Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (1) TMI 135 - AT - Income TaxLiability in respect of wages payable - Pursuant to Order dated 13-06-2003 of the Industrial Tribunal - Liability has not crystallized during the year – Held that:- Assessee has not made any provisions in the books of account during the present year and it is also stated that the orders passed by Commissioner / Industrial Tribunal were challenged before the Hon’ ble High Court. It could not be established that the liability has crystallized during the present year. In favour of revenue Disallowance of Prior Period expense - salary, wages, bonus and welfare expenses and water expenses – Held that:- Assessee had failed to furnish any material to show that liability has crystallized during the present year. AO must have allowed the deduction to the assessee in that year to which this expenditure are pertaining to and hence, no deduction can be allowed in the present year. In favour of revenue Computation of Book Profit u/s 115JB - Provision for take or pay lease rental charges - Provision for Wage Revision – Contingent Liability - Unascertained liability – Held that: - The provisions regarding take or pay lease rental charges and the provisions for wage revision is a contingent liability. This is also submitted by assessee that this provision was written back in A.Y. 2006-07. In favour of revenue Computation of Book Profit u/s 115JB - Excess provision for doubtful advances – Held that:- It is seen that same amount was added in book profit but in view of the contradictory finding of A.O. in assessment order, we feel it proper that in the interest of natural justice, this matter should go back to the file of AO for fresh decision. Remand back to AO. Expenditure on the release of water and discharge of effluent and pollution control – Revenue or Capital expenditure – Held that:- Following the decision in case of Hooghly Mills Company Limited (2006 (11) TMI 137 - SUPREME COURT) that this expenditure did not result in the creation of any specific asset, without appreciating that the expenditure gave an advantage of enduring nature and fell in the capital field, and, for being capital expenditure, it is not always necessary that it results in creation of a new, depreciable asset for the assessee. In favour of assessee Expenditure on acquiring fire-fighting equipments – Capital or revenue expenditure – Held that:- Following the decision in case of Ballimal Naval Kishore (1997 (1) TMI 3 - SUPREME COURT) that these expenses were necessary for complying with the Government regulations and did not result in the creation of any asset, without appreciating that these are not the relevant considerations for determining the capital vis-à-vis revenue nature of an expenditure and the expenses, being in capital field and giving an advantage of enduring nature, constitute capital expenditure. In favour of assessee Disallowance u/s 14A - Expense incurred in relation to exempted income - Assessee could not establish that the investment was made out of own fund and no borrowed funds have been utilized for making such investments – Held that:- The own fund is much higher than investment and therefore, it cannot be said that interest bearing borrowed funds were used for making investments in shares and therefore, no disallowance u/s. 14A is required in respect of interest expenditure. Confirm the disallowance of Rs. 5 lakh in respect of administrative expenses. Partly allowed Disallowance of corporate debt restructuring expenses – Revenue or capital expenditure – For waiver of loans - spreading it over a period of 6 years – Held that:- Following the decision in case of Madras Industrial Investment Corporation Limited (1997 (4) TMI 5 - SUPREME COURT) that such expenditure is an revenue expenditure. In favour of assessee Remission or cessation of liability u/s 41(1) - Waive of principal loans - Loan taken and benefit has arisen because of restructuring of loan in which part amount of principle loan was waived – Held that:- Following the decision in case of Chetan Chemicals Pvt. Ltd. (2001 (10) TMI 12 - GUJARAT HIGH COURT) that if the assessee is not carrying money lending business and earlier the loan do not give a benefit arising out of business than remission of the same cannot be taxed u/s. 41(1) of the Act or u/s. 28(iv). In favour of assessee Book profit u/s. 115JB – Provision for gratuity - On the basis of actuarial valuation - Unascertained liability – Held that:- It is submitted that this issue is squarely covered in favour of assessee by the Tribunal’s decision in assessee’s own case in A.Y. 2003-04. In favour of assessee Computation of book profit u/s. 115JB – Provision for diminution in the value of assets - Provision for bad debts – Held that:- As the retrospective amendment was made by (Finance Act, 2002) with effect from 1-4-2001 as per which the amount set aside for a provision for diminution in the value of any asset is to be added back in book profit. In favour of revenue Computation of book profit u/s. 115JB – Deduction u/s 80 HHC – Held that:- Following the decision in case of Bhari Information Tech Systems (P) Ltd. (2011 (10) TMI 19 - SUPREME COURT OF INDIA) that that deduction claimed by the assessee u/s 80HHE has to be worked out on the basis of adjusted book profit u/s 115JA and not on the basis of the profits computed under regular provisions of law applicable to computation of profits and gains of business. In favour of assessee Penalty u/s 271(1)(c) - Tax payable as per MAT u/s 115JB - Taxable income was nil as per the regular provision - The tax was payable by the assessee on book profit u/s 115JB - Out of these two additions long term capital loss and depreciation on co-generation power unit for which penalty was imposed by A.O - No addition was made in computing book profit by the AO - There is no impact on tax payable by the assessee – Held that:- Following the decision in case of Vijay Mistry Construction & Rajakamal Builders Pvt. Ltd. (2013 (1) TMI 97 - GUJARAT HIGH COURT) and NALWA SONS INVESTMENTS LTD. (2010 (8) TMI 40 - DELHI HIGH COURT) that Even after making these two additions in regular assessment, income-tax payable by the assessee remained the same being on book profit. When the computation was made u/s 115JB, alleged concealment has no role to play on tax payable and therefore, the concealment did not lead to tax evasion at all and by making this observation, penalty was deleted. In favour of assessee
|