9911796707
TMI Blog2022 (2) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 43B, consistent with the Department's stand. 1.2 The CIT (A) ought to have held that in the event the Department's stand is accepted by the ITAT in earlier years, then deduction of amounts paid or written back amounting to Rs. 1,38,78,153/- should be allowed in the previous year. 2. Provision for bad and doubtful debts 2.1 The CIT (A) erred in upholding the action of the AO in disallowing amount of Rs. 1,20,11,696/- towards provision for bad and doubtful debts. 2.2 The CIT (A) failed to appreciate that the provisions of Sec. 36(1)(vii) are not applicable since the amount of provision made represents identified bad and doubtful debts and is not on estimate basis. 3. Disallowance of Club membership fees The CIT (A) erred in not allowing club membership fees of Rs. 16,21,025/- paid to Cricket Club of India as deduction. 4. Interest received from Income Tax Department: 4.1 The CIT (A) erred in upholding the action of the AO in taxing interest of Rs. 25,07,53,088/- allowed by the Department. 4.2 The CIT (A) failed to appreciate that no income can be taxed until the entitlement is absolute or irretrievable. The CIT (A) ought to have held that interest allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it directly originating from the main business of the appellant. 8. The appellant prays for the cost of this appeal in view of section 254 (2B) of the LT. Act." The appellant craves leave to add to, alter, amplify or delete any of the above ground(s) before or at the time of hearing. The appellant respectfully prays that relief prayed for in the abovementioned grounds be granted and that the appellate order of the learned CIT (A) be modified accordingly. 3. Assessee raised following additional ground in its appeal: - "1. On the facts and circumstances of the case and in law, the Appellant prays that the ("AO") be directed to i) Exclude from taxable profits, the sales tax exemption benefit of Rs. 69 crores, which is included in Sales and which is taxed in the assessment order as part of profits of the business; and ii) To treat the same as capital receipt not chargeable to tax. 4. Assessee further raised following additional ground in its appeal: - "1. The learned CIT (A) ought to have held that the sum of Rs. 3,25,44,527/- being royalty was an allowable deduction when computing the assessee's income chargeable to tax and could not be disallowed by applying section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea which relates to A.Y. 1993-94 decided by the Tribunal in assessee's favour. The appeal filed by the Department has been dismissed by the Tribunal vide order dated 20-12-2001. As the facts and circumstances during the year under consideration are para materia wherein appeal of department in earlier year was dismissed by the Tribunal, therefore, ground taken by assessee for disallowance during the year has become infructuous. The view taken by the Tribunal in A.Y. 2000-01 is respectfully followed, ground of the assessee becomes otiose and is accordingly dismissed. 7. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2000-01 is respectfully followed, ground raised by the assessee is accordingly dismissed. 8. With regard to Ground No. 2 which is in respect of Write off of Bad and Doubtful Debts, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the various courts in the following cases and decided in favour of the assessee viz., Vijaya Bank [323 ITR 166 (SC)], TRF Ltd [323 ITR 397 (SC)], Arrow Coated Products Ltd [136 ITD 315 (Mum)], Jwala Prsad Tiwari [24 ITR 53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a pre-condition for claiming deduction under Section 36(1)(vii) of 1961 Act. This view has been taken by the Assessing Officer because the Assessing Officer apprehended that the assessee-Bank might be taking the benefit of deduction under Section 36(1)(vii) of 1961 Act, twice over. [See Order of CIT (A) at Pages 66, 67 and 72 of the Paper Book, which refers to the apprehensions of the Assessing Officer]. In this context, it may be noted that there is no finding of the Assessing Officer that the assessee had unauthorisedly claimed the benefit of deduction under Section 36(1)(vii), twice over. The Order of the Assessing Officer is based on an apprehension that, if the assessee fails to close each and every individual account of it's debtor, it may result in assessee claiming deduction twice over. In this case, we are concerned with the interpretation of Section 36(1)(vii) of 1961 Act. We cannot decide the matter on the basis of apprehensions/desirability. It is always open to the Assessing Officer to call for details of individual debtor's account if the Assessing Officer has reasonable grounds to believe that assessee has claimed deduction, twice over. In fact, that exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins of business and, accordingly, chargeable to income tax as the income of the previous year in which it is recovered. In the circumstances, we are of the view that the Assessing Officer is sufficiently empowered to tax such subsequent repayments under Section 41(4) of 1961 Act and, consequently, there is no merit in the contention that, if the assessee succeeds, then it would result in escapement of income from assessment." 