TaxTMI 
TaxTMI 
2023 (7) TMI 130
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....above captioned appeals have been filed by the 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....
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....ing the order of his predecessor in the own case of the assessee for AY 2008-09 deleted the addition made by the AO in part by observing 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 Do....
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....eduction. 10. Both the ld. AR and DR before us vehemently supported the order of the authorities below as favourable to them. 11. We have heard the rival contentions and perused the materials 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....
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....d the party namely Shri Babubhai Ramanlal Patel to pay an amount of Rs. 20,50,00,000/- for full and final settlement of the loan and advance. 13.1 The assessee in accordance with the arbitration award has written 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....
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....ssee further submitted that there cannot be nexus between the money lent to Shri Babubhai Ramanlal Patel and land transaction between impugned party and its associate concern/individual. 15. The learned CIT(A) after considering the facts confirmed the disallowances made 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 ....
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....s 75 qualifies for deduction under Section 36(1)(vii) of the Act being a deposit made in the money lending business activity of the assessee automatically entails the assessee to a like deduction in respect of the advance to extent of Rs 5.34 crore also as a deduction under the very provision 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 instance....
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....8 and not in the year under consideration. There is no confusion that the order of the arbitration was made on 3rd August 2006 based on the application made by the parties i.e. the assessee and the party being Shri Babubhai Ramanlal Patel which was made sometime in the month of June 2006 whereas the books of accounts of the assessee 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 th....
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.... However, the aforesaid aspect of the matter has not been appreciated by the tribunal. Alternatively, the claim of the assessee under section 37(1) of the Act has also not been examined. 19.2 Likewise, we note that the Hon'ble Madras High Court in the case of CIT Vs Southern Polymers Pvt. Ltd. reported in 20 taxmann.com 847 has observed 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 ....
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.... was really in the nature of a loan. 19.3 Based on the above, it can be concluded that the assessee is engaged in the business of moneylending and therefore once the amount lent in normal course of business become irrecoverable/bad. The benefit of deduction as business loss to the assessee cannot be denied on the reasoning that there was no license 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 as....
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....ransaction of the purchase of land by the group company of the assessee based on the documentary evidence suggesting that the land has been purchased by the group company at the nominal price which has ultimately resulted the low-income tax liability on the assessee. Thus, in the absence of necessary details, we're not inclined to confirm the order of the authorities 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. ....
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....arging interest is only incidental to the business. This cannot be treated as an activity of money lending in absence of any systematic business of taking deposits on interest and lending the same or having a money lending license. The appellant merely utilized funds available with it to earn some income. Following the stand taken while deciding the 10th ground of appeal the action of A.O. in disallowing the claim of provision for doubtful advances 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 pro....
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....eiterated the findings of the authorities below. 26. We have heard the rival contention of both the parties and perused the materials available on record. The facts of the issue on hand have been elaborated in previous paragraphs, therefore we are not inclined to repeat the same for the sake of brevity and convenience. The first question before us is whether the assessee is in the business of money lending or not and consequently the loan and advances given became irrecoverable 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 th....
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.... 30. However, the learned CIT(A) dismissed the additional ground of appeal of the assessee by observing as under: I have carefully considered the contention made by the appellant. Hon'ble Supreme Court in the case of Goetz India Ltd. 284 ITR 323 has held that any claim for deduction not made in the return cannot be made except by way of filing revised return. In the case of appellant , no revised return was filed for making the claim. Hence, the claim is not acceptable. The additional 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 t....
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.... of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income tax Appellate Tribunal under section 254 of the Income-tax Act, 1961. There shall be no order as to costs. 34.2 On perusal of the above judgement, there remains no ambiguity to the fact that it 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....
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....thorities below. 39. We have heard both the parties and perused the materials available on record. The Hon'ble Supreme Court in the case of National Thermal Power Co. Limited vs. CIT reported in 229 ITR 383 has held as under:- " Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the 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....
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....he Act i.e. not liable to be tax then such receipt cannot be included in the book profit under section 115JB of the Act. The relevant observation of the Hon'ble Court is extracted as under: 27. In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital receipt' and does not fall within the definition of 'Income' under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under Section 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 I....
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....account of Disallowance of transportation charges paid to GAS Authority of India of u/s 40 (a) (ia) of Income -tax Act. (vii) The CIT(A) has further erred in law and on facts in deleting the addition-of Rs. 11,68,377/- on account of Depreciation on Heavy Vehicles. (ix) On the facts end circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. (x) It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 44. The first issue raised by the Revenue vide ground No. 1 of its appeal is that 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 ....
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....ue in details in para 4 to 26 of the order. The concluding para 26 of the aforesaid order is reproduced for ready reference. "26. Having held that the assessee is entitled to proportionately claim the expenditure towards 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." 3.4 Following the above ITAT order in the case of appellant for A.Y. 2002-03 I hold that the appellant is entitled to pro rata interest expenditure pertaining to current A.Y. 2006-07. The 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 ....
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....requires proper allocation of costs into appropriate periods so that relevant incomes and expenses are matched to work out the correct profits in a given accounting period. This view is well fortified by the judgment in Taparia Tools Ltd., 260 ITR 102, 116 (Bom.) in which the Hon'ble High... Cot has explained the matching concept thus: "'....Therefore, under the mercantile system of accounting, in order to determine the net income of an accounting year, the revenue and other incomes are matched with the cost of resources consumed (expenses). Under the mercantile system of accounting, this matching is required to be done on accrual basis. Under this matching concept, revenue and income earned during an accounting period irrespective 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 earne....
