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06-09-2019, Bata India , Section 43B(f), 28, 139, 115JB, Tribunal Kolkata

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5 days 5 hours ago #10764 by amit
Section - 43B(f), 28, 139, 115JB
Order Date - 06-09-2019
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - Bata India Ltd.
Respondent - DCIT
Justice - A. T. VARKEY, JM & DR. A.L.SAINI, AM
Citation - 919Taxpundit85
Appeal No. - ITA No.2255/Kol /2014
Asstt. Year - 2008-09

Order

PER : Dr. A. L. Saini

The captioned cross appeals filed by the Assessee and Revenue, pertaining to Assessment Year 2008-09, are directed against the order passed by the ld. Commissioner of Income Tax (Appeals)-VI, Kolkata, which in turn arise out of an assessment order passed by the Assessing Officer u/s 143(3)/144C(3) of the Income Tax, Act,1961 (hereinafter referred to as the ‘Act’), dated 03.02.2012.

2.Since these cross appeals filed by the Assessee and Revenue for A.Y. 2008-09 pertain to the same assessee, identical issues are involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.

3.The appeal filed by Revenue in ITA 77/Kol/2015, for Assessment Year 2008-09, is barred by limitation by 1day. The Revenue has moved a petition requesting the Bench to condone the delay.We heard the party on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal of Revenue for hearing.

4. First we take assessee`s appeal in ITA No. 2255/Kol/2014, for AY 2008-09, the grievances raised by the assesseeare as follows:

1.The learned Commissioner of Income-tax(Appeals)Vl Kolkata [hereinafter referred to as the "CIT-(Appeals)"] erred in confirming the decision of learned Assessing Officer in not allowing a deduction of Rs. 82,71,000/- in respect of provision made in book of accounts and debited to Profit & Loss Account towards ascertained leave liability for the AY 2008-09 on the basis of actuarial valuation report following mandatory AS-15 ( Revised 2005 ) prescribed by ICAI, on the ground that such expenditure come within ambit of the provisions of Section 43B(f) of the Income-tax Act,1961(hereinafter referred to as 'the Act"), having failed to appreciate that provision made in book of accounts towards leave liability is in the nature of general trade liability and therefore, the same was allowable u/s 37 having regard to the ratio of the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers Ltd. Vs. CIT reported in 245 ITR 428 (SC) and decision of the Hon'ble Calcutta High in the case of Excide Industries Ltd. Vs. Union of India reported in292 ITR 470 (Cal. HC).

2. The learned CIT (Appeals) erred in confirming the decision of learned Assessing Officer in not allowing 'Transitional Liability' of Rs. 85,34,740/- provided in book of accounts and adjusted against Opening General Reserve as per Para 143 to 145 of AS 15 (Revised 2005), towards ascertained leave liability done by an outside actuary under mandatory AS 15 (Revised 2005) on employee benefits issued by ICAI, on the ground that such expenditure come within ambit of Sec 43B(f) of the Act.

3. For that in view of the facts and circumstances, the learned CIT (Appeals) erred in not holding that provision for leave encashment is neither a statutory nor contingent liability and therefore not to be considered for the purpose of computing disallowance u/s 43B(f) of the Act having regard to the ratio of the decision of Hon'ble Kolkata Tribunal in the case of Universal Cables Ltd. Vs. DCIT, ITA No. 954/Kol/2010, Order dated 29th April 2011 in the same issue which decision was binding upon him.

4 .The learned CIT (Appeals) erred in confirming that total provision towards leave encashment of Rs. 16,805,740/- is covered u/s 43B(f) in view of stay granted /SLP accepted by Hon'ble Supreme Court against Calcutta High Court Order in the case of Excide Industries Ltd (supra) without appreciating the fact that interim order passed in the course of SLP hearing is not law and cannot supersede law pronounced by High Courts having regard to the ratio of the decision of the Hon'ble Supreme Court in the case of Kunhaymmed Vs. State of Kerala reported in 245 ITR 360 (SC) and Jurisdictional Calcutta High Court Order in the case of PijushKanti Chowdhury Vs. State of West Bengal (2007) 2 CaI LT 577, dated 14.05.2007.

5. The learned CIT (Appeals) erred in confirming the decision of learned Assessing Officer in not allowing 'Transitional Liability' provided in book of accounts and adjusted against Opening General Reserve as per Para 143 to 145 of AS-15 (Revised 2005), towards ascertained leave liability Rs. 85,34,000/- and towards ascertained gratuity liability Rs.3,32,38,000/- done by an outside actuary under mandatory AS-15 (Revised 2005) on employee benefits issued by ICAI, on the ground that such expenditures had not been debited in Profit and Loss Account for the financial year and cannot be reduced from current year`s profit for computation of Book Profit u/s 115JB.

6. The learned CIT (Appeals) erred in confirming the decision of learned Assessing Officer in assessing Rs.37,682,692/- (Consideration Rs.39,190,000 Minus 15,07,308/- VAT deposited) as income chargeable under the head long term capital gains accruing on transfer of 'Trade Marks' without appreciating that "Trade Mark" being a self gene ated asset and cost of improvement was not determinable and hence it could not be brought to tax under the head “Capital Gains" having regard to the decision of the Hon'ble Pune Tribunal in the case of "lnstitute For Micronutrient Technology Vs. Dy. ClT reported in 43 taxmann.com 426 (Pune. Trib).

7. The learned CIT (Appeals) erred in confirming the decision of learned Assessing Officer relying upon the CBDT Circular No. 338 , dated 18.02.1998 issued for inserting intangible asset i.e"a right to manufacture, produce, or process any article or thing "under Sec 55 (2)(a) and under Sec 55(1)(b) by Finance Act 1997.

8. The learned CIT (Appeals) erred in not appreciating that in the assessee's case there was transfer of "Trade Mark", CBDT Circular No.14/2001, dated 09.11.2001 was applicable issued for changes made by Finance Act, 2001 in Sec 55(2)(a) in the "Cost of Acquisition" only and not u/s 55(1)b) relating to "Cost of Improvement", hence cost of improvement was not determinable and thus computation provision under head capital gains failed.

9. The learned CIT (Appeals) erred in disallowing 10% of Dividend Income of Rs.66,464/- on adhoc basis as expenditure incurred for earning dividend income of Rs. 6,64,638/- without appreciating the fact that in the assessee's case dividend income had been earned out of investments made in Mutual Fund and had been received through ECS with same Banker where the assessee is maintaining Current Accounts, therefor no disallowance u/s 14A.

10. The learned CIT (Appeals) erred in not allowing expenditure disallowed u/s 14A Rs. 66,464/- for computation of Book Profit u/s 115JB for Minimum

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