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TMI Blog2020 (7) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... ed particular expenditure over a period of years as it reflects from the return filed by it and it has claimed the entire expenditure as deductable in the same year. The assessee has claimed the expenditure in this particular year in which it has been incurred and, therefore, when it has chosen to claim the entire expenditure spent it is justifiable to allow such claims for the year under consideration invoking the provision of Sec. 36(1)(iii) of the Act and also the ratio laid down by the judgment TAPARIA TOOLS LIMITED VERSUS JOINT COMMISSIONER OF INCOME TAX [ 2015 (3) TMI 853 - SUPREME COURT] - we allow the entire claim of the assessee. The addition is, therefore, deleted. - Decided in favour of assessee. - ITA Nos. 2277 And 2278/Ahd/2018 - - - Dated:- 28-7-2020 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri S. N. Soparkar, Sr. Advocate Shri Parin Shah, A.R. For the Respondent : Shri Vinod Tanwani, Sr.D.R. ORDER PER MS. MADHUMITA ROY -JM: Both the appeals filed by the assessee are directed against the separate orders dated 04.09.2018 06.09.2018 passed by the Commissioner of Income Tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation asked for by the Ld. AO. According to the Ld. AO such calculation is not justifiable in the absence of any proof or specific explanation other than working on disallowance at .5% of the average value of investment. Further that the assessee has only considered certain specific investment for the purpose of disallowance under Section 14A r.w.r. 8D and has not considered the value of entire investment in terms of Sec. 14A r.w.r. 8D as also was the finding of the Ld. AO. He, therefore, determined the disallowance under Section 14A r.w.r. 8D .5% on the average value of total investment of ₹ 2,21,56,37,775/-. The disallowance was worked out at ₹ 1,10,78,189/-. Since the assessee has already made disallowance under Section 14A amounting to ₹ 59,05,592/- the balance of ₹ 51,72,597/- has been added to the total income of the assessee which was, in turn, confirmed by the First Appellate Authority. Hence, the instant appeal before us. 4. At the time of hearing of the instant appeal the Ld. Senior Counsel Mr. Soparkar appear for the assessee submitted before us that only those investments are to be considered for computing average value of investment which yi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... future years and, therefore, that investment should also be excluded, is hypothetical and cannot be accepted. 11.18 In view of above discussion, the matter is restored back to the file of AO for recomputing the disallowance u/s 14A in terms of above observations. Thus, revenue s appeal is dismissed and assessee s cross-objection, on the issue in question, stand allowed for statistical purposes, in terms indicated above. In view of the ratio laid down by the above judgment we find substance in the argument made by the Ld. Senior Counsel appearing for the assessee to this effect that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. In that view of the matter we find it fit and proper to restore the matter to the file of the Ld. AO for re-computing the disallowance under Section 14A in terms of the observation made hereinabove. Hence, this ground is allowed for statistical purposes. Ground No. 2:- 7. The crux of the issue is this that as to whether the addition in respect of river diversion expense and HT line shifting expense of ₹ 23,03,770/- treating the same as of capital ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s case is this that Sec. 37 prohibits allowance of expenditure having an enduring benefit but by diverting and obstructing river or HT line, the corporation has not gained or availed any benefit but only could get rid of an obstacle. Though the benefit is always on positive side and results in positive gain, getting rid of an obstacle or hurdle is removal of negativity and both are different. However, the Ld. AO relying on the assessment made in the preceding year on the similar issue, rejected the right off of the claim of Mining and Project Development expenses amounting to ₹ 28,79,712/- and added back to the total income of the assessee. However, since in the earlier years the Ld. CIT(A) allowed 1/5th of such expenses of deduction for 5 years, the Ld. AO as amortized the expenditure in 5 years treating the benefit of expenditure as long-term and allowed only ₹ 5,75,942/- i.e. 1/5th of the total expenditure. In appeal the Ld. CIT(A) upheld such disallowance holding the expenditure as capital in nature. The assessee before the Ld. AO further relied upon the judgment passed by the Hon ble Apex Court in the matter Bikaner Gypsum Ltd. vs. CIT, reported in 187 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation, when this course of action was permissible in law to the assessee as it was in consonance with the provisions of the Act which permit the assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was given in the books of account cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. It has been held repeatedly by this Court that entries in the books of account are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act [See Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC); Tuticorin Alkali Chemicals Fertilizers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC); Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC) and United Commercial Bank v. CIT [1992] 240 ITR 355/106 Taxman 601 (SC). 20. At the most, an inference can be drawn that by showing this expenditure in a spread over manner in the books of account, the assessee had initially intended to make such an option. However, it abandoned the same before reaching the crucial stage, inasmuch as, in the income tax return filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On facts and circumstances of the case, your appellant submits that the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts by confirming the addition in respect of river diversion expense and HT lines shifting expense of ₹ 43,02,943/- by treating the same as of capital expense not following the ratio as specified in the decision of Hon ble Supreme Court in the case of Bikaner Gypsums Ltd. vs. Commissioner of Income Tax (1991 AIR 227, 1990 SCR Supl. (2) 313). Ground No. 1:- 15. This ground of appeal is identical to that of the ground already been dealt with by us in ITA No. 2277/Ahd/2018 for A.Y. 2014-15 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the ground preferred by the assessee is also allowed for statistical purposes. Ground No. 2:- 15. This ground of appeal is identical to that of the ground already been dealt with by us in ITA No. 2277/Ahd/2018 for A.Y. 2014-15 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the ground preferred by the assessee is also allowed. 16. In the result, both appeals filed by the assessee are allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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