TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 1606
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.... the earlier years. 3. Facts on record show that during the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has changed its method of accounting. On perusal of the change, the Assessing Officer found that the assessee company has added back an amount of Rs. 97.65 lakhs in its computation of income and claimed depreciation @ 25%. The Assessing Officer found that in Assessment Years 2001-02 to 2003-04, a similar issue arose where the claim of depreciation was denied, as the machinery spares which were in stock were not put to use, though capitalised to plant and machinery. 4. The Assessing Officer further observed that inn so far as the alternative claim raised by the assessee on actual consumption basis of machinery spares is concerned, since complete details which show machinery spares of Rs. 3,74,269/- have been consumed during the year, alternative claim of the assessee to the extent of Rs. 3,74,269/- was allowed and balance claim of depreciation was denied as was done in the earlier Assessment Years. 5. The assessee carried the matter before the ld. CIT(A) but the ld. CIT(A) confirmed the findings of the Assessing Officer. 6. Before....
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....tisfies the requirement of section 37(1) of the Act and accordingly, ground No.1(c) of the appeal of the assessee is allowed.". 9. As mentioned elsewhere, during the year under consideration, the Assessing Officer himself has allowed the claim in respect of machinery spares consumed during the year. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 1 with its sub ground is, accordingly, dismissed. 10. Ground No. 2 relates to the disallowance of Rs. 28,04,000/- made u/s 14A of the Income-tax Act, 1961 [hereinafter referred to as 'The Act']. 11. While scrutinising the return of income, the Assessing Officer noticed that the assessee has earned dividend income of Rs. 7.38 crores, which has been claimed as exempt u/s 10(33) of the Act. The Assessing Officer further noticed that income from tax free bonds of Rs. 51,00,760/- has also been claimed exempt u/s 10(15) of the Act. The Assessing Officer was of the firm belief that provisions of section 14A squarely apply on the facts of the case. The assessee was asked to show cause as to why reasonable disallowance of expenses should not be made for earning exempt income. 12. In its....
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....ntimation under section 143(1) of the Act, an enforceable debt was created in favour of the assessee in respect of the interest due on such refund and thus income accrued as the right to receive was acquired. The relevant finding of the Tribunal is reproduced as under: "9. The main contention of the assessee's counsel is that such right is contingent as the interest so received can be varied or withdrawn after the assessment under s. 143(3'). We are unable to accept such contention of assessee for the reasons given hereafter. According to the dictionary meaning, a right or an obligation can be said to be contingent when such right or obligation is dependent on something not yet certain. According to s. 244A. the only condition for grant of interest is that there must be a refund due to assessee under any provision of the Act. There is no other condition in the said provision affecting such right. Therefore, the moment a refund becomes due to assessee, an enforceable debt is created in favour of assessee and assessee acquires a right to receive the interest. Sub-s. (3) of s. 244A only affects its quantification under certain circumstances and not the right of interest. The....
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....ersons where lands were acquired, such assessment would become patently erroneous, as the basis itself has ceased to exist. Such assessment would, therefore, amount to mistake, which, in our opinion, can be rectified. Similarly, any income assessed may become non-taxable by virtue of retrospective amendment and consequently, erroneous assessment can be rectified. Therefore, in our humble opinion, if the interest granted under s. 244A(1) is varied under sub-s. (3) of such section, then the interest originally granted would be substituted by the reduced/increased amount as the case may be. Thus, income on account of interest if assessed can be rectified under s. 154." 18.7 In view of the above finding of the Tribunal (supra), we restore the issue in dispute to the file of the Ld. Assessing Officer for verifying that the interest granted under section 143 (1) in relation to assessment year 2000-01 in the previous year corresponding to assessment year under consideration, but same has been subsequently withdrawn under section 143(3) of the Act passed in financial year 2003-04 and decide the issue in accordance with law after providing adequate opportunity of being heard to the assess....
