TaxTMI 
TaxTMI 
2020 (12) TMI 488
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....ch ld. AR did not object to it. After considering 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 altog....
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....884/- under "Interest on unpaid Electricity Duty and water charges, although a statutory liability, the learned CIT (Appeals) holding that the same is a provision and disallowable 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....
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....ssumptions, surmises and conjectures, the disallowance made in order dated 30.3.2015, sustained by the learned CIT(Appeals) is arbitrary, unjustified, erroneous and bad, both in the eye of law and on facts and legally untenable. 5. Disallowance of Provision 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 Commission....
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.... 40(a)(ia) of the Act. 6. Against the above additions and the order of the AO, the assessee filed an appeal before the CIT(A). In the appellate proceedings the assessee reiterated the submissions made before the AO and filed detailed written submissions. The CIT(A) after considering the submissions of assessee and findings of AO has partly allowed 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....
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....4.2018, wherein the Tribunal has decided the issue in favour of the assessee relying on the earlier decision of the Tribunal in assessee's own case for the assessment years 2006-2007 & 2007-2008 in ITA Nos. 233 & 234/CTK/2011, dated 20.07.2012 and also for the assessment year 2005-06 in ITA No. 286/CTK/2013, order dated 11.05.2016. The observations of the Tribunal 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....
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....t and therefore, even if such interest is not paid the same is not to be disallowed under section 43B. 8. Following the reasoning given hereinabove with regard to the interest on delayed payment of electricity bill, we direct the AO to allow interest on the water bill. We direct accordingly." We respectfully follow the above orders of the Tribunal and direct the AO to allow the claim of the assessee on account 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 as....
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....n assessee's own case in ITA No. 66-68, 459, 511 & 512/CTK/2003 order dated 30.11.2015 and in subsequent years. To support his view, ld. AR also relied on various case laws, copies of which are filed in the paper book. 15. On the other hand, ld. CIT-DR relied on the CIT(A)'s order and further submitted that the entire expenditure has not been expended as per notification issued by the Govt. of Odisha. The assessee has incurred some expenditure 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,....
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....h deduction. In this regard, we direct the AO to considering the above alternative plea of the assessee on production of supporting documents by the assessee to substantiate the claim for deduction u/s. 80G of the I.T. Act, 1961. A reasonable opportunity of being heard is to be provided to the assessee. Thus, ground No. 3 is allowed for statistical purposes. Ground No. 4: Disallowance u/s. 40(a)(i) of the Act-Rs. 5,58,82,675/- 17. This expenditure 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 ....
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....erefore, the authorities below were justified to disallow the amounts paid. 21. After hearing the submissions of both the parties and perusing the entire material available on record, we find that during the course of assessment proceedings u/s. 143(3)/263 of the Act, as per the AO, the assessee could not deduct TDS from the payment in foreign currency. The contention of the assessee before us that the A.O. has not specified on which amount the TDS were not 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 curre....
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.... AO to examine and allow the claim of the assessee. The relevant observations of the Tribunal at para 28 read as under:- "28. We have heard rival submissions and perused the material available on record. We find that the Tribunal in assessee's own case for the assessment year 2010-2011 in ITA No. 352/CTK/2016 along with other appeals, order dated 27.04.2018 relying on its earlier order has restored the disputed issue to the file of AO. The observations of the Tribunal 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. 3....
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....wer of the Parliament to enact clause (f) in the light of article 245 is not doubted at all. That brings to the next step of examination i.e., whether the said clause contravenes any right enshrined in Part III of the Constitution, either in its form, substance or effect. It is no more res integra that the examination of the Court begins with a presumption in favour of constitutionality. This presumption is not just borne out of judicial discipline and prudence, but also out of the basic scheme of the Constitution wherein the power to legislate is the 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....
