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2025 (7) TMI 369
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....ncurred by schools run by Singareni Educational Society, which is welfare expenditure, as per the Coal Wages Agreement, the addition may be deleted. 2. Your Appellant submits that the CIT(A) ought to have appreciated the fact that there is no voluntary contribution to the society, nor it is the case of the assessing Officer that there is transfer of substantial funds while retaining control over the funds, the provision of section 40A(9) of the Income Tax Act, 1961 are applicable, the addition may be deleted. 3. Your Appellant submits that it is an undisputed fact from the account of the society that the funds paid are to mitigate the deficit of funds in running the Scholls or colleges for the year in question as per the obligation vested on Your Appellant as per the Coal Wages Agreement. It is therefore incurred in the course of business and for the purpose of business, cannot be disallowed under section 40A(9) and is allowable under section 37 of the Income Tax Act, 1961. 4. Your Appellant submits that the CIT(A) as well as the Assessing Officer ignored the fact that the payments made to Singareni Educational Society in the past have been allowed as bus....
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.... assessee is to be treated as revenue expenditure when the capital expenditure does not lead to the creation of asset. (iv) Whether the CIT(A) ought to have seen that the expenditure incurred was capital in nature and same was for the development of a mine for 'extraction of coal bringing forth an asset in its balance sheet on which depreciation was claimed by the assessee treating the same as "plant" (v) Whether the CIT(A) ought to have seen that expenditure incurred for setting up a new project or for developing a new coast centre represents capital expenditure, which even the assessee accepted and consistently treated the same as capital expenditure in its books of account. (vi) Whether the CIT(A) erred in holding that the civil works carried out by the assessee by way on construction of works for culverts, land leveling, laying of sand and stone, etc as "Plant & Machinery " entailing depreciation @ 15% and ought to have seen that by any standard can such civil works can only be treated as "Building" which entails depreciation @ 10% and not " Plant & Machinery". * (vii) Any other grounds that may be urged at the time of hearing. ITA No.....
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....t investment allowance has been claimed in respect of plant and machinery acquired during the period 1-4-2014 to 31-3-2016 and installed by 31- 3-2016, the assessing Officer on presumptions and suspicion cannot disallow the same. 8. Your Appellant submits that the Assessing Officer as well as the CIT(A) without proper application of mind and appreciating the fact that the Hon'ble Supreme Court has held electricity is an article or thing, the production of the same is equal to manufacturing, hence does not need specific inclusion in the Memorandum, therefore the addition is bad in law. For this and for such other grounds that may be urged at the time of hearing your appellant submits that the additions made by the Assessing Officer may be deleted. ITA No.301/Hyd/2024 (A.Y 2016-17) - (Revenue) (i) Whether the Order of the Ld.CIT (Appeal) is erroneous on facts and in law. (ii) Whether the CIT(A) erred in deleting the disallowance in terms of Sec. 40(a)(ia) of the Income-tax Act, 1961, for non-deduction of TDS as required u/s. 194 of the Act and ought to have seen that the assessee, being aware of the identity of the Pattadars, the non-deducti....
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....on vested on Your Appellant as per the Coal Wages Agreement. It is therefore incurred in the course of business and for the purpose of business, cannot be disallowed under section 40A(9) and is allowable under section 37 of the Income Tax Act, 1961. 4. Your Appellant submits that the CIT(A) as well as the Assessing Officer ignored the fact that the payments made to Singareni Educational Society in the past have been allowed as business expenditure u/s 37, ought not to have disallowed Rs. 41,08,54,250/- under section 40A(9) of the Income Tax Act, 1961. For this and for such other grounds that may be urged at the time of hearing your appellant submits that the additions made by the Assessing Officer may be deleted. ITA No.308/Hyd/2024 (A.Y 2020-21) Revenue Whether the Order of the Ld.CIT(Appeal) is erroneous on facts and in law. (II) Whether the CIT(A) erred in holding that the capital expenditure incurred by the assessee is to be treated as revenue expenditure when the capital expenditure does not lead to the creation of asset. Whether the CIT(A) ought to have seen that the expenditure incurred was capital in nature and same was for th....
