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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Godara]
Date of concluding the hearing : January 23rd, 2019 Date of pronouncing the order : April 3rd, 2019 O R D E R Per J. Sudhakar Reddy :- Both these appeals filed by the assessee are directed against the common order of the Learned Commissioner of Income Tax (Appeals) - 8, Kolkata, (ld. CIT(A)) passed u/s. 250 of the Income Tax Act, 1961, (the ‘Act’), dt. 21/01/2016, for the Assessment Years 2002-03 & 2003-04.
The two common issues that arise in this appeals are deduction u/s 80HHC & u/s 35D of the Act. For the Assessment Year 2002-03, one more ground arises i.e., set off of losses of a merged subsidiary which was disallowed by the revenue. For the Assessment Year 2003-04, three more issues arise i.e., disallowance of depreciation on capital subsidy, additions to corporate building and set off of loss of EOU.
We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:-
2 Assessment Year: 2002-03 I.T.A. No. 629/Kol/2016 Assessment Year: 2003-04 M/s. Beeyu Overseas Ltd 4. On the issue of deduction u/s 80HHC of the Act, the ld. CIT(A) had followed the judgment of the Tribunal on the same issue in the assessee’s own case for the Assessment Years 2001-02, 2002-03, 2003-04 & 2004-05. The ld. D/R could not point out any infirmity in the order of the ld. CIT(A). The ld. CIT(A) in the earlier Assessment Years has applied the propositions of law laid down by the Special Bench of the Tribunal in the case of Surendra Engg. Corpn. v. Assistant Commissioner of Income-tax [2003] 86 ITD 121 (MUM.) (SB).
Coming to the issue of netting off of interest, during the year interest income was assessed under the head income from business. Applying the decision of the Hon’ble Apex Court in the case of ACG Associated Capsules (P.) Ltd. vs. Commissioner of Income-tax, Central-IV, Mumbai reported in [2012] 18 taxmann.com 137 (SC), we find that this ground has to be adjudicated in favour of the assessee. Thus, this ground of the revenue is dismissed for both the Assessment Years.
The next issue that arises for adjudication is the allowability of 1/5th of preliminary IPO expenses u/s 35D of the Act. Expenses incurred by the assessee on IPO and preliminary expenses are amortised over a period of 5 years. During the year 1/5th of the said expenditure was claimed. The ld. CIT(A) applied the decision of the Tribunal in the case of the assessee on this issue for other Assessment Years and granted relief u/s 35D of the Act. We find no infirmity in the same and dismiss this ground of the revenue.
The next issue is the set-off of loses of the amalgamated company. During the year three subsidiary companies were merged with the assessee company. The loss of the amalgamated companies of Rs.9,63,330/-, was allowed in terms of Section 72A of the Act, by the ld. CIT(A). The ld. D/R could not controvert the findings of the ld. CIT(A). We find no infirmity in the order of the ld. CIT(A) and dismiss this ground of the revenue.
In the result revenue’s appeal for the Assessment Year 2002-03 is dismissed.
3 Assessment Year: 2002-03 I.T.A. No. 629/Kol/2016 Assessment Year: 2003-04 M/s. Beeyu Overseas Ltd 9. Now we take up ITA No. 629/Kol/2016 for the Assessment Year 2003-04.
Ground No. 1 & 2 are the same as the revenue’s ground nos. 1 & 2 for the Assessment Year 2002-03. Consistent with the view taken therein, we dismiss both these grounds of the revenue.
Ground No. 3 is on the disallowance of depreciation on the ground that capital subsidy was received on certain assets and depreciation was also claimed on such portion of capital receipt. On fact, the assessee submits that, assets for which capital subsidy was received have not been installed and consequentially no depreciation was claimed by the assessee on these assets. The ld. CIT(A) accepted this factual position stated by the assessee. The ld. D/R could not controvert this factual position. Hence this ground of the revenue is dismissed.
Ground No. 4 is on the rate of depreciation that has to be applied on corporate buildings. Depreciation of building is allowable at 10%, hence we find no infirmity in the order of the ld. CIT(A). Accordingly, we dismiss this ground of the revenue.
Ground No. 5 is on the set off of loss of EoU.
This issue is now covered by the decision of the Hon’ble Bombay High Court in the case of CIT v. Galaxy Surfactants Ltd. (2012) 343 ITR 108. As the order of the ld. CIT(A) is in line with the propositions laid down in the judgment by the Hon’ble Bombay High Court, we uphold the order of the ld. CIT(A) and dismiss this ground of the revenue.
In the result, both the appeals of the revenue are dismissed.