TaxTMI 
TaxTMI 
2019 (9) TMI 728
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.... 15-16, which in turn arise out of separate assessment orders dated 29.12.2009, 23.12.2010, 23.12.2011 and 30.11.2012, 30.01.2014, 31.03.2015, 29.01.2016, 30.12.2016 and 30.12.2017 passed by the assessing officers. 2. Although, these appeals filed by the Assessee and Revenue for different Assessment Years, contain multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Revenue as well as Assessee. Most of the grounds raised by the Revenue as well as Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of Revenue and the Assessee as well. With this background, we summarize and concise the grounds raised by the Revenue as well as Assessee as follows: 3. The Common Grounds raised by assessee in Assessment Years, 2007-08 to 2013-14, are as follows: - (1) Disallowance of claim of deduction under section 80-1B(9) of the Income Tax Act, 1961 for the Motor Spirit New Industrial undertaking of the Assessee Company, commissioned on 25-07-2006. Ground and Assessment Year: Amount Ground No. 4. A.Y....
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.... Ground No.(3) for the Assessment Year 2012-13 Rs. 586,21,435/- Ground No.(3) for the Assessment Year 2013-14 Rs. 536,19,001/- (7) Disallowance of claim of deduction under the head 'Provisions for Stores and Consumables' and 'Capital work in progress'. Ground No.(2) for the Assessment Year 2007-08 Rs. 16,17,31,186/- Ground No.(1) for the Assessment Year 2010-11 Rs. 13,56,00,000/- Capital work in progress Rs. 20,00,000/- Ground No.(1) for the Assessment Year 2011-12 Capital work in progress Rs. 12,90,738/- Ground No.(4) for the Assessment Year 2012-13 Capital work in progress Rs. 4,22,70,535/- Ground No.(4) for the Assessment Year 2013-14 Rs. 37,19,83,895/- (8) Disallowance of claim of deduction for Interest paid u/s 234D of the Income Tax Act,1961." Interest on excess refund" Ground and Assessment Year Amount Ground No.(3 ) for the Assessment Year 2011- 12; Rs. 3,83,88,266/- Ground No.(2) for the Assessment Year 2012- 13; Rs. 6,54,39,202/- Ground No.(2) for the Assessment Year 2013-14; Rs. 7,35,87,056/- (9). Disallowance of claims of deduction under the he....
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....s not 'mineral oil' and secondly, the activities carried out by the new undertaking are not 'refining'. He followed para 19.1 of the CBDT Circular No. 1/2009, dated 27-03-2009 where it has been stated that the term 'mineral oil' does not include petroleum and natural gases, unlike in other sections of the Income Tax Act. The Id AO was of the view that since naphtha is a petroleum product, the term mineral oil does not include it within the meaning of mineral oil for the purpose of section 80-IB(9) of the Act. Further, The Id AO was also of the view that to 'refine' means to make fine or to purify without involving any change in the basic product. This way, Id AO disallowed the deduction under section 80-IB(9) of the Act. 6. Aggrieved by the stand so taken by the assessing officer, the assessee carried the matter in appeal before the Id CIT(A), who has confirmed the disallowance made by assessing officer under section 80-IB(9) of the Act. While dismissing the ground of the assessee, the Id CIT(A) observed that the deduction has been claimed by the assessee under clause (iii) of section 80-IB(9) of the Act under which deduction is admissible only if....
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....nal undertaking in the previous year relevant to Assessment Year 2001-02. The company is engaged in the business of a refinery and as it fulfills the required conditions u/s 80-IB(9)(iii) of the Act. The assessee company claimed deduction u/s 80-IB(9)(iii) for seven assessment years consecutively from Assessment year 2001-02 to Assessment year 2007-08 and the same were allowed by the Department. The company decided to set up a new undertaking, the Motor Spirit Plant, (referred in brief as the MS Plant), since the assessee company was willing to refine Naphtha generated by its old plant. Earlier, the assessee company had to sell Naphtha, which is also a petroleum product, to power sector industries where it is used as fuel. Now, with the new MS Plant, the assessee company was in a position to refine 'Naphtha' generated by the original plant to produce gasoline which is known in the common parlance as petrol. Had the Motor Spirit Unit been set up along with the original plant, there would not have been any issue of using Naphtha, an intermediary product, in the refining process and the assessee company could have availed the benefit under section 80-IB(9)(iii) of the Act in full. It ....
