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TMI Blog2018 (4) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the additional depreciation is allowed only once. We notice that the Kolkatta bench of Tribunal did not consider the third proviso inserted by Finance Act, 2015. Since the legislative intent in inserting sec.32(1)(iia) has been made clear by the third proviso inserted in sec. 32(1) by Finance Act 2015, we are unable to follow the view expressed by the Kolkatta bench of Tribunal in the case of Gloster Jute Mills (2017 (3) TMI 143 - ITAT KOLKATA), which was in turn followed in the assessee s own case. Since the decision rendered by Ld CIT(A) on this issue is in accordance with the legislative intent discussed above, we affirm the same. Accordingly this issue is decided against the assessee. Disallowance of foreign exchange fluctuation loss arising on currency swap/derivative transactions - Held that:- Following the decision rendered by the co-ordinate bench in the assessee s own case, we reverse the order passed by Ld CIT(A) on this issue and direct the AO to allow the claim of the assessee. Taxability of excise duty exemption - Held that:- Excise incentive received by the assessee is considered as capital in nature, the same would go to reduce the Cost of assets as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T) and has held that both surcharge and Education Cess are part of income tax, though payable in addition to the income tax. Also observed that the various provisions of Finance Act speak about income tax being increased by the amount of surcharge and cess. Accordingly it was held that the surcharge and education cess is not anything other than income tax. The CBDT circular, relied upon by the assessee, only explains the difference between the provisions of Income tax Act, 1922 and 1961. It does not clarify the nature of Education cess levied under Finance Act. The nature of Cess mentioned in 1922 Act is also not explained. Since the education cess has been levied under Finance Act as an item to increase income tax and since it has been held to be part of income tax by Hon ble Calcutta High Court, we are of the view that there is no merit in the contentions of the assessee. Accordingly we reject this ground of the assessee. Disallowance of various expenses u/s 69C - Held that:- Since the assessee has proved majority of expenses and since the assessee has furnished primary details for all the expenditure, we are of the view that the disallowance of entire amount of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order was allowed in part. Hence, both the parties are in appeal before us. 3. We shall first take up the appeal filed by the Revenue. The solitary issue urged therein relates to assessment of sales tax incentive of ₹ 583.36 lakhs earned by the assessee during the year under consideration. 4. The assessee availed sales tax incentive of ₹ 583.36 lakhs under New Package Scheme of Incentive 1992 . The assessee treated the same as capital receipt. The Assessing officer, however, took the view that the sales tax incentive is revenue receipt and accordingly assessed the same as income of the assessee. The learned CIT(A) allowed the claim of the assessee by following the decision rendered by the ITAT in assessee s own case for A.Y. 2003-04 and also by following his own orders passed for A.Ys. 2007-08 2008-09. The revenue is aggrieved. 5. Learned Departmental Representative submitted that the order passed by the learned CIT(A) in A.Ys. 2007-08 2008-09 was challenged by the Revenue before the Tribunal and Tribunal, vide its order dated 15.9.2017 passed in ITA No. 1885 1886/Mum/2013, has restored the matter to the file of the Assessing Officer wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that in the interest of justice matter should be restored back to the file of the AO for fresh adjudication. He is directed to compare the scheme deliberated upon by the Tribunal in the case of RIL and the scheme of 1993 applicable for the year under appeal. He would afford a reasonable opportunity of hearing to the assessee. First Ground of appeal is decided in favour of the assessee, in part. Since the order passed by the Tribunal for A.Ys. 2007-08 2008-09 is later one, consistent with the view taken therein, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with identical directions. The AO should also take into account the decision rendered by the Tribunal in the assessee s own case in AY 2003-04, wherein, according to Ld A.R, it has already been decided in favour of the assessee. 8. We shall now take up the appeal filed by the assessee. 9. First issue contested by the assessee is whether the learned CIT(A) was justified in directing the Assessing Officer to reduce the amount of sales tax incentive from the Cost of asset as per Explanation 10 to section 43(1) of the I.T. Act for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncentive is to be reduced from the cost of assets in respect of which the said subsidy had been received and the CIT(A) has applied the same. 10. The perusal of the Package Scheme of Incentive, 1993 placed at pages 21 to 44 reflect that the purpose of the scheme was to establish industries in the underdeveloped areas of the Maharashtra State under which the Government appointed SICOM Ltd. to act as an agent of the Government for the implementation of the scheme. Under the 1993 scheme, the procedures were framed and the entrepreneur was entitled to special capital incentive of varying percentage of the gross fixed capital investment, subject to ceiling in respect of eligible unit, provided where the entrepreneur does not opt for availing sales tax incentive under Part-III of 1993 scheme. Under the said scheme a grant of ₹ 15 lakhs was disbursed to the assessee. 