Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Adani Enterprises Ltd., DCIT, Circle-01, Ahmedabad Versus Addl. Commissioner of Income Tax, Range-1, Ahmedabad, Adani Enterprises Ltd.

Bad debt disallowance while computing section 115JB book profits - CIT(A) deleted the addition - Held that:- It is to be seen that the lower appellate findings that assessee is already assessed under normal provision rather than MAT u/s. 115JB. The Revenue is unable to dispel this factual position in the course of hearing. We accordingly hold that the issue of bad debt in question vis-a-vis for computing book profits becomes mere academic in nature. - Decided against revenue

Transfer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng loan obligation. Then comes assessee’s AE’s request to RBI dated 15-01-2007 seeking approval of the MPSEZ’s shares pledging. The same stood declined on 21-02-2007 at page 229 of the paper book. There is no evidence to the contrary forthcoming from the case record. We conclude in these facts and circumstances that the CIT(A) has rightly held the assessee not to have furnished the impugned corporate guarantee in favour of its AE so as to be taken as an international transaction u/s. 92C of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

its non-interest bearing funds in the nature of general reserves, debt redemption reserves and share premium amounts read ₹ 396.61 crores, ₹ 70 crores and ₹ 181.30 crores respectively. Its tax free investments are of ₹ 600.82 crores. These figures are as on the last day of the relevant account year 31- 03-2007. We observe in these facts and circumstances that a presumption can safely be drawn as per case law of CIT vs. Torrent Power Ltd [2014 (6) TMI 185 - GUJARAT HIGH C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

istrative expenditure for making the impugned section 14A disallowance. The CIT(A) has indirectly been guided by rule 8D otherwise not applicable in the impugned assessment year. We hold in these facts and circumstances that the impugned section 14A r.w. Rule 8D disallowance in question is liable to be deleted in entirety. - Decided in favour of assessee

Depreciation disallowance - CIT(A) allowed claim - Held that:- There is no dispute about the fact that the assessee has claimed depr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of hearing. - Decided in favour of assessee

Section 43B disallowance - Held that:- There is no dispute so far as factual position that the assessee has not paid the above stated sums on or before the due date of furnishing the return is concerned. We accordingly reject assessee’s contentions and confirm the impugned leave encashment disallowance.- Decided against assessee

VAT component coupled with entry tax and custom duty sum disallowed u/s 43B - Held that:- The paper bo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

refer to the above extracted lower appellate findings dealing with the leave encashment issue only and without even adverting to assessee’s detailed submission narrated hereinabove. The CIT(A) has simply brushed aside the same with sweeping observations qua applicability of section 43B. We are of the view in these peculiar facts and circumstances that larger interest of justice would be met in case this limited issue of VAT, entry tax and customs duty vis-à-vis application of 43B is restored bac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r challenge. However, it failed to justify the impugned course of action in invoking the impugned disallowance vis-à-vis assessee’s eligible profit instead of specific expenditure allocated in books. We feel it more appropriate in these peculiar facts and circumstances that this issue also needs to be re-adjudicated at the level of Assessing Officer as per law after affording adequate opportunity to the assessee - Decided in favour of assessee for statistical purposes. - ITA No. 1859/Ahd/2011, I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ar 2006-07. The next assessment year 2007-08 involves similar cross appeals no. 486 & 558/Ahd/2012 against order of the lower appellate authority dated 20- 12-2011 in appeal no. CIT(A)-VI/Addl.CIT./R.1/334/2010-11 The relevant proceedings are u/s, 143(3) and 143(3) r.w.s. 144C of the Income tax Act, 1961, in short the Act respectively. We proceed assessment year wise for the sake of convenience and brevity. Assessment Year 2006-07 2. The assessee s appeal ITA 1859/Ahd/2011 raises first subst .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

red, relevant bills had not been received at the time of finalizing accounts of the previous assessment year, its unique business gave rise to credit and debit entries of earlier years, there was no revenue loss involved and the issue had already been decided in its favour in earlier assessment years. This was followed an alternative plea of netting of prior period income against the impugned expenditure. The Assessing Officer rejected all this explanation by quoting lack of proof of crystalliza .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s our attention to the fact that its prior period income already stand assessed. Relevant bills and vouchers of the impugned prior period expenditure are stated to have been received only in the relevant previous year after being crystalized. It is stated to have been following consistent accounting practice as in preceding assessment years. The assessee accordingly argues that both the lower authorities have erred in disallowing the impugned prior period expenditure. The netting plea as raised .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n corresponding assessment year. Three judicial decisions are also quoted in support. 5. We have heard rival contentions. Page 13 to 16 of the paper book comprise all details of assessee s prior period expenditure amounting to ₹ 67,88,591/- falling under major heads of C & F, misc. expenditure, outward freight and travelling etc. Its ledger accounts reveals that the same have been recognized on various dates from 01-04-2005 to 31-03-2006. There is hardly any dispute on genuineness aspe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

