TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 130
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....assessee and the Revenue against the separate orders of ld. Commissioner of Income-Tax (Appeals) arising in the matter of assessment order passed under section 143(3) of the Income tax Act 1961 (in short, the 'Act') involving respective Assessment Years. 1.1 First, we take up ITA No. 515/Ahd/2014, an appeal by the assessee for the AY 2006-07. 2. The assessee has raised the following grounds of appeal: 1) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in the points of law and facts. 2) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming disallowance of expenses Rs. 2,72,563 u/s. 37(1)of I.T.Act. 3) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming disallowance of Rs. 1,66,51,168. 4) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming disallowance of Rs. 48,96,52,916. 5) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in dismissing appellant's ground regarding ....
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....rving as under: 9.6 It is seen that appellant's factories are located at village: Mandali, Savali, Near Baroda and Moraiya. Many of the staff and worker are residing in the vicinity of these areas. In view of these facts, I am of the opinion that donation/payments are nothing but an exercise of maintaining good relation and improving the vicinity area by which employees can get benefits, who stay in the nearby areas as well as advertisement of the appellant company for the benefit of appellant's business. Appellant had placed reliance in the cases of CIT V/s.Madura Coats Ltd. 24 DTR 24 (Mad) and C!T v/s. Madras Refinery Ltd. reported at 266 ITR 170 (Mad.) My predecessor while deciding the appeal for Asst. Year: 2008-09 allowed certain claims of the appellant. Following the order of my predecessor for Asst.Year: 2008-09 in the case of appellant as well as considering submissions made by the appellant I allow the claim in respect of following payments. The A.O. is directed to allow the same accordingly u/s. 37(1) of Income-tax Act. 1 Donation given to Mandali Gram Panchayat u/s. SOG of IT. Act 50,000/- 2 Payment made for construction work of Primary School at Savali 7....
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....available on record. We have perused the list of nature of expenses incurred under the head general public utility expenses and find that the payments were made to gram panchayat, schools, social or religious welfare groups, hospitals which are working in the localities where assessee's factories or other premises are situated. Generally, these types of expenses incurred to maintain good relationship with the people in locality which also helps in image building of the business organizations. There are several instances where business houses incur expenses voluntary which may not directly be linked to the business carried out by such business houses or may not yield direct/ immediate benefit to the trade but same can indirectly facilitate in carrying on the business in long run. The Hon'ble Supreme Court in the case of Sri Venkata Satyanarayna Rice Mill Contractors Co vs CIT reported in 223 ITR 101 held that any expenditure incurred by the assessee which has commercial expediency will be allowable as business income as long as same is not made by way of penalty for infraction of law. The Hon'ble bench further held that any contribution made by the assessee toward public welfare in ....
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....en of the sum of Rs.11,66,51,168/- (being difference between amount due as per books of assessee and claim awarded by the arbitrator) in the profit and loss account of as not recoverable. However, the AO disallowed the claim of the assessee by observing as under: 6.7. In view of the above discussion, it is held that, (a) that the claim of assessee regarding write off of advance has been made by passing entry in the accounts on 31.03.2006, when the Arbitration Order on which the assessee relies is dated 03.08.2006. Further, the communication referred to by the Arbitrator received from both the parties is also of June 2006. Therefore, this write off of advance could have arisen only on 03.08.2006 (A.Y. 2006-07). Therefore, the claim of write off of advance in A.Y. 2005-06 of the assessee is incorrect. (b) The purpose for which these advances were given has not been clarified by the assessee. Since Ajay Structural Engineering Works is engaged in the business of construction, these advances could only be related to construction activity and is therefore, not a trade debt. Accordingly, this claim of loss being made by the assessee is a capital loss. (c) Bad Debts of any loans or....
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.... by the AO by observing as under: 11.6 I have carefully considered the rival contention. Appellant's claim is that it had business transactions with Shri Babubhai R. Patel. It has also been claimed that the appellant is in the business of financing and therefore is entitled to write off of the principal amount also. In connection it is seen that the main object clause of the appellant company does not include the business of financing or money lending.) The appellant company also does not have any license of money lending neither is it registered as NBFC. Just because of one of the clauses of Memorandum of Association Articles of Association of the company includes the activity of financing does not entitle the appellant to claim the status of a money Tender. Appellant is merely utilizing surplus funds available with it for earning of interest from some of the parties. For an activity to qualify into that of lender it was required to be conducted in a business like and systematic manner. Reliance is placed on the decision of Hon'ble Karnataka High Court in the case of CIT vs Epsilon Advisors Pvt. Ltd. 80 DTR 366 in which it was held as under 34. On an examination of the....
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....of law without more. The assessee's mam business activity was only in providing services in telecommunication technology and not in money lending activity. 36. While it may be true that in terms of No 23 of the objects clause of Memorandum and Articles of Association of the Company, the assessee could have carried on this activity incidental to its main business, it was not made known as to whether the assessee was carrying this business also in a systematic manner. Mere fact that the assessee had made some inter- corporate deposits and the assessee earned income by way of interest in itself is not a circumstance to conclude that it was carrying on money lending activity as part of its business activity. To qualify to claim of bad debt the appellant has to substantively prove that it is engaged in the business of money lending on regular basis. There are very few instances of loans granted by the appellant which do not qualify it to assume the character of money lending business. The claim is not allowable on merit. It is further seen that the appellant has passed the entry of bad debt on the basis of arbitration award given on 4.11.2006. This award was therefore passed i....
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....ssee were closed as on 31 March 2006. In the present case, the balance sheet for the period ending as on 31 March 2006 was prepared and signed dated 31st August 2006 and return was filed as on 5th January 2007 whereas the order of the arbitrator was made dated 3rd August 2006. In other words, it can be said that loss to the assessee was known at the time of signing the audited financial statements. The accounting principles also provide if it is likely that a contingency will result in a loss to the enterprise, then it is prudent to provide for that loss in the financial statements. Thus, the assessee cannot be denied the deduction as discussed above merely for the reason that the order of the arbitrator was passed after the balance sheet date. Thus, it is transpired that the assessee was known to the fact of the loss of Rs.11.66 crores in accordance with the award of the arbitration before filing the return of income. Therefore, the event for writing off the loss certainly occurred after the balance sheet date but before signing the financial statements and filing the income tax return. 19.1 The 2nd controversy arises whether the loan advanced by the assessee to Shri Babubhai Ram....
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.... as under: 7. It is seen from the order of the Tribunal that it had, in an elaborate manner, considered the claim of the assessee as well as the Revenue, on the aspect of the assessee doing business in money-lending. A perusal of the order of the Tribunal and the assessment order shows that right from the assessment years 1991-92 to 2000-01, the assessee had been consistently receiving interest from the money-lending business as a business income and the same was offered as business income, the Revenue accepted the claim of the assessee in the assessment made for the earlier years under section 143(3) of the Income tax Act. Even for the assessment year 2000-01, the interest arising out of the same transaction was offered as business income, which was allowed by the Assessing Officer. Having considered the detailed working of the assessee as regards the interest received by the assessee from the various borrowers right from the assessment years 1991-92 to 1999-2000, the Tribunal pointed out that admittedly, the debtor had deducted tax at source before paying interest to the assessee. The Tribunal found that the copies of the statement filed before it showed that the assessee had b....
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....nse available to it for carrying out the moneylending business. 19.4 As regards the conditions specified under section 36(2) read with section 36(1)(vii) of the Act, i.e. amount of bad debt written off as irrecoverable in the books of account is subject to the condition that income should have been offered in the year of writing off or in earlier years out of such bad debt. In this regard, we note that the assessee written off amount as irrecoverable as well as has offered interest income from the loan extended to impugned party in earlier years which can be verified from ledger copy of party placed at pages 80 to 97 for the period starting from 08-09-1997 to 31-03-2006. Thus, the conditions specified under section 36(2) r.w.s. 36(1)(vii) of the Act have been satisfied. 19.5 Regarding the non-recovery of the advances given by the assessee, we note that it is not necessary to prove non-recovery of loan from the party by the assessee. The accounting entries made in the books of accounts are sufficient for claiming the deduction on account of such non-recovery of loan. It is the wisdom of the assessee to decide whether the loan is to be written off as non-recoverable from the party.....
