Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 62 - ITAT MUMBAIWrite-off or waiver of advance given to its subsidiary - Whether allowable as deduction under Section 36(1)(vii)/37(1)/28 and/or any other provision of the Act? - HELD THAT:- In the present case, it is not in dispute that the assessee earned interest income of ₹ 39,00,00,000/- and assignment charges of ₹ 10,45,00,000/- from the transaction of development of NGE land. Following the ratio laid down by the Hon'ble Supreme Court in the case of T. Veerabhadra Rao [1985 (7) TMI 2 - SUPREME COURT] which has been applied by the Hon'ble Bombay High Court in Shreyas S Morakhia [2012 (3) TMI 103 - BOMBAY HIGH COURT] we find that the income offered by the assessee in the form of interest and assignment charges formed part of the entire debt owned by the assessee from NGE and since the assessee had offered to tax a part of the debt, the requirement of Section 36(2) of the Act stood satisfied and the assessee is eligible to claim the deduction under Section 36(1)(vii). Since we have accepted the plea of the assessee for deduction of the said sum in terms of Sec. 36(1)(vii) of the Act, the alternate pleas made by the assessee for deductibility of the said sum in terms of Sec. 37(1) of the Act or as a 'business loss' in terms of Sec. 28 of the Act, are rendered academic and are not being adjudicated for the present. Accordingly, Ground of appeal no. 1 of the assessee is allowed. Disallowance of claim of Short Term Capital Loss and Long Term Capital Loss claimed by the assessee on sale of assets used for Research & Development activities for which deduction under Section 35 of the Act was already claimed by the assessee holding it to be double deduction - HELD THAT:- Issue is decided against the assessee by the Tribunal in assessee's own case [2013 (9) TMI 522 - ITAT, MUMBAI] holding that the claim of short term and long term loss will amount to double deduction, which is not permissible. Since there is no change in facts, following the decision of our co-ordinate Bench in assessee's own case, this Ground of appeal is decided against the assessee. Disallowance of claim of special pension liability based on actuarial valuation - HELD THAT:- Since the Assessing Officer himself has allowed the claim of the assessee under Section 35DDA of the Act in subsequent years, we direct the Assessing Officer to allow the claim under Section 35DDA of the Act for the year under consideration as the nature of payment in all the years is the same, there being no change in facts. Thus, on this Ground, assessee partly succeeds. Addition of value of closing stock on account of unutilised MODVAT Credit applying the provisions of Section 145A - HELD THAT:- Irrespective of the method of accounting followed by the assessee, i.e. 'Inclusive method', wherein the taxes are included in the opening stock, purchases, etc. or the 'Exclusive method', the MODVAT credit does not have any impact on the profit of the assessee. Thus, following the ratio laid down by the Hon'ble Supreme Court in the case of Indo Nippon Chemicals Co. Ltd. [2003 (1) TMI 8 - SUPREME COURT] and Diamond Dye Chem Ltd. [2017 (7) TMI 616 - BOMBAY HIGH COURT] we set-aside the order of the CIT (A) and direct the Assessing Officer to delete the addition made on account of unutilised MODVAT credit. This Ground of appeal is accordingly allowed. Manner of computation of deduction under Section 80HHC - HELD THAT:- Receipts by way of income from Services rendered and Property Development activity is concerned, undoubtedly the same are in respect of activities which fall within the ambit of 'income from business', a treatment which has been accepted by the Revenue in the past years also. AO has excluded 90% of the above items by applying Explanation (baa) to Sec. 80HHC of the Act on the premise that said receipts are not directly related to exports. Pertinently, the said position taken by the Assessing Officer is in variance with his stand in the earlier assessment years, as contended by the Ld. Representative for the assessee. Earnings by way of Services rendered and Property Development activity as well as income from scrap is an integral part of diverse activities being carried out by the assessee and the income has otherwise also been assessed from such activities as business income. In fact, the Ld. Representative pointed out, without controversion, that such receipts do figure as a part of 'total turnover' of business for the purpose of computing deduction under Section 80HHC of the Act. We are also in agreement with the Ld. Representative that so far as scrap income is concerned, since it has been generated from production process and assessee is not in the business of sale of scrap, any income from such scrap tantamounts to recoupment of cost of raw material/production and, therefore, is includible in the 'profits of business' for the purpose of Sec. 80HHC of the Act. The requirement of reducing 90% of such receipts from the 'profits of business' as contained in Explanation (baa) to Sec. 80HHC of the Act, in our view, is not relevant qua the aforesaid three receipts, since same are in the nature of operational incomes. Thus, on this aspect, assessee succeeds. Insofar as receipt from Royalty is concerned, the same has been rightly excluded as required by Explanation (baa) to Sec. 80HHC of the Act by the Assessing Officer, which is hereby affirmed. Insofar as the alternate plea of the assessee for exclusion of the same from the figure of total turnover is concerned, the Assessing Officer shall verify the same and thereafter decide on the plea of the assessee afresh. Thus, this Ground of appeal is partly allowed.
|