quence, more particularly, when the same is allowable. Next judgment (2010) 194 TAXMANN 158 (Del) CIT vs. Jagatjit Industries accepts consistent accounting practice claiming identical expenditure in mercantile system of accounting wherein the necessary expenditure vouchers have been received after 31st March of the relevant accounting period. Case law (2014) 221 TAXMANN 80 (Bom) CIT vs. Mahanagar Gas Ltd supports assessee s case that prior period expenditure crystallize during the year on receip .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

35 taxmann.com (Hyd) now Bharat Ventures Ltd vs. CIT deciding the issue in Revenue s favour. We find that these tribunal s decisions do not confirm to different views of various hon ble high courts hereinabove. Next case law (2013) 42 taxmann.com 142 (Guj) CIT vs. Gujarat Mineral Development Corporation is an admission order after framing substantial question of law wherein the main case is still pending for final disposal. We observe that this latter order does not settle a ratio. We take into .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xpenditure is disallowed, an identical claim of ₹ 2,80,17,537/- raised in the succeeding year 2007-08 is liable to be accepted in the impugned assessment year as the same stands disallowed therein as prior period expenditure. Both parties are unanimous that our findings on first substantive ground decided hereinabove render the same as having become infructuous. Ordered accordingly. 7. The asesseee s last substantive ground pleads that the CIT(A) has erred in dismissing its additional grou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Heard both sides. Assessee as well as reiterate their respective stands. There is no dispute that this plea was raised in lower appellate proceedings only. We find in these facts that the hon ble jurisdictional high court in (2014) 270 CTR 66 (Guj) CIT vs. Mitesh Impex settles the law regarding admissibility of additional grounds raised before appellate forums as under:- 27. In the case of all other assessees similar facts emerge. The claims under section 80-IB/80HHC were made for the first ti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rm No. 10CCB during the assessment proceedings, claiming the deduction under section 80-IB which was not claimed in the return, the deduction is admissible even in absence of revised return. The Hon'ble High Court held that there was no requirement for filing of any revised return. Hon. High Court has further considered the decision of the Hon'ble Goetz (India) Ltd. v. CIT (284 ITR323) (SC) and after considering the decision of SC the High Court has held that when the assessee has filed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing the claim. As about the deduction u/s. 80-IB, the condition required for being eligible to the deduction are similar to that of the conditions applicable for section 10B. Moreover, there is specific bar in granting two benefits. The audit report in form No. 1OCCB was furnished in support of the claim. The provision of section 10B(6) applied to post holiday period applicable for section 10B. Therefore, when the assessee is eligible for deduction under section 80-IB. However, first part of pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n u/s.80-IB is shown in the CIT(A)'s order, therefore, we are of the view that our interference is not required. We therefore Ground No.2 of revenue's appeal is dismissed.' 28. Learned counsel Mr. Pranav Desai for the department submitted that in view of the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra), the assessee could not have maintained additional claim that too at an appellate stage without revising the return. 29. On the other hand learned counsel M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d with approval observation of the Court in the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 to the effect that "The Appellate Assistant Commissioner, therefore, has plenary powers in disposing of appeal The scope of his power is coterminus with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do." It was observed that there was no reason why the appellate authority cannot modify the assessment order .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot modify the assessment order on an addition ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ermal Power Co. Ltd. v. CIT[1998] 229 ITR 383 (SC) when the question of law was raised for the first time before the Tribunal though facts were already on record, the Supreme Court observed that there is no reason why the assessee should be prevented from raising such a question before the Tribunal for the first time so long as the relevant facts are on record in respect of the item concerned. There is no reason to restrict the power of the Tribunal in such appeal only to decide the grounds whic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cision does not relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the process the Supreme Court recognized that a new claim could not be entertained by the assessing officer without the assessee revising the return. While doing so it was clarified that- "4. . . However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

axman 498/23taxmanacom 23 (Bom) the Bombay High Court considered the issue at considerable length and held that Commissioner (Appeals) as well as the Tribunal have the jurisdiction to consider the additional claim and not merely additional legal submissions. The appellate authorities have discretion to permit such additional claims. Such claims need not be those which became available on account of change of circumstances of law but which were even available when the return was filed. 36. The De .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

