TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 1468
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.... CENVAT credit. 4 Upholding the action of the AO in treating corporate advertisement as capital expenditure of Rs. 1,80,54,376/- 5 Upholding the action of the AO of treating lease equalisation charges as notional expense and disallowing the same u/s 37 amounting to Rs. 19,48,66,687/- 6 Upholding the action of the AO of treating interest liability on Electricity Tax of Rs. 2,10,36,953/- is covered u/s 43B of the Act and is to be allowed on payment basis. 7 Reduction of capital investment subsidy from the actual cost of plant & machinery of Rs. 3,923,46,000/- 8 Upholding the action of the TPO of treating corporate guarantee given to subsidiaries as international transaction and partly confirming the additions made by the TPO. 9 Interest under section 234B, 234C & 234D. 10 Penalty proceedings u/s. 271(1)(c) Revenue Ground No. Issues 1 to 4 Disallowance u/s 14A of the Act 5 Disallowance u/s 40(a)9ia) on year end provisions 6 Deleting the addition on account of CENVAT Credit ignoring the fact that the addition was made on net-basis and assessee, itself, withdrew its ground before ITAT for AY 2006-07 amounting to Rs. 10....
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....ernational Transaction the assessee is having with its Associated Enterprises (AE). The TPO passed an under section 92CA of the Act dated 09.01.2015 computing a TP Adjustment towards performance guarantee at Rs. 5,26,17,801/-. The AO passed an assessment order under section 143(3) r.w.s. 144C of the Act by incorporating the TP Adjustments. The AO besides the TP Adjustment also made various additions/disallowances to arrive at the assessed income of the assessee under normal provisions at Rs. 412,98,31,100/-. The AO also recomputed the book profit under section 115JB at Rs. 549,90,08,672/-. 3. Aggrieved the assessee filed the appeal before the Ld. CIT(A). The CIT(A) partly allowed the appeal filed by the assessee. The assessee and the Revenue are in appeal before the Tribunal against the order of the CIT(A). ITA No. 1065/Mum/2017-Assessee's appeal. Disallowance under section 14A of the Act and adding the disallowance to book profits under section 115JB of the Act. - Ground No. 1 & 2. 4. During the year under consideration the assessee has received an amount of Rs. 4,52,39,231/- as dividend income. The assessee has made a suo-moto disallowance of Rs. 43.13 crores in t....
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....nd, relied on the order of the lower authorities. 7. We have heard the parties and perused the material on record. We noticed that the identical issue has been considered by the Tribunal in assessee's own case for AY 2010-11 (supra) wherein it is held that 5.3 The third contention of the assessee is that for the purpose of computing disallowance u/r.8D(2)(iii) only those investments are to be considered which have yielded exempt income. This contention of the assessee is supported by the decision rendered in the case of ACIT vs.Vireet Investments Pvt. Ltd.(supra). The assessee has filed fact sheet listing the investments where the assessee has earned dividend income. We deem it appropriate to restore this issue to the file of Assessing Officer for recomputation of disallowance u/r.8D(2)(iii) in line with the decision of Special Bench in the case of DCIT vs. Vireet Investments Pvt. Ltd.(supra). Thus in view of our above finding, ground No.1 and additional ground No.1 of the appeal by the assessee are partly allowed for statistical purpose." ***** 8. Respectfully following the above decision we remit the issue of disallowance towards indirect expenses back....
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....be reduced from the profits eligible for deduction under section 80IA. The AO further noticed that the assessee has shown the expenses without including the component of excise / CENVAT / service tax, etc and called on the assessee to submit the details of the tax component on the expenses on consumption of raw-materials and other services in relation to these power plants. Based on the details furnished by the assessee, the AO computed an amount of Rs. 16,03,42,300/- to be deducted from the profits computed for the purpose of claiming deduction under section 80IA. On further appeal, the CIT(A) confirmed the deductions made by the AO from the profits eligible for section 80IA of the Act. The CIT(A) with regard to the deduction made towards excise / CENVAT / VAT directed the AO to rework the deduction based on actual expenditure and restrict the disallowance accordingly. Aggrieved the assessee is in appeal before the Tribunal. 12. The ld. AR submitted that this issue is identical to assessee's own case for the AY 2008-09 to 2010-11 which have been considered by the Co-ordinate Bench (ITA No. 7640 to 7642/Mum/2019) where it has been held in favour of the assessee. The ld. AR a....
