TMI Blog2019 (7) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... ive any weight to this letter since it is contrary to the own version given by DSPML in the year 2002 as the payment towards ₹ Advisory fee for sale of controlling stake . A letter coming into existence after about 9 years from the date of invoice, cannot be taken into consideration at this stage. The ld. AR was called upon to place on record a copy of the agreement under which said sum of ₹ 1.00 crore was paid. He fairly expressed his inability to produce such an agreement, which on specific requisition by the lower authorities also could not be adduced. CIT(A) was fully justified in treating the entire amount of ₹ 1.74 crore as deductible in the computation of long term capital gain and not accepting the assessee s claim of treating ₹ 1.00 crore as deductible from non-compete fee chargeable as business income. Deduction u/s.35DDA towards VRS on accrual basis - HELD THAT:- Tribunal in assessee s own case for the immediately preceding assessment, which has been discussed of the order. The Tribunal has held the assessee to be entitled to deduction u/s.35DDA on the basis of incurring of liability. A further direction has been given to ensure that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses incurred by the assessee are deductible in full. As regards the remaining expenses, the ld. CIT(A) restricted the addition to 25%. Considering the peculiar circumstances prevailing in the extant case, we are of the considered opinion that it would be just and fair if the disallowance is restricted to 15% of such expenses Computation of deduction u/s.80HHC - confirmation of inclusion of commission income as part of total turnover in the computation of deduction and towards confirmation of exclusion of 90% of Service charges and Miscellaneous income from profits of business for deduction u/s.80HHC - HELD THAT:- Similar issue came up for consideration before the Tribunal in assessee s own case for the immediately preceding assessment year. Following the view taken by the Tribunal in assessee s own case for still another year, the matter has been remitted to the AO for a fresh decision. Both the sides are in agreement that the facts and circumstances of the extant ground are similar to those for the A.Y. 2002-03. Following the view taken for the immediately preceding assessment year, we set aside the impugned order and remit the matter to the file of AO for deciding this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame up for consideration before the Tribunal in assessee s own case for the immediately preceding assessment year [ 2019 (7) TMI 949 - ITAT PUNE] . The transfer pricing addition made in similar circumstances has been deleted. Considering the entire conspectus of the case, including the fact that the payment of Royalty to AEs was as per RBI norms, we are satisfied that the view taken by the ld. CIT(A) is unassailable. Interest u/s.234D - HELD THAT:- AR fairly conceded that in view of the retrospective amendment carried out to section 234D by insertion of Explanation 2 by the Finance Act, 2012 with retrospective effect from 01-04- 2003, the ground by the Revenue needs to be allowed. We, therefore, overturn the impugned order on this issue and uphold the charging of interest u/s.234D. - ITA No.1676/PUN/2011, ITA No.54/PUN/2012 - - - Dated:- 18-7-2019 - Shri R.S. SYAL, Vice President And Shri Partha Sarathi Chaudhury, Judicial Member For the Assessee : Shri R. Murlidhar And Shri Prashant Gandhi For the Revenue : Ms. Kesang Y. Sherpa, CIT ORDER PER R.S.SYAL, VP : These two cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant year should not be charged to tax, since the deduction itself has not been allowed by the Tribunal in the preceding year. 6. The second additional ground is in respect of income of ₹ 20,10,925/- which was realized in the preceding assessment year but not offered for taxation. Such amount was treated as outstanding liability. The Tribunal did not approve the contention of the assessee in its order for the immediately preceding assessment year and ordered to include the same in the total income. The ld. AR contended that a sum of ₹ 20,10,925/- which was not offered for taxation in the preceding year, was, in fact, offered in the year under consideration. Under these circumstances, we direct the AO to verify the assessee s contention regarding inclusion of ₹ 20,10,925/- in the income from sale of scrap in its accounts for the year under consideration. If the amount is found to be included in the total income for the year under consideration and offered for taxation, then the same should be excluded as it has been directed to be charged to tax in the preceding year. 7. Ground no.1 of the assessee s appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-solicitation fee. The assessee attempted to reduce a sum of ₹ 1.00 crore from such non-compete fee allegedly on the ground that it paid non-compete fee to DSPML, which was a part of payment to DSPML. We have gone through the invoice of DSPML, whose copy is available at page 233 of the paper book. This invoice dated 23-08-2002 clearly mentions that the said sum of ₹ 1.74 crore and odd is towards Advisory fee for controlling stake in REL along with the amount of service tax and offered for taxation. The assessee bifurcated ₹ 1.74 crore into two components. Whereas a sum of ₹ 74.92 lakh was considered as deduction in the computation of long term capital gain arising from the sale of shares, it considered a sum of ₹ 1.00 crore towards noncompete fee paid to DSPML, thereby reducing the business income to this extent. The invoice clearly demonstrates that a sum of ₹ 1.74 crore was entirely paid towards Advisory fees for sale of controlling stake in REL. The assessee tried to fortify its contention with the help of a letter dated 22-09-2011 received from DSPML. We are unable to give any weight to this letter since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made on page 12 para 17. Such ground in the assessee s appeal has been allowed. Following the precedent, we allow this ground of appeal. 