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....t is evident on bare perusal of the Information Memorandum of both the series of DDBS that the liability towards discount or interest was incurred in that very year in which the DDBS were issued. The assessee was contractually bound to discharge it at the time of maturity of DDBS. The assessee had no element of discretion in this behalf. By issuing the debentures at a discount, the assessee-company incurred the liability in the year of issue of debentures to pay the discount at the time of maturity but such payment was to secure the benefit over a number of years. And therefore such liability was not to be allowed in its entirety in the year of issue of DDBS as the entire liability did not relate to that year. Here comes the relevance of matching principle. Since 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 ....
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....d by the company for the purposes of its business. This would therefore be expenditure. (ii) The Hon'ble Supreme Court cited, with approval, the observations made in India Cements Ltd., 60 ITR 52 (SC), that (a) the loan obtained is not an asset or advantage of an enduring nature; (b) the expenditure was made for securing the use of money for a certain period; and (c) it irrelevant to consider the object with which the loan was obtained. (iii) By Issuing the debentures at a discount, the assessee incurs the liability to pay the discount in the year of issue of debentures but such payment is to secure a benefit over a number of years. Since there is a continuing benefit to the business of the assessee over the entire period, the liability should be spread over the period 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 valu....
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....pective hands; (v) Since the assessee did not deduct the tax at source in terms of section 193, it could not be allowed to claim deduction on account of interest liability; (vi) Insertion of Clause (illa) in section 36 made it abundantly clear that "pro- rata discount could be allowed in respect of Zero Coupon Bonds alone issued by an infrastructure capital company or infrastructure capital fund or public sector company after 1.6.2005 and therefore such a concession could not be extended in respect of earlier assessment years and that too to the assessee company which was neither an infrastructure company nor a public sector company; (vii) The device adopted by the assessee was a tax avoidance device and therefore such device was to be ignored. 25. It is submitted on behalf of the assessee that all the aforesaid observations have no 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 fu....
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....t to outcome of identical issue pending before higher authority. 53. On appeal by the assessee, the learned CIT(A) allowed the ground of appeal of the assessee subject to verification. The relevant finding of the learned CIT(A) is extracted as under: 5.3 This issue is also covered by the order of Hon'ble ITAT, Bench: A, Ahmedabadjor A.Yrs,.2002-03 and. 2004-05 dtd. 13th July, 2009. The relevant portion of the order passed by Hon.'lTAT is reproduced for immediate reference. "26. Having held that the assesses is entitled to proportionately claim the expenditure towards 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." 5.4 As per 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. i....
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.... 58. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO on account of sales tax benefit of Rs. 99,19,95,360/- 59. The assessee during the year received sales tax subsidy aggregating to Rs. 99,19,95,360/- for two units namely Alindrra Unit Broada and Kalatalav Unit Bhavnagar under the backward area development scheme. The impugned subsidy was treated as capital receipt by the assessee. However, the AO found that the impugned subsidy was received in the form of exemption on sales tax on sale and purchases of different products. Hence, the same is directly linked to the turnover of the assessee. Therefore, as per the AO, the same should be treated as revenue receipt. The AO further held that had impugned subsidy been for the investment in plant & machinery, then the same should have been reduced from the original cost of the plant & machinery as prescribed 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 obs....
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....ve heard both the learned counsel and perused the record. We have also gone through the decisions cited before us. After considering the material on record, we are of the view that the issues involved in these appeals are squarely covered by the decisions of this Court in Birla VXL Ltd. (supra) and in Munjal Auto Industries Ltd. (supra). Therefore, the questions of law posed for our consideration in these appeals are answered in favour of the assessee and against the department. Accordingly, all these appeals are dismissed. 62.2. Respectfully following the finding of the Hon'ble Gujarat High Court in the own case of the assessee, 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. 63. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 209,41,67,551/- made by the AO on account of setoff of losses and unabsorbed depreciation of a unit 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 merge....
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....sorbed depreciation of the unit of Core Healthcare Ltd merged with the assessee arising from AY 2005-06 where the dispute travelled to this Tribunal in ITA No. 2208/AHD/2009. The coordinate bench vide order dated 31st July 2017 decided the issue in the favour of the assessee by observing as under: 4.3 So far as disallowance of set off of losses and depreciation of Rs. 1,64,78,76,612/- in respect of Sachana Division is concerned. The Appellant company being resulting company acquired unit at Sachana from Core Healthcare Ltd. (CHL) being the demerged company. All the assets and liabilities of Sachana Unit stands transferred to the appellant company. The Scheme was approved by Hon'ble High Court vide order dated 01/03/2007. The Scheme was divided into following parts. Part-I Deals with introduction and definitions. Part-II: Deals with compromise with lenders. Part-III: Deals with reconstruction of demerged company. Part-IV: Deals with reorganization of share capital of resulting Part-V: company, Deals with demerger. Part-VI: Deals with other terms and conditions applicable to the Scheme. * The scheme of demerg....
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....ffective credit of and net taxes shall be paid over to the Resulting Company." Thus all the liabilities of the CHL were settled before the transfer of the Demerged Unit. The liabilities in respect of secured lenders of CHL got settled at Rs. 138 Crore. All the conditions enumerated in section 2(19AA) of the I.T. Act provides as under: "(19AA) "demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956 ( 1 of 1956), by a demerged company of its one or more undertakings to any resulting company in such a manner that- (i) all the property of the undertaking, being transferred by the demerged company, immediately before the demerger, becomes the property of resulting company by virtue of the demerger; (ii) all the liabilities relatable to the undertaking, being transferred by the demerged company, immediately before the demerger, become the liabilities of the resulting company by virtue of the demerger; (iii) the property and liabilities of the undertaking or undertakings being transferred by the demerged company are transferred at values appearing in its ....
