D.C.I.T CC - XIII,kolkata., Kolkata v. M/s Dhoot Developers Pvt Ltd, Haryana

ITSSA 34/KOL/2013 | 2009-2010
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 3423516 RSA 2013
Assessee PAN AABCD5433A
Bench Kolkata
Appeal Number ITSSA 34/KOL/2013
Duration Of Justice 3 year(s) 7 month(s) 12 day(s)
Appellant D.C.I.T CC - XIII,kolkata., Kolkata
Respondent M/s Dhoot Developers Pvt Ltd, Haryana
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Bench Allotted C
Tribunal Order Date 19-10-2016
Date Of Final Hearing 23-08-2016
Next Hearing Date 23-08-2016
Assessment Year 2009-2010
Appeal Filed On 08-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENC H KOLKATA BEFORE SHRI M. BALAGANESH AM & SHRI S.S.VISWANETHR A RAVI JM IT(SS)A NO.34/KOL/2013 ( / ASSESSMENT YEAR :2009-2010) DCIT-CC-XIII KOLKATA VS. M/S DHOOT DEVELOPERS PVT. LTD. 904-907 TIME TOWER M.G.ROAD SECTOR-28 GURGAON-122002 ./ ./PAN/GIR NO. : AABCD 5433 A ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI G.MALLIKARJUNA CIT DR /ASSESSEE BY : SHRI A.K.TULSYAN FCA / DATE OF HEARING : 23/08/2016 /DATE OF PRONOUNCEMENT 19/10/2016 / O R D E R PER M.BALAGANESH AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDE R OF LEARNED CIT(A)-III NEW DELHI IN APPEAL NO.472/10-11/CIT(A )-III DATED 21.12.12 PASSED AGAINST THE ASSESSMENT FRAMED U/S.153A/143(3 ) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. THE GROUNDS 1 2 & 15 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN ACCEPTING THE ALLOCATION OF INTERE ST TO VARIOUS PROJECTS AS DONE BY THE ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE RETU RN OF INCOME FOR THE ASST YEAR 2009-10 WAS FILED BY THE ASSESSEE ON 1.2.2010 DECLARING TAXABLE INCOME OF RS. 2 31 22 010/-. THE ASSESSEE IS ONE O F THE COMPANIES OF DHOOT GROUP OF COMPANIES HAVING HEAD OFFICE AT DELH I. THE DHOOT GROUP IS MAINLY INVOLVED IN CONCEIVING AND DEVELOPI NG REAL ESTATE PROJECTS IN DIFFERENT PARTS OF THE COUNTRY. ALL THE COMPANI ES OF DHOOT GROUP HAVE IT(SS)A NO.34/13 2 THEIR HEAD OFFICE AT 504 ANSAL BHAWAN NEW DELHI WHERE A SEARCH U/S 132 OF THE ACT WAS CONDUCTED ALONG WITH THE CASES O F SUNCITY GROUP ON 25.9.2008. THE LD AO OBSERVED THAT ASSESSEE COMPAN Y DURING THE YEAR HAD CONSTRUCTED AND SOLD A COMMERCIAL PROJECT NAMED AS TIME TOWER WHEREIN A LOSS OF RS. 3 12 36 632/- WAS DISCLOSED B Y THE ASSESSEE. THE LD AO SOUGHT TO ANALYSE THE REASON FOR THE LOSS. THE A SSESSEE WAS ASKED TO GIVE THE LEDGER ACCOUNT OF EXPENDITURE INCURRED AND TO GIVE QUANTITATIVE DETAILS OF THE COMPLETE TRADING SECTION AND FINALLY TO GIVE JUSTIFICATION WITH REGARD TO CLAIM OF INTEREST AND ADMINISTRATIVE EXPE NDITURE AGAINST THE TIME TOWER PROJECT. THE LD AO OBSERVED THAT THE ASSESSEE HAD RAISED LOANS FROM BODY CORPORATE AMOUNTING TO RS. 34 79 08 640/- AND HAS PAID INTEREST OF RS. 2 43 16 405/-. THE ASSESSEE WAS RU NNING FOUR DIFFERENT PROJECTS IN VARIOUS CITIES AND TO CONSTRUCT THESE P ROJECTS THE ASSESSEE HAS RAISED LOANS FROM ITS GROUP COMPANIES. THE LD A O OBSERVED THAT THE LOANS SO RAISED HAS BEEN UTILIZED PARTIALLY FOR THE PROJECTS AND PARTIALLY FOR GIVING INTEREST FREE ADVANCES AND FOR MAKING TAX FR EE INVESTMENTS. THE LD AO OBSERVED THAT THE INTEREST HAS BEEN PAID ON UNSE CURED LOANS RAISED BY THE ASSESSEE AND THE SAID INTEREST HAS BEEN APPO RTIONED MAINLY IN THE TIME TOWER PROJECT. THE LD AO NOTICED THAT THE AS SESSEE HAD CHARGED THE INTEREST MAINLY ON ITS TIME TOWER PROJECT AND HUGE ADVANCES WERE GIVEN TO ITS SISTER CONCERNS WITHOUT CHARGING ANY I NTEREST. THE LD AO ALSO NOTICED THAT THE ASSESSEE HAD NO BASIS TO ALLOCATE THE INTEREST EXPENDITURE IN 80:20 RATIO BETWEEN TIME TOWER PROJ ECT AND SATBARI PROJECT. ACCORDINGLY HE HELD THAT THE BOOK RESU LTS DO NOT GIVE THE CORRECT PICTURE OF PROFIT AND PROCEEDED TO REJECT T HE BOOKS OF ACCOUNTS IN TERMS OF SECTION 145(3) OF THE ACT. THE LD AO ON H IS OWN THEREFORE ALLOCATED INTEREST TO TIME TOWER PROJECT @ 50% OF 80% I.E EFFECTIVELY AT 40% AND MADE AN ADDITION OF RS. 2 07 62 848/- IN TH E ASSESSMENT. 3.2. BEFORE THE LD CITA THE ASSESSEE SUBMITTED T HAT IT IS WELL ACCEPTED PRACTICE THAT THE INTEREST COST SHOULD BE LOADED TO VARIOUS PROJECTS BASED ON FUND UTILIZATION METHOD. IT WAS STATED THAT THE ASSESSEE HAS MADE IT(SS)A NO.34/13 3 PAYMENT OUT OF LOAN FUNDS ON WHICH INTEREST IS CHAR GED AND SUCH INTEREST IS PROPERLY CAPITALIZED ON TIME TOWER PROJECT SATB ARI PROJECT AND GHATKOPER PROJECT. IT WAS ALSO STATED THAT THE CH ART THAT THE LD AO HAD REFLECTED IN HIS ORDER REGARDING INVESTMENT IN VARI OUS PROJECTS OF DHOOT GROUP DOES NOT MATCH WITH THE BOOKS OF ACCOUNT. TH E CORRECT STATEMENT THEREON WAS FILED BEFORE THE LD CITA. IT WAS ARGU ED THAT THE CHART PROVES THAT THE LD AO HAD NOT GONE IN DEPTH AND THE ASSESS MENT OF INVESTMENT OF THE ASSESSEE COMPANY. IT WAS FURTHER STATED THAT T HE LD AO HAD GROSSLY MISREAD THE BALANCE SHEET OF THE ASSESSEE COMPANY A ND HAD FAILED TO JUDGE THE NATURE OF THE ITEMS SHOWN IN THE BALANCE SHEET. IT WAS STATED THAT IN PARA 4.10 OF THE ASSESSMENT ORDER THE LD A O HAD SHOWN A CHART OF INTEREST PAID AND LOADED ON DIFFERENT PROJECT IN DI FFERENT YEAR. RS. 69 00 000/- WAS SHOWN AS INVESTMENT IN LAND IN KOLK ATA. IT WAS STATED THAT THE AMOUNT IS DULY REFLECTED IN THE CREDITOR S IDE OF THE BALANCE SHEET AND THE AMOUNT OF RS. 69 00 000/- COMPRISES AS AMOU NT RECEIVED AS ADVANCE FROM CUSTOMER INSTEAD TO INVESTMENT OF THE ASSESSEE COMPANY. IT WAS STATED THAT IN PARA 4.12 OF THE ASSESSMENT O RDER THE LD AO HAD SHOWN A CHART SHOWING UNSECURED LOAN FROM BODY CORP ORATE AS RS. 34 79 08 640/- AND ITS UTILIZATION AS INTEREST FREE ADVANCE TO KOLKATA BRANCH AS RS. 22 29 99 531/- AND INTEREST FREE ADVA NCE TO MUMBAI AS RS.3 36 63 526/- AND AMOUNT INVESTED IN SECURITIES WHOSE INCOME IS EXEMPTED AS RS. 9 20 62 662/-. THE ACTUAL FUND UT ILIZATION OUT OF LOAN FUNDS WERE FURNISHED BY THE ASSESSEE BEFORE THE LD CIT(A) . 