The ACIT, Ahmedabad Circle-3,, Ahmedabad v. Gray Cast Foundry Works, Ahmedabad

ITA 1477/AHD/2007 | 2003-2004
Pronouncement Date: 12-04-2010 | Result: Dismissed

Appeal Details

RSA Number 147720514 RSA 2007
Assessee PAN SINCE1995A
Bench Ahmedabad
Appeal Number ITA 1477/AHD/2007
Duration Of Justice 3 year(s)
Appellant The ACIT, Ahmedabad Circle-3,, Ahmedabad
Respondent Gray Cast Foundry Works, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 12-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 12-04-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year 2003-2004
Appeal Filed On 12-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' [BEFORE SHRI MAHAVIR SINGH JM AND SHRI A N PAHUJA A M ITA NO.1477/AHD/2007 WITH C O NO.131/AHD/2007 (ASSESSMENT YEAR:-2003-04) ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-3 AHMEDABAD V/S GRAY CAST FOUNDRY WORKS 163 GVMM ODHAV AHMEDABAD [PAN:AABFG9451C] [APPELLANT] [RESPONDENT] REVENUE BY SHRI C K MISHRA DR ASSESSEE BY:- SHRI TUSHAR P HEMANI AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION[CO] BY THE ASSESSEE AGAINST AN ORDER DATE D 25-01-2007 OF THE LD. CIT(APPEALS)-VII AHMEDABAD RAISES THE FOL LOWING GROUNDS- ITA NO.1477/AHD/2007 1 THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELET ING THE ADDITION OF RS.19 55 581/- MADE ON ACCOUNT OF DISALLOWANCE OUT OF LABOUR CHARGES MISCELLANEOUS EXPENSES. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3 THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. C O NO.131/AHD/2007 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE APPELLANT HAS NOT RENDERED ANY SERVICES TO M/S CENT RICAST ENTERPRISES PVT. LTD FOR THE YEAR UNDER CONSIDERATION . ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 2 2. THE ID. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE APPELLANT HAS NOT RENDERED ANY SERVICES TO M/S CENT RICAST ENTERPRISES PVT. LTD FOR A.Y. 2002-03 AND EARLIER YEARS. 3. THE ID. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE PAYMENT OF SERVICE CHARGES BY M/S CENTRICAST ENTERP RISES PVT. LTD TO THE APPELLANT WAS NOTHING BUT DIVERSION OF INCOME WITHO UT THERE BEING ANY FACTUAL BASIS FOR THE SAME. 4. BOTH THE LOWER AUTHORITIES HAVE ERRED IN L AW AND ON FACTS IN NOT PROPERLY APPRECIATING AND CONSIDERING VARIOUS SUBMI SSIONS EVIDENCES AND SUPPORTING PLACED ON RECORD DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS AND NOT PROPERLY APPRECIATING VARIOUS F ACTS AND LAW IN ITS PROPER PERSPECTIVE AND FURTHER ERRED IN PASSING ORD ERS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 5. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE LEVY OF INTEREST U/S 234B & C OF THE ACT. LD. CIT(A) FAILED TO APPRECIATE THAT LD. AO HAS LEVIED INTEREST U/S 234B & 234C OF THE ACT O N THE ASSESSED INCOME FIGURE WITHOUT AFFORDING AN OPPORTUNITY OF B EING HEARD TO THE APPELLANT. THE APPELLANT CAME TO KNOW ABOUT THE LEV Y OF INTEREST ONLY WHEN THE ASSESSMENT ORDER ALONG WITH NOTICE U/S 156 OF T HE ACT WERE RECEIVED BY IT. THE ISSUE IS DIRECTLY COVERED BY THE DECISIO N OF THE ITAT AHMEDABAD BENCH IN THE CASE OF VIKSHARA TRADING & INVESTMENT (P) LTD. VS. DCIT (61 TTJ 6) FOLLOWING THE DECISION OF THE COCHIN BENCH I N THE CASE OF M MANI VS. ACIT (51 TTJ 273) WHEREIN IT WAS HELD THAT THE LEVY OF INTEREST U/S 234A/B/C IS AN APPEALABLE ISSUE AND THEREFORE OPPOR TUNITY OF HEARING MUST BE GRANTED TO THE ASSESSEE. IF THE OPPORTUNITY IS N OT GRANTED THERE IS GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THER EFORE THE LEVY OF INTEREST DESERVES TO BE DELETED. 2 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING AN INCOME OF RS.24 81 446/- FILED ON 06-1 1-2003 BY THE ASSESSEE AFTER BEING PROCESSED ON 21-03-004 U/S 14 3(1) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS TH E ACT] WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 18- 11-2004. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASS ESSEE CLAIMED AN EXPENDITURE OF RS.19 55 582/- ON ACCOUNT OF LABOUR CHARGES MISC. IN THE YEAR UNDER CONSIDERATION AS AGAINST R S.1 52 648/- IN THE PRECEDING FINANCIAL YEAR. TO A QUERY BY THE AO THE ASSESSEE ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 3 REPLIED VIDE LETTER DATED 29-03-2006 THAT THE ASSES SEE WAS RENDERING CERTAIN SERVICES TO M/S CENTRICAST ENTERPRISE PVT. LTD. (CEPL) IN THE PRECEDING YEARS FOR WHICH IT HAD RECEIVED AN AMOUNT OF RS.14 77 821/- IN THE YEAR UNDER CONSIDERATION. AFT ER SETTING OFF THE TOTAL EXPENDITURE OF RS.16 30 469/- AGAINST THESE R ECEIPTS THE BALANCE AMOUNT OF RS.1 52 648/- WAS CLAIMED AS LAB OUR CHARGES MISC. SINCE CEPL WAS IN NEED OF TECHNICAL CONSULTA NCY SERVICES AN ARRANGEMENT WAS ENTERED INTO IN AY 1995-96 WHEREUND ER THE ASSESSEE AGREED TO PROVIDE TECHNICAL SERVICES. IN SUPPORT THE ASSESSEE ALSO FILED THREE BILLS RAISED IN THE MONTH S OF OCTOBER NOVEMBER AND DECEMBER 2001. HOWEVER THE AO DID NO T ACCEPT THESE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THA T THE SERVICES RENDERED BEING OF A SPECIAL NATURE AND LABOUR INTEN SIVE THE ASSESSEE WOULD HAVE SPECIALLY EMPLOYED THEIR STAFF AT THE LOCATION OF CEPL SINCE 1995 AND THOUGH THE ASSESSEE CLAIMED TO HAVE TERMINATED THE ARRANGEMENT THE EXPENSES INCREASED RATHER THAN DECREASING. SINCE THE SERVICES WERE NOT FOUND TO BE ONLY OF CONSULTANCY NATURE NOR THE DETAILS OF TERMINATION O F THE ARRANGEMENT WERE FILED THE AO CONCLUDED THAT THE SERVICES HAV E BEEN RENDERED BY THE ASSESSEE WITHOUT CHARGING THE REQUISITE FEE S FROM THE CEPL WHILE THE EXPENSES DEBITED WERE NOT FOUND TO BE INC URRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. ACCORDINGL Y THE AO DISALLOWED THE CLAIM FOR EXPENSES OF RS.19 55 582/- . 3 ON APPEAL THE ASSESSEE REITERATED THEIR CONTENT IONS BEFORE THE AO AND FURTHER EXPLAINED THAT THE AGREEM ENT WAS IN OPERATION UP TO 31-03-2002. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION NO INCOME HAD BEEN SHOWN UNDER THE H EAD OF RECEIPT OF SERVICE CHARGES FROM SISTER CONCERN CEPL. REGARD ING THE EXPENSES OF RS.19 55 582/- IT WAS CLARIFIED THAT I N EARLIER ASSESSMENT YEARS THE NET AMOUNT OF LABOUR CHARGES WAS DEBITED TO P&L ACCOUNT AFTER EXCLUDING AMOUNT RECEIVED AS SERV ICE CHARGES. ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 4 THEREFORE THE ASSERTION OF THE AO THAT THE EXPENDI TURE OF ONLY RS.1 52 648/- WAS INCURRED IN AY 2002-03 WAS NOT CO RRECT BECAUSE THE ACTUAL EXPENDITURE INCURRED IN THAT YEAR WAS RS .16 30 469/- WHILE IN THE YEAR UNDER CONSIDERATION THE EXPENDITU RE OF RS.19 55 582/- HAD BEEN INCURRED. IN THE LIGHT OF T HESE SUBMISSIONS AND AFTER HAVING A REMAND REPORT FROM THE AO THE L EARNED CIT(A) CONCLUDED AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIO N AND THE DOCUMENTS FILED. IT IS TO BE NOTED THAT APPELLANT FIRM AND M/ S CENTRICAST ENTERPRISES PVT. LTD. (CEPL) ARE SISTER CONCERNS. THEY ARE IN T HE SAME LINE OF BUSINESS AND CONTROLLED BY SAME GROUP OF PERSONS VIZ. THE P ARTNERS OF THE APPELLANT FIRM. ON PERUSAL OF THE DETAILS I FIND THAT FOR A. Y. 02-03 THE APPELLANT FIRM HAS RECEIVED SERVICE CHARGES EVERY MONTH AS UNDER AGAINST WHICH IT HAS ADJUSTED THE EXPENDITURE INCURRED. ASST. YEAR : 2002-03 LABOUR CHARGES PAID AND SERVICE CHARGES RECEIVED . (A) LABOUR CHARGES PAID TO: (I) NEETA LABOUR CONTRACTOR : RS.3 99 993 (II) SEMOL LABOUR SUPPLIER : RS.4 68 049 (III) VAHANVATI LABOUR CONTRACTOR: RS.4 70 961 (B) TUMBLING CHARGES PAYABLE TO CEPL: RS.2 91 467 TOTAL RS.16 30 469 LESS: (C) SUPERVISION CHARGES RECEIVABLE FROM CEPL: RS.L4 77 821 NET EXPENSES CLAIMED RS. 1 52 648 ASSTT. YEAR: 2003-04 LABOUR CHARGES PAID AND SERVICE CHARGES RECEIVED . (A) LABOUR CHARGES PAID TO: (I) NEETA LABOUR CONTRACTOR RS.4 17 758.69 (II) SEMOL LABOUR SUPPLIER RS.5 14 391.98 (III) VAHANVATI LABOUR CONTRACTOR RS.4 93 958.9 2 (IV) OTHER CHARGES RS. 18 678.41 (B) TUMBLING CHARGES PAYABLE TO CEPL:RS.5 10 793.00 ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 5 TOTAL RS.19 55 581.00 LESS: SUPERVISION CHARGES RECEIVABLE FROM CEPL : RS. NI L NET EXPENSES CLAIMED RS. 19 55 581.00 5.1 THE ABOVE RECEIPT OF SERVICES CHARGES FROM CEP L AND TUMBLING CHARGES PAYABLE TO CEPL IS MADE ON THE BASIS OF AGR EEMENT DATED 1.4.95. THE RELEVANT PORTION OF THIS AGREEMENT IS REPRODUCE D BELOW: '1. THIS AGREEMENT IS EFFECTIVE FROM 1.4.1995 FOR 5 YEARS AND CAN BE RENEWED THEREAFTER FOR SUCH FURTHER PERIOD AND ON T HE SUCH TERMS AND CONDITIONS AS BOTH THE PARTIES HERETO THEN MUTU ALLY AGREED TO. 2. AT THE REQUEST OF CEPL GCFW HAS AGREED TO PROVI DE THE TECHNICAL SERVICES WHICH INCLUDES. A) PRODUCTION PLANNING- PRODUCTION PLANNING INCLUDES RECEIVING OF ORDERS FR OM THE CUSTOMERS DETERMINING THE PRIORITY OF THE PRODUCTION ASCERTAINING THE REQUIREMENT OF RAW MATERIAL AGAI NST SPECIFIC ORDERS CHECKING OF M CLEANING OF SOFT