11. We find that similar issue of taxability of the capital incentive received under the Package Scheme Incentive, 1993 arose before the Tribunal in ACIT Vs. M/s. Endress + Hauser Flowtec (India) Pvt. Ltd., in ITA No.1206/PN/2011, M/s. Endress + Hauser Flowtec (India) Pvt. Ltd., Vs. ACIT in ITA No.1215/PN/2011 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The issue before us is restricted to the invoking of Explanation 10 to section 43(1) of the Act, under which it is provided that where portion of cost of asset acquired by the assessee has been met directly or indirectly by the Central Government or the State Government or any Authority established under any law or by any other person, in the form of subsidy or grant or reimbursement, then so much of the cost as is relatable to such subsidy or grant or reimbursement, shall not be included in the actual cost of the asset to the assessee. It is further provided there under that where such subsidy or grant or reimbursement of such nature cannot be directly relatable to the asset acquired, so much of the amount which bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee. In other words, in order to invoke the provisions of Explanation 10 to section 43(1)of the Act, it is necessary to establish that the subsidy was directly or indirectly utilized for meeting the cost or portion of cost of asset acquired. Where it is found that the cost for acquiring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual cost and thus it falls outside the ken of Expln. 10 to s. 43(1) of the Act. In the light of the above discussion, we are of the view that for the purpose of computing depreciation allowable to the assessee, the subsidy amount cannot be reduced from the cost of the capital asset. The AO is directed accordingly. 14. The perusal of the Package Scheme of Incentive, 1993 reflect that the scheme was formulated to give incentive for setting up the industries in certain belts of Maharashtra and for the purpose of working out the amount of subsidy, though the cost of eligible investment was taken as the base, but the said subsidy was not specifically intended to meet the cost of assets. In view thereof, it could not be held that the incentive received by the assessee under the Package Scheme of 1993 in the form of subsidy was covered under provisions of Explanation 10 to section 43(1) of the Act and consequently, the subsidy amount was not to be reduced from the cost of the assets. Accordingly, the Assessing Officer is directed not to reduce the value of the ITA No.1880/PN/2013 Rohit Exhaust Systems Pvt. Ltd subsidy from the cost of assets while allowing depreciation on the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance on the decision of Honble Kerala High Court in the case of Hindustan Latex Ltd (supra) and also on the decision rendered by Honble Rajasthan High Court in the case of CIT Vs. Raj. State Bride and Construction Corporation Ltd (2012)(346 ITR 53). We notice that the Rajasthan High Court, in the above cited case, has considered the claim of deduction of Provision for leave encashment for assessment year 2000-01. However, the provisions of sec. 43B(f) was inserted into the Act by Finance Act,2001 w.e.f. 1.4.2002, which could not have been considered by Honble Rajasthan High Court. Hence, reliance placed by the assessee on the said decision may not be useful for the year under consideration. 8. We have also carefully gone through the decision rendered by the jurisdictional Kerala High Court in the case of Hindustan Latex Ltd (supra) and notice that the High Court has allowed the claim of the assessee on two grounds viz., (a) The Honble Kerala High Court, in para 5 of its order, has concurred with the view expressed by the Honble Calcutta High Court in the case of Exide Industries Ltd (supra) that Clause (f) of Section 43B is unconstitutional. (b) The decision rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Though the interim orders were passed by the Honble Apex Court in the years 2008/2009, it was not brought to the notice of Honble jurisdictional High Court. We further notice that the Honble Supreme Court has modified the decision rendered in the case of Berger Paints (supra) in its subsequent decision in the case of Gangadharan (304 ITR 61). The operative part of the said decision reads as under:- In answering the reference, we hold that merely because in some cases the Revenue has not preferred appeal that does not operate as a bar for the Revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher court when divergent views are expressed by the Tribunals or the High Courts. 