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TMI Blog2015 (5) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 December 21, 2009 and December 21, 2010. I. T. A. No. 161/Kol/2012 filed by the Revenue and C.O. No. 26/Kol/2012 filed by the assessee are against the order of the Commissioner of Income-tax (Appeals)-XII, Kolkata in Appeal No. 287/CIT(A)-XII/10(3)/10-11 dated November 10, 2011. Assessment was framed by ITO, Ward-10(3), Kolkata under section 143(3) of the Act for the assessment year 2008-09 vide his order dated December 14, 2010. I.T.A. No. 1094/Kol/2012 filed by the Revenue is against the order of CIT(A)-XII, Kolkata in Appeal No. 459/CIT(A)-XII/12/2011-12 dated April 19, 2012. Assessment was framed by Additional Commissioner of Income- tax, Range-12, Kolkata under section 143(3) of the Act for the assessment year 2009-10 vide his order dated December 30, 2011. I. T. A. No. 2115/ Kol/2013 filed by the Revenue and C.O. No.128/Kol/2013 filed by the assessee are against the order of Commissioner of Income-tax (Appeals)-XII, Kolkata in Appeal No. 209/CIT(A)-XII/Cir-12/2012-13 dated April 23, 2013. Assessment was framed by Deputy Commissioner of Income-tax, Circle-12, Kolkata under section 143(3) of the Act for the assessment year 2010-11 vide his order dated February 22, 2013. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment; operation and maintenance of road or bridges as envisaged in section 80-IA(4). Traffic signal system is a facility which assists in regulating vehicular and pedestrian traffic on the road but by itself installation of such system does not amount to development of roads. Applying the functional test one can say that installation, operation and maintenance of traffic signal system does not constitute business of development of roads. Infrastructure facility such as road can function sans electric traffic signalling system also. It is not necessary for the developer of the road to install signalling system because roads can be used as infrastructure facility even without sophisticated electronic system. In the assessee's case, it was not all involved in construction or development of roads but it installed traffic signalling system on the preexisting road network and therefore the assessee's business cannot be equated with business development, operation and maintenance of roads as envisaged in section 80-IA(4)." 4. Aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), who allowed the claim of the assessee on the basis of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the publicity charges received on account of the road automatic traffic signals and foot overbridges are given under paragraphs 19 and 21 and in the profit and loss account attached to Form 10CCB (audit report under section 80-IA(7)) as filed with the return.' The assessee vide its letter dated November 27, 2006 further sub mitted the details of nature of infrastructural facilities maintained i.e. No location and size of these facilities in response to item No. (xxvi-a) of the Assessing Officer's letter dated December 13, 2006 and details of publicity charges from infrastructural facilities showing number location, bill date, period and amount of publicity charges in response to item No. (xxvi-b) of the same letter of the Assessing Officer. The details are available at pages 21 to 27 of the paper book. The assessee- company vide its letter dated December 20, 2006 also submitted the details regarding the apportionment of common expenses to the infrastructural facilities which are available at pages 28 and 29 of the paper book. The apportionment of all the expenses have been shown in the profit and loss account which is evident from item No.(xxi) of Form 10CCB of the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Calcutta High Court in the assessee's own case in I. T. A. T. No. 49 of 2010 for the assessment year 2004-05, G. A. No. 894 of 2010 dated April 22, 2010 whereby quashing of revision order under section 263 of the Act by the Tribunal was upheld as under : "The court : The Revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 against the order dated September 30, 2010 of the Income-tax Appellate Tribunal 'A' Bench, Kolkata for the assessment year 2004-05. The appellant proposed the following substantial questions of law : '(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in quashing the revision order under section 263 of the Income-tax Act, 1961, passed by the Commissioner of Income-tax, on the ground that the Assessing Officer had taken one of the possible views while, in fact, the question is one of law and not fact and incorrect appreciation of law by the Assessing Officer is amenable to correction through the instrumentality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of deduction under section 80-IA of the Act in the case of the assessee was the assessment year 2004-05 and this has become final after the decision of the hon'ble Calcutta High Court confirming the order of Income-tax Appellate Tribunal in quashing revision order passed by the Commissioner of Income-tax under section 263 of the Act. 7. However, learned counsel for the assessee stated that in sister concern's case, i.e., Selvel Transit Advertising Pvt. Ltd., the first year was the assessment year 2001-02 and for both assessment years 2001-02 and 2002-03 returns were filed by the assessee and the Revenue accepted the same under section 143(1) of the Act. However, assessments were taken up for scrutiny by issuing notice under section 143(2) of the Act for assessment years 2003-04, 2004-05, 2006-07 and 2007-08 and in each of the assessment year deduction under section 80-IA of the Act was allowed but for the assessment year 2003-04 there was dispute with regard to quantum of deduction under section 80-IA of the Act which was resorted to in favour of this assessee. Learned counsel for the assessee relied on the proposition laid down by various High Courts that once ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing to continue the relief of tax holiday granted to the assessee-company for the assessment year 1968-69, in the assessment year under reference, that is, 1969-70, without disturbing the relief granted for the initial year. It should be stated that there is no provision in the scheme of section 80J similar to the one which we find in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. No doubt, the relief of tax holiday under section 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds. But without disturbing the relief granted in the initial year, the Income- tax Officer cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted. The learned advocate for the Revenue, invited our attention to certain observations made by this court in CIT v. Satellite Engineering Ltd. [1978] 113 ITR 208 (Guj), where the court was concerned with the question, whether an industrial undertaking which did not satisfy the prescribed conditions so as to entitle itself to the relief under section 80J in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same was allowable in the subsequent years also unless there was any material change in the succeeding years. It is well-settled law that the principles of res judicata do not apply to Income-tax proceedings and assessment for each year is an independent proceeding. It is now equally well established that issues that have been settled and accepted over a period of time should not be revisited in subsequent assessment years in the absence of any material change which would justify the change in view. The Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC) has held that unless there is a material change in justifying the Revenue to take a different view the earlier view which has been settled and accepted of a several years should not be disturbed. The relevant extract from the said judgment is quoted below (page 329) : 'We are aware of the fact that strictly speaking res judicata does not apply to Income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80J of the Income-tax Act in respect of its new unit, namely, 10 ton furnace division and steel unit "B". This case pertains to the assessment year 1976-77. A perusal of the order of the Assessing Officer would reveal that for the first time, claim under section 80J of the Act was made by the assessee in the assessment year 1973-74. The assessee was denied that claim by the Assessing Officer. For this reason, the Assessing Officer denied the claim in this assessment year as well, taking note of the fact that the matter pertaining to 1973-74 was pending before the Income-tax Appellate Tribunal. It is a matter of record that the appeal filed by the assessee for the assessment year 1973-74 was allowed by the Income-tax Appellate Tribunal. The effect thereof was that the assessee was granted the requisite deduction under section 80J of the Act for the assessment year 1973-74. The Department has sought reference under section 256(1) of the Act which reference application was also rejected by the Tribunal. Likewise, for the assessment years 1974-75 and 1975-76, the claims of the assessee were allowed. The assessee, once given the deduction under section 80J of the Act is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning or the company commences work by way of repairs to ocean-going vessels or other powered craft. Such deduction is also available for the seven assessment years immediately succeeding the initial assessment year. Surely in cases where an assessee is held to be eligible for deduction in the initial assessment year, the same cannot be denied in the subsequent assessment years on the ground of ineligibility since the set of facts which enable an assessee to claim to be eligible for deduction under section 80-I of the Act occur in the previous year relevant to the initial assessment year and have to be examined in the initial assessment year. In such cases, where the facts on the basis of which the deductions are claimed are subject matter of an earlier assessment year and do not arise in the current assessment year, it would not be possible for an Assessing Officer to take a different view in the current assessment year without altering or reopening the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Saurashtra Cement and Chemical Industries Ltd. [1980] 123 ITR 669 (Guj) is quoted below (page 675): 'The next question to which the Tribunal addressed itself, and in our opinion rightly, was whether the Income-tax Officer was justified in refusing to continue the relief of tax holiday granted to the asses see-company for the assessment year 1968-69, in the assessment year under reference, that is, 1969-70, without disturbing the relief granted for the initial year. It should be stated that there is no provision in the scheme of section 80J similar to the one which we find in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. No doubt, the relief of tax holiday under section 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds. But without disturbing the relief granted in the initial year, the Income-tax Officer cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted.' &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite conditions for allowance of deduction has been satisfied, the same cannot be questioned in future years unless and until the Revenue disturbs the initial assessment year. The hon'ble Delhi High Court in the case of CIT v. Delhi Press Patra Prakashan Ltd. (No. 2) [2013] 355 ITR 14 (Delhi), has considered this issue by following the decision of the hon'ble Supreme Court in the case of Radhasoami Satsang [1992] 193 ITR 321 (SC), and of the hon'ble Bombay High Court in the case of Paul Brothers [1995] 216 ITR 548 (Bom), and also Saurashtra Cement and Chemical Industries Ltd. v. CIT [1980] 123 ITR 669 (Guj). Similar are the facts in the case of sister concerns of the assessee, i.e., Selvel Transit Advertising Pvt. Ltd. In term of the above, we confirm the order of the Commissioner of Income- tax (Appeals) on this issue and dismiss this common issue of the Revenue's appeals. 11. The next issue in I. T. A. No. 657/Kol/2011 is as regards to the order of the Commissioner of Income-tax (Appeals) allowing the depreciation on LED video display board considering the same as temporary structure. For this the Revenue has raised following ground No. 2 : &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature, are purely temporary structures. Even sometimes, these structures are not taken by the assessee for reuse again. When such structures are put on land not belonging to the assessee, the expenditure is held to be the nature of revenue in view of the judgment of the hon'ble Supreme Court in the case of CIT v. Madras Auto Service P. Ltd. [1998] 233 ITR 468 (SC). In view of the above, we confirm the order of the Commissioner of Income-tax (Appeals) and this issue of the Revenue's appeal is dismissed. 13. The next issue in this appeal of the Revenue in I. T. A. No. 657/Kol/2011 is against the order of the Commissioner of Income-tax (Appeals) allowing depreciation on intangible assets considering the same as temporary structures. For this, the Revenue has raised following ground No. 3 : "3. That the learned Commissioner of Income-tax (Appeals) erred in allowing depreciation on intangible assets considering the same as temporary structure without appreciating the facts and circumstances of the case." 14. We have heard rival submissions and gone through facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial rights for fifty years to use the entire area allotted to it and according to him, this falls under the category of, "any other business or commercial rights of similar nature". Learned counsel for the assessee argued that these rights for commercial uses are owned by the assessee and used by it during the relevant year for the purposes of business or profession. Learned counsel for the assessee referred to the particular clause 15 of the terms and conditions of the tender issued by KMC and the same reads as under : "That the right of display of advertisement on the signal posts will be allowed at a reduce rate of Rs. 550 per sq. mtr. per annum, inclusive of all charges for a period of 10 (ten) years from the date of installation. At the end of this period of 10 (ten) years, the normal advertisement charge shall be levied at the usual prescribed rate of the Calcutta Municipal Corporation." And finally agreement was entered between the assessee and KMC on December 20, 1995 and the relevant approvals for proposal of illuminated automatic traffic signals from DCP, Traffic Department, Lalbazar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t issue in this appeal of the Revenue is against the order of the Commissioner of Income-tax (Appeals) allowing expenditure on prior period expenses related to earlier years. For this, the Revenue has raised following ground No. 4 : "4. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in allowing expenditure on account of prior period expenses related to earlier years." 17. We have heard rival submissions and gone through the facts and circumstances of the case. We find that the Commissioner of Income-tax (Appeals) has deleted the disallowance of prior period expenses relied on the assessee' s own case for assessment years 2003-04, 2004-05 and 2005-06 decided by the Income-tax Appellate Tribunal in I. T. A. Nos. 541, 494, 820/ Kol/2008 order dated December 11, 2009. The Commissioner of Income- tax (Appeals) observed in para 8.2 as under : "8.2. I have considered the submission of the appellant and perused the assessment order. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306 (SC) we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to section 43B of the Income-tax Act, as introduced by the Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from April 1, 1988. Such being the position, the deletion of the amount paid by the employees' contribution beyond due date was deductible by invoking the aforesaid amended provisions of section 43B of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal." 20. Once the issue is decided by the hon'ble jurisdictional High Court in the case of Vijay Shree Ltd., wherein it is held that the provident fund and employees State insurance are paid on or before the due date of filing of return under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial Corporation while the Kolkata Municipal Corporation has issued a trade licence for the year 2008-09 and the proprietor was also paying electricity bills from that address. The Assessing Officer has made the addition even without providing the copy of Inspector's report to the appellant so that any rebuttal of his report could be filed by the appellant. On perusal of copies of bills issued by M/s. Vijay Industrial Corporation, it was observed that he was having value added tax registration and charging applicable value added tax on the sales made by him to the appellant-company. All the payments of purchases to M/s. Vijay Industrial Corporation, were made by the appellant-company through cheques. In view of documentary evidences produced by the appellant in support of existence of M/s. Vijay Industrial Corporation, I am of the opinion that there is no reason to hold that the purchases made by the appellant from him were bogus. In view of the above, the Assessing Officer is directed to delete the addition of Rs. 16,75,875. Ground No.11 is allowed." Aggrieved the Revenue came in appeal before us. 23. The assessee furnished proofs to substantiate the purchases made from M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; "4. For that the learned Assessing Officer has materially erred in law and on facts of the case in invoking the provisions of section 115JB in the case of the appellant even though there was no 'book profits' as per provisions of sub-sections (1) and (2) of section 115JB of the Income-tax Act, 1961. 