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.... (c) The liabilities (including debentures, if any) other than those referred to in sub-clause (a) and (b) above, being the amounts of general or multipurpose borrowings of the demerged Company prior to the Appointed Date for Demerged, allocated to the Demerged Undertaking in the same proportion in which the books value of the assets transferred to the Resulting Company under this Scheme to the total value of the assets the Demerged Company on Appointed Date of Demerger." The liabilities were scaled down in the hands of CHL only. This is clearly mentioned in the scheme duly approved by Hon'ble High Court. The accounts are duly prepared by the Management of the Company and Auditors opined about the correctness of the financial statement based on the audit. The Auditors verified the liabilities of the Demerged Undertaking which were taken over by the appellant company. Once Hon'ble High Court sanctioned the scheme it binds all concerned. The settlement of debts was carried out by CHL with its lenders of Sachana Division which were taken over by the appellant company. The appellant company is not concerned in the matter of settlement due of CHL.....
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....atsoever the rights of the Lenders' to the Settlement Amount (in terms of Clause 7 of this Scheme, absolutely towards discharge of Liabilities) and the new equity shares of the Resulting Company (in terms of Clause 9.4 of this Scheme from the Resulting Company." In our considered opinion A.O. and the department is bound by the decision of Hon'ble High Court. He has to follow the directions given by the Hon'ble court. The appellant Company claimed the losses to the extent of 98.28% pertaining to demerged undertaking on the basis of 72A(4)(b). Accordingly having complied all the conditions Section 2(19AA) of Income-tax Act and Scheme sanctioned by the Hon'ble High Court, the appellant Company is eligible to reduction on Undertaking. loss depreciation pertaining Sachana Depreciation and losses of CHL should be determined as on 31- 032004 and cannot be determined as on 01-12-2004. The depreciation and losses are always to be worked out at the end of the year as per section 72A of Income Tax Act. This is also mentioned in the scheme sanctioned by Hon'ble High court at Para-8 of the Scheme. . 4.4 So far as directing to allow depreciation Rs.....
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.... purchase cost in the books by the assessee. Thus, the AO was of the view that the transportation charges paid by the assessee to the GAIL were in the nature of work contract on which tax under section 194C of the Act ought to have deducted. However, the assessee failed to deduct due taxes. Thus, the AO by invoking the provision of section 40(a)(ia) of the Act disallowed the transportation charges of Rs. 66,37,143/- and added to the total income of the assessee. 73. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: .The issue pertains to non deduction of TDS from the of Gas Authority of India Ltd. The Id. CIT(A)-X, Ahmedabad while dealing with the appeal for Asst.Years: 2004-05 to 2006-07 in the case of appellant has held that there was no requirement of deducting TDS in the appeal order No.CIT(a)-X/15,16 &17/06-07 dtd.03-01-2008. The order of Id.CIT(A) was confirmed by Hon. ITAT Bench: A. Ahmedabad in the order passed vide ITA Nos.1072 to 1074/Ahd/2008 for Asst. Years 2004-05 to 2006-07 dtd. 22nd May, 2008. In view of the above appeal orders, I allow the claim of the appellant and direct the AO to delete the disall....
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....e of the terms of such a contract. Clear understanding of the parties that the ownership of gas would pass on to the buyer at the delivery point would clearly show that transport of gas by the seller was a step towards execution of contract for sale of gas and there was no contract for carriage of goods. We are not unmindful of the decision of the Apex Court in case of Associated Cement Co. Ltd. (supra) wherein it was observed that Section 194C(1) does not require that a contract to carry out a work or the contract to supply labour to carry out work should be confined to "works contract." However, in the present case we are not faced with such a situation. We only find that there was no contract between GAIL and the assessee for carriage of goods. Transportation of gas by GAIL was only in furtherance of contract of sale of gas. 18. In view of the above discussion, we are of the opinion that the Tribunal committed no error in coming to the conclusion that the case was not covered under Section 194C of the Act. It may be that the transportation component of gas was paid separately by the assessee to GAIL. Here also the transportation charges did not depend on the consumption....
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.... for half year. However, the AO found that the assessee failed to prove that the vehicles were put to use as on 31st March 2006. Hence, the AO disallowed the depreciation on the same for Rs. 11,68,377/- and added to the total income of the assessee. 80. On appeal by the assessee, the learned CIT(A) deleted the disallowance made by the AO by observing as under: I have carefully considered rival contentions. It is seen that the trucks purchases by the appellant were second-hand and were therefore ready for use. They were also registered in the name of the appellant. I do not doubt the claim of the use of these trucks since they were also registered in the name of the appellant. Disallowance of depreciation of Rs. 11,68,377/- on these truck by A.O is deleted and 12 the ground of appeal is allowed. 81. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 82. The learned DR before us reiterated the findings contained in the assessment order by supporting the order of the AO. 83. On the other hand, the learned AR before us submitted that vehicles in dispute were ready to use as on 31 March 2006 and therefore the assessee canno....
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.... 4. Prior Period Income Rs. 1,17,56,630/- 87.1 On appeal by the assessee, the ld. CIT-A was pleased to delete the penalty levied by the AO under section 271(1)(c) of the Act. 87.2 Being aggrieved by the order of the ld. CIT-A, the revenue is in appeal before us. 87.3 Both the ld. DR and AR before us vehemently supported the order of the authorities below as favorable to them. 88. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we find that against the first two quantum additions/disallowances, the assessee is in appeal before us in ITA No. 515/AHD/2014 where the quantum additions have been deleted by us vide paragraphs nos. 11 and 19 of this order. 88.1 Thus, from the above there remains no ambiguity that the first two additions/disallowances being General Public Utility Expenses and Bad Debt Written Off based on which the penalty was levied upon the assessee by the AO has ceased to exist. In other words, the quantum additions made by the AO and confirmed by the learned CIT(A) were deleted by the us. Thus, the question of concealment of income or furnishing inaccurate particular of income ....
