2015 (11) TMI 1741 - AT - Income Tax

Sales tax incentive received - revenue or capital receipt - disallowance of premium payable on issue of Zero Coupon Convertible Bonds - Disallowance on account contribution to various institutions and club - disallowance on account of deduction of contribution to an approved body recognized u/s 35(1)(ii) - Held that - Acceptable by the learned Departmental Representative that learned CIT(Appeals) has followed ITAT s order in assessee s own case in deleting the addition or setting aside the same to the file of the AO to consider in the light of ITAT decision. No case has been made out that jurisdictional High Court has reversed the earlier ITAT decision or that the facts in the present case are different. Hence respectfully following the precedent we do not find any infirmity in the order of learned CIT(Appeals). We affirm his order deleting the addition or setting aside the issue as applicable.

Summary

Issues involved:
1. Treatment of sales tax incentive as capital receipt
2. Disallowance of premium payable on Zero Coupon Convertible Bonds
3. Disallowance of contribution to various institutions and clubs
4. Disallowance of charity donation and CSR expense
5. Treatment of sales tax incentive while computing book profit under section 115JB
6. Disallowance of contribution to an approved body recognized under section 35(1)(ii)

Issue 1: Treatment of sales tax incentive as capital receipt
The appeal questioned the treatment of sales tax incentive as a capital receipt not chargeable to tax. The ITAT referred to previous decisions favoring the assessee and upheld the CIT(A)'s order, stating that the issue was covered by earlier tribunal decisions in the assessee's favor.

Issue 2: Disallowance of premium payable on Zero Coupon Convertible Bonds
The dispute centered on the disallowance of premium payable on Zero Coupon Convertible Bonds. The ITAT, citing previous tribunal decisions, supported the assessee's position that the premium payable was for the use of funds raised through the bonds and was an allowable business expenditure.

Issue 3: Disallowance of contribution to various institutions and clubs
The contention was over the disallowance of contributions to institutions and clubs. The ITAT, guided by previous rulings, concluded that the expenditure was in the nature of staff welfare or business development and thus allowable.

Issue 4: Disallowance of charity donation and CSR expense
The issue involved the disallowance of charity donations and CSR expenses. The ITAT noted that the CIT(A) directed the Assessing Officer to consider the claim as per tribunal directions in a previous case, emphasizing that the expenditure was for staff welfare or business development.

Issue 5: Treatment of sales tax incentive in computing book profit under section 115JB
The question was whether to exclude sales tax incentives while calculating profits under section 115JB. The ITAT, relying on past decisions, favored the assessee's stance, stating that the sales tax incentive was not deductible under section 115JB.

Issue 6: Disallowance of contribution to an approved body recognized under section 35(1)(ii)
The issue revolved around the disallowance of contributions to an approved body recognized under section 35(1)(ii). The ITAT upheld the CIT(A)'s order, directing the Assessing Officer to consider the claim in line with tribunal directions in a previous case, emphasizing the deduction's allowance under section 35(1)(ii).

In conclusion, the ITAT affirmed the CIT(A)'s order, stating that the issues raised were covered by earlier tribunal decisions favoring the assessee. The appeal was partly allowed for statistical purposes, with no infirmity found in the CIT(A)'s order.