TaxTMI 
TaxTMI 
2018 (1) TMI 1649
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....e fly ash is a by-product generated out of the said generation activity of electricity. During the assessment proceedings, the AO noticed that the assessee has included sale of fly-ash bricks of Rs. 31,85,628/- in the total sale of power division and has claimed deduction u/s. 80IA on the entire profit. The Assessing officer examined the sales account of power division and found that the sale proceeds on sale of the said bricks was found credited and the relevant profits earned on sale of the fly ash bricks are considered by the assessee as eligible profits for the purpose of claiming of deduction under section 80-IA of the Act. The Assessing Officer noticed that the assessee has claimed the deduction in the year Rs. 4,05,493/- and therefore, he reduced this amount from the total claim of the assessee. 4. Being aggrieved the view so taken by the AO, the assessee carried the matter before the CIT(A). 5. Before the ld CIT(A), it was argued by the assessee that the fly ash brick plant is an integral part of the power plant. It is a functional requirement of the power plant to make a suitable arrangement for disposal of fly ash without which the assessee company could not ha....
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....ssue we have heard both the sides. We have been informed that the forward contract was entered into by the assessee to hedge the loss in respect of sale of carbon credits. Since we have held that the receipts from sale of carbon credit were in the nature of capital receipt, therefore, the consequence is that the impugned loss shall also be a capital loss. The present situation is that the revenue authorities have not examined the nature of loss suffered by the assessee and how a provision was made. Whether, it was a foreign derivative transaction or transaction in respect of forward exchange contract pertaining to hedge the loss in respect of carbon credit has not been clearly emerged from the facts of the case. We, therefore, deem it proper to restore this issue to the file of the AO so that he can make necessary enquiry and if it was a foreign exchange loss connected to the carbon credit then naturally the same should not be allowed in the light of the view taken by us about the nature of the carbon credit receipt. This ground of the revenue is therefore, allowed for statistical purposes.' We, find there being no change in the facts in the present years under consideratio....
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....he disallowance of Rs. 21,94,020/- on account of share capital expenses. 4. Whether in law and on facts & circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs. 77,58,654/- on account of Social Welfare expenses which have not been incurred wholly and exclusively for the purpose of business. 5. Whether in law and on facts &Y circumstances of the case, the CIT(A) has erred in deleting the disallowance u/s.40A(3) of the I.T.Act, 1961 to Rs. 17,54,455/- thereby giving a relief of Rs. 7,02,476/-." 16, The Assessing Officer has noticed that the assessee has invested Rs. 71,54,15,800/- in shares and dividend and income from these investment is exempt from tax. Therefore, the Assessing Officer did not allow fully the interest expenditure claimed by the assessee at Rs. 32,03,91,939/- on borrowed funds and disallowed a sum of Rs. 2,03,73,385/-. 17. On appeal, the CIT(A) deleted the disallowance made by the Assessing Officer by discussing the issue at length and also by relying the judicial decisions at pages 2 to 12 of the order. Hence, the revenue is in appeal before us. 18. At the time of hearing, both the sides conceded that Ground N....
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....e. The assessee also cited CBDT Circular No.17(F.No.26(2)-II-IT/43 dated 6.5.1983 & Circular No.13A/20/68-IT(A-II) dated 3.10.1968 wherein, it was emphasized that expenses incurred on the occasion of Diwali and Mahurat are in the nature of business expenditure and it was not lay down any monetary limits for the purpose of allowance of the expenditures. 22. Considering the submission of the assessee and also the CBDT Circulars on the issue, the CIT(A) allowed relief of Rs. 6,54,900/- and sustained the balance addition. 23. Having heard the rival submissions, we find that the CIT(A) after considering the CBDT circulars held that the expenses under the head charity, donation do not relates to business of the assessee whereas he has allowed deduction for the pooja and festivals aggregating to Rs. 6,54,900/-. We see no reason to interfere with the order of the CIT(A), which is hereby confirmed. Ground No.2 of the appeal is dismissed. 24. Adverting to next issue i.e. disallowance of share capital expenses of Rs. 21,94,020/-, the Assessing Officer observed that the assessee did not raise any fresh capital during the year, which is verifiable from Schedule -I of balance sheet. The....
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.... of the assessee. 31. On appeal, the CIT(A) observed that there is no dispute to the genuineness of claim of expenditure i.e. incurrence of expenditure and payment thereof. The CIT(A) following the decision in the case of CIT vs. Modi Industries Ltd., 327 ITR 570, the decision of Karnataka High Court in the case of CIT vs. Infosys Technologies Ltd., 360 ITR 714 (kar) and also the amendment in Section 37 in the Finance No.(2) Act, 2014 w.e.f. 1.4.2015, deleted the disallowance of Rs. 2,68,796/-. 46. Being aggrieved, the revenue is in appeal before us. 47. We have heard the rival submissions and perused the record of the case. We find that the CIT(A) has relied on the decision in the case of Modi Industries (supra) and Hon'ble Karnataka High Court in the case of CIT vs. Infosys Technologies Ltd (supra), wherein, it has been held that the expenditure incurred on social responsibility was laid out or expended wholly and exclusively for purposes of business. The CIT(A) has referred to the amendment made in Finance Act (No.2) 2014 w.e.f. 1.4.2015 in Section 37, wherein, it is declared that for the purposes of sub-section(1) any expenditure incurred by an assessee on the activiti....