TaxTMI 
TaxTMI 
2018 (2) TMI 1272
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.....2010 for assessment years 2004-05 to 2008-09 respectively. Shri Deepaka Chopra & Mrs. Manas Vini Bajpai, Ld. Authorized Representative appeared on behalf of assessee and Shri G.Hangshing, Ld. Departmental Representative appeared on behalf of Revenue. 2. All the appeals are disposed off by this common order for the sake of convenience. First we take up Revenue's appeal in ITA No.343/Kol/2009 for A.Y. 04-05. 3. Revenue has raised the following grounds of appeal. "1. That the CIT(Appeal) erred on act and in law in allowing the assessee to adjust unabsorbed depreciation of Rs. 6.67 crore in computing Book Profit u/s. 115J Beventhough the provisions are unambiguous in their ambit." 4. Sole issue raised by the Revenue in this appeal is that ld. CIT(A) erred in adjusting the unabsorbed depreciation of Rs. 6.67 crores while computing the book profit under section 115JB of the Act. 5. Briefly stated facts are that the assessee in the present case is a Limited company and engaged in the business of cellular mobile phone service. The assessee for the year under consideration has filed its return of income on 01.11.2004 declaring total income of Rs. 1,54,29,940/- un....
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....liance thereto the assessee submitted that "8. The assessee has submitted its explanation vide its letter dated 30/8/2006. In respect of the issue mentioned in paragraph 6(a) above, the assessee has stated that he provisions of section are not clear and therefore, a view favourable to the assessee must be accepted. It has relied on Circular No. 26 dated 7/7/1955 in support of its claim." However the AO disregarded the contention of the assessee for the claim made of the unabsorbed depreciation of Rs. 6,67,29,000.00 by observing as under: "the assessee will get the benefit of the "loss brought forward excluding depreciation" unabsorbed depreciation only when both of them are present. Even otherwise, there are several material differences between old section 115J and Section 115JB. 10(b) In view of the above it is held that the lower of "loss excluding depreciation "unabsorbed depreciation for AY 2002-03 will be nil. Therefore, the aggregate of lower of "loss excluding depreciation"/ unabsorbed depreciation upto AY 2002-03 will be Rs. 30,67,83,000/- 10(c) Therefore, an amount of Rs. 6,67,29,000/- is added to book profit." 7. Aggrieved assessee preferr....
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....triction of any sort. It is only when profits are positive after providing for current year depreciation that the provision of clause (iii) of Explanation 1 of Section 115JB(2) of IT Act are invoked. Here again the cumulative brought forward losses and cumulative unabsorbed depreciation as per books are required to be compared before allowing the set off. Such cumulative unabsorbed depreciation will include the unabsorbed depreciation of Rs. 6.67 crore of Assessment Year 2002-03 for the purpose of clause (iii) of Explanation 1 of section 115JB(2) for AY 2004-05. 6. In view of the above discussion, impugned order hold that the argument of appellant is correct. In AY 2002-03 there is positive profit before depreciation and the entire profit is set off by the depreciation of that year itself and there is still unabsorbed depreciation of Rs. 6.67 core after such setting off. It is not justified on part of assessing officer to invoke explanation (b) to clause (iii) of Explantion1 of 115JB(2) for the purpose of restricting the quantum of unabsorbed depreciation of Assessment Year z2002-03 from Rs. 6.67 crore to Nil when such unabsorbed depreciation was not used for setting off a....
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....of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2001, is less than seven and one-half per cent of its book profit, 68[such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of seven and one-half per cent]. (2)------------ Explanation.-For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by- (a) -------- (b) (c) (d) (e) (f) if any amount referred to in clauses (a) to (f) is debited to the profit and loss account, and as reduced by- 71[(i) ---- (ii) 72[(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation.-For the purposes of this clause,- (a) the loss shall not include depreciation; ....
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....ase and in law, the learned CIT(A) erred in confirming the action of the learned AO in allowing depreciation at the rate of 25 per cent on computer, instead of 60 per cent as claimed by the Appellant. 3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not allowing deduction of Rs. 569,248, being contribution paid to Life Insurance Corporation of India in respect of gratuity fund. 4. As interest under section 234B of the Act is not leviable in case of computation of income under the provisions of Minimum Alternate Tax, the learned AO be directed to cancel interest charged under section 234B of the Act. All the above grounds are without prejudice to each other. The appellant craves leave to add, amend, vary omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. The Appellant prays that appropriate relief be granted based on the said grounds of appeal and the facts and circumstances of the case." 11. First issue raised by assessee in this appeal is that ld. CIT(A) erred in confirming the order of AO by not adjusting ....
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..... 8,83,81,000/-. A copy of this report is enclosed which forms a part of this order as Annexure. Surprisingly, the assessee company has changed their Auditor in A.Y 2004-05 for giving report u/s 115JB. In AY 2004-05 one Saswati Ghosh & Company has given the said report, which is clearly in contravention of the provisions of sub-clause (iii) of explanation below section 115JB(2). 11(d) In view of the above, an amount of Rs. 8,83,81,000/- is added to book profit." 13. Aggrieved, assessee preferred an appeal before ld. CIT(A). The assessee before the ld. CIT(A) submitted that the provisions of the Section 115JB are to be applied at the end of a relevant year and accordingly, the book loss or unabsorbed depreciation as on that date needs to be classified to compute the 'book profits'. Adjustment on account of earlier year's reduction from the unabsorbed depreciation is not called for. The provision of Section 115JB envisages 'the amount of loss brought forward or unabsorbed depreciation, which is less as per books of account'. If in any earlier year, reduction from book profits is made on account of unabsorbed depreciation, no adjustments are made in the books of account of....
