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2011 (4) TMI 981 - AT - Income TaxDisallowance in respect of interest on capital work in progress - issue is covered against the revenue by the decision of the Tribunal in assessee s own case for the assessment years 1992-93 to 1997-98. Respectfully following the same this ground is dismissed Assessee is aggrieved by the CIT (A) s action in not allowing claimed by the assessee towards cost of catalyst - during the course of assessment proceedings the Assessing Officer noticed that the assessee has claimed deduction on the new method which was not allowed by the Assessing Officer in full. The view taken by the AO was upheld by the first appellate authority - on similar issue in assessee s own case for the assessment years 1987-87 to 1997-98 the matter has been restored back to the file of the Assessing Officer with directions to re-compute the profits in accordance with the old method followed by the assessee - there is no change in the facts in the current year issue restored to the file of the Assessing officer with the same directions as were given by the Tribunal in the years cited appeal allowed for statistical purposes Voluntary Retirement Scheme - AO held that expenditure incurred under the Voluntary Retirement Scheme of the assessee company for its employees was of capital nature and was not allowable as it has resulted in a benefit of enduring nature - no infirmity in the order of the Learned CIT (A) issue is covered in favour of the assessee by the judgment of the Hon ble Supreme Court in the case of Bhor Industries Ltd. ground of the Revenue is also dismissed Write off of loans and advances - AO noticed that assessee has claimed write off of loans and advances but these are not bad debts as the same are not trade debts and since the assessee is not in the business of money lending. These write offs were in the nature of partial write off of housing loan to employee write off of security deposits insurance claims loans recoverable from ex-employees and miscellaneous recoverables etc - Departmental Representative could not point out a single instance where the advances written off were not made during the course of and as incidental to business of the assessee. As long as amounts written off have been in the course of and as incidental to assessee s business activities the loss so incurred is admissible as business loss ground dismissed appeal of the Assessing Officer is thus partly allowed Disallowance of over-riding commission paid to Consultants - Assessing Officer noticed that the assessee had paid to Neeraj Consultants Ltd. towards overriding commission - assessee was unable to produce any evidence to show that Neeraj Consultants Ltd has rendered any service to the assessee - AO disallowed the expenses - issue is covered against the assessee by the decision dated 28th January 2011 of a co-ordinate Bench of this Tribunal in assessee s own case for the assessment year 1997-98 disallowance made by the authorities confirmed appeal dismissed Disallowance of fees paid for restructuring the assessee s business -CIT (A) has merely followed the decision for the assessment years 1993-94 to 1997-98 - Tribunal has reversed the order of the CIT (A) and accepted the grievance of the assessee for the above years - there is no change in facts in the year under consideration ground is allowed Disallowance of consultancy and advisory fees for modernization project - CIT (A) has merely followed the decision for the assessment years 1993-94 to 1997-98 - Tribunal has reversed the order of the CIT (A) and accepted the grievance of the assessee for the above years. Since there is no change in facts in the year under consideration respectfully following the same this ground is allowed
Issues Involved:
1. Disallowance of deduction of pro-rata premium on leasehold land. 2. Disallowance of license and process technology fees. 3. Disallowance of cost of catalyst issues. 4. Disallowance of prior period expenditure. 5. Disallowance of overriding commission. 6. Disallowance of expenditure on purchase of property time share. 7. Disallowance of loans and advances written off. 8. Disallowance of fees for restructuring business. 9. Disallowance of consultancy and advisory fees for modernization project. 10. Deletion of disallowance of interest on advance made to Orbit Finance Ltd. and other parties. 11. Deletion of disallowance of interest on capital work in progress. 12. Exclusion of write-back of commission payable to Gwalior Transmission Systems Ltd. 13. Disallowance of expenditure on making a new road, water pipelines, and overhead transmission lines. 14. Deletion of disallowance of stamp duty on amalgamation. 15. Deletion of disallowance of expenditure under the Voluntary Retirement Scheme. 