TMI Blog2024 (3) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below and allow the ground of appeal raised by the assessee. Decided against revenue. Disallowance of Commission - AO has disallowed payment of commission as the assessee had not furnished adequate evidence to substantiate that the expenditure was incurred wholly and exclusively for the purpose of business - HELD THAT:- We find that this issue is recurring. In absence of any cogent evidence, the assessee s claim of payment of commission has been consistently dismissed. Similar is the situation in the impugned assessment year. No evidence has been brought on record by the assessee to substantiate its claim. Decided against assessee. Addition u/s. 40A(9) - Contribution to Utmal Employees Welfare Fund - disallowed assessee s claim on the ground that the said payment is not backed by any legal provision or any law for the time being in force, hence, the amount was disallowed u/s. 40A(9), also confirmed by CIT(A) - HELD THAT:- As this issue has been decided by the Tribunal [ 2022 (5) TMI 104 - ITAT MUMBAI] (supra). The Co-ordinate Bench following the order of Tribunal in assessee's own case for preceding Assessment Year allowed assessee s contribution towards Utmal Employees We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's own case in [ 2020 (10) TMI 1324 - ITAT MUMBAI] for Assessment Year 2001-02 restored the issue back to the file of Assessing Officer. Both sides are unanimous in stating that the facts relating to Assessment Year under appeal on this issue are identical, hence, respectfully following the decision of Co-ordinate Bench we restore this issue back to the file of Assessing Officer with similar directions. Set off of loss on export of trading goods against profits on export of Manufactured goods - As assessee fairly stated that this issue has been decided against the assessee in the preceding Assessment Years, the facts in the impugned assessment year are identical. In view of the statement made by ld.Counsel for the assessee, sub-ground No. (b) is dismissed. Reduction of 90% Miscellaneous Income received from profits of Business - We find that similar issue was raised before Co-ordinate Bench in appeal by the assessee in Assessment Year 2001-02 and Assessment Year 2002-03 placing reliance on the decision of Tribunal for Assessment Year 2000- 01 [ 2020 (10) TMI 1324 - ITAT MUMBAI] restored the issue back to the file of Assessing Officer. The Revenue has not placed on record any m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee are directed against the order of Commissioner of Income Tax(Appeals)-5, Mumbai [in short the CIT(A) ] dated 30/01/2013, for the Assessment Year 2003-04. ITA NO.3190/MUM/2013-A.Y. 2003-04: 2. The Revenue in its appeal has assailed the order of CIT(A) on solitary issue i.e. deleting disallowance of Rs. 107.13 crores qua work-in-progress of Construction Contracts. The ground raised in appeal by the Revenue reads as under: 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 107.13 crore being the amount provided in valuing work-in-progress of construction contracts since to that extent profit of the assessee company got reduced. 3. Shri Ajay Chandra representing the Department submitted that assessee is engaged in execution of civil projects. The assessee while determining work-in-progress (WIP) in respect of construction work valued the same after reduction of certain amounts on account of various adverse factors. The assessee in the past made similar adjustment to the WIP. Such reduction was treated as provision for contingent liability and was disallowed in the past . In the impugned assessment year t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk-in-progress relating to incomplete contracts has been made by the assessee company in a consistent manner following the accepted principles of accounting and decided the issue in favour of the assessee. Respectfully following the decision of the coordinate bench in assessee's own case, we set aside the impugned orders of the authorities below and allow the ground of appeal raised by the assessee. No contrary decision or any material has been brought to our notice by the Revenue, thus, we see no reason to take a different view. Respectfully following the decision of Co-ordinate Bench in assessee's own case in the preceding Assessment Years we find no merit in the ground raised by the Revenue in its appeal. Hence, the solitary ground raised by the Revenue in its appeal is dismissed. 6. In the result, appeal of the Revenue is dismissed. ITA NO.3451/MUM/2013-A.Y.2003-04: 7. The assessee in its appeal has raised as many as 10 grounds and two additional grounds. The grounds / additional grounds of appeal are taken up for adjudication in seriatim as under. 