9911796707
TMI Blog2004 (12) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... contingency accounts i.e. out of part provision made at foreign branches and Rs. 1,13,83,00,000 Amounts written off against G/L contingency interest suspense account at foreign branches Rs. 17,30,86,759 (c)Disallowance of public issue expenses claimed under section 35D Rs. 2,99,90,000 (d)Disallowance of proportionate expenses in respect of dividend income Rs. 9,16,09,210 2. The assessee is a public sector undertaking and the grounds of appeal have been approved by the COD (Cabinet Committee on Disputes). With regard to first issue i.e., interest on purchase of securities for the broken period, both the parties agreed that this issue is covered in assessee's favour by the Bombay High Court decision in the case of American Express Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the assessee that the claim was not admissible as the appellant was not an industrial undertaking. It was claimed before the Assessing Officer that the assessee bank was in the nature of industrial undertaking and therefore the claim was allowable. The Assessing Officer did not accept this claim. He has mentioned that the phrase 'industrial undertaking' has not been defined in the Income-tax Act, but the meaning can be understood from the provisions contained under sections 80HH, 80-I and 80J etc. Under all these provisions, deductions are allowable on profits and gains derived from the industrial undertaking and the condition is that the industrial undertaking must manufacture or produce an article or thing. The Assessing Officer also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth Tax Act defined the term as an undertaking engaged in the business of generation or distribution or electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. There is nothing in the language of section 80HH or section 80J which would suggest that a different meaning is contemplated for the term 'industrial undertaking', when it relates to a unit engaged in manufacture or production. On the other hand the conditions to be fulfilled by the industrial undertaking as provided under sub-section (2) would indicate that a unit which is manufacturing or producing articles can be treated as an industrial undertaking without any further qualification." 5. The ld. CIT(A) ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. counsel argued that the meaning of the phrase 'industrial undertaking' given under section 80HH etc. cannot be applied while dealing with the assessee's claim under section 35D. It is pointed out that the assessee bank is providing financial services and therefore it is a service industry and also an industrial undertaking. 6. The ld. DR strongly opposed the submissions made on behalf of the assessee and supported the orders of the Revenue authorities. It is argued that when the term has not been specifically defined in the Income-tax Act, the meaning attributed to such term in various other sections of the IT Act must be adopted and there is no need to travel to the meaning given by the learned authors of the Legal & Commercial Diction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, but the meaning and purport of such terms can be understood by referring to various other provisions contained in the IT Act. The term 'industrial undertaking' has also been used in sections 80HH and 80-I etc., which entitle the assessee to certain deductions if the profits and gains are derived from the industrial undertaking. In these sections, it is stipulated that the industrial undertaking must engage in manufacturing or production of an article or a thing. The Assessing Officer had also referred to certain judgments and the relevant portions of which have been reproduced above. A reference has been made to the Karnataka High Court decision in the case of CIT v. Indian Resins & Polymers [1999] 235 ITR 5, where the Hon'ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer is arbitrary and it is submitted that no expenditure is attributable to the dividend income earned by the assessee. The ld. DR supported the order of the Revenue authorities. 9. We have considered the rival submissions and have gone through the facts. The ld. CIT(A) has dealt with this issue at Paras 26 and 27 of his order, which are reproduced below : "In the ground of appeal No. 1(h), it has been agitated that the Assessing Officer has erred in making disallowance of proportionate expenses in respect of dividend income to the tune of Rs. 9,16,09,210. In view of the decision of the jurisdictional High Court in the case of Maganlal Chaganlal reported in 236 ITR 515 (SC), the disallowance of Rs. 9,16,09,210 is hereby confirmed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
