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TMI Blog2012 (5) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to the assessee. Disallowing the Interest attributable to Investments made by the company in dividend earning assets - Held that:- Remit the matter back to the file of the AO to recompute the disallowance u/s 14A in the light of the decision of the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co.Ltd. vs DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT ). Adding back provision for doubtful debts and advances while computing book profits u/s 115JB - Held that:- Adjustments cannot be made once the assessment is to be framed under MAT provisions, hence the addition made by the revenue authorities is deleted. Exclude excise duty and sales tax from the total turnover for the purpose of computation of deduction u/s 80HHC - I.T.A.NO.3926 /Mum/2005 & I.T.A.NO.4171/Mum/2005 - - - Dated:- 16-5-2012 - SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER SHRI VIVEK VARMA, JUDICIAL MEMBER. For the Petitioner : Shri Y.P.Trivedi, Senior Advocate, P.R.Toprani S.M.Bandi. For the Respondent : Shri Sanjiv Dutt. ORDER VIVEK VARMA, JM : The appeals filed by the assessee and department arise from the order of the CIT(A)-XXX, Mumbai dated 30-03-2005. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in paras 17 18 and I.T.A. No. 3925 4170/Mum/2005 in assessment year 2000-01, in para 12, wherein the co-ordinate Bench held Part of this has been disallowed mainly on the basis that the payment has not been made and it was only a notional loss. The Hon ble Supreme Court has clearly held in the case of CIT vs. Woodward Governer (I) Pvt. Ltd. that loss incurred on revenue side on account of foreign exchange fluctuation is allowable. Since the disallowance of loss amounting to Rs. XXXXX is admittedly on revenue side, therefore, we set aside the order of ld. CIT(A) and direct the AO to allow this loss . Respectfully following the aforesaid decision of the Tribunal, we set aside the order of CIT(A) and direct the AO allow the ground of the loss as claimed by the assessee. Ground no. 1 is, therefore, allowed. 7. The ground No. 2 of appeal is that the ld. C.I.T.( A) has erred in confirming the action of the A.O. in holding that the income/receipts, were not derived from industrial undertaking of Century Yarn and Century Denim a 100% E.O.U s for the purpose of claiming exemption u/s 10B of Century Yarn ₹ 62,96,874/- and Century Denim ₹ 56,53,019/- as not derived fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch other. Therefore, we hold that refund of sales-tax cannot be reduced from profits. Respectfully following the aforesaid order, we set aside the order of the CIT(A) on this issue and direct the AO to treat the reimbursement of CST as business receipt for the purpose of claiming exemption u/s 10B. Ground no. 2(ii) is allowed. 11. Ground Nos. 2(iii) relates to insurance claims received at ₹ 1,76,719 in Century Yarn and ₹ 14,89,484/- in Century Denim. This issue has been decided against the assessee in I.T.A. Nos. 3890 3507/Mum/2005 in assessment year 1999-2000 in para 20. We do not intend to disturb the accepted position, hence we hold that these receipts do not qualify for the exemption u/s 10B as they are cannot be held to be receipts, derived from the industrial undertakings. Ground no. 2(iii) is dismissed. 12. Ground No. 2 (iv) relates to sundry credit balance written back. This issue has been decided against the assessee in I.T.A. Nos. 3890 3507/Mum/2005 in assessment year 1999-2000 in para 20. We do not intend to disturb the accepted position, hence we hold that these amounts do not qualify for the exemption u/s 10B as the cannot be held to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not qualify for exemption u/s 10B, being receipts not derived from the industrial undertaking. Hence, we reject this ground. Ground no. 2(ix) is dismissed. Grounds no. 2(i) to 2(ix) are partly allowed. 18. Ground No. 3 is that the C.I.T.(A) has erred in confirming the action of the A.O. in disallowing the Forfeiture of employees security deposit of ₹ 2,88,780/-. 19. This issue has been decided against the assessee in the assessee s own case in I.T.A. Nos. 3925 4170/Mum/2005 in assessment year 2000-01, in para 23, which is as under: 23. After hearing both the parties, we find that similar disallowance as made even in earlier year and the matter travelled to Tribunal. After considering the submissions, the Tribunal decided the issue against the assessee, which is also an admitted position in the chart. Therefore, following the earlier year order, we decide this issue against the assessee. We do not intend to disturb the findings of the co-ordinate Bench taken on this issue, we therefore, decide the issue against the assessee. Ground no. 3 is dismissed. 20. Ground No. 4 is that the C.I.T(A) has erred in confirming the action of the A.O. in disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to the same line of business carried on by the assessee and therefore allowable as revenue expenditure. The expenditure incurred related to salary, conveyance, legal and professional charges, printing and stationery, which are revenue in nature. In this view of the matter, no fault can be found with the decision of the Tribunal in allowing the expenses as revenue expenditure. Following the above, we decide this issue in favour of the assessee. In the chart submitted by the Senior AR, he referred to the case of CIT vs. Coromandal Fertilizers, reported in 105 Taxman 490 (AP), wherein it was held It was only at the stage of studying the feasibility for exploring the area for investing the surplus funds. It had not resulted in a benefit on enduring nature. Therefore, the expenditure incurred by the assessee was on account of revenue and not of capital nature . In the instant case, the expenses incurred by the assessee were primarily in the nature of salaries, we find force in the case cited by the AR and hold that the expenses were in the nature of revenue. In any case, we do not intend to disturb the findings of the co-ordinate Bench taken on this issue. We, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO for adjudication. Ground no. 8 is allowed for statistical purposes. 