TMI Blog2013 (10) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... s borne by Madhusudhan Oils and Fats Ltd. then the Assessing Officer would take the balance of Rs. 1,63,666/- for the purpose of section 35DD and allow 1/5th of the same – Decided partly against the Revenue. Prior period expenses allowability – Held that:- Appellant have four divisions where the net figure after adjustment of prior period expenses had been worked out. However, while examining the same, the Assessing Officer has made a mistake to the extent of taking the net figure where short provision of earlier years have also been written back and adjusted with provisions made relating to earlier years expenses – Only expenditure related to prior period is disallowed - Therefore, out of disallowance of Rs. 5,17,785/-, Rs. 2,10,807/- is hereby confirmed. - I.T.A. Nos. 766,767,781,1063 & 1064/AHD/2007 - - - Dated:- 4-10-2013 - Shri D. K. Tyagi, J. M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri S. N. Soparkar A. R. For the Respondent : Shri O. P. Batheja. Sr. D. R. ORDER Per Bench:- 1. Out of the total five appeals, one appeal is filed by the Assessee and the other four appeals are filed by the Revenue against the order of CIT(A)-VII, Ahme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter allowed the deduction to the extent of Rs. 97,03,051/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) allowed the appeal of the Assessee by holding as under: "6,7 I have gone through the facts of the case. In this case the ld. CIT(A), Ahmedabad vide his order dated 31.03.2004 allowed certain relief to the appellant. The Assessing Officer has given effect to the order of Ld. CIT(A) on 12.05.2004. After receipt of the order, the appellant filed a letter on 30.08.2004 requesting the A.O. to rectify the order dated 12.05.2004. In this petition the appellant has requested to rectify the order giving appeal effect. The rectification request was mainly for computing correct deduction u/s 80HHC by taking profit making units as per direction of CIT(A). This rectification petition of the appellant filed on 30.08.2004 is still pending for disposal. It is seen from the record that in response to the above letter the Assessing Officer sent a letter dated 16.02.2005 and requested the assessee to furnish a certificate from auditors in form 10CCAC in support of its claim of deduction u/s 80HHC unit wise. The relevant portion of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 in favour of Assessee. He pointed out to the relevant paras of the aforesaid order and therefore submitted that similar view be taken in the present appeal since there are no change in the facts of the year as compared to earlier years. The ld. D.R. on the other hand relied on the order of Assessing Officer. 7. We have heard the rival submissions and perused the material on record. We find that before the Co-ordinate Bench of Tribunal in ITA No. 765/Ahd/2006 order dated 30.03.2012 the issue of deduction under 80HHC was considered and decided in Assessee's favour in following manner:- 31 The 1st issue raised hi 2nd ground of appeal filed by the assessee is of directing the Assessing Officer to compute deduction under section 80HHC of the Act by taking profits of all the units as a whole and 2nd issue in its ground is of turnover/profits of non-exporting units to be included. 32 The Ld. Authorised Representative submitted that this issue is covered in Assessee's favour by the order of I.T.A.T., Ahmcdabad "C" Bench in assessee's own case for Assessment Year 1992-93 vide ITA No. 1390/Ahd/2003 1409/Ahd/2003 order dated 13.08.2009. The relevant finding of I.T.A.T. from the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) and thus this ground of Revenue is dismissed. 9. In the result, the appeal of the Revenue is dismissed. ITA No. 1063 and 1064/Ahd/2007( for A.Y. 1999-2000 2000-01) Revenue's appeal 10. Before us, both the parties submitted that the facts in both the appeals are identical except for the amounts and therefore the submissions made by them in one year would be equally applicable to the other. We therefore proceed with the facts of ITA No. 1063/Ahd/2007 for A.Y. 1999-2000. In the present case, Assessing Officer vide order dated 24th March, 2006 levied penalty of Rs. 31,31,710/- under section 271(1)(c) as he was of the view that Assessee has concealed its income to the extent of Rs. 89,47,745/- by making a wrong claim of deduction under Section 80HHC of the Act. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 13.12.2006 deleted the penalty by holding as under: "6. I have considered the above submissions. Before deciding the issue, it is necessary to refer to the observations of the ld. AO in para-7.3 of the penalty order as under: "Coming to the issue of levy of penalty, it is being taken note of that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .A.T., Ahmedabad in its own case for A.Y. 1993-94. From the above it is clear that the claim of the appellant can be decided in either way by relying decisions of courts on the subject. This makes the issue debatable one on which two opinions are possible. Disallowance of appellant's claim on such issue cannot amount to concealment of income or furnishing of inaccurate particulars of income. 6.4 ...................................... 6.5................................... 