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2015 (12) TMI 302 - ITAT MUMBAI

2015 (12) TMI 302 - ITAT MUMBAI - TMI - Disallowance u/s 14A - CIT(A) has enhanced the disallowance u/s 14A to ₹ 3,25,89,130/- as against the disallowance made by the AO at ₹ 9,98,374/- Held that:- The formula adopted by the Ld. CIT(A) for making the disallowance u/s 14A is quite akin to formula laid down in Rule 8D which admittedly cannot be held to be applicable at all in the AY 2004-05. What could be the reasonable basis for disallowance has to be worked out from the nature of exp .....

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9 - BOMBAY HIGH COURT ), we hold that no disallowance on account of interest can be made in this case. As regards direct expenses are concerned, the AO, has given a categorical finding which has not been rebutted before us, that Demat charges of ₹ 8,25,010/- were directly related to investment made in shares. Accordingly, so far as disallowance of ₹ 8,25,010/- on account of demat charges made by the AO, the same stands confirmed. Regarding balance disallowance, we find that 5% of the .....

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engine designs patented, which the assessee produces/manufactures. Such a copyright and patent will only go to enhance the cost of such an intangible asset and accordingly, it has been rightly disallowed as capital expenditure by the Ld. AO and CIT(A). However, we agree with the alternate contention of the Ld. Counsel that if it is treated as capital expenditure for a capital asset then, depreciation has to be allowed on such an intangible asset, which specifically finds mention in section 32(1 .....

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no justifiable reason to interfere with the impugned order of the learned CIT(Appeals) confirming the disallowance made by the AO on this issue by invoking the provisions of section 40A(9). - Decided against assessee.

Disallowance of various payments on the ground of infraction of law - Held that:- so far as late payment of fee to Chennai Municipal Corporation is concerned it is on account of late payment of Health License, it is not for any kind of penalty or infraction of law. Accor .....

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or any violation which can be suggestive of any infringement of law, hence it cannot be held to be punitive in nature and accordingly, the same is held to be allowable. Lastly, as regard the amount paid to the High Court for sum of ₹ 10,00,000/-, this was on account of direction given by the High Court for granting Stay of demand on Company's Stay Petition in respect of appeal filed before the High Court. The said direction for depositing the amount was to be allowed in the year where it w .....

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ample products were also tested. Since AO and CIT(A) have solely gone by the fact that that in the tax audit the amount under R & D has not been qualified therefore, in the interest of justice, we are of the opinion that this matter should go back to the file of the AO to verify the details of expenses incurred by the assessee and if the same are for R&D purpose, as claimed by the assessee, then the same should be allowed as deduction u/s 35(1)(iv).- Decided in favour of assessee for statistical .....

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al purposes.

Exemption u/s 41(1) for the waiver of interest - Held that:- when certificate is issued by the CBDT then corresponding effect should be given to the assessee for not taxing the interest amount which has been waived. Accordingly, this matter is restored back to the file of the AO so as to give effect to the CBDT's certificate if it has been or would be issued by the CBDT. Needless to say that if such certificate is not produced by the assessee, then AO can draw adverse inf .....

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rables and complete gross profit margin for benchmarking the assessee's gross profit margin in the import transaction carried out by the assessee with its AE. - Decided in favour of assessee for statistical purposes.

Computation of long-term-capital-gain on sale of flat held for more than 3 years challenged - Held that:- The deeming provisions as contained in section 50 is to be restricted only to the computation of capital gain, as held by Hon'ble Bombay High Court in the case of Ace .....

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ns made in this order. Accordingly, on similar line we direct the AO to compute the capital gain from sale of flat and apply appropriate tax rate. - Decided in favour of assessee.

Addition to the book profit on account of extra ordinary items - Held that:- The assessee before us has now filed a computation of paper book containing additional and petition for admission of such additional evidences which are in the form of lease agreement dated 06.11.2003 and sale agreement dated 30th .....

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Addition on account of revaluation of reserve made in the book profits - Held that:- Depreciation of ₹ 16,10,62,604/- has been reduced by the amount transferred from revaluation reserve and only the net depreciation has been debited i.e. ₹ 6,80,317/- and accordingly, this net depreciation which has been transferred and reduced from revaluation reserve credited to the P&L account, ought to be excluded. Accordingly, AO is directed to reduce the net amount of ₹ 6,80,31 .....

