M/S SHAW WALLANCE BREWERIES LTD., Mumbai v. THE ADDL CIT 7(2), Mumbai

ITA 1611/MUM/2005 | 2001-2002
Pronouncement Date: 30-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 161119914 RSA 2005
Assessee PAN AAFCS3230E
Bench Mumbai
Appeal Number ITA 1611/MUM/2005
Duration Of Justice 5 year(s) 2 month(s)
Appellant M/S SHAW WALLANCE BREWERIES LTD., Mumbai
Respondent THE ADDL CIT 7(2), Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 30-04-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2001-2002
Appeal Filed On 28-02-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI D.K. AGARWAL JUDICIAL MEMBER & SHRI R.K.PANDA AM I.T.A. NO. 1611/MUM/2005 (ASSESSMENT YEAR 2001-02) M/S. SHAW WALLACE BREWERIES LTD. EWART HOUSE 22 HOMI MODY STREET MUMBAI-23 PAN: AAFCS3230E VS. ADDL. CIT RANGE 7(2) AAYAKAR BHAVAN MUMBAI-400 020 APPELLANT RESPONDENT I.T.A. NO. 2477/MUM/2005 (ASSESSMENT YEAR 2001-02) ASST. CIT RANGE 7(2) ROOM NO. 624 6 TH FLOOR AAYAKAR BHAVAN MUMBAI-400 020 VS. M/S. SHAW WALLACE BREWERIES LTD. EWART HOUSE 22 HOMI MODY STREET MUMBAI-23 PAN: AAFCS3230E APPELLANT RESPONDENT ASSESSEE BY : MR. J.D. MISTRY REVENUE BY : MS. ASHA AGARWAL ORDER DATE OF HEARING: 04.02.2010 DATE OF ORDER: 30.04.2010 PER R.K.PANDA AM THESE ARE CROSS APPEALS THE FIRST ONE FILED BY TH E ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DI RECTED AGAINST THE ORDER DATED 31 ST DECEMBER 2004 OF THE CIT(A)-VII MUMBAI RELATING TO THE ASSESSMENT YEAR 2001-02. FOR THE S AKE OF CONVENIENCE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. I.T.A. NO. 2477/MUM/2005 WAS EARLIER DECIDED EX-PAR TE IN FAVOUR OF THE REVENUE BY THE TRIBUNAL VIDE ORDER DA TED 30 TH ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 2 NOVEMBER 2007. SUBSEQUENTLY THE TRIBUNAL VIDE OR DER DATED 6 TH JULY 2009 RECALLED THE ORDER. HENCE I.T.A. NO. 24 77/MUM/2005 IS A RECALLED MATTER. I.T.A. NO. 2477/MUM/2005 (BY REVENUE): 3. GROUNDS OF APPEAL NOS. 1 AND 2 RAISED BY THE REVEN UE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF REMISSION OF LIABILITIES U/S. 47 OF THE I.T. ACT 1961 HOLDING TH AT THE LIABILITIES HAVE NOT BEEN WAIVED BUT SETTLED BY WAY OF ADJUSTMENT ENTRIES TO THE EXTENT OF RS.12 CRORES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IGNORING THE ACCOUNTS OF M/S. ALAKNBANDA MANUFACTURING & FINANCE LTD. (PAGE 7 POINT XIII CLAUSE B) AND BOARDS RESOLUTION DATED 21/3/01 AND IN GIVING CREDENCE TO THE ADJUSTMENT ENTRIES MADE THROUGH GROUP CONCERN TO AVOID TAX LIABILITY. THE ADJUSTMENT ENTRIES HAVE BEEN MADE ONLY AFTER REMISSION OF LIABILITY. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION TWO COMPANIES NAMELY M/S. HAYWARD BREWERIES LIMITED (HBL) AND M/ S. ALAKNANDA MANUFACTURING & FINANCE LTD. (AMFL) GOT M ERGED WITH THE ASSESSEE COMPANY UNDER THE ORDER OF HIGH COURT MUMBAI AND KOLKATA RESPECTIVELY. THE HIGH COURT APPROVED SCH EME OF AMALGAMATION OF THESE TWO COMPANIES WITH THE ASSESS EE COMPANY WITH EFFECT FROM 1 ST JULY 2000. ACCORDINGLY ALL THE ASSETS AND LIABILITIES OF THE COMPANIES WERE MERGED WITH THE A CCOUNT OF THE ASSESSEE COMPANY FOR THE YEAR ENDED AS ON 31 ST MARCH 2001. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TH E ASSESSEE SUBMITTED THE BALANCE SHEET PROFIT AND LOSS A/C. O F THE MERGED COMPANY FOR THE PERIOD FROM 1.4.1999 TO 30 TH JUNE 2000. ON ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 3 PERUSAL OF THE NOTE OF THE ACCOUNT OF M/S. AMFL IT WAS NOTICED ON PAGE 7 POINT-XIII CLAUSE-(B) AS UNDER: (I) SUBSEQUENT TO 30.06.2000 CREDITORS FOR OTHER FI NANCE AMOUNTING TO RS.79 68 163 (REFER SCHEDULE 7) AND GROSS INTEREST LIABILITY ON UNSECURED LOAN AMOUNTING TO RS.5 55 72 639 (REFER SCHEDULE 2) DUE TO THE HOLD ING COMPANY HAVE BEEN WAIVED BY THE HOLDING COMPANY AS COMMUNICATED BY THE VIDE THEIR LETTER DATED 07.03.2 001 AND SUBSEQUENTLY ADOPTED BY THE BOARD BY RESOLUTION DAT ED 21.03.2001 WHICH HAVE NOT BEEN TAKEN INTO COGNISANC E IN THESE ACCOUNTS. (II) A SUM OF RS.5 75 00 343 ASSIGNED AND DUE TO A SUBSIDIARY OF THE HOLDING COMPANY (REFER SCHEDULE 7 ) WAS REASSIGNED BY THE SAID SUBSIDIARY OF THE HOLDING CO MPANY TO THE HOLDING COMPANY AND THEREAFTER THE SAID AMOUNT WAS WAIVED BY THE HOLDING COMPANY VIDE THEIR LETTER DAT ED 07.03.2001 AND SUBSEQUENTLY ADOPTED BY THE BOARD VI DE RESOLUTION DATED 21.03.2001 WHICH HAVE NOT BEEN TAK EN INTO COGNISANCE IN THESE ACCOUNTS. 5. THE ASSESSING OFFICER ACCORDINGLY DIRECTED THE ASSE SSEE COMPANY TO REPLY AS TO WHY NOT THE LIABILITY WRITTE N OFF BY THE HOLDING COMPANY WAS TAKEN AS INCOME AS IT HAS BEEN COMMUNICATED ON 7 TH MARCH 2001 AND ADOPTED BY THE BOARD RESOLUTION DA TED 21 ST MARCH 2001. THE ASSESSEE WAS ALSO ASKED TO EXPLAI N THE NATURE OF THE LIABILITY WRITTEN OFF AS TO WHETHER IT IS ON AC COUNT OF REVENUE OR CAPITAL. 5.1 THE ASSESSEE VIDE ITS LETTER DATED 24 TH MARCH 2004 REPLIED AS UNDER: 6.3 WE REFER TO YOUR INQUIRY ABOUT THE WAIVER OF INTEREST OF RS.5 55 72 639/- BY M/S. SHAH WALLACE & CO. LTD. (HEREINAFTER REFERRED AS SWCL). IN THIS CON TEXT ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 4 WE ARE SUBMITTING HERE WITH THE FOLLOWING DETAILS O F INTEREST ACCRUED. 