AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 823
X X X X Extracts X X X X
X X X X Extracts X X X X
....21. 03. 2011 2006-07 25. 10. 2006 Nil 08. 12. 2008 NIL 22. 03. 2011 2007-08 16. 10. 2007 Nil 18. 12. 2009 87, 05, 00, 935/- 23. 03. 2011 ITA/4540/Mum/2011-AY. 2005-06: 2. Assessee is engaged in the business of manufacturing of locks, security equipments, washing machine and refrigerators etc. The effective Ground of appeal is about restricting the depreciation at Rs. 38. 98 crores as against Rs. 53. 27 crores, claimed by the assessee. 3. During the course of hearing before us, Authorised Representative(AR)and the Departmental Representative(DR)agreed that identical issue was decided by the Tribunal in the earlier years(ITA Nos. 4538-39/Mum/11, AY. s 2003-04 and 2004-05). We find that except for the amount involved with regard to depreciation, the assessee had raised the identical grounds for two earlier AY. s. and the Tribunal had decide the issue as under :- "17. We have considered the rival contentions and have also gone through the record. We have carefully gone through the relevant provisions i. e. explanation 2A and 2B to section 43(6) and have also considered the respective amendments brought out from time to time in the said pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... contention of the assessee is to be accepted, then, the words appearing before amendment and after amendment made vide Finance Act 2000, will give the same meaning, resulting to inference that the legislature has not made any amendment in the said section and the said amendment will become meaningless and rendered redundant. However, in our view, the Parliament has not made a futile exercise in amending the relevant provisions vide Finance Act, 2000. Hence, we agree with the view taken by the Ld. AO after referring to the memorandum explaining the provisions of Finance Bill, 1999 that provisions relating to the demerger of companies were introduced based on certain principles one of which was that the demergers should be tax neutral and should not attract any additional tax liability. The value of the assets of the demerged company should be the same when transferred to the resulting company. The amendment made by Finance Act, 2003 w. e. f. 01. 04. 2004, in our view, is curative and clarificatory in nature. The omission of the words "as appearing in the books of account" have neither taken away nor affected any rights of the assessee which were accrued to him before the said amend....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved vide Finance Act, 2003 so as to bring clarity. In our humble view, whatever rights had accrued to the assessee in view of the ambiguity in the provisions at the time of their insertion vide Finance Act, 1999, the same had been taken away/clarified immediately by removing the ambiguity through amendment made vide Finance Act, 2000. Hence, without going into the details of the facts of the various case laws, we have no hesitation to hold that the proposition laid therein cannot be applied to the facts and circumstances of the case in hand. These grounds are accordingly decided against the assessee. " Respectfully following the above, we decide the effective Ground of appeal (GOA, 1-3)against the assessee. 4. The assessee had raised following additional grounds for the year under consideration: "Both the lower authorities erred in holding that adhoc disallowance made u/s. 14A of the Act was also required to be added back for computing book profits u/s. 115JB of the Act. " 5. During the course of hearing before us, the AR fairly conceded that additional Ground had to be decided against the assessee, that Hon'ble Bombay High Court had decided the issue against the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the assessee before deciding the matter. Both the additional grounds of appeal, raised by the assessee vide its letter dated 22/02/2016, are decided in its favour, in opart. ITA/4541&4542/Mum/2011-AY. s. 2006-07& 2007-08: 8. The effective grounds of appeal for both the AY. s. are about computation of depreciation. Following our order for the earlier year Gs. OA 1-3 are decided against the assessee for the above mentioned assessment years. 9. Additional ground of appeal, filed by the assessee is decided against it, following our order for the earlier year. 10. Additional grounds, raised by the assessee vide its letters, dated 22/02/2016, for both the years are decided in favour of the assessee, in part, in pursuance of our order for the earlier year. ITA/4755/Mum/2011, AY. 2005-06: 11. The solitary ground of appeal, filed by the AO, is about restricting the disallowance in respect of managerial/administrative expenses to 1% of dividend income and deleting the disallowance of interest expenditure. During the assessmentt proceedings, the AO found that the assessee had earned dividend income of Rs. 4833. 44 lakhs during the year and had claimed it as exempt. He....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... After considering the available material we find that the Tribunal had , while deciding the appeals for earlier years, given a finding that the assessee had not used borrowed funds to earn exempt income, that the FAA discussed the issue at length and held that there was no evidence to prove that the assessee had not used its own funds for earning exempt income. In these circumstances, we are of the opinion that there is no legal infirmity in the order passed by the FAA as far as interest expenditure is concerned. We further find that FAA had restricted the administrative/managerial disallowance@ 1%. The AO had not given any reason for making the disallowance. Therefoere, confirming the order of the FAA, we decide the effective GOA against the AO. ITA/4756/Mum/2011, AY. 2006-07: 14. The first GOA is identical to the ground raised by the AO for the earlier year. Following our order for that year Gr. No. 1 is decide against the AO. 15. Next GOA is about deleting the addition made by the AO u/s. 41(1), being the difference between the sales tax liability and the net value paid under a scheme of Govt. of Maharashtra. During the course of hearing before us, representatives of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....trongly supported the findings of the Assessing Officer and contended that the facts of the case are squarely covered by the provisions of section 41(1) of the Act. It is the say of the counsel that what has been credited by the assessee is a trading liability allowed as deduction while computing the income. The DR strongly submitted that the remission of liability is taxable in the hands of the assessee. Per contra the counsel for the assessee submitted that the issue is squarely covered by the decision of the Tribunal Special Bench in the case of Sulzer India Ltd. (supra). 4. We have considered the rival submissions and carefully perused the orders of the lower authorities and the material evidences brought on record. It is not in dispute that the assessee has taken benefit of the scheme offered by the Government of Maharashtra. As provided in Circular No. 496 dated 25. 09. 1987 and Circular No. 674 dated 29. 12. 1993 issued by the CBDT, although the sales tax collected from the customers is a trading receipt, on account of deferral scheme, the same is deemed to have been paid. As a result, it amounts to discharge of the liability to pay sales tax. Once the liability is discha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... may call net present value immediately. Thus, in this situation, it could not be construed as remission of liability, because the State Government had not waived of any of the liability as given in the illustrations. Had the State Government accepted lesser amount after twelve years or reduced such instalments, then it could have been a case of remission or cessation. However, in the instant case the State Government had chosen to receive the money immediately which was receivable from 1-5-2003 to 1- 5-2008. The amount of Rs. 337. 13 lakhs was actually paid to SICOM on 30-10-2002. Thus, it did not satisfy the condition of actual remission in praesenti. It was a simple case of collecting the amount at net present value which was due later on and even the formula for collecting the net present value was also given by the SICOM and the amounts had been paid as per that formula. Therefore, such payment of net present value of a future liability could not be classified as remission or cessation of the liability so as to attract the provisions of section 41(1)(a) [Para 108] " Considering facts in totality, in the light of the aforesaid decision of the Tribunal Special Bench, which ha....