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JB, the relief will be computed u/s 80HHC(3)/3A subject to conditions under sub-clauses (4) and (4A) of that section. Thus, this issue is squarely covered by the decision of Hon'ble Supreme Court - Decided in favour of assessee.

MAT assessment - Direction by CIT(A) to AO to deduct book profit carried forward on loss or unabsorbed depreciation, whichever is less - Held that:- We agree with the contention of the Ld. Counsel that the loss or depreciation should be adjusted as per the ear .....

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ss Aarti Visanji For the Respondent : Shri N K Chand ORDER Per Amit Shukla, AM The aforesaid appeal has been filed by the assessee against impugned order dated 24.08.2011, passed by CIT(A) -15, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2004-05. In various grounds of appeal, the assessee has challenged following additions/disallowances :- Sr. No. Ground No. Issue Amount 1 A Disallowance u/s 14A which has been enhanced by the CIT(A) at ₹ 3,25,89,130/- fro .....

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g payments : 1) Charges towards late payment fee to Chennai Municipal Corporation ₹ 9,650/- 2) Sales tax charged due to technical error and Stating destination of as Indore even though Consignee's name and address were correctly Written on consignment ₹ 1,22,887/- 3) Compliance fee per Weights and Measurement Rules ₹ 32,000/- 4) Amount paid to High Court in pursuance of High Court order on company's stay petition in respect Of appeal to HC ₹ 10,00,000/- 11,65,749/ .....

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ain since the block of assets in which said asset falls as on 01.04.2003 was at 'Nil' 4,19,85,605/- 11 K Addition on account of book profit u/s 115JB on extraordinary items 52,73,20,474/- 12 L Deduction from books profit u/s 115JB the Revaluation Reserve of ₹ 6,80,317/- which was withdrawn and credited to the Profit & Loss Account 6,80,317/- 13 M Deduction of the amount eligible for deduction u/s 80HHC from the book profit - 14 N Deduction of carried forward losses and Unabsorb .....

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are that the assessee has earned following exempt income during the previous year; (a) dividend income of ₹ 28,56,000/- and (b) interest on tax free bonds of ₹ 21,000/- and ₹ 5,90,825/-. In response to the show cause notice as to why the expenditure attributable to earning of exempt income should not be disallowed, the assessee submitted that, firstly, the dividend received on shares were from the investment made in shares of Griever Morgwite Crucible Ltd., which was purchased .....

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he exempt income was treated as expenditure disallowable u/s 14A and accordingly, he made the disallowance of ₹ 1,73,364/- being 5% of the total exempt income of ₹ 34,67,285/- Besides this, he further made the disallowance of Demat charges of ₹ 8,25,010/- debited under the head "other sundry expenses" which was a direct expenditure. Accordingly, aggregate disallowance of ₹ 9,98,374/- was made. 5. In the first appellate proceedings, Ld. CIT(A) held that the asses .....

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aring in the balance sheet of the -B The average of total assets as appearing in the balance sheet of the appellant as on the first day and the last day of the previous year - C An amount equal to one-half per cent of the monthly weighted average of the Value of investment, income from which does not or shall not form part of the total income -D The amount of expenditure directly relating to income which does not form part Of the total income -E The computation of disallowance for the purposes o .....

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sel Ms. Aarti Vissanji, submitted that though CIT(A) has not mentioned about Rule 8D while making the enhancement, however, his method is exactly similar to the formula prescribed in Rule 8D which is untenable in law for the period prior to 2008-09. She further submitted that so far as the interest disallowance is concerned, the same cannot be made in the case of the assessee, because the investments which have yielded exempt income were made out of assessee's own funds and which fact has be .....

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rt in the case of CIT vs HDFC Bank, 366 ITR 505 and Delhi High Court in the case of Taikisha Engineering, 370 ITR 338. 8. On the other hand, Ld. CIT DR, submitted that the Ld. CIT(A) has only tried to work out a reasonable basis for disallowance for which he has taken a same clue from formula laid down in Rule 8D. It is the onus of the assessee to prove the nexus between the investment made and interest free funds and also the expenditures debited in the P&L Account. In support of his conten .....

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(A) for making the disallowance u/s 14A is quite akin to formula laid down in Rule 8D which admittedly cannot be held to be applicable at all in the AY 2004-05. What could be the reasonable basis for disallowance has to be worked out from the nature of expenses debited and overall accounts of the assessee. So far as disallowance of interest expenditure is concerned, in the case of the assessee it is an admitted fact, permeating from the earlier years that the investments which have yielded exemp .....

