TaxTMI 
TaxTMI 
2019 (11) TMI 1434
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.... ITA No.801/Ind/2018 Assessment Year 2012-13 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to Rs. 57,94,105/- in respect of computing arm's length price for the corporate guarantee given by the appellant on behalf of the AE. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance of Rs. 3,19,635/- made u/s 14A of the Act. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the disallowance out of colliery & repairs and maintenance expenses of Rs. 6,03,938/-. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal. ITA No.802/Ind/2018 Assessment Year 2013-14 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition made on account of guarantee commission fees amounting to Rs. 61,81,250/- in respect of computing arm's length price for the corporate guarantee given by the appellant on behalf of the AE. 2. Whether on the f....
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.... record, we do not have slightest of hesitation in holding that the concession extended by the CBDT not only applies to the appeals to be filed in future but it is also equally applicable to the appeals pending for disposal as on now. Our line of reasoning is this. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular no 3 of 2018 (and subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. This is evident from the following extracts from the circular dated 8th August 2019: 2. As a step towards further management of litigation. it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly. the table for monetary limits specified in Para 3 of the Circular shall read as follows: S.No. Appeals/SLPs in Income-tax matters Monetary Limit (Rs.) 1 Before Appellate Tribunal 50,00,000 2 Before High Court 1,00,00,000 3 Before Supreme Court 2,00,00,000 3. Further, with a view to provide parity in filing of appeals in scenarios where sep....
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.... which are inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds Rs. 50,00,000. None opposes this prayer; we accept the same. We make it clear that the appellants shall be at liberty to point out the cases which are wrongly included in the appeals so summarily dismissed, either owing to wrong computation of tax effect or owning to such cases being covered by the permissible exceptions- or for any other reason, and we will take appropriate remedial steps in this regard. 9. In the light of the above discussions, all the appeals stand dismissed as withdrawn. As the appeals filed by the Revenue are found to be non-maintainable and as all the related cross-objections of the assessee arise only as a result of those appeals and merely support the order of the CIT(A), the cross objections filed by the assessee are also dismissed as infructuous. Ordered, accordingly. 10. As we part with the matter, we must place on record our deep appreciation to our own team which has painstakingly identified all these low tax effect appeals in the long weekend and less than two working days, to the Principal Chief Commissioner of Income....
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....ving been made during the course of assessment proceedings is legally allowable to the appellant, which has also been allowed in subsequent years, is prayed to be now allowed. 2. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. Assessee has also raised following additional Ground; 3. That in the facts and in the circumstances of the case and in law the appellant is entitled to deduction of cess of Rs. 18,38,280/- incurred during the year under consideration which is prayed to be now allowed" C.O.No.23/Ind/2019 Assessment Year 2013-14 1.That on the facts and in the circumstances of the case and law,the respondent assessee is legally entitled to the claim deduction of cess paid of Rs. 32,19,899/- for the year under consideration, which is prayed to be now allowed. 2. The assessee craves leave to add, to alter, modify, substitute and/or withdraw all or any of the grounds of appeal at any stage of the appellate proceedings. C.O.No.24/Ind/2019 Assessment Year 2014-15 1.That on the facts and in the circumstances of the case and....
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....has been allowed. However as regards the issues raised in the appeal that whether legitimate claim can be denied by the Ld. A.O merely for not filing revised return of income and not filing the audit reports in support of the deduction and also with regard to the issue that whether the deduction u/s 80IA(4) is to be granted for each unit rather than consolidated profits of all the eligible units run by the assessee out of which for few of the units assessee has not opted the initial assessment year for claiming deduction, all are squarely covered by the following various judicial pronouncements deciding in favour of the assessee:- For the proposition that the rightful claim made during the course of assessment proceedings cannot be denied by taking recourse of revised return and shelter of the case of Goetz India. It is the benevolent duty of Assessing Officer to assess the correct taxable income of a person as per law even if the assessee fails to claim the same in the return of income. (i) Hon'ble Apex Court in the case of CIT vs. Mahalaxmi Sugar Mills Co. Ltd 58 CTR 0138. (ii) Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders (P) Ltd ....
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.... with necessary documentary evidence in the form of audit report without filing revised return. (ii) That whether the assessee should be denied the benefit of deduction u/s 80IA(4) of the Act just for not making the claim in the regular return of income and not filing revised return of income even if the audit report in Form 10CCB is filed during the course of assessment proceedings along with making the claim. (iii) Whether the deduction u/s 80IA(4) is to be provided for each eligible unit or the losses of other eligible units should be first set off against the profits of other units and the balance profit (if any) is only eligible for deduction u/s 80IA(4) of the Act. 19. As regards the first sub issue Ld. Counsel for the assessee invited out attention to Circular issued by the Central Board of Direct Taxes circular No.14(XL-35) dated April 11,1955, which states as under: Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxp....
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....person as per law even if the assessee fails to claim any benefit legitimately due to him. 22. Hon'ble Apex court in the case of CIT vs. Mahalaxi Sugar Mills Co Ltd. 58 CTR 138 (enclosed at page 01 to page No.09 of the Case law Paper book). Relevant portion held that: " There is a duty cast on the ITO to apply the relevant provisions of the Indian IT Act for the purpose of determining the true figure of the assesee's taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set off, in cannot relieve the ITO of his duty to apply s. 24 in an appreciate case". 23. We also find that the Co-ordinate Bench, Indore in the case of ACIT V/s Admanum Finance Limited (supra) has dealt with similar deciding in favour of the assessee after relying on the judgment of Hon'ble Punjab & Haryana High Court and after considering and distinguishing the judgment of Hon'ble Supreme Court of India in the case of Goetze India Ltd V/s CIT (2006) 284 ITR 323 (SC) observing as under:- "128. We have heard the rival contention of both the parties. Looking to the facts and circumstances of the case, we find that the assessee treated debtors....
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....ssessment proceedings. Hon'ble Apex Court held that; 129. We find that it has been time and again held by various courts that legitimate claims of the assessee should be allowed even if raised during the assessment proceedings. In the case of CIT vs. Ramco International in (2011) 332 ITR 306. The Hon'ble Punjab and Haryana High Court has held that:- "Deduction under section 80-IB-Allowability-Claim not made in return - Assessee having duly furnished the documents and submitted Form No. 10CCB during the assessment proceedings, claim for deduction under section 80-IB by way of an application was admissible There was no requirement for filing any revised return - No substantial question of law arises - Goetze India Ltd. Vs. CIT (2006) 204 CTR (SC) 182 (2006) 284 ITR 323 (SC) distinguished".» 130. In view of the above discussion and also considering the uncontroverted finding of the CIT(A) that the similar claim of bad debts made by filing the revised return for immediately succeeding year i.e. AY 2011-2012 has been accepted In the assessment proceedings for that year and also considering the legal position, we hold that the CIT(A) has rightly allowed the said claim o....
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....der s. 80-1 is justified even if he had not filed the audit report in Form No. 10CCB along with the return. We, therefore, answer the question against the Revenue and in favour of the assessee. 26. As regards to third sub issue relating to deduction u/s 80IA(4) of the Act raised before us that whether before allowing deduction u/s 80IA(4) of the Act, profit and loss of each unit needs to be considered on individual basis or consolidated profit & loss of all the eligible units basis, we find that assessee runs three wind mill units, one at Jodha, (Rajasthan) and two at Shajapur, (Madhya Pradesh). Out of the three units which are eligible for deduction u/s 80IA() of the Act assessee has opted Assessment Year 2012-13 as initial assessment year for claiming deduction u/s 80IA(4) of the Act for only Jodha unit, (Rajasthan). For the other two units assessee has not opted for deduction u/s 80IA(4) of the Act since post depreciation their were losses, Ld. A.O combined the profit and loss of all the three eligible units which resulted in loss due to which no deduction u/s 80IA(4) of the Act was allowed. 26A. Ld. Counsel for the assessee contended that the option of choosing initial assess....
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.... any industrial undertaking which fulfils all the conditions stipulated in this sub-section. Sub-section (4) of section 80-IB states that "the amount of deduction in the case of an industrial undertaking in an industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter. ". "In the instant case, it is not in dispute that the assessee has satisfied all other requisite conditions making the assessee eligible for deduction. On a cursory look at subsection (4), it is apparently borne out that the amount of deduction is available in respect of the profits and gains derived from an industrial undertaking. If there is no profit from an industrial undertaking obviously there cannot be any question of allowing deduction under this section. Equally if there is a loss in an industrial undertaking in that case again there will not be any point in claiming deduction under this section. As this sub-section provides for granting deduction on the profits and gains derived from "such industrial undertaking", it is clear point....
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....urce of income of the assessee. In other words, the income or loss from other business or other activities are to be ignored for the purpose of determining the amount which is eligible for deduction u/s 80IB(l) of the Act. 13. Section 80A(1) provides that in computing total income of the assessee, there shall be allowed from the gross total income the deductions specified in sections 80-C to 80-U. Sub-section (2) further provides that the aggregate amount of deductions under this Chapter shall not in any case exceed the gross total income of the assessee. The gross total income has been defined under section 80B (5) to mean 'the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter.' It therefore follows that the primary step for considering the grant of deductions under Chapter VI-A is to determine the gross total income, which, in turn, is computed by aggregating the income from all the sources in this year after adjusting the losses of the current year under any head. The brought forward loss or unabsorbed depreciation etc., are also reduced. The resultant figure is determined as gross total income. To put i....
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.... the profit without reducing the loss from the alloy steel industry. The ITO held that the assessee will be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture. The High court decided the point in assessee's favour. The revenue assailed the judgment of the Hon'ble High Court before the Hon'ble Supreme Court. While affirming the view taken by the Hon'ble High Court, it was held that in computing the profits for the purpose of deduction under section 80E, the loss incurred by the assessee in the manufacture of alloy steels (a priority industry) could not be set off against the profits of the manufacture of automobile ancillaries (another priority industry) and hence the assessee was entitled to deduction at the specified rate on the entire profits of the automobile parts industry included in the total income without deducting there from the loss in the alloy steel manufacture. Facts involved in the instant appeal are mutatis mutandis similar. 16. The Hon'ble Andhra Pradesh High Court in the case of CIT v. Visakha Industries Ltd. (2001) 251 ITR 471 has also take....
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....see though filed the appeal before the Tribunal in AYs 2003-04 & 2004-05 but had withdrawn the same and, therefore, the appeals of the assessee were dismissed as withdrawn. Thus, as the Tribunal has dismissed the appeals of the assessee for want of prosecution, it cannot be a decision on merits which can be applied in the subsequent years in the case of the assessee. We find force in the argument of the Id.AR of the assessee since the appeal of the assessee for AYs 2003-04 & 2004-05 was dismissed in limine by the Tribunal, therefore the ratio in the said decision is not a binding precedent to be applied to the assessee for the subsequent years on the same issue. We find that the issue as pointed out by the Id.AR of the assessee is covered in favour of the assessee by the decision of Chennai Bench of the Tribunal in the case of M/s. Shriram Properties Pvt.Ltd. vs. ACIT (supra), wherein it was held that the profit derived from a particular eligible Industrial undertaking is qualified for deduction u/s.80IB without reduction of loss suffered by any other eligible industrial undertaking, subject to gross total income of assessee. Thus, this ground of the appeal of the assessee is allow....
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....e respectfully following the above judicial pronouncements and in the given facts and circumstances of the case are of the considered view that Ld. A.O should have accepted the legitimate claim made by the assessee claiming deduction u/s 80IA(4) of the Act, for the eligible undertaking namely wind mill at Jodha, Rajasthan and also accepted the audit report filed for making such claim during the course of assessment proceeeings. Further since the assessee opted claim u/s 80IA(4) of the Act for only Jodha unit, the loss of other two eligible undertakings were not required to be set off against the profits of Jodha unit since assessee had opted Assessment Year 2012-13 as initial assessment year for claiming deduction u/s 80IA(4) of the Act only for Jodha unit and not for other two units at Shajapur (M.P.). Ld. A.O is therefore directed to allow the deduction u/s 80IA(4) of the Act at Rs. 64,62,398/-. Accordingly Ground No.1 raised by the assessee for Assessment Year 2012-13 is allowed. 33. Now we take up common issue raised by the assessee in Cross Objections No.23 & 24 for Assessment Years 2013-14 and 2014-15 and in additional grounds of appeal No.3 for Assessment Year 2012-13 again....
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....entions and perused the records placed before us and carefully gone through the judgments relied by the Ld. Counsel for the assessee. The other issue commonly raised by the assessee for Assessment Year 2013-14 is that whether the education cess paid by the assessee along with the income tax and surcharge is deductible as expenditure u/s 37 or it is not deductible as per provisions of Section 40(a)(ii) of the Act which refers to the 'amount not deductible'. 39. We observe that similar issue came up before the Hon'ble High Court of Rajasthan in the case of Chambal Fertilizers and Chemicals Limited (supra) wherein Hon'ble High Court referred to Circular No. No.91/58/66-ITJ(19) dated 18.5.1967 and also various judgments. The relevant extract of the judgment of the Hon'ble High Court in this case is mentioned below:- (i) Hon'ble High Court of judicature for Rajasthan Bench, Jaipur in the case of CIT, Kota V/s Chambal Fertilizers and Chemicals Ltd, Kota D.B. IT No.52/2018 order dated 31.7.2018 raised following substantial question of law:- "3.Whether under the facts and circumstances of the case the Ld. ITAT has not erred in holding that the education cess is a disallo....
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....der:- "33.While answering the said question this Court considered the object of insertion of Section 14A in the Income Tax Act by Finance Act, 2001, details of which have already been noticed. Noticing the objects and reasons behind introduction of Section 14A of the Act this Court held that: Expenses allowed can only be in respect of earning of taxable income. In paragraph 17, this Court went on to observe that: Therefore, one needs to read the words "expenditure incurred" in Section 14A in the context of the scheme of the Act and, if so read, it is clear that it disallows certain expenditure incurred to earn exempt income from being deducted from other income which is includible in the "total income" for the purpose of chargeability to tax. The views expressed in Walfort Share and Stock Brokers P.Ltd (supra), in our considered opinion, year again militate against the plea urged on behalf of the assessee. 34. For the aforesaid reasons, the first question formulated in the appeal has to be answered against the Appellant-Assessee by holding that Section 14A of the Act would apply to dividend income on which tax is payable Under Section 115-0 of the Act." The Hon'ble Hi....