9911796707
TMI Blog2016 (11) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by the Transfer Pricing Officer ("TPO') be treated as illegal, invalid, bad in law and be quashed. Without prejudice to above ground : Ground No. 2 : Reference to Transfer Pricing Officer ("TPO"): 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO of making a reference to the TPO without satisfying the conditions as to what are "necessary or expedient" circumstances existed in the Appellant's case for such a reference. 2. The Appellant prays that the action of the lower authorities be deleted by holding that the reference to TPO as also the order pursuant to such reference be treated as invalid, illegal and bad in law and be quashed. Without prejudice to above grounds: Ground No. 3 : Non compliance with the instruction issued by the Central Board of Direct Taxes ("CBDT"): 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO of referring the Appellant's case to TPO for determination of Arms-Length price ("ALP') contrary to the Instruction No. 3 of 2003 dated May, 20, 2003 issued by the CBDT. 2. That the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchanje contract- Rs. 2,62,65,930/-. 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the A. 0 of disallowing Rs. 2,62,65,9301- being the difference in value of the forward contracts as on the date on which the contract was entered into and the rate prevailing as at the end of the financial year, on the ground that the same represents notional loss. 2. The Appellant prays that the action of the lower authorities be deleted. Without prejudice to above 3. If at all the action of the lower authorities is upheld then, in that case, the Appellant be allowed the loss in the year in which the contract is settled. Ground No. 8 : Disallowance of provision for leave encashment - Rs. 95,184/-: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the A.O of disallowing Rs. 95,184/- being provision for leave encashment, u/s 43B(f) of the Act. 2. The Appellant prays that the action of the lower authorities be deleted. Ground No. 9: Disallowance u/s 14A- Rs. 14,495/- 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Form 3CEB', referred the computation of the 'Arms length price' ('ALP') as regards the International transactions of the assessee company relating to advance of share application money to its 'Associated Enterprise' (AE), and incurring of expenses in relation to pre and post incorporation of the 'AE', to the Transfer Pricing Officer 11(2), Mumbai ('TPO') u/s 92CA(1) of the 'Act', who vide his order passed u/s 92CA(3) of the 'Act', dt. 15.03.2011, proposed adjustments of Rs. 16,56,556/- as regards the aforesaid International transactions of the assessee company. The A.O following the order of the 'TPO' and carrying out adjustments as regards the International transactions of the assessee company with its 'AE', alongwith certain other additions to the 'returned income' of the assessee company, therein as required u/s 144C(1) of the 'Act', forwarded a 'draft assessment order' dt. 28.11.20 11 to the assessee company (Page 122 of 'APB'). The assessee company vide its letter dt. 20.12.2011 (Page 121 of 'APB') intimated to the A.O that as the proposed additions/disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation, therein submitted that the Ld. CIT(A) while observing that on perusal of Sec. 153 r.w 144C of the 'Act', the assessment framed by the A.0 was found to be well within the period of limitation, had gravely erred in loosing sight of the fact that as Sec. 144C was in itself made available on the statute vide the 'Finance Act, 2012, w.r.e.f 01.04.2009, therefore the same was to be made applicable for A.Y. 2009-10 and the succeeding years, and as such was not applicable to the year under consideration in the case of the assessee company, pursuant whereto the limitation for framing of assessment in the case of the assessee company was to be gathered only on the basis of the period contemplated in the Second proviso of Sec. 153(1) of the 'Act'. The Ld. A.R further supporting his contention that Sec. 144C was applicable only w.e.f A.Y 2009-10, and thus could not be made applicable to the preceding years, therein culling out the changes brought in by Sec. 144C of the 'Act', submitted that as the same had changed the law of filing the appeal and has also created new rights and obligations, not only in favour of assessee but also in favour of DRP and conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the provisions of Sec. 144C, therefore the same inescapably, in light of the parameters laid down by the Hon'ble Apex Court in the case of H.V Thakur (supra), have to be construed as 'Substantive provisions', as a result whereof the same could only be given prospective operation, and resultantly would not be applicable to the year under consideration in the case of the assessee company. 