TaxTMI 
TaxTMI 
2023 (12) TMI 969
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....it of the appellant situated in the Union Territory of Dadra & Nagar Haveli had received sales tax incentive of Rs. 17,98,29,328 /- for setting up and/or expansion of industries in the backward areas of Dadra & Nagar Haveli and to generate employment opportunities. The same should be considered as capital in nature and hence not liable to tax. 3.0 In the computation of total income for the instant Assessment Year, the appellant has disallowed under clause () to section 43B, provision for leave encashment of Rs. 17,14,942/- created during the year and not paid on or before the due date of filing of return. The same should be considered as allowable deduction in computing the total income in view of the decision of Hon'ble Calcutta High Court in the case of Exide Industries Ltd -v,- Union of India (2007) 292 ITR 470 (Cal). 4.0 The appellant follows exclusive method of accounting for Cenvat Credit in the books of account and hence, opening inventory, purchases and closing inventory are recorded net of Cenvat Credit. As per Sec. 145A (i.e. inclusive method), purchaser registered Office: Kasturi Buildings, Mohan TAdvant Chowk, Jamshedji Tata Road, Mumbai 400 020,nd....
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....ies as retention money to be paid after successful completion of the contract or on fulfillment of certain predetermined conditions mentioned therein. The appellant has no right to receive the said money by virtue of the terms of the contract & also has no right to enforce payment till the completion of contract or fulfillment of predetermined conditions for claiming the retention money. Thus, the said amount has not accrued as income to the appellant during the year under consideration and shall be excluded in the computation of income in view of various judicial decisions of High Court. In the instant year, the appellant inadvertently omitted to claim exclusion of retention money of Rs. 9,09,22,620 /- included in revenue from contract business recognized during the previous year 2005-06. 7.0 Prayer: In view of the above, the appellant most respectfully prays for admission of the enclosed additional ground of appeal in the appeal pending before your goodself. Your appellant also most respectfully craves leave to add, to amend, modify, rescind, or alter the additional ground either before or at the time of hearing of the appeal. 3. The assessee has also raised ....
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....the impugned order of the ld. CIT(A). ITA No. 4792/Mum/2011 8. Ground no. 1 of the assessee's appeal is on the allocation of advertisement expenses amounting to Rs. 648.15 lacs to the eligible units in the ratio of turnover of eligible units to the total turnover of the assessee while computing the deduction u/s. 80IB/80IC of the Act. 9. The brief facts are that the assessee had claimed deduction u/s. 80IB of the Act of Rs. 18,52,30,000/- for the unit at Dadra & Nagar Haveli and u/s. 80IC amounting to Rs. 2,20,78,000/- for the newly set up unit at Himachal Pradesh and had filed Form No. 10CCB for the said units. The assessee was asked by the ld. A.O. to furnish computation of deduction available u/s. 80IB and 80IC of the Act for the earlier years as the assessee is said to have not allocated the head office depreciation and corporate expenses properly. The ld. A.O. had observed that the assessee has not allocated depreciation on assets of head office for claiming deduction u/s. 80IB/80IC of the Act and had only claimed depreciation of Dadra and Himachal Pradesh unit for the said deduction. The ld. A.O. further stated that the assessee has not given cogent reason for not al....
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....t as per Form No. 10CCB 61,74,33,000 Less: Expenses as per revised computation furnished by assessee Corporate expenses 5,54,25,000 Advertisement expenses 3,27,77,000 Travelling expenses 1,99,15,000 Commission expenses 2,31,56,000 13,12,73,000 Add: Expenses already considered by the assessee Corporate expenses 2,65,79,000 Profit of eligible undertaking 51,27,39,000 Deduction u/s. 80IB @ 30% 15,38,21,000 8.5 The 80IC profit of the assessee is computed as under: Net profit of eligible unit as per Form No. 10CCB 2,20,78,000 Less: Expenses as per revised computation furnished by assessee Corporate expenses 82,90,000 Advertisement expenses 49,77,000 Travelling expenses 21,98,000 Commission expenses 34,63,000 1,89,28,0....
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....of product of the assessee company thereby benefitting the eligible units also. The ld. DR further contended that the lower authorities have rightly allocated the advertisement expenses in proportion to the turnover of the eligible units to the total turnover of the assessee. The ld. DR relied on the order of the lower authorities. 15. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee company has incurred advertisement expenses on account of publication of quarterly, half yearly and annual result, public notice, company meeting etc. These expenses are said to enhance sale of the product of the assessee company and according to the Revenue are directly benefitting the eligible units by increasing the customer base for sale of the product. The assessee has relied on the word 'derived from' as per the provision which according to the assessee relates to the expenses which have direct nexus pertaining to the eligible units for claiming deduction u/s. 80IB/80IC of the Act. The Revenue, on the other hand, has contradicted the same by stating that this interpretation of the assessee is not to be considered and only the a....
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....deprecation of Head Office is warranted. The Assessing Officer is directed to calculate the disallowance amount by adopting source basis and ratio as adopted by the assessee for considering Head Office expenses. The Assessing Officer is directed according. 16. As this issue has been dealt with by the co-ordinate bench and as there is no change in circumstances, we deem it fit to respectfully follow the said decision. Therefore, ground no. 1 raised by the assessee is allowed. 17. Ground no. 2 of the assessee's appeal pertains to treating of advertisement expenses amounting to Rs. 737.27 lacs as capital expenditure thereby enhancing the income of the assessee which is treated as capital expenditure as against revenue expenditure. It is observed that the assessee company has incurred an expense of Rs. 737.27 lacs on brand building under the head 'advertisement expenses' of Rs. 1385.42 lacs. 18. Though this issue was not raised by the ld. A.O. during the assessment proceeding, the ld. CIT(A) exercised the power of enhancement u/s. 251 of the Act and sought for explanation as to why the impugned expenses on advertisement mainly for the advertisements in electronic media which a....
