TaxTMI 
TaxTMI 
2019 (3) TMI 735
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....rs. Each year appeals are being piled up in the pendency before us. It would be fruitless to find out who is responsible for non-disposal of these appeals for all these years, because the answer is that all stakeholders i.e. Assessee, revenue and of course this tribunal is responsible for this state of affairs unquestionably. These matters were adjourned for more than 35 times in past. Therefore, with the consent of the parties, an attempt was made to dispose of all these appeals. At request of parties, we have heard them together and disposed of by this common order. ITA No 4410/Del/2003 AY 2000-01 2. First, we take up ITA number 4410/del/2003 for assessment year 2000 - 01 filed by learned Assistant Commissioner of Income Tax, Range - 1, Moradabad (learned AO) against order of The Commissioner of Income Tax (Appeals), Bareilly dated 10/7/2003 wherein learned AO has raised following grounds of appeal. "1. that LD CIT (A) has erred in law and on facts of case in directing AO not to enhance book profit by a sum of Rs. 10540000/- which represents depreciation on revalued assets for purpose of section 115J of Income Tax Act, 1961. 2. That ld CIT(A) has erred ....
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....m decision reported in 259 ITR 30 (Raj) wherein decision of Hon‟ble Apex court reported in 166 ITR 66 was followed. 11. That ld CIT (A) has erred in law and on facts of case in directing AO to treat sum of Rs. 14389000/- and Rs. 34364/- as business income which was correctly assessed under head Income from other source. 12. That ld CIT (A) has erred in law and on facts of case in directing to treat service charges of Rs. 2163586/- as business income. 13. that ld CIT (A) has erred in law and on facts of case in deleting disallowance of expenses of Rs. 2098978/- incurred on books and journals, which was taken as capital expenses by Assessing Officer ass assessee admitted that books are tools for its business activities. 14. That ld CIT (A) has erred in law and on facts of case in treating expenses incurred in purchase of books as revenue expenses while Assessing Officer has rightly taken it capital in nature and treated it as a plant as per section 43(3) and reliance is placed on decisions reported in 132 ITR 401 (Guj) 129 ITR 73 and 206 ITR 30 (Cal) 15. That ld CIT(A) has erred in law on facts of case in allowing relief of Rs. 91315....
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....n by learned assessing officer. On careful perusal of page number seven of assessment order it is apparent that learned assessing officer has himself accepted that revaluation reserve being credited to profit and loss account does not warrant any further adjustments. It is also noted that amount of INR 10548000 as mentioned in ground of appeal number 1 relates to amalgamation adjustment reserve that has been dealt with in ground number 7 of appeal of learned assessing officer. The ld DR also did not show us how this ground is arising from order of lower authorities. Therefore, it is apparent that this ground has been taken under some misunderstanding or erroneously. In view of this ground number, 1 and 2 of appeal are dismissed. 6. The 3rd ground of appeal is with respect to order of learned CIT - A deleting addition of INR 75230705/- in book profit computation under section 115JA of income tax act as this amount is not actual profit derived from industrial undertaking engaged in business of generation of distribution of power. The 4th ground is also related to same where learned AO has contested that assessee had generated power for internal consumption of its existing unit and....
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....mently supported order of learned assessing officer stating that DG sets were imported for home consumption and there is No separate distinct independent unit for generation of power. He stated that in absence of actual sales and generation of power of own use no business was carried on by assessee for generation and distribution of power. The profit shown is notional one. He therefore submitted that claim of assessee is not allowable u/s 80 IA of act and therefore no book profit deduction can be granted. 10. The learned authorised representative stated that order of learned assessing officer is not sustainable and learned CIT - A has correctly deleted addition for following reasons. (a) Re: DG sets were imported for home consumption: The Ld. AO‟s allegation that if custom authorities have marked invoice of DG sets for home consumption, it means that goods are not used for purpose of business is not based on appreciation of Customs Act, 1962. As per section 45 thereof, imported goods may be cleared by Custom authorities in either of following manner: • Home consumption or • Warehoused; or • Transshipped. It ....
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....erating power had independent, separate existence since separate land was earmarked for establishing said undertaking, and undertaking was independent of other undertakings of assessee. The assessee‟s auditor had computed separate profit, which was attributable to power generation business. (Page 72 to 75 of Paper book). (c) Re: Power not supplied to public i.e. it is for captive use: The Ld. AO‟s allegation that merely because electricity produced is not sold in open market, profits thereof profits there from need not be reduced from book profits under section 115JA of Act is devoid of any merits. It is because no such condition is mentioned in clause (iv) of Explanation to section 115JA (2) of Act. The assessee places reliance on following judgments wherein under similar circumstances profits from captive power generation business have been allowed to be reduced from book profits: • CIT vs. DCM Sriram Consolidated Ltd. [(2014) 368 ITR 720 (SC)] • Tata Iron And Steel Co. Ltd vs. The State of Bihar [1958 AIR 452] Consequently, this means that where assessee is producing something, is using produced product captively (....
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....tion 80 IA of income tax act is not allowable on it is devoid of any merit. Further, with respect to power generation unit not being a separate unit and further power is not supplied to public but it is for captive consumption and therefore no deduction under section 80 IA of income tax act is allowable is also now judicially settled by decision of honourable Delhi High Court in case of CIT vs. Orient Abrasives Ltd [271 CTR 626] wherein honourable Delhi High Court has held where substantial question of law before honourable High Court was Whether "profit and gain" from captive consumption of electricity supplied from generator set and which cannot be sold to any third person will qualify for deduction under Section 80-IA of Income Tax Act, 1961?. The honourable High Court answered same as under:- "11. A similar issue was raised before Delhi High Court in CIT Vs. Orissa Cement Ltd. [2002] 254 ITR 412 (Delhi), where deduction under Section 80-I was claimed on profits derived from captive consumption of limestone excavated from mines and thereafter used for manufacture of cement in plant of assessee. Revenue‟s submission that one cannot earn profit by indulging in bu....
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....ing that there is a profit realised from sale of end product -steel, but these are matters of calculation not relevant at present stage, for we are endeavouring to ascertain whether there could in law be a profit when mined ore is converted into steel in mills of mining-company. It thus factually profit from mine or from mining operation is imbedded in profit from sale of steel is there any principle of law which prevents effect being given to this factual position? The learned Attorney-General submitted that in such a situation "profit" is not a real or an actual profit but is one which is merely notional, and that when Act spoke of a "profit" it meant an actual, real and realised profit and not a merely notional "profit". We find ourselves unable to accept this submission. We start with premise that by sale of end product a real "profit" has been realised. When analysed it is found that that profit is aggregate or resultant of profits from different lines of activity. If arithmetically that total represents resultant aggregation of different items of activity we fail to see how it could be said that profit from each item which results in that total is a notional and not an actual....
