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TaxTMI 
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2020 (12) TMI 488
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....dering the application of the department, we find that the department has explained the sufficient cause for condonation of delay. Accordingly, we condone the delay of 19 days in filing the present appeal and the appeal is heard finally along with other connected appeals. 3. First of all, we would like to take on record the following paper books filed by the assessee in the appeals under consideration which have been perused and relevant part of the same have been considered for deciding the above appeals:- Sl. No. ITA Nos. Assessment Year Volume of the Paper Book Pages of the Paper Book 1 331 & 338/CTK/2017 2009-2010 I 1 to 202 2 -do- -do- II 1 to 372 3 -do- -do- - 1 to 35 4 -do- -do- - 1 to 20 5 39 & 69/CTK/2019 2015-2016 I & II 1 to 596 6 -do- -do- III 597 to 704 7 01 & 65/CTK/2020 2016-2017 I, II & III 1 to 531 8 -do- -do- II 1 to 49 4. Since the issues involved in all the appeals are mostly common except some grounds which will be adjudicated separately, therefore, all the appeals are heard altogether and disposed off by this common order. For the sake of convenience and brevity, first we shall take into consideration the facts na....
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.... because the same is under dispute and no demand has been raised in respect thereof, is arbitrary, erroneous, and bad, both in the eye of law and on facts and legally untenable. 3. Increasing the additions/disallowance under "Peripheral Development Expenses" to Rs. 7,25,83,189/- a. That on the facts and in the circumstances the case, the order of the learned CIT(Appeals) in increasing the additions/disallowance to Rs. 7,25,83,189/- under 'Peripheral Development Expenses' as against the disallowance of Rs. 50,42,549/- made in the order dated is unjustified based on irrelevant considerations, contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts and legally untenable. The addition was made without giving a reasonable period to defend it's position and violates the principle of natural justice. b. That on the facts and in the circumstances the case, the order of the learned CIT(Appeals) in disallowing Rs. 7,25,83,189/- under 'Peripheral Development Expenses' is unjustified based on irrelevant considerations, contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts and legally untenable. c. That out ....
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....ion for Leave Encashment'-u/s. 43B(f) of the Act Rs. 43,44,18,199/- That on the facts and in the circumstances the case, the sustaining of the disallowance of Rs. 43,44,18,199/- u/s. 43B(f) of the Act in respect of Provision for Leave Encashment by the learned CIT(Appeals) is erroneous and bad in law. 6. Claim of Addl. Depreciation u/s. 32(i)(iia) of the Act-Rs. 72,49,60,074/- That on the facts and in the circumstances the case, the learned CIT(Appeals) ought to have allowed the disallowance of claim of Addl. Depreciation of Rs. 72,49,60,074/- u/s. 32(i)(iia) of the Act. 7. Disallowance U/s. 43B of the Act-Under 'Electricity Duty' & water Charges-Rs. 46,28,87,187/-. That on the facts and in the circumstances the case, the sustaining of disallowance of Rs. 46,28,87,187/- under 'Electricity Duty' & water Charges u/s. 43B of the I.T. Act by the learned Commissioner of Income Tax (Appeals) is erroneous and bad both on facts and in law. 8. That the appellant craves leave to add, supplement, modify the grounds here-in-above before or at the hearing of the appeal. 5. Brief facts of the case are that the assessee is a public sector company, engaged in the b....
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....lowed the appeal of the assessee. 7. Feeling aggrieved by the order of CIT(A), both the assessee and Revenue are in appeals before the Income Tax Appellate Tribunal. 8. Ground No. 1 & 8 are general in nature. Ground No. 2: Disallowance of interest on disputed Govt. duty (Electricity Duty and water charges at Rs. 76,56,75,884/- 9. The AO in the assessment order stated that the payments of interest on such dispute of electricity duty and water charges are not ascertained liabilities, and, therefore, such unascertained liabilities are not allowable as business expenditure. The AO further noted that in the earlier years the issue is pending before the higher appellate stage and the matter has not yet been finalised, therefore, disallowed interest on disputed govt. duty and added to the total income of the assessee. In appeal, the CIT(A) observed that the amount is a provision and has been calculated on the basis of the enhanced electricity duty which itself is in dispute. Since the amount has not been arisen out of any demand raised by any authority and is in the nature of provisions, therefore, the CIT(A) confirmed the disallowance made by the AO. 10. Ld. AR before us submitted t....
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....al in this regard are as under:- "12. We have heard rival submissions and perused the material available on record. We find that the issue under consideration is covered by the order of the Tribunal in assessee's own case for the assessment year 2006-07 & 2007-08 in ITA No. 233 & 234/CTK/2011, order dated 20.07.2012 and also for the assessment year 2005-06 in ITA No. 286/CTK/2013, order dated 11.05.2016 has followed the above order of Tribunal and decided in favour of the assessee. The observation of the Tribunal for the assessment year 2005-06 are as under:- "4. We have considered rival contentions and found that the issue under consideration is covered by the order of the Tribunal in assessee's own case vide order dated 20-07-2012 for the assessment year 2006-07 & 2007-08, wherein the Tribunal on merit allowed such interest after observing as under:- 6.1 With respect to the interest on electricity duty provided for by the assessee was in consequence to the preference and not claimed as prior period expenses on the basis of statutory auditors pointing out that the amount held by the assessee to be paid as statutory duty in a bank was for earning interest. Therefore....
