The ACIT, 1(2), v. M/s Primear Protins,

ITA 972/IND/2003 | 1996-1997
Pronouncement Date: 15-03-2010 | Result: Dismissed

Appeal Details

RSA Number 97222714 RSA 2003
Bench Indore
Appeal Number ITA 972/IND/2003
Duration Of Justice 6 year(s) 4 month(s) 4 day(s)
Appellant The ACIT, 1(2),
Respondent M/s Primear Protins,
Appeal Type Income Tax Appeal
Pronouncement Date 15-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 15-03-2010
Date Of Final Hearing 10-03-2010
Next Hearing Date 10-03-2010
Assessment Year 1996-1997
Appeal Filed On 10-11-2003
Judgment Text
PAGE 1 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO. 1060/IND/1997 A.Y. : 1994-95 DY. CIT PREMIER PROTEINS LIMITED SPL. RANGE II VS CHETAK CENTRE R.N. T. MARG INDORE INDORE. APPELLANT RESPONDENT I.T.A.NO. 1047/IND/1997 A.Y. : 1994-95 PREMIER PROTEINS LIMITED DY. CIT CHETAK CENTRE R.N. T. MARG VS SPL. RANGE II INDORE. INDORE APPELLANT RESPONDENT I.T.A.NO. 481/IND/1998 A.Y. : 1995-96 DY. CIT PREMIER PROTEINS LIMITED SPL. RANGE II VS CHETAK CENTRE R.N. T. MARG INDORE INDORE. APPELLANT RESPONDENT PAGE 2 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE I.T.A.NO. 972/IND/2003 A.Y. : 1996-97 DY. CIT PREMIER PROTEINS LIMITED SPL. RANGE II VS CHETAK CENTRE R.N. T. MARG INDORE INDORE. APPELLANT RESPONDENT DEPARTMENT BY : SHRI K.K.SINGH CIT DR RESPONDENT BY : SHRI M.C.MEHTA AND SHRI HITESH CHIMNANI CAS DATE OF HEARING : 10.03.2010 O R D E R PER V.K. GUPTA A.M. THIS IS A BUNCH OF FOUR APPEALS BELONGING TO THE SA ME ASSESSEE HENCE THIS BEING DISPOSED OF THROUGH THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE SHALL TAKE UP THE REVENUES APPEAL IN I.T .A.NO. 1060/IND/1997. 3. GROUND NO.(I) READS AS UNDER ;- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN ALLOWING THE PRIOR PERIOD EXPENSES OF RS. 17 82 431/- AS AGAINST THE CLAIM OF ASSESSEE OF RS. 12 43 617. PAGE 3 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE THE ASSESSEE HAD NOT FILED ANY PROOF THAT THE LIABI LITY AND CRYSTALLIZED DURING THE YEAR. 4. THE FACTS IN BRIEF ARE THAT THE A.O. DISALLOWED E XPENSES OF RS. 20 20 114-53 ON THE GROUND THAT THESE EXPENSES PERT AINED TO EARLIER YEARS AND DID NOT CRYSTALLIZE IN THE YEAR UNDER CONSIDERA TION. AGGRIEVED BY THIS THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE SUBMITTED DETAILED SUBMISSIONS VOUCHE RS AND OTHER DOCUMENTARY EVIDENCES TO SHOW THAT THESE EXPENSES A CTUALLY CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION HENCE ALLOWAB LE IN THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) AFTER EXAMINING THE D ETAILS SO PRODUCED BY THE ASSESSEE HELD THAT OUT OF THE TOTAL DISALLOWANC E EXPENSES WORTH RS. 17 82 431/- WERE ALLOWABLE IN THE YEAR UNDER CONSID ERATION AND DIRECTED THE A.O. TO VERIFY THE QUANTUM THEREOF. THE LD. CIT (A) HOWEVER DISALLOWED A SUM OF RS. 2 19 961/-. AGGRIEVED BY TH IS THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FA CTS AND PLACED STRONG RELIANCE ON THE ORDER OF A.O. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND CONTENDED THAT THESE EXPENSES WERE TO BE ALLOWED IN THE YEAR OF CRYSTALLIZATION AS HELD BY THE TRIBUNAL IN ASSESSE ES OWN CASE OF ASSESSMENT YEAR 1993-94 AND ALSO IN VIEW OF THE DEC ISION OF THE TRIBUNAL PAGE 4 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE IN THE CASE OF AMBA TRADING & MFG. CO.LTD. AS REPOR TED IN 12 ITJ 547 AND SINCE LIABILITY TO PAY THESE EXPENSES CRYSTALLI ZED IN THE YEAR UNDER CONSIDERATION AND HENCE THESE WERE RIGHTLY ALLOWE D BY THE CIT(A). AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT AS PER THE DOCUMENTARY EVIDENCE PR ODUCED BEFORE US THE IMPUGNED EXPENSES HAVE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION AS THERE WERE SOME DISPUTES/CLARIFIC ATION WHICH HAVE BEEN SETTLED IN THE YEAR UNDER CONSIDERATION. WE FURTHE R FIND THAT THE LD. CIT(A) HAS EXAMINED ALL THE ITEMS UNDER THIS HEAD I N DETAIL AND THESE FINDINGS OF THE LD. CIT(A) HAVE REMAINED UNCONTROVE RTED. THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD. THUS THIS GROUND OF THE REVENUE IS DISMISSED. 9. GROUND NO. (II) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE DEDUCTION OF RS. 6 00 765/- MADE ON ACCOUNT OF EXCESS SHORTAGE CLAIMED IN THE MANUFACTURE PROCESS OF NUGGETS. 