TMI Blog2018 (6) TMI 1541X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed. Inclusion import duty to the income of the assessee - Held that:- As the facts circumstances are exactly identical in this year, respectfully following the Tribunal’s order in earlier years, we direct the AO to exclude the import duty entitlements from the total income of the assessee. This issue of the assessee’s appeal is accordingly allowed. Disallowance on Pooja expenses - Held that:- Tribunal in the assessee's own the A.Y. 1997-98 and 2003-04 has decided a similar issue in favour of the assessee. Disallowing the claim of payment made to relatives of deceased employees - Held that:- Respectfully following the Tribunal’s order in earlier years, we direct the AO to allow the claim of payment made to relatives of deceased employees. This issue of the assessee’s appeal is accordingly allowed. Disallowing expenses relatable to exempt income - Held that:- We find that the Tribunal in earlier years also remanded the matter back to the file of the AO with directions to decide a reasonable disallowance by following the decision in the case of Godrej & Boyce Manufacturing Company Limited Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. Accordingly, we also direct t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Silvia Apparel Ltd. 80,00,000 (f) Sushmita Holdings Ltd. 4,75,02,610 (g) Mafatlal Engineering Industries Limited (MEIL) 3,91,15,000 (h) MEIL by Mafatlal Fine Spg. Mfg.Co. Ltd. 2,77,50,000 Total 15,67,14,262 2. Without prejudice, the learned Commissioner (Appeals) ought to have appreciated that interest on advances to MEIL was to accrue only after all the dues of the financial institutions had been paid and that the question of comparing the interest paid with the interest receivable from MEIL did not arise in the present year. 3. The learned Commissioner (Appeals) ought to have appreciated that the advances to Ibiza Industries Ltd., Mafatlal S.A. Intex Ltd., Mafatlal V.K. Intex Ltd., Repal Apparel P. Ltd., Silvia Apparel Ltd., Sushmita Holdings Ltd., were for the purpose of the business of the appellant. 4. The learned Commissioner (Appeals) ought to have appreciated that the Assessing Officer was not justified in cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing both the parties and on perusal of the record, we find that the similar issue had come up before this Tribunal in assessee's own cases in the assessment years (supra) and the Tribunal has restored this issue to the file of AO for fresh adjudication. Accordingly, we set aside the order of Ld. CIT(A) on this issue and restore the same to the file of AO to decide the issue denovo. Ground No.1 is allowed for statistical purposes. 4. The learned D.R. also stated that the issue is exactly identical and matter can be remitted back in terms of the Tribunal s decision. 5. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the Tribunal consistently set aside the issue to follow the precedent laid down by Hon ble Supreme Court in the case of S.A. Builders 288 ITR 1 (SC). On same reasoning, we set aside this issue to the file of the AO. This issue is allowed for statistical purposes. 6. The next issue in this appeal of assessee is against the order of CIT(A) confirming the addition of valuation of closing of finished goods. For this assessee has raised the following ground:- Valuation of closing stock 7. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in taxing interest on Government securities. For this, assessee has raised following Ground No.10: Interest on securities 10. The learned Commissioner (Appeals) erred in confirming the action of the Assessing Officer in bringing to tax a sum of ₹ 15,840 as interest on Government Securities. 12. At the outset, the learned Counsel for the assessee stated that this issue is adjudicated in assessee s own case by Tribunal in earlier years and Tribunal in ITA No.4597/Mum/2015 for assessment year 2009-10 vide order dated 21.10.2015 has adjudicated the issue in para Nos.15 16 as under: 15. The facts with regard to disallowance of interest on securities of ₹ 15,840/- are that the AO noticed that the assessee has received interest on securities of ₹ 15,840/- and since the assessee did not receive receipt thereof from the State Government, the assessee did not mentioned it in the profit and loss account Therefore, the assessing officer did not allow deduction thereof and added the same to the total income of the assessee. The Id. CIT(A) followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n during the year of accounting. Following the said order of the Tribunal dated 16=04.2008 for the A.Y, 1997-98 in the assessee's own case, we direct the AO to exclude the import duty entitlement from the total income of the assessee for the year under appeal. Thus, Ground No.18 is allowed. 16. As the facts circumstances are exactly identical in this year, respectfully following the Tribunal s order in earlier years, we direct the AO to exclude the import duty entitlements from the total income of the assessee. This issue of the assessee s appeal is accordingly allowed. 17. The next issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance on Pooja expenses of ₹2,30,445/-. For this, assessee has raised following ground Nos.12 13: Pooja expenses 12. The learned Commissioner (Appeals) erred in confirming disallowance in respect of pooja expenses of ₹ 2,30,445. 13. The learned Commissioner (Appeals) erred in not considering fact that in the Income-tax Appellate Tribunal order dated June 9, 1998 in the case of erstwhile Mafatlal Fine and Spg. Mfg. Co. Ltd. for the assessment year 1987-88, such expenses on pooja wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of the assessee s appeal is accordingly allowed. 22. The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing expenses relatable to exempt income. For this, assessee has raised following ground Nos.17 18: Setting Off interest expenses against dividend income: 17. The learned Commissioner (Appeals) erred confirming the action of the Assessing Officer in estimating disallowing expenses to the extent of ₹ 53,70,804 and setting off the same against dividend income. 18. The learned Commissioner (Appeals) ought to have appreciated that the learned Assessing Officer had not established any nexus and therefore the expenditure of ₹ 50,70,804 cannot be set off against the dividend income. 