TMI Blog2011 (6) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(A)-V, Chennai in ITA No. 57/2006-07 dated 30-06-2010 for the assessment year 2003-04. The Revenue has raised the following grounds : 1. The order of the learned CIT(A) is contrary to law and facts of the case. 2.1 The learned CIT(A) has erred in deleting the addition of bad debts of ₹ 868 crores following the orders of the ITAT in ITA No. 973/Mds/2006 and ITA No.2117/Mds/2008 for A.Ys 2002-03 and 2004-05 in assessee s case. 2.2 It is submitted that the decision of the ITAT relied upon by the CIT(A) in the has not become final and appeal to High Court has been filed by the department. 3.1 The learned CIT(A) has erred in deleting the disallowance of ₹ 10.20 crores being interest on security deposit, commission and gift paid to closely associated companies. 3.2 The learned CIT(A) failed to appreciate that payment of commission of group companies is not for commercial expediency the group companies never offer any security like other subscribers, the group companies pay subscription from prized amounts and assessee and other companies have common directors. 4.1 The learned CIT(A) has erred in deleting the disallowance of Bid loss of ₹ 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 and 4.2 the Revenue has challenged the action of the learned CIT(A) in deleting the disallowance of bid loss of ₹ 8.89 crores. At the time of hearing it was fairly agreed by both sides that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of M/s. Bilahari Investment P. Ltd. (299 ITR 1). In the circumstances, respectfully following the decision of the Hon'ble Supreme Court in the case of M/s. Bilahari Investment P. Ltd., the finding of this learned CIT(A) on this issue stands confirmed. It is also noticed that the learned CIT(A) has followed the decision of the Hon'ble Supreme Court in the case of M/s. Bilahari Investment P. Ltd., referred to supra. 7. In grounds 5.1 5.2 the Revenue has challenged the action of the learned CIT(A) in deleting the disallowance of royalty. At the time of hearing it was fairly agreed by both the sides that the issues is squarely covered by the decision of the co-ordinate Bench of this Tribunal in the cases of M/s. Shriram Transport Finance Co. Ltd. and M/s. Shriram City Union Finance Co. Ltd. in ITA Nos. 725 726/Mds/2010 dated 16-12-2010 wherein the Tribunal had held that the payment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategorically shown that the amounts had not been given out of the over draft taken by the assessee. In fact, the over draft account is to an extent of ₹ 2.27 crores as on 1.4.2003 and the closing balance as on 31.3.2004 was only ₹ .22,97,207/-. In fact the learned CIT(A) for the assessment year 2004-05 has also categorically found that the reserves and surplus as on 31.3.2004 itself was nearly ₹ 25 crores and for 31.3.2003 it was ₹ 18.5 crores. It is further noticed that the over draft account as on 31.3.2003 was only ₹ . 2.27 crores. It is further notices that the dues from the sister concerns are not fully dues which had arisen during the relevant assessment year. It is also undisputed that there is a continuous business connection between the assessee and the sister concerns. The claim of the assessee that it was exiting the chit business has also not been disputed. In the circumstances, we are of the view that as no interest-bearing funds have been diverted for non-business purposes or as advance to sister concerns during the relevant assessment year, the interest on the over draft account is not disallowable. In the circumstances the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount as bad debts or business loss. 2.8 Having regard to the decision of the Hon'ble High Court of Madras in the case of Tuticorin Spinning Mills (261 ITR 291), the CIT(A) should have held that the business expenditure u/s 37 (if the assessee s claim is under section 37 and to be allowed accordingly) could be claimed only in relation to the year in which it pertained to. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored. 13. Grounds No. 21 to 2.8 are against the action of the learned CIT(A) in directing the Assessing Officer to delete the disallowance of brokerage earned which was written off as a bad debt. It was submitted by the learned DR that the assessee had not shown the brokerage as income. It was the further submission that in the assessment order age page 3, para 6, the Assessing Officer had categorically held that no evidence had been produced to support that the assessee had taken legal action. It was the submission that that before the Assessing Officer the claim of the assessee was that the amount was expenditure incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Shriram Capital Trust P. Ltd. In the Revenue s appeal, the Revenue has raised the following grounds : 1. The order of the learned CIT(A) is contrary to law and facts of the case. 2.1 The learned CIT(A) has erred in directing the AO to delete the addition of ₹ 2,66,84,763 being minimum guarantee charges to assisting companies relying on his own orders in the case of M/s. Shriram Properties and Construction for A.Y 2003-04 in ITA No. 99/2006-07 and Hon'ble ITAT s orders in the case of M/s. Rambal Properties P. Ltd. ion ITA Nos. 1240/Ms/2005 for A.YT 200-01 and 2003-04. 2.2 It is submitted that the decision of the CIT(A) relied upon by the CIT(A) in the has not become final and appeal to this Hon'ble Tribunal has been filed by the department. 2.3 It is submitted that the decision of the Hon'ble Tribunal relied upon by the CIT(A) in the has not become final and appeal before the Hon'ble High Court has been filed by the department. 3.1 The learned CIT(A) has erred in directing the A.O to delete the entire amount of disallowance of administration and other expenses interest finance charges and depreciation of ₹ 26,63,531. 3.2 The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the sister concern of the assessee M/s. Rambal Properties Pvt. Ltd. in ITA No. 1240.Mds.2005 dated 28-022007 confirmed the finding of the learned CIT(A) in deleting the addition. In the circumstances, respectfully following the decision of the co-ordinate Bench of this Tribunal in the assessee s own case for the assessment year 2002-03, the finding of the learned CIT(A) stands confirmed. 19. In grounds 3.1 to 3.3 the Revenue has challenged the action of of the learned CIT(A) in directing the Assessing Officer to delete the disallowance of the administration and other expenses being interest in finance charges and depreciation. It was the submitted by the learned DR that the assessee was following a completed contract method. It was submitted that the expenses which have been disallowed by the Assessing Officer was administrative and other expenses, interest and finance charges and depreciation relating to the projects which were under progress. It was the submission that ion view of the decision of the Mumbai Special Bench of this Tribunal in the case of Wall Street Construction Ltd., reported in 101 ITD 156, the identifiable expenses in relation to projects which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue has challenged the action of the learned CIT(A) in respect of the disallowance made under section 43B of the I.T. Act, 1961 representing the employees contribution to PF and ESI. It was submitted by the learned DR that the employees contribution to PF and ESI was liable to be allowed only if it has been paid before the due date of filing the return. It was the submission that the learned CIT(A) has given a blanket deduction to the assessee. It was the submission that the issue may be restored to the file of the Assessing Officer for verification. 23. In reply, the learned authorised representative vehemently supported the order of the learned CIT(A). 24. We have considered the rival submissions. A perusal of the decisions relied upon by the learned CIT(A) clearly shows that the amounts remitted before the filing of the returns in respect of the PF and ESI is an allowable deduction. The dates of payments of the PF and ESI are not before us. In the circumstances, this issue is restored to the file of the Assessing Officer for re-adjudication in line with the decision of the Hon'ble Supreme Court in the case of CIT v. Vinay Cement Ltd. reported in 213 CTR 268 as al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03. In the circumstances, respectfully following the decision of the co-ordinate Bench of this Tribunal, the finding of the learned CIT(A) stands confirmed. 