Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘ D’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
These are appeals and cross appeals filed by assessee and Revenue respectively for the assessment years 2006-07, 2007-08 and 2008-2009 directed against the orders of the Commissioner of Income Tax (Appeals) for the impugned assessment years. Cross appeals of the assessee and Revenue for the assessment year 2006-2007 are taken up first for disposal in that order.
Assessee in its appeal has taken altogether thirteen grounds 2. of which Grounds No. 1 & 13 are general in nature needing no specific adjudication.
Through its Ground Nos.2 to 4, the assessee is aggrieved by 3. a disallowance of software expenditure of �15,61,995/-.
The ld. Counsel for the assessee submitted that the 4. software which were acquired by the assessee did not result in any enduring benefit to it. As per the ld. Authorised Representative these were payments for renewing software licenses and for antivirus for & 675/12, 1165, :- 3 -: 1166, 1171 & 1172/13. disaster recovery system and for internet usage tracker. The ld.
Authorised Representative submitted that the ld. Assessing Officer erroneously held it to be acquisition of capital asset and disallowed the claim. As per the ld. Authorised Representative, the ld. Commissioner of Income Tax (Appeals) confirmed the treatment without properly appreciating the facts relying on the judgment of Hon’ble Delhi High Court in the case of CIT vs. Asahi India Safety Glass (346 ITR 329).
The ld. Authorised Representative submitted that the expenditure incurred for acquiring software which did not give enduring benefit could only be considered as Revenue expenditure.
Per contra, the ld. DR strongly supported the orders of the 5.
authorities below.
We have considered the rival contentions and perused the orders of the authorities below. It is not disputed by the Revenue that type of software acquired had maximum life of two to three years only.
These were not system software but application software. In view of the judgment of Hon’ble Delhi High Court in the case of Asahi India Safety Glass (supra) we are of the opinion that claim had to be allowed. We therefore, delete the disallowance of �15,61,995/-
Ground Nos. 2 to 4 stand allowed. & 675/12, 1165, :- 4 -: 1166, 1171 & 1172/13.
Vide its ground Nos. 5 to 8, the grievance raised by the assessee is that upfront lease rent of �5,96,80,000/- was disallowed by the lower authorities as capital expenditure.
The ld. Counsel for the assessee submitted that the above lease rent advance was paid for obtaining leasehold land at Mahindra SEZ Chennai. As per ld. Authorised Representative payment of the lease advance gave it a right over the land for 99 years for setting up a manufacturing facility. The ld. Authorised Representative submitted that lower authorities erroneously considered it to be capital outgo for a reason that commercial production from the manufacturing facility setup in the leased land started only in September, 2007. As per the ld. Authorised Representative the ld. Commissioner of Income Tax (Appeals) had confirmed the findings of the ld. Assessing Officer without expressing any specific reasons why he was rejecting the contention taken by the assessee. As per the ld. Authorised Representative by virtue of judgment of jurisdictional High Court in the cases of CIT vs. Gemini Arts Pvt. Ltd. 254 ITR 201 and CIT vs. Rane (Madras) Ltd 293 ITR 459 such lease advance payment could only be considered as Revenue in nature.
Per contra, the ld. Departmental Representative relying on the judgment dated 4th December, 2006 of Apex Court in the & 675/12, 1165, :- 5 -: 1166, 1171 & 1172/13. Enterprising Enterprises vs. DCIT 293 ITR 437(SC) submitted that payment for acquiring leasehold rights was capital expenditure.
We have considered the rival contentions and perused the 11. orders of the authorities below. It is not disputed that by virtue of upfront lease rent of �5,96,80,000/- paid, assessee had obtained lease right for 99 years over 14.92 acres of land. Assessee has started manufacturing facility over the said land in September, 2007. No doubt, the jurisdictional High Court in the case of Gemini Arts Pvt. Ltd (supra) relied on by the ld. Authorised Representative had held that lumpsum lease rent payments, which gave no other advantage than relief from paying annual rent, could not be considered as capital outgo but only as Revenue expenditure, allowable in the year in which it was paid. The above judgment is dated 1st August, 2001. In the case of Rane (Madras) Ltd (supra) their lordship had held that expenditure incurred for setting up new factory which resulted in extension of an existing unit could only be considered as Revenue expenditure. We find that judgment in the case of Gemini Arts Pvt. Ltd (supra) was pronounced much earlier to the judgment of Hon’ble Apex Court in the case of Enterprising Enterprises (supra). In the last mentioned case, the Hon’ble Apex Court had clearly held that irrespective of whether lease money was paid as slumpsum or installment it was nothing but capital expenditure. As for the reliance & 675/12, 1165, :- 6 -: 1166, 1171 & 1172/13. placed by the ld. Authorised Representative on Rane (Madra) Ltd (supra) the issue there was the nature of expenditure incurred for setting up a new factory which was extension of an existing unit.
