9911796707
TMI Blog2016 (6) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... whichever is earlier. Hence we hold that the assessee cannot be faulted with for violation of TDS obligations due to retrospective amendment in procedural law - retrospective amendment in statute does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability with retrospective effect. Accordingly the raised by the assessee is allowed. Disallowance of Professional and Consultancy Fees - Held that:- CIT-A after taking into account the remand report and rejoinder filed by the assessee and on perusal of the entire details had deleted the addition. We also find that the Learned CIT-A had given categorical finding in respect of each and every payment by referring to relevant provisions of the Act and with specific reference to treaties of various countries. None of these findings were controverted by the revenue before us. Hence we find no infirmity in the order passed by the Learned CIT-A on this issue. Accordingly, the Ground No. 1 raised by the revenue in respect of Professional and Consultancy fees is dismissed. Disallowance on account of Commission charges - Held that:- CIT-A after taking into account the remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition that what is apparent is real and the allegation to prove the contrary is on the person making such allegation. Disallowance on account of notional interest on interest free advances given to associate companies - Held that:- It is not in dispute that the assessee had sufficient own funds to make these advances. The assessee had earned a profit of 260,74,50,176/- during the year and had reserves and surplus of 992,56,27,750/-. Hence it could be safely concluded that the assessee was flooded with own funds and borrowed funds were not utilized for making these interest free business advances. None of the findings given in the aforesaid order in assessee’s own case were controverted by the revenue before us. Disallowance u/s 14A - Held that:- It is not in dispute that the assessee had derived taxable income as well as tax free income and incurred expenditure for deriving both the incomes and hence disallowance is definitely warranted in terms of section 14A which is brought in the statute book with retrospective effect from 1.4.1962. The disallowance had to be made only on an estimated basis with regard to the expenditure incurred for the purpose of earning tax free income.We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmity in the order of the Learned CIT-A in this regard. Disallowance on account of Provision for Bonus - double deduction - Held that:- CIT-A correctly observed that the Tax Auditor of the assessee had duly certified that a bonus amount of 29,65,542/- remain unpaid and accordingly the same was disallowed voluntarily by the assessee in the return of income. He observed that the sum of 7,12,000/- is included in the disallowance made in the sum of 29,65,542/- and accordingly deleted the double disallowance. Addition towards unclaimed salaries and wages u/s 41(1) - Held that:- -We find that no specific arguments were advanced by the Learned DR in respect of this addition. We agree with the contentions of the assessee that the employees who had left the organization had not filed any declaration that they had waived their dues from the assessee and the liabilities towards unclaimed salaries and wages continue to be reflected in the books of the assessee. No benefit was derived by the assessee in this regard. We hold that the liability to pay the agreed dues exists on the part of the assessee and merely in the absence of a valid claim from the resigned employees, it cannot be concluded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Ground No. 1 and thereby not concluding that the aforesaid payments do not attract the provision of section 40(a)(i) of the Act." 3. The brief facts of this issue is that during the course of assessment proceedings, the learned AO directed the assessee to give details of expenditure incurred in foreign exchange under the head "Advertisement, Publicity and Sales Promotion" to the extent of ₹ 4,16,64,373/-. The Learned AO observed that the assessee had not deducted tax at source on any of the foreign remittance under this head. The Learned AO observed that no specific reasons were given by the assessee for non-deduction of tax at source on payments made to different parties. Accordingly, he proceeded to disallow 20% of the expenditure in foreign currency and disallowed a sum of ₹ 83,32,875/- ( 4,16,64,373 * 20%) in the assessment. 