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....y have the inevitable effect of being different from the theme of mercantile system of accounting on accrual of liability basis qua the specific head of deduction covered therein and not to other heads. But that is a matter for the legislature and its wisdom in doing so. [Para 17] * The existence of section 43B traces back to 1983 when the legislature conceptualised the idea of such a provision in the 1961 Act. Initially, the provision included deductions in respect of sum payable by the assessee by way of tax or duty or any sum payable by the employer by way of contribution to 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 uniformit....
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....f public good, employees' welfare and prevention of fraud upon revenue is writ large in the said clause. Such statutes are to be viewed through the prism of the mischief they seek to suppress, that is, the Heydon's case [1584] 3 Co Rep 7 principle. In CRAWFORD, Statutory Construction (CRAWFORD, Statutory Construction p. 508), it has been gainfully delineated that "an enactment designed to prevent fraud upon the revenue is more properly a statute against fraud rather than a taxing statute, and hence should receive a liberal construction in the government's favour. [Para 21] Allegation of non-disclosure 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 imp....
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.... its validity. This approach is flawed for at least three reasons. First, it steers clear from the necessary attempt to discover any constitutional infirmities in the enacted provision. Second, it makes no attempt to dissect the text of the provision so as to display the need to go beyond the text. Third, it goes into the background of the enactment and ventures into a sphere which is out of bounds for the Court as long as the need for interpretation borne out of any ambiguity arises. [Para 28] * The process of testing validity is not to sneak into the prudence or proprieties of the legislature in enacting the impugned provision. Nor, is it to examine the culpable 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 ....
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....ation upon the power of legislature to include only particular type of deductions in the ambit of section 43B. To say that section 43B is restricted to deductions of a statutory nature would be nothing short of reading the provision in a purely imaginative manner. As already discussed above, from 1983 onwards, section 43B had taken within its fold diverse nature of deductions, ranging from tax, duty to bonus, commission, railway fee, interest on loans and general provisions for welfare of employees. An external examination of this journey of section 43B reveals that the legislature never restricted it to a particular category of deduction and that intent cannot be read into the main section by the Court, 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 ....
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....ompetence does not come into doubt. Upon the law coming into force, it becomes operative in the public domain and opens itself to any review under Part III as and when it is found to be plagued with infirmities. Upon being invalidated by the Court, the legislature is free to diagnose such law and alter the invalid elements thereof. In doing so, the legislature is not declaring the opinion of the Court to be invalid. [Para 37] * The instant case was rendered in light of general dispensation of autonomy of the assessee to follow cash or mercantile system of accounting prevailing at the relevant time, in absence of an express statutory provision to do so differently. It is an authority on the nature of the liability of leave encashment in 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 th....
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....annot be read into the process of judicial review. A priori, the plea that clause (f) has been enacted with the sole purpose to defeat the judgment of this Court is misconceived. [Para 40] * The position of law discussed above leaves no manner of doubt as regards the legitimacy of enacting clause (f). The respondents have neither made a case of non-existence of competence nor demonstrated any constitutional infirmity in clause (f). [Para 41] * In view of the clear legal position this appeal deserves to be allowed. Accordingly, the impugned judgment of the Division Bench of the High Court is reversed and clause (f) in section 43B is held to be constitutionally valid and operative for all purposes. [Para 42] 27. Respectfully following the above observations 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 Depreciatio....
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....depreciation has been claimed rightly on the additions to its plants and not in respect of individual machinery as per the provisions of the act. The appellant further submitted full details of plants acquired and installed and the summary statements of particulars of purchase order. The appellant had given an example of the account of work in progress where capitalization has already been made for assets acquired before F/Y. 2005-06. The appellant company emphasized that the assets for which the additional depreciation are claimed have been acquired after 31.03.2005 and assembled over the period and capitalize as and when complete. The AO had referred to the order to the Ld. ITAT for the AY. 2003-04 which was passed before the amendment to the act w.e.f. 01.04.2005. For the AY. 2006-07, 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 01.04.200....