1) DETAILS OF INTEREST ACCRUED OF RS.12 67 66 975/ - F.Y. AMOUNT (RS.) PRIOR TO 1993 40 80 041 31.3.1994 7 20 960 48 01 001 LESS: TDS 1 65 820 46 35 181 31.3.1995 4 53 55 661 31.3.1996 6 17 81 436 31.3.1997 1 49 94 697 TOTAL 12 67 66 975 2) INTEREST EXPENSES WERE ALLOWED/NOT ALLOWED BY THE ASSESSING OFFICER: PERIOD PARTICULARS 31.03.1994 INTEREST EXPENSES WERE ALLOWED BY THE ASST. CIT VIDE THEIR ORDER DATED 27.03.1997 U/S. 143(3) OF THE INCOME-TAX ACT. 31.03.1995 INTEREST EXPENSES WERE ALLOWED BY THE DY . CIT VIDE THEIR ORDER U/S. 143(1) OF THE INCOME-TAX ACT. 31.03.1996 INTEREST EXPENSES WERE NOT ALLOWED BY TH E DY. CIT VIDE THEIR ORDER DATED 04.03.2002 U/S. 144/147/ 143(3) OF THE INCOME-TAX ACT. 31.03.1997 INTEREST EXPENSES WERE NOT ALLOWED BY TH E DY. CIT VIDE THEIR ORDER DATED 29.02.2000 U/S. 143(3) OF THE INCOME-TAX ACT. IN OTHER WORDS THE TOTAL AMOUNT OF INTEREST DISALL OWED FOR THE YEAR ENDED 31 ST MARCH 1994 31 ST MARCH 1996 AND 31 ST MARCH 1997 WORKS OUT TO RS.8 14 11 314/- WHICH AMOUNT IS MORE THAN THE INTEREST WAIVED DURIN G THE ASSESSMENT YEAR IN QUESTION FOR A SUM OF RS.5 55 72 639/-. ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 5 3) AMOUNT PAYABLE TO SWCL ADJUSTED MAY WE FURTHER STATE AS ON 30 TH JUNE 2000 INTEREST OF RS.12 67 66 975/- PAYABLE TO SWCL THE SAME WAS ADJUSTED IN THE FOLLOWING MANNER: RS.5 84 12 282/- ADJUSTED BY MALLESWARA FINANCE & INVESTMENT CO. LTD. RS.93 83 597/- ADJUSTED BY SHAW WALLACE BREWERIES LTD. (ERSTWHILE OVERSEAS TRANSPORT CO. LTD.) RS.8 69 945/- ADJUSTED BY VIBHAVARI FINANCE & INVESTMENT CO. LTD. RS.53 01 000/- ADJUSTED BY NISMUKH TRADING & INVESTMENT CO. PVT. LTD. IN OTHER WORDS INASMUCH AS A SUM OF RS.5 55 72 639 /- HAS NOT BEEN ALLOWED BY THE AO AS A TRADING LIABILI TY FOR A.Y. 1994-95 1996-97 AND 1997-98 THE WAIVER OF INTEREST OF RS.5 55 72 639/.- WILL NOT ATTRACT THE PROVISIONS OF SECTION 41(1) OF THE INCOME-TAX ACT. IN THIS CONNECTION MAY WE INVITE YOUR ATTENTION TO TH E BOMBAY HIGH COURT DECISION IN CASE OF MAHENDRA & MAHENDRA REPORTED IN 261 ITR 501 WHERE IT HAS BEEN CLEARLY LAID DOWN THAT IN ORDER TO INVOKE THE PROVI SIONS OF SECTION 41(1) OF THE INCOME-TAX ACT THE ASSESSE E SHOULD HAVE OBTAINED DEDUCTION IN THE ASSESSMENT FO R ANY YEAR IN RESPECT OF LOSS EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE. IN VIEW OF THE FACT THAT THE SAID INTEREST HAS BEEN DISALLOWED BY THE A O TO THE EXTENT OF RS.8 14 11 314/- IT CANNOT BE SAID TH AT EXPENDITURE HAS BEEN ALLOWED IN THE PREVIOUS ASSESSMENT YEARS AND THEREFORE PROVISIONS OF SECT ION 41(1) OF THE INCOME-TAX ACT CANNOT BE ATTRACTED. 6. HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE COMPANY. HE NOTE D THAT THE ASSESSEE DID NOT FILE ANY REPLY REGARDING THE CREDI TORS FOR OTHER FINANCES AMOUNTING TO RS.79 68 163 WAIVED BY THE HO LDING COMPANY. THE ASSESSEE COMPANY COULD NOT EXPLAIN THE INVOLVEM ENT OF REVENUE/CAPITAL ELEMENT IN THESE CREDITORS. THE AS SESSEE ALSO COULD NOT EXPLAIN AS TO WHY THIS AMOUNT SHOULD NOT BE ADD ED TO THE INCOME. AS REGARDS THE GROSS INTEREST LIABILITY ON UNSECURED LOAN ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 6 AMOUNTING TO RS.5 55 72 639 WRITTEN OFF BY THE HOL DING COMPANY THE REPLY GIVEN BY THE ASSESSEE WAS NOT SATISFACTOR Y. THE ASSESSING OFFICER NOTED THAT THIS IS AN INCOME OF THE ASSESSE E AS THE INTEREST LIABILITY HAS BEEN WRITTEN OFF BY THE HOLDING COMPA NY DURING THE YEAR UNDER CONSIDERATION. HE ACCORDINGLY TREATED B OTH THE AMOUNTS OF RS.79 68 163 AND RS.5 55 72 639 AS THE INCOME OF THE ASSESSEE U/S. 41(1) OF THE INCOME-TAX ACT 1961 (THE ACT). 7. AS REGARDS THE SUM OF RS.5 75 00 343 ASSIGNED AND D UE TO SUBSIDIARY COMPANY OF THE HOLDING COMPANY WAS REASS IGNED BY THE SAID SUBSIDIARY COMPANY OF THE HOLDING COMPANY TO T HE HOLDING COMPANY AND THEREAFTER WAIVED BY THE HOLDING COMPAN Y. HE NOTED THAT THE ASSESSEE HAS NOT TAKEN COGNISANCE OF THIS AMOUNT IN ITS ACCOUNTS THOUGH THE AMOUNT HAS BEEN WRITTEN OFF DUR ING THE YEAR UNDER CONSIDERATION. THE ASSESSEE DID NOT FILE ANY REPLY IN SPITE OF OPPORTUNITIES GIVEN. THE ASSESSEE ALSO DID NOT EXP LAIN AS TO WHETHER THIS AMOUNT IS ON ACCOUNT OF CAPITAL OR REVENUE HEA D AND ITS BIFURCATION. IN ABSENCE OF ANY EXPLANATION BY THE ASSESSEE THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.5 75 00 343 AS INCOME U/S. 41(1) OF THE ACT. 8. BEFORE CIT(A) IT WAS EXPLAINED THAT ACTUALLY THERE WERE NO WAIVERS AND THE AUDITORS OF M/S. AMFL HAVE MADE THE NOTE WITHOUT LOOKING AT THE BOOKS OF ACCOUNT FOR THE LATER PERIO D UP TO 31 ST MARCH 2001. IT WAS SUBMITTED THAT THE AUDITORS HAVE BASE D THEIR OPINION ONLY ON THE SAID LETTER AND RESOLUTION BUT HAVE NOT BOTHERED TO LOOK INTO THE BOOKS OF ACCOUNT FOR THE ENTIRE FINANCIAL YEAR ENDED ON 31 ST MARCH 2001. IT WAS SUBMITTED THAT THE EARLIER PL AN OF THE REMISSION OF THE SAID AMOUNT WAS ACTUALLY NOT GIVEN EFFECT TO AND WAS ABANDONED. THE ABOVE REFERRED AMOUNTS HAVE NOT BEE N WAIVED BUT HAVE BEEN LATER ON ACTUALLY SETTLED BY ADJUSTMENT E NTRIES TO THE EXTENT OF RS.12 CRORES AND ONLY THE BALANCE AMOUNT OF RS.10 41 145 WAS WRITTEN BACK. A DETAILED NOTE WAS GIVEN TO TH E CIT(A) AND IT ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 7 WAS SUBMITTED THAT THERE WAS NO WAIVER OF INTEREST AT ALL AND THE ASSESSING OFFICER HAS ERRED IN MAKING THE ADDITION OF RS.12 10 41 145 U/S. 41(1) OF THE ACT ON AN ERRONEO US PRESUMPTION WITHOUT APPRECIATION OF THE CORRECT FACTS. 