TMI Blog2022 (2) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... ice that assessee has charged the unrecovered portion to the profit and loss account and reduced the amount in the debtors balances, therefore the facts are exactly similar to the facts in the above case, accordingly, we allow the claim of the assessee. Disallowance of club membership fees - HELD THAT:- Aforesaid issue raised in the assessment year 1993-94 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. Interest received from the Income-tax Department - HELD THAT:- As in own case the Coordinate Bench of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] issue decided in favour of assessee. Deduction u/s. 80HHC as claimed, interest received cannot be reduced from business profits as interest paid is higher than interest received - HELD THAT:- We observe from the record that identical issue in own case the Coordinate Bench of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] decided in favour of the assessee as direct the A.O. to exclude the excess of interest income over interest ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] decide this issue in favour of the assessee. Disallowance of tax exempt dividend received - HELD THAT:- As in own case the Coordinate Bench of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] wherein the disallowance was restricted to 1.5% of the exempt income. As the facts and circumstances during the year under consideration are same, we direct the A.O. to restrict the disallowance to 1.5% of the exempt income Expenses towards family welfare activities, sewing centre, supply of seeds, teachers training, Agarbatti making, temple expenses, drama expenses, taxi hire for pulse polio, well dipping expenses, electrification of Gram Panchayat, distribution of material to children and rural sports, leprosy camp expenses, medical camps, balwadis, carpet weaving training, farmers training programme etc . - HELD THAT:- As in own case the Coordinate Bench of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] decided issue in favour of assessee. Exchange fluctuation loss - HELD THAT:- As in own case the Coordinate Bench of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] decided issue in favour of assessee. Capitalized in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such films do not add to the capital structure of the company. Expense incurred on implementation of software and ERP - HELD THAT:- We observe that this issue is dealt by the Hon'ble Jurisdictional High Court in the case Raychem RPG Ltd [ 2011 (7) TMI 953 - BOMBAY HIGH COURT] - thus we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of the assessee. Ground raised by the revenue are dismissed. We order accordingly. Excluding the excise duty and sales tax in the total turnover for computing the deduction u/s 80HHC - HELD THAT:- As decided in own case [ 2014 (10) TMI 994 - ITAT MUMBAI] no infirmity in the order of the ld. CIT(A) in directing the A.O. to exclude the amount of excise duty and sales tax from the total turnover of the assessee while computing deduction u/s 80HHC. Appropriated gross expenses of Head Office on an estimate basis and reduced the amount of eligible deduction u/s 80IA - HELD THAT:-As in own case the Coordinate Bench of the Tribunal [ 2014 (10) TMI 994 - ITAT MUMBAI] decided issue in favour of assessee. Deduction u/s 80IA in respect of profit of Vikram Power Unit allowed. Levy interest u/s 234D - HE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitlement is absolute or irretrievable. The CIT (A) ought to have held that interest allowed by the Department is not to be taxed till the matters are finally decided and the appellant is absolutely entitled to such interest. 5. Deduction under section 80 HHC 5.1. The CIT (A) erred in not directing the AO to allow deduction under section 80 HHC, as claimed by the appellant. 5.2 The CIT (A) ought to have held that no amount of interest received is to be reduced from profit of the business for the purpose of calculating deduction u/s. 80 HHC. 5.3 Without prejudice to the above, the CIT (A) failed to appreciate that interest paid during the previous year amounting to ₹ 190,25,43,479/- was higher than the amount of interest received amounting to ₹ 54,65,73,130/- resulting in net interest paid and therefore amount of interest received during the previous year cannot be reduced from the profit of the business. 5.4 The CIT(A) ought to have held that rent ₹ 1,03,98,185/should not be reduced from the profit of the business, while calculating allowable deduction under section 80HHC. 5.5 The CIT(A) erred in not following the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : - 1. The learned CIT (A) ought to have held that the sum of ₹ 3,25,44,527/- being royalty was an allowable deduction when computing the assessee s income chargeable to tax and could not be disallowed by applying section 43B of the Act. 5. At the outset, with regard to Ground No. 1 which is in respect of Alternate claim to allow deduction u/s. 43B clause (C), (d) and (e) and Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal and decided the issue in favour of the assesse and against the department, the ITAT has dismissed the plea of the assesse as otiose in the earlier year, therefore it becomes infructuous. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 6. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - 2. Rival contentions have been heard and perused the record. The assessee is engaged in manufacturing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice that the issue in appeal has been considered by the various courts in the following cases and decided in favour of the assessee viz., Vijaya Bank [323 ITR 166 (SC)], TRF Ltd [323 ITR 397 (SC)], Arrow Coated Products Ltd [136 ITD 315 (Mum)], Jwala Prsad Tiwari [24 ITR 537 (Bom)] and Vithaldas Dhanji Bhai [130 ITR 95 (Guj)] and requested the same be adopted in the case of assessee also. Ld.DR has relied on the orders of the lower authorities. 8.1 Further, Ld AR submitted that in the instant case the assessee declared all details of debtors and bad debts claimed in the Profit and Loss Account, he brought to our notice the details, which he has filed in the paper book: - Schedule 9 ₹. In Crores Previous year Sundry Debtors Exceeding Six Months 0.42 1.03 Good and secured 58.01 88.27 Good and unsecured 1.70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer because the Assessing Officer apprehended that the assessee-Bank might be taking the benefit of deduction under Section 36(1)(vii) of 1961 Act, twice over. [See Order of CIT (A) at Pages 66, 67 and 72 of the Paper Book, which refers to the apprehensions of the Assessing Officer]. In this context, it may be noted that there is no finding of the Assessing Officer that the assessee had unauthorisedly claimed the benefit of deduction under Section 36(1)(vii), twice over. The Order of the Assessing Officer is based on an apprehension that, if the assessee fails to close each and every individual account of it's debtor, it may result in assessee claiming deduction twice over. In this case, we are concerned with the interpretation of Section 36(1)(vii) of 1961 Act. We cannot decide the matter on the basis of apprehensions/desirability. It is always open to the Assessing Officer to call for details of individual debtor's account if the Assessing Officer has reasonable grounds to believe that assessee has claimed deduction, twice over. In fact, that exercise has been undertaken in subsequent years. There is also a flip- side to the argument of the Department. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is recovered. In the circumstances, we are of the view that the Assessing Officer is sufficiently empowered to tax such subsequent repayments under Section 41(4) of 1961 Act and, consequently, there is no merit in the contention that, if the assessee succeeds, then it would result in escapement of income from assessment. 10. Respectfully following the said decision, we notice that assesse has charged the unrecovered portion to the profit and loss account and reduced the amount in the debtors balances, therefore the facts are exactly similar to the facts in the above case, accordingly, we allow the claim of the assessee. We order accordingly. 11. With regard to Ground No. 3 which is in respect of disallowance of club membership fees, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in ITA No 2944/M/1997. Ld. DR has fairly accepted the submissions of the Ld.AR. 12. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1993-94. While deciding the issue in favour of the assessee the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to reduce from the taxability of the aforesaid interest granted to the assessee, the amount which has been withdrawn subsequently. We direct accordingly. 8. It was argued by the ld. A.R. that benefit of interest so allowed by the department was subsequently withdrawn as a result of the appellate orders should be given to the assessee and the interest subsequently withdrawn should not be taxed and for this, reliance was placed on the decision of the Tribunal in the case of Avada Trading Co. (P.) Ltd. vs. ACIT (2006) 100 ITD 131. 9. We have considered the rival contentions. As far as the taxability of interest amounting to ₹ 13,64,09,609/- is concerned, the same is assessable in the year in which the refund has been 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 16. Respectfully following the above decision and following the principle of consistency, the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... psules reported in 67 DTR (SC) 205, the Explanation to section 80 HHC to be applied on net interest and not on gross interest. Accordingly, we direct the AO to apply clause (baa) in respect of interest receipt by following the decision of honourable Supreme Court (supra). We accordingly direct the A.O. to exclude the excess of interest income over interest expenditure from the eligible profit of the company while computing deduction u/s 80HHC of the Act. 19. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02 is respectfully followed, we order accordingly. 20. With regard to Ground No. 5.4 5.5 which are in respect of rent should not be reduced from the profits of business for computing deduction u/s.80HHC, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal. Ld.DR has fairly accepted the submissions of the Ld.AR. 21. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y.2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - 25. The assessee has taken additional ground with regard to appropriation of HO expenses in computing deduction u/s 80-O of the Act amounting to ₹ 3,18,000/-. 26. The issue has been decided in favour of the assessee by the Tribunal for the assessment years 1996-97, 1997-98, 1994-95 1995-96. It was further brought to our notice that no appeal has been filed by the Department against the decision of the Tribunal for allowing appropriation of HO expenses in computing deduction u/s 80-O of the Act. 27. For the assessment year 1996-97 and 1997-98, this Tribunal has considered and decided an identical issue in para 15.2 to 15.4 as under. 15.2 We have heard the Sr ld Counsel for the assessee as well as the ld DR and considered the relevant material on record. A similar issue has been considered and decided by the Tribunal in assessee s own case for the AY 1995-96 in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed. 29.2 Respectfully following the aforesaid decision of the Tribunal, these grounds, namely 27 to 30 A, are allowed . Respectfully following the earlier order of the Tribunal, we decide this issue in favour of the assessee. 28. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02 is respectfully followed, we order accordingly. 29. With regard to Ground No. 6.3 which is in respect of HO expenses can only be certain percentage of the gross receipts eligible for deduction u/s.80-O and not of the total turnover of the division, Ld. AR of the assesse submitted that this is an alternate plea, since we already allowed the issue raised by the assesse in ground nos 6.1 and 6.2, this becomes infructuous, accordingly not dealt with and kept open. 30. With regard to Ground No. 7 which is in respect of deduction u/s. 80-IA on gain arising on sale of machinery, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the following judicial pronouncements and decided in favour of the assessee CIT v. Eltek Sgs (P) Ltd., [300 ITR 6 (Del. HC) CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) and the decision seems to suggest, as we have held above, that the expression 'derived from an industrial undertaking' is a step removed from the business of the industrial undertaking. 5. Having regard to the aforesaid judgments we are not inclined to entertain the above appeals, as there is no substantial question of law involved in both the appeals. In the result, both the appeals stand dismissed. 33. Since the issue is similar, respectfully following the above ratio we are inclined to allow the ground raised by the assesse. 34. Coming to additional grounds, Ld. AR submitted that additional grounds raised by the assessee are purely legal issues, the facts there off were already on record. Failure to raise these grounds originally was neither deliberate or contumacious. It is submitted that since these additional grounds were purely legal issues, placing reliance on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd v. CIT [229 ITR 383] the same may be admitted for adjudication. 35. On hearing both sides, we are of the view that the issues are only legal issues and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this ITAT. Ld. DR has fairly accepted the submissions of the Ld.AR. 40. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y.2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - The next grievance relates to the disallowance of royalty and interest on royalty u/s 43B of the Act treating it as tax. The issue is now settled by various orders of the Tribunal in assessee s own case for assessment years 1995-96 to 2000-01. A similar issue was considered by the Tribunal in the assessee s own case in A.Y. 1999-2000 in ITA No. 5631/M/2002, wherein we find that the Tribunal has followed its earlier order in the assessee s own case in ITA No. 5630/Mum/02 for A.Y. 1998-99. In the absence of any contradictory facts brought on record by the Revenue, following the aforementioned decision, we decide this issue in favour of the assessee. Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 2000-01 2001-02 which have been contested by the department in further appeal before the ITAT. 6. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of ₹ 2,88,46,944/- being interest expenditure claimed u/s.36(1)(iii) relying upon the orders of the CIT(A) in the assessee s own case for the AYrs. 1995-96 to 2001-02 which have been contested by the department in further appeal before the ITAT. 7. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of deduction of ₹ 9,15,068/- on account of debenture issue expenses relying upon the CIT(A) s orders in the assessee s own case for the AY ₹ 1998-99, 2000-01 2001-02 which have been contested by the department in further appeal before the ITAT. 8. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the deduction in respect of payments on account of PF/ESIC made after the due date but within the grace period without appreciating that the department has not accepted the decision of the Bombay High Court on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business in a more beneficial manner and to get rid of a disadvantageous commercial relationship resulting from a large work force with low productivity without appreciating that the Andhra Pradesh High Court has, in the case of Vazir Sultan Tobacco Co. Ltd. (174 ITR 689), observed that where the object of incurring an expenditure is to effect a capital restructure as a result of which certain incidental advantage flows, the expenditure will be of capital nature . 12. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of ₹ 2,03,13,851/-, being expenses incurred for making advertisement film, relying upon the order of the CIT(A) in the assessee s own case for the AYr. 2001-02 which has been contested by the department in further appeal before the ITAT. 13. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of professional fees of ₹ 91,85,500/- paid in connection with software development and implementation of ERP accepting the assessee's contention that in the field of computer software new devices and user friendly concepts are int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2.2004, the Assessing Officer cannot legally charge interest from 23.5.2003 to 16.2.200. as on 16.2.2004 there was no existence of any refund and on 23.5.2003 (date of issue of refund section 234D was not in the statute and the same has been inserted w.e.f. 1.6.2003 ignoring the basic condition under the provision that once a regular assessment is completed on or after 1.6.2003, the provisions of section 234D become operative and interest becomes chargeable from the date of grant of refund u/s. 143(1) to the date of such regular assessment. 19. The appellant prays that the order of CIT(A) on the above grounds be set aside and that the Assessing Officer be restored. 20. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 43. At the time of hearing, Ld. AR submitted that all the grounds except ground Nos. 9 to 11 are covered and adjudicated by various courts and supported by the ITAT orders in assessee s own cases in earlier assessment years. Ld. AR submitted the principal of consistence may be adopted for this assessment year also. 44. On the other hand, Ld. DR not controverted with the submissions of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - 31. Ground No. 1 in Revenue s appeal relates to the disallowance u/s 43B of the Act which has been dealt with by the A.O. at para No. 9-9.5 of his order. The ld. CIT(A) dealt with this issue at page No. 2, para 5 of his order and deleted the disallowance by following the order of the Tribunal in earlier years. From the record, we found that the Tribunal has been consistently allowed the issue in favour of the assessee in assessment years 1990-91, 1993-94, 1994-95, 1996-97, 1997-98 1998-99. We further found that against the order of the Tribunal, the Department has not filed any appeal before the Hon ble High Court in assessment years 1996-97, 1997-98, 1995- 96 1994-95. As the matter has been settled and the ld. CIT(A) deleted the disallowance by following the order of the Tribunal, we do not find any reason to interfere with the order of the Ld. CIT(A) deleting the disallowance made by the A.O. u/s 43-B of the Act. 49. Respectfully following the above decision, we sustain the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The order of the Tribunal for 2000-01 was not challenged by the Department before the Hon ble High Court on this issue. Respectfully following the order of the Tribunal and Hon ble High Court in assessee s own case, we do not find any reason to interfere with the order of the ld. CIT(A). 53. Respectfully following the above decision, we sustain the order passed by the Ld.CIT(A) and dismiss the Ground No. 2 raised by the revenue. We order accordingly. 54. With regard to Ground No. 3, the brief facts are, during the relevant previous year, the Assessee received tax exempt dividend of ₹.9,58,17,268/-The investment in shares/securities, on which tax exempt dividend was received during the previous year, were made out of internal accruals and own funds. The Assessee always had sufficient capital and free reserves (non-interest bearing funds) for making investments, as under: Amount As on 31.03.2001 As on 31.03.2002 Share Capital 91.69 91.69 Reserve Surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 raised by the revenue. 