TaxTMI 
TaxTMI 
TaxTMI 
2011 (8) TMI 1154
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....s. 20,54,935/-- being interest u/s 244A for the Assessment Year 1993-94 received and offered to tax during the year under appeal and ld CIT(A) has erred in confirming the action of the AO. The Assessing Officer be directed to exclude Rs. 20,54,935/- being withdrawn interest u/s 244A, from the total income of the appellant and to reduce the total income accordingly. 3. On the facts and in the circumstances of the case and in law, the AO has erred in disallowing Rs. 29,061 being deprecation claimed by the appellant on roll over charges and ld CIT(A) has erred in confirming Rs. 28,095/- worked out by appellant based on revised working excluding roll over charges allowed by ITAT as revenue expenditure in Assessment Year 1987-88. The Assessing Officer be directed to allow the revised amount of depreciation of R. 28,095/- on roll over charges and to reduce the total income accordingly. 4. On the facts and in the circumstances of the case and in law, the AO has erred in making the disallowance of Rs. 29,74,188/- u/s 40A(9) being expenditure incurred on payment made to schools at Veraval and Malkhed wherein children of the employees of the appellant company are studying and ld CIT(A) h....
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....mount of Rs. 3,44,461/- as deduction on account of rural development expenses incurred at Malkhad. The AO disallowed the claim of the assessee on the ground that in the earlier years, an identical claim was disallowed. On appeal, the CIT(A) has confirmed the disallowance because the same was confirmed in the AY 1994-95 to 1997-98. 4. We have heard the ld senior counsel for the assessee and the ld DR and considered the relevant material on record. The ld senior counsel has pointed out that in the earlier years for AY 1992-93 to 1995-96, the Tribunal restored back the issue to the record of the AO. He has further submitted that the AO has allowed the claim of the assessee in the order giving effect for the AY 1992-93 to 1995-96. On the other hand, the ld DR has relied upon the orders of the lower authorities. 5. At the outset, we note that a similar issue came before the Tribunal for AY 1994-95 and vide order dated 31.7.2008, the issue of disallowance on account of rural development expenses was restored to the record of the AO. The AO in the order giving effect dated 19.2.2009 allowed the claim of the assessee. Accordingly, the claim of the assessee for the AY under consideration ....
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....essee would be without remedy if the interest is reduced by virtue of assessment under section 143(3). This apprehension, in our opinion, is unfounded. If interest is reduced by virtue of sub-section (3) of section 244A on account of assessment under section 143(3), the interest granted in earlier year gets substituted and it is the reduced amount of interest that would form part of income of that year. Thus, it would amount to mistake rectifiable under section 154 of the Act. In our opinion, if the basis, on which income was assessed is varied or ceases to exist, then such assessment would become erroneous and can be rectified. This can be explained with an exampi.e. For instance, land in a village belonging to various persons is acquired by Government for some development works and the compensation is awarded by the Collector with interest, if any. But one of the land holders challenges the acquisition proceedings in the High Court and later on succeeds as the acquisition is declared illegal. By virtue of such High Court order, such compensation has to be returned and Government will have to restore the land to the villagers. Therefore, if capital gain has been assessed in the ha....
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....harges, which are treated as capital in nature should be allowed. On the other hand, the ld DR supported the orders of the lower authorities. 14. After considering the rival contention and other relevant material on record, at the outset we find that the Hon'ble jurisdictional High Court in asessee's own case for AY 1991-92 and 1992-93 has decided the issue of allowability of rollover charges against the assessee while adjudicating the appeal of the revenue. The Hon'ble High Court in para 5 of its order has held as under: "5 During the course of the hearing of the appeal, the attention of the Court has been drawn to the judgment of the Supreme Court in ACIT, Vadodara v Elecon Engineering Co Ltd. It is common ground between counsel appearing on behalf of the Revenue and counsel appearing on behalf of the assessee that the assessee had pad a sum of Rs. 6.89 lacs to the bank as roll over charges for repayment of the principal amount of foreign exchange loans taken for capital investments in its High Tech division. This statement of fact also appears in the original order of assessment dated 30th March 1994, pertaining to Assessment Year 1991-92. In view of the factual position, the....
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.... of Rs. 19,05,496/- under section 40A (9). The said expenditure had been incurred by the assessee on payment made to schools at Veraval and Malkhed wherein the children of the employees of the company were studying. The AO disallowed the expenditure under section 40A(9). The said section provides that no deduction could be allowed in respect of any sum paid by the assessee as an employer towards setting up or formation of or as contribution to any fund/ trust, company, association of persons, body of individuals, society registered under the Societies Registration Act or other institution for any purpose except wheresum is so paid for the purposes and to the extent provided for under clause (iv) or clause (v) of sub section (1) of section 36 or as required by or under any other law for the time being in force. The assessee argued that provisions of section 40A(9) were not applicable and the expenditure was allowable as revenue expenditure under section 37(1). CIT(A) however following the decision in assessment year 1994-95 confirmed the disallowance. Aggrieved by the said decision the assessee is in appeal. 2.9.1 We have heard both the parties in the matter. We find that the same....
