2013 (1) TMI 1057 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of expenditure on 20 Point Programme
2. Addition of notional amount u/s. 14A towards expenditure to earn tax-free income
3. Additions u/s. 145A on account of net modvat credit receivable on raw material not considered in the value of closing stock
4. Right to use technical know-how - Disallowance of 100% claim u/s. 37(1) and allowance of 1/6th u/s. 35AB
5. Provision towards post-retirement medical benefit
6. Disallowance of claim of deduction u/s. 80HH, 80I/IA on LPG Bottling plants
7. Tax u/s. 115O for dividend paid to Government of India
8. Additional Grounds: Deduction u/s. 37(1) towards detailed feasibility study expenses and Deduction u/s. 35(1)(ii) contribution to LERC

Summary:

1. Disallowance of Expenditure on 20 Point Programme:
The Tribunal allowed the expenditure incurred u/s. 37(1) towards the 20 Point Programme, following its own earlier decisions and judgments from the Hon'ble Karnataka High Court and the Hon'ble Supreme Court. It was held that such expenditure, even if altruistic, is deductible if it serves business interests.

2. Addition of Notional Amount u/s. 14A:
The Tribunal set aside the issue to the CIT(A) for a proper finding on whether the investments in tax-free bonds were made from surplus funds or borrowed funds. The CIT(A) was directed to verify these details and decide accordingly.

3. Additions u/s. 145A on Account of Net Modvat Credit:
The ground was dismissed as not pressed by the assessee since the impact of the addition in the closing stock was given to the next year's opening stock.

4. Right to Use Technical Know-How:
The Tribunal upheld the disallowance of 100% claim u/s. 37(1) and allowed only 1/6th u/s. 35AB, following the assessee's admission and the Tribunal's earlier decisions.

5. Provision Towards Post-Retirement Medical Benefit:
The Tribunal set aside the issue to the Assessing Officer to allow the claim based on the Actuarial valuation report, following its earlier decision for A.Y. 1997-98.

6. Disallowance of Claim of Deduction u/s. 80HH, 80I/IA on LPG Bottling Plants:
The Tribunal allowed the deduction, holding that the bottling of LPG is a manufacturing activity, following the Hon'ble High Court's decision and earlier Tribunal orders.

7. Tax u/s. 115O for Dividend Paid to Government of India:
This ground was dismissed as not pressed by the assessee.

8. Additional Grounds:
- Deduction u/s. 37(1) towards detailed feasibility study expenses was not admitted as it was not claimed in the return of income or before the lower authorities.
- Deduction u/s. 35(1)(ii) on contribution to LERC was allowed for examination by the Assessing Officer to ensure the correct allowance of 125% deduction instead of 100%.

Conclusion:
The appeals were partly allowed for statistical purposes, with specific directions for verification and re-examination by the Assessing Officer and CIT(A) on various grounds.