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SabMiller India Limited (formerly SKOL Breweries Ltd.) Versus CIT-8 Mumbai

2017 (1) TMI 733 - ITAT MUMBAI

Revision u/s 263 - disallowance of depreciation - addition u/s 40(a)(ia) - Held that:- There was no lack of enquiry on part of the AO and he had taken an informed decision. Therefore, it cannot be said that no proper enquiry was made. We find that the issue of disallowance of depreciation was discussed and deliberated upon by the Tribunal in assessee’s own case for the year under consideration. Therefore, the consequential disallowance with respect to forex loss capitalised cannot be upheld. .....

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me the order of CIT was passed. Thus there was no justification for the CIT to direct the AO to initiate penalty proceedings. It is found that the CIT had further directed the AO to make further verification of consumption of containers. We find that assessee had filed all necessary details before the AO during assessment proceedings and he had passed the order after considering the available material. Thus we are of the opinion that, the order passed by the AO was neither erroneous nor prejudic .....

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e present appeal. Assessee company, engaged in the business of manufacturing and sale of beer, filed its return of income on 31. 10. 07 declaring total income at Rs. Nil. The Assessing Officer completed the assessment u/s. 143(3) r. w. s. 144C (13) of the Act on 29. 7. 2011 . 2. The CIT found that while completing the assessment the AO had disallowed a sum of ₹ 38. 35crores u/s. 40(a)(i)r. w. s. 9, 195 and 200 of the Act which was the depreciation claimed on payment made by the assessee to .....

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t and parcel of acquiring trade mark/brand. He further found that the assessee had been collecting sales tax from its customers by raising debit notes that it was treating the debit notes as contingency deposits, that it had collected sales tax from its customers from the period from 1996-97 to 1999-2000, amounting to ₹ 58. 98 lakhs, that the amount in question was neither paid to the government not was refunded to the customers from whom it was collected. He observed that it had not offer .....

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ess claim of expenditure of ₹ 43. 93crores. Consideirng the above, the CIT held that the order passed by the AO was erroneous and prejudicial to the interest of Revenue. He issued a notice u/s. 263 of the Act to the assessee asking it to show cause as to why the assessment order should not be set aside/ cancelled. 3. Vide its letters dt. 31. 1. 14 and 23. 3. 14, the assessee filed detailed submission to the notice . After considering the same, the CIT held that the assessee had purchased b .....

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e amount of ₹ 153 crores should be capitalised and depreciation thereon computed by the assessee at ₹ 1. 33 crores would have to be disallowed. With regard to sales tax collected from the customers the assessee argued that there was dispute on the issue with the Government authorities, that the matter was finally settled by the Hon'ble Supreme Court which affirmed the levy of tax on value of packing material ranging from 3% to 3. 5%, that after the matter was finally settled the .....

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order. The CIT directed the AO to pass a suitable rectification order and to consider the disputed amount for computing the income of the assessee. He further observed that the assessee had voluntarily offered the income, therefore, there was no need to consider further addition. With regard to discrepancy in the amount shown against the consumption of containers in the books of accounts and in the computation of income filed with the return the CIT observed that the assessee had successfully e .....

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imed as revenue expenditure . The CIT directed the AO to verify the claim made by the assessee. 4. During the course of hearing before us the Authorized Representative (AR) of the assessee contended that order passed by AO was neither erroneous nor prejudicial to the interest of the revenue, that he had made proper enquiries and examined the accounts during the course of assessment proceedings, that it could not be held that there was no application of mind by the AO, that the CIT had wrongly in .....

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was not in respect of expenditure incurred, that it was allowable on an asset which was eligible for deduction on depreciation, that the CIT was not authorised to give direction contrary to direction of the Act, that the direction to disallow the amount of depreciation of ₹ 1. 33 crores on forex loss capitalised was not as per the provisions of law. He referred to order of the Tribunal delivered for AY 2008-09 in its own case. About the addition of sales tax collected (Rs. 58. 98 lakhs) t .....

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account that had been added back to the income of the assessee, that the order passed by the AO was not erroneous or prejudicial to the interest of the revenue. He also referred to the case of Dish TV India Ltd. (157 ITD 1096). The Departmental Representative(DR)supported the revisionary-order of the CIT. 5. We have heard the rival submissions and perused the material before us. We find that while completing the assessment the AO had called for explanation about the issue raised by the CIT in h .....

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