments and reports were submitted. The project was not found viable since the profit margin was very low and it was decided not to pursue the project. Since the assessee is already manufacturing Ammonium Nitrate in the liquid form and feasibility study for manufacturing Prilled Ammonium Nitrate is nothing but expenditure for extension of existing business and therefore allowable as revenue expenditure....
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.... been held that the receipts constituting independent income having no nexus with exports were required to be deducted from business profit under clause (baa). Therefore, in the said order the Tribunal has upheld the order of the lower authorities in excluding 90% under clause (baa) of section 80HHC of the Act on the gross receipts from interest income of rent, hire charges, interest on bonds and debentures and fertilizers and urea subsidy received from the Government of India. The learned DR accordingly supported the orders of both the authorities below. 14 We have heard the rival contentions and perused the facts of the case. As regards the decision of the Hon'ble Supreme Court in the case of Sahaney Steel and Press Works Ltd. (supra) where it has been mentioned that the payments in the nature of subsidy from public funds, if made to the assessee to assist him to carry on the trade or business, they are trade receipts. If the purpose is to assist the assessee in carrying out the business operations, such subsidy must be treated as assistance for the purpose of the trade and are of revenue in nature and would have to be taxed accordingly. The facts in the case of Sahaney Steel ....
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.... profits under section 80HHC(3) as it stood in the assessment year 19930-94 processing charges are to be included in the total turnover. In this view, we uphold the order of the lower authorities in excluding 90% under clause (baa) of Section 80HHC of the Act on these gross receipts from interest income of rent, hire charges interest on bonds and debentures and fertilizers & urea subsidy received from the Govt. of India. However, we are in full agreement with the alternative contention of the assessee that only the net amount of the above receipts should be excluded under clause (baa) of Section 80HHC of the Act and not the gross receipts in view of the decision of Hon'ble Delhi High Court in the case of CIT v. Shri Ram Honda Power Equipments and Others (2007) 289 ITR 475 (Del). Accordingly,"this issue of the assessee's appeal is partly allowed." In the circumstances and facts of the case and following the order of the Tribunal mentioned hereinabove, we dismiss Ground no.5 of the assessee's appeal. 15 As regards Ground no.8 of the assessee's appeal, the facts are that the assesses company had claimed expenditure of Rs. 3400.90 lakhs on account of consumption and replacem....
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....0 As regards Ground no.9 of the assessee's appeal, the brief facts are that the assessee company has claimed deduction of Rs. 1,02,34,103/- towards incidental expenditure incurred on substitution of high interest cost NCDs, as deduction u/s 37(1) of the Act in the statement of total income, although it treated the said expenditure as deferred revenue expenditure in its books of account over a period of 5 (five) years thereby debiting Rs. 67,48,391/- to the P&L Account for the previous year. The assessee submitted the explanation which was not accepted by the AO and accordingly disallowed the claim of the assessee. This action of the AO was confirmed by the learned CIT(A). 21 It was argued by the learned counsel for the assessee that the company had incurred Rs. 1,02,34,103/- towards pre-payment of premium expenses of 16.54% term loan of Rs. 73.50 crores from IDBI for its Synthesis Gas Generation Unit (SGGU). The assessee had claimed interest on such loan till date as deduction u/s. 36(1)(iii) of the Income tax Act which had been allowed also. It was added that as there was a general reduction in the interest rates on borrowings in the market, the assessee felt that the rate of i....
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....zed over a remaining period payment, commencing from the previous year in which payment was i.e. A.Y. 2000-2001 and A.Y. 2003-04. As the said premium has n claimed in the respective assessment years, Rs. 67,48,391 (Rs.29,4,0,357 in respect of A.Y. 2000-01 plus Rs. 38,08,034 of A.Y. 2003-04) debited to P&L Account has been added to the total income. As the said premium for repayment was in the nature of financing charges and was incurred for the purpose of business, the entire amount of the premium was claimed by the assessee as business expenditure u/s. 36(1)(iii)/37(l) of the Income tax Act although the same had been amortized in the books of account over a period of 5 years. It was further argued that the facts in the present case are different to the facts in the decisions relied upon by the AO. 22 The learned DR, on the other hand, argued that the incidental expenditure incurred on substitution high interest cost and payment towards premium is a liability for the future years and cannot be allowed in the impugned year. He relied upon the decisions of various courts of law as referred in the AO's order. 23 We have heard the rival contentions and perused the facts of the ca....
