Sicom Ltd., vs Department Of Income Tax

[Cites 23, Cited by 0]

Income Tax Appellate Tribunal - Mumbai

Sicom Ltd., vs Department Of Income Tax

आयकर अपील य अ धकरण,
धकरण, मंुबई यायपीठ 'जी
जी'
जी मंुबई

IN THE INCOME TAX APPELLATE TRIBUNAL
"G" BENCH, MUMBAI

ी राजे संह, लेखा सद य,
य एवं ी अ मत शु ला, या यक सद य के सम

BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER

आयकर अपील सं. / ITA no. 7901/Mum./2003
( नधारण वष / Assessment Year : 1997-98)

SICOM Limited ....................... अपीलाथ /
Solitaire Corporate Park Appellant
Building no.4
Guru Hargovindji Road
Andheri Ghatkopar Link Road
Chakala, Andheri (E), Mumbai 400 093
थायी लेखा सं./ Permanent Account Number - AAACS5524J

बनाम v/s

Jt. Commissioner of Income Tax ................... यथ /
Special Range-4, Aayakar Bhavan Respondent
101, M.K. Road, Mumbai 400 020

आयकर अपील सं. / ITA no. 7955/Mum./2003
( नधारण वष / Assessment Year : 1997-98)

Dy. Commissioner of Income Tax ....................... अपीलाथ /
Range-3(3), Aayakar Bhavan Appellant
101, M.K. Road, Mumbai 400 020

बनाम v/s

SICOM Limited ................... यथ /
Nirmal, 1s Floor Respondent
Nariman Point
Mumbai 400 021
थायी लेखा सं./ Permanent Account Number - AAACS5524J
SICOM Limited

आयकर अपील सं. / ITA no. 2337/Mum./2004
( नधारण वष / Assessment Year : 1998-99)

....................... अपीलाथ /
SICOM Limited Appellant
Solitaire Corporate Park
Building no.4
Guru Hargovindji Road
Andheri Ghatkopar Link Road
Chakala, Andheri (E), Mumbai 400 093
थायी लेखा सं./ Permanent Account Number - AAACS5524J

बनाम v/s

Jt. Commissioner of Income Tax ................... यथ /
Special Range-4, Aayakar Bhavan Respondent
101, M.K. Road, Mumbai 400 020

आयकर अपील सं. / ITA no. 3194/Mum./2004
( नधारण वष / Assessment Year : 1998-99)

Dy. Commissioner of Income Tax ....................... अपीलाथ /
Range-3(3), Aayakar Bhavan Appellant
101, M.K. Road, Mumbai 400 020

बनाम v/s

................... यथ /
SICOM Limited Respondent
Solitaire Corporate Park
Building no.4
Guru Hargovindji Road
Andheri Ghatkopar Link Road
Chakala, Andheri (E), Mumbai 400 093
थायी लेखा सं./ Permanent Account Number - AAACS5524J
SICOM Limited

आयकर अपील सं. / ITA no. 4719/Mum./2004
( नधारण वष / Assessment Year : 1999-00)

Dy. Commissioner of Income Tax ....................... अपीलाथ /
Range-3(3), Aayakar Bhavan Appellant
101, M.K. Road, Mumbai 400 020

बनाम v/s

आयकर अपील सं. / ITA no. 5094/Mum./2004
( नधारण वष / Assessment Year : 1999-00)

................... यथ /
Asstt. Commissioner of Income Tax (OSD) Respondent
Range-3(3), Aayakar Bhavan
101, M.K. Road, Mumbai 400 020
SICOM Limited

आयकर अपील सं. / ITA no. 5152/Mum./2005
( नधारण वष / Assessment Year : 2000-01)

Dy. Commissioner of Income Tax ....................... अपीलाथ /
Range-3(3), Aayakar Bhavan Appellant
101, M.K. Road, Mumbai 400 020

बनाम v/s

आयकर अपील सं. / ITA no. 6586/Mum./2005
( नधारण वष / Assessment Year : 2000-01)

बनाम v/s

................... यथ /
Addl. Commissioner of Income Tax (OSD) Respondent
Range-3(3), Aayakar Bhavan
101, M.K. Road, Mumbai 400 020
SICOM Limited

आयकर अपील सं. / ITA no. 5153/Mum./2005
( नधारण वष / Assessment Year : 2001-02)

Dy. Commissioner of Income Tax ....................... अपीलाथ /
Range-3(3), Aayakar Bhavan Appellant
101, M.K. Road, Mumbai 400 020

बनाम v/s

आयकर अपील सं. / ITA no. 6587/Mum./2005
( नधारण वष / Assessment Year : 2001-02)

SICOM Limited ....................... अपीलाथ /
Solitaire Corporate Park Appellant
Building no.4
Guru Hargovindji Road
Andheri Ghatkopar Link Road
Chakala, Andheri (E), Mumbai 400 093

बनाम v/s

................... यथ /
Addl. Commissioner of Income Tax (OSD) Respondent
Range-3(3), Aayakar Bhavan
101, M.K. Road, Mumbai 400 020
थायी लेखा सं./ Permanent Account Number - AAACS5524J
SICOM Limited

आयकर अपील सं. / ITA no. 5154/Mum./2005
( नधारण वष / Assessment Year : 2002-03)

Dy. Commissioner of Income Tax ....................... अपीलाथ /
Range-3(3), Aayakar Bhavan Appellant
101, M.K. Road, Mumbai 400 020

बनाम v/s

SICOM Limited ................... यथ /
Solitaire Corporate Park Respondent
Building no.4
Guru Hargovindji Road
Andheri Ghatkopar Link Road
Chakala, Andheri (E), Mumbai 400 093
थायी लेखा सं./ Permanent Account Number - AAACS5524J

आयकर अपील सं. / ITA no. 6588/Mum./2005
( नधारण वष / Assessment Year : 2002-03)

Addl. Commissioner of Income Tax ................... यथ /
Range-3(3), Aayakar Bhavan Respondent
101, M.K. Road, Mumbai 400 020

राज व क ओर से / Revenue by : Mr. Pavan Ved
नधा रती क ओर से / Assessee by : Mr. Rajan R. Vora a/w
Mr. Nikhil Tiwari

सनवाई
ु क तार ख / आदे श घोषणा क तार ख /
Date of Hearing - 13.05.2013 Date of Order - 22.05.2013
SICOM Limited

आदे श / ORDER

येक पीठ / PER BENCH.

These cross appeals are directed against the impugned separate orders 10th Oct. 2003, 9th Feb. 2004, 9th March 2004 and 31st March 2005, passed by the learned Commissioner (Appeals)-XXXVIII, Mumbai, for assessment years 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02 and 2002-03, respectively for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act").

2. Since all these appeals pertain to the same assessee involving mostly common issues arising out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. However, in order to understand the implication, it would be necessary to take note of the facts of one appeal. We are, accordingly, narrating the facts, as they appear in the assessee's appeal in ITA no. 7901/Mum./2013, for assessment year 1997-98 and proceed to dispose off the appeals one by one for each assessment year.