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....er where it was clearly shown that the "Profit" of FY 2002-03 of Rs. 8.84 crore is required to be set off against the brought forward depreciation of Rs. 37.35 crore and only the balance unabsorbed depreciation of Rs.37.35 crore - 8.84 crore = Rs.28.51 crore can be carried forward to FY 2003-04. In sum and substance this ground of appellant is same as Ground No.1 of appeal No.501/CIT(A)-VIII/KOL./RNGTE-7/07-08 for A.Y 2005-06 in appellant's own case. This issue has been decided by me against the appellant in AY 2005-06 vide order dated 9/1/2009 for the said appeal. Following my own decision, I hold that claim made in respect of set off of profits of Rs. 8.84 crore in Assessment Year 2003-04 under clause (iii) of the explanation to section 115JB(2) cannot be ignored by the appellant in AY 2004-05, ie, the instant assessment year." Aggrieved by this, the assessee has come up in appeal before us. 14. The ld. AR reiterated the submissions that were made before the ld. CIT(A). The ld. AR relied on the order of Hon'ble ITAT in the case of DCIT Vs. Binani Industries Limited reported in 178 TTJ 658. He stated that the issue may be decided on merit. On the other hand, Ld DR before us ....
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....o in clauses (a) to (f) is debited to the profit and loss account, and as reduced by- 71[(i) ---- (ii) 72[(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation.-For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or] As per the provisions of the above section we note that the assessee is entitled to claim the deduction of brought forward losses or unabsorbed depreciation whichever is less as per the books of accounts. In the instant case before us the assessee has claimed that the profit earned during the assessment year 2003-04 for Rs. 8,83,81,000/- was adjusted against the unabsorbed brought forward losses in the books of accounts. The Ld DR has not advanced any argument to controvert the arguments submitted by the Ld AR. Therefore, we are of the view that the assessee is very much entitled to claim the deduction of the unabsorbed depreciation of Rs. 37,35,12,000/- without adjusting the amount of profit for Rs. 8,83,....
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....lue (WDV for short) would be at Rs.26,07,502/- (65,18,756 - 39,11,254). Accordingly on the WDV of Rs.26,07,502/- assessee would have claimed depreciation @ 60% i.e.Rs.15,64,501/- only. Whereas assessee is entitled for depreciation @ 25% of Rs.26,07,502/- which comes out to Rs.6,51,876/- only. Accordingly, the AO further observed that assessee has claimed excessive depreciation for Rs.9,12,625/- (15,64,501 - 6,51,876). In view of above, AO disallowed the excess depreciation for Rs.9,12,625/- and added to the total income of assessee. 18. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the depreciation was claimed on computers as per the rates specified in the Appendix-1 of the Income Tax Rule, 1962. The assessee without prejudiced to the above also submitted that incase depreciation is allowed @ 25% only then the opening WDV should be accordingly modified as discussed above. However, Ld. CIT(A) allowed the appeal of assessee for statistical purpose by observing as under:- "2. Assessing Officer has followed theism order of A.Y 2003-04 and has allowed depreciation at a rate of 25% instead of 60%. The rate of deprecia....
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....llowed depreciation @ 25% on the computers(s) on the ground that sufficient documentary evidence were not produced by the assessee during assessment proceedings pertaining to the AY 2003-04. The assessee has filed the documents before Ld. CIT(A) which is still sub judice. The AO on the basis of disallowance made in the immediate preceding AY also made similar disallowance on the opening WDV in the year under consideration. 20.1 However, on perusal of impugned appellate order, we note that Ld. CIT(A) in the immediate preceding AY i.e. 2003-04 has directed the AO to verify the necessary records and adjudicate the issue accordingly. As none of the party has brought to our notice about the outcome of the order passed by Ld. CIT(A) in the immediate preceding Assessment Year. Therefore, we are inclined to restore the matter back to the file of AO for fresh adjudication in accordance with law and after providing reasonable opportunity of being heard to assessee and after considering the direction of Ld. CIT(A) issued in the immediate preceding Assessment Year 2003-04. We also note that the ld. CIT-A in the instant case has given very clear & unambiguous direction for adjudication of....
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....me Court in the case of CIT vs. Taxtool reported in 216 taxman 327 (SC) Pr.CIT vs. Rajasthan State Seed Corporation 386 ITR 267 (Raj) and CIT vs. Continental Commercial Co. Ltd 192 ITR 66 (Cal). On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 25. We have heard the rival contentions of both the parties and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. At the outset, we find that the impugned issue is duly covered in favour of assessee and against the Revenue by the judgment of Hon'ble Supreme Court in the case of taxtool (supra), the relevant extract of the judgment is reproduced below:- "Having considered the matter in the light of the background facts, we are of the opinion that there is no merit in the appeal. True that a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the Section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act. (See : S....
