AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 926
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....d in not granting relief u/s 43B of the Income tax Act 1961 in respect of interest aggregating to Rs. 14077397/- on term loan paid to ICICI during the previous year relevant to the assessment year 2001-02 when no claim for deduction was made by the Appellant on this account in any other assessment year. II. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) should have held that mistake in not recognizing interest expenditure aggregating to Rs. 14077397/- on term loan paid to ICICI on mercantile basis while preparing the Accounts for the assessment year 2001-02 should not debar the Appellant from claiming the same in the year of payment, i.e. assessment year 2001-02, under section 43B, when the said interest on term loan was not an allowable expenditure in any other assessment year in view of the provision contained in section 43B(d) of the Income Tax Act, 1961." 3. The assessee is a Government company wholly owned by the Government of West Bengal. It is a non banking finance company registered with the Department of Non-Banking Supervision, Kolkata Regional Office of Reserve Bank of India. During the previous year relevant to A.Y.2001-02 i.e. on 18.9.2....
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....sion of the Hon'ble Calcutta High Court in the case of Associated Pigments Ltd. Vs CIT (supra). With regard to the assessee not having filed the revised return of income, the ld. Counsel for the assessee referred to the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs CIT 284 ITR 323 (SC) and submitted that the aforesaid decision only bars a claim being considered by AO without filing of a revised return of income and that such bar does not extent to the appellate authorities under the Act. Our attention was drawn to the following decisions for the proposition that the ratio laid down by the Hon'ble Supreme Court in the case of Goetze (India) Ltd does not apply to the appellate authorities under the Act. (i) Universal Subscription Agency P. Ltd. Vs. JCIT 293 ITR 244 (All) (ii) CIT vs Pruthvi Brokers & Shareholders (P) Ltd 349 ITR 336 (Bom) (iii) CIT vs. Sam Global Securities Ltd. 360 ITR 682 (Del) (iv) CIT vs. Rajasthan Fasteners P. Ltd. 363 ITR 271 (Raj) 7. He also drew our attention to the remand report of the AO filed before CIT(A) wherein the AO has accepted the fact that the interest payment in question was allowable u/s 43B ....
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.... appeal) 10. Ground No.1 raised by the revenue reads as follows :- "1. That the Ld. CIT(A) has erred in law as well as on facts by deleting the addition of interest of Rs. 1,24,31.423/- made on account of non-provision of interest on Nonperforming Asset (NPA)." 11. The factual background with regard to the ground raised by the revenue are that the assessee had not recognized as income interest that has to receive on loans that it had lent because these loans had become non-performing assets(NPA), within the meaning of the Prudential norms laid down in Non-Banking Financial Companies Prudential Norms (Reserve bank) Directions, 1998 (Prudential Norms). As per the aforesaid norms income on non- performing assets shall be recognized only when it is actually realized. The AO rejected the claim of the assessee and considered a sum of Rs. 1,24,31,423/- which was interest on NPA which was not recognized by the assessee as income in the books of accounts. The AO was of the view that the prudential norms of Reserve Bank of India are not binding when it comes to computing the total income under the Income Tax Act, 1961. AO also referred to his order in A.Y.2002-03 on similar issue that ha....
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....may be prescribed700b having regard to the guidelines issued by the National Housing Bank in relation to such debts, shall be chargeable to tax in the previous year in which it is credited by the public financial institution or the scheduled bank or the State financial corporation or the State industrial investment corporation or the public company to its profit and loss account for that year or, as the case may be, in which it is actually received by that institution or bank or corporation or company, whichever is earlier. Explanation : For the purposes of this section,- (a) "National Housing Bank" means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987); (b) "public company" means a company,- (i) which is a public company within the meaning of section 3 of the Companies Act, 1956 (1 of 1956); (ii) whose main object is carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes; and (iii) which is registered in accordance with the Housing Finance Companies (NHB) Directions, 1989, given under section 30 and section 31 of the National Housing Bank....