3. The assessee, in the present case, is an undertaking set-up by the Government of Maharashtra for providing finance for industrial development. It is mainly engaged in the business of leasing along with the other financing activities for the industrial development. The business of leasing is being carried out from the last several years on which it was assessed to tax.

Assessee's appeal in ITA no.7901/Mum./2013, for assessment year 1997-98.

SICOM Limited 8

4. In ground no.1, the assessee has challenged the disallowance of survey charges of Rs. 19,75,520.

5. The assessee, for the implementation of port development programme of Government of Maharashtra, was required to spend survey charges which included preparing of offer documents, evaluation of bids for the development of minor ports, etc. These expenditures were to be recovered from the successful bidders later on when the contract has been awarded for the port development. These expenses were shown as "Receivables" and accounted under the head "Account Receivables" in the assessment years 1997-98. However, during the relevant year, the bidders could not be found for the projects. The assessee debited these expenditures in the Profit & Loss Account in the assessment year 1998-99 and the same was treated as prior period in the audited account of assessment year 1998-99. The assessee then filed the revised return of income and claimed such expenses in assessment year 1997-98 on the ground that it pertained to this year only. The Assessing Officer disallowed the claim on the ground that the assessee is following mercantile system of accounting and the income / expenses pertaining to the period prior to the previous year, relevant for the assessment year 1997-98 cannot be allowed. Further, these expenses have not been crystalised in assessment year 1997-98. Before the learned Commissioner (Appeals), it was pointed out that these amounts have been recovered in the assessment year 1999-2000 and have been offered to tax and in support of this, various evidences by way of various documents were filed before the learned Commissioner (Appeals).

6. The learned Commissioner (Appeals) upheld the disallowance mainly on the ground that the assessee was not entitled to claim deduction of such expenses as it was not the expenses of assessee's own business but was to be incurred on behalf of other persons from whom the assessee was required to recover these expenses.

SICOM Limited 9

7. Before us, the learned Counsel, appearing on behalf of the assessee, submitted that these expenses were incurred in the assessment year 1997-98 only and has to be allowed as deduction during these years since the assessee, as per the direction of the Maharashtra Government, was required to incur these expenses. Moreover, without going into this controversy, this amount has already been offered for tax in the assessment year 1999-2000, and same has been accepted by the department, therefore, the same cannot be taxed twice in this year also. Alternatively, he pleaded that if the said amount is being confirmed in the present case, then the directions should be given for allowing the same in the assessment year 1999-2000. He also submitted a petition for admission of additional ground relevant for the appeal for the assessment year 1999-2000 which is also the subject matter of hearing before us, that the amount taxed in A.Y. 1999-2000 should be directed to be deleted.

8. On the other hand, the learned Departmental Representative relying upon the findings of the learned Commissioner (Appeals), submitted that when the expenditure has been incurred on behalf of other persons and the same was to be recovered by the assessee, then there was no need for claiming it as an expenditure. However, he has not disputed the fact that this amount has already been offered for tax in the assessment year 1999-2000.

9. We have given our anxious consideration to the rival contentions and perused the relevant material on record. The assessee was acting as an advisor to the Government of Maharashtra and was required to implement port development programme in Maharashtra. For this purpose, it has to incur various expenses which was recoverable from the successful bidders. As apparent from the records, these expenses have been incurred in the assessment year 1997-98. The only reason given by the learned Commissioner (Appeals) is that, since these expenses were incurred on SICOM Limited 10 behalf of others which was recoverable, the assessee should not have debited to the Profit & Loss Account. Such a view cannot be affirmed because the assessee could have either shown this amount in the Balance Sheet as expenses recoverable or could have debited these expenses in the Profit & Loss Account and claimed it as expenses and as and when these expenses are recovered, the same could have been offered for tax. The assessee has followed the second step, which in our opinion cannot be held to be incorrect. From the details of the break-up of the expenses, it is seen that most of these expenses relate to professional and technical fees for geotechnical investigations and various other expenses for advertisement, etc. It is not in dispute that these expenses have been incurred by the assessee in pursuance of the activities assigned to it. Now that these expenses have been offered for tax in the assessment year 1999-2000, when the same has been recovered from the concerned persons then there is no occasion to disallow the same in this year. Thus, under these circumstances, once the amount has already been offered for tax, we do not find any reason to confirm this disallowance in this year. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and allow the ground raised by the assessee. Ground no.1, is thus treated as allowed.

10. In ground no.2, the assessee has challenged the disallowance of deprecation on assets acquired under sale and leaseback transactions with Maharashtra Esters & Keytones Pvt. Ltd. and Konkan Railway Corp. Ltd.

11. As stated in the forgoing paragraph, the assessee is engaged in the business of financing industrial units and it not only provides loans to industrial units but also gives assets on lease for the purpose of financing and industrial development. During the relevant year, the assessee has claimed total depreciation of Rs. 22,76,84,377, in respect of the leased assets under section 32(1) that the WDV of these leased assets as on 1st April 1996 was shown at Rs. 53,23,49,851 and the additions during the SICOM Limited 11 year were shown at Rs. 23,36,53,852. The Assessing Officer, after analyzing the various lease agreement, came to the conclusion that these are nothing but financial lease and are in the nature of financial transactions only, therefore, depreciation cannot be allowed in such transactions. He has given a very detail analysis of terms and conditions of the lease agreement and has also referred to various case laws to come to the conclusion that these are nothing but loan transactions and are not proper lease transactions as they were entered to gain the benefit of depreciation and reduce the legitimate tax liability, firstly, the assets were not owned by the assessee but were held by the assessee only for the purpose of securities and secondly, it was purely for financing various industries. His detail findings have been given from Pages-8 to 26 of the assessment order.

12. The learned Commissioner (Appeals), looking to the various nature of lease agreements, held that there were mainly two categories of lease transactions one was in the nature of sale and leaseback transactions and other finance lease i.e., normal lease transactions. The break-up of these categories have been given by him as under:-

                        Category of Lease              Depreciation

            Sale and Lease Back Transactions          Rs. 5,46,58,200
            Other Finance Leases                     Rs. 17,30,26,176
            Total                                    Rs. 22,76,84,377

13. Insofar as the normal lease transactions are concerned, the learned Commissioner (Appeals) held that nature of transactions are directly covered by the ratio of Jurisdictional High Court in the case of Prakash Industries Ltd. and Anr. v/s Development Credit Bank Ltd., Appeal no.12 of 1999. After analyzing the facts of the assessee's case and the ratio laid down by the Bombay High Court, he held that the assessee was entitled for claiming the depreciation for the one main reason that the assessee SICOM Limited 12 was the owner of the asset given on lease by it and even after the expiry of lease period, the equipment or assets were to be returned back to the lessor. Thus, he directed to allow the depreciation on normal lease transactions for sums aggregating to Rs. 17,30,26,176. His detail reasoning for coming to this conclusion has been given in Pages-8 to 10 of the appellate order. As regards the sales and leaseback transactions, he observed that the same has been made in respect of the following four transactions.