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....f mineral oil, it begins refining on or after 1st day of October, 1998. Provided also that where such undertaking begins refining of mineral oil on or after the 1st day of April,2009, no deduction under this section shall be allowed in respect of such undertaking unless such undertaking fulfils all the following conditions, namely:- (i) It is wholly owned by a public sector company or any other company in which a public sector company or companies hold at least forty-nine per cent of the voting rights; (ii) It is notified by the Central Government in this behalf on or before the 31st day of May, 2008 and (iii) It begins refining not later than the 31st day of March, 2012." (iii) However, the above provisions of sub-section (9) of section 80-IB of the Act has been substituted by the Finance (No.2) Act, 2009 with retrospective effect from 01-04-2000. Thus, section 80-IB (9) of the Act with retrospective effect from 01-04-2000 reads as under:- "(9)The amount of deduction to an undertaking shall be hundred percent of the profit for a period of seven consecutive assessment years, including the initial assessment year, if such underta....
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....ate Government in any other manner, shall be treated as single 'undertaking'." Thus, deduction of hundred percent of the profit for a period of seven consecutive assessment years is allowed to an undertaking u/s 80-IB(9)(iii), if it is engaged in refining of mineral oil and begins such refining on or after the 1st day of October, 1998 and but not later than 31st day of March, 2012 as amended by Finance (No.2) Act,2009. Since the new MS Plant started commercial production from 25-07-2006 which is within the specified period and fulfills all the conditions, the assessee company, without prejudice, is entitled to deduction u/s 80-IB(9)(iii) of the Act. 9. We note the old section 80IA of the Act, prior to its restructure into two parts, as section 80IA and 80-IB by Finance Act,1999, w.e.f 01-04-2000, was inserted by Finance (No.2)Act,1991 w.e.f. 01-04-1991 and later on various amendments were made to the section .Sub-section (4E) was inserted by the Finance Act,1997 which granted relief to undertaking which began commercial production of mineral oil in the North Eastern Region. Sub-section (4E)of section 80IA inserted by Finance Act,1997w.e.f1st April ,1998 reads as under :- ....
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.... (iv).The Mine and Minerals (Development and Regulation) Act, 1957 defines by Section 3(b), the term 'mineral oil' to include petroleum and natural gas. (v). Section 3(h) of the Oil Industry( Development) Act,1974, defines 'mineral oil' to include petroleum and natural gas. (vi) Under the Mines Act, 1952 in section 2(jj) 'mineral' means substances which can be obtained from the earth by mining, digging, drilling, dredging, hydrolyzing, quarrying or by any other operation and includes mineral oil. (vii) The Oil Fields (Regulation & Development) Act,1948 defines 'Mineral Oil' in section 3(c) as " Mineral Oils" include natural gas and petroleum. 11. At this juncture, it would be important to see the meaning of the words 'Petroleum', 'Petroleum Products' and 'Crude Oil' as these terms are associated with the definition of 'Mineral Oil'. The various Acts define these terms as follows: (i) The Petroleum Act, 1934 has defined Petroleum in section 2(a) as, 'Petroleum' means any liquid hydrocarbons or mixture of hydrocarbons and any inflammable mixture (liquid , viscous or solid ) containing any liquid hydro- carbon. (ii) In the "Petr....