10. Respectfully following the said decision, we notice that assesse has charged the unrecovered portion to the profit and loss account and reduced the amount in the debtors balances, therefore the facts are exactly similar to the facts in the above case, accordingly, we allow the claim of the assessee. We order accordingly. 11. With regard to Ground No. 3 which is in respect of disallowance of club membership fees, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in ITA No 2944/M/1997. Ld. DR has fairly accepted the submissions of the Ld.AR. 12. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. We accordingly direct the Assessing Officer to reduce from the taxability of the aforesaid interest granted to the assessee, the amount which has been withdrawn subsequently. We direct accordingly." 8. It was argued by the ld. A.R. that benefit of interest so allowed by the department was subsequently withdrawn as a result of the appellate orders should be given to the assessee and the interest subsequently withdrawn should not be taxed and for this, reliance was placed on the decision of the Tribunal in the case of Avada Trading Co. (P.) Ltd. vs. ACIT (2006) 100 ITD 131. 9. We have considered the rival contentions. As far as the taxability of interest amounting to Rs. 13,64,09,609/- is concerned, the same is assessable in the year in which the refund has been granted alongwith interest. However, if in the subsequent year refund of interest is withdrawn, then the same should be reduced from the total income of the assessee. Accordingly, we direct the A.O. to tax interest income in terms of the order of the tribunal for A.Y. 1993-94 as reproduced above, keeping in view our above observation" 16. Respectfully following the above decision and following the principle of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in 67 DTR (SC) 205, the Explanation to section 80 HHC to be applied on net interest and not on gross interest. Accordingly, we direct the AO to apply clause (baa) in respect of interest receipt by following the decision of honourable Supreme Court (supra). We accordingly direct the A.O. to exclude the excess of interest income over interest expenditure from the eligible profit of the company while computing deduction u/s 80HHC of the Act." 19. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02 is respectfully followed, we order accordingly. 20. With regard to Ground No. 5.4 & 5.5 which are in respect of rent should not be reduced from the profits of business for computing deduction u/s.80HHC, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal. Ld.DR has fairly accepted the submissions of the Ld.AR. 21. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is decided in favour of the assessee for the A.Y.2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "25. The assessee has taken additional ground with regard to appropriation of HO expenses in computing deduction u/s 80-O of the Act amounting to Rs. 3,18,000/-. 26. The issue has been decided in favour of the assessee by the Tribunal for the assessment years 1996-97, 1997-98, 1994-95 & 1995-96. It was further brought to our notice that no appeal has been filed by the Department against the decision of the Tribunal for allowing appropriation of HO expenses in computing deduction u/s 80-O of the Act. 27. For the assessment year 1996-97 and 1997-98, this Tribunal has considered and decided an identical issue in para 15.2 to 15.4 as under. "15.2 We have heard the Sr ld Counsel for the assessee as well as the ld DR and considered the relevant material on record. A similar issue has been considered and decided by the Tribunal in assessee's own case for the AY 1995-96 in paras 29.1 & 29.2 as under: 29.1 On a similar issue the Tribunal in assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2001-02 is respectfully followed, we order accordingly. 29. With regard to Ground No. 6.3 which is in respect of HO expenses can only be certain percentage of the gross receipts eligible for deduction u/s.80-O and not of the total turnover of the division, Ld. AR of the assesse submitted that this is an alternate plea, since we already allowed the issue raised by the assesse in ground nos 6.1 and 6.2, this becomes infructuous, accordingly not dealt with and kept open. 30. With regard to Ground No. 7 which is in respect of deduction u/s. 80-IA on gain arising on sale of machinery, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the following judicial pronouncements and decided in favour of the assessee CIT v. Eltek Sgs (P) Ltd., [300 ITR 6 (Del. HC) CIT v. Jagdishprasad M. Joshi [318 ITR 420 (Bom. HC)], CIT v. M/S Meghalaya Steels Ltd [317 ITR 259 (Gauhati)] and Shivansh buildcon Pvt. Ltd., v. ACIT [318 ITR (AT) 346 (Jaipur)] and requested the same be adopted in the case of assessee also. 31. Ld. DR vehemently supported the orders of the authorities below. 