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Everest industries ltd. Versus Asst CIT Cir 1, Thane

2017 (12) TMI 293 - ITAT MUMBAI

Sales tax subsidy - revised return of income claiming notional sales tax liability - Held that:- We find that the assessee had claimed that sales tax incentives received by it had to be treated as capital receipt in the revised return filled by it. The AO and the FAA had rejected its claim. The matter of RIL, relied upon by the assessee, has been sent back to the Hon’ble Bombay High Court by the Hon’ble Apex Court with a direction to consider the provisions of the scheme. There is no doubt about .....

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s we are of the opinion, that in the interest of justice matter should be restored back to the file of the AO for fresh adjudication. He is directed to compare the scheme deliberated upon by the Tribunal in the case of RIL and the scheme of 1993 applicable for the year under appeal. He would afford a reasonable opportunity of hearing to the assessee. First Ground of appeal is decided in favour of the assessee, in part. - Income under the head capital gains from sale of plot of land at Mulund .....

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no justification for making a reference to the Valuation Cell. Besides, the AO had made the reference after the assessment was over. In short, in our opinion the FAA was not justified in endorsing the views of the AO. Considering the above, grounds decided in favour of the assessee. - Disallowance made u/s.54G - Held that:- The assessee, in the case under consideration, had entered in to an agreement with a developer for selling rights in the plots of land. But, the agreement was cancelled l .....

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econdition in the section that new machinery should be purchased at the time of shifting of industrial undertaking. No undertaking can function without P&M. But, the assessee can purchase machinery even after shifting and commissioning of business from the new premises. Expansion of business can take place any time. Generally, shifting of industrial unit from urban to rural areas take place simultaneously. But, in a few cases, there can be time lag between shifting of unit and receipt of capital .....

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of the ledger account in respect of the details provided. The assessing officer has not asked for any specific detail or proof in the nature of any particular bill from the assessee during the assessment proceedings. No explanation regarding allowability or reasonableness of the expenses was asked for during the course of assessment proceedings. On this factual matrix, we hold that the adhoc disallowance is nothing but a sheer surmise and such disallowance cannot be sustained. - Disallowing .....

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rplus the AO had taxed the same. In our opinion the AO should follow uniform policy for taxing or not taxing the foreign exchange loss/gains. If gains are to be taxed of a particular transaction the losses arising out of same cannot be denied to the assessee. The AO/FAA has not commented upon the fact that assessee was following AS-11. Considering the above, we are of the opinion that FAA was not justified in confirming the order of the AO. - ITA 1885/MUM/2013, ITA 1886/MUM/2013, ITA 1971/MUM/20 .....

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accessories. The details of dates of filing of returns, returned incomes, dates of assessments, dates of orders of the First Appellate Authority (FAA) can be summarised as under: A.Y. ROI filed on Returned Income Assessment dt. Assessed Income Dt. of order of the CIT (A) 2004-05 01.11.04 ₹ 20.59 crores 03.03.2006 ₹ 71.38 crores 30.11.2006 2005-06 28.10.05 ₹ 23.76 crores 03.12.2007 ₹ 29.68 crores 28.11.2008 2007-08 31.10.07 ₹ 4.74 crores 11.12.2007 ₹ 18.48 cror .....

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e not being adjudicated. ITA/815/Mum/2007, AY.2004-05. 2. First Ground of appeal is about sales tax subsidy amounting to ₹ 6.57 crores. During the assessment proceedings, the AO observed that the assessee had filed a revised return of income claiming notional sales tax liability to the tune of ₹ 6,57,91,246/-, as incentive/subsidy in the form of sales tax exemption, that it had claimed that subsidy was capital receipt, that it had relied upon the cases of CIT v. Balrampur Chini Mills .....

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is also certificate of entitlement way back in 1996, that it had not claimed any deduction on notional sales tax exemption as capital receipt for the AY.s 1995-96 to 2003-04, that filing of a revised return on the last day for the year under consideration was only an indication of afterthought on part of the assessee to claim sales tax exemption as capital subsidy, that any capital subsidy granted by the government would be granted as one-time transaction, that it could not be the nature of rec .....

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ysed the sales tax incentive scheme and held that in the case of Reliance Industries Ltd.(RIL) (supra) the Tribunal had dealt with the sales tax incentive granted under 1979 scheme. He analysed the various aspects of the incentive scheme of 1993 i.e. Maharashtra Special Package Scheme of 1993 and held that the legislature had never intended that sales tax incentive by way of exemption would be different from sales tax incentive by way of deferral and by way of interest-free unsecured loan, that .....