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....nt of the assessee and the joint bipartite committee of Coal Industry (JBCCI) which consists of representative of State Govt, representative of the Central Govt and Members of various recognized trade unions. The Assessing Officer did not accept this contention of the assessee and disallowed the said claim of deduction u/s 40A(9) of the Act. 3. The assessee challenged the action of the Assessing Officer before the learned CIT (A) but could not succeed. 4. Before the Tribunal, the learned Counsel for the assessee submitted that the assessee is engaged in the business of extraction and sale of coal and power generation in the State of Telangana. The assessee is primarily governed by Mines Act, 1952. The operation of the assessee are spread across various remote area in the State of Telangana. In view of the compelling working conditions under which the workers of the assessee are working, the assessee provides with certain welfare benefits to the employees/workers and their family members/children. The service conditions of the workers and employees of the assessee are governed by the National Coal Wages Agreement (NCWA) and therefore, the assessee was under the obligation to e....
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....d therefore, the expenditure incurred by the assessee cannot be considered as laid out wholly and exclusively for the purpose of the business of the assessee. He has relied upon the orders of the Assessing Officer as well as the learned CIT (A). 6. We have considered the rival contentions as well as the relevant material available on record. The Assessing Officer has disallowed the claim of the assessee by holding that the payment in question made by the assessee to the educational society would not be an allowable expenses u/s 40A(9) of the I.T. Act, 1961 as this payment is not made for the expenses provided u/s 36(1)(iv) &(iv) of the Act. The relevant finding in para 9.2 are as under: 9.2 The expenditure incurred does not come in the ambit of the section 40A(9) since the amount contributed is towards the running of schools and colleges meant for the employees of SCCL. The provisions of section 40A(9) of the I T Act are very clear in providing that any payment or contribution made by an employer on behalf of the employees to any fund, trust, society, association or person etc. would not be an allowable expenses except the payment made for expenses provided for under se....
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....Industrial Disputes Act, 1947 is binding on the parties ". "10. A settlement within the meaning of sub-section (3) of Section 18 of the Industrial Disputes Act is binding on both the parties and continues to remain in force unless the same is altered, modified or substituted by another settlement ". 12. A similar issue came up for consideration before the Jharkhand High Court at Ranchi in L.P.A.No.17 of 2018 which has been decided on 23.04.2019 and where the Division Bench of the Jharkhand High Court, in paragraph 6, relying upon the aforesaid judgment of the Hon'ble Supreme Court, held as under: "6. We are in agreement with the contention of the appellant that National Coal Wage Agreement is statutory in nature. It is an outcome of tripartite agreement among the Coal Company, Labour Unions and Central Government. It has been held by the Hon'ble Supreme Court in Mohan Mahto Vs. Central Coalfields Ltd. reported in (2007) 8 SCC 549, that it has statutory force. Learned Single Judge came to the aforesaid findings due to following facts and reasons which have been depicted in paragraph 7 of the impugned judgment which reads hereunder: 7. (i) ....
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.... Tax Act, 1961 on account of non-deduction of TDS? Accordingly, we have heard Advocate Parchure for the Department Advocate Dewani for assessee. We find that the provision for educational facilities is being made by assessee as a part of its obligation under various National Coal Wage Agreement (NCWA), which are legally enforceable in terms of Section 18 of the Industrial Dispute Act. The said provision is also accepted and allowed by Department since 1992. In fact, assessment order itself records that for assessment year 1995-96, appeal filed by Department in this respect before ITAT was withdrawn. It is not the case of Department that aims and objects of assessee do not permit such expenditure. Fact show that, to provide education towards of its employees who are working at sites which are otherwise away from town, schooling facility is being provided by employer. To provide better facility, the central school organization an undertaking of Union of India is requested to offer it at such site. In this situation, we find that no substantial questions of law as sought to be raised arise out of concurrent finding of CIT and ITAT". 14. The same view was further reit....
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....nd again that of the two cases by the High Court of Bombay, when we compare the facts of the present case, undisputedly in the instant cases also, the issue is in respect of the benefits provided to the employees by way of supply of electricity to their residence, township and street lights. The question again would be whether this so called benefit is one which is for the welfare of the employees or not and whether it is not part of the statutory obligation. The other undisputed fact is that the said benefit extended by the appellant/employer is in terms of the clauses that are reflected in the NCWA. The judgments referred to in the preceding paragraphs clearly indicate and lay to rest the issue as to whether it is a statutory document or not, where all the judgments referred to above have clearly held that NCWA is a statutory document and it has binding force of law so far as its enforceability is concerned. 16. Under the circumstances, if we look into the un-amended "Explanation" to Section 115WB(2)(E) of the Act, it would further make it clear that any expenditure which was incurred in order to fulfill a statutory obligation would not be considered as an expenditure fo....