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...., the evaluation of the current income and the determination of the assessed income had to be made in terms of the statutory scheme comprising section 115J/115JA. Hence, levying of interest was inescapable." In view of the aforesaid facts and respectfully following the judicial pronouncements relied upon hereinabove, we do not find any infirmity in the order of Authorities Below. Consequently, assessee's ground is dismissed. Therefore, the issue decided accordingly. 27. In the result, assessee's appeal is partly allowed for statistical purpose. Coming to Cross-appeal in ITA 377/Kol/2009 by the Revenue and ITA 357/Kol/2009 by Assessee for the AY 2005-06 28. The Revenue has raised the following grounds of appeal:- "1. That the learned CIT(Appeal) erred on fact and in law in allowing the assessee to adjust unabsorbed depreciation of Rs. 37,35,12,000/- in computing Book Profit u/s.115JB even though the provisions are unambiguous in their ambit. 2. That the learned CIT(Appeal) erred in holding that the assessee was liable to get the benefit of deduction u/s. 80IA to the extent of 100% CIT(Appeal) has also erred in holding that the assessee has the option to ch....
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....ned AO in excluding other receipts amounting to Rs. 765,866 from the profits of the eligible business, while computing deduction under section 80IA of the Act. 4. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in excluding interest income amounting to Rs. 66,96,909 from the profits of the eligible business, while computing deduction under section 80IA of the Act. 5. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the learned AO in not allowing de of Rs. 697,488, being contribution paid to Life Insurance Corporation of India in respect of gratuity fund." First we take up Revenue's appeal ITA 377/Kol/2009 29. The First issue raised by the Revenue in this appeal is that ld. CIT(A) erred in adjusting the unabsorbed depreciation of Rs. 37,35,12,000.00 while computing the book profit under section 115JB of the Act. 30. At the outset it was observed that the impugned issue has already been decided in favour of assessee by this Hon'ble Tribunal in the case of Binani Industries Limited (supra) reported in 178 TTJ 658 which reads a....
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.... However the Finance Act 1999 w.e.f. AY 2000-01 allowed the assessee to choose the ten years of tax holiday out of 15 year beginning from initial assessment year. However the assessee was covered under the old provision of the section 80IA of the Act wherein the deduction was available to it for 10 continuous years from the initial assessment year which is AY 1997-98. Thus, the assessee was eligible to claim the deduction u/s 80-IA of the Act as detailed under : S.No. Particulars % of deduction 1. AYs 1997-98 to 2001-02 100% 2. AYs 2002-03 to 2006-07 30% But the assessee claimed the deduction under section 80-IA of the Act for the AY 2005-06 for Rs. 132,70,62,114.00 @ 100%. Accordingly the AO called upon the assessee to seek clarification as to why the deduction should not be allowed @ 30% as discussed above. In compliance thereto the assessee submitted that the amended provisions of section 80IA of the Act provides that the profits of an undertaking providing telecommunication services after 1st day of April, 1995, but before the 31st day of March, 2005 shall be eligible for 100% deduction for first five years in respect of profits deriv....
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.... of fifteen years from the year in which such undertaking starts to provide the telecom services. In the present case the assessee had started the telecom operation in September 1995 i.e. assessment year 1996-97. But in view of carried forward losses, it had not claimed any deduction u/s 80IA upto A.Y 2003-04. In view of specific provisions of section (2) to Section 80IA, it would be eligible to claim deduction for any ten consecutive years out of fifteen year. Accordingly, the assessee has started claiming deduction for the first time from assessment year 2004- 05. Thus, it would be entitled to claim 100% deduction upto AY 2008-09 and subsequently it would claim 30% deduction only for AY 09-10 and 10-11. This is further supported by the language used in sub-section (2A) i.e. at any time during the periods as specified in sub-section (2). Thus, an assessee has the liberty to opt for a consecutive ten years exemption out of the period of 15 years. 32.1 It is settled law that the law to be applied is that enforce in the relevant assessment year. For this proposition reliance is placed on the following decisions: Maharajah of Pithapuram vs. CIT (13 ITR 221) (PC); ....
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....al importance and that as per the provisions as they stand today, the assessee will be eligible for 100 percent deduction for first five years and @ 30 percent for the next five year within the period of ten years chosen by it, out of the fifteen years commencing from the start of the business. For such an interpretation the assessee submits that even though the concept of option was introduced w.e.f Assessment Year 2000-01, the operative paragraph still refers to the business of telecom which starts its operation on or before April, 1995 and therefore, contemplates granting of deduction to undertaking providing telecom services after 01.04.1995 and not after 01.04.2000. For this purpose the assessee also relies upon clause (ii) of section 80IA(4) (as it stands presently) which uses the phase "any undertaking which has started or starts." 16(d) At this point in time, it must be remembered that by Finance Act, 1999, w.e.f. 1st April, 2000, old Section 80IIA has been completely replaced by new section 80IA. The use of the phase "any undertaking which has started or starts providing telecommunication services. In clause (ii) of Section 80IA(4), in respect of those services wh....