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....e unit will be increased and on other side income of the eligible unit will be increased. The appellant also submitted that the cenvat credits are in the nature of reimbursements and bear a direct nexus to the business of the eligible unit and therefore would qualify for the deduction w/s 801A of IT Act, 1961. 6.5 I find that the issue had been settled by Hon'ble Apex court and High Courts in favour of the appellant. The Hon'ble Apex Court in the case of CIT vs. Meghalaya Steels Ltd reported in 383 ITR 217 had decided that the subsidies reimbursed to the assessee for element of cost relating to manufacture or sale of their products bear a direct nexus between profits of assessee's business and reimbursement of such subsidies and therefore such subsidies are eligible for deduction u/s 8018 rws. 801C of IT. Act, 1961. The relevant finding of Hon'ble Apex Court is as under :- "Assistance by way of subsidies which are reimbursed on the incurring of costs relatable to a business, do not fall under the head "income from other sources", which is a residuary head of income that can be availed only if income does not fall under any of the other four heads o....
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....al undertaking within the parameters of sections 80HH and 80-1, the relief could be given. Therefore, refund of excise duty was includible in its profits computed for the purpose of deductions under sections 80HH and 80-I. The Hon'ble Gujarat High Court in the case of CIT vs. Shah Alloys Ltd reported in 396 ITR 711 had decided that "Whether interest received on margin money placed for business purpose cannot be treated as income from other sources and, therefore, eligible for deduction under section 80-IA being incidental to business of assessee-Held, yes." The Hon'ble Meghalaya High Court in the case of Pr. CIT vs. Shree Mahabir Foods Ltd reported in 282 CTR 112 had decided that "Deduction under section 80-18 would be allowed on the transport subsidy recen from the Government when it was not the case of revenue that the transport subsidy had no bearing on the cost of production of the industrial undertaking of the assessee." The Hon'ble Delhi ITAT in the case of JK. Aluminium Co. vs. ITO reported in 292 CTR 112 had decided that "As we have observed from the papers in the paper book, the exempt amount has be....
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....ystems, the assessee had debited the expenses directly attributable to the eligible units, net of CENVAT credit availed, wherever applicable, on the expenditure incurred. These CENVAT credits are available under the excise provisions and adjusted against the excise duty liability on goods produced by the related cement manufacturing units. In effect, the component of expenses of statutory duties/ taxes is credited directly to „CENVAT receivable account‟ without routing it through the profit and loss account. The Assessing Officer was of the view that Section 80A(IA) provides for exemption in respect of „profit derived by an eligible undertaking‟ for the specified purposes, but the critical words are "derived from" and, therefore, "it is only the expenditure, which had a direct and proximate (immediate) nexus with the earning of profit from eligible undertaking that could be taken into consideration for determining such profits". It was also noted that the eligible unit is to be viewed as an independent unit on the standalone basis, as Section 80IA(5) requires such an eligible unit to be treated "as if such eligible business were the only source of income of ....
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....nses which have earned the CENVAT credits, but not to account for the CENVAT credits and the benefits accruing form the same. In any event, the fiction envisages under section 80IA(5) is to enable computation of profits on a standalone basis, rather than to increase the scope of profits itself and allocate notional expenditure to the eligible units. When the eligible units are other units are treated as independent of each other, and the profit computations are on a standalone basis, the eligible unit must get the corresponding credit for the CENVAT credits availed by the other units. Viewed thus, not accounting for the CENVAT credit does not, in our considered view, vitiate the profits of the eligible undertaking, as long as all such credits are fully availed by the other units as is the undisputed position anyway. What the assessee has done is that the expenses are debited net of the CENVAT credit availed. To this extent, we see no infirmity in the stand of the assessee. 103. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and direct the Assessing Officer to delete the impugned adjustment on account of C....
