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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI P.K BANSAL, VICE- & SHRI PAWAN SINGH
THE INCOME TAX APPELLATE TRIBUNAL“B” BENCH, MUMBAI BEFORE SHRI P.K BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA no.3636/Mum./2013 & 4279/Mum/2014 (Assessment Year: 2006-07 & 2007-08)
Bharat Petroleum Corporation Ltd., Taxation Section, 3rd Floor, ……………. Appellant Bharat Bhavan-ll, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 400001, PAN AAACB1902M v/s
ACIT(OSD) Range 2(1) ……………. Respondent Mumbai Assessee by : Shri. J. D. Mistri Sr. Advocate Revenue by : Shri. Anand Mohan DR
Date of Hearing –11.09.2017 Date of Order - 24.10.2017
O R D E R PER: PAWAN SINGH 1. These two appeals by assessee under section 253 of Income Tax Act, are directed against the order of CIT-A for the assessment year 2006-07 and 2007-08. 2. In appeal for A.Y 2006-07 in ITA No. 3636/Mum/2013 the assessee has raised following ground of appeal. 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax [CIT(A)] erred in confirming
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 the disallowance of Rs. 1,57,59,706/- of premium on leasehold land. On the facts of the case CIT(A) ought to have allowed the same. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming disallowance of Rs. 12,77,80,000/- made by the assessing officer u/s 14A of the Income Tax Act 1961, by invoking Rule 80 when the said Rule is inapplicable to A.Y 2006-07. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the assessee has claimed that no expenditure is incurred with regard to exempt income when the assessee has in fact submitted that only Treasury Dept. expenses can, if at all be attributed to earning the exempt income and consequently only Rs 1,77,284 qualifies for disallowance u/s 14A of the Income Tax Act, 1961. 4. On the facts and in the circumstances of the case and in law and without prejudice to above, the learned CIT(A) erred in not holding that since the tax free investments are made by the assessee out of its own funds, no amount of the interest of Rs 247,41,36,975 paid on borrowings qualifies for disallowance u/s 11A of the Income Tax Act, 1961. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not admitting the additional grounds of appeal filed by assessee. The assessee submits that the learned CIT(A) ought to have admitted the additional grounds and adjudicated them on merits. 6. On the facts and in the circumstances of the case and in law, the appellant submits that the net loss on sale of oil bonds of Rs. 80,90,000/- is not a capital loss and the same is allowable as 'Business Loss' in computing the income of the assessee and allowed to carried forward under section 72 of Income Tax Act, 1961. 7. On the facts and in the circumstances of the case and in law, the assessee submits that in calculating the book profits u/s 115JB of the Income Tax Act 1961, no notional disallowance is permissible u/s 14A of the Income Tax Act, 1961 read with Rule 80. 8. On the facts and in the circumstances of the case and in law, the assessee submits that based on recent judgment of jurisdictional Bombay High Court in the case of CIT Vs Raymond Ltd [Born] (209 Taxman 65/21), the amount transferred to Debenture Redemption Reserve of Rs. 189 Crs. is not a transfer within the meaning of clause (b) of Explanation (1) of section 115JB and consequently, the said amount is to be deducted while arriving at the 'books profit' u/s 115JB of Income Tax Act, 1961. 9. On the facts and in the circumstances of the case and in law, the appellant submits that based on the decision of the Hon'ble ITAT (Delhi) in DCIT Vs Cosmo Films Ltd (ITA No. 25081 Dell 2007), the Balance Additional Depreciation u/s 32 (iia) in respect of additions to new plant and machinery made in Financial Year 2004-05 i.e. 2
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 relevant to Assessment Year 2005-06 and put to use for less than 180 days in the said assessment year, amounting to Rs. 371,21,86,8341- may be allowed as deduction in Assessment Year 2006-07 Further it is submitted that balance additional depreciation on Rs. 371,21,86,834/- be allowed to carried forward and set off in subsequent assessment years u/s 32(2) of the Income Tax Act, 1961. 10. On the facts and in the circumstances of the case and in law, the assessee submits that interest income earned on Oil Bonds ought to be taxed as 'Profits and gains from Business and Profession' a d not under the head 'Income from other sources'. 11. The assessee craves leave to amend, alter and delete any of the above grounds and add any Additional ground(s) either before or at the time of hearing.
