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TMI Blog2013 (9) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... n State Electricity Board (RSEB) - (a State Government Undertaking, formed under the State Electricity Supply Act) – Held that:- Relying upon the decision in the case of COMMISSIONER OF INCOME-TAX Versus GUJARAT GAS CO. LTD[2008 (9) TMI 126 - GUJARAT HIGH COURT], depreciation is allowed. Penalty u/s 271 (1) (c) of the Income Tax Act – Held that:- There is no material brought out by the AO to prove the ingredients for levy of penalty that the assessee has furnished inaccurate particulars of income or concealed particulars of income - There was no fault or willful negligence on the part of the assessee and, therefore, penalty is not justified – Decided in favor of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, ground No.2 of the assessee is allowed. 6. Ground No.3 is as under: "3. The ld. CIT(A) erred in confirming the disallowance of Rs.15,03,448/- being reimbursement of 50% of interest on housing loan taken by the employees on wrong premises. Your appellant submits that it has not given any loan to the employees, but the employees of the assessee company have taken loan from the parties other than the assessee company and the company has actually reimbursed 50 per cent of the interest paid on the loan taken by the employees. The expenditure is included for the purpose of the business and ought to have been allowed. It is submitted that it be so held now." 7. Regarding this ground also, it is submitted by the learned AR of the assessee that this issue is also covered in favour of the assessee by the same Tribunal decision in the assessment year 2000-01 and also by the Tribunal decision in assessee's own case in assessment year 2002-03. He also submitted that the relevant pages of the Tribunal decision are available in paper book pages 85 to 93. The learned DR supported the orders of the learned CIT(A). 8. We have considered the rival submissions and we find that this issue was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee by following the decision of the Hon'ble Apex Court rendered in the case of Core Health Care Ltd. (supra). Since, no difference in the facts could be pointed out by the learned DR in the present year; we do not find any reason to take a contrary view in this year. Accordingly, this ground of the assessee is also allowed. 12. Ground No.5 is as under: "5. The ld. CIT (A) erred in confirming the disallowance of Rs.30,389/- being amount spent as a subsidy given towards supply of gas connection to the employees of the company, considering the same as non-business expenditure." 13. It is submitted in the chart that this issue is also covered in favour of the assessee by Tribunal order in assessee's own case in the assessment years 2000-01 and 2002-03. It is also submitted that the relevant pages of the paper book are 85 to 93. The learned DR supported the order of the learned CIT(A). 14. We have considered the rival submissions and we find that in the assessment year 2000-01, ground No.3 raised by the revenue in that year was related to deletion of disallowance of Rs.2.89 lacs on account of subsidized gas connection to the employees of the assessee. This disallowance was del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.7.50 Crores in shares of Petroleum Infrastructure Ltd. being long term business investment. He has also submitted that the company subsequently went into winding up and the value of the investment had completely eroded. He has also submitted that under these facts, the assessee company had written off the entire investment as diminution in the value of the investment and it should be allowed as business loss. Reliance was placed by him on the Tribunal Decision rendered in assessee's own case for the assessment year 2001-02 in ITA No.36/Ahd/2005 dated 28-02-2011. He has also submitted that the relevant portion of this Tribunal decision is at pages 43 to 47 of the paper book. He has also placed reliance on the judgment of the Hon'ble Gujarat High Court rendered in the case of CIT Vs Gujarat Mineral Development Corporation Ltd. reported in 314 ITR 322(Guj). The learned DR supported the order of the learned CIT(A). 20. We have considered the rival submissions and perused the material on record and gone through the orders of the authorities below and the judgments cited by the learned AR. First, we consider the Tribunal decision in assessee's own case for the assessment year 2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance given for business purpose as in that case. We are of the considered opinion that loss on account of diminution in the value of investment in shares is allowable by way of capital loss only when transfer of shares takes place. In the present case, it is admitted position of fact that there is no transfer of shares in question and, therefore, in our considered opinion, the claim of the assessee regarding this diminution in the value of investment in shares is not allowable. Hence, we decline to interfere with the order of the learned CIT(A) on this issue. This ground of the assessee is rejected. 22. Ground No.8 is as under: "8. The ld. CIT (A) has erred in confirming the disallowance of the claim for deduction of Rs.45,16,411/- being the amount of bad debts written off in respect of Rajinder Steels Ltd. being amount written off against the provision for doubtful debts made in A. Y. 1998-99." 