TMI Blog2014 (10) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... -97 to 2000-01. Accordingly this ground taken by the assessee becomes academic and accordingly rejected. Notional interest accrued but not due on securities - Held that:- In assessee’s own case in its favour in A.Y. 1998-99 and also by the Hon’ble Bombay High Court in assessee’s own case for assessment years 1994-95, 1995-96 wherein it was held that such interest are taxable in subsequent year when securities are sold. Respectfully following the decision of the Tribunal as well as Hon’ble Bombay High Court in assessee’s own case as referred, we do not find any merit for taxing the interest accrued but not due on securities during the year under consideration. As far as the taxability of interest the same is assessable in the year in which the refund has been granted alongwith interest. However, if in the subsequent year refund of interest is withdrawn, then the same should be reduced from the total income of the assessee. Accordingly we direct the A.O. to tax interest income in terms of the order of the tribunal for A.Y. 1993-94 as reproduced above, keeping in view our above observation. Allowability of technical assistance fees as revenue expenditure - Held that:- The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly conceded that this issue is now settled by the Hon’ble Supreme Court against the assessee in the case of Ipca Laboratories [2004 (3) TMI 9 - SUPREME COURT]. Respectfully following the proposition laid down by the Hon’ble Supreme Court in the case of Ipca Laboratories (supra), we do not find any infirmity in the order of the lower authorities adjusting the loss on export of traded goods against profit on export of manufactured goods for computing deduction u/s 80HHC. Interest u/s 244A - Held that:- Tribunal in assessee’s own case for 1998-99 vide order dated 10th August, 2012 has restored similar matter to the file of the A.O. for considering the assessee’s claim of interest after taking into account the judicial pronouncements as referred above. Respectfully following the decision of the Tribunal, we restore the computation part of interest u/s 244A of the Act to the file of the A.O. for deciding as per the direction given by the Tribunal in its order dated 10th August, 2012. Appropriation of HO expenses in computing deduction u/s 80-O - Held that:- there is no necessity for allocating the head office expenses to the units claiming deduction u/s. 8OHH, 801, 80M and 80-0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in appeal on this ground before the Hon’ble High Court against the Tribunal order. The Hon’ble Supreme Court in the case of Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] has decided this issue in favour of the assessee. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A) deleting the disallowance Crystallization of liability - Held that:- As found that after considering the decision of Hon’ble Supreme Court in the case of CIT vs. Swadeshi Cotton Flour Mills Pvt. Ltd. [1964 (4) TMI 8 - SUPREME COURT] on this issue, the ld. CIT(A) reached the conclusion that liability has been crystalised under consideration, the same is therefore allowable. We do not find any reason to interfere with the order of the ld. CIT(A) Deduction against bad debts - Held that:- Actual write off was in A.Y. 2000-01 and the same was again allowed by the ld. CIT(A). Since the claim was pertaining to the A.Y. 1996-97 which have already been allowed by the A.O. when the matter was remanded back by the Tribunal, allowing of the claim by the ld. CIT(A) during the year under consideration amounts to double deduction of the same amount. Accordingly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting deduction u/s 80HHC - Held that:- This issue has been settled by the Hon’ble Supreme Court in the case of Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] - No infirmity in the order of the ld. CIT(A) in directing the A.O. to exclude the amount of excise duty and sales tax from the total turnover of the assessee while computing deduction u/s 80HHC of the Act. Increase profits of the business by the loss of foreign branch and the loss on export of trading goods for the purpose of computation of deduction u/s 80HHC - Held that:- CIT(A)’s direction to the A.O. to increase profits of the business by the loss of foreign branch and the loss on export of trading goods for the purpose of computation of deduction u/s 80HHC of the Act. We found that this issue is covered against the assessee and in favour of Revenue by the decision of Hon’ble Supr4eme Court in the case of Ipca laboratories, [2004 (3) TMI 9 - SUPREME COURT]. Respectfully following the said decision of Hon’ble Supreme Court in the case of Ipca Laboratories (supra), we do not find any merit in the order of ld. CIT(A) for allowing the assessee’s claim. Deduction u/s 80-IA of the Act in respect of Vikram Power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputed on a per day basis on securities amounting to ₹ 66,575/- cannot be taxed, as the said interest had not accrued i.e. interest was not due for payment on 31.3.2001 and not right to receive interest vested in the appellant as on that date. 4. Interest received from Income Tax Department: 4.1 The CIT(A) erred in upholding the action of the AO in taxing interest of ₹ 13,64,09,609/- allowed under section 144A/244 by the Department. 