Tata Chemicals Ltd , vs Department Of Income Tax

सव ी आई.पी. बंसल, या यक सद य, एवं ी एन .के ."ब#लैया, लेखा सद य के सम& Before Shri I P Bansal, JM, & Shri N K Billaiya, AM

आयकर अपील सं./ITA No.4465/Mum/2003 ( नधा रण वष / Assessment Year: 1988-89)

The DCIT Cir. 2(2) Vs. Tata Chemicals Ltd. Mumbai Bombay House, 24 Homi Mody Street, Fort Mumbai- 400 001

(अपीलाथ) /Appellant) (*+यथ) / Respondent)

आयकर अपील सं./ITA No.4566/Mum/2003 ( नधा रण वष / Assessment Year :1988-89)

Tata Chemicals Ltd. Vs. The DCIT Cir. 2(2) Mumbai- 400 001 Mumbai

(अपीलाथ) /Appellant) (*+यथ) / Respondent)

For the Revenue : Shri Akhilendra Yadav For the Assessee : Shri Dinesh Vyas

Date of Hearing : 20.04.2015 Date of Pronouncement : 20.04.2015

आदे श / O R D E R

Per I P Bansal, Judicial Member :

These are cross appeals directed against the consolidated order passed by the CIT(A) dated 28.02.2003 in respect of A.Ys. 1986-87 to 1991-92.

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2. It may be mentioned here that during the course of hearing the learned AR has filed a chart stating ground-wise grievance of the assessee as well as of the department. A copy of the chart was also given to the learned DR, who after going through the chart did not object to the submissions of the assessee that many of the issues are covered by the earlier decisions of the Tribunal as stated in the chart and in this manner we proceed to dispose of the aforementioned appeals.

3. The grounds of appeal filed by the assessee are lengthy and narrative, therefore, for the sake of brevity we refer to the grievance of both the parties ground-wise as has been mentioned in the chart. It may also be mentioned here that in the chart reliance has been placed on various judicial pronouncements which may also include the decision rendered by the Tribunal in assessee's own case, therefore, wherein the issue is covered by the order of Tribunal in assessee's own case, reference, is made by us only to the decision of the Tribunal which is rendered in own case of the assessee. This is being done for the sake of brevity.

ITA No. 4566/Mum/2003 (Assessee's appeal & ground Nos. 4 and 5 of ITA No. 4465/Mum/20013, Revenue's appeal)

4. Ground no.1 relates to the disallowance of Rs.39,72,055 relating to interest on application money for tax free bonds. As per the chart, it is the case of the learned AR that similar issue has been considered and decided by the Tribunal in the assessee's own case for A.Y. 1987-88. Reference was made to the decision of the Tribunal dated 16.05.2014 passed in ITA No. 4464 & 4565/Mum/2003, copy of which has been placed at Sr. No.5 of the paper-book. The relevant discussion of the Tribunal is found in para 5 & 6 of its order, which reads as under:-

"5. Ground No.1 as reproduced above is relating to taxing of the interest amount received by the assessee on application money for purchasing tax free bonds. At the outset, the ld. A.R. of the assessee has submitted that under section 10(15)(iv)(h) the interest paid by a public sector company in respect of such bonds is exempt. He has further submitted that the interest paid on the 3 ITA No 4465 & 4566/M/2003 AY:1988-89

amount deposited with the application money till the allotment of the bonds is also covered in this respect. He has further relied upon the decision of the Hon'ble Delhi High Court in the case of 'CIT vs. Bharat Heavy Electricals Ltd.' 352 ITR 88 wherein the Hon'ble High Court has upheld the finding of the Tribunal that interest for the brief period between the date of application and allotment of bonds could not be taxed.

6. The ld. D.R. could not bring before us any contrary fact or case law which may justify departure from the above decision of the Hon'ble High Court. In view of the above, the ground No.1 is allowed in favour of the assessee."

5. After hearing both the parties, respectfully following the aforementioned decision of the co-ordinate Bench in respect of the immediate preceding year, we allow ground no.1 in favour of the assessee.