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....horities below. The expenditure incurred by assessee towards corporate advertisement was disallowed holding it to be capital in nature. We find that similar disallowance of advertisement expenditure was made in assessment year 2009-10. The Co-ordinate Bench of the Tribunal, following the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Asian Paints (India) Ltd., reported as 243 Taxman 348 (Bom) held the expenditure as revenue in nature. The ld. Departmental Representative has not been able to controvert the findings of then Co-ordinate Bench of the Tribunal in assessee's own case on the same issue. Following the same reasoning, we hold corporate advertisement expenditure as revenue expenditure. Thus, ground No.4 of the appeal of the assessee is allowed." 18. We also noticed that a similar view has been held by the co-ordinate Bench in assessee's own case for AY 2009-10 also, the facts of the year under consideration being identical respectfully following the above decision of the coordinate bench, we allow the grounds raised by the assessee and delete the addition made in this regard. Disallowance of lease equalization charges - Ground No.5 ....
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....ber of lease years (5 years in this example), and claim such notional rent figure as rent expenses, which can be illustrated with the help of following table:- Year Rental (Rs.) Charges Debit in Profit and loss account on account of lease equalization charges Total debit in Profit and loss account 1 100 20 120 2 110 10 120 3 120 0 120 4 120 0 120 5 150 - 120 Total 600 -30 600 (iv) Thus it can be seen from the example as above that the lease equalization charges is nothing but a notional entry in the books without any corresponding obligation of the assessee to pay the same. As far as making the notional entry in the books of accounts is concerned, as per certain accounting standards or assessee's consistent accounting policies, the same can very much be followed for the purpose of book entries, but while computing the income as per the provisions of the Act, necessary adjustments therein has to be made mandatorily. Now Section 30 of the Act read as below:- Sec. 30. "In respect of rent, rates, taxes, repairs and insurance for premises, used for the purposes of the business or professi....
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.... lease equalisation charges. 22. The ld. DR on the other hand submitted that the applicability of accounting standard mandatorily to assessee's case is only with respect to preparation of financial statements as per the Companies Act and cannot be applied for the purpose of Income Tax. The ld. DR further submitted that the claim made by the assessee first time before the AO by relying on the decision in the case of Virtual Soft (supra) is not correct since in the said decision the lease equalization charges were allowed with respect to the finance lease and in assessee's case it is the operating lease and therefore it is distinguishable. On the contention of the ld. AR that section 30 should be read along with section 43(2) of the Act, the ld. DR submitted that the said section provides that amount actually paid or incurred according to the method of accounting upon the basis of which profits and gains are computed under the head "Profits & Gains of Business or Profession". The ld. DR argued that what the section envisages is the computation as per the Income Tax Act and that the assessee has in the computation of income (page 50 of PB) has disallowed the lease equalizat....
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.... the Expert Advisory Committee of the Institute of Chartered Accountants of India had issued a clarification in respect of mandatory Accounting Standard-19 on accounting of operating lease rent expense. Pursuant to the said clarification the assessee was required to recognize in its annual audited accounts the scheduled rent increments over the lease term on a straight line basis in respect of all existing operating lease agreements remained in force on or after 2001. The assessee adopted the method prescribed in the Accounting Standard-19 for accounting of operating leases in the relevant year under consideration since the relevant clarification to AS-19 was issued by ICAI only in the relevant year. The assessee therefore had to compute the impact of such straight-lining of lease rent from 01.04.2001 up to 31.03.2007 which was determined at Rs 39,718,000/- and the same was accounted under the head "Prior Period Expenses' in the Profit &Loss account. A further sum of Rs.40,647,000/- was determined as the current year's expense on account of straight-fining of lease rent which was debited to the Profit &Loss account. In the return of income filed for the A.Y. 2008-09, the as....