29. In the result, the appeal of the Revenue in ITA No. 1514/Mds/2010 is partly allowed for statistical purposes. 30. ITA No. 1515/Mds/2010: This is an appeal filed by the Revenue against the order of the learned CIT(A) in ITA No. 186/07-08 dated 23-06-2010 for the assessment year 2000-01 in the case of M/s. Shriram Capital Trust P. Ltd. 31. In the Revenue s appeal, the Revenue has raised the following grounds : 1. The order of the learned CIT(A) is contrary to law and facts of the case. 2.1 The learned CIT(A) has erred in directing the AO to delete the addition of ₹ 2,83,26,764 being minimum guarantee charges to assisting companies relying on his own orders in the assessee s case for A.Y 1999-00 in ITA No.457/2006-07. 2.2 It is submitted that the decision of the CIT(A) relied upon by the CIT(A) in the assessee s case has not become final and appeal to this Hon'ble Tribunal has been filed by the department. 3.1 The learned CIT(A) has erred in directing the A.O to delete the entire amount of add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces our finding in respect of grounds 2.1 to 2.3 in ITA NBo. 1514/Mds/2010 would be applicable here. 33. In grounds 3.1 to 3.3 the Revenue has challenged the action of the learned CIT(A) in directing the Assessing Officer to delete the addition representing the administration and other expenses. It was fairly agreed that this issue was identical to grounds 3.1 to 3.3. of the Revenue s appeal in ITA No. 1514/Mds/2010, supra. In the circumstances, our finding in regard to grounds No. 3.1 to 3.3 of the Revenue s appeal in ITA No. 1514/Mds/2010 would apply to these grounds also. 34. In regard to grounds 4.1 and 4.2 it was fairly agreed that this issue was identical to ground 4.1 and 4.2 of the Revenue s appeal in ITA No. 1514/Mds/2010, supra. Our finding in grounds 4.1 and 4.2 of the Revenue s appeal in ITA No. 1514/Mds/2010 would apply here. 35. In regard to ground Nos. 5.1 and 5.2 which is against the action of the learned CIT(A) in directing the Assessing Officer to delete the disallowance of bad debts in respect of M/s. Novochem Laboratories and M/s. Bafna Motors it was submitted by the learned DR that the amount had not been shown as income during the earlier years. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has erred in directing the AO to delete the addition of ₹ 2,12,31,881 being minimum guarantee charges to assisting companies relying on his own orders in ITA No.457/2006-07 for A.Y 1999-2000. 2.2 It is submitted that the decision of the CIT(A) relied upon by the CIT(A) has not become final and appeal to this Hon'ble Tribunal has been filed by the department. 3.1 The learned CIT(A) has erred in directing the A.O to delete the entire amount of addition of administrative and other expenses, interest finance charges and depreciation of ₹ 31,33,263 relying on his order for A.Y 99-2000 in ITA No. 457/06-07.. 3.2 It is submitted that the decision of the CIT(A) relied upon by the CIT(A) in the assessee s case has not become final and appeal to this Hon'ble Tribunal has been filed by the department. 3.3 Having regard to the decision of the ITAT Mumbai in the case of Wall Street Construction Ltd. (101 ITD 156) the CIT(A) ought to have at least identified expenses identifiable with the project. 4.1 The learned CIT(A) has erred in directing the A.O to delete the disallowance of Bad debts of ₹ 1,27,98,162 consisting of advance of money and advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds. 45. In the result, the Revenue s appeal in ITA No. 1516/Mds/2010 is dismissed. 46. ITA No. 1517/Mds/2010: This is an appeal filed by the Revenue against the order of the learned CIT(A)-V, Chennai in ITA No.624/06-07 dated 2306-2010 for the assessment year 2004-05 in the case of M/s. Shriram Capital Trust P. Ltd. 47. In the Revenue s appeal, the Revenue has raised the following grounds : 1. The order of the learned CIT(A) is contrary to law and facts of the case. 2.1 The learned CIT(A) has erred in directing the AO to delete the addition of ₹ 51,64,563 being minimum guarantee charges to assisting companies relying on his own orders in ITA No.457/2006-07 for A.Y 99-2000. 