At the outset of the hearing the Sh J.D. Mistry ld. Sr Advocate ( ld AR)
appearing on behalf of the assessee argued that all the ground of the appeal
raised by assessee are covered in favour of the assessee by the decision of
assessee’s own case for earlier assessment year. The Ld. A.R of the
assessee submitted a chart showing the narration ground of appeal and the
details of various orders in assessee’s own case for earlier orders. The Ld.
D.R for the revenue after going though the details furnished by the Ld. A.R
of the assessee not disputed the contention of the Ld. A.R of the assessee.
Ground No. 1 relates to disallowance of amortization of premium on
leasehold land of Rs. 1,57,59,706. The Ld. A.R of the assessee argued that
this ground of appeal is covered in favour of assessee by the decision of
Tribunal in assessee own case for A.Y 2004-05 and 2005-06.
We have considered the submission of the Ld. A.R of the assessee and
perused the order of Tribunal for A.Y 2004-05 in ITA no. 5963/um/2011.
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 The coordinate bench of the Tribunal in identical ground of appeal has
passed the following order:-
We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material produced before us. We find that as stands gathered from the records, the revenue in the assessment framed in the hands of the assessee corporation for A.Y. 2014-15 had allowed the registration and stamp duty charges of Rs.2,47,98,757/- as a revenue expenditure, as claimed by the assessee corporation in its revised return of income for A.Y. 2014-15, by relying on the judgment of the Hon’ble High Court of Bombay in the case of CIT-3 Vs. Reliance Industrial Infrastructure Ltd. (2015) 379 ITR 0340 (Bom). The Hon’ble High Court in its aforesaid judgment had held as under:- “In fact during the hearing before the Tribunal, the only issue which appears to have been in dispute was whether the amount of Rs.23.42 lacs paid as a stamp duty to take land on lease is a capital expenditure or revenue expenditure. On the aforesaid facts, the Tribunal by the impugned order placed reliance upon the decisions of this Court, particularly in Cincita Pvt. Ltd. wherein it has been observed that the period of lease for which the property has been taken, cannot be regarded as a decisive test to determine the nature of the expenditure. In any case, it is not disputed before us that the stamp duty amount has been paid on the lease deed for the purposes of carrying on assessee's business. Once the aforesaid position is accepted then the amount of stamp duty paid for has to be allowed as revenue nature.” We would now test the claim of the assessee as regards the allowability of amortization of leasehold premium as a revenue expenditure, in the backdrop of the aforesaid judgment of the Hon’ble Jurisdictional High Court in the case of Reliance Industrial Infrastructure Ltd. (supra). We find that the assessee had entered into an agreement with various parties for the purchase of leasehold lands at various places, which were to be used for its business operations, viz. for establishing retail outlets, LPG bottling plants, refineries etc. The premium paid by the assessee corporation was one of the mode of giving compensation to the landlords, besides nominal annual rent paid to them. It is thus the contention of the assessee that the premium paid was in the nature of rent, and as such the amortization of premium should be considered as a revenue expenditure. Per contra, the Ld. D.R relied on the orders of the lower authorities, and therein averred that as the said payment by the assessee corporation was clearly by way of a capital expenditure, therefore the same had rightly been held as not allowable as a revenue expenditure by the 4