                               Lessee                 Depreciation

           Maharashtra Esters & Ketones Pvt. Ltd.      Rs. 9,74,670

           Fujitsu ICIM Ltd.                         Rs. 86,96,030

           Datar Switchgear Ltd.                    Rs. 1,99,87,500

           Konkan Railway Corp. Ltd.                Rs. 2,50,00,000

           Total:-                                  Rs. 5,46,58,200

14. Insofar as the transactions relating to Fujitsu ICIM Ltd. and Datar Switch Gear Ltd., he held that the depreciation is allowable for the reason that the assessee has bought products manufactured by them and lease them back and no depreciation has been claimed in respect of such assets by them. Even the sale of such products was on normal selling price. However, with regard to the depreciation claimed on the lease transactions with Maharashtra Esters & Keytones Pvt. Ltd. and Konkan Railway Corp. Ltd., he held that there was no physical delivery of the assets which was brought from them and again leased back to them. These assets were integral part of the plant and machinery of the lessee and the lessee could not have intended to sell such items as its plant could not have functioned without such items. Thus, he held that sale by these parties to the assessee was not a genuine one and consequently, the leaseback was also not genuine and the transaction as a whole was merely the financing SICOM Limited 13 arrangement. Accordingly, he confirmed the disallowance of depreciation on these two transactions.

15. The learned Counsel, Mr. Rajan R. Vora, appearing on behalf of the assessee, first of all, raised a preliminary submission that out of the total disallowance of depreciation of Rs. 22,78,84,378, the depreciation aggregating to Rs. 15,58,39,334, pertains to the assets which were leased out in the earlier years and on some assets opening WDV was shown in the block of assets as on 1st April 1996. The depreciation of these WDV assets now cannot be disallowed in this year. His other main contention was that in the subsequent years also the Department has allowed the depreciation on similar assets which were on similar nature of transactions, thus, the disallowance of depreciation for in between period cannot be upheld. He gave the details of WDV of lease assets and the depreciation claimed on these assets under normal lease as well as sale and leaseback transactions. In case of depreciation on normal lease, he submitted that depreciation on opening WDV comes to Rs. 14,71,07,522, which is the subject matter of the Departmental appeal and the depreciation on opening WDV in relation to sale and leaseback transaction is Rs. 87,31,812. On this preliminary ground, he submitted that at least depreciation on the opening WDV should be deleted. In support of his contention that depreciation cannot disallowed in subsequent year once the asset had entered into block of assets in the previous year and depreciation has been allowed, he relied upon the decision of the Tribunal, Mumbai Bench, in case of Boskalis Dredging India Pvt. Ltd., ITA no.6251/Mum./ 2010, G.R. Shipping Ltd. Income Tax Appeal no.958 of 2009, and host of other decisions which have been placed in the paper book from Pages-706 to 740.

16. On merits, he submitted that in normal lease transactions, the assessee has purchased assets from the third party manufactured and has leased to the lessee wherein the assessee had the right to repossess the SICOM Limited 14 equipment on default by the lessee and can sell it to others and also the lessee has to return the equipment at the end of lease period. In such a case, he submitted that the judgment of Jurisdictional High Court in Prakash Industries Ltd. (supra) as relied upon by CIT(A) is squarely applicable to the facts of the present case. He also submitted that in the latest judgment of the Hon'ble Supreme Court in ICDS Ltd. v/s CIT, [2013] 350 ITR 227 (SC), the Hon'ble Supreme Court has held that if the assessee is the owner of the assets and has leased the assets to the lessee, depreciation has to be allowed in the hands of the lessor only. He also referred to the decision of the Tribunal, Mumbai Bench, in Development Credit Bank Ltd., ITA no.3006/Mum./2013. Regarding sale and leaseback transactions, he submitted that insofar as the transactions relating to Marharasthra Esters & Keytones Pvt. Ltd. (supra) is concerned, the asset was purchased in the earlier years and the depreciation was allowed in the earlier years, therefore, the same cannot be disallowed in this year. Regarding other sale and leaseback transactions, he submitted that in such cases also, the depreciation has to be allowed because ultimately the assets belongs to the assessee only. He referred to the various decisions wherein the depreciation has been allowed on sale and leaseback transactions. Few of such decisions relied upon by him are as under:-

i) CIT v/s Cosmo Films Ltd., [2011] 245 CTR (Del.) 23;

ii) CIT v/s Punjab State Electricity Board, [2010] 320 ITR 469 (P&H);

iii) CIT v/s Gujarat Power Co. Ltd., Income Tax Appeal no.215/2010, judgment dated 1st August 2011; and

iv) First Leasing Co. of India Ltd. v/s ACIT, Madras High Court, Income Tax Appeal no.107/2007, judgment dated 21st February 2010.

He further referred to the decision of the Tribunal, Mumbai Bench, in Development Credit Bank Ltd. (supra).

SICOM Limited 15

17. Further, he submitted that even the decision of Special Bench of the Tribunal in Indusind Bank v/s ACIT, [2012] 135 ITD 165 (Mum.), the issue of sale of leaseback transaction have been decided in favour of the assessee and in support of this, he referred to Para-6.7 of the order. He also pointed out the comparison of the facts in the case of Indusind Bank (supra) with that of the assessee and then again facts of the case in Prakash Industries Ltd. as decided by the Bombay High Court and Indusind Bank (supra) vis-a-vis, the assessee's case and submitted that even on the facts, the Special Bench decision supports the case of the assessee. Lastly, he pointed out that in the sale and leaseback transactions, the Department has accepted the decision of the learned Commissioner (Appeals) in assessment year 1999-2000 and also the appellate order for assessment years 2000-01, 2001-02 and 2002-03, wherein no appeal has been preferred against order of Commissioner (Appeals). In support of these facts, he referred to the copy of the remand report dated 27th August 2008 submitted by the Assessing Officer, copy of which has been placed in the paper book at Pages-506 and 507. Thus, he submitted that once the Department has accepted these sale and leaseback transactions and allowed depreciation in the subsequent years, there is no occasion to choose in between period of two years for making the disallowance.

