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From the Courts »
  Vatsala Shenoy vs. JCIT (Supreme Court)
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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

The Asst. Commissioner of Income Tax-8(3), Room No.217, Vs. M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited), (address changed)
June, 19th 2015
                IN THE INCOME TAX APPELLATE TRIBUNAL,
                       MUMBAI BENCH "E", MUMBAI

        BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND
               SHRI SANJAY GARG, JUDICIAL MEMBER

                                ITA No.1471/M/2012
                              Assessment Year: 2002-03

        The Asst. Commissioner       of        M/s. SKOL Breweries Ltd. (now
        Income Tax-8(3),                       known as SAB Miller India
        Room No.217,                           Limited), (address changed)
        Aayakar Bhavan,                        Unit No.301-302, Third Floor,
        M.K. Marg,                        Vs. Dynasty Business Park,
        Mumbai ­ 400 020                       B Wing,
                                               Andheri Kurla Road,
                                               Andheri (East),
                                               Mumbai ­ 400 059
                                               PAN: AAACS 8580M
             (Appellant)                      (Respondent)

                                ITA No.3265/M/2012
                              Assessment Year: 2006-07

        M/s. SKOL Breweries Ltd. (now      DCIT, Range-8(3),
        known as SAB Miller India          Mumbai ­ 400 020
        Limited), (address changed)
        Unit No.301-302, Third Floor,
        Dynasty Business Park,        Vs.
        B Wing,
        Andheri Kurla Road,
        Andheri (East),
        Mumbai ­ 400 093
        PAN: AAICS 2238R
             (Appellant)                  (Respondent)

      Present for:
      Assessee by                 : Shri R.R. Vora, A.R & Shri Hemen Chandariya, A.R.
      Revenue by                  : Shri Neil Philip, D.R.

      Date of Hearing             : 19.03.2015
      Date of Pronouncement       : 17.06.2015

                                    ORDER

Per Sanjay Garg, Judicial Member:

      The above titled appeals one by the assessee and the other by the
Revenue have been directed against the orders dated 08.12.2011 & 29.02.2012
                                         2            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

of the Commissioner of Income Tax (Appeals) [(hereinafter referred to as
CIT(A)] relevant to assessment years 2002-03 & 2006-07 respectively. The
same were heard together and are being disposed of with this common order.
First we take up the Revenue's appeal bearing ITA No.1471/M/2012 for A.Y.
2002-03.

ITA No.1471/M/2012 for A.Y. 2002-03
2.     The Revenue through its grounds of appeal has agitated the action of
the Ld. CIT(A) in deleting the disallowance of write off of Rs.163 crores being
forfeiture of surety given by the assessee on behalf of associate concern.

3.     The brief facts of the case are that the assessee is a company which is
engaged in the business of manufacturing and sale of Beer. A return of income
for the year under consideration was filed by it on 30.12.02 declaring total
income at 'Nil'. The assessee company had issued a letter of intent of Rs. 5.5
crores approx. to M/s. Alfa Laval (India) Ltd., in May, 1989 for purchase of
brewery equipment. As per the terms of the said letter of intent, an advance of
Rs. 1.6 crores being 30% of the value of equipment was also paid by the
assessee company. Subsequently, the assessee company decided to purchase
equipment worth only Rs. 3 crores from M/s Alfa Laval (India) Ltd. as against
the letter of intent issued for Rs. 5.5 crores. One sister concern of the asessee
`M/s Vindale Distilleries Ltd.' was also considering the proposal for purchase
of equipment from M/s Alfa Laval (India) Ltd. However, keeping in view of its
adverse financial position, it was facing difficulties in securing acceptance of
its intent to purchase the machinery on its terms from M/s Alfa Laval (India)
Ltd. The assessee company asked M/s. Alfa Laval (India) Ltd. to appropriate
the balance amount of Rs. 2.5 crores towards M/s Vindale. M/s Alfa Laval
(India) Ltd. accepted this proposal put forth by the assessee company subject to
the condition that in the case of default of balance payment against purchase of
                                        3            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                 M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