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 lower authorities. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material produced before us. We are of the considered view that after appreciating the facts of the case in toto, it can safely be concluded that the leasehold premium amortized by the assessee corporation was in the nature of compensation paid to the landlords, in addition to the rent. We thus are of the considered view that the leasehold premium amortized by the assessee corporation, being in the nature of rent, was therefore allowable as a revenue expenditure in the hands of the assessee. We are of the considered view that our aforesaid view stands fortified by an analogy that can safely be drawn from the judgment of the Hon’ble Jurisdictional High Court in the case of Reliance Industrial Infrastructure Ltd. (supra), on the basis of which the claim of the assessee corporation towards registration and stamp duty charges of Rs.2,47,98,757/-, as observed by us hereinabove, had been allowed as a revenue expenditure in the assessment framed in the case of the assessee corporation for A.Y. 2014-15. We are further of the considered view that the claim of the assessee corporation that the lease premium paid to the landlords in order to facilitate payment of nominal rent , can safely be characterized as a ‘revenue expenditure’ in the light of the judgment of the Hon’ble Supreme Court in the case of : Commissioner of Income Tax Vs. Madras Auto Service (P) Ltd. (1998) 233 ITR 468 (SC), wherein it was held as under:-
In order to decide whether this expenditure is revenue expenditure or capital expenditure, one has to look at the expenditure from a commercial point of view. What advantage did the assessee get by constructing a building which belonged to somebody else and spending money for such construction? The assessee got a long lease of a newly constructed building suitable to its own business at a very concessional rent. The expenditure, therefore, was made in order to secure a long lease of new and more suitable business premises at a lower rent. In other words, the assessee made substantial savings in monthly rent for a period of 39 years by expending these amounts. The saving in expenditure was a saving in revenue expenditure in the form of rent. Whatever substitutes for revenue expenditure should normally be considered as revenue expenditure. Moreover, assessee in the present case did not get any capital asset by spending the said amounts. The assessee, therefore, could not have claimed any depreciation. Looking to the nature of the advantage which the assessee obtained in a commercial sense, the expenditure appears to be revenue expenditure. We thus are persuaded to subscribe to the view of the Ld. A.R that the amount of Rs. 1,04,86,210/- pertaining to amortization of premium on 5
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 leasehold land was allowable as a revenue expenditure in the hands of the assessee corporation. The Ground of Appeal No. 5 raised by the assessee before us is thus allowed.
Further for A.Y 2005-06 on similar ground of appeal in ITA No.
5966/Mum/2011 the coordinate bench of the tribunal passed the following
order:-
That the assessee had assailed the upholding by the CIT(A) of the disallowance of Rs.1,40,19,374/- on amortization of premium of leasehold land. That at the very outset of the hearing of the appeal it was submitted by the ld. A.R. that the issue involved in the ‘Ground of Appeal No. 1’ in the present appeal was identical to the ‘Ground of Appeal No. 5’ raised by the assessee corporation in its appeal before us for A.Y. 2004-05, viz. Bharat Petroleum Corporation Ltd. Vs. Additional CIT-Range-2(1), Mumbai, marked as ITA 5963/Mum/2011. The ld. D.R. had not disputed the aforesaid factual position. We have perused the orders of the lower authorities and the material produced before us. We find that the issue involved in the present appeal is identical to that as was raised before us by the assessee corporation as ‘Ground of appeal No. 5’ in its appeal for A.Y. 2004-05. That in the backdrop of our observations and reasonings adopted while adjudicating the ‘Ground of Appeal No. 5’ raised by the assessee before us in its aforesaid appeal for A.Y. 2004- 05, viz. Bharat Petroleum Corporation Ltd. Vs. Additional CIT- Range-2(1), Mumbai, marked as ITA 5963/Mum/2011, our decision passed in the context of the issue under consideration shall apply mutatis mutandis in the present appeal also. We thus going by our observations and reasonings adopted while disposing of the ‘Ground of appeal no. 5’ raised before us in assesses own appeal for A.Y. 2004-05, therein allow the ‘Ground of appeal no. 1’ raised by the assessee before us in the present appeal.
