THE ASSTT. CIT, BARODA Circle-4., v. RICKMAN ALUMINIUM PVT. LTD.,

ITA 2636/AHD/2003 | 1997-1998
Pronouncement Date: 13-08-2010 | Result: Dismissed

Appeal Details

RSA Number 263620514 RSA 2003
Bench Ahmedabad
Appeal Number ITA 2636/AHD/2003
Duration Of Justice 7 year(s) 2 month(s) 11 day(s)
Appellant THE ASSTT. CIT, BARODA Circle-4.,
Respondent RICKMAN ALUMINIUM PVT. LTD.,
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 13-08-2010
Date Of Final Hearing 24-06-2010
Next Hearing Date 24-06-2010
Assessment Year 1997-1998
Appeal Filed On 02-06-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.2635-2636/AHD/2003 [ASSTT.YEARS: 1996-97 & 1997-98] ASSTT. COMMISSIONER OF INCOME-TAX -VS- RICKMANN AL UMINIUM PVT. LTD. CIRCLE-4 4 TH FLOOR AAYAKAR GULABWADI O.P. ROAD BHAVAN RACE COURSE BARODA BARODA PAN NO.AAACR9882L ITA NO.1040/AHD/2003 [ASSTT. YEAR: 1995-96] ASSTT. COMMISSIONER OF INCOME-TAX -VS- RICKMANN A LUMINIUM PVT. LTD. BARODA CIRCLE-4 4 TH FLOOR GULABWADI OLD PADRA ROAD AAYAKAR BHAVAN AKOTA BARODA ITA NO.4121/AHD/2003 [ASSTT. YEAR: 199 6-97] RICKMANN ALUMINIUM PVT. LTD. VS- ITO WARD-4(3) BARODA ITA NO.1559/AHD/2002 [ASSTT. YEAR : 1998-99] ASSTT. COMMISSIONER OF INCOME-TAX -VS- RICKMANN AL UMINIUM P LTD. BARODA CIRCLE-4 4 TH FLOOR GULABWADI OLD PADRA ROAD AAYAKAR BHAVAQN RACE COURSE BARODA CIRCLE BARODA (APPELLANT) (RESPONDENT) REVENUE BY :SHRI K. MADHUSUDAN SR-DR ASSESSEE BY: SHRI S.N. SOPARKAR SR-AR & SHRI JAIMI N GANDHI O R D E R ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 2 PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE FIVE APPEALS FOUR BY REVENUE AND ONE BY AS SESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-I II BARODA IN APPEAL NOS.CAB/III-61 59 123/2002-2003 CAB/III-47 60 20 9/00-01 02-03 & 03-04 OF DIFFERENT DATE 06-03-2003 08-08-2003 23-12-2002 A ND 22-02-2002. THE ASSESSMENTS WERE FRAMED BY ITO WARD-4(3) AND DCIT CIRCLE-1(2) BARODA U/S. 143(3) R.W.S 147 OF THE INCOME-TAX ACT 1961 (HEREI NAFTER REFERRED TO AS THE ACT) VIDE THEIR ORDERS DATED 26-03-2002 27-03-2002 AND 31-03-2000 FOR THE ASSESSMENT YEARS 1995-96 TO 1998-99 RESPECTIVELY. 2. THE FIRST COMMON ISSUE IN THESE APPEALS OF REVEN UE IN ITA NO.2635- 2636/AHD/2003 AND ITA NO.1040/AHD/2003 IS AS REGARDS TO THE ORDER OF CIT(A) IN DELETING THE ADDITIONS MADE ON ACCOUNT OF INCLUSIO N OF VALUE OF CLOSING STOCK THE AMOUNT OF EXCISE DUTY PAYABLE ON THE FINISHED GOODS . 3. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISSU E ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THESE ASSESSMENT YEARS NOTICED THAT THE ASSESSEE HAS SHOWN VALUE OF CLOSIN G STOCK OF FINISHED GOODS WHICH ARE EXCISABLE ITEMS BUT DO NOT INCLUDE THE EXCISE D UTY PAYABLE ON THE FINISHED GOODS. ACCORDING TO ASSESSING OFFICER THE LIABILITY OF TH E CENTRAL EXCISE DUTY ARISES AS SOON AS GOODS ARE MANUFACTURED AND THE ASSESSEE SHOULD H AVE INCLUDED THE CENTRAL EXCISE DUTY LEVIED IN THE VALUE OF CLOSING STOCK OF FINISHED GOODS. AGGRIEVED AGAINST THE ACTION OF AO INCLUDING THE EXCISE DUTY IN THE VALUE OF CLOSING STOCK MAKING ADDITIONS ASSESSEE PREFERRED APPEALS BEFORE CIT(A) AND HE DELETED THE ADDITION BY FOLLOWING DECISIONS OF HONBLE MADRAS H IGH COURT IN THE CASE OF CIT V. ENGLISH ELECTRIC CO. OF INDIA LTD. (2000) 243 ITR 512 (MAD) AND HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. INDO NIPPON CHEMICAL CO. LTD. (2000) 245 ITR 384 (BOM). AGGRIEVED REVENUE PREFERRED APPEAL BEFORE U S. 4. BEFORE US LD. SR-COUNSEL FOR THE ASSESSEE SHRI S.N.SOPARKAR STATES THAT THIS COMMON ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN TAX APPEAL NO.852 OF 2007 ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 3 IN THE CASE OF ACIT V. NARMADA CHEMATUR PETROCHEMICALS LTD. WHEREIN THE HONBLE JURISDICTIONAL COURT HAS HELD AS UNDER:- .THOUGH THE BILL PROPOSED RETROSPECTIVE INSERTION ULTIMATELY THE SECTION HAS COME ON THE STATUTE BOOK ONLY FROM 1.4.1999. WHAT I S MORE MATERIAL IS THAT THE SAME RELATES TO INCLUSION SINS THE VALUE OF INV ENTORY THE AMOUNT OF ANY TAX DUTY ETC. PAID OR LIABILITY INCURRED FOR THE S AME UNDER ANY LAW IN FORCE. MEANING THEREBY SUCH TAX DUTY ETC. SHOULD HAVE BE EN ACTUALLY PAID OR SHOULD BE ACTUALLY DUE AND PAYABLE UNDER THE LAW APPLICABL E TO SUCH TAX DUTY ETC. IN FORCE. OTHERWISE EVEN SECTION145-A OF THE ACT WILL ALSO NOT CARRY CASE OF REVENUE ANY FURTHER. 31. VARIOUS JUDGMENTS CITED ON BEHALF OF THE PARTIE S WHICH HAVE NOT BEEN SPECIFICALLY REFERRED TO HAVE BEEN CONSIDERED WHILE RENDERING THIS JUDGMENT BEARING IN MIND THE SALUTARY PRINCIPLE THAT A JUDGM ENT IS AN AUTHORITY FOR WHAT IS ACTUALLY DECIDED AND THE OBSERVATIONS MADE THERE IN WOULD BE APPLICABLE IN THE CONTEXT IN WHICH THEY ARE MADE AND WHAT IS BIDI NG IS ONLY THE RATIO DECIDENDI OF THE DECISION WHICH HAS TO BE GATHERED FROM THE STATEMENTS OF LEGAL PRINCIPLES SET OUT IN THE FACTS OF THE CASE B ROUGHT BEFORE THE COURT. 32. THIS COURT IS IN RESPECTFUL AGREEMENT WITH THE OPINION EXPRESSED BY THE MADRAS HIGH COURT IN THE TWO JUDGMENTS CITED ON BEH ALF OF THE PARTIES. 33. ACCORDINGLY IT IS HELD THAT THE TRIBUNAL WAS J USTIFIED IN LAW IN EXCLUDING THE EXCISE DUTY AT THE TIME OF VALUATION OF THE CLOSING STOCK OF FINISHED GOODS AT THE END OF THE ACCOUNTING PERIOD IN LIGHT OF WHAT I S STATED HEREINBEFORE. THE APPEAL IS ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS. EVEN THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO T HE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF ENGLISH ELECTRIC CO. OF INDIA LTD. (SUPRA) AND BOMBAY HIGH COURT IN THE CASE OF INDO NIPPON CHEMICAL CO. LTD. (SUPRA). WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN NARMADA CHEMATUR PETROCHEMICALS LTD. (SUPRA). ACCORDINGLY THIS COMMON ISSUE IN THE APPE ALS OF THE REVENUE IS DISMISSED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IN ITA NO.1559/AHD/2002 IS AS REGARDS TO THE ORDER OF CIT(A) IN DELETING THE DISA LLOWANCE OF DEDUCTION U/S.80IA ON REVISED ELECTRIC BILLS FOR CALCULATION OF PRODUCTIO N CARRIED OUT BY THE ASSESSEE AT SILVASSA FACTORY. FOR THIS REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 :- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN DIRECTING TO ALLOW DEDUCTION UNDER SECTION 80IA OF THE ACT AFTER CONSIDERING THE REVISED ELECTRICITY BILL FOR CALCUL ATION OF PRODUCTION CARRIED OUT ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 4 BY THE ASSESSEE AT SILVASSA. THE LEARNED CIT(A) IGN ORED THE DETAILED REASONS MENTIONED IN THE ASSESSMENT ORDER BY THE A.O. ON TH IS ISSUE. 6. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER D URING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE QUANTITY OF THE ITEMS MANUFACTURED AND AS DECLARED IN THE RETURN OF INCOME BY THE ASSESSEE IT IS NOT POS SIBLE TO MANUFACTURE SUCH HUGE QUANTITY CONSIDERING THE LOW CONSUMPTION OF ELECTR ICITY AND ACCORDINGLY HE DISALLOWED THE ADDITION BY HOLDING THAT THESE ITEMS ARE NOT MANUFACTURED IN THE FACTORY PREMISES OF THE ASSESSEE LOCATED IN SILVASS A BUT WERE MANUFACTURED IN OTHER FACTORY PREMISES BELONGING TO ITS SISTER CONCERN OU TSIDE SILVASSA AND AS SUCH PART OF THE MANUFACTURED ITEM DID NOT QUALIFY FOR DEDUCTION U/S.80IA OF THE ACT. THE AO NOTED THAT THERE WAS SURVEY U/S.133A OF THE ACT AT THE FACTORY PREMISES OF THE ASSESSEE AT SILVASSA AND OFFICE PREMISES AT BARODA ON 23-03-1999. DURING THE COURSE OF SURVEY IT WAS NOTICED THAT AGAINST THE AC TUAL POWER CONSUMPTION OF APPROXIMATELY 13 900 UNITS DURING THE YEAR 1 83 64 0 UNITS IS REQUIRED IF 80% OF THE MACHINERY CAPACITY IS UTILIZED. HE REQUIRED THE ASS ESSEE TO GIVE THE DETAILS OF CONSUMPTION OF ELECTRICITY IN THE MANUFACTURING PRO CESS AND ASSESSEE FILED A DETAILED ANALYSIS WHICH INDICATED THAT THE POWER REQUIREMENT WAS 13 900 UNITS AS AGAINST 12 149 UNITS OF POWER CONSUMED. THE AO THEN REFERRE D TO THE STATEMENT OF SHRI DHANRAJ PATIL PRODUCTION & MACHINERY IN-CHARGE OF THE ASSESSEE-COMPANY RECORDED DURING THE COURSE OF SURVEY. ACCORDING TO WHICH THE CONSUMPTION OF ELECTRICITY SHOULD BE 94 418 UNITS WITH REGARD TO THE FURNACE WHEREAS THE ASSESSEE IN ITS CALCULATION HAS SHOWN CONSUMPTION IN THIS REGARD AT 7 358 UNITS . CONSIDERING THE VAST DIFFERENCE BETWEEN THE ELECTRICITY CONSUMED AND SHOWN BY ASSES SEE ON ONE HAND AND THE EXPECTED CONSUMPTION OF ELECTRICITY IN UTILIZATION OF MACHINERY AND THE ONE INDICATED BY SHRI DHANRAJ PATIL WITH REFERENCE TO THE PRODUCT ION ON THE OTHER HAND. THE AO ASKED THE ASSESSEE TO OBTAIN THE OPINION OF AN EXPE RT IN THIS REGARD. THIS WAS SUBMITTED BUT ON ANALYSIS OF THIS REPORT THE AO FO UND THAT THE REPORT WAS NOTHING BUT THE REITERATION OF THE ASSESSEES CALCULATION A ND THIS WAS ONLY TO MISLEAD THE DEPARTMENT AND THEREFORE HE DID NOT ACCEPT THE REPO RT AND IN THE MEANTIME ASSESSEE VIDE LETTER DATED 03-03-2000 INFORMED THE AO THAT THE LOCAL ELECTRICITY DEPARTMENT HAS RAISED A REVISED BILL OF ELECTRICITY CONSUMED BY THE ASSESSEE DATED 29-02-2000 FOR THE PERIOD FROM OCT95 TO DEC98 DUE TO CERTAIN ERROR IN CALCULATING THE UNITS OF ELECTRICITY CONSUMED DURING THAT PERIO D. IN THE REVISED BILL THE AO FOUND ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 5 THAT ELECTRICITY CONSUMPTION HAS BEEN SOWN AT 4 31 340 UNITS IN PLACE OF 43 134 UNITS FOR WHICH THE BILLS WERE RAISED FOR THAT PERIOD I. E. CONSUMPTION IN THE REVISED BILL WAS SHOWN TEN TIMES HIGHER THAN THE ORIGINAL BILL. THE ASSESSEE FURTHER SUBMITTED A REVISED CALCULATION OF ELECTRICITY REQUIRED FOR THE GIVEN LEVEL OF PRODUCTION AT 1 28 239 UNITS DURING THE CURRENT YEAR INSTEAD OF 13 900 UNI TS CLAIMED EARLIER. THE ASSESSEE MADE CERTAIN CHANGES ON THE BASIS OF CALCULATION W HICH ACCORDING TO THE AO INDICATES THAT THE ASSESSEE MADE AN ABOUT TURN IN I TS EXPLANATION AND IN VIEW OF MANY DISCREPANCIES THE AO ISSUED SUMMONS TO SOME O FFICIALS OF THE ELECTRICITY DEPARTMENT AND RECORDED THEIR STATEMENTS AND THESE OFFICIALS WERE ALSO CROSS- EXAMINED BY THE AUTHORIZED REPRESENTATIVE. THE REVI SED BILL WAS ISSUED BECAUSE OF ERROR IN TAKING METER READING AND IT WAS CLAIMED TH AT THE METER AT THE ASSESSEES PREMISES GIVES READING IN MULTIPLES OF TEN AND THIS WAS LOST SIGHT OFF WHILE PREPARING THE ORIGINAL BILLS TO THE ASSESSEE. THIS HAS NOT BE EN CORRECTED IN THE REVISED BILL. BUT THE ELECTRICITY DEPARTMENT DOES NOT HAVE ANY RECORD TO SHOW THAT THE METER INSTALLED AT THE ASSESSEES PREMISES GIVES READING IN MULTIPL ES OF TEN. THE JURISDICTIONAL JR. ENGINEER CLAIMED IN HIS STATEMENT THAT THE ERROR WA S DETECTED IN AUG.98 BUT THE MATTER WAS NOT REPORTED TO THE DEPARTMENT NOR ANY INQUIRY WAS CONDUCTED BY HIM OR ANY OTHER PERSON IN THIS REGARD. THE DY. ENGINEER SHRI C.R. PATEL CAME TO KNOW ABOUT THIS MISTAKE ONLY WHEN THE REVISED BILL WAS P UT TO HIM FOR SIGNATURE ON 28-02- 2000. ACCORDING TO THE ASSESSING OFFICER THIS INDI CATED THAT THE REVISED BILL OF DIFFERENTIAL CONSUMPTION OF RS.6 38 890/- WAS ISSUE D BY THE BILL CLERK WITHOUT ANY DIRECTION FROM ANY AUTHORITY IN THIS REGARD AND FUR THER FOR ISSUE OF REVISED BILL NO REFERENCE WAS MADE TO THE READING BOOK AND FALL OF READINGS IN THE READING BOOK FROM LAKH TO THOUSAND SHOWS THAT THE READING BOOK I S INCORRECT AS ADMITTED BY THE DY. ENGINEER AND HE WAS NOT AWARE OF THE LOW CONSUM PTION OF ELECTRICITY BEFORE OCT.95 I.E. BEFORE THE PERIOD FOR WHICH REVISED BI LL WAS ISSUED. THE AO CONCLUDED THAT THE RECORDS OF THE ELECTRICITY DEPARTMENT ARE FACTUALLY ERRONEOUS AND UNRELIABLE SO REVISED BILL ISSUED BY THEM IS NOT BASED ON ANY RELIABLE RECORDS OR SUPPORTING EVIDENCE AND ISSUANCE OF REVISED BILL AFTER A GAP O F 4-5 YEARS IS AD HOC AND WITHOUT VERIFICATION OF THE FACTS. FURTHER THE TIMING OF T HE ISSUE OF REVISED BILL COINCIDED WITH THE CULMINATION OF INQUIRY BY THE REVENUE IN THIS R EGARD WHICH INDICATED THAT THERE WAS CONNIVANCE BETWEEN THE ASSESSEE AND SOME OFFICI ALS OF THE ELECTRICITY DEPARTMENT. HE ALSO OBSERVED THAT IT IS QUITE SURPR ISING THAT THE ASSESSEE DID NOT NOTICE THE FALL IN CONSUMPTION OF ELECTRICITY FOR A LL THESE YEARS. ON THE BASIS OF ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 6 CONSUMPTION OF ELECTRICITY OF 13 900 UNITS HE COMP UTED THE PRODUCTION AT 30 458 KG OF ALUMINUM SLUGS AT SILVASSA FACTORY WHICH IS 10. 