9911796707
TMI Blog2025 (1) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee has not brought on record after acquiring the assets from M/s. Brindavan Beverages, how the cost are allocated and for the purpose of registration, it has booked the value of Rs. 20,93,29,172/-, the combined value for land and building and when such slum sales are being recorded in the books of account the value has to be recorded on the basis of transfer value and if there is any difference between assets acquired and the liability, normally the difference would be charged to goodwill. Nothing has been brought on record to show that what is the value recorded by the assessee in FY 1999-00 after acquisition of the abovesaid factory with the parcel of freehold land and it has only filed fixed assets schedule it contains details of addition on freehold land of Rs. 15,66,92,008/- and also there are several additions in building as well. It is the duty upon the assessee only to show the fixed assets schedule prepared for the purpose of income-tax alone and in which value of respective assets are disclosed in terms of addition and deletions which tallies with the fixed assets schedule prepared for the purpose of Companies Act. No depreciation schedule prepared for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rahman, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Assessee : Shri Sachit Jolly, Advocate, Ms. Soumya Singh, Advocate For the Revenue : Shri Dayainder Singh Sidhu,CIT-DR ORDER PER S. RIFAUR RAHMAN, AM : 1. These cross appeals filed by the assessee and Revenue are against the separate orders of ld. Commissioner of Income-tax (Appeals)-35, New Delhi (hereinafter referred to Ld. CIT (A) ) dated 25.07.2018, 25.07.2018 and 29.05.2019 for AYs 2014-15, 2015-16 and 2016-17 respectively. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. ASSESSEE S APPEAL (ITA No.6507/DEL/2018 FOR AY 2014-15) (ITA No.6508/DEL/2018 FOR AY 2015-16) (ITA NO.6766/DEL/2019 FOR AY 2016-17) 3. Ground No.1 in all the three Assessment Years i.e. 2014-15, 2015-16 2016-17 is not pressed, hence the same are dismissed as not pressed. 4. With regard to Ground No.2 in all the three Assessment Years i.e. 2014-15, 2015-16 2016-17 regarding disallowance of traffic challans, at the outset, ld. Counsel of the assessee submitted that the same issue arising in assessee s own case for AY 2009-10 has been allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order). Accordingly, he prayed that this ground may be allowed in favour of the assessee. 8. On the other hand, ld. DR for the Revenue did not controvert this proposition. 9. Considered the rival submissions and perused the material on record. We observed that the same issue was taken up by the ITAT in assessee s own case for AY 2010-11 and the same was allowed by a coordinate Bench of ITAT in its order dated 18.07.2023 passed in ITA No.5671/Del/2018 and further the said decision for AY 2010-11 was followed in assessee s own case for subsequent AYs 2017-18 and 2011-12 to 2013-14. Therefore, respectfully following the aforesaid decisions of the coordinate Bench of the Tribunal, we allow this ground in the all AYs under consideration. 10. Ground No. 4 in AY 2014-15 is on account of Corporate Social Responsibility ( CSR ) expenditure amounting to Rs. 5,29,86,175/-. Brief facts of this ground are, the AO while making the above disallowance on account of CSR for A.Y 2014-15 relied upon Explanation 2 to section 37 of the Act to disallow expenditure incurred on account of CSR. Against this order, assessee preferred an appeal before the ld. CITA) and ld. CITA) agreed with the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 17 (Delhi) (URO) wherein the claim of expenditure incurred in order to bring goodwill to the assessee or for promoting the business was held as allowable. The relevant finding of the decision reads as under:- 31. We have carefully considered the rival submissions in the light of material placed before us. The contribution of Rs. 50 lacs was made by the assessee to Ranbaxy Community Health Care Society in assessment year 1997-98 and the said issue was considered by the Tribunal in paras 6 to 6.16. After discussing the issue in detail, it was held that such contribution was an expenditure incurred by the assessee to bring goodwill to the assessee or for the purpose of promoting its business and is an allowable expenditure. The conclusion of Tribunal is in paras 6.9 1o 6.l6 and the same is reproduced below for the sake of convenience: Just because the expenditure was voluntary in nature and was not forced on the assessee by a statutory obligation, it could not cease to be a business expenditure. Therefore, the authorities below indeed erred in law in declining deduction of the expenditure incurred on 20- point programme which was. beyond dispute or controversy, at the instance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year. However, the expenses incurred by the