TaxTMI 
TaxTMI 
2020 (2) TMI 245
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....ances 1,15,89,656/- b) Foreign exchange fluctuation loss 3,39, 41,455/- c) Provision for diminution in value of investments 5,25,600/- 4. That the learned CIT(A)-II has erred in not allowing claim of Rs. 1,00,51,000/- in respect of expenses on the abandoned project. 5. That the learned CIT(A)-II has erred in not allowing the claim of Rs. 3,19,356/- made during the course of proceedings being the amount of employee's contributing towards Provident Fund having been paid before the due date of filing of return. 6. That the learned CIT(A)-II has erred in confirming the charging of interest u/s 234B of the Income Tax Act. 7. The Appellant craves leave for permission to add, amend or alter any ground of appeal at the time of hearing. 3. Apart from the above grounds of appeal, the following additional grounds have been raised by the assessee. Additional grounds of appeal The appellant humbly submits that the following additional grounds of appeal which is purely of legal nature may kindly be admitted. 1. That the authorities below have erred in treating the Sale tax Subsidy of Rs. 42,36,100/- and transport subsidy of Rs. 20,11,023/- receipt from HP Government unde....
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....sallowance u/s 14A of the Act read with Rule 8D(2)(ii) of the I.T. rules is attracted on this issue. 6. So far as the disallowance of administrative expenditure u/s 14A of the Act read with Rule 8D(2)(iii) is concerned, the Ld. counsel for the assessee has relied upon the decisions of the Hon'ble Delhi High Court in the case of 'Joint Investments Private Ltd vs CIT' ITA No.117/2015 dated 25.2.2015 and further in the case of 'ACB India Limited vs ACIT' ITA No. 615/2014 dated 24.3.2015 wherein it is held that for computing the average value u/s 14A of the Act read with rule 8D(2)(iii), only the investment yielding non-taxable income have to be considered and not the entire investment. In view of this, the Assessing Officer is directed accordingly to consider only the investments yielding tax exempt income for computation of disallowance under Rule 8D(2)(iii) of the I.T. Rules. 7. Ground No.2: Vide ground No.2, the assessee has agitated the confirmation of 10% of the disallowance out of deduction claimed u/s 80IC of the Act on the ground of utilization of expertise of management of non-eligible unit in the eligible units at Tahiwal (HP). 8. The Ld. Counsel, at the outset, has s....
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....ions of sub section 8 & 10 to section 801A are not applicable in these circumstances as these provisions refer to transfer of goods and service. While in the 'instant case there is no such transfer of any goods or service and no business has been transacted between the eligible Unit and other Unit of the assessee company which resulted in excess profit to the eligible unit. Unless until any specific benefit is pointed out and expressed in monetary terms, no addition can be made on the basis of conjectures and surmises." I have duly considered the reply of the assessee. It is observed that the exempted unit is using all the services, reputation, goodwill, experience, depots facilities, sharing of staff for sales and distribution, network of established non-exempted units etc. Therefore, the provisions of sub-section 8 & 10 of Section 80IA r.w.s. 14A of Income Tax Act, 1961 are applicable in the case of the assessee. The Assessing Officer during the assessment proceedings of assessment year 2006-07 has observed on this issue in the case of M/s. Cremica Agro Foods Ltd. , which is relevant this year also as follows:- "8. The assessee is running a unit at Tahliwal claiming exemp....
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....eleted the addition based on the decision taken in the case of the assessee for the A.Y. 2006-07 in the Appeal No. 03/ROT/IT/CIT(A)-l/LDH/2016-17 dated 26.10.2016 by holding as under:- "I have considered the facts of the case, the basis of the additions made by the Assessing Officer and the arguments of the AR. The AO has reworked the claim under section80IC between the Tahliwal unit and the Phillaur unit on estimated basis without bringing any evidence on record to show whether there has been any transaction between the two units. The appellant has made the allocation of all common expenses on turnover basis and the AO has failed to mention any expense which has not been considered in the said exercise. Thus, the reducing of the eligible profits to the extent of 10% by the AO without any sound basis is unwarranted and is hereby ordered to be deleted. Further, the basic process is carried out by the appellant is the same whether the production is done for itself or job work. The Hon'ble Punjab and Haryana High Court in the case of CIT vs Impel Forge and Allied industries Ltd 326ITR 27 has held that the assessee is at liberty to manufacture for itself or others which makes n....
