9911796707
TMI Blog2023 (4) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assessing Officer and held the expenditure to be on revenue account. Deduction u/s.80HH and 80-IA without deducting notional depreciation of individual units - HELD THAT:- As decided in A.Y. 1996-97 Co-ordinate Bench in the appeal by Revenue for assessment year 1995-96 had accepted identical ground raised by the Revenue following the decision rendered by the Tribunal in assessee s own case - No contrary material has been placed before us by assessee. We find no reason to take a different view. Consequently, the fining of the CIT(A) on this issue are reversed and Ground No.4 raised in the appeal by Revenue is allowed. Deduction u/s.80HH and 80-IA by including duty drawback and interest - whether the income earned by the assessee relating to interest earned from the suppliers and duty drawback from the customs are relating to the business carried on by the assessee or income from other sources? - HELD THAT:- The issue under consideration is already considered by various courts particularly the Hon ble Supreme Court in the case of Meghalaya Steels Ltd [ 2016 (3) TMI 375 - SUPREME COURT] as it is clear that the source of income earned by the assessee which has direct link to the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Under Section 40 of the Finance Act, 1983, total wealth of the company was not chargeable to wealth-tax. It was only the assets specified under Sub-section (3) of Section 40 of the Finance Act, 1983, which was chargeable to wealth-tax. Therefore, the exception part of Explanation to Section 40(a)(iia) of the Act referred to above became applicable in the present case and the wealth-tax paid by the assessee in pursuance to Section 40 of the Finance Act, 1983, was admissible for deduction. Decided in favour of assessee. Allowing expenses on GDR issue as covered in section 35D - HELD THAT:- We observe that the assessee has incurred expenses in connection with the issue of GDR and these expenses are allowable only when new or expansion of industrial undertaking. During the current Assessment Year, the assessee has completed the expansion of the Industrial undertaking, the expenses are allowable deduction u/s 35D of the Act, since the expenses are incurred during previous AY and expansion was completed only this AY, the relevant expenses are allowable in this Assessment Year. In the similar facts, the ITAT Ahmedabad Bench has decided the issue in favour of the assessee, in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue that the surplus earned by the assessee cannot be treated as interest income and it is fact on record that assessee has held the treasury bills for certain period of time as investment and the surplus has to be taxed under the head capital gain and the same was sustained by the Ld.CIT(A). Therefore, the contention of the Assessing Officer is accordingly rejected and we observe that CIT(A) has rejected claim made by the assessee that the redemption of such treasury bills is not a transfer - Grounds raised by the revenue is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in allowing expenses on GDR issue as covered in Sec. 35D even though these expenses cannot be said to be on account of cost of project or for capital employed for the business of the assesse. (l) Erred in holding that the sales and lease back transaction entered into by the assessee with M/s Tata Chemicals Ltd. (TCL) was genuine oneand legally valid and that the lease assets is immovable property on which the assessee is entitled to claim depreciation. (m) Erred in holding that the lease agreement with JCT Ltd. is genuine and the assessee company is entitled to depreciation on the assets leased to JCT Ltd. (n) Erred in holding that sum of Rs. 4,60,02,985/- being the surplus on redemption of treasury bills is to be taxed as 'Capital Gains' and not revenue receipts and further allowing benefit of indexation to the assesse. (0) Erred in holding that sum of Rs. 34,76,738/- being the surplus on redemption of treasury bills is to be taxed as 'Capital Gains' and not as revenue receipts and further allowing benefit of indexation to the assessee." 4. At the outset, with regard to Ground No. (a), which is in respect of allowing the expenditure on dies &moul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 9. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 10. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee in the A.Y. 1995-96. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 3493/Mum/1999, held as under: - "34. At the outset, Ld. AR brought to our notice para 4 of assessment order and para 3 of CIT(A)'s order and submitted that this issue has already been decided by the Coordinate Bench of ITAT in assessee's own case for Assessment Year: 1993-94 & 1994- 95 (ITA No. 2739, 3175, 3491 & 3492/Mum/1999) on merits in favour of the assessee. 