TaxTMI 
TaxTMI 
2025 (1) TMI 381
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....) (ITA NO.6766/DEL/2019 FOR AY 2016-17) 3. Ground No.1 in all the three Assessment Years i.e. 2014-15, 2015-16 & 2016-17 is not pressed, hence the same are dismissed as not pressed. 4. With regard to Ground No.2 in all the three Assessment Years i.e. 2014-15, 2015-16 & 2016-17 regarding disallowance of traffic challans, at the outset, ld. Counsel of the assessee submitted that the same issue arising in assessee's own case for AY 2009-10 has been allowed by a coordinate Bench of ITAT in its order dated 07.06.2023 passed in ITA No.4588- 4589/Del/2015 (refer para 24 at pages 14 - 15 of the order). He submitted that the said decision for AY 2009-10 has also been followed in assessee's own case for subsequent AY 2010-11 by a coordinate Bench of ITAT in its order dated 18.07.2023 passed in ITA No.5671/Del/2018 (refer paras 24 to 27 at pages 9 to 11 of the order). Furthermore, he submitted that the said issue has been again adjudicated in favour of the assessee by this Tribunal in assessee's own case for subsequent assessment years 2011-12 to 2013-14 vide order dated 05.03.2024 passed in ITA No.5925/Del/2018 (refer paras 14-20 at pages 14 to 19 of the order). Accordingly, he pray....
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....d in the all AYs under consideration. 10. Ground No. 4 in AY 2014-15 is on account of Corporate Social Responsibility ("CSR") expenditure amounting to Rs. 5,29,86,175/-. Brief facts of this ground are, the AO while making the above disallowance on account of CSR for A.Y 2014-15 relied upon Explanation 2 to section 37 of the Act to disallow expenditure incurred on account of CSR. Against this order, assessee preferred an appeal before the ld. CITA) and ld. CITA) agreed with the submission of the assessee that Explanation 2 to section 37 would not apply in the year under consideration, however, he sustained the said disallowance on the basis that CSR expenditure does not assume the character of business expenditure which is required to claim deduction u/s 37 of the Act. 11. At the time of hearing, ld. AR for the assessee submitted that the AO while making the said addition wrongly invoked Explanation 2 to Section 37 of the Act, which applies prospectively from assessment year 2015-16 and hence is not applicable to the year under consideration as rightly held by the ld. CIT(A). In this regard, ld. AR relied on the decision of the Hon'ble jurisdictional High Court in the cases of....
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....usiness and is an allowable expenditure. The conclusion of Tribunal is in paras 6.9 1o 6.l6 and the same is reproduced below for the sake of convenience: ... Just because the expenditure was voluntary in nature and was not forced on the assessee by a statutory obligation, it could not cease to be a business expenditure. Therefore, the authorities below indeed erred in law in declining deduction of the expenditure incurred on 20- point programme which was. beyond dispute or controversy, at the instance of the Government and was to discharge the assessee's obligations towards society as a responsible corporate citizen (para 10) 6.16 In view of the above authorities, it is clear that even if there is no statutory obligation on the part of the assessee to incur the expenditure, but the expenditure has been incurred to bring goodwill to the assessee or is or the purpose off promoting its business then such expenditure is to be allowed as business expenditure. In view of the above, we uphold the claim of the assessee and allow ground No.5." 32. In this view of the situation, as the abovementioned order of the Tribunal is regarding contribution to t....
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....ective from AY 2015- 16. The issue involved under consideration is related to AY 2014-15. Even the amendment made in Companies Act, 2013 as per the policies, it is effective from 01.04.2014, as held in the case of PEC Limited (supra) and Steel Authority of India Limited (supra), the amendment made in Companies Act as well as in section 37 are not applicable to the current assessment year. Therefore, these expenditures are incurred without there being any obligation on the assessee. Further we observed that ld. CIT (A) also came to the same conclusion, however he has taken a different view after examining the nature of CSR expenditure holding that such expenses have no direct nexus with respect to the business of the assessee. We observed that the expenditure incurred on CSR activities may not have direct nexus with the activities of the assessee but it may have indirect and may bring goodwill to the assessee. We observed that similar view was expressed by the coordinate Bench in the case of Ranbaxy Laboratories Ltd. (supra) and decided the issue in favour of the assessee at pars 31 and 32 of the order. Therefore, we are inclined to decide the issue in favour of the assessee as t....
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.... impairment of Rs. 1400 crores was required to be made. 19. In the absence of guidelines on impairment in Indian Accounting Standards at that time, the Company decided to allocate the impairment, inter-alia, by allocating a portion of the business impairment on assets acquired from Bottlers and assets of Greenfield projects on a pro rata basis. 20. Accordingly, the gross block and depreciation was restated and total impairment of Rs. 47.59 crores was shown in the fixed asset schedule on land in the financial statement. This resulted in the land transferred during the subject assessment year being shown at Rs. 10.84 crores in the books of accounts of the Assessee. 21. As regards the cost of acquisition showing at Rs. 10,84,01.36l/-, ld. AR submitted that the same was on account of impairment loss recorded under Companies law for the purpose of books of account and the same cannot be considered under Income Tax law, as the provisions of the Act do not recognize any impairment addition/ reduction for the purpose of calculating Capital Gain and Loss. However. the AO observed that in FY 1999-2000, the very next year of acquisition by the assessee, the assessee revalued its asse....
