Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 428 - ITAT MUMBAIDisallowance u/s 14A attributed for earning dividend income - HELD THAT:- AO is directed to re-work disallowance u/s.14A under rule 8D(2)(iii) on investment which has yielded exempt income. Addition of unutilized CENVAT Credit - HELD THAT:- As per Department Appeal for AY 2005-06 [2023 (2) TMI 1210 - ITAT MUMBAI] 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 in the case of Indo Nippon Chemicals Co. Ltd. [2003 (1) TMI 8 - SUPREME COURT] and followed by 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. Nature of receipt - refund of sales tax - Revenue or capital receipt - HELD THAT:- Sales tax incentives received by assessee are rightly considered as Capital Receipts by Ld. CIT(A). Excise duty exemption received by assessee are capital receipts both for the purpose of computing income as per normal provision of the Act as well as book profit u/s 115JB of the Act and the addition made by Assessing Officer is deleted. Preoperative expenses - assessee itself had claimed the expenses as capital expenses and added them to its capital work-in progress/fixed assets and there is no provision in Income-tax Act permitting the allowance of such expenses - HELD THAT:- It is observed that identical issue was decided by coordinate bench of Mumbai ITAT in the case of holding company of the assessee being Ambuja Cement Limited [2022 (11) TMI 1420 - ITAT MUMBAI] held as in the books of account the assessee had capitalised the expenses does not prevent the assessee from claiming them as revenue expenses since the question of allowance of expenses has to be considered in the light of the legal position and the accounting treatment cannot be conclusive.The limited grievance raised by the Assessing Officer is thus devoid of any legally sustained merits, and we reject the same. Additional depreciation u/s 32(1)(iia) - whether additional depreciation is allowable only on “new machinery” be the first year in which it is put to use? - HELD THAT:- It is observed that coordinate bench in its later decision in the case of Ambuja Cement Limited [2022 (11) TMI 1419 - ITAT MUMBAI] holding company of assessee has allowed similar claim of depreciation. When coordinate bench of ITAT in its latest decision has decided issue in favour of assessee by holding that assessee is entitled for additional depreciation u/s 32(1)(iia), such later decision would prevail over the decision of Everst Industries Limited [2018 (4) TMI 426 - ITAT MUMBAI] relied upon by Ld DR. As a result, since this aspect of the matter is no longer res integra, we see no reasons to take any other view of the matter than the view so taken by the coordinate bench in the group concern’s case of the assessee. We uphold the plea of the assessee and direct the Assessing Officer to allow depreciation u/s.32(1)(iia) of the Act. Deduction u/s 80IA on TG-3 located at Wadi allowed - As deduction u/s. 80-IB was granted for an initial assessment year, same could not be rejected for subsequent assessment years unless relief for initial year was withdrawn. Auditor’s fee and director’s remuneration (indirect expenses) should not be apportioned for computing deduction u/s 80IA - AO is directed to allocate Head office expenses (other than auditor fees and CMA expenses) on the basis of expenditure incurred by the units vis-à-vis overall expenditure. Thus, related ground of appeal in departmental appeal is dismissed. Addition of provision for gratuity made while computing book profit u/s 115JB is deleted. Wealth tax provision is not required to be added back while computing Book Profits under Section 115JB. Disallowance u/s 14A cannot be made while computing book profit u/s.115JB. See Vireet Investments Pvt Ltd [2017 (6) TMI 1124 - ITAT DELHI] Expenditure incurred on club entrance fee and subscription fee is allowable revenue expenditure. Nature of receipts - sales proceeds of Voluntary Emission Receipts (VER's) - Sale proceeds from CERs is treated as capital receipts and accordingly, this ground of appeal raised by the assessee is accordingly allowed. Reduction in deduction u/s 80-IA on power generating undertakings due to modification in "Market Value" of electricity generated - HELD THAT:- As observed that while computing the output of the CPP, the Assessing Officer has excluded the transmission loss which was considered by assessee in their calculations but during the course of hearing before bench, assessee conceded the ground on the exclusion of the units lost in transmission for the purpose of computing the turnover of CPP. As observed that Ld AR has filed details regarding rate to be taken based upon decisions referred supra, such working was not available with the file of AO hence on this limited purpose of verification for the year under consideration, the AO is directed to verify the working as submitted by Ld AR before us and directed to consider the market value of power sold by CPP units at the Electricity rate at which CMM units at different location is purchasing electricity from SEBs as held/discussed by various courts. Accordingly, this ground of appeal is allowed for statistical purpose. Deduction u/s.80IA on Rail Infrastructure to be allowed. Delete the Adjustment on account of CENVAT in the profits of the eligible units for deduction u/s 80IA . Proportionate Head Office expenditure while computing deduction u/s 80IA/80IC - Allocate Head office expenses (other than auditor fees and CMA expenses) on the basis of expenditure incurred by the units vis-à-vis overall expenditure. LTCG on Sale of Air Pollution Control (APC) Business - sale as slump sale by invoking the provision of sec. 50B - HELD THAT:- In the present case, assessee has valued each assets separately in agreement itself and same was already on record of Assessing Officer hence the transaction would be item wise sale and such facts cannot be ignored. Hon’ble Madras High court in the case of CIT v. Shiva Distilleries Ltd [2019 (7) TMI 706 - MADRAS HIGH COURT] has held that “Where transfer price of undertaking was based on individual assets and liabilities, said sale would not qualify as 'Slump Sale' as per section 2(42C). Thus it is found that AO has wrongly invoked provisions of Section 50B of the Act for computing Income from Capital gain on sale of a divisions without transfer of other related business assets and liabilities of undertaking in the year under consideration. The assessee has correctly treated transaction of sale as item wise sale in return of income and computed Income from capital gain as applicable to sale of Individual item of assets. Thus, addition made by Assessing Officer and sustained by CIT(A) cannot be upheld and related ground of appeal is allowed. Denial of claim for deduction of Leave Encashment on provision basis - Hon'ble supreme court in the case of UOI v. Exide Industries Ltd. [2020 (4) TMI 792 - SUPREME COURT] has upheld constitutional validity of provision of section 43B(f) for provision for leave encashment liability and considering binding decision of Hon'ble Supreme Court claim cannot be allowed. However, if payment of such provision towards leave encashment is made in subsequent year, deduction may be allowed to assessee in such years if not allowed till date. Therefore, Assessing Officer is directed to verify and the same and allow the same as per our above directions. Write off of CWIP expenditure pertaining to referred projects which are part of existing business activity hence such expenditure is allowable expenditure. The addition made by Assessing Officer is thus deleted and related ground of appeal is allowed. Provision for leave encashment made while computing book profit u/s 115JB is to be deleted. Sales tax and excise duty incentive be excluded while computing book profits u/s. 115JB
|