29. Ground No. 9 is that the C.I.T.(A) has erred in confirming the action of the A.O. in disallowing the Deduction u/s 35D in respect of Euro Issue of ₹ 47,46,750/-. This issue has been set aside decided to the file of the AO in the assessee s own case in I.T.A. Nos. 3925 4170/Mum/2005 in assessment year 2000-01 in paras 58, 59 61 as under: 58. After hearing both the parties, we find that during assessment proceedings the AO noticed that the assessee had made a Euro Issue during accounting year 1994-95. The issue was for ₹ 304.10 crores and the assessee had utilized the same in respect of extension of the industrial project. The total expenditure involved was ₹ 9,49,86,299/- which was in excess of the limit laid down in sec. 35D(2) at 2.5% of the cost of project However, the AO disallowed the same by observing that even Euro Issue expenses are in the nature of share issue expenses and would be therefore not eligible u/s.35D In view of the decision of Hon ble Supreme Court in the case of Brook Bond India Ltd. vs. CIT (225 ITR 798). Before the Id. CIT(A), it was mainly submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved. It seems the figure relates to utilization of funds and perhaps the Accountants were not present in the Court that is why the Sr. counsel could not explain the figures. In the interest of justice, we set aside the order of Ld. CIT(A) and restore the matter to the file of AO with a direction to re-examine the issue and allow the expenditure by way of one time cost of project after verification. Since the facts in the current year are identical with the facts in assessment year 2000-01, we, respectfully following the aforesaid order of the Tribunal, set aside the order of the CIT(A) and restore the issue to the file of the AO for passing a fresh order after necessary examination in accordance with law, and after allowing opportunity to the assessee. Ground no. 9 is allowed for statistical purposes. 31. Ground No. 10 is that the C.I.T.(A) has erred in confirming the action of the A.O. in disallowing the Interest attributable to Investments made by the company in dividend earning assets of ₹ 8,81,108/-. 32. We find that the ITAT has restored the issue back to the AO to be decided on the basis of the decision of the Hon'ble Bombay High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of account of the company. Held accordingly, that, while determining the book profits under section 115J, the Assessing Officer could not recompute the profits in the profit, and loss account by excluding provisions made for arrears of depreciation. Respectfully following the decision of the Apex Court, we hold that adjustments cannot be made once the assessment is to be framed under MAT provisions, hence the addition made by the revenue authorities is deleted. Ground no. 12 is allowed. 36. Ground No. 13 is that the C.I.T(A) has erred in confirming the action of the A.O in disallowing the lease expenses of ₹ 81,180/- being 1/20th of ₹ 16,23,610/- as against 1/10th claimed by the Appellant. This issue is covered in favour of the assessee by the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking, is not penalty and has to be allowed as business expenditure. The Hon ble Court has given the ample of penalty paid for delayed payment of Sales-tax which was held to be compensatory nature. Since no details have been given for the amount paid, which has been disallowed by the AO, and even the Sr. counsel of the assessee has not placed any details before us, therefore, we set aside the order of id. CIT(A and remit the matter back to the file of AO for re-examination of the issue and if various penalties paid are found to be only compensatory in nature in view of the decisions of the Hon ble Supreme Court (supra), then the same may be allowed. Respectfully following the decision taken by the coordinate Bench in the assesee s own case, we in the current year, set aside the order of the CIT(A) and restore the issue to the file of the AO to re examine the exact nature of payments, i.e., whether these are compensatory or these are penal in nature. The ground is allowed to that extant. Ground no. 1 is allowed for statistical purposes. 42. Ground No. 2 is that the CIT(A) erred in directing the assessing officer to allow ex gratia payment of ₹ 2,21,8831- u/s 43B(C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d flow statement to the satisfaction of the Assessing Officer. 49. In ITA No. 41790/Mum/2005 for assessment year, the issue was restored to the file of the AO for fresh adjudication in the light of the decision of the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co.Ltd. vs. DCIT 328 ITR 81 (Bom). Hence, we allow this ground to that extent. Ground no. 5 is partly allowed. 50. Ground No. 6 is that the CIT(A) erred in directing the Assessing Officer to exclude excise duty and sales tax from the total turnover for the purpose of computation of deduction u/s 8OHHC by relying on the decision of the Bombay High Court in the case of Sudarshan Chemicals Ltd. v/s CIT, reported in 245 ITR 769 without appreciating the fact that the department had not accepted the decision and its appeal on merits was pending before the Apex Court and also not appreciating that as per the provisions of section 145A the same is to be included as an integral part of the turnover. 51. The issue is covered by the decision of the Hon'ble Bombay High Court in the case of CIT v/s Sudarshan Chemical Industries Ltd., reported in 245 ITR 769, wherein the Hon'ble Bombay High Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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