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....es below. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee hereby allowed. 20. The next issue raised by the assessee vide ground No. 4 of its appeal is that the learned CIT(A) erred in confirming the disallowance of Rs. 48,96,52,916/- on account of provision for doubtful loans and advances. 21. The AO during the assessment proceeding found that an amount of Rs. 48,96,52,916/- being provision for doubtful advances was appearing in the profit and loss account under the head manufacturing and administrative expenses. The impugned provision was made against the loan and advances given in the earlier to the parties detailed as under: Rin Finance 31,441,081 East West Polyart Ltd. 51,698,494 Edeal Petro Products Ltd. 409,558,610 492,698,185 Less: written back Shree Rama Multi Tech Ltd. 3,045,269 Total 489,652,916 21.1 On question by the AO, the assessee during the assessment proceedings submitted that the loan was extended to these parties in earlier years....
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....dvances amounting to Rs. 48,96,52,916/- is upheld. In addition the claim has been made only in respect of the provision and the debt has not been written off in the books of accounts which is the primary condition for claim u/s. 36(1)(vii). The allowability of bad debt on the provisions has been rejected by number of judicial forums. Reliance is placed on the decision of Haryana State Industrial Development Corporation (2012) 344 ITR 460 (P&H) in which it has been held that Section 36(1)(vii) provides for deduction in the computation of taxable profits of any debt or part thereof, which is proved to have become a bad debt in the previous year subject to the fulfilment of the conditions specified in sub-section (2) of section 36. The proviso to section 36(1)(vii) stipulates that the amount of deduction relating to any debt or part thereof which is claimed to have become bad debt shall be limited to the amount by which such debt or part thereof exceeds the balance in the provision for bad and doubtful debts account made under that clause. Section 36(1)(viia) of the Act was introduced with a view to provide for grant of deduction in respect of provision for bad debt made by all the ....
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....able is eligible for deduction as business loss or not. This question has been answered by us while adjudicating the immediate previous ground of appeal of the assessee i.e. ground no.-3 where we vide paragraph no. 19 of this order have held that the assessee is also engaged in the business money lending. Thus, we are not in agreement with the finding of learned CIT(A) to this extent. 26.1 Moving ahead, as per the provision of section 36(1)(vii) the amount of bad or part thereof will be allowed as deduction in the previous year in which written off as irrecoverable in the books of accounts. This principle has also been confirmed by various judicial pronouncements. In the case of the present assessee both the lower authority being the AO and the learned CIT(A) have given concurrent finding that the amount claimed as deduction represents provision only and no amount of bad debt or part thereof is written off as irrecoverable in the books of account. We further note the learned AR for the assessee before us also submitted that amount of bad debt has actually been written off in the A.Y. 201011 and made alternate prayer that if the claim disallowed in the year under consideration, the....
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....nal ground of appeal raised by appellant is dismissed. 31. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 32. The learned AR before us contended that the deduction was not claimed by the assessee as there was no positive income but on account of the disallowance made by the AO, there was positive income to the assessee and therefore the assessee becomes entitled for the deduction provided under section 80-IA of the Act. It was further contended by the learned AR that the assessee has been allowed the deduction under section 80 IA of the Act in the earlier assessment year. Therefore, according to the learned AR, the assessee cannot be denied for the deduction under section 80 IA of the Act for the year under consideration. 33. On the other hand, the learned DR before us vehemently supported the order of the authorities below. 34. We have heard the rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we note that the revenue has admitted the claim of the assessee for the deduction under section 80-IA of the Act in the earlier years with respect to its power undertaking located....
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....is the only AO who has no power under the statute to entertain a claim of deduction otherwise than by filing a revised return. However, there is no restriction on the power of the CIT(A) and ITAT being quasi-judicial authority. Thus, we are of the view that the learned CIT(A) should have accepted the claim of the assessee by extending the benefit of deduction envisaged under the provisions of section 80IA of the Act. Accordingly, we set aside the finding of the learned CIT(A) and direct the AO allow the deduction to the assessee under section 80IA of the Act as per the provisions of law. Hence, the ground of appeal of the assessee is hereby allowed. 35. The assessee, vide applications dated 26-03-2019, 02-03-2020 and 15-022021 pleaded before us for the admission of the additional grounds of appeal which read as under: Additional ground of appeal vide letter dated 26-03-2019 In law and in facts and circumstances of the Appellant's case on an alternate plea, if the addition on account of provision for doubtful advances of Rs. 48,96,52,916/- is confirmed, in part or full, for Asst. Year 2006-07, then the said claim should be allowed in the Asst year 2010-11 when advances we....
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....e taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 39.1 From the above, it is transpired that the view that the Tribunal is confined only to those issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new....
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....ion 115JB of the Act, 1961. In the case of Appollo Tyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation under Section 115JB of the Income Tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961. 40.1 In view of the above, respectfully following the ratio laid down by the Hon'ble Calcutta High Court in the case discussed above, we hereby direct the AO to exclude the sales tax benefit from the computation of book profit under section 115JB of the Act. Thus, the additional ground of appeal of the assessee vide letter dated 02-03-2020 is hereby allowed. 41. Coming to the issue raised by the assessee vide additional ground appeal filed vide letter dated 26-03-2019. The assessee vide impugned additional ground of appeal pleaded the bench that if claim of provision for doubtful advance for Rs....
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....at the learned CIT(A) erred in deleting the disallowances of interest expenses of Rs. 15,71,96,428/- on deep discount bonds (DDBs). 45. The necessary facts are that the assessee has issued different series of deep discount bonds (DDBs) in earlier years which were having the maturity date in the subsequent years. The assessee was claiming the interest/discount (being difference between the price of the bonds when allotted and the price at which same will be redeemed on maturity) on pro rata basis. Accordingly, the assessee in the year under consideration also claimed interest expenses of Rs. 15,71,96,428/- only. However, the AO disallowed the same for the following reasons: i. The assessee company is cash rich company and still collecting fund by issuing DDBs to the related persons and claiming the losses/ expenses which is nothing but tax saving device and the same is not permissible in the light of the judgment of Hon'ble Gujarat High Court in case of Shri Shankarlal Balabhai reported in 69 ITR 186 which was also approved by the Hon'ble Supreme Court in case of Mcdowell & Co. Ltd reported in 154 ITR 148 ii. On conjoint reading of provision of section 36(1)(iii) & (iiia), sect....
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....e A.O is directed to allow the pro-rata interest expenditure after necessary verification. The second ground of appeal is allowed accordingly. 47. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 48. The learned DR before us vehemently supported the order of the AO. 49. On the other hand, the learned AR before us contended that the issue on hand is covered in favour of the assessee by the order this tribunal in its own case for the AYs 2002-03 to 2004-05. The ld. AR vehemently supported the order of the ld. CIT-A. 50. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the issue on hand is covered in favour of the assessee by the order of this tribunal in its own case of the assessee for A.Y. 2002-03 bearing ITA No. 1245/AHD/2006. The relevant finding of the coordinate bench of this Tribunal is extracted as under: 16. We have carefully considered the rival submissions. The short issue is whether the amount of difference between the issue price and par value/deemed face value of DDBs, which has been treated as interest by the assessee as well as by the Departme....