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....No.6668/Mum/2003 along with the additional grounds as under: i) Exclude from taxable profits, the sales tax exemption benefit of Rs. 1,38,50,922/- which is included in sales and which is taxed in the assessment order as part of profits of the business" ii) Without prejudice to the claim of the appellant that expenditure incurred oh assets not owned is allowable as revenue expenses in the eyar in which it is incurred, as it is held by Hon'ble ITAT in AY 1995-96 that such expenditure is capital in nature the appellant claims that expenditure he added to the cost of fixed ass and depreciation on the same be allowed. The Assessing Officer be directed to allow the claim consequential depreciation on the said expenditure of Rs. 9,96,08,1334 (8,49,13,250 and Rs. 1,19,94,884 and reduce the total income accordingly." 26.1 The assessee has also filed additional evidences in the shape of copy of sales tax exemption scheme and copy of exemption certificate (eligibility certificate) in support of the additional ground no.1. The assessee has also filed a letter dated 24.8.2007 for admission of the additional evidences. 27. We have heard the ld senior counsel of the assessee as well as ld D....
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.... arising from the facts which are on record in the assessment proceedings has to be allowed to be raised if it is necessary to consider the question in order to correctly assess the tax liability of the assessee. In this case the assessee had availed sales tax exemption of Rs. 1,14,51,012/- which was already on record before the AO as the same was included in the total sale figure of Rs. 928.36 crores. This claim of the assessee has not been controverted before us by the revenue. Therefore the fact that the assessee had availed sales tax exemption which had been shown as part of the sales was already on record before the lower authorities. In view of the decision of the Special Bench of the tribunal in case of DCIT Vs Reliance Industries Ltd. (supra) which held that sales tax subsidy granted by the State Government was of the nature of capital receipt and could not be taxed, a legal question does arise in case of the assessee whether the sales tax exemption received by the assessee from the U.P.Government was taxable or not. Such question has a direct bearing on computation of tax liability of the assessee. Therefore in our view the legal question raised by the assessee as an addit....
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....ortunity of hearing to the assessee. 4.4 The ground No.4 in the cross objection is regarding allowability of expenditure being premium of Rs. 4 crores on non convertible debentures (NCD). The assessee has raised an alternate plea that in case the expenditure was not allowed the same should be considered under section 35D. Since the expenditure has already been allowed on pro rata basis over a 9 year period the ground raised by the assessee has become infructuous and the same is dismissed as infructuous." Accordingly, we restore this additional ground no.2 to the record of the Assessing Officer to examine and decide the same as per law. ITA No.6762/M/003 (by the revenue) 30. The revenue has raised only ground as under: "On the facts and circumstances of the case and in law, the ld CIT(A) erred in holding that interest expenses for the period prior to commencement of business, amounting to Rs. 37,60,46,864/- attributable to borrowing utilized for creating fixed assets in a new line of business was deductible u/ 36(1)(iii) of the I T act." 30.1 The assessee claimed a sum of Rs. 37,60,46,864/- being interest paid on capital borrowed funds for its new project/expansion namely wh....
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....ation were also the subject matter for the AY 1995-96. He has took us to the order for the AY 1995-96 and pointed out that except high-tech carbon all other products are already there and even the products were already manufactured by the assessee. Therefore, the facts and circumstances are identical for the AY under consideration to the AY 1995-96. He has further submitted that the CIT(A) has adjudicated the issue after considering the various decisions of the Supreme Court, High Courts as well as the Tribunal. 31.3 He has relied upon the decision of the Hon'ble Supreme Court in the case of DCIT vs Core Health Care Ltd reported in 298 ITR 194 and submitted that when the assessee borrowed capital for the business, which is carried on by the assessee, the interest is allowable. He has also relied upon the decision of the Hon'ble Supreme Court in the case of Waterfall Estate Ltd vc CIT reported in 219 ITR 563 and submitted that various projects/divisions are set up at different places and at different point of time as well as managed by local units; however, controlled by the Head office of all the division/projects then, it will be considered as expansion of the business, and not s....
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....gment in case of Prithvi Insurance (supra) held in case of Produce Exchange Corporation (supra) that it was the unity of control and not the nature of two businesses which was a decisive test to determining whether the two businesses are same or not. In this case we find that all the units are under the direct control and supervision of the board of directors and thus have a common business administration. Though the employees and funds are separately allocated for different units they are depended upon the head office for raising of funds and employees are transferable from one unit or another. There is also intertransfer of funds. There is centralized finance sell for looking after accounts, finance, funds management, information, secretarial matters and taxation matters for all the unit. Though separate profit and loss account and balance sheets are prepared for different units, these are only to ensure compliance with local laws and for claim of deduction under section 80IA/ 80HHC etc which are separately allowable in respect of each unit. Similar situation has already been considered by the tribunal in case of Grasim Industries Ltd. (64 TTJ 357). In that case the assessee was ....
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....d to allow the claim of Rs. 5,63,084/- and to reduce the total income accordingly. 2. On the facts and in the circumstances of the case and in law, the AO has erred in disallowing Rs. 17,267/- be depreciation claimed by the appellant on roll over charges and ld CIT(A) has erred in confirming Rs, 17,267/- as revenue expenditure. The Assessing Officer be directed to allow the revised amount of depreciation of Rs. 17,267/- on roll over charges and to reduce the total income accordingly. 3. On the facts and in the circumstances of the case and in law, the AO has erred in making the disallowance of Rs. 23,48,193/- u/s 40A(9) being expenditure incurred on payment made to schools at Veraval and Malkhed wherein children of the employees of the appellant company are studying and ld CIT(A) has erred in confirming the disallowance. The Assessing Officer be directed to allow the expenditure of Rs. 23,438,193/-and to reduce the total income accordingly. 4. Without prejudice to the claim of the appellant that the debenture issue expenditure incurred by the appellant during the previous years relevant to AY 1988-89 and 1989-90 is revenue expenditure, it is held in those years that the said ....