AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2020 (1) TMI 446
X X X X Extracts X X X X
X X X X Extracts X X X X
....lay of 3573 days in filing of cross-objections by the department, however, it has been explained that the said cross-objections arises out of additional grounds filed by the assessee on 15/05/2017 and therefore, counting from the date of receipt of additional ground, the delay is only for 63 days. The condonation of the same has been sought by the revenue on the strength of condonation petition dated 22/08/2017 explaining the facts that led to delay. The delay has been attributed to annual general transfer and change of incumbency in Large Taxpayer Unit [LTU]. Finding the reasons to be plausible one, the bench formed an opinion that the delay was to be condoned and the matter was to be proceeded on merits. 1.2 The name of erstwhile entity namely Gujarat Ambuja Cement Ltd. has undergone change to M/s Ambuja Cements Ltd. and accordingly, revised appeal memo has been filed by the revenue. Finding the same in order, we proceed to adjudicate the same. 1.3 The assessee being resident corporate assessee stated to be engaged in manufacturing of cement was assessed u/s. 143(3) of the Act on 30/09/2005 wherein the income of the assessee was determined at Rs. 90.25 Crores under normal p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....01 of 2007 Revenue 1988-89 22/04/008 19. Hon'ble Supreme Court -SLP(Civil) No.2822/2009 Revenue 1988-89 17/07/2009 20. Order of Hon'ble High Court -ITA No.936 of 2003 Revenue 1989-90 16/04/2007 21. Order of Hon'ble High Court -ITA No.6186 of 2010 Revenue 1995-96 22/10/2012 22. Order of Hon'ble High Court -ITA No.6195 of 2010 Revenue 1996-97 22/10/2012 23. Order of Hon'ble High Court -ITA No.2176 of 2010 Revenue 1997-98 22/10/2012 1.6 In the above background, we proceed to adjudicate the revenue's appeal ITA No.7486/Mum/2007. The ground raised by revenue read as under: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of community welfare expenses of Rs. 48,71,746/-. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of temple expense of Rs. 6,85,908/- 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of prior year's expenses of Rs. 58,16,022/-. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing assessment proceedings, the attention was drawn to the fact that similar expenses incurred by assessee in AYs 1989-90 & 1990-91 were allowed by Tribunal. The said decision was followed by Tribunal in AY 1993-94. However, finding that the department was under appeal before High Court against the decision of the Tribunal, the said expenditure was disallowed by Ld. AO. The learned CIT(A) deleted the same by following the Tribunal order for AYs 1989-90 & 1990-91. It was observed that following Tribunal order, similar view was taken by first appellate authorities in AYs 1995-96 to 2003-04. It is admitted position before us that the departmental appeal, on this issue, against appellate orders for AYs 1995-96 to 2003-04 has been dismissed by the Tribunal. Further, the question on this issue raised by the department for AYs 1988-89 & 1989-90 was not admitted by Hon'ble Bombay High Court. No Appeal has been preferred by the department on this issue before Hon'ble High Court for AYs 1990-91, 1991-92 & 1993-94. Therefore, respectfully following the consistent stand of Tribunal, we dismiss this ground of appeal. 2.2 Gr. No.2: Deletion of disallowance of Temple Exp. for Rs. 6.85 Lacs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n order dated 10/08/2018. The Tribunal confirmed the stand of Ld. CIT(A) in view of the clear finding that the expenses had crystalized during the year. Similar findings have been given by learned first appellate authority in this year. Therefore, respectfully, following the same, we dismiss this ground of appeal. 2.4 Gr. No.4: Deletion of disallowance of Mines Prospecting Expenses for Rs. 32.38 Lacs The said expenditure was stated to be incurred on various site locations to check the availability of limestone which was major raw material for manufacturing of cement. It was pleaded that similar expenditure was allowed by Tribunal for AYs 1989-90 which was followed in 1990-91 and similar claim was allowed in AY 1994-95 also. However, finding the department was under appeal to Hon'ble High Court against the decision of Tribunal for AYs 1989-90 & 1990-91, the said expenditure was disallowed, being capital in nature. Since no new asset was created, the depreciation on the same was also denied to the assessee. The learned first appellate authority, following appellate orders of earlier years, deleted the same. We find that this issue is squarely covered in assessee's favor r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....surplus / gains would be fully taxable, applying the same analogy. Accordingly, the reduction of income by Rs. 5.62 Lacs (including surplus of Rs. 1.10 Lacs) as done by Ld. AO would not be warranted. We direct Ld. AO not to reduce the total income by Rs. 5.62 Lacs. We find that this ground is badly drafted since there was no disallowance made by Ld. AO but, in fact, a relief was granted to the assessee. Nevertheless, to settle the things as per earlier decisions, we direct Ld. AO not to reduce the total income by Rs. 5.62 Lacs. This ground may be deemed to be allowed. 