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TMI Blog2014 (8) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 for assessment year 2007-08 Hon'ble Members; Kindly refer to above stated appeals are fixed for hearing on 22.7.2014. It is respectfully submitted that we are busy with the filing of the returns upto 31st July 2014 and require some time to file the paper book in these appeals. Your honour is therefore requested to give adjournment in these appeals. Thanking you, Yours faith fully, Sd/- (C.A. T.N. Singla) Counsel for the appellant" It was pointed out to Shri. Neeraj Sharma that in this case last and final opportunity was granted on 17.4.2014. It was made clear that no further opportunity would be given. His attention was invited to the order passed by the Bench on 17.4.2014 which reads as under: "17.4.2014 Present for assessee: Shri Dinesh Sharma Department: Dr Amarveer Singh Ld. Counsel for the assessee has been given many adjournments. Ld. Counsel for the assessee has prayed for last opportunity. The case is being represented by Shri T.N. Singla. It is made clear that no further opportunity would be given to assessee. Therefore the case is adjourned to 22.7.2014." Therefore in this case Shri Neeraj Sharma wanted to contact Mr. T.N. Singla who is argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on 17.4.2014 that too after more than 22 adjournments on behalf of the assessee then the Ld. Counsel for the assessee should have taken a precaution to prepare and argue the appeals on that date but he preferred to seek simple adjournment requesting that he is busy with other work. In these circumstances we are constrained to reject adjournment application and decided to hear the appeals on ex-parte basis. ITA No. 511/Chd/2009-Assessee's appeal In this appeal the assessee has raised following grounds: "1 That he order of LD. CIT(A) is bad, against the facts and law. 2. That he Ld. CIT(A) has wrongly confirmed the disallowance of weighted deduction on research and development expenditure incurred during the year u/s. 35(2AB) of the Act amounting to Rs. 23729464/-. 3. That the Ld. CIT(A) has wrongly confirmed the disallowance of seed marketing expenses amounting to Rs. 4,11,68,104/-. 4. That the Ld. CIT(A) has wrongly confirmed the disallowance of expenses amounting to Rs. 37,50,152/- u/s. 40(a)(ia) of the Act. 5. That the Ld. CIT(A) has wrongly confirmed the disallowance of expenses u/s. 14A of the Act amounting to Rs. 6340937/- out of Rs. 109,32,198/-. 6. That the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority in writing in Form No. 3CM. The assessee has simply submitted that R & D Unit is recognized by the Government. Even before me, the assessee has not given the order of the prescribed authority. The decision of Ahmedabad Bench in the case of Claris Life Science Ltd. 112 ITD 307 is not applicable as in that case the condition of furnishing the order of the prescribed authority has not been waived. Furnishing the order of prescribed authority is the necessary requirement. Thus this ground of the assessee is dismissed." 9. Before us. the Ld. D.R. for the revenue submitted that disallowance is justified because no details were furnished by the assessee. Similar issue came up for consideration in assessment year 2005-06 before the Tribunal in ITA No. 771/Chd/2008 and same was decided against the assessee in the absence of details. 10. After considering the submissions of the Ld. D.R. for the revenue and the material on record we find that identical issue came up for consideration of the Tribunal in assessment year 2005-06 in ITA No. 771/Chd/2008 in assessee's own case and the issue was decided vide para 15 to 19 which are as under: "15 Ground No. 6-After hearing both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case are different and distinguishable. In the case of Claris Life Science Ltd., 112 ITD 307 (Ahd), the assessee had made an application prior to the date of approval whereas for the present case, the assessee made application on 08/01/2007 and the approval was granted retrospectively w.e.f. 01/04/2006. Moreover, the prescribed authority has to satisfy himself on the basis of the data supplied by the assessee. The assessee has attached the details which are to be submitted for getting the approval. Certain data is supplied to the prescribed authority. The prescribed authority examines the details of the data and then comes to a conclusion. In the present case, the prescribed authority after examining the case granted the approval and that too w.e.f. 01/04/2006. Now the question arises, there has to be an enquiry as to why the prescribed authority did not grant the approval for the A.Y. 2005-06. The approval is not a mere formality. The prescribed authority has to go through the entire data supplied by the assessee and satisfy himself. Since there has to be an enquiry into the facts as to why the prescribed authority did not grant approval for the A.Y. 2005-06, then this addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -91. The loss was computed at Rs. 427,63,353/- inter alia by making several additions and disallowances. The