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TMI Blog2012 (11) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s.143(3) was sought to be reopened u/s.148, vide notice dated 24.07.1997 interalia on the following "reasons recorded" by the A.O. :- "Assessment Year - 1994-95 A letter has been received from Deputy Commissioner, Special Range 3, dated 26/6/97 whereby letter dated 28/4/97 of Deputy Commissioner of Income tax, Central circle I, Jaipur, was forwarded along with copy of assessment order for assessment year 1994-95 in the case of Meru Woodlands Caterers (P) Ltd., Kotawala Market, Tripolia Bazar, Jaipur passed under sec. 143(3) on 31/3/97. From the perusal of this letter and assessment order it is seen that share capital raised by the assessee is bogus and not completely verificable, e.g., M/s. Meru Woodland Caterers (P) Ltd. has not been able to explain the investment in the shares of Lupin Laboratories Limited through public issue. Share investment requires verification. Hence in view of Delhi High Court decision in the case of Sophia Finance Ltd., income has escaped assessment, as the unverifiable share capital would need to be added under sec. 68. Further loan given by the assessee to Kothawala Exports Pvt. Ltd., at lower rate of interest than the rate at which it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This itself is a prima facie 'reasons' to entertain a belief that the income chargeable to tax has escaped assessment. Even though the A.O. has not made any addition on this scope, this does not preclude the A.O. for entertaining the reason to belief based on such information. Regarding the second part of the "reasons recorded", he submitted that apparently the deduction computed u/s.80HHC was erroneous and was excess of what was admissible in law. Thus the reasoning given by the Ld. CIT(A) in his order for sustaining the "reasons recorded" is justified. He strongly relied upon the findings of the Ld. CIT(A). 5. We have carefully considered the rival contentions, perused the material on record. From the perusal of the "reasons recorded" it is seen that an information was received from the Deputy Commissioner, Central Circle -1, Jaipur along with the copy of the assessment order in the case of Meru Woodlands Caterers (P) Ltd. passed u/s.143(3), that share capital raised by the assessee is bogus and not completely verifiable. This information itself prima-facie can lead to the 'reasons to believe' that the income chargeable to tax has escaped assessment. Even though the A.O. has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of advance payment for acquiring land on lease for 19 years was allowable as revenue expenditure. Therefore, the decision of the earlier Tribunal order may not be followed. 7.1 On the other hand, the learned DR relied upon the findings given by the Ld. CIT(A) as well as the earlier orders of the ITAT. 8. After carefully considering the rival submissions, we find that the amount which has been amortized relates to the payment for lease hold of land and building. The Ld. CIT(A) has dismissed the assessee's ground on the reason that this issue has been decided against the assessee by the Ld. CIT(A) in the earlier year. The Tribunal also in the A.Y. 2000-01 in ITA No.3314/M/2005 has dismissed the assessee's appeal on the following reasoning:- "6. Ground 2 relates to CIT (A)'s decision in confirming the disallowance of the assessee's claim of ₹ 2,97,015/- u/s 35D. 7. During the assessment proceedings before us, the Ld AR stated that the said expenditure was incurred in connection with the issue of shares for increase in share capital. AO made disallowance basing on the apex court judgments in the case of M/s Brooke Bond India Ltd (225 ITR 798)(SC) and M/s Punjab State Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edence on the facts of the case. Accordingly, the ground nos. 5 and 6 are allowed in favour of the assessee. 10. Ground Nos. 7, 8, 9 and 10 have not been pressed by the learned counsel at the time of hearing, accordingly the same is being dismissed as not pressed. 11. In ground no. 11 the assessee has challenged the disallowance of deduction u/s.80HHC on the basis of entity, as a whole, as against on the basis of each business unit separately computed by the assessee. At the outset the learned counsel submitted that this issue has been decided in favour of the assessee by the Tribunal in assessee's own case for the A.Y. 2000-01 vide order dated 23.09.2008 passed in ITA No.3242 & 3314/M/05. The learned DR fairly conceded that this issue stands covered by the said decision of the Tribunal in the favour of the assessee. 12. After carefully considering the orders passed by the authorities below and the decision of the Tribunal in assessee's own case we find that similar issue has been decided by the Tribunal in favour of the assessee. The learned Tribunal has discussed this issue in the said order in para 8 to 11 which for the sake of ready reference is reproduced herein below :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds of appeal." 10. Aggrieved with the above, the assessee is before us. Assessee, while relying on the submissions made before the CIT (A), has relied on the recent judgment of the Madras High Court in the case of M Gani & Co (301 ITR 381) (Mad) relevant to assessment year 2001-02 apart from the coordinate Bench order in the case of Miku Agencies vide ITA 4205/Mum/1995 for AY 1991-92 to support his case that the computation u/s 80HHC must be calculated quo assessee and not qua business. Ld DR for revenue relied on the orders of the lower authorities. 