9. THE AR OF THE ASSESSEE APPEARING BEFORE THE CIT(A) FILED COPIES OF THE RELEVANT ACCOUNTS AND JOURNAL ENTRIES OF M/S. SHAW WALLACE & CO. LTD. (SWCL) AND M/S. SHAW WALLACE BR EWERIES LTD. (SWBL) UP TO 31 ST MARCH 2002. AN AFFIDAVIT DATED 22 ND NOVEMBER 2004 FROM SHRI RAJEEV PRADHAN DY. GENERAL MANAGER (TAXATION) OF M/S. SWCL WAS FILED TO THE EFFECT THAT M/S. SWCL HA S NOT WAIVED THE SUM OF RS.12 10 41 145 WHICH WAS DUE TO THEM FROM M /S. AMFL. IT WAS FURTHER SUBMITTED THAT THE ABOVE EXPLANATION OF FACTS COULD NOT BE SUBMITTED TO THE ASSESSING OFFICER BECAUSE OF IN SUFFICIENT OPPORTUNITY GRANTED BY THE ASSESSING OFFICER IN THI S REGARD. IT WAS FURTHER SUBMITTED THAT ALTHOUGH MORE THAN 7 HEARING S HAVE TAKEN PLACE ONLY AT THE FAG END I.E. ON 19 TH MARCH 2004 THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO SUBMIT INFORMAT ION LATEST BY 24 TH MARCH 2004 IN RESPECT OF NOTE MADE IN ALAKNANDA M ANUFACTURING & FINANCE LTD. REGARDING WAIVER OF INTEREST. IT WA S SUBMITTED THAT AT THAT POINT OF TIME THE ASSESSEE HAD IN THEIR POSSES SION ONLY THE ACCOUNTS OF AMFL AND THE RECORDS OF M/S. SWCL WERE NOT COLLECTED AND WERE NOT ACCESSIBLE IN SUCH A SHORT PERIOD. H ENCE THE EXPLANATION WAS GIVEN ON 24 TH MARCH 2004 BASED ON WHATEVER INFORMATION WAS AVAILABLE AT THAT TIME. FURTHER TH E ASSESSING OFFICER WAS GOING ON ELECTION DUTY FOR WHICH HE PA SSED THE ASSESSMENT ORDER HURRIEDLY BY TAXING THE ENTIRE SUM OF RS.12 10 41 145. SUBSEQUENTLY ON ENQUIRY AND AFTE R RECEIVING THE RECORDS OF M/S. SWCL IT WAS NOTED THAT IN THE BOOKS OF M/S. SWCL NONE OF THE AMOUNTS WERE WAIVED. 10. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND ON THE BASIS OF THE ADDITIONAL EVIDENCES FURNISHED BEFORE HIM THE CIT(A) ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 8 DELETED AN AMOUNT OF RS. 12 CRORES AND SUSTAINED ON LY THE AMOUNT OF RS.10 41 145. WHILE DOING SO HE OBSERVED THAT THE ASSESSEE WAS GRANTED VERY SHORT TIME FOR GIVING ITS EXPLANATION. BY ASKING THE ASSESSEE ON 19 TH MARCH 2004 TO FURNISH THE EXPLANATION BY 24 TH MARCH 2004 THE ASSESSING OFFICER VIRTUALLY GAVE ON LY 2 WORKING DAYS TIME TO THE ASSESSEE TO SUBMIT THE EXPLANATION SINCE 20 TH AND 21 ST MARCH 2004 WERE SATURDAY AND SUNDAY RESPECTIVELY . HE OBSERVED THAT ON EXAMINATION OF THE JOURNAL VOUCHER AND COPIES OF THE RECORDS IN THE BOOKS OF M/S. SWCL AND THE ASSES SEE THE ABOVE AMOUNT OF RS.12 10 41 145 HAS NOT BEEN WAIVED BUT H AS BEEN ACTUALLY SETTLED BY ADJUSTMENT ENTRIES TO THE EXTEN T OF RS.12 CRORES AND THE BALANCE AMOUNT OF RS.10 41 145 HAS BEEN WRI TTEN BACK. HE NOTED THAT THE SUM OF RS.12 CRORES HAS BEEN ADJUSTE D AGAINST THE SECURITY DEPOSIT OF RS.14 87 00 000 RECEIVABLE BY M /S. HBL FROM M/S. SWCL AND THE BALANCE SUM OF RS.2.87 CRORES HAS BEEN ADJUSTED IN THE NEXT FINANCIAL YEAR AGAINST A CREDIT BALANCE IN THE CURRENT ACCOUNT OF M/S. SWCL AND THE SUNDRY CREDITORS IN TH E NAME OF M/S. SWCL AND THE BOOKS OF THE ASSESSEE TO THE EXTENT OF RS.2 43 18 103 AND RS.43 81 897 RESPECTIVELY. HE NOTED THAT THES E FACTS ARE EVIDENT FROM THE SECURITY DEPOSIT ACCOUNT OF VARIOUS PARTIE S IN THE BOOKS OF ACCOUNT OF M/S. SWCL THE ACCOUNT OF M/S. SWBL IN T HE BOOKS OF M/S. SWCL AND SECURITY DEPOSIT WITH M/S. SWCL IN TH E BOOKS OF THE ASSESSEE. 11. HE FURTHER NOTED THAT BECAUSE OF THE INSUFFICIENT T IME GRANTED BY THE ASSESSING OFFICER THE ASSESSEE HAS NOT BEEN ABLE TO PUT UP PROPER EXPLANATION OF THE FACTS. HOWEVER THE ASSE SSEE CANNOT BE SADDLED WITH A HUGE ADDITION FOR JUST NOT PUTTING U P PROPER EXPLANATION BEFORE THE ASSESSING OFFICER. THE EXPL ANATION FILED IN THE APPEAL PROCEEDINGS IS FACTUALLY CORRECT ON THE BASIS OF SUPPORTING ACCOUNTS AND JOURNAL VOUCHERS. ALTHOUGH IN THE ORIGINAL STAGE M/S. SWCL HAD PROPOSED TO WAIVE RS.12 10 41 1 45 BUT LATER ON AN AMOUNT OF RS.12 CRORES WAS ACTUALLY SETTLED B Y AN ADJUSTMENT ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 9 OF RS. 12 CRORES AGAINST THE SECURITY DEPOSIT RECEI VABLE AND THERE WAS NO WAIVER OF THE AMOUNT OF RS. 12 CRORES. THER EFORE THE ADDITION TO THE EXTENT OF RS.12 CRORES CANNOT BE SU STAINED. 12. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 13. THE LEARNED DR WHILE SUPPORTING THE ORDER OF THE AS SESSING OFFICER SUBMITTED THAT THE ORDER PASSED BY THE CIT( A) IS ERRONEOUS BECAUSE THE CIT(A) HAS ACCEPTED FRESH EVIDENCE IN V IOLATION OF RULE 46A OF THE ACT. 14. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT SINCE THE POWER OF THE CIT(A) IS CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER HE WAS FULLY JUSTIFIED IN ACCEPTING THE AD DITIONAL EVIDENCES AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 15. THE LEARNED DR IN HIS REJOINDER REFERRED TO THE P ROVISIONS OF RULE 46A TO SUBMIT THAT ONLY UNDER SPECIFIC CIRCUMS TANCES THE CIT(A) CAN ACCEPT ADDITIONAL EVIDENCES. HE SUBMITT ED THAT THE PRIMARY INVESTIGATING AUTHORITY IS THE ASSESSING OF FICER AND HE MUST BE GIVEN AN OPPORTUNITY TO GO THROUGH THE DOCUMENTS WHICH WERE NEVER FILED BEFORE HIM. REFERRING TO THE ORDER OF THE CIT(A) HE SUBMITTED THAT THE CIT(A) HAS DELETED THE ADDITION ON FLIMSY GROUNDS WITHOUT GIVING AN OPPORTUNITY TO THE ASSESS ING OFFICER TO GO THROUGH THE FRESH EVIDENCES FILED BEFORE HIM WHICH WERE NEVER FILED BEFORE THE ASSESSING OFFICER. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. TH ERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS NOT GIVEN FULL DE TAILS BEFORE THE ASSESSING OFFICER ABOUT THE AMOUNT WRITTEN OFF AMOU NTING TO ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 10 RS.12 10 41 145. WE FIND BEFORE THE CIT(A) THE ASS ESSEE HAD TAKEN A PLEA THAT THE TIME GIVEN BY THE ASSESSING OFFICER W AS VERY SHORT AND THEY WERE NOT HAVING FULL DETAILS FOR WHICH THESE C OULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER. WE FIND THE ASSESSEE PRODUCED CERTAIN DETAILS IN THE SHAPE OF ADDITIONAL EVIDENCES BEFORE THE CIT(A) BASED ON WHICH THE CIT(A) GAVE AN OBSERV ATION THAT OUT OF RS.12 10 41 145 AN AMOUNT OF RS.12 CRORES HAS BE EN SETTLED BY ADJUSTMENT ENTRY AND ONLY THE BALANCE AMOUNT OF RS. 10 41 145 HAS BEEN WRITTEN BACK. IT IS THE SUBMISSION OF THE LEA RNED DR THAT BY ACCEPTING FRESH EVIDENCES IN VIOLATION OF RULE 46A THE ORDER OF THE CIT(A) IS ERRONEOUS AND THEREFORE THE ORDER OF THE CIT(A) ON THIS ISSUE SHOULD BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. HOWEVER IT IS THE SUBMISSION OF THE LEA RNED COUNSEL FOR THE ASSESSEE THAT THE POWERS OF THE CIT(A) ARE CO-T ERMINUS WITH THAT OF THE ASSESSING OFFICER AND THEREFORE HE IS JUST IFIED IN ACCEPTING FRESH EVIDENCES AD DELETING THE ADDITION. 