TaxTMI 
TaxTMI 
2018 (1) TMI 1359
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....n ITA No. 2636/Del/2012 are reproduced as under: "Ground 1: Charging Passenger Service Fee (Security Component) as income of the Appellant - Rs. 80,72,64,401/- 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Additional Commissioner of Income- tax, Range-10, New Delhi ("the A.O.") in charging to tax the Passenger Service Fee (Security Component) managed by the Appellant in fiduciary capacity on behalf of the Government of India as income of the Appellant. 2. The Appellant prays that the action of AO in treating the Security Component of the Passenger Service Fee as income of the Appellant be deleted. Ground 2: Disallowance u/s.40a(ia) of the Act - Rs. 7,51,65,000/- 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of AO in disallowing a sum of Rs. 7,51,65,000/- being provision made at year end on best estimate basis, on account of nondeduction of tax on the said payment under section 40a(ia) of the Act. 2. The Appellant humbly prays that the AO be directed to delete the aforesaid disallowance. Grou....
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....the amount of upfront fees Without Prejudice to the claim of the Appellant that Repairs and Maintenance incurred in AY 2007-08 were allowable as revenue expenditure in AY 2007-08 Ground 6: Not granting Depreciation 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the alternate claim raised by the Appellant in regard to not granting depreciation under section 32 of the Act at appropriate rates on the repair and maintenance of the building, plant and other as the same treated as capital in nature but merely allowing the amortization over the term of the agreement is infructuous. 2. The Appellant prays that if department appeal on this issue is allowed for the Assessment year 2007-08 and it is held that expense on repair and maintenance of building, plant and others amounting to Rs. 24,00,00,000/- is capital in nature then depreciation be allowed under section 32 of the Act on the repairs and maintenance of the building, plant and others. Ground 7: Not granting Deduction under section 80-IA of the Act 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in....
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.... Act, 1961 (in short 'the Act') was issued and complied with. The assessment under section 143(3) of the Act was completed on 24/12/2010 assessing total income at Rs. 201,61,04,090/-. The additions/disallowances made by the Assessing Officer were challenged by the assessee before the Ld. CIT-(A), who allowed part relief to the assessee. Aggrieved with the finding of the Ld. CIT-(A), both the assessee and the Revenue are in appeal before the Tribunal raising the grounds as reproduced above. 5. Before us, the Ld. counsel filed two paper books containing pages from 1 to 420 and 1 to 494 and made detailed arguments supporting the grounds raised. 5.1 The ground No. 1 of the appeal of the assessee relates to "Passenger Service Fee" (security component) amounting to Rs. 80,72,64,401/- which has been treated by the Assessing Officer as taxable income of the assessee and upheld by the Ld. CIT-(A). 5.2 The brief background of the issue in dispute involved as culled out from the order of the lower authorities is that: (i) the assessee entered into an agreement for " Operation, Management and Development Agreement"( OMDA) with the "Airport Authority of the India" (AAI) on 04/....
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....OCA has supervening powers to direct the operation of the Escrow account. viii. The amount of PSF to be collected is statutorily fixed by MOCA, and a fixed portion (65%) of the PSF is statutorily earmarked for scrutiny purposes. (v) During assessment proceedings before the Assessing officer, the assessee agreed to offer the income from PSF(SC). The assessee submitted that after the decision of the Central Board of Direct Taxes (CBDT) as conveyed by the Ministry of civil aviation (MOCA) vide letter dated 15/11/2010, income arising out of PSF(SC) was considered as liable to tax and accordingly , it paid tax. (vi) The assessee vide letter dated 30/11/2010 filed a revised computation incorporating income from PSF(SC) before the Assessing Officer. The assessee declared receipt of aeronautical passenger service fee of Rs. 15044.74 lakhs and other income of Rs. 1198.71 lakhs aggregating to Rs. 16243.45 lakh under the head PSF(SC) and claimed following expenses of Rs. 7937.27 lakhs against the said receipt : Security Deployment cost Rs.7351.85 lakhs Administrative cost Rs. 539.90 lakhs Interest & Finance charges Rs. 4.37 lakhs Depreciat....
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....rt private limited versus ACIT in ITA No. 3232/Mum/2012 and 2760/ Mum/2012 and submitted that amount of passenger service fee(security component) is not the income of the assessee. 6.1 Further, the Ld. counsel submitted that that the amount is received in fiduciary capacity on behalf of the Government of India and therefore the assessee being holder, said amount is not chargeable as income in the hands of the assessee. According to the assessee, the amount was held in the fiduciary capacity due to following reasons: (i) The security services formed part of the 'reserved activities' and ,hence the assessee was barred under 'OMDA' to carry out security services. (ii) The security component of the PSF was to be deposited in a separate 'Escrow account' maintained with bank (iii) The 'SOP' required the assessee to maintain separate bank account for PSF(SC) and cheques in respect of security component were credited directly to 'Escrow account' . (iv) The assessee cannot use the said money for any purpose it desires. 6.2 In support of the contention that amount received in fiduciary capacity ,is not taxable in the hands of the assessee, the Ld. co....
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....IT (237 ITR 518) Submission of Revenue before the Tribunal 7. On the contrary, Ld. CIT(DR) contended that in the revised computation of income filed, the assessee itself has included the income from PSF(SC) as its income and also paid taxes thereon and therefore the assessee has already accepted the amount as income liable to tax and the issue before the Assessing Officer was only regarding allowing of the expenditure claimed by the assessee against receipt of PSF(SC) only. 7.1 The Ld. CIT(DR) further referred to the standard operating procedure(SOP) for account/audit of PSF(SC) by the Private airport operator issued by the 'MOCA' dated 19/01/2009, which is available on page 438 to 447 of the assessee's paper book. She particularly referred to para-4.6 and 4.8 of the said SOP and submitted that the assessee was allowed to adjust the tax deducted at source on payments related to security component by 'Airlines' against the income tax liability on PSF(SC) ,which establish that PSF(SC) is in the nature of income in the hands of the assessee. 7.2 The Ld. CIT(DR) placed reliance on Para -8 of the CBDT Office Memorandum dated 30/06/2008, which is available on page 448 to 449 of ....
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....er service fee like other component of facilitation and only difference was instruction of incurring expenditure for maintaining standards of security prescribed by the relevant competent authorities. 7.7 Lastly, The Ld. CIT(DR) submitted that the assessee has not taken any ground related to PSF(SC) as income in assessment year 2010-11,therefore, the assessee has impliedly accepted that PSF(SC) is an income in that year. According to her, once the assessee has accepted that position, then following the Rule of Consistency, the assessee should not dispute the position in the year under consideration. Rejoinder by the Assessee 8. In the rejoinder, the Ld. counsel of the assessee submitted that the assessee neither credited the PSF(SC) to the profit and loss account nor same was offered to tax and only subsequent to the standard operating procedure issued by MOCA on 19/01/2009, it offered the income from PSF(SC) in the revised computation of income and that too without prejudice to the main contention that this income was not taxable. 8.1 The Ld. counsel submitted that the Tribunal in the case of Mumbai International airport limited (supra) has considered all the order of ....
