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TMI Blog2015 (5) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... to disallow the allowability of deduction u/s. 32AB, particularly in view of the fact that the assessee is having cash profit of 51.65 crores, which is not contradicted by the revenue. So far as it relates to allowability or otherwise of deduction u/s. 32AB on the income of earlier years, town income and rental income from employees, learned CIT(A) has allowed the claim of the assessee for the reason that these form part of the business income. It is observed from the order passed by the learned CIT(A) that he has not given reasons for the same. Similarly, according to the assessee the dividend and interest income also could not be excluded as per the decisions relied upon by the learned AR. While deciding this issue also the learned CIT(A) has not considered any of the judicial pronouncements. Therefore, keeping in view the interest of justice, we are of the opinion that the issue requires to be restored back to the file of the CIT(A) with a direction to readjudicate the same in the light of the decisions relied upon by the AR after bringing all the facts on record. - Decided in favour of revenue for statistical purposes. Disallowance of convertible bonds/debentures - Held that:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mixed with soda ash for making detergent powder/washing powder - assessee contented for balance amount of 24,000 which is incurred in respect of existing business - Held that:- Restore the issue to the file of the AO with a direction to verify the contention of the assessee that it was incurred for the existing business. On verification, if it is found that these expenses are incurred for existing business then the same should be allowed. - Decided partly in favour of assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... ground No.1 is allowed in favour of the assessee." 5. After hearing both the parties, respectfully following the aforementioned decision of the co-ordinate Bench in respect of the immediate preceding year, we allow ground no.1 in favour of the assessee. 6. Ground no.2 of the assessee's appeal is common with ground nos. 4 & 5 of the revenue's appeal. It relates to two issues - one, grant of deduction u/s. 32AB amounting to ₹ 4,73,55,170 on the amount deposited by the assessee in Industrial Development Bank of India (IDBI) on 26.08.1988. Learned CIT(A) has allowed this deduction on the ground that the assessee has cash profit of ₹ 51.65 crores from the business activity carried on by it and sale of the products. This amount was disallowed by the AO on the ground that all receipts were deposited in the cash credit account with the bank from which overdraft was taken by the assessee from time to time for the purpose of business. The learned CIT(A) has granted relief to the assessee as according to him section 32 AB provides that where an assessee whose total income includes chargeable to tax under the head 'profit and gains of business' has out of such income deposited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard both the parties and their contentions have carefully been considered. So far as it relates to decision of the CIT(A) regarding grant of deduction in respect of IDBI deposit, we are of the opinion that the learned CIT(A) has correctly decided the issue in favour of the assessee. The assessee is having cash profit of ₹ 51.65 crores and only for the reason that deposit of IDBI is made from cash credit account, which was showing overdraft is not sufficient to disallow the allowability of deduction u/s. 32AB, particularly in view of the fact that the assessee is having cash profit of ₹ 51.65 crores, which is not contradicted by the revenue. So far as it relates to allowability or otherwise of deduction u/s. 32AB on the income of earlier years, town income and rental income from employees, learned CIT(A) has allowed the claim of the assessee for the reason that these form part of the business income. It is observed from the order passed by the learned CIT(A) that he has not given reasons for the same. Similarly, according to the assessee the dividend and interest income also could not be excluded as per the decisions relied upon by the learned AR. While deciding this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's appeal relates to disallowance of Bhanwad Prospecting and survey expenses amounting to ₹ 71,963. This issue is stated to be covered by the aforementioned order of the Tribunal dated 16.05.2014 in the assessee's own case for A.Y. 1987-88 in ITA No. 4565/Mum/2003. It was the case of the AR that since deduction u/s. 35E is allowed this ground was dismissed. It is therefore submitted by him that similar order may be passed. 15. We have heard both the parties. The Tribunal in the order for A.Y. 1987-88 (supra) vide para nos. 7 & 8 has held as under: "7. Ground No.2 as reproduced above is relating to the disallowance of Bhanwad Prospecting & Survey Expenses of ₹ 1,6 1,176/-. The ld. A.R. of the assessee has submitted that the issue taken vide ground No.2 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 para 14 of the said decision has observed that since the assessee had been allowed deduction under section 35(E) of the Income Tax Act (hereinafter referred to as the Act), hence the grievance of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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. In this view of the situation after hearing both the parties, we restore this issue to the file of the AO with same directions as have been given above. This ground is considered to be allowed for statistical purposes in the manner aforesaid. 17. Ground no.7 relates to disallowance of provision for interest on electricity duty amounting to ₹ 11,55,549. This issue was stated to be covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein vide order dated 16.05.2014 in para 18, it has been held as under: "18. Ground No.8 as reproduced above relates to provision for interest on electricity duty. The ld. A.R. has submitted that the identical issue, for earlier assessment years i.e. assessment year 1984-85, 1985-86 and 1986-87 has been referred back to the AO. Facts for this year being identical this issue is accordingly referred back to the AO to dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile of the AO with a direction to verify the contentions of the assessee. If the foreign travel expenses are incurred in respect of already existing business, the same should be allowed. For the rest of the disallowance amounting to ₹ 3,16,976 the order of the CIT(A) is upheld as the same is not being pressed. This ground is partly allowed. 22. Ground no.11 relates to family planning expenses amounting to ₹ 79,680/-. It was submitted the disallowance of similar expense in the assessee's own case for A Y 1987-88 was restricted to 50%. In the said order the Tribunal vide para 21 has observed as under: "21. Ground No.11 as reproduced above relates to family planning expenses. The ld. A.R. has stated that the family planning expenses were incurred by the assessee on the workers who, though, were not regular employees of the assessee, but in fact their earnings depend upon the business of the assessee. He has relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of 'Atlas Cycle Industries Ltd.' 128 ITR 60 wherein the Hon'ble High Court has upheld the disallowance of 50% made by the Income Tax Authorities for such type of expenditures incurred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders. The ld. A.R. of the assessee has submitted that the issue taken vide ground No.6 is covered in favour of the assessee by the decision of the Tribunal in the own case of the assessee for assessment years 1995-96 and 1996-97 vide ITA No.2658/M/2002 and 5728/M/06 respectively. The Tribunal while dealing with the identical issue for assessment year 1995-96 has directed the AO to decide the same in I.T.A. No .44 64/ Mum/20 03 I.T.A. No .45 65/ Mum/20 03 9 accordance with the decision of the Tribunal in the case of TELCO decided in ITA No.5449/M/1998. Since for the earlier assessment years, the issue has been remanded back to the AO for deciding the same as observed above, the facts being identical for this year also, this issue is remanded back to the AO to decide the same as per the directions of the Tribunal given for assessment year 1995-96 and 1996-97 in the own case of the assessee" Accordingly, after hearing both the parties, we restore this issue to the file of the AO to decide the same in the light of the earlier year's decision in the assessee's own case. This ground is considered to be allowed for statistical purpose in the manner stated above. 25. Ground no.14 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said issue in accordance with the decisions of the Tribunal on this issue in the earlier assessment years." Respectfully following the aforesaid decision, we direct the AO to decide the issue in accordance with the aforementioned decision of the Tribunal on this issue in earlier assessment years. It may be mentioned here that so far as it relates to sundry contribution of ₹ 4,064 the same was not pressed due to smallness of amount. Therefore to this extent the disallowance is upheld. This ground is considered to be partly allowed for statistical purpose. 26. Ground no.15 relates to disallowance of Delhi Office expenses amounting to ₹ 1,25,000. As per chart this issue is also covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein as per para 20 of order dated 16.05.2014 it has been observed as under: "20. Ground No.10 as reproduced above relates to Delhi office expenses. The ld. A.R. has stated from the chart that the issue is squarely covered in favour of the assessee for earlier assessment years i.e. assessment year 1983- 84 to 1986-87. The AO is accordingly directed to decide the said issue in the light of the decisions given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance relating to mineral rights tax is concerned, the ld. A.R. has fairly stated that the issue has already been decided by the Tribunal in the earlier assessment year i.e. assessment year 1986-87 against the assessee. The Tribunal, while deciding the said issue for assessment year 1986-87, has observed as under: "42. We have considered the rival submissions and perused the orders of the lower authorities. It is not in dispute that the company purchased limestone on which MRT was payable to the suppliers. It is also not in dispute that the assessee has discounted MRT in its purchase consideration payable to the suppliers of the lime stone which means that to the extent of MRT, the assessee has retained the money from the suppliers on the pretext that it will make the payment to the Government. Therefore, by not paying the said amount to the Government, the assessee has retained public fund with itself. As the assessee itself has agreed to pay the MRT on the limestone purchased by it and as it has not discharged the liability till the end of the accounting year, we do not find any reason to tamper with the findings of the Ld. CIT(A). The disallowance in respect of Mineral R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renovation expenses Rs.1,85,623 Food exp. (net of recoveries) Rs.4,79,458 Depreciation Rs.1,44,721 Maintenance expenses Rs.4,34,994 Rs.20,10,227 This ground was pressed only to the extent of food expenses amounting to ₹ 4,79,458. It was contended that to this extent the issue is decided in favour of the assessee by the latest decision of the Tribunal rendered in respect of A. Y. 1996-97, which is filed at Sr. no.12 of the paper-book. In this order dated 17.08.2007 (ITA No. 5728/Mum/2004) the issue has been discussed at para 4.2 and 4.3, which read as under: "4.2 The next ground is against the disallowance of expenses on maintenance of guest house. The food expense of ₹ 42,29,391 has been claimed by the assessee as allowable. In the assessee's own case for assessment year 1995-96 in ITA No. 2658/Mum/02 dated 26-07-2006 this issue has been considered and held in favour of the assessee. Respectfully following the same we direct the assessing officer to allow the expenditure incurred by the assessee for food served at the guest house. Coming to the other expenses incurred on the guest house, i.e. salaries ₹ 29,41,078; repairs ₹ 5,91,940; and society ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide para 37 of its order has observed as under: "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 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." Accordingly, this ground being also covered in favour of the assessee the same is dismissed. 38. Ground no.3 relates to disallowance of ₹ 1,98,012 being incentive bonus given to workers. This issue is stated to be covered by the order of the Tribunal for A.Y. 1987-88 (supra) in favour of the assessee. The Tribunal vide para 38 & 39 of its order has observed as under: "38. Ground No.3 relates to incentive bonus to workers. The similar issue on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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