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आदेश/Order
Per Sanjay Garg, Judicial Member Bench:
These are cross appeals by the assessee and Revenue preferred against the separate orders of the Commissioner of Income Tax (Appeals)- 1, Ludhiana [hereinafter referred to as CIT(A)] relating to respective assessment years.
Since the issues involved in all the appeals are identical, hence, the appeals have been heard together and are being disposed of by this common order. First, we shall deal with the appeal of the assessee in ITA No. 1429/Chd/2010 for assessment year 2006-07.
ITA No. 1429/Chd/2010 (A.Y. 2006-07). 3. The assessee in this appeal has taken the following grounds of appeal:- 1. That the Ld. CIT(A) has erred in law and on facts while treating interest income amounting to Rs.16517422/- as ''Income from other sources" instead of "Income from Business and Profession".
That the Ld. CIT(A) has erred in law and on facts while reducing profits of undertaking for calculating deduction u/s 10B. 80IB and 80IC by the following amounts:
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana
Name of Anant VSGM Auro Auro Auto Spinning Auto the unit Spinnin EOU Weaving Wvg Mills Textiles. g Mills Unit-2 Unit-3 Unit 3 Deduction 10B 10B/ 80IB 80IB 80IC 80IC Claimed 80IB Rent 494567 249016 73301 38982 1032309 1072193 Misc. 238725 3482 1275 282989 696527 Receipts DEPB/Duty 370206 5820457 68903960 Drawback Commission 7141 1426 2771 Interest 93264
That the Ld. CIT(A) erred in law and on the facts while confirming the action of Ld.AO. for reducing profits of units eligible for deduction u/s 10B, 801B and 801C by allocating Head office expenses.
That without prejudice to ground No. 3, the Ld. CIT(A) erred in law and on facts while allocating gross head office expenses instead of expenses net of income.
That the Ld. C1T(A) erred in law and on the facts while confirming theaction of Ld. AO while taxing the capital receipt amounting TO Rs. 8,55,37,074/- on account of Sales Tax Exemption; Subsidy received from Government of Punjab as revenue receipt of the appellant.
Without prejudice to the ground (5) above, the Ld. CIT{A) erred in law and on the facts while confirming the action of Ld. AO while taxing the capital receipt amounting to Rs. 8,55,37,074/- on account of Sales Tax Exemption/Subsidy received from Government of Punjab as 'Income from other Sources'.
The. CIT(A) erred in law and on the facts while directing the assessing officer to make disallowance under section 14A of The Income Tax Act w.r.t. dividend income earned by the assessee.
That the Ld. CIT(A) erred in law and on the facts while confirming the action of Ld.AO for disallowing foreign traveling expenses of wife of Chairman & Managing Director amounting to Rs. 11,46,863/-.
That the Ld. CIT(A) erred in law and on the facts while confirming the action of Ld.AO for not allowing premium
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 4
payable on redemption of optionally convertible foreign currency bonds as revenue expenditure.
That the appellant craves leave to add/alter/amend any ground of appeal on or before the due date of hearing of appeal.
Ground No.1: Vide ground No.1, the assessee has agitated the action of the CIT(A) in treating the interest income amounting to Rs. 1,65,17,422/- as ‘income from other sources’ instead of ‘income from business or profession’ as was claimed by the assessee.
The facts relating to the above issue are that the Assessing
officer had treated interest from customers and suppliers amounting to
Rs. 355.28 lacs and further interest from bank & others amounting to
Rs. 165.17 lacs as ‘income from other sources’ as against the claim of
the business income. The Ld. CIT(A) held that since income on the
delayed payment from customers and suppliers was intrinsically
linked with the business activity of the assessee, hence, the same was
to be treated as business income of the assessee, whereas, the interest
received from bank & others was directed to be treated as ‘income
from other sources’.
We have heard the rival submissions on this issue. We do not
find any infirmity in the order of the CIT(A) so far as the treatment of
the interest from customers and suppliers as ‘business income’ and
interest from bank and other sources as ‘income from other sources’
is concerned. However, a contention has been raised by the Ld.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 5
Counsel for the assessee that where there is a direct nexus between
the interest income earned and the interest expenditure incurred in this
respect, the assessee should be allowed netting of the same before
computing the same under the head ‘income from other sources’. We
find merit in the above contention of the assessee and we order
accordingly.