equipments by `M/s Vindale Distilleries Ltd', the assessee company would be
liable to make good the said default. After acceptance of this condition by the
assessee company, part of the advance amount paid by the assessee company
was appropriated by M/s Alfa Laval (India) Ltd. towards advance payable by
M/s Vindale against its letter of intent. M/s Vindale was subsequently declared
as a sick unit by BIFR and after having become aware that the said sick
company owed it significant amounts. M/s. Alfa Laval (India) Ltd. become
apprehensive of collection of its outstanding dues from the said company. It
therefore wanted the assessee company to make good the outstanding dues
receivable from Vindale. A meeting in this regard was held of all the
representatives of the assessee company, Vindale and Alfa Laval, wherein, it
was agreed that the assessee company shall pay part of the outstanding amount
payable by Vindale to M/s Alfa Laval and shall co-accept with Vindale hundis
for the final settlement in favour of Alfa Laval (India) Ltd. According to the
assessee company, it was expecting that once the said hundis issued in favour
of Alfa Laval (India.) Ltd. are honored by the bankers of Vindale, part payment
by it to Alfa Laval (India) Ltd will be refunded back. However, due to
unfortunate twist of events, the management of Vindale went in the hands of a
hostile group and the bankers of Vindale dishonored the hundis issued in
favour of Alfa Laval (I) Ltd. The payment made by the assessee company to
M/s Alfa Laval (I) Ltd. on behalf of Vindale against the transaction
aggregating to Rs. 1,63,50,000/- therefore was forfeited by M/s Alfa Laval (I)
Ltd. and the resultant loss suffered by it on this count was claimed by the
assessee company after having written off the said amount.

4.     The Assessing Officer (hereinafter referred to as the AO) however
disallowed this deduction claimed by the assessee company on account of bad
debts holding that the conditions stipulated in the relevant provisions of
Section 36(1)(vii) r.w.s. 36(2) of the Act were not satisfied. Thc matter was
                                          4            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                   M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

carried before the Ld. CIT(A) and it was fairly conceded on behalf of the
assessee company before the Ld. CIT(A) that AO was right in disallowing its
claim for deduction on account of the amount of Rs.1,63,50,000/- written off in
respect of Vindale transaction u/s. 36(1)(vi) r.w.s. 36(2). It was, however,
claimed on behalf of the assessee company before the Ld. CIT(A) that the said
amount representing its business loss was liable to be considered for deduction
under the provisions of Section 28 & 29 of the Act. In support of this
alternative stand taken before the Ld. C1T(A), reliance was placed by the
assessee company, inter alia, on the decision of Hon'ble Supreme Court in the
case of "Ramachandcr Shivnarain vs. CIT", 111 ITR 263 wherein it was held
that if there is a direct and proximate nexus between business operation and the
loss or it is incidental to it, then the loss is deductible. It was contended that
losses incurred by the assessee company on standing surety for another
company in the course of mutually beneficial business transaction arise or
spring out from the business and hence the same are allowable u/s. 28 r.w.s. 29
of the Act being incidental to the business. In support of this contention,
reliance was placed on behalf of the assessee company on the decision of
Hon'ble Supreme Court in the case of "CIT vs. Amalgamations Ltd.", 226 ITR
188 and that of Hon'ble Bombay High Court in the case of Jokhiram
Ramchandra v. CIT, 61 ITR 693. After considering the submission of the
assessee, the Ld. CIT(A) allowed the said expenditure as business loss u/s.28
and 29 of the Income Tax Act. Aggrieved by the order of the CIT(A), the
Revenue preferred an appeal before the Tribunal(ITAT). The Tribunal vide
order dated 19th June,2009 observed that the Ld. CIT(A) had passed a cryptic
order and had not given any reasoning for the decision rendered by him on this
issue. It had also been observed by the Tribunal that the assessee before the
assessing officer had claimed the deduction on account of debts written off
u/s.36(1)(vii) read with section 36(2) of the Act. However, the assessee had
                                          5            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                   M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)




changed its stand before the Ld. CIT(A) and sought to claim the deduction
u/s.28 read with 29 of the Act being a business loss. The Tribunal, therefore,
observed that the Ld. CIT(A) ought to have given opportunity to the assessing
officer to examine the alternative claim made by the assessee company and
further he should have passed a speaking order while examining the claim of
the assessee and in respect of his conclusions made thereupon. The Tribunal
therefore, restored the matter back to the file of the Ld. CIT(A) for deciding the
same a fresh by way of a well discussed and well reasoned order.

