TaxTMI 
TaxTMI 
2020 (1) TMI 952
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....tion alongwith the original grounds of appeal. We find that the assessee had derived dividend income of Rs. 16,81,44,106/- and claimed the same as exempt in the return of income. We find that the assessee had made voluntary disallowance u/s.14A of the Act in the sum of Rs. 83,04,00,000/- worked out as under:- Interest on specific borrowings - Rs. 59.66 Crores Interest on general borrowings - Rs. 20.36 Crores Direct / Indirect expenses - Rs. 3.02 Crores =========== Total Rs. 83.04 Crores 2.1. The ld. AO on verification of details of various expenses and the financial statements of the assessee agreed to the disallowance made by the assessee towards interest on specific borrowings and general borrowings as stated supra. But however, with regard to disallowance made in the sum of Rs. 3.02 Crores towards direct / indirect expenses, the ld. AO proceeded to make the disallowance based on the computation mechanism provided under Rule 8D(2)(iii) of the rules and arrived at the disallowance of Rs. 22.46 Crores thereon. After reducing the amount disallowed by the assessee in the sum of Rs. 3.02 Crores towards administrative....
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....ate Finance Division alone pertaining to treasury department could be considered for the purpose of making disallowance of administrative expenses u/s.14A of the Act. 2.4. It was further pleaded that majority of dividends were received only from the group companies of the assessee where dividend gets credited directly through Electronic Clearing Service (ECS) in the bank account of the assessee for which no expenses need to be incurred by the assessee. The assessee pleaded before the ld. CIT(A) that it had worked out the disallowance on a scientific method based on actual expenses debited in the profit and loss account and hence, there is no need to make further disallowance by applying the Rule 8D (2)(iii) of the rules. 2.5. We find that the assessee vide letter dated 22/01/2014 had furnished the details of administrative expenses and its relation with regard to the investment activity in the following tabular form:- Details of administration expenses incurred at CFD level Total Expenses as per CFD Audited Balance Sheet Already Disallowed in return Balance Expenses not related to investment activity Balance Common. expenses Remarks Audit Fee ....
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....86,178 5,435,306 7,550,872 Conference Exp 1,110,143 1,110,143 . 1,110,143 Loss on Sale of Fixed Assets 18,622 18,622 18,622 Inter Unit Expenses Recovered (11,662,778) (11,662,778) (11,662.778) Expenses incurred at CFD 106,175,412 26,100,697 80,074,715 43,220,563 36,854,152 Bad Debts &. Provisions for doubtful debts & advances (27,726,000) (27,726,000) - (27,726,000) Unspent Liabilities, Excess provisions and unclaimed balances in respect of earlier years written back (net of short provisions and sundry balances written off) ( (2,125,053) (2,125,053) - (2,125,053) Total 76,324,359 26,100,697 50,223,662 43,220,563 7,003,099 2.6. We find that the ld. CIT(A) on verification of the aforesaid tabulation had observed as under:- "I have carefully examined the submissions made by the assessee on 22/01/2014 in continuation with the earlier submissions, with regard to exclusion of items of expenditure that were not....
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....e was an inadvertent mistake in arriving at the expenditure of Rs. 7,63,34,352/- as mentioned in schedule 12 of Balance Sheet of Aditya Birla Nuvo Ltd. - Corporate Finance Division where in the assessee reduced a sum of Rs. 2,77,26,000/-, pertaining to positive balance of provision for bad and doubtful debts from the expenses. After verification, it is found that the same is correctly pointed out. Therefore the sum of Rs. 2,77,26,000/-is to be added to the total expenditure of CFD of the assessee. In light of these comments, the amount disallowable under Rule 8D(2)(iii) is arrived at as under:- Net Expenses: Rs. 12,50,08,837/- Add: Bad debts provisions Rs. 2,77,26,000/- Less: Printing and stationary Rs. 49,00,462/- Postage Rs. 17,99,943/ Courier Charges Rs. 6,75,993/- VAT paid Rs. 13,792/- Sale of assets Rs. 18,622/- Audit fee 50% Rs. 43,41,586/- Advertisement Rs. 8,32,765/- Less: Legal and Professional charges Rs. 1,68,08,130/- Disallowance u/s 14A Rs. 11,92,91,169/- It is, therefore, held that the disallowance under section 14A of I.T. Act, 1961 read with rule 8D(2)(iii) of I.T. Rules, 1962 ....