2.2 It is submitted that the decision of the CIT(A) relied upon by the CIT(A) has not become final and appeal to this Hon'ble Tribunal has been filed by the department. 3.1 The learned CIT(A) has erred in directing the A.O to delete the entire amount of addition of administrative and other expenses, interest finance charges and depreciation of ₹ 12,34,686 relying on his order for A.Y 99-2000 in ITA No. 457/06-07. 3.2 It is submitted that the decision of the CIT(A) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by both the sides that these issues were identical to grounds 2.1 to 2.3 of the Revenue s appeal in ITA No.1514/Mds/2010. In the circumstances, our finding with regard to the grounds 2.1 to 2.3 of the Revenue s appeal in ITA No.1514/Mds/2010 would apply to these grounds. 49. In regard to grounds 3.1 to 3.3 it was fairly agreed that the issue was identical to grounds 3.1 to 3.3 of the Revenue s appeal in ITA No.1514/Mds/2010. In the circumstances, our finding in grounds No. 3.1 to 3.3 of the Revenue s appeal in ITA No. 1514/Mds/2010 would apply here. 50. In regard to grounds 4.1 and 4.2 it was fairly agreed that the issue was identical to grounds 4.1 and 4.2 of the Revenue s appeal in ITA No. 1514/Mds./2010. In the circumstances, our finding in respect of grounds 4.1 and 4.2 in ITA No. 1514/Mds./2010 would apply to these grounds also. 51. In regard to grounds 5.1 to 5.3 and 6.1 6.2 it was submitted by the learned DR that the assessee had entered into an agreement with M/s. DBS Properties in regard to the development of property. The project did not go through. The assessee had received advance from M/s. DBS Properties. The issue reached the court and the assessee was dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A)-V, Chennai in ITA No. 188/07-08 dated 23-067-2010 for the assessment year 2005-06 in the case of M/s. Shgriram Capital Trust P. Ltd. 57. In the Revenue s appeal, the Revenue has raised the following grounds : 1. The order of the learned CIT(A) is contrary to law and facts of the case. 2.1 The learned CIT(A) has erred in directing the A.O to delete the entire amount of addition of administrative and other expenses of ₹ 19,16,910. 2.2 The CIT(A) relied on his own orders in assessee s case for A.Y 1999-00 in ITA No. 457/2006-07. 2.3 It is submitted that the decision of the CIT(A) relied upon by the CIT(A) has not become final and appeal to this Hon'ble Tribunal has been filed by the department. 3.1 The learned CIT(A) has erred in directing the AO to delete the disallowance of Bad debts of ₹ 1,06,61,349 in respect of money advanced in respect of M/s. Shriram Coffee Tea Plantation Pvt. Ltd. and ₹ 2,18,007 of trade advances written off u/s 37. 3.2 The learned CIT(A) failed to appreciate that the assessee is neither a money lender nor has taken these amount as income earlier to be treated as bad debts and the amounts written of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount from M/s. Shriram Coffee Tea Plantation Pvt. Ltd., the same had been written off as business expenditure. It was the further submission that the assessee had not decided to take any legal action as there was no hope of getting any recovery from M/s. Shriram Coffee Tea Plantation Pvt. Ltd. whose name had also been changed to M/s. Sudharma Estate Pvt. Ltd. 60. We have considered the rival submissions. The fact that the assessee was also doing money lending activities cannot be disputed in view of the fact that for the assessment years 1999-2000 and 2000-01 the assessee has lent money to M/s. Shri Housing Pvt. Ltd. The interest income from the same has also been assessed as income from business. The assessee has also given loans to depositors against the deposits and the interest thereon has also been assessed under the head income from business . Thus it cannot be said that the assessee is not in the business of money lending. The assessee has not invested its funds in acquiring share capital of M/s. Shriram Coffee Tea Plantation P. Ltd. The assessee has only advanced the money to M/s. Shriram Coffee Tea Plantation Pvt. Ltd. M/s. Shriram Coffee Tea Plantation Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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