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....a person cannot trade with himself, but one far removed from it, viz., whether when a profit has been made as a conjoint result of different but integrated operations, profits so derived could be broken up so as to permit attribution of specific amounts of profit to each or any of several operations or activities." 12. Thereafter, Supreme Court in Tata Iron and Steel Co. Ltd. (supra) noticed and went into question whether there was anything in law which prohibits/bars ascertainment of profit and loss attributable to each line of activity, where sale of final end product has resulted in profit or loss for entire venture. Contra argument raised on behalf of Revenue was rejected for reasons given in paragraph which has been quoted in decision of Delhi High Court in Orissa Cement Ltd. (supra). We have already noted statutory provisions of Section 80 IA of Act and observed that statutory provisions in fact were to contrary and stipulate computation of an eligible undertaking‟s profit or loss, even when sales/transactions were made to a related party or to same assessee, but in such cases, profits have to be computed in manner stipulated in sub-sections (10) and (8) to Sec....
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....ofit or gain in order to state that such profit or gain derived only through an outside source alone would make eligible for benefits provided in said section. 9. Therefore, there is no difficulty in holding that captive consumption of power generated by assessee from its own power plant would enable respondent/assessee to derive profits and gains by working out cost of such consumption of power inasmuch as assessee is able to save to that extent which would certainly be covered by section 80- IA(1). When such will be outcome out of own consumption of power generated and gained by assessee by setting up its own power plant, we do not find any lack of merit in claim of respondent/assessee when it claimed by relying upon section 80-IA(1) of Income-tax Act by way of deduction of value of such units of power consumed by its own plant by way of profits and gains for relevant assessment years." 14. At this stage, it would be appropriate to also notice judgment of Delhi High Court in CIT Vs. DCM Sriram Consolidated Ltd., [2010] 322 ITR 486 (Delhi), wherein explanation clause (iv) to Section 115JA of Act had come up for interpretation. The clause provided for exclusion of....
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.... Section 80IA. Learned counsel for respondent-assessee submits that Assessing Officer is competent to decide said question as per law and hands and power of Assessing Officer have not been curtailed and present order does not give any specific or clear finding/direction. We take statement made by learned counsel respondent-assessee on said aspect on record. Both parties will be entitled to raise their contentions on computation of eligible profit/loss from eligible business." 12. In view of this, we do not find any infirmity in order of learned CIT - A in holding that above sum cannot be included in book profit for taxation. Accordingly, ground numbers 3 - 6 of appeal are dismissed. 13. Ground number 7 and 8 of appeal is against claim of deduction of INR 10540000/- because of transfer from revaluation reserve while computing book profit under section 115JA of act. The learned assessing officer while computing book profit under section 115JA of act has added above sum transferred to amalgamation reserve. The learned AO was of view that sum has been transferred out of profit and loss account though said sum was never debited to profit and loss account. The learned CIT - A allow....
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....as shown as amalgamation reserve account. The above sum was never transferred to profit and loss account and withdrawn there from. As per para number 16 of accounting standard if amalgamation is „amalgamation in nature of merger‟ identity of reserve is preserved and they appear in financial statement of transferee company in same form in which they appeared in financial statement of transferor company. Thus, for example, general reserve of transferor company becomes general reserve of transferee company, capital of transferor company becomes capital reserve of transferee company, and revaluation reserve of transferor company becomes revaluation reserve of transferee company. However if amalgamation is in nature of „amalgamation in nature of purchase‟, then identity of reserve other than statutory reserve dealt with in paragraph 18 of Accounting standard (AS) is not reserve, amount of consideration is deducted from value of net assets of transferor company acquired by transferee company. If result of computation is negative, difference is debited to goodwill arising on amalgamation and dealt with in manner stated in paragraph number 19 - 20 of AS. If result o....
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....015 wherein under identical circumstances order of learned CIT - A was upheld holding that above expenditure on software system is revenue in nature. 21. The learned departmental representative vehemently relied upon decision of honourable Rajasthan High Court in 259 ITR 30 to support case of learned assessing officer. 22. The learned authorised representative relied upon CIT v. K. & Co.[2003] 181 CTR (Delhi) 378, Para 4, Amway India Enterprises vs. DCIT [(2008) 111 ITD 112 (Delhi) (SB)] affirmed by Delhi High Court in CIT vs. Amway India Enterprises [2012] 346 ITR 341 (Delhi), (Refer para 6) ,CIT vs. Asahi India Safety Glass Ltd.[(2012) 346 ITR 329 (Delhi)] (Refer para 9, 10), Sumitomo Corpn. India (P.) Ltd. v. Addl. CIT [2005] 1 SOT 91 (Delhi), Para 8, Bank of Punjab Ltd. v. Jt. CIT[2002] 122 Taxman 235 (Chd.) (Mag.) ,Alembic Chemical Works Co. Ltd. v. CIT[1989] 177 ITR 377 (SC), ,Arch Finance Ltd. vs. ACIT[(2007) 165 Taxman 188 (Delhi)(MAG.)], Business Information Processing Services vs. ACIT [(2000) 73 ITD 304(Jaipur)] and ITC Classic finance Ltd. vs. DCIT [(2000) 112 Taxman 155 Mag (Cal)] Glaxo Smithkline Consumer Healthcare Ltd. Vs. ACIT [(2007) 112 TTJ 94 (Chd)], Para ....
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....ure on that, capital expenditure. Considering these facts and decision of their Lordships and later decision of Bombay High Court, in our view, acquisition of technical know-how is a capital expenditure; therefore, Assessing Officer has rightly treated expenditure on acquiring computer software as expenditure of capital nature and rightly allowed depreciation as per rules." 25. In present case, it is apparent that assessee has been granted license for a particular period of enterprise resource planning software. In view of this, there is no outright purchase in case of assessee. In view of this facts stated by assessee before us and facts before honourable Rajasthan High Court were all together distinguishable. The learned departmental representative could not show us any reason to deviate from order of coordinate bench. Accordingly following decision of coordinate bench in assessee‟s own case in earlier years, we confirm order of learned CIT - A and dismiss ground number 9 and 10 of appeal. 26. The ground number 11 of appeal is against order of learned CIT Appeal directing AO to treat sum of INR 14389000/- of interest as business income, which was correctly assessed by....
