9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 952 - AT - Income TaxDisallowance u/s 14A - disallowance based on computation mechanism provided under Rule 8D(2)(iii) - Disallowance of indirect expenses vis- -vis Rule 8D(2) (iii) of the rules - HELD THAT - Issue which has to be decided by us also is only with regard to disallowance made under Rule 8D(2)(iii) of the rules for which purpose, the availability of own funds with the assessee company has got no relevance, hence, the argument made by the ld. AR in that regard and reliance placed by him on certain decisions need not be adjudicated at all. We find that a Special Bench of Delhi Tribunal in the case of Vireet Investments 2017 (6) TMI 1124 - ITAT DELHI had held that only those investments which had yielded exempt income should be considered for the purpose of working out the disallowance under rule 8D(2) of the rules. Accordingly, we direct the ld. AO to recompute the disallowance under rule 8D(2)(iii) of the rules by considering only those investments which had actually yielded exempt income and reduce a sum of ₹ 3.02 Crores which had already been disallowed by the assessee in the return of income towards administrative expenses. Accordingly, the ground No.1 of original grounds and additional grounds 1 2 raised by the assessee and ground No.1 of revenue are partly allowed. Disallowance u/s.40(a)(ia) - Non deduction of TDS on provisions of interest made at the end of the year - HELD THAT - As decided in own case for A.Y.2008-09 regular return bonds being transferable on simple endorsement and delivery and the relevant registration date being a date subsequent to the closure of books of account, the assessee could not have ascertained the payees at the point of time when the provision for interest accrued but not due was made. Accordingly, no tax was required to be deducted at source in respect of the provision for interest payable made by the assessee which reflected provision for 'interest accrued but not due' in a situation where the ultimate recipient of such 'interest accrued but not due' could not have ascertained at the point of time when the provision is made - In the case under consideration, the assessee had made provisions but had not received the bills, that in the subsequent year the provisions made by it were offered for taxation. We decide ground no.2 in favour of the assessee Disallowance on provision made for leave salary / compensated absence as per actuarial valuation - HELD THAT - Hon ble Calcutta High Court in the case of Exide Industries Ltd. vs Union of India 2007 (6) TMI 175 - CALCUTTA HIGH COURT had struck down the provisions of Section 43B Clause (f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon ble Supreme Court in the subsequent order had not stayed the judgement of Hon ble Calcutta High Court. We find that the Hon ble Supreme Court 2009 (5) TMI 894 - SC ORDER had passed an interim order giving the aforesaid observations. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld. AO to pass orders based on the outcome of the main appeal on merits by the Hon ble Supreme Court as stated supra. Accordingly, the ground No.3 of original grounds of appeal raised by the assessee is allowed for statistical purposes. Claim of Deduction u/s.80IA vis- -vis allocation of head office expenses - HELD THAT - We find that this issue is already covered in favour of the assessee by the orders of this Tribunal from A.Y₹ 2003-04 to 2008-09. We also find that for A.Y.2006-07, the revenue had carried this matter to the Hon ble Jurisdictional High Court and the Hon ble Jurisdictional High Court in Income Tax Appeal 2018 (1) TMI 1558 - BOMBAY HIGH COURT had held that the question raised by the revenue does not give raise to any substantial question of law and accordingly, did not entertain the same Disallowance of Additional Depreciation on assets acquired and put to use for less than 180 days in the earlier assessment year - HELD THAT - We find that there is absolutely no dispute that assets were acquired and put to use by the assessee in the earlier assessment years for less than 180 days. The assessee had claimed the remaining portion of additional depreciation in the year under consideration. We find that this issue has already been held in favour of the assessee by the decision of the Hon ble Jurisdictional High Court in the case of PCIT vs. Godrej Industries Ltd. 2018 (12) TMI 64 - BOMBAY HIGH COURT Treatment of expenditure incurred towards corporate advertisement as capital in nature and allowing depreciation thereon - HELD THAT - We find that there is no dispute that assessee company had incurred an expenditure on corporate advertisements to maintain its corporate image which in turn resulted in increased sale of products of the assessee. The assessee claimed the same as revenue expenditure where as the ld. AO treated the same as brand building expenditure and accordingly considered it as capital in nature and granted depreciation. This action was upheld by the ld. CIT(A). We find that the reliance placed by the ld. AR on the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Asian Paints India Ltd. 2016 (11) TMI 258 - BOMBAY HIGH COURT on the impugned issue squarely addresses the dispute in favour of the assessee. Expenses incurred for making advertisement films - treated as a capital or revenue expenditure - HELD THAT - What is to be examined is the nature of advantage obtained in the commercial sense by incurring the expenditure. If the expenditure consists of merely facilitating the assessee to carry on business more profitably leaving the fixed capital untouched, it would be on revenue account. The entire expenditure, the Court observed, has to be looked at from a businessman's point of view. In the present facts, the expenditure on account of corporate advertisement is to essentially maintain the corporate image and not create a corporate image. Further, the impugned order holds on facts that the corporate advertisement expenditure facilitates the business having a direct impact on sales and profitability of the Respondent-Assessee. The view taken by the impugned order that corporate advertisement enhances the business of the Assessee resulting in increased sales of its product in Revenue field, is a possible view, on the present facts Claim of deduction towards the education cess and secondary and higher education cess - HELD THAT - Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. vs. JCIT 2018 (10) TMI 589 - RAJASTHAN HIGH COURT had taken into account the CBDT Circular dated 18/05/1967 for holding such education cess, secondary and higher education cess to be allowable as deduction. Their Lordships had held that Section 40a(ii) of the Act applies only on taxes other than cess. Claim of depreciation on Goodwill allowed Receipt on account of sale of certified emission as capital receipt (Carbon Credit receipts) - Revenue or capital reciept - HELD THAT - We find that the Hon ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd. 