2.7 Gr. No.7: Deletion of disallowance of expenses on Powerline, Marine Structure, Road & Railway Sidings for Rs. 1.08 Lacs, Rs. 20 Lacs & Rs. 209.15 Lacs respectively The assessee claimed these expenditure u/s 37(1) by submitting that the ownership of powerline, marine structures and road do not belong to the company but belong to government authorities and therefore, the expenditure was an allowable revenue expenditure. However, the deduction of the same was denied treating the expenditure to be capital in nature and since no new asset was created, depreciation was also denied. The Ld. CIT(A), following the or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0HHC The assessee claimed deduction u/s 80HHC for Rs. 717.50 Lacs on the strength of accountant's certificate. Upon perusal of working, it was noted that excise duty for Rs. 334.52 Crores was excluded from gross turnover. Similarly, Sales Tax of Rs. 72.34 Crores was not passed through Profit & Loss Account. The Ld. AO, referring to provisions of Sec. 145A, held that these two items would be includible while working out the deduction. The working in the aforesaid manner reduced the deduction u/s 80HHC to Rs. 558.39 Lacs. The learned CIT(A) following the decision in AYs 2000-01 to 2002-03, directed for exclusion of these two items while computing deduction u/s 80HHC. We find that Tribunal dismissed similar ground raised by revenue in AY 2002-03 by following the order for AY 2001-02 and upheld the stand of Ld. CIT(A). Facts being pari-materia the same, following consistent view of the Tribunal in earlier years, we confirm the stand of Ld. CIT(A) and dismiss this ground of appeal. 2.11 Gr. No.11: Credit for MAT for the purposes of Charging interest u/s 234B From perusal of paras-23 & 24 of quantum assessment order, it is evident that the tax payable on normal income was mor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amounting to Rs. 32,52,000/- by holding that the said expenditure is capital in nature. 2(b) That on the facts and in the circumstances of the case and without prejudice to Ground No.2(a), taken here-in-above, having held that the impugned expenditure is capital in nature, the Ld.ClT (Appeals) erred in not allowing depreciation on the same. 3(a) That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified in confirming the disallowance of charges for service amounting to Rs. 1,93,960/- by holding that the said expenditure is capital in nature. 3(b) That on the facts and in the circumstances of the case and without prejudice to Ground No. 3(a), taken here in above, having held that the impugned expenditure is capital in nature, the Ld. CIT(Appeals) erred in not allowing depreciation on the same. 4. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in not excluding gain on exchange due to decrease in Rupee Liability on account of fluctuation in Rate of Exchange, from the computation of total income irrespective of the stand taken by the department in earlier years to treat the exch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cumstances of the case, the Ld. CIT(Appeals) was not justified in confirming addition of unutilized MODVAT credit as on last day of accounting year being 31st March 2004 as adjustment under section 145A disregarding the fact that the appellant himself has already carried out necessary adjustment u/s 145A which was duly certified by Tax Auditors and hence any further adjustment was not warranted. 9(b) That on the facts and in the circumstances of the case, and without prejudice to the ground no. 9(a) taken here in above, even if adjustment u/s 145A in respect of unutilized MODVAT credit is carried out, deduction for the same is available to the appellant under provisions of Section 43B since the appellant had paid excise duty payable on closing stock of cement as on last day of accounting year before filing of return of income for Assessment Year 2004- 05 by adjusting unutilized MODVAT credit and necessary proofs for payment of excise duty are on the records of assessing officer. 