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TMI Blog2019 (2) TMI 1747X X X X Extracts X X X X X X X X Extracts X X X X ..... r the limited purpose to the AO to verify whether the insurance claim received by the assessee is on account of loss of trading assets and the same has been booked as an expenditure in the earlier years. If it is found so, then to allow the insurance claim to be included into the income for the purpose of benefit u/s 80IA of the Act. This ground is, accordingly, partly allowed in favour of the assessee. Income from sale of forms which admittedly is not related to the manufacturing activity of the assessee and we do not find any reason to interfere in the orders of the lower authorities in denying the aforesaid claim. Incidental expenditure incurred for the purpose of earning of interest income from the banks - Expenditure on certain percentage of bank interest does not seem to be a correct and proper method for the same - HELD THAT:- We are of the view that if investment or deposit is made to the bank, same effort is to be made irrespective of the quantum of the investment i.e. whether it is regarding the deposit of ₹ 1 lac or ₹ 10 Crores, subject to a very few additional formalties. Under the circumstances, we restore this issue to the AO to examine the calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions or enabling the management and conduct of the assessee s business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusion test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. Write back of provisions of leave salary and pension as income eligible u/s 80IA - HELD THAT:- We find that the leave salary and pension etc. are the expenditures incurred by the assessee which are directly relating to the running of the business operations. Therefore, ld. CIT(A) has rightly allowed the write back of the provisions for the same as income of the assessee as eligible for deduction u/s 80IA Excess provisions written back for stores - Provisions for stores is relating to the trading assets of the assessee hence, any excess provisions written back will also constitute income of the assessee relating to the business operations of the assessee. - ITA No. 583/CHD/2012, ITA No. 596/CHD/2012 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee, though could not convince us about the non-deduction of TDS on the aforesaid amount, however, the only submission of the ld. counsel for the assessee in this respect is that the assessee may be given the benefit in the shape of allowance of the said expenditure in the year in which the TDS has been deducted on the aforesaid payments. The ld. DR has also fairly agreed that the assessee is entitled to the allowance of expenditure in the year in which TDS has been deducted. In view of this, this ground of appeal is dismissed with the observation that the assessee will be at liberty to claim the aforesaid expenditure in the year in which the TDS has been deducted. 5. Vide ground No. 2, the assessee has agitated the action of the lower authorities in denying the benefit of exemption u/s 80IA of the Act in respect of income received on various counts. First is the interest from employees and Directors of ₹ 5763604/-. The ld. Counsel has fairly admitted that this income has not accrued from the manufacturing/generation of electricity activity of the assessee so this allowance has rightly been made by the lower authorities. 6. Second issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble expenditure incurred for the purpose of investment/generating interest income from the banks is required to be allowed as an expenditure. Ld. Counsel has further submitted that the assessee has been allowed 5% of the total income as incidental expenditure in the previous and subsequent assessment year, however, in the year under consideration only 2% of the interest income has been allowed as expenditure. 10. After considering rival contentions, in our view the allowing of expenditure on certain percentage of bank interest does not seem to be a correct and proper method for the same. We are of the view that if investment or deposit is made to the bank, same effort is to be made irrespective of the quantum of the investment i.e. whether it is regarding the deposit of ₹ 1 lac or ₹ 10 Crores, subject to a very few additional formalties. Under the circumstances, we restore this issue to the AO to examine the calculations given by the assessee in respect of expenditure incurred for making deposits with the bank and to decide the issue a fresh having regard to the accounts of the assessee, the manpower and the administrative infrastructure used for the same and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration will remain the same. Admittedly, the assessee has already booked the aforesaid amount as income in the earlier years and has paid the due taxes; if the same is reduced in the respective year, same will have bearing on the next year. Hence, instead of making adjustment one by one in each of the year, the assessee made the requisite entry in the current year. However, the question of allowability of the aforesaid claim in respect of advance on depreciation , in our view is required to be looked into by the AO. We, therefore, restore this issue to the file of the AO to examine the nature of the income received and apply the decision of the Hon'ble Supreme Court in the case of NHPC or any other case law as may be available at that time. However, if the claim of the assessee is found allowable, then to reduce the income from the book profits of the current year as per our observations made above. 14. The next issue raised by the assessee is regarding addition of ₹ 8.57 Cr, ₹ 50.13 Cr and ₹ 4.60 Cr made by the AO on account of unascertained liability. The ld. Counsel, in this respect has submitted dispute was going on of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is revenue in nature. Merely because the expenditure results in ending benefit is not enough to categorize it is capital in nature. This issue has been settled by the Supreme Court in Empire Jute Co. Ltd, Vs. CIT 124 ITR 1 (SC) wherein the Court has held : ii. There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the les, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee s trading operations or enabling the management and conduct of the assessee s business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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