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....hat the profits of an undertaking providing telecommunication services after 1st day of April, 1995, but before the 31st day of March, 2005 shall be eligible for 100% deduction for first five years in respect of profits derived from such business out of the ten years and 30% for subsequent five years. It is well settled law that the law to be applied is that which is enforce in the assessment year unless otherwise provided expressly or by necessary implication. The assessee in support of his claim relied on the following judgments : i. Maharaja of pithapuram Vs. CIT reported in 13 ITR 221 ii. Karim Tharuvi Tea Estate Ltd vs. State of Kerala 60 ITR 262 (SC) iii. Reliance vs. CIT 120 ITR 921 (SC) Thus, since the law as in the captioned assessment year provides for the deduction to be claimed in any 10 years out of the initial 15 years, the Appellant would be entitled to claim 100% deduction in the AY 2005-06 and therefore, the restriction of the deduction to 30% should be lifted. Thus, if the view taken by the AO that since the Appellant has started its operation in AY 97-98, the old section 80IA has to be applied, it would render the aforesaid Supreme C....
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....no doubt that the Appellant is entitled for deduction as per the amended section 80IA of the Act, which confers option of 10 out of 15 assessment year. Now, attention is also invited to the Explanatory Memorandum, explaining the amendments made by the Finance Act, 1999. It would be observed that it states that "..... as these undertakings are capital intensive and get delayed returns on investments, it is proposed to similarly allow then to avail of the benefits in any ten consecutive years. 33.2 Thus, clearly the intention was to enable even an existing undertaking that has commenced operations but is incurring losses to select its claim of deduction of ten consecutive assessment years out of 15 years from the date of commencement of operations. In the Appellant's case, it had started the telecom operations in September 1995 i.e. Asst Year 1996-97. In view of carried forward losses, the Appellant had not claimed any deduction u/s.80IA upto AY 2003-04. In view of specific provisions of section (2) to section 80IA, the Appellant would be eligible to claim deduction for 'any ten consecutive years' out of 'initial fifteen years'. Accordingly, the Appellant had started claimin....
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....claiming deduction u/s.80IA of the Act in past until AY 3004-05, the Appellant is free to choose 10 out of 15 years for claiming deduction u/s. 80IA of the Act as per amended section 80IA of the Act. The Appellant would further drew our attention towards section 10A and 10AA of the Act, which specifically provide for transition of deduction to an eligible undertaking from secion10A to 10AA and specifically provides that Assessee shall be entitled to claim deduction u/s.10A for the balance unexpired years. Now, had the intention of the legislature been to provide that even in case of undertaking who have been allowed deduction under erstwhile section 80IA, such undertaking would be entitled to balance unexpired period under the new provision, it would have made similar amendments. 33.3 Further, the Appellant would most humbly submit that the Supreme Court in Bajaj Tempo's case (196 ITR 188), has held that the provision granting deduction, exemption or relief should be construed liberally and in favour of the assessee. The above test has also been laid down in the following cases: * CIT v. South Arcot Soc (176 ITR 117, 119) (SC); * CIT v. UO Co-op. Fed. (176 I....
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....by not claiming deduction u/s.80IA till Assessment Year 2003-04, appellant had not exercised its option of choosing ten years which was available from Assessment Year 2000-01. Moreover, if there was any intention of the legislature to exclude such undertakings which had begun options before 1.4.1999, from exercising the choice of 10 years out of 15 year, it would have expressed it in the amendment itself. The industries which were given exemption u/s. 80IA form Assessment Year 1996-97 as per the provision of Section 80IA which existed till Assessment Year 1999-00 were capital intensive industries and were not able to make any profits in the first few years. Therefore the provisions were amended by legislature and a choice of 10 years out of first 15 years instead of fixed first 10 years was given to all such undertakings which had begun operation form 1.4.1995. The intention of legislature was clearly to extend the benefit of deduction u/s 80IA for full 10 years out of initial 15 years to all such industry which had begun operations on or after 1.4.1995 and due to substantial capital investment were not able to make profits in the initial few years of operation. The instant case of....
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....A), Both Revenue & assessee are in appeal before us. 34. The grievance of the Revenue is that ld. CIT(A) erred in allowing deduction @ 100% of the profit as against 30% of the profit allowed by the AO. 34.1 The grievance of the assessee is that ld. CIT(A) erred in giving finding that the assessee has to necessarily claim the deduction u/s 80-IA of the Act for 10 consecutive years. The assessee also assailed the order of ld. CIT(A) by submitting that the impugned issue for 10 consecutive years deduction is not arising from the order of AO. The ld. DR before us submitted that the assessee was entitled for the deduction under section 80-IA of the Act for 10 consecutive years commencing from the AY 1997-98 as per the old provision of section 80-IA of the Act. The ld. DR relied on the order of AO. However in case of assessee appeal ITA 357/Kol/2009 the ld. DR submitted that the assessee has to choose the block of ten years for claiming the deduction under section 80-IA of the Act. The ld. DR vehemently supported the order of authorities below. On the other hand the ld. AR reiterated the submissions as made before the ld. CIT(A) The ld. AR relied on the order of ld. CIT(A)....
