TaxTMI 
TaxTMI 
2019 (7) TMI 882
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....income of the assessee at Rs. 61.41 Crores as against returned income of the assessee of Rs. 51.40 Crores after making series of additions as per Para 22 of the assessment order which is scanned and extracted as under :- "22. Subject to the above, the total income of the assessee is computed as under: Income from business (as per computation of income) Rs. 52,85,31,712/- Add: Additions/Disallowance's as per the body of the Assessment Order a) Amortization of lease hold land as per para 4 Rs. 2,66,396/- b) Addition on account of negative CIP (AS-7) as per para 5 Rs. 3,72,84,000/- c) Prior year expenses as per para 6 Rs. 3,23,912/- d) Liquidated damages as per para 7 Rs. 92,59,000/- e) Lease rentals as per para 8 Rs. 1,53,21,302/- f) Depreciation as per para 9 Rs. 58,73,012/- g) Short Term Incentive plan as per para 10 Rs. 23,21,000/- h) Out of Club Expenses as per para 11 Rs. &n....
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....; The learned CIT(A) ought to have accepted the contention of the Appellant that freight paid by the Appellant and freight recovered from the customer were not relevant for determining the stage of completion of any project and were therefore rightly not considered by the appellant for this purpose. The addition sustained by the learned CIT(A) be deleted The learned CIT(A) further erred in omitting to direct the AO to allow deduction for a sum of Rs. 13,69,648/- being the amount of income already brought to tax AY 2003-04 pursuant to the order of the CIT(A) for that year. 3. Prior Year Expenses: On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming disallowance of 'prior period expenses' of Rs. 3,23,912/-. 4. Liquidated Damages: On the facts and in the circumstances of the case and in law the learned CIT(A), erred in directing the AO to allow deduction for liquidated damages only to the extent the amounts debited are found supported by the 'clause for liquidated damages' instead of allowing the claim in its entirety. The claim of the Appellant be directed to ....
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....loss/expenses on foreign representative offices Rs. 5,30,06,437/- on the basis of CIT(A) order for AY 2003-04 and thereby ignoring the relief allowed by the learned CIT(A)'s in years prior thereto. d) The Learned CIT(A) ought to have accepted the contention of the appellant that loss of foreign representative offices should go to increase the "profits of the business" eligible for deduction u/s.80HHC instead of ignoring the same. e) Reducing the profits of the business by Rs. 451.90 lacs by not allowing deduction with reference to the proportionate export incentive (DEPB 156.45 & Duty Draw back Rs. 295.45)." 6. Ground No.1 relates to the claim for deduction of proportionate premium on leasehold land amortized Rs. 2,66,396/- which has been wrongly referred to as Rs. 2,69,628/- in the grounds of appeal. The Assessing Officer discussed this issue vide Para 4 of the assessment order and the Ld. CIT(Appeals) dealt with this issue vide Para 5 of appellate order and confirmed the addition. 7. In the light of the order of the Ld. CIT(Appeals) against the assessee on this issue before us, the Ld. Counsel for the assessee fairly submitted that this iss....
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....ded by the co-ordinate Bench of the Tribunal against the assessee by holding as under : "14. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to claim of amortization of premium paid for leasehold land. We find that identical issue of amortization of premium on leasehold land arose in assessee's own case in A.Yrs. 2000-01 and 200102. The issue was decided against the assessee by the coordinate Bench of the Tribunal by holding as under : 8.1 The Ld. AR of the assessee fairly submitted that this issue has been decided against the assessee in assessment years 1998-99 and 1999-2000 by the Tribunal. We observe that this issue has been considered by the Co-ordinate Bench in assessment years 1998-99 and 1999-2000 and has decided the same against the assessee with the following observations :- 15. In this context, the Ld. Representative for the assessee conceded that similar issue has been decided against the assessee by the Tribunal in the past years and in this context referred to the recent order of the Tribunal dated 03.09.2014 (supra) pertaining to assessment year 1997- 98. It was also an accepted po....
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....ssessee follows Accounting Standard 7 (AS 7) and the Percentage Completion Method for recognizing the taxable income, when the said contracts spread over many years i.e. Contracts in Progress (CIP). At times, the assessee receives more sales receipts which is much higher than the income duly recognized based on the above principle of percentage completion method -cum- AS 7. Taxability of such excess receipts is the matter of litigation. Explaining the said excess, the assessee submitted that it consistently followed the method of AS-7 - cum- percentage completion method over the years and the said excess is eventually taxed on completion of the contract. The percentage completion method followed by the assessee involves the quantification of taxable income based on the proportion between the 'total estimated cost of a project' and the 'expenditure incurred on the project during the year on the said contracts in progress (CIP). The assessee objected to the negative CIP in respect of the contracts execution which commenced on 01st April, 2003 qua the modified AS-7. Otherwise, the Assessing Officer accepted the calculation of profits in respect of a....
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....ect of projects which started during the year and which have negative CIP as on 31.03.2004 for determining stage of completion. In respect of all other contracts the A.O. has not interfered. Therefore, the approach taken by the A.O. is without any logic and cannot be upheld. The appellant gets relief of Rs. 345.35 lacs." 14. On the other issues of the need of adjustment of estimated cost on account of warranty cost, the CIT(A) decided the issue in favour of the assessee as per the discussion given in para 12 of the order of the CIT(A). For the sake of completeness, the said para is extracted hereunder :- "12. I have carefully considered the facts of the case. Provisions of warranty are no doubt an allowable expenditure and also approved by AS 7 but the same has to be calculated on scientific basis as held by the Hon'ble Supreme Court in the case of Rotork Controls India P. Ltd. vs. CIT (2009) 314 ITR page 62. The appellant objected the action of the A.O. stating that the working of the A.O. has distorted the entire working for all time to come and also that the entire exercise is revenue neutral in the ultimate analysis. The A.O.....
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....act work is completed, in more than one year, the revenue recognition is made as per AS7. Since sales are some times higher than the cost of the work completed, negative CIP is shown. The A.O has selectively rejected the working of negative CIP in respect of contract entered into during the year 2003-04. As held in the preceding paras this approach of the A.O is without any logic and therefore cannot be upheld. As regards adjustment in cost on account of warranty expenses to the action of the A.O fails while in respect of freight received the action of the A.O. is upheld. The learned Counsel of the Appellant was asked to give the working of disallowance on account of Negative CIP which is as under: Negative CIP : Rs. 342.35 lacs Adjustment of account of warranty : Rs. 3.94 lacs Adjustment of account of cost : Rs. 26.55 lacs Thus, the appellant gets relief of Rs. 346.29 lacs (Rs. 372.84 - 26.55). The ground is thus partly allowed." 17. In the background of the above facts and aggrieved with the order of the CIT(A), the ld. Counsel raised the ground relating to inclusion of the freight outward to the extent of Rs. 26.55 lakhs....
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....erefore be directed to allow deduction for Rs. 4,86,48,820/- in place of deduction for Rs. 23.21 lacs directed to be allowed by the CIT(A). The ground of the Department needs to be consequentially dismissed." 19. Further, referring to the changes in accounting brought by the AS-7 applicable to the period from 01.04.2003 onwards, ld. Counsel submitted that till the last year, the positive or negative contract-wise conclusions were shown as profit equalization adjustment and the same effect is now achieved by reflecting the difference as negative CIP or positive CIP, as the case may be. In effect, the method of accounting followed by the assessee even after amendment to AS-7 is one and the same in spirit. Further, referring to the AS-7 and its adoption by the assessee, ld. Counsel submitted that the examples demonstrating the working of income qua the AS-7, are annexed to the note. The detailed working of income placed before us relates to a CIP with Prasad Constructions. 20. On the other hand, ld. DR for the Revenue relied heavily on the order of the Assessing Officer. 21. On hearing both the sides, we find in the appeal of the assesse....
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....er of revenue recognition and accordingly, making provisions for equalization, its actual working is not above scrutiny. He held that the appellant was not justified in omitting to recognize revenue wherever completion was less than 33% of the total project or where the contracts were less than Rs. 25 lacs. The Ld.CIT(A) also disapproved the appellant's act of further scaling down towards contingencies/unforeseeable losses. The facts of the case during this year are identical to those in A.Y. 2002-03 and I find no reason to form a view other than that of my predecessor. Accordingly, the Assessing Officer is directed to work out the excess provision in the light of the observation made by Ld.CIT(A) in A.Y.2002-03 and restrict the disallowance to that extent. Decided accordingly." Aggrieved by the order of Ld.CIT(A) assessee is now in appeal before us. Revenue is also aggrieved by order of CIT(A) to the extent of relief granted by him and has therefore raised ground No.2 in its appeal. Since the grounds raised by assessee and Revenue are inter-connected, both are considered together. 12. Before us, Ld. AR submitted that identical issue arose before Tribunal in assessee's ....