3.1. Before the Learned CITA, the assessee claimed that the entire detail party wise was filed before the Learned AO and he ought not to have made any disallowance on estimated basis. The Learned CITA made extensive verification of the details filed by the assessee. It was argued that payments towards foreign advertisements to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in (2009) 178 Taxman 84 (Delhi) wherein it has been held that income by way of advertisement, publicity and sales promotion were not assessable u/s 9 of the Act as well as under Article 7 of the DTAA. 3.2.1. The Learned CITA on verification of the details filed by the assessee and the explanations offered by the assessee that the payments made by the assessee are not taxable in India and are not in the nature of royalty or fees for technical services cannot be outrightly accepted in full. He observed that it depends on the nature of services provided by those foreign parties in different tax jurisdictions. He further held that even otherwise, there is no justification for the Learned AO to disallow 20% of expenses on an estimated basis for alleged violation of provisions of section 40(a)(i) of the Act without examining the nature of payments made thereon and giving specific findings thereon. Hence the entire details were sent back to Learned AO by the Learned CITA for obtaining remand report. He observed that the Learned AO did not make any additional remark in the remand report. He observed that similar disallowance was made in Asst Year 2005-06 and the same was upheld by the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment to the provisions of section 9 of the Act in Explanation 2 would not confer the TDS obligation on the assessee with retrospective effect. He placed reliance on the decision of this tribunal in assessee's own case for the Asst Year 2005-06 in this regard. In response to this, the Learned DR vehemently supported the orders of the Learned AO and prayed for setting aside of this issue to the file of the Learned AO for verification of the details filed by the assessee before the Learned CITA. In defence, the Learned AR stated that the Learned AO had been given due opportunity by the Learned CITA by obtaining remand report and the Learned AO did not make any remark in the said remand report and vehemently objected to set aside of the issue to AO. 3.5. We have heard the rival submissions and perused the materials available on record. We are in agreement with the Learned AR that setting aside of this issue to the file of the Learned AO would not serve any purpose as the Learned AO had not made any remark in the remand proceedings wherein the entire details of expenses were before him. We find that the genuinity of the expenditure incurred by the assessee was not disputed by the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision together with the decision of the Hon'ble Apex Court in the case of CIT vs Hindustan Electro Graphites Ltd reported in (2000) 243 ITR 48 (SC) as below:-. In this case, the assessee company filed a writ petition in the High Court challenging the very constitutionality of section 143(1)(a) read with section 143(1A) and section 4 and also the intimation sent by the AO levying additional tax. High court speaking through one of us (Ruma Pal, J.) noticed that section 28 of the Act was amended with retrospective effect from 1st April 1967. It said: "An assessee cannot be imputed with clairvoyance. When the return was filed , the assessee could not possibly have known that the decision on the basis of which cash compensatory support has been claimed as not amounting to the assessee's income ceased to be operative by reason of retrospective legislation." 3.6. We hold that the assessee cannot be expected to foresee an amendment in the statute with regard to TDS obligations and any retrospective amendment in the law could only disturb the computation mechanism of determination of income. Accordingly, we hold that by virtue of a retrospective amendment, the income of an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings. As per the assessee, the contention of the Ld. AO that no tax was deducted on the above payments is not true. The assessee submitted that entire remittance of ₹ 8,41,027/ - by the Bangalore unit and a sum of ₹ 4,348,330/ - paid by The Oberoi, New Delhi had been subjected to TDS. Further to the above, the assessee submitted that the payments under this head was mostly for legal charges for services rendered abroad or towards purchase of designs prepared abroad. In case the above services were rendered abroad, no tax was deducted due to the following reasons: i) Since there is no "technical services" involved, the provisions of section 9(i)(vii) (b) are not attracted. ii) The non-residents are not assessable in respect of income accruing and received abroad. iii) The non-residents under consideration are residents of countries with which India have Double Taxation Avoidance Agreements (DTAA) and the favourable tax treaty provisions should be considered. iv) It is well settled that if services rendered are in the nature of professional services then those provisions of DTAA are to be applied which specifically deal with" professional serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to ₹ 66,35,747/- for Trident Mumbai project, the assessee contended that the amount was capitalized and thus not claimed as tax deductible. Accordingly, the question of disallowing such expenditure does not arise. 