TaxTMI 
TaxTMI 
2019 (9) TMI 728
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....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. 2007-08 Rs. 38,65,11,189/- Ground No. 3 A.Y. 200....
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....wance 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 head 'Provision for Doubtful Debt' Ground and Assessment Year Amount Ground No.(2 ) for the Assessment Year 2009-10 ; Rs. 13,97,827/- (10). Disallowance of claims of deduction o....
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....neral 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 the assessee is engaged in refining of mineral oil. According to Id CIT(A), the raw material used by the assessee is Naphtha which is a product of refining of crude oil. Relying on the Circular No. 1/2009 dated 27-03-2009 where it has been....
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....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 is submitted that Naphtha is also a petroleum product which fall within the definition of 'Mineral oil' and hence the assessee company is entitled to deduction u/s 80-IB(9)(iii) of the Act in respect of the new Motor Spirit Unit ( M S Plant) w....
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....ulfils 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 undertaking fulfills any of the following, namely:- (i) Is located in North Eastern Region and has begun or begins commercial production of mineral oil before the 1st day of April, 1997. (ii) Is located in any part of India and has begun or begins commercial production of mineral oil on or after the 1st day of April, 1997. (....
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.... 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 :- " (4E) This section applies to any undertaking which begins commercial production of mineral oil in the North Eastern region". The sub-section was further amended by the Income Tax (Amendment) Act,1998 w.e.f 1st April, 1998 and this sub-section was made applicable all over India and after the words "North Eastern Region", the words " or in any part of India on or after the 1st April,199....
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...., 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 "Petroleum and Carbide Manual" issued by the Chief Inspector of Explosive of India in 1959, there is an opinion to the following effect:- " Comments by the Chief Inspector of Explosive-The following more common articles of commerce fall within the definition of 'petroleum'- liquid hydrocarbons or mixture of hydrocarbons, asphalt, aviation spirit, benzene, benzene... ethyl, white oil, white spirit, xylene, xylol. Inflammable mixture (liquid , viscas or solid....
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....ricted 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 which are then graded and isolated mainly by their specific gravity and volatility. (iv).The word naphtha came from Latin and Greek. It is an ancient Greek word that was used to refer to any sort of petroleum or pitch. It appears in Arabic as 'naft' and Hebrew as 'neft'. Arabic and Persian have used and distilled petroleum for tar and fuel from ancient times, as attested in local Greek and Roman histories of the region. In old en usage 'naphtha' simply means crude oil. The Ukrainian word and Russian word mean exactly 'crude oil'....
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....d 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 Engines and in industrial and domestic combustion. The Institute also provides technical and analytical services to petroleum refinery and related industries including technology transfer for developing novel state of art technologies and product. The Indian Institute of Petroleum (IIP) opined as under :- "As per technical and commercial understanding of the term 'Mineral' within the oil and gas industry, petroleum (which includes crude oil and petroleum products obtained there from) and natural gas can be categorized as 'Minerals' Considering the fact that ....
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....ined 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 section or a deeming fiction is created in the section. However, no such intention is found in section 80-IB(9) of the Act and hence meaning of the term 'mineral oil' has to be wide and the same cannot be restricted to the meaning given in para 19.1 of Circular No.1/2009 dated 27-032009. We have mentioned above paras of this order, the meaning of 'mineral oil', 'petroleum', 'petroleum product' in different statutes, which clearly justify that 'Naphtha' will fall within the definition of 'mineral oil'. The Id AO as well as Id CIT(A) even admitted that 'Naphtha' is a 'Petroleum Product'. It seems b....
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....f 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 Circular no 1 dated 27-03-09, while explaining the Finance Act,2008, CBDT opined that the term 'mineral oil' does not include petroleum and natural gas. The said Circular was issued on 27-03-2009 explaining the provisions of Finance Act 2008. It appears that the Revenue through the Circular tried to force its view on the assessee without considering the intention of the Legislature to provide relief to public sector and specific company owned refineries. It shows that spirit of the amended provisions was not reflected in para 19.1 of the Circular No.1/2009. The assessee is a public sector undertaking a....
