TaxTMI 
TaxTMI 
2019 (11) TMI 1434
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....appeal raising following Grounds of appeal: 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 l....
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....n the case of ITO Vs. Dinesh Madhavlal Patel (supra) decided the issue by holding as under: "5. Having considered the rival submissions and having perused the material on 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 B....
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....erty may kindly be given to point out, upon necessary further verifications, and to seek recall the dismissal of appeals and restoration of the appeals in the cases (i) in which it can be demonstrated that the appeals are covered by the exceptions, and (ii) 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, accordingl....
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....IT(A) erred in not allowing the claim of deduction made under section 80IA(4) in respect of the profits of Rs. 64,62,398/- derived from the eligible power generation business through Wind Mill units of the appellant. That on the facts and in circumstances of the case the claim of deduction having 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 yea....
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.... 13. Aggrieved with the finding of Ld. A.O assessee preferred appeal before Ld. CIT(A) but failed to succeed. 14. Now the assessee is in appeal before the Tribunal for Assessment Year 2012-13. 15. At the outset Ld. Counsel for the assessee submitted that assessee's claim of being eligible for deduction u/s 80IA(4) of the Act is not disputed as in the subsequent assessment years such claim 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 she....
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....We have heard rival contentions and perused the records placed before us and also carefully gone through the judgments referred and relied by both the parties. 18. As regards the issue of eligibility of deduction u/s 80I(4) of the Act at Rs. 64,62,398/- comprises of three sub-issues:- (i) Whether the Ld. A.O is duty bound to compute the correct income of the assessee even if the claim has not been made in the return of income but subsequently made during the course of assessment proceedings along 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) o....
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....on of India which has overrinding and superseding effect over the all prevalent laws including Income Tax Act. That in the case of appellant, due to the rejection of a legitimate claim, the correct income has not been ascertained and the purpose of assessment has been defeated. 21A. Ld. Counsel for the assessee also submitted that the appellant's ignorance to claim correct deduction in the return of income cannot be taken to the advantage by the assessing officer and it is the benevolent duty of assessing officer to assess the correct income of a 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....
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....etze India the claim cannot be accepted. The CIT(A) has also stated that when the bad debts are actually written off in the books of accounts as irrecoverable the said claim is allowable to the appellant u/ s 36(1)(vii) read with section 36(2). Since the amount of Rs. 11,90,575/- was actually written off from the debtors account in this year, the claim made by the appellant is a legitimate claim and is allowable. The AO is bound to assess the correct income and for this purpose the AO may grant relief suo-moto or on being pointed out by the assessee in the course of assessment 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 applicatio....
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.... within the specified time but after the expiry thereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the objects sought to be achieved by prescribing the time-limit, it would be the duty of the officer to consider the documents, even submitted belatedly. Thus, this decision also supports the view that even if the prescribed form is submitted belatedly, the AO has to proceed on the basis of the claim made. 9. We, therefore, hold that in the facts and circumstances of the case, the Tribunal was justified in law in holding that the claim of the assessee under 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)....
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....oss total income of higher amount of Rs. 2,56,37,975/-, but in view of the fact that amount computed under the head 'business income' by aggregating profits and losses of all business is loss of Rs. 64,49,445/-. 9. Sub-section (1) of section 80-IB provides that where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (lIB), there shall be allowed, in computing the total income of the assessee a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. Sub-section (2) states that this section applies to 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 assess....
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....sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made." 12. Thus, a reading of the above provisions shows that for determining the amount which qualifies for deduction u/s 80lB(1), one has to compute the income from eligible business as if the eligible business was the only source 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 de....
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....aggregating income from all the different business of the assessee which is the amount assessable as business income of the assessee. 15. We are reminded of the celebrated judgment rendered by the Hon'ble Supreme Court in the case of CIT v. Canara Workshop (P.) Ltd. (1986) 161 ITR 320 in which the assessee was engaged in the manufacture of automobile spares. The products manufactured by it were covered by the list in the Fifth Schedule to the Income-tax Act. During the relevant period, the assessee commenced another activity, that is the manufacture of alloy steels, which was also an industry covered in the Fifth Schedule. The assessee sustained loss in the alloy steel industry but profit in the other industry. It claimed deduction in respect of 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 a....
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....dbhav Engineering Ltd V/s DCIT (2013) 38 CCH 0105 (supra) observing as follows:- "13. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The undisputed facts of the case in the years under appeal is that the assessee claimed deduction u/s.80-IB of the Act. The AO computed the claim for deduction allowable u/s.80-IA to the assessee by allocating the losses of other units against the profits of the eligible units in proportion to the turnover of the assessee. On appeal, the CIT(A) confirmed the action of the AO on the ground that in the appeal for A Ys 2003-04 & 2004-05,the CIT(A) has confirmed the action of the AO. The Id.AR has submitted that due to smallness of the amount involved, the assessee 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....
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....ee) he shall be entitled to claim deduction u/ s 80JA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfilment of conditions prescribed in the section. Hence) the term 'initial assessment year) would mean the first year opted for by the assessee for claiming deduction u/ s 80JA. However) the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years) as the case may be and the period of claim should be availed in continuity." 31. Further the judgment of Hon'ble High Court of Himachal Pradesh in the case of CIT vs. Deepak Gupta and Rajiv Sharma(supra) relied by the Ld. DR is not applicable since the facts of the instant appeals are distinguishable. 32. We therefore 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 th....
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....t in the case of Chambal Fertilizers and Chemicals Limited D.B.I.T.A No.52/2018 dated 31.7.2018. (ii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs. Eicher Motors Ltd (2007) 293 ITR 0464. (iii) Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs Bhopal Sugar Industries Ltd(1998) 233 ITR 0429. (iv) Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd Vs. CIT (1993) 199 ITR 0351. 37. Per contra Ld. Departmental Representative strongly opposed the submissions of the Ld. Counsel for the assessee and contended that the nature of the education cess is the same as for taxes and surcharge levied on the income of the assessee and thus are of the personal nature and not deductable as an expenditure. 38. We have heard rival contentions 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....
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.... Vs/ Union of India & Ors (1962) 2 SCR 644, it has been held as under:- "19. There is another answer to the point of res judicata raised on behalf of the petitioners, relying upon the decision of the Punjab High Court in Installment Supply Ltd, New Delhi v State of Delhi MANU/PH/0068/1956. It is well settled that in matters of taxation there is no question of res judicata because such year's assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period. (See the decision in the House of Lords in Society of Medical Officers of Health v. Hope (Valuation Officer) (1960) A.C. 551 approving and following the decision of the privy Council in Broken Hill Proprietary Company Limited v Municipal Council of Broken Hill (1925) A.C. 94. In Godrej & Boyce Manufacturing Company Ltd vs. Dy. Commissioner of Income Tax & ors (2017) 247 Taxman 361 (SC), it has been held as under:- "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 i....