2023 (6) TMI 665 - ITAT MUMBAI

Amount paid or written back - Amount already been disallowed in earlier years u/s 43B - HELD THAT:- As in assessee’s own case in Grasim Industries Ltd in [2022 (2) TMI 376 - ITAT MUMBAI] issue against assessee.

Disallowance of club membership fee - HELD THAT:- As decided in assessee own case [2022 (2) TMI 376 - ITAT MUMBAI] we find that he aforesaid issue raised in the assessment year is covered in favour of the assessee by the decision of the jurisdictional High Court in Otis Elevator CO. (India) Ltd [1991 (4) TMI 53 - BOMBAY HIGH COURT] Respectfully following the same, we dismiss the ground raised by the department.

Taxability of the interest received from the Income–tax Department - HELD THAT:- We find that the coordinate bench of the Tribunal [2022 (2) TMI 376 - ITAT MUMBAI], passed in assessee’s own case for the assessment year 2002–03 held as far as the taxability of interest amount is concerned, granted alongwith interest. However, if in the subsequent year refund of interest is withdrawn, then the same should be reduced from the total income of the assessee. Accordingly, we direct the A.O. to tax interest income in terms of the order of the tribunal for A.Y. 1993-94 as reproduced above, keeping in view our above observation

Reduction of interest income while calculating the deduction u/s 80HHC - HELD THAT:- As decided in ACG Associate Capsule Pvt. Ltd. [2012 (2) TMI 101 - SUPREME COURT] for computation of profit of business for the purpose of deduction under section 80HHC of the Act, only 90% of net interest or net rental income is to be reduced under clause (1) of Explanation (baa) to section 80HHC of the Act.

Reduction of rental income while calculating deduction u/s 80HHC - HELD THAT:- We find that the coordinate bench of the Tribunal [2022 (2) TMI 376 - ITAT MUMBAI], passed in assessee’s own case for the assessment year 2002–03 held net rent expenditure and net commission expenditure is required to be reduced from eligible profit rather than the gross rent and gross commission for the computation of deduction u/s 80HHC

Deduction u/s 80HHC - Reduction of miscellaneous receipts from the profit of business while calculating the deduction - HELD THAT:- As per ratio laid down by the Hon’ble Supreme Court in ACG Associated Capsules Pvt. Ltd [2012 (2) TMI 101 - SUPREME COURT] only the net amount can be added. As noted above, under the broad head "Miscellaneous Receipt" the assessee has received income of varied nature. Therefore, we deem it appropriate to remand this aspect also to the file of the AO for de novo adjudication after necessary examination. If upon examination it is found that the miscellaneous expenses incurred by the assessee are of a similar nature as business income earned, then relief be granted to the assessee in light of the decision in ACG Associated Capsules Pvt. Ltd. (supra).

Deduction u/s 80HHC - adjusting loss on the export of trade in goods against profit on export of manufactured goods, while calculating the deduction - HELD THAT:- As in own case in Grasim Industries Ltd. [2022 (2) TMI 376 - ITAT MUMBAI], for the assessment year 2002-03 dismissed similar ground filed by the assessee, inter-alia, in view of the decision of Hon’ble Supreme Court in IPCA Laboratories [2004 (3) TMI 9 - SUPREME COURT].

Allocation of head office expenditure and reducing the same from deduction u/s 80-O - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case in Grasim Industries Ltd [2022 (2) TMI 376 - ITAT MUMBAI], for the assessment year 2002-03, decided the similar issue in favour of the assessee as held there is no necessity for allocating the head office expenses to the units claiming deduction u/s. 8OHH, 801, 80M and 80-0. The order of the CIT(A) on this issue is accordingly set aside and the grounds raised by the assessee are allowed.

LTCL on sale of Equity shares - date of acquisition - HELD THAT:- The date of acquisition of debentures, i.e. 27/06/1997, be considered as the date of acquisition of the equity shares for the computation of long-term capital loss.

Additional depreciation claimed by the assessee u/s 32(1)(iia) - Claim denied as plant and machinery should be acquired and put to use in the relevant previous year - HELD THAT:- As relying on Pr. CIT v/s IDMC Ltd [2017 (2) TMI 644 - GUJARAT HIGH COURT] issue decided in favour of assessee.

