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TMI Blog2014 (6) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of Assessee. Expenses on issue of debentures and bonds – Held that:- Following M/s. Tata Chemicals Ltd. Versus The DCIT, Special Range-1, Mumbai[2014 (5) TMI 956 - ITAT MUMBAI] - the Tribunal has allowed the debenture expenses – thus, the AO is directed to allow the expenses on issue of debenture – Decided in favour of assessee. Disallowance of sundry contributors u/s 40A(9) of the Act – Staff welfare expenses – Held that:- As it has been already decided by the Tribunal in the earlier assessment years, the AO is directed to allow the expenses - So far the payments to schools (staff welfare expenses) is concerned, the matter is remitted back to the AO for adjudication – Decided in favour of Assessee. Family planning expenses – Held that:- Following Atlas Cycle Industries Ltd. [1980 (3) TMI 43 - PUNJAB AND HARYANA High Court] - the disallowance of 50% made by the Income Tax Authorities for such type of expenditures incurred on an Eye Camp for the workers of the assessee company is upheld - The 50% of the expenditure was disallowed in the case on the ground that the benefit was also derived by the outsiders - thus, the disallowance on the issue is restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Employees’ entertainment expenses u/s 37(2) r.w. Explanation III - Subsidized lunch coupons – Payments made to Tata Services Ltd. – incentive bonus to workers - Held that:- As decided in assessee’s own case for the earlier assessment year, it has been already decided in favour of assessee – thus, there is no need for interference – Decided against Revenue. - I.T.A. No. 4464/Mum/2003, I.T.A. No. 4565/Mum/2003 - - - Dated:- 16-5-2014 - Shri D. Karunakara Rao (AM) And Sanjay Garg (JM),JJ. For the Petitioner : Shri Atul Suryya For the Respondent : Shri Dinesh Vyas ORDER Per Sanjay Garg Judicial Member: The present cross appeals i.e. one filed by the assessee and the other filed by the Revenue are directed against the order of the CIT(A) dated 28.2.2003 relevant to assessment year 1987-88. First we take up the appeal of the assessee. ITA No. 4565/Mum/2003: The assessee has taken the following grounds of appeal. Each of the following grounds of appeal is independent of and without prejudice to the other: 1. The Learned CIT (Appeals) erred in holding that interest received on application money of tax free bonds of Rs.48,08,220/- is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.27,257/- on foreign personnel and treated the same as capital expenditure although the same were expenses incurred on visit of foreign persons to India to discuss explore the possibilities of setting up a project and was basically for expansion and diversification of the existing business. 6. The Learned CIT (Appeals) erred in holding that expenses of Rs.6,590/- incurred on tea, coffee, etc. at the time of Annual General Meeting of Shareholders to conduct the statutory business of the company is in the nature of entertainment and consequently disallowable. (i) The Learned CIT (Appeals) erred in confirming the disallowance u/s.40A(9) for payments to following organisations: a. Tata Sports Club Rs.2,39,160/- b. Nutan Balsikshan Sangh Rs.2,00,000/- c. Kinder garten primary school Rs. 1,00,000/- d. Mithapur Kamdar Club Rs. 12,240/- e. Fort Medical Society Rs.3,21,749/- (ii) The Learned CIT(A) failed to appreciate that these payments have nothing to do with Section 40A(9) and are in the nature of welfare expenses and allowable u/s 37(1). (iii) The Learned CIT(A) erred in confirming the disallowance of the contributions to various associations a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act. 14. The Learned CIT (Appeals) erred in confirming the disallowance of following expenses u/s.40A(5) though they cannot be related to individual flats / portions occupied by Executives: (i) Expenses on maintenance of Harbour Heights flats. (ii) Expenses on maintenance of Lovedale flats. (iii) Estimated expenses on maintenance of houses provided to Executives at different places. 15. (i) The Learned CIT (Appeals) erred in confirming the disallowance of Rs. 16,68,477/- u/s 37(4) of the Act in respect of Guest House expenses which includes repairs and maintenance expenses, expenditure on food and salaries wages to staff which are covered in favour of the appellant by the decision of Jurisdictional Tribunal in case of Hindustan Lever 58 ITD 555 and Mahindra Mahindra 61 ITD 129 and in the appellant s own case for Assessment Year 1992- 93 (Reference application u/s 256(1) and 256(2) preferred by Department rejected). (ii) The Learned CIT (Appeals) erred in not accepting Appellant s alternative plea that expenses incurred on maintenance of Mithamahal should be allowed as Staff Welfare Expenses as allowed by Honourable ITAT in A.Y. 1992-93. 