TaxTMI 
TaxTMI 
2018 (7) TMI 2266
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.... deletion of disallowance of interest and expenses u/s. 14A r.w.r 8D of the I.T Rules, 1962. 4. We find that the assessee on its own made disallowance of Rs.2,25,833/- for the purpose of section 14A. The AO made disallowance under Rule 8D(2)(ii) & (iii) of the I.T Rules, 1962 to an extent of Rs. 1,16,08,167/-( Rs.1,18,34,000 - Rs.2,25,833) for the A.Y 2009-10 & Rs.1,58,30,500/- (Rs. 1,61,31,000 - Rs.3,00,500) for the A.Y 2010-11. 5. The CIT-A considered that the assessee having its own fund which is more than the investment and as such deleted the said disallowance of Rs. 1,16,08,167/- for the A.Y 2009-10 & Rs.1,58,30,500/- for the A.Y 2010-11. He also held that suomotu disallowance made by the assessee is reasonable and as such deleted both the disallowances made thereon for the purpose of section 14A. 6. The ld. DR relied on the orders of AO. 7. On the other hand, the ld. AR placed his reliance on the order dt. 31-07-2017 of Co-ordinate Bench of ITAT, Kolkata in the case of DCIT Vs. Century Ply Boards (I) Ltd in ITA No. 1873/Kol/2014 and referred to para 20.1 of the said order at page 43 of the paper book, which reads as under:- 20.1 Now coming to the disallo....
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.... Ground no. 3 in A.Y 2010-11 11. Ground no.2 raised by the revenue for the A.Y 2009-10 & ground no. 3 raised by the revenue for the A.Y 2010-11 are relating to deletion of disallowance of 25% of air craft flying right charges. 12. The ld. DR relied on the orders of the AO. 13. The ld. AR submits that the issue in hand is covered by the order dt. 12-08-2016 in assessee's own case for the A.Ys 2006-07 & 2008-09 in ITA Nos. 2123 & 2124/Kol/2013 and referred to paras 12 to 17 of the order dt. 12-08-2016 at pages 6-8 of the paper book. 14. After hearing both the parties, we find that the issue in hand is covered by the order dt. 12-08-2016 in asessee's own case for the A.Ys 2006-07 & 2008-09. Relevant portion of which is reproduced herein below:- "12. Ground no.2 raised by the revenue is as under:- 2. Whether Ld CIT(A)-XII, Kolkata, was justified in holding that expenditure of Rs. 85,00,000/- as flying rights charge was allowable business expenditure on the basis of decision of the CIT(A)-XXXIV, Kolkata in assessee's own case for Asst year 2005-06, when the said decision is challenged before the Hon'ble ITAT, Kolkata? 13. Brief facts....
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....income of the assessee. 15. On first appeal, the CIT-A relying on his earlier order dated 30-11-2011 for AY 2005-06 deleted the disallowance 25% of the expenditure incurred on aircraft flying rights charges. 16. Aggrieved by such order of the CIT-A, now the Revenue before the Tribunal by raising by above ground. 17. At the time of hearing before us, the assessee submits that the issue involved in this appeal is squarely covered in favour of the assessee by an order dated 30th October, 2014 of the Hon'ble High Court at Calcutta in GA No. 1382 of 2014 & 2390 of 2014/ITAT 31 of 2014 & 107 of 2014 in assessee's own case for the A.Y 2005-06 placed at pages 36-37 & 51-52 respectively of the assessee's paper book. In this case the revenue preferred appeal before the Hon'ble Calcutta High Court, wherein the revenue's appeal was dismissed by upholding the order dated 13th November, 2013 of the Tribunal in ITA No. 235/Kol/2012 for the AY 2005-06 on similar issue and in ITA No.741/Kol/2012 & 939/K/2012 for AY 2007-08. The Ld. DR conceded that the Hon'ble High Court of Calcutta dismissed their appeal. In view of the same and respectfully following , ground no-2 of re....
