TaxTMI 
TaxTMI 
2017 (11) TMI 1745
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.... DBITA No. 622/2009 "1) Whether on the facts and in totality of circumstances, the work by EPC contractors having been executed by 31.3.2005, bills for the works having been received on 3.3.05, the work so executed have being put to use and income earned therefrom, the quantum claim by the EPC contractors being highly excessive, and unreasonable finally settled on 12.9.06 and paid accordingly, the system of accounting being mercantile, the learned Tribunal grossly erred in holding the amount of Rs. 57,07,62,552/- as a 'provision and a contingent liability', which accrued by 31.3.2005 and should have been considered for capitalization on 1.4.2005. 2) Whether on the facts and in totality of circumstances and the appellant having suffered loss, the ld. Tribunal was right in law in holding that there is liability to charge of interest u/s 234B and 234C of the Act. 3) Whether on the facts and in totality of circumstances cheque for Rs. 14 lacs having been given to the (**) Foundation on 31.3.2006 having been cleared and collected by the Foundation after 1.4.06, receipt having been issued on 31.3.2006, the appellant was not entitled to deduction u/s 80G of the ....
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....was incorporated on 1st April, 2002 by a two member consortium led by one of the constituent of the consortium namely M/s GVK International NV. The consortium participated in the bid invited by the National Highway Authority of India (NHAI) working under the Ministry of Surface Transport. The bid involved the strengthening of the existing two lane road on Jaipur Kishangarh section of National Highway No. 8 in the State of Rajasthan. The bid also involved the creation of additional Four lanes thus bringing the Highway to Six lanes. The other requirements of the bid was to construct, operate and maintain the six lanes highway. The consortium having offered the bid was successful and was awarded the job promote and incorporate a limited liability company in the form of 'Special Purpose Vehicle (SPV) for executing the concession agreement. It was incorporated in April, 2002 for the specific purpose of this work. It was converted into a limited company on 3.11.2004. The concession agreement was entered into with National Highway Authority of India on 8.5.2002. The agreement conferred certain rights to the appellant company, which include levy, demand, collect and appropriate the fees (k....
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.... He failed to give credit for the payments made by way of tax deducted at source, advance tax and self assessment tax and interest of Rs. 3,10,03,012/- through complete details and proof was on assessment record. He charged interest u/s. 234B of Rs. 5,49,25,727/- + Rs. 15,58,080/- u/s. 234C. On application u/s. 154 dated 05.01.2009 the demand was belatedly rectified on 22.01.2009. Copy of the assessment order dated 29.12.2008. That the respondent though originally granted 30 days statutory period for payment of the highly disputed paper demand but surprisingly illegally reduced the period to 3 days on 7.1.2009 without any valid reason. He also summarily and perfunctorily rejected stay petition filed u/s. 220(6) of the Act on 9.1.2009. Notice of Demand for Justice was given on 12.1.2009. It was registered as S. B. Civil Petition No. 311 of 2009. The Hon'ble Court was pleased to stay the demand. However, the respondent illegally collected Rs. 1,72,60,105.03 from Axis Bank u/s. 226(3) without prior service of the said notice on the appellant. The appellant had to deposit Rs. 5 Crores on 5.3.2009 in order to get Order u/s. 226(3) withdrawn on 6.3.2009. Stay was granted, on intervention....
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....bility can be said to be ascertained one has arisen in the context of both a statutory liability and a contractual liability. An example of a statutory liability is the case of Kedarnath Jute Manufacturing Co. Ltd. (supra). There the Assessee followed the mercantile system of accounting. The relevant AY was 1955-56. The Assessee had in the calendar year 1954, i.e., the relevant previous year, incurred a liability of Rs. 1,49,776/- on account of sales tax determined as payable by the Sales Tax Authorities on the sales made by it. The sales tax demand had already been raised. The Assessee had contested the sales tax liability by filing an appeal. It had also not made any provision in its books as regards payment of the said amount. On these two grounds, the AO rejected the Assessee's claim for deduction. Holding for the Assessee, the Supreme Court held that although the sales tax liability could not be enforced till the quantification was effected in the assessment proceedings, since the Assessee had followed the mercantile system of accounting it was entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the pro....