10. That on the facts and in the circumstances of the case, the Ld. ClT(Appeals), was not justified and rather grossly erred in confirming the non-exclusion of Capital Profit on sale of in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see claimed deduction of said sum which was stated to be paid for civil construction. It was submitted that the expenses were in the nature of repairs and maintenance of civil structures and hence, allowable. The attention was drawn to the fact the similar expenditure was allowed by Ld. CIT(A) in earlier years. The attention was also drawn to favorable order of Tribunal for AY 1990-91. However, since the department was in further appeal in AY 1990-91, the said expenditure was disallowed, holding the same to be capital in nature. Since no new asset was created, depreciation was also denied. The learned CIT(A), following the orders for AYs 1995-96 to 2003-04, held the same to be capital in nature. We find that this ground is covered in assessee's favor by the decision of Tribunal up-to AYs 2003-04. Nothing contrary is on record. Respectfully following the same, we allow this ground of appeal. Consequently, the plea of allowance of depreciation against the same becomes infructuous. 4.3 Gr.No.3: Disallowance of Service Charges for Rs. 1.93 Lacs The charges represent service charges paid to Sh. L. H.Hirani. The attention was drawn to the fact the similar expenditure was allowed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re treated as income from other sources. The same upon confirmation by Ld. CIT(A), is under challenge before us. We find that this ground would be remitted back to the file of Ld. AO on similar lines as done by the Tribunal in its latest order for AYs 2002-03 & 2003-04. Accordingly, Ld. AO is directed to re-adjudicate the same as directed by Tribunal in AY 1999-2000 after providing due opportunity of hearing to the assessee. This ground stand allowed for statistical purposes. 4.7 Gr. No.7: Disallowance u/s 35D and non-admission of additional ground This issue was not subject matter of quantum assessment order and was raised before Ld. CIT(A) for the first time as additional ground. The assessee claimed deduction of Rs. 0.83 Lacs, being 1/10th of tradeable warrant issue expenses since the said claim was omitted to be lodged in the return of income. However, Ld. CIT(A) declined to admit the same. Drawing analogy from the decision of Hon'ble Bombay High Court in CIT V/s Pruthvi Shares & Stockbrokers Pvt. Ltd. (349 ITR 336), we direct Ld. AO to admit this claim and adjudicate the same after providing due opportunity of hearing to the assessee. This ground stand allowed for sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order of the Tribunal for AYs 2002-03 & 2003-04, we confirm the stand of Ld. CIT(A) and dismiss this ground of appeal. 4.11 Gr. No.11: Adjustment of Dividend Distribution Tax u/s 115JB and non-admission of additional ground This issue was not subject matter of quantum assessment order and was raised before Ld. CIT(A) for the first time as an additional ground. The assessee challenged addition of Dividend Distribution Tax for Rs. 1393 Lacs while computing Book Profit u/s 115JB. However, Ld. CIT(A) declined to admit the same. Drawing analogy from the decision of Hon'ble Bombay High Court in CIT V/s Pruthvi Shares & Stockbrokers Pvt. Ltd. (349 ITR 336), we direct Ld. AO to admit the said claim and adjudicate the same after providing due opportunity of hearing to the assessee. This ground stand allowed for statistical purposes. 4.12 Gr. No.12 & 13 are general in nature and do not require any specific adjudication. 4.13 Resultantly, the appeal stands partly allowed to the extent as indicated in the order. The learned AO is directed to recompute the income of the assessee in terms of our adjudication. Assessee's Additional Ground of Appeal & Revenue's Crossobjections ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 67. We have considered rival submissions and perused materials on record. Undisputedly, the assessee has not claimed the Sales Tax incentives received by it as capital in nature either in the return of income filed for the impugned assessment year nor in course of proceedings before the Departmental Authorities. In fact, the assessee itself has treated the Sales Tax incentive received by it as revenue in nature by including it in the sales as reflected in the books of account and audited financial statements. It is only at the second appellate stage before the Tribunal the assessee has claimed the Sales Tax incentives received by it as capital in nature by raising the additional grounds. Thus, the first issue which is to be decided is, whether the additional grounds raised by the assessee at this stage are to be admitted or not. It is the contention of the assessee before us that on the basis of ratio laid down in certain judicial precedents, wherein, it is held that Sales Tax incentive received is capital in nature, the assessee has raised the additional ground. On a careful analysis of the decisions relied upon by the learned Authorised Representative in support of ad....