TaxTMI 
TaxTMI 
2017 (8) TMI 1440
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.... The challenge is to the Tribunal's order, where the assessee's appeals for the Assessment Years have been allowed in part. The Revenue's appeals for the Assessment Years 2003-04 to 2005-06 are allowed in part but for the Assessment Year 2006-07 it is rejected as a whole. 5. For convenience's sake, we take up Income Tax Appeal No.1775 of 2014 for the Assessment Year 2003-04. 6. Mr. Malhotra, learned counsel appearing on behalf of the Revenue in support of these appeals, would submit that all the questions which have been proposed by the Revenue in the memo of appeals are substantial questions of law. 7. It is stated that the respondent/assessee, M/s. Reliance Industries Limited, is engaged in the business of oil exploration, manufacturing and trading of petro-chemicals, polyester, fibre intermediate textiles, generation and distribution of power, operation of jetties, investments, etc.. The return of income was filed and the assessment was completed under Section 143(3) of the Income Tax Act, 1961 (for short, "the I.T. Act, 1961") in this appeal on 30-1-2006 at total income of Rs. 2719,68,29,460/- under the normal provisions and Rs. 3879,08,06,960/- under S....
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....terest on funds utilized for exempt investment on the basis that own funds are more than investments made? 6.4 Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was right in holding that disallowance u/s 14A cannot be imported into provisions of section 115JB in view of clause (f) to Explanation (1) to the section? 6.5 Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was right in holding that the notional sales tax of Rs. 1252,83,84,360/- is capital in nature and not liable to tax? 6.6 Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was right in holding that prior to insertion of Explanation-5 to section 32 of the I.T. Act, the claim of depreciation was optional and could be thrust on the assessee, if it had not claimed it? 6.7 Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was right in holding that pre-operative expenses of Rs. 3,99,96,448/- incurred in connection with creation of Plant and Machinery in units which have not commenced production, are revenue in nature? 6.8 Whether o....
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....s order and that of the Assessing Officer, contended that the Assessing Officer had rightly disallowed the administrative expenses under Section 14A and the Tribunal erred in bringing it down to 1% of the exempt income. Thus, the apportionment of expenses to the earning of the exempt income has been rightly done by the Assessing Officer and the Tribunal should not have interfered with the same, is the argument of Mr. Malhotra. 17. As far as question No.6.3 is concerned, Mr. Malhotra would submit that this question is equally a substantial question of law as the Tribunal was not right in deleting the disallowance made by the Assessing Officer under Section 14A of the interest on funds utilised for exempt investment on the basis that own funds of the assessee are more than the investments made. 18. As far as question Nos.6.4 and 6.5 are concerned, Mr. Malhotra would submit that in the case of this assessee, as also in the case of another assessee, namely, RBK Share Broking (P.) Ltd. {Income Tax Appeal No.924 of 2014}, the said questions have been admitted and treated as substantial questions of law. In that regard, our attention has been invited to the orders passed in Income T....
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.... that if the facts and claims were identical to the Assessment Year 2002-03, in which as well the Tribunal interfered at the instance of the assessee with regard to certain claims and deduction, and an appeal of the Revenue challenging that order of the Tribunal was dismissed by this Court at the stage of registration itself, the application to restore the appeal has also been dismissed today by our order passed in Notice of Motion No.684 of 2017 in Income Tax Appeal {L} No.1647 of 2012, then, all the more we must not entertain these appeals. There is no deviation or departure and on facts which has been brought to the notice of this Court from the prior assessment year. For these reasons, it is submitted that the present appeals be dismissed. 23. For properly appreciating the rival contentions, we must consider the order of the Tribunal, and which is impugned in Income Tax Appeal No.1775 of 2014 as also the other appeals. 24. The Tribunal had before it, in relation to the questions proposed as above of the Revenue, the orders of the Assessment Officer, that of the First Appellate Authority and related records. Upon a perusal of all these, the Tribunal found that the Revenue&....
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....#39;s views are that in cases of the interest free loans and interest given by the assessee to its subsidiary companies are in the above sums, still, the principle laid down by this Court that if there are funds available to them interest free and overdraft or loans taken, would not apply. This view of the Assessing Officer is ex facie contrary to the settled principle that a presumption would arise that the investment would be out of the interest free funds generated or available with the company. Then, the borrowed capital in hand in that case and interest expenditure was deductible under Section 36(1)(iii) of the I.T. Act, 1961. The Tribunal held that the interest free fund available to the assessee is sufficient to meet its investment. It can be presumed that investments were made from interest free funds available with the assessee. This position clearly emerges from the record and for the current assessment year as well. We do not see how a different view in the facts and circumstances can be taken. If the Tribunal had followed the earlier view and on facts, then, there is no perversity when nothing contrary to the factual material was brought on record by the Revenue. In suc....
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....er under appeal that the Hon'ble Supreme Court had considered the matter and laid down a principle. In the assessment year under consideration, the Assessing Officer allowed depreciation relating to these plants/units to the assessee and accordingly reduced the written down value of the said plants/units. In the assessment year under consideration, the assessee claimed depreciation on the said plants/units in view of the amendment made, namely, insertion of Explanation-5 to Section 32(1) of the I.T. Act, 1961. The depreciation so claimed was on the basis of written down value as per the assessee's record and based on the written down value in the year after which depreciation has not been claimed by the assessee. The Assessing Officer allowed the depreciation on the basis of the written down value. He arrived at it after allowing depreciation to the assessee in the preceding years. Thus, the Assessing Officer computed the amount of allowable depreciation at the figure, namely, Rs. 3903,53,90,481/- as against the claim of the assessee of Rs. 4977,74,24,949/-. 39. The assessee preferred an appeal before the First Appellate Authority and the Commissioner of Income Tax (Appe....
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....our of the assessee. Therefore, when identical issue arose and on similar facts for the assessment year under consideration, it is on facts that the earlier view was followed. Once the earlier view was followed on facts and the same not being disputed, then, the settled principle would apply in that the Revenue is bound by the view taken by the Tribunal for the prior assessment years on facts and that applies with full force. More so, when it is allowed to gain finality. 44. We do not see any reason to interfere with such findings of fact. 45. Then comes question No.6.8 and it is conceded that the issue raised in this question is identical to question Nos.6.2, 6.3 and 6.4 of the Revenue's memo of appeal in the present case. Hence, it need not be separately answered. 46. Then comes question No.6.9 and it pertains to expenditure on estimated basis. The argument was that such a basis cannot be utilised to reduce from dividend income the expenditure. 47. The Section 80M of the I.T. Act, 1961 was relied upon. After having heard both sides, what we find is that the Revenue's appeal before the Tribunal mentioned this issue as ground No.9. The First Appellate Authority ....
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.... the Assessing Officer had applied a certain principle. That principle has been extensively referred by the Tribunal. The ground No.3 of the Department's appeal pertains to the order of the Commissioner deleting the adjustment of Rs. 1,76,36,077/- made by the Assessing Officer under Section 92 on account of international taxation entered by the assessee-company for consultancy charges with its Associated Enterprises ("AE" for short). In para 67.1 the representatives of both sides submitted before the Tribunal that this issue is similar to ground No.11 of the Revenue's appeal for the Assessment Year 2003-04 and whatever decision is taken therein would govern for this year and the ground as well. 53. In para 67.2, the Tribunal found that in the light of the similarity in facts, it can safely rely on the findings for the Assessment Year 2002-03. In paras 23.1 to 23.3 and also para 23.4 the Tribunal follows the reasoning for the Assessment Year 2002-03 and applies to the assessment year under consideration. The Tribunal has confirmed the order of the First Appellate Authority by rejecting the ground of appeal taken by the Department. 54. We do not see any reason to differ....
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....ransaction. Therefore, all that remained for decision was whether the guarantee commission should be at the rate of 0.38% in place of 2.5% and in consideration thereof the Tribunal found from the facts that there is no dispute that by providing guarantee to Bank of America against the financial assistance given to its Associated Enterprise, the assessee has not charged any commission. The Tribunal found that the details of the guarantee commission charged by Banks in India for giving non-funded guarantee through parties are referred to and set out in the order of the First Appellate Authority. The Tribunal found that the Transfer Pricing Officer has not brought on record anything which would indicate that 2.5% rate of guarantee commission has been charged. The charging of guarantee commission depends upon transaction to transaction and mutual understanding between the parties. A rate of 2.5% for guarantee commission therefore cannot be applied in the absence of relevant and cogent material. 60. The Tribunal, therefore, came to the conclusion that this exercise of the First Appellate Authority has been carried out to its satisfaction. The assessee itself paid the guarantee commis....