9911796707
TMI Blog2012 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of the closing stock on the other side. Hence, excise duty is to be excluded at the time of valuation of closing stock of finished goods at the end of account period - Decided against Revenue Addition of expenditure incurred on repairs and maintenance treated as capital expenditure - Held that:- CIT(A) has given a finding of fact that the expenditure were incurred on account of maintenance of the existing plant and machinery. Revenue has not placed anything contrary on record suggesting that such expenditure was made for bringing into existence of a new asset on for the enduring benefit to the existing asset. Hence allowable as revenue expenditure - Decided against Revenue Addition U/s 40(a)(ia) on account of commission paid to foreign agents in foreign currency without deduction of tax at source - assessee did not deducted tax at source in compliance with Board Circular No.786 - Held that:- It is not disputed that in respect of AY 2005-06 the claim of the assessee was accepted by the Revenue and there is no change in the circumstance except the contention that the Circular No.786 dated 7.2.2000 has been withdrawn vide Circular No.7 of 2009. Since the claim of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Commissioner of Income-tax (Appeals)-VI, Baroda of even date i.e. 18-09-2009 for the assessment years 1999-00 to 2006-07. These are heard together and disposed of by a consolidate order for the sake of convenience. First we take up Revenue s appeal in ITA No.5/Ahd/2010 (A.Y. 99-00). 2. The Revenue has raised single effective ground, same is reproduced as under:- 1(i) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of loss due to cancellation of forward contract amounting to Rs.34,88,834/- 1(ii) The Ld. CIT(A) in his order failed to address the issue whether forward contract would fall under speculative transaction or constitute revenue expenditure. 3. The facts in brief are that assessee filed original return on 29-03-2001 declaring total loss of Rs.9,72,95,505/-. Subsequently, a revised return was filed on 30-03-2001 declaring loss of Rs.7,73,42,356/-. A notice u/s. 148 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was issued and served upon the assessee in response thereto the assessee vide letter dated 21-11-2003 requested to consider revised return filed on 30-03-2001 as the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suffered loss of Rs. 15 lac. The Assessing Officer disallowed the loss holding it as speculative in nature and therefore covered under subsection 5 of Section 43. In further appeal CIT(A) confirmed the order of Assessing Officer relying on the decisions of the Andhra Pradesh High Court in the case of M.G. Brothers V. CIT (1985) 154 ITR 195 (AP) and also in the case of Commissioner of Income Tax Vs. Joseph John, 67 ITR 74. However, on further appeal the Tribunal deleted the disallowance following the decision of the Hon ble Bombay High Court in the case of CIT v. Badridas Gaurida (P) Ltd 261 ITR 251 (Bom). We find that the facts of the case in hand are identical with the facts of the case of the Friends and Friends Shipping Pvt Ltd (supra), in the case present case also the assessee has claimed business loss of Rs. 34,88,834/- as foreign exchange ratio difference on account of cancellation of forward contract booked for import of material. In this view of the matter, respectfully following the decision of Hon ble Gujrat High Court in the case of Friends and Friends Shipping Pvt Ltd. (supra), this ground of Revenue s appeal is dismissed. 7. In the result, Revenue s appeal is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see perused the material available on record and the decision cited. It is recorded by the Assessing Officer that in this case employee s and employer s contribution has been made within grace period and not before due date. However the same was deposited before expiry of due date of filing of return. It is not controverted by the Ld. Departmental Representative that the PF contribution of employer and employee was deposited within grace period and well before filing of due date of income tax return. The Hon ble Coordinate Bench in CO No. 188/A/2004 for the assessment year 1988-89 assessee s own case while deciding this issue in favour of the assessee has held as under:- 5. Ground No.4 relates to confirmation of disallowance of Rs.5,65,278/- being the delayed Provident Fund payment. After careful consideration of the submissions made in the written submissions and after hearing the learned DR, we find that the issue is duly covered in favour of the assessee by the decision of this Tribunal Ahmedabad Bench-D in the case of M/s JMC Projects (India) Ltd. v. DCIT [ITA No.4175/Ahd/2007] wherein vide order dated 28-03-2008, this Tribunal has held as under:- Moreover, Hon ble IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.3,09,42,594/- on account of excise duty not included in the valuation of closing stock of finished goods. 1(ii). The Ld. CIT(A) failed to appreciate that the excise duty adopted at the rate of 16% was rightly included by the AO in the value of closing stock of finished goods, as mandated by section 145A of the Act. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs.22,95,488/- on account of repairs and maintenance expenses treated as capital expenditure. 3(i) On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs.1,43,220/- on account of late payment of employees contribution to PF and ESI. 3(ii). The decision of Ld. CIT(A) is not acceptable, as the provisions of section 43B which applies to employer s contribution have no role in deciding the issue of allowability of employees contribution which are governed by section 36(1)(va) r.w.s. 2(24)(x) of the Act. 15. Facts in brief are that return of income was declared loss of Rs.6,52,37,920/- was filed by assessee on 21-11-2000 subsequently case was selected for scrutiny. The Assessing Officer made various addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the option of the assessee, at cost or market price, whichever is lower. Duty of Central excise is levied on the goods manufactured, i.e. excisable goods manufactured by an assessee. It is not a part of manufacturing cost. It can be termed a post-manufacturing cost. Therefore, unless and until it is entered on one side, as an item of cost, it cannot be taken as a component of the value of the closing stock on the other side. The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered on the other side of the account. It is further held by the Hon ble jurisdictional High court that making of any entry or absence of an entry cannot determine the rights and liabilities of parties. In other words, if the law does not lead to incurring of a liability, or does not lead to a corresponding right to insist on discharging such a liability any accounting practice (even if suggested by the Institute of Chartered Accounts of India) cannot lay down anything to the contrary. It is held by the Hon ble court that excise duty is admittedly an indirect levy. The manufacturer does not effectively pay from his own pocket. The duty of central excise is collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st to find out as to what would constitute current repairs as that the expenditure must have been incurred to preserve and maintain an already existing asset, and the expenditure must not bring to a new asset into existence or to obtain new advantage and we find that Ld. CIT(A) has given a finding of fact that the expenditure were incurred on account of maintenance of the existing plant and machinery. The Revenue has not placed anything contrary on record suggesting that such expenditure was made for bringing into existence of a new asset on for the enduring benefit to the existing asset. In this view of the matter, the ground of Revenue s appeal is dismissed. 22. Next ground relates to deletion of add of Rs.1,43,220/- on account of late payment of employees contribution. This issue we have already decided in Revenue s appeal in ITA No. 6/Ahd/2010 embodied in para-10 11 of this order there is no change into facts as circumstance in this year also, therefore following our discussion in ITA No.6/Ahd/2010, this ground of Revenue s appeal is dismissed. 23. In the result, Revenue s appeal is dismissed. Now we take up Revenue s appeal in ITA No.8/Ahd/2010 (A.Y.01-02) 24. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OL-471-SC-IT. On the contrary, Ld. Authorized Representative submitted that the judgment of Hon ble Supreme Court in the case of Transmission Corporation (supra) and the judgment of Hon ble Karnataka High Court in the case of Samsung Electronics (supra) is not applicable in the facts and circumstances of the present case. He submitted that this issue has already been decided by the Hon ble ITAT Ahmedabad Bench in ITA No.1443-1444/Ahd/2010 for the A.Ys 2002-03 and 2007-08 in assessee s own case. The Hon ble Tribunal in ITA No.1443 of 2010 has held as under:- We have considered the rival submissions and the material available on record. The assessee specifically pleaded before the learned CIT(A) that tax was not deducted because income tax is deductible at source only from payments which are chargeable to tax under Income Tax Act. It was submitted that the amount was paid for commission in foreign currency was not chargeable to tax in India because these payments represented business income of non-resident and that none of the payees have permanent establishment or business connection in India within the meaning of section 9 of the I.T. Act. It was also explained that nonresidents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of income in any earlier year not challenged, it is not open to the revenue to challenge the same in subsequent year . Hon ble Supreme Court in the case of Radhaswami Satsang Vs. CIT 193 ITR 321 held that consistency in the approach by the revenue deptt. Should be maintained . Hon ble Pupnjab Haryana High Court in the case of Prakash Industries Ltd. 324 ITR 391 held that when the order for earlier year has become final, the rule of consistency should be followed. Considering the above, in the light of the finding of the learned CIT(A), we are of the view that since the claim of the assessee was based upon the circular existing at the time of assessment year under appeal and the view of the assessee has been accepted by the AO in assessment year 2005-06, therefore, the learned CIT(A) was justified in deleting the additions. We, therefore, do not find any perversity in the approach of the learned CIT(A). We confirmed his findings and dismiss both the appeals of the revenue. 