TMI Blog2013 (8) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... refundable grants sanctioned, are claimed as deduction only when fund are already utilised/ fund utilisation report are received. Rate of Depreciation on rail mil tankers - Held that:- depreciation rate of 30% is allowable in the case of motor taxi and motor bus, but admittedly in the present case, the rail milk tanker cannot move of its own, and hence, the same cannot be classified as motor bus or motor taxi, and therefore, the same is not eligible for depreciation at the rate of 30%, and the AO has rightly allowed the depreciation at the rate of 15%, by treating the same as plant & machinery - Decided against assessee. Claim of deduction of an amount Disallowed earlier on account of non TDS - u/s 40(a)(ia) - Held that:- As per the proviso to section 40(a)(ia) of the Act, if the tax has been deducted in a subsequent year or if already deducted in the earlier year, has been paid after the due date specified in section 139(1), such sum shall be allowed as deduction in computing the income of the previous year in which such tax has been paid - The requirement of proviso is satisfied by the assessee, but the learned CIT(A) has put one more condition that, unit for which this exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Commissioner of Income Tax (Appeals) has erred in upholding the order of Assessing Officer passed u/s 147, which was based on change of opinion and that is not permissible under the Income Tax Act. The Commissioner of Income Tax (Appeals) should have quashed the order of Assessing Officer considering the same as void ab initio. It is submitted that it be held now. 2.1 The learned Commissioner of Income Tax (Appeals) has erred in upholding the contention of the Assessing Officer of reopening the assessment without any tangible material to come to conclusion that there was an escapement of income from assessment. 2.2 The learned Commissioner of Income Tax (Appeals) has erred in relying on Supreme Court's decision in the case of ACIT V. Rajesh Jhaveri Stock Brokers (P.) Ltd, reported in 291 ITR 500 which is not applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance Rs.2,39,42,883/- by applying section 14A. In the facts and circumstances of the case it is submitted that no disallowance under section 14A is required to be made. It is submitted that it be so held now. 3.1 The learned Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the I.T.Act. on 28/12/2006. He has also noted that on going through the profit loss account, it is seen that the assessee has shown income from dividend of Rs.115.72 lakhs, but while computing the taxable income, the assessee has deducted such dividend as exempt, and this claim of the assessee was accordingly allowed by the AO. He has further noted that as per the provisions of section 14A of the I.T.Act, for the purpose of computing total income, no deduction shall be allowed in respect of the expenditure incurred by the assessee, in relation to the income, which does not form part of the total income. Thereafter, he had noted that the assessee was allowed deduction of total dividend income of Rs.115.72 lakhs as exempt income, but in view of provision of section 14A of the Act, the expenses incurred for earning the dividend income are to be disallowed and added to the total income, and while computing the taxable income, such expenditure was not added back in the total income. Thereafter, he has given a finding that since the expenditure incurred for earning the exempt income, i.e. dividend income is not disallowed while computing taxable income, he has reason to believe tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment. In our considered opinion, this issue in the present case regarding reopening is squarely covered in favour of the assessee by this judgment of the Hon'ble Delhi High Court rendered in the case of CIT Vs. Kelvinator India Ltd. (supra), which was duly approved by the Hon'ble Apex Court, and respectfully following the same, we hold that in the facts of the present case, reopening is not valid, and same is hereby quashed. The ground no.2 is allowed. 5. In view of our decision regarding ground no.2, the remaining grounds raised by the assessee on merit, do not call for any adjudication. 6. In the result, appeal of the assessee stands allowed. 7. Now, we take up the appeal of the Revenue for the same assessment year i.e. 3205/Ahd/2010. 8. We find that this appeal has arisen out of the reassessment order passed by the AO under section 143(3) r.w.s 147 of the I.T. Act, dated 29.12.2002. While deciding the appeal filed by the assessee, we have already held in para-4 that the reopening is not valid and we have quashed the assessment. Since the assessment order passed by the AO in reassessment proceeding itself is quashed by us, the appeal filed by the Revenue does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of Rs.78,88,592/- given to various cooperative societies and other organizations as deductible expenditure u/s.36(1)(xii) of the IT Act. It is submitted that the amount represents an expenditure incurred by the appellant for the purpose of objects of the appellant and thereby fulfills all conditions of section 36(1)(xii) of the IT Act and accordingly it is entitled to deduction u/s.36(1)(xii). It is submitted that it be so held now." 16. It was submitted by the learned AR of the assessee that in A.Y.2003-2004, the Tribunal had recalled the earlier order, and it was held that the grant is allowable as an expenditure under section 36(1)(xii) of the Act, and the matter was sent back to the AO for verification (i) whether the alleged non-refundable grants are given from grants received or not, and (ii) non-refundable grants sanctioned, are claimed as deduction only when fund are already utilised/ fund utilisation report are received. He also submitted that under similar facts, in A.Y.2004-05, 2005-2006 and 2006-2007, the Tribunal has restored back the matter to the file of the AO for readjudication. Accordingly, in the present year also, we set aside the order of the CIT(A) on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are different, and therefore, these judgments do not render any help to the assessee in the present case. This ground of the assessee is rejected. 