GST Helpdesk   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
GST - Acts SGST - Acts GST - FAQ GST Rates, Exemption CGST Notif. IGST Notif. Exempt Income Salary income
Extracts
Home List
← Previous Next →

2017 (6) TMI 249 - ITAT MUMBAI

2017 (6) TMI 249 - ITAT MUMBAI - TMI - Addition made on account of capitalization of amount in respect of contract awarded - Held that:- We find that the amalgamation of the JSW(E)Ratnagiri took place on 01.04.2010, that before that date Ratnagiri Unit was an independent entity, that the alleged bogus bills were obtained by JSW(E)Ratnagiri.If any addition in that regard had to be made it could be made in the hands of Ratnagiri Unit or successor to that unit. The FAA has deleted the addition as t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

allowance in the return filed in response to notice u/s. 153A of the Act. Considering the above, we are of the opinion that there is no need to disturb the order of the FAA. - Deduction u/s. 80IA in respect of the total disallowance u/s.14A - Held that:- Issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09 wherein held whatever income was enhanced on account of disallowance computed u/s 14A of the Act, it has been offset by the exemption 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

ing back the issue to the file of the AO for fresh adjudication - I.T.A. /1334/Mum/2015, And I.T.A. /1091/Mum/2015, - Dated:- 2-6-2017 - Shri Rajendra,Accountant Member, And Ram Lal Negi,Judicial Member For The Revenue : Shri Alok Johari-DR For The Assessee : Shri Rakesh Joshi Order u/s.254(1)of the Income- tax Act,1961(Act) PER RAJENDRA, AM Challenging the order dated 22.12.2014 of CIT(A)-47,Mumbai the AO and the assessee have filed cross appeals for the above mentioned assessment years.Assesse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts: 2.An action u/s. 132(1) of the Act was carried out in JSW group, including the assessee, on 16/03/2011resulting in seizure of books of accounts and documents.Thereafter, a notice u/s. 153A was issued requiring the assesse to file return of income. In response to the notice it filed return on 29/01/2011 declaring income of ₹ 255.08 crores. Income u/s.115JB was disclosed at ₹ 9,76,27,90,248/-. 3.First Ground of appeal is about deleting the addition made on account of capitalization .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

based on the discrepancies found during the course of search and seizure proceedings.He further observed that JSW Energy Ltd.(Ratnagiri), previously a wholly owned subsidiary of the assessee had merged with it w.e.f. 01.04.2010, that it got generation of electricity from its plant at village Nandiwade, that the total capacity of the project was 1200MW, that it had invested ₹ 3527.00 crores in the project till 31/3/2010, that about ₹ 615.00 crores were invested in capital assets and & .....

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 and from the log sheets he observed that all these documents were prepared on a particular day to serve the purpose of having some supporting evidence for the bills produced by the contractor i.e. GIEPL, that the bills were approved and passed for payment without any cross verification,that the log sheet of the contractor were manipu - lated,that the serially numbered log sheets were not issued in order, that the Log-sheet for July-August,2007 were issued after the Log sheet for the next two 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

out the transactions, that the AO of GIEPL had informed that during the course of hearing GIEPL had admitted that it had provided accommodation entry to JSW(E), Ratnagiri of ₹ 35.54 crores.The AO directed the assessee to file explanation as to why all the expenditure ₹ 35.54 crores should not be disallowed. 3.2.After considering the submission of the assessee, the AO observed that GIEPL (New name-Sancia Global Infra Projects Ltd.)-Sancia) had admitted that it had provided entries to .....

