TMI Blog2017 (2) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the same pertaining to 1140 units. This is supported by the notes attached to the return of income and computation of capital gains for the year under appeal. Addition on account of change in method of valuation of closing stock applying provisions of Section 145A - Held that:- the assessee has adopted method of valuation of closing stock which is most suitable to the GNF Unit also method has been changed to weighted average cost method in line with other units so that the principle of consistency could be followed among all the units. In-fact, the Assessing Officer’s addition on account of change in method of valuation of closing stock applying provisions of Section 145A does not come in consistence with the proper change of method of accounting, without this fact it could not have been possible to implement the ARP Software for accounting, the said reason is not disputed by the Assessing Officer either in the order or in the remand report. The CIT(A) (A) has rightly deleted this addition. Addition of interest paid by the assessee being 10% of the sum advanced by the assessee to its subsidiary company in an earlier year - Held that:- This amount was paid by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in doubt or when an asset subject matter of transfer actually from a physical part of another larger asset or such sham transaction takes place that the revenue can rightly object to the arrangements. in the present case, there was no doubt about existence of the assets, the sale proceeds and consequent short term capital gains were duly assessed in Assessment Year 2000-01, and the transaction entitled the assessee to the use of the sale proceeds at a cost lower than borrowing through debentures. The CIT(A) has rightly deleted the same. This ground is dismissed. - I.T.A .No. 2285/DEL/2009 AND I.T.A .No. 1849/DEL/2010 - - - Dated:- 20-2-2017 - SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Appellant by Sh. Umesh Chand Dubey, Sr. DR Respondent by Sh. Rupesh Jain, Adv, Aharnish Kapoor, CA ORDER PER SUCHITRA KAMBLE, JM These appeals have been filed by the Revenue against the orders dated 6/4/2009 6/1/2010 passed by CIT(A)-XXI, New Delhi CIT(A)-VII, New Delhi. The Revenue filed appeals for A.Y. 2001-02 2002-03. 2. The grounds of appeal are as under:- ITA No. 2285/Del/2009 (A.Y 2001-02 1. On the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition made on account of disallowance of ₹ 1,00,000/- pertaining to the expenditure incurred in earning the dividend income which is exempt from tax. 2. On the facts and in the circumstances of the case, Ld.CIT(A) erred in deleting the addition of ₹ 48,35,989/- on account of valuation of closing stock in spite of the fact that the accounting standard-2 issued by ICAI itself provides for adjustment in valuation of inventory on the basis of change in method of accounting; and that the assessee is not consistently following any single method of accounting. 3. On the facts and in the circumstances of the case, Ld.CIT(A) erred in deleting the disallowance of ₹ 4,89,586/- made on account of ESI PF contribution as explanation to Section 36(1) (va) provided for due date . 4. On the facts and in the circumstances of the case, Ld.CIT(A) erred in deleting the disallowing of ₹ 1,74,96,745/- out of the lease rentals despite the fact that the assets, being computers are being continuously used by the assessee and there is not real transfer of assets and the agreement to sell and lease back assets is only a colorable device in order to inflate expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment orders the amount of depreciation without setting of the depreciation for the earlier assessment years come to ₹ 1,10,58,57,287/- depreciation on returned down value of fix assets after allowing depreciation for the Assessment Years 1997-98, 1998-99 1999-2000 comes to ₹ 70,59,29,517/-. The Assessing Officer reduced the licenses of depreciation by ₹ 39,99,27,770/- being the difference in the amount of depreciation claimed by the assessee and computed by the Revenue. The Assessing Officer also disallowed sum of ₹ 20,13,907/- on account of late payment of PF Dues ESI Dues. The Assessing Officer also disallowed sum of ₹ 53,500/- out of interest paid by the assessee against borrowed funds which were rent to subsidiary as an interest free loan. The Assessing Officer also disallowed expenditure on lease rents claim with ₹ 288.40 lacs and allowed expenditure of ₹ 1,45,86,857/-. 4. Aggrieved by this, the assessee filed appeal before the CIT(A). 