18. On the other hand, the learned Departmental Representative submitted that just because no disallowance was made in the earlier assessment years or the matter has been accepted by the Department in the subsequent year, this does not preclude the department to challenge the issue of disallowability of depreciation in this year. Each year is independent and in the income tax law, principles of resjudicata do not apply. In support of this contention, he strongly relied upon the judgment of Hon'ble Supreme Court in the case of New Jehangir Vakil Mills Co. Ltd. Vs. CIT, (1963). Regarding various judgments relied upon by the learned Counsel, he submitted that the ratio of the judgment has to be seen and SICOM Limited 16 not in between the lines to which the learned Counsel has referred during the course of his arguments. The most important thing which has to be seen is whether it is a case of finance lease or an operating lease. The Assessing Officer has very clearly made out the case that it was a case of pure finance lease and the decision of the Special Bench of the Tribunal in Indusind Bank (supra) is squarely applicable. If the lessor has recovered the cost plus interest during the life of the assets, it is a clear cut case of finance lease and no depreciation can be allowed on such kind of lease. He strongly relied upon the observations and the conclusion drawn by the Assessing Officer.

19. We have heard the rival contentions, perused the findings of the Assessing Officer and the learned Commissioner (Appeals) and the material placed on record as well as the case laws cited by the either party. In this case, the preliminary issue is that in most of the leased assets, depreciation aggregating to Rs. 15,58,39,334 has been disallowed on the assets which were leased earlier and the depreciation has been allowed. These assets are also forming part of the 'block of assets'. Not only this, the depreciation has also been allowed in the subsequent assessment years wherein the Department is not in contest. Once these assets have found to be a part of the block of assets and depreciation has been allowed in the earlier years, the depreciation on some assets cannot be disallowed on the opening WDV by taking a new stand on exactly similar nature of transaction. Though the principle of resjudicata does not apply in the income tax proceedings, however, if the similar facts are permeating through all the assessment years and both the parties have accepted a particular stand, then the principle of consistency has to be followed. In this case, out of total disallowance of depreciation for sums aggregating to Rs. 22,76,84,378, depreciation on opening WDV on normal lease transactions and sale and leaseback transactions comes to Rs. 15,58,39,334 and it is only with respect to depreciation amounting to Rs.

SICOM Limited 17 7,18,45,042, that the same pertains to the assets which have been added in the block of the assets during the year. Thus, prima-facie, we are of the considered opinion that insofar as the claim of depreciation of opening WDV for sums aggregating Rs. 15,58,59,334, the same cannot be disallowed, following the principle of consistency and also that these are already a part of block of assets on which the depreciation has been allowed and the same cannot be disturbed from the block of assets. This point in issue is squarely covered by the decision of the co-ordinate bench in Boskalis Dredging India Pvt. Ltd. (supra) and G.R. Shipping Ltd. (supra).

20. Now coming to the claim of depreciation on leased assets which has been added during the year, it is seen that it comprises of depreciation on normal lease transactions and sale and leaseback transactions. In case of normal lease transactions, the learned Commissioner (Appeals) has followed the decision of Prakash Industries Ltd. (supra) and has given a categorical finding that these lease assets are owned by the assessee and as per the terms of lease agreement, the assessee has a right to repossess the assets and will revert back to the assessee at the end of lease period. Further, the leasing of the assets is part of the business activity of the assessee, therefore, the depreciation has to be allowed in the hands of the lessors i.e. assessee. Thus, to the extent of assets leased under the normal lease transaction, we find that the ratio laid down by Hon'ble Supreme Court in case of ICDS Ltd. (supra) is also applicable to the facts of the present case. The main principle laid down by the Apex Court was that, firstly, the lessor should be the ultimate owner of the assets and secondly, leasing business should be part of its business activity. Apart from this, the ratio of the Bombay High Court in Prakash Industries Ltd. (supra) as relied upon by the learned Commissioner (Appeals) is also applicable. The learned Commissioner (Appeals) has analysed the clauses of lease agreement entered into by the assessee and also the clauses of SICOM Limited 18 the agreement which was there in Prakash Industries Ltd. (supra) and come to the conclusion that most of the clauses were similar. In view of this categorical finding, we do not find any reason to deviate from the findings of the learned Commissioner (Appeals) that the depreciation on the asset has to be disallowed which is claimed on normal lease transactions. Moreover, the Department has also accepted similar nature of normal lease transactions from assessment year 1999-2000 onwards. Thus, the disallowance on normal lease transaction is set aside and is decided in favour of the assessee.

21. Coming to the sale and leaseback transactions, the learned Commissioner (Appeals) has confirmed the disallowance of depreciation in Maharashtra Esters & Keytones Pvt. Ltd. (supra) and Konkan Railway Corp. Ltd. (supra), mainly on the ground that there was no physical delivery of the assets as it already belong to them and therefore the transactions itself was not genuine. In case of the other two parties, namely Fujitsu ICIM Ltd. (supra) and Datar Switchgear Ltd., he has allowed the same mainly on the ground that sale transactions and leaseback after the purchase is a genuine transactions. In case of Maharashtra Esters & Keytones Pvt. Ltd. (supra), it is seen that this transaction of sale and leaseback took place in the earlier previous year and the depreciation has been allowed in respect of such leased assets. Thus, the disallowance of depreciation in case of Maharashtra Esters & Keytones Pvt. Ltd. (supra) cannot be upheld mainly on the ground that the depreciation has already been allowed in the earlier years and forms part of the block of assets. Coming to the transactions with Konkan Railway Corp. Ltd. (supra) and other two parties, it is seen that the learned Commissioner (Appeals) has gone on a wrong footing of judging the genuineness of the sale transactions without any adverse material on record brought by the Assessing Officer. Under the sale and lease agreement, the asset is purchased and the same is leased back to the SICOM Limited 19 party and the assets so purchased belongs to the assessee as it retains the title and ownership of the said asset and also the right of reversion of possession at the end of lease period. In our considered opinion, this issue has not been properly dealt with either by the learned Commissioner (Appeals) or by the AO who has gone by the reasoning it is a colourable device either in the case of Konkan Railway Corp. Ltd. (supra) even in the case of Fujitsu ICIM Ltd. (supra) and Datar Switchgear Ltd. (supra) the issue has not been examined properly. In the absence of any proper material and record to come to such a finding, we are of the opinion that this matter needs to be restored back to the file of the Assessing Officer to examine it afresh. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) on these three transactions and restore the matter back to the file of the Assessing Officer who shall examine the issue of sale and leaseback agreement afresh and also in the light of the judgment of Delhi High Court in Cosmo Films Ltd. (supra), as have been referred to by the learned Counsel, the decision of Special Bench decision of the Tribunal in Indusind Bank (supra) and other decision on this issue. Thus, the claim of depreciation on the assets pertaining to aforesaid three sale and leaseback transactions which have been entered into this year is set aside to the file of the Assessing Officer to decide the issue afresh. Thus, ground no.2, raised by the assessee is treated as partly allowed for statistical purposes.

22. प रणामतः नधा रती क नधारण वष 1997-98 क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

In the result, assessee's appeal for assessment year 1997-98 is treated as partly allowed for statistical purposes.

We now take up Revenue's appeal in ITA no.7955/Mum./2003, for the assessment year 1997-98.

SICOM Limited 20

23. In ground no.1, the Revenue has challenged the deletion of disallowance of Rs. 36,59,755, on account of renovation expenses out of the total amount disallowed by the Assessing Officer of Rs. 73,19,509.

