TaxTMI 
TaxTMI 
2019 (3) TMI 990
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.... 1. That the Order passed by the Ld. CIT(A)-I, Ludhiana is preconceived, biased, perverse unsustainable in the eyes of law, arbitrary and have been passed without appreciation of facts and without appiication of mind. 2. That the Ld. CIT(A) has erred in law and on facts in upholding the disallowance of Rs. 1055.23 Lacs under section 14A of The Income tax Act, 1961 read with Rule 8D. 3. That the Ld.CIT (A) has erred in law and on facts while upholding the disallowance of interest expenditure on notional basis amounting to Rs. 4231.77 Lacs on investments under the provisions of section 36(l)(iii). 4. Without pre-judice to ground no.3, the Ld.CIT(A) has erred in not allowing the above mentioned interest expenditure under section 57 of The Act and setting off the same against income from other sources. 5. That the Ld.CIT(A) has erred in law and on facts in upholding that the premium of Rs. 10350 Lacs paid on redemption of Foreign Currency Convertible Bonds (FCCB} is capital expenditure and not revenue expenditure as claimed by the assessee and has further erred in holding that the assessee deliberately claimed premium as revenue expenditure in its Computation of income in ord....
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....out prejudice to ground no.12, the Ld. CIT(A) has erred in treating sales tax subsidy of Rs. 12,31,25,525/- as 'Income from Other Sources' instead of 'Income from Business and Profession'. 14. That the Ld.CIT(A) has erred in law and on facts in treating line/bay charges amounting to Rs. 33,75,000/- as capital expenditure instead of revenue expenditure. 15. That the appellant craves leave to add/alter/amend any ground of appeal on or before the due date of hearing of appeal 4. Ground No.1: Ground No.1 is general in nature and does not require adjudication on any specific issue. 5. Ground No.2 : Vide this ground the assessee has agitated the action of the CIT(A) in upholding the disallowance of Rs. 1055.23 lacs under section 14A of the Income-tax Act, 1961 read with rule 8D of the Income Tax Rules. 6. At the outset, the Ld. Counsel has invited our attention to the chart furnished by him to show that the assessee during the year received dividend income from subsidiaries amounting to Rs. 7.91 crores and dividend income from investment in other companies of Rs. 4.68 cores totalling to Rs. 12.59 cores. Further, the assessee during the year earned cash profits at R....
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...., Ld. Counsel for the assessee has submitted that now the issue is squarely covered by the latest decision of the Hon'ble Supreme Court in the case of in the case of 'CIT (LTU) Vs. Reliance Industries Ltd.' [2010] 410 ITR 466 (SC), wherein, the Hon'ble Supreme Court has reiterated the proposition that if there are interest funds available with the assessee, which are sufficient to meet the investment, it can be presumed that the investments are made from the interest free funds available with the assessee. In view of this, this question is now settled by the decision of the Hon'ble Supreme Court and the issue accordingly is decided in favour of the assessee so far as the issue of disallowance of interest expenditure is concerned. 9. However, so far as the issue of disallowance of administrative expenditure is concerned, the Ld. Counsel for the assessee has invited our attention to the earlier order of the Tribunal to state that in the appeal for the assessment year 2006-07, the assessee has earned dividend income of Rs. 1.59 crores and the Tribunal restricted the disallowance of administrative expenditure to Rs. 2 lacs and further in the assessment year 2007-08, the as....
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....sessee that the same is Revenue expenditure. The facts relevant to the issue are that the assessee issued Foreign Currency Convertible Bonds in the year 2006 and these were to be matured in February 2011. As the Bonds holders did not exercise their option to convert the bonds in equity shares, so FCCB were repaid along with premium / interest @ 6% per annum. The lower authorities treated the aforesaid payment as capital payment and denied the deduction of expenditure in this respect. 14. The Ld. Counsel for the assessee has invited our attention to the decision of the Tribunal in the own case of the assessee M/s Vardhman Textiles Ltd Vs. Addl. CIT Ludhiana in ITA no. 1429/Chd/2010 for the assessment year 2006-07 and in ITA No. 270/Chd/2011 for assessment year 2007-08 order dated 18.12.2018, wherein, on identical facts, the Tribunal after considering the relevant facts has held that the said expenditure is to be treated as Revenue expenditure, in the year of payment. The relevant findings of the Tribunal on this issue are reproduced as under:- "20. Ground No. 9 : Vide ground No.9, the assessee has agitated the action of the CIT(A) in confirming the action of the Assessing office....
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....sing officer disallowed the aforesaid commission holding that the assessee was liable to deduct tax at source in respect of the aforesaid payments. However, after going through the assessment orders, we find that the Assessing officer has not disputed that the aforesaid payments were made to foreign agents who were not taxable in India. Since income, if any, received or accrued to foreign agents was not taxable in India, hence, as per the settlement law, the expenditure cannot be disallowed for non-deduction of TDS on such payments. 19. In view of this, we do not find any justification on the part of the lower authorities in disallowing the expenditure under this head. This issue is accordingly decided in favour of the assessee and the disallowance made, if any, on the issue for non-deduction of TDS is ordered to be set aside/deleted. 20. Ground No.8 : Vide ground No.8, the assessee has agitated the action of the lower authorities in treating the interest received amounting to Rs. 21,21,35,487/- as 'Income from other sources' instead of income form 'Business and Profession'. 21. It is an undisputed fact on the file that the aforesaid amount of interest has not been received by t....
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.... "28. The third part of ground No.2 is against the action of the CIT(A) in directing the Assessing officer not to reduce foreign exchange fluctuation gain from eligible profits of units eligible for deduction u/s 80IB and 80IC and exemption u/s 10B of the Act. 29. The Ld. Counsel for the assessee has submitted that the foreign exchange fluctuation gain is in respect of export receipts / receivable of the assessee and any gain in respect of receivable on account of foreign exchange fluctuation in fact contributes to the profits of the assessee from the sale/ export of the products. We find force in the aforesaid contention. We do not find any infirmity in the order of the CIT(A) in this respect also." 25. In view of the above findings of the Tribunal, this issue is squarely covered in favour of the assessee. The assessee is held to be eligible to claim deduction u/s 80 IB / 80 IC of the Act in this respect. So far as the claim of the assessee regarding receipt of income / Misc. income and interest from employees, rental income is concerned, the said income, in our view, is not generated from the business activity of the assessee and the lower authorities have rightly held that....
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....) in not allowing the claim of the assessee for treating interest reimbursement under Technology Upgradation Fund Scheme (TUFS) as capital receipt. 31. Both the Ld. Representatives of the parties have been fair enough to submit that in the earlier assessment years i.e. for 2006-07 and 2007-08, this issue is restored to the file of the CIT(A) for decision afresh. With the same directions in identical terms as are given for earlier assessment year, this issue is accordingly restored to the file of the CIT(A) for decision afresh in accordance with law. 32. Ground Nos.12 & 13: Vide ground Nos.12 & 13, the assessee has agitated the action of the CIT(A) in treating the sales tax subsidy as Revenue receipt instead of capital receipt as claimed by the assessee. This issue is now well settled by the decision of the Hon'ble Supreme Court in 'CIT-I Vs. M/s Chaphalkar Brothers, Pune and Others' in Civil Appeal Nos. 6513-6514 of 2012 order dated 7.12.2017, wherein, it has been held that the sales tax subsidy is a government incentive to set up new industrial units in specified areas and to be is treated as capital receipt. Further, the Ld. counsel for the assessee has also invited our at....
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....m other sources? 3. Whether upon the facts and circumstances of the case, was Ld. CIT(A) justified in excluding the amount of interest from customers / suppliers from the disallowance of interest netted off with expenses and holding the same for calculating deduction u/s 80IB/ 80IC of the Income tax Act, 1961? 4. Whether upon the facts and circumstances of the case, was Ld. CIT(A) lawfully justified in deleting the sum of Rs. 11,96,65,327/- on account of Interest reimbursed under TUFS (Technology Upgradation Funds Schemes) disallowed by A,O. and holding the same as eligible for calculating deduction u/s 80IB/ 80IC of the Income-tax Act, 1961? 5. That the order of the Ld. CIT(A) be set aside and that of the Assessing Officer be restored. 6. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 38. Ground No.1 : The first ground is relating to the action of the CIT(A) in allowing excess expenditure claimed by the assessee on power generation. It has been mentioned in the ground of appeal itself that the Ld. CIT(A) has followed his own judgement in the assessee's own case for assessment year 2007-08. It has been also pleaded t....
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....of appeal:- ITA No.483/Chd/2016 (A.Y. 2012-13) - assessee appeal 1. That the order passed by Ld.CIT(A), Ludhiana is contrary to law and facts of the case. 2. That the Ld.CIT(A) has erred in law and on facts in upholding the disallowance of Rs. 1719.99 Lacs under section 14A of The Income Tax Act, 1961 read with Rule 8D. 3. That the Ld. CIT(A) has erred in law and on facts while upholding the disallowance of interest expenditure on notional basis amounting to Rs. 3270.47 Lacs on investments under the provisions of section 36(l)(iii). 4. Without pre-judice to ground no.3, the Ld. CIT(A) has erred in not allowing the above mentioned interest expenditure under section 57 of The Act and setting off the same against income from other sources. 5. That the Ld.CIT(A) has erred in law and on facts in upholding the disallowance of Rs. 2544.03 Lacs under section 40(a)(ia) for non-deduction of withholding tax/TDS on the amount of commission paid to non-resident agents against export sales. 6. That the Ld.CIT(A) has erred in law and on facts in treating interest received amounting to Rs. 19,57,19,837 as 'Income from Other Sources' instead of 'Income from Business and Pro....