TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1606
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.... even an amendment was made by Finance Act, 2022 by way of insertion of Explanation to Section 14A of the Income Tax Act, 1961." 2. "On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the assessee is entitled to claim 10% additional depreciation in the year under consideration ignoring that there is nothing in the statute which allows carry forward of additional depreciation and thus there cannot be any presumption that unless it is specifically denied, carry forward has to be allowed ". 3. "On the facts and circumstances of the case, the Ld. CITIA) erred in holding that the expenditure incurred by the assessee was a normal business expenditure towards sale of products and hence it is allowable as revenue expenditure ignoring the fact that the expenditure incurred towards obtaining "Certificate of Suitability (COS)" and filing of "Drug Master File (DMF)" are capital in nature as these expenses give enduring benefit to the business of the assessee spread over several years and therefore the Ld CIT(A) ought to have held it as capital in nature". 4. "On the facts and circumstances of the case, the Ld.CIT(A) erred in Scheme (FMS)" and "Focus Produ....
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....fically denied, carry forward has to be allowed". 3. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in holding that the expenditure incurred by the assessee was a normal business expenditure towards sale of products and hence it is allowable as revenue expenditure ignoring the fact that the expenditure incurred towards obtaining "Certificate of Suitability (COS)" and filing of "Drug Master File (DMF)" are capital in nature as these expenses give enduring benefit to the business of the assessee spread over several years and therefore the Ld CIT(A) ought to have held it as capital in nature". 4. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in ignoring the ratio laid down by the Hon'ble Supreme Court in the case of Ballimal Navi Kishore Vs CIT reported in 224 ITR 414 (SC) in allowing the expenditure incurred towards obtaining COS and DMS as revenue expenditure". 5. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in treating the "Focus Market Scheme (FMS)" and "Focus Product Scheme (FPS)"as capital receipts, claims of which have been made in appellate stage by way of filing a letter and ignoring the fact that ....
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....ure". 4. "On the facts and circumstances of the case, the Ld. CIT(A) is erred in ignoring the ratio laid down by the Hon'ble Supreme Court in the case of Ballimal Navi Kishore Vs CIT reported in 224 ITR 414 (SC) in allowing the expenditure incurred towards obtaining COS and DMS as revenue expenditure". 5. "On the facts and circumstances of the case, the Ld.CIT(A) is erred in treating the "Focus Market Scheme (FMS)" and "Focus Product Scheme (FPS)"as capital receipts, claims of which have been made in appellate stage by way of filing a letter and ignoring the fact that the assessee has never made the claim in the return of income filed u/s 139 for the year under consideration". 6. On the facts and circumstances of the case, the Ld CIT(A) erred in treating the SHIS, FMS and FPS as capital receipts ignoring the findings of the Assessing Officer in the remand report, wherein the AO has strongly objected the admission of fresh claims" 7. On the facts and circumstances of the case, the Ld CIT(A) erred in treating the SHIS, FMS and FPS as capital receipts ignoring the ratio laid down in the decision of the Hon'ble Supreme Court in the case of M/s Goetze India Ltd 8.On ....
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....ng of the return. However, during the course of the assessment, Ld. AO invoked Rule 8D and made a disallowance of Rs. 11,79,942/-. In appeal, Ld. CIT(A) vide his order dated 21.09.2015 partly allowed the assessee's claim and directed the Ld. AO to restrict the disallowance to the extent of exempt income i.e. Rs. 81,792/-. 5.2 Before us, Ld. AR has submitted that the assessee had the following interest-free funds available during the year against the investment of Rs. 275,oo,ooo/- in the shares. Share Capital 12.10 Cr. Reserved and surplus 195 Cr. Total 207.10 Cr. Since the assessee had sufficient own funds, thus no disallowance of interest should have been made, as none of the interest-bearing funds have been used for the purpose of investment in shares. Ld. AR has, further, pointed out that the issue is squarely covered by the decision of the co-ordinate benches in its own case for earlier years as under: AY ITA No. 2010-11 6783/Mum/2014 2011-12 6784/Mum/2014 2012-13 2503/Mum/2014 It has, further, been submitted by him that the issue is also covered in favour of the assessee in various decisions including that of the Hon'ble Apex Cour....
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....1-12, following the principle laid down by the Hon'ble Jurisdictional High Court in aforesaid decision directed the deletion of addition made u/s 14A r.w.r 8D(2) (ii). We find that the Hon'ble Jurisdictional High Court in Nirved Traders (P.) Ltd. Vs. Dy. CIT, I.T. Appeal No.149 of 2017, vide judgement dated 23.04.2019, has held that disallowance under section 14A of the Act cannot be more than exempt income. Thus, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground no.1, raised in Revenue's appeal is dismissed." As the facts for the present year are identical, respectfully following the decision of the co-ordinate bench, we uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue on this issue. The disallowance u/s 14A r.w Rule 8D is accordingly restricted to Rs. 81,792/-. 6. Ground No. 2 : Disallowance of additional depreciation - Rs. 1,59,80,258/-. 6.1 Brief facts in this regard are that the assessee had claimed additional depreciation @10% u/s 32(1)(iia) of the Act as the machinery in question had been used for less than 180 days in the financial year relevant to AY 2012-13. The balance 10% of th....