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....e of actual cash in-flow is to be compared with expenses incurred during the same period irrespective of actual out-flow of cash." 18. to the provisions of section 145(2), the Central Government has notified Accounting Stapdards to be followed for income-tax purposes. According to Paragraph 6(b) of the aforesaid Notification, "Accrual" refers to the "assumption that revenues and costs are accrued, that is, recognized as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the period to which they relate." The aforesaid definition has now statutory force and therefore has to be followed. According to the said definition, two conditions must be satisfied to constitute "Accrual". They are: (1) the revenues and costs are required tribe recognized as they are earned or incurred (and not as money is received or paid); and (ii) the revenues and costs so recognized must be recorded in the financial statements of the periods to which they relate. Thus mere incurrence of liability or cost is not sufficient. The incurrence of liability/cost should be recognized and recorded in the financial statements of the periods to which they rel....
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....there was a continuing benefit to the business of the assessee over the entire period, the liability was required to be spread over the entire period of the DDBs. Besides, there is no dispute that the funds borrowed through DDBs were used for the purposes of the business in the year under appeal and hence the expenses, e.g., discount/interest, etc, relating thereto would deserve to be accounted for in and allocated to the year under appeal on pro-rata basis. Tested on the aforesaid principles, the assessee is entitled to succeed in its claim as the discount/interest worked out on proportionate basis not only related to the accouriting period under appeal but was also incurred to achieve the accomplishments, L.e., the profits of the year under appeal. The mere fact that the impugned liability was to be discharged at the time of maturity/redemption of DDBS will not defeat the claim of the assessee as the factum of actual payment is irrelevant in deciding upon the claim under the accrual system of accounting 21. Now let us turn to the specific provisions of law governing the claim. The focus Section 37 of the Income-tax Act is to allow deduction in respect of any expenditure t being....
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....of the debentures. 22. The factual matrix of the case before us is almost identical with the one in Madras Industrial Investment Corporation Ltd. (supra). In this view of the matter, the law as laid down in the aforesaid judgment would squarely cover the issue involved in the case before us as well. In the case before us, the assessee has issued DDBS at a price lower than their par value/deemed face value, i.e., the value at which they were required to be redeemed upon expiry of redemption period. The liability towards proportionate discount incurred by the assessee was a liability not only in praesenti although it was payable in future but also related to the accounting period under appeal. Besides, it was not only quantifiable but was also actually quantified by the assessee, which has not been disputed by the Department. The matching principle of accounting also requires that the expenditure relatable to a particular year must be allocated to that year otherwise it would lead to distortion in profits. The assessee is therefore entitled to the deduction of proportionate amount of discount in the year under appeal in terms of the principles laid down in the aforesaid judgment an....
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....o direct bearing on the issue and therefore are not relevant in deciding upon the claim of the assessee under section 36(1)(ii)/37 of the Income-tax. We are in agreement with the aforesaid submissions. In our view, the assessee is entitled to succeed in its claim for deduction under section 36(1)(ii)/37 so long as he fulfils all the conditions prescribed therein. We have already held earlier that the assessee not only satisfies all the conditions stipulated by the aforesaid provisions but also that the case of the assessee is covered by the principles laid down by the Hon'ble Supreme Court in Madras Industrial Investment Corporation (supra). 26. Having held that the assessee is entitled to proportionately claim the expenditure discount/interest on the DDBS on accrual basis in the year under appeal, we direct the AO to correctly work out the amount of deduction to the extent it relates to the year under appeal. In view of the foregoing, ground no.3 taken by the assessee is allowed subject to the aforesaid observations. 50.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside/stayed ....
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....r the direction of Hon'ble ITAT the interest on DDBs has been allowed in the earlier year on accrual basis. The write back of excess provision was on the basis of the accounting practice of the appellant. Since out of 400 DDBs, 175 DDBs were ,; repurchased by the appellant, A.O. is directed to verify, if the interest I allowed till purchase on 175 DDBs has exceeded the consideration paid while repurchase, towards interest, then the same would be added to the income for the year. Otherwise appellant succeeds. The ground of appeal is accordingly decided. 54. Being aggrieved order of the learned CIT(A), the Revenue is in appeal before us. 55. The learned DR before us reiterated the findings contained in the assessment order. 56. On the other hand, the learned AR before us reiterated that there is no ambiguity in the direction of the ld. CIT-A. As such the ground of the assessee was allowed by the ld. CIT-A after necessary verification. The learned AR before us vehemently supported the order of the ld. CIT-A. 57. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee in the ....
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.... under explanation 10 to section 43 of the Act. The AO accordingly treated the subsidy received by the assessee as revenue receipt and added to the total income of the assessee. 60. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: 6.4 It is seen that addition made on account of sales-tax subsidy treating as revenue receipt was deleted by my predecessor in the case of appellant for Asst.Year: 2008-09 vide appellate order No.CIT(A)-XI/94/Cir.5/10-11 dtd. 27th February, 2012 following the order of ITAT of appellant vide ITA No.1245/Ahd/2006 dtd. 13-7-2009 for Asst.Year: 2002-03. Following the above orders, it is held that sales-tax subsidy may be treated as capital receipt Vide this ground, appellant originally claimed Sales-tax benefit of Rs. 99,19,95,360/. Subsequently, vide submission dtd. 10th December, 2013 appellant claimed Sales-tax benefit of Rs. 92,63,70,395 as per sales-tax assessment orders for F.Y. 2005-06 in respect of following two units: (i) For Alindra unit . Rs. 69,74,96,294 (ii) For Kalatalav unit Rs. 22 88,73.471 Total Rs. 92,63,70,395 I direct the AO to allow the claim of the appellant to th....
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....t of Core Healthcare Ltd. merged with the assessee. 64. The necessary facts are that one of the units of Core Healthcare Ltd was merged with the assessee company w.e.f. from 1st April 2004 and scheme of merger was approved by the Hon'ble Gujarat High Court vide order dated 07-032007. The assessee during the year in the scheme of merger claimed brought forward losses and unabsorbed depreciation of demerged unit for Rs. 209,41,67,551/- only. The assessee also made a similar claim in the immediate previous year i.e. FY. 2004-05 corresponding to AY 2005-06 which was disallowed by the AO. Following the same, the AO also disallowed the claim of losses and unabsorbed deprecation for the year under consideration. 65. On appeal by the assessee, the learned CIT(A) by following the order of his predecessor for AY 2005-06 allowed the claim of the assessee by observing as under: The Id. CIT(A)-II, Ahmedabad vide order dtd.23-4-2009 had directed the AO to allow benefit of carry forward business loss and unabsorbed depreciation u/s. 72A of the I.T. Act to the appellant company. It has been pointed by the appellant that AO has allowed the said claim to the appellant in Asst.Year: 2005-06 follo....
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....art-V: company, Deals with demerger. Part-VI: Deals with other terms and conditions applicable to the Scheme. * The scheme of demerger was approved by board of directors and share holders of the appellant company and CHL and also was approved by lenders of CHL. The scheme contains various clauses. This was a composite scheme whereby the liabilities of CHL got settled prior to demerger and later on Sachana Division got demerger from CHL and transferred to the appellant company. Para-3 of the Schemes provides as under: "COMPROMISE WITH LENDERS IN RESPECT OF LIABILITIES As and by way of a full and final settlement with the Demerged Company in respect of the Liabilities, the Lenders have, upon the Scheme becoming effective, agreed to accept the Settlement Amount towards discharge of the liabilities as detailed in clause 7 of this Scheme. Upon the Scheme becoming effective, the above settlement shall be binding on all the Lenders with effect from the Appointed Date for Reconstruction and shall represent full and inal settlement of the liabilities." Para- 7.1.1 of the scheme reads as under: The Resulting Company shall, within three working days of filing of this Scheme with....
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....y the demerged company are transferred at values appearing in its books of account before the demerger; (iv) the resulting company issues, in consideration of the demerger, its shares to the shareholders of the demerged company on a proportionate basis [except where the resulting company itself is a shareholder of the demerged company]; (v) the shareholders holding not less than three-fourths in value. of the shares in the demerged company (other than shares already held therein) immediately before the demerger, or by a nominee for the resulting company or, its subsidiary) become shareholders of the resulting company or companies by virtue of the demerger, otherwise than as a result of the acquisition of the property or assets the demerged company or any undertaking thereof by the result in company. (vi) the transfer of the undertaking is on a going concern basis; (vii) the demerger is in accordance with the conditions, if any, notified under sub-section of section 72A by the Central Government in this behalf." The Scheme contains two dates namely "appointed date of reconstruction' which is 30-112004 and "appointed date for demerger" which is 01-12-2004. The scheme it....
