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TMI Blog2014 (4) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy and as hotels were not available in these places, expenditure on the same is allowable as revenue expenditure. The learned CIT (A) further erred in not accepting appellant's contention that expenses specifically allowable uls,30 to 36 can not be disallowed as per provisions of Section 37(4) as well as that Section 37(4) is limited to disallow maintenance expenses and not the running expenses. Ground of Appeal No.2 {page 30 of CIT (A)'s Order} Recovery of Guest House Expenses considered under Rule 6D Rs.11,12,710 The learned CIT (A) erred in rejecting appellant's claim that recoveries made in respect of Guest House expenses should be treated as travelling expenses, on which Rule 6D should apply and expenses proportionately disallowed and not the entire disallowance of recoveries as 'Guest House Expenses.' Ground of Appeal No.3 {Page 31 of CIT (A)s Order} Disallowance under Rule 6B with respect to Calendars and Diaries Rs.1,47,600 The learned CIT (A) erred in disallowing expenditure on Diaries and Calendars on the ground that the same has Company's logo fixed on it, hence has advertisement value. Ground of Appeal No.4 {Page 34 of CIT (A)s Order} Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishes nexus between the contributions made and the business of the appellant. Ground of Appeal No.12 {Page 105 of CIT (A)'s Order} Fees paid to Consultants for Feasibility Studies Rs. 4,83,584 The learned CIT (A) erred in disallowing Rs. 4,83,584 being fees paid to the Consultants for carrying out feasibility studies on the ground that it constitutes capital expenditure. Ground of Appeal No.13 {Page 109 of CIT (A)'s Order} Expenditure on Immovable Assets in Bhutan Rs. 4,99,898 The learned CIT(A) erred in disallowing expenditure incurred on immovable assets in Bhutan on the ground that the same is capital expenditure. Ground of Appeal No.14 {Page 115 of CIT (A)'s Order} Disallowance under Rule 6DTravelling Expenses Rs. 6,50,000 The learned CIT(A) erred in confirming adhoc disallowance of Rs. 6,50,000 in respect of travelling expenses of Auditors, Technicians and Consultants. Ground of Appeal No.15 {Page 116 of CIT (A)'s Order} Expenditure incurred on Darjeeling Holiday Home Rs. 3,08,000 The learned CIT(A) erred in treating Darjeeling Holiday Home as Guest House rejecting appellant's contention that the same is covered by the second proviso to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) failed to appreciate the circumstances in which expenditure through the medium of TSRDS was incurred and erred a treating the same as non-business expenditure. Ground of Appeal No.6 {Page 80 of CIT (A)'s Order} Contribution to Tata Sports Club Rs. 3,88,654 The learned CIT (A) erred in holding that contribution to Tata Sports Club is covered by the provisions of Section 40A(9). Ground of Appeal No.7 {Page 90 of CIT (A)'s Order} Contributions to various Institutions in Jamshedpur Rs. 85,00,889 The learned CIT (A) erred in disallowing contributions to institutions on the ground that such expenditure was not incurred for the purposes of the business, having failed to understand the scenario that establishes nexus between the contributions made and the business of the appellant. Ground of Appeal No.8 {Page 93 of CIT (A)s Order} Foreign Travel Expenses Rs. 3,50,486 The learned CIT (A) erred in disallowing foreign travel expenses on the ground that the same was in the nature of capital expenditure and appellant had given no clarification whether the expenditure on Chess Federation was on employees. Ground of Appeal No.9 {Page 105 of CIT (A)'s Order} Fees paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for training of employees is deductible as revenue expenditure. Ground of Appeal No.18 The learned CIT(A) has committed error in recording some facts in his Order. The appellant craves leave to produce before the honourable ITAT correct facts at the time of hearing. The Appellant craves leave to add to, alter or amend the above ground of appeal. ITA No. 3970/Mum/2003 Ground of Appeal No.1{Page 24 of CIT(A)'s Order} Expenditure on maintenance of certain Buildings Rs. 3,50,64,202 The learned CIT (A) erred in rejecting the claim of the appellant that certain buildings were maintained at far flung places due to business expediency and as hotels were not available in these places, expenditure on the same is allowable as revenue expenditure. The learned CIT (A) further erred in not accepting appellant's contention