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....ection 2(e) as:- "Crude Oil" means petroleum in its natural state before it is refined or otherwise treated but from which water and foreign substances have been extracted." 12. Now coming to the meaning of 'Naphtha', it has been defined as under:- (i) Naphtha is the first petroleum product produced during the distillation process and subsequently upgraded to make major components of gasoline. (ii) Naphtha consists in crude oil. According to Columbia Encyclopedia, naphtha, the term usually restricted to a class of colorless product obtained as one of the more volatile fraction in the crude (petroleum naphtha), in the fractional distillation of coal wood (wood naphtha). (iii) According to Wikipedia Encyclopedia, naphtha normally refer to a number of different flammable liquid mixtures of hydrocarbons, i.e. a distillation product from petroleum or coal tar boiling in a certain range and containing certain hydrocarbons, a broad term encompassing any volatile, flammable liquid hydrocarbon mixture. Like many hydrocarbon products, they are product of a refinery process in which a complex soup of chemicals is broken into another range of chemicals wh....
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....an a 'specific term' (viii) Again, Naphtha has been defined to fall within the meaning of" petroleum product" in section 2(m) by The Oil Industry (Development) Act,1974. (ix) Naphtha has been defied in the Naphtha (Acquisition, sale, storage and Prevention of use in Automobiles) order,2000 in clause 2(5) as, " Naphtha" is a light hydrocarbon liquid with 90% volume distillation by ASTM D-86 distillation method of 190 degree Centigrade or less. (x) Reference is also made to the opinion of Indian Institute of Petroleum which was filed before the Id AO to explain that naphtha is covered within the definition of 'mineral oil'. The same was also referred to in written submissions filed before the Id CIT(A). The Indian Institute of Petroleum (IIP) is one of the leading constituent laboratories of the Council of Scientific and Industrial Research (CSIR) established in 1960. The Institute is devoted to multid is ciplinary areas of research and development in the downstream sector of hydrocarbon and related industry. The Institute undertakes R & D work in areas of petroleum, natural gas, alternative fuels, petrochemicals, utilization of petroleum products in I C En....
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....t to be considered as 'mineral oil'; Naphtha being a product of refining of crude petroleum oil can much less be said to be included in 'mineral oil'." It is abundantly clear from the orders of the Id AO as well as from the consolidated appeal order of the Id CIT(A) that conclusions were drawn based on para 19.1 of the Circular No.1/2009 dated 27-03-2009 where it is mentioned that. "For the purpose of this section, the term 'mineral oil', does not include petroleum and natural gas, unlike in other sections of the Income Tax Act." As we stated earlier that the term 'mineral oil' has not been defined in section 80-IB(9) of the Act. Hence, the meaning of the term has to be derived from the meaning given in other sections of the Act, other statutory definition given in other Acts and technical and commercial use of the term in related industries. There is no restriction u/s 80-IB(9) of the Act that the meaning of the term cannot be imported from other statutes or from the technical or commercial definition available in the industry or common parlance meaning. Normally, when the intention of Legislature is to give a narrow meaning of any term in the Act, restriction forms part of the....
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....on or after 0104-2009, such undertaking must fulfill the conditions that (a) it is a public sector company or any company in which a public sector company or companies hold at least 49% of the voting rights, (b) it is notified by the Central Government in this behalf on or before 31st day of May,2008 and (c) it begins refining not later than 31-03-2012. Thus, section 80-IB(9) was amended to disallow benefit to undertakings if it does not begin refining of mineral oil on or before 01-04-2009 and a concession was given to the public sector and other companies in which public sector companies hold 49% of the voting rights with notification by the Central Government who could avail the benefit of section 80-IB(9) if it begins refining of mineral oil on or before 31-03-2012. It clearly shows that benefits were extended to public sector and specific companies which could not begin refining of mineral oil till 01-04-2009. Thus, scope of section 80-IB(9) was extended to public sector and specific companies by the amendment in Finance Act,2008. The meaning of the term 'mineral oil' was not restricted by the amendment in Finance Act,2008 in section 80-IB(9) of the Act. In para 19.1 of the Ci....