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT , Subhash Kabini Power Corporation Ltd 2016 (5) TMI 793 - KARNATAKA HIGH COURT held that Carbon Credit receipts are to be construed as capital receipts. When this was put to the ld. DR, the ld. DR fairly conceded that this issue is covered in favour of the assessee by various High Courts, but he however, prayed for verification of these figures by the ld. AO. The ld. AR also fairly agreed that verification of the figures by the ld. AO be made. Accordingly, we deem it fit and appropriate, to set aside this issue to the file of the ld. AO, to verify the actual figures of carbon credit receipts and decide the taxability of the same in the light of the aforesaid decisions of the Hon ble High Courts
Issues Involved:
1. Disallowance under Section 14A of the Income Tax Act. 2. Disallowance under Section 40(a)(ia) of the Act on provisions made at the end of the year. 3. Disallowance on provision made for leave salary/compensated absence as per actuarial valuation. 4. Claim of Deduction under Section 80IA of the Act vis-à-vis allocation of head office expenses. 5. Disallowance of Additional Depreciation on assets acquired and put to use for less than 180 days in the earlier assessment year. 6. Treatment of expenditure incurred towards corporate advertisement as capital in nature and allowing depreciation thereon. 7. Disallowance of ESOP Expenses. 8. Claim of depreciation on the expenditure incurred towards catalysts. 9. Chargeability of interest under Section 234D of the Act. 10. Initiation of penalty proceedings under Section 271(1)(c) of the Act. 11. Treatment of interest subsidy received under Technology Upgradation Fund Scheme (TUFS). 12. Claim of deduction towards education cess and secondary and higher education cess. 13. Depreciation on goodwill. 14. Treatment of receipt on account of sale of certified emission (Carbon Credit receipts). Detailed Analysis: 1. Disallowance under Section 14A of the Income Tax Act: The Tribunal addressed the disallowance issue under Section 14A, focusing on the administrative expenses calculated under Rule 8D(2)(iii). The assessee had voluntarily disallowed ?83.04 crores, but the AO increased the disallowance to ?22.46 crores. The CIT(A) reduced it to ?11.93 crores. The Tribunal directed the AO to recompute the disallowance by considering only those investments yielding exempt income and reducing the already disallowed ?3.02 crores. 2. Disallowance under Section 40(a)(ia) of the Act on provisions made at the end of the year: The Tribunal noted that this issue was already decided in favor of the assessee in previous years (A.Y. 2006-07 to 2008-09). It was held that TDS provisions were not applicable to provisions made at year-end. Therefore, the ground was allowed in favor of the assessee. 3. Disallowance on provision made for leave salary/compensated absence as per actuarial valuation: This issue was remanded to the AO to pass orders based on the outcome of the main appeal on merits by the Hon’ble Supreme Court, as the matter was pending before it. 4. Claim of Deduction under Section 80IA of the Act vis-à-vis allocation of head office expenses: The Tribunal found that this issue was consistently decided in favor of the assessee in previous years and had attained finality. Therefore, the ground was allowed in favor of the assessee. 5. Disallowance of Additional Depreciation on assets acquired and put to use for less than 180 days in the earlier assessment year: The Tribunal followed the decision of the Hon’ble Jurisdictional High Court in PCIT vs. Godrej Industries Ltd., which allowed the remaining 50% of additional depreciation in the subsequent year. Therefore, the ground was allowed in favor of the assessee. 6. Treatment of expenditure incurred towards corporate advertisement as capital in nature and allowing depreciation thereon: The Tribunal followed the decision of the Hon’ble Jurisdictional High Court in CIT vs. Asian Paints India Ltd., which treated such expenditure as revenue in nature. Therefore, the ground was allowed in favor of the assessee. 7. Disallowance of ESOP Expenses: The Tribunal followed its previous decision for A.Y. 2008-09, which allowed ESOP expenses as revenue expenditure. Therefore, the ground was allowed in favor of the assessee. 8. Claim of depreciation on the expenditure incurred towards catalysts: The Tribunal noted that this issue was already decided in favor of the assessee in A.Y. 2008-09, allowing the expenditure as revenue. Therefore, the ground was dismissed as infructuous. 9. Chargeability of interest under Section 234D of the Act: This issue was noted as consequential in nature. 10. Initiation of penalty proceedings under Section 271(1)(c) of the Act: The Tribunal considered this issue premature for adjudication at this stage. 11. Treatment of interest subsidy received under Technology Upgradation Fund Scheme (TUFS): The Tribunal remanded this issue to the AO for denovo adjudication, following its decision in earlier years. 12. Claim of deduction towards education cess and secondary and higher education cess: The Tribunal followed the decision of the Hon’ble Rajasthan High Court in Chambal Fertilizers and Chemicals Ltd. vs. JCIT, which allowed such cess as a deduction. Therefore, the ground was allowed in favor of the assessee. 13. Depreciation on goodwill: The Tribunal followed its previous decision for A.Y. 2008-09, which allowed depreciation on goodwill. Therefore, the ground was dismissed. 14. Treatment of receipt on account of sale of certified emission (Carbon Credit receipts): The Tribunal noted that various High Courts had treated such receipts as capital. The issue was remanded to the AO for verification of the figures and decision in light of the High Court rulings. Conclusion: The Tribunal provided a detailed analysis and adjudication on each issue, often relying on precedents and previous decisions in the assessee's own case. Most grounds were decided in favor of the assessee, with a few issues remanded for further verification or considered premature for adjudication.
|