10. We also notice that the Calcutta Bench of Tribunal has considered an identical issue in the case of S.R Batliboy Co. in ITA No.1598/Kol/2011 and the Tribunal, vide its decision dated 13-03-2012, has set aside the matter to the file of the AO with the direction to consider the issue afresh as per the decision of Hon ble Apex Court in the case of Exide Industries Ltd (supra). Accordingly, we set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r additional depreciation @ 20% of the actual cost every year. However, the said contention of the assessee was rejected by the Assessing Officer for the reasons discussed above and accordingly the additional depreciation of 1621.45 lakhs claimed by the assessee in respect of assets purchased and installed during the Financial Year 2005-06 to 2007-08 relevant to A.Ys. 2006-07 to 2008-09 was disallowed by the AO. The learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before us. 19. The Learned AR submitted that an identical issue was considered by the Coordinate Bench in assessee s own case in ITA No. 1971/Mum/2013 and the Tribunal has decided the issue in favour of the assessee by following the decision rendered by Hon'ble Kolkata Bench of the Tribunal in the case of Gloster Jute Mills Ltd. (ITA No. 95/Kol/2011 dated 1.3.2017). The Learned AR submitted that provisions of section 32(1)(iia) of the Act was substituted by the Finance Act, 2005 w.e.f. 1.4.2006. In the substituted section, there is no restriction that the additional depreciation prescribed in that section is allowable only in the year of acquisition and installation. 20. He sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bench in A.Y. 2007-08 should be followed. 22. On the contrary, the learned Departmental Representative submitted that the legislative intention was to allow additional depreciation u/s. 32(1)(iia) of the Act only in the year in which new plant and machinery is acquired and installed. He submitted that the legislative intention can be understood by considering the decisions rendered in the context of the second proviso to section 32(1) of the Act. He submitted that the second proviso to sec. 32(1) restricts the amount of depreciation allowable during the year to 50%, if the asset was put to use for a period of less than one hundred and eighty days. The assessees contended that the additional depreciation allowed u/s.32(1)(iia) of the Act, if got restricted by the second proviso, then the balance amount should be allowed in the succeeding year. The additional depreciation is allowed at 20% u/s 32(1)(iia). The second proviso to sec. 32(1) states that the depreciation shall be restricted to 50%, if the asset was put to use for less than 180 days. Accordingly, the additional shall be restricted to 10% (50% of 20%), if the asset was put to use for less than 180 days. In that kind o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation prescribed u/s 32(1)(iia) of the Act is allowable every year. At this juncture, we feel it necessary to refer to the provisions of sec. 32(1) of the Act which prescribes the conditions for allowing normal depreciation, viz., (a) the asset should be owned by the assessee wholly or partly and (b) it should be used for the purposes of the business or profession. The question of user of the asset came to be considered after introduction of Block concept of allowing depreciation , i.e., whether the assessee is required to prove that the assets were used in that year. The Hyderabad bench of Tribunal in the case of Coromandal Bio Tech Industries (I) Ltd. in ITA Nos. 287 to 289/Hyd/2007 1512/Hyd/08, vide order dated 30/03/2012, examined this issue and by placing reliance on the decision rendered by the same Bench in the case of Natco Exports Vs. DCIT, 86 ITD 445 (Hyd.), held as follows: 16. The condition/requirement of section of word 'used for the purpose of business' as provided in section 32(1) of the Act for the concept of depreciation on block of assets can be summarised, that use of individual asset for the purpose of business can be examined only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity, meaning thereby, the question of allowing additional depreciation on the cost of assets should not arise. It is a well settled proposition that the aggregate amount of depreciation allowable during the life of asset cannot exceed the cost of asset. The concept of Block of asset was introduced in order to overcome the difficulty of maintaining and arriving at the WDV of individual assets. The claim of the assessee that it is entitled for additional depreciation every year would necessitate maintaining separate record for each of the asset, which also go against the Block concept of allowing depreciation. If the legislature intended that the additional depreciation should be allowed every year, which go against the block concept of allowing depreciation, then the legislature would have made its intention clear by inserting suitable provisions. Hence there appears to be merit in the contentions of the revenue that the word new used in sec. 32(1)(iia) would make it clear that the additional depreciation is allowable only once in the year in which the machinery or plant is acquired and installed. 