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.... as the liability which had thus accrued during the accounting year was to be discharged at a future date the amount to be expended in the discharge of that liability would have to be estimated in order that under the mercantile system of accounting the amount could be debited before it was actually disbursed. The difficulty in the estimation thereof again would not convert an accrued liability into a conditional one, because it is always open to the Income-tax authorities concerned to arrive at a proper estimate thereof having regard to all the circumstances of the case." 42. The Supreme Court Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (supra) also explained that since the Assessee was being assessed in respect of the profits and gains of its business, the same could not be determined "unless and until the expenses of the obligations which have been incurred are set off against the receipts." It was observed as under: "The expression profits and gains has to be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipts is d....
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....ve. Although the ITAT held the Assessee to be entitled to claim the said sum as deduction, the High Court was of the view that it was not. The Supreme Court explained as under: "The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in present though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain." 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen MANU/SC/0120/1968 : (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: "(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would....
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....tained one but a contingent one." 47. A conspectus of the above decisions reveals that whether a liability is ascertained or contingent is dependent on the facts of each case. Merely because a liability may be contractual or non-statutory would not make it incapable of being ascertained. Where an Assessee follows the mercantile system of accounting it is not necessary that the liability must have actually been incurred during the AY in question to enable the Assessee to claim it as an expense or deduction as the case may be. The crux of the matter is the reasonable certainty with which the liability can be ascertained." 6.1. He has also relied upon the decision of Delhi High Court in case of Commissioner of Income Tax vs. Ansal Land Mark Township P. Ltd. reported in [2015] 377 ITR 635 (Delhi) wherein it has been held as under:- "9. It is seen that the second proviso to Section 40(a)(ia) was inserted by the Finance Act 2012 with effect from 1st April 2013. The effect of the said proviso is to introduce a legal fiction where an Assessee fails to deduct tax in accordance with the provisions of Chapter XVII B. Where such Assessee is deemed not to be an assessee in ....
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.... "It is contended before us on behalf of the appellant that the cheque for Rs. 6,02,000/- was tendered in Court on 29 May, 1980 and that it was duly honoured by the Bank and money was realised under the cheque, and therefore it must be taken that payment had been effected by the appellant on 29 May, 1980 within the time stipulated by this Court in its order dated 29 November, 1979. In Commissioner of Income Tax, Bombay South, Bombay v. Messrs Ogale Glass Works Ltd. Ogale Wadi MANU/SC/0087/1954 : [1954]25ITR259(SC) it was laid down by this Court that payment by cheque realised subsequently on the cheque being honoured and encashed relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheque. Payment by cheque is an ordinary incident of present-day life, whether commercial or private, and unless it is specifically mentioned that payment must be in cash there is no reason why payment by cheque should not be taken to be due payment if the cheque is subsequently encashed in the ordinary course. There is nothing in the order of this Court providing that the deposit by the appellant was to be in cash. The terms of the....
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.... the ground of delay. There cannot be any estoppel against the statute, Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. The Constitution Bench of the Supreme Court in Amalgamated Coalfields Ltd. v. Janapada Sabha MANU/SC/0105/1961 : [1962]1SCR1 , held thus (page 965) : "It may be stated at the outset that the tax now impugned has been imposed by the local authority from March 12, 1935, and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might not itself be a ground for denying them relief. Before however we set out the points urged by the learned Attorney- General in support of the petition, it would be convenient if we narrate briefly the history of the levy of this tax." 15. The Supreme Court, thus, held that acquiescence to an illegal tax for a long time is not a ground for denying the party the relief that he is entitled to. In the ....
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....tude would, in the long run, benefit the department, for, it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should - (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." This is Circular No. 14 (XI-35) of 1955 and is dated April 11, 1955. In view of this circular it is clear that for the purpose of the circular, what should be the guiding factor is whether the proceedings or other particulars before the ITO at the stage of original assessment disclosed any grounds for relief under s. 2(5)(a)(iii) 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. IT is possible to argue that, to the extent to which the circular of 1955 sp....
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....76 ITR 165 wherein it has been held as under:- "The position is therefore that, regardless of whether the revised return was filed or not, once an assessee is in a position to show that the assessee has been over-assessed under the provisions of the Act, regardless of whether the over-assessment is as a result of assessee's own mistake or otherwise, the Commissioner has the power to correct such an assessment under Section 264(1) of the Act. If the Commissioner refuses to give relief to the assessee, in such circumstances, he would be acting dehors the powers under the Act and the provisions of the Act and therefore, is duty bound to give relief to an assessee, where due, in accordance with the provisions of the Act. A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay Chandulal Satia v. Shri....