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.... considered as capital employed. The increase in share capital and debenture between 31.3.1994 and 31.3.1995 was Rs. 37.53 crores and thus 2.5% of such capital employed was Rs. 93.82 lacs. Further it was stated that cost of Acetic Acid Expansion Project was Rs. 188.31 crores whereas the net proceeds of GDR issue was Rs. 182.95 crores (191.72 crores being gross proceeds - 8.77 crores being expenses). Further from the proceedings for A.Y. 2001-02 it was noticed that Rs. 128.93 crores was invested in UTI Unit 65 scheme out of the GDR issue proceeds and since this investment was 70% of the GDR issue process, 70% of the expenses of Rs. 87.73 lacs written off in that year by the assessee amounting to Rs. 62 lacs was disallowed u/s. 14A as the dividend income in respect of UTI was exempt under the Act. It is mentioned by the Assessing Officer that excluding the investment in UTI the amount invested towards the cost of project is Rs. 54.02 crores ( 182.95 crores - Rs. 128.93 crores) and 2.5% of such cost works out to Rs. 1.35 crores. Therefore 10 % of this amount of Rs. 1.35 crores at Rs. 13.5 lacs was allowed by the Assessing Officer under section 35D. 25 The learned CIT(A) confirmed t....
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....ision of the Hon'ble Supreme Court in the case of DCIT vs. Core Health Care Ltd. (2008) 298 ITR 194 in which i t has been held that - "Section 36(1)(iii) of the Income-tax Act, 1961, has to be read on its own terms: It is a code by itself. It makes no distinction between money borrowed to acquire a capital asset or a revenue asset. All that the section requires is that the assessee must borrow capital and the purpose of the borrowing must be for business which is carried on by the assessee in the year of account. Unlike section 37 which expressly excludes an expense of a capital nature, section 36(1)(iii) emphasizes the user of the capital and not the user of the asset which come into existence as a result of the borrowed capital. The Legislature has, therefore, made no distinction in section 36(1)(iii) between "capital borrowed for a revenue purpose" and "capital borrowed for a capital purpose". An assessee is entitled to claim interest paid on borrowed capital provided that the capital is used for business purpose irrespective of what may be the result of using the capital which the assessee has borrowed. "Actual cost" of asset has no relevancy in relation to section 36(1)....
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.... Plant which are given on lease to Western Railway and Narmada Chematur Petrochemicals Co. Ltd. (NCPL) respectively in the course of its business and therefore depreciation has been claimed as assessee is the owner of the assets which has been used for its business iii. As regard specific circumstances under which the assets were given on lease, the assessee stated during the reassessment proceedings for A. Y. 2000-01 as under: "Indian Railways was facing acute shortage of railway wagons in general and for movement of fertilizers in particulars. Thus in order to get priority allotment of wagons for movement of fertilizers, manufactured by the company, under guaranteed clearance of traffic, as per the own your wagon scheme of railways, company had given on lease 34 wagons to western railways. Further in order to prevent substantial loss due to power dips as well as to achieve economy on power cost, NCPL, a subsidiary of GNFC Ltd., decided install captive power plant (CPP). However, since production at NCPL had not established till that time, NCPL was not in a position to finance the cost of proposed CPP. GNFC purchased the equipments for CPP for NCPL and the same was given on ....
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....e lease. Nothing has been brought to disapprove the said clauses of the lease deed by any of the authorities below or by the learned DR. The learned DR could not prove that in fact the assessee is only a financer and is not interested in the assets and therefore, it cannot be said as full payout lease. Therefore, in the circumstances and facts of the case, the arguments made by the learned DR cannot be accepted and following the rule of consistency, the assessee deserves to be allowed the claim and we direct the AO accordingly to allow the claim of the assessee. The order of the learned CIT(A) is reversed. Thus, Ground no.12 of the assessee's appeal is allowed. 36 As regards Ground no.13, the facts are that the assessee has written off an amount of Rs. 1,38,743/- and has claimed as an expenditure. The AO did not allow the same, which action of the AO was confirmed by the learned CIT(A). 37 We have heard the rival contentions and perused the facts of the case. We concur with the views of the learned CIT(A) that the assessee has not submitted the details of such debts and also the fact that this was actually a trade debt. In the absence of details, the assessee could not be jus....
