TaxTMI 
TaxTMI 
2023 (6) TMI 665
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....in the production and sales of Viscose Staple Fibre, Chemicals, Cement, and the production of Sponge Iron and Textile. The Assessing Officer ("AO"), vide order dated 26/03/2004, passed u/s 143(3) of the Act, assessed the total income of the assessee at Rs. 494,59,33,333, after making certain additions/disallowances to the income declared by the assessee. The learned CIT(A), vide impugned order granted partial relief to the assessee. Being aggrieved, both, the assessee as well as the Revenue are in appeal before us. ITA no.4754/Mum./2004 Assessee's Appeal - A.Y. 2003-04 3. In its appeal, the assessee has raised the following grounds:- The appellant prefers an appeal against the order of the Commissioner of Income Tax (Appeals)- XXVI [hereinafter referred as "CIT (A)"] on the following amongst other grounds each of which is without prejudice to any other. 1. Disallowance under section 43B: 1.1 The CIT (A) erred in not allowing the amounts paid or written back during the previous year amounting to Rs. 1.30,00,904/-, which had already been disallowed in the past under clause (c), (d) and (e) of section 43B, consistent with the Department's stand. 1.2 The CIT (A) ought to....
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....port of manufactured goods, while calculating deduction under section 80 HHC. 5. Appropriation of Head Office expenses 5.1 The CIT (A) erred in confirming the AO's action in appropriating Head Office expenses and reducing the amount of allowable deduction u/s 80O. 5.2 The CIT (A) failed to appreciate that Head Office expenses cannot be reduced from the receipts while computing allowable deduction u/s. 80O. 5.3 Without prejudice to the above, the CIT (A) failed to appreciate that even if head office expenses are to be reduced from gross receipts for computing allowable deduction u/s. 80O, such expenses can only be a certain percentage of the gross receipts eligible for deduction u/s. 80O and not the total turnover of the division. 6. Long Term Capital Loss 6.1 The CIT (A) erred in upholding the action of the AO in reducing long term capital on sale of equity shares of MRPL from Rs. 328,24,90,776/- to Rs. 314,11,35,651/-. 6.2 The CIT (A) ought to have held that the third proviso to Sec 48(ii) is not applicable to the appellant's case. 7. Additional depreciation u/s. 32(1)(iia) The CIT (A) erred in confirming action of the AO in rejecting the appellant's ....
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....) of the Act by the assessee itself. However, an amount of Rs. 1.31 crores was not considered as disallowance u/s 43-B of the Act falling under clause (b) to (d). The contention of the assessee was that the amount of Rs. 1.31 crores which falls under clauses (b) to (d) of section 43-B of the Act which are not payable as on 31-3- 2001 cannot be covered by the provisions of section 43-B of the Act. However, the A.O. did not agree with this explanation and made the disallowance. The ld. CIT(A) by his impugned order, confirmed the order of the A.O. and the assessee is in appeal before us. 3. At the outset, the ld. Counsel for the assessee contended that the issue is covered by the decision of the Tribunal in earlier years i.e assessment years 1993-94 to 1998-99 and 2000-01 in assessee's own case, copy of which was placed on record. We find that similar issue was considered by the Tribunal in A.Y. 2000-01 vide order dated 9-10-2013 wherein the ground taken by the assessee was dismissed as the same has become infructuous. It was found by Tribunal that it is an alternative plea which relates to A.Y. 1993-94 decided by the Tribunal in assessee's favour. The appeal filed by the Department....
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....at by such payment, the assessee got the right to use the facilities of the Club which is the advantage of enduring nature. Accordingly, the AO disallowed the payment towards Club Membership fees of Rs. 8,48,100. The AO further accepted the alternative contention of the assessee and allowed depreciation considering it it as intangible asset. 10. The learned CIT(A), vide impugned order, granted partial relief to the assessee and directed the A.O. to disallow only the entrance fees as capital in nature and allow all other expenditures as revenue expenditure. Being aggrieved, the assessee is in appeal before us. 11. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03 cited supra, by following the decision rendered in the preceding year, observed as under:- "12. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1993-94. While deciding the issue in favour of the assessee the Coordinate Bench of the....
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.... perused the material available on record, we find that the coordinate bench of the Tribunal, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03 cited supra, by following the decision rendered in the preceding year, observed as under:- "15. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "7. The assessee is also aggrieved for taxing of interest received from Income Tax Department amounting to Rs. 13,64,09,609/-. We find that similar issue has been dealt with by the Tribunal in A.Y. 1993-94 in ITA No. 1523/Mum/1997 vide para 62 as under;- "We have heard the parties and considered the rival submissions. These refunds have been granted to the assessee in the year under consideration and therefore they would partake the character of income of the assessee. If however, any refund has been found to be not refundable to the assessee and consequently the interest granted is withdrawn t....
