TaxTMI 
TaxTMI 
2015 (11) TMI 1799
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....s. 3 and 7were infructuous and Ground No. 11 was pre-mature. Hence, Grounds No. 3, 7 and 11 stand dismissed. 2. First ground of appeal is regarding disallowance of Rs. 19, 08, 99, 783/- u/s. 43B(f) being provision made for leave salary/compensated absence as per actuarial valuation. During the course of hearing the AR and the Departmental Representative(DR)agreed that the issue stands decided in favour of the assessee by the orders of the Tribunal for earlier year. We find that the Tribunal had dealt the issue as under, while deciding the appeal for the AY. 2006- 07(8427 & 8483/Mum/10 dt. 17/09/2014): "4. Ground no. 4 deals with disallowance of Rs. 1. 73 crores, made u/s. 43B(f) of the Act, being provision made for leave salary. We find that similar issue had arisen in the AY 2002-03, 2003-04, 2004-05 and 2005-06 also. While deciding the appeal for the last three AY. s. , the Tribunal had dealt the issue as under: 4. Second common Ground is about disallowance of provisions made for the leave salary u/s. . 43f of the Act and the amount involved are Rs. 2. 48 crores, 1. 76 crores and 2. 6 crores. During the course of hearing before us, Representatives of both the....
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....submission of the assessee the AO made a disallowance of Rs. 13. 81 crores u/s. 14A r. w. r. 8D of Rules. 3. 1. In the appellate proceedings, the First Appellate Authority(FAA), directed the AO to compute the disallowance u/s. 14A, as per the direction of the then FAA given for the earlier AY. s. 3. 2. Before us, the AR stated that the AO had applied Rule 8D while making the disallowance for the year under appeal, that the provisions of Rule 8D were applicable from the next A. Y. , that he had failed to appreciate that any disallowance u/s14A in respect of other expenses could not exceed Rs. 50. 20 lacs. The DR left the issue to the discretion of the Bench. 3. 4. We have heard the rival submission and perused the material before us. We find that the AO has made disallowance u/s. 14A with regard to other expenses, that he had applied provisions of Rule 8D of the Rules. The Hon'ble Jurisdictional High Court has held that said Rule could be applicable from AY. 2008-09 only. In these circumstances, we are of the opinion that, in the interest of justice, the matter should be restored back to the file of the AO for fresh adjudication. He is directed to afford a reasonable opport....
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....mes framed by the company and the amount of liability was deducted from the gross receipts in the profit and loss account. The company had worked out on an actuarial valuation its estimated liability and made provision for such liability not all at once but spread over a number of years. The practice followed by the company was that every year the company worked out the additional liability incurred by it on the employees putting in every additional year of service. The gratuity was payable on the termination of an employee's service either due to retirement, death or termination of service-the exact time of occurrence of the latter two events being not determinable with exactitude before hand. A few principles were laid down by this court, the relevant of which for our purpose are extracted and reproduced as under : (i) For an assessee maintaining his accounts on the mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy. It is not as if such deduction is permissible only ....
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....(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 nonspeaking 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 specifically mentioned during the assessment proceedings, that it had not received the bills under various heads, that provisions of tax deducting at source were not applicable for the provisions made. We find that similar issue had arisen in the case of Mahindra & Mahindra Ltd. (supra). In that matter it was held that TDS provisions were not applicable for the provisions made at the yearend. Similarly, in the case of Industrial Development Banking Company(supra), the Tribunal had held as under: "The deduction of tax at source can only be effected when payee is known. As far as the situation before us is concerned, the regular return bonds being tra....
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....red for the purpose of determining the amount of exemption u/s 80IA. The AO, after considering the submission of the assessee, held that without involvement of HO none of the units could have worked, that the management of the company was involved in policy matters, that HO expenses had to be apportioned to the above units to the extent of involvement of HO, that the HO expenses of Rs. 13 Crores were directly related to the units and had to be apportioned on the turnover basis for all the units. Accordingly, he worked out administrative expenses on pro-rata basis and reduced the claim u/s. 80IA of the Act by Rs. 31. 32 Lakhs (Hitech Carbon and Chemical Rs. 4. 17 lakhs + Rayon Power Plant Rs. 27. 14 Lakhs). He held that both the plants enjoyed 100% exemption, therefore, the disallowance had to be added back to the total income of the assessee. 5. 1. Assessee preferred an appeal before the FAA. After considering the assessment order and submission of the assessee, he held that theory apportionment of expenses had to be followed, that disallowance of administrative expenses was justifiable. Finally, he upheld the order of the AO. 5. 3. We have heard the rival submiss....
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....s no. 9, 6 and 4 in favour of the assessee for the AY. s. 2003-04to2005-06. 6. Issue of deduction in exemption u/s. 10B towards allocation of head office expenses/expense of other division and interest income earned by 100% E. O. U. under normal income and MAT provisions. The issue is subject matter of appeal for the AY 2003-04 and 2004-05 and the amounts involved are Rs. 1, 42, 544/- and 1, 10, 488/-. AR brought to our notice that Tribunal had in the order for the AY 2002-03 has decided the issue in favour of the assessee-company while deciding ground no. 9 for that year. 6. 1. While deciding the earlier common grounds of appeal no. 3, at paragraph no. 5. 1. we have reproduced the order of the Tribunal for the earlier year where the issue of interest income earned by the 100%EOU and allocation of head office expenses of other division have been decided in favour of the assessee-company. Considering the above ground no. 6 and ground no. 3 for the AY. s. 2003-04 and 2004-05 are decided in favour of the assessee. " Following the order for the earlier years, ground no. 5 is decided in favour of the assessee. " Considering the above, we decide Ground no. 6....
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....dt. 12. 2. 2009, the assessee contended that it had credited to the P&L A/c. a sum of Rs. 663. 73 lacs, the amount in question represented the sales tax/VAT collected from purchasers of caustic soda manufactured at company's plant at Veraval, that it was exempt as per new incentive policy of Govt. of Gujarat. It referred to the Judgment of Special Bench of the Tribunal in the case of Reliance Industries Ltd, (88 ITR 273) and argued that the amount in question was not chargeable to tax. The AO however, held that sales tax incentive was in the nature of running and operation of business, it was not a capital receipt, that same was liable to tax. Finally, he rejected the claim made by the assessee. 8. 1 Before the FAA, the assessee made the similar submission that were made before the AO. He held that the amount had been shown in the books as revenue receipt, that the claim of it being a capital receipt was neither made in the return nor a revised return was filed, that the amount received by the assessee was directly linked with the running and operation of the business, that it was revenue receipt. Finally, he confirmed the order of the AO. 8. 2. During the course of hearing b....
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....he process of business, that it was not a capital receipt, that same was liable to tax. 9. 2. During the appellate proceedings before the FAA, the assessee contended that CER were a type of emission unit issued by the clean development mechanism executive board for emission reduction, that carbon credit was generated by using advanced technology that reduced the carbon emission in environment, that the income was generated by the co. by selling the points in the market, that it was capital receipt and was not chargeable to tax. The FAA held that the assessee had shown the income as revenue receipt in the books of account, that it did not file revised return, that the amount received by it was directly linked with running of the business. Upholding the order of the AO, he rejected the appeal filed by the assessee. 9. 3. Before us, the AR contended that the issue of CER had been dealt and decided by the Tribunal/Courts in favour of the assessee . He referred to the cases of My Home Power Ltd. (365ITR 82);My Home Power Ltd. (63 SOT 227);M/s. Shree Cements Limited(ITA / 503/ JP/2012); BEST Corporation Pvt. Ltd. (ITA 1958/Mds/2014 dt. 20. 05. 2015) and M/s. Subhash Kabini Power Co....
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....income, that the amount in question was a capital receipts and was not chargeable to tax, 13. During the course of hearing before us, the AR referred to the cases of Glouster Jute Mills Ltd. (51 taxmann. com 547), Shyamlal Bansal(11taxmann. com 369), Best Corpn. Pvt. Ltd. (2105 -TIOL-829-ITAT-Mad. ), C&V Textiles Pvt. Ltd. (ITA746/Mds/2014, AY10-11, dt. 21. 11. 14) and assessee's own case for the AY 1995-96. We have heard the rival submissions, perused the material. We find that, while deciding the appeal for AY. 95-96 the Tribunal had dealt with the sales tax/Vat subsidy. It had no occasion to deal with the interest subsidy received under the TUFS. We find that neither the AO nor the FAA had any occasion to decide the nature of the interest subsidy of TUFS while passing the assessment order or deciding the appeal for the year under consideration. We are of the opinion that, in the interest of justice, the matter should be restored back to the File of FAA for fresh adjudication . The FAA will afford a reasonable opportunity of hearing to the assessee Additional Ground No. 3 stands admitted and allowed in favour of the assessee, part. ITA No. 3634/M/2011-AY. 2007-08: 14.....
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....nus the Modvat credit. This method was also adopted while valuing the unconsumed raw materials and the work in progress at the end of the year. The Assessing Officer took the view that the Modvat credit should be treated as an income or advantage in the nature of income and added back the Modvat credit. The Appellate Tribunal held that the Modvat credit could not be added back to the income of the assessee. ...... that merely because the Modvat credit was an irreversible credit available to manufacturers upon purchase of duty-paid raw material, that would not amount to income which was liable to be taxed under the Act : income was not generated to the extent of the Modvat credit on unconsumed raw material ;(ii) that it was not permissible for the Assessing Officer to adopt the "gross method" for valuation of raw materials at the time of purchase and the "net method" for valuation of stock on hand. " Respectfully following the above decision Grounds no. 2, 1 and 1 for the AY. s. 2003-04, 2004-05 and 2005-06 are decided against the AO. In light of the above discussion, effective ground of appeal is decided against the AO. Following the above, we decide Ground No.....
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....unds or increase in the capital employed, the capital employed remains the same. Issuance of bonus shares by capitalization of reserves is merely a reallocation of the company's fund. This is illustrated by the following hypothetical tabulation which establishes that bonus shares leave the capital employed untouched, because in the hypothetical example, the capital employed remains the same (i. e. Rs. 600) both pre and post issuance of bonus shares. Sl. No. Particulars Pre-bonus issue Rs. On bonus issue Rs. Post bonus shares Rs. 1. Pre-paid share capital 100 100+100assessee200 200 2. Reserve 500 500-100assessee400 400 3. Total 600 600 600 22. As observed earlier, the issue of bonus shares by capitalization of reserves is merely a reallocation of company's funds. There is no inflow of fresh funds or increase in the capital employed, which remains the same. If that be so, then it cannot be held that the company has acquired a benefit or advantage of enduring nature. The total funds available with the company will remain the same and the issue of bonus shares will not result in any change in the capital structure....