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....A.Y.2008-09 in assessee's own case wherein it was held as under:- 6.Ground No.2 is about disallowance of Rs. 4.83crores u/s.40(a)(ia) of the Act towards provisions made for expenses at the year end. 6.1.Before us,representatives of both the sides agreed that Tribunal had in the AY.2007- 08(supra)had decided the issue in favour of the assessee.We would like to reproduce the order for that year: "5.Next Ground is regarding disallowance of Rs. 1,33,57,668/- u/s. 40(a)(ia) towards provision made for expenses at the year-end as per best estimates. Before us,representatives of both the sides agreed that Tribunal had in the AY.2006- 07(supra)had decided the issue in favour of the assessee in following manner: "3.2.We have heard the rival submissions and perused the material before us.We find that the AO had invoked the provisions of section 40(a)(ia),though he has also discussed the principles of contingent liability,while making the disallowance.We find that FAA has passed a non- speaking order and just endorsed the views of the AO but he was also of the opinion that provisions of section 40(a)(ia) were applicable.It is found that assessee had specificall....
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....R 470 (Cal) had struck down the provisions of Section 43B Clause (f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon'ble Supreme Court which initially in Special Leave to appeal (Civil) CC12060/2008 dated 08/09/2008 had held as under:- "The petition was called on for hearing today. Upon hearing the Counsel, the Court made following order. Issue Notice In the meantime, there shall be stay of the impugned judgment, until further orders." 4.1. Later, the Hon'ble Supreme Court in Special Leave to Appeal (Civil) No.(s) CC22889/2008 dated 08/05/2009 had held as under:- "The petition was called on for hearing today. Upon hearing the Counsel, the Court made following order. Delay condoned Leave granted. Upon hearing the final disposal of the Civil Appeal, the department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as on date is concerned, it would be open to the department to recover that amount in case civil appeal of the department is allowed. We further make it....
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....Ltd. in Income Tax Appeal No.511/2016 dated 24/11/2018 wherein the operative portion of the judgement is as under:- 5. Having heard Counsel for the Revenue and for the Assessee, we notice that the Assessee's claim of additional depreciation arises out of clause (iia) of subsection 1 of Section 32 of the Act. Clause (ii) of subsection 1 of Section 32 of the Act recognizes the depreciation on block of assets. Clause (iia) grants additional depreciation in case of acquisition and installation of new machinery or plant by an Assessee after 31st March, 2005, the Assessee being engaged in business of manufacture or production of an article or things. 6. We may also notice that the second proviso to clause (ii) of Subsection 1 of Section 32 of the Act, would restrict Assessee's claim of depreciation to 50% in case, the assets are acquired by the Assessee during the previous year and put to use for the purposes of business or profession for a period less than 180 days in the said previous year. 7. In the context of such statutory provisions, the Revenue has raised the question - whether when 50% of the additional depreciation is claimed by the Assessee in....
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.... should be given liberal interpretation so as to benefit the assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, in our view, has rightly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a onetime benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. We are in full agreement with such observations made by the Tribunal. In view of the aforesaid, we do not find that any interference is called for with the order of the Tribunal, or that any question of law arises in this appeal for determination by this court."After the said judgment of the Karnataka High Court in Rittal India Pvt. Ltd., (supra), legislation has also amended....
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....vant part of the memorandum is extracted hereafter: " .... To remove the discrimination in the matter of allowing additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more, it is proposed to provide that the balance 50 per cent of the additional depreciation on new plant or machinery acquired and used for less than 180 days which has not been allowed in the year of acquisition and installation of such plant or machinery, shall be allowed in the immediately succeeding previous year. This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years." 11.2. A perusal of the extract of the memorandum relied upon would show that the legislature recognized the fact that the manner in which the Revenue chose to interpret the provision, as it stood prior to its amendment would lead to discrimination, in respect of plant and machinery, which was used for less than 180 days, as against that, which was used for 180 days or more. 11.3. In our opinion, as indicated above, the amendment is clarificatory in nature and not pros....