Considering the order of Tribunal for AY 2004-05 & 2005-06 and
following the principle of consistency, the ground no. 1 of appeal raised by
assessee is allowed.
Ground no. 2 to 4, relates to disallowance u/s. 14A read with Rule 8D. The
Ld. A.R of the assessee argued that these grounds of appeal are also
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 covered in favour of assessee in assessee’s own case for A.Y 2002-03 and
2003-04 and further in appeal for A.Y 2004-05 and 2005-06. On the other
hand, Ld. D.R for the Revenue not disputed the contention of Ld. A.R of
the assessee.
We have considered the rival submission of the parties and have gone
through the order of authorities below. We have seen that assessee has
raised similar ground of appeal A.Y 2004-05 & 2005-06 in ITA No. 5963,
5966/Mum/2011 passed the following order:-
That it was submitted by the ld. A.R. that the issue pertaining to disallowance u/s. 14A which had been assailed by the assessee by way of ‘Ground of appeal No. 2 & 3’ in the present appeal, is identical to that involved in ‘Ground of appeal 2 & 3’ raised in the assesses appeal for A.Y. 2004-05 before us, viz. Bharat Petroleum Corporation Ltd. Vs. Additional CIT-Range-2(1), Mumbai, marked as ITA 5963/Mum/2011. The ld. D.R. had not disputed the aforesaid factual position. We have heard the Authorized representatives of both the parties, perused the orders of the lower authorities and the material produced before us. We find that the issue involved in the present appeal is identical to that involved in the appeal before us in the assesses own case for A.Y. 2004-05. That in the backdrop of our observations and reasoning adopted while adjudicating the ‘Ground of Appeal No. 2 & 3’ raised by the assessee before us in its aforesaid appeal for A.Y. 2004-05, marked as ITA No. 5963/Mum/2011, our decision passed in the context of the issue under consideration shall apply mutatis mutandis in the present appeal also. We thus going by our observations and reasonings adopted while disposing of the ‘Grounds of appeal no.2 & 3’ raised before us in the assesses own appeal for A.Y. 2004-05, viz. Bharat Petroleum Corporation Ltd Vs. 7
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 Additional CIT-Range-2(1), Mumbai, marked as (ITA No. 5963/Mum/2011), therein allow the ‘Grounds of Appeal No. 2 and 3’ raised by the assessee before us in the present appeal.
Considering the decision of co-ordinate bench in assessee’s own case and
following the principle of consistency, ground no. 2 to 4 of appeal are
allowed in favour of assessee with similar direction as contained in the
order for AY 2004-05. 10. Ground No. 5 relates to not admitting the ground of appeal raised before ld
CIT(A). Ground No.6 is the claim with regard to loss on Oil Bond as a
business loss, which was raised as additional ground No.1 of before ld.
CIT(A). The ld CIT(A) not admitted the additional ground of appeal
holding that the assessee has not revised the return nor such claim was
made before the AO during the assessment proceeding. It was argued that
similar loss on Oil Bonds was allowed as business loss by the Tribunal in
assessee’s own appeal for AY 2004-05 & 2005-06. 11. Considering the contention of ld. AR of the assessee and the decision of
Co-ordinate Bench in assessee’s own case in ITA No. 5963 &
5966/M/2004-05 & 2005-06. We admit this ground of appeal and restored
the matter to the file of CIT(A) to verify the fact and allow the claim in
accordance with law and considering the decision of Tribunal in assessee’s
own case for AY 2004-05 & 2005-06. In the result, the ground no. 5 & 6
are allowed for statistical purpose.
