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2016 (7) TMI 1696 - AT - Income TaxDisallowance of commission paid - HELD THAT:- AR and DR agreed that the issue stands decided against the assessee by the order of the Tribunal for the earlier years. Addition u/s 40A(9) - contribution to Marine Navy Officers Welfare Fund and Utmal Employees Welfare Fund - HELD THAT:- Identical issue was decided in favour of the assessee by the Tribunal, while adjudicating the appeal for A.Y. 1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI] wherein the CIT(A) has directed the Assessing Officer to allow deduction - Decided in favour of assessee. Slump sale - Failure to treat the transfer of Bangalore undertaking as slump sale and disallowing depreciation - HELD THAT:- If ongoing concern is sold for a lump sum amount it has to be treated a slump sale and had to be taxed as such. In such cases itemized sale of the assets is not there-an amount is paid for transferring an independent unit. To find out the facts of the case we would like to refer to the agreement entered in to by the assessee with the JV company. We find that in the agreement the assessee had specifically mentioned that the property was valued at Rs.59.31 crores for registration purposes. It is further found that in application made u/s.230A of the Act, the total sale consideration for transfer of construction manufacturing undertaking was mentioned and no separate value for land and building was indicated. Considering the above, we are of the opinion that no value was assigned to plot of land and building while transferring the assets to the JV and that the assessee had transferred the business at a lumpsum consideration by way of slump sale without assigning any individual value to various assets and liabilities. We find that one of the reasons, given by the FAA, for not considering the transaction a slump sale was that the purchaser had assigned cost to the assets acquired by it.It is a coincidence that the AO for the assessee happened to be the AO for the JV also and from the return of income of the JV he found that the purchaser had shown exact cost of each of the assets.In our opinion, it cannot be the deciding factor.A purchaser of a going concern has to assign cost to the assets received by it. Accounting standard mandates that the entity acquiring a going concern has to get its assets valued. But, valuation report obtained by the purchaser do not prove at all that the assets had the same value for the seller .Once an assessee sells the lock stock and barrel of a unit for that assessee individual items loose existence. In the case before us, there is nothing on record to show that the value shown by the JV was the itemized value of the assets owned by the assessee. Thus we hold that the sale of earth moving manufacturing unit was a slump sale. Here, we want to make it clear that the assessee would not be entitled to claim loss for the transaction in question. Decided partly in favour of assessee. Computation of deduction u/s.80HHC - Respectfully following the orders of the Tribunal in earlier years part of the issue, raised by the assessee, is decided in its favour on Inclusion of scrap sales and other items of miscellaneous income in the total turnover, Set off of loss of export of trading goods against profit on export of manufactured goods. Unclaimed credit balance in the total turnover - HELD THAT:- While deciding the appeal, filed by the assessee, the first appellate authority (FAA) followed the order of his predecessor of the earlier AY. and decided the issue against the assessee. We find that the issue is covered in favour of the assessee by the decision of Jeyar Consultants(supra), relied upon by it. Therefore, we decide issue in favour of the assessee. Section 80HHC calculation and reduction of 90% of gross interest receipt from the profits of business disregarding interest paid by the assessee - HELD THAT:- Tribunal while deciding the issue for A.Y. 1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI] allowed assessee ground of appeal - Thus decided in favour of assessee. Set off of losses on export trading goods against profit on export of manufactured goods to be decided against assessee. Reduction 90% of miscellaneous income received from profits of business - In the case of Sharda Gums [1999 (12) TMI 114 - ITAT JODHPUR] issue of interest income has been decided. It does not deal with the other items. Thus, the cases relied upon by the assessee are of little help to the resolve the issue. But, on the other hand the stand taken by the departmental authorities is also defective. We find that the AO and the FAA have relied upon the case of K K Doshi [2000 (8) TMI 74 - BOMBAY HIGH COURT] that stands reversed by the Hon’ble Apex Court [2007 (10) TMI 61 - SC Orde].Therefore, we are of the opinion that the issue needs a fresh adjudication at the level of the AO. Addition u/s 14A - reducing the amount claimed as exempt under section 10 (15)and 10(33) - HELD THAT:- We find that while deciding the appeal for the AY.1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI], the Tribunal had disallowed the expenses relating to interest on tax free bonds @ 2%, and had held that strategic investments made by the assessee, should be excluded for 14A disallowance. Following the same, ground raised by the assessee is allowed in its favour, in part. Computing book profit u/s 115JA - HELD THAT:- AR and DR stated that this issue stands decided in light of the decisions delivered in the cases of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT], TRF Limited [2010 (2) TMI 211 - SUPREME COURT] The second item with regard to computation under section 115JA is about disallowance made under section 14A of the Act. Respectfully, following the judgment of Vijaya Bank (supra) and TRF Ltd.(supra)we allow the appeal filed by the assessee. Second item being of consequential nature, stands allowed for statistical purposes. Disallowance of professional fees for projects not materialized - HELD THAT:- Identical issue was decided against the assessee by the Tribunal while deciding the appeal for A.Y. 1990-91 and 1993-94 wherein as held even though the proposed projects may he intimately connected to the existing business carried on by the assessee, the assessee-company was in fact exploring the prospectus of new units. Those units were not ultimately successful; we can say that they were all aborted projects. Therefore, those expenses are to be treated in the nature of loss of capital instead of revenue expenditure deductible in computing the income of the running business. Even though the items of expenditure may be in the nature of revenue expenses per se, those expenses were incurred not in connection with the business carried on by the assessee-company but those expenses were incurred for the business which were proposed by the assessee-company to commence and carry on. This line of distinction cannot overlooked. Therefore, in the light of the statutory provision governing the subject, we hold that this expenditure cannot be allowed. Decided against assessee. Calculation of book profit for deduction u/s 80HHC - We direct the AO to follow the decision of Bahary Information Technology System Pvt. Ltd. [2011 (10) TMI 19 - SUPREME COURT] while calculating the book profit for deduction u/s.80HHC. Disallowance of claim for loss in computation of value of work-in-progress on construction contracts - HELD THAT:- DR and the AR conceded before us that identical issue was decided in favour of the assessee by the Tribunal, while deciding the appeal in [2013 (10) TMI 1581 - ITAT MUMBAI] for A.Y. 1997-98 - Decided against revenue. Expenditure on construction of jetty, expenses on cement plants, expenses on cement plants (towards setting up of new captive power section) depreciation, interest and commitment charges in respect of borrowings made for cement projects, Mining lease, Mining Development expenses and charges, including commitment charges, in respect of borrowings made for cement projects is to be allowed as issue decided in favour of the assessee by the Tribunal in [2013 (10) TMI 1581 - ITAT MUMBAI] for AY.1997-98. Interest u/s 244A of the Act - HELD THAT:- At the time of hearing the AR for the assessee submitted that this issue is considered and decided in favour of the assessee by the Tribunal for AY.1997-98 [2013 (10) TMI 1581 - ITAT MUMBAI] DR could not controvert the claim made by the AR.Therefore, respectfully following the above order of the Tribunal, last ground is decided against the AO.
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