round that no revised return was filed. 37. In case of Commissioner of Income Tax v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Gui.). Full Bench of this Court held that merely because a ground has not been raised though it could have been raised in support of the relief sought in the appeal, it cannot be said that such ground cannot be raised before the Tribunal. Such ground can be raised provided it falls within the contours of the subject matter, of the appeal. 38. It thus becomes c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question effect or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ore the appellate authority without resorting to revising the return before the assessing officer. 40. Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what has ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

appellate authority and the Tribunal would have the power to entertain any such new ground, legal contention or claim. However, it is only the Bombay High Court in the case of CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. (supra), which has travelled a little beyond this preposition and come to the conclusion that even if facts necessary to examine such a claim are not placed before the assessing officer and, therefore, not on record, there would be no impediment in the Commissioner (Appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

chnical aspect of the matter. We find that merits of the issue have nowhere been discussed in lower appellate findings under challenge. This makes us to admit this additional ground with directions to Assessing Officer for its appropriate adjudication as per law after affording adequate opportunities of hearing. This ground is treated as allowed for statistical purposes. ITA 1859/Ahd/2011 is partly accepted. 10. This leaves us with Revenue s cross appeal ITA 2078/Ahd/2011 raising sole substantiv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nature. This ground is rejected. Revenue s appeal ITA 2078/Ahd/2011 fails. ASSESSMENT YEAR 2007-08 11. The Revenue s appeal ITA 486/Ahd/2012 raises first ground averring that the CIT(A) has wrongly deleted transfer pricing adjustment of ₹ 3,65,96,000/- in lower appellate findings under challenge reading as follows:- 2. The first ground of appeal is against addition of ₹ 3,65,96,000/-on account of transfer pricing adjustment. 2.1 The T.P.O-I has stated in the order u/s 92CA (3) dtd. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he assessee. In view of same, a show-cause notice dated L 10.2010 was issued to the assessee to show cause why arm's length guarantee fees should not be computed using CUP as most appropriate method for the transaction. 5.2 In response to the above show-cause notice the assessee has submitted its reply vide letter dated 16/10/2010. The relevant portion is reproduced hereunder. "... In respect of above the assessee company would hereby like to clarify that its AE (M/s. Adani Global Pte L .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

etter RB.I. after doing detailed analysis did not approve the pledge of Shares by the assessee company. The copy of the same letter has been attached as Enclosure-3 to this letter. So the assessee company did not pledge any shares following the orders of RB.I. and accordingly no services were provided to AE. So no question of guarantee commission arises, there is no need to submit the copy of the agreement as no agreement for the same has been entered into. Accordingly the assessee company is of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rovided guarantee by pledging share to its AE. Adani Global Pte. Limited has negotiated interest rate on the basis of this pledge which is clearly reflected in their letter to the bank dated 28.12.2006. All these correspondence is on record as submitted by the assessee. It may be that RBI may have turned down their request for pledge of shares of Mundra Port and SEZ Ltd. but AE and the bank may have proceeded further on the basis of above pledge of shares. The letter of Reserve Bank of India dat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

forceable agreement that intends to survive the insolvency of the person or concern on whose behalf it is issued and obliges the guarantor to provide for payment if that person or concern fails to. In case the guarantee is valid, unconditional and irrevocable and it requires prompt payment in full before pursuit of remedies, in principle it provides full credit substitution. If sufficient funding is not provided by the parent company for some reason, subsidiaries that attract funding from third .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

