TaxTMI 
TaxTMI 
2024 (7) TMI 1697
X X X X Extracts X X X X
X X X X Extracts X X X X
....e tax / VAT claimed as CENVAT credit. 4 Upholding the action of the AO in treating corporate advertisement as capital expenditure of Rs. 2,94,84,009/- 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. 1,47,06,437/- 6 Upholding the action of the AO of treating interest liability on Electricity Tax of Rs. 25,90,428/- is covered u/s 43B of the Act and is to be allowed on payment basis. 7 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. Additional Ground No.1 Claim of Education and Secondary and Higher Education Cess as an allowable expenditure Additional Ground No.2 Re-computation of Dividend Distribution Tax ("DDT") liability on dividends paid to non-resident shareholders at beneficial rates as per applicable Double Taxation Avoidance Agreements and claim of refund for excess taxes paid Additional Ground No.3 Treating incentives under Market Linked Focus Product Scheme as a capital receipt and therefore not charging it to tax under the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and book profit of Rs. 403,71,63,629/- as per provisions of section 115JB of the Income Tax Act, 1961, (the Act) on 29.09.2012. The assessee subsequently filed revised return on 27.03.2014 revising the income under the normal provisions of the Act to Rs. 343,33,03,740/-. The case was selected for scrutiny under CASS and the statutory notices were duly served on the assessee. A reference was made to the Transfer Pricing Officer (TPO) to determine the Arms Length Price (ALP) of the International Transaction the assessee is having with its Associated Enterprises (AE). The TPO passed an under section 92CA of the Act dated 29.01.2016 computing a TP Adjustment towards financial and performance guarantee totalling to Rs. 10,00,84,210/-. 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. 424,67,28,014/-. The AO also recomputed the book profit under section 115JB at Rs. 430,23,05,337/-. 3. Aggrieved the assessee filed the appeal before the Ld. CIT(A). The CIT(A) partly all....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inate Bench in assessee's own case for AY 2011-12 (ITA No. 1065 & 1248/Mum/2015 dated 28.12.2023 and MA 56/Mum/2024 dated 26.03.2024) The ld AR drew our attention to the findings of the Tribunal where the Tribunal has remitted the issue back to the AO with a direction to consider only those investments which are earning tax free incomes by placing reliance on ACIT Vs. Vireet Investments Pvt. Ltd. (2017) 165 ITD 27 (Del. Trib.(SB). The ld AR for the year under consideration presented the alternate argument that the AO did not record any satisfaction while rejecting the suo-moto disallowance made by the assessee towards indirect expenses. The ld AR in this regard placed reliance on CIT vs M/s.Asian Paints Ltd (ITA No.1564/Mum/2016) and Ultra Tech Cement ltd (ITA No.1401 of 2014). Therefore the ld AR argued that the AO should not have made any disallowance under section 14A r.w.r. 8D(2)(iii) without recording satisfaction and accordingly prayed that the disallowance towards indirect expenses should be restricted to the suo-moto disallowance already made by the assessee. 6. The ld. DR on the other hand, relied on the order of the lower authorities. 7. We have heard the partie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amount of expenditure directly relating to income which does not form part of total income; and (ii) an amount equal to half per cent of the annual average of the monthly average of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income : Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee." 8. From the combined reading of the above provisions, it is clear that for the purpose of application of section 14 r.w.r 8D(2)(iii) the AO has to record reasons as to why he is not satisfied with the correctness of the claim of expenditure by the assessee. In order to understand whether the AO has recorded satisfaction for the year under consideration in assessee's case, we need to look at AO's relevant findings which are extracted below - "3.2 From examination of the return, It was observed that the assessee has received an amount of Rs. 77,89,81,486/- as dividend during the year which has been claimed as exempt u/s 10 of the I.T. Act, 1961. Since the assessee has not apportioned any expenses as having been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e expenses, which has been reasonably incurred for earning the dividend income, it is difficult to allocate the amount that assessee would have spent in order to earn tax-free income, mare se from the nature of business carried on by the assessee. In order to estimate the amount spent for earning dividend, it is essential to identify the various types of expenses that assessee would have incurred directly as well as indirectly. It is also essential to understand that dividend is one of essential criteria in an investment decision. vi ) Considering the difficulty in arriving at the expenditure attributable to the earning of exempted income, the legislature in his wisdom has introduced an amendment to Section 14A(2). This amendment has prescribed the methodology for determining the expenditure attributable to earning of exempted income. By insertion of this amendment the powers vested with the A.O, are not left to his discretion rather this power of determining expenditure as per his will and whims has been diluted. This has also helped in overcoming the difficulties faced by both tax payer and tax administrators, Further it is a uniform method prescribed by the statute, whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also been considered by the decision of Co-ordinate Bench in assessee's own case for AY 20110-11 (supra) where it has been held that - 7. We find merit in the contentions of the ld. Authorized Representative for the assessee. For the purpose of computation of book profits under section115JB, disallowance made under section 14A r.w.r. 8D cannot be added. The Hon'ble Jurisdictional High Court in the case of CIT vs. Bengal Finance & Investment Pvt. Ltd.