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....e to adjust excess billing. The adjustment is made in accordance with AS 7 by creating a provision 'Contribution Equalization Provision'. The Assessing Officer rejected this method of making adjustment by the assessee. In the first appeal, the Commissioner of Income Tax (Appeals) partly accepted the claim of the assessee. Against the finding of the Commissioner of Income Tax (Appeals), both, the assessee and the Revenue have come in appeal. 9.1 We observe that similar issue had come up in the appeal of the assessee and the Revenue for assessment years 1998-99 and 1999-2000. The Co-ordinate Bench decided the issue in favour of the assessee. The relevant extract of the order of the Tribunal reads as under:- 22. On this aspect, it was a common ground between the parties that in assessment year 1997-98, the Tribunal vide its order dated 03.09.2014 (supra.) in the assessee's own case has upheld the stand of the assessee by following the decision of the Pune Bench of the Tribunal on a similar issue in the case of Thermax Babcock & Wilcox Ltd. vs. DCIT vide ITA Nos.157 & 158/PN/1995 dated 11.05.2001 for assessment years 1990- 91& 1991-92. The Tribunal in its order dated 03.09.....
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....minor changes. There are minor changes in relation to the computational issues. However, there is no change so far as "cost based" percentage completion method in concerned. Therefore, the computation of "recognition income" is concerned, the order of the CIT(A) is fair and reasonable and the same does not call for any interference. Accordingly, relevant grounds stand allowed in favour of the assessee. 23. Further, so far as adjustments made by the Assessing Officer to the estimated cost is concerned, the CIT(A) already granted part relief to the assessee. With reference to the freight outward to be included in the estimated total cost, we find it is a case of reimbursement of the actual cost incurred by the assessee. The inclusion in the total estimated cost when the same is returned has no effect on the income aspect. Therefore, being the case of reimbursement, there is no profit element. Consequently, recognition income of such reimbursement is not appropriate. Therefore, the order of the CIT(A) on this issue requires to be reversed. Accordingly, assessee is entitled to get relief on this issue also. Thus,....
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....Since the commission is linked with the sales, the liability to pay commission has arisen in the respective years in which the sales have taken place and therefore, it cannot be allowed as deduction from the income of this year. The commission cannot be considered as deductible during this year on the ground that the same has been remitted during the year. Accordingly, this ground of appeal fails." Aggrieved by the order of Ld.CIT(A) assessee is now in appeal before us. 16. Before us, Ld. AR reiterated the submissions made before AO and Ld.CIT(A) and further fairly submitted that identical issue arose in assessee's appeal in AY 2002-03 and the ground was decided against the Assessee by the Tribunal. He therefore submitted that the issue be decided accordingly. Ld.D.R. on the other hand, did not controvert the submissions of Ld AR and supported the order of lower authorities.17. We have heard the rival submissions and perused the material on record. Before us both the parties have fairly admitted that the issue in the year under consideration is identical to that of AY 2002-03. In AY 2002-03, the coordinate Bench of Tribunal had decided the issue against the Assess....
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....in ITA No.1055 & 1056/PUN/2009 for the assessment year 2003-04 dated 12.03.2019. 30. The Ld. DR for the Revenue placed reliance on the order of the Assessing Officer. 31. We have heard both the sides and perused the Para 12 to 25 of the Tribunal's order in assessee's own case wherein this issue was decided in favour of the assessee. For the sake of completeness, the same is extracted as under: "22. Ground No.5 of Assessee's appeal and Ground No.3 of Revenue's appeal is with respect to Liquidated Damages. 22.1. During the course of assessment proceedings AO noticed that Assessee had debited Rs. 200.26 lacs under the head "Liquidated damages". The Assessee was asked to justify it towards the allowability along with the evidences. Assessee inter-alia submitted that Assessee manufactures water treatment plants, pollution control equipments etc and these are manufactured as per the order and requirements of the customers. The contracts involves medium to long term contracts which include activities like pre-design, discussion with the clients, drawings, designs, procurement, fabrication, erection, commissioning and installation of the equipments which i....
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.... company containing clause of Liquidated Damages according to which penalty at the prescribed rate is leviable in case of delay in supply of goods ordered. On perusal of these documents, in principle, I agree with the claim of the appellant company that the liquidated damages, arising out of the terms of the purchase orders, schedule, are allowable as business expenditure. The cases relied upon by the Assessing Officer while disallowing the liquidated damages of Rs. 200.26 lakhs have also been successfully distinguished by the appellant by explaining the difference in the facts of appellant's case from the facts of those cases. In this view of the matter, I direct the Assessing Officer to verify and allow the appellant's claim of liquidated damages out of Rs. 200.26 lakhs to the extent the amounts debited under this head are found supported by the clause of Liquidated Damages. Decided accordingly." Aggrieved by the order of CIT(A), Assessee and Revenue are now in appeal before us. 23. Before us, Ld AR reiterated the submissions made before AO and CIT(A) and further submitted that Assessee is engaged in the business of manufacturing of engineering....
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....se of CIT Vs. Seshasayee Industries Ltd.(242 ITR 691) are distinguishable and therefore not applicable to the present facts of the Assessee. He thereafter submitted that the expenditure has been incurred during the course of business and is for the purpose of business more so when CIT(A) has accepted the allowability of claim of liquidated damages as business expenditure. He further submitted that Hon'ble Apex Court in the case of SA Builders (288 ITR 1) has held that to the extent that the expenditure may not have been incurred under legal obligation but yet it is allowable as a business expenditure if it is incurred on grounds of commercial expediency. It has further held that "commercial expediency" is a term of wide import and has been held to include such expenditure as a prudent businessmen incurs for the purpose of business. He further submitted that no disallowance of liquidated damages were made in earlier years though the assessee was following similar methodology for accounting. Ld AR thereafter submitted that when CIT(A) had accepted the allowability of claim for liquidated damages as a business expenditure then he should have not directed the AO to allow deductio....
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....e is dismissed." From the above, it is evident that the Pune Bench of the Tribunal has decided this issue in favour of the assessee. Now, it is a settled law that such expenditure is allowable as business expenditure if it is incurred on the grounds of "commercial expediency". Commercial expediency is a term of wide import and has been held to include such expenditure as a prudent businessman incurs for the purpose of business. The expenditure incurred though not under any legal obligation but still it is allowable as a business expenditure if incurred on the grounds of commercial expediency and the method of recognition is followed from year to year. Before us, no material has been placed by the Revenue that the expenditure is not a genuine expenditure or has been incurred to benefit any group concerns. Considering the totality of the facts we are of the view that the expenditure is allowable. Hence, ground No.4 raised in appeal by the assessee is allowed. 32. Ground No.5 relates to disallowance of "claim for depreciation @100% on Plant & Machinery" installed in Plant No.4, 8 and 11 of the Company. The Assessing Officer discussed this issue vide Para 9 of t....
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.... and the arguments of the Ld.Authorised Representative. First coming to plant No.11 i.e., absorption cooling division, which manufactures heat pumps, the stand taken by the Assessing Officer will have to be confirmed. Entry No.3(iii)(C)(c) specifically deals with heat pumps. It provides for depreciation on heat pumps at the rate of 100%. This entry will not apply to the appellant as the appellant does not own / use the heat pumps. Instead, it manufactures them. This entry also does not cover the plants and machineries manufacturing heat pumps. Hence plant No.11 would fall outside the purview of entry No.3(iii)(C)(c). It is the appellant's argument that heat pumps would come under entry 3(xii)(e) i.e., air / gas / fluid heating systems. Nothing has been adduced to establish that the heat pumps manufactured by the appellant are in the nature of such heating systems. Further, even while it has been submitted that a heat pump is also a renewal energy device, no evidences have been adduced in this regard apart from stating that it is a waste heat recovery equipment. If the heat pump is a waste heat recovery equip....
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....the above sub-items' will themselves have to be in the nature of renewal energy devices. Or else, (r) would have come as a separate entry and not as a sub-item in entry No.3(xiii). Nothing has been adduced to show that the plants and machineries in respect of which depreciation at the higher rate has been claimed are in the nature of renewal energy devices. For these reasons, I do not see any valid reason for interfering with the stand taken by the Assessing Officer i.e., in rejecting the appellant's claim of depreciation on the plants and machineries in question @ 100% and in allowing depreciation on the said plants and machineries @ 25% only. Consequently, the resultant disallowance made by the Assessing Officer is hereby confirmed and the ground raised by the appellant against such disallowance dismissed." Aggrieved by the order of Ld.CIT(A) assessee is now in appeal before us. 27. Before us, Ld. AR reiterated the submissions made before lower authorities and fairly admitted that identical issue arose in assessee's appeal before Hon'ble ITAT in A.Ys. 2000-01 to 2002-03. The Tribunal while deciding the appeals for AY 2002-03, ....