that expenses specifically allowable uls,30 to 36 can not be disallowed as per provisions of Section 37(4) as well as that Section 37(4) is limited to disallow maintenance expenses and not the running expenses. Ground of Appeal No.2 {page 30 of CIT (A)'s Order} Recovery of Guest House Expenses considered under Rule 6D Rs. 56,45,446 The learned CIT (A) erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Rs. 1,89,86,431 The learned CIT (A) erred in treating expenses incurred on Rights Share Issue as capital in nature. Ground of Appeal No.11 {Page 41 of CIT (A)'s Order} Expenditure on business meetings and conferences of employees Rs. 27,02,017 The learned CIT (A) erred in holding that the expenditure incurred on the business meetings and conferences as entertainment expenditure incurred under the provisions of Section 37(2A) of the Income tax Act. Ground of Appeal No.12{Page 226 of CIT (A)'s Order} Contribution of Institute for Miners & Metal Workers. 16,00,000 The learned CIT(A) erred in not allowing contribution to Institute for Miners & Metal Workers and setting the same aside to the Assessing Officer to determine whether actual training was imparted to employees of the appellant. Ground of Appeal No.13 The learned CIT(A) has committed error in recording some facts in his Order. The appellant craves leave to produce before the honourable ITAT correct facts at the time of hearing. The Appellant craves leave to add to, alter or amend the above ground of appeal. In their appeals, AO.s. have raised following grounds for above referred three AY.s. ITA No. 3985/Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in directing the A.O.to allow 20% of initial contribution as deduction in the year in which the initial contribution was made to the approved superannuation fund." 3."On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in directing the A.O. to allow Rs. 40,85,564/on account of payment for holiday plan at hotels as guest house expenses." 4.On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in directing the A.O. to allow Rs. 1,35,435/on account of foreign travel expenses." The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the ITO/AC/DC be restored.The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. From the above it is clear that most of the issue are common for all the three AY.s.For sake of convenience, we are arranging them in a tabular form: Issue Ground no (G.) & AY. Appeals by the Assessee Expenditure on maintenance of certain Buildings G.1-1991-92,1994-95,1995-96 Guest House Expenses considered under Rule 6D G.2-1991-92,1994-95,1995-96 Disallowance of AGM Expenses of the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t we would take up the appeals filed by the assessee.First common ground of appeal is about Expenditure on maintenance of certain Buildings.Amounts involved for the AY.s1991-92,199495,1995-96 are Rs. 1.84 Crores,Rs.3.25 Crores and Rs. 3.50 Crores respectively.AO.s had disallow ed the said expenditure u/s.37(4)of the Act and the FAA confirmed their orders. Before us,AR conceded that issue was decided against the assessee,by the order of the Tribunal for the AY.s.1987-88,1989-09 and 1990-91(ITAs/ 3965,3966 and 3967/Mum/2003 07.03.2014).We find that issue was dismissed,as same was not pressed for the last AY. Following the order for that year,we decide G.1 for all the three AY.s. against the assessee. 3.Common ground of appeal(G.2)for the all the AY.s deals with recovery of Guest House Expenses considered under Rule 6D of the Income-tax Rules,1962(Rules),amounting to Rs. 11.12 lakhs, 42. 16 lakhs and 56.45 lakhs, respectively for the said AY.s under appeal. During the assessment procee dings, AO.s found that the assessee maintained guest houses at Jamshedpur mines and collieries, and at Kharagpur, that it collected service charges for providing lodging or boarding and lodging to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the AY.s.1987-88,1989-09 and 1990-91 (supra).We find that issue of recovery of Guest House Expenses has been dealt by the Tribunal for the earlier AY.s. as under: "4.2.Before us,Before us representatives of both the sides admitted that the issue was decided in favour of the assessee by the Tribunal while adjudicating Appeal for the AY.1985-86.We find that Tribunal in its order dated 27.02.2009(supra),in paragraphs 12-13,has held as under: As far as ground No. 4 is concerned, on similar issue the Hon'ble ITAT, Mumbai in assessee's own case in A.Y. 1992-93 in I.T.A. No. 7121/Mum/96 has held as follows: 'Admittedly recoveries have been made from the parent departments of the company whose persons utilised the facilities of the guest house in the course of official work relating to the business of the company.Assuming the situation of non-existence of the guest house of the company in that place, then, such employees would have stayed in a hotel or guest house run by third parties and made payments to them for use of their facilities and accordingly payments made to outside parties would have been treated as travelling expenses incurred by the company for its business. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oft drinks is covered by the Explanation 2 to section 37(2A)/(37(2). In the Explanation 2 it is stipulated that the expenditure on provision of hospitality of every kind by the assessee to any person whether by way of provision of food or beverages or in any other manner, whatsoever, would be entertainment expenditure.The sweep of the words entertainment expenditure found in the Explanation 2 to section 37(2A)is wide and broad to cover every expenditure on provision of hospitality of every kind to any person other than the employees at the place of their work The appellant relied on the judgment of the Karnataka High Court in the case of Bangalore Turf Club Ltd 126 ITR 430.The Hon'ble Karnataka High Court in a later judgment in the case of Mysore Minerals Ltd 162 ITR 562 did not approve the ratio laid down in Bangalore Turf Club on the ground that the Explanation 2 to subsection (2A) of section 37 was not there in the statute when the judgment in the case of Bangalore Turf Club was delivered.Thus, the Karnataka High Court overruled its own decision in Bangalore Turf Club in the case of Mysore Minerals Ltd. (supra). Hon'ble Karnataka High Court has categorically stated that the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice or factory and it could not be taken to include hotel or restaurant, that the assessee did not place any evidence to establish the fact that the expenditure incurred on business meetings & conferences contained the rent paid for the halls in the hotels.He directed the AO to examine & allow if the assessee is able to furnish the evidence of rent paid to the hotels or restaurants which was included in the business meeting & conferences expenditure.Finally,he sustained the additions made by the AO subject to verification of evidence of rent paid. 5.2.Before us,AR agreed that the issue was decided against the assessee by the order of the Tribunal for earlier AY.s.We find that identical issue,for the AY.s.1987-88,1989-09 and 1990-91(supra),was dealt by the Tribunal as under: 8.2.Before us, representatives of both the sides agreed that while adjudicating the appeal for the AY.1985-85(supra),Tribunal had decided the matter against the assessee-company. We find that appeal filed by the assessee with regard to disallowance of expenditure on business meetings and conferences of the employees,was dealt by the Tribunal as under,in paragraphs 27-30 as under : "27.We have considered hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir work" includes places such as mine, work site, drilling site, godown etc. But certainly the expression does not include expenditure incurred at a place other than the place at which an employee normally works. The principle of ejusdem generic warrants that "other place of work" should be akin to office or factory and it cannot be taken to include hotel or restaurant. The expenditure incurred by the appellant was towards food or beverages. In my view, the expenditure incurred on the employees at a place other than office or factory requires to be treated as entertainment expenditure. The hotel or restaurant cannot be treated as "any other place of their work". I am also not able to agree with the contention that a large number of employees had attended the business meetings. As observed earlier, the sweep of the words entertainment expenditure found in Explanation is wide and broad to cover every expenditure on provision of hospitality of every kind to employees also, provided the expenditure is not incurred in office or factory or any other place of their work where an employee normally discharges his duties. In my view, the hotel cannot be equated with the other place of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89-90 and 1990-91 respectively are decided against the assessee -company." Considering the orders for the earlier years (supra)we decide the issue against the assessee-company. 