TMI Blog2020 (11) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... the land for textile Special Economic Zone (SEZ) - Acquisition/identifying and liaison of a textile Aparel Park - HELD THAT:- Assessee has not let in any evidence to establish the fact that the amount was either advanced for business purpose or for commercial expediency and it was not the case of the assessee itself that the amount was advanced in previous year. The CIT (Appeals) has recorded a finding that the assessee has neither acquired the land nor has set up any SEZ. Therefore, in the fact situation of the case, we deem it appropriate to remit the matter for re consideration to the tribunal afresh. Accordingly, the second substantial question of law is answered. MAT Computation - Disallowance u/s 14A not be added to the Book Profits of the assessee under section 115JB - HELD THAT:- Tribunal by placing reliance on decision of the Supreme Court in APOLLO TYRES [2002 (5) TMI 5 - SUPREME COURT] has held that Assessing Officer while determining book profits under Section 115JB of the Act cannot tamper with the profits as per profit and loss account prepared in accordance with the Companies Act except in the manner provided in Explanation 1 to Section 115JB - As held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under Section 10B of the Act. For the aforementioned reasons, the fifth substantial question of law is also answered against the revenue and in favour of the assessee. - I.T.A. NO.77 OF 2015 - - - Dated:- 2-11-2020 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T. NARENDRA PRASAD APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) RESPONDENT (BY SRI. ASHOK A. KULKARNI, ADV.) JUDGMENT ALOK ARADHE J., This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court vide order dated 04.08.2015 on the following substantial question of law: (i) Whether on the facts and in circumstances of the case, the Tribunal is right in law in holding that the amount of ₹ 62,84,681/- advanced by the assessee to M/s. Hinduja Realtors Pvt. Ltd, which is a sister concern of the assessee, for payment of Municipal Taxes, without charging any interest on the same is to be treated as business expenditure, without appreciating that the assessee does not have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its sister concern without charging interest on the same. It was further held that aforesaid monies have been advanced out of borrowed funds and interest should have been charged on the same. Accordingly interest to the tune of ₹ 6,10,75,200/- was charged. The Assessing Officer also made an addition in respect of claim under Section 115JB of the Act and deleted portion of common expenses which were allocated. The set off of profits of export oriented units against non export oriented unit's losses and brought forward unabsorbed depreciation was also not allowed. 3. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 25.02.2013 inter alia held that advance of ₹ 53.77 Crores given to M/s Hinduja Relators Pvt. Ltd. is only out of commercial expediency and can be considered as advance for business purpose. It was further held that there was neither any commercial expediency nor any business transaction with M/s Hinduja Investments Pvt. Ltd. For giving an interest free advance of ₹ 7 Crores. It was further held that expenses incurred towards legal and professional fees, rates and taxes, insurance, manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export oriented units and it ought to have been appreciated that the Assessing Officer has rightly allocated expenses on turnover basis. It is also submitted that assessee had not maintained separate books of accounts. It ought to have been appreciated by the tribunal that adjustment and set off is governed by Section 70 of the Act and the issue was covered in favour of the revenue in view of the judgment of this court. In support of aforesaid submissions, reliance has been placed on decisions of Supreme Court in 'S.A.BUILDERS LTD. VS. COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH', (2007) 158 TAXMAN 74 (SC) 'COMMISSIONER OF INCOME-TAX VS. YOKOGAWA INDIA LTD', (2017) 77 TAXMANN.COM 41 (SC) and M/S KARLE INTERNATIONAL PRVIATE LTD. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX', I.T.A.NO.377/2017 DECIDED ON 07.09.2020. 6. On the other hand, learned counsel for the assessee submitted that amount of ₹ 7 Crores was alone advanced by the assessee to M/s Hinduja Investments Pvt. Ltd. For acquisition / identification and liaison towards exploring possibility of expanding in textile apparel park. Therefore, the amount was advanced as a matter of commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an advance of ₹ 7 Crores was given to Hinduja Investments Pvt. Ltd. for acquiring the land for textile Special Economic Zone (SEZ). However, the assessee neither acquired the land nor set up any SEZ. Therefore, the Commissioner of Income Tax (Appeals) held that there was neither any commercial expediency nor any business transaction for giving an interest free advance of ₹ 7 Crores. However, the tribunal has reversed the aforesaid finding on the ground that the aforesaid sum is opening balance on 01.04.2007 and revenue having accepted the loan advanced for the purpose of business in past assessment could not seek to decline the claim as not related to business. However, the tribunal itself has recorded a finding that the assessee has not led any evidence in this regard. The relevant extract of the order passed by the tribunal reads as under: As far as the aforesaid sum is concerned, it was claimed by the assessee that the sum in question was given to HIPL for the purpose of acquiring and identifying land for setting up textile apparel park. As we have already seen, the assessee has not let in any evidence in this regard. It is however seen from page 8 of the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. However, the Assessing Officer has not mentioned anything contrary in his remand report, therefore, the Commissioner of Income Tax (Appeals) has permitted the allocation of the expenses incurred by the assessee viz., legal and professional fees, rates and taxes, insurance, managerial remuneration and miscellaneous expenses. The Income Tax Appellate Tribunal has held that the expenses related exclusively to non export oriented units and has affirmed the finding recorded by the Commissioner of Income Tax (Appeals). For the aforementioned reasons, the fourth substantial question of law is also answered against the revenue and in favour of the assessee. 12. Admittedly, the decision rendered by this court in case of YOKOGAWA has been upheld by the Supreme Court from perusal of para 29 of the order passed by the tribunal, it is evident that the revenue has not disputed that the ratio laid down in YOKOGAWA supra is applicable to the facts of the present case. It is pertinent to mention that the decision of this court in M/S KARLE INTERNATIONAL PVT. LTD. Supra is not applicable to facts of the case as in the aforesaid case, the assessee had not claimed any de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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