9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 1584 - AT - Income TaxNature of expenses - Expenditure incurred on Facilities put up but ownership lying with others/statutory authorities - since the expenditure was incurred for the smooth running of the business of the assessee, the expenditure is inevitably is a business expenditure - HELD THAT - As consistent with the earlier decision of the Tribunal 2016 (11) TMI 1751 - ITAT MUMBAI held that expenditure as incurred on construction of Railway Track and siding is revenue expenditure and not a Capital expenditure. Decided in favour of assessee. Disallowance u/s. 14A - assessee received dividend from two Joint Venture Companies - assessee made suo moto disallowance on the basis of tax Auditor certificate - AO invoked the provisions of Rule 8D and made disallowance - HELD THAT - It is an admitted position under the law that the provisions of Rule 8D is not applicable for the year under consideration. Further, we have seen that in assessee's own case for AY 2003-04 2016 (11) TMI 1751 - ITAT MUMBAI the Tribunal on similar set of facts as held disallowance of section 14A was restricted as per the tax Auditors certificate, we direct the AO to verify the fact if the disallowance under section 14A was restricted as per tax Auditors certificate in AY 2010-11 to 201213 and restrict the disallowance to Rs. 53.70 lakhs. In the result this ground of appeal is allowed. Allowability of Establishment expenses - Nature of expenses - reliance on particular treatment is given in the books of account - assessee submits that the expenses are in the nature of salary, dearness allowances, postage, Bank charges, stationary etc in relation to employee of project department who monitors various projects in the existing line business - HELD THAT - We have seen that in assessee's own case for AY 2003-04 to 2005-06 2016 (11) TMI 1751 - ITAT MUMBAI on similar set of facts Accounting Practices cannot be override section 56 or any other provisions of the Act. The assessee incurred expenses on various personnel/employee in the project for supervision and monitoring the various project and marketing allocation and refineries which is certainly allowable as business expenditure u/s. 37(1) of the Act. Expenses were made on account of salary, Dearness Allowance (DA), Conveyance Expenses, postal charges, bank charges, rent for housing accommodation, Motorcar etc. which is certain of revenue expenditure. Decided in favour of the assessee. Provision toward post retirement medical benefits - HELD THAT - We have noted that this is recurring issue from the AY 1996-97 onwards and on identical grounds of appeal, the Tribunal in AY 2003-04 2016 (11) TMI 1751 - ITAT MUMBAI in set-aside the matter to the file of AO to verify the Actuarial Valuation Report and then allowed the claims of assessee, this ground of appeal is allowed for statistical purpose. Deduction of leave encashment u/s 43B - claim of the assessee was not considered by the lower authorities for the regions that it was claimed without filing the revise return of income - HELD THAT - As identical grounds of appeal, the Tribunal in AY 2003-04 2016 (11) TMI 1751 - ITAT MUMBAI , Goetz India Ltd 2006 (3) TMI 75 - SUPREME COURT held that whenever the assessee makes a mistake or omitted to lodge a legitimate claim, the appellate authority be it first appellate authority or the second appellate authority, has vide power to entertain the new grounds of appeal. Thus we admit the grounds of appeal raised by the assessee and restore this ground of appeal to the file of AO to reconsider it afresh and pass order in accordance with law. Thus, this ground of appeal is allowed for statistical purpose. Nature of receipts - Treatment of profit on sale of oil bonds - capital gain or business income - HELD THAT - We find that in the case of Patnaik Co. Ltd. 1986 (7) TMI 6 - SUPREME COURT held that Appellate Tribunal found that having regard to the sequence of events and the close proximity of the investment with the receipt of Government orders the conclusion was inescapable that the investment was made in order to further the sales of the assessee and boost its business. In the circumstances, the Appellate Tribunal held that the investment was made by way of commercial expediency for the purpose of carrying on the assessee's business and that therefore, the loss suffered by the assessee on the sale of the investment must be regarded as a revenue loss. Also decided in DCM Shriram Consolidated Ltd. 2015 (5) TMI 727 - ITAT DELHI loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered on the last date of accounting year and it is deductible u/s. 37(1). Decided in favour of assessee. Additional ground of appeal before ld CIT(A) - Deduction for feasibility study expense - CIT(A) held that the power to entertain new/additional ground of appeal is available before the Tribunal and not CIT(A) - HELD THAT - We have noted that the assessee raised the additional ground of appeal before the ld. CIT(A), which was not allowed by him by taking view that only Tribunal is entitled to admit the additional ground of appeal. In our view the decision of ld CIT(A) was not in consonance with the decision of Hon'ble Bombay High Court in Pruthwi Broker and shareholder 2012 (7) TMI 158 - BOMBAY HIGH COURT therefore, we admit the additional ground of appeal raised by the assessee. We are in principal accepting that the claim of the feasibility study expenses is allowable expenses. However, keeping in view that the assessee has raised this issue for the first appellate stage, therefore, we deem it appropriate to restore this issue to the file of AO to verify the expenses and allow in accordance with law. Deduction u/s. 80IB pertaining to VREP-II Unit - HELD THAT - We find that the in assessee's own case for the assessment year 2005-06 2016 (11) TMI 1751 - ITAT MUMBAI has considered similar issue in assessee's favour wherein as directed to accept the appellant's claim of profit from the VERP II for the purpose of deduction u/s 80 IB. Decided in favour of assessee. Deduction u/s. 80IB in respect of Silvassa Lube Blending Plant - AO disallow the deduction as no manufacturing or production of articles are done by assessee in terms of section 80IB(2)(iii) - CIT(A) allowed relief to the assessee by holding that the assessee is manufacturing lubricants from Lube Oil base stock, which is considered as manufacturing activity under Central Excise Act - HELD THAT - We have noted that the end product manufactured by assessee as explain hereinabove is quite distinct and is a commercially different article than the major input rectified, which is fit for consumption/use for commercial use. That the changes made in input result in a new and different article is recognized in the trade as such. Hence, the assessee, in the instant case, satisfied the requirement, that it manufactured or produced an article or thing for the purpose of section 80-IB. Thus, we affirm the order passed by ld CIT(A). In the result the appeal of the revenue is dismissed. Interest u/s. 244A on payment of self assessment tax - HELD THAT - The Hon'ble Bombay High Court in Stockholding Corporation of India Ltd. 2014 (11) TMI 899 - BOMBAY HIGH COURT held that tax paid on self assessment would fall under section 244A(1)(b), i.e. a residuary clause covering refunds of amount not falling under section 244A(1), therefore, interest is payable on refund on excess amount paid on self assessment tax. Considering the decision of Jurisdictional High Court we do not find any infirmity in the order passed bt. ld CIT(A), which we affirm. In the result this ground of appeal raised by the revenue is also dismissed . Interest on delayed refund issued - as per DR delay in filing TDS certificate was attributable to the assessee, the assessing officer was right in restricting the interest u/s. 244A from the date of filing of TDS certificates.HELD THAT - We have noted that the assessee claimed the AO while issuing refund granted interest from the date of submissions of TDS instead of 01.04.2006. It was claimed that the TDS amount is also to be treated as advance tax as paid u/s. 199. The ld CIT(A) after considering the submissions agreed with the contention of the assessee. CIT(A) while directing the AO has clearly held that section 244(1)(a) clearly prescribed the calculation of interest on advance tax and TDS from 1st day of the April of the assessment year. No contrary fact is brought to our notice to take the other view. In the result we affirm the order of ld CIT(A) is affirmed and the ground of appeal raised by the revenue is dismissed.