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.... of interest on disputed Govt. duty (Electricity duty and water charges) and this ground of assessee is allowed." We respectfully follow the reasoning and observation of the judicial decision and direct the AO to delete the disallowance of interest on disputed Govt. duty (Electricity duty and water charges) and this ground of appeal of assessee is allowed. Respectfully following the above observations of the Tribunal, we direct the AO to delete the disallowance made on account of interest on disputed Govt. duty (Electricity duty and Water Charges. Thus, ground No. 2 of appeal of the assessee is allowed. Ground No. 3: Increasing the additions/disallowance under "Peripheral Development Expenses" to Rs. 7,25,83,189/- 13. During the course of assessment proceedings, the AO observed that the peripheral development claimed by the assessee are not incurred wholly and exclusively for the business purpose and disallowed the claim. In appeal the CIT(A) observed that the assessee has claimed expenditure of Rs. 7,22,76,640/- incurred towards through the corporate office at Bhubaneswar, which cannot be categorized as peripheral development expenses since the same is not covered by the noti....
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....xpenditure through corporate office which is beyond the radius of 50 K. Ms. from the mines/factory situated. The ld.CIT-DR also drew our attention on the details of expenses incurred by the Corporate Office of Rs. 7,22,76,640/- out of which all the expenses relate to either for charity or donation and the measure amount has been given as donation to CM's relief fund and temple and trust. These are not related to exclusively business expenditures of the assessee. Even from the details of the expenditures as narrated by the CIT(A) the employees of the assessee are also not getting any benefits. These expenditures are not in consonance with the Notification issued by the Government of Odisha dated 15.01.2004 & 20.02.2004 and order No. 33167, dated 21.07.2004 issued in P&RE/1-49 by the Additional Secretary to the Government of Odisha, Revenue Department. Such above expenditures are also not for periphery development in the district of Angul and Koraput and not in accordance with the notification issued by the Government of Odisha. The ld. CIT(A) has also found excess claim of Rs. 3,06,549/- which is also correct. Therefore, the CIT(A) has righty enhanced the disallowance of periphe....
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....ure claimed by the assessee was disallowed by the AO on the direction of the CIT and in the assessment framed u/s. 143(3)/263 of the Act, the AO found that the assessee failed to make TDS from the payment in foreign currency an amount of rupees 27,38,71,725/-. If the assessee fails to make TDS, the expenses booked under such head should be disallowed u/s. 40(a)(ia) in the light of provision of section 9 r.w.s. 1(i) and 1(ii) of the IT Act. As per the AO, the assessee submitted explanation that TDS has been deducted on the foreign payments of Rs. 21,79,89,050/- @10% amounting to Rs. 2,17,98,905/-. However, the AO observed that the balance payment of Rs. 5,58,82,675/- (27,38,71,725-21,79,89,050) has not been considered for TDS. After due verification the AO disallowed Rs. 5,58,82,675/- u/s. 40(a)(ia) of the Act and added back to the total income of the assessee. 18. On appeal, the CIT(A) did not accept the submissions of the assessee and confirmed the findings of the AO. 19. Before us, ld. AR submitted that the amount of Rs. 27,38,71,725/- has been picked up by the A.O. from the printed Annual reports of NALCO, the data was given under additional information and disclosures as requ....
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....ot made and which are required to be made by NALCO and merely on a working made by A.O. himself without any material on record and evidence. Ld. AR also drew our attention to page Nos. 281 & 282 of the paper book and submitted that the assessee has made TDS wherever applicable on the said amount of Rs. 27,38,71,725/- on which appropriate tax amounting to Rs. 2,17,98,905/- has been deducted and paid to the Central Government, however, the AO without considering the same disallowed Rs. 5,58,82,675/-. Accordingly, we are of the opinion that the matter needs to be examined by the AO and, thus we remit this issue to the file of the AO to examine as to whether the assessee has deducted appropriate TDS from the payment in foreign currency as per Section 195 read with Section 9(1)(i) and 9 (1)(ii) of the Income Tax Act, 1961. In this regard, the assessee is directed to submit the relevant documents relating to foreign remittance and TDS and cooperate with the AO for early disposal of the case. Needless to say, the assessee shall be provided a reasonable opportunity of being heard. Thus, ground No. 4 is allowed for statistical purposes. Ground No. 5: Disallowance of provision for Leave Enc....