made by the Ld. A.O. pursuant to the order dated 18th October, 2010 passed under Section 92CA(3) of the Income Tax Act, 1961 by the Transfer Pricing Officer - I, Ahmedabad. During the course of proceedings before the TPO, the Appellant Company was informed by the TPO that its associate enterprise M/s. Adani Global PTE Limited, Singapore, raised term loan of Singapore Dollars 239.882 million (converting to ₹ 731.92 crores) from ICICI Bank Limited, for which the appellant company provided gu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ide its letter dated 16.10.2010 submitted that the appellant company intended to provide guarantee by pledging the shares. However, since the permission was not granted by the RBI, the transaction was not taken place. Accordingly, the service was not provided to the AE of the appellant company. Hence, the question for guarantee commission also does not arise. 1.3.1. However, the Ld. TPO held that the appellant company has provided the guarantee by pledging the shares to its AE. Further, the Ld. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tention of the Ld. TPO make an addition of ₹ 3,65,96,0007- in the hands of the appellant company. 1.4. In this regards, we firstly submit that RBI did not permit such pledging of shares by way of guarantee and accordingly no guarantee was provided by the Appellant Company and, therefore, the question of charging guarantee fees does not arise, copy of letter of RBI is enclosed on Page No. 65 of Paper Book. Accordingly, we submit that, since the RBI has not granted the permission for pledgin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hon'ble Hyderabad ITAT in case of Four Soft Ltd. vs. DCIT, Circle - 1(3), Hyderabad (ITA No. 1495/Hyd/W) (copy enclosed on Page No. 285 of PB), Further, we submit that it is not a financial transaction for the appellant company and accordingly the addition cannot be made in the hands of appellant company. 1.5. In addition to above, we also submit that, the Ld. TPO has further mentioned that the letter dated 21st February, 2007 from Reserve Bank of India is regarding pledging of shares in fa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2006 of ICICI Bank Limited, Singapore the copy of same is enclosed herewith as Annexure - A - 8. From this letter it is clear that the loan was sanctioned to Adani Global PTE Limited on the basis of certain securities which included extension of pledge of 23.5% shareholding (212.5 million shares) of Mundra Port & SEZ Limited. In this regards, we submit that the transaction was to be done by pledging the shares of MPSEZ to IDBI Trusteeship Services Ltd. and not ICICI Bank Ltd. 1.6. In so far .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that since no guarantee has been given, the same can be possible by oversight of the details available with the Ld. TPO. The appellant company reiterates that since pledging was not at all done, the question for addition should not be made based on assumptions on Ld. A.O.'s own wishes. 1.8. In view of above, we request humbly before your honour to kindly direct the Ld. A.O. to delete the said disallowance of ₹ 3,65,96,000/- as it is totally uncalled for, baseless and it deserves to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not provide guarantee to its AE. Since the shares were not finally pledged due to refusal of RB1 permission, there is no question of making adjustment in respect of guarantee commission. Appellant submitted copy of letter written by Adani global pte Ltd, Singapore dated 15 January 2007 to RBI requesting approval for pledge of shares in favour of IDBI trusteeship services Ltd (Indian security trustee appointed by ICICI bank Limited, Singapore) and RBI's letter dated 21st of February 2007 ref .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g these letters referred earlier, it is clear that IDBI trusteeship Ltd is security trustee of ICICI bank Limited, Singapore and RBI's letter refusing the permission for pledge of shares is in respect of same shares which were provided for guarantee to ICICI bank Limited, Singapore. Thus, it is clear that entire addition is based on the misconception that these two entities represented separate transactions. In view of this it is clear that appellant did not provide guarantee services by ple .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed the rival submissions and perused the materials available on record. We find that the JP legislation provides for computation of income from international transaction as per Section 928 of the Act. The corporate guarantee provided by the assessee company does not fall within the definition of international transaction. The TP legislation does not stipulate any guidelines in respect to guarantee transactions. In the absence of any charging provision, the lower authorities are not correct in br .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee on this issue." From the above it is clear that appellant's case is covered by the aforesaid decision also. Therefore even otherwise, the adjustment made by the TPO in respect of guarantee commission is not sustainable. Accordingly addition made by the assessing officer based on the TPO's order is deleted. 12. The Revenue seeks to rebut above narrated findings of fact the assessee has not tendered the impugned corporate guarantee in favour of its Singapore based associate enterpr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

paper book. There is no evidence to the contrary forthcoming from the case record. We conclude in these facts and circumstances that the CIT(A) has rightly held the assessee not to have furnished the impugned corporate guarantee in favour of its AE so as to be taken as an international transaction u/s. 92C of the Act. This first substantive ground is rejected. 13. We come to Revenue s second substantive ground challenging lower appellate order restricting section 14A disallowance of ₹ 8,13 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome and expenditure incurred. It denied to have put on use any borrowed funds in making the impugned tax free investments. And also that no administrative expenditure had been incurred on its part. The Assessing Officer appears to have entered into a much lengthier discussion for observing that though Rule 8D of the Income Tax Rules applied from assessment year 2008-09 only, the same would still provide a reasonable basis for computing the impugned disallowance. He proceeded accordingly to mak .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sallowed interest and part of administrative expenses under section 14A by holding those expenses relating to exempt income. Appellant submitted that it was maintaining separate books of accounts for treasury and investment activities and therefore all expenses relating to exempt income have been debited there and no separate disallowance is required to be made under section 14A. Appellant further argued that no borrowings were made for making investments. All the investments were made from owne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f interest and administrative expenses are separately dealt with in subsequent Para. As regards disallowance of interest, appellant's arguments are in the following lines- 1- Since separate books are maintained, no expenses should be separately disallowed. 2- Appellant did not borrow funds for making investments. Till last year, no disallowance of interest was made under section 14 A and this year all the investments were made form owned funds therefore as per recent Gujarat High Court decis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

