TMI Blog2015 (7) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... ive cannot be taken into account for reducing the cost of assets. It has been finally concluded that such a cost of asset can only be reduced by a subsidy or grant which is to meet directly or indirectly the cost of assets in question. Revenue fails to point out any distinction on facts or law. We find that the tribunal’s earlier order relates to the very subsidy schemes (supra). It has also been held that the authorities below have wrongly treated the same to be revenue receipt as in the impugned assessment year as well. We adopt consistency in these circumstances and affirm the CIT(A) findings under challenge - Decided against revenue. Deduction u/s.80HH and 80IA on exchange rate difference (Mandali Division) - CIT(A) allowed claim - Held that:- As held in Priyanka Gems case [2014 (3) TMI 938 - GUJARAT HIGH COURT ] such an income is directly related to assessee’s export business and it could not be been removed beyond the first degree. The Revenue fails to point out from the case record that the assessee’s force in exchange gains fluctuation are not connected to its export activities. We affirm the CIT(A) findings in these facts - Decided against revenue. Disallowance of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, we hold that the assessee’s claim in question has been rightly disallowed by both the lower authorities for want of necessary factual evidence - Decided against assessee. Disallowance of expenditure of soda ash project and LAB project - Held that:- Assessee has not placed on record the tribunal’s earlier order holding that the expenditure in question has not been incurred in expansion of the already existing units of business. We observe in these facts that earlier observations of the ld. co-ordinate bench have attained finality. The assessee’s paper book does not contain any cogent evidence to rebut the same. We find no reason to take a different view on facts in this consequential round of litigation. . However, an alternative contention at this stage is also raised that if the impugned expenditure is held to be capital in nature, it is entitled for consequential depreciation relief. We find that this plea requires examination at the Assessing Officer’s behest in facts of the case. - Decided partly in favour of assessee for statistical purposes. Depreciation relief on soda ash project and LAB END Project - Held that:- The Assessing Officer’s order is silent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s case, the learned CIT(A) has grossly erred in confirming issue of Notice u/s.148 of I.T. Act. 3.In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming re-assessment order passed u/s. 147 of I.T. Act. 4. In law and in facts and circumstances of the Appellant's case, the Id. Commissioner of Income-tax (Appeals) has erred in confirming vyaj badla income of ₹ 41,43,543 as interest income instead of short term capital gain. 5. In law and in facts and circumstances of the Appellant's case, the Id. Commissioner of Income-tax (Appeals) has erred in not appreciating Appellant's contention that amount of ₹ 41,43,543 is already assessed under the head capita] gain as well as interest income, which is not permissible under the Act. 6. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in holding that levy of interest u/ss. 234A, 234B and 234C of I.T. Act is consequential. 7. In law and in the facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are finance transactions and income arising therefrom is to be taxed as interest income. Following the said appellate order, I also confirm the action of the A.O. on this issue. This ground of appeal is, therefore, dismissed. 5. In ground No.6 it is submitted by the appellant that the income of ₹ 41,43,543/- is already included in the returned income as short term capital gain and now it is being assessed as interest income and thus it amounts to taxing the same income twice. On consideration of the facts of the appellant's case, I find that as observed in the reasons recorded for reassessment, though the appellant had shown this income as short term capital gain, the same was adjusted against carried forward long term capital loss and thus this income was not reflected in the income shown by the appellant. The argument that the addition made results into double taxation is, therefore, not correct to this extent. However, I may also observe that the adjustment of such income against long term capital loss brought forward for earlier was not required as it is held that it is not short term capital gain. Hence the carried forward long term capital loss will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahd/2011 Assessment Year 1999-00 13. The Revenue s sole substantive grievance in its appeal is against CIT(A) order deleting depreciation disallowance of ₹ 1,49,43,270/- on sales tax incentive as made by the Assessing Officer in the course of re-assessment framed on 31.12.2007. The assessee s grounds challenge the lower appellate order upholding validity of the reopening in question. 14. The assessee-company started getting benefit of sales tax subsidy from the impugned assessment year onwards in respect of its detergent complex, Alindra and Soda S. Project (Chemical Complex) at Kalatalav, Bhavnagar. The state government issued the relevant subsidy schemes dated 26.7.1991 and 11.9.1995; respectively. The former one provided sales tax exemption to the tune of 90% on the fixed capital investment in land, new building, other construction on plant/machinery for a period of 14 years from the date of commencement of the commercial production. The latter one envisaged the same benefits to the tune of 80% of the fixed capital assets. Per Assessing Officer, these schemes indirectly met cost of the assets and the same was liable to be excluded from net cost thereof as per secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate difference (Mandali Division) of ₹ 1,56,350/-. We do not find any discussion much less an elaborate one in the Assessing Officer s order dated 28.12.2007. The CIT(A) holds that the assessee s plea of impugned deduction in respect of this exchange rate difference is covered by the tribunal s decision of the tribunal in Priyanka Gems vs. ACIT 94 TTJ 557 (Ahm.). The hon ble jurisdictional high court has affirmed the said decision in its judgment reported as (2014) 367 ITR 575 (Guj.) CIT vs. Priyanka Gems and holds that such an income is directly related to assessee s export business and it could not be been removed beyond the first degree. The Revenue fails to point out from the case record that the assessee s force in exchange gains fluctuation are not connected to its export activities. We affirm the CIT(A) findings in these facts and reject the Revenue s first substantive ground. 19. The Revenue s second substantive ground assails correctness of the lower appellate order deleting disallowance of section 80HHC and 80IA deduction regarding interest on debtors (Mandali Division) of ₹ 12,96,576/-. The CIT(A) has followed decision of hon ble jurisdictional high court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the assessee s trade debts. It replies in negative. Nor any infirmity is pointed out in the assessee s books of account. We follow the hon ble jurisdictional high court decision in these facts and hold that once the assessee s interest in question has arisen from trade debtors, the same could not have been disallowed for the purpose of impugned deduction u/ss. 80HHC and 80IA of the Act. The Revenue s second substantive ground fails. 21. The Revenue s next ground is against the CIT(A) directions directing the Assessing Officer to excluded sales tax and excise duty while working out section 80HHC deduction. The same is stated to be in contravention of section 145A of the Act. The case file reveals that a co-ordinate bench of the tribunal in assessee s case for assessment year 2002-03 has relied on the judgment of hon ble apex court in CIT vs. Lakshmi Machine Works, 290 ITR 667 (SC) holding that excise duty and sales tax do not involve any element of turnover and hence, they have to be excluded. The Revenue fails to point out any distinction on facts involved in the impugned assessment year vis- -vis those in assessment year 2002-03. The assessee submits that the Revenue has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest u/ss.234B and 234C is consequential. 25. The assessee submits at the very outset that its grounds no.2 to 4 relate to interest on fixed deposits, loans, interest expenditure and reduction of expenses from the insurance claim for the purpose of deductions claimed u/ss. 80HH, 80HHC and 80IA of the Act. It quotes the decision of hon ble jurisdictional high court in Tax Appeal No.358 of 2014 for A.Y.1998-99 and also the other judgment reported as (2014) 367 ITR 12 (Guj.) in its own case directing the authorities below to adopt netting formula i.e. the total receipts minus the expenditure incurred in relation thereto for the purpose of excluding it from the deduction claimed u/s.80HH or 80I in the light of the hon ble apex court decision reported as ACG Associated Capsules P. Ltd. vs. CIT (2012) 343 ITR 89 (SC). The same relief is prayed herein as well. The Revenue does not raise any serious objection to the same. We follow the aforesaid case law in these circumstances and direct the Assessing Officer to adopt netting formula qua assessee s grounds no.2 to 4 raised in these appeal. These grounds are accepted for statistical purpose. 26. The assessee s next substantive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of litigation holding that the common indirect revenue expenditure pertaining to existing as well as new units e.g. Auditor s fees, director s remuneration is allowable. The Assessing Officer noticed from details of both soda ash and LAB project and observed that no relief was allowable since none of the expenditure was of common indirect revenue nature. This resulted in the impugned disallowance of expenditure of ₹ 5,35,61,516/- relating to soda ash project and ₹ 40,57,968/- relating to LAB project. 30. The CIT(A) has also affirmed the Assessing Officer s findings in the order under challenge. He agreed with the assessee s submission that in A.Y. 1997-98 the tribunal had held identical expenses to be revenue in nature. However, he refers to the tribunal s order in the earlier round of litigation dated 30.8.2006 giving specific finding that there is no substance in assessee s submission that the impugned expenditure is incurred for expansion of existing business unit u/s.37(1) of the Act. The same appears to be the precise reason that the CIT(A) has inferred that the direct revenue expenditure in question for new units is related to purchase and installation of plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Madras high court decision (supra) and that of the tribunal in assessment year 1997-98 and 1998-99 allowing the very relief. We find that the hon ble Madras high court dealt with a case of revenue expenditure arising from expansion of existing business units and not that of depreciation. Similar is the factual position in assessee s cases decided by the tribunal in assessment year 1997-98 and 1998-99 allowing identical claims of revenue expenditure. Therefore, we proceed to decide this issue independently. The Assessing Officer s order is silent on the impugned depreciation claimed. This is not the Revenue s case in appellate order that the assessee has not put its assets in question in ready to use condition even if its commercial production has not commenced. We quote the case law of hon ble Delhi high court in CIT vs. Integrated Technologies Ltd. dated 16.12.2011 in these facts holding that it is not necessary to actually put to use the plant and machinery in question but such a depreciation claim is allowable even if the assets in question are kept ready for being used in the business concern. The Revenue fails to point out any judicial precedent to the contrary. We accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the case of S.K. Patel Family Trust where it was held that section 234D was introduced w.e.f. 01.06.2003 and not applicable to the earlier assessment years and also interest u/s.234B cannot be charged u/s.154 of the Incometax Act. However, this view of the Hon'ble ITAT has not been upheld by the Hon'ble High Court in the case of CIT vs Kerala Chemicals Proteins Ltd. (323 ITR 584), has held as under: Interest u/s.234D - chargeability - applicability of section 234D - Tribunal holding that interest under section 234D was not chargeable as the provision was applicable only from A.Y.2004-05 - not justified - section 234D was introduced w.e.f. 1st June, 2003 and not with reference to any assessment year - interest chargeable for the period from 1st June, 2003 till completion of regular assessment. Following this decision of the Hon'ble Kerala High Court, it is held that the Assessing Officer was justified in charging the interest u/s.234D of the I.T. Act which is upheld and the appellant's ground is rejected. 38. Heard both sides and record perused. The assessee refers to the earlier order of the tribunal deleting similar interest thereby upho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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