TMI Blog2021 (4) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... owance u/s. 14A - HELD THAT:- Respectfully following the decision of Co-ordinate Bench of the ITAT in the case of the assessee itself for A.Y. 2009-10 and A.Y. 2010-11 [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] the appeal of the Revenue is dismissed. Regarding the appeal of the assessee, we direct the Assessing Officer to decide the issue afresh after examination/verification of the details filed by the assessee as per the direction laid down in the decision of the Co-ordinate Bench of the ITAT in the case of the assessee itself [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] and decision of Hon ble Gujarat High Court [ 2017 (5) TMI 1160 - GUJARAT HIGH COURT ] Addition on account of foreign exchange fluctuation gain - HELD THAT:- We have gone through the decision of ITAT on the similar issue and identical facts and noticed [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] the issue was decided in favour of the assessee Addition for late contribution to ESIC - HELD THAT:- In view of the decision of Hon ble Gujarat High Court in the case of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ], we do not find any merit in the appeal of the assessee and the same stands di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial changes of ₹ 118.11 lacs in the accounts of the Baddi Unit. However, on perusal of the detail, the Assessing Officer observed that the assessee company was having common pools of funds as well as common bank accounts for its entire business being carried out from the head office. Therefore, the Assessing Officer was of the view that the interest expenditure required to be allocated proportionately in the ratio of sales for deduction u/s. 80IC of the Act for the industrial undertaking of the assessee. Accordingly, the Assessing Officer has allocated expenses of ₹ 891.99 lacs in the case of Baddi unit. The Assessing Officer also noticed that assessee company has debited common head expenses incurred by the company under various heads. The detail is given as under:- S. No. Particulars Amount (Rs. in lakhs) 1 Audit Fees 52-00 2 Computer maintenance expenses 11.98 3 Security charges 3.99 4 Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sales/turnover ratio. 6. During the course of appellate proceedings before us, the ld. counsel has submitted that aforesaid issue of allocation of expenses has been adjudicated by Co-ordinate Bench of the ITAT in favour of the assessee itself vide ITA No. 1548/Ahd/2012. The ld. Departmental Representative was fair enough not to controvert these undisputed fact that issue is covered in favour of the assessee by the order of the ITAT. 7. With the assistance of representatives, we have gone though the decision of Co-ordinate Bench of the ITAT vide ITA No. 1548/Ahd/2012 in the case of the assessee itself on identical facts/similar issue and noticed that allocation of common interest financial charges, common head expenses and allocation of plastic and corporate division expenses were adjudicated in favour of the assessee vide order of the ITAT for assessment year 2010-11 vide ITA No. 1548/Ahd/2012. The relevant part of the decision of the ITAT is discussed as under:- In respect of allocation of common interest and financial charges:- 17. We have duly considered rival contentions and gone through the record carefully. The case of the assessee is that financial charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nits, vis-a-vis this expenditure, it has already made disallowance. Let us take an example. As far as security charges are concerned, the assessee already accounted the security charges relevant for the purpose of 80IC units. Why allocation out of the expenditure incurred at head office ought to be made to this unit. Similarly, it has allocated out of computer maintenance. This expenditure would relate to the computers which are directly involved in 80IC units. After considering the orders of the Id.CIT(A) on this issue, we do not find any error in the orders, and accordingly, the orders of the-CIT(A) in both the years are upheld on this issue. The Id.CIT(A) has rightly deleted the disallowance made by the AO, out of common head expenses of corporate division. In respect of plastic and corporate division:- 28. We have examined the details with the assistance of the representatives. In our reasoning given while upholding the deletion ut of certain common head expenses, we do not find any error in deleting the disallowance under these head. The basic reason is that the assessee has debited expenditure which has direct nexus with 80IC units. Such expenditure cannot be amplif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the ld. CIT(A) . The ld. CIT(A) has partly allowed the appeal of the assessee and restricted disallowance to the amount of ₹ 1.78 crores. 10. During the course of appellate proceedings before us, the ld. counsel submitted that on similar issue disallowance made for assessment year 2010- 11 was deleted by the ITAT vide ITA No. 1598/Ahd/2012 and the Hon ble High Court has also decided this issue in favour of the assessee vide IT Appeal No. 268 of 2017. The ld. counsel has further submitted that Hon ble Supreme Court has also dismissed the Special Leave Petition filed by the Revenue against the order of Hon ble Gujarat High Court. The ld. counsel is fair enough not to controvert these undisputed facts that assesse s is covered by the decision of Co-ordinate Bench of the ITAT for assessment year 2010- 11 as cited above. 11. With the assistance of ld. representatives, we have gone through the decision of Co-ordinate Bench of the ITAT for assessment year 2010-11 and noticed that at para 36 and 37 of the order the issue has been adjudicated in favour of the assessee. The relevant part of the decision of the Co-ordinate Bench is reproduced as under:- 36. We have duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee claims that no expenditure has been incurred in relation to income which does not form part of the total income under the said Act. In other words, sub-section (2) deals with cases where the assessee specifies a positive amount of expenditure in relation to income which does not form part of the total income under the said Act and sub-section (3) applies to cases where the assessee asserts that no expenditure had been incurred in relation to exempt income. In both cases, the Assessing Officer, if satisfied with the correctness of the claim of the assessee in respect of such expenditure or no expenditure, as the case may be, cannot embark upon a determination of the