32. Considered the submissions and material placed on record, we observe from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result, both the appeals stand dismissed." 33. Since the issue is similar, respectfully following the above ratio we are inclined to allow the ground raised by the assesse. 34. Coming to additional grounds, Ld. AR submitted that additional grounds raised by the assessee are purely legal issues, the facts there off were already on record. Failure to raise these grounds originally was neither deliberate or contumacious. It is submitted that since these additional grounds were purely legal issues, placing reliance on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd v. CIT [229 ITR 383] the same may be admitted for adjudication. 35. On hearing both sides, we are of the view that the issues are only legal issues and following the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd v. CIT (supra), we admit the additional grounds for adjudication. 36. Coming to the additional ground in regard to sales tax exemption benefit being capital receipt not chargeable to tax, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this ITAT, after adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "The next grievance relates to the disallowance of royalty and interest on royalty u/s 43B of the Act treating it as tax. The issue is now settled by various orders of the Tribunal in assessee's own case for assessment years 1995-96 to 2000-01. A similar issue was considered by the Tribunal in the assessee's own case in A.Y. 1999-2000 in ITA No. 5631/M/2002, wherein we find that the Tribunal has followed its earlier order in the assessee's own case in ITA No. 5630/Mum/02 for A.Y. 1998-99. In the absence of any contradictory facts brought on record by the Revenue, following the aforementioned decision, we decide this issue in favour of the assessee. Additional ground No. 2 is accordingly allowed." 41. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2001-02 is respectfully followed, we order accordingly. ITA.No. 5584/MUM/2004 (A.Y. 2002-03) - Revenue Appeal 42. Revenue has raised following grounds in its appeal: - "1. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law, the CIT(A) erred in deleting the disallowance of deduction of Rs. 9,15,068/- on account of debenture issue expenses relying upon the CIT(A)'s orders in the assessee's own case for the AY'Rs. 1998-99, 2000-01 & 2001-02 which have been contested by the department in further appeal before the ITAT." 8. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the deduction in respect of payments on account of PF/ESIC made after the due date but within the grace period without appreciating that the department has not accepted the decision of the Bombay High Court on this issue in the case of Maharashtra State Seeds Corporation Ltd. Vs. CIT, Nagpur and is contesting the same by way of SLP." 9. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the expenses of Rs. 15 crores being the payment towards transfer of liability of the employees of the textile unit at Gwalior, as revenue expenditure without appreciating that no details in respect of valuation of the liability of Rs. 15 crores was furnished and the assessee failed to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of Rs. 2,03,13,851/-, being expenses incurred for making advertisement film, relying upon the order of the CIT(A) in the assessee's own case for the AYr. 2001-02 which has been contested by the department in further appeal before the ITAT." 13. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of professional fees of Rs. 91,85,500/- paid in connection with software development and implementation of ERP accepting the assessee's contention that in the field of computer software new devices and user friendly concepts are introduced which are fast changing and no software could be of enduring nature without appreciating that the Rajasthan High Court has, in the case of Arawali Constructions Co. P. Ltd. (259 ITR 30 ), held that expenditure incurred in the acquisition of computer software is a capital expenditure and, in view of the same, the Assessing Officer rightly treated software expenses of Rs. 91,85,500/- as a capital expenditure and disallowed the same. " 14. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to exclude the amount of sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside and that the Assessing Officer be restored. 20. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 43. At the time of hearing, Ld. AR submitted that all the grounds except ground Nos. 9 to 11 are covered and adjudicated by various courts and supported by the ITAT orders in assessee's own cases in earlier assessment years. Ld. AR submitted the principal of consistence may be adopted for this assessment year also. 44. On the other hand, Ld. DR not controverted with the submissions of the Ld. AR on all other grounds except ground nos 9 to 11. The relevant submissions of the Ld DR are dealt in the respective paras. 45. With regard to Ground No. 1, the brief facts, the Assessee contends that in view of the Explanation (2) to section 43B, liability falling under clauses (b) to (e) of section 43B, which was incurred during the previous year but was not payable within the previous year is not covered under section 43B of the Act. This contention of the Assessee has been accepted by the ITAT in the Assessee's own case in earlier years. Accordingly, the Assessee has not offered for disallowance liability incurred and accounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter has been settled and the ld. CIT(A) deleted the disallowance by following the order of the Tribunal, we do not find any reason to interfere with the order of the Ld. CIT(A) deleting the disallowance made by the A.O. u/s 43-B of the Act." 49. Respectfully following the above decision, we sustain the order passed by the Ld.CIT(A) and dismiss the Ground No. 1 raised by the revenue. 50. With regard to Ground No. 2, the brief facts during the F.Y. 2001-02, the Assessee has made contribution of Rs..12,75,197/- to various organizations. Such contribution helps to carry out the business smoothly, ensure good relations, maintain good profile and secure benefit to the business and are allowable expenses. Details of such contribution was filed before the Assessing Officer and the Ld.CIT(A). During the assessment proceedings Assessing Officer disallowed contribution of Rs..12,75,197/- on the ground that such contributions, even though related to business considerations, are in the nature of donations. Discussion in this regard is in para 7 on pages 5 and 6 of the assessment order. On appeal Ld.CIT(A) deleted the disallowance made by the Assessing Officer relying on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt As on 31.03.2001 As on 31.03.2002 Share Capital 91.69 91.69 Reserve & Surplus 3,001.66 2,622.51 Deferred Tax Balance -- 640.50 Total 3,093.35 3,354.70 No borrowing was made, specific or general, for the purpose of making these investments. During the relevant previous year, no expenses were incurred for earning tax exempt dividend income. Mere deposit of dividend warrants into the bank account does not entail any expenditure and the banks do not charge for crediting amount in Assessee's account. During the assessment proceedings the Assessing Officer disallowed interest expense of Rs..55,81,093/- on estimate basis treating the same as incurred for earning tax-free dividend. Discussion in this regard is in para 10 on page 7 of the assessment order. On appeal Ld. CIT(A) deleted the disallowance of interest made on estimate basis by the AO. The Ld.CIT(A) followed order of the ITAT in the Assessee's own case for A.Y. 1993- 94 wherein the ITAT held that there is no justification for allocation any expenditure to the earning of dividend income. The Ld.CIT(A) has discussed this issue in para 4.1 to 4.4 on page 3 of the order. Revenue preferred appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has discussed this issue in para 5.1 to 5.5 on page 3 & 4 of the order. Revenue preferred appeal against this order of the Ld.CIT(A). 59. Before us, the Ld. AR of the assessee brought to our notice that the Co-ordinate Bench of this tribunal has allowed the above issue in favour of the assessee. Ld. DR has fairly accepted the submissions of the Ld.AR. 60. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "38. Ground No. 6 of Revenue's appeal relates to the disallowance of rural development expenses. The A.O. has dealt with this issue at page 9, para 15 and the ld. CIT(A) has dealt with this issue at page 4-5, para 11 of his order. We found that the issue has been decided by the Tribunal in assessee's own case in its favour in assessment years 1998-99, 1999-00 & 2000-01. We further found that the Department on this ground is not in appeal before the Hon'ble High Court in these years. Respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim after having observed at para 12. We found that the issue has been decided by the Tribunal in assessee's own case in its favour in assessment years 1998-99 to 2000-01. Furthermore, the Department is not in appeal on this ground before the Hon'ble High Court against the Tribunal order. The Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd., 312 ITR 254 (SC) has decided this issue in favour of the assessee. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A) deleting the disallowance made on account of exchange fluctuation loss on conversion of trading assets and liabilities on balance sheet date." 66. Respectfully following the above decision, we sustain the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly. 67. With regard to Ground No. 6, the brief facts are, during the previous year, the Assessee capitalized in its books of account debenture interest of Rs. 2,88,46,944/- in respect of amount borrowed for setting up of grinding unit at Bhatinda. The Company was manufacturing and selling Cement since 1985 and expanded during the previous year cement business by setting up a grinding u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly. 71. With regard to Ground No. 7, the brief facts are that the Assessee company issued 10.75% XXVI series and 10.10% XXVIII series non-convertible debentures during the relevant previous year and incurred expenditure of Rs. 9,15,068/- in this connection, as under: Sl. No. Particulars Amount (Rs.) 1. Interest on application money 3,04,385/- 2. Underwriting fees to bank 3,00,000/- 3. Credit rating fees to M/s CARE 2,03,727/- 4. Debenture trustee remuneration 77,250/- 5. Debenture trustee acceptance fees 3,000/- 6. Finance Charges 26,707/- Total 9,15,068/- 72. Debenture issue expenses were capitalised in the books of account. However, in the return of income, the same were claimed as business expenditure relying on the decisions in the case of Premier Automobiles Ltd v. CIT (80 ITR 415) (Bom) and India Cement Limited Vs CIT (60 ITR 52) (SC). During the assessment proceedings the Assessing Officer rejected claim of the Assessee following its own order for AY 98-99. Detailed discussion in this regard is in para 14 on page 9 and 10 of the assessment. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Fluid Air (India) Ltd. (63ITD 182). The CIT(A) has discussed this issue in para 10.1 to 10.4 on page 5 & 6 of the order. Revenue preferred appeal against this order of the Ld.CIT(A). 77. Before us, the Ld. AR of the assessee brought to our notice various decisions which are in favour of the assesse viz., AIMIL Ltd., [321 ITR 508 (Del.)], Fluid Air (India) Ltd., [63 ITD 182 (Mum)], Vinay Cement, [ 213 ITR 268 (SC)], Bharati Shipyard [11 ITR (Tri) 599 (Mum)(SB)], CIT v. Jaipur Vidhyut Vitran Ltd [363 ITR 307 (Raj HC)] and CIT v. Ghatge Patil Transports Ltd., [368 ITR 749 (Bom)] and requested the same be adopted in the case of assessee also. 78. Considered the submissions and material placed on record, we observe from the record the coordinate bench has already considered this issue and decided the issue in favour of the assesse in the case of Fluid Air (supra), the relevant findings are given below: "17. Considering all the facts and circumstances of the case as well as the decisions referred to above, we are of the opinion that as the assessee had paid all the amounts within a period from 9 to 22 days from the date of payment of wages/salary and therefore the submissions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch leads to injustice may be avoided. 19. In view of the decisions referred to in the foregoing paragraphs of this order, and the facts and circumstances of the present case, we are of the considered opinion that none of the payments in question were hit by the provisions of section 43B or section 2(24)(x) read with section 36(1)(va), as the case may be, and the additions made by invoking these provisions are hereby deleted." 79. Respectfully following the above decision, on similar facts as the Hon'ble Jurisdictional High Court held that provisions of section 43B should be construed in a liberal way keeping in view the Legislative intention so that absurdity and the interpretation which leads to injustice may be avoided. Thus, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly. 80. Coming to Ground No. 9 to 11, the brief facts are that the Assessee is inter alia engaged in manufacture of Fiber, Pulp, Chemicals, Cement, Fabric, Yarn and Sponge Iron. The Assessee had two facilities for manufacturing of fabrics, which were located at Gwalior, Madhya Pradesh and Bhiwani, Haryana. The textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the assessee also agreed for making payment of Rs. 15 cores to the purchasers of the assets of the Gwalior Unit for taking over the liabilities in respect of the employees and ensuring no obstruction thereto by them. 83. Further submitted that there were about 1185 employees employed at Gwalior on 31.03.02, liabilities in respect of which were transferred to the purchasers of the assets. The consideration for taking over the liabilities in respect of employees was arrived at based on the negotiations between the Assessee and the purchasers. The buyers provided continued employment to all transferred employees and assumed all the responsibilities in respect of such employees such as payment of salaries, wages, contribution to PF and other funds, allowances, gratuity, leave salary etc. The buyers agreed to pay to the transferred employees on their retirement, benefits for the period of service rendered by them to the Assessee company. 