The ITO, Ward-4(4), Ahmedabad v. Madhusudan Industries Ltd., Ahmedabad

ITA 1064/AHD/2007 | 2000-2001
Pronouncement Date: 04-10-2013 | Result: Dismissed

Appeal Details

RSA Number 106420514 RSA 2007
Assessee PAN AABCM0538M
Bench Ahmedabad
Appeal Number ITA 1064/AHD/2007
Duration Of Justice 6 year(s) 6 month(s) 22 day(s)
Appellant The ITO, Ward-4(4), Ahmedabad
Respondent Madhusudan Industries Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 04-10-2013
Date Of Final Hearing 13-09-2013
Next Hearing Date 13-09-2013
Assessment Year 2000-2001
Appeal Filed On 12-03-2007
Judgment Text
ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI D.K. TYAGI J.M. & SHRI ANIL CHATURVE DI A.M.) I.T. A. NOS. 766 767 781 1063 & 1064/AHD/2007 (ASSESSMENT YEAR: 1999-20 00 2000-01 & 2002-03) I.T.O WARD 4 (4) AHMEDABAD. (APPELLANT) VS. MADHUSUDAN INDUSTRIES LTD. MADHUSUDAN HOUSE OPP. NAVRANGPURA TELEPHONE EXCHANGE NAVRANGPURA AHMEDABAD (RESPONDENT ) MADHUSUDAN INDUSTRIES LTD. MADHUSUDAN HOUSE OPP. NAVRANGPURA TELEPHONE EXCHANGE NAVRANGPURA AHMEDABAD (APPELLANT) VS. I.T.O WARD 4 (4) AHMEDABAD. (RESPONDENT ) PAN: AABCM0538M APPELLANT BY : SHRI S.N. SOPARKAR A.R. RESPONDENT BY : SHRI O.P. BATHEJA. SR. D.R. ( )/ ORDER DATE OF HEARING : 13-09-2013 DATE OF PRONOUNCEMENT : -09-2013 PER BENCH: 1. OUT OF THE TOTAL FIVE APPEALS ONE APPEAL IS FILED BY THE ASSESSEE AND THE OTHER FOUR APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 2 VII AHMEDABAD DATED 29.11.2006 30.11.2006 & 13.1 2.2006 FOR A.YS. 1999-2000 2000-01 & 2002-03 RESPECTIVELY. ALL THE APPEALS ARE DISPOSED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. WE FIRST TAKE UP ITA NO. 781/AHD/2007 (FOR A.Y. 199 9- 2000) REVENUES APPEAL 2. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER. 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MA NUFACTURING OF VANASPATI DEOILED CAKES SOLVENT SOLVENT EXTRACTE D OILS SOAP TILES SANITARY WARES AND ELECTRICITY. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 1999-2000 ON 30.12.1999 DECLARING TOTAL INCOME AT RS. 1 20 52 503/-. THE CASE WAS RE-OPENED BY ISSUING N OTICE UNDER SECTION 148 DATED 29.06.2001 AND THEREAFTER THE ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT VID E ORDER DATED 25.03.2003 AND THE TOTAL INCOME WAS DETERMINED AT R S. 3 10 91 550/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 29.11.2006 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER O F CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS TAKEN TH E FOLLOWING EFFECTIVE GROUND. 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CAS E IN DIRECTING THE A.O. TO COMPUTE THE DEDUCTION U/S 80HHC UNIT-WISE (WITHOUT INSISTING FOR REVISED AUDITORS REPORT) IGNORING THE FACT THAT THE LD. CIT(A) HIMSE LF HAD GIVEN CONTRARY DECISION IN THE ASSESSEES OWN CASE FOR A.YRS. 2000-01 & 2001-0 2 WHEREIN THE ACTION OF THE A.O. IN TAKING ALL THE UNITS AS A WHOLE FOR THE PURPOSE OF DEDUCTION U/S 80HHC OF THE ACT WAS UPHELD. ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 3 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS ING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 8 0HHC AMOUNTING TO RS. 1 09 59 205/- AGAINST EXPORT TURNOVER OF RS. 8 08 98 081/-. HE FURTHER NOTED THAT ASSESSEE HAD CLAIMED DEDUCTION ONLY AGAI NST THE PROFIT MAKING UNITS BY EXCLUDING THE LOSS MAKING UNITS. ASSESSIN G OFFICER WAS OF THE VIEW THAT THE TURNOVER AND PROFIT SHOULD BE CONSIDE RED FOR ALL THE DIVISIONS FOR WORKING THE CLAIM OF DEDUCTION UNDER 80HHC AND THE LOSS MAKING UNITS SHOULD NOT BE IGNORED FOR WORKING OUT DEDUCTION. THE SUBMISSION OF THE ASSESSEE THAT IT WAS CONSISTENTLY CLAIMING DEDUCTION ON PROFIT MAKING UNITS EVEN IN THE PAST WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. HE ACCORDINGLY RE-WORKED THE DED UCTION UNDER 80HHC AND THEREAFTER ALLOWED THE DEDUCTION TO THE E XTENT OF RS. 97 03 051/-. AGGRIEVED BY THE ORDER OF ASSESSING O FFICER ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) ALLOWED TH E APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: 6 7 I HAVE GONE THROUGH THE FACTS OF THE CASE. IN THIS