TMI Blog2014 (8) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... . 80IB on its Parwanoo Unit No. 2 - interest and other items cannot be said to have been derived from industrial undertaking Profits eligible for deduction u/s. 80IB - R & D expenses should be allocated on the basis of actual expenditure incurred. We therefore set aside the order of Ld. CIT(A) and direct the Assessing Officer to allocate the expenses actually incurred by the assessee on R & D in the eligible unit. Proportionate interest has to be disallowed because the assessee had admittedly diverted interest bearing funds to the sister concern Variations for deduction to be allowed u/s. 80IB - Held that:- after per using the order of the income tax authorities, we do not find that such burden has been discharged by the Assessing Officer so as to reject the profits declared by the assessee in the respective units. Therefore we are not inclined to uphold the order of assessment as made by the Assessing Officer. Quite clearly, 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usy 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 arguing counsel and ask him to argue the appeal and matter was passed over. When the appeals were taken up again for hearing, Shri Neeraj Sharma inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 23729464/-. 3. That the Ld. CIT(A) has wrongly confirmed the disallowance of seed marketing expenses amounting to ₹ 4,11,68,104/-. 4. That the Ld. CIT(A) has wrongly confirmed the disallowance of expenses amounting to ₹ 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 ₹ 6340937/- out of ₹ 109,32,198/-. 6. That the Ld. CIT(A) has wrongly confirmed the disallowance of hire ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.3 which is as under: I have carefully considered the rival submissions. The Assessing Officer has denied the deduction as the assessee failed to furnish the order of the prescribed 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 considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certified date when the assessee has filed the application in time. In that case, the assessee had made an application vide letter dated 07/08/2000 and the approval was granted w.e.f. 27/02/2001. 48. In my opinion, the facts of the present 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of expenditure is of revenue or capital. This issue came up before the Hon'ble Delhi High Court in case of CIT V Jai Parabolic Springs Ltd. (supra). In that case the assessee filed return of income declaring a net loss at ₹ 4,40,36,000/- for the assessment year 1990-91. The loss was computed at ₹ 427,63,353/- inter alia by making several additions and disallowances. The assessee incurred an expenditure of ₹ 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 ₹ 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 ₹ 389,625/- and disallowed the claim of ₹ 15,58,500/- on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and set aside the order of the Ld. CIT(A) and remit the same to the file of Assessing Officer with a direction to examine the genuineness and nature of the expenditure and then allow the same if the same are genuine and are of revenue nature. 13. Ground No. 4-Brief facts of the case are that during assessment proceedings 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 ₹ 37,50,152/- (remaining amount was of capital nature) on which TDS was not deducted therefore a sum of ₹ 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the TDS on salary paid on behalf of the assessee. under such circumstances the assessee was not required to deduct the TDS on reimbursement on salary being made by it to M/s. Mercator Lines Ltd. 23. Hon'ble High Court has confirmed the decision of the Tribunal. Thus it is clear that Hon'ble Allahabad High Court was neither required nor has given detail reasons for approving 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 ₹ 8.74 crores. Since the assessee had admittedly not deducted the tax from such payments and individual payments to transporters exceeded limit of ₹ 20,000/- for a single trip and aggregated over ₹ 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical services payable to a resident, or amounts payable to a contractor or sub-contractor for carrying out any work on which tax is deductible at source and such tax has not been deducted or after deduction has not been paid before the due date, such amounts shall not be deducted in computing the income chargeable under the head Profits and Gains of Business or Profession irrespective of the provisions contained in Sections 30 to 38 of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an artificial charge on an amount which is otherwise not an income of the assessee, cannot be liberally construed. Undoubtedly if the language of the section is plain, it must be given its true meaning irrespective of the consequences. We have noticed that the provision makes disallowance of an expenditure which has otherwise been incurred and is eligible for deduction, on the ground that though tax was required to be deducted at source it was not deducted or if deducted, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These amounts are such on which tax is deductible at source under Chapter XVII-B. (c) Such tax has not been deducted or after deduction has not been paid on or before due date specified in sub-Section (1) of Section 39. For the purpose of current discussion reference to the proviso is not necessary. 