6. Ground no.2 of the assessee's appeal is common with ground nos. 4 & 5 of the revenue's appeal. It relates to two issues - one, grant of deduction u/s. 32AB amounting to Rs.4,73,55,170 on the amount deposited by the assessee in Industrial Development Bank of India (IDBI) on 26.08.1988. Learned CIT(A) has allowed this deduction on the ground that the assessee has cash profit of Rs.51.65 crores from the business activity carried on by it and sale of the products. This amount was disallowed by the AO on the ground that all receipts were deposited in the cash credit account with the bank from which overdraft was taken by the assessee from time to time for the purpose of business. The learned CIT(A) has granted relief to the assessee as according to him section 32 AB provides that where an assessee whose total income includes chargeable to tax under the head 'profit and gains of business' has out of such income deposited any amount with the IDBI then the same shall be allowed as deduction equal to 20% of the profit of eligible business as computed in the accounts of the assessee audited in accordance with the sub-section 5 subject to a maximum of amounts deposited with the IDBI. Referring to these facts of the case and keeping in view the amount of profit earned by the assessee learned CIT(A) has decided this issue in the favour of assessee.

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7. The second limb of the issue relates to disallowance of investment allowance on dividend and interest income earned by the assessee as under:

Dividend from Tata Fertilizers Ltd. Rs.589.97 lakhs Dividend from UTI Rs.402.69 lakhs Dividend from other companies Rs. 63.24 lakhs Interest on debentures Rs. 3.15 lakhs Interest on tax free bonds Rs.538.2 lakhs

The assessee in its appeal in ground no.2 is agitating the disallowance u/s. 32AB on the aforementioned dividend and interest, whereas revenue in its appeal in ground no. 5 is agitating the order of the CIT(A), vide which it has been held that the assessee is entitled to claim deduction u/s. 32AB in respect of amount of Rs. 4,73,55,170 deposited with the IDBI.

8. Further, learned CIT(A) has directed the AO to include the following income for the purpose of grant of deduction u/s. 32AB which has been agitated by the revenue in ground no.4 of its appeal:-

Income of earlier year Rs.56.35 lakhs Town income Rs.31.63 lakhs Rental income from employees Rs. 1.95 lakhs

9. As per the submissions made in the chart, the learned AR has relied upon the following decisions to contend that the assessee is entitled to deduction u/s. 32AB on the entire amount:

• Tata Yodogawa 67 ITD 174 (Pat) • Highway Cycles India 1 SOT 176 (Chd) (SB) • Diner's Club India Ltd. 248 ITR 679(Bom) • Apollo Tyres vs CIT 255 ITR 273 (SC) • Jindal Aluminium Ltd. 87 ITD 598 • Mahavir Spinning Mills Ltd. 87 TTJ 400 • Sukhjit Starch & Chemicals Ltd. 85 TTJ 218 • Tata Sons Ltd. ITA No.5742/M/02 for (AY 1990-91)

The learned DR relying on the assessment order submitted that the AO has rightly disallowed deduction u/s. 32AB. He further agitated that the decision of the CIT(A) in 5 ITA No 4465 & 4566/M/2003 AY:1988-89

holding that the assessee is entitled to deduction in respect of IDBI deposit and in respect of income of earlier year, town income and rental income from employees.

10. We have heard both the parties and their contentions have carefully been considered. So far as it relates to decision of the CIT(A) regarding grant of deduction in respect of IDBI deposit, we are of the opinion that the learned CIT(A) has correctly decided the issue in favour of the assessee. The assessee is having cash profit of Rs.51.65 crores and only for the reason that deposit of IDBI is made from cash credit account, which was showing overdraft is not sufficient to disallow the allowability of deduction u/s. 32AB, particularly in view of the fact that the assessee is having cash profit of Rs.51.65 crores, which is not contradicted by the revenue. So far as it relates to allowability or otherwise of deduction u/s. 32AB on the income of earlier years, town income and rental income from employees, learned CIT(A) has allowed the claim of the assessee for the reason that these form part of the business income. It is observed from the order passed by the learned CIT(A) that he has not given reasons for the same. Similarly, according to the assessee the dividend and interest income also could not be excluded as per the decisions relied upon by the learned AR. While deciding this issue also the learned CIT(A) has not considered any of the judicial pronouncements. Therefore, keeping in view the interest of justice, we are of the opinion that the issue relating to ground no.4 of the revenue's appeal and ground no.2 of the assessee's appeal requires to be restored back to the file of the CIT(A) with a direction to re- adjudicate the same in the light of the decisions relied upon by the AR after bringing all the facts on record. So far as it relates to ground no.5 of revenue's appeal, in view of above discussion, we dismiss the same.

11. To sum up, ground no.2 of the assessee appeal and ground no.4 of the revenue's appeal is allowed for statistical purpose in the manner aforesaid and Ground no.5 of the revenue's appeal is dismissed.