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 12. Ground No. 7 relates to calculating the book profit under section 115JB and
disallowance under section 14A. The ld. AR of the assessee argued that this
ground of appeal is also covered in favour of assessee by the decision of
Tribunal in case of Reliance Industrial Infrastructure Ltd. vs ACIT in ITA
No. 69 & 70/M/2009 dated 05.04.2013. The ld. DR for the Revenue not
disputed the contention of ld. AR of the assessee. 13. We have considered the contention of both the parties and noticed that
recently the Special Bench of Delhi Tribunal in ACIT Vs. Vireet
Investment Pvt. Ltd.[2017] 82taxman.com 415(Delhi-Trib)(SB) held that
computation under Clause-(f) of Explanation-1 to section 115JB(2) of the
Act is to be made without resorting to computation as contemplated u/s
14A r.w. Rule 8D of the Act. We may note that lower authority was not
having the benefit of decision of Special Bench while passing the order
impugned in the present appeal. Considering the fact that the lower
authorities were not having benefit of decision of Special Bench in ACIT
vs. Vireet Investment Pvt. Ltd.(supra). In view of the submissions of both
the parties and the nature of disallowance, the matter is restored to the file
of AO to pass the order in accordance with law after considering the
decision of ACIT vs. Vireet Investment Pvt. Ltd. (supra). In the result, this
ground of appeal is allowed for statistical purpose. 14. Ground No. 8 & 9 was not pressed by ld. AR of the assessee, hence, both
the grounds are dismissed as not pressed. 9
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 15. Ground No.10 relates to income from Oil Bonds to be taxed as Business
Income. The ld. AR of the assessee argued that this ground of appeal is also
covered in favour of assessee by the decision of Tribunal in assessee’s own
case for AY 2004-05 & 2005-06 and by the decision of Hon’ble Bombay
High Court in case of Mangalore Refinery & Petrochemical Ltd. (supra).
The ld. DR for the Revenue not disputed the contention of ld. AR of the
assessee.
We have considered the submission of both the parties and noticed that
similar ground of appeal was raised by assessee before the Tribunal for AY
2004-05 & 2005-06 in ITA No. 5963 & 5966/M/2011. The Tribunal passed
the following order:
“24. That the Ld. A.R had assailed before us the assessing of the interest income on oil bonds, which though was shown by the assessee under the head ‘Profits and gains of business’, but had been assessed by the A.O. under the head ‘Income from other sources’. That it was submitted by the Ld. A.R that a similar change of head of income had also been carried out by the A.O in the case of the assessee for the A.Y. 2004- 05. It was further averred by the Ld. A.R that the said change of head of income had also been assailed before us in the appeal of the assessee for A.Y. 2004-05, viz. Bharat Petroleum Corporation Ltd. Vs. Additional CIT-Range-2(1), Mumbai, marked as ITA 5963/Mum/2011. We find that the identical issue raised by the assessee in the present appeal before us was also raised in its aforesaid appeal for A.Y. 2004-05, marked as ITA 5963/Mum/2011, wherein in the backdrop of the order of the ITAT passed in the case of Mangalore Refineries and Petro Chemicals Ltd.(Supra) Vs. DCIT (ITA No. 776/Mum/2004), which thereafter had been affirmed by the Hon’ble High Court of Bombay in the case of Manglore Refineries and Petro Chemicals Ltd.(Supra), we had restored the matter to the file of the CIT(A) for re-adjudication. We thus in the backdrop of our aforesaid observations and on the same reasoning, therefore in all fairness restore the matter to the file of the CIT(A), with a direction to readjudicate the same in the backdrop of the aforesaid judgment of the Hon’ble High Court of Bombay in the case of Mangalore Refineries and Petro Chemicals Ltd.(supra). Needless to say, the CIT(A) during the 10
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 course of readjudicating the aforesaid issue shall afford reasonable opportunity of being heard to the assessee. The additional ground of appeal raised by the assessee us is thus allowed in terms of our aforesaid observations”.
Considering the decision of Co-ordinate Bench in assessee’s own case
wherein the similar ground of appeal was restored to the file of CIT(A),
hence, keeping in view, the principle of consistency, this ground of appeal
is also restored to the file of ld. CIT(A) to decide it afresh, with similar
directions. In the result, this ground of appeal is allowed for statistical
purpose.
In the result, the appeal of the assessee is partly allowed.
