2017 (7) TMI 139 - HC - Income Tax

Deduction under Section 35D - Held that - Apex Court in the case of C.C.E. Navi Mumbai Vs. Amar Bitumen & Allied Products Pvt. Ltd.(2006 (8) TMI 187 - SUPREME COURT OF INDIA) has held that the principles of consistency has to be followed. According to the Assessee in the last assessment year the same amount was claimed as deduction under Section 35D of the Act and allowed by the Revenue. The Revenue has not assailed the said order. In view of the above the order with regard to previous assessment year has become final. The same principle will have to be adopted. More particularly when the same amount was claimed as deduction under Section 35D of the Act for the earlier year also

Summary

Issues:
1. Interpretation of Section 35D for deductibility of amortized expenditure.
2. Consideration of full facts before allowing deductions.
3. Burden of proof for deduction claims.

Analysis:

Issue 1:
The main issue in this case was the interpretation of Section 35D regarding the deductibility of amortized expenditure claimed by the Respondent company. The Tribunal had allowed the deduction, which was challenged by the Revenue. The appellant argued that the Assessee was only entitled to 1/5 of the amortized amount as per Section 35D, and the Assessing Officer had rightly concluded so. The counsel contended that the Tribunal and Commissioner misinterpreted the provisions of Section 35D. However, the Assessee relied on the principle of consistency, stating that the Revenue had accepted the same figure for the preceding Assessment Year, which had become final.

Issue 2:
Another aspect raised was whether the Tribunal considered all the relevant facts before allowing the deduction. The appellant questioned the Tribunal's decision to allow the deduction without all the facts being presented by either the Revenue or the Respondent Company. The counsel argued that the Tribunal should not have permitted the deduction without a complete understanding of the case. However, the Assessee emphasized that the Revenue had not contested the deduction in the previous assessment year, and the principle of consistency should be maintained, as established by the Apex Court in a relevant case.

Issue 3:
The burden of proof for claiming deductions was also a point of contention. The appellant argued that the Tribunal erred in calling upon the Revenue to prove that the deduction was not claimed in earlier years, as the burden of proof lies with the claimant. However, the court referred to the principle of consistency and the previous acceptance of the deduction by the Revenue in the same amount for the earlier year, which had become final. The court upheld the decision based on the application of this principle and dismissed the appeal without costs.

In conclusion, the High Court of Bombay upheld the Tribunal's decision to allow the deduction under Section 35D for the Respondent company based on the principle of consistency and the previous acceptance of the deduction by the Revenue for the same amount in the earlier assessment year.