TMI Blog2013 (9) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... 35E because the assessee had not fulfilled the required conditions - the learned authorised representative could not controvert these findings of the authorities below and hence, the aspect was decided against the assessee - the only argument raised was that deduction should be allowed under section 37(1) of the Income-tax Act - No deduction was allowable in the present year because even if the expenditure were to be debited in the profit and loss account, the same had to be considered in the credit side of the profit and loss account also as closing stock of work-in-progress and there will be no resultant deduction in the present year – there was no merit in this ground of the assessee - Decided against Assessee. Disallowance of Deduction u/s 35D - increase in share capital - fee paid to Registrar of Companies - stamp fee - in connection with the extension of the industrial undertaking or setting up of a new industrial undertaking - Held that:- The findings of the AO were not controverted by the CIT (Appeals) or by the learned authorised representative by showing that the assessee was fulfilling the requirements of subsections (1) and (2) of section 35D of the Act and we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l expenditure – Decided in favour of Assessee. - I.T.A. No.2943Ahd/2006, I.T.A.No.1338/Ahd/2007, I.T.A.No. 3503/ Ahd/2008 and I.T.A.No. 1286Ahd/2009 , I.T.A.Nos. 84, 1468/Ahd/2007, I.T.A.No. 3578/Ahd/2008 & I.T.A.No. 1669/Ahd/2009 And C.O. No.164/Ahd/2010 in I.T.A.No. 2943/Ahd/2006 - - - Dated:- 31-8-2012 - Order The order of the Bench was delivered by A. K. Garodia (Accountant Member).-Out of this bunch of 9 appeals, there are 8 cross appeals of the assessee and the Revenue for the assessment years 2003-04, 2004-05, 2005-06 and 2006-07 and there is one crossobjection of the Revenue for the assessment year 2003-04. All these were heard together and are being disposed of by way of this common order for the sake of convenience. The assessee has furnished a chart showing year wise position of the grounds of appeals for the assessment years 2003-04, 2004-05 and 2005-06. As per this chart, the first issue is regarding disallowance of claim under section 10(23G) of the Income-tax Act, 1961 and this issue is raised by the assessees as ground No. 1 in the assessment years 2003-04 and 2004-05. The first ground in the assessment year 2003-04 reads as under : "(1) The learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of interest income received form investment in bonds of SSNNL and GIPCL and he made addition of Rs.68,06,441 in the income of the assessee. Being aggrieved, the assessee carried the matter in appeal before the learned Commissioner of Incometax (Appeals) but without success and now, the assessee is in further appeal before us. It was submitted by the learned authorised representative that this issue is covered in favour of the assessee by the Tribunal decision rendered in the assessee's own case in the assessment year 2001-02 in I.T.A.No. 1663/ Ahd/2008 dated November 30, 2010 and he submitted a copy of this Tribunal decision. The learned Departmental representative supported the orders of the authorities below. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below and the Tribunal decision cited by the learned authorised representative for the assessment year 2001-02 in the assessee's own case. We find that in that year also, the dispute was regarding interest income in respect of amount invested in bonds of SSNNL and GIPCL. In that year, the Tribunal held by following the Tribunal decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative that even if this claim is not allowable under section 35E, the same should be allowed under section 37 because the assessee proposes to sell the project and recover the expenses from the buyer. The learned Departmental representative supported the orders of the authorities below. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below. We find that before us, no serious argument was made regarding eligibility of the assessee for deduction under section 35E and a clear finding is given by the authorities below that the assessee is not eligible for deduction under section 35E because the assessee has not fulfilled the required conditions. Before us, the learned authorised representative could not controvert these findings of the authorities below and hence, this aspect is decided against the assessee. Before us, the only argument raised is that deduction should be allowed under section 37(1) of the Income-tax Act, 1961. This contention was also raised before the learned Commissioner of Income-tax (Appeals) and was decided by the learned Commissioner of Income-tax (Appeals) as per paragraph 4.3.2 of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk-in-progress and there will be no resultant deduction in the present year. Therefore, we do not find any merit in this ground of the assessee and, therefore, the same is rejected in all the three years. As per the chart, the third issue is regarding disallowance of deduction claimed by the assessee under section 35D. This issue has been raised by the Revenue as per ground No. 1 in the assessment years 2003-04, 2004-05 and 2005-06. The brief facts are that it is noted by the Assessing Officer in para 9 of the assessment order for the assessment year 2003-04 that the assessee claimed deduction of Rs. 28,20,192 under section 35D of the Income-tax Act, 1961. The Assessing Officer asked the assessee to furnish necessary evidence and to explain vide notice under section 142(1) dated December 15, 2005 followed by another notice under section 142(3) dated January 20, 2006. Two replies were submitted by the assessee before the Assessing Officer being dated February 22, 2005 and January 30, 2006. The Assessing Officer has noted that the total expenses incurred for which deduction is claimed by the assessee under section 35D can be categorised in three categories : The first is fee to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at high Court rendered in the case of Saurashtra Cement and Chemical Industries Ltd. v. CIT as reported in [1980] 123 ITR 669 (Guj) and the judgment of the hon'ble Madhya Pradesh High court rendered in the case of CIT v. Bhilai Engineering Corporation P. Ltd. as reported in [1982] 133 ITR 687 (MP). He also submitted that since the same was allowed in the earlier years, it cannot be disallowed now. He also submitted that on pages 99-102 of the paper book, is the assessment order passed by the Assessing Officer under section 143(3) of the assessment year 1995-96 and there is no disallowance under section 35D of the Income-tax Act, 1961 whereas the computation of income is available on page 94 of the paper book where, the assessee claimed deduction of Rs. 3,03,704 under section 35D of the Income-tax Act, 1961. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below. We find that this disallowance is made by the Assessing Officer by giving a specific finding that the assessee is not fulfilling the conditions imposed under subsections (1) and (2) of section 35D and there is no finding given by the learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght by the Incometax Officer to show that finding reached for the earlier year was erroneous whereas, in the present case, we find that the Assessing Officer has established that the assessee is not fulfilling the conditions of sub-sections (1) and (2) of section 35D and hence, this judgment is also not applicable in the present case because the facts are different. From the above discussion, we find that none of the judgments cited by the learned authorised representative is helping the case of the assessee and the findings of the Assessing Officer are not controverted by the Commissioner of Income-tax (Appeals) or by the learned authorised representative by showing that the assessee is fulfilling the requirements of subsections (1) and (2) of section 35D of the Act and we have also discussed that in the name of rule of consistency, mistake cannot be perpetuated and, therefore, we hold that the learned Commissioner of Income-tax (Appeals) was not justified in deleting the disallowance made by the Assessing Officer under section 35D. We, therefore, reverse the order of the learned Commissioner of Income-tax (Appeals) on this issue and restore that of the Assessing Officer. This g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he three years. The fifth issue as per this chart is regarding disallowance on account of rates and taxes. This issue is raised by the Revenue in the assessment year 2005-06 as per ground No. 2 in I.T.A. No. 3578/Ahd/2008. The ground reads as under: "The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in the case in deleting the addition of Rs. 2,72,81,590 made by the Assessing Officer on account of disallowance of expenses under rates and taxes." The brief facts of the case are that it is noted by the Assessing Officer in the assessment order for the assessment year 2005-06 that the assessee has debited in his profit and loss account a sum of Rs. 2,72,81,589 in respect of rates and taxes. The Assessing Officer asked the assessee to explain the nature of these expenses. In reply, it was submitted by the assessee before the Assessing Officer that land revenue authorities have levied land revenue and education cess on the land situated in various villages of Bhavnagar and Amreli Districts. The Assessing Officer has given a finding that as per the submission of the assessee, the land has been acquired for the power project of the power corporation. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2006-07. The grounds raised by the assessee in this year are as under: "The appellant being dissatisfied with the order passed by the Commissioner of Income-tax (Appeals)-VI, Ahmedabad (CIT(A)), prefers this appeal against the same on the following amongst other grounds, which are without prejudice to each other. 1. The order passed by the Commissioner of Income-tax (Appeals) is erroneous and contrary to the provisions of law and facts and therefore requires to be suitably modified. It is submitted that it be so done now. 2. The learned Commissioner of Income-tax (Appeals) erred in confirming disallowance made for Rs. 77,83,160 under section 35E of the Act. It is submitted that in the facts and circumstances of the case the appellant is eligible for the deduction under section 35E of the Act. It is submitted that it be so held now. 2.1 The learned Commissioner of Income-tax (Appeals) erred in confirming the stand of the Assessing Officer that production must have been commenced. It is submitted that operation relates to prospecting is sufficient for being eligible for deduction under section 35E of the Income-tax Act and therefore, the appellant is eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding interest chargeability under section 234B and withdrawal of interest allowed to the assessee earlier under section 244A. This issue is consequential and hence, no separate adjudication is called for. In the Revenue's appeal for this year, one more ground is raised by the Revenue regarding direction of the learned Commissioner of Income-tax (Appeals) to delete the disallowance made by the Assessing Officer for rates and taxes paid by the assessee on land. Both sides agreed that this issue is identical to ground No. 2 raised by the Revenue in the assessment year 2005-06. In that year, we have decided this issue in favour of the Revenue and against the assessee as per paragraph 24 above and accordingly, in the present year also, this issue is decided in favour of the Revenue. This ground of the Revenue is allowed. Now, we take up the cross-objection filed by the Revenue for the assessment year 2003-04, i.e., C.O. No. 164/Ahd/2010. As per this cross-objection of the Revenue, we find that no specific grounds are available on record but as per the background facts of the cross-objection, the grievance of the Revenue is this that the claim of the assessee regarding claim un ..... 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