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2018 (3) TMI 391 - AT - Income TaxExclusion of Freight and Insurance from the Total turnover for the purpose of quantifying the deduction u/s.10B - Held that - We have already decided this issue against the Revenue and in favour of the assessee relying on the decision of the Tribunal in assessee s own case 2014 (4) TMI 1091 - ITAT PUNE . Nature of expenses - Product Development Expenditure - revenue or capital expenditure - Held that - As decided in assessee s own case 2016 (8) TMI 1047 - ITAT PUNE we do not find any infirmity in the findings of Commissioner of Income Tax (Appeals) in accepting the product development expenditure as revenue in nature. Allowability of deduction paid by the assessee to the Coast Guard u/s.37(1) - Held that - As decided in assessee s own case 2016 (8) TMI 1047 - ITAT PUNE the intention of celebrating Cost Guard Day is to spread awareness of the service which operates with Indian Navy during external aggression and independently guards Indian cost line from intruders during peace. The business motive behind contributing the fund was the assessee has taken godowns on lease from M/s. Sovereign Pharma Pvt. Ltd. at Daman for storage of vaccines and Indian Cost Guard has its huge base at Daman. The expenditure has been incurred towards discharge of corporate social responsibility. Disallowance u/s.14A of the Act r.w. Rule 8D(ii) - assessment u/s 153A - Held that - AO has no jurisdiction over the assessee since he does not have any incriminating material in his possession for granting jurisdiction to make addition u/s.14A of the Act Allowability of deduction with reference to the Wealth Tax paid by the assessee for the purpose of computing book profits u/s.115JB - Held that - As relying on case of Usha Martin Industries Ltd. 2000 (3) TMI 170 - ITAT CALCUTTA-E we agree with the contention of the learned authorised representative of the assessee that a provision made for wealth-tax cannot be equated to any liability towards income-tax and accordingly, cannot be disallowed while computing the book profit by invoking Clause (a) of the Explanation to Section 115JA(2) of the Act. In any case, this is the case where no incriminating material was seized by the Revenue during the search action connecting to the disallowability of Wealth Tax payment qua the book profits computation. - Assessee appeal allowed.
Issues Involved:
1. Exclusion of Freight and Insurance from Total Turnover for Section 10B deduction. 2. Nature of Product Development Expenditure (Revenue vs. Capital). 3. Allowability of deduction paid to the Coast Guard under Section 37(1). 4. Classification of certain steel items for higher depreciation under Section 32. 5. Disallowance under Section 14A read with Rule 8D(ii). 6. Repeated additions in Section 153A assessment similar to regular assessment under Section 143(3). 7. Allowability of Wealth Tax paid for computing book profits under Section 115JB. Detailed Analysis: 1. Exclusion of Freight and Insurance from Total Turnover for Section 10B Deduction: The Revenue's appeal regarding the exclusion of Freight and Insurance from Total Turnover for Section 10B deduction was dismissed. The Tribunal had previously decided this issue against the Revenue in the assessee’s own case for earlier assessment years (2006-07 and 2007-08). The Tribunal followed the same reasoning and dismissed the grounds raised by the Revenue. 2. Nature of Product Development Expenditure (Revenue vs. Capital): The Revenue contended that the Product Development Expenditure should be treated as capital in nature. However, the Tribunal referred to its earlier decision in the assessee's case for A.Y. 2008-09, where it was concluded that such expenditure is revenue in nature. The Tribunal found no change in facts and upheld the CIT(A)'s order, dismissing the Revenue's ground. 3. Allowability of Deduction Paid to the Coast Guard under Section 37(1): The Revenue appealed against the deduction allowed by CIT(A) for payments made to the Coast Guard. The Tribunal referred to its previous decision in the assessee's case for A.Y. 2008-09, where it was determined that the expenditure was for corporate social responsibility and allowable under Section 37(1). The Tribunal upheld the CIT(A)'s order and dismissed the Revenue's ground. 4. Classification of Certain Steel Items for Higher Depreciation under Section 32: The Revenue challenged the classification of certain steel items as Plant and Machinery. The Tribunal cited its earlier decision, which classified these items as Plant and Machinery, thus allowing higher depreciation. The Tribunal found no new facts and upheld the CIT(A)'s order, dismissing the Revenue's ground. 5. Disallowance under Section 14A Read with Rule 8D(ii): The assessee contested the disallowance under Section 14A read with Rule 8D(ii). The Tribunal noted that the original assessment had already determined a lower disallowance, and the AO had no jurisdiction to make this addition in the absence of any incriminating material during the search. The Tribunal allowed the assessee's ground, remanding the issue to the AO for verification. 6. Repeated Additions in Section 153A Assessment Similar to Regular Assessment under Section 143(3): The assessee argued against repeated additions made under Section 153A, which were similar to those made in the regular assessment under Section 143(3). The Tribunal agreed that such repeated additions amount to double taxation and are unsustainable. The Tribunal dismissed the grounds related to Foreign Travel Expenses, receipts from M/s. Akorn Inc., USA, and Provision for Leave Encashment as these were already decided against the assessee. Other issues were decided in favor of the assessee based on previous Tribunal decisions. 7. Allowability of Wealth Tax Paid for Computing Book Profits under Section 115JB: The assessee challenged the disallowance of Wealth Tax paid for computing book profits under Section 115JB. The Tribunal referred to the decision in Usha Martin Industries Ltd., which held that Wealth Tax is an ascertained liability and should be allowed. The Tribunal also noted the absence of any incriminating material linking to this issue during the search. The Tribunal allowed the assessee's ground. Conclusion: The appeal of the assessee was partly allowed, and the appeal of the Revenue was dismissed. The Tribunal upheld the CIT(A)'s decisions on various grounds, relying on previous decisions in the assessee's own case and the absence of incriminating material during the search. The order was pronounced in the open court on November 28, 2017.
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