35. On the other hand, Ld. DR relied on the orders passed by revenue authorities, however he conceded that this ground is covered by the decision of ITAT. 36. Considered the rival submission and material placed on record. We notice from the records that the identical issue has already been decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed the aforesaid charges as cpital receipt, whereas, the Assessing Officer treated the aforesaid charges as revenue in nature. The CIT(A) following the order of his predecessor in Assessment Year 1991-92 to 1994-95 held the penalty charges to be capital receipt. We find that in the preceding Assessment Year this issue had come up in the appeal of assessee. The Co-ordinate Bench afterconsidering the decisions in assessee's own case for Assessment Year 1993-94 in ITA No.3491/Mum/1999 decided the issue in favour of assessee holding penalty charges to be capital receipt. The aforesaid decision of the Tribunal has not been controverted by the Revenue, hence, following the same we uphold the findings of CIT(A) and dismiss ground No.2 in the appeal by Revenue." 12. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.1996-97 is respectfully followed, accordingly, ground raised by therevenue is dismissed. 13. With regard to Ground No. (c) which is in respect of directing the Assessing Officer to allow deduction of ₹.2,36,37,738/- towards expenditure relating to purchase of jigs and fixtures, Ld. AR of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... replacement of jigs and fixtures would be capital expenditure and accordingly, granted depreciation thereon. It is not in dispute that assessee had indeed capitalised the replacement cost of jigs and fixtures in its books and had claimed depreciation as per Companies Act in its books. However, for the purpose of Income Tax, the assessee had claimed the said expenditure as the revenue expenditure on the ground that the said expenditure would fall under the category of "current repairs". We find that the present state of appellate proceedings is the second round of proceedings, since in the first round, this Tribunal had restored this issue to the file of the Id. CIT(A) for adjudication in the light of various judicial decisions relied upon by the assessee. We find that the expenditure incurred on replacement of jigs and fixtures are basically toolling aids required in the production process and these items are part of the machinery in automobile industry. We find that these jigs and fixtures need to be constantly replaced due to constant wear and tear and also due to changes in the design of the part. It is not in dispute that the 'expenditure incurred on jigs and fixt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal and decided the issue in favour of the revenue and against the assessee. However, Ld. AR relied on the decision on Reliance Industries Limited v. ACIT in ITA.No. 7299/Mum/2017 and prayed that the ground raised by the revenue be dismissed. 19. On the other hand, Ld. DR objected to the submissions made by the Ld.AR and filed his written submissions vide letter dated 19.01.2023. For the sake of clarity, it is reproduced below: - "2. During, the hearing on 16.01.2023 for ground No. 4 which relates to "Erred in directing the A.O. to grant deduction u/s 80HH & 80IA on the profits derived from respective units without deducting depreciation of respective units which is contrary to the provision of the above section". During, the course of hearing, AR ha presented a case law, which was never put forth before the honorable bench. Thus, a written submission is being submitted. 3. Firstly, it is stated that the above ground of appeal is squarely covered in favour of department vide ITAT order of assessee's own case of AY 1993-94 to 1996-97. However, assessee in its argument asserted that the issue is covered in assessee's favour in ITAT order of Reliance indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3175, 3491 & 3492/Mum/1999) on merits against the assessee. 43. Considered the rival submission and material placed on record. We notice from the records that the identical issue has already been decided by the Coordinate Bench of ITAT in assessee's own case for Assessment Year: 1993-94 & 1994-95 (ITA No. 2739, 3175, 3491 & 3492/Mum/1999) on merits. For the sake of clarity, relevant portion of the decision in assessee's own for Assessment Year 1993-94 (ITA No. 3491/Mum/1999) is reproduced below:- 6. The next issue in the revenue's appeal is against the grant of deductions u/s 80HH, 80I & 80IA on the profits of the respective units without deducting depreciation of the individual units. The issue is covered in favour of the revenue and against the assessee by the earlier decisions of the Tribunal for assessment years 1988-89 to 1992-93 in assessee's own case. Respectfully following the same we allow this ground of the revenue. 44. Therefore, respectfully following the above decisions of Coordinate bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. DR. Accordingly, this ground raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est paid by the said units. In support of the above propositions, Ld. AR of the assessee relied on the following case laws: - a) CIT vs. Meghalaya Steels Ltd [2016] 383 ITR 217 (SC)] b) Arvind Footwear Pvt. Ltd. vs. DCIT (ITA No.363/Lkw/2010) c) Suzlon Energy Limited vs. DCIT (32 taxmann.com 349) (Ahd) (Trib.) d) CIT vs. Vidyut Corporation [2010] 324 ITR 221 (Bom) e) CIT vs. Advance Detergents Ltd [2010] 339ITR 81 (Delhi) 24. On the other hand, Ld. DR relied on the order of the Assessing Officer. 