84% OF THE PRODUCTION DECLARED BY THE ASSESSEE FOR CLAIMING DEDUCTION U/S.80IAT OF TH E ACT. ACCORDINGLY HE DISALLOWED THE DEDUCTION ON THE PRODUCTION OF ALUMINUM SLUGS T O THE EXTENT OF 2 50 548 KGS. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 7. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY GIVING FOLLOWING FINDINGS IN PARA-1.31 TO 1.32 OF HIS APPELLATE ORDER:- 1.31 THE DEDUCTION OF INTEREST ON I.T. REFUND IS N OT DISPUTED. I WOULD FIRST CONSIDER THE DEDUCTION OF RS.48 43 366 AND IT IS SE EN HAS CONSIDERED THE ISSUE FROM THREE ANGLES FOR DEDUCTION OF THE SAID A MOUNT. FIRST IS THE CONSUMPTION OF ELECTRICITY. HE IGNORED THAT THE APP ELLANT HAS SHOWN CONSUMPTION OF POWER AT 13 900 UNITS AND ON THAT BA SIS HE WAS OF THE OPINION THAT THE PRODUCTION AS SHOWN BY THE ASSESSEE IS NOT POSSIBLE WITH THAT MUCH CONSUMPTION OF ELECTRICITY. HE IGNORED THE REVISED BILL AND PAYMENT MADE AGAINST THAT ISSUE HAS TO BE SEEN IN ENTIRETY. THE METER READING AS SHOWN IN READING BOOK IS GIVEN AT PARA-1.4. A CLOSE LOOK AT THAT INDICATES THAT THE READING IS NOT CORRECT. IF WE IGNORE ZERO AT THE EN D THE READING IS PROGRESSIVE. BUT ON 22-11-1996 28-12-1996 01-04-1997 AND 02-01 -1998 THE ZERO IS THERE AFTER THE LAST DIGIT MAKING THE READING IN LAKHS WH EREAS THE OTHERS ARE IN THOUSAND. IT THUS APPEARS THAT THE READING IS NOT PROGRESSIVE WHICH CAN NOT BE THE CASE. THE ORIGINAL BILL WAS ISSUED ON THE BA SIS OF THESE READINGS AND AS SUCH THAT CAN NOT BE CONSIDERED AS CORRECT. THE ELE CTRICITY DEPARTMENT HAS NOW ISSUED A REVISED BILL BY TAKING THE READINGS IN LAKH. THAT IS TO SAY BY MULTIPLYING THOSE READINGS IN THOUSANDS BY TEN. THI S HAS BEEN DONE ON THE GROUND THAT THE METRE INSTALLED AT THE FACTORY PREM ISES OF THE APPELLANT GIVES READING IN THE UNITS OF TEN (WHICH IS SUPPORTED BY THE STATEMENT OF THE JR. ENGINEER AND THE PHOTOGRAPH OF THE METRE (- PARA 1. 28 DEALING WITH THE APPELLANTS REPLY). IT APPEARS THAT ON MANY OCCASIO NS THE READINGS AS RECORDED IN THE METRE WERE NOT MULTIPLIED BY TEN WH ICH HAS NOW BEEN DONE WHILE ISSUING REVISED BILL. IF THAT IS DONE THE ME TRE READING BECOMES PROPER AS THE THEN READINGS SHOW PROGRESSIVE TREND. THE REVIS ED BILL HAS BEEN ISSUED AFTER RECTIFYING THIS MISTAKE I.E. BY MULTIPLYING M ETRE READINGS IN THOUSAND BY TEN AND HENCE THE REVISED BILL APPEARS TO GIVE THE CORRECT STATE OF AFFAIRS AND THIS APPEARS LOGICAL ALSO. IF THIS IS CONSIDERED T HEN THE CONSUMPTION OF ELECTRICITY MATCHES WITH THE PRODUCTION SHOWN BY TH E APPELLANT. 1.32. THE ASSESSING OFFICER ON THE GROUND OF LOW CO NSUMPTION OF ELECTRICITY ON THE BASIS OF ORIGINAL BILL CALCULATED THAT ONLY 30 458 KGS. OF ALUMINIUM SLUGS COULD HAVE BEEN MANUFACTURED BY THE APPELLANT AT IT S SILVASSA FACTORY WHICH IS ONLY 10.84 PERCENT OF PRODUCTION SHOWN BY THE APPEL LANT AND THE BALANCE OF 89.16% OF PRODUCTION I.E. 2 50 548 KG. WERE PRODUCE D OUTSIDE THE FACTORY AND HE HAS HINTED THAT THIS COULD HAVE BEEN MANUFACTURE D BY THE APPELLANTS UNIT AT VAPI. THIS CONCLUSION OF THE APPELLANT DOES NOT APPEAR TO BE LOGICAL ON TWO COUNTS. FIRST THE FACTORIES AT VAPI BELONGING TO T HE APPELLANTS GROUP ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 7 MANUFACTURE COLLAPSIBLE ALUMINUM TUBES AND CORRUGAT ED BOX WHICH ARE DIFFERENT FROM THE MANUFACTURED PRODUCTS OF THE APP ELLANT. IN FACT THE RAW MATERIAL FOR COLLAPSIBLE TUBES IS ALUMINUM SLUGS W HICH IS MANUFACTURED BY THE APPELLANT. THE MACHINERY INVOLVED IN THE MANUFACTUR ING OF THE TWO PRODUCTS ARE DIFFERENT AND IT IS NOT THE CASE OF THE ASSESSI NG OFFICER THAT IN THE FACTORIES AT VAPI MACHINERIES WERE AVAILABLE FOR MANUFACTURI NG ALUMINIUM SLUGS. THUS IT CAN NOT BE SAID THAT THE GOODS WERE MANUFACTURED IN THOSE FACTORIES AT VAPI. SECONDLY AS DISCUSSED ABOVE IT HAS BEEN ACCEPTED THAT THE REVISED BILL OF ELECTRICITY APPEARS TO BE CORRECT BEING LOGICAL AND WITH THE CONSUMPTION OF ELECTRICITY UNITS MENTIONED THEREIN THE PRODUCTION LEVEL AS SHOWN BY THE APPELLANT STANDS EXPLAINED. THE ASSESSING OFFICER H AS ALSO DOUBTED THE MANUFACTURING AT SILVASSA UNIT ON THE BASIS OF OCTR OI RECEIPTS IN RECEIPT OF THE GOODS CARRIED TO BOMBAY WHERE THE SOURCE OF MATERIA L IS SHOWN AS SILVASSA VAPI ETC. NOT MUCH IMPORTANCE CAN BE ATTACHED TO T HIS IN VIEW OF THE APPELLANTS SUBMISSION THAT THE TRUCKS CARRYING THE GOODS OF SILVASSA FACTORY OF THE APPELLANT ALSO CARRIED GOODS OF VAPI FACTORI ES OF THE APPELLANTS GROUP AND OCTROI CLERK MENTIONED THE PLACES AS TOLD BY TR UCK DRIVERS WHO ARE MOSTLY ILLITERATE OR SEMI-ILLITERATE. FURTHER THE PRODUCT ION AT SILVASSA FACTORY IS SUPPORTED BY VARIOUS OTHER REGISTERS LIKE EXCISE RE GISTERS ETC. AS MENTIONED IN THE APPELLANTS SUBMISSION IN WHICH NO DEFECT H AS BEEN FOUND BY THE ASSESSING OFFICER. HE HAS SIMPLY MENTIONED THAT NO ANNEALING REGISTER IS MAINTAINED BY THE APPELLANT BUT THE EXISTENCE OF E XCISE REGISTER AND OTHER REGISTERS PROVE THE PRODUCTION OF GOODS AT SILVASSA FACTORY AND HENCE NOT MUCH IMPORTANCE CAN BE GIVEN TO THE ABSENCE OF ANNE ALING REGISTER AS ALLEGED BY THE ASSESSING OFFICER. AGGRIEVED REVENUE CAME IN SECOND APPEAL BEFORE US. 8. THE LD. SR-DR FILED WRITTEN SUBMISSIONS ON BEHAL F OF REVENUE AND ARGUED THAT THE ASSESSING OFFICERS STAND HAS BEEN THAT PR ODUCTION WAS NOT POSSIBLE WITH A MEAGER NUMBER OF UNITS SHOWN AND THEREFORE HE CORRE CTLY INFERRED THAT THE PRODUCTION OF OUTSIDE AREA WAS PRODUCED AT SILVASSA FACTORY. HE STATED THAT EVEN IF THE REVISED FIGURES OF ELECTRICITY CONSUMPTION WERE TO BE ACCEPTED WHAT WILL BE