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....s/ Courts which are adjudicating the matter. Besides, it is well settled proposition of law that Notes on clauses have no legal effect and are not binding on the courts. I may assure the potential bidders that the benefit of section 80-IB(9), as finally interpreted by the courts, will be applicable to all exploration and production contracts, whether obtained through nomination or bidding." It is well settled that Speech made by the Finance Minister at the Parliament may be used in interpreting the meaning of the words used in the Act. Reference may be made to the decision of K.P. Varghese Vs. ITO (1981) 131 ITR 597(SC) where the H'ble Supreme Court has held that Speech made by the Finance Minister while moving the amendment is extremely relevant. It is held that this speech made by the mover of the bill explaining the reason for the introduction of the bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. The H'ble Apex Court in the case of Kerala State Industrial Development Corporation (2003) 259 ITR 51 (SC) has held that the Finance Minister's Sp....
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....to the raw material and processes employed by the MS Plant of the assessee company, there is no justification on the part of the Id AO to deny the benefit of section 80-IB(9) to the MS Plant of the assessee company where the Central Government has notified these refineries to be eligible to get benefit u/s 80-IB(9). If the intention of the amendment of section 80-IB(9) was to restrict the meaning of the term 'mineral oil', there was no reason to notify Eight Refineries akin to the new MS Plant of the assessee company to avail benefit of section 80-IB(9) of the Act till 31-03-2012. We note that based on the reasons stated above, the assessee is entitled to benefit of section 80-IB(9)(iii) of the Act. 16. We note that section 80-IB(9) was again amended by Finance (No.2) Act,2009 w.e.f 01-04-2000 and restrictions put by Finance Act, 2008 were removed. The only conditions u/s 80-IB(9)(iii) is that the undertaking is engaged in refining of mineral oil and begins such refining on or after 01-10-1998 but not later than 31-03-2012. Again, the amendment has been made retrospective from 01-04-2000. This clearly shows that the scope of section 80-IB(9) of the Act has been extended by the F....
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....oil. The argument of the Revenue was that the expression 'Mineral Oil' means crude oil and not its product". In para 9 of the order, the Hon'ble High Court observed that the expression 'Mineral Oil' has not been defined anywhere in the Act. The Hon'ble High Court discussed the meaning of 'Mineral Oil' in para 10 , which is given as under: "We have already stated that the combined effect of various provisions of the Act to which we have already made reference is that if the company is engaged in doing business of manufacturing or production of mineral oil, then it is entitled to 35 per cent rebate. We have referred to the meaning given to the term 'Mineral Oil' and 'Crude Oil' in the aforesaid dictionaries which indicates that the crude oil means petroleum in its raw form as it comes from the ground and the expression 'Mineral Oil' is wide enough to include both petroleum as well as the product produced from petroleum by refining or the products secured from raw petroleum or crude oil. Prima facie, the company appears to have been engaged in the business of manufacturing or production of mineral oil." Further in the case of Add. CIT Vs. Distillers Trading Corporation Ltd....
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....h less the High Court, is an authority under the Act. The Circulars do not bind them. But the benefits of such Circulars to assessee have been held to be permissible even though the Circulars might have departed from the strict tenor of the statutory provisions and mitigated the rigour of the law. But that is not the same thin gas saying that such circulars would either have binding effect in the interpretation of the provisions itself or that the Tribunal and the High Court are supposed to interpret the law in the light of the Circular. The Apex Court in case of Kerala Financial Corporation V CIT (1994) 210 ITR 129(SC) has observed that circulars, orders, instruction or direction of the Board cannot overrlde the provisions of the Act; that would be destructive of all known principles of law as the same would really amount to giving power to delegated authority to even amend the provisions of law enacted by Parliament. Such a contention cannot seriously be even raised. In case of Madura Chit & Investment (P) Ltd Vs. ITO (1994) 208 ITR 228(Mad) it is held that instructions and Guidelines cannot overrIde the specific provision of the Income Tax Act. In case of CIT V Sirpur Paper Mill....