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....on continues The losses were allocated in the proportion of the assets of the Demerged Undertaking. Accounting treatment in the books of resulting company was a per Para-16 of the Scheme duly sanctioned by Hon'ble High Court. Section 72(A)(4) deals with carry forward set off of demerge undertaking in the hands of resulting company which provides as under: "(4) anything contained other provisions this Act, in the case of a demerger, the accumulated loss and t allowance for unabsorbed depreciation of the demerged compa shall- (a)........ where (b) Where such loss or unabsorbed depreciation is not dired relatable to the undertakings transferred to the resulting compa be apportioned between the demerged company and the result company in the same proportion in which the assets of undertakings have been retained by the demerged company transferred to the resulting company, and be allowed to the car forward and set off in the hands of the demerged company or resulting company, as the case may be." In the present case, the loss and depreciation were allo between CHL and appellant company in the same proportionin which the assets are retained by CHL and assets which ....
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....29). In this case, Hon'ble Tribunal allowed the depreciation in the case of Nirma Industries Ltd. for the Asst. Year 2001- 02 on Rs. 62.50 crores taking the cost of Rs. 500 crores. Para 6.1.1 (P.B. Volume II - Page No.310 backside and 311). Thereafter, ITAT has also allowed in the Asst. Year 2004-05 in favour of the assessee. Respectfully following the decision of the Coordinating Bench, this Ground of the appeal is allowed. 68.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside/stayed or overruled by the Higher Judicial Authorities. Before us, no material was placed on record to point out any distinguishing feature in the facts of the case of immediate previous AY and the year under consideration. Thus, respectfully following the order of the tribunal in the own case of the assessee as discussed above, we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed. 69. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of the general public utility ex....
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..... This ground of appeal is allowed. 74. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 75. The learned DR before us vehemently supported the order of the AO by reiterating the findings contained in the assessment order. 76. On the other hand, the learned AR submitted that the transportation charges were part and parcel of the purchases and therefore the same is outside the purview of TDS. The learned AR before us vehemently supported the order of the ld. CIT-A. 77. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case arises for our adjudication whether the assessee has defaulted for not deducting TDS on the transportation expenses. Admittedly, the assessee was purchasing the natural gas from the Gas Authority of India Ltd (GAIL) which was directly supplied to the factory premises of the assessee for which the GAIL has charged separately for the transportation of such material to the place of the assessee. Finally, the payment was also made by the assessee to GAIL against the purchase of the raw material as well as the transportation charges. Thus, it is trans....
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....vested in GAIL till it was transported and delivered to the assessee's premises at the outlet of the gas metering station. The pipeline was laid down by GAIL and was permitted to be utilized for further onward transportation of gas to other consumers. 77.2 At the same, it also pertinent to highlight that the CBDT after taking cognizance of judgment of Hon'ble Gujarat High Court in case of CIT(TDS) vs. Krishak Bharati Cooperative Limited (supra) vide circular no. 09 of 2012 dated 1710-2012 clarified that in case of contract of supply of gas the provision of section 194C of the Act will not apply. The relevant portion of the clarification issued by CBDT vide impugned circular reads as under: 4. It is clarified that in case the Owner/Seller of the gas sells as well as transports the gas to the purchaser till the point of delivery, where the ownership of gas to the purchaser is simultaneously transferred, the manner of raising the sale bill (whether the transportation charges are embedded in the cost of gas or shown separately) does not alter the basic nature of such contract which remains essentially a 'contract for sale' and not a 'works contract' as envisaged ....
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....ontentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee purchased secondhand trucks and claimed to have put to use on 31st March 2006. However, the AO held that no evidence of put to use as on 31st March 2006 was furnished and accordingly disallowed the deprecation claimed on same. On appeal by the assessee, the learned CIT(A) was pleased to allow the claim of the assessee. 84.1 In this regard, we note that the assessee purchased secondhand trucks from Ashok Leyland Fin. Ltd and this fact can be verified from the vehicle registration form placed on pages 158 to 162 of the paper book. Thus, it is transpired that the impugned truck was ready to use on the date of purchase i.e. 31st March 2006. The only concern of the AO was with regard to put to use. As such, there is no dispute with regard to date of purchase of such truck. Therefore, we can safely assume that the truck was put to use on the date of purchase as claimed by the assessee. It is also pertinent to highlight that there is no reason or material brought by the AO to disbelief the version of the assessee that truck was not put to use on the date ....
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....t to be evaded subject to the maximum limit of 300% of such amount. Under explanation 4 to section 271(1)(c) of the Act, the manner for quantifying the amount of tax sought to be evaded has been specified which has direct nexus with the additions/ disallowances made during the quantum proceedings. Therefore, when the quantum additions/disallowances have been deleted, then the manner of quantifying the amount of penalty under explanation 4 to section 271(1)(c) of the Act as discussed above fails. Accordingly, we are of the view that that there cannot be any penalty with respect to the quantum additions which have been deleted by us. 88.2 Coming to penalty against the disallowances of claim of provision for doubtful advance of Rs. 48,96,52,916/-. In this regard, we note that the assessee against the impugned quantum additions/disallowance is in appeal before us in ITA No. 515/AHD/2014. The quantum appeal of the assessee has been adjudicated by us vide paragraph 20 to 26 of this order where we have found that the assessee is engaged in the business of moneylending and eligible to claim the deduction in case such loan or advances become bad. However, we confirmed the disallowances mer....
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....cept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. 88.5 As such revenue authority has to prove based on cogent material that the assessee has concealed income willfully with mala fide intention. There is no such finding of the Revenue authority in the penalty proceedings. In the case on hand there is no material on record suggesting that the assessee willfully or with wrong intention furnished inaccurate particulars of income. As such it is a mere case of bona fide mistake committed by the assessee while filing revised return of income which he duly admitted. Thus, in our considered opinion, no penalty should be levied for impugned addition made in the quantum proceeding. 88.6 In view of the above detailed discussion, we hereby uphold the finding of learned CIT(A) and direct the AO to delete the penalty levied by him. Hence, the ground of appeal of the Revenue is hereby dismissed. 88.7 In the result, the appeal of the Revenue is hereby dismissed. Coming to ITA No. 516/AHD/2014, an ....
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....or the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 200708. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2007-08. Hence, the ground of appeals filed by the assessee is hereby allowed. 91. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of Rs. 6,759/- under section 14A of the Act. 91.1 The AO in the assessment order disallowed an amount of Rs. 6,749/- under the provisions of section 14A as per the working provided by the assessee. Against the addition made by the AO, the assessee preferred an appeal before the learned CIT(A). However, the learned CIT(A) found that the issue was not pressed during the appellate proceeding. Hence the same was confirmed. 92. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 93. At the outset, we note that the learned AR for the assessee befo....
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....nces of the case and in law, education cess and secondary & higher education cess(education cess) paid on income tax and surcharge during the year, ought to be allowed as a deductible expense under the provisions of the Income-tax Act, ('the Act') while computing the taxable income. The appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 100. At the outset, we note that identical additional grounds were raised by the assessee in ITA NO. 515/Ahd/2014 which were accepted by us vide paragraph Nos. 36 to 40 of this order. Hence, following the same, the additional grounds raised in captioned appeal are also accepted. 101. At the outset, we note that the issues raised by the assessee in its additional grounds of appeal for the AY 2007-08 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 2007-08. The grounds of appeal of the assessee for the A.Y. 2006-07 have been de....
