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TMI Blog2015 (3) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... nk loan received by the assessee could be ascertained. In such a situation, we are of the view that the issue needs re-examination at the end of AO. We therefore remit the issue to the file of AO to re-examine the issue afresh - Decided in favour of revenue for staitiscal purposes. Addition on account of stamp duty for pledge agreement and processing fees charged by bank CIT(A) deleted addition - Held that:- CIT(A) while deleting the addition has noted that the expenses incurred towards pledge agreement with the bank was for borrowing working capital availed from bank and by incurring the expenditure no capital asset has come into existence. Before us no material has been placed on record by the Revenue to controvert the findings of CIT(A) and thus this ground of Revenue is dismissed. - Decided against revenue. Disallowance on account of repairs etc. - Held that:- CIT(A) deleted addition - Held that:- CIT(A) while deleting the addition has noted that simply on the basis of quantum of expenditure vis-à-vis the WDV of assets, the expenditure cannot be treated as capital expenses. He has further given a finding that the entire work of repairs and renovation was given on contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of non-resident shipowners, we find that A.O was justified in disallowing the expenditure on Ocean freight u/s. 40(a)(ia) of the Act. With respect to payment to Terminal handling charges it is Assessee’s submission that it has deducted the TDS but on the contrary it is A.O’s observation that TDS was deducted only of ₹ 91,789/-, and no evidence of deduction of TDS on other payments was furnished before A.O. We also find that CIT(A) has also not given a categorical finding about the deduction of TDS by Assessee on the other payments of Terminal Handling charges. In view of these facts, we are of the view that the matter needs to be reexamined at the end of A.O. We therefore set aside the ground with respect to the disallowance of Terminal handling charges to the file of A.O to verify the contention of the Assessee and thereafter decided the issue in accordance with law and after giving a reasonable opportunity of hearing to the Assessee. With respect to deduction of TDS on the fees for services rendered, it is assessee’s contention that the TDS has been deducted but on the other hand it is Revenue’s contention that on all the bills TDS has not been deducted and it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocated in the same compound to which no satisfactory reply was given by ld. A.R. Further the exceptional reasons which necessitated the payment has also not been placed before us. We further find that CIT(A) has also not given any finding on the issues raised by A.O. In view of the these facts, we are of the view that A.O was fully justified in making the disallowance, we therefore uphold the action of A.O. - Decided in favour of revenue. Disallowance out of Terminal handling charges - non deduction of TDS - Held that:- A.O while disallowing the expenditure has noted that Assessee did not furnish any details in support of its claim of deduction of TDS. We further find that CIT(A) has also noted that before him , the A.R of the Assessee have expressed his inability to furnish the necessary details or evidence. Before us also no details of the same has been furnished by the Assessee. We further find that the ratio of the decision relied upon by ld. A.R. are not applicable to the present case as in that case, it was not a case of non deduction of tax, was a different case of difference in rate of deduction of TDS (i.e. whether TDS to be deducted u/s 194C or 194I of the Act). In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 438 - ITAT HYDERABAD] and Honda Siel Power Products Ltd vs. CIT [2007 (11) TMI 8 - Supreme Court of India] wherein held that a decision of Special Bench of the Tribunal on a particular issue is binding unless contrary decision of higher court is brought to its notice. - Decided against assessee. - .T. A. No. 2914 /AHD/2011 & C.O. No. 4/AHD/2012, I.T.A. No. 2148/AHD/2012 & C.O. No. 218/AHD/2012 - - - Dated:- 4-3-2015 - Shri G.C.Gupta And Shri Anil Chaturvedi JJ. For the Appellant : Shri M.K. Singh, Sr. D.R. For the Respondent : Smt. Urvashi Sodhan, A.R. ORDER Per Shri Anil Chaturvedi,A.M. 1. These appeals filed by the Revenue and CO of the assessee are against the order of CIT(A)-XX, Ahmedabad dated 12.09.2011 5.07.2012 for A.Y. 2008-09 2009-10) respectively. 2. Before us both the parties submitted that though the appeals pertaining to 2 different assessment years but some of the grounds are identical in both the years and therefore both the appeals can be heard together. We therefore proceed to dispose of all the appeals together for the sake of convenience and thus proceed with the facts for A. Y. 2008-09. 