12. Ground no.3 of assessee's appeal relates to disallowance of Rs.1,62,20,000 being provision for employees pending settlement of their demands. This ground was 6 ITA No 4465 & 4566/M/2003 AY:1988-89

not pressed as the said amount was allowed on payment basis in A.Y. 1992-93. This ground is dismissed being not pressed.

13. Ground no.4 relates to disallowance of expenses on issue of convertible debentures amounting to Rs.17,94,514. This ground was stated to be covered by the decision of the Tribunal dated 26.04.2013 in ITA Nos. 4564 & 4463/Mum/2003 for A.Y. 1986-87, copy of which is placed at Sr. No.4 of the paper-book. This issue has been discussed at para 18 to 21, which is reproduced below:

"18. Ground no.6 relates to disallowance of Rs.1,96,864/- incurred on issue of convertible bonds/debentures.

19. The AO has discussed this issue at page 5 para 12 of his order which has been confirmed by the Ld. CIT(A) at para 24.5 at page 84 of his order.

20. The Ld. Senior Counsel pointed out that this issue has been decided in favour of the assessee in assessee's own case for A.Y. 1992-93 by the Tribunal in ITA No.4604/M/96

21. We have carefully perused the said order of the Tribunal. We find that the Tribunal has discussed this issue at para 69 of its order and has allowed the debenture expenses. In the instant case, facts being identical, therefore respectfully following the decision of the Tribunal (supra), we direct the AO to allow the expenses on issue of debentures. This ground of the assessee is accordingly allowed."

Accordingly, after hearing both the parties this ground is allowed in favour of the assessee.

14. Ground 5 of asessee's appeal relates to disallowance of Bhanwad Prospecting and survey expenses amounting to Rs.71,963. This issue is stated to be covered by the aforementioned order of the Tribunal dated 16.05.2014 in the assessee's own case for A.Y. 1987-88 in ITA No. 4565/Mum/2003. It was the case of the AR that since deduction u/s. 35E is allowed this ground was dismissed. It is therefore submitted by him that similar order may be passed.

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15. We have heard both the parties. The Tribunal in the order for A.Y. 1987-88 (supra) vide para nos. 7 & 8 has held as under:

"7. Ground No.2 as reproduced above is relating to the disallowance of Bhanwad Prospecting & Survey Expenses of Rs.1,6 1,176/-. The ld. A.R. of the assessee has submitted that the issue taken vide ground No.2 is covered in favour of the assessee by the decision of the Tribunal in the own case of the assessee for assessment year 1986-87 vide ITA No.4564/M/2003. The Tribunal while dealing with the issue in question in para 14 of the said decision has observed that since the assessee had been allowed deduction under section 35(E) of the Income Tax Act (hereinafter referred to as the Act), hence the grievance of the assessee became otiose and the Tribunal therefore dismissed the ground of appeal relating to this issue.

8. In view of the above, this issue is decided accordingly and the ground No.2 of the appeal is therefore dismissed."

Respectfully, following the decision of the Tribunal, this ground is dismissed.

16. Ground no.6 relates to disallowance of foreign exchange fluctuation loss as expenditure. . This issue is stated to be covered by the aforementioned order of the Tribunal dated 16.05.2014 in the assessee's own case for A.Y. 1987-88 in ITA No.4565/Mum/2003. We find that that the Tribunal in the said order vide para nos. 9 & 10 has held as under:

"9. Ground No.3 as reproduced above is relating to the disallowance of foreign exchange fluctuation loss as revenue expenditure and further disallowance of investment allowance on increase in liability on account of foreign exchange fluctuation loss. The ld. A.R. of the assessee has submitted that the issue taken vide ground No.3 is covered in favour of the assessee by the decision of the Tribunal in the own case of the assessee for assessment year 1986-87 vide ITA No.4564/M/2003. The Tribunal, while dealing with the issue in question in para 17 of the said decision, has observed as under:

"17. The Ld. Senior Counsel pointed out that this issue has been decided in favour of the assessee in assessee's own case in ITA No. 4194 & 4137/M/01 for A.Y. 1984-85. We find that the assessee has been allowed depreciation on foreign exchange fluctuation loss by the Tribunal in ITA No. 4137/M/01 at para-15 page 12 of its orders. Facts and issues being identical, we accordingly direct the AO to allow depreciation as per law. As regards the second limb of ground No. 5 i.e. disallowance of investment allowance, we find that similar issue came up for hearing before the Tribunal in assessee's own case in A.Y. 85-86 in ITA No. 8 ITA No 4465 & 4566/M/2003 AY:1988-89

5181/M/02. This issue finds place in the order of the Tribunal (supra) at para 116, page-46 of its order. The Tribunal has given its finding at para- 119 and has followed the decision of the Tribunal in assessee's own case for A.Y. 1984-85 in ITA No. 4194/M/01 and directed the AO to allow the investment allowance on exchange loss treated as capital expenditure. Facts being identical, respectfully following the decision of the Tribunal (supra), we accordingly direct the AO to allow the investment exchange loss treated as capital expenditure."

