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TMI Blog2015 (10) TMI 2739X X X X Extracts X X X X X X X X Extracts X X X X ..... Mafatlal S .A. Intex Ltd. 2,04,20,095 (d) Mafatlal V.K. Intex Ltd. 38,00,000 (e) Repal Apparel P. Ltd. 75,76,557 (f) Silvia Apparel Ltd. 80,00,000 (g) MEIL by Mafatlal Fine Spg. 2,77,50,000 (h) MEIL 3,91,15,000 Total 11,25,36,652 2. Without prejudice, the learned Commissioner (Appeals) ought to have appreciated that interest on advances to MEIL was to accrue only after all the dues of the financial institutions had been paid and that the question of comparing the interest paid with the interest receivable from MEIL did not arise in the present year. 3. The learned Commissioner (Appeals) ought to have appreciated that the advances to Ibiza Industries Ltd., Mayesh Chemicals P. Ltd., Silvia Apparel Ltd., Mafatlal S.A. Intex Ltd., Mafatlal V.K. Intex Ltd. and Repal Apparel P. Ltd. were for the purpose of the business of the appellant. 4. The learned Commissioner (Appeals) ought to have appreciated that the Assessing Officer was not justified in charging to tax notional interest of Rs. 1,63,12,256 which had not at all accrued to the appellant. 5. The learned Commissioner (Appeals) further erred in not considering the fact that as the amount due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y directing the Assessing Officer to allow the capital expenditure on scientific research of Rs. 74,51,457. Interest on securities 13. The learned Commissioner (Appeals) erred in confirming the action of the Assessing Officer in bringing to tax a sum of Rs. 15,840 as interest on Government Securities. Import duty benefit 14. The learned Commissioner (Appeals) erred in not directing the Assessing Officer to exclude from the income the estimated import duty benefit of Rs. 422.93 lacs. Pooja Expenses 15. The learned Commissioner (Appeals) erred in confirming disallowance in respect of pooja expenses of Rs. 2,30,445. 16. The learned Commissioner (Appeals) erred in not considering fact that in the Income-tax Appellate Tribunal order dated June 9, 1998 in the case of erstwhile Mafatlal Fine and Spg. & Mfg. Co. Ltd. for the assessment year 1987-88, such expenses on pooja were allowed as deduction. Payment to relatives of deceased employees 17. The learned Commissioner (Appeals) erred in not specifically allow the appellant's claim in respect of amount of Rs. 3,49,027 being payment made to relatives of deceased employees. 18. The learned Commissioner (Appeals) er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income. Carry forward of losses 28. The learned Commissioner (Appeals) erred in not specifically directing the Assessing Officer to quantify and carry forward unabsorbed business losses and depreciation of the assessment year 1998-99 and the earlier assessment years. 3. At the outset the ld. AR submitted that the assessee do not want to press following grounds : i) Ground No.10 regarding disallowance of Rs. 25,00,000/- on account of valuation of closing stock of finished goods; ii) Ground No.12 regarding disallowance of stamp duty payable on amalgamation in the year in which the same has been paid; iii) Grounds No. 11 and 12 , regarding disallowance of exchange gain of Rs. 985.52 lakhs; iv) Repeat ground No.11 regarding disallowance of capital expenditure incurred on scientific research of Rs. 74,51,457/- ; v) Ground No.28 regarding disallowance of carry forward unabsorbed business loss and depreciation of the AY 1998-99 and the earlier assessment years. vi) Therefore, these grounds are dismissed as not pressed. 4. Grounds No.29 and 30 are general in nature therefore dismissed 5. Now we are dealing with the remaining grounds as follows: 6. Brief fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation from the assessee and on being scrutiny the same, the AO did not accept the explanation rendered by the assessee and disallowed the above mentioned expenses and added back to the total income of the assessee. The ld.CIT(A) allowed the 1/5th of the above expenditure for the year under consideration and rest 4.5th to the succeeding four years. Aggrieved by this, the assessee is in appeal before us. 12. At the time of hearing, the ld. AR submitted that an identical issue had come up before this Tribunal in the assessee's own case for the assessment year 1998-99 and the Tribunal following the decision of jurisdictional High Court in Bhore Industries Ltd (264 ITR 180) (Bom) allowed the claim of the assessee. 13. The ld. DR did not bring any cogent material to controvert the factual proposition submitted by the ld.AR. 14. After hearing both the parties and on perusal of the record, we find that the similar issue had come up before this Tribunal in assessee's own case for the assessment year 1998-99 and the Tribunal has decided this issue in favour of assessee by following the decision of jurisdictional High Court(supra). Therefore, we set aside the order of ld.CIT(A) on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that CIT(A) confirmed the same for the AY 1987-88 in the case of another group company namely, The Mafatlal Fine Spg.and Mfg Co.Ltd. The ld. CIT(A) also upheld the action of the AO by upholding his observations. 21. Before us, the contentions of the ld.AR are that the similar issued has been decided in favour of the assessee by this Tribunal in the assessment year 2003-04, 1998-98 and 1997-98 and therefore prayed that similar view be taken for this year also. 22. On the contrary, the ld.DR could not bring any material contrary to the submissions of the ld.AR so we can take different view than the view so taken by this Tribunal in earlier years. 23. After hearing both the parties and on perusal of the record and decisions cited by the Ld.AR, we are of the confirmed view that this is an allowable expenditure. Accordingly, we allow the claim of the assessee. Grounds No.15 and 16 are allowed. 24. The next issue pertains to the payment to relatives of deceased employees amounting to Rs. 3,49,027/-. The AO disallowed the claim of the assessee by following the decision of Hon'ble Jurisdictional High Court in Lob Theatre P Ltd (122 ITR 240) and Sirur and Co.P Ltd (109 ITR 421). The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd V/s ITO (264 ITR 193)(Bom); b) M/s Artex Manufacturing Company reported in 227 ITR 260 (SC) ; c) CIT V/s Electric Control Gear Mfg.Co. 227 ITR 278 (SC); and d) CIT V/s Asea Brown Boveri Ltd 11 TTJ 502 (Mum). and submitted that the issue may be restored to the file of AO for fresh adjudication in the light of the above precedents. 30. The ld. DR did not object to the plea putforth by the ld.AR. 31. After hearing both the parties and perusal of the record on this issue, we find that the assessee has claimed depreciation on total scrap sales which comprises different type of the assets. The assessee failed to produce value of each assets on which it claimed depreciation. Therefore, this facts needs to be verified to come to an exact price of each assets and depreciation therefore, respectfully following the Tribunal orders and citation relied upon by the assessee. We set aside the order of the ld. CIT(A) and restore this issue to the file of the AO for fresh application of mind. Accordingly, Grounds No.20 to 22 are allowed for statistical purposes. 32. Grounds No.23 and 24 pertains to expenses incurred by the assessee in respect of cloth coupons issued to the shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own funds and assessee could not establish the nexus with own funds or borrowed funds completely. Therefore, without discussing the issue thoroughly, the ld. CIT(A) reduced the disallowance to 50%. Being aggrieved by this decision of ld. CIT(A), the assessee is in appeal before us. 40. Before us the ld. AR contended that the assessee made investment and earned dividend income. The said investment was made by taking funds from outside. The assessee has also paid interest on borrowed funds. Therefore, the assessee has incurred expenditure for earning dividend income. Hence the claim of the assessee is allowable and be allowed. The ld.AR also placed reliance on the decision [2010] 328 ITR 81(Bom) in Godrej & Boyce Mfg. Co. Ltd. V/s DCIT and contended that the issue be decided in favour of assessee. 41. On the other hand, the ld. DR contended that before the assessee has stated that it has made investment by bringing funds from outsides and paid interest there over and claimed expenditure u/s 36(1)(iii) of the Act. Before the ld. CIT(A) has stated that assessee made investment from his own fund. The assessee could not prove its case before the lower authorities to claim setting off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The AO is directed to follow the decision rendered by the Hon'ble High Court in Godrej & Boyce Mfg. Co. Ltd (supra). Resultantly, Grounds No. 25 and 26 are allowed for statistical purposes. 43. The last issue is in respect of disallowance of excess expenses incurred towards repairs and maintenance of house property amounting to Rs. 8,69,220/-. 44. The assessee incurred expenses toward repairs and maintenance amounting to Rs. 67,86,676/-, and the assessee on own disallowed 25% thereof. The AO restricted the claim 25% of Rs. 34,76,882/-. The CIT(A) confirmed the action of the AO on the ground that the AO restricted the claim of the assessee at 1/4th of the annual value of Mafatlals House of Rs. 34,76,882/-. 45. The ld. AR submitted that the expenditure incurred for maintenance of the house referred above be allowed fully and this is an actual expenses incurred by the assessee. In support of this, the ld. AR placed reliance in Verma Family Trust V/s ITO (71 ITD 392) and Vaswani Chambers (AOP) V. DCIT (Mum). 46. The ld. DR strongly relied on the orders of authorities below and submitted that the Tribunal in assessee's own case for the assessment year 1998-98 decided this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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