5.1. The Learned CITA observed that most of the payments have been made to the payees of USA, UK, Germany, France and UAE i.e the countries where treaty is entered into by India and thus the payees should be eligible to tax treaty benefits. He further observed that on perusal of the details, the payees are either corporate or non-corporate entiries and the services provided by the said parties are varied in nature. He held that the payment should not be considered as taxable in India since the services are provided outside India and also utilized outside India. He detailed the payments made to various parties as under:- (a) Payment to M/s Deloitte & Touche, USA - Covered by Article 12 of the treaty (b) Payment to Deutsche Immobilien, Germany - Payment does not fall within the scope of section 9(1)(vii) of the Act. (c ) Payment to Clifford Chance, LLP, UAE - Covered by Article 14 of the treaty (Independent Personal Services) (d) Payemnt to Atanoskovic Hart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to treaties of various countries. None of these findings were controverted by the revenue before us. Hence we find no infirmity in the order passed by the Learned CITA on this issue. Accordingly, the Ground No. 1 raised by the revenue in respect of Professional and Consultancy fees is dismissed. 6. Disallowance on account of Commission charges The assessee paid ₹ 2,92,38,340/ - as commission to foreign.travel agents on which no tax was deducted at source. Thus, the Ld. AO applied the provisions of section 40(a)(i) of the act and inflicted an ad hoc disallowance of ₹ 2,923,834 / -, being 10% of the aggregate payment under this head. In the assessment order, the Ld. AO has indicated that during the assessment proceedings the assessee provided the name of the payees and the amount paid to them as commission but not the detailed reasons for non deduction of tax in respect of each payment. As per the Ld. AO, the assessee summarily stated to the Ld. AO that no tax was deductible while making the said payments. In the submissions made during the course of appellate proceedings, the assessee submitted that the amount paid to the foreign travel agents are not taxable in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inder to the remand report . The Learned CITA after taking into account the remand report and rejoinder filed by the assessee and on perusal of the entire details had deleted the addition. We also find that the Learned CITA had given categorical finding in respect of this issue which is stated hereinabove and we find that none of these findings were controverted by the revenue before us. Hence we find no infirmity in the order passed by the Learned CITA on this issue. Accordingly, the Ground No. 1 raised by the revenue in respect of Commission expenditure is dismissed. 7. Disallowance of commission paid on account towards reservation charges The assessee had raised the following grounds :- 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the disallowance of ₹ 1,58,005/- on account of commission paid towards 'reservation charges' on the wrong notion that no tax was deducted at source while making payments of the said sum ignoring the fact that no tax withholding was necessary while making such payments. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the disallowance of ₹ 797,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 The leading Hotels of the World 72,817.08 Leading Interactive Reservation 16,406.00 Provision for 388 nights 14,379.00 Provisions of different months 7,82,966.53 -------------------- 1,79,13,387.84 -------------------- Out of the above payments, the assessee submitted that payments to Oberoi Contact Centre being inter unit payments, should not be taxable in India and consequently, not liable to tax deduction. The Learned CITA agreed with the contention of the asesssee that payment by one division to another division of the same assessee is not liable to tax withholding and accordingly, in his considered opinion held , that the assessee was not liable to deduct tax at source while making the above payments. The Learned CITA granted relief to the extent of ₹ 8,36,037/- and confirmed the disallowance to the extent of remaining amount of ₹ 9,55,351/- as according to him, the assessee had not substantiated the claim with supporting evidence. Aggrieved, the assessee as well as the revenue both are in appeals before us. 7.1. The Learned AR argued that the assessee had filed complete details before the lower authorities. It is the claim of the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined liability since the concerned parties had fulfilled their contractual obligations and they were entitled to additional commission. Since the actual payment of the commission was made in a later date and the assessee was following mercantile system of accounting, the amount as determined was shown as "provision" in the books of the assessee. Subsequently, vide its submission dated 15th November, 2010, the assessee further submitted that the services were provided during the relevant year and thus the liability for payment of overriding commission did accrue during the relevant year. In the books of account, the expense was inadvertently reported as provisions. With the submission, the assessee furnished the sample copies of the letters issued by the travel agents in respect of the conditions to be fulfilled for entitlement of overriding commission and a statement of overriding commission paid to travel agents for the FY 2005-06. In view of the above submissions the assessee prayed that the disallowance of ₹ 37,00,563/- inflicted by the Ld. AO in respect of overriding commission should be deleted. 