5.     Consequent to the directions of the ITAT, the case was heard afresh by
the CIT(A). A remand report was also called upon from the AO. After
considering the remand report and submissions of the assessee, the Ld. CIT(A),
vide impugned order dated 8th December 2011, held that though the amount
was initially given for the purchase of machinery but it had changed its
character to guaranty/surety given on behalf of Vinedale Distilleries Limited.
He, thereafter relying upon the decision of the Hon'ble Bombay High Court in
the case of CIT vs. Dempo and Company Limited (206 ITR 291) held that the
amount written off was allowable as business loss.
Aggrieved by the order of CIT(A). The revenue has preferred the present
appeal before us.

6.    We have heard the rival contentions and have also gone through the
record. The Ld. AR of the assessee has vehemently contended that the assessee
had acted in accordance with its business objective as a guarantor/surety for
the outstanding dues of sister concern of the assessee i.e. M/s Vinedale Ltd. He
has brought our attention to clause 12 and clause 13 of the object clauses of the
`Memorandum of Association' of the assessee and has further contended that
the guarantee was given by the assessee company in furtherance of its business
objectives. He has relied upon the decision of Chennai Tribunal in the case of
                                         6            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

`ACIT vs. WS Industries (India) Limited' (ITA No.1373/Mad/2008) and
further that of Hon'ble Madras High Court in the case of `CIT vs. Spencers and
Co. Ltd.' [359 ITR 612]. The Ld. AR has further contended that the amount in
question was utilized as a guarantee given on behalf of sister concern and
therefore, any loss suffered by the assessee on account of such
surety/guarantee was as allowable business loss u/s.28 read with section 29 of
the Act. He has further contended that the loss suffered by assessee in this case
was incidental to business of the assessee and as such was deductable as a
business loss. He has relied in this respect upon the decisions of the Hon'ble
Supreme Court in the case of `Ramchander Shivnarain vs CIT' (111 ITR 263)
and in the case of `CIT vs. Jaganath Kissonlal Lal' (41 ITR 360) and certain
other case laws. He has further contended that the expenditure had been
incurred by the assessee on account of commercial expediency, it was
therefore, allowable as a business expenditure. He has placed reliance in this
respect on catena of judicial decisions including that of Hon'ble Supreme
Court in the case of `S.A. Builders vs. CIT' (2007) [288 ITR 1] (SC) and
`Dhanranjgiriji Raja Narasinggirji' (1973)[91 ITR 544] (SC). He has further
submitted that the amount written off was an irrecoverable business advance
given by the assessee during the course of business and as such the same was
otherwise allowable as a business loss u/s.28 read with section 37 of the Act.
He has further submitted that the amount forfeited by `Alfa Laval' given as a
guarantee by the assessee on behalf of its sister concern `Vinedale' had
changed its character to advance receivable from its sister concern `Vinedale'.
He has further submitted that the purpose of loan/advance was of no
consequence but what was of consequence was the utilization of the amount.
The Ld. AR in this respect has relied upon a number of judicial decisions to
contend that when at the time of writing off the amount, it has changed its
character from Capital account to trading account, then, it is allowable as a
                                              7            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                       M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

business expenditure. He, therefore, has submitted that Ld. CIT(A) has rightly
allowed the claim of deduction put forth by the assessee.
The Ld. DR on the other hand has submitted that the deduction claimed by the
assessee is not allowable as business loss. He has further submitted that there
was no business expediency for incurring the expenditure in question and
further that even otherwise the loss at the most can be said to be a capital loss,
not allowable as business loss either u/s 36 or u/s 28 and 29 of the Income Tax
Act.