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....the bank account is not covered under section 43B of the Act. The designated bank account is also in the name of NALCO, therefore, it cannot be said that the payment has been made actually for the payment of electricity duty. 33. After hearing both the sides and perusing the entire material available on record, we find that the liability of Rs. 46,28,87,187/- under the provisions of Section 43B of the Act disallowed by the AO has already been decided by the coordinate bench of the Tribunal in assessee's own case and matter is pending before the Hon'ble High Court. The Tribunal in ITA Nos. 196 & 91/CTK/2010, order dated 29.06.2012, para 16 to 23 at pages 10 to 13 has held as under:- "23. We have considered the rival submissions and have perused the material available on record. To set the controversy 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....
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.... original cost. The Accounting Standard-1 was relying on by the assessee before the AO does not help the assessee. The policy and practice followed by the Steel Authority of India is a premier manufacturing concern of the country for valuing the non-moving stores and spare parts, is different, which is as under:- - not moved for 5 years or more : 25% - not moved for 10 years or more : 50% - not moved for 15 years or more : 90% - obsolete/surplus stores and spares : 90% In this case, the company is valuing for not moving stores and spares for 5 years or more is valuing at 25% but in the impugned case, the assessee is following 5% which is without the reasonable expenses. Therefore, the policy adopted by the assessee company is highly arbitrary and unreasonable for undervaluing of the non-moving stores and spares. Therefore, the matter should be restored 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 ....
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.... 40(a)(ia) of the Act. Accordingly, ld. DR submitted that the addition made by the AO should be restored. 40. On the other hand, ld. AR relied on the order of CIT(A) and submitted that the assessee has paid wheeling charges to GRIDCO and the TDS provisions under Section 194I of the Act does not apply and in the subsequent assessment year the expenditure of wheeling charges where the interpretation was made on applicability of provisions u/s. 194-I and 194-J of the Act and the CIT(A) has allowed in assessee's own case in the immediately preceding assessment years. Further, the ld. AR submitted that in the case of recipient of wheeling charges the coordinate bench of the Tribunal in the case of GRIDCO vs. ACIT in ITA No. 404/CTK/2011 order dated 07.11.2011 has allowed the claim. Ld. AR of the assessee also relied on the may case laws which have been filed in the paper book and submitted that in those cases 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 Rev....
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....of the Act considering the decision of coordinate bench of the Tribunal in the case of GRIDCO, ITA No. 404/CTK/2011, order dated 07.11.2011, in the case of Madhyanchal Vidyut Vitran Nagam Ltd (ITAT Lucknow Bench) and the decision of Hon'ble Bombay High Court in the case of Maharashtra State Electricity Distribution Co. Ltd. in ITA No. 336 of 2013. Ld. DR could not controvert the above findings of the CIT(A). Accordingly, we do not see any good reason to interfere with the above findings recorded by the CIT(A) in this regard and we uphold the same. Thus, ground No. 2 of the Revenue is dismissed. 43. Ground No. 3 is relating to deletion of addition of Rs. 3,33,22,664/- made under the head claims, receivables, debts, shortages etc. written off. In this regard, ld. DR submitted that the assessee could not explain the claim properly before the AO during the course of assessment proceedings,. The assessee has written off 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 ....
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....was furnished at the time of assessment. In this view of the matter, the disallowance of Rs. 3,33,22,664/- is directed to be deleted." 46. On perusal of the above observations of the CIT(A), we find that the assessee has purchased coal from Mahanadi Coal Field Limited which is Government of India Enterprises and the assessee after purchasing coal it is transported upto the destination where the coal measurements are taken by the assessee and shortages are also properly recorded but the CIT(A) has not observed as to whether the shortage are claimed by the assessee to the transporters and without examining the above facts the CIT(A) deleted the addition made by the AO, which in our opinion is not plausible. Neither the assessee has made any effort with regard to the above fact nor he has filed any supporting documents or evidence before us. The assessee has just explained before us that the shortage of coal worked out to 0.498% of the 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 ....
