TMI Blog2015 (1) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has directed to restrict the disallowance to an amount of ₹ 25,41,312/- on account of peripheral development because the amount paid through Corporation office at Bhubaneswar was not in connection with business are distinguishable from the facts for assessment year 2007-08 - Decided against assessee. Entertainment expenses - dis allowance of 20% of such expenses on estimate basis - Held that:- AO has disallowed 20% of the claim of entertainment expenses on adhoc basis without pointing out specific item, which allegedly were personal in nature. The assessee is a Government of Odisha Undertaking. Thus being a legal entity, no disallowance is called for particularly on the ground of the same being personal in nature - Decided in favour of assessee. Disallowance under section 80-IA - assessee's claim is that if disallowances are sustained correspondingly eligible business profits will increase - Held that:- There was no ground before ld CIT(A) in this regard. Therefore, this issue does not arise out of the order of ld CIT(A). Thus, this ground is misconceived and, therefore, dismissed - Decided against assessee. Period expenses disallowed - Held that:- Since the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee are as under: 1. That the assessment order dated 31.12.2009 rectification order dated.30.06.2010 passed by the Ld Assessing Officer are void ab intio, against the natural justice, unjustified ,erroneous ,arbitrary , contrary to facts ,bad in law, without jurisdiction and / or in excess of jurisdiction and legally untenable. 2. That the learned Assessing Officer has misconstrued /mis-appreciated the facts and the exclusion of ₹ 2,51,00,337/- while computing the deduction of Power profits U/s 801A of the Act and the determination of deduction of ₹ 203,55,84,247/- in stead of ₹ 206,05,01,377/- is contrary to facts, based on irrelevant consideration presumptions, conjectures and surmises without any evidence on record, arbitrary incorrect and legally not tenable. 3. That the Ld Assessing Officer has failed to apply the settled judicial pronouncements and has erroneously excluded ₹ 2,51,00,337/- While computing the deduction of Power Profits u/s 80IA of the Act. 4. That without prejudice to above the Ld .A.O has erred on fact and law not to determine ₹ 2,51,00,337/-as income as derived from power business eligible for deduction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ld CIT(A) partly allowed the assessee's appeal. Being aggrieved by the order of ld CIT(A), the assessee is in appeal before us. 5. Ground No.1 is general in nature, hence requires no adjudication. 6. Apropos Ground Nos.2,3,4 5, brief facts are that, during the course of assessment proceedings, the Assessing Officer, on perusal of schedule-10 of the audited profit and loss account, noticed that 'other income' disclosed by the assessee was as under: Sl.No. Nature of receipt Total receipt in Rs. 1. Income from investment/deposits 25,77,43,691 2. Int. on refund of advance income tax 45,061 3. Int. income from employees others 19,06,515 4. Receipt for rent, elect.charges 80,43,368 5. Sundry receipt 29,50,613 6. Sale of scrap 1,19,30,199 7. Profit on sale of disposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case Pandian Chemicals Ltd. Vs. CIT [262 ITR 278 (SC)] , which was followed by the Hon'ble Jurisdictional High Court in the case of Tata Sponge (I) Ltd. (supra). We hold that interest of ₹ 9,00,00,000/- was earned by the assessee from- investment of fund in GRIDCO Bond. Thus, the same cannot be considered as interest received by the appellant for late payment of electricity by the GRIDCO. In the above circumstances, we hold that the assessee is not entitled to deduction u/s.80IA w.r.t. other income of Rs,24,97,18,456/- as mentioned in ground nos.2 and 5 taken by the appellant Therefore, these grounds raised by the assessee are rejected. 9. At the time of hearing, ld counsel for the assessee fairly conceded that above issue has been decided by the Tribunal against the assessee in earlier assessment year. However, the appeal has been filed before the Hon'ble Jurisdictional High Court and, therefore, in order to keep the issue alive, these grounds may be decided as per the decisions of earlier assessment years for the reasons given in assessment year 2003-04. 10. In view of above submissions of ld counsel for the assessee, we dismiss Ground Nos.2 to 5. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial before me to take a different view than the AO. Accordingly, the disallowance made by the AO is confirmed. 5.1 The AO in the table at page 5 of the assessment order considers disallowable items for Rs,61,91,054/- whereas he 'actually disallows amount of ₹ 34,03,487/-. There are further discrepancies between the figures discussed by the AO and given by the appellant. The AO considers the amount of ₹ 55,51,092/-whereas the appellant refers to ₹ 27,63,525/- (as per written submission) against the item 'water supply to peripheral village'. All other items taken by the AO and appellant are tallying, except total figure, i.e. the AO considers the disallowance to, be ₹ 34,03,487/- whereas the appellant has given the figure of ₹ 34,18,487/-. Accordingly, the AO is directed to recheck the figures and consider rectification u/s.154 if necessary. 13. Ld counsel for the assessee submitted that in assessment year 2009-2010, ld CIT(A) has allowed this expense incurred under this head. Therefore, he urged to allow the expense for this assessment year also. 14. We have considered the submissions of parties and perused the record of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult, appeal filed by the assessee for A.Y. 2007-08 is partly allowed. 