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.... being a State Industrial Investment Corporation, it is covered by Explanation (f) and it is of no consequence that it is not a public financial institution within the meaning of Explanation (c). 17. It is also pertinent to mention that the entire interest on NP A was offered to tax in the assessment year 2006-07. At page 32 of the printed accounts forming part of the Paper Book in ITA 324/K/20 12 for the assessment year 2006-07, the following note appears :- "INTERST ON NON PERFORMING ASSETS (N.P.A) With reference to Note No.7 to the Notes on Accounts for the accounting year 2004-05, it is noted that in consonance with the comments of the Comptroller and Auditor General of India, the Company has written back the entire provisions for doubtful debts recoverable from the agencies of the Govt. of West Bengal, which has been realized in full with interest on 3l.3.2007. Further interest accrued thereon till the end of the year has been .treated as income for the year". As such. the assessee has filed additional ground in ITA 324/K/12 for the assessment year 2006-07 to the effect that in the event the ground relating to interest on NP A in the Department's appeals for the asse....
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....cept of real income cannot be employed so as to defeat the provisions of the Act and the Rules. Further there can be no dispute with regard to the proposition laid down in Tuticorin Alkali's case(supra) but the fact is that there is no accrual of income in so far as the assessee is concerned. 20. For the reasons given above, we are of the view that the CIT(A) was justified in coming to the conclusion that interest on NPA need not be recognized as income by the Assessee. The relevant ground of appeal of the Revenue is dismissed. 21. Ground No.2 raised by the revenue reads as follows :- "2. That the ld. CIT(A) has erred in law as well as on facts by deleting the addition of Rs. 11,74,79,000/- on account of interest on Recurring Deposits made on accrual basis." 22. The second ground in respect of interest on recurring deposit is also covered in favour of the assessee by the aforesaid order in ITANo.395/Kol/2006 order dated 25.08.2006 read with the order dated September 21, 2007 passed on the MA against the aforesaid order. The material facts are that the assessee creates sinking fund by depositing from time to time the required amounts with Banks in the form of recurring depo....
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....was held that such interest accrued on year to year basis. In the instant case, there was no accrual since the interest was neither due nor receivable until maturity. The decision of the Hon'ble Supreme Court in CIT v. A.Gajapathy Naidu, (1964) 53 ITR 114 (SC) sought to be relied upon on behalf of the revenue actually supports the plea of the assessee in its contention that interest income is taxable only upon maturity when the right to receive interest accrued to the assessee. In Laxmipat Singhania v CIT, (1969) 72 ITR 291 (SC), relied upon on behalf of the revenue it was held that where the amount had escaped assessment on accrual basis it could not be taxed in another year on the basis of receipt. No such situation has arisen in the instant case inasmuch as accrual of interest is only upon maturity and there is no question of any income escaping assessment on accrual basis. On behalf of the revenue, it was also submitted that the three decisions relied upon in connection with non- provision of interest on NP A were also relevant for deciding the ground relating to interest on recurring deposits. We are of the view that none of the said decisions is of any assistance to the r....
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....come Tax Appellate Tribunal in the Appellant's own case for the assessment year 2002-03 when the same was accepted by the Department." 32. The facts with regard to the aforesaid grounds of appeal are as follows: The assessee has made deposits from time to time with the Pay & Accounts office of the Government of West Bengal. When these deposits were made initially, it did not carry any interest. By a letter dated 13th June. 2001 the Principal Secretary to the Government of West Bengal wrote to the Principal Accountant General (A&E) to the effect that the deposits of the Public Sector Undertaking were maintained under Public Accounts Major Head 8342, which was an interest bearing account. However, the State Government had not been paying interest for the said deposits and the office of the Accountant General raised an objection and suggested that these accounts be transferred from Major Head 8342 to 8449, a non-interest bearing head. Accordingly, the said transfer was effected by the Principal Secretary to 8449, a non-interest bearing head. Thereafter it was felt necessary by the State Government to maintain the deposit account of the Assessee under interest bearing head i.e. 8....
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.... the Government to pay interest and the right of the Assessee to receive interest. On such reasoning, the order of the AO was confirmed by the CIT(A). 36. We have heard the rival submissions and perused the letters dated 13.6.2001 and 5.3.2004 and 31.3.2001, copies of which are placed at pages 43 to 50 of the paper filed by the Assessee in ITA No.389/Kol/2008 for AY 2001-02. It would be seen from the letter dated June 13, 2001 (page 43) that the Principal Secretary wrote to the Principal Accountant General (A & E) for approval in respect of the Government's decision to pay interest on deposit with Pay & Accounts Office at the same rate at which the State received loan against Central Plan Assistance from the Department of Expenditure, Ministry of Finance, Government of India. The decision of the State Government was thus subject to approval and it cannot be said that interest accrued on the basis of a decision awaiting approval. The next letter dated March 5, 2004 at page 45 is to the effect that the State Government had since reviewed the matter and decided that interest would be paid as applicable for normal ways and means advance availed by the State Government from the Res....