16. (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for earlier years. 4. In view of the above submissions, now we take up the different grounds of appeal of the assessee. Ground No.1 5. Ground No.1 as reproduced above is relating to taxing of the interest amount received by the assessee on application money for purchasing tax free bonds. At the outset, the ld. A.R. of the assessee has submitted that under section 10(15)(iv)(h) the interest paid by a public sector company in respect of such bonds is exempt. He has further submitted that the interest paid on the amount deposited with the application money till the allotment of the bonds is also covered in this respect. He has further relied upon the decision of the Hon ble Delhi High Court in the case of CIT vs. Bharat Heavy Electricals Ltd. 352 ITR 88 wherein the Hon ble High Court has upheld the finding of the Tribunal that interest for the brief period between the date of application and allotment of bonds could not be taxed. 6. The ld. D.R. could not bring before us any contrary fact or case law which may justify departure from the above decision of the Hon ble High Court. In view of the above, the ground No.1 is allowed in favour of the assessee. Ground No.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment allowance on exchange loss treated as capital expenditure. Facts being identical, respectfully following the decision of the Tribunal (supra), we accordingly direct the AO to allow the investment exchange loss treated as capital expenditure. 10. So respectfully following the above decision of the Tribunal for the earlier assessment year, the facts being identical for this year also, this issue is restored to the AO to decide the same in view of the above observations of the Tribunal for this year also. Ground No.4 11. Ground No.4 as reproduced above is relating to the expenses on issue of debentures and bonds. The ld. A.R. of the assessee has submitted that the issue taken vide ground No.4 is covered in favour of the assessee by the decision of the Tribunal in the own case of the assessee for assessment year 1986-87 vide ITA No.4564/M/2003. The Tribunal, while dealing with the issue in question in paras 20 21 of the said decision, has observed as under: 20. The Ld. Senior Counsel pointed out that this issue has been decided in favour of the assessee in assessee's own case for A.Y. 1992- 93 by the Tribunal in ITA No. 4604/M/96. 21. We have carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder has observed as under: 51. This issue find place at page-12 para 26 of the assessment order and at page-28 para-10 of the appellate order. Identical issue came up for hearing in the case of the assessee in A.Y. 1983-84 in ITA No. 4058/M/99, ITA No. 2706/M/2000 for A.Y. 1993-94, ITA No. 454/M/02 for A.Y. 1994-95, ITA No. 3082/M/02 for A.Y. 1995-96 and ITA No. 5181/M/02 for A.Y. 1985-86. We find that the Tribunal in ITA No. 5181/M/02 in assessee's own case has decided a similar issue at para- 140 of its order wherein the Tribunal has followed the earlier decision of the Tribunal in assessee's own case for A.Yrs 1993-94 to 1995-96. Respectfully following the decision of the Tribunal in assessee's own case, we direct the AO to allow the expenses as claimed by the assessee. Ground No. 14 is accordingly allowed. 16. Since the facts for this year are also identical, hence the AO is directed to allow the expenses following the decision of the Tribunal in the earlier assessment year as reproduced above. 