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TMI Blog2017 (6) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... ] order dated 30/12/2009 at Rs. 27.17 crores after certain adjustments / disallowances as against returned income of Rs. 15.47 crores e-filed by assessee on 08/11/2006. During assessment proceedings, it was noticed that the assessee claimed an amount of Rs. 1.35 crores as refurbishment expenses on leasehold property as revenue expenditure which were capitalized in the books of accounts and against which depreciation was provided. However, the assessee, in the computation of income, disallowed the depreciation and claimed full expenses of Rs. 1.35 crores as revenue expenditure. The AO noted that the same were incurred in connection with starting of new consumer business by the assessee which was altogether a new line of business and hence the same were capital in nature. The depreciation on these expenses was disallowed by the Ld. AO on the premises that the assessee failed to substantiate that leasehold assets were put to use during the impugned AY. 3. Aggrieved, the assessee assailed the same successfully before Ld. CIT(A) vide impugned order dated 21/01/2011 where the Ld. CIT(A) noted that the assessee, being a NBFC, was already engaged in corporate financing and incurred the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts are not conclusive / determinative of taxability of income and therefore, issue of taxability has to be adjudged within the statutory framework only. At this juncture, it would be prudent to reproduce the relevant observations of apex Court in CIT Vs. Madras Auto Services (P) Ltd. [supra]:- "11. All these cases have looked upon expenditure which did bring about some kind of an enduring benefit to the company as revenue expenditure when the expenditure did not bring into existence any capital asset for the company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount. In all these cases, the expenses have been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully. In the present case also, since the asset created by spending the said amounts did not belong to the assessee but the assessee got the business advantage of using modern premises at a low rent, thus saving considerable revenue expenditure for the next 39 years, both the Tribunal as well as the High Court have rightly come to the conclusion that the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident fund which was deposited after the due date and hence disallowed by AO u/s 43B. 9. Aggrieved, the assessee contested all the additions before Ld. CIT(A) without any success vide impugned order dated 21/01/2011 and raised similar contentions. The Ld. CIT(A) noted that the preference shares carried fixed rate of return and had no linkage with proportionate holding of the assessee and therefore, not dividend in nature but interest income and therefore, rightly been added to the income of the assessee. The disallowance of debt issue expenses was confirmed upon noting that the identical matter in assessee's own case for AY 2004-05 was remitted back to the file of Ld. AO by the Tribunal and the same was pending. The third addition u/s 43B for Rs. 40,505/- was also confirmed on the premises that the same was deposited late. Aggrieved, the assessee is in appeal before us. 10. The Ld. Counsel for assessee, first of all drew our attention to the fact that identical issue of debt issue expenses arose in assessee's own case for AY 2004-05 & 2005-06 and the Tribunal, in both the years, restored the matter back to the file of Ld. AO for some verification and re-adjudication and hence fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,000/- for stamping charges for CPS are not available on record as no relevant receipts were produced. Whether such certificates amount to loan paper. The nature of the document has not been examined by the revenue authorities after considering relevant rules & procedures and utilization of the certificate. The relevant facts are required to be put on record after necessary verification. Further, it is not clear from the record that the amount paid to CRISIL Ltd. is in respect of certificate dated 5th March, 2004 or 12.07.2005. The relevant details of particulars of total commercial papers pertaining to the year under consideration are also not on record, which are necessary for deciding the issue under consideration. Under these circumstances, since the above facts are required to be brought on record after verification, we remit the matter back to the file of the AO to decide the issue in accordance with law after considering the discussion made as above and after providing the opportunity of hearing to the assessee." Since Ld. AR has contended that the matter is identical and similar in all respect, following the decision of this Tribunal in assessee's own case, we remit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applies to employees' contribution as well as employers' contribution. Question Nos.2, 3 & 4 are accordingly answered in favour of the assessee and against the revenue." Respectfully following the same, we find that since the contribution has been deposited by the assessee before due date of filing of return of income, no disallowance is called for in terms of Section 43B. The impugned addition stands deleted. This ground of assessee's appeal succeeds. 14. Regarding addition on account of accrued interest on preference shares, the Ld. AR, drawing our attention to the documents placed in the paper book, contended that the assessee held preference shares of several companies as long term investments as capital assets on heldto- Maturity basis and reflected as such in the Balance Sheet. The assessee could earn fixed pre-determined return in the form of dividend on these shares and the assessee, following consistent accounting policy, recognized the accrued dividend income on these shares over the tenure of the shares. But nevertheless, the shares constituted capital assets in the hands of the assessee, being taxable under the head capital gains u/s 45 upon their maturity / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to which the assessee is holding preference shares of four companies namely (i)Idea Cellular Ltd. (ii)A.V.Digital Networks Pvt. Ltd. (iii) Deccan Digital Networks Pvt. Ltd. & (iv) Metro Digital Networks Pvt. Ltd. 18. A perusal of terms of preference shares of Idea Cellular Ltd. as contained in amendment agreement dated 31/10/2005 reveals that the assessee could earn two streams of income on these shares viz. right to receive fixed cumulative preferential dividend and secondly, certain predetermined redemption premium as per the attached annexure. 19. Further, a perusal of copies of financial statements of issuer companies and relevant shares certificates placed in the paper-book reveals that these instruments have been classified as preference shares in the books of issuer as part of share capital. 20. As per Note No. 3 forming part of Computation and Return of income for impugned AY, it is stated that the assessee, following applicable accounting guidelines, hold preference shares on Held to maturity basis / Long Term Capital Assets and accordingly, income credited to Profit & Loss account on these shares has been deducted from computation of income and would be offered t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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