TMI Blog2017 (5) TMI 1499X X X X Extracts X X X X X X X X Extracts X X X X ..... answered in favour of the revenue and against the assessee. See CIT. Versus ILPEA PARAMOUNT (P) LTD. [2010 (2) TMI 45 - DELHI HIGH COURT ] Disallowance of sum incurred on building by holding the same to be of revenue nature - Tribunal deleted the addition - Held that:- Claim allowed of assessee as relying on CIT Versus Dr. AM Singhvi [2007 (8) TMI 265 - RAJASTHAN HIGH COURT] - D.B. Income Tax Appeal No. 65 / 2008, D.B. Income Tax Appeal No. 465 / 2008, D.B. Income Tax Appeal No. 862 / 2008 - - - Dated:- 3-5-2017 - HON'BLE MR. JUSTICE K.S. JHAVERI AND HON'BLE MR. JUSTICE VIJAY KUMAR VYAS For the Appellant : Mrs. Parinitoo Jain For the Respondent : Mr. Sanjay Jhanwar JUDGMENT Per Hon ble Jhaveri, J. 1. All these appeals arise out of the different judgments and orders of the Tribunal whereby the Tribunal has decided the issues in favour of the assessee and against the department. 2. This Court while admitting the appeal No.65/2008 on 01.09.2008 has framed the following substantial questions of law: 1. Whether under the facts and circumstances of the case and in law, the Tribunal was justified in allowing the fluctuation loss of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in excluding the provision for bad and doubtful debt for the purpose of Section 115JA? 3. The brief facts of the case are that the assessee has declared of book profit of ₹ 126927620/- for taxation u/s 115JA. The return was processed u/s 143(1)(a) and the case was taken up for scrutiny by issuing notice u/s 143(2) dated 1.6.99. Fresh notices u/s 143(2) were issued on 24.8.99 and 6.10.2000 which were partly complied with. 3.1. A questionnaire was issued vide this office letter dated 27.2.2000 asking the assessee to furnish certain clarifications/details and documents. The assessee company attended the proceedings from time to time and filed its reply vide letters dated 8.11.2000, 10.12.2000, 20.10.2000, 13.02.2001 and 20.2.2001. The case was discussed with them. 3.2. The assessee company is engaged in the business of manufacturing and sale of Shaving blades, Rajors and other products as done in the earlier years. The sales of the company have increased from ₹ 11975.61 lacs of last year to ₹ 16677.68 lacs in the year under consideration on which a gross profit rate of 67.58% has been shown as against last year s gross profit rate 62.79%. On per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the assessee and against the department. 9. In appeal No.465/2008 the first issue regarding the amount shown as recovery of common services whether qualify for the purpose of deduction under Section 80HHC or not. Counsel for the appellant has taken us to the judgment of the AO wherein in para 3, the AO has observed as under: 3. The assessee company has claimed deduction u/s 80HHC of ₹ 2721246/- prior to absorption of BF depreciation of ₹ 54956926/- in the computation of income enclosed with the return. In view of the provisions of section 80A read with section 80B(5), the deduction under chapter VIA are allowable from the gross total income. Therefore, the computation of total income will be rearranged accordingly. Further, it has been noticed that the assessee company in the Schedule 16 of the P L a/c has appropriated a sum of ₹ 19247604/- as share of common service expenses recovered. Vide order sheet entry no. 17 dated 28.5.2001, the A/R of the assessee company was asked to show cause as to why should not the common service exp. Be treated as other income for the purpose of section 80HHC of the IT Act. By Sr. No.10 of the order sheet entry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04/- (iii) Export Incentive Rs.2308313/- 90% of ₹ 58210064/- Rs.52389058/- Gross total income Rs.142931099/- Deduction u/s. 80HHC=142931099 x 33807507/- + 2077482/- x 3807507/- 1934260852/- 1934260852/- = 2498186/- + 36311/- = ₹ 2534497/- In view of the above working the assessee company is allowed to claim a deduction of ₹ 2534497/- u/s 80HHC as against its claim of ₹ 2721246/-. 10. He has also taken us to the judgment of CIT(A) where the CIT(A) has held as under: I have considered the facts of the case and the arguments of the appellant and I find that the agreement in question are generally for sharing of common expenses by way of fixed charges per month. The appellant company has charged a fixed sum per month for providing services under these agreements. The AO, however, has mentioned in the assessment order that there was an agreements for letting out the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, we are of the view that the assessee has shared the expenses from its group companies which is clear from Note No.10 of schedule to the balance sheet PB50. The Ld. D/R has not brought any agreement or any other material on record in support of his argument and also we find nothing in the agreement which the AO. Has referred with regard to rent @ ₹ 21,000/- per month. In the absence of any material on record, the argument of ld. D/R cannot be accepted and we have no other alternative but to treat the entire recovery of expenditure as recovery of expenditure only and not the income from other sources. Hence, the decision of ld. CIT(A) in treating ₹ 21,000/- per month as rent reversed. 12. He has contended that the recovery of common services is required to be not granted under Section 80HHC and the same is required to be considered, as income. 13. With regard to issue No.2 whether the Tribunal has committed any error in considering the rent of ₹ 21,000/- received by the assessee was business income specifically when there was no agreement and it was sharing of common facility to divide expenses proportionately to company. 14. In the appeal no.862/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability; and the provision should be for other than ascertained liability, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract Item (c) of the Explanation to Section 115JA. In our view, Item (c) is not attracted. There are two types of debt . A debt payable by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the assessee has to receive from others. In the present case debt under consideration is debt receivable by the assessee. The provision for bad and doubtful debt, therefore, is made to cover up the probable diminution in the value of asset, i.e., debt which is an amount receivable by the assessee. Therefore, such a provision cannot be said to be a provision for liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odward Governor India (P) Ltd. (supra). The issues No.3 4 are also decided in favour of the assessee and issue no.5, in view of the decision of this Court in the case of Commissioner of Income Tax vs. Dr. A.M. Singhi (supra) and in the case of Commissioner of Income Tax vs. Lake Palace Hotels and Motels Pvt. Ltd. (supra), is decided in favour of the assessee. 19. However, in the other appeals the issues No.1 2 the Tribunal has observed in para 85 that there was no agreement on record. 20. In that view of the matter, the benefits which were analysed and applied by the Assessing Officer was rightly modified by CIT(A) and further modified by the Tribunal. Therefore, both the issues are answered in favour of the assessee. 21. However, the issues No.1 2 in appeal No.862/2008 are squarely covered by the decision of issues No.3 4 of appeal No.65/2008 and on issue No.3 we remit back the matter to the Tribunal in view of the amended provisions which were made retrospective with effect from 01.04.1998 and made applicable from 2009. 22. The Tribunal will reconsider and decide the matter afresh after considering the law on the subject, the judgment of Supreme Court and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