10. THE LEARNED COUNSEL AT THE VERY OUT-SET SUBMITTED THAT THE ISSUE RAISED IN THIS GROUND WAS COVERED IN FAVOUR O F THE ASSESSEE BY THE PAGE 5 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1993-94 IN I.T.A.NO. 223/IND/1997 ORDER DATED 12.11 .2009 AND REFERRED TO PAGE 73 TO 76 OF THE SAID ORDER FOR OUR PERUSAL. 11. THE LD. DEPARTMENTAL REPRESENTATIVE HOWEVER PREFE RRED TO RELY ON THE ORDER OF THE A.O. 12. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 13. THE FACTS OF THE ISSUE INVOLVED IN THE YEAR UNDER C ONSIDERATION ARE IDENTICAL TO THE FACTS OF THE ISSUE IN ASSESSME NT YEAR 1993-94 IN ASSESSEES OWN CASE. HENCE THE RATIO OF THE DECISI ON OF THE TRIBUNAL IN THAT CASE WOULD BE SQUARELY APPLICABLE. IN THESE CI RCUMSTANCES WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND FOR THE SA KE OF READY REFERENCE REPRODUCE THE FINDINGS OF THE TRIBUNAL IN PARA 7 OF THE SAID ORDER AS UNDER :- WE HAVE CONSIDERED THE SUBMISSION MADE BY BOTH THE SIDE MATERIAL ON RECORD AND ORDERS OF THE AUTHORITIES BE LOW. WE FIND THAT ASSESSEES ACCOUNTS ARE AUDITED AND ARE A LSO SUBJECT TO SUPERVISION OF THE EXCISE DEPARTMENT. NO DEFECT HAS BEEN PRINTED OUT BY THE ASSESSING OFFICER IN SU CH ACCOUNTS. WE FURTHER FIND THAT THE PERCENTAGE OF MANUFACTURING LOSS IN THE PRODUCTION OF SOYA NUGGET S IS PAGE 6 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE COMPARABLE TO PERCENTAGE OF SUCH LOSS IN EARLIER YE ARS WHEREIN NO SUCH ADDITION HAS BEEN MADE. WE ALSO FIN D THAT THE A.O. HAS ACCEPTED CERTAIN PART OF MANUFACTURING LOSS AS GENUINE WITHOUT GIVING ANY BASIS FOR REJECTING THE REMAINING QUANTUM OF SUCH LOSS. IN OUR OPINION THE SUCH KIND OF MANUFACTURING PROCESS RESULTS INTO MANUFACTURING LO SSES HENCE IT CAN NOT BE SAID THAT THE ASSESSEE HAS SHO WN SOMETHING WHICH IS NOT POSSIBLE. FURTHER THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE HIS CLAIM THAT CERTAIN QUANTITY HAD BEEN SOLD OUT OF THE BOOK INSP ITE OF SUPERVISION OF EXCISE DEPARTMENT. THUS IN OUR OPIN ION THE LD. CIT(A) HAS RIGHTLY DELETED THIS ADDITION. AS RE GARDS THE SALE OF INFERIOR QUALITY OF NUGGETS IS CONCERNED T HE ASSESSEE HAS GIVEN ALL THE DOCUMENTARY EVIDENCES IN SUPPORT OF SUCH CLAIM AND THE A.O. ORDER IS A CASE OF PRESUMPTION A ND SUBSTANTIATE ONLY AS NO MATERIAL HAS BEEN BROUGHT O N RECORD BY THE ASSESSING OFFICER TO SUBSTANTIATE THE SAME. ACCORDINGLY BOTH THESE GROUNDS OF THE REVENUE ARE DISMISSED. 14. GROUND NO. (III) READS AS UNDER :- PAGE 7 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 95 20 214/- MADE ON ACCOUNT OF INVESTMENT IN UNACCOUNTED STOCK HYPOTHECATED TO BANK. 15. GROUND NO. 3 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 95 20 214/- MADE ON ACCOUNT OF INVESTMENT IN UNACCO UNTED STOCK HYPOTHECATED TO BANK. 16. THE FACTS IN BRIEF ARE THAT THE A.O. ON COMPARISO N OF STOCK AS PER BOOK AND AS PER BANK RECORDS FOUND THAT THERE W AS A DIFFERENCE BETWEEN THE TWO IN RESPECT OF ITEMS OF SOYA DOC AND RAPE SEED. THE A.O. ARRIVED AT THE VALUE OF SUCH ITEMS AT RS. 95 2 0 214/-. THE A.O. REQUIRED THE ASSESSEE TO EXPLAIN THE REASONS FOR SU CH DIFFERENCE. THE ASSESSEE SUBMITTED THAT SOYA DOC WEIGHING 1546.95 M . T. VALUED AT RS. 94.26 LAKHS HAD BEEN EXPORTED AT THE FAG END OF THE YEAR AND THEREFORE THE SAME HAD BEEN REDUCED FROM THE STOCK AVAILABLE IN THE BOOKS. HOWEVER THE BANK AS PER PRACTICE USED TO REDUCE TH E SAME ONLY AFTER REALIZATION OF SALE PROCEEDS AS WAS DONE IN THE CAS E OF PACKING CREDIT LIMIT FACILITY ENJOYED BY THE ASSESSEE. THE A.O. HOWEVER REJECTED THESE CONTENTIONS OF THE ASSESSEE AND HELD THAT THE ASSES SEE HAD MADE PAGE 8 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE UNEXPLAINED INVESTMENT IN STOCK NOT DISCLOSED IN TH E BOOKS OF ACCOUNT AND ACCORDINGLY TREATED THE SAME AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND ALSO DENIED DEDUCTION U/S 8 0HH 80-I AND 80HHC THEREOF. AGGRIEVED BY THIS THE ASSESSEE CARR IED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE ALSO FILED A CERTIFICATE FROM STATE BANK OF INDIA INDUSTRIAL FINANCE BRANCH INDORE SUPPORTING