10. So respectfully following the above decision of the Tribunal for the earlier assessment year, the facts being identical for this year also, this issue is restored to the AO to decide the same in view of the above observations of the Tribunal for this year also.

In this view of the situation after hearing both the parties, we restore this issue to the file of the AO with same directions as have been given above. This ground is considered to be allowed for statistical purposes in the manner aforesaid.

17. Ground no.7 relates to disallowance of provision for interest on electricity duty amounting to Rs.11,55,549. This issue was stated to be covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein vide order dated 16.05.2014 in para 18, it has been held as under:

"18. Ground No.8 as reproduced above relates to provision for interest on electricity duty. The ld. A.R. has submitted that the identical issue, for earlier assessment years i.e. assessment year 1984-85, 1985-86 and 1986-87 has been referred back to the AO. Facts for this year being identical this issue is accordingly referred back to the AO to decide in accordance with the directions of the Tribunal given for earlier assessment years."

Accordingly, we restore this issue to the file of the AO to decide the same in accordance with the directions given by the Tribunal in above decision. This ground is considered to be allowed for statistical purposes in the manner aforesaid.

18. Ground no.8 relates to disallowance u/s. 40A(5) amounting to Rs.10,14,915. This ground was not pressed hence dismissed as not pressed.

19. Ground no.9 relates to disallowance of sum of Rs.97,76,096 being addition of interest on account of interest free advances to Senegal Investment & Trading Co. Ltd.

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This issue was stated to be covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein vide order dated 16.05.2014 it was held as under:

"23. The ground No.13 as reproduced above relates to addition of interest on account of advance to subsidiary company. The ld. A.R. has submitted that the issue is squarely covered in favour of the assessee for earlier assessment years. For reference he has relied upon the decision of the Tribunal for assessment year 1986-87 passed in ITA No.4564/M/2003. The Tribunal, while dealing with the issue, has allowed this ground following the decision of the Jurisdictional High Court in the case of 'Reliance Utilities' 313 ITR 340. The facts for this year being identical in nature, the AO is directed to decide this issue in the light of the earlier year's decisions in the own case of the assessee."

Accordingly, after hearing both the parties, we direct the AO to decide the issue in light of the above decision in the assessee's own case. This ground is considered as allowed for statistical purposes in the manner aforesaid.

20. Ground no.10 relates to disallowance of foreign travel expenses amounting to 6,32,809. The break-up of the same is given in Annexure 1 of the chart filed before us. Out of this a sum of Rs.3,16,976 relates to oil refinery, which was not pressed by the learned AR for the reason that these expenses were incurred for a new business. Balance amount of Rs.3,15,873 relates to existing business. It is the contention of the AR that out of the total disallowance of Rs.6,32,809 the sum of Rs.3,15,873 should be allowed as it was incurred on the existing business.

21. After hearing both the parties, we restore this issue to the file of the AO with a direction to verify the contentions of the assessee. If the foreign travel expenses are incurred in respect of already existing business, the same should be allowed. For the rest of the disallowance amounting to Rs.3,16,976 the order of the CIT(A) is upheld as the same is not being pressed. This ground is partly allowed.

22. Ground no.11 relates to family planning expenses amounting to Rs.79,680/-. It was submitted the disallowance of similar expense in the assessee's own case for A Y 1987-88 was restricted to 50%. In the said order the Tribunal vide para 21 has observed as under:

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"21. Ground No.11 as reproduced above relates to family planning expenses.

The ld. A.R. has stated that the family planning expenses were incurred by the assessee on the workers who, though, were not regular employees of the assessee, but in fact their earnings depend upon the business of the assessee. He has relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of 'Atlas Cycle Industries Ltd.' 128 ITR 60 wherein the Hon'ble High Court has upheld the disallowance of 50% made by the Income Tax Authorities for such type of expenditures incurred on an Eye Camp for the workers of the assessee company. The 50% of the said expenditure was disallowed in the said case on the ground that the benefit was also derived by the outsiders. The ld. A.R. has further submitted that the said expenditure was not only incurred for the welfare of the workers but also for a social cause. So considering the overall facts and circumstances of the case, the disallowance on this issue is restricted to 50% of the expenditure incurred. This ground is accordingly partly allowed in favour of the assessee."