8.1. The Learned CIT(A) deleted the disallowance by observing as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned AO. Aggrieved, the assessee is in appeal before us on the following ground:- "5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the estimated disallowance of ₹ 3,632,508/-, on account of aircraft running and maintenance expenses being 10% of the aggregate expenditure of ₹ 36,325,075/- on the basis of past assessments ignoring the fact that the aircrafts were exclusively used for the purpose of the business and unlike the past years, there was total compliance before the AO and the CIT(A) so far as the submissions of details were concerned, a fact which has been admitted by the lower authorities." 9.1. We have heard the rival submissions and perused the materials available on record. We find that this issue is covered in assessee's own case for the Asst Years 2003-04 , 2004-05 & 2005-06 in ITA Nos . 57/Kol/2007 ; 1846/Kol/2007 and 299/Kol/2010 dated 9.12.2015 respectively, wherein it was held that :- 6.3. We have heard the rival submissions and perused the materials available on record. We find that this issue is squarely covered by the decision of the co-ordinate bench decision of this tribunal in assessee's own ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 349 (SC) Sukhdayal Rambilas vs CIT (1982) 136 ITR 414 Madura Knitting Co vs CIT (1956) 30 ITR 764 (Mad) In view of the aforesaid facts and circumstances and respectfully following the judicial precedents thereon, we have no hesitation in deleting the addition made in the sum of ₹ 42,80,883/- on an estimated basis. Accordingly, the Ground No. 4 raised by the assessee is allowed. In view of the aforesaid facts of the case and respectfully following the co-ordinate bench decision (supra), we hold that no addition need to be made on an estimated basis towards running and maintenance of aircrafts. Accordingly, the ground nos. 6 & 7 raised by the assessee are allowed. Respectfully following the aforesaid decision in assessee's own case, we allow the Ground No. 5 raised by the assessee. 10. Disallowance on account of notional interest on interest free advances given to associate companies During the course of assessment proceedings the Ld. AO found that an amount of ₹ 39,13,08,052/ - was given by the appellant as advances to various sister concerns associates free of interest. The details of the advances as per the assessment order is as under : Balaji Hotels and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at out of the amount of ₹ 17,83,91,145/ -, only ₹ 15,12,00,000 represents the amount of advance, The remaining amount of ₹ 2,71,91,145/- represents accumulated interest. The appellant duly offered such interest to income tax in the respective years. Thus, while computing the notional interest for the purpose of disallowance, the AO mistakenly considered the entire amount as advance. In respect of amount advanced to Green Field Resorts Pvt. Ltd, the assessee submitted that the amount was given to the party as a project advance towards 50% share in joint venture agreement with the party for operating hotel/ resort. Further to the above submission, the assessee vide its submission dated 15th November, 2010 provided in detail the necessity for providing the advance to the party. As per the assessee Hiranandani Group was holding a piece of land in Maharashtra and was planning to acquire some further land. During the year 1995 the assessee entered into a Memorandum of Understanding (MOU) with Hiranandani Group for the purpose of setting up hotels, resort complex, golf course and real estate development through a Joint Venture Company (JVC). As per the MOU a company Gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that, it had a reserves and surplus of ₹ 992,56,27,750/ -. It was also submitted that Ld. AO that all receipts including the sale proceeds and the borrowings were deposited in cash credit account and all payments including the advances were effected through this mixed account. Thus the question of submission of separate accounts for utilization of own surplus and borrowed funds does not arise. Further, the net increase of loans and advances during the year much lesser than the profit earned during the year. Thus, to summarize, with its submission, the assessee argued that all loans and advances were given out of commercial expediencies and out of its own funds and not out of any borrowed funds. Thus the question of disallowance