25. Considered the rival submissions and material placed on record, the issue raised before us is that whether the income earned by the assessee relating to interest earned from the suppliers and duty drawback from the customs are relating to the business carried on by the assessee or income from other sources. The issue under consideration is already considered by various courts particularly the Hon'ble Supreme Court in the case of Meghalaya Steels Ltd (supra) and held as under: - "An important test in order to determine whether profits and gains are derived from business or an industrial undertaking is that there should be a direct nexus between such profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals, that as all the four subsidies were recent receipts which were reimbursed to the assessee for elements of cost relating to manufacture or sale of their products, there could certainly be said to be direct nexus between profits and gains of the industrial undertaking o or bust ness, and reimbursement of such subsidies. The subsidies were only in order to reimburse, wholly or partially, costs actually incurred by the assessee in the manufacturing and selling of its products." 26. From the above, it is clear that the source of income earned by the assessee which has direct link to the business carried on by the assessee has to be considered to assess the same under the head income from Business and earned from the eligible unit. Therefore, it is eligible to get the benefit under section 80HH and 80IA. Accordingly, the ground raised by the revenue is dismissed. 27. With regard to Ground No. (f) which is in respect of deduction u/s.80HHC pertaining to exclusion of excise duty of ₹.518,72,77,930/- and exclusion of Sales-tax of ₹.131,65,350/-. Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer had included scrap sales generated out of raw material used in manufacturing Rs.43,92,32,708/, miscellaneous scrap sales consisting of packing material like emptybarrels, steel covers, etc. amounting to Rs.4,82,77,276/- and sundry sales not covered in items above amounting to Rs.2,44,358/-. In the first appellate proceedings, the CIT(A) held that the sale of aforesaid items should be excluded from total turnover for the purpose of calculating deduction u/s 80HHC of the Act, as in Assessment Year 1995-96 these very items were excluded from total turnover while computing deduction u/s 80HHC of the Act. In assessment year 1995-96, the assessee carried the issue in appeal before the Tribunal in ITA No.3144/Mum/1999 (supra). The Co-ordinate Bench after placing reliance on the decision rendered by Hon'ble Supreme Court of India in the case of CIT vs. Punjab Stainless Steel Industries Ltd. 364 ITR 144 decided the issue in favour of assessee. Since, in the impugned assessment year there is no distinguishing feature, we see no reason to take a different view. Consequently, additional ground No.1 of the appeal is allowed." 30. Respectfully following the above decision and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as well as profit out of local trade. There is a formula prescribed by the statute for working out export profit as against the total profit of the business pertaining to the total turnover. Therefore, whether the profit has come out of main business or subsidiary business or incidental business is not a matter to be considered in the context of section 80HHC. The only issue to be looked into whether the income arose out of any of the business activities carried on by an assessee. Here, the assessee is a manufacturing company possessing requisite technical know-how. The said technical know-how has been provided to a Maharashtra State Government Undertaking and the assessee thereby earned income. The income earned by the assessee by way of technical know-how fees is absolutely its business income. The technical know-how is its business asset. Its own manufacturing activities are carried-on on the strength of technical know- how, the assessee has in its possession. The deliberation of such technical know-how to other companies for a considerations is one of the business activities, incidental or ancillary carried on by the assessee -company. Therefore, there is no force in arguing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific words forming themselves into a special category. If so, the word "charges" should be confined to those charges which do not have anything to do with the business and the related activities carried on by the assessee. 7. In the present case, rendering of technical know-how in the peculiar line of industry in which the assessee is engaged in, is undoubtedly an activity related to the business carried on by the assessee. Therefore, the technical know-how income earned by the assessee company cannot be dissociated with its business income. For the same reason, it cannot be brought under the items qualified in sub-clause (i) of clause (baa). Therefore, the finding of the CIT that the technical know-how need to be excluded to the extent of 90 per cent is again not sustainable in law." The Technical know-how charges in the impugned assessment year is identical. Thus, in the light of above decision of Co-ordinate Bench, we concur with theorder of CIT(A) in reversing the addition made by Assessing Officer in respect of Technical Know-how charges. The ground No.5 of the appeal is dismissedbeing devoid of any merit." 