Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (5) TMI 956 - AT - Income TaxDisallowance of Guest House expenses u/s. 37(4) of the Act – Held that:- Tata Chemicals Limited Versus The ACIT Cir 2(2), Mumbai & Others [2012 (10) TMI 46 - ITAT MUMBAI] these are not allowable in view of the decision of the Hon’ble Supreme Court in the case of Britannia Industries Ltd. vs. CIT (2005 (10) TMI 30 - SUPREME COURT) and accordingly the disallowance made by the A.O. upheld - With regard to the food expenses, the matter is remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. Disallowance of payment paid to ROC - Increase in Authorised Share capital – Held that:- Following CIT Vs General Insurance Corporation of India [2006 (9) TMI 116 - SUPREME Court] - expenditure incurred in connection with issuance of bonus shares is Revenue expenditure as issuance of bonus shares does not result any inflow of fresh funds or increase in the capital employed, the capital employed remains the same - Issue of bonus shares does not result in the expansion of the capital base of the company - the expenditure incurred in connection with issuance of bonus shares is Revenue expenditure - the assessee has made payment to the ROC in relation to issue of bonus shares – thus, the AO is directed to allow the expenses – Decided in favour of Assessee. Disallowance of foreign travel expenses - Preliminary studies for implementation of Fertilizer Project – Disallowance of Sundry contributions u/s. 40A(9) of the Act - Held that:- As decided in assessee’s own case for the earlier year, the matter is remitted back to the AO to allow depreciation on the foreign travel expenses added to the cost of the machinery – Decided in favour of Assessee. Disallowance of foreign exchange fluctuation loss - Disallowance of investment allowance on increase in liability on account of foreign exchange fluctuation loss – Disallowance of expense on fish and prawn culture – Part disallowance of Delhi expenses - Held that:- As decided in assessee’s own case for the earlier year, it has been held that the assessee has been allowed depreciation on foreign exchange fluctuation loss – thus, the AO is directed to allow depreciation as per law also the AO is directed to allow the investment allowance on exchange loss treated as capital expenditure – thus, the matter is remitted back to the AO – Decided in favour of Assessee Disallowance of expenditure treating them as expenses of earlier year – Disallowance of premium on redemption of debentures - Held that:- Following Saurashtra Cement and Chemical Industries Ltd. Vs CIT [1994 (10) TMI 30 - GUJARAT High Court] - merely because an expense relates to a transaction of an earlier year, it does not become a liability payable in the earlier year unless it can be said that the liability is determined and crystallized in the year in question on the basis of maintaining account on the mercantile basis - In each case, when the accounts are maintained on mercantile basis, it has to be found in respect of any claim whether such liability was crystallized and quantified during the previous year as required to be adjusted in the books of account of that previous year - the liabilities under the heads have crystallized during the year under consideration - These expenses cannot be disallowed as deduction merely on the basis that accounts are maintained on mercantile basis and that it relates to a transaction of the previous year - the liabilities have been accepted by the assessee and have been actually claimed and paid in the year under consideration – thus, the AO is directed to allow the expenses – Decided in favour of Assessee. Addition of interest on advance to WOS Company - Held that:- Following The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - CIT(A) was not justified in sustaining the disallowance of interest – Decided in favour of Assessee. Disallowance made u/s. 43B of the Act - Royalty on limestone - Interest on outstanding electricity duty - Held that:- The matter travelled upto Tribunal and the Tribunal has restored back the issue to the file of the AO to verify the payment and allow deduction as per law if the payments have already been made – thus, following the assessee’s own case the matter is remitted back to the AO for verification of the payments as per the provisions of Sec. 43B – Decided in favour of Assessee. Disallowance of Mineral Rights Tax – Held that:- by not paying the said amount to the Government, the assessee has retained public fund with itself - the assessee itself has agreed to pay the MRT on the limestone purchased by it and as it has not discharged the liability till the end of the accounting year – thus, there was no reason to interfere in the order of the CIT(A) – Decided against Assessee. Disallowance of Customs fine - Imported spares from customs – Held that:- If the amount so paid is found to be not a penalty or something akin to penalty due to the fact that the amount paid by the assessee was in exercise of the option conferred upon him under the very law or scheme concerned then one has to regard such payment as business expenditure of the assessee, allowable u/s. 37 of the Act – Relying upon CIT Vs Ahmedabad Cotton Mfg. Co. Ltd [1993 (10) TMI 1 - SUPREME Court] vis-à-vis Sec. 125 of the Customs Act - what has been paid by the assessee is a fine to prevent confiscation of its spare parts which were required for its business – thus, the payment deserves to be allowed as deduction u/s. 37(1) of the Act – thus, the AO is directed to allow the deduction. Disallowance of depreciation and extra shift allowance – Disallowance of expenses – Expenses treated as capital expenses – Disallowance of expenses on soil investigation and effluent outfall - Held that:- Following the assessee’s own case of the earlier assessment year, it has been held that, as regards extra shift allowance, the matter is to be remitted back to the AO to consider the claim of the assessee after taking into consideration the I.T. Rule-5 of 1984-85 – with regard to the depreciation , the AO is directed to allow depreciation – the AO is also directed to allow the depreciation on items of expenditure treated as capital expenditure - Decided in favour of Assessee. Employees’ entertainment expenses u/s 37(2) r.w. Explanation III - Subsidized lunch coupons - Payments made to Tata Services Ltd. – incentive bonus to workers – Issue of bonus shares treated as revenue expenses – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been already decided in favour of assessee – thus, there is no need for interference – Decided against Revenue.
|