5. The Ld. A.R further to drive home his contention that while for procedural provisions are applicable both to future as well as pending proceedings, while for amendments to substantive provisions can only be given a prospective effect, therein in support of the aforesaid proposition, relied on a host of Judgments, as under: (i). Jai Parkash Singh Vs. (219 ITR 737)(SC) (ii). KM Sharma Vs. ITO (254 ITR 772, 779)(SC) (iii). Aditya Cement Staff Club Vs. UOI (266 ITR 70)(Raj) (iv). Associated Cement Co. Vs. CTO (48 STC 466) (v). K. Co. Gopal Rao Vs. CWT (181 CTR 94)(AP) (vi). CWT Vs. R.K Indrajeet Singh(86 Taxman 507)(Raj) (vii). CWT Vs. Man Bahadur Singh (208 ITR 658)(Raj) (viii). Gulabrai Hanumanbux Vs. CWT (198 ITR 13 1)(Guj) (ix). ACIT Vs. Hasmat Rai Raj Pal (167 ITR 79 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led position of law that CBDT Circulars are binding on the Revenue/department, the A.0 in the case of the assessee company had thus grossly erred in adopting a view contrary to the CBDT Circular, and as such erred in extending the scope of applicability of the provisions of Sec. 144C to the years preceding the A.Y. 2010-11. The Ld. A.R further in support of his contention that the Circulars issued by CBDT in exercise of its powers u/s 119 of the 'Act', though are not binding on the assesses or the appellate authorities, but are binding on the Revenue/department, therein relied on the following judgments: (i). CIT Vs. K. Srinivasan and K. Gopalan (23 ITR 87)(SC) (ii). CWT, Central Vs. Balbhadradas Bangur(148 ITR 149)(Cal). (iii). CIT Vs. 0.M.S.S. Sankaralinga Nadar & Co. (147 ITR 332)(Mad). (iv). Charitable Gadodia Swadeshi Stores Vs. CIT (12 ITR 385)(Lahore) (v). CIT Vs. Raja Bahadur Kamakhaya Narayan Singh (16 ITR 325) (Privy council). (vi). Beohar Singh Raghubir Singh Vs. CIT (16 ITR 433)(Nag). (vii). Comm. Of Agri. Income tax Vs.Raja Jagdish Chandra Dhabal (171TR 426)(Cal). (viii). S.D Sharma Vs. CIT (45 ITR 107 )(Mah). (ix). Delhi Flour Mills Co. Ltd. Vs. CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rict literal interpretation', it can safely and rather inescapably be gathered that the provisions of Sec. 144C are to be made effective from A.Y. 2010-11, and no interpretation howsoever meaningful it may so appear, can therein be permitted to substitute the plain and literal interpretation of the said statutory provision. 10. The Ld. D.R on the hand rebutting the aforesaid averments of the assessee company, relied on the order of the Ld. CIT(A) and submitted that the provisions of Sec. 144C which were made available on the statute vide the 'Finance (No. 2) Act, 2009, w.r.e.f 01.04.2009, were applicable as regards any order which the A.O proposes to make as a consequence of the order of the TPO uls 92C(3) of the 'Act', therein effecting variation in income or loss returned by an eligible assessee on or after October 1, 2009, irrespective of the assessment year to which it pertains. It was further submitted by the Ld. D.R that the aforesaid scope and gamut as regards the period of applicability of the provisions of Sec. 144C had been clarified vide Circular No. 9; Dt. 19.11.2013 issued by the CBDT, wherein the anomaly as had crept in Para 45.5 of its earlier Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough it is the settled position of law as had been so laid down by the Hon'ble Supreme Court in the case of : H.V Thakur Vs. State Bank of Maharashtra (1994 AIR 263), as well as appreciated in the host of other judgments relied upon by the Ld. AR, that a statute which effects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, however are convinced that the said proposition would not help the assessee company to support its contention that Sec. 144C being substantive in nature, therefore the same would be applicable prospectively w.e.f A.Y. 2010-11, because to our understanding Sec. 144C has only brought about a procedural amendment therein providing the tax payer an alternate dispute resolution mechanism, exercise of which too is optional at the end of the tax payer. Rather, as a matter of fact, neither the said statutory provision is compulsory, nor the same causes any prejudice of any kind to the tax payer, and thus