interest should be worked out as per rule 8D (ii) The aforesaid arguments of the appellant have been considered in detail. Just by maintaining separate books of accounts, appellant cannot claim exemption from disallowance under section 14A. When business funds were commonly used for business as well as investment, it cannot be said that no part of borrowed funds were used in making investments resulting in exempt income. Assessing officer dealt with this argument in detail. Just by maintaining s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vestment resulting in exempt income out of owned fund and therefore as per recent decision of Gujarat High Court, no disallowance of interest can be made. Assessing officer found that common pool of funds were used in investments as well as business and therefore it cannot be said that investments were made only from own funds and not borrowed funds. Since appellant is not able to prove direct nexus between owned fund with investment in exempt assets, the decision of Gujarat High Court relied up .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

issue to be decided here is whether this interest income also deserved to be reduced from interest expense or not. The reason for not reducing this interest income while computing disallowance as per the formula given in rule 8D (ii) is that it was not specific purpose interest income. However appellant pointed out that borrowed funds were directly used in granting loan to subsidiaries which resulted in taxable interest income and therefore it is also specific interest income like other interest .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terest income from the interest expense without any basis, the appellant's argument is justified. Appellant also relied upon various decisions as per which netting off of interest is considered appropriate while making interest disallowance. Considering all these decisions and also assessing officer's computation of interest disallowance, I find merit in appellant's argument that RS 59.71 crores interest income should be reduced from interest expenses while computing disallowance of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der section 14 A is confirmed to this extent. As regards disallowance of administrative expenses, appellant's arguments are in the following lines- 1-Profit from partnership firm is not really exempt as held by Bombay tribunal in the decisions relied upon by the appellant and accordingly no disallowance of expenses relating to this income can be made. 2- The disallowance of administrative expenses till assessment year 2007-08 cannot be made as per Kerala High Court decision in the case of Ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the AO is not sustainable. The decision of Kerala High Court that disallowance of administrative expenses should be made from assessment year 2008-09 is not followed in several decisions of ITAT. Apart from this, Bombay High Court decision in the case of Godrej and Boyce confirmed the disallowance of interest and administrative expenses under section 14A even before AY 2008-09 as per reasonable estimate. Therefore, the disallowance under section 14A has to be made irrespective of the applicabi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the quantum of investment, expenses incurred by the appellant, the disallowance @.5% of average value of investment is held to be reasonable, appropriate and also as per rule 8D. The disallowance of administrative expenses is accordingly confirmed to the extent of .5% of the average value of investments (RS 359.64 crores as per assessment order). The disallowance of administrative expenses comes to RS 179.82 lakhs which is confirmed in addition to interest disallowance as mentioned in earlier p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iture as well. Its categoric case made out in lower proceedings is that its non-interest bearing funds in the nature of general reserves, debt redemption reserves and share premium amounts read ₹ 396.61 crores, ₹ 70 crores and ₹ 181.30 crores respectively. Its tax free investments are of ₹ 600.82 crores. These figures are as on the last day of the relevant account year 31- 03-2007. We observe in these facts and circumstances that a presumption can safely be drawn as per c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bearing funds nor its plea of having incurred no administrative expenditure for making the impugned section 14A disallowance. The CIT(A) has indirectly been guided by rule 8D otherwise not applicable in the impugned assessment year. We hold in these facts and circumstances that the impugned section 14A r.w. Rule 8D disallowance in question is liable to be deleted in entirety. Ordered accordingly. This substantive ground raised in Revenue s appeal fails. The assessee s corresponding ground (supr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een enjoyed rights in lease hold land. Remaining figure of ₹ 1.44 crores was attributed towards construction contribution along with exclusive use of terrace and allotted parking space. The Assessing Officer did not deny the fact that the assessee had raised depreciation claim on above stated shares. He observed that this share ownership would not include assets themselves under the Act since the same could not be held to be building as per the depreciation schedule. This reasoning resulte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sum of RS 3.75 crores since 1998. Assessing officer for the first time disturbed the claim of depreciation on the ground that no depreciation is allowable on shares. Appellant submitted that the ownership of building occupied by it is represented in the form of shares. These shares entitled it to occupy and use office premise. Appellant also submitted that this asset was purchased in 1998 and the same is part of block of asset. WDV of building block included this asset. As per section 43 (6), WD .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

