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2021 (6) TMI 68
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....ss objections are common and therefore, these were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts. ITA No. 3885/Del./2011 & 3942/Del./2011 2. First we take up, appeal of the assessee (ITA No. 3885/Del/2011) and cross appeal of the Revenue (ITA No. 3942/Del/2011) for assessment year 2006-07. 3. The assessee originally raised 14 grounds in its appeal, however during the course of the hearing, the assessee on 31/03/2015, submitted seven (7) condensed/concise grounds, as under: 1. Original ground no. 1 to 3 and 13 & 14;- a. It is contended that non acceptance of the revised return filed by the Corporation with in the time limit prescribed u/s 139(5) is unlawful. b. It is contended that the CIT(Appeal) has made wrong conclusion that the revised return should have been filed before the completion of the processing u/s 143(1). 2. Original ground no.4 & 5:- a. It is contended that the CIT(A) had erred in not accepting the contention of the appellant with regard to the applicability of provisions of u/s 36(l)(xii) while appellant fulfills all the conditions laid down in thi....
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.... and circumstances of the case, the Appellant being a Corporation created by an Act of Parliament, could be construed to be a Company for the purposes of applying the provisions of section 115JA of the IT Act. 2 Whether both on the facts and on law, Non-schedule VI Companies are Exempt from the provisions of the Minimum Alternate Tax (MAT), since such Non- schedule VI Companies are not required under the proviso to Section 211(2) of the Companies Act to prepare their Profit & Loss Account in accordance with Schedule VI of the Companies Act, 1956. 3. Whether both on facts and on law for the purpose of computing the Book Profit under section 115JA of the Income Tax Act, the Profit & Loss Account; prepared in accordance with the provisions of the Appellant's Regulatory Act viz. the Warehousing Corporations Act, 1962 read with Central Warehousing Corporation Rules, 1963 and Central Warehousing Corporation (General Regulations), 1965 shall be taken as the basis for computing the Book Profit under section 115JA of the Income Tax Act. 3.2 The grounds raised by the Revenue in the appeal are reproduced as under: 1. The Ld.CIT(A) has erred on facts and in law in....
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....system of accounting. 7. The Ld.CIT(A) has erred in law and on facts in deleting addition made on account ofcomputing book profit u/s 115JB provision for meeting liabilities other than ascertained liabilities such as provision for gratuity (Rs. 63759797/-), provision for bad and doubtful debts(Rs. 89686802/-), provision for wealth tax(Rs. 662044/-), provision for leave encashment(Rs. 54227950/-) and provision for PLI (Rs. 40205550/-) ignoring the fact that provisions of section 115JB clauses (a) to (f) are applicable in this case. 8. The Appellant craves leave for reserving the right to amend, modify, alter, add or forego anyground(s) of appeal at any time before or during the hearing of this appeal. 4. Briefly stated facts of the case are that the assessee is a Government of India undertaking, established under section 3 of the Warehousing Corporation Act, 1962 and for the purpose of the Income- tax Act,1962 ( in short the Act) , it is deemed to be a company within the meaning of the Act. It is an authority constituted under the law for the purpose of warehousing and marketing of commodities / agricultural products. The assessee derived its income from letting....
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....e Directorate of Income Tax (system), New Delhi i.e., relevant office of the Income Tax Department, responsible for managing e-filing of return of income. The assessee also sent hard copy of the revised return of income by speed post on 31/03/2008 and uploaded the said revised return electronically on 01/04/2008. As per the provisions of the Act, i.e. Section 139(5), an assessee can revise its return of income, within one year from the end of the relevant assessment year (i.e. 31/03/2008) or before completion of the assessment, whichever is earlier. The Ld. Assessing Officer ignored the revised return of income filed by the assessee. According to the Ld. CIT(A), the intimation under section 143(1) was sent on 28/03/2008, which is in the nature of the assessment, and therefore, the revised return of income filed thereafter on 31/03/2008, was not valid in terms of section 139(5) of the Act. 6.2 Further, the condensed ground No. 6 of the appeal of the assessee relates to claim for allowing provision of Post-retirement Medical Benefit, which was claimed under revised return of income. 6.3 Before us, the Learned counsel of the assessee referred to paper-book page 16, which is retu....