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e directly related to investment made in shares. Accordingly, so far as disallowance of ₹ 8,25,010/- on account of demat charges made by the AO, the same stands confirmed. Regarding balance disallowance, we find that 5% of the exempt income appears to be quite reasonable having regard to the nature of expenses and accounts of the assessee. Accordingly, we uphold the disallowance to the extent of ₹ 9,98,374/- which was made by the AO. Thus, ground no. A is treated as partly allowed. 1 .....

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the assessee. Alternatively, it was pleaded that if it is treated as capital expenditure then depreciation @ 25% should be allowed. 12. The Ld. CIT(A) rejected the assessee's contention on the ground that the expenditure has been incurred for getting the designs patented which adds to the value of the new asset which has an enduring benefit and accordingly, it is capital in nature. 13. After considering the rival contentions and on perusal of the impugned orders, it is an undisputed fact tha .....

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cifically finds mention in section 32(1)(ii). Accordingly, we direct the AO to allow depreciation as per relevant rules provisions on such a capital expenditure. Accordingly, ground no. B is treated as partly allowed. 14. As regards ground no. C relating to addition on account of contribution to employees welfare fund of ₹ 1,73,543/-. It has been admitted by the Ld. Counsel that this issue has been decided against the assessee by the Tribunal in AY 2003-04. On perusal of the Tribunal order .....

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1,70,218/- to the following funds: Sl.No. Description Amount 1. Contribution to welfare fund at: Petrol Engine Unit, Thoraipakkam 84,206 Heavy Engineering Unit, Chennai 3,900 88,106 2. Contribution to family welfare fund at Light Engines Unit- II, Ranipet 40,580 3. Contribution to disability fund at Petrol Engine Unit, Thoraipakkam. 3,113 4. Contribution to benevolent fund at Petrol Engine Unit, Thoraipakkam. 15,326 5. Contribution to death relief fund at Light Engine Unit - II, Ranipet 10,145 .....

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rovisions of section 40A(9). Before the learned CIT(Appeals), it was submitted by the assessee that all the contributions made to the various funds other than the contributions to unrecognized superannuation funds were as per the agreement with workers' union and since the same was done as per the Industrial Dispute Act, 1947, the provisions of section 40A(9) were not applicable. The learned CIT(Appeals), however, did not find merit in these contentions of the assessee. According to him, all .....

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tlement arrived at with the workers' union, the same are covered by the Industrial Dispute Act, 1947 and provisions of section 40A(9) of the Act cannot be invoked. However, she has not been able to produce any evidence in the form of the copy of agreement with the workers' union to support and substantiate her stand taken on this issue and in the absence of the same, we find no justifiable reason to interfere with the impugned order of the learned CIT(Appeals) confirming the disallowance .....

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gainst the assessee and thus, ground no. C is treated as dismissed. 15. Next issue raised vide ground no. D is disallowance of various payments on the ground of infraction of law. The details of such payments were under : 1) Charges towards late payment fee to Chennai Municipal Corporation ₹ 9,650/- 2) Sales tax charged due to technical error and Stating destination of as Indore even though Consignee's name and address were correctly Written on consignment ₹ 1,22,887/- 3) Complia .....

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ation of Chennai towards Health License is not punitive one but compensatory and is allowable as business expenditure. (ii) Sales tax charged of ₹ 1,22,887/- due to technical error of stating destination of consignee as Indore even though consignee's name and address correctly written on consignment is not penalty but compensation for technical error. (iii) Charges of ₹ 32,000/- for compliance of weights & Measurement Rules is not punitive and hence allowable is business expe .....

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of infraction of law. 17. After considering the submissions made by the parties and also the relevant findings given in the impugned orders, we find that so far as late payment of fee to Chennai Municipal Corporation is concerned it is on account of late payment of Health License, it is not for any kind of penalty or infraction of law. Accordingly, the payment made to Chennai Municipal Corporation is treated as business expenditure. As regards the payment on account of sales tax, it was due to t .....

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allowable. Lastly, as regard the amount paid to the High Court for sum of ₹ 10,00,000/-, this was on account of direction given by the High Court for granting Stay of demand on Company's Stay Petition in respect of appeal filed before the High Court. The said direction for depositing the amount was to be allowed in the year where it will get adjusted against the demand. Accordingly, this payment cannot be held to be for any infraction of law or penalty. Accordingly, the same is treate .....

