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TMI Blog2019 (7) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... re is not allowable? - HELD THAT:- The issue is recurring in nature. Similar disallowance was made by the AO in the case of assessee in the past. The Tribunal in assessment years 2002-03, 2003-04, 2007-08 and 2008-09 has already considered this issue of liquidated damages/late delivery charges. The Co-ordinate Bench in assessment year 2008-09 [ 2019 (3) TMI 1612 - ITAT PUNE] has restored this issue back to the file of AO for fresh adjudication. Since, the nature of payment of liquated damages in assessment year under appeal is identical, we deem it appropriate to restore this issue to the file of AO to decide the issue on similar lines. Accordingly, ground No. 1 of the appeal by the Revenue is allowed for statistical purpose. Allowability of depreciation @ 60% on UPS and other allied items - HELD THAT:- The depreciation @ 60% was allowed to the assessee on UPS and other allied items in preceding assessment years. No material has been placed on record by the Revenue to controvert the findings of Co-ordinate Bench in assessment year 2008-09. We find no reason to take contrary view. Hence, we uphold the findings of CIT(A) in allowing depreciation @ 60% on UPS and other allied it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided against revenue. Subsidy received under Government of Maharashtra Package Scheme of Incentive, 2001 - characterization of receipt - revenue or capital receipt - HELD THAT:- After considering catena of judgments the Tribunal held that the incentive received by the assessee under Package Scheme of Incentive, 2007 is in the form of refund of Sales Tax and is a capital receipt not liable to tax. The Commissioner of Income Tax (Appeals) has granted relief to the assessee by following the aforesaid decision of Tribunal of INNOVENTIVE INDUSTRIES LIMITED VERSUS DCIT, [ 2017 (4) TMI 44 - ITAT PUNE] . We find no reason to interfere with the findings of CIT(A). Accordingly, the same is upheld and the ground of the appeal is dismissed. - ITA No.1831/PUN/2014, ITA No.1919/PUN/2014 - - - Dated:- 17-7-2019 - Shri D. Karunakara Rao, AM And Shri Vikas Awasthy, JM For the Assessee : Shri C.H. Naniwadekar For the Revenue : Shri Sudhendu Das ORDER PER VIKAS AWASTHY, JM : These cross appeals by the assessee and the Revenue are directed against the order of Commissioner of Income Tax (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt income earned. The limited prayer of assessee is that while computing disallowance under Rule 8D(2)(iii) only these investments on which the assessee has earned dividend income should be considered. 6. We find merit in the submissions of assessee. The Special Bench of Tribunal in the case of Assistant Commissioner of Income Tax Anr. Vs. Vireet Investment Pvt. Ltd. Anr. (supra) has held that only those investments are to be considered for computing average value of investment which have yielded exempt income during the year. The ground raised by the assessee is allowed in principle. The issue is restored back to the file of Assessing Officer to determine disallowance under Rule 8D in line with the decision of Special Bench of Tribunal (supra). 7. In the result, the appeal of assessee is allowed for statistical purpose in the terms aforesaid. ITA No. 1919/PUN/2014, A.Y. 2009-10) 8. The Department in appeal has assailed the order of Commissioner of Income Tax (Appeals) by raising following grounds : 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001 is capital receipt while during the course of scrutiny, the AO observed that major amount of subsidy received by the assessee company is by way of reimbursement of taxes paid i.e. VAT to the State Govt. and hence a taxable revenue receipt? 9. The appellant craves leave to add, amend or alter any of the above grounds of appeal. 9. The ld. DR submitted that in ground No. 1 of the appeal, the Revenue has assailed deleting of addition on account of liquidated damages amounting to ₹ 12,96,830/- by admitting new evidences. The Commissioner of Income Tax (Appeals) without giving opportunity to examine the additional evidence filed by the assessee deleted the addition. The liquidated damages claimed by the assessee are in the nature of penalty for late delivery of Gensets, therefore, the said expenditure is not allowable. 9.1 In respect of ground No. 4 of the appeal, the ld. DR submitted that the Assessing Officer observed that the assessee has paid commission to the tune of ₹ 3,52,00,000/- during the impugned assessment year as compared to ₹ 2,85,70,000/- in assessment year 2008-09. Thus, there was inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income Tax (Appeals) upheld the addition made by the Assessing Officer. The assessee carried the issue in appeal before the Tribunal in ITA No. 918/PUN/2014. The Tribunal has restored this issue back to the file of Assessing Officer for verification. The facts in assessment year under appeal are same. Therefore, the issue raised by the Department in ground No. 1 of the present appeal can be restored back to Assessing Officer with similar directions. 10.1 In respect of ground No. 2 of the appeal, the ld. AR submitted that the Tribunal in assessee s own case for assessment year 2008-09 (supra) has allowed assessee s claim of depreciation @ 60% on UPS and other allied items. 