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....er considering the above submissions of the assessee being similar payments made in AY 2005-06 disallowed the amount of Rs.12,26,700/- for the assessment year under consideration and added back the same to the total income of the assessee. 21. On first appeal, the CIT-A found that the issue of allowability of payment of retainership/consultancy charges paid to M/s. Sreebala P.Ltd came up before the ITAT, Kolkata in assessee's case in a.y 1996-97 and 1997-98. The Tribunal vide its order dated 26-7-04 in ITA Nos. 720 & 747/Kol/03 held that the payments made to M/s. Sreebala P.Ltd were allowable as business expenses. He further found that the Tribunal in assessee's own case for AY 1998-99 in ITA No. 232/K/04 dated 05.05.05 and for AY 1999-2000 in ITA No.1818/K/05 dtd. 30.01.06 followed its earlier order for AY 1996-97 and 1997-98 and allowed the claim of assessee regarding retainership fees paid to M/s. Sree Bala P.Ltd The disallowance in AY 2003-04 and 2004-05 was deleted by the CIT(A). The Tribunal in ITA No.1447/Kol/06 dated 22.09.06 and ITA No.566/K/09 dated 10.06.11 had upheld the orders of the CIT(A) deleting the said disallowance. The CIT-A relying on order of Tribunal....
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....red expenditure on guest house of Rs.77,34,306/-. The AO, that being nature of expenses as was in AY 2005-06, disallowed 25% of the total expenses of Rs.19,33,576/- and added the same to the total income of the assessee. 26. On 1st appeal, the CIT-A following the order dt: 29-07-2005 of Tribunal in ITA 1071/Kol/2005 deleted the said disallowance. 27. Aggrieved by such order of the CIT(A) now the revenue is in appeal before us by raising the above mentioned ground. 28. At the time of hearing before us, the assessee submits that the issue in hand is squarely covered in favour of assessee and against the revenue by the order of the Hon'ble Jurisdictional Calcutta High Court vide order dated 23-02-2012 & 30-10-2014 in GA Nos. 276 of 2012 & ITAT 12 of 2012 & 1382 of 2014/ITAT 31 of 2014 (in ITA No.235/Kol/2012 for the AY 2005-06), wherein the revenue's appeal was dismissed by upholding the order dated 13th November, 2013 of the Tribunal in ITA No. 235/Kol/2012 for the AY 2005-06 on similar issue. The Ld. DR conceded that the Hon'ble High Court of Calcutta dismissed their appeal. Respectfully following the same, this ground of revenue is dismissed. 29.....
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...., amongst others, (a) Human resources, (b) Strategic planning (c) Corporate finance, (d) Management information, (e) Forex management, (f) Taxation and legal, (g) Total quality management, (h) Project development, (i) Information technology, (j) Corporate governance, etc. It is with the timely support of such services provided by RPG Enterprises Ltd that the company has become the largest carbon black manufacturer in the country and the largest exporter of carbon black from India. It is also one of most cost efficient production center. The company started its production facility at Durgapur and had further acquired production facilities at Baroda in Gujarat and Cochin in Kerala and substantially expanded the production capacities. With these production facilities in place the company caters easily to markets in East, West and South India. Needless to mention, that there is a considerable saving that has arisen to the company. It all became possible since it enjoyed the services of experts of RPG Enterprises Ltd readily and timely, though at cost. The entire business strategy of our company in areas of exports, capacity enhancem....
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....cord including the paper book. It is noticed that the assessee claimed loss of Rs.46.58 crores on account of foreign exchange fluctuation. We noticed that the assessee has shown gain in its profit & loss account on account of foreign exchange fluctuation for the A.Y 2010-11 and the AO assessed the same as income on account of forward contract gain, in the same way, in our opinion, the AO should have taken the loss due to unrealized forward contract for the A.Y under consideration as real loss. The CIT-A held the same as real loss and the assessee is entitled to claim as deduction. We find that similar issue on identical facts and circumstances, this Tribunal has decided the issue by placing reliance on the decision of the Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd supra , wherein held that loss recorded due to foreign exchange fluctuation is an allowable deduction. Relevant portion of the order dt. 03-05-2017 is reproduced herein below for better understanding:- paras 18 to 20 of the said order at page 49 to 51 of the paper book. "18. We have heard rival contentions and perused the materials available on record. From the aforesaid discussion, we ....