58. With regard to Ground No. 4, the brief facts are, during the financial year 2001-02, the Assessee has incurred expenses of ₹.71,31,011/- towards family welfare activities, sewing centre, supply of seeds, teachers training, Agarbatti making, temple expenses, drama expenses, taxi hire for pulse polio, well dipping expenses, electrification of Gram Panchayat, distribution of material to children and rural sports, leprosy camp expenses, medical camps, balwadis, carpet weaving training, farmers training programme etc. The beneficiaries of these expenses include employees and their dependents, ex-employees and their dependents, people residing nearby plant area and other people directly and indirectly connected with the business. Such expenses help to carry out the business smoothly and secure benefit to the business. Details of such expenses was filed before the AO. During the assessment proceedings, Assessing Officer has disallowed these expenses of ₹.71,31,011/- following his own order for the A.Y.2001-02. Detailed discussion in the regard is in para 11 on page 8 of the assessment order. On appeal the Ld.CIT(A) deleted the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer has disallowed exchange fluctuation loss of ₹ 2,19,82,299/- relying on his own order for the AY 1998-99. Discussion in this regard is in para 13 on page no. 8 and 9 of the assessment order. On appeal Ld.CIT(A) deleted the disallowance made by the Assessing Officer following his order in the Assessee's own case for the AY 1998-99. The CIT(A) has discussed this issue in para 6.1 to 6.4 on page 4 of the order. Revenue preferred appeal against this order of the Ld.CIT(A). 64. Before us, the Ld. AR of the assessee brought to our notice that the Co-ordinate Bench of this tribunal has allowed the above issue in favour of the assessee. Ld. DR has fairly accepted the submissions of the Ld.AR. 65. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA. No. 4083/Mum/2003 dated 22.10.2014 held as under: - 39. Ground No. 7 pertains to exchange rate fluctuation loss on conversion of trading assets and liabilities amounting to ₹ 2,00,03,443/-. The A.O. has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to our notice that the Co-ordinate Bench of this tribunal has allowed the above issue in favour of the assessee. Ld. DR has fairly accepted the submissions of the Ld.AR. 69. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - 40. Ground No. 8 pertains to deleting of interest u/s 36(1)(iii) of the Act. The issue has been dealt with by the A.O. at page 10-11, para 18 of his order and the ld. CIT(A) deleted the same after having observed at page 5, para 13 of his order. From the record we found that the issue has been decided by the Tribunal consistently in favour of the assessee in assessment years 1993-94, 1994-95, 1996-97 to 1998-99 2000-01. We found that on this ground the Department is not in appeal before the Hon ble High Court on this ground in assessment years 1996-97 to 1998-99. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee. Ld. DR has fairly accepted the submissions of the Ld.AR. 74. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - 35. Ground No. 4 of Revenue s appeal relates to the debenture issue expenses by the assessee. The issue has been dealt with by the A.O. at page 10-11, para 18 of his order and the ld. CIT(A) has dealt with this issue at page 3-4, para 9 of his order and deleted the disallowance made in respect of debenture issue expenses. We found that the issue has been consistently . decided in favour of the Tribunal in assessee s own case in assessment years 1986-87 to 1989-90, 1998-99, 1999-00 2000-01. Respectfully following the order of the Tribunal in assessee s own case, we do not find any infirmity in the order of the ld. CIT(A) deleting the debenture issue expenses. 75. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the risk of serious penal consequences, as envisaged in sections 43B, 2(24)(x) read with the provisions of section 36(1)(va) which no prudent person would like to do, have got force. We, therefore, are of the opinion that in the light of our decision for liberal interpretation of the provisions of the relevant sections, as observed earlier, by following the decision of the Hon'ble Supreme Court, the delay in depositing the amounts in question being under a bona fide belief and for want of funds can be said to be due to reasonable cause and, therefore, there was no justification in disallowing the assessee's claim for payments of contributions towards, EPF, EFPF, Administrative Charges, Insurance Fund and ESIS by invoking the provisions of section 43B and in making addition of contribution on account of employee's contribution towards EPF, EFPF by treating the same as assessee's deemed income under section 2(24)(x) because the same should have been allowed as a deduction under section 36(1)(va) of the Act. 18. Before parting with the matter, we would like to record that a similar view has been taken by the Tribunal, Madras Bench, in the case of Madras Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other products were wiped off due to losses in fabric manufacturing. The overall profitability of the Company was affected and outlook of the fabric sector was very weak. In order to reduce the salary and wages bill of the Units, the Assessee declared voluntary retirement scheme for the employees of the Textile