of notional interest does not arise. Beside the above, the assessee submitted that for inflicting a disallowance, the onus is on the AO to make out a case and in the impugned assessment order which the AO has failed to do so. In addition, the assessee also submitted that the notional rate of interest of 12% as computed by the Ld. AO is arbitrary. As per the assessee, the average rate of interest for the relevant year is 8.60%. Thus, even assuming w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the rival submissions and perused the materials available on record. We find from the paper book filed by the assessee that the entire details as to for what purpose the monies were paid by the assessee company to the aforesaid parties were given before the Learned AO . We find that in respect of amounts advanced by the assessee to certain group companies where interest is charged by it, there is absolutely no dispute. In respect of interest free advances, it has to be seen whether the same were advanced out of own funds or out of borrowed funds by the assessee. The Learned AO simply states that similar disallowances were made in the earlier years and accordingly the same is to be made for this asst year also brushing aside all the submissions of the assessee. In the instant case, the assessee had in fact made borrowings and utilised the same for the purpose of its business. The borrowed funds and the own funds in the form of share capital, reserves & surplus, cash profits derived during the year, etc were inextricably mixed in the same bank account and hence presumption could be drawn that interest free advances were made out of own funds provided the own funds are more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 239 ITR 795 (MAD) d) CIT vs Britannia Industries Ltd reported in 280 ITR 525 (CAL) e) S A Builders Ltd vs CIT reported in 288 ITR 1 (SC) f) Addl. CIT vs Tulip Star Hotels Ltd in CC No. 7138-7140 / 2012 dated 30.4.2012 by the Supreme Court , wherein it was held as below:- In our view, S.A.Builders Ltd vs CIT reported in 288 ITR 1, needs reconsideration. Though it is stated that the decision in S.A.Builders Ltd in 288 ITR 1 (SC) requires reconsideration, notice has been ordered to be issued to both the parties and the matter is still pending before the Supreme Court as on date. Hence the decision in 288 ITR 1 (SC) is very much applicable as on date until the judgement in Tulip Star Hotels Ltd is pronounced by the Supreme Court. g) Munjal Sales Corporation vs CIT and Another reported in 298 ITR 298 (SC) h) CIT vs Reliance Utilities and Power Ltd reported in 313 ITR 340 (BOM) i) Recent decision of the Hon'ble Apex Court in the case of Hero Cycles (P) Ltd vs CIT reported in (2015) 63 taxmann.com 308 (SC) dated 5.11.2015. The operative portion of the aforesaid judgements are not reproduced herein for the sake of brevity. However the principles laid down by the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully following the aforesaid decision in assessee's own case, we allow the Ground Nos. 6 to 8 raised by the assessee and dismiss the Ground No. 3 raised by the revenue. 11. Disallowance u/s 14A of the Act The AO, in the assessment order has stated that the assessee company earned exempt income of ₹ 95,47,937/ - during the relevant assessment year. During the course of assessment proceedings the assessee submitted that no expenditure was incurred to earn the exempted income. Considering the explanation provided by the assessee as unrealistic , the Ld. AO disallowed a proportionate sum of ₹ 1,924,086/- u/s 14A of the Act. Assessee furnished a detailed submission during the course of appellate proceeding against the above disallowance. It pleaded that the investments which yielded tax free income, were very old and no expenditure had actually been incurred for earning such income. It further submitted that for receiving dividend warrants and depositing the same into bank, no management efforts were employed. Even the tax auditor had also confirmed that no disallowance u/s 14A would arise for the assessee for the relevant assessment year. 11.1. The Learned CITA by plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Learned CITA in this regard. Accordingly, the Ground No. 9 raised by the assessee is dismissed and Ground No. 5 raised by the revenue is dismissed. 