6.Disallowance of Tata Steel Rural Development Society Expenditure(TSRDS)-G.9-1991-92,G.51994-95,G.4-1995-96)is the next common ground of appeal for the years under consideration. As per the AO.s,assessee had claimed expenditure on rural development in the assessment years under consideration, as business expenditure u/s. 37(1) of the Act, that the assessee had claimed that it had incurred expenditure on payment to TSRDS amounting to Rs. 2Crores,Rs.2.93Crores and Rs. 2.99 Crores respectively for the years under appeal.AO.s were of the opinion that payments made to TSRDS were not admissible as same were not incurred wholly and exclusively for the purpose of business of the assessee,that the expenditure incurred on various activities like village link road, drinking water project, irrigation facilities, vocational training etc.had no nexus with the business carried on by the assessee. 6.1.Against the order of the AO.s,assessee preferred an appeal before the FAA. After considering the submissions of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: 42.The assessee had set up its Works in 1907 in the virgin forest areas of the Singhbhum-District, had to develop the township over a period of years on land of about 25 sq. km. leased to it on a long term basis by the Government of Bihar. As all the facilities of the Works, sites for the associate companies, residence sites for its own employees and their dependents and sites for the business community were to be located on its own land, the assessee had to provide all the facilities of a Municipality like, power, water, sanitation, hospitals, playgrounds, clubs, reading rooms, dispensaries, community welfare centres, cultural assistance, etc. In the Lease Agreement finalised with the Bihar Government the assessee was under an obligation to provide aji the civic amenities in Jamshedpur and, therefore, the assessee had to continue these obligations which it had undertaken earlier on its own, in the absence of a Municipality in a large township like Steel City of Jamshedpur. With the increase in the number of people residing in Jamshedpur, the assessee found it difficult to cope with all the services of civic amenities and it has, therefore, encouraged senior officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed, Ground No. 14 is allowed." We have perused the MOU signed by the assessee with the workers' union. Considering the terms and conditions of the MOU we are of the opinion that orders of the Tribunal delivered in the case of the assessee as well as TELCO should be followed. In our views, MOU makes the facts and circumstances of the case peculiar. We find that Hon'ble jurisdictional High Court has, in its order dated 26.12.2012, dismissed the appeal filed by the department filed for AY.1985-86(IT Appeal No.3176 of 2010) where similar issue of contribution to various institutions was decided in favour of the assessee by the Tribunal.(Ground no.B and F).As far as discharging of social responsibility is concerned Voltas Ltd.had to be considered the guiding case.As in that case there was no MOU with the workers, so, considering the peculiarity of facts of the case,as against the matter of Voltas,we decide the issue in favour of the assessee." Following the order for the AY.1986-87 we decide the issue of payments to TSRDC in favour of the assessee for all the three AY.s Considering the orders for the earlier years(supra),issue of payment to TSRDC is decided in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 12.2.We find that,following the order for allowing expenditure to TSRDC,Tribunal had decided the issue of payment to Steel Plants'Sport Board and Tata Sports Board in favour of assessee, while adjudicating appeal for the year 1986-87.Following the orders for the earlier AY,we decide the ground no.G.12 and G.11for the AY.1987-88 and AY.1990-91 in favour of the assessee Following the same we decide Ground no.10,Ground no.6-and Ground no.5for AY.s.1991-92, 1994-95 and 1995-96 in favour of the assessee. 8.Contributions to various Institutions at Jamshedpur is subject matter of Ground no.11 for AY. 1991-92,Ground no.7for AY.1994-95 and Ground no.6 for AY.1995-96.During the assessment proceedings AO.shad made disallowance of Rs. 25.54 lakhs,Rs.85lakhs.and Rs. 1.79 Crores respectively for the years under appeal.Assessee contended that the said contributions were made to various institutions for discharging its civic, social obligations to maintain the township of Jamshedpur. AO.s did not accept the contention of the assessee and held that the contributions were given for the welfare of the employees and such contributions which were given to them were hit by the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / project reports in connection with the expansion of industrial undertakings or in connection with the setting up of a new units was an admissible deduction u/s.35D of the Act. 9.1.In the appellate proceedings,upholding the order of the AO.s,FAA held that the expenditure incurred was in the capital field.We find that identical issue has been decided by us,while adjudicating the appeals for the earlier three AY.s.i.e.