assessee incurred an expenditure of Rs. 19,48,125/- as expenditure on account of customer introduction charges which were debited as "deferred revenue expenses" in the balance sheet. The expenditure was written off over a period of five years starting from the assessment year 1990-91 and accordingly the assessee claimed reduction of Rs. 389,625/- in the return. The claim was allowed by the Assessing Officer. In appeal before the Ld. CIT(A) the assessee claimed an additional ground that the entire deferred revenue expenses were deductible in the assessment year in appeal. The appeal was allowed. The Tribunal restored the matter to the Assessing Officer. The Assessing Officer allowed only a reduction of Rs. 389,625/- and disallowed the claim of Rs. 15,58,500/- on the ground that this was not claimed by the assessee in its return of income in the assessment year 1990-91. The Ld. CIT(A) held that the Assessing Officer erred in disallowing the expenditure on the sold ground that no claim for deduction of the amount was made in the return of income. This order was confirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was asked to furnish the details of tax deducted at source and in response the details were filed which have been annexed by the Assessing Officer as per annexure AI. It was noted that the expenses debited to profit and loss account were Rs. 37,50,152/- (remaining amount was of capital nature) on which TDS was not deducted therefore a sum of Rs. 37,50,152 was disallowed. 14. On appeal before the Ld. CIT(A) it was mainly stated that disallowance can be made only if the expenditure was payable and not if the same has already been paid. Since the amount of the expenses have already been paid, therefore the provision of deduction of tax were not applicable and no disallowance can be made. 15. The Ld. CIT(A) after examination of the submissions discussed the issue in detail and decided the same against the assessee. 16. The Ld. D.R. for the revenue was heard. 17. After considering the submissions of Ld. D.R. for the revenue and relevant material on record, we find that recently identical issue has been discussed in detail and was adjudicated by this Bench of the Tribunal in case of DCIT V. Rana Sugars in ITA No. 48/Chd/2011 and Cross Objections No. 20/Chd/2011. Interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Special Bench whereas Hon'ble Gujarat High Court has after detailed discussion, over ruled the decision of Special Bench. 24. In case of Sikandarkhan N Tunwar (supra) the assessee was engaged in the business of transport contractor and commission agent. During the scrutiny assessment it was noticed by the Assessing Officer that expenditure in the nature of payment made by the assessee to its sub-contractors to the tune of Rs. 8.74 crores. Since the assessee had admittedly not deducted the tax from such payments and individual payments to transporters exceeded limit of Rs. 20,000/- for a single trip and aggregated over Rs. 50,000/- in the year though the assessee had obtained form No. 15-I from such sub-contractors but the same were not furnished along with the particulars in Form 15-J to the CIT before due date and therefore, the expenditure on account of payment to sub-contractors was disallowed by invoking the provisions of section 40(a)(ia) of the Act. 25. On appeal the ld. CIT(A) confirmed this order. 26. When the matter traveled to the Tribunal the appeal of the assessee was allowed by relying on the decision of Merilyn Shipping Transporters V. ACIT (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Proviso to Section 40(a)(ia), however, enables the assessee to take such deduction in subsequent year, if tax is deducted in such year or though deducted during the previous year but paid after the due date specified in sub-Section(1) of Section 139 of the Act. 18. In such context, therefore, the question arises whether under Section 40(a)(ia) of the Act disallowance of the expenditure payment of which, though required deduction of tax at source has not been made would be confined only to those cases where the amount remains payable till the end of the previous year or would include all amounts which became payable during the entire previous year. 19. Decision in the case of M/s. Merilyn Shipping & Transports vs. ACIT (supra) was rendered by the Special Bench by a split opinion. Learned Accountant Member who was in minority, placed heavy reliance on a decision of Madras High Court in the case of Tube Investments of India Ltd. and another vs. Assistant Commissioner of Income-Tax (TDS) and others reported in [2010] 325 ITR 610 (Mad). Learned Judge did notice that the High Court in such case was concerned with the vires of the statutory provision but found some of the observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been deposited before the due date. By any intendment or liberal construction of such provision, the liability cannot be fastened if the plain meaning of the section does not so permit. 