Here on the other hand, the facts show that the assessee had obtained leasehold right for 99 years over the land which was definitely in the nature of acquisition of a capital asset. Therefore, we are of the opinion that the disallowance was righty done by the lower authorities.
No interference is required. Ground Nos. 5 to 8 of the assessee stand dismissed.
Vide its ground Nos. 9 to 12, the grievance raised by the assessee is on failure on the ld. Assessing Officer to give credit for TDS and TCS claimed in the Return of income.
We are of the opinion that whether the claim for tax credit was correctly made by the assessee is the issue need to be examined afresh by the ld. Assessing Officer. If the assessee is able to show evidence for TDS/TCS of �28,81,980/-, the ld. Assessing Officer is directed to give such credit. Accordingly, ground Nos. 9 to 12 of the assessee is treated as allowed for statistical purpose. & 675/12, 1165, :- 7 -: 1166, 1171 & 1172/13.
In the result, the appeal of the assessee in ITA No.591/Mds/2012 of assessment year 2006-07 is partly allowed for statistical purpose.
Now, we take up appeal of the Revenue in of assessment year 2006-2007:- The Revenue has altogether raised five grounds of which ground No.1 & 5 are general in nature needing no specific adjudication.
Vides its ground No.2, the grievance of the Revenue is that 16. the ld. Commissioner of Income Tax (Appeals) restricted disallowance u/s.14A of the Act to 2% of the dividend income.
Before us, the ld. Departmental Representative submitted 17. that original disallowance made by the ld. Assessing Officer was �27,46,264/- applying Rule 8D of the Act. Further as per ld. Departmental Representative the ld. Commissioner of Income Tax (Appeals) unfairly curtailed disallowance to 2% of the exempted income.
Per contra, the ld. Authorised Representative relied on the judgment of Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd vs. DCIT and another 328 ITR 81. & 675/12, 1165, :- 8 -: 1166, 1171 & 1172/13.
We have considered the rival contentions and perused the orders of the authorities below. By virtue of judgment of Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd (supra) Rule 8D cannot be applied for the impugned assessment year. However, Sec.14A of the Act was very much there in statute for the impugned assessment year. Hence, disallowance under the said section could be made dehorse the rules. Co-ordinate Benches of the Tribunal are taking consistent view that disallowance of 2% of the exempt income would suffice for the years were Rule 8D were not applicable. Hence, we find no error in the order of the ld. Commissioner of Income Tax (Appeals) in restricting disallowance 2% of the dividend income claimed by the assessee as exempt. Accordingly, we dismiss the ground No.2 of the Revenue.
Vide its ground No. 3, the grievance raised by the Revenue is that the ld. Commissioner of Income Tax (Appeals) deleted a disallowance of notional interest working out to �2,70,52,088/-, as relatable to interest free loans granted by the assessee to its subsidiary.
Before us, the ld. Departmental Representative submitted that assessee could not show commercial expediency for the loans given to its subsidiaries. As per ld. Departmental Representative, the & 675/12, 1165, :- 9 -: 1166, 1171 & 1172/13. assessee had borrowed �43,860/- lakhs of which it had given free interest loan of �3,379/- lakhs. Ld. Departmental Representative submitted that interest of �2,958/- lakhs was paid by the assessee on the loans taken by it. As per ld. Departmental Representative the amount of interest free loans were utilized by Sundaram Fasteners Investment Ltd (SFIL) which in turn gave loans to certain other companies. Thus, as per ld. Departmental Representative assessee could not demonstrate how the loans given were commercially expedient.
Per contra, the ld. Authorised Representative supported the 22.
orders of the Commissioner of Income Tax (Appeals) and submitted that by virtue of judgment of Apex Court in the case of S.A. Builders Ltd vs. CIT (A) and Another (2007) 288 ITR 1(SC) loans given to subsidiary were always deemed commercial expedient. According to him, M/s. SFIL was making investments and giving inter corporate loans to its subsidiaries in China since assessee could not directly invest in a subsidiary in China. Further, as per the ld. Authorised Representative in Revenue’s appeal for assessment year 2005-06, same issue had come up before and Tribunal in vide order dated 15.07.2016 deleted such interest disallowance. & 675/12, 1165, :- 10 -: 1166, 1171 & 1172/13.
