TaxTMI 
TaxTMI 
2019 (7) TMI 1082
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....tten-back and offered to tax in the AY 2003-04, being held to be assessable in the assessment year 2002-03, the Appellant prays for a consequential reduction of such amount from the assessed income of the year under consideration, i.e. AY. 2003-04." 3. The above additional grounds are nothing but an outcome from the order dated 16.07.2019 passed by the Tribunal in assessee's own case in ITA No. 1311 and 1414/PN/2011 for the immediately preceding year, that is, 2002-03. We are, therefore, admitting such grounds and taking them for disposal on merits. 4. The first additional ground is in respect of confirmation of disallowance of excess provision of Rs. 8,25,000/- for the preceding year by the Tribunal. 5. The facts apropos this ground are that the assessee made a provision of Rs. 8,25,000/- in its accounts for the preceding year. Such provision was made for expenses. Since no expenditure was incurred against such provision, the Tribunal held that no deduction could be allowed in respect thereof. The ld. AR contended in the proceedings for the immediately preceding year that the entry passed for creation of provision for Rs. 8,25,000/- in its accounts for the A.Y. 2002-03 was rev....
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....duced from receipt of Rs. 10.00 crore from REL and net amount of Rs. 9.00 crore was offered. The AO, on perusal of bill of DSPML, observed that the entire consideration was towards Advisory fee for sale of controlling stake in REL and there was nothing to show that a sum of Rs. 1.00 crore was attributable to any non-compete or nonsolicitation agreement. The AO, therefore, did not allow any deduction for sum of Rs. 1.00 crore and accordingly considered full amount of Rs. 10.00 crore as non-compete fee. The ld. CIT(A) required the assessee to produce agreement under which such payment was claimed to have been made to DSPML. The assessee failed to produce any such agreement. The ld. CIT(A) noticed that since the entire amount of Rs. 1.74 crore and odd was towards Advisory fee for sale of controlling stake in REL, the sum of Rs. 1.00 crore was also liable to be allowed as deduction in the computation of long term capital gain. The assessee is aggrieved by this direction. 9. We have heard the rival submissions and perused the relevant material on record. The assessee sold a larger stake and negotiated non-compete and non-solicitation agreement with REL. This offloading was facilitated ....
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.... issue came up for consideration before the Tribunal in assessee's own case for the immediately preceding assessment, which has been discussed on page 9 para 12 of the order. The Tribunal has held the assessee to be entitled to deduction u/s.35DDA on the basis of incurring of liability. A further direction has been given to ensure that the assessee is not allowed deduction on actual payment basis. The AO is directed to examine this aspect and allow deduction only towards incurring of liability, i.e. on accrual of liability towards VRS u/s.35DDA and no amount should be allowed as deduction on payment basis. This ground is, therefore, allowed for statistical purposes. 12. Ground no.3 of the assessee's appeal is against the confirmation of disallowance u/s.35DD of the Act at Rs. 2,10,000/-, being, 1/5th of the fees paid to Registrar of Companies for increasing the authorized capital on amalgamation. 13. Both the sides are in agreement that the facts and circumstances of the instant ground are mutatis mutandis similar to those of the preceding year. This issue has been considered by the Tribunal in its order for the immediately preceding assessment year. Relevant discussion has been....
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.... substantiated and hence was not deductible; donations of Rs. 6,26,628/- were liable to be added; and fees for handling shares record at Rs. 13,53,956/- was also to be disallowed. For the remaining expenses, he restricted the disallowance at 25% as against 50% made by the AO. 17. Having heard both the sides and gone through the relevant material on record, we find that the first sum of Rs. 33,76,762/- is in the nature of actual expenses incurred during warranty period. Since a deduction has been separately allowed to the assessee on creation of provision for warranty, there can be no question of allowing any separate deduction for actual expenses incurred in accepting the claims under warranty. We, therefore, uphold the impugned order to the extent of disallowance of Rs. 33,76,762/-. 18. Second item is expenditure on Gifts at Rs. 14,99,816/-. The assessee could not produce any evidence to show whether the Gifts were given for the business purpose or were hit by Explanation 1 to section 37(1) of the Act. In the absence of furnishing any such details, we uphold the view taken by the ld.CIT(A) in sustaining this disallowance. 19. Similar is the position regarding donations of Rs. ....
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....in amounting to Rs. 7,09,64,882/- arising on transfer of Revathi CP Shares. The ld. CIT(A) affirmed the view taken by the AO against which the assessee has approached the Tribunal. 26. We have heard the rival submissions and gone through the relevant material on record. There is no dispute on the assessee actually suffering long term capital loss on sale of mutual fund investments amounting to Rs. 31,62,005/-. The dispute is only against the set off from the long term capital gain. Whereas the case of the assessee is that such loss should be set off against long term capital gain arising from Mulund property, the authorities below have opined that such loss should be set-off against long term capital gain on Revathi CP shares. The raison détre for the assessee's stand is that if the loss is allowed against the long term capital gain from Mulund property, the amount of long term capital gain on Revathi CP shares would stand at a higher level, which would result in lower tax liability and vice-versa. 27. Section 112 of the Act deals with determination of tax on long term capital gains. Clause (d) of section 112(1) provides for the determination of tax arising from long term ....
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....he same so long as it is otherwise in accordance with the provision. That is how, the computation of income from long term capital gain gets concluded u/s.70(3) of the Act. Such computation is then sent for determination of tax payable in terms of section 112 of the Act. As section 112 has application only for the purpose of determination of tax, it cannot apply to determine the amount of income or prioritize the computation in any manner. Once the assessee has determined its long term capital gain income in a particular manner which has sanction of section 70, the AO cannot disturb such calculation merely because it is less remunerative from the angle of determination of tax. 28. Adverting to the facts of the instant case, we find that the assessee set off its long term capital loss from the sale of mutual funds against the long term capital gain from transfer of Mulund property. This is absolutely permissible under section 70(3) of the Act. We, therefore, hold that no exception can be taken to the action of the assessee and accordingly the amount of long term capital gain on Revathi CP shares at Rs. 7.09 crore should be taxed under proviso to section 112 of the Act. Ex conseque....