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....ibunal in this regard are as under:- "31. We have heard rival submissions and perused the material on record. We found that the similar issue has been decided by the Tribunal in assessee's own case for the assessment years 2007-08 & 2008-2009 in ITA No. 343 & 392/CTK/2015, order dated 23.04.2018, wherein the Tribunal has observed as under:- "28. We have heard rival submissions and perused the material on record. The assessee has made the provision for leave encashment and the provision was not added back in the computation of income. As the ld. AR submitted that the above issue is covered by the order of the coordinate bench of the Tribunal in the case of Baitarani Gramya Bank in ITA Nos. 318 & 319/CTK/2013 for assessment years 2008-09 & 2009-10, wherein the Tribunal held as under:- "19.1The DR also agreed with the submission of ld. AR of the assessee. In the circumstances of the case, we set aside the order of the CIT(A) and remit the matter to the file of the Assessing officer to re-adjudicate the issue in the light of the Hon'ble Supreme Court decision. Hence, this ground is allowed for statistical purposes. 20. In the result, appeal for the assessment year 2008-....
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....exclusive domain of the Legislature/Parliament. This power is clothed with power to decide when to legislate, what to legislate and how much to legislate. Thus, to decide the timing, content and extent of legislation is a function primarily entrusted to the legislature and in exercise of judicial review, the Court starts with a basic presumption in favour of the proper exercise of such power. [Para 13] * Generally, the heads of income to be subjected to taxability under the 1961 Act are enumerated in section 14 which starts with a saving clause and expressly predicates that profits and gains of business or profession shall be chargeable to income tax. This general declaration of chargeability is followed by section 145. [Para 14] * Sub-section (1) of section 145 explicitly provides that the method of accounting is a prerogative falling in the domain of the assessee and an assessee is well within its rights to follow the mercantile system of accounting. Be it noted that as per the mercantile system of accounting, the assessment of income is made on the basis of accrual of liability and not on the basis of actual expenditure in lieu thereof. The expression "either cash or mercant....
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.... any provident fund or superannuation fund. It is noteworthy that the legislature explained the inclusion of these deductions by citing certain practices of evasion of statutory liabilities and other liabilities for the welfare of employees. * With the passage of time, the legislature inserted more deductions to section 43B including cess, bonus or commission payable by employer, interest on loans payable to financial institutions, scheduled banks etc., payment in lieu of leave encashment by the employer and repayment of dues to the railways. Thus understood, there is no oneness or uniformity in the nature of deductions included in section 43B. It holds no merit to urge that this section only provides for deductions concerning statutory liabilities. Section 43B is a mix bag and new and dissimilar entries have been inserted therein from time-to-time to cater to different fiscal scenarios, which are best determined by the government of the day. It is not unusual or abnormal for the legislature to create a new liability, exempt an existing liability, create a deduction or subject an existing deduction to override regulations or conditions. [Para 18] * The leave encashment scheme e....
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....e of objects and reasons * The objects and reasons behind the enactment of a statute signify the intention of the legislature behind the enactment of a statutory provision. Indubitably, the purpose or underlying aim of a law can be discerned when interpreted in the light of stated objects and reasons. Inasmuch as, the settled canon of interpretation is to deduce the true intent of the legislature, as the will of the people is constitutionally bestowed in the legislature. It is true that an express objects and reasons would be useful in understanding the import of an enacted provision as and when the Court is called upon to interpret the same. [Para 24] * Whereas, when there is no ambiguity about the legislative competence and of the import of the enactment, no rule, authority or convention to support the view that publication of objects and reasons is quintessence for the sustenance of a duly enacted provision has been brought to notice. In fact, objects and reasons feature in the list of external aids to interpretation and can be looked into for the limited purpose in the process of interpretation. * The express objects and reasons, serves a limited purpose of assisting the ....
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....able conduct of the legislature as an appellate authority over the legislature. The only examination of the Court is restricted to the finding of a constitutional infirmity in the provision, as is placed before the Court. Thus, the non-disclosure of objects and reasons per se would not impinge upon the constitutionality of a provision unless the provision is ambiguous and the possible interpretation violate Part III of the Constitution. In the absence of any finding of any constitutional infirmity in a provision, the Court is not empowered to invalidate a provision. [Para 29] * To hold a provision as violative of the Constitution on account of failure of the legislature to state the objects and reasons would amount to an indirect scrutiny of the motives of the legislature behind the enactment. Such a course of action, is unwarranted. The raison d'etre behind this self-imposed restriction is because of the fundamental reason that different organs of the State do not scrutinise each other's wisdom in the exercise of their duties. In other words, the time-tested principle of checks and balances does not empower the Court to question the motives or wisdom of the legislature, ....