14. Ground no.4 of the assessees appeal and ground no.3 of the Revenue s appeal are in respect of deduction towards provision for warranty. 15. Both the sides fairly agreed that the facts and circumstances of these grounds are similar to those of preceding year. The Tribunal has discussed this aspect in para no.8 to 11 of its order in which it has been held that provision for warranty should be allowed at 0.4% of net sales in the Atlas Copco Division. As regards the Chicago Pneumatic Division, since the actual expenditure was more than the amount of provision, the Tribunal directed to allow deduction for the entire amount of provision. Relevant discussion for the year under consideration has been made at page no.29 of the impugned order, on which a table has been drawn depicting the position of provision. As per this table, the actual expenses incurred by the assessee stand at ₹ 2.85 crore. There is a recovery of claim to the tune of ₹ 24.37 lakh. If claims recovered are reduced from the actual expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any such details, we uphold the view taken by the ld.CIT(A) in sustaining this disallowance. 19. Similar is the position regarding donations of ₹ 6,26,628/-, for which the assessee could not adduce any evidence. The impugned order is, therefore, upheld to this extent. 20. As regards the fee of ₹ 13,53,956/- for handling share records is concerned, we find that the same is in respect of shares issued by the assessee company and not for handling any investments of the assessee. Such expenses incurred by the assessee are deductible in full. 21. As regards the remaining expenses, the ld. CIT(A) restricted the addition to 25%. Considering the peculiar circumstances prevailing in the extant case, we are of the considered opinion that it would be just and fair if the disallowance is restricted to 15% of such expenses. We order accordingly. 22. Ground no.6 of the assessee s appeal is against the confirmation of inclusion of commission income of ₹ 7,87,32,730/- as part of total turnover in the computation of deduction u/s.80HHC. The later part of the ground is towards confirmation of exclusion of 90% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g term capital gain on Revathi CP shares would stand at a higher level, which would result in lower tax liability and vice-versa . 27. Section 112 of the Act deals with determination of tax on long term capital gains. Clause (d) of section 112(1) provides for the determination of tax arising from long term capital gain in the hands of a recipient, who is not an individual or HUF or a domestic company. The assessee is covered under this clause. Under the main provision of clause (d), income-tax should be calculated on long term capital gain @20%. First proviso to section 112 (1) states that where the tax is payable in respect of income arising from the transfer of long term capital asset, being the listed securities (other than a unit), then such amount should be charged to tax at the rate of 10%. Obviously, the mutual fund investments are listed securities. Now the question arises as to whether loss from listed securities, being, on mutual fund investments should be reduced from gains from other listed securities, being, shares of Revathi? It is pertinent to note that section 112 falls under Chapter XII of the Act with the heading Determination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds against the long term capital gain from transfer of Mulund property. This is absolutely permissible under section 70(3) of the Act. We, therefore, hold that no exception can be taken to the action of the assessee and accordingly the amount of long term capital gain on Revathi CP shares at ₹ 7.09 crore should be taxed under proviso to section 112 of the Act. Ex consequenti, this ground of appeal is allowed. 29. Ground no.1 of the Revenue s appeal is against the amalgamation expenditure of ₹ 49,60,536/- incurred by the assessee on stamp duty for transfer of immovable assets, which was held by the CIT(A) to be an allowable expenditure u/s.35DD of the Act. 30. Both the sides are consensus ad idem that similar issue came up for consideration before the Tribunal in the case of the assessee for the A.Y. 2002-03. We find that relevant discussion has been made on page 13 para 22 of the order by which the issue has been determined in favour of the assessee. Following the view taken for the immediately preceding year, we dismiss this ground of appeal by the Revenue. 31. Second ground by the Revenue is against allowing cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further observed that similar issue came up for consideration before the Tribunal in assessee s own case for the immediately preceding assessment year. The transfer pricing addition made in similar circumstances has been deleted. Relevant discussion has been made on page 39 onwards of the order. Considering the entire conspectus of the case, including the fact that the payment of Royalty to AEs was as per RBI norms, we are satisfied that the view taken by the ld. CIT(A) is unassailable. This ground, therefore, fails. 35. Last ground taken by the Revenue in its appeal is against the direction of the ld. CIT(A) for not charging interest u/s.234D. 36. The ld. AR fairly conceded that in view of the retrospective amendment carried out to section 234D by insertion of Explanation 2 by the Finance Act, 2012 with retrospective effect from 01-04- 2003, the ground by the Revenue needs to be allowed. We, therefore, overturn the impugned order on this issue and uphold the charging of interest u/s.234D of the Act. 37. In the result, both the appeals are partly allowed. Order pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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