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....tion whether the expenses incurred by the Respondent-Assessee therein for making advertisement films is to be treated as a capital or revenue expenditure. This Court opined that the correct test to be applied in respect of expenditure incurred for making advertisement films was that when the same was incurred in respect of an ongoing business of the Assessee, it is Revenue. On the other hand, when the expenditure is incurred in respect of a brand which is to be used in a business which is yet to be commenced, it is capital expenditure. In this case also, the expenditure on corporate advertisement films is in respect of ongoing business. The expenditure for advertisement of a brand or corporate name of an existing ongoing business is in the nature of maintaining the brand and/or corporate image and it is not for creation of a brand. Further, the test of enduring benefit urged by the Revenue was considered by the Apex Court in Empire Jute Co.Ltd. v. CIT [1980] 124 ITR 1/3 Taxman 69 to hold that it is not a conclusive test in all cases so that such expenditure is always on capital account. The Court observed that what is to be examined is the nature of advantage obtained in the commer....
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.... was held that while determining the character of receipt the purpose for which the subsidiary is given has to be considered by the purpose test and the time and source as to when it was granted becomes irrelevant. The ld. AR also relied on the decision of the Hon'ble Supreme Court in the case of Shree. Balaji Alloys & Ors [2016] 138 DTR 36 (SC) and the Hon'ble High Court decision in the case of CIT vs. Harinagar Sugar Mills Ltd. (ITA No. 1132 of 2014 vide order dated 04.01.2017)along with the various other decisions. 23. The ld. DR controverted the said fact and stated that the assessee has not raised this issue before the lower authorities and since it requires its factual verification, the same additional ground raised by the assessee ought not to be admitted. 24. We have heard the rival submissions and perused the materials available on record. As this additional ground of appeal raised by the assessee requires factual verification, we deem it fit to remand this issue back to the file of the ld. A.O. for verification of the facts and decide the issue on the merits of the case based on the submission of the assessee. We, therefore, remand this issue to the file of ....
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....sion of the amount of retention money included in sales, since the same has not accrued during the year, in computing total income under the normal provisions of the Act (Rs. 9,09,22,620/-). 30. The assessee has contended that as it was engaged in the contract business of erection commission and of air conditioning system where certain percentage of bills is retained by the parties as retention money which has been credited to the profit and loss account along with the work bills (revenue from contract business), aggregating to Rs. 9,09,22,630/-. The assessee contended that the said retention money will be paid after completion of the contract or on fulfillment of certain conditions mentioned in the order and the said retention money are already included in the sale as the sale are booked on percentage completion method. The assessee contended that as the said amount does not accrue as income to the assessee, the same has to be excluded from the computation of the total income. The assessee relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Associated Cables Pvt. Ltd. [2006] 286 ITR 596 (Bom) which had relied on the decision of the Hon'ble Calcutt....
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.... High Court in the case of CIT vs. Associated Cables Pvt. Ltd. (supra). The ground no. 6 raised by the assessee is allowed for statistical purpose. 32. Ground no. 7 is general in nature and requires no separate adjudication. ITA No. 5550/Mum/2011 33. Ground no. 1 of the Revenue's appeal is on the disallowance of Rs. 8,16,995/- u/s. 14A read with Rule 8D of the Rules. It is observed that the assessee company has invested in shares yielding exempt income of Rs. 329.65 lacs as per the balance sheet and has earned dividend income of Rs. 2,24,28,375/- as exempt income u/s. 10(34)of the Act. The ld. A.O. observed that the assessee has not made any suo moto disallowance u/s. 14A with respect to the expenditure incurred for earning of the exempt income. The assessee had own funds as share capital and reserves to the tune of Rs. 17271.06 lacs and the borrowed capital from secured and unsecured loans were Rs. 7587.13 lacs and contended that the investment which had earned exempt income was out of the interest free fund and not from the borrowed funds. The ld. A.O. disagreed with the submission of the assessee. The ld. A.O. held that the assessee has not proved the nexus between the ....
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.... the disallowance u/s. 14A of the Act. We, therefore, dismiss ground no. 1 raised by the Revenue. 37. Ground no. 2 pertains to the allocation of 50% of the head office expenses as against 100% of the allocated by the ld. A.O. while computing deduction u/s. 80IB of the Act. 38. Ground no. 3 pertains to the allocation of 50% of the depreciation of head office on assets as against 100% allocated by the ld. A.O. to the eligible units while computing the deduction u/s. 80IB of the Act. 39. Ground no. 4 pertains to the allocation of 50% of the depreciation on head office on assets as against 100% allocated to the ld. A.O. to the eligible unit while computing deduction u/s. 80IC of the Act. 40. As we have already decided this issue in favour of the assessee as per the finding in ground no. 1 of the assessee's appeal, by following the decision of the co-ordinate bench in assessee's case for the earlier years, we hereby dismiss ground nos. 2, 3 and 4 raised by the Revenue based on the finding given in ground no. 1 of the assessee's appeal. 41. Ground no. 5 of the Revenue's appeal relates to the allocation of travelling expenditures made by the assessee while computing deducti....