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.... of the Assessing Officer be restored. 103. The first issue raised by the Revenue vide ground No. 1 of its appeal is that the learned CIT(A) erred in deleting the disallowance of interest expense of Rs. 60,83,39,826/- on deep discount bonds (DDBs). 104. At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2007-08 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 200708. The appeal of the Revenue for the AY 2006-07 has been decided by us vide paragraph No. 50 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment years 2007-08. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 105. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of interest written back in books on the re-purchase of DDBs for Rs. 9,98,90,845/- only. 106. At the outset, we note that the issue raised by the Revenue in its groun....
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....ue is hereby dismissed. 111. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of depreciation on intangible assets for Rs. 46,39,21,449/- only. 112. At the outset, we note that the assessee has acquired brand/trademark in the A.Y. 2003-04 from Nirma Industries Ltd and this is 5th year of its claim. We also note that there is no dispute other than the value of brand/trademark to be adopted for the purpose of the depreciation to be allowed to the assessee. We are of the view that the value of the brand/trademark on which depreciation should be provided can only be determined in the first year itself i.e. A.Y. 2003-04 and deprecation in subsequent year should be allowed on WDV of first year onwards. We find the value of brand/trade in A.Y. 2003-04, on which depreciation should be allowed to the assessee, has been decided at Rs. 249,07,23,831/- by this ITAT in ITA No. 1599 & 1280/Ahd/2013. The relevant ground and finding of the bench read as under: 40. Ground No.5: In this ground of appeal, grievance of the Revenue is that the ld.CIT(A) has erred in law and on facts in holding that correct value of intangible assets of the Nirma Ind....
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....ent proceedings vide letter dated 23-122009 submitted that an amount of Rs. 12,30,29,250/- was credited to profit and loss account representing settlement of loan in the scheme of merger of Sachana Division of Core Healthcare Ltd. There was not claimed any deduction against such loan against the taxable income of the assessee. Therefore, the waiver of the loan cannot be made taxable under section 41 of the Act. Further, the unpaid interest on such a loan was also disallowed under section 43B of the Act. Therefore, the remission of such a loan is not taxable but the same was inadvertently included in computation of income which should be excluded. 117. However, the AO found that whatever the amount offered to tax with respect to impugned loan was offered by the Core Healthcare Ltd which is a distinct assessee. Therefore, the remission of loan liability in the hand of the assessee was correctly credited to profit and loss account as well offered to tax. Further remission of liability on account of demerger is also taxable under the provision of section 28(iv) of the Act. Accordingly, the AO rejected the claim of the assessee made by filing a letter dated 23-12-2009. 118. Aggrieved ....
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....indra and Mahindra Ltd reported in 93 taxmann.com 32 has observed as under: On a plain reading of section 28(iv), prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provision of section 28(iv), the benefit which is received has to be in some other form rather than in the shape of money. In the instant case, it is a matter of record that the amount of Rs. 57.74 lakhs is having received as cash receipt due to the waiver of loan. Therefore, the very first condition of section 28(iv) which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the instant case. Hence, in no circumstances, it can be said that the amount of Rs 57.74 lakhs can be taxed under the provisions of section 28(iv).[Para 13] 123.1 From the above discussion, there remains no ambiguity to the fact that the waiver of loan cannot be made subject to tax under the provisions of section 28 (iv) of the Act. 123.2 The next aspect arises whether such waiver of loan can be brought to tax under t....
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....cted from the Kaiser Jeep Corporation is in respect of plant, machinery and tooling equipments which are capital assets of the Respondent. It is important to note that the said purchase amount had not been debited to the trading account or to the profit or loss account in any of the assessment years. Here, we deem it proper to mention that there is difference between 'trading liability' and 'other liability'. Section 41 (1) of the IT Act particularly deals with the remission of trading liability. Whereas in the instant case, waiver of loan amounts to cessation of liability other than trading liability. Hence, we find no force in the argument of the Revenue that the case of the Respondent would fall under Section 41 (1) of the IT Act. 123.3 However, we note that if the loan relates to the working capital loan, then the waiver of such loan represents the benefit to the assessee in respect of which the expenditure was claimed by the assessee and allowed as deduction to the assessee. Accordingly, such working capital loan has to be treated as income of the assessee within the provisions of section 41(1) of the Act. In holding so, we draw support and guidance from the j....
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....t be made subject to tax on account of waiver of interest on the loan as it was never allowed deduction to the assessee in any of the assessment year. 123.7 Thus, in view of the above discussion we do not find any reason to interfere in the finding of the learned CIT(A). Hence, the ground of appeal of the revenue is hereby dismissed. 124. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting addition of Rs. 6,01,00,000/- on account of liabilities transferred to capital account. 125. The assessee during the year under consideration, on merger of Sancha Division of Core Health Ltd, transferred the liabilities being custom duty, demurrage and detention and sales tax liabilities amounting to Rs. 6.01 crores to capital reserve. The AO held that the assessee derived benefit on account of cessation of liabilities in the process of merger/demerger which was liable to be taxed under the provision of section 28(iv) of the Act. Accordingly, the AO added the same to the total income of the assessee. 126. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing that since the expenditure on account of impugned statutory liabi....
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.... learned CIT(A). Hence the ground of appeal of the Revenue is hereby dismissed. 131. The last issue raised by the Revenue is that the learned CIT(A) erred in deleting addition of Rs. 350,71,61,552/- on account of difference between assets and liabilities taken on merger of Sachana Division of Core Healthcare Ltd. 132. The AO during the assessment proceedings found that the assessee has created capital reserve account of Rs.350,71,61,552/- only. On question by the AO, it was submitted that the difference between assets and liabilities brought on occasion of merger of one of the divisions of Core Healthcare Limited were credited to capital reserve account and such entry was passed according to the merger scheme approved by the High Court which do not represent any income liable to be tax. 132.1 However, the AO held that the assessee on one hand is claiming the losses and unabsorbed depreciation brought from scheme of merger against its profit, whereas no income has been offered in respect to the benefit arising in such scheme of merger. As such, the assessee in the scheme of merger acquired assets more than liabilities which resulted in the benefit of Rs. 350,71,61,552/- to the as....
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....ollowing ingredient should be available on record: i. The assessee should have derived any benefit or perquisite which is in the form of kind whether convertible into money or not. ii. Such benefit or perquisite should be derived from business or exercise of business or profession. 136.2 In the case on hand the assessee received surplus assets over the liabilities and purchase consideration paid in the scheme of demerger. In our considered opinion such surplus of assets cannot be taxed under section 28(iv) because firstly, such surplus does not arise from carrying on the business, secondly, it is not in the nature of income to be covered u/s 2(24), thirdly, increase in assets and liabilities creating some benefit to the transferee is in the capital field as it is relatable to the non-trading assets and it only affects capital structure of the transferee company. 136.3 Before parting we also not that there was amendment brought in the statute w.e.f. April 1, 2017, which provides that the difference between the consideration and the fair market value of property received by any person is liable to be taxed as income from other sources in the hands of the recipient if they are a....
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....and circumstances of the Appellant's case, the learned CIT (A) has grossly erred in dismissing appellant's ground regarding initiation of penalty proceedings u/s. 271 (l)(c) of Income-tax Act. 8) Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time. 139. The first issue raised by the assessee is that the learned CIT(A) erred in holding sales tax benefit of Rs. 41,55,36,734/- only representing capital receipt instead of holding entire benefit of Rs. 42,30,14,976/- as capital receipt. 140. The assessee in computation the income for the year under consideration excluded an amount of Rs. 41,55,36,734/- being sales tax benefit not chargeable to tax under the Act. The assessee during the assessment proceeding submitted that as per revised vat audit report the sales tax benefit was of Rs. 42,30,14,976/only. Therefore, an amount of Rs. 42,30,14,976/- should be excluded from profit as capital receipt not chargeable to tax. However, the AO disagreed with the contention of the assessee and held that sale tax benefit arises to the assessee is revenue receipt chargeable to tax. Accordingly, the AO made a....