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....section 80HHC of the Act. Accordingly, the assessee was asked to show cause as to why 90% of the above receipt be not reduced from the profit of the business for the purpose of deduction under section 80HHC of the Act. In response thereto, the assessee submitted that the interest paid during the previous year is Rs. 168.41 crore, and, therefore, only net interest should be reduced from business profit. The AO, vide order passed under section 143(3) of the Act, did not agree with the submissions of the assessee and held that only gross interest is to be reduced for the purpose of section 80HHC of the Act. 20. The learned CIT(A), vide impugned order, dismissed the ground taken by the assessee. Being aggrieved, the assessee is in appeal before us. 21. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03 cited supra, by following the decision rendered in the preceding year, observed as under:- "18. Considered the submissions and material placed on record, we observe from the record that identical issue....
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....lso find that in the preceding assessment years, the coordinate bench, followed the decision of the Hon'ble Supreme Court in ACG Associate Capsule Pvt. Ltd. v/s CIT, [2012] 343 ITR 89 (SC), wherein it was held that for computation of profit of business for the purpose of deduction under section 80HHC of the Act, only 90% of net interest or net rental income is to be reduced under clause (1) of Explanation (baa) to section 80HHC of the Act. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in the facts and law was alleged in the relevant assessment year. Since in the present case, it is an accepted fact that interest paid during the year is Rs. 168.41 crore, while interest received is Rs. 39.33 crore, therefore, respectfully following the judicial precedence in assessee's own case cited supra, we uphold the plea of the assessee and allow grounds no.4.2 and 4.3, raised in assessee's appeal. 23. The issue arising in ground no.4.4, is pertaining to the reduction of rental income while calculating deduction under section 80HHC of the Act. 24. The brief facts of the case pertaining to the issue, as emana....
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....o the Profit & Loss Account for the purpose of computation of deduction under section 80HHC of the Act. 30. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue. Being aggrieved, the assessee is in appeal before us. 31. The learned Sr. Counsel, appearing for the assessee, during the hearing, by referring to Page-41 of the paper book submitted that these miscellaneous receipts are in respect of various items. The learned Sr. Counsel further submitted that these receipts are in the nature of rebate on sales tax, refund of mineral area development cess, sundry balance returned back, scrap sales, sale of empty cement bags, plastic barrel, scrap barrel, waste oil, insurance claim and recovery, deposit forfeited, discount, recovery of water charges, freight recovery, liquidated damages, recovery of packing charges and other miscellaneous income. The learned Sr. Counsel submitted that under Explanation (baa) to section 80HHC of the Act, only non-operation receipts are excluded for the computation of deduction under the said section, however, the aforesaid receipts are pertaining to operations carried out by the assessee and, therefore, the s....
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....aste oil 23.37 lakh 6. Insurance claim and recovery Rs. 28.02 lakh 7. Deposit forfeited Rs. 19.01 lakh 8. Discount Rs. 20.84 lakh 9. Recovery of water charges 17.25 lakh 10. Freight Recovery 11.31 lakh 11. Liquidated damages 37.51 lakh 12. Recovery of packing charges 1.02 crore 13. Other misc. expenses 4.66 crore 14. Net misc. expenses incurred Misc. expenses Misc. income of Rs. 58.86 crore Rs. 70.34 crore Rs. 11.48 crore 35. In respect of rebate on sales tax and refund of Mineral Area Development Cess, the assessee has placed reliance upon the decision of the Hon'ble Jurisdictional High Court in Alfa Laval India Ltd. v/s DCIT, [2003] 133 Taxman 740 (Bom.), wherein the Hon'ble Court held that interest income received from customers as well as sales tax set off cannot be excluded from business profit while calculating deduction under section 80HHC of the Act. Further, in respect of sundry balances written back, the assessee has placed reliance upon the decision of the coordinate bench of the Tribunal in DCIT v/s Gharda Chemicals Ltd., [2016] 71 taxmann.....