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....aim of provision for doubtful debt. 88.3 Coming to the issue of levy of penalty on addition of prior period income for Rs. 1,17,56,630/-. In this regard there was prior period income of Rs. 58,78,315/- but the assessee in the revised return of income inadvertently has shown the same as prior period expenses. However, the assessee during the assessment proceedings admitted the mistake stating that the income was inadvertently treated as an expense. Accordingly, the AO made addition of Rs. 1,17,56,630 to the total income of the assessee which was not contested by the assessee either at the time of assessment proceeding neither before the appellate authority. 88.4 From the above, it is transpired that there was bona fide mistake committed by the assessee which was duly admitted before the AO. It is settled position of law that quantum proceedings and the penalty proceeding are different. Any addition or disallowances made under quantum proceeding do not ipso facto empower the revenue authority to levy penalty under section 271(1)(c) of the Act. In the penalty proceeding it has to be proved by the revenue based on cogent material that the assessee has either concealed income or f....
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....he learned CIT(A) has grossly erred in dismissing appellant's ground regarding charging interest u/s. 234B of I.T. Act. 6) 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 charging interest u/s. 234D of I.T. Act. 7) 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 withdrawing interest u/s. 244A of I.T. Act. 8) 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 initiation of penalty proceedings u/s. 271(l)(c) of I.T. Act. 9) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in dismissing additional ground regarding allowances of deduction u/s. 80IA of I.T Act on the profit of the power project. 10) 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. 90. The first issue raised by the assessee is that the ....
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.... the assessee vide ground Nos. 5 to 8 of its appeal are either consequential or premature to decide. Hence, the same are dismissed accordingly as infructuous. 97. The next issue raised by the assessee vide ground No. 9 of its appeal is that the learned CIT(A) erred in dismissing the additional ground raised before him for allowances of deduction under section 80IA of the Act. 98. At the outset, we note that the issues raised by the assessee in its grounds of appeal for the AY 2007-08 is identical to the issue 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 years 200708. The appeal of the assessee 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 years 2007-08. Hence, the ground of appeal filed by the assessee is hereby allowed. 99. The assessee, vide application dated 02-03-2020 and 15-02-2021, has pleaded before us for admitting the additional gr....
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....,98,90,845/- on account of Interest written back in books of account on DDBs. iii) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 38,29,13,332/-on account of Sales tax benefit. iv) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 237,59,10,531/-on account of Set off of losses and depreciation of demerged undertaking of Sachana division of Core Healthcare Ltd. v) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 46,39,21,449/-on account of Depreciation on intangible assets. vi) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 6,24,764/-on account of Disallowance of expenses u/s 37 (1) of I.T. vii) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 12,30,29,250/-on account of Benefit on settlement of loan. vii) The CIT(A) has further erred in law and on facts in deleting the addition of Rs. 6,01,00,000/-. On account of Disallowance of liabilities transferred to capital reserve of u/s .28 (1) of the IT Act. viii) The CIT(A) has further erred in law and on facts in de....
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....in deleting the addition made on sales tax benefit of Rs. 38,29,13,332/- only. 108. 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 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 2007-08. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 109. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 237,59,10,531/- made by the AO on account of setoff of losses and unabsorbed depreciation of a unit of Core Healthcare Ltd. merged with the assessee. 110. At the outset, we note that the issue raised by the Revenue in its ground of appeal for the AY 2007-08 is identical to the issue raised by the Revenue in ITA No. 685/AH....
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....ollowed order of the ITAT in the Asstt.Year 2001-02 wherein value of intangible assets was upheld at Rs. 500 crores. Thus, following order in the case of Nirma Industries, para-8 of order onwards, we are of the view that the ld.CIT(A) has rightly taken the value of intangible assets at Rs. 500 crores and has rightly allowed depreciation to the assessee. There is no merit in this ground of appeal. It is rejected. 112.1 Thus, in view of the above we uphold the order of the ld. CIT-A and direct the AO to allow the depreciation to the assessee on closing WDV as decided in A.Y. 2003-04. Hence, the ground of appeal of the Revenue is hereby dismissed. 113. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowances of expenses for Rs. 6,24,764/- under section 37(1) of the Act. 114. At the outset, we note that the issue raised by the Revenue in its ground 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 h....
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.... Healthcare Ltd. v/s. DCIT in ITA No.25432547/Ahd/2007 dtd.5-6-2009 and ratio of Hon'ble Jurisdictional High Court decision in the case of CfT v/s. Chetan Chemicals Pvt. Ltd. (2004) 267 ITR 770 (Guj.) 'Following the above orders of appellate authorities and Hon'ble Jurisdictional High Court, I direct the A.O. not to assess benefit on settlement of loan of Rs. 12,30,29,250/-. This ground of appeal is allowed. 120. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 121. The learned DR before us reiterated the findings of the AO contained in the assessment order by supporting the order of the AO. 122. On the other hand, the learned AR for the assessee submitted that the waiver of the loan was with respect to the capital account transaction and therefore the waiver of the loan represents the capital receipts in the hands of the assessee which is not chargeable to tax. The learned AR before us vehemently supported the order of the ld. CIT-A. 123. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the case on hand relates whether the waiver of loan amounting ....