17. WE FIND THE PROVISIONS OF RULE 46A READ AS UNDER: 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS THE CASE MAY BE THE COMMISSIONER (APPEALS) ] ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OTHER TH AN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER] EXCEPT IN THE FOLLOWING CIRCUMSTANCES NAMELY : ( A ) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR ( B ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR ( C ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 11 ( D ) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE ( 1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS THE CASE MAY BE THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS TH E CASE MAY BE THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY ( A ) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS- EXAMINE THE WITNESS PRODUCED BY THE APPELLANT OR ( B ) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT TH E POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR A S THE CASE MAY BE THE COMMISSIONER (APPEALS)] TO DIR ECT THE PRODUCTION OF ANY DOCUMENT OR THE EXAMINATION OF ANY WITNESS TO ENABLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEME NT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTIO N OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CL AUSE ( A ) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITI ON OF PENALTY UNDER SECTION 271.] 18. FROM THE ABOVE IT IS CLEAR THAT THE CIT(A) SHALL NO T TAKE INTO ACCOUNT ANY FRESH EVIDENCE PRODUCED BEFORE HIM UNLE SS HE GIVES A REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCES OR DOCUMENTS OR PRODUCED ANY EVIDENCES OR DOCUMENTS IN REBUTTAL OF THE ADDITIONAL EVIDENCES PRODUCED BY TH E ASSESSEE. THERE IS NO DISPUTE TO THE SETTLED PROPOSITION OF L AW THAT THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE ASSE SSING OFFICER. HOWEVER IN THE PECULIAR CIRCUMSTANCES OF THE INSTA NT CASE WHEN CERTAIN EVIDENCES WERE NEVER FILED BEFORE THE ASSES SING OFFICER AND FILED FOR THE FIRST TIME BEFORE THE CIT(A) IN OUR OPINION THE CIT(A) ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 12 SHOULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSING O FFICER EITHER BY GIVING HIM AN OPPORTUNITY TO APPEAR BEFORE HIM OR B Y CALLING A REMAND REPORT FROM HIM. HOWEVER NO OPPORTUNITY WH ATSOEVER HAS BEEN GIVEN TO THE ASSESSING OFFICER EITHER TO EXAMI NE THE FRESH EVIDENCES OR REBUT THE EVIDENCES FILED IN THE SHAPE OF ADDITIONAL EVIDENCE BY THE ASSESSEE. WE FIND THE AFFIDAVIT OF MR. RAJEEV PRADHAN DATED 22 ND NOVEMBER 2004 IS AFTER THE COMPLETION OF ASSESSMENT U/S. 143(3) ON 25 TH MARCH 2004. THEREFORE THE ASSESSING OFFICER HAS NO OPPORTUNITY WHATSOEVER TO GO THROUGH THE CONTENTS OF THE AFFIDAVIT. FURTHER THE ASSESSEE IT SELF HAS STATED BEFORE THE CIT(A) THAT THE AUDITORS HAVE NOT BOTHER ED TO LOOK INTO THE ACCOUNTS FOR THE ENTIRE FINANCIAL YEAR MEANING THEREBY THAT THE ACCOUNTS PRODUCED BEFORE THE ASSESSING OFFICER ARE NOT CORRECT. FURTHER MERELY BECAUSE THE ADDITION IS HUGE THE S AME CANNOT BE DELETED ON THE BASIS OF MERE ORAL OR WRITTEN STATEM ENTS AND FRESH DOCUMENTS WHICH WERE NEVER PRODUCED BEFORE THE ASSE SSING OFFICER WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFF ICER. WE THEREFORE DEEM IT PROPER TO RESTORE THE MATTER BAC K TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE AN OPPOR TUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE. THE ASSESSING O FFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER G IVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GR OUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 19. GROUNDS OF APPEAL NOS. 3 AND 4 ARE AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ACCEPTING THE ADDITIONAL EVIDENCES IN CONTRAVENTION OF RULE 46A O F THE I.T. ACT BY ACCEPTING AFFIDAVITS OF SHRI RAJEEV PRADHAN. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PAYMENTS OF RS.1.5 LACS RELATED TO PAYMENT TO SALESMAN BY ADMITTING ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A. ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 13 20. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXAMINE D THE BOOKS OF ACCOUNT AND OBSERVED THAT THE ASSESSEE DID NOT PROD UCE ANY BILLS RELATED TO SALESMEN AMOUNTING TO RS.1.5 LAKHS. EVE N THE REPRESENTATIVE OF THE ASSESSEE SHOWED HIS INABILITY TO PRODUCE BILLS AS PER NOTE-SHEET ENTRY DATED 26 TH FEBRUARY 2004 MENTIONED IN THE BODY OF THE ASSESSMENT ORDER AT PAGE 5. HE ACCORDI NGLY MADE AN ADDITION OF RS.1.5 LAKHS. 21. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE AMOUNT OF RS.1.5 LAKHS DISALLOWED BY THE ASSESSING OFFICER DOES NOT REPRESENT ANY PAYMENT BUT ACTUALLY IT IS A SALES PROMOTION EXPEND ITURE IN THE SHAPE OF FREE SUPPLY OF LIQUOR TO HOTEL INTERCONTIN ENTAL NEW DELHI ON THREE OCCASIONS AS PART OF THE SALES PROMOTION O F THE ASSESSEE. IT WAS EXPLAINED THAT THE SALES PROMOTION SCHEME WAS P ROPOSED FOR FREE SUPPLY OF LIQUOR IN THE SAID HOTEL IN ORDER TO GAIN ENTRY IN THE HOTEL MAKE BEER AVAILABLE IN F & B OUTLETS OF THE HOTEL AND TO ENHANCE THE ASSESSEE REACH AND VISIBILITY AND TO OB TAIN ASSURED ORDER OF 25 CRATES A MONTH IN THE NEXT CALENDAR YEA R. AS A PART OF THE PROMOTIONAL SCHEME LIQUOR WORTH RS.1.5 LAKHS WAS SU PPLIED TO THE HOTEL FREE OF COST. IN SUPPORT OF THIS CONTENTION THE ASSESSEE SUBMITTED A COPY OF THE PROPOSAL MADE BY MR. PANIYA NAIPAUL ON 11 TH DECEMBER 2000 AND COPIES OF THREE REQUESTS MADE B Y SALESMEN MR. SALIAN AND MR. A.N. PATEL. 