TMI Blog2013 (11) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... :- There were two components of this claim of the assessee for deduction under Section 80HHC, which was not allowed by the authorities below - It was held by the Tribunal that the claim of shortage paid by the assessee in fact increases the cost of the export, but it does not decrease the export turnover - For second aspect of the matter regarding 90% of the other income – there was no merit in the claim of the assessee - In the absence of any evidence to establish that this income was business income, this part of the ground was rejected. Deletion of Compensation from Multilateral Fund – Loss of Business Earnings – Revenue OR Capital Receipt – Held that:- Following Assistant Commissioner of Income Tax, Circle 1(1), Versus Gujarat Fluorochemicals Ltd. [2012 (8) TMI 37 - ITAT, AHMEDABAD] - No difference in facts could be pointed out by the learned DR of the Revenue in the present year - Accordingly, we find no reason to take a contrary view in this matter, and thus, this additional ground of the Revenue was rejected. Expenses u/s 37(1) – Village development expenses to be allowed or not - Nexus between the work of the association and the business of the assessee - the onus cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest expenditure in respect of investment - Since the balance sheet was not available before us, we set aside the order of the CIT(A) on this issue, and restore the matter back to the file of the AO for fresh decision. - ITA No.4515,4563/Ahd/2007 , ITA No.898,1111,1108/Ahd/2009 , - - - Dated:- 31-1-2013 - A K Garodia and Kul Bharat, JJ. For the Appellant : Shri S N Soparkar For the Respondent : Shri Shelly Jindal ORDER:- Per: A K Garodia: Out of this bench of five appeals, there are four cross appeals of the assessee and the Revenue for Assessment years 2002-2003 and 2004-2005, in respect of the assessment made by the AO under Section 143(3) of the Act and remaining one appeal is of the Revenue for A.Y.2004-2005 in respect of penalty imposed by the AO under Section 271(1)(c) of the Act. All these appeals were heard together, and are being disposed of by way of this common order, for the sake of convenience. 2. First we take the appeal of the assessee for the assessment year 2002-2003 i.e. ITA No.898/Ahd/2009. In this appeal, the assessee has raised total seven grounds, out of which, ground no.7 is general in nature. Regarding ground nos.1, 2 and 5, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same were taken into account while computing the profit of the assessee. In reply, it was submitted by the learned AR of the assessee that even advances are allowable as write off of bad debts or as business loss, and in support of this contention, he relied on the decision of Hon ble Bombay High Court in the case of Lord's Dairy Farm Ltd. v. Commissioner of Income-tax, 27 ITR 700 (Bom) 7. He also submitted that the matter may be restored back to the file of the AO fresh decision after examining the nature of advances and in light of the judgments cited supra. The learned DR of the Revenue supported the orders of the authorities below. 8. We have considered rival submissions and perused the material on record and gone through the orders of the authorities below, and the judgment cited by the learned AR of the assessee. We find that the Tribunal order in assessee s own case for A.Y.2001-02 is not applicable in the present case because in that year, the issue was decided by the Tribunal in favour of the assessee on the basis that the balances were taken into account while computing the profit of the assessee. In the present year, the facts are different. But still if it is fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover, we find that this issue is covered in favour of the assessee by the Tribunal decision in assessee s own case for A.Y.2003- 2004. In that year, it is held by the Tribunal that the claim of shortage paid by the assessee in fact increases the cost of the export, but it does not decrease the export turnover. Hence, respectfully following the decision of the Tribunal cited supra, we decide this issue in favour of the assessee. For second aspect of the matter regarding 90% of the other income of Rs.33,998/-, we do not find any merit in the claim of the assessee. In the absence of any evidence to establish that this income is business income, this part of the ground is rejected. 12. In the result, the appeal of the assessee is partly allowed. 13. Now we take up the appeal of the Revenue being ITA No.1111/Ahd/2009 for A.Y.2002-2003. 