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...., while sitting in judicial review. Concededly, it is a provision to attach conditionality on deductions otherwise allowable under the Act in respect of specified heads, in that previous year in which the sum is actually paid irrespective of method of accounting. [Para 32] * Further, it may be noted that the broad objective of enacting section 43B concerning specified deductions referred to therein was to protect larger public interest primarily of revenue including welfare of the employees. Clause (f) fits into that scheme and shares sufficient nexus with the broad objective. [Para 33] * The approach of constitutional courts ought to be different while dealing with fiscal statutes. It is trite that the legislature is the best forum to weigh different problems in the fiscal domain and form policies to address the same including to create a new liability, exempt an existing liability, create a deduction or subject an existing deduction to new regulatory measures. In the very nature of taxing statutes, legislature holds the power to frame laws to plug in specific leakages. Such laws are always pin-pointed in nature and are only meant to target a specific avenue of taxability depe....
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.... terms of the earlier dispensation. In absence of any such provision, the sole operative provision was section 145(1) that allowed complete autonomy to the assessee to follow the mercantile system. Now a limited change has been brought about by the insertion of clause (f) in section 43B and nothing more. It applies prospectively. Merely because a liability has been held to be a present liability qualifying for instant deduction in terms of the applicable provisions at the relevant time does not ipso facto signify that deduction against such liability cannot be regulated by a law made by Parliament prospectively. In matter of statutory deductions, it is open to the legislature to withdraw the same prospectively. In other words, once the Finance Act, 2001 was duly passed by the Parliament inserting clause (f) in section 43B with prospective effect, the deduction against the liability of leave encashment stood regulated in the manner so prescribed. Be it noted that the amendment does not reverse the nature of the liability nor has it taken away the deduction as such. The liability of leave encashment continues to be a present liability as per the mercantile system of accounting. Furth....
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....ervations of the Hon'ble Apex Court as well as the coordinate bench of the Tribunal, we remit the issue to the file of AO to examine and allow the claim of the assessee as per Section 43B(f) of the Act in terms of the observations made by the Hon'ble Supreme Court in the case of Exide Industries Ltd. (supra) in this regard. Ground No. 4 is allowed for statistical purposes. Ground No. 6: Additional Depreciation u/s. 32(i)(iia) of the Act at Rs. 72,49,60,074/-. 28. Ld. AR before us submitted that the assessee is eligible for claim of additional depreciation and the assessee had also substantiated its claim before the lower authorities. Ld. AR relied on the order of the coordinate bench of the Tribunal in assessee's own case for A.Y. 2014-2015 in ITA Nos. 106/CTK/2018, order dated 23.09.2019. Ld.AR further submitted that the very same issue has been decided by the Hon'ble Gujarat High Court in the case of PCIT Vs. IDMC Ltd. [2017] 78 taxmann.com 285 (Gujarat), therefore, observations of the Hon'ble Gujarat High Court are also squarely applicable in the case of assessee in the present case and the claim of additional depreciation may kindly be allowed. On the othe....
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...., the Hon'ble Tribunal have restored the matter to the file of the AO observing that the AO should find out whether the assets were acquired or installed after 01.04.2005. The AO is therefore once again directed to verify the same and find out whether the main assets to which additions of further assets were made and additional depreciation were claimed have been acquired after 01.04.2005 and allow additional depreciation to such part of the additional assets for which the main assets have been acquired after 01.04.2005." My predecessor has also decided the issue under similar facts and circumstances for the AY 2007-08 vide order dt. 7.5.2015 in appeal No. 0176/14-15 and for the AY 2008-09 vide order dt. 8.6.2015 in appeal No. 0544/14-15, directing the AO for necessary verification. The issues being similar in the assessment year, the AO is directed to call for the relevant details from the assessee and after necessary verification, allow additional depreciation as per law on those machineries, the components of which were acquired as well as installed after 1.4.2005. 30. From the above observations of the CIT(A), we are of the considered opinion, that the CIT(A) has already....
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.... at rest, we are of the considered view that a disallowance u/s. 43B has to be primarily when such electricity duty has been claimed as expenditure in the impugned assessment year. The assessee could not override the Hon'ble High Court directions. The expenditure remained unpaid for both the years in spite of these directions, therefore, was rightly brought to tax by the ld AO u/s. 43B, we uphold the confirmation thereof by the ld CIT(A). This ground for both years stands dismissed." Respectfully following the decision of the coordinate bench of the Tribunal in assessee's own case for earlier year, we dismiss the ground No. 7 of the assessee. 34. Thus, the appeal of the assessee in ITA No. 338/CTK/2017 is allowed partly for statistical purposes. 35. Now, we shall decide the appeal of Revenue in ITA No. 331/CTK/2017 for the assessment year 2009-2010, wherein the Revenue has raised the following grounds:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified on facts and in law in deleting the addition of Rs. 4,95,31,377/- under the head 'revaluation of non moving Stores & Spares'. 2. On the facts and in the circumstances of the ....