34. Respectfully following the above decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue authorities, however he conceded that this ground is covered by the decision of Hon'ble Apex Court, High Courts & ITAT. 51. Considered the rival submission and material placed on record. We notice from the records that the identical issues have already been decided by the Hon'ble Supreme Court, High Courts and ITAT on merits:- (i) DCIT vs. Sun Pharmaceutical Ind. Ltd [2010] 329 ITR 479 (Guj) (ii) DCIT vs. Sun Pharmaceutical Ind. Ltd [2010] 325 ITR (SC) (iii) United Phosphorous Ltd. vrs. ACIT(2015) 230 Taxman 596 (Guj) (iv) Lupin Ltd. vrs. JCIT (ITA No. 5088/Mum/2005) For the sake of clarity, relevant portion of the decision in the case of Lupin Ltd is reproduced below:- 7. Ground nos. 5 and 6 relates to the disallowance of amortisation of payment made for leasehold land of ₹.2,45,000/-. At the outset, the learned counsel of the assessee submitted that this issue has come up for consideration in assessee's own case in the A.Y. 2000-01 in ITA No. 3314/3242/M/05 and in the A.Y. 2002-03 in ITA No.648/411/M/2008, wherein this issue has been decided against the assessee. However, the learned counsel submitted that this issue now stands covered by the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of allotment of shares and increase in share capital, whereas in this case, the issue is entirely different and relates to the payment on account of lease hold of land and building. This issue as rightly been pointed out by the learned counsel is covered by the decision of the Hon'ble High Court of Gujarat in the case of DCIT vs. Sun Pharmaceuticals Industries Ltd. reported in 329 ITR 479, wherein the Hon'ble High Court has held that the payment of advance lease rent for acquisition of land on lease for a period of 19 years is revenue expenditure. While coming to this conclusion the Hon'ble High Court has relied upon the principle and ratio laid down by the Hon'ble Supreme Court in the case of CIT vs. Madras Auto Services Ltd. (1998), reported in 233 ITR 468 (SC). The point in issue is also covered by the decision of the Hon'ble Madras High Court in the case of CIT vs. Ucal Fuel Systems Ltd. reported in 296 ITR 702, wherein similar matter was involved and was held that upfront lease rent charges paid for obtaining lease of land and building is revenue expenditure. In view of the aforesaid preposition laid down by the Hon'ble High Courts, we are persuaded to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 44. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 45. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1995-96. While deciding the issue, the Coordinate Bench in ITA.No. 3493/Mum/1999 dated 20.01.2021 held as under: - "69. Considered the rival submission and material placed on record. We notice from the records that the identical issues have already been decided by ITAT Delhi Bench in the case of Punj Sons (P) Ltd. vrs. DCIT (2002) 74 TTJ 596) (Del) on merits. For the sake of clarity, relevant portion of the said decision is reproduced below:- 7. We have considered the rival submissions and the materials on the file. We are of the view that the issue in the present case is covered by the Supreme Court decision in the case of AAC Ltd (supra). Section 40(a)(iia) prohibits deduction of "any sum paid on account of wealth-tax". However, Explanation to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 40 of the Finance Act, 1983, was admissible for deduction. 9. In the above view of the matter, we direct the AO to allow deduction of Rs. 1,55,820. 70. Therefore, respectfully following the above decision, which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the revenue is dismissed." 46. Further, in assessee's own case for the A.Y. 1996-97 the Coordinate Bench of the Tribunal in ITA.No. 2230/Mum/2000 dated 20.06.2022 following the decision in assessee's own case for the A.Y. 1995-96, held as under: - "22. During the period relevant to assessment year under appeal the assessee paid wealth tax of Rs.6,19,229/-. The deduction of the aforesaid amount claimed by the assessee was denied by the Assessing Officer. In first appellate proceedings, the CIT(A) allowed assessee's claim of deduction in the light of explanation to section40(a)(iia) of the Act. Assessee's similar claim was allowed by the CIT(A) for the assessment year 1995-96. We find that the Revenue in assessment year 1995-96 has assailed the order of CIT(A) in allowing assessee's claim of deduction in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra), the same reproduced below: "24. As regards Ground no.10 of the assessee's appeal, the assessee has claimed deduction u/s 35D amounting to Rs.87,73,000/- which was restricted to Rs.13,50,000/- by the AO. The brief facts are that during the previous year relevant to AY 1995-96 the company made an Euro