TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 273
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.... the Assessee. Though, the Assessee replied the said notice by filing written submissions, however the ld. Commissioner, set aside the assessment order and directed the AO to re-frame the assessment by holding as under:- "4.1 I have gone through the submissions made by the Assessee and various case laws relied upon by the Assessee and found it to be not satisfactory. The law prohibits claiming CSR expense as a deduction from income. Under the new Companies Act, certain class of profitable entities is required to shell out at least two per cent of their three year average annual net profit towards Corporate Social Responsibility (CSR) activities. The CSR expense is treated as application of income. As the application of income is not allowed as deduction, amount spent on CSR cannot be allowed as deduction for computing taxable income of the company. The assessing officer should have disallowed the entire CSR expense instead of disallowing only Rs. 5,00,000/- out of CSR expense. Since the assessing officer has not disallowed the entire CSR expense it renders the assessment order as erroneous in so far as it is prejudicial to the interest of the revenue. 4.2 So far as claim of 50%....
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....ejudice to the interest of the revenue, suo motu revisional jurisdiction could be exercised by the Commissioner. I, accordingly set aside the assessment order on the limited issues discussed in para 4.1 to 4.3. 3. The Assessee challenged the impugned order passed by the ld. Commissioner which is under consideration before us. 4. The ld. DR vehemently supported the impugned order passed by the ld. Commissioner and submitted that the ld. Commissioner only directed the AO for verification of the issues and, therefore, the order under challenge cannot be attributable to improper and unsustainable. 5. We have heard both the parties and perused the material available on record. In this case three issues are involved. First issue relates to the CSR expenses. The Assessee before the AO claimed deduction of Rs. 47,52,825/- as CSR expenses which were partly allowed by disallowing Rs. 5.00 lakhs only. The ld. Commissioner set aside the said allowance of deduction by observing that the law prohibits claiming CSR expenses as a deduction from income. The CSR expenses are treated as application of income. As the application of income is not allowed as deduction, amount spent on CSR cannot be ....
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...., wherein it is declared that for the purposes of sub-section (1) any expenditure incurred by an Assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the Assessee for the purposes of the business or profession. The CIT(A) has held that there was no such embargo for the preceding years. In view of the above, the CIT(A) held that the disallowance cannot be sustained. In the instant case, it is submitted that CSR expenses are incurred for the welfare of local community and thereby improve corporate image of the companies incurring such expenditure. We are of the considered opinion that the CIT(A) has rightly considered the decision and deleted the addition made by the Assessing Officer and ground No. 4 of appeal of the revenue is dismissed." 5.3. We have considered the facts and circumstances of the case The amendment was made to Section 37 by Finance Act (No. 2) 2014 which came into effect from 01/04/2015 wherein it is declared that for the purposes of sub-section (1) any expenditure incurred by an Assessee on the activities relating to corporate social respon....
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....fact that by raising specific query vide column No. 8 of notice dated 17/12/2012, the AO asked the Assessee that there is huge investments in fixed assets specially plant & machinery. Despite this fact your turnover has decreased then what use has been put to new assets. The said query was replied by the Assessee vide column No. 8 of the its reply (Pg no. 47 of PB) wherein it was replied by the Assessee that during the year under consideration the Assessee company started its commercial production in Block Mill since December, 2009 and also set up another Wind Mill installed in the month of March. The said query and its reply goes to show that the AO has made the requisite enquiry, therefore the assumption of the Ld. CIT is wrong and contrary to the facts. 6.2. The Hon'ble Delhi High Court in the case of Pr. CIT vs. Delhi Airport Metro Express Pvt. Ltd. has held that for the purpose of exercising jurisdiction under section 263 of the Act, the conclusion of the ld. Commissioner has to be preceded by some minimal inquiry before coming to the conclusion that the order of the AO is erroneous and prejudicial to the interests of the revenue and once the PCIT is of the view that the ....
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....usiness of manufacture of production of an article or thing. The ld. Commissioner further held that wrongly allowing additional depreciation on power generation has rendered the assessment order as erroneous insofar as it is prejudicial to the interest of the revenue. 7.2. We may observe that the Hon'ble Apex Court in the case of State of Andhra Pradesh vs. National Thermal Power Corporation Ltd. [ (2002) 5 SCC 203] held the electricity as "GOODS" which can be transmitted, transferred, delivered, possessed. The amendment was brought out in section 32(1)(iia) by Finance Act 2012 to include the business of generation and distribution of power for the benefit of additional depreciation which was held by the various Co-ordinate Benches as clarificatory in nature, specifically in the case of ACIT vs M. Satish Kumar in ITA No. 718/MDS/2012 decided on 28/09/2012 by holding as under:- "8. We have heard the submissions made by the respective parties and have also examined the judgments orders relied on by the A.R. of the Assessee. A perusal of the judgments clearly show that generation of electricity is akin to manufacturing of a new product. In the instant case, electricity which m....
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....assessee's own products namely mining and extraction of gold. The use of electricity in the manufacturing activity of the core business of the assessee is not a precondition for the grant of additional depreciation under the statue. 7.1 The amendment brought about in section 32(1)(iia) by the Finance Act, 2012 to include the business of generation and distribution of power to the benefit of additional depreciation is only clarificatory. A similar view has been held by the Hon'ble Chennai Bench of the Tribunal in the case of ACIT vs. M Satish Kumar in ITA No. 718/Mds/2012 dated 28th September, 2012. The relevant findings of the Tribunal read as follows: "9. We have heard the submissions made by the respective parties and have also examined the judgments orders relied on by the A.R. of the assessee. A perusal of the judgments 7 ITA No. 718/Mds/2012 clearly show that generation of electricity is akin to manufacturing of a new product. In the instant case, electricity which may not be seen with the eyes, however, its effect can be seen and felt. The electricity can be transmitted, transferred, delivered, stored, possessed etc. The Hon'ble Supreme Court in the case of th....