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TMI Blog2017 (11) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... essee need verification by the AO and matter needed to be restored to the file of the A.O for denovo adjudication of the issue on merits in accordance with law. Thus keeping in view factual matrix of the case , we are inclined to restore this issue to the file of the AO for de-novo determination of the issue on merits in accordance with law after verification and examination of all the contentions of the assessee in the light of provisions of the statute and judicial precedents. Provision towards licence fee for renewal of Excise licence fee of PLL and RS II payable to the State Excise Department - Held that:- We have observed that the provision for licence fee payable to State Government for renewal of licence was made by the assessee for the impugned assessment year while no payment has been made by the assessee to the Government till the due date of filing the return of income u/s 139(1) which has infringed Section 43B of the 1961 Act and the same cannot be allowed as an expenses for the year under consideration. Hence in view of the provisions of Section 43B these expenses claimed by the assessee towards provision for license fee cannot be allowed as no payment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not during the years, therefore disallowance made was not sustainable. 2. The learned CIT(A) erred in confirming the action of the A.O. for determining the rate of interest @ 24% instead of rate @ 18 % has been paid by the assessee to the Bharat Co-Op Bank. Hence, the observation of A.O confirmed by the CIT(A) was not correct. II. License fee of ₹ 22,96,200/- 3. The learned CIT(A) erred in confirming the disallowance of license fees of ₹ 22,96,200/ - by misinterpreting the letter dated 30-1- 2013, without considering the submission of assessee. 4. The learned CIT(A) erred in disallowing the amount of ₹ 22,96,200/ - as a licence fees u/s. 43B without considering the submissions, evidence and correspondence done by the assessee with the excise department for PLL License RS II License. III. Addition u/s. 41(1) of the Act ₹ 1,20,25,559/-. 5. The learned CIT (A) erred in confirming the addition of ₹ 1,20,25,559/- (Rs.1,25,91,600/- - ₹ 5,66,041/-) u/s. 41(1) being outstanding liability shown by assessee as payable to State Excise Aurangabad on account of PLL and RS II License fee without appreciating the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was observed by the A.O that the assessee has paid bank interest of ₹ 6,31,235/- to Bharat Co-operative Bank Limited . It was observed by the AO from the Balance Sheet of the assessee , that the assessee has taken secured loan from Bharat Cooperative Bank Ltd. of ₹ 26,41,687/- on which interest has been paid of ₹ 6,31,234/- . It was observed by the AO that the opening and closing balance of the said loan was stagnant at ₹ 26,41,687/- . It was observed by the AO that the assessee has advanced loans and advances amounting to ₹ 1,75,66,151/- , out of which the assessee has charged interest from two parties as under:- (In Rs.) Name Op. Amt. Addition Reduction Balance Rate of Interest Alfa Consumer Products Pvt. Ltd. 3,92,916 16,678 1,50,000 2,59,595 6% Alfa Sai Minerals Pvt. Ltd. 68,26,696 3,23,245 13,95,450 57,54,491 6% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department , Aurangabad wherein vide letter dated 30.01.2013 State Excise department wrote to the AO that the amount payable by the assessee is only ₹ 5,66,041/- . The assessee was asked to explain the same and the assessee submitted as under: .... this amount pertains to F.Y.2002-03, which has been subsequently paid in 2005-06. The state excise department has stated the amount outstanding, for which the PLL Licence was renewed. They have not stated the amount of Licence fees payable as on 31.03.2010 for renewal of licence along with interest. The record maintained by them pertains to any short payment towards application for renewal of licence. It is pertinent to note that if the assessee goes for renewal of licence today, then he is liable to pay licence fees for each year for which he has not deposited the same. Licence fees accounted in the books for each year is as per the state excise department's circular. We attach herewith statement and copies of the circulars for each year from F.Y.2003-04, for which the licence fees has to be deposited as on 31.03.2010. As a confirmation of the liability we are enclosing the copies of state government circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erns at a very low rate of interest @6%. The learned CIT(A) after hearing the assessee held that interest of ₹ 2,14,640/- was not being incurred wholly and exclusively for the purpose of assessee s business and the disallowance of ₹ 2,14,640/- was confirmed by learned CIT(A) , vide appellate order dated 22-12-2014. With respect to the second and third issue , it was submitted that licence fee payable to Excise Department is debited to P L Account based on circulars issued by State Government, from year to year. The assessee submitted copies of circular and statement for each year from financial year 2003-04 onwards . The correspondence with the State Excise Department was enclosed. The assessee submitted that the claim of the license fee for current year is ₹ 22,96,200/- and the total amount payable as at year end was ₹ 1,25,91,600/- as confirmed by the inspector of State Excise which was on account of PLL and RS II licence fee . It was submitted that Superintendent, State Excise has confirmed liability of ₹ 5,66,041/- as on date and it was submitted that this amount pertained to financial year 2002-03 which was paid in 2005-06. Thus it was submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 22-12-2013 passed by learned