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.... and Volute Casing at Rs. 16,83,630/- and Rs. 13,85,260/- respectively. The AO treated the said expenditure as independent expenditure of enduring in nature and disallowed the claim of the assessee allowed the depreciation only. 46 The learned CIT(A) vide para 13.3.2 of his order treated them as revenue expenditure and allowed the claim of the assessee. 47 We have heard the rival contentions and perused the facts of the case. We concur with the views of the learned CIT(A) that the expenditure on the said items does not result in new self contained items and therefore the same is revenue in nature. Moreover, the expenditure on such items does not give any enduring benefit to the assessee. In the circumstances and facts of the case, we find no infirmity in the order of the learned CIT(A) who has rightly allowed the claim of the assessee. Thus, Ground no.3 of the Revenue's appeal is dismissed. 48 As regards Ground no.4 of the Revenue's appeal, the brief facts are that the assessee has incurred expenses on salary and other expenses for the information and technology business. The assessee has entered into a verbal agreement with Infinium (India) Ltd. and M/s TIW-USA. As per th....
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....free dividend. The learned CIT(A) allowed the claim of the assessee vide para 12.2 to 12.3 of his order for the reasons mentioned therein. 54 We have heard the rival contentions and perused the facts of the case. In view of the decisions of the ITAT Delhi in the cases of Maruti Udyog Ltd. vs. DCIT 92 ITD 119 and ACIT vs. Eicher Ltd. 101 TTJ 369, no notional disallowance can be made in respect of expenditure for the purpose of section 14A. Accordingly, we find no infirmity in the order of the learned CIT(A) who has rightly deleted the addition on the same basis. Thus, Ground no.6 of the Revenue's appeal is dismissed. 55 In the result, the appeal of the Revenue in ITA no.1373/Ahd/2007 for AY 2003-04 is dismissed. ITA no.1463/Ahd/2007 for AY 2000-01:- 56 Now, we take up the appeal of the assessee in ITA no.1463/Ahd/2007 for AY 2000-01. Ground nos.3, 9 and 10 were not pressed by the learned AR appearing for the assessee. Therefore, the same are dismissed, as not pressed. 57 Ground no.11 in this appeal is general in nature and therefore does not require any adjudication. As regards Ground no.8 which is with respect to initiation of penalty proceedings and, therefore, d....
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....468 (SC) iv. CIT v. Bhor Industries Ltd. [2003] 264-ITR-180 (BOM) [6] In law and in the facts and circumstances of the appellant's case, the Learned CIT(A) has erred in confirming the deduction u/s. 35D to the extent of Rs. 13,50,000/- as against the claim of Rs. 87,73,000/- made by the appellant. He has erred in upholding the views of the Assessing Officer and not appreciating that the GDR issue made by the appellant was mainly for the purpose of capital expenditure in connection with the expansion plan of the appellant and since there was some time to commence expansion/extension of projects, the appellant had temporarily deployed part of proceeds of GDR issue in the units of UTI. [7] In law and in the facts and circumstances of the appellant's case, the Learned CIT (A) has erred in confirming the disallowance of depreciation of Rs. 14,91,87,864/- claimed on certain assets given on lease. While doing so, he has erred in reaching to the conclusion that the lease transaction is a mere financial arrangement, without appreciating the facts of the case. [7.1] Without prejudice to above, the Learned CIT (A) has erred in not directing the Assessing Officer to exclude....
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.... of notice u/s. 148 of the I.T. Act." 59 It was submitted before the AO that the assessee had disclosed fully and truly all material facts necessary for the assessment. The sale comprised of sale of goods and services inclusive of Excise Duty and includes claims preferred on the Government of India for retention price reimbursement on dispatches of fertilizers and admissible claims for change in retention price on account of variation in the cost. The AO has examined all the details u/s 80HHC and then restricted the deduction after making above adjustment. Therefore, no income chargeable to tax has escaped assessment and the re-assessment proposed based on the change of opinion on same set of facts available at the time of passing the order u/s 143(3), is not warranted. The learned AR made similar submissions before the learned CIT(A) as well. Both the authorities did not appreciate the submissions of the assessee. Accordingly, the learned CIT(A) confirmed the action of the AO in reopening the assessment. 60 We have heard the rival contentions and perused the facts of the case. We concur with the views of the learned CIT(A) who has relied upon decisions of various courts of l....