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.... in the Profit & Loss A/c does not take away the power of the AO. The assessee fails in ground of appeal No. 3." 7.2 Before us, the Learned Counsel of the assessee submitted that direction may be issued to the Assessing Officer for examining and allowing the claim as per law. 7.3 The learned DR, on the other hand, submitted that expenditure claimed in profit and loss account has been allowed by the Assessing Officer subject to the provisions of the Act and all expenditure cannot be allowed to deduct merely on the ground the same has been debited in the profit and loss account of the assessee. 7.4 We have heard rival submissions and perused the relevant material on record. The section 36(1)(xii) of the Act during relevant period is reproduced as under: "36(1)(xii) any expenditure (not being in the nature of capital expenditure) incurred by a corporation or a body corporate, by whatever name called, constituted or established by a Central, State or Provincial Act for the objects and purposes authorized by the Act under which such corporation or body corporate was constituted or established." 7.4.1 The above provision was inserted in the Act by way of Finance Act ....
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.... which such corporation has been established, then those expenses might be allowed under section 36(1)(xii) of the Act. 7.5 Before us the learner Consul of the assessee did not furnish details of any amount eligible for deduction under the section 36(1)(xii) of the Act. No evidence have been filed before us to substantiate that said details were ever filed before the Assessing Officer or the Ld. CIT(A). The assessee has never contested deduction under above provision in earlier years. Even in subsequent assessment year i.e. AY 2007-08, the assessee has not pressed this ground of Cross Objection. Thus, it is evident that ground in current year has been raised in casual manner without any detail of actual amount eligible under the above provision. The claim of the assessee before the Assessing officer was that all expenditures have been incurred for the object and purpose of the Central Warehousing Act. The Ld. CIT(A) also rejected the claim of the assessee. 7.6 In our opinion, it is for the assessee to substantiate, whether particular expenditure has been incurred for the objects and purpose of the Central Warehousing Act, 1962. In absence of any such detail of the claim of de....
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.... shares are not listed and have never been traded. He submitted that Warehousing Corporation Act has been restructured in such a manner so that the assessee i.e. Central Warehousing Corporation does business through State Warehousing Corporations. He submitted that the Board of Directors of the State Warehousing Corporation(s) are appointed by the assessee and even salary of Managing Director(s) of the State Warehousing Corporations is also fixed in consultation with the assessee Corporation. Thus, according to the learned Counsel, the warehousing business of the State Warehousing Corporations (SWC) is conducted through the assessee Corporation and, therefore, expenses in holding shares of those SWCs are deductible against business income of the assessee. The learned Counsel submitted that shares in the State Warehousing Corporation are a tool in assessee corporation's trade. The learned Counsel relied on the decision of the Hon'ble Supreme Court in the case of State Bank of Patiala, which was given alongwith the Civil Appeal in the case of Maxopp Investment Ltd Vs CIT, 402 ITR 640. The learned Counsel further submitted that the investments in State Warehousing Corporation are lega....
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.... as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income. 33. There is no quarrel in assigning this meaning to section 14A of the Act. In fact, all the High Courts, whether it is the Delhi High Court on the one hand or the Punjab and Haryana High Court on the other hand, have agreed in providing this interpretation to section 14A of the Act. The entire dispute is as to what interpretation is to be given to the words 'in relation to' in the given scenario, viz. where the dividend income on the shares is earned, though the dominant purpose for subscribing in those shares of the investee company was not to earn dividend. We have two scenarios in these sets of appeals. In one group of cases the main purpose for investing in shares was to gain control over the investee company. Other cases are those where the shares of investee company were held by the assessees as stock-in-trade (i.e. as a business activity) and not as investment to earn dividends. In this co....
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...., the principle of apportionment of the expenditure relating to the non-taxable income did not apply. The principle of apportionment was made available only where the business was divisible. It is to find a cure to the aforesaid problem that the Legislature has not only inserted Section 14A by the Finance (Amendment) Act, 2001 but also made it retrospective, i.e., 1962 when the Income Tax Act itself came into force. The aforesaid intent was expressed loudly and clearly in the Memorandum explaining the provisions of the Finance Bill, 2001. We, thus, agree with the view taken by the Delhi High Court, and are not inclined to accept the opinion of Punjab & Haryana High Court which went by dominant purpose theory. The aforesaid reasoning would be applicable in cases where shares are held as investment in the investee company, may be for the purpose of having controlling interest therein. On that reasoning, appeals of Maxopp Investment Limited as well as similar cases where shares were purchased by the assessees to have controlling interest in the investee companies have to fail and are, therefore, dismissed. 36. There is yet another aspect which still needs to be looke....
