Serum Institute of India Ltd.,, Pune v. Deputy Commissioner of Income-tax,,

ITA 986/PUN/2015 | 2007-2008
Pronouncement Date: 28-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 98624514 RSA 2015
Assessee PAN AABCS4225M
Bench Pune
Appeal Number ITA 986/PUN/2015
Duration Of Justice 2 year(s) 4 month(s) 28 day(s)
Appellant Serum Institute of India Ltd.,, Pune
Respondent Deputy Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 28-11-2017
Date Of Final Hearing 03-11-2017
Next Hearing Date 03-11-2017
Last Hearing Date 17-10-2017
First Hearing Date 20-07-2017
Assessment Year 2007-2008
Appeal Filed On 30-06-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE . BEFORE SHRI D.KARUNAKARA RAO AM AND SHRI VIKAS AWASTHY JM . / ITA NOS.985 & 986/PUN/2015 / ASSESSMENT YEARS : 2006-07 & 2007-08 SERUM INSTITUTE OF INDIA LTD. SAROSH BHAVAN 16-B/1 DR. AMBEDKAR ROAD PUNE 411 001 PAN : AABCS4225M . /APPELLANT VS. DCIT CENTRAL CIRCLE-1(1) PUNE . / RESPONDENT . / ITA NOS.1535 & 1536/PUN/2015 / ASSESSMENT YEARS : 2006-07 & 2007-08 DCIT CENTRAL CIRCLE-1(1) PUNE . /APPELLANT VS. SERUM INSTITUTE OF INDIA LTD. 212/2 HADAPSAR PUNE 411 028 PAN : AABCS4225M . / RESPONDENT ASSESSEE BY : SHRI R.S. ABHYANKAR REVENUE BY : SHRI RAJEEV KUMAR CIT DR / DATE OF HEARING : 03.11.2017 / DATE OF PRONOUNCEMENT: 28.11.2017 / ORDER PER D. KARUNAKARA RAO AM : THERE ARE FOUR APPEALS UNDER CONSIDERATION FILED BY THE ASSESSEE AND THE REVENUE INVOLVING A.YRS. 2006-07 & 2007-08. ITA NO S. 985 & 1535/PUN/2015 ARE THE CROSS APPEALS FOR A.Y. 2006-07 AND ITA NOS. 986 & 1536/PUN/2015 ARE THE CROSS APPEALS FOR A.Y. 2007-08. THESE APPEALS ARE FILED AGAINST THE ORDERS OF CIT(A)-11 COMMONLY DATED 28-11-2014. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 2 2. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF VACCINES ANTI SER A PLASMA HORMONE PRODUCTS ETC. AND THE STUD FARM ACTIVITIES. THERE WAS SEAR CH ACTION ON THE ASSESSEE U/S.132 OF THE ACT ON 21-06-2011 IN THE POONAWALLA GROUP OF CASES. THE CASES OF POONAWALLA GROUP INCLUDE TWO SUB-GROUPS. ONE SUB-G ROUP INCLUDES FAMILY MEMBERS OF SHRI CYRUS SOLI POONAWALLA (IN SHORT CS P) AND THE GROUP CONCERNS UNDER HIS CONTROL AND MANAGEMENT WITH M/S. SERUM IN STITUTE OF INDIA LTD. AS THE FLAGSHIP COMPANY. THE OTHER SUB-GROUP INCLUDES FAM ILY MEMBERS OF SHRI ZAVAREH SOLI POONAWALLA (IN SHORT ZSP). ASSESSMENTS WERE COMPLETED U/S.153A R.W.S. 143(3) OF THE ACT. ASSESSEE DECLARED UNDISCLOSED I NCOME DURING THE SEARCH ACTION FOR THE A.Y. 2006-07 THE ASSESSEE FILED THE RETUR N OF INCOME DECLARING INCOME OF RS.46 01 00 856/-. ASSESSMENT WAS COMPLETED ON THE TOTAL INCOME OF RS.68 18 00 121/- AFTER GRANTING EXEMPTION U/S.10B OF THE ACT. CIT(A) GAVE PART RELIEF IN THE FIRST APPELLATE PROCEEDINGS AND ACCOR DINGLY THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED. AGAINST THE PART RELIEF GRANTE D BY THE CIT(A) TO THE ASSESSEE THE REVENUE IS IN APPEAL BEFORE US. SIMILARLY AGG RIEVED WITH THE ADDITIONS CONFIRMED BY THE CIT(A) THE ASSESSEE IS IN APPEAL B EFORE US. ITA NO.1535/PUN/2015 (BY REVENUE A.Y. 2006-07) : ITA NO.985/PUN/2015 (BY ASSESSEE A.Y. 2006-07) : 3. WE SHALL TAKE UP THE CROSS APPEALS FOR THE A.Y. 2006-07. COMING TO THE ISSUE RAISED IN THE CROSS APPEALS LD. COUNSEL FOR THE ASSESSEE FILED A CHART BEFORE US. BASED ON THE SAME WE PROCEED TO ADJUDICATE GR OUND-WISE AND APPEAL-WISE IN THE FOLLOWING PARAGRAPHS. WE SHALL TAKE UP THE REV ENUES APPEAL FIRST. ITA NO.1535/PUN/2015 (A.Y. 2006-07 - BY REVENUE ) 4. IN THE REVENUES APPEAL THE ONLY ISSUE RAISED B Y THE REVENUE RELATES TO EXCLUSION OF FREIGHT AND INSURANCE FROM THE TOTAL T URNOVER FOR THE PURPOSE OF QUALITY DEDUCTION U/S.10B OF THE ACT. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 3 5. LD. DR FOR THE REVENUE RELIED ON THE ORDER OF TH E AO. 6. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BY THE TRIBUNAL IN THE ASS ESSEES OWN CASE FOR THE A.Y. 2007-08 VIDE THE ITA NO.17/PN/2012 AND OTHER CONNEC TED APPEALS ORDER DATED 10- 04-2014. BRINGING OUR ATTENTION TO PARA NOS. 4 AND 4.1 THE LD. COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT ON IDENTICAL FACTS REL YING ON THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF M/S.GEMS PLUS JEWELLE RY INDIA LTD. 330 ITR 175 AS WELL AS THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF SAK SOFT LTD. 121 TTJ 865 THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE AND THE AO WAS DIRECTED TO EXCLUDE FREIGHT AND INSURANCE CHARGES F ROM THE TOTAL TURNOVER OF THE ASSESSEE FOR COMPUTING THE ALLOWABLE DEDUCTION U/S. 10B OF THE ACT. 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE OR DER OF THE TRIBUNAL ON THIS ISSUE IN ASSESSEES OWN CASE FOR A.Y. 2007-08 VIDE ITA NO.17/PN/2012 WE PROCEED TO EXTRACT THE OPERATIONAL PARA 4.1 AND THE SAME RE ADS AS UNDER : 4.1 SINCE THE LD.CIT(A) WHILE DIRECTING THE AO TO EXCLUDE THE FREIGHT AND INSURANCE CHARGES FROM THE TOTAL TURNOVER HAS FOLLO WED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GEMS PLUS JEWELLERY INDIA LTD (SUPRA) AND THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF SAK SOFT LTD. (SUPRA) THEREFORE RESPECTFULLY FOLLOWING THE ABOV E DECISIONS AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). MERELY BECAUSE THE REVENUE HAS NOT ACCEPTE D THE ABOVE DECISION OF THE HONBLE HIGH COURT AND HAS FILED APPEAL AGAINST THE SAID DECISION WILL NOT BE A GROUND TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY THE HONBLE HIGH COURT UNLESS AND UNTIL THE SAME IS REVERSED. IN THIS VIE W OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) DIRECTING THE AO TO EXCLUDE THE FREIGHT AND INSURANCE CHARGES FROM THE TOTAL TURNOV ER FOR COMPUTING DEDUCTION U/S.10B . WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. FROM THE ABOVE EXTRACT IT IS EVIDENT THAT IN TH E ASSESSEES OWN CASE FOR A.Y. 2007-08 THE DIRECTION OF THE TRIBUNAL IS CLEARLY I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THERE IS NO CHANGE ON FACTS F OR THIS YEAR. THEREFORE WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE. CO NSEQUENTLY THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 4 9. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ITA NO.985/PUN/2015 (A.Y. 2006-07 -BY ASSESSEE) 10. IN THE GROUNDS RAISED BY THE ASSESSEE IN ITS AP PEAL THE ASSESSEE RAISED 6 GROUNDS WHICH ARE SUMMARIZED BY THE LD. COUNSEL FOR THE ASSESSEE IN A CHART FORM BEFORE US. WE PROCEED TO ADJUDICATE THE GROUNDS ON THE BASIS OF THE CHART PROVIDED TO US. 11. GROUND NO.1 RELATES TO DISALLOWANCE ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT OF RS.49 48 494/-. AO DISALLOWED THE S AID CLAIM AND THE CIT(A) CONFIRMED THE SAME AS PER THE DISCUSSION GIVEN IN P ARA 6 ON PAGES 7 TO 9 OF THE ORDER OF THE CIT(A). 12. BEFORE US ON THIS ISSUE LD. COUNSEL FOR THE A SSESSEE FAIRLY SUBMITTED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BY THE TRI BUNAL FOR A.Y. 2002-03 (ITA NI.413/PN/2006 DATED 24-02-2012) AS WELL AS FOR A.Y . 2006-07 ITA NO.1383/PN/2011 DATED 22-02-2013) AND THE ISSUE WAS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. HE FAIRLY S UBMITTED THAT THIS ISSUE NEEDS TO BE DECIDED AGAINST THE ASSESSEE. 13. ON THE OTHER HAND LD. DR FOR THE REVENUE HEAVI LY RELIED ON THE SAID ORDERS OF THE TRIBUNAL FOR AYRS. 2002-03 AND 2006-07 (SUPR A). 14. ON HEARING BOTH THE PARTIES ON THIS ISSUE WE P ROCEED TO REFER TO PARA NO.6 IN ITA NO.413/PN/2006 AND PARA NO.26 OF THE ORDER OF THE TRIBUNAL IN ITA NO.1383/PN/2011. FOR THE SAKE OF COMPLETENESS WE REPRODUCE PARA NO.26 OF THE ORDER OF THE TRIBUNAL FOR A.Y. 2006-07 (ITA NO.1383 /PN/2011 DATED 22-02-2013) AND THE SAME READS AS UNDER : 26. THE NEXT ISSUE PERTAINS TO DISALLOWANCE OF PRO VISION FOR LEAVE ENCASHMENT AMOUNTING TO RS.49 48 494/- WITH RESPECT TO DTA UNI T OF THE ASSESSEE. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ISSUE IS IDENTICAL TO GROUND NO.2 ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 5 CONSIDERED BY US IN ITA NO.679/PN/2009 FOR ASSESSME NT YEAR 2005-06 IN EARLIER PARAGRAPHS WHEREIN FOLLOWING THE DECISION OF THE T RIBUNAL IN ASSESSEES OWN CASE IN ITA NO.413/PN/2006 PERTAINING TO A.Y. 2002-03 THE ISSUE WAS DECIDED AGAINST THE ASSESSEE. IN THIS VIEW OF THE MATTER THE CIT( A) MADE NO MISTAKE IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER IN THIS YEAR ALSO. THUS ON THIS GROUND ASSESSEE FAILS. 15. THE ALLOWABILITY OF THE CLAIM OF LEAVE ENCASHM ENT IS NOW SETTLED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. CONSIDERING THE SETTLED NATURE OF THE ISSUE AND FOLLOWING THE RULE OF CONSISTENCY WE ARE OF TH E VIEW THAT THIS ISSUE HAS TO BE DECIDED AGAINST THE ASSESSEE. ACCORDINGLY GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 16. GROUND NO.2 DEALS WITH THE DISALLOWANCE OF RS.1 69 10 798/- U/S.14A OF THE ACT IN ASSESSMENT U/S.153A OF THE ACT ON ADHOC BAS IS @10% OF THE EXEMPT INCOME IN THE NON-ABATED ASSESSMENT IN THE ABSENCE OF INC RIMINATING MATERIAL. RELEVANT FACTS RELATING TO THIS ISSUE INCLUDE THAT REGULAR A SSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED MAKING NIL DISALLOWANCE. IN THE CURRENT ASSESSMENT YEAR MADE U/S.153A R.W.S. 143(3) OF THE ACT ON ADHOC BASIS A O DISALLOWED THE EXPENDITURE U/S.14A OF THE ACT @10% OF THE EXEMPT INCOME. CIT( A) CONFIRMED THE SAME. GROUND NO.2 HAS 3 SUBGROUNDS AND ALL OF THEM REVOL VE AROUND THE ASSESSEES GRIEVANCE OF MAKING ADDITIONS U/S.14A WHEN THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH RELATING TO THE EXPENDITURE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 14A OF THE ACT IN CONNECTION WITH THE EXEMPT INCOME WHICH FORMED PART OF THE TOTAL INCOME OF THE ASSESSEE. A GGRIEVED WITH THE SAME THE ASSESSEE IS IN APPEAL BEFORE US. 17. BEFORE US LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE SO- CALLED SEIZED DOCUMENT AND SUBMITTED THAT THE SAID DOCUMENT WHICH HAS A HEADING OF INTER OFFICE COMMUNICATION HAD A REFERENCE TO THE TRANSACTION OF BUYING THE SHARES IN GROUP COMPANIES INVOLVING DECCAN CHRONICL E AND BAJAJ HOLDINGS. THE PURCHASES WERE MADE FOR DR. C.S. POONAWALLA AND M/S . ADURJEE BROTHERS. IT HAS NOTHING TO DO WITH THE ASSESSEE UNDER CONSIDERATION . AS SUCH ALL THESE PURCHASE ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 6 TRANSACTION OF SHARES ARE DULY ACCOUNTED IN THE BOO KS OF ACCOUNT OF THE CONCERNED ASSESSEES. IT IS THE ARGUMENT OF THE LD. COUNSEL F OR THE ASSESSEE THAT SAID DOCUMENT DOES NOT CONSTITUTE AN UNACCOUNTED AND AN INCRIMINATING ONE AS THE SAID DOCUMENT IS DULY ACCOUNTED IN THE BOOKS OF ACC OUNT. AS SUCH THERE IS NO DISPUTE ON THIS. IN SUCH CIRCUMSTANCES AS PER THE LD. COUNSEL FOR THE ASSESSEE THE AO IS NOT ALLOWED TO ASSUME JURISDICTION TO INV OKE THE PROVISIONS OF SECTION 14A OF THE ACT IN THE SEARCH AND SEIZURE ASSESSMENTS MA DE U/S.153A OF THE ACT WHEN THERE IS NO INCRIMINATING MATERIAL. THE A.Y. 2006- 07 IS A NON-ABATED ASSESSMENT. FURTHER BRINGING OUR ATTENTION TO ASSESSEES OWN C ASE FOR A.Y. 2005-06 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNA L VIDE THE APPEAL IN ITA NO. 1073/PN/2014 DATED 30-11-2016 (VIDE PARA NOS. 39 TO 44 - PAGE 26 OF THE ORDER OF THE TRIBUNAL) DELETED THE ADDITION HOLDING THAT SU CH GENERAL ADDITIONS CANNOT BE MADE IN THE SEARCH AND SEIZURE ASSESSMENT U/S.153A R.W.S. 143(3) OF THE ACT. 18. ON HEARING BOTH THE SIDES WE PERUSED THE FINDI NG OF THE TRIBUNAL ON THIS ISSUE GIVEN IN ITA NO.1073/PN/2014 FOR A.Y. 2005-06 AND PROCEED THE EXTRACT THE OPERATIONAL PARA NO.44. WHICH READS AS UNDER : 44. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF R ELIANCE UTILITIES AND POWER LTD. (SUPRA) HAS HELD THAT IF THERE WERE FUNDS AVAI LABLE BOTH INTEREST FREE AND OVERDRAFT AND OR LOANS TAKEN THEN PRESUMPTION WOUL D ARISE THAT INVESTMENT WOULD BE OUT OF THE INTEREST FREE FUNDS GENERATED OR AVAI LABLE WITH THE COMPANY. IF THE INTEREST FREE FUNDS WERE SUFFICIENT TO MEET THE INV ESTMENTS. SINCE IN THE INSTANT CASE ADMITTEDLY RESERVES AND SURPLUS OF THE ASSESSE E COMPANY WAS RS.463.58 CRORES AS ON 31-03-2005 AND THE INVESTMENTS ARE ONL Y RS.200.18 CRORES THEREFORE IN VIEW OF THE DECISIONS CITED SUPRA WE ARE OF THE CONSIDERED OPINION THAT NO DISALLOWANCE U/S.14A IS CALLED FOR. IN THIS VIEW OF THE MATTER WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 19. WE ALSO FIND THE SEIZED PAPER RELIED UPON BY TH E AO CANNOT BE TERMED AS AN INCRIMINATING MATERIAL AS IT DOES NOT BELONG/PERT AINS/RELATE TO THE ASSESSEE AND THE TRANSACTIONS ON THE SAME ARE FOUND TO BE ACCOUNTED ONES. THUS CONSIDERING THE SETTLED NATURE OF THE ISSUE WE ARE OF THE OPINION THAT ON THE GROUND OF ABSENCE OF ANY INCRIMINATING MATERIAL THE AO CANNOT ASSUME JUR ISDICTION AND INVOKE THE ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 7 PROVISIONS OF SECTION 14A FOR MAKING DISALLOWANCE. ACCORDINGLY GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 20. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO C LASSIFICATION OF STAINLESS STEEL ITEMS AS FURNITURE AND FIXTURES INSTEAD OF PLANT AND MACHINERY. ADDITION ON THIS ACCOUNT WORKS OUT TO RS.8 82 555/-. 21. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT AN IDENTICAL ISSUE WAS SUBJECT MATTER OF ADJUDICATION BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR MANY ASSESSMENT YEARS I.E. A.Y. 2001-02 TO 2006-07. BR INGING OUR ATTENTION TO PARA NOS. 2 TO 6 OF THE ORDER OF THE TRIBUNAL FOR A.Y. 2 001-02 (ITA NO.948/PN/2005 DATED 18-01-2012) LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. SIMILAR ADJUDIC ATION WAS DONE IN FAVOUR OF THE ASSESSEE VIDE THE ORDER OF THE TRIBUNAL IN ITA NO.1 383/PN/2011 FOR A.Y. 2006-07 DATED 22-02-2013 TOO. 22. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE ON THIS ISSUE. WE PROCEED TO EXTRACT THE OPERATIONAL PARA NO.29 OF THE ORDER OF THE TRIBUNAL IN ITA NO.1383/PN/2011 FOR A. Y. 2006-07. THE TRIBUNAL DISMISSED THE GROUND RAISED BY THE REVENUE RELYING ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2001-02. THE SAME REA DS AS UNDER : 29. THE FIRST ISSUE RELATES TO DISALLOWANCE OF DEP RECIATION BY CLASSIFYING CERTAIN ITEMS OF FIXED ASSETS LOCATED IN MANUFACTURING UNIT AS FURNITURE AND FIXTURES AND NOT AS PLANT AND MACHINERY AS CONTENDED BY THE A SSESSEE. THIS ISSUE IS RELATED TO THE CROSS GROUND NO.4 CONSIDERED IN ASSESSEES APPE AL FOR ASSESSMENT YEAR 2006-07 AND IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE DIRECTIONS OF THE CIT(A) ARE IN LINE WITH THE DECISION OF THE TRIBUNAL IN ASSESS EES OWN CASE FOR ASSESSMENT YEAR 2001-02 VIDE ITA NO.948/PN/2005 DATED 18-10-2012. ACCORDINGLY THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 23. CONSIDERING THE SETTLED NATURE OF THE ISSUE AND FOLLOWING THE RULE OF CONSISTENCY WE ARE OF THE OPINION THAT THE GROUND RAISED BY THE ASSESSEE IS TO BE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY GR OUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 8 24. GROUND NO.4 BY THE ASSESSEE RELATES TO THE DISA LLOWANCE OF EXPENDITURE ON REPAIRS/RENOVATION OF BUNGALOW AT 70 KOREGAON PARK . ADDITION ON THIS ACCOUNT WORKS OUT TO RS.1 06 07 000/- AND RENT PAID OF RS.2 4 00 000/-. 25. ON THIS ISSUE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT SIMILAR ISSUE WAS ADJUDICATED IN ASSESSEES OWN CASE FOR A.Y. 2005-06 IN HIS FAVOUR. BRINGING OUR ATTENTION TO PARA NOS. 35 TO 37 OF THE ORDER OF THE TRIBUNAL IN ITA NO.1703/PN/2014 DATED 30-11-2016 LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE EXPENDITURE INCURRED ON REPAIRS/RENOVATION OF THE BUNGALOW WAS ALLOWED AS BUSINESS EXPENDITURE OF THE ASSESSEE. 26. ON HEARING BOTH THE SIDES ON THIS ISSUE WE PER USED THE SAID PARAGRAPHS OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE DA TED 30-11-2016 AND FOR THE SAKE OF COMPLETENESS WE PROCEED TO EXTRACT THE RELEVANT LINES OF THE OPERATIONAL PARA. THE SAME READS AS UNDER : 35. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT THE EXPENDITURE OF RS.1 17 88 000/- INCURRED ON REPAIRS AND RENOVATION ON BUNGALOW LOCATED AT 70 KOREGAON PARK PUNE HAS TO BE ALLOWED AS A BUSINESS EXPENDITURE IN THE HANDS OF THE ASSESSEE C OMPANY. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A). THE GROUND RAIS ED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 27. WE FIND THAT THE ARGUMENTS RAISED BY THE LD. DR FOR THE REVENUE ARE IDENTICALLY RAISED IN THE SAID APPEAL PROCEEDINGS F OR A.Y. 2005-06. FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 (SUPRA) WE ARE OF THE OPINION THAT THIS ISSUE ALSO SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY GROUND NO.4 RAISED BY THE ASSESSEE IS ALLOWED. 28. GROUND NO.5 RELATES TO INCLUSION OF INCOME OF A N AMOUNT OF RS.1 CRORE WHICH WAS OFFERED AS CONTINGENCY IN THE STATEMENT U/S.132 (4) OF THE ACT. RELEVANT FACTS ARE THAT THE ASSESSEE WAS COVERED U/S.132 OF THE AC T AND THE SAME RESULTED IN DISCLOSURE OF UNDISCLOSED INCOME. DETAILS ARE GIVE N IN PARA NOS. 13 AND 13.1 (PAGES ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 9 55 TO 60) OF THE ORDER OF CIT(A). ACCORDINGLY RS. 1 CRORE WAS OFFERED AGAINST THE CONTINGENCIES IF ANY TO BE SET OFF AGAINST THE DISC REPANCIES/OMISSIONS. WHILE FILING THE RETURN OF INCOME AND ADHERING TO THE SAID STAT EMENT U/S.132(4) OF THE ACT SAID AMOUNT OF RS. 1 CRORE WAS OFFERED AS UNDISCLOSED IN COME OF THE ASSESSEE FOR THE YEAR. ACCORDINGLY THE SAME WAS TAXED ALTHOUGH NO S PECIFIC DISCREPANCIES/OMISSIONS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE. ASSESS EE DID NOT RAISE ANY ISSUE BEFORE THE AO. HOWEVER BEFORE THE CIT(A) ASSESSEE SUBMI TS THAT SAID CONTINGENCY OF RS.1 CRORE SHOULD NOT BE TAXED AND THE SAME IS REQU IRED TO BE EXCLUDED FROM THE UNDISCLOSED INCOME OFFERED BY THE ASSESSEE. CIT(A) REJECTED THE SAID DEMAND OF THE ASSESSEE AS PER THE DISCUSSION GIVEN IN PARA 13 .2 OF HIS ORDER. THUS CIT(A) DECIDED THIS ISSUE AGAINST THE ASSESSEE. 