3. The facts as culled out fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer, on account of milling charges expenses. 8). On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad ought to have upheld the order of the Assessing Officer. 9). It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad may be set-aside and that of the Assessing Officer be restored. 6. On the other hand, the grounds raised by the Assessee in its CO reads as under:- 1. Ld. CIT (A) erred in law and on facts in directing AO to verify bills issued for Inland Transport and Ocean Freight in support of the proposition advanced by the appellant that they were only reimbursement of expenses. Ld. CIT (A) ought to have granted relief claimed by the appellant rather than issuing direction to AO to examine when complete bill wise details were already submitted before AO during the assessment proceedings. 2. Ld. CIT (A) erred in confirming disallowance of ₹ 5,75, 370/- made by AO out of Terminal Handling charges u/s 40(a)(ia) of the Act without taking into consideration submissions made by the appellant. Ld. CIT (A) ought to have deleted such disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of funds. As against the interest paid to other parties of ₹ 3,59,788/- the interest disallowed by the AO works out to ₹ 25,56,814/-. The AO did not establish any nexus between the interest bearing funds and the interest free advances. Appellant is having sufficient interest free funds. In the light of the decisions relied on by the AR, impugned disallowance is not in accordance with law. It is seen that for the assessment year under consideration i.e. 2008-09, both the debtor firms - Jyotindra Brothers and Jyotindra Herbal Industries returned income of ₹ 1,19,530/- and Rs. Nil (after set off of brought forward depreciation of ₹ 1,95,723/-) respectively. Impugned disallowance is deleted. This ground of appeal is allowed. 8. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 9. Before us, ld. D.R. submitted that during the course of assessment proceedings, Assessee was asked to submit cash flow statement in support of its contention that no borrowed funds have been diverted to the sister concerns but Assessee did not submit the cash flow statement. He further submitted that Assessee has not demonstrated the availability and use of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the issue needs re-examination at the end of AO. We therefore remit the issue to the file of AO to re-examine the issue afresh and thereafter decide the matter in accordance with law. The assessee is also free to furnish additional documents in support of its contention and is also directed to furnish all the required information promptly before AO so as to enable him to decide the issue. In the result, this ground is allowed for statistical purposes. Ground No. 2 is with respect to deletion of addition of ₹ 2,60,700/- on account of stamp duty for pledge agreement and processing fees charged by the bank. 11.During the course of assessment proceedings, on perusing the details of bank charges, A.O noticed that it included ₹ 1,00,700/- on account of stamp duty charges and ₹ 1,60,000/- as processing fees. The Assessee was asked to justify its claim of revenue expenditure to which it was interalia submitted that ₹ 1,00,700/- was paid towards stamp duty for pledge agreement entered with Dena Bank for working capital limits and with respect to payment of ₹ 1,60,000/-, it was submitted that it was the processing fees charged by the bank. The su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineers and from the copy of the invoices, he noticed that the payment was for purchase of doors, windows, ventilators. He also noticed that payment of ₹ 1,00,580/- was made to Vishwas Trading towards purchase of paints, oil paints, primer etc. On verification of the bills of Bhavanbhai Prajapati amounting to ₹ 4,22,818/-, he noticed that it was for dredging of earth, RCC granite fitting, wall plaster etc. The Assessee was asked to justify the expenses as revenue expenses to which Assessee interalia submitted that the payments were made for renovation of the offices and factory premises and were revenue in nature. The submission of the Assessee was not found acceptable to the A.O, as he was of the view that the expenditure incurred was for overhauling of assets which would give a benefit of enduring nature. He was further of the view that the nature of expenditure incurred confirmed that some capital work has definitely been carried out by the Assessee. He accordingly treated the amount paid to Welldor Engineers as capital expenditure and 40% of the expenditure was considered by him to be as labour charges for fitting of doors, windows, partition etc and it was also trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 9,64,104/- on account of machinery reconditioning charges. 