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2015 (5) TMI 306 - AT - Income TaxDisallowance of interest on application money for tax free bonds - Held that - As decided in assessee own case in respect of the immediate preceding year 2014 (6) TMI 146 - ITAT MUMBAI wherein following the case of CIT vs. Bharat Heavy Electricals Ltd. 2012 (9) TMI 515 - DELHI HIGH COURT held interest for the brief period between the date of application and allotment of bonds could not be taxed Revenue could not bring any contrary fact or case law Decided in favour of Assessee. Deduction u/s. 32AB - amount deposited by the assessee in Industrial Development Bank of India (IDBI) - this amount was disallowed by the AO on the ground that all receipts were deposited in the cash credit account with the bank from which overdraft was taken by the assessee from time to time for the purpose of business - CIT(A) allowed claim - Held that - The assessee is having cash profit of 51.65 crores and only for the reason that deposit of IDBI is made from cash credit account which was showing overdraft is not sufficient to disallow the allowability of deduction u/s. 32AB particularly in view of the fact that the assessee is having cash profit of 51.65 crores which is not contradicted by the revenue. So far as it relates to allowability or otherwise of deduction u/s. 32AB on the income of earlier years town income and rental income from employees learned CIT(A) has allowed the claim of the assessee for the reason that these form part of the business income. It is observed from the order passed by the learned CIT(A) that he has not given reasons for the same. Similarly according to the assessee the dividend and interest income also could not be excluded as per the decisions relied upon by the learned AR. While deciding this issue also the learned CIT(A) has not considered any of the judicial pronouncements. Therefore keeping in view the interest of justice we are of the opinion that the issue requires to be restored back to the file of the CIT(A) with a direction to readjudicate the same in the light of the decisions relied upon by the AR after bringing all the facts on record. - Decided in favour of revenue for statistical purposes. Disallowance of convertible bonds/debentures - Held that - Decided in favour of the assessee in assessee s own case for A.Y. 1992-93. Disallowance of Bhanwad Prospecting and survey expenses - Held that - Tribunal in the assessee s own case for A.Y. 1987-88 2014 (6) TMI 146 - ITAT MUMBAI while dealing with the issue in question in para 14 of the said decision has observed that since the assessee had been allowed deduction under section 35(E) of the Income Tax Act (hereinafter referred to as the Act) hence the grievance of the assessee became otiose and the Tribunal therefore dismissed the ground of appeal relating to this issue. Disallowance of foreign exchange fluctuation loss as expenditure - Held that - The Tribunal in the assessee s own case for A.Y. 1987-88 2014 (6) TMI 146 - ITAT MUMBAI has given its finding and has followed the decision of the Tribunal in assessee s own case for A.Y. 1984-85 and directed the AO to allow the investment allowance on exchange loss treated as capital expenditure. Facts being identical respectfully following the decision of the Tribunal (supra) we accordingly direct the AO to allow the investment exchange loss treated as capital expenditure .Thus this issue is restored to the AO to decide the same in view of the above observations of the Tribunal for this year also. Disallowance being addition of interest on account of interest free advances to Senegal Investment 3, 16, 976 the order of the CIT(A) is upheld as the same is not being pressed. - Decided partly in favour of assessee. Family planning expenses - Held that - Disallowance of similar expense in the assessee s own case for A Y 1987-88 was restricted to 50%. Thus we direct the AO to restrict the disallowance to 50% of the expenditure incurred. Disallowance of expenses on fist and prawn culture - Held that - Tribunal in assessee s own case for A.Y. 1985-86 followed the decision of the Tribunal in assesee s own cae for A.Yrs. 1981-82 and allowed the claim. - Decided in favour of assessee. Disallowance under section 43B - royalty of limestone - Held that - Royalty on limestone is restored to the file of the AO for verification of the payments as per the provisions of Sec. 43B and if it is found correct then AO is directed to allow the deduction - Decided in favour of assessee for statistical purposes. Disallowance of expense incurred on new projects - This is for survey and market study of LAB a chemical agent used to be mixed with soda ash for making detergent powder/washing powder - assessee contented for balance amount of 24, 000 which is incurred in respect of existing business - Held that - Restore the issue to the file of the AO with a direction to verify the contention of the assessee that it was incurred for the existing business. On verification if it is found that these expenses are incurred for existing business then the same should be allowed. - Decided partly in favour of assessee for statistical purposes.