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....d CIT (Appeals) in respect of 'Additional Deprecation u/s. 32(1)(iia) of the I.T. Act, the learned CIT (Appeals) ignoring and not following the order of the Jurisdictional ITAT and in confirming the addition/disallowance of Rs. 43,48,202/- under 'Additional Deprecation u/s. 32(i)(iia) of the I.T. 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. d. That the details in respect of Additions to 'New Plants' having been furnished, the learned CIT(Appeals) holding that: i. the appellant has failed to furnish the details in the form of dates of acquisition and dates of installation of plant and machineries after 31.03.2005; and ii. that there is no concrete evidence regarding the claim of additional depreciation is on mis-appreciation/misconstruing the facts, contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts. e. That on the facts 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. Disallo....
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....able 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 ITAT (Hon'ble ITAT 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 ITAT and the CIT (Appeals)'s order for Asst. Year 2011-12, in confirming the addition/disallowance of Rs. 5,47,52,850/- 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. 5. Disallowance of claim of Investment Allowance u/s. 32AC of Act-Rs. 34,12,08,111/- a. That on the facts and in the circumstances the case, the learned CIT(Appeals) has mis-appreciated the facts and the sustaining of disallowance of claim of Investment Allowance of Rs. 34,12,08,111/- u/s. 32AC of the I.T. Act and dismissin....
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....also 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 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 to examine and allow the claim of the assessee. 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. 3 is allowed for statistical purposes. 52. With regard to ground No. 4, in respect of disallowance u/s. 14A of the Act, the ld.AR submitted that this issue has already been decided by the Tribunal in assessee's own case for A.Y. 2014-2015 in ITA No. 106 & 110/CTK/2018, vide order dated 23.09.2019, therefore, following the observations made by the Tribunal in the said order, this ground of assessee deserves to be allowed. 53. We have also gone through the order dated 23.09.2019 passed by th....
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.... 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 investments may also include such investments from which no exempt income would have been earned by the assessee. As is clear from the Rule itself, the average of only such investments have to be taken into account, which yielded the income not forming part of the to....
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....ing the period specified to the provision u/s. 32AC(1)(b)(1.4.2013 to 31.3.2015) In examination to the above points, the AO observed that the first three points are established and does not need any elaboration. It was also found by the AO that the addition/installation of assets are also prima facie supported by the Tax Audit report which may be taken as a base for ascertaining the installation of asset as per para No. 10.6.1. On being asked by the AO, the assessee produced a reconciliation of CWIP claiming that the assets acquired during and after 01.04.2013 and installed during the current year. Finally, the AO found that the assessee in his claim for the year has not complied to the requirement of acquisition of assets. Further the AO asked the assessee for details of assets, year of placement of order, date(s) of acquisition of assets and other details in support of their claim, which was partly complied by the assessee but in majority of the cases he noticed as under:- a. In majority of the cases, work orders/contracts placed much before that times stipulated u/s. 32AC 1 i.e. 1.4.2013. This prima facie establishes that the acquisition of assets must have started m....
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....ure of Addition after excluding fully WIP figure as of 31.03.13) 226.84 Claimed by Assessee for Investment allowance 227.47 It was also contended by the ld. AR of the assessee that during the financial year 2013-2014 relevant to assessment year 2014-2015 on which no investment allowance has been claimed by the assessee. Further, the ld. AR of the assessee relied on the assessee's own case for the assessment year 2005-2006, wherein in similar circumstances for the purpose of claim of additional depreciation u/s. 32(1)(iia) of the Act, wherein similar stipulation of both acquisition and installation on or after 1.4.2002 was envisaged and the coordinate bench of the Tribunal has accepted the same. Ld.AR further submitted that the Hon'ble Gujarat High Court in the case of PCIT Vs. IDMC Ltd. [2017] 393 ITR 441 (Gujarat), has held that the additional depreciation is a beneficial provision and has to be interpreted purposefully and accordingly even if acquisition has taken place in a previous year when the provisions of Section 32(1)(iia) of the Act has not come into effect but installation of Plant & machinery has taken place after the said date, additional depreciati....