Ground No.2 : Vide ground No.2, the assessee has agitated the 7.
action of the CIT(A) in directing the Assessing officer to reduce the
eligible profits of the undertaking for the purpose of deduction u/s
10B, 80IB and 80IC of the Income-tax Act, 1961 (in short 'the Act') in
respect of other income received.
The Ld. Counsel for the assessee has given details of other
income which is mentioned in the ground No. 2 itself. A perusal of
the aforesaid details will reveal that the assessee claimed rent, Misc.
receipts, DEPB, commission and interest income as ‘other income’
and has claimed deductions in respect of the same u/s 10B, 80IB and
80IC etc., as applicable in respect of the respective unit. The Ld.
Counsel for the assessee has fairly agreed that except the brokerage
from ocean freight, the other items do not constitute income derived
from undertaking. So far as the brokerage of ocean freight is
concerned, the Ld. Counsel for the assessee has submitted that the
same is nothing but refund / rebate out of the freight expenditure
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 6
incurred by the assessee which has resulted in increase in income of
the assessee.
The Ld. DR also could not rebut the aforesaid arguments of the
assessee
In view of this, out of the items mentioned in ground No.2, the
Assessing officer is directed to consider the rebate on ocean freight as
income of the undertaking of the assessee. However, the findings of
the lower authorities in respect of the remaining items is affirmed.
Ground Nos. 3 & 4 : Vide these grounds, the assessee has
agitated the action of the CIT(A) in directing the Assessing officer in
confirming the action of the CIT(A) for reducing profits of the units
eligible for deductions u/s 10B, 80IC and 80IB of the Act by
allocating Head office expenses. The Ld. CIT(A) while holding so,
however, has directed the Assessing officer to allocate the net Head
office expenses and not the gross net expenditure. We do not find any
infirmity in the order of the CIT(A) on the issue and the same is
accordingly upheld.
Ground No.5 : Vide ground No.5, the assessee has agitated the
action of the CIT(A) in taxing the amount received on sale tax
exemption / subsidy. Both the Ld. representatives of the parties have
fairly submitted that the issue is now covered by the various decisions
of the Hon'ble High Courts including the decision of the Hon'ble
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 7
Supreme Court in ‘CIT-I Vs. M/s Chaphalkar Brothers, Pune and Others’ in Civil Appeal Nos. 6513-6514 of 2012 order dated 7.12.2017, wherein, it has been held that the aforesaid receipt is a capital receipt
and not exigible to taxation. We hold accordingly and the lower
authorities are directed not to tax the aforesaid receipts.
Ground No.7 : Vide ground No. 7, the assessee has agitated
the action of the CIT(A) in directing the Assessing officer to make
disallowance u/s 14A of the Act on the actual expenditure incurred by
the assessee.
At the outset, Ld. Counsel for the assessee has submitted that the
issue is squarely covered in favour of the assessee by the decision of
the Hon'ble Jurisdictional High Court in the case of the assessee in
ITA No.141 of 2012 dated 31.7.2013 and has pointed out that in the
year 2000-01, the assessee had earned dividend income of Rs. 2.16
crores whereupon the disallowance of Rs. 1 lac was affirmed by the
Hon'ble High Court. The Ld. Counsel for the assessee has further
submitted that for the year under consideration the assessee had
earned dividend income of Rs. 1.59 crores.
The Ld. DR, on the other hand has, however, relied on the
findings of the lower authorities.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 8
We have considered the rival submissions. The assessment year
involved admittedly is 2006-07. The Hon'ble Bombay High Court in
the case of ‘Godrej & Boyce Manufacturing Co. Ltd.’ 234 CTR 1 (Bom.)
held that Rule 8D of the Income Tax Rules is applicable from the
assessment year 2008-09 onwards and that for the year prior to
assessment year 2008-09, the disallowance u/s 14A is to be made on
some reasonable basis. Considering the overall facts and
circumstances of the case and the respective submissions of the Ld.
representatives of the parties, we confirm the disallowance of Rs. 2
lacs u/s s 14A of the Act on this issue for the year under
consideration. The remaining disallowance made by the lower
authorities is ordered to be deleted.
Ground No. 8 : Vide this ground the assessee assessee has
agitated the disallowance of foreign travel expenses of Rs. 11,46,863/-
in respect of expenditure on foreign travelling of the wife of the
Chairman & Managing Director, pleading that she had accompanied
him for business purpose and that she had duly assisted for procuring
business.
