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TMI Blog2013 (9) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment years 2003-04 and 2004-05. The first ground in the assessment year 2003-04 reads as under : "(1) The learned Commissioner of Income-tax (Appeals) erred in holding that the appellant is not eligible for the exemption under section 10(23G) of the Act. It is submitted that in the facts and circumstances of the case the appellant is eligible for exemption under section 10(23G) of the Act. It be so held now. (1.1) The learned Commissioner of Income-tax (Appeals) erred in holding that the appellant is not an infrastructure capital company. It is submitted that in the facts and circumstances of the case the appellant is an infrastructure capital company as defined in section 10(23G) of the Act. It is submitted that it be so held now." The brief facts as noted by the Assessing Officer in the assessment order are that the assessee has claimed exemption of interest income under section 10(23G) in respect of interest received from SSNNL and GIPCL of Rs.68,06,441. The Assessing Officer asked the assessee to furnish necessary evidence that these institutions are approved by the Central Government within the meaning of section 10(23G) of the Income-tax Act, 1961 and to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of amount invested in bonds of SSNNL and GIPCL. In that year, the Tribunal held by following the Tribunal decision of the Hyderabad Bench rendered in the case of VBC Ferro Alloys Ltd. v. Asst. CIT [2007] 107 ITD 367 (Hyd) that the assessee is entitled to exemption under section 10(23G) of the Income-tax Act, 1961. No difference in facts could be pointed out by the learned Departmental representative and hence, we do not find any reason to take a contrary view in the present year. Therefore, respectfully following this Tribunal decision in the assessee's own case for the assessment year 2001-02, we decide this issue in favour of the assessee. This ground is allowed in all three years. The second issue as per the chart is regarding disallowance under section 35E. This issue has been raised by the assessee as per ground No. 2 in the assessment years 2003-04 and 2004-05 and ground No. 1 in the assessment year 2005-06. The brief facts are that it is noted by the Assessing Officer in page 6 of the assessment order for the assessment year 2003-04 that the assessee claimed deduction of Rs. 35,37,800 under section 35E of the Income-tax Act, 1961. The Assessing Officer asked the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax (Appeals) and was decided by the learned Commissioner of Income-tax (Appeals) as per paragraph 4.3.2 of his order for the assessment year 200304 which is reproduced below for the sake of ready reference: "4.3.2 The alternate submissions and claim for deduction under section 37(1) of Income-tax Act, 1961 have also been considered. In this connection, it is noticed that the Commissioner of Geology and Mining, Government of Gujarat had raised a demand of Rs.7,78,31,600 on November 7, 2000. This is relevant to the assessment year 2001-02. The demand was disputed and subsequently debited in books for the year ended on March 31, 2002 under the head "Consultancy fees" towards project. This is relevant to the assessment year 2002-03. Payment of Rs. 3,35,78,000 was made on July 10, 2002, relevant to the present year. It is first of all seen that the expenses were not treated as revenue expenses by the appellant. There was also no claim in the return of income that the above expenses constituted revenue expenses. On the contrary, the appellant had claimed the expenses as eligible for deduction under section 35E which would show that such expenses were not coming under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich deduction is claimed by the assessee under section 35D can be categorised in three categories : The first is fee to Registrar of Companies of Rs. 1,51,06,000, the second is stamp fee of Rs. 5,00,622 and the third is printing charges of Rs.12,858. Thereafter, the Assessing Officer has observed that as per the requirement of sub-section (1) of section 35D, the expenditure should be incurred in connection with the extension of the industrial undertaking or setting up of a new industrial undertaking. Thereafter, the Assessing Officer has noted the nature of eligible expenditure as per sub-section (2) of section 35D in connection with extension of industrial undertaking/setting up of new industrial unit. The Assessing Officer has further noted that fee paid to the Registrar of Companies is not fee for extension of the company but for expansion of capital. The Assessing Officer has given a finding that the assessee has not fulfilled the requirement of sub-sections (1) and (2) of section 35D and therefore, the assessee is not eligible for deduction under section 35D. He has also referred to the judgment of the hon'ble apex court rendered in the case of Punjab State Industrial Developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions imposed under subsections (1) and (2) of section 35D and there is no finding given by the learned Commissioner of Income-tax (Appeals) in his order that the assessee is fulfilling these conditions. The order of the learned Commissioner of Income-tax (Appeals) is on this basis that since the deduction was allowed in earlier years, the same cannot be disallowed in the present year. It is also seen that assessment order for the assessment year 1995-96 is available in the paper book and we find that there is no discussion in the assessment order on this aspect. Regarding the rule of consistency followed by the learned Commissioner of Income-tax (Appeals) in deleting this disallowance, we are of the considered opinion that if the view taken by the Assessing Officer in the earlier year is a possible view then there may be a case for taking the same view in the present year as per the rule of consistency. But if the view taken in the earlier year is not a possible view then a mistake cannot be perpetuated in the name of consistency. Regarding the judgment of the hon'ble Gujarat high Court cited by the learned authorised representative being rendered in the case of Saurasht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned Commissioner of Income-tax (Appeals) on this issue and restore that of the Assessing Officer. This ground of the Revenue is allowed in all the three years. The fourth issue as per this chart is regarding disallowance of depreciation on leased assets. This issue has been raised by the assessee as per ground No. 3 in the assessment years 2003-04 and 2004-05 and ground No. 2 in the assessment year 2005-06. The Revenue has also raised this issue as per ground No. 2 in the assessment years 2003-04 and 2004-05 and ground No. 3 in the assessment year 2005-06. The Revenue's grievance is regarding the direction of the learned Commissioner of Income-tax (Appeals) that principal portion out of lease rent is to be excluded from the income of the assessee. It was submitted by the learned authorised representative that this issue is now covered in favour of the assessee by the decision of the Special Bench of the Tribunal rendered in the case of Indusind Bank as reported in I.T.A.No. 6566/Ahd/2002 of November 6, 2003. It was submitted that as per this decision of the Special Bench of the Tribunal, it was held by the Special Bench of the Tribunal that principal portion of lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission of the assessee, the land has been acquired for the power project of the power corporation. He has also noted that none of such power project has commenced business. Under these facts, it is held by the Assessing Officer that this expenditure is a capital expenditure relating to the land which is purchased for the proposed joint venture power project where the business has not yet commenced. He disallowed this claim. Being aggrieved, the assessee carried the matter in appeal before learned Commissioner of Income-tax (Appeals) who has deleted this disallowance and now, the Revenue is in appeal before us. The learned Departmental representative supported the assessment order whereas the learned authorised representative supported the order of the learned Commissioner of Income-tax (Appeals). He also submitted that this is allowable under section 37 of the Income-tax Act, 1961. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this disallowance was deleted by the learned Commissioner of Income-tax (Appeals) on this basis that the payment of taxes of any kind whether one time or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for deduction under section 35E of the Income-tax Act and therefore, the appellant is eligible for such deduction. It be so held now. 2.2 The learned Commissioner of Income-tax (Appeals) erred in not holding that entire expenses are admissible as deduction under section 28/37(1) of the Act. It is submitted that it be so held now. 3. The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of depreciation on leased asset for Rs.50,62,500. It is submitted that in the facts and circumstances of the case all the conditions of section 32 are complied with and therefore, the depreciation on leased asset is allowable as deduction. It is suited that it be so held now. 4. The learned Commissioner of Income-tax (Appeals) erred in holding that interest under section 234D and withdrawing interest under section 244A is consequential. It is submitted that in the facts and circumstances of the case interest under section 234D is not chargeable and interest under section 244A shall not be withdrawn. It be so held now." Ground No. 1 is general and ground No. 2 is regarding allowability of deduction under section 35E of the Income-tax Act, 1961 and the same is b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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