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....se of business for a period of less than 180 days, that u/s. 32(1)(iia), read with the second proviso to section 32(1)(ii) of the Act, for the AY. 2007-08, the assessee was granted benefit of 50% of the 20% of the amount of depreciation allowable. Dispute 6783-83/M/14910-11(11-12- Aarti Drug Limited 5 arose with regard to the allowance of the balance 10% depreciation in the next AY. i.e. for the AY.2008-09. The AO, as well as the FAA disallowed the claim of the assessee, whereas the Tribunal, allowed the appeal of the assessee. Challenging the same, the Revenue filed appeal before the Hon'ble court raising the following two substantial questions of law: "(1) Whether the Tribunal is correct in extending the benefit of section 32(1)(iia) of the Act to the next AY. When the Income tax Act does not provide for such carryover, thereby violating the legal principles of 'casus omissus' which states that the courts cannot compensate for what the Legislature has omitted to enact? (ii) Whether the Tribunal was correct in holding that additional depreciation allowed u/s.32(1)(iia) is a one-time benefit to encourage industrialisation and the relevant provisions has been construed....
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....eduction can be avalled of in the subsequent AY., otherwise the very purpose of insertion of clause (ila) would be defeated because it provides for per cent deduction which shall be allowed. 10. It has been consistently held by this court, as well as the apex court, that the beneficial legislation, as in the present case, should be given liberal interpretation so as to benefit the 6783-83/M/14910-11(11-12- Aart/ Drug Limited 6 assessee. In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one AY., if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent AY. The Tribunal, in our view, has rightly held, that additional depreciation allowed u/s.32(1)(iia) of the Act is a one-time benefit to encourage Industrialisation, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. We are in full agreement with such obse....
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....ench in ITA No. 2503/Mum/2021 for AY 2012-13 is reproduced as under: "20. We have considered rival submission and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee's own case in ACIT Vs. Aarti Drugs Limited, in ITA No. 5526/MUM/2013, vide order dated 14/01/2015, for the assessment year 2009-10 decided a similar issue in favour of the assessee by observing as under: "7. We have carefully considered the rival submissions and perused the record. Admittedly the expenditure incurred is not preproduction expenditure. The assessee has been marketing products elsewhere and thus it can be said that the assessee is already in the business of manufacture and sale of drugs. To expand the business in certain countries it has to obtain certificate of suitability as per the FDA Regulations, which is a part of the process of sale of its products. Similar expenditure was considered by Hon'ble Gujarat High Court, wherein it was held that such payments should be considered in the revenue field. No decision of any other High Court, wherein contrary view taken, was placed before us by the Revenue. Having regard to the circumstances of ....
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....ppellate authority to admit an additional claim raised for the first time during the appellate proceedings. Accordingly, after considering the remand report and the submissions made by the assessee, Ld. CIT(A) observed that the co-ordinate bench had already decided the issue in the previous year in ITA no. 2503/Mum/2021 in favour of the assessee. He, therefore, held that the incentives received by the assessee towards FMS, FPS & SHIS on export during the year under consideration should be treated as capital receipt. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. 8.2 We have heard the rival submissions and perused the material placed before us. It is seen that the issue is squarely covered by the decision of the coordinate bench in the assessee's own case for AY 2012-13 in ITA No. 2503/Mum/2021. Relevant portion of the order supra is reproduced below: 43. We have considered the rival submissions and perused the material available on record. The assessee is a manufacturer of bulk drugs and also exports some of the products to various countries for which the government is providing certain subsidies under the Foreign Trade Policy. As noted above, the ....
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....at the AO in its remand report dated 11/04/2019, forming part of the paper book from pages No. 117-120 after examining the submissions of the assessee and schemes and various facts placed on record noted that the salient objectives of the FPS/FMS/SHIS subsidy received under the Foreign Trade Policy is to increase percentage share of global trade by increasing the competitiveness in selected markets, technological upgradation and expanding employment opportunity. In para 7.2 of its remand report, the AO further stated that the purpose of introduction of the schemes was to encourage industries, which require industrial growth, technological upgradation, and development. 46. Accordingly, the learned CIT(A) came to the conclusion that the subsidy is a capital receipt in the hands of the assessee and therefore not includable in the total income. The relevant findings of the learned CIT(A) in this regard are as under: "14.11 Thus, on a plain reading of the relevant policy document of the Government of India, it is clear that the objective of the subsidy granted under FPS, FMS and SHIS is to increase the global market share, technology up gradation and employment generation in certa....
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....as capital receipt. As a result, grounds no. 9-13 raised in Revenue's appeal are dismissed." As the facts in the current year are identical, respectfully following the order of the co-ordinate bench, we hold that the incentive received on account of FMS, FPS & SHIS are to be treated as capital receipt. 9. In the result, the appeal of the revenue on this issue is dismissed. ITA No. 3071/mum/2023 - AY 2014-15 10. As all the grounds in this year are identical to the grounds raised in AY 2013-14, the decision for AY 2013-14 hereinbefore, shall apply mutatis mutandis for this year also. ITA No. 3068/Mum/2024 - AY 2015-16 11. As ground Nos. 1 to 9 for this year are identical to AY 2013-14, decision for AY 2013-14 hereinbefore shall apply mutatis mutandis for this year also in respect of these grounds 12. Ground No. 10 & 11: Allowance of deduction in computing Book Profit u/s 115JB(2). 12.1 Brief facts of the issue are that the company had adopted transition provision as per Schedule II to the new Companies Act, 2013, of computing depreciation. The depreciation of assets was directly reduced from Reserves as specified in the Act, instead of debiting to the P&L Account. Thu....