THE CLAIMS OF THE ASSESSEE REGARDING METHODOLOGY OF REDUCING THE STOCK IN THE STOCK STATEMENT SUBMITTED TO THE BANK. THE ASSE SSEE ALSO SUBMITTED LOCATION-WISE STOCK DETAILS AND RECONCILIATION OF B OOK STOCK VERSUS STOCK IN STATEMENT GIVEN TO BANK. THE LD. CIT(A) HELD THA T THE A.O. DID NOT VERIFY THE CLAIMS MADE BY THE ASSESSEE FROM THE BAN K NOR MADE ANY FURTHER PAYMENTS TO VERIFY THE CONTENTIONS OF THE A SSESSEE. THE LD. CIT(A) FURTHER HELD THAT SALE INVOICE IN RESPECT OF SOYA DOC HAD DULY BEEN ACCOUNTED FOR THE IN THE BOOKS OF ACCOUNT WERE DULY AUDITED AND STOCK RECORDS WERE PROPERLY MAINTAINED. HENCE HE D ELETED THE ADDITION. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 17. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FA CTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. 18. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND BESIDES NARRATING THE SUBMISSION MADE BEFORE THE LD. CIT(A) PLACING RELIANCE ON PAGE 9 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND/ 1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE THE ORDER OF THE LD. CIT(A) ALSO PLACED RELIANCE ON THE FOLLOWING JUDICIAL DECISIONS IN SUPPORT OF ITS CLAIM :- A. 125 TTJ 810 (DEL) B. 264 ITR 582 & 585 ( P & H )PUNJAB RICE ( S.C. DECISION RELIED ON ) C. 73 TTJ 712 (JD) RELAXO FOOT WEAR D. 59 ITD 346 (CHD) HARPREET INDUSTRIES. 19. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 20. IT IS NOTED THAT THE STATE BANK OF INDIA FROM WHOM SUCH PACKING CREDIT LIMIT HAS BEEN OBTAINED BY THE ASSESSEE HAS ALSO CORROBORATED THE CLAIMS MADE BY THE ASSESSEE. HENCE IN OUR VIEW TH ERE REMAINS NO QUESTION TO MAKE THE ADDITION UNLESS SUCH CERTIFICA TE OF THE BANK IS FOUND TO BE FALSE AND SURPRISINGLY THE A.O. HAS NOT DONE ANY EXERCISE. THUS IN OUR OPINION THERE IS NO MERIT IN THIS GROUND OF TH E REVENUE. ACCORDINGLY WE DISMISS THE SAME. 21. GROUND NO. (IV) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 6 20 9 17/- MADE ON ACCOUNT OF LOCAL TRADING ACTIVITY OF THE ASSESSE E. THE LD. PAGE 10 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE CIT(A) ERRED IN DIRECTING THE A.O. TO TAKE THE FIGU RE OF LOSS OF RS. 65 22 096/- AS AGAINST THE FIGURE OF INCOME OF RS. 6 20 917/-. THE LD. CIT(A)S WORKING OF INDIRECT CO ST OF TRADING GOODS ON PRORATE BASIS IS NOT ACCEPTABLE IN VIEW OF THE FACT THAT NO EXPENSES ARE ATTRIBUTABLE TO THE T RADING ACTIVITIES. 22. THE FACTS IN BRIEF ARE THAT THE A.O. FOUND THAT T HE ASSESSEE WAS ENGAGED IN THE TRADING ACTIVITIES IN DOMESTIC MATER IAL AND WAS ALSO ENGAGED IN MANUFACTURING ACTIVITIES AND SUCH MANUFA CTURING ACTIVITIES WAS ELIGIBLE FOR DEDUCTION U/S 80HH/80I. THE A.O. I N THIS BACKGROUND HELD THAT THERE WAS A PROFIT OF RS. 6 20 917/- ON T HE TRADING GOODS AND WHICH WAS WORKED OUT BY THE ASSESSING OFFICER BY RE DUCING THE COST OF PURCHASES FROM THE SALE VALUE OF SUCH GOODS. THE AS SESSEE ON A QUERY FROM THE A.O. SUBMITTED THAT INDIRECT EXPENSES ATTR IBUTABLE TO TRADING ACTIVITY WERE TO BE CONSIDERED AND IF THAT BE SO T HEN QUANTUM OF SUCH EXPENSES WAS RS. 71 43 030/- AND THEREFORE EVENTU ALLY THERE WAS A TRADING LOSS OF RS. 65 22 096/- AND THUS NO ADJUS TMENT WERE REQUIRED TO BE MADE IN THE QUANTUM OF PROFIT ELIGIBLE FOR DEDUC TION U/S 80HH & 80I. THE A.O. HOWEVER REJECTED THESE CONTENTIONS OF TH E ASSESSEE AND REWORKED OUT THE QUANTUM OF PROFIT ELIGIBLE FOR DED UCTION U/S 80HH & 80- I. AGGRIEVED BY THIS THE ASSESSEE CARRIED THE MATT ER INTO APPEAL BEFORE THE PAGE 11 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE LD. CIT(A) WHEREIN THE SUBMISSIONS MADE BEFORE THE A.O. WERE REITERATED AND THE LD. CIT(A) RELYING ON THE FORMUL A GIVEN IN SECTION 80HHC OF THE ACT HELD THAT PROPORTIONATE DEDUCTION OF SUCH EXPENSES BASED ON TRADING SALE VALUE HAD TO BE GIVEN DUE CON SIDERATION AND THEREFORE ULTIMATELY THERE WOULD BE A LOSS OF RS. 65 22 096/- AS AGAINST THE PROFIT OF RS. 6 20 917/- ASSESSED BY THE A.O. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 23. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT HOW THE ASSESSEE FAILED TO JUSTIFY AS TO HOW INDIRECT COST OF TRADING GOODS HAD BEEN WORKED OUT AT RS. 71 43 013/- AND SUCH HUGE COST CO ULD NOT BE POSSIBLE IN THE CASE OF TRADING ACTIVITIES. 24. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND TRIED TO JUSTIFY THE ACTION OF THE LD. CIT(A). HOWEVER HE F AILED TO GIVE US THE BIFURCATION OF INDIRECT COST WHICH WAS PROPORTIONA TELY APPORTIONED OVER THE ACTIVITIES AND SALE OF PURCHASE OF TRADING GOOD S. IN THIS SITUATION WE RESTORE THIS ISSUE TO THE FILE OF A.O. TO VERIFY TH E INDIRECT COST WHICH CAN BE APPORTIONED TOWARDS THE TRADING ACTIVITIES OF TH E ASSESSEE BECAUSE IN OUR OPINION THERE MUST BE SOME INDIRECT COST INVOL VED IN THIS ACTIVITY. HENCE IT MAY NOT BE PROPER TO NOT TO GIVE ANY CRED IT/ALLOWANCE TO THE ASSESSEE IN THIS REGARD. WITH THESE DIRECTIONS WE RESTORE THE ISSUE TO THE FILE OF A.O. WHEREIN THE ASSESSEE WOULD SUBMIT THE NECESSARY DETAILS SO AS PAGE 12 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE TO SUBSTANTIATE ITS CLAIM REGARDING INDIRECT COSTS INVOLVED IN THE TRADING ACTIVITIES. IT IS NEEDLESS TO MENTION THAT THE A.O. SHALL GRANT AN ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THIS GROUND OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 25. GROUND NO.(V) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING TO INCLUDE THE FOLLOWING ITEMS FOR WORKING OUT DEDUCTION U/S 80HH & 80I. A. PREMIUM ON IMPORT LICNECE RS. 17 74 052/- B. SETTLEMENT OF CONTRACTS RS. 2 16 821/- C. MISC.BALANCES WRITTEN OFF RS. 5 23 347/- D. INTEREST FROM MPEB RS. 1 37 9653/- E. INTEREST FROM SBI BONDS RS. 35 795/-= 26. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD OFFE RED INCOME TO THE TUNE OF RS. 26 67 968/- WHICH WAS NOT CONSIDER ED AS ELIGIBLE FOR DEDUCTION U/S 80HH & 80I BY THE ASSESSING OFFICER. ON APPEAL HOWEVER THE LD. CIT(A) ACCEPTED THE CLAIMS OF THE ASSESSEE. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 27. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT OTHER INCOME COMPRISED OF THE FOLLOWING :- I. PREMIUM ON IMPORT LICENSE RS. 17 74 052/- PAGE 13 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE II. SETTLEMENT OF CONTRACTS RS. 2 16 821/- III. MISC. BALANCES WRITTEN OFF RS. 5 23 347/- IV. INTEREST FROM MPEB RS. 1 37 953/- V. INTEREST FROM SBI BONDS RS. 35 795/- TOTAL RS.26 67 968/- 28. HE THEREFORE CONTENDED THAT PREMIUM ON IMPORT LIC ENCE WAS TO BE EXCLUDED FROM THE ELIGIBLE PROFITS IN VIEW OF TH E DECISION OF HON'BLE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA AS REPORTED IN 317 ITR 218. THE LEARNED COUNSEL FAIRLY AGREED. ACCORDI NGLY THIS PART OF THIS GROUND IS DECIDED AGAINST THE ASSESSEE. 29. AS REGARD TO ITEM OF SETTLEMENT OF CONTRACT THE LE ARNED COUNSEL FAIRLY SUBMITTED THAT THIS ISSUE WAS ALSO TO BE DEC IDED AGAINST THE ASSESSEE. HENCE THIS PART OF THE GROUND OF THE REV ENUE IS ALLOWED. 30. AS REGARD TO ITEMS OF INTEREST FROM MPEB AND INTERE ST ON SBI BOND THE ASSESSEE CHOSE NOT TO PRESS THE SAME DUE TO SMALL-NESS OF THE AMOUNT INVOLVED THEREIN. ACCORDINGLY THIS PART OF THE REVENUES APPEAL IS ALSO ALLOWED. 31. AS REGARD TO MISC. BALANCES WRITTEN OFF AND CREDITE D IN THE PROFIT AND LOSS ACCOUNT THE LEARNED COUNSEL SUBMITTED THA T THESE WERE THE ITEMS PERTAINING TO TRADING ACTIVITIES HENCE THESE WERE TO BE TREATED DERIVED FROM INDUSTRIAL UNDERTAKING. THE LD. DEPARTMENTAL R EPRESENTATIVE COULD PAGE 14 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE NOT CONTROVERT THIS CLAIM OF THE ASSESSEE. ACCORDIN GLY WE DISMISS THIS PART OF THE GROUND OF THE REVENUE. 32. THUS THIS GROUND OF THE REVENUES APPEAL STANDS PA RTLY ALLOWED. 33. GROUND NO. (VI) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW DEDUCTI ON U/S 80I WITHOUT REDUCING THE AMOUNT OF DEDUCTION U/S 80HH F ROM GROSS TOTAL INCOME. THE DECISION RELIED BY CIT(A) H AS BEEN CHALLENGED IN THE SUPREME COURT BY FILING L.P.A. BY THE DEPARTMENT. 34. BOTH THE PARTIES AGREED THAT THE ISSUE RAISED I N THIS GROUND WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECIS ION OF THE ORDER OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF J.P. TOBACCO & CO. AS REPORTED 229 ITR 123 AND ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 1993-94 ORDER DATED 12.11.2009. ACC ORDINGLY WE DISMISS THIS GROUND OF THE REVENUE. 