TaxTMI 
TaxTMI 
2026 (6) TMI 330
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....2011-12 Assessee 2 8504/Mum/2025 ITBA/NFAC/S/250/2025- 26/1081780142(1) 15.10.2025 ACIT-15(2)(1), Mumbai 07.03.2015 143(3) 2012-13 Assessee 3 8505/Mum/2025 ITBA/NFAC/S/250/2025- 26/1081780574(1) 15.10.2025 ACIT-15(2)(1), Mumbai 02.03.2016 143(3) 2013-14 Assessee 4 8506/Mum/2025 ITBA/NFAC/S/250/2025- 26/1081781159(1) 15.10.2025 ACIT-15(2)(1), Mumbai 27.12.2016 143(3) 2014-15 Assessee 5 8507/Mum/2025 ITBA/NFAC/S/250/2025- 26/1081781687(1) 15.10.2025 ACIT-15(2)(1), Mumbai 29.12.2017 143(3) 2015-16 Assessee 6 536/Mum/2026 ITBA/NFAC/S/250/2025- 26/1081779624(1) 15.10.2025 ACIT-15(2)(1), Mumbai 25.03.2014 143(3) 2011-12 Revenue 7 537/Mum/2026 ITBA/NFAC/S/250/2025- 26/1081780574(1) 15.10.2025 ACIT-15(2)(1), Mumbai 02.03.2016 143(3) 2013-14 Revenue 2. This bunch of five appeals filed by the assessee and two appeals by the Revenue have certain common issues with similar facts pattern and therefore, are taken up together for adjudication by passing this consolidated order. 2.1. There is a delay of 21 days in filing the two ....
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....rred to the decision of Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT(A) (2018) 402 ITR 640 (SC), Walfort Share and Stock Brokers (2010) 326 ITR 1 (SC) and Redington (India) Ltd. v. CIT(A) (2017) 77 taxmann.com 257 (Mad) to confirm the disallowance made by the ld. AO. In respect of the decision of Coordinate Bench in assessee's own case for A.Y. 2010-11 in ITA no. 7342/Mum/2017 dated 10.5.2022, he noted that this appeal by the Revenue was dismissed on the ground of low tax effect as prescribed by the CBDT in its circular. 4. Before us, ld. Counsel for the assessee referred to the audited financial statement forming part of paper book to evidently demonstrate that there is no exempt income earned and reported by the assessee for the year under consideration. He placed reliance on the decision of Hon'ble Supreme Court in the case of Oil Industry Development Board (supra) as well as on the decision of Cheminvest Ltd. (supra) which squarely covers the case of the assessee, according to which section 14A will not apply if no exempt income is received during the year relevant to the previous year, by the assessee. 4.1. In the factual matrix before us, t....
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....ssed this fact at all. We find that even assuming that Coating Specialities (India) Ltd., is a related party of the assessee, still the rent paid by the assessee @Rs.39.23 per sq.ft per month is lesser than rent paid to an unrelated party i.e. Mrs. Vandana G. Pahilwani and Mr. Ghanshyam L. Pahilwani. On this count itself, the rent paid by the assessee cannot be treated as excessive to invoke the provisions of Section 40A(2) of the Act. As stated supra, in any case, the ld. AO had not brought any evidence on record by way of comparable instances of fair market value of rent to drive home the point that rent paid by the assessee is excessive or unreasonable. Hence, we have no hesitation in directing the ld. AO to delete the disallowance made u/s.40A(2)(a) of the Act in the sum of Rs. 23,15,000/- towards rent. Accordingly, the ground No.1 raised by the assessee is allowed." 5.1. CIT(A) has taken cognizance of the factual position which is identical to what has already been dealt with by the Coordinate Bench in assessee's won case (supra) except for variation in the quantum. Furthermore, no contrary material has been brought on record by the Revenue to demonstrate anything otherwise....