We have considered the rival contentions and perused the orders of the authorities below. No doubt the issue was decided in favour of the assessee by this Tribunal for the assessment year 2005- 06 on Revenue appeal. However, in the said order, the assessee could demonstrate that the amounts loaned to the subsidiary companies was much less than its net worth. As for as the reliance placed by the assessee on the judgment of Apex Court in the case of S.A. Builders Ltd (supra), the lordship had remitted the matter back to the Tribunal for enquiry whether interest loans were given to the sister concern was as a measure of commercial expediency. Their lordship took a view that once nexus was established between the expenditure and the purpose of the business, which need not necessary be business of the assessee itself, Revenue could not disallow the claim assuming what was reasonable. Considering, the facts and circumstances of the case, we are of the opinion that lower authorities failed to verify whether loans given by the assessee to its subsidiaries were commercially expedient. The amount that were given as loans was not stagnant.
Therefore, we set aside the order of the lower authorities and remit the issue regarding allowability of pro-rata interest on interest free loans granted to subsidiaries, back to the file of the ld. Assessing Officer for consideration of fresh in accordance with law. Ground No.3 of the Revenue is allowed for statistical purpose. & 675/12, 1165, :- 11 -: 1166, 1171 & 1172/13. 24. Vide its ground No.4, the ground raised by the Revenue is that ld. Commissioner of Income Tax (Appeals) deleted disallowance of �3,04,36,000/- made by the ld. Assessing Officer for want of deduction tax of source relying on Sec. 40(a)(ia) of the Act.
The ld. Departmental Representative submitted that the 25. export commissions paid to Non Resident Agents fell within the ambit of Sec. 195(1) of the Act. As per ld. Departmental Representative if the assessee was of the opinion that there was no need for deducting tax at source then it should have obtained a certificate from the ld. Assessing Officer as stipulated u/s.195(2) of the Act. Further, as per ld. Departmental Representative by virtue of explanation added below Sec. 9 of the Act through Finance Act, 2010 with retrospective effect from 01.06.1976 there was no requirement of residency of a Non Resident or place of business or business connection in India, nor it was necessary for the non resident to render services in India
Per contra, the ld. Authorised Representative submitted that 26.
Non Resident person to whom sale commission was paid was canvassing sales for the assessee abroad and no part of their services were rendered in India. As per ld. Authorised Representative non- resident agent was providing warehousing services in foreign soil. & 675/12, 1165, :- 12 -: 1166, 1171 & 1172/13. According to him no part of income could arise in India since non- resident was doing business exclusively outside India.
We have considered the rival contentions and perused the 27. orders of the authorities below. We find ld. Commissioner of Income Tax (Appeals) had relied on the judgment of GE Technology Centre vs. CIT (327 ITR 456) (SC) for giving relief to the assessee and had extensively extracted the relevant paras of the judgment. The ld. Commissioner of Income Tax (Appeals) held that Sec. 195(2) of the Act, applied only for composite payments. Here on the other hand, commission was paid to foreign agent for services rendered outside India. It is true that by virtue of Explanation to Section 9, substituted by Finance Act, 2010 with retrospective effect, it was not necessary for a non-resident to have a place of business or business connection in India for being fastened with a tax liability in India. However, the said Explanation applies only to income by way of interest, income by way of Royalty and income by way of fees for technical services. There is no case for the Revenue that earning of the foreign agent fell in any of these three categories. In such a situation, we are of the opinion that agent having rendered services only outside India, assessee was required to deduct tax at source on payments made to them. We do not find any reason to interfere with the order of the ld. Commissioner & 675/12, 1165, :- 13 -: 1166, 1171 & 1172/13. of Income Tax (Appeals). Ground No.4 of the Revenue stand dismissed.
In the result, the appeal of the Revenue in ITA 28.
No.675/Mds/2012 is partly allowed for statistical purpose.
Now, we take up assessee appeal in of assessment year 2008-2009:- The assessee in its appeal has taken altogether seven grounds of which Ground Nos. 1 & 7 are general in nature needing no specific adjudication.
In Ground No.2, the assessee is aggrieved by the 30. disallowance of software expenditure of �51,82,081/-.
We find that similar issue was raised by the assessee in its 31. appeal for the assessment year 2006-2007 also. Software purchased and the payment was made for relevant previous year were also similar. It consisted of application software and user licenses. For the reasons by us at para 6, we are of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in allowing the claim. The ground No. 2 is therefore treated as allowed.