19.On perusing the details of expenses of machinery parts and machinery reconditioning expenses, A.O noticed that Assessee has purchased certain machineries which has been claimed as Revenue expenditure. The list of expenses is tabulated at page 9 of the assessment order. Assessee was asked to justify its claim of expenses as revenue expenses to which Assessee interalia submitted that it had incurred heavy expenditure for repairs and reconditioning of the old machineries. It was also submitted that while repairing, the core machinery consisting of grinder and pulveriser were untouched and the other ancillary machineries were extensively renovated and replaced. It was further submitted that no new asset has come into existence by incurring the expenditure. The submissions of the Assessee was not found acceptable to the A.O, for the reason that as against the factory machinery of ₹ 36,84,203/-, Assessee had incurred total expenditure of ₹ 29,89,498/- under the head reconditioning of machinery which according to AO would yield enduring benefit to Assessee and therefore the expense was capital in nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that Assessee had deducted TDS only on payment of ₹ 9,61,583/-. The Assessee was asked to show cause as to why the expenses amounting to ₹ 80,42,054/- on which TDS was not deducted be disallowed to which Assessee interalia submitted that the inland transportation charges were collected by Soham Logistic Pvt. Ltd. and they in turn have paid to others and Soham Logistic Pvt Ltd has deducted TDS on the payments made by it. Assessee also produced a letter from Soham Logistic Pvt. Ltd. stating that it had made payments on behalf of Assesse as well as other parties. The reasons given by the assessee for non deduction of TDS from inland transportation charges was not found acceptable to the A.O. as he was of the view that the letter of Soham Logistic Pvt Ltd has not pointed out the details of payment received from Assessee on which it has made TDS payments and therefore it remained unverifiable. With respect to payment of ₹ 56,74,349/- towards ocean freight it was assessee s submission that the payment of Ocean Freight was to non resident Foreign Companies or their agents and therefore no TDS was required to be deducted in view of CBDT Circular No. 23 dated 19.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be deducted when the expenses are only reimbursement and there is no element of profit or income. In support of this contention, he relied on the Ahmedabad Tribunal's decision dt. 13-05-2011 in the case of M/s. Satya Exim Pvt. Ltd. in ITA No.l335/Ahd/2010. The issue involved in the said case was disallowance u/s 40(a)(ia) of C F charges and Ocean freight and Octroi charges. At para-7 of the said decision it was held that no TDS is required to be deducted in the present case for reimbursement of expenses for which separate bills were raised by the commission agent and hence the provisions of Section 40(a)(ia) is not applicable to such payments. Respectfully following the decision, AO is directed to verify whether separate bills were raised for the above sums and if so to delete disallowance of above sums (since this plea was not taken before the AO). 7.3(ii)The third component is ₹ 5,75,370/-. AO observed that out of the Terminal Handling Charges of ₹ 6,67,159/- tax was deducted only on ₹ 91,789/-. Therefore, he disallowed the balance payment of ₹ 5,75,370/-. During the course of appellate proceedings the learned AR fairly conceded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that there is no mark up on Inland transportation charges and the payments made the assessee are in the form of mere reimbursements. We further find that there is no finding of CIT(A) about payments made the Assessee to be in the nature of reimbursement. We therefore feel that the issue needs to be re-examined at the end of A.O. We therefore remit the issue to the file of A.O to decide the issue afresh in the light of submissions made by the Assessee and in accordance with law. The Assessee is also directed to furnish all the necessary details called for by the A.O to decide the issue. (b) With respect to Ocean freight we find that it is A.R s contention that the Ocean freight was paid to Non Resident Foreign Companies and therefore in view of CBDT Circular No. 723 dated 19.09.1995 no TDS was required to be deducted. On the other hand we find that the A.O while making the addition has noted that Soham Logistic Pvt. Ltd. was Assessee s custom agent and not an agent of Non Resident Foreign Companies or was agent of non residents. Before us also no material has been placed on record by the Assessee to demonstrate that the Sohan Logistics Pvt Ltd to whom the Ocean freigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it is not the case of short deduction but the case is of no deduction of TDS. Before us no details of such expenses have been placed on record by both the parties so as to justify thier respective stands. We therefore feel that this issue of payment of TDS on account of services rendered also needs to be re-examined. We therefore set aside this portion of ground to the A.O to decide the issue in accordance with law and after giving a reasonable opportunity to the Assessee. The Assessee is also directed to furnish to all the necessary details called for by the A.O. 27.In the result, this ground of Revenue is partly allowed for statistical purposes. Ground no. 6 is with respect to deletion of addition on account of seed purchases expenses. 28.During the course of assessment proceedings, A.O noticed that Assessee has purchased seeds from various parties including Jyotindra Brothers, a person specified u/s. 40(a)(2b) of the Act. On the basis of the details examined by him, he noticed that Assessee has purchased seeds from its sister concerns at a higher rate than the purchase from outside parties. The Assessee was asked to show cause as to why no disallowance be made u/s. 40( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonable having regard to the fair market value of the goods, made the additions. It was further submitted that Jyotindra Brothers is also taxed at the maximum rate and thus there was no intention to divert any profit in the form of unreasonable or excessive payments. She thus supported the order of CIT(A). 31.We have heard the rival submissions and perused the material on record. Before us it is Assessee s contention that the prices paid to the sister concerns were comparable to the price paid to outsiders and no undue advantage has been passed on to the sister concerns. CIT(A) while deleting the addition has given a finding that the transaction of purchase could not have been with an idea to avoid payment of taxes. Before us Revenue has not placed any material on record to controvert the submissions of the Assessee or the findings of CIT(A). In view of these facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. Ground no. 7 is with respect to deletion on account of addition of milling expenses. 32.On perusing the details submitted by the Assessee, AO noticed that Assessee has debited milling expenses of ₹ 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion more so when no such payments were made in earlier years and therefore the A.O was fully justified in making the disallowance. He further submitted that CIT(A) deleted the addition mainly for the reason that the tax was deducted on the payments made to Jyotindra Industries and Jyotindra Industries was an income tax payee. He submitted that merely that the recipient has paid the tax cannot be the ground for deleting the addition. He thus supported the order of AO. Ld. AR on the other hand reiterated the submissions made before lower authorities and supported the order of CIT(A). 35.We have heard the rival submissions and perused the material on record. We find that A.O while disallowing the expenses has noted that no evidence like challans for sending and receiving the goods have been submitted by the assessee. Before us also no material has been placed on record by the Assessee in the form of challans, transportation receipts bills etc to demonstrate that there was movements of goods between the premises of Assessee and Jyotindra Industries. From the copy of the audit report for year ending 31st March, 2009 of Jyotindra Industries placed at page 128 of the paper book, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by CIT(A) to AO and submits that since the details were furnished, CIT(A) should have granted relief claimed by the Assessee rather than directing the A.O to verify and then decide. Ld. DR on the other hand submitted that u/s. 251 CIT(A) does not have power to remand. 40. We have heard the rival submissions and perused the material on record. We find that the CIT(A) has directed the AO to verify the details and thereafter decide the issue. We find that u/s 251(1) CIT(A) can only confirm, reduce, enhance or annul the assessment. By Finance Act, 2001 w.e.f. 01-06-2001, the words he may set aside has been omitted meaning thereby that CIT(A) has no power to set aside. We also find that the issue raised in this ground is connected with ground no. 5 of Revenue s appeal. While deciding the ground of Revenue hereinabove and for the reasons given therein the matter has been set aside by us the file of AO with directions contained therein. Since the present ground in interconnected no separate adjudication is required and therefore this ground for similar reasons is set aside with ground no. 5 of Revenue s appeal and thus allowed for statistical purposes. Ground no. 2 is with respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for A.Y. 2009-10 45.We now take up the grounds raised by Revenue reads as under:- 1. The Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the disallowance of ₹ 5,72,512/- being depreciation on BMW car treating it as a commercial vehicle. 