quently was entitled to claim depreciation. Respectfully following this decision, assessing officer is directed to allow depreciation on full value of office premises which is partly represented in the form of shares. This ground is accordingly allowed. 17. Heard rival contentions. There is no dispute about the fact that the assessee has claimed deprecation in question on shares of the above stated assets. The Revenue fails in rebutting the crucial appellate finding that the same already forms p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l ITA 486/Ahd/2012. Its first substantive ground challenges section 43B disallowance of ₹ 1,33,82,156/- comprising of leave encashment sum of ₹ 70,46,416/-, VAT payable (Karnataka) of ₹ 3,720/-, entry tax of ₹ 5470/- and Customs duty of ₹ 73,26,550/-; respectively incurred in the previous year and not paid on or before furnishing the return of income. The CIT(A) s findings under challenge discussed the issue as under:- 4. The third ground of appeal is against additi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x Auditor, it was seen that few of the amounts pertaining to unpaid term loan interest which remained unpaid totaling to 122041/- were disallowed in the computation of income. However, the other amounts qualified by the Auditor were not offered for tax by the assessee in its return of income. 6.2 Accordingly, vide questionnaire dated 09.08.2010, the assessee was required to explain as under: (a) Please refer Annexure XI r.w. clause 21 (1) (B) of 3CD. in this connection a) please explain why the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shed copy of challan showing payment of outstanding bonus as qualified by the Auditor on 26.10.2007 and 27.10,2007 (after the date of report by the Auditor & before the due date of filing of return]. In view of the evidences on record, no disallowance for outstanding bonus as qualified by the Auditor is being made. c) 6.5 As regards leave encashment the contention of the assessee has been considered and is not found acceptable. It is with respect submitted that as on date Section 43B(f) is a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t debited in its books of accounts during this year before the due date of filing the return of income (there is no dispute on these facts), the same are clearly disallowable u/s.43B(f) and are accordingly added. Penalty u/s.271(1)(c) is separately being initiated for furnishing inaccurate particulars of income. d) 6.6 As regards amount outstanding on account of VAT Payable (Karnataka) 3,720/-, Entry Tax of 5,470/- and Custom Duty of 63,26,550/-, the contention of the assessee is that these amou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l is that the assessee failed to debit the liability in its books of accounts and, therefore, 10(1) or under section 10(2) (xv) of the act. We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, a deduction must be allowed by the Income-tax Officer, the allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provisio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

116ITR 1} {SC} the Hon'ble Supreme Court has observed as under: g) It is settled that the way in which entries, are made by the assessee is not determinative of the question whether the assessee earned any profit or suffered any loss. The assessee may, by making entries which are not in conformity with the proper accountancy principles, conceal profit or show loss and the entries made by him cannot, therefore, be regarded as conclusive one way or the other. What is to be considered is the tr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x and Custom Duty is that these are revenue items which should have been passed through P&L Account. Accordingly, if is held that these receipts are revenue in nature and are of the nature specified u/s.43B i.e. tax & duty, if may be noted that these entries of taxes and duties payable would represent the taxes collected by the assessee from its customers on sales, which has been credited to the tax/ duty payable account instead of crediting if to the sates account. Thus, to this extent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e i.e. whether from the angle of short recording of credits in the P&L Account or from the angle of amount unpaid liable to be disallowed u/s.43B which should have been debited to P&L Account, the net impact would be to increase the profits of this year. Accordingly, these amounts are added and disallowed in the total income. Penalty u/s.271(1)(c) is separately being initiated for furnishing inaccurate particulars of income. 6.7 Thus, the total disallowance works out to ₹ 133,82,15 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f ₹ 63,26,550/-. 1.2. The Ld. A.O. during the course of assessment proceedings asked the appellant company to explain as to why the above expenses should not be disallowed and added to the total income of the appellant company. 1.2.1. In this regards, the appellant company filed its reply dated 29.10.2010 stating that as regards to Leave encashment amounting to ₹ 70,46,4161-, the appellant company while filing the Return of Income, had not disallowed ₹ 70,46,416/- relying upon .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

disposal of the Civil Appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed. We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax as if Section 43B(f) is on the Statute Book but at the same time it would be ent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or other cases. We also submit that till today the hon'ble Supreme Court has not passed its final order. The last hearing of the said case was called on 13.07.2011, wherein both appellant & Respondent have filed their statement of cases. The copy of order of Hon'ble Supreme Court is enclosed on Page No. 72 of Paper Book, for your honour's reference. 1.4. Further, we submit that the appellant company was making provision of the said expenses in its books of accounts. At this junct .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

upplier is received, the material is discharged from the Custom House. Only at the time of final assessment by the Custom Authorities the Appellant Company receives call for making payment of differential amount of duty. To take care of such differential amount, demand in respect of which may arise in future, provision is created, which is not passed through Profit & Loss Account. The aforesaid procedure proves that this is not in the nature of income as understood by the Ld. A. O. without a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

