TaxTMI 
TaxTMI 
2016 (2) TMI 1177
X X X X Extracts X X X X
X X X X Extracts X X X X
....xclusion of interest u/s. 244A of Rs. 2,41,44,527/-. v. Confirming the disallowance of proportionate amount of premium of Rs. 20,92,331/- on lease hold land by treating it as capital expenditure. vi. Confirming the interest income of Rs. 25,91,62,561/-, incentive of application money of Rs. 73,904/- and truck hire charges of Rs. 1,75,64,062/- as income under the head "Income from other sources". vii. Confirming the addition of unutilized MODVAT credit as on last date of accounting year on 31.03.1999 u/s. 145A. viii. Not allowing deduction of profit derived from Himachal Unit (located in Industrially Backward District in computing the book profit as per clause 5 to the explanation of 2nd proviso of section 115JA. ix. Not granting exclusion of export profit as computed under the provisions of Act in book profit for the purpose of section 115JA. x. Confirming the non-exclusion of capital profit on sale of investment amounting to Rs. 3,70,27,738/- from the net profit in computing book profit as per provision of section 115JA of the Act. 3. The Revenue has raised the following grounds of appeal in ITA No. 2653/Mum/2005. 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enses except disallowance of Rs. 3.00 lac out of lavish travelling expenses of Rs. 3.8 lacs on travelling and food. The present year expenditure seems to be normal day to day expenses on Pooja for running the temple in the vicinity of the plant. Accordingly, after considering the rival submissions, facts of the issue as stated above, and Tribunal's decision referred above, this ground is allowed in favour of the assessee. The addition so sustained by the CIT(A) is deleted." And again in AY 1989-90 the similar issue was raised wherein the expenses of Rs. 8,33,943/- on account of Pooja Expenses was claimed and the co-ordinate bench of this Tribunal in its order dated 20.12.2002 partially allowed the Pooja Expenses and granted a relief of Rs. 4,32,507/-. The department has filed appeal against the order of ITAT in AY 1989-90 but same has not been admitted in the Hon'ble High Court. Further the revenue has filed further appeal against the order of ITAT in respect of AY 1988-89 but no ground has been taken against allowing of Pooja Expenses. In view of the above discussion, we respectfully following the judgment of co-ordinate bench in the year 1988-89 and keeping in view the princip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for in the order of the CIT(A) on this issue. The ld. Counsel of the assessee stated at the bar that no depreciation was allowed by the AO when the impugned expenditure was treated as capital expenditure. In view of this fact, no order with regard to withdrawal of depreciation is required to be passed. The appeal of the revenue fails on this issue. Hence keeping in view the above observation of co-ordinate bench, as these ground i.e. ground no.2 & 3 are also covered in favour of assessee, hence both the Grounds are allowed in favour of assessee. 7. Ground No. 4, for our consideration is non-exclusion of interest u/s. 244A of Rs. 2,41,44,527/-. The AR of the assessee has argued that similar issue has been decided by the special bench of ITAT, Mumbai in case of Avada Trading Company Pvt. Ltd. vs ACIT reported vide (2006) 100 ITD 131, Mum (SB) wherein it has been held that interest granted vide intimation u/s. 143(1a) has to be taxed in the year in which the said interest is received. However, in case interest to be reduced by subsequent year, than it is reduced amount of interest that would form part of income of that year. We have considered the submission of assessee, in Avad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utation of total income chargeable to tax. We have seen that similar issues were arise in respect of AY 1995-96 and the matter travelled in appeal to ITAT and vide ITA No. 942/Mum/2004 decided vide order dated 27.10.2008 in the following manner: 14 Ground No, 7 raised by the assessee reads as follows: 7(a) That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in holding that interest income, income from bills discounting and income from truck hire is to be taxed as income under the head "Income from other Sources." 7(b) That on the facts and in the circumstances of the case, and without prejudice to ground No. 7(a) taken here-in-above, having held that the said income were to be assessed under the head "Income from other Sources", the Ld. CIT(A), ought to have allowed the actual expenditure incurred to earn the aforesaid income, instead of considering Rs. 2,000/- on adhoc basis, as expenditure incurred to earn the said income." 15. The assessee has wrongly included income from truck hire charges under the head "Income from other Sources". 16. With respect to taxing interest income and income from Bill Discountin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....counting year as adjustment u/s. 145A of the Act of Rs. 1,69,49,695/-. AR of the assessee has argued that assessee in the revised return of income had adjusted the net profit for the year to the provision of section 145A which has been inserted w.e.f. 01.04.1999. Rs. 42,42,649/- being the difference between excise duty of Rs. 1,75,01,154/- payable on opening stock of finished goods and Rs. 1,32,58,505/- payable on closing stock of finished goods lying in the factory has been adjusted. The assessee has also claimed deduction u/s. 43B of excise duty payable on stock of finished goods as on 31.03.1999 of Rs. 1,32,58,505/-, details of which are available on page no. 37 & 45 of Paper Book, the AO while making the assessment concluded that in case of Melmould Corporation Vs. CIT (1993) 202 ITR 789 (Mum) held that unutilized MODVAT credit balance shall be added to the closing stock. The CIT(A) while dealing with this ground concluded the unutilized MODVAT credit at the end of year should be added to the income of assessee. However, corresponding adjustment in the opening stock should also be made. AR of the assessee argued that unutilized balance of MODVAT credit is nothing but excise