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market and business. The assessee had decided to develop world class multipurpose engines and for this purpose it embarked upon "Avatar Project" and incurred expenses on technical expert advice, project materials and fees for Technical advisory services. The said project was to be completed in AY 2007-08 and sample products was also tested. Accordingly, the expenditure incurred on such a project was claimed as deduction u/s 35(1)(iv) r.w. sub-section (2)(ia). The Ld. CIT(A) and AO held .....

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ied upon the order of the CIT(A). The Ld. CIT(A) has dismissed the assessee's claim in the following manner :- "I have considered the fact of the case and submissions of the appellant as against the observation/finding of the AO in this regard. The only explanation given by the appellant about the mention of the Auditors, that the project was kept on hold due to huge losses incurred by the appellant in the earlier three years' This alone cannot be the reason taken by the auditors to .....

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al expenses incurred by it, which would qualify for deduction under section 35 of the Act. Further the appellant has not even furnished any clarification from their auditors to this effect that they mentioned NIL against deduction u/s 35 for the reason that the appellant kept on hold the project due to huge losses incurred by the Appellant in earlier three years. Taking into consideration all the facts of the case, the action of the AO is considered justified and his action is upheld. Accordingl .....

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R & D has not been qualified therefore, in the interest of justice, we are of the opinion that this matter should go back to the file of the AO to verify the details of expenses incurred by the assessee and if the same are for R&D purpose, as claimed by the assessee, then the same should be allowed as deduction u/s 35(1)(iv). Accordingly, ground E is treated as allowed for statistical purposes. 22. In ground no. F, the assessee has challenged the addition on account of unutilized CENVAT .....

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side of the Balance sheet. It should be further increased by SINVAT credit of raw material utilized in payment of duty of finished goods. The assessee's case before the authorities below was that, it has been following the consistent method of account for valuing the inventory. If addition of CENVAT amount is added to the closing stock, then it would distort the real profit and will disturb the consistency in valuation of inventory. Heavy reliance was placed on the decision of Hon'ble Su .....

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d to ₹ 53,14,543/-. 24. Before us, the Ld. Counsel merely submitted that the full effect of section 145A has to be given and purchases made during the year should also be given effect to. 25. After going through the relevant finding given in the impugned order, we find that the Ld. CIT(A) has rightly directed the AO to make corresponding adjustment of CENVAT credit in the opening stock also in accordance with the decision of jurisdictional High Court. However, the Ld. CIT(A) has not referr .....

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e on waiver application filed by the assessee u/s 41(1) as per the order of the BIFR. The assessee has shown an amount of ₹ 10,14,94,385/- on account of interest waived by the bank as taxable, however, in the loss shown in the return, the said amount was not reduced. The reason being, the assessee had filed an application before the CBDT seeking exemption u/s 41(1) for the waiver of interest. 27. The CIT(A) has confirmed the said addition on the ground that CBDT has not issued any certific .....

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s been or would be issued by the CBDT. Needless to say that if such certificate is not produced by the assessee, then AO can draw adverse inference. Accordingly, ground G is treated as allowed for statistical purposes. 29. Next issue raised vide ground no. H is addition on account of transfer pricing adjustment of ₹ 1,23,86,407/- in respect of import made from AEs, based on internal comparable transaction with another AE. 30. The assessee has undertaken transaction of import purchase of &q .....

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declared at 11.75% with BOMAG GmbH, 5.25% with CIFA the average of which was arrived at 8.53%. The details of sales, profit and gross margin are as order :- CIFA % BOMAG % Sales 19,05,60,100 100 16,09,81,100 100 Less: Imports (international transaction) 6,80,36,363 35.70 5,56,07,570 34.54 Gross Profit of International Transaction 12,25,23,737 64.30 10,53,73,530 65.46 Less: Indigenous cost (Local transactions) 11,24,62,164 59.02 8,54,09,950 53.69 Total Gross Profit 1,00,61,573 5.28 1,89,63,574 1 .....

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rved that since assessee is carrying out transaction with 2 AEs, therefore, there is an internal comparability and if internal RPM is applied and gross margin of BOMAG GmbH, Germany which was at 11.7% and transaction with SIFA Spa, Italy, which was 5.28% is applied to benchmark the assessee's margin, then it can be seen that there is huge variation and therefore adjustments has to be made. Thus, he held that 11.78% should be taken as arm's length gross profit margin for benchmarking the .....

