Gujarat High Court
United Phosphorus Ltd vs Addi.C.I.T. - Opponent(S) on 17 October, 2005
TAXAP/129/2003 1/11 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No.129 of 2003
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UNITED PHOSPHORUS LTD. - Appellant(s)
Versus
ADDI.C.I.T. - Opponent(s)
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Appearance :
MR SN SOPARKAR with MRS SWATI SOPARKAR for Appellant: 1
MR BB NAIK for Opponent(s) : 1,
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CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA
and
HONOURABLE MS.JUSTICE H.N.DEVANI
Date : 17/10/2005
ORAL ORDER
(Per : HONOURABLE MR.JUSTICE D.A.MEHTA)
1. Heard Mr.S.N.Soparkar, learned Senior Advocate appearing on behalf of the appellant.
2. The appellant has proposed the following nineteen questions:
(i) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the alleged income from Advance License Benefit TAXAP/129/2003 2/11 ORDER Receivable ("ALBR" for short) is taxable in the year under consideration even though the said income has accrued to the appellant in the subsequent years?
(ii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that once a particular method of accounting for booking a particular income in the books of accounts is chosen, the same method must be followed for the purpose of determining the taxable income also ?
(iii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the alleged income from Pass Book scheme is taxable in the year under consideration even though the said income has accrued to the appellant in the subsequent years ?
(iv) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the nature and character of the Pass Book Benefit Receivable scheme is identical in all material particulars, to the scheme of Advanced License Benefit Receivable without appreciating all the distinguishing features of both the schemes placed before it ?
TAXAP/129/2003 3/11 ORDER
(v) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that even if a particular income is unascertainable and unquantifiable, the same has accrued to the appellant and is required to be included in the taxable income on the basis of estimation ?
(vi) Whether, in the facts and circumstances of the case the ITAT was right in law in holding that premium paid for the leasehold land is not revenue expenditure and not allowable as such ?
(vii) Whether, in the facts and circumstances of the case the ITAT was right in law in holding that premium of leasehold land can not be allowed on proportionate basis spread over the period of lease which is totally contrary to the decision of Hon'ble the Supreme Court in the case of Madras Industrial Investment Corporation Limited vs CIT (225 ITR 802) ?
(viii) Whether, in the facts and circumstances of the case, the ITAT was right in law in not adjudicating upon the issue of allowance of special license premium when all the necessary information was very much TAXAP/129/2003 4/11 ORDER available before it ?
(ix) Whether, in the facts and circumstances of the case, the ITAT was right in law in not following the order for A.Y. 1996-97 while adjudicating upon the issue of allowance of special license premium ?
(x) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that business loss suffered by the appellant in China is not allowable in the year under consideration ?
(xi) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that depreciation allowed, whether claimed or not, on notional basis is required to be reduced from the profit of eligible industrial undertakings for the purpose of calculating deduction u/s 80I and 80IA of the Act in spite of the fact that the new scheme of depreciation of block of assets does not provide for computation of depreciation on cost of individual asset ?
(xii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that income from Advance License Benefit Receivable, Pass Book Benefit Receivable and profit on TAXAP/129/2003 5/11 ORDER sale of import license is not derived from industrial undertaking and thus not eligible for deduction u/s 80I and 80IA of the Act ?
(xiii) Whether, in the facts and circumstances of the case, the ITAT was right in law in giving contradictory and conflicting findings in paras 22(f) & 22(g) of the impugned order and thus passing an order which suffers from perversity ?
(xiv) Whether, in the facts and circumstances of the case, the ITAT was right in law in excluding discount, miscellaneous receipts, advance license benefit and commission from the business profits for the purpose of calculating deduction u/s 80HHC of the Act ?
(xv) Whether, in the facts and circumstances of the case, the ITAT was right in law in not granting set off of expenditure against income, which are to be excluded as per clause (i) of Explanation (baa) to Section 80HHC of the Act for the purpose of calculating deduction u/s 80HHC of the Act ?