it can be safely concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derlying object behind the enactment, but are unable to persuade our self to interpret the scope and gamut of the period of applicability of Sec. 144C(1) of the 'Act' by divorcing the 'Cut off' date of 01.10.2009 from the text in which it has been used, and therein reading the same in isolation. We are of the considered opinion that as Sec. 144C which had been inserted vide the Finance (No. 2) Act, 2009, w.r.e.f 01.04.2009, nowhere makes any mention that the said statutory provision would only be applicable to A.Y. 2010-11 and onwards, therefore the same would be applicable in the cases where the A.0 on or after the 1st day of October, 2009, as a consequence of the order of the TPO u/s 92CA(3) of the 'Act', proposes to make any variation in the income or loss returned, which is prejudicial to the interest of the assessee, independent of the assessment year involved therein. That as regards the reliance placed by the Ld. A.R on Para 45.5 of the CBDT Circular No. 5; Pt. 03.06.2010, to support his contention that the provisions of Sec. 144C were applicable w.e.f A.Y. 2010-11, we are of the considered view that without prejudice to the fact that that the CBDT Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144C is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after ft October, 2009, irrespective of the assessment year to which it pertains. Amendments to other sections of the Income-tax act referred to in para 45.3 of the Circular No. 5 of 2010, dated 3'd June, 2010, shall also apply from 1st October, 2009." 13. Thus in light of the fact that an inadvertent drafting error as had crept in Para 45.5 of Circular No. 5 ; Dt. 03.06.2010, therein wrongly stating that the provisions of section 144C inserted vide Finance (No. 2) Act, 2009 were in relation to the assessment year 2010-11 and subsequent assessment years, had in itself been taken cognizance of as being an 'Inadvertent mistake', and rectified by the CBDT by substituting Para 45.5 (supra), vide its Circular No. 9; 19.11.2013, pursuant thereto the support taken by the assessee company on the basis of Para 45.5 of the Circular No. 5 of 2010, dated 3rd June, 2010, therein falls to ground. We are also not impressed by the claim of the Ld. A.R that as the CBDT Circular No. 9; dt. 19.11.2013 (supra) was not there before the A.0, therefore the latter was bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see company within a period of 33 months from the end of the relevant assessment year, i.e latest by 31.12.2011, however as the same was framed only as on 19.01.2012, therefore the same was barred by limitation and was thus liable to be struck down on the said count itself That the Ld. D.R on the other hand rebutting the aforesaid contention and relying on the order of the Ld. CIT(A), therein submitted that in the case of the assessee company, the A.0 by resorting to the provisions of Sec. 144C of the 'Act' therein remained under a statutory obligation to frame assessment within the time period contemplated U/s 144C(4) of the 'Act', and as the assessment framed by the A.O in the hands of the assessee company was found to be within the parameters contemplated u/s 144C(4) of the 'Act', therefore no infirmity as regards the limitation for framing of the assessment was liable to be drawn. 15. We have considered the rival submissions of either side and perused the relevant materials on record, including the orders of the authorities below and are of the considered opinion that as the time period involved in framing of an assessment where the provisions of Sec. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Sec. 144C had been invoked, are reproduced as under:- "Sec. 144C(4). The Assessing Officer shall, notwithstanding anything contained in Sec. 153 [or Section 153B], pass the assessment order under sub-section (3) within one month from the end of the month in which- (a). the acceptance is received; or (b). the period of filing of objections under sub-section (2) expires. 16. Thus a bare perusal of Sec. 144C(4), which starts with the non obstante clause "The Assessing Officer shall, notwithstanding anything contained in Sec. 153 " and provides for an independent 'time limit' of 'One month' which is to be reckoned from the end of the month, in which either the acceptance to the variations is received by the A.0 from the assessee, or the stipulated period of filing of objections had expired, therein puts the matter to rest, beyond any scope of doubt, that the time limitation for framing of an assessment where the provisions of Sec. 144C had been invoked, is separately provided for in the body of Sec. 144C itself, and the time limitations contemplated as per provisions of Sec. 153C shall not put any fetters to the framing of any such assessment, which as men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment u/s 143(3) in the hands of the assessee company, as required u/s 144C(4)(b) of the 'Act'. 