14. In this appeal, the Revenue has filed one additional ground, which reads as under: 1(a) On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs.17,06,35,278/- towards compensation from multilateral fund under the terms of Montreal Protocol for reducing production of Chlorofluorocar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal order in assessee s own case for A.Y.2003-2004 in ITA No.4/Ahd/2007, copy of which has been filed at page no.1 to 26 of the compilation of the decisions. He also submitted that relevant portions of the Tribunal decision being para-4 to 7 are available at page no.3 to 7 of the paper book. 19. We have considered rival submissions. We find that the issue is covered in favour of the assessee by the Tribunal order in A.Y.2003-2004, and since no difference in facts could be pointed out by the Revenue, we find no reason to take contrary view. Respectfully following the above decision of the Tribunal in assessee s own case, this ground of the Revenue is rejected. 20. Ground No.2 of the Revenue s appeal is as under: 2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in allowing the contribution of Rs.15,24,537/- to Refrigerant Gas Manufacturer Association, without appreciating that the expenditure was not incurred wholly and exclusively for the purposes of the business within the meaning of section 37(1) there being no direct nexus between the work of the association and the business of the assessee, and that the onus case on the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted the order of the AO, whereas the learned counsel for the assessee supported the order of the CIT(A). He also placed reliance on the following judicial pronouncements: a) Commissioner of Income-tax v. Pfizer Ltd., 330 ITR 62 (Mum) b) Commissioner of Income-tax Vs Motor Industries Co. Ltd. (Kar), 331 ITR 79 (Kar) 27. At this juncture, a query was raised by the Bench regarding the nature of the insurance claim. In reply, it was submitted by the learned AR of the assessee that the same is in respect of loss of goods in transit, but since this aspect of the matter is not examined by the authorities below, and no finding is available regarding nature of the insurance claim, the matter may be restored back to the file of the AO for examining the nature of the claim and then decide the matter afresh. 28. We have considered rival submissions. We find that the learned CIT(A) has not examined the nature of the insurance claim. There is no finding of the AO also regarding the nature of the insurance claim, and hence, we feel it proper to restore this issue back to the file of the AO for fresh decision after examining the nature of insurance claim. Accordingly, we restore thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 of the paper book. At this juncture, a query was raised by the Bench as to the basis of allocating the entire amount of labour expenses to noncontributable for trading goods, it was submitted by learned counsel of the assessee that the basis is not available readily. Regarding third part of this ground, i.e. regarding reducing the amount of Rs.11,64,167/- paid to customers for shortage claims, it was submitted that this issue is identical to ground no.6 of assessee s appeal in A.Y.2002-2003. The learned DR supported the order of the CIT(A) on this issue. 33. We have considered rival submissions and have perused the material available on record and gone through the orders of the authorities below. Regarding the first issue being reduction of 90% of Rs.3.67 lakhs in respect of other misc. income from business profit, we feel that this matter should go back to the file of the AO for fresh decision. In our considered opinion, the amount received in present year relating to earlier years, should not be considered in the present year, as the income as well as for deduction under Section 80HHC, and the same should be considered in the respective years as income as well as for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is called for out of interest expenditure in respect of investment. Since the balance sheet is not available before us, we set aside the order of the CIT(A) on this issue, and restore the matter back to the file of the AO for fresh decision. The AO should examine the balance sheet of the assessee-company, and if it is found that own funds are more than the investment, then no disallowance should be made out of interest expenses under Section 14A. This ground is allowed for statistical purpose. 37. Ground no.3 of the assessee s appeal is as under: 3. In the facts and circumstances of the case and in law, the ld.CIT(A) erred in confirming addition of Rs.13,57,606/- being interest on income tax refund. 38. It was fairly conceded by the learned counsel for the assessee that this issue is now covered against the assessee as per the decision of the Special Bench of the Tribunal. Accordingly, this ground of the assessee is rejected. 