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TMI Blog2016 (2) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... e afresh in the light of decision rendered by him in the assessment year 2006-07. Since the matter has been restored to the file of the AO for fresh consideration, we do not deem it necessary to interfere with his order on this issue. In the assessment year 2008-09, we notice that the ld. CIT(A) has restored the matter to the file of the AO with a direction to examine the same afresh in the light of the decision rendered by him in the assessment year 2006-07. Hence, we decline to interfere with the order of ld. CIT(A) in this year also as the AO has been directed to examine the issue afresh. Disallowance made u/s 14A - Held that:- Considering the fact that the assessee has made investment in one company only, that the investment was made long back, that the assessee has received dividend from that company only, we are of the view that the disallowance computed at 0.5% of the investment value of shares is reasonable, in the facts and circumstances of the case. Disallowance of prior period expenses - Held that:- It is a well settled proposition of law that the income relating to one year cannot be assessee in any other year. Under the same principle, the expenditure relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venience. 2. The assessee is engaged in the business of Warships, Off-shore Platform, shipping repairs and general engineering. 3. We shall take up the appeals filed by the revenue for the assessment years 2007-08 and 2008-09. For both the years, the revenue is aggrieved by the decision of ld. CIT(A) in deleting the addition made under section 43B of the Income Tax Act, 1961. 4. We heard the parties and perused the record on this issue. The assessee entered into a contract with M/s Armarous of France for transfer of technical knowhow as well as supply of material/ services etc. for manufacturing of Scorpene Class-Sub-marines. As per the terms of agreement, the liability to pay service tax was placed upon the assessee as service receiver. The AO noticed in AY 2007-08 that the assessee had provided service tax liability of ₹ 104.45 crores in its books of account. But it had actually paid a sum of ₹ 101.21 crores only. Hence, the AO disallowed the difference of amount of ₹ 2.93 crores u/s 43B of the Act. Besides the above, the AO noticed that a sum of ₹ 22.91 crores was disallowed in the immediately preceding year i.e. in assessment year 2006-07 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same in the year under consideration. Accordingly, we set aside the order of ld.CIT(A) passed on the issue relating to ₹ 22.91 crores and direct the AO to add the same on substantive basis. 8. With regard to the balance amount of ₹ 2.93 crores added by the AO, we notice that the ld. CIT(A) has restored the matter to the file of the AO for considering the same afresh in the light of decision rendered by him in the assessment year 2006-07. Since the matter has been restored to the file of the AO for fresh consideration, we do not deem it necessary to interfere with his order on this issue. 9. In the assessment year 2008-09, the revenue is contesting the decision of ld. CIT(A) in directing the AO to allow the service tax amount of ₹ 17.34 crores claimed by the assessee on payment basis. We notice that the ld. CIT(A) has restored the matter to the file of the AO with a direction to examine the same afresh in the light of the decision rendered by him in the assessment year 2006-07. Hence, we decline to interfere with the order of ld. CIT(A) in this year also as the AO has been directed to examine the issue afresh. 10. We shall now take up the appeals fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by disposal of the existing shares. The assessee has held the shares in only one company and has, thus, received dividend from one company only. The assessment years under consideration, being 2004-05 and 2007-08, the provisions of Rule 8D shall not be applicable as per the decision of Hon ble Bombay High Court in the case of Godrej Boyce Manufacturing Ltd (328 ITR 81). Hence the disallowance u/s 14A has to be computed on a reasonable basis during these years as held in the above said case decided by Hon ble Bombay High Court. 15. The Ld A.R has pointed out that the assessing officer himself has disallowed a sum calculated at 0.5% of the investments made in shares u/s 14A of the Act in AY 2009-10 and 2012-13. The Ld A.R has also furnished the relevant assessment orders to substantiate his submissions. The disallowance computed at 0.5% works out to about ₹ 3.00 lakhs. Considering the fact that the assessee has made investment in one company only, that the investment was made long back, that the assessee has received dividend from that company only, we are of the view that the disallowance computed at 0.5% of the investment value of shares is reasonable, in the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5A of the Act requires the adjustment should be made in respect of purchases and sales also. He further submitted that the profit of the assessee would not change, even if the inclusive method of accounting is followed. He further submitted that the assessing officer has included the amount of deposits kept with Port authorities, but the same would not fall under the category of tax, duty, cess or fee specified in sec. 145A of the Act. 20. We heard ld D.R on this issue. When a specific query was asked to ld A.R as to whether the assessee has prepared financial statements both under inclusive method and exclusive method to demonstrate that there was no change in the profit under both the methods, the ld A.R submitted that the assessee may be provided with an opportunity to furnish such kind of statement. Under the accounting principles, both inclusive and exclusive method of accounting for tax, duties etc., are acceptable methods and they do not affect the profitability of the assessee. The assessee has followed exclusive method, where as the provisions of sec. 145A mandates that the inclusive method of accounting the tax, duties etc., should be followed. In such a situation, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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