CASE THE LD. CIT(A) AHMEDABAD VIDE HIS ORDER DATED 31.03.2004 ALLOWED C ERTAIN RELIEF TO THE APPELLANT. THE ASSESSING OFFICER HAS GIVEN EFFECT TO THE ORDER OF LD. CIT(A) ON 12.05.2004. AFTER RECEIPT OF THE ORDER THE APPELL ANT FILED A LETTER ON 30.08.2004 REQUESTING THE A.O. TO RECTIFY THE ORDER DATED 12.0 5.2004. IN THIS PETITION THE APPELLANT HAS REQUESTED TO RECTIFY THE ORDER GIVING APPEAL EFFECT. THE RECTIFICATION REQUEST WAS MAINLY FOR COMPUTING CORRECT DEDUCTION U/S 80HHC BY TAKING PROFIT MAKING UNITS AS PER DIRECTION OF CIT(A). THIS RECTI FICATION PETITION OF THE APPELLANT FILED ON 30.08.2004 IS STILL PENDING FOR DISPOSAL. IT IS SEEN FROM THE RECORD THAT IN RESPONSE TO THE ABOVE LETTER THE ASS ESSING OFFICER SENT A LETTER DATED 16.02.2005 AND REQUESTED THE ASSESSEE TO FURNISH A CERTIFICATE FROM AUDITORS IN FORM 10CCAC IN SUPPORT OF ITS CLAIM OF DEDUCTION U/ S 80HHC UNIT WISE. THE RELEVANT PORTION OF THE ASSESSING OFFICERS LETTER IS REPRODUCED BELOW. 'YOU HAVE SUBMITTED THE UNIT-WISE WORKING OF EXPORT TURNOVER TOTAL TURNOVER AND PROFIT OF THE BUSINESS. YOU HAVE COMPUTED THE DEDUC TION U/S 80HHC AT RS62 00.948/- IN ACCORDANCE WITH THE CIT(A)'S ORDER . IN THIS CONNECTION YOU ARE REQUIRED TO PRODUCE A CERTIFICATE FROM AUDITORS GIV ING THE DETAILED WORKING OF EXPORT TURNOVER TOTAL TURNOVER PROFIT OF THE BUSI NESS FOR EACH UNIT SEPARATELY AND THE DETAILS OF UNITS THEIR PRODUCTS WHICH ARE ELIG IBLE FOR DEDUCTION U/S 80HHC AS PER CIT(A)'S ORDER DATED 21.03.2004. YOU ARE ALSO R EQUIRED TO SUBMIT THE ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 4 AUDITORS REVISED REPORT IN FORM NO. 10CCAC AS PER THE AFORESAID ORDER OF THE CIT(A). 7 ON RECEIPT OF THIS LETTER THE APPELLANT HAS SUBMIT TED REPLY ON 26.5.2005 STATING THAT THERE IS NO SCOPE TO FILE A REVISED AUDIT REPO RT. THE ORIGINAL CLAIM U/S 80HHC WAS COMPUTED UNIT-WISE AND NOT FOR THE BUSINESS AS A WHOLE AND THIS WAS CERTIFIED BY THE AUDITOR IN HIS CERTIFICATE IN FORM NO. 10CCA C FILED ALONG WITH THE RETURN OF INCOME. THE AO HAS DISALLOWED CERTAIN ITEMS AND ID. CIT(A) HAS ALLOWED PART RELIEF. IN VIEW THIS MATTER. THERE IS NO SCOPE TO F ILE REVISED AUDITORS REPORT. IN COURSE OF HEARING IT IS STATED BY THE LD. A.R. THAT THE ABOVE PETITION U/S 154 IS STILL PENDING FOR DISPOSAL. ON GOING THROUGH THE LD. CIT( A)S ORDER I FIND THAT THERE IS NO DIRECTION OF CIT(A) FOR OBTAINING REVISED AUDITO RS CERTIFICATE FOR ALLOWING DEDUCTION U/S 80HHC UNIT-WISE. THE CIT(A) HAS DIRE CTED TO ALLOW RELIEF U/S. 80HHC UNIT-WISE AND NOT TAKING BUSINESS AS A WHOLE. 7.1 ON CAREFUL CONSIDERATION OF THE MATTER MENTIONE D ABOVE. I AM OF THE VIEW THAT THERE IS NO NEED FOR FILING A REVISED AUDITORS REPO RT SINCE THE ORIGINAL REPORT OF THE AUDITOR IN FORM 10CCAC WAS FILED ALONG WITH THE RET URN OF INCOME WHEREBY DEDUCTION HAS BEEN COMPUTED AND CLAIMED UNIT-WISE. FURTHER THERE IS NO DIRECTION OF CIT(A) TO OBTAIN A REVISED AUDITORS CE RTIFICATE. IN VIEW OF THE MATTER THE ASSESSING OFFICER IS DIRECTED TO RECTIFY THE OR DER DATED 12.05.2004 BY FOLLOWING THE DIRECTION OF CIT(A) AND WITHOUT INSIS TING ON THE REVISED AUDITORS REPORT. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NO W IN APPEAL BEFORE US. 6. BEFORE US THE LD. A.R. AT THE OUTSET SUBMITTED THA T ON IDENTICAL FACTS IN ASSESSEES OWN CASE THE ISSUE HAS BEEN DECIDED FOR ASSESSMENT YEAR 2001-02 IN ITA NO. 765/AHD/2006 ORDER DATED 30.03.2 012 IN FAVOUR OF ASSESSEE. HE POINTED OUT TO THE RELEVANT PARAS OF THE AFORESAID ORDER AND THEREFORE SUBMITTED THAT SIMILAR VIEW BE TAKEN IN T HE PRESENT APPEAL SINCE THERE ARE NO CHANGE IN THE FACTS OF THE YEAR AS COM PARED TO EARLIER YEARS. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT BEFORE THE CO-ORDINATE BENCH OF TRIBUN AL IN ITA NO. 765/AHD/2006 ORDER DATED 30.03.2012 THE ISSUE OF DE DUCTION UNDER ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 5 80HHC WAS CONSIDERED AND DECIDED IN ASSESSEES FAVO UR IN FOLLOWING MANNER:- 31 THE 1 ST ISSUE RAISED HI 2 ND GROUND OF APPEAL FILED BY THE ASSESSEE IS OF DIREC TING THE ASSESSING OFFICER TO COMPUTE DEDUCTION UNDER SECTIO N 80HHC OF THE ACT BY TAKING PROFITS OF ALL THE UNITS AS A WHOLE AND 2 ND ISSUE IN ITS GROUND IS OF TURNOVER/PROFITS OF NON-EXPORTING UNITS TO BE INCLUDED. 32 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THIS ISSUE IS COVERED IN ASSESSEES FAVOUR BY THE ORDER OF I.T.A.T. AHMCDAB AD 'C' BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1992-93 VIDE ITA NO. 1390/ AHD/2003 & 1409/AHD/2003 ORDER DATED 13.08.2009. THE RELEVANT FINDING OF I.T .A.T. FROM THE AFORESAID ORDER (SUPRA) IS REPRODUCED AS UNDER :- '7.1 IN CIT V. RATHORE BROTHERS REPORTED IN (2002) 254 1TR 656 (MAD) HON 'BLE HIGH COURT HELD THAT 'WHERE THE ASSESSEE HAS MAINTA INED SEPARATE ACCOUNTS AND IT HAD MAINTAINED ITS TRADING RECEIPTS AND PROFIT AND LOSS ACCOUNTS SEPARATELY FOR EXPORT SALES AND DOMESTIC SALES AND THERE WAS SUFFICIENT M ATERIAL SUPPORTED BY ALL THE NECESSARY DOCUMENTS TO SHOW THAT THE DEDUCTION CLAI MED WAS ENTIRELY DUE TO EXPORT THERE WAS NO WARRANT FOR DISALLOWING ANY PORTION OF THE EXPORT EARNINGS PRO RATA. BY INVOKING CLAUSE (B) OF SUB-SECTION (3) OF SECTION 8 0HHC OF THE ACT. THE PURPOSE OF THE CLAUSE WAS TO DISALLOW A PART OF THE ALLOWANCE UNDE R THE SECTION ONLY WHEN THE ENTIRE CLAIM COULD NOT BE REGARDED AS BEING RELATABLE TO E XPORT. IN CIT V. SURESH B. MEHTA REPORTED IN (2007) 291 1TR 462 (MAD) IN SIMILAR SET OF FACTS WHERE THE ASSESSEE MAINTAINED THE SEPARATE ACCOUNTS FOR DOMESTIC TRANS ACTION AS WELL AS THE EXPORT TRANSACTION HON. HIGH COURT HELD THAT THE ASSESSEE WAS MAINTAINING SEPARATE ACCOUNTS INDEPENDENT OF HIS OTHER BUSINESS AND THAT THERE WAS NO INTERMINGLING OF EXPENDITURE OR INTERLACING OF F UNDS OF ANY KIND WHATSOEVER THE ASSESSEE WAS ENTITLED TO THE RELIEF. IN THE LIGHT OF THESE DECISIONS AND VIEW TAKEN IN THE ASSESSEE'S OWN CASE BY THE ITAT IN THE A. Y. 1993-9 4 WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE ID. CIT(A) IN DIRECTING THE A.O. TO ADOPT EXPORT TURNOVER AND TOTAL TURNOVER OF THE SOLVENT UNIT AT RAKHIAL A ND SANITARY UNITS AT KADI FOR THE PURPOSE OF DEDUCTION U/S 80HHC OF THE ACT ESPECIAL LY WHEN THE ASSESSEE WAS FOUND TO BE MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR TH ESE UNITS AND THE PROFITABILITY OF EACH UNIT CAN BE DETERMINED. THEREFORE THE GROUN D RAISED BY THE REVENUE IN RELATION 'TO THE AFORESAID ISSUES ARE DISMISSED WHI LE GROUND NOS.2.1 & 2.2.1 RAISED BY THE ASSESSEE ARE ALLOWED.' 33 TO MAINTAIN CONSISTENCY WE RESPECTFULLY FOLLOW THE ABOVE ORDER OF I.T.A.T. ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1992-93 AND THE ASSESSING OFFICER IS DIRECTED TO CALCULATE THE DEDUCTION UNDER SECTION 8 0HHC OF THE ACT IN ACCORDANCE WITH ABOVE ORDER OF ITAT (SUPRA). 8. SINCE THE FACTS IN THE YEAR UNDER APPEAL ARE IDENTI CAL TO THAT OF A.Y. 2001- 02 AS ADMITTED BY BOTH THE PARTIES AND SINCE THE RE VENUE COULD NOT ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 6 CONTROVERT THE FINDINGS OF CIT(A) WE FIND NO REASO N TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 1063 AND 1064/AHD/2007( FOR A.Y. 1999-2000 & 2000-01) REVENUES APPEAL 10. BEFORE US BOTH THE PARTIES SUBMITTED THAT THE FACT S IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE AMOUNTS AND THEREFORE THE SUBMISSIONS MADE BY THEM IN ONE YEAR WOULD BE EQUALLY APPLICABLE TO THE OTHER. WE THEREFORE PROCEED WITH THE FACTS OF ITA NO. 1063/AHD/2007 FOR A.Y. 1999-2000. IN THE PRESENT CASE ASSESSING OFFICER VIDE ORDER D ATED 24 TH MARCH 2006 LEVIED PENALTY OF RS. 31 31 710/- UNDER SECTION 271 (1)(C) AS HE WAS OF THE VIEW THAT ASSESSEE HAS CONCEALED ITS INCOME TO THE EXTENT OF RS. 89 47 745/- BY MAKING A WRONG CLAIM OF DEDUCTION UN DER SECTION 80HHC OF THE ACT. AGGRIEVED BY THE ORDER OF ASSESSING OFF ICER ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 1 3.12.2006 DELETED THE PENALTY BY HOLDING AS UNDER: 6. I HAVE CONSIDERED THE ABOVE SUBMISSIONS. BEFOR E DECIDING THE ISSUE IT IS NECESSARY TO REFER TO THE OBSERVATIONS OF THE LD. A O IN PARA-7.3 OF THE PENALTY ORDER AS UNDER: COMING TO THE ISSUE OF LEVY OF PENALTY IT IS BEIN G TAKEN NOTE OF THAT THE ASSESSEE COMPANY HAS NOT FURNISHED ANY REPLY IN ITS SUPPORT TILL DATE. THE VARIATION BETWEEN INCOME-RETURNED BY THE ASSESSEE COMPANY AND THE INCOME ASSESSED BY THE DEPARTMENT IS QUITE HUGE' HOWEVER IN PARA-4 OF HIS PENALTY ORDER THE AO HAS STATED AS UNDER: ACCORDINGLY A FRESH OPPORTUNITY OF BEING HEARD WA S GIVEN TO THE ASSESSEE VIDE LETTER DATED 16.2.2006 REQUESTING THE ASSESSEE TO A PPEAR BEFORE THE UNDERSIGNED ON OR BEFORE 24.2 2006. IN RESPONSE TO THE SAID NOT ICE THE ASSESSEE COMPANY SUBMITTED ITS REPLY ON 17.2.2006 WHICH IS REPRODUC ED HEREUNDER.' ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 7 FROM THE ABOVE IT IS CLEAR THAT THE APPELLANT HAS F ILED AN EXPLANATION IN COURSE OF PENALTY PROCEEDINGS. THEREFORE THE AO'S OBSERVATIO N THAT APPELLANT HAS NOT FURNISHED ANY REPLY IN SUPPORT OF ITS CLAIM IS NOT CORRECT. 6.1 THE LD. CIT(A) HAS ALLOWED RELIEF (A) ON ACCOU NT OF EXCLUSION OF EXCISE DUTY AND SALES TAX FROM TOTAL TURNOVER (B) UNITWISE COM PUTATION OF DEDUCTION AND NOT THE BUSINESS AS A WHOLE AND (C) CLAIMS OF PROVISIO NS WRITTEN BACK. IN RESPECT OF EXCLUSION OF INTEREST INCOME AND OTHER INCOME FROM BUSINESS PROFIT THE ID. CIT(A) HAS UPHELD THE ORDER OF THE AO. IT IS NECESSARY TO NOTE THAT IN APPELLANT'S CASE IN MY ORDER NO. CIT(A)VII/CIR.4/L 22/2004-05 DATED 29. 11.2006 FOR A.Y. 1999-2000 I HAVE DIRECTED TO THE AO TO GIVE CORRECT APPEAL EF FECT OR RECTIFY THE ORDER U/S 250 DATED 31.3.2004. THIS WILL NO DOUBT REDUCE THE DIS ALLOWANCE OF DEDUCTION U/S 80HHC. REGARDING DIFFERENT ITEMS OF DISALLOWANCE CO NFIRMED BY ID. CIT(A) THERE ARE DIVERGENT OPINIONS OF COURT. FOR EG. IN RESPECT OF INTEREST INCOME THERE IS A DECISION OF HON'BLE I.T.A.T. DELHI (SB) IN CASE OF LALSON ENTERPRISES 89 ITD 15(DEL) WHICH SAYS THAT ONLY NET INTEREST INCOME SH OULD BE EXCLUDED FROM BUSINESS PROFIT FOR COMPUTATION OF DEDUCTION U/S 80 HHC. SAME IS THE ISSUE WITH OTHER ITEMS OF DISALLOWANCES MADE BY THE AO. 6.2 IT IS TO BE NOTED THAT THE ASSESSEE HAS DISCLO SED ALL MATERIAL .FACTS WHILE FILING RETURN OF INCOME. IN FACT THE AO HAS RECOMPUTED DE DUCTION U/S 80HHC AFTER DISALLOWING OR EXCLUDING CERTAIN INCOME AS MENTIONE D IN THE P & L ACCOUNT FILED WITH THE RETURN OF INCOME. 6.3 IN ADDITION TO THIS IT IS VERY CLEAR THAT MAN Y ISSUES LIKE UNITWISE DEDUCTION EXCLUSION OF EXCISE DUTY AND SALES TAX FROM TOTAL TURNOVER ETC. HAVE BEEN A MATTER OF DISPUTE BETWEEN THE DEPARTMENT AND THE APPELLANT HAS INFACT GOT A RELIEF FROM I.T.A.T. AHMEDABAD IN ITS OWN CASE FOR A.Y. 1993-9 4. FROM THE ABOVE IT IS CLEAR THAT THE CLAIM OF THE APPELLANT CAN BE DECIDED IN E ITHER WAY BY RELYING DECISIONS OF COURTS ON THE SUBJECT. THIS MAKES THE ISSUE DEBA TABLE ONE ON WHICH TWO OPINIONS ARE POSSIBLE. DISALLOWANCE OF APPELLANT'S CLAIM ON SUCH ISSUE CANNOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. 6.4 .. 6.5.. 6.6IN VIEW OF THE ABOVE DECISIONS THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80HHC WILL NOT AMOUNT TO CONCEALMENT OF INCOME. IN ADDITION TO THIS IN APPELLANTS CASE IT HAS FILED ALL NECESSARY PARTICU LARS ALONG WITH RETURN OF INCOME. ON THIS ACCOUNT ALSO EVEN IF THE DISALLOWANCE IS MA DE THERE CANNOT BE A CONCEALMENT. 11. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NO W IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1.THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF T HE CASE IN CANCELING THE PENALTY OF RS. 28 34 748/- LEVIED U/S. 271(1)(C) OF THE I.T. ACT 1961 HOLDING THAT NO PENALTY WAS LEVIABLE IN RESPECT OF ADDITIONS/DISALLOWANCES MADE ON DEBATABLE/DISPUTED CLAIMS/DEDUCTIONS IGNORING THE FACT THAT THE ASSESSEE COMPANY HAD FURNISHED INACCURATE PARTICULA RS OF INCOME ON VARIOUS DEDUCTIONS TO LOWER ITS ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 8 TAX LIABILITY WHICH WERE CONFIRMED IN QUANTUM APPE AL AS HELD IN THE CASES OF A.M. SHAH & CO. VS. CIT 238 ITR 415 (GUJ) AND CIT VS. GATES FOAM AND RUBBER COMPANY 91 ITR 467 (KER). 