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ears, wherein it was held to be as a good comparable. Further, the assessee imports Tailor made spare components and the imported items purchased from AE are not sold in the Indian market. The assessee imports from BOMAG GmbH, Germany tailored made spares, components and kits for manufacture of Tandem Rollers and Vibratory Compactors and similarly, the imports from CIFA, Italy are also tailor made components and kits for manufacture of transit /Concrete Mixtures. Both these items are used for in .....

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pearing in para 18.2.3 from pages 45 to 48 of the appellate order on the ground that, firstly, the computation of gross profit submitted by the assessee has not found to be correct on facts and also as per the accounting practice; secondly, internal comparability resorted to by the TPO has not been disputed by the assessee and lastly, the assessee has not identified external comparability and therefore, the internal comparability resorted by the TPO is fully justified. 33. Before us, the Ld. Cou .....

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O is erroneous. She further submitted that external comparables, as submitted by the assessee should be adopted and in case of L & T, the same has held to be a good comparable in the earlier year, which has been upheld by the Tribunal also, therefore, TPO should be directed to accept the assessee's external comparables. 34. On the other hand Ld. DR, argued that it is not in dispute that Resale Price Method (RPM) should be adopted and PLI should be the gross margin. If there are no intern .....

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Thus, the comparability analysis as made by the AO/TPO and confirmed by CIT(A) by comparing two uncontrolled transactions, cannot be sustained. Under the transfer pricing regulations, a comparability analysis is a comparison of a controlled transaction with uncontrolled transaction and they are comparable if none of the difference between transactions could effect the factors like price or margin. If there are some differences then a reasonable accurate adjustment can be made to eliminate the m .....

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a comparability analysis at the threshold is liable to be rejected. Accordingly, the entire approach of the TPO as well as CIT(A) is rejected because appropriate comparison has to be made from comparable uncontrolled transaction with the third parties, if there are no uncontrolled internal transaction. The assessee has selected two comparables initially and later on added one more comparable i.e. Escorts Ltd. The turnover (in crores); segmental result plus percentage margin of the three compara .....

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examining the three external comparables and complete gross profit margin for benchmarking the assessee's gross profit margin in the import transaction carried out by the assessee with its AE. Accordingly, ground no. H is treated as partly allowed for statistical purposes. 36. In ground no. I, the assessee has challenged carried forward losses and unabsorbed depreciation. 37. At the time of hearing, the Ld. Counsel submitted that this is a general ground and hence same is not pressed. Accor .....

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assessee's case before the authorities below was that since these flats were held for more than 5 years, hence held to be capital arising from sale of flats were long-term capital gain. It was submitted that fiction created in section 50 is only to restricted to mode of computation of capital gain contained in sections 48 & 49 and does not apply to other provisions of the sections. Accordingly, assessee contended that the capital of ₹ 4,19,85,805/- should be treated as longterm- ca .....

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D 417 wherein the decision of Hon'ble Bombay High Court in the case of S A Builders Ltd. has been relied upon. 41. On the other hand Ld. DR submitted that section 50 is nonobstinate clause wherein it is deemed that an asset, which was part of the block of asset is deemed to be short-term-capital-gain. Thus, it has to be treated as short-term-capital-gain. 42. We have heard the rival contentions and also perused the relevant material on record. The deeming provisions as contained in section 5 .....

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ses of section 48 and 49 which relate to computation of capital gain. The deeming provisions has, therefore, to be restricted only to computation of capital gain and for the purpose of other provisions of the Act, the capital gain has to be treated as long term capital gain. The view canvassed by the learned AR is supported by the judgment of Hon'ble High Court of Bombay in case of Ace Builders P. Ltd. (Supra) in which it has been held that for the purpose of other provisions of the Act such .....

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e than three years would retain the character of long term capital gain for the purpose of all other provisions of the Act. In this case the Ld. AR for the assessee submitted that flat had been held for 15 to 20 years which is supported by the fact that cost of the flat as shown in the balance sheet was only ₹ 1,30,000/-. Therefore, if the flat is held for than three years the tax rate has to be applied as provided in section 112 of the IT Act applicable in respect of capital gain from tra .....

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is order. Accordingly, on similar line we direct the AO to compute the capital gain from sale of flat and apply appropriate tax rate. Accordingly, ground no. J should be treated as allowed. 43. Ground No. K, the assessee has challenged the addition to the book profit on account of extra ordinary items of ₹ 2,73,20,474/-. 44. In this regard, the assessee has filed a separate compilation of paper book with a petition for admissions of additional evidence and submitted that the same should be .....

