TaxTMI 
TaxTMI 
2015 (12) TMI 1825
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....cord. The additional grounds, raised by the assessee, are the same that were raised for the earlier AY i. e. disallowance made u/s. 14A and interest subsidy received under Technology Upgradation Fund Scheme (TUFS). In our opinion the grounds raised by it are legal in nature, therefore, same are being admitted. 2. Assessee-company, engaged in the business of manufacturing of Rayon, carbon black and insulators etc, filed its return of income on30. 09. 2008. The Assessing Officer(AO)has finalised the assessment, u/s. 143(3)of the Act, on 22. 03. 2010 determining the income of the assessee at Rs. 226, 91, 32, 020/-. ITA/3178/Mum/2012: 3. First Ground of Appeal is about deletion of unutilised modvat credit amounting to Rs. 12. 40 crores. We find that we have decided the identical issues against the AO, while deciding the appeal for earlier year(ITA/3703/M/11 & 3634/M/11, dtd. 24. 11. 2015)as under: 14. The First Ground of appeal is about deletion of modvat credit in closing stock. Representatives of both sides agreed that issue was decided against the AO by the order of the Tribunal delivered for A. Y. 2006-07 (ITA/8427&8483/Mum/10dt. 17/09/2014). The relevant portion ....
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....ded 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 dutypaid 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. 1 against the AO. 4. Next ground is about deleting the addition made on account of catalyst and treating the same as capital expenditure. During the assessment proccedings, the AO found that the assessee had claimed an expenditure of Rs. 6. 69 Crores on account of catalyst deployed in t....
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....ue was decided in assessee's favour and the matter was before the High Court for the Asses merit Year 1997-98. It was further submitted that irrespective of the fact that whether the expenditure is held to be revenue or capital, it is not in dispute that the spares and catalysts were a passive or active use during the whole of the year. U/s. 32 only two conditions are to be fulfilled for allowing depreciation i. e. , (a) ownership and (b) its use for the purpose of business. According to the proviso to Section 32, depreciation is to be restricted to 50% if it was acquired during the previous year and put to use for a period of less than 180 days. The assessee was not coming under the limitation according to the proviso. 6. the assessee further submitted that in fact the assessee had made the written submission running to 43 pages which, among other details contained the date of purchase, commercial description of the spare, number of pieces and total value against a particular entry. Out of the total spares for the financial year 1995-96, items that cost less than Rs. 5, 000/- totaled to Rs. 45, 30, 617/-. The assesse also furnished a copy of vouchers/bills covering va....
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....n expenditure to the assessee, the assessee, on the basis of average could make a provision for this expenditure for every year of assessment even if no bill was received in a particular of assessment. As the assessee had failed to claim this expenditure in the earlier assessment year and having failed to discharge this duty of providing for a known expenditure, the assessee could not claim the electricity charges in the subsequent assessment years. Coming to the instant case of the assessee, on facts it is to be seen that the assessee changed the method and started capitalization of the spares and catalysts b cause of the change in the method of accounting standards as prescribed by the ICAI. Coming to the objection of the revenue as to how the spare parts were valued, it is always the case of the assessee that it was always valued at cost and it had never changed this method. One of the objection of the revenue was that there was no certificate nor evidence to show that these spa or catalysts had lost its commercial properties nor that the same had aged. At the time of hearing, we directed the assessee to produce certificate from the competent authority, which has now been placed....
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....epted in the absence of any evidence to the contrary. 23. In view of the above, we allow this ground taken by the assessee. 24. The next effective ground urged by the assessee before us is against the disallowance of interest u/s. 244A on advance tax, being self assessment tax, without taking into consideration the fact as also the law that the phrase 'unless the context otherwise requires' used in the beginning of the definition means that the phrase 'advance tax' and also other phrases defined in section 2(1) are capable of more than one meaning, and as such, self assessment tax would be regarded as 'advance tax' that qualifies for interest uls. 244A of the Act. " Respectfully, following the above order we confirm the order of the FAA and decide ground no. 2 against the AO. ITA/3033/Mum/2012: 5. First ground of appeal filed by the assessee is about upholding a disallowance of 19. 25 crores u/s. 14A of the Act. While deciding the appeal for the AY. 2007-08(supra), we have restored back the issue of disallowance to be made u/s. 14A to the file of the AO. Following the same, AO is directed to decide the issue afresh after affordi....