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....;. We proceed to discuss this aspect hereinafter. 39. In those cases, where shares are held as stock-in-trade, the main purpose is to trade in those shares and earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as 'income' under the head 'profits and gains from business and profession'. What happens is that, in the process, when the shares are held as 'stock-in-trade', certain dividend is also earned, though incidentally, which is also an income. However, by virtue of Section 10 (34) of the Act, this dividend income is not to be included in the total income and is exempt from tax. This triggers the applicability of Section 14A of the Act which is based on the theory of apportionment of expenditure between taxable and non-taxable income as held in Walfort Share and Stock Brokers P Ltd. case. Therefore, to that extent, depending upon the facts of each case, the expenditure incurred in acquiring those shares will have to be apportioned. 40. We note from the facts in the State Bank of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowanc....
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...., 1962 (in short 'the Rules') cannot be invoked in the case and the disallowance of expenses has to be made on reasonable basis. The issue in assessment year 2002-03 ( ITA No. 635/Del/2012) has been restored by the ITAT to the file of the Assessing Officer for deciding afresh observing as under: "4. We have carefully considered the rival submissions in the light of the material placed before us. We find that there is a force in the claim of the learned AR that Rule 8D is not applicable to the impugned assessment year, hence, the matter has to be reconsidered in the light of the aforementioned decision of Hon'ble Delhi High Court in the case of Maxopp Investment-Limited vs. CIT (supra) as the said decision of Hon'ble Delhi High Court was not available when learned CIT (A) has decided the issue. We, therefore, restore this issue to the file of Assessing Officer for re-determination of the disallowance u/s 14A. We direct accordingly. This issue of disallowance u/s 14A is considered to be allowed for statistical purposes in the manner aforesaid." 8.6 The identical issue in AY 2005-06 (ITA No. 2918/Del/2009) has been restored by the ITAT to the file of the Assessing ....
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.... cost more than Rs. 5,000/-. However, in the case in hand, the ld. AO had specifically requested for the details of the assets wherein expenditure to the tune of Rs. 5,000/- per se had been made. The assessee did not provide the detailed list of assets. It only refers to an enclosure filed along with the Tax Audit Report, which to my mind is inadequate. Once the assessee has not availed of this opportunity, it does not deserve any sympathy. In CIT Vs. Motor General Finance Ltd., (2002) 254 ITR 449, the Delhi High Court has held that the failure of the assessee to produce documents during the course of hearing can lead to an adverse inference to the effect that if produced they would have gone against assessee in terms of section 114 of the Evidence Act, 1872. This case had gone to the Supreme Court wherein the Apex Court returned the case to the High Court, as reported in 267 ITR 381 (SC) but did not comment upon the presumption raised u/s 114 of the Evidence Act. Thus, in such circumstances, when the assessee has not produced the primary bills/vouchers, it deserves to fail. As such, the assessee deserves to fail in ground of appeal No. 9." 9.1 The learned Counsel before us refe....
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....ned DR, on the other hand, did not object for verification of the issue in dispute by the Assessing Officer. 10.3 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that income from joint-venture has to be taxed in the hands of the assessee once and same income cannot be taxed twice. Since the assessee is following mercantile system of accounting, the income from joint-venture is required to be taxed on accrual basis after verification of audited accounts of the joint ventures. The Learned Counsel of the assessee has not disputed taxing the same following mercantile system and therefore we are not going into the aspect whether those receipt should be taxable on cash basis . The income from joint-venture once considered on mercantile basis in the year under consideration, same income cannot be taxed by the Assessing Officer on cash basis in subsequent years at the time of receipt. Accordingly, the issue in dispute is restored to the file of the Assessing Officer for adjudication after verification of the documentary evidence including audited accounts of the joint ventures under reference. The gro....
