TMI Blog2019 (6) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... O to form an opinion as to why the disallowance offered by the assessee, having regards to its accounts, was not satisfactory or correct. The aforesaid satisfaction of AO, is sine-qua-non before clothing Ld. AO the power to acquire jurisdiction u/r 8D. Therefore, finding no infirmity in the decision on this issue, we dismiss ground nos. 5 6. Addition of discount received on Foreign Currency Convertible Bonds [FCCB] buyback u/s 28(iv) - HELD THAT:- In the present case, it is a matter of record that the amount having received as cash receipt due to the waiver of loan. Therefore, the very first condition of Section 28(iv) which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount can be taxed under the provisions of Section 28(iv) - benefit to be received by the assessee has to be in some form other than in the shape of money so as to bring the same within the ambit of Section 28(iv). See M/S. XYLON HOLDINGS PVT. LTD. [ 2012 (9) TMI 449 - BOMBAY HIGH COURT] Grant of deduction u/s 80-IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and after concluding that the purchases were in nature of job work liable to the provision of tax deducted at source u/s 194C of the Act. 2. Whether on the facts and circumstances of the case and in law the Ld CIT(A) has erred in deleting the disallowance of ₹ 44,65,86,415/-made u/s 40(a)(ia) of the I T Act 1961 in respect of the import purchases without appreciating that the disallowance made by the AO was after analyzing the facts of the case and after concluding that the purchases were in nature of job work liable to the provision of tax deducted at source u/s 194C of the Act. 3. Whether on the facts and circumstances of the case and in law the Ld CIT(A) has erred in deleting the disallowance of ₹ 2,88,52,671/-made u/s 40(a)(ia) of the I T Act 1961 in respect of the freight payment on raw-materials without appreciating that the disallowance made by the AO was after analyzing the facts of the case and on the AO had concluded that the freight payment on raw-materials were in nature of job work liable to the provision of tax deducted at source - u/s 194C of the Act. The CIT(A) has failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill the condition laid down u/s. 80IB(2)(iv) of the Income Tax Act 1961? 9. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has in erred in deleting the disallowance deduction claimed of ₹ 81,96,759/- u/s. 80IA of the Act without considering the fact that the assessee did not set-off unabsorbed depreciation before making the claim in violation of the provision of section 80IA(5) of the Act when the law is very clear that brought forward unabsorbed depreciation has to be first adjusted against the profit of the undertaking and only such profit of the undertaking which are in excess of such unabsorbed depreciation can be allowed as deduction u/s. 80IA of the Act . 10. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) is perverse in applying the decision of the Hon'ble Bombay High Court in assessee's own case for AY 2006-07 and 2007-08 when the Hon'ble Court's order was in the context of applicability of CBDT Circular No.1 of 2016 whereas the issue in the impugned matter is different and not covered by CBDT Circular No. 1 of 2016? Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. DR, while relying on the order of Ld. AO, could not controvert the aforesaid fact. In the above background, we proceed to dispose-off the appeals as argued before us. 3.1 The assessee being resident corporate assessee stated to be engaged in manufacturing of adhesives was assessed for impugned AY in scrutiny assessment u/s 143(3) by Ld. Additional Commissioner of Income Tax-Range 3(2), Mumbai [AO] on 08/03/2013 wherein the income was determined at ₹ 222.98 Crores after certain additions / disallowances as against returned income of ₹ 119.60 Crores e-filed by the assessee on 29/09/2010. 3.2 The assessee has been saddled with certain disallowances u/s 40(a)(i) 40(a)(ia) in the impugned AY in view of the fact that the assessee was treated as assessee-in-default vide orders passed u/s 201(1) / 201(1A) etc. dated 25/03/2011 for AY 2009-10 order dated 28/01/2009 for AY 2007-08, with respect to certain payments made in those years and the assessee was saddled with disallowances u/s. 40(a)(i) 40(a)(ia) in those years. Since similar payments were made by the assessee during impugned AY, the same also call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2009-10 which was agitated before this Tribunal wherein the view taken in AY 2007-08 was followed by the Tribunal. Nothing has been demonstrated before us to suggest any change in material facts or circumstances. Further, nothing contrary has been brought on record to suggest that aforesaid rulings are not applicable to the facts of the present case. Therefore, respectfully following the consistent view of the Tribunal, we dismiss ground nos. 1 to 4. 