Vide ground No.3, the grievance raised by the assessee is on disallowance of additional depreciation. & 675/12, 1165, :- 14 -: 1166, 1171 & 1172/13.
Before us, the ld. Authorised Representative submitted additional depreciation of �99,57,900/- claimed by the assessee was disallowed by the ld. Assessing Officer on a ground that such depreciation was admissible only in the year in which new plant and machinery was put to use. As per ld. Authorised Representative, the ld. Commissioner of Income Tax (Appeals) erroneously confirmed this view of the ld. Assessing Officer disregarding the arguments of the assessee that machinery on which additional depreciation was claimed was acquired during the second half of financial year 2006-07 and therefore balance of the additional depreciation which was restricted to 50% of the eligible amount had to be allowed in the impugned assessment year. In support of this, ld. Authorised Representative placed reliance on judgment of Karnataka High Court in the case of CIT vs. Rittal India Pvt. Ltd 380 ITR 428.
Per contra, the ld. DR strongly supported the orders of the 34.
authorities below.
We have considered the rival contentions and perused the orders of the authorities below. There is no dispute, that the additional depreciation claimed by the assessee was balance of what remained out of such depreciation claimed in the immediate preceding year. There is also no dispute that such claim was restricted to & 675/12, 1165, :- 15 -: 1166, 1171 & 1172/13. 50% of the eligible amount for use less than 180 days. The issue whether such additional depreciation to the extent not allowed due to restriction placed on account of usage for a period less than 180 days could be allowed in the succeeding year had come up for hearing before Jurisdictional High Court in the case of Rittal India Pvt. Ltd (supra), and Hon’ble High Court had held in favour of the assessee. Accordingly, we are of the opinion that claim of additional depreciation of �99,57,900/- has to be allowed. Disallowance of the claim is deleted. Ground 3 of the assessee is allowed.
Through ground No.4, assessee is aggrieved by levy of 36. interest u/s.234D of the Act.
Before us, the ld. Authorised Representative submitted that 37. such interest should be computed on tax that remained payable from the date of grant of refund to the date of regular assessment. As per ld. Authorised Representative interest could not be charged on interest allowed to the assessee u/s.244(A) of the Act on refund issued. The ld. Authorised Representative submitted that similar issue was adjudicated by the Tribunal in assessee’s own case for the assessment year 2003-04 in dated 15.07.2016. & 675/12, 1165, :- 16 -: 1166, 1171 & 1172/13.
Per contra, the ld. DR strongly supported the orders of the authorities below.
We have considered the rival contentions and perused the 39. orders of the authorities below. We find that similar issue came up before Tribunal in Revenue appeal for the assessment year 2003-2004 and relevant part of the decision dated 15.07.2016 is reproduced hereunder:-
‘’3. Regarding the second issue, relating to the levy of interest u/s 234D of the Act, Ld Counsel for the assessee fairly submitted that the said issue has to be decided in favour of the Revenue in view of the subsequent judgment of the Hon'ble Madras High Court in the case of CIT vs. Infrastructure Development Finance Co. Ltd [2012] 340 ITR 580 ( Mad.), which is relevant for the proposition that for the applicability of provisions of section 234D, the date of assessment is relevant and not the year of assessment therefore/ when once the regular assessment is completed after the amended proviso of law (i. e 1.6.2003) came into operation the assessee is liable to pay interest on the refunded amount as contemplated u/s 234D of the Act.
After hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the cited judgment of the Hon'ble Madras High Court in the case of Infrastructure Development Finance Co. Ltd (supra), we are of the opinion & 675/12, 1165, :- 17 -: 1166, 1171 & 1172/13. that the decision taken by the CIT (A) vide para 5.3 of the impugned order is required to be reversed on this issue. Considering the same, the second issue raised by the Revenue is decided in favour of the assessee and against the Revenue’’.
Accordingly, we are of the opinion that claim of the assessee has to be allowed. The ld. Assessing Officer is directed to rework interest levied u/s.234D of the Act. Ground No.4 is allowed.
Vide ground No.5, the assessee is aggrieved on 40. disallowance of Long Term Capital Loss on redemption of units of ICICI Venture Capital Fund and vide ground no.6 assessee is aggrieved on disallowance of upfront lease rent of �27,80,596/-.
