9911796707
TMI Blog2014 (10) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT in earlier years, then deduction of amounts paid or written back amounting to Rs. 4,55,53,707/- should be allowed in the previous year. 2. Exchange Fluctuation loss: 2.1 The CIT(A) failed to decide ground No.9.4 that the learned AO erred in not allowing deduction in respect of exchange fluctuation loss of Rs. 1,99,71,608/- actually incurred during the year, which had been disallowed in earlier years, consistent with the Department's stand. 2.2 The CIT(A) ought to have held hat in the event the Department's stand is accepted by the ITAT in earlier years, then deduction of amounts actually paid in the previous year amounting to Rs. 1,99,71,608/- should be allowed. 3. Notional interest accrued but not due on securities 3.1 The learned CIT(A) erred in upholding the action of the AO in taxing interest nationally computed on securities amounting to Rs. 66,575/-. 3.2 The learned CIT(A) ought to have held that interest notionally computed on a per day basis on securities amounting to Rs. 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o another division of the appellant company is not turnover. 6.8 The CIT(A) erred in upholding the action of the AO in adjusting loss on export of traded goods against profit on export of manufactured goods, while calculating export of traded goods is to be ignored or should not be adjusted against the profits on export of manufactured goods. 7. Interest under section 244A 7.1 The CIT(A) erred in upholding action of the AO in not allowing interest under section 144A on refund of Rs. 12 crores paid by the appellant on 30.04.2001. 7.2 The CIT(A) ought to have directed the AO to allow interest on refund of Rs. 12 Crores under section 244A of the Income Tax Act from date of payment to date of refund. 8. The appellant prays for the cost of this appeal in vies of section 154(2B) of the I.T. Act." 2. Rival contentions have been heard and perused the record. The assessee is engaged in manufacturing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7. The assessee is also aggrieved for taxing of interest received from Income Tax Department amounting to Rs. 13,64,09,609/-. We find that similar issue has been dealt with by the Tribunal in A.Y. 1993-94 in ITA No. 1523/Mum/1997 vide para 62 as under;- "We have heard the parties and considered the rival submissions. These refunds have been granted to the assessee in the year under consideration and therefore they would partake 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration are same, we do not find any infirmity in the order of the lower authorities for allowing the claim of deduction u/s 80HHC of the Act to be computed on the profit of the company as a whole, rather than unit-wise. 14. The next grievance of the assessee relates to allowing deduction u/s 80HHC of the Act with respect to interest income. The issue under consideration is squarely covered by the decision of Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd., 343 ITR 89(SC) wherein it was held that net interest income is to be excluded from the eligible profit for computing deduction u/s 80HHC rather than gross interest. 15. An identical issue raised as additional grounds for the assessment year 1996-97 and 97-98 was considered and decided by this Tribunal in assessee's own case in paras 30 & 30.1 as under: "30 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 intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by the judgement of Hon'ble jurisdictional High Court rendered in the case of Sudarshan Chemicals Industries Ltd. (supra). Respectfully following the same, this aspect of the matter is decided in favour of the assessee. Regarding the first aspect of the matter ie. regarding exclusion of interdivision transfer from total turnover, we find that this issue is covered in favour of the assessee by the judgment of the tribunal rendered in assessee's own case for A.Y. 1990-91 to 1992-93. In para No. 152 of the judgment, this has been held by the Tribunal that inter-division transfer has to be excluded as that would amount to double addition in the figure of total turnover. Respectfully following this judgment, this aspect of the matter is also decided in favour of the assessee. This ground No. 26(ii) stands allowed. Respectfully 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the relevant material on record. A similar issue has been considered and decided by the Tribunal in assessee's own case for the AY 1995-96 in paras 29.1 & 29.2 as under: 29.1 On a similar issue the Tribunal in assessee's own case in AY 1994-95(supra) in paragraphs 25 to 25.2 has held as follows:-, '25. In grounds of appeal No. 32 to 35, the assessee has challenged the order of the CIT(A) in allocating head office expenses and thereby reducing the quantum of deduction available to the assessee under the following provisions: Section Rs. 8OHH 14,20,000 801 5,54,600 80M 7,50,000 80-0 3,50,000 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty u/s 43B of the Act treating it as tax. The issue is now settled by various orders of the Tribunal in assessee's own case for assessment years 1995-96 to 2000-01. A similar issue was considered by the Tribunal in the assessee's own case in A.Y. 1999-2000 in ITA No. 5631/M/2002, wherein we find that the Tribunal has followed its earlier order in the assessee's own case in ITA No. 5630/Mum/02 for A.Y. 1998-99. In the absence of any contradictory facts brought on record by the Revenue, following the aforementioned decision, we decide this issue in favour of the assessee. Additional 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to the construction period, relying upon the order of the CIT(A) in the assessee's own case for the A.Y. 20000l which has not been accepted by the department and contested in further appeal before the ITAT. 9. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs. 17,79,22,078/- being revised electricity charges liability for the period from 1994 to 1997 ignoring, inter alia, the following :- (i) The decision of the Hon'ble Supreme Court in the case of Raymonds Limited cannot 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 circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay High Court, as aforesaid, has not been accepted by the department and contested by way of filing SLP. 15. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to reduce the net interest, arrived at after reducing the amount of interest paid from the interest received in case the interest received is found to be linked with the business of the assessee, from the profits of the business for the purpose of computation of deduction u/s. 8OHHC, without appreciating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the ld. CIT(A) deleted the disallowance by following the order of the Tribunal, we do not find any reason to interfere with the order of the ld. CIT(A) deleting the disallowance made by the A.O. u/s 43-B of the Act. 32. With regard to the contribution to the local organization, the issue has been dealt with by the A.O. at page 6 -7, para 10 of his order. The ld. CIT(A) deleted the addition/disallowance by dealing the issue at page 3, para 7 of his order wherein he has followed the order of the Tribunal in 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999-00 & 2000-01. We further found that the Department on this ground is not in appeal before the Hon'ble High Court in these years. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the order of the ld. CIT(A) for deleting the rural development expenses amounting to Rs. 66,08,937/-. 39. Ground No. 7 pertains to exchange rate fluctuation loss on conversion of trading assets and liabilities amounting to Rs. 2,00,03,443/-. The A.O. has dealt 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Swadeshi Cotton Flour Mills Pvt. Ltd. (1964) 53 ITR 134 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) as the same is based on the decision of Hon'ble Supreme Court dated 16/11/2000. 43. Ground No. 10 pertains to allowing the deduction against bad debts. The A.O. has dealt with this issue at page 12, 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. Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess losses and unabsorbed depreciation of the earlier years against the current years income. Accordingly this ground of the Revenue is allowed. 50. Ground No. 15 of Revenue's appeal has already been dealt with by us while deciding assessee's appeal with regard to deduction of interest expenses out of allowable profit of asseessee. On the same reasoning, we direct the A.O. to reduce the net amount of interest expenditure out of allowable income of 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) to the A.O., hence allowed this ground of the assessee. 59. In its C.O., the assessee has raised the following grounds:- "1. The Ld. CIT(A) erred in rejecting the alternate ground raised by the Respondent that the AO erred in not allowing deduction for tax paid in foreign countries amounting to Rs. 23,36,958/- from tax payable in India on profit of the foreign branches. 2. The Ld. CIT(A) erred in rejecting the alternate/without prejudice submission of the respondent that the deduction of Rs. 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 Rs. 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 Rs. 68,26,833/- in case t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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