Issue of the Global Depository Receipts (GDRs) for its Acetic Acid Expansion Project and collected Rs.191.72 crores inclusive of premium. The company incurred expenditure of Rs.8.77 crores for this issue. It was submitted by the assessee in assessment proceedings that subscribed and paid up capital of the company increased to Rs.146.48 crores and that coupled with debenture and long term borrowings of Rs.583.77 crores the total capital employed was Rs.730.25 crores and 2.5 % of such capital employed is Rs.18.26 crores. It was further stated that the cost of project of Ascetic Acid Expansion project was Rs.188.31 crores and that the said project was commissioned on 30.5.1995. It was stated that the expenditure of Rs.8.77 crores was less than 2.5 % of the cost of the project and capital employed and thus the assessee was entitled to deduction of Rs.87.7 lakhs as claimed u/s. 35D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly the order of the learned CIT(A) is reversed. Thus, Ground no.10 of the assessee' appeal is allowed." 52. Respectfully following the above said decision, we direct assessing officer to allow the claim made by the assessee relating to deduction u/s. 35D of the Act. 53. With regard to Ground No. (i) which is in respect of allowability of depreciation in respect of sale and lease back transaction with M/s. Tata Chemical Limited. Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. Further, he submitted that for the year under consideration there is no transactions involved with M/s. Tata Chemicals limited. Therefore, the ground raised by the revenue is misconceived. 54. On the other hand, Ld. DR agreed with the submissions made by the Ld AR. 55. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1996-97. However, the Ld AR has brought to our notice that the assessee has not entered in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "(a) Whether the assessee can be said to have acquired ownership of the assets in question from the Electricity Boards for purpose of claiming depreciation. (b) Whether the transactions entered into with the Electricity Boards were genuine lease transactions. (c) Whether the transactions can be characterized as loan transactions against security of the assets in question. (d) Whether the transactions can be treated as hire-purchase agreements" The CIT(A) after considering the facts of the case and lease agreement threadbare answered the first two issues in affirmative holding that the assessee had acquiredthe ownership of the assets purchased from Electricity Board and hence, eligible to claim depreciation on the said assets. The CIT(A) further held that the lease agreements with the State Electricity Board i.e. HSEB and PSEB are genuine lease transactions. As regards the issue raised in (c) & (d) above, the CIT(A) answered the question in negative holding that the transaction of purchase of assets from HSEB and PSEB and leasing it back to the State Electricity Board is not a hire purchase agreement nor it is a loan transaction against security of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003] 263 ITR 706 (SC); AIR 2004 SC 107. Reiterating the view that the assessee was entitled to arrange his affairs to reduce his tax liability, without violating the law, it was observed in AzadiBachaoAndolan [2003] 263 ITR 706 (SQ; AIR 2004 SC 107 that the principle laid down in IRC v. Duke of Westminster [1936) AC 1 was still valid. 4. It was further observed that the above principle had been approved in India in the Judgment of the hon'ble Supreme Court in CZT v, A. Roman and Co. [1968] 67 ITR 11 (Mad) and the observations of Chinnappa Reddy J. in McDowell could not be treated as the ratio of the Judgment in view of opinions of majority to the effect (headnote of 154 TR 148): Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges." 5. The hon'ble Supreme Court affirmed the view token by the Madras High Court in M. V. Valliappan v. TTO [1988] 170 ITR 238 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Hon'ble Supreme Court in the case of Vania silk Mills P. Ltd., v. CIT [191 ITR 647]. The Assessing Officer rejected the contention of the assessee and by relying on the decision of the Hon'ble Supreme Court in the case of Anarkali Sarabhai v. CIT [228 ITR 222] followed in Karthakaya Sarathai v. CIT [228 ITR 163]. 63. Before the Ld.CIT(A) assessee has fairly accepted that the issue under consideration is against the assessee following the decision of the Hon'ble Supreme Court in the case of Grace Collins v. CIT [248 ITR 323] wherein it was held that extinguishment of the asset itself is also covered by the term "transfer" and would give rise to capital gains. Accordingly, Ld. CIT(A) held that surplus on redemption as liable to tax under the head "capital gain". 64. Aggrieved revenue is in appeal before us, taxability of surplus on account of redemption of preference shares is revenue receipt. However, it is brought to our notice that the Assessing Officer himself treated the surplus of redemption of preference shares and preference shares as income chargeable to tax under the head "capital gain". Therefore, even Ld. CIT(A) has decided the issue as per the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly rejected and we observe that Ld.CIT(A) has rejected claim made by the assessee that the redemption of such treasury bills is not a transfer. 