35. GROUND NO. (VII) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 15 LAK HS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST FRE E LOAN PAGE 15 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE GIVEN TO ITS SISTER CONCERN DESPITE THE DETAILED F ACTS DISCUSSED BY A.O. IN SUPPORT OF HIS ACTION. 36. THE FACTS IN BRIEF ARE THAT THE A.O. FOUND THAT T HE ASSESSEE HAD TRANSACTIONS WITH A SISTER CONCERN NAMELY M/S. PR EMIUM INDUSTRIES (I) LIMITED TO WHOM IT HAD GIVEN MONEY TO THE TUNE OF R S. 1.29 CRORES IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE EXPLAINED TH AT BOTH THE FIRMS WERE DEALING IN THE SAME COMMODITY/PRODUCTS AND THERE WE RE TRANSACTIONS OF SALE AND PURCHASE OF RAW MATERIALS AS WELL AS FINIS HED PRODUCTS. HENCE THIS TRANSACTION WAS OF THE NATURE OF CURRENT ACCOU NT TRANSACTION ENTERED INTO BY THE ASSESSEE COMPANY FOR COMMERCIAL CONSIDE RATIONS. THE ASSESSEE ALSO SUBMITTED THAT THESE FUNDS WERE GIVEN OUT OF ITS OWN SURPLUS FUNDS AND NO BORROWED FUNDS HAD BEEN UTILIZED AND THEREFORE NO DISALLOWANCE WAS WARRANTED. THE A.O. HOWEVER RELY ING ON VARIOUS JUDICIAL DECISIONS HELD THAT INTEREST PAID ON BORR OWED CAPITAL WAS NOT ALLOWABLE AS SUCH CAPITAL HAD BEEN UTILIZED FOR SOM E ONE ELSE BUSINESS AND ACCORDINGLY HE MADE A DISALLOWANCE OF RS. 15 LAKHS OUT OF THE INTEREST PAID BY THE ASSESSEE. 37. AGGRIEVED BY THIS THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A) WHEREIN THE COPY OF ACCOUNT WAS SUBMITTED TO SHOW THAT MAJORITY OF THE TRANSACTIONS IN THIS ACCO UNT PERTAINED TO SALE OF GOODS BY THE ASSESSEE COMPANY TO THE OTHER COMPANY . HENCE THE PAGE 16 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE MAJORITY OF THE BALANCE WAS OF THE NATURE OF THE TR ADE DEBTORS. THE LD. CIT(A) ALSO FOUND THAT THE ASSESSEE HAD NOT CHARGED INTEREST FROM ANY TRADE DEBTORS. THE LD. CIT(A) ALSO TOOK NOTE OF THE FACT THAT NO SUCH DISALLOWANCE HAD BEEN MADE IN THE PAST. ACCORDINGLY HE DELETED THE IMPUGNED ADDITION. AGGRIEVED BY THIS THE REVENUE I S IN APPEAL BEFORE US. 38. THE LD. CIT DR NARRATED THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. 39. THE LEARNED COUNSEL SUBMITTED THAT THERE WERE REGU LAR BUSINESS TRANSACTIONS BETWEEN THESE TWO COMPANIES AND TWO AC COUNTS WERE MAINTAINED. HOWEVER ULTIMATELY BOTH THESE TWO ACCO UNTS HAD BEEN MERGED. HENCE THERE WAS NO REASON TO MAKE ANY DISA LLOWANCE OUT OF INTEREST PAID ON BORROWED FUNDS. THE LEARNED COUNSE L FURTHER SUBMITTED THAT ON EARLIER OCCASIONS THE SAID COMPANY HAD ALS O ADVANCED A SUM OF RS. 75 LAKHS TO THE ASSESSEE COMPANY WHEREON NO INT EREST WAS CHARGED FROM THE ASSESSEE COMPANY AND NOTIONAL INTEREST WAS DISALLOWED IN THE HANDS OF THAT COMPANY IN ASSESSMENT YEAR 1989-90. H OWEVER THE TRIBUNAL EVENTUALLY DELETED THAT ADDITION AND THER EFORE THIS FACT ALSO SUPPORTED THE CLAIM OF THE ASSESSEE. IT WAS ALSO CO NTENDED THAT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1993-94 IN RESPECT OF ADVANCE GIVEN ASSESSEE COMPANY TO ONE OF ITS SUBSIDIARIES NAMELY M/S. NARMADA SUGAR LIMITED SIMILAR ADDITION WAS DELETED BY THE TRIBUNAL AS THE SAME PAGE 17 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE WAS FOUND FOR COMMERCIAL CONSIDERATIONS AND THE RAT IO OF THIS DECISION ALSO SUPPORTED THE CLAIM OF THE ASSESSEE IN THE YEA R UNDER CONSIDERATION. HE FURTHER PLACED STRONG RELIANCE ON THE ORDER OF T HE LD. CIT(A). 40. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 41. IT IS NOTED THAT THERE ARE TRANSACTIONS OF PURCHAS E AND SALE BETWEEN TWO COMPANIES. HENCE THE NATURE OF SUCH P ARTY IS OF TRADE DEBTORS. IT IS ALSO AN ADMITTED FACT THAT THE ASSES SEE COMPANY HAD NOT CHARGED INTEREST FROM TRADE DEBTORS ON OUTSTANDING AMOUNTS. HENCE THERE ARISES NO QUESTION OF CHARGING INTEREST FROM THIS P ARTY. WE ARE OF THE VIEW THAT ONCE THE COMMERCIAL CONSIDERATIONS ARE ESTABLI SHED THEN NO NOTIONAL DISALLOWANCE CAN BE MADE OUT OF THE INTEREST EXPEND ITURE CLAIMED U/S 36(1)(III) OF THE ACT. ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE. 42. GROUND NO. (VIII) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 10 81 290/-MADE ON ACCOUNT OF EXCESS CONSUMPTION OF COAL AND GROSS PROFIT ON ITS SALE OUT OF BOOKS AT RS. 1 08 130/-. 