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.... to the AO for explaining the details of under valuing assets. 37. On the other hand, ld. AR relied on the order of CIT(A) and reiterated the submission made before the AO. He further submitted that the CIT(A) has rightly followed its earlier years order and directed the AO to allow the loss on valuation of non-moving stores and spares. Ld. AR further submitted that this Bench of the Tribunal in assessee's own case in ITA Nos. 106 & 110/CTK/2018 for A.Y. 2014-2015 has decided the issue relying on its earlier order passed in ITA No. 197/CTK/2017, order dated 29.06.2018 wherein the Tribunal has followed the decision rendered in its order for the assessment year 2011-2012. Therefore, appeal of the Revenue deserves to be dismissed. 38. After hearing submissions of the both the parties and perusing the entire material on record as well as orders of authorities below along with the order of the Tribunal on which reliance has been placed by the ld. AR, we found that the Tribunal in assessee's own case in ITA No. 106 & 110/CTK/2018, order dated 23.09.2019 has already decided the issue against the Revenue confirming the observations made by the CIT(A) thereby deleing the addition ....
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....es it has been held that payment of transmission/wheeling charges, neither attracts the provision of Section 194-I of the Act nor Section 194C & 194J of the Act. Therefore, ld. AR submitted that on the above observations of the Tribunal in its earlier orders, this ground of Revenue may kindly be dismissed. 41. After considering the submissions of both the sides and perusing the entire material available on record, we find that during the course of assessment proceedings the AO found that the assessee has paid wheeling charges for transmission of power which has been paid to GRIDCO without deducting TDS under the provisions of Section 194I of the Act. The assessee explained before the AO as to why the wheeling charges are paid as per the tariff fixed by the GRIDCO for the transmission of power and submitted that power transmission charges does not attract the provisions of Section 194I and no deduction is made, whereas the AO found the wheeling charges are clearly subject to provisions of Section 194I of the Act as use of transmission network and equipments of GRIDCO attracts TDS deduction u/s. 194-I of the Act by the assessee. It was submitted by the ld. AR that wheeling charges d....
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.... of loss on coal without any proper explanation behind the decision and any supporting documents and evidences, to which the ld. CIT(A) has accepted the claim of the assessee by holding that the assessee has proper internal control system and the books of accounts are audited by a statutory auditor and C & AG auditor. But without considering the coal supply by MCL through the linkage coal and open auction. The supplier of the coal is also government of India enterprises, therefore, there should not be any difference in the supply of coal. therefore, the ld. CIT(A) is not justified deleting the addition made by the AO. Accordingly, ld. DR submitted that the order of the AO should be upheld. 44. On the other hand, the ld. AR of the assessee reiterated the submissions made before the authorities below and relied on the order of CIT(A) to the extent of deleting the addition made on account of claims, receivables, debts, shortages etc. written off. It was also contended by the ld. AR that the amount in question is for shortage in coal written off which is revenue/trading loss, therefore, the CIT(A) has rightly deleted the same. Further, the ld. AR pointed out that shortage of coal work....
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....e total coal purchased and simply accepted that the above percentage of shortage is very reasonable nor the auditors have made any adverse comments. Stating this fact, the assessee company has kept itself mum. It is also a fact that the coal is not an evaporated item, rather it is solid items for which, the quantity dispatched from the weighbridge at the loading point should be received with the same weight at the weighbridge of the destination point. As per our considered opinion and looking to the facts of the case, the assessee must have claimed to the responsible transporters which is lack in this case. The ld. AR of the assessee was unable to explain about the shortage during the course of hearing before us. What is the internal control system adopted by the assessee is also not explained before us by the assessee. Therefore, the shortage of the coal claimed by the assessee of Rs. 3,33,22,664/- is not accepted. Thus, CIT(A) is not justified in deleting the addition made in this regard. Accordingly, we allow the ground No. 3 raised by the Revenue. 47. Ground Nos. 4 & 5 are general in nature, which require no adjudication. 48. Thus, the appeal of Revenue in ITA No. 331/CTK/201....
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....ts and in the circumstances the case, the learned CIT(Appeals) ought to have allowed the claim of Addl. Depreciation of Rs. 43,48,202/- u/s. 32(i)(iia) of the Act. 3. Disallowance of Provision for Leave Encashment'-u/s. 43B(f) of the Act-Rs. 30,66,15,443/- a. That on the facts and in the circumstances the case, the sustaining of the disallowance of Rs. 30,66,15,443/- u/s. 43B(f) of the Act and dismissing the ground of the assessee by the learned CIT(Appeals) is erroneous and bad, both in the eye of law and on facts. b. That in similar facts and circumstances, for the Asst. Year 2007-08 and subsequent years upto Asst. Year 2012-13, in assessee's own case, the Jurisdictional ITAT (Hon'ble IT AT Cuttack Bench, Cuttack) having not accepted the findings of the learned CIT (Appeals) in respect of 'Provision for Leave Encashment' u/s. 43B(f) of the Act, the learned CIT (Appeals) ignoring and not following the order of the Jurisdictional ITAT and in confirming the addition/disallowance of Rs. 30,66,15,443/- under 'Provision for Leave Encashment' u/s. 43B(f) of the Act is arbitrary, erroneous, and bad, both in the eye of law and on facts and legally untenab....
