TMI Blog2014 (8) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... on-business purpose or not – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that Revenue could not controvert by bringing any contrary material on record – CIT(A) rightly was of the view that the manufacturing units of the assesses company are situated at a distance from nearest urban area and therefore adequate educational facilities are not available - The interest free advance given to the trust i.e. NE&SRS is to support the college - the financial support to the trust and 'thereby to college is motivated out of the commercial expediency - there was no reason to interfere with the order of CIT(A) – Decided against Revenue. Expenses on maintenance on assets of Gujarat Narmda Auto Ltd. – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the AO made a disallowance being the expenditure incurred on protecting the assets of wholly owned subsidiary i.e. M/s Gujarat Narmada Auto Ltd. - CIT(A) has rightly allowed the claim of the assessee – Decided against Revenue. Repairs and maintenance expenses – Held that:- Following the decision in Gujarat Narmada Valley Fertilizers Co. Ltd. Ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ₹ 4,22,24,655 being 25% of Goodwill amounting to ₹ 16,88,98,620/- ought to have been allowed as Depreciation on goodwill u/s. 32(1)(iii). 1st ground is with respect to depreciation of wagons:- 6. During the course of assessment proceedings and on verification of the depreciation chart filed by the Assessee. A.O noticed that Assessee had claimed depreciation of ₹ 6,74,467/- on the assets leased to Western Railways. A.O was of the view that Assessee had only extended finance to Western Railways for purchasing assets under the guise of finance lease transactions and had wrongly claimed depreciation. He further noted that similar issue arose in earlier years in the case of Assessee and the depreciation was disallowed by the A.O. and was also confirmed by Ld. CIT(A). He therefore disallowed the claim of depreciation. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) following the decision of his predecessor, upheld the order of A.O by holding as under:- 10.2 The issue of depreciation on wagons leased to Western Railways was subject matter of appeal before my predecessor. As the lease is held to be finance lease, the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plant and machinery incinerator 1998-99 26333260 4 Plantand Machinery- SAT NOX unit 1998-99 54679889 During the year, the company earned the lease rent of ₹ 12,51,30,606/-, which has been credited to the Profit and loss account and shown as income. Further, as per accounting guidance note, an amount of ₹ 1,21,41,524/- being lease equalization amount has been debited to the profit and loss account. The company is maintaining the lease equalization account for the assets given on lease in order to comply with the accounting standard and guidance note issued by the Institute of chartered Accountant of India In order the justify its claim of depreciation the assessee raised various contentions which are summarized as under: i. the company is authorised by its Memorandum of Association to do lease business and thus leasing is one of the business, of the company. ii. The company has purchased the assets viz. Railway Wagons and Captive Power Plant which are given on lease to Western Railway and Narmada Chematur Petrochemicals Co. Ltd. (NCPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid that it will not be used for the purpose and use of the assessee i.e. the lessor. The insurance has been taken by the lessee on behalf of the lessor. It is not a finance lease since the period of lease does not start from the date of finance of the assets but at a later date. 34 On the other hand, the learned D.R. relied upon the order of the A.O. as pages 43 and 44 and in specific relied upon the decision of the Hon. Supreme Court in the case of Asea Brown Boveri Ltd. vs. Industrial Finance Corporation, dated 27.10.2004 which has been placed on record. 35. We have heard the rival contentions and perused the facts of the case. As regards reliance on the decision of the Hon. Supreme Court in the case of Asea Brown Boveri Ltd. (supra) by the learned DR, the arguments of the learned D.R that the assessee had purchased the equipments for the economic life of the plant itself and not more than that. As a matter of fact, it is not a case, as is appearing from different clauses of the lease deed that the equipments leased will be returned back to the lessor after the expiry of the lease. Nothing has been brought to disapprove the said clauses of the lease deed by any of the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, it cannot be said as full payout lease. Therefore, in the circumstances and facts of the case, the arguments made by the learned DR cannot be accepted and following the rule of consistency, the assessee deserves to be allowed the claim and we direct the Assessing Officer accordingly to allow the claim of the assessee. The order of the learned CIT(A) is reversed. Thus, Ground No. 12 of the assessee's appeal is allowed. 7.1 From the above, we noticed that one of the prime factors which weighed with the Tribunal was the rule of consistency. Learned counsel for the assessee rightly pointed out that such claim did not arise for consideration for the first time, but, is spread over to the entire period between A.Y. 1996-97 to 1999-2000. Such claim was made by the Assessee and duly granted by the Assessing Officer. In that view of the matter, in our opinion, the Tribunal committed no error. 7. In the present case a view has already been taken by Co-ordinate Bench and the same has also been affirmed by Hon. Guj. High Court. Since the issue has already been decided by the Hon. Gujarat High Court in assessee's own case, we respectfully following the order of Hon. Guj. High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal of Assessee is allowed for statistical purposes. We now take up Revenue's appeal in ITA No. 1696/AHD/2010 15. The grounds raised the Revenue reads as under:- 1(a). On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of ₹ 42,15,333/- made out of the interest claimed u/s. 36(1)(iii) on account of diversion of borrowed funds to subsidiary and associate concerns, by merely relying on the appellate orders for earlier years (which has been contested by the Department), without appreciating that each year's income-tax proceedings are independent and the matter had to be decided on merits in the light of the principles settled by authoritative jurisdictional pronouncements. 