4.1 Ground Nos. 5 6 are related with disallowance u/s 14A. During assessment proceedings, it transpired that the assessee earned exempt income of ₹ 2.93 Crores and offered suo-moto disallowance of ₹ 22.60 Lacs against the same in the computation of income. However, not satisfied with assessee s working, Ld. AO computed aggregate disallowance u/r 8D for ₹ 26.90 Lacs which comprised-off of interest disallowance u/r 8D(2)(ii) for ₹ 20.95 Lacs and expense disallowance u/r 8D(2)(iii) for ₹ 5.95 Lacs. After adjusting suo-moto disallowance offered by the assessee, the net disallowance thus worked out to be ₹ 4.30 Lacs. The Ld. first appellate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating the same as income u/s 28(iv) and relying upon the decision of Hon ble Bombay High Court rendered in Solid Containers Ltd. V/s DCIT 178 Taxman 192 , added the same to the income of the assessee. 5.2 The Ld. CIT(A) observed that, in terms of RBI circular, the proceeds of FCCB could be used only for the purpose of import of capital goods, new projects, expansion and modernization or overseas direct investment in joint ventures / wholly owned subsidiaries and expressly prohibits utilization of FCCBs for working capital, general corporate purpose and repayment of existing Rupee loans. It was also observed that since the assessee was not engaged in the business of giving and taking loans through debt instruments, the aforesaid reduction in loan liability could not be said to be on account of appellant s business or profession in the context of Section 28(iv). Relying upon the decision of Hon ble Bombay High court rendered in Bombay Gas Co. Ltd. Vs ACIT ITA No 646 and 1188 of 2009 for the proposition that waiver of loan taken for the purpose of acquiring capital assets would be on capital account and by making an observation that since the proceeds of bond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher judicial authorities. 5.5 The Hon ble Supreme Court in recent decision of CIT V/s Mahindra and Mahindra Ltd. [93 Taxmann.com 32] has observed as under: - 10. The term loan generally refers to borrowing something, especially a sum of cash that is to be paid back along with the interest decided mutually by the parties. In other terms, the debtor is under a liability to pay back the principal amount along with the agreed rate of interest within a stipulated time. 11. It is a well-settled principle that creditor or his successor may exercise their Right of Waiver unilaterally to absolve the debtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. The waiver may be a partly waiver i.e., waiver of part of the principal or interest repayable, or a complete waiver of both the loan as well as interest amounts. Hence, waiver of loan by the creditor results in the debtor having extra cash in his hand. It is receipt in the hands of the debtor/assessee. The short but cogent issue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbit of Section 28(iv). 5.6 Similar view has been taken by Hon ble Bombay High Court in CIT V/s Xylon Holdings Pvt. Ltd [supra] wherein the case law of Solid Containers Ltd. [supra] as relied upon by Ld. AO, has been distinguished. Similar view has been expressed in CIT V/s Santogen Silk Mills Ltd. [supra]. 5.7 Respectfully following the aforesaid binding judicial precedents, we confirm the view taken by Ld. first appellate authority. This ground stands dismissed. 6.1 In ground No.8, the revenue is aggrieved by grant of deduction u/s 80-IB. The assessee claimed deduction u/s. 80IB amounting to ₹ 515.68 Lacs, being 30% of profit earned from M-seal unit situated at Daman . The said unit became operational in 2002 and thereafter, the assessee had been claiming the said deduction from year to year. However, the same was disallowed by the department in all the earlier years. Keeping in view the same, the said deduction was disallowed in this AY also. The Ld. CIT(A), following the favorable decision of Tribunal for AY 2006-07 vide ITA No.3300/Mum/2009, allowed the deduction, against which the revenue is in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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