Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (10) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 1209 - KARNATAKA HIGH COURTRevision u/s 263 by CIT - Deduction u/s 35D - assessee had wrongly claimed the deduction as it was not an industrial undertaking within the meaning of such expression as envisaged u/s 35D - HELD THAT:- Considering the fact that in respect of financial year 2006-07 relatable to assessment year 2007-08 the assessee had been granted the benefit of amortization under Section 35D[1] of the Act and no action under Section 147 or 263 of the Act had been taken in relation to the said assessment year. Thus, it has been held that once the claim has been granted by the assessing officer in respect of previous years, such claim cannot be disallowed subsequently without disturbing the decision in the initial year. In that context, it was held that the view adopted by the assessing officer is not a plausible view, it is now well settled that if two views are possible and the assessing officer has adopted one view, the same would not warrant exercise of the powers under Section 263 of the Act. No doubt, in the present case, it is not in dispute that during the first year relating to the assessment year 2007-08, Section 154 proceedings were initiated, subsequent to initiation of revisional proceedings under Section 263, the same would not pass the test of law as enunciated by the Hon'ble Apex Court in Shasun Chemicals and Drugs Ltd.[2016 (9) TMI 1199 - SUPREME COURT] since the same being post revision proceedings and has resulted in giving relief to the assessee on some other ground. Even in terms of Gujarat Narmada Valley Fertilizers Co. Ltd. [2013 (8) TMI 300 - GUJARAT HIGH COURT], the claim which has been granted by the Assessing Officer could not be disallowed subsequently, without disturbing the decision in the initial year. Post action of the Assessing Officer in modifying the original order would not cure the flaw pointed out in Shasun Chemicals and Drugs Ltd. [2016 (9) TMI 1199 - SUPREME COURT] - We answer this issue in favour of the assessee and against the Revenue. Whether share premium collected on the issue of Share Capital by the Appellant cannot be taken as part of the ‘Capital Employed’ for allowing deduction under Section 35D? - HELD THAT: This question of law has been considered by the Hon'ble Apex Court and answered in favour of the Revenue in Berger Paints India Ltd., V/s. Commissioner of Income-tax, Delhi-V, [2017 (3) TMI 1531 - SUPREME COURT] Accordingly, this substantial question of law is answered in favour of the Revenue and against the Assessee. Cost of acquisition of companies cannot be treated as asset for allowing deduction u/s 35D - assessee submitted that the acquisition of 100% subsidiary shares of the two companies has to be construed as cost of project - HELD THAT:- The assessee itself stated before the revisional authority under 263 proceedings with regard to computation of cost of project it had incurred, that expenditure towards issue of Global Depository Receipt and Foreign Currency Convertible Bonds was related to extension of industrial undertaking of the assessee; there being no definition of the word “extension” under the Act, the word “expansion” has to be considered as “extension”. Thus, going by meaning assigned to the word “extension”, quite apart from the horizontal expansion in the industrial undertaking, vertical expansion also stands included within the meaning of the term “extension” of the industrial undertaking. It was further stated that the assessee has incurred expenditure for the purpose of acquisition of Subex Americas Inc., and Subex UK Limited and the same was incurred for the purpose of expansion of the business. As aforementioned, there being vast difference between “expansion” and “extension”, the arguments of the learned counsel for the assessee, placing reliance on the consolidation procedures as per the Accounting Standard [AS-21], cannot be countenanced. - Decided in favour of revenue.
|