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....e same were admitted following the ratio in the case of NTPC Ltd. (supra). The contention of the assessee is that provision of Minimum Alternative Tax (MAT) are not applicable over the assessee being a non-Schedule VI company of Companies Act. Under the section 115JB, the book profit is taken as profit computed on the basis of books of accounts maintained as per Companies Act. The part of section 115JB of the Act during relevant period is reproduced as under: " (2) Every assessee, being a company, shall for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of schedule 6 to the companies act, 1956 ( 1 of 1956)." 11.3 The said Schedule VIof Companies Act,1956 has provided instruction for preparing profit and loss account for the financial year and balance sheet at the financial year end. The relevant section 211 of the Companies Act, 1956 specifying the form and content of the balance-sheet is reproduced as under for ready reference: "211. Form and contents of balance-sheet and profit and loss account.-(1) Every balance-sheet of a company shall give a true and ....
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.... matters which are not required to be disclosed by the Insurance Act, 1938 (IV of 1938); (ii) in the case of a banking company, any matters which are not required to be disclosed by the Banking Companies Act. 1949 (X of 1949) ; (iii) in the case of a company engaged in the generation or supply of electricity any matters which are not required to be disclosed by both the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948; (iv) in the case of a company governed by an other special Act for the time being in force, any matters which are not required to be disclosed by that special Act; or (v) in the case of any company, any matters which are not required to be disclosed by virtue of the provisions contained in Schedule VI or by virtue of a notification issued under sub-section (3) or an order issued under sub-section (4)" .............................................. " 11.4 The sub section (2) of section 211 of the Companies Act, 1956 has specifically excluded application of preparing profit and loss account as per schedule VI to the insurance and banking companies, or companies engaged in the generation or supply of the....
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....e a true and fair view- (а) in the case of the balance sheet, of the state of the Corporation's affairs at the end of its financial year, and (б) in the case of the profit and loss account, of the profit or loss for its financial year, and in case he has called for any explanation or information from the officers, whether it has been given and whether it is satisfactory. (6) The appropriate Government may, after consultation with the Comptroller and Auditor- General of India at any time issue directions to the auditor requiring him to report to the appropriate Government upon the adequacy of measures taken by a Warehousing Corporation for the protection of its shareholders and creditors or upon the sufficiency of his procedure in auditing the accounts of the Corporation and may enlarge or extend the scope of the audit or direct that a different procedure in audit may be adopted or direct that any other examination may be made by the auditor if in the opinion of the appropriate Government public interest so requires. (7) A Warehousing Corporation shall send a copy of every report of the auditor to the Comptroller and Auditor-Genera....
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....mployees, debited in profit and loss account. The assessee claimed that said provision was created on the basis of parameters laid down in the approved PLI scheme of the assessee Corporation, however, according to the Assessing Officer neither details regarding working of the provision nor evidence of the payment before filing return of income were filed. According to the Assessing Officer, the provision was in the nature of an unascertained liability and therefore, he added the same back to the returned income of the assessee. Before the Ld. CIT(A) the assessee submitted that the liability does not attract provisions of section 43B of the Act and it has to be allowed when same is crystallized. Further, it was submitted that it was an ascertained liability computed in accordance with the PLI scheme framed by the Corporation keeping in view the Government guidelines duly approved by the Board of Directors. It was submitted that provision was being made in earlier years also and have been allowed by the Department except for the assessment years 2004-05 and 2005-06. The Ld. CIT(A) has deleted additions made by the Assessing Officer observing as under: "11. I have consider....
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....he assessee referred to page 24 of the paper-book and submitted that information, documents and evidences were filed before the Assessing Officer along with letter dated 22/11/2008. He also referred to a copy of said details of the claim, calculation and breakup of offices available on page 138 to 145 of the paper-book. It was also submitted that entire liability was paid before due date of filing of return. The Learned Counsel relied on the order of the Tribunal in the case of Container Corporation of India Ltd ( ITA No.1555/Del/2012 and 1363/Del/2012) for assessment year 2006-07 and submitted that identical liability of PLI has been held to be non-contingent and allowable. 12.3 We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. It is undisputed that liability of PLI has been allowed by the Assessing Officer in the case of the assessee except for assessment year 2004-05 to 2005-06. The Ld. CIT(A) has deleted the addition in all the three assessment years. The counsel submitted that in the AYs 2004-05 and 2005-06, no appeal was filed by the Revenue in absence of COD (Committee of Disputes) approval.The page 141 ....