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....to be business income but it is income from other sources. 28. The learned authorised representative vehemently stated that coordinate bench in assessment year 1998-99 in assessee‟s own case wherein issue was adjudicated in favour of assessee (page 33 of order). However, in captioned assessment year even Ld. AO has assessed loss in assessment order passed by him. Accordingly, this issue becomes academic and department‟s grounds of appeal be rejected on this premise itself. 29. We have carefully considered rival contention and perused orders of lower authorities. The interest income earned by assessee is on bank interest as well as on interoperates deposits. The interest was also received on income tax refund. Looking to nature of interest income shown by assessee, we do not find any reason to sustain order of learned CIT appeal. In several decisions cited before us by learned departmental representative, it is apparent that earning of interest income is not business of assessee, and also above income is also not inextricably linked with business of assessee but is altogether a different source of income which should be taxed under income from other sources only. I....
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....t fund dues have been deposited in time allowed, CIT (A) correctly deleted disallowance. Ground number 15 of appeal of revenue is dismissed. 33. Ground number 16 of appeal is with respect to addition of INR 5862377/- made by learned assessing officer on account of prior period expenses which was deleted by learned CIT - A. The fact shows that assessee during year had claimed prior period expenditure amounting to INR 5 862377/- and shown income of INR 9215260 as prior period income, on ground that it has been crystallized during assessment year under appeal. Learned AO disallowed prior period expenses as same were not incurred during year but in earlier years , but did not disturb prior period income offered by assessee during year. However, claim of assessee is that such expenditure has crystallized during year. However, learned AO did not accept argument of assessee. The learned CIT - A allowed claim of assessee holding that it is not a prior period expenditure as it has been crystallized during year. 34. The learned departmental representative reiterated facts stated before learned CIT - A as well as before assessing officer and stated that merely because assessee has shown....
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....ance also vide para number 1 of order, learned CIT appeal noted that it is clear that assessing officer has not allowed proper opportunity to explain same to assessee and learned AO has straight way referred notes of accounts as mentioned by auditor and concluded that disallowance is made without appreciating proper facts. We do not agree with finding of learned CIT - A that disallowance cannot be sustained as assessee has also been taxed on miscellaneous income of earlier years charged to tax this year. The logic given by learned CIT appeal that assessing officer should have treated both these items of prior period income and expenses on same parity is devoid of any merit. It is also not acceptable that without examining facts of case that when these expenses have been crystallized, disallowance cannot be deleted. Before neither learned assessing officer nor before learned CIT appeals or before us has assessee shown that, this expenditure has been crystallized during year. Unless this is shown these expenditure cannot be allowed without verification. It is also fact that definition of prior period expenditure for companies act and definition of prior period expenditure for income ....
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....ted deduction under section 35(2AB) of Act as was certified by auditors (Pg 131 of Paper book). The assessee thus claimed weighted deduction amounting to Rs. 3,02,51,250 on said amount. On balance amount revenue expenditure of Rs. 7995472/- and capital expenditure other than land and building of Rs. 189093, assessee has claimed deduction u/s 35 (1) (i) and 35 (2) (ia) respectively. Thus assessee has claimed total deduction amounting to INR 38435815 in respect of expenditure incurred on scientific research as under:- Deduction under section 35(2AB) Rs.3,02,51,250 (125% of Rs. 2,42,01,000) Deduction under section 35(1)(i) Rs. 79,95,472 Deduction under section 35(2)(ia) Rs. 1,89,093 Rs. 3,84,35,815 38. The Ld. AO while framing assessment held that assessee is only entitled for weighted deduction under section 35(2AB) of Act amounting to Rs. 3,02,51,250 and balance deduction amounting to Rs. 81,84,565 was disallowed alleging that assessee had claimed excess deduction and same was also not certified by tax auditors in their report. The Ld. AO ignored fact that Annexure 7 to tax audit report clearly stated total capital and revenue sci....
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.... was assessed at a loss of INR 85955505/- under normal computation and book profit was computed at INR 51182447/-. Assessee preferred appeal before learned CIT - A, who disposed of appeal of assessee vide order dated 6/5/2004 and therefore this appeal before us by learned AO against disallowances deleted by him. 45. The Revenue has raised following grounds of appeal in this appeal:- 1. That Ld CIT(A) has erred in law and on facts of case in deleting disallowance of Rs. 4,06,135/- which was made on account employees contribution and employers contribution respectively towards PF not paid within stipulated period. 2. That Ld. CIT(A) has erred in law and on facts of case in deleting disallowance of Rs. 25,48,000/- made on account of proportionate Interest on interest free advances given to sister concerns. 3. That Ld. CIT(A) has erred in law and on facts of case in reversing action of Assessing Officer who assessed interest income under head „Income from Other Source. 4. That Ld. CIT(A) has failed to consider his own order No. 77 dated 13-5-04 in case of M/s The Dhampur Sugar Mills Ltd., Dhaxnpur wherein action of Assessing Officer was uphe....
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....sessing Officer as capital in nature on a/c of consultancy fee paid. 14. That Ld. CIT(A) has erred in law and on facts of case in allowing expenses of Rs. 4,49,91,662/- being upfront fee for loans swap and Interest arbitrage expenses. 15. That order of Ld. CIT (A) being erroneous may be cancelled and order of A.O. may be restored." 46. The 1st ground of appeal was with respect to disallowance deleted of INR 406135/- on account of employees contribution and employers‟ contribution respectively towards provident fund allegedly not paid within stipulated period. 47. On hearing parties, it was found that this ground of appeal is Similar to ground of appeal no. 15 of departmental appeal for AY 2000-01 bearing ITA No. 4410/Del/2003 wherein we have confirmed order of learned CIT - A in deleting above disallowance. The fact shows that salary for a calendar month is paid by 10th of succeeding month. The due date for payment of PF contributions would, therefore, be 15th of month following. In that view of matter, payments which have been disallowed by AO have been made within due dates (including grace period) and therefore, disallowance under section 43B and/or....
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....ar under appeal. As far as amount of Rs. 115 lacs advanced during year under consideration, Ld. CIT (A) noted that assessee had mixed pool of funds and profits for year (Rs. 12.93 crores) far exceeded advances made. The Ld. CIT(A) accordingly held that interest free advances, in such a situation be presumed to have come out of profits in absence of any nexus between borrowed funds and interest free advances. Hence assessing officer is in appeal before us. 50. The learned departmental representative vehemently supported order of learned assessing officer whereas learned authorised representative relied upon order of learned CIT - A and submitted that reasons given by learned CIT - A are further supported by several judicial precedents where assessee has enough non-interest-bearing bearing surplus funds available with it, which exceeds amount of advances given without charging interest, then, no disallowance can be made. 51. We have carefully considered rival contention and found that decision taken by learned CIT A in deleting above disallowance where assessee has excess of non-interest-bearing funds in form of share capital and free reserve then amount advanced allegedly with....
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....e us. This issue has already been decided by us in appeal of learned assessing officer for assessment year 2000 - 01 vide ground no 12 of that appeal, wherein we have held that service charges earned by assessee are business income as they are inextricably linked with business of assessee. Therefore, accordingly we dismiss ground number 7. 54. Ground number 8 of appeal is with respect to disallowance of books and journals expenditure amounting to Rs. 4114059/- held by learned assessing officer as capital expenditure, claimed by assessee as revenue expenditure, learned CIT appeal deleting above disallowance. The identical issue has been decided by us in appeal of learned assessing officer for assessment year 2000 - 01 in ground number 13 of that appeal wherein we have confirmed action of learned CIT - A in holding that above expenditure is revenue in nature. Therefore, for similar reasons we dismiss ground number 8. 55. Ground number 9 is with respect to disallowance made by learned assessing officer of INR 50471311/- for interest paid on loans utilized in expansion and modernization of existing business which was deleted by learned CIT - A. Both parties agreed that this is id....
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.... expenditure however learned assessing officer was of view that same is a capital expenditure which was reversed by learned CIT appeal holding it to be a revenue expenditure. The ground number 12 is also supporting same for similar reasons. We have identically decided above issue in appeal of assessee for assessment year 2000 - 01 by this order vide ground no. 9 wherein we have held that software expenditure incurred by assessee are revenue expenditure in nature. We have also noted facts of honourable Rajasthan High Court cited by learned DR as well as in grounds of appeal and distinguished same with facts of case of assessee. Therefore, for similar reason we dismiss ground number 11 and 12 of appeal of AO. 58. Ground number 13 is with respect to deleting addition made by learned assessing officer with respect to INR 6,500,000 in treated by learned assessing officer as capital expenditure incurred by assessee of consultancy fees paid. During year, assessee paid Rs. 65 lakhs as consultancy fee to M/s. Shinning Strategic Identity (P) Ltd. Such expenses were incurred for services provided by said company to assessee in respect of developing its corporate and brand identity, therefo....
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....ove expenditure is not capital expenditure but revenue expenditure as it helps assessee in maintaining its corporate image to outside world. The corporate image of assessee is created by product of assessee and these products are to be demonstrated to outside world in a proper manner by whole organization. Therefore, identity or image of assessee is not distorted to various stakeholders. In view of this, we do not find that these expenditure are creating any benefit of enduring nature to assessee. In fact, they are standard operating procedure of communicating with outside world. Accordingly we hold that these are revenue expenditure incurred by assessee which has been rightly allowed by learned CIT - A. Accordingly, ground number 13 is dismissed. 62. Ground number 14 is with respect to disallowance deleted of Rs. 44991662/- being upfront fees for loans swaps and interest arbitrage expenses. 63. Heard rival contentions. Facts shows that assessee incurred expenses of Rs. 4,49,91,662/- being upfront fees paid for swap of high interest bearing loans for low cost borrowings. The Ld. AO allowed only 1/5th of entire expenditure i.e. Rs. 89,98,332/- as per provisions of section 35D ....
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.... of appeal of revenue are general in nature, no arguments advanced, therefore there dismissed. 65. Accordingly appeal number 3426/del/2004 filed by learned assessing officer on 29/07/2004 for assessment year 2001 - 02 is partly allowed for statistical purposes. AY 2002-03 ITA No 1271/del/2006 ( By Assessee) & ITA No ITA no 1308/del/2006 ( By ld AO) 66. The assessee filed its return of income on 29/10/2002 declaring loss of INR 1084320 in normal computation of income and under section 115 JB it disclosed book profit of INR 15646013/-. Assessment order under section 143 (3) of income tax act 1961 was passed on 31/03/2005 by The Assistant Commissioner of Income Tax, Range - 1, Moradabad making several disallowances/ additions at Rs. nil. The book profit was computed under section 115JB of act at Rs. 27864409/-. The assessee challenged same before learned Commissioner of Income Tax Appeals, Bareilly, who passed an order dated 2/2/2006 against which both parties are aggrieved and have preferred appeal before us. 67. The assessee has raised following grounds of appeal ITA No. 1271/Del/2006 for Assessment Year 2002-03:- "1. That learned CIT-A had erred on fac....
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....xpenditure holding Rs. 7,26,666/- as revenue expenditure. 3. The ld. CIT(A), Bareilly has erred in law and on facts of case in deleting disallowance of interest of Rs. 2,14,84,000/- claimed as revenue Expenditure while this amount was actually capitalized in books of account maintained by assessee. 4. The Ld. CIT(A), Bareilly has erred in law and on facts of ease in deleting disallowance of prior period expenses of Rs. 77,02,730/-, which, were debited by assessee in P&L Account. This has already been pointed out by auditors in Tax Audit Report. Considering mercantile system of accounting employed by assessee company, it is not allowable for year under consideration. 5. The Ld. CIT(A), Bareilly has erred in law and on facts of case in deleting addition made by A.O. amounting to Rs. 5,16,880/- being 10% of 16.51,68,887/- on account of claims received from insurance companies in respect of raw materials, stocks, finished goods, fixed assets, vehicles and from railways in absence of these details to plug pilferage loopholes. 6. That order of Ld CIT(A),Bareilly being erroneous may be cancelled and order of Assessing Officer lie restored." 69. 1st w....
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.... of fifth proviso to section 80HHC(3) of Act (by Taxation Laws (Amendment) Act, 2005)exclusively dealing with a situation of loss. 73. Therefore, issue before us is how to calculate profit u/s 80 HHC while computing book profit. It is submission of Appellant that for purpose of 115JB of Act, deduction under section 80HHC of Act must be computed with reference to book profits and not business income computed under normal provisions of Act. This issue has been settled by Hon‟ble Supreme Court by dismissal of Special Leave Petition („SLP‟) in case of CIT vs. Futura Polyester Ltd. SLP (Civil) No(s).3189/2010 wherein judgment of Hon‟ble Madras High Court [186 Taxman 51 (Madras)] in context of deduction under 80HHC for purpose of section 115JA of Act, was upheld. The Hon‟ble High Court relying on CIT vs. Rajanikant Schnelder & Associates (P.) Ltd. [2008] 302 ITR 22 (Madras) held that only book profits need to be taken into account for computing deduction under 80HHC of Act for purpose of section 115JA of Act. Further, Hon‟ble Supreme Court in case of CIT vs. Bhari Information Technology Systems (P.) Ltd. [2012] 340 ITR 593 (SC) upheld ruling o....
