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2015 (7) TMI 529 - ITAT MUMBAI

2015 (7) TMI 529 - ITAT MUMBAI - TMI - Disallowance of deduction in respect of loss in the value of shares of ICO Global Holdings Ltd. in the computation of its business income - assessee has raised an alternative ground that the loss on the shares of ICO Global Holding Ltd. is admissible as a capital loss - Held that:- Transfer within the meaning of section 2(47) of the Act is an inclusive term, including extinguishment of any right in an asset, as held, inter alia, in “CIT vs. Collis” (2001 (2 .....

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f I.C.O. Global Holdings Ltd. were actually transferred. The loss was on investment in the shares. The shares were received from the company/liquidator, as noted by the ld. CIT(A). Therefore, we hold that the loss is a capital loss. Pertinently, the issue raised by the assessee that it was a business loss stands decided against the assessee

Denial of claim made u/s 80IA of the Act, in respect of earth station - Held that:- This issue stands consistently decided against the assesee by .....

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emitted to the file of ld. CIT(A), to be decided afresh on affording due opportunity of being heard to the assessee.

Liability to pay interest under section 234D - Held that:- Levy of interest u/s 234D would be applicable in these years in view of the decision of Hon’ble Bombay High Court in CIT vs. Indian Oil Corporation Ltd.(2012 (9) TMI 517 - BOMBAY HIGH COURT). - Decided against the assessee.

Interest u/s 244A needs to be excluded while computing the interest u/s 234B o .....

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ed that the assessee had, in the succeeding year, suo motu made the necessary adjustments and reduction in the cost of depreciable fixed asset. It is only a question of time taken. In fact, there is no revenue loss. Therefore, directing the A.O. to make necessary verification and grant relief accordingly.

Disallowing certain late remittances of Provident Fund (PF) concerning the contribution by the management towards PF and pension fund - Held that:- Such contributions are covered und .....

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to the capital in nature. Accordingly, this alternative claim is also rejected.The assessee has further raised a second alternative claim, i.e., of depreciation in this regard. Since the nature of the expense has already been held to be capital, as above, the A.O. is directed to allow the depreciation thereon in accordance with law.The issue of allowability of repairs and maintenance expenses (prior deductions being expenses pertaining to the year under consideration), amounting to ₹ 3,41, .....

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enses related to prior period. These expenses are of ₹ 49,99,521/- for A.Y. 2000-01. Under similar circumstances, the A.O. should verify whether this write-back of repair and maintenance expenses was also subjected to tax for A.Y. 1999-2000, being disallowed in the assessment order and to take steps to avoid double taxation of the same amount as per the Tribunal order for A.Y. 2000-01, for the year under consideration also, we remit the matter to the file of the A.O. for making a similar v .....

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vant facts and details in respect of the claim during the assessment proceedings and the claim has been specifically explained through the notes of the return of income. Therefore, we find that the penalty on the disallowance of claim of business loss on account of written down value of shares of ICO Global in the facts and circumstances of the case does not warrant levy of penalty. Accordingly, we delete the penalty on this account. - Decided in favour of assessee.

Disallowance of de .....

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an one view on this issue. Accordingly, the disallowance of claim which involves a highly debatable issue and based on the difference of opinion would not amount to furnishing incorrect particulars of income or concealment of particulars of income on the part of the assessee. Hence levy of penalty on such a debatable legal issue is not warranted and accordingly deleted. - Decided in favour of assessee.

Wrong full claim of advance rent as revenue expenditure - Held that:- The claim was .....

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- 8-7-2015 - Shri A.D. Jain and Shri N.K. Billaiya, JJ. For the Petitioner : Shri Dinesh Vyas For the Respondent : Shri G.M. Doss ORDER PER A.D. JAIN, J.M. : These appeals have been filed by assessee and Revenue. ITA No. 4221/Mum/2005, assessee s appeal for A.Y. 2001-02, ITA No. 4219/Mum/2005, Department s appeal for A.Y. 2001-02, ITA No. 1107/Mum/2008, assessee s penalty appeal for A.Y. 2001-02, and ITA No. 1835/Mum/2008, Department s penalty appeal for A.Y. 2001-02. First, we shall take up ass .....

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…………..In the case in hand the purpose of investment at the most can be said for acquiring or having access to the new advanced technology in the mobile telecommunication system, which could be treated as acquisition of a new and modern profit making apparatus. The loss suffered due to the devaluation of the investment is on capital account. In view of the above discussion, we do not find any error or illegality in the order of ld. CIT(A) qua this issue. (Page 27 of t .....

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o be taken now. It has been requested that, accordingly, this alternative claim be not entertained. 6. In this regard, it is not correct to say that this claim was never made by the assessee earlier. In fact, as pointed out on behalf of the assessee, it was made at the very first instance, i.e., in the return of income, by way of Notes to the Return. Further, it was also made before the A.O. The A.O. dealt with it in the assessment order for A.Y. 2000-01, vide para Nos. 4.5, 4.6 and 4.15 to 4.20 .....

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s of this additional ground, the assessee maintained this transaction is covered under the provisions of section 46 of the Act. The ld. CIT(A) has held it to be a case of liquidation, to which, the provisions of section 46(2), pertaining to capital gains on distribution of assets by companies in liquidation, apply. It has been so held in Vijay Kumar Budhia vs. CIT , 204 ITR 355 (SC). 8. Further, transfer within the meaning of section 2(47) of the Act is an inclusive term, including extinguishmen .....

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res of I.C.O. Global Holdings Ltd. were actually transferred. The loss was on investment in the shares. The shares were received from the company/liquidator, as noted by the ld. CIT(A). Therefore, we hold that the loss is a capital loss. Pertinently, the issue raised by the assessee that it was a business loss stands decided against the assessee by the Tribunal on the case for A.Y. 2000-01. 9. As per ground No.2, the ld. CIT(A) erred in denying the claim made u/s 80IA of the Act, in respect of e .....

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essment years 1999-2000 and 2000-01, the Tribunal has set aside this issue to the file of ld. CIT(A). Here also, the facts remaining the same, and in keeping in view the said appeal Tribunal order, this issue is remitted to the file of ld. CIT(A), to be decided afresh on affording due opportunity of being heard to the assessee. 12. Ground No. 3 states that the ld. CIT(A) erred in charging interest u/s 234D of the Act. This issue stands decided against the assessee by the Hon ble jurisdictional H .....

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4962/Mum/2013, for A.Y. 1990-91, dated 22-10-2014, in the case of Tata Communications Ltd., the Mumbai ITAT decision dated 6- 3-2013 in ITA No. 6863/Mum/2011, for A.Y. 1997-98, in the case of M/s Tata Power Company Ltd., and the Mumbai ITAT decision dated 3-7-2013 in ITA No. 3977 & 3978/Mum/2012 for assessment years 2002-03 and 2005- 06, respectively, in the case of Tata Power Company Ltd. 14. In the case of Tata Power Company Ltd. (supra), the A.O. was directed by the ITAT to exclude the in .....

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ins Ltd., rendered by the Hon ble Kerala High Court on 15-1-2010. Reliance has also been placed on the Hon ble Punjab & Haryana High Court decision in the case of CIT vs. Avery Cycle Industries Ltd. , 56 Taxmann.com 459 (Punjab & Haryana). 15. In keeping with the above case laws, the interest u/s 244A needs to be excluded while computing the interest u/s 234B of the Act and this computation needs to be done for the period beginning on 1-6-2003. We order accordingly and remit the issue to .....

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is not disputed that the assessee had, in the succeeding year, suo motu made the necessary adjustments and reduction in the cost of depreciable fixed asset. It is only a question of time taken. In fact, there is no revenue loss. Therefore, ground No. 4 & 5 are accepted, directing the A.O. to make necessary verification and grant relief accordingly. 18. Ground No. 6 states that the ld. CIT(A) has erred in partially disallowing certain late remittances of Provident Fund (PF) concerning the co .....

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C) d) Euro Pratik Ispat P. Ltd. vs. ACIT [2013] , 27 ITR (T) 432 (Mum) (Trib. At page 433 para 4. e) Onward Technologies Ltd. vs. Dy. CIT [2013], 26 ITR (T) 734 (Mum)(Trib) at page 742 para 2. f) Gammon India Ltd. vs. ACIT (ITA No. 20/Mum/2009. g) CIT vs. Spectrum Consultants [2013], 215 Taxman 597 (Kar.)(HC) h) CIT vs. Aimil Ltd. [2009], 321 ITR 508 (Del)(HC) i) CIT vs. Mark Auto Industries Ltd. [2013], 358 ITR 43 (P&H)(HC) j) CIT vs. Kichha Sugar Company Ltd. (2013) 35 taxmann.com 54 (Utta .....

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he depreciation on the amount paid to acquire the right to use the land for 80 years ought to have been allowed. The ld. CIT(A) confirmed the disallowance made, observing, inter alia, that on the expiry of the lease, the assessee had the right to remove and appropriate to itself all buildings, erections and structures and materials from the land and that enduring benefit accrued to the assessee; that the rights were in respect of interest in land and they could not be equated with know-how, pate .....

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ssessee to M/s. MMRDA Ltd. for the leasehold rights acquired by the assessee through the lease deed dt. 22nd November, 2004. It is the say of the Revenue that this lease premium was liable for deduction of tax at source failing which the assessee is to be treated as assessee in default. It is the say of the assessee that such lease premium is in the nature of capital expenditure and therefore there is no question of deduction of tax at source. Further, the said lease premium does not come within .....

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e payment to MMRD is also for additional built up are and also for granting free of FSI area, such payment cannot be equated to rent. It is also seen that the MMRD in exercise of power u/s. 43 r.w. Sec. 37(1) of the Maharashtra Town Planning Act 1966, MRTP Act and other powers enabling the same has approved the proposal to modify regulation 4A(ii) and thereby increased the FSI of the entire G Block of BKC. The Development Control Regulations for BKC specify the permissible FSI. Pursuant to such .....

