TMI Blog2015 (1) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. Therefore, the same cannot be disallowed by holding them to be prior period expenditure. Hence, the CIT(A) rightly granted relief for the Assessee and we decline to interfere with the impugned order in this regard. - Decided against revenue. Processing fees paid to banks and financial institutions - Revenue v/s capital expenditure - Held that:- When the processing fee was paid for obtaining a loan for the purpose of business then it is a revenue expenditure and the same could not be disallowed hence the CIT (A) rightly deleted the addition in this regard. - Decided against revenue. Commission paid for processing loans from banks/financial institutions disallowed - CIT(A) deleted the addition - Held that:- Assessee has submitted details of brokerage as well as amount of loan received and the name of the bank of financial institution from where the loans were obtained. Thus, CIT(A) right hold that the respective progress rendered services to the Assessee for obtaining huge amounts of loans from banks and financial institutions. Therefore, the brokerage expenses incurred in this regard has to be allowed as revenue expenditure and the CIT(A) rightly allow the same b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been preferred against the one order of CIT (A), therefore, for the sake of convenience and clarity in the findings these appeals are being clubbed and we are deciding them both together by this consolidated order. GROUNDS OF THE REVENUE IN ITA NO. 1375/DEL/2011 2. The grounds raised by the Revenue read as under:- 1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing depreciation on assets of the Vegetable Oil Division by ignoring the fact that this business was not conducted during the year and the basic condition of Section 32 that assets must be used for the purpose of business is not satisfied. 2. On the facts and circumstances of the case, the Ld. CIT(A)has erred in deleting the addition of prior period expense of ₹ 1,36,51,602/- in law and on merits. 3. On the facts and circumstances of the case, the Ld. CIT(A)has erred in treating the expenditure of ₹ 92.50 lakhs incurred on processing fees paid to banks and financial institutions as Revenue expenditure. 4. On the facts and circumstances of the case, the Ld. CIT(A)has deleted the addition of ₹ 1,02,75,000/-. On account of commission paid for processing lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book wherein it has been held that once an asset forms a part of block of assets and the business having been carried on, the depreciation is allowable on the written down value (WDV) comprising of block of assets sole on as the business is being carried on by the Assessee then the condition of user of a particular asset is not applicable under the concept of allowing depreciation on block of assets as once the asset forms a part of block of assets it loses its individual WDV or identity. Accordingly, we hold that the CIT(A) rightly allowed relief for the Assessee and orders of the ITAT have not been set aside or modified by any high forum. We, therefore, of the firm opinion that we are unable to see any ambiguity or any other valid reason to interfere with the findings of the CIT(A) in this regard. Therefore, under these circumstances, Ground No.1 of the Revenue being devoid of merits is dismissed. GROUND NO. 2 OF THE REVENUE. 5. The Ld. Departmental Representative submitted that the CIT(A) has erred in deleting the addition of prior period expenses of ₹ 1,36,51,602/- in law and on merits. The Ld. Departmental Representative further submitted that the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same of the nature of prior period expenses, the same were held to be not proper and held to be allowed in the year in which such expenses have been incurred and crystallized. The AR drawn our attention towards order of Commissioner of Income Tax, Delhi-IV dated 22/12/2004 (paper book Page No. 121 to 123) and submitted that in view of categorical findings of the administrative CIT(A) in the order passed u/s 263 of the Act. It has been accepted that as per regular system of accounting followed by the Assessee the disputed expenses are always claimed in the year in which the same are quantified in view of above we inclined to hold that since the liability in respect of entire expenditure arose during the year under consideration. Therefore, the same cannot be disallowed by holding them to be prior period expenditure. Hence, the CIT(A) rightly granted relief for the Assessee and we decline to interfere with the impugned order in this regard. On the basis of aforementioned discussions, Ground No. 2 of the Revenue being devoid of merits is dismissed. GROUND NO. 3 OF THE REVENUE. 