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....isallowance of claim of Investment Allowance of Rs. 34,12,08,111/- u/s. 32AC of the I.T. Act and dismissing the ground of the assessee is contrary to facts, erroneous and bad, both in the eye of law and on facts. b. That on the facts and in the circumstances the case, the learned CIT(Appeals) holding that: i. the details of the assets for the claimed investment allowance u/s. 32AC are vague, sketchy, lacks clarity and has no linkage with the assets against which investment allowance u/s. 32AC of the Act is claimed and cannot be taken as the base for claiming investment allowance; ii. the appellant could not provide any conclusive evidences to prove its acquisition within the stipulated period 31.03.2013 but before 1.4.2015 neither before the AO nor before her; iii. the reconciliation of capital works account submitted by assessee for claiming the benefit is not scientifically acceptable, tenable for passing the benefit; and iv. the disallowance made by the AO u/s. 32AC is in accordance with law. is on mis-appreciation /misconstruing the facts, contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts. c. That on the facts and in the circumst....
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....gh the order dated 23.09.2019 passed by the Tribunal in ITA Nos. 106 & 110/CTK/2018, wherein the Tribunal while deciding the similar issue has observed as under:- 11. Invoking the provisions of Section 14A r.w. Rule 8D, the AO has made the disallowance of Rs. 6,82,43,072/- by observing that the disallowance suo-moto made by the assessee is very less compared to the administrative and employee cost devoted to earn the exempt income. In appeal, the CIT(A) has confirmed the disallowance as there may not be any direct expense and that the assessee has not made any interest payments related to earning of exempted dividends and accordingly, the only way disallowance can be computed proportionately as per Rule 8D(2)(iii) of I.T. Rules. 12. Ld. AR before us submitted that the assessee has already added the sum of Rs. 82,378/- in the computation of income with the (return of income) u/s. 14A of the Act in respect of expenses incurred relating to its exempted income and Rule 8D is not applicable. Ld. AR further submitted that this issue has been decided by the Tribunal in ITA No. 211/CTK/2016 along with other connected appeals, order dated 29.06.2018 for the assessment year 2013-2014. On....
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.... the total income. Therefore, the AO was required to work out the average of such investment, the income from which did not form part of the total income instead of total value of investment. For this view, our stand is fortified by the decision of Special Bench in the case of ACIT vs. Vireet Investment (P) Ltd., (2017) 82 Taxman.com 415 (Delhi Trib.)(SB). None of the parties before us, however, have laid any details to examine as to which of the investments have yielded such income which did not form part of the total income. We, therefore, restore the matter back to the file of the Assessing Officer for calculating the disallowance u/s. 14A read with Rule 8D afresh, in the light of observations made in the body of this order above. Accordingly, ground No. 4 is allowed for statistical purposes. Respectfully following the above observations of the Tribunal, we also restore this issue to the file of AO for calculating the disallowance u/s. 14A read with Rule 8D afresh in the light of the observations made by us in the earlier order as quoted above. Thus, ground No. 4 is allowed for statistical purposes. 54. Ground No. 5 relates to disallowance of claim of investment allowance u/s.....
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....lusive proof otherwise. b. On query, the assessee also couldn't provide conclusive evidence to prove its acquisition, within the stipulated period, which could stand in the test of law (as provided u/s. 32AC(1)(b). The AO observed that the provisions of law, inter alia, other requirements does not entitled one to claim investment allowance on assets, acquisition of which does not happen within the stipulated period of 01.04.2013 and 31.03.2015. Accordingly, the AO disallowed the claim of the assessee under the head investment allowance and added to the total income of the assessee. 56. In appeal, the CIT(A) observed that the details of the assets against which the assessee has claimed investment allowance u/s. 32AC of the Act are vague, sketchy, lacks clarity, and has no linkage with the assets against which investment allowance u/s. 32AC of the Act is claimed, therefore, the same cannot be taken as the base for claiming investment allowance. Accordingly, the CIT(A) has confirmed the action of the AO. 57. Ld. AR before us reiterated the submissions made before both the authorities below and submitted that provisions of section 32AC of the Act stipulates that both acquisiti....
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....t the provisions of Section 32AC and additional depreciation u/s. 32(1)(iia) of the Act, being pari materia, therefore, the claim of the assessee of investment allowance u/s. 32AC of the Act deserves to be allowed. 58. On the other hand, ld. DR, at the outset of his argument, firstly he vehemently challenged the claim of the assessee by way of filing of revised return and submitted that there must be mistake in the original return filed by the assessee due to bonafide mistake which is not in this case, therefore, the claim made by the assessee u/s. 32AC of the Act should not be accepted. In support of his arguments, he relied on the decision of Hon'ble Gauhati High Court in the case of Sunanda Ram Deka Vs. CIT, [1994] 210 ITR 988 (Gau). Further he relied on the orders of authorities below and submitted that the assessee also could not provide any conclusive evidence to prove its acquisition within the stipulated period i.e., after 31.03.2013 but before 01.04.2015, neither before the AO nor before the CIT(A), to satisfy the provisions of Section 32AC(1)(b) of the Act. It was further submitted by the ld. DR that reconciliation of capital work account for claiming the benefit is ....
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....at the filing of original return of income or any other mistakes. The assessee has filed return of income before the competition of the assessment which is as per the Income Tax Act. The case laws relied on by the ld. CIT-DR are not applicable in the present case of the assessee. 60. After hearing both the sides and perusing the entire material available on record in regard to fresh claim made by the assessee u/s. 32AC of the Act by way of filing of revised return of income, we observe from the assessment order that the AO has accepted the revised return of income filed by the assessee and has disallowed fresh claimed made by the assessee as per Section 32AC of the Act. The ld. CIT-DR has raised this issue before us without taking any grounds in his appeal or by way of filing any cross objections regarding the revised return filed by the assessee. It was the bonafide claim made by the assessee which is legally if he has fulfilled entitled as per Section 32AC of the Income Tax Act. We also noted that the revised return was filed by the assessee on 29.03.2017, whereas the assessment proceedings have been completed 30.03.2017. Therefore, it is within the purview of the Income Tax Act....
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....% of aggregate amount of actual cost of new assets, acquired and installed during the period beginning on 1-4-2013 and ending on 31-3-2015, as reduced by the deduction allowed, if any, for assessment year 2014-15. Illustration 1 ABC Ltd., a manufacturing company, acquires and installs new plant and machinery of Rs. 300 crores during financial year 2013-14 and Rs. 200 crores during financial year 2014-15. In this case, deduction will be allowed as under: Deduction that will be allowed for assessment year 2014-15 in terms of new section 32AC(1)(a)=15% of Rs. 300 crores = Rs. 45 crores Deduction that will be allowed for assessment year 2015-16 in terms of new section 32AC(1)(b) Rs. 75 crores Rs. 45 crores Rs. 30 crores Illustration 2 ABC Ltd., a manufacturing company, acquires and installs new plant and machinery of Rs. 100 crores during financial year 2013-14 and Rs. 200 crores during financial year 2014-15. In this case, deduction will be allowed as under: No deduction under section 32AC(1)(a) for assessment year 2014-15 as investment during financial year 2013-14 does not exceed Rs. 100 crores Total investment for both financi....
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.... with additional depreciation, the Tribunal held as under: On the plain reading of these provisions it is obvious and apparent that both the words "acquired" and "installed" are linked with "and". Thus requirement of both these words cannot be seen fulfilled even if either of the two is only fulfilled. In other words both the "acquisition" and "installation" of the new machinery or plant are required to be made after 31-3-2005 by an assessee engaged in the business of manufacture or production of an article or thing. There is no doubt that incentive provisions of the Act should be read liberally. However, that does not mean that liberal approach should be applied at the cost of literal and obvious meaning of the statute, fulfilment of which is the primary requirement to qualify for the benefit of claimed depreciation. Liberal approach is required to be given while interpreting a provision, where possibility of more than one interpretations is there and one of them appears favourable to the assessee. In the present case when the requirement of fulfilment of the conditions of acquisition and installation to grant the benefit of the claimed additional depreciation is so obvious a....
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....produced hereinabove, we think it fit to send back to the file of AO for re-examination of the claim made by the assessee u/s. 32AC of the I.T. Act after considering the above commentaries of the Finance Act and the decision of the coordinate bench of the Tribunal. The assessee is also directed to provide the necessary details for fulfilling the above twin conditions in the light of the above commentaries and the decision of the coordinate bench of the Tribunal, quoted supra. Needless to say, that reasonable opportunity of being heard be given to the assessee. Thus, this ground of appeal of the assessee is allowed for statistical purposes. 63. Thus, ITA No. 39/CTK/2019 is allowed for statistical purposes. 64. Now, we shall take up the appeal of the Revenue in ITA No. 69/CTK/2019 for the assessment year 2015-2016, wherein the Revenue has raised the following grounds:- 1. The order of the Ld. CIT(A) is erroneous on facts and in law. 2. On the facts and the circumstances of the case and in law, ld. CIT(A) is not justified in deleting the addition of Rs. 7,09,23,893/- made by the AO towards 'disallowance of loss on revaluation of non-moving stores and spares' ignoring the....
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....p the appeal of the assessee filed for assessment year 2016-2017 in ITA No. 01/CTK/2020, wherein the assessee has raised the following grounds:- 1. That the order dated 21.10.2019 passed by the Learned Commissioner of Income Tax (Appeals) [in short "CIT(Appeals)"], in so far as sustaining the additions and disallowance made by the Learned Assessing Officer, is based on irrelevant considerations, against the principles of natural justice, contrary to facts, arbitrary, erroneous and bad in law. 2. Disallowance of claim of Addl. Depreciation u/s. 32(i)(iia) of the Act-Rs. 88,15,717/- a. That the learned CIT (Appeals) has mis-appreciated the facts and the sustaining of disallowance of Rs. 88,15,717/- under 'Additional Deprecation u/s. 32(1)(iia) of the I.T. Act and dismissing the ground of the assessee is contrary to facts, erroneous and bad, both in the eye of law and on facts. b. That the acquisition and installation in respect 'New Plants' having been made after 01.04.2005, the claim of Addl. Depreciation of Rs. 88,15,717/- u/s. 32(i)(iia) of the Act ought to be fully allowed. c. That in similar facts and circumstances, for the Asst. Year 2007-08 and subsequent....