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....n in the Accounting Standards which are followed in the determination of accounting income. Since the income tax law does to lay down any such rules, the tax authorities are not required to examine the computation of the valuation of inventories and its effect on computation of income. However, in case of depreciation on assets, different rules accounting guidelines are laid down in the Accounting standards vis a vis Income tax Act, 1961. Accordingly, in such cases the provisions & rules laid down in LT Act, 1961 & LT. Rules, 1962 are to be followed. The Apex Court observed that under Section 211 of the Companies Act, 1955 every company is mandatorily required to prepare its accounts in accordance with the Accounting Standard, presented by the Central Government in consultation with National Advisory Committee on Accounting Standards and at present the Accounting Standards prescribed by the Institute is deemed to be the Accounting Standards which are to be complied by all the companies. The Supreme Court therefore accorded Judicial recognition to the accounting standards issued by ICAI and the profits determined in accordance with the accounting guidelines laid down by the prescrib....
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....rcial profits of the assessee company, In light of the law down by the Apex Court since there are no contrary or specific provisions in the Income-tax Act, 1961 in respect of accounting of lease rentals, the expenditure of Rs 40,847,000/- so recognized in the Profit & Loss account is deductible 137 while computing profits of the business. We note that ld CIT(A) has rightly held that assessee is entitled to claim deduction of Rs. 40,647,000/- on account of lease rent, observing the following: "13.4 1 have considered the facts of the case. The assessee had taken several assets on operating lease basis. In certain agreements, there was clause for scheduled increase in lease rent. Earlier, the assessee was not taking into account such scheduled increase while debiting the least rent. However, ICAI issued AS-19 for accounting of operating lease and a clarification relevant to the issue was issued in the year under consideration. As a consequence, the assessee had to compute impact of straight-lining of lease rent from 01.04.2001 to 31.03.2007 which was determined at Rs. 3,97,18,000/- and the same was accounted under the head prior period expenses'. For the current year, a f....
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..... 284 ITR 323, though he has not specifically mentioned the same. However, in the said decision itself, Hon'ble Supreme Court has clarified that the bar on claiming a deduction not claimed in the return does not apply on the appellate authority. In the decisions in the case of National Thermal Power Co Ltd. (xupro) and Jute Corporation India Ltd. (supra) Hon'ble Supreme Court has held that appellate authority has power even to admit a claim not made in the proceedings before the lower authority. Power of CIT(A) to consider claim not made in the return has also been upheld in the decision of Delhi High Court in the case of CIT v. Jindal Saw Pipes Ltd. 328 ITR 338 and by Bombay High Court in the case of CIT v. Pruthvi Brokers and Shareholders P. Ltd. 349 ITR 336. It is also noted, that jurisdictional bench of tribunal, in the case of DCIT, Circle-50, Kolkata v. Ramesh Chandra Kedia ITA No. 2072/Kol/2007, has held after considering various decisions, including in the case of Goetze India Ltd. (supro) that CIT(A) has power to admit additional ground claiming relief not claimed in the return and without filing revised return, even if the same results in assessed income going bel....
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....ally,he held that the lease payment under the operating lease should be recognised as an item of the P&L A/c on a straight line basis over the lease period. He deleted the addition made by the AO. 8.Before us,the DR supported the order of the AO.AR relied upon the order of the FAA and stated that the assessee followed the mandate of AS-19, that the provision was made on a scientific basis, that rent payable was allowable as per the section 30 of the Act. 9.We find that the AO had made the disallowance as he was of the opinion that it was a prepaid expense and that it could not be claimed during the year under appeal, that the assessee had claimed the expenditure as per the provisions of AS-19, that the agreement entered into by the assessee was in the nature of operating lease as defined in AS-19, as per the accounting standard in such cases the payments have to be considered as an item of P&L account on a straight line basis over the lease period. The FAA had given a categorical finding of fact that the provision of Rs.1.08 crores was in respect of the liability that had accrued during the FY 2009-10.We are of the opinion that, by following AS-19 the assessee has....
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....ose of allowability under the said section. The ld. DR placed reliance on the decision of the Rajasthan High Court in the case of CIT Vs. Udaypur Distillery (1986) 24 taxman 282 where it has been held that the interest paid by the assessee on arrears of sales tax should be allowed as a deduction under section 37(1). The ld. DR submitted that applying the ratio of the said decision to the issue under consideration the interest on electricity tax should be considered together for the purpose of allowability under section 43B of the Act. 29. We have heard the parties and perused the material on record. The assessee has made a provision of Rs. 2,10,36,953/- towards interest for nonpayment of Electricity Tax. The AO disallowed the same under section 43B stating that the interest payable is part and parcel of the Electricity Tax. The contention of the assessee is that the interest is not part of the tax payable and is compensatory in nature that should be allowed as deduction under section 37 of the Act. Therefore the question before us for consideration is whether the interest levied on unpaid portion of Electricity Tax is part of the tax and hence to be allowed only on payment basis....
