9911796707
TMI Blog2016 (4) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 41,96,741/- stands allowed. For adjudication of issue, the expenditure of ₹ 1,37,93,473/- has to be considered and after excluding the expenditure of ₹ 41,96,741/-, the balance is ₹ 95,96,732/-, which is the expenditure to be shared between the assessee and its sister concern SIIL. In view of the admission of learned Authorized Representative for the assessee, we remit this issue back to the file of Assessing Officer to verify the claim of assessee vis-à-vis its allowability in the hands of assessee and / or its sister concern after verifying the nature of expenditure incurred by the assessee to the tune of ₹ 95,96,732/-. The Assessing Officer shall determine the expenditure allowable in the hands of assessee and the amount apportioned to the sister concern SIIL after affording reasonable opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes. Claim of deduction under section 80IA(2) - interpretation of ‘initial assessment year’ - Held that:- Initial assessment year would mean the first year opted by the assessee for claiming deduction under section 80IA of the Act. The CBDT has also directed the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant Company. 2. Confirming the disallowance of ₹ 50,96,657/- out of Sales Promotion Expenses and in any event enhancing the disallowance by ₹ 36,90,771/- without giving the Appellant an opportunity of being heard. 3. Confirming the disallowance for Foreign Travel expenses amounting to ₹ 2,85,610/- 4. The appellant reserves the right to add, alter, amend, amend withdraw any of the Grounds of Appeal mentioned above at the time of appeal hearing. 4. The Revenue in ITA No.1 618/PN/2012 has raised the following grounds of appeal:- 1. The order of the learned CIT (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The Commissioner of Income-Tax(Appeals) erred on facts and In circumstances of the case and in law, in holding that the initial Assessment Year for the purpose of claiming deduction u/s 80IA(2) of the Act, was the first year in which the assessee made such claim after exercising the option, ignoring the provisions of section 80IA(2) according to which the first year was the year in which the assessee started generating electricity. 3. The Commissioner of Income-Tax (Appeals) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction for leave encashment payable to the employees could be allowed only on actual basis. Accordingly, the deduction claimed amounting to ₹ 7,86,853/- was disallowed. 7. Before the CIT(A), the claim of assessee was that the same provided by it was on the basis of actuarial valuation, therefore, the provisions of section 43B(f) of the Act were in-applicable. It was further argued that the leave encashment was not a statutory liability unlike PF, ESIC, etc. and so long as leave encashment was of contractual liability between the employer and employee, the provisions of section 43B(f) of the Act were in-applicable. The CIT(A) on the other hand, was of the view that under section 43B of the Act, deduction in respect of certain types of expenditure is allowable, in computation of income of the assessee, only in the year in which the same amount is actually paid, irrespective of the year in which the liability to pay such amount had arisen, in accordance with the method of accounting regularly employed by the assessee. The types of expenditure include the sum payable by the assessee by way of tax, duty, cess or fees, and contribution to provident / superannuation/ gratuity fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance has been enhanced by ₹ 36,90,771/-. 13. The grievance of the assessee before us is that the said enhancement has been made without giving the assessee an opportunity of being heard. 14. The brief facts relating to the issue are that, during the year under consideration, the assessee had claimed expenditure to the tune of ₹ 41,96,741/- under the head sales promotion expenses . The total expenses claimed by the assessee under the head sales promotion expenses was ₹ 1,37,93,473/- which included the items on account of Gifts totaling ₹ 41,96,741/-. The assessee allocated the expenditure incurred on sales promotion on behalf of sister concern Serum Institute India Ltd. to the tune of ₹ 45,00,075/- and claimed the expenditure of ₹ 92,93,398/- in its Profit Loss Account. The Assessing Officer in the first instance considered the claim of expenditure to the tune of ₹ 41,96,741/- and held that the same was not allowable as it related to gifts. In respect of balance expenditure, the Assessing Officer was of view that the allocation made to Serum Institute India Ltd., a group company whose sales were ₹ 985.77 crores as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 crores, the allocation of expenses is to be made on the basis of turnover and the expenditure which could be apportioned to the assessee was ₹ 5,05,972/- and the expenditure attributable to SIIL was ₹ 1,32,87,501/-. Accordingly, the remaining sales promotion expenses of ₹ 87,87,426/- i.e. ₹ 1,32,87,501/- - ₹ 45,00,075/- was held to be attributable to SIIL and the same was held to be not allowable in the hands of assessee. Thus, the addition made on this count of ₹ 50,96,657/- as revised by the order passed under section 154 of the Act was enhanced to ₹ 87,87,426/-. 16. The assessee is in appeal against the order of CIT(A). 17. The first plea raised by the assessee before us is that the CIT(A) has worked out the disallowance incorrectly. In the first instance, he allowed the gift articles of about ₹ 41 lakhs and then disallowed ₹ 92 lakhs i.e. 95% of ₹ 92 lakhs i.e. ₹ 87 lakhs has been disallowed in the hands of assessee. He further, pointed out that the turnover criteria applied by the CIT(A) was wrongly worked and the claim of the assessee was that the balance expenditure be allowed in the hands of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is the expenditure to be shared between the assessee and its sister concern SIIL. In view of the admission of learned Authorized Representative for the assessee, we remit this issue back to the file of Assessing Officer to verify the claim of assessee vis- -vis its allowability in the hands of assessee and / or its sister concern after verifying the nature of expenditure incurred by the assessee to the tune of ₹ 95,96,732/-. The Assessing Officer shall determine the expenditure allowable in the hands of assessee and the amount apportioned to the sister concern SIIL after affording reasonable opportunity of hearing to the assessee. The ground of appeal No.2 raised by the assessee is thus, allowed for statistical purposes. 21. The ground of appeal No.3 raised by the assessee is not pressed and hence, the same is dismissed as not pressed. 22. The only issue raised by the Revenue is against the order of CIT(A) in holding that for the purpose of claim of deduction under section 80IA(2) of the Act, the same is to be allowed from the year in which the assessee first exercised its option ignoring the provisions of section 80IA(2) of the Act, according to which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be pursued to the extent it relates to interpreting initial assessment year as mentioned in sub-section 5 of section 80IA of the Act. The copy of Circular is placed on record. Further, similar issue of claim of initial assessment year arose before the Tribunal in assessee s own case relating to assessment years 2004-05 to 2006-07 and the Tribunal in ITA No s.290 to 292/PN/2010, vide order dated 28.09.2011 accepted the plea of assessee and held that the assessee has the option in choosing the initial assessment year i.e. 2004-05 in the instant case and held that only the losses of the year beginning from initial assessment year were to be brought forward and not the losses of earlier year which had already been set off against the other income of assessee. It was further held by the Tribunal that the revenue could not notionally bring forward any loss of earlier years which had already been set off against any other income of the assessee and set off the same against the current income of the eligible business. Applying the said decision in assessee s own case and in view of the Circular of CBDT (supra), we uphold the order of CIT(A) and dismiss the grounds of appeal raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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