TaxTMI 
TaxTMI 
2016 (7) TMI 392
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....the assessee was taken up for scrutiny and assessment u/s 143(3) was completed by Assessing Officer (hereinafter referred to as 'AO') vide its order dated 20.01.1999 wherein certain claims were disallowed thereby reducing the assessed loss to Rs. 7,85,36,585/-. The assessee preferred an appeal u/s 246 against the said order to CIT(A) vide appeal no CIT(A)XXXII/IT/99-00. The appeal was disposed-off by CIT(A) vide its order dated 25.02.2003 partly allowing the claims and submissions of the assessee. Similarly, the assessee filed its return of income for Assessment Year 1997-98 disclosing net loss of Rs. 8,58,87,283 on 28.11.1997 the assessment of which was also completed u/s 143(3) vide AO's order dated 21.02.2000. Certain adjustments and disallowance were made by the AO in the said order. Consequently, the income of the assessee was assessed at Rs. 4,83,44,099/-. The assessee carried the matter in appeal before CIT(A) who disposed-off the same vide its order dated 05.02.2003 partly allowing the claim of the assessee. Aggrieved by the above orders, both department and the assessee are in appeal before us on various grounds which we take up one by one. Department's Appeal ITA No. 3....
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....agrees upon demand by Hindoostan to pay to Hindoostan the sum of Rs. 1 Crore (Rupees One crore Only) by a Banker's Pay Order drawn in favour of Hindoostan on a scheduled Bank in Bombay to enable Hindoostan to obtain suitable alternate accommodation of its own choice at such place and on such terms as it may deem fit. 2. Simultaneously against the receipt of the aforesaid amount of Rs. 1 Crore (Rupees One crore only) as above, Hindoostan shall handover to Malik a letter addressed by Hindoostan to the landlord of the said premises Shi Mahendra Popatlal Shah (HUF) surrendering its tenancy and handing over vacant possession of the said premises with immediate effect." 6. We have heard the rival contentions and also perused the material on record. The assessee has received the said payment from a third party. The terms of the agreement clearly shows that the assessee has given up its right of tenancy in favor of the third party by accepting a certain sum of money. The possession of the premises has been parted away and the transaction is being recognized by the landlord. Hence, the assessee has surrendered the tenancy rights against certain sum of money, no matter whether th....
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....ore us. The ld. DR has supported the stand taken by the AO and on the other hand, the assessee has supported the view of the CIT(A) and relies on the judgment in the case of 'CIT V Bhor Industries Ltd.' (2003) 264 ITR 180 (Bombay). We have heard the contention of both the sides and the perused case law cited before us. We hereby quote the relevant portion of ratio of decision in the case of "CIT v Bhor Industries Ltd." (supra) delivered by jurisdictional Bombay High Court:- "It is well settled that, ordinarily, revenue expenditure, which is incurred wholly and exclusively for the purposes of business, must be allowed in its entirety in the year in which it is incurred and it cannot be spread over a number of years even though the assessee has written it off in its books over a period of years. It is only in cases of special type of assets that the spread over is warranted. In the case of Empire Jute Co. Ltd. v. CIT, it has been held by the Supreme Court that there are cases where the test of enduring benefit may break down. In that case, expenditure was incurred to remove certain restrictions on the number of working hours so that the assessee could increase its profits. T....
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.... a portion of the said expenditure in the books of account yet, claimed the same in full in computation sheet. As held by the Hon'ble Supreme Court that such course of action is permissible under law as the assessee has claimed the expenditure in the year in which these were incurred, hence, respectfully following the above judicial pronouncements, we affirm the view of the CIT(A) in this regard. Ground No.3 13. Ground No.3 relates to the claim of depreciation allowance. An amount of Rs. 13,90,752/- was disallowed by the AO during the course of proceedings u/s 143(1)(a) by way of prima facie adjustment and applying the same logic, AO disallowed the same. In the appeal filed against the said intimation passed u/s 143(1)(a) and after giving opportunity of being heard to the assessee, the CIT(A) deleted the same. The stand of the CIT(A) has been contested by the Revenue. 14. We have been informed that this issue has already been decided in favor of the assessee by ITAT Mumbai in ITA No. 286/Mum/2003. The claim of the assessee has been found to be correct as per the decision of Tribunal in this case. Hence, this issue is already settled in favor of the assessee and no interfer....