24. What this Sub-Section, therefore, requires is that there should be an 'amount payable in the nature described above, which is such on which tax is deductible at source under Chapter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Merely because, accounts are closed on that date and the computation of profit and loss is to be judged with reference to such date, does not mean that whether an amount is payable or not must be ascertained on the strength of the position emerging on 31st March. 25. This brings us to the second aspect of this discussion, namely, whether this is a case of conscious omission and therefore, the legislature must be seen to have deliberately brought about a certain situation which does not require 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 observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Union of India and others reported in AIR 1958 SC 578, N.H. Bhagwati, J., observed as under:- 173. We do not propose to enter into any elaborate discussion on the question whether it would be competent to us in arriving at a proper construction of the expression fixing rates of wages to look into the Statement of Objects and Reasons attached to the Bill No. 13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word minimum came to be deleted from the provisions of the Bill relating to rates of wages and the Wage 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er:- The omission of the words as proposed earlier from the final definition is a deliberate and conscious act on the part of the legislature, only with the objective to provide protection to all the labourers or workers, who were the manual workers and were engaged or to be engaged in any scheduled employment. Therefore, there was a specific act on the part of the legislature to enlarge the scope of the definition and once we accept this, all the arguments regarding the objects and reasons, the Committee Reports, the legislative history being contrary to the 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been the easiest thing for Parliament to say that 'banking company' shall mean 'banking company' as defined in Section 5(c) and shall include 'co-operative bank' as defined in Section 5(cci) and 'primary co-operative bank' as defined in Section 5(ccv). However, the Parliament did not do so. There was thus a conscious exclusion and deliberate commission of cooperative banks from the purview of the RDB Act. The reason for excluding co-operative banks seems to be that co-operative banks have comprehensive, self-contained and less expensive remedies 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is appropriate to construe that the period of limitation prescribed under Section 8 of the Act specifically and expressly governs an application to be made under the said section and not the period prescribed under Article 137 of the Limitation Act. 37. In our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provision is amply clear. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 1990 Hon'ble Supreme Court 334; [1989] 4 SCC 187 (at page 344 of AIR 1990 S.C.): 22. It has been already notice that the special leave petition filed on behalf of the Union of India against the said judgments of the Delhi High Court were summarily dismissed by this court. It is now a well settled principle of law that when a special leave petition is summarily dismissed under article 136 of the Constitution, by such dismissal this court does not lay down any law, as envisaged by article 141 of the Constitution, as contended by the learned Attorney-General. In Indian Oil Corporation Ltd. v. State of Bihar [1987] 167 ITR 897; [1986] 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 imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an applicant to enter in its appellate jurisdiction not open otherwise and as of right. The jurisdiction conferred by article 136 is divisible into two stages; the first stage is up to the disposal of the prayer for special leave to appeal; the second stage commences if and when the leave to appeal is granted and the petition for special leave to appeal is converted into an appeal. While hearing the petition for special leave to appeal, the Supreme Court is called upon to see whether the petitioner should be granted such leave or not. While hearing such petition the Supreme Court does not exercise its appellate jurisdiction; it merely exercises 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 chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ld. CIT(A). Following the above we decide this issue against the assessee. 