ASSTT. CIT, CIR- 7, Nagpur V. M/S. BALLARPUR INDUSTRIES LTD., GURGAON

ITA 331/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1607 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Business expenditure; Capital receipt
• Section: 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 331/NAG/2014 ASSESSMENT YEAR : 2007 - 08. ASSTT. COMMISSIONER OF INCOME - TAX, M/S BALLARPUR INDUSTRIESLTD. CIRCLE - 7, NAGPUR. VS. GURGAON, HARYANA. PAN AAACB5343E APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI K.P. DEWANI. DATE OF HEARING : 03 - 11 - 2015. DATE OF PRONOUNCEMENT : 24 TH NOV., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 27 - 03 - 2014 FOR ASSESSMENT YEAR 2007 - 08. THE GROUNDS OF APPEAL READ AS UNDER : 1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LA W THE LD. CIT(A) IS RIGHT IN RESTRICTING DISALLOWANCE TO RS. 1 , 92 , 07 , 4881 - FROM RS. 19 , 20 , 74 , 880/ - REGARDING WRITE OFF OF STORE S LYING IN THE BONDED WAREHOUSES WITHOUT APPRECIATING THE FACT THAT NO BASIS HAD BEEN PROV I DED FOR QUANTIFICATION OF LOSS ON AMOUNT OF WRITE OFF? 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD . CIT(A ) IS RIGHT IN SETTING ASIDE THE MATTER OF DISALLOWANCE OF RS . 87,24,729/ - ON ALC OF CUSTOMS DUTY LIABILITY UNDER ADVANCE LICENSE SCHEME TO THE FILE OF AO WITHOUT APPRECIATING THE FACT THAT THE SAME IS NOT ALLOWABLE EXPENDITURE? 3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) IS RIGHT IN SETTING ASIDE THE MATTER OF DISALLOWANCE OF RS . 1,29,00,000/ - ON ALC OF CONTRIBUTION TO AN APPROVED BODY RECOGNIZED ULS 35 (1) (II) TO THE FILE OF A O WITHOUT APPRECIATING THE FACT THAT THE SAME DOES NOT AMOUNT TO ALLOWABLE EXPENDITURE? 4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD . CIT(A) S RIGHT IN DELETING DISALLOWANCE OF PREMIUM PAYABLE ON ISSUE OF ZERO COUPON CONVERTIBLE BONDS OF RS . 17 , 52 , 16 , 424/ - . WITHOUT APPRECIATING THE 2 FACT THAT THE SAME DOES NOT AMOUNT TO THE EXPENDITURE . SINCE IT IS NOT AT ALL PAYABLE BY THE ASSESSEE ON ZCCB , AFTER THE MATURITY OF THE BONDS THE ASSESSEE IS REQUIRED TO ISSUE SHARES TO THE BOND HOLDERS AND NOT THE AMOUNT INVESTED WITH PREMIUM? 5 WHETHER ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT(A) I S R I GHT I N DIRECTING THE AA TO FO L LOW THE ITAT ' S DIRECTION AS G I VEN I N A . Y . 04 - 05 IN ASSESSEE OWN CASE AND CONSIDER THE CLAIM OF DEDUCTION ON ACCOUNT OF CHARITY AND DONATION RS . 1 , 79 , 46,9141 - WITHOUT APPRECIATING THE FACT THAT THE SAME DOES NOT AMOUNT TO ALLOWABLE EXPENDITURE? 6 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT(A) IS RIGHT IN DELETING DISALLOWANCE OF RS 87,38 , 1781 - ON ACCOUNT OF CONTRIBUTION TO VARIOUS INSTITUTIONS & CLUBS WITHOUT APPRECIATING THE FACTS THAT THE SAME DO NOT AMOUNT TO ALLOWABLE EXPENDITURE? 7 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) AS RIGHT IN TREATING SALES TAX INCENTIVE RECEIVED OF RS . 20 , 66 , 23 , 325/ - AS CAPITAL RECE I PT AND NOT CHARGEABLE TO TAX WITHOUT APPRECIATING THE FACT THAT THE SAME IS BEING REVENUE I N NATURE AND SLP HAS BEEN F I LED BEFORE THE HON ' BLE SUPREME COURT AGAINST THE HIGH COURT ORDER? 8 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT(A) IS RIGHT IN DIRECTING TO DELETE SALES TAX INCENTIVE WHILE COMPUTING BOOK PROFIT U/S . 