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the extent of Ruby 6.57 crores, was not allowable. 2.1 Aggrieved by the order of the AO, assessee preferred an appeal before the First Appellate Authority (FAA) and made elaborate submissions. It also relied upon certain case laws. After considering the available material, she held that sales tax incentive was granted to the assessee in respect of shifting of the factory from Mumbai to district Nashik in the year 1995, that it had put forth its claim for similar reduction in the AY.2001-02 by wa .....

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ar even to the assessee, that it was advised in represented by professionals, that the scheme and the certificate granted to the assessee proved that it had got sales tax incentive by way of interest-free unsecured loan, that it had to repay the sales tax liability after 10 years as per the repayment schedule, that there was no mention in the scheme to the effect that the amounts retained by it had to be utilised towards acquisition of any fixed capital, that the perusal of the 1993 scheme revea .....

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was not of capital nature, that there was nothing under the scheme to indicate that sales tax exemption was in the nature of capital subsidy for the purpose of bringing into existence any capital asset or for the purpose of subsidising purchase of any capital asset, that the validity period of the scheme was 176 months, that the assessee had not linked the sales tax incentive receipt to the acquisition of any capital asset, that as per the scheme the assessee was entitled to receive incentive on .....

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the case of Reliance Industries was still a good law . The DR supported the order of the FAA and contended that both the Schemes were separate, that the matter of Reliance Industries dealt with the earlier Scheme, that the Scheme under consideration for the year was 1993 Scheme. 2.3 We have heard the rival submissions and perused the material before us. We find that the assessee had claimed that sales tax incentives received by it had to be treated as capital receipt in the revised return filled .....

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plicable to all kind of subsidies. As the various schemes announced by the state government from time to time lay down different conditions for availing the incentive schemes, so, without analysing the scheme, as a whole, no final conclusion can be drawn. Considering the peculiar facts and circumstances of the case, we are of the opinion, that in the interest of justice matter should be restored back to the file of the AO for fresh adjudication. He is directed to compare the scheme deliberated u .....

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he return of income it had claimed Long-Term Capital Loss (LTCL) from sale of plot of land, that it had claimed deduction u/s. 54 of the Act, that in the return of income it had taken value of sale consideration at ₹ 64.92 crores as per the registered agreement of sale of the plot of land, that on the sale deed document the franked value of stamp duty was mentioned at ₹ 80.78 lakhs, that the details obtained from the office of the registrar indicated that market value of the plot of .....

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y, he decided to take the full value of consideration as per the provisions of section 50 and directed the assessee to file explanation in that regard. The assessee stated that conditions of section 50 were not applicable. The AO observed that the assessee had not directly disputed the value adopted by the Stamp valuation authority, that the case was not referred to District Valuation Officer (DVO) as required by the provisions of section 50 (2) of the Act. However, he decided to make a request .....

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t the computation of rate made by the DVO was very reasonable, that rate per ft.2as per the stamp duty authorities would be ₹ 1,140/-(Rs. 80,78,14,570/- (/)7,08,894 sq.ft.), that the rate of ₹ 1,140 per sq. ft. was very reasonable compared to the rate suggested by the DVO. Finally, he held that value of consideration for the plot of land had to be taken at ₹ 80.78 crores as against ₹ 64.92 crores. With reference to the Fair Market Value (FMV) as on 01/04/1981, the AO obse .....

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-95 and accordingly the assessee claimed Long-Term Capital Gain (LTCG) on sale of land, that the land in question was acquired much before 01/04/1981, that the assessee exercised the option of FMV as on that date for the cost of acquisition of land, that the land was valued at the rate of ₹ 60.40 per square feet (Rs. 650/- per sq.mtr.) as on 01/04/1981,that the assessee had filed the valuation report along with the return of income, that the valuation was done by a registered valuer who ha .....

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at the rate of ₹ 590/-per sq. mtr. (Rs. 54.83 per sq. ft.). As per the AO the assessee, vide its letter dated 07/03/2003,during the proceedings of the computation had consented to adopt the value as reported by the DVO on the reference made by the Department, that for the purpose of computation of capital gain for the AY. 2001-02 in respect of part of land sold during the relevant AY. The assessee had consented to adopt the value as reported by the DVO on the reference made by the Departme .....

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the return of income for the year under consideration, the AO observed that the registered valuer had considered sale instances in the report and arrived at the rate of ₹ 200/- per square feet, that the DVO had considered the sale instances considered by the registered valuer, that the valuation officer had held that rate of ₹ 590/- per sq. mtr. was determined after taking into consideration all the relevant factors, that the rate of ₹ 590/- per sq. mtr. adopted by the DVO as a .....