amount of expenditure in accordance with any prescribed method, as mentioned in subsection (2) of Section 14A of the said Act. It is only if the Assessing Officer is not satisfied with the correctness of the claim of the assessee, in both cases, that the Assessing Officer gets jurisdiction to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the said Act in accordance with the prescribed method. The prescribed method being the method st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve fund of ₹ 2319.17 crores and made investment of ₹ 111.09 crores. The Id.AO has not given any heed to these submissions or figures submitted by the assessee. The assessee has further made disallowance of ₹ 5.12 lacs in the Asstt.Year 2009-10. This was mainly for management of investment. He simply discussed the background for bringing section 14A as well Rule 8D on the statute book. He has specifically not worked out the amounts even on the basis of Rule 8D. He called for a working from the assessee and made a lumpsum addition in both the years. The Id.AO has not recorded any finding that amounts added back by the assessee are not commensurate with the administrative expenses which might be attributable to earning exempt income. Because, on interest expenses account, there cannot be any disallowance as the assessee has far more interest free fund than investment. We are of the view that the Id.CIT(A) has looked into all these aspects in the Asstt.Year 2009-10 before deleting the disallowance. We do not find any error in the order of the Id.CIT(A) on this issue in Asstt.Year 2009-10. Consequently, we allow the ground of appeal raised by the assessee in the Asst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of FCCB loan related to its utilization for shares of subsidiary company. It is therefore considering the facts, provisions of section 43A of the Act, CBDT circulars, ratio of various case laws relied on by appellant and ratio of my predecessor in the case of appellant in appeal order for A.Y. 10-11, the A.O. is not justified in treating ₹ 5,28,10,870/- as taxable gain. The A.O. is directed to treat the same as notional gain of capital nature and delete the addition so made. The appellant gets relief accordingly. This ground is treated as allowed. 14. During the course of appellate proceedings before us, the ld. counsel has contended that similar issue has been adjudicated by the Co-ordinate Bench of the ITAT in the case of the assessee for assessment year 2010-11 vide ITA No. 1548/Ahd/2012. The ld. counsel also submitted that Hon ble Gujarat High Court has also confirmed the order of the ITAT for assessment year 2010-11. The ld. Departmental Representative is fair enough not to controvert these undisputed facts that issue is covered by the decision of the ITAT as referred above. 15. With the assistance of ld. representatives, we have gone through the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... figure of actual cost and, secondly, such adjustment should be made in the year in which the increase or decrease in liability arises on account of fluctuation in the rate of exchange. It is for this reason that though section 43A begins with a non obstante clause, it makes section 43(1) its integral part. This is because section 43A requires the cost to be recomputed in terms of section 43Afor the purposes of depreciation [Sections 32 and 43(1)]. A perusal of section 43A makes it clear that insofar as the depreciation is concerned, it has to be a/lowed on the actual cost of the asset, less depreciation that was actually a/lowed in respect of earlier years. However, where the cost of the asset subsequently increased on account of devaluation, the written down value of the asset has to be taken on the basis of the increased cost minus the depreciation earlier allowed on the basis of the old cost. One more aspect needs to be highlighted. Under section 43A, as it stood at the relevant time, it was inter alia provided that where an assessee had acquired an asset from a country outside India for the purposes of his business, and in consequence of a change in the rate of exchange at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015] 376 ITR 553 [Guj] needs a reference where the Division Bench has held and observed that when the assessee had sufficient interest free funds out of which concerned investments had been made, disallowance under Section 14A of the Act is not justified. 11. Considering the aforesaid facts and circumstances, it cannot be said that the learned Tribunal has committed any error in deleting the disallowance of expenditure of ₹ 39,48,81,350/- incurred towards foreign exchange gain. We concur with the findings recorded by the learned CIT(A) as well as Tribunal. No substantial question of law arises. Following the decision of the Co-ordinate Bench of the ITAT and the findings of Hon ble Jurisdictional Gujarat High Court in the cases of the assessee itself as supra on the identical issue on same facts we do not find any merit in the appeal of the Revenue therefore same stands dismissed. ITA No. 2702/Ahd/2014 A.Y. 2011-12 filed by assessee 16. The ground nos. 1 to 3 are not pressed, therefore, the same stands dismissed as not pressed. Ground No. 5 (Addition of ₹ 4,29,414/- for late contribution to ESIC) 17. During the course of assessment , the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-14 therefore after applying the decision adjudicated vide ITA No. 2786/Ahd/2014 as supra in this order, this ground of appeal of the revenue stands dismissed. Ground No. 2 (Deleting the disallowance of ₹ 38,91,06,367/-u/s. 14A and restricting the same to the extent of exempt income) 24. As the facts and issue involved in ground of appeal no. 2 vide ITA No. 2786/Ahd/2014 Assessment Year 2011-12 are similar as in ITA No. 1417/Ahd/2015 Assessment Year 2013-14 therefore after applying the decision adjudicated vide ITA No. 2786/Ahd/2014 as supra in this order, this ground of appeal of the revenue stands dismissed. Ground No. 3 (Deleting the addition of ₹ 38,91,06,367/- u/s. 14A) 25. As the facts and issue involved in ground of appeal no. .... vide ITA No. 2786/Ahd/2014 Assessment Year 2011-12 are similar as in ITA No. 1416/Ahd/2015 Assessment Year 2013-14 therefore after applying the decision adjudicated vide ITA No. 2786/Ahd/2014 as supra in this order, this ground of appeal of the revenue stands dismissed. 26. In the result, appeal ITAs 2786/Ahd/2014, 1416/Ahd/2018, and 1417/Ahd/2018 filed by revenue are dismissed and appeal ITA No. 2702/Ahd/2014 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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