18. Thus now in the case of the assessee company, the A.0 who remained under a statutory obligation to frame the assessment, not later then 31.01.2012, is found to have framed the same as on 19.01.2012, therefore the same is within the period of limitation. Thus the claim of the assessee company that the assessment framed by the A.0 is barred by limitation, is rejected, and consequent thereto the 'Ground of appeal No. 1' of the assessee company is dismissed. GROUND OF APPEAL 2 & 3: 19. The Ld. A.R of the assessee company during the course of the hearing of the appeal had therein submitted that 'Ground of appeal No. 2' and 'Ground of appeal No. 3' are not being pressed, as a result whereof the same are dismissed as being not pressed. GROUND OF APPEAL 4 & 5:. 20. The Ld. A.R of the assessee company had assailed the order of the Ld. CIT(A) who had confirmed the action of the AO/TPO of treating remittances of US $ 8,60,000/- (Rupee equivalent of Rs. 1,51,18,263/-) by the assessee company to its 'AE', i.e M/s Taurian CISA at Abdidjan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the WOS, therefore in view the color and character of the transaction, no adverse inference as regards the same were liable to be drawn in the hands of the assessee company. The Ld. A.R further submitted that the amount of 'Share application' money so remitted to the 'WOS' was to be used by the latter for the purpose of obtaining mining contracts in Africa, and therefore till the mining contracts were finalized, the money was kept in the bank by the 'WOS' and it was only after the finalization of the contracts, the amount which was not required by the WOS for the aforesaid purpose were refunded to the assessee company 22. The TPO not finding favour with. the submissions of the assessee company, therein held the remittances of US $ 8,60,000/- (Rupee equivalent of Rs. 1,51,18,263/-) by the assessee company to its 'AE', i.e M/s Taurian CISA at Abdidjan Ivory Coast of South Africa (the 'WOS' of the assessee company) , as a loan transaction, on which the TPO observed that the assessee company ought to had charged interest. The TPO rejecting the contention of the assessee company that as the amount remitted to the 'AE' was towards share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith interest at the rate of not less than 4% but not exceeding 15%, and further taking support from certain other regulations of the SEBI (Issue of Capital and Disclosure Requirement) Regulations of 2009, though upheld the order of the A.O, but however directed the latter to workout interest at the rate of 6 month LIBOR plus 150 basis points. 24. That during the course of hearing of the appeal before us, the Ld. A.R of the assessee company, in order to drive home his contention that the remittance made by the assessee company to its WOS/AE was towards share application money, after satisfying all the requisite, parameters under law, which was duly recognised and approved as such, therein referred to the Resolution dated. 21/03/2006 of the 'Board of Directors' of the assessee company wherein consent was given to incorporate the WOS/AE in the name of Taurian CISA with the Share capital of CFA 1,00,00,000/- at Abidjan in Ivory Coast of African Continent (Page 157 of 'APB'), and further drew the attention of the bench to the RBI letter dated 24/08/2006 (Page 161 of 'APB'), whereby RBI had allotted identification number to WOS/AE outside India, wherein at Para 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcargo Global Logistics Ltd.Vs. ACIT (150 ITD 651 )(Mum) (iv) Parle Biscuits (P) Ltd. Vs. DCIT (46 taxmann.coml 1)(Mum) (v). Vijay Electricals Ltd. Addl. CIT (60 SOT 77)(Hyd) (vi). Micro Inks Ltd. Vs. ACIT (144 ITD 610)(Ahd) (vii).Prithvi Information Solutions Ltd. Vs. ACIT (49 Taxmann.com 176)(Hyd). (viii).Hill Country Properties Ltd. Vs. Addl. CIT (48 Taxmann.com.94)(Hyd). (ix). ITO Vs. Sterling Oil Resources (P) Ltd. (67 Taxmann.com 2)(Mum). 