8. Apropos Ground No. 3 the Ld. Departmental Representative submitted that the CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt fee was paid for obtaining a loan for the purpose of business, then it could not be disallowed u/s 36(1)(iii) of the Act. 10. In view of above, we observe that when the processing fee was paid for obtaining a loan for the purpose of business then it is a revenue expenditure and the same could not be disallowed hence the CIT (A) rightly deleted the addition in this regard. We are unable to see any ambiguity or perversity in the impugned order thus Ground NO. 3 of the Revenue being devoid of merits is dismissed. GROUND NO. 4 OF THE REVENUE. 11. Apropos Ground No.4 the Ld. Departmental Representative submitted that CIT(A) has deleted the addition of ₹ 1,02,75,000/- on account of commission paid for processing loans from banks/financial institutions without appreciating the fact that there was no evidence on record that the recipient of the commission actually lisioned with banks/financial institutions to arrange the finance for the Assessee. The DR further submitted that the AO rightly held that these agents were not required and on enquiries made from banks it was denied by the bankers that any person other than employees of the Assessee Company was involved in synd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue expenditure and the CIT(A) rightly allow the same by deleting the impugned addition. Under these circumstances, we hold that Ground No. 4 of the Revenue is not sustainable and the same is disallowed being without having substance. GROUND NO. 5 OF THE REVENUE. 14. The Ld. Departmental Representative submitted that the CIT(A) has erred in remanding the addition on account of exchange rate fluctuation back to the AO and given directions to the AO which are violative of Section 251 of the Act. The DR has drawn our attention towards provisions of Section 251 of the Act and submitted that the CIT(A) is not empowered to remand or restore the issue to the file of the AO with certain directions. Replying to the above, the Ld. AR submitted that the point of the Revenue is not clear whether the Department is aggrieved over the remanding of this matter to the AO or wanted the matter to be referred back. The AR further submitted that the Assessee has disallowed a sum of ₹ 64 lakhs in the Assessment Year 2002-03 on account of exchange rate fluctuation and had claimed this amount as deduction in the Assessment Year 2003-04 on payment basis. On careful consideration of above submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer has not raised or disputed the issue of brought forward loses and unabsorbed depreciation and the Revenue is not allowed to create or re-open the issue which was not an issue of dispute before the authorities below. Therefore, Ground No. 6 (a)and 6(b) of the Revenue are also dismissed. GROUND NO. 7 (a) AND 7(b) OF THE REVENUE. 18. These grounds of the Revenue are of general in nature which need no adjudication and we also dismiss the same. ITA NO. 1011/DEL/2011 OF THE ASSESSEE. 19. At the outset, the Ld. AR submitted that the Assessee do not want to press Ground No. 1, 1.1 and 2. Accordingly, Ground No. 1, 1.1 and 2 are dismissed as not pressed. Ground No. 4 of the Assessee is of general in nature which needs no adjudication. We also dismiss the same. The remaining Ground No. 3, 3.1, 3.2 and 3.3 are related to the one issue which read as under:- .3. That the Ld. CIT(A) has grossly erred in law and in the circumstances of the appellant s case in confirming the addition of ₹ 1,56,85,383/- on account of provisions made by the appellant towards various routine expenses at the end of the year. 3.1 That the Ld. CIT(A) has erred in law and on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. On careful consideration of above submissions and contentions at the outset we observe that the CIT(A) has observed that the Assessee has not explained the nature of the liability. Therefore, it was not ascertainable as to whether the provisions has been made for a crystallized or contingent liability. Under these circumstances, when the allowbility ability of claim of the Assessee has been decided in earlier and subsequent years by affording due opportunity to the Assessee to explain the nature of liability then during the year under consideration the issue requires detail examination and verification at the end of AO. Accordingly, we are of the opinion, that the issue is restored to the file of Assessing Officer for proper examination and verification in the light of earlier and subsequent assessments of the Assessee. Needless to say that the AO shall provide due to opportunity of hearing for the Assessee during the fresh adjudication of the issue. The Assessing Officer is further directed to consider the explanation, evidence and documents of the Assessee in the light of earlier and subsequent assessment orders of the assessee company in this regard. Accordingly, these gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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