TaxTMI 
TaxTMI 
2016 (9) TMI 1521
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....ppeals of the Revenue in ITA No.4824/Mum/2004 for assessment year 1998-99 and ITA No.4825/Mum/2004 for assessment year 1999-2000 is as regards to the claim of deduction of write off of investments. For this issue, in both the appeals of the assessee and the Revenue, the facts and circumstances are exactly identical as admitted by both the sides. Hence, we take up the ground No.2 of assessee's appeal for assessment year 1998-99. The relevant ground No.2 reads as under:- "[2] On the facts and circumstances of the case and in law, the CIT (A) erred in not assessing Rs. 63,44,04,198/- as long term capital in respect of write-off of shares and debentures made in certain companies". Similarly, the ground No. 4 from Revenue's appeal reads as under:- "4. On the facts and circumstances of the case and in law, the learned CIT (A) erred in holding that the write off of investment on conversion of loan arrears amounting to Rs. 12,09,03,673/- can be allowed as business loss." 3. At the outset, the learned Counsel for the assessee stated that an identical issue has been decided by the Tribunal in favour of the assessee in assessee's own case in ITA No.5424/Mum/2001 wh....
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....en alternatively claimed to be business loss. It is noted that the Tribunal in assessee's own case for A. Y. 1982-83allowed it as business loss. No distinction has been brought in facts or legal position by Ld. CIT-DR. Therefore, respectfully following the orders of earlier years, the A O is directed to follow the orders of the earlier years and allow a sum of Rs. 10,47,95,551 as business loss and the balance amount on account of write-off of investment as capital loss should be disallowed, as held above also. Thus, assessee gets part relief. This ground is partly allowed. Respectfully following the decision of the Coordinate Bench of the Tribunal in assessee's own case as above, we direct the AO to partly allow relief as above. This common issue of assessee's appeal is dismissed and that of the Revenue is also dismissed. 6. The next common issue in these two appeals of the assessee and two of Revenue is as regards to the order of the CIT (A) partly confirming the interest expenses of Rs. 150,39,30,857/- incurred for earning interest free income from bonds instead of Rs. 5,04,68,381/- being only direct expenses thereby allowing only part expenses u/s 1....
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....ed by the ld. Counsel is reproduced below: (Amount in Crores) Rs. Ratio of borrowed funds to total funds: 550.53 Share capital 3,900.21 Reserves and surplus I 4,450,74 _____________ II 29,393.86 Interest bearing funds: (I + II) 3,844.59 Ratio of borrowed funds to total funds (29,393.86/33844.59*100) 86.85% 2. Ratio of allocable expenses Total interest expenses as per Revenue Account 4,439.67 Ratio for allocation (25,02,93/4439.67*100) 56.38% 3. Calculation of income exempt u/s 10(23G) A 1,371,052.701 Proportion of income out of borrowed funds (137,10,52,701*86.85%)  ....
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....essee to submit requisite details and documents in support of claim made by the assessee. The assessee shall also extend requisite cooperation to the Assessing Officer. The Assessing Officer shall consider aforesaid circular of the Board as well as judgments relied upon by both the parties before us. The assessee is also free to place on record any other judgment in its support as may be available at the time of passing of fresh assessment order. The assessee is free to raise all legal and factual issues in this regard. The Assessing Officer is also at liberty to taken into account latest position of law as may be available at the time of deciding this issue afresh. The Assessing Officer shall consider all the submissions and evidences as may be placed by the assessee on objective basis and shall decide all the issues as may be raised by the assessee before him. Thus, this issue is sent back to the Assessing Officer with our direction as given above and these grounds may be treated as partially allowed for statistical purposes". According to the learned Counsel for the assessee, the AO has disallowed exemption u/s 10(23G) of the Act on account of receipts of financing to in....
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....previous year after excluding the principle component of lease rentals". Both the parties admitted that the facts and circumstances are exactly identical in both the years and hence, the facts can be taken from assessment year 1997-98 and the issue can be decided. 10. We find that the Tribunal in assessment year 1997-98 in ITA No.5424/Mum/2001 vide order dated 13-07-2016 had restored the matter back to the file of the AO to decide the same in favour of the assessee following the order of the assessment year 1995-96 by observing in Para 9.2 as under:- "9.2 With the assistance of the parties, it is noted by us that in A.Ys. 1995-96 and 1996-97 this issue has already been decided by the Tribunal. In A.Y. 1995-96, the Tribunal decided this issue vide its order dated 15-09-2007 reported in 115 ITD 25 (Mum). It is further noticed by us that in A.Y.1996-97 in ITA No.4109/Mum/2001 vide order dt. September 9, 2015 the Tribunal decided this issue in favour of the assessee following the order for A. Y. 1995-96 and also following the order for A. Y. 1998-99. No distinction has been made before us in the facts or legal position with regard to the issue under consi....
