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2018 (12) TMI 456

uring the previous year relevant to impugned assessment year and a claim u/s 37(1) was made during the course of assessment proceedings. The fact of incurrence of the expenditure and the fact that the said expenditure has been incurred for the purposes of the business has not been disputed. - In the return of income, the assessee has claimed depreciation of ₹ 52.98 lacs however, the said depreciation relates to expenditure incurred in earlier years and which has been capitalized as well as expenditure incurred during the year under consideration on which depreciation has been claimed. In the earlier year i.e, AY 2013-14, the whole of the expenditure has been allowed as revenue expenditure and therefore, if we were to approve the approach of the Revenue, it will create an inconsistent position as far as this claim of expenditure is concerned. - Once a claim is held to be legally allowed, there is thus no basis to restrict the quantum of such claim once other conditions for claiming such expenditure has been duly satisfied. Therefore, consistent with the position in the earlier year and following the decision of the Coordinate Bench referred supra, the whole of the exp .....

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and hence admissible deduction u/s 37(1). (b) whether in the facts and circumstances of the case and in law the Ld. CIT(A) is justified in holding that the payment of ₹ 60 lacs pertaining to Khasara No. 42/63; 42/64 (total area of 15 Bigha) is in the nature of compensation even when the agreement clearly states purchase of land . (c) whether in the facts and circumstances of the case and in law the Ld. CIT(A) is justified in overlooking that these land i.e. Khasara No. 42/63; 42/64 are different from the lands which are stated in the Samarpan Patra submitted to the Tehsildar. (ii) Whether in the facts and circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition of ₹ 13,70,733/- made for depositing the employees contribution to PF & ESI beyond the prescribed time limit provided in the respective Act. (iii) Whether in the facts and circumstances of the case and in law the Ld. CIT(A) was justified in holding that the employees contribution to PF & ESI are governed by the provisions of Section 43B and not by section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act, 1961. 2. Regarding ground no. 1 of the assessee s appeal and the gro .....

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oordinate Bench and allowed the deduction U/s 37(1) of the Act. 5. At the same time, it was submitted that the finding of the ld. CIT(A) that the claim of the assessee company U/s 37(1) of the Act cannot be greater than the amount originally claim in the return is not correct and ld. CIT(A) has misplaced her reliance on the decision in case of ACIT vs. Subh Laxmi Construction Co. (2003) 1 SOT 587 and ITO vs. New Mitherwal Construction Co. (2002) 120 Taxman 82 as the facts in those two cases are total different from the present case. In both these cases, entire mechanism of determining the assessed income had undergone change during appellate proceedings, wherein percentage of NP to be applied, in the case of the assessee, subject to certain deduction, was determined. However, after application of such percentage determined, assessed income, unknowingly, had become lower than the returned income whereas, the appellate authorities had never intended to give relief to the assessees, in such a manner, that their assessed income could go below the returned income. Neither, any such claim, at any point of time, was made by the assessee, before the AO or the appellate authorities. However .....

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the AO and CIT(A) for allowability of entire amount of ₹ 60,00,000 under section 37(1) of the Act. 5.3 It was further submitted that it is a settled law that fresh claim can be made for the first time before the CIT(A). The ld. CIT(A) herself has accepted the said legal proposition. However, having accepted the said legal proposition, ld. CIT(A) gravely erred in coming to a conclusion that fresh claim should not lead to assessed income below returned income. Such a proposition would frustrate the established legal principle that fresh claim can be made before the CIT(A) even if the same is not claimed in the return of income. Reliance is placed on the judgment of Hon ble Supreme Court in the case of Jute Corporation of India [1991] 187 ITR 688 [SC], wherein the claim of the assessee of additional deduction in respect of its liability of purchase tax made during the hearing of appeal was held to be lawful and admissible. 5.4 Further, reliance was placed on the judgment of the Hon ble Supreme Court in the case of National Thermal Power Company Limited [1998] 229 ITR 383 (SC). In this case, assessee had deposited its funds not immediately required by it on short term deposits w .....

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n 143(3). This matter came up Hon ble Andhra Pradesh High Court in the case of Bakelite Hylam Ltd. [1999] 107 Taxman 429 (AP) wherein Hon ble High Court considered the provisions of section 143 and the said CBDT Circular and held that AO has power to grant refund to the assessee in assessment proceedings. For example, if assessee claims depreciation at a rate lower than the rate prescribed in the Income Tax Rules, then in such case at the time of assessment AO will apply the correct rate as prescribed in the rules. This will result in a situation where assessed income would be lower than returned income. Therefore, even if returned income is higher, assessing officer in regular assessment can determine the assessed income at an amount lower than returned income by allowing all the deductions to which the assessee is lawfully entitled. 6. The ld. DR is heard who has relied on the order of the lower authorities. 7. We have heard the rival contentions and perused the material available on record. Firstly, on merits, undisputedly, there are no changes in the facts and circumstances of the case as compared to previous AY 2013-14 and the alternate claim of assessee U/s 37(1) made during .....

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ents documented by Tehsildaar, letter written by Land Owner to Tehsildaar surrendering the land, report of Tehsildaar for verification of facts and evidence that the land surrendered by Mr. Ranga was mutated in the name of the Government of Rajasthan in the revenue records. It has been contended that all these documents were submitted before the ld CIT(A). In our view, these are relevant documents which have been brought on record by the assessee company to determine the exact nature of transaction and amount paid by the assessee company to the land owner. The ld CIT(A) has recorded a finding that during the previous year relevant to A.Y 2013-14, the appellant paid ₹ 35 lac to Shri Ranga who was having in his possession, a piece of land (Khasra No. 53, Araji No. 157, Rakba 3 bigha & 8 biswa), as this piece of land was part of the total area allotted by the government to the appellant for mining the soap stone. The appellant had in the past also made such payments to other persons for getting possession of the land in order to do the mining in the area. The said finding of the ld CIT(A) remain uncontroverted before us. Given that the piece of land falls within the mining a .....

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been duly satisfied. Therefore, consistent with the position in the earlier year and following the decision of the Coordinate Bench referred supra, the whole of the expenditure of ₹ 60,00,000 incurred during the year is allowed as revenue expenditure u/s 37(1) of the Act. In the result, ground of assessee s appeal is allowed and the ground of Revenue s appeal is dismissed. 9. Regarding ground No. 2 and 3 of the Revenue s appeal, the Revenue has challenged the deletion of addition of ₹ 13,70,733/- towards contribution to PF and ESI. The ld. AR submitted that the assessee company has deposited employee s contribution to PF and ESI amounting to ₹ 13,70,733/- with delay of few days from the due dates, however the same were deposited before the due date of filing of the return of income U/s 139(1) of the Act which is evident from the order of the Assessing Officer. It was further submitted that the matter is squarely covered in favour of the assessee by the decisions of the Hon ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur 43 taxman.com 411 and CIT vs. Jaipur Vidyut Vitran Nigam Ltd. 49 taxman.com 540. 10. We find that the ld CIT(A) ha .....

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