8. Shri J.D.Mistry, Sr. Advocate appearing on behalf of the assessee stated at the outset that majority of the issues raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erit in ground No.1 of appeal. The ground No.1 of appeal is dismissed. Ground No.2- Addition u/s. 40A(9) of the Income Tax Act, 1961 [in short the Act ]- Contribution to Utmal Employees Welfare Fund Rs. 1,00,000/- : 13. During the period relevant to assessment year under appeal, the assessee contributed to Utmal Employees Welfare Fund Rs. 1,00,000/-. The Assessing Officer disallowed assessee s claim on the ground that the said payment is not backed by any legal provision or any law for the time being in force, hence, the amount was disallowed u/s. 40A(9) of the Act. The CIT(A) upheld the findings of the Assessing Officer. The ld.Counsel for the assessee pointed that this issue has been decided by the Tribunal in ITA No.6908/Mum/2012(supra). The Co-ordinate Bench following the order of Tribunal in assessee's own case for preceding Assessment Year allowed assessee s contribution towards Utmal Employees Welfare Fund. We find that this issue has been recurring since Assessment Year 1994-95. In preceding Assessment Years, the Tribunal has consistently allowed contribution towards said Fund.. The facts being similar in the impugned assessment year, ground No.2 of appeal is allowed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of interest income and disallowed the same u/s. 14A of the Act. The ld.Counsel for the assessee submits that the assessee is having own interest free funds to cover investments, hence, disallowance u/s. 14A of the Act on account interest expenditure is not warranted. In support of his submissions he placed reliance on the decision in the case of HDFC Bank Ltd. ,383 ITR 529 (Bom) and the decision in the case of Reliance Utilities Power Ltd., 178 taxmann.com 135 (Bom). We find that the Assessing Officer has made disallowance u/s.14A of the Act solely on account of interest expenditure. The contention of the assessee is that assessee is having own funds sufficient to cover the investments. It is no more res-integra that where the assessee is having mixed bag of; own interest free funds and borrowed interest bearing funds, it shall be presumed that the assessee has made investments from own interest free funds. Similar disallowance made by Assessing Officer in Assessment Year 2001-02 Assessment Year 2002-03 was deleted by the Co-ordinate Bench . We deem it appropriate to restore this issue to Assessing Officer for the limited purpose of verification of availability of assessee s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores was credited to the P L account, however while computing the income the assessee, the same was reduced in the computation of income by treating the same as capital receipt not chargeable to tax. According to the A.O., the said liability has ceased to exist in the books of the assessee as the same was taken over by another entity. In coming to this conclusion, the A.O relied on the decision of CIT vs. Sunderam Iyengar Sons Ltd. (supra). wherein the assessee used to receive deposits in the course of its trading transaction on sale of Coca Cola in glass bottles of, etc. which are refundable on return of the said bottles. wherein the order of the Supreme Court has held that liability needs to be treated as income of the assessee u/s 41(1) of the Act. The ld. CIT(A) in the appellate proceeding affirmed the order of AO by holding that the said takeover of deferred sales tax liability to be paid in future is taxable u/s 28(iv) of the Act, by relying on the decision of CIT(A) Vs. Sundaram Iyangam Sons Ltd., (supra) and also the decision of the Jurisdiction High Court in the case of Solid Container Ltd., Vs. DCIT (supra). In this case, we note that the A.O made addition u/s 41(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh at the present value. The liability has been discharged by the Appellant by making an immediate payment at the present value and therefore it cannot be said that there is a remission or cessation of the liability. Further there is no remission or cessation of the liability for the reason that the assignment of the liability is to a third party whereas qua the Sales-Tax Department the assessee continues to be liable to pay the said amount and thus as for as the Sales-Tax Department is concerned, there is no remission or cessation of a liability. The case of the assessee finds support from the decision of the Apex Court in CIT vs. S.I. Group India Ltd., (Supra) wherein the Apex Court held that when the Sales-tax Department has not accepted the pre-payment, it cannot be a case of cessation or remission of a liability. In the present case also, the assignment has not been accepted by the Sales-tax Department and, therefore, there is no question of cessation or remission of the liability. Besides the deemed loan from the Sales-tax Department is not a loss or expenditure or a trading liability and, therefore, the provision of section 41(1) of the Act is not applicable. The sales-tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of Coca Cola in glass bottles of, etc. which are refundable on return of the said bottles. During the relevant year, such deposits outstanding for a number of years were transferred by the assessee to the Profit Loss Account as no longer payable to the said customers. On these facts, the Apex Court held that the amount was received by the assessee in the course of trading transaction and the same is chargeable to tax as trading receipts when the said amount becomes the assessee s own money. The Apex Court further held that because of the trading transaction, the assessee has become richer to the extent of the amount transferred to Profit Loss Account and, hence, the amount so transferred is to be treated as income of the assessee. In the present facts are distinguishable and, therefore, the decision of the Apex Court is not applicable as the Supreme Court was neither concerned with section 28(iv) or section 41(1) of the Act, but with the issue of whether the amount received by an assessee in the course of a trading transaction, should be treated as income of the assessee or not. In the present case, the allegation of the Assessing Officer and the Commissioner of Income-tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the reliance on the decision of the Madras High Court by the Revenue is wholly misplaced and completely unjustified. The facts in the case of CIT vs. Aries Advertising Pvt. Ltd.