10.2 In respect of ground No. 3 the ld. AR pointed that the disallowance u/s. 40A(2) in respect of commission paid to the Directors was made in assessment year 2008-09. The Commissioner of Income Tax (Appeals) granted relief to the assessee and the same was upheld by the Tribunal in appeal filed by the Department in ITA No. 1153/PUN/2014 for assessment year 2008-09. 10.3 In respect of ground No. 4 relating set off of brought forward capital losses against Long Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue in its appeal have already been considered by the Tribunal in assessee s own case in immediately preceding assessment year. 12. In ground No. 1 of the appeal the Revenue has assailed deleting of damages paid by the assessee to its customers for delayed delivery of consignments. The issue is recurring in nature. Similar disallowance was made by the Assessing Officer in the case of assessee in the past. The Tribunal in assessment years 2002-03, 2003-04, 2007-08 and 2008-09 has already considered this issue of liquidated damages/late delivery charges. The Co-ordinate Bench in assessment year 2008-09(supra) has restored this issue back to the file of Assessing Officer for fresh adjudication. Since, the nature of payment of liquated damages in assessment year under appeal is identical, we deem it appropriate to restore this issue to the file of Assessing Officer to decide the issue on similar lines. Accordingly, ground No. 1 of the appeal by the Revenue is allowed for statistical purpose. 13. The ground No. 2 of appeal is qua allowability of higher rate of depreciation @ 60% on UPS and other allied items. The depreciation @ 60% was allowed to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital loss for the reason that the transaction was a tax planning devise to evade taxes. Before us, Ld.A.R. has reiterated the submissions made before lower authorities and has submitted that the preference shares were allotted to assessee due to the restructuring exercise carried out as per the mandate of other public financial institutions. It is an undisputed fact that KFIL was promoted by assessee, is a listed company and had huge accumulated losses. The issuance of preference shares to the assessee on account of restructuring exercise undertaken to revive KFIL is an undisputed fact. It is also a fact that the assessee was issued preference shares in earlier years and in those years the transaction was not doubted by the Revenue. Further no material has been brought on record by Revenue to demonstrate that the transaction was a sham. We further find that while deciding the issue in favour of assessee, Ld.CIT(A) had relied on the decision of Hon ble Bombay High court in the case of CIT Vs. Enam Securities Pvt. Ltd., (2012) 345 ITR 64. Before us, Revenue has not pointed out any fallacy in the findings of Ld.CIT(A) nor has pointed out as to why the ratio of decision relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra considered the scope of sub-s. (6) of s. 80-I, which is the corresponding provision of sub-s. (5) of s. 80-IA. Both are similarly worded and therefore we agree entirely with the Division Bench judgment of this Court cited supra. In the case of CIT vs. Mewar Oil General Mills Ltd. (2004) 186 CTR (Raj) 141 : (2004) 271 ITR 311 (Raj), the Rajasthan High Court also considered the scope of s. 80-I and held as follows : Having considered the rival contentions which follow on the line noticed above, we are of the opinion that on finding the fact that there was no carry forward losses of 1983-84, which could be set off against the income of the current asst. yr. 1984-85, the recomputation of income from the new industrial undertaking by setting off the carry forward of unabsorbed depreciation or depreciation allowance from previous year did not simply arise and on the finding of fact noticed by the CIT(A), which has not been disturbed by the Tribunal and challenged before us, there was no error much less any error apparent on the face of the record which could be rectified. That question would have been germane only if there would have been carry forward of unabs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew industrial undertaking, ship or approved hotel will be taken into account in determining the quantum of deduction admissible under the new s. 80-I even though they may have been set off against the profits of the taxpayer from other sources. We are not agreeing with the counsel for the Revenue. We are, therefore, of the view that loss in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided in the s. 80-IA(5). [Emphasized by us] The Tribunal has been consistently following the law laid down by the Hon ble Madras High Court and similar view has been taken in the case of Poonawala Estate Stud Agro Farm Pvt. Ltd. Vs. ACIT (supra). Thus, in view of the settled law, we find no merit in ground Nos. 5 to 7 of the appeal by the Department. Hence, the same are dismissed. 17. The ground No. 8 of the appeal is with respect to subsidy received by the assessee under Government of Maharashtra Package Scheme of Incentive, 2001. The assessee has cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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