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....he Act. In holding so we draw support and guidance from the judgement of Hon'ble Supreme Court in the case of CIT vs. Mahindra and Mahindra Ltd (supra) where it was held as under: 15. On a perusal of the said provision, it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under Section 41 of the IT Act. The objective behind this Section is simple. It is made to ensure that the assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year with reference to deduction allowed earlier in case of remission of such liability. It is undisputed fact that the Respondent had been paying interest at 6 % per annum to the KJC as per the contract but the assessee never claimed deduction for payment of interest under Section 36 (1) (iii) of the IT Act. In the case at hand, learned CIT (A) relied u....
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.... the waiver thereof may result in the income more so when it was transferred to Profit and Loss account. 123.4 Now coming to the case on hand, we note that the loan was taken by the Sachana Division of Core Healthcare Ltd. which has been acquired by the assessee company in the scheme of demerger. The learned CIT(A) while dealing with issue on hand found that nature of loan is identical to the nature of loan settlement entered by the assessee in A.Y. 2008-09 which was capital in nature. Thus, the learned CIT(A) held that no addition is required to be made either under section 28(iv) or under section 41(1) of the Act. The finding of learned CIT(A) has nowhere been controverted by the learned DR based on cogent material. Hence, considering the finding of learned CIT(A) that the nature of loan was for capital assets, we hold that no addition under section 41 of the Act is required to made on waiver of such capital loan. 123.5 With regards to the interest, the assessee has clearly stated before the authorities below that the assessee was not allowed the deduction of unpaid interest expenses by virtue of the provisions of section 43(B) of the Act. The relevant extract of the conten....
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....subject to tax in the year in which such liabilities were written off. The learned AR before us vehemently supported the order of the ld. CIT-A. 130. We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the case on hand relates whether the writing off the statutory liabilities being custom duty, demurrage, detention, and sales tax amounting to Rs. 6,01,00,000/- is chargeable in the hands of the assessee either under the provisions of section 28(iv) of the Act or section 41(1) of the Act. 130.1 At the outset, we note similar issue was there in the immediate previous ground of appeal of the Revenue where we hold that to attract the provisions of section 28(iv) of the Act there must be some benefit to the assessee in any form other than the cash arising from business or the exercise of profession. Writing off statutory liability is not a benefit arising in the form of kinds, rather it is in the form of money. Hence, the provisions of section 28(iv) of the Act cannot be applied. 130.2 The next aspect arises whether such writing-off of the liability can be brought to tax under the provisions of section 41(1) o....
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.... is merely to satisfy the requirements of accounting and does not bring any benefit to the appellant. The addition is not called for and is directed to be deleted. The thirteenth ground of appeal is allowed and appellant gets a relief of Rs. 350,71,61,552/-. 134. The learned DR before us reiterated the findings of the AO contained in the assessment order by supporting the order of the AO. 135. On the other hand, the learned AR for the assessee submitted that the benefit arising on account of taking over of the divisions in the scheme was representing the capital account transaction and therefore the same cannot be treated as income under the provisions of section 28(iv)/ 2(24) of the Act. The learned AR before us vehemently supported the order of the ld. CIT-A. 136. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee acquired one of the divisions of M/s Core Healthcare Limited in the scheme of demerger approved by the Hon'ble Gujarat High Court. The assessee in the process of demerger received assets having book value of Rs. 964,44,80,456/- and liabilities having book value of Rs. 611,86,73,204/-. ....
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....fit or surplus on transfer of assets or liabilities in the scheme of merger, demerger or to say amalgamation. Thus, in view of the above and after considering the facts in totality we do not find any infirmity in the order of the learned CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed. 137. In the result, the appeal of the Revenue is hereby dismissed. Coming to ITA No. 911/Ahd/2012, an appeal by the assessee for the A.Y. 2008-09 138. 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 fads. 2) In law and in facts and circumstances of the Appellant's case, the learned CIT (A) has grossly erred in holding sales tax benefit as capital receipt for Rs. 41,55,36,734 instead of Rs. 42,30, 14,976. 3) In law and in (acts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in holding that depreciation on intangible assets should be allowed on WDV of current year based on Us. 152. 89 crores being market value in Asst. Year 4) In law and in facts and circumsta....
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.... of Rs. 42,30,14,976/- whereas amount excluded from the business income for Rs. 41,55,36,734/-only. Therefore, direction should be provided to exclude the amount of Rs. 42,30,14,976/- from business income instead of Rs. 41,55,36,734/- as capital receipt not chargeable to tax. We find force in the contention of the learned AR of the assessee. therefore, we hereby direct the AO to exclude the amount of Rs. Rs. 42,30,14,976/- instead of Rs. Rs. 41,55,36,734/- on account of sales tax benefit being capital receipt. Hence, the ground of appeal of the assessee is hereby allowed. 141. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of deprecation on intangible assets based on market value of same for A.Y. 2001-02 at Rs. 152.89 crore. 141.1 At the outset, we note that the issue raised by the assessee 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 parag....
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....8 of its appeal are either general, consequential, or premature to decide. Hence the same are dismissed accordingly as infructuous. 147. The assessee, vide applications dated 01-04-2013, 02-03-2020 and 15-022021 has pleaded before us for admitting the additional grounds of appeal which read as under: Additional ground vide letter dated 01-04-2013 In law and in facts and circumstances of the Appellant's case the deduction u/s. 80IA should be allowed on the profit of the power project. Additional ground vide letter dated 02-03-2020 In law and in facts and circumstances of the Appellant's case, sales tax benefit of Rs. 41,55,36,734/- should be excluded from the book profit u/s. 115JB of the IT Act. Additional ground vide letter dated 15-02-2021 On the facts and in the circumstances 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....