24. The assessee had incurred an expenditure of Rs. 77,66,359, for renovating its office premises at Mumbai, Nasik and Chiplon. The Assessing Officer disallowed the same as capital expenditure. It was submitted by the assessee that out of total expenditure of Rs. 77,66,359, it has capitalized an amount of Rs. 4,46,850, and the balance amount of Rs. 73,19,509, was claimed as revenue expenditure. It was also submitted that all these expenses were incurred on the rented premises which could not have been shifted by the assessee.

25. Before the learned Commissioner (Appeals), the assessee filed details of such expenditure along with the copy of bills and vouchers relating to such expenditure. Reliance was also placed on various case laws for the proposition that such a claim of expenses on a rented premises is a revenue expenditure. The learned Commissioner (Appeals), on a perusal of the details found that these expenses were both in the nature of revenue and capital as it consisted of plastering, flooring, painting, polishing, re-wiring, pest control treatment, etc. After finding it difficult to bifurcate such expenditure into revenue and capital account, the assessee, vide its letter dated 9th June 2003, agreed that 50% of such expenditure may be treated as capital expenditure. The learned Commissioner (Appeals) agreed with the contentions of the assessee and held that disallowance of Rs. 36,59,755, out of such expenditure can be treated as capital in nature and that would meet the ends of justice and also held that the assessee would be entitled for depreciation on the amount capitalized. The balance sum of Rs. 36,59,754, was treated as revenue expenditure.

SICOM Limited 21

26. Before us, the learned Counsel submitted that all these expenses were incurred for renovation of the office on rented premises, the assessee could not have utilized any kind of the asset created by way of renovation. In support of his contentions, he relied upon the following case laws:-

i) CIT v/s Ogilvy and Mather Pvt. Ltd., Income Tax Appeal no.4260 of 2009, judgment dated 26th September 2011 (Bom.);

ii) Set India (P) Ltd. v/s CIT, judgment dated 12th July 2011 (Bom.); and

iii) Edelwiss Capital Ltd. v/s ITO, ITA no.5324/Mum./ 2007, order dated 10th November 2010 (Mum.).

27. The learned Departmental Representative, on the other hand, submitted that once the learned Commissioner (Appeals) has accepted that it is very difficult to bifurcate such expenditure, there was no basis for treating 50% to be allowable as revenue expenditure on estimate basis. He, thus, strongly relied upon the findings of the Assessing Officer.

28. After carefully considering the rival contentions, we find that it is undisputed fact that these expenses were incurred for renovation of office on rented premises. The learned Commissioner (Appeals) has given a finding that it was very difficult to bifurcate the expenditure into revenue and capital, therefore, 50% of such expenses, as admitted by the assessee, was treated as capital expenditure and the balance as revenue. From the case laws relied upon by the assessee, it is seen that the Courts have held that in cases of repairs and renovation on rented premises, they have to be treated as revenue expenditure. Once 50% of the expenditure has been disallowed as capital expenditure, we do not find any reason to deviate from such a findings, as allowance of 50% of revenue expenditure actually meet the ends of justice in these facts and circumstances. Thus, ground no.1, is treated as dismissed.

SICOM Limited 22

29. In ground no.2, the Department has challenged the allowance of depreciation on various leased assets by the assessee. This issue has already been discussed in detail while discussing the assessee's appeal in ground no.2 raised by the assessee in ITA no.7901/Mum/2003, wherein we have directed the Assessing Officer to examine the issue of depreciation of assets which were procured during the year in case of sale and leaseback transaction and insofar as allowance of depreciation on normal lease transaction is concerned, the same has been allowed by us in the assessee's appeal cited supra. Hence, the findings of the learned Commissioner (Appeals) on the issue of allowance of depreciation are confirmed. On the issue of sale and leaseback transaction, in assessee's appeal cited supra, the matter has been restored to the file of the Assessing Officer who shall decide the issue denovo in the light of the observations made therein. Similar directions are issued on this issue also. Thus, ground no.2, raised by the Revenue is partly allowed for statistical purposes.

30. In ground no.3, the Revenue has challenged deduction under section 80M on the dividends earned by the assessee without deducting the interest therefrom.

31. The assessee has claimed deduction under section 80M on the gross amount of dividend at Rs. 4,91,80,447. The Assessing Officer computed the net income from dividend by deducting proportionate finance and interest charges from the gross dividends. Since it resulted into a negative amount of Rs. 1523.99 lakhs, he denied the deduction under section 80M to the assessee.

32. Before the learned Commissioner (Appeals), it was contended by the assessee that shares on which dividend income has been earned were not acquired with the borrowed funds as all the borrowings was for the SICOM Limited 23 purpose of business and, hence, the entire interest was to be allowed as deduction under section 36(1)(iii) against the business income and not against the income from dividends. It was also pointed out that similar issue had come up for consideration before the Tribunal in assessee's own case in assessment year 1984-85. The learned Commissioner (Appeals) following the decision of the Tribunal in assessee's own case held that this issue is decided in favour of the assessee and, accordingly, the assessee is entitled for deduction under section 80M on the dividend without deducting the interest therefrom.

33. Both the parties fairly agreed that this issue is now covered in favour of the assessee by the judgment of Hon'ble Jurisdictional High Court in CIT v/s Emerald Co. Ltd., [2006] 284 ITR 586 (Bom.) and also that similar issue has been decided in favour of the assessee by the Tribunal.

34. After carefully considering the relevant findings of the learned Commissioner (Appeals) and the Assessing Officer, and the case laws relied upon, we find that there is no dispute that the borrowings of the assessee has been purely for the purpose of business and none of the borrowed funds were utilized for making the investment in the shares. Once this is so, the judgment of Hon'ble Jurisdictional High Court in Emerald Co. Ltd. (supra) is squarely applicable, wherein the High Court has held that interest on borrowings and other expenditures incurred during the course of carrying on the business are allowable as deduction while computing the business income, these expenditures cannot once again be deducted from the dividend income for the purpose of computing deduction under section 80M and the deduction has to be granted with reference to the gross dividend. Thus, we do not find any merit in the grounds raised by the Department and the same stands dismissed.

35. Grounds no.4 and 5, being general in nature, no separate adjudication is required.

SICOM Limited 24

36. प रणामतः राज व क नधारण वष 1997-98 क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

In the result, Revenue's appeal for the assessment year 1997-98 is treated as partly allowed for statistical purposes.

We now take up assessee's appeal in ITA no.2337/Mum./2004 for the assessment year 1998-99.

37. Ground no.1, relates to disallowance out of exemption claimed under section 10(23G).

38. Learned Counsel for the assessee contended before us that he did not wish to press this ground. Learned Departmental Representative also did not object to the submissions made by the learned Counsel. Consequently, this ground is dismissed as "not pressed".