84. It was submitted that the purchaser companies announced voluntary retirement scheme on 15.01.2003. In response to the VR scheme, 542 employees opted for retirement and the buyer companies paid compensation, gratuity, leave salary and other bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cotton Clothes Mills Put Ltd (53 ITR 134). 7. The assessee continue to carry on the same business and therefore, the payment of Rs. 15 crores is allowable as deduction as has been held by the Supreme Court in the case of K. Ravindranathan Nair (247 ITR 178) and the jurisdictional High Court in the case of Western India Oil Distribution Co. Ltd. (77 ITR 140). The Ld.CIT(A) has discussed this issue in detail in para 11 on page 6 to 11 of the order. Revenue preferred appeal against this order of the Ld.CIT(A). 87. Before us, the Ld. AR of the assessee brought to our notice various decisions which are in favour of the assesse viz., Ambala Cantt Electric Supply Corp. Ltd [133 ITR 343 (P&H), K. Ravindranath Nair [247 ITR 178 (SC)], Empire Jute Co. Ltd., [124 ITR 1 (SC)], Western India Oil Distribution Co. Ltd., [77 ITR 140 (Bom)], Simson & Company Ltd., [230 ITR 794 (Mad)], Health & Co. (P.) Ltd., [114 ITR 605, Single Tea & Agricultural Industries Ltd 250 ITR 274 (Cal.)] and Dalmia Dadri Cement Ltd., [77 ITR 410 P & H)] and requested the same be adopted in the case of assessee also. 88. Ld. DR vehemently supported the order of the Assessing Officer and submitted that the liabilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.27. In result, this ground is allowed." 90. Further, we notice that the Hon'ble Jurisdictional High Court in the case of Western India Oil Distribution Co. Ltd., (supra) held as under: - "Held, (1) that the Appellate Tribunal erred in rejecting the claim of the assessee-company to deduct the sum of Rs. 3 lakhs or any instalments thereof as were paid and the litigation expenses amounting to Rs. 69,645 in relation to its suit in the assessments of the assessee for the assessment years 1957-58 and 1958-59. The intent and the main purpose of the three agreements was to enable the assessee-company to carry on its business for its own profits. The goods had to be imported by the company and the company had to pay the price of the goods. In that connection the lenders agreed to make finances available. Though the goods were to remain in pledge with the lenders, the ownership of the goods Continued in the company and the company had to get the goods released from the pledge within four months of their receipt. The lenders were not concerned with the resale price of the goods. For the moneys advanced by the lenders, they were given, as and by way of security, several important r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 3 lakhs." 91. Respectfully following the above said decision and considering the fact that the issue is similar to the present case in the sense that the assesse has to let go the huge labour force and their huge liability of employee accumulation of their services, it has the option to settle directly to the employees or select the indirect settlement through the acquiring company. It is wrong to say that this liability is not ascertained, it is mutually agreed liability that the assesse will compensate certain amount of liability and accordingly, it has made provision to settle the liability. On a perusal of the Ld.CIT(A) order, we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of the assessee. Ground raised by the revenue are dismissed. We order accordingly. 92. With regard to ground No. 12, the brief facts are, during the previous year, the Assessee company incurred expenses of Rs. 2,03,13,851/- on production of film to be used for advertisement purposes. Details of the expenditure were filed before the Assessing Officer and the CIT(A). During the assessment proceedings the Assessing Officer disallowed the expenditure on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s useful life is very short and such films do not add to the capital structure of the company." 95. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly. 96. With regard to ground No. 13, during the previous year, the Assessee made payment to M/s Mahindra Consulting Limited of Rs. 75,75,500/- and to M/s Birla Technology Limited of Rs. 16,10,000/- for implementation of software and ERP. This expense totaling to Rs. 91,85,500/- was claimed as revenue expense. During the assessment proceedings the Assessing Officer did not allow the claim and disallowed the professional fees of Rs. 91,85,500/- paid in connection with software treating the same as capital in nature. The AO has discussed the issue in para 24 on page 22 of the assessment order. On appeal the Ld.CIT(A) allowed the claim of the Assessee company relying on the various judicial pronouncements. The CIT(A) has discussed this ground in para 17.1 to 17.6 on page 18 & 19 of the order. Revenue preferred appeal against this order of the Ld.CIT(A). 