22. For the purpose of the said section, we are also of the opinion that the terms payable and paid are not synonymous. Word paid has been defined in Section 43(2) of the Act to mean actually paid or incurred according to the method of accounting, upon the basis of which profits and gains are computed under the head Profits and Gains of Business or Profession. Such definition is applicable for the purpose of Sections 28 to 41 unless the context otherwise requires. In contrast, term payable has not been defined. The word payable has been described in Webster's Third New International Unabridged Dictionary as requiring to be paid: capable of being paid: specifying payment to a particular payee at a specified time or occasion or any specified manner. In the context of section 40(a)(ia), the word payable would not include paid. In other words, therefore, an amount which is already paid over ceases to be payable and conversely what is payable cannot be one that is already paid. When as righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter XVII-B but such tax has not been deducted or if deducted not paid before the due date. This provision no-where requires that the amount which is payable must remain so payable throughout during the year. To reiterate the provision has certain strict and stringent requirements before the unpleasant consequences envisaged therein can be applied. We are prepared to and we are duty bound to interpret such requirements strictly. Such requirements, however, cannot be enlarged by any addition or subtraction of words not used by the legislature. The term used is interest, commission, brokerage etc. is payable to a resident or amounts payable to a contractor or sub-contractor for carrying out any work. The language used is not that such amount must continue to remain payable till the end of the accounting year. Any such interpretation would require reading words which the legislature has not used. No such interpretation would even otherwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any such meaning. If the interpretation as advanced by the assessees is accepted, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any further interpretation. This is the fundamental argument of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT(supra) to adopt a particular view. 26. While interpreting a statutory provision the Courts have often applied Hyden's rule or the mischief rule and ascertained what was the position before the amendment, what the amendment sought to remedy and what was the effect of the changes. 27. In the case of Bengal Immunity Co. Ltd. vs. State of Bihar and others reported in: AIR 1955 SC 661, the Apex Court referred to the famous English decision in Hyden's case wherein while adopting restrictive or enlarging interpretation, it was observed that four things are to be considered, (1) what was the common law before making of the act (2) what was the mischief and defect in which the common law did not provide. (3) what remedy the Parliament had resolved and adopted to cure the disease and (4) true reason of the remedy. 28. In such context, the position prevailing prior to the amendment introduced in Section 40(a) would certainly be a relevant factor. However, the proceedings in the Parliament, its debates and even the speeches made by the proposer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board and the fact of such deletion when the act came to be passed in its present form. There is a consensus of opinion that these are not aids to the construction of the terms of the Statute which have of course to be given their plain and grammatical meaning (See: Ashvini Kumar Ghosh v. Arabinda Bose,: 1953 SC R 1 : (AIR 1952 SC 369) (Z24) and Provat Kumar Kar v. William Trevelyan Curtiez Parker,: AIR 1950 Cal 116 (Z25). It is only when the terms of the statute are ambiguous or vague that resort may be had to them for the purpose of arriving at the true intention of the Legislature. 31. It can thus be seen that the debates in the Parliament are ordinarily not considered as the aids for interpretation of the ultimate provision which may be brought into the statute. The debates at best indicate the opinion of the individual members and are ordinarily not relied upon for interpreting the provisions, particularly when the provisions are plain. We are conscious that departure is made in two exceptional cases, namely, the debates in the Constituent Assembly and in case of Finance Minister's speech explaining the reason for introduction of a certain provision. The reason why a cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... express language, are relegated to the background and are liable to be ignored. 