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....d all conditions laid down u/s 80IC(2) (a) ( i i ) of the Act and had right ly claimed the deduct ion, while the Assessing Of f icer had wrongly interpreted the provisions of sub-sect ion (8) & (10) of sect ion 80IA of the Act since these sub-sect ions referred to transfer of goods and services to any other business or to any other person while in the case of the assessee there was no transfer of goods or service to any other business or to any other person. I t was pointed out that the assessee had already al located the common expenses incurred to various units on the basis of turnover and, therefore, the denial of deduct ion to the extent of 10% of the profits on the basis of some notional expenses such as knowhow, goodwill , trade name, etc. was highly unjustified. 31. The Ld.CIT(Appeals) af ter considering assessee's submissions held the deduct ion of eligible profits by the Assessing Officer as unwarranted deleting the same by holding that the entire exercise of the Assessing Officer was done on estimate basis without bringing any evidence on record to show whether there was any transact ion between the two units. The Ld.CIT(Appeals) held that the assessee having al located....
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....ingly allowed in favour of the assessee and the disallowance / reduction made by the Assessing Officer on this issue is ordered to be deleted. 9. Ground No.3: Vide ground No.3, the assessee has agitated the action of the CIT(A) in computing book profits u/s 115JB by making the following additions:- a) Provision for doubtful debt and advances 1,15,89,656/- b) Foreign exchange fluctuation loss 3,39, 41,455/- c) Provision for diminution in value of investments 5,25,600/- (a) Provision for doubtful debt and advances : The Ld. Counsel for the assessee has submitted that as per the instructions of his client, he does not press this issue. The disallowance of adjustment made on this issue is accordingly confirmed. (b) Foreign exchange fluctuation loss : The Ld. Counsel for the assessee has submitted that this claim was made in the original return filed under normal provisions of the Act as well as return u/s 115JB of the Act. However, in the revised return, under normal provisions, this claim was not made. However, this claim was duly made in the revised return filed u/s 115JB of the Act. The Ld. counsel has further submitted that in subsequent years i.e. assessment ye....
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....o entertain an additional ground which was not raised before the lower authorities. 11. The Ld. DR, on the other hand, has relied on the findings of the lower authorities. 12. We have heard the rival contentions of the Ld. Authorized Representatives of both the parties. We find that the case laws cited by the Ld. counsel for the assessee are applicable to the issue raised before us. Even the Hon'ble Bombay High Court in the case of "CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd." (2012) 349 ITR 336 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words 'could not have been raised' must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. In view of this, ground No.4 taken by th....
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....surance and provident fund as the contributions had been deposited prior to the filing of the return under section 139(1)." So respectfully following the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to case, the impugned addition made by the AO and sustained by the Ld. CIT(A) is deleted." Since no contrary decision on the above proposition has been cited before us, hence, respectfully following the above decision of the Coordinate Bench, the impugned disallowance is deleted. Ground No. 5 stands allowed. 16. Ground No.6: This ground is consequential in nature and does not require any specific adjudication. 17. Now, we proceed to adjudicate the additional grounds of appeal raised by the assessee. 18. Additional ground No.1: The assessee through this additional ground has claimed that the sales tax subsidy and transport subsidy received by the assessee from HP government is a capital receipt. The Ld. Counsel for the assessee has further submitted that this legal issue has been raised for the first time before this Tribunal. He has further submitted that in identical circumstances this issue was raised in the earlier years also as an add....