12. BEFORE US THE LEARNED D.R. RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND THE LD. A.R. SUBMITTED AGAINST THE WORKING OF DEDUCTION UNDER 80HHC THE MATTER HAS BEEN SUBSTANTIALLY DECI DED IN FAVOUR OF ASSESSEE AND THEREFORE NO PENALTY IS LEVIABLE. HE FURTHER SUBMITTED THAT MANY COURTS HAVE DELETED THE PENALTY LEVIED ON THE DEDUCTION UNDER 80HHC FOR THE REASON THAT THE DEDUCTION U/S 80HHC H AS BEEN A CONTENTIOUS ISSUE AND THE ISSUE IS DEBATABLE AND TH EREFORE ADDITION MADE ON ACCOUNT OF VARIATION TO DEDUCT U/S 80HHC CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME. HE THUS SUPPORTED THE ORDER OF CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS WHILE FILING T HE RETURN OF INCOME. FURTHER HE HAS ALSO NOTED THAT MANY ISSUES LIKE UNI TWISE DEDUCTION EXCLUSION OF EXCISE DUTY AND SALES TAX FROM TOTAL T URNOVER ETC. HAD BEEN A MATTER OF DISPUTE BETWEEN THE DEPARTMENT AND THE AS SESSEE AND THUS THE ISSUE OF DEDUCTION IS A DEBATABLE ONE ON WHICH TWO OPINIONS ARE POSSIBLE. HE FURTHER HELD THAT DISALLOWANCE OF ASSESSEES CLA IM OF SUCH ISSUES CANNOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. FURTHER WHILE DECIDING THE QUANTUM APPEAL IN ITA NO. 781/AHD/2010 ORDER HEREINABOVE WE HAVE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. IN VIEW OF THE AFORESAID FACTS WE ARE OF THE VIEW THAT NO PENALTY FOR CONCEALMENT OF INCOME IS LEVIABLE I N THE PRESENT CASE AND THEREFORE WE FIND NO REASON TO INTERFERE WITH THE O RDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. FURTHER SINCE THE FACTS IN A.Y. ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 9 1999-2000 ARE IDENTICAL TO THAT OF A.Y. 2000-01 WE ALSO DELETE THE PENALTY FOR A.Y. 2000-01. 14. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ITA NO. 766/AHD/2007 (FOR A.Y. 2002-03) ASSESSEES APPEAL 15. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2002-0 3 ON 30.10.2002 DECLARING TOTAL INCOME AT RS. 62 46 583/-. THE CAS E WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 28.03.2005 AND THE TOTA L INCOME WAS DETERMINED AT RS. 79 41 105/-. AGGRIEVED BY THE ORD ER OF ASSESSING OFFICER ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 30.11.2006 PARTLY ALLOWED THE APPEAL OF THE A SSESSEE. 16. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE AND REVENUE BOTH ARE IN APPEAL BEFORE US WE FIRST TAKE UP ASSESSEES APPEA L. 1 ST GROUND IS GENERAL AND REQUIRES NO ADJUDICATION THE REFORE DISMISSED. GROUND 2 AND 3 ARE WITH RESPECT TO DISALLOWANCE U NDER SECTION 14A. 17. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS ING OFFICER NOTICED THAT ASSESSEE ON THE INVESTMENTS OF RS. 1 57 78 386 /- IN SHARES MUTUAL FUNDS AND SUBSIDIARY COMPANIES HAD EARNED DIVIDEND INCOME TO THE TUNE OF RS. 11 124/- WHICH WAS CLAIMED AS EXEMPT UNDER S ECTION 10 (33) OF THE ACT. ASSESSING OFFICER WAS OF THE VIEW THAT AS PER SECTION 14A OF THE ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 10 ACT THE EXPENSES INCURRED FOR EARNING DIVIDEND INC OME CANNOT BE ALLOWED AS DEDUCTION AND THAT INTEREST EXPENSES INC URRED FOR MAKING INVESTMENTS ALSO CANNOT BE ALLOWED AS BUSINESS EXPE NDITURE UNDER SECTION 36 OF THE ACT. HE NOTED THAT THE ASSESSEE H AD DEBITED INTEREST OF RS. 1 44 68 905/- AND THE INVESTMENTS AT THE BEGINN ING AND END OF THE YEAR WAS TO THE TUNE OF RS. 1 57 78 386/-. HE ACCOR DINGLY WORKED OUT THE DISALLOWANCE OF INTEREST IN PROPORTION OF THE INVES TMENTS TO THE TOTAL FUNDS OF THE ASSESSEE AND DETERMINED THE DISALLOWAN CE OF INTEREST AT RS. 5 56 080/-. HE FURTHER DISALLOWED RS. ONE LAC ON AC COUNT OF ADMINISTRATIVE AND GENERAL EXPENSES AND THUS MADE A TOTAL DISALLOWANCE OF RS. 6 56 080/-. AGGRIEVED BY THE ORDER OF ASSES SING OFFICER ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED PA RTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 5.2. I HAVE CONSIDERED THE ABOVE SUBMISSIONS. IT I S A FACT THAT INTEREST ON TERM LOAN INTEREST OF PARTLY COVERTIBLE DEBENTURES AND INTERE ST PAID TO CLFI CANNOT BE USED FOR THE PURPOSE OF INVESTMENT IN SHARES OR DIVIDEND EAR NING INVESTMENT. HOWEVER INTEREST INCOME OF THE APPELLANT PARTICULARLY INTEREST ON F DRS WITH BANK OF BARODA (RS. 4 17 442/-) AND INTEREST ON INTER CORPORATE DEPOSIT S (RS. 95 55 118/-) CANNOT BE SAID TO BE OUT OF OWN SOURCES