26. The various decisions relied upon by the Ld D.R, in our view, bring ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full 100% of additional depreciation for acquisition and installation of new plant or machinery in the second half of the year may motivate the assessee to defer such investment to the next year for availing full 100% of additional depreciation in the next year. To remove the discrimination in the matter of allowing additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more, it is proposed to provide that the balance 50% of the additional depreciation on new plant or machinery acquired and used for less than 180 days which has not been allowed in the year of acquisition and installation of such plant or machinery, shall be allowed in the immediately succeeding previous year. 28. By insertion of the above said proviso in sec. 32 though Finance Act 2015 w.e.f. 1.4.2016, the parliament has approved the view taken by the Tribunal/Courts in respect of additional depreciation allowable u/s 32(1)(iia) of the Act. This provision also makes it very clear that the additional depreciation is allowed only once. 29. We notice that the Kolkatta bench of Tribunal did not consider the third proviso inserted by Finance Act, 2015. Since the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orward contracts are supported by underlying receivables, the Tribunal has taken the view that the assessee is immune from any fluctuation in the foreign exchange rates. Accordingly, the Tribunal has taken the view that once there is no liability or benefit on the settlement date, then there is no possibility of any liability or benefit to the assessee on the balance sheet date also. 34. In the instant case, we notice that the tax authorities have taken the view that the mark to market loss booked by the assessee is a notional loss. Other than these observations, they have not brought any other facts on record. Hence, in the absence of relevant facts, we are unable to decide as to whether the decision rendered in the case Bechtel India P Ltd (supra) is applicable to the present case or not. In any case, we notice that an identical issue has been decided in favour of the assessee by the co-ordinate bench in AY 2008-09 in ITA No.1972/Mum/2013, vide its order dated 15-09-2017. The relevant observations made by the co-ordinate bench are extracted below, for the sake of convenience:- 18.3. We have heard the rival submissions and perused the material before us. During the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut it was embedded in the value of total sales consideration. Since the excise duty incentive has been received after commencement of commercial production, the learned CIT(A) held that the nature of receipt is revenue in nature and liable for taxation. He also held that source of subsidy is excise duty which is collected from the customers against sales of goods and on this count also, it is revenue in nature. The learned CIT(A) placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Sahney Steel Press Works Ltd. (228 ITR 253), wherein Hon'ble Supreme Court held that nature of receipt, whether capital or revenue, will have to be determined having regard to the purpose for which subsidy is given. If the purpose is to help the assessee to set up its business or to complete a project monies must be treated as having been received from capital purpose. But if the monies are given to the assessee for carrying on the business operations and the monies are given only after and conditional upon commencement of production, such subsidy must be treated as assistance for the purpose of trade. 38. The learned CIT(A) further held that the assessee could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt and not chargeable to tax. Learned AR also placed reliance on various other case laws in this regard. Learned AR also furnished a chart comparing the Excise incentive scheme framed for Jammu Kashmir Government and Uttaranchal Government. The Learned AR submitted that the objectives of both the schemes are identical in nature and hence decision rendered by Hon'ble J K High Court in the case of Shree Balaji Alloys (supra) should be followed in the instant case. 41. On the contrary, the learned Departmental Representative submitted that the tax authorities have not analyzed the terms and conditions of the scheme of reimbursement of excise duty and hence the matter may be restored to the file of the Assessing Officer. 42. We have heard the rival contentions and perused the record. We find merit in the submissions made by learned Departmental Representative. From the orders passed by the tax authorities, we noticed that they have not analysed the terms and conditions of Excise incentive scheme. Before us, the assessee has furnished a chart comparing various Clauses of excise incentive scheme floated for J K Government and Uttaranchal Government. We feel that the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates . The said paragraph 46 reads as under:- 46. In respect of accounting periods commencing on or after 7 th December, 2006 and ending on or before 31st March 2011, at the option of the enterprise (such option to be irrevocable and to be exercised retrospectively for such accounting period, from the date this transitional provision comes into force or the first date on