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....tical to the facts in assessee's own case for AY 2003-04 where the issue has been decided by us in Ground no.9 in ITA no.1464/Ahd/2007 hereinabove. Following the same, Ground no.2 of the assessee's appeal is allowed. 68 As regards Ground no.6 of the assessee's appeal, the brief facts are that the assessee has claimed deduction u/s 35D amounting to Rs. 87,73,000/- which was restricted to Rs. 13,50,000/- by the AO. The learned CIT(A) confirmed the action of the AO. 69 We have heard the rival contentions and perused the facts of the case. The facts are identical to the facts in assessee's own case for AY 2003-04 where the issue has been decided by us in Ground no.10 in ITA no.1464/Ahd/2007 hereinabove. Following the same, Ground no.2 of the assessee's appeal is allowed. 70 As regards Ground no.7 of the assessee's appeal, the facts are that the AO made a disallowance of depreciation of Rs. 14,91,87,864/- claimed on certain assets given on lease. The learned CIT(A) confirmed the action of the AO. 71 We have heard the rival contentions and perused the facts of the case. The facts are identical to the facts in assessee's own case for AY 2003-04 where the issue has been decided....
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....stern Railways and NCPL. Since the issue of the lease to Western Railways and NCPL has already been adjudicated by us in assessee's appeal in ITA no.1463/Ahd/2007 hereinabove and the appeal of the assessee has been allowed. Therefore, the AO is directed to decide the issue de novo after considering our decision in ITA no.1463/Ahd/2007 hereinabove but by affording adequate opportunity of being heard to the assessee. Thus, the appeal of the assessee is allowed for statistical purpose. ITA no.4007/Ahd/2007 for AY 2004-05:- 77 Now, we take up the appeal of the assessee in ITA no.4007/Ahd/2007 for AY 2004-05. Ground no.9 in this appeal is general in nature and does not require any adjudication. The remaining grounds are as under:- [1.1] In law and in the facts and circumstances of the appellant's case, the Learned CIT(A) has erred in up-holding the addition made by the Learned A. 0. in respect of notional interest income of Rs. 3,58,19,000/- on loan given to Gujarat State Investment Ltd. [GSIL for short]. The addition was up-held on the assumption that a right to receive that interest from GSIL to whom the appellant had advanced a loan during the A.Y. 1994-95, had acc....
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....g the Learned AO to allow repairs and maintenance expenses of Rs. 1,36,71,288/- incurred on the plant and machinery as revenue expenditure. [5] In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in restricting the deduction on account of GDR Issue Expenses of Rs. 87,73,000 claimed by the appellant u/s. 35D,to only Rs. 13,50,000, thereby disallowing deduction for Rs. 74,23,000 out of the same. [6] In law and in the facts and circumstances of toe appellant's case, the learned CIT(A) has grossly erred in disallowing deduction of depreciation amounting to Rs. 1,20,92,362 on the assets leased by the appellant to Western Railways and Narmada Chematur Petrochemicals Ltd. [7] The Learned CIT(A) has erred in upholding the action of the Learned A.O. in disallowing Rs. 1,48,541 being bad debts written off irrevocably in the books of account. [8] The Learned CIT(A) has erred in directing the Learned A.O. to disallow of donation given out of interest bearing funds. The CIT(A) has erred in not appreciating the fact of the case that these C donations were given considering the business expediency and as a socially responsibl....
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....82 ITR(SC) iii. S.M.S. Investment Corporation P. Ltd. vs. CIT 203 ITR 1001 (Raj) iv. Western India Oil Distribution co. Ltd. vs. CIT 206 ITR 359(Bom) v. Swadeshi Cloth Dealers - 187 ITR 620(AII) vi. CIT vs. Shiv Prakash Janakraj & Co. Pvt. Ltd. 222 ITR 589(SC) vii. CIT vs. Girishchandraharidas & Others - 196 ITR 833(ker) It was also indicated that the copy of award of the sole arbitrator Shri B.M. Oza was dated 30.9.2006 which is subsequent to the end previous year. Accordingly it is held that the interest income of Rs. 3,58,19,000 was to the assessee and was added to the total income. 79 The learned CIT(A) for the reasons mentioned in his order held that the interest income of Rs. 3,58,19,000/- was accrued to the assessee and therefore observed that the AO was justified in bringing to tax the accrued interest income of Rs. 3,58,19,000/-. 80 We have heard the rival contentions and perused the facts of the case. There is no dispute to the fact that the Award of the Arbitrator was passed in the present case in September, 2006. The arguments made by the learned AR before the learned CIT(A) and before us that the interest accrued upto the end of the impugned yea....