Accordingly, after hearing both the parties, we direct the AO to restrict the disallowance to 50% of the expenditure incurred. This ground is considered to be partly allowed.

23. Ground no.12 relates to disallowance of Rs.2,29,750 being expenses on fist and prawn culture. As per chart this issue has been dealt by the Tribunal in the assessee's own case for A.Y. 1986-87 in ITA No. 4564/Mum.2003. The Tribunal vide its order dated 26.04.2013 has observed as under:

"22. Ground no.7 relates to the disallowance of expense of Rs.2,22,508/- incurred on fist and prawn culture.

23. The AO has discussed this issue at page -6 para 15 of his order and the Ld. CIT(A) has decided the grievance at para - 12 page 44 of his order. We find that the similar issue has come up before the Tribunal in assessee;s own case for A.Y. 1985-86 in ITA No. 5181/M/02. We find that the Tribunal has discussed this issue at para - 66 and the findngs of the Tribunal is given at para - 70 of its order. We find that the Tribunal has followed the decision of the Tribunal in assesee's own cae for A.Yrs. 1981-82 & 1982-83 in ITA No. 1579/M/98 and allowed the deduction. Facts being identical, respectfully following the decision of the Tribunal (supra) in assessee's own case, we direct the AO to allow the expenses of Rs.2,22,508/- This ground of the assessee is accordingly allowed."

Respectfully following the aforementioned decision, we allow this ground.

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24. Ground no.13 relates to disallowance of Rs. 10,630 being expenditure incurred at the time of AGM. This issue was stated to be covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein at para 14 in its order dated 16.05.2014 it has been observed as under:

"14. Ground No.6 as reproduced above is relating to the expenses incurred on annual general meeting of shareholders. The ld. A.R. of the assessee has submitted that the issue taken vide ground No.6 is covered in favour of the assessee by the decision of the Tribunal in the own case of the assessee for assessment years 1995-96 and 1996-97 vide ITA No.2658/M/2002 and 5728/M/06 respectively. The Tribunal while dealing with the identical issue for assessment year 1995-96 has directed the AO to decide the same in I.T.A. No .44 64/ Mum/20 03 I.T.A. No .45 65/ Mum/20 03 9 accordance with the decision of the Tribunal in the case of TELCO decided in ITA No.5449/M/1998. Since for the earlier assessment years, the issue has been remanded back to the AO for deciding the same as observed above, the facts being identical for this year also, this issue is remanded back to the AO to decide the same as per the directions of the Tribunal given for assessment year 1995-96 and 1996-97 in the own case of the assessee"

Accordingly, after hearing both the parties, we restore this issue to the file of the AO to decide the same in the light of the earlier year's decision in the assessee's own case. This ground is considered to be allowed for statistical purpose in the manner stated above.

25. Ground no.14 relates to following disallowance u/s. 40A(9)

Tata Sports Club Rs.2,35,600 Payment to schools (staff Welfare Expenses) Nutan Balsikshan Sangh Rs.3,50,000 Kindergarten Primary School Rs.2,46,000 Mithapur Kamdar Club Rs. 6,000 Sundry Contribution Rs. 4,064

Before us it was stated that this issue is also covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein vide order dated 16.05.2014 it has observed as under:

"15. The ground No.7 relates to disallowance of sundry contributions under section 40A(9) and payments to schools (staff welfare expenses). So far the 12 ITA No 4465 & 4566/M/2003 AY:1988-89

issue relates to disallowance of sundry contributions is concerned, the ld. A.R. has submitted that the issue raised vide ground No.7 is squarely covered in favour of the assessee for earlier assessment years i.e. assessment year 1985- 86, 1986-87, 1995-96 and 1996-97. For reference we take up the decision of the Tribunal for assessment year 1986-87. The Tribunal vide para 51 of the order has observed as under: "51. This issue find place at page-12 para 26 of the assessment order and at page-28 para-10 of the appellate order. Identical issue came up for hearing in the case of the assessee in A.Y. 1983-84 in ITA No. 4058/M/99, ITA No. 2706/M/2000 for A.Y. 1993-94, ITA No. 454/M/02 for A.Y. 1994-95, ITA No. 3082/M/02 for A.Y. 1995-96 and ITA No. 5181/M/02 for A.Y. 1985-86. We find that the Tribunal in ITA No. 5181/M/02 in assessee's own case has decided a similar issue at para- 140 of its order wherein the Tribunal has followed the earlier decision of the Tribunal in assessee's own case for A.Yrs 1993-94 to 1995-96. Respectfully following the decision of the Tribunal in assessee's own case, we direct the AO to allow the expenses as claimed by the assessee. Ground No. 14 is accordingly allowed."

16. Since the facts for this year are also identical, hence the AO is directed to allow the expenses following the decision of the Tribunal in the earlier assessment year as reproduced above.

17. So far the payments to schools (staff welfare expenses) is concerned, the ld. A.R. has again submitted that the issue raised vide ground No.7 is squarely covered in favour of the assessee for earlier assessment years i.e. assessment year 1983-84, 1984-85, 1992-93 and 1996-97. The facts for this year, being identical in nature, the AO is directed to decide the said issue in accordance with the decisions of the Tribunal on this issue in the earlier assessment years." Respectfully following the aforesaid decision, we direct the AO to decide the issue in accordance with the aforementioned decision of the Tribunal on this issue in earlier assessment years. It may be mentioned here that so far as it relates to sundry contribution of Rs.4,064 the same was not pressed due to smallness of amount. Therefore to this extent the disallowance is upheld. This ground is considered to be partly allowed for statistical purpose.

26. Ground no.15 relates to disallowance of Delhi Office expenses amounting to Rs.1,25,000. As per chart this issue is also covered by the decision of the Tribunal in the assessee's case for A.Y. 1987-88, wherein as per para 20 of order dated 16.05.2014 it has been observed as under:

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"20. Ground No.10 as reproduced above relates to Delhi office expenses. The ld. A.R. has stated from the chart that the issue is squarely covered in favour of the assessee for earlier assessment years i.e. assessment year 1983- 84 to 1986-87. The AO is accordingly directed to decide the said issue in the light of the decisions given for earlier years in the own case of the assessee."

Accordingly, after hearing both the parties we direct the AO to decide the issue in the light of the earlier year's decision in the assessee's own case. This ground is allowed.

27. Ground no.16 relates to the following disallowance made u/s. 43B

Royalty to Limestone Rs. 3,59,426 Mineral Rights Tax Rs.55,04,020

So far as the expenditure incurred as royalty to Limestone is concerned, this was stated to be covered by the order of the Tribunal dated 16.05.2014 in the assessee's own case for A.Y. 1987-88. In the said order vide para 31, it has been held as under:

"31. The ground No.18 as reproduced above relates to disallowance under section 43B. The assessee has agitated the disallowance on royalty on limestone of Rs.1,75,384/- and mineral rights tax of Rs.97,18,528/-. So far the royalty on limestone is concerned, the ld. A.R. has submitted that the issue has been allowed in the earlier assessment years including assessment I.T.A. No .44 64/ Mum/20 03 I.T.A. No .45 65/ Mum/20 03 15 year 1986-87 in ITA No.4564/M/03 in the own case of the assessee. The Tribunal, while dealing with the issue in para 36 of the said decision, has restored the issue back to the file of the AO to verify the payments, observing as under:

"36. These items of disallowances are discussed by the AO at page-10 para-23 of his order. The AO has disallowed Royalty of Limestone at Rs. 1,71,003/- following the assessment order of his predecessor for A.Y. 1984-85. The Ld. CIT(A) considered this issue at page-62, para-18 of his order for A.Y. 1984-85. We find that the matter travelled upto Tribunal and the Tribunal has restored back the issue to the file of the AO to verify the payment and allow deduction as per law if the payments have already been made. Facts and issues are identical as far as royalty of limestone at Rs. 1,71,003 is concerned, we restore this issue back to the files of the AO to verify the payments as per the provisions of Sec. 43B and if found correct, may allow the deduction. This grievance of the assessee is allowed for statistical purposes."

So far as the expenditure relating to Mineral Rights Tax is concerned, reference was made to para 32 and 33 of the order, which is reproduced below:

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"32. We accordingly direct the AO to decide this issue accordingly as per the above decision. So far the disallowance relating to mineral rights tax is concerned, the ld. A.R. has fairly stated that the issue has already been decided by the Tribunal in the earlier assessment year i.e. assessment year 1986-87 against the assessee. The Tribunal, while deciding the said issue for assessment year 1986-87, has observed as under:

"42. We have considered the rival submissions and perused the orders of the lower authorities. It is not in dispute that the company purchased limestone on which MRT was payable to the suppliers. It is also not in dispute that the assessee has discounted MRT in its purchase consideration payable to the suppliers of the lime stone which means that to the extent of MRT, the assessee has retained the money from the suppliers on the pretext that it will make the payment to the Government. Therefore, by not paying the said amount to the Government, the assessee has retained public fund with itself. As the assessee itself has agreed to pay the MRT on the limestone purchased by it and as it has not discharged the liability till the end of the accounting year, we do not find any reason to tamper with the findings of the Ld. CIT(A). The disallowance in respect of Mineral Right tax to the tune of Rs. 55,55,738/- is accordingly confirmed. Ground No. 11 is dismissed."

33. The facts for this year being identical in nature, the issue is accordingly decided against the assessee."

28. After hearing both the parties and in the light of the order of the Tribunal for A.Y. 1987-88, the issue relating to royalty on limestone is restored to the file of the AO for verification of the payments as per the provisions of Sec. 43B and if it is found correct, then AO is directed to allow the deduction. This grievance of the assessee is allowed for statistical purposes.

29. So far as the issue relating to Mineral Rights Tax is concerned, respectfully following the decision of the Tribunal in the assessee's own case (supra), we decide the issue against the assessee.

30. Accordingly ground no.16 is partly allowed in the manner aforesaid.

31. Ground no.17 relates to disallowance of 20,00,000 out of provision for doubtful debts. According to the submissions made by the learned AR, since the amount was 15 ITA No 4465 & 4566/M/2003 AY:1988-89

written back in financial year ending 31.03.1990 and was not taxed, this ground is not pressed. Accordingly, this ground is dismissed as not pressed.

32. Ground no.18 relates to disallowance of Rs.1,39,420 on account of expense incurred on new projects. This is for survey and market study of LAB a chemical agent used to be mixed with soda ash for making detergent powder/washing powder. It is the contention of the learned AR that out of the said amount the assessee does not press for disallowance of Rs.1,15,420 incurred on Kamal Oil Refinery, which is a new business. The only case of the assessee is for balance amount of Rs.24,000 which is incurred in respect of existing business. After hearing both the parties, we uphold the decision of CIT(A) in respect of Rs.1,15,240 and for the balance disallowance of Rs.24,000, we restore the issue to the file of the AO with a direction to verify the contention of the assessee that it was incurred for the existing business. On verification, if it is found that these expenses are incurred for existing business then the same should be allowed. This ground is partly allowed for statistical purposes.

33. Ground no.19 relates to disallowance of expenses incurred on guest house totaling to Rs.20,10,227 details of which is as under:

Salaries, wages to staff Rs.7,65,431 Repairs & renovation expenses Rs.1,85,623 Food exp. (net of recoveries) Rs.4,79,458 Depreciation Rs.1,44,721 Maintenance expenses Rs.4,34,994 Rs.20,10,227

This ground was pressed only to the extent of food expenses amounting to Rs.4,79,458. It was contended that to this extent the issue is decided in favour of the assessee by the latest decision of the Tribunal rendered in respect of A. Y. 1996-97, which is filed at Sr. no.12 of the paper-book. In this order dated 17.08.2007 (ITA No. 5728/Mum/2004) the issue has been discussed at para 4.2 and 4.3, which read as under:

"4.2 The next ground is against the disallowance of expenses on maintenance of guest house. The food expense of Rs.42,29,391 has been 16 ITA No 4465 & 4566/M/2003 AY:1988-89

claimed by the assessee as allowable. In the assessee's own case for assessment year 1995-96 in ITA No. 2658/Mum/02 dated 26-07-2006 this issue has been considered and held in favour of the assessee. Respectfully following the same we direct the assessing officer to allow the expenditure incurred by the assessee for food served at the guest house. Coming to the other expenses incurred on the guest house, i.e. salaries Rs.29,41,078; repairs Rs.5,91,940; and society charges and taxes Rs.2,84,949 we hold that the issue is covered against the assessee and in favour of the Revenue by the decision of the Hon'ble Supreme Court in the case of Britannia Industries Ltd. Vs. CIT 278 ITR 546 (SC). Respectfully following the same we uphold these disallowances made by the Revenue authorities.

4.3 In the result, this ground is partly allowed."

Respectfully, following the aforementioned decision we allow this ground only to the extent of food expenses amounting to Rs.4,79,458 and rest of the disallowance is upheld as not pressed. This ground is partly allowed.

34. Ground no.20 relates to disallowance of sponsorship expenses amounting to Rs.17,448/-. This ground was not pressed due to smallness of amount, the same is dismissed as not pressed.