SINCE THE APPELLANT HAS FA ILED TO FURNISH ANY CLARIFICATION AND EVIDENCE REGARDING THIS. ON CONSIDERATION OF THE F ACTS OF THE CASE IT WILL BE REASONABLE TO EXCLUDE THE FOLLOWING FROM TOTAL EXPE NDITURES OUT OF TOTAL EXPENDITURE CLAIMED OF RS. 1 44 68 904/-: TERM LOAN RS. 21 31 019/- INT. ON PARTLY CONV. DEBENTURES RS. 35 00 000/- INT. PAID TO CLFI RS. 5 25 163/- RS.61 56 182/- THE BALANCE SHOULD BE DISALLOWED ON PRO-RA TA BASIS AS WORKED OUT BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER BY APPLYI NG THE SAME FORMULA.IN THE EARLIER APPEAL FOR A.Y. 2000-01 LD. CIT(A) HAS ALSO HELD T HE SAME VIEW. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO RECALCULATE THE DISALLOWANCE AS DIRECTED ABOVE. 5.3THE NEXT PART OF THIS GROUND IS REGARDING DISALL OWANCE OF ADMINISTRATIVE AND GENERAL EXPENDITURE ON ESTIMATED BASIS AT RS. 1 LA KH. IT IS A FACT THAT SOME EXPENDITURE IS INCURRED IN MONITORING THE INVESTMEN TS. HOWEVER THE ESTIMATE MADE BY THE ASSESSING OFFICER APPEARS TO BE ON HIGHER SI DE. ON CONSIDERATION OF THE FACTS ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 11 OF THE CASE IT WILL BE FAIR AND JUST TO DISALLOW RS . 25 000/- AS EXPENDITURE TOWARDS ADMINISTRATIVE AND GENERAL EXPENDITURE. THIS DISALLOWANCE TO THE EXTENT OF RS. 25 000/- IS CONFIRMED. 18. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE IS N OW IN APPEAL BEFORE US. 19. BEFORE US THE LEARNED A.R. AT THE OUTSET SUBMITTED THAT ON IDENTICAL FACTS IN THE ASSESSEES OWN CASE FOR A.Y. 2000-01 THE IS SUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. HE FURTHER SUBMITTED THA T SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 2000-01 THE ISSUE BE DECIDED IN FAVOUR OF ASSESSEE. HE ALSO PLA CED ON RECORD THE COPY OF THE AFORESAID ORDER. THE LD. D.R. ON THE OTHER H AND RELIED ON THE ORDER OF ASSESSING OFFICER. 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN ITA NO. 3800/AHD/2004 ORDER DATED 2 8.02.2013 FOR A.Y. 2000-01 ON IDENTICAL FACTS THE ISSUE HAS BEEN DECI DED IN FAVOUR OF ASSESSEE BY THE CO-ORDINATE BENCH OF TRIBUNAL BY HO LDING AS UNDER:- 31 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE COPY OF THE AUDITED BALANCE SHEET PLACED ON REC ORD IT IS SEEN THAT AS ON 31 ST MARCH 2000 THE SHAREHOLDERS FUNDS (COMPRISING OF S HARE CAPITAL AND RESERVES) IS TO THE TUNE OF 49.92 CRORES AND THE INVESTMENTS ARE OF RS.1 69 CRORE AND THUS THE INTEREST FREE FUNDS ARE IN EXCESS OF INVESTMENTS. IN THE CAS E OF RELIANCE UTILITY AND POWER (SUPRA) THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST FREE AND OVERDRAFT AND/OR LOAN TAKEN THEN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF INTEREST FREE FUND S GENERATED OR AVAILABLE WITH THE COMPANY IF THE INTEREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. LOOKING AT THE FACTS IN THE PRESENT CASE AND IN THE LIGHT OF T HE RATIO OF THE DECISION IN THE CASE OF RELIANCE UTILITY (SUPRA) SINCE THE SHAREHOLDERS FU NDS ARE FAR IN EXCESS OF THE INVESTMENTS WE ARE OF THE VIEW THAT IT CAN BE PRES UMED THAT INVESTMENTS ARE OUT OF ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 12 INTEREST FREE SHAREHOLDERS FUNDS AND THEREFORE NO D ISALLOWANCE ON ACCOUNT OF INTEREST CAN BE MADE IN THE PRESENT CASE. 32 WITH RESPECT TO THE MANAGEMENT EXPENSES INCURRED IT IS SEEN THAT THE A.O. HAS DISALLOWED MANAGEMENT EXPENSES BY WORKING OUT THE I N THE PROPORTION OF EXEMPT INCOME TO THE TOTAL RECEIPTS. HE HAS NOT PIN POINTE D ANY PARTICULAR EXPENSES WHICH THE ASSESSEE HAS INCURRED FOR EARNING EXEMPT INCOME. 33 IN THE CASE OF CATHOLIC SYRIAN BANK & ORS. 237 C TR 164 (KER) IT HAS BEEN HELD AS UNDER:- IN THE ABSENCE OF ANY PRECISE FORMULA FOR PROPORTI ONATE DISALLOWANCE NO DISALLOWANCE IS CALLED FOR IN RESPECT OF ADMINISTRA TIVE COST ATTRIBUTABLE TO EARNING OF TAX FREE INCOME UNTIL RULE 8D CAME INTO FORCE ' 34 IN THE CASE OF ACIT VS. TORRENT PH ARRNACEUTICALS LTD. 23 TAXMANN.COM 55 (AHD ) THE CO-ORDINATE BENCH HAS HE LD AS UNDER:- SECTION 14A OF THE INCOME TAX ACT 1961 - EXPENDITU RE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME -ASSESSMENT Y EAR 2005-06 ~~ WHETHER PROPORTIONATE DISALLOWANCE U/S 14A SHOULD BE LIMIT ED TO ONLY INTEREST LIABILITY AND NOT OVERHEAD OR ADMINISTRATIVE EXPENDITURE WHICH S HOULD BE CONSIDERED FOR DISALLOWANCE UNDER RULE 3D FROM 2007-08 - HELD YES ~~ WHETHER FOLLOWING RATIO IN CASE OF CIT VS. CATHOLIC SYRIAN BANK LTD. [2002] 20 7 TAXMAN 2/ [2011] 9 TAXMANN.COM 148 (KER ) (MAG.) ADDITION MADE ON ACCO UNT OF ADMINISTRATIVE EXPENSES WAS TO BE DELETED AND ASSESSEE'S APPEAL WAS TO BE A LLOWED - HELD YES. [IN FAVOUR OF ASSESSEE.].' 