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Jurisdictional High Court in the case of Khimline Pumps Ltd. (supra) squarely and directly apply on the facts of the case wherein the Hon ble Jurisdictional High Court has held that payment for acquiring leasehold land is a capital expenditure. Considering the entire facts in totality in the light of the judicial decisions vis-à-vis provisions of Sec. 194-1, definition of rent as provided under the said provision, we do not find any reason to tamper or interfere with the findings of the .....

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ised a second alternative claim, i.e., of depreciation in this regard. Since the nature of the expense has already been held to be capital, as above, the A.O. is directed to allow the depreciation thereon in accordance with law. 24. The issue of allowability of repairs and maintenance expenses (prior deductions being expenses pertaining to the year under consideration), amounting to ₹ 3,41,222/- as raised on the additional ground stands decided in favour of the assessee by the Tribunal in .....

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The assessee has also claimed write-back of repairs and maintenance expenses disallowed in A.Y. 1999-2000, since the expenses related to prior period. These expenses are of ₹ 49,99,521/- for A.Y. 2000-01. Under similar circumstances, the A.O. should verify whether this write-back of repair and maintenance expenses was also subjected to tax for A.Y. 1999-2000, being disallowed in the assessment order and to take steps to avoid double taxation of the same amount as per the Tribunal order fo .....

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ssessment years 1997-98 to 2000-01. In accordance with thereof, ground No. 1 is rejected. 29. As per ground No. 2, the ld. CIT(A) erred in directing the A.O. to restrict the disallowance u/s 36(1)(va) and section 43B of the Act to the contribution credited in the funds after the grace period, specified in the relevant statutes. 30. This ground is a counter ground to ground No. 6 taken by the assessee its appeal and our observation therein in deciding that ground are squarely applicable here also .....

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ccount of ICO Global Holdings Ltd. The ld. CIT(A) confirmed the penalty. A similar penalty for A.Y. 2000-01 stands deleted by the Tribunal holding as follows:- 18.1 We first take up ground no. 2 regarding levy of penalty of disallowance of claim of business loss on account of devaluation of the value of investment in ICO Global. We have heard the Ld. Senior Counsel as well as Ld. DR and carefully perused the relevant material on record. Though, the disallowance of claim being business loss has b .....

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be termed as bogus or inherently incorrect claim leading to the conclusion that the assessee has furnished inaccurate particulars of income or concealed the particulars of income. Disallowance of a claim which is not found bogus or inherently incorrect or patently untenable would not ifso facto lead to the conclusion that the assessee has furnished inaccurate particulars of income or concealed particulars of income attracting levy of penalty U/s 271 (1)(C). The assessee has disclosed all the rel .....

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, the levy of penalty on this count is deleted. 35. Penalty was also levied on disallowance of deduction u/s 80IA of the Act on income from earth station undertaking. This penalty amounting to ₹ 75.56 crores, The ld. CIT(A) confirmed the same. Here also for A.Y. 2000-01, the Tribunal has deleted the penalty holding as follows:- 18.2 Ground no. 3 is regarding levy of penalty on disallowance of deduction u/s 80IA. We have heard Ld. Senior Counsel as well as Ld. DR and considered the relevant .....

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essee is a highly complexed and debatable one as it was finally decided by a larger bench of this Tribunal. Since the issue was referred to the larger bench (SB) of this Tribunal for adjudication which itself manifests that there was possibility of more than one view on this issue. Accordingly, the disallowance of claim which involves a highly debatable issue and based on the difference of opinion would not amount to furnishing incorrect particulars of income or concealment of particulars of inc .....

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vied for wrong full claim u/s 80IA of the Act. Here, for A.Y. 2000-01, the Tribunal decided the matter in favour of the assessee, holding as follows:- 19.1 We have heard the Ld. DR as well as Ld. Senior Counsel and considered the relevant material on record. The AO levied the penalty inter alia against the disallowance of higher depreciation on Gateway Digital Switches(GDS). We have set aside the issue of higher depreciation on GDS to the record of CIT(A) and, therefore, the penalty on this acco .....

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t. Even otherwise there is no dispute about the asset in question and the higher rate of depreciation is only a question of interpretation of definition of the computer. Therefore, when the assessee has disclosed and explained all the relevant facts and details relevant to the claim of higher depreciation on GDS, then we do not find that merely claiming a higher depreciation which is otherwise supported by the various decisions would lead to the conclusion that the assessee has furnished inaccur .....

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the year under consideration, following the Tribunal order for A.Y. 2000-01, ground No. 1 raised by the Department is rejected. 40. Penalty was also levied for wrong full claim of depreciation on GDS The equipment. The ld. CIT(A) deleted the penalty. The Tribunal, for A.Y. 2000-01 has again decided the matter in favour of the assessee. Respectfully following that order, ground No. 2 is rejected. 41. Penalty was also levied for wrong full claim of advance rent as revenue expenditure. The ld. CIT .....

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