115JB OF THE I . T . ACT WITHOUT APPRECIATING THE FACTS THAT THE SALES TAX INCENTIVE BEING REVENUE RECEIPTS, THE SAME IS NOT DEDUCTIBLE WITHIN THE MEANING OF SECTION 115JB OF THE I T ACT? 2. AT THE OUTSET IN THIS CASE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUES INVOLVED IN THE APPEAL ARE ALL COVERED BY THE EARLIER DECISION OF THE TRIBUNAL IN ASSESSEES OWN C ASE. LEARNED D.R. ALSO AGREED WITH THIS SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. ACCORDINGLY WE TAKE UP THE ADJUDICATION OF THE ISSUES RAISED. WE MAY GAINFULLY REFER TO THE WRITTEN SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSE IN THIS REGARD WHICH EXPLAINS AS TO HOW THE ISSUES INVOLVED ARE COVERED BY EARLIER DECISIONS AS UNDER : GR . NO.1: RESTRICTING DISALLOWANCE TO RS . 1,92,07 , 488/ - FROM RS.19,20, 74,8801 - . WRITE OFF OF STORES LYING IN THE BONDED WAREHOUSE . 3 A) SIMILAR ISSUE AS TO WRITE OFF OF STORES ON TRANSFER OF ONE OF THE BUSINESS DIVISION OF THE ASSESSEE COMP ANY HAS BEEN CONSIDERED BY HON'BLE ITAT NAGPUR BENCH , NAGPUR IN THE CASE OF ASSESSEE FOR A . YR 2003 - 04 IN ITA NO.262/NAG/2007 VIDE ORDER DATED 12/0812009. B) HON ' BLE CIT(A) BY FOLLOWING DECISION OF HON ' BLE ITAT IN THE CASE OF ASSESSEE HAS RESTRICTED ADDITION TO 10% I . E RS.1,92 , 07 , 488/ - FROM RS . 19 , 20 , 74 , 8801 - BEING ESTIMATED SALVAGE VALUE OF THE SAID STORES AND SPARES . GR . NO . 2: SETTING ASIDE THE MATTER ON ACCOUNT OF CUSTOMS DUTY LIABILITY UNDER ADVANCE LICENSE SCHEME BY HON'BLE CIT(A) . A) HON'BLE CIT(A) DIRECTED A.O . TO CONSIDER CLAIM OF ASSESSEE AS PER DIRECT I ON OF HON ' BLE ITAT IN ITA NO.262/NAG/2007. B) HON'BLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASSESSEE. CIT(A) MERELY DIRECTED A . O . TO CONSIDER CLAIM AS PER DIRECTION OF HON ' BLE I TAT IN THE CASE OF ASSESSEE IN ITA NO.262/NAG/2007 . NO GRIEVANCE TO REVENUE . GR.NO . 3 : RS.1,29 , 00 , 0001 - CONTRIBUTIONS TO AN APPROVED BODY RECOGN I ZED U/S 35(1 )(II). A) RS.1 , 29,00,001 - PAID TO THAPAR CENTRE FOR INDUSTRIAL RESEARCH & DEVELOPMENT . I) IT IS CONTRIBUTION ON ACCOUNT OF BUSINESS EXPEDIENCY AND NOT A DONATION AS DISALLOWED BY A . O . 4 II) IN TERMS OF PROVISIONS OF SEC.35(1 )(II) DEDUCTION IS TO BE ALLOWED AT ONE AND ONE FOURTH TIME I . E. 125% OF AMOUNT PAID . ASSESSEE PRAYS THAT DEDUCTION OF RS . 1 ,61 ,25 , 0001 - DIRECTED TO BE ALLOWED. III) CENTRAL BOARD OF DIRECT TAXES GRANTED APPROVAL U/S 35(1 )(II) OF I . T . ACT W.E.F 2004 - 05 VIDE NOTIFICATION DATED 04/09/2009. IV) DEDUCTION IS ALLOWABLE U/S 35(1 )(II) OF I . T ACT 19 61. B) HON ' BLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASSESSEE . CIT(A) MERELY DIRECTED A . O . TO CONSIDER CLAIM AS PER DIRECTION OF HON ' BLE ITA T IN THE CASE OF NEWQUEST CORPORATION LTD . FOR A . YR 2004 - 05 IN ITA NO.243/NAG/200B . NO GRIEVANCE TO REVENUE. GR.NO . 4 : RS.17 , 52 , 16 , 424/ - PREMIUM PAYABLE ON REDEMPTION OF ZERO COUPON BONDS . A) ZERO COUPON BONDS ISSUED TO MEET THE WORKING CAPITAL REQUIREMENT AND WAS UTILIZED FOR REGULAR BUSINESS ACTIVIT I ES . B) DIFFERENCE BETWEEN FACE VALUE AND REDEMPTION VALUE IS AMOUNT OF PREMIUM PAYABLE BY ASSESSEE. PREMIUM PAYABLE BY ASSESSEE IS AN AMOUNT PAYABLE FOR USE OF FUNDS RAISED THROUGH ISSUE OF ZERO COUPON BONDS. PREMIUM AMOUNT RELATING TO USE OF MONEY FOR PREVIO US YEAR UNDER CONSIDERATION IS RS. 17,52 , 16 , 424/ - . 