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2019 (7) TMI 1211 - AT - Income TaxDisallowance on loss of sale of items held in capital WIP - AO held that project is not identifiable hence it is not incidental to the assessee’s business - HELD THAT:- At the outset, the ld. AR pointed out that these expenses incurred towards steel structures and steel fabrications were not incurred for a new project as such. Moreover, the assessee is not following project completion method. It is not known from where the ld. AO had material to come to this conclusion. These expenditures were incurred for an ongoing project which was kept in capital work in progress. We find that the reliance placed by the ld. AR on the Co-ordinate Bench decision of this Tribunal in the case of Idea Cellular Ltd., vs. ACIT which was approved by High Court in [2016 (10) TMI 181 - BOMBAY HIGH COURT] is well founded and consequently applicable to the facts of the instant case. As relying on M/S. IDEA CELLULAR LTD (supra), we hold that the losses incurred by the assessee in the sum has to be treated as incidental business loss and hence to be allowed as revenue expenditure to the assessee for the A.Y.2003-04. Accordingly, the ground No.2 raised by the assessee is allowed and ground No.3 raised by the revenue is dismissed. Enhancement by CITA) to book profit computation u/s.115JB - Provision of deferred tax, Provision for diminution in value of investments and Provision for bad and doubtful debts - CIT(A)'s enhancement powers u/s 251(1)(a) - HELD THAT:- Three issues viz. provision for deferred tax; provision for diminution in value of investments; Provision for bad and doubtful debts vis-à-vis computation of book profits u/s.115JB were already added by the ld. AO in the re-assessment order framed on 31/12/2007. Admittedly, the ld. CIT(A) issues enhancement notice to the assessee by way of recording in the order sheet only on 07/03/2011, on which date these three additions have already been made by the ld. AO in the re-assessment order. Hence, by respectfully following the decision of Jaipur Tribunal, [2018 (7) TMI 1398 - ITAT JAIPUR] we hold that the ld. CIT(A) erred in exercising enhancement powers in terms of Section 251(1)(a) in the facts and circumstances of the case before us. Even on merits, we find that the AO in the original assessment proceedings u/s.143(3) completed on 31/01/2006 had applied the law prevailing on that date. These three items i.e. provision for deferred tax; provision for diminution in value of investments; Provision for bad and doubtful debts were sought to be added in the computation of book profits u/s.115JB only pursuant to an amendment brought by the Finance Act 2008 with retrospective effect from 01/04/2001. Hence, on the date of passing of order u/s.143(3) on 31/01/2006, the ld. AO could not have added these three items in the computation of book profits u/s.115 JB. Hence, what could not have been done by the ld. AO as per law prevailing at that time, the ld. CIT(A) could not do by exercising enhancement powers - enhancement made by the ld. CIT(A) with respect to aforesaid three items in the computation of book profits u/s.115JB deserves to be deleted and is hereby deleted. Claim of provision of warranty expenses - HELD THAT:- Decided in favour of assessee as relying on own case [2018 (4) TMI 1696 - ITAT MUMBAI]. Allowability of Expenses incurred towards issue of foreign currency convertible notes - allowability as revenue expenditure - HELD THAT:- We find that the ld. AR stated that this issue is also covered by the order of this Tribunal in assessee’s own case for A.Y₹ 2004-05 to 2006-07 [2018 (4) TMI 1696 - ITAT MUMBAI] Following the decision of the Hon'ble Rajasthan High Court in Secure Meters Ltd. [2008 (11) TMI 66 - HIGH COURT RAJASTHAN] has held that irrespective of the fact whether the debenture issued is convertible or non- convertible, it is in the nature of loan. Therefore, any expenditure incurred in relation to issuance of such debenture is allowable as expenditure. and had granted relief to the assessee which do not call for any interference. Accordingly, ground No.2 raised by the revenue is dismissed.
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