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TMI Blog2025 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... y of proceedings. Disallowing after sales expenses etc. - Both the parties reiterate their respective stands against and in support of the impugned after sales expenditure disallowance claim as a provision which stands treated as a mere contingent liability by the learned lower authorities - HELD THAT:- We find merit in the assessee's arguments as CIT(A) has simply brushed aside it's impugned provision for after sales expenditure etc. by observing, "The ground taken by the appellant in its appeal memo settles the issue". Meaning thereby that the assessee's scientific computation herein has nowhere been specifically dealt with or rejected as the learned lower authorities have declined it's provision of the impugned expenditure raised for meeting future anticipated liabilities as per Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] Coupled with this, the assessee has already succeeded on the very issue before hon'ble jurisdiction high court hereinabove. We, thus see no substance in the Revenue's vehement contentions supporting the impugned disallowance, which stands deleted therefore. Disallowance u/s 14A related to exempt income - HELD THAT:- In absence of any other material t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 1056 - SUPREME COURT] to conclude that such an assessment itself is not sustainable in law. We order accordingly. Learned Assessing Officer's impugned assessment herein stands quashed.
Unexplained expenditure - Loose sheets of paper found in a premises not under the control of the appellant relied upon - HELD THAT:- We quote hon'ble jurisdictional high court decision in CIT v. Girish Choudhry [2007 (5) TMI 176 - DELHI HIGH COURT] that such a dumb document could not lead to an addition in assessment proceedings.
Addition of excess stock of bagasse - HELD THAT:- Assessee herein has already been held entitled for claiming section 80IA deduction. And also that the relevant item i.e. baggage herein is indeed 'derived' from the eligible business activity of producing power and, therefore, the same is also in the nature of "business income" only, which would fall u/s 80IA deduction. X X X X Extracts X X X X X X X X Extracts X X X X ..... receivable under the Policy was merely contingent receipt, not resulting in accrual of any amount in favour of the appellant. 1.2 That the CIT(A) erred on facts and in law in holding that since the Policy was withdrawn on 04.06.2007, the appellant was entitled to receive incentive till 03.06.2007 and therefore, the incentive/subsidy under the Policy could not be regarded as contingent. 1.3 That the CIT(A) erred on facts and in law in not appreciating that remission of statutory levies and reimbursement of specified expenses under the Policy (since revoked) was, in any case, in the nature of a capital receipt, not liable to tax under the provisions of Income-tax Act, 1961 ('the Act'). 2. That the CIT(A) erred on facts and in law in upholding disallowance to the extent of Rs. 5,13,50,000 out of Rs. 6,89,80,258, being expenses incurred on account of after sale and other expenses, holding the same to be merely provision and not accrued liability. 2.1 That the CIT(A) failed to appreciate that the aforesaid amount of Rs. 5,13,50,000 was in respect of ascertained contractual liability and not merely in the nature of a provision. 3. That the CIT(A) erred on facts and in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 4. It is in this factual backdrop that both parties are indeed ad-idem during the course of hearing that the first and foremost common issue raised in the instant appeal is that of correctness of the CIT(A)'s action partly reversing the Assessing Officer's finding rejecting the assessee's subsidy claim of Rs. 1,10,90,94,770/-; to the extent of Rs. 1,04,70,00,000/-; which leaves the taxpayer as well as the department aggrieved. 5. Learned counsel reiterates the assessee's stand all along that the above subsidy/ incentives receivable under the sugar industrial promotion policy, 2004 is in the nature of a capital receipt going by the "purpose test" in light of Sahney Steel and Press Works Ltd. & Others v. CIT (1997) 228 ITR 253 (SC); CIT v. Pony Sugar & Chemicals Ltd. (2008) 306 ITR 392 (SC); & CIT v. Chaphalkar Brothers (2018) 400 ITR 279 (SC). 6. Learned CIT(DR) on the other hand, strongly supports the assessment findings that the impugned subsidy in fact deserves to be treated as a revenue receipt on "accrual" basis and, therefore, we ought to revive the entire addition of Rs. 1,10,90,94,770/-. 7. Faced with this situation, learned counsel takes us to the assessment discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of assessment to Rs. 5,13,56,000/-, in the lower appellate discussion, reading as under: "14. The Id. A.O. disallowed an amount of Rs. 6,89,80,258/- treating the same as provision and not the liability having actually accrued. The appellant in its grounds at para 6.1 on page 14 of its paper book filed with appeal memo has admitted that out of the expenditure of Rs. 6.89 crores an amount of Rs. 5.1350 Crores only was provision and the balance of Rs. 1.7630 Crores was actual expense. The ground taken by the appellant in its appeal memo settles the dispute. The disallowance to the extent Rs. 5.1350 Crores is therefore confirmed being the provision and for which the liability has not yet arisen. The amount for Rs. 1.7630 Crores which admittedly represented actual expenses is allowed and addition to that extend is deleted. The appellant gets relief to the extent of Rs. 1.7630 Crores out of the disallowance of Rs. 6,89,80,258/-." 10. Both the parties reiterate their respective stands against and in support of the impugned after sales expenditure disallowance claim as a provision which stands treated as a mere contingent liability by the learned lower authorities. 