TMI Blog2018 (5) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ic congestion u/s 37(1) of the Act by holding that such expenses can be held to be expanded wholly and exclusively for the purpose of business u/s 37(1) of the Act. Addition u/s 145A - Held that:- Hon’ble Supreme Court in CIT vs. Hindustan Zinc Ltd. [2007 (5) TMI 195 - SUPREME Court] and CIT vs. Loknete Balasaheb Desai SSK Ltd. (2011 (6) TMI 48 - BOMBAY HIGH COURT), we are of the considered view that the ld. CIT (A) has rightly deleted the addition u/s 145A of the Act made by the AO as the central excise duty on the stock lying in the goddown is not to be incurred unless the stock is removed. So, we find no illegality or perversity in the findings returned by the dl. CIT (A). Ground no.3 is determined against the Revenue. Addition of expenses on account of sales-tax written off made u/s 37(1) - Held that:- CIT (A) by following the decision rendered by the Sales-tax Tribunal as well as Hon’ble Allahabad High Court in assessee’s own case held that transfer of goods from Sahibabad, UP to Murthal, Haryana, was in the nature of central sale and as such liable to pay Central Sales-tax and is not a penalty for violation of Sales-tax Act as has been held by the AO. Moreover, items/go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on opening stock and closing stock. AO further made addition of ₹ 11,52,000/- on account of sales-tax return of being in violation of law. 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the additions made by the AO by accepting the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 5. Undisputedly, the assessee has received exempt income of ₹ 5,256/- and has suo motu made disallowance of ₹ 10,86,161/- by applying the provisions contained u/s 14A read with Rule 8D of the Income-tax Rules, 1962 (for short the Rules ). 6. Ld. DR for the Revenue challenging the impugned order contended inter alia that the AO has worked out the disallowance under Rule 8D as per accounts rendered by the assessee having been duly explained at page 6 of the assessment order; that section 114 of the Evidence Act, 1872 raises presumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntuality, the Assessing Officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the Assessing Officer is not, on the basis of the objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the Assessing Officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment. 10. Hon ble Apex Court in Godrej Boyce Manufacturing Company Ltd. vs. DCIT 394 ITR 449 (SC) thrashed the issue in controversy as to invoking of the provisions contained under Rule 8D of the Rules by observing as under :- 37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 is determined against the Revenue. GROUND NO.2 14. The Revenue challenged the deletion of disallowance of ₹ 14,85,571/- on account of CSR expenses. The ld. AR challenging the impugned order relied upon the order passed by AO who has disallowed the expenditure claimed by the assessee in profit loss account on account of CSR on the ground that such expenses should be incurred from the surplus profit after tax and it need not claim these expenses in the books of account as expenditure for determining the taxable profit. 15. The ld. CIT (A) deleted the disallowance made by the AO on account of CSR by following the order dated 19.05.2015 for AY 2011-12 passed in assessee s own case wherein such expenses were deleted. The ld. DR has failed to controvert if facts of this case are different from AY 2011-12. 16. Hon ble Karnataka High Court in case cited as CIT Anr. Vs. Infosys Technologies Ltd. (2014) 360 ITR 714 allowed the expenditure incurred by Infosys Technologies Ltd. on account of CSR by installing traffic signal near the establishment to ease the traffic congestion u/s 37(1) of the Act by holding that such expenses can be held to be expanded wholly an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Loknete Balasaheb Desai SSK Ltd. 339 ITR 288 decided the issue in controversy as under :- The expression 'incurred by the assessee' in section 145A (b) is followed by the words 'to bring the goods to the place of its location and condition as on the date of valuation'. Thus, the expression 'incurred by the assessee' relates to the liability determined as tax, duty, cess or fee payable in bringing the goods to the place of its location and condition of the goods. Explanation to section 45A(b) makes it further clear that the income chargeable under the head 'profits and gains of business' shall be adjusted by the amount paid as tax, duty, cess or fee. Therefore, the expression 'incurred' in section 115A(b) must be construed to mean the liability actually incurred by the assessee. [Para 9] The Apex Court in the case of Collector of Central Excise v. Polyset Corpn. 2000 (115) ELT 41 has held that the dutiability of excisable goods is determined with reference to the date of manufacture and the rate of excise duty payable has to be determined with reference to the date of clearance of the goods. Therefore, though the date of manu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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