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TMI Blog2013 (4) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... d Departmental Representative fairly conceded that the facts and circumstances of this ground are similar to those of earlier years already decided by the Tribunal. Respectfully following the precedent, we set aside the impugned order on this issue and remit the matter to the file of A.O. for deciding it afresh in conformity with the observations made by the Tribunal in the afore-noted order for earlier years. 4. The second ground is against the confirmation of disallowance of Rs.69,71,705 on account of MODVAT excise duty credit. 5. Both the sides are in agreement that the facts and circumstances of this ground are similar to the ground raised in assessee's own case for the assessment year 1999-2000, which has been disposed off by the Tribunal vide its above referred order dated 18th January, 2013. It is observed that the Tribunal has restored the matter to the file of A.O. for re-working the disallowance, if any, subject to certain verifications set out in the order. Respectfully following the precedent, we set aside the impugned order on this issue and remit the matter to the file of A.O. for deciding it in conformity with the view taken by the Tribunal in its order for assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(33) of the Act. As no disallowance was offered by the assessee towards expenses incurred in earning such exempt income, the Assessing Officer disallowed 2% of the gross dividend as incidental expenses for earning of such dividend. The learned CIT(A) upheld the action of the A.O. 12. After considering the rival submissions and perusing the relevant material on record, it is observed that the assessee has relied on the order passed by the Tribunal for earlier years in which the sustenance of disallowance of expenses in the context of deduction u/s 80M of the Act has been set aside. In our considered opinion the ratio of the Tribunal order for the earlier years cannot be applied to the facts of the instant case inasmuch as there is no question of deduction u/s 80M in respect of dividend in the instant year. Rather it is a case of exempt dividend received by the assessee. Only when a particular income is otherwise taxable and enters into the computation of total income, that it can qualify for deduction under Chapter VI-A as per the relevant provisions. If an income is exempt in itself, then there is no point of including such income in the total income and thereafter granting dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le opportunity of being heard to the assessee. 16. Ground no.1 of the Revenue's appeal is against the deletion of addition on account of sales made to Johnson & Johnson Exports Limited. 17. Both the sides agree that the facts and circumstances of this ground are similar to the grounds raised in appeals for assessment years 1997-98 to 1999-2000 in which the Tribunal remitted the matter to the file of A.O. giving certain directions. In the absence of any distinguishing facts having been brought to our notice, respectfully following the precedent, we set aside the impugned order on this issue and remit the matter to the file of A.O. for deciding it in conformity with the directions contained in the afore-noted Tribunal order. 18. Ground no.2 is against deletion of addition of Rs.2,41,52,480 on production of ad films which was treated by the A.O. as capital expenditure but revenue expenditure by the learned CIT(A). Here again we find that similar issue was raised in the appeals for the assessment years 1997-98 to 1999-2000. The Tribunal decided this issue in assessee's favour by following certain other earlier orders passed in assessee's own case. Following the same, we uphold the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to note that section 35DDA has been inserted by the Finance Act, 2001 with effect from 01.04.2001. This section provides for amortization of expenditure incurred under Voluntary Retirement Scheme (VRS) . As per this section, the entire amount of expenditure incurred on VRS cannot be allowed as deduction in the first year. Only 1/5th of the same is to be deducted in first year and then equal amounts in four immediately succeeding previous years. The learned Counsel for the assessee contended that the provisions of section 35DDA are not applicable as ERS is different from VRS. We find no discussion on the facts of the instant ground in the orders of the authorities below. Since section 35DDA has been inserted by the Finance Act, 2001, which is relevant from assessment year 2001-2002, we therefore, set aside the impugned order and remit the matter to the file of A.O. for deciding this issue afresh in the light of section 35DDA, if applicable. 26. Ground no.3 of the assessee's appeal and ground no.2 of the Revenue's appeal are against the provision of cash discount. We have dealt with this issue in the appeals for the assessment year 2000- 2001, by which the matter has been restored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s extent. Now, we turn to the sustenance of disallowance at 10% of the value of goods purchased from sister concerns. A bare perusal of section 40A(2)(b) reveals that disallowance can be made when the payment is shown to have been made excessive. The onus is on the AO to demonstrate that the payment was excessive. There is no warrant for making any disallowance under this section without pointing out as to how payment was excessive. When we advert to the facts of the instant case we find that there is really no mention by the authorities below as to the excessive amount of payment made by the assessee for purchases made from its two sister concerns. We, therefore, overturn the impugned order on this issue and direct to delete the disallowance. 29. Ground no.5 is against the confirmation of disallowance towards provision for bonus at Rs.25,45,215. This ground is not pressed by the learned AR. The same is, therefore, dismissed. 30. Ground no.6 is against not allowing full amount of deduction u/s 80-IB. This ground has been decided against the assessee in earlier years. The same view is repeated and the impugned order is upheld. 31. Other part of Ground no.6 is against denial of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s favour by considering certain other earlier orders passed accordingly. Following the same, we uphold the impugned order on this issue. This ground is not allowed. 36. Ground no.3 is against granting of depreciation of testing equipment. This issue also came up for consideration before us in the Revenue's appeal for assessment year 2000-2001, which has been decided in assessee's favour. Following the view taken hereinabove, we uphold the impugned order on this issue. 37. Ground no.4 is against deletion of disallowance of expenses for repairs and maintenance amounting to Rs.52,92,987 . From the details of repairs and maintenance expenses for Building and Plant & Machinery, the Assessing Officer observed that certain capital expenditure was claimed as revenue. He, therefore, made disallowance of Rs.52.92 lakh. The learned CIT(A), on perusal of details of such expenses, observed that no capital expenditure was incurred calling for any disallowance. 38. After considering the rival submissions and perusing the relevant material on record, it is seen from the details of expenses disallowed by the A.O. that all are of revenue nature. Aounts has been incurred on items of revenue nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A). However, the Assessing Officer is directed to ensure that no deduction is allowed for the 4/5th of the total amount in the succeeding years. 44. Ground no.9 is against deletion of addition of 10% of professional sponsorship expenses amounting to Rs.22,39,680. During the course of assessment proceedings, the Assessing Officer noted that the assessee incurred a sum of Rs.2.23 crore towards professional sponsorship. On the perusal of details of such expenses it was seen that this was towards sponsorship of various doctors for attending various training programmes on behalf of the assessee. The A.O. held that by spending this amount, the assessee-company had invested for future benefits. He, therefore, disallowed 10% of such expenses being not incurred for business purposes. The learned CIT(A) chose to delete the addition. 45. Having regard to the facts of the instant case it is amply borne out that the Assessing Officer accepted the incurring of such expenses towards the promotion of assessee's business. Once the expenditure is held to be for business purposes, there is no question of disallowing 10% of such expenses by treating the same as for non-business purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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