(xvi) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding, arbitrarily and without any TAXAP/129/2003 6/11 ORDER basis, that only 50% of the Miscellaneous Receipts would be liable for the purpose of deduction as per clause (i) of Explanation (baa) to Section 80HHC of the Act ?
(xvii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that provisions of S. 43B of the Act are attracted to the payment of ESIC even when such payments are made within the grace period allowed under that Act ?
(xviii)Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that for the purpose of calculating book profit u/s 115JA of the Act prior period adjustments as debited to P & L Account and tax on distributed profits are required to be added back to the books profit ?
(xix) Whether, in the facts and circumstances of the case, the ITAT was right in law in allowing deduction u/s 80M after deducting management expenses from the gross dividend received when no such expenses have been incurred by the appellant ?
ADMIT.
TAXAP/129/2003 7/11 ORDER
3. The following questions arise for determination:
(i) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the alleged income from Advance License Benefit Receivable ("ALBR" for short) is taxable in the year under consideration even though the said income has accrued to the appellant in the subsequent years?
(ii) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the alleged income from Pass Book scheme is taxable in the year under consideration even though the said income has accrued to the appellant in the subsequent years ?
(iii) Whether, in the facts and circumstances of the case the ITAT was right in law in holding that premium paid for the leasehold land is not revenue expenditure and not allowable as such ?
(iv) Whether, in the facts and circumstances of the case the ITAT was right in law in holding that premium of leasehold land can not be allowed on proportionate basis spread over the period of lease which is TAXAP/129/2003 8/11 ORDER totally contrary to the decision of Hon'ble the Supreme Court in the case of Madras Industrial Investment Corporation Limited vs CIT (225 ITR 802) ?
(v) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that business loss suffered by the appellant in China is not allowable in the year under consideration ?
(vi) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that income from Advance License Benefit Receivable, Pass Book Benefit Receivable and profit on sale of import license is not derived from industrial undertaking and thus not eligible for deduction u/s 80I and 80IA of the Act ?
(vii) Whether, in the facts and circumstances of the case, the ITAT was right in law in not granting set off of expenditure against income for the purpose of calculating deduction u/s 80HHC of the Act ?
(viii) Whether, in the facts and circumstances of the case, the ITAT was right in law in allowing deduction u/s 80M after deducting management expenses from the gross dividend received TAXAP/129/2003 9/11 ORDER when no such expenses have been incurred by the appellant ?4. In so far as proposed question Nos.8 and 9
are concerned, the Tribunal in its impugned order has merely restored the matter with a direction to adjudicate the issue afresh. In the circumstances, no substantial question of law can be said to arise on this issue.
5. In relation to proposed question No.13, it is apparent that the Tribunal while passing the impugned order in Paragraph No.22(f) has restored the matter to the file of the Assessing Officer to consider the claim of the assessee if the necessary material is brought on record justifying the claim made by the assessee. Thereafter, in the immediately succeeding paragraph i.e. Paragraph No.22(g), the Tribunal goes on to TAXAP/129/2003 10/11 ORDER refer to some figures in relation to advance license benefit and pass book benefit as well as the note appearing in Schedule of the Balance-Sheet so as to reject the contention of the assessee. Thus, there is apparent conflict between the findings recorded in the two successive paragraphs.
In the circumstances, it would be in the fitness of things to treat the direction in Paragraph No.22(f) as being operative while the subsequent findings appearing in Paragraph No.22(g) are required to be ignored by the Assessing Authority when he considers the claim of the assessee as per earlier direction of the Tribunal.
Accordingly, proposed question No.13 stands disposed of.
6. The apppeal is accordingly, admitted in relation to the aforesaid questions and the TAXAP/129/2003 11/11 ORDER other questions, except question No.13, accordingly stand dismissed as not being substantial question of law.
Sd/- Sd/-
[ D.A. MEHTA, J ] [ H.N. DEVANI, J ] Bhavesh*