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....ility is an ascertained liability and not a contingent liability. We find that Tribunal in the case of container Corporation of India Ltd. (supra) has allowed the provision of productivity linked incentive on the ground that the liability is in present, quantifiable and not contingent. Since the quantification of liability has not been verified at the level of the Assessing Officer, in the interest of substantial justice, we feel appropriate to restore this issue to the file of the Assessing Officer for verification of documentary evidences and decide in the light of the decision in the case of Container Corporation of India Ltd (supra). The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purposes. 13. The ground No. 2 of the appeal relates to addition of Rs. 69,44,300/-on account of capitalization of special ( SLP) Dunnage, which has been deleted by the Learned CIT(A). 13.1 The facts in brief qua the issue-in-dispute are that the Assessing Officer observed from balance-sheet of the assessee that special (SPL) Dunnage has been treated as capital asset and depreciation has been claimed on the same, however, in the profit and loss account, a sum....
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....on the issue in dispute and perused the relevant material on record. We find that the identical issue of special versus ordinary dunnage and their treatment as capital expenditure or revenue expenditure has been adjudicated by the Tribunal in appeal filed by the Revenue in the case of the assessee in ITA No. 5449/Del/2017 for assessment year 2012-13. The relevant finding of the Tribunal is reproduced as under: "11. We have perused the record in the light of submissions made on either side. At the outset, there is no disputed that the assessee has been using two types of Dunnage, though for the same purpose, but with two different life times, namely, the special Dunnage having life time of more than five years, whereas the ordinary Dunnage has to be used only for one year ad un-usable thereafter. It is also not in dispute that the assessee has capitalized the expenditure on the special Dunnage in their accounts and has been claiming depreciation @ 16% per annum over the useful period and on the same analogy in respect of ordinary Dunnage, they are treating the expenditure for one year and debiting the same to the profit and loss account to claim it as revenue expenditure. I....
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....land letters, printing of fire safety posters, computer printing of ISO documents, casual labour engaged for cleaning of godowns, lamination and framing work etc. 14.2 The Learned DR before us submitted that no details of the expenses are available on record in the year under consideration on the basis of which the capital or revenue nature of such expenses could be decided and therefore issue in dispute may be restored back to the file of the Ld. CIT(A) or the Assessing Officer. 14.3 The Learned Counsel of the assessee on the other hand referred to page 24 of the paper-book and submitted that details in respect of the expenses were provided to the Assessing Officer with letter dated 22/11/2008. The Learned Counsel referred to the details of the expenses filed in the paper-book from pages 153 to 164. He submitted that expenses incurred are mostly of the routine office expenses nature. 14.4We have heard rival submission of the parties on the issue in dispute. The main issue-in-dispute is whether the expenses incurred under the head 'Quality Improvement expenses' are in the nature of the capital or revenue. The lower authorities have not appreciated the details of expenses f....
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....bed overheads on capital works". The Assessing Officer noted that no details of the relevant expenses were provided by the assessee and no distinction has been brought out as how a part of the expense was capital and balance was treated as revenue expenditure. In view of the facts, the Assessing Officer treated the revenue expenditure of Rs. 4,52,83,000/- as capital expenditure and after allowing depreciation at the rate of the 10%, disallowed the balance amount of Rs. 4,07,54,700/-. The Ld. CIT(A) following the finding of his predecessor, deleted the addition in dispute. 15.2 Before us, the Learned DR relied on the order of the Assessing Officer and submitted that in view of the no details of actual expenses incurred, there was no option with the Assessing Officer except to treat the same as capital expenditure. The learned DR submitted that issue in dispute may be restored to the file of the Learned Assessing Officer for deciding afresh in the light of the nature of the expenses actually incurred. 15.3 The Learned Counsel of the assessee, on the other hand, submitted that detail in respect of the expenses was already filed by the assessee before the Assessing Officer alongw....
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....fficer for deciding afresh after providing reasonable and adequate opportunity of being heard to the assessee. This ground of the appeal of the Revenue is accordingly allowed for statistical purposes. 16. The ground No. 6 of the appeal of the Revenue relates to addition for income from bonded warehouses amounting to Rs. 7,24,44,000/-, which has been deleted by the Learned CIT(A). 16.1The facts in brief qua the issue in dispute are that the assessee operates bonded warehouse under a license given by the customs department, where imported consignments are being deposited by the importers to enable them to take delivery of the consignment by paying custom duty and warehousing charges at the time of the actual release of the imported goods. These warehousing charges are being accounted by the assessee on realisation basis. The contention of the assessee that realisation of such warehousing charges is uncertain as sometimes paying of custom duty and warehousing charges becomes commercially unviable to the importer and therefore importers are not induced to take delivery of such consignment. According to the Assessing Officer, the assessee is following Mercantile system and therefo....