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.... Act ' The reliance by the appellant on the decision of the Hon'ble Madras High Court in the case of CIT Vs. VRSRM Firm and others (1994) 208 ITR 400 (Mad) is rather misplaced; the Hon'ble Court was examining the legal status of the DTAA when it held that Tax treaties have to be considered to be mini legislations containing in themselves all the relevant aspects or features which are at variance with the general taxation laws of the respective countries. The observations of the Hon'ble Court are in relation to the computation of 'total income' under the provisions of the Income Tax Act, taking into consideration the provisions of the relevant DTAA. None of the DTAAs provide for computation of 'Book Profit' under the provisions of Section 115JA of the Act. For this reason alone, as held by the Hon'ble court, the basic tax laws in force in the country (115JA) will get attracted since there is no specific provision in the DTAA as regards the computation of 'Book Profit' for the purpose of levy of Minimum Alternative Tax (MAT). Therefore, there is no merit in the claim of the appellant since section 115JA imposes tax on the Book Profit, whi....
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....to the file of the Assessing Officer for verification observing as under: "9. Vis-a-vis the claim in respect of provision for bad and doubtful debts, relevant Schedule 7 of its Balance-sheet is reproduced hereunder:- Schedule 7 -Sundry debtors (unsecured) Debts outstanding for a period exceeding six months considered good 4,446.29 4,263.29 Doubtful 1063.70 439.00 Less : Provision 1063.70 439.00 4,446.20 4,263.29 Other debts - Considered good 18,920.26 1 7,948.30 33,366.55 22,211.59 It is not clear whether the total debts of Rs. 23,366.55 lakhs is after deducting the provision of Rs. 1,063.70 lakhs. The amount of Rs. 624.70 lakhs considered by the Assessing Officer for addition is obviously difference between opening provision of Rs. 439 lakhs and closing provision of Rs. 1063.70 lakhs, mentioned in the above schedule. If the provision debited by assessee is indeed deducted from the total debts and only the net balance shown in the balance-sheet then by virtue of decision of the Hon'ble Karnataka High Court in the case of Yokogawa India Ltd. (....
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...., a plain reading of s. 1153 shows that if the assessee is a company and its total income under the IT Act is less than 30 per cent of its book profits then, fictionally, it will be deemed that its total income chargeable to tax would be an amount equal to 30 per cent of such book profits. Hence, in such a case, the total income of the assessee is first required to be computed under the IT Act and if the total income so computed is less than 30 per cent of the book profits then the P&L a/c shall have to be prepared in accordance with Part II and Part III of Sch. VI of the Companies Act. The important thing to be noted is that while calculating the total income under the IT Act, the assessee is required to take into account income by way of capital gains under s. 45 of the IT Act. In the circumstances, one fails to understand as to how in computing the books profits under the Companies Act, the assessee-company cannot consider capital gains for the purposes of computing book profits under s. 115J of the Act. Further, under cl. (2) of Part II of Sch. VI to the Companies Act where a company receives the amount on account of surrender of leasehold rights, the company is bound to disc....
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....d by the parties and .after going through the orders and material placed before us, we hold as under" Regarding the claim of deduction u/s 801A, it is seen that appellant is a company and has entered into contracts with various Central Government, State Government, State Government and Local Authority and other statutory bodies. A close reading of the agreement (for instance agreement with MSRDC enclosed in the paper book) clearly shows that appellant developed the infrastructure facility and has not acted merely as contractor as sought to be made out by Assessing Officer and C1T (Appeals). The Oxford dictionary defines the term developer as a person that designs and crate new products, whereas contractor is a person or a company that has a contract to do work or to provide goods or services. Various clauses of the above referred agreement to which reference has been made by us little below would show that the construction rail over bridge projection (ROB) awarded by MSRDC to the appellant is nothing but development of infrastructure facility, which was to be legally handed over to the Railways and MSRDC after the payment was received. Various clauses of the agreement would sho....