17. So far the payments to schools (staff welfare expenses) is concerned, the ld. A.R. has again submitted that the issue raised vide ground No.7 is squarely cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed in the said case on the ground that the benefit was also derived by the outsiders. The ld. A.R. has further submitted that the said expenditure was not only incurred for the welfare of the workers but also for a social cause. So considering the overall facts and circumstances of the case, the disallowance on this issue is restricted to 50% of the expenditure incurred. This ground is accordingly partly allowed in favour of the assessee. Ground No.12 22. The ground No.12 as reproduced above relates to disallowance of foreign travel expenses for new project (fertilizers). The ld. A.R. has submitted that the issue again is squarely covered in favour of the assessee for earlier assessment year 1985-86 passed in ITA No.5181/M/2002. The Tribunal, while dealing with the issue, has held the said expenditure as capital in nature and allowed the depreciation on the same. The facts being identical, respectfully following the said decision, the AO is directed to allow the depreciation in this respect accordingly. Ground No.13 23. The ground No.13 as reproduced above relates to addition of interest on account of advance to subsidiary company. The ld. A.R. has submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page-12 para-29 of his order and the same has been considered by the Ld. CIT(A) at page-102 para 32 of his appellate order. As regards extra shift allowance, the Senior Counsel pointed out that in assessee's own case for A.Y. 1984-85, the Tribunal has restored back this issue to the files of the AO to consider the claim of the assessee after taking into consideration the I.T. Rule-5 of 1984-85 and two case laws relied upon by the Ld. Counsel for the assessee. A perusal of the said order of the Tribunal show that the assessee has placed reliance on the decision of Allahabad High Court in the case of CIT Vs Indian Turpentine 75 ITR 533 and also the decision of Madras High Court in the case of Jagadeeshchandran 75 ITR 697. Respectfully following the decision of the Tribunal, we restore this issue back to the file of the AO. The AO is directed to decide this issue afresh as per the findings given in assessee's own case for A.Y. 1984-85. This part of the ground is allowed for statistical purposes. 27. The facts for this year being identical in nature the issue is accordingly restored to the file of the AO to decide the same in accordance with the directions given by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n royalty on limestone of Rs.1,75,384/- and mineral rights tax of Rs.97,18,528/-. So far the royalty on limestone is concerned, the ld. A.R. has submitted that the issue has been allowed in the earlier assessment years including assessment year 1986-87 in ITA No.4564/M/03 in the own case of the assessee. The Tribunal, while dealing with the issue in para 36 of the said decision, has restored the issue back to the file of the AO to verify the payments, observing as under: 36. These items of disallowances are discussed by the AO at page-10 para-23 of his order. The AO has disallowed Royalty of Limestone at Rs. 1,71,003/- following the assessment order of his predecessor for A.Y. 1984-85. The Ld. CIT(A) considered this issue at page-62, para-18 of his order for A.Y. 1984-85. We find that the matter travelled upto Tribunal and the Tribunal has restored back the issue to the file of the AO to verify the payment and allow deduction as per law if the payments have already been made. Facts and issues are identical as far as royalty of limestone at Rs. 1,71,003 is concerned, we restore this issue back to the files of the AO to verify the payments as per the provisions of Sec. 43B and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us to the workers Ground No.1 36. Ground No.1 relates to the subsidized lunch coupons issued to the employees entertainment expenditure u/s 37(2) read with explanation (iii). The identical issue has already been decided by the Tribunal in favour of the assessee in the earlier assessment years i.e. assessment year 1995-96 in ITA No.3082/M/2002 in the own case of the assessee. The facts and the issues involved for this year also being identical in nature, this ground is decided in favour of the assessee accordingly, in terms of the directions given by the Tribunal for assessment year 1995-96 in the own case of the assessee. Ground No.2 37. Ground No.2 relates to the payments made to Tata Services Ltd. The similar issue on identical facts has already been decided by the Tribunal in favour of the assessee in the earlier assessment years i.e. assessment years 1983-84, 1984-85 and 1986-87 in ITA Nos.4242/M/1999, 4194/M/2001 and 4564/M/2003 respectively in the own cases of the assessee. Since the facts for this year also being identical in nature, this ground is also accordingly decided in favour of the assessee as per the directions given by the Tribunal for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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