THE STATUS OF THE ARGUMENT OF THE ASSESSEE AS THE ASSES SEE GOT AN EXPERT OPINION WHO JUST GAVE THE CERTIFICATE THAT THE CONSUMPTION WAS CORRECT. HE FURTHER STATED THAT WHAT THE SANCTITY OF THE EXPERT OPINION WHO CERTIF IED THAT THE PRODUCTION TO 10 TIMES WAS POSSIBLE WITH THE CONSUMPTION OF 1/10 TH OF ELECTRICITY UNIT. THE LD. SR-DR STATED THAT WHEN THE ISSUE WAS REFERRED TO THE ELECTRICITY OFFICIALS THE CONSUMPTION FIGURE CHANGED AND NOW THESE FIGURES HAVE BEEN MULTIPLIED BY 10 TO GET ACTUAL CONSUMPTION BUT THE AO RIGHTLY STATED THAT THIS MUL TIPLICATION OF 10 TO ACTUAL CONSUMPTION OF ELECTRICITY IS NOT CORRECT AND FOR T HAT HE CITED THE REASON THAT THE REVISED CONSUMPTION FIGURES ARE NOT BASED ON MEASUR EMENT BOOK OR METRER READING ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 8 SO THE SAME CANNOT BE ACCEPTED IN VIEW OF THE FACT OF CHANGING OF STAND BY ELECTRICITY DEPARTMENT. IN VIEW OF THESE ARGUMENTS LD. SR-DR RELIED ON THE ASSESSMENT ORDER. 9. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE SHRI S.N.SOPARKAR FULLY SUPPORTED THE ORDER OF THE CIT(A) AND HE ARGUED THA T THE ASSESSING OFFICER HAS WRONGLY CONCLUDED THAT THE LEVEL OF PRODUCTION SHOW N BY THE ASSESSEE CAN NOT BE ACHIEVED WITH THE POWER CONSUMPTION AS PER THE ORIG INAL BILL BUT HE HAS NOT DULY CONSIDERED THE REVISED ELECTRICITY BILL WHICH IS I N CONFORMITY WITH THE LEVEL OF PRODUCTION. HE ARGUED THAT IT IS NOT CORRECT ON THE PART OF THE ASSESSING OFFICER TO STATE THAT THE REVISED BILL ISSUED WAS AD HOC WHER EAS VARIOUS OFFICIALS OF THE ELECTRICITY DEPARTMENT FROM THE EXECUTIVE ENGINEER TO JR. ENGINEER WHO WERE EXAMINED ON OATH EXPLAINED THAT CLERICAL MISTAKE OC CURRED WHILE CALCULATING THE ENERGY CONSUMPTION ON THE BASIS OF ELECTRICITY METE R READING AND IT WAS ADDED THAT THE METER INSTALLED AT THE FACTORY PREMISES OF THE ASSESSEE GAVE THE READING IN MULTIPLES OF TEN. ACCORDING TO HIM THE METER READI NG WAS TO BE MULTIPLIED BY TEN TO CALCULATE THE ACTUAL CONSUMPTION OF ELECTRICITY AND FACTUALLY A METER WAS PHYSICALLY BROUGHT AND PRODUCED BY THE ELECTRICITY DEPARTMENT BEFORE THE ASSESSING OFFICER INDICATING THAT SUCH METERS RECORD THE READING IN M ULTIPLES OF TEN. HE STATED THAT THE METER READING HAS TO BE PROGRESSIVE WHICH WAS NOT T HERE IN THE RECORD ON WHOSE BASIS THE ORIGINAL BILL WAS PREPARED AND THIS MISTA KE HAS BEEN CORRECTED BY MULTIPLYING THE READING BY 10 WHEREVER NECESSARY AN D REVISED BILL ISSUED. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED BEFORE US THAT TH E ASSESSEE HAS NOT CHALLENGED THE REVISED BILL AND ACTUALLY THE PAYMENT HAS ALREA DY BEEN MADE TO THE EXTENT OF REVISED BILL RAISED BY THE ELECTRICITY DEPARTMENT A ND THE ASSESSING OFFICER IS NOT CORRECT IN IGNORING THE REVISED BILL WITHOUT NEGATI NG THE EVIDENCES BROUGHT IN THIS REGARD. HE FURTHER CONTENDED THAT THE ASSESSEES CO NDUCT CAN NOT BE DOUBTED BECAUSE OF MISTAKES IN THE RECORD OF ELECTRICITY DE PARTMENT AND THE FACT THAT THE ASSESSEE HAS WRITTEN TO THEM TO RECTIFY THE MISTAKE BEFORE THE I.T. PROCEEDINGS STARTED AND FOR THIS HE REFERRED A COPY OF LETTER D ATED 13.8.1999 WRITTEN TO ELECTRICITY DEPARTMENT BUT IT IS THE ELECTRICITY DEPARTMENT WHI CH TOOK TIME IN ISSUING REVISED BILL FOR WHICH THE ASSESSEE CAN NOT BE FAULTED. THE LD. COUNSEL FURTHER ARGUED THAT THE ASSESSING OFFICER HAS COMPLETELY IGNORED VARIOUS OT HER SUPPORTING RECORDS FOR THE LEVEL OF PRODUCTION SHOWN AND THE TOTAL QUANTITY MO VEMENT OF RAW MATERIAL AND ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 9 FINISHED GOODS AS CLAIMED BY THE ASSESSEE AND THE S UPPORTING RECORDS COMPRISE OF EXCISE RECORD EXCISE INVOICE FINISHED GOODS MOVEM ENT STATEMENT ANNELLING RECORD RAW MATERIAL MOVEMENT STATEMENT WITH CONFIRMATION F ROM JOB WORKERS STATEMENT OF SCRIP MOVEMENT WITH CONFIRMATION WITH SUPPORTING EX CISE ENTRY REGISTER ETC. WITH REGARD TO OCTROI RECEIPTS IT WAS STATED BY LD. COU NSEL THAT THE TRUCKS MORE OFTEN GO TO TWO OR THERE DESTINATIONS LIKE FACTORY AT SILVASSA VAPIA AND OTHER PLACES AND AS SUCH THE TRUCK DRIVERS MAY GIVE ANY NAME OF THE PLACE FR OM WHERE HE HAS COME TO THE OCTROI CLERK AT BOMBAY AND HENCE UNDUE WEIGHTAGE HA S BEEN GIVEN BY THE ASSESSING OFFICER TO THREES MINOR DETAILS AND FURTH ER HE WRONGLY OBSERVED THAT THE ASSESSEE HAS PRODUCED ONLY 1/5 TH OF THE ENTRY RECEIPTS. WHEREAS IN FACT 178 RECEIP TS OUT OF 239 CONSIGNMENTS WERE PRODUCED BEFORE HIM FO R ENTRY IN THE UNION TERRITORY OF DADRA & NAGAR HAVELI WHICH IS 74.5% AND SIMILARLY 169 OCTROI RECEIPTS OUT OF 172 CONSIGNMENTS FOR BOMBAY WERE PRODUCED WHICH IS 98. 26%. THE LD. COUNSEL FURTHER STATED THAT EVEN DURING SURVEY VARIOUS PRODUCTION / QUANTITY RECORDS LIKE ANNEALING RECORD EXCISE RECORD ETC. WERE VERIFIED WHICH SU PPORT THE LEVEL OF PRODUCTION SHOWN BY THE ASSESSEE AND EVEN PHOTOGRAPHS OF PLANTS WERE TAKEN BUT ALL THESE HAVE BEEN IGNORED BY THE ASSESSING OFFICER. ACCORDINGLY HE S TATED THAT THE ASSESSING OFFICER ON THE BASIS OF ELECTRICITY CONSUMPTION AS PER THE ORIGINAL BILL HAS WRONGLY CONCLUDED THAT THE ASSESSEE COULD NOT HAVE DONE THE PRODUCTIO N AS SHOWN AND MAJOR PART OF THE PRODUCTION WAS DONE IN THE FACTORY OF THE SISTE R CONCERN SITUATED AT VAPI. HE CLARIFIED THAT THE AO HIMSELF HAS NOTED THAT THE SI STER CONCERN MANUFACTURES ALUMINUM COLLAPSIBLE TUBES FROM ALUMINUM SLUGS WHI CH IS ONLY ONE STAGE AHEAD AND THE OBSERVATION OF THE ASSESSING OFFICER IS NOT COR RECT AS THE PROCESSES INVOLVED IN THE TWO FACTORIES ARE DIFFERENT AND THE MACHINERIES INVOLVED IN MANUFACTURING TUBES ARE DIFFERENT FROM THOSE USED FOR MANUFACTURING ALU MINUM SLUGS. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THE FACTS THAT T HE LEVEL OF PRODUCTION SHOWN BY THE ASSESSEE CANNOT BE ACHIEVED WITH THE POWER CONS UMPTION AS PER THE ORIGINAL BILL BUT THE LOWER AUTHORITIES HAVE NOT DULY CONSIDERED THE REVISED ELECTRICITY BILL WHICH IS IN CONFORMITY WITH THE LEVEL OF PRODUCTION. WE FURT HER FIND THAT THE REVISED BILL ISSUED WAS NOT AD HOC AS VARIOUS OFFICIALS OF THE ELECTRI CITY DEPARTMENT FROM THE EXECUTIVE ENGINEER TO JR. ENGINEER WHO WERE EXAMINED ON OATH EXPLAINED THAT CLERICAL MISTAKE OCCURRED WHILE CALCULATING THE ENERGY CONSUMPTION O N THE BASIS OF ELECTRICITY METER ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 10 READING AND IT WAS ADDED THAT THE METER INSTALLED A T THE FACTORY PREMISES OF THE ASSESSEE GAVE THE READING IN MULTIPLES OF TEN. WE F IND THAT THE OFFICIALS OF ELECTRICITY DEPARTMENT CLEARLY ADMITTED THAT METER READING WAS TO BE MULTIPLIED BY TEN TO CALCULATE THE ACTUAL CONSUMPTION OF ELECTRICITY AND FACTUALLY A METER WAS PHYSICALLY BROUGHT AND PRODUCED BY THE ELECTRICITY DEPARTMENT BEFORE THE ASSESSING OFFICER INDICATING THAT SUCH METERS RECORD THE READING IN M ULTIPLES OF TEN. WE ARE OF THE VIEW THAT THE METER READING HAS TO BE PROGRESSIVE WHICH IS NOT THE CASE IN THE PRESENT APPEALS IN THE RECORD ON WHOSE BASIS THE ORIGINAL BILL WAS PREPARED AND THIS MISTAKE HAS BEEN CORRECTED BY MULTIPLYING THE READING BY 10 WHEREVER NECESSARY AND REVISED BILL ISSUED. WE FIND THAT THE ASSESSEE HAS NOT CHAL LENGED THE REVISED BILL AND ACTUALLY THE PAYMENT HAS ALREADY BEEN MADE TO THE EXTENT OF REVISED BILL RAISED BY THE ELECTRICITY DEPARTMENT AND THE ASSESSING OFFICER IS NOT CORRECT IN IGNORING THE REVISED BILL WITHOUT NEGATING THE EVIDENCES BROUGHT IN THIS REGARD. WE FURTHER FIND THAT IT IS A FACT THAT THE ASSESSEE HAS WRITTEN TO ELECTRICITY D EPARTMENT TO RECTIFY THE MISTAKE BEFORE THE I.T. PROCEEDINGS STARTED AND FOR THIS AS SESSEE REFERRED TO A COPY OF LETTER DATED 13.8.1999 WRITTEN TO ELECTRICITY DEPARTMENT B UT IT IS THE ELECTRICITY DEPARTMENT WHICH TOOK TIME IN ISSUING REVISED BILL FOR WHICH THE ASSESSEE CAN NOT BE FAULTED. WE FURTHER FIND FROM THE RECORDS THAT THE ASSESSING OF FICER HAS COMPLETELY IGNORED VARIOUS OTHER SUPPORTING RECORDS FOR THE LEVEL OF P RODUCTION SHOWN AND THE TOTAL QUANTITY MOVEMENT OF RAW MATERIAL AND FINISHED GOOD S AS CLAIMED BY THE ASSESSEE AND THE SUPPORTING RECORDS COMPRISE OF EXCISE RECOR D EXCISE INVOICE FINISHED GOODS MOVEMENT STATEMENT ANNELLING RECORD RAW MATERIAL MOVEMENT STATEMENT WITH CONFIRMATION FROM JOB WORKERS STATEMENT OF SCRIP M OVEMENT WITH CONFIRMATION WITH SUPPORTING EXCISE ENTRY REGISTER ETC. WITH REGARD TO OCTROI RECEIPTS IT IS TO BE MENTIONED THAT THE TRUCKS MORE OFTEN GO TO TWO OR T HERE DESTINATIONS LIKE FACTORY AT SILVASSA VAPIA AND OTHER PLACES AND AS SUCH THE TR UCK DRIVERS MAY GIVE ANY NAME OF THE PLACE FROM WHERE HE HAS COME TO THE OCTROI C LERK AT BOMBAY AND HENCE UNDUE WEIGHTAGE HAS BEEN GIVEN BY THE ASSESSING OFFICER T O THREES MINOR DETAILS AND FURTHER HE WRONGLY OBSERVED THAT THE ASSESSEE HAS P RODUCED ONLY 1/5 TH OF THE ENTRY RECEIPTS. WHEREAS IN FACT 178 RECEIPTS OUT OF 239 CONSIGNMENTS WERE PRODUCED BEFORE HIM FOR ENTRY IN THE UNION TERRITORY OF DADR A & NAGAR HAVELI WHICH IS 74.5% AND SIMILARLY 169 OCTROI RECEIPTS OUT OF 172 CONSIG NMENTS FOR BOMBAY WERE PRODUCED WHICH IS 98.26%. ACCORDINGLY WE ARE OF T HE VIEW THAT THE OBSERVATIONS OF THE ASSESSING OFFICER ON THE BASIS OF ELECTRICITY C ONSUMPTION AS PER THE ORIGINAL BILL IS ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 11 WRONG TO CONCLUDE THAT THE ASSESSEE COULD NOT HAVE DONE THE PRODUCTION AS SHOWN AND MAJOR PART OF THE PRODUCTION WAS DONE IN THE FA CTORY OF THE SISTER CONCERN SITUATED AT VAPI. WE FIND FROM THE RECORDS THAT THE AO HIMSELF HAS NOTED THAT THE SISTER CONCERN MANUFACTURES ALUMINUM COLLAPSIBLE TU BES FROM ALUMINUM SLUGS WHICH IS ONLY ONE STAGE AHEAD AND THE OBSERVATION OF THE ASSESSING OFFICER IS NOT CORRECT AS THE PROCESSES INVOLVED IN THE TWO FACTORIES ARE DIFFERENT AND THE MACHINERIES INVOLVED IN MANUFACTURING TUBES ARE DIFFERENT FROM THOSE USED FOR MANUFACTURING ALUMINUM SLUGS. ACCORDINGLY WE ARE OF THE CONSIDER ED VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION BY ACCEPTING THE CONTE NTION OF THE ASSESSEE THAT THE REVISED BILL ISSUED BY ELECTRICITY DEPARTMENT IS RE AL CONSUMPTION FOR THE LEVEL OF PRODUCTION MADE BY ASSESSEE-COMPANY. ACCORDINGLY W E CONFIRM THE ORDER OF CIT(A) AND THIS COMMON ISSUE OF THE REVENUES APPEALS IS D ISMISSED. 11. THE NEXT COMMON ISSUES IN THESE APPEALS OF THE REVENUE IN ITA NO.2635- 2636/AHD/2003 1040/AHD/2003 & 1559/AHD/2002 IS AS REGARDS TO THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE BY ASSESSING O FFICER AFTER DISALLOWING DEDUCTION U/S.80IA OF THE ACT ON ACCOUNT OF PROFI TS DUE TO OVER-CHARGING FROM SISTER CONCERNS. 12. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISS UE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING NOTICED THAT THE ASSESSEE HAS CHARGED ABNORMAL PROFITS FROM ITS SIX SISTER CONCER NS TO WHOM IT HAS SOLD THE ENTIRE GOODS. ON GOING THROUGH THE DETAILS OF THE PRICE RA NGE ON WHICH THE SISTER CONCERNS ARE PURCHASING THE GOODS FROM THE ASSESSEE AND THOS E WHICH THEY ARE PURCHASING FROM THE OUTSIDE PARTIES THE AO OBSERVED THAT THE PRICE AT WHICH THE SISTER CONCERNS ARE PURCHASING GOODS FROM THE ASSESSEE ARE 15 TO 20 % HIGHER THAN THE RATE ON WHICH THE SAME ARE PURCHASED FROM OUTSIDE PARTIES A ND AO CALLED FOR QUOTATION OF MARKET PRICE CHARGED BY ONE M/S. PET METAL PVT. LD. BARODA AND HE FOUND THAT FOR 99.7% PURE ALUMINUM SLUGS WITH OTHER MATCHING SPECI FICATIONS THE PRICE FOR THIS YEAR CHARGED BY THE SAID CONCERN WERE 97 TO 104 AS AGAIN ST 119 TO 127 AND 124 TO 131 CHARGED BY THE ASSESSEE DURING VARIOUS PERIODS OF T HE YEAR AND ASSESSEE EXPLAINED BEFORE AO THAT CUSTOMERS WERE ISO 9000 COMPANIES EX PORTING THEIR PRODUCTS AND HAVING HIGH SPEED PRODUCTION LINE AND THE ASSESSEE S CASE CANNOT BE COMPARED WITH THAT OF PET METAL SO FAR AS THE QUALITY OF PRODUCT IS CONCERNED. FURTHER DUE TO SALES ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 12 TAX EXEMPTION GRANTED TO