7.     We have considered the rival contentions. It is an admitted fact that
initial amount was paid by the assessee to M/s Alfa Laval for the purchase of
machinery. Later on the assessee had decided to cut down the value of the
order of purchase of equipment from Rs. 5.5 crore to Rs. 3 crore. The excess
advance of Rs. 81.30 lacs paid by the assessee to Alfa Laval was adjusted as
advance on behalf of M/s. Vinedale Ltd. The assessee also stood
guarantee/surety on behalf of the M/s. Vinedale Ltd., in relation to the
purchase of equipment of Rs.2.94 crores by M/s. Vinedale Ltd. from Alfa
Laval. Though the facts are clear that not only the advance paid by the assessee
on behalf of Vinedale Ltd. of Rs. 81.30 lacs was forfeited but the assessee also
paid further amount, it being a guarantor of M/s. Vinedale Ltd., incurring total
liability of Rs. 16,350,000/- written off during the year under consideration.
The Ld. AR at the first instance has relied upon the object Clause no. 12 and
13 of the Memorandum of Association which for the sake of convenience are
reproduced as under:-
       "Clause 12- Guarantee- To guarantee the performance of any contract or
       obligations of and the payment of or dividends and interest on any stock shares or
       securities of any company, corporation, firm or person in any case in which such
       guarantee may be considered like directly or indirectly to further the objects of the
       company or the interests of its shareholders.
       Clause 13- Guarantee & surety- To guarantee the payment of money unsecured and
       secured by or payable under or in respect of promissory notes, bonds, debentures-
                                           8            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                    M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

      stock, contractor, mortgages, charges, obligations, instruments and securities of
      any company or of incorporated or not, and generally to guarantees or become
      sureties for the performance of any contracts or obligations."

8.    It is pertinent to mention here that the above reproduced objects of the
assessee company are not the main objects of the company. The main object of
the assessee is written in Article `a' of `Memorandum of Association' which is
to carry on the business of brewers, maltsters, distillers etc. and further to
manufacture, sale or deal etc. in mineral waters etc. In article `b', of the
MOA, objects incidental or ancillary to the attainment of the main objects have
been stated and the clauses `12' and `13' as reproduced above are part of
article `b' of the MOA, stating the objects or activities in which the assessee
may involve for the purpose of achievement of main objects or business of the
assessee company. Further a perusal of clause 12 and 13 above reveals that the
assessee for the furtherance of its main objects or for the sake of interests of
its shareholders can stood as a guarantee or surety for other companies, firms
or persons, as the case may be, in relation to the performance of contract or
payment of money etc. When adjudicating on an identical issue, the Coordinate
Bench of the Tribunal in the case of `LML Ltd. vs. Joint CIT' 2014 33
ITR(Trib) 269 (Mum), wherein, the assessee company had stood surety for its
joint holding company, has held that the relevant clauses being under part B of
the Memorandum of association that is for carrying out of the object incidental
of the ancillary attainment of the main objects are only in the nature of
enabling provisions.

9.    Now, the question, which is to be seen, is whether the act of furnishing
guarantee on behalf of the Vinedale Ltd. was an act of the assessee in
furtherance of its main object/business. The assessee could not explain either
before the AO or before the CIT(A) or before us that how the act of standing as
guarantee for M/s. Vinedale Ltd. was beneficial for the interest of the
                                         9            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