Issues Involved:
1. Disallowance of interest on application money for tax-free bonds. 2. Deduction under Section 32AB. 3. Disallowance of provision for employees pending settlement of their demands. 4. Disallowance of expenses on issue of convertible debentures. 5. Disallowance of Bhanwad Prospecting and survey expenses. 6. Disallowance of foreign exchange fluctuation loss as expenditure. 7. Disallowance of provision for interest on electricity duty. 8. Disallowance under Section 40A(5). 9. Disallowance of interest on account of interest-free advances to subsidiary. 10. Disallowance of foreign travel expenses. 11. Disallowance of family planning expenses. 12. Disallowance of expenses on fish and prawn culture. 13. Disallowance of expenses incurred at the time of AGM. 14. Disallowance under Section 40A(9). 15. Disallowance of Delhi Office expenses. 16. Disallowance under Section 43B. 17. Disallowance of provision for doubtful debts. 18. Disallowance of expenses on new projects. 19. Disallowance of expenses incurred on guest house. 20. Disallowance of sponsorship expenses. 21. Calculation of interest under Section 214. 22. Disallowance of entertainment expenses on subsidized food coupons. 23. Disallowance of payments made to Tata Services Ltd. 24. Disallowance of incentive bonus given to workers. Issue-wise Detailed Analysis: 1. Disallowance of Interest on Application Money for Tax-Free Bonds: The Tribunal allowed the ground in favor of the assessee, following its earlier decision in the assessee's own case for A.Y. 1987-88, where it was held that interest on application money for tax-free bonds is exempt under Section 10(15)(iv)(h). 2. Deduction under Section 32AB: The assessee's claim for deduction under Section 32AB on the amount deposited with IDBI was allowed by the CIT(A) and upheld by the Tribunal. However, the issue of disallowance of investment allowance on dividend and interest income earned by the assessee was restored to the CIT(A) for re-adjudication. The Tribunal directed the CIT(A) to consider various judicial pronouncements cited by the assessee. 3. Disallowance of Provision for Employees Pending Settlement of Their Demands: This ground was not pressed by the assessee as the amount was allowed on a payment basis in A.Y. 1992-93. Hence, it was dismissed. 4. Disallowance of Expenses on Issue of Convertible Debentures: The Tribunal allowed this ground in favor of the assessee, following its earlier decision in the assessee's own case for A.Y. 1986-87, where it was held that such expenses are allowable. 5. Disallowance of Bhanwad Prospecting and Survey Expenses: The Tribunal dismissed this ground, following its earlier decision in the assessee's own case for A.Y. 1987-88, where it was held that since deduction under Section 35E is allowed, the grievance became otiose. 6. Disallowance of Foreign Exchange Fluctuation Loss as Expenditure: The Tribunal restored this issue to the AO for verification, following its earlier decision in the assessee's own case for A.Y. 1987-88, where it was directed to allow depreciation and investment allowance on exchange loss treated as capital expenditure. 7. Disallowance of Provision for Interest on Electricity Duty: The Tribunal restored this issue to the AO, following its earlier decision in the assessee's own case for A.Y. 1987-88, where it was referred back to the AO to decide in accordance with the Tribunal's directions for earlier assessment years. 8. Disallowance under Section 40A(5): This ground was not pressed by the assessee and hence dismissed. 9. Disallowance of Interest on Account of Interest-Free Advances to Subsidiary: The Tribunal directed the AO to decide this issue in light of the earlier year's decisions in the assessee's own case, where it was allowed following the decision of the Jurisdictional High Court in the case of 'Reliance Utilities'. 10. Disallowance of Foreign Travel Expenses: The Tribunal restored this issue to the AO for verification. If the foreign travel expenses were incurred for the existing business, they should be allowed. The rest of the disallowance was upheld as not pressed. 11. Disallowance of Family Planning Expenses: The Tribunal directed the AO to restrict the disallowance to 50% of the expenditure incurred, following its earlier decision in the assessee's own case for A.Y. 1987-88. 12. Disallowance of Expenses on Fish and Prawn Culture: The Tribunal allowed this ground, following its earlier decision in the assessee's own case for A.Y. 1986-87, where such expenses were allowed. 13. Disallowance of Expenses Incurred at the Time of AGM: The Tribunal restored this issue to the AO to decide in light of the earlier year's decision in the assessee's own case, where it was remanded back to the AO for deciding as per the directions of the Tribunal for A.Y. 1995-96 and 1996-97. 14. Disallowance under Section 40A(9): The Tribunal directed the AO to decide the issue in accordance with the earlier year's decision in the assessee's own case. The disallowance of sundry contribution of Rs. 4,064 was upheld as not pressed. 15. Disallowance of Delhi Office Expenses: The Tribunal directed the AO to decide the issue in light of the earlier year's decision in the assessee's own case, where it was decided in favor of the assessee. 16. Disallowance under Section 43B: The issue relating to royalty on limestone was restored to the AO for verification of payments as per the provisions of Section 43B. The disallowance relating to Mineral Rights Tax was decided against the assessee, following the earlier year's decision. 17. Disallowance of Provision for Doubtful Debts: This ground was not pressed by the assessee and hence dismissed. 18. Disallowance of Expenses on New Projects: The Tribunal upheld the disallowance of Rs. 1,15,240 incurred on Kamal Oil Refinery as a new business. The issue of disallowance of Rs. 24,000 incurred for the existing business was restored to the AO for verification. 19. Disallowance of Expenses Incurred on Guest House: The Tribunal allowed the ground only to the extent of food expenses amounting to Rs. 4,79,458, following its earlier decision. The rest of the disallowance was upheld as not pressed. 20. Disallowance of Sponsorship Expenses: This ground was not pressed by the assessee due to the smallness of the amount and hence dismissed. 21. Calculation of Interest under Section 214: This ground was not pressed by the assessee due to the smallness of the amount and hence dismissed. 22. Disallowance of Entertainment Expenses on Subsidized Food Coupons: The Tribunal decided this issue in favor of the assessee, following its earlier decision in the assessee's own case for A.Y. 1987-88. 23. Disallowance of Payments Made to Tata Services Ltd.: The Tribunal dismissed this ground, following its earlier decision in the assessee's own case for A.Y. 1987-88, where such payments were allowed. 24. Disallowance of Incentive Bonus Given to Workers: The Tribunal dismissed this ground, following its earlier decision in the assessee's own case for A.Y. 1987-88, where such bonuses were allowed. Conclusion: Both the appeals were partly allowed in the manner stated above. The Tribunal provided detailed directions on each issue, often restoring matters to the AO for verification or re-adjudication based on earlier decisions in the assessee's own case. The judgment emphasized consistency with prior rulings and adherence to established legal principles.
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