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....case of Mumbai International Airport P. Ltd. (supra). 9.1 In the instant case, the Ld. CIT(DR) has raised issues that additions in question was accepted by the assessee in assessment proceedings and the addition has been made by the Assessing Officer following the opinion expressed by the CBDT. We find that both these issues have been raised before the Tribunal in the case of Mumbai International Airport P. Ltd.(supra). The Tribunal in para-14.8 to para-14.17 of the order discussed the first issue, whether amount could be taxed in the hands of the assessee merely because it was offered to tax during the course of assessment proceeding. The Tribunal answered in negative. The relevant discussion and finding of the Tribunal is reproduced as under: "14.8 With regard to the first issue, the brief facts and background brought before us are that in pursuance to process of privatization of airports in India, the assessee company had entered into an agreement in the nature of OMDA with Airport Authority of India to operate, maintain, develop, design, construct, upgrade, modernize, finance and manage the Chhatrapati Shivaji International Airport at Mumbai (hereinafter called 'air....
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....n back and cannot claim it to be not taxable. On the other hand, the assessee's Counsel maintains that the said amount was not included as part of its income in the return filed originally and only during the course of assessment proceedings, because of the pressure made by the assessing officer by showing letters of CBDT and MOCA, the said amount was offered for tax. But the assessment should be done strictly in accordance with law and mere acquiescence of the assessee expressed during the course of assessment proceedings would not alter the true position of law and would not make the aforesaid amount as liable to be taxed in the hands of the assessee, if the same is actually not liable to be taxed as per the provisions of the Income-tax Act. 14.10. We have analyzed this issue. It is well settled position of law that an amount can be brought to tax in the hands of an assessee only in accordance with the provisions of Income- tax Act. This fundamental position has been well explained and well settled in many judgments. It is well settled that there is no estoppel against law. No tax can be collected except with the authority of law as per clear mandate of Article 265 of Co....
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....the stage of original assessment disclosed any grounds for relief under section 2(5) (a) (hi ) of the Finance Act of 1964 or of the Finance Act of 1965, even though no claim was made for that relief by the assessee at the stage of those proceedings before him. Even if there is a deviation on a point of law, so far as the circular of the Board is concerned, that circular will be binding on all officers concerned with the execution of the Act and they must carry out their duties in the light of the circular. In view of this clear position regarding the effect of the circular, it was obvious that in the instant case it was incumbent on the Income-tax officer to advise the assessee to claim relief under section 2(5)(a) if the proceeding or any other particulars before him at the stage of the original assessment indicated that the assessee was entitled to such relief under the provisions of the relevant Finance Act, 1965, so far as the order under reference was concerned......... " 14.12. Further reference is placed upon another judgment in the case of S.R, Koshti 276 ITR 165 (Guj) in which relief was granted to assessee with following observations: "The authorities un....
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....sed above, it is held that the amount in question cannot be taxed in the hands of the assessee merely because the same was offered to tax during the course of assessment proceedings under certain circumstances. Under these circumstances, we need to examine and determine whether the impugned amount of PSF-SC collected by the assessee company is actually taxable in the hands of the assessee as per the provisions of Income-tax Act, 1961. 9.2 In the instant case also, the assessee has not filed any income from the PSF-(SC) in the return of income filed and it has been filed during assessment proceeding by way of a revised computation of income that too, without prejudice to the claim that it was not taxable in the hands of the assessee. Thus, respectfully, following the finding of the Tribunal that amount in question cannot be taxed in the hands of the assessee merely because the same was offered to tax during assessment proceedings under certain circumstances, we reject the contention of the Ld. CIT(DR) that once the assessee itself has offered the income from PSF(SC), it cannot be allowed to contest the issue in further appellate proceedings . 10. The second issue of binding le....
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.... taxable in the hands of the assessee company, and therefore, while filing the return the same was not included in the taxable income by the assessee. But during the course of assessment proceedings, the AO was of the opinion that the said amount was taxable in the hands of the assessee in view of Office Memorandum of CBDT dated 30- 06- 2008 and instructions dated 19-01-2009 issued by MOCA. With a view to clarify the situation, representation was made before the CBDT as well as MOCA. In response, MOCA issued a letter dated 15-11-2010 wherein it was stated that the matter was examined with the Ministry of Finance and accordingly it is clarified that the whole amount of PSF - SC including security component was revenue receipt, and thus it was taxable under the Income-tax Act. 14.19 The assessee challenged before us, the validity and binding force of the aforesaid Office Memorandum issued by the CBDT and clarification received by MOCA. It has been noted by us firstly that in none of these documents, there seems to have been made any application of mind by the concerned authorities while expressing their opinion. None of the authorities have considered the aspect that the imp....
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....SC) and distinguished that of Chowringhee Sales Bureau P. Ltd. vs. CIT, supra. 14.20 Thus, at the outset, it is clearly visible that both the authorities expressed their opinions without proper application of mind and without examining the nature of impugned receipt within the framework of provisions of Income-tax Act, 1961. 14.21 Apart from that, the binding effect of Office Memorandum issued by CBDT, clarification issued by MOCA is also under question. It has been argued that it has been held by Hon'ble Supreme Court many times that circulars issued by the Board are binding upon the authorities working under it, viz. the AO, etc. but these are not binding upon the appellate authorities including Income Tax Appellate Tribunal. We have examined this aspect also carefully. It is noted that as per section 119 of the Act, the CBDT has been empowered by the legislature to issue orders, instructions or directions to all the Income-tax authorities working under it for proper administration of the I.T. Act. And it has also been provided that this shall be binding upon the Income-tax authorities. But it is further noted that a proviso has been added to sub section (1) of ....
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....mpowered the CBDT to issue orders, instructions or directions for the proper administration of the Act. Hon'ble High Court has taken into consideration various earlier judgments of Hon'ble Supreme Court on this issue. Similarly, the Hon'ble Supreme Court in the case of CIT Vs. Hero Cycles Pvt. Ltd (supra) held that circulars can bind the Income-tax Officer but will not bind the appellate authority or the Tribunal or the Court or even the assessee. It is further noted that law in this regard was further analyzed by Hon'ble Supreme Court in the case of UCO Bank (supra). It was observed by the Hon'ble Supreme Court that CBDT has power to tone down the rigour of the law and ensure enforcement of its provisions of issuing circulars. The Board has been given for the purpose of just, proper and efficient management of work of assessment. However, these are not meant for contradicting or nullifying any provision of the statute. Relying upon its earlier judgment comprising of three judges in the case of Keshavji Ravji & Co vs CIT 183 ITR 1 (SC), it was inter-alia observed that Board cannot pre-empt judicial interpretation and the scope and ambit of a provision of the Act. Also, a circular c....
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....s actually a loss, but this loss was not claimed in the return of income filed. It was only claimed during assessment proceeding without prejudice to the claim of the assessee that income from PSF(SC) was not taxable in the hands of the assessee. We find the claim of the loss in assessment year 2010-11 has only been made, to take care of the situation in case the security component of PSF would have been held taxable. Thus in our opinion, the assessee has not accepted that PSF(SC) was taxable in the hands of the assessee and accordingly ,the rule of consistency cited by the Ld. CIT(DR) cannot be applied in the instant case before us. 11.2 The argument of the Ld. CIT(DR) that in view of the decision of the Hon'ble Supreme Court in the case of Chowrangi Sales Bureau (supra), the receipt is taxable in the hands of the assessee, has also been considered by the Tribunal (supra) in para 14.19 of the order. The Tribunal (supra) has distinguished the facts of the case of Chowangiee Sales Bureau (supra). The relevant finding of the Tribunal has already been reproduced by us in preceding paras and, therefore, we are not reproducing again. In the said case, amount of sales tax was received....