shareholder of the company or for the purpose of attainment of main object or
main business activity of the assessee. The only plea that has been taken is that
since the assessee had to renegotiate about the terms of intent to purchase the
equipment and that is why it had opted to ask Alfa Laval to treat the excess
advance of the assessee as advance made by M/s. Vindale Ltd. for purchase of
equipment. There is no document on the file to show that if the assessee had
cut down its intent to purchase from Rs.5.5 crore to Rs.3 crore for purchase of
equipment, it would have suffered any business/trading loss on that account.
Even there is no document on the file which suggests that there was any
condition put forward between the parties that if the value of the purchase
orders would be reduced, the assessee would have to suffer any loss on that
account. Even otherwise the money was paid by the assessee for purchase of
capital asset and the loss if any on account of cut in the purchase order would
otherwise be a capital loss. Under such circumstances, the advance of Rs.81.30
lakhs paid by the assessee on behalf of its sister concern for the purchase of
equipment by its sister concern Vinedale, could                neither be treated as a
business or trading advance on behalf of the assessee nor on behalf of its sister
concern Vinedale. So far as the question as to the nature of loss suffered by
the assessee is concerned, it is pertinent to note that the amount had been paid
by the assessee to the creditors of M/s Vinedale Ltd., being its
guarantor/surety. After paying the amount/debt of M/s Vinedale Ltd. to the
creditors of the M/s Vinedale Ltd., the assessee stepped into the shoes of the
creditors and the amount paid therefore can be said to be a debt only, which
would otherwise fall in the definition of capital asset. The said loan on being
become irrecoverable or unrealizable on account of the debtor company
declared as sick unit and incurring huge losses, the nature of loss of assessee
cannot be said to be a business loss or expenditure but a capital loss only.
Reliance in this respect can also be placed on the decision of the co-ordinate
                                        10            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

bench of the Tribunal in the case of "LML Ltd." (supra).                      The assessee
company fully knowing that its sister concern M/s. Vinedale Ltd. was running
into losses and having a weak financial status, opted to not only pay advance
for the purchase of the machinery by the said concern but also settled the
accounts of the M/s. Vinedale Ltd. by way of paying the remaining amount.
This act of the assessee was neither in furtherance of business activity of the
assessee nor was in the interest of its shareholders. The assessee company
rather assumed the risk of taking the liability of another company which cannot
be said to be for business purpose of the assessee. Hence, the activity of
advancing the money and paying the debt of the M/s. Vinedale Ltd. which was
on account of purchase of machinery being capital asset, cannot be said to be
the business activity or any activity incidental to the business of the assessee.
The loss incurred by the assessee thus can neither be said to be a business loss
allowable as deduction under section 28 read with section 29 of the Act nor
can be said to be a business expenditure. The assessee has also failed to
explain that the expenditure had been incurred by the assessee on account of
commercial expediency. The only explanation given by the assessee that it
would have to renegotiate the letter of intent for purchase of machinery cannot
be said to be an activity of commercial expediency. Even the assessee could
not explain how the assessee would have been benefited from the machinery
purchased by M/s. Vinedale Ltd. The assessee had not been in the business of
lending the money. Hence, the irrecoverable advance given by the assessee
which partakes the character of debt cannot be said to be a business advance.
So far as the contention that the character of the advance given by the assessee
has changed from that of advance given for machinery to that of guaranty and
further that the purpose of loan advance was of no consequence but that of
utilization of the amount, we may, in this respect, observe that in the case in
hand the assessee has not utilized the amount in the course of business activity
                                        11            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

of the assessee. It is not the case that the guaranty given or the amount
advanced had changed its character from capital account to trading account.
Even the M/s. Vinedale Ltd. had utilized the amount of loan/advance for the
purpose of purchase of machinery i.e. for capital asset the said amount has
never been treated or utilized by M/s. Vinedale Ltd. as business advance taken
from the assessee for the purpose of its business activity nor the assessee
company could explain as to how the amount of guaranty given for purchase of
machinery, which liability was ultimately owned by the assessee company, can
in any manner be said to be relating to the business activity of the assessee or
that of the M/s. Vinedale Ltd. The loan amount was used for the purchase of
machinery which even otherwise was not in any manner used for the purpose
of business of the assessee. Hence, it cannot be said that the character of the
amount advanced had changed from capital account to revenue account. The
various case laws relied upon by the assessee as discussed above, with due
respect, are not applicable to the facts and circumstances of the case of the
assessee in view of our discussions made above.                 Even a perusal of the
impugned order reveals that the Ld. CIT(A), though, held that the amount in
question was earlier given as advance for purchase of machinery but has
changed its character to that of guaranty/surety but has not given any finding as
to how the amount even given as a guaranty for purchase of machinery would
fall in the definition of revenue loss. The Ld. CIT(A) has simply observed that
earlier the assessee had paid the amount as an advance with purchase of
machinery but later on the same was converted as guaranty for purchase of
machinery by M/s. Vinedale Ltd. and thereafter without giving any reasoning
treated the same as revenue loss. The Ld. CIT(A) even has not considered that
the amount of advance paid to M/s. Alfa Laval (India) Ltd. which was initially
treated as advance on behalf of M/s. Vinedale Ltd. was only Rs.81.30 lakhs.
The said amount has never changed its character as a guaranty rather was
                                       12            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                 M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