On the other hand, the Ld. DR has submitted that since the wife
of the Managing Director of the assessee is neither employee nor the
director of the company, hence, the expenditure relating to her
foreign travelling should be disallowed.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 9
In rebuttal, the Ld. Counsel for the assessee has submitted that
the company had passed a resolution authorizing the director of the
company to accompany his wife on the foreign travel and further that
she had duly helped the director in his business tour.
Considering the over all facts and circumstances of the case, we
are of the view that the interest of justice will be well served if 50%
of the expenditure incurred on the foreign traveling of the wife of the
director is allowed. We, therefore, confirm the disallowance upto the
extent of 50% of the aforesaid amount and the remaining 50% of the
disallowance on this issue is ordered to be deleted.
Ground No. 9 : Vide ground No.9, the assessee has agitated the 20.
action of the CIT(A) in confirming the action of the Assessing officer
in not allowing premium payable on redemption of optionally
convertible foreign currency bonds as Revenue expenditure.
The Ld. Counsel for the assessee in this respect has relied upon
the decision of the Hon'ble Jurisdictional High Court in the case of
‘CIT Patiala Vs. Industrial Cables (P) Ltd’. reported in (2007) 162
taxman 272 (P&H), wherein, the issue is as to whether the premium
paid on expiry / redemption of debentures was to be treated as capital
expenditure or Revenue expenditure. The Hon'ble Court while relying
upon the other case laws held that the said premium paid by the
assessee on redemption of debentures as Revenue expenditure. The Ld.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 10
counsel has further relied upon the decision of the Hon'ble Supreme
Court in the case of ‘Taparia Tools Ltd Vs. JCIT’ (2015) 7 taxman 361
wherein, the Hon'ble Supreme Court has held that such type of
premium / interest paid to debenture holders was to be allowed as
Revenue expenditure in the year of payment itself. Admittedly, in the
year under consideration, the assessee has booked the aforesaid
expenses payable which was paid in the assessment year 2011-12. In
view of this, the said expenditure is to be allowed in the year of
payment. Subject to the above observation, this ground of the
assessee’s appeal for the year under consideration is hereby
dismissed.
Apart from the above, the assessee has raised an additional
ground of appeal which reads as under:-
“That the authorities below have erred in treating the interest reimbursement of Rs. 24,64,44,644/- under Technology Upgradation Fund Scheme (TUFS) as Revenue receipt instead of capital receipt.”
The assessee has claimed that interest reimbursement of Rs.
24,64,44,644/- received under ‘Technology Upgradation Fund Scheme’
(TUFS) should be treated as capital receipt instead of Revenue receipt
as treated by the lower authorities.
Admittedly, this ground has been taken as addition ground which
has not been examined by the lower authorities. The Ld. Counsel for
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 11
the assessee submitted that in the earlier years also this issue has been
restored to the file of the CIT(A) for decision afresh.
Considering the above submissions of the Ld. Counsel for the
assessee, this additional ground is restored to the file of the CIT(A)
for adjudication afresh in accordance with law taking intro
consideration the relevant case laws as may be available or cited
before him.
The appeal of the assessee is accordingly treated as partly
allowed.
ITA No. 35/Chd/2011 (A.Y.2006-07)
Now coming to the Revenue appeal in ITA No. 35/Chd/2011 25.
(A.Y.2006-07), in its appeal, has taken the following grounds:-
That the Id. CIT(A) has erred in law and facts in directing the A.O. to consider interest income received by the assessee on delayed payments from customers as 'Business Income' instead of 'Income from Other Sources' as considered by the A.O.
2 (i) That the Id. CIT(A) has erred in law and facts in directing the A.O. to treat the interest received from the customers and suppliers to be the income derived from industrial undertaking and eligible for exemption u/s 10B and deduction u/s 80IB and 80IC.