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....oned that the valuation of the assets determined at the time of acquisition is correct. Accordingly, it is submitted that there was no fall in the value of the asset but only a business impairment was recognized in the books of accounts. Further, he submitted that since the Indian Accounting Standards did not prescribe for any method to recognize such impairment loss, the Company had allocated a portion of the impairment loss towards its fixed assets. He submitted that there was no fall in the market value of the assets per se. 26. It is further submitted that if the approach of the Revenue is accepted, it would lead to absurdity as it would enable a person to claim higher cost of acquisition only on account of the inflated cost of acquisition recorded in the books of account and therefore, the addition made by the AO and sustained by the ld. CIT(A) without considering the material on record, is completely erroneous. Furthermore, he submitted that the lower authorities have wrongly observed that the Assessee had not produced the copy of slump sale agreement with M/s Brindavan Beverages, whereas a perusal of submission dated 13.12.2016 filed before the AO and submissions dated 24....
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....ed that it acquired the said land from M/s Brindavan Beverages for FY 1998-99 as part of the Agreement to Transfer its undertaking in whole. The stamp duty value of land and building was recorded as Rs. 23.55 crores as per Conveyance Deed dated May 1998. The total value of land and building in the books of account is taken as Rs. 22.47 crores only. In FY 1999-00, the company had carried out a total review of its business and during the year prepared a long term discounted cash flow business model for valuation of its business and accordingly it carried out business impairment estimated at Rs. 1400 crores. Accordingly, it made adjustment in the books of account. It was submitted that this is the reason of re-stated and total impairment of Rs. 47.59 crores towards impairment loss was adjusted in the fixed asset schedule on land and that is the reason for which the land transferred during the current assessment year was shown at Rs. 10.84 crores in the books of account. 29. After considering the factual matrix, we observed that the assessee has acquired M/s. Brindavan Beverages in FY 1998-99 i.e. in AY 1999-00. The agreement was submitted before us for the above transaction. The re....
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....any Sheet roof 18 ft. to bottom of Trussels. 8. Passage for conveyors, gen room, boiler room, with PCC flooring & AC sheet roof. 9. Finished goods store, loading yard with CC flooring AC sheet roof of 20 ft. height over R.S. Joists. 10. Finished goods store with AC sheet roof of 20 ft steel ventilation with north tile glazing CC flooring and walls on all sides. 11. Storage tanks of RCC for treated and untreated water. 12. Overhead tank of plastic make 13. Overhead tank of RCC. 14. Empty bottle godown with AC sheet roof over RS joists at ht. of 19 ft. PCC flooring over a bed of CC of 1 mt. Ht. 2 side walls of hollow CC block. 15. Wooden crates stored shed with AC sheet roof Y brickwalls. 16. Security room (2 nos.) with RC roof and CC flooring. 17. Effluent treatment plant and terminal manhole, setting tank, aeration & neutralisaiton tank, grease trap, bar screen, sludge drying beds. 18. MS gate at entrance (3 nos.) 19. Toilets (ladies & gents) change room of RC roof, glazed tiles for walls upto 7 ft. ceramic tiles flooring. 20. Cycle/Scooter parking with AC sheet roof....
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....at is relevant in this case is the depreciation schedule prepared for the purpose of income-tax for the AYs 1999-00, 2000-01 & 2001-02. As per the Act, no depreciation is allowed for block of land. In our view, whatever business impairment loss, assessee has recorded in the fixed assets schedule prepared for the purpose of Companies Act has no relevance considering the fact that no depreciation is allowed for the freehold land. Considering the overall facts on record, the assessee has not brought on record after acquiring the assets from M/s. Brindavan Beverages, how the cost are allocated and for the purpose of registration, it has booked the value of Rs. 20,93,29,172/-, the combined value for land and building and when such slum sales are being recorded in the books of account the value has to be recorded on the basis of transfer value and if there is any difference between assets acquired and the liability, normally the difference would be charged to goodwill. Nothing has been brought on record to show that what is the value recorded by the assessee in FY 1999-00 after acquisition of the abovesaid factory with the parcel of freehold land and it has only filed fixed assets schedu....
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.... has. not accepted the said demand and the matter is pending before Commissioner, Commercial Taxes, Bihar, Patna. The appellant has submitted that the aforesaid amount was claimed as a deduction as the appellant was of the view that these payments were compensatory in nature and relief will be granted in appeal and the amount was debited to P&L A/c and reported in clause 21(a) of the Form 3CD. The submissions filed by the appellant company and the case laws cited have been considered. It is seen that the AO has disallowed the aforesaid expenses as the nature of the payments are penal and therefore, cannot be allowed as business expenditure. I find no reason to interfere with the AD's order on this issue. Appeal on this ground is dismissed. 32. Aggrieved, the assessee in appeal before us raising the ground no 4 of the appeal. At the time of hearing learned AR of the assessee submitted that the assessee incurred an expense of Rs. 14,68,935/- on account of penalty/fine towards seizure of its truck, carrying finished goods, on account of wrong waybill under State VAT law. It was submitted that assessee has filed appeal before Commissioner, commercial Taxes, Patna, which....
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....Rs. 2,71,115/- made by the Assessing Officer in respect of delayed payment of the Employees contribution to the Provident Fund, ESI and other welfare funds, not appreciating that the employees contribution to PF & ESI is governed by the provisions of section 2(24) read with section 26(1)(va) and by section 43 B of the Act. 37. At the time of hearing, ld. DR for the Revenue submitted that the issue is squarely covered by the decision of Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT 143 taxmann.com 178 and accordingly, the ground may be allowed. 38. Ld. AR for the assessee did not object to this proposition. 39. Considered the rival submissions and material placed on record. We observed that this issue is now settled by the Hon'ble Supreme Court in the case of Checkmate Service Pvt. Ltd. (supra). Accordingly, in our considered view, this issue is already settled in favour of the Department. Hence, this ground of Department's appeal is allowed. 40. With regard to Ground No.2 of AY 2014-15 and Ground No.1 of 2015-16 & 2016-17 regarding deletion of addition made by the AO on account of inventory loss and leakage, ld. Counsel of the assessee submit....