39. Ground no.4 and 5 of the assessee s appeal are as under: 4. In the facts and circumstances of the case and in law, the ld.CIT(A) erred in confirming disallowance of Rs.9,64,177/- being charges for extension of time for construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the exchange fluctuation gain of Rs.84.95 lacs, it was submitted that the details are available at page no.33 of the paper book, which includes the gain of Rs.82.45 lakhs on account of term loan and Rs.17.64 lakhs on account of swap charges, and it is not clear as to whether the swapping is of term or other business liability. Under these facts, the Bench wanted to know as to how the exchange fluctuation gain is eligible for deduction under Section 80HHC and in reply, the learned AR has placed reliance on the judgment of Hon ble Gujarat High Court in the case of Amba Impex, as reported in 282 ITR 144. 47. We have considered rival submissions and have perused the material on record and gone through the orders of the authorities below. Regarding first aspect of the matter, i.e. regarding reduction of 90% of the insurance claim of Rs.2.74 lakhs, we set aside the order of the learned CIT(A) on this issue and restore the matter back to the file of the AO for fresh decision after examining the nature of insurance claim, as per the similar direction, as we have given in A.Y.2002-03 while deciding the ground no.4 of the Revenue s appeal in that year. For the second aspect of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a copy of which is available at page no.1 to 26 of the compilation of the decisions. 53. We have considered rival submissions. Respectfully following the decision of the Tribunal cited by the learned counsel for the assessee, supra, we decide the issue in favour of the assessee and ground raised by the Revenue is thus rejected. 54. The ground no.4 of the Revenue s appeal reads as under: 4. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in allowing the contribution of rs.11,05,246/- to Refrigerrant Gas Manufacturer Association, without appreciating that the expenditure was not incurred wholly and exclusively for the purposes of the business within the meaning of section 3791) there being no direct nexus between the work of the association and the business of the assessee, and that the onus cast on the assessee in this regard as settled in the case laws mentioned above was not discharged. 55. The learned DR supported the assessment order, whereas the learned counsel for the assessee supported the order of the CIT(A), and he also submitted that this issue is also covered in favour of the assessee by the same decision of the Tribunal in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT Vs. S.G.Chemicals and Pharmaceuticals Ltd., 258 ITR 109 (Guj) and Synbiotics Ltd. Vs. CIT, 259 ITR 122 (Guj). 59. The learned DR supported the assessment order, whereas the learned counsel for the assessee supported the order of the CIT(A). He also placed reliance on the judgment of the Hon ble Apex Court in the case of Commissioner of Income-tax Vs Woodward Governor India P. Ltd., 312 ITR 254. 60. We have considered rival submissions and perused the judgment of the Hon ble Apex Court cited by the learned counsel of the assessee supra. This issue is squarely covered by the judgment of the Hon ble Apex Court. We find no reason to interfere in the order of the CIT(A) on this issue, and therefore this ground of the Revenue is rejected. 61. The ground no.7 reads as under: On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in allowing deduction u/s.36(1)(vii) for sundry balances of Rs.1,12,300/- written off, without appreciating that the relevant advances had not been taken into account in computing the income of this year or any earlier previous year nor is the assessee in the business of banking or money lending as per mandate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) that amendment in the provision of Section 94(7) are prospective and applicable from 1-4-2005, and therefore, the same is not applicable in the present year. Considering all these aspects of the case and legal provision, we do not find any reason to interfere with the order of the CIT(A) on this issue, and accordingly this ground of the Revenue is dismissed. 67. In the result, Revenue s appeal is partly allowed for statistical purpose in terms indicated above. 68. No we take up remaining one appeal of the Revenue for A.Y.2004- 2005 in respect of penalty proceedings i.e. ITA No.1108/Ahd/2009. 69. The only ground raised in the Revenue is as under: 1(a) On the facts, in the circumstances of the case and law, the ld.CIT(A) erred in law and on facts in deleting penalty u/s.271(1)(c) amounting to Rs.8,15,000/- without considering the decision of the Hon ble Supreme Court in the case of Dharmendra Textiles, 306 ITR 277 (SC), according to which, there is no onus upon the department to establish mens rea. 70. The learned DR supported the penalty order, whereas the learned counsel for the assessee supported the order of the CIT(A). 71. We have considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