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under section 293(1)(a) of the Companies Act, 1956 through postal ballot. As per notice to the shareholders the directors estimated the sale value of the undertaking to be ₹ 11,00,00,000/-. Accordingly the Estimated loss of ₹ 37,90,00,000/- has been provided and disclosed as extra ordinary in the accounts (ii) Pending disposal of RPRL undertaking Unamortized Balance of Goodwill as on 30.06.2003 amount to ₹ 14,82,20,274/- is written off and disclosed as on Extraordinary item in .....

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item(Pg 40 of the audited accounts Rs.32,47,54,786/-" The assessee's case had been that, it has not sold PPRL Unit in AY 2004-05 and instead of estimating sale value of ₹ 11 crores and provided estimated loss of ₹ 37,89,80,137/-. Further the assessee has sold RPRL unit in 2005-06 and not in AY 2004-05. The assessee's clarification in this regard has been incorporated by the CIT(A) from pages 57 to 59 of the appellate order. However, the Ld. CIT(A) rejected the assessee& .....

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from the copy of the valuation report attached with the submissions that it clearly mentions valuation is based on the existing ground reality and could vary depending upon the actual time of sale. The valuation report is dt. 29.06.2003. However it is mentioned here that the sale of RPRL unit did not take place in the AY 2004-05. As per the facts submitted by the appellant, the unit was sold in the previous year pertaining to AY 2005-06. Accordingly, the provisions for such losses by the appell .....

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ther the sale of the plant only took placed in the previous year pertaining to AY 2005-06 and not in the year under consideration and the charge of income is therefore merely on the basis of estimation. However, it could be said that the estimation is based on the valuation report but such valuation report had clearly qualified its finding that there may not be any buyers for the purchase of assets on going concern basis, given the limited alternate use for the facilities and that the value are .....

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fore this money would be available to the company for any other use till the time of actual sale of the unit. Further, the actual sales anyway resulted into profit or loss which took placed in the previous year relevant to the AY 2005-06, has not been detailed or submitted by the appellant. Further with amendment of Finance Act, 2009, w.e.f. 01.04.2001, the amount or amounts set aside as provision for diminution in value of any assets is required to be added to the profit as shown in the Profit .....

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re upheld. Consequently this sub round of appeal raised by the appellant is dismissed". 45. The assessee before us has now filed a computation of paper book containing additional and petition for admission of such additional evidences which are in the form of lease agreement dated 06.11.2003 and sale agreement dated 30th June 2004, both pertaining to RPRL Unit which was available on the date of the Balance Sheet for the relevant previous year. These additional evidence go to the very root o .....

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rved that assessee has reduced an amount of ₹ 6,80,317/- on account of transfer from revaluation reserve, from the book profit. This revaluation is allowed to be reduced from the book profit of the year, when the said provision was made, and has been increased by these reserve or provision as per the proviso to sub-clause (i) under Explanation to section 115JB(2). The AO observed that since no details or brief has filed therefore it is not allowed as deduction. 47. Before the CIT(A), the a .....

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however, uphold the action of the AO. 48. After hearing both the parties and on perusal of the material placed on record, it is seen that depreciation of ₹ 16,10,62,604/- has been reduced by the amount transferred from revaluation reserve and only the net depreciation has been debited i.e. ₹ 6,80,317/- and accordingly, this net depreciation which has been transferred and reduced from revaluation reserve credited to the P&L account, ought to be excluded. Accordingly, AO is direct .....

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;s case was that as per provisions of section 115JB, there is a book profit and therefore, the deduction for the purpose of eligible profit u/s 80HHC is to be worked out based on such book profit deducted as per explanation (iv) to section 115JB(2). However, the Ld. CIT(A) dismissed the assessee's contention on the following ground :- "I have considered the facts of the case, submission of the appellant as against the observation / findings of the AO in his order passed u/s 143(3) of th .....

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to be worked out based on the book profit as computed in accordance with the Sec 115JB of the Act. The AO's stand that the profits and gains of the business of the appellant is NIL and hence the appellant is not eligible for deduction u/s 80HHC from the book profit computed in accordance with the Sec. 115JB of the Act is therefore found to be justified and accordingly, this sub ground of appeal is dismissed". 51. Admittedly, now the decision of the Hon'ble Supreme Court in the case .....

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