THE ASSESSEE THEIR LANDED COST TO CUSTOMERS WOULD BE LESSER TO THAT EXTENT WHEN COMPARED WITH THE SAID C ONCERN. THE AO DID NOT ACCEPT THE EXPLANATION ON THE GROUND THE QUALITY SPECIFICA TIONS OF PET METALS MATCHES WITH THAT OF ASSESSEE AND THE INCIDENCE OF SALES TAX ITS ONLY 2.4% WHEREAS THE PRICE VARIATION IS 15 TO 20%. ACCORDING TO THE AO THE AS SESSEE HAS OVERCHARGED FROM ITS SISTER CONCERNS AND THUS INCREASED ITS PROFIT ON WH ICH HUNDRED PER CENT DEDUCTION U/S.80IA IS CLAIMED. AO CALCULATED THAT WEIGHTED AV ERAGE REALIZATION PER KG. FROM ITS SISTER CONCERN IS RS.121.42 AS AGAINST RS.104.83 PE R KG. PAID TO OTHER PARTIES BY THE SISTER CONCERNS GIVING RISE TO DIFFERENCE RS.16.5 P ER KG. PERCENTAGE TERM 13.65% AND THUS THE EXCESS REALIZATION COMES TO RS.48 43 366/-. THE ASSESSING OFFICER MADE DISALLOWANCE OF DEDUCTION U/S 80IA OF THE ACT AMOUNTING TO RS.48 43 366/- ON THIS ISSUE. AGGRIEVED ASSESSEE PREFERRED APPEAL BE FORE CIT(A). 13. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY GIVING FOLLOWING FINDINGS IN PARA-1.33 OF HIS APPELLATE ORDER:- KEEPING THESE TWO FACTORIES IN BACKGROUND THE ASS ESSING OFFICER FURTHER DEVELOPED THE CASE TO SHOW THAT ABNORMAL PROFIT HAS BEEN SHOWN FROM THE SALE OF MATERIAL TO SISTER CONCERN. IT IS SEEN THAT THE ASSESSEE PRODUCES ALUMINUM SLUGS OF THE PURITY OF 99.7%. THE BASIS OF THE ASSESSING OFFICERS OBSERVATION ABOUT THE OVERCHARGING OF SALES PRICE A RE THAT THE SISTER CONCERNS HAVE PURCHASED THE SLUGS FROM OUTSIDE PARTIES AT AN AVERAGE RATE WHICH IS LOWER BY 15 TO 20% THAN THE AVERAGE RATE OF PURCHAS ES FROM THE APPELLANT AND THE QUOTATION OF MARKET PRICE CHARGED BY THE ASSESS EE AND THE QUOTATION OF MARKET PRICE CHARGED BY ONE M/S. PET METALS PVT. LT D. BARODA. WITH REGARD TO QUOTATION FROM M/S. PET METALS IT IS SEEN THAT IT HAS NOT BEEN ESTABLISHED THAT THE SAID COMPANY MANUFACTURES ALUMINUM SLUGS OF 99. 7% PURITY. IT HAS SIMPLY GIVEN THE QUOTATION OF SALES PRICE OF ALUMINUM SLUG S OF PURITY OF 99.7%. FURTHER THE APPELLANT HAS GIVEN THE DETAILS ABOUT THE INPUT COST OF MANUFACTURING WHICH IS RS.86.29 PER KG. AS AGAINST RS.73.82 PER KG. OF THE PET METALS PVT. LTD. THE COMPARISON HAS BEEN CONFIR MED BY THE ASSESSING OFFICER VIDE HIS LETTER DATED 28-11-2001 AS MENTION ED ABOVE AND THUS THERE IS A DIFFERENCE IN THE INPUT COST OF RS.12.47 PER K G. AND THIS GIVES RISE TO DIFFERENCE OF 16.89% IN THE INPUT COST ALONE. IT IS TO BE FURTHER SEEN THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE PURCHASES OF THE APPELLANT AND HAS NOT EVEN DOUBTED THE PURCHASE PRICE OF THE RAW MATERIAL OF THE APPELLANT AS SUCH THE DIFFERENCE IN THE SALES PRICES OF THE APPELLANT AND THAT OF PET METAL IS EXPLAINED. I ALSO FIND THAT THE SISTER CONCERNS WHO USE THE PRODUCTS OF THE APPELLANT AS RAW MATERIALS HAVE BEEN CHARGING DIFFE RENT RATES FROM THEIR CUSTOMERS FOR THEIR PRODUCTS OF SIMILAR SIZE WHICH CLEARLY INDICATES THAT THEY ARE SUPPLYING DIFFERENT QUALITY OF TUBES TO DIFFERE NT CUSTOMERS DEPENDING UPON THEIR SPECIFICATIONS OF DEMAND. NATURALLY THEY WOU LD USE DIFFERENT QUALITY OF INPUTS TO ACHIEVE THAT. FURTHER THE SISTER CONCERNS ARE EXPORTING THEIR PRODUCTS AND IT IS QUITE NATURAL THAT THE RAW MATERIAL USED FOR SUCH PRODUCT WILL BE BETTER ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 13 THAN THE RAW MATERIAL FOR THE PRODUCTS FOR INLAND C USTOMERS WHO ASK FOR CHEAPER GOODS. HENCE THERE IS A FORCE IN THE ARGUM ENT OF THE APPELLANTS COUNSEL THAT THE APPELLANT IS CHARGING HIGHER FOR I TS PRODUCTS FROM SISTER CONCERN AS COMPARED TO OTHERS BECAUSE OF QUALITY OF MATERIAL (99.7% PURITY IN APPELLANTS CASE AS AGAINST 99.5% PURITY IN CASE OF OTHERS). THIS GETS FURTHER SUPPORTED BY THE COMPARISON OF COST OF INPUT IN TWO CASES OF PET METALS AND SUNDAR METALS (THOUGH THEY HAVE NOT SUPPLIED THE MA TERIAL TO SISTER CONCERN) AS DISCUSSED ABOVE. THUS I FIND THAT THERE IS NO B ASIS FOR COMING TO THE CONCLUSION THAT THE APPELLANT HAS OVERCHARGED THE S ISTER CONCERN BY AN AMOUNT OF RS.48 43 368/-. THIS WILL THEREFORE NOT BE DEDUCTED FROM THE PROFIT FOR THE PURPOSE OF DEDUCTION U/S.80IA. AGGRIEVED REVENUE CAME IN SECOND APPEAL BEFORE US. 14. BEFORE US LD. SR-DR ARGUED THAT OVERCHARGING FR OM SISTER CONCERNS BY THE ASSESSEE IS BASED ON FACTS AND STATED THAT THE ASSE SSING OFFICER HAS GIVEN COMPARATIVE OVERCHARGING FROM SISTER CONCERNS AND A BNORMAL PROFIT EARNED BY THE ASSESSEE FOR THE CLAIM OF DEDUCTION U/S.80IA OF THE ACT. FOR THIS HE REFERRED TO THE CHART WHICH IS BEING REPRODUCED FROM THE ASSESSMEN T ORDER:- PURCHASED FROM ASSESSEE PURCHASED FROM OUTSIDE QTY. AVERAGE RATE PRICE RANGE AVERAGE RATE PRICE RANGE LANS METAL P. LTD. 61133 KGS 67% 124 119-127 124-131 110 97-127 EXTRUSION PROCESS LTD. 1 65 298 30% 120 119-127 124-131 106 97-124 IMPACT CONTAINER LTD. 4150 9% 115 119-127 124-131 104 89-115 BHAVINI CONTAINER P.LTD. 5537 12% 124 119-127 124-131 103 97-126 BARODA CONTAINERS P. LTD. 35 092 53% 123 119-127 124-131 107 98-132 PUNIT PRINTS 17245 51% 122 119-127 124-131 99 89-126 IN VIEW OF THIS HE STATED THAT EVEN THE CLAIM OF TH E ASSESSEE THAT THE PRODUCT OF THE ASSESSEE IS SUPERIOR TO THE OTHERS I.E. THE ASSESSE ES PRODUCT IS PURE AT 99.7% AS AGAINST THE PURITY OF OTHERS AT 99.5% THE LD. SR-D R STATED THAT THIS IS NOT BASED ON DOCUMENTARY EVIDENCE FROM THE ASSESSEE AND AGAINST THE M/S. PET METALS PURITY. THERE IS NO PROOF THAT THE ASSESSEE HAS A HIGHER TE CHNOLOGY AND THE OTHER COMPANY CANNOT PRODUCE HIGH PURITY PRODUCT. HE STATED THAT THE BASIC ALUMINUM INGOTS ARE ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 14 PRODUCED BY COMPANIES LIKE BALCO HINDALCO ETC. HE STATED THAT THE DOCUMENTS PRODUCED ARE ONLY QUOTATIONS OF PET METALS AND ACTU ALLY THEY HAVE NOT SUPPLIED ANY MATERIAL. EVEN OTHERWISE ACCORDING TO THE LD. SR-D R THE COST DIFFERENCE IS WORKED OUT BY THE AO AT RS.1 PER KG. OF METAL IN VIEW OF T HE FACTS OF THE CASE