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....efore, unpaid amount of interest is not liable to be disallowed under Section 43B. 42. The operative para of the said decision is as under: 6. We have carefully examined the scope and ambit of Section 43B of the Act. In our view, this section has two parts. The first part is that whether the interest paid in addition will at all be deductible under this section and if so, then the question would arise whether the assessee would be entitled to the deduction until and unless the said amount is actually paid. So far as this case is concerned, we are not concerned with the second part. Therefore, let us concentrate ourselves on the first part of the Section 43B of the Act. The Question that is to be decided is, whether the interest paid under Section 43B(a) of the Act would be deductible under the said section. No dispute has been raised by Mr. Agarwal, learned advocate appearing for the Department, that in this particular case Section 43B(a) would be applicable. The Section 43B(a), as noted earlier, provides, notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of (a) any sum payable by the a....
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....ding to the Supreme Court, if the cess was not paid within the prescribed period, a larger sum would become payable as cess. We have not noticed the nature of Sub-section (3) of Section 236 of the Calcutta Municipal Act, which is more or less on similar terms. It is also a like expression as used in Section 3(3) of the U.P. Sugarcane Cess Act, 1956, which enjoins that 'interest shall be payable'. The Supreme Court was of the view 'that in truth the interest provided under Section 3(3) of the U.P. Sugarcane Cess Act, 1956, was in the nature of compensation paid to the Government for delay in the payment of cess. It was not by way of penalty for which provision has been separately made by Section 3(5). From the above, we cannot agree with Mr. Agarwal, learned advocate for the Revenue, that since the principle laid down in the said decision of the Supreme Court cannot be applied to the facts of this case, as we find that Sabyasachi Mukherjee, J. (as His Lordship then was) in the aforesaid Division Bench decision considered the Cess Act as well as the Calcutta Municipal Act, with which we are not therefore (sic), it cannot be disputed that the decision of Hindustan....
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....ure and not a penalty/tax. 43. We also filed that the Hon'ble Calcutta High Court in the case of CIT v. E.L. Properties (P) Ltd. (supra) has held as under (short notes) : It is settled beyond dispute that interest on late payment of municipal rates is not in the nature of a payment of penalty, and is thus clearly deductible as a general business expense under Section 37. The requirement of Section 43B that even for assessees following the mercantile system, payments by way of tax, duty, cess, etc. cannot be claimed as deductions unless actual payment has been made in the previous year, is also not applicable in this case, because the words of the section encompass the municipal rates but interest thereon--CIT v. Padmavati Raje Cotton Mills Ltd. and Hindustan Motors Ltd. v. CIT followed. Interest payable on unpaid municipal rates is not in the nature of penalty and therefore, it is clearly deductible under Section 37; Section 43B is also not attracted as it is applicable to municipal rates and not to interest thereon. 31. We also notice that the Hon'ble High Court of Telangana & Andhra Pradesh in the case of CIT vs Andhra Sugars Ltd ([2014] 52 t....
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....the AO by holding that "20.2 Decision: I have carefully considered the submissions of the appellant. The contention of the appellant that the capital investment subsidy received from the West Bengal Government for expansion of its Textile unit under the West Bengal Incentive Scheme 2004 are not connected with any specific machinery or plant hence the same cannot be treated as "cost directly or indirectly met by any other person" within the meaning of explanation to Section 43(1). The appellant has heavily relied on the ITAT in the case of Godrej Agrovet Ltd. and other decisions. The ruling of Supreme Court in the case of P.J. Chemicals (120 ITR 830) held that the subsidy received from Government but not for the specific purpose of meeting a portion of the cost of assets, though quantified as percentage of such cost, and the same is therefore not deductible from the actual cost" for the purpose of calculation of depreciation. On perusal of the Incentive Scheme, I find that the subsidy has been granted for the purpose of expansion of the existing plant of the appellant. It is also not disputed that the subsidy has been granted only because of capital expenditure inc....