33. In the case of Agricultural Produce Market Committee, Narela, Delhi vs. Commissioner of Income Tax and anr. reported in AIR 2008 SC(Supplement) 566, the Supreme Court noticed that prior to Finance Act, 2002, the Income Tax Act did not contain the definition of words Local Authority. The word came to be defined for the first time by the Finance Act of 2002 by explanation/definition clause to Section 10(20) of the Act. It was further noticed that there were significant difference in the definition of term local authority contained under Section 3(31) of the General Clauses Act, 1987 as compared to the definition clause inserted in Section 10(20) of the Income Tax Act, 1961 vide Finance Act, of 2002. In this context it was observed that:- 27. Certain glaring features can be deciphered from the above comparative chart. Under Section 3(31) of the General Clauses Act, 1897, local authority was defined to mean a municipal committee, district board, body of port commissioners or other authority legally entitled to the control or management of a municipal or local fund. The words other authority in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to them under the State Co-operative Societies Acts of the States concerned, while other banks and financial institutions did not have such speedy remedies and they had to file suits in civil courts. 35. In the case of National Mineral Development Corporation Ltd. vs. State of M.P. and another reported in AIR 2004 SC 2456, the Apex Court observed as under:- 29. The Parliament knowing it full well that the iron ore shall have to undergo a process leading to emergence of lumps, fines, concentrates and slimes chose to make provision for quantification of royalty only by reference to the quantity of lumps, fines and concentrates. It left slimes out of consideration. Nothing prevented the Parliament from either providing for the quantity of iron ore as such as the basis for quantification of royalty. It chose to make provision for the quantification being awaited until the emergence of lumps, fines and concentrates. Having done so the Parliament has not said fines including slimes. Though 'slimes' are not 'fines' the Parliament could have assigned an artificial or extended meaning to 'fines' for the purpose of levy of Royalty which it has chosen not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38. In the result, we are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT(surpa), does not lay down correct law. 39. We answer the questions as under:- Question (1) in the negative i.e. in favour of the Revenue and against the assessees. Question (2) also in the negative i.e. in favour of the Revenue and against the assessees. " Thus it is clear that Hon'ble Gujar at High Court has considered all aspects of the issues raised in the decision of Special Bench in case of Merilyn Shipping Transporters V. ACIT (supra). We further find that that even Hon'ble Calcutta High Court has overruled this decision in case of CIT Vs. Cresent Export Syndicate. Moreover Chandigarh Bench of the Tribunal consistently has been following the decision of Hon'ble Gujarat High Court in case of CIT V. Sikandarkhan N Tunwar and others (supra) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 986] 4 SCC 146; AIR 1986 Hon'ble Supreme Court 1780, it has been held by this court that the dismissal of a special leave petition in limine by a non-speaking order does not justify any inference that, by necessary implication, the contentions raised in the special leave petition on the merits of the case have been rejected by the Supreme Court. It has been further held that the effect of a non-speaking order of dismissal of a special leave petition without anything more indicating the grounds or reasons of its dismissal must, by necessary implication, be taken to be that the Supreme Court had decided only that it was not a fit case where special leave should be granted. In Union of India v. All India Services Pensioners' Association [1988] 2 SCC 580; AIR 1988 Hon'ble Supreme Court 501, this court has given reasons for dismissing the special leave petition. When such reasons are given, the decision becomes one which attracts article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India. It, therefore, follows that when no reason is given, but a special leave petition is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s its discretionary jurisdiction to grant or not to grant leave to appeal If the petition seeking grant of special leave is dismissed, it is an expression of opinion by the Supreme Court that a case for invoking the appellate jurisdiction of the court was not made out. An order refusing special leave to appeal may be by a non speaking order or by a speaking order. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in the place of the order under challenge. All that it means is that the Supreme Court was not inclined to exercise its discretion so as to allow the appeal being filed. Whatever be the phraseology employed in the order of dismissal, if it is a non-speaking order, i.e., it does not assign reasons for dismissing the special leave petition, it would neither attract the doctrine of merger so as to stand substituted in the place of the order put in issue before it, nor be a declaration of law by the Supreme Court under article 141 of the Constitution for there is no law which has been declared. If the order refusing special leave to appeal is a speaking order, i.e., it gives reasons for refusing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in the same and rejected the claim of the assessee. 21. Before us. Ld. D.R. for the revenue strongly supported the order of the Assessing Officer and the Ld. CIT(A). 