FLOORR ETC. B) MELTING ARRANGEMENT: MELTING ARRANGEMENTS INCLUDES CALCULATION OF THE CH ANGE OF RAW MATERIALS DETERMINING THE PRIORITY OF THE PRODUCTI ON ASCERTAINING THE REQUIREMENT OF RAW MATERIALS AGAINST SPECIFIC ORDER S CHECKING OF PATTERNS CLEARING OF SOFT FLOOR ETC. C) MOULDING ASSISTANCE: MOULDING ASSISTANCE INCLUDES SUPERVISIONS OF SAND P REPARATION ARRANGING FOR ALL TOOLS AND TACLES SUPERVISION OF MOULDING PROCESS AND PREPARATION OF MOULD BOXES ARRANGING FOR ... SUPERVISION OF LIQUID METAL POURING AND ARRANGING FOR TRANSFER OF MATERIALS ETC. D) FETTLING INSPECTION: FETTLING INSPECTION INCLUDES INSPECTION OF FETTLING OF CASTINGS SUPERVISION OF SEPARATION OF RUNNERS/RISERS ARRANG ING FOR MANPOWER AND FETTLING MATERIALS INSPECTION OF FINISHED MATE RIAL ETC. ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 6 E) MAINTENANCE SERVICES-MAINTENANCE SERVICE INCLUDE S SUPERVISION OF MAINTENANCE STAFF ATTENDING SHUT DOWN AND WEEKLY M AINTENANCE AND PREVENTIVE MAINTENANCE. 3. AT THE REQUEST OF GCFW CEPL HAS ALSO AGREED TO PROVIDE TUMBLING SERVICES TO GCFW ON SUCH TERMS AS SPECIFIE D IN THE FOLLOWING PARAS. 4. IN CONSIDERATION OF THE ABOVE SERVICES THE SERV ICE CHARGES @ RS.400 PER M.T. OF MATERIALS DESPATCHED BY CEPL TO ITS CUSTOMERS WILL BE PAID BY CEPL TO GCFW WITH A SPECIFIC CONDIT ION THAT CEPL WILL TUMBLE THE GRINDING MEDIA MANUFACTURED AT GCFW ON THE TUMBLING BARREL (TUMBLING MACHINE) POSSESSED BY CEP L FREE OF CHARGE WITH A MAXIMUM LIMIT OF 1800 M.T. PER YEAR A S THE TUMBLING MACHINE IS NOT POSSESSED BY GCFW. TECHNICAL SERVICE CHARGES OF RS.400 PER M.T. PAYABLE BY CEPL TO GCFW WERE ARRIVE D AT AFTER CONSIDERING THE FACT OF FREE TUMBLING OF GRINDING M EDIA OF GCFW BY CEPL. 5. IN CASE TUMBLING OF GRINDING MEDIA OF GCFW EXCEE DS THE ABOVE LIMIT OF 1800 M.T. PER YEAR IN THAT CASE TUMBLING CHARGES @ RS.50 PER MT ON SUCH EXCESS WILL BE PAID BY GCFW TO CEPL. 6. IT IS HEREBY AGREED BY AND BETWEEN CEPL AND GCF W THAT CEPL WILL MAKE THE PAYMENT OF TECHNICAL SERVICE CHARGES ON RECEIPT OF MONTHLY DEBIT NOTE FROM GCFW.' 5.2 ON EXAMINATION OF THE ABOVE FACTS ALONG WITH TH E DETAILS FILED CERTAIN INCONSISTENCY ARE NOTED AS UNDER: (I) IT IS STATED BY THE APPELLANT THAT GROSS AMOUNT OF LABOUR CHARGES ARE ADJUSTED WITH SERVICE CHARGES RECEIVABLE FROM CEPL AND NET AMOUNT IS DEDUCTED BUT IN THE ACCOUNTS THERE IS NO SUCH CLARIFICATION ON THIS NEITHER SUCH A PRACTICE IS F OLLOWED IN PRESENTATION OF ACCOUNTS. (II) THE SERVICES TO BE RENDERED BY APPELLANT AS ME NTIONED IN PARA-2 OF THE AGREEMENT ARE NOT SPECIFIC. THIS RAISES SERIOUS DOUBT ABOUT THE ACTUAL SERVICES RENDERED. THE PAYMENTS ARE ADJUSTED THROUGH BOOK ENTRY. NO DETAILS OR RECORDS OF SERVICE RENDERED BY THE APPELLANT IS MAINTAINED BY EITHER APPELLANT FIRM OR CEPL. (III) AS PER CLAUSE 4 OF THE AGREEMENT THE SERVICE CHARGES ARE TO BE PAID AT THE RATE OF 400 PER M.T. OF MATERIALS DESPA TCHED BY CEPL TO ITS