dut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ormal provision. CIT while dealing with this ground followed the decision of CIT(A) in earlier years and upheld the order of AO. AR of the assessee argued that this ground is covered in favour of the assessee by the order of co-ordinate bench of this Tribunal in assessee's own case for AY 1997-98 in ITA No. 1859/Mum/2004. In ITA No. 1859/Mum/2004 the co-ordinate bench of this Tribunal while dealing with the similar ground held as under: "The seventh dispute is regarding not allowing the exclusion of profit from the Himachal Unit computed as per books while computing the book profit as per clause (v) to Explanation to section 115JA(2). The income from Himachal unit was exempt under section 80IA. The AO held that income as computed under the provisions of the Act and as reduced by brought forward losses was only to be deducted. CIT(A) upheld the view of the AO that the income computed under the provisions of Act has to be deducted but he directed not to deduct the brought forward losses. After hearing both the parties we find that this issue is covered in favour of the assessee by the decision of the Tribunal in case of Tushako Pump Ltd. (2 SOT 556) in which it has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....while computing the book profit as per clause (v) to Explanation to section 115JA(2). The income from Himachal unit was exempt under section 80IA. The AO held that income as computed under the provisions of the Act and as reduced by brought forward losses was only to be deducted. CIT(A) upheld the view of the AO that the income computed under the provisions of Act has to be deducted but he directed not to deduct the brought forward losses. After hearing both the parties we find that this issue is covered in favour of the assessee by the decision of the Tribunal in case of Tushako Pump Ltd. (2 SOT 556) in which it has been held that for the purpose of computing book profit under section 115JA, the profit of industrial undertaking eligible for deduction under section 80IA must be computed as per the books of accounts and not as per the provisions of the Act. Respectfully following the said decision we hold that the profit of the Himachal unit computed as per the books and after making adjustments as permissible under section 115JA will only be excluded while computing the book profit." We have carefully considered the contention of the AR of assessee and found that this g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns should be included for the purposes of computing book profits. In view of the above decision of Hon'ble jurisdictional High Court, this ground of appeal is dismissed. In the result, appeal of the assessee is partly allowed. 14. Now we shall take up ITA No. 2653/Mum/2005, appeal filed by the revenue in respect of same AY. The revenue has raised as much as five grounds of appeal: 15. Ground No. 1 raised by Revenue is deletion of disallowance of community welfare expenses of Rs. 163,83,699/-.The ld. AR of the assessee argued that a similar disallowance was made against the assessee in AY 1988-89, AY 1989-90, AY 1990-91, 1991-92 & 1992- 93 and the assessee carried the matter to ITAT and the same was allowed by the co-ordinate bench of ITAT, Mumbai and the appeal filed by the Revenue has not been admitted by the Hon'ble High Court for the AY 1988-89 and for AY 1989-90 and further SLP filed before the Hon'ble Apex Court for AY 1988-89 as since we dismissed vide order dated 17.07.2009, however, the department has not filed appeal before the Hon'ble High Court for AY 1990-91, AY 1991-92 and AY 1993-94. We have seen the order of ITA No. 3733/Mu/10096 for AY 1988-89, the co-ordinate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Mills Co. Ltd. (supra) even held that expenditure incurred for conducing directly related to the business of the assessee." "5.8 In view of the aforesaid findings the impugned expenditure is held to be allowable business expenditure u/s. 37(1) of the Act. At this juncture, it will not be out of place to mention that similar disallowances were also attempted by Revenue in other cases and Bombay Tribunal vide its order dated 09/02/1994 in ITA No.2696/B/1990 has deleted such disallowances and held that such Welfare Expenses have to be allowed as deduction u/s. 37(1) of the Income Tax Act, 1961. Our conclusion that the impugned expenses are allowable as deduction stands fortified by the aforesaid decision of Mumbai Tribunal. The appeal of the assessee, therefore, succeeds on this issue. The order of the CIT(A) is set aside on this issue and AO is directed to delete the impugned addition". Further, we have noticed that the similar grounds of appeal were allowed in favour of assessee for AY 1990-91 vide ITA No. 2419/Mum/1994, for AY 1991-92 vide ITA No. 4034/Mum/1996 and for AY 1992-93 vide ITA No. 4035/Mum/1996, for AY 1993-94 vide ITA No. 1577/Mum/1999 and for AY 1994-95 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pex court in the case of Empire Jute Co. Ltd. (supra) wherein it was held that if the advantage consists merely in facilitating the assessee's trading operation, the expenditure would be on revenue account. Respectfully, following the said decision and other decisions relied upon by the ld. Counsel, we hold that the said expenditure can in no way be treated as capital in nature. We, therefore confirm the order of CIT(A) who has held that the impugned expenditure is revenue expenditure allowable u/s. 37(1). The assessing officer has not discussed the issue at all. The appeal of the revenue fails on this issue as well". In view of the above, quarry development expenses are treated as revenue expenditure and are allowed. The assessee succeeds on this ground". Hence, keeping in view the order of Co-ordinate Bench in assessee's own case and following the principle of consistency this ground of appeal raised by the Revenue is dismissed. 18. Ground No.4 raised in the present appeal is deletion of disallowance of foreign exchange loss of Rs. 2,02,82,094/-. Ld. DR for Revenue argued that the ld. CIT(A) wrongly deleted the disallowance of foreign exchange loss and prayed that ....