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.... In the matter of engagement of advocate his confidence in him is important. He has all the rights to elect his advocate. On the other hand, the advocate on his being approached by the litigant is free to charge his fees from the litigant to provide him his professional services in the matter. In the matter of settlement of the fees to be charged by an advocate seldom there may be any question of bargaining. In the facts of this case, I do not find any unreasonableness or irrationality in the approach of the petitioner to engage the advocate of his choice and naturally, the advocate on his part is within his rights to charge his fee in the matter. So, this amount of Rs. 11,000 paid by the petitioner to his advocate to render his professional services in this matter to him is a reasonable amount and it has to be awarded to the petitioner. So far as the litigation expenses are concerned, the amount of Rs. 2,000 is also reasonable and for which the petitioner is entitled. Respondent No. 2 is the concerned person who is a creator of this litigation. He has realised his mistake and ultimately the impugned notice has been withdrawn. Respondent No. 2 is the person concerned who i....
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....er should go back to the Tribunal with a direction to the Tribunal either to take additional evidence itself or to direct the Income Tax Officer to take additional evidence and make a report to it, on the question whether the sums of Rs. 25 lakhs and Rs. 12,50.000/- were held in West Pakistan as capital asset or as trading asset or in other words, as part of fixed capital or part of circulating capital in the business. The Tribunal will, on the basis of this additional evidence and in the light of the law laid down by us in this judgment determine whether the loss suffered by the assessee on remittance of the two sums of Rs. 25 lakhs and Rs. 12,50,000/- was a trading loss or a capital loss. 2. Challapalli Sugar Ltd. vs. The Commissioner of Income Tax, A.P., Hyderabad (31.10.1974 - SC), (1975) 98-ITR-167 (SC) 28. There is, in our opinion, force in the submission of Mr. Palkhivala. As stated above, arguments were heard together on February 1, 1972 in civil appeals Nos. 1784, 1694, 1730 and 1831 on the question as to whether the wealth-tax paid by the assessee was a permissible deduction under Section 10(2)(xv) of the Indian Income-tax Act. On the conclusion of the a....
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....e only considered the provisions of s. 10(2)(xv) of the Act and came to the conclusion that on a strict interpretation of those provisions the sum of Rs. 24,809 was not an allowable deduction. Its attention was drawn by the learned Counsel for the appellant to the provisions of s. 10(1) of the Act also but it negatived this argument observing that under the Indian Act, the profits must be determined by the method of making the statutory deductions from the receipts and any deduction from the business receipts, if it was to be allowed, must be brought under one or the other of the deductions mentioned in s. 10(2) and that there was no scope for any preliminary deduction under general principles. It was, however, held by this Court in Badridas Daga v. The Commissioner of Income-tax [1958]34ITR10(SC) "It is to be noted that while s. 10(1) imposes a charge on the profits or gains of a trade, it does not provide how those profits are to be computed. Section 10(2) enumerates various items which are admissible as deductions, but it is well settled that they are not exhaustive of all allowances which could be made in ascertaining profits taxable under s. 10(1)." 4. Metal ....
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....e actual taxable income worked out under all the elaborate provisions relating to deductions, allowances, reliefs, rebates, etc., provided by the Income-tax Act and other such Acts. This is particularly so as in each bonus dispute the Tribunal not equipped with the detailed knowledge of all such Acts would have to undertake an enquiry into the various deductions, rebates, reliefs, etc., claimable by the employer under those Acts. The fact that payment of bonus cannot brook delay without causing hardship to labour would seem to militate against the possibility of such prolonged enquiries. 36. The key to the words in section 6(c), namely, "is liable to pay" emphasised on behalf of the unions and some of the interveners lies in the opening words "subject to the provisions of section 7" in clause (c). These words are used, whether the tax liability is to be calculated on actual taxable income or on the notional amount worked out under sections 4 and 6 and Schedule II, because the direct taxes payable by the employer are to be calculated at the rates applicable during that year as provided by section 7. That both such amounts cannot be the same is clear because section 7 in exp....
