9911796707
TMI Blog2017 (3) TMI 1937X X X X Extracts X X X X X X X X Extracts X X X X ..... naji in appeal No. ITA. No. 96/MRG/13-14 dated 21.04.2014 for the assessment year 2008-09. C.O No. 38/PNJ/14 is the Cross Objection filed by the assessee in the revenue appeal filed in ITA. No. 230/PNJ/14 against the Learned CIT(A) Panaji in appeal ITA. NO. 97/MRG/13-14 dated 21.04.2014 for the assessment year 2009-10 and ITA. No. 91/PAN/16 is the appeal filed by the assessee against the order of the Assessing Officer in the assessment order dated 17.03.2016 for the assessment year 2011-12. 2. As issues in the appeals are common and relates to the same assessee these appeals are disposed of by this common order. 3. Shri Mukund Bakshi, CA represented on behalf of the Assessee and Shri Raviraj Y.V represented on behalf of the Revenue. 4. ITA. No. 328/PNJ/14 for the A.Y-2006-07:- Two grounds have been raised in this appeal. Ground No. 1 is against the reopening of the assessment. At the time of hearing learned Authorized Representative of the assessee submitted that he does not wish to press the Ground No. 1 regarding reopening. Consequently Ground No. 1 of the assessee's appeal stands dismissed as not pressed. 5. In regard to Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese facts in totality, we do not find any logic in making the addition of Rs.. 6,13,84,689/- for computing the book profit; the same has to be deleted. Ground No. 1 is accordingly dismissed." 6. In reply the learned Departmental Representative vehemently supported the order of the Assessing Officer and CIT(A). It was submitted that assessee had withdrawn the said ground before the CIT(A). 7. We have considered the rival submissions. It is noticed that the learned CIT(A) has recorded that the issues in the appeal has been withdrawn before the CIT(A). However when this issue was decided by the Tribunal in its order dated 07.07.15 the same was challenged by the assessee before the Hon'ble Bombay High Court in Tax Appeal No. 79 to 82 / 2015 and by an order dated 16.02.2016 the Hon'ble High Court has set aside the Tribunal order and has directed the Tribunal to hear the appeals fresh after hearing the parties in accordance with the law. Consequently as it is noticed that the withdrawal before the learned CIT(A) is categorically conditional, and as it is noticed that as per the law the claim as made by the assessee is justifiable, the issues are being decided on merits. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as generated the exempt income. It was submission that even assuming that, disallowance is to be calculated it is to be made taking into consideration the investments which has generated the exempt income. It was submission that as no satisfaction itself has been recorded the disallowance as made by the Assessing Officer was liable to be deleted. It was also submission that as the assessee had substantial own funds in excess of the investment, no disallowances is liable to be made in view of the decision of the Hon'ble Bombay High Court in the case of HDFC Bank Limited reported in 366 ITR 505 as also the decision of the Hon'ble Bombay High Court in SBI-DHFL Limited reported in 376 ITR 296. In reply learned Departmental Representative vehemently supported the order of the Assessing Officer and the learned CIT(A). 13. We have considered the rival submission. A perusal of the assessment order clearly shows that the Assessing Officer has not recorded the satisfaction under section 14A(2) regarding the incurrence of expenditure. In the circumstances respectfully following the decision of the coordinate bench of this Tribunal in the case of the Sesa Goa Ltd. referred (supra) wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izer bonds were not purchased by the assessee as investments but were in fact thrust on the assessee in lieu of the subsidy receivable by the assessee company. It was a submission that the assessee had been claiming the loss in respect of the dimunition in the values of the fertilizer bonds every year and the differential actual loss was claimed in the year of sale of the fertilizer bonds. In reply learned Departmental Representative vehemently supported the order of the Assessing Officer and learned CIT(A). 17. We have considered the rival submissions. Admittedly the assessee has not shown these bonds as investments in its books of accounts. They are shown as current assets. The bonds have been received by the assessee admittedly in the course of its business. It is noticed that the learned CIT(A) has directed the Assessing Officer to allow the real loss as and when the bonds are sold. The assessee has not been able to show as to how the said direction given by the learned CIT(A) is erroneous. This being so the finding of the learned CIT(A) on this issue stands confirmed. 