22. After considering the submissions of the Ld. D.R. for the revenue and the relevant material on record, we find that identical issue came up for consideration of the Tribunal in assessee's own case in assessment year 2005-06 in ITA No. 771/Chd/2008. This issue was adjudicated vide para 12 which reads as under: "12 We have considered the rival submission carefully and find that Hon'ble Bombay High Court in case of Godrej And Boyce Mfg. Co. Ltd. V. Deputy CIT and Another (supra) has clearly held Rule 8D is applicable from AY 2008-09. Therefore this rule cannot be applied in the present case which is for assessment year 2005-06. At the same time reasonable disallowances has to be made. Considering over all fact of the case we are of the opinion that disallowance of Rs. 1 Lac would meet the ends of justice. Accordingly we set aside the order of Ld. CIT (A) and direct AO to make disallowance of Rs. 1 Lac under section 14A." In the present year also rule 8D is not applicable and therefore only reasonable d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, the Ld. CIT(A) confirmed the addition. 30. Before us. Ld. D.R. for the revenue strongly supported the order of the Ld. CIT(A). 31. After considering the submissions of the Ld. D.R. for the revenue and the relevant material on record, we find that the issue has been decided vide para 7.3 which is under: "I have carefully considered the rival submissions. The assessee has railed to give any detail regarding the deduction of TDS on the repair bill. The addition made by the Assessing Officer is con and this ground of the assessee is dismissed." In our opinion, the Ld. CIT(A) has correctly decided the issue because the assessee was not able to furnish any evidence regarding deduction of tax. Therefore we confirm his order. 32. Ground No. 8-Brief facts of the case are that assessee has given interest free advances of Rs. 101,36,000/- to Swift Fundamental Research and Education Society and Rs. 2 crores to Swift Infrastructure. Both these parties were sister concerns of the assessee. The assessee was asked why proportionate interest should not be disallowed. In response it was stated vide letter dated 25.12.2008 as under: "An amount of Rs. 101,36,000/- was given to Swift Founda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Chauhan, ITA No. 851/Chd/2008 dated 27.2.2009 (Placed at Annexure 3), after referring the decision of Hon'ble Supreme Court in the case of S.A. Builders and also the decision of Hon'ble Supreme Court in the case of Abhishek Industries has upheld the disallowance of interest. In another dec is ion i.e. in the case of Trident Infotec, in ITA No. 800/Chd/2008 dated 27.1.2009 (placed at Annexure 4), ITAT, Chandigarh has upheld the disallowance of interest." In our opinion, the Ld. CIT(A) has correctly decided the issue against the assessee as the assessee has not shown what is the business expediency. Some general statement is not sufficient. Therefore we find nothing wrong in the order of CIT(A) and confirm the same. 36. Ground No. 9-After hearing the submissions of the Ld. D.R. for the revenue we find that during assessment proceedings the Assessing Officer noticed that the assessee has debited previous year expenses amounting to Rs. 1071907/- to the profit and loss account. The assessee was asked to furnished the details and show how such expenses were allowable in the present year. The assessee could not explain how such expenses were allowable during the year, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit were shown at Rs. 13,47,52,105/-. Some details were filed but according to the Assessing Officer other income like interest, discount receipts and insurance claim etc. cannot be said to have been derived from industrial undertaking, therefore such amounts were reduced from the profits for the purpose of computing the deduction u/s. 80IB in the light of the decision of Hon'ble Supreme Court in case of Pandian Chemicals Ltd. V CIT, 262 ITR 278. 42. On appeal before the Ld. CIT(A) it was submitted as under: "The income from other sources include discount received, excess recovery, salary received in lieu of notice, insurance claim received and interest received on FDRs purchased for L/C purposes. These receipts re part of business income and cannot be treated as income from other sources as these receipts are directly related to the business of appellant and expenses incurred for the business during the year." 43. The Ld. CIT(A) did not find force in the submissions and dismissed this ground. 44. Before us. Ld. D.R. for the revenue strongly supported the order of the Ld. CIT(A). 