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....ilable surplus ? If it were to reverse the process and first deduct bonus and ascertain the tax amount, it would have to do so on a somewhat ad hoc figure thus bringing about the same result deprecated by this court in decisions referred to above. This and the other difficulties already pointed out must lead to the result that the Tribunal must estimate the amount of direct taxes on the balance of gross profits as worked out under sections 4 and 6, but without deducting the bonus, then work out the quantum of taxes thereon at rates applicable during that year to the income, gains and profits of the employer and after deducting the amount of taxes so worked out arrive at the available surplus. Section 6(c) being subject to section 7 the computation has to be done without taking into account the items specified in section 7(a) and in the manner prescribed by the remaining clauses of that section. This interpretation is commendable because: (1) it is consistent with the words " is liable to pay " in section 6(c)(2) it is in harmony with the provisions of sections 4 and 6 and Schedule II, and (3) it is consistent with the intention of Parliament apparent from the scheme of com....
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....ear, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in present though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 5. In Metal Box Company of India Ltd. v. Their Workmen (1969)ILLJ785SC the appellant company estimated its liability under two gratuity schemes framed by the company and the amount of liability was deducted from the gross receipts in the P&L account. The company had worked out on an actuarial valuation its estimated liability and made provision for such liability not all at once but spread over a number of years. The practice followed by the company was that every year the company worked out the additional liability incurred by it on the employees putting in every additional year of service. The gratuity was payab....
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....t earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability. The High Court was not right in taking the view to the contrary. 6. M/s. Madras Industrial Investment Corporation Ltd. vs. The Commissioner of Income Tax, Tamil Nadu-I, Madras (04.04.1997 - SC), 225-ITR-802 The department disallowed this expenditure. Upholding the claim of the assessee to deduction, this Court said that the undertaking given by the assessee imported a liability on the assessee which accrued on the dates of the deeds of sale though that liability was to be discharged at a future date. It was thus an accrued liability and the estimated expenditure which would be incurred in discharging the same could be deducted from the profits and gains of business. The difficulty in the estimation of liability did not convert the accrued liability into a conditional one. This Court said that the expression 'profits or gains' in Sectio....
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....is no finding recorded by the AO that the completed contract method distorts the profits of a particular year. Moreover, as held in various judgments, the Chit Scheme is one integrated scheme spread over a period of time, sometimes exceeding 12 months. We have examined computation of tax effect in these cases and we find that the entire exercise is revenue neutral, particularly when the scheme is read as one integrated scheme spread over a period of time. 17. As stated above, we are concerned with assessment years 1991-1992 to 1997-1998. In the past, the Department had accepted the completed contract method and because of such acceptance, the assessees, in these cases, have followed the same method of accounting, particularly in the context of chit discount. Every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted. It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits, the Department can insist on substitution of the existing method. Further, in the present cases, we find from the various statements produced before us, ....
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....ion to provident fund, Employees State Insurance Scheme, etc., for long periods of time, extending sometimes to several years. For the purpose of their Income Tax assessments, they claim the liability as deduction on the ground that they maintain accounts on mercantile or accrual basis. On the other hand, they dispute the liability and do not discharge the same. For some reason or the other undisputed liabilities also are not paid. To curb this practice, it is proposed to provide that deduction for any sum payable by the assessee by way of tax or duty under any law for the time being in force (irrespective of whether such tax or duty is disputed or not) or any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed only in computing the income of that previous year in which such sum is actually paid by him. On perusal of the said object it would appear that the legislature expressed concern about the unreasonable deduction claim on the basis of mercantile accounting method without discharging statutory liabilities. It was observed by the l....
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....cular financial year. The legislature is free to do so after they disclose reasons for that and such reasons are not inconsistent with the main object of the enactment. We are deprived of such reasons for our perusal. Mr. Banerjee, appearing for the Revenue, could not enlighten us on that score. We also do not find such enactment consistent with the original provision being Section 43B which was originally inserted to plug in evasion of statutory liability. The apex Court considered the situation in the case of Bharat Earth Movers (supra), when Clause (f) was not there. The apex Court, considering all aspects as disclosed by us hereinbefore, rejected the contention of the Revenue and granted appropriate deduction to the concerned assessee. The legislature to get rid of the decision of the apex Court brought out the amendment which would otherwise nullify the Judge made law. The apex Court decisions are Judge-made law and are applicable to all under the Constitution. We, not for a single moment, observe that legislature was not entitled to bring such amendment. They were within their power to bring such amendment. However, they must disclose reason which would be consistent with the....