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....he year under consideration, the assessee has claimed deduction of Rs. 240 crores u/s 32AC(1) of the Act on the investment of Rs. 1600/- crores made in new plant & machinery installed at the new power plant situated at Jaipur Mandal, Telangana State @ 15% on the total investment. However, the claim of the assessee was disallowed by the Assessing Officer by holding that the generation of electricity is not production of any article or thing as per section 32AC of the I.T. Act, 1961 and therefore, in the absernce of inclusion of the power generation in the purview of section 32AC of the Act, the benefit of the said provisions has been excluded to the power generation company. The learned AR has submitted that on a plain reading of section 32AC(1) of the Act, if the assessee satisfy the conditions being a company engaged in the business of manufacture or production of any article or thing and acquire/install new assets during the period 1.4.2013 to 31.03.2014, the benefit u/s 32AC is available to the assessee. The learned AR has further submitted that the Hon'ble Supreme Court as well as Hon'ble High Courts have held that the generation and distribution of electricity falls wi....
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.... was called for and the Assessing Officer has again examined the facts relating to the setting up of plant & machinery and given a factual report that the assessee has failed to prove that the plant & machinery was set up during the period relevant to the A.Ys 2015-16 & 2016-17. He has referred to the bills raised by the BHEL bearing the dates of the month of May, 2016 which shows that the work of setting up of the plant & machinery was not completed even before 31/03/2016. The learned DR relied on the decision of the Coordinate Bench of the Tribunal in the case of ACIT vs. M/s. Hinduja National Power Corporation Ltd in ITA No.235/Hyd/2023, dated 08/01/2025. 13. In rejoinder, the learned AR of the assessee has submitted that the bills referred by the learned DR are in respect of the escalation claimed by the BHEL and not the original invoice/ bills for the supply of plant & machinery and setting up of the same. He has referred to the certificate issued by the Telangana State Power Coordination Committee dated 19/01/2024 regarding the injection of the power generation into State Grid on 12 to 13th March, 2016. 14. We have considered the rival submissions as well as relevant ma....
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....ls as stated in BTG contract agreements dated 06.09.2012 with BHEL and BOP contract agreements with M/s McNally Bharat Engineering Co. Limited dated 28.09.2013. In reply to specific queries raised with reference to the said agreements the assessee could not furnish any documentary evidences. Assessee also failed to furnish original certificates of installation for verification. The certificate of Chartered Engineer dt.8-1-2018 is very vague and does not contain any details of the dates of the individual plants. Despite of asking further evidence in this respect assessee could not substantiate the installation of new asset. Vide this office letter dt.18-12-2018, assessee was asked to submit various certificates which were not complied with. 7.13 i) The assessee could not produce details of type test charges amounting to Rs. 23.98 crores, therefore the dates of acquisition/installation of assets could not be established. It is relevant to note that the asset should have been both acquired and installed in the given period as allowed in the Act. ii) The assessee could not produce certificate as given by project manager on physical verification of Boiler Turbine Gener....
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.... Export Case is not correct and all the decisions which took similar view as in Sun Export case stands over-ruled". 3. In view of the above arguments the clam of the assessee under the provisions of section 32AC of Income Tax Act, 1961 do not stand merit on both legal and factual basis hence same is disallowed and added to the total income. Addition: Rs. 272,15,43,386/-" 16. We further note that for the A.Y 2016-17, the learned CIT (A) has called for a remand report on this issue and after considering the remand report has confirmed the action of the Assessing Officer when the assessee has failed to establish that the plant & machinery was installed before 31/03/2016. The assessee has relied upon various judgments and most of them are not in respect of the investment allowance u/s 32AC but are on the point of either the generation of power to be considered as production of goods under sales tax or production of goods/articles u/s 32(1)(iia) of the Act. However, in the latest decision, the Coordinate Bench of this Tribunal in case of ACIT vs. Hinduja National Power Corporation Ltd (Supra) has considered this issue and analyzed the provisions of section 32AC visa-vis t....
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....r clause (i) or clause (ii) or clause (iia), as the case may be :Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998 but before the 1st day of April, 1999 and is put to use before the 1st day of April, 1999 for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be ....
