2013 (7) TMI 1058 - AT - Income Tax

2017 (3) TMI 889 - AT

Issues Involved:

1. Late payment of employees' contribution to provident fund.
2. Inclusion of excise duty on finished goods/closing stock.
3. Disallowance of depreciation on provision of exchange rate difference.
4. Disallowance of MODVAT received on capital assets.
5. Disallowance of product development expenses.
6. Suppression of gross profit due to low GP ratio.
7. Notional interest on advance given to a wholly-owned subsidiary.
8. Disallowance of building repair expenses.
9. Disallowance of small charities expenses.
10. Disallowance of sales promotion expenses.
11. Disallowance of legal and professional charges.
12. Disallowance u/s 40(a)(i) for commission payment in foreign currency.
13. Addition on account of income accrued from arbitration award.
14. Disallowance of 1% of total expenses under "other expenses".
15. Disallowance of bad debts.
16. Addition in book profit u/s 115JB for provision for gratuity and bonus.

Summary of Judgment:

1. Late Payment of Employees' Contribution to Provident Fund:
The Tribunal decided against the assessee, holding that section 43B is not applicable for delayed payment of employees' contribution to PF, and the amount should be added as income as per section 2(24)(x) r.w.s section 36(1)(va).

2. Inclusion of Excise Duty on Finished Goods/Closing Stock:
The issue was remanded to the CIT(A) to verify if the excise duty was paid before the due date of filing the return of income. If paid, no addition is justified; otherwise, the addition must be made.

3. Disallowance of Depreciation on Provision of Exchange Rate Difference:
The Tribunal upheld the CIT(A)'s decision allowing depreciation, following the Supreme Court's judgment in CIT Vs. Woodward Governor India P. Ltd.

4. Disallowance of MODVAT Received on Capital Assets:
The Tribunal upheld the CIT(A)'s decision, noting that the assessee had reduced the cost of capital assets by the MODVAT credit, thus no further disallowance was warranted.

5. Disallowance of Product Development Expenses:
The Tribunal restored the AO's order, noting that the assessee had already adjusted the amount in the computation of income.

6. Suppression of Gross Profit Due to Low GP Ratio:
The Tribunal restored the AO's addition, finding no reasonable basis in the CIT(A)'s order for deleting the addition.

7. Notional Interest on Advance Given to a Wholly-Owned Subsidiary:
The Tribunal rejected the assessee's ground, following its decision in the assessee's own case for A.Y.1998-99.

8. Disallowance of Building Repair Expenses:
The Tribunal upheld the CIT(A)'s decision, finding that the expenses were capital in nature and not current repairs.

9. Disallowance of Small Charities Expenses:
The ground was not pressed by the assessee and was rejected.

10. Disallowance of Sales Promotion Expenses:
The Tribunal deleted the addition, noting that the amount had already been adjusted in the computation of income.

11. Disallowance of Legal and Professional Charges:
The Tribunal confirmed the addition but directed the AO to verify if the provision was reversed and offered as income in the subsequent year.

12. Disallowance u/s 40(a)(i) for Commission Payment in Foreign Currency:
The issue was remanded to the AO for fresh decision, following the Tribunal's direction in the assessee's own case for A.Y.1998-99.

13. Addition on Account of Income Accrued from Arbitration Award:
The Tribunal upheld the CIT(A)'s decision, noting that the issue was already decided in favor of the assessee in earlier years.

14. Disallowance of 1% of Total Expenses Under "Other Expenses":
The Tribunal rejected the assessee's ground, following its decision in the assessee's own case for A.Y.1998-99.

15. Disallowance of Bad Debts:
The Tribunal upheld the CIT(A)'s decision, finding that the assessee could not establish that the business loss had crystallized during the year.

16. Addition in Book Profit u/s 115JB for Provision for Gratuity and Bonus:
The issue was remanded to the AO to verify if the provisions were made as per actuarial valuation and the Payment of Bonus Act, respectively.

Conclusion:
The appeals of the Revenue were partly allowed for statistical purposes, while the COs of the assessee were partly allowed, dismissed, or allowed for statistical purposes as indicated.

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