TaxTMI 
TaxTMI 
2018 (9) TMI 2118
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....d CIT(A)] in Appeal No. 970/2014-15 dated 12.01.2016 against the order passed by the DCIT, Circle-5, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short "the Act") dated 31.01.2014 for the Assessment Year 2011-12. Since identical facts are involved in both the appeals, they are taken up together and disposed off by this common order for the sake of convenience. 2. WRITE OFF OF ADVANCES - Rs 12,92,000/- Ground No.1 of Revenue Appeal for Asst Year 2010-11 The brief facts of this issue are that the assessee is a Government of India Enterprise under the administrative control of the Ministry of Petroleum & Natural Gas, engaged in the business of manufacturing of industrial container grease & lubricants, leather chemicals, trading in tea, logistic infrastructure (CFS), Engineering & Technology Service Division and Travel & Tour Services. The return of income for the Asst Year 2010-11 was filed by the assessee on 23.9.2010 declaring total income of Rs 153,93,56,690/-. The ld AO observed that the assessee had debited advances written off of Rs 12,92,000/- in its profit and loss account and claimed the same as deduction. The assessee submitted the....
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....ading loss. We find that the reliance placed by the ld AR on the decision of Hon'ble Apex Court in the case of CIT vs Mysore Sugar Co. Ltd reported in 46 ITR 649 (SC) and the Hon'ble Jurisdictional High Court in the case of CIT vs Rohtas Industries Ltd reported in 120 ITR 110 (Cal) are very well founded, among others. In view of the aforesaid observations and respectfully following the aforesaid judicial precedents, we find no infirmity in the order of the ld CITA granting relief to the assessee in this regard. Accordingly, the Ground No.1 raised by the revenue for Asst Year 2010-11 is dismissed. 3. DEDUCTION U/S 80IA OF THE ACT Ground No. 2 of Revenue Appeal for Asst Year 2010-11 Ground No. 3 of Assessee Appeal for Asst Year 2010-11 The brief facts of this issue are that the assessee claimed deduction of Rs 17,95,43,785/- in respect of Container Freight Station (CFS) activity carried on by it. There is no dispute with regard to the fact that the CFS activity is an industrial undertaking and is entitled for deduction u/s 80IA of the Act. The assessee filed the break up of its income before the ld AO. In the said break up, there were certain items like intererst on security d....
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....assets etc. are not eligible for deduction u/s 80IA. Similar finding has been given in respect of rent in the appellate order for A.Y. 2008-09. Considering this, the amount on which deduction is not allowable is taken as Rs. 2.95 lacs. The assessing officer is directed to reduce the disallowance accordingly." 3.2. Aggrieved, both the assessee as well as the revenue are in appeal before us. 3.3. We have heard the rival submissions. It is not in dispute that the CFS activity of the assessee falls under the ambit of an industrial undertaking thereby making it eligible to claim deduction u/s 80IA of the Act. The only dispute to be decided here is as to whether certain receipts earned by the assessee could be construed to be 'profits derived from CFS undertaking' and consequential eligibility of the same for deduction u/s 80IA of the Act. The details of other income earned by the assessee are tabulated above. The ld DR argued that the ld CITA ought not to have given relief to the assessee in respect of credit balances written back in the sum of Rs 12.39 lakhs; forfeiture of deposit of Rs 2.69 lakhs; disposal of pallets / garbage in the sum of Rs 6.26 lakhs and net realization from au....
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.... the same are owned by the customers who stack their products in the pallets. While removing the goods from the warehouse of the assessee, the assessee stated that the pallets are left by the parties, which were unnecessarily occupying the space of the assessee and hence the same were disposed off. We find that this does not have any first degree nexus with the CFS activity of the assessee and cannot be construed as income derived from the said undertaking. Hence we hold that the ld AO had rightly denied deduction u/s 80IA of the Act for the same. 3.3.3. With regard to income earned on net realization from auction of cargo, the ld AR argued that the assessee has got lien over the goods stored in the warehouse belonging to the assessee in the CFS unit. When those goods are not taken / removed by the customers within the prescribed time, the assessee in order to utilize the relevant space for better commercial purposes and derive more income, would resort to auction the said goods and realize proceeds thereon, which proceeds would only be substitute for receipt of rental income by the assessee which has got first degree nexus with CFS activity. We are not in agreement with this argu....