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....he assessee to claim deduction for 10 consecutive assessment years out of 15 years.' We also find support & guidance from the judgment of the Hon'ble Supreme Court in the case of Bajaj Tempo's case (196 ITR 188), wherein it was held as under : "A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. Since a provision intended for promoting economic growth has to be interpreted liberally the restriction on it too has to be construed so as to advance the objective of the section and not to frustrate it. Under clause (i) of sub-section (2) of section 15C formation of the undertaking by splitting up or reconstruction of an existing business by transfer to the undertaking of building, raw material or plant used in any previous business results in denial of the benefit contemplated under subsection ( 1)." The amended provisions of section 80IA of the Act are clear and unambiguous and the purpose of the amendment has already been explained in the memorandum as explained in the preceding paragraph. In this regard we also find that the CBDT has clarified the term 'Initial Assessment Year' in relation to sectio....
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....ad debt recovery, The assessee has submitted that bad debt was claimed as business expenses in the earlier years and therefore any recovery of the same is a receipt from business and hence, eligible for deduction u/s. 80IA of the Act. In respect of bounce cheque charges It was submitted that the amount has been recovered from subscribers on bouncing of cheques received from them. The charges were received in the course of the business and therefore eligible for deduction under section 80-IA of the Act. The assessee in support of his claim has also relied on the judgment of Madras High Court in the case of CIT Vs Madras Motors Ltd. reported in 257 ITR 60 (Mad). As regards the cell site sharing revenue, It was submitted that the activity of cell site sharing reduces the cost and the amount is received from other telecom operators in the course of business. Therefore the same is eligible for deduction u/s 80IA of the Act. In respect of other receipts It was claimed that they are inextricably linked to the business and therefore the same is eligible for deduction u/s. 80IA of the Act. However the AO observed that the term used in Section 80IA is "derived" and no....
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....g the captioned year, the Appellant earned certain interest income which has been treated by the Appellant as income chargeable to tax under the head "Business". It being the income derived from the business by the telecom undertaking, the Appellant claimed deduction u/s. 80IA in respect of such interest income as well. The AO ha disallowed the claim for such deduction. The AO has relied upon the decision of the Supreme Court in the case of Pandian Chemicals Ltd. V. CIT (262ITR 278) to hold that interest income is not eligible for the tax holiday. In this behalf, the Appellant most humbly submits that the decision of the Supreme Court in the case of Pandian Chemicals was rendered in the context of provisions of Sec. 80HH whereas the present case is concerned with provisions of Sec. 80-IA. The Appellant submits that under sec. 80HH(1) the tax holiday is available where the gross total income of an assessee includes any profits and gains "derived from an industrial undertaking". As against the foregoing, deduction under Sec 80-IA is available when the gross total income of an assessee includes any profits and gains." derived by an undertaking or an enterprise from a....
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....ich are inextricably related to carrying on the business of industrial undertaking are to be considered for deduction u/s. 80IA of the Act, and accordingly, interest income and miscellaneous income were eligible for deduction u/s. 80IA of the Act. It is true that some of the above decisions were rendered in the context of section 80IA as it stood prior to its bifurcation into two, i.e. section 80IA and 80IB. However, that cannot make any difference since the splitted section also talks of the profits derived from the business by the undertaking, In fact the CBDT, while explaining the rationale behind the splitting of the section has categorically stated, in para 39.1 of its circular no. 779 dated September 14, 1999 that: 'The erstwhile provision of section 80IA in the Income tax Act has been restructured and incorporated as two new distinct sections = section 80IA and 80IB. the restructured section seek to retain the benefits hitherto provided in section 80IA.however the amended provisions extend the benefits to certain sectors...' The above paragraph clearly articulates the intention of the legislature that the benefits available under the pre-splitted s....
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....page Nos. 164-166) Thus, once the write back are taxed u/s. 41(1) of the Act, following the Delhi High Court decision in Eltek (supra), it would undisputedly be considered as receipt directly connected with the business of the telecommunication carried on by the Appellant and thus eligible for deduction u/s. 80IA of the Act. The Appellant therefore prays that AO be directed to allow deduction u/s. 80IA on the provisions written back and bad debts recovered. 4. Amount received as bounce charges: The Appellant recovers a fixed amount of bounce charges from the customers who makes default in making payment and whose cheques get bounced. The receipt is in the nature of penal charges recovered from the customer who fails to pay on time. The Appellant relies on the following cases were it is held that the interest received on delayed payment from debtors is eligible for deduction u/s. 80-IA of the Act: o Nirma Industries Ltd. v. DCIT (283 ITR 402) (Guj) o CIT v. Sidheswari paper Udyog Ltd. (94 ITD 187)(TM) (Del) :The Gujarat High Court decision in the case of Nirma Industries Ltd. v. DCIT 92006) (283 ITR 402) (supra) held tha....