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....of the activity and such other tests. The Hon'ble Court further held that just looking at the nomenclature without any further enquiry into the nature of the business, Explanation (baa) cannot be invoked, since the nomenclature may not be accurate. The relevant findings of the Hon'ble Jurisdictional High Court, in the aforesaid decision, are as under:- "8. We do not find any merit in the argument advanced on behalf of the Department. In this case, we are concerned with profits from business of exports of goods manufactured by the assessee. Therefore, the export profits were required to be computed in the ratio of export turnover to total turnover as contemplated by the above formula. Explanation (baa) was introduced into the Act by Finance (No. 2) Act, 1991 with effect from 1-4-1992. Under the Circular of CBDT bearing No. 621 dated 19-12-1991, it has been stated that the above formula gave distorted figure of export profits when receipts like interest, commission etc. which do not have element of turnover are included by the assessee in profit and loss account. Therefore, Explanation (baa) came to be introduced. Under that Explanation, profits of business, for the purposes of sec....
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.... charges of Rs. 19.60 lakhs did not represent Operational Income and, therefore, it came within Explanation (baa). However, we find that the Department just looks at the nomenclature of the receipt and if it finds that the nomenclature is rent, interest, commission then without any further inquiry into the nature of business, the Department invokes Explanation (baa) which is not the purpose and the object of that Explanation. In the present case, the receipt in question is labour charges. However, this nomenclature may not be accurate. In the present case, the assessee is a manufacturer and exporter of garments. In the present case, the Tribunal has recorded a finding of fact which is not challenged, namely, that there was no difference between the activities relating to export business carried on by the assessee and the processes carried on for manufacturing garments for others under job-work contracts. The Tribunal has further found, on facts, that the activity of labour job involved use of machinery, labour and material which were also forming part of the activity of manufacturing garments for its own sales. The Tribunal further found that there was no difference between manufac....
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....efore, in view of the above, before applying the ratio laid down by the aforesaid decisions, relied upon by the assessee, it is relevant to examine each and every receipt under the broad head of „Miscellaneous Receipts‟ in light of the decision of the Hon'ble Jurisdictional High Court in Bangalore Clothing Co. (supra) and for this purpose, we remand this issue to the file of the AO for de novo adjudication. We further direct that if upon examination it is found that the receipt is having an element of turnover or arises out of the business operation of the assessee then the same cannot be excluded from the profit of the business for the purpose of computing deduction under section 80HHC of the Act. During the hearing, the learned Sr. Counsel also submitted that the net miscellaneous expenses incurred by the assessee is Rs. 70.34 crore, while miscellaneous income is Rs. 11.48 crore and therefore applying the ratio laid down by the Hon'ble Supreme Court in ACG Associated Capsules Pvt. Ltd. (supra), only the net amount can be added. As noted above, under the broad head „Miscellaneous Receipt‟ the assessee has received income of varied nature. Therefore, we deem....
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...., the assessee has claimed a deduction of Rs. 6,00,362, under section 80-O of the Act. The total turnover of the ED & D unit for the previous year was Rs. 20.58 crore. Therefore, the AO, vide assessment order passed under section 143(3) of the Act, allocated the head office expenses of Rs. 9,05,520 (being 0.44% of the turnover) against royalty income of Rs. 30,01,812 and computed the deduction under section 80-O to Rs. Nil (20% of Rs. 30,01,812, i.e. Rs. 6,00,362 minus Rs. 9,05,520). The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue. 43. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee's own case in Grasim Industries Ltd. (supra), vide order dated 14/12/2021, for the assessment year 2002-03, decided the similar issue in favour of the assessee, following the decision rendered in preceding years, by observing as under:- "27. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding ....
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....ideration for computing the income of the assessee eligible for deduction u/s. 801 and also u/s 8OHH. Similarly we find the Bangalore bench of the ITAT in the case of Wipro GE Medical Systems Ltd. Vs. DCIT reported in 81 TTJ 455 has held that there is no need for allocation of any expenses when the expenses are directly connected with periods. Following the decision of the coordinate bench of the Tribunal and the decision of the Bangalore Bench of the Tribunal, we are of the considered opinion that there is no necessity for allocating the head office expenses to the units claiming deduction u/s. 8OHH, 801, 80M and 80-0. The order of the CIT(A) on this issue is accordingly set aside and the grounds raised by the assessee are allowed. 29.2 Respectfully following the aforesaid decision of the Tribunal, these grounds, namely 27 to 30 A, are allowed". Respectfully following the earlier order of the Tribunal, we decide this issue in favour of the assessee." 28. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02 is respectfully followed, we order accordingly." 44. The learned DR could not show us any ....