Before us, the ld. Counsel for assessee submitted that lower authorities relying on the decision of Apex Court in the case of Goetze (India) Ltd vs. CIT (2006) 284 ITR 323 refused to consider above claims. As per ld. Authorised Representative long term capital loss was claimed by the assessee during the course of assessment proceeding through letter dated 5.4.2010 addressed to the ld. Assessing Officer.
As for upfront lease rent, the ld. Authorised Representative submitted it had made the claim first time made before the Commissioner of Income Tax (Appeals). According to ld. Authorised Representative judgment of Apex Court in the case of Goetze (India) Ltd (supra) only & 675/12, 1165, :- 18 -: 1166, 1171 & 1172/13. restricted the powers of the ld. Assessing Officer and did not impinge on the powers of the ld. Appellate Authority to give relief.
Per contra, the ld. DR strongly supported the orders of the 42.
authorities below.
We have considered the rival contentions and perused the 43. orders of the authorities below. It is true that assessee did not file revise its return either for claiming long term capital loss or for claiming the upfront lease rent. Nevertheless, the assessee has filed letter before ld. Assessing Officer making a claim for long term capital loss and had filed additional ground before ld.Commissioner of Income Tax (Appeals) for claiming upfront lease rent. The ld. Commissioner of Income Tax (Appeals) relying on the Apex Court judgment of Goetze India Limited (supra) dismissed both these claim. In our opinion by virtue of judgment of Apex Court in the case of National Thermal Power Corporation vs. CIT 229 ITR 383 (SC) the Appellate authorities could consider such claims. Hon’ble Apex Court in the case of Goetze India Limited (supra) only limited the powers of the ld. Assessing Officer. We are therefore of the opinion that ld. Commissioner of Income Tax (Appeals) fell in error in not considering both these grounds on merit. We therefore, set aside the order of the ld. Commissioner of Income Tax (Appeals) and remit the issue regarding & 675/12, 1165, :- 19 -: 1166, 1171 & 1172/13. claim of Long Term Capital Loss and upfront lease rent back to the file of ld. Commissioner of Income Tax (Appeals) for consideration a fresh in accordance with law. Ground Nos. 5 & 6 are partly allowed for statistical purpose.
In the result, appeal of the assessee in ITA 44.
No.1166/Mds/2013 is partly allowed for statistical purpose.
We take up appeal of the Revenue in for assessment year 2008-2009. The Revenue has altogether raised four grounds of which 1 & 4 are general in nature needing no specific adjudication.
Vide ground no.2, the Revenue is aggrieved on deletion of 46. notional interest of �61,31,769/- attributed to interest free loans given by the assessee to its subsidiary SFIL.
We find that similar issue has come up before this Tribunal in Revenue’s appeal for the assessment year 2006-2007. We have held that at para 23 that the matter requires afresh consideration by the ld. Assessing Officer for verifying commercial expediency. For the impugned assessment year also similar direction is given. Ground No. 2 is allowed for statistical purpose. & 675/12, 1165, :- 20 -: 1166, 1171 & 1172/13.
Vide ground No.3, the Revenue is aggrieved on deletion of disallowance made by the ld. Assessing Officer u/s.40(a)(ia) of the Act for export commission paid to non-resident person.
We find that similar issue has been raised by the Revenue in its appeal for the assessment year 2006-2007. We have at para 27 held that disallowance was rightly deleted by the ld. Commissioner of Income Tax (Appeals). The fact situation being the same, we do not find any reason to interfere with the order of the Commissioner of Income Tax (Appeals) on this issue for the impugned assessment year also. Accordingly, ground no.3 stand dismissed.
The appeal of the Revenue in of 50. assessment year is partly allowed for statistical purpose.
Now, we take up Cross-Appeals for assessment year 2007- 51.
2008:- Assessee in its appeal has altogether raised five grounds of which 1 & 5 are general in nature needing no specific adjudication.
Vide ground no.2, the grievance of the assessee is on 52. disallowance of expenditure incurred on software which was confirmed by the ld. Commissioner of Income Tax (Appeals).
We find that similar ground was raised by the assessee in its appeal for the assessment year 2006-2007. We have held at para 6 & 675/12, 1165, :- 21 -: 1166, 1171 & 1172/13. that software expenditure being in the nature of renewal of license and acquisition of application of software not having life of more than two to three years could only be considered a Revenue outgo. Fact situation being same, we delete the disallowance of �42,87,180/-.
Accordingly, ground no.2 of the assessee is deleted.
Vide at ground No.3, the grievance of the assessee is that prior period expenditure of �1,08,868/- was disallowed by the ld. Assessing Officer and such disallowance was confirmed by the ld. Commissioner of Income Tax (Appeals).
