TMI Blog2018 (1) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... could not demonstrate that it did not incur any direct expenditure to make the investments. Therefore, the issue, in our opinion, remains inconclusive and requires reconsideration by Ld. AO. Hence, the matter is remitted back to Ld. AO to re-appreciate the factual matrix with a direction to assessee to justify his stand forthwith, failing which the Ld. AO shall be at liberty to decide the same as per law on the basis of material available on record. This ground stands allowed for statistical purposes. Claim of Loan Processing Fees - Held that:- Undisputedly, the sale of investments was chargeable under the head ‘Capital Gains’. In such a scenario, we find that the reliance of Ld. AR on various case laws could not help assessee since the fact of those cases reveals that the loan was utilized for the purpose of capital expansion of assessee’s business and the purpose of the same was capital expenditure. This vital fact is missing in the present case.A lso not evident from material on record that the assessee did not claim the balance deferred revenue expenditure in subsequent years on proportionate basis. Therefore, this matter is also remanded back to the Ld. AO for re-appreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. Vs DCIT, wherein the decision of ITAT, Mumbai, E Special Bench in the case of DCIT Vs Times Guaranty Ltd (ITA Nos.4917 and 4918 (MUM) of 2008 dated 30.06.2010) was not considered although the Special Bench was specially constituted by the Mumbai Tribunal to decide the issue of applicability of provisions of section 32(2), in view of the amendments made by the Finance Act,1996 and Finance Act,2001, vis a vis carry forward and set-off of the unabsorbed depreciation. 5. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 2.1 Facts leading to the same are that the assessee being resident corporate assessee engaged in the business of cable television and transmission of satellite channels etc. was assessed u/s 143(3) of the Income Tax Act, 1961 at ₹ 38,01,10,120/- under normal provisions as against Nil return filed by the assessee on 28/09/2011 which was subsequently revised on 28/09/2012. The sole issue under revenue s appeal is set-off of brought forward unabsorbed depreciation beyond eight years. 2.2 During assessment proceedings, it was noted that the assessee had brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarified vide Circular No.14 of 2001 the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with restriction of 8 years for carry forward and set off of unabsorbed depreciation. The AR has placed reliance on the latest decision of Hon ble Gujarat High Court in the case of General Motors Pvt. Ltd. in ITA No.1773 of 2012 dated 23.08.2012, wherein, it was held that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y.2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act,2001 and once Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 to 2001-02 got carried forward to A.Y.2002-03 and became a part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. Since the decision of Hon ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed u/s 115JB of the Income Tax of the Income Tax Act. In doing so, the CIT(Appeals) further erred in observing that the Appellant has not refuted the findings of the Tax Auditor. The quantification of disallowance in the Tax Audit report was without prejudice to the representation made by the Appellant for consideration of the disallowance u/s 14A r.w.rule 8(D) at Rs.Nil. ( ii) On facts and circumstances of the case and in law, the CIT(A) has erred in holding that loan processing fees paid of ₹ 60 Lacs to GE Money Financial Services Private Ltd. is a capital expenditure. He has further erred in observing that GE Money Financial Services Private Ltd. Is a company belonging to the HInduja Group. 5.1 Facts qua the first ground is that during assessment proceedings, it was noted that disallowance u/s 14A for ₹ 5,34,72,365/- as reported in the Tax Audit Report was not made by the assessee in its computation of income. The assessee pointed out that the investment were mainly in shares of unlisted joint venture entities, whose capital gain, when divested would be fully taxable under the head Capital Gains and hence, no adjustment of disallowance has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the fact that adjustment of disallowance u/s 14A is not called for while arriving at book profits u/s 115JB in view of the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [82 Taxmann.com 415]. Proceeding further, Ld. counsel for Assessee drew our attention to the fact that the assessee contested the stand of revenue qua disallowance u/s 14A in AY 2009-10 before this Tribunal vide ITA No. 356/Mum/2013 dated 29/01/2016 where the matter, considering the ratio of this Tribunal rendered in in Garware Wall Ropes Ltd. [46 Taxmann.com 18], was remitted back to the file of Ld. AO with certain directions. Qua loan processing fees, the Ld. AR primarily contended that the nature and purpose of loan was irrelevant for determining its allowability and therefore, the same was allowable to the assessee. Reliance has been placed on the decision of Hon ble Supreme Court in India Cements Ltd. Vs. CIT [60 ITR 52] Hon ble Madras High Court in CIT Vs. Super Spinning Mills Ltd. [296 ITR 168] Hon ble Bombay High Court in Bajaj Tempo Ltd. Vs. CIT [ITA No. 128 of 2000 22/06/2017]. 6. We have heard the rival contentions and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is uncontroverted fact that the gains from sale of those investments were taxable under the head Capital Gains . As correctly noted by Ld. CIT(A), the assessee failed the refute the findings of Tax Auditor in this regard and could not demonstrate that it did not incur any direct expenditure to make the investments. Therefore, the issue, in our opinion, remains inconclusive and requires reconsideration by Ld. AO. Hence, the matter is remitted back to Ld. AO to re-appreciate the factual matrix with a direction to assessee to justify his stand forthwith, failing which the Ld. AO shall be at liberty to decide the same as per law on the basis of material available on record. This ground stands allowed for statistical purposes. 8. So far as assessee s claim of Loan Processing Fees is concerned , we find that the assessee incurred Loan Processing Fees of ₹ 75 Lacs out which ₹ 15 Lacs were debited to the Profit Loss account whereas the balance ₹ 60 Lacs was treated as deferred revenue expenditure in the books of account. Further, the assessee did not claim the balance ₹ 60 Lacs either in computation of income or by filing the revised return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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