3.3. THE LD CITA ON GOING THROUGH THE SUBMISSIONS O F THE ASSESSEE AND THE PAPERS FILED BEFORE HIM HELD THAT THE LD AO CAN NOT DISALLOW THE INTEREST MORE THAN WHAT IS CHARGED TO THE PROFIT AND LOSS AC COUNT. HE OBSERVED THAT THE ASSESSEE HAD PAID INTEREST OF RS. 2 43 16 405/- AND OUT OF WHICH ONLY RS. 60 74 934/- WAS DEBITED TO PROFIT AND LOSS ACCOUNT AND BALANCE WAS CHARGED TO DIFFERENT PROJECTS NAMELY TIME TOWE R PROJECT (RS. 81 27 908/- ) SATBARI PROJECT (RS. 94 69 171/-) A ND GHATKOPER PROJECT IT(SS)A NO.34/13 4 (RS. 6 60 580/-). THE LD CIT(A) DELETED THE ADDITI ON BY OBSERVING AS UNDER:- 7.3 IT IS SEEN THAT THE APPELLANT HAD A SHARE CAPI TAL AND RESERVE FUND OF MORE THAN RS.51 CRORE AND IT IS ALSO FURTHE R NOTICED THAT APPELLANT HAS PAID THE BUSINESS ADVANCES OF RS.25 6 6 63 057 WHICH THE AO TREATED AS 'INTEREST FREE LOAN TO GROU P COMPANIES'. WHEN THIS ISSUE WAS FURTHER EXAMINED DURING THE APP ELLATE PROCEEDINGS IT IS SEEN THAT OUT OF RS. 25 66 63 05 7 A SUM OF RS.3 36 63 526 IS PAID TO VARIOUS CONTRACTORS WHO W ERE UNDERTAKING THE CONSTRUCTION WORK OF 'TIME TOWER PROJECT' AND ' SATBARI PROJECTS' AND NOT TO THE APPELLANT'S GROUP COMPANY AS ALLEGED BY AO AND IT IS ALSO SEEN THAT RS. 20 62 30 328 HAS BE EN PAID TO KOLKATA METROPOLITAN DEVELOPMENT AUTHORITY PURSUANT TO A JV AGREEMENT FOR CONSTRUCTING COMMERCIAL COMPLEX AT KO LKATA. IT IS PERTINENT TO MENTION HERE THAT FROM THE PERUSAL OF THE BANK STATEMENT IT IS OBSERVED THAT THE SAID PAYMENT TO K OLKATA METROPOLITAN DEVELOPMENT AUTHORITY IS NOT MADE OUT OF BORROWED FUNDS AS ALLEGED BY THE AO BUT THE PAYMENT IS MADE OUT OF THE SALE PROCEEDS OF THE MUTUAL FUNDS RECEIVED ON 04.03.2008 . 7.4 FROM THE PERUSAL OF APPELLANT'S FINANCIAL ACCOU NTS IT IS SEEN THAT BOTH THE 'TIME TOWER PROJECT' AND 'SATBARI PROJECT' HAD THE TOTAL COST OF RS. 83.63 CRORES AND RS. 14.02 CRORE RESPEC TIVELY THEREFORE I DON'T FIND ANY LOGIC AS TO ON WHAT BASIS AO HAS C OME TO THE CONCLUSION THAT ONLY 40% OF THE INTEREST COST SHOUL D BE APPORTIONED TO 'TIME TOWER PROJECT' AS AGAINST 80% ALLOCATED BY THE APPELLANT. 7.5 HENCE IN VIEW OF THE ABOVE STATED FACTS I HOL D THAT AO IS NOT RIGHT IN DISALLOWING THE INTEREST OF RS.2 07 62 848 WHEN ACTUALLY ONLY RS.60 74 934 HAS BEEN CHARGED TO PROFIT AND LOSS AC COUNT. ACCORDINGLY THE ADDITION MADE BY THE AO DESERVES T O BE DELETED. 3.4. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 3. THAT THE LD. CIT (APPEALS) ERRED IN NOT APPREC IATING THE FACT THAT APPORTIONING EVERY EXPENSE ON AD HOC BASIS TO A PR OJECT DOES NOT REFLECT TRUE INCOME FROM A PROJECT. 