18. Ground No. 5-Brief facts of the case are that during assessment proceedings the Assessing Officer noticed that assessee has invested a sum of ₹ 15,38,82,785/- in shares of other companies, therefore the Assessing Officer invoked the provisions of section 14A r.w.r. 8D and disallowed a sum of ₹ 109,32,198/-. 19. On appeal before the Ld. CIT(A) it was mainly submitted that rule 8D was inserted by Income Tax (Fifth amendment) Rules 2008 w.e.f. 23.4.2008 therefore same was not applicable in the present assessment year. 20. The Ld. CIT(A) after considering the submissions did not find force 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 rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or debit incurred or in respect of any credit facility which has not been utilized. In our opinion, the Ld. CIT(A) has correctly adjudicated the issue and no interference is called for in his order. 28. Ground No. 7-Brief facts of the case are that assessee has not deducted tax on various types of works for repair on plant and machinery to the following parties: <!--[if gte vml 1]> <![endif]--><!--[if !vml]--><!--[endif]--> Though the details were filed but it was admitted that no tax was deducted and therefore the Assessing Officer invoked the provisions of section 40(a)(ia) and disallowed a sum of ₹ 55275/-. 29. On appeal before the Ld. CIT(A) it was submitted that the assessee has deducted tax on repair amounting to ₹ 22750 and therefore this disallowance was wrong. Since no detail and evidence were given for deduction of tax, 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting evidence is not sufficient to discharge the onus. The assessee is applying the ratio of the decision in the case of S.A. Builders V CIT, 288 ITR 1. In that case, Hon'ble Supreme Court restored the matter to the file of ITAT to give a finding whether interest free advances were given for business purposes. Hon'ble Supreme Court has not laid down any law that no disallowance can be made in respect of interest fee advances given to sister concern. The onus is on the assessee to prove beyond doubt that the interest fee advances were meant for business purposes. The assessee has also argued that sufficient funds in the shape of reserve surplus, etc. were available with the assessee. The assessee failed to establish any link of these non interest bearing funds with the interest free advances. As per the decision of Hon'ble High Court of Punjab Haryana the onus is on the assessee to establish the link. In the latest decision, ITAT in the case of Vijay 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under: I have carefully considered the rival submissions. The perusal of details shows that these expenses do not crystallize in the present assessment year. It is the duty of the assessee to ask the employees and the field staff to give the details of expenses within time. Any leverage cannot be given to the assessee to claim the expenses if there is a delay on the part of the employees and the filed staff. In my opinion, the Assessing Officer was justified in making the disallowance and thus this ground of the assessee is dismissed. In our opinion, the LD. CIT(A) has decided the issue correctly because previous year expenses could be allowed only if it is proved that such expenditure crystallized during the year. This fact has not been proved and therefore there is nothing wrong with the order of the Ld. CIT(A) and accordingly we confirm the same. 41. Ground No. 10-Brief facts of the case are that assessee had claimed deduction u/s. 80IB on its Parwanoo Unit No. 2 and the total profits of this unit were shown at ₹ 13,47,52,105/-. Some details were filed but according to the Assessing Officer other income like interest, discount receipts and insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other priority sectors. The expenditure is incurred to develop new pharmaceutical products. Therefore there was no logic of reducing the same on a specific unit. 47. On appeal, the Ld. CIT(A) held that such expenses should be allocated on the basis of sales ratio. 48. Before us. Ld. D.R. for the revenue strongly supported the order of the Assessing Officer. 49. After considering the submissions of Ld. D.R. for the revenue and relevant material on record, we find that this issue came up for consideration in assessee's own case in assessment year 2006-07 in the appeal filed by the revenue in ITA No. 729/Chd/2009. In that case the ground reads as under: 1 On the facts and circumstances of the case the Ld. CIT(A) vide appellate order No. 208/P/08-09 has erred in disallowance of deduction u/s. 80IB on salary of Directors amounting to ₹ 111,24,000/-. 2. The Ld. CIT(A) has erred in disallowance of deduction u/s. 80IB on seed marketing expenses amounting to ₹ 119,50,367/-. 3. The Ld. CIT(A) has erred in disallowance of deduction u/s. 80IB on R D expenses amounting to ₹ 208,67,119/-. This issue was adjudicated vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has raised following grounds: 1 That the order of Ld. CIT(A) is bad, against the facts and law. 2. That the Ld. CIT(A) has wrongly confirmed the disallowance of seed marketing expenses amounting to ₹ 4,56,56,288/-. 