2015 (2) TMI 1322 - AT - Income Tax

Revision u/s 263 - claim relating to the Investment written off - HELD THAT - As brought to our notice that this issue was decided in favour of the assessee by the coordinate bench of Tribunal while considering the appeal filed against the revision order passed by Ld CIT u/s 263 of the Act, vide its order dated 29-7-2011 passed in 2011 (7) TMI 391 - ITAT MUMBAI to AY 2004-05. We notice from paragraph 15.7 of the order that the Tribunal has expressed the view that, neither the loss on account of diminution in the value of investment shall be allowed as deduction nor any income on investment shall be subjected to the tax. Following the said decision of the Tribunal, we uphold the order of Ld CIT(A) on this issue. Disallowance of leave encashment claim - This issue was also decided by the Co-ordinate bench in 2011 (7) TMI 391 - ITAT MUMBAI of the order. Following the same, we uphold the order of Ld CIT(A) on this issue. Relief granted in respect of claim relating to the contribution made to Pension and Gratuity fund - Both the parties agreed that this issue is decided against the assessee by the Tribunal 2011 (7) TMI 391 - ITAT MUMBAI . By following the same, we set aside the order of Ld CIT(A) on this issue and direct the AO to follow the decision rendered by the Co-ordinate bench in its order referred supra.

Issues:
1. Denial of exemption of incomes claimed u/s 10 of the Act.
2. Disallowance of deduction of income/expenditure relating to earlier years.
3. Determination of income u/s 115JB of the Act.
4. Relief granted to the assessee for the investment written off.
5. Disallowance of leave encashment claim.
6. Relief granted for the contribution made to Pension and Gratuity fund.

Analysis:

Issue 1: Denial of exemption of incomes claimed u/s 10 of the Act
The first issue pertains to the denial of exemption claimed by the assessee under various provisions of sec. 10 of the Act. The Ld CIT(A) rejected the exemption, enhancing the income of the assessee. However, the jurisdictional Hon'ble Bombay High Court had previously ruled in favor of the assessee in a similar case. The Appellate Tribunal, following the High Court's decision, set aside the Ld CIT(A)'s order on this issue, thereby allowing the exemption claimed by the assessee.

Issue 2: Disallowance of deduction of income/expenditure relating to earlier years
The next issue concerns the disallowance of a deduction amounting to Rs. 33.28 crores related to income/expenditure from earlier years. The claim for deduction of prior year items was rejected by the assessing officer and Ld CIT(A), citing the provisions of section 44 read with Rule 5 of the First Schedule of the Act. The Appellate Tribunal upheld the Ld CIT(A)'s decision based on a previous ruling by a co-ordinate bench of the Tribunal, which deemed the claim meritless.

Issue 3: Determination of income u/s 115JB of the Act
Regarding the determination of income under sec. 115JB of the Act, the assessee contended that these provisions were not applicable as its accounts were not prepared under the Companies Act. Although the Ld CIT(A) initially agreed with the assessee's stance, the claim was rejected on the grounds that the assessed income cannot be lower than the returned income. The Appellate Tribunal disagreed with this reasoning, holding that the voluntary offer made by mistake does not disentitle the assessee to make the claim. Consequently, the Tribunal ruled in favor of the assessee, stating that it is not covered by the provisions of sec. 115JB of the Act.

Issue 4: Relief granted for the investment written off
The Appellate Tribunal upheld the relief granted to the assessee for the investment written off amounting to Rs. 17.29 crores, following a decision by a coordinate bench of the Tribunal that disallowed both the loss on diminution in the value of investment and any income on investment.

Issue 5: Disallowance of leave encashment claim
The issue of disallowance of the leave encashment claim of Rs. 27.90 crores was also decided in favor of the assessee by a coordinate bench of the Tribunal, leading the Appellate Tribunal to uphold the Ld CIT(A)'s decision on this matter.

Issue 6: Relief granted for the contribution made to Pension and Gratuity fund
Lastly, the relief granted in respect of the contribution made to the Pension and Gratuity fund amounting to Rs. 47.57 crores was decided against the assessee by the Tribunal. The Appellate Tribunal directed the assessing officer to follow the decision rendered by the Co-ordinate bench, setting aside the Ld CIT(A)'s order on this issue.

In conclusion, the appeal filed by the assessee was allowed, while the appeal of the revenue was partly allowed, with specific decisions made on each issue discussed during the proceedings.

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