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....ssed the ground raised by the assessee on this issue and upheld the findings of the AO. Being aggrieved, the assessee is in appeal before us. 48. We have considered the submissions of both sides and perused the material available on record. The assessee acquired 9,53,79,023 nos. of 7% unsecured FCD of Mangalore and Petrochemical Refinery Ltd at the rate of Rs. 19.26 each on 27/06/1997. These debentures were converted into 9,53,79,023 equity shares on 26/12/1998. During the year under consideration, the assessee sold the equity shares at the rate of Rs. 2 each and computed long-term capital loss of Rs. 328.25 crore. The aforesaid facts are not in dispute in the present case. Further, it is also not in dispute that the shares sold by the assessee are long-term capital assets. The assessee considered the date of acquisition of debentures, i.e. 27/06/1997, as the date of acquisition of the equity shares and accordingly indexed the cost of acquisition. While, the AO considered the date of conversion of FCD, i.e. 26/12/1998 as the date of acquisition of equity shares and recomputed the long-term capital loss to Rs. 314.11 crore. Thus, the only dispute between the parties is regarding th....
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....loss. As a result, ground no.6, raised in assessee's appeal is allowed. 50. The issue arising in ground No. 7, raised in assessee's appeal, is pertaining to claim for additional depreciation under section 32(1)(iia) of the Act. 51. The brief facts of the case pertaining to the issue, as emanating from the record, are: During the year under consideration, the assessee claimed additional depreciation as per the provisions of section 32(1)(iia) of the Act on assets acquired and put to use during the previous year, which contributed in enhancing the installed capacity. In this regard, the assessee also filed accountant‟s report in Form No.3AA as prescribed in the third proviso to section 32(1)(iia) of the Act. Accordingly, the AO allowed the deduction of Rs. 4,04,34,409. The assessee further submitted that the additional depreciation under section 32(1)(iia) of the Act of Rs. 30,19,657 be also allowed on the assets, which were purchased in the year prior to the relevant previous year but were installed during the relevant previous year. In this regard, the assessee submitted that section 32(1)(iia) of the Act is a beneficial provision and therefore should be interpreted liberal....
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....se and object of granting additional depreciation under Section 32(1)(iia) of the IT Act is stated hereinabove i.e. to encourage the industries by permitting the assessee setting up the new undertaking/installation of new plant and machinery and to give a boost to the manufacturing sector by allowing additional depreciation deduction. Thus, as rightly held by the learned ITAT the provision of section 32(1)(iia) of the IT Act is required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) of the IT Act will lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery. Under the circumstances, no error has been committed by the learned ITAT in allowing the additional depreciation at the rate of 20% on the plant and machinery installed by the assessee after 31st Day of March 2005 i.e. the year under consideration. No substantial question of law arise." 54. We further find that the Hon'ble Supreme Court vide order dated 13/10/2017 dismissed the Special Leave Petition in Pr. CIT v/s IDMC Ltd, in Diary No. 28648 of 2017, filed by the Revenue against the a....
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....bunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "The next grievance relates to the disallowance of royalty and interest on royalty u/s 43B of the Act treating it as tax. The issue is now settled by various orders of the Tribunal in assessee's own case for assessment years 1995-96 to 2000-01. A similar issue was considered by the Tribunal in the assessee's own case in A.Y. 1999-2000 in ITA No.5631/M/2002, wherein we find that the Tribunal has followed its earlier order in the assessee's own case in ITA No. 5630/Mum/02 for A.Y. 1998-99. In the absence of any contradictory facts brought on record by the Revenue, following the aforementioned decision, we decide this issue in favour of the assessee. Additional ground No. 2 is accordingly allowed." 41. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02 is respectfully followed, we order accordingly." 58. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully following the judici....
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....2, wherein the Tribunal at para No. 26.1 on page 11 has restored the issue back to the file of the A.O. to decide the issue afresh after considering the decision in the case of Special Bench of the Tribunal in the case of Reliance Industries Ltd. (supra). Respectfully following the same, the issue is restored back to the file of the A.O. for deciding the same afresh." 38. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02, we also remit this issue back to the file of AO for deciding the issue afresh after proper verification. It is needless to say that assessee may be given proper opportunity of being heard." 61. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we remand the issue raised vide aforesaid additional to the file of AO for adjudication after proper verification. As a result, the aforesaid additional grounds are allowed for statistical purposes. 62. Vide a....
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....xamine whether taxes have been paid in Egypt. 65. Having considered the submissions of both sides, we find that as per Article 11(2) of the India- UAR (Egypt) DTAA, dividends paid by a company which is a resident of the UAR (Egypt) to a resident of India may be taxed in the UAR (Egypt). As noted above, it is the plea of the assessee that prior to amendment by Finance Act 2003, w.e.f. 01/04/2004, to section 90 of the Act, the term "may be taxed" means that only the source country has the right to tax the income earned in such country and the resident country does not have any taxing rights. Therefore, the dividend received by the assessee from the Egyptian company, in the present case, is only taxable in Egypt. We find that while examining the issue of applicability of the aforesaid amendment vide Finance Act, 2003 to section 90 of the Act, and the aforesaid Notification issued under the said section, the coordinate bench of the Tribunal in Essar Oil Ltd v/s ACIT, [2013] 42 taxmann.com 21 (Mum-Trib.), observed as under:- "88 We summarise our conclusion as under:- (i) ..... (ii) The notification dated 28th August 2008, reflects a particular intent and objective of the Governme....
