2012 (3) TMI 658 - AT - Income Tax

2020 (1) TMI 1331 - AT

Issues Involved:
1. Set-off of loss of the amalgamating company.
2. Classification of income from sale of premises.
3. Disallowance of provision for premium on redemption of debentures.
4. Disallowance of expenditure on gifts and presentation articles.
5. Disallowance of loss representing the unrealizable portion of inter-corporate deposits.
6. Disallowance of provision for probable claim against the appellant by the Department of Telecommunications.
7. Allocation of expenses u/s 80-IA.
8. Disallowance of expenses on foreign tour of Director's relative.
9. Classification of foreign exchange fluctuation loss.
10. Treatment of various receipts for deduction u/s 80HHC.
11. Allowance of depreciation on leased assets and financial cost.
12. Treatment of sales tax and excise duty for deduction u/s 80HHC.
13. Disallowance of leave encashment.
14. Treatment of software expenses.
15. Disallowance of miscellaneous expenses.
16. Disallowance of repairs and maintenance expenses.
17. Disallowance of interest on advances to subsidiary companies.
18. Allocation of expenses for determination of profits u/s 80IA.
19. Disallowance of administrative expenses attributed to earning of dividends.
20. Disallowance of liquidated damages.
21. Disallowance of buy-back expenses.
22. Disallowance of provision for slow-moving stock.
23. Disallowance of club membership fees.
24. Disallowance of repairs and maintenance expenses.
25. Disallowance of interest on advances to subsidiary companies.
26. Disallowance of administrative expenses attributed to earning of dividends.
27. Disallowance of expenditure on gift and representations.
28. Allowance of deduction u/s 80IA.
29. Allowance of deduction u/s 80IB on sale of scrap.
30. Allowance of deduction u/s 80HHC on excise duty and sales tax.

Summary:

1. Set-off of loss of the amalgamating company:
The Tribunal upheld the assessee's claim for the set-off of losses of the amalgamating company, FSL, for the assessment years 1998-99 and 1999-2000, against the positive income of the assessee company. The Tribunal concluded that fixing the appointed date of amalgamation as 1.4.1997 was not a colorable device to evade taxes and directed the Assessing Officer to allow the claim.

2. Classification of income from sale of premises:
The Tribunal upheld the view of the lower authorities that the profit on sale of flats constructed by the assessee should be taxed under the head "profits and gains of business" and not as "capital gains," as the activity was characteristic of a person carrying on the business of a builder and developer.

3. Disallowance of provision for premium on redemption of debentures:
The Tribunal followed the decision of its coordinate Bench in assessee's case for the assessment year 1997-98 and allowed the provision for premium on redemption of debentures on a pro-rata basis.

4. Disallowance of expenditure on gifts and presentation articles:
The Tribunal set aside the disallowance of Rs. 1,00,000 on gift expenses, following the reasoning given in the earlier order of the Tribunal dated 30.3.2010, and allowed the claim of the assessee.

5. Disallowance of loss representing the unrealizable portion of inter-corporate deposits:
The Tribunal allowed the claim of the assessee for the write-off of the irrecoverable amount of inter-corporate deposits as a deduction within the meaning of section 36(1)(vii) of the Act, holding that the activity of giving ICDs was a business activity.

6. Disallowance of provision for probable claim against the appellant by the Department of Telecommunications:
The assessee did not press this Ground, and it was dismissed as not pressed.

7. Allocation of expenses u/s 80-IA:
The Tribunal set aside the issues regarding the allocation of expenses while working relief u/s 80-IA to the file of the Assessing Officer to be adjudicated afresh in the light of the directions given by the Tribunal in its order dated 30.3.2010.

8. Disallowance of expenses on foreign tour of Director's relative:
The Tribunal followed the parity of reasoning given in the order of the Tribunal dated 30.3.2010 and decided the issue against the assessee.

9. Classification of foreign exchange fluctuation loss:
The Tribunal followed the decision of its coordinate Bench in assessee's case for assessment year 2001-02 and decided the issue in favor of the assessee, holding that the loss on exchange fluctuation was not speculative.

10. Treatment of various receipts for deduction u/s 80HHC:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) on this issue and restored the matter back to his file with directions to adjudicate the same afresh in view of the judgment of the Hon'ble Bombay High Court in the case of Pfizer Ltd.

11. Allowance of depreciation on leased assets and financial cost:
The Tribunal set aside the issues regarding the allowance of depreciation on leased assets and financial cost to the file of the Assessing Officer with certain directions, following the parity of reasoning given in the order of the Tribunal dated 30.3.2010.

12. Treatment of sales tax and excise duty for deduction u/s 80HHC:
The Tribunal decided the issue in favor of the assessee, following the judgment of the Hon'ble Supreme Court in the case of Laxmi Machine Works, holding that excise duty and sales tax are not includible in 'total turnover' for the purposes of applying the formula contained in section 80HHC (3) of the Act.

13. Disallowance of leave encashment:
The Tribunal directed the Assessing Officer to consider and allow the claim of the assessee on actual payment basis in case the claim of the assessee in the past years on the basis of the provision made in the account books is found to be ultimately unsustainable.

14. Treatment of software expenses:
The Tribunal allowed the expenditure on software as a revenue expenditure, following the judgment of the Hon'ble Bombay High Court in the case of M/s Raychem RPG Ltd., holding that the expenditure was intended to improve the quality and efficiency of the information systems.

15. Disallowance of miscellaneous expenses:
The Tribunal directed the Assessing Officer to restrict the disallowance to 5% of the amount of Miscellaneous Expenses, following the precedent set in the assessment year 2001-02.

16. Disallowance of repairs and maintenance expenses:
The Tribunal set aside the issue and restored the matter to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.

17. Disallowance of interest on advances to subsidiary companies:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2001-02.

18. Allocation of expenses for determination of profits u/s 80IA:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.

19. Disallowance of administrative expenses attributed to earning of dividends:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.

20. Disallowance of liquidated damages:
The Tribunal allowed the claim of the assessee for liquidated damages as a deduction, holding that the amounts represented short recoveries from various Government customers and satisfied the conditions prescribed under section 36(1)(vii) read with section 36(2) of the Act.

21. Disallowance of buy-back expenses:
The Tribunal allowed the claim of the assessee for buy-back expenses as a revenue expenditure, following the judgment of the Hon'ble Delhi High Court in the case of Selan Exploration Technology Ltd.

22. Disallowance of provision for slow-moving stock:
The assessee did not press this Ground, and it was dismissed as not pressed.

23. Disallowance of club membership fees:
The Tribunal deleted the disallowance of club membership fees, following the judgment of the Hon'ble Bombay High Court in the case of Otis Elevators (I) Ltd.

24. Disallowance of repairs and maintenance expenses:
The Tribunal set aside the issue and restored the matter to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.

25. Disallowance of interest on advances to subsidiary companies:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2001-02.

26. Disallowance of administrative expenses attributed to earning of dividends:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.

27. Disallowance of expenditure on gift and representations:
The Tribunal decided the issue in favor of the assessee, following past precedents.

28. Allowance of deduction u/s 80IA:
The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the issue to the file of the Assessing Officer to be decided afresh in accordance with the directions and findings given by the Tribunal for the assessment year 2002-03.

29. Allowance of deduction u/s 80IB on sale of scrap:
The Tribunal decided the issue against the Revenue and in favor of the assessee, following past precedents.

30. Allowance of deduction u/s 80HHC on excise duty and sales tax:
The Tribunal decided the issue in favor of the assessee, following the decision of the Hon'ble Supreme Court in the case of Laxmi Machine Works.

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