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....acts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. vi) It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 150. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO by treating the benefit of sales tax subsidy of Rs. 41,55,36,734/- only as revenue receipts. 151. 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. 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 200809. 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 2008-09. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 152. The n....
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....R 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 2008-09. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 157.1 In the result appeal of the Revenue is hereby dismissed. Coming to ITA No. 2236/Ahd/2015, an appeal by the assessee for the A.Y. 2009-10 158. 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 disallowance of expenses Rs. 1,14,6517- u/s. 37(l) 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 payment of Rs. 22,05,579/- made to Government of Gujarat. 4) In law and in facts and circumstances of the Appellant's case, the learned CIT (A) has grossly erred in holding that charging of interest u/s. 234B; 234C, 234D of the Act is mandatory. 5) In law and in ....
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.... to the Government for breach of condition was penal in nature. 165. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 166. The learned AR before us contended that he has been instructed not to press the impugned ground of appeal. 167. On the other hand, the learned DR before us vehemently supported the order of authorities below. 168. We have heard the rival contention of both the parties and perused the materials available on record. At the outset, we note that the learned AR for the assessee at the time of hearing submitted that he has been instructed by the assessee not to press the issue on hand. Hence, the ground of appeal of the assessee is hereby dismissed as not pressed. 169. The next issue raised by the assessee vide ground Nos. 4 to 6 of its appeal are either general, or consequential or premature to decide. Hence the same are dismissed accordingly as infructuous. 170. The assessee, vide application dated 05-03-2020 and 15-02-2021, has pleaded before us for admitting the additional grounds of appeal which read as under: Additional ground vide .letter dated 05-03-2020 In law and in facts and circum....
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....253) and in the case of Rajaram Maize Products (251 ITR 427). 2. The Id. CIT(A) has erred in law and on facts in allowing the Assessee's claim of setoff of brought forward losses and unabsorbed depreciation of Rs. 96,86,00,918/- on account of merger of its demerged undertaking of Core HealthCare Ltd. 2.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the assessee had taken over only about 97.15% of the assets and 9.33% of liabilities of the Core Healthcare Ltd, and as such the conditions laid down u/s 2(19AA) of the Act were not satisfied. 3. The Id. CIT(A) has erred in law and on facts in deleting the disallowance of excess claim of depreciation of Rs. 23,12,67,110/- 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 Id. CIT(A) has erred in law and on facts in deleting addition to the extent of Rs. 23,36,500/- made on account of general public utility expenses. 4.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the assessee had failed to prove....
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....fficer be restored. 174. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO by treating the benefit sales tax of Rs. 54,58,47,279/- as revenue receipt. 175. 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. 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 2009-10. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 176. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 96,86,00,918/- made on account of setoff of losses and unabsorbed depreciation of demerged unit of Core Healthcare Ltd. 177. At the outset, we note that the issue raised by the Revenue in it....
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....IT(A) erred in deleting the disallowance of Rs. 15,18,778/- made under section 14A of the Act. 182. The assessee in the year under consideration earned exempted income in the form of dividend. The AO, by invoking the provisions of section 14A r.w. rule 8D of Income Tax Rule made the disallowance of Rs. 15,18,778/- only. 182.1 On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: 8.3 I have carefully considered appellant's submission on this issue. Learned Assessing Officer disallowed Rs. 15,18,778 u/s. 14A of Income-tax ;Act, 1961 by applying Rule 8D of Income-tax Rules. According to Assessing Officer since the investment is made in shares from where the income will be tax free, the expenses were disallowed as per the formula given in Rule 8D of Income-tax Rule. According to the appellant company, no expenses were incurred to earn tax free income. The investments were made in earlier year. The appellant had not incurred expenses either interest expenses or other expenses for earning interest tax free income. Moreover no other expenses were also incurred to earn tax free income. The appellant also submitted its sh....
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.... jurisdictional High court in the case of CIT vs. Torrent Power Ltd reported in 363 ITR 474 wherein it was held as under: It was noted from records that the assessee was having share holding funds to the extent of 2607.18 crores and the investment made by it was to the extent of`Rs. 195.10 crores. In other words, the assessee had sufficient funds for making the investments and it had not used the borrowed funds for such purpose. This aspect of huge surplus funds is not disputed by the revenue which earned it the interest on bonds and dividend income. [Para 7] 186.2 In the case on hand the assessee company has an interest free fund of Rs. 2601.04 crore against the total investment yielding exempted income for Rs. 6.24 crores. Thus, considering the above discussion, no disallowances of interest expense in warranted in the given facts. 186.3 Coming to the issue of disallowance of administrative expenses. In our considered opinion, the contention of the assessee cannot be accepted that no expenditure in relation to the investment was incurred. Therefore, the disallowance of administrative as per rule 8D of the income tax rule needs to be made but such disallowances canno....
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....,115/-. This ground of appeal is allowed. 190. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 191. The learned DR before us vehemently supported the findings of the assessment order. 192. On the other hand, the learned AR contended that there is no benefit arising out of such product registration expense which is of enduring nature and 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. 193. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that issue on hand is covered in favour of the assessee by the order of the Hon'ble Gujarat High court in the case of CIT vs. Torrent Pharma Ltd. reported in 29 taxmann.com 405 where following question of law was framed: [B] Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to treat the expenditure of Rs. 28,14,355/- incurred on foreign registration fees as revenue expenses?" 193.1 The Hon'ble bench regarding the above question of law held as under: Similarly,....
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....15JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962." 199.1 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case in h.and. Thus, it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 199.2 However, it is also clear that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- "We find computation of the amount of expenditure relatable to exempted income of the assessee mu....
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....t Bhavnagar. 201. 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 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 200910. The appeal of the assessee 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 2009-10. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 202. The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition on account of guaranteed fee for Rs. 12,48,19,000/- only. 203. The AO/TPO in the assessment proceedings found that that the assessee has provided foreign Bank Guarantee for the borrowing taken by its USA based AE namely Karnavati Holdings Inc and Searles Valley Minerals Inc to the extent of Rs. 659.62 crores without charging any guaranteed fees. The TPO/AO treating the same as an interna....
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....t be classified as an international transaction as per the provisions of chapter X of the income tax act. In view of decision of Hon'ble Delhi Tribunal, in the case of Bharti Airtel Ltd Vs. CIT (43 taxrriann.com 150), "It is held that, the bank guarantee to the foreign bank for providing finance to associated enterprise at U.S.A. which is wholly owned subsidiary of the appellant company, is not covered within the purview of making any adjustment since it is not international transaction. Following the said decision, I delete the addition made for Rs. 12,48,19,000/-. This ground of appeal raised by the appellant is allowed. 205. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 206. The learned DR before us vehemently supported the findings of the assessment order. 207. On the other hand, the learned AR contended that the assessee has not taken any fees against the bank guarantee furnished to the AE and therefore there cannot be any adjustment towards the upward direction with respect to the bank guarantee furnished by the assessee to the AE. The learned AR vehemently supported the order of the learned CIT-A. 208. We have heard th....
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....n profit & loss account, but inherent risk cannot be ruled out in providing guarantees. U1 and adjustment are to be made on guarantee commissions on such guarantees provided by the Bank directly and also on the guarantee provided to the erstwhile shareholders for assuring the payment of Associate Enterprise. In the light of the above decisions, the Tribunal committed an error in deleting the additions made against Corporate and Bank Guarantee and the order passed by the DRP is to be restored. [Para 76] 208.2 Thus, in view of the above, we hold that the bank/corporate guarantee is an international transaction. Therefore, the same has to be bench marked for determining the ALP. Thus, the issue involved on hand is no longer covered as alleged by the learned AR for the assessee in view of the judgment of Hon'ble Madras High Court as discussed above. 208.3 The next aspects arise to determine the benchmarking for working out the ALP of the impugned international transaction. The TPO/AO in the case on hand has worked out the ALP at 2.09 % and basis of the same has already been elaborated in TPO order. In this regard, we find that the Hon'ble Bombay High Court in case of CIT....
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....tion as international transaction. However, guarantee commission was fixed at 0.50%. (v) Mylan Laboratories Ltd. v. Asstt. CIT [2015] 155 ITD 1123/63 taxmann.com 179 (Hyd. - Trib.). The assessee admitted corporate guarantee as international transaction, then as against 2% fixed by TPO the Tribunal upheld the claim of the assessee at 0.53% following the decision in Prolifics Corpn. Ltd. v. Dy. CIT [2015] 68 SOT 104 (URO)/55 taxmann.com 226 (HYD - Trib.). (vi) Everest Kanto Cylinder Ltd. (supra) - Assessee paid guarantee commission at rate of 0.5 per cent for obtaining guarantee. This was accepted as ALP for all corporate guarantees given by the assessee. (vii) Godrej Consumer Products Ltd. v. Asstt. CIT [2016] 69 taxmann.com 436 (Mumbai - Trib.)- The assessee suo motu benchmarked the commission chargeable on bank guarantee @ 0.25%. It was determined at 0.50%. 208.5 Thus, in view of the above discussed latest development, we are also of the opinion that the extension of corporate/guarantee to AEs is an international transaction which needs to be benchmarked and in view of several order of the tribunal as referred above 0.5% commission on the value of cor....
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....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. 7.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the amount in question would not qualify for deduction either u/s 36(1)(vii) or 36(1)(1) of the Act. 8. The Id. CIT(A) has erred in law and on facts in treating the consultation for future project expenses of Rs. 25,00,000/- paid to IFCI as allowable expenses instead of capital expenses as held by the AO. 8.1 The Id. CIT(A) has erred in law and on facts by not appreciating the facts that the benefit of the consultation for future project expenses is of enduring nature and therefore the expenses are not allowable u/s 37(1) of the Act 9. The Id. CIT(A) has erred in law and on facts in deleting the addition made on account of account of Guarantee Fees and benchmarking of loan totaling to Rs. 6,00,00,397/-. 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 ....
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.... 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 Revenue for the A.Y. 2006-07 has been decided by us vide paragraph No. 68 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. 213. 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. 17,34,50,332/- only. 214. 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. 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 years 201011. The appeal of the Revenue for the A.....
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....ical 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 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 dismissed. 219. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of doubtful advance written off for Rs. 2,62,88,016/- only. 219.1 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 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 201011. 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. T....
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....d 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 IFCI Limited to know the updated status of the Cement Industries in India on the reasoning that the impugned expenditure is capital in nature. But the learned CIT(A) allowed the same on the reasoning that the Soda Ash generated in the business of the assessee is used in the cement industries. According to the learned CIT(A), the expenses on the feasibility study was conducted which was in relation to the business carried on by the assessee. 224.1 Now the controversy arises before us whether the assessee is eligible for deduction of the impugned expense treating the same as revenue in nature. Admittedly, the deduction was claimed by the assessee under the provisions of section 37 of the Act. The provision of section 37 of the Act is a residuary provision and provide for deduction of those expenses which have been incurred in the cour....