AND THEREFORE THE DIFFERENCE OF RS.15 TO RS.20 IS NOT JUSTIFIABLE . THE CLAIM OF THE ASSESSEE THAT IT HAD SUPPLIED HIGH PURITY PRODUCTS TO SISTER CONCERN S WHICH WERE SOLD AT HIGHER PRICE AT INTERNATIONAL MARKET BUT THERE IS NO PROVE THAT THE SISTER CONCERNS SOLD HIGH PURITY PRODUCTS SEPARATELY IN THE MARKET AND SISTER CONCER NS PURCHASED 99.5% PURITY PRODUCT FROM THE MARKET AND EXPORTED. EVEN THE AO H AS COMPARED THE GROSS PROFIT OF PET METALS WITH THAT OF THE ASSESSEE AND WHICH IS 7 .9% AND AVERAGE GP OF PET METALS FOR THREE YEARS IS 8-9%. EVEN THE CLAIM OF T HE ASSESSEE THAT IT GOT SALES TAX EXEMPTION AND SO THE PRICE OF THE ASSESSEES PRODUC T IS COMPETITIVE IN MARKET HE ARGUED THAT THE EFFECT OF SALES TAX IS ONLY 2.4% IN SALE PRICE WHEREAS ACTUALLY THE ASSESSEES SALE PRICE IS HIGHER TO THE EXTENT OF 15 -20% WHICH IS NOTHING BUT OVERCHARGING OF PRICE FROM SISTER CONCERNS FOR CLAI MING EXCESS DEDUCTION U/S.80IA OF THE ACT. IN VIEW OF THESE ARGUMENTS HE URGED THAT T HE ASSESSING OFFICERS ORDER BE RESTORED. 15. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSE SSEE SHRI SOPARKAR ARGUED THAT THE HIGHER PROFITS FROM SALES TO SISTER CONCER NS IS BASED ON PRICE COMPARISON AND IT WAS STATED THAT THE ALUMINUM SLUGS MANUFACTU RED BY THE ASSESSEE-COMPANY IS 99.7% PURITY AS AGAINST 99.5% OR LESS SOLD BY OT HERS. ACCORDING TO HIM THE SLUGS MANUFACTURED BY THE ASSESSEE ARE PRE-TUMBLED BEARI NG NO BUR ON THE CIRCUMFERENCE OR ON THE APERTURE AND THE SLUGS SUPPLIED WERE PROP ERLY ANNEALED ONES AND WERE SORTED OUT TWICE RESULTING IN ALMOST NIL ONES AND W ERE SORTED OUT TWICE RESULTING IN ALMOST NIL REJECTION AND FURTHER THE SAME ARE SUPPL IED WITH COMPLETE HARDNESS REPORT. THE LD. COUNSEL ARGUED THAT THE AO HAS IGNORED THES E FACTS AND MADE COMPARISON WITH THE RESULTS OF PET METALS A COMPANY WHICH CAN NOT MATCH WITH THAT OF ASSESSEE IN THE MATTER OF QUALITY OF SLUGS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED A STATEMENT BEFORE AO SHOWING DIRECT COST OF PRODUCTI ON AT RS.102.39 PER KG. AGAINST SELLING PRICE OF SLUGS AT RS.122.28 AND IT WAS ARGU ED THAT THE INDUSTRY NORMALLY OPERATES IN THAT GROSS PROFIT RANGING FROM 15% AND ABOVE WHICH MATCHES WITH THAT OF THE ASSESSEE. ACCORDING TO HIM THE SISTER CONCERNS TO WHOM THE SLUGS HAVE BEEN SOLD ARE THE LARGEST MANUFACTURERS OF COLLAPSIBLE T UBES IN INDIA AND DEAL WITH VARIOUS ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 15 KINDS OF CUSTOMERS AND MOREOVER THE QUALITY CONSCI OUS CUSTOMERS PAY HIGHER PRICE FOR BETTER QUALITY OF THE PRODUCT THAN THE NORMAL P RICE IN ORDER TO MINIMIZE PRODUCTION / MATERIAL LOSS. FOR THIS HE CITED AN EXAMPLE EXT RUSION PROCESS SOLD THE TUBES OF SIZE 132.50 MM X 7.00MM ON 23-01-1998 AT RS.1 500/- PER 1000 WHILE THE SAME SIZE TUBES WERE SOLD AT RS.1 800/- PER 1000 ON 29-0 9-1997.IMPACT CONTAINERS SOLD THE PRODUCT OF SIZE 22.20 MM X 120.00 MM AT RS.972/ - PER 1000 ON 30-08-1997 WHILE THE PRODUCT OF SAME SIZE WAS SOLD FOR RS.1 35 0/- PER 1000 NUMBERS ON 09-09- 1997 AND SIMILAR IN THE CASE WITH OTHER SISTER CONC ERNS. IN VIEW OF THESE FACTS HE CONTENDED THAT BETTER QUALITY PRODUCTS MANUFACTURED BY THE SISTER CONCERNS WERE MADE OUT OF PURER ALUMINUM INGOTS SUPPLIED BY THE A SSESSEE WHEREAS THE LESSER QUALITY PRODUCTS WERE MANUFACTURED WITH THE ALUMINU M INGOTS OF INFERIOR QUALITY SUPPLIED BY OTHERS. THE ASSESSEE MANUFACTURERS FINE ST QUALITY OF SLUGS WHICH ARE USED BY THE SISTER CONCERNS IN TURN TO SATISFY THE QUALITY CONSCIOUS CUSTOMERS MOST OF THEM ARE FOR DIRECT EXPORTS OR BY MULTINATIONALS AND THE COMPARISON WITH M/S. PET METALS IS MISPLACED AS THE SAID CONCERN MANUFACTURE S SLUGS WHICH ARE 99.5% OR LESS PURE. HE NARRATED THE FACT THAT THE FACTORY IS SITU ATED IN BARODA WHEREAS THE ASSESSEES ONE IS IN SILVASSA AND INQUIRY SHOULD HA VE BEEN MADE TO KNOW WHETHER ANY COMPANY USING HIGH-SPEED LINES AND PRODUCING HI GH QUALITY TUBES USES THEIR SLUGS. FURTHER THE INCIDENCE OF SALES TAX IS 4% AN D ABOVE AS AGAINST 2.4% TAKEN BY THE ASSESSING OFFICER. IN VIEW OF THESE ARGUMENTS HE STATED THAT THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE AFTER CON SIDERING THE ENTIRE SUBMISSIONS AND FACTS OF THE CASE. 16. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E PRODUCES ALUMINUM SLUGS OF THE PURITY OF 99.7%. WE FIND THAT THE VERY BASIS OF THE ASSESSING OFFICERS OBSERVATION ABOUT THE OVERCHARGING OF SALES PRICE A RE THAT THE SISTER CONCERNS HAVE PURCHASED THE SLUGS FROM OUTSIDE PARTIES AT AN AVER AGE RATE WHICH IS LOWER BY 15 TO 20% THAN THE AVERAGE RATE OF PURCHASES FROM THE ASS ESSEE AND THE QUOTATION OF MARKET PRICE CHARGED BY THE ASSESSEE AND THE QUOTAT ION OF MARKET PRICE CHARGED BY ONE M/S. PET METALS PVT. LTD. BARODA. WE FIND THAT THE HIGHER PROFITS EARNED BY THE ASSESSEE FROM SALES TO SISTER CONCERNS IS BASED ON PRICE COMPARISON AND THE ALUMINUM SLUGS MANUFACTURED BY THE ASSESSEE-COMPANY IS 99.7% PURITY AS AGAINST 99.5% OR LESS SOLD BY OTHERS. WE FURTHER FIND FROM THE RECORDS THAT THE SLUGS ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 16 MANUFACTURED BY THE ASSESSEE ARE PRE-TUMBLED BEARI NG NO BUR ON THE CIRCUMFERENCE OR ON THE APERTURE AND THE SLUGS SUPPLIED WERE PROP ERLY ANNEALED ONES AND WERE SORTED OUT TWICE RESULTING IN ALMOST NIL ONES AND W ERE SORTED OUT TWICE RESULTING IN ALMOST NIL REJECTION AND FURTHER THE SAME ARE SUPPL IED WITH COMPLETE HARDNESS REPORT. WE ARE OF THE VIEW THAT THE COMPARISON WITH THE RES ULTS OF PET METALS A COMPANY WHICH CAN NOT MATCH WITH THAT OF ASSESSEE IN THE MA TTER OF QUALITY OF SLUGS CAN BE MADE BY SHOWING DIRECT COST OF PRODUCTION AT RS.102 .39 PER KG. AS AGAINST SELLING PRICE OF SLUGS AT RS.122.28 AND THE INDUSTRY NORMAL LY OPERATES IN THAT GROSS PROFIT RANGING FROM 15% AND ABOVE WHICH MATCHES WITH THAT OF THE ASSESSEE. WE FIND THAT THE SISTER CONCERNS TO WHOM THE SLUGS HAVE BEEN SO LD ARE THE LARGEST MANUFACTURERS