3. That the Ld. CIT(A) has wrongly disallowed weighted deduction on research and development expenditure incurred during the year u/s. 35(2AB) of the Act amounting to ₹ 3,64,14,403/-. 4. That the Ld. CIT(A) has wrongly confirmed the disallowance of expenses u/s. 14A of the Act amounting to ₹ 85,34,057/-. 5. That the Ld. CIT(A) has wrongly confirmed the disallowance of expenses of ₹ 460,000/- shown as Corporate and administrative expenses. 6. That the Ld. CIT(A) has erred in not discussing our ground of appeal for the addition of ₹ 411,99,000/- on account of deferred tax while calculating the tax payable (MAT) u/s. 115JB of the Act. 52. Ground No. 1 is of general nature and therefore no separate adjudication is required. 53. Ground No. 2-Identical issue has been decided while adjudicating assessee's appeal in ITA No. 511/Chd/2011 for assessment year 2006-07 vide para 12. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment made in Clause VIII to Sec. 115JB of the Act. 61. The Ld. D.R. for the revenue was heard. 62. After considering the submissions of Ld. D.R. for the revenue and the relevant material on record, we find that Clause (viii) to Sec. 115JB was inserted by Finance Act, 2008 with retrospective effect from 1.4.2001. This clause reads as under: Clause (viii) to Sec. 115JB-An amount of deferred tax, if any, such amount is credited to the profit and loss account. Thus it is clear that the amendment is retrospective and is applicable from assessment year 2001-02, therefore we confirmed this disallowance. 63. In the result, assessee's appeal in ITA No. 428/Chd/2011 is partly allowed for statistical purposes. ITA No. 615/Chd/2011-Revenue's appeal 64. In this ground revenue has raised the following grounds: 1 That on the facts and circumstances of the case and in law the Ld. CIT(A) has gravely erred in deleting the addition of ₹ 13,62,367/- made by the Assessing Officer as per Sec. 36(i)(iii) of the Act after considering the judgment of Hon'ble High Court of Punjab Haryana in the case of Abhishek Industries Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After considering the rival submissions we find that there was opening debit balance of ₹ 4413287/- in case of Jay Ess Exports. No doubt certain purchases have been made from this party but for making purchases fresh payments have been made to this party and at all relevant time, the debit balances has rather increased during the year. We asked the Ld. Counsel for the assessee whether any disallowance was made in the earlier year and he admitted that disallowance was made with reference to the debit balance in case of Jay Ess Exports which was not challenged by the assessee. The Ld. Counsel for the assessee could not point out why huge advances have to be given to this party at all times, therefore in our opinion, the commercial expediency can not be inferred in this case. Coming to the case laws, first of all the decision in case of S.A. Builders V CIT(A) (supra) has been doubted out by the Hon'ble Supreme Court itself and the matter has been referred to the larger bench but in any case following important observations were made in that case itself at para 25, 29 35 which are as under: In our opinion, the High Court as well as the Tribunal and other income-tax au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 636/Chd/2001 for assessment year 1997-98 on 24th June 2009 by holding as under: We have carefully perused the assessment order in this regard and find that there is no specific reason or defect pointed out by the Assessing Officer in the accounts submitted by the assessee to support that the results declared in the Trading unit are not correct. In any case in the entire assessment order and also in the order of the Ld. CIT(A), we find no material bought out by the Revenue to show that any of the expenditure that has been debited in the accounts of the Trading unit, which other wise belongs to the manufacturing units, which are eligible for Sec. 80IA/80I benefits. The accounts as prepared by the assessee have not been accepted by the Assessing Officer without offering any cogent reasons. In this connection, we may refer to a recent decision of the Hon'ble Supreme Court of India in the case of CIT V Jindal Fine Industries, 307 ITR 202 for the proposition that he burden under such circumstances is on the Assessing Officer. Considered in this light, after per using the order of the income tax authorities, we do not find that such burden has been discharged by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that while computing the book profits the assessee added a sum of ₹ 31,55,004/- pertaining to disallowance u/s. 14A of the Act. 77. On appeal it was mainly submitted notional disallowance u/s. 14A could not be added to the book profits. The LD. CIT(A) has decided this issue vide para 6.3, 6.3.1 and 6.3.2 and 6.3.3 which are as under: 6.3 I have considered the submissions of the Counsels for the appellant. For the sake of convenience, Explanation 1(f) below section 115JB is reproduced below: For the purposes of this section, book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-sec (2) as increased by- (f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply. 6. 