assessee cannot be considered as wholly or exclusively for the purpose of business as the application of income is not allowed as deduction for the purpose of computing taxable income since the amount spent on CSR activities. Therefore, any expenditure incurred on CSR is not an allowable expenditure as the same is not incurred for the purpose of business and also Explanation 2 of section 37 of the Act clarifies the same. Accordingly, he disallowed the same. However, we observed that the Assessing Officer himself acknowledged the fact that expenses pertained to CSR activities are effective from AY 2015- 16. The issue involved under consideration is related to AY 2014-15. Even the amendment made in Companies Act, 2013 as per the policies, it is effective from 01.04.2014, as held in the case of PEC Limited (supra) and Steel Authority of India Limited (supra), the amendment made in Companies Act as well as in section 37 are not applicable to the current assessment year. Therefore, these expenditures are incurred without there being any obligation on the assessee. Further we observed that ld. CIT (A) also came to the same conclusion, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t towards the close of AY 2000-01, the assessee had carried out a detailed review of its business basis a long-term discounted cash flow approach on account of the following reasons:- a. Withdrawal of backward area incentives for future expansions. b. Non-reduction as initially expected of the effective excise duty levies. c. Increase in other indirect tax levies in some states. d. Highly elastic nature of demand for beverages inhibiting simultaneously sales growth as well as ability to raise prices. 18. Basis of the above business valuation exercise, it was concluded that a business impairment of Rs. 1400 crores was required to be made. 19. In the absence of guidelines on impairment in Indian Accounting Standards at that time, the Company decided to allocate the impairment, inter-alia, by allocating a portion of the business impairment on assets acquired from Bottlers and assets of Greenfield projects on a pro rata basis. 20. Accordingly, the gross block and depreciation was restated and total impairment of Rs. 47.59 crores was shown in the fixed asset schedule on land in the financial statement. This resulted in the land transferred during the subject assessment year being shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with income tax return and computation of income as Enclosure 1 and copy of financial statements for financial year 2000-2001 relevant to assessment year 2001-02 along with income tax return and computation of income as Enclosure 2. 25. Furthermore, ld. AR for the assessee submitted that the Notes to the financial statement for F.Y. 1999-2000 (refer Note 10 @pg. 19 of the financial statements) clearly states that basis long term discounted cash flow, a business impairment was to be recognized. He submitted that in the financial statements, it is clearly mentioned that the valuation of the assets determined at the time of acquisition is correct. Accordingly, it is submitted that there was no fall in the value of the asset but only a business impairment was recognized in the books of accounts. Further, he submitted that since the Indian Accounting Standards did not prescribe for any method to recognize such impairment loss, the Company had allocated a portion of the impairment loss towards its fixed assets. He submitted that there was no fall in the market value of the assets per se. 26. It is further submitted that if the approach of the Revenue is accepted, it would lead to abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the rival submissions and material placed on record. We observed that assessee has sold some land for a total consideration of Rs. 68,83,50,000/- and claimed indexed cost of acquisition of original cost of the land at Rs. 20,69,46,071/- and determined the indexed cost of acquisition at Rs. 55,36,24,959/-/-. The Assessing Officer observed from the Balance Sheet and depreciation schedule that assessee has deducted/adjusted an amount of Rs. 10.84 crores from the gross block relating to the abovesaid sale of land. In support of that, assessee submitted that it acquired the said land from M/s Brindavan Beverages for FY 1998-99 as part of the Agreement to Transfer its undertaking in whole. The stamp duty value of land and building was recorded as Rs. 23.55 crores as per Conveyance Deed dated May 1998. The total value of land and building in the books of account is taken as Rs. 22.47 crores only. In FY 1999-00, the company had carried out a total review of its business and during the year prepared a long term discounted cash flow business model for valuation of its business and accordingly it carried out business impairment estimated at Rs. 1400 crores. Accordingly, it made adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for flooring RCC roof with beams, aluminium doors windows and false ceiling of perforated particle board. 