(ii) That the Id. CIT(A) has erred in law and facts in directing the A.O. to allow deduction u/s 80IB and 80IC and exemption 10B on profits after excluding loss debited in the accounts in respect of which the Insurance claims were received. (iii) That the Id. CIT(A) has erred in law and facts in directing the A.O. not to reduce foreign exchange fluctuation gain from eligible profits of units
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 12
eligible for deduction u/s 80IB and 80IC and exemption u/s 10B. 3 . The Id. CIT(A) has erred in law and facts in directing the A.O. to allocate the eligible head office income to the respective unit for calculating deduction u/s 801B and section 80IC and exemption u/s 10B. 4 . That the Id. CIT(A) has erred in law and facts in allowing the deduction u/s 80IB on profits of unit named Vardhman Spinning & General Mills (100% EOU) on which exemption u/s 10B has been claimed. 5 . That the Id. CIT(A) has erred in law and facts in deleting the addition of Rs. 16,43,668/- made u/s I4A by the A.O. on proportionate basis out of personal, administrative and financial expenses for earning of dividend income.
That the Id. CIT(A) has erred in law and facts in treating the income from Sale of Shares amounting to Rs.2,35,69,012/- as income from Capital gain instead of income from speculative Business as considered by the Assessing Officer in view of explanation to section 73.
That the order of the Id. CIT(A) be set aside and that of the A.O. be restored.
That the appellate craves leave to add or amend any ground of appeal before it is finally disposed off.
Ground No.1 :The Revenue vide ground No.1 of the appeal has
agitated the action of CIT(A) in deleting the interest received on
account of delayed payment from customer’s and suppliers as business
income instead of income from other sources.
In view of our findings given above awhile deciding ground No.1
of the assessee’s appeal in ITA No. 1429/Chd/2010, we do not find
any infirmity in the order of the CIT(A) on this issue. Ground No.1 of
the Revenue’s appeal is accordingly dismissed
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 13
Ground No.2 : Ground No.2 raised by the Revenue is in three
parts. The Revenue in the Ist part has agitated the action of the
CIT(A) in directing the Assessing officer to treat the interest received
from the customers and suppliers to be income derived from industrial
undertaking and eligible for exemption u/s 10B and deduction u/s
80IB and 80IC of the Act. Since we have already held that the interest
income received on delayed payment is in fact part of the sale
consideration / receivable from the customers and we have also held
that the same to be treated as business income and since the aforesaid
receipts are relating to the sale receipts of the assessee of the
produced manufactured, hence, we do not find any infirmity in the
order of the CIT(A) in this respect.
In the second part of ground No.2, the Revenue has agitated the
action of the CIT(A) in directing the Assessing officer to allow
deduction u/s 80IB and 80IC and exemption u/s 10B on profit after
excluding loses debited in the accounts in respect of which insurance
claims were received. The Ld. Counsel for the assessee in this respect
has invited our attention to the paper book page 2 wherein the details
of the items has been given on which insurance claim was received.
However, after perusal of the same, it is not clear as to which of the
items constituted capital assets and which of the items constituted
trading asset of the assessee. We therefore, restore this issue to the
file of the assessee to bifurcate the items between capital assets and
trading assets and to allow the claim in respect of insurance claim
received on trading assets only.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 14
The third part of ground No.2 is against the action of the CIT(A)
in directing the Assessing officer not to reduce foreign exchange
fluctuation gain from eligible profits of units eligible for deduction
u/s 80IB and 80IC and exemption u/s 10B of the Act.
The Ld. Counsel for the assessee has submitted that the foreign
exchange fluctuation gain is in respect of export receipts / receivable
of the assessee and any gain in respect of receivable on account of
foreign exchange fluctuation in fact contributes to the profits of the
assessee from the sale/ export of the products. We find force in the
aforesaid contention. We do not find any infirmity in the order of the
CIT(A) in this respect also.
Ground No. 3 :Vide ground No.3, the Revenue has agitated the
action of the CIT(A) in directing the Assessing officer to allocate the
eligible Head office expenses to the respective units for reducing the
same out of eligible profits of assessee for claim of exemption /
deduction u/s 80IB, 80IC and u/s 10B of the Act.
This issue has already been discussed while adjudicating ground
No.4 of the assessee’s appeal wherein we have upheld the order of the
CIT(A) on this issue.
In view of this, ground No.3 of the Revenue’s appeals is hereby
dismissed.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 15
Ground No.4 : Vide ground No.4, the Revenue has agitated the
action of the CIT(A) in allowing deduction u/s 80IB in respect of unit
which has already claimed exemption u/s 10B of the Act. The Ld.
Counsel for the assessee has submitted that the assessee has claimed
deduction u/s 80IB in respect of unit Vardhman Spinning & General
Mills on the balance amount, after excluding the amount upon which
the exemption u/s 10B of the Act has been claimed.
In view of this, it is not a case of double deduction, hence we do
not find any infirmity in the order of CIT(A) on this issue also. The
order of the CIT(A)on this issue is accordingly upheld.
Ground No.5: The Revenue vide this ground has agitated the
action of the CIT(A) in reducing / deleting the addition made by the
Assessing officer u/s 14A of the Act on account of expenditure
incurred for earning of tax exempt dividend income. This ground has
already been dealt with while adjudicating ground No.7 of the
assessee’s appeal wherein after considering the over facts and
circumstances of the case, we have directed to restrict the
disallowance to Rs. 2 lacs on this issue. We order accordingly.
Ground No.6: Vide ground No.6, the assessee has agitated the
action of the CIT(A) in treating the income from sale of shares as
income from capital gains instead of income from speculative loss as
assessed by the Assessing officer.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana
After considering the rival submissions of the parties and after
going through the impugned order of the CIT(A), we are of the view
that the Ld. CIT(A) has rightly held that it was not a case of
speculative / trading in sale and purchase of the shares. The Ld.
CIT(A) therefore, has rightly treated the same as income from capital
gains while following the order of his predecessor for assessment year
2005-06. In view of this, we do not find any infirmity in the order of
the CIT(A) on this issue.
Ground Nos. 7 & 8 : These grounds are general in nature and do
not require any specific adjudication.
In view of our findings given above, both the appeals of the
assessee and Revenue are treated as partly allowed.
ITA No. 270 & 286/Chd/2011 (A.Y.2007-08)
The assessee in its appeal (ITA No. 270/Chd/2011) has taken the
following grounds of appeal :-
That the Ld. CIT(A) has erred in law and on facts while treating Interest income amounting to Rs. 11,50,89,979/- as ‘Income from other sources1' instead of “Income from Business and Profession".
That the Ld. CIT(A) has erred in law and on facts while reducing profits of Undertaking for calculating deduction u/s I0B. 80IB and 801C by the following amounts:
Anant Auro Auro Auro Arisht Name of the VSGM Auro Spinning Wcavin Wvg Spinning Spinning unit EOU Textiles Mills Unil3 g Unit-2 Unit-3 Mills Mills
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana
Deduction 10B/ 10B 801 B 801 B 80IC 80IC 80IC claimed 80IB Interest from 304 Bank Interest from 103854 1627 others DEPB 142386 97833 134407 769738 2056766
Duty 2447280 2755000 293032 201342 13696283 8894379 11284064 Drawback Rent 471200 235503 80710 43397 12359452 1 593793 636884 1 Misc. 1406002 978 51888 53682 Receipts 586025 Commission 603 1996 1083 94395
Total 4429243 2993477 516128 342572 26243113 11845562 14125791
That the Ld. CIT(A) erred in law and on the facts while confirming the action of Ld. AO for reducing profits of units eligible for deduction u/s 10B, 80IB and 801C by allocating Head office expenses as under:
Anant-III Vsgm(Eou) Auro Auro Auro Spg. Auro Arisht Wev.II Wev.III Tex.
6449934 6077375 3632454 1746372 10711082 36161544 18348549
That without prejudice to ground No. 3, the Ld. CIT(A) erred in law and on facts while allocating gross head office expenses instead of expenses net of income. 5. That the Ld. CIT(A) erred in law and on the facts while confirming the action of Ld.AO while taxing the capital receipt amounting to Rs. 9,87,63,065/- on account of Sales Tax Exemption/Subsidy received from Government of Punjab as revenue receipt of the appellant. 6. Without prejudice to the ground (5) above, the Ld. CTT(A) erred in law and on the facts while confirming the action of Ld.AO while taxing the capital receipt amounting to Rs. 9.87,63,065/- on account of Sales Tax Exemption/Subsidy received from Government of Punjab as ‘Income from other Sources'. 7. That the Ld. CIT(A) erred in law and on facts while confirming the action of Ld.AO while misinterpreting and applying the provisions of Rule 8D of Income Tax Rules as the said provision is effective from Assessment year 2008-09 only.