18. In regard to Ground No. 4 it was submitted by the Learned Authorized Representative of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the ground No. 1 is against the reopening under Section 147 of the Act. At the time of hearing the Authorized Representative of the assessee submitted that the same was not pressed. As the assessee did not wish to press the same, consequently the said ground stands dismissed as withdrawn. 24. In respect of the Ground No. 2 it was submitted that the issue was against the action of the CIT(A) in confirming the disallowance of expenditure by invoking of provision of Section 14A of the Act. It was fairly agreed by both sides that the issue was identical to the issue in Ground No. 2 of the Cross Objection No. 37/PNJ/2014 for the Assessment Year 2008-09 and the same arguments would apply. 25. We have considered the submissions. As it is noticed that the issue in Ground No. 2 is in respect of the disallowance under Section 14A, our decision in respect of Ground No. 2 in C.O. NO. 37/PNJ/2014 would apply to this ground. Consequently the disallowance made by the Assessing Officer and confirmed by the learned CIT(A) under Section 14A read with rule 8D stands deleted. 26. In respect of Ground No. 3 it was fairly agreed by both sides that the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is liable to be invoked under the provisions of section 36(1)(iii) is liable to be made. In reply learned Departmental Representative vehemently supported the order of the Assessing Officer and learned CIT(A). 29. We have considered the rival submissions. Admittedly the assessee has adequate noninterest bearing own funds far an excess of the gross of the advances made to the subsidiary and the gross of the investments in the shares. This being so we respectfully following the decision of the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd. referred to (supra). Wherein it has been held "if there were funds available both interest-free and overdraft and / or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments", the Assessing Officer is directed to delete the disallowance of interest. In the result Ground No. 4 of the Cross objection stands allowed. 30. In respect of the Ground No. 5, it is fairly agreed by both sides that the issue was against the granting short TDS credit. It is fairly agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp;2 is partly allowed. 37. In respect of the Ground No. 3 it was fairly agreed that the issue was identical to ground No. 4 in C.O. NO. 38/PNJ/2014 for the Assessment Year 2009-10. It was further submitted that for the relevant assessment year the gross noninterest bearing own funds was Rs..1,068 crores whereas the noninterest bearing loans to the subsidiaries was to an extent of Rs.. 68.9 crores and the investments in shares was Rs..1,049 crores. It was submission that there is a short fall of Rs..49.9 crores. It was fairly agreed by the learned Authorized Representative of the assessee that the proportionate interest in respect of this amount i.e. Rs..49.9 crores was liable to be disallowed. 38. We have considered the submissions. Admittedly in respect of Ground No. 4 in the C.O. No. 38/PNJ/2014, we have held that as the assessee had adequate noninterest bearing funds available during that financial year no disallowance is called for under Section 37(1)(iii) of the Act. However as it has been shown that there is a short fall of the noninterest bearing own funds to an extent of Rs..49.9 crores in the relevant assessment year the disallowance of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lizer Project cannot be treated as the revenue expenditure. Consequently the finding of the Assessing Officer and the learned CIT(A) in holding the said expenditure as the capital expenditure stands confirmed. In the result Ground No. 4 of the assessee's appeal stands dismissed. 41. In respect of the Ground No. 5 it was submitted that the issue was against the action of the learned CIT(A) in confirming the action of the Assessing Officer in disallowing the set off of loss arising out of the sale of the preference shares of Zuari Maroc Phosphates Limited. Learned Authorized Representative of the assessee drew our attention to the Page 113 of the paper book to submit that the said redeemable preferential shares of Zuari Maroc Phosphates Limited was held as investments right from the date of purchase. It was submission that these shares were purchased in 2006-07 and from that time itself the shares were shown as investment. It was submission that the Assessing Officer had held the loss on the sale speculation loss by applying the explanation to section 73 of the Act. It was submission that the assessee was not in the business of purchase and sale of the shares. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable to losses in speculation business and the explanation is also relevant to the same. But, in the case of the assessee on sale of shares the assessee has declared income. The AO without passing any speaking order merely applied the explanation to section 73 of the IT Act in order to disallow the claim of the assessee which is not warranted under the law. The learned CIT(A) on proper appreciation of the facts on record, rightly held that explanation to section 73 is not ACIT Cir-i, I Bhavnagar Vs Shree Gautam Ship Breaking Industries Ltd. applicable to the case of the assessee because it has not suffered any low on sale and purchase of the shares. The learned CIT(A) also on appreciation of the evidences on record rightly held that the assessee was holding the shares and sold during the year under consideration as investment. The finding of facts recorded by the learned CIT(A) have not been disputed through any material or evidence on record. Once, the shares are held as investment, any gain or loss suffered on account of sale of the same shall have to be taxed under the head capital gain. We, therefore, do not find any infirmity in the order of the learned CIT(A). We conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring learned Authorized Representative of the assessee submitted that the issue in respect of the transfer pricing in Part-A Grounds from 1 to 6 of the assessee's appeal was not pressed. Consequently grounds from 1 to 6 in Part-A of the assessee appeal stands dismissed as not pressed. 48. In respect of Part-B Grounds from 7 to 14, it was submitted that the issues was against the confirming of the disallowance made under Section 14A read with Rule 8D of the Act. It was fairly agreed by both the sides that the submissions in respect of the said grounds were identical to the submission in respect to the ground No. 2 in the C.O. No. 37/PNJ/2014 for the Assessment Year 2008-09. 49. We have considered the rival submissions. As we have already deleted disallowance made by invoking provisions of section 14A in respect of Ground No. 2 of C.O. NO. 37/PNJ/2014 for the Assessment Year 2008-09, on identical findings the disallowance made under Section 14A for the relevant Assessment Year stands deleted. In the circumstances grounds from 7 to 14 of the assessee's appeal stands allowed. 50. In respect of Part-C Grounds 16 and 17, it was submitted that the issues are relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dimunition in the value of the fertilizer bonds. It was fairly agreed by both the sides that the submissions in respect of the said grounds were identical to the submission in respect to the Ground No. 3 of the C.O.NO. 37/PNJ/2014 for the Assessment Year 2008 -09. 55. We have considered the submissions. As we have already held that the real loss on the sale / redemption of the fertilizer bonds is to be allowed in the year of sale / redemption when deciding the Ground No. 3 of the C.O. NO. 37/PNJ/2014 for the Assessment Year 2008 -09 on identical findings the Assessing Officer is directed to grant the assessee the real loss in the year the fertilizer bonds are sold / redeemed. In the result Ground No. 22 to 24 stands partly allowed. 56. In respect of Part-G Ground 25 and 26, it was submitted that the issue was against the action of the learned CIT(A) in confirming the additions made by the Assessing Officer by invoking the provisions of section 41(1) on account of cessation liability. It was submission that there were certain trade liability which was being carried forward for substantial number of years. It was submission that the Assessing Officer had invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is liable to the allowed as business expenditure. In reply learned Departmental Representative of the assessee submitted that the assessee has not provided the details of the persons to whom the gifts have been given. It was submission that the disallowances are liable to be confirmed. 59. We have considered the rival submissions. Admittedly the assessee has not been able to place before us the details of the persons to whom the gifts have been given. In fact even the Assessing Officer has disallowed the same only on the ground that the assessee has failed to submit the details as to whom the gifts were given. This being so the finding of the learned CIT(A) and that the Assessing Officer in respect of the disallowances stands confirmed. In the result Ground No 27 of the assessee appeal stands dismissed. 60. In respect of the Part-H Ground No. 28 it was fairly agreed by both the sides that the issue was against the non granting of TDS credit. It was fairly agreed that the issue may be restored to the file of the Assessing Officer by granting the assessee adequate opportunity to produce the same. 61. We have considered the rival submissions. As we have already decided ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
