TMI Blog2013 (11) TMI 1774X X X X Extracts X X X X X X X X Extracts X X X X ..... ide assessment order dated 30-11-2009 made certain additions/disallowances in the income returned by the assessee. Aggrieved against the assessment order, the assessee preferred an appeal before the CIT(Appeals). The CIT(Appeals) vide impugned order partly allowed the appeal of the assessee. Against the order of CIT(Appeals), both the assessee and the Revenue have come in appeal before the Tribunal. 3. The assessee in its ground of appeal has assailed the order of CIT(Appeals) in confirming the dis-allowance of additional depreciation amounting to ₹ 3,15,48,837/- in respect of Plant Machinery installed in the preceding year and put to use for less than 180 days. The assessee has also raised an additional ground with respect to waiver of loan arising from sales tax liability, not amounting to remission u/s.41(1) of the Act. On the other hand, Revenue has assailed the order of CIT(Appeals) primarily on three grounds which are as follows: I. Restricting dis-allowance u/s.14A to 2% on exempt income; II. CIT(Appeals) holding that the loss of re-valuation of forward contracts represents loss incurred by assessee in the ordinary course of business; and III. Deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of unrealised foreign exchange fluctuation on derivatives. With regard to third issue raised in the grounds of appeal in respect of legal charges paid to M/s. Reed Smith, LLP, USA, the ld.DR submitted that the assessee neither approached the department u/s.195(2) before remitting the above payments to non-residents nor filed the prescribed undertaking and the certificate from the Chartered Accountant. In reply to the grounds raised by the assessee in appeal, the ld.DR submitted that assessee is not entitled to carry forward additional depreciation. The benefit of additional depreciation is available only in the year in which the new Plant Machinery is first put to use. 6. Au contraire the ld. Counsel for the assessee controverting the submissions made by the ld.DR in the appeal of the Revenue submitted that in view of the judgment of the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd., reported as 328 ITR 81 (Bom), the provision of rule 8D are applicable w.e.f. AY.2008-09. The CIT(Appeals) has rightly made disallowance on estimation basis in accordance with the law laid down by the Hon ble Bombay High Court in the aforesaid judgment. On the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al grounds of appeal with regard to deferred payment of sales tax collected. This issue was not raised before the lower authorities. The assessee has retained sales tax collected from customers during the period between1998-99 to 2004-05 to be paid to the Government in the year 2008-09 onwards in accordance with the scheme introduced by the Government of Maharashtra. The State Government for early recovery of sales tax collected, gave liberty to the assessees to pay future sales tax liability on net present value basis. Under the scheme, the assessee opted for early repayment at discounted value and thus, difference of ₹ 87,21,582/- arose, which was treated as Income from Other Sources . The ld. Counsel has contended that the said difference does not amount to remission of liability u/s.41(1) of the Act. The Special Bench of the Tribunal in the case of Suzler India Ltd., Vs. JCIT (supra), has held that payment of net present value of the future liability cannot be classified as remission or cessation of the liability, therefore, provisions of section 41(1)(a) of the Act are not attracted. The relevant extract of the order of the Special Bench is reproduced herein under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011: 10. The Revenue has raised five grounds in appeal. Ground No. 1 5 are general in nature, therefore, requires no adjudication. Ground No.2 in the appeal relates to restricting disallowance to 2% on exempted income. The Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd., (supra) has held that the provisions of rule 8D are applicable w.e.f. AY. 2008-09 thus, the contention of the Revenue that the provisions of rule 8D of the Income Tax are applicable in the present case is not tenable. In the period prior to the application of provision of rule 8D i.e., prior to AY.2008-09, estimation has to be made for making dis-allowance u/s.14A. The CIT(Appeals) has restricted dis-allowance to 2% of exempt income. However, keeping in view the extent of investment made in shares ₹ 3.42 Crores earning dividend income, we deem it appropriate to increase disallowance to 3% of the exempt income. This ground of appeal of the Revenue is partly allowed. 11. In Ground No.3 of the appeal, the Revenue has raised the issue of loss on forward contracts. The CIT(Appeals) after taking into consideration the submissions of both the sides and the facts on record have remitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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