23. It is submitted by the learned AR that this amount has been written off in respect of debts recoverable from Rajinder Steels Ltd., to whom the assets have been leased. He also submitted that this amount has been written off as this company has gone into liquidation. He further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned AR that this issue is now covered in favour of the assessee by the Tribunal decision in assessee's own case for the assessment year 1995-96 and 2000-01. He also submitted that the Hon'ble Gujarat High Court has dismissed the appeal filed by the Department in assessee's own case as per the judgment dated 10-09-2008 in Tax Appeal No.444/2008. He has submitted a copy of the above judgment of the Hon'ble Gujarat High Court. The learned DR supported the order of the learned CIT(A). 27. We have considered the rival submissions. We find that as per the judgment of the Hon'ble Gujarat High Court in assessee's own case for the assessment year 1995-96, the question raised before the Hon'ble Gujarat High Court was this as to whether the Tribunal is right in law and in facts in holding that the transaction of sale and lease back was genuine and the assessee was entitled to depreciation. In that year, the dispute was regarding the transaction of sale and leas back between the Assessee Company and Rajasthan State Electricity Board (RSEB). It is noted by the Hon'ble High Court in this decision that as per the judgment of the Hon'ble Rajasthan High Court rendered in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebit notes. Your appellant submits that it be so done now." 29. It was submitted by the learned AR that this liability is in respect of difference in meter reading payable to GAIL and ONGC pertaining to earlier years has crystalized in the present year. He submitted that the Minutes of Meeting (MOM) between the Assessee Company and GAIL and ONGC is available on page 144 of the paper book and the same is dated 30-03-1999. At this juncture, it was pointed out by the Bench that the relevant debit note issued by GAIL is available on page 145 of the paper book which is dated 24-06-199 and the debit note issued by ONGC is available on page 46 of the paper book which is dated 02-06-1999. In reply, it was submitted by the learned AR that provision was made in the light of the MOM held on 30-03-1999 and, therefore, the claim of the assessee should be allowed in the present year because the liability has crystallized on the date of meeting itself. The learned DR supported the order of the learned CIT(A). 30. We have considered the rival submissions. We find that it is not the case of the AO that the liability in question is not a business liability. But only reason for making the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the letters for payment of lease rent received from GIDC during the present year. We do not find any merit in this contention because as per the letter dated 25-2-1998, available on pages 148 and 149, the liability was worked out for the period from 1990 to 1997 on that day and hence, it cannot be accepted that the liability was not crystallized during that year only because no formal letter was received from GIDC asking the assessee to make payment. Hence, we feel that the liability relating to the present year of Rs.43,87,752/- in respect of GIDC Ankleshwar and Rs.1,03,272/- in respect of GIDC Bharuch should be allowed in the present year because the same are related to the present year but the remaining amount which is related to earlier years cannot be allowed in the present year because these liabilities are not related to the present year and the same has not been crystallized in the present year. This ground is partly allowed. 34. In the result, the appeal of the assessee in the quantum proceedings is partly allowed. 35. Now, we take up the appeal of the revenue and the cross objection of the assessee in the penalty proceedings. 36. The learned DR supported the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealment penalty u/s.271 (1) (c) either on facts or in law and accordingly, I cancel the penalty levied u/s. 271 (1) (c) at Rs.4,23,25,084/-." 38. From the above two paragraphs of the order of the learned CIT(A), we find that a clear finding is given by the learned CIT(A) that the disallowances were made purely on the basis of judicial opinion and there was no fault or willful negligence on the part of the assessee and, therefore, penalty is not justified. He has also given a finding that there is no material brought out by the AO to prove the ingredients for levy of penalty that the assessee has furnished inaccurate particulars of income or concealed particulars of income. This finding of the learned CIT(A) could not be controverted by the learned DR and hence, we do not find any reason to interfere in the order of the learned CIT(A). Accordingly, the appeal of the revenue and the cross objection of the assessee are dismissed. 39. In the combined result, the appeal of the assessee in quantum proceedings is partly allowed; whereas the appeal of the revenue and the cross objection of the assessee in penalty proceedings are dismissed. Order pronounced in the open Court on 21/06/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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