35 FOLLOWING THE RATIO OF THE DECISION OF HON'BLE K ERALA HIGH COURT AND THE CO- ORDINATE BENCH WE ARE OF THE VIEW THAT IN THE PRESE NT CASE NO DISALLOWANCE WITH RESPECT TO MANAGEMENT EXPENSES CAN BE MADE IN VIEW OF THE FACT THAT THE DISALLOWANCE HAS BEEN MADE WITHOUT PIN POINTING ANY EXPENSES WHICH ARE DISALLOWABLE. WE THUS DELETE THE DISALLOWANCE MADE. 21. SINCE IT IS AN UNDISPUTED FACT THAT THE FACTS OF TH E CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 2000-01 AND SI NCE THE REVENUE COULD NOT POINT OUT ANY CONTRARY FACTS WE FOLLOWING THE ORDER OF CO-ORDINATE BENCH FOR A.Y. 2000-01 IN ITA NO. 3800/AHD/2004 (SU PRA) AND FOR SIMILAR REASONS DECIDE THE ISSUE IN FAVOUR OF ASSE SSEE. THUS THIS GROUND OF ASSESSEE IS ALLOWED. GROUND NO. 4 IS WITH RESPECT TO DE-MERGER EXPENSES OF RS. 1 66 666/-. ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 13 22. ASSESSING OFFICER NOTICED THAT HON. GUJARAT HIGH CO URT VIDE ORDER DATED 30.10.2011 HAVE APPROVED THE SCHEME OF DE-MERGER OF THE ASSESSEE. FROM THE DETAILS OF THE EXPENSES INCURRED HE NOTIC ED THAT ASSESSEE HAS INCURRED RS. 3 27 332/- FOR THE PURPOSE OF DE-MERGE R. ASSESSING OFFICER WAS OF THE VIEW THAT SINCE DE-MERGER BRINGS STRUCTU RAL CHANGES LEADING TO ALTERATION IN THE FRAMEWORK OF THE ASSESSEE THE EX PENDITURE IN RELATION TO DE-MERGER WOULD BE CAPITAL IN NATURE. HE ACCORDINGL Y DISALLOWED RS. 3 27 332/-. AGGRIEVED BY THE ORDER OF A.O. ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 6.1 ON GOING THROUGH THE RECORD I FIND THAT THERE I S A BREAK UP OF DE-MERGER EXPENDITURE AMOUNTING TO RS. 3 27 332/-. HOWEVER THE FACT THAT THE SAME HAS TO BE BORNE BY MADHUSUDAN OILS AND FACTS LTD. IS NOT AVAI LABLE FROM DETAILS FILED BEFORE ME. IN ANY CASE THE FACT REMAINS THAT THIS IS A CA PITAL EXPENDITURE WHICH IS REQUIRED TO BE DISALLOWED. AT THE SAME TIME IN VIEW OF CLEA R PROVISIONS OF LAW APPELLANTS CLAIM OF DEDUCTION U/ 35DD HAS TO BE ALLOWED. THER EFORE THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE DETAILS AND IF 50% IS BORNE BY MADHUSUDHAN OILS AND FATS LTD. THEN THE ASSESSING OFFICER WOULD TAKE THE BALA NCE OF RS. 1 63 666/- FOR THE PURPOSE OF SECTION 35DD AND ALLOW 1/5 TH OF THE SAME. THIS GROUND IS TREATED AS PARTLY ALLOWED. 23. BEFORE US THE LD. A.R. FAIRLY SUBMITTED THAT IN VI EW OF THE PROVISIONS SECTION 35DD THE ISSUE HAS TO BE DECIDED AGAINST T HE ASSESSEE. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF CIT(A ). WE HAVE HEARD BOTH THE PARTIES AND IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GR OUND OF ASSESSEE IS DISMISSED. GROUND NO. 5 IS WITH RESPECT TO PRIOR PERIOD EXPENS ES. ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 14 24. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS ING OFFICER NOTICED THAT ASSESSEE HAD DEBITED THE FOLLOWING AMOUNTS TO THE PROFIT AND LOSS ACCOUNT AND WERE NOT RELATED TO THE ASSESSMENT YEAR S. HE ACCORDINGLY CONSIDERED THE SAME TO BE PRIOR PERIOD EXPENDITURE AND DISALLOWED THE SAME. (I) RAKHIAL DIVISION RS. 135821/- (II) NIMBAHERA RS. 47341/- (III) WIND FARM UNIT RS. 100/- (IV) CORPORATION OFFICE RS. 334523/- RS 517785/- 25. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 7. THE NEXT GROUND IS REGARDING PRIOR PERIOD EXPENSES. THE ASSESSING OFFICER HAS DISALLOWED PRIOR PERIOD EXPENSES AMOUNTING TO RS. 5 17 785/-. IN COURSE OF HEARING BEFORE ME IT WAS SUBMITTED THAT THE APPELL ANT HAVE FOUR DIVISIONS WHERE THE NET FIGURE AFTER ADJUSTMENT OF PRIOR PERIOD EXP ENSES HAD BEEN WORKED OUT. HOWEVER WHILE EXAMINING THE SAME THE ASSESSING OF FICER HAS MADE A MISTAKE TO THE EXTENT OF TAKING THE NET FIGURE WHERE SHORT PRO VISION OF EARLIER YEARS HAVE ALSO BEEN WRITTEN BACK AND ADJUSTED WITH PROVISIONS MADE RELATING TO EARLIER YEARS EXPENSES. 