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 AO, the assessee is in appeal before the First Appellate Authority (FAA)and made elaborate submissions. After considering the assessment order and the submissions of the assessee,he held that JSW(E), Ratnagiri made payment to GEIPL, that the subsidiary got merged with the assessee w.e.f. 1.4.2010 as per the scheme arrangement approved by the Hon ble Bombay High Court vide order dt.24/9/2010, that it stood dissolved without being wound up on 2/11/2010 being the date of filing of order of the Ho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by JSW(E), Ratnagiri same could have been dealt with under separate proceedings initiated in its name/ in the names of its successors, that disallowance of capital expenditure of ₹ 33.84 lakhs in respect of transaction between JSW(E) Ratnagiri and GEIPL.Finally, he deleted the addition made by the AO. 3.4.project carried out by Ratnagiri unit, that GEIPL had admitted to have issued bogus bill to JSW(E),Ratnagiri,that the AO had rightly made the disallowance.The Authorised Representa -tive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was an independent entity, that the alleged bogus bills were obtained by JSW(E)Ratnagiri.If any addition in that regard had to be made it could be made in the hands of Ratnagiri Unit or successor to that unit. The FAA has deleted the addition as the bills were not taken by the assessee in the year under consideration. In our opinion the order of the FAA does not suffer from any legal or factual infirmity.Therefore, confirming the same the Ground is decided against the AO. 3.6.We find that ident .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

imed to have engaged the services of GEIPL for exhibiting part of its projects, that it had been held during that year that no work had been done by GEIPL in respect of the contract awarded,that no work could be executed,that the payment made by the assessee could not be considered for purpose of business,that capital expenditure of ₹ 68.15 lakhs claimed by the assessee for the year under consideration could not be allowed. 3.Aggrieved by the order of the AO, the assessee preferred an 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

W Energy(Ratnagiri)Ltd.(JSWERL),that it was a subsidiary of the assessee and the amount in question was included in the capital work in progress,that JS got merged with the assessee with effect from 01/04/2010 vide an scheme of arrangement approved by honorable Bombay High Court order dated 24/09/2010 that during the search and seizure proceedings carried out in the case of assessee group certain papers were found about the contract given to GEIPL, that the AO of that company had disallowed a su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and perused the material before us.We find that the assessee had not claimed the expenditure in question in its books of accounts for the year under appeal.For disallowing any expense,the AO should first prove the incurring and claiming of of the said expenditure in the regular books of accounts.But, without establishing the basic fact that the assessee had claimed the expenditure,the AO had made the disallowance.The expenditure was incurred by an erstwhile entity namely JSWERL and certain disc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rongly disallowed the expenditure in the hands of the assessee.Thus, there was no justification for making any addition in the case of the assessee.In our opinion,there is no legal or factual infirmity in the order of the FAA.So,confirming his order,we decide first ground of appeal against the AO. 4.Second Ground is about restricting the disallowance u/s. 14A r.w. Rule 8D of the income tax Rules,1962 at ₹ 9.14 crores against ₹ 44.03 crores.In the original assessment order the AO had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

FAA,in the appellate proceedings,the assessee made elaborate submissions regarding non applicability of section 14A and Rule 8D contending that no disallowance had been made as it had not earned any exempt income during the year.After considering the submissions of the assessee, the FAA held that disallowance of ₹ 9.14 crores was made by the assessee itself in the return filed by the assessee u/s. 153A,that there was no explanation as to how the expenditure-that was identified by the asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wance in the return filed in response to notice u/s. 153A of the Act. Considering the above, we are of the opinion that there is no need to disturb the order of the FAA.Ground No.2 stands dismissed. 5.Third ground deals with allowing deduction u/s. 80IA in respect of the total disallowance u/s.14A of the Act. The DR supported the order of the AO and the AR stated that issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09(ITA/463/Mum/2014 dt.31. .....

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 section 14A of the Act is quite redundant because the CIT(A) agreed to an omnibus alternate plea of the assessee to the effect that the amount disallowed u/s 14A of the Act resulted in increased profits, which qualified for the benefits of section 80IA of the Act. The aforesaid decision of the CIT(A) is challenged by the Revenue by way of Ground of appeal No.2. 17. Pertinently, with respect to the disallowance u/s 14A of the Act made by application of clauses (i) and (ii) of Rule 8D of the 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