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....of the Act for the same. 3.3.7. On hire charges received on assets to the tune of Rs 0.02 and Rs 0.07 lakhs, we find that the assessee had provided refrigerators, generator sets and personal computers to the customers who had stored the goods in the godown / warehouse of the assessee and had collected hire charges. These assets are given to the customers as part and parcel of the CFS activity carried on by the assessee for smooth and effective storage of the goods and income derived thereon in the form of hire charges is inextricably linked with the CFS activity carried on by the assessee. Hence we direct the ld AO to grant deduction u/s 80IA of the Act for the same. 3.3.8. With regard to sale of tender documents in the sum of Rs 0.46 lakhs, the assessee being a Government of India Enterprise, would have to invite tenders from the customers in connection with its CFS unit. For this purpose, the tender documents were printed by the assessee and had incurred expenses for the same. These tender documents, when remaining unutilized, were sold by the assessee in order to recover its cost / expenses incurred thereon. Hence it would only tantamount to recovery of expenses incurred direc....
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....nding that liability in respect of the prior period expenses crystallized during the year which are quite evident from the details filed before the ld AO. The ld CITA also observed that no discrepancy was noticed by the ld AO on the said details of prior period expenditure. The ld CITA noticed that the prior period expenditure debited during the year include depreciation of Rs 7,16,473/- being the depreciation as per books, which in any case, would have to be added back while computing the business income of the assessee. Accordingly, he confirmed the disallowance of Rs 7,16,473/- and granted relief for the remaining sum of Rs 6,83,527/- (14,04,000 - 7,16,473) to the assessee. Aggrieved, the revenue is in appeal before us. 4.2. We have heard the rival submissions. We find that the entire details of prior period expenses of Rs 14,03,667/- are enclosed in page 77 of the paper book. It is not in dispute that these details were also filed before the lower authorities. From the perusal of the said details, we are convinced of the fact that the liability for such expenses had crystallized during the year excluding depreciation of Rs 7,16,473/- and hence we hold that the ld CITA had righ....
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....und that there were fresh facts involved in this year which make it distinguishable from the facts of the Asst Year 2008-09. He brought the following fresh facts in the year under appeal by stating that during the year under appeal, the assessee had entered into a fresh lease agreement with Kolkata Port Trust for a fresh period of 15 years in respect of land situated at CGS Kolkata and W&D (i.e last 2 items in the aforesaid table) for which it had claimed a sum of Rs 16,09,686/- and Rs 6,91,893/- respectively as is evident from the aforesaid table. The ld AR argued that there is a difference between the term 'rent' and 'premium'. He argued that the payment made for getting into a premises is called 'premium'. He argued that the payment made for using the premises is called 'rent'. Admittedly, the payments made during the year contains payment towards lease rent for fresh lease and for existing leases. Obviously differential treatment need to be given for both in the light of difference between the term ' rent' and 'premium' as the said difference has been duly noted by the Hon'ble Supreme Court in the case of CIT vs Panbari Tea Company Ltd reported in 57 ITR 422 (SC). In the absenc....
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....l had already held that only dividend bearing investments should be considered for the purpose of working out the disallowance under second and third limb of Rule 8D(2) of the Rules. In the instant case, since the assessee company is having sufficient own funds, by placing reliance on the decision of the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd reported in 313 ITR 340 (Bom), we direct the ld AO not to make any disallowance of interest under second limb of Rule 8D(2) of the Rules. With regard to the disallowance under third limb of Rule 8D(2) of the Rules, in consonance with the decision of this tribunal in the case of REI Agro Ltd reported in 144 ITD 141, we direct the ld AO to consider only investments (excluding foreign investments) that had yielded dividend income should be considered for working out the disallowance under third limb of Rule 8D(2) of the Rules. Accordingly, the Ground No. 4 of original grounds of appeal in assessee appeal for Asst Year 2010-11 and Additional Ground No. 2 of assessee appeal for Asst Year 2010-11 is partly allowed for statistical purposes. 10. The Ground Nos. 1 and 3 raised by the assessee for Asst Year 2011-12 ar....