4.2 The CIT(A) failed to appreciate that no income can be taxed until the person becomes entitled to it absolutely or irretrievably. The CIT(A) ought to have held that interest allowed by the Department is not to be taxed, till the matter/appeals are finally decided and the appellant become absolutely entitled to such interest. 5. Technical assistance fees: 5.1 The CIT(A) erred in upholding the action of the AO in disallowing amount of ₹ 2,34,17,500/- paid towards technical assistance fees for the existing business. 5.2 CIT(A) ought to have deleted disallowance made by the AO towards technical assistance fee. 6. Deduction under section 80HHC 6.1 The CIT(A) erred in not directing the AO to allowed deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing and sale various products. During the course of scrutiny assessment, the A.O. disallowed assessee s claim of deduction u/s 43-B of the Act in respect of liabilities disallowed in earlier years which are paid/written back in the current year. The A.O. found that in the computation of income an amount of ₹ 10.85 crores has been considered as disallowance u/s 43-B (a) of the Act by the assessee itself. However, an amount of ₹ 1.31 crores was not considered as disallowance u/s 43-B of the Act falling under clause (b) to (d). The contention of the assessee was that the amount of ₹ 1.31 crores which falls under clauses (b) to (d) of section 43-B of the Act which are not payable as on 31-3-2001cannot be covered by the provisions of section 43-B of the Act. However, the A.O. did not agree with this explanation and made the disallowance. The ld. CIT(A) by his impugned order, confirmed the order of the A.O. and the assessee is in appeal before us. 3. At the outset, the ld. Counsel for the assessee contended that the issue is covered by the decision of the Tribunal in earlier years i.e assessment years 1993-94 to 1998-99 and 2000-01 in assessee s own case, copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtake the character of income of the assessee. If however, any refund has been found to be not refundable to the assessee and consequently the interest granted is withdrawn the same would not partake the character of income. We accordingly direct the Assessing Officer to reduce from the taxability of the aforesaid interest granted to the assessee, the amount which has been withdrawn subsequently. We direct accordingly. 8. It was argued by the ld. A.R. that benefit of interest so allowed by the department was subsequently withdrawn as a result of the appellate orders should be given to the assessee and the interest subsequently withdrawn should not be taxed and for this, reliance was placed on the decision of the Tribunal in the case of Avada Trading Co. (P.) Ltd. vs. ACIT (2006) 100 ITD 131. 9. We have considered the rival contentions. As far as the taxability of interest amounting to ₹ 13,64,09,609/- is concerned, the same is assessable in the year in which the refund has been granted alongwith interest. However, if in the subsequent year refund of interest is withdrawn, then the same should be reduced from the total income of the assessee. Accordingly we direct the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the additional ground no.1 pertaining to deduction u/s 80HH on gross interest the Sr ld counsel for the assessee has submitted that this issue has been decided by the Hon ble Supreme Court in the case of ACG Associated Capsules vs CIT vide decision dated 8.2.2012; therefore, the deduction u/s 80HH should be allowed on the gross interest received. 30.1 Since this ground has been raised by the assessee first time in view of the decision of the Hon ble Supreme Court; therefore, it requires verification and examination at the level of the AO. Accordingly, we remit this issue to the record of the AO to consider and decide the same as per law after considering the contention of the assessee and after giving reasonable opportunity of being heard to the assessee. 16. In view of the decision of honourable Supreme Court in case of ACG Associated Capsules reported in 67 DTR (SC) 205, the Explanation to section 80 HHC to be applied on net interest and not on gross interest. Accordingly, we direct the AO to apply clause (baa) in respect of interest receipt by following the decision of honourable Supreme Court (supra). We accordingly direct the A.O. to exclude the excess of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly following the decision of the Tribunal in assessee s own case, we set aside the order of the CIT(A) and direct the AO to exclude the inter-division transfer from the total turnover. Respectfully following the decisions of the Tribunal, the claim of the assessee is directed to be accepted. 20. The next issue relates to ignoring loss on export of traded goods and for not adjusting the same against profit on export of manufactured goods for computing deduction u/s 80HHC of the Act. 21. The ld. Sr. counsel for the assessee fairly conceded that this issue is now settled by the Hon ble Supreme Court against the assessee in the case of Ipca Laboratories, 266 ITR 521 (SC). Respectfully following the proposition laid down by the Hon ble Supreme Court in the case of Ipca Laboratories (supra), we do not find any infirmity in the order of the lower authorities adjusting the loss on export of traded goods against profit on export of manufactured goods for computing deduction u/s 80HHC of the Act. 22. The next grievance of the assessee relates to allowing interest u/s 244A of the Act on the refund of ₹ 12 crores paid on 30-04-2001. 