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e based on presumptions only, that the rate of FMV as on 01/04/1981 calculated by the valuer on the basis of different methods of valuation was only to suit the requirements of the assessee for higher value, that during the assessment proceedings it had submitted another valuation report dated 01/03/2006 and had taken the rate at ₹ 200/-per sq.ft. as on 01/04/1981, that the registered valuer had given sales instances of flat, godowns and shops of different areas along with two instances of .....

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apital gains, that the amount of such expenses were in the range of ₹ 15-Rs. 16 crores, that if the value of the said amount is on 01/04/1981 was calculated backwards the FMV as on 01/04/1981 would be much lower than what had been reported by the DVO, that the rate of ₹ 200 per sq.ft. has FMV of land could not be accepted, that the principle of estoppel is applicable as the assessee was all along taking the rate of land is on 01/04/1981. ₹ 60.40 per sq.ft. for the AY.s 1995-96 .....

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LTCG from the sale of land at ₹ 54.41 crores. 3.1 During the appellate proceeding, before the FAA, the assessee made elaborate submissions and relied upon certain case laws. After considering the available material, she held that the AO had computed the LTCG at ₹ 50.32(1) crores as against the LTCL of ₹ 15.34 crores as claimed by the assessee, that the AO had correctly applied the provisions of section 50 of the Act to the facts of the case, that he had necessary and sufficient .....

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ded that if the value of land sold was adopted at the rate of the stamp duty authorities the rate per sq. ft. would come to a similar value occurring in the area in respect of the land sold. With regard to FMV of the land as on 01/04/1981, the FAA held that the AO had correctly adopted the rate of the land determined in the earlier AY.s, that on earlier occasions the DVO had recommended the rate of ₹ 590/-per sq. meters and that same was adopted at the time of giving effect to the appellat .....

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m industrial to residential. Referring to the provisions of section 54, the FAA held that the section could not be interpreted in isolation, that the assessee had claimed and had been allowed the benefit of special deduction u/s.54 in the earlier AY.s, that it could not be allowed the benefit of same deduction again in the year under consideration, that to avail the benefit of the provisions of section 54 time period was of material importance. About the area of land sold, the FAA held that the .....

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ee had transferred the development rights in respect of its industrial land situated at Mulund to Nirmal Lifestyles (NL) in terms of the development agreement dated 24/02/2004, that in terms of the said agreement gross sale consideration agreed between both the parties amounted to ₹ 64.92 crores, that accordingly the said sum was considered as full value of the sale consideration for the purpose of computing capital gains on sale of development rights, that the assessee had not parted with .....

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f the scheme and recessed by the legislature while enacting the provisions of section 50,that section 50 had created a fiction for substituting full value of consideration with stamp duty value, that there was distinction between land and buildings and rights in land and building, that the legislature had made parallel use of land and building as well as rights in land and building, that both were distinct from each other and had different connotation, that section 50 of the Act was not applicab .....

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disregarding the objection AO proceeded to complete the assessment at the value determined by the state authorities without referring to DVO, that the action was totally against the express provision of the Act, that FAA had wrongly held that AO had discretion in referring the case to the valuation cell especially when the assessee had lodged its objection. He referred to the case of Aditya Narayan Verma-HUF [IT Appeal No. 4166 (Delhi) of 2013, dated 7-6-2017]. 3.2.1 Referring to the issue of F .....

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valuer s report as on 01/04/1981 pertaining to industrial land, that the assessee had contested the valuation done by DVO for the earlier AY.s, that valuation report had been set aside by the Tribunal for the AY.1995-96, that the valuation done by the DVO since 1995-96 would not survive any longer, that there was no question of Estoppel in any event, that for computing FMV of the property it had submitted a valuation report from two independent valuers, that the valuer had computed FMV of the a .....

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East, that in Indian Valuers Directory market value of the adjoining areas had been decided to ₹ 440-480 per sq.f.t as on 1/4/1981, that the land was located in Mulund. 3.2.2 The AR further made submission about the reference made to the DVO u/s.55A of the Act and contended that no reference to DVO could be made where value of the capital asset, estimated by the registered valuer was more than its FMV. He relied upon the cases of Daulal Mohata (360 ITR 680) of the Hon ble Bombay High Court .....

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of transfer of TDR, that with the shifting of industrial estates assets has shifted to Lakhampur, that assessee was not entitled to claim deduction u/s. 54G of the Act, that the investment was made after nine years. Referred to the cases of Arif Akhtar Husain v. ITO [2011] 45 SOT 257, Asstt. CIT v. Dattani Developers [2016] 160 ITD 242 (Mum. - Trib.); Edac Engg. Ltd. v. Asstt. CIT [2014] 207/149 ITD 341 (Chennai - Trib.); ITO v. Bharat R. Patel [2016] 159 ITD 473 (Mum. - Trib.). In his rejoinder .....