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....f collection of Passenger Service Fee (PSF) at airports have been engaging the attention of the Government for some time. The matter has been deliberated with Airports Authority of India and other airport operators and it has now been decided that:- i. CISF will be deployed as per the assessment of BCAS at airports operated by JVCs or private operators also. ii. Passenger Service Fee (PSF) at airports would he collected by the respective Airport Operator, which could be AM, JVC, or a private operator. iii. The amount of PSF to be collected will he fixed by the Ministry of Civil Aviation. The amount will continue to be Rs. 200/- per passenger till further orders. The airport operator would retain Rs. 70/- towards passenger facilitation. An Escrow account would be opened whenever the airport operator is a JVC or private operator. This account will be operated by the airport operator (not by AM). Rs. 130/- of the PSF collected per passenger by such airport operator would be deposited in the Escrow account by the Airport Operator for payments to be made to CISF. The Escrow account would be subject to Government Audit of CAG. iv. In case any amount re....
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....foresaid amount for any other purposes other than the designated purpose of meeting security expenses. So much so, even the surplus left if any, was not at the disposal of the assessee company but was to be mandatorily transferred to the account of Airport Authority of India as per the prescribed procedure. Under these circumstances, it is clear that assessee merely acted as a conduit or a trustee for collection and disposal of the impugned amount of PSF-SC. Under these circumstances, the aforesaid amount could not have been characterized as income' u/s 2(24), section 5 or any other provisions of the Income-tax Act, 1961." (emphasis supplied externally) 11.10 Thus, in above cases the Tribunal observed that the assessee has no freedom to utilize the amount or even surplus was not at the disposal of the assessee. But in the instant case, we found that certain facts differ from the facts in the case of MIAL. In the instant case, during the year the assessee entered into agreement for operating of Escrow Account with the Bank. A copy of said agreement has been produced before the Bench by the Ld. Counsel. We find that on the directions of the assessee, the bank invested the funds (w....
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....or accounting / audit of Passenger Service Fee (Security Component) by the airport operators. The aforesaid order contained whole procedure in detail for collection and disbursement of the said amount. Relevant portion of the same is reproduced hereunder, for the sake of better clarity on facts related to conditions attached with regard to collection and disbursement of the aforesaid amount: "2. Nature of Security component of PSF: 2.1 Aviation security is an activity reserved for the Government of India. Force deployment at the airports, security requirements including the requirement of capital items and specifications thereof are laid down by the Government/Bureau of Civil Aviation Security (BCAS). As stated above, PSF is levied under Rule 88 of the Aircraft Rules, 1937 and covers security component as well as facilitation. While the fee is collected by the license of the airports, i.e., the airport operator, through the airlines, the security component thereof, which constitutes 65% of the total amount, can be used only in terms of directions issued by the Government/ BCAS, from time to time. The amount collected by the airport operator, which is kept separate....
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....hall be credited in Escrow Account." 11.14 In view of the SOP, the Tribunal (supra) concluded as under: "14.34 The perusal of the above order containing SOP makes it clear that the amount collected by the airport operator is to be kept separately in 'Escrow Account' and the same is held by the airport operator in fiduciary capacity. It becomes further clear that the amount of any surplus left in the said account could not have been utilized for any purpose other than security related expenses. Under these circumstances, it was clearly not having any characteristics of income in the hands of the assessee company. The said SOP also contained certain guidelines with respect to taxability of the impugned amount. In our view, MOCA is not the designated authority to determine the taxability of the said amount as has also been discussed by us in detail in earlier part of our order and, therefore, to that extent, the observations or guidelines issued by MOCA exceed its jurisdiction and, therefore, these were not binding upon the assessee. The assessee was, of course, bound by remaining position of the guidelines as per concerned rules & regulations." 11.15 Thus, the Tribunal....
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....Tirathdas 41 ITR 367 (SC) which is still followed in many other judgments by various courts all over the country. The relevant part of the judgment laying down an acid test to decide such issues is reproduced hereunder: "In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income and. an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. The first is a case in which the income never reach....
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....or directed to be collected from the passengers with this clear understanding and prior stipulation that 65% of the same is meant for security agencies. Thus, the assessee merely acted as a collection agent. Thus, applying the first principle, the impugned amount would fall in the category of diversion of income. 14.40. As far as the other three principles are concerned, the crux of these three principles is to find out whether the assessee had, in substance, earned any income. In other words, these three principles suggest application of the concept of 'real income', which suggests that unless the income has been earned by a person in real sense, the same cannot be held as taxable income. There has to be first income and only then its taxability could be determined. It is noted by us that in the facts before us, no portion of the amount collected on behalf of AAI / MOCA is reported to have been retained by the assessee as its income in as much as nothing belonged to it. Thus, the impugned amount is clearly not taxable in the hands of the assessee. 14.41. It is further noted by us that in many cases, wherein under some requirement of law if the amounts we....
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....d 269 ITR 397 (SC) and CIT vs Ambur Cooperative Sugar Mills Ltd 269 ITR 398 (SC) wherein it was held that the amount set apart towards molasses reserve fund constituted diversion of income by overriding title, and therefore, it was held to be excludible from assessee's total income. Similarly, in the case of CIT vs Bijli Cotton Mills Pvt. Ltd. 116 ITR 60 (SC), the Hon'ble Supreme Court held that when right from the inception, amount of 'Dharmada' was collected and held by the assessee company under an obligation to spend for charitable purposes only, then those amounts were not its trading receipts and was not taxable as business income." (emphasis supplied externally) 27. While concluding that PSF(SC) is an income by overriding of title , the Tribunal (supra) has noted that no income was retained by the assessee. But in present case, this fact is not getting ascertained from the orders of lower authorities as well as submission of the assessee and Ld. Counsel also could clear this fact as how the dividend income earned on investment made out of surplus fund has been utilized. Thus, the above finding of Tribunal (supra) also cannot be applied straightway in the instant cas....
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.... is done by the assessee in this regard, then the AO will be at his liberty to treat the amount so misappropriated as income of the assessee but to that extent/only. Further, if any refund is received by the assessee on account of TDS deducted on this component, i.e. on PSF-SC, then the same shall also be deposited by the assessee in the Escrow Account, as was fairly agreed by the Ld. Counsel during the course of hearing before us, failing which it would be treated as income of the assessee, to that extent only. We direct accordingly. This ground is allowed subject to directions given above." 11.18 During the hearing, the Ld. Counsel was asked to produce a statement of 'Escrow Account' with narration of entries to assertion whether; the assessee has invested the funds for purposes other than designated purpose of security. But the Ld. counsel provided copy of statement for a period of one month that too without any narration, thus it is not possible at our end to determine whether the assessee utilized the PSF(SC) funds for its own benefit or according to its choice. It is vey crucial to determine that how the assessee utilized the funds lying in 'Escrow Account' and whether the....