26. The Ld. A.R to further support his aforesaid contention that the lower authorities had seriously erred in re-characterizing the transactions of remittance of share application money as a loan, in light of the fact that the genuineness of the aforesaid transactions, i.e as that of being in the nature of remittance towards share application money had duly been accepted and had never been held to be sham or bogus, therein relied on a judgment of the Hon'ble High Court of jurisdiction in the case of :- Director of Income Tax (Intl. Taxation) Vs. Besix Kier Dabhol SA (26 taxmann.com 169)(Bom) wherein the Hon'ble High Court recording the findings of the Tribunal, as under:- "Before the Tribunal the case of the Revenue was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resources (P) Ltd. (67 taxmann.com 2) 29. Alternatively, it was further submitted by the Ld. A.R that even if the aforesaid remittance of share application money was to be treated as a loan transaction, then only the funds against which no shares have been allotted be treated as a loan transaction and interest thereon be considered based on LIBOR plus 150 points as determined by the Ld. CIT(A). 30. The Ld. D.R on the other hand had strongly relied on the order of the Ld. CIT(A) and had averred that the color and character of the remittances made by the assessee company to its WOS/AE was not to be gathered merely as per its hollow claim, but rather the same was to be arrived at on the basis of conjoint perusal of the facts involved right from the remittance of the amounts to the WOS/AE, specific purpose beyond the remittance, allotment of shares against part of the remittance and refund of the balance amount of remittance and the substantially abnormal delay in allotment of shares and refund of the amount by the WOS/AE in contravention of the parameters contemplated under the various statutory provisions. The Ld. D.R further submitted that not only the circumstances attending righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led position of law that re- characterization of a transaction is permissible on the part of the Revenue, where either the economic substance of a transaction differs from its form, or where the form and substance of the transaction though are the same, but arrangements made in relation to the transaction, viewed in their totality, differ from those which would have been adopted by independent enterprises behaving in a commercially rational manner, thus submitted that in the case of the assessee company not only the economic substance of the transaction pertaining to remittance of funds, which as claimed by the assessee company was towards share application money, clearly differed from its form, but rather even otherwise, the peculiar arrangement and the circumstances attending to the remittance of funds by the assessee company, as claimed by the latter to be towards share application money, viewed in their totality, seriously differed from those which would have been adopted by the assessee company with an unrelated concern, behaving in a commercially rational manner, therefore in light of the aforesaid factual position, no infirmity could be saddled with the observation of the TP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the re-characterization by the AO/TPO of the remittance made by the assessee company by way of share application money to its `WOS' to the said extent, as a loan due to delay in allotment of shares is not permissible in the eyes of law, but are unable to persuade ourselves to accept the contention of the Ld. A.R that a similar treatment is also to be accorded to the balance amount of US $ 2,00,000 (supra) which had been refunded by the WOS to the assessee company. In other words, to be brief and explicit, to the extent the remittance of US $ 6,60,000 made by the assessee company to its `WOS' by way of share application money is concerned, against which 31,120 shares had been allotted to the assessee company, though involving some delay, to the said extent the AO/TPO had erred in re-characterizing the share application money, as a loan due to delay in allotment of shares. The aforesaid view so arrived at by us is fortified by the judgment of the Hon'ble High Court of jurisdiction so passed in the case of Director of Income Tax (Intl. Taxation) Vs. Besix Kier Dabhol SA (26 taxmann.com 169)(Bom). However, as regards the balance amount of remittance of US $ 2,00,000 (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent from its form, and rather as a matter of fact the arrangements made in relation to the aforesaid transaction, viewed in their totality, differ from those which would have been adopted by the assessee company behaving in a commercially rational manner, no embargo under such factual circumstances can be placed as regards re-characterization of such remittance towards share application money as a loan transaction. 