TaxTMI 
TaxTMI 
2017 (1) TMI 1435
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....st of Rs. 37, 72,463/- by applying average cost of borrowing in respect of interest free advances given for business transaction. Ld. CIT (A) ought to have deleted disallowance as appellant has sufficient interest free funds. It be so held now. 4. Ld. CIT (A) erred in law and on facts in confirming write off of business advances of Rs. 36, 21,619/-. Ld. CIT (A) ought to have allowed same as it is given for business purpose. It be so held now. 5. Ld. CIT (A) erred in law and on facts in confirming loss due to fire of Rs. 2, 34, 97, 227/- ignoring various evidences place on records by the appellant. Ld. CIT (A) ought to have deleted disallowance considering submissions of the appellant. It be so held now. 6. Ld. CIT (A) erred in law and on facts in confirming Rs. 1,14,785/- in respect of advances for expenses. Ld. CIT (A) ought to have allowed write off of same as per various judicial pronouncement. It be so held now. 7. (a) Ld. CIT (A) erred in law and on facts in directing AO to allow weighted deduction of 150% on research and development expenses toward capital account of Rs. 3,73,29,509/- in respect of which is duly certified by DSIR. Ld. CIT (A) ought not to have giv....
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....r diminution in value of investment by invoking Clause (i) to Explanation of Section 115JB of the Act (a)(iii) Both the lower authorities erred in law and on facts in making double addition of Rs. 36,21,619/- (correct figure Rs. 36,27.619/-) as addition mentioned on page 27 of assessment order under head provision for diminution in value of investments of Rs. 74,46,037/-comprises of following items: Particulars Amount Total (a) Diminution in value of investment Rs. 36,06,638/- Rs. 36,06,638/-(P/B Page 22) (b)(i)Provision for doubtful debts Rs. 36,27,6 19/- (addition wrongly made as Rs. 36,21, 619/- as per ground 13(a) above) (b)(ii)Provision for doubtful debts Rs. 2,11,780/- (No addition made by AO) Rs. 38,39,399/-(P/B Page 22) (TOTAL) Rs. 74, 46,037/- Ld. CIT (A) ought not to have confirmed double addition made by the AO. (b)Ld. CIT (A) also erred law and on facts in confirming addition of Rs. 1,73,79,923/- disallowed u/s 14A by invoking Clause (f) to Explanation of section 115JB of the Act." 3. The assessee' first substantive ground pleads that CIT(A) has erred in affirming Assessing Officer's action ma....
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.... order confirming disallowance/addition of write of business advances of Rs. 36,21,619/-. The assessee's case is that it had given the same only for business purposes. The Assessing Officer was of the view that it had claimed the impugned deduction in the nature of a provision made for doubtful debts. Both the lower authorities conclude that neither the assessee has written off these amounts nor considered the same in computing income of any preceding assessment year. The assessee then raises an alternative contention to treat the above sum as business loss under section 28 of the Act. The CIT(A) declines this plea after holding that the assessee has failed to discharge its onus in proving beyond doubt that the above loss was incidental to running of its business without any sign of recovery. 6. Learned counsel representing assessee vehemently argues in support of its alternative plea of business loss claim. He however states that the lower authorities have not even adverted to nature of assessee's advances as to whether the same amounts to a trading loss or business loss nor do they discuss each and every advance had recorded in books of accounts. The Revenue is fair enough in ....
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.... by the insurance company. Before that there cannot be any loss. Even if the value of inventory is reduced due to fire, the difference has to be accounted for against the insurance company. Whatever amount is not recovered from insurance company, the same can be claimed as business loss in the year in which the claim of the appellant is crystallised i.e. financial year 2007-08. In the current year, no loss was crystallized. Only fire took place which did not result in business loss since inventory is covered by fire insurance. Therefore I'm fully in agreement with the assessing officer that there was no business loss due to fire during the year. The loss was of the insurance company and only after settlement of the claim; appellant is entitled to claim the difference as loss. Accordingly the disallowance made by the assessing officer is confirmed." 9. Heard both sides. Case files perused. Page no.28 of the paper book contains assessee's Notes on Account that it had charged the above amount of loss of material to profit & loss account pending its insurer's approval. Both the lower authorities hold that assessee's loss claim is yet to be crystallised pending insurance claim. W....