22. BASED ON THE SUBMISSION THE CIT(A) DELETED THE ADD ITION. WHILE DOING SO HE NOTED THAT AS PER THE 3 REQUISITI ON SLIPS LIQUOR WORTH RS.49 956 EACH HAS BEEN ACTUALLY SUPPLIED FRE E OF COST TO HOTEL INTERCONTINENTAL NEW DELHI ON 29 TH DECEMBER 2000 31 ST JANUARY 2001 AND 28 TH FEBRUARY 2001. 23. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE US. ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 14 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. TH ERE IS NO DISPUTE TO THE FACT THAT BEFORE THE ASSESSING OFFICER THE A SSESSEE EXPRESSED ITS INABILITY TO PRODUCE ANY BILLS/EVIDENCES IN SUP PORT OF THE CLAIM OF EXPENDITURE OF RS.1.5 LAKHS. WE FIND BEFORE THE CIT (A) THE ASSESSEE PRODUCED A PROPOSAL AND THREE REQUISITION SLIPS BAS ED ON WHICH THE CIT(A) DELETED THE ADDITION. WE FIND THE CIT(A) DI D NOT GIVE ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE FRESH EVIDENCES FILED BEFORE HIM. THEREFORE THE SAME IN OUR OPIN ION CONSTITUTES VIOLATION OF RULE 46A. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DISCUSSION AT PARA NOS. 16 AND 18 IN GROUNDS OF APP EAL NOS. 1 AND 2 OF THE REVENUE WE DEEM IT PROPER TO RESTORE THE MA TTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO G IVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CLA IM. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORD ANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVE NUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 1611/MUM/2005 (BY THE ASSESSEE): 25. GROUNDS OF APPEAL NO. 1 BY THE ASSESSEE READS AS UN DER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN SPREADI NG THE EXPENDITURE ON NON-REFUNDABLE LICENCE FEES OF RS.32 00 000/- OVER A PERIOD OF 10 YEARS INSTEAD OF ALLOWING THE FULL AMOUNT OF RS.32 00 000/- DURING T HE ASSESSMENT YEAR IN QUESTION BY ERRONEOUSLY HOLDING THAT THE SAME IS IN THE NATURE OF DEFERRED REVENUE EXPENDITURE. 26. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSING OFFICER ON PERUSAL OF THE DETAILS FILED BEFORE HIM FOUND THAT THE ASSESSEE HAS PAID RS. 32 LAKHS AS ONE TIME BRAND LICENCE FEE TO THE HOLDING COMPANY M/S. SWCL. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE ALLOWABILITY OF THIS PAYMENT AS REVENUE EXPENDITURE. IT ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 15 WAS SUBMITTED THAT ONE TIME NON-REFUNDABLE ROYALTY AND KNOW-HOW FEES OF RS.32 LAKHS TO BE PAID AT THE TIME OF AGRE EMENT WAS REVENUE EXPENDITURE. THE PROVISIONS OF SECTION 35AB WERE B ROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AND IT WAS SUBMITTE D THAT IN CASE THE SAID AMOUNT OF RS.32 LAKHS WAS NOT ALLOWED AS REVEN UE EXPENDITURE THE SAME SHOULD BE ALLOWED AS SPREAD OVER IN TERMS OF SECTION 32AB OF THE ACT. 27. HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE VARIOUS EXPLANATIONS OF THE ASSESSEE. HE NOTED THA T IT IS SECURITY DEPOSIT FOR USE OF BRAND LICENCE BY THE ASSESSEE CO MPANY AND PAID TO M/S. SWCL. THE AGREEMENT SUBMITTED BY THE ASSES SEE FOR CLAIMING THE AMOUNT AS REVENUE EXPENDITURE WAS NOT ACCEPTED BY HIM AS THE NON REFUNDABLE DEPOSITS CANNOT BE REVENU E EXPENDITURE OF THE ASSESSEE. HE ACCORDINGLY DISALLOWED THE CLA IM OF EXPENDITURE OF RS.32 LAKHS AS REVENUE IN NATURE. 28. BEFORE CIT(A) IT WAS SUBMITTED THAT IN THE RELEVANT ASSESSMENT YEAR TWO COMPANIES NAMELY M/S. AMFL AND M/S. HBL HAVE AMALGAMATED WITH THE ASSESSEE COMPANY WITH EFF ECT FROM 1 ST JULY 2004 BY THE ORDERS OF HIGH COURTS OF CALCUTTA AND MUMBAI RESPECTIVELY. AS PER THE LICENCE AGREEMENT DATED 1 ST DECEMBER 2000 ENTERED INTO BETWEEN M/S. SWCL AND THE ASSESSE E THE ASSESSEE HAS ACQUIRED LICENCE TO USE THE TRADEMARK OF M/S. SWCL FOR A ONE TIME NON REFUNDABLE LUMP SUM FIXED LICENSE FE E OF RS.32 LAKHS FOR A PERIOD OF 10 YEARS. IT WAS SUBMITTED THAT TH E ABOVE SUM OF RS.32 LAKHS PAID BY THE ASSESSEE TO M/S. SWCO WAS O NLY A LICENCE FEE FOR USE OF THE BRAND NAME OWNED BY M/S. SWCL FOR A LIMITED PERIOD OF 10 YEARS AND THE ASSESSEE HAS NOT ACQUIRED ANY R IGHTS OVER THE BRAND NAME. IT WAS VEHEMENTLY ARGUED THAT THE AMOU NT IN QUESTION WAS REVENUE IN NATURE. 29. BASED ON THE VARIOUS ARGUMENTS ADVANCED BY THE ASSE SSEE THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFIC ER. WHILE DOING SO ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 16 HE NOTED THAT AS PER CLAUSE 1 OF THE AGREEMENT M/S. SWCL IS A KNOWN MANUFACTURER AND TRADER OF NON-ALCOHOLIC LIQU OR FALLING UNDER CLAUSE 32 OF THE 4 TH SCHEDULE OF THE TRADEMARK RULES 1959 AND ALSO A KNOWN MANUFACTURER AND TRADER OF ALCOHOL IC LIQUORS SUCH AS WINE WHISKY BRANDY GIN RUM VODKA ETC. FALL ING UNDER CLAUSE 33 OF THE 4 TH SCHEDULE OF TRADE MERCHANDISE MARKS RULES 1959. FURTHER M/S. SWCL ARE THE OWNERS OF LARGE NUMBER OF TRADEMARKS IN THE SAID CLASS 32 AND 33. SOME OF THESE TRADEMARKS ARE IN USE IN RELATION TO BEER AND HAVE EARNED CONSIDERABLE GOODW ILL AND REPUTATION. M/S. SWBL I.E. THE ASSESSEE COMPANY IS SIMILARLY A MANUFACTURER AND TRADER OF ALCOHOLIC LIQUORS. DESI ROUS OF MANUFACTURING AND TRADING ON THE GOODWILL AND REPUT ATION OF SWCL IN RESPECT OF THE TRADEMARKS IN RELATION TO BEER TH E ASSESSEE HAS APPROACHED SWCL FOR GRANTING THE LICENCE TO THE ASS ESSEE. THE SAID LICENCE HAS BEEN GRANTED UNDER THE AGREEMENT DATED 01.12.2000. AS PER CLAUSE 21 OF ARTICLE II SWCL HAS GRANTED TO THE ASSESSEE AN EXCLUSIVE LICENCE TO MANUFACTURE BOTTLE AND SELL BE ER UNDER THE TRADE MARKS MENTIONED IN ANNEXURE 1 OF THE AGREEMENT. AS PER CLAUSE 2.3 SWCL HAS RETAINED THE RIGHT TO VISIT THE MANUFACTUR ING FACILITIES OF THE ASSESSEE WHENEVER DEEMED NECESSARY TO ENSURE TH AT THE SPECIFIED