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TMI Blog2015 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the A.O not to exclude 'other income' being bad debts recovered, Insurance claim, Sundry Creditors, Forfeiture of advances and Exchange rate fluctuation from the business profits, for the computation of deduction u/s 80HHC - Held that:- As decided in assessee's own case in A.Y. 2004-05 [2010 (10) TMI 974 - ITAT AHMEDABAD] Commissioner of Income Tax (Appeals) was justified in holding that 90% of such receipts are to be excluded for arriving at eligible profits of business. No specific error in the order of the Learned Commissioner of Income Tax (Appeals) could be pointed out by the Learned Departmental Representative. - As far as the issue with respect to exchange fluctuation and forefeiture of advances are concerned, we find that Ld. CIT(A) has considered the aforesaid items as being eligible for deduction u/s. 80HHC in view of the fact that those amounts have been assessed as business income by the AO. Before us, Revenue has not brought any material to controvert the findings of Ld. CIT(A). - Decided in favour of assessee. Addition u/s. 40(a)(i) - TDS short deducted on Royalty payment - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. We further find that Ld. CIT(A) has noted that AO has not come out with any specific finding for making disallowance in respect of any particular bad debt but had made estimated disallowance. Before us, Revenue has not brought any contrary binding material in its support nor could controvert the finding of Ld. CIT(A). We therefore find no reason to interfere with the order of Ld. CIT(A) and thus this ground of revenue is dismissed. - Decided in favour of assessee. - ITA No.1613/Ahd/2008 - - - Dated:- 26-3-2015 - Mukul Kumar Shrawat, JM And Anil Chaturvedi, AM,JJ. For the Appellant : Shri M K Patel, Sr. DR For the Respondent : Shri Nimesh Yadav, AR ORDER Per : Anil Chaturvedi, Accountant Member:- This is the Revenue s appeal against the order of Ld. CIT(A)-VIII, Ahmedabad dated 29-02-2008 for A.Y. 2001-02. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a company engaged in the business of manufacturing of induction furnaces. Assessee filed its return of income for A.Y. 2001-02 on 25-10-2001 declaring total income of ₹ 4,69,93,442/-. The case was selected for scrutiny and thereafter as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of investment in shares and mutual funds during the year under consideration and had also not stated as to whether it has maintained separate accounts of interest bearing funds and non interest bearing funds for the purpose of investments. He was therefore of the view that in the absence of aforesaid information, it could be inferred that assessee has invested interest bearing funds for making investments in shares and mutual funds. He also noted that no deduction can be allowed in respect of administrative expenses incurred for earning exempt income. He therefore following the decision in the case of Harish Krishna kant Bhatt vs. ITO (2004) 91 ITD 311 (Ahd) worked out the disallowance of administrative expenses of ₹ 1,44,038/- u/s. 14A. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who deleted the addition by holding as under:- 4.1 Before me, the learned counsel for the appellant contended that the AO failed to appreciate that the appellant had bought 10,000 10.50% tax-free bonds of ₹ 1,000 each of Konkan Railway Corporation limited, a Government of India undertaking, in the year 1995 and maturity term of the said investment has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the appellant. 5. Before us at the outset Ld. AR submitted that on identical facts in assessee s own case for A.Y. 2004-05, the issue has been decided by the Hon ble Tribunal in its favour. He placed on record the copy of the aforesaid decision in ITA No. 4231/Ahd/2007 order dated 29-10-2010. He also pointed to the relevant portion of the order. He therefore submitted the since the facts of the case in the year under appeal are identical to that of earlier years, the issue has rightly been decided in favour of the assessee by Ld. CIT(A). He thus supported the order of Ld. CIT(A). Ld. DR on the other hand supported the order of AO. 6. We have heard the rival submissions and perused the material on record. We find that Ld. CIT(A) while deleting the addition has noted that assessee has received only two half yearly interest warrant bonds during the year under appeal and which were collected in routine through bank account. He has further noted that the investments were made in the year 1995 and there have been no transactions in bonds during the year under review. We further find that on identical facts, the Co-ordinate Bench of Tribunal while deciding the assessee s a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C at ₹ 49,37,379/- as against claim of assessee of ₹ 51,85,178/- and the excess deduction at ₹ 2,47,799/- worked out by him was disallowed. 9. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who after considering the submissions of the assessee decided the issue by holding as under:- 5.2 I have considered the submissions of the A.R. carefully. As regards exclusion of interest, as the same is not derived from export business, the A.O. has rightly excluded the same from business profile. As regards training fees collected of ₹ 1 ,08,000/-, the same is not income derived from export business as decided against the appellant by CIT(A)-VIII in A.Y. 2001-02 and 2000-01. So the finding of the Assessing Officer is confirmed on the issue of reduction of training fees collected. The A.O is directed to verify and ensure that the disallowance is not made again as similar addition was made in the original assessment and sustained in first appeal by ClT(A). The bad debts recovered, insurance claims, sundry creditors, forfeitnre of advances and exchange rate fluctuation have arisen fully out of the regular business activities and not out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out by the Learned Departmental Representative. We therefore, confirm the order of the Learned Commissioner of Income Tax (Appeals) and dismiss the ground of appeal of the Revenue. 13. We thus find that on identical facts for A.Y. 2004-05, the issue has been decided by the Co-ordinate Bench of Tribunal in Assessee s favour. Before us, Revenue has not brought any contrary binding decision in its support nor could distinguish the decision of the Tribunal for A.Y. 2004-05. As far as the issue with respect to exchange fluctuation and forefeiture of advances are concerned, we find that Ld. CIT(A) has considered the aforesaid items as being eligible for deduction u/s. 80HHC in view of the fact that those amounts have been assessed as business income by the AO. Before us, Revenue has not brought any material to controvert the findings of Ld. CIT(A). We therefore find no reason to interfere with the order of Ld. CIT(A) and thus this ground of Revenue is dismissed. Third ground is with respect to deleting the addition u/s. 40(a)(i) of the Act. 14. During the course of assessment proceedings, AO noticed that assessee had claimed royalty expenses of ₹ 62,92,000/- on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the, provision 5 of this Act shall apply to the extent they are more beneficial to that assessee. Needless to add that rate of TDS under the DTAA (Article 12) at 15% of the royalty payable is more beneficial to the assessee and hence the general rate in First Schedule to the Finance Act does not come into operation. The appellant has deducted TDS from the royalty payments in accordance with the rate prescribed under Article 12 of the DTAA. The prescribed declarations under section 195 have been filed with the AO/the TDS officer, the Reserve Bank of India and the authorised dealer. The appellant has thus claimed the deduction in respect of royalty payments in accordance with section 40(a)(i). 6.2 I have considered the submissions of the A.R, carefully. I find that the appellant has made TDS as per the rates provided in DTAA, hence disallowance made by the A.O. is not justified, and the same is deleted. 15. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 16. Before us, Ld. DR supported the order of AO and further submitted that the matter be sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. The intention of the Legislature is to allow deduction in respect of any tax or duty in computing under section 28 the income of that previous year in which such sum is actually paid by the assessee. The intention is made more specific by providing that it would be so irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by the assessce, The Hon. Supreme Court in Berger Paints India Limited 266 ITR 99 (SC) has held as under:- The entire amount of excise duty/customs duty paid by the assessee in a particular accounting year is allowable under section 43B of the Income lax Act, 1961, as deduction in respect of that year, irrespective of the amount of excise duty/customs duty included in the valuation of the assessee's closing stock at the end of the accounting year as relating thereto. 7. 2 I have considered the submissions of the A,R. carefully. As the excise duty has been paid during the year, the same is directed to be allowed u/s.43B of the IT. Act. 19. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 20. Before us, Ld. DR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - ₹ 74,21,369) [and which has not been funded under section 40A(7) has been disallowed during the previous year. The appellant has paid ₹ 5,96,837 as LIC group gratuity policy premium and so claimed and accepted in the original assessment. The appellant also invites attention to note no. 2 in computation of total income for the previous year and gratuity provision made of ₹ 7,62,641, in respect of three employees, who retired on 31st March, 2001, have been claimed under section 40A(7)(b), since the said gratuity of ₹ 7,62,641 have since been paid to the respective retired employees in April, 2001 as per the receipts filed on records of the predecessor A0. The remaining sums of ₹ 13,884, ₹ 10,077 and ₹ 1,553, aggregating ₹ 25,514, are the gratuity paid and gratuity policy expenses paid during the previous year and claimed/allowed in the assessment. As the entire cumulative gratuity provisions of ₹ 79,81,247/- as on 31st March, 2001 have been disallowed during the assessment years 2000-01 and 2001-02 and not claimed, there has been no error on facts of the case on part of the predecessor AO. Thus it was submitted that non-dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A) who deleted the addition by holding as under:- 9.1 Before me, the learned counsel of the appellant submitted that the sales commission is in respect of sales effected during the previous year, is relatable to the previous year, was actually paid by cheque during the previous year and the said sales commission was not outstanding for payment and that it was not a provision entry for any outstanding expenses. The appellant adds that the opening balance in sales commission provision is in respect of liabilities accrued during earlier years and the same has not been charged to Profit and Loss account of the previous year. The sales commission of ₹ 2 lacs accrued, due and was paid by cheque during the previous year. 27. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 28. Before us, Ld. DR submitted the no details of sales commission was provided by the assessee before AO and further Ld. CIT(A) decided the issue without calling a remand report from AO. He therefore supported the order of AO. Ld. AR on the other hand reiterated the submission made before Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant in A.Y. 2004-05 , A.Y. 2003-04 by holding that the bad debts written off are of the name of price rebate. Considering that similar facts existed in the year under consideration and the finding in the original assessment for this year that conditions as required for claim of bad debts were satisfied except for bad debts of ₹ 5.45 lakhs which were further allowed by the CIT(Appeals) and that the A.O. has not come out with specific finding for making/ disallowance in respect of any particular bad debt, but has made estimated disallowance , the disallowance of bad debts is held to be not justified and the same is deleted. 31. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 32. Before us, Ld. DR supported the order of AO. On the other hand, Ld. AR reiterated the submissions made before AO and supported the order of CIT(A). 33. We have heard the rival submissions and perused the material on record. We find that Ld. CIT(A) after considering the submissions of the assessee and following the order of his predecessor granted relief to the assessee. We further find that Ld. CIT(A) has noted that AO has not come out with any specific finding for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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