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....used by fire would be considered in the year in which the insurance company has settled the claim is vacated. The Assessing Officer is directed to consider the claim of the assessee in this behalf in the year under appeal. 9. We find that both the authorities below have decided the issue on the short ground that the loss claimed by the assessee was not liable to be allowed in the year under appeal but in the year in which its claim is settled by the insurance company. They have however not adjudicated upon the correctness of the computation of loss/claim as submitted by the assessee before them. We therefore direct the Assessing Officer to consider and adjudicate upon the claim of the assessee on merits in the year under appeal, after giving reasonable opportunity of hearing to the assessee." We draw support from the above extracted coordinate bench decision to observe that the assessee is very much entitled to claim the impugned loss caused by fire in this assessment year itself and the same is indeed in the nature of an accrued liability. The Assessing Officer is accordingly directed to allow the impugned claim of loss caused due to fire amounting to Rs. 2.34 crores in ques....
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....ions, the impugned weighted deduction under section 35(2AB) ought not to be denied. The CIT(A) on the other hand concludes that the assessee had failed to get the expenses verified in course of remand proceedings. 14. We have heard both the parties reiterating their respective stands. Case record indicates that the above prescribed authority has further approved the assessee's inhouse research and development facilities in form 3M on 21.7.2005 as effective from 1.4.2005 to 31.3.2007. This follows form 3CL (supra) approving expenses of Rs. 11.95 crores. We notice in this background that hon'ble jurisdictional high court in CIT Vs. Claris Lifesciences (2010) 326 ITR 251 (Guj) holds in such circumstances that the impugned weighted deduction under section 35(2AB) would not be disallowed for the purpose of expenditure prior to issuance of form 3CM. We repeat that the assessee's case rather stands on a better footing since the impugned expenditure is post-facto form 3CM as approved in form 3CL hereinabove qua almost the entire expenditure amount. We further find that a coordinate bench in ACIT Vs. Torrent Pharmaceuticals, ITA 3569/Ahd/2004 decided on 13.9.2009 also holds that once an ....
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....1,09,56,337/- to the extent of exempt income of Rs. 7680/- only. The assessee's additional ground hereinabove is accordingly rendered academic. 19. The assessee's next substantive ground avers that both the lower authorities have erred in making disallowance of section 80IB deduction claim of Rs. 1,50,78,467/- representing excise refund received. The Assessing Officer declined the above deduction relief mainly on the ground that the amount in question of excise refund could not be said to have been derived from the eligible undertaking as per hon'ble apex court decision in Liberty India Ltd. Vs. CIT, 317 ITR 218 (SC). The CIT(A) confirms the above view. He concludes that assessee's excise refund arises on account of incentive only which could not be interpreted to have been derived its industrial undertaking. 20. Heard both sides. Case file perused. There is hardly any quarrel that the assessee has claimed the impugned 80IB deduction qua the excise refund amount received. The CIT(A) treats it as a case of government scheme offering incentives. We notice in this factual background that hon'ble apex court in a very recent judgement of CIT Vs. Meghalaya Steels Ltd. Civil Appeal ....
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....ational, ITA 452/2013 decided on 30.6.2014 upholds tribunal's order concluding that such non-compete fees results in acquisition of business of commercial right under section 32(1)(ii) of the Act entitled for depreciation relief. We thus accept assessee's arguments and direct the Assessing Officer to allow depreciation claim on assessee's above non-compete fees as per law. 23. Assessee's next substantive ground no.12 has four components. The first one assails the correctness of the above appellate order confirming addition of Rs. 36,21,619/- (correct figure stated to be Rs. 36,27,619/-) of provision of doubtful debts by invoking section 115JB explanation 1 (i) of the Act. We find that hon'ble jurisdictional high court in Tax Appeal no.1775/2008 CIT Vs. IPCL Ltd. decided on 19.7.2016 has held that such a provision is not to be added under section 115JB explanation 1(c) of the Act. Learned departmental representative however submits that their lordships have now ordered a full bench constitution in Tax Appeal No.749 of 2012 CIT Vs. Vodafone Essar Gujarat Ltd. as per order dated 23.8.2016. We thus deem it proper in the background of facts that the Assessing Officer shall keep the i....