I have considered the facts of the case; assessment order and appellant's written submission, it is not in dispute that appellant did not pay leave encashment, custom duty and entry taxes etc during the year fill the due date of filing return. Accordingly these expenses are not allowable in view of the express provision of section 43B. Appellant's only argument is that in the case of Exide industries Ltd, Calcutta High Court decided the issue in respect of leave encashment in appellant& .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s factual position that the assessee has not paid the above stated sums on or before the due date of furnishing the return is concerned. It refers to case law of Exide Industries vs. Union of India 292 ITR 470 (Cal) striking down section 43B(f) as ultra-vires followed by a co-ordinate bench of the tribunal in 33 taxmann.com 476 (Ahmedabad) in case of Eimco Elecom (India) Ltd vs. Addl. CIT accepting the very argument. The Revenue places strongly reliance on the case of (2014) 45 taxmann.com 428 ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sion of the Revenue s SLP. We observe in these facts that the latter decision prevails over the co-ordinate bench view in these facts and circumstances. We accordingly reject assessee s contentions and confirm the impugned leave encashment disallowance of ₹ 70,46,416/-. 20. Now, we come to the VAT component coupled with entry tax and custom duty sum (supra) as disallowed by both the lower authorities. Pages 94 to 95 of the paper book contained assessee s argument justifying its accounting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ealing with the leave encashment issue only and without even adverting to assessee s detailed submission narrated hereinabove. The CIT(A) has simply brushed aside the same with sweeping observations qua applicability of section 43B. We are of the view in these peculiar facts and circumstances that larger interest of justice would be met in case this limited issue of VAT, entry tax and customs duty vis-à-vis application of 43B is restored back to the assessing authority for a fresh adjudic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bstantive ground no. 1 in assessee s appeal for assessment year 2006-07) without involving any distinction on facts or law. We appreciate this fair submission. We referred to our corresponding finding hereinabove on the very issue in assessment year 2006-07 and accept assessee s submissions. This substantive ground is treated as allowed. 22. The assessee s third substantive ground assails correctness of disallowance of ₹ 50,31,149/- out of exemption claim u/s. 10AA of the Act. The CIT(A) r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xpense have not been charged to P&L Account for working out the profits eligible for exemption u/s, 10AA. At this juncture, attention is invited to Note-838 of Schedule-20 wherein, the commission paid to the Chairman and The Managing Director {@ 2% each} of 4% of the profits earned by the Company has been stated and charged to the P&L Account of this year. The profits on which such commission has been worked out includes the profits earned by this SEZ undertaking and claimed exempt u/s. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the SEZ, communication expenses, printing & stationery etc. In this connection, attention is invited to Section 44C of the Income-tax Act as per which in the case of assessment of Non-Residents, the head-office expenditure is to be computed @ 5% of the total income. On this basis and considering the fact that Directors' Commission incurred directly in relation to this income @ 4% has not been charged to the separate P&L Account of the SEZ undertaking, it is held that the allocable h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A.O. grossly erred in understanding that since the appellant company is maintaining its separate sets of books for head office and that of SEZ units, the ad-hoc expenses should not be debited to profits pertaining to SEZ unit. However, the Ld. A.O. failed to appreciate the fact that as per Form No. 56F certified by the auditors of the appellant company, it has been specifically stated that all the necessary information for computing allowable deduction has been verified. From the above, it can .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is only a mode of calculation of the commission payable to the Directors and it does not follow that the commission is in relation to the earning of the profit in the SEZ Unit. 1.1.3. The aforesaid commission is payable on the net profits of the appellant company irrespective the fact as to whether such net profit includes any exempt income or not. Similarly, there is no justification whatsoever for allocating General Head Office administrative expenses of the SEZ Unit at 1% of the profit of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot; 6.3 I have considered the facts of the case; assessment order and appellant's written submission. Appellant claimed the profit from SEZ unit at Surat exempt under section 10 AA of the act. Appellant maintained separate accounts for SEZ unit but did not allocate head office expenses to this unit and accordingly claimed excess deduction. Assessing officer found that Chairman and MD each are entitled to 2% of the net profit as commission. Such commission is also given on income from this un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: Restriction on number of layers for certain classes of holding companies - More than two layers of subsidiaries not allowed subject to certain exceptions.

