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TMI Blog2020 (1) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore covered by Sec. 35D(2) of the Act. However, it was held that the deduction would start from year in which the project starts commercial production. Since, the project had started commercial production in June, 2002, the deduction of the same would be allowable to the assessee. Credit for MAT for the purposes of Charging interest u/s 234B - Held that:- The assessee was found eligible to claim MAT credit of ₹ 585.04 Lacs as per Sec.115JAA and therefore, the credit of the same was allowed. However, interest u/s 234B was computed before adjusting MAT credit. - interest was to be charged only after adjustment of tax credit. - I.T.A. No.7486/Mum/2007 And I.T.A. No.7494/Mum/2007 And C.O. No.222/Mum/2017 [Arising out of ITA No. 7494/Mum/2007] - - - Dated:- 6-1-2020 - Shri Mahavir Singh, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : S/Shri Yogesh Thar, Hardik Nirmal And Chaitanya Joshi - Ld. ARs For the Revenue : Shri Anadi Varma-Ld.CIT-DR And Shri Harshad Vengurlekar-Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1.1 Aforesaid cross-appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the various orders have been placed on record, which we have considered. The latest order has been passed by Tribunal in cross-appeals / objections for AYs 2002-03 2003-04 vide ITA Nos.7092/Mum/2015 ors., common order dated 10/08/2018. 1.5 The decisions rendered in assessee s own case for various Assessment Years, for ease of reference, could be tabulated in the following manner: - No. Citation Appeal By AY Date of Order 1. ITA No.3733/Mum/1996 Assessee 1988-89 03/06/2005 2. ITA No.2690/Mum/1993 Ors. Cross-Appeals 1989-90 20/12/2002 3. ITA No.2292/Mum/1993 Ors. Cross-Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/05/2016 15. ITA No.4373/Mum/2005 Ors. Cross-Appeals 2000-01 21/10/2016 16. ITA No.4374/Mum/2005 Ors. Cross-Appeals 2001-02 18/01/2017 17. ITA Nos.7092/M/2005 Ors. Cross-Appeals 2002-03 2003-04 10/08/2018 18. Hon ble High Court ITA (L) No.2401 of 2007 Revenue 1988-89 22/04/008 19. Hon'ble Supreme Court SLP(Civil) No.2822/2009 Revenue 1988-89 17/07/2009 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 1,08,416/-, ₹ 20,00,000/- and ₹ 2,09,15,649/- respectively. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance made u/s 14A of the I.T. Act to ₹ 50,000/- as against ₹ 21,65,213/- made by the AO for the expenses incurred in earning the dividend income being exempt under the I.T. Act. 9. On the facts and in the circumstances of the case and in law, the Ld. ClT(A) in deleting the disallowance u/s 35D regarding preliminary expenses of ₹ 19,89,83,520/- and ₹ 41,74,223/- for A.Yrs. 2001-02 2002-03 respectively. 10. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to include the excise duty and sales tax amounting to ₹ 334,52,74,729/- and ₹ 72,34,31,000/- respectively in the total turnover for the purpose of computation of deduction u/s 80HHC. 11. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing credit for MAT paid u/s 115JA for the purpose of charging interest u/s 234B. 12. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of Tribunal for AYs 1998-99 to 2002-03. It is admitted position that this issue is squarely covered by earlier decisions of Tribunal right up-to AY 2003-04. No Appeal has been preferred by the department on this issue before Hon ble High Court for AYs 1990-91, 1991-92 1993-94. We find that this question raised by the revenue before Hon ble High Court has been admitted in few earlier years, however, the same is still pending for adjudication vide ITA No. 6186 of 2010, ITA No. 6195 of 2010 ITA No. 660 of 2011. Therefore, as of now, the issue is covered in assessee s favor by the earlier decisions of the Tribunal. Respectfully following the same, we dismiss this ground of appeal. 2.3 Gr. No.3: Deletion of disallowance of Prior Years Expenses for ₹ 58.16 Lacs The Tax Audit Report for the year under consideration reported that the assessee debited previous years expenses of ₹ 58.16 Lacs in the Profit Loss Account. The assessee defended the same by submitting that the said expenditure crystalized during the year and arose due to late submission of bills by parties, disputed bills settled in current year, short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs The assessee offered foreign exchange gain of ₹ 4352.74 Lacs in the Profit Loss Account. Till AY 2002-03, the assessee claimed deduction of forex loss which was denied to the assessee treating it as a notional loss. Therefore, the assessee submitted that the gain should also not be taxed since the claim of notional loss was not accepted by the department in earlier years. However, the said plea could not find favor with Ld. AO who denied the adjustment of the same. The learned first appellate authority confirmed the same since forex loss disallowance made in earlier years was deleted in those years and therefore, the gain would be fully taxable. We find that this issue is already decided against the assessee by Ld. CIT(A) and therefore, there could be no occasion of grievance for revenue. Consequently, this ground stand dismissed as being infructuous. 