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....r :- "35. Now, we may first take-up assessee's claim for depreciation 100% with respect to the plant & machinery used in the manufacture of air/gas/fluid heating systems. In this context, it is clear noted that having regard to the entry 3(xiii)(r) read with 3(xiii)(e) of the Depreciation Table annexed to the Rules, plant & machinery used for the manufacture of air/gas/fluid heating systems is eligible for depreciation @ 100%. The plea of the Assessing Officer that other items in Entry in 3(xiii) contain a reference to 'solar' and therefore item (e) of Entry 3(xiii) should also be read to be referring to solar air/gas/fluid heating systems, in our view, is not justified. The Assessing Officer has attempted to read into the statute a word which is conspicuous by its absence. Therefore, in our view, having regard to the item (r) read with item (e) of Entry 3(xiii) of the Depreciation Table, the claim of the assessee has been rightly allowed by the CIT(A) and we find no force in the Ground of Appeal raised by the Revenue. 36. Now, with regard to assessee's claim for allowance of depreciation @ 100% in respect of plant & machinery used in the manufacture of heat pumps....
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....o be directed to follow the said order of the Tribunal (supra). Accordingly, ground No.5 raised in appeal by the assessee is partly allowed. 36. Ground No.6 relates to the Short Term Incentive Plan (STIP) of Rs. 4,86,48,820/- on account of provision for performance incentive payable to employees. The Assessing Officer discussed this issue vide Para 10 of the assessment order and the Ld. CIT(Appeals) dealt with this issue vide Para 30 of the appellate order. 37. The Ld. Counsel for the assessee submitted that in assessment year 2003-04, provision for amounts payable under the STIP was disallowed by the Assessing Officer for the reason that the plan was approved by the Board of Directors of the company as its meeting held after the close of the accounting year. On these facts, the disallowance was upheld by the Tribunal in assessee's own case for the assessment year 2003-04 in ITA No.1055 & 1056/PUN/2009 (supra.) but with a direction that deduction would be allowed for amounts paid under the Scheme. The Ld. Counsel for the assessee further submitted that the Ld. CIT(A) in his order has observed that the scheme was approved by the Board of Directors on 28.05.2003....
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.... year more so as the scheme was approved by the Board of Directors on 28.05.2003. He further noted that the amounts were disbursed to the employees after the close of financial year and it was included in form 16 of the concerned employees during F.Y 2003-04. He therefore concluded that there was no incentive plan during the year under consideration and the liability of Rs. 4,63,70,760.- did not accrue or arise during FY 2002-03 and further the liability could not be termed to be as "provision for know liability" and therefore not allowable as expenditure. He accordingly disallowed the claim of expenditure and made addition of Rs. 4,63,70,760/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who upheld the order of AO by observing as under : "13.3. I have carefully considered the submission of the appellant. As already mentioned in para 8.3 above, an expenditure is deductible in the year in which liability to incur the expenditure arises. In the present case, as rightly pointed out by the Assessing Officer, the company became liable to pay the incentive only on 28.05.2003, the date when the scheme recommended by the Vice President (HR) was ap....
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....sation payable under STIP was in line with the payment which was given earlier and therefore approved the same and therefore it cannot be said that the scheme was approved for the first time. He further submitted that the tax with reference to the amount was deducted u/s 192 of the Act at the time of payment. He further submitted that if at all anything was postponed, it was the quantification of the liability which was based on certain norms evolved by the Company. He further submitted that any difficulty in quantifying the liability would not make an existing liability into a contingent liability if the liability has definitely arisen during the year and that the deduction should be allowed although the liability may have been quantified and discharged at a future date and for the aforesaid proposition he relied on the decision of Hon'ble Apex Court in the case of Bharat Earth Movers reported in 245 ITR 428 (SC). He further relying on the decision of Hon'ble Apex Court in the case of Calcutta Co., Ltd reported in 37 ITR 1 (SC) submitted that any difficulty in the estimation of the liability would not convert the accrued liability into a conditional one. He further submitted that ....
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...." 40. Considering the totality of facts and circumstances of the case, the direction of Tribunal's order in assessee's own case and observation of the Ld. CIT(A) to the effect that the STIP scheme has been approved by the Company Board on 28.05.2003, we are of the considered view that the assessee is eligible for claiming deduction for Rs. 4,86,48,820/-. Accordingly, we direct the Assessing Officer to allow the deduction as claimed by the assessee. Hence, ground No.6 raised in appeal by the assessee is allowed. 41. Ground No.7 and its sub-grounds relates to the deduction u/s.80HHC of the Act. The Assessing Officer discussed this issue vide Para 18 of the assessment order and the Ld. CIT(Appeals) dealt with this issue vide Para 41 of the appellate order. 42. The Ld. Counsel for the assessee submitted that the Ld. CIT(Appeals) confirmed the exclusion under Explanation (baa) of 90% and also from eligible profits of business, loss/expenses on foreign representative offices ignoring the relief allowed by the Ld. CIT(Appeals) in years prior thereto. The Ld. Counsel for the assessee further submitted that the Ld. CIT(Appeals) did not accept the contention of the as....
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..... 46. In the result, appeal of the assessee is partly allowed for statistical purposes. ITA No.1803/PUN/2012 ( By Revenue) A.Y. 2004-05 47. In ITA No.1803/PUN/2012, the Revenue has raised following grounds: "1(a) Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in holding that the method adopted by the Assessing Officer for recognition of contract revenue in respect of negative CIP is incorrect? 1(b) Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in holding on the basis of decision given in A.Y. 2003-04 that there is no fault in following AS-7. 2(a) Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in directing to delete the disallowance of Rs. 92.59 lacs claimed as liquidated damages? 2(b) Whether on the facts and circumstances of the case, the Ld.CIT(A) was justified in terms of provisions contained in Section 251 of the Act in directing the A.O. to verify and allow the claim of Liquidated Damages following the decision in the assessee's own case for A.Y. 2003-04. 3. Whether on the facts and circumstances o....
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....ionate interest attributable to the exempt income without assigning any reason for granting relief to the assessee. 11. Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition made on account of commission paid on sales, when the same were not justifiable and also when no proof of services rendered were furnished. 12. The appellant craves leave to add, amend or alter any of the above grounds of appeal." 48. Ground Nos.1(a) and 1(b) raised in appeal by the Revenue are incidental to the ground No.2 of assessee's appeal. Since we have adjudicated all the relevant issues while deciding with the ground No.2 in assessee's appeal, the ground Nos. 1(a) and 1(b) raised in appeal by the Revenue are dismissed. 49. Ground Nos. 2(a) and 2(b) raised in appeal by the Revenue are identical to ground No.4 of assessee's appeal. Since, we have adjudicated the issue in favour of the assessee and allowed the ground No.4 in assessee's appeal, ground Nos. 2(a) and 2(b) raised in appeal by Revenue are dismissed. 50. Ground No.3 relates to the lease rental income of Rs. 1,53,21,302/-. The Assessing Officer discussed....
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....ieved by the order of CITA(A), Revenue is now before us. 67. Before us. Ld DR supported the order of AO. Ld AR on the other hand reiterated the submissions made before lower authorities and further submitted that in the year under appeal there was no subsisting lease agreements. He further submitted that in earlier year, the order of CIT(A) deleting the addition made by the AO has been upheld by the Tribunal. He thus supported the order of CIT(A). 68.We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to addition made on account of lease rentals. Before us it is submitted that in earlier year the addition has been deleted by the tribunal. Before us, no fallacy has been pointed out by the revenue in the order of CIT(A). We therefore find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed." From the above, it is evident that when the assets were not leased out like in the assessment year 2002-03 above, the lease income cannot be taxed as directed by the Tribunal the issue in favour of the assessee. The CIT(A) rightly deleted the addition. Respec....
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....,11,62,875/-, Rs. 16,30,830/- was towards miscellaneous expenses which was disallowed by him on account of failure on the part of the Assessee to produce the full details. Out of the residential telephone expenses, he disallowed 5% of the expenses (Rs. 3,73,617/-) for the reason that personal element of expense could not be ruled out. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), Assessee is now before us. 42. Before us, Ld AR reiterated the submissions made before lower authorities and further submitted that identical issue arose in Assessee's own case in A.Y 2002-03 before the tribunal and the issue was decided in Assessee's favour. He placed on record the order of tribunal for A.Y 2002-03 and pointed to the relevant findings of the tribunal. He further submitted that the facts of the case in the year under appeal is similar to that of A.Y 2002-03 and therefore following the decision of A.Y 2002-03, the addition be deleted. He further submitted that in the subsequent years, CIT(A) has deleted such adhoc disallowances. Ld DR on the other hand supported the order of lower authorities. ....