5 C) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HON'BLE ITAT , NAGPUR BENCH , NAGPUR I N THE CASE OF ASSESSEE. I) ITA NO.1 06/NAG/2011 ORDER DATED 05/06/2015 (ASSTT . YEAR 2006 - 07) (P - 16 & 17) GR . NO.5: ADDITION RS.1 ,79,46 , 914/ - CONTRIBUTIONS TO SCHOOL AND INSTITUTIONS A) HON'BLE CIT(A) DIRECTED A.O. TO CONSIDER CLAIM OF ASSESSEE AS PER DIRECTION OF HON'BLE ITAT IN ITA NO.261/NAG/2007. B) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPMENT AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. C) RELIANCE ON: I) 266 ITR 170 (MAD.) CIT VS. MADRAS REFINERIES LTD. D) HON'BLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASSESS EE. CIT(A) MERELY DIRECTED A . O . TO CONSIDER CLAIM AS PER DIRECTION OF HON'BLE ITAT IN THE CASE OF ASSESSEE IN ITA NO.261/NAG/2007. NO GRIEVANCE TO REVENUE. E) SIMILAR MATTER RESTORED FOR RE - ADJUDICATION BY THE A . O. IN THE CASE OF ASSESSEE BY HON'BLE CIT(A) FOR A.YR 2006 - 07. HON'BLE ITAT IN ITA NO. 106/NAG/2011 VIDE ORDER DATED 05/06/2015 HAS CONFIRMED THE DIRECTION OF HON'BLE CIT(A). GR . .NO.6 : ADDITION RS.87 , 38 , 178/ - U/S 40A(9) CONTRIBUTION TO VARIOUS INSTITUTIONS AND STAFF 1 WORKMEN ' S CLUB ETC . 6 A) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPING AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. B) ISSUE COVERED IN FAVOUR OF ASS ESSEE BY FOLLOWING DECISION OF HON ' BLE ITAT , NAGPUR BENCH , NAGPUR I N THE CASE OF ASSESSEE : I) ITA NO . 106/NAG/2011 ORDER DATED 05/06/2015 (ASSTT . YEAR 2006 - 07) (P - 18) GR . NO . 7 : SALES TAX INCENTIVE RS.20 , 66 , 23 , 325/ - A) SALES TAX INCENTIVE AVAILED UNDER THE PACKAGE SCHEME OF INCENTIVES,1993 OF GOVT . OF MAHARASHTRA FOR SETTING UP OF INDUSTRIAL UNIT IS CAPITAL RECEIPT . B) LSSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HON ' BLE ITAT , NAGPUR BENCH, NAGPUR IN THE CASE OF ASSESSEE. (I) ITA NO . 262/NAG/2007 ORDER DATED 12/8/2009 (ASSTT . YEAR 2003 - 04) (P - 36 & 37) GR . NO . 8: SALES TAX INCENTIVES OF RS.20 , 66 , 23 , 325/ - TO BE EXCLUDED FOR COMPUTING PROFIT U/S 115JB . A) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HON ' BLE ITAT, NAGPUR BENCH , NAGPUR IN THE CASE OF ASSESSEE. 7 I) ITA NO . 1 06/NAG/2011 ORDER DATED 05/06/2015 (ASSTT . YEAR 2006 - 07) (P - 20 & 21 ) 3 . FROM THE ABOVE IT IS APPARENT AND IT IS ALSO ACCEPTABLE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT LEARNED CIT(APPEALS) HAS FOLLOWED ITATS ORDER IN ASSESSEES OWN CASE IN DELETING THE ADDITION OR SETTING ASIDE THE SAME TO THE FILE OF THE AO TO CONSIDER IN THE LIGHT OF ITAT DECISION. NO CASE HA S BEEN MADE OUT THAT JURISDICTIONAL HIGH COURT HAS REVERSED THE EARLIER ITAT DECISION OR THAT THE FACTS IN THE PRESENT CASE ARE DIFFERENT. 4. HENCE RESPECTFULLY FOLLOWING THE PRECEDENT , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). WE AFFIRM HIS ORDER DELETING THE ADDITION OR SETTING ASIDE THE ISSUE AS APPLICABLE. 5. IN THE RESULT, THIS APPEAL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOV., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH NOV., 2015. 8 COPY FORWARDED TO : 1. M/S BALLARPUR INDUSTRIES LTD. FIRST INDIA PLACE, TOWER C, MEHRAULI, GURGAON ROAD, GURGAON., HARYANA. 2. A.C.I.T., CIRCLE - 7, NAGPUR. 3. C.I.T. CONCERNED 4. C.I.T. - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR