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2016 (11) TMI 1389 - AT - Income TaxAddition u/s 41(1) - urplus arising on prepayment of deferred sales tax loan at NPV - Held that:- There is also no dispute to the assertions made by the learned representative for the assessee that the sales tax deferred scheme under the Package Scheme of 1983 and the Package Scheme of incentive, 1985 notified by Government of Maharashtra, which was considered in the case of Sulzer India Ltd. & Others (2014 (12) TMI 267 - BOMBAY HIGH COURT) is pari materia to the scheme availed by the assessee herein, as notified by the Government of Karnataka. Having regard to the aforesaid, we find that the judgment of the Hon'ble Bombay High Court in the case of Sulzer India Ltd. (supra), squarely covers the controversy before us, and the CIT(A) made no mistake in holding that the surplus arising on prepayment of deferred sales tax loan at NPV is a Capital receipt, which cannot be termed as remission or cessation of a trading liability so as to invite Section 41(1) of the Act. - Decided against revenue. Treating the interest received from Oil Coordination Committee - ‘business income’ OR ‘income from other sources’ - Held that:- It is clear that so far as the income relating to interest on bank deposits, interest from New Mangalore Port Trust, interest and discount charges received from customers, interest on contractors’ advances and interest on housing loans given to employees is concerned, it has been held to be taxable as ‘business incomes’. Our attention has also been drawn to the Statement of Facts filed before CIT(A), which also enumerates the detail of interest income which was considered by the Assessing Officer to be taxed as ‘income from other sources’. It is clear that neither in the details of such interest income and nor in the reliefs allowed by CIT(A) there is any reference to interest received from Oil Coordination Committee and, therefore, the plea of assessee that the aforesaid Ground of appeal raised by Revenue is misconceived is emerging from record.- Decided against revenue. Disallowance of payment made to MRPL Education Trust and MRPL Janaseva Trust - Held that:- No doubt, the two trusts have been set-up by the assessee-company, but the impugned payments are not for ‘setting-up’ or for ‘formation’ of or as ‘contribution’ to the trusts so as to fall within the mischief of Sec. 40A(9) of the Act. The phraseology of Sec. 40A(9) of the Act itself clearly suggests that only sums paid by the assessee as employer towards ‘setting-up’ or ‘formation’ of or as ‘contribution’ to any trust, fund, society, etc. is to be disallowed whereas the expenses in question are not of the nature covered by Sec. 40A(9) of the Act and are instead incurred by assessee wholly and exclusively for the welfare of its employees and same is deductible u/s 37(1) of the Act. At the time of hearing, the learned representative for the assessee had also relied upon the judgment of Bharat Petroleum Corporation Ltd, (2001 (3) TMI 20 - BOMBAY High Court ), which also clearly supports the proposition that such like expenses which are incurred not for ‘setting-up’ or for ‘formation’ of or as ‘contribution’ to any trust, etc. are not covered within the scope of Sec. 40A(9) of the Act. Therefore, under these circumstances, we hereby affirm the ultimate conclusion of CIT(A) in deleting the addition - Decided against revenue. Depreciation based on the opening WDV of assets, calculated without reducing the depreciation thrust upon the appellant in Assessment Year 2001-02 - Held that:- The order of Assessing Officer for Assessment Year 2001-02 wherein assessee was allowed depreciation inspite of the fact that it was not claimed in the return of income, has since been reversed by the CIT(A) and even the appeal of Revenue against such an order has been dismissed by the Tribunal for want of requisite permission from COD. It is sought to be emphasised that the order of the CIT(A) for Assessment Year 2001-02 on this point has since become final. The aforesaid factual matrix has not been disputed by the ld. DR and in this view of the matter, we find no reason to find fault with the directions of CIT(A) that the adjustment of WDV done by Assessing Officer in order to recalculate the depreciation is untenable. As a consequence, the order of CIT(A) on this aspect is upheld - Decided against revenue. Charging of interest u/s 234B & 234C - Held that:- As we have seen in the present case, during the relevant assessment year under consideration, the position regarding payment of MAT in advance was governed by the judgment in the case of Kwality Biscuits Ltd. (1999 (11) TMI 48 - KARNATAKA High Court) which ruled non-payment of MAT in advance and, thus interest for such a default was not chargeable. Under these circumstances, we hereby affirm the ultimate decision of CIT(A) in deleting the levy of interest u/s 234B & 234C of the Act, albeit on a different ground. Provision of Customs duty created by the assessee as on 31.3.2004 - whether is a liability which has arisen so as to fall within the expression “a deduction otherwise allowable under this Act” in Sec. 43B? - Held that:- It is reasonable to conclude that the liability represented by the Provision being Customs duty payable on import of raw material arises during the previous year relevant to the assessment year under consideration as assessee brought the requisite goods into India from a place outside India. Therefore, under these circumstances, CIT(A) erred in taking the view that Sec. 43B of the Act is not applicable in the case of assessee on an erroneous ground that the liability of Customs duty did not arise in the instant year. Stand of Revenue is misconceived because fulfilment of export obligations by the assessee reduces the Customs duty liability of the assessee. In fact, if no export of finished goods was made by the assessee as required, then assessee would have to pay the Customs duty in monetary terms. Obviously, the payment of duty in monetary terms would have facilitated deduction u/s 43B of the Act in the year of payment. The moot question is could the legislature have intended that an assessee who does not comply with the mandated export obligations would be able to avail the provisions of Sec. 43B of the Act, but not a performing assessee who complies with and discharges his obligation to make the mandated export? Be that as it may, in our view, the fulfilment of export obligations has resulted in reduction of a liability which is otherwise allowable under this Act and, therefore, in terms of the first proviso to Sec. 43B of the Act the amount of ₹ 40,41,81,896/- is deductible in the instant assessment year, and the stand of the Assessing Officer in this context is legally misplaced. - Decided in favour of assessee
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