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....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 Speech can be relied upon to throw light on the object and purpose of the particular provisions introduced by the Finance bill. Moreover, if petroleum is not included in the meaning of 'mineral oil', there was no reason to extend concession to public sector companies till 31-03-2012.The speech of the Hon'ble Finance minister shows that the contents of the 'Notes on Clauses' are mere restatement of the positions of the Income-tax Department and the same cannot be binding on Courts and Tribunals. Hence, the Circular is not sacrosanct and it is not binding on the assessee company. The interpretation given by the ....
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....tated 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 Finance (No.2) Act,2009 and benefit extended to Public Sector Companies in Finance Act,2008 is also available to other companies w.e.f.01-04-2000. As Circular No.1/2009 dated 27-03-2009 was issued to explain the provisions of Finance Act,2008 and para 19.1 explained scope of section 80-IB(9) of the Act, after the amendment of section 80-IB(9) of the Act by the Finance (N0.2) Act,2009, such narrow explanation of the Circular does not hold good. As the scope of section 80-IB(9) has become wider and conditions put by Finance Act, 2008 were removed, the contents of the Circular No.1/2009 in para 19.1 has also become ineff....
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.... 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 (1982) 137 ITR 894(Del), the Hon'ble Delhi High Court has observed in para 5 of the order that: "The AAC pointed out that the term 'Mineral Oil' covers both crude oil and liquid products derived from liquid petroleum which are in the nature of mixture of hydrocarbons such as motor spirit, aviation kerosene and other allied articles. In order to find out whether ethyl alcohol was a mineral oil, it is necessary to see whether this product comes within the meaning of the word petroleum. The AAC referred to the definition of 'petroleum' under the Petroleum Act,1934, and the Inflammable Substances Act,1952, and, reading ....
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.... 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 Mills (1999) 237 ITR 41(SC) and CIT V Mahindra Sintered Products Ltd (2001) 252 ITR 576 (Bom) it is held that notification issued by the CBDT cannot curtail the scope of deduction granted by the Income Tax Act. In case of Associated Cement Co Ltd V CIT (1994) 210 ITR 69(Bom) it is held that the memorandum explaining the provisions of the Finance Act or the Circular of the Board cannot be used to curtail or modify the clear meaning of an expression used in the Statute. Thus, a Circular cannot overrlde the provision of law. For that we rely on the judgment of the Hon`ble Bombay High Court in the case of Banque Nationle de Paris Vs. CIT (1....
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....ity 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's crude oil exploration very much amounts to production going by the relevant facts in the light of the preceding legal position. The Revenue's instant last argument is also rejected. We hold that CIT(A) has rightly granted sec. 80IC(2)(b) deduction to the taxpayer in assessment years 2005-06 and 2006-07. The Revenue's two corresponding appeal(s) ITA No.122 and 123/Gau/2018 also fails. 27. Next comes the assessee's four appeal(s) ITA No.87/Gau/2010, 33/Gau/2018, 325/Gau/2013 & 09/Gau/2014 relevant to assessment year(s) 2007-08 to 2010-11; respectively. Learned representatives inform us very fairly that the lower authorities' have declined the assessee's ....
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....n 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 assessee company claimed deduction under section 80IC for balance three assessment years starting from assessment year 2008-09. We have already explained the meaning of 'mineral' in para No. 4 to 17 of this order, therefore, we do not repeat the same. Under section 80-IC(2)(iii), a 100% deduction from the profit of an assessee is allowed if the gross total income of the assessee includes profit of an undertaking producing article specified in Fourteenth Schedule subject to certain conditions. Section 80-IC is a special provision in respect of certain undertakings or enterprises in certain special categories states. The intention of the legislation is clear that certain underdeveloped....
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.... 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 earlier years, but debited in the accounts during the assessment year 2007-08. The Id AO asked for an explanation for the amounts debited to profit and loss account and reply of the assessee company is also incorporated in the assessment order. The assessee company explained the facts and also submitted that Prior period depreciation of Rs. 83,14,90,487/- has already been added in computation of income. The Id AO was of the view that under the Scheme of the Act, tax is levied on the income of the previous year. The Id AO considered the issue in para 5 to 7 of his assessment order dated 29-12-2009 for the Assessment Year 2007-08. As mentioned in para 7 of the assessment order, the Id AO held that in mercant....
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....ditors 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 a result of errors or omissions in the preparation of the financial statements of one or more prior periods. Therefore, incomes or expenses relatable to prior period items are those which arise in the current period i.e. the period relevant for the purposes of computing the net profit or loss. Prior period items are to be included in the determination of the net profit or loss. Respectfully following the above cited judgments we allow 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 relating to claim of deduction of expenses under the head 'Prior Period Expenses'. 24. Common ground No.4 raised by the assessee....
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....er 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 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 5.0 to 5.03 (page 2 to 4) of his order dated 23-12-2011. Hence, only Ground no.(1) was taken before the Id CIT(A) against additions of Rs. 97,67,000/- under general provisions of the Act. For the assessment year 2010-11, the assessee claimed deduction of Rs. 8,37,000/being provisions for re-settlement benefits of employees, in co....
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....e 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 was corrected and a rectification order by the Id CIT(A) was passed on 28-02-2014 and ground no.(1) for the Assessment Year 2009-10 was taken into account in para (F) of his order. However, The Id CIT(A) in para (F) of the consolidated order considered the issue as whether 'retirement benefit for employees' is to be added to book profit for the purpose of section 115JB of the Act and followed the appeal order of his predecessor where the decisions of Apex Court in case of Metal Box Co. Of India Vs Their Workmen 73 ITR 53(SC) and Bharat Earth Movers Ltd Vs CIT 245 ITR 428(SC) were followed. The Id CIT(A) directed the Id AO to verify the actual sums debited to P &L account based on actuarial valuation and to consider the amount as a....
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....ection 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 2007-08, Ground No.(5) for the Assessment Year 2008-09, Ground No.(6) for the Assessment Year 2009-10 are against rejection of additional grounds raised before the Id CIT(A) regarding claim of deduction of expenditure on account of corporate social responsibility. Brief facts qua the issue are that during the appellate proceedings before the Id CIT(A), the assessee company raised additional grounds for the above-mentioned years claiming deduction of expenses incurred by it following guidelines issued by the Government on corporate social responsibility. It was submitted by the assessee company that the expenditures under the Corporate Social Responsibility Scheme were debited in the profit and loss account. However, while making computation of income, the s....
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....llate 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 that the appellate power conferred on the AAC u/s 251 was confined to the matter which had been considered by the ITO. The Apex Court held that the power of the AAC is plenary and co-terminus with the power of the ITO. The Hon'ble Calcutta High Court in case of Ranicherra Tea Co Ltd (1994) 207 ITR 979 (Cal) has held that power of CIT (A) is not confined only to the materials on records at the time of assessment. CIT (A) has plenary powers and can make such further enquiries as he thinks fit and has all the power of original authority. The power of CIT (A) is discussed in case of Hukum chand Mills Ltd V CIT(1967) 66 ITR 232(SC). It is observed that power of AAC is not confined to the subject matter of the appeal, but extends to the subject matter of assessm....
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....sment 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 Corporate Social Responsibility(CSR) for public sector enterprises. The Id CIT(A) is not justified in bringing a new issue of application of income for CSR expenditure in terms of Circular No.1/2015 dated 21-01-2015 which has been issued in relation to Explanation 2 to Section 37(1) of the Act which is prospective and applicable from Assessment Year 2015-16 relating to expenses incurred with reference to section 135 of the Companies Act,2013. The CSR expenditure is always an expense to be reflected in the Statement of Profit and Loss Account. Such treatment is considered in generally accepted principles of accounting. Regarding preparation of budget of CSR expenditure based on Net Profit as per Guidelines of CSR issued by the Government, it is submitted that a measuring rod has to ....