29. TO SUM UP HIS FINDING IN THE SAID PARA THE CI T(A) HELD THAT THE CLAIM MADE BY THE ASSESSEE THAT SUCH INCOME OF RS.1 CRORE MAY BE EXCLUDED FROM THE TOTAL INCOME ASSESSED BY THE ASSESSEE AS NO DISCREPANCIES WERE FOUND DURING THE ASSESSMENT PROCEEDINGS CANNOT BE ACCEPTED AS THE S AID ADDITIONAL INCOME WAS OFFERED VOLUNTARILY IN THE RETURN OF INCOME. IF AC CEPTED THE ASSESSED INCOME SHALL BE LOWER THAN THE RETURNED INCOME. THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR SET OFF OF SUCH CONTINGENCIES AGAINST OTHER DISALLOWANC ES U/S.14A OF THE ACT MADE BY THE AO WAS ALSO REJECTED DESPITE THE EXISTENCE OF T HE FAVOURABLE DECISION OF THE TRIBUNAL IN THE GROUP CASES OF THE ASSESSEE (M/S. A DURJEE BROTHERS PVT. LTD.). AGGRIEVED WITH THE ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 30. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT SIMILAR ISSUE WITH SOME VARIANCE CAME UP FOR ADJUDICATION BEFORE THE T RIBUNAL IN A CASE BELONGING TO THE SAME GROUP NAMED M/S. ADURJEE BROTHERS PVT. LTD . (SUPRA). IN THIS CASE THE DEMAND OF THE ASSESSEE WAS FOR SET OFF OF THE OTHER DISALLOWANCES MADE U/S.14A OF THE ACT AGAINST SUCH CONTINGENCY DISCLOSURE. THE T RIBUNAL ALLOWED THE ARGUMENT OF THE ASSESSEE ON THIS ISSUE OF SET OFF. CONTENTS OF PARA NO.12 OF THE ORDER OF THE ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 10 TRIBUNAL IN ITA NO.1067/PN/2014 DATED 13-06-2014 AR E RELEVANT AND THEREFORE WE PROCEED TO EXTRACT THE SAME AS UNDER : 12. WE FIND MERIT IN THE ALTERNATE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF RS.75 LAKHS OFFERED TO TAX IN THE STATEMENT RECORDED U/S.132(4) BE SET OFF AGAINST THE DISALLOWANCE CALC ULATED UNDER THE PROVISIONS OF SECTION 14A R.W. RULE 8D. ADMITTEDLY THE ASSESSEE HAD MADE DISCLOSURE OF RS.75 LAKHS VOLUNTARILY AS ADDITIONAL INCOME UNDER THE HE AD CONTINGENCIES TO COVER ANY OTHER ERRORS OMISSIONS OR DISCREPANCIES. THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF RS.75 LAKHS WAS VOLUNTA RILY OFFERED AND THERE WAS NO DETECTION OF ANY INCRIMINATING MATERIAL OR UNDISCLO SED INCOME COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE . WE THEREFORE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF RS.75 LAKHS OFFERED BY THE ASSESSEE AS UNDISCLOSED INCOME TO CO VER ANY ERRORS OMISSIONS OR DISCREPANCIES IN COMPUTING THE TAXABLE INCOME SHOUL D BE SET OFF AGAINST THE DISALLOWANCE MADE U/S.14A R.W. RULE 8D OF THE I.T. ACT. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO RESTRICT THE DISALLOWANCE U/S.14A R.W. RULE 8D TO RS.18 19 294/- I .E. (RS.93 24 674 RS.75 00 000/-). GROUNDS OF APPEAL NO.1 TO 3 BY TH E ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 31. FROM THE ABOVE WE FIND THE TRIBUNAL PERMITTED FOR SETTING OFF THE DISALLOWANCE OF EXPENDITURE U/S.14A OF THE ACT AGAI NST THE SAID BUFFER DISCLOSURE OF INCOME. IN THAT CASE RS. 75 LAKHS WAS OFFERED AS BUFFER AND THE ISSUE OF DISCLOSURE U/S.14A OF THE ACT CREATED THE ADDITIONAL INCOME EX CEEDING THE SAID BUFFER DISCLOSURE OF RS.75 LAKHS. FURTHER IN THE SAID DE CISION THE INCOME ASSESSED NEVER FELL BELOW THE RETURNED INCOME. HOWEVER THERE IS NO DISCUSSION OR DECISION OF THE TRIBUNAL ON THE ISSUE OF REDUCTION OF THE DISCLOSED RETURNED INCOME. THEREFORE WE SHALL PROCEED TO ANALYSE THE LEGAL SCOPE ON THIS IS SUE. LEGAL SCOPE ON THE SANCTITY OF RETURNED INCOME IF THE ASSESSED INCOME BE LESS THAN THE RETURNED INCOME. 32. ON THIS ISSUE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT IT IS A SETTLED LEGAL PROPOSITION IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE. FOR THIS LD COUNSEL RELIED ON VARIOUS BINDING JUDGMENTS OF APEX COURTS AND OTHERS. WE SHALL NOW PROCEED TO ANALYSE EACH OF THEM HERE AS UNDER. 33. TO START WITH WE WILL TAKE UP THE APEX COURTS JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. SHELLY PRODUCTS [2003 ] 261 ITR 367 (SC) THE APEX ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 11 COURT HELD IN FAVOUR OF REFUNDING OF THE EXCESS TAX ES PAID (OF ADVANCE TAX AS WELL AS SELF-ASSESSMENT TAX) OUT OF ABUNDANT CAUTION OR OWING TO ERROR OR NON TAXABILITY. HELD PORTION OF THIS JUDGMENT IS EXTRACTED AS UNDER : HOWEVER FAILURE OR INABILITY OF THE REVENUE TO FR AME A FRESH ASSESSMENT SHOULD NOT PLACE THE ASSESSEE IN A MORE DIS-ADVANTAGEOUS P OSITION THAN HE WOULD HAVE BEEN IN IF A FRESH ASSESSMENT WERE MADE. IN A CASE WHERE THE ASSESSEE CHOOSES TO DEPOSIT BY WAY OF ABUNDANT CAUTION ADVANCE TAX OR TAX ON SELF ASSESSMENT WHICH IS IN EXCESS OF HIS LIABILITY ON THE BASIS OF THE RETURN FURNISHED OR IF THERE IS AN ARITHMETICAL ERROR OR INACCURACY IT IS OPEN TO THE ASSESSEE TO CLAIM REFUND OF THE EXCESS TAX PAID IN THE COURSE OF THE ASSESSMENT PRO CEEDINGS. HE CAN CERTAINLY MAKE SUCH A CLAIM BEFORE THE CONCERNED AUTHORITY CA LCULATING THE REFUND. SIMILARLY IF THE ASSESSEE HAS BY MISTAKE OR INADVERTENCE OR ON ACCOUNT OF IGNORANCE INCLUDED IN HIS INCOME ANY AMOUNT WHICH IS EXEMPTED FROM PAYMENT OF INCOME-TAX OR IS NOT INCOME WITHIN THE CONTEMPLATI ON OF LAW HE MAY LIKEWISE BRING THIS TO THE NOTICE OF THE ASSESSING AUTHORITY WHICH IF SATISFIED MAY GRANT HIM RELIEF AND REFUND THE TAX PAID IN EXCESS IF ANY. SUCH MATTERS CAN BE BROUGHT TO THE NOTICE OF THE CONCERNED AUTHORITY IN A CASE WHERE A REFUND IS DUE AND PAYABLE AND THE AUTHORITY CONCERNED ON BEING SATISFIED SHALL GRANT APPROPRIATE RELIEF. 