11. It has come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof; coming to Rs. 1,09,126/- only leaving both the parties aggrieved against the same. 16. The assessee's case is that the impugned disallowance deserves to be deleted in entirety as against the Revenue's contention that we ought to revive the Assessing Officer's action invoking 14A read with Rule 8D of the Act. 17. We have given our due consideration to the foregoing vehement rival stands and see no merit in the learned Assessing Officer's computation invoking Rule 8D of the Income-tax Rules, which has been made applicable from A.Y. 2008-09 onwards in light of Godrej & Boyce Manufacturing Co. Ltd. v. DCIT 394 ITR 449 (SC). That being the case and in absence of any other material to the contrary, we make it clear that although the assessee has claimed not to have incurred any expenditure; but, the same cannot be accepted as at least some indirect expenditure in such an instance could not be altogether ruled out. Faced with this situation, we conclude that the learned CIT(A) has fairly estimated the impugned disallowance @ 5% of the assessee's exempt income (supra). The same stands upheld. Both these assessee's and Revenue's corresponding third substantive ground(s) herein stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips' elaborate discussion in para 4 has categorically concluded that jurisdiction of the appellate authorities under the provisions of the Act in entertaining such a new claim for the first time; even without a revised return, has not been impinged upon. We thus accept the assessee's instant 5th substantive ground in principle and direct the learned assessing authority to frame its consequential computation as per law subject to a rider that it shall be the tax payer's risk and responsibility only to plead and prove the corresponding claim u/s 10(34) of the Act within three effective opportunities. Ordered accordingly. 23. Learned counsel lastly submits that the assessee's sixth substantive ground seeks deduction of 1,91,524/- representing expenditure relatable to the relevant assessment year but debited in the P&L a/c of the succeeding assessment year i.e. in the nature of "prior period expenditure". Our attention is further invited to this tribunal's common order in it's appeal ITA 1955 to 1959/Del/2016 relevant to A.Y. 2001-02 to A.Y. 2005-06 pages 142 para 14, wherein the very claim of prior period expenditure was restored back to the CIT(A). And that the instant ground is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el/2016: 26. Both the learned representatives are indeed very fair during the course of hearing that this A.Y. 2008-09 also involves an "unabated" assessment as on the date of search i.e. 7.4.2010 wherein no additions based on any specific seized material has been made. We thus quash the impugned assessment itself in very terms. This assessee's appeal ITA 1964/Del/2016 is allowed and the Revenue's cross appeal ITA 2359/Del/2016 is dismissed. A. Y. 2009-10 - Assessee's appeal and Revenue's cross appeal - ITA 1965 and 2360/Del/2017: 27. Coming to the assessee's appeal ITA 1965/Del/2016 herein, we note that it's sole substantive ground seeks to claim deduction of expenses amounting to Rs. 6,52,803/-; which are found as "prior period" in nature. Both the learned representatives very much agree during the course of hearing that the same is indeed identical to that already dealt with in the preceding assessment year wherein we have accepted the same in principle. We thus adopt judicial consistency to accept the same in very terms. This assessee's appeal ITA 1965/Del/2016 succeeds therefore. 28. The Revenue's cross appeal herein ITA 2360/Del/2016 on the other hand raises following sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponding figures stated in the books of account. What is thus clear is that impugned addition is based on mere assumptions and presumptions and without even quoting market comparables which cannot be held to have been rightly made in the facts and circumstances of the case. Learned CIT(A)'s impugned lower appellate findings stand upheld therefore. Rejected accordingly. 31. The Revenue's second substantive ground raises the issue of capital subsidy which is admittedly identical to that raised in the first and foremost assessment year 2007-08 herein above. The same is hereby restored back to the learned Assessing Officer in very terms. This latter ground is accordingly accepted for statistical purposes and this cross appeal ITA 2360/Del/2016 is partly allowed for statistical purposes. A. Y. 2010-11:Assessee's and Revenue's cross appeals ITA 1966/Del/2016 and 2361/Del/2016. 32. We advert to the assessee's sole substantive ground canvassed in the instant main appeal ITA 1966/Del/2016 raising the issue of "prior period" expenditure disallowance amounting to Rs. 6,33,346/- which has already been accepted in principle in the preceding assessment years going by accrual method. We accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 78,66,269/- was unaccounted expenditure of the appellant cannot be sustained in the eyes of the law. The same is therefore deleted. The appellant gets relief to that extent." 35. The Revenue vehemently argues during the course of hearing that the learned CIT(A) has erred in law and on facts in deleting the impugned addition. The assessee's case on the other hand is that the same is indeed not based on any specific seized material from its custody during the course of search. Learned counsel has further referred to paper book for the relevant previous year (page 69) wherein the assessee's name even does not figure so as to attract the statutory presumption of correctness of the contents thereof u/s 292C of the act. 36. Faced with this situation, we quote hon'ble jurisdictional high court decision in CIT v. Girish Choudhry (2008) 296 ITR 619 (Delhi) that such a dumb document could not lead to an addition in assessment proceedings. Ordered accordingly. This Revenue's cross appeal ITA 2361/Del/2016 is partly allowed for statistical purposes in above terms. A.Y. 2011-12: Assessee's and Revenue's cross appeals 1967 & 2362/Del/2016. 37. This assessee's appeal ITA 1967/Del/2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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