TaxTMI 
TaxTMI 
2015 (6) TMI 1084
X X X X Extracts X X X X
X X X X Extracts X X X X
.... binding judgments. The order of the Tribunal in assessee's own case for assessment years 2003-04, 2005- 06 and 2006-07 are relevant. For the sake of convenience, the said issues and the details of the relevant orders of Tribunal are extracted as under: Gr.No Issues Remarks 2.1 - 2.2 Disallowance of depreciation on windmills Allowed by ITAT in favour of assessee in ITA No.1964 of 2006 AY 2003-04 & ITA No. 1542 &. 1543 of 2010 for A.Y 2005-06 & 2006-07 3.1 - 3.2 Disallowance u/s 40(a)(ia) on catering charges Allowed by ITAT in favour of assessee in ITA No 1542 and 1543 of 2010 for the assessment years 2005-06 and 2006-07 4.1 - 4.4 Disallowance of FCB issues expenses CIT Vs Secure Meters - 2009 TIOL - 63 SC 5.1 - 5.8 Disallowance of preference share issue expenses u/s.35DAllowed by ITAT in favour of assessee in ITA No. 1382 of 2010 for the assessment year 2006-07. Alternatively the expenditure should be added to cost of oil rig. 6.1- 6.3 Disallowance u/s.14A r.w.Rule 8D Rule 8D is not applicable for this assessment year 7.1- 7.5 Disallowance u/s 40(a)(i) on payments made to non residents Allowed by ITAT in favour of assessee in ITA No 1542 and 1543 of 2010 for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowing the decision of the Hon'ble ITAT, the addition is deleted and the ground is allowed." 7. Considering the above facts, we find that the facts and issue are similar in the year under consideration and therefore, the same has to be decided in favour of the assessee by following the order of the Tribunal in assessee's own case (supra). Accordingly, the ground raised by the Revenue is dismissed. 8. The third issue relates to allowability of FCB issue expenses. The details of this issue are discussed in paragraphs 9.2.1 and 9.2.2 of the order of the CIT(A). The CIT(A) granted relief to the assessee relying on the binding Hon'ble Supreme Court's decision in the case of India Cements Ltd vs CIT, 60 ITR 52, which is relevant for the proposition that the expenditure incurred for obtaining the loan is meant for securing the use of money for a certain period and is always treated as revenue expenditure irrespective of the purpose for which the funds are raised. The expenses which are incurred for obtaining the loan is a revenue expenditure and the Hon'ble Madras High Court judgment in the case of South India Corporation (Agencies) Ltd , 290 ITR 217, is relevant. The CIT(A)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....decision of the Apex Court in the case of India Cements Ltd (supra). The Hon'ble Supreme Court in the case of India Cements Ltd. (supra) observed as follows: "We are unable to see the relevance of this principle to the facts of the case before us. That was a case of raising a loan and not of raising additional capital. While raising a loan does not add to the capital base, raising of capital does." Further, the Hon'ble Madras High Court in the case of South India Corporation (Agencies) Ltd, 290 ITR 217 has also clearly upheld the decision of the Tribunal which held that issue of shares is a future event which may or may not happen. Since the expenditure incurred at present was towards obtaining a loan, it was revenue in nature. It also referred to the decisions of the Apex Court in India Cement Ltd and of the Delhi High Court in CIT v. Thirani Chemicals Ltd, 290 ITR: 196 (Del). 9.2.2 It is clear from the principles laid down in the above decisions that an expenditure incurred to obtain a debt is allowable. The FCCB issued by the appellant carries a fixed rate of interest and the nomenclature of the bonds by itself signifies that these instruments are debt instruments and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Tribunal in assessee's own case in I.T.A.No. 1382/Mds/2010 for assessment year 2006-07. We reproduce para 10.2 of the CIT(A)'s order as under: 10.2 I have carefully considered the facts of the case and the submission of the Id. AR. I have also gone through the decisions relied on by the AO and AR. Similar issue had come up for consideration in appellant's own case for A.Y. 2006-07. After considering the facts and rival submissions, it was held in ITA No.573/08**09/A.1I1 dated 23.06.2010 for A.Y. 2006- 07 that the expenditure on issue of shares is not deductible because it is directly related to the expansion of the capital base of the company. The disallowance of the AO was sustained. However, since the appellant is engage in the business of hiring rigs as well as the business of drilling and other oil field services, hydrocarbon exploration and production, it was held that these activities would fall within the ambit of "mining" under clause (aa) (iv) of sub-section (7) of section 72A of the Act which defines "industrial undertaking". Having decided that the appellant qualifies as an industrial undertaking, it was further examine as to whether it satisfies the conditions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....During assessment proceedings, the Assessing Officer invoked the provisions of section 14A as well as Rule 8D of I.T Rules and quantified the disallowance at Rs. 5,48,81,584/-. Otherwise, the assessee quantified the disallowance should not exceed Rs. 17,415/-. 15. In the first appellate proceedings, the CIT(A) held that the provision of Rule 8D of I.T Rules does not apply to the assessment year under consideration i.e 2007-08. However, as seen from para 11.2.4 of the CIT(A)'s order that relying on the Hon'ble Bombay High Court's judgment in the case of Godrej & Boyce Mfg. Co. Ltd vs DCIT , 328 ITR 81, he has restricted the disallowance to 5% of the exempt income. 16. On hearing both the parties and on perusal of para 11.2.4 of the CIT(A)'s order, for completeness of the order, we find it relevant to reproduce the same as under: "11.2.4 It is thus clear from the discussion made above that investment in foreign subsidiary has to be excluded for making disallowance u/s 14A. Further, no interest can also be disallowed for the reasons given in para 11.2.2. However, as stated earlier, the Hon'ble Bombay High Court in the case of Godrej & Boyce (supra) has held that even prior....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anting relief to the assessee. Therefore, we find it relevant to extract para 12.2 here as under: "12.2 I have carefully considered the facts of the case and the submission made by the ld. AR. I have also gone through the decisions relied on by the A.O and AR. Similar issue had come up for consideration before the CIT(A) in appellant's own case for A.Ys 2005-06 and 2006-07. After considering the facts of the case, reasons given by the A.O, submission of the assessee and the decisions on the subject issue, the issue was decided in favour of the appellant in I.T.A.No. 569/08-09 and 573/08-09 dated 23.6.2010 for A.Ys 2005-06 and 2006-07. On further appeal by the department, the Hon'ble ITAT has upheld the order of the CIT(A) in I.T.A.No. 1542 & 1543/Mds/10 dated 1507.2011 in appellant's own case for A.Ys 2005-06 and 2006-07. It concluded as under: ...................... ........................... Since the facts are similar, respectfully following the above decision, the addition is deleted and the ground is allowed." 20. Considering the above settled nature of the issue in the assessee's own case in the earlier assessment years, we are of the opinion that the order of the CI....