TMI Blog2013 (12) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... sue was restored to examine the issue in the light of fund flow statements and also on the basis of section 14A(2) to examine whether at all with the correctness of the cash flow statement, any disallowance could be made u/s 14A and then section 36(1)(iii) - The disallowance shall be looked into from both the angels, i.e. 36(1)(iii) and section 14A. Bad Debts – Held that:- If the bad debts are written off in the books of accounts, the claim is allowable – Assessee neednot prove irrecoverability of such debts - Decided against Revenue. Excise Duty – To be included in total turnover or not – Held that:- Following CIT vs. Sudarshan Chemicals Industries Ltd. [2000 (8) TMI 73 - BOMBAY High Court] - Sales tax and excise duties are levied un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90,00,918, whereas, the AO computed it at Rs. 21,80,55,063. The facts are that the assessee had not claimed depreciation in the preceding year, i.e. assessment year 1999-2000, but the AO allowed the same. In the current year, the AO adopted the WDV as per the preceding year and computed the depreciation, which was accordingly determined at Rs. 2,18,055,063. 3. Before the CIT(A), the assessee made the submissions, whereby, the assessee prayed for the depreciation at a higher value, i.e. at Rs. 25,90,00,918, but the CIT(A) sustained the computation of the AO and allowed the depreciation at Rs. 21,80,55,063. 4. Before us, the AR, though cited a number of citations but fairly conceded that the issue is now covered against him in the ratio l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the issue is travelling from assessment year 1998-99 and 1999-2000. The issue traveled to the ITAT, where the assessee in the proceedings in assessment year 1998- 99, filed statement of fund flow from financial year 1991-92 to 1997- 98 to show that the investments in tax free investments and mutual funds were made out of internal accruals and own funds. The ITAT for giving fair opportunity, directed the AO to examine the issue. The AO, in assessment year 1998-99 examined the entire issue, taking into account the fund flow statement, came to a conclusion that the assessee did not utilize any borrowed funds on which interest was paid, for the purpose of investment in shares or units, giving rise to income which was exempt from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istent view, the AO has to be afforded with the similar directions, but at this stage, we cannot ignore the provisions of section 14A, which was inserted with retrospective effect from 01.04.1962. This issue, we find was touched upon by the coordinate Bench in ITA no. 4862/Mum/201 in assessment year 1998-99, wherein, it was argued that ratio laid down in the Godrej Boyce Mfg. Co. Ltd. vs. DCIT, reported in 328 ITR 81 could not be applied. The AR, had submitted that on the facts, where interest free funds are substantially higher then the investments, it would be appropriate that the case of Reliance Utilities Power Ltd. reported in 178 Taxman 135 (Bom) and the decisions of the coordinate Benches at Mumbai, in the cases of DCIT vs. HDFC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for recovery treating it bad and allowing the same u/s. 36(1)(iii) and 28 of the Act. (iii) On the facts and circumstances of the case and in law, the CIT(A) erred in directing the AO to exclude excise duty from total turnover on the basis of decision in the case of Sudarshan Chemicals Ltd. (245 ITR 769) without appreciating the fact that the said decision is not accepted by; the Department. (iv) On the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating the fact of the case regarding exclusion of DEPB income from the eligible profit for the deduction u/s. 80HHC and its being taxed u/s. 28(iv)." 18. Ground no. 1 here has been covered in ground no. 2 in ITA no. 4845/Mum/2011, wherein we have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CIT(A). 26. The ground as raised by the department, is, therefore, rejected. 27. Ground no. 4 is with regard to exclusion DEPB from the eligible profits for the computation of deduction u/s 80HHC. 28. In our considered opinion, the Hon'ble Supreme Court of India in the case of Topman Export vs. CIT, reported in 342 ITR 49, have laid the controversy to rest by holding, "Where DEPB accrues to the assessee in one previous year and it transfers the DEPB certificate in another previous year, only ninety per cent of the profits on the transfer of the DEPB covered under cl. (iiid) of s. 28 and not ninety per cent of the entire sale value including the face value of the DEPB has to be excluded to arrive at the "profits of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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