TaxTMI 
TaxTMI 
TaxTMI 
2013 (10) TMI 1535
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....A) III, Mumbai, dated 20.12.2004. Since the appeals arise out of the same order, we are passing a consolidated orders for the sake of convenience and brevity. Assessment Year 2000-01 ITA No. 5421/Mum/2005: Assessee's appeal: The following grounds have been taken: "(1) That, on the facts and in the circumstances of the case and in law, the learned Assistant Commissioner of Income Tax (herein after referred to as ACIT) has erred in making disallowance of ₹ 5,85,508/-being rural development expenditure incurred by the appellant and learned Commissioner of Income Tax (Appeals) (herein after referred to as CIT (A)) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow the claim of ₹ 5,85,508/-and to reduce the total income accordingly. (2) That, on the facts and in the circumstances of the case and in law, the learned ACIT has erred in disallowing ₹ 12,950/being depreciation claimed by the appellant on roll over charges and learned CIT (A) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow the Depreciation of ₹ 12,950/- on roll over charges and to reduce the total income ac....
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....oans taken for new projects/ expansion / modernization during assessment years 1994-95 to 1999-2000 is revenue expenditure, however, if it is held in those years that the said expenditure is not revenue expenditure ,the appellant claims that the said expenditure be capitalized to the actual cost of fixed assets and depreciation be allowed on the same and to reduce the total income accordingly". 3. Ground no. 1 pertains to disallowance of ₹ 5,85,508/-, being expenditure incurred on rural development. 4. At the time of hearing, the Senior Counsel submitted that the issue has been in continuance since assessment year 1992-93. When the issue reached the ITAT, it was restored to the AO and in all the subsequent years, the issue has been held by the ITAT in favour of the assessee. The Senior Counsel submitted that last in the series of orders has been in ITAs No. 6668 & 6669/Mum/2003, wherein the coordinate Bench in the assessee's own case directed the AO to allow the expense, if the AO had allowed the same in assessment year 199293, to give effect to the order of the coordinate Bench on the issue, travelling to subsequent years upto 1995-96, facts being identical, as in the pr....
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....ther miscellaneous expenses, but disallowed the rest, "as there was no cogent reason to allow the same". 18. The AR pointed out that the issue pertains to buy back of shares and has nothing to do with the capital restructuring of the capital base of the company. He placed reliance on the decision of Bombay High Court in Burmah Trading Corpn. Ltd. vs CIT reported in 145 ITR 793 and on the decision of Hon'ble Bombay High Court in the case of CIT vs Hindalco Industries Ltd., wherein the Hon'ble Bombay High Court held, "It must be clarified that the expenditure does not include the price paid to the shareholders for buying back the shares. It merely relates to the expenditure incurred in connection with the carrying out of the buy back scheme. … The buy back however, would not in any manner enhance the capital structure of the respondent. If anything there is an outflow of capital. As we noted earlier, the respondent has not claimed a deduction qua the outflow. It has claimed a deduction in respect of the expenditure incurred in connection with the process. There is no increase in the capital base of the respondent and the expenses incurred were in connection with the ex....
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....pellant prays that the ("AO") be directed to: i. Exclude from taxable profits, the sales tax exemption benefit of ₹ 7,55,70,408/-, which is included in Sales and which is taxed in the assessment order as part of profits of the business; and ii. To treat the same as capital receipt not chargeable to tax". The AR pointed out that in earlier years as well, the issue was taken up as additional ground and the issue had been restored to the file of the AO. He, therefore, prayed, like wise, the additional ground be admitted. 29. DR strongly objected to the allowability of additional ground. 30. On hearing and on going through the orders of the preceding years, the coordinate Bench has allowed the admission of additional ground and we find that the same has been restored to the file of the AO. 31. For the sake of continuance and in the interest of justice, we also admit the additional ground and direct the AO to adjudicate on the issue as per law and relying on the decisions of the DCIT vs Reliance Industries Ltd. reported in 82 TTJ 765 (Mum-SB), as done by the coordinate bench in ITAs No. 6668 & 6669/Mum/2003, needless to mention that adequate and reasonable opportunit....
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.... ""2.9 The ground No.9 is regarding disallowance of ₹ 19,05,496/- under section 40A (9). The said expenditure had been incurred by the assessee on payment made to schools at Veraval and Malkhed wherein the children of the employees of the company were studying. The AO disallowed the expenditure under section 40A(9). The said section provides that no deduction could be allowed in respect of any sum paid by the assessee as an employer towards setting up or formation of or as contribution to any fund/ trust, company, association of persons, body of individuals, society registered under the Societies Registration Act or other institution for any purpose except wheresum is so paid for the purposes and to the extent provided for under clause (iv) or clause (v) of sub section (1) of section 36 or as required by or under any other law for the time being in force. The assessee argued that provisions of section 40A(9) were not applicable and the expenditure was allowable as revenue expenditure under section 37(1). CIT(A) however following the decision in assessment year 1994-95 confirmed the disallowance. Aggrieved by the said decision the assessee is in appeal. 2.9.1 We have heard ....
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....for which they were issued. In other words, the contractual terms of issue of the debentures were not fulfilled and there was a novation of contract between the Assessee and the debenture holders. In such circumstances, we are of the view that the year in which the expenditure in the form of premium redemption of debentures should be allowed. We order accordingly. Gr. No.4 raised by the Assessee is allowed". 47. We find that the issue is squarely covered by the decision in the case of Grind Well (supra), we, therefore, respectfully following the decision of the coordinate Bench, sustain the order of the CIT(A) and reject the decision of the AO on the issue. 48. Ground no. 4 is rejected. 49. Ground no. 5 pertains to allowance of expenditure on acquisition of marketing and technical know-how of ₹ 18,67,22,219/- as revenue expenditure. 50. In the assessment proceedings, the AO bifurcated the expenditures as technical know-how expenses and marketing knowhow expenses at ₹ 14.05 crores and 5.61 crores respectively and allowed the same to be as deferred revenue expenses to be written off in 5 years. 51. The CIT(A) accepted the submissions of the assessee and allowed ....
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....order of the learned ACIT. The learned ACIT be directed to allow the claim of ₹ 5,72,764/- and to reduce the total income accordingly. (2) That, on the facts and in the circumstances of the case and in law, the learned ACIT has erred in disallowing ₹ 9,731/- being depreciation claimed by the appellant on roll over charges and learned CIT (A) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow the Depreciation of Rs. ₹ 9,731/- on roll over charges and to reduce the total income accordingly. (3) That, on the facts and in the circumstances of the case and in law, the learned ACIT has erred in disallowing ₹ 19,20,39,222/- being deduction claimed by the appellant under section 80HHC [read with Circular No. 680 dated 21.2.1994] from MAT income as per provisions of Sec 115JB calculated based on book profit and learned CIT (A) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow the deduction of ₹ 19,20,39,222/- claimed by the appellant under section 80HHC [read with Circular No. 680 dated 21.2.1994] and to reduce the total income under section 115JB accordingly. (4) That....
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..... 62. Ground no. 1 is thus allowed. 63. Ground no. 2 pertains to disallowance of ₹ 9,713/- being depreciation on roll over charges. 64. The expenditure has been allowed as revenue expenditure, thus this ground becomes infructuous in so far as the instant appeal is concerned. 65. Ground no. 2 is thus, rejected. 66. Ground no. 3 pertains to disallowance of ₹ 19,20,39,222/- being deduction claimed under section 80HHC on MAT provisions. 67. At the time of hearing, the Senior Counsel submitted that the issue is squarely covered by various decision, as referred to in the synopsis filed. The Senior Counsel further submitted that in the latest decision in the case of CIT vs Bhari Information Tech. Sys. P. Ltd., reported in 340 ITR 593, Hon'ble Supreme Court held, "In the present case, we are concerned with section 80HHE which is referred to in the Explanation to section 115JA, clause (ix). In our view, the judgment of the Special Bench of the Tribunal in Syncome Formulations squarely applies to the present case. The Hon'ble Supreme Court, after upholding the decision of the Special Bench in Syncome Formulations, held, We see no reason to interfere with the judgment.....
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.... in various years, allowing the expense under section 36(1)(iii) and also we have held the issue in this order itself in ITA No. 5421/Mum/2005, following the same, we hold that in the instant appeal, the ground is infructuous, hence rejected. 78. In addition to the above, the assessee has raised additional grounds of appeal, which are as follows: "1. On the facts and in the circumstances of the case and in law, the learned AO ought to have allowed 100% of the export profit as deduction under section 80HHC from book profits (ignoring the subsection (1B) of section 80HHC), calculated on the basis of adjusted books profits under section 115JB". 79. Additional Ground no. 1: The issue is identical as that in assessment year 2000-01, wherein we have restored the issue back to the file of the AO, as has been done in the preceding years by the coordinate Benches in the case of the assessee. For the sake of consistency, we restore the issue to the file of the AO, who shall adjudicate the issue afresh in light of the decisions of DCIT vs Reliance Industries Ltd. reported in 82 TTJ 765 (Mum SB), needless to mention that adequate and reasonable opportunity shall be given to the assessee....