In appeal for A.Y 2007-08 in ITA No. 4279/Mum/2013 the assessee has
raised following ground of appeal.
On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax [CIT(A)] erred in confirming the disallowance of Rs. 1,71,56,704/- of premium on leasehold land. On the facts of the case CIT(A) ought to have allowed the same. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Rs 16,13,13,124/- made by the assessing officer u/s 14A of the Income Tax Act 1961, by invoking Rule 80 when the said rule is inapplicable to A.Y. 2007-08. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the assessee has claimed that no expenditure is incurred with regard to exempt income when the assessee has in fact submitted that only Treasury expenses can, if at all be attributed to earning the exempt income and consequently only Rs 1,52,577/- qualifies for disallowance u/s 14A of the Income Tax Act, 1961. 4. On the facts and in the circumstances of the case and in law and without prejudice to above, the learned CIT(A) erred in not holding that since the tax free investments are made by the assessee out of its 11
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 own funds, no amount of the interest of Rs 477,35,26,537/- paid on borrowings qualifies for disallowance u/s 14A of the Income Tax Act, 1961
On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the oil bonds are capital assets and in confirming that the loss of Rs. 42,21,00,000/- incurred on sale of oil bonds is a capital loss and not business loss.
On the facts and in the circumstances of the case and in law, assessee submits that Oil bonds issued being in lieu of under recovery on sale of sensitive petroleum products are not capital assets & consequently learned CIT (A) erred in confirming Assessing Officer's action of treating loss on sale of oil bonds as capital loss and not as business loss.
On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming disallowance of prior period expenditure made by Assessing officer amounting to Rs. 4,32,53,288/-
On the facts and in the circumstances of the case and in law, the assessee submits that Interest income earned on Oil Bonds ought to be taxed as 'Profits and gains from Business and Profession' instead of 'Income from other sources'.
On the facts and circumstances of the case and in law the assessee submits that the contribution of Rs. 1,55,00,000/- to the Rajiv Gandhi Institute of Petroleum Technology made by the Corporation is allowable as deduction under section 37 of the Income Tax Act, 1961 and the learned CIT(A) erred in not allowing the same in entirety.
The Appellant craves leave to amend, alter and delete any of the above grounds and add any Additional ground(s) either before or at the time of hearing.
Ground No.1 relates to disallowance of amortization of premium on lease
hold land. We have seen that this ground of appeal is identical to the
grounds of appeal for AY 2006-07 which we have allowed on the basis of
decision of Tribunal for AY 2004-05 & 2005-06. Thus, following the
principle of consistency, this ground of appeal is allowed in favour of
assessee. 12
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 21. Ground No.2 to 4 relates to disallowance under section 14A r.w.r 8D of the
Act. We have seen that these grounds of appeal are identical to the ground
no.2 to 4 of appeal for AY 2006-07 which we have allowed in favour of
assessee on the basis of decision of Tribunal in assessee’s own case for
earlier years. Thus, these grounds of appeal are allowed mutatis mutandis. 22. Ground No. 5 relates to loss on sale of Oil Bonds. This ground of appeal is
identical to the ground no. 6 of appeal for AY 2006-07, which we have
restored to the file of ld. CIT(A) for verification of fact and to allow the
relief to the assessee on the basis of decision for AY 2004-05 & 2005-06.
Considering the decision of Tribunal in assessee’s own case for AY 2004-
05 & 2005-06 vide order dated 14.06.2007 wherein the similar ground of
appeal was restored to the file of ld. CIT(A) to decide afresh. Hence, this
ground of appeal is also restored to the file of ld. CIT(A) with similar
direction. 23. Ground No.6 relates to loss on sale of Oil Bonds is business loss. The ld.
