TaxTMI 
TaxTMI 
2016 (6) TMI 245
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....ppeal, the Revenue has challenged the deletion by the learned Commissioner of Income-tax (Appeals) of the addition of Rs. 8,52,83,712 made by the Assessing Officer on account of disallowance of the assessee's claim for deduction under section 80-IA. 4. The assessee in the present case is a company, which is engaged in the business of manufacturing of pig iron. The return of income for the year under consideration, i.e., the assessment year 2005-06 was filed by it on October 30, 2005, declaring a total income of Rs. 86,56,89,360. In the said return, deduction of Rs. 8,52,83,712 was claimed by the assessee under section 80-IA in respect of one of its two power generating units, namely, turbine power generating unit. During the course of assessment proceedings, it was noticed by the Assessing Officer that the entire power generated by the said unit is consumed by the pig iron manufacturing unit of the assessee- company. According to him, the assessee was not entitled for deduction under section 80-IA in respect of the captive power plant on the ground that a person could not undergo any commercial transaction with himself. He, therefore, disallowed the claim of the assessee for d....
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....ation, the assessee-company had received a sum of Rs. 11,61,154 under the sales tax remission arrangement as incentive for expansion/modernisation carried out by it. The said incentive was granted under the West Bengal Incentive Scheme, 1983, in respect of industrial units of large and medium scale, set up in the State of West Bengal. In the return of income, this amount of incentive was claimed to be exempt by the assessee being in the nature of capital receipt. Reliance in support of this claim was placed on the decision of the hon'ble Calcutta High Court in the case of CIT v. Balarampur Chini Mills Ltd. [1999] 238 ITR 445 (Cal) as well as the decision of the Special Bench of the Income-tax Appellate Tribunal in the case of Deputy CIT v. Reliance Industries Ltd. reported in [2005] 273 ITR (AT) 16 (Mum) [SB] ; [2003] 88 ITD 273 (Mum) [SB]. It was explained by the assessee before the Assessing Officer that the subsidies in the form of sales tax remission were directly related to expansion of the undertaking, sales, investment of fixed capital and the same, therefore, was a receipt of capital in nature. This stand of the assessee was not found acceptable by the Assessing Officer....
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....uction on account of leave encashment on provision basis. 10. In the profit and loss account filed along with its return of income for the assessment year 2005-06, the assessee-company had debited a sum of Rs. 21,66,000 on account of provision for leave encashment and the said amount was added back in the computation of total income as per clause (f) of section 43B as the same was not paid before the due date of filing of the return of income for the year under consideration. During the course of appellate proceedings before the learned Commissioner of Income-tax (Appeals), the assessee, however, raised an additional ground claiming deduction on account of leave encashment on provision basis. Although the said additional ground was admitted by the learned Commissioner of Income-tax (Appeals), he disallowed the claim of the assessee for deduction on account of leave encashment on provision basis on the ground that deduction on account of leave encashment could be allowed only on payment basis as per clause (f) of section 43B. He also took note of the interim order passed by the hon'ble Supreme Court in the case of Exide Industries Ltd., wherein the operation of section 43B(f) w....
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....ad suffered a loss, whereas the other captive power plant, namely, turbine generating power unit had earned profit. In the return of income, the assessee-company had claimed deduction under section 80-IA in respect of profit of the turbine generating unit without setting off the loss of the diesel generating unit against the said profit. According to the Assessing Officer, his computation of deduction under section 80-IA made by the assessee-company was not in accordance with the provision of section 80AB as the loss of the diesel generating unit as per the said provision was required to be set off with the profit of the turbine generating unit for the purpose of computing deduction under section 80-IA. The learned Commissioner of Income-tax (Appeals), however, did not approve this stand of the Assessing Officer by relying on the decision of his predecessor in the assessee's own case for the assessment year 2003-04, wherein a similar issue was decided in favour of the assessee and the said decision was accepted by the Department by not raising this issue in the appeal filed before the Tribunal for the assessment year 2003-04. 16. We have heard the arguments of both the sides o....
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....vestment in shares must have been made by the assessee out of interest-bearing funds. On appeal, the learned Commissioner of Income-tax (Appeals) deleted the disallowance made by the Assessing Officer on account of interest after having found that the investment in shares was entirely made by the assessee out of its own funds and the borrowed funds were not utilised for making such investment. As regards the disallowance made under section 14A by the Assessing Officer to the extent of 0.5 per cent. of the common and general expenses, the learned Commissioner of Income-tax (Appeals) followed the consistent stand taken by the Kolkata Benches of this Tribunal in several cases to restrict the same to 1 per cent. of the dividend income. Accordingly, the disallowance of Rs. 16,76,000 made by the Assessing Officer under section 14A was restricted by the learned Commissioner of Income-tax (Appeals) to Rs. 34,750. 19. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the disallowance made by the Assessing Officer under section 14A on account of interest amounting to Rs. 8,00,000 has been deleted by th....