68. Similar issue was considered by the Coordinate Bench in favour of the revenue for the A.Y. 1996-97. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 2230/Mum/2000 dated 20.06.2022 following the decision in assessee's own case for the A.Y. 1995-96, held as under: - "21. In the books of account for the period relevant to the assessment year under appeal, the assessee has shown Rs.1,48,47,037/- as surplus on redemption of treasury bills. The Assessing Officer held the aforesaid amount as short term capital gains. The claim of the assessee is, that redemption of treasury bills result in total extinguishment of the treasury bills other than by way of transfer, hence, does not cover by the definition of 'transfer u/s 2(47) of the Act so as subjected to short term capital gains. The CIT(A) following the ratio laid down in the case of Vania Silk Mills Pvt. Ltd. vs. CIT, 191 ITR 647(SC) held that in redemption, the asset in the form of treasury bills stood extinguished without transfer. Therefore, the surplus ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tertainment expenditure and accordingly, is includible for the purpose of computation of disallowance under section 37(2) of the Act. 2.2 In doing so, the Commissioner of Income-tax (Appeals) failed to appreciate that sponsorship of lunches/dinners hosted by associations were in the nature of advertisement expenses and could not be regarded as entertainment expenditure and accordingly, no portion thereof ought to have been considered for disallowance under section 37(2) of the Act. III. DISALLOWANCE OF FINES AND PENALTIES: 3.1 On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in upholding the action of the Joint Commissioner of Income-tax and disallowing the sum of Rs.5,59,750/- being expenditure on fines and penalties. 3.2 In doing so the Commissioner of Income-tax (Appeals) erred in not appreciating the fact that the said fines and penalties had been incurred incidental to the carrying on of the business and not for deliberate infraction of law and accordingly ought to have been allowed as a deduction. IV. DIES AND MOULDS LEASED 4.1 On the facts and in the circumstances of the case and in law, the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and in law, it is prayed that if at all duty drawback and interest is excluded while computing the deduction under sections 80HH and 80-IA as prayed for by the Department in ground no. 5 of Appeal No, 5030/Mum/2000, then only the net interest and the net duty drawback received ought to be taken into account while computing the profits of the eligible undertakings. 4. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) rejecting the claim for deduction in respect of provision for doubtful debts amounting to Rs. 3,95,59,255/-. 5. On the facts and in the circumstances of the case and in law, it is prayed that in case ground no. 4 above is decided in favour of the Department, directions may be issued to grant deduction in respect of the aforesaid amount in the year/s in which the corresponding debts have been written off against the provision for doubtful debts created in the above assessment year or in case of write back of the provision, to exclude the same from total income. 6. The appellant prays that in respect of provision of doubtful debts disallowed in the earlier years, directions may be issued to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile computing the deduction. In Assessment Year 1995-96 similar ground was raised by the assessee before the Tribunal assailing exclusion of excise duty and sales tax from the total turnover while computing deduction u/s 80HHC of the Act. The Coordinate Bench in appeal by the assessee in ITA No.3144/Mum/1999(supra) decided this issue in favour of the assessee by placing reliance on the judgment rendered by Hon'ble Supreme Court of India in the case of CIT vs. Laxmi Machine Works, 290 ITR 667. The facts germane to the issue raised 16 the present appeal are admittedly identical to the facts in Assessment Year 1995-96, therefore, following the decision of Co-ordinate Bench the ground No.1 raised in the appeal is allowed for parity of reasons. 5. In additional ground No.1 of the appeal the assessee has assailed exclusion of scrap sales, miscellaneous scrap sales and sundry sales from total turnover for the purpose of calculating deduction u/s 80HHC of the Act. The Id. Counsel for the assessee has placed reliance on the decision of Tribunal in assessee's own case for Assessment Year 1995-96 to contend that the assessee is eligible to claim deduction u/s.800HHC on scrap sale, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(supra) after considering the decisions referred by the assessee and after appreciating the facts decided the issue against the assessee by holding ass under:- "18. However, we notice that the issue in the present appeal is relating to disallowance u/s 37(2) of the Act, which was applicable at that point of time. It was omitted by the Finance Act, 1977 w.e.f. 01.04.1988. The expenditure incurred by the assesses was on sponsorship of lunch and dinner hosted by various associations. The assessee claimed that these are in the nature of advertisement. Ld. CIT(A) rejected the contention of the assesses. We notice that the issue under consideration is covered under the explanation to entertainment expenses under Explanation-(iii) to section 37(2) of the Act. It is reproduced for the sake of clarity- (iii) expenditure on provisions of hospitality of every kind by the assesses to any person, whether by "way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade, but does not include expenditure on food or beverages provided by the assesses to his emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in ITA.No. 3492/Mum/1999 dated 30.05.2008 following the decision in assessee's own case for the A.Ys. 1998-89 to 1992- 93 and held as under: - "22. The next ground is against the addition on account of fines and penalties. Admittedly the issue has been decided against the assessee in the assessee's own case for the assessment years 1988-89 to 1992-93. Consistent with the view taken for assessment year 1993-94 on a similar issue we allow this ground of the revenue." 88. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in assessee's own case for A.Y.1993-94 is respectfully followed, accordingly, ground raised by the assessee is dismissed. 89. With regard to Ground No. 4 which is in respect of Dies and Moulds leased, this ground is not pressed by the Ld. AR of the assessee. Accordingly, the same is dismissed as not pressed. 90. With regard to Ground No. 5 which is in respect of taxability of surplus on redemption of securities, this ground is similar to ground raised by the revenue in Ground No. (d), accordingly, the decision taken therein shall apply mutatis-mutandis to this ground of appeal also. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is respectfully followed, accordingly, ground raised by the assessee is allowed. 95. With regard to additional Ground No. 2, Ld. AR of the assessee submitted that common expenditure not specifically incurred towards the tax incentive unit ought not to be considered for computing the deduction u/s.80HH and 80-IA of the Act. Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 96. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 97. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1996-97. While deciding the issue, the Coordinate Bench of the Tribunal in the immediately preceding assessment year in ITA.No. 1781/Mum/2000 dated 20.06.2022 following the decision in assessee's own case for the A.Y. 1995-96, held as under: - "8. The learned Counsel for the assessee submitted that as only income "derived from" the undertaking is included for the purpose of computing d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal in assessee's own case in the immediately preceding assessment year and decided the issue in favour of the assessee and against the department. 101. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 102. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1996-97. While deciding the issue, the Coordinate Bench of the Tribunal in the immediately preceding assessment year in ITA.No. 1781/Mum/2000 dated 20.06.2022 following the decision in assessee's own case for the A.Y. 1995-96, held as under: - "19. A perusal of the assessment order shows that in computation of total income the Assessing Officer has added provision for bad and doubtful debts Rs.2,85,47,483/-. However, the Assessing Officer has not given any reasoning for adding provision for doubtful debts. In the first appellate proceedings the CIT(A) has directed the Assessing Officer to allow deduction of the aforesaid amount. Against this the Revenue is in appeal before the Tribunal. We find that in assessment year 1995-96 the Assessing Officer in identical manner had added provision fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the issue can be restored back to the Assessing Officer with similar directions. 10.1 We find that in Assessment Year 1995-96 in assessee's own case identical ground was raised. The Co-ordinate Bench restored this issue back to the file of Assessing Officer by observing as under: "30. With regard to additional ground no. 4, we notice from the records that the similar ground has already been decided by the Coordinate Bench of 1TAT in assessee's own case for Assessment Year: 1993-94 & 1994-95 (ITA No. 2739 & 3175/Mum/1999) on merits, wherein IT AT has remit the matter back to the file of AO for fresh adjudication in accordance with law. For the sake of clarity, relevant portion of the decision in assessee's own for Assessment Year 1994-95 reproduced below:- 28. In this assessment year also the assessee has raised two additional grounds. The first being the debts written off against the provision /provision of written back in the subsequent year have to be allowed. In other words that deduction should be allowed in respect of debts written off during the year against the provision or in case of write back of the said provision the same should be excluded fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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