AR of the assessee argued that this ground of appeal is also covered in
favour of assessee by the decision of Hon’ble Bombay High Court in case
of Mangalore Refinery and Petrochemical Ltd. (supra) and decision of
Tribunal in case of Mangalore Refinery and Petrochemical Ltd. vs. DCIT
in ITA No. 77/M/2003. Ld. DR for the Revenue not disputed the contention
of assessee.
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 24. We have seen that the similar grounds of appeal was raised by assessee for
AY 2006-07 which we have already restored to the file of ld. CIT(A) on the
basis of decision of Tribunal in assessee’s own case for AY 2004-05. Thus,
considering the principle of consistency, this ground of appeal is also
restored to the file of ld. CIT(A) with similar direction.
Ground No.7 relates to prior period expenditure. The ld. AR of the assessee
argued that this ground of appeal is also covered in favour of assessee by
the decision of Tribunal in assessee’s own case for AY 2002-03 in ITA No.
2557/M/2011. The ld. DR for the Revenue not disputed the contention of
ld. AR of the assessee. We have considered the submission of both the
parties and find that the Co-ordinate Bench of Tribunal in assessee’s own
case for AY 2002-03 have passed the following order:
“Ground No. 4. 10. This ground is against the disallowance of Rs.5,33,97,234/- held to be prior period expenses. Similar issue was decided by coordinate bench in ITA No.1013/Mum/2001 and the operative para is reproduced below:- “2. Ground No.1 of the appeal is regarding disallowance of prior period expenses amounting to Rs.34,51,324/-. 3. Learned Departmental Representative of the revenue supported the orders of authorities below. 4. It is submitted by ld. AR of the assessee that the amount of prior period expenses of Rs.34.51 lakhs arises on account of various expenses for the reason that there was some mistake in making provisions in the relevant year and it constitutes only 0.03% of the turnover of the assessee, which is Rs.1045.22 crores. It is submitted that under these facts, this issue is covered in favour of the assessee by the Tribunal judgment rendered in the case of Escorts Limited Vs. IAC reported in 79 ITD 291 (Del). Our attention was drawn to para No.118 to 121 of this Tribunal Judgment as per which under similar situation this issue was decided by the Tribunal in favour of the assessee. Relevant para no. 121 is reproduced below:- 14
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014
"121. In the peculiar facts and circumstances of the case where the turnover or .he assessee is substantial, some bonafide adjustments in the books of accounts where the accounts for the relevant year may have been closed or the assessee's avenues for claiming these deductions in the relevant year have been exhausted. The assessee would be entitled to claim such deductions..Therefore we are unable to come to any other conclusion and are or the opinion that no interference in the impugned order is called for. Accordingly the ground raised by the Revenue is rejected." . 5. In the present case also, we find that the turnover of the assessee is substantial i.e. Rs. 1045.22 crates and the amount of prior period expenses disallowed by the: Assessing Officer is only Rs: .34.51 lakhs, Since, facts and circumstances of the present' case are similar with the facts in the case (X Escorts Limited (supra), we decide this issue in favour of the assessee' by respectfully following this Tribunal Judgement. This ground of the assessee is allowed. 11. As identical facts and circumstances have been brought before us in the present case hence we decide this issue in favour of assessee by respectfully following the order of coordinate bench in the case of “Rashtriya Chemicals and Fertilizers ltd.” vs. JCIT, ITA No. 1013/Mum/2001. Therefore, this ground is allowed.”
Considering the decision of Tribunal in assessee’s own case for AY 2002-
03 and respectfully following the decision of Co-ordinate Bench, this
ground of appeal is allowed in favour of assessee.
Ground No.8 relates to Interest Income from Oil Bonds to be taxed as
Business Income. We have seen that this ground of appeal is identical to
the ground no.10 of appeal for AY 2006-07 which we have restored to the
file of ld. CIT(A) to decide afresh in accordance with the direction
contained hereinabove. Thus, respectfully following the decision of Co-
ordinate Bench, this ground of appeal is also restored to the file of CIT(A)
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 to decided afresh a per the direction in appeal for AY 2006-07. In the
result this ground of appeal is allowed for statistical purpose. 28. Ground No.9 relates to contribution to Rajiv Gandhi Institute of Petroleum
Technology. The ld. AR of the assessee argued that the assessee
contributed a sum of Rs.1,55,00,000/- to Rajiv Gandhi Institute of
Petroleum Technology. The contribution was made for promotion of
efficient human resources and to meet the growing requirement of
Petroleum and Energy sector. The contribution is allowable deduction
under section 37 of the Act. On the other hand, the ld. DR for the Revenue
supported the order of authority below. 29. We have considered the rival submission of the parties and perused the
record of the case. Rajiv Gandhi Institute of Petroleum Technology was set
up by the Government of India by enacting law with the object to promote
research and development for benefit of Oil, Gas and Petrochemical
Industry through integration of teaching and research. The Chairman and
Managing Director of assessee-company is one of the ex-officio, member
of General council of Institute. The assessee has claimed the contribution of
Rs. 1,55,00,000/-. The Rajiv Gandhi Institute of Petroleum Technology is
promoted by eminent Petroleum Companies including assessee on the
directive of the Ministry of Petroleum and Natural Gas for imparting
education in the field of petroleum technology. The assessee made the
contribution of Rs. 1,57,00000/- to Rajiv Gandhi Institute of Petroleum 16
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 Technology during the relevant Financial Year. The assessee claimed
deduction under section 37 on the ground that education provided by the
said Institute is going to be helpful in over all development of the assessee-
company. The AO disallowed the claim holding that assessee has not filed
any evidence for the said payment. Before ld. CIT(A) assessee placed copy
of receipt No.10 dated 22.03.2017 for Rs. 1,55,00,000/-. The assessee in
alternative claimed deduction under section 80G. The ld. CIT(A)
disallowed the deduction holding that such deduction/donation to Institute
can only be allowed when contribution are approved by the Government
for deduction under any specific section of I.T. Act. Deduction under
section 80G can be allowed on fulfilling the required condition. The ld.
CIT(A) directed the AO to entertain the claim of assessee under section
80G and allowed, if the conditions of section 80G are fulfilled. We have
seen that the assessee has made the contribution related to research. Rajiv
Gandhi Institute of Petroleum Technology is engaged in research related to
the business of assessee-company. The contribution was made by assessee
as per the directive of Ministry of Petroleum and Natural Gas. Rajiv
Gandhi Institute of Petroleum Technology is an organization set up by
Government of India for promoting quality and excellence in education and
research in the area of Petroleum and Hydrocarbon. The Institute is
providing education relating to the research leading to award of Bachelors,
Master and Doctoral degree and Engineering Technology, Management, 17
Bharat Petroleum Corporation Ltd ITA no.3636/Mum./2013 & 4279/Mum/2014 Science and Arts in the area of Petroleum and Hydrocarbon besides other
innovative research and development for the benefit of Oil, Gas and
Petrochemical Industry. The receipt of contribution placed by assessee
contains the reference of certificate of exemption under section 80G,
granted to Rajiv Gandhi Institute of Petroleum Technology vide letter no.
58-59/130/19/2006-07/IT/A-A-1/Luck/126/121. The assessee has already
declared income of Rs. 2650,94,29,571/- for the AY under consideration,
the assessee has contributed Rs.1.55 Crore only to the said institute. We
therefore direct the AO to allowed the deduction of the said contribution
under section 80G in accordance with law. In the result, ground of appeal
raised by assessee is allowed for statistical purpose.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the Open Court on 24.10.2017
Sd/- Sd/- P.K. BANSAL PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 24.10.2017 Copy of the order forwarded to: 1. The Assessee; 2. The Revenue; 3. The CIT(A); 4. The CIT, Mumbai City concerned; 5. The DR, ITAT, Mumbai; 6. Guard file. By Order sk Private Secretary (Dy./Asstt.Registrar) ITAT, Mumbai 18