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TMI Blog2014 (3) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... s ground of the appeal are similar to that of the Asstt. Year 1994-95, wherein the Tribunal has held as under: 6. We find that we have decided this issue in assessment year 1994-95 vide consolidated order passed in ITA No. 3403/Ahd/1997 and CO No. 73/Ahd/2011 dated 31.1.2014, wherein, we have held as under: 14. The Ld. DR supported the order of Assessing Officer whereas the Ld. AR of the assessee contended that the name of Adani Exports will be displayed for ever and therefore, there was no basis for the Ld. CIT(A) to arrive at a conclusion that the expenditure would benefit the assessee over a period of 10 years and thereby allowing 1/10 of the same as deduction during the year under consideration. We find that in the instant case, it is not in dispute that the assessee during the year paid Rs. 7,00,000/- to Gujarat Cricket Association. As per agreement entered into with Gujarat Cricket Association which has been quoted by the Assessing Officer in the Assessment Year as well as copy of which is placed at page numbers 44 to 45 of the assessee's paper book it is observed that as per the said agreement, the assessee agreed to meet payment of Rs. 25,00,000/- including Rs. 7,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2435/Ahd/1998, we have held as under: 12. We have heard rival submissions and perused the orders of the authorities below and material available on record. In the instant case, the facts of the case are that the assessee claimed higher depreciation at the rate of 40% on trucks given by it on lease. The AO disallowed the claim for higher depreciation at the rate of 40% on trucks given on lease to the assessee, and allowed depreciation at the rate 25% and as the trucks were actually used for less than 180 days by the assessee, he allowed depreciation at the rate 12.5% in place of 20% claimed by the assessee, and thereby made disallowance of Rs. 15,49,241/- for the reason that the trucks were not used by the assessee for the business of hire. On appeal, the CIT(A) allowed the claim of the assessee for the reason that the trucks were given on lease by the assessee which was one of the business of the assessee. Being aggrieved the Revenue is appeal before us. We find that the Hon'ble Apex Court in the case of ICDS Ltd. (supra) has held as under: Held, affirming the decision of the Tribunal, (i) that the assessee was a leasing company which leased out the trucks that it purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of ICDS Ltd. (supra). We, therefore, do not find any good reason to interfere with the order of the CIT(A) on this issue, and accordingly, the ground No. 2 of the appeal of the Revenue is dismissed. Following the above order of the Tribunal, we dismiss this ground of the appeal of the Revenue. 7. The ground No. 3 of the appeal of the Revenue is against the order of the CIT(A) in directing to allow deduction under section 80HHC for marine division. 8. Both the parties before us agreed that the facts and issues involved are similar to the Asstt. Year 1994-95 and 1995-96, in ITA No. ITA No. 2405 and 2435/Ahd/1998 wherein we have held as under: 18. We find that the facts and issue involved in the present year are similar to that of A.Y. 1994-95 and on the similar facts and circumstances of the case, Tribunal held as under: 36. We have heard the rival submissions, perused the orders of lower authorities and the material available on record. The undisputed facts are that the assessee in its marine division suffered loss of Rs. 13,50,71,719/- on export of trading goods and earned export incentives of Rs. 13,70,45,917/-. The assessee claimed deduction u/s. 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house would not be entitled to any deduction in cases where there is a loss but because disclaimer has been made both the export house and the supporting manufacturer would become entitled to deductions. The proviso to sub-section (3) of section 80HHC enables a disclaimer only to enable the export house to pass on deductions. It in no way reduces the turnover of the export house. In computing total income, the entire turnover is taken into account even though there is a disclaimer. Thus even though the disclaimer is made the taxable income of Rs. 4.39 crores has been arrived at by the Appellants after taking into account the entire turnover from export of trading goods. In arriving at the figure of Rs. 4.39 crores admittedly the loss of Rs. 6.86 crores has been taken into account. Even after disclaimer the turnover has remained the turnover of the Export House, i.e., the Appellants. The disclaimer is only for purposes of enabling the export house to pass on the deduction which it would have got to the supporting manufacturer. It follows that if no deduction is available, because there is a loss, then the export house cannot pass on or give credit of such non-existing deduction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that there is no profit from marine export and only profit was in the form of increment of 90% of export incentive provided under the section. The learned CIT(A) following his order passed in the assessment year 1994-95 and 1995-96 allowed the claim of the assessee for deduction under section 80HHC of Rs. 16,36,84,806/- which is equal to 90% of export incentives subject to the gross total income of the assessee. In view of our decision in the assessment year 1994-95 and 1995-96, the assessee is entitled for deduction under section 80HHC, after netting of loss from the export incentive which works out to Rs. 1,32,07,423/-. Thus, this ground of the appeal of the Revenue is allowed. 