97. Before us, the AR of the assessee brought to our not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aratus of the assessee and hence the same is to be disallowed a revenue expenditure. We hold so because we find that the business of the assessee company is that of manufacturing of telecommunication and power cable accessories and trading in oil retracing system and other products and impugned software is an Enterprises Resources Planning (ERP) package and hence it facilitate the assessee's trading operations or enabling the management to conduct the assessee's business more efficiently or more profitably but it is not in the nature of profit making apparatus. We, therefore, decide this issue also in favour of the assessee and we hold that this expenditure of Rs. 20.60 lakhs is of revenue expenditure. We hold so by following the judgment of the Special Bench of the Tribunal relied upon by the LD AR of the assessee." 3. In our view, no fault can be found in the aforesaid order of ITAT holding that software expenditure was allowable as revenue expenditure." 100. Respectfully following the above said decision and on a perusal of the Ld.CIT(A) order, we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of the assessee. Ground raised by the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97-98 & 1998-99. In view of above, we do not find any infirmity in the order of the ld. CIT(A) in directing the A.O. to exclude the amount of excise duty and sales tax from the total turnover of the assessee while computing deduction u/s 80HHC of the Act. 106. Respectfully following the above decision, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the ground raised by the revenue. We order accordingly. 107. With regard to ground No. 16, the brief facts are, the AO appropriated gross expenses of Head Office on an estimate basis and reduced the amount of eligible deduction u/s 80IA by Rs. 83,30,093/-. During the assessment proceedings Assessing Officer allocated the proportionate expenses of the Head Office (being the controlling unit) among Units claiming deduction u/s.80IA. The Assessing Officer discussed this issue in para no.28.3 on page 29 of the order. On appeal Ld.CIT(A) allowed the claim of the assessee company relying on the decision of the ITAT in the case of Assessee for the AY 1996-97 to AY 2001-02. The CIT(A) has discussed this issue in para no. 20.1 to 20.6 on page 21 & 22 of the order. Revenue is in appeal against this order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the Assessee following his order for the AY 1998-99 to AY 2001-02. The CIT(A) has taken note of the fact that the AO himself has allowed deduction u/s 80 IA from AY 1994-95 to AY 1997-98. The CIT(A) has discussed this issue in Para 21.1 to 21.6 on page 22-23 of the order. Revenue is in appeal against this order of the Ld.CIT(A). 112. Before us, the Ld. AR of the assessee brought to our notice that the Co-ordinate Bench of this tribunal has allowed the above issue in favour of the assessee. Ld.DR has fairly accepted the submissions of the Ld.AR. 113. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02 in favour of the assessee. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 4083/Mum/2003 dated 22.10.2014 held as under: - "Ground No. 19 of Revenue's appeal pertains to deduction u/s 80-IA of the Act in respect of Vikram Power Unit amounting to Rs. 3,58,74,158/-. 57. The ld. CIT(A) has dealt with this issue at page 16-17, para 24 of his order. We found that the issue has been decided by the Tribunal in assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending proceedings. It is not the case of the respondent that the proceeding in regard to refund which has been granted under section-143(1) of the Act are concluded and final. The refund which has been granted under section 143(1) of the Act is provisional, to be finally determined when final assessment order is passed under section 143(3) of the Act. Explanation-2 to section 234D of the Act makes it clear that it would be applicable to pending proceedings i.e. where assessments in respect of such assessment year is not completed on 1/6/2003. 28. Mr. Suresh Kumar submitted that as an assessee is entitled to interest where there is any delay in making the refund, it is only fair that an assessee who has enjoyed the benefit of excess refund granted to it must refund the same along with interest from the date of receipt of refund to the date of final assessment. The Apex Court in Sandvik Asia Ltd. v. CIT [2006] 150 Taxman 591 granted interest on delayed payment of interest by the revenue to the assessee. Considering the view we have taken, it is not necessary to decide this question based on equitable grounds. 29. In view of the above, the question of law is answered in the nega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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