AI Drafter 
TaxTMI 
TaxTMI 
2019 (6) TMI 1526
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....sessment was originally completed under section 143(3) of the Income-tax Act, 1961 (for short "the Act") vide order dated 22nd March 2005, assessing the total income at Rs.nil and book profit at Rs. 75,52,70,710. Subsequently, the Assessing Officer re-opened the assessment under section 147 of the Act. In the course of re-assessment proceedings, the Assessing Officer noticing that the assessee has debited an amount of Rs. 23,03,48,610, to the Profit & Loss account towards VRS expenses called for necessary details and also asked the assessee to explain as to why it should not be disallowed. In response, it was submitted by the assessee that the assessee has claimed the deduction in terms of section 35DDA of the Act. The Assessing Officer, however, did not find merit in the submissions of the assessee. He observed, though the assessee had claimed deduction under section 35DDA of the Act towards VRS expenses of Rs. 11,03,45,554, being 1/5th of Rs. 55,17,27,077, However, it has debited an amount of Rs. 23,03,48,610, to the Profit & Loss Account. Alleging that the assessee was unable to prove with supporting evidence that the VRS expenses amounting to Rs. 23,03,48,610, has been added to....
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....t as per clause (c) to Explaination-1 to section 115JB(2) of the Act, it has to be added back for computing book profit. Accordingly, he added back the said amount to the book profit computed under section 115JB of the Act. The assessee challenged the aforesaid decision of the Assessing Officer before the first appellate authority. 10. Learned Commissioner (Appeals) relying upon the Special Bench decision of the Tribunal, Kolkata Bench, in JCIT v/s Usha Martin Industries Ltd., [2007] 104 ITD 249 (Kol.) and the decision of the Tribunal, Mumbai Bench, in Maharashtra State Electricity Board v/s JCIT, [2002] 82 ITD 422 (Mum.), held that the provision for bad and doubtful debt and advances is not a liability of the assessee but diminution in value of the asset. Therefore, Explanation-1(c) of section 115JB(2) of the Act would not be applicable. Accordingly, he directed the Assessing Officer not to add the amount while computing the book profit under section 115JB of the Act. 11. The learned Departmental Representative submitted, as per clause (g) to Explanation to section 115JA r/w clause (i) of Explanation-1 to section 115JB(2) of the Act, the amounts set aside as provision for di....
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....d Departmental Representative that as per clause (i) to Explanation-1 of section 115JB(2) of the Act, the Assessing Officer can make such adjustment, we are of the view that this was neither the case before the Assessing Officer nor before learned Commissioner (Appeals).Since, at the time of completion of the assessment proceedings such provision was not in the statute book, therefore, applicability of such provision has never been examined vis-a-vis the relevant facts. That being the case, at this stage we cannot entertain a completely new plea taken by the Revenue on the issue. Therefore, respectfully following the decision of the Tribunal in assessee's own case as referred to above, we uphold the decision of the learned Commissioner (Appeals) on this issue. Ground is dismissed. 14. In ground no.3, the Revenue has challenged the decision of learned Commissioner (Appeals) in directing the Assessing Officer to allow assessee's claim of deduction under section 80HHC of the Act from the book profit computed under section 115JB of the Act. 15. Brief facts are, in the course of assessment proceedings the Assessing Officer noticed that while computing book profit under section ....
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....Representative that the aforesaid Special Bench decision is no more a good law in view of the decision of the Hon'ble Jurisdictional High Court in Ajanta Pharma Ltd. (supra). We are unable to accept the aforesaid contention of the learned Departmental Representative for the following reasons. The Hon'ble Supreme Court in Bhari Information Technology Systems Pvt. Ltd. (supra), has approved the view taken by the Special Bench decision of the Tribunal in Syncom Formulations India &Ors. (supra). Further, in case of KEC International Ltd. (supra), the Tribunal following the aforesaid decision of the Hon'ble Supreme Court has directed the Assessing Officer to compute deduction under section 80HHC of the Act on the basis of adjusted book profit and not on the basis of profit computed under the normal provisions of the Act. In view of the aforesaid, we do not find any reason to interfere with the decision of the learned Commissioner (Appeals). Ground raised is dismissed. 20. In ground no.4, the Revenue has challenged the decision of the learned Commissioner (Appeals) in directing the Assessing Officer to allow set-off of brought forward loss and unabsorbed depreciation for t....
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....tional High Court and Hon'ble Delhi High Court. Learned Commissioner (Appeals) has also observed that the dispute between the assessee and the Department is only with regard to the appointed date and whether the scheme becomes operative from 31st March 2001. It is further noticed that while allowing assessee's claim, learned Commissioner (Appeals) has relied upon the ratio laid down by the Hon'ble Supreme Court in case of Marshall Sons & Co. (supra). As per the aforesaid decision, the date of merger is from the appointed date and not the date on which the High Court granted its approval. In our view, as per the ratio laid down by the Hon'ble Supreme Court in assessee's claim of set-off of accumulated loss and unabsorbed depreciation has to be allowed from the appointed date of merger in terms of section 72A of the Act. That being the case, we do not find any infirmity in the decision of learned Commissioner (Appeals) on the issue. Accordingly, the ground raised is dismissed. 26. Grounds no.5 and 6 being general in nature do not require adjudication. 27. In the result, Revenue's appeal is dismissed. C.O. no.83/Mum./2013 - By Assessee [Arising out of ITA no.6501/....
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...., there is a difference between entrance fee and subscription fee. He submitted, any payment made towards entrance is of capital nature, hence, not allowable as expenditure. 36. In rejoinder, the learned Authorised Representative drawing our attention to the material placed in the paper book submitted, these are membership renewal fee, hence, cannot be considered as capital expenditure. 37. We have considered rival submissions and perused material on record. The dispute is with regard to allowability of club expenditure incurred by the assessee towards its employees. While the assessee has claimed it as revenue expenditure, the case of the Revenue is, since the expenditure incurred is towards subscription for acquiring the membership of the club it is capital in nature, hence, not allowable. Keeping in view the aforesaid factual position, we have to examine the allowability of the expenditure. The Hon'ble Supreme Court in United Glass Mfg. Co. Ltd. (supra), has held that club membership fee for employees incurred by the assessee is allowable as business expenditure under section 37 of the Act. Further, the Hon'ble Supreme Court has also held that even otherwise also, ....
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....Hon'ble Jurisdictional High Court in Tops Security Ltd. (supra) has attained finality as the SLP filed by the Revenue has been dismissed by the Hon'ble Supreme Court. 43. The learned Departmental Representative relied upon the order of the Assessing Officer. 44. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. Undisputedly, the amount in dispute represents service tax which remains to be paid by the assessee. It is the contention of the assessee that service tax is payable only on receipt from consumer of such service. It is observed that the Hon'ble Jurisdictional High Court in Tops Security Ltd. (supra) following its earlier judgment held that provision of section 43B of the Act does not impose liability to pay service tax before actual receipt of the fund in the account of the assessee. The Hon'ble Jurisdictional High Court held that liability to pay service tax into the treasury will arise only upon the assessee receiving the fund and not otherwise. Further, in Knight Frank India Pvt. Ltd. (supra), the Hon'ble Jurisdictional High Court held that since the assessee did not c....
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....yees are not identified. Therefore, the assessee could not have deducted tax at source in the absence of the details of the payees. He submitted, in the subsequent year, when the amount is actually paid the assessee deducts tax at source and entries were made in the books of account reversing the provision made earlier. The learned Authorised Representative submitted, in assessee's own case for the assessment year 2006-07, the Tribunal has decided identical issue. Further, he relied upon the following decisions:- i) Alstom own's ITAT order in A.Y. 2006-07; ii) Industrial Development Bank of India v/s ITO; iii) Apollo Tyres Ltd v/s DCIT, [2017] 78 taxmann.com 195 (Del.); and iv) Pfizer Ltd v/s ITO, ITA no.1667/Mum./2010, etc., dated 31.10.2012. 48. The learned Departmental Representative relied upon the observations of learned Commissioner (Appeals) and the Assessing Officer. 49. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. The specific contention of the learned Authorised Representative before us is, the amount in dispute is created as a provision towards ex....