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....rcial assets, either by using the same on his own account or allowing others to use the same. So far as the same is used for rendering telecommunication services in either case, the income generated would be regarded as income from providing telecommunication services. Section 80-IA(4) is a provision which is enacted to confer tax relief for socioeconomic objectives. It is a settled rule of interpretation that a provision like section 80-IA (tax holiday) should, therefore, receive an interpretation that accords with the objective behind the tax holiday. This has, indeed, been settled by the Supreme Court's decision in Bajaj Tempos case (196 ITR 188) (PB II 0-Page Nos. 167-174) Without prejudice to above If at all the income from site sharing is not to be treated a eligible for 80-IA, the Appellant prays that the expenses to that effect on account of site sharing also ought to be excluded." However the ld. CIT(A) after considering the submission of the assessee has partly allowed the relief to the assessee by observing as under:- "4. The language of section 80IA has been analyzed by various courts and it has been distinguished from the language....
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....41(1), it is deemed to be the business profits of the current year. Therefore the argument of Assessing Officer that this income is related to a liability or debt which was created in an earlier year has no force. The details of such liabilities written off were submitted by appellant during the appellate proceedings. The entire liability was written off against "Siemens AG". The liability was against the purchases made from "Siemens AG" in respect of various Fast File Transfer, Implementation of SMS, Hardware/software, Switches, up gradation etc. The nature of such deemed income on account of writing off the liability falls under the category of "profits and gains derived from business of Cellular services". Therefore assessing office is directed to include Rs. 26,73,408 of provisions/Liabilities written back and Rs. 7,77,123 of Bad debt recovery in "profit and gains derived from business of Cellular services". Amount received as bounce charges: The appellant recovered a fixed amount of bounce charge from the customers and the receipt is in the nature of penal charges. The arrangement of charging on bounced cheques is an arrangement to ensure proper payment from ....
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....aring revenue Rs. 2,85,000.00 The grievance raised by the assessee in its appeal ITA No. 357/Kol/2009 in ground no. 3 & 4 is that ld. CIT(A) erred in not allowing deduction under section 80-IA of the Act in respect of interest income and other receipts amounting to Rs. 66,96,909.00 and 7,65,866.00 only. 40. The ld. DR before us submitted that the income which has direct nexus with the cellular business of the assessee is eligible for deduction. Thus the income from Interest on Margin Money, Provision/liabilities written back, Bad debt recovery, Bounce cheque charges & Cell site sharing revenue are not eligible for deduction under section 80-IA of the Act. the ld. DR vehemently supported the order of the AO. Similarly the ld. DR supported the order of lower authorities for not allowing the deduction in respect of interest receipts of Rs. 66,96,909.00 and other receipt of Rs. 7,65,866.00 only. On the other hand the ld. AR submitted that the assessee is eligible for deduction in respect of all its receipt/ income as discussed above. The ld. AR in support of his claim relied on the order of Hon'ble Tribunal in the case of BSNL Vs. DCIT reported in 156 ITD 847 which was s....
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....standing". The meaning and the consequent legislative intent can clearly be understood by the subsequent words used "anything contained in .........". Thus as literally as it can be read the legislative intent of "Notwithstanding" "anything contained in sub-section (1) or sub-section (2)" is plain and clear. The clear meaning of this non-obstante clause, which is reflected upto this stage is that whatever may have been contained in subsection (1) or sub-section (2) of section 80-IA is to be excluded. This position is fortified by the conscious inclusion of the word "anything contained in" which qualifies "notwithstanding". The meaning and import of the term "notwithstanding" is well-settled and understood and by itself cannot be said to be leading to any ambiguity. The said term by itself would have been sufficient and complete to convey the legislative intent that whatever may have been said in sub-sections (1) and (2) but the legislature has not rested there and has taken care to qualify the word with the all encompassing, all inclusive, well understood word "anything" contained in sub-section (1) or (2). The meaning, use and import of the said word does not lead to any confusion....
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....ontained in sub-section (2) by making a specific reference to it. Thus conscious of the fact that sub-sections (1) and (2) had completely been over-ridden for an assessee falling in section (2A), reference to sub-section (2) is made only for the purposes of increasing the timeline from which the assessee could opt for selecting ten consecutive years out of the total 15 years. 13.10 Thus the dispute of bringing sub-section (1) into play for a tax payer falling in sub-section (2A) of section 80-IA to our minds cannot arise. According to the assessee sub-section (2A) does not put the restriction contemplated in sub-section (1) of section 80-IA in the face of the nonobstante clause coupled with the specific omission to use the well understood term "derived from". This argument is notwithstanding the argument that considering the assessee's nature of business the direct nexus presumed by sub-section (1) of section 80-IA is also fulfilled. On a careful reading of the above provisions, we find that the legislature has left no ambiguity in the wording of the sub-section (2A). Having started with the non-obstante clause in sub-section (2A) which over-rides the mandate of sub-se....
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.... clearly stated. The meaning and extent of the statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be considered to be just or expedient. To put in the words of Rowlatt J. as held in Cape Brandy Syndicate v. Commissioners of Inland Revenue [(1921) 1 KB 64, 71]. "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 13.13 Interpretation postulates the search for the true meaning of the words used in the statutes as a medium of expression to communicate a particular thought. The task is not easy as the language used even in ordinary conversation or correspondence is capable of being mis-understood, however in such cases the person using the language can be approached for a clarification. The language used in a statute till it is amended, repealed or modified remains static as the Legislature cannot be approached for clarification. After having enacted a law or an act, the legislature becomes func....