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....d appeal. Following the same, this Ground no.4 of the assessee's appeal is allowed for statistical purpose. 86 As regards Ground no.5 of the assessee's appeal, the brief facts are that the AO disallowed the claim of the assessee u/s 35D on account of GDR Issue Expenses of Rs. 87,73,000/-. The learned CIT(A) restricted the same at Rs. 13,50,000/-. 87 We have heard the rival contentions and perused the facts of the case. Similar issue has arisen in the assessee's own case for AY 2003-04 where identical issue has been decided by us in ITA No.1464/Ahd/2007 vide Ground no.10 hereinabove. Following the same, Ground no.5 in this appeal is allowed. 88 As regards Ground no.6 of the assessee's appeal, the brief facts are that the AO made a disallowance of deduction of depreciation of Rs. 1,20,92,362/- on the assets leased by the assessee to Western Railways and Narmada Chematur Petrochemicals Ltd. The learned CIT(A) confirmed the action of the AO. 89 We have heard the rival contentions and perused the facts of the case. The identical issue has arisen in the assessee's own case for AY 2003-04 in ITA no.1464/Ahd/2007 and vide Ground no.12, the issue has been decided by us hereinabo....
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....statement to elicit that sufficient funds were available for making the donations or not, the details were not furnished before the Assessing Officer. Accordingly the appellant is directed to produce before the Assessing Officer the cash flow statement and on verification by Assessing Officer to the extent the own funds are available on various dates of donation the same would stand allowed. And if the borrowed funds are found to be utilized for making donations, the disallowance of 10% interest cost for appropriate period on such funds would stand confirmed. Thus, Ground no.8 of this appeal is dismissed. 94 In the result, the appeal of the assessee in ITA no.4007/Ahd/2007 is partly allowed. ITA no.3993/Ahd/2007 for AY 2004-05:- 95 Now, we take up the appeal of the Revenue in ITA no.3993/Ahd/2007 for AY 2004-05. The grounds raised by the Revenue are as under:- [1.(a)] On the facts and in the circumstances of the case, the CIT(A) erred in deleting the disallowance of Rs. 4,33,13,600/- made out of the interest claimed u/s. 36(1)(iii) on account of diversion of borrowed funds to subsidiary and associate concerns, by merely relying on the appellate orders for earlier years ....
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....25,00,000/- being payment for Information Technology Related Services paid to M/s. Infinium (India) Ltd., treated as expenses deriving benefit of enduring nature. [5] On the facts and in the circumstances of the case, the CIT(A) erred in directing to exclude sales tax and excise duty as part of total turnover while working out the deduction u/s. 80HHC. [6] The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. RELIEF CLAIMED IN APPEAL : The order of the CIT(A) on the issues raised in the aforesaid grounds be set aside and that of the A.O. be restored. 96 As regards Ground nos.1(a) and 1(b), the brief facts of the case are that the AO made a disallowance of Rs. 4,33,13,600/- out of interest claimed u/s 36(1)(iii) on account of diversion of borrowed funds to subsidiary and associate concerns. The learned CIT(A) after appreciating the facts and submissions made by the learned AR of the assessee, allowed the claim of the assessee. 97 We have heard the rival contentions and perused the facts of the case. Similar issue has arisen in the assessee's own case for AY 2003-04 in ITA no.1464/Ahd/2007 which has been decided by us her....
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....missed. 104 As regards Ground no.4 of the Revenue's appeal, the brief facts are that the AO disallowed deduction of Rs. 25,00,000/- being payment for Information and Technology Related Services paid to M/s Infinium (India) Ltd. treating as expenses deriving benefit of enduring nature. The learned CIT(A) by accepting the explanation of the assessee, deleted the addition made by the AO. 105 We have heard the rival contentions and perused the facts of the case. The identical issue has arisen in the assessee's own case for AY 2003-04 in ITA No.1464/Ahd/2007 which has been decided by us vide Ground no.4 in the said appeal hereinabove. Therefore, following the same, we find no infirmity in the order of the learned CIT(A) who has rightly deleted the addition made by the AO. Thus, Ground no.4 of the Revenue's appeal is dismissed. 106 As regards Ground no.5 of the Revenue's appeal, the facts are that the AO did not allow deduction u/s 80HHC. The learned CIT(A) directed the AO to exclude sales tax and excise duty as part of turn turnover while working out the deduction u/s 80HHC of the Act. 107 We have heard the rival contentions and perused the facts of the case. The issue at....