2.6 Gr. No.6: Deletion of disallowance of employees stock option expenses for ₹ 4.51 Lacs The assessee credited a sum of ₹ 1.10 Lacs, being Employees remuneration and Benefits Account since expenditure on this account in ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the decision of Tribunal in AY 2001-02. Therefore, respectfully following the consistent stand of Tribunal, we dismiss this ground of appeal. 2.8 Gr. No.8: Restriction of disallowance u/s 14A from ₹ 21.65 Lacs to ₹ 0.50 Lacs The assessee earned exempt dividend income of ₹ 107.60 Lacs which led the Ld. AO to invoke disallowance u/s 14A. The Ld. AO, as done in earlier years, estimated the disallowance @2% which resulted into addition of ₹ 2.15 Lacs in the hands of the assessee. Upon further appeal, Ld. CIT(A) estimated the same at ₹ 0.50 Lacs. We find that in AY 2002-03, Tribunal has confirmed the estimation of ₹ 2 Lacs as made by Ld. CIT(A), finding the same to be fair and reasonable. Applying the same logic, we dismiss this ground of appeal. 2.9 Gr. No.9: Deletion of disallowance u/s 35D being preliminary expenses of ₹ 1989.83 Lacs ₹ 41.74 Lacs for AYs 2001-02 2002-03 respectively We find that this ground is wrongly drafted since the perusal of quantum assessment order would reveal that the assessee has been saddled with disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it is evident that the tax payable on normal income was more than tax payable on Book Profits computed u/s 115JB and therefore, the assessee has paid normal tax in this year. The assessee was found eligible to claim MAT credit of ₹ 585.04 Lacs as per Sec.115JAA and therefore, the credit of the same was allowed. However, interest u/s 234B was computed before adjusting MAT credit. The Ld. CIT(A), accepting assessee s submissions and relying upon various decisions of Tribunal, held that interest was to be charged only after adjustment of tax credit. We find that the adjudication of Ld. CIT(A) is in line with following binding judicial pronouncements: - i) CIT V/s Tulsyan NEC Ltd. [2011 330 ITR 226(SC)] ii) CIT V/s Apar Industries Ltd. [(2010)323 ITR 411(Bombay HC)] iii) CIT V/s Shiv Texyarn Ltd. [(2009) 182 Taxman 1(Madras HC)] iv) CIT V/s. Gujarat Mitra (P.) Ltd. [(2013) 214 taxman 35(Gujarat HC)] v) Chemplast Sanmar Ltd. V/s DCIT [(2004) 83 TTJ 427 (Chennai Tribunal)] vi) Phillips India Ltd. V/s. ACIT [(2005) 92 ITD 441 (Chandigarh Tribunal)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the Ld. CIT(Appeals) erred in not excluding gain on exchange due to decrease in Rupee Liability on account of fluctuation in Rate of Exchange, from the computation of total income irrespective of the stand taken by the department in earlier years to treat the exchange loss as notional, hence not allowable. 5. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified in estimating ₹ 50,000/- as expenses incurred towards earning dividend income u/s 14A, when no such expenses were actually incurred by the appellant. 6(a) That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified in confirming the decision of the A.O. in assessing Interest Income of ₹ 38,41,56,750/- and Truck Hire Charges of ₹ 2,79,759/- (Net) as income under the head Income from Other Sources . 6(b) That on the facts and in the circumstances of the case, and without prejudice to ground no.6(a) taken here-in-above, having held that the said income were to be assessed under the head income from other sources , the Ld. CIT(Appeals) ought to have allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear before filing of return of income for Assessment Year 2004- 05 by adjusting unutilized MODVAT credit and necessary proofs for payment of excise duty are on the records of assessing officer. 10. That on the facts and in the circumstances of the case, the Ld. ClT(Appeals), was not justified and rather grossly erred in confirming the non-exclusion of Capital Profit on sale of investment amounting to ₹ 3,11,81,125/- in computing Book Profit as per provisions of Sec 115JB. 11(a) That on the facts and in the circumstances of the case, the Ld, CIT(Appeals) was not justified and rather grossly erred in not admitting the additional ground inspite of the fact that all the materials for adjudicating the issue were already available on record. 11 (b) That on the facts and in the circumstances of the case, and without prejudice to the ground no.11(a) taken here in above, the Ld. ClT(Appeals) was not justified in confirming the addition of dividend distribution tax in computing Book Prof it u/sll5JB. 12. That on the facts and in the circumstances of the case, on disposal of this appeal, material adjustments would be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same to be capital in nature. We find that this ground is covered in assessee s favor by the decision of Tribunal up-to AYs 2003-04. Nothing contrary is on record. Respectfully following the same, we allow this ground of appeal. Consequently, the plea of allowance of depreciation against the same becomes infructuous. 