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....so that the Legislature may take notice and promptly remedy the situation. Reliance can be placed on Standard Chartered Bank v. Directorate of Enforcement [2005] 275 ITR 81/145 Taxman 154 (SC). 13.17 The settled principles of interpretation are that the Court must proceed on the assumption that the legislature did not make a mistake and that it did what it intended to do. The Court must, as far as possible, adopt a construction which will carry out the obvious intention of the Legislature. Undoubtedly, if there is a defect or an omission in the words used by the Legislature, the Court would not go to its aid to correct or make up the deficiency. The Court could not add words to statutes or read words into it which are not there, especially when the literal reading produces intelligible results. Reference may be made to Dadi Jagannadham v. Jamulu Ramulu AIR 2001 SC 2699. Any presumption to the contrary in the absence of any ambiguity would be contrary to the settled legal position as the legislature as far as possible is presumed to know what it intends to stay. 13.18 Thus reverting again to considering the words used in sub-section (2) the proviso thereto and sub-....
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.... under clause (ii) of sub-section (4) and is such an enterprise providing telecommunication services. After having over-ridden the requirements of sub-sections (1) and (2) completely the legislature in its wisdom has directed that hundred per cent "of the profits and gains of the eligible business" and not "the profits and gains derived from" can be claimed as a deduction in the first five assessment years by such an enterprise commencing at any time during the periods as specified in subsection (2) and thereafter thirty per cent of "such profits" for further five assessment year. Thus giving due recognition for the peculiarities of the telecommunication services where heavy investment costs in the initial years are a necessity they have been allowed to be recovered by way of profits to the extent of hundred per cent from that activity in the first five years and thereafter the allowable deduction is substantially reduced to thirty per cent in the next five years presuming that by then the heavy infrastructural costs would have been recovered and/or the objectives of the governmental policy would have been attained. Keeping in mind the services and functions performed by such an as....
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....were not so argued before the tax authorities. We record our appreciation for the confident and effective representation of Ld. CIT DR, Ms. A. Mishra. We also put on record our appreciation for the well-seasoned and tempered arguments advanced by Sr. Advocate, Mr. P. Pardiwala supported by the synopsis and updated synopsis prepared and filed by his team of lawyers. However having minutely gone through the case laws and the proposition relied upon which we have brought out in the earlier part of this order, we find that in the face of the clear mandate of law addressing the case laws which are on entirely different facts and considering different set of provisions reference thereto would be out of context as it would be of no help to decide the issue which we find is clear from the very language used by the Legislature in the statutory provisions under consideration. The meaning which the Revenue would want us to read into the said provision would be in violation of the basic fundamental principles of interpretation of statutes namely that the Courts cannot write the laws as legislation is the domain of the Legislature, the Courts can only interpret the law; any Interpretation which....
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....tail the time line during which deduction can be claimed and also addressing the extent upto which it can be claimed has consciously carved out an exception to specified undertakings/enterprises whose needs and priorities differ has taken care to expand the time line for claiming deductions. It has consciously enabled those undertakings/enterprise who fall under sub-section (2A) to claim 100% deduction of profits and gains of eligible business for the first five years and upto 30% for the remaining five years in the ten consecutive assessment years out of the fifteen years starting from the time the enterprise started its operation. The legislature having ousted applicability of sub-section (1) and (2) in the opening sentence brought in for the purposes of time line sub-section (2) into play but made no efforts whatsoever to put the assessee under sub-section (2A) to meet the stringent requirements that the profits so contemplated were to be Page 51 "derived from". The requirements of the first degree nexus of the profits from the eligible business has not been brought into play." 11. As a result, the orders of both the AO and the CIT(A) to the extent they deny the assesse....
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....d above. Thus the ground of appeals raised by the Revenue is dismissed and the grounds of appeals raised by the assessee is allowed. Now coming to ITA No. 357/Kol/2009 appeal by the assessee 42. The First issue raised by the assessee in this appeal is that ld. CIT(A) erred in not allowing setoff of the unabsorbed depreciation of Rs. 37,35,12,000.00 while computing the book profit under section 115JB of the Act being lower of the brought forward loss. 43. We have already dealt this issue elaborately while adjudicating the ground of appeal of assessee in ITA No.356/Kol/2009 and allowed the issue in favour of assessee. 43.1 Besides the above we also observed that the impugned issue has already been decided in favour of assessee by this Hon'ble Tribunal in the case of Binani Industries Limited (supra) reported in 178 TTJ 658 which reads as under:- "We have heard the rival submissions and perused the materials available on record. We are in agreement with the arguments of the Learned AR that the losses (both cash loss and depreciation loss) would continue to remain in the books of accounts till it is wiped off by earning profits by the assessee company and according....