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....cupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.-For the purposes of this sub-section "written down value of the block of assets" shall have the same meaning as in clause* (c) of sub-section† (6) of section 43. Explanation 3.-For the purposes of this sub-section, the expression "assets" shall mean-(a)tangible assets, being buildings, machinery, plant or furniture;(b)intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature [, not being goodwill of a business or profession]. Explanation 4.-For the purposes of this sub-section, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of min....
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.... sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof :Provided that such deficiency is actually written off in the books of the assessee. Explanation.-For the purposes of this clause,-(1)"moneys payable" in respect of any building, machinery, plant or furniture includes-(a)any insurance, salvage or compensation moneys payable in respect thereof;(b)where the building, machinery, plant or furniture is sold, the price for which it is sold, so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as....
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....aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and (b) for the assessment year commencing on the 1st day of April, 2015, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a). [(1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets [acquired during any previous year exceeds twenty-five crore rupees and such assets are installed on or before the 31st day of March, 2017], then, there shall be allowed a deduction of a sum equal to fifteen per cent. of the actual cost of such new assets for the assessment year relevant to that previous year: [Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed:] [Provided further that] no deduction unde....
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....pril, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new asset for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, there shall be allowed a deduction of a sum equal to fifteen per cent. of the actual cost of such new asset for the assessment year relevant to the previous year in which such new asset is installed. (2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger or re-organization of business referred to in clause (xiii) or clause (xiiib) or clause (xiv) of section 47, within a period of five years from the date of its installation, the amount of deduction allowed under sub- section (1) in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which su....
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....rovided the new machinery or plant is acquired after 31.03.2005. Further, an amendment effective from 01.04.2016 inserted by way of proviso to Section 32(1)(iia), a beneficial provision applicable to the states of Andhra Pradesh, Bihar, Telangana, and West Bengal. This proviso allows an enhanced additional depreciation of 35% instead of 20% for undertakings or enterprises engaged in manufacturing or producing any article or thing, provided they were set up on or after 01.04.2015. However, upon a closer scrutiny of the proviso to Section 32(1)(iia) and the main Section 32(1)(iia) of the Act, it is evident that "the business of generation, transmission, and distribution of power" has not been included within the scope of the enhanced benefit of 35%. The enhanced rate of depreciation was specifically restricted to undertakings or enterprises set up for the manufacturing or production of any article or thing in the specified states. 18. In light of the above, we are of the opinion that the language used in Section 32 is a plain, simple and unambiguous. Each word of the section is required to be given due interpretation and meaning. In our view, the proviso to Section 32(1)(iia....
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....nction of a proviso is that it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso would fall within the main enactment. Ordinarily it is foreign to the proper function of proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment." Further, a proviso is not normally construed as nullifying the enactment or as taking away completely a right conferred by the enactment. As a consequence of the aforesaid function of a true proviso certain rules follow. 18.3. From the reading of the above, it is clear that proviso to provision is restricting/qualifying the scope of the main Provision. In other words, proviso creates an exception to what is included in the main section. In the present case, the Section 32(1)(iia) of the Act is available for an assessee who has set up any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the bus....
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.... In our view the Legislature deem it appropriate to restrict the benefit of Section 32AC and 32AD only to such class of assessee, which are engaged in the business of manufacture or production of any article of thing acquires any new assets etc. and had not deliberately extended to "business of power generation, transmission and distribution. The benefit of Section 32AC and 32AD of the Act, were extended only to the assessee engaged in the business of manufacture of production of any article of thing acquires any new assets etc. and was not extended to the assessee which are engaged in the "business of power generation, transmission and distribution". As held by us, that "business of power generation, transmission and distribution" is altogether a different class of assessee, for which the restrictive / limited benefit have been given by the Legislature. Quite contrary to this, the benefit under Proviso to Section 32(1)(iia), 32AC and 32AD of the Act has been given to the first class i.e., the assessee which are engaged in the business of manufacture of production of any article of thing acquires any new assets etc. In our view, the law is required to be read in context and is requ....