20. The ground no.6 of the assessee is as under: "6. The ld.CIT(A) has erred in confirming disallowance of expenses amounting to Rs.4,23,75,516/- pertaining to Junagadh and Safal, which were claimed as per section 40(a)(ia) of the IT Act. It is submitted that the appellant ahs paid TDS in respect of both the above during the year under consideration, and is thus entitled to deduction of the said expenses u/s.40(a)(ia). It be so held now." 21. It was submitted by the learned AR of the assessee that in A.Y.2006-2007, the assessee made provision for payment to contractors and professionals in respect of its two units, Safal Market-Bengaluru and Junagadh Dairy, on which TDS was not deducted/deducted but not paid and accordingly, the expenses was disallowed in the return of income under section 40(a)(ia) of the Act in that year. He also submitted that the assessment was completed for A.Y.2006-2007 by making disallowance. He also submitted that subsequently, TDS on these amount were paid in June 2006/December, 2006 and assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingent liability in the year in which the same was incurred, and therefore, it was not an allowable expenditure in A.Y.2006-2007. On this aspect, we find that the finding of the learned CIT(A) is not clear, and there is no finding of the AO on this aspect in assessment order. In these facts, we feel that this matter should go back to the file of the AO for fresh decision after examining this aspect, as to whether the same is otherwise allowable or not, and what was reasoning given for making disallowance in A.Y.2006- 2007. If it is found that this expenditure was otherwise allowable in A.Y.2006-2007, and disallowance was made only for the reason that TDS was not deducted and paid, and same is deducted and paid in the present year, then the deduction should be allowed in the present year. The AO should pass necessary order as per law, as per our above discussion, after providing adequate opportunity of being heard to the assessee. This ground of the assessee is allowed for statistical purpose. 23. The ground no.7 of the assessee is as under: "7. The ld.CIT(A) erred in confirming interest charged under section 234B, 234D and recovery of interest under section 244A of the Act." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, in the present year also, this ground is rejected. 29. For the ground no.3 also, it was fairly conceded by the learned AR of the assessee that the issue was decided against the assessee by the Tribunal for A.Y.2003-2004 and subsequent year. Accordingly, this ground is also rejected. 30. In the result the appeal of the assessee is partly allowed for statistical purposes. 31. Now, we take up the Revenue's appeal for A.Y.2007-2008 i.e. ITA No.3206/Ahd/2010. 32. The ground no.1 is as under: "I(i). On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs.24,15,74.441/--u/s 41(1) of the Act being the provision written back without appreciating the fact that the entire entity was exempt horn tax up to A.Y. 2002-03, therefore, claiming the deduction by way of excess provision written back of earlier years. amounts to double deduction, which is not permissible as per provisions of the Act. I(ii). The Id.CIT(A) failed to appreciate the fact that the write hack of the provision can only be claimed as a deduction if it is proved by the assessee that the provision made in the earlier year was disallowed and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such provision cannot give rise to an income under section 41(1) of the Act. We therefore decline to interfere in the order of the learned CIT(A) on this issue. This ground is rejected. 35. The ground no.2 is as under: "2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting addition of Rs.5,22,681/- u/s 41(1) of the Act being excess provision for sales tax made in A.Y. 1995- 96 without appreciating the fact that the entire entity was exempt from tax up to A.Y. 2002-03, thus provision made was neither added hack nor subjected to tax being allowed in that year and allowing the same during the year would amount to double deduction, which is not permissible as per provisions of the Act." 36. The learned DR supported assessment order, whereas, the learned AR supported the order of the CIT(A). Regarding this ground also, it was submitted by the assessee that the provision was made in the year when the assessee was not liable to tax, and therefore, write back of such provision cannot result in addition under section 41(1) of the Act. 37. We have considered rival submissions. We find that the amount in question is, write back of excess pro ..... 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