TMI Blog2013 (9) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... nds. The AO added the interest accrued on such bonds of Rs.23,36,301/- to the sale price for computing capital gains – Held that:- Interest to be taxed, either on accrual basis or as part of sale consideration for computation capital gain. In the instant case accrued interest should be considered as part of sale consideration for computing capital gains since the accrued interest was not being taxed as interest – Decided against the Assessee. Taxability of interest received from the Income Tax Department of Rs.22,35,44,844/- for various assessment years – Held that:- Ground raised by the revenue is misconceived as the same is raised with the wrong perception as if the Ld.CIT(A) has directed the AO to exclude the interest where the said interest is taxable under the provisions of Income Tax Act - Hence dismissed this ground – Decided in favor of Assessee. Expenditure towards legal and professional fees allowability – Capital of revenue expenditure – Held that:- Perusal of the details of expenditure reveals that the assessee has not added any new assets - Said expenditure is not incurred for acquiring any enduring benefit or income-yielding asset - Expenditure is legally permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. This issue stands settled in favour of the assessee by the judgmental the Hon ble Apex Court in the case of Madras Industrial Investment Corporation Ltd. vs. CIT 225 ITR 802 (SC). We also find that for the AYs 1986-87 to 1989-90, identical issue was decided by Mumbai Bench J of the Tribunal in assessee s own case in ITA Nos. 939/Mum/1993 ors and vide order dated 22nd March, 2007 by following the above judgment of the Hon ble Apex Court Ground No. 2 of revenue fails. 45.1 Respectfully following the above decision of the Co-ordinate Bench this issue is decided in favour of the assessee. 38.3 Accordingly, following the earlier orders of the Tribunal in assessee own case, we decide this issue against the revenue and in favour of the assessee. 30.2 Following the earlier order of this Tribunal, we decide this issue against the revenue and in favour of the assessee. Considering the facts that the identical issue has been decided consistently by the ITAT in favour of the assessee, we decide this ground in favour of the assessee and against the revenue. Ground No. 1 is dismissed. 3. Ground No. 2 relates to disallowance of Rs.6,94,557/- made by the AO on account of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of Article 5 of the Indo-US DTAA. The Assessing Officer has also accepted the proposition that if the transactions are at ALP, then, the benefit of Article 7 of the DTAA is available to the assessee. Accordingly, we do not find any error or illegality in the order of the CIT(A), qua this issue. We, therefore, following the said decision of the ITAT, decide this ground against the revenue and in favour of the assessee. Ground No. 5 is dismissed. 6. Ground No. 6 relates to action of the AO in disallowing Rs.2,38,33,333/- being brokerage paid for arranging foreign currency loan and the same allowed by the Ld.CIT(A). It is noted that the Ld.CIT(A) has relied on the decision of the Bombay High Court in Premiere Auto Mobile Limited Vs. CIT [80 ITR 415] and the decision of the Hon ble Supreme Court in India Cement Limited Vs. CIT [60 ITR 52]. Since this issue is covered in favour of the assessee by various decisions of the Hon ble Supreme Court including the said decision relied on by the Ld.CIT(A), we do not find any infirmity in the decision of the Ld.CIT(A) and the same is upheld. We decide this ground against the revenue and in favour of the assessee. Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) for allowing the said claim of the assessee by following the decision of the ITAT for the assessment year 1993-94. Accordingly we decide this issue against the revenue and in favour of the assessee. Ground No. 9 is dismissed. 10. Ground No. 10 relates to the action of the AO in disallowing the expenditure of Rs.5,65,383/- incurred on medical camps, construction of well and pipe lines and the rural dispensary expenses, where majority of the working population employed is residing and the same allowed by the Ld.CIT(A) by following his own order for the assessment year 1998-99. It is noted that the order of the Ld.CIT(A) for the assessment year 1998-99 has been confirmed by the ITAT in ITA No. 1865/M/2003 and the relevant portion of the said decision is extracted hereunder: 39. Once the expenditure has been incurred, which is in connection with the business of the assessee, then the same is allowable n view of the decision of the Hon ble Supreme Court in the case of Srivenkat Satyanarayan (supra) as well as the decision of the Hon ble Karnataka High Court in the case of Mysore Kirloskar and the decision of the Hon ble Madras High Court in the case of Madras Refinery (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest subsequently withdrawn from taxable income of the assessee in the light of the fact that the interest of Rs.2,62,01,305/- received by the assessee was offered for tax as income for assessment year 1999-2000, is subsequently withdrawn by the AO. In view of that matter, we are of the opinion that this ground raised by the revenue is misconceived as the same is raised with the wrong perception as if the Ld.CIT(A) has directed the AO to exclude the interest where the said interest is taxable under the provisions of Income Tax Act. Hence we dismiss this ground. 