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....em at the balance sheet date: 11(b).... 11(c)... 12. Cash receivables and payables are examples of monetary items.... 13. Exchange differences arising on the settlement of monetary items or on reporting an enterprise's monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, should be recognized as income or as expenses in the period in which they arise..." 19. At this juncture we also wish to reproduce the provisions of Section 145 of the Act which reads as under:- "3.4 As per section 145 of the Act, '(1) Income chargeable under the head "Profits and gains of business or profession" or "income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time accounting standards to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or com....
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....T, Kolkata) in the case of TMT Viniyogan Ltd Vs. DCIT, in ITA No. 561/Kol/2015, A.Y 2008-09 and referred to para 14 of the said order at pages 81-82 of the paper book. 38. On the other hand, the ld. DR relied on the order of the AO. However, he did not controvert the above submissions of the ld.AR by bringing any contrary material on record. 39. Heard rival submissions and perused the record including the case law/order as relied on by the assessee. On perusal of record, we find that the similar issue was decided by this Co-ordinate Bench, ITAT, Kolkata in the case of TMT Viniyogan Pvt. Ltd supra as referred by the ld.AR before us, wherein the Tribunal held that no disallowance could be made u/s. 14A while computing the book profit u/s. 115JB of the Act and remanded the matter to the file of AO for computing the disallowance under clause (f) to section 115JB of the Act by placing reliance on the decision of the Hon'ble High Court of Calcutta in the case of CIT Vs. Jayshree Tea Industries Ltd in GA No. 1501 of 2014 (ITAT No. 47 of 2014) dt. 19-11- 14. Relevant partition of order dt. 15-12-2017 is reproduced herein below for better understanding:- 14. We have heard the....
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....ode in itself and resort need not and cannot be made to section 14A of the Act. " In view of above we hold that the disallowances made under the provisions of Sec. 14A r.w.s 8D of the IT Rules, cannot be applied to the provision of Sec.115JB of the Act as per direction of the Hon'ble jurisdictional High Court in the case of CIT Vs. Shree Tea Industries Ltd. (Supra). Therefore, the AO shall work out the disallowances in terms of the clause (f) to Explanation-1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit & loss account as mandated under the provisions of law. Therefore we are inclined to restore this issue to the file of AO for fresh adjudication in accordance to law and in the light of above discussion. Thus this ground of appeal of the assessee is allowed for statistical purposes." 40. In view of the above decision of Hon'ble High Court of Calcutta and respectfully following the same, we remand the matter to the AO and to work the disallowance in terms of clause (f) to Explanation-1 of Section 115JB of the Act for the purpose of book profit. Ground no. 2 raised by the revenue in ITA No. 1274/Kol/2015 for the A.Y 2010-1....
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....s generally done to cover the social need of the employee and other compulsion so should be allowable but it was not established that how these expenses are compulsory for business expediency. Considering the facts and circumstances of the case, the expenses claimed under this head of Rs.10,89,099 is disallowed and added to the total income of the assessee." 46. The CIT-A directed the AO to delete the disallowance of Rs.10,89,099/- by stating as under:- "8.2. I have carefully considered the submission of the AR of the appellant and the impugned order of the AO. I have also perused the judicial precedents on this issue relied upon by the appellant in its submissions. In Para 8 of the impugned order, the AO stated that the pooja & temple expenses did not involve any business expediency and disallowed the same. The appellant has factories located in different states of India. Small temples are constructed in the factory premises to cater to the religious beliefs & sentiments of the labour/workers employed at the factory. Accordingly small rituals &. ceremonies are performed at these temples as required under the local customs such as on occasion of Vishwakarma, Diwali, Ona....