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.... been used for the purpose of capital work-in-progress, therefore, it would amount to double deduction, which needs to be verified by the Assessing Officer regarding the date of purchase of the assets which has been used by the assessee as a capital work for claiming deduction u/s. 32AC of the Act. These details were not provided at any level of assessment proceedings as well as the appellate proceedings. It was also contended by the ld. CIT-DR that the case laws relied on by the ld. AR of the assessee are not applicable in the present facts of the case. Therefore, the ld. DR submitted that the issue should be restored to AO for fresh adjudication. 59. On the rejoinder, the ld. AR of the assessee submitted that the revised return was filed as per the Income Tax Act. There was a bonafide claim made in the revised return of income, for which was legally entitled to claim deduction u/s. 32AC of the I.T. Act. It was also contended by the ld. AR of the assessee that due to the mistake of the tax consultant in not claiming the deduction in the original return of income, for which the assessee was legally entitled, therefore, the assessee shall not be deprived of its benefit available ....
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....n investment allowance at the rate of 15% to a manufacturing company that invests more than Rs. 100 crores in new plant and machinery during the period 1.4.2013 to 31.3.2015. This investment allowance will be in addition to the current rates of depreciation. Accordingly, the Finance Act, 2013 inserts new section 32AC 'Investment in new plant or machinery' with effect from 1-4-2014. 5.1-1 Condition to be satisfied for availing investment allowance deduction To avail benefit of the investment allowance incentive under new section 32AC, following conditions need to be satisfied by the assessee: Assessee is a company. Assessee-company is engaged in the business of manufacture or production of any article or thing. Assessee acquires and installs new asset (see para5.1-2) after 31-3-2013 but before 1-4-2015 (see para5.1-3). Aggregate amount of cost of such new assets acquired and installed after 31-3-2013 but before 1-4-2015 should exceed Rs. 100 crores. If above conditions are satisfied, then, there shall be allowed: for assessment year 2014-15, a deduction of 15% of aggregate amount of actual cost of new as....
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....ent year 2014-15 Actual cost of assets installed between 1-4-2013 and 31-3-2015 (C) Whether deduction available? i.e., whether (C) exceeds Rs. 100 Cr 15% of (C) (D) Deduction allowed in assessment year 2014-15 (E) Deduction allowed in assessment year 2015-16 (F)=(D)-(E) 5.1-2 New asset The phrase 'new asset' has been defined as new plant or machinery but does not include-- any plant or machinery which before its installation by the assessee was used either within or outside India by any other person; any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house; any office appliances including computers or computer software; any vehicle; ship or aircraft; or any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head 'Profits and gains of business or profession' of any previous year. 5.1-3 Acquires and installs new asset after 31-3-2013 but ....
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....'put to use' or 'commences production'. 5.1-4 Five year lock-in-period in respect of new assets If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger, within a period of five years from the date of its installation, the amount of deduction allowed in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset. Where the new asset is sold or otherwise transferred in connection with the amalgamation or demerger within a period of five years from the date of its installation, the restrictions on non-transfer within 5 years shall apply to the amalgamated company or the resulting company, as the case may be, as they would have applied to the amalgamating company or the demerged company. 62. As per our considered opinion, this new incentive section have been inserted in the Income Tax Act to encourage subst....
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....ecided this issue while deciding the appeal of Revenue for assessment year 2009-2010 in ITA No. 331/CTK/2017, wherein we have observed that the coordinate bench of 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 made on account of loss on revaluation of non-moving stores and spares. In this order, Tribunal has followed the decision taken in ITA No. 197/CTK/2017, order dated 29.06.2018. Respectfully following the observations of the coordinate bench of the Tribunal in the said appeal, we dismiss the ground No. 2 raised by the Revenue. 67. Ground No. 3 relates to deleting the addition of Rs. 110,03,59,666/- by the CIT(A) which was made by the AO on account of interest on disputed Govt. dues (Water Charges). 68. We have already decided this issue while deciding the appeal of assessee for assessment year 2009-2010 in ITA No. 338/CTK/2017, wherein we have observed that the coordinate bench of the Tribunal in assessee's own case in ITA Nos. 106& 110/CTK/2018, order dated 23.09.2019, has followed its earlier o....
