2012 (2) TMI 545 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of amortization claim u/s 35D.
2. Disallowance of bad debts u/s 36(1)(iii).
3. Addition on account of unutilized CENVAT credit.
4. Disallowance of deduction u/s 80HHC in respect of DEPB profit.
5. Disallowance of excise duty and bonus paid u/s 43B.
6. Disallowance of contribution to provident fund.
7. Disallowance of maintenance of livestock.
8. Computation of deduction u/s 80HHC for book profit u/s 115JB.

Summary:

1. Disallowance of Amortization Claim u/s 35D:
The assessee's claim for amortization of registration fees paid for increasing authorized share capital was disallowed by the Assessing Officer (AO) and upheld by the Commissioner (Appeals). The Tribunal agreed with the Commissioner (Appeals) that the expenditure did not qualify for deduction u/s 35D as it was not incurred for public subscription of shares.

2. Disallowance of Bad Debts u/s 36(1)(iii):
The AO disallowed the bad debts claim on the grounds that the debts were not proven to be bad. The Commissioner (Appeals) upheld this disallowance. However, the Tribunal, following the Supreme Court judgment in TRF Ltd. v/s CIT, remitted the matter back to the AO to verify if the debts were written off in the books, directing allowance of the claim if they were.

3. Addition on Account of Unutilized CENVAT Credit:
The AO added the unutilized CENVAT credit to the closing stock value. The Commissioner (Appeals) directed adjustments for stocks, purchases, sales, and excise duty payments. The Tribunal restored the issue to the AO for de novo adjudication as per the Bombay High Court's ruling in Mahalaxmi Glass Works Pvt. Ltd.

4. Disallowance of Deduction u/s 80HHC in Respect of DEPB Profit:
The AO disallowed the deduction u/s 80HHC due to export losses. The Commissioner (Appeals) upheld the disallowance except for DEPB utilized for imports. The Tribunal, following the Supreme Court judgment in Topman Exports v/s CIT, remitted the issue back to the AO for fresh adjudication.

5. Disallowance of Excise Duty and Bonus Paid u/s 43B:
The AO disallowed claims for excise duty and bonus due to lack of evidence. The Commissioner (Appeals) directed verification for bonus payments and rejected the excise duty claim. The Tribunal upheld the Commissioner (Appeals)'s findings, dismissing the assessee's ground on excise duty and allowing the bonus claim subject to verification.

6. Disallowance of Contribution to Provident Fund:
The AO disallowed the contribution to provident fund due to lack of evidence. The Commissioner (Appeals) directed re-examination of payments made within the grace period. The Tribunal, following the Supreme Court judgment in CIT v/s Vinay Cement Ltd., allowed the deduction for payments made before filing the return.

7. Disallowance of Maintenance of Livestock:
The AO disallowed the expenditure on livestock maintenance, not considering it part of the assessee's business. The Commissioner (Appeals) allowed the expenditure as a staff welfare measure. The Tribunal upheld this decision, recognizing the commercial expediency of the expenditure.

8. Computation of Deduction u/s 80HHC for Book Profit u/s 115JB:
The Tribunal directed the AO to apply the Supreme Court's judgment in Ajanta Pharma Ltd. v/s CIT for computing the deduction u/s 80HHC for book profit u/s 115JB, allowing the ground for statistical purposes.

Conclusion:
The appeals by the assessee and the Revenue were partly allowed, and the cross objection by the assessee was dismissed. The Tribunal directed the AO to re-examine several issues in light of relevant judicial precedents.