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 18
That the Ld. CIT(A) erred in law and on facts while confirming the action of the Ld.AO in allocating and disallowing expenses amounting to Rs.34,28,175/- for earning dividend income under Section 14A of the Act read with Rule 8D of Income Tax Rules.
That the Ld. CIT(A) erred in law and on facts while confirming the action of the Ld.AO in allocating proportionate indirect personnel, administrative and financial expenses amounting to Rs.22.84,306/- to dividend income.
That the Ld. C)T(A) erred in law and on the facts while confirming the action of Ld.AO for disallowing foreign traveling expenses of wife of Chairman & Managing Director amounting to Rs. 5,16,573/-. 11. That the Ld. C1T( A) erred in law and on the facts while confirming the action of Ld.AO for not allowing premium payable on redemption of optionally convertible foreign currency bonds as revenue expenditure. 12. That the appellant craves leave to add/alter/amend any ground of appeal on or before the due date of hearing of appeal.
Hence the appeal may kindly be allowed, necessary reliefs as per aforesaid grounds may kindly be granted and/or other reliefs deemed fit and proper under the circumstances of the case may kindly be granted.
Apart from the above grounds, the assessee has also taken as
additional ground of appeal, which reads as under:-
“That the authorities below have erred in treating the interest reimbursement of Rs. 37,77,75,988/- under Technology Upgradation Fund Scheme (TUFS) as Revenue receipt instead of capital receipt.”
The Revenue in its appeal, in ITA No.286/Chd/2011 has taken
following grounds of appeal:-
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 19
That the Id. CIT(A) has erred in Law and facts in directing the A.O. to consider interest income received by the assessee on delayed payments from customers as 'Business Income, instead of ‘Income from Other Sources' as considered by the A.O.
2 (i) That the Id. CIT(A) has erred in law and facts in directing the A.O. to treat the interest received from the customers and suppliers to be the income derived from industrial undertaking and eligible for exemption u/s 10B and deduction u/s 801B and 80IC.
(ii) That the Id. CIT(A) has erred in law and facts in directing the A.O. to allow deduction u/s 8OIB and 80IC and exemption 10B on profits after excluding loss debited in the accounts in respect of which the insurance claims were received.
(iii) That the Id. CIT(A) has erred in law and facts in directing the A.O. not to reduce foreign exchange fluctuation gain from eligible profits of units eligible for deduction u/s 801B and 80IC and exemption u/s 10B.
3 . The Id. CIT(A) has erred in law and facts in directing the A.O. to allocate the eligible head office income to the respective unit for calculating deduction u/s SOIB and sec 80IC and exemption u/s 10B.
4 . That the Id. CIT(A) has erred in law and facts in allowing the deduction u/s 80IB on profits of unit named Vardhman Spinning & General Mills (100% EOU) on which exemption u/s JOB has been claimed.
That the order of the Ld. CIT(A) be set aside and that of the A.O. be restored. 6. 7. That the appellant craves leave lo add or amend any ground of appeal before it is finally disposed off.
Both the Ld. representatives of the parties stated at bar that all
the issues either by the assessee or by the Revenue are identical to that
have been taken for assessment year 2006-07, hence our findings
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 20
arrived at in respect of each of the issue will apply mutatis-mutandis
to the issues taken by the assessee as well as by the Revenue for
assessment year under consideration i.e assessment year 2007-08. It
is clarified that one of the issue which is identical to assessment year
2006-07 in relation to the disallowance u/s 14A of the Act, there is a
difference in figure of tax exempt dividend income earned by the
assessee during the year. The assessee during the year had earned
dividend income of Rs. 2.19 cores whereas in the assessment year
2006-07, the assessee had earned dividend income of Rs. 1.59 crores.
Considering the facts and circumstances, the disallowance u/s
14A of the Act is restricted to Rs. 2.50 lacs for the year under
consideration. As discussed above, our findings as arrived at in the
assessment year 2006-07 on the remaining issues will apply to the
issues raised in appeals relating to assessment year 2007-08 also.
Accordingly, the appeals of the assessee as well of the Revenue are
treated as partly allowed.
Order dictated and pronounced in the Open Court immediately on completion of hearing.
Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 18.12. 2018 “आर.के.”
ITA Nos. 1429-c-10 & 35-C-2011- & 270 & 286-c-2011- M/s Vardhman Textiles ltd., Ludhiana 21
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar