TMI Blog2013 (2) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... d that:- Following the decision of CIT vs. General Insurance Corporation of India [2000 (9) TMI 12 - BOMBAY HIGH COURT] that only the expenses those are directly relatable to earning of dividend income should be reduced for the purpose of computing deduction u/s 80M and any disallowance of such expenses made on adhoc or estimate basis cannot be sustained. Thus direct the AO to allow the deduction u/s 80M as claimed by the assessee in respect of dividend income - in favour of assessee. Including sales-tax amount to total turnover for the purpose of computing deduction u/s 80HHC - Held that:- This issue is squarely covered in favour of the assessee by the decision of CIT vs. Laxmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] & direct the AO to exclude the sales-tax amount from the figure of total turnover for computing deduction u/s 80HHC - in favour of assessee. Disallowance of payment made to M/s Asia Today for broadcasting Cibaca Gel Spots on Zee TV - Held that:- As the assessee has contended that the amount in question was paid by the assessee to a non-resident for services rendered outside India DR has fairly suggested that this matter may be sent back to the AO for ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef to the assessee accordingly. Disallowance of expenses incurred on VRS - CIT(A) deleted the addition - Held that:- A perusal of the relevant portion of the Tribunal’s order for assessment year 1993- 94 on similar issue shows that it was noted by the Tribunal that the liability in question was well supported by the actuarial valuation as well as the agreements between the assessee company and the employees. However, keeping in view that the said evidence was not examined by the AO, the matter was restored to the file of the AO in the interest of justice giving an opportunity to the AO to verify the same - in favour of revenue for statistical purposes. Disallowance of expenses incurred on promotional cinema films and on production of radio programme - Held that:- A similar disallowance made by the AO in assessment years 1992-93 and 1993-94 has been held to be unsustainable by the Tribunal following the decision in the case of CIT vs. Geoffrey Manners and Co. Ltd. 2009 (2) TMI 13 - BOMBAY HIGH COURT, thus the expenditure incurred on production of promotional films etc. has been allowed as revenue expenditure - against revenue. Addition on account of unutilized modvat credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional fees etc. 4. During the year under consideration, provision was made by the assessee for certain expenses on estimated basis. As per the final position emerged in the subsequent year, the provision so made for some expenses turned out to be more whereas the provision made for other expenses turned out to be short. The excess provision was written back by the assessee in the subsequent years which was offered to tax by the assessee in the subsequent year. In the year under consideration, the AO, however, disallowed the amount of provision for expenses made by the assessee in excess and confirming the said addition made by the AO, the learned CIT(Appeals) directed the AO to consider this aspect in the subsequent year by reducing the income offered by the assessee in that year by way of excess provision written back to avoid double taxation. 5. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. The learned counsel for the assessee has submitted that in respect of excess provision, the assessee has already got the relief from the AO in the subsequent year as per the direction given by the learned CIT(Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the assessee was not used in the year under consideration due to lack of export order, the depreciation claimed by the assessee on the said plant was disallowed by the AO which was confirmed by the learned CIT(Appeals). 9. After considering the rival submissions and perusing the relevant material on record, it is observed that a similar issue was restored by the Tribunal in assessee s own case for assessment year 1993-94 to the file of the AO with a direction to decide the same afresh after necessary verification. Before us, the learned counsel for the assessee has submitted that Kandla Plant was used by the assessee earlier for more than five years. If this is so, we find merit in the contention of the learned counsel for the assessee that once the asset enters the relevant block, it loses its separate existence for the purpose of depreciation and what is to be seen for the purpose of allowing depreciation is the use of the relevant block as a whole and not the use of individual asset. We, therefore, direct the AO to consider this legal position and allow the claim of the assessee for depreciation in respect of Kandla Plant after verifying the factual position from the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal, the learned CIT(Appeals) confirmed the disallowance made on account of item No. (a), (b) and (d) above following the order of his learned predecessor for assessment year 1993-94 and allowed part relief in respect of item No. (c) holding that 25% of the business meeting expenses should be treated as having been spent on the employees and disallowance at 50% should be made out of the remaining 75% expenses treating the same as in the nature of entertainment. 15. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. It is observed that a similar issue has been considered and decided by the Tribunal in assessee s own case for assessment year 1993-94 vide its order dated 29-06-2012 (supra) wherein it was held that business meeting expenses and expenses on AGM cannot be treated as in the nature of entertainment expenses. The Tribunal also directed the AO to add only Rs.2 lakhs out of total canteen expenses keeping in view the finding given by the Tribunal in earlier year i.e. assessment year 1993-94. Respectfully following the order of the Tribunal for assessment year 1993-94, we modify the impugned order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,27,789/- being 2% of dividend income on account of administrative and overhead expenses while calculating the deduction u/s 80M. 21. After considering the rival submissions and perusing the relevant material on record, it is observed that similar issue has been decided by the Tribunal in favour of the assessee in assessment year 1991-92 vide its order dated 4th Nov., 2010 passed in ITA No. 9566 and 9679/Mum/1995 wherein it was held following the decision of Hon ble Bombay High Court in the case of CIT vs. General Insurance Corporation of India 254 ITR 203 that only the expenses those are directly relatable to earning of dividend income should be reduced for the purpose of computing deduction u/s 80M and any disallowance of such expenses made on adhoc or estimate basis cannot be sustained. Respectfully following the said order of the Tribunal for assessment year 1991-92, we set aside the impugned order of the learned CIT(Appeals) on this issue and direct the AO to allow the deduction u/s 80M as claimed by the assessee in respect of dividend income. Ground No. 9 of the assessee s appeal is accordingly allowed. 22. In ground No. 10, the assessee has challenged the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 has not been accepted by the Tribunal vide its order dated 29-06-2010 (supra) and a similar issue has been decided against the assessee. As a matter of judicial discipline, we follow the said decision of the Tribunal in assessee s own case for assessment year 1993-94 and uphold the impugned order of the learned CIT(Appeals) confirming the disallowance made by the AO on this issue. Ground No.11 of the assessee s appeal is accordingly dismissed. 27. The next issue raised in ground No. 12 of the assessee s appeal relates to the disallowance of Rs.10,42,491/- made by the AO and confirmed by the learned CIT(Appeals) on account of payment made to M/s Asia Today for broadcasting Cibaca Gel Spots on Zee TV. 28. During the course of assessment proceedings, it was noticed by the AO that the amount in question was paid by the assessee to M/s Asia Today Ltd., a non-resident, without deducting tax at source. He, therefore, invoked the provisions of section 40(a)(i) and disallowed the said amount which the learned CIT(Appeals) confirmed. 29. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. The learned counsel for the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly. 2) The AO be directed to allow the depreciation on of Rs.1,67,768 on the written down value of the foreign visitors expenditure disallowed as capital expenditure by the Tribunal vide order dated 12th October, 2011 for the assessment year 1992-93. 32. As the relief sought by the assessee by way of additional grounds is only consequential as a result of decision rendered by the Tribunal on certain issues in the earlier years and the learned DR has also not raised any objection, the additional grounds filed by the assessee have been admitted. 33. As regards additional ground No.1, the relief claimed by the assessee therein is only limited i.e. to allow the deduction for proportionate amount of premium on redemption of non-convertible debenture which as claimed by the assessee in full in assessment year 1992-93 was disallowed by the Tribunal. 34. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. It is observed that while disallowing the deduction claimed by the assessee on account of entire premium on redemption of non-convertible debenture in assessment year 1992-93, the Tribunal has held in its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted for retirement which was accepted by the assessee company. He also found that the liability on this account was an ascertained liability as the same was made on the basis of actuarial valuation. He, therefore, held that the said liability was not a contingent liability as held by his predecessor in his appellate order for assessment year 1993-94 and allowed the deduction claimed by the assessee on account of such liability. 39. Before us, the learned DR has submitted that a similar issue involved in assessee s own case for assessment year 1993-94 has been restored by the Tribunal to the file of the AO with a direction to verify certain relevant aspect. The learned counsel for the assessee, on the other hand, has submitted that specific findings have been recorded by the learned CIT(Appeals) in his impugned order for the year under consideration on verification of the relevant agreements as well as the actuarial valuation that the liability was accrued and crystallized. 40. After considering the rival submissions and perusing the relevant material on record, it is observed that a similar issue has been decided by the Tribunal in assessee s own case for assessment year 1993- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the value of closing stock. 42. After considering the rival submissions and perusing the relevant material on record, it is observed that a similar issue has been decided by the Tribunal in favour of the assessee in assessee s own case for assessment years 1992-93 and 1993-94 deleting the similar additions made by the AO in the earlier years on account of proportionate cost of freight relatable to closing stock. Respectfully following the decision of the Tribunal in the earlier years on similar issue, we uphold the impugned order of the learned CIT(Appeals) giving relief to the assessee on this issue and dismiss ground No. 2 of the Revenue s appeal. 43. In ground No.3, the Revenue has challenged the action of the learned CIT(Appeals) in deleting the addition of Rs.60,70,949/- made by the AO by way of disallowance of expenses incurred on promotional cinema films and Rs.7,38,281/- on production of radio programme. 44. After considering the rival submissions and perusing the relevant material on record, it is observed that the expenses incurred by the assessee on production of promotional films, TV films and radio programme were disallowed by the AO treating the same as capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in the said Rule and does not extent to any other expenditure which is incurred wholly and exclusively for the purpose of business. Following the said decision rendered in assessment year 1991-92, the Tribunal has also decided a similar issue in favour of the assessee in assessment year 1992-93. Following the decision of the Tribunal in assessment year 1991-92 and 1992-93 on a similar issue, we uphold the impugned order of the learned CIT(Appeals) giving relief to the assessee on this issue and dismiss ground No. 6 of the Revenue s appeal. 50. In ground No.7, the Revenue has challenged the action of the learned CIT(Appeals) in deleting the disallowance of Rs. 15,72,856/- made by the AO on account of expenditure incurred on computer software. 51. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the deduction claimed by the assessee on account of expenses incurred on software application system and purchase of software package was disallowed by the AO treating the said expenses as of capital in nature in view of their enduring benefit. The learned CIT(Appeals) deleted the said disallowance following the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to verify the claim of the assessee that there are no brought forward losses available to be set off and to allow appropriate relief to the assessee in terms of deduction u/s 80HHC if the same is found to be correct. The learned counsel for the assessee has submitted that a similar direction may also be given in the year under consideration as the facts involved therein are similar to assessment year 1993-94. Since the learned DR has not raised any objection in this regard, we set aside the impugned order of the learned CIT(Appeals) on this issue and restore the matter to the file of the AO for deciding the same afresh as per the same direction given in assessment year 1993-94. 55. As a result of our decision rendered in ground No. 9, ground No. 10 relating to the Revenue s alternative claim on the same issue as involved in ground No. 9 has become infructuous and the same is accordingly dismissed. 56. In ground No. 11, the Revenue has challenged the action of the learned CIT(Appeals) in accepting the claim of the assessee to allow deduction u/s 80I ignoring the provisions of section 80HH(9). 57. After considering the rival submissions and perusing the relevant material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s cross objection raise its alternative claim corresponding to the issues involved in ground No. 2, 3 and 5 of the Revenue s appeal. Since the said issues involved in ground No. 2, 3 and 5 have been decided by us in favour of the assessee, ground No. 1, 2 and 3 of the assessee s cross objection have become infructuous and the same are accordingly dismissed. 60. As regards ground No. 4 relating to assessee s alternative claim that if the expenditure on computer software is treated as capital expenditure, depreciation thereon should be allowed, it is observed that the main issue relating to the nature of computer software expenses whether capital or revenue has been restored by us to the file of the AO for deciding the same afresh. We, therefore, also restore the issue relating to assessee s alternative claim for depreciation on computer software if the same is treated as capital expenditure, to the file of the AO for considering and deciding the same depending on his decision on the main issue. Ground No. 4 of the assessee s cross objection is accordingly treated as allowed for statistical purposes. 61. In the result, the appeal of the assessee is partly allowed whereas t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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