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....f 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 AO/TPO on account of guaranteed fee and interest free loans. 226. In the caption ground of appeal, there were involved the disputes of upward adjustment on account of extension of bank guarantee fee as well as benchmarking of interest on loan and advances. As far as the issue of upward adjustment of Rs. 5,86,08,293/- on Corporate/bank Guarantee is concerned, we note that the identical issue was raised by the Revenue in its ground of appeal for the AY 2010-11 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 assessee for the A.Y. 2009-10 has been decided by us vide paragraph No. 208 of this order partly in favour of revenue. The learned DR and the AR also agreed that whatever w....
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....n 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 appeal before us. 229.1 The learned DR before us vehemently supported the findings of the assessment order. 229.2 On the other hand, the learned AR before us reiterated the findings contained in the order of the learned CIT-A. The learned AR vehemently supported the order of the learned CIT-A. 230. We have heard the rival contention of both the parties and perused the materials available on record. Admittedly, the assessee has extended loan & advances to its AE in USA and also charged interest @ 5% on such loan & advance. However, the AO/TPO worked out the ALP of interest at 5.38% being LIBOR + 409.72 basis points and made upward adjustment but the learned CIT(A) was pleased to delete such upward adjustment. The basis adopted by the learned CIT(A) was that there were series of orders of diffe....
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....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 ground of objection raised by the assessee is that if disallowances of bad & doubtful debt claimed in A.Y. 2006-07 is confirmed then same should be allowed in the current A.Y. being the year in which amount was written off in the books of accounts. 235. At the outset, we note that issue on hand is arising from AY 2006-07 wherein the assessee claimed deduction for the provision of doubtful debt which was disallowed by the AO as well by the learned CIT(A). Against the order of learned CIT(A) the assessee preferred further appeal vide ITA No. 515/AHD/2014 which has been dealt by us vide paragraph No. 20 to 26 of this order. While adjudicating the relevant ground of appeal of the assessee in ITA. 515/AHD/2014 we have confirmed the disallowances made by the AO in A....
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....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. 37(1) of the 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 delayed payment of Rs. 2,733/- to RSIC and Rs. 40,932/- to Provident Fund aggregating to Rs. 43,665/- as per provision of section 2(24)(x) r.w.s 36(1)(va) of the I.T Act. 4) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming disallowance of previous year adjustment of Rs. 28,84,009/- 5) In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in holding that charging of interest u/s. 234B & 234C of the Act is mand....
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....ays 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 employees contribution in respect of ESIC & PF amounting to Rs. 2,733/- and Rs. 40,932/- respectively totaling to Rs. 43.665/-as per the respective due date. The A.O has disallowed the said amount and added to the total income of the appellant as per the provisions of sec.2(24)(x) r.w.s. 36(1 }(va) of the Act. The provisions of section 43B are applicable in respect of employers contribution and in this context it is different from the provisions of sec.36(1)(va). The Hon'ble High Court of Gujarat in the case of CIT vs Gujarat State Road Transport Corporation 265 CTR 64 have held that when the employer has not credited the sum received by it as....
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....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 the judgment of Hon'ble Supreme Court in case of Goetze (India) Ltd vs. CIT 284 ITR 323. 253. On appeal by the assessee the learned CIT(A) also dismissed the ground of appeal of the assessee by observing as under: 16.2 I have carefully considered the rival contentions as well as the observation of the A.O in the assessment order. Appellant submitted that for F.Y 2012-13, previous year adjustment net expense Rs. 53,70,290/- was debited to P & L a/c. which was disallowed in the Return of Income for A.Y. 2013-14. Out of this sum, net expenditure of Rs. 23,98,687/- pertains to A.Y. 2011-12. Appellant submitted that....
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....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 observed that the necessary supporting documents of the claim made by the assessee were filed. No defect has been pointed out by the learned CIT(A). Rather, the learned CIT(A) has given categorical finding that assessee can claim the expenses in the assessment year if such expenses pertaining to the corresponding previous year. In the present case, The assessee is only claiming expenditure, which was left out at the time of filing of original income tax return and in any event, the Assessing Officer has power to make upward or downward adjustments in the income returned filed by the assessee and when the ....
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..../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 Revenue has raised following grounds of appeal: 1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 56,21,38,408/- made on account of disallowance of claim of sales tax subsidy holding the same as capital receipts instead of revenue receipts as held by the AO. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 13,00,87,749/- made on account of disallowance of excess claim of depreciation on intangible assets. 3. The Ld. CIT(A) has erred in law and on facts in restricting the addition t....
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....he 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 201112. 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 2011-12. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 268. The next issue raised by the Revenue is that the learned CIT(A) erred in restricting the disallowance of....
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....hat 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 decided by us vide paragraph No. 193 of this order against the 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 years 2011-12. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 276. 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 generatio....
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.... 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 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. 284. The next issue raised by the revenue is that the learned CIT(A) erred in deleting the addition of Rs. 5.14 crores on account of benefit arising on the settlement of loans liabilities. 285. At the outset, we note that the issue ra....
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....sation 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 other hand, the learned DR vehemently supported the order of the authorities below. 291. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute to the fact that the assessee has been granted refund of Rs. 75,00,281/- and interest under section 244A of the Act on the same for Rs. 22,12,583/- for the period of March 2004 to January 2009. The dispu....
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....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 month of May 2016. Thus, the assessee will be entitled to interest under section 244A of the Act for the delay in issuing of refund for Rs. 22,12,583/- which represents the principal amount. 291.2 The above principle was also followed and held in favour of assessee by this tribunal in case of Karsanbhai Kacharabhai Patel HUF vs. ITO in ITA No. 183/AHD/2022. 291.3 Before parting, we are also conscious....