2. The Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 11,55,370/- made by the Assessing Officer, on account of interest expenses. 3. The Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 9,62,408/- made by the Assessing Officer, on account of factory building expenses. 4. The Ld. Commissioner of income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 17,37,360/- made by the-Assessing Officer, on account of machinery reconditioning charges of existing plant and machinery. 5. The Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 45,63,471/- made by the Assessing Officer, on account of disallowance of expenses u/s.40(a)(ia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under the definition of light motor vehicle . It is further provided that commercial vehicle would not include maxi-cab and motor-cab as per provisions of Motor Vehicle Act means any motor vehicle constructed or adapted to carry more than six passengers but not more than twelve passengers excluding the driver for hire or reward. Similarly the term motor-cab also excludes any motor vehicle for hire or reward. If the provisions of Explanation to this proviso and the definition of maxi-cab and motor cab as given in Motor Vehicles Act, 1988 are read together then motor vehicles used for hire or reward would not be covered under this proviso to section 32 of the Act, and such motor vehicles would be covered under entry (2)(ii) of Item-3 of Part-A of Appendix-I to rule 5 of the Rules. This conclusion further leads to an interference that the Legislature has given benefit of higher depreciation to the assessee not engaged in the business of Motor Buses, Motor Lorries and Motor Taxies on hire and defining such light motor vehicles as commercial vehicles though intentionally excluding vehicles commercially exploited for yielding income from the definition of commercial vehicle f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of various types of vehicles specified herein above shall have the meanings respectively as assigned to them in S. 2 of Motor Vehicles Act, 1988. As per the definition of Motor Vehicle Act, heavy goods vehicle heavy passenger motor vehicle among other things stipulates that a heavy vehicle would be one with the unladen weight which exceeds 12000 kg the light motor vehicle vehicle s apart from other things in the Act would be one whose weight does not exceed 7500 kgs. Before us no copy of the Registration certificate issued by Motor Vehicle Authorities has been placed on record to demonstrate as to the nature of the vehicle i.e. whether the vehicle is heavy motor vehicle or light motor vehicle being considered by them. Further there is no finding by the A.O or CIT(A) that it has been used for the purpose of business nor any material has been placed by the Assessee to demonstrate its use for the purpose of business. In view of the aforesaid facts, we are of the view that the matter needs reexamination at the end of AO. We therefore set aside the issue to the file of AO to decide the issue afresh in accordance with law and after giving a reasonable opportunity of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the submissions made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. As admitted by the Id.AR himself, impugned disallowance is in accordance with the Ahmedabad Tribunal's Special Bench decision in the case of ACIT Vs. Goldmines Shares Finance Pvt. Ltd. 113 ITR 209 and Ahmedabad Tribunal's decision in the case of Vodafone Essar Gujarat Ltd. In view of the Special Bench decision which is binding on the lower authorities and also keeping in view the fact that the High Court decision relied on by the A.R. is not of the jurisdictional High Court, I am of the view that the disallowance made by the AO is in accordance with law. It is upheld. These grounds of appeal are dismissed. 55.Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 56. Before us, ld. A.R. submitted that for the purpose of calculation of deduction under 80IB, the loss of earlier year is not required to be adjusted and for which she placed reliance on the decisions in the case of Sheri Exports vs. JCIT (2013) 33 Taxman.com 446 (Mum), Anil Lad vs. DCIT (2012) 25 Taxman.com 454 (Banglore) and the decision in the case of Jivraj Tea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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