Forum: GST on RCM on rent in a unregistered state

Forum: COMPOSITION SCHEME

Forum: Input Tax Credit - Reg

Forum: GST Invoice

Article: Websites of Government Departments need lot of improvement. We are noticing detoriations in them for example, case of website of ITAT.

Highlight: Levy of additions tax u/s 115O on distribution of dividend - shares of its profits declared as distributable among the shareholders is not impressed with the character of the profit from which it reaches the hands of the shareholder - not to be bifurcated as agriculture and non-agriculture dividend - SC

Highlight: Rate of GST on old and scrap buses - 28% or 18% - at such initial tender process initiated by the Respondents-KSRTC, the present petitions filed by the petitioners are premature and misconceived and do not require any interference by this Court at this stage. - HC

Forum: Rent a cab operator

Highlight: In view of amendment made u/s 132A of the Income Tax Act, 1961 by Finance Act of 2017, the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal, SC dismissed the appeal of the assessee

Highlight: Validity of Assessment Order - period of limitation u/s 153 (2A) is applicable even if the entire order was not set aside but matter was remanded back for for limited aspects with directions - HC

News: Note ban was a shake-up, achieved its main objectives

Notification: Amendments in the notification No.5/2017- Integrated Tax (Rate) dated the 28th June, 2017.

Highlight: Levying interest u/s 234C - interest is to be charged on the returned income and not on assessed income.

Highlight: Accrual of income - sale of right to develop and sell incentive FSI under LOI - till the conditions of LOI are fulfilled transfer is not complete and income does not accrue to the assessee

Highlight: TPA - determination of ALP - TP adjustment by applying Bright Line Test (BLT) is not sustainable on protective basis having no statutory mandate.

Highlight: Safeguard Duty - Advance License Scheme - as there is no exemption from safeguard duty leviable under Section 8C, which is imposed on the goods imported from China, the importer has to pay safeguard duty

Highlight: Manufacture - process of cutting of waste plastic container - Such plastic containers before and after cutting are nothing but waste / scrap - Not a manufacturing activity as no new product emerges.

News: NITI Aayog and Govt. of Assam organizes workshop on health sector reforms in Guwahati; launches SATH- Sustainable Action for Transforming Human Capital

Notification: Seeks to amend notification no. 5/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction of refund on corduroy fabrics

Notification: Seeks to amend notification no. 2/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst exemptions

Forum: GSTR 3B Rectification

Notification: seeks to exempt Skimmed milk powder, or concentrated milk

Notification: Seeks to amend notification no. 2/2017- integrated tax(rate) dated 28.06.2017 to give effect to GST council decisions regarding GST exemptions.

Notification: Seeks to amend notification no. 1/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates

Notification: Seeks to amend notification no. 1/2017- integrated tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates.

News: Notification Issued For GST Actionable Claim On Branded Food Products

Highlight: Classification printed computer stationary/manifold Business Forms - to be classified under Chapter Heading 4820.00 or under Chapter Heading 4901.90 - items like A4 sheets, advertisement and job card to be classified under Chapter 49

Article: RCM – Applicability to persons not liable to get registered us 23(1)

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

News: GST Refund - Blockage of Working Capital of Exporters - earlier also there was a normal blockage of funds for a period of 5-6 months at least

News: Clarification about Transition Credit - ₹ 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30th June, 2017 - claim of credit of ₹ 65,000 crore is not unexpected

Article: 20 Things You must know about E Way Bills in GST Law

Article: MISTAKES IN DRAFTING

Highlight: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg. - Circular

Highlight: The definition of "subsidiary company" or "subsidiary" u/s 2(87) of the Companies Act, 2013 shall come into force w.e.f. 20-9-2017

Highlight: Central Government notified the All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017 - Notification

Notification: All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017

Circular: Investment by Foreign Portfolio Investors in Corporate Debt Securities – Review

Notification: Exemptions on supply of services under UTGST Act

Notification: Rates for supply of services under UTGST Act

Notification: Exemptions on supply of services under IGST Act

Notification: Rates for supply of services under IGST Act

Notification: List of Exempted supply of services under the CGST Act

Notification: Rates for supply of services under CGST Act

Highlight: Acceptance of deposits by companies from its members - conditions relaxed in case of Specified IFSC Public company and a private company - Rule 3 amended

Notification: Rate of exchange of conversion of the foreign currency with effect from 8th September, 2017

News: Tax Payers Advised To Confirm Identities Of Income Tax Search Authorities

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Notification: The Customs and Central Excise Duties Drawback Rules, 2017



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version