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....mmissioner of Income-tax (Appeals) dated March 1, 2012. 22. As regards grounds Nos. 1, 2 and 3 of the Revenue's appeal for the assessment year 2007-08, it is observed that the issue involved therein relating to the deletion by the learned Commissioner of Income-tax (Appeals) of the addition of Rs. 16,15,08,683 made by the Assessing Officer on account of disallowance of the assessee's claim for deduction under section 80-IA is similar to the one involved in ground Nos. 1 and 2 of the Revenue's appeal for the assessment year 2005-06 which has already been decided by us in the foregoing portion of this order. Following our conclusion drawn on the similar issue in the assessment year 2005-06, we dismiss grounds Nos. 1, 2 and 3 of the Revenue's appeal for the assessment year 2007-08. 23. As regards grounds Nos. 4 and 5 of the Revenue's appeal and ground No. 2 of the assessee's appeal for the assessment year 2007-08, it is observed that the common issue involved therein relating to the disallowance under section 14A is similar to the one involved in ground No. 2 of the assessee's appeal and ground No. 4 of the Revenue's appeal for the assessment year 200....
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....th the sides, this issue involved in ground No. 6 of the Revenue's appeal for the assessment year 2007-08 is squarely covered, inter alia, by the decision of the co-ordinate Bench of this Tribunal in the case of Goetze (India) Ltd. (supra), wherein the similar addition made to the book profit of the assessee-company computed under section 115JB on account of disallowance of expenses made under section 14A was held to be unsustainable by the Tribunal holding that the provisions of section 14A could not be imported into clause (f) of Explanation 1 to section 115JA. Respectfully following the said decision of the co-ordinate Bench of this Tribunal in the case of Goetze (India) Ltd., we uphold the impugned order of the learned Commissioner of Income-tax (Appeals) giving relief to the assessee on this issue and dismiss ground No. 6 of the Revenue's appeal. 27. In grounds Nos. 7 and 8 of its appeal for the assessment year 2007-08, the Revenue has challenged the action of the learned Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 3,15,00,000 made by the Assessing Officer by way of disallowance of expenditure incurred on railway sidings. 28. During the year ....
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....essee, inter alia, by the decision of the hon'ble Gauhati High Court in the case of CIT v. Bongaigaon Refinery and Petro-chemicals Ltd. (supra), wherein it was held by relying on the decision of the hon'ble Supreme Court in the case of Associated Cement Companies Ltd. (supra) that the amount incurred by the assessee for construction of railway sidings and track outside the refinery complex was a revenue expenditure in the year in which it was incurred since the said expenditure did not result in bringing into existence any capital asset for the assessee. Respectfully following the said decision of the hon'ble Gauhati High Court in the case of CIT v. Bongaigaon Refinery and Petro-chemicals Ltd. (supra), we uphold the impugned order of the learned Commissioner of Income-tax (Appeals) giving relief to the assessee on this issue and dismiss grounds Nos. 7 and 8 of the Revenue's appeal for the assessment year 2007-08. 30. As regards ground No. 1 raised in the appeal of the assessee for the assessment year 2007-08, it is observed that the issue involved therein relating to the claim of the assessee for deduction on account of leave encashment amounting to Rs. 24,87,000 o....
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....sallowance made by the Assessing Officer on account of interest under section 14A has been upheld by us after having found that the assessee was having sufficient own funds to make investment in shares and the interest bearing borrowed funds had not been utilised for making such investment. Following our conclusions drawn in the assessment years 2006-07 and 2007-08, we uphold the impugned order of the learned Commissioner of Income-tax (Appeals) deleting the disallowance made by the Assessing Officer on account of interest under section 14A. 35. As regards the disallowance made by the Assessing Officer under section 14A on account of common and general expenses, the learned Commissioner of Income-tax (Appeals) held that rule 8D of the Income- tax Rules being made applicable to the assessment year 2008-09, such disallowance is required to be made to the extent of 0.5 per cent. of average value of investment as per the said Rule. Accordingly, the disallowance made by the Assessing Officer under section 14A on account of common and general expenses to the extent of Rs. 2,91,260 by applying rule 8D was confirmed by the learned Commissioner of Income-tax (Appeals). At the time of heari....
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....mpany to Pattaya. In this regard, the explanation offered by the assessee that the said visit was for attending Tata Quality Management Convention held at Pattaya was not found acceptable by the Assessing Officer as, according to him, Pattaya was a world famous tourist spot, where no business related activities could take place. The learned Commissioner of Income-tax (Appeals), however, did not agree with this stand of the Assessing Officer and deleted the disallowance made by the Assessing Officer out of the foreign travel expenses after having found that the Tata Quality Management Meet is an annual Tata Business Excellence Convention in which hundreds of officials from various Tata group companies meet in pursuit of business excellence. He also noted that the main agenda of such meet was to make the employees of the Tata group of companies aware with the latest developments in the whole world. Accordingly, he held that the expenditure incurred on foreign travel to attend such convention organised at Pattaya was allowable business expenditure. 39. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observe....