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....he Ld. CIT-(A) that no tax is deductible on sitting fee of Rs. 12.20 Lakhs and direction to delete the addition of Rs. 8.31 lakhs subject to verification of deduction of tax, whereas the assessee is aggrieved with the disallowance under section 40(a)(ia) sustained in respect of the year-end provisions. 15. The facts qua the addition are that the Assessing Officer observed various expenses amounting to Rs. 759.75 Lakhs, like cargo handling charges(Rs. 457.53 Lakhs), consultancy horticulture (Rs. 11.80 Lakhs), equipment hire (Rs. 53.04 Lakhs), housekeeping ( Rs. 99.55 Lakhs) , operation security cargo(Rs. 2.73 Lakhs), audit fee (Rs. 27.00 Lakhs), advertisement (Rs. 87.59 Lakhs), recruitment employee verification fee (Rs. 8.31 Lakhs), sitting fee board meeting (Rs. 12.20 Lakhs) and found that no tax was deducted though same was liable for TDS according to him, thus, he disallowed the said sum of Rs. 759.75 Lakhs in terms of section 40(a)(ia) of the Act. 15.1 The Ld. CIT-(A) grouped the above expenses under four heads as under: Nature of Expenditure Amount (in Lakhs) Various Provisions 701.65 Sponsorship Fees 50.00 Recruitment Fees 8.31 ....
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....default and deduction be allowed to it in the year in which tax is deducted. 18. On the other hand, Ld. CIT(DR) on the issue of sitting fee submitted that an employer needs to deduct TDS on salary paid to employees as per provisions of section 192 of the Act and the term employee in its scope also include managing director. She referred to the new clause i.e. (1)(ba) of section 194J of the Act inserted as on 01/07/2012 by the Finance Act, 2012, which reads that any remuneration of fees or commission by whatever name called, other than those on which tax is deductible under section 192 of the Act, to a director of a company, shall be liable to deduct at the rate of 10%. According to her, this insertion is clarificatory in nature and therefore it would be retrospective in application. She submitted that even prior to the amendment, the sitting fee paid was in the nature of fee for technical services and thus it was liable for deduction at the rate of 10% under section 194J of the Act. In respect of recruitment verification fee, she referred to circular No. 715 dated 08/08/1995 and submitted that in terms of question No. 12, it is clearly specified that payment to a recruitment age....
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.... uphold the order of the Ld. CIT-(A) on the issue in dispute. 21.1 As far as the issue of recruitment expenses amounting to Rs. 8.31 lakhs is concerned, the Ld. CIT-(A) held as under: 6.2.3 As regards the recruitment expenses amounting to Rs. 8.31 lacs, the appellant submits that tax has been deducted at the time of booking the expenses in another general ledger account which was merely transferred to another general there is no case for disallowance u/s 40(a)(ia). The AO is directed to verify the above contention of the appellant from the books of account and to delete the impugned addition of Rs. 8.31 lakhs if/the appellant's contention is found to be correct. 21.2. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is well reasoned as he has directed the Assessing Officer to verify the fact of deduction of tax at source already done by the assessee. We do not find any error in the said direction of the Ld. CIT-(A) and, accordingly, we uphold the same. 21.3 As regard to the year-end provisions, the Ld. CIT-(A) has observed as under: "6.2 I have carefully considered the assessment order and the submissions of the Ld. AR on the above issue. As ....
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....en into consideration the alternative plea of the assessee to allow the deduction in subsequent year and accordingly directed the Assessing Officer. The Revenue has not filed any appeal on that issue. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and no further interference is required. Accordingly we uphold the same. 22. The ground No. 2 of the appeal of assessee is accordingly, allowed, and ground No. 2 of the appeal of Revenue is dismissed. 23. The ground No. 3 of the appeal of the assessee relates to disallowance of Rs. 2,36,70,000/-under section 14A read with Rule 8D of the Income-tax Rules, 1962. 24. The Ld. counsel further submitted that during the year under consideration investments were only in mutual funds-daily dividend scheme and there was no actual cost incurred since the dividend was directly reinvested in the mutual funds. 24.1 The Ld. counsel of the assessee submitted that the assessee had not incurred any expenditure in relation to earning exempt income and therefore in view of the Hon'ble Supreme Court is in in the case of Godrej Boyce manufacturing Co Ltd versus DCIT (394 ITR 449) and Maxopp Investment Ltd. V....
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....elevant material on record. On the issue of dissatisfaction on correctness of the claim of the assessee, the Assessing Officer in para-8.1 of the assessment order has reproduced the submission of the assessee and thereafter in Para-8.2 in 8.3 of the assessment order has expressed his dissatisfaction on the claim of no expenditure incurred by the assessee. The relevant paragraphs of the assessment order are reproduced as under: "8.2 In view of the Supreme court judgment in the case of CIT Vs United General Trust Ltd 200ITR 455(SC) coupled with the finding that expenditure has been incurred by the assessee Company on the earning of the dividend income and in absence of any better method the method suggested by Rule 8D of the Income Tax Rules is adopted in determining the expenditure incurred by the assessee company in relation to dividend income/ exempt income calculated as under which is not includible in total income. 8.3 The language of subsection (1) of section 14A clearly provides that no deduction shall be allowed n respect of expenditure incurred by the assessee in rotation to income which does not form part of the total income under this Act On going through....
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....lation to income which forms pad of the total income can be allowed. The expenditure incurred in relation to income which does not form pad of the total income has to be disallowed. (iii) From this it would follow that Section 14A has implicate within it a notion of apportionment The principal of apportionment which prior to the amendment of Section 14A would have not applied to expenditure incurred in a composite and indivisible business which results in taxable and nontax able income must after the enhancement of the provisions apply even to such a situation. .............................................. (v) Even in the absence of sub-section (2) of Section 14A the Assessing Officer would have to apportion the expenditure and to disallow the expenditure incurred by the assessee in relation to income which does not farm part of total income under the Act." 26.1 Thus, in our opinion, it cannot be said that the Assessing Officer was not dissatisfied with the claim of the assessee. We find that Hon'ble Delhi High Court in the case of Indiabulls Financial Services Ltd. (supra) has held that where the Assessing Officer after carrying out elaborate a....
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....hat the Supreme Court in East India Commercial Co. Ltd. v. Collector of Customs, AIR 1962 SC 1893 (at page1905) declared: "We, therefore', hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and they cannot ignore it. ...." This position has been summed up by the Supreme Court in Mahadeolal Kanodia v. Administrator General of West Bengal, AIR 1960 SC 936 (at page 941) as follows: "Judicial decorum no less than legal propriety forms the basis of judicial procedure. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if judges of co-ordinate jurisdiction in a High Court start overruling one another's decisions. If one Division Bench of a High Court is unable to distinguish a previous decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view, the result would be utter confusion. The position would be equally bad where a judge sitting singly in the High Court is of opinion that the previous decision of another single judge on a question of l....