27. It is noteworthy Ld. CIT(A) has decided this issue in para 7.3 of his order which is reproduced as under:- I have considered submission of the appellant as well as facts of the case. Similar issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the assessee had been accepted by the Assessing Officer in assessment year 2005-06. Therefore, the order of Ld. CIT(A) no infirmity is found. Since the judgments as filed by the Revenue would not apply on the facts of the present case as the issue of Circular No 7 of 2009 was not before the Hob ble High Court. Respectfully following the decision of the Hon ble Co-ordinate Bench in ITA No. 1443-1444/Ahd/2010, this ground of the Revenue s appeal is dismissed. 29. In the result, the appeal of the Revenue is dismissed. Now we take up Revenue s appeal in ITA No.9/Ahd/2010 (A.Y.01-02) 30. Revenue has raised following grounds of appeal:- 1(i) On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs.10,34,262/- on account of late payment of employees contribution of PF. 1(ii) The decision of Ld. CIT(A) is not acceptable, as the provisions of section 43B which applies to employer s contribution have no role in deciding the issue of allowability of employees contribution which are governed by section 36(1)(va) r.w.s. 2(24)(x) of the Act. 2(i) On the facts and in the circumstances of the case, the learned CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in deleting the addition of Rs.37,15,954/- on account of late payment of employees contribution to PF. And addition of Rs.4,82,915/- on account of late payment of employees contribution to ESI. 1(ii) The decision of Ld. CIT(A) is not acceptable, as the provisions of section 43B which applies to employer s contribution have no role in deciding the issue of allowability of employees contribution which are governed by section 36(1)(va) r.w.s. 2(24)(x) of the Act. 35. We find that the facts and the grounds in this appeal are identical with ITA No.9/Ahd/2010. Since these issues we have already decided in ITA No.9/Ahd/2010 of Revenue s appeal, following our decision in ITA No.9/Ahd/2010, this ground of the appeal of the Revenue is also rejected. 36. In the result, Revenue s appeal is dismissed. Now we take up Revenue s appeal in ITA No.11/Ahd/2010 (A.Y.03-04) 37. The Revenue has raised following grounds of appeal:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition u/s 40(a)(ia) of Rs.49,48,283/- on account of commission paid to foreign agents in foreign currency without deduction of tax at source. 2. On the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of commission paid to foreign agents in foreign currency without deduction of tax at source. 1(ii). The Ld. CIT(A) failed to appreciate that the Circular No. 786 dated 7.02.2000, in which he has relied upon the above issues, has been withdrawn by the CBDT vide Circular No. 7 of 2009 (F NO. 500/135.2007-FTD-1), dtd 22.10.2009. Further, on the issue of deduction of TDS on payments to Non-residents, recently the Hon ble Karnataka High Court in its judgment in the case of CIT (International ITA No.5-14/Ahd/2010 CO 61-63/Ahd/2010 A.Ys. 99-00 to 06-07 DCIT PNC Cir.GRD v. Panchmahal Steel Ltd. Page 19 Taxation Vs. Samsung Electronics Co. Ltd. reported in TIOl 2009-TIOL- 629-HC-Kar-IT, relying upon the decision of Apex Court in the case of Transmission Corporation Ltd., Vs. CIT-2002-TIOl-471-SC-IT, has held that the obligation to deduct tax at source u/s 195 has nothing to do, with the actual liability of the non-resident to tax under the provision of the Act, including the quantum thereof. The payer in such circumstances should take resource to the provision of section 195(2) of the IT Act, if he is of the view that only a part of the payment made by him or no part thereof would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT. 20002-TIOL-471-Supreme Court-IT, has held that the obligation to deduct tax at source under section 195 has nothing to do, with the actual liability of the non-resident to tax under the provisions of the Act, including the quantum thereof. The payer in such circumstances should take recourse to the provisions of section 195(2) of the Act if he is of the view that only a part of the payment made by him or no part thereof would bear the character of income in the hands of the non-resident. 2(i) On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the disallowance of excess payment of interest of Rs.35,27,425/- u/s. 40A(2)(b) of the Act. 2(ii) The Ld. CIT(A) failed to allow an opportunity to the Assessing Officer to verify the assessee s claim that liability to pay interest pertaining to past years got crystallized in the A.Y. 2005-06, which is in contravention to Rule 46A of the I.T. Rules 1962. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in allow additional depreciation as claimed by the assessee ignoring the fact that he assessee has not made any claim for additional depreciation in the original retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there is no change in the circumstance except the contention that the Circular No.786 dated 7.2.2000 has been withdrawn vide Circular No.7 of 2009. This contention of the Revenue was considered and decided by the Tribunal that since the claim of the assessee was based upon the circular existing at the time of assessment year, no appeal, and the view of the assessee had been accepted by the Assessing Officer in assessment year 2005-06. Therefore, the order of Ld. CIT(A) no infirmity is found. Since the judgments as filed by the Revenue would not apply on the facts of the present case as the issue of Circular No 7 of 2009 was not before the Hob ble High Court. Respectfully following the decision of the Hon ble Co-ordinate Bench in ITA No. 1443-1444/Ahd/2010, this ground of the Revenue s appeal is dismissed. Following our decision in ITA No. 8/Ahd/2010, this ground of Revenue s appeal is dismissed. 48. Next ground is raised against the deletion of disallowance of excess payment of interest amounting to Rs.30,27,425/- u/s40A(2)(b) of the Act. Ld. CIT-DR submitted that the order of Ld. CIT(A) is erroneous and submitted that Ld. CIT(A) did not give any opportunity to Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of Rs.35,27,425/- ( 1,13,57,425 78,30,000) is disallowed and accordingly an addition of Rs.35,27,425/- is made to the income returned by the assessee co. However, Ld. CIT(A) has decided this issue in para-8.2 of his order, which is reproduced hereinbelow:- 8.2 In appeal it is submitted that originally the amount was accepted from promoters as required under structuring scheme and not as unsecured loan. However, later on restructuring scheme was not implemented and so appellant was obliged to pay interest on said advance as unsecured loan to the Company. Further, the interest on it was required to be paid from the date from which the amount was actually received by the appellant. Since the liability to pay the interest crystallized during the relevant previous year, appellant has paid interest for the period from which the loan was taken till the date of repayment i.e. for more than 12 months at an agreed rate of 12% only and not @ 21% as mentioned by AO in the said order. The appellant also furnished detailed working for the same and it is verified that interest is actually paid at 12% p.a. and not at 21%. 51. The contention of the Ld. CIT-DR is that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t before the AO while passing the order and AO was generous enough to state the same in his order. In the remand report both the Jt. CIT and DCIT after due verification confirmed that both the plants were put to use in A.Y. 2005-06, but based on production the JCIT has opined that in as much as additional depreciation is concerned, it is allowable in the A.Y. 2004-05. On the basis of facts placed before me, I do not have any reason to believe that those plants were not put to use. Accordingly, I differ with the report of the JCIT, to the extent that if production as per the excise records has started in a previous. A.Y then both regular and additional depreciation should be allowable first in the A.Y. 2004-05, for the second half of the year, as noted in the excise duty record. Hence, it is not acceptable that the SS Wire Drawing plant and Billet Yard were both commissioned and put to use in A.Y. 2005-06 as claimed by the assessee because trail run and regular run were commissioned in the second half of the previous A.Y. 2004-05, even though these assets were capitalized in books on 01-04-2004.. It is not a material as to on what date the plant and machinery was put to use. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t without deduction at source. The identical ground was raised in ITA No. 8/Ahd/2010 following there is change into the facts and circumstances following our decision in ITA NO. 8/Ahd2010 this ground of the Revenue is rejected. 57. In the result, this appeal of the Revenue is dismissed. Now we take up assessee s CO No.61/Ahd/2010 (A.Y.00-01) 58. The assessee has raised the following grounds of C.O.:- 1.00 On the facts and in the circumstances of the case as well as in law, the learned CIT(A) ld. CIT(A) in sort] erred in confirming the following disallowances: (i) Disallowance of Rs.6,35,014/- being 1/3rd out of Miscellaneous Expenditure; (ii) Disallowance of Rs.3,06,580/- being 1/10th out of Staff Welfare Expenses; (iii) Disallowance of Rs.3,24,742/- being 1/10th out of Vehicle Running Expenses and related depreciation thereon (iv) Disallowance of Rs.2,31,450/- being 1/10th out of Travelling Expenses; (v) Ad-hoc Disallowance of Rs.50,000/- out of Telephone Expenses; (vi) Disallowance of Rs.2,12,852/- being 1/10th out of discount on sales and Rs.1,16,803/- being 1/10th out of commission on sales. 59. All the grounds of CO have been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly it can not be allowed as incurred for the purpose of business is not acceptable, as the appellant has incurred such expenditure understanding its social responsibility which the society expects from every rational businessman. The learned CIT(A) was not able to prove personal element involved in incurring such expenditure. 63. First ground is against the purchased of gifts amounting to Rs.1,12,715/-. Ld. Authorized Representative for the assessee relied upon the judgment of Hon ble jurisdictional High Court in the case of CIT v. S.L.M. Maneklal Industries Ltd. (1997) 107 ITR 133 (Guj) and assessee has incurred the expenses for the encourage of working ability to its workers. On the contrary, Ld. CIT-DR could not controvert the submission of Ld. AR as he simply relied on the order of Ld. CIT(A). 64. We have heard the rival contentions perused the materials available on record. We find that the judgment cited by Ld. AR in the case of S.L.M. Maneklal Industries Ltd. (supra) and in view of the decision of Hon ble jurisdictional High Court we allow the claim of assessee. This ground of assessee s CO is allowed. 65. Next ground is against payment to Shri Hindu Smashan Samiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