35. Ground no.21 relates to calculation of interest u/s. 214 amounting to Rs.8,097. Due to smallness of amount, this ground was also not pressed. Accordingly, this ground is dismissed as not pressed.

4465/Mum/2003 AY :1988-89(Revenue's appeal)

36. Ground no.1 relates to disallowance of Rs.4,17,990 being entertainment expenses on subsidized food coupons delivered to staff. In this respect it was submitted that this issue is covered in favour of the assessee by the order of the Tribunal dated 16.05.2014 in ITA No. 4464/Mum/2003 for A.Y. 1987-88 , at para 36 which reads as under:

"36. Ground No.1 relates to the subsidized lunch coupons issued to the employees' entertainment expenditure u/s 37(2) read with explanation (iii). The identical issue has already been decided by the Tribunal in favour of the assessee in the earlier assessment years i.e. assessment year 1995-96 in ITA No.3082/M/2002 in the own case of the assessee. The facts and the issues involved for this year also 17 ITA No 4465 & 4566/M/2003 AY:1988-89

being identical in nature, this ground is decided in favour of the assessee accordingly, in terms of the directions given by the Tribunal for assessment year 1995-96 in the own case of the assessee."

Accordingly, after hearing both the parties, we decide this issue in favour of the assessee and the ground raised by the assessee is dismissed.

37. Ground no.2 of the revenue's appeal relates to disallowance of Rs.75,000 being payments made to Tata Services Ltd. This issue was also stated to be covered by the order of the Tribunal for A.Y. 1987-88 (supra) in favour of the assessee. The Tribunal vide para 37 of its order has observed as under:

"Ground No.2 relates to the payments made to Tata Services Ltd. The similar issue on identical facts has already been decided by the Tribunal in favour of the assessee in the earlier assessment years i.e. assessment years 1983-84, 1984-85 and 1986-87 in ITA Nos.4242/M/1999, 4194/M/2001 and 4564/M/2003 respectively in the own cases of the assessee. Since the facts for this year also being identical in nature, this ground is also accordingly decided in favour of the assessee as per the directions given by the Tribunal for assessment years i.e. assessment years 1983-84, 1984-85 and 1986-87 in ITA Nos.4242/M/1999, 4194/M/2001 and 4564/M/2003 respectively in the own cases of the assessee."

Accordingly, this ground being also covered in favour of the assessee the same is dismissed.

38. Ground no.3 relates to disallowance of Rs.1,98,012 being incentive bonus given to workers. This issue is stated to be covered by the order of the Tribunal for A.Y. 1987-88 (supra) in favour of the assessee. The Tribunal vide para 38 & 39 of its order has observed as under:

"38. Ground No.3 relates to incentive bonus to workers. The similar issue on the identical facts has already been decided by the Tribunal in favour of the assessee in the earlier assessment years i.e. assessment years 1984-85 and 1986-87 in ITA Nos.4194/M/2001 and 4564/M/2003 respectively in the own cases of the assessee. Since the facts for this year also being identical in nature, this ground is also accordingly decided in favour of the assessee as per the directions given by the Tribunal for assessment years i.e. assessment years 1984-85 and 1986-87 in ITA Nos.4194/M/2001 and 4564/M/2003 respectively in the own cases of the assessee.

18 ITA No 4465 & 4566/M/2003 AY:1988-89

39. The ld. D.R. has also fairly admitted that the issues taken by the assessee vide its grounds of appeal as well as the issues taken by the Revenue in its grounds of appeal are squarely covered with the decisions of the Tribunal given in earlier assessment years in the own case of the assessee. He has not brought any distinguishing facts or case laws justifying departure from the findings of the Tribunal given in earlier years on the related issues"

Accordingly, respectfully following the aforementioned decision, we decline to interfere with the relief given by the CIT(A). This ground of the revenue is dismissed.

39. It may be mentioned ground nos. 4 & 5 of revenue's appeal are already adjudicated as per para no.11 of this order.

40. In the result, both the appeals are partly allowed in the manner aforesaid.

Order pronounced in the open court on this 20th day of April 2015.

Sd/- Sd/- (N K Billaiya) (I P Bansal) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, Dt : 20th April, 2015 SA

Copy forwarded to : 1. The Appellant 2. The Respondent 3. The C.I.T, concerned 4. The CIT (A)-concerned 5. The DR, "F" Bench, Mumbai BY ORDER

//True Copy// ASSISTANT REGISTRAR ITAT, Mumbai Benches, Mumbai