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TMI Blog2019 (1) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh in the light of the decision rendered by the Hon’ble Supreme Court in Bharat Earth Movers (2000 (8) TMI 4 - SUPREME COURT). So, grounds determined in favour of the assessee company for statistical purposes. Eligible for deduction u/s 80O - Held that:- When the claim of the assessee u/s 80-O is duly certified by statutory auditor and has been perused by the AO, the AO has erred in estimating the expenditure so as to compute the deduction u/s 80-O of the Act. In these circumstances, this issue is also set aside to the AO to decide afresh after providing an opportunity of being heard to the assessee by identifying the expenditure on actual basis for deduction against the gross receipts for the purpose of section 80-O of the Act. Assessee is also directed to furnish relatable details to the AO to decide the issue in controversy. So, grounds determined in favour of the assessee for statistical purposes. Deduction u/s 80HHC computation - AO also reduced 90% of the receipts by way of lease rental and other operation income including other receipts and interest income to compute the deduction u/s 80HHC of the Act and AO has also set off carry forward business losses for the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of the assessee. Disallowance of claim of the assessee on account of village development and other social welfare expenses on the ground that these expenses are beyond its objectives - Held that:- When the Corporate Social Responsibility (CSR) is recognised activities of the companies, all these expenses are allowable expenses. Prior to Finance (No.2) Act of 2014 from 01.04.2015, all these expenses incurred on CSR were allowable for deduction irrespective of the qualification contained for allowability of the business expenditure in section 37(1) of the Act. Moreover, such expenses have been allowed by the CIT (A) itself in assessee’s own case for AYs 2004- 05 and 2005-06. So, the AO is directed to allow these expenses as deduction by following the rule of consistency as similar expenses have already been allowed by the Revenue itself in AYs 2004-05 and 2005-06. Additions in respect of interest on line of credit extended to APSEB which was not received - Held that:- CIT (A) has also not dealt with the issue and disposed of the ground by stating that this ground is academic in nature. So, in these circumstances, we are of the considered view that this issue is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case in upholding the deduction of estimated amount of ₹ 94,46,058 on account of expenses incurred to earn the income from the amount eligible for deduction u/s 80-0. 3.c That the learned CIT(A) erred in law and on facts of the case in not considering the full amount of foreign exchange realized in respect of fees for technical services eligible for deduction u/s 80-O. ( Refer to Para No.4 Page No.2 3 of DCIT Order dated 25.02.2005) ( Refer to Para No.5 Page No.3 of CIT(A) Order dated 27.01.2006) 4(a) That the learned CIT(A) has erred in law and on facts of the case in not allowing deduction of ₹ 48,19,71,436 under section 80HHC but restricting the same to ₹ 36,80,68,813. 4(b) That the learned CIT( A) has erred in law and on facts of the case in upholding the addition to total turnover items which are not part of turnover for the purpose of computing claims u/s 80HHC. 4(c) That the learned CIT(A) has erred in law and on facts of the case in upholding the reduction of the profit of the company by 90% lease rental, other operational income, other receipts and interest income, which form part of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2500 ii/ Visually Impaired Women Association - ₹ 5000 ( Refer to Para No.l1 Page No.8-9 of CIT(A) Order dated 27.01.2006) 10. That the learned DCIT has erred in law and on facts of the case in initiating penalty proceedings u/s 271(1)(c) of Income Tax Act. ( Refer to Page No.9 of DCIT Order dated 25.02.2005) ( Refer to Para No. 13 Page No.9 of CIT(A) Order dated 27.01.2006). 