(supra) are altogether different vis a vis the facts in the present case as in the case before the High Court, there was actual write off credit balance (trading liabilities) and, accordingly, the High Court held that the assessee therein had received a benefit in respect of a trading liability which came within the ambit of section 41(1) of the Act whereas in the present case, there is no question of any benefit being received by the Appellant as the appellant has discharged the net present value of a future liability not can the present case be said to be of remission or cession of the liability. Therefore, this decision is clearly inapplicable to the facts of the present case. In the case of CIT vs. ICC India Pvt. Ltd. (supra), the Hon ble High Court has held that share application amount was a capital receipt and was never received towards trading purpose and, therefore, the question of applicability of section 41(1) does not arise. The High Court has, therefore, dismissed the appeal of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has assailed recomputation of deduction by the Assessing Officer u/s. 80HHC on different facets. The same are as under: (a) Reduction of 90% gross interest received from profits gains of Business- Rs. 4804.16 lacs. 19. The ld.Counsel for the assessee submits that in assessment proceedings the Assessing Officer held that the assessee has not reduced gross interest received from profits and gains of business. Accordingly, 90% of the interest received on ICD, subsidiary and associate companies and customers treated as business income by the assessee was reduced from the profits and gains of the business. There should be no reduction of interest for computing profits u/s. 80HHC of the Act. The ld.Counsel for the assessee pointed that this issue has been decided by the Tribunal in assessee's own case in preceding Assessment Years and recently in appeal for Assessment Year 2001-02 and Assessment Year 2002-03. 20. We find that the Co-ordinate Bench while deciding the appeal for Assessment Year 2001-02 and Assessment Year 2002-03 following the decision of Tribunal in assessee's own case in ITA No.3076/Mum/2012 for Assessment Year 2001-02 restored the issue back to the file of Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. We find that similar issue was raised before Co-ordinate Bench in appeal by the assessee in Assessment Year 2001-02 and Assessment Year 2002-03. The Co-ordinate Bench placing reliance on the decision of Tribunal for Assessment Year 2000- 01 in ITA No. 3076/Mum/2012 decided on 29/10/2020. restored the issue back to the file of Assessing Officer. The Revenue has not placed on record any material to controvert the submissions of the assessee, hence, following the decision of Co-ordinate Bench, we restore sub-ground (c) to the Assessing Officer for parity of reasons. (d) Reduction of profits in respect of projects eligible for deduction u/s. 80HHB of the Act. 24. We find that this issue was also considered by Co-ordinate Bench in the preceding Assessment Year and was restored to the Assessing Officer. Both sides are unanimous in stating that the facts relevant to the issue are identical to the facts in appeal for Assessment Year 2001-02. Hence, following the decision of Co-ordinate Bench, the issue in sub-ground (d) is also restored to the Assessing Officer. 25. In the result, ground No.6 is partly allowed for statistical purpose. Ground No.7 - Deduction u/s. 80HHE of the Act: 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT 125 taxmann.com 72 has reiterated that disallowance made u/s. 14A could not be added to book profits of assessee u/s.115JB of the Act. In light of aforesaid decisions, assessee succeeds on ground No.9 of appeal. 30. The assessee vide application dated 14/11/2018 has raised additional grounds of appeal. The additional grounds reads as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer (AO) ought to have computed the deduction u/s 80HHC of the Act in determining the Book Profit u/s 115JA on the basis of profit as per the profit and loss account instead of profits of business and profession computed under the normal provisions of the Act while determining tax liability u/s 115JA of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer (AO) ought to have computed the deduction u/s 80HHE of the Act in determining the Book Profit u/s 115JA on the basis of profit as per the profit and loss account instead of profits of business and profession computed under the normal provisions of the Act while determining tax liability u/s 115JA of the Act. 31. The ld.Counsel for the assessee submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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