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....ty cannot be taken "manufacture or production" as prescribed in sec. 80IC(2)(b) of the Act. Hon'ble apex court's landmark judgment in CIT vs. N.C. Budharaja and Co. and Another (1993) 204 ITR 412 (SC) held long back that the statutory expression "produce" has wider connotation than the word "manufacture". The former; when used in juxtaposition with the latter, brings into existence new goods by a process which may or may not amount to manufacture. And that the same also includes in all the by products; intermediary or residuary hon'ble Delhi high court's decision in HLS India Ltd. (supra) also hold s that whether or not any particular business activity amounts to manufacture or production for the purpose of various incentives schemes under the Act is required to be examined in the light of facts and circumstances in each case. These can be no denial of the fact that crude oil contains hydrocarbons as paraffin, cycloparaffin, napthene and araomaticcomprcands which is obtained from beneath the earth's surface. We reiterate that this assessee admittedly drills / explores crude oil for the purpose of refining the same to various by-products. This we thus conclude that assessee'....
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....ased on these facts and circumstances, we direct the assessing officer to allow deduction under section 80-IB(9) of the Act, for the Seven Assessment Years 2007-08 to 2013-14 . 18. Common Ground No.2 raised by the assessee reads as follows: "(2) Disallowance of claim of deduction under section 80-1C of the Income Tax Act, 1961. Ground and Assessment Year Amount Ground No.(4) for the Assessment Year 2008-09; Rs. 351,28,35,732/- Ground No.(4) for the Assessment Year 2009-10; Rs. 221,27,40,983/- Ground No.(7) for the Assessment Year 2010-11 Rs. 170,67,11,811/"-. 19. We have already adjudicated the issue of the assessee company relating to deduction under section 80-IB(9) of the Act in para No. 4 to 17 of this order. We note that assessee company claimed benefit under section 80IB((9) of the Act from assessment years 2001 to 2007-08 for the original plant. The assessee company found that entitled to under section 80IC(2)(b)(iii) of the Act, for ten assessment years as all the conditions contained in the section were fulfilled by it. Since, the company availed deduction of 100% of its profit under section 80IB(9) of the Act for seven years, the ass....
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....6,614/" 21. We note that Ground No. (1) for the Assessment Year 2007-08, Ground No.(1) for the Assessment Year 2008-09 and Ground No.(5) for the Assessment Year 2012-13 are against disallowance of claim of deduction of expenses under the head 'Prior Period Expenses'. Brief facts qua the issue are that from the Tax audit Report u/s 44AB of the Act, the Id AO observed that the Tax Auditor had certified that an amount of Rs. 77,14,27,745/- had been debited in the Profit and loss account under the head 'Prior Period Expenses'. The relevant portion of the Report 'Annexure -V' which is Schedule W of the Report of Tax Auditor has been incorporated in Para 5 of the Assessment order. From the Schedule -W, the Id AO observed that the assessee credited Rs. 8,37,58,169/-on account of purchase for resale and other operating and administrative expenses and debited Rs. 85,51,85,914/- on account of sale of products, raw material consumed and depreciation, effecting net debit to the profit and loss at Rs. 77,14,27,745/-. The Id AO further observed that Sale of Product of Rs. 8,81,913/-, Raw Materials Consumed worth Rs. 2,28,13,514/- and depreciation amounting to Rs. 83,14,90,487/- relates to ear....
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....hati High Court in case of CIT Vs. Nathmal Tolaram (1973) 88 ITR 234 (Gau). Further, the Hon'ble Gujarat High Court in case of Saurashtra Cement & Chemical Industries Ltd V CIT (1995) 213 ITR 523 (Guj) has held that if any liability though relating to the earlier year, depends upon making a demand and its acceptance by the assessee and such liability has been actually claimed and paid in the later previous years, cannot be disallowed as deduction merely on the basis that the accounts are maintained on mercantile basis and that it related to a transaction of the previous year. In case of CIT V Jatia Manufacturing Investment Co (P) Ltd (1983) 142 ITR 536 (Cal) it is held that liability to pay interest to creditors having arisen or accrued to the assessee only on the final rejection of its request for waiver of interest in the previous year relevant year to assessment year 1970-71, the interest was an allowable expenses for assessment year 1970-71. In CIT V Khaitan Chemicals & Fertilizers Limited (2008) 307 ITR 150 (del), the Hon'ble High Court has observed that Accounting Standard (AS-5) stipulates that prior period items are income or expenses which arise 'in the current period' as ....