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee is a public sector undertaking engaged in the manufacturing of power generation equipment and other heavy industrial elements. Assessing Officer rejected the claim of the assessee fro deduction of entire amount of provision of ₹ 327,22,64,000/- by following Assessment Year 2000-01 on the ground that there is no evidence to show that these provisions are in the nature of ascertained liabilities. AO also made disallowance of claim of provision of liquidated damages made by the assessee amounting to ₹ 42.12 crores as per Schedule 18 on the same ground that the provision is not an ascertained liability. AO allowed the deduction claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1(a) 1(b) 7. Undisputedly, the assessee company has claimed deduction of ₹ 3,27,22,64,000/- which includes for provision for nonmoving stock amounting to ₹ 4,38,91,000/- and provision for liquidated damages to the tune of ₹ 42,11,93,000/- being the provisions debited to P L account as per Schedule 11 and claimed the same to be deducted while computing the taxable income of the assessee by claiming the same as ascertained liability. However, AO as well as CIT (A) have disallowed the same on the ground that these provisions are not in the nature of ascertained liability by following AY 2000-01. 8. Undisputedly, assessee company is maintaining its account in mercantile system. It is also not in dispute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company are audited by statutory auditor and C AG, the deduction cannot be disallowed merely on the ground that the liability has to be quantified and discharged at a future date. So, in view of the matter, this issue is required to be set aside to the AO to decide afresh in the light of the decision rendered by the Hon ble Supreme Court in Bharat Earth Movers (supra). So, grounds no.1(a) 1 (b) are determined in favour of the assessee company for statistical purposes. GROUND NO.2 11. Ground No.2 is dismissed having not been pressed during the course of arguments. GROUNDS NO.3.a, 3.b 3.c 12. Assessee has claimed deduction of ₹ 1,57,50,000/- computed @ 30% of the gross receipt of ₹ 5.25 crores eligible for deduction u/s 80-O of the Act, which has been reduced to ₹ 1,29,16,182/- on the ground that the assessee has not furnished detail of direct and indirect expenses to earn such receipts However, it is the case of the assessee that its claim has been duly certified by statutory auditors attached with the return of income for perusal of the AO. Assessee also claimed that even during assessment proceedings, the details of the claim h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputed fact that partial relief in this regard has been given to the assessee on same items by ld. CIT (A) in AY 2004-05, copy of order is available at pages 229 to 238 of the paper book. So, we are of the considered view that when there is no change in the facts and circumstances of the case, the AO is directed to decide this issue afresh by following the decision rendered by the ld. CIT (A) in AY 2004-05 by following the rule of consistency by providing an opportunity of being heard to the assessee. Consequently, grounds no.4(a), 4(b), 4(c) 4(d) are determined in favour of the assessee for statistical purposes. GROUNDS NO.5(a), 5(b) 5(c) 17. AO allowed the deduction claimed by the assessee u/s 80IA to the tune of ₹ 8,21,59,986/- as against claimed deduction of ₹ 9,82,63,507/- calculating the profit after setting off brought forward losses and allowed the deduction @ 30% of the resulting profits. AO estimated the deduction of carry forward losses to reduce the claim on assumptive basis. 18. Undisputedly, profits of the assessee company from the eligible projects from the previous years have not been considered. No doubt, there was overall business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest. Assessee claimed to have explained all these facts in Schedule 19 of the annual accounts attached with the income-tax return but AO/CIT(A) have not allowed the deduction on account of addition made in AYs 1997-97 1999-00 qua the interest on line of credit extended to APSEB which was not received. Ld. AR for the assessee contended that this issue has been decided in favour of the assessee in AYs 1997-98 1998-99 in ITA Nos.1833 1834/Del/2006 order dated 11.03.2011, copy available at pages 185 to 193 of the paper book, and AY 1999-00 in ITA No.1835/Del2006 order dated 26.10.2017, copy available at pages 194 to 207 of the paper book. 22. However, ld. CIT (A) has also not dealt with the issue and disposed of the ground by stating that this ground is academic in nature. So, in these circumstances, we are of the considered view that this issue is required to be set aside to AO to decide afresh in the light of the decision taken by the Revenue in earlier years. So, ground no.8 is determined in favour of the assessee for statistical purposes GROUND NO.9 23. AO/CIT (A) have disallowed the claim of the assessee u/s 80G of the Act. Now, it is contended by the ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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