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....icer chose to make sweeping observation that the assessee is not developer. Such sweeping and bald assertion cannot be approved by us. Therefore, taking into the facts of the present case., we are the considered view that appellant is entitled to claim deduction 80IA, which was wrongly denied. We set aside the order of the. ld. CIT (Appeals) and direct the Assessing Officer to allow deduction: u/s 801A has claimed by the appellant. Ground No. 1 is allowed." 38. As no new facts have been brought on record for the year under consideration, respectfully following the findings of the co-ordinate bench [supra] we direct the Assessing Officer to allow deduction u/s 80IA of the Act as claimed by the assessee. The findings of the ld. CIT(A) are accordingly confirmed. Ground No. 2 is dismissed. 39. Ground No. 3 relates to the deletion of addition of Rs. 1.56 crores on account of provision for maintenance expenditure. 40. An identical issue was considered by the co-ordinate bench in ITA No. 3805/DEL/2008. The relevant findings of the co-ordinate bench read as under: "62. Ground No. 5 the appeal relates to addition of Rs. 1,28,77,257/-deleted by the Ld. CIT(A) on account of provision for....
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....of the appeal of the Revenue, are dismissed." 44. Respectfully following the findings of the co-ordinate bench, we decline to interfere with the findings of the ld. CIT(A) Accordingly, Ground No. 4 is dismissed 45. Ground No. 5 relates to deletion of disallowance of Rs. 16.19 crores on account of foreign exchange fluctuation loss. 46. Facts on record show that the Assessing Officer has disallowed loss stating that it is notional in nature. It was strongly agitated before the ld. CIT(A) that the loss arising on account of foreign exchange fluctuation cannot be called notional since the fall in the exchange rate has already taken place in the accounting year. Reference was made to the CBDT Circular 225/161/95/ITA dated 07.05.1996 wherein the Board has stated that foreign exchange fluctuation gain earned by the project exporters has to be considered as income chargeable to tax in the year in which the said gain accrues/arises. 47. By the same analogy, it was claimed that loss should also be allowed as deductible expenditure in the year in which the same accrues or arises. It was brought to the notice of the ld. CIT(A) that similar forex loss has been allowed in Assessment Year 19....
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..... 38,81,258 lakhs. 58. While scrutinising the return of income, the Assessing Officer noticed that the auditors have mentioned prior period expenses claimed during the year under consideration. The assessee was asked to justify the claim of prior period expenses. The assessee furnished details of prior period expenses. 59. On perusal of the details, the Assessing Officer was convinced with the claim of three expense, namely, leave encashment and bonus, adjustment of exchange fluctuation and payment to M/s Alstom. As regards the claim of other expenses, the Assessing Officer observed that no evidence has been furnished to demonstrate that the liabilities have actually crystallised during the year under consideration. The Assessing Officer, accordingly, made disallowance of prior period expenses amounting to Rs. 66,31,867/-. 60. The assessee carried the matter before the ld. CIT(A) and reiterated its claim and furnished few supporting evidences to demonstrate that the liabilities have been crystallised during the year. 61. After considering the facts and after analysing the details, the ld. CIT(A) was convinced that to the extent of Rs. 27,50,609/-, the assessee has successfully ....
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....l. For our detailed discussion therein, we direct accordingly. Accordingly, Ground No. 3 is dismissed. 72. Ground No. 2 relates to the deletion of disallowance of deduction u/s 80IA of the Act amounting to Rs. 39,40,45,216/- made by the Assessing Officer. 73. A similar issue was considered by us in ITA No. 1491/DEL/2010 [supra] vide Ground No. 2 of that appeal. For our detailed discussion therein, we direct accordingly. Accordingly, Ground No. 2 is dismissed. 74. Ground No. 3 relates to the deletion of addition of Rs. 2.44 crores on account of provision for maintenance expenditure. 75. A similar issue was considered by us in ITA No. 1491/DEL/2010 [supra] vide Ground No. 3 of that appeal. For our detailed discussion therein, we direct accordingly. Accordingly, Ground No. 3 is dismissed. 76. Ground No. 4 relates to the restriction of disallowance of Rs. 53.58 lakhs made u/s 14A of the Act. 77. This issue has been considered by us in assessee's appeal [supra] vide Ground No. 1 of that appeal. For the detailed reasoning given therein, this ground is partly allowed. 78. Ground No. 5 relates to deletion of addition of Rs. 2.17 crores on account of proportionate corporate expenses ....