TMI Blog2015 (12) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. to be decided afresh without applying Rule 8D after giving a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Treatment of premature repayment of sales tax loan at net present value as revenue receipt chargeable for tax - Held that:- Hon'ble High Court of Karnataka in the case of CIT v. McDowell & Co. Ltd. [2014 (11) TMI 272 - KARNATAKA HIGH COURT] has laid down the ratio that where the assessee, due to certain scheme, made premature payment of deferred sales-tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable. A similar view was taken by the Special Bench of the Tribunal in the case of Sulzer India Ltd. (2012 (8) TMI 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is consolidated order for the sake of convenience. ITA No.7793/Mum/2010 : Asst.Year 2005-2006 3. The first ground relates to the treatment of income under the head income from house property. The assessee is aggrieved by the direction of the CIT(A) to determine the annual value of the property at 12% of the cost of land and building. At the very outset, the Counsel for the assessee fairly conceded that this issue has been decided against the assessee and in favour of the Revenue by the Tribunal vide a consolidated order dated 1st May, 2009 for assessment years 1999-2000, 2000-2001 and 2001-2002. 3.1 We find that this issue has been considered by the Tribunal in para 2.7 of its order and at 2.7.1, the Tribunal has followed the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan u/s 38 of Bombay Sales-tax Act, of ₹ 1,19,14,723 has been repaid prematurely on net present value of ₹ 57,97,097 and ₹ 61,17,626 is credited to profit and loss account and the same has been treated as capital receipt. The assessee was asked to explain why the said receipt should not be treated as revenue receipt. The assessee explained that it has availed the benefit of premature repayment of sales-tax loan, thus, the benefit accrued to the assessee is on account of loan transaction in which no deduction or allowance was ever granted in earlier years, therefore, the said receipt is a capital receipt. This submission of the assessee was dismissed by the AO, who was of the firm belief that the benefit so derived by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the decisions of the Hon'ble Karnataka High Court and the Special Bench, ground No.3 is decided in favour of the assessee and against the Revenue. 6. Ground No.4 is not pressed and the same is dismissed accordingly. 7. Ground No.5 relates to the denial of deduction claimed u/s 35D of the Act. During the course of scrutiny assessment proceedings, the AO found that the assessee has claimed deduction u/s 35D of the Act at ₹ 60,00,150, which pertains to its Steel Division. The AO further noticed that the said claim was not made in the return of income. On further proof the AO found that the assessee had already sold its Steel Division in financial year 2000-2001. The AO was of the firm belief that since the assessee does not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till assessment year 2001-2002. The impugned assessment year, i.e., assessment year 2005-2006 is the last assessment year, i.e., the tenth year of claim of deduction, which has been denied since the Steel Unit has been sold by the assessee. On a perusal of section 35D shows that the Act is silent in the case when a unit is sold. Section 35D(5) of the Act refers to the transfer before the expiry of the period of 10 years to another Indian company in a scheme of amalgamation and section 35D(5A) refers to the transfer before the expiry of the period in a scheme of demerger. There is no clause in the section which debars the assessee from claiming the expenses as a write off on sale of the undertaking. We, therefore, do not find any reason for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on therein ground No.1 is dismissed. 10. Ground No.2 relates to the disallowance made u/s 14A read with rule 8D. An identical ground is considered by us in ITA No.7793/Mum/2010 qua Ground No.2 of the said appeal. For similar reasons, this grievance of the assessee is restored to the file of the AO to be decided afresh without applying Rule 8D. Accordingly, ground No.2 is treated as allowed for statistical purposes. 11. Ground No.3 relates to the treatment of premature repayment of salestax loan at net present value as revenue receipt. This issue has been decided in favour of the assessee and against the Revenue by us in ITA No.7793/Mum/2010 qua ground No.3 of that appeal. For similar reasons, this ground of appeal is allowed. 12. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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