QUALITY STANDARDS ARE MAINTAINED BY THE A SSESSEE IN RESPECT OF THE GOODS MANUFACTURED. AS PER CLAUSE 2 .6 SWCL HAS AGREED TO PROVIDE THE ASSESSEE ALL THE DETAILS OF R AW-MATERIALS PROCESS CONDITIONS SPECIFICATIONS KNOW-HOW AND AL L OTHER INFORMATION IN RELATION TO THE GOODS WITH REFERENCE TO EACH OF THE TRADEMARKS COVERED BY THE AGREEMENT TO THE ASSESSEE . AS PER CLAUSE 2.8 OF THE AGREEMENT THE ASSESSEE SHALL INDICATE ON ALL THE PRODUCTS SOLD BY IT THAT IT IS THE LICENCE OF THE SWCL UNDER THE TRADEMARKS. AS PER CLAUSE 2.17 THE TRADEMARKS WILL REMAIN EXCLUSIV E PROPERTY OF SWCL AND THE ASSESSEE HAS ONLY A LICENCE TO USE THE SAME. AS PER ARTICLE 3.1 SWCL RENDER ALL NECESSARY TECHNICAL ASS ISTANCE TO ASSESSEE WHENEVER REQUIRED BY IT DURING THE TERM OF THE AGREEMENT FREE OF ANY TECHNICAL FEE AND AS PER CLAUSE 3.2 THE TECHNICAL ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 17 ASSISTANCE PROVIDED TO THE ASSESSEE SHALL REMAIN E XCLUSIVE PROPERTY OF SWCL AND THE ASSESSEE SHALL NOT HAVE ANY RIGHT T O USE THE SAME FOR ITS PRODUCTS OTHER THAN THE LICENSED PRODUCTS. SIMILARLY AS PER CLAUSE 2.1 THE ASSESSEE SHALL NOT USE THE SAID TRAD E MARKS IN RELATION TO ANY GOODS OTHER THAN THE LICENSED PRODUCTS. 30. IN VIEW OF THE ABOVE THE CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT ACQUIRED ANY EXCLUSIVE RIGHTS ON THE TRADEM ARKS. IT HAS ONLY ACQUIRED A LICENCE I.E. A RIGHT TO USE THESE TRADE MARKS FOR SELLING ITS PRODUCTS FOR A LIMITED PERIOD OF 10 YEARS. HE OBSE RVED THAT THE AGREEMENT HAS RESTRICTED THE ASSESSEES RIGHT TO US E THE TRADEMARKS ONLY IN RESPECT OF THE AGREED PRODUCTS AND THE ASSE SSEE IS NOT FREE TO USE THE SAID TRADEMARKS IN RELATION TO ANY OTHER GO ODS. FURTHER SWCL HAS RETAINED A VESTED RIGHT IN MAINTAINING QUA LITY STANDARDS OF THE PRODUCTS TO BE MANUFACTURED BY THE ASSESSEE. H E NOTED THAT THE TRADEMARKS SHALL REMAIN THE EXCLUSIVE PROPERTY OF S WCL AND SHALL CONTINUE TO BE THE SAME EVEN DURING THE PERIOD OF T HE AGREEMENT. THE ASSESSEE HAS THUS NOT ACQUIRED ANY ASSET OR EVE N THE ADVANTAGE OF ENDURING NATURE IN THE CAPITAL FIELD. 31. HE REFERRED TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORA TION LTD. VS. CIT 225 ITR 802 (SC) AND NOTED THAT WHILE DECIDING THE ISSUE OF ALLOWABILITY OF DISCOUNT ON DEBENTURES THE HONBLE SUPREME COURT HELD THAT ORDINARILY REVENUE EXPENDITURE WHICH IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS MUST B E ALLOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT IS INCURRED. IT C ANNOT BE SPREAD OVER A NUMBER OF YEARS EVEN IF THE ASSESSEE HAS WRITTEN IT OFF IN HIS BOOKS OVER A PERIOD OF YEARS. HOWEVER THE FACTS MAY JUS TIFY AN ASSESSEE WHO HAS INCURRED EXPENDITURE IN A PARTICULAR YEAR TO SPREAD AND CLAIM IT OVER A PERIOD OF ENSUING YEARS. IN FACTS ALLOWING THE ENTIRE EXPENDITURE IN ONE YEAR MIGHT GIVE A VERY DISTORTED PICTURE OF THE PROFITS OF A PARTICULAR YEAR. ISSUING DEBENTURES I S AN INSTANCE WHERE ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 18 ALTHOUGH THE ASSESSEE HAS INCURRED THE LIABILITY TO PAY THE DISCOUNT IN THE YEAR OF ISSUE OF DEBENTURES THE PAYMENT IS TO SECURE A BENEFIT OVER A NUMBER OF YEARS. THERE IS CONTINUING BENEFI T TO THE BUSINESS OF THE COMPANY OVER THE ENTIRE PERIOD. THE LIABILI TY SHOULD THEREFORE BE SPREAD OVER THE PERIOD OF THE DEBENTU RES. 32. IN THE LIGHT OF THE ABOVE FINDINGS OF THE HONBLE S UPREME COURT THE LEARNED CIT(A) OBSERVED THAT THE EXPENDI TURE INCURRED BY THE ASSESSEE IN THE SHAPE OF THE LICENSED FEES OF T HE NON-REFUNDABLE DEPOSIT FOR USE OF THE TRADEMARK OWNED BY THE SWCL IS INCURRED TO SECURE A BENEFIT OVER A NUMBER OF YEARS. IN VIEW O F THE CONTINUED BENEFIT TO THE BUSINESS OF THE COMPANY OVER A PERIO D OF 10 YEARS HE HELD THAT ALLOWING THE ENTIRE EXPENDITURE OF RS.32. 00 LACS IN THE YEAR WILL GIVE A VERY DISTORTED PICTURE OF THE ASSESSMEN T YEAR UNDER CONSIDERATION. THEREFORE THE EXPENDITURE SHOULD B E SPREAD OVER THE PERIOD OF THE LICENCE I.E. 10 YEARS. THIS ACC ORDING TO HIM IS IN CONFORMITY WITH THE MATCHING PRINCIPLE OF THE EXPEN DITURE FOR USE OF THE TRADEMARKS AND THE BENEFIT DRAWN THEREFROM BY S ELLING GOODS IN RESPECT OF THIS ASSESSMENT YEAR. 33. HE FURTHER OBSERVED THAT EVEN IN THE CASE OF HINDUS TAN ALUMINIUM CORPORATION LTD. 144 ITR 474 (CAL.) THE EXPENDITURE ON TRAINING OF ASSESSEES EMPLOYEES AND PROVIDING TECH NICAL ADVICE AND INFORMATION FOR 20 YEARS WAS HELD ALLOWABLE OVER A PERIOD OF 20 YEARS. HE ACCORDINGLY DIRECTED THE ASSESSING OFFIC ER TO ALLOW 1/10 TH OF THE EXPENDITURE OF RS.32.0 LAKHS I.E. RS.3 20 0 00/- IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 34. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE US. 35. THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTEN TION OF THE BENCH TO ARTICLE 6.1 AT PAGE 6 OF THE AGREEMENT . REFERRING TO PAGE 12 OF THE PAPER BOOK HE SUBMITTED THAT IN THE BOOKS OF M/S. ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 19 SWCL FOR THE YEAR ENDED 31 ST MARCH 2001 A SUM OF RS.32 LAKHS IS ACCOUNTED AS INCOME EARNED FROM M/S. SWBL AS FIXED LICENCE FEE IN TERMS OF THE LICENCE AGREEMENT DATED 1 ST FEBRUARY 2000. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER TREATED THE EXPENDITURE AS CAPITA L IN NATURE AND THE REVENUE IS NOT IN APPEAL. HE ACCORDINGLY SUBM ITTED THAT INSTEAD OF ALLOWING THE FULL AMOUNT AS REVENUE EXPENDITURE THE CIT(A) HAS WRONGLY DIRECTED TO SPREAD OVER THE EXPENDITURE OVE R A PERIOD OF 10 YEARS. 