12. Disallowance on account of Commission paid to Airport Authority of India for non-deduction of tax at source The AO in the assessment order passed, has stated that Oberoi Flight Services, an unit of the assessee company, had paid an amount of ₹ 59,63,025/ - as commission to the Airport Authority of India. From the details submitted during the assessment proceedings, it was observed that no tax was deducted by the assessee company on such commission expenses. In absence of deduction of tax at source, the Ld. AO applied the provisions of section 40(a)(ia) of the Act and disallowed the said sum in the assessment order. The assessee submitted that the Ld. AO came across the details of commission payment while checking the unit wise liability for expenses for the relevant year. The details submitted during the assessment proceedings did not provide for the tax withholding from the above payments. The assessee further submitted that out of the aggregate payable of ₹ 59,63,205/ -, ₹ 29,00,000/- was actually paid and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee, on the other hand, furnished a detailed submission contending that it is entitled to the deduction of the said amount in the assessment year under appeal. The assessee contended that the AO did not dispute the genuineness of the claim. However, in view of the decision of Hon'ble Apex court in the case of Goetze India Ltd. (supra) the deduction was denied. It was further argued that the department could collect only legitimate tax as per Article 265 of the Constitution of India. It was further argued that the powers of the appellate commissioner is not restricted to the subject matter of the appeal but extends to entire subject matter of the assessment. Based on the above submission, the assessee pleaded that the decision of Supreme Court in the case of Goetze (India) Ltd. (supra) is not binding on the appellate authorities and submitted that a direction may be issued to the AO to recompute the income as per law by allowing the claim of ₹ 2,01,50,000/-. 13.1. The Learned CITA observed that the Learned AO did not indicate any adverse reason as to why the amount should not be allowed as deduction to the assessee in the year under appeal. He further observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned AR stated no such separate entity as claimed by the Learned DR was ever started for joint venture participation. The assessee was to get royalty from various hotels for using its trademark, logo and name at various locations across India. The assessee was not entitled to any other income other than royalty out of making this joint venture investment. 13.3. We have heard the rival submissions. The facts stated hereinabove remain undisputed and hence are not reiterated for the sake of brevity. We had already held in assessee's own case for the Asst Year 2002-03 in ITA No. 316/Kol/2006 dated 11.9.2015 in the context of allowability of interest on borrowed funds alleged to be used for advance to Nandi Hills Resorts Ltd that the said advance was for the purpose of business. We find lot of force in the argument of the Learned AR that the assessee would get only royalty from various hotels for using its trademark, logo and name for which purpose it had made investments in joint venture equity participation. Due to the fact that the project could not take off and got abandoned for various reasons beyond the control of the assessee, the assessee had to claim the same as a regular busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the Ground No. 11 raised by the assessee is allowed. 14. Disallowance on account of provision for leave encashment - ₹ 12,70,751/- The assessee has raised the following ground:- "12. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the disallowance of ₹ 12,70,751/- made by the Assessing Officer on account of claim for Provision for Leave Encashment made in assessment on the basis of the decision of the jurisdictional High Court in the case of Exide Industries Ltd. & Anr. Vs. Union of India reported in (2007) 292 ITR 470 (Cal) for the reason that the Hon'ble apex Court has ordered a stay on the aforesaid judgment." 14.1. At the outset, we find that the CIT(A) confirmed the disallowance of ₹ 12,70,751/- as made by the Ld. AO on account of claim for provision for leave encashment. Ld. counsel for the assessee stated that the deduction on account of provision of leave encashment was made on the basis of the judgment of Hon'ble jurisdictional High Court in the case of Exide Industries Ltd. Vs. Union of India (2007) 292 ITR 470 (Cal) but he fairly conceded that subsequently Hon'ble Supreme Court has stayed this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see also placed reliance on the decision of Hon'ble Punjab & Haryana High court in the case of CIT Vs. Shreyans Industries Ltd. (2006) 157 Taxman 417. 15.1. The Learned CITA observed that the Ld. AO had made the impugned disallowance on ad hoc basis which is not based on any specific observation on the details provided by the assessee. Even in the remand report, the Learned AO could not justify his addition. The Learned CITA held that the Learned AO had summarily mentioned that the general charges include payments for penalty and TDS write off. He also agreed with the contention of the assessee that the TDS written off should be allowed as deduction in view of the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs Shreyans Industries Ltd reported in (2006) 157 Taxman 417 (P&H). Accordingly, he deleted the disallowance. Aggrieved, the revenue is in appeal before us on the following ground:- "4. That the Ld. CIT(A) has erred on facts and circumstances of the case and in law by overlooking the fact that general expenses contained certain expenditure in the nature of penalty, tax deducted at source write offs." 15.2. The Learned DR argued that this issue may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the return of income. He observed that the sum of ₹ 7,12,000/- is included in the disallowance made in the sum of ₹ 29,65,542/- and accordingly deleted the double disallowance. Aggrieved , the revenue is in appeal before us on the following ground:- "6. That the Ld. CIT(A) has erred on facts and circumstances of the case and in law by allowing provision for bonus u/s. 43B of the Act even when such provision is not an allowable expenditure." 