32. That still further we are not impressed by the contention of the Ld. A.R of the assessee company that as the business of a `WOS' is to be treated as the business of the 'Holding company', therefore going by the said position of law, as the fruits of the investment by the assessee company in its `WOS' were solely to belong to the assessee company (i.e the 'Holding company), as the latter remained the sole and absolute owner of the said `WOS', thus giving of the money to the 'WOS' and use of the said money by the latter, the assessee company in its status as that of being the sole owner of the subsidiary company, remains the beneficiary of all the gains of the subsidiary company, therefore non allotment of the shares to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , had thus claimed the lease rental charges as an expenses as per the provisions of the 'Act', while filing its 'Return of income' for both of the aforesaid assessment years. However, the assessee company following the 'Accounting Standard 19' (AS 19) on lease (both for 'Operating lease' and 'finance lease') as issued by the ICAI, had therein in its 'Books of accounts' treated the same as a 'Finance lease' and accordingly the value of assets taken on lease were capitalized as 'Fixed assets' and 'Interest' and 'depreciation' on the said assets., i.e wagons were debited in the 'P &. loss a/c' as an expense. The assessee company while filing its 'Return of income' for the year under consideration, disallowed the 'depreciation' and the expenses in the 'Computation of income' and claimed the 'lease rental' of Rs. 9,70,34,749/- as an expense by treating the lease as on 'Operating lease'. During the course of the assessment proceedings, the assessee company justifying its entitlement towards the 'lease rentals' therein submitted that the treatment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the claim of the assessee company towards 'depreciation' and 'Interest'. 36. That the A.O while framing the assessment in the hands of the assessee company for the year under consideration, not finding favour with the contentions of the assessee company that the 'lease transaction' was in sum and substance an 'Operating lease' and not a 'Finance lease', therein referring to various articles of the 'Lease agreement', Schedules to the 'Balance sheet' of the assessee company [Schedule 3, Schedule 19 - Note 5 & Note 1(h), Schedule II of the 'Balance sheet', i.e Note to the annexures of 'Fixed assets'], which did go to prove beyond any scope of doubt that the assessee company was the sole and absolute owner of the wagons, therein held that the assessee company thus had rightly capitalized the value of assets as 'Fixed assets', which as per the A.0 was the correct position of law. The A.0 further referring to the AS-19 which provides for guidelines both for the 'Finance lease' and 'Operating lease' ,and referring to various clauses of the 'Lease agreement' (supra), therein concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;Act', however during the course of proceedings before him, no submission in support of the aforesaid contentions was raised by the Ld. A.R of the assessee company, except for stating that the issue was covered against it as per the order of the Ld. CIT(A) in A.Y. 2007-08, therefore relying on the order of his predecessor for A.Y. 2007-08, proceeded with and dismissed the ground of appeal pertaining to the issue under consideration. 38. That before us the Ld. AR had submitted that the lease transaction was in the nature as that of a 'Operating lease' and the authorities below erred in taking the same as a 'Finance lease' and had wrongly disallowed the Rs. 9,70,34,749/- so claimed by the assessee company as a revenue expenditure. Alternatively, it was submitted by the Ld. AR that in case the disallowance was to be upheld by treating the same as a 'Finance lease', then the assessee company be allowed the 'finance charges' and 'depreciation', as per the provisions of the 'Act'. That the Ld. D.R on the other hand relied on the order of the Ld. CIT(A) and averred that the latter had rightly concurred with the observations of the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet' and categorically raised its claim towards 'Interest' and 'depreciation' on the said assets., and debited the same in its `13 & loss a/c' as an expense, but being of the view that the lease transaction was a 'Operating lease', had thus while filing the 'Return of income' for the year under consideration, disallowed the 'depreciation' and the 'Interest' in the 'Computation of income' and claimed the 'lease rental' of Rs. 9,70,34,749/- as an expenses by treating the lease as on 'Operating lease', however now when the said claim of the assessee company had not found favour with the lower authorities who therein held that the lease transaction was in the nature as that of a Finance Lease and not an operating lease and on the said basis disallowed the claim of the assessee company as regards lease rental' of Rs. 9,70,34,749/-, pursuant thereto we are of the view that the assessee company was duly entitled towards the 'depreciation' and 'Interest' of Rs. 2,68,14,392/- and Rs. 73,67,890/-, respectively, as had been reflected/claimed by it in its 'I' & Loss a/c'. That as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Hon'ble Supreme Court in the case of : Goetz India Ltd. Vs. CIT (2006) 157 Taxmann 1 (SC), which debars the A.0 to allow a new claim of an assessee, which the latter had not raised in its 'Return of income', except by way of filing a revised 'Return of income', without going into the issue as to whether the claim raised by the assessee company in the present case towards 'depreciation' and 'Interest', and duly reflected by the latter in the `13 & Loss a/c', but had been added back by the assessee company in its 'Computation of Income', being of the view that the lease transaction was in the nature as that of an 'Operating lease' and not a 'Finance lease', could in the backdrop the said factual position be held to be in the nature as that of 'New claim', therein debarring the A.0 to allow the said claim of the assessee company, we being of the view that in light of the fact that the lease transaction is in the nature as that of a 'Finance lease' and not an 'Operating lease', therefore the assessee company would duly stand entitled towards the consequential claim of 'depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company which is engaged in the business of processing and trading of iron ore, carrying out mining activity of extracting iron ore on contract basis, generation of wind power and trading in iron ore in domestic as well as international market, was recognized as a Star export house during the year under consideration. The assessee company in order to safeguard against the loss on account of foreign exchange fluctuation with respect to export receivables, had therein entered into hedging contracts. The said contract was settled in the immediately succeeding year, i.e period relevant to AN 2009-10. However, the assessee company on the basis of the guidelines issued by the ICAT, claimed the same as an allowable deduction in the 'Return of income' for the year under consideration. The A.0 however treated the impugned loss as notional loss on the ground that the contract was settled in the next assessment year, which order of the A.0 was thereafter upheld by the Ld. C1T(A). 44. That before us it was at the very outset submitted by the Ld. A.R for the assessee company that as the A.0 vide his assessment order dated. 26/03/2013 so passed for A.Y. 2009-10, had allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the said liability is to be quantified and discharged at a future date, as claimed by the assessee company, may therein be allowed. The Ld. D.R on the other hand relied on the order of the CIT(A) and submitted that as the matter was pending adjudication before the Hon'ble Supreme Court and the operation of the judgment of the Hon'ble Calcutta High Court in the case of : Exide Industries Ltd. (supra) had been stayed by the Hon'ble Supreme Court, therefore the appeal of the assessee company on the said issue was liable to be dismissed. 47. We have considered the rival submissions of either side and perused the relevant materials on record, including the orders of the authorities below and are of the considered view that as the issue pertaining to the allowability of provision for leave encashment u/s 43B(f) is pending before the Hon'ble Supreme Court, wherein on a `SLP' filed before the Hon'ble Supreme Court against the judgment of the Hon'ble Calcutta High Court in the case of : Exide Industries Ltd. Vs. UOI (292 ITR 470)(Cal), and the Hon'ble Apex Court had stayed the operation of the judgment of the Hon'ble Calcutta High Court, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