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.... For the assessment year 2008-09, the assessee claimed deduction of Rs. 1,02,74,000/-being provisions for retiring benefits of employees, in computation of income under the general provisions of the Act as well as in determining income u/s 115JB of the Act, which was arrived at based on actuarial valuation . The Id AO added the amount in computation of income under general provisions of the Act hold ing that the amount is not an ascertained liability. However, the Id AO did not compute income u/s 115JB of the Act as income under the general provisions of the Act was on the higher sId e and book profit as shown by the assessee was taken in the assessment order. The Id AO considered the issue in para 8 and 9(page 5 ) of his order dated 23-12-2010. Hence, only Ground no.(2) was taken before the Id CIT(A) against additions of Rs. 1,02,74,000/- under the general provision of the Act. For the assessment year 2009-10, the assessee claimed deduction of Rs. 97,67,000/-being provisions for resettlement benefits of employees, in computation of income under the general provisions of the Act as well as in determining income u/s 115JB of the Act, which was arrived at based on actuarial valuat....
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.... the assessee is included in the Paper Book for the assessment Year 2008-09 in para 5 in page Nos. 34 to 38.For the Assessment 2009- 10, the assessee made submissions that provisions for resettlement benefit of Rs. 97,67,000/- should be allowed as the same was arrived at based on actuarial valuation. The submission of the assessee is included in the Paper Book for the assessment Year 2009-10 in para 4 in page 31 to 36.For the Assessment 2010- 11, the assessee made submissions that provisions for resettlement benefit of Rs. 8,37,000/- should be allowed as the same was arrived at based on actuarial valuation. The submission of the assessee is included in the Paper Book for the assessment Year 2010-11 in para 6 in page 29 to 34. We note that the Id CIT(A) decId ed the issues in para (F) in page 7 of his consolidated order dated 08-10-2013. The CIT(A) allowed the grounds partly by directing the Id AO to verify the actual sums debited to the Profit and Loss Account based on actuarial and consider such amounts as ascertained liability. The Id CIT(A) followed the order of his predecessor in Appeal No.Guwa223/2006-07 dated 22-06-2007 for the Assessment Year 2004-05. An apparent mistake ....
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....he same is not hit by the provisions of section 43B of the Act. We note that the Coordinate Bench of Mumbai Tribunal in case of Hindustan Petroleum Corporation Ltd in ITA No.1294/Mum/2001 dated 26-09-2012 has held in para 1 to 10 that provisions of post retirement benefits based on actuarial valuation is an allowable expenses u/s 37(1) of the Act. Therefore, respectfully following the judgment of the Coordinate Bench in case of Hindustan Petroleum Corporation Ltd (Supra), we direct the assessing officer to allow provisions of post- retirement benefits based on actuarial valuation as expense u/s 37(1) of the Act, after due verification and in accordance to law. 29.Common ground No. 5 raised by assessee reads as follows: "(5) Rejection of Additional Ground raised before the CIT(A) relating to claim of deduction of expenditure on account of corporate social responsibility. Ground and Assessment Year Amount Ground No.(5) for the Assessment Year 2007- 08; Rs. 309,08,755/- Ground No.(5) for the Assessment Year 2008- 09; Rs. 350,25,274/- Ground No.(6) for the Assessment Year 2009- 10; Rs. 402,89,573/"- 30. Ground No. (5) for the Assessment Year 2007-....
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....r before the AAC, the assessment case is thrown open and appellate proceedings constitute a continuation of the assessment proceedings. In case of CIT V Kanpur Coal Syndicate (1964) 53 ITR 225(SC)it is held that scope of AAC's power is co-terminus with that of the ITO. CIT(A) has plenary power in disposing of an appeal. He can do what the ITO can do and also direct him what he has failed to do. In case of Jute Corporation of India Ltd Vs. CIT (1991) 187 ITR 688(SC) it is held that the observation of the Supreme Court in case of Kanpur Coal Syndicate (Supra) are squarely applicable in the interpretation of section 251(1)(a). It is held that power of the AAC is co-terminus with that of the ITO. If that is so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. An appellate authority while hearing an appeal against the order of a sub-ordinate authority has all the powers which the original authority may have in decId ing the question before it. The Hon'ble Supreme Court in case of CIT V Nirbheram Daluram (1997) 224 ITR 610(SC) has held that the High Court was in error in holding t....
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....oduction of any document or the examination of any witness to enable him to dispose of the appeal. Considering the legal position explained above, we admit the additional grounds raised by the assessee and the same is being adjudicated in the subsequent para of our order. 33. Common ground No.6 raised by the assessee reads as follows: "(6) Disallowance of claim of deduction of expenditure for 'Corporate Social Responsibility' made following Guidelines issued by the Government. Ground and Assessment Year Amount Ground No.(6) for the Assessment Year 2007-08; Rs. 309,08,755/- Ground No.(6) for the Assessment Year 2008-09 Rs. 350,25,274/- Ground No.(7) for the Assessment Year 2009-10 Rs. 402,89,573/- Ground No.(5) for the Assessment Year 2010-11 Rs. 470,96,316/- Ground No.(2) for the Assessment Year Social2011-12 Rs. 497,43,581/- Ground No.(3) for the Assessment Year 2012-13 Rs. 586,21,435/- Ground No.(3) for the Assessment Year 2013-14 Rs. 536,19,001/"- 34. We have heard both the parties and perused the material available on record, we note assessee incurred these expenses by following specific guidelines on Cor....
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.... 2 to section 37(1) of the Act inserted by the Finance (No.2)Act,2014 w.e.f 01-04-2015. The Explanation states that expenditure incurred by an assessee on activities relating to corporate social responsibility referred to section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purpose of business or profession. As a deeming fiction has been created in the Explanation and hence its scope is limited to the purpose for which it is created. The deeming fiction has been created for CSR expenses referred to in section 135 of the Companies Act,2013 and the same cannot be extended to expenses incurred following mandated Guidelines on CSR for Central Public Sector Enterprises. Moreover, the deeming fiction of the Explanation has been effective from 01-04-2015 and the same is applicable from the Assessment Year 2015-16 onwards and the same cannot be applied retrospectively for earlier years. The creation of a deeming fiction establishes that the same has been introduced to negate another available view and hence the scope of Explanation 2 to section 37(1) of the Act is limited to the fiction created and the same cannot be extended to e....
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....ogress Rs. 12,90,738/- Ground No.(4) for the Assessment Year 2012-13 Capital work in progress Rs. 4,22,70,535/- Ground No.(4) for the Assessment Year 2013-14 Rs. 37,19,83,895/- The assessee informs us by way of written submission that he does not want to press this ground, therefore, we dismiss the common ground No. 7 raised by the assessee as not pressed. 37. Common ground No. 8 raised by the assessee reads as follows: "(8) Disallowance of claim of deduction for Interest paid u/s 234D of the Income Tax Act, 1961. " Interest on excess refund" Ground and Assessment Year Amount Ground No.(3 ) for the Assessment Year 2011-12; Rs. 3,83,88,266/- Ground No.(2) for the Assessment Year 2012- 13; Rs. 6,54,39,202/- . Ground No.(2) for the Assessment Year 2013-14; Rs. 7,35,87,056/"- The assessee informs us by way of written submission that he does not want to press this ground, therefore, we dismiss the common ground No. 8 raised by the assessee as not pressed. 38. Common ground No. 9 raised by the assessee reads as follows: "(9). Disallowance of claims of deduction under the head 'Provision for Doubtf....