39. Ground no.2, relates to disallowance of depreciation on the assets acquired under sale and leaseback transactions with Maharashtra Esters & Keytones Pvt. Ltd. (supra), Konkan Railway Corp. Ltd. (supra) and Andhra Pradesh State Electricity Board Unit-I and II.

40. This issue has already been discussed in detail while deciding the assessee's appeal in ITA no.7901/Mum./2007, for the assessment year 1997-98. Insofar as the disallowance of depreciation in relation to the leaseback transactions with Maharashtra Esters & Keytones Pvt. Ltd. (supra) is concerned, we have already held that the depreciation has to be allowed as the Revenue has allowed the depreciation in the earlier years as the assets leased form part of the WDV of the block of assets. Regarding Konkan Railway Corp. Ltd. (supra), the matter has been restored to the file of the Assessing Officer. Similarly, in the case of Andhra Pradesh State Electricity Board Unit-I and II, these relates to sale and leaseback transactions which were entered into this year. Therefore, SICOM Limited 25 this matter is also set aside to the file of the Assessing Officer to examine the same in view of the directions given with regard to Konkan Railway Corp. Ltd. (supra). Consequently, ground no.2, raised by the assessee is treated as partly allowed for statistical purposes.

41. प रणामतः नधा रती क नधारण वष 1998-99 क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

In the result, assessee's appeal for the assessment year 1998-99 is treated as partly allowed for statistical purposes.

We now take up Revenue's appeal in ITA no.3194/Mum./2004, for the assessment year 1998-99.

42. The sole dispute in this appeal relates to allowance of depreciation on account of normal lease transactions and sale and leaseback transactions.

43. This ground is similar to the ground no.2, in Revenue's appeal for the assessment year 1997-98, wherein this issue has been decided after a detail discussion following the findings given in the assessee's appeal in ITA no.7901/Mum./2003, for the assessment year 1997-98. In view of our findings given therein, the ground raised by the Revenue is treated as partly allowed for statistical purposes.

44. Grounds no.2 and 3, being general in nature, no separate adjudication is required.

45. प रणामतः राज व क नधारण वष 1998-99 क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

In the result, Revenue's appeal for the assessment year 1998-99 is treated as partly allowed for statistical purposes.

SICOM Limited 26 We now take up Revenue's appeal in ITA no.4719/Mum./2004, for the assessment year 1999-2000.

46. The only issue arising in this appeal relates to disallowance under section 14A on account of proportionate administrative expenses.

47. The Assessing Officer observed that the assessee has received dividend income of Rs. 9,18,96,361 and held that the assessee must have incurred certain establishment / administrative expenses towards earning such income. Accordingly, he worked out proportionate expenditure for earning the income and worked out the disallowance at Rs. 64,28,000 and reduced the dividend income by such amount and allowed deduction under section 10(33) of the dividend income at Rs. 8,54,68,361.

48. The learned Commissioner (Appeals) held that once the investment has been made, there is no further effort on the part of the investor to receive and realized the dividend income as it is received without any incurring of expenditure. The administrative expenditure and establishment cost cannot be held to have been incurred for earning dividend income. Accordingly, he held that no administrative expenditure are attributable or allocable to the dividend. Accordingly, the entire dividend income shown by the assessee at Rs. 9,18,96,361, was held to be allowed as exempt under section 10(33).

49. The learned Departmental Representative submitted that in view of the provisions of section 14A, some disallowance has to be made because the Jurisdictional High Court in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT & Anr., [2010] 328 ITR 81 (Bom.), has held that prior to application of Rule 8D, some reasonable basis has to be evolved for making the disallowance for earning of exempt income. Thus, the administrative expenditure as disallowed by the Assessing Officer is quite justified. In any case, the some reasonable disallowance is called for.

SICOM Limited 27

50. The ld. Counsel submitted that the assessee does not have to incur any cost for making investment in the shares as the same were made out of interest free advance received from Govt. of Maharashtra with a main object to promote industrial development. No administrative expenditure can be allocated. Thus, he strongly relied upon the findings of the CIT(A).

51. We have heard the rival contentions and also perused the relevant findings of the Assessing Officer and the learned Commissioner (Appeals). We find that the Assessing Officer, though, has not invoked the provisions of section 14A, but has held that certain administrative expenditure have to be allocated for the purpose of earning dividend income and, therefore, he has reduced such proportionate cost from the dividend income while allowing the exemption under section 10(33). The learned Commissioner (Appeals) deleted the entire addition mainly on the ground that earning of dividend income is purely automatic and no effort is required. Looking to the fact that such a disallowance if at all can be made is only under section 14A. It is not disputed that no borrowed funds have been utilized for the purpose of making the investment in the shares. The only issue is whether certain administrative can be held to be allocable for earning of such dividend income which is exempt. The Bombay High Court in Godrej & Boyce Mfg. Co. Ltd. (supra), has held that in case of earning of an exempt income, some reasonable basis for allocating the expenditure has to be worked out. The Assessing Officer has worked out an expenditure of Rs.64,28,000, which, in our opinion, is too high and excessive looking to the fact that the assessee is not engaged mainly into the investment. Since the assessee is buying shares of the company by way of financing to promote such companies for industrial development in backward area, certain administrative cost has to be allocated. In our considered opinion, one percent (1%) of the administrative expenses should be disallowed and that would be a reasonable allocation of administrative expenses for the purpose of earning exempt income. Thus, the SICOM Limited 28 disallowance is restricted to one percent of administrative expenses. Thus, ground raised by the Revenue is treated as partly allowed.

52. प रणामतः राज व क नधारण वष 1999-

                                         1999-2000 क अपील आं शक       वीकत
                                                                         ृ
मानी जाती है ।

In the result, Revenue's appeal for the assessment year 1999-2000 is treated as partly allowed.

We now take up assessee's appeal in ITA no.5094/Mum./2004, for the assessment year 1999-00.

53. In ground no.1, the assessee has challenged the disallowance of Rs. 15,08,000, out of exemption claimed under section 10(23G).

54. Learned Counsel for the assessee contended before us that he did not wish to press this ground. Learned Departmental Representative also did not object to the submissions made by the learned Counsel. Consequently, this ground is dismissed as "not pressed".

55. In ground no.2, the assessee has challenged disallowance of depreciation of assets acquired under the sale and leaseback transactions with Konkan Railway Corp. Ltd. (supra) and Andhra Pradesh State Electricity Board Unit-I and II.

56. This ground is similar to ground raised in the appeals in ITA no.7901/Mum./2007, for the assessment year 1997-98 and in ITA no.2337/Mum./2004 for the assessment year 1998-99 as decided above. Therefore, in view of our findings given therein, this ground is treated as partly allowed for statistical purposes.

57. प रणामतः नधा रती क नधारण वष 1999-

                                         1999-2000 क अपील सां यक य उ े य
के लए आं शक      वीकत
                    ृ मानी जाती है ।
                                                                             SICOM Limited


                                                                                     29

In the result, assessee's appeal for the assessment year 1999-2000 is treated as allowed for statistical purposes.