43. BOTH THE PARTIES SUBMITTED THAT THE IDENTICAL ISSU E AROSE IN ASSESSMENT YEAR 1993-94 ALSO AND WHEREIN THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL VIDE ITS ORD ER DATED 12.11.2009. PAGE 18 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE AND REPRODUCE THE FINDINGS OF THE TRIBUNAL IN PARA 9 OF THE SAID ORDE R AS UNDER FOR THE SAKE OF READY REFERENCE :- 9. BOTH THE PARTIES AGREED THAT THIS ISSUE WAS COVERED IN FAVOUR OF ASSESSEES BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR ASSESSMENT YEARS 1991-92 AND 1992-93 WHICH WERE FOLLOWED BY THE LD. CIT(A). ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE AND FOR BETTER APPRECIATION OF FACTS WE REPRODUCE THE FINDINGS :- PARA 6 NEXT POINT IS AGAINST ADDITION OF RS.23 37 310/- OUT OF EXPENSES INCURRED ON COAL CONSUMPTION WHICH COMPRISES OF RS. 21 24 882/- AND RS. 2 12 428/-.THE APPELLANT DURING THE YEAR HAD PROCESSED 54466.575 M.T OF SOYASEED ON WHICH COAL CONSUMPTION HAS BEEN SHOWN AT 7618.230 MT WHICH GIVES AN AVERAGE CONSUMPTION OF 140 KG OF COAL FOR PROCESSING ONE M.T OF SOYA SEED. THE ABOVE CONSUMPTION OF COAL HAS BEEN CONSIDERED BY THE PAGE 19 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE ASSESSING OFFICER TO BE EXCESSIVE AND HE HAS ALLOWE D THE COAL CONSUMPTION AT 100 KG FOR ONE M.T. OF PROCESSING SOYA SEED TO BE REASONABLE RESULTING IN THE IMPUGNED ADDITION. THE LD. REPRESENTATIVES RELIES O N THE APPELLATE ORDER IN THE CASE OF THE APPELLANT FO R ASSESSMENT YEAR 1991-92 AND 1992-93 WHERE COAL CONSUMPTION HAS BEEN CONSIDERED REASONABLE AT 140 KG AND 136.91 KG RESPECTIVELY. HE HAS ALSO RELIED O N THE ITAT INDORE BENCH INDORE ORDER IN THE CASE OF VIPPY SOLVEX IN WHICH HIGHER CONSUMPTION OF COAL WA S ACCEPTED. IT IS ALSO POINTED OUT THAT THE SAME ASSE SSING OFFICER IN THE CASE OF THE APPELLANT FOR ASSESSMENT YEAR 1989-90 HAD ACCEPTED THE COAL CONSUMPTION @ 203 KG PER M.T OF SOYA SEED CRUSHED AS REASONABLE THEREFORE THE ADDITION IS UNCALLED FOR. FOLLOWING THE APPELLATE ORDERS IN THE CASE OF THE APPELLANT FOR EARLIER YEARS AND REASONS DISCUSSED THEREIN ADDITIO N OF RS. 23 37 310/- IS NOT JUSTIFIED AND DELETED. 44. GROUND NO. (IX) READS AS UNDER :- PAGE 20 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO EXCLUDE THE F OLLOWING ITEMS OF WORKING OUT DEDUCTION U/S 80HHC FROM TOTAL TURNOVER :- A) SALES TAX COLLECTED RS. 62 69 357/- B) SALES OF OLD BAGS RS. 45 04 717/- C) SALE OF COAL ASH RS. 4 90 888/- D) SALE OF COAL CHURI & STONE RS. 2 53 743/- E) SALE OF EMPTY DRUMS RS. 26 535/- F) SALE OF SCRAP RS. 24 300/- 45. THE FACTS IN BRIEF ARE THAT WHILE COMPUTING THE D EDUCTION U/S 80HHC THE A.O. INCLUDED FOLLOWING ITEMS :- (I) SALES TAX COLLECTED RS. 62 69 357/- (II) PACKING MATERIAL (OLD) RS. 45 04 717/- (III) COAL CHURI & STONE RS. 2 53 743/- (IV) COAL ASH RS. 4 90 888/- (V) EMPTY DRUM RS. 26 535/- (VI) SCRAP SALES RS. 24 300/- RS. 1 15 69 540/- PAGE 21 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE 46. THE LD. CIT(A) HOWEVER EXCLUDED THE SAME FROM TH E TOTAL TURNOVER OF THE ASSESSEE. AGGRIEVED BY THIS THE RE VENUE IS IN APPEAL BEFORE US. 47. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SALES TAX WAS NOT TO BE INCLUDED IN TOTAL TURNOVER AS PER THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF LAXMI MACHINE WORKS AS R EPORTED IN 290 ITR 667. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO AGREE D. HENCE THIS PART OF THE GROUND OF THE REVENUE IS DISMISSED. 48. AS REGARD TO SALE OF PACKING MATERIAL THE LEARNED COUNSEL TRIED TO JUSTIFY THE EXCLUSION OF THE SAME BY DRAWING OUR ATTENTION TO THE METHODOLOGY OF RECORDING OF EXPENDITURE ON ACCOUNT OF PACKING MATERIAL PURCHASED BY NETTING THE SALE OF THE SALE PROCEEDS OF SUCH PACKING MATERIAL. HOWEVER WE ARE NOT IMPRESSED AS THE ASSE SSEE HAS SOLD ITS FINISHED PRODUCTS IN THE PACKING MATERIAL AND IF TH IS METHODOLOGY OF THE ASSESSEE IS APPROVED THEN THERE WOULD NOT BE ANY R EQUIREMENT OF RECORDING THE TURNOVER AS ALL THE EXPENSES CAN BE N ETTED IN THIS MANNER. ACCORDINGLY WE HOLD THAT THE VALUE OF PACKING MATE RIAL SOLD OR USED IN SALE OF FINISHED PRODUCTS IS TO BE TREATED AS PART OF TOTAL TURNOVER OF THE ASSESSEE IN COMPUTING THE DEDUCTION U/S 80HHC OF TH E ACT. SIMILARLY ALL OTHER ITEMS OF SALE OF COAL CHURI STONE COAL ASH EMPTY DRUMS AND SCRAPS ARE INSTANCES OF SALE HAVING ELEMENT OF TURNOVER AN D THEREFORE THESE PAGE 22 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE ITEMS ARE TO BE INCLUDED IN THE TOTAL TURNOVER OF T HE ASSESSEE IN COMPUTING QUANTUM OF DEDUCTION U/S 80HHC. THUS THIS GROUND O F THE REVENUE STANDS PARTLY ALLOWED. 49. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. 50. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE I N I.T.A.NO. 1047/IND/1997 FOR THE ASSESSMENT YEAR 1994-95. 51. GROUND NOS. 1 & 2 READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING THAT INTEREST OF RS. 20 16 438/- RS. 3 106/- RS. 89 349/- WAS INCOME FROM OTHER SOURCES AND DEDUCTIONS U/S 80HH & 80I WAS NOT ALLOWABLE ON THE SAME. THAT THE SAID INTEREST REQUIRES TO BE DEDUCTED FROM INTEREST PAID AND THUS DEDUCTION IS ALLOWABLE ON THESE AMOUN TS AS PER VARIOUS DECISIONS OF VARIOUS HIGH COURTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE 80HHC DEDUCTION IS ALLOWABLE IN RESPECT OF INTEREST RECEIVED OF RS. 21 08 893/-. 52. THE LEARNED COUNSEL FOR THE ASSESSEE WITH A VIEW TO ASSIST THE BENCH SUBMITTED THAT WHETHER INTEREST INCOME WAS TO BE ASSESSED AS INCOME FORM OTHER SOURCES AS INCOME FROM BUSINESS I N BOTH CASES INTEREST PAGE 23 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE PAID TO EARN SUCH INCOME HAD TO BE ALLOWED AS EXPEN DITURE AND THEREFORE THE MATTER COULD BE RESTORED TO THE FILE OF A.O. FO R EXAMINATION OF THE ASPECT OF NEXUS AND CONSEQUENT SETTING UP OF EACH O THER. 53. THE LD. DEPARTMENTAL REPRESENTATIVE HOWEVER PREFE RRED TO RELY ON THE ORDER OF THE LD. CIT(A). 54. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 55. IT IS NOTED THAT AS PER THE SCHEME OF THE ACT THAT THE NET INCOME IS TO BE ASSESSED TO TAX HENCE IN CASE ANY INTERE ST EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE TO EARN SUCH INTEREST INCO ME THEN THE SAME SHOULD BE ALLOWED AS AN EXPENDITURE AGAINST SUCH IN COME. WE ARE FURTHER OF THE VIEW THAT IN CASE THE INCOME IS ASSESSED AS INCOME FROM BUSINESS THEN ONLY 90 % OF NET INTEREST INCOME I.E. AFTER NE TTING OF INTEREST PAID TO EARN SUCH INTEREST INCOME HAS TO BE EXCLUDED FROM T HE PROFITS OF THE BUSINESS AS PER CLAUSE (BAA) OF EXPLANATION TO SECT ION 80 HHC AND IN CASE THE INTEREST INCOME IS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES THEN OUT OF TOTAL INTEREST EXPENDITURE TH E PORTION PERTAINING TO EARNING OF SUCH INTEREST INCOME HAS TO BE REDUCED T HEREFROM AND ACCORDINGLY PROFITS OF BUSINESS SHOULD BE COMPUTED . FURTHER THE NET INTEREST INCOME THEREAFTER SHOULD ONLY BE TAXED UND ER THE HEAD INCOME FROM OTHER SOURCES. IN VIEW OF THIS LEGAL POSITION WE RESTORE BOTH THESE PAGE 24 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE GROUNDS TO THE FILE OF THE A.O. TO EXAMINE THE NEXU S BETWEEN TWO AND ALSO TO EXAMINE THE HEAD OF ASSESSABILITY OF SUCH I NTEREST INCOME HAVING REGARD TO THE FACTS OF THE CASE. IT IS NEEDLESS TO MENTION THAT BURDEN TO PROVE THE NEXUS SHALL LIE ON THE ASSESSEE WHO SHAL L BE AT LIBERTY TO ADDUCE NECESSARY EVIDENCES IN THIS REGARD. THUS BOTH THES E GROUNDS OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. 56. GROUND NO. 3 READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE DEDUCTION IN RESPECT OF PRIOR PERIOD EXPENSES OF RS . 2 19 961/-. 57. IT WAS NOT PRESSED HENCE DISMISSED AS NOT PRESS ED. 58. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES 59. NOW WE SHALL TAKE UP THE REVENUES APPEAL IN I.T.A .NO. 481/IND/1998. 60. THE ISSUE RAISED IN GROUND NO.1 IS IDENTICAL TO ISS UE RAISED IN GROUND NO.1 OF I.T.A.NO. 1060/IND/1997. HENCE THIS GROUND OF REVENUE IS DISMISSED FOLLOWING THE SAME REASONS. 61. THE ISSUE RAISED IN GROUND NOS. 2 & 3 IS IDENTICAL TO ISSUE RAISED IN GROUND NO. 8 OF I.T.A.NO. 1060/IND/1997 AND ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1993- PAGE 25 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE 94 ORDER DATED 12.11.2009 AS SUBMITTED BY BOTH THE PARTIES. HENCE THIS GROUND OF THE REVENUE IS ALSO DISMISSED FOLLOWING T HE SAME. 62. THE ISSUE RAISED IN GROUND NO.4 IS IDENTICAL TO ISS UE RAISED IN GROUND NO. 7 OF REVENUES APPEAL IN I.T.A.NO. 1060/ IND/1997. HENCE FOLLOWING THE SAME REASONS THIS GROUND OF THE REVE NUE IS DISMISSED. 