TaxTMI 
TaxTMI 
2016 (2) TMI 1146
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.... the assessment years 2007-08 and 2008-09. For both the years, the revenue is aggrieved by the decision of ld. CIT(A) in deleting the addition made under section 43B of the Income Tax Act, 1961. 4. We heard the parties and perused the record on this issue. The assessee entered into a contract with M/s Armarous of France for transfer of technical knowhow as well as supply of material/ services etc. for manufacturing of Scorpene Class-Sub-marines. As per the terms of agreement, the liability to pay service tax was placed upon the assessee as service receiver. The AO noticed in AY 2007-08 that the assessee had provided service tax liability of Rs. 104.45 crores in its books of account. But it had actually paid a sum of Rs. 101.21 crores only. Hence, the AO disallowed the difference of amount of Rs. 2.93 crores u/s 43B of the Act. Besides the above, the AO noticed that a sum of Rs. 22.91 crores was disallowed in the immediately preceding year i.e. in assessment year 2006-07 on the ground that the assessee has paid service tax in advance before availing the corresponding services, i.e., the AO took the view that the service tax paid in advance cannot be allowed as deduction and accor....
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.... of Rs. 2.93 crores added by the AO, we notice that the ld. CIT(A) has restored the matter to the file of the AO for considering the same afresh in the light of decision rendered by him in the assessment year 2006-07. Since the matter has been restored to the file of the AO for fresh consideration, we do not deem it necessary to interfere with his order on this issue. 9. In the assessment year 2008-09, the revenue is contesting the decision of ld. CIT(A) in directing the AO to allow the service tax amount of Rs. 17.34 crores claimed by the assessee on payment basis. We notice that the ld. CIT(A) has restored the matter to the file of the AO with a direction to examine the same afresh in the light of the decision rendered by him in the assessment year 2006-07. Hence, we decline to interfere with the order of ld. CIT(A) in this year also as the AO has been directed to examine the issue afresh. 10. We shall now take up the appeals filed by the assessee. The first common issue urged in the appeals filed by the assessee for AY 2004-05 and 2007-08 relates to the disallowance made u/s 14A of the Act. The Ld A.R submitted that the assessee herein is a public sector undertaking and it....
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....t be applicable as per the decision of Hon'ble Bombay High Court in the case of Godrej Boyce Manufacturing Ltd (328 ITR 81). Hence the disallowance u/s 14A has to be computed on a reasonable basis during these years as held in the above said case decided by Hon'ble Bombay High Court. 15. The Ld A.R has pointed out that the assessing officer himself has disallowed a sum calculated at 0.5% of the investments made in shares u/s 14A of the Act in AY 2009-10 and 2012-13. The Ld A.R has also furnished the relevant assessment orders to substantiate his submissions. The disallowance computed at 0.5% works out to about Rs. 3.00 lakhs. Considering the fact that the assessee has made investment in one company only, that the investment was made long back, that the assessee has received dividend from that company only, we are of the view that the disallowance computed at 0.5% of the investment value of shares is reasonable, in the facts and circumstances of the case. Accordingly, we set aside the order of Ld CIT(A) on this issue passed for AY 2004-05 and 2007-08 and direct the AO to compute the disallowance at 0.5% of the value of investment in these two years also. 16. The next common is....
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....ssing officer has included the amount of deposits kept with Port authorities, but the same would not fall under the category of tax, duty, cess or fee specified in sec. 145A of the Act. 20. We heard ld D.R on this issue. When a specific query was asked to ld A.R as to whether the assessee has prepared financial statements both under inclusive method and exclusive method to demonstrate that there was no change in the profit under both the methods, the ld A.R submitted that the assessee may be provided with an opportunity to furnish such kind of statement. Under the accounting principles, both inclusive and exclusive method of accounting for tax, duties etc., are acceptable methods and they do not affect the profitability of the assessee. The assessee has followed exclusive method, where as the provisions of sec. 145A mandates that the inclusive method of accounting the tax, duties etc., should be followed. In such a situation, in our view, the assessee should have prepared financial statements under inclusive method also and should have satisfied the assessing officer that the profitability shown by it would turn out to be the same under inclusive method also. In the instant case....