which the concerned foreign currency monetary item is acquired whichever is later and applied to all such foreign currency monetary items) exchange difference arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset can be added to or deducted from the cost of the asset and shall be depreciated over the balance life of the asset and in other cases, can be accumulated in a Foreign Currency Monetary Item Translation Difference Account in the enterprise s financial statements and amortized over the balance period of such long term asset/liability but not beyond 31st March 2011 . In accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in the case of CIT Vs. Tata Iron Steel Co. Ltd. (231 ITR 285) that cost of an asset and cost of raising money for purchase of asset are two different and independent transactions. Hence events happening subsequent to acquisition of asset cannot change the price paid for it. Accordingly, learned AR contended that fluctuation in foreign currency rate while repaying installments of foreign loan raised to acquire asset cannot be alter actual cost of asset. 47. Learned AR further submitted that the assessee has recognized loss arising on account of foreign exchange fluctuation as per Accounting Standard 11, as per which said loss is an accrued and subsisting liability and not a contingent or hypothetical liability. Accordingly he submitted that the Ld CIT(A) was not correct in law in holding that it is a notional loss. The Learned AR also placed reliance on the decision rendered by Pune Bench of the ITAT in the case of Cooper Corporation P. Ltd. (159 ITR 165), wherein it was held that the foreign exchange fluctuation loss arising on account of reinstatement of loan is allowable as deduction. 48. On the contrary, learned Departmental Representative submitted that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied) 21. In conclusion, we may state that in order to find out if an expenditure is deductible the following have to be taken into account (i) whether the system of accounting followed by the assessee is mercantile system, which brings into debit the expenditure amount for which a legal liability has been incurred before it is actually disbursed and brings into credit what is due, immediately it becomes due and before it is actually received; (ii) whether the same system is followed by the assessee from the very beginning and if there was a change in the system, whether the change was bona fide; (iii) whether the assessee has given the same treatment to losses claimed to have accrued and to the gains that may accrue to it; (iv) whether the assessee has been consistent and definite in making entries in the account books in respect of losses and gains; (v) whether the method adopted by the assessee for making entries in the books both in respect of losses and gains is as per nationally accepted accounting standards; (vi) whether the system adopted by the assessee is fair and reasonable or is adopted only with a view to reducing the incidence of taxation. The Hon ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether in fact it has resulted in profit or loss to the assessee. 52. The Hon ble Supreme Court has also observed in the case of Woodward Governor India P Ltd (supra) that the profits and gains of the previous year are required to be computed in accordance with the relevant accounting standard (paragraph 16). Hence the Hon ble Supreme Court analysed various clauses of AS-11 and finally upheld the view taken by the assessee, in the case before Hon ble Supreme Court, that the foreign exchange fluctuation arising on valuation as on the date of balance sheet is required to be adjusted to the value of assets u/s 43A of the Act. 53. The Ld D.R took the support of sec. 43A of the Act and accordingly supported the action of the AO in adjusting the foreign exchange loss to the value of assets. However, a perusal of the provisions of sec. 43A would show that the said section shall have application only in a case where any asset is acquired in any previous year from a country outside India for the purposes of his business or profession. If the assets were acquired in India, in our view, the provisions of sec. 43A shall not have application. 54. In the instant case, it is not clear as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs under the Companies (Accounting Standards) Rules, 2006. The accounting standards, as we have seen earlier, are relevant to determine the profits and gains of business. Hence, this aspect would also require consideration. 