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....e assessee. Accordingly, the bonded warehouse income added by the Assessing Officer on accrual basis, is hereby confirmed, however, the Assessing Officer is directed to ascertain that, bonded warehouse income which has been added on Mercantile basis in the year under consideration, is not again subjected to tax on cash basis in subsequent years. The ground No. 6 of the appeal of the Revenue is accordingly, partly allowed for the statistical purposes. 17. In ground No.7, the Revenue has contested the additions for various provisions, made by the Assessing Officer in terms of section 115JB of the Act, which the Ld. CIT(A) has deleted. 17.1 The facts in brief qua the issue in dispute are that section 115JB of the Act specifies that provisions made for meeting liabilities other than ascertained liabilities are to be added to the book profit as per clause (c) of said section. The assessee in its books of accounts made provision for payment of gratuity at Rs. 6,37,59,797/-, provision for bad and doubtful debts at Rs. 8,96,86,802/-, provision for payment of wealth tax at Rs. 6,62,044/-, provision for leave encashment at Rs. 5,42,27,950/- and provision for PLI of Rs. 4,02,05,550/-....
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.... In view of the above facts and circumstances, we feel it appropriate to restore this issue to the file of the Assessing Officer for verification of the claim of the assessee of actuarial valuation and other documentary evidence to substantiate that the relevant liabilities are ascertained liabilities. The ground No. 7 of the appeal of the Revenue is accordingly allowed for statistical purposes. 18. In the result, the appeal of the assessee as well as appeal of the Revenue, both are allowed partly for the statistical purposes. ITA No. 3439/Del./2014 & C.O. No.93/Del./2015 19. Now, we take up the appeal of the Revenue and cross objection of the assessee for assessment year 2007-08. The grounds raised by the Revenue are reproduced as under: Grounds of appeal of the Revenue: 1. On the facts and in the circumstances of the case, the CIT(A) has erred in: (i) Deleting the addition of Rs. 81,60,521,/- made on account of disallowance of SLP Dunnage, treating it as Revenue Expenditure instead of capital Expenditure as held by the AO. (ii) In Deleting the addition of Rs. 1,70,80,395/- made by the AO who disallowed the Depreciation claimed at 100% ....
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....g Officer, the business of the assessee Corporation depends on the quality of the service provided by the Corporation to its customer and not on discharging of social obligations. The Ld. CIT(A) deleted the disallowance observing as under: "12.Ground No 8: This disallowance is in respect of Social Obligation expenditure of Rs. 19,76,364/-. The AO in his assessment order has disallowed these expenses holding that the business of the assessee corporation depends on the quality of service which the assessee provides to its customers and not on the discharging of social obligation. On its part, the appellant has filed various documents with reference to the expenses incurred for social up- liftment which is a part of the Corporate Social Responsibility of the appellant corporation, as per the directions issued by the Ministry. Taking in to account all these factors, being a Government Corporation in my considered view such expenses made by the appellant towards meeting the social objective are an allowable business expenditure even though it may not have directly yielded to immediate revenue on one to one basis. The assessee succeeds in this ground. Accordingly ground....
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.... ground of the appeal is allowed for statistical purpose. 24. Ground No. 1(v) of the appeal of the Revenue is identical to ground No. 5 (five) of the appeal of the assessee in assessment year 2006-07. Following our finding in assessment year 2006-07, this ground of the appeal is allowed for statistical purposes. 25. As far as cross objection No. 1 of the assessee is concerned, the learned Counsel did not press the said objection, accordingly same is dismissed as infrutuous. 26. The cross objection No.2 raised by the assessee is identical to ground No.7 (seven) of the appeal of the assessee for assessment year 2006-07, accordingly this ground is dismissed following our finding in assessment year 2006-07. 27. In the result, the appeal of the Revenue is allowed partly for the statistical purposes, whereas cross objection of the assessee are dismissed. ITA No.3440/Del./2014 & C.O. No.94/Del./2015 (AY 2008-09) ITA No. 2201/Del/2014 (AY 2009-10) ITA No. 5784/Del/2014 & CO No. 158/Del/2015 (AY 2010-11) 28. Now, we take up the appeals of the Revenue and Cross objections of the assessee for assessment year 2008-09 and 2010-11 and appeal of the assessee for AY 2009-10....