CUSTOMERS WITH A SPECIFIC CONDITION THAT CEPL W ILL TUMBLE GRINDING MEDIA MANUFACTURED BY APPELLANT ON THE TUM BLING BARREL (TUMBLING MACHINE) POSSESSED BY CEPL 'FREE OF CHARG E' WITH A ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 7 MAXIMUM LIMIT OF 1800 M.T. PER YEAR. IF TUMBLING OF GRINDING MEDIA OF APPELLANT FIRM EXCEEDS 1800 M.T. PER YEAR IN THA T CASE TUMBLING CHARGES OF RS.50 PER M.T. ON SUCH EXCESS WILL BE PA ID BY APPELLANT TO CEPL. BUT LABOUR CHARGES ACCOUNT OF THE APPELLAN T FOR A.Y. 2002- 03 SHOWS THAT THE ABOVE AGREEMENT IS NOT FOLLOWED A T ALL. FOR A.Y. 2002-03 THE EXACT QUANTITY OF GRINDING MEDIA TUMBLE D BY CEPL IS NOT AVAILABLE. HOWEVER THE TOTAL PRODUCTION BY APP ELLANT FIRM IS SHOWN AT 2116.637 MT. EVERY MONTH CEPL CHARGES TUMB LING CHARGES TO APPELLANT FIRM. THIS MEANS TUMBLING CHA RGES UPTO 1800 M.T. ARE NOT DONE FREELY AS PER THE AGREEMENT. THE ASSESSEE HAS NOT EXPLAINED WHY TERMS OF AGREEMENT ARE NOT FOLLOW ED. THIS LEADS TO AN INFERENCE THAT THE APPELLANT FIRM IS NOT ACTU ALLY RENDERING ANY SERVICES FOR WHICH IT WAS RECEIVING SERVICE CHARGES FROM CEPL UPTO A.Y. 2002-03. THIS VIEW IS RE-ENFORCED FROM THE ACC OUNTS OF CEPL FOR A.Y. 2002-03 AND 2003-04. UNDER PROFESSIONAL FE ES CEPL HAS SHOWN PAYMENT OF RS.16 94 846 FOR A.Y. 2002-03 WHIC H HAS BEEN REDUCED TO RS.78 961 FOR A.Y. 2003-04. ACCORDING TO THE APPELLANT NO SERVICE CHARGES ARE PAID TO IT AS NO SERVICES AR E RENDERED TO CEPL. BUT HOW CEPL CAN CONTINUE ITS BUSINESS ALMOST AT THE SAME LEVEL WITHOUT THOSE PROFESSIONAL SERVICES IS NOT CL EAR. THIS MEANS SUCH SERVICES WERE NOT NEITHER REQUIRED NOR RENDERE D BY APPELLANT FIRM. 5.3 FROM THE ABOVE FACTS THE FOLLOWING POINTS EMERG E: (I) THE APPELLANT FIRM HAS NOT RENDERED ANY SERVICE S TO CEPL. UPTO A.Y. 2003-04. (II) THE PAYMENT OF SERVICE CHARGES TO APPELLANT FI RM UPTO A.Y.2002-03 ARE NOTHING BUT DIVERSION OF INCOME OF THE SISTER C OMPANY TO THE APPELLANT FIRM WHICH ARE NOT ELIGIBLE FOR DEDUCTION IN THE HANDS OF CEPL UPTO A.Y. 02-03. 6. THE EXPENDITURE OF THE APPELLANT FOR THE CURRENT YEAR IS RS.19 55 581/- WHICH ARE PAID TO THE FOLLOWING PART IES: (I) NEETA LABOUR CONTRACTOR RS. 4 17 758.69 (II) SEMOL LABOUR SUPPLIER RS. 5 14 391. 98 (III) VAHANVATI LABOUR CONTRACTOR RS. 4 9 3 958.92 (IV) OTHER CHARGES RS. 18 678.41 (V) TUMBLING CHARGES PAYABLE TO CEPL RS. 5 10 793 .00 TOTAL RS.19 55 581.00 ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 8 6.1 THE AO'S VIEW IS THAT LABOUR CHARGES AS MENTION ED ABOVE ARE IN CONNECTION WITH THE SERVICES RENDERED TO CEPL. I HA VE HELD EARLIER THAT NO SERVICES WERE RENDERED EITHER IN EARLIER YEAR OR IN CURRENT YEAR TO THE SISTER CONCERN. THEREFORE THESE LABOUR CHARGES CAN BE SAI D TO BE RELATED TO BUSINESS OF THE FIRM. THERE ARE TWO CATEGORIES OF L ABOUR CHARGES ONE IS PAYMENT TO LABOUR CONTRACTORS AND THE OTHER IS TUMB LING CHARGES PAYABLE TO CEPL AS THE APPELLANT HAS NO 'TUMBLING MACHINE' AS MENTIONED IN THE AGREEMENT. THESE EXPENDITURES BEING RELATED TO APPE LLANT'S BUSINESS ARE CLEARLY ALLOWABLE. IN ANY CASE THE AO HAS NOT RELIE D ON ANY MATERIAL TO HOLD THAT THESE EXPENDITURES ARE NOT INCURRED BY THE APP ELLANT FIRM OR ARE ONLY RELATED TO RENDERING OF SERVICE TO CEPL. 6.2 ON CONSIDERATION OF THE FACTS OF THE CASE AND E XPLANATION FILED I HOLD THAT THE ABOVE EXPENDITURE IS ALLOWABLE AS DED UCTION IN THE HANDS OF THE FIRM. CONSEQUENTLY THE DISALLOWANCE OF RS.19 5 5 581/- IS DELETED. 4 THE REVENUE IS NOW IN APPEAL AGAINST THE AFORESAI D FINDINGS OF THE LD. CIT(A). THE LEARNED DR RELIED UPON THE ORDE R OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. UNDISPUTEDLY THE ASSESSEE AND IT S SISTER CONCERN CEPL ARE IN THE SAME LINE OF BUSINESS & CONTROLLED BY THE SAME GROUP OF PERSONS. IN THE AY 2002-03 THE ASSESSEE I NCURRED AN EXPENDITURE OF RS.16 30 469/- WHICH WAS SET OFF AGA INST SUPERVISION CHARGES RECEIVED FROM CEPL TO THE EXTENT OF RS.14 7 7 821/-. IN THE YEAR UNDER CONSIDERATION NO SUPERVISION CHARGES HA VE BEEN RECEIVED FROM CEPL WHILE THE EXPENDITURE IN THE YEA R UNDER CONSIDERATION INCLUDES TUMBLING CHARGES PAYABLE TO CEPL TO THE EXTENT OF RS.5 10 793/- IN TERMS OF AN AGREEMENT EF FECTIVE FROM 01- 04-1995 BESIDES PAYMENT TO LABOUR CONTRACTORS AND O THER CHARGES. UNDISPUTEDLY THERE WERE ONLY TWO CATEGORIES OF LAB OUR CHARGES; ONE PAYMENT TO LABOUR CONTRACTORS AND THE OTHER ON ACCO UNT OF TUMBLING CHARGES. IRRESPECTIVE OF THE FINDINGS OF THE LD. CI T(A) ABOUT SERVICES RENDERED BY THE ASSESSEE TO ITS SISTER CONCERN CEPL SINCE THESE EXPENSES RELATED TO THE BUSINESS OF THE ASSESSEE THE LEARNED ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 9 CIT(A) ALLOWED THE SAME THE GENUINENESS OF THE EXP ENDITURE HAVING NOT BEEN DOUBTED BY THE AO. IN THE LIGHT OF THESE U NDISPUTED FINDINGS OF THE LEARNED CIT(A) ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A). THEREFORE GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6 GROUND NOS.2 AND 3 IN THE APPEAL OF THE REVENUE BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJU DICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF TH E RESIDUARY GROUND THESE GROUNDS ARE DISMISSED. 7 AS REGARDS THE GROUNDS RAISED IN THE CO SINCE T HE LEARNED AR ON BEHALF OF THE ASSESSEE MERELY RELIED UPON THE FINDINGS OF THE LEARNED CIT(A) THEREFORE THESE GR OUNDS BECOME INFRUCTUOUS AND ARE DISMISSED.. 8 IN THE RESULT BOTH THE APPEAL BY THE REVENUE A ND THE CO BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 12-04-2 010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 12-04-2010 COPY OF THE ORDER FORWARDED TO : 1. GRAY CAST FOUNDRY WORKS 163 GVMM ODHAV AHMED ABAD 2. THE ACIT CIRCLE-3 AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-VII AHMEDABAD 5. THE DR ITAT D BENCHAHMEDABAD ITA NO.1477/AHD/2007 &C O NO.131/AHD/2007 10 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD