TaxTMI 
TaxTMI 
2019 (12) TMI 692
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.... The learned CIT(A) erred in holding that the aircraft were used for non-business purposes when it was averred before him that the aircrafts are used for business purposes and there is no element of personal use at all. 2. Disallowance of Expenses u/s. 14A - Rs. 6,92,39,354/-. The learned CIT(A) erred on facts and in law in upholding disallowance of Rs. 6,92,39,354/- u/s. 14A r.w.r. 8D in Principle. He ought to have deleted the disallowance in its entirety. In any case, the learned CIT(A) erred in not appreciating assessee's contentions, factual background and settled case law in respect of disallowance of interest expenditure u/s. 14A. The Disallowance of interest is totally wrong. The assessee has sufficient interest free fund available. The AO considered finance charges for disallowance. There are calculation mistakes while arriving disallowance under rule 8D. 3. The assessee craves leave, to add, to alter, and to modify any of the above grounds of appeal." 4. Ground No.1 pertains to the disallowance out of Aircraft Expenses of Rs. 83,85,796/-. 5. The facts with regard to this issue are that the assessee company has incurred an amount of Rs. 2....
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....rtly allowed in the terms aforesaid." Thereafter, the Ld. AR of the assessee prayed that the disallowance may be restricted to 15% as per the view taken by the Pune Bench of the Tribunal in the earlier year. 8. The Ld. DR fairly conceded to these facts on record. 9. We have perused the case records and heard the rival contentions. We find this issue is squarely covered by the decision of the Pune Bench of the Tribunal in assessee‟s own case (supra.) wherein this disallowance has been restricted to 15%. Both the parties agreed that facts and circumstances for this relevant assessment year is absolutely similar to assessment year 2010-11 and therefore, maintaining principle of consistency, we follow our decision on this issue and for this year also, this disallowance on account of aircraft expenses and corresponding depreciation is restricted to 15%. The order of the Ld. CIT(Appeals) is therefore modified as indicated above. Thus, ground No.1 raised in appeal by the assessee is partly allowed. 10. Ground No.2 pertains to disallowance of Expenses u/s.14A of the Income Tax Act, 1961 (hereinafter referred to as "the Act‟). 11. At the very outset the Ld. AR of ....
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.... Incentive, 2001 is capital receipt while during the course of scrutiny, the AO observed that major amount of the subsidy received by the assessee company is by way of reimbursement of taxes paid i.e. VAT to the State Govt. And hence taxable revenue receipt? 4. Disallowance out of Aircraft Expenses - restricted to 25% to Rs. 83,85,796/-. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in holding that the expenditure incurred by the assessee on aircraft running and depreciation would be restricted to 25% of the total Aircraft Expenses when no details have been provided by the assessee even during the appellate proceedings? 5. Disallowance of Provision for Warranty Rs. 26,63,90,572/-. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in holding that the provision of warranty during it is a covered issue for AY 2010-11 whereas no deduction is allowable under this head? 6. The appellant craves leave to add, to alter, or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal." 15. Ground No.1 pertains to t....
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....ssee in view of these facts on records. That further, for assessment year 2010-11 in assessee‟s own case, the Tribunal had upheld the findings of the Ld. CIT(Appeal) on this issue giving relief to the assessee. Therefore, respectfully following our findings and on similarity of facts and circumstances, we sustain the relief granted to the assessee by the Ld.CIT(Appeal). Thus, ground No.1 raised in appeal by the Revenue is dismissed. 21. Ground No.2 pertains to disallowance u/s.40A(2) in respect of commission paid to Directors of Rs. 4,82,55,000/- 22. The Assessing Officer has discussed this issue vide Para 6 onwards and finally at Para 6.4, has concluded that the commission paid to the Directors are unreasonably high and are not fully allowable as assessee company could not give any specific basis for increase in commission and therefore, the Assessing Officer disallowed 50% of the amount of commission paid as per provisions of Section 40A(2) of the Act and accordingly, added Rs. 4,82,55,000/- to the total income of the assessee. 23. The Ld. CIT(Appeal) has discussed this issue at Para 5 onwards in his order and as per detailed reasoning therein, has decided this ....
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....d. CIT(Appeal) and the relief provided to the assessee by the Ld. CIT(Appeals) is sustained. Thus, ground No.2 raised in appeal by the Revenue is dismissed. 27. Ground No.3 pertains to addition to capital subsidy of Rs. 86,73,56,670/- 28. The Assessing Officer has discussed this issue at Para 7 onwards of his order. That as per the detailed reasoning given therein, finally at Para 7.4, the Assessing Officer holds that the subsidy received under Government of Maharashtra Package Scheme of Incentive, 2001 is revenue in nature and therefore, added the entire amount to the total income of the assessee. 29. That when the matter travelled before the Ld. CIT(Appeals), at Para 6.1 of his order the Ld. CIT(Appeal) observed that the issue is covered in favour of the assessee in its own case in the appellate order for A.Y.2009-10 passed by the Ld. CIT(A)-II, Nashik on 01.08.2014 and the same decision has been followed while deciding the issue in assessee‟s favour during appellate proceedings for assessment year 2010-11. Thereafter, the Ld. CIT(Appeals) at Para 6.2 observed that the facts in respect of the issue being similar for the year under consideration, there is no need to....
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....n assessment order vide Para 9 and inferred that based on historical trends the provision created was more than the actual warranty claims which can be seen from the opening accumulated provision of Rs. 31.70 crores when in fact there was no need to create any such provision for the year under consideration. It is further contended that if the warranty was inextricably linked to the sales made during the period, the accumulated provision should had been reversed considering the warranty period offered however, a very small portion of warranty provisions accumulated was written back. It was, therefore held by the Assessing Officer that the aforesaid warranty provision made by the assessee had no strong scientific basis and the case law relied upon was also found to be not applicable to the facts of the assessee companies case, hence, was disallowed being excessive after setting off current year‟s warranty claim expenses. 35. During the appellate proceedings before the Ld. CIT(Appeal), the Ld. AR of the assessee submitted that this issue has been allowed in assessee‟s own case for A.Ys. 2005-06, 2006-07, 2007-08 and 2010-11. The Ld. CIT(Appeal) thereafter observed that....