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....the expenditure that it relates to earning of exempted income. 1.02 It is contended without prejudice to the above grounds that the investment made in various state warehousing corporations is in accordance with the statutory obligations under Warehousing Corporations Act and such investment is made more to secure control and management for the smoothsailing of the state warehousing corporation and not with the purpose of earning dividend income. 1.03 Accordingly the aforesaid investment should not form part of investment while calculating the disallowance under Rule 8 D of the IT Rules to arrive at 0.5% of the average of opening and closing value of the investment. 1.04 It is contended, without prejudice the above grounds, that the disallowance made is high and excessive. Further the working of disallowance by the AO is wrong. 2. Both on facts and on law, the disallowance of Rs. 3945000/- under the head social obligation expenses are normal routine business expenses with a view to achieve a corporate social responsibility as per the guidelines of the Dept, of Public enterprises, Govt, of India. 3. It is contended that both on fact and i....
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....y ground(s) of appeal at any time before or during the hearing of this appeal. (v) The Cross Objections raised by the Assessee in C.O. No. 158/Del./2015 are as under: 1) It is contended that the Section 14A has no application in the instant case and disallowance to the extent of Rs. 75,23,199/- without bringing on record any material to the fact that expenses have been incurred by the appellant for earning exempted income is wrong. 2) Without prejudice to the above, it is contended that disallowance under section 14A is wrong and require revision since Investment in subsidiary have to be excluded. 3) It is contended that Engineering Overheads on capital works has been wrongly disallowed by the Assessing Officer treating these as capital expenditure. There has been no change in the treatment and principle of consistency should have been followed. 4) It is contended that the provisions of section 115JB are not applicable in the instant case since it is a non-schedule VI company. The Appellant craves leave for reserving the right to amend, modify, alter, add or forego any cross objection(s), to Grounds of Appeal filed by the Revenu....
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....ss objection no.2 of the assessee for assessment year 2008-09 ; ground No. 6 (six) of the appeal of the assessee for assessment year 2009-10 and cross objection No. 4 for assessment year 2010-11 are dismissed accordingly. 34. The ground No. 3 of the appeal of the assessee for assessment year 2009-10 and cross objection No. 3(three) of the assessee for assessment year 2010-11 relates to unabsorbed Engineering overheads. These issues are identical to ground No. four of the appeal of the Revenue for assessment year 2006-07, which has been restored to the file of the assessing officer for deciding afresh. Accordingly, following our finding in assessment year 2006-07, these grounds of the appeal and cross objection of the assessee are restored to the file of the Assessing Officer. These grounds are accordingly allowed for statistical purposes. 35. The ground No. 4 (four) of the appeal of the assessee for assessment year 2009-10 relates to income from bonded warehouse. The identical ground raised by the Revenue in assessment year 2006-07 has been restored to the file of the Assessing Officer for deciding afresh. Accordingly, following our finding in assessment year 2006-07, this gr....
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....his explanation was introduced to reiterate the position taken by various courts that any expenditure incurred in connection with infringement of law is not an allowable business deduction. In Haji Aziz & Abdul Shakoor Bros V. CIT (1961) 41 ITR 350(SC), it was held by the apex court that no item of expenditure which is paid by way of penalty for the breach of law will be allowed as it cannot be said that the amount is incurred wholly and exclusively for the business of the assessee. Considering the fact that the assessee has paid interest on delayed payment of service tax, the view taken by the AO is held to be correct as that tantamount to penalizing the assessee for such default or infringement of law. Ijf the preliminary liability to be discharged by the assessee is not allowed as expenses laid out or incurred for the purpose of the business, ordinarily, the interest paid thereon also cannot be considered as expenses /aid out or incurred wholly & exclusively for the purpose of business, as held in Saurashtra Cement & Chemical Industries Ltd. V. CIT (1995) 213 ITR 523 (Guj). Therefore, the addition of Rs. 15,57,766/- is hereby confirmed and the assessee gets no relief on this gro....