9911796707
TMI Blog2017 (4) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... re made within the grace period. After considering the submission of the assessee and the assessment order, the FAA held that all the payments to PF had been deposited in government account within the grace period allowed to the assessee as per the provisions of employees' Provident Fund Scheme, 1952. Referring to the judgment of the Hon'ble Supreme Court in the case of Alom Extrusions (319ITR306), he directed the AO to verify from the records as to whether the payments had been within the grace period. He further held that if the claim of the assessee was supported by evidences addition made by AO should be deleted. 2. 2. Before us the Departmental Representative stated that mater could be decided on merits. The Authorised Representative supported the order of the FAA. We find that the FAA has directed the AO to verify the records and to delete the addition only after verification. In our opinion, the direction of the FAA is as per law and no appeal should have been filed with regard to the said issue. Accordingly, we decide First Ground of appeal against the AO. 3. Second ground of appeal is about restricting the remuneration to the Directors to Rs. 10 lakhs. During the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 00, 000/- and the assessee-company all of sudden decided to increase the remuneration by 500% to Rs. 30, 00, 000/- to the Directors. While the gross remuneration in AY 2009-10 to the Net Profit was 5. 93%, it was jumped to 22. 35% in the year under consideration and disallowed Rs. 22, 00, 000/- u/s 40A(2) holding as excessive and unreasonable. Before the ld. CIT(A), it was argued that the remuneration was paid as per market and business exigencies. The Directors to whom the remuneration was paid are responsible to carry out the function such as production, planning and marketing, financial planning and control. However, the ld. CIT(A) after referring the decision of Delhi High Court in Hive Communication Pvt. Ltd. vs. CIT (2011) 201 Taxman 99 held that the disallowance is on higher side and restricted the same to Rs. 10, 00, 000/- and granted partial relief to the assessee. We have seen that while making the disallowance, the onus is on the AO and the AO has not brought any material on record as to how the remuneration paid to two Directors are excessive, no comparable on the basis of region cum industry was referred by the AO or by the ld. CIT(A) while restricting the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income for the assessment year 2005- 06. But the assessee was not entitled for unabsorbed depreciation of Rs. 43, 60, 22, 158 for the assessment year 1997-98, which was not eligible for being carried forward and set off against the income for the assessment year 2006-07. 33. Prior to the Finance (No. 2) Act of 1996 the unabsorbed depreciation for any year was allowed to be carry forward indefinitely and by a deeming fiction became allowance of the immediately succeeding year. The Finance (No. 2) Act of 1996 restricted the carry forward of unabsorbed depreciation and set-off to a limit of eight years, from the assessment year 1997-98. Circular No. 762, dated February 18, 1998 (see [1998] 230 ITR (St. ) 12 ), issued by the Central Board of Direct Taxes (CBDT) in the form of Explanatory Notes categorically provided, that the unabsorbed depreciation allowance for any previous year to which full effect cannot be given in that previous year shall be carried forward and added to the depreciation allowance of the next year and be deemed to be part thereof. 34. So, the unabsorbed depreciation allowance of the assessment year 1996-97 would be added to the allowance of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to or exceeds the accumulated losses. Explanation. -For the purposes of this clause, 'net worth' shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. " 36. The aforesaid provision was introduced by the Finance (No. 2) Act, 1996, and further amended by the Finance Act, 2000. The provision introduced by the Finance (No. 2) Act was clarified by the Finance Minister to be applicable with prospective effect. 37. Section 32(2) of the Act was amended by the Finance Act, 2001, and the provision so amended reads as under : "Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of sec tion 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad the intention of the Legislature been to allow the unabsorbed depreciation allowance worked out in the assessment year 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by the Finance Act, 2001, it would have incorporated a provision to that effect. However, it does not contain any such provision. Hence, keeping in view the purpose of the amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. While construing the taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leaning to the side of the assessee or the Revenue. But if the Legislature fails to express clearly and the assessee becomes entitled for a benefit within the ambit of the section by the clear words used in the section, the benefit accruing to the assessee cannot be denied. However, Circular No. 14 of 2001 had clarified that under section 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