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....ses. The detail of expenses incurred formed part of the Audit Report and assessee made suomoto disallowances to the extent of Rs. 9432.30 in the same.The A.O. disallowed a further sum of Rs. 5 Lakhs under the head travelling expenses on the presumption that some incidental expenses have been incurred during travelling. The relevant portion of AO order reads as follows: "10. In working out disallowance on travelling the assessee has not considered the following points- A) incidental expenses while travelling B) Travelling expenses on non residents In my opinion, there I see no reason why both these items should not be considered in travelling expenses. Since, details of these expenses are not available, I estimate the expenditure at Rs. 5,00,000/- and add back the same." 20. The Ld. CIT(A) deleted the same on the ground that the adequate details of the same were already available in the return of income vide annexure 8 to the Tax audit report and the auditor have quantified the inadmissible expenses. The AO neither examined the same nor pointed out any discrepancy and made adhoc deduction. The DR contended that in view of the connectivity of th....
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....also book entries are not determinative of the income and expenditure to be taxed or allowed in the Income Tax Assessments. CIT(A) noted that the case law relied upon by the assessee pertained prior to introduction of Section 35AB and accordingly he supported the AO's action of allowing only 1/6th of said expenditure as per the provisions of Section 35AB.Before us, the assessee has assailed the order of CIT(A) in this regard and relied upon various case laws in support of his contention that such expenditure being revenue in nature should be allowed in full while computing the taxable income of the assessee. The DR supported the view of CIT(A) in this regard. 25. We have heard the rival contentions and gone through the following case laws as cited by the assessee:- -Commissioner of Income Tax V TTG Industries Ltd 2012 24 taxmann.com 129 (Madras High Court) -Indian Petrochemicals Corporation Ltd V Deputy commissioner of Income Tax 2002 81 ITD 263 (ITAT Ahm.) -Deputy Commissioner of Income Tax V Metalman Auto (P) Ltd 78 ITD 327 ITAT Chandigarh. 26. In particular, the following observation in the case of Deputy Commissioner of Income Tax V Metalm....
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....in nature are allowed in full as per various judicial pronouncements as cited above. The same are allowable in full being revenue in nature and hence, the appeal is decided in favour of the assessee. Ground No. 2 29. Ground No.2 relates with disallowance u/s 43B in respect of Sales Tax. An amount of Rs. 1,13,272/- was claimed by the assessee which remain unpaid by the stipulated date and accordingly, added to the income of the assessee by AO by invoking Section 43B which was affirmed by the CIT(A). During submissions, AR, in the alternative, prayed before us, to issue directions to AO to allow the same in the year of payment. The DR had no objection against the same. Accordingly, AO is directed to allow the same in the year of payment as per the request of the assessee. Ground No. 3 30. This issue relates with disallowance of Guest House Expenditure. An amount of Rs. 28,004/- were claimed by the assessee and the same were found to be incurred on guest house. The AO added the same to the income of the assessee by following the stand taken in the earlier years. The same were affirmed by CIT (A) on the basis of judicial pronouncements. The Ld. AR submitted that the identic....
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....(A) has erred in deleting the disallowance of expenses on account of amortized leased hold land. 36. All these issues are identical issues which are raised by the department in Assessment Year 1996-1997. The same has already been adjudicated in preceding paragraphs and in view of our findings given in preceding paras of this order, this appeal of the Revenue is hereby dismissed. Assessee's Appeal ITA No. 3823/M/03 for Assessment Year 1997-1998 Ground No.1 37. Ground No. 1 relates with disallowance of loss on damaged uninstalled machinery. The assessee had incurred a loss of Rs. 4,11,778/- on account of damage of machinery purchased in earlier years. The machinery was awaiting installation. The full cost of the machinery came to Rs. 32.51 Lacs against which the insurance amount received was set off and the balance was debited to Profit & Loss Account. The loss was sought to be set off by the assessee u/s 55 against the income from capital gain on sale of shares. The said adjustment was not permitted by the AO on the ground that there was no actual transfer of asset and therefore the same was not covered under the head capital gains. Resultantly, this loss was added back to ....