45. After considering the submissions of Ld. D.R. for the revenue and the relevant mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D expenses amounting to Rs. 208,67,119/-." This issue was adjudicated vide para 6 & 7 which are as under: 6. We find that similar issue arose before the Tribunal in ITA No. 636/Chd/2001 relating to assessment year 1997-98 wherein it was held as under:- "........Quite clearly, the assessee brought out before the Assessing Officer as well as before the CIT(A) that the manner of maintenance of the records and the system of apportionment of impugned expenses on the basis of the proportionate turnover of various units was accepted in the past and there no cogent reasons have been brought out by the Revenue which would require departure from the same." 7. The assessee before us had allocated the impugned expenses on the basis of sales ratio, which is an accepted accounting standard applicable to computation of income of various units. The factum of incurring of the expenditure is not questioned. The only point of dispute was the apportionment of the impugned expenses. The assessee had apportioned the seed marketing and Director's salary expenses on the basis of sales ratio and the R & D expenses on actuals whereas the Assessing Officer had adopted the basis of profit ratio for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision we decide this issue in favour of assessee and set aside the order of the Ld. CIT(A) and remit the matter back to the file of Assessing Officer with a direction to examine the genuineness and nature of expenditure and then allow the same if the same are genuine and are of revenue nature. 54. Ground No. 3-Identical issue has been decided while adjudicating assessee's appeal in ITA No. 511/Chd/2011 for assessment year 2006-07 vide para 10. Therefore following that decision we decide this issue against the assessee. 55. Ground No. 4-Identical issue has been decided while adjudicating assessee's appeal in ITA No. 511/Chd/2011 for assessment year 2006-07 vide para 22 and following the same we restrict the disallowance in this year to Rs. 4 lakhs. Thus this ground is partly allowed. 56. Ground No. 5-Brief facts of the case are that during assessment proceedings the Assessing Officer noticed that the assessee has claimed expenditure amounting to Rs. 4,60,000/- under the head "corporate and other administrative expenses". The assessee did not furnish any details. It was noticed that this payment was towards penalty but no details of this penalty expenses were furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on the disallowance made by the Assessing Officer on the deduction claimed by the assessee u/s. 80IB of the Act. 3. That the Ld. CIT(A) has gravely erred in law and on facts in nullifying the recompilations of the profits made by the Assessing Officer without appreciating the fact that the adjustment was made as per Explanation 1(f) to Sec. 115JB of the Act. 4. That on the facts and circumstances of the case and in law the Ld. CIT(A) has gravely erred in deleting the addition made by the Asses sing Officer and applying the sales ratio in apportioning the expenses without appreciating the Assessing Officer's finding that the expenditure between different units should be allocated in the profit ratio." 65. Ground No. 1-Brief facts of the case are that during assessment proceedings the Assessing Officer noticed that the assessee had raised secured loans from bank, therefore the assessee was having interest bearing funds. It was further seen that the assessee has diverted interest bearing funds by way of interest free advances to Swift Fundamental Research and Education Society, therefore the Assessing Officer disallowed average rate of interest @ 4.5% and thus disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have enquired as to whether the interest free loan was given to the sister company (which is subsidiary of the assessee) as a measure of commercial expediency, and if it was, it should have been allowed. In the present case, neither the High Court not the Tribunal nor other authorities have examined whether the amount advanced to the sister concern was by way of commercial expediency. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. We wish to make it clear that it is not our opinion that in every case interest on borrowed loan has to be allowed if the assessee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. " Above observation makes it clear that the authorities are required to examine whether there is commercial expediency or not?" Thus from above it is clear that expediency has to be examined. The Ld. CIT(A) has simply observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee brought out before the Assessing Officer as well as before the Ld. CIT(A) that the manner of maintenance of the records and the system of apportionment of impugned expenditure on the basis of the proportionate turnover of various units was accepted in the past and there no cogent reasons have been brought out by the revenue which would require departure from the same. In view of the above, respectfully following the decision of ITAT in the assessee's own case, this ground of appeal is decided in favour of the appellant." 70. Before us, the Ld. D.R. for the revenue strongly supported the order of Assessing Officer. 71. After considering the submissions of Ld. D.R. for the revenue and relevant material on record, we find that the Ld. CIT(A) has decided the issue in favour of the assessee by following the order of the Tribunal in assessee's own case in earlier years. Therefore we find nothing wrong in the order of CIT(A) and confirm the same. 72. In the result, appeal of the Revenue in ITA No. 615/Chd/2011 is partly allowed. ITA No. 745/Chd/2012-Assessee's appeal 73. In this case the assessee has raised following grounds: "1. That the order of Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and so the expenditure incurred in relation to the income (and not the real/actual expenditure incurred) is to be added for calculating book prof. it u/s. 115JB of the Act. The appellant has relied upon the decision of Hon'ble Supreme Court in the case of Apollo Tyres (supra), but the ratio of that decision does not apply to the instant case, since that decision was on section 115J which is much different from section 115JB and moreover the Hon'ble Apex Court had merely held in that case that while determining tax u/s. 115J the Assessing Officer could not question the correctness of the profit and loss account prepared in accordance with Schedule VI to the Companies Act, 1956. 6.3.3. In view of the above discussion, it is held that the disallowance made u/s. 14A/Rule 8D is to be added to arrive at the book profits u/s. 115JB and the Assessing Officer has rightly made the adjustment in this regard." 78. Before us the Ld. D.R. for the revenue strongly supported the order of the Assessing Officer and the Ld. CIT(A). 79. After considering the submissions of Ld. D.R. for the revenue and the relevant material on record and observation of the Ld. CIT(A) we find that identical i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that rule 8D is not applicable in this year. Reasonable disallowance in this year is held to be Rs. 3 lakh and therefore we set aside the order of the CIT(A) and direct the Assessing Officer to disallow a sum of Rs. 3 lakhs. 83. Ground No. 3-Brief facts of the case are that during assessment proceedings the assessee was asked to provide the details of loans and advances given by the assessee. Perusal of the details showed that the assessee has given interest free advances to Chopsan Pharma and the detail of the same are as under: According to the Assessing Officer there was no business expediency for giving these loans, therefore he referred to the decision of Hon'ble High Court of Punjab & Haryana in case of CITV V Abhishek Industries, 286 ITR 1 and disallowed interest @ 10% amounting to Rs. 14,64,737/-. Disallowance was confirmed by the Ld. CIT(A) because no reply was filed by the assessee. 84. Before us. Ld. D.R. for the revenue strongly supported the order of the Assessing Officer and the Ld. CIT(A). 85. After considering the submissions of Ld. D.R. for the revenue and the relevant material on record, we find that this issue has been decided by us in assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because for resident global income is taxable. However, for the remaining investment Sec. 14A r.w.r. 8D would be applicable. Accordingly the Assessing Officer worked out disallowance as per Rule 8D at Rs. 57,10,834/-. 94. On appeal the disallowance was confirmed by the Ld. CIT(A). 95. Before us the Ld. D.R. for the revenue supported the order of the Assessing Officer and the Ld. CIT(A). 96. After considering the submissions of the Ld. D.R. for the revenue and the relevant material on record, we find that Hon'ble Bombay High Court in case of Godrej & Boycee (supra) has clearly held that rule 8D would be applicable from assessment year 2008-09, Therefore in this year rule 8D has to be applied and disallowance has to be made as per calculation of Rule 8D. Therefore we find nothing wrong with the order of Ld. CIT(A) and confirm his order. 97. Ground No. 3-Brief facts of the case are that the assessee has paid some commission to domestic sales but TDS has not been deducted. Therefore Assessing Officer invoked section 40(a)(ia) and disallowed a sum of Rs. 7,13,430/-. On appeal action of the Assessing Officer was confirmed by the Ld. CIT(A). 98. The Ld. D.R. for the revenue supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble High Court of Punjab & Haryana, the addition made in this year is also deleted. Ground of appeal No. 5 is allowed." In our opinion, once the Ld. CIT(A) has followed the decision of Hon'ble High Court of Punjab & Haryana then no fault can be found in his order. The Ld. D.R. for the revenue has not produced any contrary decision before us. Therefore we find nothing wrong in the order of CIT(A) and confirm the same. 106. In the result, appeal of the revenue in ITA No. 721/Chd/2012 is dismissed. ITA No. 799/Chd/2012-Revenue's appeal 107. In this appeal the revenue has raised the following effective grounds: "2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 184,18,422/- made by the Assessing Officer by invoking the provisions of section 145A of the Act. 3. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 14,702/- without considering the fact that the Assessing Officer had rightly made the said addition as per the provisions of section 36(1)(va) r.w.s. 2(24)(x). The Ld. C IT(A) has further ignored the fact that the addition was an agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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