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TMI Blog2015 (7) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014/copy on record). The tribunal, it was further submitted, has relied on the decision in the case of Bharat Earth Movers vs. CIT [2000] 245 ITR 428 (SC), even as the assessee also relies on the decisions in the case of Badridas Daga vs. CIT [1958] 34 ITR 10 (SC) and Metal Box Co. of India Ltd. v. Their workmen [1969] 73 ITR 53 (SC). The matter stands followed by the tribunal for the subsequent years as well. The ld. Departmental Representative (DR), on the other hand, would rely on the orders of the authorities below. The said decisions have been considered and found inapplicable by the Revenue in view of the absence of identifiable parameters, so that the degree of uncertainty is far greater, making it a provision for a liability which is vague, besides being in futuro. 3. We have heard the parties, and perused the material on record. The tribunal for A.Y. 1996-97 has followed its order for A.Y. 1997-98 (in ITA No. 1294/Mum/2001 dated 26.09.2012). As regards the Revenue's contention of the provision being not on a scientific basis, based on an empirical study, even as observed by the apex court in Bharat Earth Movers (supra), the tribunal has directed the provision to be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Petroleum, are not even remotely related to the business of the assessee. Pursuance of the social economic goals of the Government, do not advance the business of the assesseecompany in any manner. The hon'ble supreme court in CIT vs. N.M. Rayaloo Iyer & Sons [1961] 41 ITR 671 (SC) has clarified that commercial expediency must be viewed in light of the requirement of the business and the capital services referred by the persons concerned, i.e., is to be viewed objectively and not on abstract considerations. The claim being disallowed and being confirmed so, the assessee is in second appeal. 6. Before us, the assessee's contention was of its claim as being squarely covered by the orders by the tribunal in the assessee's own case for earlier years, i.e., A.Y. 1988-89 onwards as well as for the subsequent years being A.Ys. 2000-01 and 2001-02. 7. We have heard the parties, and perused the material on record. The assessee has placed the decision by the tribunal in its' case for earlier years, being A.Ys. 1993-94 to 1995-96 (in ITA Nos. 5856 to 5858/Mum/1999 dated 31.07.2012), on record. The tribunal, following its earlier decision in the assessee's case for A.Y. 1989-90, has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of section 43B, is another matter. The matter stands discussed extensively by the tribunal in the case of Hercules Pigment Industry vs. ITO [2014] 146 ITD 31 (Mum); Raj Petro Specialities (P.) Ltd. vs. Asst. CIT [2013] 157 TTJ 349 (Mum) (58 SOT 60), rendered considering the decisions by the higher forums, including by the apex court in CIT vs. Indo Nippon Chemicals Co. Ltd. [2003] 261 ITR 275 (SC), relied upon by the assessee. The decision in the case of Melmould Corporation vs. CIT [1993] 202 ITR 789 (Bom), cited by the ld. CIT(A), would also be of little assistance in view of the non obstante provision of section 145A, mandatory w.e.f. the current year. The said decision in fact stands explained by the tribunal in the case of Dy. CIT vs. Daman Ganga Paper Ltd. (in ITA No. 7756/Mum/2010 dated 26.10.2014/39 CCH 362 (Mum)(Trib)), adverting to and relying on the decision by the apex court in the case of CIT vs. British Paints (India) Ltd. [1991] 188 ITR 44 (SC). This leaves us with the duty on the opening stock, which stands valued at net of excise, i.e., as the closing stock for the immediately preceding year, following exclusive method of accounting. The excise duty thereon i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal project, aimed at reclamation of municipal sewage water at the assessee's Mumbai refinery. Apart from the treatment of sewage water, it would provide fresh water for cooling the tower. The project, however, became unviable as the BMC increased the sewage charges from Re.1, as initially agreed at the time of initiation of the project, to Rs. 6/- per 10,000 ltrs., and was accordingly shelved, resulting in the write off. In the view of the ld. CIT(A), the project was a new one. Its execution would have resulted in a facility in the form of an effluent treatment plant (ETP), for treating sewage water, besides generating water for operating the plant. The expenditure, thus, was to bring an asset of enduring nature into existence. The fact that it did not yield the desired result, or proved abortive, would not be determinative of whether it was a capital or revenue expenditure. The disallowance was confirmed, relying on the decision in the case of Shree Digvijay Woollen Mills Ltd vs. CIT [1993] 204 ITR 398 (Guj). 12. We have heard the parties, and perused the material on record. Without doubt, as apparent from the foregoing narration of facts, which are not disputed, the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to the efficient running of the business. The decisions relied by the assessee, viz. CIT vs. Priya Village Roadshows Ltd. [2011] 332 ITR 594 (Del); Gujarat Green Revolution Co. Ltd. vs. Asst. CIT [2013] 145 ITD 161 (Ahbd.); and Excel Industries Ltd. vs. Dy. CIT [2004] 86 TTJ 840 (Mum), are not directly toward the acquisition or setting up of a capital asset. The question whether an expenditure is capital or revenue is essentially a matter of fact, to be decided keeping the tests and principles laid down by the apex court in mind (refer, inter alia, Assam Bengal Cement Co. Ltd. vs. CIT [1995] 27 ITR 34, 46 (SC) and CIT vs. Coal Shipments Pvt. Ltd. [1971] 82 ITR 902, 909 (SC)). How would it matter, one may ask, whether the capital asset - the ETP in the instant case, under fabrication, is toward an existing or new business? What is relevant is if the expenditure qualifies for being considered as a part of the fixed assets, and which it undoubtedly does, being costs toward bringing the asset to its present location or condition. Clearly, the expenditure under reference is toward setting up of the plant, and which is precisely the reason for it being accumulated under a separate he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... double taxation. The fact that a particular method of accounting has been consistently followed in the past is no ground for following it in future, where it is not proper in-as-much as each year is separate and independent year of assessment, and income of each year only is to be brought to tax for that year. Reference in this context may also be made to the decision in the case of British Paints (India) Ltd. (supra). Accordingly, the assessee would be entitled to relief where an amount stands already offered and brought to tax for a subsequent year (SPB pgs.1, 8). As regards the second issue, i.e., of deduction qua interest withdrawn u/s.244A, the same stands again discussed and decided by the tribunal in Avada Trading Co. Ltd. (supra). It was, with reference to the decision in CIT vs. Chunilal V. Mehta & Sons (P.) Ltd. [1971] 82 ITR 54 (SC), held that the withdrawal would relate back to the year of grant of the refund (interest) in-as-much as it can only be considered as allowed in excess for that year. The decision is consistent with the decision in CIT vs. Syndicate Bank [1986] 159 ITR 464 (Kar). The proper course therefore would be to claim the same through rectification u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; (Amt. in Rs. Crs.) Financial Year Amount 1989-90 33.83 1990-91 75.875 1991-92 39.20 Total 148.905 The Revenue, on the other hand, would rely on the impugned order, stating it to be a fair estimation of the expenditure incurred in relation to the tax-exempt interest income. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premise for providing for satisfaction is towards the provision of an objective basis, which could be subject to review, besides operating as an in-built check against arbitrariness. Appellate proceedings, it is well settled, are only a continuation of the assessment proceedings. The powers of the first appellate authority under the Act are coterminous with that of the assessing authority, so that he has all powers of assessment, including the power of enhancement, the only limitation being that it cannot extend to a new source of income. He is, therefore, not only vested with but obliged to do what he did, i.e., given that the 'satisfaction' by the A.O. was not based on any materials or the facts of the case, based on a presumption made de hors the record. Reference towards the foregoing statement of law may be made to the decisions in the case of CIT vs. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC); Kapurchand Shrimal vs. CIT [1981] 131 ITR 451 (SC); and Ahmedabad Electricity Co. Ltd. vs. CIT [1993] 199 ITR 351 (Bom)(FB). Rather, the Act provides for a check in the form of power of revision u/s. 263, i.e., against any arbitrary action or even lack of proper enquiry/due applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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