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....given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 200809. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2008-09. Hence, the ground of appeal filed by the assessee is hereby allowed. 144. The next issue raised by the assessee is that the learned CIT(A) erred in not allowing the additional depreciation on account of disallowances of deprecation in earlier assessment year i.e. 2006-07 for the reason that the asset was not put to use in the said assessment year. 145. At the outset, we note that the assessee claimed deprecation on purchase of second-hand truck dated 30-03-2006 in the A.Y. 2006-07 which was disallowed by the AO by holding that the impugned truck was not put to use in the A.Y. 2006-07. On appeal by the assessee, the learned CIT(A) set aside the finding of the AO and held that the assessee is eligible to claim the depreciation allowances from A.Y. 2006-07. On further appeal by the Revenue in ITA No. 685/Ahd/2....
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....ssment years 2008-09. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 36 and 40 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2008-09. Hence, the additional grounds of appeal filed by the assessee are hereby partly allowed. 148.2 In the result, the appeal of the assessee is partly allowed. Coming to ITA No. 969/Ahd/2012, an appeal by the Revenue for the A.Y. 2008-09 149. The Revenue has raised following grounds of appeal: i) The Id. CIT(A) has erred in law and on facts in treating the sales tax subsidy of Rs. 41,55,36,734/- as capital receipt, and thereby deleting the addition made by the Assessing Officer. ii) The Id. CIT(A) has erred in law and on facts in allowing the Assesses fs claim of setoff of brought forward losses and. 'unabsorbed depreciation of Rs. 210,78,03,786/- on account of merger of its demerged undertaking of Core Health Care Ltd. iii) The Id. CIT(A) has erred in law and on facts in deleting the disallowance of excess claim of depreciation of Rs. 34,79,41,087/....
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....ce, the ground of appeal filed by the Revenue is hereby dismissed. 154. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowances of excess depreciation on intangible assets for Rs. 34,79,41,087/- only. 155. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2008-09 is identical to the issue raised by the Revenue in ITA No. 686/AHD/2014 for the assessment year 2007-08. Therefore, the findings given in ITA No. 686/AHD/2014 shall also be applicable for the assessment year 200809. The appeal of the Revenue for the AY 2007-08 has been decided by us vide paragraph No. 112 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2007-08 shall also be applied for the assessment year 2008-09. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 156. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 1,53,33,661/- on account of benefit of settlement of loan. 157. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2008-....
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....he assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 11 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2009-10. Hence, the ground of appeal filed by the assessee is hereby allowed. 161. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of expense of Rs. 22,05,579/- paid to Government of Gujarat. 162. The AO found that the assessee was allowed to extract salt for its captive consumption. However, the assessee during the year extracted salt and sold outside. Therefore, the Government of Gujarat levied penalty of Rs. 22,05,579/- for infringement of law/condition. Accordingly, the AO disallowed the impugned penalty and added to the total income of the assessee. 163. The aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that the land was given by the Government to it for extraction of salt for its captive consumption. However, a sale of salt was made to outside party. Therefore, a payment of Rs. 22,05,579/- was made for breach of condition. ....
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....lowing the same, the additional grounds raised in captioned appeal are also accepted. 171.1 At the outset, we note that the issues raised by the assessee in its additional grounds of appeal for the AY 2009-10 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 2009-10. The appeal of the assessee for AY 2006-07 has been decided by us vide paragraph No. 36 and 40 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment years 2009-10. Hence, the additional grounds of appeals filed by the assessee are hereby partly allowed. 172. In the result, the appeal of the assessee is partly allowed. Coming to ITA 2411/AHD/2015, an appeal by the Revenue for the A.Y. 2009-10 173. The Revenue has raised following grounds of appeal: 1. The Id. CIT(A) has erred in law and on facts in treating the sales tax subsidy of Rs. 54,58,47,279/- as capital receipt instead of revenue receipt, and thereby deleting th....
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....ower Generation Unit at Bhavnagar. 8.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the power generated: was consumed on captive basis and therefore the assessee is not entitled for deduction u/s 80IA. 9. The Id. CIT(A) has erred in law and on facts in deleting the addition made on account of guarantee fee of Rs. 12,48,19,000/- 9.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the addition is based on order u/s. 92 CA (3) of the Act. 9.2 The Id. CIT(A) has errsd in law'and on facts by not considering the judgment of Hon'ble Mumbai Tribunal in the case of Nimbus Communications Ltd (2013) 34 Taxmann.com 298 wherein it is explained that where higher credit rating of AE is'due to a guarantee by another group member, there was clear benefit accrued to the AEs by the guarantee provided by the assessee and when such benefit was passed on by the assessee to the said AEs, guarantee commission should have been charged at Arm's Length Price. 10. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 11. It is, the....
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....for the assessment year 200910. The appeal of the Revenue for the AY 2007-08 has been decided by us vide paragraph No. 112 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2007-08 shall also be applied for the assessment year 2009-10. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 180. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of general public utility expense for Rs. 23,36,500/- only. 180.1 At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2009-10 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 200910. The appeal of the Revenue for the AY 2006-07 has been decided by us vide paragraph No. 70 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2009-10. Hence, the ground of appeal filed by....
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.... DR before us vehemently supported the findings of the assessment order. 185. On the other hand, the learned AR before us submitted that the own fund of the assessee exceeds the amount of investments and therefore there cannot be any disallowance of interest expense under the provisions of section 14A read with rule 8D of Income Tax Rules. The learned AR before us vehemently supported the order of the learned CIT-A. 186. We have heard the rival contentions of both the parties and perused the material available on record. At the outset we note that the assessee company earned dividend income of Rs. 70,75,768/- which was claimed as exempted income under the provision of section 10(38) of the Act. The AO invoked the provisions of section 14A read with rule 8D of the Income Tax Rule and worked out the amount of disallowance at Rs. 15,18,778/- which include disallowances of interest expenses as well as administrative expenses. 186.1 As far as disallowance of interest expenses is concerned, it is fairly settled position of law that if the assessee having interest free fund/own fund then no disallowance of interest under the provision of section 14A r.w.r. 8D of the Act can be made. In....
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....isallowed product registration expenses of Rs. 15,98,155/- as in the opinion of the A.O, the benefit derived by the product registration expenses (nay benefit the appellant for many years and accordingly benefit of enduring nature had accrued to the appellant as a result of these expenses. Taking entirety of facts in view, I am not inclined to agree with the contentions of Ld. A.O. The product registration expenses are nothing but the registration expenses incurred to get the pharmaceutical products registered with the local health authorities, association and their counterparts -at the foreign destinations. Without getting the products registered the appellant cannot sell the pharmaceutical product in a specific territory. In view of above, I hold that these expenses are enabling expenses and no new assets having enduring benefit have been created. In this regard reliance is placed on the decision of Cadila Healthcare Ltd., vide ITA No.3140/Ahd/2010. Further the said case is also confirmed by the-jurisdictional High Court in case of Cadila Healthcare Ltd (Tax Appeal No 752 of 2012). Following the above order of Hon. Jurisdictional High Courts. I allow the claim of appellant regard....
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....g aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 197. The learned DR before us vehemently supported the findings of the assessment order. 198. On the other hand, the learned AR contended that the addition under the normal provisions of the Act cannot be added while determining the income under the provisions of MAT. Thus, such expenses cannot be disallowed while calculating the profit under the provisions of section 115 JB of the Act. Therefore, the learned CIT-A rightly treated such expenses as revenue in nature. The learned AR vehemently supported the order of the learned CIT-A. 199. We have heard the rival contention of both the parties and perused the materials available on record. At the outset we note that the Special Bench of Hon'ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 has held that the disallowance made u/s 14A r.w.r. 8D cannot be the subject matter of disallowance while determining the net profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2....
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....ice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the maximum adjustment made by the AO. Thus, the ground of appeal of the Revenue is partly allowed. 200. The next issue raised by the Revenue is that the learned CIT(A) erred in allowing the deduction under section 80IA of the Act for Power generation unit at Bhavnagar. 201. At the outs....