(supra) while answering the substantial question of law on this issue affirming findings of Tribunal observed : "4. So far as Question (b) is concerned, the impugned order of the Tribunal followed its decision in M/s Essar Teleholdings Ltd. v/s. DCIT in ITA No. 3850/Mum/2010 to held that an amount disallowed under Section 14-A of the Act cannot be added to arrive at book profit for purposes of Section 115JB of the Act. The Revenue's Appeal against the order of the Tribunal in M/s. Essar Teleholdings (supra) was dismissed by this Court in Income Tax Appeal No. 438 of 2012 rendered on 7th August, 2014. In view of the above, question (b) does not raise any substantial question of law". The Special Bench of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 15. We have heard the parties and perused the material on record. We noticed that on identical issues the co-ordinate bench in assessee's own case for AYs 2008-09 to 2010-11 (ITA No. 7640 to 7642/Mum/2019) has held that "3.10. Even on merits, we find that the main grievance of the Revenue is that the assessee had not debited certain expenses in the eligible unit i.e. 80IA units and thereby had claimed excess deduction u/s.80IA of the Act in the return of income. We find that this aspect has been addressed elaborately by the ld.CIT(A) and the ld. CIT(A) had deleted the said disallowances by placing reliance on various decisions of Tribunals, High Courts and Supreme Court and granted relief to the assessee. Relevant observation of the ld. CIT(A) are as under:- 6.3 I have carefully perused the facts of the case and arguments advanced by the AR The AO has observed that the appellant is booking the expenses in its P&L account net of CENVAT which is shown separately i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er any of the other four heads of income. Section 28(iiib) specifically states that income from cash assistance, by whatever name called, received or receivable by any person against exports under any scheme of the Government of India, will be income chargeable to income tax under the head "profits and gains of business or profession" If cash assistance received or receivable against exports schemes are included as being income under the head "profits and gains of business or profession", it is obvious that subsidies which go to reimbursement of cost in the production of goods of a particular business would also have to be included under the head "profits and gains of business or profession", and not under the head "income from other sources" The Hon'ble Delhi High Court in the case of CIT vs. Dharam Pal Prem Chand Ltd reported in 317 ITR 353 had decided that: "The finding of the authorities below was that the refund of excise duty was pivoted on the manufacturing activity carried on by the assessee. Once such a finding of fact had been returned, there was no need to go further and to examine the immediate and proximate source of refund of excise duty. As a ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r book, the exempt amount has been paid as is evident from the orders granting the refund which are placed. The Supreme Court after examining the affidavits passed on 11.01.2010 in the case of CIT vs. Dharam Pal Prom Chand Ltd. and after hearing both the parties, eventually dismissed the appeal of the Department against order of Delhi High Court on 22.02.2010. As is clear, the Notification dated 14.11.2002 exempts the amount of paid ensure proper control over the transactions, the Notification only requires the manufacturers to first deposit the excise duty and then claim the refund of the same next month. Thus the refund is assessee's own money itself in a way security deposit which is being refunded on submission of the evidence depositing the same. Therefore, in our view this is not an income at all. Therefore, the A.O, in our view, was not justified in making a separate addition of income and thereby denying the relief eligible u/s 80.IB of the Act on that amount." Thus, respectfully following the judicial decisions cited supra and considering the facts of the case, hold that the appellant is eligible to claim the deduction u/s 80IA of I.T. Act. 1961, I direct the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re the only source of income of the assessee during the previous year relevant to the assessment year". Accordingly, the Assessing Officer reduced the eligible deductions under section 80IA, by the amount of CENVAT credits attributable to eligible units, as the expenses were not booked through the profit and loss account, and, to that extent, the profits stood distorted/ inflated. These allocations were done on the basis of turnover "in the absence of any item wise details". Aggrieved, inter alia, by these adjustments on account of CENVAT credit, assessee carried the matter in appeal before the CIT(A) but without success. The assessee is not satisfied and is in further appeal before us. 101. We have heard the rival contentions, perused the material on record and duly considered the fact of the case in the light of the applicable legal position. 102. We find that Section 80IA(5), which has been heavily relied upon by the assessee, provides that " notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pugned adjustment on account of CENVAT in the profits of the eligible units. The assessee gets the relief accordingly. 3.12. Even on merits, the addition made by the ld. AO deserves to be deleted in view of the aforesaid decision of this Tribunal. 3.13. In view of the aforesaid observations and respectfully following the various judicial precedents, the reopening made by the ld. AO for A.Y.2008-09 is bad in law and is hereby quashed. Accordingly, the appeal of the assessee is allowed. On merits, the issue is already covered in favour of the assessee by relying the decision of this Tribunal in the case of Ambuja cements referred to supra. Accordingly, the grounds raised by the Revenue are dismissed." 