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....ax was required to be deducted at source in respect of the provision for interest payable made by the assessee which reflected provision for 'interest accrued but not due' in a situation where the ultimate recipient of such 'interest accrued but not due' could not have ascertained at the point of time when the provision is made" In the case under consideration, the assessee had made provisions but had not received the bills, that in the subsequent year the provisions made by it were offered for taxation. Considering these facts and following the orders of the Tribunal in the case of Mahindra & Mahindra Ltd. & Industrial Development Banking Company (supra), we decide ground no. 2 in favour of the assessee. " Following the above, ground no. 5 is decided in favour of the assessee . " Considering the above, second ground of appeal is allowed. 7. Next ground is about disallowance of Rs. 2. 07 crores u/s. 43B(f), being provision made for leave salary. The AR and the DR agreed that identical issue was stands decided in favour of the assessee by the Tribunal by earlier years orders. We find that the Tribunal had dealt the issue as under, while dec....
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.... for the AY. s. under appeal are decided in favour of the assessee-company. In view of the above, ground no. 4 is decided in favour of the assessee. " Respectfully, following the above decision, Ground no. 3 is decided in favour of the assessee . 8. Ground No. 4 deals with reduction of deduction u/s. 80IA on account of allocation of HO expenses, amounting to Rs. 26. 64 lacs. The AR and the DR, before us, agreed that the issue stands decided in favour of the assessee by the order of the Tribunal for the AY. 2006-07 (supra). We are reproducing the relevant portion of the said order and same reads as under: "5. Next ground is about reduction of deduction, amounting to Rs. 31. 32 Lakhs on account of allocation of Head Office (HO) expenses. During the assessment proceedings, the AO found that the assessee had claimed deduction, u/s. 80IA of the Act, in respect of Power Plant of Rayon Division (17. 31 Crores) and Power Plant at Hitech Carbon and Chemical (Rs. 5. 79 Crores), that it had not apportioned any HO expenses in respect of the above units. He directed the assessee to explain the reason for not considering the HO expenses in working the profits of the above....
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....r the AY 2002-03 (supra) and same read as under: "19. Ground No. 9 reads as under: "On the facts and in the circumstances of the cases and in law, the learned AO has erred in reducing the exemption u/s. 10B i) by Rs. 75, 083/- on account of allocation of Head Office expenses to 100% export oriented unit and; ii) by Rs. 32, 289/- on account of allocation of expenses of another division namely, Global Export & Marketing to 100% export oriented unit and iii) by Rs. 25, 943/- on account of interest income earned by 100% export oriented unit; and the CIT(A) has erred in confirming the above disallowance. The learned AO be directed to increase the exemption u/s. 10B and reduce the total income and reduce the book profit u/s. 115JB accordingly. " 20. We find that an identical issue has been considered by the Tribunal in the case of Grasim Industries in ITA Nos. 5630/M/02 & 1865/M/03. The Tribunal in the case of Procter & Gamble Hygiene & Health Care Ltd. in ITA Nos. 1499/M/05 and 1500/M/05 have again considered a similar issue at para-54 of its order directed the AO not to reduce the claim of deduction u/s. 80IB of the Act by allocating Head Office expenses to profits derived fro....
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....chnologies (2 ITAT India 184);SSI Ltd. (85 TTJ 1049) and Biocon Limited. DR supported the order of the FAA. 10. 2. We have heard the rival submissions and perused the material before us. We find that the Special Bench of the Tribunal in the case of Biocon Limited(144ITS215)has decided the issue of ESPO in favour of the assessee in following manner. 11. 3 We, therefore, sum up the position that the discount under ESOP is in the nature of employees cost and is hence deductible during the vesting period w. r. t. the market price of shares at the time of grant of options to the employees. The amount of discount claimed as deduction during the vesting period is required to be reversed in relation to the unvesting/ lapsing options at the appropriate time. However, an adjustment to the income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference the market price at the time of grant of option and the market price at the time of exercise of option. No accounting principle can be determinative in the matter of computation of total income under the Act. The question before the special bench is thus answered....
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....see. " Considering the above, we are deciding ground no. 9 in favour of the assessee. 12. Ground No. 10 is about sale of certified Emission deduction (CER) amounting to Rs. 4. 92 crores. The representatives of both the sides made the same submissions that were made while arguing the case for the AY. 2007-08(supra). 12. 1. We would like to reproduce paragraphs 9. to 9. 3 dealing with the issue and same read as under: "9. Ground No. 10 is with regard to sale of certified emission reduction (CER) Rs. 6, 95, 29, 718/- treated as revenue receipts and liable to tax and to treat the same as capital receipt not chargeable to tax. 9. 1. During the assessment proceedings vide its letter dt. 25. 3. 2009 the assessee submitted it had received Rs. 6. 95crores on sale of CER, that out of abundant caution it had offered the amount as taxable income, that the amount in question was in the nature of capital receipt and was not liable to tax. The AO rejecting the claim of the assessee held that CER was generated in the 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 ass....