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01.04.1982 and iii) entitlement of deduction u/s.54G of the Act (GOA,6-8). 3.3.1 First of all we would take up the issue of applicability of section 50.We find that in the case of Aditya B Mahadevia (supra), the Tribunal has dealt with the identical issue. Following the judgment of the Hon ble Bombay High Court in the case of Heatex Products (supra) the Tribunal decided the issue in favour of the assessee. We are reproducing the relevant portion of the order and it reads as under: 2. The grievan .....

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l difficulties could not make the payment of lease as per the schedule, the lease hold rights were assigned to M/s. Deepak Textiles for consideration of ₹ 28,59,395/-. The AO held that assessee has transferred rights in an immovable property, accordingly he invoked the provisions of Section 50C and made an addition of ₹ 41,47,204/-. 5. By the impugned order, CIT (A) deleted the addition after following the order of the ITAT-Mumbai Bench in case of Atul G Puranik v. ITO (132(1) ITD 49 .....

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umbai Bench in case of Atul G.Puranik 58 DTR 208 Pradeep Steel Re-Rolling Mills (P) Ltd., wherein it was held that Section 50C applies only to capital assets being land or building or both, it does Shri Aditya D. Mahadevia 3 not in terms include leasehold rights in land or building within its scope. Similar view has been taken in the case of Voltas Ltd., ITAT Bench in case of Kancast (P) Ltd., (55 Taxmann.com 171). Recently Hon ble Bombay High Court in case of Heatex Products Pvt. Ltd., vide ord .....

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f Section 50C of the Act mandates that where a transfer of capital asset being land or building or both is for consideration less then its value as adopted/assessed by the State Government for the purpose of stamp duty then the stamp duty value would be adopted as being the full value of consideration for computing capital gains arising out of transfer of the asset. It is the case of the revenue that Section 50C of the Act would apply also to transfer of leasehold interest in land and is not lim .....

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l in Atul G. Puranik (supra). This inference is drawn as no evidence of filing an appeal from the order of the Tribunal in Atul G. Puranik (supra) is produced. The fact situation in both Atul G. Puranik (supra) and this case is identical as no distinction in facts of the present case from those arising in Atul Puranik (supra) has been pointed out. 6. In above view the question as framed does not give any rise to any substantial question of law and thus not entertained. 10. Respectfully following .....

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, once objections are raised, by an assessee, about the valuation, the AO has no option-he had to refer the matter to the valuation cell. But, in the case under appeal the AO completed the assessment without making a reference. We hold that the AO had crossed the limits drawn by the provisions of the Act. In the case of Aditya Narayan Verma HUF (supra) the Tribunal has held as under: On the very perusal of the provisions laid down u/s. 50C of the Act reproduced hereinabove, we fully concur with .....

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slature behind the provisions laid down under sub section (2) to section 50C of the Act is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non-compliance of the provisions laid down under sub section (2) by the Assessing Officer cannot be held valid and justified. The Honble jurisdictional High Court of Allahabad in the case of Shashi Kant Garg 285 ITR 158 (All) has been ple .....

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ale of plot of land is FMV of the asset as on 01.04. 1981.We find that the assessee had valued the FMV of the land at ₹ 200 per sq. feet, that the FMV was based on the report of a registered valuer, that later on he obtained one more report from other valuer, that the AO and the FAA had rejected the FMV adopted by it, that they held that it had not challenged the FMV determined by the DVO for the period 1995 to 2001, that the FAA was of the opinion that rate computed by the valuer was not .....

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d the said Reference Book as a reliable source for valuation of capital assets. So, in our opinion, FMV adopted by the assessee as on 01.04.1981 cannot be brushed aside-rather it is quite reasonable. As far as reference to the DVO u/s.55A of the Act is concerned, we would like to say that after the judgments of the Hon ble Bombay High Court in the cases of CIT v. Daulal Mohta (HUF) [2014] 360 ITR 680 and CIT v. Pooja Prints [2014] 360 ITR 697/224 Taxman 22 there is no doubt that the AO cannot ma .....

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after the assessment was over. In short, in our opinion the FAA was not justified in endorsing the views of the AO. Considering the above, grounds no. 2-5 are decided in favour of the assessee. 4. Next effective ground of appeal (GOA.6-8) is about disallowance made u/s.54 G of the Act. With regard to admissibility of claim, made by the assessee, u/s.54G of the Act, the AO observed that in the computation of income under the head income from capital gains the assessee had computed net loss from s .....