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....ffective 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 earlier years. For that we rely on the judgment of the Coordinate Bench of Raipur in case of ACIT Vs. Jindal Power Limited in ITA No.99/BLPR/2012, for the Assessment Year 2008-09, where it has been held that expenditure on Corporate Social Responsibility though voluntary, is allowable as business expenditure. It is also held that Explanation 2 to section 37(1) inserted w.e.f. 01-04-2015 is not retrospective. It applies only to Corporate Social Responsibility expenditure referred to in section 135 of the Companies Act,2013 and not to voluntary Corporate Social Responsibility expenditure. The Tribunal has observed that the amendment in the scheme of section 37(1) which has been introduced with effect from 1st April,2015 cannot be construed as to disadvantage to the assessee in the peri....
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..... 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 Doubtful Debt' Ground and Assessment Year Amount Ground No.(2 ) for the Assessment Year 2009-10 ; Rs. 13,97,827/- 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. 9 raised by the assessee as not pressed. 39.Common ground No. 10 raised by the assessee reads as follows: "(10). Disallowance of claims of deduction of 'Prior period Depreciation'. Ground and Assessment Year Amount Ground.No.(5) for the Assessment Year 2009-10, Rs. 2,58,27,259/- And Rs. 22,83,310/- 40. We have heard both the parties and perused the material available on record, we note that the assessee company claimed that there was an apparent mistake in computation of income for the Assessment Year 2009-10 as prior period depreciations am....
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....ssessee. 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 above, we direct the assessing officer to allow the prior period depreciation. 41. Common ground No. 11 raised by the assessee reads as follows: "(11). Disallowance of claim of deduction for "Provision for Allowance for Non- Management Staff'" Ground and Assessment Year Amount Ground No.(3) for the Assessment Year 2010-11; Rs. 17,46,80,387/- 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. 11 raised by the assessee as not pressed. 42. Common ground No. 12 raised by the assessee reads as follows: "(12). Disallowance of claim of deduction for 'Other Provisions'. Ground and Assessment Year Amount Ground No.(4) for the Assessment Year 2010-11; Rs. 5,61,254/- The assessee informs us by way of written submission that he does ....
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....editing 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 Rs. 38,92,108/- towards other provisions (unsettled Tour bills, Medical Expenses, etc.) in its submission for A.Y. 2010-11. The assessee had furnished details of bills amounting to Rs. 33,30,854/- only and for the balance amount of Rs. 5,61,254/-(Rs. 38,92,108- Rs. 33,30,854), the assessee had not submitted any bill and it was purely a provision. The A.O. had disallowed the amount of Rs. 5,61,254/-and added to the total income of the assessee for the A.Y. 2010-11. It appears from the books of the accounts of the assessee that the amount of Rs. 5,61,254/- were reversed and credited to P&L Account in the relevant A.Y.2011-I2. 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. 47. Ground No.5 raised by Revenue in ITA No.97/Gau/16, A.Y. 2011-12 relates to in directing t....
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..... 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. Moreover, subsequent developments of the events of dismissal of the appeals by the Golaghati Court fortify the justification of the assessee to make provisions of the interest liability in the previous year relevant to assessment year 2012-13. Hence, the assessee is entitled to deduction of Rs. 1,88,88,019/- being the provisions made for interest liability for the previous year relevant to assessment year 2013-13. I am of the view that the provisions of section 194A are not applicable to the facts of the case. Section 194A of the Act is applicable at the time of credit of the income to the account of the payee or at the time of payment thereof whichever is earlier. In case of the assessee company, an unilateral action is taken by the assessee company to recognize its liability and a sum of money is kept separately as provisions in its books of account for the liability. The liability is recognized and provided for in the ....
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..../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 Cheminvest Ltd. Vs CIT 317 ITD 33 (Delhi), wherein it was held that if there is no exempt income earned or received by the assessee, no dis-allowance is warranted under section 14A read with rule 8D of the Rules. We note that Coordinate Bench of ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT 144 ITD 141 (Kol-Trib) has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) & (iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by the Hon'ble Calcutta High Court in G.A.No.3581 of 2013 in the appeal against the order of the Tribunal in the case of REI Agro Ltd. (supra). We note that there is no disallowance under Rule 8D(2)(i). Besides under rule 8D(2)(ii) no disallowance can be made as the assessee has own funds which is more than investments made by asses....