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....nd completely in their entirety, and the deduction or additional benefit cannot be granted based merely on interpretation. We may rely on the following observations of the Hon'ble Supreme Court in the case of PCIT Vs. Wipro (supra), as under: "7. It is the case on behalf of the Revenue that as there was a non- compliance of twin conditions under Section 10B (8) of the IT Act, namely, the declaration under Section 10B (8) was not submitted along with the original return of income, the assessee shall not be entitled to the exemption/benefit under Section 10B (8) of the IT Act. According to the Revenue, furnishing of declaration under Section 10B (8) before the due date of filing original return of income is also mandatory. On the other hand, it is the case on behalf of the assessee, which has been accepted by the High Court, that the requirement of submission of declaration under Section 10B(8) is mandatory in nature, but the time limit within which the declaration is to be filed is directory in nature. While considering the issue involved, whether the time limit within which the declaration is to be filed as provided under Section 10B (8) is mandatory or directory, Sect....
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....der to avail the benefit of carrying forward or set-off of any loss under Section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set- off of any loss. Filing a revised return under Section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 10B (8) and furnishing the declaration as required under section 10B (8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed he....
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.... upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under Section 10B (8) of the IT Act. 12. Even the submission on behalf of the assessee that the assessee had a substantive statutory right under Section 10B (8) to opt out of Section 10B which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under Section 10B (8) as being mandatory also has no substance. As observed herein above, the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement." 25. Similarly, in the case of Commissioner of Customs Vs. Dilip Kumar (supra), the Hon'ble Supreme Court in paragraph 40 has held as under : "40. After considering the various authorities, some of which are adverted to above, we are compelled to observe how true it is to say that there exists unsatisfactory state of law in relation to interpretation of exemption clauses. Various Benches which decided the question of interpretation of taxing statute on one hand and exemption notification on the other, have broadly assumed ....
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....gued by the ld.AR. On the other hand, the Tribunal is duty bond to make efforts to give meaning to each and every word used by the Legislature. The Legislature has inserted the words "in the business of generation, transmission or distribution of power" for a purpose and the legislative intention is that every part of the statute should be given effect and no part of it can be surplusage or in vain. The exclusion of business of generation, transmission or distribution of power from the Proviso to Section 32(1)(iia), 32AC and 32AD, were not mere surplusage but carved out and exclusion for the purposes of restricting the benefit only for a limited class of eligible assessee. Therefore, the decision in these cases is not applicable here. We are of the considered opinion that the judgments of the Hon'ble Supreme Court were not based on the interpretation of the relevant statutory provisions, and the questions posed to the Court were not concerning the statute in its present context. In light of the above, the grounds raised by the Revenue are allowed." 17. Thus, it was held that despite the amendment in section 32(1)(iia) of the Act, no corresponding amendment is made in section....
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....sation offered by the SCC Ltd., the Hon'ble Courts have directed SCC Ltd., as an interim/final orders to deposit with the courts the enhanced compensation along with interest and the amount was to be deposited on or before the specified date mentioned in the orders. In compliance with the court orders, SCC Ltd have deposited enhanced compensation and also deposited an amount of Rs. 4.75 crores towards interest on enhanced compensation in F. Y. 2010-11. Further, the amount was deposited with courts directly drawing Cheques/DDs in the name of the courts/designation of principal officer of the court in compliance with various court orders. Therefore, the amount to the tune of Rs. 4.75 crores was dealt by the courts. As per the directives in the case, the courts/principal officers of the courts have directly disbursed the payments to the beneficiaries out of the deposits held by them, as per the provisions laid down in Civil Rules in practice. In view of the above, the amounts deposited by SCCL with the courts directly fall under para-4(a) of the Circular No: 08/2011 ( F. No: 275/30/2011-IT(B), dated 14/10/2011 and do not attract TDS provisions." 9.1 After considering the ....
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....ls to pay the tax to the credit of Central Government, he shall be liable to action in accordance with the provisions of section 201. In this connection attention is also invited to the provisions of section 276B of the Income-tax Act, as substituted by the Direct Tax Laws (Amendment) Act, 1987 according to which if a person fails to pay to the credit of the Central Government the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years and with fine. 2. It has come to notice that various State Development Authorities, the Housing Boards, Public Works Department, etc., acquire immovable property from the public for the purpose of their developmental activities. Huge amounts are disbursed on behalf of these departments as payments of compensation for land acquired including considerable amount of interest on excess compensation as per the Land Acquisition Act. The interest payment made under the Land Acquisition Act are covered by the provisions of section 194A. As a result, tax will have to be deducted at source under section 194A from the interest payments made to the public under the Land Acquisition A....
