Itxa/417/2010 Of The Commissioner Of Income Tax -6 Mumbai v. Grasim Industries Ltd

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.417 OF 2010 The Commissioner of Income Tax-6, Mumbai ..Appellant. V/s. M/s. Grasim Industries Ltd. ..Respondent. Mr. Suresh Kumar for the appellant. Mr. J.D. Mistri, senior Advocate with A.K. Jasani for the respondent. CORAM : J.P. DEVADHAR AND K.K. TATED, JJ. DATED : 5TH SEPTEMBER, 2011 P.C. :- 1.Following questions of law are raised by the revenue in this appeal :- (a)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the assessee’s claim for enhancing actual cost of plant & machinery due to increase in foreign exchange liability resulting from exchange rate fluctuations in subsequent years and allowing the investment allowance on such enhanced cost ?law, the Tribunal was justified in allowing the assessee’s claim for enhancing actual cost of plant & machinery due to increase in foreign exchange liability resulting from exchange rate fluctuations in subsequent years and allowing the investment allowance on such enhanced cost ? (b)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the expenses on tea, coffee, snacks, etc. provided to the customers, suppliers and expenses on company’s guest and expenditure on auditors did not law, the Tribunal was justified in holding that the expenses on tea, coffee, snacks, etc. provided to the customers, suppliers and expenses on company’s guest and expenditure on auditors did not constitute entertainment expenses within the meaning of Sec.37(2) of the I.T. Act, 1961 read with clause (iii) of the explanation therein ? (c)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing expenditure of Rs.14,31,555/- being expenditure incurred on account of fabric show, meeting and sales conference and opening ceremony of retail show room as business expenditure ?law, the Tribunal was justified in allowing expenditure of Rs.14,31,555/- being expenditure incurred on account of fabric show, meeting and sales conference and opening ceremony of retail show room as business expenditure ? (d)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing foreign travel expenses of employees as revenue expenditure which were treated by the assessing officer and confirmed by the CIT(A) as capital expenditure ?law, the Tribunal was justified in allowing foreign travel expenses of employees as revenue expenditure which were treated by the assessing officer and confirmed by the CIT(A) as capital expenditure ? (e)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance of the interest on surface rent of Rs.3,40,666/- and interest on electricity duty of Rs.28,51,010 and welfare cess of Rs.84,177/- made under Sec.43B of the I.T. Act ?law, the Tribunal was justified in deleting the disallowance of the interest on surface rent of Rs.3,40,666/- and interest on electricity duty of Rs.28,51,010 and welfare cess of Rs.84,177/- made under Sec.43B of the I.T. Act ? (f)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing a sum of Rs.4,86,688/- incurred on account of contribution to local organization as business expenditure ?law, the Tribunal was justified in allowing a sum of Rs.4,86,688/- incurred on account of contribution to local organization as business expenditure ? (f)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing a sum of Rs.4,86,688/- incurred on account of contribution to local organization as business expenditure ?law, the Tribunal was justified in allowing a sum of Rs.4,86,688/- incurred on account of contribution to local organization as business expenditure ? (g)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing expenditure of Rs.7,000/- on providing tea, snacks, etc. to the shareholders at the time of Annual General Meeting, holding that the same are not in the nature of entertainment expenses ?law, the Tribunal was justified in allowing expenditure of Rs.7,000/- on providing tea, snacks, etc. to the shareholders at the time of Annual General Meeting, holding that the same are not in the nature of entertainment expenses ? (h)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the claim of the assessee regarding exclusion of inter-divisional transfer from total turnover, for the purpose of computing deduction u/s.80HHC of the IT Act ?law, the Tribunal was justified in allowing the claim of the assessee regarding exclusion of inter-divisional transfer from total turnover, for the purpose of computing deduction u/s.80HHC of the IT Act ? (i)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the interest accrued but not due on securities should not be taxed as income for the year despite the fact that the assessee is following mercantile system of accounting and that it has accounted for such interest in the books ?law, the Tribunal was justified in holding that the interest accrued but not due on securities should not be taxed as income for the year despite the fact that the assessee is following mercantile system of accounting and that it has accounted for such interest in the books ? (j)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing proportionate premium payable on the redemption of bonds during the year, as expenditure ? (k)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing depreciation on intake well, telpher plant and shortage tank at the rate applicable to plant and false ceiling ?law, the Tribunal was justified in allowing depreciation on intake well, telpher plant and shortage tank at the rate applicable to plant and false ceiling ? (l)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing depreciation on shops at Bhiwani, which were held to be non business assets by assessing officer ?law, the Tribunal was justified in allowing depreciation on shops at Bhiwani, which were held to be non business assets by assessing officer ? (m)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing expenditure of the presentation articles without logo as admissible business expenditure of the assessee ignoring the fact that the assessee had gained in terms of advertisement by distributing these articles even without assessee’s logo on them ?law, the Tribunal was justified in allowing expenditure of the presentation articles without logo as admissible business expenditure of the assessee ignoring the fact that the assessee had gained in terms of advertisement by distributing these articles even without assessee’s logo on them ? (n)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance on account of expenses on issue of debenture amounting to Rs.84,86,723/- ignoring the provisions of Sec. 35D of the Act ?law, the Tribunal was justified in deleting the disallowance on account of expenses on issue of debenture amounting to Rs.84,86,723/- ignoring the provisions of Sec. 35D of the Act ? 2. (n)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance on account of expenses on issue of debenture amounting to Rs.84,86,723/- ignoring the provisions of Sec. 35D of the Act ?law, the Tribunal was justified in deleting the disallowance on account of expenses on issue of debenture amounting to Rs.84,86,723/- ignoring the provisions of Sec. 35D of the Act ? 2. As regards question (a) is concerned, counsel for the revenue fairly states that the said question is answered against the revenue by the decision of the Apex Court in the case of CIT V/s. Woodward Governor India P. Ltd. reported in [2008] 312 ITR 254(SC). Hence question (a) cannot be entertained. 3.As regards questions (b), (c), (d) (e), (f), (g), (j) & (k) are concerned, counsel for the revenue does not press these questions as similar decisions rendered by the ITAT in the earlier assessment years have been accepted by the revenue. Hence the above questions cannot be entertained. 4.As regards questions (h) & (l) are concerned, counsel for the revenue states that the ITAT has answered the questions in favour of the assessee by relying upon the decision in the assessee’s own case for AY 1990-91. The appealfiled by the revenue against the order of the ITAT for AY 1990-91 has been dismissed by this Court on the ground of delay. Thus, the order of the ITAT for AY 1990-91 has attained finality. In these circumstances, questions (h) & (l) cannot be entertained. 5.As regards question (i) is concerned, counsel for the revenue states that he is not pressing the said question as the ITAT has followed the decision of the Madras High Court in CIT v/s. Mercantile Bank reported in 291 ITR 137 (Mad). 6.As regards question (m) is concerned, counsel for the revenue states that the said question stands answered against the revenue by the decision of this Court in the case of CIT V/s. Allana & Sons reported in 216 I.T.R. 690 (Bom). Accordingly, question (m) cannot be entertained. As regards question (n) is concerned, counsel for the 5 itxa417-10 revenue states that the said question stands answered against the revenue by the Apex Court in the case of CIT V/s. India Cements Co. Ltd. reported in 60 ITR 52 (SC). Accordingly, question (n) cannot be entertained. 8.Thus, the appeal is disposed off in the above terms with no order as to costs. (K.K. TATED, J.) (J.P. DEVADHAR, J.)