Before us, the ld. Counsel for the assessee submitted that 55. the bills for expenditure was received by assessee during the previous year relevant to assessment year 2009-2010. Such expenditure as per ld. Authorised Representative was added back in the return in the said assessment year. Submission of the ld. Authorised Representative was that sum was correctly claimed as prior period expenditure during the impugned assessment year when it was incurred. Thus, according to him the claim was unfavorably disallowed.
Per contra, ld. Departmental Representative submitted that 56.
assessee was not able to show what the type of expenditure was and how the bills were raised in succeeding years. According to him, disallowance is rightly made. & 675/12, 1165, :- 22 -: 1166, 1171 & 1172/13. 57. We have considered the rival contentions and perused the orders of the authorities below. The claim of the assessee that bills for the expenditure claimed as prior period was received by the assessee only in the previous year relevant to assessment year 2009-2010. The assessment year 2009-2010 is subsequent to the impugned assessment year. If the expenditure was incurred in the previous year relevant to the impugned assessment year, assessee ought have shown it only as a provision and not as prior period of expenditure.
We are, therefore of the opinion that assessee failed to justify its claim, and it was rightly disallowed by the lower authorities. Ground No.3 stand dismissed.
Vide no. 4, assessee is aggrieved on disallowance of long term capital loss of �90,188/- on redemption of units of ICICI and inclusion of tax free interest income of �1,26,765/- received from UTI.
The ld. Counsel for assessee submitted that these claim were 59. preferred by the assessee for the first time before ld. Commissioner of Income Tax (Appeals). As per ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) relying on the judgment of Hon’ble Apex Court in the case of Goetze (India) Ltd (supra) had refused to consider the claim. However, as per the ld. Authorised Representative by virtue of judgment of Apex Court in the case of & 675/12, 1165, :- 23 -: 1166, 1171 & 1172/13. National Thermal Power Corporation (supra) appellate authority had ample powers to consider such a claim.
Per contra, the ld. DR strongly supported the orders of the 60.
authorities below.
We have considered the rival contentions and perused the 61. orders of the authorities below. We find that similar issue has been raised by the assessee in its appeal in assessment year 2008-2009.
We had held at para 43, that the claims had to be considered on merits by the ld. Commissioner of Income Tax (Appeals). For the impugned assessment year also remit the issue relating claim of long term capital loss and claim for exclusion of tax from interest income back to the file of the ld. Commissioner of Income Tax (Appeals) for consideration afresh in accordance with merits of the issue.
Accordingly, ground no.4 is allowed for statistical purpose.
In the result, the appeal of the assessee in is partly allowed for statistical purpose.
Now, we take up Revenue appeal in 63. of assessment year 2007-2008:- The Revenue has altogether raised five grounds of which 1 & 5 are general in nature needing no specific adjudication. & 675/12, 1165, :- 24 -: 1166, 1171 & 1172/13. 64. Ground no.2 raised by the Revenue is similar to its ground no.2 for the assessment year 2006-2007.
We have upheld the order of the ld. Commissioner of Income 65.
Tax (Appeals) restricting disallowance to 2% of the exempt income.
For the very same reasons which as mentioned by us at para 19, we are of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in restricting the addition to 2% of the exempt income. Hence ground No.2 of the Revenue is dismissed.
Ground No.3 raised by the Revenue is similar to ground No.3 in its appeal for the assessment year 2006-2007. We had remitted the issue regarding disallowance of interest expenditure attributable to interest free loans given to its subsidiaries back to the file of the ld. Assessing Officer for considering the commercial expediency at para 23 above. Similar directions are given here also. Ground 3 of the Revenue is allowed for statistical purpose.
Ground No.4 raised by the Revenue is similar to ground No.4 67. for the assessment year 2006-2007.
For the very same reasons as mentioned by us in para 27 in 68. above in relation to Revenue’s appeal for the assessment year 2006- 07, we uphold the order of ld. Commissioner of Income Tax (Appeals) & 675/12, 1165, :- 25 -: 1166, 1171 & 1172/13. deleting the disallowance made u/s.40(a)(ia) of the Act. Ground 4 raised by the Revenue is therefore dismissed.
In the result, the appeals of the assessee in ITA 69.
Nos.591/Mds/2012, 1165 &1166/Mds/2013 are partly allowed for statistical purpose and and Revenue appeals in 1171 & 1172/2013 are also partly allowed for statistical purpose.
Order pronounced on Friday, the 30th day of September, 2016, at Chennai.