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....51/-. The CIT (A) partly confirmed the disallowance of interest expenses at Rs. 32,72,22,218/- and managerial and administrative expenses at 1%. The assessee before us now claimed that no interest expenses to be allocated as the investment is made out of assessee's own funds. For this, the learned Counsel for the assessee relied upon the decision of the Hon'ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd. 366 ITR 505 (Bom.) and also in the case of CIT Vs. Reliance Utilities & Power Ltd. 313 ITR 314 (Bom.). It was contended by the learned Counsel for the assessee that the entire interest expenses are to be allowed as expenses and no interest expenses to be allocated as the investment is made out of assessee's own funds. She referred to the Tribunal's decision in assessee's own case in assessment year 1997-98 in ITA No.5424/Mum/2001 wherein the issue is decided vide Para 10.3 by observing as under:- "10.3 It is noted that in earlier years, this issue has been decided in favour of the assessee, after considering the judgment of Hon'ble Bombay High Court in the case of Emerald Co. Ltd. (supra). It is noted that in assessment year 1995-96 (order dt. 09.09.2015), the Tribun....
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....tly attributable to non-finance are allocated while working out profits from long term finance. [10] The CIT (A) erred on the facts and circumstances of the case and in law, in not accepting the appellant's without prejudice working by (a) treating commission and fees as fund based and (b) reducing bad debts pertaining to noon-finance income". The revenue has raised following ground No.7:- "7. On the facts and circumstances of the case and in law, the learned CIT (A) erred in holding that for the computation u/s. 36(1) (viii) of the I. T. Act, the Assessing Officer will also take into account the interest cost attributable to non-finance income, in addition to administrative overheads estimated by him at 10%". 16. At the outset, the learned Counsel for the assessee stated that she has instructions from the assessee not to press these two issues. On this, the Revenue has not objected. Accordingly, these two issues of assessee's appeals are dismissed. Similar are the issue in assessee's appeal for assessment year 19992000 in appeal No.4656/Mum/2004, hence, taking a consistence view these two issues in this year also dismissed. ....
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.... consequently, recasting of accounts resulted in debit of Rs. 7,55,30,000/- to the profit & loss account including this amount of Rs. 5,45,30,000/-. The assessee explained that these expenses relates to earlier years but cannot be classified as prior period expenses because they arose in the current year on account of extra ordinary event of merger of ITC into assessee and accounting policies were recasted to bring it in line with those followed by the assessee. The A O was not convinced for the reason that both the parties are following mercantile system of accounting and hence, he disallowed. The CIT (A) confirmed the action of the AO by observing in Para 13.3 as under:- "13.3 I have carefully considered the submissions made by the Appellant. The A O has rightly pointed out that when both the amalgamating and amalgamated companies were following the mercantile system of accounting and if it had been correctly followed as per the accounting in practice, there could not have been any scope for adjustment which could give rise to the said prior period expenses of Rs. 5,45,30,000/-. I entirely agree with the view and I hold that these expenses cannot be allowed in the ....
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....996-97 and 1997-98 in ITA No.3782 & 5339/Mum/2001 order dated 28-10-2005 and 24-05-2006 has decided this issue in favour of the assessee, wherein exactly on identical facts vide Para 9 as under:- "9. Having heard both the parties we find that this issues stands covered in favour of the assessee by the aforesaid decisions of t he Tribunal for assessment year 1991-92, 1994-95 and 1996-97 passed in assessee's own case. The relevant para No.10 of the Tribunal order dt. 29.3.2004 reads as under: "We find that it is an undisputed position that it is not a case of double deduction in as much as the deduction was not also allowed in the year to which according to the revenue, these expenses pertain. We also find that the revenue has not disputed assessee's claim about the accounting policies of booking the expenditure in the year in which liability is crystallized and paid, and not in the year to which strictly speaking, these expenses pertain. This practice, in any case has the approval of Hon'ble Gujarat High Court in the case of Saurashtra Cement Vs. CIT (213 ITR 523). No doubt the assessee is following mercantile method of accounting but as is the settled legal position, ev....
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....eal is set aside. 26. The next common issue in Revenue's appeal in ITA No.4824/Mum/2004 for assessment year 1998-99 and in ITA No.4825/Mum/2004 for assessment year 1999-2000 is against the order of the CIT (A) deleting the disallowance of claim of the assessee of write back of non-cash. 27. At the outset, the learned Counsel for the assessee as well as the learned CIT DR conceded that the Tribunal in assessee's own case for assessment year 1996-97 and 1997-98 in ITA No.4109 & 5424/Mum/2001 order dated 09-09-2015 and 31-07-2016, wherein exactly on identical facts following assessee's own case for assessment year 1987-88 in ITA No.8958/Bom/90 decided the issue and the matter back to the file of the A O. The Tribunal in assessment year 198788 restored the matter back to the file of the A O by observing as under in Para 9 by following Hon'ble Supreme Court decision in the case of CIT Vs United Provinces Electric Supply Co. 110 Taxman 134 as under:- "We find that for the asst. year 1986-87 also similar issue came up before the CIT (A) and he had set aside the matter to the file of A O with similar direction. When the matter came before the Tribunal, the Tr....