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.... the ld. CIT(A). We find that the reliance placed by the ld. AR on the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Asian Paints India Ltd., reported in 243 Taxman 348(Bom) on the impugned issue squarely addresses the dispute in favour of the assessee. The question raised before the Hon'ble Jurisdictional High Court is as under:- "(B) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the disallowance made by the Assessing Officer on expenditure on "Corporate Brand‟ building, treating such expenditure as revenue in nature?" 7.1. The Hon'ble Jurisdictional High Court held as under:- 5. Re. Question No.(B) : (a) The Respondent Assessee incurred expenditure on advertisement on television aggregating to Rs. 29.99 crores. This expenditure related to advertisements published on television relating not only to individual products manufactured by it but also towards corporate advertisement to the extent of Rs. 5.47 crores. (b) The Assessing Officer disallowed the expenditure claimed towards corporate advertisement amounting to Rs. 5.47 crores on the ground that the same i....
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....her, the test of enduring benefit urged by the Revenue was considered by the Apex Court in Empire Jute Co. Ltd. vs. CIT 124 ITR 1 to hold that it is not a conclusive test in all cases so that such expenditure is always on capital account. The Court observed that what is to be examined is the nature of advantage obtained in the commercial sense by incurring the expenditure. If the expenditure consists of merely facilitating the assessee to carry on business more profitably leaving the fixed capital untouched, it would be on revenue account. The entire expenditure, the Court observed, has to be looked at from a businessman's point of view. In the present facts, the expenditure on account of corporate advertisement is to essentially maintain the corporate image and not create a corporate image. Further, the impugned order holds on facts that the corporate advertisement expenditure facilitates the business having a direct impact on sales and profitability of the Respondent-Assessee. (f) In the above circumstances, the view taken by the impugned order that corporate advertisement enhances the business of the Assessee resulting in increased sales of its product in Revenue fi....
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....d by the assessee is with regard to initiation of penalty proceedings u/s.271(1)(c) of the Act, which would be premature for adjudication at this stage. Additional Ground 12. We find that the assessee has raised additional ground No.3 for A.Y.2009-10 challenging the action of the ld. AO in treating the interest subsidy received under Technology Upgradation Fund Scheme (TUFS) as revenue receipt amounting to Rs. 8,34,26,992/-. We find that similar issue had arose in assessee's own case in earlier years and non-raising of a specific ground in this regard in the original ground of appeal is a genuine omission on the part of the assessee and since this issue is only a legal issue and does not involve any verification of facts and in view of the fact that it goes to the root of the matter, we deem it fit and appropriate to admit this additional ground and take it up for adjudication. 12.1. We find that both the parties before us agreed that this issue had been remanded back to the file of the ld. AO in earlier year for denovo adjudication. Respectfully following the said decision, we deem it fit to remand this issue to the file of the ld. AO for denovo adjudication in accordance....
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....identical issue had been decided in favour of the assessee as following: 3.1.We find that sum of Rs. 3.33 crores,Rs. 2.50 crores and Rs. 1.87 crores was found to be incurred by the assessee for the AY.s.2003-04.2004-05 and 2005-06 respectively on account of marketing and knowhow incurred on acquisition of Madura Garments division. We find that the identical issue was deliberated upon by the Tribunal while deciding the appeal for earlier AY. We are reproducing the relevant paragraph of that order and same reads as under: 18.Ground No. 8 reads as under: "That, on the facts and in the circumstances of the case and in law, the learned AO has erred in disallowing depreciation of Rs. 3,33,86,719 claimed by the appellant on goodwill of Rs. 20.35 crores acquired on acquisition of 'Madura Garments' division from Madura Coasts Ltd. on a going concern basis and learned CIT (A) has erred in confirming the order of the learned AO. The learned AO be directed to allow the depreciation on goodwill and to reduce the total income accordingly." 18.1.We find that this issue has already been allowed in assessee's own case in ITA No.5421/ M/05 for A.Y.2000....