11. We have heard the rival submissions and perused the orders of the lower authorities along with the judgments relied upon by the parties. From the perusal of the judgment in the case of M Gani & Co (supra), we find that the assessee is entitled to the allowability of deduction u/s 80HHC with the turnover of qua assessee and not the qua business, when assessee having maintained separate books of accounts for different businesses which is the case in the instant case also. Therefore, we are of the considered opinion that the CIT (A) order is set aside on this issue and AO is directed to recompute allowability of deduction u/s 80H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below and the decisions relied upon by the parties, we find that this issue stands squarely covered by the decision of the Tribunal in assessee's own case for the A.Y. 2000-01 and A.Y. 2002-03 and also in the appeal for the block period, decided by the Tribunal in ITA No. 311/M/03. We also find that the department has challenged this issue before the Hon'ble High Court in ITA No.5718 of 2010, wherein the question of law no. IV was specifically raised, which has been dismissed by the Hon'ble High Court following the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. Vs. CIT (supra). In view of these facts, we do not found any merits in the additional ground raised by the department and, therefore, the same is dismissed. 19. Ground no. 1 which has been raised by the departmental appeal in memo of the appeal is not adjudicated upon, as fairly admitted by the learned DR that the said issue is covered by additional ground as discussed above. 20. In ground no. 2, the department has challenged the deduction u/s.80IA and 80HHC on interest received from customers for delayed payments and excess recovery from debtors. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Specific Family Trust 248 ITR 29 (Bom), CIT v. Chokshi Contracts Pvt. Ltd. 251 ITR 587 (Raj), CIT v. Sidpur Isabgul Processing Co. Ltd. 252 ITR 777 (Guj), CIT v. Avon Emery Industries 117 Taxman 510 (Raj), CIT v. M.P. State Electronics Development Corpn Ltd. 267 ITR 405 (MP), CIT v. Anita Stampings 2000 Tax LR 1009 (Guj), CIT v. Mittal Appliances Pvt. Ltd. 270 ITR 176 (Guj), Vam Organic Chemicals Ltd. v. DCIT 138 Taxman 20 (Del)(Mag) and Ramnath Exports Pvt. Ltd. v. IAC 42 TTJ (Del) 331. Secs 80HH and 80-I are independent; therefore, deduction under sec 80-I shall be allowed on the profits without reducing the deduction under sec. 80HH. In other words, a new industrial undertaking can claim deduction under both these sections. It is not necessary that after taking deduction under sec 80HH deduction under sec 80-I should be taken on the reduced balance. The appellant, therefore, succeeds on these grounds of appeal." 22.1 On this issue, the learned DR relied on the findings of the A.O. On the other hand, the learned counsel submitted that besides the decision cited by the Ld. CIT(A), this issue now stands decided in favour of the assessee by the decision of Hon'ble Gujarat High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed. 25. In ground no. 5 the department has challenged the direction of the Ld. CIT(A) to reduce 90% of the net and not gross amount of interest from the services and interest from banks while calculating deduction u/s.80HHC. At the outset both the parties agreed that this issue now stands covered by the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. Vs. CIT (supra). 26. The learned counsel also pointed out that this issue has came up for consideration before the Hon'ble High Court in assessee's own case in ITA No.5718 of 2010, wherein specific the question of law no. V was taken which has been answered against the revenue and in favour of the assessee following the aforesaid decision of the Hon'ble Supreme Court. Thus following the binding precedence, we do not find any merits in the grounds raised by the department and the same is dismissed. 27. In ground no. 6, the department has challenged the deduction u/s.80HHC on the interest income received from the customers for delayed payment of sale consideration and recovery from the debtors after allowing the netting of expenses. Both the parties admitted that this issue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jab State Industrial Development Corporation Ltd (225 ITR 792)(SC). The CIT (A) confirmed the action of the AO stating that the said expenditure should not be allowed as revenue expenditure. During the proceedings before us, Ld AR for assessee relied on various judgments including the jurisdictional High Court judgment in the case of Maharashtra Ugine and Steel Co Ltd (250 ITR 84)(Bom). After going through the said judgments, we find that the said jurisdictional High Court judgment relates to allowability of expenditure incurred on payment of Stamp duty for debenture issue and, therefore, we are of the considered opinion that the apex court judgments cited above are relevant and expenses are not allowable as revenue expenditure and thus, the order of the CIT (A) does not call for any interference. Accordingly, ground 2 is dismissed." Further this issue also stands covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Pfizer Ltd. reported in (2011) 330 ITR 62. Thus following the aforesaid judgment of the Hon'ble Jurisdictional High Court we do not find any merit in the grounds raised by the department and the same is treated as dismissed. 30. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng manufacturing process and in the technology of the product already manufactured by it. We do not find any merit in the submission of the ld. Departmental Representative that the expenditure should be disallowed for the reason that the assessee has not given details of per person and per tirp. The First Appellate Authority has observed that the disallowances were made by making some general observations and without pointing out any specific defect. He has recorded a specific finding that these expenses were incurred by the assessee in connection with running his business and the foreign tours were undertaken by Senior Executives and Consultants for bringing up improvements in the existing manufacturing operations so as to facilitate the conduct of the assessee's business in a more efficient and profitable manner. We fully agree with his finding and uphold his order on this issue. Thus, this ground of the Revenue for the Assessment Year 1992-93, 1993-94 and 1994- 95 is dismissed as devoid of merits." Thus respectfully following the aforesaid decision and also the fact that we do not found any infirmity in the order of the Ld.CIT(A), the grounds raised by the department on this sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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