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.... confirmed the entire reasoning of the S.R.M. Firm (supra) which, in our opinion, is slightly different from the judgment of the Hon'ble Supreme Court in P.V.A.L. Kulandagan Chettiar (supra) to the extent that the phrase "may be taxed" was not expressly dealt with by the Hon'ble Supreme Court as the reasoning of the High Court was affirmed on different ground. Thus, the later decision of the Hon'ble Supreme Court in Turquoise Investments & Finance Ltd. (supra) can be said to be the view expressed by the decision in S.R.M. Firms (supra) by the Madras High Court. In this background, that the three High Courts have expressed their views and which have been affirmed by the Hon'ble Supreme Court in some context or the other, specially the decision of Turquoise Investments & Finance Ltd. (supra), wherein the Apex Court has approved these decisions completely, then as a judicial precedence, one has to accept that the phrase "may be taxed" has to be inferred as allocating the taxing right to the source country only on the income earned in such country and the country of resident is completely precluded from taxing the same income." 67. Accordingly, the coordinate bench held that as a re....
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....which have been contested by the department in further appeal before the ITAT. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs. 64,21,953/- made by the Assessing Officer on account of rural development expenses, relying upon the orders of the CIT(A) in the assessee's own case for the AYrs 1996-97 to 2002-03 which have been contested by the department in further appeal before the ITAT. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs. 33,33,614/- made on account of exchange rate fluctuation loss, relying upon the orders of the CIT(A) in the assessee's own case for the AYrs.1998-99 to 2002-03 which have been contested by the department in further appeal before the ITAT. 5. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the deduction in respect of payments on account of PF/ESIC made after the due date but within the grace period without appreciating that the department has not accepted the decision of the Bombay High Court on this issue in the case of Maharashtr....
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....appeal before the ITAT. 11. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the assessee is eligible for deduction u/s.80-IA in respect of profit derived from alleged 'Rail System' ignoring the fact that the "Rail System" is itself not an Industrial Undertaking and also that the assessee company has not fulfilled the conditions laid down u/s.80-1A in as much as:--- (i) the assessee company has developed the alleged 'Rail System' for its 'Cement Division' over the years and for its own convenience for transportation and not with any 'profit making motive'; and (ii) further that the alleged 'Rail System' itself is neither a saleable commodity nor a 'profit centre' but it is the cost centre of the assessee company; and (iii) further that the assessee company does not maintain separate books of account for alleged 'Rail System' as envisaged under the provisions of section 80-IA; and (iv) further that the assessee company has capitalised the different assets in different assessment years and was also claiming depreciation on these assets under the block of assets of 'Cement Divis....
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...., vide order passed under section 143(3) of the Act, did not agree with the submissions of the assessee on the basis that the Revenue has filed an appeal before the Hon'ble Jurisdictional High Court on this issue. Accordingly, the amount of Rs. 10,89,50,144, was disallowed. 72. The learned CIT(A), vide impugned order, following judicial precedent in assessee's own case deleted the aforesaid disallowance made by the AO. Being aggrieved, the Revenue is in appeal before us. 73. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee, by observing as under:- "48. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "31. Ground ....
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.....O., vide order passed under section 143(3) of the Act, did not agree with the submissions of the assessee and held that such contributions are essential in the nature of donations and since a specific provision already exists in the Act to take care and govern the allowability of payments made in the nature of donations, only such payments which satisfies the conditions laid down under section 80G of the Act can be allowed as deduction. Accordingly, the AO held that these contributions do not satisfy those conditions and, therefore, are not eligible for deduction. 77. The learned CIT(A), vide impugned order, following the decision of its predecessor-in-office, rendered in assessee's own case deleted the aforesaid disallowance made by the AO. Being aggrieved, the Revenue is in appeal before us. 78. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee, by observing as under:- "52. Considered the submiss....