63. GROUND NO. 5 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 16 19 547/- MADE BY THE ASSESSING OFFICER IN THE NUGGETS PRODUC TION ACCOUNT BY RESTRICTING THE PRODUCTION LOSS AT 1.12 % BY FOLLOWING THE CIT(A)S ORDER FOR ASSESSMENT YEAR 19 94-95 CONVERTING SOYA FLAKES INTO POWDER THE LOSS OCCURS 3-4 % & WHILE CONVERTING POWDER TO NUGGET THE MANUFACTURIN G LOSS OCCURS 4 5 % THOUGH THE ASSESSEE COULD NOT GIVE ANY EVIDENCE IN SUPPORT ITS CONTENTION THAT INFERIOR QU ALITY OF RAW MATERIAL WAS USED IN PRODUCTION OF NUGGETS. BOTH THE PARTIES SUBMITTED THAT THE ISSUE RAISED IN THIS GROUND WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECIS ION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1993- 94. THE LEARNED COUNSEL REFERRED TO PARA 3 TO 7 AT PAGES 2 & 5 OF THE SAID ORDER FOR OUR PERUSAL. ACCORDINGLY W E DISMISS PAGE 26 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE THIS GROUND OF THE REVENUE FOLLOWING THE ABOVE ORDE R AND THE FINDING THEREOF HAVE ALREADY BEEN REPRODUCED IN PARA 13 ABOVE. 64. GROUND NO. 6 READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW DEDUCTI ON U/S 80HH 80I AND 80HHC IN RESPECT OF INTEREST OF RS. 8 6 341/- RECEIVED FROM MPEB AND RS. 1 94 200/- ON SBI BONDS AS THE SAME ARE DIRECTLY RELATED TO THE INDUSTRIAL ACTIVIT Y FOLLOWING THE DECISION OF CIT(A) IN THE ASSESSEES CASE DATED 18.9.97 FOR ASSESSMENT YEAR 1994-95 THOUGH THE SAME WAS NO T ACCEPTED BY THE DEPARTMENT AND FURTHER CONTESTED I N I.T.A.T. THE LEARNED COUNSEL FOR THE ASSESSEE CONCEDED ON TH E ISSUE RAISED IN THIS GROUND HENCE THIS GROUND OF REVENUE IS ALLOWED. 65. GROUND NO. 7 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW DEDUCTI ON U/S 80HHC EVEN THOUGH THE ASSESSEE HAS FAILED TO FURNIS H ITS AUDIT REPORT U/S 80HHC IN FORM NO.10CCAC ALONGWITH THE RETURN PLACING THE RELIANCE ON THE I.T.A.T. CALCUTT A E PAGE 27 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE BENCH DECISION IN THE CASE OF DHANNOLAL & SONS VS. DCIT REPORTED IN 55 TTJ 250. THE FURNISHING OF AUDIT REP ORT IS AN OBLIGATORY IN VIEW OF SUB SECTION (4) OF SECTION 80 HHC TO FILE AUDIT REPORT IN FORM NO.10CCAC ALONGWITH THE R ETURN. 66. IN OUR VIEW THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD ARE CORRECT AS IT IS A SETTLED JUDICIAL POSITION THAT T HE REPORT CAN BE FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS ALSO. HENCE THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 67. IN THE RESULT THE APPEAL FILED BY THE REVENUE STAN DS PARTLY ALLOWED. 68. NOW WE SHALL TAKE UP REVENUES APPEAL IN I.T.A.NO. 972/IND/2003. 69. THE ISSUE RAISED IN GROUND NO.1 IS IDENTICAL TO ISS UE RAISED IN GROUND NO.7 OF I.T.A.NO. 1060/IND/1997 HENCE DISM ISSED FOR THE SAME REASONS. 70. THE ISSUE RAISED IN GROUNDS NO. 2 & 3 IS IDENTICAL TO ISSUE RAISED IN GROUND NO.8 OF I.T.A.NO. 1060/IND/1997. HENCE T HIS GROUND OF THE REVENUE IS DISMISSED FOLLOWING THE SAME REASONS. 71. GROUND NO. 4 READS AS UNDER :- PAGE 28 OF 28 - I.T.A.NOS. 1060/IND/1997 481/IND /1997 972/IND/2003 PREMIER PROTEINS LIMITED INDORE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 7 98 9 00/- ON ACCOUNT OF SUPPRESSION OF PRODUCTION OF NUGGETS. 72. THE ISSUE RAISED IN GROUND NO. 4 IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 1993-94 WHICH HAS BEEN FOLLOWED BY DISMISSING THE REVENUES APPEAL IN THIS REGARD IN E ARLIER YEARS HEREINABOVE. HENCE FOLLOWING THE SAME REASONS THI S GROUND OF THE REVENUE IS ALSO DISMISSED. 73. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. 74. TO SUM UP APPEAL OF THE REVENUE IN I.T.A.NO. 1060 /IND/1997 IS PARTLY ALLOWED APPEAL IN I.T.A.NO. 1047/IND/199 7 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES REVENUES APPEAL IN I.T.A.NO . 481/IND/1998 IS PARTLY ALLOWED AND REVENUES APPEAL IN I.T.A.NO. 97 2/IND/2003 IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH MARCH 2010. CPU* 10123