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....management fees as per TDS Certificate, books of accounts stating the month wise details thereon, which is enclosed in page 31 of the paper book. The aforesaid payment of management fees had been duly subjected to deduction of tax at source by the assessee. The ld. CIT(A) considering the fact that the sales to non-Asian Paints customers had increased only by 25%, held that the management fees also would be eligible for increase only to the extent of 25% and since Rs. 24,00,000/- was paid in earlier year, the payment of management fees during the year would be reasonable if the same is fixed at Rs. 30,00,000/- (Rs.24,00,000 x 25% of Rs. 24,00,000). Against this finding of the ld. CIT(A), there is no appeal by the Revenue preferred before us and only assessee is in appeal for deletion of disallowance of remaining Rs. 63,00,000/- (Rs. 93,00,000/- - Rs. 30,00,000/-). As stated earlier in ground No.1, even for this disallowance, the ld. AO had not brought any evidence on record any comparable instances to drive home the point that the payment of management fees paid by the assessee to Coating Specialities (India) Ltd., is excessive or unreasonable to invoke the provisions of Section 40A....
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....mmission paid thereon was Rs. 7,17,681/- which works out to 4.26% of sales. This goes to prove that the commission percentage actually had decreased during the year under consideration when compared to earlier year. In any case, the commission paid by the assessee to the very same party on the same per piece basis was duly allowed as deduction by the ld. AO in the A.Y.2009- 10. It is not in dispute that the said payment of commission was duly subjected to deduction of tax at source by the assessee. As stated earlier, in ground No.2 hereinabove, even for this disallowance the ld. AO had not brought any evidence on record any comparable instance to drive home the point that the payment of commission made by the assessee to MIPAC Polymers Ltd., is excessive or unreasonable to invoke the provisions of Section 40A(2) of the Act. Hence, in our considered opinion, the provisions of Section 40A(2) of the Act could not be brought into operation at all in the instant case without bringing in any comparable instances on fair market value of commission payment. Hence, we have no hesitation in deleting the disallowance of commission payment of Rs. 7,17,681/- made herein. Accordingly, the ground....
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....e the lower authorities. When the deposits are sought to be raised by the assessee company pursuant to a public advertisement in statutory prescribed format, the assessee cannot be expected to provide confirmation from all the depositors who are general public. The assessee could at best possess only the deposit application form and the mode of receipt of deposit in its records. Of course, due diligence should be taken by the assessee to ensure that all the necessary columns in the deposit application form are duly filled by the concerned depositors. In the instant case, we find all the columns in the deposit application form are duly filled which alone enabled the assessee to provide the complete list of names of the depositors, address of the depositors, PAN of the depositors and mode of receipt of deposit together with the amount thereon. Beyond this, the assessee cannot be expected to provide any further details as the deposits were raised from the general public. This is akin to share capital raised by the limited company pursuant to public issue or initial public offer. In fact, wherever the details of PAN are not available, the assessee had deducted TDS @20% while making pay....
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....e intrinsically connected with the manufacturing operations of the undertakings and hence, are eligible for deduction under section 80IB. Also, inter-unit transfers are recorded at market price in accordance with section 80IB(8) and therefore, no reduction is warranted in the claim made by the assessee. This is also a legacy issue already dealt with by the Coordinate Bench in assessee's own case for A.Y. 2010-11, wherein it was held that the sale of scrap, foreign exchange fluctuation and processing charges have direct nexus with the business of industrial undertaking and are eligible for deduction under section 80IB. It also held that inter-unit transfers are required to be valued at market price as per section 80IA(8). According to it, substituting cost basis for such transfers is not justified. This reduction made by the ld. AO was deleted. Relevant extract in this regard from the said decision are as under :- "7. The ground No.6.1 raised by the assessee is seeking deduction u/s.80IB of the Act in respect of sale of scrap, exchange gain, sundry balances written back and miscellaneous income by treating the same as profits and gains derived from eligible industrial under....
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.... of the decision of the Coordinate Bench which squarely covers the case of the assessee for the year under consideration, there being no change in material fact except for variation in quantum as well as nothing contrary was brought on record by the Revenue. Having perused the said order as well as relevant material placed on record, we do not find any infirmity in the findings arrived at by the ld. CIT(A). Ground no. 3 raised by the Revenue is dismissed. 10. In the result, appeal filed by the Revenue is dismissed. 11. We now take up appeal for A.Y. 2012-13 filed by the assessee. Ground raised by the assessee is only in respect of disallowance of Rs. 41,33,147/- made under section 14A. Stand of the assessee is that it has not earned any exempt income during the year and therefore, disallowance is not warranted, which is a settled position of law. This issue has already been adjudicated upon by us in appeal for A.Y. 2011- 12 in the above paragraphs. There being no change in material fact and position and law except for variation in quantum, our observation and findings in this regard applies mutatis mutandis. Accordingly, ground no. 1 raised by the assessee is allowed. 12. ....
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....gs also. We note that ld. CIT(A) is in gross error by making such an observation that the assessee has failed to substantiate its claim by not furnishing supporting documentation. Also, we note that this issue is squarely covered by the decision of the Coordinate Bench in assessee's own case for A.Y. 2010- 11 (supra), wherein on similar discharge of onus by the assessee by furnishing documentary evidence and explanation, addition so made was deleted including interest component on the said deposits. In the given set of facts, duly supported by the decision of the Coordinate Bench in assessee's own case, we delete the addition made both, in respect of deposits as well as interest thereon. Ground no. 2 raised by the assessee is allowed. 15. Ground no. 3 is towards disallowance of provision for doubtful debts of Rs. 18,67,000/-. Before us, it was pointed out that ld. CIT(A) has erroneously typed amount of Rs. 34,20,657/-, whereas the correct amount of disallowance is Rs. 18,67,000/-. Facts of the matter is that the assessee claimed expenditure of Rs. 18,67,000/- on account of provisions for doubtful debts in its profit and loss account. The said claim was denied to the assessee, be....
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....et, then it would constitute a provision for doubtful debt. In the latter case, the assessee would not be entitled to deduction after April 1, 1989.' Further, it has been held that coming to the second question, we may reiterate that it is not in dispute that Section 36(1)(vii) of 1961 Act applies both to Banking and Non-Banking businesses. The manner in which the write off is to be carried out has been explained hereinabove." 15.2. It is pertinent to note that this issue has also been dealt by the Coordinate Bench in the case of Asian Paints Ltd in ITA nos. 2700, 2697 and 2696/Mum/2023, dated 26.07.2024 for A.Y. 2016-17 to 2018-19. In this judicial pronouncement, reliance was placed on the decision of Hon'ble Jurisdictional High Court of Bombay in the case of CIT v. Tainwala Chemicals & Plastics India Ltd. [2013] 215 Taxman 153. Relevant extracts from the decision of the Coordinate Bench (supra) are as under: "38. In ground Nos. IX & X, assessee has challenged the disallowance of provision for doubtful debts under normal computation and adjustment to book profits u/s.115JB of the Act. 39. The brief facts are that during the year consideration, the....
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....t qualified for deduction under section 36(1)(vii) following Vijaya Bank (supra). This judgment was not considered in the earlier AY 2015-16 ITAT order 41. Further, the Hon'ble Supreme Court in Vijaya Bank (supra) itself observed at Pg. 383 and Para 8 of LPB that 'it is not in dispute that section 36(1)(vii) of the Act applies both to the Banking and Non- Banking business'. Accordingly, it appears that the Tribunal in earlier year in assessee's own case inadvertently did not consider this observation. Further, decision of Tainwala (supra) rendered by Jurisdictional High Court was not cited and therefore not considered. 42. Further, decision of Vijaya Bank (supra) is in the context of section 11 5JB qua provision for doubtful debts also followed by Karnataka High Court in CIT v. Kirloskar Systems Ltd 220 Taxman I and Hon'ble Gujarat High Court in the case of CIT v. Vodafone Essar Gujarat Ltd [2017] 397 ITR 55 for doubtful debt while computing book profit u/s.II5JB). 43. He also submitted that similar issue has arisen in the Joint venture company M/s Asian Paints PPG Pvt Ltd. The ld. CIT (A) had ruled the issue in favour of company.....
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....ver, under earlier provisions of u/s.115JB any amount set aside for meeting liabilities, other were to be added back. The than ascertained liabilities Department used to add back provision of doubtful debt in said category. However, the Supreme Court in CIT v. HCL Comnet Systems & Services [2008] 174 Taxman 118 decided matter in favour of Assessee. Thereafter, the Act was amended and a provision for diminution in the value of the asset was categorically inserted vide Finance Act 2009 (i.e. under clause (i) However, even after such amendment, Jurisdictional HC in 8. "Whether, on Tainwala Chemicals above observed that the facts and circumstances of the case, the Tribunal was justified in upholding the decision of the CIT (A), in deleting the addition on account of provision for doubtful debts to the book profit under Section 115JB of the Act without appreciating that the disallowance / addition on account of diminution in the value of assets is mandatory in view of Explanation (I) to Section115JB of the Act ? In so far as question (k) is concerned, the grievance of the Revenue is that for the purpose of computing profits under Section 115JB, the provision of doubtful debts has to be ....
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....c- 12 SPMBR 35,922/- 18/01/2013 15/01/2013 3 4 Jul-12 Rohtak 44,764/- 16/08/2012 15/08/2012 1 5 Aug-12 Rohtak 53,260/- 17/02/2012 15/02/2012 2 6 Jan -13 Rohtak 51,287/- 18/02/2013 15/02/2013 3 7 April -12 Chinchwad 49,668/- 16/02/2012 15/02/2012 1 8 May- 12 Chinchwad 49,018/- 18706/2012 15/06/2012 3 9 June- 12 Chinchwad 48,566/- 16/07/2012 15/07/2012 1 10 Sep-12 Chinchwad 49,749/- 16/10/2012 15/10/2012 1 11 Oct. -12 Chinchwad 49,298/- 19/11/2012 15/11/2012 4 12 Dec. -12 Chinchwad 51,875/- 16/01/2013 15/01/2013 1 13 Jan -13 Chinchwad 52,825/- 16/02/2013 15/02/2013 1 14 Jan -13 Khandala 9,225/- 09/08/2013 15/02/2013 175 15 Feb-13 Khandala 21,410/- 09/08/2013 15/03/2013 147 16 Mar -13 Khandala 28,678/- 09/08/2013 15/04/2013 116 Total 7,14,897/- 16.1. Considering the facts on record as tabulated above, what ought to be disallowed is amount of Rs....
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.... given in appeal for A.Y. 2013-14 applies mutatis mutandis. Accordingly ground nos. 2 and 3 are allowed. 21. Ground no. 4 is in respect of set off claimed by the assessee for brought forward MAT credit under section 115JAA of Rs. 80,42,465/- which has not been allowed to the assessee. Contention of the assessee in this regard is that assessment for the immediately preceding year i.e. A.Y. 2013-14 has been completed under section 143(3), wherein MAT credit claimed by the assessee is accepted and available to it for set off in the subsequent years in accordance with provisions of section 115JAA. In this regard, reference was made to the assessment order for A.Y. 2013-14 placed on record. Assessee had raised this issue before the ld. CIT(A) who did not deal with the same. Taking into consideration material on record, on this issue we direct the ld. AO to consider the claim of the assessee for set off of MAT credit available to it which has been accepted in the assessment completed under section 143(3) for A.Y. 2013-14, against the tax liability under the normal provisions for the year under consideration. Ground no. 4 raised by the assessee is allowed. 22. In the result, appeal ....