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....g centre, supply of horticulture sapling to villagers, self-help training, natural resources management, medical camps, medicine distribution, etc., where the majority of working population employed in assessee's factories/offices are residing. Accordingly, the assessee submitted that the expenditures incurred were for the purpose of business and claimed the same as allowable under section 37(1) of the Act. On the basis that in the assessment year 2002-03, such expenditure was disallowed, the AO disallowed the expenditure in the year under consideration. 82. The learned CIT(A), vide impugned order, following the decision of its predecessor-in-office in assessee's own case deleted the aforesaid disallowance made by the AO. Being aggrieved, the Revenue is in appeal before us. 83. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee by observing as under:- "60. Considered the submissions and material plac....
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....vable, etc. Thus, the loss is incurred in respect of its trading assets/liabilities, in the normal course of its business, which are part of the circulating capital or working capital of the business. On the basis that loss on exchange fluctuation was disallowed in the assessment year 1998-99, the AO vide order passed under section 143(3) of the Act, disallowed the deduction claimed in respect of exchange fluctuation loss of Rs. 33,33,614, incurred due to conversion at the exchange rate on 31/03/2003. The learned CIT(A), vide impugned order, following the decisions of his predecessor-in-office rendered in assessee's own case deleted the aforesaid disallowance made by the AO. Being aggrieved, the Revenue is in appeal before us. 87. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee, by observing as under:- "65. Considered the submissions and material placed on record, we observe from the record that id....
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....isallowed under section 43B(b) of the Act. In response thereto, the assessee submitted that the P.F. Authorities have, with the approval of the Government of India, issued a circular and allowed a grace period of 5-15 days for making payment of contribution. The assessee submitted that the payment has been made within the grace period and thus the same is within the due date under the relevant statute. The AO, vide order passed under section 143(3) of the Act, did not agree with the submissions of the assessee and held that the payment was made after the due date and accordingly disallowed the same under section 43B(b) of the Act. 91. The learned CIT(A), vide impugned order, following the decision of the coordinate bench of the Tribunal, Mumbai Bench, in Fluid Air (India) Ltd. v/s DCIT, [1997] 63 ITD 182 (Mum.), directed the AO to allow the claim of the assessee if the payment has been made within 9-22 days of the date of disbursement. Being aggrieved, the Revenue is in appeal before us. 92. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for....
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.... & Pressings Ltd. (supra) where on the facts of that case it has been held that so long as the payments of PF and contribution to ESIS are made within the previous year, the same cannot be disallowed under section 43B and also cannot be considered as assessee's income under section 2(24)(x) read with section 36(1)(va). Further, in an unreported case the ITAT Calcutta Bench, in the case of Sudera Services (P.) Ltd. (supra), on which the ld. counsel relied on (copy is placed at page 65 of the paper-book), it has been held, on the facts of that case, that the provisions of section 43B should be construed in a liberal way keeping in view the Legislative intention so that absurdity and the interpretation which leads to injustice may be avoided. 19. In view of the decisions referred to in the foregoing paragraphs of this order, and the facts and circumstances of the present case, we are of the considered opinion that none of the payments in question were hit by the provisions of section 43B or section 2(24)(x) read with section 36(1)(va), as the case may be, and the additions made by invoking these provisions are hereby deleted." 79. Respectfully following the above decision, on ....
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....nt of production of films. The cost of production of ad film does not stand on the same footing as the expenditure on air-time on IV or radio. The film produced once is used -again and again to advertise the product. Thus the cost of ad film cannot be allowed as deduction in full in the year in which the said expenditure has been incurred, as the assessee has derived benefit of enduring nature. 15.4. Assessee company is in the business of manufacturing and selling various products. Assessee company is not in the business of producing ad films. Rather, the advertisement films have been got produced by assessee to be used in an advertisement of its products: The question is whether by producing the film itself assessee has done the advertisement of its product. Answer is clearly no because production of ad film does not advertise anything. Only after the film has been produced, it is telecast. It is used as advertisement when it is telecast. Thus the production of ad film is not business expenditure incurred by assessee for purposes of business, rather, it is an expenditure of capital nature incurred to acquire an asset namely, advertisement film, which can be exploited by advertis....
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....5.6. The judgment of Hon'ble Bombay High Court is directly on the facts involved in the case of assessee. Assessee has not acquired the ad films as stock-in-trade. Rather, this has been acquired to be used as advertisement for assessee's business. Therefore following the judgment of Hon'ble Bombay High Court, the expenditure incurred on purchase/production of ad films is held to be expenditure of capital nature. Accordingly, the claim of assessee is not allowed. 15.7. Addition of Rs. 95,24,532/- is made to income of assessee for capital expenditure on production of films. The alternate submission is accepted and depreciation is allowed on the cost of film at the rate applicable to plant and machinery." 96. The learned CIT(A), vide impugned order, following the decision of his predecessor-in-office, deleted the aforesaid disallowance made by the Assessing Officer. Being aggrieved, the Revenue is in appeal before us. 97. Having considered the submissions of both sides and perused the material available on record, we find that the Coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, while following the decision r....