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....d to total turnover. However, Appellant submitted that such miscellaneous receipts should not be added to total turnover. In context of Ld. AO‟s contention regarding miscellaneous receipts, Appellant relies on Hon‟ble Supreme Court in case of CIT vs. Punjab Stainless Steel Industries [2014] 364 ITR 144 (SC) wherein in context of section 80HHC of Act, it was held that " sale proceeds of scrap cannot be included in the term 'turnover' for reason that respondent-unit is engaged primarily in manufacturing and selling of steel utensils and not scrap of steel." This view was also upheld in case of Jagraon Exports vs. CIT [2016] 284 CTR 209 (SC). Applying this analogy to facts of present case, miscellaneous receipts should not be added to total turnover. In view of above judicial precedent it is held that assessee is directed to submit computation of income under section 80 HHC which is required to be reduced from book profit to be computed under section 115JB of Income Tax Act before learned Assessing Officer. The learned AO after examination, in view of above judicial precedents, allow claim of assessee, if it is found in accordance with law. Accordingly, ground numb....
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....e by assessee with club is also for purposes of business. Therefore we reverse finding of learned CIT - A and allow ground number 4 of appeal of assessee. 79. Ground number 5 of appeal is on issue of disallowance of INR 516339/- under section 35D of the act. Assessee has claimed deduction under section 35D of act amounting to INR 516339/- for share issue expenses incurred by amalgamating companies. The claim of assessee is that it has been allowed to assessee in previous assessment years and this being last year of said claim, it should be allowed in this year as well. The assessing officer as well as learned CIT - A disallowed deduction alleging that appellant could not furnish nature of expenditure. 80. The learned authorised representative submitted that deduction claimed represent specified expenditure i.e. issue expenditure incurred by amalgamating company such claim has been verified by statutory auditors and quantified by tax auditors. Therefore, on principle of consistency it should be allowed. 81. The learned departmental representative vehemently contested claim of assessee and submitted that according to provisions of section 35D of act no such deduction can ....
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.... 67.83 Lakhs to RBPPL under previous agreement and this sum in terms of clause 3 of agreement was to be adjusted against sale consideration of apartments. The consideration was also agreed between parties at Rs. 875 per square feet. The agreement in clause 19 allowed Appellant an option to withdraw from this agreement and take back advance and interest (if any) due to it. As time period for constructing apartments in terms of agreement dated Jan 6, 1997 was to expire on Jan 6, 2002 with no visible certainty of completion of residential complex and there were revisions in construction plans which were not acceptable to Appellant, on May 24 2001, the Appellant relinquished its rights under the agreement dated Jan 6, 1997 vide a relinquishment deed for a consideration of Rs. 1,62,50,000. In furtherance of same, Appellant computed along term capital gain of Rs. 17,53,277 /- upon sale of aforesaid rights and claimed brought forward losses. Such long-term capital gain was Rs. 6,68,961. After adjustment, Appellant offered Long-term capital gain on Rs. 10,84,316/-. The Ld. AO observed that rights relinquished vide relinquishment deed emanated from agreement entered on Jan 6, 1997 and that ....
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....ion as follows: (a) As mentioned above, Appellant by virtue of agreement dated Jan 3, 1989, Appellant received a right to have a say in fixation of official rates, a 10% rebate and right to negotiate payment terms. (b) The allegation that first agreement of 1989 appears to be an adventure in area of construction activity by Appellant is merely an allegation which does not have any legs to stand. Further, this allegation is in contradiction to subsequent allegation of CIT(A) that agreement of 1989 was merely drawn up to safeguard money advanced by Appellant to RBPPL for reason that transaction could either be in nature of financing activity or a construction venture but it cannot be both[The Appellant however denies that aforesaid allegation of Ld. CIT(A)]. (c) The Ld, CIT (A)‟s allegation that in absence of a specific number of flats, size, cost etc. transaction was a financing transaction is devoid of any merit for reason that RBPPL even in 1989 was engaged in business of real estate development and as rightly pointed out by CIT(A) could not have transferred rights in apartments prior to it acquiring same. RBPPL was allotted said land by Ghaziabad ....
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....uisition is indeterminate. Applying Hon‟ble Supreme Court‟s judgment of CIT vs.B.C. Srinivasa Setty[1981] 128 ITR 294 (SC) capital gains cannot be taxed in case cost of acquisition is indeterminate. 88. Without prejudice to above, regarding Ld. AO‟s allegation that indexation benefits would be allowable from AY 1997-98, Appellant submits that at best Ld. AO could argue that rights mentioned above which Appellant received in 1989 were transformed into undivided interest in land and rights in proposed building in 1997. If that be so, Ld. AO ought to have taxed capital gain in AY 1997-98 on transfer of rights received in year 1989 and treat consideration as cost of acquisition for undivided interest in land and rights in proposed building. Therefore, if he were to treat that Appellant acquired rights in 1997, he cannot tax entire capital gain made from 1989 to 2001 in captioned assessment year. 89. The learned departmental representative vehemently supported orders of lower authorities and submitted that it is clear transaction of advancing loan and there is no capital asset coming into existence which can result into short-term capital gain or long-term capita....
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....e reduced the sale consideration on ad hoc basis to the 10% of the amount advanced. The learned CIT - A held that the above sum is nothing but the compensation paid for using the money of the assessee. The learned CIT - A dealt with the whole issue and devoted more than 20 pages to consider the facts of the case. The page number 23 - 40 of the order of the learned CIT - A while dealing with ground number 9 of the appeal of the assessee are very relevant. After considering the same the learned CIT - A has held that the above income is nothing but an interest of compensation for the money used by the other company of the assessee for the relevant period. There is no justification available to us to upset the finding of the learned CIT appeal. It is correct that as on 3/1/1989 there were no identification of the area to be purchased by the assessee, number of flats to be obtained by the assessee, the rate at which the flats would be obtained, the time by which such flats would be available for occupation by the assessee. In absence of all these things the assessee paid a sum of INR 4,800,000 to the above company. Further it was not known whether the assessee company also identified th....
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....rdingly, ITA number 1271/del/2006 filed by assessee for assessment year 2002 - 03 is partly allowed. 93. Now we come to ITA number 1308/Del/2006 filed by learned assessing officer for assessment year 2002 - 03. 94. The 1st ground of appeal is with respect to disallowance of INR 726666/- out of expenditure incurred on books and periodicals treating same as capital expenditure which was held by learned CIT - A as revenue expenditure. Both parties agreed that facts of this ground of appeal are identical to facts stated in department‟s appeal ground number 13 for assessment year 2000-01. After hearing parties, on perusal of facts for year, for same reasons has given in disposing of ground number 13 for assessment year 2000-01 in appeal of learned AO we also dismiss this ground of appeal. Ground number 2 of appeal is with respect to claim of depreciation thereon. Therefore consequently ground number 1 and 2 both are dismissed. 95. Ground number 3 of appeal is with respect to disallowance of interest of Rs. 21484000/- claimed by assessee as revenue expenditure, held by learned assessing officer as capital expenditure. Both parties submitted that it is identical to ground n....
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....ount of loss from insurance companies because issues of obsolete items, depreciation due to efflux of time etc. It is also known that insurance companies have surveyors whose primary work is to review claims made and assess losses. Surveyors in insurance industry are domain experts for particular area- be it fire, loss in transit or loss due to any other natural calamity. The Ld. AO does not have any mechanism to estimate it. Receipt of sums from insurance companies is sufficient proof of having incurred losses. Nevertheless, claims received from insurance companies because of raw materials, stocks, unfinished goods, fixed assets, vehicles and from railways was credited to P&L account and offered to tax by Appellant. When sum is offered to tax, Action of Ld. AO cannot doubt correctness of claim without any evidences. Ld. AO‟s addition is based on mere suspicion and surmises therefore have no legal or factual basis. Therefore, we upheld the order of the ld CIT A. Accordingly, ground number 5 of appeal is dismissed. 100. Accordingly, appeal of learned assessing officer in ITA number 1308/del/2006 for assessment year 2002 - 03 is partly allowed with above directions. ITA N....
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....ar due to NIL business profit, this issue becomes academic. 105. The learned departmental representative vehemently stated that above issue is not an academic but income earned by assessee does not have any Nexus with business of assessee and therefore it is rightly taxed as income from other sources. He reiterated submissions made for assessment year 2001 - 02. 106. We have carefully considered rival contentions and found that identical issue has been decided by us in departmental appeal vide ground no 11 for assessment year 2000-01 wherein it has been held that interest income earned by assessee is not business income but is chargeable to tax under the head " income from other sources" only. Accordingly, we also held for this year that above interest income earned by assessee is chargeable to tax under head "income from other sources." Accordingly, ground number 1 of appeal of assessee is dismissed. 107. The second ground of appeal is with respect to taxing income of Rs. 2192000/- from utilities as income from other sources instead of income from business. After hearing both parties it was noted that identical issue has been decided in case of assessee for assessment yea....
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....olding that interest income on refund is not a taxable real income as Appellate order based on which refund has been granted is subject to Appeal by Department. 7. That learned CIT (A) erred on facts and in law in holding that quantum of claim of deduction u/s 80HHC is to be restricted by a sum of Rs. 11,09,55,402/- being 90% of impugned export incentives from "Profits and Gains of Business." 111. Ground number 1 and 2 of appeal are with respect to disallowance confirmed of club expenses as well as national interest disallowed on refundable deposits made with club. Identical issues have been decided by us in assessee‟s appeal for assessment year 2001 - 02 wherein club expenditure has been allowed and disallowance on account of interest on refundable deposit made with club is deleted. Therefore, for identical reasons we also allow ground number 1 and 2 of appeal. 112. Ground number 3 of appeal is with respect to taxing of interest income of INR 15738220/- as income from other sources instead of income from business as claimed by appellant. This issue is also decided in assessee‟s appeal for assessment year 2000-01 wherein it has been held that interest inc....
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.... above fact as issue has now been decided by honourable Supreme Court. 118. In view of above facts and after hearing parties it was noted that now issue is squarely covered in favour of assessee by decision of honourable Supreme Court in 277 CTR 460 wherein decision of honourable Gujarat High Court in Avani exports vs. CIT 348 ITR 391 was confirmed. In view of above facts, we direct assessee to file revised computation of deduction allowable to it before learned AO, who after verification allow claim of assessee, if found in accordance with law. Accordingly, ground number 7 of appeal of assessee is allowed. 119. Accordingly, appeal of assessee for assessment year 2004 - 05 in ITA number 3104/del/2008 is partly allowed. 120. The revenue has raised following grounds of appeal in ITA No. 3242/Del/2008 for Assessment Year 2004-05:- "1. That Commissioner of Income-tax (Appeals), Bareilly has erred in law and circumstances in allowing relief of Rs. 37,49,191/- on account of out of books of periodicals. 2. The Commissioner of Income-tax (Appeals), Bareilly has erred in law and circumstances in allowing relief of Rs. 22,50,215/- out of prior period expenses. ....
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....9 (Departmental appeal) A Y 2005-06 125. For assessment year 2005 - 06 assessee filed its return of income on 29/10/2005 declaring income of Rs. 551847983/-. Subsequently return was revised on 4/2/2007 at income of INR 393262221/-. The assessment under section 143 (3) of act was passed on 30/12/2008 wherein total income of assessee was determined at INR 459144871/-. Aggrieved by order of learned assessing officer, assessee preferred an appeal before learned CIT - A, Bareilly, who passed an order on 2/7/2009 partly allowing appeal of assessee. Therefore, both parties are in appeal before us. 126. The assessee has raised following grounds of appeal in ITA No. 3724/Del/2009 for Assessment Year 2005-06:- "1. That ld CIT(A) erred on facts and in law in upholding disallowance of club expenses of Rs. 2,34,352/- by holding that same not been incurred for purpose of business of appellant company. 2. That ld CIT(A) erred on facts and in law in upholding addition of a sum of Rs. 3,92,000/- being notional interest on refundable deposits made to clubs." 127. The ground number 1 and 2 of appeal is with respect to disallowance of club expenses of INR 234352/- and int....
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....dentical issue is decided in assessment year 2002 - 03 in ground number 5 of revenues appeal wherein we have deleted above addition made by learned assessing officer holding it to be without any justification. For similar reasons we also dismiss ground number 2 of this appeal. 132. Ground number 3 of appeal is with respect to deletion of disallowance on account of INR 3687419/- of prior period expenses. Identical issue has been decided by us in revenues appeal for assessment year 2000-01 in ground number 16 wherein we have set aside whole issue back to file of learned assessing officer with a direction to assessee to justify before assessing officer that above expenditure has crystallized during year. In view of this for similar reasons, we also set aside this ground of appeal back to file of learned assessing officer with similar directions. 133. Ground number 4 of appeal is with respect to deduction allowable u/s 80 IA to assessee on profits derived from business of generation of power. We have decided identical issue in appeal of assessing officer for assessment year 2001 - 02 wherein we have held that assessee is eligible for deduction under section 80 IA on profits deriv....
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....tract for setting up plant is not a Capital Receipt." 137. Ground number 1 of appeal is with respect to disallowance of club expenses of INR 1 91676 and ground number 2 is with respect to disallowance of interest expenditure of INR 231000/- on refundable deposits made with club. The parties confirmed that identical issue has been decided by lower authorities in assessee‟s own case for earlier years. It was also submitted that there is no change in facts and circumstances of case. 138. On careful consideration of orders of lower authorities and contentions of rival parties, it was found that identical issue has been decided in assessee‟s own case for assessment year 2002-03 vide ground no 3 & 4 of assessee‟s appeal . Therein it has been held that club expenditure incurred by assessee is for purpose of business of assessee and therefore deposits made with club is also for purposes of business of assessee and therefore no interest disallowance can be made. Therefore, following decision in assessee‟s own case for earlier years we also direct learned assessing to delete disallowance involved in ground number 1 and 2 of appeal. Accordingly, ground number 1 a....
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....a presumption, it is one which is in assessee's favour. The Department could have rebutted this presumption by calling for records from bank itself. It chose not do so at though assessee stated that it was not in possession of records. There was no application either before Tribunal or before us for an opportunity to lead further evidence in this regard. 20. In circumstances, question No.(i) is answered in favour of respondent-assessee. The Appellant submits that it is imperative for Ld. AO to establish a direct or indirect nexus between expenditure alleged to have been incurred for earning exempt income in order to invoke section 14A of Act. He referred judicial precedents of CIT., Mumbai vs. M/s. Walfort Share & Stock Brokers P. Ltd. [2010] 326 ITR 1 (SC). Thus, a vague assertion by Ld. AO that Appellant has not considered indirect expenses is not sufficient and cannot automatically trigger Rule 8D of Rules without satisfying provisions of section 14A(1) of Act. It is submitted before Hon‟ble Bench that sub-section (2) of section 14A of Act provides that requirement of Assessing Officer embarking upon a determination of amount of expenditure incurred in relation....
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.... cases where different funds are mixed in a common pool..." Further, Ld. CIT(A) also disallowed expenditure earned on dividend income by applying rule 8D of Income-tax Rules, 1962 („IT rules‟)which is incorrect as rule 8D of IT rules is not applicable in instant case as same became effective from 24 March 2008. The CIT (A) placed reliance on judgments such as Cheminvest Ltd. vs. CIT [2009] 121 ITD 318 (Delhi) which is highly misplaced since, overruled by Hon‟ble Delhi High Court. It is also pertinent to note that in case of Godrej & Boyce Manufacturing Company Ltd. vs. DCIT [2017] 394 ITR 449 (SC) Hon‟ble Supreme Court has held that rule 8D can only be applied prospectively. He further stated that the recording of the satisfaction on examination of the books of the assessee is a mandatory exercise, which should have been carried out by the assessing officer but has not been carried out and therefore on this score itself the disallowance cannot be made. Hence, action of AO is without any basis and cannot be explained with any cogent reason, accordingly it is submission of Appellant that disallowance made by AO is ought to be deleted. 141. Learned DR veh....
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....ismissed the claim of the assessee stating that the claim of the assessee of raising the ground in appeal proceedings which was not claimed in the return of income cannot be entertained at this stage. 144. The learned authorised representative vehemently submitted that details of the expenditure are at pages 98-99 of the paper book. The expenses crystallized / became known for the first time during the relevant previous year on claims / bills being received. Even though such expenses pertained to earlier years, deduction for the same needs to be allowed in the year under appeal. The Appellant places reliance on CIT vs.Pruthvi Brokers & Shareholders [2012] 349 ITR 336 (Bombay)wherein the Hon‟ble Bombay High Court held that an assessee is entitled to raise before appellate authorities additional grounds in terms of additional claims not made in return filed by it. The Hon‟ble Bombay High Court in another case of CIT vs. Mukund Bhawan Trust , Pune (ITA No. 60 of 2015)dismissed revenue‟s appeal while upholding its own judgment in the aforesaid case. Further, reliance can also be placed on the following decisions wherein, it has been held that merely because an expe....
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....e above expenditure has crystallized during the year and therefore they are allowable as deduction. Therefore, for similar reasons and with similar direction we set aside this ground of appeal to the file of the learned assessing officer. Accordingly, ground number 4 is allowed with above direction. 147. Ground number 5 is with respect to the disallowance upheld by the learned CIT - A of INR 3 6520000/- on account of claim recoverable from Ranbaxy laboratories Ltd by holding that the amounts receivable towards breach of contract for setting up of the plant is not a capital receipt. The brief fact shows that the assessee has received payment from Messer is Ranbaxy laboratories Ltd of INR 3 6520000/- which is credited to the profit and loss account but now during the assessment proceedings the assessee claimed before the learned AO that the said amount is in the nature of capital receipt and therefore should not have been charged to income tax. It was claimed that it is not chargeable to income tax. The assessee submitted that Assessee Company is engaged in drug discovery and chemistry services, custom research and manufacturing services for advance intermediates, fine chemicals, ....
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....y which led to incurrence of losses by the Appellant on account of overheads, depreciation and interest on investment made in setting up the plant. After various negotiations, the parties then executed a termination and settlement contract dated 2 June 2006. The Termination and settlement contract entitled the Appellant to receive the following amounts from Ranbaxy: 1. Rs. 1,25,00,000 towards expenses incurred in maintaining the plant. (40% of amount spent by vendor till the date of termination subject to maximum of Rs. 6,40,00,000 in accordance with clause 16(iv)(a) of the manufacturing agreement) 2. Total Compensation of Rs. 5,96,73,000 (after subtracting the earned profits of Rs. 43,27,000 (ACS-4 Qty procured by Ranbaxy x Rs. 4020 + DKT-3 Qty procured by Ranbaxy x Rs. 1320) from Rs. 6,40,00,000 in accordance with clause 16(iv)(b) of the manufacturing agreement) ii. Hence, the amount of compensation to be received by the Appellant amounted to Rs. 7,21,73,000. The Appellant on an accrual basis treated the amount of Rs. 3,65,00,000 as a capital receipt to be recoverable from Ranbaxy in the current year and the rest of the amount was to be recovered in the....
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....ssee was paid was to compensate him for loss of a capital asset. It matters little whether the assessee did continue after the determination of its agency with the Fort William Co. Ltd. to conduct the remaining agencies. The transaction was not in the nature of a trading transaction, but was one in which the assessee parted with an asset of an enduring value. We are, therefore, unable to agree with the High Court that the amount received by the Appellant was in the nature of a revenue receipt" 149. Learned departmental representative vehemently supported the order of the lower authorities and submitted that when there is no claim in the original return of income as well as assessee did not file any revised return making such claim, lower authorities have correctly not entertained the claim of the assessee following the decision of the honourable Supreme Court. 150. We have carefully considered the rival contentions and perused the orders of the lower authorities. The learned assessing officer has correctly not entertained the claim of the assessee as assessee neither filed the revised return nor made the claim in the original return of income. He followed the mandate of the h....