1.(b). The CIT(A) failed to appreciate the legal principle, that onus u/s. 36(1)(iii) lies on the assessee to prove that each loan is used for the purposes of the business and there is no presumption in law that it is own capital or surplus funds that were diverted for non-business purposes, as settled in the case of Kishanchand Chellaram vs. CIT. 114 ITR 654 (Bom), R. Dalmiya vs CIT. 133 ITR 169 (Del.), CIT Vs. M.S. Venkateshwaran 222 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvances and thus Assessee had diverted its interest bearing funds for non business purposes and therefore the interest expenditure claimed u/s. 36(1(iii) on the borrowing made to the extent utilized for non business purposes cannot be allowed. He accordingly worked out the disallowance at ₹ 42,15,333/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) deleted the addition made by the A.O by holding as under:- 5.3. I have considered the submission of the ld. AR and facts of the case. The claim of the appellant company that it had adequate non interest bearing funds in past when advances were made has been accepted by the Hon'ble ITAT in several years. There is no further advance during the year. In fact, there is reduction in advance during the year. Therefore the finding of the Hon'ble ITAT in A.Y. 1992-93 to 1997-98 and A.Y. 2002-03 remain applicable to the year under consideration. In that sense the issue is a covered matter. Even on the ground of commercial expediency in respect of advance, the following facts stated by the appellant are very relevant:- As regards element of commercial expediency in relation to advances to NE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owings were utilized for non-business purpose. 40. The learned CIT(a) vide para 5.3 of his order allowed the claim of the assessee since the assessee had been allowed in earlier years the claim on identical matters and therefore it is a covered matter. 41. We have heard the rival contentions and perused the facts of the case. We concur with the views of the ld CIT(A) and the decision of the Tribunal Ahmedabad Bench in assessee's own case for A.Y. 95-96 as referred to in the order of the ld. CIT(A) vide para 5.2.3 and therefore we find no infirmity in the order of the ld. CIT(A). Thus, Ground no. 1 of the Revenue's appeal is dismissed. 20. Before us, ld. A.R. has submitted the facts of the case in the year under appeal are identical to that of earlier years and which the Revenue could not controvert by bringing any contrary material on record. We therefore respectfully following the decision of the co-ordinate Bench and for similar reasons, find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. Ground no. 2(a) and 2(b) are considered together and they are with respect to expenses incurred on maintenance on assets of Guj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de similar disallowances and in the Revenue's appeal before Hon'ble ITAT In ITA No. 3993/A/2007 for A.Y. 04-05, the issue was decided in favour of the Assessee. He therefore submitted that since the issue in the year under appeal are identical to that of 04-05, the order of CIT(A) needs to be upheld. 24. We have heard the rival submissions and perused the material on record. We find that similar issue arose for A.Y. 04-05 in ITA No. 3993/A/07 for A.Y. 04-05 and the issue was decided in favour of the Assessee by the Hon'ble Tribunal vide order dated 30.12.2011 by holding as under:- 98 As regards Ground no.2 of the Revenue's appeal, the brief facts are that the AO made a disallowance of ₹ 14.63,659/- being the expenditure incurred on protecting the assets of wholly owned subsidiary i.e. M/s Gujarat Narmada Auto Ltd. The learned CIT(A) deleted the addition made by the Assessing Officer, since or, identical issue for AYs 1996-97 to 2002-03, the disallowance was deleted by the learned CIT(A) in assessee's own case. 99 We have heard the rival contentions and perused the facts of the case. It was pointed out by the learned counsel for the assessee that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be held that there is no justification for disallowance. I direct the AO to delete the disallowance. 27. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 28. Before us, ld. D.R. relied on the order of A.O. The ld. A.R. on the other hand submitted that on identical facts in A.Y.06-07 in ITA NO. 827/A/10 order dated 14.09.2012 on similar facts the Hon'ble Tribunal had remitted the issue to the file of A.O. He therefore fairly submitted that the issue may be remitted back to the file of A.O with similar directions. 29. We have heard the rival submissions and perused the material on record. We find that identical issue with respect to the claim of expenditure as Revenue expenditure was remitted to the file of A.O in Assessee's own case for A.Y. 06-07 by the Co-ordinate Bench of Tribunal by holding as under:- 12. We have considered the rival contentions of the appellant and perused the assessment record and heard the arguments from both sides. The ld. CIT(A) had observed that this replacement of stores and spares can be sued independently and its of replacement of plant and machinery. As per A.O's. observation it has endorsing benefit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant also drew my attention to CIT(A)'s order in his own case for A.Y. 2003-04 to 2006-07. 32. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 33. Before us, ld. D.R. relied on the order of A.O. On the other hand ld. A.R. submitted that on identical facts in the Assessee's own case in A.Y. 03- 04 to 06-07 the issue has been decided by Hon'ble Tribunal in favour of the Assessee. He therefore submitted that since the facts of the year under appeal are identical to that of earlier years, the issue be decided in its favour. 34. We have heard the rival submissions and perused the material on record. We find that in the case of Assessee for A.Y. 06-07 and on identical facts, the issue was decided by the co-ordinate Bench of Tribunal in favour of the Assessee by holding as under:- 30. Ground no. 4 is against allowing deduction of ₹ 5,83,000/- by the CIT(A) for Information Technology Related Services paid to M/s. Infinium (India) Ltd. The appellant had entered into a verbal tripartite agreement with M/s. Infinium (India) Ltd. and TIW-USA jointly and equally financed the capital, operating cost and shares the revenues of alliance busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