23. At the outset, the learned Counsel for the assessee stated that the Tribunal in ITA No.4597/Mum/2005 for assessment year 1999-2000 in assessee s own case vide order dated 21.10.2015 has set aside the issue to the file of the AO to decide a reasonable disallowance by following the decision of Hon ble Bombay High Court in the case of Godrej Boyce Manufacturing Company Limited Vs. DCIT (2010) 328 ITR 81 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure incurred by the Assessee, The AO is directed to follow the decision rendered by the Hon'ble High Court in Godrej Boyce Mfg. Co. Ltd (supra). Resultantly, Grounds No. 25 and 26 are allowed for statistical purposes. 24. We find that the Tribunal in earlier years also remanded the matter back to the file of the AO with certain directions. Accordingly, we also direct the AO to decide the issue in terms of the directions of Tribunal in 1999-2000. Accordingly, this issue is remanded back to the file of the AO. 25. The next issue in this appeal of assessee is against the order of the CIT(A) confirming the action of the AO in not excluding the CFC grant received in pursuant to the Montreal Protocol for phasing out production of refrigerant gases. For this assessee has raised following ground No.19: CFC Grant 19. The learned Commissioner (Appeals) erred in confirming the action of the Assessing Officer in not excluding the CFC grant of ₹ 17,48,87,557 received pursuant to the Montreal Protocol for phasing out production of Refrigerant gases. 26. Briefly stated facts are that the assessee company is engaged in the business of manufacture and trading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 2003-04 and subsequent assessment years. Hence, earlier this type of grant was always taxable. As the assessee has already offered for tax CFC grant of ₹1748.89 lacs in the return of income, no further addition is required to be made on this account. On the other hand, the appellant submitted that later on since such grant were to be considered as capital receipt, on the same principle similar effect should be given this year also. The appellant s ground is not tenable as the amendment has come by the Finance Act 2002 i.e. with effect from A.Y. 2003-04. Therefore, the AO s action is upheld. Aggrieved, now assessee is in second appeal before Tribunal. 28. Before us, the learned Counsel for the assessee Shri Girish Dave along with Ms Kadambari Dave argued that this grant received by assessee pursuant to Montreal Protocol for phasing out production of refrigerant gases was transferred to the capital reserve account No.3 and the assessee while computing total income included the same in the total income. But the assessee by Note No.14 to the statement of total income claimed the same in the nature of capital receipt and therefore, excluded from the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to go through the copy of resolution of Board of Directors dated 7.6.2000 (which is enclosed in assessee s paper book at page No.166), whereby resolution is passed to execute Performance Agreement with the Government of India and the assessee in view of Government order No.11/7/99-OC dated 2.3.2000 issued by Government of India, Ministry of Environment Forests, Ozone cell for implementation and adherence to quota system for CFC production and CFC phasing out obligations in India. In consequence to this, a Performance Agreement between assessee and the Government of India through Director (Ozone Cell), Ministry of Environment and Forests, Government of India was entered into on 25.8.2000, whereby obligation casted upon the beneficiaries by Government of India reads vide clause 2 as under: 2. The Beneficiary agrees to abide by the obligations casted upon it in Government Order No.11/7/99-OC dated 2.3.2000 and its annexures as mentioned below:- i) Implement the CFC Production Sector gradual phase out Project in accordance with the Annual Program for each Program year from 1999 to 2010 as stated in Annexure I of the Government Order No.11/7/99-OC dated 2.3.2000. ii) Compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st incurred in changeover from CCFC for phasing out of production of refrigerant gases. Before us revenue has relied on the decision of Hon ble Madras High Court in the case of CIT Vs. Ramaniyam Homes Private Limited (2016) 68 Taxmann.com 289 (Madras) and according to revenue, the grant received by assessee is business receipt and for this the learned Sr. D.R. relied on para 39 of the judgement, which reads as under: 39. Therefore, it is not the actual receipt of money, but the receipt of a benefit or perquisite, which has a monetary value, whether such benefit or perquisite is convertible into money or not, which is what is covered by Section 28(iv). Say for instance, a gift voucher is issued, enabling the holder of the voucher to have dinner in a restaurant, it is a benefit of perquisite, which has a monetary value. If the holder of the voucher is entitled to transfer it to someone else for a monetary consideration, it becomes a perquisite convertible into money. But, irrespective of whether it is convertible into money or not, it should have a monetary value so as to attract Section 28(iv). A monetary transaction, in the true sense of the term, can also have a value. Any num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any debate or controversy, was to phase out ODS under the Montreal Protocol. The Government of India Office Memorandum stated that the assessee s project was examined and recommended by the Ministry of Environment and Forests, for approval of the Executive Committee. The Executive Committee approved the project to be implemented by the World Bank at cost of US $ 5,30,000. It was stated that the release of grant would be subject to terms and conditions as decided by the Government of India and in terms of the Montreal Protocol. The accounting or tax treatment of the capital cost of the equipment had nothing to do with the sanction of the grant to the appellant- assessee. The grant was only of a sum of ₹ 1.84 crores a appraised by the technical reviewer of the World Bank, as against ₹ 3.2 crores cost of the plant. There was no correlation whatsoever between lease rentals paid by the assessee and the grant. The grant was made in public interest to protect the environment from ODS. The grant had nothing to do with the setting up of the industry or its economics or profitability. Accordingly, the grant received by the assessee was capital receipt and not liable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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