CIT(A) , the assessee has come in appeal before the Tribunal. With regard to the ground no. 1 and 2 raised by the assessee in memo of appeal filed with the tribunal, it was submitted by learned counsel for the assessee that loans were obtained from Bharat Cooperative Bank in the year 1996 . Our attention was drawn to page 164/pb wherein assessment order for assessment year 2009-10 is placed wherein no such addition has been made by Revenue towards disallowance of interest on loans on differential between interest paid on bank loans and interest on loans earned being given to sister concerns at lower rate of interest. Further our attention was drawn to page 216 to 217 wherein the accounts of Alfa Consumer Products P. Ltd and also Alfa Sai Minerals P. Ltd. are placed for the period 1st April, 2000 to 31st March, 2010 . Our attention was also drawn to page no. 215 of the paper book wherein the certificate from Bharat Cooperative Bank(Mumbai) Ltd. dated 31-07-2000 is placed wherein it is specified that they have sanctioned loan of ₹ 24,84,216/- to the assessee on 16th July, 1996 and interest of ₹ 6,31,234.80 was received by them from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and also it was not paid till the due date of filing of return of income u/s 139(1). It is claimed that Section 43B is applicable and the appellate order of learned CIT(A) be confirmed. With respect to the next ground wherein ₹ 1,20,25,559/- was disallowed under 41(1) of the Act, It was submitted by learned counsel for the assessee that the matter is pending before Hon ble Bombay High Court . It was also submitted by learned counsel for the assessee that it has led to the double addition as the amounts were disallowed on yearly basis in the year of making provision for license fee , while again it is now disallowed by invoking provisions of Section 41(1). Our attention was drawn to page no. 219 and it is submitted that the licence fees is disallowed on year to year basis for which a chart is prepared by the assessee for assessment year 2006-07 to 2013-14. Our attention was also drawn to page no. 96-97/paper book wherein the decision of Hon ble Bombay High court dated 12.10.2001 is placed wherein the execution , implementation and operation of the order of the State Excise order bearing no. MPL-5290/1745/EXC-3 dated 26.09.2001 by Hon ble Bombay High Court is placed. On di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - . It was observed by the AO that the assessee has advanced loans and advances amounting to ₹ 1,75,66,151/- , out of which the assessee has charged interest from two parties as under:- (In Rs.) Name Op. Amt. Addition Reduction Balance Rate of Interest Alfa Consumer Products Pvt. Ltd. 3,92,916 16,678 1,50,000 2,59,595 6% Alfa Sai Minerals Pvt. Ltd. Ltd. 68,26,696 3,23,245 13,95,450 57,54,491 6% Thus it was observed by the A.O. that the assessee has obtained secured loan of ₹ 26,41,687/- on which the assessee has paid interest @ 24% and the assessee has given loans of ₹ 60,14,086/- on which interest at the rate of 6% was earned . The AO observed that it is not acceptable as in the opinion of the A.O. that borrowing was at a very excessive rate of inteerst as compared to interest charged on loans to the sister concerns which were at a lower r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Manufacturing of IMFL from the year 1975 and the assessee has claimed that it holds the licence for manufacturing of liquor dated 24-12-1975 and to keep the licence active, the assessee has made provisions for the yearly license fees payable to the State Government. We have observed that the license for manufacturing of IMFL was issued by State Government in the name of one Mr Anant Parshuram Shetye on 24-12-1975 under the provision of Section 15 of Maharashtra Distillation and Spirit and Potable Rules 1966. On 05-06-1976 this license was transferred in the name of M/s Pen Distilleries. Later Mr Anant Parshuram Shetye turned blind and he entered into an MOU on 01-10-1990 with Captain Pramod Salvi to convert license as well as business into a Private Limited company with Captain Pramod Salvi wherein Captain Pramod Salvi to have absolute majority in the newly incorporated Private Limited Company and Mr Anant Parshuram Shetye will be made a permanent Director and Chairman. The license was converted into the name of the company namely Alfa Distilleries Private Limited and it was proposed to shift unit from District Raigarh to District Aurangabad . Some dispute arose between the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee is that the said amount has been disallowed over a period of time by Revenue by not allowing the provision for license fee for IMFL made in the year of making provision itself and its addition u/s 41(1) by the AO in this year of the entire accumulated amount of provision on the ground of cessation of liability has led to double addition i.e. once by not allowing the expense in the year of provision and secondly by treating the entire accumulated amount as cessation of liability u/s 41(1) . We are in agreement that there cannot be double jeopardy and the assessee cannot be prejudiced twice once by disallowing the expenses itself in the year of incurring of the said expense and secondly by treating the same amount accumulated over a period of time by treating the same as income u/s 41(1) on account of cessation of liability . Hence , in our considered view this matter need to be restored back to the file of the A.O for denovo adjudication of the entire issue on merits in accordance with law after conducting such verification as is considered fit by the AO including status of dispute between parties . We order accordingly. 7. In the result, appeal of the Assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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