4. THAT THE LD. CIT (APPEALS) ERRED IN NOT APPR ECIATING THE FACT THAT WHILE THE AO WAS LIBERAL IN ACCEPTING 80% OF OFFICE EXPENSES ALLOCATION TO THE TIME TOWER PROJECT THE SAME WAS NOT NECESSARILY RIGHT FOR OTHER EXPENSES. 5. THAT THE LD. CIT (A) WAS CLEARLY IN ERROR OF FACT AND LAW IN NOT UNDERSTANDING THAT EXCESSIVE FINANCE CHARGES WERE L OADED TO THE TIME TOWER PROJECT 6. THAT THE LD. CIT (A) ERRED ON FACTS AND IN L AW IN NOT CORRECTLY UNDERSTANDING THE ADMITTED FACTS ON ALLOCATION OF F INANCE CHARGES. IT(SS)A NO.34/13 5 7. THAT THE LD. CIT (APPEALS) ERRED IN NOT APPRE CIATING THE ADMITTED FACTS ON PAGE 6 OF HIS OWN ORDER WHEREIN ONLY 30.80 % OF BORROWED FUNDS WERE UTILISED FOR THE TIME TOWER PRO JECT. 8. THAT THE LD. CIT (APPEALS) ERRED IN NOT APPR ECIATING THAT THE AO ERRED IN ALLOCATING 40% OF RS.4 15 25 696/- INTERES T COST AMOUNTING TO RS.2 07 62 848/- TO TIME TOWER PROJECT WHEREAS IT OUGHT TO HAVE BEEN NO MORE THAN 30.80% OR RS.1 27 8 9 914/- THEREBY HE FAILED TO DECIDE THAT DISALLOWANCE OUGHT TO HAVE BEEN RS.2 87 35 781/- INSTEAD OF RS.2 07 62 848/-. 9. THAT THE LD. CIT (APPEALS) ERRED IN GIVING REL IEF OF RS.2 07 62 848/- ON ACCOUNT OF INTEREST EXPENSE HAV ING LOADED TO THE TIME TOWER PROJECT @40% WHEN IT OUGHT NOT TO HAVE BEEN MORE THAN 30.80% ON ADMITTED FACTS OF THE ASSE SSEE. 10. THAT THE LD. CIT (APPEALS) ERRED IN NOT ENHAN CING BY AN AMOUNT OF RS.79 72 933/- (RS.2 87 35 781/ - - RS.2 07 62 848/-) ON ACCOUNT OF EXCESSIVE FINANCE LOAD ALLOCATED TO THE TIME TOWER PROJECT. 11. THAT THE LD. CIT (APPEALS) ERRED IN UNDERSTAN DING THE MEANING OF RS.60 74 934/ - INTEREST DEBITED TO P&L ACCOUNT WHICH IS IN ADDITION TO INTEREST DIRECTLY CHARGED TO DIFFERENT PROJECTS AND CANNOT BE THE BASIS OF DISALLOWING EXCESSIVE ALLOCA TION OF INTEREST TO THE TIME TOWER PROJECT. 3.5. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF T HE LD AO AND REITERATED THE FINDINGS OF THE LD AO . HE STATED THAT THERE I S NO SCIENTIFIC METHOD OF ALLOCATION OF INTEREST COST TO VARIOUS PROJECTS IN THE RATIO OF 80:20 BETWEEN TIME TOWER AND SATBARI PROJECTS. THIS IS DONE ONLY TO REDUCE THE TAXABLE INCOME OF TIME TOWER PROJECT. IT CANNOT BE BRUSHED ASIDE THAT THE ASSESSEE BY DEBITING EXCESSIVE INTEREST TO TIME TOW ER PROJECT HAD DECLARED HUGE LOSS THEREON. HENCE THERE WAS NOTHIN G WRONG IN THE LD AO MAKING EXAMINATION FOR ASCERTAINING THE REASON FOR THE LOSS. IN RESPONSE TO THIS THE LD AR ARGUED THAT THE LD AO IS AT LIBE RTY TO EXAMINE THE REASON FOR THE LOSS BUT HAD NOT BROUGHT ANY MATERIAL ON RE CORD TO DISPUTE THE ALLOCATION OF INTEREST TO VARIOUS PROJECTS. ADMITT EDLY THE ASSESSEE HAD ALLOCATED THE INTEREST COST TO VARIOUS PROJECTS BAS ED ON ACTUAL UTILIZATION OF BORROWED FUNDS TO VARIOUS PROJECTS. THERE IS ABSOL UTELY NO BASIS FOR THE LD AO TO REJECT THE BOOKS OF ACCOUNTS U/S 145(3) OF TH E ACT AND DISALLOW 50% OF INTEREST CLAIMED BY THE ASSESSEE. HE ARGUED THA T THE DISALLOWANCE OF THE LD AO IS VERY ARBITRARY IN AS MUCH AS IT HAD EX CEEDED EVEN THE INTEREST DEBITED IN THE PROFIT AND LOSS ACCOUNT. THIS ITSEL F GOES TO PROVE THAT THE IT(SS)A NO.34/13 6 DISALLOWANCE MADE HAS GOT NO BASIS. THIS WAS RIGHT LY APPRECIATED BY THE LD CITA AND THE ADDITION WAS ACCORDINGLY DELETED. 