3.1. Thus the amount of expenditure relatable to any income to which provisions of section 10 (except 10(38)) apply have to be added for computing book profit . Section 14A(1) reads as under: For the purposes of computing the total income under this chapter, no deduction shall be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act itself. There is no provision in the Act to make adjustment on account of notional disallowance worked out u/s. 14A of the Act. The Hon'ble Supreme Court in Apollo Tyres Ltd. (supra) held that the profits of the business are not to be disturbed for computing the book profits except in the circumstances provided under the said Act. We confirm the order of Ld. CIT(A) in this regard and dismiss the ground No. 1(iv) raised by the Revenue. Following the above we set aside the order of Ld. CIT(A) and delete this addition. In the result, appeal of the assessee in ITA No. 745/Chd/2012 is partly allowed ITA No. 746/Chd/2012-Assessee's appeal 80. In this appeal the assessee has raised the following grounds: 1 That the order of Ld. CIT(A) is bad, against the facts and law. 2. That the Ld. CIT(A) has erred in sustaining the disallowance of proportionate expenses u/s. 14A of the IT Act amounting to ₹ 56,40,504/-. 3. That the Ld. CIT(A) has erred in sustaining disallowance of 10% of interest on advances amounting to ₹ 14,64,737/-. 4. That the LD. CIT(A) has erred in sustaining the addition of disallowances u/s. 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 4-Brief facts of the case are that while computing the disallowance and computing the deduction profit u/s. 115JB, the Assessing Officer added a sum of disallowance amounting to ₹ 56,40,504/- which was made by him u/s. 14A of IT Act. 87. On appeal before the Ld. CIT(A) action of the Assessing Officer was confirmed by the Ld. CIT(A). 88. Before us. Ld. D.R. for the revenue strongly supported the order of the Ld. CIT(A). 89. After considering the submissions of Ld. D.R. for the revenue and relevant material on record, we find that this issue has been decided by us while adjudicating assessee's appeal ITA No. 745/Chd/2012 which has been decided vide para 79 above. Following the same we set aside the order of Ld. CIT(A) and delete the addition. 90. In the result, appeal of the assessee in ITA No. 746/Chd/2012 is partly allowed for statistical purposes. ITA No. 1032/Chd/2013-Assessee's appeal 91. In this appeal assessee has raised the following grounds: 1 That the order of Ld. CIT(A) is bad, against the facts and law. 2. That he Ld. CIT(A) has wrongly upheld he disallowance of proportionate expenses u/s. 14A r.w.r. 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 721/Chd/2012-Revenue's appeal 101. In this appeal the revenue has raised the following effective ground: 2 On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of ₹ 418,86,628/- made by the Assessing Officer by invoking the provisions of section 145A of the Act. 102. Brief facts of the case are tat during assessment proceedings the Assessing Officer noticed that the assessee had not routed various dues and taxes through profit and loss account. She also noted that although sales and finished goods in closing stock were inclusive of excise duties, CENVAT was not being included in raw material purchased and raw material in closing stock. The assessee had filed a reply but the Assessing Officer was not satisfied and increased the income of the assessee by ₹ 418,86,628/- on this account. 103. On appeal it was submitted that similar issue has been decided in favour of the assessee by the Hon'ble High Court of Punjab Haryana in case of Nahar Spinning Mills Ltd. in ITA No. 503 of 2007. The Ld. CIT(A) following that decision decided the issue in favour of the assessee. 104. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon'ble High Court of Punjab Haryana. 111. Before us the Ld. D.R. for the revenue supported the order of the Assessing Officer. 112. After considering the submissions of the Ld. D.R. for the revenue and the relevant material on record, we find that this issue has been decided by the Ld. CIT(A) vide para 7.3 which is as under: 7.3 I have considered the submissions of the Counsels for the appellant. The deduction of employees' share of PF is to be allowed if the payments have been made before due date of filing of return in view of the decision of Hon'ble High Court of Punjab Haryana in the case of M/s. Nuchem Ltd. In ITA No. 323 of 2009. The appellant had agreed for this addition at the time of assessment proceedings, but the issue is being decided in favour of the appellant in view of the decision of the Hon'ble Jurisdictional High Court and also on account of the fact that the amount involved is too small. The appellant has claimed that the payments were made before the due date of filing of return but no evidence in this regard has been filed. The Assessing Officer is directed to verify this contention of the appellant and allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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