58. The Ld A.R took support from the decision rendered by Hon ble Pune bench in the case of Cooper Corporation (P) Ltd (2016)(69 taxmann.com 244) to support the claim of loss. However, following observations made by the Pune bench of Tribunal would show that the facts prevailing there is different:- 10.9 We find that the decision in the case of Sutlej Cotton Mills Ltd. (supra) relied upon by the Ld. Departmental Representative is of no assistance to the Revenue. The Hon'ble Supreme Court therein stated the principle of law that where any profit or loss arises to an assessee on account of depreciation in foreign currency held by him on conversion from another currency, such profit and loss would ordinary be trading loss if the foreign currency held by the assessee on revenue account as trading asset or as a part of circulating capital embargo in business. However, if the foreign currency is held as a capital asset, the loss should be capital in natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of se. 40(a)(ii), 40(a)(ic) and sec. 115O(5) of the Act. He submitted that the CBDT has issued instructions from time to time fixing monetary limits for preferring appeal before ITAT, HC SC. He submitted that the definition of tax effect mentioned in those instructions, nowhere mentions that tax shall include surcharge or cess. He submitted that the Mumbai bench of ITAT has held in the case of ITO Vs. Ushma ketan Morakhia (ITA No.3357/Mum/2016 dated 02-08-2017) and also in other cases has clarified this legal position. He submitted that the term tax has been defined in sec.2(43) of the Act and it has been defined to include only income tax, super tax and fringe benefit tax. Since there is conscious omission to include surcharge and education cess, the Ld A.R contended that they cannot be considered to be part of tax . He further submitted that the provisions of sec.10(4) of the I.T.Act, 1922, which is pari material with sec. 40(a)(ii) of the I T Act, 1961, included Cess as part of item to be disallowed. However, the provisions of sec. 40(a)(ii) does not include the term Cess . The CBDT has clarified the position, vide its Circular No.91/58/66-IT(19) dated 18.05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than income tax. 63. The CBDT circular, relied upon by the assessee, only explains the difference between the provisions of Income tax Act, 1922 and 1961. It does not clarify the nature of Education cess levied under Finance Act. The nature of Cess mentioned in 1922 Act is also not explained. Since the education cess has been levied under Finance Act as an item to increase income tax and since it has been held to be part of income tax by Hon ble Calcutta High Court, we are of the view that there is no merit in the contentions of the assessee. Accordingly we reject this ground of the assessee. 64. The next issue urged by the assessee relates to the disallowance of various expenses u/s 69C of the Act. During the course of assessment proceedings, the AO asked the assessee to furnish party wise details of all major expenses and also party wise details of sundry debtors and sundry creditors. On submission of details, the AO issued notices u/s 133(6) of the Act to more than 500 parties seeking details of transactions entered by them with the assessee. Out of the above, some of the parties did not respond to the notices, some notices were returned un-served. Further in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be collected. It could not obtain confirmation letters from certain parties, since they have closed the business, which is beyond the control of the assessee. The Ld A.R submitted that the addition of ₹ 369.93 lakhs sustained by the Ld CIT(A) includes transactions amounting to ₹ 169.95 lakhs, for which the assessee had already furnished confirmation letters. However, the said amount of ₹ 169.95 lakhs was sustained only for the reason that there were certain differences. He submitted that the addition of ₹ 169.95 lakhs should be deleted, since the differences are subject matter of reconciliation. 69. There should not be any doubt that the primary responsibility to prove the genuineness of expenditure claim is placed upon the assessee. In the instant case, it is the contention of the assessee that it has proved the genuineness of expenditure by furnishing the primary details available with it. However, the AO has further probed the claim by sending notices u/s 133(6) of the Act to various parties and it so happened that certain notices were returned unserved; certain parties did not respond and in some cases, there were differences in the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the reasoning that both the items as revenue in nature. The Ld CIT(A) further held that these items have to be included in Book Profits, even if they are treated as capital receipts, since they have not been specifically excluded in Explanation 1 to sec. 115JB of the Act. 72. The Ld A.R submitted that both the receipts are capital receipts and hence they shall not be included in book profits as held by Jaipur bench of ITAT in the case of ACIT Vs. Shree Cement Ltd (ITA No.614, 615 635/Jp/2010 dated 09-09-2011). He submitted that the Hon ble Bombay High Court has also held in the case of CIT Vs. Harinagar Sugar Mills Ltd (ITA No.1132 of 2014 dated 04-01-2017) that the excise duty reimbursement shall be excluded while computing income under MAT provisions based on the reasoning that subsidy in question is a capital receipt not chargeable to tax under MAT provisions. He further submitted that the Mumbai bench of ITAT has held in the case of Shivalik Venture (P) Ltd Vs. DCIT (2015)(173 TTJ 238) that an item of receipt which does not fall under the definition of income as given in sec. 2(24) cannot be included in computation of book profit u/s 115JB of the Act even if it is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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