TMI Blog2019 (12) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... for fresh adjudication. The assessee committed before us that he will file all the required details to prove the commission expenses before the AO and incase assessee fails to explain the same, the AO can repeat the addition. Hence, this issue is set aside to the file of the AO. Claim of deduction in respect of education cess - HELD THAT:- Education-cess is part of the Income tax and cannot be allowed as deduction. See K. SRINIVASAN [ 1971 (11) TMI 2 - SUPREME COURT] Deduction under section 80IA - HELD THAT:- We noted that the Revenue has now only relied on the assessment order and no arguments were made. We noted that even this issue is covered by the CBDT Circular No 1/2016 dated15.02.2016, wherein the initial assessment order is defined. Even this provision is interpreted by the Hon ble Supreme Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. [ 2012 (10) TMI 1125 - SC ORDER] . Hence, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we upheld the same. This issue of Revenue s appeal is dismissed. Addition u/s 14A - disallowance of interest expenditure under Rule 8D(2)(ii) - Disallowance under Rule 8D(2)(iii) being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Rules. For this assessee has raised the following ground: - 1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) erred in confirming the disallowance under section 14A of the Income-tax Act ( the Act ) to the extent of ₹3,34,685/-. 3. Briefly stated facts relating to AY 2007-08, are that the assessee has earned tax free interest bonds amounting to ₹5,20,918/- and claiming the same as exempt income under section 10(15) of the Act. The assessee has made suo moto disallowance of expenses relatable to exempt income amounting to ₹60,913/-. The AO disallowed the interest amounting to ₹71,21,033/- and administrative expenses at ₹9.30,863/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) restricted the disallowance on account of interest at ₹2,95,995/-. Aggrieved, assessee came in appeal before Tribunal on this issue. 4. Before us, the assessee contended that the investments in tax free bonds of UTI is made at &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the previous year 2006-07 relevant to AY 2007-08, the assessee incurred expenditure on commission on sales amounting to ₹9.76 crores and claim deduction in the original return of income. During the course of survey on the premises one of the commission agents namely Nischal Corporate Securities Limited, the assessee vide letter dated 31.03.2009 stated that it is not possible for assessee to provide documentary evidences to substantiate the transaction of commission paid to Nischal Corporate Securities Limited. The assessee in the revise return of income filed on 31.03.2009, suo moto disclosed the commission expenses as income amounting to ₹1,56,29,741/-. Subsequently, during the course of scrutiny assessment proceedings assessee was asked to filed complete details of commission payment and also justification providing name and addresses of the parties, the assessee vide letter dated 29.12.2009 decided to forego of its claim of commission expenses amounting to ₹8,26,90,631/-. The AO as well as CIT(A) has reproduced the relevant letter dated 29.12.2009, wherein the disclosure was made only with a condition that no panel proceedings will be initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts are there. The assessee has admitted payment of commission as bogus and the same has been added to the total income of the assessee. The principle of resjudicata does not apply to Income-tax proceedings. So even if the AO ahs allowed payment of commission in ensuing years, commission payment is not admissible in this year. Reliance on case law is placed. This ground of appeal is dismissed. Aggrieved, now assessee is in appeal before Tribunal. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the revised return filed on 19.12.2009 was invalid return filed belatedly and hence, no cognizance can be taken of the same. We noted that the assessee has now contested by filing all the evidences before CIT(A) but CIT(A) has not gone into the details and confirmed the disallowance of commission expenses simplicitor. Hence, we are of the view that this issue needs detailed verification at the level of AO afresh. Hence, we set aside the orders of the lower authorities i.e. the order of CIT(A) and that of the AO and remand the matter back to his file for fresh adjudication. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taxation laws in our country. The power to increase federal tax by surcharge by the federal legislature was recommended for the first time in the report of the committee on Indian Constitutional Reforms, volume I, part I. From paragraph 141 of the proposals it appears that the word surcharge was used compendiously for the special addition to taxes on income imposed in September, 1931. The Government of India Act, 1935, Part VII, contained provisions relating to finance, property, contracts and suits. Sections 137 and 138 in Chapter I headed finance provided for levy and collection of certain succession duties, stamp duties, terminal tax, taxes on fares and freights, and taxes on income, respectively. In the proviso to section 137 the federal legislature was empowered to increase at any time any of the duties or taxes leviable under that section by a surcharge for federal purposes and the whole proceeds of any such surcharge were to form part of the revenues of the federation. Sub-section (3) of section 138 which dealt with taxes on income related to imposition of a surcharge. Under the Government of India Act, 1935, the surcharge was levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions for a surcharge on income-tax. It is significant that section 2 of the Finance Act of 1971 speaks only of income-tax and not of any surcharge. It is only in the modifications made in the Schedule to the Finance Act of 1970 that there is provision for a surcharge. The above legislative history of the Finance Acts, as also the practice, would appear to indicate that the term income-tax as employed in section 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of article 271 of the Constitution. The phraseology employed in the Finance Acts of 1940 and 1941 showed that only the rates of income-tax and super-tax were to be increased by a surcharge for the purpose of the Central Government. In the Finance Act of 1958, the language used showed that income-tax which was to be charged was to be increased by a surcharge for the purposes of the Union. The word surcharge has thus been used to either increase the rates of income-tax and super-tax or to increase these taxes. The scheme of the Finance Act of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case, will be the Finance Act, enacts that income-tax shall be charged for any assessment year at the rate or rates specified therein. The distinction made by the High Court that the surcharge are levied only under the Finance Act and income-tax under the Act may not hold good if the above view which has been pressed on behalf of the revenue were to be accepted. In our judgment it is unnecessary to express any opinion in the matter because the essential point for determination is whether surcharge is an additional mode or rate for charging income-tax. The meaning of the word surcharge as given in the Webster's New International Dictionary includes, among others, to charge (one) too much or in addition................ ; also additional tax . Thus, the meaning of surcharge is to charge in addition or to subject to an additional or extra charge. If that meaning is applied to section 2 of the Finance Act, 1963, it would lead to the result that income-tax and super-tax were to be charged in four different ways or at four different rates which may be described as : (i) the basic charge or rate (In Part I of the First Schedule); (ii) surcharge ; (iii) spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stalled Windmill at Village Vankusawade, District Satara, Maharashtra and the same qualifies as power generating unit keeping in view of the provisions of section 80IA(4)(iv) of the Act. The said Wind Farm was commissioned in September, 1999 and the assessee as per the provisions of section 80IA of the Act claimed deduction at the option of the assessee for the first time in AY 2005-06. He stated that as per the provisions of section 80IA(2) of the Act, the deduction under section 80IA is available at the option of the assessee for any ten consecutive assessment years out of the 15 years beginning from the year in which the unit begins to generate power. The assessee contended that assessee has not opted to claim deduction under 80IA of the Act for the first five years actually and factually, the assessee had exercised the option to claim deduction under section 80IA of the Act for the first time in AY 2005-06 which is initially assessment year in term of the section. The CIT(A) following the decision of Hon ble Madrass High court in the case of Velayuthasamy Spinning Mills (P) Ltd., Vs ACIT (2010) 231 CTR 368 allowed the claim of the assessee by observing in para 5 as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Hon ble Madrass High court in Velayudhaswamy Spinning Mills (P) Ltd. (supra). Hence, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we upheld the same. This issue of Revenue s appeal is dismissed. 15. The first common issue in these cross appeals of assessee and Revenue in ITAs No 3789 3811/Mum/2012 for AY 2008-09 is as regards to the computation of disallowance of expenses relatable to exempt income under section 14A of the Act read with Rule 8D of the rules. For this assessee has raised the following grounds: - Disallowance under section 14A of the Income Tax Act, 1961 ( the Act ) : ₹ 97,63,086/- 1.1 The CIT(A) erred in confirming the action of the AO in applying the provisions of Rule 8D and holding that the entire expenses are disallowance under section 14A of the Act as expenses incurred for earning exempt income. 1.2 The CIT(A) failed to appreciate that the disallowance made in the return of income was sufficient and no further disallowance was called for. 1.3 The CIT(A) failed to appreciate that the provisions of sub secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,73,45,096/-. It is explained that when the suppliers extend the credit extra interest is paid, which is known as interest on buyer credit and it has nothing to do with the investment activity. Similarly, discounting charges are related to the credit facility availed by the assessee through bill of exchange from its creditors and, therefore, it is claimed that it also has nothing to do with the investment activity. Similarly, assessee has also claimed that it has paid interest on vehicle loan ₹ 5,25,527/- which could neither have been utilized for any other purpose nor relates to investment activity directly or indirectly. Therefore, AO is directed to examine the claim of the assessee with regard to these three items of interest and if it is found that they are not related to the investment activity but directly related to other business activities, then exclude them from the interest taken for calculating the disallowance under Rule 8D Accordingly, the ground of appeal is partly allowed. Aggrieved, both Revenue and assessee came in appeal before Tribunal. 18. We have heard rival contentions and gone through the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following ground No. 2.1 as under: - 2.1 The CIT(A) erred in confirming the action of the AO in disallowing the commission expense amounting to ₹10,92,49,857/- on the ground that the said expenses were not claimed by way of revised return. 22. Both sides conceded that the facts and circumstances are exactly identical in AY 2007-08 decided above. As the facts and circumstances are exactly identical in this year also, we set aside this issue to the file of the AO for fresh adjudication in term of the decision for AY 2007-08 above. This issue of assessee s appeal is allowed for statistical purposes. 23. The next issue in this appeal of Revenue in ITA No. 3811/Mum/2012 for AY 2008-09 is as regards to the order of CIT(A) allowing claim of deduction under section 80IA(4)(iv) of the Act not setting of losses of earlier years with current years income. For this Revenue has raised the following ground No. 3: - 3. (A) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing assessee s claim of deduction of ₹1,39,36,154/- under section 80IA(4)(iv) ignoring the requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge @ 10% 38,442,050 Add: Education cess @ 2% 10,85,205 Total Tax 435,548,421 Less: Tax deducted at Source 12,121,664 Less: Advance tax paid 342,000,000 Shortfall in assessed tax 81,426,757 Further, in the said assessment order, interest under section 234B has been computed as shown below: Amount ₹ Period No. of Months Interest ₹ From To 81,426,757 Apr 08 May 08 2 1,628,535 36,897,748 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct working of interest under section 234B is as shown below: Amount ₹ Period No. of Months Interest ₹ From To 81,426,757 Apr 08 May 08 2 1,628,535 36,265,347 May 08 Jan 10 20 7,253,069 11,961,348 Jan 10 Dec 10 11 1,315,748 10,197,353 The amount of ₹36,265,347 is calculated as under: Particulars Amount ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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