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.... facts and circumstances of the case, the CIT(A) ought to have allowed depreciation as claimed by the appellant. It is submitted that it be so held now. Without prejudice to above, in the event of depreciation is ultimately held to be not allowable on leased assets then capital component needs to be excluded and only interest portion out of lease rent is required to be taxed. [6] In law and in facts & circumstances of the appellant's case, the learned CIT(A) ought to have deleted the disallowance made in respect of interest expenses amounting to Rs. 4,26,548/-, on the ground that donation was given out of borrowed funds. It is submitted that it be so held now. [7] In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in confirming the disallowance of advances written off amounting to Rs. 9,38,376/-. In the facts & circumstances of the case it is submitted that the CIT(A) ought to have allowed the same under section 28 / 37 of the Act. It is submitted it be so held now. 111 As regards Ground no.2 in the appeal, the brief facts are that the AO made an addition of Rs. 2,75,61,076/- in respect of interest receivable from GSI....
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.... The assessee was asked to explain the reasons for write off of advances as bad debts. It was submitted in assessment proceedings that company had made 100% advance payment for purchase of Citric Acid from Citric India Ltd. and the material supplied by them was of substandard quality and thus rejected by the assessee company. However, the supplier had not accepted the claim of assessee and thus civil suit was filed. Court had issued a decree in favour of the assessee and the assessee company tried to execute the decree of the Court. However, it was noticed that the supplier M/s Citric India Ltd. has closed down its business since 1990 and thus the decree could not be executed. Since there was no hope of recovery of the advances the same were written of as bad debts. Similarly in the case of Mardia Chemicals also the assessee had made advance payment for purchase of material and as the material supplied by them was of substandard quality, the company had to sell it in the market at a lower price then given to Mardia Chemicals. Mardia Chemicals did not accept the claim of the company and had not paid back the excess payment made to them in spite of repeated attempts by the assessee c....
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....,100/- made out of the interest claimed u/s 36(1)(iii) on account of diversion of borrowed funds to subsidiary and associate concerns, by merely relying on the appellate orders for earlier years (which have been contested by the Department), without appreciating that each year's income-tax proceedings are independent and the matter had to be decided on merits in the light of the principles settled by authoritative jurisdictional pronouncements. [1(b)] The CIT(A) failed to appreciate the legal principle, that onus u/s 36(l)(iii) lies on the assessee to prove the that each loan is used for the purposes of the business and there is no presumption in law that it is own capital or surplus funds that were diverted for non-business purposes. as settled in the case of Kishanchand Chellaram vs CIT 114 ITR 654 (Bom), R Dalmia vs. CIT 133 ITR 169 (Mad), CIT vs. M S Venkateshwaran 222 ITR 163 (Mad), K Somasundaram & Brothers vs. CIT 238 ITR 939 (Mad) and CIT vs. Motor General Finance Ltd. 254 ITR 449 (Del) which was confirmed in principle by the Supreme Court in the case of Motor General Finance vs. CIT 267 ITR 381 (SC). 2(a) On the facts and in the circumstances of the case, the CIT....
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..... Therefore, following the same, we dismiss Ground no.1 of the Revenue's appeal. 126 As regards Ground no.2 in the Revenue's appeal, the brief facts are that the AO disallowed expenses of Rs. 5,46,794/- on protecting the assets of M/s Gujarat Narmada Auto Ltd., sister concern of the assesese. The learned CIT(A) deleted the addition for the reasons mentioned in his order. 127 We have heard the rival contentions and perused the facts of the case. Similar issue has arisen in the assessee's own case for AY 2003-04 in ITA no.1464/Ahd/2007 which has been decided by us hereinabove vide Ground no.2 in the said appeal. Therefore, following the same, we dismiss Ground no.2 of the Revenue's appeal. 128 As regards Ground no.3 in the Revenue's appeal, the brief facts are that the AO made a disallowance of Rs. 2,99,40,437/- out of repairs and maintenance treating the same as capital expenditure. The learned CIT(A) deleted the addition to the extent of Rs. 1,59,73,789/- for the reasons mentioned in his order. 129 We have heard the rival contentions and perused the facts of the case. The identical issue came up in the assessee's own case for AY 2003-04 in ITA no.1464/Ahd/2007 which ....