Division at Gwalior in August 2000 and also in March 2001. Response to the voluntary retirement scheme was very poor and far below the desired level. In the financial year 2001-02 only 81 workers opted for voluntary retirement and none of the staff member opted for voluntary retirement. The Assessee undertook extensive evaluation of its operations of fabric business and decided to restructure the operations and manufacture to gain economies of scale and operations. The Assessee accordingly sold certain assets of the manufacturing facility located at Gwalior to two unrelated companies: (a) M/s Takshila Textiles Private Limited, 79 Mittal Chambers, Nariman Point, Mumbai (b) M/s Harshit Textile Private Limited, Swastik Chambers, Gandhi Nagar, Bhilwara 82. It was submitted before us that transaction for sale of the assets was approved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee with respect to the sale of the assets and has only disputed the allowability of the claim of ₹ 15 crores as deduction in computing the business income of the Assessee. Discussion in this regard is in para 18 on page 11 to 15 of the assessment order. The AO disallowed the claim of the Assessee on the grounds as under: (a) Payment of ₹ 15 crores is not made for earning an income assessable during the year and is therefore not an allowable expenditure. (b) Payment is for acquiring advantage of enduring benefit and therefore not allowable as revenue expenditure u/s 37(1). (c) No payment is made in the year under consideration therefore the same is also not an allowable expenditure. 86. On appeal Ld.CIT(A) deleted the disallowance made by the AO and allowed deduction for ₹ 15 crore holding as under: 1. The AO has not disputed that the financial position of the textile unit at Gwalior in the last three years were in bad shape as well as the projected position in the subsequent three years was also likely to be bad. 2. It is established that the Company is already incurring huge losses and is bound to incur heavy regular loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by the Ld.CIT(A) by following various judicial pronouncements and held that the expenses incurred of ₹.15 Crores is to be allowed as revenue expenditure, while holding so the Ld.CIT(A) held as under: - 11.2 In the appellant's case the liabilities for payment of ₹ 15 crores arose during this assessment year and therefore the claim during the current assessment year is held to be correctly made by the appellant. 11.22 Now the facts of the case shows that in order to get rid of Surmounting losses year after year which were definitely revenue in nature, and any payments made will also normally be revenue in nature. Moreover, the case laws quoted in the earlier paragraphs will further support this case. 11.23. It was also the fact that the appellant was already running the Same fabric business in both the units i.e. Bhiwani and Gwalior, and therefore the losses of the overall business were to a great extent set off or reduced, by the disposal of the huge liabilities of revenue nature incurring year after year. Therefore, the appellants claim of such payment u/s. 37(1) of the I.T. Act appears to be on a strong footing. 11.24 Moreover, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocable power of attorney, etc. The rights reserved were only towards securing to the lenders payments of money agreed to be paid by the company under the agreements. The main intent and purpose of the agreements was to make available to the company finances to enable it to carry on its business. The provisions in the agreement, did not relate to the whole structure of the assessee s profit making apparatus and did not regulate the assessee s activities. Under the agreements, the company hag the heavy liability to pay interest at 6 per cent. on the entire amount of ₹ 19 lakhs whether any finance was borrowed by it or not, commission was to be paid in respect of all goods of import irrespective of the company having borrowed any finance under the agreements and the commission was payable even after the period of ten years so long as the company continued business. These were disadvantages of a trading nature which made it impossible for the company to make any profits. The agreement to pay damages in the sum of ₹ 3 lakhs was, therefore, an expenditure to be made for terminating the disadvantageous relationship between the parties and to remove difficulties in the smooth c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard is in para 22 on page 19 to 21 of the assessment order. On appeal the Ld.CIT(A) deleted the disallowance after discussing the detailed submissions made by the Assessee and held that the decision of the Bombay High Court in the case of CIT Vs Patel International Film Ltd. (Supra) is not applicable to the facts of the present case. In Patel International films case the business of the assessee had not started whereas in the present case the Assessee is already having running business. The CIT(A) has also followed his own decision for the AY 2001-02. The Hon'ble Mumbai ITAT in the Assessee's own case for AY 1976-77 deleted the disallowance made by the AO towards expenditure incurred for installation for neon signs. The CIT(A) has discussed this ground in para 15.1 to 15.7 on page 17 18 of the order. Revenue preferred against this order of the Ld.CIT(A). 