TMI Blog2011 (12) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the disallowance of loss amounting to ₹ 47,01,720/- is admittedly on revenue side, therefore, we set aside the order of ld. CIT(A) and direct the AO to allow this loss. Exemption u/s.10B - Held that:- We find that as far as the issue regarding premium on transfer of import licences, insurance claim, sundry credit balance written back and staff agreement deposit forfeiture is concerned, the same has been decided against the assessee by the order of Tribunal for earlier year, particularly in asstt. year 1998-99 Compensation for amount received on surplus of assets can also be not related to the business of export and, therefore, the same is also decided against the assessee. Refund of sales-tax - We agree with the contention of the ld. Sr. Advocate, Shri Y.P. Trivedi, that when sales-tax is initially paid, that will go on to increase the purchases which means profit is reduced and when sales-tax is refunded the profit would increase and therefore payment and reimbursement would nullify each other. Therefore, we hold that refund of sales-tax cannot be reduced from profits. Ddisallowing the interest u/s.36(i)(iii) being the amount capitalized in the Books - Held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed and set aside. 3. After hearing both the parties, we find that originally the return was processed u/s.143(1) and later on a notice u/s.148 was served on the assessee. Objections were raised before the AO regarding re-opening of the assessment. The AO upheld the re-opening on the basis that income has escaped assessment, particularly in respect of issues like loss on account of exchange fluctuation, income of units u/s.10B, interest on loans taken for new projects capitalized in the books but claimed as revenue, commission payment, provision for debts etc. are not allowable. 4. Before the ld. CIT(A), it was mainly submitted that sufficient time was not given to file the return as provided u/s. 148(1). The re-opening was without jurisdiction because the conditions laid down in sec. 147 were not satisfied because the AO had no material at all to form a reasonable belief. The ld. CIT(A) adjudicated this issue vide para 3.2 of his order, which is as under : 3.2 Finding: The Appellant had made similar submission during assessment proceedings. The Assessing Officer has considered and rejected the same for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has escaped assessment and the case is clearly covered by Explanation 2(c) of sec. 147. Further, the Hon ble Supreme Court has held in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) that if a return has been only processed u/s. 143(1), then re-opening is justified. In fact, the held column of the said decision reads as under : Taxing income escaping assessment in the case of an intimation under section 143(1) is covered by the main provision of section 147 as substituted with effect from April 1, 1989, and initiating reassessment proceedings in the case of intimation would be covered by the main provision of section 147 and not the proviso thereto. Only one condition has to be satisfied. Failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings when intimation under section 143(1) has been issued. In view of the above position, we are of the opinion that assessment has been validly re-opened. 8. Issue No. 2 reads as under : Sr.No. Grounds of Appeal Amounts Rs. Amounts Rs 2 The ld. C.I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year. The balance amount of loss crystallized in subsequent years on actual repayments of the loans. It has also been noticed that in Assessment Year 2001-02 the loss has been allowed only on the basis of actual repayment of the loan. The amount of exchange rate fluctuation loss relating to the amount of loan which was not paid during the year under consideration was a notional loss, hence it is not allowable as deduction. Reliance is placed on the decision of Rajasthan High Court in Dhadda Co. vs. CIT (2003) 22 SITC 366. However, in view of the Supreme Court decision in the case of Sutlej Cotton Mills Ltd. vs. CIT (116 ITR 1) the actual loss of ₹ 3,75,63,754 only incurred during the year on repayment of loan obtained for working capital requirement of the company is allowable deduction u/s. 37(1) of the Act, which the Assessing Officer has already allowed in assessment order for Assessment Year 2000-2001. Therefore, the Assessing Officer has allowed the deduction correctly and no interference is called for. Consequently, Ground No.2 is dismissed. 10. Before us, the ld. Sr. Advocate of the assessee submitted that the issue is covered in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst claim of Fire in Blow Room. - 90,828 vii) Compensation received from M/s.Milestone Switchgears Ltd. For non-working of computers supplied by them. - 24,990 viii) Surplus on sale of Assets - 450 Total 3,345,296 5,339,740 14. After hearing both the parties, we find that as far as the issue regarding premium on transfer of import licences, insurance claim, sundry credit balance written back and staff agreement deposit forfeiture is concerned, the same has been decided against the assessee by the order of Tribunal for earlier year, particularly in asstt. year 1998-99 in ITA No.9329/Mum/2004 vide paras 9 to 11. This position is admitted in the chart also and accordingly we decide this issue against the assessee. 14.1 Similarly, compensation for amount received on surplus of assets can also be not related to the business of export and, therefore, the same is also decided against the assessee. 14.2 As far as the issue regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 20. Issue No. 5 reads as under : 5 The ld. C.I.T.(A) has erred in confirming the action of the A.O. in disallowing Commision of ₹ 1,50,000/- paid to M/s. L.K. Corporation by relying on order for the earlier Assessment Years. 1,50,000/- 21. After hearing both the parties, we find that even in earlier year a sum of ₹ 1,50,000/- paid to M/s. L.K. Corporation as commission was disallowed and the Tribunal has in earlier year restored this matter to the file of AO for reconsideration. Reference may be made to para 16 in ITA No.9329/Mum/2004. Consistent with the earlier order, we restore this issue to the file of AO with a direction to reconsider the same and the decide the same as per decision of earlier year. 22. Issue No. 6 reads as under : 6 The ld. C.I.T.(A) has erred in confirming the action of the A.O. in disallowing the Forfeiture of employees security deposit of ₹ 187,167/-. 1,87,167/- 23. After hearing both the parties, we find that similar disallowance was made even in earlier year and the matter travelled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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