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....ready dealt this issue elaborately while adjudicating the ground of appeal of Revenue in ITA No.377/Kol/2009 (supra) and since we have dismissed this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. 50. The last issue raised by the assessee is that ld. CIT(A) erred in not allowing deduction for the contribution made gratuity fund maintained with LIC for Rs. 6,97,488.00 only. 51. We have already dealt this issue elaborately while adjudicating the ground of appeal of assessee in ITA No.356/Kol/2009 and since we have allowed this ground of appeal of assessee following the same analogy we also allow this ground of appeal of assessee. 52. In the result, assessee's appeal is allowed. Coming to ITA 482/Kol/2010 appeal by the Revenue and ITA 485/Kol/2010 appeal by Assessee for the AY 2006-07 53. The grounds of appeal raised by the Revenue, are reproduced as under:- "That the Ld. CIT(Appeals) has erred in holding that the assessee was eligible to get deduction u/s. 80IA on the following receipts:- 1. Cellsite sharing revenue Rs.3,77,60,000/- 2. Bounce cheque charges Rs.8,70,000/- 3. Intere....
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....he aforesaid grounds of appeal at any time before or at the time of hearing of the appeal." First we take up Revenue appeal ITA 482/kol/2010 54. The inter-related issue raised by the Revenue in this appeal is that ld. CIT(A) erred in allowing the deduction u/s 80-IA of the Act in respect of certain receipts not eligible for deduction. 55. We have already dealt this issue elaborately while adjudicating the ground of appeal of Revenue in ITA No.377/Kol/2009 and since we have dismissed this ground of appeal of Revenue following the same analogy we also dismissed the inter-related issue of appeal of Revenue. Accordingly, AO is directed. 56. In the result, Revenue's appeal is dismissed. Now coming assessee's appeal ITA 485/Kol/2010. 57. The assessee vide letter dated 06.07.2015 has revised the ground no. 1 which reads as under:- "The Appellant respectfully submits that: 1.On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in following the order issued by his predecessor for Assessment Year ('AY') 2005-06 and giving a finding that the Appellant is necessarily required to claim deduction for full ten consecutive y....
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....in giving finding that the assessee has to necessarily claim the deduction u/s 80-IA of the Act for 10 consecutive years. The assessee also assailed the order of ld. CIT(A) by submitting that the impugned issue for 10 consecutive years deduction is not arising from the order of AO. 59. We have already dealt this issue elaborately while adjudicating the ground of appeal in ground No. 2 of Revenue in ITA No.377/Kol/2009 and since we have dismiss this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. Accordingly, AO is directed. 60. The 2nd issue raised by the assessee is that ld. CIT(A) erred in not allowing deduction under section 80-IA of the Act in respect of certain income. 61. We have already dealt this issue elaborately while adjudicating the ground of appeal No. 3 of Revenue in ITA No.377/Kol/2009 and since we have dismissed this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. Accordingly, AO is directed. 62. The 3rd issue raised by assessee in this appeal is that ld. CIT(A) erred in confirming the order of AO by not adjusting the unabsorbed depreciation of....
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.... while adjudicating the ground of appeal No. 2 of Revenue in ITA No.377/Kol/2009 and since we have dismissed this ground of appeal of Revenue following the same analogy we also allow this ground of appeal of assessee. AO is directed accordingly. 68. In the result, assessee's appeal is Coming to assessee's appeal in ITA 431/Kol/2012 for the AY 2008-09 69. The assessee vide letter dated 8th July 2015 has filed the additional ground no. 2.2 in its appeal which reads as under:- * Ground No.2.2 - On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding the allegation of the learned Deputy Commissioner of the Income-tax, Circle 7, Kolkata ('learned Assessing Officer') that interest income amounting to INR 66 laksh is assessable to tax as 'income from other sources' and not as 'profits and gains from business and profession'. Other grounds of appeal are as under:- "1. Ground No. - The Appellant is eligible for deduction @ 100% of eligible business profits under section 80IA of the IC Tax Act, 1961(' Act') On the facts and I the circumstances of the case and in law, the learned Commissioner of Income ....
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....r Ltd (2011) (330 ITR 239) since the same was pronounced in the context of interconnect charges and not roaming charges. 4. Ground No. 4- Interest under section234B and 234D Without prejudice and in addition, on the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding the levy of interest under section234B and 234D of the Act. 5. Ground No. 5- Levy of penalty under section 271(1)(c)On the facts and circumstances of the case and in law, the learned CIT(A) has erred in not adjudicating on the ground raised by the Appellant against the intimation of penalty proceedings under section 271(1)(c) of the Act. The CIT(A) ought to have held that the proceedings under section 271(1)(c) of the Act are not justified in the instant case. All the above grounds are without prejudice to each other. The Appellant craves leave to add, amend, vary omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. The Appellant prays that appropriate relief be granted based on the said grounds of appeal and the facts and circumstances of the case." 70. The first issue raised by t....
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....rk'. We have already held that the payment of roaming charges does not require any human intervention. Hence in the absence of human intervention, the services rendered in the context of the impugned issue does not fall under the definition of 'work' as defined in section 194C and hence the provisions of section 194C are not applicable to the impugned issue. 4.19. Let us now get into the applicability of provisions of section 1941 of the Act to the facts of the impugned issue. The term 'rent' is defined in section 194 as below:- "For the purposes of this section, "rent" means any payment, by whatever name called, under any lease, sublease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,- (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings whether or not any or all of the above are owned by the payee." The real test to be considered is whether it is possi....