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....from 1-4-1975, if the amount exceeded Rs. 1,000 was not and could not be valid. Such a direction did not get support from section 194A under which Department sought deduction of income-tax at source. The proviso to section 194A of the Act empowers the assessee to receive the income by filing an affidavit or statement in writing declaring that his estimated total income assessable to tax for the assessment year next following the financial year in which the income is credited or paid will be less than the minimum liable to income-tax. The orders under revision did not disclose the break-up in each execution petition about the compensation amount awarded and the interest payable thereon. The orders also did not disclose as to when possession of the land concerned in each execution petition was taken by the Government and the date of depositing the compensation amount. In the absence of those details, it was not possible to determine whether the individual claimants were liable to pay income-tax or not. In view of above it was further held that Circular No. 526, dated 5-12-1988, which is on same line as D.O. stated above, will not have binding effect on Civil Court unless provisions o....
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....e person making payment and as such he is responsible for making deduction at source in terms of section 204( iii) of the Income-tax Act. However, we had requested the Department to confirm the factual position from the Ministry of Rural Development. The Department of Rural Development have stated that the person responsible for payment of compensation under Land Acquisition Act is the Collector. In Baldeep Singh v. UOI [1993] 199 ITR 628 the Punjab and Haryana High Court held that "the Court is not the person responsible for paying any income by way of interest...As per the legal incidents, the legal person responsible for paying income by way of interest is the Land Acquisition Collector who had the money in his possession and was responsible for making the payment of that income to the petitioners The Court is acting only as a conduit for getting the payment to the petitioner in execution of a decree passed in his favour." In view of the above, we confirm the views expressed by us earlier, referred to above. The Administrative Department have stated that while there may be no objection to TDS being made by Collector, in such cases a practical difficulty that may arise i....
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....atement of facts, online submissions of the appellant, the case laws cited and the assessment order are considered. The submission of the appellant is examined. It is noted that the Hon'ble ITAT, Hyderabad bench in appellant's own case in earlier years has adjudicated the issue in appellant's favour. In view of the decision reproduced as above and respectfully following the higher authorities decision on the issue, the grounds of appeal no. 1 to 3 are allowed." 21. The learned DR has submitted that the Department has not accepted the decision of this Tribunal for the earlier A.Ys and filed appeals before the Hon'ble jurisdictional High Court. He has also referred to the Circular No.23/2015 dated 28/12/2015 of CBDT whereby it is clarified the applicability of provisions of section 194A in respect of the interest on the fixed deposit made as per the directions of the Court and observed that tax would not be required to be deducted at source but the TDS is required once the ownership is decided by the Govt. For ready reference, we reproduce the relevant para 2 & 3 of the said circular as under: 2. In the case of UCO Bank in Writ Petition No. 3563 of 2012 (available on ....
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.... was decided in favour of the assessee by the Hon'ble ITAT, Hyderabad in its orders for the AY 2005-06 to AY 2011-12 (Para 5 in the Page No.3 to 11) and AY 2012-13 (Para 3 in the Page No.3) dated 20th May, 2021 and 25th October, 2021 respectively. The relevant part of the order dated 20th May, 2021 is reproduced as following: "5. As Regards ground Nos. 1 to 4 regarding capital work in progress raised (in AYs 2005-06 to 2011-12), which has been raised in all the appeals under consideration, the facts as taken from AY 2005-06 are that the assessee had debited a sum of Rs. 4.24 crores towards 'assets written off' and the same was included under the head 'provisions and write off was debited to the P&L A/c. Out of the said amount, the assessee had added back a sum of Rs. 4,09,97,398/- in the income computation statement as the same did not represent an allowable deduction in arriving at the total income as per the provisions of the IT Act. The balance amount of Rs. 14,54,302/- had not been added back by the assessee in the income computation statement. In this regard it was mentioned in Col. 17(a) of the tax audit report enclosed to the return that the said bal....
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....nior advocate, appearing for the appellant submitted that the question is partly covered by the decision in CIT v. Graphite India Ltd. [1996] 221 ITR 420 (Cal.). The relevant question referred by the Tribunal to this Court in that case was whether in the facts and circumstances of that case, the Tribunal was justified in holding that the expenditure incurred for the assessee's proposed Petro-chemical project was revenue expenditure and to be allowed as a deduction? This Court in answering the question, held as follows: "So far as question No. 4 is concerned, the Tribunal recorded the finding that the assessee spent an amount of Rs. 56,665 as project expenditure. The expenditure represented fees paid to Engineering India Ltd. in connection with the petrochemical project report. The amount was paid by the assessee in order to explore the possibility of setting up of a petro-chemical project which could provide a captive plant for manufacture of raw material at the assessee's own factory which would help the assessee in getting continuous supply of raw material even during periods of acute shortage. In fact, the project did not materialize. The ITO as well as the CIT(....