5. As relates to ground no. 1, the CIT(A) held that the assessee s counsel pointed out ITAT order in the case of Eicher Limited and the order of the Hon ble High Court in department s a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to deposit the cheque. This does not require the assessee to incur expenditure, the assessee s contention that Section 14A does not envisage disallowance to any ad-hoc or an estimated expenditure. It is only en expenditure actually incurred for earning an income exempt from tax that would be disallowed u/s 14A. Reliance of the Ld. AR in case of Maruti Udhyog Ltd. Vs. DCIT 92 ITD 119 ACIT Vs. Eicher Ltd. 101 TTJ 369 Delhi wherein it was held that the word incurred as used in Section 14A clearly indicates that it must be shown as a fact that some expenditure was in-fact incurred by the assessee to produce exempt income. The register did not empowering the A.O to make an arbitrary estimate of expenditure and disallow the same. The CIT(A) has rightly relied on the order of Hon ble Delhi High Court in case of CIT Vs. Chemical Metalogical Design Company Ltd, ITA No. 803, 2008 wherein it is held that making a proportionate disallowance of expenses on estimated basis could not be sustained under Section 14A of the act. Thus, the CIT (A) has rightly deleted the said addition. This ground is dismissed. 9. As relates to Ground no. 2 and 3 of the appeal, the CIT(A) held that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has rightly directed the Assessing Officer to grant relief as the assessee had claimed long term capital loss of ₹ 75,995/- on sale of 1140 units to VECAUS-ii-1990. The CIT(A) s finding is correct that the Assessing Officer fail to take into account the indexed cost of acquisition for Assessment Year 1990-91 and also the fact that the same pertaining to 1140 units. This is supported by the notes attached to the return of income and computation of capital gains for the year under appeal. As relates to Ground No. 3, the assessee has adopted method of valuation of closing stock which is most suitable to the GNF Unit also method has been changed to weighted average cost method in line with other units so that the principle of consistency could be followed among all the units. In-fact, the Assessing Officer s addition on account of change in method of valuation of closing stock applying provisions of Section 145A does not come in consistence with the proper change of method of accounting, without this fact it could not have been possible to implement the ARP Software for accounting, the said reason is not disputed by the Assessing Officer either in the order or in the remand rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted amounts paid beyond the relevant due dates of the respective months. The CIT (A) directed the A.O. to delete the disallowance of ₹ 20,13,907/- as per various decision relied by the assessee. 18. The Ld. DR submitted that the disallowance of ₹ 20,13,907/- made on account of ESI PF Contribution as Explanation to Section 36(1) (va) provided for due date to be a due date by which the assessee is required as an employer to credit an employee s contribution to the employee s account in the relevant period. 19. The Ld. AR relied upon the order of the CIT(A). 20. We have heard both the parties. Though the contribution to PF ESIC were paid during the previous year, the presented amounts paid beyond the relevant due dates of the respective months. In view of the amendment of the first provision of Section 43 (B) deletion of the second proviso by Finance Act, 2003 any payment on account of PF etc if made before the due date for filing return would not be hit by Section 43(B). The reliance on the judgment of Delhi ITAT in case of ACIT Vs. M/s Vestas RRB India Ltd. 92 ITD 1 is rightly taken into account by CIT(A). This ground is dismissed. 21. The Ground No. 6 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assets in previous year relevant to Assessment Year 2000-01 was less than the sale consideration, the differential amount of ₹ 1,84,33,029/- was offered to tax as short term capital gain in Assessment Year 2000-01 and assessed as such in that year. The assessee entered into lease agreement with L T Finance Ltd. on 29/3/2000 for lease of computers and pursuant thereto paid lease rent of ₹ 288.40 lacs during the previous year under consideration. The CIT(A) further observed that in the present case, there was no doubt about existence of the assets, the sale proceeds and consequent short term capital gains were duly assessed in Assessment Year 2000-01, and the transaction entitled the assessee to the use of the sale proceeds at a cost lower than borrowing through debentures. Thus, the CIT(A) deleted this addition. 26. The Ld. DR submitted that CIT(A) erred in deleting the disallowance of ₹ 142,53,143/- out of the lease rentals despite the fact that the assets being computers and being continuously used by the assessee and these is not real transfer of assets. The agreement to sell and lease back assets are only colourable device in order to inflate expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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