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TMI Blog2025 (2) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company as explained. 3. In law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred and the Ld. CIT A has erred in confirming in making further disallowance of Rs. 31,40,536/- on account of Sec.43B disallowables; the same should be duly allowed to the appellant company. 4. In law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred and the Ld. CIT A has erred in confirming in disallowing claim u/s. 35 to the extent of Rs. 337,73,000/- on flawed base that such expenditure is not incurred by the assessee company, whereas, as identified by the assessee company - the relevant expenditure recorded by the assessee company, having been netted by merger entries of excess of assets over liabilities representing reserves and surplus of erstwhile Indus Biotheraputics Ltd. The claim u/s.35 of the assessee company be allowed as claimed. 5. In law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred and the Ld. CIT A has erred in confirming in the alleged excess deduction u/s.35(2AB) by Rs. 87,66,984/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udice, the appellant company submits that, in the event, there is any amount finally determined to be of capital nature, the depreciation allowance in respect of the same be eligible to the assessee company commencing from the year of put to use of relevant assets. 9. In law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred and the Ld. CIT A has erred in confirming in the alleged foreign commission expenditure of Rs. 90.39 lacs as ineligible expenditure under the provisions of the Section 40, when the appellant company has duly brought out that the said remittances did not attract TDS/WHT provisions of Sec. 195 of the IT Act. The same commission expenditure should be duly allowed to the appellant company 10. In law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred and the Ld. CIT A has erred in confirming in denying deduction, which was made based on valid claim during the assessment proceedings, towards bad Debts expenses of Rs. 1,16,47,500/- being debts w/off during the year out of provision, both while computing normal income as well as book profit. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 3.1 The Assessing Officer observed that the assessee has made huge investments in shares of subsidiaries and other companies. The opening balance of investment was at Rs. 1020.98 Lakhs as on 01.04.2011 whereas the closing balance of investment as on 31.03.2012 was reported at Rs. 1029.96 Lakhs. Vide notice under Section 142(1) dated 21.08.2014, the assessee was asked to furnish the details of investment in shares/securities with an explanation as to whether any expenses have been claimed in respect of exempt income, which is disallowable under Section 14A read with Rule 8D. In response to the same, the assessee filed reply on 21.11.2014. After taking the same into consideration, the Assessing Officer observed that as per the Circular No.5/2014 dated 11.02.2014, even where taxpayer in a particular year has not earned any exempt income, the provisions of Rule 8D read with Section 14A of the Act are applicable. The Assessing Officer observed that the assessee has given only general explanation that it has not incurred any expenses related to exempt income. The assessee has not given/submitted any proof of specific explanation other than this and, therefore, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance under Section 40A(2)(b) of the Act amounting to Rs. 5,61,34,515/- in respect of purchases made from related parties which comes to Rs. 14,03,363/- and added the same thereby mentioning that it is excessive and unreasonable under Section 40A(2)(b) of the Act. The Assessing Officer also made disallowance of Foreign Exchange loss on capital assets amounting to Rs. 86,27,682/- as per the provisions of Section 37(1) of the Act. The Assessing Officer made disallowance of sales promotion amounting to Rs. 81,23,963/- under Section 37(1) of the Act. The Assessing Officer further made disallowance of commission paid to non-resident amounting to Rs. 90,39,000/- under Section 40(a)(ia) of the Act. The Assessing Officer also made disallowance of claim of write off of debts amounting to Rs. 1,18,15,926/- which was claimed as provision of bad debts. The Assessing Officer also made disallowance of tax credit wherein the assessee claimed foreign tax credit of Rs. 1,59,00,000/- less Rs. 21,43,693/- and thus disallowed the tax credit which was excessively claimed by the assessee amounting to Rs. 1,37,56,307/- Thus, the total assessed income was (-) Rs. 2,13,47,020/-. 4. Being aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. All these aspects needs verification, hence this issue is remanded back to the file of the Assessing Officer. Besides this whether any expenditure relating to administrative expenditure incurred or not by the assessee also needs verification. Thus, the issue is remanded back to the file of the Assessing Officer for proper verification and adjudication as per the evidences and submissions of the assessee. Assessee be given opportunity of hearing by following principles of natural justice. Ground No. 2 is partly allowed for statistical purpose. 8. As regards to Ground No. 3 relating to disallowance of Rs. 34,40,536/- on account of Section 43B disallowance, the Ld. AR submitted that the amount of Rs. 2014/- represent short payment out of amount of interest provided in respect of DBT Soft Loan 2 is accepted by the assessee while the residual amount of Rs. 31,38,522/- represents amount of disallowances of A.Y. 2011-12 being offered as disallowances of unpaid interest as under: Interest on Buyer's credit : Rs. 1,56,402/- Interest on DBT Soft Loan 1 : Rs. 9,00,000/- Interest on DBT Soft Loan 2 : Rs. 1,65,411/- Rs. 12,21,813/- Out of Bonus payable (Rs. 21,02,913/-) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded by the assessee company, having been netted by merger entries of excess of assets over liabilities representing reserves and surplus of erstwhile Indus Biotheraputics Ltd. The claim u/s.35 of the assessee company be allowed as claimed. The Ld. AR submitted that the assessee claimed deduction under Section 35 that of Rs. 16.73 crores. In fact, the Assessing Officer and the CIT(A) has not taken cognisance that the base taken of Rs. 18.84 crores from Director's report is not enough as in this year Indus Biotherapeutics is merged into the assessee company. This merger resulted into negative goodwill which has reduced the value of intangibles. That is why the value seen is Rs. 18.84 crores but in fact R & D is Rs. 20.10 crores. The Ld. AR pointed out the reconciliation at pg. 210 of the paper book. 12. The Ld. DR submitted that the Ld. AR is filing reconciliation at this juncture which was not before the CIT(A) as well as before the Assessing Officer. The Ld. DR relied upon the assessment order and the order of the CIT(A). 13. We have heard both the parties and perused all the relevant material available on record. Since the assessee is filing reconciliation at this juncture a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Ground No. 6, the Ld. AR submitted that the CIT(A) has erred in confirming in making addition of Rs. 13,05,000/- being the signing amount of Grant received, and been treated by the assessee company as liability, being not spent during the year. The same should be considered as income or outstanding as and when and according to the proper accounting treatment thereof. The Ld. AR submitted that matching concept will apply and it is a liability until specific project is executed. 18. The Ld. DR relied upon the assessment order and the order of the CIT(A). 19. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that it is signing amount for grant received and the contention of the Ld. AR that unless and until project is fully executed and delivered, the assessee is a custodian of that grant otherwise it has to be remitted back if the project is not executed which is a liability. This appears to be justifiable. Hence, Ground No. 6 is allowed. 20. As regards to Ground No. 7, the Ld. AR submitted that the CIT(A) has erred in confirming in disallowing interest expenses to the extent of Rs. 3,44,20,356/- considering the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No. 8, the Ld. AR submitted that the CIT(A) has erred in confirming in disallowing exchange fluctuation debit to the extent of Rs. 86,27,682/- considering the same to be of capitalized on account Capital WIP/Assets of the assessee company. The Ld. AR relied upon the decision of the Tribunal in case of Cooper Corporation (P) Ltd. (2016) 69 taxmann.com 244 (Pune Tri.). The Ld. AR further submitted without prejudice that, in the event, there is any amount finally determined to be of capital nature, the depreciation allowance in respect of the same be eligible to the assessee company commencing from the year of put to use of relevant assets. The Ld. AR relied upon the judgment of the Hon'ble Karnataka High Court in case of Bangalore International Airport Ltd. 459 ITR 158. 24. The Ld. DR relied upon the order of the CIT(A) and the Assessment Order. The Ld. DR submitted that the claim of foreign exchange loss was not the ascertained liability and it was just the notional loss worked out by the assessee as on 31.03.2012. As per Section 43A of the Act, the loss could have been worked out on the date of actual settlement of payment which did not happen and also did not fall in year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see being ITA No. 400/Ahd/2018 for A.Y. 2013-14. 27. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 28. We have heard both the parties and perused all the relevant material available on record. The finding of the CIT(A) that the assessee failed to adduce necessary evidences appears to be not correct as the assessee has dealt with these non-resident and rendered service outside India in A.Y. 2013-14, there was no distinguishing facts established by the Revenue that the services was rendered in India by the non-residents. Hence, following the decision of the Tribunal in assessee's own case for A.Y. 2013-14, this issue is allowed in favour of the assessee. Ground No. 9 is allowed. 29. As regards to Ground No. 10, the Ld. AR submitted that the CIT(A) has erred in confirming in denying deduction, which was made based on valid claim during the assessment proceedings, towards bad Debts expenses of Rs. 1,16,47,500/- being debts written off during the year out of provision, both while computing normal income as well as book profit. The same should be duly allowed to the assessee company. This year the assessee has written off the reserve against debts. In fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AR submitted that the CIT(A) has erred in confirming in giving short credit, under the favourable provisions of the income tax act and/or DTAA for the foreign tax incidence. The Ld. AR submitted that income of Rs. 15.93 crores earned outside India is already included in the income offered. Tax of Rs. 1.53 crore is paid on it outside India. The Ld. AR submitted that the tax authorities have not examined whether Section 90 of the Act will apply or Section 91 of the Act or Rule 128 of the Rules. Therefore, Ld. AR requested that this needs to be remanded back to the file of the Assessing Officer. 39. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 40. We have heard both the parties and perused all the relevant material available on record. Since, both the parties agree that this issue needs verification and examination, the issue is remanded back to the file of the Assessing Officer for proper examination and adjudication as per Income Tax Act and Rules. Ground No. 13 is partly allowed for statistical purpose. 41. As regards to Ground No. 14, the Ld. AR submitted that the CIT(A) has erred in confirming in giving short credit, under the provisions of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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