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TMI Blog2024 (8) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... davit and are of the considered view that the assessee was prevented by reasonable and sufficient cause for not filing the cross-objections within time. Considering the facts of the case in the light of the previous history of the assessee and in the interest of justice, the delay is condoned and both the cross-objections are admitted. 3. The appeals and the cross-objections were heard together and are disposed off by this common order for the sake of convenience and brevity. 4. The grievance of the revenue is that, the ld. CIT(A) erred in reducing the bank guarantee fee levied by the AO and the assessee in its cross-objection has challenged the very levy of the bank guarantee. Since the cross-objections go to the root of the matter, we take up the same for adjudication first. 5. Representatives were heard at length. Case records perused and the judicial decisions brought to our notice, duly considered in the light Rule 18(6) of the ITAT Rules, 1963. 6. The underlying facts show that the assessee along with Afcons Construction Mideast LLC and Saipem Afcons Joint Venture for securing contract for some projects in UAE. The joint ventures were required to furnish bank guarantee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises." 15. Ergo, it is to be seen whether such transaction is having a bearing on the profits, income, losses or assets or any kind of a mutual agreement or arrangement for the allocation or apportionment or contribution to any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided. Thus, the transaction or the arrangement should have the bearing of profit or income or any kind of benefit or facility. Here providing of performance guarantee or corporate guarantee did not gave benefit to the AE, albeit on the facts of the case the entire benefit for giving such guarantee is only to the assessee because the guarantee was given to carry out the work which was done de-facto by assessee. Even the work performed by the Afcons Mideast was totally done by the support service through infrastructure and man power and the organizational support of the assessee company only and that's the reason why the entire reward and profit went to the assessee Once, the entire benefit and the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments and direct the TPO/AO to delete the same. Accordingly, both the cross-objections of the assessee are allowed and appeal of the revenue to this extent becomes infructuous. 9. In ITA No. 2390/Mum/2017 for AY 2011-12, the next ground relates to the allowance of depreciation on the written down value (WDV) of plant & machinery. This issue was also considered by the Coordinate Bench in AY 2010-11 and the relevant findings read as under:- "17. We heard the parties. We notice that this is a recurring issue and that Coordinate Bench in assessee's case for AY 2009-10 while considering the issues has held that:- "23. In so far as disallowance of depreciation of Rs. 25,000/- and written down value of speed boat, it has been submitted that the issue is in favour of the assessee by ITAT in assessee's own case for the A.Y. 2001-02, A.Yrs. 2002- 03 to 2005-06 and A.Yrs 2006- 07 to 2008-09. As per the Tribunal order, it was held that:- (i) As per the facts on record, machinery was purchased by the principal but the assessee had been vested with the possession of them and utilized them for its business. (ii) It is not disputed that the principal has debited the cost of machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lastly, the Tribunal declined the observation of the ld. AO that since the income from arbitration award is excluded from the total income, therefore, professional fees incurred in this should be disallowed. This exact observation of the ld. AO as made in the present assessment year also has been rejected and accordingly, the ground raised by the Revenue is dismissed." 21. We notice from the above extracted observations of AO that the reason for disallowance during the year under consideration is simply to follow the earlier year disallowance and to keep the issue alive. The AO for the year under consideration also has not disputed the fact that the professional fee is incurred for the purposes of business. Therefore, respectfully following the decision of the Co-ordinate Bench, we hold that the CIT(A) has rightly deleted the disallowance made by the AO. Accordingly, this ground raised by the Revenue is dismissed. 12. Respectfully following the same, we decline to interfere. Ground No. 6 is also dismissed. 13. Accordingly, Ground Nos. 1 to 4 of ITA No. 2390/Mum/2017, become infructuous and Ground Nos. 5 and 6 are dismissed. 14. In ITA No. 5296/Mum/2019 for AY 2012-13, the soli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits made/income earned by it during the relevant assessment year. The aforesaid adjustment is made to arrive at the correct income-tax liability based on the book profits of a company. It does not deal with income-tax liability incurred by the company on account of any contractual obligation. In the assessee's case the assessee company has discharged the income-tax liability of its employees on account of the perquisite provided to them. The said income tax liability has not arisen to the assessee on its income/book profits. The said tax liability is of the employees which has merely been discharged by the assessee as per the terms of agreement between the assessee company and its employees. Therefore, from assessee Company's perspective, the said payment is nothing but a contractual liability incurred in the course of regular business of the assessee. Hence, the said amount is business expenditure of the assessee company and not its tax payment. The said expense has been debited to the profit and loss account for the year ended 31 March 2012. Hence, the aforesaid expenses cannot be added back in computing the book profits under section 115JB of the Act. (v) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tue of their income arisen on receipts of the ESOP since the payments are in the nature of income tax, the same are covered by clause (a) to Explanation 1 to Section 115JB of the Act and accordingly disallowed Rs. 37,98,345/- and added to the book profit. 16.1. Assessee agitated the matter before the ld. CIT(A) and reiterated its submissions made before the AO. After considering the facts and the submissions and analyzing the relevant provisions, the ld. CIT(A) was of the opinion that the definition of the term "income tax" for the purpose of clause (a) of Explanation 1 to Section 115JB of the Act does not cover income tax payment made by an employer on behalf of the employees and accordingly directed the AO to delete the impugned adjustment of Rs. 37,98,345/-. 17. Before us, the ld. D/R strongly supported the findings of the AO and the ld. Counsel reiterated what has been stated before the lower authorities. 18. We have given a thoughtful consideration to the orders of the authorities below. The entire quarrel revolves around Clause (a) of Explanation 1 to Section 115JB of the Act. For the purpose of clause (a) of Explanation 1, the amount of income tax shall include, (i) any t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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