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.... or indirectly, to meet any portion of the 'actual cost'. The expression 'actual cost' in section 43(1) of the Income Tax Act,1961, needs to be interpreted liberally. Such a subsidy does not partake of the incidents which attract the conditions for its deductibility from 'actual cost'. The amount of subsidy is not to be deducted from the 'actual cost' under section 43(1) for the purpose of calculation of depreciation etc." 36. The argument of the revenue is that the such incentive is to be adjusted against the actual cost of the Plant and Machinery as per the provisions of Explanation 10 to section 43(1) and that the decision of the Hon'ble Supreme Court cannot be applied in assessee's case since the same was rendered prior to insertion of the Explanation 10 to section 43. Therefore before proceeding further we will look at the provisions of Explanation 10 to section 43(1) which reads as under Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by wh....
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....ntre concerned finally or permanently. Such permanent or final registration must be valid and remain in force. However, in respect of subsidy on investment in plant and machinery the undertaking concerned may by provisionally or temporarily registered on or after the 1st April, 2004 and valid registration to the effect may be accepted in place of permanent or final registration and the amount of subsidy shall be judged on the quantum of investment in plant & machinery as verified and accepted by the Registering Authority. (ii) Industrial Co-operatives, undertakings assisted by K.VI.C. or W.B.K.V.L. Board as well as the undertaking set up under IRDP/ SESRU/IUEP/SEEUY and other similar self employment schemes receiving benefits in respect of any of the items specified under this Scheme shall also be eligible to get the benefit of other items only under this Scheme. 6.1.3 In case of tourism unit' eligibility certificate shall be issued by the West Bengal Tourism Development Corporation on satisfaction of arrangement of finance as mentioned at sub-para (b) of para 6.1.1 and the registration certificate shall be Issued by the Directorate of Tourism and tha....
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....ined reading of the above clauses of the scheme establishes the fact that the incentive scheme is for establishing industries in the state and that investment in Plant and Machinery is used as a basis for calculating the incentive subject to the eligible unit fulfilling various conditions stipulated in clause 6 above. Therefore, in our considered view when the incentive is to encourage setting up of the industry, it does not go to reduce the actual cost, even though the amount of incentive was quantified on basis of the percentage of the total investment made by the assessee. In this regard we also place reliance on the decision of the Jurisdictional High Court in the case Pr. CIT Vs M/s. Welspun Steel Ltd (Appeal No.1743 of 2016 dated 26/02/2019) and also on the decisions of the Gujarat High Court in the case of CIT v/s. Grace Paper Industries Pvt. Ltd.,reported in 183 ITR 591 and CIT v/s. Swastik Sanitary Works Ltd., reported in 286 ITR 544. Accordingly, we hold that the incentive cannot be reduced from the actual cost of Plant and Machinery and that resultant disallowance of depreciation be deleted. This ground is allowed in favour of the assessee. Transfer Pricing Adjustment....
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.... Act. Additional Ground no. 5- Treating fertilizer subsidy as a capital receipt and therefore not charging it to tax under normal provisions of the Act and excluding it while computing book profits u/s 115JB of the Act. Additional Ground no. 6- Treating freight subsidy as a capital receipt and therefore not charging it to tax under normal provisions of the Act and excluding it while computing book profits u/s 115JB of the Act. 4. 25.07.2023 Additional ground no. 7 Treating sales tax subsidy as a capital receipt and therefore not charging it to tax under normal provisions of the Act and excluding it while computing book profits u/s 115JB of the Act. 43. With regard to the admission of the additional grounds, the ld. AR and ld DR presented elaborate arguments and also made written submissions which have been taken on record. 44. We have heard the parties and perused the material on record. From the perusal of the additional grounds as tabulated above, we are convinced that its adjudication does not require any fresh investigation of facts and involves substantial question of law. Therefore respectfully following the judgement of the Hon'ble Supreme Court in the c....