7.1 I HAVE EXAMINED THE DETAILS. AS THE EXPENDITURE RE LATES TO EARLIER YEARS I HOLD THAT ASSESSING OFFICER IS JUSTIFIED IN DISALLOWING THE SAME. HOWEVER ONLY THE FOLLOWING EXPENDITURE RELATING TO EARLIER YEARS CAN BE DISALLOWED: (I) RAKHIAL DIVISION-NET BALANCE OF RS. 1 35 821 /- (II) NIMBHAHERA DIVISION-DEBIT EXPENSES OF RS. 38 376/- (III)CORPORATE OFFICE DEBIT EXPENSES- RS. 36 610/ - RS. 2 10 807/- THEREFORE OUT OF DISALLOWANCE OF RS. 5 17 785/- RS. 2 10 807/- IS HEREBY CONFIRMED. THE APPELLANT GETS RELIEF OF RS. 3 06 97 8/-. ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 15 26. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE IS N OW IN APPEAL BEFORE US. 27. BEFORE US THE LD. A.R. SUBMITTED THAT THE EXPENSES WHICH HAVE BEEN DEBITED IN THE CURRENT YEAR HAD CRYSTALLIZED DURING THE YEAR AND THEREFORE THE SAME WERE ALLOWABLE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD RIGHTLY CLAIMED IT AS EXPENDITURE FOR THE YEAR. HE THEREFORE SUBMITTED THAT NO DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENDIT URE IS CALLED FOR. HE FURTHER RELIED ON THE DECISION IN THE CASE OF SAURA SHTRA CEMENT AND CHEMICAL LTD. VS. CIT 213 ITR 523. THE LEARNED D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER. 28. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS SUBMITTED THAT THE LI ABILITY CRYSTALLIZED DURING THE YEAR AND FOR WHICH HE HAS ALSO PLACED TH E COPY OF THE LEDGER ACCOUNT BUT HOWEVER NO OTHER SUPPORTING EVIDENCE IN SUPPORT OF ITS CLAIM IS AVAILABLE ON RECORDS. WE FURTHER FIND THAT OUT OF THE TOTAL DISALLOWANCE MADE BY ASSESSING OFFICER CIT(A) AFTER CONSIDERING THE SUBMISSIONS GRANTED PARTIAL RELIEF TO ASSESSEE. IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO THE INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF ASSESSEE IS DISMISSED. 29. THUS THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ITA NO. 767/AHD/2007 (FOR A.Y. 2002-03) REVENUES A PPEAL 30. THE GROUND READS AS UNDER: ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 16 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O TO RE-COMPUTE THE DISALLOWANCE MADE ON ACCOUNT OF INTE REST OF RS. 5 56 080/- AND TO RESTRICT THE ADMINISTRATIVE EXPENSES OF RS. 1 LAKHS TO RS. 25 000/-. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O TO RESTRICT THE DISALLOWANCE MADE ON ACCOUNT OF PRI OR PERIOD EXPENSES FROM RS. 5 17 785/- TO RS. 2 10 807/- WITHOUT GIVING ANY CLE AR FINDINGS ON THE ISSUE. 31. BEFORE US BOTH THE PARTIES SUBMITTED THAT THE GROUN D RAISED IN THIS APPEAL ARE INTERCONNECTED WITH THE GROUND RAISED IN ITA NO . 766/AHD/2007. IT WAS FURTHER SUBMITTED THAT THE SUBMISSIONS MADE BY THEM WOULD BE EQUALLY APPLICABLE TO THE PRESENT GROUNDS. 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. SINCE GROUND NO. 1 OF THE PRESENT APPEAL IS CONNECT ED WITH GROUND NO. 2 & 3 OF ITA NO. 766/AHD/2007 WHICH IS WITH RESPECT T O DISALLOWANCE UNDER 14A AND SINCE GROUND NO. 2 & 3 IN ASSESSEES APPEAL IN ITA NO. 766/AHD/2007 HEREINABOVE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE THIS GROUND OF REVENUE IS DISMISSED. 33. SINCE GROUND NO. 2 OF THE PRESENT APPEAL IS CONNECT ED WITH GROUND NO. 5 OF ITA NO. 766/AHD/2007 WHICH IS WITH RESPECT TO PR IOR PERIOD EXPENSES AND SINCE THE GROUND NO. 5 OF ASSESSEE IN ITA NO. 7 66/AHD/2007 IS DISMISSED HEREINABOVE THIS GROUND OF REVENUE IS AL LOWED. THUS THIS GROUND OF THE REVENUE IS ALLOWED. 34. IN THE RESULT THE APPEAL OF REVENUE IS PARTLY ALLOW ED. 35. IN THE RESULT ITA NO. 781/AHD/2010 REVENUES APPEAL IS DISMISSED ITA. NOS. 1063 & 1064/AHD/2010 REVENUES APPEALS ARE DIS MISSED ITA NO. ITA NOS.766 767 781 1063 & 1064/A /2010 . A.YS. 1999-2000 2000- 01 & 2002- 03 17 766/AHD/2010 ASSESSEES APPEAL IS PARTLY ALLOWED AN D ITA NO. 767/AHD/2010 REVENUES APPEAL IS ALSO PARTLY ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 04 - 10 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T AHMEDABAD