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....y to facts, erroneous and bad in law. d. The appellant's computation of the aforesaid sum u/s. 14A of the Act is based on its books of accounts and is worked out in a reasonable and fair manner, the learned lower authorities have mis appreciated/misconstrued the same and the disallowance u/s. 14A of the Act is incorrect, arbitrary, erroneous and bad in law. e. That in similar facts and circumstances, for the Asst. Years 2010-11 and 2012-13, in assessee's own case, the Jurisdictional IT AT (Hon'ble IT AT Cuttack Bench, Cuttack) having not accepted the findings of the learned CIT (Appeals) in respect of disallowance u/s. 14A of the Act, the learned CIT (Appeals) ignoring and not following the order of the Jurisdictional IT AT and the CIT (Appeals)'s order for Asst. Year 2011-12, in confirming the addition/disallowance of Rs. 4,57,03,000/- u/s. 14A of the Act is arbitrary, erroneous, and bad, both in the eye of law and on facts and legally untenable and deserves to be set aside on this ground alone. 4. Additions under "Provision for Leave Encashment'-u/s. 43B(f) of the Act-Rs. Rs. 1,30,66,93,385/- a. That on the facts and in the circumstances the case, the ....
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.... 5. That the appellant craves leave to add, supplement, modify the grounds here-in-above before or at the hearing of the appeal. 71. Ground Nos. 1 & 5 are general in nature. Ground No. 2 relates to disallowance of claim of additional depreciation u/s. 32(i)(iia) of the Act. The issue raised by the assessee has already been decided by us while deciding the appeal of the assessee for A.Y. 2009-2010 in ITA No. 338/CTK/2017, wherein we have observed that the CIT(A) has already remitted the issue to the file of AO to allow the claim of the assessee after verification of necessary details, therefore, any order/direction by us, at this stage, on this issue, would be futile exercise. However, a reasonable order is expected from the AO on the above observations of CIT(A). Accordingly, the issue raised in ground No. 1 being similar to the issue decided by us in ITA No. 338/CTK/2017, therefore, our observations made therein shall apply mutatis mutandis to this ground also. Thus, ground No. 2 is allowed for statistical purposes. 72. With regard to ground No. 3, which relates to disallowance u/s. 14A of the Act, the ld.AR submitted that this issue has already been decided by the Tribunal in a....
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....unal and remit the disputed issue to the file of AO for re-examination and verification and to decide the issue on merits after complying the mandatory requirement of the provisions of Section 14A of the Act and this ground of appeal is allowed for statistical purposes. 14. From the orders both the authorities below, we observe that the assessee is earning income under different heads, as mentioned above. During the year, the assessee has received dividend of Rs. 11,00,68,076/- and claimed such income as exempt income. The assessee has only made disallowance at Rs. 1,20,828/- u/s. 14A to earn the exempt income. The Assessing Officer has applied section 14A read with Rule 8D and disallowed the expenditure as per formula provided under rule 8D. The assessee is stated to have made no fresh investments out of borrowed funds. The Assessing Officer appears to have calculated the disallowance as per Rule 8D(2)(iii) observing that administrative expenses cannot be denied to earn exempt income. We, however, find that the Assessing Officer has considered average total investment appearing on the first day and last day of the financial year, which in our opinion is not justified. These in....
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....ding the appeal of the assessee for A.Y. 2009-2010 in ITA No. 338/CTK/2017, wherein we have observed that the issue is squarely covered by the decision of the Tribunal in assessee's own case in ITA Nos. 106& 110/CTK/2018, order dated 23.09.2019, wherein the Tribunal has followed its earlier order dated 29.06.2018, passed in No. 211/CTK/2017, thereby restoring the issue to the file of AO further verification and examination of the issue. Thus, we direct the AO to examine as to whether the payment has been made towards leave encashment during the financial year 2015-2016 as claimed by the assessee before us and decide the issue as per law. Accordingly, the issue raised in ground No. 3 being similar to the issue decided by us in ITA No. 338/CTK/2017, therefore, our observations made therein shall apply mutatis mutandis to this ground also. Thus, ground No. 4 is allowed for statistical purposes. 77. Thus, the appeal of the assessee in ITA No. 01/CTK/2020 is allowed for statistical purposes. 78. Now, we shall take up the appeal of the Revenue filed for assessment year 2016-2017 in ITA No. 65/CTK/2020, wherein the grounds raised by the Revenue read as under:- (i) On the facts and....