3.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE COMPRISING OF PAGES 1 TO 243. WE FIND THAT THE ASS ESSEE OUT OF TOTAL INTEREST PAID ON BORROWED FUNDS HAD CAPITALIZED SOM E PORTION TO THE VARIOUS PROJECTS WHICH WERE NOT COMPLETED. THIS WA S MADE BASED ON ACTUAL FUND UTILIZED OUT OF BORROWED FUNDS TO VARIO US PROJECTS UNDERTAKEN BY THE ASSESSEE. THE REMAINING PORTION WAS CHARGED OFF TO PROFIT AND LOSS ACCOUNT. WE FIND THAT THERE IS ABSOLUTELY NO BASI S FOR DISALLOWANCE OF 50% OF INTEREST IN THE SUM OF RS. 2.07 CRORES WHICH WAS MUCH MORE THAN WHAT WAS EVEN CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. WE FIND THAT THE ASSESSEE HAD FILED FRESH UTILIZATI ON OF BORROWED FUNDS FOR VARIOUS PURPOSES INCLUDING THE PROJECTS BEFORE THE LD CITA WHICH WAS NOT SUBJECTED TO ANY VERIFICATION BY THE LD AO. WE ARE IN AGREEMENT WITH THE ARGUMENT OF THE LD AR THAT THE ALLOCATION OF INTERE ST TO VARIOUS PROJECTS BASED ON ACTUAL UTILIZATION OF BORROWED FUNDS TOWAR DS VARIOUS PROJECTS IS MORE SCIENTIFIC AND WOULD RESULT IN TRUE PICTURE. WE FIND THAT THE ENTIRE WORKINGS OF ALLOCATION OF INTEREST AND UTILIZATION OF FUNDS REQUIRES RE- EXAMINATION BY THE LD AO IN THE PROPER PERSPECTIVE. HENCE IN THE INTEREST OF JUSTICE AND FAIRPLAY WE DEEM IT FIT AND APPROPR IATE TO SET ASIDE THIS ISSUE TO THE FILE OF THE LD AO TO DECIDE THIS ISSU E AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY THE GROUNDS 3 TO 11 RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. THE LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA JUSTIFIED IN DELETING THE ADDITION OF RS. 40 L ACS MADE BY THE LD AO ON ACCOUNT OF UNDERCHARGING OF SALES TO GROUP COMPANIE S IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT(SS)A NO.34/13 7 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE SIZEABLE PORTION OF THE SALES OF RS. 52.52 CRORES H AS BEEN MADE TO GROUP COMPANY I.E DHOOT INFRASTRUCTURE PROJECT LTD AND ES SEL HOUSING WHO CONTRIBUTED THE LAND. THE ASSESSEE WAS ASKED TO G IVE BIFURCATION OF SALE RATE WITH RESPECT TO EACH SALE AND TO FURNISH DETAI LS OF EACH SALE WHICH COULD NOT BE FURNISHED BY THE ASSESSEE. ACCORDINGLY THE LD AO CONCLUDED THAT THE UNDERPRICING OF THE SALE AMOUNT TO THE GRO UP COMPANIES CANNOT BE RULED OUT AND HELD THAT THE SALE MADE TO GROUP C OMPANIES WOULD BE COVERED U/S 40A(2)(B) OF THE ACT . HE ALSO HELD TH AT THE HUGE SALES ARE SHOWN AS SUNDRY DEBTORS UNDER THE NAME M/S DHOOT I NFRASTRUCTURE PROJECTS LTD AND NO INTEREST IS CHARGED ON THESE SU NDRY DEBTORS FOR BELATED PAYMENTS. HENCE HE MADE AN ESTIMATED ADDIT ION OF RS. 40 00 000/- ON ACCOUNT OF UNDERCHARGING OF SALES. 