2015 (9) TMI 1424 - HC - Income Tax

Appeal is admitted limited to the following two questions of law framed for consideration (i) Whether on the facts and circumstances, the ITAT was correct in law in deleting the addition of ₹ 86,19,96,884 being the sales tax exemption claimed as capital subsidy by the assessee? (ii) Whether on the facts and circumstances of case, the ITAT was correct in law in deleting the addition of ₹ 9,95,426 on account of disallowance of depreciation on the assets (buildings) not registered in the name of the assessee company?

Summary

Issues:
1. Synchronization charges under Section 80IA of the Income Tax Act.
2. Addition of sum paid to Mr. R.N. Mahindru from undisclosed sources.
3. Deletion of addition in book profits under Section 115JB regarding Fringe Benefit Tax.
4. Deletion of addition for Minimum Alternate Tax under Section 115JB related to expenditure for earning exempt income under Section 14A.

Analysis:
1. The first issue pertains to synchronization charges under Section 80IA of the Income Tax Act. The Assessing Officer had ordered the addition of a specific amount for this purpose. However, the Tribunal ruled in favor of the Revenue, leading to the decision that the Revenue did not press Question No. 3 related to this matter.

2. The second issue involves the addition of a sum paid to Mr. R.N. Mahindru from undisclosed sources. The Assessing Officer relied on Mr. Mahindru's statement under Section 132(2) of the Act, but the CIT (A) noted the retraction of this statement by Mr. Mahindru. The CIT (A) and ITAT both affirmed that there was no evidence to support the payment made by the Assessee to Mr. Mahindru from undisclosed sources. The Court found the CIT (A) and ITAT's decision plausible and declined to frame a question on this issue.

3. Moving on to the third issue, the deletion of the addition in book profits under Section 115JB regarding Fringe Benefit Tax was questioned. The Circular No. 8 of 2005 clarified that FBT would not form part of book profits for Section 115JB. The Court concluded that no substantial question of law arose in this regard.

4. Lastly, the issue of deletion of addition for Minimum Alternate Tax under Section 115JB concerning expenditure for earning exempt income under Section 14A was discussed. The ITAT held that the addition was not justified as it was in the nature of disallowance, and Explanation 115JB did not specifically mention Section 14A. The Court supported the ITAT's decision, citing the Apollo Tyres Ltd. case, and declined to frame a question on this issue.

In conclusion, the appeal was admitted limited to two questions of law framed for consideration, which involved the sales tax exemption claimed as a capital subsidy and the disallowance of depreciation on assets not registered in the name of the assessee company.