9911796707
Advanced Search 
TMI Blog2013 (9) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome tax refund & provision for income tax reversed 2136824 TOTAL 3864355 The Book profit may please be allowed to be recomputed after allowing the aforesaid allowable deductions u/s 115JB." 3. 11. The Revenue in ITA No. 101 8/Chd/12 has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in allowing the appeal of the assessee without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO by assesing the Die Tooling charges of Rs.5,89,00,905/- as capital expenditure which was claimed by the assessee as revenue expenditure. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO by assessing the Technical Know-how expenditure of Rs. 19,31,265/-as capital expenditure which was claimed by the assessee as revenue expenditure." 4. The learned A.R. for the assessee at the outset pointed out that both the grounds of appeal raised by the Revenue are covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and III of Schedule VI to the Companies Act, 1956(1 of 1956) : Provided that while preparing the annual accounts including profit and loss account,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956 (1 of 1956) : Provided further that where the company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including profit and loss account; (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA, as the case may be; or] (ii) the amount of income to which any of the provisions of [section 10 (other than the provisions contained in clause (38) thereof)] or [***] section 11 or section 12 apply, if any such amount is credited to the profit and loss account; or [(iia) the amount of depreciation debited to the profit and loss account (excluding the depreciation on account of revaluation of assets); or (iib) the amount withdrawn from revaluation reserve and credited to the profit and loss account, to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (iia); or] [(iii) the amount of loss brought forward or unabsorbed depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time.] (3) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or sub-section (3) of section 74A. (4) Every company to which this section applies, shall furnish a report in the prescribed form from an accountant as defined in the Explanation below sub-section (2) of section 288, certifying that the book profit has been computed in accordance with the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of book profits for the purpose of section 115JB and the same is to be allowed as a deduction. In view of the clarification issued by the CBDT vide Circular No.8/2005 dated 29.8.2005 we find no merit in the order of the Assessing Officer in not deducting the amount of expenditure relatable to fringe benefit tax amounting to Rs. 16,49,531/- from the profits of business, while computing the book profits of the assessee for the relevant assessment year. The said expenditure debited to the Profit & Loss Account is to be allowed as an expenditure and there is no merit in adding back the same while computing book profits under section 115JB of the Act. 9. The second item was agricultural income of Rs.78,000/-. The Explanation-1 under section 115JB of the Act first enlists the nature of the items by which the net profits shown in the Profit & Loss Account is to be increased by and second part of the Explanation enlist the items in clauses (a) to (i) wherein the amount referred to is debited to the Profit & Loss Account, then such amounts are to be reduced from the profits of the business for computing book profits under section 115JB of the Act. Under sub-clause(ii) to Explanation-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessment year 2008-09. The Tribunal in combined order in cross appeals filed by the assessee and the Revenue being ITA No.756/Chd/2011 of the assessee and ITA No.828/Chd/2011 of the Revenue, vide order dated 30.11.2011 had allowed the claim of the assessee in view of the issue being covered by the earlier order of the Tribunal in assessee's own case. Relevant observations are in para 12 of the order of the Tribunal dated 30.11.2011 which read as under: "12. As regards Ground No.2 taken by the Department, both the parties agree that the issue has already been considered and decided by this Tribunal in Department's appeal bearing ITA No. 341/Chd/2007 (A.Y. 2004-05) against the Department and in favour of the assessee. The issue under appeal has been disposed of by this Tribunal in the said appeal with the following observations : "7. It is agreed by the parties that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee's own case for assessment year 2001-02 (supra). The relevant discussion and findings on this issue contained in para Nos.12 and 13 of the order which are reproduced hereunder and adopted for the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing the same products, and simply to increase the business more efficiently and more profitability, especially when the expenses were incurred for making technological changes. It is not the case of the revenue that new machinery was installed rather the assessee incurred expenses for the improvement of product and quality with an object of achieving maximum output by improving the already existing machinery, therefore, it cannot be said that it is setting up of altogether new business. The assessee company by incurring such expenditure has only improved the efficiency in manufacturing of existing products more economically for the purposes of getting maximum business advantage. In view of these facts, we have not found any defect in the conclusion of the ld CIT(A), consequently, this ground of the revenue is also dismissed. 8. Since the decision of the Commissioner of Income-tax (A) is in accord with the decision of the Tribunal in assessee's case referred to above, we find no justification to interfere with the order of the Commissioner of Income-tax (A). The ground of appeal raised by the Revenue is thus dismissed." 12. The facts of the present case being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment from 23.6.2000 to 22.6.2002, for a period of 2 years. As per the assessee the main purpose of these agreements was to increase the productivity from present average level of 210 wheels pear hours to 340 wheels per hours and further for reduction of rejections substantially. Similarly, the main object of the second agreement was to improve productivity, resolution of licenses, chronic quality problems, reducing process rejection/rework and technical up-gradation in the existing car line and introducing of the manufacturing facility of tractor wheels. The contention of the revenue is that it should be assessed as capital expenditure. The observation of the ld assessing officer is reproduced herewith: "Attention is invited to section 32(1)(ii) wherein know how is considered to be an intangible asset w.e.f. 1.4.99. It may be pointed out that the Technical Collaboration agreement signed originally on 23.6.1997 by the assessee's own admission has been renewed from 23.6.2000 and, is therefore, squarely covered under the said provision of the statute. The case law cited as DCIT v Metalman Auto (P) Ltd (78 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 11. If the facts of the case and the conclusion drawn by ld assessing officer/CIT(A) are analysed, the decision of the ld first appellate authority seems to be more reasoned one which is based on various judicial pronouncements identical to the facts of the present appeal . The assessee is further fortified by the decision of the Hon'ble jurisdictional High Court in the case of CIT vs Swaraj Engines Ltd (2006) 203 CTR 310(P&H). wherein the assessee claimed deduction for an amount of Rs. 26,65,340/- paid to M/s Kirloskar Oil Engines Ltd as royalty on the basis of agreement for the purposes of acquiring technical know how. It was decided in favour of the assessee by upholding the decision of the Tribunal. The Hon'ble Court has already considered the decision of the Hon'ble Apex Court pronounced in the case of Radha Swami vs CIT (193 ITR 321), CIT vs Wavin (India) Ltd (236 ITR 314) and various other decisions. The Hon'ble Gujrat High Court in the case of CIT vs Mihir Textiles Ltd (2006) 287 ITR 232, on identical fact, decided in favour of the assessee by holding that technical service fee is deductible. While coming to this conclusion th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