93. Before us, the Ld. AR of the assessee brought to our notice that the Co-ordinate Bench of this tribunal has allowed the above issue in favour of the assessee. Ld. DR has fairly accepted the submissions of the Ld.AR. 94. Considered the submissions and material placed on record, we observe from the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass Ltd. [TS-640-HC-2011 (Delhi HC)], Amway India Enterprises [346 ITR 341 (Delhi HC)], DCIT v. Lubi Electricals O. Ltd. (ITA No. 1163/Ahd/92), Amway India Enterprises [111 ITD 112 (Delhi SB)], Empire jute Co. Ltd [124 ITR 1 (SC)], Media Video Ltd [122 Taxman 28 (Delhi ITAT)] and Forbes Campbell Co. Ltd in ITA No. 8489/Bom/88 (Mumbai ITAT) and requested the same be adopted in the case of assessee also. 98. Ld. DR vehemently supported the order of the Assessing Officer. 99. Considered the submissions and material placed on record, we observe that this issue is dealt by the Hon'ble Jurisdictional High Court in the case Raychem RPG Ltd. [346 ITR 138 (Bom. HC)] and held as under: - 1. Two questions of law raised by the Revenue in this appeal, which reads thus: (a) Whether on the facts and circumstance of the case and in law, the Hon'ble ITAT was justified in deleting the additions in respect of disallowance of software expenditure to the extent of ₹ 23,62,368/- as capital expenditure as software used for the first time will have to be considered as capital in nature? (b) Whether on the facts and circumstances of the case and in law, the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, the Assessee claimed deduction u/s 80HHC of ₹ 14,29,360/-. The AO allowed deduction to the extent of ₹ 11,99,358/- only by restricting the deductions on the following grounds: a. Total turnover to be considered inclusive of sales tax and excise duty. b. Reduced 90% of interest income ignoring interest expenditure. 102. Assessing Officer made detailed discussion in this regard in para 27 on page 24 to 28 of the assessment order. 103. On appeal Ld.CIT(A) as regards excluding the excise duty and sales tax in the total turnover for computing the deduction s 80HHC, the CIT(A) allowed the contentions of the Assessee and directed the AO to exclude excise duty and sales tax from the total turnover for computing the deduction u/s. 8OHHC. The CIT(A) has discussed this issue in para 19A.1 to 19A.3 on page 20 of the Order. As regards reduction of 90% of interest income the CIT(A) has discussed this issue in Para 19B.1 to 19B.6 on page 20 21 of the order. The CIT(A) has dismissed both these claims of the assessee and upheld the order AO on this issue. Revenue is in appeal against this order of the Ld.CIT(A). 104. Before us, the Ld. AR of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur notice that the Co-ordinate Bench of this tribunal has allowed the above issue in favour of the assessee. Ld. DR has fairly accepted the submissions of the Ld.AR. 109. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - 54. The issue in ground No. 18 pertains to the apportionment of head Office expenses while computing deduction u/s 80IA of the Act. 55. This issue has been dealt with by the ld. CIT(A) vide his order in page 15-16, para 23.5 23.6. We found that the issue has been decided by the Tribunal in assessee s own case in its favour in assessment years 1994-95 to 1998-99 and the Department is not in appeal against the order of the Tribunal. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the order of ld. CIT(A) on this issue.. 110. Respectfully following the above decision, we do not find any reason to interfere with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in assessment years 1998-99 to 2000-01. Furthermore, the Department is not in appeal against the Tribunal order on this issue before the Hon ble High Court for A.Y. 1998-99. Respectfully following the order of the Tribunal, we do not find any infirmity in the order of the ld. CIT(A) for allowing deduction u/s 80IA of the Act in respect of Vikram Unit amounting to ₹ 3,58,74,158/-. 114. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly. 115. With regard to Ground No. 18, the brief facts are, provisions of section 234D were introduced from 01.6.2003 for levy of interest on refund issued in summary assessment. In this case, intimation of summary assessment u/s 143(1) for AY 02-03 was issued by the AO on 28.02.2003 granting refund to the Assessee. Regular assessment order was passed on 16.02.2004 and demand of ₹ 7.27 Cr was raised. The Assessing Officer levied interest u/s 234D of ₹ 40.06 lac. On appeal Ld.CIT(A) deleted the levy of interest. The CIT (A) discussed this issue in para 23B.1 to 23B.4 on page 24 of the order. Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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