10. The ground No. 4 of the appeal of the Revenue is directed against the order of the CIT(A) directing the AO to consider net interest as against gross interest in indirect cost while working out deduction under section 80HHC from general division. 11. Both the parties agreed before us that the facts and issues involved are similar to that for A.Y. 1995-96, wherein the Tribunal in ITA No. 2405 and 2435/Ahd/1998 has held as under: 23. We have heard rival submissions and perused the orders of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit making, is still retains the character of capital expenditure, since the expenditure is directly related to the expansion of the capital base of the company. We, therefore, dismiss this ground of the appeal of the assessee. 14. The ground No. 3 of the appeal of the assessee is directed against the order of the CIT(A) in confirming the disallowance of Rs. 3,55,000/- as entertainment expenses. 15. At the time of hearing, the learned AR of the assessee has not pressed this ground of appeal, hence, the same is dismissed, as not pressed. 16. The ground No. 4 of the appeal of the assessee is directed against the order of the CIT(A) in confirming the addition of Rs. 13,93,492/- made for the alleged unexplained payment to Aditya Cargo Group. 17. Both the parties agreed that facts and issues involved in this ground of the appeal are similar to that for the A.Y. 995-96. In A.Y. 1995-1996, we held as under: 45. We have heard rival submissions and perused the material available on record. We find force in the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is dismissed as not pressed. 28. The ground No. 10 is against the order of the CIT(A) in setting aside the issue regarding the disallowance of interest of Rs. 11,52,124/- on account of advance given to Anurag Chemicals Ltd. 29. At the time of hearing, learned counsel for the assessee has not pressed this ground of appeal, hence, the same is dismissed as not pressed. 30. The ground No. 11 of the appeal is directed against the order of the CIT(A) in upholding the disallowance of Rs. 31,250/- under section 35D of the Act. 31. Both the parties agreed that the facts and issues involved in this ground are similar to that of Asstt. Year 1995-196. IN A.Y. 1995-96 in ITA No. 2405, 2435/Ahd/1998, we have held as under: 36. We find that the Tribunal in the case of Sirhind Steel Ltd. (supra) has held as under: 7. Since there is no amount outstanding on account of debentures and long-term borrowings as on the last day of the previous year, Explanation (c) to section 35D(3) is irrelevant. So is the case with Explanation (a) to section 35D(3) as cost of project is also much less than issued share capital. Therefore, we have to concentrate on the definition given to term "capital employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commencement of this Act form an identifiable part of the company's reserves within the meaning of Schedule VI, shall be disregarded in determining the sum to be included in the share premium account. (Emphasis supplied) A perusal of above-mentioned section will reveal that any share premium collected by a company shall be treated as if the same is paid-up share capital of the company and it is also required to be retained in a separate account. The said amount cannot be utilized for any purpose, other than the one specified in sub-section (2). If amount lying in separate premium account is used for any other purposes, it would tantamount to reduction in share capital which will attract the provisions of sections 100 to 105 of the Companies Act. 8. According to sub-section (2) the share premium account may be applied for the following purposes:-- (1) The paying up of fully paid bonus shares to be issued by the company to its members; (2) The writing off of preliminary expenses of the company; (3) The writing off of the expenses of, or underwriting commission paid or discount allowed on, any issue of shares or debentures of the company; (4) The providing of a pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the above decision of the Tribunal direct the AO to recompute the deduction allowable to the assessee under section 35D by including the share premium amount received by the assessee during the year along with the share capital received during the year for the purposes of taking amount of issued capital. Thus, the ground of the appeal of the assessee is allowed as above. Following the same, we allow this ground of the appeal of the assessee. 32. Ground No. 12 is against the order of the CIT(A) in holding that the levy of interest under section 234A & 234B of the IT Act is consequential. 33. Both the parties agreed that facts and issues involved in this ground is similar to that of Asstt. Year 1995-1996. In A.Y. 1995-96 in ITA No. 2405, 2435/Ahd/1998, we have held as under: 48. We have heard rival submissions and perused the material available on record. We find that for marine division netting was done as per the retrospective amendment brought by Finance Act, 2005 w.e.f. 1.4.1992 (5th proviso to section 80HHC(3)). In our considered view, to the extent of disallowance upheld in marine division, no interest would be chargeable. In this connection, our view finds support f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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