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was sold in the year 2004,that from the past records it was clear that the industrial undertaking had been shifted to Nasik and it had started commercial production in the AY.1995-96, that the assessee had claimed exemption u/s. 54 for the AY.s 1995-96 and 1996-97, that the land was transferred in 2004 and that the period allowed by the Act should have been between 2003 and 2007 for claiming deduction u/s. 54G, that the industrial undertaking had been shifted in the FY.1994- 95, that the assesse .....

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that shifting of original industrial undertaking was complete before 01/01/2002 itself, that the provisions of section 54G did not intend to give exemption for any further expansion in the capacity or investment in plant and machinery subsequent to original shifting of industrial undertaking, that the computation of income for the AY.s 2000-01 and 2001-02 indicated that the assessee had sold part of residential land during the previous year relevant to those AY.s also, that there was no mention .....

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ons of section 54G(1) of the Act, that the assessee had already claimed and had also been allowed the benefit of special deduction u/s. 54G in the earlier years, that it could not be allowed the same deduction again. Finally, she upheld the order of the AO. 4.2 Before us, the AR argued that the assessee had fully satisfied all condition for claiming deduction u/s.54G, that undertaking was shifted from urban area to non-urban area i.e. from Mulund to Lakhampur, that as a consequence of shifting o .....

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he date of shifting of industrial undertaking, that the word transfer was used in conjunction with capital asset, and utilisation of the capital gains arising therefrom, that the word shifting was prefixed with phrase industrial undertaking, that it had shifted its undertaking to Lakhmpur in AY.1995-96, that to obtain economic benefits from vacant land it entered into development agreement, that due to the dispute with the developer the matter was contended before the courts, that after settleme .....

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re us. We find that during the previous year relevant to the assessment year 1995-96 the assessee had shifted its industrial undertaking out of Mumbai, that it had entered into an agreement with Lok group for transfer of development rights for the industrial land at Mulund, that because of litigation the agreement with Lok group was terminated, that later on the assessee entered into a new agreement with NL for a consideration of ₹ 64.92 crores, that it made a claim that it was entitled fo .....

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poses serious problems of congestion, pollution and hazards. In order to encourage industries to shift out of such areas, I propose to exempt capital gains made on the sale of land and buildings in such areas provided these are reinvested in approved relocation schemes. Notes on clause for the Finance Bill, 1987 reads as under: The new section 54G provides for exemption of capital gains on transfer of assets in cases of industrial undertaking shifting from urban area. Sub-section (1) provides t .....

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under taking is shifted or incurs expenses on shifting the original asset and transferring the establishment of the undertaking to such area and incurs expenses on such other purposes as may be specified in a scheme framed by the Central Government, the capital gain shall be exempt to the extent such gain has been utilised for the aforesaid purposes. Explanation to sub-section (1) defines urban area on the lines of the definition in section 280Y. The relevant part of the Memorandum Explaining t .....

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alanced regional growth, the Bill seeks to exempt capital gains arising on transfer of long-term capital assets in the nature of machinery, plant, building or land used for the purposes of the business of the industrial undertaking situated in an urban area in connection with the shifting of such industrial undertaking from an urban area to a non-urban area. Accordingly, capital gains arising in such cases will be exempt to the extent they are utilised within a period of one year before or three .....

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, and will, accordingly, apply in relation to the assessment year 1988-89 and subsequent years. On a conjoint reading of the aforesaid Budget Speech, Notes on clauses and Memorandum Explaining the Finance Bill of 1987, it becomes clear that the idea of omitting section 280ZA and introducing on the same date section 54G was to do away with the tax credit certificate scheme together with the prior approval required by the Board and to substitute the repealed provision with the new scheme contained .....

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t the tax incidence will come into picture only after assets are transferred. The purpose behind the section is to decongest the urban areas and to shift the industries from the cities. In that sense it is a welfare legislation. As per the settled principles of taxation benevolent provisions of Act should always be interpreted liberally. The intention behind the section is clear that assessee should invest the sale proceeds of sale of specified assets in industrialisation or should deposit the s .....

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and part of it was deposited in a designated bank account. P &M purchased by it at the time of shifting the premises had nothing to do with the new P & M acquired after sale of capital assets. There is no precondition in the section that new machinery should be purchased at the time of shifting of industrial undertaking. No undertaking can function without P&M. But, the assessee can purchase machinery even after shifting and commissioning of business from the new premises. Expansion .....