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....he system of reopening of accounts does not fit in with the scheme of the IT Act. As far as receipts are concerned there can be no reopening of accounts, and the position is the same in respect of expenses". 6. Mr. R.N. Bandopadhyay, learned advocate appearing on behalf of the Revenue relying upon the decision in Delhi Tourism & TDC Ltd. v. CIT [2006] 285 ITR 114/155 Taxman 10 (Delhi) submitted that the expenditure was rightly disallowed by the learned Tribunal as it was made and related to earlier years. 7. We accept Mr. Bajoria's submission regarding the expenditure made for construction/acquisition of new facility subsequently abandoned at the work-in-progress stage was allowable as incurred wholly or exclusively for the purpose of assessee's business as covered by the decision in Graphite India Ltd. (supra ). The issue whether such expenditure could be allowed in the relevant assessment year is however yet to be resolved. 8. The CIT(A) in his order had found as follows : " The company claimed as allowable the expenditure on this abandoned project. While it was found to be unviable, the expenditure on it was for the purpose o....
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....n declining to accede to the prayer made under s. 66(2) of the IT Act, 1922." 13. Sec. 10(2)(xv) of the old Act corresponds to s. 37(1) of the present Act. Our above conclusion is fortified by the view expressed by the Supreme Court in the said decision. For the aforesaid reasons the question is answered in the affirmative in favour of the assessee. The appeal is thus allowed. 5.4.2 In the case of CIT Vs. Indian Oxygen Ltd., [1996] 218 ITR 337 (SC), the Hon'ble Supreme Court has held as under: "The Tribunal held that the certain amount paid by the assessee to the English company, in pursuance of the agreement, was a permissible deduction under section 37(1). On reference, the High Court found that the English company did not sell any information, processes and inventions to the Indian company; that under the agreement, the Indian company was not entitled to use them after the termination of this agreement; that the Indian company was prohibited from disclosing these information, processes and inventions during the currency and also after the determination of this agreement and that thought the agreement was for a period of ten years, it could be terminated ea....
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....15 (Para 6 & 7 in the Page No.9 & 10) dated 20th May, 2021, 25th October, 2021 and 27th May, 2021 respectively. The relevant part of the order dated 20.05.2021 is reproduced as under: "11. As regards the ground relating to restriction of depreciation on mine development to 10% as against 15% claimed, as raised in AY 2011-12 as ground Nos. 9 & 10, the assessee has claimed depreciation @ 15% to the extent of Rs. 40,46,18,947/-, which was restricted by the AO to 10%, which comes to Rs. 13,48,72,982/-. The CIT(A) confirmed the same. ........................................... 11.4 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The assessee is engaged in the business of coal mines and he is extracting coal from open cast mines as well as underground mines. As per details submitted by the AR of the assessee during the course of assessment proceedings and appellate proceedings, it is clear that the expenditure incurred by the assessee are to be treated as 'plant and machinery'. The civil works are relating to directly for the excavation of coal. Without doing the....
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....ssee is entitled to charge depreciation @ 15% under the block of assets "plant and machinery", as against 10% made by the AO." 7.3.2 All the facts of the case, Grounds of appeal, statement of facts, online submissions of the appellant, the case laws cited and the assessment order are considered. The submission of the appellant is examined. It is noted that the Hon'ble ITAT, Hyderabad bench in appellant's own case in earlier years has adjudicated the issue in appellant's favour. In view of the decision reproduced as above and respectfully following the higher authorities decision on the issue, the grounds of appeal no. 6 to 7 are allowed." 28. The learned DR has submitted that the assets on which the assessee has claimed depreciation @ 15% are not in the nature of plant and machinery but are falling in the definition of building and therefore, eligible for depreciation @ 10% only. He has relied upon the decision of the Hon'ble Madras High Court in the case of M/s. Narmada Infrastructure Corporation Enterprises Ltd vs. ACIT and another in TCA No.868 to 870 of 2009 & Others. Thus, the learned DR has submitted that the Tribunal while deciding this issue for the precedin....