16. We further notice that a similar view is held by the coordinate bench in assessee's own case for AY 2011-12 also. We also notice that the facts for the year under consideration are identical and therefore respectfully following the decisions of Co-ordinate Bench in assessee's own case, we allow the issue in favour of the assessee. Treating corporate advertisement as capital expenditure - Ground No.4 17. The AO observed during the assessment proceed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e co-ordinate bench, we allow the grounds raised by the assessee and delete the addition made in this regard" 19. We notice that the above view has been consistently held by the coordinate Bench in assessee's own case for AY 2009-10 also. Since the facts of the year under consideration are identical we are of the considered view that the above decision of the co-ordinate bench is applicable to the year under consideration also and accordingly we delete the addition made in this regard. The ground raised by the assessee is hereby allowed. Disallowance of lease equalization charges - Ground No.5 20. During the course of assessment proceedings, the assessee made a claim through notes to return of income in respect of lease equalisation charges, The assessee submitted before the AO that the assessee has debited Rs. 1,47,06,437/- as lease equalization charges to the P&L A/c as per accounting standard 19 which is mandatorily applicable to the assessee company. The assessee further submitted that the said charges being ascertained liability as per the mandatory accounting standard the same shall be allowable as an expenditure under section 37. The assessee also submitted that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ht on record. The Ld Counsel submitted before us that during the financial year 2007-08 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s position by citing examples. In case of inventories, the valuation rules are laid down 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 pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....traight-lining of lease rentals reflected a better & accurate picture of the true commercial 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w strength from the decision of the Hon'ble Supreme in the case of Goetze India Ltd. 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tific method,that the assessee was following the same method in earlier years.Finally,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 durin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. In the given case, there is no dispute that the assessee has not paid the Electricity Tax and it is also not in dispute that the interest charged on the same is unpaid. The assessee placed reliance on various judicial pronouncements to contend that interest which is compensatory in nature is not part of tax and therefore provisions of section 43B are not applicable to unpaid interest. Before proceeding further we will look at the relevant provisions of section 43B of the Act and the Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003, which read as under - Certain deductions to be only on actual payment. 43B. Notwithstanding anything contained in any other provision of this Act, a dedu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force. In our view, this question has been set at rest by the decision of the Supreme Court as well as by another decision of this Court. 7. In Mahalakshmi Sugar Mills Co. v. CIT (supra), as noted herein earlier, the Supreme Court, while considering a case under Section 3(3) of the U.P. Sugarcane Cess Act, 1956, on arrears of cess payable held that the interest payable did not fall within the scope of Section 10(2)(xv) of the Indian IT Act, 1922, because it was paid by way of penalty or infringement of the Cess Act. In that actual situation the Supreme Court held that the interest payable under Section 3(3) o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Motors Ltd. (supra), as rendered by Sabyasachi Mukherjee, J. (as His Lordship then was) was so rendered applying the principles laid down in the aforesaid decision of the Supreme Court and the submission of Mr. Agarwal that the decision of the Supreme Court was not applicable in this case, cannot be alleged. That apart, we are also fortified by a recent decision of this Court in the case of Hindustan Motors Ltd. v. CIT . It appears that there was a difference of opinion on the question mentioned above between the Hon'ble Chief Justice Mr. K.C. Agarwal (as His Lordship then was) and the Hon'ble Justice Mrs. Ruma Pal (while she was in this Court). The matter was referred to a Third Judge, the Hon'ble Justice....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 taxmann.com 61 (Andhra Pradesh and Telangana)) while considering the allowability of interest on purchase duty has held a contrary view that if actual tax, duty, or cess can be deducted only on payment, interest thereon can be deducted only on making payment and that the provisions of section 43B are applicable to interest payable on purchase duty. Further the Hon'ble Rajasthan High Court in the case Shree Pipes vs DCIT ([2007] 162 Taxman 442 (Rajasthan)) had held a similar view in the context of interest on sales tax. However in the absence of decision of the jurisdictional High Court, when two contrary views are expressed by the non jurisdictional High Courts, the view favourable to the assessee need to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,82,208 was done by applying 1.74%. The CIT(A) did not accept the submission of the assessee that providing corporate guarantee is not an international transaction. However, the CIT(A) gave relief to the assessee by restricting the rate of guarantee commission at 0.5% by relying on the decision of the Co-Ordinate Bench in the case of Everest Kanto Cylinder Ltd. (ITA No. 7073/Mum/2012 dated 25.09.2014). 28. We have heard the parties and perused the material on record. It is a settled position that the guarantees given by the assessee to its AE is an international transaction and hence we are not inclined agree with the contention of the assessee that the it is not an international transaction. This contention of the assessee is accordingly dismissed. Further we notice that the co-ordinate Bench in assessee's own case for AY 2010-11 & AY 2011-12 has considered the similar issue and upheld the guarantee commission and @ 0.5% by relying on the decision of the Bombay High Court in the case of Everest Kanto Cylinder Ltd. (supra). The facts being identical for the year under consideration, we see no reason to interfere with the decision of the CIT(A). This, ground of the assessee i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ditional ground. The ld AR further submitted that the records relied upon are already part of the records and no new materials need to be examined. The ld AR also submitted that the issue could not be raised before the lower authorities since the judicial pronouncements came in subsequent to the appellate proceedings. The ld DR on the other vehemently argued that the claim of the assessee for treating certain incentives and subsidies as capital receipts are not tenable and therefore to be dismissed. The ld DR made a without prejudice submission that since the AO did not have an opportunity to examine the issue during assessment proceedings, the issues may be set aside to the AO for fresh examination. 47. We heard the parties with regard to additional ground no 3 to 7. We notice that the assessee has not raised these issues before the lower authorities and that the same is 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ia) - Ground No.2 36. The AO from the perusal of the Audit Report under section 44AB noticed that assessee has made a provision of Rs. 66,69,802/- for the year ended 31.03.2012 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 tune of Rs. 66,69,802/-. The CIT(A) deleted the disallowance by relying on the order of his predecessor for AY 2011-12. 37. We have heard both the parties on this issue. We ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he closing stock by placing reliance on the decision of the Supreme Court in the case of CIT Vs. Indo-Nippon Chemical Co. Ltd. (261 ITR 272). The AO rejected the submissions of the assessee and proceeded to make an adjustment of Rs. 25,03,57,966/-. 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. 40. We heard the parties and perused the material on record. We notice that the Co-ordinate Bench in assesee's own case for AY 2011-12 has considered a similar issues and held that "56. We notice that the Co-ordinate Bench in assesee's own case for AY 2010-11 has considered a similar issue 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). ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m the findings of CIT(A) in deleting the disallowance. Consequently, ground No.4 of the appeal by the Revenue is dismissed. 59. Considering that there is no change to the facts for the year under consideration following the above decision of the co-ordinate Bench, we dismissed the ground raised by the Revenue" 43. Respectfully following the above decision, we see no reason to interfere with the findings of the CIT(A) on this issue. Accordingly the ground raised by the revenue in this regard is dismissed. Allowance of allocation of Head Office expenses for the purpose of deduction under section 80IA - Ground No.5 44. This ground of the revenue is with regard to the decision of the CIT(A) by holding that the Head Office Expenses cannot be allocated to profits derived from 100% export oriented units falling under section 80IA of the Act and in directing to reduce interest income. We notice that this has been consistently held in favour of the assessee in assessee's own case from AY 2003-04 to 2011-12. The relevant observation of the co-ordinate bench in assessee's own case for AY 2011-12 is extracted below - " 60. Ground No.8 is with regard to the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a) in the succeeding assessment year where the assets were put to use for less than 180 days in relevant previous year. We notice that the AO has made a similar disallowance in the earlier years also i.e. AY 2010-11 and AY 2011-12 and that the coordinate bench has upheld the relief given by the CIT(A). For the year under consideration the revenue did not bring any new material on record and therefore we see no reason to take a different view from the view taken for the earlier years. Accordingly we uphold the decision of CIT(A) and dismiss the ground raised by the revenue. Allowance of ESOP expenses - Ground No.7 47. We notice that this is a recurring issue in assessee's case and that the coordinate bench has been consistently holding the issue in favour of the assessee. The relevant observations of the coordinate 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/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lready 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 of sale of certified emission as capital receipt (Carbon Credit receipts). We find that the Hon'ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd. reported in 365 ITR 82; Hon'ble Karnataka High Court in the case of CIT vs. Subhash Kabini Power Corporation Ltd reported in 385 ITR 592; Hon'ble Allahabad High Court in the case of PCIT vs L.H. Sugar Factory Pvt. Ltd. reported in 392 ITR 568 had held that Carbon Credit receipts are to be construed as capital receipts. When this was put to the ld. DR, the ld. DR fairly conceded that this issue is covered in favour of the assessee by various High Courts, but he however, prayed for verification of these figures by the ld. AO. The ld. AR also fairly agreed that verification of the figures by the ld. AO be made. Accordingly, we deem it fit and appropriate, to set aside this issue to the file of t....