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.... of ERP software as a Revenue deduction. The AO, vide order passed under section 143(3) of the Act, treated the said payment as payment for the acquisition of software, which is the capital asset, and accordingly disallowed the deduction claimed by the assessee. The AO, however, allowed the depreciation on this payment at the rate applicable to computer software. 101. The learned CIT(A), vide impugned order, deleted the disallowance made by the AO by treating the expenditure as revenue in nature. 102. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench, vide order dated 14/12/2021, passed in assessee's own case for the assessment year 2002-03, by following the decision rendered in the preceding year, decided the similar issue, inter-alia, in respect of payment made to M/s. Mahindra Consulting Ltd., for implementation of software and ERP in favour of the assessee. The relevant findings of the coordinate bench, in the aforesaid decision, are as under:- "99. Considered the submissions and material placed on record, we observe that this issue is dealt by the Hon'ble Jurisdictional High Court in the case....
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....by the LD AR of the assessee." 3. In our view, no fault can be found in the aforesaid order of ITAT holding that software expenditure was allowable as revenue expenditure." 100. Respectfully following the above said decision and on a perusal of the Ld.CIT(A) order, we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of the assessee. Ground raised by the revenue are dismissed. We order accordingly." 103. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in relevant assessment year. This issue has been decided in favour of the assessee in the preceding years also. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, ground no.7, raised in Revenue's appeal is dismissed. 104. The issue arising in ground no.8, raised in Revenue's appeal, is pertaining to the exclusion sales tax and excise duty from the total turnover. 105. We find that this issue is no longer res integra and has been decided in favour of the assessee by the Hon'ble Supreme Court in CIT v/s Lakshmi Machine Works, [2007] 290 ITR 667 (SC)....
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....e order of the Tribunal, we do not find any reason to interfere with the order of ld. CIT(A) on this issue.." 110. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly." 110. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in relevant assessment year. This issue has been decided in favour of the assessee in the preceding years also. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, ground no.9, raised in Revenue's appeal is dismissed. 111. The issue arising in ground no.10, raised in Revenue's appeal is pertaining to allowance of deduction under section 80IA of the Act in respect of Vikram Power Unit. 112. The brief facts of the case pertaining to the issue, as emanating from the record, are: During the year under consideration, the assessee claimed deduction of Rs. 13,75,79,804, in respect of power unit at Salav (Vikram Power Unit) under section 80IA of the Act. The A.O., vide order passed under sect....
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....ited supra, ground no.10, raised in Revenue's appeal is dismissed. 116. The issue arising in ground No. 11, raised in Revenue's appeal, is pertaining to the claim of deduction under section 80-IA of the Act in respect of profit derived from the rail system. 117. The brief facts of the case pertaining to the issue, as emanating from the record, are: During the year under consideration, the assessee claimed a deduction of Rs. 7,67,21,341 under section 80-IA of the Act in respect of the rail system at Raipur. During the assessment proceedings, the assessee was asked to submit justification in support of this claim. In response thereto, the assessee submitted that it has established a Cement plant in the Raipur District of Chhattisgarh state. For the operation of the cement plant, inward materials are transported through Rail up to the nearest railway siding, and for dispatch of cement from the plant through rail, cement bags are taken up to the railway siding for onward transportation to various destinations. The nearest railway siding is at a distance of around 20 km from the plant. To facilitate the inward and outward movement of goods, the assessee company developed an infrastruc....
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....n the absence of a cement unit, the identity of the rail system is not feasible. The AO further held that the assessee has only one employee for liaison between the assessee and the Railway Authority. For crucial operations, the Railway Department has deputed its own staff. Therefore, the assessee is not having any control over the operations of the rail system. The AO also held that the rail system per se is not an industrial undertaking or enterprise as understood to have been eligible for deduction under section 80-IA of the Act. The AO also held that in the present case, the rail system does not have any agreement with any of the authorities as mentioned in sub-section(4) of section 80-IA of the Act. Accordingly, the AO rejected the claim of deduction under section 80-IA of the Act in respect of the rail system. 119. The learned CIT(A), vide impugned order, allowed the ground raised by the assessee on this issue, by observing as under:- "16.4 The appellant made detailed submission with regard to the issue in dispute before the undersigned. It stated that the appellant company had established a cement plant in Raipur. The nearest available Railway Siding was at a distance of ....