We now take up Revenue's appeal in ITA no.5152/Mum./2005 for the assessment year 2000-2001.

58. In ground no.1, the Revenue has challenged the deletion of disallowance under section 14A on account of proportionate expenditure pertaining to earning of dividend income.

59. The Assessing Officer noted that the assessee has claimed an amount of Rs. 5,27,52,000 as exempt under section 10(23). He further observed that there are no borrowed funds on which the assessee has incurred interest expenditure. However, he proceeded to disallow proportionate expenditure in the ratio of dividend income to the total receipts as being attributable to earning the dividend income. Accordingly, he worked out proportionate disallowance of Rs. 5,10,70,000 which is 2.45% of the expenditure incurred during the year.

60. The learned Commissioner (Appeals) categorically held that the Assessing Officer could not establish by lending any necessary evidence that interest bearing borrowings of the assessee were utilized for acquisition of shares and securities. The borrowings of the assessee were utilized only for financing the various industrial units and the assessee was prohibited from diverting its borrowed funds towards shares and investment. Thus, interest expenditure cannot be apportioned or disallowed. He further held that, otherwise also, there is no factual and legal basis for making any account of disallowance under section 14A. He gave a very detail reasoning as to why such disallowance cannot be made.

61. The learned Counsel strongly relied upon the findings of the learned Commissioner (Appeals) whereas the learned Departmental Representative submitted that certain expenditure has to be allocated for SICOM Limited 30 the purpose of disallowance under section 14A as the assessee has earned a huge dividend income which is exempt.

62. After hearing both the parties, we find that this issue had also come up for consideration in the earlier department's appeal and this ground is similar to the ground decided in Revenue's appeal in ITA no.4719/Mum./2004, wherein we have held that one percent of the administrative expenditure would be sufficient for allocation of expenditure which can be said to be attributable to earning of dividend income. Accordingly, we direct the Assessing Officer to disallow only one percent of the administrative expenditure. Thus, ground no.1, raised by the Revenue is treated as partly allowed.

63. In ground no.2, the Department has challenged the deletion of disallowance made on account of repairing expenses of Rs. 14,85,671, which was treated as capital expenditure.

64. The Assessing Officer noted that the assessee has incurred expenditure which were in the nature of renovation and repairs and renewals. These expenses were for rewiring, installation of light, fixture & fittings and dismantling / reinstallation of cooling tower / pump. All these expenditure were held to be in the nature of capital expenses. Accordingly, he treated the amount of Rs. 15,63,864 as capital expenditure and allowed depreciation @ 5%. The net disallowance was made at Rs. 14,85,671.

65. The learned Commissioner (Appeals), after considering the assessee's submissions and the details placed before him, observed that the very description of the expenditure given in the assessment order suggest that these were normal repairs and renovation expenses and were incurred for observing and maintaining the existing asset and no new asset or expenditure of enduring nature has been incurred. Relying upon the various case laws, he held that these expenses which were in the nature of SICOM Limited 31 renovation and repair are therefore, revenue expenses. Detail finding has been incorporated in Pages-3 and 4 of the appellate order.

66. After hearing both the parties and considering the relevant findings given by the description of expenses as given at Pages-6 and 7 of the assessment order, it is seen that it mostly relates to installation of light, fixture & fitting, repair & replacement of small electrical fittings. All these expenses are in the nature of either preserving and maintaining the existing assets or repairs. These expenses definitely are not capital in nature because no new asset has come into existence or any enduring benefit has been derived by the assessee. Accordingly, on this issue, we decline to interfere with the order passed by the learned Commissioner (Appeals) as such. Ground no.2, raised by the Revenue is treated as dismissed.

67. In ground no.3, the Revenue has challenged the exclusion of provision of bad debt while working out book profit under section 115J.

68. The Assessing Officer has added back the provisions for bad debt and provisions for leave salary in the computation of book profit.

69. Before the learned Commissioner (Appeals), it was pleaded that the provisions for doubtful debt does not represent any provision created in respect of any liability and the same is, therefore, not includible in book the book profits. In support of this, reliance was place on the judgment of Jurisdictional High Court in CIT v/s Echjay Forgings Pvt. Ltd. [2001] 251 ITR 015 (Bom.). Likewise, the judgment of Bharat Earth Movers Vs. CIT 245 ITR 428 the provisions of leave salary is also not an unascertained liability, therefore, the same was also to be excluded from the book profit. Relying upon this decision, the learned Commissioner (Appeals) excluded the said provisions for bad debt and leave salary.

SICOM Limited 32

70. Before us, it has been admitted by both the parties that now this issue stands covered by the judgment of Hon'ble Supreme Court in CIT Vs. HCL Comet System and Services Ltd., (2008) 305 ITR 409 (SC). In view of the admitted position of law declared by the Hon'ble Supreme Court in the aforesaid case, we affirm the findings given by the learned Commissioner (Appeals) and hold that the provisions for bad debt and leave salary cannot be included in the computation of book profit and the same has to be excluded. Thus, ground no.3, is treated as dismissed.

71. Ground no.4 and 5 being general in nature, hence, no separate adjudication is required.

72. प रणामतः राज व क नधारण वष 2000-

                                      2000-01 क अपील आं शक     वीकत
                                                                  ृ मानी
जाती है ।

In the result, Revenue's appeal for the assessment year 2000-01 is treated as partly allowed.

We now take up assessee's appeal in ITA no.6586/Mum./2005, for the assessment year 2000-01.

73. In ground no.1, the assessee has challenged the disallowance of exemption claimed under section 10(23G) in relation to interest income of Rs. 3,30,64,292.

74. The Assessing Officer observed that the assessee has claimed exemption under section 10(23G) of Rs. 3,22,58,000, on net interest income receivable as per the details given at Para-6. He observed that exemption claimed by the assessee cannot be given as a necessary approval / notification by the Central Government could not be received. This has been confirmed by the learned Commissioner (Appeals) on the ground that the assessee could not furnish the letters of approval during the assessment proceedings.

SICOM Limited 33

75. Before us, the learned Counsel for the assessee submitted that now the approval is granted and has been notified, therefore, no disallowance is called for.

76. Learned Departmental Representative submitted that this issue can be restored to the file of the Assessing Officer for verification.

77. After hearing both the parties, we find that now the notification under section 10(23G) is available, therefore, the matter is restored back to the file of the Assessing Officer who shall verify the notification and accordingly grant exemption to the assessee if it is entitled for under the law. Consequently, ground no.1, is allowed for statistical purposes.

78. Ground no.2, relates to disallowance of Rs. 31,01,470, out of exemption claimed under section 10(23G).

79. Learned Counsel for the assessee contended before us that he did not wish to press this ground. Learned Departmental Representative also did not object to the submissions made by the learned Counsel. Consequently, this ground is dismissed as "not pressed".

