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TMI Blog2019 (7) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Ltd. Vs. Additional CIT-Range-2(1), Mumbai, bearing ITA 5963/Mum/2011. The operative portion of the decision of ITAT is reproduced below:- (D). GROUND OF APPEAL NO.5 : Disallowance of amortization of premium on leasehold land: 14. The A.O had during the course of the assessment proceedings disallowed an amount of Rs. 1,04,86,210/- which was claimed by the assessee as a revenue expenditure towards amortization of premium on leasehold land. The A.O holding a conviction that the amortization of premium on leasehold land was in the nature of premium paid for long term lease, and thus being capital in nature, was not allowable to be charged to the profit & loss a/c. The assessee assailed the aforesaid addition/disallowance before the CIT(A), who therein being of the view that there was no provision for amortization of the capital expenditure incurred on lease premium, therefore held that the same was not allowable as a revenue expenditure as claimed by the assessee. 15. The assessee aggrieved with upholding of the disallowance of amortization of premium of leasehold land by the CIT(A), had therein carried the matter in appeal before us. That at the very outset it was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said judgment of the Hon'ble Jurisdictional High Court in the case of Reliance Industrial Infrastructure Ltd. (supra). We find that the assessee had entered into an agreement with various parties for the purchase of leasehold lands at various places, which were to be used for its business operations, viz. for establishing retail outlets, LPG bottling plants, refineries etc. The premium paid by the assessee corporation was one of the mode of giving compensation to the landlords, besides nominal annual rent paid to them. It is thus the contention of the assessee that the premium paid was in the nature of rent, and as such the amortization of premium should be considered as a revenue expenditure. Per contra, the Ld. D.R relied on the orders of the lower authorities, and therein averred that as the said payment by the assessee corporation was clearly by way of a capital expenditure, therefore the same had rightly been held as not allowable as a revenue expenditure by the lower authorities. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material produced before us. We are of the considered view that after appreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advantage which the assessee obtained in a commercial sense, the expenditure appears to be revenue expenditure. We thus are persuaded to subscribe to the view of the Ld. A.R that the amount of Rs. 1,04,86,210/- pertaining to amortization of premium on leasehold land was allowable as a revenue expenditure in the hands of the assessee corporation. The Ground of Appeal No. 5 raised by the assessee before us is thus allowed. 4. On the other hand, ld. D.R. had not disputed the aforesaid factual position. 5. After having heard the counsels at length and after having gone through order of ITAT as mentioned above in assessee's own case, we find that the identical issue has already been decided by the Hon'ble ITAT in ITA No. 5963/Mum/11 for AY 2004-05 in assessee's own case. Therefore, respectfully following the decision of the Coordinate Bench of Hon'ble ITAT and in order to maintain judicial consistency, we apply the same findings which are applicable mutatis mutandis in the present case. Resultantly, this ground raised by the assessee stands allowed. Ground Nos. 2, 3 & 4 6. These grounds raised by the assessee are inter related and inter connected and related to challenging the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal had deleted the addition by observing as under:- "8.4 After considering the facts of the afore mentioned decided case and the judgments passed by the Hon'ble Bombay High Court we are of the considered view that if there is interest free funds available with the assessee which are sufficient to meet its investment and at the same time the assessee had raised a loan, then it can be presumed that the investments were from interest free funds available. We find support from the judgment rendered by the Jurisdictional High Court in the case of 'Reliance Utilities and Power Ltd.". and also while the relying upon the judgment of Hon'ble Bombay High Court in the case of East India (supra) and considering the decision of Calcutta High Court in similar issue had arisen it was rightly held that if assessee is having interest free fund sufficient to meet the investments then it can be safely presumed that the investments were from the interest free fund available. Therefore, after considering the facts of the present case and also taking into consideration the findings recorded by the Revenue Authority, this presumption is established. Hence, in the net result, this ground of appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Incremental total own funds' with the assessee corporation since the F.Y. 1986-87 were substantially enough to fund the 'Incremental investment in the investments yielding tax free income', and as averred by the Ld. A.R, it could safely be concluded that the investments in the tax free income yielding investments, were throughout made by the assessee corporation out of its interest-free funds, and thus no part of the interest expenditure could be related to such tax free income yielding investments. We are of the considered view that the issue involved in the case of the present assessee, as observed by us hereinabove is squarely covered by the order of the Tribunal in the assessee's own case for A.Ys. 2002-03 and 2003-04. We thus are of the considered view that if the assessee was having substantial interest free funds, then irrespective of the fact that it had also borrowed interest bearing funds, it can safely be presumed that the investments had been made from the interest free funds available with the assessee. We find that our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Reliance Utility and Power Ltd. (Supra), which ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of our aforesaid observations are of the considered view that both on facts and the settled position of law, the adhoc disallowance made by the A.O u/s 14A cannot be approved. We thus set aside the orders of the lower authorities and delete the disallowance made in the hands of the assessee u/s 14A. The Ground of appeal No. 2 and 3 raised by the assessee before us are thus allowed. 8. On the other hand, Ld. DR contested the appeal and relied upon the orders passed by the revenue authorities. 9. After having heard the counsels at length and after having gone through order of ITAT as mentioned above in assessee's own case, we find that the identical issue has already been decided by the Coordinate Bench of ITAT in ITA No. 5963/Mum/11 for AY 2004-05 in assessee's own case. Therefore, respectfully following the decision of the Coordinate Bench of Hon'ble ITAT and in order to maintain judicial consistency, we apply the same findings which are applicable mutatis mutandis in the present case. Resultantly, these ground raised by the assessee stands allowed. Ground Nos. 5 & 6 10. These grounds raised by the assessee are inter related and inter connected and relates to challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's own case. Therefore, respectfully following the decision of the Coordinate Bench of Hon'ble ITAT and in order to maintain judicial consistency, we apply the same findings which are applicable mutatis mutandis in the present case and restore these grounds of appeal to the file of Ld. CIT(A) with similar directions. Ground No. 7 14. This ground relates to Interest Income from Oil Bonds to be taxed as Business Income. 15. At the very outset, Ld. AR appearing on behalf of the assessee submitted before us that this ground is covered by the order of Coordinate Bench of ITAT in ITA No. 3636/Mum/13 and 4279/Mum/14 for AY 2006-07 and 2007-08 in assessee's own case, wherein the identical grounds raised in the present appeal have already been decided on merits. The operative portion of the decision of the Coordinate Bench is reproduced below:- 27. Ground No.8 relates to Interest Income from Oil Bonds to be taxed as Business Income. We have seen that this ground of appeal is identical to the ground no.10 of appeal for AY 2006-07 which we have restored to the file of ld. CIT(A) to decide afresh in accordance with the direction contained hereinabove. Thus, respectfully following the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Tribunal in assessee's own case for AY 2002-03 have passed the following order: "Ground No. 4. 10. This ground is against the disallowance of Rs. 5,33,97,234/- held to be prior period expenses. Similar issue was decided by coordinate bench in ITA No.1013/Mum/2001 and the operative para is reproduced below:- "2. Ground No.1 of the appeal is regarding disallowance of prior period expenses amounting to Rs. 34,51,324/-. 3. Learned Departmental Representative of the revenue supported the orders of authorities below. 4. It is submitted by ld. AR of the assessee that the amount of prior period expenses of Rs. 34.51 lakhs arises on account of various expenses for the reason that there was some mistake in making provisions in the relevant year and it constitutes only 0.03% of the turnover of the assessee, which is Rs. 1045.22 crores. It is submitted that under these facts, this issue is covered in favour of the assessee by the Tribunal judgment rendered in the case of Escorts Limited Vs. IAC reported in 79 ITD 291 (Del). Our attention was drawn to para No.118 to 121 of this Tribunal Judgment as per which under similar situation this issue was decided by the Tribunal in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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