23. The ld. Senior counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,74,600 25.1 Facts of the case, in brief, are that the AO estimated the expenses and allocated head office expense to the various units which had claimed benefits u/s. 8OHH,801, 80M and 80-0 of the Act. Since the nexus between the head office and the individual units cannot be denied and since the assessee did not give details so as to give better allocation of these expenses to various units, the CIT(A) upheld the action of the AO. Aggrieved with such order of the CIT(A), the assessee is in appeal before us. 25.2 After hearing both the sides, we find the AO has only allocated the expenses but no income was allocated. We find the co-ordinate Bench of the Tribunal in the case of M/s. Procter Gamble India Ltd. Vs. DCIT, vide ITA No. 5466/Mum/99 order dated 27th November, 2006 for the A.Y. 1990-91 has held that head office expense allocated to the units are not to be taken into consideration for computing the income of the assessee eligible for deduction u/s. 801 and also u/s 8OHH. Similarly we find the Bangalore bench of the ITAT in the case of Wipro GE Medical Systems Ltd. Vs. DCIT reported in 81 TTJ 455 has held that there is no nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal ground No. 2 is accordingly allowed. 30. The Revenue has raised the following grounds:- 1. On the facts and in the circumstances of the case and in law, the CT(A) erred in deleting the disallowance of Rs.l,31,61,935/ made under clauses (b), (c) and (6) of section 43B of the Income Tax Act, ignoring the provisions of section 43B of the Act as a whole and without taking into consideration a harmonious construction of various provisions of the said section. Further, the meaning of the word payable, as applicable to the provisions of section 43B(b)(c) (d), was also ignored. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of ₹ 5,11 ,756/ towards contribution to local organisations, relying upon the C1T(A)s order in the assessee s own case for the A.Y. 1999200O which has not been accepted by the department and contested in further appeal before the ITAT. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition of ₹ 2,63,29,807/, being profits of the USA and UK branch of the assessees software division, relying upon the CIT(A) s order in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form the basis of crystallization of the liability in the assessee s case when, as per record, the assessee s own writ petition in the M.P. High Court was still pending. (ii) The order of M.P.E.B. Chairman dtd. 12.04.2001 raising the demand on the assessee was never produced before the Assessing Officer and acceptance of the same to allow relief to the assessee without affording opportunity to the A.O. was violative of Rule 46A of the I.T. Rules and even admitting that such an order existed, the liability crystalised only in the following accounting period and not in the period relevant to A.Y. 2001-02. 10. On the facts and in the circumstances of the case and in law, the CIT(A) erred in allowing the deduction for bad debts of ₹ 7,38,368/ which was adjustment against the provision for doubtfull debts holding that the provision made by the assessee for doubtful debts in the earlier assessment years was disallowed without appreciating that the assessee has contested this issue before the ITAT in earlier assessment years. 11. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs.l5,57,153/- being 25% of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iating that there is no provision for reduction of net interest from the profits of the business as per Explanation to sub-section (4B) of section 80HHC . 16. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to exclude the amount of excise duty and sales tax from the total turnover for the purpose of computation of deduction u/s.80HHC, relying upon the order of the CIT(A) in the assessee s own case for the A.Y. 1998-99, which has not been accepted by the department and contested in further appeal before the ITAT. 17. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to increase profits of the business by the loss of foreign branch and the loss on export of trading goods for the purpose of computation of deduction u/s 80HHC, relying upon the order of the CIT(A) in the assessee s own case for the A.Y. I 996-97, which has not been accepted by the department and contested in further appeal before the ITAT. 18. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that no amount of head office expenses can be apport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier years. 33. We have considered the rival contentions and we found that the issue has been decided by the Tribunal consistently in favour of the assessee in the assessment years 1986-87 to 1989-90, 1994-95 1995-96 to 1997-98. In an appeal further filed by the Revenue before the Hon ble High Court in assessment years 1988-89, 1994-95, 1995-96, the same has been decided in favour of the assessee. The order of the Tribunal for 2000-01 was not challenged by the Department before the Hon ble High Court on this issue. Respectfully following the order of the Tribunal and Hon ble High Court in assessee s own case, we do not find any reason to interfere with the order of the ld. CIT(A). 