5. Microlab, quality, assurance lab, production office with glazed tiles for walls upto 7 ft. Cuddappah tiles for floor RCC roof of 12 ft. 6. CO2 Room, LT panel room, workshop shipping office of RCC roof of ht.19 CC flooring. 7. Bottling washing area, packing area Tandoor and CC flooring, assessee company Sheet roof 18 ft. to bottom of Trussels. 8. Passage for conveyors, gen room, boiler room, with PCC flooring AC sheet roof. 9. Finished goods store, loading yard with CC flooring AC sheet roof of 20 ft. height over R.S. Joists. 10. Finished goods store with AC sheet roof of 20 ft steel ventilation with north tile glazing CC flooring and walls on all sides. 11. Storage tanks of RCC for treated and untreated water. 12. Overhead tank of plastic make 13. Overhead tank of RCC. 14. Empty bottle godown with AC sheet roof over RS joists at ht. of 19 ft. PCC flooring over a bed of CC of 1 mt. Ht. 2 side walls of hollow CC block. 15. Wooden crates stored shed with AC sheet roof Y brickwalls. 16. Security room (2 nos.) with RC roof and CC flooring. 17. Effluent treatment plant and termina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me time, depreciation schedule for the purpose of income-tax was also filed. But assessee has not filed or submitted before us, the depreciation schedule prepared for the purpose of income-tax. What is relevant in this case is the depreciation schedule prepared for the purpose of income-tax for the AYs 1999-00, 2000-01 2001-02. As per the Act, no depreciation is allowed for block of land. In our view, whatever business impairment loss, assessee has recorded in the fixed assets schedule prepared for the purpose of Companies Act has no relevance considering the fact that no depreciation is allowed for the freehold land. Considering the overall facts on record, the assessee has not brought on record after acquiring the assets from M/s. Brindavan Beverages, how the cost are allocated and for the purpose of registration, it has booked the value of Rs. 20,93,29,172/-, the combined value for land and building and when such slum sales are being recorded in the books of account the value has to be recorded on the basis of transfer value and if there is any difference between assets acquired and the liability, normally the difference would be charged to goodwill. Nothing has been brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse of Rs. 14,68,935 on account of penalty/ fine towards seizure of its truck (carrying finished goods) on account of wrong way bill under Bihar State VAT law. The appellant company has. not accepted the said demand and the matter is pending before Commissioner, Commercial Taxes, Bihar, Patna. The appellant has submitted that the aforesaid amount was claimed as a deduction as the appellant was of the view that these payments were compensatory in nature and relief will be granted in appeal and the amount was debited to P L A/c and reported in clause 21(a) of the Form 3CD. The submissions filed by the appellant company and the case laws cited have been considered. It is seen that the AO has disallowed the aforesaid expenses as the nature of the payments are penal and therefore, cannot be allowed as business expenditure. I find no reason to interfere with the AD's order on this issue. Appeal on this ground is dismissed. 32. Aggrieved, the assessee in appeal before us raising the ground no 4 of the appeal. At the time of hearing learned AR of the assessee submitted that the assessee incurred an expense of Rs. 14,68,935/- on account of penalty/fine towards seizure of its truck, carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6298/DEL/2018 FOR AY 2015-16) (ITA NO.6487/DEL/2019 FOR AY 2016-17) 36. Ground No.1 of AY 2014-15 is relating to the deletion of the addition of Rs. 2,71,115/- made by the Assessing Officer in respect of delayed payment of the Employees contribution to the Provident Fund, ESI and other welfare funds, not appreciating that the employees contribution to PF ESI is governed by the provisions of section 2(24) read with section 26(1)(va) and by section 43 B of the Act. 37. At the time of hearing, ld. DR for the Revenue submitted that the issue is squarely covered by the decision of Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT 143 taxmann.com 178 and accordingly, the ground may be allowed. 38. Ld. AR for the assessee did not object to this proposition. 39. Considered the rival submissions and material placed on record. We observed that this issue is now settled by the Hon ble Supreme Court in the case of Checkmate Service Pvt. Ltd. (supra). Accordingly, in our considered view, this issue is already settled in favour of the Department. Hence, this ground of Department s appeal is allowed. 40. With regard to Ground No.2 of AY 2014-15 and Ground No.1 of 2015-16 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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