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....nue. Before us, the submission of Ld AR that in subsequent years CIT(A) has deleted the adhoc deletions made by AO has not been controverted by Revenue. In such circumstances and following the reasoning as given while deciding the Assessee's appeal for AY 2002-03 and for similar reasons, hold that no disallowance of expenses on adhoc basis is called for in the present case. We therefore direct its deletion. Thus the ground of Assessee is allowed." From the above, it is evident that the Tribunal has decided the issue in favour of the assessee. Respectfully, following our decision, ground No.5 raised in appeal by the Revenue is dismissed. 58. Ground No.6 relates to the provision for Medical Expenses of Rs. 48,22,069/-. The Assessing Officer discussed this issue vide Para 39 of the assessment order and the Ld. CIT(Appeals) dealt with this issue vide Para 39 of the appellate order. 59. The Ld. Counsel for the assessee submitted that this issue is decided in favour of the assessee vide Para 69 to 71 of the Tribunal's order in assessee's own case ITA No.1055 & 1056/PUN/2009 (supra.). 60. We have heard both the sides and perused the Para 69 to 71 of t....
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....nd No.7(a) and 7(b) relates to the deduction u/s.80HHC. The Assessing Officer discussed this issue vide Para 18 of the assessment order and the Ld. CIT(Appeals) dealt with this issue vide Para 41 of the appellate order. 62. The Ld. Counsel for the assessee submitted that this issue is decided in favour of the assessee vide Para 50 of the Tribunal's order in assessee's own case ITA No.1055 & 1056/PUN/2009 (supra.). 63. We have heard both the sides and perused the Para 50 of the Tribunal's order wherein this issue has been decided in favour of the assessee. For the sake of completeness, the relevant paragraph is extracted as under: "50. The next item in ground of appeal No.11(a) is Exchange Difference, wherein the Ld.A.R. for the assessee fairly admitted that the said difference to the extent of sales would form part of the total turnover and the balance needs to be excluded. We find merit in the plea of the assessee that exchange difference to the extent of sales would be included as part of the total turnover. With respect to ground No.7 of Revenue, we find that CIT(A) has held that Assessee had taken the figure of exp....
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....essing Officer. 71. We have perused the case record and heard the rival contentions. We find that the Ld. CIT(A) granted partial relief to the assessee after following the ratio laid down by the Hon'ble Jurisdictional High Court in the case of Associated Capsules Ltd. (supra.) by observing as under: "55. After carefully considering the facts of the case it is seen the issue is covered by the Hon'ble Jurisdictional High Court in the above case. The A.O is directed to re-compute the deductions following the above order of Hon'ble Bombay High Court. Thus, the sub ground is allowed for statistical purposes." We also observe that the Assessing Officer has primarily reduced the entire amount of profits allowed as deduction u/s.80-IA from the profits eligible for deduction u/s.80HHC of the Act and computed deduction u/s.80HHC on such reduced profits and this issue is now settled by the decision of the Bombay High Court (supra.) wherein it has been held that deductions u/s.80-IA and 80HHC are to be computed in the manner prescribed in those sections; only it should be ensured that in relation to the profits derived by the 80IA undertaking the two ....
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....ed the case record. We find that no disallowance was made u/s.14A in respect of interest in the past. Only interest incurred was by way of post shipment credit which is always levied on credit utilized for specific purpose for which it is granted no proportion thereof can be disallowed under section 14A as attributable to exempt income. In the present year Rule 8D is not applicable. Therefore, expenses related to earning of exempt income are required to be estimated. The Ld. CIT(A) while restricting the disallowance to 2.5% of the exempt income, has placed reliance on the earlier appellate order. It is a well settled law that the rule of consistency should be followed. Considering the above facts and circumstances, we are of the considered view that the order of the Ld. CIT(A) is well reasoned and it does not call for any interference. Hence, ground No.10 raised in appeal by the Revenue is dismissed. 76. Ground No.11 relates to the deleting the addition made on account of commission paid on sales when the same were not justifiable and also when no proof of services rendered were furnished. 77. During the relevant year, the assessee has claimed commission payment of Rs. 15,00,00....