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2021 (2) TMI 851 - AT - Income TaxMAT computation u/s 115JB - disallowance of provision for bad and doubtful debts for computing the book profit u/s 115JB - HELD THAT:- As decision in Syndicate Bank [2018 (12) TMI 1769 - KARNATAKA HIGH COURT] relied on by the Ld. counsel is applicable to the instant case, wherein the Hon’ble Karnataka High Court by following the judgment of the Hon’ble Supreme Court in Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] has held that where the AO while computing book profit u/s 115JA, added back provision for ‘Non-performing Assets’, matter was to be remanded back with a direction to look into records and to record a finding as to whether bad and doubtful debts were reduced from loan and advances of debtors from asset side of balance sheet and thereafter, recompute income u/s 115JA. Accordingly, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to re-compute income u/s 115JB by following the above ratio laid down in Vijaya Bank (supra) and Syndicate Bank (supra) after giving reasonable opportunity of being heard to the assessee.We direct the assessee to file the relevant accounts/documents before the AO. Thus the 1st ground of appeal along with the additional ground is allowed for statistical purposes. Disallowance paid to Tata Sons Limited towards the subscription paid for The Brand Equity and Business Promotion(BEPB) Agreement - HELD THAT:- In the wake of new competitive environment and radical transformation of the business scene created by liberalization and globalization of trade and industry, it was felt that all Tata Companies should come under one umbrella and hence an agreement titled “TATA Brand Equity & Business Promotion Agreement” was signed on 01.01.1999 and the assessee-company subscribed to the ‘Brand Equity Scheme’ by paying premium @ 0.25% per annum. The said agreement was entered into between Tata Sons and Tata Chemicals (the assessee-company) to pool their resources and make a co-operative effort to promote a unified common Tata Brand which, collectively would match the Brand Equity of well known international brand names. Explaining the above, the Ld. counsel submits that the ITAT ‘H’ Bench, Mumbai in assessee’s own case for AY 2002-03 on similar facts has dismissed the appeal filed by the Revenue. Disallowance u/s 80M/section 14A with a direction to rework the same in respect of indirect expenses - HELD THAT:- There is no dispute that in the instant case, the assessee-company has not incurred any expenses for earning dividend income. Surplus funds time to time are invested in shares, securities, units etc. of reputed company. In the impugned assessment year, there is merit in the contentions of the Ld. counsel that for earning income from investments, the assessee-company has not incurred any expenses as evident from facts mentioned at para 13 hereinabove, which is reflected in the audited accounts. In fact the ‘Reserve & Surplus’ as at 31st March 2003 is ₹ 1,455.16 crores, whereas the ‘Investment’ is ₹ 569.02 crores, as evident from the audited accounts for the year under consideration.Further, on identical facts, the Tribunal for AYs 1992-93, 1993-94 and 1994-95 has decided the issue in favour of the assessee. Deduction u/s 80(IB) in respect of the fertilizer unit of Haldia - HELD THAT:- Section 80IB claim of ₹ 7.59 crores was made in respect of its 3 new industrial undertakings located in category “B” industrially backward district i.e. in Midnapore, West Bengal; the effective date of amalgamation was 01.06.2004 and the appointed date of amalgamation was 01.04.2002 i.e. HLCL amalgamated with the assessee-company w.e.f. 01.04.2002 ; after the amalgamation, the assessee-company filed its revised return of income for the year under consideration incorporating the working results of HLCL. Also it is the contentions of the assessee that during the course of assessment proceedings, vide letter dated 30.11.2005, section 80IB claim of ₹ 7,59,59,000/- (same as that claim in original return of HLCL) @ 30% of the profits (this being the 4th year of claim) in respect of erstwhile HLCL was made. Fertilizer price concession from the Government - It is the contentions of the assessee that to support industries, certain portion of price is reimbursed by Central Government in the name of fertilizer concession ; while selling the fertilizer, the assessee-company recovers part cost from farmers and part cost through Government by way of concession; the subsidy is related to the business activity of the assessee as the subsidy claim arises only upon sale of the fertilizer to the farmers ; the subsidy is nothing but a difference between cost of sales and MRP indicated by the Government; it is the subsidy amount which alone permits the manufacturer, like the present assessee to recover is uncovered cost of production including distribution cost and minimal margin allowed; it is only pursuant to the sale of fertilizer to the farmers would the assessee be eligible to receive subsidy; the fertilizer concession received by the assessee is nothing but part of sales proceeds, which cannot be excluded while working out profit u/s 80IB of the Act. Sales tax remission - it is the contentions of the assessee that it sold its products at notified prices and charged sales tax in the invoices ; in the books of accounts, sales tax collected was shown as sales tax incentive and not deposited the Government as per the Industrial Development Policy of the State; sales tax remission/subsidy is arising only on account of sales from fertilizers to the farmers, which clearly indicates that the sales tax remission has direct nexus with the activities of the industrial undertaking Having examined the materials available on record, we find that the AO has not examined in proper perspective the above contentions of the assessee. As the above contentions have a direct bearing on the above ground of appeal, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to pass an order afresh.
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