advance for the purchase of machinery on behalf of M/s. Vinedale Ltd. The
remaining amount was paid by the assessee for settlement of the accounts of
M/s. Vinedale Ltd. which were on account of outstanding dues for the
purchase of machinery by M/s. Vinedale Ltd. The assessee has paid the said
amount on behalf of M/s. Vinedale Ltd. being its guarantor/surety which was
not relating to any business or trading activity of the assessee in any manner.
We therefore do not find any merit in the order of the Ld. CIT(A) and the same
is therefore set aside. The action of the AO disallowing the said loss is
confirmed.

10.   Now we take up the assessee's appeal bearing ITA No.3265/M/2012 for
A.Y. 2006-07.

ITA No.3265/M/2012 for A.Y. 2006-07
11.   The assessee in this appeal has taken two effective grounds of appeal.

12.   Ground No.1 is relating to the action of the Ld. CIT(A) in declining to
consider the claim of deduction of Rs.99,85,274/- on account of consumption
of containers. During the assessment proceedings, the assessee made a revised
claim of deduction on account of consumption of containers. However, since
the same was not claimed in the return of income, the AO rejected the same.

13.   In appeal, the Ld. CIT(A) also rejected the claim of the assessee on the
ground that if the said claim is allowed it would have the effect of increasing
the returned loss. He held that assessment under section 143(3) of the Act
cannot be framed below the return of income. He therefore disallowed the
claim of the assessee.




14.   The Ld. A.R. of the assessee has submitted before us that the action of
the Ld. CIT(A) in rejecting the claim of the assessee was not justified. He has
                                        13            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

further relied upon the decision of the Hon'ble Gujarat High Court in the case
of "Gujarat Gas Ltd. vs. JCIT" (2000) 245 ITR 84. In the said case, the words
of the Circular No.549, para 5.12, dt. 31st October, 1989, providing that the
assessed income under section 143(3) shall not be less than the returned
income was considered by the Hon'ble High Court and it was held that as per
proviso to section 119 of the Act, the Board cannot issue instructions to the
Income Tax Authority to make a particular assessment or to dispose of a
particular case in a particular manner as well as not to interfere with the
discretion of the Commissioner in exercise of his appellate functions. It was
further held that the AO, while exercising his quasi judicial powers was not
bound by the said circular and should have exercised his powers
independently. The Hon'ble High Court, therefore, directed the AO to make
the assessment without keeping in mind the said circular. It may be further
observed that the Hon'ble Bombay High Court in the case of `Pruthvi Brokers
& Shareholders Pvt. Ltd.' ITA No.3908 of 2010 decided on 21.06.12, while
relying upon the various decisions of the Hon'ble Supreme Court and other
Hon'ble High Courts has held that even if a claim is not made before the AO, it
can be made before the appellate authorities. The jurisdiction of the appellate
authorities to entertain such a claim is not barred. The Hon'ble High Court has
further observed that the decision of the Hon'ble Supreme Court in the case of
`Goetze (India) Limited v. CIT' (2006) 157 Taxman 1, relating to the
restriction of making the claim through a revised return was limited to the
powers of the Assessing Authority and the said judgment does not impinge on
the power or negate the powers of the appellate authorities to entertain such
claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to
have considered the claim of the assessee in exercise of his appellate
jurisdiction under section 250 of the Act.           Moreover, if the assessee is,
otherwise, entitled to a claim of deduction but due to his ignorance or for some
                                        14            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

other reason could not claim the same in the return of income, but has raised
his claim before the appellate authority, the appellate authority should have
looked into the same. The assessee cannot be burdened with the taxes which
he otherwise is not liable to pay under the law. We, accordingly, restore this
issue to the file of the Ld. CIT(A) to consider the claim of the assessee on
merits and pass a reasoned order, irrespective of the returned loss/ income of
the assessee. The Ld. CIT(A) will be at liberty to call the views/remand report
of the AO on this issue and to decide the issue in accordance with law.

15.   The second ground is relating to the disallowance under section 14A of
the Act. The Ld. A.R. of the assessee, at the outset, has stated that the Ld.
CIT(A) has made the disallowance under section 14A as per the provisions of
Rule 8D of the Income Tax Rules.             He has further submitted that the
assessment year under consideration is A.Y. 2006-07 and in view of the law
laid down by the Hon'ble Bombay High Court in the case of "Godrej & Boyce
Manufacturing Co. Ltd. Vs. DCIT" [(2010) 328 ITR 81 (Bom)], Rule 8 is
applicable from assessment year 2008-09 onwards.                   Therefore, the same
cannot be applied for the year under consideration. He has further submitted
that during the year, the assessee had not made any investments for earning of
exempt income. He has submitted that the assessee had made investments in
National Savings Certificate (NSC), Indira Vikas Patre (IVP) and shares of Co-
operative Banks. He has further submitted that the interest from NSC & IVP
are taxable in case of companies and further that dividend from Co-operative
Banks is also not exempt under section 10(34) of the Act. He therefore has
submitted that such investments were not capable of generating exempt income
and therefore there was no question of disallowance under section 14A of the
Act. He has further relied upon the decision of the Hon'ble Allahabad High
Court in the case of "CIT vs. Shivam Motors to stress the point that during the
year the assessee had not earned any exempt income, hence no disallowance
                                           15            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                     M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

under section 14A was warranted. We may find that the above contentions of
the assessee have not been looked into by the Ld. CIT(A) while enhancing the
income of the assessee on account of disallowance made under section 14A of
the Act.

16.      We therefore restore this issue also to the file of the Ld. CIT(A) for
adjudication afresh.       It is made clear that if the assessee had made no
investments for earning of exempt income, no disallowance would be
warranted under section 14A. The Ld. CIT(A) will also look into the other
contentions raised by the assessee on this issue. Accordingly, this appeal of
the assessee is allowed for statistical purposes.
         Before parting with the order, we may mention here that as per the
revised Appeal Form No.36, for A.Y. 2006-07 the assessee has changed its
name from SKOL Breweries Ltd. to SAB Miller India Ltd. We further find
that for A.Y. 2002-03 the PAN number is mentioned as AAACS 8580M and
for A.Y. 2006-07 the PAN number is mentioned as AAICS 2238R. The AO to
verify and use correct PAN while giving effect to this order.

17.      In the result, the appeal of the Revenue is allowed and the appeal of
the assessee is allowed for statistical purposes.

                  Order pronounced in the open court on 17.06.2015.


          Sd/-                                                     Sd/-
    (R.C. Sharma)                                             (Sanjay Garg)
ACCOUNTANT MEMBER                                         JUDICIAL MEMBER

Mumbai, Dated: 17.06.2015.
* Kishore, Sr. P.S.



Copy to: The Appellant
        The Respondent
                                        16            ITA No.3265/M/2012 & ITA No.1471/M/2012
                                  M/s. SKOL Breweries Ltd. (now known as SAB Miller India Limited)

        The CIT, Concerned, Mumbai
        The CIT (A) Concerned, Mumbai
        The DR Concerned Bench
//True Copy//                           [




                                              By Order



                              Dy/Asstt. Registrar, ITAT, Mumbai.

 
 
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