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....al cost to any given assessee was of items of depreciable machinery, plant, etc., acquired by him. Such expenditure considered for capitalisation might itself be expenditure of a capital nature or it might be expenditure of a revenue nature. In either case, it would be subject to the principles enunciated in the decisions aforesaid. But those principles have no direct bearing on the question of a claim for a straightforward allowance as an expenditure of a revenue nature in the computation of business profits. Nor is it the law that only those expenses which cannot be capitalised can come in for straight deduction as revenue expenditure, for, as we have earlier seen, the accountancy principles, relating to capitalization are themselves not hard and fast rules, but are to be adopted only at the option of the owner of the capital asset. 26. The expenditure incurred for the purchase of the machinery was undoubtedly capital expenditure, for it brought in an asset of enduring advantage. But the guarantee commission stands on a different footing. By itself, it does not bring into existence any asset of an enduring nature ; nor did it bring in any other advantage of an enduring b....
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....found to be other than what has been stated by the assessee i.e., to say the expenses were incurred for the benefit of welfare of the children of staff/workmen of the company as a part of employees' welfare expenses incurred for the purpose of securing healthy services for staff members. Applying the test indicated by this Court in the order referred to above, it is not difficult to reach to the conclusion that the Tribunal was right in holding the expenses to be incurred wholly and exclusively for the purpose of assessee's business and since the assessee has not acquired any asset, it is not capital expenditure either and, therefore, the assessee is entitled to claim deduction in full under Section 37(1). It is not being contended by the learned counsel for the appellant that the allowance of expenditure is otherwise not provided under any provision of the Act. Consequently, the principle of law was correctly enunciated and application of law has been correctly made by the " Tribunal. 6. In our opinion, no substantial question of law arises in examining the issue again about the test of applicability of allowable expenses claimed by the assessee and the benefits d....
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....ter, the Tribunal has considered it in right spirits and observed as under:- "9. We have considered the arguments advanced by the parties and have perused the material on record and the decisions relied upon. The main objections of the department for not allowing the capitalization of a sum of Rs. 57,07,62,552/- are that the assessee has not included this amount in its books of accounts even as work in progress on 31.03.2006 i.e. the year under hand, the audie report also does not refer anything on this issue, the assessee itself has taken this expenditure in the financial year 2006-07, the actual amount payable to the EPC contractors was neither ascertained nor in any manner was settled, the revision in the books of account is not permissible in companies act, no provision was made in the books of accounts nor any tax was deducted thereupon. Whereas the appellant has contended that the liability got crystalized on 12.09.2006 and a payment schedule was made after the amount was finally determined to be payable as claimed to be capitalized. The assessee also contends that there is no statutory compulsion to record a capital expenditure in the books of accounts so as to make....
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....s taken this asset in the financial records i.e. in its balance sheet etc. Thus, this ground no. 5 of appeal is accordingly rejected. Ground No. 11: 15. In this ground the assessee has agitated the action of the lower authorities in not allowing deduction u/s 80G on donation of Rs. 14 lacs. 15.1. We have considered the arguments of both the parties. From the perusal of the record it is seen that assessee has made the payment of Rs. 14 lacs by tendering a cheque dated 31.03.2006 and obtained receipt of even date however, the cheque was encashed later on. Further the assessee company itself had shown the amount under the head "Provision/Liability" as on 31.03.2006 in its Balance Sheet which clearly establish that the payment has not been recognized by the assessee company. Considering these facts we are not inclined to interfere in the order of the lower authorities, who have rightly disallowed the claim of the assessee. Thus the ground no. 11 of the appeal is rejected." Ground No. 13: 17. In this ground the assessee has agitated the disallowance made of Rs. 13,50,000/- u/s 40(a)(ia) for delayed payment of TDS. 17.1. We have consi....
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.... of the amount of Rs. 1,72,60,105.03 recovered from bank account of the assessee company by making attachment. 20.1. We have considered the arguments of the parties. We find that the amount of Rs. 1,72,60,105.03 was recovered from the assessee. However, it appears that the amount recovered, if any, shall find its way into the computation of income with the assessing authority and any amount found payable/receivable by the assessee shall be considered under the provisions of the Income Tax Act, 1961. Hence, this ground does not call for any adjudication as the recovery/payment of tax is always subject to the finality of the orders from the appellate authorities. Thus, the ground being infructuous the same is dismissed. Ground No. 17: 21. In this ground the assessee has requested for awarding the exemplary cost u/s 245(2B) of the Income Tax Act, 1961. 21.1. Since no serious arguments have been put forth by the ld. Counsel of the assessee in support of this ground, therefore, the ground is rejected. 7.1. He further contended that the expenses which was done by the previous company cannot be allowed since it was prohibited under Section 35B. Howev....