OF COLLAPSIBLE TUBES IN INDIA AND DEAL WITH VARIOUS KINDS OF CUSTOMERS AND MOREOVER THE QUALITY CONSCIOUS CUSTOMERS PAY HIGHER PRICE FO R BETTER QUALITY OF THE PRODUCT THAN THE NORMAL PRICE IN ORDER TO MINIMIZE PRODUCTI ON / MATERIAL LOSS. FOR THIS THE EXAMPLE CITED BY LD. COUNSEL FOR THE ASSESSEE PROVE S THE COMPARISON OF PRICE AND THE EXAMPLE QUOTED IS AS EXTRUSION PROCESS SOLD THE TUBES OF SIZE 132.50 MM X 7.00MM ON 23-01-1998 AT RS.1 500/- PER 1000 WHILE T HE SAME SIZE TUBES WERE SOLD AT RS.1 800/- PER 1000 ON 29-09-1997.IMPACT CONTAIN ERS SOLD THE PRODUCT OF SIZE 22.20 MM X 120.00 MM AT RS.972/- PER 1000 ON 30-08- 1997 WHILE THE PRODUCT OF SAME SIZE WAS SOLD FOR RS.1 350/- PER 1000 NUMBERS ON 09-09-1997 AND SIMILAR IN THE CASE WITH OTHER SISTER CONCERNS. IN VIEW OF THE SE FACTS WE ARE OF THE VIEW THAT BETTER QUALITY PRODUCTS MANUFACTURED BY THE SISTER CONCERNS WERE MADE OUT OF PURER ALUMINUM INGOTS SUPPLIED BY THE ASSESSEE WHEREAS TH E LESSER QUALITY PRODUCTS WERE MANUFACTURED WITH THE ALUMINUM INGOTS OF INFERIOR Q UALITY SUPPLIED BY OTHERS. THE ASSESSEE MANUFACTURERS FINEST QUALITY OF SLUGS WHIC H ARE USED BY THE SISTER CONCERNS IN TURN TO SATISFY THE QUALITY CONSCIOUS CUSTOMERS MOST OF THEM ARE FOR DIRECT EXPORTS OR BY MULTINATIONALS AND THE COMPARISON WITH M/S. P ET METALS IS MISPLACED AS THE SAID CONCERN MANUFACTURES SLUGS WHICH ARE 99.5% OR LESS PURE. THE FACTORY IS SITUATED IN BARODA WHEREAS THE ASSESSEES ONE IS IN SILVASSA AND INQUIRY SHOULD HAVE BEEN MADE TO KNOW WHETHER ANY COMPANY USING HI GH-SPEED LINES AND PRODUCING HIGH QUALITY TUBES USES THEIR SLUGS. FURT HER THE INCIDENCE OF SALES TAX IS 4% AND ABOVE AS AGAINST 2.4% TAKEN BY THE ASSESSING OFFICER. IN VIEW OF THESE FACTS WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A ) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS COMMON ISSUE OF THE R EVENUES APPEALS IS DISMISSED. ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 17 17. THE NEXT ISSUE IN ASSESSEES APPEAL IN ITA NO.4121/AHD/2003 IS AS REGARDS TO THE ORDER OF CIT(A) IN NOT ALLOWING DEDUCTION U/ S.80IA OF THE ACT ON INTEREST INCOME RECEIVED FROM CUSTOMERS ON DELAYED PAYMENTS. 18. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SHR I SOPARKAR STATED THAT IT IS AN ADMITTED POSITION THAT THE INTEREST INCOME RECEIVED IS FROM CUSTOMERS ON DELAYED PAYMENTS HENCE THIS INTEREST IS EARNED IS ON ACCO UNT OF TRADE CREDITORS. HE STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF NIRMA INDUSTRIES V. DCIT (2006) 283 ITR 402 (GUJ) WHEREIN THE HON'BLE GUJ ARAT HIGH COURT HAS HELD AS UNDER:- 33. HOWEVER THE PARTIES HAVING MADE ELABORATE SUB MISSIONS THE MATTER MAY BE EXAMINED FROM A SLIGHTLY DIFFERENT ANGLE. WH EN THE ASSESSEE ENTERS INTO A CONTRACT FOR SALE OF ITS PRODUCTS IT COULD E ITHER STIPULATE (A) THAT INTEREST AT THE SPECIFIED RATE WOULD BE CHARGED ON THE UNPAI D SALE PRICE AND ADDED TO THE OUTSTANDING TILL THE POINT OF TIME OF REALIZATI ON OR (B) THAT IN THE CASE OF DELAY THE PAYMENT FOR SALE OF PRODUCTS WORTH RS.100 TO CARRY THE SALE PRICE OF RS.102 FOR FIRST MONTHS DELAY RS.106 FOR THE THIR D MONTHS DELAY AND SO ON. IF THE CONTENTION OF THE REVENUE IS ACCEPTED MERELY B ECAUSE THE ASSESSEE HAS DESCRIBED THE ADDITIONAL SALE PROCEEDS AS INTEREST IN THE CASE OF A CONTRACT AS PER ILLUSTRATION (A) ABOVE SUCH PAYMENT WOULD NOT BE PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKING BUT IN THE CASE OF ILLUSTRA TION (B) ABOVE IF THE PAYMENT IS DESCRIBED AS SALE PRICE IT WOULD BE PROFITS DERI VED FROM THE INDUSTRIAL UNDERTAKING THIS CAN NEVER BE BECAUSE IN SUM AND S UBSTANCE THESE ARE ONLY TOW MODES OF REALIZING SALE CONSIDERATION THE OBJE CT BEING TO REALIZE THE SALE PROCEEDS AT THE EARLIEST AND WITHOUT DELAY. THE PUR CHASER PAYS A HIGHER SALE PRICE IF IT DELAYS PAYMENT OF THE SALE PROCEEDS. IN OTHER WORDS THIS IS A CONVERSE SITUATION TO OFFERING OF CASH DISCOUNT. TH US IN PRINCIPLE IN REALITY THE TRANSACTION REMAINS THE SAME AND THERE IS NO DI STINCTION S TO THE SOURCE. IT IS INCORRECT TO STATE THAT THE SOURCE FOR INTERE ST IS THE OUTSTANDING SALE PROCEEDS. IT IS NOT THE ASSESSEES BUSINESS TO LEN D FUNDS AND EARN INTEREST. THE DISTINCTION DRAWN BY THE REVENUE IS ARTIFICIAL IN NATURE AND IS NEITHER IN CONSONANCE WITH LAW NOR COMMERCIAL PRACTICE. 19. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN F AVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIRMA INDUSTRIES (SUPRA). HOWEVER LD. SR-DR MADE SUBMISSIONS THAT THE INTEREST CHARGE D FROM TRADE DEBTORS AFTER 30 DAYS IS ONLY FROM SISTER CONCERNS AND ACCORDING TO HIM THIS IS A POSSIBLE DESIGN TO RECEIVE MORE AS SALE CONSIDERATIONS AND ASSESSEE CH ARGED HIGHER SELLING RATE WHICH IS ALL THE MORE REASONS FOR NOT CHARGING INTEREST. HE STATED THAT THE HONBLE HIGH COURT HAS NOT CONSIDERED THE FOLLOWING POINTS:- ITA NO.2635-36/AHD/03 4121/AHD/03 1040/AHD/03 & 1559/AHD/02 ACIT CIR-4 BRD V. RICKMANN ALUMINIUM PVT. LTD. AYS 95-96 TO 98-99 PAGE 18 I) WHETHER SALES TAX RETURNS HAVE BEEN MODIFIED TO SHOW THE REVISED SALES RECEIPTS; II) WHETHER EXCISE RECORDS REFLECT THE REVISED RATE S; III) WHETHER THERE WAS ANY CONTRACT BETWEEN ASSESSE E AND THE CUSTOMERS FOR INTEREST PAYMENT; AND IV) WHETHER DEBTORS DEDUCTED TAX FROM SO CALLED IN TEREST U/S.194C OF THE ACT. 20. THE FACT REGARDING THE INTEREST RECEIPTS ON DEL AYED PAYMENT FROM CUSTOMERS IS NOT DISPUTED BY THE REVENUE. AS THE ISSUE IS SQUARE LY COVERED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF NIRMA INDUSTRIES (SUPRA) RESPECTFULLY FOLLOWING THE SAME WE ALLOW THIS ISSUE OF THE ASSESSEES APPEAL. 21. IN THE RESULT REVENUES APPEALS ARE DISMISSED AND THAT OF ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS DAY OF 13 TH AUG 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 13/08/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-III BARODA 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD