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TMI Blog2010 (11) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... d in earlier years on capital work-in-progress that had been capitalized during the year in case it is ultimately held that the appellant is entitled to deduction for scientific research expenditure in the year of capitalization." 4. The Ld. CIT(A) erred in not directing the Additional Commissioner to allow deduction for the expenditure of ₹ 9,16,30,000/- being premium paid on leasehold land, as revenue expenditure" 5. The Ld. CIT(A) erred in not directing the Additional Commissioner to allow deduction for the expenditure of ₹ 2,29,98,000/- being expenditure on right of way as revenue expenditure" 6. Without prejudice to the above, the Ld. CIT(A) ought to have directed to allow proportionate deduction for expenditure incurred during the year and during the earlier years on leasehold land and right of way." 7. The Ld. CIT(A) ought to have specifically directed to allow deduction of ₹ 5,70,91,700/- u/s. 80IB in respect of AU-V Gujarat refinery." 8. The Ld. CIT(A) erred in not specifically directing the Additional Commissioner to allow deduction u/s. 80IB of ₹ 68,71,26,000/- in respect of profit of marketing division of GHP unit." 9. The Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the action of the Asstt. Commissioner in disallowing the appellant's claim for deduction of the amount of ₹ 3,94,01,265/- u/s. 80HHC in respect of the following exports: (a) Export of ATF to foreign airlines (b) Export of petroleum products produced in the refinery like naptha, furnace oil, benzene, etc. "11. The Ld. CIT(A) ought to have held that the appellant was entitled to the entire amount of deduction u/s. 80HHC as claimed by the appellant, subject only to variation based on the amount of profits assessed under the head "profits and gains of business or profession". 12. The Ld. CIT(A) erred in holding that a sale of ATF to foreign airlines is not of the nature of exports. The Ld. CIT(A) ought to have appreciated the fact that the ATF was in fact exported out of India and payment thereof had been received in convertible foreign exchange. Hence as per the provisions of Sec. 80HHC, the appellant is entitled for deduction in respect of such exports. 13. The Ld. CIT(A) erred in holding that the products exported by the appellant fall under the prohibitory ambit of Sec. 80HHC(2)(b) and that the appellant is not entitled for any deduction u/s. 80HHC. 14. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,41,637 6. Hire charges 30,99,438 7. Expenses pertaining to security force at Tikrikalan Bottle Plant 30,60,000 8. Error in posting purchase of AFFF type 3% foam concentrate (Chemical & additive, item code -6516151014) 6,71,670 9. Survey expenses 2,22,60,225 10. Error in reconciliation and adjustment of Crude Oil Loan 32,24,31,000 11. Depreciation of AOD 65,77,000 8. Without prejudice to the above, the Ld. CIT(A) erred in holding that the Ld. Additional Commissioner has in the assessment order disallowed the net prior period expenditure after netting off the prior period income. The Ld. CIT(A) ought to have directed the Ld. Additional Commissioner to set off canalizing commission pertaining to earlier years of ₹ 1624 lacs against the prior period expenses." 19. Without prejudice to the above, the Ld. CIT(A) ought to have directed the Additional Commissioner to allow deduction for prior period expenditure of ₹ 43,22,71,000 in the respective years to which it pertains." 9. The Committee of Disputes held on 15th Nov. 2007, the permission has been granted. 10. The Ld. Counsel for the assessee in the written submissions submitted as follows: i). Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariation and that these differences were claimed as expenditure during the year. It is further argued that Accounting Standard -2 notified u/s. 145 by the Central Board of Direct Taxes pertains to "disclosure of prior period and extraordinary items and changes in accounting policies". He submitted that this accounting standard specifically states that a change in estimate does not constitute correction of an error and that a change in estimate does not constitute correction of an error and that a change in estimate shall not be treated as prior period items. Thus he argues that the expenditure in question has to be allowed on the ground that it has crystallized during the year. Reliance was placed on the following judgements: 1. Saurashtra Cements & Chemicals Industries Ltd. Vs CIT 213 ITR 523 (Guj) 2. Sterlite Industries (I) Ltd., 6 SOT 497 (Mum) 3. Annamaria Travels & Tours Pvt. Ltd. Vs DCIT 95 TTJ 71 Alternatively it is submitted that prior period income should not be brought to tax during the current year and at best the prior period income should be set off against prior period expenses and only the net amount should be disallowed during the current year. For this propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said liability has become real and enforceable. The Hon'ble Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Vs CIT 213 ITR 523 (Guj) held as follows: "Merely because an expenses relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. It is to be found in respect of any claim, whether such liability was crystallized and quantified during the previous year so as to be required to be adjusted in the books of that previous year." It further observed as follows: "If any liability, though relating to the earlier year, depends upon making a demand and its acceptance by the assessee and such liability has been actually claimed and paid in the later previous years it cannot be disallowed as deduction merely on the basis the accounts are maintained on mercantile basis and that it related to a transaction of the previous year." Accounting Standard as notified by the Board is applicable only in cases where there is change in estimates. On the perusal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest under Sec. 234D. The appellant denies liability towards interest u/s. 234D." 27. The Ld. CIT(A) ought to have appreciated that interest under Sec. 234D can be charged only in cases where the refund was granted after 1st June, 2003." 17. The Committee of Disputes held on 15th Nov. 2007, the permission has granted. 18. The assessee relies on the decision in the case of Ekta Promoters Pvt. Ltd., (Delhi Special Bench dt. 11th July 2008) 305 ITR 01 (Del)(SB)/113 ITD 719 & CIT Vs Bajaj Hindustan Ltd in ITA No. 198 of 2009. 19. We find that before the Bombay High Court the following question of law has been raised: "Whether in the facts and circumstances of the case and in law the ITAT was right in holding that the interest u/s. 234D cannot be charged in respect of refunds granted prior to 1.6.2003? 20. The Bombay High Court has held as follows: "So far as the last question in concerned, kit is seen that the subject provision came on statute book w.e.f. 1.6.2003. If that be so, the said provision does not have retrospective effect. In this view of the matter, we do not see appeal giving rise to any substantial question of law. Appeal is, therefore, dismissed in limini with n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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