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....r on merits. It is well settled the Id CIT(A) has a plenary power to consider the issue in merits. We note that in case of Ahmedabad Electricity Co. Ltd (1993) 199 ITR 351 (Bom)(FB) it is held that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. There is nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to consider only the objections raised before it or allowed to be raised before it either by the assessee or by the Department, as the case may be. They can consider the entire proceedings to determine the tax liability of an assessee. In case of CWT V Smt. Vimlaben Vadilal Mehta (1984) 145 ITR 11(SC) it is held that when an appeal is filed against an assessment order before the AAC, the assessment case is thrown open and appellate proceedings constitute a continuation of the assessment proceedings. Considering the facts and circumstances narrated a....
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....0 was Rs. 20,64,46,406/- (out of which was provided for in F.Y. Rs. 17,46,80,387/-, was provided for in 2009-10 i.e. A.Y. 2010-11). Considering this factual position, we do not find any infirmity in the order of Id CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed. 45. Ground No. 3 and 4 raised by Revenue in ITA No.97/Gau/16, A.Y. 2011-12 relates to allowing claim of deduction of Rs. 5,61,254/- for the reversal entry of other provisions passed in the books of account. 46.We have heard both the parties and perused the material available on record, we note that Id CIT(A) allowed the claim of the assessee observing the following: "If the amount of Rs. 5,61,254/- was allowed and taxed in the assessment year 2010-11, the same amount should not be taxed again in the assessment ear 2011-12.If entries are passed in the books of account by crediting the amount in the profit and loss account. otherwise, the same amount will be fixed in two assessment years. I direct the Assessing Officer to verify the facts and allow deduction of the mount if the same is taxed twice." We note that the assessee had debited an amount of ....
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.... Considering this factual position, we do not find any infirmity in the order of Id CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed. 49. Ground Nos. 1 and 2 in Revenue's appeal in ITA No. 98/Gau/2016, for A.Y.2012-13 and Ground Nos. 1 and 2 in Revenue's appeal in ITA No. 28/Gau/2016, for A.Y.201314 relate to deletion of addition of Rs. 1,88,88,019/- and Rs. 2,84,55,706/- respectively relate to disallowance under section 40(a)(ia) of the Act. 50. We have heard both the parties and perused the material available on record, we take the lead case for A.Y.2012-13 and we note that Id CIT(A) allowed the claim of the assessee observing the following: The Id . CIT(A)-2 Guwahati has made the following observation for A.Y.2012-13. "The only contention of the Assessing Officer against the provisions is that the assessee company preferred for further litigation. However, appeal before higher authorities need not make an ascertained liability into a contingent liability in all cases. The assessee company clearly explained why and how the provisions are made following different paragraphs of the Accounting Standard AS-29.....
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....relate to disallowance under section 14A of the Act. 52. We have heard both the parties and perused the material available on record. We note that Id . CIT(A) viewed that, the AO failed to consider the accounts of the appellant company which shows that the company earned huge profits and utilized only a very small portion of it for investment in mutual funds which generated exempted income. No nexus between the borrowed funds & mutual funds was established by the AO, hence, Id CIT(A) deleted the addition. Aggrieved by the order of Id CIT(A), the Revenue is in appeal before us. 53.After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Id . AR, we find that the issue involved in the present appeal is no longer res integra. We note that Special Bench of ITAT in the case of C-heminvest Ltd. Vs CIT 121 ITD 318 (Delhi) (SB) held that the dis-allowance u/s 14A of the Act can be made even in the year where there is no exempt income earned or received by the assessee. The decision of the Special Bench on which the CIT(A) placed reliance has since been reversed by the Hon'ble Delhi High Court in the case of Chem....