on the amount of ₹ 3,11,29,566/-. In appeal, the CIT(A) has noted that the expenses debited to non-80-IA units were direct expenses pertaining to those units and insofar as the indirect expenditure was concerned, the same was debited to 80IA units, which are engaged in the business of generation of power. Thus, as per the CIT(A), the disallowance of administrative expenses u/s.14A r.w.r. 8D(2)(iii) of the Rules amounting to ₹ 5,29,15,000/- would only result in increased profits of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his aspect, we find no reason to interfere with the same inasmuch as the same are unexceptional. The CIT (A) has factually concluded that the disallowance of administrative expenses amounting to ₹ 5,29,15,000/- u/s 14A r.w.r 8D(2)(iii) of the Rules leads to enhanced profits of the eligible business of the generation of power and, therefore, such enhanced profits have been rightly held to be eligible for benefits of section 80IA of the Act. No material has been lead by the Revenue 12 M/s JS .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pact the net taxable profits as assessee becomes eligible to higher exemption u/s 80IA of the Act. Therefore, the dispute pertaining to the efficacy of the disallowance u/s 14A of the Act, r.w. rule 8D(2) of the Rules, which is manifested in Ground of appeal no. 4 of the assessee and in Ground of appeal no. 1 of the Revenue, is academic in nature. Thus, we refrain from adjudicating the same at the present. Respectfully following the above, Ground three decided against the AO. 6.Sale of Certified .....

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 Hon'ble Bombay High Court (ITA No.1468 of 2013 dt. 30/4/2015) was dismissed. In these circumstances, we are of the opinion that the order of the FAA has to be confirmed. Respectfully following the order of the Tribunal for AY 2006-07,we decide the fifth Ground against the AO. 8.Last Ground deals with penalty proceedings.As the issue raised before us is premature so,same is not being adjudicated. ITA/1091/Mum/2015:- 9.First Ground of appeal,raised by the assessee,is about treatment given t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plea of assessee is that the CERs or Carbon Credits are in the nature of a capital receipt and, therefore, the same is liable to be reduced while computing the Book Profit for the purposes of section 115JB of the Act. The point made out by the appellant is that if the receipts on account of sale of Carbon Credits are held to be capital receipts not chargeable to tax, it would automatically have the effect of altering the Book Profit computable for the purpose of section 115JB of the Act. Since .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evant in determining appropriate tax liability of the assessee and, therefore, following the Judgment of Hon ble Supreme Court in the Case of National Thermal Power Corporation (supra), the same is liable to be admitted. Nevertheless, the said Ground of appeal was not hitherto raised by the assessee before the lower authorities, therefore, the same is ought to be examined appropriately by the income tax authorities. Thus, the Additional Ground of appeal no. 1 is admitted and the same is restored .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ivision in computing the book profits.We find that similar Ground was taken by the assessee before the Tribunal in the appeal filed by the assessee in the AY 2008-09.We are reproducing the para -24, 25, 26 and 28 of the order. 24. The Additional Ground of appeal no. 2 also involves determination of Book Profits for the purpose of section 115JB of the Act. It is canvassed that assessee is entitled to a deduction of ₹ 3,25,83,13098/- on account of loss arising on demerger of its investment d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bilities of the investment division were transferred JSWEIPL at their book values. As a consequence, a sum of ₹ 3,25,83,13,098/-, being the excess of book value of assets over the liabilities transferred, was a loss suffered on demerger of the investment division. Notably, in lieu of such transfer of investment division, shares of JSWEIPL were issued to shareholders of assessee company in the ratio specified in the Scheme of arrangement. The loss of ₹ 3,25,83,13,098/- was adjusted ag .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted out that under the Act transfer of assets/liabilities in the case of merger or demerger is a transaction of transfer and liable to Capital gains tax under section 45 of the Act. So however, since section 47(vib) of the Act, exempts transfer in the scheme of demerger from the definition of transfer , the same is not liable to Capital gains tax. The plea set up by the assessee is that the Act recognizes transfer of shares, in the scheme of merger, as a transfer but provides exemption u/s 47(vi .....

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 Book Profits u/s 115J of the Act. It was noted by the Hon ble High Court that under Clause (2) of part II of Schedule -VI of the Companies, Act 1956, where a company receives the amount on account of sale of lease hold rights, the company is bound to disclose in the Profit & Loss Account, the said amount as a non-recurring transaction or a transaction of an exceptional nature irrespective of its nature being Capital or revenue and that it would be inappropriate to directly transfer such .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| 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