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....ot cost anything to the assessee, such an assistance or accommodation will not have any bearing on its profits, income, losses or assets, and, therefore, it is outside the ambit of international transaction under section 92B(1). * Corporate guarantees issued for the benefit of AEs do not cost anything to the issuing enterprise and yet it might provide certain comfort levels to the parties dealing with the AEs; * These guarantees do not have any impact on profits, income, losses or assets of the enterprise. Therefore, corporate guarantees do not fall within the scope of the term 'international transaction' even after insertion of Explanation to section 92B by Finance Act, 2012 with retrospective effect from 01.04.2002. Considering the submissions made by appellant as above, it is concluded that the appellant did not incur any costs in providing the corporate guarantee to the associated enterprises and neither was any amount of guarantee commission charged by the appellant. As the transaction did not have any impact on the income, profits, losses or assets of the appellant the same could, not be classified as an international transaction as per the provisions of chapter....
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....is covered by the definition of international transaction after retrospective amendment made by Finance Act, 2012. The assessee argued that the Corporate Guarantee is and additional guarantee, provided by the Parent company. It does not involve any cost of risk to the shareholders. Further, the retrospective amendment of section 92B does not enlarge the scope of the term 'international transaction' to include the Corporate Guarantee in the nature provided by the assessee therein. The Tribunal held that in case of default, Guarantor has to fulfil the liability and therefore, there is always an inherent risk in providing guarantees and that may be a reason that Finance provider insist on non-charging any commission from Associated Enterprise as a commercial principle. Further, it has been observed that his position indicates that provision of guarantee always involves risk and there is a service provided to the Associate enterprise in increasing its creditworthiness in obtaining loans in the market, be from Financial institutions or from others. There may not be immediate charge on profit & loss account, but inherent risk cannot be ruled out in providing guarantees. U1 and ad....
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....ion. Some of these cases are as under: (i) Videocon Industries Ltd. v. Dy. CIT [2017] 79 taxmann.com 216 (Mumbai - Trib.), Parent company charged commission at 0.25 %. The ALP was determined by the Tribunal at 0.50%. (ii) Hindalco Industries Ltd. v. Addl. CIT [2015] 62 taxmann.com 181 (Mum.), Parent company charged commission at 0.50% which was considered as at ALP. (iii) Manugraph India Ltd. v. Dy. CIT [2015] 62 taxmann.com 347 (Mum. - Trib.), The corporate guarantee was not treated as international transaction by the parent company but the Tribunal treated it as international transaction u/s 92B and upheld the ALP of 0.50%, following the order in the case of the assessee for the earlier year. The Tribunal followed Everest Kento Cylinder Ltd. v. Asstt. CIT [2015] 56 taxmann.com 361 (MumTrib). It seems that the decision in Bharti Airtel Ltd. (supra) was not referred to in this case. (iv) Aditya Birla Mincas Worldwide Ltd. v. Dy. CIT [2015] 56 taxmann.com 317/69 SOT 18 (URO) (Mum - ITAT). The assessee had not classified this transaction as international transaction. However, guarantee commission was fixed at 0.50%. (v) Mylan Laboratories Ltd. v. Asstt. CIT [2015] 155 ITD 1....
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..... 3. The Id. CIT(A) has erred in law and on facts in deleting the disallowance of excess claim of depreciation of Rs. 17,34,50,332/- on intangible assets and in directing the Assessing Officer to work out the WDV of intangible assets with reference to the market value of the assets at Rs. 500 Crores.; 4. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,68,231/- made on account of disallowance u/s. 14A of the Act r.w Rule SDof the IT Rule. 5. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,68,231/- made on account of disallowance u/s. 14A of the Act r.w. Rule 8D of the I T Rule under the MAT provisions. 6. The Id. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 76,86,229/- made on account of product registration expenses, 6.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the benefit of the registration of the product is of enduring nature and therefore the expenses are not allowable u/s 37(1) of the Act. 7. The Id. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,62,88,016/- made on account of disallowance of doubtful advances written off.....
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....evenue in its ground of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 201011. The appeal of the Revenue for the A.Y. 2006-07 has been decided by us vide paragraph No. 62 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2010-11. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 211. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 131,00,00,000/- made on account of setoff of losses and unabsorbed depreciation of demerged unit of Core Healthcare Ltd. 212. At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 201011. The appeal of the Reve....
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....identical to the issue raised by the Revenue in ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2010-11. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 199 of this order partly in favour of Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2009-10 shall also be applied for the assessment year 2010-11. Hence, the ground of appeal filed by the Revenue is hereby partly allowed. 218. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of product registration expense of Rs. 76,86,229/- only. 218.1 At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2010-11. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 193 of this order against the Reve....
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....ellant. Appellant is one of the leading manufacturer of Soda Ash in the country. Accordingly, ash is generated in large quantity which will be used in production of cement as backward integration, hence which is part of the same business. After considering the entirety of facts, am not inclined to agree with the contentions of the Id.A.O. as appellant paid consultation fee to IFCI regarding feasibility of study to know updated status of cement industry in India. Accordingly, I am of the opinion that the payment made to IFCI of Rs. 25,00,000/- is rightly claimed by the appellant as consultation expenses. The said disallowance made by the Id.A.O. of Rs. 25,00,000/- is deleted. This ground of appeal is allowed. 223. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 223.1 Both the learned DR and learned AR before vehemently supported the order of the authorities below to the extent favourable to them. 224. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the AO has disallowed the deduction claimed by the assessee for Rs.25 lakhs for the feasibility study conducted by the I....
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.... of the assessee-company. Considering the facts involved in the present case, in our opinion, the Seamless Steel Tube Project was an expansion of the present business of the assessee which is supported by the objects mentioned in the memorandum of association. However, ultimately the project was given up by the assessee for some reason even otherwise it is a business loss of the existing company. Considering the entire circumstances of the case and the decisions which have been relied upon by the assessee, in our opinion, the Assessing Officer should have allowed the expenditure as revenue expenditure. Never materialized, whether expenses incurred towards such project was rightly treated as revenue expense and not as capital expenditure. In view of the above, we do not find any reason to interfere in the finding of the Ld. CIT-A. Accordingly, we hold that the assessee is eligible for the deduction of such expenses under the provisions of section 37 of the Act. Hence, the ground of appeal of the revenue is hereby dismissed. 225. The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the upward adjustment in TP report for Rs. 6,00,00,397/- made by the A....
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....count of benchmarking of loan to Rs. 13,92,104/-. The copy of the order u/s 92CA(5) r.w.s. 154 of the I. T. Act was furnished. Appellant submitted that loan granted to its AE (subsidiary company) should be computed at LIBOR plus 200 to 250 points. Appellant submitted that considering the fact that the LIBOR rate during FY 09-10 was 1.28% and by applying the higher rate of 250 basis points the total interest percentage comes to 3.78%. Appellant submitted that it charged interest of 5% and there was no justification for the TPO to take the interest rate at 5.38% by considering the basis points at 409.72 instead of the settled rate as accepted by various Tribunals as relied upon by the appellant in the written submission. After considering the entirety of facts, I am inclined to agree with the contention of appellant and the addition made by the A.O. for 32,23,160/-, which is now revised to Rs. 13,92,104/- as per order u/s. 92CA(5) r.w.s. 154 of the I.T. Act dtd. 18.07.2014 passed by TPO. Accordingly, the addition made for Rs. 13,92,104/- is deleted. This ground of appeal raised by the appellant is allowed. 229. Being aggrieved by the order of the learned CIT(A) the revenue is in app....
