TaxTMI 
TaxTMI 
2016 (1) TMI 1458
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....the return of income, a refund of Rs. 1,14,10,224/- was granted to the assessee. 2.1. The case was selected for scrutiny, by issuance of a notice, under Section 143 (2) of the Act, on 28.04.1998. The assessment came to be made under Section 143 (3) of the Act and by the order, dated 27.03.2000, the total income was determined at Rs. 8,98,52,050/-. 2.2. Deductions were claimed by the assessee invoking Sections 35D, 36, 37 (4) and 80 HHC of the Act and they were disallowed by the Assessing Officer. As against the order passed, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals) and the Commissioner, by the order, dated 28.02.2001, partly allowed the appeal. Challenging the same, the Assessee filed the Appeal before the Income Tax Appellate Tribunal and the Tribunal, in I.T.A.No.703/Mds/2001, allowed the appeal partly, by the order, dated 27.07.2006. 2.3. As against the order passed by the Income Tax Appellate Tribunal, Chennai 'B' Bench, in I.T.A.No.703/Mds/2001, this appeal has been filed before this Court by the assessee, raising the following substantial questions of law: (i) Is not the order of the Tribunal vitiated on the soul ground ....
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....e specified in sub-section (2), - (i) before the commencement of his business, or (ii) after the commencement of his business, in connection with the extension of his undertaking or in connection with his setting up a new unit, the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the undertaking is completed or the new unit commences production or operation : [Provided that where an assessee incurs after the 31st day of March, 1998, any expenditure specified in sub-section (2), the provisions of this sub-section shall have effect as if for the words "an amount equal to one-tenth of such expenditure for each of the ten successive previous years", the words "an amount equal to one-fifth of such expenditure for each of the five successive previous years" had been substituted.] (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of th....
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.... Explanation. - In this sub-section - (a) "cost of the project" means - (i) in a case referred to in clause (i) of sub-section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the business of the assessee commences; (ii) in a case referred to in clause (ii) of sub-section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the extension of the undertaking is completed or, as the case may be, the new unit commences production or operation, in so far as such fixed assets have been acquired or developed in connection with the extension of the undertaking or the setting up of the new unit of the assessee; (b) "capital employed in the business of the company" means- (i) ....
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....uction shall be admissible under sub-section (1) in the case of the amalgamating company for the previous year in which the amalgamation takes place; and (ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalga-mating company if the amalgamation had not taken place. 1[(5A) Where the undertaking of an Indian company which is entitled to the deduction under sub-section (1) is transferred, before the expiry of the period specified in sub-section (1), to another company in a scheme of demerger, - (i) no deduction shall be admissible under sub-section (1) in the case of the demerged company for the previous year in which the demerger takes place; and (ii) the provisions of this section shall, as far as may be, apply to the resulting company, as they would have applied to the demerged company, if the demerger had not taken place.] (6) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure specified in sub-section (2), the expenditure in respect of which deduction is so allowed shall not qualify for deduction ....
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....D will be allowed to the extent of Rs. 1039812 only and the balance of Rs. 2656979 will be disallowed." 8. The learned counsel for the assessee submitted that when the claim was allowed for one year, i.e. during 1995-96, there is no reason to refuse the deduction for the consecutive year. This contention would be legally correct, provided, the deduction had been claimed for the consecutive year in respect of the same unit. 9. From the discussions, it is evident that the assessee had claimed deduction in respect of successive units over a period of time; one unit during 1995-96, another unit during 1996-97 and yet another unit during 1997-98. There is also a finding that there is no proof to show that Euro Issue had been used for the capital expansion over a period of so many years. On these findings, the assessing officer has chosen to grant deduction only in respect of one unit, namely, for the unit established in 1995-96 to the extent of Rs. 10,39,812/- and disallowed the deduction in respect of other units. Therefore, we find no reason to differ the findings of the Tribunal. Deduction disallowed as claimed under Section 36 of the Act:- 10. The assessee had advanced a....
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....should be written off as irrecoverable in the accounts of the assessee for that accounting year in which the claim for a deduction is made for the first time. 14. The contention of the learned counsel for the assessee is that as part of the debt had to be written off, the same should have been allowed as revenue expenditure, and that the Assessing Officer has chosen to treat the same as capital loss, which is not correct in law. 15. A perusal of the order passed by the Income Tax Appellate Tribunal would go to show that rightly, the Tribunal has relied upon the Judgment of this Court in CIT vs. Micromax Systems (P) Ltd., reported in (2005) 277 ITR 409 and chosen to confirm the disallowance. In the reported decision, it has been held as under: "In the present case, it can be seen that the assessee did not write off the debt in question as irrecoverable in his accounts for the previous year. Hence, on the plain language of Section 6(1)(vii) of the Act, the debt cannot be allowed as a "bad debt". It may be that the assessee committed an inadvertent mistake, but, we cannot go by notions of equity in tax matters. Making a provision is not the same thing as writing off a d....
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....ess or profession would include within its scope and ambit the expression 'residential accommodation including any accommodation in the nature of guest house' used in Sub-sections (3), (4) and (5) of Section 37 of the Act. While the two expressions can be similarly interpreted, a distinction has been sought to be introduced for the purposes of Section 37 by specifying the nature of building to be a guest house. In our view, the intention of the Legislature appears to be clear and unambiguous and was intended to exclude the expenses towards rents, repairs and also maintenance of premises/accommodation used for the purposes of a guest house of the nature indicated in Sub-section (4) of Section 37. When the language of a statue is clear and unambiguous, the courts are to interpret the same in its literal sense and not to give it a meaning which would cause violence to the provisions of the statute. If the Legislature had intended that deduction would be allowable in respect of all types of buildings/accommodations used for the purposes of business or profession, then it would not have felt the need to amend the provisions of Section 37 so as to make a definite distinction with....