13. Ground No. 13 relates to the disallowance of deduction of export profit u/s 80HHC by the AO on the ground that the assessee is having negative income and the Ld.CIT(A) s direction to the AO to recomputed the deduction of export profit for the limited purpose of section 115 JA of the Act in accordance with the circular no.680 dated 21.02.1994 of the CBDT. It is pertinent to note that it is the claim of the assessee that the amount of deduction claimed towards export profits is as per the certificates in form no 10 CCA enclosed with the return of income and the amount of profit derived from export business has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s entitlement of the tax credit of the tax so paid under this provision against regular tax payable in future assessment years. It is noted that the Ld. CIT allowed the assessee s claim that the amount of carried forward unabsorbed depreciation for the A.Y. 1999-2000 should be increased by the amount of total income brought to tax by virtue of the provisions of section 115JA of the Act. The said direction, in our view is not in accordance with the provisions of Section 115 JA (3) which reads as under: (3) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or subsection (3) of section 74A. However, since the assessee is getting tax credit in the later years, the Revenue has a merit in the grounds raised. In view of that matter, we set aside this ground to the file of the AO to look into the matter afresh and decide the same in accordance with law. The said ground is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. The details of the said legal and professional expenditure are given on page numbers 36 to 38 of the assessment order. The perusal of the details of expenditure reveals that the assessee has not added any new assets. Also, it is noticed that the said expenditure is not incurred for acquiring any enduring benefit or income-yielding asset. The decisions relied on by the Senior Counsel as noted from the chart in the respective ground, in our view are in support of the case of the assessee. Therefore, the said expenditure is legally permissible as a deduction under section 37(1) of the Act being expenditure of revenue in nature. It has also been brought to our notice that the AO has already allowed depreciation on the said expenditure at the rates applicable to normal plant and machinery by holding that the expenditure is capital in nature and in view of the adjudication of this ground in the aforementioned manner allowing the claim of the assessee, the AO is directed to withdraw the depreciation benefit given already on the said expenditure. We direct and order accordingly. Accordingly, Ground No. 5 is allowed. 21. Ground No. 6 relates to computation of book profit und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to recompute the deduction of export profit for the limited purpose of section 115JA in accordance with the circular no. 680 dated 21.02.1994 of CBDT. This ground is linked to para 13 supra regarding the adjudication of ground no 13 of the Revenue s appeal. Since we have upheld the decision of the Ld.CIT(A) while rejecting the ground of the Revenue as discussed in the said para, the AO is accordingly directed to allow the deduction as per law. 25. Ground No. 6.4 relates to re-computation of profits of Vikram Power Unit. It is noted that the ITAT in the assessee s own case in ITA No. 5630/Mum/2002 for the Assessment Year 1998-99 has decided an identical ground in favour of the assessee at paras 13 to 15.2. In the absence of any distinguishing facts brought on record by the revenue, we, by following the said decision, decide this issue in favour of the assesse and against the department. Ground No. 6.4 is allowed. 26. Vide letter dated 26th April 2006, the assessee has raised additional ground as regards the sales tax exemption. The senior counsel for the assessee has stated that High Court s decision in the case of Echjay Forgings (P) Ltd 251 ITR 15. Hence, we do not find an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r counsel for the assessee has stated that the issue of sales tax exemption are covered by the ITAT Special Bench decision in the case of DCTI Vs. Reliance Industries Ltd. [88 ITD 273]. However, when this appeal has been filed before the ITAT, the decision of the Special Bench was not available. Hence, the additional ground raised in this appeal has to be allowed. In view of the fact that the additional grounds raised pertain to legal issue, we admit the same. 26.1 The additional ground no. 1 relates to the claim of sales tax exemption benefit being a capital receipt and not chargeable to tax. It has been observed that the ITAT in the assessee s own case for the earlier years remitted this issue to the record of the AO for considering the claim of the assessee. Considering the fact that the adjudication of this additional ground requires the AO to examine the scheme under which subsidy was received and thereafter give conclusion regarding claim made by the assessee, we are of the opinion that the matter should be remanded to the AO with the direction to examine the claim of the assessee after providing an opportunity of being heard to the assessee and decide the issue afresh cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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