-AY.s.1987-88,1989-09 and 1990-91(supra)in the following manner: Before us,AR and DR agreed the identical issue was decided in favour of the assessee by the order for the AY.1986-87.We find that in the earlier AY.,issue of expenditure incurred for making payments to consultants for feasibility studies,has been dealt in following manner: 16.2.Before us,AR submitted that similar issue was decided in favour of the assessee in the preceding AY.DR did not controvert the fact.We find that in the AY.1985-86 assessee had paid fees for feasibility study to the same consultant to whom fess was paid during the year also.While deciding the appeal,Tribunal at paragraph 38 has held as under: "We have perused the details of the expenses.A sum of Rs. 10 lakhs was paid for moderni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings AO.s found that the assessee had made contributions to IMMW and same were claimed as business expenditure u/s.37(1) of the Act.AO observed that the assessee could not establish that expenditure was incurred wholly and exclusively for the business carried out by it,that benefit from the institution would accrue not only to the assessee,but also to its business rivals,that there was no nexus between the expenditure and business. 11.1.After considering the submissions of the assessee,FAA held that the assessee had not submitted before the AO that the contribution to IMMW was made towards the training of the workers,that no evidence was produced before the AO.Following the principles of natural justice he directed the assessee to produce the evidence before the AO to substantiate the fact that the contribution was towards training of the workers and that same was not a general contribution or donation.He directed the AO to examine the claim of the assessee and decided the issue on merits. 11.2.Before us,AR submitted that IMMW,Calcutta was involved in promotion of cultural,social and vocational training programmes for mines and metal workers,that training courses wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of advertisement calling for invocation of Rule 6B of the Income-tax Rules read with the provisions of section 37(3A), 3(3) and (3C) of the Act.We are of the view that in the light of the decision of the Hon'ble Bombay High Court in the case of Allana Sons Pvt. Ltd., 216 ITR 690 (Bom) holding that presentation articles bearing the logo of the assessee would fall within the ambit of Rule 6B as expenditure in the nature of advertisement,the argument of the learned counsel for the assessee cannot be accepted. Ground No. 5 is accordingly dismissed." Following the order of the last AY.,with regard to the issue of expenditure incurred for Calendars and Diaries,we dismiss the G.3/4 of the appeals filed by the assessee for the AY.under appeals." Considering the above,we decided the ground no.3 against the assessee. 13.Next ground for the same AY.is about disallowance of expenditure incurred on tea and coffee offered to the visitors(G.5).While framing assessments for the AY under appeal,AO found that that the entertainment expenditure quantified by the auditors did not include the expenditure on tea, coffee,food or other beverages provided to the visitors either in office or in factory, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears,1981-82 and 1985-86,we direct the AO.s to restrict the disallowance to 25% of the expenditure incurred (Rs.2.25lakhs,Rs.2.75lakhs, Rs. 35, 395/-)for the AY.s1987-88,1989-90,1990-91.Ground no.5/6,for the AY.s under consideration are allowed in part. Following the above,we direct the AO to restrict the disallowance on account of tea coffee served to the visitors' @25%.Ground of appeal no.5 is allowed in part. 14.Next Ground (G.7)pertains to disallowance of expenditure of Rs. 38.81 lakhs on account of payments made to Clubs.On the basis of the details furnished by the assessee in the tax audit report, AO came to the conclusion that the payments made to clubs,were in the nature of entertainment expenditure.He disallowed the said amount,claimed,u/s.37(2A)/37(2) of the Act. 14.1.In the appellate proceedings FAA,held that that the assessee did not bring any material on record to establish that payments to clubs did not contain the expenditure in the nature of entertainment expenditure,that the payment made to clubs comprised mainly of expenditure on food and beverages,that the expenditure on food etc.incurred at clubs had to be treated as entertainment expenditure u/s.37(2A)/ 37(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of Secure Meters (321ITR611) delivered by the Hon'ble Rajasthan High Court. 