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rounds No. 6-8 are decided in favour of the assessee. 5. Grounds 9 and 12 are also about sale of right of the plot of land. As pre the assessee the AO had erroneously reduced the area of assets sold by it. It was also argued that there was a mistake in determining the proportionate cost of improvement calculation. 5.1 The AR argued that the AO and FAA erroneously reduced the area of assets sold, that there was error in calculation of proportionate cost of improvement, that it had sold developmen .....

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FAA. 5.2 In our opinion, both these facts needs further verification on part of the AO. So, in the interest of justice we direct the AO to decide both the issue afresh. He is directed to consider all the facts and figures produced by it, before us, during the appellate proceedings. Both the grounds stand partly allowed. 6. Next effective Ground of appeal (GOA.13-16) is about ad hoc disallowance of various expenses. During assessment proceedings, the AO had made disallowance under various heads n .....

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AR stated that the Tribunal while deciding the appeal for AY. 2003-04 (ITA/814/Mum/2007) had decide identical issue and set aside the issue of disallowance made for electricity expenses to the file of FAA for fresh adjudication, that FAA, vide his order dt.30/3/2015, deleted the said disallowances, that the Tribunal had deleted the other disallowance while adjudicating appeal for AY.2003-04 (supra). The DR left the issue to the discretion of the Bench. 6.3 We find that the Tribunal had deliberat .....

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ws: Lalchand Bhagat Ambica Ram v. CIT (1959) 37 ITR 288 (SC)CIT v. Daulat ram Rawatmull[1973] 87 ITR 349 (SC), Sukhdayal Rambilas v. CIT[1982] 136 ITR 414 (Bom.) He also pointed out that the details of the sale promotion expenditure are given at page 237 of the paper book as well as on pages 19 and 36 of the supplementary paper book. 23. The learned departmental representative, on the other hand, supported the order of the first appellate authority. 24. Rival contentions heard. On a careful cons .....

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assessing officer has not asked for any specific detail or proof in the nature of any particular bill from the assessee during the assessment proceedings. No explanation regarding allowability or reasonableness of the expenses was asked for during the course of assessment proceedings. On this factual matrix, we hold that the adhoc disallowance is nothing but a sheer surmise and such disallowance cannot be sustained. In the result, this addition is deleted. Following the above, we allow grounds .....

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ntive scheme. Following our order for earlier AY. (paragraph 2.3 of the order), we restore back the issue to the file of the AO and allow the ground partly. 10. Ad-hoc disallowance of ₹ 61.26 lakhs is the subject matter of Ground four. During the assessment proceedings, the AO found that the assessee had claimed sales promotion expenses incurred under a scheme namely Shubh Utsav under which stockiest were provided foreign trips as reward, that Kyoni Travels were paid the disputed sum. He d .....

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e AY.2003-04, had allowed the relief to the assessee holding that ad hoc disallowance could not be sustained, that the FAA had inadvertently disallowed the entire expenditure, that he had not given any reason for the enhancement. DR left the issue to the discretion of the Bench. 10.3 We have heard the rival submissions and perused the material before us. We find that the AO had made ad hoc disallowance of ₹ 6 lakhs, that the FAA disallowed ₹ 61.26 lakhs, that the assessee did not fil .....

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ent of ₹ 62.92 lakhs. The assessee had raised an additional ground before the FAA in that regard. Facts of the issue are that in the return of income, the assessee had added back provision for leave encashment of ₹ 62,92,345/- outstanding till the last date of filing of return in view of provisions of section 43B(f), that before the FAA it raised an additional ground referring to the judgment of Hon ble Calcutta High Court Delivered in the case of Exide Industries Ltd. v. Union of In .....

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. CIT [2015] 68 SOT 403 (Mum. - Trib.). The DR left the issue to the discretion of the bench. 11.2 We find that the FAA has not adjudicated the issue, though a specific ground was raised before him with regard to provision for leave encashment. As per the Hon ble Bombay High Court additional claim can be raised before the appellate authorities CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336 (Bom.). Therefore, we are of the opinion matter should be restored back to the file .....

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9,22,101/- towards provision for leave encashment in P&L account. However, the AO disallowed the claim of the assessee on the Ground that the it had made the claim in view of the decision of the Excide Industries Ltd. v. Union of India [2007] 292 ITR 470, that the Hon ble Supreme Court had provisionally stayed order of Calcutta High Court in the case of Excide Industries. In the appellate proceedings the FAA upheld the order of the AO. 12.1 Before us, the AR stated that the provisions for le .....

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Earth Movers (supra) and Aditya Birla Nuvo Ltd. (supra) are concerned, we will like to mention that both did not have benefit of the judgment of the Hon ble Supreme Court in the case of Exide Industries Ltd. (supra). Therefore, in our opinion, the order of the FAA does not suffer from any legal or factual infirmity. Confirming the same, we decide first ground of appeal, against the assessee. 13. Next ground is about deduction of additional depreciation u/s.32(1)(iia) of the Act, in respect of el .....

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had been acquired and put to use, that once an asset had been depreciated and used in the business of the assessee it could not be considered to be a new asset. 13.1 The FAA, after considering the submissions held, that the appellant has claimed additional depreciation u/s.32(1) on the Plant & Machinery acquired and installed after 31/03/2005, but before 01/04/2007,that the section has undergone changes on various occasions and prior to the amendment effected by the Finance Act, 2005, the ad .....

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lier year could be said to be a new Plant & machinery in the subsequent years. He referred to the Explanatory note to Finance Act 2005, (Circular No.3 dt. 27/2/2006) and held that additional depreciation would be admissible only at the time of investment in new P&M and not in any of the subsequent years. Finally he upheld the order of the AO. 13.2 Before us the AR referred to the case of Gloster Jute Mills Ltd. (IT Appeal/95 (Kol) of 2011, dated 01/03/2017) and argued that as per the ame .....

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plant and machinery which were acquired and installed after 31/3/2005, that it had claimed additional depreciation in the AY. 2006-07, that it had claimed additional depreciation on same assets for the year under appeal also. He relied upon the order of the Tribunal in the case of CRI Pump (P.) Ltd. v. Asstt. CIT [2013] 58 SOT 154, wherein it was held that no additional depreciation could be allowed on the same assets on year to year basis. Relying upon the order of the Tribunal in the case of .....

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on the same assets from year to year basis. He referred to the cases of CIT v. Plantation Corpn of Kerala [2001] 247 ITR 155 (SC) and Prakashnath Khanna v. CIT [2004] 266 ITR 1 (SC). 13.3 We have heard the rival submissions and perused the material before us. We find that in the case of Gloster Jute Mills Ltd. (supra) the Tribunal has deliberated upon the issue extensively and has decided it, while deciding the appeal filed by the AO, as under: 24. Ground No.3 raised by the revenue reads as fol .....

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peal relates to the claim of the Assessee for additional depreciation u/s. 32(1)(iia) of the Act. The undisputed facts are that the original cost of the new machinery purchased and installed by the Assessee after 31.3.2005, but before 1.4.2006 in the 100% EOU and DTA unit ₹ 29,77,470 and ₹ 2,41,30,615. The WDV of these machineries as on 1.4.2006 was ₹ 24,51,920/- and ₹ 1,81,50,266/- respectively. The Assessee availed of additional depreciation @ 20% on the original cost o .....

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e machinery ceases to be a new machinery and therefore additional depreciation cannot be allowed. The plea of the Assessee however was that Section 32(1)(iia) of the Act merely provides that further to the normal depreciation at the prescribed rates, an additional depreciation shall be allowed to the assessee at the rate of 20% on new plant and machinery acquired and installed after 31.03.2005. However, the period the period during which such additional depreciation shall be allowed is not speci .....

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not existing before; now made, or brought into existence, for the first time . The AO held that the assets on which additional depreciation was claimed by the assessee is neither new nor brought into existence in the hands of the assessee in the relevant previous year. It is already used in earlier years and is already depreciated and, therefore, old in the hands of the assessee in the previous year. He held that the qualification that the asset should be new was basic qualification for entitlem .....

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hinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed- (i) in the case of assets of an undertaking engaged in generation or generation and distribution of pow .....

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any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent. of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii): 29. It can be seen from the provisions of Sec.32(1)(iia) as it existed from 1.4.1981 to 31.3.1988 and reinserted subsequently from 1.4.2003 .....

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to use in the immediately succeeding previous year. From AY 2003-04 till 2005-06, the claim for additional depreciation was restricted to previous year in which such undertaking begins to manufacture or produce any article or thing on or after the 1st day of April, 2002; or if any industrial undertaking existed before the 1st day of April, 2002, during any previous year in which it achieves the substantial expansion by way of increase in installed capacity by not less than ten per cent. From AY .....

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dering the aforesaid scheme and history of the provisions of Sec.32(1)(iia) of the Act, deleted the addition made by AO observing as follows :- I have considered the submissions of the Ld. A/R and find substance in the contention of the Appellant. On a conjoint reading of the provisions of section 32(1)(iia) inserted by Finance (No. 2) Act, 1980 and reinserted by Finance Act, 2002 it is evident that the said sections specifically restricted the allowability of additional depreciation in the year .....