16.2. We have heard the rival submissions. We find that no contrary evidence has been brought on record by the revenue in respect of the categorical finding given by the Learned CITA in his appellate order. Hence we find no infirmity in the order of the Learned CITA in this regard. Accordingly, the Ground No. 6 raised by the revenue is dismissed. 17. Addition towards unclaimed salaries and wages u/s 41(1) of the Act - ₹ 3,42,747/- The Ld. AO has stated that from the details submitted during the assessment proceedings, it was observed that Oberoi Flight Services Mumbai, an unit of the assessee company had an outstanding liability of ₹ 1,20,851/- on account of "unclaimed salaries & wages". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of the assessee and there should be cessation of liabiities. He agreed with the various judicial decisions relied upon by the assessee and deleted the addition made u/s 41(1) of the Act. Aggrieved , the revenue is in appeal before us on the following ground:- "7. That the Ld. CIT(A) has erred on facts and circumstances of the case and in law by holding that section 41(1) of the Act is not applicable in the assessee's case regarding unclaimed salaries and wages in respect of Oberoi flight Services Mumbai and Oberoi Airport Services." 17.2. We have heard the rival submissions. We find that no specific arguments were advanced by the Learned DR in respect of this addition. We agree with the contentions of the assessee that the employees who had left the organization had not filed any declaration that they had waived their dues from the assessee and the liabilities towards unclaimed salaries and wages continue to be reflected in the books of the assessee. No benefit was derived by the assessee in this regard. We hold that the liability to pay the agreed dues exists on the part of the assessee and merely in the absence of a valid claim from the resigned employees, it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work of installation of the items would require some special expertise. Thus, the contention of the assessee that the items were ready to use is not tenable since, even the work of unpacking the goods, preparing the platform for installation etc would require some time. In view of the above, the Ld. AO concluded that the selected items of additions made on 30th September, 2005 should be allowed depreciation for the use of less than 180 days during the year. On the other hand, additions of the selected items on 31st March, 2006 should not be eligible for depreciation. The Ld. AO further observed that the assessee claimed 60% depreciation on APC SL 80KH (UPS) and Software of 9 series Mailing System Machines. He rejected the claim of 60% depreciation on these items and allowed 15% depreciation. The assessee, filed a detailed submission on 2nd March, 2010 contending the disallowance of depreciation. In summary, the assessee submitted the following: - During the assessment proceedings, the store register and copies of the delivery challans could not be produced since the concerned person was on leave. - As mentioned by AO, all the selected items were not imported - Installation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery cannot be installed on the very same day of its receipt. He further observed that a certificate from the Production Manager of the assessee was produced before the Learned AO confirming the fact that the machinery under consideration was put to use on a particular date and in the instant case , going by the size of the assessee company, where there are designated persons to deal with individual departments , a certificate from the person heading the particular division cannot be lightly and summarily ignored. However, in respect of depreciation on a specific machinery APC SL 80KH, the Learned AO reduced the depreciation rate to 15% which was confirmed by the Learned AO. In respect of software of 9 series mailing systems machine, the Learned CITA held that this is a software and hence assessee is eligible for depreciation at the rate of 60%. Aggrieved, the revenue is in appeal before us on the following ground :- "8. That the Ld. CIT(a) has erred on facts and circumstances of the case and in law by allowing the assessee's claim of depreciation on Plant & Machinery items on the bsis of the date on which it was received in stores and not on the basis of the date of its pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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