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....duct of the business of the assessee; (c) where the assessee is a company, also expenditure- (i) by way of legal charges for drafting the Memorandum and Articles of Association of the company; (ii) on printing of the Memorandum and Articles of Association; (iii) by way of fees for registering the company under the provisions of the Companies Act, 1956 (1 of 1956)94a; (iv) in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus; (d) such other items of expenditure (not being expenditure eligible for any allowance or deduction under any other provision of this Act) as may be prescribed. (3) Where the aggregate amount of the expenditure referred to in sub-section (2) exceeds an amount calculated at two and one-half per cent- (a) of the cost of the project, or (b) where the assessee is an Indian company, at the option of the company, of the capital employed in the business of the company, the excess shall be ignored for the purpose of com....
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....eans- (i) any moneys borrowed by the company from Government or the Industrial Finance Corporation of India or the Industrial Credit and Investment Corporation of India or any other financial institution 98[which is eligible for deduction under clause (viii) of sub-section (1) of section 36] or any banking institution (not being a financial institution referred to above), or (ii) any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India of capital plant and machinery, where the terms under which such moneys are borrowed or the debt is incurred provide for the repayment thereof during a period of not less than seven years. (4) Where the assessee is a person other than a company or a co-operative society, no deduction shall be admissible under sub-section (1) unless the accounts of the assessee for the year or years in which the expenditure specified in sub-section (2) is incurred have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income for the first year in which the deduction under this section is claimed....
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....tled with the EPC contractors was quite different from what had been claimjed by them ion their letters addressed to the assessee. The final settlement had been in a lump sum amount. 5. The books of the assessee had been duly audited, both for I.T. purposes as well as under the Companies Act. After audit of the books such a revision is not permissible. 6. No provision for such expenses had been made during the year, nor was any tax deducted on such amounts showing these as payable. 7. The actual payments had been made much later, during F.Y. 2006-07." 12. Before proceeding with the matter, it will not be out of place to mention that the matter is of 2009 and for the assessment year 2006-07. A number of matters of same assessee were heard earlier and for the two issues in these two matters, we have heard independently. 13. On the first issue while considering the matter, counsel for the assessee has pointed out the agreement of MOU which has been entered between the company assessee and the original company. He has specifically taken us to the agreement which was part of paper book dated 1st March, 2002 and referred Clause-2 and incorporation was don....
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....the assessee as referred hereinabove therefore, the same issue is required to be answered in favour of the assessee against the department. 20. On the 5th issue, whether the Tribunal was right in law in holding the sum of Rs. 6,33,803/- on account of leave encashment as a contingent liability is not liability. Even this Court while deciding the matter has taken leave encashment as liability. In that view of the matter, the issue is answered in favour of the assessee against the department. 21. On the 6th issue whether Tribunal was right in not allowing expenditure of Rs. 5,45,264/- on police stations, in view of the judgment cited by counsel for the assessee regarding the expenses which was done for protection of the employees and the other threat from the truck owners and having other instructions which has been construed liable expenses. In that view of the matter, disallowance of expenses of Rs. 5,45,264/- for the police stations is required to be answered in favour of the assessee against the department. Hence, the 6th issue is answered in favour of the assessee. 22. Regarding issue no. 7 & 8 the facts which have been narrated by the assessee are required to be viewed ....
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....onsidering the matter, the Tribunal has considered the expenses prior to commencement of this company has taken the management and construction activity from the previous company on the basis of MOU, all expenses done was given a capital which was shown as an expenses by the previous company. 26. Regarding removal of debris and everything that work which was required to be done on the war footing and the time consumed therefore, the expenses which was done by the contractor employees which can be done on Jaipur road but no doubt it has to be done on war footing therefore, expenses are bound to be more than normal which has been done. In that view of the matter, the Tribunal has not committed an error in allowing their expenses regarding removal of trees tampling or removal or debris and other expenses. Hence, the issue is also answered in favour of the assessee against the department. 27. Regarding third & fourth issue the same are covered by the earlier decision of this Court in DBITA No. 232/2016 in the case of same assessee decided on 10th October, 2017, wherein it has been held as under:- "14.1 The interpretation which has been putforward by the counsel for the d....