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....ne. d. That the details in respect of Additions to 'New Plants' having been furnished, the learned CIT(Appeals) holding that: i. the appellant has failed to furnish the details in the form of dates of acquisition and dates of installation of plant and machineries after 31.03.2005; and ii. that there is no concrete evidence regarding the claim of additional depreciation is on mis-appreciation/misconstruing the facts, contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts. e. That on the facts and in the circumstances the case, the learned CIT(Appeals) ought to have allowed the claim of Addl. Depreciation of Rs. 88,15,717/- u/s. 32(i)(iia) of the Act. 3. Disallowance u/s. 14A-Rs. 4,57,03,000/- a. That on the facts and in the circumstances of the case, the order of the learned CIT (Appeals) in sustaining the disallowance of Rs. 4,57,03,000/- u/s. 14A of the Act and dismissing the ground of the assessee is based on irrelevant considerations, presumptions, conjectures and surmises, without any material evidence on record, contrary to facts, arbitrary, erroneous and bad both in the eye of law and ....
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....ncashment', the Lower authorities have mis-appreciated/misconstrued the facts and the sustaining of the Addition of Rs. 1,30,66,93,385/- under 'Provision for Leave Encashment' u/s. 43B(f) of the Act is erroneous and bad, both in the eye of law and on facts and is to be deleted on this ground alone. c. That during the accounting year 2015-16, the assessee in its annual audited accounts (Statement of Profit and Loss) having debited Rs. 1,30,66,93,385/- being the actual amount paid during the accounting year 2015-16, under "Leave Encashment", the Lower authorities have mis-appreciated/misconstrued the facts and the sustaining of the Addition of Rs. 1,30,66,93,385/- under 'Provision for Leave Encashment' u/s. 43B(f) of the Act is erroneous and bad, both in the eye of law and on facts and is to be deleted on this ground alone. d. That in the Tax Audit Report it is nowhere stated that the an amount of Rs. 1,30,66,93,385/- under 'Provision for Leave Encashment' is outstanding as on Balance Sheet date and not paid before the due date of filing return and the same having brought to the notice of the Lower authorities, the sustaining of the Addit....
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....e 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 the other hand, ld. DR relied on the order of AO. 13. We find that this issue has been decided by the Tribunal in assessee's own case for the assessment year 2010-2011 in ITA No. 211/CTK/2016 along with other connec....
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....s 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. 3 is allowed for statistical purposes. 74. Ground No. 4 relates to disallowance of provision for leave encashment u/s. 43B(f) of the Act. In this regard, ld.AR of the assessee submitted that the issue is very similar to the issue raised by the assessee in the appeal for A.Y. 2009-2010, however, the facts of the....
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....016-17 as against 80% applied in the initial years upto AY 1998-99? (iii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal is right in concurring with the changed method of valuation adopted by the assessee for its unmoved stores and spares which have not moved for 5 years from 20% of cost to 5% of cost accepting the estimation of the assessee that 5% of the cost thereof would be the Net Realizable Value NRV)-and-the-loss-chargeable to P & L Account as revenue loss ? (iv) The appellant craves to alter, amend or add any other ground that may be considered necessary in course of the appeal proceedings. 79. Ground Nos.(i) & (iv) are general in nature. Ground No. (ii) & (iii) relate to deleting the addition of Rs. 8,56,12,086/- made by the AO on account of disallowance of loss on revaluation of non-moving stores and spares. 80. We have already decided this issue while deciding the appeal of Revenue for assessment year 2009-2010 in ITA No. 331/CTK/2017, wherein we have observed that the coordinate bench of the Tribunal in assessee's own case in ITA No. 106 & 110/CTK/2018, order dated 23.09.2019 has already decided....