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....e for the A.Y. 2006-07 has been decided by us vide paragraph No. 34 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2010-11. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 233. In the result, the appeal of the Revenue is partly allowed. Coming to CO No. 63/AHD/2019 in ITA No. 2414/AHD/2015, by the assessee for A.Y. 2010-11 234. The assessee has raised the following grounds of objection: 1) In law and in the facts and circumstances of the Respondent's case, the learned CIT(A) has grossly erred in points of law and facts. 2) In law and in facts and circumstances of the Respondent's case, if the addition on account of provision for doubtful advances of Rs. 48,96,52,916/- is confirmed, in part or full, for Asst. Year 2006-07, then the said claim should be allowed in current Asst. Year 2010-11 when advances were actually written off. 3) Your respondent reserves the right to add, alter, amend or vary all or any of the above Grounds of Cross Objection as may be advised from time to time. 234.1 The only groun....
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....es raised by the assessee in its additional grounds of objection for the AY 2010-11 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 200607. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 2010-11. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 36 to 40 of this order in partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2010-11. Hence, the additional grounds of CO filed by the assessee are hereby partly allowed. 239. In the result, the CO of the assessee partly allowed. Coming to ITA No. 1872/Ahd/2016, an appeal by the assessee for A.Y. 2011-12 240. The assessee has raised following grounds of appeal: 1) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in the points of law and facts. 2) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming part disallowance of expenses Rs. 5,13,814/- u/s. ....
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....provisions of section 2(24)(x) r.w.s. 36(1)(vi) and after placing reliance on the judgment of Hon'ble Gujarat High Court in case of CIT vs. G.S.R.T.C. in tax appeal No. 673/2010 treated the same as income of the assessee and added to the total income. 245. Aggrieved, assessee preferred an appeal before the learned CIT(A). 246. The assessee before the learned CIT(A) submitted that in case of deposit of ESI, there was delay of just 7 days which occurred due to online payment system. Under ESIC, the technology for online payment was introduced for the first time in the year under consideration. Likewise, the delay in the deposit of PF was for 1 or 4 days which is within the grace period of 5 days. Further, the cheque for the payment of PF was issued before the due date but cleared after due date. Therefore, the delay was beyond its control. Thus, no addition on this account is required to be made. 247. However, the learned confirmed the addition made by the AO by observing as under: 15.2 I have carefully considered the rival contentions as well as the observation of the A O. It can be observed from para-14 of the assessment order that the appellant has failed in depositing employ....
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....It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. If not so paid then no deduction 36(1)(va)" 250.1 From the above it is very clear that the payment under section 36(1)(va) would be allowed in respect to the payment of employee contribution towards ESI/EPF if such payment is made on/before due date as specified under the relevant Act (i.e. 15 days from the month for which salary is due). Thus, the payment made by the assessee on account of employee contribution towards ESI/EPF after the due date stands disallowed in view of the judgment in the case of M/s Checkmate Facility and Electronics Solutions Pvt. Ltd. v/s DCIT (Supra). We uphold the order of the lower authorities. Hence the ground of appeal of the assessee is dismissed. 251. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of previous year adjustment for Rs. 28,84,009/- only. 252. The assessee during the assessment filed application for deduction on account of certain adjustment pertaining to the previous year which was rejected by the AO after placing reliance on ....
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....owed the same suo moto in the computation of income on the reasoning that these expenses do not pertain to the previous year 2012-13 corresponding to the assessment year 2013-14. However, it was contended by the assessee that these expenses pertain to the year under consideration and therefore the assessee has claimed deduction for the same by way of letter filed during the assessment proceedings. But the AO disallowed the contention of the assessee on the reasoning that such claim was not made in the income tax return or revised income tax return. The AO while doing so has placed reliance on the judgment of Hon'ble Supreme Court in case of Goetze (India) Ltd vs. CIT 284 ITR 323. Subsequently, the learned CIT-A confirmed the order of the AO. 257.1 There is no dispute with the fact that the assessee during the assessment proceedings can make the fresh claim which was not made during in the return of income. The decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) was regarding the limitation of the power of the assessing authority and did not impinge on the power of the Tribunal. 257.2 It is also a fact on record that the learned CIT(A) in his order has obs....
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....before the appeal hearing. 260. At the outset, we note that identical additional grounds were raised by the assessee in ITA NO. 515/Ahd/2014 which were accepted by us vide paragraph No. 37 of this order. Hence, following the same, the additional grounds raised in captioned appeal are also accepted. 261. At the outset, we note that the issues raised by the assessee in its additional grounds of appeal for the AY 2011-12 are identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 2011-12. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 36 to 40 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2011-12. Hence, the additional grounds of appeal filed by the assessee are hereby partly allowed. 262. In the result, appeal of the assessee is hereby partly allowed. Coming to ITA No. 2237/AHD/2016, an appeal by the Revenue for A.Y. 2011-12 263. The Reve....
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....t. 265. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issue raised by the Revenue in ITA No. 685/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 685/AHD/2014 shall also be applicable for the assessment year 201112. The appeal of the Revenue for the A.Y. 2006-07 has been decided by us vide paragraph No. 62 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2006-07 shall also be applied for the assessment year 2011-12. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 266. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance made by the AO of excess depreciation on intangible assets for Rs. 13,00,87,749/- only. 267. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issue raised by the Revenue in ITA No. 686/AHD/2014 for the assessment year 2007-08. Therefore, the findings given in ITA No. 686/AHD/2014 shall also be applicable for the assessment year 20111....
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....raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issue raised by the Revenue in ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2011-12. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 199 of this order partly in favour of revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2009-10 shall also be applied for the assessment year 2011-12. Hence, the ground of appeal filed by the Revenue is hereby partly allowed. 274. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of product registration expense of Rs. 70,35,164/- only. 275. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issue raised by the Revenue in ITA No. 2411/AHD/2015 for the assessment year 2009-10. Therefore, the findings given in ITA No. 2411/AHD/2015 shall also be applicable for the assessment year 2011-12. The appeal of the Revenue for the AY 2009-10 has been d....
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....ssessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 201112. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 19 of this order in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 200607 shall also be applied for the assessment year 2011-12. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 282. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 4,89,80,354/- made by the AO on excess provision written off. 283. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2011-12 is identical to the issues raised by the assessee in ITA No. 515/AHD/2014 for the assessment year 2006-07. Therefore, the findings given in ITA No. 515/AHD/2014 shall also be applicable for the assessment year 201112. The appeal of the assessee for the A.Y. 2006-07 has been decided by us vide paragraph No. 19 of this order in favour of the assessee. The learned AR and the DR also....
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..../- on the amount of refund for the period March 2004 to January 2009. The amount of refund for Rs. 22,12,583/- being interest under section 244A was adjusted against demand of A.Y. 2011-12 as on 04-05-2016. 288.1 Thus, the assessee made a claim for additional compensation of interest under section 244A of the Act for the period February 2009 to May 2016. But the AO rejected the claim of the assessee for additional compensation as claimed by the assessee. 289. On appeal, the learned CIT (A) was also pleased to confirm the order of the AO by relying on the order of the Tribunal in case of Hirenbhai Karsanbhai Patel vs. ACIT bearing IT(SS)A No 462/AHD/2013. 290. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 290.1 The learned AR before us filed a paper book running from pages 1 to 105 and contended that the amount of refund given by the revenue first should be adjusted against the interest payable by the Revenue. As such the amount of the refund first should be adjusted against the interest payable to the assessee. Accordingly, the ld. AR requested for the grant of interest under the provisions of section 244 A of the Act. 290.2 On the o....
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....a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided. Under these circumstances and aforesaid discussion, we find that the judicial proprietary demands that order of the Tribunal of earlier years must be followed and therefore we direct the AO to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Thus, with these directions, the appeal of the assessee is allowed." 291.1 From the above we hold that the amount of refund granted to the assessee, first, has to be adjusted against the interest payable to the assessee in the given facts and circumstances. Considering the fact that the amount of refund issued to the assessee for Rs. Rs. 75,00,281/- was first to be adjusted against the interest of Rs. 22,12,583/- then refund of principal amount. Admittedly, the interest for Rs. 22,12,583/- was finally issued to the assessee in the mon....