6.6. In view of the above decisions, the disallowance of claim of deduction u/s 80HHC will not amount to concealment of income. In addition to this in appellant's case it has filed all necessary particulars along with return of income. On this account also even if the disallowance is made, there cannot be a concealment. 11. Aggrieved by the order of CIT(A) the Revenue is now in appeal before us and has raised the following ground:- 1.The Ld. CIT(A) erred in law and on the facts of the case in canceling the penalty of Rs. 28,34,748/- levied u/s. 271(1)(c) of the I.T. Act, 1961 holding that no penalty was leviable in respect of additions/disallowances made on debatable/disputed claims/deductions ignoring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed under Section 143(3) of the Act vide order dated 28.03.2005 and the total income was determined at Rs. 79,41,105/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 30.11.2006 partly allowed the appeal of the assessee. 16. Aggrieved by the order of CIT(A), the Assessee and Revenue both are in appeal before us, we first take up Assessee's appeal. 1st ground is general and requires no adjudication therefore dismissed. Ground 2 and 3 are with respect to disallowance under Section 14A. 17. During the course of assessment proceedings, Assessing Officer noticed that Assessee on the investments of Rs. 1,57,78,386/- in shares, mutual funds and subsidiary companies, had earned dividend income to the tune of Rs. 11,124/- which was claimed as exempt under Section 10 (33) of the Act. Assessing Officer was of the view that as per Section 14A of the Act, the expenses incurred for earning dividend income cannot be allowed as deduction and that interest expenses incurred for making investments also cannot be allowed as business expenditure under Section 36 of the Act. He noted that the Assessee had debited interest of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before us. 19. Before us the learned A.R. at the outset submitted that on identical facts in the Assessee's own case for A.Y. 2000-01, the issue has been decided in favour of the Assessee. He further submitted that since the facts of the case in the year under appeal are identical to that of A.Y. 2000-01 the issue be decided in favour of Assessee. He also placed on record the copy of the aforesaid order. The Ld. D.R. on the other hand relied on the order of Assessing Officer. 20. We have heard the rival submissions and perused the material on record. We find that in ITA No. 3800/Ahd/2004 order dated 28.02.2013 for A.Y. 2000-01 on identical facts, the issue has been decided in favour of Assessee by the Co-ordinate Bench of Tribunal by holding as under:- 31 We have heard the rival submissions and perused the material on record. From the copy of the audited balance sheet placed on record it is seen that as on 31st March, 2000 the shareholders funds (comprising of share capital and reserves) is to the tune of 49.92 crores and the investments are of Rs.1,69 crore and thus the interest free funds are in excess of investments. In the case of Reliance Utility and Power, (supra) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We thus delete the disallowance made." 21. Since it is an undisputed fact that the facts of the case in the year under appeal are identical to that of A.Y. 2000-01 and since the Revenue could not point out any contrary facts, we following the order of Co-ordinate Bench for A.Y. 2000-01 in ITA No. 3800/Ahd/2004 (supra) and for similar reasons, decide the issue in favour of Assessee. Thus this ground of Assessee is allowed. Ground no. 4 is with respect to de-merger expenses of Rs. 1,66,666/-. 22. Assessing Officer noticed that Hon. Gujarat High Court vide order dated 30.10.2011 have approved the scheme of de-merger of the Assessee. From the details of the expenses incurred, he noticed that Assessee has incurred Rs. 3,27,332/- for the purpose of de-merger. Assessing Officer was of the view that since de-merger brings structural changes leading to alteration in the framework of the Assessee, the expenditure in relation to de-merger would be capital in nature. He accordingly disallowed Rs. 3,27,332/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) granted partial relief to the Assessee by holding as under:- 6.1 On going through the record I fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1 I have examined the details. As the expenditure relates to earlier years, I hold that Assessing Officer is justified in disallowing the same. However, only the following expenditure relating to earlier years can be disallowed: (i) Rakhial division-Net balance of Rs. 1,35,821/- (ii) Nimbhahera division-debit expenses of Rs. 38,376/- (iii)Corporate office debit expenses- Rs. 36,610/- Rs. 2,10,807/- Therefore, out of disallowance of Rs. 5,17,785/-, Rs. 2,10,807/- is hereby confirmed. The appellant gets relief of Rs. 3,06,978/-. 26. Aggrieved by the order of CIT(A), the Assessee is now in appeal before us. 27. Before us, the Ld. A.R. submitted that the expenses which have been debited in the current year had crystallized during the year and therefore the same were allowable. He further submitted that the Assessee had rightly claimed it as expenditure for the year. He therefore submitted that no disallowance on account of prior period expenditure is called for. He further relied on the decision in the case of Saurashtra Cement and Chemical Ltd. vs. CIT 213 ITR 523. The learned D.R. on the other hand s ..... 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