4.3 Gr.No.3: Disallowance of Service Charges for ₹ 1.93 Lacs The charges represent service charges paid to Sh. L. H.Hirani. The attention was drawn to the fact the similar expenditure was allowed by Ld. CIT(A) in earlier years up-to AY 1994-95. The attention was also drawn to favorable order of Tribunal for AY 1992-93. However, disregarding the same, the expenditure was disallowed. Since no new asset was created, depreciation was also denied. The learned CIT(A), following the orders for AYs 1995-96 to 2003-04, held the same to be capital in nature. We find that this ground is covered in assessee s favor by the decision of Tribunal up-to AYs 2003-04. Nothing contrary is on record. Respectfully following the same, we allow this ground of appeal. Consequently, the plea of allowance of deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for statistical purposes. 4.7 Gr. No.7: Disallowance u/s 35D and non-admission of additional ground This issue was not subject matter of quantum assessment order and was raised before Ld. CIT(A) for the first time as additional ground. The assessee claimed deduction of ₹ 0.83 Lacs, being 1/10th of tradeable warrant issue expenses since the said claim was omitted to be lodged in the return of income. However, Ld. CIT(A) declined to admit the same. Drawing analogy from the decision of Hon ble Bombay High Court in CIT V/s Pruthvi Shares Stockbrokers Pvt. Ltd. (349 ITR 336), we direct Ld. AO to admit this claim and adjudicate the same after providing due opportunity of hearing to the assessee. This ground stand allowed for statistical purposes. 4.8 Gr. No.8: Premium on Leased land for ₹ 30.73 Lacs The assessee claimed deduction of premium on leasehold land. The assessee submitted that it obtained various lands on lease basis and paid premium from time to time. The period of lease was in the range of 30 to 99 years and therefore, the lease premium was to be written-off over such a period. The attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This issue was not subject matter of quantum assessment order and was raised before Ld. CIT(A) for the first time as an additional ground. The assessee challenged addition of Dividend Distribution Tax for ₹ 1393 Lacs while computing Book Profit u/s 115JB. However, Ld. CIT(A) declined to admit the same. Drawing analogy from the decision of Hon ble Bombay High Court in CIT V/s Pruthvi Shares Stockbrokers Pvt. Ltd. (349 ITR 336), we direct Ld. AO to admit the said claim and adjudicate the same after providing due opportunity of hearing to the assessee. This ground stand allowed for statistical purposes. 4.12 Gr. No.12 13 are general in nature and do not require any specific adjudication. 4.13 Resultantly, the appeal stands partly allowed to the extent as indicated in the order. The learned AO is directed to recompute the income of the assessee in terms of our adjudication. Assessee s Additional Ground of Appeal Revenue s Crossobjections 5.1 The assessee, vide petition dated 15/05/2017, has pleaded for admission of an additional ground of appeal which read as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused materials on record. Undisputedly, the assessee has not claimed the Sales Tax incentives received by it as capital in nature either in the return of income filed for the impugned assessment year nor in course of proceedings before the Departmental Authorities. In fact, the assessee itself has treated the Sales Tax incentive received by it as revenue in nature by including it in the sales as reflected in the books of account and audited financial statements. It is only at the second appellate stage before the Tribunal the assessee has claimed the Sales Tax incentives received by it as capital in nature by raising the additional grounds. Thus, the first issue which is to be decided is, whether the additional grounds raised by the assessee at this stage are to be admitted or not. It is the contention of the assessee before us that on the basis of ratio laid down in certain judicial precedents, wherein, it is held that Sales Tax incentive received is capital in nature, the assessee has raised the additional ground. On a careful analysis of the decisions relied upon by the learned Authorised Representative in support of admission of additional ground, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Departmental Authorities, since, the assessee did not raise the issue earlier before them. Therefore, on over all consideration of facts and material on record and also keeping in view the fact that the Department should be given an fair and reasonable opportunity to examine assessee s claim, we are inclined to restore the issues raised in the additional grounds to the file of the Assessing Officer for fresh adjudication keeping in view the relevant Sales Tax incentive schemes and the decisions relied upon by the assessee. Needless to say, the Assessing Officer must afford reasonable opportunity of being heard to the assessee before deciding the issues through a speaking order. Both the additional grounds are allowed for statistical purposes. Similar additional ground was admitted for AY 2003-04 also. Facts being pari-materia the same, following the consistent view of the Tribunal, we admit the additional ground of appeal as raised by the assessee and remit the same back to the file of Ld. AO on similar lines. The additional ground stand allowed for statistical purposes whereas the crossobjections filed by the revenue stand dismissed. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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