19. Now, we take up the appeal of the assessee for assessment year 2008-09 in ITA 20. Ground No.1 is general in nature. 21. Ground Nos.2 to 5 are similar to Ground Nos.2 to 5 taken by the assessee for assessment year 2007-08. 22. In line with our decision for assessment year 2007-08, Ground Nos.2 to 5 are dismissed. 23. Ground No.6 reads as under: That the disallowance of ₹ 7,75,792/- prior period expenses is based only on presumption conjecture and surmises contrary to the submissions placed before the AO and as such are arbitrary, unjustified and not tenable in the eyes of law. 24. The Assessing Officer disallowed ₹ 8,43,448/- being prior period expenses not related to the assessment year under consideration but to assessment year 2007-08. Before ld CIT(A), it was submitted that all such expenses were approved for payment during the financial year 2007-08 relevant to assessment year 2008-09, therefore, same should be allowed. The prior period expenses included cabling lighting, supervision charges, lunch expenses and reimbursement of service tax for assessment year 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss account. He also noticed that an additional amount of ₹ 33,12,500/- had been booked as peripheral development expenses from account named JVr 3288 dt..31.3.2008. After considering the assessee's submissions, the AO observed that the expenditures were not related to the business of the assessee and were of voluntary in nature. Accordingly, he disallowed an amount of ₹ 1,41,89,570/-. 29. Before ld CIT(A), it was submitted that the peripheral development expenses were in the nature of water supply to peripheral village, boundary wall of Sahajbahal ME School, supply of furniture to the school, construction of community hall, sports expenditure, etc. They had been incurred for carrying out smooth activities and maintaining social relationship as a good corporate citizen. It was also submitted that an amount of ₹ 33,12,500/- had been doubly added, which was part of ₹ 1,08,77,070/- claimed by the assessee under this head. Ld CIT (A) observed that the expenditure incurred on the development of the periphery of the industry was wholly and exclusively for the purpose of business since the business could not function in isolation from the social environment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oluntary in nature. Ld CIT(A) observed that an amount of ₹ 25,41,312/- had been spent through corporate office, Bhubaneswar, therefore, same could not be considered for the business purpose of the assessee. Accordingly, he disallowed ₹ 25,41,312/-. However, for the balance amount of ₹ 64,29,097, he observed that same was incurred in connection with the business purpose of the assessee as the same had been spent at IB Thermal station. Therefore, he directed the AO to allow the same. Aggrieved, assessee is in appeal before us. 39. We have heard representatives of the parties and perused the record of the case. Before us, ld counsel for the assessee could not produce any supporting material to take contrary view that the amount, confirmed by ld CIT(A), was in connection with the business purposes of the assessee. This issue came up for consideration in assessment year 2007-08 and 2008-09. In line with our decision for the said assessment years, we reject this ground. 40. Ground No.3 relates to disallowance of ₹ 7,93,787/- under the head 'prior period expenses'. 41. The Assessing Officer disallowed an amount of ₹ 1,14,60,407/- being prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stallize during the relevant previous year. 46. The assessee has filed cross objection for the assessment year 2008-09 as under: 1. For that, in consideration of overall facts the order of the CIT (A) is justified in deleting the amount of ₹ 33,12,500/- out of the addition of ₹ 1,41,89,570/- made by the AO on account of periphery development expenses. The CIT(A) further justified in directing Ld. AO to verify the ledger balance claimed by the assessee company as ₹ 1,08,77,070 in place of ₹ 1,41,89,570/-. 2. For that in consideration of details of expenses submitted by assessee company the CIT(A) is justified in allowing the claim of the assessee expenses in full on account of staff welfare expenses. 3. For that, in consideration of overall facts the order of the CIT (A) is justified in deleting the amount of ₹ 67,655/- on account of Prior Period expenses. By disallowing ₹ 7,75,792 the CIT (A) is not justified as the expenses are incurred and eligible for deduction while computing the taxable income. First we take up the revenue's appeal: 47. As far as Ground No.1 is concerned, we find that this issue came up for our consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition of ₹ 2,52,00,981/- made by the AO for non-deduction of tax u/s.194A without giving the AO an opportunity to rebut the claim of the assessee. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in allowing relief of ₹ 1,14,60,407/- on account of prior period expenses without giving the AO an opportunity to rebut the claim of the assessee. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in accepting the contention of the assessee without giving the AO a reasonable opportunity in violation of Rule 46A. 52. The assessee has raised following grounds in its cross objection for assessment year 2009-2010; 1. For that, in consideration of overall facts the order of the CIT (A) is justified in deleting the amount to the extent of ₹ 64,20,097/- out of the addition of ₹ 89,70,409/-made by the AO on account of periphery development expenses. But simultaneously has erred on fact and law in disallowing ₹ 25,41,312/- as the expenses are incurred and eligible for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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