9911796707
Advanced Search 
TMI Blog2019 (2) TMI 1747X X X X Extracts X X X X X X X X Extracts X X X X ..... d from staff Rs. 2404593/- (iii) Profit on sale of assets Rs. 1115530/- (iv) Miscellaneous income derived from rents from transit camps, other recoveries from employees, receipts from buses Rs. 1397668/- (v) Insurance claim Rs. 231898830/- (vi) Sale of forms - Rs. 8 lacs III. Incidental expenditure allowed only @ 2% as against 5% claimed on interest income IV. Computation of income as per provisions of section 115JB on - a) Advance against deduction depreciation b) Addition of 8.57 crores and 50.13 crores to the book profits on account of unascertained liability. c) Addition of Rs. 46089897/- to book profits on account of interest on arbitration awards. 3. The first ground/issue is relating to the disallowance u/s 40(a)(ia) of the Income Tax Act, 1961 ( hereinafter referred to as 'the Act'). In respect of the interest and other expenses incurred by the assessee, the assessee did not deduct tax at source while making/crediting the aforesaid payments to payees. Therefore, the disallowance of expenditure u/s 40(a)(ia) of the Act has been made by the Assessing Officer (hereinafter referred to as AO) which has been further confirmed by the CIT(A). 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mnify the loss is business income of the assessee. We restore this issue for the limited purpose to the AO to verify whether the insurance claim received by the assessee is on account of loss of trading assets and the same has been booked as an expenditure in the earlier years. If it is found so, then to allow the insurance claim to be included into the income for the purpose of benefit u/s 80IA of the Act. This ground is, accordingly, partly allowed in favour of the assessee. 8. The next contention raised by the assessee is regarding income from sale of forms which admittedly is not related to the manufacturing activity of the assessee and we do not find any reason to interfere in the orders of the lower authorities in denying the aforesaid claim. 9. The next issue raised by the ld. counsel for the assessee in respect of incidental expenditure incurred for the purpose of earning of interest income from the banks. The ld. counsel for the assessee has submitted that the assessee generates huge interest income from the banks for which certain administrative expenses such as employment of full time employees etc. is incurred, therefore, a reasonable expenditure incurred for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee for computing the book profits u/s 115JB of the Act. 12. Now the contention of the ld. counsel for the assessee before us is that since assessee has wrongly booked the aforesaid amount as income of the assessee in the earlier years, hence, by way of an accounting entry for the year under consideration, the said amount has been reduced from the book profits as the taxes have already been paid by the assessee on the aforesaid amount. It is pertinent to mention here the ld. CIT(A), however, has made some observations that the assessee has tried to take undue benefit of the decision of the Hon'ble Supreme Court in the case of NHPC (supra) by stating that the assessee was required to rectify entries in the respective years in which sales were booked and that the act of the assessee in revising the entire amount during the current year's book profit was not justified. 12. We have considered the rival contentions. In our view, even if we go by the analogy adopted by the CIT(A), it will result into complicated and multiplied assessment of different years whereas the net effect for the year under consideration will remain the same. Admittedly, the assessee has already booked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court did not find reason to interfere in the order of the CIT(A) in identical facts in earlier assessment year. The relevant part of the order of the Tribunal is reproduced as under : 10. On consideration of the rival submissions, we find that CAT payments were made for maintaining the environment and afforestation of the catchment area of the project, which is an operational project, to minimize silt erosion. The expenditure is vital for the continued power-generation by any hydro-power generating company. It is incurred on land not owned by the assessee and is incurred every year. No tangible or intangible asset comes into existence by virtue of this expenditure. All these facts are undisputed and have not been rebutted by the Revenue. It is evident from the above facts that the CAT expenditure is related to carrying on of the business operations of the assessee. It is an integral part of the profit earning process. Moreover the expenditure has not resulted in the acquisition of any tangible/ intangible asset. The expenditure therefore is revenue in nature. Merely because the expenditure results in ending benefit is not enough to categorize it is capital in na ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