34. With respect to ground No. 3 on account of profits of the USA UK branch, the A.O. has been dealt with this issue at page 8, para 13 of his order. The ld. CIT(A) deleted the addition by observing at para 8 of his appellate order wherein it was held that the action of the A.O. in not excluding profit of foreign branch amounting to ₹ 2,63,29,807/- from the taxable profit was not justified. From the record we found that the issue has been decided by the Tribunal in assessee s own case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with this issue at page 9-10, para 16-16.6and the ld. CIT(A) has dealt with this issue at page 5, para 12 of his order. The ld. CIT(A) has allowed the assessee s claim after having observed at para 12. We found that the issue has been decided by the Tribunal in assessee s own case in its favour in assessment years 1998-99 to 2000-01. Furthermore, the Department is not in appeal on this ground before the Hon ble High Court against the Tribunal order. The Hon ble Supreme Court in the case of Woodward Governor India Pvt. Ltd., 312 ITR 254 (SC) has decided this issue in favour of the assessee. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A) deleting the disallowance made on account of exchange fluctuation loss on conversion of trading assets and liabilities on balance sheet date. 40. Ground No. 8 pertains to deleting of interest u/s 36(1)(iii) of the Act. The issue has been dealt with by the A.O. at page 10-11, para 18 of his order and the ld. CIT(A) deleted the same after having observed at page 5, para 13 of his order. From the record we found that the issue has been decided by the Tribunal consistently in favour of the assessee in assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 21 of his order. The ld. CIT(A) has deleted the disallowance after having observed at para 15 of his order. The ld. Counsel for the asessee fairly conceded that the A.O. has allowed the claim in his order giving effect from A.Y. 1996-97. Actual write off was in A.Y. 2000-01 and the same was again allowed by the ld. CIT(A). Since the claim was pertaining to the A.Y. 1996-97 which have already been allowed by the A.O. when the matter was remanded back by the Tribunal, allowing of the claim by the ld. CIT(A) during the year under consideration amounts to double deduction of the same amount. Accordingly we set aside the order of the ld. CIT(A) on this ground and allow this ground in favour of the Revenue. 44. Ground No. 11 pertains to the expenses incurred in connection with the assessment of the loss and insurance claim reduced from insurance claim received. (Net insurance amount received is reduced from block of assets by the assessee). 45. We found that the A.O. has made this addition towards expenses incurred in connection with assessment of loss and insurance claim reduced from insurance. Accordingly, addition of ₹ 15,57,538/- was made by the A.O. holding that gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee for the purpose of computing deduction u/s 80HHC of the Act. We direct accordingly. 51. Ground No. 16 pertains to the ld. CIT(A) s action for excluding the amount of excise duty and sales tax from the total turnover for computing deduction u/s 80HHC of the Act. 52. This issue has been settled by the Hon ble Supreme Court in the case of Lakshmi Machine Works, 290 ITR 667 (SC). Similar issue has been decided by the Tribunal in assessee s favour in assessment years 1986-87 to 1989-90, 1990-91, 1994-95 to 1998-99. Further we found that Revenue is not in appeal against this issue before the Hon ble High Court in assessment years 1994-95, 1995-96, 1996-97 and 1997-98 1998-99. In view of above, we do not find any infirmity in the order of the ld. CIT(A) in directing the A.O. to exclude the amount of excise duty and sales tax from the total turnover of the assessee while computing deduction u/s 80HHC of the Act. 53. Ground No. 17 pertains to the ld. CIT(A) s direction to the A.O. to increase profits of the business by the loss of foreign branch and the loss on export of trading goods for the purpose of computation of deduction u/s 80HHC of the Act. We found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the alternate/without prejudice submission of the respondent that the deduction of ₹ 17,79,22,078/- be allowed in the previous year in which the respondent accounts for the said liability towards electricity charges. 3. The Ld. CIT(A) erred in not deciding the alternate ground raised by the respondent that the expenses incurred in connection with assessment of loss and insurance claim of ₹ 62.30 lacs in the previous year, be allowed as business expenditure. 4. The Ld. CIT(A) erred in not deciding the alternate ground raised by the respondent that the AO failed to appreciate and decide alternate/without prejudice submission of the respondent to allow depreciation on the expenses incurred for production of advertisement film amounting to ₹ 68,26,833/- in case the same is treated as capital in nature. 5. The Ld. CIT(A) erred in not deciding the alternate ground raised by the Respondent in respect of the basis of estimation of allocating Head Office expenses to undertaking in respect of which deduction u/s 80IA was claimed. 60. The ld. Counsel for the assessee fairly conceded that the grounds taken in the C.o. has become infructuous, the same are theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