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.... raised before us based on certain judicial pronouncements which happened subsequent to the appellate proceedings. At the same time we see merit in the argument of the ld DR that the treatment of subsidies and incentives are not uniform across all Schemes and that the various clauses, terms and conditions of the specific scheme need to be examined before applying the decisions of the Hon'ble High Courts and Tribunals to assessee's case. Since the AO has not scrutinized these issues and since the issues require factual verification, we are remitting the issues of treatment of incentives under Market Linked Focus Product Scheme, fertilizer subsidy and sales tax subsidy as capital receipt back to the AO for a denovo examination. The AO is directed to call for necessary details and keep in mind the judicial pronouncements rendered in this regard to decide in accordance with law. Needless to say that the assessee be given an opportunity of being heard. 48. In the result, the appeal of assessee is partly allowed. ITA No. 1248/Mum/2017- Revenue's Appeal Disallowance under section 14A- Ground No. 1 to 4 49. The revenue is in appeal against the relief given by the CI....
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....onsidered for the purpose of computing book profits under section 115JB of the Act. Accordingly, this contention of the Revenue is rejected. Disallowance under section 40A(ia) - Ground No.5 52. The AO from the perusal of the Audit Report under section 44AB noticed that assessee has made a provision of Rs. 3,19,63,955/- for the year ended 31.03.2011 on estimated basis pending receipt of bills from the parties. The AO called on the assessee to submit why disallowance under section 40(a) (ia) of the Act cannot be made. The assessee submitted that the provision is made on estimated basis towards services is utilized from vendors and that the assessee has not received the actual bills from the vendors. The assessee accordingly submitted that the assessee is not the person responsible for deducting TDS and therefore, no disallowance under section 40(a)(ia). The assessee relied on the decision of the Co-ordinate Bench in the case of Pfizer Ltd. (ITA No. 1667 and 1765/Mum/2010 & IDBI Vs. ITO 107 ITD 45 (Mumbai). The AO did not accept the submissions of the assessee and proceeded to make disallowance under section 40(a)(ia) of the entire amount of provision made by the assessee to the....
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.... assessee and proceeded to make an adjustment of Rs. 10,05,32,813/-. On further appeal, the CIT(A) deleted he addition by placing reliance on the decision of his predecessors who have been consistently holding the issue in favour of the assessee from AY 2005-06 to AY 2010-11. 56. We notice that the Co-ordinate Bench in assesee's own case for AY 2010-11 has considered a similar issues and held that "25.1 The Assessing Officer made addition of Rs.17,57,56,385/- on account of CENVAT credit in respect of closing stock. The CIT(A) allowed assessee's claim by following the decision of his predecessor in assessment year 2005-06 to 2008-09, wherein the CIT(A) had in turn followed the decision of the Hon'ble Apex Court in the case of CIT vs. Indo Nippon Chemical Co. Ltd., reported as 261 ITR 275(SC). The ld. Authorized Representative for the assessee further pointed that the Tribunal in assessment year 2008-09 in ITA No.3033/Mum/2012(supra) had decided this issue in favour of the assessee. We do not find any infirmity in the findings of CIT(A) in deleting the addition by following the decision of Hon'ble Apex Court. The Coordinate Bench of the Tribunal i....
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.... 31.1 This issue is identical to the one already adjudicated by the Tribunal in assessee's own case for assessment year 2009-10 (supra). The relevant extract of the finding of the Tribunal read as under:- "5. We have heard rival submissions. We find that this issue is already covered in favour of the assessee by the orders of this Tribunal from A.Yrs 2003-04 to 2008-09. We also find that for A.Y.2006-07, the revenue had carried this matter to the Hon'ble Jurisdictional High Court and the Hon'ble Jurisdictional High Court in Income Tax Appeal No.433/2015 dated 15/01/2018 had held that the question raised by the revenue does not give raise to any substantial question of law and accordingly, did not entertain the same. This goes to prove that the order passed by this Tribunal on the impugned issue had attained finality. Respectfully following the same, the ground No. 4 raised by the assessee is allowed." The CIT(A) has allowed relief to the assessee by following the decision of Tribunal in assessee's own case for assessment year 2003-04 to 2006-07. We find no infirmity in the impugned order. Accordingly, ground No.5 of the appeal is dismissed.....
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....rdinate bench on this issue in assessee's own case for AY 2010-11 is as follows - 13. We have heard the submissions made by rival sides. We find that identical issue was raised in an appeal by the assessee before the Tribunal in assessment year 2009-10. The Tribunal in turn following the order of Co-ordinate Bench in assessee's own case in ITA No.3033/Mum/2012 for assessment year 2008-09 decided on 09/12/2015 allowed assessee's claim and held he expenditure in respect of ESOP as revenue in nature. No contrary decision has been placed by ld. Departmental Representative. Respectfully following the decisions of Coordinate Bench of the Tribunal in assessee's own case for the preceding assessment years we hold ESOP expenditure as revenue in nature. The ground No.5 of the appeal is allowed for parity of reasons. 65. We notice that the facts for the year under consideration are identical and therefore we see no reason to take a different view on the impugned issue. Accordingly we dismissed the ground raised by the Revenue. 66. While contending the issue of CIT(A) deleting the addition made towards expenditure on account of catalyst deployed in plant through ....
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....s been capitalized for the purpose of taxation, it was being claimed as expense. Capitalisation was done on the basis of binding directives of ICAl Many of the spares were procured as back as 1986 but capitalized now because of the change in the accounting standards. The assessee relying on the decision of the Hon'ble Supreme Court in the case of Kedarmath Jute Mfg. Co. Ltd., v. Commissioner of Income-tax (1971) 82 ITR 363, contended that entries in the books of account cannot be decisive or conclusive, for determining the taxability of income. The assessee contended in the light of the decision of the jurisdictional High Court in the case of Anil Bulk Carriers P. Ltd. v. Commissioner of Income tax(2005) 276 ITR 625 and in the case of Commissioner of Income tax v. Swarup Vegetable Products India Ltd., (2005) 277 ITR 60, on the subject to depreciation in the value due to passage of time is to be recognized. 21.Coming to the objection of the revenue that spares and catalysts were carried forward from year to year and by the year 2002-03, it had lost its commercial value and therefore, the claim was without merit. The learned AR's submission that the capitalization wa....
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....that one of the major reason for this claim now made is the amalgamation of IGFL with Aditya Birla Muva Ltd., and the loss is passed on to the amalgamated company. We are unable to subscribe to the view canvassed by the revenue that whether the collaboration took place in this year or not, the fact that the accounting standard was changed by the ICAl during the year is not disputed. 23. We find that on a similar issue which was agitated before the Cuttack bench of the Tribunal in the case of National Aluminium Co. Ltd., (supra) the Tribunal held that the valuation taken of obsolescence loss at 20% of the historical cost cannot be said to be without any basis not it is improper. Consequentially, the claim of the assessee after three years, the Tribunal held, is to be allowed. The same decision on principle is applicable in the instant case of the assessee as well. The assessee capitalized these items on account of the change in the accounting standard prescribed by the ICAI. The objection by the revenue that the assessee should have claimed it in the earlier years, or the basis for claiming this during the year under consideration is because the assessee started making prof....
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.... 70. Ground No.13 is with regard to CIT(A) allowing the claim of the assessee of sale of certified emission receipt. The ld AR submitted that this issue is also covered by the decision of the coordinate bench in assessee's own case for AY 2010-11 and facts being identical, the decision is squarely applicable for the year under consideration also. The ld AR drew our attention to the relevant observations of the coordinate bench as extracted below - 33. Ground No.7 : 7. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the proceedings from sale of certified emission reduction of Rs. 4,11,58,512/- relying upon the decision in the case of My Home Power Ltd vs. DCIT, Central Circle - 7 (2012) 27 taxmann.com.27, without appreciating the facts of the case." 33.1 This issue is identical to the one already adjudicated by the Tribunal in assessee's own case for assessment year 2009-10. The relevant extract of the finding of the Tribunal on this issue read as under:- "16. The ground No.3 raised by the revenue is with regard to challenging the action of the ld. CIT(A) in treating the receipt on account ....