4.2. THE ASSESSEE SUBMITTED THAT THERE WAS NO SALE MADE TO ESSEL HOUSING WHO CONTRIBUTED THE LAND. THE ASSESSEE ST ATED THAT THE LD AO DID NOT SEEK ANY INFORMATION DURING THE COURSE OF A SSESSMENT PROCEEDINGS. THE LD CITA DELETED THE ADDITION BY OB SERVING AS UNDER:- ON GOING THROUGH THE DETAILS OF TOTAL SALES MADE BY THE APPELLANT IT IS SEEN THAT OUT OF THE TOTAL SALES AMOUNTING TO RS.52 53 19 562 THE APPELLANT HAS MADE THE SALES OF 6289 SQUARE FEE T TO DHOOT INFRASTRUCTURE AT A SELLING PRICE OF RS.5000 PER SQ UARE FEET AND 4879 SQUARE FEET IS SOLD AT RS.4950 PER SQUARE FEET AND THIS RATE OF PER SQUARE FEET IS THE MORE THAN THE RATE CHARGED FROM OTHER 108 PARTIES IN NUMBER TO WHOM THE APPELLANT HAS SOLD THE UNITS RANGING FROM RS.2 100 PER SQUARE FEET TO RS.4 500 PER SQUARE FEE T. IN VIEW OF THE ABOVE STATED FACTS I DONT SEE ANY REASON OF UNDER PRICING OF SALES MADE TO GROUP COMPANY ACCOR DINGLY THE ADDITION OF RS.40 LACS DESERVES TO BE DELETED. 4.3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND :- 13. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION MA DE BY THE AO ON ACCOUNT OF UNDER CHARGING OF SALES MADE TO GROUP COMPANIES. 14. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FAC T THAT NO INTEREST HAD BEEN CHARGED BY THE ASSESSEE ON SUNDRY DEBTORS. IT(SS)A NO.34/13 8 4.4. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF T HE LD AO. THE LD AR VEHEMENTLY RELIED ON THE ORDER OF THE LD CITA. 4.5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD CITA HAD GIVEN A FINDING ON VERIFICATION OF THE ACCOUNTS OF THE ASSESSEE THAT THE SALES MADE TO GROUP COMPANIES WERE MADE AT RATES WH ICH ARE MORE THAN THAT MADE TO OTHERS . THIS FACT HAS NOT BEEN CONTR OVERTED BY THE REVENUE BEFORE US. WE FIND THAT THE INSTANT ADDITION WAS MA DE U/S 40(A)(2)(B) OF THE ACT BY THE LD AO IN RESPECT OF UNDERCHARGING OF SALES MADE TO GROUP COMPANIES. WE FIND THAT THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT ONLY SPEAKS ABOUT PAYMENTS MADE BY AN ASSESSEE AND NOT THE SALES MADE THEREON. WE HOLD THAT THE SAID PROVISIONS HA VE BEEN WRONGLY INVOKED BY THE LD AO AND THE SAME CANNOT BE MADE AP PLICABLE IN ANY STRETCH OF IMAGINATION. WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE LD CITA. ACCORDINGLY THE GROUNDS 13 & 14 RAISED BY T HE REVENUE ARE DISMISSED. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19/10/ 2016. S D/ - (S.S.VISWANETHRA RAVI) SD/ - (M.BALAGANESH) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 19/10/2016 & ()*/PRAKASH MISHRA . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 4 ( ) / THE CIT(A) KOLKATA. 4. 4 / CIT 5. 567 8 8 / DR ITAT KOLKATA 6. 79 / GUARD FILE. 5 //TRUE COPY// IT(SS)A NO.34/13 9 / BY ORDER / ( ASSTT. REGISTRAR) & ' / ITAT