80. In ground no.3, the assessee has challenged the disallowance of depreciation of sale and leaseback transactions with regard to Maharashtra Esters & Keytones Pvt. Ltd. (supra), Konkan Railway Corp. Ltd. (supra) and Andhra Pradesh State Electricity Board Unit-I and II.

81. After hearing both the parties, we find that this ground is similar to the ground decided in assessee's appeal in ITA no.7901/Mum./2007, for the assessment year 1997-98. Therefore, the findings given therein will apply mutatis mutandis in this year also. Consequently, ground no.3, is treated as partly allowed for statistical purposes.

SICOM Limited 34

82. प रणामतः नधा रती क नधारण वष 2000-

                                       2000-2001 क अपील सां यक य उ े य
के लए आं शक     वीकत
                   ृ मानी जाती है ।

In the result, assessee's appeal for the assessment year 2000-01 is treated as partly allowed for statistical purposes.

We now take up Revenue's appeal in ITA no.5153/Mum./2005, for the assessment year 2001-02.

83. The only issue arising in this appeal relates to disallowance under section 14A on account of proportionate administrative expenses exempt under section 10(33).

84. After hearing both the parties, we find that this ground is similar to the ground decided in Revenue's appeal in ITA no.4719/Mum./2004, for the assessment year 1999-2000. Therefore, the findings given therein will apply mutatis mutandis on this issue also wherein it has been held that one percent of administrative expenses would be disallowed. Consequently, ground is treated as partly allowed for statistical purposes.

85. प रणामतः राज व क नधारण वष 2001-02 क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

In the result, Revenue's appeal for the assessment year 2001-02 is treated as partly allowed for statistical purposes.

We now take up assessee's appeal in ITA no.6587/Mum./2005, for the assessment year 2001-02.

86. Ground no.1, relates to disallowance claimed exempt under section 10(23G), which relates to interest income of Rs. 71,87,083.

87. This ground is similar to ground no.1, raised by the assessee in its appeal in ITA no.6586/Mum./2005, for the assessment year 2000-01, wherein this issue has been restored to the file of the Assessing Officer in SICOM Limited 35 the wake of the fact that notification under section 10(23G) is now being available and, therefore, the Assessing Officer is directed to verify the same and allow the exemption in accordance with law. Ground no.1 is thus, treated as allowed for statistical purposes.

88. Ground no.2, relates to disallowance of Rs. 32,23,260, out of exemption claimed under section 10(32G).

89. Learned Counsel for the assessee contended before us that he did not wish to press this ground. Learned Departmental Representative also did not object to the submissions made by the learned Counsel. Consequently, this ground is dismissed as "not pressed".

90. Ground no.3, relates to disallowance of depreciation on sale of leaseback transaction in respect of Maharashtra Esters & Keytones Pvt. Ltd., Konkan Railway Corp. Ltd. and Andhra Pradesh State Electricity Board Unit-I and II.

91. After hearing both the parties, we find that this ground is similar to the ground decided in assessee's appeal in ITA no.7901/Mum./2007, for the assessment year 1997-98. Therefore, the findings given therein will apply mutatis mutandis in this year also. Consequently, ground no.3, is treated as partly allowed for statistical purposes.

92. प रणामतः नधा रती क नधारण वष 2001 2001-02 क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

In the result, assessee's appeal for the assessment year 2001-02 is partly allowed for statistical purposes.

We now take up Revenue's appeal in ITA no.5154/Mum./2005, for the assessment year 2002-03.

SICOM Limited 36

93. The only issue involved in this appeal relates to disallowance of proportionate expenditure under section 14A from the dividend income exempt under section 10(33).

94. After hearing both the parties, we find that this ground is similar to the ground decided in Revenue's appeal in ITA no.4719/Mum./2004, for the assessment year 1999-2000. Therefore, the findings given therein will apply mutatis mutandis in this year also wherein it has been held that one percent of administrative expenses would be disallowed. Consequently, ground is treated as partly allowed for statistical purposes.

95. प रणामतः राज व क नधारण वष 2002-

                                     2002-03 क अपील सां यक य उ े य के
लए आं शक     वीकत
                ृ मानी जाती है ।

In the result, Revenue's appeal for the assessment year 2002- 03 is treated as partly allowed for statistical purposes.

We now take up assessee's appeal in ITA no.6588/Mum./2005, for the assessment year 2002-03.

96. The only dispute in this appeal relates to disallowance of exemption claimed with regard to the interest income in the absence of notification for eligibility under section 10(23G).

97. After hearing both the parties, we find that this ground is similar to the ground raised in the assessment years 2000-01 and 2001-02 and, therefore, in view of the findings given therein, this issue is restored to the file of the Assessing Officer who shall verify the notification of section 10(23G), which has been claimed by the assessee that the same is available now, the Assessing Officer will verify the same and will grant exemption in accordance with law. Thus, this ground raised by the assessee is treated as allowed for statistical purposes.

SICOM Limited 37

98. प रणामतः नधा रती क नधारण वष 2002 2002-

                                               02-03 क अपील सां यक य उ े य
के लए आं शक        वीकत
                      ृ मानी जाती है ।

In the result, assessee's appeal for the assessment year 2002-03 is treated as partly allowed for statistical purposes.

99. नणय के सारांश व प, नधा रती एवं राज व क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।

To sum up, all the assessee's appeals as well as Revenue's appeals are treated as partly allowed for statistical purposes.

आदे श क घोषणा खले ु यायालय म दनांकः 22nd May 2013 को क गई ।

Order pronounced in the open Court on 22nd May 2013 Sd/- Sd/-

          राजे      संह                                               अ मत शु ला
          लेखा सद य                                                   या यक सद य
    RAJENDRA SINGH                                                  AMIT SHUKLA
  ACCOUNTANT MEMBER                                               JUDICIAL MEMBER


मंुबई MUMBAI,       दनांक DATED: 22nd May 2013

आदे श क    त ल प अ े षत / Copy of the order forwarded to:

(1)    नधा रती / The Assessee;
(2)   राज व / The Revenue;
(3)   आयकर आयु (अपील) / The CIT(A);
(4)   आयकर आयु            / The CIT, Mumbai City concerned;
(5)    वभागीय      त न ध, आयकर अपील य अ धकरण, मंुबई / The DR, ITAT, Mumbai;
(6)   गाड फाईल / Guard file.
                                                स या पत       त / True Copy
                                                 आदे शानसार
                                                        ु   / By Order
 द प जे. चौधर / Pradeep J. Chowdhury
वर    नजी स चव / Sr. Private Secretary
                                      उप / सहायक पंजीकार / (Dy./Asstt. Registrar)
                                     आयकर अपील य अ धकरण, मंुबई / ITAT, Mumbai

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Income Tax Appellate Tribunal - Mumbai

Sicom Ltd., vs Department Of Income Tax