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....und by the decisions of the Nigh Court of this State ( see CIT v. Indian Press Exchange Ltd. [1989] 176 ITR 331 (Col) ; East India Commercial Co. Ltd. v. Collector of Customs AIR 1962 SC 1993, paragraph 29). In that view of the matter, the impugned order must be set aside and the Commissioner is directed to consider the matter afresh in keeping with the decisions of this court after giving the petitioners an opportunity of being heard. At least 48 hours clear notice must be given to the petitioners. The Commissioner will communicate the final order to the petitioner within eight weeks from the date of hearing. (iv) CIT v. J.K. Jain [1998] 230 ITR 839 (P&H), observing as under: "We have carefully examined the records and have heard Ld. counsel representing the parties. We are in respectful agreement with the view expressed by the Allahabad High Court in Omega Sports and Radio Works' case [1982] 134 ITR 28, as also the decision of this court in Mohan Lal Kansal's case [1978] 114 ITR 583. Following the decision in the two cases referred to above, we hold that it was not a case of divergence of opinion inasmuch as the opinion expressed by this court was bin....
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....ted that the Tribunal in assessment year 2007-08 has held the upfront fee paid by the assessee to the AAI as revenue in nature. The Ld. counsel accordingly did not press this ground. 28. The Ld. CIT(DR), on the other hand, concurred with the submission of the Ld. counsel of the assessee and submitted that the Assessing Officer might be directed to withdraw depreciation if any allowed to the assessee during the year under consideration on said upfront fee amount held by the Assessing Officer as capital in assessment year 2007-08. 29. We have heard the rival submission and perused the relevant material on record. The Tribunal in ITA No. 2720/Del/2011 and ITA No. 4202/Del/2013 for assessment year 2007-08 in para-35 of the order has held the payment of upfront fee as revenue expenditure. The relevant para of the Tribunal(supra) is reproduced as under: "25. One more important aspect in this case is that, if the assessee had acquired any right by making payment of Rs. 150 crores, then under the terms of OMDA it is clearly stipulated that the payment of 'annual fee' of 45.99% of gross revenue of the year is not made continuously then the OMDA agreement will come to an end. ....
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....s capital expenditure. The Tribunal in ITA No. 2720/Del/2011 and ITA No. 4202/Del/2013 for assessment year 2007-08, out of the repair and maintenance expenditure of Rs. 20 crore, removed amount of Rs. 1,54,61,755/- towards advertisement in newspaper and the balance amount on repair and maintenance was treated as revenue expenditure. The relevant finding of the Tribunal(supra) in para-42 is extracted as under: "42. We have heard the rival submissions and also perused the relevant finding given in the impugned orders as well as the judgments referred and relied upon by the parties. Here in this case as noted above the nature of expenditure is on account of renovation and repairs for improving the existing infrastructure. The Ld. AO has not pointed out as to which expenditure is for construction of new structure. In fact he has classified all the expenditure as revenue and that is why he has allowed it in a deferred manner, that is, as deferred revenue expenditure. If AO himself has accepted that expenditure is revenue and has held to be allowable on a deferred basis spread over 30 years, then there cannot be case that it is capital in nature. As submitted by the Ld. Sr. Coun....
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....e of audit report specified for the purpose. 38. We have heard the rival submission and perused the relevant material on record. We find that the issue of claim of deduction under section 80IA of the Act in case the assessee has been adjudicated by the Tribunal in ITA No. 2720/Del/2011 and 4202/Del/2013 for assessment year 2007-08 as under: "48. Lastly, with regard to the ground No. 4 that Ld. CIT (A) has erred in allowing the assessee's claim u/s 80-IA in case the assessed income is positive, we find that here in this case, it is an undisputed fact that assessee is engaged in the business of operating and maintaining of airport and the profits and gains derived by an undertaking from such business which has been referred to as eligible business in section 80-IA. The assessee before the Ld. CIT (A) has submitted that, since the return of income has filed at a huge loss of Rs. 150.55 crores, therefore, no claim for deduction u/s 80IA was made. It is only when the AO has made the assessment at a positive figure Rs. 62.70 crores, the assessee has made a claim for deduction u/s 80-IA. In support of such a claim, audit report was also filed in the prescribed form, a copy of ....
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....ption Rs. In lacs Cargo Expenses Rectification of civil & fire fighting work etc.- old Cargo Bldg. 7.59 Cargo Expenses Misc. civil work at Haj terminal 3.31 Cargo Expenses Providing & fixing industrial vents at roof- Import & Export area 8.08 Cargo Expenses Supply/hiring of tents for the Air side area 17.59 Cargo Expenses Maint. &repair of Tech. Bldg. Cargo- Procurement of Trouplin for cargo terminal 29.98 Cargo Expenses Repair of covered Shed for motor transport workshop.... 9.60 Repair &Maint. - Terminal Bldgs. Civil, Masonary& repair work at the terminal & in front of terminal 20.20 Repair &Maint. - Terminal Bldgs. Internal painting & repair work in Ceremonia Lounge at Igia at terminal-1 32.65 Repair &Maint. - Terminal Bldgs Supply of spare part-replacement of sanitary fittings 8.29 Repair &Maint. - Terminal Bldgs. Painting-P/F frameless Glass double doors&Alumn. Composite panels 4.25 Repair &Maint. - Terminal Bldgs. Renovation of ceremonial lounge in terminal 1B-flooring, civil work & furniture 10.11 Repair &Maint. - Terminal Bldgs. Renovation of Delta ladies ....
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.... 7.34 Rep. &Maint.-of Sewage & Drainage Misc. civil, plumbing & piping work related to water supply at terminal-li 3.46 Rep. &Maint.-of Sewage & Drainage Modification of rain water drainage system over the check in area of terminal 1B civil works for diversion 11.30 Rep. &Maint.-of Sewage & Drainage Providing & fixing of drain covers 1.14 Repairs operational Bldg Misc. civil jobs at terminal Buldgroads& car park area fixing of step tiles at stair case 48.00 Repairs operational Bldg. Temp, vehicle parking-renovation for facilitating vehicle movement 52.00 Repairs operational Bldg. Structure steel work, demolition cement concrete-painting with enamel paint 7.00 Repair and Maint.- Runways Misc. civil works amd filling of joints with sealing compound - Terminal 1 &2 4.31 Repair and Maint.- Runways Painting of taxiways and Apron at Igia- marking with paint to facilitate Aircrafts 21.01 Repair and Maint.- Runways Recarpetting of balance area of taxiways at Igia 31.98 Repair and Maint.- Taxi Runways Operation &maint Contract of Runway marking Machine 3.20 Repair and Maint.- Taxiways....
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....ed for A.Y. 2007-08 was disallowed in the assessment order, the same has been fully allowed by the Id. CIT (A) XVI, New Delhi vide her order dated 28.02.2011 in appeal no. 69/2010-11 and 419/09-10 with the following observations. "8.14 From the assessment order, it is observed that the expenditure has been incurred for renovation, tile fitting and flooring, dismantling and shifting, electrical fitting and rewiring, rehabilitating and painting, interior work, beautification and decoration work, advertisement, etc. It cannot be said that the expenditure so incurred is capital in nature, these expenses cannot be held to be capital in nature in view of the judicial pronouncements which would apply directly to the present facts. 8.15 Thus, applying the above discussed general principles, I hold that the said expenditure is allowable under section 30/31/37 of the Act as being in the general nature of repair, and maintenance expenditure. Therefore, this ground of appeal stands allowed. 5.3.1 Perusal of the assessment order for the year under consideration shows that the nature of expenditure is similar to that of A.Y. 2007-08. Further, the said expenditure is on....
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....e expenditure on the basis of tests laid down by various courts as under: * Nature Capital expenditure is of non-recurring nature. Revenue expenditure is of recurring nature. * Purpose Capital expenditure is incurred in acquiring permanent assets or improving their existing capacity. Revenue expenditure is incurred in managing day-to-day activities of the organization and maintaining its fixed assets. * Benefit Capital expenditure gives benefit over a number of years. Revenue expenditure gives benefit not for more than one year. * Earning Capital expenditure helps in increasing earning capacity of the business. Revenue expenditure helps in earning capacity of the business. * Treatment Capital expenditure is shown on asset side of the balance sheet. Revenue expenditure is shown on the debit side of the trading and profit and loss account. 41.1 She further relied on the following judgments: 1. Empire Jute Company (1980) 124 ITR 1 2. Assam Bengal Cement Co. Ltd. Vs. CIT (1955) 27 ITR 34 42. On the contrary, the Ld. counsel of the assessee submitted that: a. ....
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....ses like construction of vehicle parking for accommodating more vehicles etc, which apparently are in the nature of capital expenditure. 43.1 The issue of distinction between capital and revenue expenditure came for consideration before the Hon'ble Supreme Court in the case of Assam Bengal cement Co Ltd versus CIT(1955) 27 ITR 34. The Hon'ble court laid down following test for deciding whether expenditure incurred is capital or revenue: "5. This synthesis attempted by the Full Bench of the Lahore High Court truly enunciates the principles which emerge from the authorities. In cases where the expenditure is made for the initial outlay or for extension of a business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure. A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure. The question however arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for th....
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....the IT authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of fact if they have been arrived at on a proper application of those principles. The expression "once and for all" used by Lord Dunedin has created some difficulty and it has been contended that where the payment is not in a lump sum but in instalments, it cannot satisfy the test. Whether a payment be in a lump sum or by instalments, what has got to be looked to is the character of the payment. A lump sum payment can as well be made for liquidating certain recurring claims which are clearly of a revenue nature, and on the other hand payment for purchasing a concern which is prima facie an expenditure of a capital nature may as well be spread over a number of years and yet retain its character as a capital expenditure (Per Mukherjee, J., in CIT vs. Piggot Chapman & Co. (1949) 17 ITR 317 (Cal). The character of the payment can be determined by looking at what is the true nature of the asset which has been acquired and not by the fact whether it is a payment in a lump sum or by instalments. As was otherwise put by Lord Greene, M.R., in H....
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.... which have to be applied in order to determine whether in the present case the expenditure incurred by the company was capital expenditure or revenue expenditure. Under cl. 4 of the deed the lessors undertook not to grant any lease, permit or prospecting licence regarding limestone to any other party in respect of the group of quarries called the Durgasil area without a condition therein that no limestone shall be used for the manufacture of cement. The consideration of Rs. 5,000 per annum was to be paid by the company to the lessor during the whole period of the lease and this advantage or benefit was to enure for the whole period of the lease. It was an enduring benefit for the benefit of the whole of the business of the company and came well within the test laid down by Viscount Cave. It was not a lump sum payment but was spread over the whole period of the lease and it could be urged that it was a recurring payment. The fact however that it was a recurring payment was immaterial, because one had got to look to the nature of the payment which in its turn was determined by the nature of the asset which the company had acquired. The asset which the company had acquired in conside....
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....l decisions and various tests evolved for distinguishing the capital or revenue expenditure held that no test is paramount or conclusive as every case has to be decided on its facts keeping in mind the broad picture of whole operation in respect of which the expenditure has been incurred. The relevant finding of the Hon'ble Supreme Court is reproduced as under: "6. The decided cases have, from time to time, evolved various tests for distinguishing between capital and revenue expenditure but no test is paramount or conclusive. There is no all-embracing formula which can provide a ready solution to the problem; no touchstone has been devised. Every case has to be decided on its own facts, keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred. But a few tests formulated by the Courts may be referred to as they might help to arrive at a correct decision of the controversy between the parties. One celebrated test is that laid down by Lord Cave L.C. in Atherton vs. British Insulated & Helsby Cables Ltd. (1925) 10 Tax Cases 155 (HL), where the Ld. Law Lord stated : "....when an expenditure is made, not only once an....
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....n enduring nature. It is limited in its duration to six months and, moreover, the additional working hours per week transferred to the assessee have to be utilized during the week and cannot be carried forward to the next week. It is, therefore, not possible to say that any advantage of enduring benefit in the capital field was acquired by the assessee in purchasing loom hours and the test of enduring benefit cannot help the Revenue. Another test which is often applied is the one based on the distinction between fixed and circulating capital. This test was applied by Lord Haldane in the leading case of John Smith & Son vs. Moore (1921) 12 Tax Cases 266 (HL) where the Ld. law Lord drew the distinction between fixed capital and circulating capital in words which have almost acquired the status of a definition. He said: "Fixed capital is what the owner turns to profit by keeping it in his own possession; circulating capital is what he makes profit of by parting with it and letting it change masters." Now so long as the expenditure in question can be clearly referred to the acquisition of an asset which falls within one or the other of these two categories, s....
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....f capital expenditure. But we fail to see how it can at all be said in the present case that the assessee acquired a source of profit or income when it purchased loom hours. The source of profit or income was the profit making apparatus and this remained untouched and unaltered. There was no enlargement of the permanent structure of which the income would be the produce or fruit. What the assessee acquired was merely an advantage in the nature of relaxation of restriction on working hours imposed by the working time agreement, so that the assessee could operate its profit-earning structure for a longer number of hours. Undoubtedly, the profit-earning structure of the assessee was enabled to produce more goods, but that was not because of any addition or augmentation in the profit-making structure, but because the profit-making structure could be operated for longer working hours. The expenditure incurred for this purpose was primarily and essentially related to the operation or working of the looms which constituted the profit-earning apparatus of the assessee. It was an expenditure for operating or working the looms for longer working hours with a view to producing a larger quanti....
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....the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. See Bombay Steam Navigation Co. (P) Ltd. vs. CIT (1965) 56 ITR 52 (SC) : TC16R.881. The same test was formulated by Lord Clyde in Robert Addie & Sons' Collieries Ltd. vs. IRC (1924) 8 Tax Cases 671 (C Sess) in these words : "Is it a part of the company's working expenses?-is it expenditure laid out as part of the process of profit earning ?-or, on the other hand, is it a capital outlay ?- is it expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which is a condition of carrying on its trade at all ?" It is clear from the above discussion that the payment made by the assessee for purchase of loom hours was expenditure laid out as part of the process of profit earning. It was, to use Lord Sumner's words, an outlay of a business "in order to carry it on and to earn a profit out of this expense as an expense of carrying it on". John Smith & Son vs. Moore (supra). It was part of the cost of operating the profitearning apparatus and was clearly in the nature of revenue expenditure. ....
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....orming the income-earning operation. This decision bears a very close analogy to the present case and if payment made by the assessee-company to company B for acquiring an advantage by way of entitlement to produce more goods notwithstanding the cut of 10 per cent was regarded by the Privy Council as revenue expenditure, a fortiori, expenditure incurred by the assessee in the present case for purchase of loom hours so as to enable the assessee to work the profit making apparatus for a longer number of hours and produce more goods than what the assessee would otherwise be entitled to do, must be held to be of revenue character. The decision in IRC vs. Carron Co. (1968) 45 Tax Cases 18 (HL), also bears comparison with the present case. There certain expenditure was incurred by the assesseecompany for the purpose of obtaining a supplementary charter altering its constitution, so that the management of the company could be placed on a sound commercial footing and restrictions on the borrowing powers of the assessee-company could be removed. The old charter contained certain antiquated provisions and also restricted the borrowing powers of the assessee-company and these features seve....
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....d as the expenditure was incurred to render it in its functional state and therefore it is clearly in the capital field. 46. The Apex Court in CIT versus Saravana spinning Mills private limited (2007) 293 ITR 201(SC) referred its earlier decision to express as when the repair expenditure could be of capital nature. The relevant paragraph of the said decision is reproduced as under: "12. This Court in the case of Ballimal Naval Kishore vs. CIT (1997) 138 CTR (SC) 284 : (1997) 2 SCC 449 approved the test formulated by Chagla C.J. in the case of New Shorrock Spinning & Manufacturing Co. Ltd. vs. CIT (1956) 30 ITR 338 (Bom) as to when the expenditure can be said to have been incurred on current repairs. In that case it was observed as follows : "The simple test that must be constantly borne in mind is that as a result of the expenditure which is claimed as an expenditure for repairs what is really being done is to preserve and maintain an already existing asset. The object of the expenditure is not to bring a new asset into existence, nor is its object the obtaining of a new or fresh advantage. This can be the only definition of "repairs" because it is only b....
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....diture, even if certain expenditure has resulted in personal benefit to its employees . The Ld. CIT-(A) deleted the addition on two grounds, firstly that addition of Rs. 16,84,500/-has been made twice, secondly that said amount has already been subjected to Fringe Benefit Tax (FBT) by the Assessing Officer. 50. Before us, the Ld. CIT(DR) submitted that merely by charging FBT, the entire expenditure should not be allowed and the addition for the balance amount should be sustained. 51. On the contrary, the Ld. counsel of the assessee relied on various judgments as follows to support that expenses incurred towards club expenditure are for the benefit of the business and therefore allowable as business expenditure: i. CIT v. United Glass Mfg. Co. Ltd. (2012-TIOL-102-SC-IT) ii. CIT v. Samtel Color Ltd. (2010) (326 ITR 425) (Del HC.) iii. CIT v. Nestle India Ltd. (296 ITR 682) (Del HC.) iv. Hero Honda Motors Ltd. v. JCIT (2006) (103 ITD 157) (Del ITAT) v. CIT v. Johnson & Johnson Ltd. (2017) (297 CTR 480) (Bom) vi. CIT v. Groz Beckert Asia Ltd. (2013) (214 Taxman 205) (P&H) vii. Gujarat State Export Corpn Ltd. v. CIT (1....
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....lusively for the purpose of business. 55. Further, we note that in the case of Commissioner of Income Tax Vs. Samtel Colour Ltd. (supra), the Hon'ble Jurisdictional High Court High Court followed the ratio of the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Nestle India Ltd. (supra) and Hon'ble Bombay High Court in the case of Otis Elevator Company India Ltd. Vs. CIT (1992) 195 ITR 682 and held that the admission fee paid toward corporate membership is an expenditure incurred wholly and exclusively for the purpose of business and not a capital expenditure . It has only facilitated smooth and efficient running of the business enterprises and did not add to profit earning apparatus of the business enterprise. 56. In view of our discussion above, we do not find any error in the finding of the Ld. CIT-(A) on the issue in dispute. Accordingly ground No. 3 of the appeal of the Revenue is dismissed. 57. In the result, the appeals of the assessee as well as Revenue, both are allowed partly for statistical purposes. ITA Nos. 4213/Del/2012 & 4353/Del/2012 for AY: 2009-10 58. Now, we take up the appeal of the assessee in ITA No. 4213/Del/2012 and appeal of the Re....
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.... 8D. Without prejudice to Ground 3 above Ground 4: 1. On the facts and circumstances of the case and in law, the learned CIT(A)has erred in not deciding the Appellant Ground No. VIII relating to not adding the disallowance made under section 14A of the Act to the cost of the mutual fund units. 2. The Appellant humbly prays that the AO be directed to add the disallowance made under 14A to the cost of mutual fund units. Without Prejudice to the claim of the Appellant that Upfornt Fee and Payment to AAI for Capital Work in Progress was allowable as revenue expenditure in AY 2007-08 Ground No. 5: Not granting Depreciation 1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that the alternate claim raised by the Appellant in regard to not granting depreciation as per section 32 of the Act at appropriate rates on the ground that though the Upfront fees and payment towards the Capital Work in Progress incurred by AAI was in the nature of license fees for conducting business for 30 years, it was not an intangible asset within the meaning of section 32(1 )(ii) of the Act is inf....
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....he AO. iii) Whether the Ld. CIT(A) under the facts and circumstances of the case and in law was justified in deleting disallowance of Rs. 3,30,000/- made on account of club expenditure by the AO. iv) Whether the Ld. CIT(A) under the facts and circumstances of the case and in law was justified in restricting the disallowance u/s 14A read with Rule 8D of the Rules, 1962 to Rs. 2,33,10,128/- as against Rs. 8,06,74,000/- worked out the AO. v) The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 59. Before us, both the parties were agreed that issue involved in ground No. 1 & 2, 3 &4 and 5 are identical to various grounds raised in appeal of the assessee for assessment year 2008-09, and thus might be decided accordingly. 59.1 The ground Nos. 1 and 2 of the appeal of the assessee relate to the issue of taxability of security component of passenger service fee (PSF), which we have already restored to the file of the Assessing Officer, while adjudicating ground No. 1 of the appeal of the assessee for assessment year 2008-09. Accordingly, in the year under consideration also both these grounds are r....
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....hat issue in dispute is identical to the ground No. 1 of the appeal of the revenue in assessment year 2008-09. Accordingly following our finding on the issue in dispute in assessment year 2008-09, we restore the issue to the file of the Assessing Officer for deciding afresh in the light of our finding on the issue in dispute in assessment year 2008-09. 65. The ground No. 2 of the appeal of the revenue relates to disallowance under section 40(a)(ia) of the Act of sitting fee of Rs. 10.80 Lacs paid to directors, due to non-deduction of tax at source. This issue has been decided in ground No. 2 of the appeal of the Revenue for assessment year 2008-09. Accordingly, this ground of appeal is dismissed. 66. The ground No. 3 of the appeal of the Revenue relates to disallowance of Rs. 3,30,000/-made on account of club expenditure . This issue has also been decided by us in ground No. 3 of the appeal of the Revenue for assessment year 2008-09. Accordingly, this ground of appeal is also dismissed. 67. The ground No. 4 of the appeal of the Revenue relates to disallowance under section 14A of the Act. The Assessing Officer invoked rule 8D of Income-tax Rules, considered entire interest....
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....Act 1961 for disallowance u/s 14A mechanically. The AR of the appellant has submitted that for considering disallowance u/s 14A there are two types of disallowances (i). Disallowance out of the interest payment claimed and (ii) Disallowance out of indirect expenses incurred. The appellant submits that while making disallowance out of interest cost, the Assessing Officer has considered the entire amount of interest paid for disallowance u/s 14A which mainly consist of interest on secured loans obtained by the appellant for development of runway and terminal '1-D' and other assets. It is submitted that no part of these secured loans was utilized by the appellant for making investment. Therefore, the interest payment of Rs. 52.31 crore on secured loans cannot be considered for disallowance u/s 14A of the IT Act. There is another component of interest payment which was paid on loans taken for day to day working capital requirement of the appellant company. For this the appellant has paid interest of Rs. 1,07,98,051/-. The working capital loan was utilized for day to day working capital requirement and for making investment, if there was a surplus amount available. The appellant submits....
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.... read with Rule 8D (1+2+3) 23,310,128 In view of the working submitted above, the expenses pertaining to earning of exempt income comes to Rs. 2,33,10,128/-. Therefore, the disallowance u/s 14A of expenses pertaining to earning exempt income is restricted to Rs. 2,33,10,128/-as against the amount of Rs. 8,06,74,000/- worked out by the Assessing Officer. As a result, the appellant gets a relief of Rs. 5,73,63,872/-. 70. The issue of dispute raised by the Revenue is in respect of amount of indirect interest expenditure to be apportioned towards the exempt income earned. In terms of rule 8D(2)(i) only direct expenses including interest expenses are attributed towards the exempt income. In rule 8D(2)(ii), the interest expenses which are not directly related to investment yielding exempt income, are apportioned in the ratio of the average value of investment yielding exempt income to the average value of total assets. In the case of the assessee, the Ld. CIT-(A), has considered the interest expenses toward working capital loan of Rs. 1,07,98,051/- and segregated the interest expenses paid towards secured loans. In our opinion, the action of the Ld. CIT-(A), ....
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....umstances of the case and in law, the learned CIT(A) has erred in holding that the alternate claim raised by the Appellant in regard to not granting depreciation as per section 32 of the Act at appropriate rates on the ground that though the Upfront fees payment towards to AAI was in the nature of license fees for conducting business for 30 years, it was not an intangible asset within the meaning of section 32(1 )(ii) of the Act is infructuous. 2. The learned CIT(A) failed to appreciate and ought to have held that if the expenditure is treated as capital expenditure, depreciation ought to have been allowed on the same inasmuch as the same is in the nature of a business or commercial right similar to license / franchise/ other commercial right and falls within the meaning of an intangible asset as specified under section 32(1 )(ii) of the Act. 3. The Appellant prays that if department appeal on this issue is allowed for the Assessment year 2007-08 and it is held that expense on Upfront fees is capital in nature then depreciation be allowed at appropriate rate under section 32 of the Act on the amount of upfront fees. Without Prejudice to the claim of the A....
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....ount of Rs.'TO,07,34,258/- worked out the AO? vi) The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 75. The ground No. 1 of the appeal of the assessee and ground No. 5 of the appeal of the Revenue relate to disallowance under section 14A of the Act. 76. The facts qua the disallowance are that the assessee submitted before the Assessing Officer that no dividend income was earned by the assessee during the relevant year, thus no disallowance was called for but the Assessing Officer rejected the contention of the assessee and invoking section 14A of the Act read with Rule 8D of Income-tax Rules, 1962 (in short 'the Rules') made disallowance of Rs. 10,07,34,000/-. 77. Before the Ld. CIT-(A), the assessee contended that for disallowance in terms of Rule 8D(2)(ii) of Rules, the interest payment of Rs. 3,42,54,495/-towards loan taken for working capital requirement could only be considered. Further the assessee contended that the disallowance under Rule 8D can only be made with respect to the amount of investment which are capable of generating exempted income and thus investment made in mutual funds with....
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....wance made under section 14A of the Act to the cost of the mutual fund units. This ground has been raised without prejudice to the ground No. 1 of the appeal of the assessee. Since the ground No. 1 has already been allowed in favour of the assessee, the ground No. 2 is rendered infructuous and accordingly dismissed. 83. The ground No. 3 of the appeal of the assessee relates to allowing depreciation on the amount of upfront fee, which was held by the Assessing Officer as capital expenditure in assessment year 2007-08, though same was claimed by the assessee as revenue expenditure. 84. We find that the Tribunal in the case of assessee for assessment year 2007-08, has allowed the claim of the assessee of upfront fee being revenue expenditure, thus, the claim of depreciation on said amount of upfront fee ,no longer can be allowed and accordingly, we dismiss the ground No. 3 of the appeal of the assessee. 85. The ground No. 4 of the appeal of the assessee relates to allowing depreciation on the repair and maintenance expenses in assessment year 2007-08 to 2009-10 held by the Assessing Officer as capital expenditure, though same were claimed by the assessee as revenue expe....
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....n reference while filing return of income, but after receipt of communication from Ministry of civil aviation, it filed the computation of income before the Assessing Officer on 14/01/2011 and claimed setoff of the loss of PSF(SC) against other income. The Ld. CIT-(A) rejected the basis adopted by the Assessing Officer for declining setoff of losses and concluded that the appellant had filed a revised computation within statutory time of one year and claimed the set off. According to him, in the earlier years when PSF(SC) was having surplus amount, the same was included in the total income of the assessee as taxable income, there was no reason why on the same analogy, the loss suffered during the year should not be included in the hands of the assessee. Accordingly, he directed the Assessing Officer to include the amount of loss of Rs. 1550.81 lakhs in the total income/loss of the assessee. 91. Before us the Ld. CIT(DR) submitted that under the provisions of the Act for setoff of the loss, it has to be reported in the return of income filed under section 139(3) of the Act and Ld. CIT-(A) has brushed aside the clear and unambiguous provisions of the Act. She further submitted tha....
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....shall be afforded adequate opportunity of being heard. Accordingly, the ground of the appeal of the Revenue is allowed for statistical purposes. 93. The ground No. 2 of the appeal of the Revenue relates to the issue whether the expenses of Rs. 794.93 Lakhs on account of repair and maintenance of building are capital or revenue expenses. 94. This issue whether the repair and maintenance expenses incurred by the assessee are in the nature of capital or revenue expenditure has already been restored by us in assessment year 2008-09. Accordingly, following our finding on the issue in dispute in assessment year 2008-09, in the year under consideration also we restore the issue to the file of the Assessing Officer to decide in accordance with the direction given thereon. Accordingly, this ground of appeal is allowed for statistical purposes. 95. The ground No. 3 of the appeal of the Revenue relates to disallowance of Rs. 2,31,250/-on account of club expenses. The identical issue has already been decided by us in the case of the assessee in assessment year 2008-09, thus, following consistent view, we uphold the finding of the Ld. CIT-(A) in deleting the disallowance. Accordingly, ....