2013 (7) TMI 726 - AT - Income Tax

Deduction under section 35D of IT Act Held that - The claim was rejected by relying on the judgment of the Hon ble Delhi High Court in the case of Hindustan Insecticides Ltd. 2001 (2) TMI 75 - DELHI High Court - The mere fact that no addition was made on this issue in the earlier year cannot be determinative in the succeeding year because of the rule of res judicata not applying to the tax proceedings. Further there can be no estoppel against the Act Decided against the Assessee. Deduction u/s 80D Held that - When the tribunal in the earlier year has decided this issue against the assessee, we fail to see how the facts of the current year can be different necessitating departure from the earlier order Decided against the Assessee. Rectification of mistake u/s 254 Held that - Issue raised is against the confirmation of disallowance of Rs.81,31,389/- on account of write off of small debit balances. Assessee contended that such ground was not pressed - The rectification of such types of mistakes committed by the rival parties cannot be brought within the purview of the proceedings u/s 254(2) of the Act. Disallowance of advertisement expenses - Tribunal dismissed the assessee s ground by holding such expenses to be of the earlier year. He submitted that the assessee was following such consistent practice in earlier years as well which stood accepted by the Tribunal Held that - A mistake is said to apparent from record when it is so glaring so as to be deduced without entering into long deliberations. If two legally sustainable views exist on a point and one of such possible views has been taken, the issue becomes debatable and goes beyond the ken of rectification proceedings

Summary

Issues:
1. Dismissal of surplus miscellaneous applications filed by the assessee.
2. Disallowance of advertisement expenses for A.Y. 1998-1999.
3. Disallowance of write off of small debit balances for A.Y. 1998-1999.
4. Denial of deduction u/s 80 O for A.Y. 1998-1999.
5. Denial of deduction u/s 35D for GDR issue expenses for A.Y. 1998-1999.
6. Denial of deduction u/s 80 O for A.Y. 1999-2000.
7. Denial of deduction u/s 35D for GDR issue expenses for A.Y. 1999-2000.

Analysis:

1. The Tribunal dismissed two surplus miscellaneous applications filed by the assessee for A.Ys. 1998-1999 and 1999-2000, as the issues raised in these applications arose from the assessee's appeal alone. The remaining two miscellaneous applications were considered for each assessment year, covering all issues raised from both the assessee's and the Revenue's appeals.

2. For A.Y. 1998-1999, the first issue was the disallowance of advertisement expenses. The Tribunal upheld the disallowance as the expenses were from the previous year, and under the mercantile system of accounting, deductions are allowed when expenses are incurred, not when paid. The Tribunal found no mistake warranting rectification.

3. The second issue was the disallowance of write off of small debit balances. The Tribunal dismissed this ground as not pressed by the assessee's counsel, stating rectification for such mistakes post-argument is not permissible under section 254(2) of the Act. The judgment cited was distinguished as inapplicable to the present case.

4. The third issue was the denial of deduction u/s 80 O. The Tribunal rejected the claim, noting consistency with a previous order and dismissing the contention that facts differed in the current year. The ground was dismissed.

5. The last issue for A.Y. 1998-1999 was the denial of deduction u/s 35D for GDR issue expenses. The Tribunal provided detailed reasons for rejecting the claim, citing relevant judgments and emphasizing that the absence of disallowance in the previous year did not bind the current year's decision. The impugned order was upheld.

6. For A.Y. 1999-2000, similar issues were raised regarding deductions u/s 80 O and u/s 35D, mirroring those in A.Y. 1998-1999. The Tribunal applied the same reasoning as in the previous year's order, rejecting the claims in the current year as well.

7. In conclusion, all miscellaneous applications were dismissed by the Tribunal, and the order was pronounced on 17th July 2013.