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....has constructed a private siding for captive usage which cannot be termed as Public infrastructure facility within the meaning of section 80 IA (4) applicable for FY 1999-200, the assessee is not eligible for claiming deduction u/s 80 LA for the Act as applicable for AY 2000-01." 121. On the contrary, the learned Sr. Counsel, appearing for the assessee submitted that the learned DR has raised submissions which do not find any mention in the assessment order and thus the learned DR cannot now improve the case of the AO. The learned Sr. Counsel further submitted that no material has been produced to overturn the factual basis of the assessee as submitted before the learned CIT(A). 122. We have considered the submissions of both sides and perused the material available on record. In the present case, it is undisputed that the assessee has a cement plant in Raipur District. It is the claim of the assessee that to facilitate the inward and upward movement of goods, the assessee company developed an infrastructure facility for the rail system and the same satisfies the conditions for deduction under section 80-IA of the Act. We find that the assessee on this aspect made detailed submis....
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....) Anil Starch Ltd. vs CIT. 254 ITR 187(Bom.) CIT vs. Win Laboratories Pvt Ltd and 48 ITR 123(SC) Tata Iron & Steel Co. Ltd. vs State of Bihar. 16.7 Further, it was submitted that the facility of Rail System consists of all that is required to carry on the railway activity in an organised and systematic manner. The activity of Rail System is real and substantial and it is carried on with a said purpose, namely, transportation of goods from one place to another and thereby augmenting profits of the company as a whole by saving transportation cost which it would have otherwise incurred. The profits derived from the Rail System are clearly arising out of the business of developing, operating and maintaining the Rail System. 16.8 The appellant submitted that substantial investment has been made in setting up the Rail System. All the assets are new assets and were not used for any purpose by any person earlier. There is an agreement with the Government for operating and maintaining the Rail System. It employees required personnel directly or through the railway authorities and is bearing the salary cost. relating thereto. Rail System is developed on the basis of entirely different te....
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....ars the cost of the employees deputed by the railway authorities for this purpose. It is settled position that in order to compute the number of workers, casual and other workers appointed through the contractors have to be taken into consideration. The number of employees, including appointed through the railway authorities, would far exceed 10. The appellant relied 152 ITR 152(Kar.), K.G. Yediyurappa & Co, and 99 Taxmann 229 Vikshana Tdg & Investment Pvt Ltd. In any case, the condition of employing a minumum of 10 workers is not applicable to an infrastructure enterprise. 16.13 The appellant argued that the AO's allegations that it has no control over the operations of the Rail system, is baseless and without merits. Merely because the workers are deputed by the railway under the operations and maintenance agreement, does not mean that the appellant has no control over the Rail System. It is not open for the railway authority to use the faclity for any purpose other than for the purpose of appellant's business. The entire loading and unloading is done under the insistence of and supervision of the appellant. The appellant decides the destination to which the material is....
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....der passed by the Assessing Officer. He cannot raise any point different from that considered by the Assessing Officer or CIT(A). His scope of arguments is confined to supporting or defending the impugned order. He cannot set up an altogether different case. If the learned DR is allowed to take up a new contention de hors the view taken by the Assessing Officer that would mean the learned A.R. stepping into the shoes of the CIT exercising jurisdiction under section 263. We, therefore, do not permit the learned DR to transgress the boundaries of his arguments." 125. Therefore, on this preliminary basis only, as noted by the Special Bench of the Tribunal in the aforesaid decision, the contention of the learned DR is rejected. Even otherwise, it is an accepted position that the assessee did not make any claim in the first year of its operation and the claim was made for the first time in the year under consideration, i.e. assessment year 2003-04. Therefore, we are of the considered view that in order to determine the eligibility of the assessee for deduction under section 80-IA of the Act, the provisions of the Act as applicable for this year become relevant. We find that vide Financ....
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....d to submit the details of expenditure incurred to earn dividend and as to why such expenditure be not reduced while allowing deduction under section 80M of the Act. In response thereto, the assessee submitted that investments in shares/securities on which dividend was received during the previous year were made out of internal accruals and own funds. The assessee further submitted that no borrowings were made specific or general for the purpose of making these investments and during the previous year, no expenditures were incurred for earning dividend income. The assessee also placed reliance upon the decision of the coordinate bench of the Tribunal in assessee's own case for the assessment year 1993-94 wherein, in relation to deduction under section 80M of the Act, it was held that there is no justification for allocation of any expenditure as expenditure relatable to the dividend income. The AO, vide order passed under section 143(3) of the Act, did not agree with the submissions of the assessee and held that the decision of the Tribunal is not acceptable to the Revenue and has been challenged before the higher authorities. The AO further held that no income can be earned withou....