Issues Involved:
1. Disallowance of Expenditure Incurred on Facilities with Ownership Lying with Others/Statutory Authorities. 2. Additions of Notional Amount u/s 14A towards Expenditure to Earn Tax-Free Income. 3. Establishment Expenses Charged to Capital Work in Progress. 4. Provision towards Post Retirement Medical Benefit. 5. Deduction towards Provision for Leave Encashment. 6. Profit on Sale of Oil Bonds. 7. Deduction for Feasibility Study Expenses. 8. Deduction u/s 80IB for VREP-II Unit. 9. Deduction u/s 80IB for Silvassa New Blending Plant. 10. Interest u/s 244A on Payment of Self-Assessment Tax. 11. Interest from 1st April of the Assessment Year. Detailed Analysis: 1. Disallowance of Expenditure Incurred on Facilities with Ownership Lying with Others/Statutory Authorities: The Tribunal considered the assessee's claim that the expenditure on railway siding, essential for business operations, should be treated as revenue expenditure. The Tribunal noted that similar issues in previous years (AY 2003-04 to 2005-06) were decided in favor of the assessee, following the Gauhati High Court's decision in CIT v/s. Bongaigaon Refinery & Petrochemicals P. Ltd. The Tribunal directed the AO to allow the expenditure as claimed. 2. Additions of Notional Amount u/s 14A towards Expenditure to Earn Tax-Free Income: The Tribunal acknowledged that Rule 8D is prospective and not applicable for AY 2006-07, as ruled by the Supreme Court in CIT v/s. Essar Teleholdings Ltd. The Tribunal directed the AO to restrict the disallowance to Rs. 53.70 lakhs based on the tax auditor's certificate, consistent with decisions in earlier years. 3. Establishment Expenses Charged to Capital Work in Progress: The Tribunal found that similar expenses in previous years (AY 2003-04 to 2005-06) were allowed as business expenditure. The Tribunal upheld that expenses on salary, DA, postage, and other administrative costs related to modernization projects are allowable under Section 37(1) of the Act. 4. Provision towards Post Retirement Medical Benefit: The Tribunal noted that this issue had been consistently decided in favor of the assessee in earlier years (AY 1996-97 onwards). The Tribunal directed the AO to verify the actuarial valuation report and allow the claim accordingly, following the Supreme Court's decision in Bharat Earth Movers Ltd. v/s. CIT. 5. Deduction towards Provision for Leave Encashment: The Tribunal referred to the Supreme Court's decision in Goetz India Ltd. v/s. CIT, which allows appellate authorities to entertain new grounds. The Tribunal set aside the matter to the AO to reconsider the claim afresh, in line with earlier Tribunal decisions. 6. Profit on Sale of Oil Bonds: The Tribunal held that the profit on the sale of oil bonds, received as compensation from the Government, should be treated as business income. This decision was based on the Supreme Court's ruling in Patnaik & Co. Ltd. v/s. CIT and other relevant judgments. 7. Deduction for Feasibility Study Expenses: The Tribunal admitted the additional ground raised by the assessee, noting that appellate authorities have the power to entertain new grounds. The Tribunal directed the AO to verify the expenses and allow the claim in accordance with the law. 8. Deduction u/s 80IB for VREP-II Unit: The Tribunal upheld the CIT(A)'s decision to allow the deduction, noting that the issue was covered in favor of the assessee in earlier years (AY 2005-06). The Tribunal found no variance in facts for the year under consideration. 9. Deduction u/s 80IB for Silvassa New Blending Plant: The Tribunal affirmed the CIT(A)'s decision, recognizing the manufacturing process at the Silvassa plant as a distinct and commercially different activity. The Tribunal relied on various judgments, including the Supreme Court's decision in Oracle Software Ltd. 10. Interest u/s 244A on Payment of Self-Assessment Tax: The Tribunal upheld the CIT(A)'s decision to allow interest on self-assessment tax, following the Bombay High Court's ruling in Stockholding Corporation of India Ltd. v/s. CIT. 11. Interest from 1st April of the Assessment Year: The Tribunal affirmed the CIT(A)'s decision to grant interest from 1st April of the assessment year, as prescribed under Section 244A(1)(a), despite the delay in filing TDS certificates. Conclusion: The Tribunal partly allowed the assessee's appeal and dismissed the revenue's appeals, directing the AO to follow the Tribunal's and CIT(A)'s consistent decisions in earlier years on similar issues.
|