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epreciation does not exceed the cost of the asset. It is settled law that a fiscal statute has to be interpreted the basis of the language used therein and not interpreted out of context the same as held by Apex Court in the case of Orissa State Warehousing Corporation, Mohammad Ali Khan and Madurai Mills Co. Ltd. (Referred to by the Appellant.) Further, it is also imperative to state that Section 32(1)(iia) is a beneficial provision enacted with the view to provide benefit to the assessee. The .....

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ot new in the second year. In my view for claiming additional depreciation the assessee has to acquire and install the plant & machinery after 31-03-2005 and the same should be new in the year of installation. There is no requirement that the assets should be new in the year of claim of additional depreciation. For the reasons aforesaid I am of the view that in terms of provisions of Section 32(1)(iia), additional depreciation is available in AY 2006-07 and subsequent years in respect of all .....

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same. It was argued that Clause (iia) to Sec. 32(1) was first introduced vide Finance (No. 2) Act, 1980 w.e.f. 01-04-81 and was applicable till AY 1987-88. The clause was subsequently re-introduced vide Finance Act, 2002 w.e.f. 01-04-03. On perusal of clause (iia) to Sec. 32(1) as existed during the aforesaid period, it could be seen that the legislature conferred the benefit of additional depreciation only in the first AY when the asset was installed and first put to use. However vide Finance .....

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shall have to be interpreted on the basis of the language used therein and not de hors the same. Even if there is a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation :- Orissa State Warehousing Corporation v. CIT [1999] 237 ITR 589 (SC) - Prakash Nath Khanna and Another v. CIT [2004] 266 ITR 1 (SC) - Smt. Tarulata Shyam & Othrs v. CIT [1977] 108 ITR 345 (SC) - Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147 (SC) Apart from the above, .....

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for the second and subsequent years as well. It was submitted that the condition imposed by the relevant provisions was that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/s. 32(1)(iia) and not new in subsequent years. 32. We have given very careful consideration to the rival submissions and are of the view that the provision of section 32(1)(iia) as amended w.e.f. 01.04.2006 by the Finance Act 2005, there is no restriction that the addi .....

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capacity by 25%. The only objection of the AO is that the provisions refer to new machinery or plant and therefore the machinery will cease to be a new machinery after the end of the first year in which it is installed or put to use. In our view this stand taken by the revenue is not supported by the language of statutory provision. The condition imposed by the relevant provisions is that Plant and Machinery must be new at the time of installation to be eligible for additional depreciation u/s. .....

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therefore uphold the order of CIT (A) and dismiss ground no.3 raised by the revenue. Respectfully, following the above, we decide Ground no.2 in favour of the assessee. We would like to mention that the cases relied upon by the DR do not deal with the issue directly. Whereas in the case relied upon by us, the Tribunal has dealt with the identical issue and has given a categorical finding for the year under consideration. 14. Third Ground of appeal is about non admission of the ground for exclusi .....

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have restored back the matter to FAA for fresh adjudication. Following the same, we remit back the Ground No. 3 (b) to the file of FAA. As far Ground No. 3(a) we have already held that Appellate authority can admit new claims made before them for the first time. Therefore, we direct FAA to admit Ground raised by the assessee as GOA-3(a) before us. He would decide the issue raised in both the sub grounds after affording reasonable opportunity of hearing to the assessee. Grounds 3(a) and 3(b) are .....

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avour, in part. ITA/1972/Mum/2013, AY.2008-09 16. First Ground of appeal, filed by assessee, is about provision for leave encashment debited to P&L account amounting to ₹ 67.98 lakhs. Following our order for the earlier year, we decide the first ground against the assessee. 17. Second Ground deals with additional depreciation u/s. 32(1)(iia) amounting to ₹ 7.14 crores in respect of eligible P&M acquired and installed during AY. 2005-06 and 2006-07. Following our order for ear .....

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on Bank 85,00,000/- He observed that as per final Term Sheet issued by ICICI Bank in respect of Libor Hedge it was noticed that the trade date was 26/07/2007 and settlement dates were every six months starting from January 2008 to 25th July, 2014,that during the year under consideration, only one date of 25/01/2008 fell on which settlement could have been carried out by the appellant in that regard, that other settlement dates were falling in the subsequent assessment years, that any loss or gai .....

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edings, the FAA held that all the transactions were arranged on notional basis and no physical delivery was intended to be taken, that same were of speculative nature, that the assessee had notionally worked out the loss as on the last date of the year in order to make the claim, that notional claim by no stretch of imagination could be considered as actual business expenditure, that the notional loss claimed by the it in respect of foreign exchange swap transaction was not an allowable business .....

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