Taxability of the dividend received from the Egyptian company - HELD THAT:- As we find no merits in the submissions of the learned DR that this issue be remanded to the AO to examine whether taxes have been paid in Egypt. Since as per the legal position, as it existed prior to the aforesaid amendment, the country of residence is completely precluded from taxing the said income, and therefore, accepting the prayer of the learned DR would result in a complete academic exercise. Thus, respectfully following the legal position as it existed during the year under consideration, which was taken due note by the coordinate bench in the aforesaid decision, we uphold the plea of the assessee that the dividend income received by the assessee from Egypt entity is to be excluded while computing the taxable income of the assessee in India. Accordingly, the additional ground filed by the assessee vide application dated 23/01/2013, is allowed

Disallowance on account of rural development expenditure - HELD THAT:- Issue to be decided in favour of assessee as expenditures incurred were for the purpose of business and claimed the same as allowable under section 37(1).

Disallowance made on account of exchange rate fluctuation loss - HELD THAT:- Hon‘ble Supreme Court in the case of Woodward Governor India Pvt. Ltd [2009 (4) TMI 4 - SUPREME COURT] has decided this issue in favour of the assessee. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A) deleting the disallowance made on account of exchange fluctuation loss on conversion of trading assets and liabilities on balance sheet date.”

Expenditure incurred for making advertisement films to be allowed as revenue expenditure - HELD THAT:- We find that the coordinate bench [2022 (2) TMI 376 - ITAT MUMBAI], passed in assessee’s own case for the assessment year 2002–03, while following the decision rendered in the preceding year, decided the similar issue in favour of the assessee.

Deduction claimed in respect of payments on account of Provident Fund (P.F) / Employees State Insurance Corporation Scheme (ESIC) made after the due date but within the grace period - HELD THAT:- As the assessee claims that the payment of P.F/ESIC has been made within the grace period and, therefore, is an allowable deduction. In view of the above, we deem it appropriate to restore this issue to the file of the jurisdictional AO to examine the payments of P.F/ESIC made during the period as provided in the relevant statute and to delete the disallowance to that extent

Disallowance of professional fees paid in connection with software development and implementation of ERP - HELD THAT:- As assessee’s own case for the assessment year 2002–03 [2022 (2) TMI 376 - ITAT MUMBAI] software expenditure was allowable as revenue expenditure.

Computation of deduction u/s 80HHC - HELD THAT:- This issue is no longer res integra and has been decided in favour of the assessee in CIT v/s Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] wherein held that excise duty and sales tax component cannot form part of the total turnover for computation of deduction under section 80HHC

Apportionment of Head Office expenses to the units eligible for deduction under section 80IA - HELD THAT:- We find that the coordinate bench, vide order [2022 (2) TMI 376 - ITAT MUMBAI], passed in assessee’s own case for the assessment year 2002–03, decided issue in favour of assessee.

Deduction u/s 80IA - profits from the rail system - HELD THAT:- Even though the agreement was entered on 10/04/2000, and the operations commenced in September 1999, it is pertinent to note that the parties to the agreement have honoured the said agreement, and the rights granted therein were not revoked for this reason and the said agreement was still valid in the year under consideration - we find no infirmity in the impugned order allowing deduction u/s 80-IA to the assessee in respect of profits from the rail system.

Deduction u/s 80IA in respect of Vikram Unit to be allowed as relying on own case for the assessment year 2002–03 [2022 (2) TMI 376 - ITAT MUMBAI].

Deduction u/s 80M - source of investment in shares and securities on which dividend was earned - allocation of any expenditure as expenditure relatable to the dividend income - HELD THAT:- As decided in own case A.Y. 1990–91, 1991–92, 1992–93 borrowed funds were utilized for making investments in securities on which dividend was earned and, therefore, the allocation of part of interest for earning dividend was unjustified. Assessee has filed before us a comparative chart for the source of investment in shares and securities on which dividend was earned The said chart is reproduced herein below. As is evident from the aforementioned chart, the assessee's own funds were much more than the value of investment on which dividend was received in all the three years. It is not disputed that there were no specific borrowings made for making investment in shares and securities - Decided in favour of the assessee.