5. For that the decision of the Income-tax Appellate Tribunal, Bombay in N. W. Exports Ltd. v. Asst. CIT relied upon by the learned Assessing Officer is in fact in favour of the contention of the assessee as regards the adding back by the Assessing Officer at the 'provision for diminution in value of invest' Rs. 85,69,735 for computing book profit under section 115JB." 25. We have heard rival submissions and gone through facts and circumstances of the case. We find that the Commissioner of Income-tax (Appeals) has confirmed the action of the Assessing Officer for the simple reason that Explanation 1 of section 115JB(2) clause (i) was inserted by the Finance (No. 2) Act, 2009 with effect from April 1, 2001 retrospectively in respect to provision for diminution in the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under : "Grounds Nos. 1 to 5 of the appeal are related to the addition made by denying 100 per cent. depreciation on hoarding structures. I have considered the findings of the Assessing Officer on this issue and the submission made by the authorised representative. In fact this issue has been considered by my predecessor the learned Commissioner of Income-tax (Appeals) for the assessment year 2005-06 Appeal No. 518//XI/DCIT-12/07-08) dated February 26, 2008. The hon'ble Income-tax Appellate Tribunal has also considered this issue for the assessment year 2005-06 (I. T. A. No. 820/Kol/2008 dated December 11, 2009) when the Department had gone in appeal. Since this issue is covered, I do not find any reason to interfere in it. Therefore, addition made on this ground is deleted. As a result, the appeal is allowed." We find that this issue is now covered by the decision of this Tribunal in the assessment year 2005-06 in I. T. A. No. 820/Kol/2008 of the Revenue's appeal, wherein 100 per cent. depreciation on hoarding structure was claimed under the head temporary erections and the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wability of expenses in the case of lower deduction of tax." 30. Brief facts are that during the course of survey under section 133A of the Act on the assessee by the Department on February 13, 2006 noticed that the assessee has deducted TDS under section 194C of the Act, i.e., at lower rate on payment made to the persons who has sublet the premises on whom rent was paid. According to the Revenue, the payment of rent attracts TDS under section 194-I of the Act and the assessee has deducted short TDS. Therefore, on account of short TDS, the Assessing Officer disallowed the payments made to co-traders by invoking the provisions of section 40(a)(ia) of the Act. Aggrieved the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), who allowed the claim of the assessee by observing as under : "6. The third ground is related to TDS deducted by the assessee under section 194C on site hire charges paid to traders, i.e., advertising agency which the Assessing Officer has contended that the TDS deduction should have been under section 194-I of the Income- tax Act. I have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consistency as well as on merits that the Revenue has accepted this as a contractual payment and there is no change in facts and circumstances, hence, the disallowance be deleted. On the other hand, the learned senior Departmental representative accepted the argument of learned counsel qua the facts of the case. Once this is the position, we accept the contention of the assessee's counsel as regards to consistency that once on similar facts the Revenue has accepted the payments as contractual payments now they cannot deviate. This issue has been dealt with at length in paragraph 10 above and following the same proposition, we confirm the order of the Commissioner of Income-tax (Appeals) allowing the expenses. 32. Learned counsel for the assessee also made argument that on short deduction of TDS, no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act in view of the decision of the hon'ble Calcutta High Court in the case of CIT v. S. K Tekriwal [2014] 361 ITR 432 (Cal), wherein it is held that the no disallowance can be made due to short deduction of TDS. 33. In view of the above two propositions, we confirm the order of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit and substance in the contention of the assessee that no expenditure had been incurred by the assessee for earning the exempt income on this point because the investment has been made by the assessee in the group concern and not in the shares of any unrelated party. Therefore, the primary object of investment is holding and controlling stake in the group concern and not earning any income out of investment. Further, the investments were made long back and not in the year under consideration. Therefore, in view of the fact that the investment are in the group concern we do not find any reason to believe that the assessee would have incurred any administrative expenses in holding these investments. The Assessing Officer has not brought on record any material to show that the assessee has incurred any expenditure in relation to the income which does not form part of the total income. Section 14A has within it implicit the notion of apportionment in the cases where the expenditure is incurred for composite/indivisible activities in which taxable and non taxable income is received but when no expenditure has been incurred in relation to the exempt income then principle of apportion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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