34. IN THE CASE OF GUJARAT GAS COMPANY LTD. VS. JCI T (245 ITR 84) THE HONBLE GUJARAT HIGH COURT HELD THAT THE INSTRUCTION OF THE CBDT CIRCULAR NO.549 (PARA NO.5.12 DATED 31-10-1989 IS ULTRA-VIRES WHEN THE SAID INSTRUCTION MANDATES THE AO AGAINST MAKING THE SCRUTINY ASSESSMENTS AT THE FIGURE LESS THAN THAT RETURNED BY THE ASSESSEE. RELEVANT HELD PORTION OF THIS JUD GMENT READS AS UNDER : HELD THAT THE CIRCULAR IN QUESTION REFERS TO ASSE SSMENTS WHICH ARE TO BE MADE U/S.143(3) OF THE ACT. THE CIRCULAR DIRECTS THAT I N A PARTICULAR TYPE OF CASES I.E. IN SCRUTINY CASES U/S.143(3) OF THE ACT THE INCOME CA N NEITHER BE ASSESSED AT A FIGURE LOWER THAN THE RETURNED INCOME NOR THE LOSS ASSESSE D AT A FIGURE HIGHER THAN THE LOSS NOR FURTHER REFUND GIVEN EXCEPT WHAT WAS DUE O N THE BASIS OF THE RETURNED INCOME. THUS BY ISSUANCE OF THE CIRCULAR THE QUA SI-JUDICIAL OFFICER IS DIRECTED TO ASSESS CASES OF PARTICULAR NATURE IN A PARTICULAR M ANNER. THE ASSESSING OFFICER BEING BOUND BY IT HAD ABDICATED HIS FUNCTION AND DI D NOT ACT INDEPENDENTLY AND THEREFORE THERE WAS NO QUESTION OF ALTERNATIVE REM EDY WHICH WAS A FUTILE REMEDY. IN FACT THE JURISDICTION HAD BEEN EXERCISED BY THE CENTRAL BOARD OF DIRECT TAXES BY ISSUING THE CIRCULAR AND THEREFORE THE ORDER OF T HE ASSESSING OFFICER WAS WITHOUT JURISDICTION. THE COURT HAD TO EXERCISE ITS JURISD ICTION UNDER ARTICLE 226. THE ORDER OF THE ASSESSING OFFICER TO THE EXTENT IT STATED TH AT THE TOTAL INCOME WOULD BE THE RETURNED INCOME WAS TO BE SET ASIDE WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE ASSESSMENT WITHOUT KEEPING IN MIND THE CENT RAL BOARD OF DIRECT TAXES CIRCULAR DATED 31-10-1989. 35. THE SAME HONBLE GUJARAT HIGH COURT AGAIN IN TH E CASE OF CIT VS. MILTON LAMINATES LTD. VIDE TAX APPEAL NO.1022 OF 2010 DATE D 24-01-2012 HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. REVENUE TOOK THE ISSUE TO THE ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 12 HONBLE HIGH COURT ON THE ISSUE IF THE TRIBUNALS DIRECTION TO THE AO TO ALLOW COMPLETE EFFECT TO THE ORDER OF THE CIT(A) WITHOUT RESTRICTING THE INCOME TO THE RETURNED INCOME. IN THIS CASE AFTER GIVING EFFECT TO THE ORDER OF THE CIT(A) THE INCOME ASSESSED HAS FALLEN BELOW THE RETURNED INCOM E OF THE ASSESSEE. THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL . RELEVANT LINES FROM THIS JUDGMENT ALSO ARE EXTRACTED AS UNDER : 7. IN VIEW OF THE ABOVE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE TRIBUNALS ULTIMATE CONCLUSION IN ALLOWING THE ASSE SSEES APPEAL. THOUGH SOME OF THE OBSERVATIONS MAY NOT APPEAL TO US NEVERTHELESS FOR THE REASONS SOMEWHAT DIFFERENT FROM THOSE RECORDED BY THE TRIBUNAL WE CO ME TO THE SAME CONCLUSION. DECISION OF THE APEX COURT IN CASE OF SHELLY PRODUCTS & OTHERS (SUPRA) WAS RENDERED IN VERY DIFFERENT BACKGROUND. IT WAS A CA SE WHERE THE ASSESSEE HAD FILED RETURN. ASSESSEE HAD PAID SELF ASSESSMENT TAX ON T HE INCOME DISCLOSED IN THE RETURN. TRIBUNAL ON APPEAL BY THE ASSESSEE HELD TH AT THE ORDER OF THE ASSESSMENT PASSED BY THE ASSESSING OFFICER WAS AB-INITIO VOID SINCE HE HAD NO JURISDICTION TO DEAL WITH SUCH PROCEEDINGS. REVENUE SOUGHT REFEREN CE BEFORE THE HIGH COURT. WHEN SUCH REFERENCE WAS PENDING THE ASSESSEE APPLI ED TO THE DEPARTMENT FOR REFUND OF THE TAX PAID. IT WAS IN THIS BACKGROUND THE APEX COURT EXPRESSED THE OPINION THAT LIABILITY TO PAY INCOME TAX DOES NOT D EPEND ON ASSESSMENT BEING MADE AND FAILURE OR INABILITY TO FRAME FRESH ASSESSMENT AFTER EARLIER ASSESSMENT IS SET ASIDE OR NULLIFIED IN APPROPRIATE PROCEEDINGS DOES NOT DISENTITLE THE ASSESSEE TO CLAIM REFUND OF THE ADVANCE TAX AND TAX PAID ON SEL F ASSESSMENT BECAUSE TO THAT EXTENT THE ASSESSEE HAD ADMITTED HIS LIABILITY TO P AY TAX IN ACCORDANCE WITH LAW. FACTS OF THE PRESENT CASE ARE THEREFORE DIFFERENT. IN CASE OF HAND THE ASSESSMENT WAS NOT RENDERED NULL. IN FACT SUCH ASSESSMENT WH ICH ACCORDING TO THE ORDER OF CIT(APPEALS) HAD BECOME FINAL TAX LIABILITY OF THE ASSESSEE CAME LOWER THAN THAT DECLARED BY HIM IN THE RETURN FILED. (1) TO SUM UP FROM THE ABOVE IT IS OBVIOUS THAT T HE FETTERS IMPOSED BY THE CBDT ON THE AOS WHEN IT COMES TO ASSESSING THE IN COME OF ASSESSEE LOWER THAN THE RETURNED INCOME ARE HELD ULTRA VIRES . FURTHER THE HONBLE APEX COURT ALSO HELD THAT THE TAXES PAID BY THE ASSESSEE AS A MATTER OF ABUNDANT CAUTION I.E. BY WAY OF ADVANCE OR SELF ASSESSMENT TAXES NEEDS TO BE REFUN DED AFTER DUE VERIFICATION OF THE CLAIMS. (2) LD. COUNSEL FOR THE ASSESSEE FILED VARIOUS DEC ISIONS OF THE TRIBUNAL DEMONSTRATING THAT THE CONTINGENCY DISCLOSURE ARE ENTITLED TO REFUND AFTER DUE VERIFICATION. IN THIS REGARD LD. COUNSEL FOR THE ASSESSEE FILED WRITTEN NOTE ON CONTINGENCY ISSUE STATING THAT THE RETURN OF INCO ME FILED BY THE ASSESSEE CONSTITUTES A NOTIONAL UNDISCLOSED INCOME AS PART O F THE TOTAL INCOME. THE SAME ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 13 SHOULD NOT BECOME AN IMPEDIMENT FOR ASSESSING THE I NCOME OF THE ASSESSEE BASED ON THE PRINCIPLES RELATING TO THE REAL INCOME THEOR Y. ACCORDING TO HIM THE INCOME OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME IS NOT SACROSANCT AND WHAT MATTERS IS THE AOS FINDING ON THE ASSESSED INCOME OF THE A SSESSEE. THE ASSESSED INCOME CAN BE LOWER THAN THE RETURNED INCOME. RELYING ON THE DECISION OF NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SANMUKHDAS WADHWANI 85 ITD 734 SHRI R.S. ABHYANKAR LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT WHERE THE ASSESSEE HIMSELF RETURNED HIS UNDISCLOSED INCOME ON ADHOC BA SIS WITHOUT GIVING ANY BREAK- UP FOR THE SAME AND WHEN THE SUBSEQUENT WORKING SUB MITTED BY HIM REVEALS THAT THE UNDISCLOSED INCOME ACTUALLY ASSESSABLE IN THE H ANDS OF THE ASSESSEE IS LOWER THAN THE RETURNED INCOME THE SAME HAS TO BE ASSESS ED AT SUCH LOWER INCOME BASED ON THE CONCEPT OF REAL INCOME. ONLY CONDITION SPEC IFIED IN THE SAID DECISION RELATES TO THE VERIFICATION AND CORRECTNESS OF THE STATEMEN TS SO SUBMITTED GIVING THE DETAILED WORKING BEFORE THE AO. RELEVANT PORTION I S EXTRACTED AS UNDER : '12. IT IS OBSERVED THAT A SIMILAR ISSUE IN THE CON TEXT OF REGULAR ASSESSMENT AROSE FOR CONSIDERATION BEFORE THE HON'BLE DELHI HI GH COURT IN THE CASE OF CIT V . BHARAT