9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (11) TMI 209 - AT - Income TaxDisallowance u/s 40(a)(ia) for short deduction of tax - Interest u/s 201(1A) - Held that - if any part of the tax which required to be deducted was found to be not deducted then can be levied in respect of that part of the amount which was not deducted. Whereas the language of section 40(a)(ia) does not say that even for short deduction disallowance has to be made proportionately. Therefore, the legislature has clearly envisaged in section 201(1A) for levy of interest on the amount on which tax was not deducted whereas the legislature has omitted to do so in section 40(a)(ia) of the Act - section 40(a)(ia) does not enable the assessing officer to disallow any proportionate amount for short deduction or lesser deduction - section 40(a)(ia) does not envisage a situation where there was short deduction / lesser deduction as in case of section 201(1A) of the Act. There is an obvious omission to include short deduction / lesser deduction in section 40(a)(ia) of the Act - in case of short / lesser deduction of tax, the entire expenditure whose genuineness was not doubted by the assessing officer, cannot be disallowed. Accordingly, the orders of lower authorities are set side and the entire disallowance is deleted - Decided in favour of assessee. Disallowance of foreign exchange fluctuation loss - Held that - by acquisition of a company in South Africa, the manufacturing base and distribution network, in other words, the capital base of the company, expands considerably and the profit making apparatus also expanded. Though the company was acquired through a subsidiary company this Tribunal of the considered opinion that it is only an arrangement made by the assessee to acquire Dunlop Tyres International (proprietory) Ltd. In effect, the assessee is holding and controlling the subsidiary company as well as Dunlop Tyres International (proprietory) Ltd - the entire arrangements made by the assessee by establishing two intermidiary subsidy companies would come to light once the corporate veil is lifted. Therefore, the loss suffered was in the process of acquisition of Dunlop Tyres International (proprietory) Ltd in South Africa. In other words, the loss was suffered in the process of acquisition of a capital asset which expands the manufacturing facility as well as the profit making apparatus of the company - loss suffered by the assessee by settling the forward contract in the process of acquisition of Dunlop Tyres International (proprietory) Ltd is a capital loss which cannot be allowed as a revenue loss or as an item of expenditure. This is not an expenditure incurred in the course of earning of profit - Decided against assessee. Disallowance of raw material being destroyed in fire - Held that - even if the claim of loss was not made in the return of income, the CIT(A) ought to have admitted the claim as an additional ground and examined the issue on merit - CIT(A) is not justified in rejecting the claim of the assessee. However, since the assessing officer has not considered the matter on merit - the matter has to be adjudicated by the assessing officer at the first instance. Accordingly, the orders of lower authorities are set aside and the issue of loss of Rs.18,26,47,613 on account of fire is remitted back to the file of the assessing officer. The assessing officer shall consider the issue on merit and thereafter decide the same in accordance with law after giving reasonable opportunity of hearing to the assessee - Decided in favour of assessee. Deduction u/s 80IA(4)(iv)(a) - Held that - Though a claim was made with regard to deduction u/s 80IA in respect of DG & DT & GT power generating unit at Limda, admittedly, the power generated in the form of steam by gas turbine boiler was not claimed in the return of income. For the first time, the assessee makes the claim with regard to generation of power in the form of steam from its gas turbine boiler. No doubt, section 80A(5) says that no deduction shall be allowed under Chapter VIA under the heading, C.-Deductions in respect of certain incomes , unless the same is claimed in the return of income. As rightly pointed out by the learned senior counsel section 80A(5) was brought in the statute book by Finance Act, 2009, of course, with retrospective effect from 01-04-2003. Therefore, on the date of filing of return of income for the assessment year under consideration, the assessee would not have anticipated the retrospective amendment that would be brought in the statute by finance Act, 2009. The assessee was expected to file the return of income as per the law as it existed on the 01st day of April of the respective assessment year - Therefore, order of CIT(A) is set aside and the issue is restored to the file of the assessing officer with a direction to consider the same on merit in respect of deduction u/s 80IA(4)(iv)(a) with regard to generation of power in the form of steam from its gas turbine boiler - Decided in favour of assessee.
Issues Involved:
1. Disallowance under Section 40(a)(ia) of the Income Tax Act. 2. Disallowance due to foreign exchange fluctuation loss. 3. Claim for loss on account of raw material destroyed in fire. 4. Deduction under Section 80IA(4)(iv)(a) of the Income Tax Act. 5. Deduction under Section 35(2AB) of the Income Tax Act. 6. Disallowance of club expenses. 7. Bad debt written off. 8. Payment towards employees' contribution to provident fund. 9. Depreciation on office premises at Gurgaon. 10. Deduction under Section 80IA for DG & DT Power Generation unit used for captive consumption. Detailed Analysis: 1. Disallowance under Section 40(a)(ia) of the Income Tax Act: The assessee argued that the disallowance of Rs.68,68,556 was due to short deduction of tax, not non-deduction. The senior counsel cited various cases, including the Calcutta High Court and Mumbai Bench of the Tribunal, which held that Section 40(a)(ia) applies only to non-deduction, not short deduction. The Tribunal agreed, noting the omission of "any part of the tax" in Section 40(a)(ia) and concluded that short deduction does not warrant disallowance. 2. Disallowance due to foreign exchange fluctuation loss: The assessee claimed a loss of Rs.5,09,01,000 due to foreign exchange fluctuation on a loan given to its subsidiary for acquiring Dunlop Tyres. The Tribunal ruled that the loss was capital in nature since it was incurred in acquiring a capital asset, thus not allowable as a revenue expenditure. 3. Claim for loss on account of raw material destroyed in fire: The assessee claimed a loss of Rs.18,26,47,613 due to a fire accident. The Tribunal noted the claim was not made in the original return and remitted the issue back to the assessing officer for consideration on merit, emphasizing the appellate authority's power to entertain additional claims. 4. Deduction under Section 80IA(4)(iv)(a) of the Income Tax Act: The assessee sought deduction for power generated in steam form, which was not claimed in the original return. The Tribunal ruled that Section 80A(5), introduced retrospectively, should not apply to the year under consideration and remitted the issue back to the assessing officer for a merit-based decision. 5. Deduction under Section 35(2AB) of the Income Tax Act: Similar to the previous issue, the Tribunal remitted the matter back to the assessing officer, noting that the appellate authority has the power to entertain new claims not made in the original return. 6. Disallowance of club expenses: The Tribunal remitted the issue back to the assessing officer, noting that the expenditure could be allowed if commercial expediency is proven, following its earlier decision for the assessment year 2005-06. 7. Bad debt written off: The Tribunal upheld the CIT(A)'s decision to allow the claim as a business loss, noting that the advance to S Kumar Tyre Manufacturing Co was made in the course of business activity. 8. Payment towards employees' contribution to provident fund: The Tribunal confirmed the CIT(A)'s decision to allow the claim, as the payments were made before the due date for filing the return of income. 9. Depreciation on office premises at Gurgaon: The Tribunal set aside the CIT(A)'s order and restored the assessing officer's decision to disallow depreciation, following its earlier decisions for previous assessment years. 10. Deduction under Section 80IA for DG & DT Power Generation unit used for captive consumption: The Tribunal upheld the CIT(A)'s decision to allow the deduction, following its earlier decisions for previous assessment years. Conclusion: Both the assessee's and the revenue's appeals were partly allowed, and the cross-objection filed by the assessee was dismissed. The Tribunal remitted several issues back to the assessing officer for consideration on merit, emphasizing the appellate authority's power to entertain additional claims and the need for a merit-based decision.
|