16. Confirmation of enhancement in the value of closing stock. Issue-wise Detailed Analysis: 1. Disallowance of Deduction of Pro-rata Premium on Leasehold Land: The Tribunal upheld the CIT(A)'s decision to disallow the deduction of Rs. 18,01,341 on pro-rata premium on leasehold land, following the orders in the assessee's own case for previous assessment years (1989-90 to 1997-98). Consequently, the ground was dismissed. 2. Disallowance of License and Process Technology Fees: The ground relating to the disallowance of Rs. 7,92,00,396 as license and process technology fees was not pressed by the assessee, leading to its dismissal. 3. Disallowance of Cost of Catalyst Issues: The Tribunal restored the issue of the disallowance of Rs. 1,00,83,271 claimed towards the cost of catalyst issues to the file of the Assessing Officer (AO) for re-computation of profits in accordance with the old method followed by the assessee, as done in previous years. 4. Disallowance of Prior Period Expenditure: The Tribunal decided in favor of the assessee regarding the disallowance of Rs. 17,29,454 being prior period expenditure, following earlier Tribunal orders for assessment years 1991-92, 1996-97, and 1997-98. The AO was directed to ensure no double deduction. 5. Disallowance of Overriding Commission: The Tribunal confirmed the disallowance of Rs. 35,07,321 paid to Neeraj Consultants as overriding commission, as the assessee failed to produce evidence of services rendered, following the Tribunal's decision for the assessment year 1997-98. 6. Disallowance of Expenditure on Purchase of Property Time Share: The grounds related to the disallowance of Rs. 17,58,270 incurred on the purchase of property time share were dismissed as not pressed. 7. Disallowance of Loans and Advances Written Off: The Tribunal upheld the CIT(A)'s partial relief in respect of the write-off of loans and advances, amounting to Rs. 2,50,000 out of Rs. 50,18,059, as the advances were given during the course of normal business and the loss was incidental to the business. 8. Disallowance of Fees for Restructuring Business: The Tribunal allowed the ground related to the disallowance of Rs. 3,65,51,614 paid for restructuring the assessee's business, following the Tribunal's reversal of the CIT(A)'s decision for assessment years 1993-94 to 1997-98. 9. Disallowance of Consultancy and Advisory Fees for Modernization Project: The Tribunal allowed the ground related to the disallowance of Rs. 1,50,000 for consultancy and advisory fees for a modernization project, following the Tribunal's reversal of the CIT(A)'s decision for assessment years 1993-94 to 1997-98. 10. Deletion of Disallowance of Interest on Advance Made to Orbit Finance Ltd. and Other Parties: The Tribunal upheld the CIT(A)'s deletion of the disallowance of Rs. 1,86,52,315 being interest on advance made to Orbit Finance Ltd. and other parties, following the Tribunal's decision for assessment years 1993-94 to 1997-98. 11. Deletion of Disallowance of Interest on Capital Work in Progress: The Tribunal dismissed the ground related to the disallowance of Rs. 13,17,81,278 in respect of interest on capital work in progress, following the Tribunal's decision for assessment years 1992-93 to 1997-98. 12. Exclusion of Write-back of Commission Payable to Gwalior Transmission Systems Ltd.: The Tribunal confirmed the CIT(A)'s direction to exclude Rs. 31,10,688 on account of the write-back of commission payable to Gwalior Transmission Systems Ltd. from the total income, as taxing this amount would result in double taxation. 13. Disallowance of Expenditure on Making a New Road, Water Pipelines, and Overhead Transmission Lines: The Tribunal reversed the CIT(A)'s decision and restored the AO's disallowance of Rs. 25,12,528 incurred on making a new road, water pipelines, and overhead transmission lines, following the Tribunal's decision for assessment years 1993-94 to 1997-98. 14. Deletion of Disallowance of Stamp Duty on Amalgamation: The Tribunal upheld the CIT(A)'s deletion of the disallowance of Rs. 6,06,99,550 on account of stamp duty on amalgamation, following the Supreme Court's judgment in the case of CIT Vs Bombay Dying & Manufacturing Co Ltd (219 ITR 521). 15. Deletion of Disallowance of Expenditure Under the Voluntary Retirement Scheme: The Tribunal upheld the CIT(A)'s deletion of the disallowance of Rs. 29,40,41,392 on account of compensation paid under the Voluntary Retirement Scheme, following the Supreme Court's judgment in the case of Bhor Industries Ltd., 264 ITR 180. 16. Confirmation of Enhancement in the Value of Closing Stock: The Tribunal remitted the issue of the enhancement in the value of closing stock by Rs. 3,47,35,561 to the AO for fresh adjudication, following the decision of a coordinate bench in Cyanamid Agro Ltd Vs Additional CIT (121 TTJ 606). Conclusion: The appeals were partly allowed, with certain grounds dismissed, some allowed, and others remitted back to the AO for fresh adjudication.
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