21.1.We find that in the case of Secure Meters(supra)issue of expenditure on partly convertible debenture has been dealt with in following manner: "Coming to the second question, the learned Tribunal in this regard has held that the decision of the Hon'ble Supreme Court in Brooke Bond India Ltd. v. CIT reported in [1997] 225 ITR 798 is not applicable to the facts of the instant case because that was a situation in which expenditure on issue of shares was held to be ineligible for deduction,while the assessee has issued debentures for which Rs. 44 lakhs was claimed as deduction and it was considered that this aspect is settled by several decisions of various High Courts and it has been held by the Hon'ble Supreme Court in India Cements Ltd. v. CIT reported in [1966] 60 ITR 52, that a loan is not an asset or advance of enduring nature and the purpose of taking loan is totally an irrelevant consideration and hence the deduction on account of interest on loans cannot be denied. Then, the learned Tribunal also proceeded to rely upon another judgment of the Jaipur Bench of the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny finds it unnecessary to by raw material and spends the amount on capital asset, still it cannot be said to be capital expenditure, as it was held that the purpose for which the new loan was required was irrelevant to the question as to whether the expenditure for obtaining loan was revenue or capital expenditure. We are told that relying on this judgment many of the High Courts of the country have consistently taken the view that the expenditure incurred in issuing any debentures and raising loan on debentures is admissible obviously because the debenture is also a loan. At this stage it was contended by the learned counsel for the Revenue that a distinction should be drawn between the convertible and non-convertible debentures inasmuch as if the debenture is converted into shares then it partakes of the character of capital and in that event the expenditure would not be revenue expenditure and would be capital expenditure. Learned counsel for the assessee informs that though it has not come on record so far but as a matter of fact the debentures issued were of convertible nature. Then, the learned counsel for the assessee argued relying upon the judgment of the Calcutta High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was not for the purpose of business.In the appellate proceedings FAA held that the assessee did not claim the expenditure was incurred on its employees,that AO was fully justified in holding that the expenditure was not incurred for the purposes of business. 16.2.Before us,AR submitted that FAA had allowed the expenditure incurred by the assessee under the same head for the year 1995-95,that chess delegation was sent to Russia.DR supported the order of the FAA.We have heard the rival submissions.We find that FAA has clearly given a finding of facts in both the AY.s i.e.in 1994-95 and 1995-96 about participation by employees of the assessee,that in the year under consideration assessee did not claim that the employee had gone to Russia,that even before us no evidence was produced to establish the fact of participation by the employee of the assessee,whereas in the subsequent year, FAA has held that the employee had participated in international tournament. Thus, there is difference in the submissions made by it and the finding given by the FAA.In our opinion, in absence of a valid claim by the assessee,FAA had rightly rejected the appeal of the assessee with regard to foreign t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 1.80 Crores(G.16).During the assessment proceedings AO found that the assessee had issued 2.25% foreign currency convertible bonds (FCCB)of $100 millions, that same were convert ed in to rupees in February1994 @31.37 per dollar, on 31.03.94 bonds were revalued at Rs. 31.55 per dollar, that there was increase in the value of loan of Rs. 1.80 Crores due to change in the dollar rates.AO held that the bonds were to be converted in to GDR, that during the year under appeal there was no conversion of bonds in to GDR, that loss claimed by the assessee was contingent and premature. 18.1.In the appellate proceedings, assessee submitted that the proceeds of 100 million dollar were invested in temporary short term instruments and were used for reducing bank borrowings/inter corporate deposits, that there was reduction of interest on cash credit borrowings, that it had increased the profitability of the company, that the liability was revenue in nature. After considering the submissions of the assessee, FAA held that bonds were to be converted in to GDR, that same were to be converted in to shares in turn, that assessee had revalued the closing rate of rupees vis-àvis dollar an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of leave salary. 19.1.In appellate proceedings,FAA allowed the appeal filed by the assessee and directed the AO to allow the claim made under the head 'provision for leave salary'. Before us, representatives of both the sides agreed that issue of leave salary was decided against the AO in earlier AY.s. We find that in the orders for the AY.s.1987-88 and other two AY.s.(supra),we have decided the issue as under: 30.1.Before us,DR and AR agreed that submitted that while deciding the appeal for the AY. 198687(supra),Tribunal had rejected the ground raised by the AO. We would like to reproduce the order of the Tribunal for the AY.1986-87,with regard to the issue of provision for leave salary. "29.3.We have heard the rival submissions and perused the material before us. We find that while deciding the similar issue, for the earlier AY.,ITAT had allowed the appeal of the assessee, that the department had not challenged the order of the Tribunal before the Hon'ble High Court while filing appeal for that AY., that similar issue was decided in favour of the assessee by the Tribunal while deciding the appeal for the AY.1992-93(ITA7083/Mum/1996,dated.23.12. 2004). While deciding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submissions and perused the material before us.We find that the issue of contribution to ASF has been dealt by the Tribunal while passing order for the AY.1985-86 making following observations: "101.After hearing both the sides,we find the issue stands covered in favour of the assessee and against the Revenue by the decision of the Tribunal in assessee's own case vide I.T.A. No. 7083/Bom/96 order dated 27th,December, 2004. We find the Tribunal at para 4 of the order has held as under: "4.Ground No.2 disputes the Ld.CIT(A)'s order in directing to allow the entire amount of Rs. 2,43,471/being initial contribution of assessee to superannuation fund as against 1/5th of 80% of such sum allowed by Assessing Officer.The ld. DR has relied on the orders of Assessing Officer. The ld. AR of assessee has contended that this issue is covered in favour of the assessee vide the judgment of Hon'ble Supreme Court in the case of CIT vs.Sirpur Paper Mills,237 ITR 41.He has contended that this contribution has also been allowed in A.Y. 1997-98.He has contended that the issue is also covered in 239 ITR 561 (Bom), CIT vs. Beck &Co. (India) Ltd. He has also contended that the assessee's claim has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsection (4) of section 37 as existing at the relevant time and, therefore, the assessee is found to be entitled to deduction. Accordingly, the ground raised by the Revenue was dismissed. Respectfully following the decision of the Tribunal in assessee's own case and in absence of any contrary material brought to our notice this ground by the Revenue is dismissed. Respectfully, following the above, Ground no.4 is decided against the AO." In view of the above we decide ground no.3 for AY.1987-88 and Ground no.4 for AY.198990 and 1990-91 against the AO." Following the orders of the Tribunal for earlier years, we dismiss ground no.3 for all the AY.s. 22. Ground no.4 for the AY.1991-92 is about exclusion of sales tax, excise duty for 80HHC deduc tion. During the assessment proceedings, AO excluded sales tax, excise duty from the total turnover, while computing the 80HHC deduction. Assessee preferred an appeal before the FAA. After considering the submissions of the assessee and the assessment order, he held that both the items could not be excluded from the total turnover. 22.1.Before us, AR conceded that issue was decided in favour of assessee by the decisions delivered by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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