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.... year 2000-01 in assessee‟s own case by this order wherein we have allowed claim of assessee of books and periodicals expenditure holding it to be revenue expenditure confirming order of learned CIT - A, therefore, for similar reason we also hold for this year that INR 4013830 incurred by assessee on account of books and periodicals is revenue expenditure. Accordingly, ground number 1 of appeal is dismissed. 155. Ground number 2 of appeal is with respect to deletion of addition made by learned CIT - A of Rs. 280650/- as notional disallowance out of loss in transit with respect to insurance claim received by assessee. During year, assessee has received a sum of Rs. 2806502/- on account of insurance claim in respect of various losses incurred. The learned assessing officer made addition of 10% of such claim to total income of assessee. It was deleted by learned CIT - A and therefore learned AO is in appeal. 156. Both parties confirmed that identical issue has been decided in case of assessee for assessment year 2004 - 05 wherein identical addition was made by learned assessing officer was deleted by learned CIT - A. There is no change in facts and circumstances of case. I....
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.... 161. The assessee has raised following grounds of appeal in ITA No. 2479/Del/2011 for Assessment Year 2007-08:- 1. That learned CIT(A) erred on facts and in law in upholding disallowance of club expenses of Rs. 1,52,935/- by holding that same has not been incurred for purpose of business of Appellant Company. 2. That learned CIT(A) erred on facts and in law in disallowing of expenditure u/s 14A of 66,95,714/- by holding that same is relatable to earning of exempt dividend income that does not form part of total income and are not entitled to be debited to P& L Account. 3. That learned CIT(A) erred on facts and in law in upholding disallowance of expenditure of Rs. 24,73,697/- by holding inter-alia that these expenses are not relatable to year under consideration and hence, not allowable in asstt. year 2007-08. 4. That learned CIT(A) erred on facts and in law in upholding disallowance of Rs. 3,56,53,000/- on account of claim recoverable from Ranbaxy Laboratories Ltd. by holding that amounts receivable towards Breach of contract for setting up plant is not a Capital Receipt." 162. Ground number 1 of appeal is with respect to disallowance of cl....
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....ing of the order of the learned assessing officer we did not find any satisfaction recorded by him that the assessee has incurred expenditure for earning exempt income on examination of the books of account. In absence of such satisfaction, the disallowance u/s 14A cannot be upheld. Honourable Supreme Court in 402 ITR 604 has held that satisfaction is mandatory before applying any apportionment ratio. In view of this second ground of appeal is allowed. 168. Third ground of the appeal is against the disallowance confirmed by the learned CIT of INR 2473697 holding that these expenses are not relatable to the year under consideration and hence not allowable in the assessment year 2007 - 08. This relates to disallowance of prior period expenses. The fact shows that the assessee did not make claim of deduction of the above expenditure pertaining to prior period in the return of income. Assessee also did not file any revised return to raise the claim before the AO. Accordingly, the AO denied entertaining the claim of the assessee in view of the decision of the honourable Supreme Court in 284 ITR 323. Before the learned Commissioner appeals assessee submitted that these expenses were i....
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..... Vishnu Industrial Gases Pvt. Ltd. [ITR No. 229/1988 (Del)], Para 3, 4 170. The learned departmental representative vehemently supported the orders of the lower authorities and submitted that assessee itself during the course of filing of the return has made the above disallowance. Such disallowances were not rectified by offering the above adjustment in the revised return. In absence of any revised return, the learned assessing officer was bound by the verdict of the honourable Supreme Court. Therefore, the claim of the assessee was not entertained by the learned AO. Before the learned CIT - A the assessee did not file requisite details. He therefore submitted that the lower authorities have correctly disallowed the claim of the assessee. 171. On careful consideration of the rival contentions, it is noted that though learned assessing officer disallowed the claim of the assessee relying on the decision of the honourable Supreme Court correctly, the learned CIT - A has admitted the claim of the assessee but in absence of adequate details dismissed the same. The issue is the allowability of the prior period expenses. This issue is squarely covered by the decision in the case ....
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....artly allowed. 177. The revenue has raised following grounds of appeal in ITA No. 2596/Del/2011 for Assessment Year 2007-08:- "1. The Commissioner of Income tax (Appeal), Bareilly has erred in law and circumstances in allowing relief of Rs. 23,21,594/- by deleting disallowance made out of expenses incurred on purchase of books and periodicals by treating same as revenue expenditure. Departmental appeal on this issue is pending decision before ITAT in Assessment Year- 2006-07 and earlier assessment years. 2. The Commissioner of Income tax (Appeal), Bareilly has erred in law and circumstances in allowing relief of Rs. 85,988/- which represented addition on account of notional income @ 10% of insurance claim i.e. Rs. 8,59,988/- in respect of loss in transit. Departmental appeal on this issue is pending decision before ITAT in Assessment Year-2006-07 and earlier assessment years. 3. The Commissioner of Income tax (Appeal), Bareilly has erred in law and circumstances in allowing benefit of deduction u/s 80IA on profits derived from business off generation of power. Departmental appeal on this issue is pending decision before ITAT in Assessment Year-2006- 07....
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....llowable to assessee u/s 80 IA on profits derived from business of generation of power claimed by assessee. The claim was allowed by learned CIT - A. The parties confirmed before us that identical issue has been decided in assessee‟s own case for assessment year 2001 - 02 wherein claim of assessee was also dealt with lower authorities in similar manner. 183. We have carefully considered rival contention and found that identical issue has been decided by us by this order for assessment year 2001 - 02 in ground number 4 of appeal of learned assessing officer wherein we have held that assessee is entitled for deduction u/s 80 IA of income tax act on power generation unit installed by assessee. Therefore, for similar reasons we dismiss ground number 3 of appeal of AO and direct him to grant deduction under section 80 IA of income tax act being profits derived from business of generation of power. Assessee is directed to file the working of claim which will be verified by the ld AO and then if found in accordance with law may grant the same. 184. Accordingly, ITA number 2596/Del/2011 for Assessment Year 2007-08 filed by learned assessing officer is dismissed. A Y 2008-09 ....
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....arlier years wherein we have held that the decision of the honourable Supreme Court in 284 ITR 323 does not apply to the appellate authorities but only to the assessing officer. Therefore the learned CIT - A should have entertained the claim of the assessee and examine date on the merits of the case. Further the issue of disallowance of the prior period expenses has been considered by us in assessment year 2000 - 01 in the appeal of the learned assessing officer wide ground number 16 wherein we have set aside the whole issue back to the file of the learned assessing officer with a direction to assessee to demonstrate before the learned CIT (A) that above expenditure has crystallized during the year and therefore allowable for this year. Accordingly for similar reasons, with similar directions, we also set aside this ground of appeal to the file of the learned CIT - A. Accordingly, ground number 2 of the assessee‟s appeal is allowed with above direction. 190. Accordingly, ITA number 4793/del/2012 for assessment year 2008 - 09 is allowed. 191. The revenue has raised following grounds of appeal in ITA No. 4975/Del/2012 for Assessment Year 2008-09:- "1. The Commiss....