GENERAL INSURANCE CO. LTD. [1971] 81 ITR 303 WHEREIN IT WAS HELD BY THEIR LORDSHIPS THAT EVEN IF AN ASSESSEE DECLARES A N INCOME IN THE RETURN THE ASSESSING OFFICER CANNOT ASSESS IT MERELY ON THAT B ASIS AND HE HAS TO CONSIDER ITS TAXABILITY IN THE LIGHT OF OTHER CIRCUMSTANCES DE HORS THE ADMISSION MADE IN THE RETURN . IN THE CASE OF NARAYANAN V . GOPAL AIR 1960 SC 235 THE HON ' BLE SUPREME COURT HAS HELD THAT AN ADMISSION IN THE RET URN IS NOT CONCLUSIVE AND IT WOULD BE DECISIVE ONLY IF NOT SUBSEQUENTLY WITHDRAW N OR PROVED TO BE ERRONEOUS . IT IS WELL- ESTABLISHED THAT THE OBJECT OF AN ASSES SMENT IS TO DETERMINE THE CORRECT INCOME AND CONSEQUENTLY THE C ORRECT TAX LIABILITY . IN OUR OPINION THIS SETTLED POSITION EQUALLY HOLDS GOOD IN THE MAT TER OF BLOCK ASSESSMENT ALSO SINCE THE SCOPE OF UNDISCLOSED INCOME ASSESSABLE IN THE BLOCK ASSESSMENT IS SPECIFICALLY PROVIDED AND THE PROCEDU RE FOR DETERMINATION OF SUCH INCOME IS ALSO CLEARLY LAID DOWN . IN THESE CIRCUMSTANCES ANY AMOUNT WHICH IS NOT ASSESSABLE AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD CANNOT BE ASSESSED AS SUCH MERELY FOR THE REASON THAT THE SAME WAS DEC LARED BY THE ASSESSEE IN THE RETURN FOR BLOCK PERIOD AND THERE CANNOT BE SUCH ESTOPPEL AGAINST THE STATUTE . IT THEREFORE FOLLOWS THAT IF THE ASSESSEE COMMITS A PATENT MISTAKE OF FACT OR LAW WHILE FILING HIS RETURN OF UNDISCLOSED INCOME UNDER SECTION 158BC HE CANNOT BE ASSESSED ON SUCH INCORRECT INCOME MERELY ON THE BASIS OF ADMISSION MADE IN THE RETURN. 13. . . . . . . . .IN SUCH CIRCUMSTANCES WHEN A DE TAILED WORKING MADE SUBSEQUENTLY BY THE ASSESSEE OF UNDISCLOSED INCOME REVEALED THAT THE TOTAL UNDISCLOSED INCOME ASSESSABLE IN THE HANDS OF THE A SSESSEE WAS LOWER THAN THE RETURNED INCOME WE ARE OF THE OPINION THAT THE SAM E HAS TO BE ASSESSED AT SUCH LOWER AMOUNT GOING BY THE CONCEPT OF REAL INCOME ES PECIALLY WHEN THE SAID WORKING WAS VERIFIED AND FOUND TO BE CORRECT BY THE ASSESSI NG OFFICER. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 14 36. SIMILAR PROPOSITION WAS AFFIRMED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BHARAT GENERAL INSURANCE COMPANY LTD. 81 ITR 303 WHEREIN IT IS HELD THAT WHEN THE ASSESSEE DECLARES INCOME IN THE RETUR N THE AO CANNOT ASSESS MERELY ON THAT BASIS AND HAS TO CONSIDER ITS LIABILITY IN THE LIGHT OF OTHER CIRCUMSTANCES DE HORS THE ADMISSION MADE BY HIM IN THE RETURN. LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE OTHER JUDGMENT IN THE CASE OF ESTE R INDUSTRIES LTD. VS. CIT 316 ITR 260 (DELHI). ACCORDING TO THIS JUDGMENT SUO MOTO DISALLOWANCE LEADING TO INCREASED RETURNED INCOME CAN ALWAYS BE VERIFIED BY THE AO IN THE ASSESSMENT AND DECREASE THE RETURNED INCOME EVEN IF IT FALLS BELO W THE AMOUNT OF TOTAL INCOME RETURNED BY THE ASSESSEE IN THE RETURN OF INCOME. IN THIS CASE THE HONBLE HIGH COURT RESTORED THE MATTER FOR SUCH VERIFICATION. R ELEVANT PORTION OF THE JUDGMENT ARE EXTRACTED AS UNDER : '11 . ACCORDING TO US THE TRIBUNAL OUGHT TO HAVE EXAMINE D THE ISSUE AS TO WHETHER THE FACT THAT ASSESSEE HAD MADE AN ADMISSIO N WITH RESPECT TO AN ADDITION / DISALLOWANCE IN ITS ORIGINAL RETURN OR IN THE REVIS ED RETURN WOULD IPSO FACTO BAR THE ASSESSEE FROM CLAIMING AN EXPENSE OR DISPUTING AN ADDITION IF IT IS OTHERWISE PERMISSIBLE UNDER LAW . THIS IS SO ESPECIALLY IN VIEW OF THE CIRCUMSTANCES THAT THE ASSESSING OFFICER WHILE MAKING THE ADDITIO NS /DISALLOWANCES DID NOT CALL UPON THE ASSESSEE TO FU RNISH ANY EXPLANATION . THE UPSHOT OF THE SUBMISSION MADE BY THE LEARNED COUNSE L FOR THE ASSESSEE IS THAT HAD THE ASSESSEE BEEN GIVEN AN OPPORTUNITY BY THE A SSESSING OFFICER IT COULD HAVE DEMONSTRATED THAT NO ADDITIONS OR DISALLOWANCE S WERE CALLED FOR IN VIEW OF THE BINDING PRECEDENTS OF COURTS AND/OR TRIBUNAL IN RESPECT OF EACH OF THE ADDITION/DISALLOWANCE . THE OBSERVATIONS MADE IN THE TAX AUDIT REPORT COULD NOT HAVE FORMED THE BASIS OF ADDITIONS / ALLOWANCES BY THE ASSESSING OFFICER . ON THIS ASPECT OF THE MATTER THE OBSERVATIONS IN THE JUDGME NT OF THE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. V. S TATE OF KERALA [1973] 91 ITR 18 BEING APPOSITE ARE EXTRACTED HEREINBELOW : IT IS NO DOUBT TRUE THAT ENTRIES IN THE ACCOUNT BOO KS OF THE ASSESSEE AMOUNT TO AN ADMISSION THAT THE AMOUNT IN QUESTION WAS LAID O UT OR EXPENDED FOR THE CULTIVATION UPKEEP OR MAINTENANCE OF IMMATURE PLANTS FROM WHICH NO AGRICULTURAL INCOME WAS DERIVED DURING THE PREVIOUS YEAR . AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE . IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT . (P . 20) . 11 . 1 WE FIND THAT THE TRIBUNAL INSTEAD OF EXAMINING TH E MATTER FROM THIS ANGLE HAS REPEATED THE ORDER PASSED IN THE FIRST ROUND WI THOUT DUE APPLICATION OF MIND TO THE ISSUES WHICH CALLED FOR ADJUDICATION. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 15 37. THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SANMUKHDAS WADHWANI (SUPRA) HELD CATEGORICALLY THAT THE INCOME NOT ASSESSABLE AS UNDISCLOSED INCOME OF THE ASSESSEE CANNOT BE ASSESSED AS SUCH MERELY BECAUSE ASSESSEE DECLARED THE SAME THROUGH A STATEMENT IN SEARCH ACT ION. ADMISSION MADE BY THE ASSESSEE IN THE RETURN OF INCOME IS NO SACROSANCT. AO IS UNDER STATUTORY OBLIGATION TO MAKE ASSESSMENT OF ASSESSEE BASED ON THE FACTS O F CASE AND AS PER THE PROVISIONS OF ACT. IN OTHER WORDS COMING TO THE F ACTS OF THE ASSESSEE IF THE SAID SUM OF RS. 1 CRORE IS NOT ASSESSABLE TO TAX AS INCO ME OF THE ASSESSEE THE SAME OUGHT NOT BE ASSESSED EVEN IF THE ASSESSED INCOME C OMES TO A LOWER FIGURE QUA THE RETURNED INCOME. 38. WE HAVE CONSIDERED THE ABOVE LEGAL SCOPE OF THE PRINCIPLE RELATING TO THE LOWER FIGURE OF ASSESSED INCOME QUA THE RETURNED IN COME. FURTHER WE HAVE HEARD THE PARTIES AND PERUSED THE WRITTEN SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. FURTHER ALSO WE PERUSED THE REASONING G IVEN BY THE CIT(A) WHILE DISMISSING THE CLAIM OF THE ASSESSEE. WE FIND THE CONTENTS OF PARA NO.12 OF HIS ORDER ARE RELEVANT. FOR THE SAKE OF COMPLETENESS O F THIS ORDER WE PROCEED TO EXTRACT PARA NO.13.2 OF THE CIT(A) : 13.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . TO SUM UP THE FRESH CLAIM MADE BY THE APPELLANT DURING THE PRESENT PROCEEDINGS THAT SUCH INCOME OF RS.1 00 00 000/- MAY BE EXCLUDED FROM THE TOTAL INCOME ASSESSED BY THE A SSESSING OFFICER AS NO DISCREPANCIES WERE FOUND DURING THE ASSESSMENT PROC EEDINGS CANNOT BE ACCEPTED AS THE ADDITIONAL INCOME WAS OFFERED VOLUNTARILY IN TH E RETURN OF INCOME. THE ALTERNATE CLAIM OF THE APPELLANT FOR SET OFF OF SUCH CONTINGE NCIES AGAINST OTHER STATUTORY DISALLOWANCE MADE BY THE AO ALSO CANNOT BE ACCEPTED AS DISCUSSED ABOVE. GROUND OF APPEAL NO.8 STANDS REJECTED. THE CIT(A) DENIED THE CLAIM OF THE ASSESSEE IGNORIN G THE SETTLED LEGAL PROPOSITIONS ON THE TOPIC. THE REASONS GIVEN ABOVE BY THE CIT(A) ARE ARTIFICIAL AND NOT SUPPORTED BY THE LEGAL PRECEDENTS. 39. THE CBDT ISSUED A CIRCULAR NO.549 DATED 31-10-1 989 IMPOSING FETTERS ON THE AOS FOR NOT DETERMINING THE ASSESSED INCOME AT A LOWER FIGURE THAN THE ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 16 RETURNED INCOME. THE SAID CIRCULAR WAS HELD ULTRA VIRES BY THE HIGHER JUDICIARY IN THE CASE OF GUJARAT GAS COMPANY LTD. (SUPRA). INFA CT IT IS THE DUTY OF THE AO TO MAKE AN ASSESSMENT BASING ON THE FACTS OF THE CASE AND AS PER THE PROVISIONS OF THE I.T. ACT. IN THE CASE OF SHELLY PRODUCTS (SUPR A) THE HONBLE APEX COURT HELD THAT THE ADVANCE TAX/SELF ASSESSMENT TAX PAID AS PA RT OF AN ABUNDANT CAUTION ARE REQUIRED TO BE REFUNDED ON VERIFICATION OF THE CLAI M OF THE ASSESSEE. THE NAGPUR COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DC IT VS. SANMUKHDAS WADHWANI (SUPRA) HELD THAT THE ASSESSED INCOME CAN BE LOWER QUA THE RETURNED INCOME OF THE ASSESSEE. FURTHER THE TRIBUNAL HELD IN THIS CASE ANY AMOUNT WHICH IS NOT ASSESSABLE AS UNDISCLOSED INCOME OF THE ASSESSEE CA NNOT BE ASSESSED MERELY FOR THE REASON ASSESSEE DECLARED IN THE RETURN OF INCOM E. THERE CANNOT BE SUCH ESTOPPELS AGAINST THE STATUTE IF THE ASSESSEE ITSEL F FINDS A PATENT MISTAKE OF FACT WHILE FILING THE RETURN OF INCOME ASSESSEE CANNOT B E ASSESSED ON SUCH INCORRECT INCOME MERELY ON THE BASIS OF ADMISSION MADE BY HIM IN THE RETURN OF INCOME. 40. IN THE INSTANT CASE CONSIDERING THE ABOVE SETT LED LEGAL PROPOSITIONS WE PROCEED TO EXAMINE AVAILABILITY OF FACTS RELATING T O THE PRESENT CASE. IN THE RETURN OF INCOME ASSESSEE MERELY OFFERED AN AMOUNT OF RS. 1 CRORE TOWARDS CONTINGENCY. MEANING THEREBY THAT INCASE THE AO MAKES CERTAIN AD DITIONS BASING ON SAME FACTS OR LEGAL ISSUES THE SAID DISCLOSURE AMOUNT OF RS.1 CRORE SHOULD BE CONSIDERED FOR SET OFF/ADJUSTMENT ETC. IN CASE AO FAILED TO MAKE SUCH ADDITIONS THE SAID AMOUNT OF RS.1 CRORE IS NOT REQUIRED TO BE ASSESSED AS INC OME OF THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE AO MADE ADDITION U/S.14A OF THE ACT IN THE ASSESSMENT U/S.153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINA TING MATERIAL. THIS ADDITION IS MADE OVER AND ABOVE THE SAID CONTINGENCY AMOUNT OF RS.1 CRORE. HOWEVER WE FIND WHILE DISCUSSING IN THE PRECEDING PARAGRAPH TH IS DISALLOWANCE U/S.14A IS UNSUSTAINABLE IN THIS ASSESSMENT AS THE SAME DOES N OT HAVE STRENGTH OF ANY INCRIMINATING MATERIAL. IN OTHER WORDS THE AO MAD E AN UNSUSTAINABLE ADDITION U/S.14A OF THE ACT AND TAXED THE SAID AMOUNT OF RS. 1 CRORE-CONTINGENCY INCOME ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 17 WITHOUT MAKING ADJUSTMENT THE SAID AMOUNT OF RS.1 C RORE. IN ANY CASE WE DELETED SAID DISALLOWANCE U/S.14A OF THE ACT. THEREFORE T HE QUESTION OF ADJUSTMENT IS ONLY AN ACADEMIC EXERCISE. IGNORING THE SAME WE NOW HA VE TO DECIDE THAT THE SAID AMOUNT OF RS. 1 CRORE IS ASSESSABLE TO TAX IN THE L IGHT OF THE ABOVE LEGAL SCOPE RELATING TO THIS ADDITION. 41. THE AO HAS NOT BROUGHT ANY ISSUE OR FACTS RELAT ING TO THE UNDISCLOSED INCOME SPECIFIC TO THE SAID SUM OF RS.1 CRORE. IN SUCH CI RCUMSTANCES WE ARE OF THE OPINION THAT THE DECISION OF THE NAGPUR BENCH OF THE TRIBUN AL IN THE CASE OF DCIT VS. SANMUKHDAS WADHWANI (SUPRA) BECOMES RELEVANT TO THE FACTS OF THE PRESENT CASE. AS SUCH WE PROCEED TO DISMISS THE VOLUNTARY-CENTRI C REASONING GIVEN BY THE CIT(A) FOR DENYING THE CLAIM OF THE ASSESSEE REGARDING TH E ISSUE OF TAXATION OF THE SAID AMOUNT OF RS.1 CRORE. CONSIDERING THE ABOVE WE AR E OF THE OPINION THAT THE AO IS DIRECTED TO VERIFY THE WORKING OF TOTAL UNDISCLOSED INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE GOING BY THE CONCEPT OF REAL INCOME . HE SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AO IS DIRECTED TO APPLY THE RATIO LAID DOWN BY THE ABOVE REFERRED JUDGMENTS IN GENERAL AND THE RATIO LAID DOWN BY THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS . SANMUKHDAS WADHWANI (SUPRA) WHILE ARRIVING AT THE ASSESSED INCOME OF TH E ASSESSEE. AO SHALL NOT CONSIDER THE SO-CALLED VOLUNTARY DISCLOSURE OF THE SAID AMOUNT OF RS. 1 CRORE AS THE SAME DOES NOT AMOUNT TO ANY VOLUNTARY DISCLOSURE IN A REAL SENSE. HAD IT BEEN REALLY VOLUNTARY THE ASSESSEE WOULD NOT HAVE RAISE D THIS ISSUE BEFORE US. IT IS THE REQUIREMENT OF THE STATUTE THAT THE AO SHALL MAKE A SSESSMENT STRICTLY AS PER THE PROVISIONS OF THE LAW AND DETERMINE THE ASSESSED IN COME ACCORDINGLY. FOR APPLYING THE SAID LEGAL PRINCIPLES AS WELL AS THE JUDGMENTS AND THE ORDER OF THE NAGPUR BENCH OF THE TRIBUNAL WE REMAND THIS ISSUE TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF ADJUDICATION OF THE ISSUE RELATING TO TA XABILITY OF THE CONTINGENCY AMOUNT OF RS.1 CRORE. ACCORDINGLY THIS GROUND BY THE ASS ESSEE IS ALLOWED PRO TANTO . 42. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 18 43. WE SHALL NOW TAKE UP THE CROSS APPEALS FOR A.Y. 2007-08. ITA NO.1536/PUN/2015 (A.Y. 2007-08 - BY REVENUE) 44. GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD.CIT(A) HAS ERRED IN INTERPRETING THE PROVISIONS OF SEC.10B AND ACCOR DINGLY ALLOWED EXCLUSION OF FREIGHT AND INSURANCE FROM TOTAL TURNOVER FOR THE P URPOSE OF QUANTIFYING THE DEDUCTION U/S.10B. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) HAS MADE AN EXTRAPOLATION OF DEFINITION OF EXPORT TURNOVER T O DEFINE TOTAL TURNOVER AND THEREBY DISTORTED THE LEGISLATIVE INTENT IN PROVISI ON STRICT INTERPRETATION OF EXPORT TURNOVER AS PER EXPLANATION 2 TO SEC.10B OF THE IN COME TAX ACT 1961. 45. WE FIND THE ABOVE ISSUE SOLITARY ISSUE RAISED B Y THE REVENUE IS IDENTICAL TO THE ONE RAISED IN A.Y. 2006-07. WE HAVE DISMISSED THE GROUNDS RAISED BY THE REVENUE WHILE ADJUDICATING THE SAME ISSUE IN A.Y. 2 006-07 AND UPHELD THE ORDER OF THE CIT(A) BEING FAIR AND REASONABLE. FOLLOWING TH E SAME PARITY OF REASONING FOR THE A.Y. 2007-08 TOO WE DISMISS THE GROUNDS RAISED BY THE REVENUE. 46. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ITA NO.986/PUN/2015 (A.Y. 2007-08 - BY ASSESSEE) 47. GROUND NO.1 RAISED BY THE REVENUE RELATES TO DI SALLOWANCE OF RS.91 61 985/- U/S.14A OF THE ACT. 48. ON HEARING BOTH THE SIDES WE FIND THE FACTS GROUNDS ARGUMENTS THE FINDINGS BY REVENUE AUTHORITIES ARE IDENTICAL TO TH E FACTS (GROUND NO.2 IN A.Y.2006-07). OUR DECISION DELETING THE DISALLOWANC E U/S.14A RELYING ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ITA NO. 1703 /PN/2014 DATED 30-11-2016 IN THE SAID ASSESSMENT YEAR SHALL APPLY TO THIS A.Y. 2 007-08 TOO. ACCORDINGLY GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 19 49. GROUND NO.2 RAISED BY THE ASSESSEE RELATES TO C LASSIFICATION OF STAINLESS STEEL ITEMS AS FURNITURE AND FIXTURES INSTEAD OF PLANT AND MACHINERY. ADDITION ON THIS ACCOUNT FOR THE A.Y. 2007-08 WORKS OUT TO RS.9 86 9 59/-. 50. WE FIND THE ABOVE GROUND IS IDENTICAL TO GROUND NO.3 RAISED BY THE ASSESSEE IN A.Y. 2006-07. OUR DECISION ON THIS ISSUE IN ALL OWING THE GROUND IN FAVOUR OF THE ASSESEE RELYING ON THE ORDER OF THE TRIBUNAL IN ASS ESSEES OWN CASE (ITA NO.1383/PN/2011 FOR A.Y. 2006-07) SHALL APPLY TO TH IS ASSESSMENT ALSO. ACCORDINGLY GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 51. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO D ISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT AMOUNTING TO RS.11 40 849/-. 52. AFTER HEARING BOTH THE SIDES WE FIND THIS GROU ND IS IDENTICAL TO THE GROUND NO.1 RAISED BY THE ASSESSEE IN A.Y. 2006-07. WE HA VE ALREADY ADJUDICATED THIS ISSUE AGAINST THE ISSUE IN VIEW OF THE ORDER OF THE TRIBUNAL IN ITA NO.1383/PN/2011 DATED 22-02-2013. FOLLOWING THE SAME REASONING AND RULE OF CONSISTENCY WE DISMISS GROUND NO.3 RAISED BY THE ASSESSEE FOR THIS ASSESSMENT YEAR. 53. GROUND NO.4 BY THE ASSESSEE DEALS WITH DISALLOW ANCE OF RS.2 45 76 247/- INCURRED ON REPAIRS/RENOVATION OF BUNGALOW AT 70 K OREGAON PARK PUNE. 54. ON HEARING BOTH THE PARTIES WE FIND THIS ISSU E ALSO IS IDENTICAL TO GROUND NO.4 BY THE ASSESSEE IN A.Y. 2006-07. WE HAVE ALRE ADY ADJUDICATED THIS ISSUE IN FAVOUR OF THE ASSESSEE RELYING ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1703/PN/2014 DATED 30-11-2016 (SUPRA). F OLLOWING THE SAME PARITY OF REASONING WE ALLOW GROUND NO.4 RAISED BY THE ASSES SEE FOR THIS YEAR TOO. 55. GROUND NO.5 RAISED BY THE ASSESSEE RELATES TO E XCLUSION OF RS. 1 CRORE FROM THE UNDISCLOSED INCOME OFFERED BY THE ASSESSEE IN T HE ABSENCE OF ANY DISCREPANCIES FOUND DURING THE ASSESSMENT PROCEEDINGS. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 20 56. ON HEARING BOTH THE PARTIES WE FIND THIS GROUN D IS IDENTICAL TO GROUND NO.5 RAISED BY THE ASSESSEE IN A.Y. 2006-07. WE HAVE AL READY ADJUDICATED THIS GROUND VIDE PARA NOS 28 TO 41 ABOVE OF THIS ORDER. WITH I DENTICAL DIRECTIONS THIS GROUND OF THE ASSESSEE IS ALLOWED PRO TANTO. 57. GROUND NO.6 RAISED BY THE ASSESSEE RELATES TO D ISALLOWANCE OF RS.34 63 969/- ON ACCOUNT OF PMS FEES PAID AS PART OF EITHER OF COST OF ACQUISITION/IMPROVEMENT OR COST OF TRANSFER FOR COM PUTATION OF INCOME FROM CAPITAL GAINS. 58. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THIS ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE TRIBUNAL IN ASSESSEES OWN IN ITA NO.102/PN/2012. THE TRIBUNAL VIDE ORDER DATED 10-04-2014 RELYING ON THE ORDER OF COORDINATE BENCH OF THE TRI BUNAL IN THE CASE OF KRA HOLDING AND TRADING INVESTMENT PVT. LTD. VS. DCIT HELD THAT PMS FEES PAID BY THE ASSESSEE IS AN ALLOWABLE DEDUCTION. 59. AFTER HEARING BOTH THE SIDES ON THIS ISSUE WE P ERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08. WE FIND THE TRIBUNAL IN PARA NOS. 12 AND 12.1 OF THE ORDER HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE RELYING ON THE ORDER OF TRIBUNAL IN THE CASE OF KRA HOLDING AN D TRADING INVESTMENT PVT. LTD. (SUPRA). WE PROCEED TO EXTRACT THE OPERATIONAL PAR A NO.12.1 AND THE SAME READS AS UNDER : 12.1 RESPECTFULLY FOLLOWING THE DECISION OF THE TR IBUNAL IN THE CASE OF KRA HOLDING AND TRADING INVESTMENT PVT. LTD. (SUPRA) WE HOLD TH AT THE PMS FEES PAID BY THE ASSESSEE IS AN ALLOWABLE DEDUCTION FROM THE CAPITAL GAINS. 60. CONSIDERING THE SETTLED NATURE OF THE ISSUE W E ARE OF THE OPINION THAT THE GROUND RAISED BY THE ASSESSEE NEEDS TO BE ALLOWED. ACCORDINGLY GROUND NO.6 RAISED BY THE ASSESSEE IS ALLOWED. ITA NOS.985 & 986/PUN/2015 & ITA NOS. 1535 & 1536/PUN/2015 SERUM INSTITUTE OF INDIA LTD. 21 61. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 62. TO SUM UP BOTH THE APPEALS OF THE ASSESSEE FOR A.YRS. 2006-07 AND 2007-08 ARE PARTLY ALLOWED AND BOTH THE APPEALS OF THE REVE NUE FOR A.YRS. 2006-07 AND 2007-08 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 28 TH NOVEMBER 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY / ITAT PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 11 PUNE CIT - 11 PUNE % A BENCH PUNE; / GUARD FILE.