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TMI Blog2013 (11) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... nate Benches of the ITAT, in the case(s) of the assessee, in the past. The DR also accepted the descriptions given in the fact sheets/synopsis to be correct. We, therefore, proceed on the details, as submitted in the fact sheet/synopsis. 2. The appeals have been filed by the assessee and the department against the order of CIT(A) III, Mumbai, dated 20.12.2004. Since the appeals arise out of the same order, we are passing a consolidated orders for the sake of convenience and brevity. Assessment Year 2000-01 ITA No. 5421/Mum/2005: Assessee's appeal: The following grounds have been taken: (1) That, on the facts and in the circumstances of the case and in law, the learned Assistant Commissioner of Income Tax (herein after referred to as ACIT) has erred in making disallowance of ₹ 5,85,508/-being rural development expenditure incurred by the appellant and learned Commissioner of Income Tax (Appeals) (herein after referred to as CIT (A)) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow the claim of ₹ 5,85,508/-and to reduce the total income accordingly. (2) That, on the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce the total income accordingly. Without prejudice to the above; if it is held that said expenditure is neither a revenue expenditure nor capital expenditure which enhances the actual cost of fixed assets, the appellant alternatively claims that deduction Under section 35D be allowed on the said debenture issue expenditure. The learned ACIT be directed to allow the claim of deduction under section 35D on debenture issue expenditure and to reduce the total income accordingly. (6) Without prejudice to the claim of the appellant that the deduction claimed under section 36(1)(iii) for interest on loans taken for new projects/ expansion / modernization during assessment years 1994-95 to 1999-2000 is revenue expenditure, however, if it is held in those years that the said expenditure is not revenue expenditure ,the appellant claims that the said expenditure be capitalized to the actual cost of fixed assets and depreciation be allowed on the same and to reduce the total income accordingly . 3. Ground no. 1 pertains to disallowance of ₹ 5,85,508/-, being expenditure incurred on rural development. 4. At the time of hearing, the Senior Counsel submitted that the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the CIT(A) on the issue and direct the AO to allow the claim of depreciation on goodwill acquired from Madura Garments. 15. Ground no. 3 is, therefore, allowed. 16. Ground no. 4 pertains to expenses incurred on buy back of shares at ₹ 24,61,013/-, claimed as revenue expense. 17. It was pointed out that the assessee had claimed a total expenditure of ₹ 98,69,185/-. This was disallowed by the AO, wherein, he held the same to be of capital in nature. The issue was taken up before the CIT(A), who allowed the expenses incurred on printing work, certification work, postage, printing, Advertising, stationary, traveling and other miscellaneous expenses, but disallowed the rest, as there was no cogent reason to allow the same . 18. The AR pointed out that the issue pertains to buy back of shares and has nothing to do with the capital restructuring of the capital base of the company. He placed reliance on the decision of Bombay High Court in Burmah Trading Corpn. Ltd. vs CIT reported in 145 ITR 793 and on the decision of Hon'ble Bombay High Court in the case of CIT vs Hindalco Industries Ltd., wherein the Hon'ble Bombay High Court held, It must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted as not pressed. 25. Ground no. 6 is an alternative ground wherein the assessee prayed that if the expenses are not allowed then depreciation be allowed on interest capitalization. 26. At the time of hearing, the AR submitted that the expenses has been allowed under section 36(1)(iii), hence the issue impugned in the appeal is infructuous, hence not pressed. 27. Since the issue has been allowed, the alternate ground becomes infructuous. Hence the ground raised is rejected. 28. In addition to the above ground, the assessee has raised an additional ground in ITA 5421 of 2005 reads as under: 1. On the facts and circumstances of the case and in law, the Appellant prays that the ( AO ) be directed to: i. Exclude from taxable profits, the sales tax exemption benefit of ₹ 7,55,70,408/-, which is included in Sales and which is taxed in the assessment order as part of profits of the business; and ii. To treat the same as capital receipt not chargeable to tax . The AR pointed out that in earlier years as well, the issue was taken up as additional ground and the issue had been restored to the file of the AO. He, therefore, prayed, like wise, the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue has been there since 1993-94 onwards upto 1999-2000, and in all the years, the expenditure has been allowed by the coordinate Benches in its own cases (copies of ITAT orders placed in APB at pages 119 to 202, in the orders pertaining to assessment years 1998-99 and 1999-2000 in ITAs No. 6669 and 6669/Mum/2003). 34. The AR, therefore, submitted that the expenditure be allowed. 35. The DR, placed reliance on the orders of the revenue authorities. 36. On going through the orders of the coordinate Benches in assessee's own cases and in ITA No. 6668 6669/Mum/2003, the coordinate Bench relied on the decision pertaining to assessment year 1995-96 in ITA No. 3207/Mum/2002, wherein it was held, 2.9 The ground No.9 is regarding disallowance of ₹ 19,05,496/- under section 40A (9). The said expenditure had been incurred by the assessee on payment made to schools at Veraval and Malkhed wherein the children of the employees of the company were studying. The AO disallowed the expenditure under section 40A(9). The said section provides that no deduction could be allowed in respect of any sum paid by the assessee as an employer towards setting up or formation of or as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded, that only 1/3 expenditure shall be allowed in the current year and balance to be allowed in subsequent two years. 45. The issue came up before the CIT(A), who following the decision of coordinate Bench at Chennai in the case of Overseas Sanmar Financial Ltd. reported in 86 ITD 602 and Bombay High Court in the case of CIT vs Bhor Industries Ltd. reported in 264 ITR 180, allowed the expenditure. 46. The AR, pleaded that the decision of the CIT(A) is as per law and is now squarely covered by the decision of ACIT vs Grind Well Worton Ltd. in ITA No. 5512/Mum/2007, where one of us was party to the order, it was held, In the present case, we are concerned with a case where debentures redeemed much prior to the period for which they were issued. In other words, the contractual terms of issue of the debentures were not fulfilled and there was a novation of contract between the Assessee and the debenture holders. In such circumstances, we are of the view that the year in which the expenditure in the form of premium redemption of debentures should be allowed. We order accordingly. Gr. No.4 raised by the Assessee is allowed . 47. We find that the issue is squarely co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Assessee's appeal): 59. At the time of hearing, the Senior Counsel placed before us a chart/synopsis mentioning the status of each ground, which had been dealt with and decided in the preceding year(s), which the DR also accepted to be correct. We, therefore, are proceeding on grounds briefly. The assessee has raised the following grounds: (1) That, on the facts and in the circumstances of the case and in law, the learned Assistant Commissioner of Income Tax (herein after referred to as ACIT) has erred in making disallowance of ₹ 5,72,764/- being rural development expenditure incurred by the appellant and learned Commissioner of Income Tax (Appeals) (herein after referred to as CIT (A)) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow the claim of ₹ 5,72,764/- and to reduce the total income accordingly. (2) That, on the facts and in the circumstances of the case and in law, the learned ACIT has erred in disallowing ₹ 9,731/- being depreciation claimed by the appellant on roll over charges and learned CIT (A) has erred in confirming the order of the learned ACIT. The learned ACIT be directed to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring assessment years 1994-95 to 1999-2000 is revenue expenditure, however, if it is held in those years that the said expenditure is not revenue expenditure, the appellant claims that the said expenditure be capitalized to the actual cost of fixed assets and depreciation be allowed on the same and to reduce the total income computed as per provisions of MAT accordingly . 60. Ground no. 1 pertains to disallowance of ₹ 5,72,764/- being rural development expenditure. 61. This issue has been dealt with by us in ITA No. 5421/Mum/2005, wherein, we have allowed the expenditure. Relying on our own decision, as taken by us, we allow the ground, wherein we set aside the order of the CIT(A) on this issue and the AO is directed to delete the addition. 62. Ground no. 1 is thus allowed. 63. Ground no. 2 pertains to disallowance of ₹ 9,713/- being depreciation on roll over charges. 64. The expenditure has been allowed as revenue expenditure, thus this ground becomes infructuous in so far as the instant appeal is concerned. 65. Ground no. 2 is thus, rejected. 66. Ground no. 3 pertains to disallowance of ₹ 19,20,39,222/- being deduction claimed under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay High Court in the case of Indian Oil Corp. reported in 78 DTR 361. 74. The ground is, allowed for statistical purposes. 75. Ground no. 5 are alternate grounds taken with respect of allowance of expenses incurred on NCD and FCD. In the synopsis filed and as submitted, the ground becomes infructuous, in so far as the instant appeal is concerned as the revenue authorities have allowed expenses towards NCD as revenue expenses and expenses incurred towards FCDs have been allowed under section 35D. 76. The ground is, rejected as not pressed. 80. Ground no. 6 pertains to depreciation on interest capitalization on loan. 77. The ground was taken as an abundant caution. Since the issue has been decided by various decision by the coordinate Bench in the case of the assessee in various years, allowing the expense under section 36(1)(iii) and also we have held the issue in this order itself in ITA No. 5421/Mum/2005, following the same, we hold that in the instant appeal, the ground is infructuous, hence rejected. 78. In addition to the above, the assessee has raised additional grounds of appeal, which are as follows: 1. On the facts and in the circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CIT(A), wherein he has held, 10.2 I have carefully gone through the detailed submissions made by the appellant. The controversy involved is on the interpretation of proviso to sub section 3 section 8OHHC. As per the appellant if there is any loss suffered under the same sub section 3 of section 8OHHC, the same shall be ignored and deduction shall be allowed in respect of income computed as per the proviso to section 8OHHC(3). The appellant has relied on the detailed submissions made to the AO and following judgments i) ACIT vs. Prathiba Syntex (106 Taxmann 32) ii) Avon Cycles vs. ACIT (59 TTJ 75) iii) A.M.Moosa vs. ITO (54 TTJ 193) iv) Vishal Exports Overseas Ltd., Mumbai vs. ITO (ITAT I' Bench in ITA No. 1248/Mum12002 judgment dated 28.1.2003). v) CIT vs Smt T.C.Usha (132 Taxmann 297) vi) M/s. Lalsons Enterprises, New Delhi vs. DCIT 10.3 The appellant also stated that the Judgment of Hon'ble Supreme Court was on the interpretation of application of sub-section 3 itself and not on the provision to sub-section 3. It was pointed out that the order the Hon'ble ITAT Special Bench in case of Lalson Enterprises applies to the facts of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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