36. THE LEARNED DR ON THE OTHER HAND DREW THE ATTENTI ON OF THE BENCH TO PAGE 3 OF THE AGREEMENT AND REFERRED TO AR TICLE II OF THE SAID AGREEMENT AND SUBMITTED THAT THE ASSESSEE GOT 10 YEARS LICENCE T O MANUFACTURE BEER WHICH IS A NEW ITEM FOR THE AS SESSEE AND THEREFORE IT BECOMES CAPITAL EXPENDITURE. ALTHOUG H THE REVENUE IS NOT IN APPEAL YET UNDER THE CIRCUMSTANCES THEREFO RE THE CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO SPREAD OVER THE EXPENDITURE OVER A PERIOD OF 10 YEARS. 37. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS CASE LAWS CITED BEFORE US. WE FIND THE CHARTERED ACCOUNTANTS CERTIFICATE DATED 20 TH JULY 2004 WAS NOT PLACED BEFORE THE ASSESSING OFFICER WHO PASSED THE ORDER U/S. 143(3) ON 26 TH MARCH 2004. SIMILARLY THE ORDER OF THE CIT(A) I S ALSO SILENT ON THIS ISSUE. WE FIND AS PER THE AGRE EMENT ENTERED INTO BY THE ASSESSEE AND M/S. SWCL THE ASSESSEE IS ENTIT LED TO USE THE LICENCE OVER A PERIOD OF 10 YEARS. THEREFORE CLAIM ING THE EXPENDITURE IN ONE YEAR AS AGAINST SPREAD OVER FOR A PERIOD OF 10 YEARS ON PROPORTIONATE BASIS IN OR OPINION WILL G IVE A DISTORTING RESULT. THEREFORE WE ARE OF THE CONSIDERED OPINIO N THAT THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTIT LED TO CLAIM 1/10 TH ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 20 OF THE EXPENDITURE DURING THIS YEAR AND THE REMAINI NG EXPENDITURE OVER A PERIOD OF 9 YEARS. IN THIS VIEW OF THE MAT TER AND IN VIEW OF THE DETAILED DISCUSSION AS WELL AS THE CASE DECISIO NS RELIED ON BY THE CIT(A) WE DO NOT FIND ANY INFIRMITY IN HIS ORDER A ND AND ACCORDINGLY UPHOLD THE SAME. THIS GROUND BY THE ASSESSEE IS DI SMISSED. 38. GROUNDS OF APPEAL NO. 2 BY THE ASSESSEE READS AS UN DER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN SUSTAIN ING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF A SUM OF RS.18 64 800/- PAID TO MCKINSEY & CO. BY WAY OF LEGAL & PROFESSIONAL FEES ON AN INCORRECT APPRECIATION OF FACTS. 39. FACTS OF THE CASE IN BRIEF ARE THAT M/S. SWCL ENT ERED INTO AN AGREEMENT WITH M/S. MCKINSEY & CO. INC. (MCI) ON 9 TH FEBRUARY 2001 FOR RESTRUCTURING OF THE HOLDING COMPANY AND S UBSIDIARIES. THE OVERREACHING PURPOSE OF THE EFFORT WAS TO PUT S HAW WALLACE ON A FUNDAMENTALLY DIFFERENT GROWTH TRAJECTORY AND BEC OME A GLOBAL FORCE. THE PROFESSIONAL FEES FOR THIS RESTRUCTURI NG WAS 1.8 MILLION US$ WHICH WAS TO BE PAID RS.1 LAKH DOLLAR PER MONT H OVER 18 INSTALMENTS FROM THE COMMENCEMENT OF THE PROJECT. THE ENGAGEMENT WAS FOR 12 MONTHS & IT WAS SUBSTANTIAL I NVESTMENT FOR THE HOLDING COMPANY. THE ASSESSEE COMPANY HAS DEBI TED RS.18 64 800/- DURING THE YEAR AS PAYMENT TO M/S. M CI UNDER THE HEAD LEGAL AND PROFESSIONAL CHARGES. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO E XPLAIN THE NATURE OF PAYMENT TO M/S. MCI AND HOW PAYMENT AND I TS QUANTUM DEBITED TO PROFIT AND LOSS A/C. 40. IT WAS REPLIED BY THE ASSESSEE COMPANY VIDE LETTER DATED 19 TH DECEMBER 2003 AS UNDER: THE SAID COMPANY HAD CARRIED OUT INDEPENDENTLY STRUCTURAL EXERCISE FOR OUR CLIENT AND THE COST ATTRIBUTABLE TO IT IS ONLY CHARGED TO OUR CLIENT AN D THE SAME HAS BEEN DEBITED BY OUR CLIENT IN ITS PROFIT A ND LOSS A/C. ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 21 41. HOWEVER ON PERUSAL OF THE BILLS RAISED TO M/S. MCI TO M/S. SWCL AND M/S. SWBL THE ASSESSING OFFICER NOTED THA T BILLS WERE RAISED DURING THE FINANCIAL YEAR 2001-02 OF THE FOL LOWING AMOUNTS. DATE AMOUNT REMARKS 25-04-2001 RS.81 11 880 BILL IN THE NAME OF SWCL 28-01-2002 RS.48 22 000 BILL IN THE NAME OF SWCL 28-02-2002 RS.48 48 000 BILL IN THE NAME OF SWCL 28-03-2002 RS.48 41 000 BILL IN THE NAME OF SWCL 31-03-2002 RS.95 19 263 BILL IN THE NAME OF SWCL 42. NOT BEING SATISFIED WITH THE VARIOUS EXPLANATIONS G IVEN BY THE ASSESSEE THE ASSESSING OFFICER REJECTED THE CLAIM F OR REVENUE EXPENSES ON APPORTIONED AMOUNT ON THE FOLLOWING GRO UNDS: (A) THE ASSESSEE COMPANY COULD NOT EXPLAIN HOW THI S EXPENDITURE FOR FUTURE GROWTH STRATEGY IS REVENUE I N NATURE. (B) THE ASSESSEE COULD NOT EXPLAIN THE BENEFIT DER IVED OUT OF THIS EXPENDITURE DURING THE YEAR. (C) IN FACT THIS EXPENDITURE IS A SORT OF INVESTME NT FOR FUTURE DEVELOPMENT & GROWTH BOTH FOR GLOBALLY & LOCALLY. (D) THE EXPENDITURE IS IN THE NATURE OF ENDURING BE NEFIT FOR THE ASSESSEE FOR THE FUTURE PROSPECTS OF THE COMPANY. (E) THE EXPENDITURE IS IN THE FORM OF REPORT/SUGGES TIONS. (F) THE EXPENDITURE IS ABSOLUTELY CAPITAL IN NATURE . AND THE EXPENDITURE APPORTIONED TO ASSESSEE COMPANY IS ALSO CAPITAL IN NATURE. (G) SERVICES RENDERED BY M/S. MCI IS NOT YET COMPLE TE AND EXPENSES CLAIMED ON PROPORTIONATE BASIS & UNBILLED AMOUNT DURING THE YEAR IS ALSO NOT JUSTIFIED. (H) THE BILL IS IN THE NAME OF HOLDING COMPANY. PERCENTAGE OF SHARE OF HOLDING COMPANY IS HARDLY 20 % WHILE THE SHARE OF ASSESSEE COMPANY IS 40%. THE BASIS OF THIS SHARING WAS NEVER REPLIED BY ASSESSEE . ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 22 THE ASSESSING OFFICER ACCORDINGLY TREATED THE EXPEN SES SHOWN TO M/S. MCI AS CAPITAL IN NATURE DISALLOWED THE SAME AND ADDED TO THE INCOME OF THE ASSESSEE. 43. IN APPEAL THE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. WHILE DOING SO HE COMMENTED THA T THE FEES PAID BY M/S. SWCL TO M/S. MCI ARE FOR GETTING THEIR ADVI CE FOR EFFECTIVE IMPLEMENTATION OF THE RE STRUCTURAL EXERCISE CARRIE D OUT BY M/S. SWCL AND FOR RECEIVING RECOMMENDATIONS FROM MCI ABO UT THE SCIENTIFIC PLAN OF UNDERGOING RESTRUCTURAL EXERCISE WHEREBY M/S. SWCL CAN LEGALLY ASSIGN ITS MARKETING RIGHTS USE O F BRAND NAME AND TECHNICAL KNOW-HOW TO ITS SUBSIDIARY. HE NOTED THA T THE EXPENDITURE HAS NO RELATION WITH THE BUSINESS OF THE ASSESSEE C OMPANY WHICH HAS BEEN NEWLY INCORPORATED ON 01.07.1999 AND HAS E FFECTIVELY STARTED ITS BUSINESS ON 01.07.2000. THE FEES HAVE BEEN PAID FOR RESTRUCTURING OF M/S. SWCL OR AT BEST OF THE SHAW W ALLACE GROUP AND NOT FOR ANY BUSINESS PURPOSE OF THE ASSESSEE CO MPANY. THE EXPENDITURE IS NOT INCURRED IN THE COURSE OF THE AS SESSEES BUSINESS. EVEN IF FOR A MOMENT IT IS CONSIDERED THAT THE REST RUCTURING OF THE SHAW WALLACE GROUP WAS FOR THE PURPOSE OF THE ASSES SEE COMPANY ALSO AS IT WAS A PART OF THE SHAW WALLACE GROUP T HE EXPENDITURE ON RESTRUCTURING THE BUSINESS HAS TO BE REGARDED AS CA PITAL EXPENDITURE AS IT IS RELATED TO ALTERING THE CAPITAL STRUCTURE OF THE COMPANY. THE EXPENDITURE ON RESTRUCTURING CANNOT BE REGARDED AS DAY TO DAY BUSINESS EXPENDITURE. EVEN IF IT IS CONSIDERED THA T IT WAS NECESSARY FOR THE ASSESSEE COMPANY TO AMALGAMATE IN IT M/S. A MFL AND M/S.HBL THE EXPENDITURE ON THE SAME HAS TO BE REGAR DED IN ASSESSEES CASE AS CAPITAL EXPENDITURE. THIS IS BE CAUSE BEFORE THE AMALGAMATION OF M/S. AMFL AND M/S. HBL THE ASSESSE E HAD PRACTICALLY NO BUSINESS ACTIVITY. IT WAS LYING VIR TUALLY A DORMANT COMPANY FOR A YEAR SINCE ITS INCORPORATION ON 01.07 .1999. IT IS ONLY WITH THE INTENTION OF STARTING NEW BUSINESS OF MANU FACTURING AND MARKETING BEER THAT M/S. AMFL AND M/S. HBL HAVE BEE N ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 23 AMALGAMATED WITH THE ASSESSEE COMPANY. IN THAT SCE NARIO THE EXPENDITURE HAS TO BE REGARDED AS BRINGING IN AN AD VANTAGE OF ENDURING NATURE IN THE SHAPE OF A NEW ASSET NEW BU SINESS OF MANUFACTURING AND MARKETING BEER. IN THE LIGHT OF THE ABOVE DISCUSSION HE UPHELD THE DISALLOWANCE OF RS.18 64 800/- MADE BY THE ASSESSING OFFICER. 44. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE US. 45. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. TH ERE IS NO DISPUTE TO THE FACT THAT AN AMOUNT OF RS.18 64 800 HAS BEEN PAID TO MCI TOWARDS LEGAL AND PROFESSIONAL FEES. THE ONLY DISP UTE IS AS TO WHETHER THE SAME HAS TO BE ALLOWED AS A REVENUE EXP ENDITURE AS CLAIMED BY THE ASSESSEE OR CAPITAL EXPENDITURE AS HELD BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A). WE FIN D THE LEARNED CIT(A) HAS GIVEN A FINDING THAT THE FEES PAID TO M/ S. MCI ARE FOR GETTING THEIR ADVICE FOR EFFECTIVE IMPLEMENTATION O F THE RESTRUCTURAL EXERCISE CARRIED OUT BY M/S. SWCL AND FOR RECEIVING RECOMMENDATIONS FROM M/S. MCI ABOUT SCIENTIFIC PLAN OF UNDERTAKING RESTRUCTURAL EXERCISE. HE HAS ALSO GI VEN A FINDING THAT THE EXPENDITURE HAS NO RELATION WITH THE BUSINESS O F THE ASSESSEE COMPANY WHICH HAS BEEN NEWLY INCORPORATED ON 1 ST JULY 1999 AND HAS EFFECTIVELY STARTED ITS BUSINESS ON 1 ST JULY 2000. HE HAS ALSO GIVEN A FINDING THAT THE FEES HAVE BEEN PAID FOR RE STRUCTURING OF M/S. SWCL OR AT THE BEST OF THE SHAW WALLACE GROUP AND N OT FOR ANY BUSINESS OF THE ASSESSEE COMPANY. FURTHER HE HAS A LSO GIVEN A FINDING THAT THE EXPENDITURE IS NOT INCURRED IN THE COURSE OF THE ASSESSEES BUSINESS. ALTERNATIVELY HE HAS FURTHER HELD THAT EVEN IF IT IS CONSIDERED THAT IT WAS NECESSARY FOR THE ASSESSE E COMPANY TO AMALGAMATE IN IT M/S. AMFL AND M/S. HBL THE EXPENDI TURE HAS TO BE ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 24 REGARDED AS CAPITAL EXPENDITURE SINCE BEFORE THE AM ALGAMATION OF THE ABOVE TWO COMPANIES THE ASSESSEE HAS PRACTICAL LY NO BUSINESS ACTIVITY AND VIRTUALLY DORMANT FOR A YEAR SINCE ITS INCORPORATION. THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT CONTROVE RT ANY OF THE FINDINGS GIVEN BY THE CIT(A) SO AS TO TREAT THE EXP ENDITURE AS REVENUE IN NATURE. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONS GIVEN BY THE CIT(A) UPHOLDING THE ASSESSING OFFICERS ACTION IN TREATING THE EXPENDITURE AS CAP ITAL IN NATURE WE DO NOT FIND ANY INFIRMITY IN THE SAME. THE ORDER O F THE CIT(A) ON THIS ISSUE IS ACCORDINGLY UPHELD. THE GROUND RAISE D BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 46. GROUNDS OF APPEAL NO. 3 BY THE ASSESSEE READ AS UND ER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN TREATING A SUM OF RS.10 41 145/- AS INTEREST WAIVED UNDER SECTION 41( 1) OF THE INCOME-TAX ACT SINCE NO INTEREST HAS BEEN WAIVE D WHATSOEVER AND THEREFORE THE PROVISIONS OF SECTIO N 41(1) ARE NOT APPLICABLE AT ALL. 47. AFTER HEARING BOTH THE SIDES WE FIND OUT OF THE TO TAL ADDITION OF RS.12 10 41 145 THE CIT(A) DELETED AN AMOUNT OF RS.12 CRORES AND SUSTAINED AN AMOUNT OF RS.10 41 145. THE FACTS ARE ALREADY IN GROUNDS OF APPEAL NOS. 1 AND 2 IN REVENUES APPEAL WHEREIN THE REVENUE HAS CHALLENGED THE ORDER OF THE CIT(A) IN D ELETING THE AMOUNT OF RS.12 CRORES OUT OF THE ADDITION OF RS.12 10 41 145. WE HAVE ALREADY RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION SINCE THE CIT(A) WHILE DELETING THE ADDITION OF RS.12 CRORES HAD ACCEPTED CERTAIN FRESH EVIDENCES I N VIOLATION OF RULE 46A WHICH WERE NEVER PRODUCED BEFORE THE ASSES SING OFFICER. SINCE THIS GROUND BY THE ASSESSEE IS INTERLINKED WI TH THAT OF THE GROUND RAISED BY THE REVENUE IN ITS APPEAL AND SINC E THE MATTER HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION THEREFORE THIS GROUND RAISED BY THE ASSESSEE DESERVES TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ITA NOS. 1611&2477/MUM/2005 M/S. SHAH WALLACE BREWERIES LTD. ======================== 25 ADJUDICATION. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 48. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS A LLOWED FOR STATISTICAL PURPOSES WHEREAS THE APPEAL FILED BY TH E ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ON 30 TH APRIL 2010 SD/- (D.K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI DATED 30 TH APRIL 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-VII MUMBAI 4. THE CIT CITY-VII MUMBAI 5. THE DR G BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI TPRAO