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.... that during the previous year relevant to the assessment year 2003-04 the assessee had to reverse interest income of Rs. 26,43,24,776/- accounted for in earlier financial years since the assets concerned became NPA during the previous year ended March 31, 2003 relevant to the assessment year 2003-04 according to RBI's prudential norms. The assessee having accounted for such interest income in the earlier years wrote it off as irrecoverable. The debtors on account of accrued interest were reduced to the extent of Rs. 26,43,24,776/- and the same amount was reduced from the interest income credited to the profit and loss account. The effect of reduction of the said amount from the interest income on the credit side of the profit and loss account was the same as that of a debit to the profit and loss account. The assessee having written off the debt which had become bad as irrecoverable in its accounts, it claimed deduction in respect thereof under section 36(1)(vii) of the Act. The specific case of the Assessee before CIT(A) was that the said amount of Rs. 26,43,24,776/- was allowable as bad-debt written off as irrecoverable under section 36(1)(vii) of the Act. 40. The CIT(A) di....
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.... write off as bad debts in the books of accounts. The said decision will not apply to the facts of the present case. We therefore allow ground No.IV subject to verification of the write off in the debtors account as stated above. 43. In the result, the appeal by the Assessee is partly allowed. 44. In the result appeal by the Assessee is partly allowed and that by the revenue is dismissed. ITA No.580/Kol/2008 & ITA No.568/Kol/2008: 45. ITA No.568/Kol/2008 is an appeal by the Revenue while ITA No.580/Kol/2008 is an appeal by the Assessee. Both these appeals are directed against the order dated 14.2.2008 of CIT(A)-VI, Kolkata, relating to AY 2004-05. ITA No.568/Kol/2008: (Revenue's appeal): 46. The grounds of appeal raised by the revenue in this appeal reads thus: "1. That the Ld. CIT(A) has erred in law as well as on facts by deleting the addition of interest of Rs. 55,27,48,832/- made on account of non-provision of interest on Non Performing Assets (NPA). 2. That the Ld. CIT(A) has erred in law as well as on facts by deleting the addition of Rs. 138,72,53,722/- on account of interest on Recurring Deposits made on accrual basis. 47. The aforesaid grounds of appeal are ....
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....al reserve created and maintained by a specified entity, an amount not exceeding twenty per cent. of the profits derived from eligible business computed under the head "Profits and gains of business or profession" (before making any deduction under this clause) carried to such reserve account: Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid up share capital and of the general reserves of the specified entity, no allowance under this clause shall be made in respect of such excess. Explanation: In this clause,- (a) "specified entity" means,- (i) a financial corporation specified in section 4A of the Companies Act, 1956 (1 of 1956); (ii) a financial corporation which is a public sector company; (iii) a banking company; (iv) a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank; (v) a housing finance company; and (vi) any other financial corporation including a public company; (b) "eligible business" means,- (i) in respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or ....
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....tified under section 4A(2) of the Companies Act, 1956, it was not covered by section 36(1)(viia)(c). The CIT(A) extracted the proviso to section 36(1)(viii) in his order and observed that in the absence of detail the assessee's entitlement could not be ascertained in the light of the said proviso. 51. Aggrieved by the order of the CIT(A) the Assessee has raised the aforesaid grounds before the Tribunal. We have heard the rival submissions and perused the relevant statutory provisions. 52. The deduction in respect of provision for bad and doubtful debts is available under section 36(1)(viia)(c), inter alia, to a State Industrial Investment Corporation defined in Explanation (v). Public financial institution notified under section 4A of the Companies Act, 1956 is separately mentioned in Explanation (iii). That the assessee is not a public financial institution notified under section 4A of the Companies Act, 1956 does not affect its coverage under Explanation (v). The said Explanation (v) to section 36(1)(viia)(c) reads as follows:- "(v)"State industrial investment corporation" means a Government company" within the meaning of section 617 of the Companies Act, 1956 (1 of 1956)....
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....es for the development of which the assessee provides finance fall within the purview of the Explanation to clause (i) of section 80IA(4). The finance provided by the assessee is repayable along with interest during a period of more than five years. 55. The aforesaid provision of Rs. 1,45,93,510/- was written back during the previous ear relevant to the assessment year 2006-07. Although the AO had not allowed deduction of the said amount for the assessment year 2004-05 he subjected the provision written back to tax in the assessment year 2006-07. As such, in ground (I) of ITA 324/K/12 for the assessment year 2006-07 the assessee has contended that if the deduction is not allowed in the assessment year 2004-05, the provision written back cannot be taxed in the assessment year 2006-07. 56. We have considered the submissions of the learned counsel for the Assessee and the learned DR and are of the view that the Assessee is entitled to deduction u/s.36(1)(viia)(c) of Act as the Assessee satisfies the conditions laid down in the provisions referred to above. In view of the above conclusion, the alternative submission made by the Assessee does not require adjudication. The grounds of a....
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....ciding grounds of appeal of the Assessee for AY 2004-05, We have already seen that the Assessee in that year claimed as deduction a sum of Rs. 1,45,93,510 as provision for Bad and doubtful debts u/s.36(1)(viia)(c) of the Act. This was not allowed as a deduction as claimed by the Assessee by the AO and the CIT(A). While deciding the appeal of the Assessee for AY 04-05 in ITA No.580/Kol/2008, We have already allowed the claim of the Assessee for the aforesaid deduction. In the present AY 2006-07, the Provision was written back and offered as income by the Assessee as the debts ceased to be bad debts or were realised. The claim of the Assessee was that if the amount claimed as deduction in AY 04-05 is not allowed as a deduction, than the write off the said sum in the books of accounts whereby it was shown as income, the same should not be taxed as it would amount to double taxation. Since we have allowed the claim of the Assessee for AY 04-05, we are of the view that the claim made by the Assessee does not require adjudication. Consequently, the ground of appeal of the Assessee is dismissed. 64. The Assessee has filed two additional grounds of appeal. These additional grounds can be ....
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....ed for the delay in filing the appeal and are of the view that the delay in filing the appeal has occasioned owing to reasonable and sufficient cause. The delay is accordingly condoned. 71. The only ground of appeal raised by the revenue in its appeal reads thus: "1. That on the facts and circumstances of the case, Ld. CIT(A) erred in law in not considering the legal point that the revised return of assessee was not valid having been filed beyond the time limit prescribed u/s 139(5) and hence the revised income could not be treated as returned income for the purpose of levying interest u/s 234C. 2. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing." 72. The only ground in the revenue's appeal relates to the computation of interest under section 234C. The material facts are that the assessee filed its original return on November 30, 2006 showing a total income of Rs. 495.03 crores and a sum of Rs. 6.12 crores as refundable (page 37 of Paper Book in ITA 324/K/12). The said return was processed under section 143(1) on May 30, 2007. The statutory audit was completed on March 24, 2008 and the CAG audit on....
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....tice in the assessee's case to accept revised computation on the basis of audited accounts for the purpose of completing the assessment. In the assessment order for the assessment year 2006-07 the Assessing officer made the following observation :- "The income as per revised computation is accepted as conventionally for undertakings of Govt this kind of delay due to late statutory audit had been allowed earlier." 74. We have considered the rival contentions and the order of the CIT(A) in the light of the relevant provisions of Sec.234C of the Act. The provisions of Sec.234-C of the Act read thus: "234C: Interest for deferment of advance tax. (1) Where in any financial year,- (a) the company which is liable to pay advance tax under section 208 has failed to pay such tax or- (i) the advance tax paid by the company on its current income on or before the 15th day of June is less than fifteen per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less tha....
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....ount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the remaining instalments of advance tax which are due or where no such instalments are due], by the 31st day of March of the financial year. Provided further that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000), as amended by the Taxation Laws (Amendment) Act, 2000, and the assessee has paid the amount of shortfall, on or before the 15th day of March, 2001, in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000, and the 15th day of December, 2000: Provided also that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rates of surcharge under section 2 of the Finance Act, 2000, as amended by the Taxation Laws (Amendment) Ordinance, 2001, and the asse....
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....er in our view is contrary to the provisions of law and cannot be sustained. Accordingly, the appeal of the revenue is allowed. 76. In the result, the appeal by the Assessee is dismissed and that by the Revenue is allowed. ITA No. 1028/Kol/2011 & ITA No.984/Kol/2011: 77. ITA No.1028/Kol/2011 is an appeal by the Revenue while ITA No.984/Kol/2011 is an appeal by the Assessee. Both these appeals are directed against the order dated 4.3.2011 of CIT(A)-VI, Kolkata, relating to AY 2007-08. ITA No.1028/Kol.2011 (Revenue's appeal): 78. There is a delay of 14 days in filing this appeal by the Revenue. The same has been explained as owing to intervening public holidays and break down of photo copy machine. We have considered the reasons assigned for the delay in filing the appeal and are of the view that the delay in filing the appeal has occasioned owing to reasonable and sufficient cause. The delay is accordingly condoned. 79. The grounds raised by the Revenue reads thus: "1. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the addition of Rs. 1,76,10,845/- made by the Assessing Officer on account of disallowance of prior period expenses.....
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....e order of CIT(A) and direct the AO to make an assessment de novo in the light of the audited statements of income available for the relevant assessment year. With this prelude, we will take up grounds No.1 & 2 raised by the Assessee. 82. The first two grounds of the assessee's appeal are against the action of the A0 in ignoring the revised computation of income based on audited accounts filed in course of assessment proceedings on June 23, 2009 after expiry of the time limit prescribed under section 139(5) which has been upheld by the CIT(A) mainly relying upon Goetze (India)'s case. Though the AO framed the assessment on the basis of the revised return filed on March 15, 2008, he picked up prior period expenses of Rs. 1,76,10,845/- from the audited accounts submitted on June 23, 2009 and disallowed the same. The CIT(A), having upheld the AO's action in ignoring the revised computation, held that the AO could not have made the said disallowance on the basis of the audited accounts and no such disallowance could be made on the basis of the unaudited accounts filed earlier which did not show any prior period expenses. Against the said deletion of Rs. 1,76,10,845/- the r....
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....atements available. In this regard, we are also of the view that the principle laid down in Goetze India's case (supra), will not bind the appellate authorities as clarified by the Hon'ble Supreme Court in the said decision. Therefore in the interest of justice and fair play we set aside the order of CIT(A) and direct the AO to make an assessment de novo on the basis of audited statements filed by the Assessee. In view of the above conclusion no decision is given on the various other grounds raised by the revenue and the Assessee in their respective appeals. All contentions are left open. Thus both the appeals of the Assessee and revenue are allowed for statistical purposes. ITA No.1283/Kol/2012 & C.O.No.104/Kol/2012: 86. ITA No.1283/Kol/2012 is an appeal by the Revenue against the order dated 1.6.2012 of CIT(A)-VI, Kolkata relating to AY 2008-09. The Assessee has filed Cross objection being C.O.No.104/Kol/2012 against the very same order of CIT(A). ITA No.1283/Kol/2012: Revenue's Appeal: 87. There is a delay of 5 days in filing the appeal by the Revenue. The same has been explained as owing to intervening public holidays and break down of photo copy machine. We hav....
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....nted Accounts). Interest at the rate of 8.90% p.a. for 92 days on investments of Rs. 25 crore worked out to Rs. 55,92,896/-, which the Assesseee had considered disallowable u/s 14A read with Rule 8D. 91. While computing the quantum of disallowance u/s 14A, the Assessee did not consider an aggregate sum of Rs. 198,80,09,710/- (Rs. 194,61,95,7101- in 1% Cumulative Preference Shares of Haldia Petrochemicals Ltd (HP L) and Rs. 4,18,14,000/- in Equity Shares of the Calcutta Stock Exchange Association Ltd (CSEAL)), being investments made by the Appellant pursuant to the directions desire of the Government of West Bengal, as investments for the purpose of Rule BD. The Appellant-Company is wholly owned by the Government of West Bengal. The Assessee is primarily engaged in the business of providing finance for infrastructural development in the State of West Bengal. For this purpose, the Assessee was required to follow the suggestions made by the State Government from time to time. HP L was formed near Haldia Port in the district of Midnapore in the State of West Bengal as a joint venture where the Government of West Bengal is a major shareholder with the objective of promoting all-round d....
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.....a. up to February 2002, the Appellant had accounted for interest income to the extent of Rs. 19.62 crore. However, the said interest could not be realised from HPL and the said loan had become doubtful of recovery as per the appellant. The Appellant was instructed received a letter dated 12.10.2004 of the Government of West Bengal, the e-promoter ,of HPL instructing the Appellant-Company to realign the outstanding loan and accrued interest aggregating to Rs. 194.62 crores into Preference Shares of HPL. Thus due to circumstances beyond the Appellant-Company's control, it had to realign the outstanding loan and accrued interest into investment which otherwise had been doubtful of recovery as per the appellant. 5. The appellant has never received any amount as dividend on such Preference Shares subsequent to the conversion of unsecured loan into Preference Shares, till date as per the submissions of the Appellant. HPL is into heavy losses. The plea of the appellant is that the conversion of outstanding loan into Preference shares were under compulsion and it is the conversion of the loan in to equity of a non-realisable loan. It is not an investment in actuality but a decision ....
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....gh Court in GA No.2290 of 2013, ITAT No.157 of 2013, v Shri Ashish Jhunjhunwala decided on January 8,2014 and in GA No.3022 of 2013,, ITAT No.161 of 2013, CIT v REI Agro Ltd. Decided on December 23, 2013. 94. We have heard the rival submissions. We are of the view that the mandate of Rule 8D(2)(iii) of the rules in respect of disallowance of other expenses incurred to earn tax free income is as follows: "(iii) an amount equal to one-half per cent. of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance-sheet of the assessee, on the first day and the last day of the previous year. 95. That preference shares have to be considered to determine the average value of investments is not in dispute. The fact that a loan was converted into preference share consequent to direction of State Government can be no ground not to treat preference share as investment which are likely to yield tax free income. The dividend earned on such preference shares would certainly be claimed as deduction. In such circumstances, we are of the view that the conclusions of the CIT(A) cannot be accepted. 96. The learned DR ....
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....s under Rule 8D(2)(iii) of the Rules. We are however of the view that the disallowance under Sec.14A of the Act cannot be in excess of the tax free income earned by the Assessee during the previous year. We therefore hold that the disallowance u/s.14A of the Act be restricted to the tax free income earned by the Assessee. The direction given above will result in relief to the Assessee than what was given by the CIT(A). The relevant grounds of the revenue are accordingly treated as dismissed. C.O.No. 104/Kol/2012 in ITA No.1283/Kol/2012: (By Assessee) 98. The grounds raised in the CO reads thus: "I. For that the CIT(A) erred in upholding the disallowance of the assessee's claim for deduction of Rs. 7,50,000/-, being 1/10th of the registration fee of Rs. 75,00,000/- paid in 2000-01 for change in object clause, and in holding that it was a capital expenditure or was not covered by section 35D. II. For that further and in any event and without prejudice to the aforesaid, the assessee is entitled to depreciation in respect of the said expenditure." 99. The Assessee claimed deduction of a sum of Rs. 7,50,000/- which was 10% of amortisation of expenses for change in object clau....
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.... The provisions of section 350 (i) (ii) apply only in connection with setting up the new unit and the said condition and circumstances do not apply in the case of the appellant. Therefore, provisions of section 35D are not applicable. '14. The appellant has claimed that the said expenditure was allowed in assessment year 2006-07 by the Assessing Officer. The principal of res judicata does not apply in income tax of the said expenditure had been disallowed by the Assessing Officer in assessment year 2007-08 and therefore the principal of rule of consistency in assessment year 2008-09 is also not applicable. '15. My Ld. Predecessor in the assessment year 2007-08 vide appeal No.880/CIT(A)NII2009-10/Cir-6/Kol dated04.03.2011 also disallowed the said expenditure by observing in his appellate order as follows:- "Here I find that this amortized expenditure is being claimed by the assessee for the registration fees paid for change in the object clause of the assessee company. Generally this type of expenditure is capital expenditure since the assessee derives long term benefit from it. Being a capital expenditure such expenditure is not allowable under general clause of Secti....